Staffing Stream: DISYS Outlines Its Acquisition Strategy in 2-Part Series
Editor’s Note: JJ Foster, one of the architects behind DISYS’ acquisition strategy, writes a two-part series for Staffing Stream on it and how the strategy has been successfully implemented.
Part 1 – To Buy, or Not To Buy, That Is the Question …
The staffing market is looking pretty good right now. People are hiring, unemployment is at a new low and the economic outlook is bright.
Regulatory cuts and changes as well as corporate tax cuts have made it a lot easier for companies to ease up the purse string and hire and/or even expand business reach. But with all this comes uncertainty. After all, regulations can be imposed as easily as they are taken away, taxes can go up and prices for business essentials can rise. And this changes everything.
So, while we enjoy the current economy, companies that are truly serious about growth are diving into developing long-term strategies that can be achieved through deliberate, repeatable actions that render results.
How does strategy development start?
It Starts With Extensive Research
Like many companies that begin small and then experience explosive growth, Digital Intelligence Systems, LLC (DISYS) reached a plateau in its growth trajectory. In our case, this happened in late 2015. Doing the same thing we had always done was not enough to continue on an upwards path and it was time to understand why.
As with most companies seeing trends swing the wrong way and are watching competitors inch into their territory, DISYS started digging into what was happening in the market. We realized staffing was shifting to VMS and MSP buying and discovered we were at a crossroads — we could trudge along at current market growth rates and hope things improved or we could choose to move towards a more aggressive growth strategy.
It was an easy choice. We chose to implement a growth strategy and plan that was replicable and would provide instant growth while positioning the organization for organic growth in key areas.
A Strategy is Unveiled
After a significant amount of due diligence including extensive market evaluation and taking into account where DISYS was and wants to be in 10 years , Our CEO, Mahfuz Ahmed and his executive team emerged with a comprehensive strategy plan that outlined a path to growth through acquisition.
This two-year journey led to the adoption of a formalized, extensive M&A process, positioning the organization to begin its next phase of growth.
DISYS would look at acquiring strategically beneficial firms who brought on board marquee clients and also complimented and/or made current offerings more robust.
Putting the Building Blocks in Place
Now, anyone who has ever led an acquisition knows you don’t just start out to buy any company. It is important to take a step back, evaluate and make sure the right building blocks are in place.
DISYS did this by adding executive leaders, sophisticated back-office tools and internal controls to support the integration of acquired companies, tweak organic growth and address the new realities of the staffing industry.
When working towards solidifying an acquisition strategy, we ascribed to the old adage “culture eats strategy for breakfast” and targeted companies that were a good fit for the DISYS sales-driven and client-focused culture. We adopted a 5-pronged approach to define our focus:
- Companies with a strong and complementary client base with concentration in a few flagship clients in industries where we could expand our reach and enhance our global delivery model and services capabilities
- US companies strong in the staffing industry so we could utilize integration commonalities including adhering to laws, rules and regulations
- Companies with complementary skills and offerings to add to our already comprehensive portfolio of client offerings
- Targets where our platform could make a difference to their cost structure and add to DISYS’ already strong financial position
- Geographic synergies with capabilities in areas that bolster our organization’s geographic coverage
Since DISYS built out a profile outlining exactly what we were looking for, we built a strong list of potential acquisitions and eventually narrowed the list to 10 companies that met all five criteria and we are currently actively engaged with five of those 10!
Through simultaneous execution of our organic strategies that focused on our best clients, automation enablement of all services and doubling down on centralized global delivery capacity, we simultaneously began pursuing and closing complementary acquisitions to round out our capabilities.
In a post next week, I’ll discuss DISYS’ actual acquisition experience, what they taught us about our process and have we put what we learned into practice moving forward.
Part 2 – Powering Up: Executing on an Acquisition Strategy
The economic and regulatory climate is excellent for companies thinking to expand via acquisition. As I discussed in my last post, companies considering such an endeavor should consider their options carefully, and I shared some of DISYS’ planning process. Once your company has its plan in place, it is time to execute. Here, I share DISYS’ experience as we executed on a couple of acquisitions.
The First Win
The first company DISYS acquired was a small tuck — it featured a few great clients in the energy industry. We acquired and integrated it in less than three months. We used this acquisition to refine our processes, build out our “acquisition muscle” and develop a set of lessons-learned we could apply to future acquisitions. It confirmed our processes, tools and approach were repeatable and set the stage for future successes.
Flexibility Is Key to Replication
The first acquisition was a moderate lift for our organization and revealed a few flaws we had in our process. The fact we had built a repeatable process is one thing … but the fact we built a repeatable process that is adaptable to change is really what makes what we are doing so special.
Our second acquisition, Xtreme Consulting Group, was announced in April of 2018 and presented challenges beyond what we had seen in our first effort. As a larger company with multiple business touchpoints, Xtreme Consulting brought multiple office locations to the table, an international presence and other unique challenges we had to work through.
But Xtreme provided marquee clients in the manufacturing and high-tech industries, with no overlap between their top-20 clients and DISYS’ top 20. Xtreme was extremely strong and well-known in the Pacific Northwest and this substantially bolstered DISYS’ presence in that key geography — hitting on one of the main tenets of our strategy.
Finally, they provided complementary service offerings in cloud, distance-based learning (through XtremeLabs which is now its own organization) and agile development.
This acquisition closed out and we welcomed Xtreme Consulting into our fold and are still working through some of the intricate details of acquisition inclusion but once again, we learned from our process and adapted it accordingly.
The third acquisition, Princeton Information, was announced early this year. Like Xtreme, the acquisition was highly complementary to DISYS offerings. With Princeton, there was no overlap between their Top-40 and the DISYS legacy client list. These 40 marquee clients are primarily in the financial services industry and will add a robust new market for DISYS to cross-sell its services.
Princeton is well-known in the New York City market and added to DISYS strengths in that critical, growing market. Princeton will also augment DISYS’ already outstanding delivery capability in India with a new delivery center in Noida. This deal closed Feb. 12.
The last two acquisitions are currently in flight – one targets the rapidly-growing healthcare market and would add marquee clients to the DISYS portfolio in an underserved industry. The second is a full-service IT staffing firm that would bring a recruiting process outsourcing (RPO) capability to the DISYS portfolio of services. If these deals are successful, they would close in 2019 and allow DISYS to expand its footprint of clients and offerings into new adjacencies.
DISYS has proven, through these acquisitions and accompanying processes, that our systematic, deliberate and repeatable strategy works.
- We have built a robust platform for growth.
- We built a set of criteria to look for strategically complementary clients.
- We built a list of targets to match our strategy.
- We developed and executed sophisticated processes that have allowed us to acquire 3 companies in the last year — adding substantially to our geographic coverage, offering portfolio, and client base.
- We have successfully integrated our new DISYS companies in record time, with each integration taking less than three months because of our platform and the expertise of our leadership team.
We hope to close the last two deals this year, then look forward to even more activity next year and beyond!