Session 1: Uncharted Territory: Navigating the Path to Successful Acquisitions

Session I of the Smart M&A Growth Strategies webinar series features insights from guest speakers Mehul Sanghani of Octo Consulting Group and Damon Griggs of Dovel Technologies, both of whom are seasoned professionals and subject matter experts on the key challenges of generating corporate value and guiding businesses through common GovCon M&A issues.

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Episode Highlights:

03:44 – How did you decide that a buy-side M&A strategy would fit into where you were trying to drive your enterprises into that mid to long-range plan?

13:26 – What are the key factors to make for a successful buy-side transaction?

23:08 – How do you stay disciplined to your original growth strategy and now get distracted by the next big thing?

35:51 – Looking back, what might you have done differently with the benefit of hindsight, and what advice might you offer to a founder starting this journey considering an organic buy-side strategy?

Connect with the guests:

Mehul’s LinkedIn
Damon’s LinkedIn

Connect with the hosts:

Dan’s LinkedIn
Dean’s LinkedIn

Dan Doran 0:15
Good morning, or good afternoon depending on what time of day it is wherever you’re at. My name is Dan Doran. I’m the founder of Quantive. Today we are talking about a rocky road to successful Buy-Side M&A. We’re excited to have a couple of guests with us. We’re going to go through this and talk about some of the learning points and experiences that they’ve had in their very successful journeys. Getting from a, you know, initial founder point to where they’re at today. So without further ado, I’m going to pass this over to my co host and colleague here, Dean Nordlinger. Dean, why don’t you kick us off?

Dean Nordlinger 0:47
Sure. Good morning. Glad to be here. I’ve Dean Nordlinger, a partner with Blank Rome in the Washington DC office. And my focus is on business and corporate law, GovCon M&A, and I’ve been doing this for about 20 years representing companies throughout their business lifecycle startup to exit, whether we’re the buy side or sell side, and we’re delighted to have with us today, a couple of individuals who, I would say are both highly experienced in government contracting, well embedded in the GovCon ecosystem. They’re founders, owners, and or executives whose roots are in small business government contracting. And they, they might not say this, but I’m gonna say this they successfully operated through their their government contracting companies beyond small and traverse that chasm from small business to full and open territory. And with that said, I’d like Damon, and Mehul if you guys would take a minute to introduce yourselves and provide a little background to jumpstart this.

Mehul Sanghani 1:51
Okay, great. Mehul Sanghani, the CEO and founder of Octo. We are a mid-market government contractor focused on providing modernization services to the federal government.

Damon Griggs 2:10
I’m Damon Griggs, the CEO of Dovel Technologies. I joined Dovel in 2016. Dovel is primarily focused on providing high-end advanced technologies and capabilities in the federal health and adjacent civilian markets. And I became CEO in 2019. And then we just recently sold to Guidehouse last late last year.

Dean Nordlinger 2:32
Right, appreciate that. So… So just to put a little more context on this, to understate it. I think it’s fair to say the past couple years, in terms of the GovCon M&A market, things have been robust and dynamic. And and both of you have participated in substantial and material ways, both on the buy side and sell side. And for that reason, we certainly want to get the benefit of your respective perspectives. And for that, Dan, why don’t you take it away?

Dan Doran 3:01
Yeah, sure thing. So gentlemen, you’ve both managed to grow your enterprises significantly from you know, sort of a small area to mid market and beyonds through a mix of organic and inorganic growth. So the the question that sort of comes to mind first is, how did you decide that an M&A strategy, a buy side M&A strategy, might fit into where you were trying to drive the enterprise? And you’re sort of that mid to long range plan? Mehul, why don’t you dive in? And then we’ll flip over back to Damon.

