As a lesson in achieving dynamic growth, Cambridge Education Group goes straight to the top of the class with 26% compound annual growth for seven years. We ask its CEO, Fergus Brownlee, for his lessons in navigating private equity buyouts
Cambridge Education Group is a global education specialist that delivers academic, creative and English language programmes around the world. In recent years it has achieved an enviable track record in growth at a time when many business have just been trying to survive.
Here, CEO Fergus Brownlee (pictured) talks to Mo Merali, Grant Thornton’s Head of Private Equity, about how growth was achieved and the journey through two private equity buyouts.
Mo Merali: Your business background covers quite a variety of functions. Challenging the assumptions about the roles you’ve been given seems to have been a key part of your approach. How do you broker your fresh, free-thinking style with the perhaps more conservative and specific requirements of private equity?
Fergus Brownlee: Well, there are simple ways to deliver. At the beginning of the year you agree your objectives – and then you achieve them. After two or three years it’s clear that you know what you are doing and the private equity people allow you to get on with it.
But you can’t sit on your laurels for too long. I’ve only got seven years of private equity experience, but quite often I find I’m saying: “We have had growth of 26% compound for seven years, so without wishing to sound too arrogant there’s something going right here.”
I’m always open to challenges, of course, but on the rare occasions where we are in disagreement, I suggest: “Please, let us try it.”
MM: The growth of the business has really been very strong. What were the key ingredients that helped you achieve this in the early years?
FB: We started with a very small family business. When we walked into the business in February 2007, the office in central Cambridge was tiny, there was no air conditioning and only a blue fly-catcher on the wall. That was our head office. You opened the windows when it got hot and all you could hear was buskers’ music drifting up from the centre of Cambridge.
But I think the success was down to getting the right people in place quickly and then applying sound and simple business principles.
MM: How did you manage the team and remain focused on the right business issues?
FB: For 25 years I’ve had an open-plan office. At our head office I sit at a refectory table with my other directors. We don’t plan every meeting to discuss issues – we just talk to each other at the table and everyone can hear what’s going on.
One of the big issues we have right now is prioritising. We have so many opportunities that we could be completely flooded, but it is helped by the blend of the team. Everyone has at least two attributes: each is an expert in their area, but they are also business people. They must all contribute to the general running of the business because we are collegiate then decisive.
MM: And how did that ease of communications help with your strategic plan? The exit was in 2013, but how did the plan that you set up in February 2007 develop: was it gradual or in leaps?
FB: I think our flexibility and speed of action enabled us to take advantage of opportunities as they arose. Our original plan with Palaman Capital Partners was to grow through acquisitions, but in the end we made just one a few weeks before we sold the business – a little language school in Boston, a good acquisition. It certainly wasn’t the acquisitive journey we had planned. In the end the plan evolved. We became and remain very opportunistic.
MM: How has your business plan changed since the purchase by Bridgepoint in 2013?
FB: Diversification has two routes. One is product, the other is in different markets around the world. We are only targeting one product development, which is just an extension of what we are doing already. However, in terms of the geography there’s now a huge focus in our plans. Taking our proven models into America is a very large opportunity.
MM: What is the draw of the US?
FB: There are two statistics that reveal the enormity of the opportunity. In the UK we have about 140 universities; the US has around 3,500. In the UK, about 16% of the students at universities are international; in America it’s 3.6%. So if America gets up to, say, 6% then the opportunity right now before the land-grab starts is monumental.
The growth of ‘middle classes’ around the world is huge. It’s hundreds of millions of people who are deciding two things: how can I give my children a great start in life and how can I help them learn English? It is becoming the world’s business language, so the reasoning is wouldn’t it be even better if I can put them into an Anglo-Saxon education system that also provides a culturalisation and a networking opportunity?
MM: So presumably branding is going to play an important role in your plans?
FB: Exactly. Back in 2007 we bought one very valuable brand attribute, the word ‘Cambridge’. The company was making losses and it had not yet earned the reputation as a premium provider. Now it is even more important as there is an incredible value attached to it. In the hierarchy of education, Oxbridge is right up there with Harvard and the Ivy League, and commensurate with our top-end quality reputation.
Image: Amy Baker