Episodi
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Local and global investors alike are eager to tap into demand for nearshoring from U.S. and Canadian businesses, which remains high. Investors are also starting to back companies that serve local markets.
In this episode of Deal Talk with 7MA, host Ben Bruggeworth talks with 7MA colleagues Horacio Yenaropulos and Daniel Siller, both managing directors at 7MA.
Investors are “looking for nearshoring advantages and for good businesses with good capabilities inside the region,” says Horacio. Horacio and Daniel explain why investors are so excited about Latin America, the factors affecting supply and demand, and how they expect the growth of private equity in the region to play out.
Investor interest has increased following the pandemic, and both Horacio and Daniel expect it to grow further as the region develops the language and technology skills that U.S. and Canadian companies desire.
They warn, though, that founders and owners should expect lower valuations and increased scrutiny during due diligence as investors look more closely at business fundamentals than they did over the past couple of years. Daniel also notes that governments in the region need to clarify legal and legislative issues that impede investor confidence.
Regardless, Horacio and Daniel are both confident that the future for the region is bright. “It’s a nascent region with nascent private equity,” Daniel says, “I think that over time, a lot of the larger and midsize players will start to look at the region as a great place to invest.”
💡 Featured on the Episode 💡Name: Daniel Siller
What he does: Daniel is a Managing Director with 7 Mile Advisors based in Boston, Massachusetts. Across more than 25 years of experience in investment banking, he has closed over $35 billion in equity raises and $50 billion in M&A transactions. Daniel, who is fluent in English, Spanish, and French, previously worked at several banks including Credit Suisse, Lazard, Morgan Stanley, and Goldman Sachs.
Organization: 7 Mile Advisors
Words of wisdom: “There are many years, if not decades, of potential growth in Latin America.”
Connect: LinkedIn
Name: Horacio Yenaropulos
What he does: Based in Mendoza, Argentina, Horacio is a Managing Director with 7 Mile Advisors and leads the Latin America sector coverage team. He has 25 years of financial experience and previously worked with Globant’s corporate development group, where his responsibilities ranged from due diligence to SPA closing. He’s also held financial leadership positions with several key Latin American companies, including PricewaterhouseCoopers, Hidronor Chile, Viña San Pedro Wine Group, and Belatrix Software.
Organization: 7 Mile Advisors
Words of wisdom: “A lot of good things are going to continue happening in this market.”
Connect: LinkedIn
Name: Ben Bruggeworth
What he
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“We at 7 Mile Advisors are serving companies who are helping businesses procure and use technology in an effort to develop, capture, connect, move, store, compute, and secure data,” explains Founding Partner Tripp Davis, of his work at 7MA.
On this episode of Deal Talk with 7MA, host Ben Bruggeworth talks with 7MA colleagues Tripp Davis, a Founding Partner, and Tim Frye, a Managing Director, about the Managed Services Providers (MSPs) space and what they ultimately foresee happening in the market.
Since 2008, 7 Mile Advisors has been an investment bank solely focused on technology services as a sector-centric bank. They drill into the marketplace in specific sub sectors to map landscapes and identify key businesses that they can serve via M&A, private capital raising, and strategic growth advice.
The MSP sector is an area in which 7MA spends a lot of time. Due to the velocity and complexity of technology environments, it’s a fast-growing market. Tripp and Tim share their own experiences and what they see as this market continues to evolve and businesses continue to get more specialized help from MSPs.
Tune in to hear Tripp and Tim talk about their experiences in MSPs, the future of M&As in this sector, and their dedication to vertical growth in the market.
💡 Featured on the Episode 💡Name: Tripp Davis
What he does: In addition to being one of the Founding Partners of 7 Mile Advisors, Tripp Davis has more than 20 years of investment banking and advisory experience.
Organization: 7 Mile Advisors
Words of wisdom: “As investment bankers, we are looking to help sellers, boards of directors, and private equity groups grow value and, ultimately, unlock that through a successful M&A transaction.”
Connect: LinkedIn
Name: Tim Frye
What he does: Tim is a Managing Director at 7 Mile Advisors with a background in tech-enabled business services. He brings a wealth of industry experience and perspective to M&A transactions.
Organization: 7 Mile Advisors
Words of wisdom: “The core driver of value in all the processes that 7 Mile runs with MSPs has been recurring revenue. We have a saying, internally, that recurring revenue is king.”
Connect: LinkedIn
Name: Ben Bruggeworth
What he does: Ben is a Vice President in Business Development at 7 Mile Advisors.
Organization: 7 Mile Advisors
Words of wisdom: “As we think about the buyer universe, we've seen a number of private equity groups across the country make investments within the MSP space.”
Connect: LinkedIn
Connect with 7 Mile Advisors☑️ For a custom valuation assessment using 7 Mile’s five pillars of strategic value, contact Lexi Papa at
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Episodi mancanti?
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7MA’s Sydney Scadden, Nic Anderle, and Tyler Ratterree all have one significant thing in common - they sought internships to propel their careers.
While in college, Nic had two internships - one at RSM, which gave him great hands-on accounting experience, and another at Copper Run, which ultimately swayed him to pursue an investment banking career path.
With a plethora of internship experiences under his belt - in everything from commercial banks and their loan servicing departments to working in his college’s admissions department - it took Tyler more time to discover his interest in investment banking. In fact, it wasn’t until his internship at PwC during graduate school that he found his calling in deal processes.
For many, like Sydney, the ultimate goal of an internship is to have the role transition into or lead to a full-time job, which is exactly what she achieved. Sydney was a summer intern analyst at 7MA before being hired as an employee. She went from setting up phone calls and meetings as an intern to leading the deals she had once watched unfold.
On this episode of Deal Talk with 7MA, host Steve Sypek talks with three of 7MA’s finest about their personal internship experiences, the benefits of internships in general, and how 7MA’s own internship program can help young professionals hoping to break into the world of investment banking.
💡 Featured on the Episode 💡Name: Sydney Scadden
What she does: Once an intern at 7 Mile Advisors, Sydney is now a Vice President. Sydney offers project execution, data analysis, and business development expertise and has contributed to the success of more than 25 deals within the IT Services and Tech-enabled sectors since she joined 7MA in 2018.
