The Real Due Diligence | What Makes or Breaks a Deal

🎙️ The Private Equity Podcast — Episode with Cyril Aboujaoude, Co-Founder of TioPo Capital

In this episode, Alex Rawlings is joined by Cyril Aboujaoude, Co-Founder of TioPo Capital, a hands-on private equity firm investing in SMEs across the UK and France. Cyril shares the journey of launching TioPo, their operationally driven approach to investing, and how young, entrepreneurial grit fueled their path from deal number one to a thriving portfolio.

They explore the nuances of deal origination, value creation, and the power of people in private equity. From ERP frustrations to navigating downturns and structuring creative deals, Cyril breaks down the real-world lessons of building a firm from scratch—while staying laser-focused on operational excellence.

⏱️ Timestamps:

00:03 – Introduction to Cyril Aboujaoude and TioPo Capital’s mission
00:30 – TioPo’s founding story, operational mindset, and portfolio growth
01:24 – What TioPo really looks for beyond standard investment criteria
01:57 – The importance of vision alignment and execution capability
03:24 – How they assess management teams during diligence
04:35 – Why slow decision-making is riskier than a bad hire
05:29 – Biggest value creation levers: hiring an operating partner over fundraising
06:46 – Building a 100-day transformation plan post-deal
07:45 – One thing target companies should fix pre-investment: ERP systems
08:55 – How TioPo evaluates companies during downturns and market volatility
10:20 – Analyzing long-term performance and identifying macro-inflated businesses
12:51 – Most creative deal structure: partnering with the seller’s son as CEO
14:50 – Reflections on the challenges and naivety of doing their first deal
16:11 – Cyril’s top recommendations: FT, WSJ, Aswath Damodaran, and local gazettes
17:10 – How to connect with Cyril and learn more about TioPo Capital

🔑 Key Takeaways:

• People over projections: Execution ability, humility, and shared vision are more important than just strategy.
• Operations-first philosophy: Value is built in the engine room—TioPo hires operating partners before fundraising staff.
• 100-Day Plan Discipline: They begin value creation planning during diligence, long before Day 0.
• ERP readiness = smoother scale: ERP systems are the most overlooked growth barrier.
• Smart structuring builds trust: Their first deal involved bringing in the founder’s son as CEO and co-investor.
• Past ≠ future, but it’s all we’ve got: Cyril emphasizes analyzing 20+ years of company performance to identify real resilience.

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn: https://www.linkedin.com/in/alexrawlings/
🌐 Visit Raw Selection: www.raw-selection.com

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Transcript

00:03
Welcome back to the Royal Selection Private Equity Podcast. Joining us today is Cyril Aboujaude, co-founder of Teopo Capital, a private equity firm based out of London. We're going to dive into deal origination, through to value creation, and the journey of a young private equity founder growing his firm from his first deal to where they are now. Let's dive in. Cyril, if you could give us a brief insight into you, please.

00:30
Thanks for having me, Alex.  So I'm one of three co-founders of TioPo Capital. We  back  small and medium companies in the UK and France alongside my two co-founders, Greg and Shahan. We're very hands-on operational entrepreneurs. Despite our young age, we are extremely focused on operations of businesses and helping them create real value where it matters. In the past five years, we've acquired seven companies.

00:58
raised our initial fund of 80 million, which  we are still in the process of finalizing in terms of final investors. And most of our portfolio has grown quite significantly since inception. Excellent. So beyond the standard kind of criteria for a company to look to invest, what are the specific things that you  obsess over when you're looking at your potential investments?

01:24
So typically in terms of size, we focus on two to 10 million  businesses with margins  usually above 15%. But what we really focus on is  the actual know-how of the company. What market position do they have if it is differentiable enough? And of course the added value that they can bring in terms of growth. Perfect. And  beyond the standard kind of financial growth metrics.

01:52
What are the kind less obvious signals that you look for?

01:57
So  we were talking about it earlier and the main signals  is the people and specifically around the people is if we are acquiring a company that has management that is staying on board is really alignment on the vision and a proof of capability of execution on this vision because it's not only having the plan, it's mostly executing on the plan itself.  So this for us is what we  tend to spend a lot of time.

02:26
on during due diligence. So soft factors like humility, openness and curiosity are very important for us. But really is having that vision. And some of the times in  succession plays when management teams are not staying, this is where we struggle. And so it's the search  of the right person to be able to join us on the adventure because every single deal for us is an adventure. like that.  I like that lot.

02:55
So do you guys, and I think  when it comes down to people, it's very difficult to make assessments of who's going to be good and who's going to be bad. know, anybody can put on a facade, anybody can put in and, know, there's always a level of, yeah, there's an element of mistake. And this is coming from a guy who runs a search firm who will tell you that  recruitment is a science, not an art. There is an element of art to it. It's just about reducing it. Is there anything that you guys do during that due diligence phase when you're looking at the people? Do you have a school card assessment? Do you have a...

