April 12, 2023

E112: Meriplex's Tech Industry Strategies with VP Of Corporate Development & M&A, Neil Medwed

E112: Meriplex's Tech Industry Strategies with VP Of Corporate Development & M&A, Neil Medwed

Neil shares how he became the VP of Corporate Development and M&A at Meriplex. He attributes his success to his 39 years of experience in the business, his dedication to technology communities, and God's perfect timing in his life.

Neil Medwed...

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Neil shares how he became the VP of Corporate Development and M&A at Meriplex. He attributes his success to his 39 years of experience in the business, his dedication to technology communities, and God's perfect timing in his life.

Neil Medwed has over 39 years in the technology and managed service provider industry and is Meriplex's VP of Corporate Development and M&A, responsible for leading the firm’s national expansion. He’s acquired 11 quality Managed Services Providers throughout the U.S. in the last 26 months and has been called an M&A superstar in his space. He had deep knowledge from both a sell-side and a buy side and he loves to share his knowledge with others.

Watch it on Youtube: https://youtu.be/VfolSqI4n3Y
Contact Neil on
Linkedin: https://www.linkedin.com/in/neilmedwed/
Website: http://www.meriplex.com/
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[00:00:00] Ron Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Neil Medwed. He is the VP of Meriplex Corporate Development and m and a. Thank you for being on the show today Neil. 

[00:00:09] Neil Medwed: My pleasure. I'm very, very happy to be here. 

[00:00:12] Ron Skelton: I'm sure my, all my listeners probably get sick of my famous first joke and my famous joke is always, you were born and you ended up on a show about mergers and acquisitions. Can you fill out the gap in between? Can you tell us how you ended up on a show like this?

[00:00:25] Neil Medwed: Well, let's just start from the beginning over here. We have an hour to talk. May as well get into it over here. I'm a 39 year, via M S P, based in Dallas, Texas. Had my own company for 26 and a half years. Preferred Technology solutions in the Dallas area, and I'm an older man as you can see. And in the back of your mind, I was thinking in the back of my mind, I was thinking, what would an exit look like? I got a call from my best technology friend who merged with Meriplex, and one thing led to another, and five months later I became part of Meriplex.

[00:01:01] The funny story is when I came into Meriplex, we're a smaller organization, about 80 people, including my company, but I was supposed to be waving the flag in the Dallas Fort Worth marketplace. Talking to end users. The movers and shakers in Dallas and handing it off to a sales force to work. I've invested heavily in technology communities, being a leader in different technology communities. Giving back to our industry for, well over two decades. And because of that, I knew a lot of people and I was highly trusted. I was always a very, very honest person.

[00:01:38] A very, very blunt and direct person. So after I became Meriplex, I talked to a friend of mine, local friend of mine, who owned a technology company. Next thing we know, he becomes part Meriplex. And then another friend of mine from California called to do some work in Dallas. And I took the conversation to, what it looked like to be part of the Meriplex Nation, if you will. And they became part of Meriplex. And our leadership, Dave Henley, our CEO and Dusty Corning, our CSO, they said, how are you doing this, Neil? Well, I know a lot of people, I believe in what we're building, growing, doing, and I just feel that strongly. And, they said, Neil, I think that you have a new role in our company. Just do what you do.

[00:02:26] And that's what I've been doing for the last, a little bit over two years now, and I've had a blast doing it. How did I become, VP of corporate development M and A? Number one, again, is my 39 years experience in the business. Number two is my career dedication to technology communities and lifting the levels of the ocean for everybody giving back. Building, growing our industry. And three, God put me in this perfect place in my life to use my 39 years experience to help people. A long answer to a short question. It's been experience, it's been investment in community. It's been with a wonderful organization, I believe so deeply in, and that I can talk to people about, we're building, growing, doing. And it's just been a, it's been a blast. It's been a wonderful journey. And something I'm very, very excited to build, and grow and do going forward. 

[00:04:11] Ron Skelton: That said, a lot of people don't get the community side of it. When I was in tech and in computer security side of tech, we had, DEFCON and our own, like there was a community around computer security. And then as I grew inside of my role ended up being, senior director of operations for big companies. There were IT conferences and different stuff in different communities. And, partly by necessity, cuz if you really wanna solve problems fast, the fastest thing to do is ask other people that have already been there. You're probably not the first one to see an error code or an issue.

[00:04:40] Right? Somebody's already solved it. That's the fastest way to find an answer to anything. Tech is like, has anybody already seen this? And if not, then I'll go dig deeper. But there is a community inside each level that, and a lot of people don't get that. I'm sure all industries have somewhat of it, but, inside of the tech community, I used to say it's a huge world. In a small world, in a huge industry. You don't wanna burn people when you're like in tech. And if you're a coder and you write a particular code for a particular, sector of the industry, and you go around, make it a bad name for yourselves, but the rest of the people in the industry, will find out.

[00:05:10] The reason I tell that whole thing is some people who are not in tech don't realize that there are these tight-knit communities inside of the space, and you developed yourself in that leadership community. 

[00:05:19] Neil Medwed: Yeah, very, very much so. I like to say that you could be an island upon yourself, or you could be a confederation of like-minded companies, like-minded owners that work together to help each other. You're probably not the first one to have this issue. By joining a community, there's many different types of communities out there. You have the distributor communities, the TD Synnex, Community Solve Communities, and Ingram Microt Trusts X Communities. You have the IT nation, evolve types of communities. The true methods, the so many different types of communities that are out there.