Connect: LinkedIn
Name: Nic Anderle
What he does: Nic is an Internship Program Coordinator and Associate at 7 Mile Advisors with M&A and accounting experience. Before joining the team at 7MA, Nic was an Investment Banking Analyst Intern at Copper Run Capital, which is an M&A advisory firm focused on the lower-middle market.
Connect: LinkedIn
Name: Tyler Ratterree
What he does: Tyler is an Internship Program Coordinator and Associate at 7 Mile Advisors with finance, accounting, and macroeconomics experience. Prior to working at 7MA, Tyler served as a deals consultant for PwC, which focuses on capital markets and accounting advisory services.
Connect: LinkedIn
Name: Steve Sypek
What he does: Based in Nashville, Tennessee, Steve is the Senior Vice President at 7 Mile Advisors. He has 9 years of international relationship management and business development experience.
Connect: LinkedIn
Connect with 7 Mile Advisors☑️ For a custom valuation assessment using 7 Mile’s five pillars of strategic...
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Happy New Year and thank you for joining us in our first 2023 episode of Deal Talk with 7MA.
In today’s episode, 7 Mile’s co-founders Leroy Davis, Andy Johnston, and Tripp Davis join Steve Sypek to reflect on the eventful period in the M&A world over the past couple years.
They recount coming off a historic year in 2021, where M&A activity in the technology services space and the broader market was at all time highs. They discuss some challenges that 2022 introduced that they may not have expected heading into the year. They analyze the impact of geo-political events such as Russia’s attacks on Ukraine and the Fed sparking further caution as they aggressively drove interest rates higher following a prolonged period of near zero rates.
Throughout the episode, they provide insight into how 7 Mile Advisors responded to these events and what they see on the horizon for the IT Services Industry in the M&A world.
💡 Featured on the Episode 💡Name: Andy Johnston
What he does: Andy is a Partner and Co-founder of 7 Mile Advisors. He has advised on more than 50 business services and digital transformation transactions, including deals with Deloitte, Accenture, Valtech, and multiple private equity funds. He received his bachelor’s degree from Duke University and is a Certified CFA with the Chartered Financial Analyst Institute. Outside of work, Andy enjoys sailing, traveling, and spending time with his family.
Organization: 7 Mile Advisors
Connect: LinkedIn
Name: Leroy Davis
What he does: Leroy is a Partner and Co-founder of 7 Mile Advisors with 25 years of investment banking experience. He has managed transactions in the Technology, Consumer, Insurance, Healthcare & Infrastructure sectors. He began his career with Coopers & Lybrand and is a member of the AICPA. He received his bachelor’s degree from Hampden-Sydney College and his MBA from Wake Forest University.
Organization: 7 Mile Advisors
Connect: LinkedIn
Name: Tripp Davis
What he does: Tripp is a Partner at 7 Mile Advisors with 20 years of investment banking and advisory experience. He joined 7 Mile Advisors from Hyde Park Capital Partners, where he served as head of the Business Services, Technology and Communications group while advising companies in a variety of industries on M&A and capital raising assignments. He received his bachelor’s degree from Hampden-Sydney College and Post-graduate studies at Florida State University.
Organization: 7 Mile Advisors
Connect: LinkedIn
Name: Steve Sypek
What he does: Steve is a Senior Vice President at 7 Mile Advisors with 9 years of international...
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After attending the HIMSS Global Health Conference & Exhibition, Andy Johnston and Ben Garber have insight into the top industry trends as they relate to digital transformation. According to Andy and Ben, healthcare providers and digital service companies are increasingly coming together to shape a more interconnected data environment.
The focus on cybersecurity initiatives was an emerging topic of particular interest. As companies embrace digital and move their data to the cloud, the danger of cyber threats increases dramatically. While cybersecurity solutions are developing rapidly, it’s difficult to keep pace with data exposure risks. That’s why it’s vital to not only focus on your digital transformation solutions, but also on diverse security protocols to protect your information.
Individual companies aren’t the only ones focused on cybersecurity. The government is playing an increasing role in regulation to create specific standards of compliance. Through cybersecurity executive orders, the Biden administration aims to create more transparency and safety within the fast-paced digital world. So, while companies need to remain vigilant to protect themselves, a system to ensure compliance with federal regulations and statutes is important as well.
Andy and Ben further discuss changes in revenue cycle management and how it plays into the digital world, how healthcare providers are refocusing their projects on non-pandemic related issues, and how private equity groups are enhancing their shareholder value.
On this episode of Deal Talk with 7MA, Andy and Ben explore specific ways in which the healthcare industry is moving through digital transformation. From case studies to 7 Mile Advisors’ services, they break down the current trends and share how healthcare providers and technology service companies are coming together to develop better customer care.
Read the Full Show Notes on our website
💡 Featured on the Episode 💡Name: Andy Johnston
Organization: 7 Mile Advisors
Connect: LinkedIn
Name: Ben Garber
Organization: 7 Mile Advisors
Connect: LinkedIn
Name: Ariail Barker
Organization: 7 Mile Advisors
Connect: LinkedIn
Connect with 7 Mile Advisors☑️ For a custom valuation assessment using 7 Mile’s five pillars of strategic value, contact Ariail Barker at [email protected].
☑️ Follow us on Twitter & LinkedIn.
☑️ Subscribe to Deal Talk with 7MA on Apple Podcasts,
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Pablo Hernández became an entrepreneur at just 14 years old when he founded Ingenia Agency, the company he still runs today. As the oldest of seven boys, he had an early start to entrepreneurship through his father, who owned a successful chain of language schools in Mexico. Pablo would accompany his father to work over the summer months, where he first discovered the possibilities available through the internet.
"I was one of the few guys in Mexico who knew how to program websites. Anybody I would find: my dad's lawyer, my dad's architect, the school psychiatrist, the psychologist, I would say, You need to have a website," Pablo recalls. "I always had the vision of building amazing websites. I wanted to build the website for the Mexican Stock Exchange, for Coca-Cola, and Grupo Bimbo. All three happened."
