Speaker 1: Give a round of applause for Roland, please. All right. Hello, everyone. Time for some fun. First off, I'd like to thank Stefan, Sophie, and the entire Plunet team for having us. I think the attendance today is a great example of not only the quality of their product, but how important they are to our business. So I just wanted to kind of state that to begin with. So I'm not going to talk about hire three salespeople, change a commission plan, do residuals, things of that nature, because to me, that's basic execution. I think as LSB owners and leaders of our businesses, I think the first and foremost thing to do is think strategically from a top-down perspective of how are we going to grow our business. And I'll share with you how we're doing in the morning side and how we've done in past lives. Okay. So I won't bore you with who I am. I've been the CEO of Morningside for the last year or so, year and a half. So I'm probably the greenest person in this room. The one cool thing about sourcing a company was I spent about a year meeting LSB owners. I talked to over 40 owners. I've talked to another hundred different individuals that work in the space over that year to help learn before I dove in the water. And before that, I worked in technology-enabled business services for over a dozen years. And I think it's important for all of us to recognize that's the space that we work in. We are not a software industry. We are also not a services industry. We're a blend of the two. And I firmly believe anyone who thinks we're only a software space is going to die. And a lot of VC companies have done that. And lastly, if you bury your head in the sand and you ignore technology, then you're also going to die. So how do you take those two things around services and technology and bridge those two things together? And that to me is where I've spent, again, I've spent seven years at Sterling Backcheck showing talent solutions now. When I got there, we were around $50 million in revenue. In over six years, we took it from 55 to over 500. And we followed the same four pillars that I'm going to walk us through today. Morningside, quick thing to know. We're now the largest IP-focused language services company in the U.S. I know there's a bigger one here over in Europe. We've made a nice investment of capital in the last year. We have offices all over the world. We will hit 200 employees by the end of this year. So we're continuing to add both revenue and headcount. And again, we will exceed over $50 million in revenue in this year alone. Okay. So the four verticals I want to talk about is probably the most common sense one is organic growth. Secondly, partners and alliance. Obviously our biggest, most important partner that we have is Plunet, which is why, again, I'm honored to be here. Third, how do you enter new products or new geographies? How do you think about those? And last but not least is a little bit of fun with M&A. Okay. So for organic growth, again, stepping away from the concept of commission plans and sales headcount, which are all important things, I would implore everyone here to stop and think first strategically, how are you establishing your goals from a revenue perspective? And just establishing one number for the year is not going to enable you to make that number. First and foremost, what level do you go to? Do you go to the vertical level? Do you go to the product level? Do you go to the salesperson or account manager or book of business? How much detail are you going to bring down to understanding your overall revenue? And then how do you quantitatively look at it? Secondly, after you actually get, you define what you want and you define those goals, how are you measuring and analyzing against them? So are you always proud of your common themes? And then do you hide from the negative ones and ignore those? Because if you do, your business is not going to get better. And the one recommendation I will make during this presentation is that I would highly recommend that you always look at your data from a revenue perspective like a bridge. And to me, there's five key components of that bridge, as if you were doing an EBITDA bridge or something else. And the first one is, how do you separate your old logos, your old brands? How do you look how those are performing from a same-store sales growth? We're all very lucky to be in an industry that's growing 2 to 3x GDP, depending on what country you live. But from the state's perspective, about 2 to 3 times GDP. So that's a pretty exciting thing to have, right? Many industries are not like that. Thirdly, how do I look at my net new business? And that new business isn't always a different contact or a different decision maker, or maybe you look at it from a logo perspective, a different brand that we're selling to. And then fourthly, how do you separate last year's net new business from your old legacy business? Are you picking up clients that are pop and drop? So you land this new account, you spend all this time getting them onboarded, you feel good, you've taught them who you are, they give you a couple of big orders and next year, nothing. Right? Is that, how do you measure against that? If you don't know, if you're not measuring it, you won't even know what's happening. They'll just blend into your overall