Speaker 0 00:00:00 Peter Laman is the c e O of Axial. All opinions expressed by Peter and podcast guests do not reflect the views or opinions of Axial. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Podcast guests may have ongoing client relationships with Axial.
Speaker 1 00:00:22 Hello and welcome everyone. I'm Peter Larman and this is Masters in Small Business m and a. This show is an ongoing exploration into the vast and undercover world of small business m and a, where we interview both the proven and the emerging owners, operators, investors and advisors whose strategies and methods for transaction success have been put to the test. The show aims to surface the nuanced intricacies, the key ingredients, and the important factors that can improve your decision making in your own journey in the world of small business m and a. This podcast is produced by Axial, an online platform that makes it easier for business owners and their m and a advisors to find research and privately connect with a diverse mix of professional buyers of small businesses. In addition to learning more about Axial, you can find this podcast show notes, edited transcripts, and many other related resources all for
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Speaker 1 00:01:24 My guest today is my good friend and long ago classmate, Brett Forster. Brett is c e o of Peer Services, a company he acquired in 2014. The business has grown both organically and through acquisitions from about 70 employees to nearly 2000 employees. In this episode, we cover Brett's career prior to acquiring Pierce and how his early chapters in both sales and operations as well as a failed search fund acquisition in 2008 helped prepare him to lead Pierce. We also explore how he sourced the Pierce Services deal, the deal dynamics and the decisions Brett made that allowed him to win that deal and how he's developed the business since its acquisition. In particular, we cover Bret's own leadership journey in the wake of a transformational transaction that Brett and his partners closed on March 16th, 2020, the Monday after a covid induced national emergency was declared. Please enjoy this great discussion with my good friend Brett Forster.
Speaker 1 00:02:17 All right. Hey everybody, welcome back. It's great to be with you all. My name's Peter Larman, I'm the founder and CEO of Axial and the host of the small business masters in m and a podcast. I'm super excited to have a very good friend of mine and a classmate from grad school on the podcast today, Brett Forster. He is the c e O of Pierce Services. We'll spend all of today here and about Brett and his story and here a little bit more than a little bit about peer services along the way. Brett, thank you for carving out some time. I really appreciate it. It's good to have you on. That's
Speaker 3 00:02:49 Great to see you again Peter, and thanks for having me on
Speaker 1 00:02:51 The show. Yeah, for sure. And especially after schlepping your way all the way back from the east coast to the west coast on the backside of a nice proper nor Easter in particular. Thanks for doing it to the day after, so it's great to be with you.
Speaker 3 00:03:04 More of an authentic trip, I'd say.
Speaker 1 00:03:07 Yeah, yeah, exactly. So as I mentioned before we started recording, I think it's great just to quickly hear a little bit about just people's personal biography before jumping into deals and business building. Tell us a little bit about Brett, the person before we dive into to Pierce and, and the path to there.
Speaker 3 00:03:25 I'm from the San Francisco Bay area and kind of moved up and down the peninsula a few times going, going to college and then to grad school. But I pretty much stayed around California. I went to Stanford for undergrad and business school, but I often tell people I think I learned just as much playing soccer in high school and a lot of the team dynamics that came out of that. I, uh, started my career at McKinsey doing strategy consulting and I didn't know what I wanted to do, but I, when I was there, I ended up meeting through the network, a guy named, uh, David Kennedy who had just bought a company through a search fund and it started this fascination for me with the whole, uh, concept of being able to buy and, and run a business. And right around the time I went to go work for him and, and got to try all these different parts of the business doing sales, doing software development, trying to develop operating systems for them, and Bosman a little bit of starting up a European office in Dublin, which is a ton of fun as a, as a young guy, uh, coming out from San Francisco and getting a little world exposure there.
Speaker 1 00:04:22 So was that, so you, you bumped into David Kennedy at at McKinsey? I've
Speaker 3 00:04:26 Worked with his wife actually. So it's one of those small world things that seems to be the story of my career where I get to know somebody and then meet someone and that seems to be how one thing leads to another.
Speaker 1 00:04:36 Got it. So you were at McKinsey and this was right out of undergrad, is that right?
Speaker 3 00:04:41 Exactly.
Speaker 1 00:04:42 What kind of work were you doing at McKinsey?
Speaker 3 00:04:44 You started as a generalist, but in the second half of it I tried to spend most of my time working on sales related projects. I was an industrial engineer by training. I really loved in college. I loved probability and math and statistics and as I got into the working world got more fascinated by sales as I started to understand the science of selling and all the things that could go into it to take incredible athletes who are great salespeople and and really get the most out of the sales team and, and that became more and more interesting to me over time.
Speaker 1 00:05:15 So were you happy, uh, doing that work at McKenzie? I hear different stories from McKenzie alums, some of them are die hard believers in it. Others may be a little bit disenchanted with it sounds like you had some really good projects there. Actually,
Speaker 3 00:05:27 I talk to folks that work all the time now about the big difference between happiness and satisfaction and I love to surf. It's actually one of, it's my favorite hobby and it makes me happy as could be to go out and surf, but it's not fulfilling in the same way that doing something important and actually accomplishing something as a team, that to me is satisfying and it's something that you can look back on and be proud of even if the experience itself can be grueling at times and, and that's definitely how I describe McKenzie. It's very hard work, but you're with some of the smartest people I had ever met and it was the first time intellectually I'd ever been intimidated by the people that I was working with and really just learned so much over the course of two years working there. I did find, I would say I, as a young guy, you kind of want to come in and with a big ego and and go change the world in your first year in the workplace and working with really big companies like you do at McKinsey, it it's clear that it takes a lot of time to try and move the needle at the Fortune 100.
Speaker 3 00:06:20 And so that to me started more of a passion for me around small media business where I felt like you could come in and bring a lot of the skills and and see the direction change really quickly. And so since then my career has really been focused on lower middle market.
Speaker 1 00:06:34 We'll, we'll spend like a ton of the episode talking about that, but since you mentioned it, are there any takeaways or things that you remember from the sales work and the sales team performance work that you did at McKinsey? I'm curious, like what I'm always curious about that just sales and sales performance and sales compensation. Is there anything that you remember from, I know that was like probably half of a lifetime ago, but is there anything that stuck with you?
Speaker 3 00:06:57 Lemme think of a good way to answer your question cuz there are a lot of dynamics at play there. I biggest one ended up being talent management frankly more than anything else. And salespeople are so convincing oftentimes that they can convince you that they're bringing more value than anybody else in the company. And I, I think selling is really hard so often they are, when we're working McKinsey, I think we did a lot of work and realized for some especially Fortune 100, they were selling with large account teams. You know, that critical account manager who has effectively had this whole staff supporting them as a single sales key salesperson. They were the key to it and all the operational process and systems you couldn't put in place really just helped you understand who was successful in that environment and who wasn't. It was up to the senior leadership of our clients to figure out what they were actually gonna go do about it at the end of the day. And those who were able to recruit and retain the best ones were far and away more successful than others. So I don't think that's rocket science to anybody here listening to the podcast today, but it, it became clear after reams and reams of reports and data that we
Speaker 1 00:07:58 Analyzed and did. Do you feel like recruiting and retaining, obviously comp plans are critical and they're probably super critical in the sales organization where there's usually a lot of opportunity for alignment or misalignment, but so that's probably a standard that's well known and appreciated by everybody already. But was there any other variable other than great sales compensation and really good alignment there, was there any other variable that you guys dug into that you thought was like a source of, of real retention or real sort of top producer satisfaction?