Pablo shares insights into the international growth his company has experienced over the past few years, including expanding into a U.S. office based in Houston. Pablo also shares how the potentially controversial decision to pursue personal coaching over completing his MBA became a growth catalyst for his business.
On this episode of Deal Talk with 7MA, Horacio and Pablo discuss trends in digital transformation and what they're focused on to further their personal development, including developing a business mindset, pursuing continual growth both personally and at work, and embracing lifelong learning.
One way Pablo challenges himself is with triathlons. "Becoming an Ironman means that you become very disciplined in your life and very focused. You try to become the best version of yourself," he says. "You find the time to become hyper-productive … This kind of discipline gives you the ability to think more and to take perspective. I think that [training for] the Ironman and running a business is a great combination."
Listen on the Website.
💡 Featured on the Episode 💡Name: Pablo Hernández
What he does: Pablo founded Ingenia Agency, a full-service agency for creative and technology projects including advertising, web development, and digital marketing, when he was just 14 years old. The company has now been in operation for over 26 years and serves clients such as Coca-Cola, Visa, Diageo, Grupo Bimbo, Kimberly-Clark, Mondelez International, The Mexican Stock Exchange, La Costeña, Nacional Monte de Piedad, Kuspit, and many more.
Organization: Ingenia Agency
Words of wisdom: “I am obsessed with bringing out the best version of myself.”
Connect: LinkedIn
Name: Horacio Yenaropulos
What he does: Based in Mendoza, Argentina, Horacio is a Managing Director with 7 Mile Advisors and leads the Latin America sector coverage team. He has 25 years of financial experience and previously worked with Globant’s corporate development group, where his responsibilities ranged from due diligence to SPA closing. He’s also held financial leadership positions with several key Latin American companies, including PricewaterhouseCoopers, Hidronor Chile, Viña San Pedro Wine Group, and Belatrix Software.
Organization: 7 Mile Advisors
Words of wisdom: “At the end, there is a reward. And the reward is how successful we are.”
Connect: LinkedIn
🗝️ Key Points -
Tom Delbrook grew up loading trucks at UPS. What was originally just a part-time job to get through college led him to discover deals and acquisitions.
“UPS was a great business to learn from. They're willing to constantly challenge you and give you jobs you're not prepared for to see if you can pull it off,” Tom says.
Tom recently joined the 7 Mile Advisors Atlanta team. Just as he experienced at UPS, he believes that people need to be willing to constantly try new things, look at new models, and consider new ways of doing things — it’s one of the many reasons he’s eager to support businesses in technological advancement.
On this episode of Deal Talk with 7MA, Tom discusses how digital transformation has moved forward since COVID started and the incredible technological advancements that have occurred in such a short period of time. He also touches on why private equity has been more interested in IT services lately and shares a few tips for choosing an advisor if you’re looking to sell.
“People that had five or six-year roadmaps of what they needed found they were accelerated into three or four quarters. And people realized there are resources out there that can do this work,” he says. “From a business perspective, [COVID] has changed how all businesses have to think about their operations and position themselves for the future.”
💡 Featured Guest 💡Name: Thomas Delbrook
What he does: As a new partner with the 7 Mile Advisor team in Atlanta, Tom brings a wealth of knowledge to the table from his former role as SVP of M&A Strategy and Integration at Cognizant. Tom has explored a variety of roles but has always gravitated towards the deal side of business ever since his first role at UPS in college.
Organization: 7 Mile Advisors
Words of wisdom: “At any job I’ve ever done, I end up falling in love with deals.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ Digital transformation isn’t happening. It’s here. Tom shares that he saw the need for digital transformation and mobile development long before COVID impacted the ecommerce market. When COVID forced the shut down of brick and mortars, companies were pushed to build enterprise-quality apps, causing a new wave of digital transformation.
★ Private equity has a renewed interest in IT Services. Private equity firms have seen the recurring revenue potential for IT services. It is clear that tech companies with large enterprise clients will always be in demand for more projects.
★ The demand for talent can increase costs. With a limit to the availability of technical talent, for example, full-stack developers, there is a premium that companies need to pay to access top talent in the market.
★ If you’re thinking of selling, don’t sell to the first person who shows up. Tom has some advice for owners who might be considering a sale in the next year. He recommends finding an advisor who will bring you the most logical strategic buyer and encourage you to consider all options by asking the tough questions upfront.
⚡ Episode Insights ⚡[06:00] Mobile has been gaining momentum: Tom saw the demand for ecommerce years ago when he was working with major retailers and Amazon overtook his clients as the largest apparel retailer in the U.S.
[09:18] Ecommerce has turned ROI into a revenue game: Instead of looking for hard and fast returns on projects, the focus on ecommerce has given way to more flexibility. It’s no...
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In this special episode of Deal Talk with 7MA, Partner Tripp Davis leads a discussion on navigating M&A as a business owner or operator.
For the panel discussion, which was part of 7MA’s ACCESS Conference 2021, Tripp is joined by David Lewis, Founder and CEO of DemandGen (acquired by BDO) and Partner at BDO Digital; Andy Fay, Chief Revenue Officer of Innovasource (acquired by Energizer); and George Young, Founder, CEO, and now Managing Director of Kalypso (acquired by Rockwell Automation).
This panel of sellers have all navigated successful exits — some in the midst of the COVID-19 pandemic. In this episode they’re sharing first-hand lessons from their own experience in M&A and first-hand insights from the process.
The panel touches on all aspects of the M&A deal process — finding the right partners, working with a trusted advisor, navigating the emotions, and preparing your team once an acquisition goes through.
“I didn't go into the process expecting whether we would go down the private equity route or the strategic route. I really was open to both,” David says of getting acquired. “At least I thought I was; you really do some soul searching when you have people at the table.”
He continues: “When we had 22 offers, the majority of them were private equity, and there were about five strategic offers. And what made sense was it was very clear that I wanted a platform for the business that would catapult our growth.”
When discussing the sale of his consulting firm to Rockwell Automation, George admits being a little “naive” and “narrowly focused” early in the process. He shares how working with 7MA paved the way for a different kind of exit: “I think one of the things that you (7MA) helped us do was not go exclusive. Let's keep this thing open. Let's create the market.”