Mehul Sanghani 3:31
Sure. So a little bit of context on us, you know, as you all alluded to, I think, you know, we had our roots in, you know, small business. I founded the firm in 2006. And, you know, when I founded the firm, you know, really wanted to establish a firm that was differentiated. You know, obviously, this is a crowded space; I believe there’s over 10,000 companies in, you know, the government contracting market. And so, you know, we really differentiated by focusing on differentiating with our technology, really looking at trying to be a provider of services that we felt were on the front end of demand aperture, and where the market was going, you know. And so at that time, you know, words that are common in the vernacular in the marketplace now, from a technology perspective, like, agile software development and cloud, you know, weren’t really at the tip of the tongue or certainly, you know, you know, the front of the mindset of, you know, federal government customers. And so, you know, for us, that was our niche, I think we were able not only to cultivate, you know, a strong reputation doing some of those things, but also, you know, as I noted, I think we saw a tidal wave of demand aperture for, you know, some of those capabilities, and we were able to take advantage of that and see, you know, significant growth over the course of the next decade plus. We leveraged that differentiation around those capabilities rather than a set of customers that we had intimacy with. Around those sets of capabilities, we leveraged that differentiation, you know, to build not just a brand reputation and identity, you know, but the, but to cultivate our own area of the marketplace and ride that significant growth.

In 2019, we, you know, really started to get significant interest in acquiring the firm, but we still felt the company had significant room, headroom to be able to grow. And you know, rather than, you know, even though we had interest rather than sell to, you know, a strategic acquirer, you know, a larger, you know, publicly traded entity, for example. We decided to partner with Arlington Capital, you know, an established private entity in our marketplace, and one that I felt, you know, certainly had, you know, a significant reputation and credibility in terms of being able to take companies and allow them to grow to that sort of next inflection point of growth. And doing so as your question, you know, sort of, you know, led in, doing so with a combination of investing in the things that we needed for organic growth, but also being able to add, you know, inorganic, you know, growth to the mix in the form of M&A. And so, certainly, prior to our partnership with Arlington, we looked at, you know, being able to do acquisitions, and I think that is something that, you know, if you’re fortunate enough to reach a certain size and scale in our market, it not only becomes attractive, it becomes a possibility, just because you’re able to attract financing, that that makes that a possibility.

However, I think the one thing that I learned and I think is true is that even though you might have the debt capacity to do M&A, your credibility, and being a credible buyer, is predicated on your track record. And I think our partnership with Arlington, our partnership with a PE, not only lent a level of credibility to make us, you know, you know, obviously a viable buyer in the M&A space, but also allowed us access, certainly, you know, to capital in unique ways that made that more of a possibility. And so, you know, for us, I think, you know, that time period was important for us, because, you know, we were able to not only partner, you know, with a, you know, a private equity that, you know, had great reputation, but also, you know, have access to being a more credible buyer to make M&A a reality.

Dan Doran 7:34
Awesome. And one follow up question before we jump over to Damon, when you say more credible buyer. From a capital standpoint, or from deal execution, like, did you lean on them for execution help as well?

Mehul Sanghani 7:46
I’ll be honest, I think, you know, there’s no shortage of, you know, they’re almost like real estate agents, there’s no shortage of investment bankers in this market, that will service founders, entrepreneurs, and, you know, cultivating exit strategies. But you look at it, I talked about the fact that there are 10,000 companies, but only 100, and in government services, at least probably about 150 companies at best, you know, transact. And so, I think, you know, again, like, there’s, you know, credibility in terms of, you know, being a viable buyer, I think, when you look at those investment bankers. They’re looking at companies that have successfully executed a transaction before, you know, that can navigate the path not from LOI, through due diligence into executing a deal, and that they know will be there at the end of the day, and won’t flake, you know, for lack of a better term. And so, you know, that credibility is important from an M&A perspective too.

Dan Doran 8:44
Cool, thanks. Damon, let’s jump over to you.

Damon Griggs 8:48
Sure. So, I mean, organic growth is always the obviously the the primary focus for, I would think any company. It’s, it’s the most cost effective way to grow. And it obviously builds a lot more long term value, but but the M&A piece, the inorganic growth, is got to be critical for any small business. And I give full credit to Dov and Elma Levy, the co-founders of Dovel, and Paul Leslie, who was my predecessor CEO at Dovel, they really, I mean, in 2011, Novell was a $10 million women-owned small business, and they realize the need to grow quickly and that you can’t do it all organically to kind of to really build that long term value. And we invested a lot in the business and borrowed off of their own balance sheet to do some of the their initial acquisitions and that’s what ultimately led to Dovel growing out of its small business status.

