The effort to chart a new path should begin long before firm founders retire, and should be exhaustive.
In 2018, All4 Inc. successfully navigated its first ownership transition through a transaction with JMH Capital. ALL4 had two primary objectives from its transaction in 2018: (1) To successfully transition ownership from two founding partners who were nearing retirement, and (2) To position ALL4 to execute its growth plan. The ALL4 growth plan is composed of an aggressive organic growth strategy combined with a prudent acquisition strategy in the areas of geographic opportunities, complimentary air quality services, and expansion into other environmental media.
ALL4, an environmental consulting company specializing in air quality, was in the position of having two founding partners approaching retirement age and having reached a size and valuation that would require us to consider various options to accomplish our two primary objectives. These objectives were to (1) Provide a fair return to our retiring partners, and (2) Position ALL4 financially to execute our growth plan. Our process began in 2015 when we initiated the following activities:
- Educated ourselves by attending seminars and networking with industry peers about how this process occurred at other environmental consulting firms.
- Investigated various transition options to accomplish our objectives. These options included:
- “Staying the course” with the remaining two partners buying the outstanding shares.
- Rolling into a larger consulting firm (either multi-disciplinary or air quality centric).
- Creating an employee stock ownership program (ESOP).
- Bringing in an outside investment partner.
- Instituted an advisory board. We envisioned the advisory board as an opportunity to experience outside input and different perspective/thinking in our decision-making processes.
- Engaged with an outside party to perform a company valuation and to highlight those areas where we could implement changes to improve our valuation.
JMH as an investment partner. In early 2018, we completed our transaction that brought JMH in as an investment partner. JMH was a unique partner for ALL4 based on two key distinctions: First, JMH principals themselves are former consultants and helped grow a consulting practice. Second, JMH’s investment strategy and our shared vision is based on a longer investment timeline than many private equity firms. This past experience and investment timeline really resonated with my remaining partner and myself, and with the ALL4 leadership team. This experience and timeline will enable us to grow both organically and through acquisition and will enable us to grow our leadership team which will facilitate our leadership succession plan. The process was not as simple as uncovering these two distinctions and “signing on the dotted line!” I would highlight the following keys to reaching our natural conclusion:
ALL4 and JMH were aligned that we wanted to build on our foundation culture. This culture extends beyond being a great place to work or having fun, it is centered on our commitment to, and investment in, others. Consistent with our vision statement, we openly share our expertise externally and we are structured internally to teach and share technical learnings and expertise across the company for the benefit of all our clients. The openness of our consultants to invest in the growth and development of others is a major differentiator.
Formulating and collaborating with the JMH principals felt no different than if they were our original founding partners or our advisory board – they are each relationships that were built on trust and mutual respect. Our relationship with JMH was built over a 12-month period and included personal and team assessments ranging from determining financial biases to working through situational “dilemmas” or “what if scenarios” that we anticipated we could face in the future. That level of trust and understanding of how we would react as a team enabled us to hit the ground running.
Our shared “ALL4 2.0 Vision” identified investments required in systems and people to stimulate the growth plan that we declared. We recognized some of the things that could inhibit our growth and we addressed those immediately. For example, we hired a CFO, we invested in a new enterprise resource planning system, and we completed a detailed benchmarking assessment. Each of these actions were intended to facilitate our growth.
Checking in on our progress. Fifteen months into our new relationship with JMH and I can honestly say that we’d do it all over again! John Nies, JMH founding principal, said it best: “While I don’t think we have had a deal take that long to close, I have also never felt so comfortable about the team and the strategy moving forward.” As a leadership team and company that is competitive, we have been challenged to be more demanding of ourselves, but always from a position of “Does this support our ALL4 2.0 Vision?” This type of challenge is inspiring, rewarding, and completely aligned with our desire to provide growth opportunities for our consultants that enables them to see a future at ALL4.
Bill Straub is a founding principal of ALL4 and is the president and CEO. He has more than 29 years of professional experience that encompasses many aspects of the consulting industry with an emphasis on air quality. Straub led the successful ownership transition of two founding partners and his current focus is charting the ALL4 growth strategy including leading ALL4’s acquisition strategy. He can be reached at email@example.com.