Today I'm joined by Kevin Knoepp and Zack Seely. Zach acquired a healthcare software company called FSI in late 2020 with technical diligence help from Kevin, a software due diligence advisor and Trilogy operating executive. Our conversation doesn't discuss the attractiveness of software as an investment, which it very much is, but rather on how to properly diligence software and operate and improve the business once acquired. We review common technical issues in software companies, how much technical debt is acceptable, Zach's experience in diligence and operating improvements at FSI, and constructing a capable team to move a software business forward.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Zach Seely on LinkedInKevin Knoepp on LinkedInFSIMartin Fowler - The Strangler Fig tree patternTopics:(4:00) - Zach’s experience at FSI at the acquisition point(6:05) - Zach’s skills background & where Kevin fit into FSI(7:34) - Kevin’s process for analyzing the technical side of software businesses(10:50) - What are some red flags you’ll see in diligence?(12:22) - What’s your perspective on Technical Debt?(15:03) - How did you structure your deals or build teams to adjust for technical challenges you found?(17:03) - How did you first set your priorities for what to fix with FSI?(22:22) - What are some must fixes before you can complete an acquisition?(23:52) - What sorts of gaps did you focus on in the first 18 months at FSI?(26:54) - How did you evaluate the technical team before the acquisition?(28:12) - What kinds of questions do you ask the technical teams to assess their abilities?(31:46) - How do you evaluate and mitigate risk on a technical team?(36:46) - What 2 to 3 changes did you make to the technical team right off the bat?(41:59) - What sorts of processes have you set up to make work more transparent?(45:11) - What are your thoughts on outsourcing vs. insourcing tasks or positions?(49:19) - Is it common for software companies to offer some sort of budget for outsourcing services to their developers?(51:27) - How do you evaluate if your team is utilizing capacity properly?(54:34) - How did you evaluate FSI’s pricing strategy?(57:15) - What common parts of a pricing strategy could use the most improvement in software businesses?(59:19) - What strongly held belief have you changed your mind on?(1:01:30) - What’s the best business you’ve ever seen?

My guest on this episode is Freddie Bellhouse. Freddie and his partner Nick Ashford are co-founders of Fordhouse, a UK-based acquirer of small companies. In the eight years since they're founding in 2014, they've done 25 deals and are beginning to consider more fund-like permanent capital structures for future acquisitions. I was fortunate enough to meet Freddie's partner Nick in New York City, and we hit it off immediately. He'll be a future guest on here pretty soon. Freddie and I talk about lessons learned going deal by deal, building expertise in integration and organization building, and differences between the US and UK small private equity markets.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Freddie on LinkedInFordhouseEIS (Enterprise Investment Scheme)Topics:(3:30) - Can you walk us through some of the deals you’ve accomplished in your career?(7:24) - What are some nuances between the US and UK in regards to SMB?(9:55) - Have you met any people in_______(11:12) - Are there any European companies that have multiples as low as the US?(12:02) - Why have you decided to raise a fund instead of raising deal by deal?(15:03) - What’s an example of a company where you needed to build out the executive team function?(17:53) - How do you evaluate whether a team is ready for growth?(19:15) - Have you noticed that most of the compounding growth at a company happens at years 4 & 5? Why do people sell right before that?(22:13) - The scripted nature of acquisitions(24:19) - What are the differences in transaction costs between the US and the UK?(26:21) - What kinds of offers have you received for businesses?(27:45) - How intriguing is Fordhouse as an acquirer?(30:27) - What is the longer-term focus in your work?(33:10) - How do you think about keeping managers happy in terms of liquidity or dividends?(35:33) - What tends to go wrong when interests diverge?(37:39) - What causes a mediocre performance?(40:48) - Is there one company you’ve acquired that’s vastly outperformed the others?(42:35) - Thoughts on integrating companies(43:45) - What are some of the example PCV’s that you’ve enjoyed studying?(46:57) - What college class would you teach if it could be about anything?(48:14) - What’s a strongly held belief you’ve changed your mind on?(49:20) - What’s the best business you’ve ever seen?