When I joined the beginning of 2016, Dovel was on a $70 million run rate and still had some legacy small business set aside work, and I joined later that year. And and, you know, it’s it, we were able to continue investing in M&A, making some really good acquisitions. It’s it’s, it’s really meant to be a catalyst for helping not only smaller companies get the scale they need to compete in a full and open market, if they’re going to go that route. It’s really tough. Once you’re over 35 million, or whatever the NAICS codes you’re in, you’re immediately forced to compete against these multibillion dollar companies. And it’s tough to do that with with with such small scale, it’s also a great way to quickly access new customers that are difficult to penetrate. Otherwise, like NIH in our in our case, we acquired MSC in 2016. That’s a really tough customer to get into on your own, it takes a lot of time to build credibility there. And they have a small handful of trusted contractors and MSC was one of them. And we were able to get in quickly into NIH, which has been really one of our anchor accounts. And we’ve continued to build on the franchise position that MSC has had there ever since. And it’s also a great way to quickly acquire new technologies or capabilities as well. So so we were very selective about it, but it was extremely successful. And we’ve done additional m&a activity since then. The first few acquisitions we were able to do off of our own balance sheet in 2019.

Similar to what Mehul said, we made the decision to go the PE route, we really had a lot of confidence in our own strategy, and our leadership team and the capabilities, and everything that that we had. But it was, you know that the next acquisition we were going to want to do it was we were going to need to take take some additional outside investment to make that happen. So so we went with Macquarie Capital, they’ve been a tremendous partner to us. And, you know, similar to Arlington Capital, they really gave us all the investments that we needed to, to grow the business to, for me to hire a leadership team that was really built to scale for future growth. And, and then we did the Ace Info acquisition later in 2019, which couldn’t have gone better and couldn’t have been more complimentary in terms of capabilities and, and culture and some of the other key things I’m sure we’ll talk about a little bit more later. But, but obviously M&A. And then you know, it got us to the point where we were on a $450 million run rate this year when ultimately we… in a hot market. And you know, in some ways a victim of our own success, we we ended up selling to Guidehouse earlier, or late ’21.

Dean Nordlinger 12:46
Great. So lemme, so just just listening to all that both both the respective inputs, they’re gonna come back to Mehul first and then want to, Damon, come back to you. But this is sort of a distillation of the things that we’re just talking about. So let me restate it this way. So you think, both with respect to your companies before and after, you had PE, you know, partners with you. What, what do you guys think about are the key factors and ingredients that make for a successful Buy-Side acquisition, as opposed to flawed, if not failed one? When you think about it.

Mehul Sanghani 13:19
Different things. I mean, I think first and foremost, and, you know, I think this is has a tendency to get glossed over, you know, “devil is in the details.” But certainly cultural compatibility is is a key element. You know, you know, case in point, I think one of our very first acquisition that we completed, you know, shortly after our partnership with Arlington was, you know, with a technology-centric, IP-centric, almost a product, you know, based technology company known as Connexa to that, you know, not only had access to customers that we also supported at the Air Force, and NGA, but, you know, had some significant IP and technology that was a core component of their mix. And that was attractive to us as we look to differentiate. And so, you know, one of the biggest things that we looked at is, not only was there not geographic proximity, I mean, this was a company that was largely headquartered in Phoenix. But, you know, it was a company that despite our roots, and technology, you know, had more of a product culture or product centric technology culture similar to similar to maybe some of the companies in Silicon Valley, then then even we did, and so we really were, you know, spent a lot of time not only examining the cultural synergy, but ensuring that, you know, geographically, you know, with it being displaced from where our center of gravity was in Metro DC, you know, did the transaction, you know, make sense. And I think what we found is we found a set of technologists, you know, that really were passionate about some of the same things that we were. They shared you know, a passion for the missions that they serve, they just happen to be in a different geography.