[00:05:55] The key is this, again, you can be an island upon yourself trying to do things and learn things without help. Or you can be with a group of people, whether it be in competing markets or not. One thing that if the communities are set up correctly, and most of them are because they've matured, whether you're in the same city or not, you know the friendships that you develop, the trusts that you develop. Even if it's in your own city. I have so many technology owner friends in the Dallas Fort Worth metroplex. I was having lunch with one of them yesterday, that I would never do them wrong, and they would never, do me wrong. I can ask them anything from a business standpoint. They've gotten to know me deep enough.

[00:06:42] They talked to me in a personal standpoint where we share things. If I need extra help, I can pick up the phone, call them. If we have expertise that they don't, they'll pick up the phone and call me. If there's one thing we'd talk about m and a and all these different things, to your point, it's such a value to, I'm gonna tie this into you want, do you want to have the most effective, most efficient company that you can for whenever that exit is. For whether it be, to maximize your profitability running the company year over year, or for whenever you're gonna prepare for an exit, you wanna have the most profitable organization, the most well run organization that you can. And by joining communities by having peers next to you, can only help you avoid mistakes and enhance your successes.

[00:07:37] Ron Skelton: I ran in the circle as anything but Microsoft, right? So I was a unit systems administrator. I ran everything from old vax machines, if you know what those are. Back in the day when digital had its own operating system, we used, digital deck alpha. We had fax machines, we had Unix, Linux, solaris, everything but windows. I ran big data centers and big websites. Some of the biggest websites in the day back then.

[00:08:08] But yeah, the community and the people around it, you bond around something and, you talked about the, leadership giving back and that type of stuff. It's critical inside of the space. I'm kind of harping on this topic because, myself and a group of us from the show, some people that have been on the show and people I know are actually in the middle of publishing a book on people first, kind of the whole topic is, yeah, it's mergers and acquisitions. You wanna buy businesses. Yeah, numbers are important. You should probably look at their balance sheet and stuff, but if you overlook the people, you're making a mistake. 

[00:08:39] Neil Medwed: It's certainly a people business. I like to say, it's been with, 27 months or so since, maybe a little bit longer. Could have been 28 months, since I became Meriplex. I took that step to sell my company, and became Meriplex. So I understand I am one of them. I understand it from the seller's side and I certainly understand it from buyer's side. But if I knew then what I know now, and we'll get into that, I'm sure.

[00:09:07] But if I knew then what I know now, it would've been so I would've run so much different of a business. But your point, this is a people business. Culture is so important with every organization. A story I can tell you, in my journey, there is one company in the Northeast that would've been probably the best financial purchase that Meriplex could have ever made from a financial perspective. But from a cultural perspective, you don't want cancers within your culture. You can't allow cancers within your culture. This individual was so egotistical and, that even though it was a great financial deal, that's one thing I love about our CEO, Dave Henley. In my 39 years in this industry, he's easily a top five talent.

[00:10:03] He's brilliant, but he is so steadfast, on culture, keeping the right culture. Making sure that nothing rocks that particular boat, that we walked away from it. Our private equity was like, what? It's like, no, it's not gonna fit in a bigger picture. It is a people business both on the, what I do from a corporate development standpoint, m and a standpoint, as well as we analyze a company. The culture's the first thing that I look at, obviously, on the tip of the spear. Is the best way to say it with Meriplex. I talk to companies and what I'm looking for is companies, they have quality revenues, they have quality profitability, growing profitability. I have like quality leadership and again, checking that culture box is huge, but also people who wanna do something much, much bigger and better than they could otherwise. 

[00:11:02] And that's one of the keys to our success, is checking all those different boxes. For me, for an m and a deal to work, number one, has to be great to your customers. If it's not great for your customers, walk away. Number two has to be great for your employees. If it's not, these are the people that got you to where you are. If it's not good for your employees, great for your employees, again, it's not gonna be the right deal. Number three is a financial piece. Obviously has to check that, mark has to be very, very good financially for the ownership group.

[00:11:38] One thing about Meriplex, we're not bottom feeders. Obviously based on our success, we've been extremely successful in buying very successful MSPs. So, value is a box that we check, but if you notice, number one's customers, number two is employees. Before we even talk about financials, we're talking about those things. Then number four, of course, is the lane. What lane are we gonna put that former CEO in? For the most part of the 11 companies that we and I have bought in the last, basically a little bit over two years, eight of them, eight of the former CEOs are still with us. Three of them either wanted to retire or, go to Tahiti, jump on a sailboat and do the BI or something.

[00:12:24] But, eight of 11 are still with us and that's an exciting thing. I know when I was preferred Technology Solutions, one of the reasons why I became Meriplex, you asked me initially, how'd I become the VP of corporate development m and a at Meriplex. So I'd go to business meetings, I'd go to, charity events in Dallas Fort Worth. I'd sit at the speakers tables many times of these events. Talk to the, Dallas Fort Worth business leaders and movers and shakers in the, in the area. Have great conversations. Neil, who the heck are you? One present CEO of Preferred Technology Solutions. Well, tell me, tell me about your company.

[00:13:05] And Tomba my company, the air kind of goes out of the room because we weren't big enough, weren't sophisticated enough for them to introduce me to their CIOs or IT director, talking about the bigger companies in Dallas. And that was one of the driving leading forces. But for me, becoming Meriplex, cause I wanted to be able to walk into those meetings, those dinners, those charity events have great conversations, but have the power of Meriplex behind us to be able to do something, have good conversations with these people. And that was very, very exciting. 