My guest on this episode is Rob LeBlanc. Rob is a co-founding partner of Ambit Partners, a search investment fund founded in 2020 that invests in searchers worldwide in countries like Paraguay, Spain, Germany, and South Africa, where Rob is based. Together with his two co-founding partners, they have raised a $25 million fund with plans to back 50 to 60 searchers in this first fund. Today, they have funded 32 searchers in 20 markets with 5 acquisitions thus far.A recurring concept we discuss in the episode is that investing in search internationally is like going back in time to the early days of search in the US – competition was less, fewer owners were aware of searchers, and search tactics were more effective. Those are still true in most countries around the world today.Rob and I talk about finding entrepreneurs, themes that are similar across countries, and good and bad reasons to accept a given searcher in your cap table. Enjoy.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Rob on LinkedInAmbit PartnersInfo@ambitpartners.comDiscovery VitalityTopics:(3:47) - Which countries have features that make them attractive for searchers and which countries are on the come up?(8:52) - How is conducting a search in other countries like “going back in time?”(13:37) - What business models seamlessly transition overseas from the US?(15:06) - How valuable is it to have an investor from the country you’re searching in?(18:02) - What are some “bad” reasons to have a certain investor on your cap table?(21:37) - How do you think about which companies where you want to be on the board vs. having a partner on the board?(26:39) - What’s a situation where you wouldn’t be a good fit as an investor?(27:53) - What have you seen with searchers struggling to fill board seats?(30:22) - What personalities are best for leadership roles in search as the industry develops internationally?(34:24) - Where do you typically find international searchers? Would you ever go overseas and try to find people who would be good fits in Search?(40:00) - Where do you see Ambit over the next 5 years?(42:17) - Where do most of the exit opportunities exist for international searchers?(44:20) - What college class would you teach if it could be about anything?(46:18) - What’s a strongly held belief you’ve changed your mind on?(48:41) - What’s the best business you’ve ever seen?

My guest on this episode is Brendan Anderson. Brendan started his post-banking entrepreneurial career by acquiring Stam, Inc., which manufactures custom bent tubing before founding a private equity firm called ScaleCo where he has raised three funds and acquired 21 companies to date.He built his career by being an operator first and learned to become an investor, a path that's given them a big leg up when talking to other CEOs and potential sellers. One subject I've wanted to study more deeply is building a team that naturally attracts great people, and this is a major topic of our discussion and something Brendan has given a lot of thought to.We also talk about the use of debt combined with long term investment time horizons, how they facilitate data and information sharing across the portfolio, and what the top idea on his mind is today.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Brendan on LinkedInScaleCoPatrick Lencioni BooksGino Wickman booksTopics:(4:21) - Are there any market indicators you focus on that have broad implications for your portfolio of companies(5:31) - Where do your CEOs get most of their information?(6:37) - How are you bringing your companies together to share best practices?(8:40) - Can you walk us through the TAC method?(13:47) - Brendan’s background and career(23:16) - What were some notable misses you’ve seen across your 3 funds and what did you learn from them?(27:16) - How do you find great talent locally in your area?(29:35) - How do you think about scaling your recruiting pipeline?(31:03) - How do you retain great people?(33:52) - What is the “fund route” you offer people?(34:52) - Are there career advancement opportunities for people working in your portfolio who may want to jump to another company under your umbrella?(35:49) - How does your mindset shift when you’re operating with a long-term hold mindset rather than selling within a few years?(37:30) - What kind of freedom does someone at a ScaleCo company have relative to working elsewhere?(39:03) - How do you view debt within a long-term time horizon?(42:19) - What's the top-of-mind idea for you right now?(43:36) - What college class would you teach if it could be on any subject?(46:52) - What’s a strongly held belief you’ve changed your mind on?(47:55) - What’s the best business you’ve ever seen?

The 4th episode in our Trilogy Search Series features Kristen Glenn from Reverb People. Kristen is an HR professional with over 15 years of experience in HR Leadership and Business Partner roles. We also have Cyrus Symoom, the Co-CEO of Clariti Software, Clariti helps governments across North America with permitting and licensing solutions. Finally, we are joined by Jennie Ellis, who is an Operating Executive specializing in Talent Acquisition with Trilogy Search Partners.This episode is a deep dive into talent acquisition, sourcing, and HR function development. Each of my guests brings a unique perspective with their experiences in fractional HR for small companies, running HR as the owner of an acquired company, and talent acquisition.The last several years have been challenging for recruiting and retaining great people across all different kinds of companies and search funds. There are special challenges for smaller firms in hybrid arrangements, and each of my guests provides great insight into how companies can find and keep great team members. Enjoy.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Kristen on LinkedInCyrus on LinkedInReverb PeopleClariti SoftwareTopics:(3:38) - Introductions, backgrounds, and thoughts on the current recruiting market(8:59) - What are some tactics you’ve seen companies do to adjust downward as the market turns?(11:30) - Challenges Cyrus faced in building Clariti (13:43) - What ways have you seen talent compound at Clariti?(15:41) - Is sourcing talent from companies that are going through periods of change an effective strategy?(18:00) - How do you determine whether a company has good HR fundamentals in a prospective acquisition?(23:05) - What was the HR function like at Clariti when it was acquired?(24:25) - When did you decide to delegate out HR?(25:28) - How do you coach people on developing their HR function?(28:38) - How does the HR function look as the company scales?(30:01) - What does HR at Clariti look like today?(31:12) - What do fractional HR clients need to do to develop stronger HR functions?(34:52) - At what stage do companies stop outsourcing HR?(38:20) - What do some of the best HR functions have in common?(40:36) - What metrics are most important at Clariti for recruiting and retention?(41:19) - Can you expand more on the interview process at Clariti?(43:47) - How do your periodic check-ins with employees differ from the initial interview questions?(45:32) - How frequent are your retention interviews?(50:20) - What are some best practices for retention in companies?(52:40) - Where else can CEOs remind their team that communication should be open and transparent?(54:11) - Where does Clariti need to improve the most in their HR function over the next 24 months?

