December 3, 2024 • 41 mins
Mastering the Art of Selling Your Business: Insights from Industry Leaders
In this episode of IAMCP Profiles in Partnership, hosts Anthony Carrano and Rudy Rodriguez engage with industry veterans Ian Pavlik and Tim Mueller as they unpack the complexities of selling a business within the Microsoft Partner ecosystem. This enlightening conversation covers essential strategies for navigating mergers and acquisitions, with a focus on cultural integration and technology adaptation after a sale.
Throughout this episode, Anthony, Rudy, Tim, and Ian discuss:
- Cultural and Technological Integration Post-Sale: Learn about the critical role that cultural alignment and technological compatibility play in ensuring a smooth transition after a business sale. Tim shares insights on how these factors can impact employee morale and overall success.
- Importance of Strategic Planning: Ian emphasizes the necessity of long-term planning for business owners contemplating a sale. He discusses how setting the right expectations and being prepared can lead to more favorable outcomes in the M&A process.
- Real-World Experiences: Both Ian and Tim share their personal journeys in the realm of M&A, providing listeners with relatable stories and practical advice that highlight the emotional and logistical challenges of selling a business.
- Assessing Readiness for Sale: The hosts explore the concept of business readiness, offering tips on how to evaluate operational efficiency, financial health, and market positioning before taking the plunge into the M&A waters.
This episode is a must-listen for Microsoft Partners looking to understand the intricacies of selling their businesses. Tim and Ian’s expert advice equips you with the knowledge to navigate the complexities of M&A, ensuring that you approach your exit strategy with confidence and clarity.
Listener Links / Resources
International Association of Microsoft Channel Partners: IAMCP
Guests:
Tim Mueller, M&A Managing Partner at IT ExchangeNet
Personal LinkedIn: LinkedIn
Company LinkedIn: LinkedIn
Website: ITExhangeNet
Ian Pavlik, former owner of Pavliks and current founder of The Pavlik Foundation
Personal LinkedIn: LinkedIn
Website: The Pavlik Foundation
Show Hosts:
Anthony Carrano LinkedIn, Managing Partner at Dunamis Marketing
Rudy Rodriguez LinkedIn, Managing Partner at Dunamis Marketing
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Anthony Carrano (00:05):
Welcome to the IAMCP Profiles and Partnership,
the podcast that showcases howMicrosoft partners and IAMCP
members boost their business bycollaborating with other members
and partners. I'm your co-host,Anthony Carrano. And in each
episode, I'll be talking to someof the most innovative and
successful partners in theMicrosoft ecosystem. The
International Association ofMicrosoft Channel Partners,
(00:27):
otherwise known as IAMCP, is acommunity of Microsoft partners
who help each other grow andthrive.
Members can find and connectwith other partners locally and
globally and access exclusiveresources and opportunities.
Whether you're looking for newcustomers, new markets, or new
solutions, IAMCP can help youachieve your goals. We'll hear
their stories, learn from theirexperiences, and discover the
(00:50):
best practices and strategiesthey use to increase customer
loyalty and grow revenues.Whether you're a new partner or
an established one, you'll findvaluable insights and
inspiration in this podcast. Wehope you enjoy this podcast and
find it useful and inspiring.
If you do, please subscribe,rate, and review us on your
favorite podcast platform. Anddon't forget to follow us on
(01:11):
social media and connect with uson our website,
www.profilesinpartnership.com,where you can find more
information, resources, andopportunities to partner for
success. Thank you forlistening, and now let's get
started with today's episode.Welcome back to part 2 of our
podcast series featuring anin-depth conversation with Ian
(01:32):
Pavlik and Tim Mueller. In theprevious episode, we explore the
intricacies of selling abusiness and the meticulous
preparations required to ensurea successful transition.
Our guests shared invaluableinsights on the strategies and
challenges that many businessowners face. In this episode, we
continue our discussion delvingdeeper into the dynamics of
(01:53):
cultural and technologicalintegrations post sale and the
critical factors that contributeto a seamless transition. Ian
provides a candid look at hispersonal journey from navigating
the complexities of selling hisbusiness to establishing the
public foundation, which focuseson youth education and food
security. Meanwhile, we alsohave Tim who sheds light on the
(02:14):
importance of readiness andstrategic planning in the m and
a landscape. This episodepromises to be packed with
practical advice and thoughtprovoking reflections for anyone
considering the sale of theirbusiness or looking to
understand the multifacetedworld of mergers and
acquisitions.
So without further ado, let'sdive back into our enlightening
conversation.
(02:37):
What would be your advice, toyou know, let's say you have,
you know, owner operator rightnow, and let's say their
identity is tied to thebusiness. They're interacting
with, you know, at least the,you know, their their top
customers that make I'm justmaking up a number here, but
let's say, you know, that's 60,70% of their revenue. But
(02:57):
they're coming at a point where,like, you know what? I do wanna
consider I do wanna look at, youknow, a future exit.
What would be a few things thatyou would say, "Hey. You need to
do right now"? Right, to startgetting you on that path like
you just described? Like, somesome instant, you know, instant
action items.
Ian Pavlik (03:15):
One that I worked on and that I recommend is was
recommended to me. Go away for aday, turn off all your phone and
computer midweek, and do not bemake yourself inaccessible for
24 hours, and then find out whatbroke. When you come back into
the office, all hell broke looseand blah blah blah. It was a
(03:36):
problem because you wereinaccessible for 24 hours. Go
fix those things.
Then after whatever period oftime, go away for 2 days and
turn off the inaccessible.Figure out what broke. Get to
the point where you can be awayfor at least 7 for an entire
week inaccessible. To the pointwhere, say, 2 or 3 weeks through
a cycle of some point, get that.So think of it that way.
(03:57):
Don't just try to go away for a2 week vacation and turn it off.
Do it in segments knowing that Iknow there was one point back in
2018, I, my wife and I went andclimbed Kilimanjaro. And I knew
I was gonna be inaccessible for10 days at at the maximum. And
so that was kind of a a goal forme. And for about a year and a
(04:18):
half before that, I workedthrough that schedule.
So that that's I think or canreally reveal where you are
inter, you know, integral to theoperation of your business.
Anthony Carrano (04:28):
That's excellent advice. Now you've you
know, you mentioned something.This this process was 10 years
in the making. I know earlier wewere talking about just the
conversations you are having,you know, you know, with your
partners and then doing, youknow, the the you know, between
that, you know, getting itsocialized internally, making
yourself inaccessible, a focuson the reoccurring, you know,
(04:50):
revenue to increase the, youknow, the EBITDA multiple. So a
lot a lot of thought and detail,you know, was into this process.
I applaud you for that. Wasthere any thought given to,
like, what were maybe the, thekey criteria you were looking
for in a potential buyer? Wasthere any conversations about
that? If so, maybe, you know,share this a little bit of, you
(05:11):
know, what those conversationswere and why.
Ian Pavlik (05:14):
So that was probably one of the biggest barriers to
why I didn't dip my toe intounderstanding the M&A market
earlier, because I felt like wewere a Frankenstein. You know,
we were kinda like threebusinesses in one that had some
overlap, but there was some someclear distinction between three
different business units. And Ithought, why would anybody want
(05:35):
us? How I don't see anyone elsethere that fits like us. And it
wasn't until I started talkingto some m and a firms and then
talking with Tim, and that wasreally what got us to work with
Tim, was how, I guess, how muchhe held our hand and educated
us.
And his advice was you don'tknow until you start talking. I
don't know what the potentialbuyers might want. And, sure,
maybe it's a split. Maybesomebody might want this 3rd and
(05:58):
the other two might want theother two-thirds or or whatnot.
So it was there was a lot ofuncertainty. I put up my own
barriers for why I thoughtpeople did not want to buy us as
opposed to thinking about us whythey might wanna buy. And and
and as we went through thedating process with a number of,
potential, buyers, it becameclear. Some were, like, don't
(06:18):
need that part. I'm justinterested in that element. Or
there were some that wereinterested in the whole part or
didn't understand how we were orjust wanted to replace my seat
and take over versus, like, Timtalked accretive value with, you
know, merging in.
So I was a bit of a barrierthere because I didn't
appreciate or understand whatthe options were. I wish I'd
(06:41):
educated myself a little bitsooner, but that was really what
the I learned from from Tim andhis team.
Tim Mueller (06:46):
Yeah. One thing I might add with that is that, you
know, to better understand whatthe seller's long term vision is
changes who we bring to them forconversations. So Ian clearly
said, I think it's time for usto move on from the business.
Not, you know, the second we wesell, but at some point in the
(07:09):
near future, we'd like to moveon. So at that point, that opens
up for us to bring in what wecall search funds, where there's
someone who just wants to buy abusiness and run it, which we
brought a couple of those guysto talk with them. It lets the
strategics, you know, a muchbigger, you know, pavliks.com
comes in, like Sylogist, andbuys them.