Tune in to the episode to learn more about the acquisition process directly from business owners.
💡 Featured Guest 💡Name: Tripp Davis
What he does: Tripp is a Partner with over 20 years of investment banking and advisory experience. He joined 7 Mile Advisors from Hyde Park Capital Partners, where he served as head of the Business Services, Technology, and Communications group while advising companies in a variety of industries on M&A and capital raising assignments. Previously, Tripp served as Vice President at DecisionPoint International and began his career with Livingston & Associates.
Organization: 7 Mile Advisors
Words of wisdom: “Strategic points, operational points, transactional points and emotional ones are all part of the transaction cycle.”
Connect: LinkedIn
💡 Featured Guest 💡Name: David Lewis
What he does: For more than 20 years, David has been a pioneering innovator in digital marketing, and has overseen marketing for some of Silicon Valley’s leading technology firms. David and his team at DemandGen have been at the forefront of digital transformation. The company was acquired by BDO, one of the nation’s leading accounting and...
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In this special episode, recorded during 7 Mile Advisors’ 2021’s ACCESS Conference, 7MA Managing Director Horacio Yenaropulos hosts a panel discussion on exploring international M&A trends, focused on Latin America.
Joining Horacio are experienced international investor Mario Masrieh, Principal at Trivest Partners, which recently invested in Argentinian FinTech company Veritran; and Daniel Lopatin, Co-founder and CFO of tech consultancy ArganoUV. Daniel’s company United Virtualities was acquired by Argano in February 2021, in a deal that was facilitated by 7MA.
Latin America has a need and market for new digital solutions. Mario says that this was one reason Trivest invested in Veritran. “When you look at the unbanked and underbanked populations ... there's a huge white space,” he says. “Both the governments and the private sector need to bring the populations into the financial institutions, to create more wealth for the population and to support commerce.”
The panel reviews the complexities and challenges that investors may encounter when moving into LATAM, including the diversity of the region, regulatory tax differences, and how to select strategic markets for your business goals. They also discuss best practices for working with the lawyers and accountants on your team.
Daniel believes that understanding the culture of a country or region can be the difference between the success and failure of an acquisition in LATAM. “At the end of the day, your monetary success is attached to your ability to get together with them, and work together for the foreseeable future,” he says. “You shouldn’t undermine the importance of cultural differences when you come into a deal.”
💡 Featured Guest 💡Name: Horacio Yenaropulos
What he does: Based in Mendoza, Argentina, Horacio is a Managing Director with 7 Mile Advisors, and leads the Latin America sector coverage team. He has 25 years of financial experience, and previously worked with Globant’s corporate development group, where his responsibilities ranged from due diligence to SPA closing. He’s also held financial leadership positions with several key Latin American companies, including PricewaterhouseCoopers, Hidronor Chile, Viña San Pedro Wine Group, and Belatrix Software.
Organization: 7 Mile Advisors
Words of wisdom: “An M&A transaction process is normally intense and time-consuming for founders and managers.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Mario Masrieh
What he does: Mario is a Principal at Trivest Partners – a leading private equity firm focused on partnering with founder and family owned businesses. He is responsible for analyzing investment opportunities, identifying strategic acquisition targets, and monitoring existing portfolio companies in the firm’s non-control investment strategy. Prior to joining Trivest, he was a private equity Vice President at Gridiron Capital, and also previously worked as an analyst at Morgan Stanley, in the global consumer and retail team.
Organization: Trivest
Words of wisdom: “We don't re-trade our deals.”
Connect: LinkedIn
💡 Featured Guest... -
Join 7MA Partner Leroy Davis as he sits down for a fireside chat with the Assistant Director for Science and Exploration Science Directorate at NASA Headquarters, Richard (Rick) Davis. On this special episode of Deal Talk, as part of the 2021 ACCESS Conference, they discuss Richard’s background and the fascinating work his team is doing on the Mission to Mars program.
Leroy takes the opportunity to ask Rick how he first became interested in space, his involvement in the Mars Mission, and the technology behind the project. Private equity investors will be interested to hear Rick’s take on private equity, commercial involvement in space exploration, and how NASA and the government partner with private entities to advance space travel.
Rick grew up on a farm outside of Charlottesville, Virginia, in a rural town called Happy Creek. There, the lack of light pollution means “the night skies are dark as anything and you could just see star fields like you wouldn't believe," he explains. "I remember walking outside and seeing them and I was just totally drawn to that.”
Leroy and Rick discuss William Shatner's recent space flight on Jeff Bezos' Blue Origin, as well as commercial developments in space travel. As a child, Rick was an obsessive Star Trek fan, which further inspired his future in space exploration.
“As we look at going to Mars, there's actually two parts of the equation," he says. "Because when you see the Blue Origin … and the SpaceX launches, the cost of getting to space is dropping dramatically. So that increases our ability to push stuff up and to make these missions more affordable.”
💡 Featured Guest 💡Name: Richard (Rick) Davis
What he does: As the Assistant Director for Science and Exploration, Science Directorate at NASA Headquarters, Richard Davis is an accomplished aerospace engineer with extensive experience working in space exploration. His current role entails significant integration across all mission directorates and offices involved in Mars exploration. He is fluent in three languages, including English, Spanish, and Russian, and has earned numerous accomplishments and awards. Richard is also an instrument-rated pilot with 600 hours plus of flight experience.
Organization: NASA
Words of wisdom: “I think that if we do it right, you use the federal government to allow the private sector to establish a toehold and to get the sea legs — or space legs, if you will — to actually get up there. And then they will just go a lot further than any of us would imagine.”
Connect: Twitter
🗝️ Key Points 🗝️Top takeaways from this episode
★ The cost of getting to space is dropping dramatically. The Blue Origin and SpaceX launches are examples of what is possible when space travel becomes less expensive. It increases our ability to expedite plans for other missions and make future missions more affordable.
★ Let’s learn from Lewis and Clark. Rick believes we can learn from the Lewis and Clark expeditions. The explorers set out with a limited supply of materials and lived off them to extend their journey. This is what astronauts must do to make a Mars mission successful.
★ Space assembly is the new frontier. The International Space Station has provided the ability for humans to become skilled at assembling equipment and materials in space. Rick thinks it might be the next frontier of space exploration: businesses or international entities could launch materials from...