Speaker 3 00:08:31 Um, not while I was there at McKinsey, but you know, later in my career as I looked at a lot of Salesforce designs and private equity world and ultimately running our own, you, you have to come to the picture in my personal view with an understanding that sales at a foundational level, if you're gonna be good at it, you have to have more optimism than just about anybody else because you have to believe that somebody needs your product and they're gonna gonna want it and they're gonna want it from you. Otherwise it can be a very demoralizing career. So I think that sense of optimism, if you can help communicate why your business can fall into somebody's optimistic worldview, that there's a much better alignment. And I think a lot of sales great salespeople that I know see the opportunity for upside and then upside on top of upside as opposed to any downside whatsoever. And so understanding that and being able to let people feel that and experience it, I, I think often when people make those teams feel more connected to the business that you're working with.
Speaker 1 00:09:29 That's really cool. Maybe we can come back to that as we dive into peers, but before we get to peers, so you're at McKinzie, you're working with case team colleague or case team leader. Has she happens to be married to somebody who's active in the search fund world, is that right? Is that sort of step one in the journey towards sort of small business m and a lower middle market m and a?
Speaker 3 00:09:50 That's right. He had just bought a business and this was in thinking about the business around 2002, 2003 timeframe and I joined in 2004 for that company. So search funds were definitely known, some people would say that it originated at Stanford Business School and folks had just been starting to talk about it over the last seven or eight years in a pretty informal way. And this service force, the company that I joined turned out to be one of the early home runs in the search fund world and I think a few of the big ones ended up really turning the whole search fund from a, a concept or an idea to a community now with a lot of institutional investors coming into it based on some of those early successes. But at the time it was sort of this novel idea that as a young person you could go and run a small business probably that you were young in age relative to if you tried to work your way up the corporate ranks, but honestly probably a great athlete ready to go. You were just as
Speaker 1 00:10:42 Capable. You spent about two years there, 2, 2, 3 years at that business.
Speaker 3 00:10:46 Yeah, I spent two years at at Service source and ultimately I joined and since my boss had also worked at McKenzie before he had met his wife and McKenzie prior to going out and doing the search fund, he understood that I was gonna do two years and go off to business school and then potentially go back to McKenzie or or something else along the journey. And so we set up this really cool two year program where I got to try a few different things and it was an eyeopening experience for me taking a lot of things that I've learned from these incredibly smart people in McKenzie and then probably learned just as much at ServiceSource trying to apply them and seeing what actually is gonna work in the real world versus what sounds good on paper but doesn't fly when you're working with real normal people.
Speaker 1 00:11:24 Any big memories from that two year chapter at Service Source? Like what were some of the things that you take away from it that you remember the most? Obviously doing all of this work at McKinsey, probably working exclusively with the Fortune 100. How big was service source as a business? How big was it when you joined?
Speaker 3 00:11:41 Yeah, ServiceSource was hundred 20 employees when I joined about, it was two years later, it was 250 or 300 employees and so maybe it was 80 when I joined and about two 50 or 300 when I left. It was going through extremely rapid growth. It all ultimately went on to go public a handful of years later and at its course service source sold tech support to large hardware and software companies, but they didn't deliver the tech support that was what the OEMs did. But they would go to US Sun microsystem and say outsource just this sales function to us. It's like a business process outsourcing business and we'll be able to renew and sell these work contracts better than your internal teams can. And once again, that passion for selling and, and a lot of the projects I had done at McKenzie played into this was just now ultimately at its core kind of a outsource sales and marketing business.
Speaker 3 00:12:28 I learned a lot originally from my mentor David there about how to build out reporting packages and alignment and accountability because sometimes coming outta the McKinsey world, you, you build such sophisticated balanced scorecards that you can understand a hundred reds, greens and yellows and blues and purples, but ultimately you gotta simplify that down and take a complicated world and make it pretty basic in order to have any kind of real operational alignment success and trying to boil those complex metrics down to one or two things that really matter was the key to being successful. So I really learned a lot about that from him. And then his partner was a fabulous sales and marketing executive and really understood the psychology of selling larger contracts and so had a ton of great little nuggets from him, one that you would appreciate that I remember well have used successfully since then a few times.
Speaker 3 00:13:20 So I guess on the podcast I give away one of our, one of our secrets, but when you're about to try and I sell today, sell large outsourcing deals in many ways or you know, at least large kind of vendor management type of deals and you give the project a project name, which you're probably familiar with in in the m and a space. But the thing about calling something Project New York City or project whatever it is for Peter Laman is that all of a sudden Peter Laman, who works at my client now has vested interest in making the project to success <laugh>. And so over the next few months is you're trying to get this thing done for the project name all of a sudden has a project work plan orchestrate. This is incredible psychological twist and I learned a lot of those tricks of the trade from my time there.
Speaker 1 00:14:01 That's great. So, so you expose the name of the project to the prospect is that
Speaker 3 00:14:06 The, the prospect helps you come up with a project name and then you get a working person assigned from the team because they want this to happen too. It's a, these large deals are multimillion dollar contracts. They involve, you know, people from the client working on it, people from our the vendor side working on it, an executive sponsor who's the decision maker. And so you're trying to get that team to all get together and ultimately get to the right answer, which is saving the client a lot of money, doing something more efficiently or better quality. And so all the steps and analytics and the process of making that work can be a three to six month journey a lot of the
Speaker 1 00:14:37 Time. Maybe there'll be chance for you to reveal a couple more sales gems as we dive into Pierce you go back to grad school, sounds like you knew you wanted to go back to grad school. It sounds like you had a pretty clear plan two years at McKinsey. Two, it doesn't sound like you sorta were building this as you went. It sounds like you had a pretty clear plan two years at McKinsey then you did two years as service source and then you wanted to head back to grad school. Is that right? Was that like the mid twenties Brett Forster plan?
Speaker 3 00:15:01 Yeah, my second year of McKinsey I didn't know what I was gonna do. And then my second year at McKinzie as I was looking around, I actually heard about the search fund concept from some friends and friends that were at Stanford Business School at the time. And, and when I heard about it and then I heard about David Kennedy, you know, who had just bought this business immediately became what I wanted to do. And so the steps from then on were basically different ways of preparing to, to go do that.
Speaker 1 00:15:26 So let's fast forward through Stanford, that was, there's obviously a lot in those two years there and we both had a great time there working together and having a lot of fun and learning a bunch and taking some time away from the grind of work. Let's just start with, it's June, 2008, you graduated from Stanford, you wanted to go into search funds before even going back to business school. You knew you wanted to do that. What did you do next? What happened right after you wrapped up in grad school?
