Interview: Paul Simmons
Paul Simmons brings significant experience to n Industries. He was formerly CEO at Hill & Smith, a FTSE250 company (2020-2022) where he played a critical role in reshaping the company’s strategy.
Paul was also, until 2020, Sector CEO for the Infrastructure and Process Safety Sector at Halma, a FTSE100 company. Both businesses followed a similar model to n Industries – namely, repeat acquisitions and a decentralised management approach. No stranger to success with this model, Paul’s teams at Halma and Hill & Smith generated double-digit organic growth and he was at the helm for multiple successful acquisitions.
Why are you interested in the opportunity at n Industries?
I love working with business leaders to help figure out how to enhance the value that they create for their customers. So the idea of supporting successful MDs of UK Industrial businesses is very appealing.
Additionally, the opportunity to work with Jon, a talented and enthusiastic CEO, to build a great business from a standing start sounded exciting and so it is proving to be.
I hadn’t met Duncan Penny [also Senior Founding Advisor] at the time of signing up, but I had heard very good things about him so that was a significant attraction too. Together with our investors we have the potential to build an exceptional UK Industrial business.
Why are you such a strong advocate for decentralised businesses? Why do you think they can work so well?
My view is that a decentralised business structure brings three significant benefits.
Firstly, because decentralised operating company businesses are relatively small, they can focus on high value, high growth niches. Niches that are too small for larger centralised organisations to care about. We look for applications that are mission critical in a larger system: these applications tend to generate higher gross margins which more than compensate for the lack of economies of scales, the known downside of a decentralised approach.
Then secondly, the level of accountability is very high. The results are clear for all to see – people who deliver stand out without having to try to stand out. With thought, the alignment between the Operating businesses and the Group support team is very strong, which also enhances performance.
The model attracts employees who want to make a difference at work, get things done and deliver superior results.
Finally, the model attracts employees who want to make a difference at work, get things done and deliver superior results. Because of this, decentralised organisations tend to be less political, maybe less polished but often more effective than centralised or matrix structures. Employees choose to do the work that counts, before the work that merely looks good.
We can bring our experience and knowledge to bear when it will be helpful, and keep out of the way when it is not required.
How can we at n Industries help enhance the businesses that we acquire?
Between Jon, Duncan and myself we have a good amount of experience across numerous Industrial sub-sectors and the major business disciplines. Many of our MDs will have spent a great deal of their career at the business that they are leading – they bring huge depth of knowledge and experience, our job is to add breadth.
Through partnering with our MDs, we can bring our experience and knowledge to bear when it will be helpful, and keep out of the way when it is not required. The Group can also provide funding for well thought-through initiatives with a strong IRR – freeing management up from raising capital to creating value.
Your past teams at Halma and Hill & Smith generated strong organic growth when you ran them. What do you think enabled you to do this and how can you apply this experience to n Industries?
It seems to me that, fundamentally, there are two key factors in delivering strong organic growth over the longterm.
Firstly, make sure that the business is playing in strong markets. At n Industries we have the opportunity to acquire businesses that are supported by strong markets driven by long-term macroeconomic drivers. Our approach to M&A systematically exploits this.
Often the businesses themselves have a choice of markets too, inevitably some of their market options will be better than others: being thoughtful and deliberate about this increases the probability of delivering superior organic growth. Jon, Duncan and myself will work with our MDs and their teams to discriminate in favour of the stronger markets and niches.
Secondly, strong markets allow for the possibility of success: but people deliver it. As mentioned above the decentralised structure attracts employees who want to make a difference. n Industries will attract apolitical, high achieving employees who have the scope to develop with the Group as it grows rapidly.
The best MDs are decisive, but great listeners. They’re generalists who know when to pay attention to the detail.
Finally, what characteristics do you think make a good Managing Director for an n Industries operating company?
The best MDs are decisive, but great listeners. They’re generalists who know when to pay attention to the detail. And they’re humble enough to know that if they’re the company’s expert on most topics, then they need to recruit or develop some better employees.
The smartest MDs hire people who are more capable than themselves and bring out their best by empowering them with sufficient autonomy to flourish. They role model strong values and encourage a constructive culture of achievement.
Finally, they are thoughtful about what market niche they want their business to play in, what value their business can bring to that niche and how to get paid for the value.