The four-year collaboration between Lane Clark & Peacock and Inflexion was a classic minority deal – driven by management and supported by Inflexion’s Partnership Capital.
Private equity success stories typically extol the backers’ wizardry in transforming their investments. But sometimes, a supporting role is precisely what an ambitious management team are after as they pursue their growth plans.
This was the case at Lane Clark & Peacock (“LCP”), the leading independent consultancy specialising in pensions, investment and insurance, when in 2016 it sought a financial backer to enable the partners to take back control from its parent, pan-African financial services group Alexander Forbes.
Along came Inflexion who, experienced in partnering with professional services businesses, swiftly agreed terms of an investment through its dedicated Partnership Capital fund. As part of the transaction, LCP’s partners also increased their stake in the business.
LCP CEO Aaron Punwani commented, “Inflexion showed significant flexibility to adapt their model to meet our needs and operate as true minority partners”.
What followed was four years of impressive but measured growth.
“The business is fundamentally the same great one we invested in four years ago,” comments Philip Edmans, Partner at Inflexion. “We’ve just influenced a bit around the edges,” he explains, modestly understating the fact that the partnership saw revenues grow 45%, headcount grow by a third and assets under advice increase by 150%.
As LCP wasn’t seeking transformational change, Inflexion took the time to really understand the strengths and opportunities of the business. “I must have had lunch with 40 of the partners in the first year and it was really great to meet a broader set of the partners and truly understand the strengths of their unique culture. I think the partners really appreciated, it too”.
An important development was to appoint a new independent Chair. “Again, we spent the time consulting with the partners the attributes they were looking for, and then we used our network to develop a shortlist that from which we collectively chose.” Ultimately Graham Elton was appointed Chair. “It was one of the most important things we did, as his strategic lens really helped with focus and it made a great difference.”
It was a truly collaborative working relationship with Inflexion and we valued their ability to get quickly involved in the detail when necessary but also take a high level, strategic and pragmatic view when it was the right thing to do.
The growth that followed was directed by this focus and underpinned by LCP’s market positioning. The business already consulted with 50 of the FTSE 100 companies and enjoyed strong repeat spend. It was also operating in a shifting market, with clients favouring expert independent and conflict-free advice. Philip puts this down to their excellent client relationships and quality of their advice.
Lane Clark Peacock - a financial consultancy specialising in pensions, investment and insurance
Evolution, not revolution
The backdrop was favourable, but success wasn’t purely a beta play. Philip explains, “Our value add was around the edges, which, when added together, helped to really influence the operating model of the business.” The management structure was updated to support growth, succession planning and developing talent. This saw the number of members in the partnership grow around 30% during the four-year investment. The teams worked together to invest in faster-growing areas such as technology analytics, health analytics; and energy market modelling, building on its core skillsets, to support continued growth for the business and career development for its partners and staff.
“It was a true joy to be on the board of LCP,” Phil enthuses. “While it wasn’t a typical Inflexion investment from a value creation perspective, working with management to make small, but impactful, changes was important.
It’s a great case study of partnering with a top-quality leadership team and trusting them to get on with it while providing guidance to make a great business an even better business along the way.
The sentiment is reflected by Aaron, “Inflexion gave us just the right level of support. They were ambitious and challenging but not intrusive, all the while truly appreciating that it was our business.”