Speaker 3 00:15:52 So I went to go work for my boss from the service source who had actually also left and went and raised a private equity fund called Seren Capital. And the concept behind Seren Capital when it first launched was let's go do the search fund idea but let's you know, a new twist on a screw, which is, let's take some experience searchers who develop a few more reps after doing more than one deal and let's find operators who are a little bit more experienced and let's go after the exact same asset class and see if we can do it in a more professionalized way with 250 million in backing. I think there is one important kind of story from Stanford Business School that, that I think is pretty relevant to it, which is my second year of of business school I, I really wanted to find a deal and do a search fund straight out.
Speaker 3 00:16:34 And so I spent, I partnered up with one of our classmates actually and we were writing letters. So we had come up with this idea around wind farms, which is at coincidental given I'm now in the windfarm maintenance and repair business. But we had this idea around windfarm maintenance and repair at the time and we started writing letters to asset owners and we had three deals lined up to go buy wind farms and we're starting to go get the financing for it in our spring quarter there before we graduated. And the deals ended up falling apart for various different reasons. And that's right when I was trying to figure out what to do, it's a wait way to say I, I should probably learn more about the actual deal making side of this cause I understand what I wanna do on the operating side, haven't done it for four years there, but what about do I really understand the, the deal side? And so that's when I went to go join, join Sarah and ended up getting into the wind maintenance and repair business 20 years later.
Speaker 1 00:17:23 So was the reason that the financings fell apart, was that kind of related to just 2008 heavy turbulence or was there something else behind the deal?
Speaker 3 00:17:32 Unrelated, but it was probably one of the luckiest things in my career that those deals didn't close about three months before the entire market fell apart, that I was looking at these deals and called May timeframe and as you remember by October was when everything just totally melted. So it would've been an unmitigated disaster
Speaker 1 00:17:50 Man. So they fell apart for, in a way that had nothing to do with the financial crisis.
Speaker 3 00:17:55 Every deal's got its own journey and the sellers and the financing and they just didn't quite work out for different reasons. And the,
Speaker 1 00:18:02 Okay, so on Ander Capital, that was a first time fund, 250 million of capital and that was the day one job coming out of grad school. Yes,
Speaker 3 00:18:11 That's right. And at that time I knew nothing about private equity and kinda I was with other folks that came out investment banking and a little bit of private equity beforehand and I was really learning on the job and, and it was hard. I didn't know what I was doing and I think my boss who I'd worked with before was incredibly patient with me as I was trying to ramp up and get up to speed. But I learned a ton about how to find deals and professional sourcing engine, how to actually execute the deals and do all the modeling and uh, the negotiations and legal to go along with it. And so it one of those invaluable experiences
Speaker 1 00:18:44 You didn't, you didn't learn all of that in in business school. They didn't teach you that in grad school.
Speaker 3 00:18:49 It was a cool experience and I think you'd probably be, have more exposure than anybody to a lot of folks that are in little lower middle market. And it's, I'm always fascinated by how people get into the business of private equity because it's very much a trade. You look back at artisans and prior generations and there's no way to teach somebody how to be a great chef overnight. It's one of those you have to apprentice with somebody and really learn the trade and, and private equity is no different. And I think what we're seeing in the market today is a lot of people who have zero experience with it and often come in and it's fine and you can often get deals done right cuz you're dealing with a spectrum of risk but the professionals really understand how to mitigate the bottom quartile and how to drive asymmetric type risk opportunities to the top. And I'm not sure if people quite appreciate how hard that is to do, haven't been in the business.
Speaker 1 00:19:37 Yeah. So what was the chapter, uh, at Sarah in in terms of tenure before, before you set out on your own?
Speaker 3 00:19:44 I spent just about three years there before leaving and, and I think I learned a a lot there and I realized that the next five to 10 years was gonna be really perfecting deal execution as you move your way to try to become a partner at a fund. And you know, I was much more interested frankly in the original vision of, of Sam, which is look at deals for a while and then jump in and run one of the companies and, and so as Sarah was really professionalizing and started to look more and more like a traditional private equity fund and it turns out there are a lot of lessons to learned from traditional private equity funds were very good at it. And so Sarah was maturing as a firm and in understanding where they wanted to be, which led to more specialization. And I, I had never intended to be a specialized private equity partner. I really had wanted to be kind of a more of the old school doing deals and running businesses and doing a little bit of everything.
Speaker 1 00:20:31 And so you set out on your own and did you have a partner when you set out on your own? Like tell us about Wilcrest, you set up Wilcrest and tell us a little bit about that.
Speaker 3 00:20:39 Y Yeah, so I had a quick stamp when I thought I could be a software entrepreneur and do a startup, which lasted about eight, nine months, which is a whole nother story in and of itself. But I ultimately after that said okay, I wanted to do something that brought together the private equity side with operations. I was interested in the search fund model and had spent a lot of time in and around landscape because all the san folks were connected to the whole search fund crew. And so I was constantly during that tenure meeting people that were part of the community at a business school and spent the whole second year looking for a deal, right? So I kind of had known a lot of the people that were in it and the twist on the screw that we wanted to take was trying to be able to look at multiple deals as a potential.
Speaker 3 00:21:18 And so we weren't committing in the beginning of the search to going to run the company cuz we're seeing a lot of deal flow that was potentially a great deal but it just didn't require a full management transition. And so we figured as long as the hardest part was going to find a deal, so if we found something good, we didn't wanna be, uh, restricted. So we pretty much self-financed the search piece of it with the idea that instead of a private equity fund doing 15 deals over three years and during the business of transacting, our goal was to do three deals over 15 years. And so the deals a means to an end, right? And it's really the, it's the 15 year journey of trying to build a great business for the long term with all the right incentives. And I think one of the reasons that was so important to us is we saw the original purpose of private equity was in many ways taking public businesses that were focused on quarterly earnings.
Speaker 3 00:22:10 And if you could buy them, focus the team on a five year plan and highly incentivize the management team was amazing what kind of results you could get, right? Because all of a sudden people are making more long-term decisions. Well if you take a family run business that's been making kind of decisions along a 20 year timeframe and now you shorten that to three year timeframe or four year timeframe, you, you know, you're actually doing the reverse right? And you're bringing so much value by bringing experience from other industries, it can cover over this, that simple kind of problem, uh, with the business model. But we felt like there are a lot of opportunities where, you know, instead of getting people and managers think about, gosh, this is just another owner passing through the one more chapter in the business, the owner's actually there with us and we're building this business together.
Speaker 3 00:22:51 It's a different kind of mentality. He set up incentives in a different kinda way. And so that's why we wanted to set it up. And I ended up meeting my now partner Ben Crick through my brother and his wife had both gone to Stanford Business School a few years before I did. And my brother's wife actually connected Ben and I cuz they had been classmates and friends in business school and looked at some deals together in a prior life. And, and so we ended up linking up and I think we were both looking at five different investment themes and three of our, our list have overlapped so clearly we're looking at similar things and we're a great ham and egg kinda team.
