Private Equity People - A Q&A with Denise Crossley, Non-Exec Chair at Lantern Group and multiple exited founder

Our Private Equity People series returns. We speak to some of the most dynamic personalities from across the private equity industry to hear their insights and share their personal experiences. Inspired by recent studies showing there is still far more to be done to encourage diversity in private equity, the aim is to create a platform to showcase a broad range of role models who are successful founders, investors, non-execs, private equity professionals and entrepreneurs. In this instalment, we catch up with Denise Crossley.

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“Seek out a mentor, go to events and network – it will really help to have conversations with people who have been in your shoes” Denise Crossley, Non-Exec Chair at Lantern Group

Can you talk us through your own journey to date?

I've been in the debt collection sector for 40 years, and have started, grown and sold three different businesses before being headhunted into the role of CEO at Lantern in 2014. This was the same year our sector became regulated by the FCA, and I could see a huge opportunity for Lantern, which made the role very attractive.

Why was private equity investment right for you and Lantern Group?

The business had scaled and been successful with private funding, however, it was clear that to achieve our future ambitions, we also needed access to additional expertise and support. With my experience of private equity, it was agreed this would further professionalise the business by adding rigour and improve our standing, as well as raise the additional funding required for our growth.

How did you choose the right private equity partner for Lantern Group?

We initiated a formal process to help us pull together the investment memorandum and investor pack and worked our way through a beauty parade of potential investors. We finally met with around six, or eight firms, and all of them had something different to offer, but Copper Street Capital just felt like the right match for the business. They brought extensive financial services experience, and as well as giving us confidence that we’d secure the capital we needed, the senior people in Copper Street seemed a good personality fit with our own team. Having built and sold businesses before, I knew how important this would be to guarantee future success, and as CEO I was looking for a long-term partner. We also happened to be Copper Street’s first investment, so we had the benefit of a very experienced team, but it really felt like we were going on a growth journey together.

What tips would you give to someone considering private equity investment?

Get to know your potential investors. Have several meetings with them - some formal, some informal, to really get to know each other and feel comfortable about working together - it's all about relationships.

Your role in the business will change after a sale, which can be a challenge, as you are unlikely to remain the majority stakeholder. I really felt that change the first deal I did, but now I’ve sold three, I've learned along the way how to deal with this, so speak to others who have been on this journey. Seek out a mentor, go to events and network – it will really help to have conversations with people who have been in your shoes.

This is not the time to take your foot off the gas - someone's invested time and money into your business, and they expect a return, so you need to deliver what you've promised. It's your job to thoroughly understand what’s required of you and make it happen because if there's a misunderstanding about that on either side, the relationship is unlikely to work as intended.

Is there any advice you’d offer to people considering becoming Chair of a PE-backed business?

The Chair is there to lead the board and focus it on strategic matters, while overseeing the firm's business and governance standards. The management information pack presented to Board is key. It needs to be informative because everything you require must be in that pack for you to fulfil your role effectively. I would stress that the Chair should be signing off the final pack iteration, and it should be shared three days ahead of a meeting to enable a thorough review – it shouldn't be presented as a fait accompli.

You need to be prepared to be firm when it's required, and have a voice, particularly in a regulated environment. You can bring a different perspective and a fresh pair of eyes, and that you don't know all the detail is sometimes really helpful in giving new ideas and bringing challenge. It’s also very important to be organised and make sure everything keeps to time, so that you cover everything that needs to be covered.

As a Chair, what advice do you have around building a board?

I'm an advocate for keeping boards small and neat. If a board gets too big, things can get lost or lose significance. It’s key that the board has the right people on it with clear roles – at the very least a CEO, CFO and an independent Chair is useful.

Personally, I feel it is crucial to have a non-exec director and this should be a true independent to ensure they remain impartial. You need to allow the NED to fairly challenge.

I also think the board should have a mix of male and female representation. I've often sat on boards where I've been the only woman, and that's difficult. You need another female as support, otherwise you can feel isolated too, particularly if you have strong male characters, and I've heard that from lots of women.

What advice would you give other female entrepreneurs looking to scale a business?

Don't allow imposter syndrome to creep in. You were good enough to get your business to this stage, and you'll be more than capable of doing it again and scaling.

The key is to surround yourself with capable and supportive exec members who you can rely on, and make sure that there are no square pegs in round holes particularly as the business scales. You can’t pacify somebody and over adapt if they're not right for the role as the business grows and expands. You may have to make some tough decisions and move them on, in order to deliver on your promise to the investors.

What big picture trends are you currently seeing in your industry or across PE-backed businesses?

I can see that investors are staying around a little longer than originally planned, which I think is mainly due to interest rates & recent changes in Government affecting the market. However, I think we'll expect to see that positively change over the next 12 months. In regulated sectors, such as ours, I believe we will see more M&A activity as businesses step up to the regulatory challenge of operational resilience, therefore we may see a desire for business owners to take early retirement or exit the business earlier than planned. This provides a great opportunity for PE.

What’s in store Lantern Group in the next 12 months?

Lots more growth, which is happening already under our new CEO. The business will continue to drive efficiencies, as there's always more you can do in automation, while maintaining a great customer journey. There's more we can do with technology and there’s room for diversification into ancillary service offerings.

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Lantern Group is one of the top performing mid-market PE-backed companies in the Real Deals PE Value Report, in association with BDO. Read the report here.