00:26:46 · Ramsey Sahyoun
[00:26:46] S1: Yeah. Yeah. I I think doing doing your research and and coming up... Finding some... Something that, you can talk to them about, I think, is great. Think talking about we pay a lot of attention to what's going on in the MSP industry with new technologies or vendors and kind of what the key topics are, you can really come and kind of talk shop with a business owner. I think just being like open, willing to share what you're doing that's working, also like sharing your challenges. So make making a business owner feel like, hey, you know, I don't have to like put up this facade of everything is great. We all know that there are challenges in business. So I think just being open about that. I've always felt like being willing to say things that are not self serving, think can build trust and make people feel like, hey, this guy's not trying to like sell me or spin anything. So, yeah, I'll I'll tell people all the time, you know, hey, I don't I don't think you should sell the business right now because, you know, you're probably not gonna... You know, because it might grow a lot and you could sell it for a lot more in the future. Like, that's that's a very not self serving thing to say. Like, I'm trying to buy the the business, but if it's like what I really believe, then, you know, I should I should tell somebody that. So yeah, I think it's just a lot of little things that build trust and build credibility over time. And then the last thing I'll say is a increasing number of our acquisitions are coming through referrals, like from either people that have sold their business to us or people that have, you know, vendors in the industry that have seen what we're doing and and kinda like what we have to offer to business owners. So that's been really cool. And that's helped a little bit with you're not coming into a relationship totally cold. You have sort of a mutual connection that can start the conversation. So that would be the other thing I would say that has started to work well as we've developed our reputation.
00:29:18 · Mikk
[00:29:18] S0: Okay. Now, one very interesting thing you've said that if you could only be excellent at one stage of M and A, you'd still be choosing the finding part. So my follow-up question on this would be, as there is so much more competition in the MSP space now when comparing the when you started in 2017, how do you still remain so disciplined doing great deals when there is so much competition?
00:29:47 · Ramsey Sahyoun
[00:29:47] S1: Yeah. Yeah. I I would say maybe my my answer has evolved on that. I'm still not sure, like, exactly which one I would I would fall on, but I I think finding is is critical. But as things have gotten more competitive and you had to pay higher prices for businesses, we we haven't been immune to that. We've had to pay higher prices for businesses too. We... We've gotten a lot better at creating value post close. So, like, we're paying higher prices for companies today, but we're actually generating the same or better returns on those acquisitions because we're we're doing such a better job growing them organically. So that's been an interesting phenomenon. But I I I mean, I think I think sourcing, like, the finding part is is how you stay disciplined. Like, if if you just don't have enough opportunities, you're not gonna be disciplined. You're not gonna be willing to walk away from opportunities when they no longer make sense. So, you know, I I I think it's... People think it's... I I think there's a temperament element too, but I think more than anything, it's just having opportunities. So I think sourcing creates opportunities and then that creates discipline. So I think that's that's that's how we think about it. And and then I... Yeah. I I think value creation has just become so much more important because you... You've... Regardless of how disciplined you are, at least in our industries, like, there's more buyer interest in them and competition has gone up. So we've had to grow the businesses faster organically to generate the returns we want to generate. So that's become a lot more important. You can't just, like, win on a good deal the way the way you used to before.
00:31:41 · Mikk, Ramsey Sahyoun
[00:31:41] S0: I think we got here a crazy, like, an overview of the market because the the previous interview you did was, like, a half a year ago. And then you said you're still in a finding phase. And probably within the next four or five years you're going to be in the operating phase, in a value creation space. But now we're six months... It's it's just... It's been just six six months and you... Now you're already saying it's it's all about value creation. So pretty pretty fascinating how fast it changes. [00:32:07] S1: For sure. For sure. [00:32:08] S0: So you've said you you you have to pay more for for those deals. [00:32:14] S1: Yep. [00:32:15] S0: Now the cost of capital has also moved higher. How how has it changed your your day to day returns, everything? How much you can you can share?
00:32:15 · Mikk, Ramsey Sahyoun
[00:32:15] S0: Now the cost of capital has also moved higher. How how has it changed your your day to day returns, everything? How much you can you can share? [00:32:26] S1: Yeah. I think, thankfully, like, you know, we've pretty disciplined. So, you know, we we didn't you know, the... I mean, the the cost of capital and interest rates going up is like a real... It's real... Interest expense is a real expense. But, you know, I think we were disciplined in in our acquisitions when rates were, you know, close to zero. And I think that led to, you know, a healthy balance sheet and and, you know, being able to keep going when when rates went up, you know, four or 5%. Despite that, prices for businesses really kinda held steady. I mean, I I think our evaluations that we've been paying have been pretty consistent over the last, like, four years or so. Prior to that, they were a lot cheaper. So there was kind of this moment in twenty twenty, twenty twenty one where valuations expanded, and they've they've held pretty steady from there. But that was really the point at which we said, okay, we gotta we gotta be really proactive in how we create value in these businesses because we have to we have to grow the earnings of these businesses faster now that we're we're having to pay a little bit more. So, yeah, that that really... Yeah. If if if you just look at our data, it's it's pretty stark that kind of pre 2021 period and and the post 2021 period as far as valuations of companies.
00:34:02 · Mikk
[00:34:02] S0: Now, Jeff was sharing a slide on the conference in Stockholm, is your economic engine, a repeatable flywheel that compounds growth and value. And it starts with M and A, then there is a talent and then there is a playbook. Let's talk about the talent part, which is the post acquisition. So now trying to understand, do you acquire always majority, 100%, What's the ratio there? And what happens post close? How much do you change? What do you do maybe first thirty, sixty, ninety days?