Speaker 1 00:23:22 Got it. And so that and is wilcrest the, the business that you guys set up together?
Speaker 3 00:23:26 That's right, that's right. So we ended up forming Wilcrest and I think about a year into searching for deals, we'd convinced my father to start looking at some of the deals with us too. And bit by bit started to formalize the whole thing more and more as we found our first company and went from there.
Speaker 1 00:23:41 You were telling me a couple weeks ago when we caught up, uh, and we were, were talking about, uh, recording this, that there were some pretty nitty gritty early day memories from starting wilcrest and sourcing deals in your living room and your wife maybe questioning your decision to walk away from a pretty compelling private equity opportunity. Do you wanna just talk a little bit about early days at Wilcrest and just what you remember about that time before finding, uh, the business that you're running now?
Speaker 3 00:24:06 Yeah, I think speaking to the audience here, they're probably listening to this podcast. It's part of the axial community. A lot of folks that are in different phases of either setting up a fund or a, or a search fund or they, they set something up and there's nothing quite like the early days and it's very hard to explain to somebody how hard it is to go, whether it's go raise the first fund when everybody thinks you dunno what you're doing and you have to convince 'em or go find that first deal when you're independent, you don't have money, you don't have experience. And so it's very unclear what you actually bring to the table. You really need to sell your way through all of that in order to find the first one. And so you question yourself a lot along the way and I think anybody with any kind of rationality, <laugh>, why they, they made the choice to, uh, take a little bit of self punishment.
Speaker 3 00:24:49 But luckily my wife in general was very supportive. Barring one instance, which was one of the funnier stories we had found a, a third gentleman who was helping us source, he had come out of a buy-side sourcing firm and was looking for part-time work while, while raising kids and he was looking for deals with us. And I I was in a really a tiny apartment in San Francisco at the time and my wife was pregnant with our first son. We now have two beautiful boys, six and eight years old. But at the time pregnant, she had just got home, she was totally exhausted from work and my partner Ben was cold calling a CEO in the living room in the front. Our partner Sam was cold calling in the kitchen and having a conversation with the C and, and I was cold calling, uh, somebody from the nursery in the back, just like a desk slash little nursery for the upcoming baby and cold. My wife was trying to hide in our bedroom, there's nowhere to go and people doing this, you guys have to get a proper office. This is already months, this in, this is getting ridiculous. So that's where it started. And we have all these funny stories of different ways that you can say no to somebody on a cold call. It's a very healthy experience to go through for a while.
Speaker 1 00:25:54 Yeah, I think it's a great visual that you're sharing and a lot of people I think view entrepreneurship in the context of starting like an operating company, like a tech startup or, or some other sort of small or medium sized business where, you know, the, the vision in people's mind is setting up an operating company. But whenever you talk to professionals who have set up investment firms the early days at an investment firm is it never, to me sounds a whole lot different from the early days setting up and starting an operating company. Basically the same. It's a startup all its own, it, it's a startup that's set up to try and find investments, but basically everything else is the same. If the, if the founders don't do the work doesn't get done. There's not a lot of faith in the business, there's no brand, nobody takes your call <laugh>. There's a lot of, there's just a lot, there's just a lot of unknowns and, and a lot of risks and a lot of things that are not clear. I think people always tend to characterize like investment firms as, as not an entrepreneurial venture, but in the early days they're basically the same as as any other venture from what I've heard. And hearing three guys making, uh, cold calls from the nursery in the living room in the kitchen only makes me more confident that the, they're basically one in the same.
Speaker 3 00:27:02 I also think that as you get down to smaller and smaller businesses in, in the lower level market in particular, you know, m and a is a scrappy business, right? It's a scrappy business and it's entrepreneurs trying to make deals with other founder entrepreneurs and it's a very different from the fancy conference rooms and on Wall Street, right? It's a totally different business and I tell people all the time, even people that work for me today, hey, if you wanna go do what I did, you're more than welcome to. You just get, you got the internet access and you got a cell phone, you can go start it. I mean nobody cares whatsoever when you cold call 'em what your resume is. I mean you, you just need to sell your way through the whole thing and make it all happen. So I'll back anybody that you know comes to me, <laugh> says they're willing to go through it and people second guess whether they really wanna do it or not. And then you get the real entrepreneurs who, who come out and and actually give it a whirl.
Speaker 1 00:27:47 So let's hear about Pierce Pierce services, the business that you ultimately found and have really dedicated the better part of, I think a decade now. More than a decade maybe. So let's just hear about, let's hear about the business, let's hear about how you found the business and then want to hear a lot about just the, the journey as an operator. Uh, you're the CEO of the company today, so excited to dive in in the second half of the conversation on Pearson, how you found it, what you've developed it into and all the learnings along the way.
Speaker 3 00:28:15 So at the time w we were working on a few investment themes and one of them was field maintenance and repair services. And so we're looking lab maintenance and repair. We were looking at something was bordered on tested measurement in the field and I know we looked at some like gas turbine maintenance and repair and you know, all of a sudden we saw a opportunity come through Axial, which is a kind of a crazy coincidence of events. And it was being marketed by a firm has really good firm based in uh, Florida. And as it turned out, I think in retrospect a lot of their typical clientele was New York City clientele and we were one of, if not the only west coast group looking at it. The company was based in Paso Robles, which is very hard to get to from New York. It would take you all day.
Speaker 3 00:29:01 It was a two and a half hour drive for us. So I think that had something to do with it. 80% customer concentration. So any firm that had associates doing the first pass at deals coming in the door would've thrown in the trash immediately, right? Its one of the arrival type deals. And we looked at it and we said, wait a second, there's more to this than meets the eye. And I think that's one of the hardest things when you're trying to find a deal, particularly at as an independent, is you need to find something that other people don't see. Cuz if everybody sees a great business, everybody's gonna want it and you're not gonna be able to compete. But a really top auction, uh, here was something where, and we started to realize the largest customer is at and t well at and t really is is I mean it's 280,000 employees, it's larger than the government practically.
Speaker 3 00:29:45 And so you have different branches and the branch branches operate very independently and at and t is not going bankrupt. And if it is, I'd much rather bet on that risk than the risk of a small middle market company. You're talking about like levels of risk, right? You have your work that just gotta go background, like that's we're like you know, risk up here. We peeled it apart and just felt like there was a lot of different ways we could make it grow. And ultimately, frankly, we were a couple young guys getting in the business and thanks to my dad who's an old pro at some of this, he said Guys, you gotta get out in the field and really understand what these guys are doing. And you, we went on some job site visits and I remember one very specifically in San Francisco actually,
Speaker 1 00:30:25 Was this during the deal evaluation process where you guys were already out in the field?
