Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
The Upsize Growth Challenge, presented by Winthrop & Weinstine, is a contest created by Upsize magazine to match two winning business owners with the expert advice they need to reach their goals. From nominations, judges select two winners based on the ambition of the growth goal and the quality of the work already completed to meet it.
They participated in a workshop this spring with expert advisers supplied by the sponsoring companies, then shared their stories at a public event in September at the Minneapolis Club. The public event is covered here. Nominations for next year’s contest open in spring 2016.
HealthSource Solutions and Fourcubed, this year’s Upsize Growth Challenge winners, shared their progress in the quest to reach ambitious goals. Expert advisers weighed in, too, with advice applicable to all growing companies, at a wrap-up event at the Minneapolis Club. If you missed it, here’s a rundown.
Mary Kruse, CEO of HealthSource Solutions, shared her trepidations with the Upsize Growth Challenge expert advisers assembled to help her in workshop one, earlier this year.
She wants to expand her company’s wellness services into a new market, Memphis, and she has already followed one of her key clients there with a few personnel, a move the Upsize Growth Challenge experts applauded as smart.
But she was worried Southerners wouldn’t want an outsider—and a Yankee at that—to come in and tell them what to do, so she was downplaying her Minnesota connections right down to her accent. (She thought it perhaps better if a fellow Southerner did presentations on her company’s behalf in the future.)
But the experts pushed back. Minnesota is known as a leader in healthcare and in wellness solutions, with everything from Medtronic to the Mayo Clinic and much more adding to that impression. So why not play up HealthSource’s roots as a strength?
By the time the September wrap-up event came around, Kruse (pronounced KROO-zee) was embracing her company’s expertise. HealthSource Solutions was a service formerly provided by Park Nicollet Health Services, but spun out in 2009 and purchased by Kruse who then brought on a business partner.
Over time, it became clear that partner both added too much to overhead for a young company to support, and also had a different vision from Kruse as to where the company should go.
“We had two visions and I watched the staff lose passion,” she said. She bought him out about a year ago, and then began learning the business side of the company, which the other partner formerly handled. Although difficult, it was the right move to make.
“I’ve taken the company from unstable to very stable,” which is no small feat with 34 staff members on the payroll. Learning how to bird-dog daily cash flow management has been key, and she schooled herself with the help of accountants and other advisers.
The larger lesson? “If you’re in a partnership that doesn’t work—don’t hang on,” she advised.
As for another piece of advice from the expert advisers—to think much bigger about a national expansion strategy rather than planning to only open in one city—Kruse decided that’s too much to swallow in a short period of time.
She’s sticking to her one-market-at-a-time strategy, but acknowledges the experts’ pushing has also inspired her to get her timetable going. In an annual strategic planning meeting just days before the public event, Kruse noted the progress.
Instead of “grow the Memphis market” as a broad plan, “we now have action items,” with specific timetables and people assigned to execute. That’s a big step in the right direction for HealthSource Solutions as it walks down the growth path.
Rick Brimacomb, founder of Brimacomb + Associates and an Upsize Growth Challenge expert, said Kruse was “smart to follow a customer” to a new market, in her case Medtronic. He encouraged her to create a system and a process to use in Memphis, her first target for expansion, and then tweak it and move on to the next market and the next.
He also applauded her awareness of cultural differences in different parts of the country, which will be important to navigate along the way.
Dan Moshe, CEO of Tech Guru and another expert, was impressed by Kruse’s “ability to take in new ideas and new ways of thinking.” He also noted the importance of “making those tough ‘right person’ decisions” throughout the company, not only in her decision to part ways with her business partner.
Finally, he loves that Kruse is challenging the status quo. She’s not “just taking this business and enjoying it, but she’s taking a risk. I think that’s a beautiful thing,” Moshe said.
Andrew Downey, an M&A expert with PwC and an Upsize Growth Challenge adviser, likes the fact that Kruse is working with blue-chip clients. “You can tell she’s doing something right,” he said. He encouraged her and other business owners to continue honing their message, and to determine whether different audiences need to hear slightly different things.
In her case, for example, the buyer might be a CFO who is more interested in the bottom-line, return-on-investment facts, or a human resources executive who on the other hand might want to know the touchy-feely side of her services. “Hone your message depending on the buyer,” Downey advised.
Zach Robins, an attorney with Winthrop & Weinstine and an Upsize Growth Challenge expert, also praised Kruse for taking a risk, and encouraged other business owners to do so. “Sometimes you have to stick your neck out,” he said.