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How has the IT Services sector fared in M&A activity over the last 18 months?
On this episode of Deal Talk with 7MA — part of a series recorded during the ACCESS 2021 Conference Hosted by 7 Mile Advisors — Partner John Cooper provides an update on the M&A landscape. He walks us through how 7MA sees the M&A landscape including general market trends, commentary from the firm, target markets, and Q&A from the audience. View the accompanying presentation here.
7MA has closed 29 deals since October of 2020 with another 10 deals under LOI. Alongside positive deal stats, they are also hiring aggressively in response to the strong market.
Over the last number of years, key international players have made aggressive M&A moves around the Technology sector. Those in the private equity market are also looking to make strategic moves to deploy capital in the Tech sector, as it's viewed as an attractive and growing space.
In regards to market trends, the IT sector (including software, digital technology, global SI’s, management consultancies, and digital marketing) has been trading at all-time highs.
Enterprise software is reporting double-digit revenue multiples and digital technology companies are trading at multiple historically found by software companies. These technology gains have since cooled off a bit as people’s perspectives have changed causing a bit of back and forth volatility, but overall strong gains for the sector as a whole.
While private equity investors may approach deals with more caution and heightened standards, they’re not avoiding IT. We’re seeing some companies in the Enterprise Software and Digital Tech Services categories trading at all-time highs. Deal activity with IT companies have accelerated — comprising 22% of all deals done in 2021.
The support and interest in the IT sector reflect the role tech is playing in the workplace including businesses trying to be more creative in terms of remote employees, a push to stay connected with the brand’s consumer journey, optimizing marketing channels, and the need to utilize CRM data to remain competitive in the marketplace.
North America as a whole has seen strong M&A activity. The expectation is that we will see a very strong Q4 to close out a strong year of M&A activity in terms of deal count and deal value. Deal values have been on a downward trend since 2018, this trend was reflected in 2019 and 2020, however, 2021 shows a strong rebound. Megadeals and SPAC activity have helped drive the 2021 rebound by driving additional M&A funding through these channels.
As we close out 2021, John explains that he doesn’t predict an immediate slowdown in the market. There is a continued need for data, IT, SaaS, and technology services that will continue to power M&A. There is already some pent-up demand that will carry into 2022 from deals that are ready to go to market and he predicts that the current momentum will continue.
John also responded to questions from attendees, including:
How do you think about the impact of sustained inflation on margin pricing? (28:44)Are we, or why are we seeing a significant increase in employee wages? (31:23)How do you calculate time horizons to evaluations received? (32:17What are your top three criteria for investing in LATAM (Latin America) (34:56)
💡 Featured Guest 💡Name: John Cooper
What he does: John is a Partner at 7 Mile Advisors with more than 15 years of financial experience. He...
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If there’s a key to success in entrepreneurship, it could be peer-to-peer networks. Alex Robbio learned this firsthand.
With his brother, Federico, and father, Luis, Alex co-founded Belatrix Software, a company that provides digital solutions and IT outsourcing services from Latin America mostly to clients in the U.S.
Together they bootstrapped from zero to over 700 employees, with delivery centers in and operations in five different countries - including Spain, Peru, and Colombia, as well as sales offices in Silicon Valley, New York, and Florida.
In 2019, with the help of 7MA, the trio sold the company to Globant. In January 2021, Alex realized that entrepreneurs aren’t necessarily ideal employees, so he left and has since been working closely with Endeavor, which seeks to uplift handpicked entrepreneurs through investment and peer networks — a community Alex credits with helping Belatrix reach its potential.
At first, Alex wasn’t interested in Endeavor’s services, but his father was. After Alex attended one of their selection events — only 2%-3% of those who start the process to work with Endeavor get selected — he was sold.
“It was an incredible environment, and so I came back from that and told my brother and father, ‘we have to do it, no matter what it takes, how much effort it takes, let’s do it,’” Alex says.
Now, on the other side of Endeavor, Alex is a mentor to others. He says peer-to-peer mentorship can really enter the playing field in an impactful way.
“Endeavor itself maybe doesn’t have a practice or a solution, but the people within the network are resources that entrepreneurs can tap into and learn best practices and so on,” he says.
On this episode of Deal Talk with 7MA, learn more about entrepreneurship and opportunities in LATAM, as well as how peer networks can benefit entrepreneurs globally.
💡 Featured Guest 💡Name: Alex Robbio
What he does: As an Endeavor Entrepreneur and Mentor, Alex mentors fellow entrepreneurs about industry best practices. Additionally, Alex is a Venture Partner at MatterScale Ventures, a fund that invests in early stage “Latin startups with a global mindset.”
Organizations: Endeavor & MatterScale
Words of wisdom: “The plan is: pay it forward. So it’s select, support, scale up, maybe exit if not growing, get successful, get profitable. Invest in your peers, help your peers, mentor them, be an inspiration, go and talk to young people, talk about your experience, inspire the next generation of entrepreneurs.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ Personal relationships help foster business relationships. Working remotely forces creativity … especially when it comes to fostering business relationships. Traveling for work — or having potential clients visit you — can lead to out-of-office experiences, such as visiting wineries or restaurants, that build relationships on a personal level first. Alex looks at such experiences and relationships as an advantage in the sector.
★ Peer-to-peer success lies not in the taking, but giving back as well. There’s value in taking advice from mentors and peers, that leads to being successful. But that’s only one part of the plan — the other, says Alex, is to...
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In the wake of COVID-19, 7 Mile Advisors’ recently appointed Managing Director of the Latin America (LATAM) sector, Horacio Yenaropulos, is seeing many companies reflect on the shortcomings the pandemic revealed. In particular, many realized they were well behind in terms of digital transformation.
As companies try to catch up, the good news is that there are new projects on the horizon. Notably, a significant number of European companies are looking to partner with counterparts in Latin America.
Horacio, who is based in Mendoza, Argentina, hopes to combine his previous experience in financial leadership and digital transformation with his local knowledge to build bridges between these companies.
