Staffing Stream: DISYS Outlines Its Acquisition Strategy in 2-Part Series – Part 1
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.
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.