[00:13:38] Ron Skelton: It's interesting, I didn't even know that existed in the IT MSP space. Like we did a marketing roll up a couple years, almost two years ago now. And that's a huge problem in the marketing industry. In that you create a marketing agency. You start growing it, you start training people. They start getting really good. Your employees are dying to do a Coca-Cola, or a big, campaign, but you're not big enough to land that. When you go and say, I've got 10 employees and we've done X, Y, Z, they won't even let you bid. You just can't handle their volume or whatever. So there's this glass ceiling that if you either have to sell or merge up and become part of a bigger organization so you can bid on the cool jobs, or you start losing key employees cuz they're trained and ready, it's not that you're holding them back if you don't. 

[00:14:20] Neil Medwed: Every company, I had preferred technology solutions 26 and a half years. We had really good employees. I thought that we were a really good company and to some level, it's all relative. We're in a people business. Slice and dice it, we're in a people business. It's about what you know up here. It's about the sophistication of your operations and I feel like I went from minor league to major league. I couldn't afford to hire half the people we have in Meriplex. And that's again, back to the power of Meriplex. Security. You are a security guy. Thinking about the cost of quality security people. And if you train up a security person, supply versus demand from the staffing perspective, to keep quality security people's very, very difficult.

[00:15:13] Ron Skelton: The reason I laughed when you said, I'm a security guy, I've been outta that industry for what? 18, 20 years? There's not a single thing I know about computer security that would be valuable enough. That's one of the reasons I got out of it, is I kind of burned myself out. But if you don't eat it, sleep it and live it, you're obsolete.

[00:15:27] Neil Medwed: If people truly understood the risk involved at the corporate level. In America, obviously the government's doing the best job that they can on the security side, but it's a CAD mouse. We're fighting against nation states, we're fighting against criminal enterprises. I mean, we're fighting against Steve or Sue in the basement that's just messing around, found some UR and dark web, but is truly, CAD mouse type of game. And talking about being on vacation for 18 months, shoot. They have vacation for eight months. And you fall in, you have to live it, sleep it, and that's why, it's so important the sophistication. We, as an MSP, our job is to help secure the infrastructures of our client base.

[00:16:15] And there's big risk involved if something happens. Cyber security insurance is skyrocketing. The cost of cyber security, because the risks are so high. And again, you know, M S P A is a small MSP, let's say is fight truly fighting against nation, states and criminal enterprises. And it's a fierce battle. I'm in the FBI Citizens Academy, which is a community outreach I'm proud to be. Before someone says something about the FBI, there's some stuff way up there that's I believe is not right, but the local people, their hearts are bigger than their bodies. And I'm a huge supporter of the men who, men and women who serve.

[00:16:55] But for the most part, if corporate really understood the risks involved and internalized it, the CEO of the C-Suite, would not be able to sleep for the most part. 

[00:17:05] Ron Skelton: That said, let's switch back. I'm passionate about tech now. It's funny, as I got burned out and got out of it. Now that AI is out here, I'm back into the tech world cuz it's intriguing again. You're talking about eight months. Now we're talking about with AI and what's coming forward. I don't know when it's gonna come out, but like quantum computing, the things that are coming out in the next few years, you could go away for two weeks and come back and it'll be a different world. 

[00:17:25] Neil Medwed: Just before we wrap up on this one point, let's think about the life of a, of an MSP, you know, business owner right now. Security. It's very hard to sleep well at night because, there's great risk. You see, things like what happened with Kaseya in that breach. And, it goes, down to the MSP level and all of a sudden if they're not buttoned up correctly, all of a sudden it affects their client base and the legal risk involved on something like that.

Look at the new technologies, the AI technologies. Is that gonna increase the business risk of, you've been working your butt off all these years building and growing a business. And again, insurance is going up, up, up because a risk is going up, up, up. And if you don't have a sophisticated enough, uh, group of individuals doing the right things each and every day and have the investment capability, to be able to invest in the controls that you need to be effective each and every day. It makes it very difficult to sleep. So what we're seeing in the m and a side, to bring it back to the m and a component of it, when I'm talking to business owners, that's certainly part of the conversation. Their risk is higher and higher. They've been working so hard to build an organization that's valuable.

[00:18:51] At what point they wanna take some chips off the table, be a part of something much bigger than it could have otherwise, and have that family security? And, that's one of the things that, that's happening. And again, that's one of my talking points, but it's a very fair thing. How much are you gonna be sitting there and, how much risk do you wanna keep? Before we take some chips off the table. I know for me, for example, selling preferred was the best thing I could have ever done. It's a funny story. Let me give you, my personal story if that's okay. 

[00:19:29] Ron Skelton: Awesome. I love stories. Let's do it. 

[00:19:31] Neil Medwed: I was turning 60 and again, I had my business, 26 and a half years. And for estate planning purposes, I wanted to validate the preferred technology solutions. My company was worth what I felt PTS was worth. So I hired a industry expert to value, my organization. And this is a gentleman that's done a lot of m and a deals, both from the buyer side and the seller side. And he was like, Neil, would you wanna sell your business? You look like you're having a really good time.

You're very, very involved with community and, doing all these things. Well, I wanna travel more and I wanna retire my wife. And he comes back to me and says, Hey Neil, travel more and retire your wife. So it was like, yeah, I think that's what I'll do. And I was gonna keep preferred for, a few more years and I was on a golf course and, got a call from my buddy Greg, that became Meriplex after Meriplex, became private equity back. That was the first m and a transaction buying IT works. Hey, Neil, will you talk to my CEO Dave Henley, the gentleman I told you about, previously. It was like, sure, Greg's calling and we wanna expand in Dallas, you're Houston based. And I took the call from David, heard his vision, what he was trying to build, grow, and do, which I hope we can get into that during this conversation.