He says it’s important to understand the different cultures in various countries within Latin America, and more broadly across the continent. For example, knowing that many Latin American companies are family-owned changes the way you do business.
Above all, Horacio sees opportunity on both sides of the world.
“The most important goal in LATAM is to be close to the companies, the investors, and the entrepreneurs. It’s being able to share with them experiences and local knowledge, and to advise and educate them on what is going on in the market, the value drivers their businesses have, and how they can monetize all the time and effort they have been putting in in the last year,” he says.
On this episode of Deal Talk with 7MA, Horacio discusses his new role, how his background can benefit business owners, and trends across IT services within Latin America.
💡 Featured Guest 💡Name: Horacio Yenaropulos
What he does: Horacio combines his experience in technology services and financial leadership to serve as a Managing Director of 7MA, leading the Latin American practice.
Organization: 7 Mile Advisors
Words of wisdom: “It's important for LATAM companies to have confidence in investment bankers — like 7 Mile in this case — to help them work on the value drivers and monetize their past efforts.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ COVID-19 accelerated digital transformation. As companies pivoted to meet the demands of the pandemic, many realized they were falling short digitally. They also started looking into nearshore services, and many want to partner with companies in Latin America.
★ Understand the culture of companies you’re working with. A lot of Latin American companies are family-owned, and may benefit from education about the market, value drivers, and how they can monetize all their time and effort.
★ Explore the differences between LATAM countries. Chile and Uruguay are the most politically and economically stable countries in the region, but the talent pool they offer is smaller than that in Argentina, Colombia, Costa Rica and Mexico. Brazil has its own internal market and talent pool.
★ Focus on what investors are looking for. Specifically, revenue growth and gross margin.
⚡ Episode Insights ⚡[2:56] How Horacio got here: Horacio shares his background, touching on his work with Belatrix Software and other endeavors.
[7:44] As nearshore services expand, the focus comes to Latin America: As American and European companies roll out new projects, they are looking to partner with Latin American...
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With more than 25 years of experience advising businesses, Leroy Davis knows the sweet spot for selling a company. While many entrepreneurs have heard of the $20 million valuation rule, he shares there’s much more to it than numbers and forecasting.
“We don’t put a hard line on 20 [million of revenue], we try to dig on some of these more intangible factors,” Leroy says. “And we get surprised regularly with some of the revenue multiples that we see, particularly in today’s market.”
According to Leroy, entrepreneurs, particularly those in tech, must consider many financial factors when determining when to sell — and having a team of experts by their side can provide a complete picture of their options. This team is also invaluable to forecasting, one of the most important areas that potential buyers look for. Not hitting numbers is the number one reason why deals go sour, Leroy says. He also talks about how to set yourself up to attract the right buyer at the right time.
On this episode of Deal Talk with 7MA, Leroy provides invaluable insights for entrepreneurs who want to sell, particularly when intellectual property assets are part of the deal. He also shares about how to prepare yourself mentally to pass the torch on to someone else.
“As an owner, are you ready to hand the keys to somebody else and give up control? That’s a big deal.”
💡 Featured Guest 💡Name: Leroy Davis
What he does: With more than 25 years of investment banking experience, Leroy has manages transactions in the technology, consumer, insurance, healthcare, and infrastructure sectors as a Partner at 7 Mile Advisors. He began his career with Coopers & Lybrand and is a member of the AICPA.
Organization: 7 Mile Advisors
Words of wisdom: “The minute you enter an M&A process, it’s tantamount to being like a public company.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ Know your options for selling. You could sell to a strategic buyer who’s already in your space or to a private equity group that can expedite and execute a growth plan.
★ Work with a team for a full financial picture. Metrics can be overwhelming — but working with an advisor can help you see where your company will land when it comes to pricing multiples. Additionally, it helps to have a deal attorney who specializes in M&A, an accounting firm to organize your finances, an asset management or wealth management group, and an investment banker.
★ Many deals go south because of companies not hitting their numbers. High-growth rate businesses should expect to maintain those growth rates to attract buyers, but there are always some factors you can’t control. After all, businesses are subject to volatility. Taking as many variables off the table as possible can help companies hit their numbers.
★ Revenue style is a consideration, but it isn’t everything. Revenue style is indicative of scale, and there is some truth to the $20 million valuation standard. However, some subjective factors come into play beyond the P&L, especially for technology companies.
★ Take advantage of momentum and timing. The moment your business is doing well could be the right time to sell. Know that deals can take about six to eight months to close, and that if you’re highly involved in your business, you may want to stay present for about...
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When Zilker Technology co-founders Rob Thomas and Sean Wyrick attended 7MA’s annual conference in 2019, they noticed a shift in the conversations they were having with other businesses and with investors. They decided it was time to test the M&A market for Zilker, a digital consultancy and systems integrator with deep experience in a number of sectors.
Not surprisingly, Zilker’s co-founders turned to 7 Mile Advisors, with whom they had built a relationship over several years. “It came down to trust and credibility. It's a very, very big decision to entrust the future of your company,” says Rob Thomas, CEO of Zilker. “Having a good guide in that process is really important.
On this episode of Deal Talk with 7MA, 7 Mile Advisors Senior Associate Sydney Scadden sits down with Rob and Sean to talk about selling their company to Ernst & Young in October 2020.
Zilker entered the deal process with a clear picture of what was most important — finding a good cultural fit between their company and the buyer — and how they would guide their 300+ employees through the decision.
Through it all, Zilker continued to innovate in the e-commerce sector, where the realities of COVID turned up demand for the technologies that create efficiencies and seamless experience through the whole customer journey.
Tune in to episode 31 to hear more about Zilker’s journey to acquisition and what lies ahead in the world of digital transformation.
💡 Featured Guest 💡Name: Rob Thomas
What he does: Rob was the CEO and Co-founder of Zilker Technology, which was founded in 2014 as a digital transformation company helping clients achieve growth from technology investments. He’s currently a Partner in EY's Technology Consulting group.
Company: Zilker Technology, purchased by EY in October 2020
Words of wisdom: “What really excites me about the future is that the Zilker team has a bigger platform in EY to not only build their careers but also to drive long-term client value — which they like, which we like, and which clients like.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Sean Wyrick
What he does: Sean was CTO and Co-founder of Zilker Technologies, where he realized a lifelong dream of establishing and building a company from the ground up. He’s now a Partner within EY's Technology Consulting group.
