How we built a business out of recession - chapter 13 - G Forces agree to buy us
The story of CitNOW*
This is the 13th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although the company was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company. It has been sold again since.
The second dash for cash was to G Forces, a family-run web company based in Bearsted, Kent. They had been one of a small group of automotive web-builder businesses that we’d introduced ourselves to, hoping to get some dealer referrals.
G Forces were, far and away, the biggest and most impressive. From their long imposing driveway in the countryside, the scattering of aspirational vehicles in the car park, to their purpose-built, modern offices filled with busy, bright young people, they were the complete opposite of BTC in Crewe. I also liked Tim.
Donna first met them while I was up north in Chesterfield, meeting Dealerwebs, a developer specialising in motorcycle sites. We quickly compared notes on the phone afterwards, agreeing that we were having a good day.
So far, all the developers we’d met were relatively small, enjoying steady growth, as dealers woke up to the alarming fact that they needed to have a web presence with an up-to-date stock list if they were going to compete in the future.
G Forces were different. They’d already reached a significant scale and had an enviable client list, which included some of the UK's most prominent dealer groups. They had aspirations well beyond website design, selling a suite of tools to help with lead generation and stock control. It was a premium product, and they made no secret that their competition was AutoTrader,** from whom they hoped to win a significant amount of business.
The big meeting, the one arranged to discuss investment, was attended by the three of us. We met Alistair at Clacket Lane Services and left Donna’s car there, travelling the rest of the journey to Bearsted together. It was a valuable time to rehearse our story again and discuss who would say what. Given that Donna was the main contact, she would lead the charge.
Even at this early stage, there was a natural division of labour. Alistair covered the financial plan and forecasting, I focused on product development, and Donna managed the account relationship. We both talked about sales and marketing because that’s what we did every day.
Their boardroom was palatial for the three of us, plus Giles and Tim. A third younger brother didn’t yet figure in the senior management team. The other family member present was a West Highland white terrier called Archie, but he got bored and quickly fell asleep after he’d done his round of welcomes.
I don’t remember what we expected, except perhaps a hard time with the numbers and substantiating them. Tim was the more vocal, and it was clear from the outset that they liked what we were trying to do. It chimed with their longer-term strategy, offering a comprehensive digital solution which could be integrated with their existing web platform.
The meeting lasted no more than an hour and might have included a quick tour. As the meeting was winding up, they just came out with it. They wanted to buy the company. We certainly hadn’t been expecting that.
No numbers were discussed, but we agreed to meet again in the new year when they’d had a chance to digest our business plan further and come up with their valuation. We hadn’t been audacious enough to suggest any figure at a first meeting, but then we weren’t necessarily proposing a sale. If we had tried to put a number on it then, I expect we would have been happy to walk away with two to three hundred thousand pounds each.
We were in that painful period when nothing moves as quickly as you want it to. We were cash-strapped and still had only 40 dealers using CitNOW, plus that infernal revolving door with dealers leaving as fast as they were being added. Accessing the G Forces’ client list sold in as an integration to their existing platform would have been a welcome fast track. The return on investment for G Forces could also have been quick; plus, the cash could have been partially or entirely paid out in share options. Who knows?
The meeting had been a breath of fresh air. These guys were as optimistic about our business as we were. They’d also taken us seriously and now wanted to buy it. We were so excited discussing all the permutations on the way back that we completely forgot that we’d left Donna’s car at the services. We didn’t mind the 30-plus mile detour; there was so much to digest and discuss.
It quickly became apparent that this would be the best result for Alistair. He didn’t want to leave the NHS and couldn’t see a long-term future with us. This would be his healthy payoff, and we could now work for Giles and Tim, who would want our support in launching the product properly once the deal was done. They’d said as much.
Donna and I were feeling shell-shocked. I was delighted at the thought that we’d created something that someone wanted to buy but now concerned by the sudden realisation that we might soon be returning to the realm of paid employees.
The new year came and went. Nothing was forthcoming, and by the end of the first quarter, it was clear that they must have been having second thoughts. Donna and I finally met Tim again, who politely explained that they’d been a bit premature and weren’t in a position to do anything about the purchase, at least for the time being. They were an acquisitive company and would certainly have been having other discussions. We’d just been one of those and certainly not the one that warranted their immediate attention.
We couldn’t afford to sit on our hands either. If they’d been serious, there wouldn’t have been any need to chase. By the end of January, it was pretty apparent to us that we needed to forget the conversation ever happened. There was no time to reflect on what might have been. It was time to dig deep, find another investor or find another way to continue growing.
Not long after, Jason*** called me to arrange a meeting in Llandudno to meet another Alistair. He’d mentioned this guy several times - a definite must meet when back in circulation. I was intrigued. Where had he been, and why the interest, given he didn’t have a job and had only recently returned to the UK?
*CitNOW was our company’s trade name before we sold it in 2018.
** AutoTrader was and still is the number 1 site for buying and selling new and used cars in the UK. Dealers used to complain about how much of their marketing spend went on AutoTrader advertising. I’ve heard it described as a drug - no one can afford to stop.
***Jason was the Sales Manager for Rybrook Jaguar, Warrington. By the time of the phone call, he’d been promoted and was now running Rybrook Land Rover, Llandudno Junction.