Now, again, you know, separately, I think one of the things that, you know, we took note of, though is that, you know, and you’ll see this, you know, as you go through M&A Is that certain things, even though there’s that cultural compatibility, that’s a key, you know, foundational element of what you look at, in a transaction, there are certain things that are, you know, what I will call cultural sacred cows that are that are important to them, that may not be exactly what you know, we value and so spending a lot of time, you know, as much as you can up front, you know, during diligence, to better understand those cultural norms, those nuances and what’s important to, you know, the the staff that they be maintained, you know, in any sort of transition is another important element. But, you know, lastly, I think, you know, as, you know, Damon alluded to, I think, for us, at least, we look to M&A, again, as a catalyst as, as he put it as a shot in the arm. But really to kind of double down on things that we felt were core elements of our thesis and strategy. As I noted, I think we really focused on differentiation around our technology. And so the M&A transactions we’ve been fortunate enough to do have really, you know, not only filled those gaps, but doubled down, I would say, on some of the investments that we made. And then separately, we made acquisitions that allow us access to insular customers that ordinarily would be very difficult to penetrate credibly, you know, as Damon pointed out too, and so, we’re able to do acquisitions that brought us, you know, significant customer penetration in the seventh tech deal at DHS, which was an elusive customer for us, despite, you know, some cycles on our side, and then separately, the VA, which is obviously, you know, an amazing mission to be able to support, but it’s also, you know, despite, you know, you know, its largesse in terms of its budget is difficult, you know, account to penetrate for a myriad of reasons. So, again, we look to, to those elements too. How to how does the M&A in addition to the cultural compatibility? How does the M&A fit into being a catalyst for elements of strategy?

The last thing I’ll point out, in addition to culture and, you know, you know, filling out elements and thesis is, in other cases, you know, you know, we were looking for things that were adding, you know, contract vehicles that enable us access. And vehicles in our market are effectively the table stakes that you need to be able to have access to certain customers. And so, you know, getting access to vehicles, like Alliant 2 to which we did not have. And here more recently getting access to a T4NG. You know, were important elements of at least our strategy and what we looked at when we evaluated M&A too.

Dean Nordlinger 17:56
Alright, Damon.

Damon Griggs 17:57
Yeah, and I’ll try and do something that makes it, it’s because I’m going to, I’m going to hit on a lot of the same concepts that Mehul talked about, but I’ll try and make it easier for your audience to remember because I kind of put it into the 5 C’s model. So so it really is. And we can use Ace Info as an example of that. So if you look at sort of the five C’s that we consider, for successful M&A, its Capabilities, Customers, Contract vehicles, Culture, and then Cost. So so those are all key factors that that I think we need to look at.

Capabilities in this case, with Ace Info, they really complimented us, they gave us some additional areas in terms of cloud adoption, infrastructure optimization that we were looking to, to enhance some of the AI, ML, and digital modernization capabilities that we already had. It also gave us a lot more skilled, technical expertise, in terms of staff.

The customer piece, in this case, Ace Info did not have as much in the Federal health space, but they had some really great adjacent customers in the Fed civ-space, that that sort of played up along with the same mission that that that we, that we were focused on. A lot of the work we’re doing obviously I talked about is in the public health arena, but everything ultimately tied into supporting customer’s missions that improve, protect, and save lives. And a lot of stuff that that Ace Info was doing fit perfectly into that the work that they do at NOAA, DHS, FEMA, TSA, others really fit that that model and EPA and some others that there were some nice adjacencies there.

The third: Contract Vehicles. So Mehul talked about this as well. I mean, these days if you don’t have some best-in-class contract vehicles, full and open, you know that that’s your hunting license that if you don’t have some of those, then you’re just gonna be resigned to a you know, a sub position or or some other things and and it’s it’s it’s really difficult got to compete these days without having those. And, in addition, I mean, so Alliant 2, and Oasis were two full and open best in class contract vehicles that Ace Info was able to bring to Dovel. Up to that point, we’ve been pretty much relying on COSD-3 for the vast majority of our work, which we were, I think, one of the, I think we were number one in the small business category, other than small and if we had been if we didn’t have a CSP three unrestricted at the time, but if we had, we would have been in the top five. So we did very well in CSP three, but we needed other vehicles, and this, this really helped us there.