03:24
particular questions that you asked, you have something that you guys always do that's like, this  helps us on that journey of trying to get things right more than we get.

03:35
Look Alex, we definitely have our framework. We definitely have, you know, the typical list of questions and boxes to tick on candidates. But at the end of the day, it really comes into, are you executing or not? Because anyone, like you said, anyone can sell anything. Yeah, of course. So it's really the first few months on the job that really make the difference or not. So we keep a very open approach even after  selecting the candidate.

04:05
Uh, and, and then assess very early on whether the candidate is a good fit or not.  go through filtering,  um, by, having multiple interviews, reference checks are very important prior to, to agreeing on hiring someone. But, but the real test is post hiring.  So we're not worried of changing any someone that's not delivering quickly. then.

04:35
Let me just add that  not changing someone fast enough is the biggest risk compared to hiring the right, the wrong person. You are speaking my language here Cyril.  I think what's interesting and something that I'm harping on about on LinkedIn specifically at the moment is around backdoor references or soft references. And it's getting it from people that actually I've done a lot of this recently and protected people from the firm.

05:02
It does make hiring harder, but it just means that yes, you might have more pain with somebody not in the seat for an extra period of time, but  it stops you bringing someone in and swapping them out. it's, uh,  you know, we do that for our searches and processes that we run and we certainly do it without fail.  Um, for our, for our own firm as well. We do not let off on that front. Yeah. So looking at the kind of value creation work and work with the portfolio, what's the kind of.

05:29
intervention you've seen that's created the biggest step change in value for your portfolio company. It's more of a  set of tools of interventions, not one specific, one size fits all uh intervention. Just put things into perspective. We realized that operation was the cornerstone of our strategy and the most important  value lever. That instead of hiring a fundraising team, we ended up hiring an operating partner.

05:59
that was whose only job is full-time focusing on operations of businesses.  So it's really bringing that set of different tools, whether it's on the business development angle, whether it's on the  process, uh process,  sorry, let me just repeat that. It's okay. Whether it's  to help on business development, whether it's setting up metrics.

06:28
uh, setting up new teams, hiring the right people, have technology integration. We help on all of those.  And,  and we typically act as the special project hands on deck team with our management teams.

06:46
So the kind of you guys build that frame when you have that, is that the kind of first 60, 90 days process or is that kind of going out longer, longer tail on that front? So due diligence takes around three to six months, depending on negotiations as well. So it's more of a minus 90 days and then the plus hundred days post acquisition. The time zero is just  another, another point in time,  which is acquisition time. So a lot of the strategy work or at least

07:16
weakness identification is done during duty with of course, finding the right people to come with us on the adventure, whether it's as executives, as board members or senior advisors to the company. Post acquisition, uh we go with our  typical hundred day value creation plan or business transformation plan. then it, and then we iterate it on a  monthly basis.

07:45
actually.  Looking at businesses as you mentioned in that kind of EBITDA range, five to ten, what's the one thing that you would like for them to have fixed before your investment which is just a common up and coming which is like guys hey if you do this it'll just make life a lot easier for us, it'll make life a lot easier to scale the business. It might even make it more valuable  when you guys have to actually acquire it but what's that kind of one thing that always crops up they're like God if we could just fix this before they came in what would that be?

08:14
I guess that's the usual suspect, which would be probably ERP integration. Okay. It's something that's most of the time overlooked  and that takes a huge amount of time to implement.  one of the companies we acquired  pre-acquisition, they had started the process of integrating it two years before. We're still doing it now. So  these, if you don't have a real champion within the business, it takes a lot of time and bandwidth.

08:44
But that's also part of what we offer to our portfolio companies, providing that extra bandwidth to follow on a project from start to complete execution.

08:55
Yeah, that's a common problem we see for everybody. CFO coming in, ERP implementation, changing from the old QuickBooks type model. quite poignant at the moment. It's not talked about openly, but private equity is not as buoyant as it has been. Public markets are seeing records, but from a world perspective, we're not seeing as much M &A deal origination.

09:22
execution, even from selling from a private equity perspective. So just looking at how you guys are deciding on the kind of business of that initial kind of review phase, post-deal origination and assessment, how are you deciding whether a business will withstand a downturn or if it just looks good in a current bull market for them or a prior bull market and you're buying at the top? That's a great question.

09:50
And  the classic fear of most investors in my opinion,  are a few ways  to look at it. uh First of all,  really traditional fixed versus variable cost assessment of the business, but try and understand the business  as much as possible to really identify what is a real fixed cost and what is a real variable cost. Because sometimes your variable costs are more fixed than you think. Pre-acquisition. um

10:20
Another one is the visibility and the strength of the order book. If, if you're lucky to have a company with an order book  and then the cyclicality of your underlying market. we, we typically like, if it's all businesses, we typically like to go way back in time, maybe 20 years,  if the company has been trading for 20 years and analyze the 20 year performance of the business to see specifically the 2000 dot com bubble burst, which is not only uh tech related in terms of.