(07:30):
Or you have a private equitythat may want to roll
pavliks.com into an existingportfolio company. Whereas a CEO
that says, "Hey. I'm looking fora growth partner, and I wanna
stay on and run the business andgrow with them." That starts to
narrow the field a little bitmore so to the private equity
firms that say, listen. We wantthe talent to stay in place for
(07:53):
maybe ever or at least for along time versus, let's say, a
search fund that is an executivethat wants to kinda parachute in
and run the business.
And so that made our job a loteasier once we started talking
strategically with Ian and andhis family members. And and I
will put throw a shout out tothem is that family businesses
(08:14):
are not easy. But I saw, such acollaboration with the the
Pavliks, you know, in in howthey viewed the legacy of their
business as a family businessand the roles that each of them
played and the trust that theyhad in each other that the
decision was made for thebetterment of the good of
everybody. And, man, that was sorefreshing for us to see because
(08:38):
you go in a little bit shy, notknowing that's family dynamics
because they could be toxic. Butthis was just a wonderful
example of doing the right thingfor the family.
And now, you know, as we'll talka little bit more in this
podcast about the foundationthat Ian is running, you know,
they did well, and now they'redoing good. And and that's a
(08:59):
beautiful thing to see as well.
Anthony Carrano (09:02):
And I appreciate you sharing that,
Tim. And before we move to,like, the next segment, I guess
the the the question, Ian, is soas you you went through this
journey, you mentioned how, youknow, you were setting up some
of your road there wasroadblocks that you were setting
up. How did you finally get to aplace to to settle up on, yeah,
this is the right, you know,buyer for my business?
Ian Pavlik (09:25):
For us, we felt that keeping the business together as
a whole would make our staffhappy, would make our customers
happiest. So when we found abuyer in Syllogus that was
interested in the company as awhole, that was, that made us
comfortable. We saw a strongleadership team there, and that
(09:50):
was important. In hindsight, Iwish I had interviewed more of
their, leadership team. Not thatthere was anything wrong in the
end, but I didn't do as much asmaybe I should have as the as
the seller.
You know, you think of it's thebuyer who's asking most of the
questions, and I did, and theywere very open and transparent.
But it was the, that wassomething that we felt very
(10:13):
comfortable in handing the keysover to them. It was our plan
and our criteria all along wasnone of the the Pavliks, the the
owners wanted to stay alongaround for longer than 12 months
or whatever is needed to makesure there's a smooth and happy
transition for our staff and forour customers. That was
important for us, but we weren'tinterested in in hanging around
(10:35):
in a some sort of ongoingmanagement capacity. So when we
saw there was a strongmanagement team and everybody
was aligned that way and theyhad gone through some, some
acquisitions before.
So that was good. This wasn'ttheir first rodeo, and they had
a a transition, plan already inplace. Those were, signals for
(10:55):
us that this was this work aswell as the offer being very
good.
Anthony Carrano (11:00):
That helps.
Rudy Rodriguez (11:04):
Yeah. So one of the things that, you know, I
alluded to in the due diligenceprocess is cultural and
technology integration. Thoseare challenges that we all go
through. You know, I've gonethrough it in in bringing in
people, and and there'sdifferent philosophies that
people have. And I won't sharemy horror stories, about what
(11:25):
you do, doing that.
But what are what do you thinkare the most successful factors
for a business from both sides,from both the the seller and the
buyer side for successfulintegration into into the new
business?
Tim Mueller (11:38):
Rudy, that's an interesting question because,
you know, I'm sitting here inthe business of M&A knowing
that almost 60% of all deals arenot deemed successful in the
rearview mirror. 60%. And so,and and 100% of those are really
dealt to the fact that therewasn't enough due diligence in,
(12:00):
let's say, the cultural aspectof integrating the teams. You
know, the the great thing aboutour Microsoft sellers is that
they care about the businesses.They built it, and they've had
sleepless nights.
And and they've really put a lotof blood, sweat, and tears into
it, so they want a soft landingfor their their employees. They
(12:21):
want to be able to continue toservice their customers so that
their legacy stays strong, andthey also obviously want to
have, you know, the economics ofit of an exit be strong for them
and their own family. But, Ireally can't prepare our clients
much for the culturalintegration because they are who
(12:41):
they are. And all I ask them isto be transparent about what
they do and how they treat theiremployees. Don't change anything
in the months or weeks leadinginto the deal because, you know,
our buyers are professionals,and they can see whether or not
you've now put on your best suitand tie metaphorically for the
deal.
So just run the business asthough it's not gonna be sold.
(13:04):
Talked about your culture andand your employees, with total
transparency. And then it reallyis up to the buyer to get in
deeply and to compare the waythat their ecosystems work and
their culture. You know, you'vegot to ask the tough questions
that if the seller has anunlimited vacation policy, but
(13:26):
the buyer has a very strict, youearn your vacation by your
service hours and years, thenthose two might not match really
well if you're now going tochange it. And if you don't
change it, the buying companysays, how come they get
unlimited vacation and we don't?
Or, you know, if if the sellerusually has a huge benefit
(13:46):
awards gathering every year andthey take their team to a a
city, you know, destination,Vegas for a weekend or whatever
it might be, but the buyer neverdoes it. And now that's gone
from the the the the combinedbusinesses. So those are
probably more, surface levelthings, but there are things
that are idiosyncratic or thenuances of blending cultures
(14:09):
together. Cross border deals arehard because those inherently do
have cultural differences in theway that employees work, even
down to now hybrid work fromhome versus work in the office.
So your question has got a lotof different tentacles to it,
you know, Rudy, and it's reallyimportant on the cultural side
(14:31):
that the buyer be exhaustive intheir ability to understand who
they're buying.
And and I would tell you, mostcases, the buyer doesn't even
know what they bought untilthey're 6 or 8 months into it,
both from a cultural andenvironment, but also even
digging into the books and theircustomers. They really don't
know what they've bought untilwell into the integration. And
(14:53):
then I think on the technologyside, there are a lot of buyers
that say, you know, we we havenot been as technologically fat
forward as the seller is, andthey may want to adopt the way
that the seller, usestechnology, whether it's through
their billing process orprocesses that they they use
(15:13):
within servicing their customersor in Ian's case, building this
beautiful platform that it wasscalable. And so, we again look
at those buyers to do anexhaustive search on how well
the technology can scale, and ifin fact it is right for their
current customer base to pick upand cross pollinate.
Rudy Rodriguez (15:33):
I really appreciate the way you described
that, Tim, because that that issuch a real challenge when when
you're purchasing a company, andthe culture is it just has to
change at some point. And and, II could like I said, I I
remember some members of some ofmy team saying, just go in and
fire everybody and start allover again, which is not that
(15:56):
was never my my approach. So,Ian, I've got a question for you
because this leads into sinceyou're you've sold your company,
How did you manage thetransition of of the business to
Sylogist? I'm sure you had somechallenges. And then with staff
members and things like that,again, the cultural, the the
business processes, all thechallenges that are and
(16:17):
surprises that can come up.
Can you share a little bit aboutwhat you ran into?
Ian Pavlik (16:21):
Yeah. For sure. I'll be honest. I didn't think enough
about the day after the dealclosed leading up to it. I was
focused on that.
And then when it happened, I waslike, oh, yeah. So now I gotta
keep running this business, butit from a in a different
perspective, in a different way.And so that that was hard. It
was a lot of one-on-oneconversations with staff.
(16:45):
Initially key staff and thensort of sort of spread out from
there.
You know, making sure everybodyunderstood that, it's business
as usual, but is it really? Itis, but everybody's a little bit
anxious. Change is hard nomatter what. And so so my my my
focus, my responsibility wasaround keeping everybody calm,
(17:08):
being honest, because, yes,there were some check you know,
suddenly invoices went outdifferently and pay happened.
And to your point about,vacation, vacation was
calculated differently.
Still the same way, but in aslightly different manner, and
that causes a lot of confusionand and angst. So so it was just
kinda trying to smooth thingsout. I was challenged with now
(17:31):
suddenly not being the bossanymore, which was funny for me.
So for a few months, I had stillresponsibility for the
operations. But when we wantedto hire a head count, I had to
get approval, which was like,really?
Okay. How do I go about doingthat? So, you know, that was a
bit of a a a hurdle for me. Andthen very quickly, I became not
(17:52):
responsible for the P&L. Andthat responsibility disseminated
away from me into differentdepartments, and numbers weren't
my thing.
Whereas I always I live by thenumbers. I love to look at them
and analyze them. I found thatsort of an interesting difficult
change at first, and then itactually after a little while,
it became a bit low. I couldbreathe a little bit because,
(18:16):
sure, I had to make sure therevenue still happened, but, you
know, all up responsibilitystarted to disseminate. That was
a little bit difficult tohandle.
But then over so I had had a 12month, contract to stay on. And
really, the last 3 months, I wasthere just in case somebody had
(18:38):
a question. So it was a little,honestly, awkward for me because
I felt like I needed to to be ofvalue, but I guess my value was
that was the backstop forhistorical context, the
knowledge on customers, how weoperated, what was going on.
But, it was, it was aninteresting time for me.
Rudy Rodriguez (18:58):
So you brought up the that one word, customers.
How did it impact yourcustomers? Any surprises there?
