John Cerasuolo leads incredibly acquisitive companies. At ADS Security, he led the business through 45 acquisitions in a direct-to-owner model that relied on relationships and an internal team to buy-up companies. Now, with Leap Partners, he's hoping to do the same in the plumbing and HVAC sectors.
While at ADS, Cerasuolo's acquisition process started with a direct-to-owner conversation through his own deal team to start an acquisition dialogue years before an owner is ready to pull the trigger on a sale. That process that he used in the security space has translated well into the HVAC space, in part because there are many similarities between the two industry sectors.
"The type of owner that we're dealing with in HVAC and plumbing space is very similar to the owner that we dealt with in the security space," Cerasuolo says. "They came from the industry. They're generally really exceptional technically, really good on the operation side of running their business — just very talented, hardworking, capable people, and just great leaders."
The challenge, he says, is that ADS had done deals over the course of more than a decade. Leap has not.
"We [at ADS] built a reputation of being the buyer of choice," he says. "And everybody in our region knew when it was time to exit, we were on the shortlist of guys to call, and generally got deals before anyone considered going to a broker. The challenge for us in HVAC and plumbing was nobody knew us."
To get Leap on solid footing, he says the company did its first few deals through brokers as his company ramped up its prospecting engine. He brought with him from ADS a team to work the acquisition process that he says is very accomplished at identifying targets and finding ways to reach out and get in front of potential sellers who are inundated with buyer inquiries.
"That's the hard thing to do in this space because these guys are getting bombarded by brokers and folks that are reaching out to them wanting to talk to them about selling their business," he says. "So, that process took some time to ramp up and some of it comes with repetition."
In less than a year, he says Leap managed to get significant backlog of deals in its pipeline, and, at the time of the interview, had set the team's sights on landing 20 deals in a year.
"And at this point, we've got a pipeline that I think is going to support that kind of deal flow," he says. "We're getting to the point now where we're starting to build a reputation across the area in the Southeast that we're focused on that will help us put us in a position similar to where we were at ADS where we were the buyer of choice in the markets that we target."
Cerasuolo spoke on the Smart Business Dealmakers Podcast about starting the business and how the industry switch and time have affected his deal process.