This month, we are sitting down with Simon Embley (pictured), chief executive of Pivotal Growth.
Embley worked at Aviva in various senior roles between 1993 and 2000. He went on to lead the turnaround of Aviva’s UK property and estate agency division, which includes Your Move and E.surv, over the course of six years.
In 2004, the business was bought by Barclays Private Equity in a management buyout for £42m. The firm was rebranded to LSL Property Services and floated on the London Stock Exchange in 2006 with a market capitalisation of £208m.
Embley was the CEO of LSL Property Services until 2014, during which time the company bought mortgage networks Home of Choice and Pink Home Loans.
He then went on to be the chief executive of Pivotal Growth in 2021, a £200m joint venture between LSL and Pollen Street Capital, consequently stepping down as LSL chair but remaining non-executive chair.
In April, it was confirmed that Embley would be stepping down from the LSL board to “concentrate” on Pivotal Growth.
Since launch, the company has made 11 acquisitions.
What is the outlook/strategy for Pivotal for the year ahead?
Our outlook and strategy for the upcoming year are centred around proactive expansion and strategic recruitment. We are dedicated to identifying and onboarding thriving mortgage and protection businesses led by capable professionals.
While we already offer expertise in new build, buy-to-let (BTL), residential, and secured loans, we are actively seeking to bolster our portfolio by attracting firms specialising in other segments of the market, including bridging, commercial, and later life lending. By broadening our expertise and network, we aim to better serve the evolving needs of our clients and partners.
Since launching, what have been the highlights and key learnings for the business?
Since our launch, Pivotal has experienced several significant milestones and valuable insights. Undoubtedly, a standout highlight was the completion of our first acquisition with Lifetime Finance Group in Glasgow in December 2021.
However, each acquisition marks a noteworthy milestone in our journey. Our dedicated team at Pivotal has tirelessly worked to identify suitable businesses, negotiate fair valuations, and meticulously conduct due diligence on target firms.
Additionally, I take great pride in witnessing the collaboration among the newly acquired businesses. They’ve fostered an environment of sharing best practices, contributing to the thriving culture of Pivotal Growth.
Personally, navigating challenging market conditions has taught me that acquiring the right businesses, led by the right people, at the opportune moment, demands patience and precision.
Last year, LSL sold broker firms to Pivotal; can you explain that strategic decision a bit more?
LSL Financial Services primarily serves mortgage and protection brokers, while Pivotal focuses on direct ownership of broker firms. Recognising this distinction, it made strategic sense for Pivotal to acquire LSL’s direct-to-consumer (D2C) brands, including Embrace Financial Services, RSC New Homes Limited, Group First Limited, and First2Protect Limited. This consolidation allows both entities to leverage their strengths effectively.
What role do LSL and Pollen Street Capital play in the business? Is it just a funding partnership, or are there other functions they perform?
Pollen Street and LSL have a vast amount of experience in buying and building businesses. They give us help and guidance, as well as support and capital to build Pivotal Growth.
The implementation of the strategy and the day-to-day running of the business is down to me and my senior management team.
What is the acquisition pipeline like for Pivotal currently? Do you expect that to change in the near term?
Our acquisition pipeline at Pivotal is robust, with three firms currently undergoing due diligence and a healthy number in the queue. By year end, we anticipate adding another eight firms to our portfolio.
We remain focused on identifying firms that complement our expertise in various segments of the mortgage and protection market. Additionally, we encourage our existing businesses to explore opportunities for acquisitions, particularly from owners looking to exit the market.
What does Pivotal look for when it comes to acquiring a business? What are the key business aspects that it values?
We seek out thriving and financially sound businesses operating within the UK mortgage and protection markets. Our focus extends beyond mere acquisition; we aim to retain the expertise and entrepreneurial spirit of the leaders driving these businesses forward.
Key aspects we value include a solid management structure within the target companies, allowing principals to dedicate their efforts to business development and growth rather than solely advising clients.
We often encounter firms where principals are primarily engaged in client-facing duties. In such cases, we encourage them to invest in their businesses, enabling them to delegate advisory tasks and concentrate more on the overall strategy and expansion of their operations.
How has the economic landscape impacted the M&A landscape – has it made it more challenging or appealing to other parties? What is the outlook now?
The mortgage market, like many others, is cyclical, and therefore it is vital to understand the market conditions. The recent market has certainly been challenging, so it is particularly encouraging that we have now acquired 11 companies. The important thing to understand is the underlying profits of a business, allowing for the peaks and troughs in the market.
To date, we haven’t encountered any competitors in the mortgage and protection markets with a proposition akin to Pivotal Growth’s. However, I am sure that our progress is being carefully monitored by the market players.
Looking ahead, the outlook is encouraging. We’re pleased with the quality and robustness of our pipeline, which serves as a testament to our optimism for the future.
Are there specific lending areas that Pivotal is looking at or aiming to grow in?
Pivotal Growth is interested in building an ecosystem of brokers who work in the prime residential mortgage markets, as well as specialist brokers who operate in niche markets such as second charge, commercial, bridging, BTL and non-conforming markets. This allows the businesses to be both generalists and specialists.
As an example, where an adviser identifies that a second charge is a better solution than a remortgage, the case is referred on to The Loan Partnership, our second charge broker. Furthermore, protection and general insurance opportunities are also referred across the group firms.
One of the many benefits for firms joining Pivotal Growth is the ability to quickly scale to compete for large lead opportunities.
How has the integration of the various firms gone? How involved is Pivotal with the business strategy of its firms? How much support does it offer?
The integration of the various firms has been highly successful. Across all the acquisitions, we have been able to retain the existing management teams and staff, who continue to drive the businesses forward.
Leveraging Pivotal’s centralised infrastructure for IT, payroll, finance, and telephony platforms has enabled us to swiftly establish economies of scale. We are investing heavily in technology to improve our operational efficiencies, and firms within our group will also have access to these platforms.
We will provide access to capital to finance the growth of our partners, on both an organic and acquisitive basis.
What is the headcount for Pivotal currently, and what are the recruitment plans looking ahead?
Pivotal Growth has recently completed its 11th acquisition, adding John Charcol – a renowned brand in the UK mortgage market – to its portfolio.
Among the other 10 firms within our group, three specialise in the new build market, with additional expertise in BTL, second charge, general insurance, contractor mortgages, and prime residential brokerage, represented by Embrace.
With this latest acquisition, the total number of staff within Pivotal Growth has risen to 637, with 416 advisers, a combined turnover of c£63m and lending of over £8bn. Our plan is to grow the firm’s numbers and fill in the gaps in the specialist markets that we don’t currently operate in.
