Michael Orzetti, a former Marine Corps signals intelligence officer and current CEO of Eastern Communications, discusses his remarkable journey into entrepreneurship. He shares how personal traits and company attributes contribute to the success of first-time CEOs. Michael emphasizes the importance of sticky customers for new leaders to learn. He reflects on financial strategies during his self-funded business search and the significant growth of Eastern Communications. His insights shed light on the balance between leadership, family commitments, and navigating the complexities of acquisitions.
Michael Orzetti's journey illustrates how personal characteristics and strategic planning contribute to the success of first-time CEOs in acquisitions.
The emphasis on a self-funded search allowed Michael and his wife to maintain control over their entrepreneurial journey by minimizing external pressures.
Michael's adaptive management and integration of founder insights played crucial roles in tripling Eastern Communications' revenue and profitability post-acquisition.
Deep dives
Michael's Background and Transition to ETA
Michael Orzetti shares his journey from military leadership to entrepreneurship through acquisition (ETA). After serving in the Marine Corps, he briefly worked in a public securities investment firm and pursued a business degree. With a growing family and a desire for career ownership, he began exploring ETA as a means of transitioning from large organizations to taking charge of an existing profitable business. His family-oriented approach, combined with an entrepreneurial itch, ultimately drove him to pursue acquiring a company rather than starting from scratch.
The Decision to Self-Fund the Search
Michael opted for a self-funded search strategy instead of following the typical route of raising a dedicated search fund upfront. He and his wife made a conscious decision to live frugally during the search period, which involved strict budgeting to minimize living expenses. This approach allowed him to maintain control over potential investment opportunities without being tied to the expectations of external funders. Their plan was to give themselves a set timeframe to find a suitable business while keeping costs low, demonstrating their commitment to the entrepreneurial journey.
Finding Eastern Communications
During his two-year search, Michael and his team of interns actively executed a direct outreach strategy to identify potential acquisition targets. They focused on industries of interest, including specialty distribution and business services, using open-source tools and web scraping to gather leads. The interns played a crucial role in cleaning data and assessing the viability of potential candidates. Ultimately, their persistent efforts led them to Eastern Communications, a company operating within the specialized telecommunications sector, demonstrating the effective blend of organized communication and innovation in sourcing deals.
Challenges During the Acquisition Process
Michael faced challenges during the acquisition of Eastern Communications, particularly regarding the scale of investment required. Initially, he sought capital from personal contacts but eventually needed to connect with larger investors capable of financing the bigger transaction. His confidence in the business model and the underlying thesis around the necessity of reliable communications infrastructure guided him through the daunting fundraising process. Despite the challenges brought on by external factors, such as the onset of COVID-19, he successfully closed the deal and gained validation of his business model.
Early Days Post-Acquisition and Business Growth
After acquiring Eastern Communications, Michael spent the first 18 months validating his acquisition and professionalizing the business. Emphasizing robust financial practices and establishing a stable management framework, he integrated the founder's insights while transitioning to a more structured operational approach. With a focus on both organic growth and strategic M&A, Michael successfully tripled the company's size in terms of revenue and profitability. This trajectory illustrates the importance of adaptive management and leveraging existing client relationships in fostering business growth.
How is it that so many searchers become successful CEOs, even when many have never run a company before and may not have the relevant industry experience? Personal characteristics count for a lot, but so too do company attributes. Sticky customers, for example, are hugely important, as this creates space for a new CEO to learn the ropes of the business. In this episode, we meet Michael Orzetti, an acquisition entrepreneur who, in August of 2020, became CEO of Eastern Communications, a company that sells, services, and maintains critical communications infrastructure and networks. He shares insights from his self-funded search through to present day management of the company, including details of how he and his wife considered the trade-offs between different paths, the attributes he looked for while searching, his relationship with the company founder, and the impressive growth of the business over the last four years.
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