[00:20:54] But one thing led to another and five months later I was part of Meriplex. And one of the reasons was, again, as we just talked about, taking chips off the table, become part of something much, much bigger and better. I did good, selling my company financially. The equity that I pushed forward, cash is a cheapest thing that they can pay, and equity is the most expensive. I'm gonna make so much more money on the equity in the company than I ever did selling the company and having a blast in a journey with Meriplex, doing any stuff. So I look back, during Covid, selling the business, getting in the role that I'm in, and, again, doing extremely well.

Organically we're growing extremely fast. M and a we're growing, obviously, very, very fast also. In M and A world, when you look at organizations, especially in our space, if it's just inorganic growth, m and a growth, it's like a house of cards that are gonna fall down eventually. You need to couple inorganic growth with organic growth. And Meriplex we're blessed because we're a team, because of what we're building, growing, doing that we have extremely high organic growth. Also, we're blessed, but eight months ago to be recapitalized. We were with a $2 billion-ish private equity firm. We just got recapitalized by Vitruvian Partners out of London, England, a 20 plus billion dollar private equity firm.

[00:22:31] Why did that happen? Why do we get recapitalized? A couple different reasons. Number one was with Clairvest, which is a great, great, great PE firm. We're the best investment they've ever made. David Henley, our CEO, likes to say, when they came into the fold, when he chose them to be the private equity firm to partner with, it allowed David to see things through a different lens. We as business owners, probably either were salesman that said, Hey, I can do better. Or an engineer that said, Hey, I can do better. Very rarely was it a Harvard MBA, type finance person that said, Hey, let's open up an MSP. So Clairvest gave him a great lens, to look through, to build it from where we were, to where we were eight months ago.

Vitruvian partners looked at us and they're gonna take us to the next level. This map behind my head over here. I wake up every morning looking at that map in two ways. Number one, where we are from an organizational standpoint? What cities we're in, and also what verticals can we layer over the Meriplex Nation to bring better value, to the organization. So when I talk to, people about Meriplex, the story of Meriplex, the power of Meriplex, it's not just Neil Medwed saying how great Meriplex is. It's the financial institutions, the financial world, saying we believe in you. Now, the important thing is here, what is Meriplex building, growing doing? Why is Neil and Meriplex so successful in growing inorganically? Inorganically, for that matter? When you look at the MSP world, there's tens of thousands of MSPs.

[00:24:21] I'm sure you'll agree with that. When you look at the enterprise, there's maybe a handful of nationally recognized brands, from the enterprise. I call enterprise 10,000 end user or more. When you look at the mid-market and I call mid-market 200 to 10,000 end users, there is not a nationally recognized brand coast to coast, north to south in the nation. We do a great job in the SMB world. We have thousands of SMB customers, but in the co-managed space we do a phenomenal job. And Meriplex is very effectively and efficiently building that nationally recognized brand coast to coast, north to south in a nation. That's something I'm so proud of to be a part of it. That's something we as an organization, are so proud of. 

[00:25:11] Ron Skelton: I wanna circle back because you brought up something in, and it occurred three or four times on this last conversation you had and that I refer to it as enrolling somebody in your vision, right? As buyers as people who buy companies, the people listen to our show are looking to acquire companies, it's absolutely critical that you're able to share your vision of where you're taking that company in such a way that they buy into it. The reason you sold the Meriplex is you bought into his vision of where he wanted to take you.

The reason people are partnering with you right now is they're buying into your vision of where you want to take them. And the reason that you switched from one PE firm to another, is the new PE firm showed you the vision of where they want to take you and the enrollment happened. So enrollments when you're, you listen to the story and you're in on it and you're part of the story. So can you share a little bit of what it was like to have somebody tell you their vision? And then what was that process mentally for you to go through to kinda, did you buy in instantly? Did it take some time to chew on it? Like, how did you end up enrolled?

[00:26:10] And when I use the word enrolled, I'll define it, it means you become part of the story. You've already taken enrollment means I've taken ownership of the story. I believe in, and I'm gonna be part of it and I'm gonna help you get me there. 

[00:26:19] Neil Medwed: Sure. First and foremost, I'm one of them. I'm a 39 year technology guy that owned an MSP VAR MSP for 26 and a half years. It's a very emotional thing. You separate business and emotions to an extent, but this is your baby. This is what you've built, grown, before, in my case, 26 and a half years. I've been approached everybody in our space, gets emails, gets calls, and most of 'em are bs, in the big picture. But, from an emotional standpoint, number one is you need to be ready to consider an exit. I would say a majority, even, probably at least 50%.

At least 50% of the organizations that became Meriplex, were not looking to sell. Anybody that's been in the space for any amount of time. In the back of your head, you always have somewhat of an exit strategy in place. Hey, I wanna sell one day for a zillion dollars, type of thing. And that's back to, if I knew then what I know now, we'll talk about that. But, The emotions of it. I just happened to get a call from my best technology friend, Greg, who said, Hey, will you be open, to talking and, that's a big thing. Don't waste your time on most of these calls that come on in, these emails that come on in because they're, again, they're not, I don't wanna say they're not real, but I'll say they're a waste of time.

[00:28:00] So understanding that it's okay to take a call from a, from someone who's validated. I know one of your partners, Martin Wolf, great company that can talk to anybody about, what exit would look like. Myself, one of the things I love giving back is sharing my stories. Sharing, whether you become part of Meriplex or not. Sharing what I went through as a seller and what I see in the last, two and a half years analyzing companies, looking at companies and understanding what valuations are at companies. But from an emotional standpoint, you have to be in a place where you're least open to talk about it. 