revenue. And last, and probably just as important, is what are you churning out? Right? So you have natural, you have changed decision makers, you have companies go under, you have your competitors take some of your business, but how are you monitoring that? And again, going levels below. Is your churn different in IP versus localization versus e-learning? And then you can take actions based on how deep you dive into your data. I'd highly recommend when doing a bridge is go to the client level. Look at your client revenue, not just for this year, look at it five years back and see how they're doing month to month, year over year. Secondly, connect that to client concentration. Different tiers. I mean, I would advise that if you start thinking about your revenue, if you have a very large client, they probably get a little more attention than if you have a smallest client. So how does your treatment strategy dictate and connect to your overall revenue bridge? And last, but not least, is then now you can make action to go improve your organic growth. And from that perspective is where are my shortfalls and where am I doing great? If I'm doing great somewhere, how do I accentuate that? If I'm doing negative somewhere and I'm bleeding clients at the back end, what actions can I put in place operationally to minimize those? But again, it really starts, and I couldn't implore more, to start way up top and start parsing your data of your top line and thinking about it more than just a salesperson or sales and a commission plan and so forth. Really start thinking about your business holistically. Okay. So next up is partners. Again, like I said, I know my number one partner is, and that's why I'm here today. And I'm very excited about that. I see Sly looking over here. So I think when you think about partners, I think sometimes it's easier to say I want as many partners or clients as possible. But there's a real opportunity cost to spending your time with others, right, that are not core to your business. Even if, again, it sounds great or it's a great little logo to put on your website, there is an opportunity cost with that. So ensure that they create value for you. And then I'll be honest with you, your size and their reach directly correlate. If you're just getting off the ground and you're a smaller company, having a channel partner that's got more depth and breadth, again, allows you to not have to hire 10 salespeople across 10 geographies. Maybe they can help you in that manner. If you're larger, maybe you're looking for more of a niche kind of focus. And speaking of niches, one of the things that, again, I'm a big believer in is depending on what industry you're playing is, is this partner actually going to help accentuate that differentiation that you have or is it creating a distraction? If you're focused only on e-learning and they're only financial services, is that really a good partner to have, right? Are they really going to help you long term or are they going to distract you and your expertise away from your business? Fourth, reciprocal relations matter. And again, I think we've all learned this. I've failed this in my life, creating partnerships that were only one way. If it goes one way, that partnership will die and it will not benefit you or them. So really thinking about how that relationship is established, how each side can win or each side can lose, and make sure you're tied from a risk and reward perspective. From a brand perspective, this is, again, more of a personal take, but again, I think a lot of folks here spend a lot of time in the brand. I'm not a marketing person, but I do believe in our brand and our brand awareness, and I'm sure you all do, too, for your organizations. Don't let someone else own your brand. So how you create that partnership, whether it's white labeling or however you do it, be protective of your brand. And then lastly and probably most importantly in partnerships and alliances, complexity kills. Right? There are so many different models out there, like, hey, I'd be happy to work with you, but you're going to give me one cent of this word or I'm going to get this and that. If it's complex, it's not going to work. That's guaranteed. If your sales folks can't understand it, your client sure as heck aren't going to understand it. So be very, very careful with that. Next, product and geography. I love products, so I'm probably a little more biased on this one, but again, I think when we think about product and Morningside, we have to kind of always ask ourselves, and we actually do a painful process of developing a very robust go-to-market plan, and sometimes these things take two months to work out, right? And you think to yourself, holy cow, I just gave up two months of work from this individual to actually build a PowerPoint, right? Like, are you crazy? But those two months that you spend determining whether or not I want to be in this country, I want to service this product, I want to be in this vertical, you're going to make time and massive investments. That month up front is nothing in comparison to having a failed office in a different region or a failed product launch that gets nothing, right? So again, spending that time up front is very important. Risk tolerance is another one, right? Again, I would love to have offices