Company: Zilker Technology, purchased by EY in October 2020
Words of wisdom: “When we started looking at companies and doing some meetings … we spent time, just the four of us [co-founders] and said — What's most important? What do we like most about Zilker and what we've accomplished? — and culture was our number one thing.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ Hone your focus. Zilker’s co-founders went into acquisition...
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2020 was quite a year. Despite unprecedented setbacks and volatility, business moved and deals took place.
On this episode of Deal Talk with 7MA, the firm’s Founding Partners Andy Johnston, Tripp Davis, and Leroy Davis review major transactions from the past year and discuss market opportunities that arose over 2020.
Despite the various challenges over the year, 7MA closed 14 deals since April and the firm increased its staff by 25%. “We're obviously very pleased and excited for our clients who are able to navigate really successful and strategic transactions,” Andy says, “and our ability to keep bringing on really exciting clients now who’re exploring the market, and certainly 2020 you know, revealed who was ready to get deals done.” It wasn’t easy to make investments given the peculiar circumstances, but those who took the risk were rewarded.
At the start of the year, the partners could not have anticipated what the world and the market would look like by December. “[COVID-19] allowed us to kind of take a step back and think through what we were going to do as a firm,” Tripp recognizes.
While the pandemic halted a range of business plans and operations, it fueled an urgent need for more digitization. “We felt like most of our clients were still well-positioned in helping industries transform digitally. And because of that, we thought we have a story to tell. And so instead of instead of bunkering down, we chose to attack,” Tripp notes.
Tune into the episode to learn more about the highlights from 2021 and the trends the Partners will be paying attention to in 2021.
💡 Featured Guest 💡Name: Andy Johnston
What he does: A Partner at 7MA, Andy has had a vast career in investment banking and advisory services.
Company: 7 Mile Advisors
Words of wisdom: “I think we've got a great capability to bringfairly strategic deals to market and really bring our experience from the digital transformation space, and apply that to both healthcare and insurance, which are two huge sectors by their own right, but are really being upended on an accelerated pace by digital transformation.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Tripp Davis
What he does: A Partner at 7MA, Tripp has more than 20 years of experience advising companies in a variety of industries on M&A and capital raising.
Company: 7 Mile Advisors
Words of wisdom: “So our clients compete on a global basis, we've always believed that we needed to bring the world to the table, and not just those buyers that were regional, or at the top of everyone's list.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Leroy Davis
What he does: A Partner at 7MA, Leroy has managed transactions in the Technology, Consumer, Insurance, Healthcare, and Infrastructure sectors.
Company: 7 Mile...
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On this episode of Deal Talk with 7MA, Managing Director Ben Lunka joins us to provide an update on the M&A market over the course of this exceptional year. This episode is part of a series recorded during the ACCESS 2020 Event.
In this episode, Ben discusses how the M&A market has navigated COVID-19, general market trends and themes we saw over the course of the year, particular segments of the market that the 7 Mile team focuses on, and where we see the market trending from an M&A activity evaluation and volume standpoint.
COVID has had a tremendous impact on the economy, and there is always a resulting impact on the M&A market. During the initial fall in March and April, companies had to scramble to calibrate their strategies in an effort to mitigate the effects of COVID. However, now that those strategies are beginning to play out, we’re seeing a move towards areas where they see predictable growth and predictable market opportunity with cloud infrastructure, e-commerce, and remote software development.
While private equity investors may approach deals with more caution and heightened standards, they’re not avoiding the Information Technology space—a vertical on which the 7 Mile team focuses. We’re seeing some companies in the Enterprise Software and Digital Tech Services categories trading at all-time highs.
2020 has seen a 24% year-over-year decline in deal count and a more drastic 40% decline by deal value. Because of the market risk factors attributable to COVID, companies were less likely to bet the farm on megadeals in Q2 and Q3, leading to these significant declines. However, we’re already starting to see those numbers rebound heading into 2021.
Despite the damage caused by COVID-19, 70% of businesses reported that they would either increase investments or maintain current spending. Valuations are expected to maintain during this year. While 2020 will close as a down year for M&A, 2021 may likely provide an excellent rebound.
Ben also responded to questions from attendees, including:
Multiples are very high at the moment, yet you have said that deals are still being done for quality companies. Do you see moving forward that multiples will fall? What do you see M&A activity doing with regards to multiple levels? (29:17)Are multiples also including software and services? (31:08)Can you elaborate specifically on B2B fast multiples for 2020? It’s hard to know if enterprise software covers both SAS and non-SAS. (32:48) What kind of appetite is there for smaller enterprise software startups with ARR less than 1 million? (34:36)Connect with us:
Our website: www.7mileadvisors.com.
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Jeff Vogel, Partner at Court Square Capital Partners; Jared Ruger, Partner at Bertram Capital; and Iveshu Bhatia, Managing Director of Private Equity at Audax Group, can all agree on one important piece of advice: your partner matters more than the cost of capital, so be honest with them.
“Things that allow you to communicate well will fundamentally come from having command of your business and being honest about where you're good, where you're bad and what you need help with,” Iveshu says. “There's a partner for everyone that's out there. … As long as you communicate clearly and honestly, you will be able to find the right partner for you.”
When making a deal in the M&A space, you have to remember you'll be working very closely with this team for several years, so make sure you get along with them both socially and professionally. Jared suggests speaking with several of their references, particularly executives who have partnered with them in the past, to see how they dealt with issues such as dips in the market in the past. If they have a similar approach to problem solving and share a similar business outlook, you’re more likely to find success.
“Small differences in the cost of capital or valuation, I think, are meaningfully outweighed by finding the right partner that shares your vision and strategy,” Jared says.
In this episode of Deal Talk with 7MA, Jeff, Jared and Iveshu discuss tactics for finding the right partner, the importance of having command of your business and the changes — and some things that have stayed consistent — in the M&A space during the pandemic.
“The greater command you have and the greater visibility and transparency you have in your business, the better position you're going to be in to not only run that business, but if you go to market and you want to find the right partner for you, you can answer all the questions that they're likely going to have,” Jeff says.