[00:28:46] For me, again, older individual, but more importantly, cuz I could have kept on running my lifestyle business for a long, long time. But what frustrated me is, again, just like I invest in technology communities, being a leader in technology communities, I also invested in my local community and sitting at a speaker's table with, the movers and shakers of Dallas Fort Worth, one of the fastest growing areas in the United States. And knowing that I didn't have the power to be effective. How can I look someone in the eye? Integrity is key to me. If you never lie, you never have to remember what you said. And my father taught me that, so I don't lie, and I can't look someone in the eye and say yes, we can. Yes, we could be a valuable asset to your company unless we truly can be a valuable asset, to the organization. So that was the one thing that frustrated me. I came from the sales side and said, I can do it better than I was doing type of thing versus the engineering side.

But that was the one thing that really, really frustrated me is I couldn't. I didn't have the power behind me, the sophistication, the operational efficiency for that CEO to go to his CIO and say, I'd like you to talk to Neil Medwed, president, CEO of Preferred Technology Solutions. So that was the main driver I could have kept on going just like I was going and kept on making good money for another few years, then put it for sale. But having the excitement of being able to go out, again, my first role was supposed to be waving a flag in Dallas Fort Worth, handing it over to salesperson, going to the next networking meeting and doing that same thing. But the emotions play a lot and even the journey.

[00:30:28] So let's talk about the journey for a moment. This is an important conversation. You talk to a Neil Medwed about Meriplex and the story of Meriplex, what we're building, growing, doing, and where they could fit in, what their superpower is and where their role is, and how you can take chips off the table and become part of something much, much bigger and get another bite of the apple or two bites of the apple, depending on how you negotiate and you know what you're wanting as far as equity versus stock, things like that. But, going from the conversations, the way I usually do things, talk about, character and talk about, culture at the beginning of the broadcast here, I usually take the first call. And again, what I'm looking for, I'm trying to understand their business, but also understand the individual. What I want them as part of the Meriplex Nation.

Very, very important. If it doesn't pass my test, if you will, my litmus test, then it's not gonna go any further. If it does pass my litmus test, then what I do is I, talk to our CEO, Dave Henley, brilliant individual. Then I, we have a call together, and in that call I talk very, very little and let David get to know the former CEO or the CEO group, if you will, the C level, and David sharing his story with the, prospect for lack of a better name. And then after that, if David and I both agree that it's a good prospect, then we ask for, financials, three years financials. Top 20 customers with names redacted, of course, an org chart names redacted, of course. And then if it makes sense from that perspective, then the journey is to work towards LOI.

[00:32:18] Usually within about a 30 day period of getting all the numbers, we have an analyst in our organization, Dusty, who's he's our chief strategy officer, magnificent number guy. The perfect compliment to Dave Henley, our CEO. So it goes to Dusty from a, from evaluation standpoint, number standpoint. And then we work towards agreeing on a number, agreeing on roles and things like that. Then going to the LOI stage. One thing about Meriplex, very unique in the industry, 100% of our LOIs have closed. Something else unique, 100% of our LOIs have closed at the number of the LOI or more.

Versus, what happens a lot of times is certain organizations will, throw LOIs like it's, I don't know what, like it's nothing and get you tied on it and then, the LOI, let's say is at a hundred dollars to make the numbers easy. Okay. And then come back after they have you tied it up for two or three months, we're gonna pay 80. We saw some things in here that happens more times than you would believe in our industry. 

[00:33:27] Ron Skelton: They call it retrading or something. There's even a name for it. It's like retrading or?

[00:33:32] Neil Medwed: Retrading. Retrading the deal. They didn't come up to, oh yeah, we saw these things that concern us, or, Hey, interest rates have gone from low to where they are now. So the valuation 100% of the time that we sign LOI, we do so good diligence in advance. 100% of our LOIs have closed. 100% never retraded under the dollar figure we agreed on. M and a has to be good for all parties. It can't be like this, it can't be like that. If you want a long-term relationship, and that's something we're proud of.

[00:34:05] Ron Skelton: Let's talk a little bit about, I do wanna get into your story. You mentioned a couple times that had you known now, if you knew then what you knew now, what would you have done differently? How would you have prepped your company in the six months, 12 months, or 18 months prior to selling differently than you actually did?

[00:34:22] Neil Medwed: Let's just talk about, where your audience is today. Forget about if they wanna sell in six months or six years or 16 years. Let's just talk about where your audience is today from the CEO level. There's two ways to run a company. I had a lifestyle company, there's a time I wanted to build an empire, but then I just got into this groove of lifestyle company. I was making good money, but I was managing through my heart versus, my head in many ways. Looking at all these different companies and stuff, I could have had a much more effective, a much more efficient, a much more profitable company than I did if I were to manage greater with KPIs for, key performance indicators. For example, what I like to use analogy I like to use.

Let's say that each, and this is way high, but let's say each engineer can handle a hundred tickets a day. And let's say you have 1200 tickets a day coming in. You need 17 engineers. Probably not. Do you need 12? You probably need more than 12, but let's just say 13. So let's say you have 17 engineers, and really you'll need 13 engineers. Let's just use a hundred thousand dollars base. That could be $400,000 going towards your bottom line, that just by managing by the numbers in a more effective way, that could have built wealth. What could that wealth have been, that extra profitability been used for?

[00:35:57] It could have been used for bigger bonuses for your employees, your teammates, your important teammates. It could have been bigger salaries. It could have been investing, more money in automation for your business and tools for your business. And again, it could have been more profitability, creating more wealth. You should not wait until you want to sell, do your best. Understand your numbers, whichever industry you're in. Understand your key performance indicators. Manage by that. We talked about being in a peer group of some kind, using community. Island upon yourself, or confederation like-minded companies.

