Greg Cathcart, CEO & Founder of Excellis Heath sold his business in late 2020 to the Denmark-based NNIT Group. But the groundwork for a deal began when the company was founded in 2008.
“We decided years ago as we built the organization that it was going to be built for a transaction of some sort,” Cathcart says.
When the structure of the company was setup, he says he wanted everybody to be onboard with where the company was headed.
"We recognized that we were going to do a transaction at some point,” he says.
Cathcart says he gave everyone in the company stock options to keep them encouraged and focused on the ultimate outcome. That preparedness led not only to the financial payoff, but also to the future opportunity with NNIT for continued growth, as the plan was to stick around after the deal.
But building the business from the start with the end in mind also benefited the business by creating a strong foundation and identity. There was a focus on financials, with quarterly reports on the status back to the entire company to show progress towards both the company’s and individuals’ goals, much of which were intertwined.
“It was always about the team because if the team does better, each individual does better,” he says.
Tying together individual and company goals was both better for the organization as well as the individual. That’s continued as all goals are tied to the company earn-out goals under the NNIT structure.
“Because if the company makes the earn outs, not only does everyone get their personal goal money each year, they’re also going to get their earn-out money because everybody owns some stock options,” he says.
The company also benefited from going through a process in 2013 with a couple PE firms. That helped prepare them more for the transaction that would happen some seven years later. From that experience came guidelines as well as a previous offer from the previous process to leverage when talks with NNIT began. Cathcart says he even expressed his willingness to wait for non-pandemic times to get the value he believed the company was worth. But NNIT was willing to engage in that conversation in earnest, and that started the companies down the path of diligence.
Cathcart talks more about the deal and the legwork that went into being ready for it, on our Smart Business Dealmakers Podcast. Click the link to hear the full conversation.
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