Ian Pavlik (19:04):
I feel like we handled that very well. I can't
think of any customer thatbolted or got significantly
upset. In some more action, ourbigger customers were kinda
happy because, we were you know,we had grown from a 20, 30 to 40
to 50 person operation. And, youknow, while we're 50 is big, for
(19:27):
some of our really bigcustomers, we're quite small. So
they felt a little bit morecomfortable with, oh, now you're
growing when we're dealing withsome of the the the our really
big.
We had a lot of pro sportcustomers and some, big
government agencies and stuff.So I think in some ways, it
helped there. Our much smallerlocal customers felt concerned.
Oh, you're moving head officesaway. You know, are you
(19:49):
changing?
What's going on? But again,conversations with them to say
no, nothing is changing, andnothing did really change in
that regard. A little bit oftime, 2 or 3 or 4 months, and
when they called, they still gota live person on the phone like
they did before, then sort ofthe customer's anxiety waned. So
I think we we focused on thatbecause also my name was
(20:12):
attached to the company, and Iknew the customers. A good
number of local customers knewme personally in the business
world around here, and I didn'twant to just leave them high and
dry.
So there is a, you know, apersonal investment in it as
well. So I think overall, it wasa work. It was a conscious
effort, but it worked well inthe end.
Rudy Rodriguez (20:34):
That's great to hear.
Anthony Carrano (20:35):
This this has been great. I've really enjoyed
this conversation. I feel like Ican ask you guys probably about
another dozen or 2 dozenquestions. Don't worry. We've
only got 3.
And so but it this is this hasbeen I I just want this has been
really rich, so I reallyappreciate, the conversation so
(20:55):
far. So let me ask you this,Ian. I know as we're, you know,
you know, as you've gone throughand shared your journey, you
know, about with selling, youknow, your business and, you
know, that process. Tell us alittle bit about, you know, what
it was like and, you know, towork with IT Exchange Net on
your transaction.
Ian Pavlik (21:14):
They were wonderful. You know, when we were at the
point where we thought, I wannaI wanna find out how do I sell
my business, what do how do I gothrough, who do I call. I had
actually met with Tim face toface, I wanna say, 5 or 6 years
earlier at a at a Microsoftconference. I think it might
have been to Vegas. And Iremember that we were sitting in
(21:35):
a little sort of restaurantbefore it opened at a table, and
and I was trying to fish.
Like, I had no idea how much wewere worth and what's going on.
And Tim was frank and honest. Hesaid, you're not there yet. You
know, your revenue's too low.It's it's you're not mature
enough yet.
In hindsight, he was absolutelyright. So when the time came
around 5, 4 or 5 years later, Ihad seen the name around, and I
(21:56):
talked with a couple differentfirms. And then when I talked
with Tim, he spent, like, almostan hour on the phone with me,
explained the process, how it'sthis this is the first time I
was doing it. I know some peoplehave gone through this. I'm
like, you know, Rudy, he'd doneit, rinse and repeat, and gone
through.
But for me, it was the firsttime and maybe the only time
that I'll do it. So it wasimportant. And Tim really held
(22:18):
my hand and then introduced meto his team that was able to
take me through the marketingprocess and then the speed I
call it the speed dating round,I guess, with all the potential
buyers and then into the duediligence and then the deal
closed. And that was veryhelpful. And then he also
introduced me to a lawyer thathe had done some other
transactions with, and that wasreally helpful because now I had
(22:41):
somebody that I knew Timtrusted.
So therefore, by association, Ishould. And, and they were very
helpful. They've done similartransactions before and, in the
Microsoft space as well. So Iwasn't explaining to sort of my
traditional lawyers that I usein the rest of the business, who
we are, what we did, what wasthe Microsoft partner ecosystem
(23:03):
like, you know, how didrecurring revenue, what was
interesting to, like, all thatstuff. The lawyer that Tim
recommended, you know, kneweverything and came in and and
really helped us.
So I know I'm giving Tim a lotof praise, but he deserves it.
Him and his team were wereexcellent and really, really
made this process as as easy asit as I think as it should be.
Tim Mueller (23:24):
Ian, thank thank you for that. Let me just
underscore the importance ofthat lawyer who understands
those mid market technologydeals as part of the equation.
Probably the single mostimportant person, once you get
to the LOI stage, is thetransaction attorney. Because he
or she understands idiosyncraticlanguage within purchase
(23:46):
agreements and literally cansave the seller 1,000,000 of
dollars of headaches, down theroad if they make sure they
catch some of the gotchas thatare in the purchase agreement
and then can horse trade alittle bit in order to make it
seller friendly. And we have awhole host of folks that we
trust that are not overlyexpensive because these are
(24:07):
smaller mid market deals.
They're not $500,000,000 deals.And, but can't say enough about
how important they are to theprocess.
Rudy Rodriguez (24:17):
Well, Tim, I've got one final question for you.
You know, I'm gonna circle backto the beginning where you were
talking about the the MicrosoftAI partner program now. And, you
know, the whole evolution takingplace in in our industry, there
there's a lot of changes takingplace, and not every partner is
(24:38):
is adapting quickly, although Ithink people are learning more
and more every single month. Andand we certainly are trying to
help them through the IAMCP. Sowhat trends are you seeing or,
you know, happening in themarketplace now that are going
to affect the the Microsoftpartner M&A space landscape
in the next few years?
(24:59):
No. We know technology is gonnaaffect it. What other trends are
you seeing? Because there's manyfacets to to the IT industry.
What do you see how each one isgetting impacted?
Tim Mueller (25:11):
Yeah. I'll start by saying that, you know, the
conversation that he and I had,and I think it was at Inspire in
Vegas, we 5 years before youwent to market, is something
that I have with a lot of peoplebecause I will tell you plainly
there are a lot of people in inmy shoes that all they wanna do
is get the company to market.And we have found that if you
(25:33):
rush it to market, nobody'ssatisfied 6, 7, 8 months later,
and and everybody has justwasted their time as opposed to
playing more of the long ballwhere you say, you know what?
Here's a road map of things youneed to do. Let's talk once a
year or whatever it might be,and 3, 4 years down the road you
like might be mature.
There are things that companiesare not, necessarily embracing
(25:57):
quickly enough right now, whichwill diminish their value, if
they don't get on board. So someof that may be in their hiring
practices where, you know, 6, 7years ago, place mattered as far
as where employees were. And soif you were based in Boston, you
had a very rich, you know, groupof people coming out of the
(26:19):
universities to to recruit tophysically come in your office
and work in Boston. And some ofthe other major markets, you
know, Austin, Texas has awonderful piece, so does
Columbus, Ohio with Ohio State.But other cities where companies
were based were maybe a littlebit, at a disadvantage with
their employees.
Now the world is open. And withremote working, you have the
(26:43):
ability to attract the besttalent. And so buyers are
saying, you know what? Whyaren't you doing that? Why are
you keeping your universe sosmall and only bringing people
in that necessarily might be ina 30 mile radius of your
business?
That's 1. Number 2, I think thismight be number 2, 3, 4 is your
(27:03):
adaption to technology oradoption to technology and where
you stand in your yourphilosophy on this one. You
know, we still have, you know,Great Plains type of
integrators, right, that, youknow, have not evolved quickly
enough because they had followon work, and they felt they can
keep moving and not being toointimidated or being intimidated
(27:25):
by the Microsoft Dynamics Suiteand everything that has to offer
there. You know, so it's thatinability to evolve with the
Microsoft, you know, offeringsthat are out there. But by the
same token, if you're only ifyou're 5 miles wide and an inch
thick in your offerings, thatdoesn't help you either because
(27:47):
you're now competing againstsome of the large players that
have a lot of expertise in a lotof different areas within
Dynamics.
So I think you need to chooseyour lane and be the best at it.
And if you find that you're notbeing competitive in the market
with only offering, let's say,Teams or Azure, and you're
losing a lot of deals withpeople that say, listen. I want
(28:09):
kind of one one hand to shake,one throat to choke, and I'd
rather have a much bigger firmthan the writings on the wall
that it may be time to startlooking to sell your business.
And and I will give one one morenote to the to the sellers is
that, you know, what Ian didreally well was he wasn't timing
the market. He was making surethat they were at the right
(28:31):
place and they were in the rightmindset to sell.
Because if all you do is timethe market, then usually bad
results happen. And markets canswing pretty quickly depending
on geopolitical issues, themarket. You know, we're seeing,
you know, the Fed likely goingto bring interest rates down,
but, you know, people didn'ttime that 5 months ago when they
(28:52):
went to market. So it's a matterof making sure that your company
is ready from all there. And andso I'll put a quick plug in that
we do have something calledReady, Set, Go, and it's a free
readiness assessment for thosecontemplating a sale, but just
don't know if they have thereadiness.
And we'll grade you on financialpreparedness, your operations,
(29:13):
your vision, your marketing, andand make sure that, you know,
what you bring to market issomething that is very embraced
by the buyers.
Rudy Rodriguez (29:21):
That's a great answer. It's a great answer. I
really appreciate it, Tim.