Speaker 3 00:30:30 Yeah, during due diligence. And this is a kind of a key factor I think for, especially for young people that are new to the business. You get wedded to a spreadsheet and you feel like, gosh, like the whole world, if it just worked like it did on a spreadsheet, life would be so easy. And sometimes actually getting out and really seeing and touching and feeling the work, it doesn't actually solve any of the questions you're trying to solve on the due diligence list, but it's how you really understand what's there and it's ultimately how you connect with people running it cuz they understand that's what's there and if all you care about is the due diligence questions on your priority list, you kind of turn off the sellers I think and you don't really understand the business. So we went out and there was a, a union team on a commercial construction project across the street from the guys that we were shadowing for the day and the guys were shadowing and granted they knew we were about to buy the business so they were but but still they were right tools for the job hustling back and forth, good safety protocols.
Speaker 3 00:31:24 They knew what they were doing, they were all over it and across the street you had five people on a union team in San Francisco that were just hanging around. One had a around those shovel picking up dirt from the side or from the street and putting it on the sidewalk and it's like why did the pile even need to move and it is only moving half the pile and it was the wrong tool for the job anyway. And you see that incredible quality workmanship in the field, a culture of hustle. And that is something that we knew when we were going to buy a business it have that because I don't know how to fix things with my hands better than the next guy. And so there's no way I'm gonna be able to bring that to the business. But we needed somebody that had that, right? And, and it had it in spades and it was in a market where we saw, this was prior to 5G but wireless market really taking off lots of opportunities with hiring hire bandwidth on the wireline side and just felt like a lot of ways to grow in a good market.
Speaker 1 00:32:17 So were you under letter, uh, of intent to buy the business when you were out on the field? It
Speaker 3 00:32:21 Was one of our key diligence requests to do not just a tour of the office, but let's actually go and tour the real work that's happening in a field services bus. You know, in a factory deal you can go and when you tour the office, it's part of the management visit, you gotta tour the factory, but in field services you gotta really go out to the job sites and see what's going
Speaker 1 00:32:38 On. Anything you guys had to overcome in order to get exposure to a field service operator who's dispatching, well not necessarily the most senior management team out into the field to execute jobs? I know one of the things that always does get a little bit tricky at times, even if you're under letter on a business is just access to the people in the business other than those at the very top. Just because in many cases there's a lot of sensitive information, it very often is sensitive that the business is even contemplating a sale or or preparing to. Was there anything that you had to overcome? I know it sounds like a little tactical thing, but I've heard it again and again that as you get close to the end of the diligence request, you either want to be speaking with customers or you want to be meeting with members of the team that are not just the senior management team or the owners of the business and there's always some friction around how to do that in a way that keeps the, the seller calm and and feeling like they're, they're managing the sensitivities of it.
Speaker 1 00:33:34 Were there any dynamics like that in terms of just going out into the field? Yeah, just tell us about that.
Speaker 3 00:33:39 You know, it's a great question Peter, and, and I would say we've done a lot of deals since and everyone is a different dynamic between, you know, the customers and media management. So I, I don't think that there's a blanket one size fits all whatsoever, but it turned out in this particular case, what the owner was really proud of was the team and the quality of the workmanship of the team. And one of the things I think he was nervous about was a buyer coming in and being all spreadsheet oriented and not really digging in and understanding the, the heart of the business. And so simply asking that was a critical part of our due diligence ended up bringing us closer I think to the seller. And we even asked to do this before we were under exclusivity, right? And so it became one of the ways that I think we differentiated ourselves as a buyer because we actually wanted to know what was really going on. And I think that really resonated with, with the person who was selling it.
Speaker 1 00:34:31 So he had no problem introducing you to one of his crews and saying, Hey, this is Brett and guys take him out <laugh> in the truck today and
Speaker 3 00:34:38 Let's be clear, there's a lot of interrelated family in the business. It's not like we went out with just any technician <laugh>.
Speaker 1 00:34:44 Sure, no, no, no, I, I understood. What else do you think? One of the things that I hear a lot about is hesitancy by sellers and hesitancy in particular by professional intermediaries to introduce acquisition opportunities to search fund and search fund type investors. The, the common narrative is it's just either some young 20 something who's clueless, who's trying to buy business and sort of shortcut his or her way to, to the C-suite. They don't know anything about business. There's another narrative which is not only do they not know anything about business <laugh>, but what they also usually have no money behind them. They're a very contingent buyer of the business and and once you get under letter of intent, they gotta run around and pass the hat and go raise a bunch of capital. And, and so there's, there's a narrative that's very active in the market, lower middle market, small business m and a that you know, that's really true where the lower middle market intermediaries are just really reticent to introduce businesses to the kind of the type of buyer that you and, and you all were at this point in the journey of, of Wilcrest and then becoming the CEO and the the majority owners of of peers or at least major owners of peers.
Speaker 1 00:35:58 And so the reason that I give all that background is cuz I wanted to ask you how you feel, what is your advice there to people that are actively acquiring businesses through an ETA model, through a search fund model, independent private equity sponsor model? What are the things that you think are the best ways to overcome some of those issues, the best ways to win deals that are going to have some level of competition? Just how does the buyer that doesn't have the, the fancy brand name in the committed capital fund behind them, how does that buyer compete to to win? It's
Speaker 3 00:36:30 Interesting you, it's a great question because it's far and away the hardest thing to sell through. We've done a few deals subsequently and their difficulty level is A and z doing your second and third deal compared to doing the first one for exactly the reason that you're talking about. And I think there's a piece of it that I think is important for investment bankers and there's a piece that's important for kind of the searchers and tenant sponsors, family offices. I think the piece for the people searching for deals like myself is you need to have focus and the deal might come from a buddy over a beer who introduced you and our second deal came because somebody would had a friend in preschool drop off and it just happened organically and we got into it but there was actually a real relationship. But the start of that deal, the more common I would say would be having a theme.
Speaker 3 00:37:16 We were looking at maintenance or pair businesses. We had looked at, by the time we found this, we had looked at 30 or 40 maintenance or repair businesses. We had done a first party research on different dynamics going on and maintenance repair. And so by the time we were having the conversations with the banker and we were having conversations with the ceo. Now I don't know if the CEO at the end of the day really appreciated the work we had done, but at least as a banker he could honestly introduce us to the client say wait a second, they're young guys, they might not have it, it might not be a turnkey easy move like it would be with a private equity firm that's fully up and running, but they might bring something to the table unique that you can't get elsewhere because they've got a focus.
Speaker 3 00:37:55 The flip side of that is the investment banker, which I think why I think this group did a very good job and I think having been on both sides of the table now where I've been on the buying side and on the selling side is as you get closer and closer to the sale, the money's all that matters and people and you have an investment banker wants a commission and get a job done so they want to kind of get it done and move on. So they want the assure you this deal's gonna go through, they want to get the highest price. You have a seller that I don't think they even want the money, they just don't want to feel like they're gonna look back on this in five years and feel like they got shorted and their buddy got 10% more for the same thing, pride kind of thing.