And then Culture, you can’t, it sounds like a cliche, but you can’t hit it hard enough, and Mehul did it as well. I mean, it’s so important to have shared values and some belief in our similar focus in terms of customer missions, and how we support them. And, and that entrepreneurial spirit, that spirit of innovation, a lot of that really fit in nicely with the Ace Info team. And, and it was that it was so important, especially on the integration front to make sure that those employees knew that, that this was really creating more opportunities for everyone, they’re now able to take what they were doing on a larger platform, and it created more opportunities for them. This was not a cost takeout type scenario, this was really all about revenue synergies, and it could not have gone better. I mean, in the two years, since we acquired Ace Info, we grew organically, you know, 50% 100-150 million, just organic growth. So really is 1 plus 1 equaling 3 or more, by bringing a lot of those capabilities together.

But the last part: Costs. You do have to be disciplined in any deal you do, you can’t get caught up in the auction process and the need to win. You have to know kind of when to when to walk away. If things get too spicy, and these days in this market, you know, it’s you have to be willing to pay up. But you got to know when, when to when to say when. So, so all those are key factors. And it certainly has helped us as we’ve gone through this process.

Dan Doran 22:10
So Damon, picking up on your 5 C’s sort of that filter mechanism that you talked about, which is great. One of the things I wanted to talk through is focusing on, or not focusing on shiny objects. So, I’m sure both of you as the company has grown, as the company’s got bigger, you get more attention. You’ve got investment bankers, like myself, that are pitching deals at you all the time now, versus you know, when you’re yea big, not not quite not quite the level of focus that you might get right now. So you’re sitting here, you’re you’re heading down a path, you’ve got a strategy that you’re executing on, a growth plan that you’re executing on, and somebody comes knocking on your door with the next greatest deal. How do you maintain the discipline of you know, let’s not get distracted by the shiny object? Or how do you filter through that? Can you help us walk through that? And then we’ll I’ll pose the same question back to Mehul.

Damon Griggs 23:02
Sure. Yeah. So we got pretty disciplined, especially after Macquarie got involved, because it because they’re, they have a good process in place, they have a lot of expertise in this area. And I was also, as I mentioned, I was able to hire a great leadership team to come in and that included bringing in John Brooks, who was our chief legal officer, but just as importantly, if not more, so he was also, he ran corporate development and he had a similar role and agility before that. So being dual hatted really provided a great perspective, and he had a lot of good experience in the corporate dev side of the house. So we had a, we would always track a list of proprietary targets that we would refresh quarterly, John was leading the charge on that, and that we would get feedback from our line leaders to ensure we were refreshing that list. Any partners, that that that were kind of showing unique capabilities or strong growth that we thought might be good fits, we would put them in the list. And and we’d always get feedback from our board or external advisors, and Macquarie itself and and then discuss them at our board meetings and see which ones we really wanted to go after. And yeah, we got a lot of books, we probably only looked at about 10% of those and and we were very selective because it you know, no matter how big or small a deal is, it usually takes the same amount of effort to go through that process. So we we really wanted if we were going to take take the time and the effort from our from all the resources that we would need to go after something like that we wanted to make sure it was a meaningful enough amount of business and impactful enough and all the different ways I just talked about to to justify that that time investment from from so many key people.

Dan Doran 24:49
Awesome. Thank you. Mehul, how about uh, how about you. Any thoughts on this matter?

Mehul Sanghani 24:54
Yeah, no, absolutely. I think you know, very similar to what Damon articulated I think, you know. Obviously he was I think, has a tremendous, tremendously talented team. He mentioned John Brooks, I think I was also fortunate post, you know, our partnership with Arlington to attract a woman named Megan Gifford over, who leads up our corporate development. And our strategy as well, prior to joining us, oddly enough, or interestingly enough, I should say, she ran the buy-side diligence practice for Wolf Den, and she was involved and was hired by Arlington to diligence us. So, you know, it’s obviously fortunate to have her and her expertise. I think she had, she brought a wealth of, of knowledge, and insight and capabilities relative to having diligence, the number of other companies in our market for hire, you know, and cultivated that experience there. And so we’re fortunate to add, you know, that acumen to the mix.