Anthony Carrano (29:26):
Yeah. That that was great. And, Tim, I was just
gonna ask you. Is there a URLsomebody can go to to, access
that Ready, Set, Go?
Tim Mueller (29:35):
Yeah. It's it's on our home page, which we can, put
put in perhaps the the podcast,but it's, itexchangenet.com.
And, and we'll we'll get back toyou the same day, obviously, and
and and schedule a time to dothis concursory, you know,
readiness program.
Anthony Carrano (29:55):
Okay. Yeah. And we'll definitely have that in
the show notes, for sure.Alright. Well, Ian, so we've
we've talked, you know, youshared, you know, just about how
you've you know, you grew yourbusiness.
You navigated the process ofselling it. Briefly touched on a
little bit about MountKilimanjaro, hiking that. We'll
maybe have to revisit that in afollow-up maybe. Well, tell us
(30:17):
though, what are you doingtoday?
Ian Pavlik (30:20):
Well, I find I'm almost as busy as I was when I
was running the business. Butthe great thing is I'm doing the
things that I'm passionateabout. So, as Tim alluded to,
and I love that saying, when youdo, well, you do good. And my
wife and I were passionate aboutabout a couple core things
focused around youth, and thatwas education and food security.
(30:42):
So we very quickly we startedThe Pavlik Foundation, a
charity, and we are focused onproviding educational
opportunities to youth andhelping the youth with food
security.
And a program that we actuallyjust launched this fall, and
we're piloting it in a coupleschools is called Kids Pantry.
(31:02):
So we identified that a lot ofthe schools in our community get
food during the day, likethere's breakfast programs or
snack programs. Families canaccess a food bank type of
service, but usually food banksonly provide about a quarter or
third of food need for a month.And so what we're doing now is
we're actually identifying kidsin the school that are food
insecure and providing backpacksof food for them that we drop
(31:25):
off on a Friday. So the kidscome down to the front office,
pick it up, take it home, andnow the kid that child has food,
healthy food for the weekend sothey can nourish their body so
that when they come to school,they're ready to learn and and
hopefully thrive in school.
And, you know, a child can't besuccessful in their life if they
(31:45):
don't feel good about themselvesand they're physically healthy
and can learn. And we're notfocused so much on trying to
give things like scholarships tothe best, brightest, smartest.
Our hope is to take those kidsthat are maybe have challenges
that aren't their fault, that isbecause they're a matter of
circumstances, and give them theopportunity to to hopefully get
(32:07):
a a step ahead and and breakthat cycle of poverty and, give
them a chance of success inlife. So it's that's what's
keeping us busy these days.We're pretty excited about it.
Anthony Carrano (32:17):
That's awesome. And where, where can people go
to find out more about thisfoundation?
Ian Pavlik (32:24):
pavilkfoundation.com That's our website, and, you can
contact us on there and learnmore about our Kids' Pantry
program as well.
Anthony Carrano (32:31):
And and people, they can donate, I assume.
Ian Pavlik (32:34):
Absolutely. So, yeah, there's a donation form on
our website as well. And, andwhat's neat is now we now have
the ability for people tosupport a child. So if you can
support a child, it costs about20 to $25 a weekend to provide
healthy nourish full meals theentire weekend for the kid. And,
yeah, that's something that wejust launched about 2 weeks ago.
Anthony Carrano (32:56):
Oh, that's awesome. I really appreciate you
sharing, and we'll also havethat website in the in the show
notes as well. Well, gentlemen,once again, thank you. This has
been fantastic.
I've I mean, this just theinformation that you guys shared
and the time that you gave hasjust been so rich and rewarding.
So definitely wanna thank bothof you. We are we will have
(33:17):
both, you know, websites in theshow notes. So aside from, you
know, the websites, is there isthere another place where
listeners can go to connect withyou?
Tim Mueller (33:27):
Well, we we have a a Vimeo channel, as well that
has a lot of videos of, kind ofhow-to's and and, 2 minute takes
for prospective sellers. Andthen we have a lot of
information that we post in thein the form of articles on
LinkedIn. So, Anthony, if we cangive you those as well, that
would be wonderful.
Ian Pavlik (33:46):
Excellent. Anybody I have an open offer for anybody
who wants a cough cup of coffeebecause I've always had a pod on
here. If you're just drivingthrough Barrie, Ontario, Canada,
stop by my place and you canhave a coffee. I'd love to sit
on the front deck.
Rudy Rodriguez (34:00):
On my way on my way, Ian.
Anthony Carrano (34:05):
Once again, thank you so much. And,
gentlemen, enjoy the rest ofyour day.
Ian Pavlik (34:09):
Thank you very much, Anthony and Rudy.
Tim Mueller (34:11):
Thanks, Anthony. Thanks, Rudy.
Rudy Rodriguez (34:12):
Thank you, gentlemen.
Anthony Carrano (34:15):
Wow. That was a great episode. I feel like I
just sat through a Master Classon M&A , you know, for
Microsoft partners and in thetech ecosystem. I learned so
much, and I really appreciate,you know, once again, you know,
Tim and Ian for for spendingthat time with us. I know I took
away a lot of, you know, mainpoints.
(34:37):
Rudy, how about yourself?
Rudy Rodriguez (34:39):
You're absolutely right. That was a
very informative it was a MasterClass on mergers and
acquisitions. And and one of thethings that I really appreciated
was, one of the things that Timtalked about was the process
that he likes to take sellersthrough to really prepare their
companies and for all the itemsthat they're going to have to
(35:00):
deal with in selling theircompany, to make sure that the
company is mature enough to besold, that their systems and all
their accounting information isready to present. Because I know
that's one of the things I wentthrough when I sold my first
company was the tremendousamount of work that's required
when you're selling. And do youhave a good reason?
(35:23):
And are you mature enough tosell to really maximize the
proceeds that you're gonna getfrom the sale? And both Tim and
Ian shared quite a bit ofinformation on what how much
effort that's going to take. Andsometimes it just takes time to
be ready. And I would cautionanybody selling their company,
(35:43):
go through the process and beready to sell because that's
gonna be very, very important toyou whether you stay with your
the successor organization ornot.
Anthony Carrano (35:53):
Yeah. And on that note, I mean, just to
piggyback on that when and whenyou're talking about this from
at the company level and justhow I you know, as if I recall,
like, Ian shared about for themthis process, you know,
personally as as the the mainprincipal was, I think he said
something like 10 years in themaking, you know, for him and
and other members of the family.And, you know, specifically,
(36:17):
when he just talked about, justthe importance that he, you
know, as the main principal, youknow, become less significant by
design, so that, you know, thebuyer then it's not, you know,
contingent upon him, you know,staying put in the company, for
it to be successful. And so thatthat really resonated with me.
Rudy Rodriguez (36:38):
And, you know, another thing that that comes up
and have again, having gonethrough having sold a company is
things you're not alwaysprepared for, especially when
you're staying behind to do thetransition or if you accept a
new role in the company tomaximize your earn out. So are
the and those things that you'regonna deal with are both
cultural and technologicalchanges in the post sale
(37:02):
process. Because, 1, while youmay have been the most important
person in your company inbuilding and and selling that
organization, Now you're part ofa different organization, so the
culture can change on you. Andhow is that going to impact the
employees that stay behind aswell as the technology changes
that also come to play? Becausewhen you sell your company, is
(37:26):
that company identical to yoursor are you a key cog in the in
their path forward in sellingthat company?
And so that's part of theprocess that you as as a seller
go through as you help integrateyour organization into the new
organization and help themassimilate the new culture and
(37:49):
the new technology, becausethat's real important to make
your your employees feelcomfortable in that change
because they are an integralpart in the success of the new
company.
Anthony Carrano (38:00):
Yeah. No. Absolutely. And, you know, on
that note, it just you'rehearing you talk. It reminded me
of one of the lines that Timshared, and I I love this quote.
I'm gonna use this quote,because it can apply, you know,
even outside of just M&A.But when he said, you know,
expectations not articulated isdisappointment guaranteed. And I
(38:22):
just, you know, whether I'm in,you know, communication with,
you know, vendors, partners,whoever, you know, just the
importance of setting, you know,the right expectations. And, you
know, in his in this particularcontext, just the expectations,
especially around as you'recoming around just going
through, like, the duediligence. And, you know, you
(38:44):
know, folks listening will haveto, you know, go back through,
you know, the podcast and andhear it.
But as he touched on some of thekey areas of of that doing that
due diligence to set the properexpectation just around, you
know, number 1, risk,reoccurring revenue, strong
margins on revenue, but thenalso, like, you know, does your
(39:05):
technology, you know, scale?And, you know, as he touched on,
those were, like, the kinda likethe four main ones. But, I just
I just found that to befascinating and just the
importance of, you know, keepingthat, you know, that in mind,
set the right expectations.You're doing the due diligence.
But the big thing too is, youknow, as we're as our listeners
have, you know, been, you know,listening in on this particular
(39:26):
episode about, hey.
I'm interested in selling mybusiness. The the point about,
look, you're you're buildingyour business. Keep the long
term in mind. You know, don't dojust do the things to take the
shortcuts to try and spike thenumbers to try and get a sale.