Speaker 3 00:38:31 But at the end of the day, what really matters is the fit, right? And people talk about that, but I think people very much lose sight of it. The closer and closer you get to the final transaction and what independence can bring to the table is something there's no way that a private equity firm can bring. And in the situation here where you have a retiring founder, you know, having both Ben and I willing to throw our lives on the line to make this successful for a team where he had family members that were part of the team and he had his legacy and he really cared about the group that was there, he wanted this thing to be successful I that really mattered. And like I said, you get close to the deal and then all that matters is the price and the turn legal terms and all this kinda stuff. But I think that's almost outside parties distracting the buyer and the seller from what really matters most getting that
Speaker 1 00:39:25 Ship. And so what do you think is the distinct advantage of an independent buyer that's not affiliated with like a, a traditional, you know, committed capital private equity firm that, because I would think that if, if I had a committed capital private equity investment professional on the line right now with the two of us, he or she could probably come up with an argument as to there's no big difference between how they're gonna approach it. They're not gonna go try and inappropriately develop the business any differently from you. So how do we get into the nuance there? What are they missing when they come at a deal from that perspective? And cuz I really wanna try and isolate what are the winning characteristics of what an independent buyer can bring to the table? So where do they get handcuffed in a way that an independent buyer can can be different? I mean how does it happen?
Speaker 3 00:40:09 I think there's one or two people in a leadership position and a company the size matters a ton and getting the right, I talked about fit, you talked to any private equity investors that's been in the business for 30, 40 years. They'll talk more and more about how important the team is and what an independent brings is they're willing to step in and actually work on the business, run the business. And and I think for folks that are pure independent and are just doing transactions just like a private equity fund, I, I frankly don't think it applies unless they've got incredible domain experience in one particular area, which is very valuable. But I'm talking more about folks that wanna get in and get their hands dirty and if you're the seller you might go to a private equity fund who says, wait a second, I've got an entrepreneur and residence with a gold planted resume.
Speaker 3 00:40:52 Or I've got four executive head hunters that I can call and we can find the next ceo. But I think there's a big difference between finding somebody who at their heart is an entrepreneur to come take over an entrepreneurial business and then having the due diligence process, which is a very stress-inducing tune to six month kind of process to get to know somebody and that's gonna be the future leader of your, your business. And they're highly intertwined between the job and ownership of the company. So perfectly aligned, incentives perfectly aligned if you have any kind of rollover or just to take care of the employees going forward. It it's something that a private equity firm can offer. So it's gotta be the, the right fit. 70% of deals that's not relevant whatsoever, but for the ones that are, it's really important.
Speaker 1 00:41:39 So after you closed the transaction, let's just talk about operating the business. Just take us through a little bit of the chronology post-transaction. Did you jump right in and run the business? Were you, was there a transition? Just tell us a little bit about just the chronology from from closing day onward and I'll jump in with questions along the way.
Speaker 3 00:41:56 Yeah, so you remember that story about cold calling from the apartment? Well fast forward to the deal closing and my son had been born <laugh> and was now three or four months old and I told my wife now it's time we've, I've been talking about this for since we've met and we're moving and past the ropes and I think I had stopped there for gas once in my life before finding this, this company. And it turned out it's an awesome town and since I've been going there, it's become like a second nap Sonoma and tons of wineries and great restaurants and, but at the time it was, it was a little bit newer and it was a big leap of faith. Got down there and started helping people fix their desks and going around the office knowing how to do a v lookup in Excel and saving somebody two hours a time that was doing something by hand on a spreadsheet. And so it was really a kinda an awesome eye opening, transformational experience. I started, I had done some Salesforce implementations and so I started writing code in Salesforce to build out a kind of an administrative operating systems. Cause there wasn't a lot of good field services software out there at the time. And, and so we literally just fully got to work.
Speaker 1 00:43:00 Were you like a CEO day one? Was there, did you have a different role or?
Speaker 3 00:43:04 I wasn't entirely fit. There were two, uh, gentlemen running the business aside from the founder. One was running the wireless side, it was about half the business, one was running the wire lines, so I just half the business or about 70 employees at the time. And those two folks are with us today running their divisions. So at first we weren't sure if we were gonna, Ben and I would come help for a year or was it just six months. But we got in there and realized that what we brought to the table was fundamentally different from what the two operators that were there brought to the table. And we couldn't do what they could do and they couldn't do what we could do. And so what started is giving each other the benefit of the Dow turned into mutual respect and I think over time turned into incredible mutual collaboration and it's really special.
Speaker 3 00:43:49 And we go and we talk about the company now as we've gotten bigger and we joke about Silicon Valley meets the rodeo because the early guys in the, the, the company came out of Pastor Robles prior to when the wine was there as a cattle country and there's a lot of really good ropers and the founder was a really good roper himself and a lot of the early folks on the team were good ropers. And, and so it really had that feeling of two guys moving down from San Francisco, you know, to, to start programming software and this team that was there and, and it was that mutual respect I think that carried the day and it turned out to be just that right formula at the right time because our largest client at and t was consolidating purchasing and we already had remembered that really good workmanship in the field.
Speaker 3 00:44:34 But now you combine a really good software and, and backup process and analytics and as ATT wanted to consolidate their vendor pool, they were looking for somebody who could self-perform and self-manage. And those two things didn't exist in the industry. It was either people who got the white color side right, great software, great admin, and then they outsourced all of the work to local subs all over the country. Or it was the mom and pop sub that had worked their way up and had really good workmanship in the field but they never could get the photos and the scope of work and the materials and the, the bills, right? They did. Cause they just didn't respect and value that side of the equation. And so having both is I think at the right time ultimately made the business successful. So we grew and then we opened an engineering business about halfway through cuz our clients wanted us to be more of a thought partner. We wanted to be more of a thought partner. And the only problem with operations and maintenance here at the end of the bull web, so you don't know who's investing in the network or how or why. Whereas as we got on the engineering side, we're having different kinds of conversations about the future of the network and then ultimately how we could play into that as an operations and maintenance partner. And uh, the business really grew quite a bit over the next four or five years.
Speaker 1 00:45:44 So how long have you been running the business as a team? Just to give the audience a sense for the duration of the tenure,
Speaker 3 00:45:52 Uh, eight years now.
Speaker 1 00:45:53 And can you share just general, are there any like rules of thumb on growth that you're comfortable sharing in terms of just business size or employees or just however you guys think about it? I'm sure there's some that's maybe sensitive, but others that are, you're more comfortable sharing.
Speaker 3 00:46:06 I think indicative is employee count, which we share, which is about 70 employees when then I joined and we're about 2000 now.
Speaker 1 00:46:13 That's totally amazing. Different
Speaker 3 00:46:15 Chapters of the journey along the way for for sure. Nothing was up and to the right the whole way there were <laugh>, I can tell you roller coasters, but overall it's been incredibly satisfying.
Speaker 1 00:46:24 Yeah. So how much of that growth has been largely organic versus making acquisitions after you guys bought Pierce? Tell us like a little bit about the road from 70 to 2000. I mean that's, I had no idea it was that big breath. That's absolutely unbelievable. What an incredible quantum of growth. Yeah. What's been the source of the growth? Largely it's
Speaker 3 00:46:42 Been probably half m and a and half organic. And I think I talked to a really experienced investor early on and they basically said, listen, these things are like snowballs and you do the deal and if it's successful in the first 18, 24 months, things tend to spin upward because you create a little bit more EBITDA that gives you room for more debt. You can now do a creative add-on acquisition and then that one grows and it kind of builds from there. Or you start having covenant pressure and then you need to cut costs and make short-term decisions and then things tend to spiral downward. And I think we came very close to breaching covenants in the first six months we had patient investors. We kind of saw our way through it and then things started to pick up and and work from there.
