RTC Partners Partner Tony Brindisi says he thinks of value creation from a growth perspective.

"Whenever we're approaching an acquisition, we try to take a full, holistic account of the value that can be created across all stakeholders," he says.

He's looking at the potential financial value creation — is this going to be an accretive transaction or one plus one can equal three — but ultimately that's only being enabled when value is created for the other stakeholders. That means looking at employee value creation — are they going to be able to expand the opportunities for the employees, are they going to be able to work in new geographies on new types of projects? Then they look at customer value creation — is this acquisition going to improve our product or service offering to our customers? Finally, they think about value creation from a community perspective. So, is this going to enable us to give back and be more sustainable operators in our communities.

"We think by taking that holistic approach, you can truly engineer more sustainable value creation throughout the lifecycle," Brindisi said during the 2021 Charlotte Smart Business Dealmakers Conference.

Creating that value in a company that drives multiples begins at day one, Brindisi says.

"So, from the time we're reviewing a sim, we're thinking about the interconnectedness of the organizations, how they'll integrate and where potential value is going to be unlocked," Brindisi says. "The way that we ultimately are successful in achieving it is by front loading as much of that integration throughout the deal process as possible."

To do that, he says as they're working through financial and legal diligence they're also engineering opportunities to get the management and sales organizations together and have them start sharing work, competing for jobs in a joint perspective and really testing the thesis prior to ever inking the deal.

"We found the more you can front load that work, the more real answers you're going to get through your diligence, both in terms of your cultural fit and how the management teams are going to work together, and whether your thesis as to whether these two organizations can pursue work more effectively together," he says. "And then you're set up to hit the ground running as you move into the post-acquisition integration work."

One platform he and his team built a few years back started with emphasizing value creation early on in the process — about a year before making the first acquisition. They teamed up with an industry executive to develop a thesis to combine many smaller companies in a highly fragmented industry to create a middle-market player. It started with the acquisition of a couple $1.5 million EBITDA organizations in the industry. Then they installed a top-notch management team and proceeded to build out the corporate infrastructure and management systems to support scale.

"From there, we went on to make eight acquisitions over the coming three years and integrate into the 15th largest player in the country. We expanded margins, we unlocked organic top-line growth above 20 percent per year because the management teams fit so well together, the sales organizations integrated, the systems allowed for better monitoring reporting and thus management of the resources. And in industry like that where it's all about utilization of resources, when you can drive utilization up a few percentage points you can dramatically expand your EBITDA margins."

Soon after, they recapitalized the company to a mid-market PE fund who later bought it. The company was on track to double again in that first year of ownership.

"And so, we feel we really built a sustainable foundation that's going to continue to support scale well into the future and unlock value."