Torchlight supports governments, international institutions and organisations in building capacity and developing capability to address the underlying drivers of serious and organised crime, irregular and illegal migration, counter-extremism, and counter-terrorism. The company’s Co-Founders Ed Dickson and Sean Lumley came to us to support the development of the business with a view to an eventual exit.

Our relationship with Torchlight spanned over six years, including a period in which one of our team served as an NED (Non-Executive Director). During that journey, we advised the Torchlight team on best practice to ensure that value was maximised upon exit.

We assisted Torchlight with the demerger of CybSafe, a cyber awareness business that was incubated within Torchlight, as well as several employee incentives schemes and succession transactions. At all times we ensured these transactions preserved shareholder value on exit.

Our team then supported Torchlight throughout the negotiations and deal closing process. We led negotiations on behalf of the shareholders and supported management in the due diligence and closing process.

Through our support and strategic guidance, we helped Torchlight’s management team to position and prepare the business for a sale. When the opportunity presented itself, we negotiated a deal that saw the business acquired by Axiom, a portfolio company of Limerston Capital. The acquisition of Torchlight is the next step of an ambitious growth strategy aimed at creating a leading international security and criminal justice capacity building organisation.

We caught up with Ed Dickson to see how it all came together and what happened next…

"We quickly grew the business into a company making £10m a year in revenue."

‍Tell us a bit about Torchlight, how the business has grown and developed etc.

We founded Torchlight in 2011 with very little commercial experience – prior to that I had served 20 years in the military. However, through organic growth we quickly grew the business into a company making £10m a year in revenue, based on the provision of international capacity-building services with a specific focus on national security and resilience. The business quickly went from two employees to 40.

When you began to look at what ended up as the sale to Axiom, how long had you been considering/planning a sale?

To be honest, we'd been planning a sale pretty much from the outset. That was always the goal.  However, I hadn't considered selling to private equity - particularly a competitor that was ultimately owned by private equity - because I thought that the value would be more in a trade sale. Nevertheless, we adapted to a changing situation which included the onset of Covid as well as a number of other macroeconomic factors that were affecting our sector.

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"It was the first time I've gone through any form of acquisition and merger."

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How did the sale process go? What did you learn?

For me, it was the first time I've gone through any form of acquisition and merger. Also, having run Torchlight for ten years, it was interesting going from founder/owner to employee. I had to learn how to be a good employee again and how to think slightly differently, respecting and valuing the fact that I now had new leadership sitting above me that had different priorities and different requirements. I learned an awful lot about that.

I think also that coming from a small business into a larger portfolio of businesses and really understanding the private equity drivers - the things that they valued and how to communicate those in the most effective way for them - was a big learning process.

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"When you're founder and owner, you're so intimately involved and everything is very personal."

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‍In terms of transferring over to being an employee was there anything in particular that sprung to mind in terms of a learning and just that psychological shift?

There's definitely the psychological shift; shifting perspective to align with a new ‘Commander’s Intent’ as we would say in the military! What I also found interesting was the change in personal pressure. When you're founder and owner, you're so intimately involved and everything is very personal. In the shift to being an employee, the consequences feel less grave which gives you greater perspective (and operating freedom).

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"You ultimately decide if you're willing to sell at the price that you do."

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‍What advice would you give to other business owners looking to sell?

I think it's about approaching it with a positive, constructive outlook. It's about acknowledging that you are selling your business and you ultimately decide if you're willing to sell at the price that you do. Once you've made that decision, it is then about respecting and accepting that you no longer own that business and either choosing to adapt and seek new opportunities and challenges within a very different structure, or to decide that you want to exit in the quickest, most appropriate way.

In terms of selling to private equity, my advice would be to make that transition and understand what it is that drives their business because it'll be very different from those things that drive your business. Adapt to that as quickly as you can and if you can't adapt then that’s fine – just accept it and exit in an orderly fashion.

Another point is to be flexible on value. I’d always decided what the value point was and what was important to me. When I didn't achieve that figure, I thought it would be hugely disappointing and that there'd be an element of resentment or regret. I can honestly say that, actually, I don't have any of those feelings. We achieved what we achieved in terms of valuation because of a range of different factors and circumstances and I'm grateful for the sale and for the freedom and opportunity that it has afforded myself and my family.

What advice would you give to other business owners in terms of the negotiation process?

I think it is very much about trusting your advisors; for you it will be an emotional rollercoaster, for them, it is another day in the office. Focus on providing them with the information they need in a timely fashion and listen to their counsel. Also, make sure that you communicate effectively with all shareholders as the process can get very complicated if they are not on the journey with you. And finally, do not underestimate the due diligence process – it is all consuming and there is no hiding.  

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How important was Shaw & Co’s advice?

In short, their advice has been instrumental throughout every stage of the business journey, always ensuring our decision making considers our long-term goals. During the disposal process it was invaluable, translating an overwhelming barrage of legal and financial information into clear, clearly defined and understandable language that enabled us to make informed decisions.

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"It is very much about trusting your advisors."

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Given all the deals they’ve done, they’re also able to provide important context around what was standard practice, what was not, what was generous, what was not etc. Put simply, there's just absolutely no way you should entertain going through that journey without that level of insight and advice.

You end up paying a lot of fees on your business journey, but the two invoices we were genuinely delighted to pay were those of Shaw & Co and our lawyers, Thrings. They earnt every penny!

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In terms of your passions and hobbies, what has the deal enabled you to do that you didn’t / couldn’t before?

I’ve only had two weeks off since we sold the business 18 months ago, so I’ve not had a lot of time for hobbies! I did however get myself the car I always wanted, so that was nice! I guess what has been most notable is the confidence and freedom the financial security has provided us as a family – I am sure there will be lots of time to find slightly more imaginative ways to enjoy it in the future!

What does the future hold for you and for Torchlight as a business? Where do you think you’ll both be in five years’ time?

Torchlight is embarking upon a new and exciting chapter where it can bring to bear the experience of Limerston Capital, Axiom, and the new senior leadership team to help it rapidly and sustainably grow and scale.

For me personally, I am not sure where I will be in five years, but for now I am very much enjoying the journey, and look forward to contributing to Torchlight and Axiom’s continued success!