My guest on this episode is Joe Heieck. In 2015, Joe acquired gWorks, a software company that takes geographical information system data from government cities and counties and helps them visualize that data on their website among other services. Since then, they have grown impressively well both organically and through acquisition and have recently recapped their investor base through an investment by BV Investment Partners to continue their strong growth trajectory. Joe was an officer in the Navy prior to his MBA program at Harvard and subsequent search. We talk about how different building culture and leading teams is in the military compared to private companies. We also talk about building family versus team-based cultures, building a strong M&A strategy, what risks to accept versus walk away from, and knowing when it's time to exit a business.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Joe on LinkedIngWorksTopics:(3:46) - Why was the location of a business in your search so important to you and your wife?(7:17) - What other ways did you optimize constructing your life around the business you would buy?(9:05) - What enabled you to focus and get an acquisition done in just 6 months of searching?(15:42) - Did you aim for a software company initially?(18:52) - What would a government use your GIS software for?(20:45) - Do searchers grow more risk-tolerant as their search lingers and what risks did you feel were acceptable when acquiring your company?(25:04) - What did you have to change about your leadership style transitioning from the military into a civilian business?(29:22) - Building family-based vs. team-based companies(33:22) - How do you negotiate the balance of empathy in a team-oriented environment?(36:29) - Can you give an example of proper time management within your company?(39:08) - What’s your philosophy on strategic acquisitions to roll into your business?(44:08) - How do you think about exiting a business?(48:12) - How do you know if you’re the right person to keep running the business?(52:12) - Is there anything you would go back and do differently?(54:01) - What college class would you teach if it could be about anything?(55:41) - What’s a strongly held belief that you’ve changed your mind on?(57:24) - What’s the best business you’ve ever seen?

The intersection of media and data has been the top idea on my mind for quite some time now. And my guest today, Craig Fuller, runs one of the best modern examples of this concept in action. FreightWaves, founded in 2016, is a media and data company focused on trucking, freight, supply chains, and all things logistics. To date, they have raised $91 million, will hit $42 million in revenue this year, split 55/45 between data and media, and have a valuation of between $300 and 400 million today. Craig's work building FreightWaves has been an invaluable model for my work at HW Media as Chief of Staff with CEO Clayton Collins and the rest of our team. Conversations like this one have been instrumental in our discussions on the future of HW Media as an all-things housing media business. But we, and especially myself, also believe this model, this intersection of media and data can be a replicable strategy across industries. The goal of my episode with Craig today was to better understand how media and data can work together to create transformative companies, and I'm grateful for Craig's willingness to share his experience and expertise. Throughout the episode, we talk about what data sets to focus on first in an industry and how to build around them, developing the product roadmap, the media data flywheel, hiring effective editorial and sales teams, and the investor perception of FreightWaves. Enjoy. Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Craig on LinkedInFreightWavesThe Economics of Data Businesses by Abraham ThomasTopics:(4:31) - Why do media companies typically misunderstand ‘data’ and data companies?(7:13) - How did the Media & Data arms of FreightWaves impact each other as you built this business?(13:07) - When you think back about creating high-frequency data, how did you approach building it for FreightWaves?(17:54) - Where has the bulk of your capital gone in building the company?(27:24) - How do you think about expanding your data sets going forward?(32:12) - Who is involved in your product development process?(38:06) - How did you two sides of your business interact in the early days, and has that changed over time?(49:35) - How do you attract high-quality talent?(54:18) - How do you structure your sales teams? How do you think about pricing?(1:01:23) - What’s the investor perception on businesses running on Media & Data?

