Jeremy Weisz 12:48
And then in most cases, I think the founders stayed on, they didn’t just go back in and retire on a beach. Right? Correct. Yep. So they’re on board. And then how did you capitalize it? Change over time, like early and I know, I think you had said there was nine companies that were acquired under the kind of that Republix umbrella.
Thomas Le Maguer 13:15
And so the first couple were really done in a super creative way, because we had no money. So you know, it was a combination of, you know, lines of credit, and primarily that, and then, and then on a go forward, it was commercial debt. So using the big banks, to go ahead and fund the cash portion of the deals. And then in 2021, then we did a large corporate deal with the Bank of Montreal, where then they gave us, they kind of refinanced all the all the debt, and, and provided us with an acquisition facility. So that’s kind of been the evolution.
Jeremy Weisz 14:01
What made you decide to, like at this point in time, you’re not actively looking for acquisitions? Correct. At what point did you decide Okay, we’re good for now until later.
Thomas Le Maguer 14:15
Well, it’s more there’s acquisition, and then there’s integration. And when it comes to like a standard private equity model, which we’re not it’s acquire a bunch of stuff based on your size, you’re worth more and then you go ahead and sell that or take it public, right. But for us in terms of having an integrated model, where all of these services are available on one centralized platform, to be able to deliver seamlessly to people it’s not a normal roll up. It’s not it’s just we found the most effective way to get those services is through acquisition because building and partnering for it didn’t work. Right so it’s more acquisitions was a two rule to build the vision instead of the business model itself. And then what we’re realizing was, what I realized was that I really needed to go ahead and dive into those respective operations do the hard work of creating offers for the market that were performance based or value driven, that took the best pieces of each of these different agencies, and package them in a way that was meaningful for the customer. Right. And so that takes time. And for example, like one of our companies, we acquired them for like one and a half million dollars, they were doing one and a half million dollars’ worth of revenue, and very specialized in the dental space. And just by reframing that offer, and going out to market with very scalable lead generation sales, conversion processes and delivery processes, I would expect that particular offer to do anywhere between seven to $10 million with a revenue next year. So if you think about that, like there’s such Leighton power within each one of these businesses that we’ve acquired that one, we know how to do acquisitions, clearly, we did 10 And two years, that’s ruthless. Okay, we know how to do that. The second portion is unlock the value that has been acquired, right? Because that, ultimately, is what directs the transaction and also the whole acquisition thesis, like, why did you buy this thing? Right now? We had some failures, no doubt, we also had some big wins, right? And so this is an example of like, how best to go ahead and look at different companies and be like, okay, do you have a very strong vertical expertise. And that goes kind of into acquisition criteria, even though we’re not looking right now, we will be in the future. But it’s like very strong vertical expertise, you know how to deliver predictable results in terms of revenue sales for that particular vertical, like, you have a way of doing that, and it works repeatedly. Right. And then at the same time, like you ideally, have some salespeople that have been able to convert that aren’t the founder. Right? That’s also very, very important. And usually a million dollars in EBITDA. Right? Because when you’re at a million and EBITDA, you have some degree of systems, right? So when we look at that situation, then we can take a company like that, and probably five to 10, exit within a one to two year period. And that is a great acquisition thesis.
Jeremy Weisz 17:51
I’d love for you to expand a little bit on that acquisition criteria. If there’s anything else that you typically look for, you mentioned, the vertical expertise, predictability of results for the clients, salespeople, or just a good team in place. One million EBITA, which you said released the systems or any other criteria that you were looking for.
Thomas Le Maguer 18:14
Ideally, they have a management team that is not the founder, that is operating the business. Because that means there’s been a proper knowledge transfer from the founder that got procedure eyes, and that somebody who’s not them can do that work. And especially in this sort of a business, like it’s all around the process that you have around the management and the delivery of your services. Right. So that’s also a plus.
Jeremy Weisz 18:48
I know, we learn from our failures, sometimes more than our successes, I love to talk about what are some of the learnings from the failures, but it’s interesting, Thomas, I wasn’t expecting to go on this call to say you were not acquiring companies anymore. Because if you look at it, you’ve done in a couple of years, you’ve grown over $30 million, right? Let’s say from my research is over $10 million in EBITA. When you acquire a company, I’m curious about the valuation piece, but like if you acquire company one or two times when they come in to you, they’re immediately without doing anything worth of larger multiple than what you bought them for. Right. So I’m like, why is he stopping acquisitions? But maybe it’s a debt thing? I don’t know.
