SNOW MAGAZINE: So, it’s fair to say you’re in the middle of a growth mode with two recent acquisitions under your belt?
JUSTIN GAMESTER: We’d acquired a company a few years ago, then we had two [acquisition opportunities] come up that ended up being back-to-back [deals] a few months ago.
Were you actively seeking to grow strategically through acquisitions? Or, were these two opportunities just too good to not pursue?
From a growth standpoint, it was a mix of organic growth and acquisition. We’ve done a good job growing organically. The company has been around a long time, we have a decent reputation, so we get a lot of referral work.
The acquisition piece, in my mind, comes in two forms: Is it the right fit? Is it in our geography and do they do the same type of work we do from a quality perspective? Organic growth and growth through acquisition are all great as long as we don’t lose the ability or drift from our ability to deliver a level of service and an attention to detail that we pride ourselves on.
One of the nice parts of the acquisition piece is you can look at the acquisition and say, this company does these things, but I do things that they used to subcontract out. Now, I can do the work and offer the client more in-house services through our brand rather than continuing to subcontract those services out.
Everyone is dealing with labor issues. Did these acquisitions help bridge a labor gap that you may have been experiencing?
I’m going to tell you right now that there is no magic answer to the labor problem. But I will tell you this: From three years ago to today, in the few companies that we’ve acquired, I like to talk to somebody who is concerned about their customers and their employees or even the other way around.
It’s a chicken or egg thing – you can’t have one without the other. And if you have both, then your successful. With these past two acquisitions, what’s been really important to me is we’ve been able to take some of the folks who have worked with each of the [acquired] companies, bring them into our brand, show them the benefits and that it’s a really nice place to work … We want you to come to work because you like to, not because you have to. So, does it bridge the gap? No, because if you look at any of the other companies out there, I don’t think they’ll tell you that they have the staff they need. And if they do, I’m second guessing it because around here, pick the industry and they’re hiring.
The last two acquisitions were relatively close together. As you were going through the acquisition process what did you learn that you hadn’t realized previously?
That’s a great question. I can tell you that what really sneaks up on you is the amount of work required with on-boarding [acquired employees]. What you have to learn and remember is that the folks who work in your office have a job that they do every day that keeps them busy year-round. So, when you acquire a company and bring on 60 people, then all of those people have to be on-boarded. All those people need to be trained and get a feel for the company. That’s a lot of work.
There are certain things [with on-boarding] that guys like myself or Mike, our COO, are not good at. I mean, I can show them around and tell them about all of the great things we do, but then there’s that piece where they need to be formally placed on payroll, make sure all of their questions are answered, that their benefits are activated properly. That’s a lot of work.
And what I’ve learned – especially doing acquisitions back-to-back – is that you really have to be prepared and patient. And you don’t want to over promise and under deliver to the new folks who are coming to work for you.
And then the other thing I’ve learned has to do with the diligence in the contract process because no two companies have the same contracts and processes. Obviously, there are some companies who are very good with contract agreements, but there are a lot of companies who still do handshake deals. So, really being able to dive into the customer relationships is pretty important.
Again, we all have a day job. As do the people who are selling their company. A lot of the [acquisition] process happens quietly. So, exercise patience and prepare your team to do it properly.
How did you handle the leadership at the other companies? Did you keep these members on? Could you keep everyone?
The companies that we were looking at and dealing with didn’t have the level of infrastructure with the admin or management team that we have [at Piscataqua]. So, I wasn’t in a position where I had to integrate a lot of management folk. Instead, I had a lot of great foremen and a lot of great crew people, I did inherit a couple of managers, but I had a home for them. The synergy [between our companies] was fantastic.
In the last three acquisitions, I had one of the owners who stuck around and worked here for a while, which was great because it helped acclimate everything. With another [company] the owner retired, and with the most recent [acquisition] the owner is still running the branch for the time being and making sure everything is acclimated properly. However, I didn’t have a scenario where I was left with two COOs or two office managers. Looking back, this was really a blessing in disguise.
I will tell you this, with the last two acquisitions I went into both completely prepared to hire and on-board their entire team. And only a couple of folks didn’t take that offer. It’s a lot to hear that the company you’ve been with has just been acquired. I’m very sensitive to that. I get it. So, everyone had a home if they choose to accept that.
At what point did you tell your team that the acquisitions were underway? And how did you extinguish a flare up of rumors going around your camp about what the acquisition might mean for your team?
Yes. That’s a really great question. I have a unique perspective on this question because I was the guy on the other end once. For our structure, I have a group of folks who I would call the senior leadership team. I would investigate what’s coming through first. There’s kind of a feeling you get … And I’m not sure I could put it down on paper … But there’s this point that you get to where you need more info.
