Chris Adams has seen a few acquisitions.
“I had some personal experience working for a company that did 150 acquisitions,” says Adams, who ran shared services for CBIZ, which rolled up more than 200 accounting firms in the late ‘90s. “Through that process, I learned that it's just a lot of work to bring new companies into an existing structure with existing processes.”
So when Park Place Technologies’ new PE owners helped map out a global growth strategy last year, COO Adams was the man for the job.
As Park Place started acquiring companies in 2016, Adams quickly found the M&A process was putting a strain on his employees. “People love working for a growing company — unless they are getting buried,” he says.
To relieve the pressure, Adams created an M&A integration team empowered to manage each transaction from beginning to end.
We take an in-depth look at how Adams provided his M&A SWAT team with the tools it needed to complete six acquisitions in 12 months and put the company on track to $200 million in annual revenue without missing a beat.
Park Place was founded in 1991 as an alternative to post-warranty storage, server and networking hardware maintenance for IT data centers. Since 2010, the company has grown an average of 27 percent each year.
“We always had a good organic growth strategy and the country was big,” Adams says. “But we started getting big in 2014 and 2015 and the country was getting smaller. So from a growth perspective, we started to look at international opportunities.”
In December 2015, Park Place was bought by Chicago-based GTCR, a private equity firm brought in to help the company develop and implement its global growth strategy. Ten months later, the company made the first of its six acquisitions when it bought UK-based Com-Com.
There wasn’t a formal M&A plan and no set number of deals to close. The primary goal was to address the fragmentation that Park Place saw in its industry and expand the company’s reach into Europe. The new M&A integration team would be key to making that happen.
Respect the process
If Adams’ only concern was lessening the workload of his team, he would have just hired more people to manage M&A transactions. That would have allowed the people who were feeling overworked the chance to return to their primary roles. But Adams knew there was talent and energy in this group of people. He needed to find a way to maximize this potential without burning through it too quickly.
“I wanted to find good people and allow them to fail and learn from it,” he says. “When that happens, the company is always going to get better. There will be things that happen that they kick themselves for. But I’m looking at the big picture and saying, ‘Wow, what a year we’ve had.’ I’m not worried about those little details because I know people will figure it out and we’ll come out ahead in the end.”
The team is comprised of about 10 people, including leaders with expertise in finance, accounting, HR and sales. By allowing this team to focus solely on M&A without any other responsibilities, Adams noticed an immediate difference in both the workplace environment and with productivity.
“It allows us to segregate that workload and dedicate those employees to the integration efforts, and allows our existing employees to focus on welcoming the new team to our family, but not necessarily having to do all the work required in an integration,” Adams says.
After buying Com-Com, Park Place bought New Hampshire-based Ardent Support Technologies in November 2016, then UK-based Prestige Data Centre Solutions in May 2017. Two more acquisitions followed over the summer before the spree was capped off with the largest acquisition in Park Place history when the company bought NCE Group Limited, another company based in the UK.
With each deal, Adams has stepped back a little more from the process.
“Because these people came out of different jobs, early on there was a lot of contact,” he says. “I spent a lot of time working with them on tactical, strategic and everything in between with the intent over time to be able to step away from a lot of the tactical and just being involved with the strategic decisions. As an example, if you're sourcing deals and making phone calls to potential targets, I now only get involved with very large targets whereas 18 months ago, I'd be making calls to every target.”
Adams gives a lot of credit to GTCR for supporting Park Place’s decision to dedicate a team to M&A transactions.
“These are expensive people,” Adams says. “Having the support from our private equity firm to go out and make this investment was a critical piece.”
The risk-reward ratio
So when do you need a dedicated M&A team? “If it's a big acquisition, then I would be thinking about a dedicated team,” Adams says.
“If you're doing a lot of small acquisitions, it’s probably the same thing because that still puts a lot of stress on your business. “You're investing a lot of money in these acquisitions, so there's risk associated with that. The challenge is once you take them out of their day-to-day jobs, you have to backfill those people, so you have to have a place for them to land.”
Adams says there is risk in any move you make and you need to think about your long-term plans when it comes to making acquisitions. From a purely experiential point of view, M&A work is a great opportunity for employees who relish a challenge.
“Employees tend to really react positively to being on a team like this,” Adams says. “From a career experience, people view it as very favorable to their resume. So I think there's some upside to that. But you still need to think about pulling talented people out of their day-to-day jobs. What's the impact on those people? You have to balance that against what's the risk to my business? And, if you don't do it, what's the potential consequence?”
The M&A team has provided a tremendous upside for Park Place. Annual revenue is approaching $200 million and the company has a combined compound annual growth rate of 67 percent since the start of 2016. The workforce has also grown, jumping from 425 employees in early 2016 to its current total of 900 employees.
Adams acknowledges it’s not easy for some leaders to delegate anything, let alone M&A negotiations.
“We have a fast-growing business,” he says. “So if I have good, talented people over there executing, I'm going to let them do their thing and get out of the way. If it doesn't go well, I'm accountable. But if you, as a leader, want to do everything, it's going to fail. There are just too many variables associated with acquiring a company.”
How to reach: Park Place Technologies, www.parkplacetechnologies.com