Thomas Le Maguer 19:38
So there’s also the challenges from a debt market standpoint, there’s no doubt, right, in terms of interest rates rising and otherwise. The other aspect is that like our industry as a whole has been in recession for five quarters. So there’s contraction of revenue. There’s pressure at the level of Mark cutting budgets. Some of our sub segments, especially in the direct to consumer market, they’re not hitting their numbers, and therefore they’re entering restructuring phases and otherwise. So just from a macro environment standpoint, it’s just like, we have to go ahead and see how can we maximize what we have, right? Because then adding more things just increases the complexity of what needs to be solved. So I often like it’s tattooed on my back a difficulty is nothing more than an opportunity. So as these difficulties came in, we said, what are the fundamental things that we need to go ahead and focus further on customer retention, the onboarding experience, the customer experience, going to the market value based instead of commoditize. Because we were on an up market is very, very easy to sell when everything’s going great. But when things are choppy, and the environment is tough, if you’re still selling and converting at a higher rate, then you know you have a strong value based offer, because people are willing to part with their money based on the value that you’re delivering. So it really forced us to shift our offers, much closer to the vision of Republix of this this hassle free and predictable revenue, one stop shop. And we said okay, well, let’s do the hard work. And once that hard work is complete, then when we acquire, then we’re going to be extremely successful, because you’re right, let’s say, we buy them three, four times. And then you’re worth 10 times, let’s just say, automatically, you’ve two and a half extra your equity value or your enterprise value, right, because they’re still dead. But if now we said well, it’s not only that, but now we can actually 10x what that EBITDA was. Now you you’ve created 1.25 orders of magnitude return, that that is insane, right? 25 times return on that initial thing. And when your cash outlays zero, that’s beyond an undetermined return. So it’s more we figured out the front, great, we’re good at that. Let’s figure out the back. And funny enough, by having that shift in perspective, it actually changed our acquisition criteria. Because if we look at the previous model, and because it’s very easy as human beings, we like to take the easy row. It’s funny that the easy route is do 10 acquisitions in two years. But the easy route is like, oh, let’s just do this thing and look great, we generated another $20 million worth of equity value, let’s do it again and again, and again, the lens, there’s financial. If we take the lens of the customer at the center and say, how do we make that customer win? And the goal then is market penetration and market share and share of wallet, which only comes if you’re delivering value to the market? If not, they won’t expand the customer won’t expand with you. Then suddenly, the acquisition criteria is it’s actually not about the financial aspect. It’s how good is my market? How productized Are you? How scalable is that solution? How predictable is our revenue? I mean, the results for the customer, the revenue for the customer? Okay, great. Let’s scale that. Because what happens there like that example, like $1.5 million company doing 400,000 in EBITA, da, going to let’s say $7 million worth of revenue at like 3 million in EBITA that return of let’s say, 10 12x is far greater than the two and a half times arbitrage that we had from going from just the multiple arbitrage. Not only that, but we still get the multiple arbitrage on that extra two and a half million dollars of Vimbly don’t we generated. So it’s a triple bite at the apple. But you got to know what you’re doing. And for that, it requires like the proper systems, the right kind of team, the right integration process and knowing how to unlock that value. So that shifted our focus. The other thing is, we don’t need you to be 2 million in EBITA. Technically, we could buy a breakeven business that knows how to generate great revenues for their client. We pays nothing for zero risk and then scale it to 3 million and EBITA. Okay, well, that’s even less risky than anything else. So just some interesting thoughts that have come from that shift in perspective by saying, we’re not going to do this thing. We’re amazing anymore, we’re going to focus on this thing that we’re terrible at. It wasn’t terrible. I mean, we just from cross sells with what I was calling terrible was 20% of our revenues last year. But we could just be so much better if we really got diligent on that, because then there’s nothing stopping us from doing an acquisition a week. So sometimes we got to take a step back to build the infrastructure to be able to spring forward. Right? And a bunch of people would say you’re sprinting at 10 acquisitions in two years, I say, no, Apple does one a week. So we got a long ways to go. But you need to be able to digest that and unlock the value. Right? And unlocking the value comes by unlocking more value for more customers of that thing you’re acquiring.