everywhere, but again, from a fiduciary responsibility, I could not be doing that, because if I did that, then I would be putting our business at risk. So I would be thinking about that from a development perspective and working with your partners at Plunet, where is your tolerance for what you want to deploy, how you want to deploy it? Obviously, product and geographies are very capital intensive, so going back to how you analyze revenue in a very quant way, I would do the same thing, going back to that go to market, whether it's a product or whether it's geography, have that ROI locked in. So that return on investment that you're budgeting for yourself, you're measuring against, that should be in your whole company's face every single day, right? I think it was Dan who spoke earlier about change management, he's spot on. I think that's what that's about, and visualization creates change management, and again, is it core to your vision? If it's not, you're wasting your time again. The next one, I kind of made two slides, one for buyers, one for sellers, I don't know if anyone in here is a buyer, when it comes to acquisitive growth, we are, just in case anyone else will know. One of the things that I would say is that there's a lot of money coming into space, right? So there's a lot of private equity companies in here, there's a lot of financial buyers coming in. Again, as I mentioned earlier, you should all feel very lucky, you're working in an industry that's got massive natural growth, that's a fantastic thing. So again, this professional money coming in, I will tell you right now, I put that in quotes because you are going to know five times more than they ever will, and I know a lot of those folks that end up being rude, and a lot of friends of mine, but you live your world, they don't. So when you start thinking about how you differentiate your bid from someone else's, think about who you're bidding against. They may not know more about financials than you do, but they definitely do not know more about this industry than you do, right? So use that to your advantage. Now one thing I always hold to my dear near my heart is that you can never change what you buy something for, it's common sense, only what you sell for. So I think, again, when putting that bid in, think about that. One thing I think is different that I think takes a lot of learning, and I think whether you're a seller or a buyer, it's important to think about synergies are vital, especially when you put two companies that do the same thing together, there's always going to be synergies. If you're the buyer, it's your work, your risk, and your upside, differentiate that from adjustments. Those are two wildly different things. If you're thinking about changes two years away, that's the buyer's problem. If you're thinking about something today I can do beforehand, that's the seller's. And then the one thing that I've learned after doing seven transactions and rolling up at Sterling is when we built, again, that was one of the things we did for that company, we bought over $200 million of revenue into that background screening company, and we were very, very successful. But I would say the success beyond synergies and EBITDA and revenue was the qualitative gems that we found, whether it was technology, whether it was people, whether it was geography, all those different, whether it's product or geography, those things you can gather through an M&A are great opportunities to get them. I've got to keep track of my time, somebody's going to kick me off here. When you start integrating companies, to me, that is probably, that's what I love to do the most, it's my favorite thing. At Sterling, that was my job for five years, beyond the COO, I was also the person that integrated all these companies. And when you're integrating, transparency and integrity is everything. Your reputation will follow you. So again, we're the kind of believers that we don't go around just throwing out a bunch of LOIs and picking one or two afterwards. Again, I'm a big believer, you put an LOI and you close, unless something material changes. So that reputation will follow you depending on how you attack the market. Integration is hard work. I think it was Dan who spoke earlier. Integration is 100% change management, 100%. Something that tells you differently is it doesn't understand integration. It's not about technology tools or whatnot, they're all important, they're all pieces, but it's about getting people to understand and work with you. Again, as I mentioned before, if you make mistakes as a buyer, and you pay for these synergies and you don't realize them, someone else is going to pay for them in the future. That money is sunk and gone. So think about that in your overall execution. Culture is the most underrated thing when integrating a business. Again, I've had the luxury of integrating businesses across the world, not in Romania, so I guess they're tough on change management there. I learned that in the last presentation. But I would say that culture is very different. And people, if you do not think about how those folks are going to work together, you're at a big disadvantage. And one of the recommendations I would personally give you is when you think about integrating two organizations, your team that's integrating