💡 Featured Guest 💡Name: Jeff Vogel
What he does: As a Partner at middle market private equity firm Court Square Capital Partners, Jeff focuses on technology investing, particularly in software and tech services.
Company: Court Square Capital Partners
Words of wisdom: “What's very important for any investor that's coming into a business is that they’re backing a management team that has commanded their business. They don't have the perfect ability to predict what is going to happen, but they can demonstrate that in previous disruptions … this is how they were able to weather the storm.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Jared Ruger
What he does: As a Partner at private equity firm Bertram Capital, Jared leads the firm’s business services effort, which is largely a tech-enabled services vertical.
Company: Bertram Capital
Words of wisdom: “We're all trying to find the components of a business that are yet to be fully harnessed, that we feel like we have a history and track record of successfully executing on, and by nature of that, can underwrite and see growth and opportunity there.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Iveshu Bhatia
What he does: As the Managing Director of Private Equity at capital market...
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Scott Kaplan, Director of Corporate Development at S4 Capital, and Blake Clifton, Head of Corporate Development at Cognizant, are both overseeing M&A at people-based organizations, which requires a commitment to effective communication and culture.
“How do we maintain cultural alignment as we expand into new geographies and new capabilities with new entrepreneurs?” Scott recalls, explaining the question he posed to his team when, through a merger, they became the operative arm of digital marketing firm S4. “The way we've tried to structure this, outside of the initial getting to know the founders, understanding ambitions and goals and making sure that alignment is there, is trying to put a framework around how to manage different growth across different practices of our company.”
Blake has been put in the same position, and he argues that people are what make the culture. So, when determining if a deal is a good fit, he says it’s crucial to think about, within current archetypes, who additional leaders will be interacting with.
“Cognizant doesn't buy companies to grow them at the same rate that they were growing at. We buy them to grow much faster,” Blake says. “The people that are going to enable that, our client partners or sales teams, are interacting with each of those acquisition archetypes differently, and those are things that we have to take into consideration for each deal.”
In this episode of Deal Talk with 7MA, Scott and Blake discuss effective transitional strategies, how to know when a deal is right for both parties and how maintaining an open line of communication is crucial in M&A.
💡 Featured Guest 💡Name: Scott Kaplan
What he does: As the Director of Corporate Development at S4 Capital, a digital marketing services firm providing data, media and creative services, Scott oversees the company’s research, diligence and eventual integration of its mergers across its global practice.
Company: S4 Capital
Words of wisdom: “Look for teams that are leaders of a space, who are people that other people want to work with. Those are the exact types of companies, and I think reputation, that we would hope to find in a lot of our mergers.”
Connect: LinkedIn
💡 Featured Guest 💡Name: Blake Clifton
What he does: As the head of Corporate Development at Cognizant, a publicly traded global systems integrator focused on outsourced IT and digital transformation, Blake helps the company grow in its strategic battlefields and has led the organization’s seven acquisitions in those sectors.
Company: Cognizant
Words of wisdom: “That's what you're starting to look for, when the acquired company starts to leverage the platform and do things that they couldn't do on their own and go beyond the scope of what the initial content was in the acquisition.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ If your cultures don’t mesh, it’s not a good deal. Cultural alignment is crucial, and so is effective communication between both parties to ensure that this is a deal that will work once it goes into effect.
★ When they leverage your platform, you know something’s working. When the leaders of acquired companies...
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Glenn Youngkin didn’t plan on becoming the Co-CEO of one of the world's largest private capital firms. He was shooting for the moon — and wherever else NASA would be sending astronauts by the time he graduated.
“I went to college with this ridiculous ambition to be in the space program,” Glenn says. “And I guess no one really told me that when you're 6’6” and weigh 220 pounds, they're not going to let you into a rocket ship.”
He studied engineering at Rice University in Houston to be closer to NASA, but it was his additional focus on managerial studies that led him down a different path. After receiving his Master of Business Administration from Harvard Business School, Glenn landed in the world of private equity, alternative asset management and financial services, and the vast majority of his experience — 25 years — was at The Carlyle Group.
In this episode of Deal Talk with 7MA, Glenn discusses what he learned at The Carlyle Group, which includes how to adapt to the increasingly technology-driven world, the importance of ESG components in every business plan and the key components of every good business that attract investors.
“If an investor is looking at a management team and evaluating their company, it just is a lot more fun when it's a good business,” he says. “And it's a lot more challenging if the business is either running into headwinds, or candidly just isn't that great a business model. … just do everything you can to build robust business models.”
💡 Featured Guest 💡Name: Glenn Youngkin
What he does: As the Co-Founder and Chairman of the Virginia Ready Initiative, Glenn works with his wife with the goal of helping Virginians experiencing employment disruption due to COVID-19. Through the initiative, the pair rewards those who pursue training for in-demand jobs.
Organization: Virginia Ready Initiative
Words of wisdom: “You’ve got to go where the opportunities are, first and foremost.”
Connect: LinkedIn
🗝️ Key Points 🗝️Top takeaways from this episode
★ Tech dominates, so get onboard. One of the biggest evolutions in private capital over the last 10 years, Glenn argues, is the rising number of private equity firms investing in predominantly technology-driven industries such as software or healthcare. And if you’re looking to enter the business field in general right now, he adds that you better have tech skills.
★ Quality leadership makes a good company. Glenn believes there are four key components to a good business — sustainability, preparation, leadership and culture — but if you don’t have skilled, effective management, the other three won’t matter.
★ No business plan is complete without a strong Environmental, Social, and Corporate Governance (ESG) component. Every single investment Carlyle makes has a meaningful ESG component, Glenn says, so he suggests companies take a hard look at their non-financial factors when preparing to be evaluated by potential investors.
★ During a pandemic in particular, you have to adapt or you’ll fail. Glenn recognizes that many companies might have been preparing for the next recession before COVID-19 even came into existence, but responding to it and its lasting effects isn’t the same as responding to a traditional recession. Take a look at what’s changed (such as more virtual meetings) and get used to it.
⚡ Episode Insights ⚡[5:36] Getting started in the...
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