Speaker 1 00:47:25 The acquisitions that you've done, have those been largely about just expanding the, like the footprint of, of like the existing category of offering just in different parts of the country or what's been the nature of the m and a that you guys have been doing?
Speaker 3 00:47:36 The telecom business and and now too? We're in renewable energy. It, it's, I I would say it started with telecom and remember we bought a business with 80% customer concentration. And so the primary strategic objective from a very early days was build out the administrative and technology to create differentiation and then diversify. And the m a was really diversification. The problem in telecom you have four now three major players in the telecom wireless space and you have really two arguably with three or four kind of players in the wire line telecom space to deploying fiber. And so it's not a lot of clients that you can go service from an l and m standpoint that have all the equipment. Uh, and so you really need to figure out different service lines and different ways to get more share wallet. Uh, and that's why we did the m and a.
Speaker 1 00:48:24 How did you set up the m and a process at Pierce? One of the things we talked about was just that the way you guys are thinking about m and a today versus the way that m and a has happened historically, that there's maybe some fault line there or maybe some just line in the sand or maybe it was just a transition. But talk to us a little bit about just the evolution of post-transaction m and a. Like how has it become different? How has it the same as it was when you initially wanted to diversify the customer base and who's been doing it? So like how, how did you set up the capability at Pierce? When you're running a search firm, the only capability is is sourcing, right? I mean sourcing and evaluating and and trying to win and finance deals. And so there's a huge amount of capability that gets built up just sourcing. But once you've gotta run an operating company and that's part of your day job sourcing, you know, gets often pushed to the side like pretty quickly. So how did you set up m and a at at Pearson? Just how's that been changing?
Speaker 3 00:49:19 That's a great question. I think in the first kinda year and a half to two years it was all about the core platform business because there's a lot of work to do. I mean we hired a lot of people and really got a really strong operating team. So that was the number one most important thing. And when you combine that with the technology layer, it was the basic plumbing of the business, I would say got up and running and I think if you do your job as a ceo, you should, after a few years get to the point where you're spending probably more of your time working on either m and a or strategy or culture than having day-to-day work in the business. And I was just at a search fund conference and a few weeks ago and they said kind of the common theme of all the most successful search funders is over time they went from, call it 20 to 30% of their time working on people and culture in the early days to 80% working on people and culture as they got further along.
Speaker 3 00:50:09 Cause they got all the processes and system to dialed in, right? So I think after a couple years we've freed up some capacity and then Ben and I, having both been private equity guys in prior lives, we never shut down those relationships. And so we're always looking at deals coming across and anytime something came in, you have a high bar because you realize that you're gonna close this deal. It's gonna be between kind of 6:00 PM and 8:00 AM in the morning is when you're gonna be working on this deal. So it, it creates this very high bar for the kinds of deals that you're willing to actually look out. And I, I think you cut away a lot of the noise of kinda stuff that people often will bring to the table just to have something to work on. But ultimately found a couple things and it was backbreaking, I mean, to try and do deals in the early days cuz it really, we had a shielded, our operating team let them keep running the business and so we didn't really have any support to get the add-ons done.
Speaker 3 00:50:56 We did both at the same time. Having a business partner was incredibly helpful. I know I've had a lot of friends do this by themselves and I have the utmost admiration respect for the ability to do this as a one man ban. It's changed over time. I think we've done a recap a couple years ago with a great private equity firm called New Mountain Capital Professional 20 billion fund out of New York City and they really know what they're doing from a m and a standpoint and we've also hired a full-time DP of m and a. And so it, it feels like cheating to me <laugh>, we, but, but we see a lot more opportunity now and you know, I focus more on the strategy of the specific deal sourcing and execution per se, but I'm, I still like to be involved in the key management presentation type conversations cuz I think that, and I bring a lot of institutional knowledge and frankly sales ability to get the right deals across the finish line.
Speaker 1 00:51:45 The common you make about just going from sort of 20% of time on people and culture to, to 80% of time on people and culture. I think that's pretty interesting. Do you feel like that's a fair characterization of how you're spending a lot of your time now, Brett?
Speaker 3 00:51:58 I, you know, only think about it in chapters where the first six years we're running it before we did a recapitalization and when we did the recap with the mountain, there's more to it. And what ended up happening is we had built, built a business and then when frankly were playing defense, we were trying not to lose what we had created as opposed to going out and playing offense. And so that's when we decided to do a partial, we didn't sell the whole business or anything like that. We, you know, we did a partial recap and what made New Mountains so compelling is they had been looking at another deal independently in the renewable energy space. And so the pitch was, hey, instead when we wanted more capital to go do that, we had built something really cool, we thought let's go do out on acquisitions.
Speaker 3 00:52:35 We didn't have enough capital. And so it was kinda a lot of reasons we partner up and they brought the first deal with them, right? And so we ended up simultaneously buying two businesses out of a holding company the day we closed the recap in New Mountain at about four o'clock in the morning before we close the deal, Ben and I are, were still up of course trying to get the the thing done and said, I said, man, we, we have to get this done tomorrow morning and we have to get it done at six o'clock in the morning because the next day it was March 16th. And if you remember what happened on March 16th, 2020, the entire stock market completely fell apart. And you can see it happen like over the weekend it had gone from bad to worse. And y'all remember, listen that was the day quarantine started and so we ended up recapping buying these two businesses and doing a massive kind of cultural and process and systems integration over Zoom. And that ended up taking basically the last kind of year and a half, we finally like really just starting to get our sea legs again. I'm going back to working on culture again, but there's a year and a half there where it was like starting from from scratch again.
Speaker 1 00:53:36 That's amazing. You guys did, uh, you guys felt good about moving ahead with the transaction yourselves based upon what was happening and what has been the impact just over the last one to two years, if any, related to everything. I mean how has just, how has the business been impacted favorably or unfavorably or has it just been sort of indifferent to everything that's changed over the last two years For the pandemic? I
Speaker 3 00:53:59 Think the, there's been a lot of infrastructure building, right? First of all, we, we've bought two companies in the renewable energy space. So we got in for telecom business before and we got into solar, wind, ev, charging station maintenance and battery storage, maintenance and repair. And for Ben and I, there's a lot of learning to try and get up to speed. Remember early in my career was so excited about wind and actually remembered a little bit about it, but a lot more to learn and a lot had happened in intervening, you know, 15 years and so it was a lot of learning but it was all over zooms. He and everybody was nervous and uncertain about Covid. Everybody was nervous and uncertain about where their jobs stood in the middle of a three-way merger. And so there's a lot of kind of conversations of working through that.