them should be made up of both companies. You want a quick way to integrate cultures? Have the people leading the integration be for both companies. Even if you think you know you're right, and only your company is going to be the one that wins, realize that you have things to gain by listening and learning from them. And what I tell people all the time is in any acquisition, either buyer or seller, anxiety is the death of all acquisitions. And I'm a big believer, being kind of a six-level math guy, is that anxiety comes from variability. Variability comes from one person saying one thing and another person saying something else. Own your narrative, understand your narrative, and be concrete in what you do when you're integrating a company. Last, for anyone out there thinking about selling, I would ask yourself why sell first. Again, going back high-level strategically thinking. Do you not have a succession plan, son or daughter or relative in the business that you want to pass your legacy on down to? Are you having scalability challenges? I'm assuming you probably don't if you're at this conference because of Plunet, because they scale very well. Are you just worn down? Are you tired? It's been a long year, even for me. Do you have wealth concentration issues? Is all your assets tied up in one thing? Or are you trying to time the market, again, which is always an interesting thing to do? And then know your audience. If you're selling, going back to being a buyer and thinking about all this private equity and financial money coming in, think about know your audience when you're selling. There's a big difference between a financial buyer and a strategic buyer. Understand what a financial buyer can pay, what they're going to ask of you, mostly to stay on usually and run your business, if that's what you're looking for, versus a strategic buyer who's looking at integrating your business within their platform. Really understanding your buyer differences are very important in how you engage them. One thing I'd highly recommend, and I'm seeing more and more in this industry, and I feel like you're seeing it happen little by little, is that companies are buying more markets than just a revenue line or just an EBITDA line. What markets do you serve? As I mentioned, we're very heavy in some markets and not heavy in other markets. Again, do I want to continue to grow those niches, or do I want to branch out? That's core to your strategy. Understanding your buyer strategy is going to help you in determining a proper fit. Buyer principles. Again, as a buyer, these are the kind of things I think about, and I think that they're pretty standard across the business. We all read a lot of different blogs and posts that are out there on our industry. One thing I will tell you is a lot of times there's hidden numbers below that. People buy in earnings. They don't buy in revenue. Revenue is an output. Again, if you're a strategic buyer, you might look at proforma output, but really what you're buying is earnings. Earnings pay the bills. Profits pay the bills. Revenue doesn't. A revenue multiple is an output of someone already figuring out an earnings multiple, so don't let anyone confuse you on that. Number two, when you start thinking about multiples of your business and valuation, growth matters. Someone growing at 0% is not going to make as much money in the exact same business as someone growing at 20%. It's just a fact. People are thinking forward. Size matters. If you're a $1 million business, or a $10 million business, or a $100 million business, there's different multiples being paid for those areas and those size ranges, so think about where do you fit in. Client concentration matters, especially in a smaller business, it's very difficult to not have client concentration, so I'm sure most of the people in the room do. How do you manage that? If one client's making up 25% of your revenue or something like that, that buyer is going to be concerned with that. It might not drive or decrease multiples, but it will definitely drive an earn out if it doesn't do that. Just being aware of that up front will help you in those conversations. We mentioned industry niches. One thing I would also recommend if you're thinking about selling, and I use the word idealism versus reality, would be do some research, especially if you're going by yourself and not using a broker, and again, there's pros and cons with that, but even if you're using a broker, do your own research. Understand what the market's doing in the verticals that you serve, with the growth profile that you have. Think about that in advance. It will only help you in your conversations with a potential buyer or financial people or things of that nature. Broker versus non-broker, again, as a buyer, sometimes I love it and sometimes you don't love it, right? You're getting someone that's really versed in the process, so it could save time in some ways. They can actually help you grab your data and collate your data to make life easier for you, but you're going to pay them a fee, and usually the process gets dragged down a lot longer on the back end, right, because you're bringing multiple parties in. But that's it. I know that was quick. I talk fast, you know what I mean? But I hope everyone followed, and I'm happy to take any questions.