There are so many organizations that are islands behind themselves. They don't wanna share, they wanna learn, but they don't know how to learn. Invest in deep dive financial peer groups. Because then it helps you understand your numbers, helps understand your KPIs, and most importantly, it helps you be held accountable. When you're a CEO of an organization that's not in an accountability group of some kind, it's very difficult to be held accountable. Hey, I'm gonna do this, this quarter. You don't do, it's like no one's gonna be yelling at you. The other thing I gonna say is, well, there's a lot of good things like Vistage and some of these other things out there.

[00:37:22] The MSP world is a little bit different than a architectural company, insurance company. I truly believe in the communities. That are simply us, simply our industry. Don't be afraid of having other, like-minded MSPs in your geography is they become friends. The chance that you compete against them is very, very small. But what you can value, the value of working together with those people, is great. So number one, know your numbers. Number two, joining communities, is very, very important. Number three, and this is something that, I took to hired and I didn't begin in my career.

Take vacations. Understand that, from an organizational standpoint, many, especially smaller businesses, they're good at giving out titles, but they're not good at empowering those titles, empowering those people to make decisions. You can't scale, unless you do that. And if they're not the right person on the bus, either find another seat in the bus for 'em or replace those individuals. If you can't trust them to make quality decisions. If you're the funnel that all decisions have to go through, that's very difficult. That was me early in my career. If I vacationed three or four long weekends a year, that was a lot. Cause I didn't, my wife worked in the company with me, I did sales and finance and, I ran a company and she did, accounting and HR and other things. So for us both getting away at the same time, was kind of difficult.

[00:39:03] You have to have that life balance work. So that's one of the other things that, I talk about at different times is, look at your org chart. You've given titles to these people, but have you empowered them? Have you given them the decision making authority? They may not make the same decision you made, but guess what? Sometimes there's two right answers and if they make a wrong decision, use it as a learning experience to be able to train them to make a better decision next time. 

[00:39:37] Ron Skelton: One of the best lessons I ever learned when I was working for a defense contractor, actually. I didn't know what was going on, but my boss came to me and he says, Hey, I need you to train these two guys over here, they're new. Need 'em to train 'em on everything you do. And I'm thinking, is this guy firing me or something? No. He goes, I'm gonna take you on the road with me. We're gonna be gone for about two and a half months. So everything you're doing right now, I need, I was a test engineer, but I basically, I was breaking into computer systems for Lockheed Martin.

We gotta go do these things at different sites. You're the one that helped me do this stuff. I'm gonna take you with me and we're gonna go to these different sites and we're gonna do this stuff, train somebody else on the job. What I didn't know is when I came back, he, I went from being a, a systems test engineer to what's called a staff, which is one of the highest, like Lockheed Martin's, kinda like the military. They rank you in your skillset. To be a staff systems engineer is the kind of the highest honor you can have. You have to basically be a director or a management above staff, staff engineer. But, he wanted to move me to staff engineer and put some people underneath me like to train. But I was so busy doing my job and, he said, you're so good at doing your job.

[00:23:27] You're just not taking the time to make somebody else able to do it. And that was an eyeopener for me. It's often like that taking that vacation, like, Hey, you're not gonna be able to do your job for two or three weeks, or a month. Show somebody everything you do, how you do it, how you want it done, so that it's done right when you come back. And, that's absolutely critical inside of it. If you're a CEO or anything, I apply this to everything I do now is like, if I left today, who would know to do what I need to do? 

[00:40:56] Neil Medwed: Yeah. One other thing wanna add, but this is extremely important, for the audience too. In my career, especially early in my career, using outside consultants is something that I shied away from. Oh, they're too expensive, so on, so forth. Something I've learned in my journey is that investing in the right, consultants, again, we're either a salesperson that said, Hey, I can do better. Or we're an engineer that said, Hey, I can do better. Rarely are you a, an MBA in finance, from whatever university, and bringing in the right consultants to help you make the right decisions.

A dollar paid but multiples ROI comes back. Understand your strengths. Understand your weaknesses. Bring in the partnership, I talked about, Meriplex's Journey, going from Clairvest to fantastic private equity firm to vitruvian partner, a private equity firm, 10 times bigger. And one of the reasons, why David Henley, our CEO, decided to, look out. We went looking for a different organization, a bigger organization, because what gets you from here to here doesn't always get you from here. It takes a different skillset to do that. And Vitruvian Partners has those skill sets in that track record to take a Meriplex from a north of $200 million a year organization. As of, this week we're about 700 employees and we're about, 80 or so, a little bit over two and a half years ago, when Preferred was bought.

[00:42:35] And Vitruvian Partners gives David and our leadership a whole different lens to look through. Again, they're extremely experienced in building what we're building, the Meriplex Nation. Building that leading SMB and mid-market, coast to coast, north to south, MSP, MSSP. We actually coined something a little bit differently. You hear the word, managed service provider. Meriplex is a managed technology solution provider. We encompass all these different areas of the business. We have wholesale relationships with over 90 different circuit providers. And David's vision, when he went to his father as a father-son company, hey dad, I believe they would take managed circuits, managed it, and managed cybersecurity. That's the wave of the future. Using tools like Kaseya, things like that. 

And that's how Clairvest came into picture. Dad said, son, if you believe so deeply in that vision, find a Clairvest to take out the family portion of the business and live your dream. And that's something unique, very unique about the power of Meriplex, having that circuit side of the business as well as sophisticated managed services, sophisticated cybersecurity. How many times in your career and know in my career, is it the IT people knows the telecom people. So that's one of the reasons why we resonate so well in that mid-market space. And we can, are so helpful, even on the SMB side of it, because we could bring the circuits, we bring manage it, manage security, even manage physical security to their doorstep.

