Interview with Peter Alderson, Managing Director at LDF
Peter Alderson is Managing Director at LDF. Prior to this appointment his experience included; 30 years in the finance & banking sector, working for the Dresdner Kleinwort, Commonwealth Bank of Australia, and Investec. LDF is one of the largest providers of business finance to the SME community (planning to provide £400 million to this market in 2016) and achieved ‘Gold Status’ from Investors in People in 2015. Celebrating their 30th year in business, Peter talks to Finance Monthly about LDF’s plans looking forward into 2016
The role of Managing Director is well positioned to drive cultural change within a company. What goals did you arrive with as Managing Director of LDF?
I was appointed Managing Director in the middle of 2012, at which time the business was owned by Investec, a FTSE 250 South African bank. There was a definite need to address and lead a culture change in order to develop a successful privately owned business that was at the time, still fairly small, and to fit this into the larger banking environment, without losing the business’ strong existing values.
The first 18 months was focused on making the business more corporate, while being careful not to diminish the feeling that this was a good place to work. We took care to ensure that any changes did not affect our focus on our employees, our clients or our proposition to them. The first challenge was definitely to retain the feel of the place.
I was also very focused on market awareness. The business had not previously been forward in telling the world what it did. Pre-Investec ownership, the business strategy was pretty much to be the best-kept secret in the industry –almost as if we didn’t want people to know who we were or what we did. We then became part of a bank with its own very powerful global brand; we weren’t able to compete with that and so we sat quietly underneath the Investec zebra. When we changed ownership at the end of 2013 however, we realised that we were now a big business and that the market was still unaware of our offering – it was our opportunity to change this perception and to develop awareness of our brand.
The culture, as well as the marketing, needed to support this. I had to persuade employees and my Board that it is a good thing to tell people what you’re good at; it’s good to put yourself forward for awards and to market what you do well. It was at the time a very strange insular culture, and one we needed to make changes to confidently, without unsettling and alienating those individuals who had been immersed in the business for the last 10-15 years. That was definitely the biggest challenge we faced in the first couple of years – to encourage visibility but maintain pride in the business.
What were some of your major achievements in this area in 2015?
Our culture change has shifted to a more positive & current approach, this has made a massive difference to the business and to our people. We have been successful in keeping the feel-good factor about the place and we monitor this every year in a couple of ways. We test through our attrition rates, which remain incredibly low, we also survey employees in a wide-ranging engagement survey. We see a great level of input from this and last year scored a strong 8.2/10 on employee satisfaction.
We have introduced measures to make sure we are ‘getting it right’ in order to continue to develop our culture. As well as this, we were trying to create an independent commercial business and include the relevant controls and structure it needs to be successful. I certainly do not feel that our new owners, Cabot, would have acquired us had we not taken measures to encourage this cultural change.
Our change in ownership has given us the opportunity to aggressively grow the business, due to the robust platform we have built and the processes that support it.
I believe that we could double our business without significant increase in staff due to our heavy investment in systems. The hard work of 2012 and 2013 has enabled us to integrate and make the acquisition of First Independent Finance in 2015 – before that we couldn’t have considered such a move.
We’ve grown up as a business in the last 12 months. In 2013, we arranged £200 million of SME funding, £20-£30 million of which was provided using our own funds, so we were a broker that did a little bit of funding. In 2015 we wrote £270 million – £185 million of which was using our own cash. We’ve turned the business around to be a funder foremost, a broker second. This has had positive implications on all parts of the business.
You are a member of the LDF Board – what does this entail?
I am proud to be part of a Board who demonstrates strong tactical initiatives, consistently high management skills and who remain focused on regulatory awareness and compliance. As a group, we continue to develop strategically, supporting a committed business focus of continued growth.
Our parent, Cabot, have a seat on the Board; the rest however, is made up of highly tenured and experienced individuals, with strong LDF backgrounds. We are all very visible, no offices in ivory towers, but more importantly we make a point of sitting in the centre of an open plan office – a conscious decision in order to remain approachable to everyone within the business. Board meetings are often simply formal approvals or proposals that cover off any important points raised throughout the month.