Jeremy Weisz 19:42
Talk about the evolution of agency valuations a little bit, I also want to point out what you said, I did an interview with Sujan Patel, who started Mailshake. I don’t know I think when we talked, they like 70,000 customers, but he was doing acquisitions, and he was talking about this. The integration is tough. And they gave at least six months per acquisition for integration alone. And it was not easy. So you guys are on hyper speed there, but I’m talking about valuation. Because you’re talking to a founder, right? It’s their baby. There’s an emotion piece you’re looking at just here’s the criteria, here’s the financials. But when you’re talking about a founder, it’s a little bit different conversation, sometimes they have the yield tomy inflated view of how much our company is worth, potentially. Right. I don’t know if you found that, how did those conversations go? And it’s kind of a valuation piece. What have you seen with the evolution of evaluation and that conversation with founders?
Thomas Le Maguer 27:13
So it starts by being really clear where you have to say no. So our underwriting model is very clear. We know where the valuation needs to be in order for them to get their money. Right. We also have the benefit of having an acquisition facility with BMO, when we decided to go ahead and start acquiring again. So there’s, there’s also the money’s there. So it number one is like, understanding what is your model? Because you can’t lose? Acquisitions are risky. Okay, so that’s number one. So if I’m very, very clear in terms of what we can pay, you can choose to say yes or no. And if you say no, and if it’s close, we can have a conversation. If it’s like, I need 8x. And you’re doing 400,000 EBITDA. Next, there’s 14,000 agencies and 95% of businesses don’t sell. And so it’s also an internal recognition that, in that conversation, I am the valuable one. Now, I don’t say that out of pride, it’s from a negotiating standpoint, it’s like you will not find somebody else that can action on this deal, and actually get the deal done. Right, so on like, 13, ello wise, we close 10 deals, that’s a really, really high hit rate. So it’s like do choose the hit rate, and the money is there. And this is how it’s going to work. And by the way, this is how you get a second bite at the apple, if that works for you. Great. And if it doesn’t next, because there’s another one to you. Right? So that’s what I learned. I was emotionally attached to a few and I was like, No, and that’s where having proper mentorship of that those levels, I think is important.
Jeremy Weisz 29:19
We’ll talk about mentorship in a second. But um, back to the failures piece. What did you learn from some of the failures that you brought in to the acquisitions going forward?
Thomas Le Maguer 29:32
So and they don’t just tie down acquisitions, like there were many, many things that I would do differently now. But I’m grateful for what happened because it built me to who I am today. From an acquisition standpoint, really making sure that the revenue is recurring, and that the contracts are strong, we got our asses kicked on a couple because of that. The other aspect…
Jeremy Weisz 30:06
Like there wasn’t recurring revenue.
Thomas Le Maguer 30:09
There wasn’t, we didn’t dig deep enough. Right. The other one is when the founder, or the founders are responsible for sales, and have a lack of process with regards to managing their companies. Now, that bid us a couple times too. So those are some of the learnings there. But I think the biggest learning is at the level of governance, like we set a board up right off the bat. And it’s important that that board be aligned with your values. And what it is that you’re looking to create, that running a business is really hard. And so having supportive people that are honest, that will tell you the bad news, that provide the critical feedback, but do it in a kind way is important, right? And that I think is probably the most important because the board represents the shareholders. And it’s important that if you’re the founder of that company, and you’re the majority shareholder that you control that board, and I did. And so that became very problematic, and ended up forcing a shift in strategy at a time that it was the wrong move. Right, it was the wrong move, because nobody knows the business more than the CEO. Nobody, nobody has more information about the business is more in tune with what needs to be done. And ultimately, and this is something that I learned from our current chairman, and mentor Uri Levine, who, he was the co-founder and CEO of Waze to traffic navigation up,
Jeremy Weisz 32:01
I think they sold over a billion dollars to Google.
Thomas Le Maguer 32:03
Yeah, like 1.1 billion. And then he did it again with move it and they sold to Intel for a billion, like he’s just a unicorn mentor. Right? And at the end of the day, it’s just really, really important to have the right people surrounding you from a mentorship standpoint, and just really, really supporting you because the CEOs job is the hardest job. It just is. Right? There’s so many variables, there’s incomplete information, and you need to make decisive decisions on a very consistent basis, because it’s life or death to the company. Right?
