I’m Spreading The News
February 13th, 2008“I’m leaving today. I want to be a part of it – New York, New York”
I feel I should start this blog by telling you all that I am finding my new role in acquisitions more interesting than anything I have ever done before. I have always been involved with companies that were either acquiring other companies or that were being acquired but I was never actually involved in developing the acquiring funding, developing the acquisition business plan and researching acquisition targets. I have spent the last two weeks presenting our initial business plan to many different people and groups. This includes merger and acquisition consultants, funding institutions, potential strategic partners, members of Indigio’s Board of Directors and others that we felt could offer worthwhile suggestions on our plan. The feedback has been great. Most felt the plan was well thought out and, in true Indigio fashion, that we are probably projecting revenue potential too conservatively. But that is the Indigio way. Promise low and then over deliver. Everyone felt we needed to re-work the Executive Summary to better explain what we are doing and why we are doing it. Basically to get right to the point as we don’t want our target audience to stop reading because the Executive Summary lacks the punch we needed to keep them interested. All in all, the feedback has been very useful and very positive.
As I have mentioned in previous blogs, our current plan is built around targeting acquisitions of Interactive Agencies or Search Engine Marketing companies in the New York area and the Chicago Area. We have identified many strategic reasons for looking at acquisitions in these areas. With that said, the feedback we received from many that reviewed our plan was that maybe we should not focus on acquisitions in top tier markets. Many felt a more solid acquisition strategy would be to focus on smaller companies in non top tier markets. I won’t go into detail here on why this makes sense but there are definitely some very compelling reasons. There are also sound reasons to avoid the top tier markets. I have listened to the feedback and I have an answer. Yes, yes and yes. Sure we have initially targeted New York and Chicago. The primary motivation here is to have a local presence for key customers in or near those areas but we are not ruling out acquisitions in other markets. I have spent some time this week researching companies in smaller markets, including doing another Colorado based acquisition.
Let me take a step back and explain that we have been planning for growth for the last couple of years by developing the necessary infrastructure to support growth. This is what should make us compelling to investors and to companies that wish to grow by being acquired. The 2007 Acquisition of Current Wisdom proved to be extremely successful and it served as the test ground for demonstrating our ability to grow through acquisition. Regardless of where we find the best acquisition target, we are confident that we can be successful because of the infrastructure foundations that have already been laid. Keep in mind that infrastructure is more than just the office space and supporting equipment and networks. I am talking about the core systems and processes that are used by Indigio to run the business. This includes the financial and accounting processes and systems, the project management and time entry processes and system, the issue management processes and system, the contract management processes and system, the HR processes and systems, and the list goes on. Indigio has over the years developed relationships with other vendors that allow Indigio to offer great benefits including medical and 401 plans. Does this sound like a sales pitch. It is not. I am speaking strictly from an operations perspective. Setting all this up is hard and maintaining it takes constant focus and review. For a small company that is starting to grow, developing all of this can be a daunting task. It is much easier for them to become part of something bigger and already established so they can continue to focus on the delivery of services and not be bogged down by all the operational minutia associated with growth.
So New York, Chicago, Denver, Salt Lake City, Tampa, Portland, Phoenix, Atlanta, etc… My answer is yes, yes, yes, yes, yes, yes, yes… If it is a good company, with good people, a great product (services) and loyal customers then we want to look at it. I would rather find a real gem outside of New York than a bad fit in New York. At the end of the day, due diligence, financial projections and Board approval will determine whether we actually go through with any acquisition.
Another interesting aspect of venturing out and executing on an acquisition strategy is that it attracts other larger companies that are looking at us as a potential acquisition target. Within a day or two of taking on the acquisitions role, I received calls from several M&A consultant companies to discuss whether we were willing to consider being acquired. It was interesting to be the one receiving that call as opposed to making it. There is something about being a growing company that seems to attract bigger companies that want to grow. So once again, the answer is yes. If the right deal presents itself then, of course, we will consider it.
Based on all the activity the last two weeks, I have update the Business Plan and have re-submitted it for review. I am confident that I will get more feedback and that I will continue to tweak the plan. Stay tuned. More to come.