But, you know, do it right, and,you know, good things will kinda
happen.
I think that's probably one ofthe best things somebody can do
(39:49):
in setting that rightexpectation as, they look to
eventually wanna do an exit.
Rudy Rodriguez (39:53):
Yeah. So, you know, we had some great, great
advice from both of ourpresenters today. That was
really a wonderful episode. Soin closing, I wanna thank
everyone who's listened to thispodcast for joining us on this
episode of IAMCP Profiles inPartnership powered by Dunamis
Marketing. We hope you enjoyedthis podcast and we'll and we
(40:14):
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If if you did, please subscribe,rate, and review us on your
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opportunities to partner forsuccess. One of the best ways to
(40:37):
partner for success is to joinIAMCP, a community of Microsoft
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and access exclusive resourcesand opportunities. Whether
you're looking for newcustomers, new markets, or new
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(41:01):
To learn more, visit the IAMCPwebsite, iamcp.org.
Welcome to the IAMCP Profiles and Partnership,
the podcast that showcases howMicrosoft partners and IAMCP
members boost their business bycollaborating with other members
and partners. I'm your co-host,Anthony Carrano. And in each
episode, I'll be talking to someof the most innovative and
successful partners in theMicrosoft ecosystem. The
International Association ofMicrosoft Channel Partners,
(00:27):
otherwise known as IAMCP, is acommunity of Microsoft partners
who help each other grow andthrive.
Members can find and connectwith other partners locally and
globally and access exclusiveresources and opportunities.
Whether you're looking for newcustomers, new markets, or new
solutions, IAMCP can help youachieve your goals. We'll hear
their stories, learn from theirexperiences, and discover the
(00:50):
best practices and strategiesthey use to increase customer
loyalty and grow revenues.Whether you're a new partner or
an established one, you'll findvaluable insights and
inspiration in this podcast. Wehope you enjoy this podcast and
find it useful and inspiring.
If you do, please subscribe,rate, and review us on your
favorite podcast platform. Anddon't forget to follow us on
(01:11):
social media and connect with uson our website,
www.profilesinpartnership.com,where you can find more
information, resources, andopportunities to partner for
success. Thank you forlistening, and now let's get
started with today's episode.Welcome back to part 2 of our
podcast series featuring anin-depth conversation with Ian
(01:32):
Pavlik and Tim Mueller. In theprevious episode, we explore the
intricacies of selling abusiness and the meticulous
preparations required to ensurea successful transition.
Our guests shared invaluableinsights on the strategies and
challenges that many businessowners face. In this episode, we
continue our discussion delvingdeeper into the dynamics of
(01:53):
cultural and technologicalintegrations post sale and the
critical factors that contributeto a seamless transition. Ian
provides a candid look at hispersonal journey from navigating
the complexities of selling hisbusiness to establishing the
public foundation, which focuseson youth education and food
security. Meanwhile, we alsohave Tim who sheds light on the
(02:14):
importance of readiness andstrategic planning in the m and
a landscape. This episodepromises to be packed with
practical advice and thoughtprovoking reflections for anyone
considering the sale of theirbusiness or looking to
understand the multifacetedworld of mergers and
acquisitions.
So without further ado, let'sdive back into our enlightening
conversation.
(02:37):
What would be your advice, toyou know, let's say you have,
you know, owner operator rightnow, and let's say their
identity is tied to thebusiness. They're interacting
with, you know, at least the,you know, their their top
customers that make I'm justmaking up a number here, but
let's say, you know, that's 60,70% of their revenue. But
(02:57):
they're coming at a point where,like, you know what? I do wanna
consider I do wanna look at, youknow, a future exit.
What would be a few things thatyou would say, "Hey. You need to
do right now"? Right, to startgetting you on that path like
you just described? Like, somesome instant, you know, instant
action items.
Ian Pavlik (03:15):
One that I worked on and that I recommend is was
recommended to me. Go away for aday, turn off all your phone and
computer midweek, and do not bemake yourself inaccessible for
24 hours, and then find out whatbroke. When you come back into
the office, all hell broke looseand blah blah blah. It was a
(03:36):
problem because you wereinaccessible for 24 hours. Go
fix those things.
Then after whatever period oftime, go away for 2 days and
turn off the inaccessible.Figure out what broke. Get to
the point where you can be awayfor at least 7 for an entire
week inaccessible. To the pointwhere, say, 2 or 3 weeks through
a cycle of some point, get that.So think of it that way.
(03:57):
Don't just try to go away for a2 week vacation and turn it off.
Do it in segments knowing that Iknow there was one point back in
2018, I, my wife and I went andclimbed Kilimanjaro. And I knew
I was gonna be inaccessible for10 days at at the maximum. And
so that was kind of a a goal forme. And for about a year and a
(04:18):
half before that, I workedthrough that schedule.
So that that's I think or canreally reveal where you are
inter, you know, integral to theoperation of your business.
Anthony Carrano (04:28):
That's excellent advice. Now you've you
know, you mentioned something.This this process was 10 years
in the making. I know earlier wewere talking about just the
conversations you are having,you know, you know, with your
partners and then doing, youknow, the the you know, between
that, you know, getting itsocialized internally, making
yourself inaccessible, a focuson the reoccurring, you know,
(04:50):
revenue to increase the, youknow, the EBITDA multiple. So a
lot a lot of thought and detail,you know, was into this process.
I applaud you for that. Wasthere any thought given to,
like, what were maybe the, thekey criteria you were looking
for in a potential buyer? Wasthere any conversations about
that? If so, maybe, you know,share this a little bit of, you
(05:11):
know, what those conversationswere and why.
Ian Pavlik (05:14):
So that was probably one of the biggest barriers to
why I didn't dip my toe intounderstanding the M&A market
earlier, because I felt like wewere a Frankenstein. You know,
we were kinda like threebusinesses in one that had some
overlap, but there was some someclear distinction between three
different business units. And Ithought, why would anybody want
(05:35):
us? How I don't see anyone elsethere that fits like us. And it
wasn't until I started talkingto some m and a firms and then
talking with Tim, and that wasreally what got us to work with
Tim, was how, I guess, how muchhe held our hand and educated
us.
And his advice was you don'tknow until you start talking. I
don't know what the potentialbuyers might want. And, sure,
maybe it's a split. Maybesomebody might want this 3rd and
(05:58):
the other two might want theother two-thirds or or whatnot.
So it was there was a lot ofuncertainty. I put up my own
barriers for why I thoughtpeople did not want to buy us as
opposed to thinking about us whythey might wanna buy. And and
and as we went through thedating process with a number of,
potential, buyers, it becameclear. Some were, like, don't
(06:18):
need that part. I'm justinterested in that element. Or
there were some that wereinterested in the whole part or
didn't understand how we were orjust wanted to replace my seat
and take over versus, like, Timtalked accretive value with, you
know, merging in.
So I was a bit of a barrierthere because I didn't
appreciate or understand whatthe options were. I wish I'd
(06:41):
educated myself a little bitsooner, but that was really what
the I learned from from Tim andhis team.
Tim Mueller (06:46):
Yeah. One thing I might add with that is that, you
know, to better understand whatthe seller's long term vision is
changes who we bring to them forconversations. So Ian clearly
said, I think it's time for usto move on from the business.
Not, you know, the second we wesell, but at some point in the
(07:09):
near future, we'd like to moveon. So at that point, that opens
up for us to bring in what wecall search funds, where there's
someone who just wants to buy abusiness and run it, which we
brought a couple of those guysto talk with them. It lets the
strategics, you know, a muchbigger, you know, pavliks.com
comes in, like Sylogist, andbuys them.
(07:30):
Or you have a private equitythat may want to roll
pavliks.com into an existingportfolio company. Whereas a CEO
that says, "Hey. I'm looking fora growth partner, and I wanna
stay on and run the business andgrow with them." That starts to
narrow the field a little bitmore so to the private equity
firms that say, listen. We wantthe talent to stay in place for
(07:53):
maybe ever or at least for along time versus, let's say, a
search fund that is an executivethat wants to kinda parachute in
and run the business.
And so that made our job a loteasier once we started talking
strategically with Ian and andhis family members. And and I
will put throw a shout out tothem is that family businesses
(08:14):
are not easy. But I saw, such acollaboration with the the
Pavliks, you know, in in howthey viewed the legacy of their
business as a family businessand the roles that each of them
played and the trust that theyhad in each other that the
decision was made for thebetterment of the good of
everybody. And, man, that was sorefreshing for us to see because
(08:38):
you go in a little bit shy, notknowing that's family dynamics
because they could be toxic. Butthis was just a wonderful
example of doing the right thingfor the family.
And now, you know, as we'll talka little bit more in this
podcast about the foundationthat Ian is running, you know,
they did well, and now they'redoing good. And and that's a
(08:59):
beautiful thing to see as well.
Anthony Carrano (09:02):
And I appreciate you sharing that,
Tim. And before we move to,like, the next segment, I guess
the the the question, Ian, is soas you you went through this
journey, you mentioned how, youknow, you were setting up some
of your road there wasroadblocks that you were setting
up. How did you finally get to aplace to to settle up on, yeah,
this is the right, you know,buyer for my business?