But similarly, you know, certainly, you know, our partnership with Arlington brought us, you know, a wealth of capability and experience, and I noted already the credibility there. And so, similarly, we had an approach, you know, working hand in glove with the leadership team, with Arlington, where we collectively develop the draft board, and the draft board, you know, what we we started with certainly was our strategy and our thesis where we wanted to go and what we wanted to be in terms of, you know, where we wanted to go relative to the company over the next few years. But then, where could we leverage M&A, as I noted before, as a catalyst for doing that, and built our draft board around that. The other thing that all I’ll note, in addition to just having that blocking and tackling, that discipline, that process, and then really having experience in that we were both, I think, fortunate to have in terms of personnel that no one understand how you know, what assets not only fit that to strategy, what assets might have things lingering underneath rocks, as you get into the diligence exercise that might pose potential challenges.

I think, you know, the other thing that, you know, we really, you know, focused on was, you know, having a disciplined diligence approach, you know, as part and parcel of what we executed. And I think that was an important element of what we we really tried to do, you know, over time, you know, what we did is build an overall M&A playbook, you know, that we executed a, you know, not just to drive, how we viewed, you know, certain acquisition targets, but also drive how we wanted to handle integration. And I think, for us, many of the things that we looked at the things that we looked at relative that integration playbook, we were starting to look at, prior to the acquisition closing,Awesome. prior to really walking down the aisle, looking at, you know, prior tests, signing on the dotted line. And so, you know, these are our elements of discipline that, you know, really allowed us, I think, to be successful with not only the lens at which we viewed, you know, some of the acquisition opportunities, but being successful with bringing them into the fold, and having, you know, that Nirvana that everybody wants, which is having 1 plus 1 equals 3, rather than 2, you know, having those synergies, you know, associated with, with having that these inorganic things be shots in the arm.

Dean Nordlinger 28:14
So, you know, with all that said, I think that creates a natural segue to shift over to this next question, which is, when you think about deal wisdom, there are a couple of things that you hear people, I’m sure you guys have lived this. Two things, one is that, you know, time is the enemy of all deals. And because time allows people to second guess, and rethink what they’re doing, or what they’re, why they want to do it. And we all know that, look, you know, you, the legal stuff has to be taken care of correctly. But in reality, what really makes deals succeed or fail, are the people and the personalities who are in the middle of it. So I’d like to get both of your perspective on the deals you did, or the deals you walked from, how this deal wisdom has played out in some of your buy side deals and Damon bring that.. Damon, we’ll bring that to you first.

Damon Griggs 29:07
Sure, yeah. And I’ll I’ll start with the the most recent and really it was just such a great model of success and so many different factors is the Ace Info acquisition in 2019. I mean, and it really does, again, come back to culture. And, and, and making sure that our, our leadership is aligned, our employees and their values and strategy and everything is aligned. And and then on top of that, you know, it you in our case, what made it so successful is is embracing a lot of what Ace Info is bringing so so making sure there’s a seat at the table for their leadership team, making sure that they understand how much we value their contributions in terms of technologies, capabilities, the contract vehicles, that that’s really is a, in a lot of ways even though they were the ones being acquired, it was a merger of equals, in many ways, having a lot of empathy for the employees and putting ourselves in their shoes. And a lot of I went around and did town halls to all the different Ace Info employee locations, in you know, West Virginia, Maryland, out in Colorado, and, and really spent a lot of time and the presentation was all focused on, you know, from an employee perspective, what’s in it for me, and, and that’s, that’s what they want to hear, they want to know that their benefits aren’t changing, or they’re only getting better, their salary and their comp is, is only going to get better, or at least at a minimum, it’s not going to get worse, and that their job opportunities are now increasing exponentially. They’re part of a bigger platform that values them. And so a lot of that was just so important. And and it really led to, like I said, just you know that that that Nirvana model that Mehul used that word are different one, but yeah, we got the 1 plus 1 equals 3. And it was really critical.

