John Rowady has always admired the skill it takes to be an effective dealmaker.
“I love the splash it creates,” says Rowady, founder and president at marketing agency rEvolution.
“You’re not always going to have opportunities fall in your lap or have an industry where things just come to you,” he says. “There are times when you have to go out and find it. If you want growth, dynamism, innovation and game-changing activity in your business, dealmaking is something you need to embrace.”
When Rowady launched rEvolution in 2001, he had just lost his job. Rather than wallow in despair, Rowady was already deep into planning his next chapter, a company that would put a new spin on the world of branding and sports marketing.
His Chicago-based company has grown to more than 100 employees and has worked with well-known clients such as Red Bull, Chipotle, Land Rover USA and Continental Tire to develop integrated sports marketing campaigns.
Dealmaking has played a key role in the success, as rEvolution has made four acquisitions since 2009 to broaden its reach.
In this Dealmaker feature, Rowady shares his passion for M&A and the strategy he follows to identify the right acquisition targets.
Keep driving forward
We all need to have variety and change in our lives. We have a tendency when we get used to things to slide back into an almost idle state. I don't necessarily call it laziness, but we all need to be motivated to go to the next level. As humans, we get excited about things, but then there's a shelf life on how much that excitement motivates us. When you’re involved in dealmaking or acquisitions or creating new divisions, these are impact points that showcase to your team that you're driving ideas and that you expect innovation.
I don't really know how you can own a business today and keep it growing unless you are a dealmaker in some capacity or another. There is this whole network that depends on you and the business. How do I keep it going? How do my services match up? What’s our competitive edge? You’ve always got to be looking at what moves do I need to make to be able to stay relevant and thriving? If you're not motivated around dealmaking, then your ability to own a business and maintain long-range success will be short-lived.
When you go after companies that may not specifically be looking, it's good to legitimize yourself by having a representative. Because then, anybody you contact knows that you're serious, you're legitimate and you are prepared to do a deal. Otherwise you're wasting their time. That's how it happened for me. At first, I didn't have a representative and I'd be looking around. But unless it was somebody I knew, it was hard for me to get them to take more than a meeting and be serious about it.
Fuel your growth
As we grew, there were times where the impact of our organic growth couldn’t match the speed of the marketplace and what we needed to do. So that's when I started employing my resources to look outside, to add impact, add people, add new partners, add new companies, new markets, new sports and new regions of the world, components that would help accelerate the vision and the mission of the company. It would also reinvigorate and create more staying power for my current team.
Dealmaking can be tricky if you’re not careful. If you know that your environment needs some octane, you have to spend the time to find the right opportunities to make a deal. Some of the mistakes have been, I’ve got to do a deal. I'm in a hurry. I will compromise my focus and take something that is fringe to what we should be trying to acquire and try to make it into something that hits the bullseye. If I know my business and I stay focused, it's a limited group of opportunities out there that is really a fit. When you get down to slim pickings and everybody's lined up to try to bid on a firm that wouldn't even be a tier 2 or 3 in a different kind of marketplace, that's where it gets to be cumbersome and you can make a lot of mistakes.
You may think that a bigger organization is going to be more mature than a smaller organization that you're going to acquire. But I found that the smaller organizations were actually more nimble. Larger organizations have more processes and more rigid controls in place that you don't realize until you do some of these bolt-on acquisitions and that emerges as one of your bigger issues. It's not really the integration of the new family members. It's the changing of the old family members. We've done better over time letting cultures meld together over a longer span instead of jamming it through the system in some onboarding period that I found was unnatural and created a lot more animosity and led to a lot more issues.
