How I Found Post-Acquisition Success with Keith Conley

So. So Keith, as we're getting started, let's kind of set the stage because you've had, you've had a very storied career. So we'd love to hear a little bit about the story in terms of how you got to what you're doing right now. Because you know, when you look at what you're doing, Keith, it's the kind of thing you go, everybody goes, wow, I'd like to be doing that too. So I go, how do you get there? And tell us a little bit about, about the background story and how you're doing what you're doing.

Yeah. Well, I came out of undergrad with a degree in civil engineering and started with Bechtel building nuclear power plants. And I got into the project management side and liked the business and I wasn't a very good design engineer. So I went back to grad school, got me MBA and then got into the management consulting world with the Big Four and spent 15 years there working with many of the Fortune 20 around the world. And it was just a tremendous experience to apply what you learned in business school and just get exposed to so many different industries and leaders and so forth. And then during the dot com era, I jumped into a software company running the professional services there. I then did a stench with NCR for 8 years helping them run their outsourced in business. And then I came across a private equity company that was working, had invested in a company called dti, which was legal services, outsourcing illegal services. And they had traditionally been copying and scanning and they were looking for an executive to come in to run their technology business, which at that time was electronic discovery with legal issues. So I came and we built a business from 60 million to 1.2 billion. Along the way, I became president over all the operating units and we made 24 acquisitions along the way, had four transactions with four different private equity firms. So now I found myself, I left a few years ago and when I left, private equity firms started reaching out to me to provide assistance during the due diligence phase. They would look at targets in the legal service area or software area. So for the last couple years I've worked with about 16 private equity firms, helping them assess the risk, speaking to the target management team that they're looking to buy, helping them with valuations and an overall assessment of should they do this deal or not. And it's been a lot of fun. It's one thing when you're running a company and you're owned by a private equity company, but It's a lot more enjoyable to be working for a private equity company, owning the company. Right, right.

It's a lot more fun. Much, much better.

It is a lot more fun. So that's, that's what I've been doing for the last two years and have enjoyed it tremendously.

So, so one thing caught my ear. There are a lot of things called my ear, but one in particular, I see you said a DTI, you went from 60 million, is that right? To 1.2 billion. Right. That's incredible. And, and then you go, well, how do you do that? Well, you have it a lot. You had a lot of acquisitions there. How do you. How much of that was acquisition growth? How much of that was organic? Was that part of the plan to get to that level through acquisitions? Kind of. What did it look like in terms of how you made such a huge jump?

Yeah, well, the private equity companies that invested in us over that 12 year period would assist us primarily. You know, besides strategic planning would be investments and roll ups. So it was an industry that was very accretive if you could buy companies at five or six times ebitda. So that was always a plan to have an acquisition strategy. In fact, we would acquire, we got the process down so good that we would acquire, then integrate quickly to get the synergies. And one of the challenges that private equity companies would have when they would evaluate us would be to try to tease out what, what was organic versus inorganic. Because when you integrate and you get the financials going, it's very difficult to measure organic. So originally we were growing about 20% top line organic, but after a while it becomes muddy and it's very difficult to measure the true organic nature given you're trying to integrate the companies quickly to capture those synergies.

Wow, tremendous feat. Well, so when you look at the market today, Michelle, you talked about, talked about, you know, the, the amount of M and A activity happening out there, which is unprecedented as where we sit right now, the way the economy is going, the market, et cetera. What's your general assessment of what the M and A market looks like right now, say from the perspective of a private equity buyer or even the perspective of a company that's growing through acquisition, you know, acquiring other companies?

Well, from a private equity perspective, they're not having difficulty raising funds. I mean, you're talking about multi billion dollar funds. Historically the returns have been very, very healthy when you invest in private equity. So raising the capitals is not the problem. The challenge is trying to find businesses that are valued appropriately to invest in. Because the valuations today on these corporations, at least in technology at our all time high, for example, software companies in the legal services industry are going for 25 times EBITDA, service companies 12 or 13 times EBITDA. So it's been difficult to really try to get some deals done due to the valuation. So they have a lot of money and having the money set idle isn't helping their shareholders any. So they're taking more risk right now to deploy their money looking at alternative things like dentist roll ups and veterinarians and dermatologists. They're diversifying even more now to find areas to invest in. From an enterprise perspective, it's a great time to sell. Again, my experience has been more around the technology, but right now it's an all time high to sell your company and you never know about the certainty of the markets 3, 4, 5 years out when the exit would occur after you get bought. So it's a great time if you're looking or interested in selling your company just because of the valuations that you can achieve right now.

Mmhmm. So it sounds like a couple of things are happening. One is there's the challenge of you're saying take risk, which I interpret as the PEs are maybe having to pay more than they want to pay. And then there's the diversification. Okay, we're going to look in new areas, new places that we haven't looked at previously.

Exactly.