Callum Wallace, Technology Specialist, asked Robin Brown, formerly VP Portfolio at Colt DCS and now Head of TMT M&A Advisory at BDO, a few questions:
What was your journey like to get where you are?
Non-traditional – I recognized early in my career that I was interested in multiple sides of businesses but always in the technology, media and telecoms (TMT) industry so I specialised in TMT and tried to make sure I gained experience in multiple role types. This has armed me with an ability to see problems facing the sector from multiple perspectives. A handy set of skills for a Corporate Finance M&A guy! Anyone who says they planned their career and executed that plan without a hitch is ignoring the amount of luck I believe exists in the chance encounters, opportunities made and risks taken that result in the path each of us are presented with. Perseverance, faith and strong ethics are key – they will follow you wherever you go and are what people remember you for.
What’s the biggest challenge currently facing the European data centre market?
Cloud growth is fueling strong uptake in the data centre industry – not just from the Microsofts and Amazons of the shared public cloud world but from an increasing trust in outsourcing critical infrastructure to data centre specialist businesses such as Equinix, Coresite or Colt DCS. The challenge this growth delivers is that if it is not carefully managed it can reduce long-term Enterprise Value as providers chase what they see as a short term growth opportunity that results in client side opportunism around pricing. The market needs to be brave. Supply side pressure should result in firmer pricing expectations from buyers and DC providers should ensure they evaluate their specific local market before offering discounts that drive down investor IRR – especially if the contracts are long term. DCs benefiting from the cloud should not be panicked by professional DC purchasing teams as there is increasingly limited choice available for the large deals.
If you could time travel to 2026 what do you think you would tell a data centre investor in 2016?
Watch out for the growth in localised or edge storage and content delivery strategies – I believe that increased use of the cloud combined with the growth in storage available within devices, such as mobile phones, could significantly reduce the space and power required by enterprises and cloud providers in traditional data centres. This could drive more and more content closer to the user resulting in less space needed in the core where the DC resides. Content will become richer and consumers will continue to demand more information that is increasingly more tailored to their specific requirements. Generic centrally held data will be less available or accessible and offer fewer applications.
My advice therefore would be to ensure the connectivity options you have available are varied and scalable and you should also look for partnerships that allow you to offer a buying differentiator based on content delivery. The importance of content delivery will only increase and it is an opportunity that can be taken advantage of today, ensuring future investor IRR.
If you were investing your personal funds what technology sector would you be considering?
I am particularly inspired by the applications of AI evidenced by the cost savings Google believes they will generate through more efficient energy use in their data centres. The price paid for Deep Mind will be recovered through these cost savings alone, indicating tremendous value for investors. Future AI valuations may be affected positively by this one point alone.
What do you hope to achieve in your next position?
I thrive in information rich environments – one of the things I can guarantee I will experience in the Corporate Finance team at BDO is an extremely varied and intense engagement with the most senior corporate leaders in the fastest growing sector in the world – one that will change the world in which we live – I hope to be able to keep up with, learn and thrive in that environment as we are going to see some amazing opportunities in the next few decades that will reinvent how we see every aspect of our lives and even possibly the universe!
How do you view the current M&A UK Technology landscape?
Technology M&A is experiencing a very interesting phase right now as shareholders become increasingly concerned with whether or not their investments are secure when there is so much change and disruption going on across the industry. Business owners with product niches that are under increased competition from flexible contracts and (x)aaS product lines are looking for ways to pivot into new and faster growth services. Traditional, increasingly transactional, products that are experiencing decreased pricing and competition from virtualisation and the cloud need to be reviewed and owners and investors need to understand whether their current business strategy aligns with technology change. One clear trend is evidenced in virtualisation of hardware from traditional pbx's to networking hardware. Businesses still focused on capex sales, and rewarding their teams based on these one off sales, need to focus on how they increase their recurring revenues to drive shareholder value. This might mean significant change, not only in product but in the skill sets they need across the business as well as reviewing how they adapt to the demands of customers for increased digital transformation. Long term value can be generated through careful evaluation of how best to adapt to this changing market. Large amounts of enterprise value are being left on the table by business owners that fail to adapt and articulate their companies strategy to take advantage of these changes which result in an increase in shareholder value.
Three guests for a dinner party; who do you invite and why?
Assuming my wife is attending?
Chrissie Wellington – a consummate Ironman competitor and massively successful athlete – she has some controversial views and tactics which would be interesting to debate…
Walter Bonati – a true pioneer of early climbing in the Italian and French Alps – he had to deal with politics from the mountaineering community on both sides and fight to be recognised which took him long into his career – a tremendous climber, travel writer and his character shines through – I believe he was one of the greats.
Vint Cerf – a true visionary of the internet age – I have had the pleasure of dinner with him before and have debated long into the night on the possibility of inter-stellar networking and how time can be used to predict technology needs and communication types… A bit geeky but the others can talk sport while we bore each other!
What’s the best piece of advice you have ever been given?
I am going to cheat and give you two – “Intelligence is what you use when you don’t know what do” (which I heard somewhere on social media) and “live your life with unquestionable ethics” which I learned from my father.