Ian Pavlik (09:25):
For us, we felt that keeping the business together as
a whole would make our staffhappy, would make our customers
happiest. So when we found abuyer in Syllogus that was
interested in the company as awhole, that was, that made us
comfortable. We saw a strongleadership team there, and that
(09:50):
was important. In hindsight, Iwish I had interviewed more of
their, leadership team. Not thatthere was anything wrong in the
end, but I didn't do as much asmaybe I should have as the as
the seller.
You know, you think of it's thebuyer who's asking most of the
questions, and I did, and theywere very open and transparent.
But it was the, that wassomething that we felt very
(10:13):
comfortable in handing the keysover to them. It was our plan
and our criteria all along wasnone of the the Pavliks, the the
owners wanted to stay alongaround for longer than 12 months
or whatever is needed to makesure there's a smooth and happy
transition for our staff and forour customers. That was
important for us, but we weren'tinterested in in hanging around
(10:35):
in a some sort of ongoingmanagement capacity. So when we
saw there was a strongmanagement team and everybody
was aligned that way and theyhad gone through some, some
acquisitions before.
So that was good. This wasn'ttheir first rodeo, and they had
a a transition, plan already inplace. Those were, signals for
(10:55):
us that this was this work aswell as the offer being very
good.
Anthony Carrano (11:00):
That helps.
Rudy Rodriguez (11:04):
Yeah. So one of the things that, you know, I
alluded to in the due diligenceprocess is cultural and
technology integration. Thoseare challenges that we all go
through. You know, I've gonethrough it in in bringing in
people, and and there'sdifferent philosophies that
people have. And I won't sharemy horror stories, about what
(11:25):
you do, doing that.
But what are what do you thinkare the most successful factors
for a business from both sides,from both the the seller and the
buyer side for successfulintegration into into the new
business?
Tim Mueller (11:38):
Rudy, that's an interesting question because,
you know, I'm sitting here inthe business of M&A knowing
that almost 60% of all deals arenot deemed successful in the
rearview mirror. 60%. And so,and and 100% of those are really
dealt to the fact that therewasn't enough due diligence in,
(12:00):
let's say, the cultural aspectof integrating the teams. You
know, the the great thing aboutour Microsoft sellers is that
they care about the businesses.They built it, and they've had
sleepless nights.
And and they've really put a lotof blood, sweat, and tears into
it, so they want a soft landingfor their their employees. They
(12:21):
want to be able to continue toservice their customers so that
their legacy stays strong, andthey also obviously want to
have, you know, the economics ofit of an exit be strong for them
and their own family. But, Ireally can't prepare our clients
much for the culturalintegration because they are who
(12:41):
they are. And all I ask them isto be transparent about what
they do and how they treat theiremployees. Don't change anything
in the months or weeks leadinginto the deal because, you know,
our buyers are professionals,and they can see whether or not
you've now put on your best suitand tie metaphorically for the
deal.
So just run the business asthough it's not gonna be sold.
(13:04):
Talked about your culture andand your employees, with total
transparency. And then it reallyis up to the buyer to get in
deeply and to compare the waythat their ecosystems work and
their culture. You know, you'vegot to ask the tough questions
that if the seller has anunlimited vacation policy, but
(13:26):
the buyer has a very strict, youearn your vacation by your
service hours and years, thenthose two might not match really
well if you're now going tochange it. And if you don't
change it, the buying companysays, how come they get
unlimited vacation and we don't?
Or, you know, if if the sellerusually has a huge benefit
(13:46):
awards gathering every year andthey take their team to a a
city, you know, destination,Vegas for a weekend or whatever
it might be, but the buyer neverdoes it. And now that's gone
from the the the the combinedbusinesses. So those are
probably more, surface levelthings, but there are things
that are idiosyncratic or thenuances of blending cultures
(14:09):
together. Cross border deals arehard because those inherently do
have cultural differences in theway that employees work, even
down to now hybrid work fromhome versus work in the office.
So your question has got a lotof different tentacles to it,
you know, Rudy, and it's reallyimportant on the cultural side
(14:31):
that the buyer be exhaustive intheir ability to understand who
they're buying.
And and I would tell you, mostcases, the buyer doesn't even
know what they bought untilthey're 6 or 8 months into it,
both from a cultural andenvironment, but also even
digging into the books and theircustomers. They really don't
know what they've bought untilwell into the integration. And
(14:53):
then I think on the technologyside, there are a lot of buyers
that say, you know, we we havenot been as technologically fat
forward as the seller is, andthey may want to adopt the way
that the seller, usestechnology, whether it's through
their billing process orprocesses that they they use
(15:13):
within servicing their customersor in Ian's case, building this
beautiful platform that it wasscalable. And so, we again look
at those buyers to do anexhaustive search on how well
the technology can scale, and ifin fact it is right for their
current customer base to pick upand cross pollinate.
Rudy Rodriguez (15:33):
I really appreciate the way you described
that, Tim, because that that issuch a real challenge when when
you're purchasing a company, andthe culture is it just has to
change at some point. And and, II could like I said, I I
remember some members of some ofmy team saying, just go in and
fire everybody and start allover again, which is not that
(15:56):
was never my my approach. So,Ian, I've got a question for you
because this leads into sinceyou're you've sold your company,
How did you manage thetransition of of the business to
Sylogist? I'm sure you had somechallenges. And then with staff
members and things like that,again, the cultural, the the
business processes, all thechallenges that are and
(16:17):
surprises that can come up.
Can you share a little bit aboutwhat you ran into?
Ian Pavlik (16:21):
Yeah. For sure. I'll be honest. I didn't think enough
about the day after the dealclosed leading up to it. I was
focused on that.
And then when it happened, I waslike, oh, yeah. So now I gotta
keep running this business, butit from a in a different
perspective, in a different way.And so that that was hard. It
was a lot of one-on-oneconversations with staff.
(16:45):
Initially key staff and thensort of sort of spread out from
there.
You know, making sure everybodyunderstood that, it's business
as usual, but is it really? Itis, but everybody's a little bit
anxious. Change is hard nomatter what. And so so my my my
focus, my responsibility wasaround keeping everybody calm,
(17:08):
being honest, because, yes,there were some check you know,
suddenly invoices went outdifferently and pay happened.
And to your point about,vacation, vacation was
calculated differently.
Still the same way, but in aslightly different manner, and
that causes a lot of confusionand and angst. So so it was just
kinda trying to smooth thingsout. I was challenged with now
(17:31):
suddenly not being the bossanymore, which was funny for me.
So for a few months, I had stillresponsibility for the
operations. But when we wantedto hire a head count, I had to
get approval, which was like,really?
Okay. How do I go about doingthat? So, you know, that was a
bit of a a a hurdle for me. Andthen very quickly, I became not
(17:52):
responsible for the P&L. Andthat responsibility disseminated
away from me into differentdepartments, and numbers weren't
my thing.
Whereas I always I live by thenumbers. I love to look at them
and analyze them. I found thatsort of an interesting difficult
change at first, and then itactually after a little while,
it became a bit low. I couldbreathe a little bit because,
(18:16):
sure, I had to make sure therevenue still happened, but, you
know, all up responsibilitystarted to disseminate. That was
a little bit difficult tohandle.
But then over so I had had a 12month, contract to stay on. And
really, the last 3 months, I wasthere just in case somebody had
(18:38):
a question. So it was a little,honestly, awkward for me because
I felt like I needed to to be ofvalue, but I guess my value was
that was the backstop forhistorical context, the
knowledge on customers, how weoperated, what was going on.
But, it was, it was aninteresting time for me.
Rudy Rodriguez (18:58):
So you brought up the that one word, customers.
How did it impact yourcustomers? Any surprises there?
Ian Pavlik (19:04):
I feel like we handled that very well. I can't
think of any customer thatbolted or got significantly
upset. In some more action, ourbigger customers were kinda
happy because, we were you know,we had grown from a 20, 30 to 40
to 50 person operation. And, youknow, while we're 50 is big, for
(19:27):
some of our really bigcustomers, we're quite small. So
they felt a little bit morecomfortable with, oh, now you're
growing when we're dealing withsome of the the the our really
big.
We had a lot of pro sportcustomers and some, big
government agencies and stuff.So I think in some ways, it
helped there. Our much smallerlocal customers felt concerned.
Oh, you're moving head officesaway. You know, are you
(19:49):
changing?
What's going on? But again,conversations with them to say
no, nothing is changing, andnothing did really change in
that regard. A little bit oftime, 2 or 3 or 4 months, and
when they called, they still gota live person on the phone like
they did before, then sort ofthe customer's anxiety waned. So
I think we we focused on thatbecause also my name was
(20:12):
attached to the company, and Iknew the customers. A good
number of local customers knewme personally in the business
world around here, and I didn'twant to just leave them high and
dry.
So there is a, you know, apersonal investment in it as
well. So I think overall, it wasa work. It was a conscious
effort, but it worked well inthe end.
Rudy Rodriguez (20:34):
That's great to hear.
