Business leaders have all gone through tough times, such as the need for significant layoffs, in different ways. When events such as that occur, people — employees, management teams, even customers — are looking for direction, but, says rEvolution Global Head of Corporate Development Tony Lorenz, they also want to be heard.
"So, to the extent that you balance that direction that you're giving them, so they see and feel the confidence of you as a leader, and at the very same time you're listening hard, and I mean really hard, for what the best ideas are within the people that are there, that's probably where the value is going to come out," Lorenz said at the 2023 Chicago Smart Business Dealmakers Conference. "We're not going to come up with brilliant ideas every time. Most of the times they come out of the frontlines because they're the ones that do all the work."
As a privately held business without any outside professional money, he says it's important to keep a strong balance sheet because without a strong balance sheet, they can't go out and buy other agencies. So, to the extent that they're finding good process, and making sure that makes its way into the balance sheet, and then purposely taking that capital and dropping it into carefully considered acquisitions in markets where they are not in today but want to be tomorrow has been their plan for the past two years, during which time they bought four companies. That process and the results have helped strengthen the company in more ways than one.
"And it is invigorating for a couple 100 people at rEvolution to see us buying companies and doing what we're doing; they want to stay on this train. That's part one," he says. "And part two, they know we're doing it responsibly, because they know, not everything, but the level of transparency, I'm told, is pretty remarkable here versus a lot of other businesses our size, especially as a private family-held business."
Sports marketing, he says, is a fragmented industry, with only about four or five other companies that are the size of his business or a little bit bigger. In that environment, he says a lot of businesses are tired. So, he's been really active in buying companies right now because there's a wealth of opportunity to buy at multiples that make a lot of sense.
"The focus of the business has been: have a strong balance sheet all the way through and a collective focus by the entirety of the team on enterprise value," Lorenz says. "Everybody knows we're after building enterprise value at rEvolution; everybody on the team knows that — it's a clear, concise message. And they also know that enterprise value is driven by EBITDA, primarily. And so, everything they do, and are incented by and paid on, is EBITDA. So, we're able to lift enterprise value, which helps our balance sheet, which helps us get after that fragmented market."