[00:44:07] Ron Skelton: So there's one step, there's one process we haven't talked about and we're getting close to the top of the hour, so I wanna make sure we cover it. 11 companies in less than, you're just over two years of acquired. What does integration look like for you guys? How do you integrate 'em, make sure that the cultures match? And I mean, cuz that's where a lot of these mergers and acquisitions actually fell is during the integration phase. 

[00:44:28] Neil Medwed: Sure. So Meriplex unlike, number one is, we talked about, if you're thinking about exit, why talk to Meriplex? There's different types of, rollups if you will, for lack of a better word. Meriplex, we're one Meriplex, which means we're one sales organization, one operational organization, one technical organization when executive team, whereas there's others that are more of a franchise type of model. You run your company, under your brand just like you were, and we'll give you some back office, HR and accounting, but you guys, continue on. We're one brand, fully integrated. And integration, I don't care which organization you are, is extremely difficult. 

Because we're one Meriplex, the first things that we integrate is HR and accounting obviously. Number one, we wanna make sure from a relationship standpoint, our churn's about half of what the industry standard is, as far as customer loss? Because we do a very, very good job of making sure that Bob or Sue in, in the office is still talking to the customers. But, we integrate the accounting, the HR initially. And then, different systems and hopefully within nine months or so, it's fully Meriplex. Again, I was preferred Technology Solutions. Your preferred Technology Solutions, a Meriplex company, then the marquee kind of shifts, and then the preferred Technology Solutions brand, goes away.

[00:45:51] But we have a whole team in, internally, I think the team is 12 people strong. One mistake that a lot of organizations make is, you have an MSP that's running and all of a sudden this earthquake hits and they become, part of Meriplex Nation. And all of a sudden, a company will take a bunch of their technical talent, their operational talent and divert them from working with customers to trying to integrate these different things. We don't do that. We put our extra staff in there to take care of the integration, so that the new employees and new teammates can be laser focused on customer satisfaction. Something very, very important to mention in this, to your audience here, no matter how well you do it, back to the journey of m and a and transaction day is T, that's the day that transactions announced T-minus' pre-transaction.

T plus is post transaction. What happens when, with the best intentions, the day within your organization that it's announced that you're gonna become part of another organization, it's like an earthquake hit. No matter how much you plan, whatever, it's like an earthquake hit. Two very, very important things that, two things that Meriplex excels at. What's the story to the employees? What's the story to the customers? Why did you become part of the Meriplex Nation? You know with Meriplex, for the employees, it gives the employees so much better upside. We're growing between 20 and 30% year over year, organically forget m and a. So it gives much more upward mobility as far as where they can take their careers, geography wise.

[00:47:41] If they're in Denver and all of a sudden, they wanna move to Texas or California or Pennsylvania or wherever it may be, they have geographic capabilities. The other part of the story, extremely important, and this again, Meriplex excels here. What are you gonna tell your customers? Why did all of a sudden an earthquake hit them too? A certain support type of thing. Why did you become Meriplex? We became Meriplex because we can bring in much more sophisticated managed services, sophisticated cybersecurity practice. We can bring you much higher levels of talent. We can bring you the circuit side of the business.

No more finger pointing between IT and telecom, all these different things. The story resonates extremely well with customers. When that gentleman or the lady, comes home, from the Meriplex office or the office was just acquired when they come home to their family and say, oh my God, guess what just happened today? Yeah, we're acquired by Meriplex. It's a positive thing. Say I have so much upper mobility this way or this way, this can be a great thing for us. When you're a company that doesn't integrate, that doesn't bring things together, what is truly the upside for the customers? What is truly the upside for the employees? They're still running as their preferred technology solutions, and for the most part, their upward mobility is still gonna be somewhat blocked. And certainly from a customer level, they don't have anywhere near the power of Meriplex to be able to bring that story to 'em, 

[00:49:13] Ron Skelton: I've often said on the show that if I ever do another tech stack startup where I actually write code and or have my team build a team and write code, I'm gonna do a, mergers and acquisition, tool and the basic gist of it is I want to track customer sentiment, or basically what's, what are the customers saying? Like, set a baseline before you announce the merger of what is customers saying about you on this space? Set a baseline on all your employees? Look at their LinkedIn profiles and all the, job boards and like get a, when's the last time they updated their resume and get a baseline of the, change.

Basically do a change detection. And then watch the announcement, and then be able to give you a report on how many people upgraded their resume like they started searching. Cause that's one of the things that happened. People freak out and they like, I'm gonna need a new job. I better see what, who's hiring. So you get a, percentage of your people are going to update their LinkedIn profiles, update their, indeed job board. But where, whatever job boards are being used at this time, they go out and update those things. It would be a cool tool to say, Okay, before we made the announcement, this is what our employees said about us in this space, here's how many people on average were changing their, social media profile that related to job searches.

[00:50:22] And here's what our customers were saying about us. What the feedback was by them. And now we make this announcement we're doing, we're being acquired or we're acquiring somebody. What changed? I think that would be a very valuable tool for a, cuz it might be like, if something changes drastically, you could go, wait a second, we need to retool. All communication people are freaking out. You don't know until, a lot of times you don't know until people are gone. Besides some of these situations, you think everybody's fine with it, but you don't realize that 75% of your staff just updated the resume. 

