Long before Hawksmoor became a British household name and holy grail for steak lovers, its founders Will Beckett and Huw Gott were languishing on the entrepreneurial backbenches following a string of less successful ventures. Steak isn’t a dish, it’s an institution, so how exactly did these founders create a restaurant – a group, no less – that has been described by critics and customers alike as “sublime”, “world-class” and the “best in London”?
There are now a total of eight Hawksmoor restaurants – in Manchester, Edinburgh, London – and another will be opened in New York later this year. But for all its growth, Hawksmoor has maintained authenticity – no mean feat given it now has buck behind the bang with millions of pounds in investment.
Although it was founded in 2006, however, it wasn’t until 2013 that Beckett and Gott realised their family-and-friends debt structure wasn’t working and it was time to seek external support. Rather than do the “standard beauty parade”, Beckett pitched directly to five private equity groups. Surrounded by the “right non-execs and the right lawyers”, the founders were ready to scale. Hawksmoor received two serious offers and accepted Graphite Capital, a 40-year-old private equity fund that helped expand Wagamama from two to 100 restaurants. Seeking outside investment can be a perilous endeavour, even for the most robust business, and Hawksmoor’s success demonstrates it’s not all about the money. Though Graphite offered the lowest price, Beckett and Gott chose the fund because they felt it best understood their vision.
“If the founder-investor relationship is a marriage, then the legals are the ‘pre-nup'”, Nadim Meer, a private equity partner at Mishcon de Reya neatly tells me. “What is strange”, he adds, “is that both parties enter the union knowing there will be a break up”. After all, “private equity is not forever. Most investors want to get an exit. Many founders want an exit too, although not necessarily at the same time as the investor”. To get a happy exit – a Paltrow-Martinesque “conscious uncoupling” – documentation needs to be as favourable as possible to you and your business”, Meer warns.
Just as marriage requires compromise, in the founder-investor relationship disagreement is inevitable given the two parties are “coming at the deal from different angles,” Beckett says. For Graphite Capital, Hawksmoor is one of many investments; for childhood friends Beckett and Gott, it is a business for life. “We have lots of self-worth and enjoyment of life wrapped up in the company,” the founders explain. But, Beckett adds, it’s vital to look beyond that fundamental difference of perspective between founder and investor, and ensure both parties own the decisions they collectively arrive at. “We’ve developed strong relationships with Will and the team, but we don’t always agree on things,” Omar Kayat, a partner at Graphite, says. “Though I’m pretty sure we both feel that by debating and fully investigating controversial decisions, we’ve reached much better outcomes for the company”
Teaming up with a private equity house hasn’t just provided Hawksmoor with monetary investment. It has offered the group more professionalisation, challenging management to think more carefully on strategic financial issues while holding the founders to account. But striking the right balance between leading and collaborating with investors isn’t always straightforward.
As is often the case with many elements of the entrepreneurial journey, the founders have been on a steep – but rewarding – learning curve. For instance, Beckett warns “you can lead too much and micromanage,” which can ruffle feathers. But fail to lead enough and people with experience and knowledge may “feel there’s a leadership vacuum”. Striking a balance is key.
Encouragingly, however, the dynamic between founder and investor has shifted in the past few years towards a more balanced relationship. “Ten, twenty years ago, private equity firms were calling all the shots and management teams felt fortunate to have been picked,” Meer says. “It’s very different now – there can be many equity bidders for a good asset.” On a macro level, there’s even more money flowing into private equity funds. Even though entrepreneurs seeking funding don’t always feel it, Meer is adamant there is no shortage of money out there for investment in good companies.
Today, Hawksmoor is firmly established in a notoriously difficult industry, and expansion hasn’t dampened critics or customer enthusiasm for the group. What does the future have in store? Beckett gives a number-free answer. “I’m clear on the intangible goals for the company: our own quality of life and our perception of the value of our work. At some point we’ll leave, probably for retirement.” Ultimately, he adds: “I want to look back and be proud.”