Matthew Riley opens up over Daisy shake-up
In this Top VARs 2018 Q&A, Daisy's founder admits that the converged comms and IT supplier's existing structure was slowing it down as he explains why he has taken a more active role in the business
This interview originally appeared in Top VARs 2018
You ended your fiscal year with revenues of £684m and adjusted EBITDA of £127m. Was that in line with expectations?
No, this wasn't our original expectation. While we missed our overall revenue number, our EBITDA performance was strong and importantly, we delivered high levels of recurring revenue. We understand the reasons behind the miss, and we have since made changes to the structure of the business, including giving more autonomy to the divisions. This will better enable them to drive future revenue growth.
What made you decide to take a more active role in Daisy this summer, and why has Daisy reportedly shelved plans for a trade or private equity sale?
For the last three years, as non-executive chairman, my role has been supporting the team in integrating the acquisitions and developing our strategy as well as our range of products and services. We are in a strong position - Daisy is the number one independent business communications, IT and cloud services provider in the UK.
Our scale has benefited us on the one hand in terms of product development and pricing, but I believe our existing group structure has slowed down our decision making and the speed at which we work. Working at speed was one of the hallmarks of the business I founded. The market is moving incredibly quickly and we need to be more responsive.
So I want the Daisy divisions to have more autonomy to better focus on the specific needs of their customers. The MDs of each division now have greater control to shape the strategy and approach, and I chair their monthly board meetings, working with them to set the right targets and plans. We have no need for a traditional group CEO role.
In terms of the reported sale process, any private business like ours with different investors will occasionally look at what is the most appropriate shareholder structure going forward. We had positive conversations with a number of potential investors which helped us evaluate the current strengths and weaknesses of the business. There are lots of different ways for us to realise value, and at the moment our focus is on bedding in the new structure and growing the business.
What are your plans for the next year or two?
Our focus is on capturing the growth opportunities being driven by the demand for technology we see in UK business - for example, the shift to the cloud, or the need to enable more flexible workforces. By 2023, the UK addressable market for converged IT and telecoms will be worth £39bn, up from £33bn in 2015.
Discussions to buy TalkTalk's Direct B2B business fell through in June. How important are acquisitions for Daisy going forward?
The potential TalkTalk deal was at an early stage and announced because of its listing requirements. It is a good business, but once we were able to look at it in more detail, we felt it was not the right fit for us.
Acquisitions are always difficult to get over the line but a big attraction of Daisy is our track record of successful completion and integration.
This means I would expect lots of opportunities to present themselves moving forward, which we will evaluate on their merits. We will continue to look for smaller deals such as recent acquisitions Voice Mobile and DV02, but our main focus is on organic growth.
We wouldn't rule out any deal if we thought it could add value; however, that is increasingly a high bar. I don't think we will be as acquisition-led as we have been in the past, which reflects the greater maturity of the business.