Speaker 3 00:54:40 We actually did pretty well through Covid I would say we've had our woes of kind of integration and restructuring and trying to get, you know, all the right profitability in the right places. But from a overall kind of top line and gross margin gross profit standpoint, we're humming and I think now it's taken a year now, but we've got all that infrastructure rebuilt again. We're getting everybody on the same page again and we're starting to actually be able to meet in person again, which when you're going through massive organizational change, it's so critical to getting any kinda alignment around systems and process. So we have a ton of momentum now going it next year.
Speaker 1 00:55:14 I'd love to just hear a little bit about the journey for you as a leader through, through all of this. So to me it sounds a little bit like when you closed the original transaction with Pierce, it was you and Ben and then there were two sort of key operators who were already in the business. Is that right? Mm-hmm <affirmative>. So there were four of you who were the four, I guess four quarterbacks, four key leaders today. You're the c e o of this entity. It's a totally different entity than it was back then. Just tell us a little bit about your own, the evolution of leadership in the organization. I'd love to hear about that in particular, just how did it go from being four guys sort of solving whatever problems need to be solved? Did you transition it to a more like traditional standardized org chart with different C-level positions and a defined c e o or what's been the evolution of just a way that the leadership in the organization has configured itself and then love to hear about you and your own leadership journey before we finish?
Speaker 3 00:56:13 Yeah, we're not big fans of titles. I think Ben and I first took a title about a year ago because we we're being told that we had to, if it gives a sense of how we feel about it, we were just such strong believers in servant leadership and the idea of being able to meet people eye to eye and not trying to create some sort of infrastructure that,
Speaker 1 00:56:32 So there was no title,
Speaker 3 00:56:33 We didn't have titles, but that also works in small media business where people know each other. I, I think what we've found now is when we're doing, we did four add-ons this past year and I think having a little more structure is important because people are just honestly just trying to figure out who's who in the zoo. And you know, it's all remote, right? <laugh> have no idea who does what. It just becomes really inefficient. But as long as people don't lose that to the passion for the work in the field and the folks in the administrative office who are actually creating the real value, I think that's okay from a leadership standpoint, I've certainly evolved in, I've grown up in this business. I can't say that I'm a better leader today than I was then, but I definitely have added a lot of gray hairs in both sides here and learned it.
Speaker 3 00:57:16 It's really evolved a lot and we've were big proponents of software and metrics and the team that was there embraced at a ton. And we hired an absolutely fabulous CFO F within the first few months of getting there. And at the time we needed a controller and we found this incredible, it had been the senior controller of a large public company and really just wanted to live in Paso Robles cuz she liked the lifestyle of Paso compared to Orange County and kind of the authenticness, I would say, of the kind of wine cowboy lifestyle that's there. And, and because of that, she was so incredibly drawn to the culture that we were just starting to build at, at Pierce and she really became a centerpiece of creating and propagating that culture going forward. And, and then as business expanded, we've also expanded out as opposed to this way because we've added on more service lines.
Speaker 3 00:58:01 And so generally as we've added kind of new leaders have come in, but they've been part of this existing structure where historically we've really thought of ourselves as a, the best platform in the industry for great entrepreneurs to come and do their thing. And so when we started engineering, we've got a great entrepreneur come in who's now, uh, running sales for telecom side. We brought another entrepreneur who, who wanted to be an entrepreneur in engineering, right? Gotta build this whole business. It, it is, in some ways what you think of is what a couple private equity guys would do and they wanna create a portfolio of assets around some great end markets and in some ways that we've done. And I think in other ways, you know, we've really tried to create a cohesive business and share best practices across the different operating units.
Speaker 1 00:58:43 What's an amazing story? I guess maybe one last question before we wrap up. What is the, if you had to draw it up for somebody who's exploring the e t A path or is interested in exploring career owning and operating and buying small and mid-size businesses, you look back on your own career, it started out you're no slouch from a resume perspective, Brett, I mean two degrees from Stanford and, uh, McKinsey and private equity is, there's a lot of traditional accreditation there and you see a lot of people with that background really go into professional private equity careers for their entire career. You've taken that in a totally different direction, building a company close to a decade now building Pierce. When you think about when you get, when you get asked for advice on people who really want to be in sort of S M B M and a and lower middle market owner operating postures, how do you advise them? Like how do you advise them to spend the first, call it two to five, two to seven years of their career? What are the different routes you think are best for them to explore?
Speaker 3 00:59:43 You mean before getting into operating a business?
Speaker 1 00:59:46 Excuse me. Yeah, exactly.
Speaker 3 00:59:48 I think that you can do whatever you're excited and passionate about it. Cause so many people bring different skills to the table. And then when it comes to running the company, it's all hands on deck. And it comes more about attitude in some ways. I, I, I think obviously if you can figure out a way to get operating experience and m and a experience, I got squarely directly related to what I wanted to do. But I don't think you need it per se as long as you're incredibly intellectually curious. I, I am not as smart and intellectually curious as some folks that I've met that could have done it without the experience. For me, I'm a very tactile learner and so I had to go through some operating experience and some actual private equity experience. Some people can like read books and research on the internet and somehow teach themselves.
Speaker 3 01:00:33 And I've seen people do that, which is very hard. But I think it all comes down to kind of risk and return and when you're ready to make the leap into doing it and some folks want a lot more experience and in some ways they end up taking more risk when they finally make the jump because they've got families and bills to pay. Other people take the risk early cuz you have nothing to lose in your young twenties in some ways. But you also are taking a much bigger leap cuz you have no idea what you're doing. You could step into a much worse deal and it just matters so much that first deal that you find. And I think the most important thing that I've seen that's a key characteristic is you have to step away from the model as you're looking for these deals.
Speaker 3 01:01:12 And it's so appealing to spend a lot of time on great transactions where you can buy something cheap and you look at the multiple charges, gosh, I can make money on day one. Or, you know, it's, I love value investing in the public market. Value investing in this market is a horrible idea in my opinion because you're about to dump eight, 10 years of your career. So you wanna find a great business that's growing already and figure out how to make it better than something where you're stuck in a small market that isn't going anywhere. And I think that matters more than anything else.
Speaker 1 01:01:42 It's been a ton of fun to catch up with you and to hear a little bit more about the Pierce journey. Obviously there's so much more there than what we were able to cover, but thank you for coming on and sharing a little bit about how you got from point A to the point you're at today. Incredible achievements. I'm super excited to follow the Pierce story from here. Thank you so much. It was really great.
Speaker 3 01:02:02 Thanks to Tom, Peter, I appreciate the opportunity to, uh, to come on the show here and talk a little bit about it.
Speaker 1 01:02:08 Maybe we'll have you back eight years from now and see, uh, <laugh>, fewer. Thanks
Speaker 3 01:02:12 Dan. See what's next.
Speaker 1 01:02:17 If you enjoyed this episode, check out out axial.com. There you'll find every episode of this podcast as well as our recorded axial member roundtables, some downloadable tools for deal Makers Axials quarterly league table rankings of top small business acquirers and investment banks, and lots of other useful content that we've created over the course of time. If you're interested in joining Axial as either an acquirer, an owner considering an exit, or as a sell side m and a advisor, you can get started for
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