My guest on this episode is Poppy MacDonald. Poppy is the CEO of USAFacts, a not-for-profit data company founded by former Microsoft CEO Steve Ballmer to gather, organize and share data about the US government at the federal, state, and local levels entirely for free. Many of you will know about my fascination with media and data companies, and this episode with Poppy is a continuation of that strong interest. But not only is Poppy’s story about running a super interesting data company, but also about growing an organization from 5 to 47 employees in less than 4 years. The company is very much a startup with everyone wearing multiple hats and driving to the same goal. Through our conversation, Poppy and I talk about why government data can be so hard to find, building a data-centric, non-partisan organization, growing pains, the long-term vision for USAFacts, and why the company was compelling to her when Steve offered her the job.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Poppy on LinkedInUSAFactsTopics:(4:03) - Poppy’s background and career(7:29) - How did your experience in media at Politico transfer over to the world of Data?(10:54) - What channels are you using to share and gather data?(12:54) - What are your visions for further disseminating information to the broader US population?(17:51) - As you work down from federal to county size to gather data, does it get harder as you go smaller?(20:45) - How do you help governments & agencies gather their own data?(25:12) - How does your team need to grow and evolve?(28:28) - Where have you had growing pains when going from 5 or 6 to now nearly 50 people?(33:25) - What team has been the most challenging to build within the company?(35:33) - The importance of having patience while building USA Facts(37:21) - What 5-10 year growth and marketing goals do you have for the organization?(42:03) - Do you think your company could ever have a media side?(44:53) - Are there any comparable companies to yours in other countries that you can learn from?(48:06) - What’s been the most interesting or odd piece of data that’s been hard to get a hold of?(50:09) - What college class would you teach if it could be on anything?(51:28) - What’s a strongly held belief you’ve changed your mind on?(52:35) - What’s the best business you’ve ever seen?

My guest on this episode is Ujwal Velagapudi. Ujwal has acquired nine small companies, pieces of real estate, and other investments over the past few years and has stumbled upon quite a number of unique companies. He's invested in a vending business, virtual assistant business, commercial real estate, a sports bar, and several others.This episode is about getting started and is a departure from our usual episodes about larger businesses in order to focus on small incremental deals running efficiently.Ujwal is really thoughtful and claims to not be a great manager or operator, but I advise you not to believe him. We talk about all things amusement vending, re-investing profits, close calls, what he is interested in today, and his changed views on debt. Enjoy.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Ujwal on LinkedInHiByronTopics:(4:20) - Ujwal’s acquisition off of Microacquire and other businesses he’s bought(10:06) - What did the business do when you acquired it and what have you grown it to?(12:05) - What did you do before you decided to start buying companies?(13:31) - How are you getting the capital for these deals?(16:49) - Do you still live off of $1500 per month?(17:26) - What stands out to you now in a potential acquisition vs. when you first started?(18:45) - What businesses do you stay away from?(19:35) - Can you share more information on your vending business?(21:28) - What types of machines are the most profitable?(23:41) - How does the operations structure for the Vending business work?(25:10) - How many employees are in your portfolio?(25:44) - What have you learned about management during this journey?(28:15) - How do you onboard new employees at your companies?(30:58) - Where do you see things needing to improve?(32:56) - What’s the growth plan?(37:15) - How much would the average machine earn in net profit for the restaurant on a monthly basis?(41:46) - What are some mistakes you’ve made that could have been "nails in the coffin" for your business?(45:53) - What college class would you teach if it could be on anything?(47:37) - What’s a strongly held belief that you’ve changed your mind on?(49:38) - What’s the best business you’ve ever seen?

My guests on this episode are Tom Klein and Roland Lessard, Tom and Roland launched a partnered search after running a background screening business together and acquired a language service business focused on intellectual property in 2016, which they sold last year in 2021. In both companies, growth through acquisition was a core to their playbook and we spend a ton of time diving into best practices and things to avoid in doing so.This is one of the best episodes of the podcast for understanding M&A, synergies, and change management, and if any of these topics apply to your business, you'll want to tune in. This conversation covers all things M&A, shifting teams, understanding culture and structure, effective leadership, and integrations with new companies and teams.We got on such a roll near the end that I entirely skipped my closing questions to make room for more discussion, and I think it paid off. By the end of this longer-than-usual episode, I hope you're in agreement. Enjoy.Listen weekly and follow the show on Apple Podcasts, Spotify, Google Podcasts, Stitcher, Breaker, and TuneIn.Links:Tom Klein on LinkedInRoland Lessard on LinkedInMorningside TranslationsTopics:(3:58) - Tom and Roland’s Backgrounds(13:03) - How many companies within the industry did you speak with during your search?(16:35) - What was the company you bought and how did you plan out growth?(20:02) - Where were the biggest pains during your massive growth from $5mm to $30mm?(26:25) - What strategies did you use to get up to speed with everyone’s role when making changes?(32:08) - What’s your philosophy and experience with M&A?(42:51) - What are some Do’s and Don’ts of tuck-in acquisitions?(58:07) - How do you implement synergies and change management when you’ve acquired one of these companies?(1:12:45) - Additional commentary on synergies