[00:50:50] Neil Medwed: Yeah. And that's a great point right there. Again, that's why the story is so important and that's why Meriplex is so successful because our story is so powerful. But from a talent, I'm part owner in our staffing. I'm not sure if you've heard of that. So I understand the staffing side of the business. The talent, again, our churn, employee churn, customer churn, is about half the industry standard because of the story of Meriplex. What we're building, growing, doing, and how exciting it is to be a part of that. From a LinkedIn, standpoint, let's say when you're a smaller MSP, there's nothing worse than, you come in the office early and as a CEO, and again, knock on the door, Hey, can I have a few minutes with you? Because many times that's, Hey, I found a job with better pay. Or have opportunities better for my family.

And as a CEO, you never wanna hold someone back. These are your friends, your family, but you know that it's hard to match the type of pricing. It's, for the quality talent. Again, this is a people business, start off as a people business. This is a brain business over here, and your top talent has the ability really to go anyplace. So, that's the other risk, the business risk. When you look at, when you're a smaller MSP and you look at your company stack, what happens if your one or two leading engineers find a different opportunity better for their family. In a Meriplex world, because there's so much upward mobility. That person has the ability to become this or that. 

[00:52:25] There's not a glass ceiling, if you will within our organization. But that's certainly a risk. From the m and a side, number one is that, we're in a very interesting time. Interest rates are higher than they were. When interest rates are very, very low last year. There's still a lot of m and a happening, especially for well run companies. That's why I was talking about knowing then what I know now, managing your company by KPIs, making sure that you're as profitable, as you can. Having the right talent in the right direction, in your organization, whether you're selling now or six years or 16 years, means so much.

It's important to build wealth. Understand, where the wealth drivers are. I'm always open, pick up the phone, call me, talk to me about, Meriplex and building wealth. And I love to give back to community. That's one thing that, makes my heart pitter patter.

[00:53:18] Ron Skelton: Awesome. I usually ask the last thing I usually ask people on the show is, gimme a wrap up. But you did a really good job right then on like recapping what we talked about. If you could leave somebody with one or two ideas, like if they didn't remember anything else from the show today, what do you want 'em to walk away with? If they're a managed service provider out there or they're looking to buy one or they have one, what do you want people to remember from the show? 

[00:53:38] Neil Medwed: What I want them to remember is don't ever do anything without talking to me and Meriplex first. Just because the power of Meriplex is so magnificent and what we're building, growing, doing under the leadership of David Henley and our board is you need to at least hear me out and understand, what we're building, growing, doing. Number two is, link up with me on LinkedIn. So you can follow the news of everything I'm doing we're doing as an organization.

I speak quite often at different events and let me share, again, dash between life and death is how many people you can positively impact in this world. And that's why I live my life doing, if I could help positively impact your world, I'm doing my job, so don't hesitate to reach out to me. I love our community. I'm blessed that I got into technology 39 years ago. This industry will take you as far as you want to go. You need to learn and, please key is talk to me. 

[00:54:39] Ron Skelton: Is there a window, like, your, a $1 million, run rate revenue, MSP to a 25? Do you have a target demographic that you're looking for? 

[00:54:48] Neil Medwed: Sure. The bigger we get, the bigger companies that we like. When you're a north of $200 million company, let's just say a half million dollars of EBITDA doesn't move the needle. And it's just, as you talk about integration, it's just as hard to integrate a much bigger company is, that half million dollars of EBITDA company. So really for us it's, million dollars-ish of EBITDA and more. But Meriplex, it's the bigger the better. I'm talking to companies that, that are $200 million in revenue. About what it would look like coming together as once nothing scares me off. We're building this Meriplex Nation and I can't wait to see what it looks like. My personal goal is to have a Meriplex office in every NFL city within three to four years. And nothing's gonna stop me. 

[00:55:37] Ron Skelton: Awesome, awesome. So, one last thing. If somebody comes to you and like, here's a great scenario. Somebody's at that 800,000 mark or close to that, that bare minimum, that million dollar EBITDA, mark, but they wanna chat with you and say, Hey, look, I may not be ready right now, but I'm willing to work my butt off and bill, what you're looking for the next 18 to 24 months. Can we have that conversation? You tell me what we need to put in place to be a perfect acquisition. Are you willing to have those conversation?

[00:56:01] Neil Medwed: I'm checking my head big time. Yes, yes, yes. There's many companies that I'm doing that exact thing for. Again, if I knew then what I know now, if I can help you succeed, there's two things that happen. Few things that happen because of that. Number one is I'm doing what I feel I've been presence earth to do, which is helping people in any way I can. So it's helping your family, it's helping your customers, is helping your employees, right over there by sharing my knowledge in that sense.

There's been many times I've been tracking these organizations and one day hopefully they're gonna become, Meriplex. But we're a big community. I'll bet you by me helping you out and helping you build, grow, and helping your customers employees out in that sense, you may know people that you fit in my criteria. That you can do a warm introduction, happily do a warm introduction cause I helped you that you're gonna help me. Most definitely, my world is m and a. My world is that map right over there and I would love just to meet new friends. And that's, I go to a lot of the conferences and I'd consider you a new friend. 

[00:57:05] Ron Skelton: Awesome. Well, I appreciate having you on the show. I learned a lot from you today and, I look forward to seeing what you, making sure I'm connected with you on LinkedIn and just seeing what you build. I love watching success stories. My favorite thing is watching entrepreneur succeed and cheering for the underdog. Two things I root for is entrepreneurs. I love seeing entrepreneurs succeed, and if you're the underdog, I'll do everything I can, to help you swim upstream. Just because I've seen what it looks like out there and I understand that, it's not always easy for everybody. So, thank you for being on the show today. And let's call that a show. 

[00:57:34] Neil Medwed: Perfect. Have a great day everybody. Thank you for tuning in. 

[00:57:48] Ron Skelton: All right.