Jeremy Weisz 32:48
Talk about some of the mentors and a lesson, or advice I gave you. And maybe we could work in reverse order. Because when I go back to the Thomas, the one man army Thomas, I’m sure there were different mentors, either actual personal mentors or distant mentors than then there are now but let’s go reverse like now, some of your board members. Some of the advice they gave you start with Uri.
Thomas Le Maguer 33:19
Man URI is just incredible.
Jeremy Weisz 33:23
How did you get in touch with Uri in the first place?
Thomas Le Maguer 33:25
I met him at an investor roundtable with YPO, which is a global organization I’m part of Young Presidents Organization, one of the best things I’ve ever done. And, and he was presenting and I was just asking him a bunch of questions about business. And otherwise, we just ended up having a great conversation. And I was like, hey, we should do something he’s like, if I can add value, I’d love to be a part of it. And he’s just been incredible. So the lessons from Uri, there’s just so many, like one of them is put the customer and their problem at the center of your universe. So that’s been life changing for me. The other thing more from a CEO standpoint, is that how to go ahead and deliver like tough news and feedback in a way that is constructive. He just does such a great job at that and just seeing him operate is incredible. He also forces me to celebrate our wins. Like hey, take a moment that’s awesome. Like you’re not taking enough time on that and bring Not to your team. Right? So yeah, Uri’s really been at the level of like leadership, and also like a holistic way of looking at the business in a very pragmatic way to drive results. Prior to that, another life changing mentor was Dan Pena. And there’s a few different lessons there. But one of them is that concept of next that I brought up earlier, he was the one that taught me not, he also taught me everything I know about M&A. So that was very, very helpful. And at the same time to be harder. But there’s a distinction between being hard you can be hard and demanding of people and kind, and being hard and demanding and an asshole. Right, there’s a distinction. And you’ll see a lot of leaders out there, they’re trying to wrestle with this situation, right? By being hard and demanding of my people, because I was leaning on being too nice, and wanting to be liked. That’s one of the things like, as a CEO, it’s not about being liked, it’s about doing the right thing. And holding your people to a high standard. And I choose to do that through building them up coaching, giving them proper feedback on it, holding them to account. And ultimately, if they don’t perform, then it’s the conversation that needs to be had. And then you My job is to have the best team on the bench at any given time. But doing that with kindness, I think really matters. And prior to that, another critical mentor for me was Opher Briar. And he’s an Israeli. He was a top transformational consultant for Breyer, group, Disney, Nike, whatever, and he never went to school. Then he revolutionized the education system in the Czech Republic, was brought into Singapore’s education system to go ahead and work on that he worked on Elon Musk’s school. So he’s a teacher at heart. jazz pianists, martial artists, like just an incredible human being that dove really, really deep at the level of how learning occurs, and how to transfer knowledge from one individual to another and how to go ahead and bring maximal effectiveness and efficiency in a human being. So he became a mentor, I met him through an event, everybody was clamoring around. And then we went out for dinner in Chicago. Funny enough, and he’s like, I’ll work with you. And then what I did with all of my mentors, is I was always the best student. Right, I was Dan’s best student, I am Uri’s best student, I’m Opher’s best student because they a mentor loves a great student. Right? Maybe I’m not the best on some of these, but, but they’re just like, Man, this guy’s just doing everything I tell fast. And they love that. And so the mentor then gives so much more. Like, I wasn’t paying off, he was getting paid $1,000 an hour, I paid him enough. And he loves speaking with me, still does. And so the thing that he showed me is that all technology is a methodology. And the key at the level of delivering results is a predictable process. So and that was transformative in terms of the thesis of republics, right, which is turning a service into a repeatable methodology which can now be tech enabled for massive scale, and how to produce that result in the end. So I would say those have been like the most critical mentors from a business standpoint, and on a spiritual side, I had a guru and who initiated me and Buddhism, Hinduism Christianity, taught me meditation, breathing exercises, concentration, like really, really working on my spiritual self at a whole other level. That was extremely scientific and that who I am impacts everything I do. So for me, tapping into this source is a critical area of my inspiration, strengthen everything that I do. So Guru Ji was instrumental in transforming my helping me with a predictable methodology to transform my BA. So yeah, those are just a few but and I’ve had…
Jeremy Weisz 40:05
Talk about Jason Swenk for a second his role and influence.