And you know, not every acquisition goes that smoothly. And I’m not saying you know, we certainly had ones that that were a lot rockier and and so I do you think that, but but the getting the people side of it right, and making sure that you’re over communicating as often as possible, and making sure that there aren’t surprises and that you’re very transparent, has has really been one of the key themes from from my experience.

Dean Nordlinger 31:28
Great. Alright, Mehul how about you?

Mehul Sanghani 31:33
Yeah, no, I, Damon did a great job. Again, I think, you know, obviously, you know, we talked about the importance of people. In this, we talked about the importance of culture. And, you know, as Damon alluded to, I think, you know, we spend a significant amount of time winning hearts and minds at the onset. But one of the things that, you know, at least in our playbook that we’ve we’ve tried to do, is, again, we tried to win as much as we can understand as much as we can, you know, prior to walking down the aisle, and or, you know, signing on the dotted line for these deals. And so, you know, you know, one of the things that we’ve embraced doing, you know, Damon mentioned, some of the town halls, you know, certainly we do that. But what we’ve also done is, you know, prior to the town halls, we spend a good bit of time identifying, and to use a social media word, identifying people that are, quote, unquote, influencers in the company, and ensuring that it may, some of those people are influencers due to their, you know, position within the company. And some of those people are influencers due to their tenure, or due to the fact that folks just listen to their voice. And so you’re working with the leadership teams in that time period between perhaps closing and announcing and reading in that next layer of folks, you know, we’ve identify, we spend some time identifying those influencers, and then reading them in before we conduct the townhall, ensuring that we, you know, not only make them feel like they’re part of that sort of special club, but really gauging from them, you know, what, you know, perhaps some of the early reactions are going to be what the challenges are going to be what people are going to care about. Certainly, you know, folks have that Maslow view, which is, you know, what’s not only what’s in it for them, but what, you know, how do they maintain the things that they care about, the roof above their head, is their pay going to change or their benefits is going to change. But, you know, we felt that having those influencer sessions, prior to the broader town halls, you know, really illuminated things that we should be mindful for mindful of not just those sacred cows that I talked about, but things that are messaging that are important, and critical to winning hearts and minds. And in some cases, we’ve tweaked our messaging going into those town halls to ensure that we hit on the key points that we these influencers have highlighted and illuminated for us are going to be important, you know, in the M&A.

And so again, to echo the sentiment, certainly people, the cultural compatibility, understanding what’s important at both the individual and the leadership level, you know, down to the individual belly buttons, is exceedingly important, because people have, you know, divergent needs people have been read in at various levels, perhaps leading up to the transaction. In many cases, we’ve seen and dealt with the fact that people, you know, have, you know, at least have a perception of being treated disproportionately, you know, in terms of how they’re valued going into an after a transaction. So, again, the more you can take on some of those conversations, from a head on perspective, early in the dialogue, the more important it is. And so, you know, we’ve we’ve been very fortunate, you know, in, you know, our, the, the deals that we’ve done to sort of execute, you know, that playbook and… but each one I will say has been different in terms of the wants and needs in the things that are specific to the individual belly buttons, whether it be founders, things that are important to them, things are important to their leadership, or at the staff level. You know, what’s important to them. And we’ve we’ve had to sort of adjust the framework, the rubric, the model that we’ve executed to be more effective at winning hearts and minds with each each acquisition that we’ve taken on.

Dean Nordlinger 35:12
Thank you. Dan, you want to?

Dan Doran 35:14
Yes, I think I think looking at the clock, we’ve got about one more question here. Let’s, we’ll start with Mehul and finish up with Damon. So you batting then cleaning up Damon. No pressure. So easy one for you guys. I think. Looking back, what might you have done differently with the benefit of hindsight? And what advice might you offer a founder that is starting this journey considering an inorganic buy-side growth strategy?