For example, my team has been with me for some time, and they know that area beyond our geography. At one point – where I’ve read the [due diligence] and we’ve played with some financial modeling – now we need to talk about the skeletons in the closet. So, I’ll bring in my COO first and my chief administrator. I go in this order because the COO needs to know and now we’re in the phase where the numbers say this, but what about this? And there’s good input that my COO can offer at this point. My chief admin is the person who is going to start thinking about people. For example, how many and did you get an employee census. She’s already thinking that all of these people are going to show up on day one and she’s going to need to have all of the variables figured out. Like, what kind of accounting software are they using and is it transferable to what we’re using? So, she’ll know all of the “what if” questions for me to be asking at this point. And my COO, he’ll give me really pointed questions – let’s talk equipment; let’s talk revenue dollars.
So, at this point you need to be looking at specific details [about your company and the company to be acquired]. That’s why I need these two specific people in the loop. But I keep it there [among these two key people] for a little while to avoid people freaking out – How are we going to do all of this work? What kind of people will be coming over? What if all of their equipment is junk? Oh, and we’re in the middle of a pandemic and I don’t think they wear their masks in their trucks.
You need to convey a sense of calm and remind people that a part of business is to explore opportunity. That doesn’t mean we have to walk through the door. We can just take a look. And in the process of looking at [the opportunity] we have to be asking the right questions. So, I try to keep [the number of people involved] really tight. And I know the two people I go to first I can trust because once it get’s out to the wrong person you suddenly begin to hear “I heard this… I heard that…” or – and you’ll love this one – the company we’re looking at is actually buying us! How does this happen? What are you talking about!
So, initially, you really need to keep [this information] to only a very tight group on your team. What a lot of people don’t understand is that there’s a reason this is a confidential process at the start. First, the seller needs to protect his business because I could walk away tomorrow.
But then you get to a point where you’re far enough along [in the process] where you need to know from the seller how they’re going to tell their team [about the pending acquisition] and convey to them that we’re a group that can best carry on the mission that they started.
How did you approach their clients who are now – or soon will be – your clients? Clients can be just as finicky and sensitive as employees when faced with change?
You’re absolutely right. And I will tell you this, with the first acquisition the sellers did a remarkable job talking to their customers. This made life pretty easy for us. And they stuck around and offered their time because they cared about their customer base. So, they really took the time to work with our account managers [on the transition process with clients].
With the other deals, I felt the customers should hear the seller’s story first, not mine. It’s really important that the seller has a strategy to tell [their clients] the reasons behind why they’re retiring or selling the business. Now this circles back to your last question, but we kept it pretty quiet as a group – the seller and my team – until a letter from the seller has gone out to their clients. And if there are clients that require me to make a personal visit, as well, then I’m happy to go and talk about my company and the services we offer.
However, I’ve found that getting the [seller’s] letter out to clients can be either a real easy process or one that I’m asking “Why is this taking so long?” If [the latter] is the case, then you have to remember for the seller there’s an emotional component to this [acquisition]. Writing a letter is emotional, especially if they’ve been around for a long time. When you’re in business for 30-plus years there will be an emotional piece that goes along with this process. You need to be respectful of that, but at the same time remind them that their clients need to hear this news from them and not off the street.
Now, when you don’t have this scenario, you’re spending a lot of time on the phone [with the acquired clients], explaining your resources, your efficiencies, the fact that when they call with a question they’ll speak to a human on the other end of the phone.
But reinforce that the folks who come over [in the acquisition] will continue to have their relationships with these clients. That’s important and it’s the reassurances the clients want to hear.
Your last two acquisitions were nearly back-to-back. How did they impact your growth strategy for both the short and long terms?
You’re going to be shocked when I tell you this, but we evaluate [strategic growth] all of the time because of the shortage of [labor] talent. These acquisitions can be really great if you can get the people. If you can’t get the people, then all of a sudden you’ve bought work that you can’t execute on. Then you just look like an idiot.
To paint with a broad stroke, and I don’t mean to be vague, but to say “We can …,” or “We will….” really is dependent on execution and having the people to accomplish those commitments. On a percentage basis, we have the ability to grow over 25 percent in a year. Could I do that again the next year? Maybe if we can get the people.
One thing these acquisitions did for us, from a strategic perspective, was put us in a market that we’ve been staring at for the last seven to 10 years. With our last acquisition, it got us a branch location in what we call “The Lakes Region” in New Hampshire. And that’s a region where some of my [exiting] customers have second homes, and where the scope of work matches exactly what I do here on New Hampshire’s Sea Coast. In fact, we’ve had clients ask if we could come up [to The Lakes Region] to work but we declined [because it didn’t fit the company’ footprint] … Then the acquisition opportunity opened up [in that market] and it met our key goals. Were we planning to open a branch right away? No. But [the acquisition] allowed us to accelerate that goal when we bought the company. We’ve accelerated our revenue [goals] because we bought existing revenue. But then again, if I hadn’t had all of those people come over with the acquisition and stay with my company, then I would have been dead in the water.
Strategically, that’s why you have to be up front and the [acquisition] has to fit. And you have to recognize there’s a team of people that could really enjoy working for a company that can offer them more.
Remember, at the end of the day this is still a people business. So, you need to be prepared. You’ve got people who work for you and you have people who hire you [for your services], and you’ve got to have a team of people who can work together and understand that part, too. This is really important because, at the end of the day, it’s a people business.