Thomas Le Maguer 40:09
So Jason Swenk is fucking awesome. Funny enough, it was his agency Blueprint that helped eRational procedure eyes, a lot of its operations to scale to the next level. So that’s how I got introduced to Jason. And when I created Republix, with my co-founder, Niko, I reached out to him like, hey, Jason, we’re about to do this thing. It’s crazy. This is what we’re gonna do. We have nothing right now. I’d love for you to be on my board. And so we had an advisory board then, and he’s still active now. And he’s like, yeah, well, I’ll come in on this, let’s do it. And so, Jason is just a very kind and practical person. And he’s extremely efficient. What he does with an hour, and how he goes ahead and compartmentalizes his priorities in his life, I highly respect. He’s a great marketer, he’s a great business leader, he knows how to create product. But also, he’s just like a really great and kind sounding board, always there to support.
Jeremy Weisz 41:20
We have a few more minutes, I can go on for hours with this Thomas, there’s a lot to unpack here. But I do want to highlight a little bit more about what you do as a company. And I don’t know if we should talk about the IT services one or the r&d tax one, which will be better to talk through and what you did.
Thomas Le Maguer 41:42
Gotcha. So I mean, so in terms of like examples of work that we’ve done and the type of results. Yeah, like, for example, there’s an IT services company, selling to the mid-market, help them generate over 3 million in sales in a six month period. There’s an r&d Tax Credit professional services company that was coming into Canada that time, so they had no presence here. So we took them zero to $5 million in pipeline in six months. And then they ended up closing a few million dollars’ worth of business out of that.
Jeremy Weisz 42:18
Talk about the IT services for a second, what were some of the levers you had to pull to go from zero to 3 million.
Thomas Le Maguer 42:25
So we the tactics that were used within our ecosystem, email, LinkedIn, video, targeted calling an event based methodology to go ahead and bring those individuals in one centralized event, and automation, marketing automation. So that was that one? So you see, it’s these combinations of these different what we call skews, kind of like inventory skews that were pulled together to deliver a result?
Jeremy Weisz 43:01
Love it? Thomas, last question. And before I ask it, I just want to point people to check out more, learn more republix.com. Are there any other places online, we should point people towards to check to learn more?
Thomas Le Maguer 43:20
That’s a great place to start. It’s funny, our website is always the lagging indicator of what we’re doing. So that’s reflective of who we were maybe two years ago. But as we’re looking at these things, I would say come on my LinkedIn connect with me. And then from that standpoint, more than happy to have a conversation. There’s also different interviews and otherwise that I’ve done here over the last little bit, and that goes into our methodology and other ones. But yeah.
Jeremy Weisz 43:57
Last question Thomas is just, you’re obviously a voracious learner, soaking up from mentors books. I’m just curious some of your favorite resources and books could be leadership business. What are some of your favorites?
Thomas Le Maguer 44:14
One of my favorite books is The One Thing by Gary Keller, he founded Keller Williams and he goes into a methodology to prioritize your life and how best to go ahead and focus for uncommon results. That books been a game changer for me. I recommend it all the time. Another one is actually Alex Hormozi. And he came out with a book called $100 Million Offers and he just did such a great job on that how to create a brain dead offer that people would feel stupid saying no to. And it’s just very rare to find people who are speaking from experience and not just peddling their wares and the only thing they know how to make money on is selling you how to do something that they’ve only done it by selling it to you, right? That’s not a thing. That’s just like charlatans stuff, right? But the people that are practically in the trenches, getting the work done producing the results, always testing evolving. I really respect those folks. So that’s been a really great book. A Winner’s Dream by Bill McDermott, CEO of ServiceNow was the CEO of SAP. And just a tremendous book of like a very strong leader, that who leads with decisiveness takes no nonsense. And he’s just kind. He’s just a good man. And I really respect him and love his story. It’s a great story all last one Phil Knight, Shoe Dog, such a great book.
Jeremy Weisz 46:01
That’s why I call it a kind of entrepreneurial therapy.
Thomas Le Maguer 46:06
Yeah. It’s amazing because he’s so candid and vulnerable as he’s going through his story. And it’s fascinating. So yeah, those are just a few off the top of my head.
Jeremy Weisz 46:19
Thomas, I want to be the first one to thank you. Everyone check out republix.com Learn more, Thomas, thanks so much.
Thomas Le Maguer 46:26
Thank you so much, Jeremy. Thanks for having me here.