Mehul Sanghani 35:42
So yeah, I’ll start obviously, I think, you know, I talked about winning hearts and minds. I think one of the things that we add from a mentality perspective, and this is something we inherited, you know, due to Arlington influences, you know, we sort of have the mantra of do no harm. Well, when it comes to these M&A acquisitions, unlike, you know, I think Arlington team’s philosophically Octo philosophically, we haven’t gone into any of these acquisitions looking for cost synergies, we want everyone, even if there’s duplication, enroll at rolls, activities, function, if it’s HR, any of those things, everyone has a, you know, a seat on the bus, in terms of where we’re trying to go. And that is sort of the philosophy, we think we haven’t looked at cost synergies to drive the value proposition that we look at some of the M&A M&A activities that we’ve done. And so really looked at it from the perspective of growth.

And so, you know, in doing that, obviously, you know, again, like we we’ve been, you know, specifically very, very careful with, you know, how we’ve approached this. And I, as I noted, taking a Do No Harm approach really approached these methodically, in many cases, slowly? Well, I think one of the things that I’ve learned is that, and especially in talking to some of the founders, they said, you know, Mehul, you all, were so careful not to, you know, break certain elements and, and do things from a Do No Harm perspective. I think you almost in some cases went too slowly. You know, I wish you had taken a faster cadence, you know, I think, for example, in the case of, you know, Connexa, though, you know, we kept their brand, you know, certainly had some cachet, and in the markets, both at the Air Force, and NGA, we kept them, you know, we kept the Connexa brand in place, I think for about six to eight months before we made that change. And, you know, I think one of the founders pulled me aside and said, You know, I wish you had kind of, you know, we, we would have felt more like one Octo, if you had sort of, you know, painted the walls, orange and other colors, or blue, painted walls, orange, you know, maybe a month or two in. And so, you know, I think that that’s those are, these are small things. I talk about it from perspective, paint, email addresses. But I think in some cases, you have to be willing, I think and work directly with the founders. Certainly you want to be careful and do no harm, as we’ve talked about, but in other cases, it certainly made sense to move in a more expeditious way. And I think that was something that we learned. That was our first acquisition there at Connexa, I think we adopted, you know, much more of a touch and go attitude towards how the speed at which we approached integration, working carefully with the you know, what we established was an integration management office with leadership from both firms as we approach integration, looking at things that we could accelerate and things that made sense to decelerate.

Dan Doran 38:24
Awesome. Damon, back to you.

Damon Griggs 38:28
Yeah, so, you know, I’ll, I’ll weigh in, I mean, in terms of doing things differently, I feel like, I don’t have any regrets on any opportunities we passed on. I, I go back and forth. Like Mehul said, you know, did we integrate too slowly or too quickly, I it took us a while to integrate some of the brands, there was a little more complexity, because Ace Info had declared work and with Macquarie we had foreign ownership. So we couldn’t fully integrate some of that branding. But but there’s really I don’t have, there’s really not much in hindsight that I would have done differently given given the results. Because because they’ve been fantastic.

But But the second part of the question around advice to founders who are considering going and through this process, you know, I would, I would just, again, echo how important it is to be selective follow up, follow the model with with the five C’s as much as you can. Know when to walk away and and really, you know, make sure that that you’re thinking about what what are your your priorities, what are your deal breakers? What are the things that that really are important to us? So that and I like what Mehul said, think about what you want your organization to look like, and make sure you’re you’re working backwards from there, so that’ll be a great way to filter out a lot of the noise.

Dan Doran 39:56

Dean Nordlinger 39:56
That’s great. I listened all that. I always think it’s so cool what what kind of distillation what kind of takeaway we can grab from all of this just listening to you, but I would say there’s an intentionality and a discipline that has to really be the undergirding of your strategy. You know, when you when you go forward and it seems to have served you both very well. So I think that kind of brings us to the end of the road of the session. And once again, collectively thank you both, for your time. Wish you well in 2022. I’m sure the market will be ripe and robust. And you guys are I’m sure already sizing up a number of things. So we’ll be we’ll be interested and curious to see what happens with your respective companies and platforms heading into 2022.

Mehul Sanghani 40:47
Thank you, thank you for having us.

Dan Doran 40:49
Thanks, gentlemen. Much appreciate it.

Damon Griggs 40:50
Thank you.

Dan is the Founder of Quantive and Value Scout. He has two decades of experience in leading M&A transactions. Additionally oversees Quantive's valuation practice and has performed thousands of business valuations.



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