10:50
on the performance and the 2008 crisis.  COVID is really one off for a lot of companies, but you also have the COVID boom that really affected a lot of businesses. Some businesses really benefited during COVID, some businesses didn't at all, but benefited in the three years and we are still in that period. So we also got to be careful about that and looking at the trading performance of the business.

11:19
over time, if it's a business that was not growing significantly, is usually a good indicator of where the real market is for company like this one to make sure that you're not buying an overinflated or  something that's really bad.

11:35
Past performance is not a guarantee of future success, but is the only indicator  that gives you level of guarantee of what future success may be. It's just that old adage, if we've done really well in the past, it doesn't mean we'll do well in the future, but there's  not much else you can measure on the basis of that and it becomes a difficult one.  Exactly. Exactly. And it's the actual, the real data points that you have on the business itself. And that cannot lie. Business owners can say anything they want on

12:04
why the business is trading at 2x revenue of any historical revenue they've ever done. But the reality is that uh a lot of out of control um elements are in play  in  today's world  with COVID, with geopolitics, with wars.  most often than not,  the exceptional trading that we're seeing here is not because the business

12:33
If it's not something that's clearly identified in the business plan or at least in terms of  gaining revenue, then it's probably because of macro. Absolutely. So what's the most creative deal structure you've used to get something over the line?

12:51
I'm going to sound like a broken disc,  but again, that revolves around people. And I'm going to go back to the first transaction we did in July, 2021 with  T-apo. So  we got introduced to this  small labor company, fantastic know-how, fantastic manufacturing capabilities, blue chip customer base, an entrepreneur that had acquired it and did a real success story out of it.

13:22
that we met  and keep in mind, I was 25, my co-founders were 26 and 30. So we were, we were kids.  Going and trying to convince the entrepreneur that was selling his life's work to us was hard enough. So  the smart way that Greg, my partner  approached it was we need, we need the CEO in the business because

13:51
You're exiting, you want to retire. Your son is of the right age. He was 30 at the time. He knows the business. He knows, he knows finance, so we speak the same language and he's interested. So what we did, which was not in the picture at all at the time the deal was presented to us is partner up with the son, Thibaut, to become CEO and shareholder of the business. So Thibaut actually invested with T-O-PO.

14:20
to acquire the business and manage it. And it's one of our most successful deals. And this really crafted the DNA of Teopo in terms of always partner with the right entrepreneurs and with people with whom we have the shared vision.  Just taking that back to that first deal, that's like the first anything when you set up a firm, know, young guys in comparison with  what we traditionally see from a private equity perspective. How hard was it just to get that first deal?

14:50
In hindsight, it was hard because if we went through the challenges that we went through at the time,  we would be disgusted today.  But at the time we didn't see it as that hard. We're entrepreneurs at heart  and any challenge that we had, it was the first one. It was the first one with who we ever got a, no, we had a few otherwise accepted  in the past that we draw because of DD, but it was the first deal that was actually going through. So we were...

15:19
In true honesty, we were also discovering  the job. So there's a bit of that naivety at that time that allowed us to keep going and just pass on challenge after challenge. So  in hindsight, it was, at the time,  it felt like the right thing to do. Yeah, I can mean, anything when you first start is difficult, but...

15:43
I suppose you're prepared to put more work in because you kind of don't know what it takes to get where it is. Certainly as it continues to grow and continue to develop, you kind of realize that there's there's a law of averages, there's a cadence, there's a certain amount of X will get to Y and you begin to see, you know, that your skills and your acumen obviously improving those numbers begin to come down and it becomes less painful. Exactly. So what do you read? What do you watch? What do you listen to? Do you recommend others to check out?

16:11
Raw Selection is a really good podcast.  I like the FT because it's  UK based.  Most of the time it  has  a global view as well. uh Obviously look at the Wall Street Journal to have a of the US angle of things.  Usually it's a lead indicator of what's going to happen to the rest of the world. um And then try to listen to Azmani podcast and...

16:40
you know, as possible. But  in our particular case, we focus mostly on  local journals or local gazettes to understand what's happening in our regions regarding all businesses. um And whether it's in France or the UK. So any publication that we have uh in these regions, we are very interested and that can show, you know, bankruptcies of companies or companies expanding. And usually they're a good indicator of what  to do or what not to do.

17:10
Makes sense. If somebody wishes to reach out to you, say we'll post this podcast, how best do they get in touch with you please? Our LinkedIn on TioPoCapital, my personal LinkedIn or our website, TioPoCapital.com. Perfect. Well, thank you very much for coming onto the podcast and sharing everything you have done from den origination to assessment, value creation and the journey that you've had with TioPoCapital. So thank you very much for coming on the podcast. Amazing. Thanks for having me, Alex. Great chat.

17:40
And always, thank you very much for everybody for yet again tuning in to the Private XT Podcast. If you haven't done so already, please do subscribe. But till the next time, keep smashing it, and thank you very much for listening.