Anthony Carrano (20:35):
This this has been great. I've really enjoyed
this conversation. I feel like Ican ask you guys probably about
another dozen or 2 dozenquestions. Don't worry. We've
only got 3.
And so but it this is this hasbeen I I just want this has been
really rich, so I reallyappreciate, the conversation so
(20:55):
far. So let me ask you this,Ian. I know as we're, you know,
you know, as you've gone throughand shared your journey, you
know, about with selling, youknow, your business and, you
know, that process. Tell us alittle bit about, you know, what
it was like and, you know, towork with IT Exchange Net on
your transaction.
Ian Pavlik (21:14):
They were wonderful. You know, when we were at the
point where we thought, I wannaI wanna find out how do I sell
my business, what do how do I gothrough, who do I call. I had
actually met with Tim face toface, I wanna say, 5 or 6 years
earlier at a at a Microsoftconference. I think it might
have been to Vegas. And Iremember that we were sitting in
(21:35):
a little sort of restaurantbefore it opened at a table, and
and I was trying to fish.
Like, I had no idea how much wewere worth and what's going on.
And Tim was frank and honest. Hesaid, you're not there yet. You
know, your revenue's too low.It's it's you're not mature
enough yet.
In hindsight, he was absolutelyright. So when the time came
around 5, 4 or 5 years later, Ihad seen the name around, and I
(21:56):
talked with a couple differentfirms. And then when I talked
with Tim, he spent, like, almostan hour on the phone with me,
explained the process, how it'sthis this is the first time I
was doing it. I know some peoplehave gone through this. I'm
like, you know, Rudy, he'd doneit, rinse and repeat, and gone
through.
But for me, it was the firsttime and maybe the only time
that I'll do it. So it wasimportant. And Tim really held
(22:18):
my hand and then introduced meto his team that was able to
take me through the marketingprocess and then the speed I
call it the speed dating round,I guess, with all the potential
buyers and then into the duediligence and then the deal
closed. And that was veryhelpful. And then he also
introduced me to a lawyer thathe had done some other
transactions with, and that wasreally helpful because now I had
(22:41):
somebody that I knew Timtrusted.
So therefore, by association, Ishould. And, and they were very
helpful. They've done similartransactions before and, in the
Microsoft space as well. So Iwasn't explaining to sort of my
traditional lawyers that I usein the rest of the business, who
we are, what we did, what wasthe Microsoft partner ecosystem
(23:03):
like, you know, how didrecurring revenue, what was
interesting to, like, all thatstuff. The lawyer that Tim
recommended, you know, kneweverything and came in and and
really helped us.
So I know I'm giving Tim a lotof praise, but he deserves it.
Him and his team were wereexcellent and really, really
made this process as as easy asit as I think as it should be.
Tim Mueller (23:24):
Ian, thank thank you for that. Let me just
underscore the importance ofthat lawyer who understands
those mid market technologydeals as part of the equation.
Probably the single mostimportant person, once you get
to the LOI stage, is thetransaction attorney. Because he
or she understands idiosyncraticlanguage within purchase
(23:46):
agreements and literally cansave the seller 1,000,000 of
dollars of headaches, down theroad if they make sure they
catch some of the gotchas thatare in the purchase agreement
and then can horse trade alittle bit in order to make it
seller friendly. And we have awhole host of folks that we
trust that are not overlyexpensive because these are
(24:07):
smaller mid market deals.
They're not $500,000,000 deals.And, but can't say enough about
how important they are to theprocess.
Rudy Rodriguez (24:17):
Well, Tim, I've got one final question for you.
You know, I'm gonna circle backto the beginning where you were
talking about the the MicrosoftAI partner program now. And, you
know, the whole evolution takingplace in in our industry, there
there's a lot of changes takingplace, and not every partner is
(24:38):
is adapting quickly, although Ithink people are learning more
and more every single month. Andand we certainly are trying to
help them through the IAMCP. Sowhat trends are you seeing or,
you know, happening in themarketplace now that are going
to affect the the Microsoftpartner M&A space landscape
in the next few years?
(24:59):
No. We know technology is gonnaaffect it. What other trends are
you seeing? Because there's manyfacets to to the IT industry.
What do you see how each one isgetting impacted?
Tim Mueller (25:11):
Yeah. I'll start by saying that, you know, the
conversation that he and I had,and I think it was at Inspire in
Vegas, we 5 years before youwent to market, is something
that I have with a lot of peoplebecause I will tell you plainly
there are a lot of people in inmy shoes that all they wanna do
is get the company to market.And we have found that if you
(25:33):
rush it to market, nobody'ssatisfied 6, 7, 8 months later,
and and everybody has justwasted their time as opposed to
playing more of the long ballwhere you say, you know what?
Here's a road map of things youneed to do. Let's talk once a
year or whatever it might be,and 3, 4 years down the road you
like might be mature.
There are things that companiesare not, necessarily embracing
(25:57):
quickly enough right now, whichwill diminish their value, if
they don't get on board. So someof that may be in their hiring
practices where, you know, 6, 7years ago, place mattered as far
as where employees were. And soif you were based in Boston, you
had a very rich, you know, groupof people coming out of the
(26:19):
universities to to recruit tophysically come in your office
and work in Boston. And some ofthe other major markets, you
know, Austin, Texas has awonderful piece, so does
Columbus, Ohio with Ohio State.But other cities where companies
were based were maybe a littlebit, at a disadvantage with
their employees.
Now the world is open. And withremote working, you have the
(26:43):
ability to attract the besttalent. And so buyers are
saying, you know what? Whyaren't you doing that? Why are
you keeping your universe sosmall and only bringing people
in that necessarily might be ina 30 mile radius of your
business?
That's 1. Number 2, I think thismight be number 2, 3, 4 is your
(27:03):
adaption to technology oradoption to technology and where
you stand in your yourphilosophy on this one. You
know, we still have, you know,Great Plains type of
integrators, right, that, youknow, have not evolved quickly
enough because they had followon work, and they felt they can
keep moving and not being toointimidated or being intimidated
(27:25):
by the Microsoft Dynamics Suiteand everything that has to offer
there. You know, so it's thatinability to evolve with the
Microsoft, you know, offeringsthat are out there. But by the
same token, if you're only ifyou're 5 miles wide and an inch
thick in your offerings, thatdoesn't help you either because
(27:47):
you're now competing againstsome of the large players that
have a lot of expertise in a lotof different areas within
Dynamics.
So I think you need to chooseyour lane and be the best at it.
And if you find that you're notbeing competitive in the market
with only offering, let's say,Teams or Azure, and you're
losing a lot of deals withpeople that say, listen. I want
(28:09):
kind of one one hand to shake,one throat to choke, and I'd
rather have a much bigger firmthan the writings on the wall
that it may be time to startlooking to sell your business.
And and I will give one one morenote to the to the sellers is
that, you know, what Ian didreally well was he wasn't timing
the market. He was making surethat they were at the right
(28:31):
place and they were in the rightmindset to sell.
Because if all you do is timethe market, then usually bad
results happen. And markets canswing pretty quickly depending
on geopolitical issues, themarket. You know, we're seeing,
you know, the Fed likely goingto bring interest rates down,
but, you know, people didn'ttime that 5 months ago when they
(28:52):
went to market. So it's a matterof making sure that your company
is ready from all there. And andso I'll put a quick plug in that
we do have something calledReady, Set, Go, and it's a free
readiness assessment for thosecontemplating a sale, but just
don't know if they have thereadiness.
And we'll grade you on financialpreparedness, your operations,
(29:13):
your vision, your marketing, andand make sure that, you know,
what you bring to market issomething that is very embraced
by the buyers.
Rudy Rodriguez (29:21):
That's a great answer. It's a great answer. I
really appreciate it, Tim.
Anthony Carrano (29:26):
Yeah. That that was great. And, Tim, I was just
gonna ask you. Is there a URLsomebody can go to to, access
that Ready, Set, Go?
Tim Mueller (29:35):
Yeah. It's it's on our home page, which we can, put
put in perhaps the the podcast,but it's, itexchangenet.com.
And, and we'll we'll get back toyou the same day, obviously, and
and and schedule a time to dothis concursory, you know,
readiness program.
Anthony Carrano (29:55):
Okay. Yeah. And we'll definitely have that in
the show notes, for sure.Alright. Well, Ian, so we've
we've talked, you know, youshared, you know, just about how
you've you know, you grew yourbusiness.
You navigated the process ofselling it. Briefly touched on a
little bit about MountKilimanjaro, hiking that. We'll
maybe have to revisit that in afollow-up maybe. Well, tell us
(30:17):
though, what are you doingtoday?
Ian Pavlik (30:20):
Well, I find I'm almost as busy as I was when I
was running the business. Butthe great thing is I'm doing the
things that I'm passionateabout. So, as Tim alluded to,
and I love that saying, when youdo, well, you do good. And my
wife and I were passionate aboutabout a couple core things
focused around youth, and thatwas education and food security.
(30:42):
So we very quickly we startedThe Pavlik Foundation, a
charity, and we are focused onproviding educational
opportunities to youth andhelping the youth with food
security.
