Aaron Grossman was just 27 when he left a good management job at Robert Half to strike out on his own, forming Alliance Solutions Group with two partners to serve the financial and accounting sectors. He expanded into new niches and over the last two years, Alliance completed major acquisitions of companies in Connecticut and Oregon, taking it to $100 million in revenue this year.
Smart Business Dealmakers sat down with Grossman to talk about finding the right deals and not neglecting your core business. What follows is a transcript of the above video, edited for readability.
Study key data points
Data is obviously really important to how we evaluate a potential acquisition target.
How our process starts is actually through data and being able to look at financials. Typically, at least the way we've approached potential targets up to this point, is we'll leverage a broker or an outside expert that is focused in on the space, and they help the company that they're looking to help sell — they'll help them create a book.
Typically, we'll have to sign an NDA around that to be able to have access to that book, but that book gives us a sense, really, of who's the leadership that's in place? What do their financials look like? They might not define who the customer is, but they'll have Customer A with this amount of sales, so we'll be able to tell how diversified their portfolio of business is.
I was actually talking to my CFO earlier today about this, that the two most recent acquisitions that we've ended up executing on, I knew within the first five minutes of looking at that book that those were the two that we needed to buy.
We've probably looked at at least 80 over the last two years. But literally within the first five minutes of looking at the book, I knew those two were the two that we needed to bring into our family.
Identify shared core values
I think the speed that I end up understanding that this is really one that we need to focus in on, again, goes back to the pillars that I built our strategy around, which is a highly diversified portfolio of business.
Both of those companies, even though one's in Connecticut and one's in Oregon, both their largest client made no more than 4 percent of their total revenue, so that was really good. Then when you look at their second-tier leadership outside of the founder, both companies had people that had been in place for at least 20 years. That was a telling sign for us.
Then pricing, that was really easy. We were able to look at their pricing and recognized very quickly that they were aligned to how we would approach things. That was like instantaneously [I] knew that there was a connection there.
Don't neglect your core business
I think it's a good question to ask how do you do both. How do you manage an acquisition strategy and executing on that and also running your core day-to-day business?
I would say, for me, that's still very much a work in progress. I think if I evaluate over the last five years, we've learned how to buy companies successfully and bring them into our world, and that's helped elevate our growth. But when I peel the onion back, I'll look at our core business and say we haven't grown year over year in the ways that we did prior to us executing on an acquisition strategy.