He said every growing company has to pay detailed attention to their capital needs, which will only grow as they expand. He advises to not just limp along, barely getting by, but to get help from advisers to obtain the necessary capital so a growth plan can actually be executed.
Jim Olson, president of Fourcubed, spent the first workshop with Upsize Growth Challenge experts this spring digging into tactics and describing how he is embarking on an ambitious acquisition plan.
The company, founded by Chris Carlson who hired Olson as its first outside professional manager in March, is a marketing company in the i-gaming space, meaning it “collects” gamers and delivers them as leads to gaming providers and advertisers.
At the wrap-up event in September, Olson was more philosophical about growth, whether organic or by acquisition. “I think about growth as more than just a monetary thing,” Olson said. “The goal is to be able to contribute. It’s about creating opportunities, doing something new.”
Olson and Fourcubed could be called the perfect candidates for the Upsize Growth Challenge, which is all about matching business owners with ambitious goals to experts who can help them get there.
“We entered the Challenge just to learn,” Olson said, and he shared some lessons both from the process itself as well as those he’s picked up along the way.
He advocates for having outside advisers, associates and partners, and Fourcubed has formalized that process with an advisory board with a concrete structure. “They bring different skill sets to the table,” he says. “Outside advice and help is critical” to a growing company.
But there’s a flip side, too. “As the leader, you have to decide and pull the trigger,” he says. Having many voices at the table “can disperse things also, and as a leader going after growth we still need to move.” That’s a tricky balance, and one that will always challenge him and other executives.
Olson pointed out another balancing act, “between achieving goals and people. Sometimes those are in conflict,” he says, and although a fast-growing company has to keep hitting milestones, it can’t afford to mow over its people. “Making sure you are paying attention to people in the organization” is crucial, he says. “One of our corporate values is caring for others, and I’m glad.”
He said his most important lesson from the Upsize Growth Challenge experts was cultivating his relationship with Chris Carlson, the founder. That can be a challenge, when a visionary entrepreneur meets a buttoned-down executive. “We’re wired differently,” Olson said. “He’s an early stage creator—emotional. I’m at the opposite end.”
Because of expert advice, he and Carlson have committed to connecting every day, “so we’re on the same page.” Asking forgiveness for using a poker metaphor, he said they’re “doubling down on that dynamic. That’s a key thing I took from the Challenge.”
Zach Robins, an attorney at Winthrop & Weinstine, said he’s impressed by Fourcubed’s “all of the above” approach to looking at players in the gaming space to see who might be a fit.
“At times companies are fearful to reach out to competitors,” he noted, but thinks Fourcubed’s boldness is justified in an industry where so many opportunities abound worldwide.
Andrew Downey, with PwC, advised Olson to add some metrics to his acquisition criteria, zeroing in on things like ownership structures that might speed or slow a transaction. “They have to think of other characteristics that will get the deals done,” he said.
Dan Moshe, founder of TechGuru, noted Olson’s consistent message. “The one theme has been intention and moving with intention, gaining alignment and moving forward,” he said.
That includes with investors, as Rick Brimacomb, Brimacomb + Associates, noted, and complimented Olson and team for connecting “emotionally with people on the fund-raising trail,” he said.
Olson and his team have the ability “to put themselves in the shoes” of the potential funder, whatever that funder’s point of view, a desirable trait for an executive on the acquisition path.
Brimacomb had the last word, as well, a fitting summation for the Upsize Growth Challenge. “The tagline for my company is ‘grow or die.’ You’re either doing new things every day or you’re getting stagnant,” he said.
For at least two local companies, Fourcubed and HealthSource Solutions, the former is definitely the operating mode of choice.
[contact]
Mary Kruse is CEO of HealthSource Solutions in Minnetonka: 763.287.0749; ma*******@********************ns.com; www.healthsource-solutions.com.
Jim Olson is president of Fourcubed in Minneapolis: 612.454.1509;
jo****@*******ed.com;
www.fourcubed.com
Rick Brimacomb is the founder of Brimacomb + Associates in Minneapolis: 612.803.3169; ri**@*******mb.com; www.brimacomb.com.
Andrew Downey is a transactions expert and business consultant with PwC in Minneapolis: 612.596.4997;
an***********@****wc.com;
www.us.pwc.com
Dan Moshe is founder of Tech Guru in Minneapolis: 612.235.4895;
da*@********it.com;
www.techguruit.com
Zach Robins is a securities attorney at Winthrop & Weinstine in Minneapolis: 612.604.6487; zr*****@******op.com; www.winthrop.com
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