And a program that we actuallyjust launched this fall, and
we're piloting it in a coupleschools is called Kids Pantry.
(31:02):
So we identified that a lot ofthe schools in our community get
food during the day, likethere's breakfast programs or
snack programs. Families canaccess a food bank type of
service, but usually food banksonly provide about a quarter or
third of food need for a month.And so what we're doing now is
we're actually identifying kidsin the school that are food
insecure and providing backpacksof food for them that we drop
(31:25):
off on a Friday. So the kidscome down to the front office,
pick it up, take it home, andnow the kid that child has food,
healthy food for the weekend sothey can nourish their body so
that when they come to school,they're ready to learn and and
hopefully thrive in school.
And, you know, a child can't besuccessful in their life if they
(31:45):
don't feel good about themselvesand they're physically healthy
and can learn. And we're notfocused so much on trying to
give things like scholarships tothe best, brightest, smartest.
Our hope is to take those kidsthat are maybe have challenges
that aren't their fault, that isbecause they're a matter of
circumstances, and give them theopportunity to to hopefully get
(32:07):
a a step ahead and and breakthat cycle of poverty and, give
them a chance of success inlife. So it's that's what's
keeping us busy these days.We're pretty excited about it.
Anthony Carrano (32:17):
That's awesome. And where, where can people go
to find out more about thisfoundation?
Ian Pavlik (32:24):
pavilkfoundation.com That's our website, and, you can
contact us on there and learnmore about our Kids' Pantry
program as well.
Anthony Carrano (32:31):
And and people, they can donate, I assume.
Ian Pavlik (32:34):
Absolutely. So, yeah, there's a donation form on
our website as well. And, andwhat's neat is now we now have
the ability for people tosupport a child. So if you can
support a child, it costs about20 to $25 a weekend to provide
healthy nourish full meals theentire weekend for the kid. And,
yeah, that's something that wejust launched about 2 weeks ago.
Anthony Carrano (32:56):
Oh, that's awesome. I really appreciate you
sharing, and we'll also havethat website in the in the show
notes as well. Well, gentlemen,once again, thank you. This has
been fantastic.
I've I mean, this just theinformation that you guys shared
and the time that you gave hasjust been so rich and rewarding.
So definitely wanna thank bothof you. We are we will have
(33:17):
both, you know, websites in theshow notes. So aside from, you
know, the websites, is there isthere another place where
listeners can go to connect withyou?
Tim Mueller (33:27):
Well, we we have a a Vimeo channel, as well that
has a lot of videos of, kind ofhow-to's and and, 2 minute takes
for prospective sellers. Andthen we have a lot of
information that we post in thein the form of articles on
LinkedIn. So, Anthony, if we cangive you those as well, that
would be wonderful.
Ian Pavlik (33:46):
Excellent. Anybody I have an open offer for anybody
who wants a cough cup of coffeebecause I've always had a pod on
here. If you're just drivingthrough Barrie, Ontario, Canada,
stop by my place and you canhave a coffee. I'd love to sit
on the front deck.
Rudy Rodriguez (34:00):
On my way on my way, Ian.
Anthony Carrano (34:05):
Once again, thank you so much. And,
gentlemen, enjoy the rest ofyour day.
Ian Pavlik (34:09):
Thank you very much, Anthony and Rudy.
Tim Mueller (34:11):
Thanks, Anthony. Thanks, Rudy.
Rudy Rodriguez (34:12):
Thank you, gentlemen.
Anthony Carrano (34:15):
Wow. That was a great episode. I feel like I
just sat through a Master Classon M&A , you know, for
Microsoft partners and in thetech ecosystem. I learned so
much, and I really appreciate,you know, once again, you know,
Tim and Ian for for spendingthat time with us. I know I took
away a lot of, you know, mainpoints.
(34:37):
Rudy, how about yourself?
Rudy Rodriguez (34:39):
You're absolutely right. That was a
very informative it was a MasterClass on mergers and
acquisitions. And and one of thethings that I really appreciated
was, one of the things that Timtalked about was the process
that he likes to take sellersthrough to really prepare their
companies and for all the itemsthat they're going to have to
(35:00):
deal with in selling theircompany, to make sure that the
company is mature enough to besold, that their systems and all
their accounting information isready to present. Because I know
that's one of the things I wentthrough when I sold my first
company was the tremendousamount of work that's required
when you're selling. And do youhave a good reason?
(35:23):
And are you mature enough tosell to really maximize the
proceeds that you're gonna getfrom the sale? And both Tim and
Ian shared quite a bit ofinformation on what how much
effort that's going to take. Andsometimes it just takes time to
be ready. And I would cautionanybody selling their company,
(35:43):
go through the process and beready to sell because that's
gonna be very, very important toyou whether you stay with your
the successor organization ornot.
Anthony Carrano (35:53):
Yeah. And on that note, I mean, just to
piggyback on that when and whenyou're talking about this from
at the company level and justhow I you know, as if I recall,
like, Ian shared about for themthis process, you know,
personally as as the the mainprincipal was, I think he said
something like 10 years in themaking, you know, for him and
and other members of the family.And, you know, specifically,
(36:17):
when he just talked about, justthe importance that he, you
know, as the main principal, youknow, become less significant by
design, so that, you know, thebuyer then it's not, you know,
contingent upon him, you know,staying put in the company, for
it to be successful. And so thatthat really resonated with me.
Rudy Rodriguez (36:38):
And, you know, another thing that that comes up
and have again, having gonethrough having sold a company is
things you're not alwaysprepared for, especially when
you're staying behind to do thetransition or if you accept a
new role in the company tomaximize your earn out. So are
the and those things that you'regonna deal with are both
cultural and technologicalchanges in the post sale
(37:02):
process. Because, 1, while youmay have been the most important
person in your company inbuilding and and selling that
organization, Now you're part ofa different organization, so the
culture can change on you. Andhow is that going to impact the
employees that stay behind aswell as the technology changes
that also come to play? Becausewhen you sell your company, is
(37:26):
that company identical to yoursor are you a key cog in the in
their path forward in sellingthat company?
And so that's part of theprocess that you as as a seller
go through as you help integrateyour organization into the new
organization and help themassimilate the new culture and
(37:49):
the new technology, becausethat's real important to make
your your employees feelcomfortable in that change
because they are an integralpart in the success of the new
company.
Anthony Carrano (38:00):
Yeah. No. Absolutely. And, you know, on
that note, it just you'rehearing you talk. It reminded me
of one of the lines that Timshared, and I I love this quote.
I'm gonna use this quote,because it can apply, you know,
even outside of just M&A.But when he said, you know,
expectations not articulated isdisappointment guaranteed. And I
(38:22):
just, you know, whether I'm in,you know, communication with,
you know, vendors, partners,whoever, you know, just the
importance of setting, you know,the right expectations. And, you
know, in his in this particularcontext, just the expectations,
especially around as you'recoming around just going
through, like, the duediligence. And, you know, you
(38:44):
know, folks listening will haveto, you know, go back through,
you know, the podcast and andhear it.
But as he touched on some of thekey areas of of that doing that
due diligence to set the properexpectation just around, you
know, number 1, risk,reoccurring revenue, strong
margins on revenue, but thenalso, like, you know, does your
(39:05):
technology, you know, scale?And, you know, as he touched on,
those were, like, the kinda likethe four main ones. But, I just
I just found that to befascinating and just the
importance of, you know, keepingthat, you know, that in mind,
set the right expectations.You're doing the due diligence.
But the big thing too is, youknow, as we're as our listeners
have, you know, been, you know,listening in on this particular
(39:26):
episode about, hey.
I'm interested in selling mybusiness. The the point about,
look, you're you're buildingyour business. Keep the long
term in mind. You know, don't dojust do the things to take the
shortcuts to try and spike thenumbers to try and get a sale.
But, you know, do it right, and,you know, good things will kinda
happen.
I think that's probably one ofthe best things somebody can do
(39:49):
in setting that rightexpectation as, they look to
eventually wanna do an exit.
Rudy Rodriguez (39:53):
Yeah. So, you know, we had some great, great
advice from both of ourpresenters today. That was
really a wonderful episode. Soin closing, I wanna thank
everyone who's listened to thispodcast for joining us on this
episode of IAMCP Profiles inPartnership powered by Dunamis
Marketing. We hope you enjoyedthis podcast and we'll and we
(40:14):
know you will find it useful andinspiring.
If if you did, please subscribe,rate, and review us on your
favorite podcast platform. Anddon't forget to follow us on
social media and connect with uson our website, wwwiamcp.org,
where you can find moreinformation, resources, and
opportunities to partner forsuccess. One of the best ways to
(40:37):
partner for success is to joinIAMCP, a community of Microsoft
partners who help each othergrow and thrive. IAMCP members
can find and connect with otherpartners locally and globally
and access exclusive resourcesand opportunities. Whether
you're looking for newcustomers, new markets, or new
solutions, IAMCP can help youachieve your goals.
(41:01):
To learn more, visit the IAMCPwebsite, iamcp.org.
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