We maintain a relaxed and interactive approach to these sessions – the Board is young and vibrant, with an average age of 38. Tenure within this group is considerable, two members have been with us in excess of 10 years and another two have spent their entire working careers with LDF. It is fair to say that people, who join us, tend to stay with us, and wherever possible we try to support this by promoting from within.
You also oversee HR and Training. How important is staff training and how much of an emphasis do you put on it?
We invest very heavily in it – it is absolutely critical to us. Our first goal is trying to maintain that culture – a lot of the training we do is team building and exercises to make sure that people feel connected with the business as we go through our journey from small broker to largest independent SME finance provider.
We also conduct a great deal of product and customer service training. We are in a favourable position of being able to deliver much of this in-house, with three full time trainers; this means that we don’t necessarily have to outsource training requirements, unless they are specialist or skill-specific. The team have delivered over 1500 training days in the last business year and considering we have over 130 people, everyone has benefitted from at least 10 days of formal training in 2015 – quite a commitment to both time and spend.
We believe training our people is exceptionally important. Our industry continues to change rapidly and we have a responsibility to stay ahead. Keeping everyone aware of our business developments is essential to ensuring that we are in a position to handle developments in the best possible way for our Group collectively.
In an increasingly digital world, do you feel pressure as a Managing Director to embrace it? Is LDF’s online presence important to you and the company’s success?
It is important to us. In the last 18 months we have developed an online platform which approves and processes asset finance transactions. Launched this month under the brand lendinghive.co.uk, we are pleased to be at the forefront of an online asset finance solution that helps champion UK SMEs. Businesses can go online and have business loans approved at their convenience – a new experience when compared to the present asset finance landscape. While loan providers have been active in this space for some time, this has not before existed for asset deals – mainly due to its complexity. Our brand represents speed, service and professionalism (demonstrated in our current 4.9 ‘Feefo’ rating) and we see the development of digital as an opportunity to further strengthen these values.
We are however, also very cognisant that we have built this business on the back of direct relationships – people talking to and developing close working relationships with their clients. We absolutely don’t want to lose that, it’s crucial that we get the balance right between those clients that have worked with us for the last 30 years, alongside growing our business in the digital space. We must make sure that we have a compelling proposition for both client groups.
Many of our clients are professionals, many of whom do not necessarily have the time to interact with us online. Our service proposition therefore is one of “tell us what you need and just leave us to deliver it”. This level of trust brings a responsibility to deliver every time for these clients. Having the people and culture to do that is the rock on which we built our business and reputation.
Having said that, the business world is moving at pace and we now see an increasing generation of very technologically savvy business owners, who ultimately prefer to interact online. Our challenge is to take our proposition and our strengths of speed, service and professionalism, and to deliver a solution that will appeal directly to this group of prospective clients.
Looking into 2016, what do you anticipate for your role?
My role this year is all about delivering on growth. We have built a strong platform for this in recent years through our investment in both training and technology. We have the basis to enable the business to double in size without a significant infrastructure spend. We completed a major acquisition last year, which added £120 million to our origination. This year we will write around £390 million and I am confident that we can grow that to £500 million in 2017. In order to achieve this however, we need to understand which partners we want to collaborate with, decide on our appetite for acquisitions, make sure our digital platform is successful, keep our current clients happy with our present level of service, and look at new opportunities and channels that could facilitate further growth. To support this, we have introduced an internal team of 10 people, whose core role is to develop new products and channels, this in itself is another major investment.
We are still very keen to acquire new businesses that will complement the Group, adding to our client base, with a strong focus on management teams who have a growth plan for their business but who cannot commit the resources in staff, marketing, and system development to realise that plan. I expect this will take a significant amount of time in 2016.
As Managing Director, my role is primarily to help people understand the vision, and the strategic activities that underpin this. We are changing rapidly, but we are determined to take our strong and experienced workforce with us on this journey. The last five years have been a constant cycle of change; two owners, new management, regulation changes and the delivery of an enhanced product offering – all of which our employees have adapted to exceptionally well.
The pace of change is not going to slow any time soon. The market for SME finance continues to develop rapidly and this business is committed to leading that development over the next five years.