When Kevin Routhier founded Coretelligent, he wanted to reinvest as much as he could back into the business — to buy the right systems, the right tools — but also to have the right people to form the right team around him.
"Ultimately, when you're going out to market, you're not just selling a company, you're not just selling a moniker, you're selling a team," says Routhier, the company's president & CEO. "You're selling your people. You're selling their capabilities, their skills."
Through nearly 18 years in business, he's bought seven companies, which has enabled the business to have two successful exits. But in many ways, it goes back to paying attention to the team that surrounds the owner.
"Does that team have the capability to not only bring you to an exit and get the outcome that you're looking for, but to produce the metrics that are going to get you that high-end multiple?" he told attendees at the 2024 Boston Smart Business Dealmakers Conference.
Among the elements that yielded success with the first exit was paying attention to margins — what are they selling and why. They also wanted to create a revenue stream that was sustainable and renewable, and ultimately drives real value to clients. And they had to have both a foundation and results that would stand up to intense buyer scrutiny.
"What happens in diligence, it's not just a look under the hood," Routhier says. "Diligence is something that it's going to be painful. It's going to be very invasive. You're going to have to have parts of your business in tip-top shape to not only come in with the right outcomes, but to really create confidence in the deal itself. Deals don't happen because a buyer doesn't have confidence. They see something that might spook them, and then they start to look in other areas of the business. And if you have enough of those areas that don't pass muster, then ultimately you have some more work to do."
After educating themselves prior to the first exit, they knew that they had to have the right margins, the right products, and couldn't just have the same services into perpetuity. They also needed to have a personalized level of relationship with their clients as well as their internal team.
"Diligence isn't just about your metrics and your deliverables, and how well you're performing," he says. "It's what kind of relationships you have with your people. Are you sustainably retaining your top talent."
Headed into that first process, he says they had their ducks in a row, and had done a sell-side QofE. All of that, he says, inspired confidence in the potential buyer. Then he used that same formula in 2021 when they went to market, but further amplified their efforts and moved the goal.
"And I realized that the reason why the goal keeps moving is I love what I do," Routhier says. "And the reason I love what I do is because I truly enjoy the people that I work with. I truly enjoy working with the team. And we would not be here, and we would not have the success we've had, without that team. But more importantly, we wouldn't be here without our clients. It's so important to really pay close attention to your client relationships, investing in those relationships — personally investing in those relationships, not just on a service level or on dollar level, but really giving of yourself, giving your personal time to those clients, that made all the difference. And that really amplifying the metrics, really focusing and doubling down on all of the major indices that really generate value, generate multiples. We're trying to get the highest multiple, and ultimately to get there, you have to have obviously the finance piece, but the client piece is equally as important. But most importantly, you have to have great people providing those services, you have to have great people on the ground. Because without your team without the people that ultimately make this go, you don't have a business."
He says the formula that got a business from point A to point B isn't necessarily the formula that's going to take it from B to C. So, what got them to their first exit was a different formula that got them to the second exit.
"A lot of restructuring, a lot of looking at different pieces of the business and really asking challenging questions, challenging ourselves as a management team, what are we not thinking of? What could we be doing differently? Is there a more efficient way for us to approach the process of customer relationships as a more?" he says.
Something they did to change customer relationships was to think about sales in terms of hunting and farming. Hunting is their sales reps while the farming piece is about cultivating existing relationships so that clients don't feel as if every time they have a conversation with their rep, that rep is looking to extract more money from them, because that erodes trust over time.
"That was a major change in the business that ultimately helped propel much stronger existing client revenue to complement that organic revenue, because if you're not retaining and growing what you have, and it's walking out the back door, that means you got to work that much harder to sell," Routhier says. "And that's also something that, from a diligence perspective, they're going to look at on a retention basis."
