How We Bought 160 Businesses and Built a $1.5B HoldCo at 33 and 35 | Ramsey Sahyoun of Evergreen

0:00 Evergreen may be one of the most interesting holdco stores in America. Founded in 2017 by Ramsey and Jeff. The two were just 25 and 27 years old at the time. They buy businesses and hold them indefinitely. Ramsey and Jeff and their team has completed around 160 acquisitions, grown to roughly 1.5 billion in revenue and about 250 million in adjusted and still maintained around 10% organic growth. Uh they keep the structure decentralized.

0:33 They preserve the identity of the companies they acquire and over time they compound through what Ramsey and his team do best which is M&A talent and playbook. Uh thanks a lot for coming to the buyers and builders podcast Ramsey. >> Yeah thanks for having me and excited to be here. >> As I'm a former athlete myself I was doing a research on you and there is a video of you like recorded 14 years ago you playing uh golf. So, is this another great story of an athlete turned into entrepreneur?

1:06 >> Yeah, I I actually watched that video and I think I bogeied the hole from the middle of the fairway. So, uh maybe wasn't my wasn't my finest [laughter] wasn't my finest performance, but uh yeah, I I uh I got a scholarship to play golf at at USC. Um, and we were we were a good a really good program when I was there and we were always a top 25 program in the country. Um, and uh, yeah, I I thought basically until kind of the the tail end of my college career, I thought I wanted to be a professional golfer. Um, and I'd worked at that since, you know, since I was a kid, but uh, realized that that I wasn't good enough to to make it a career. Um the the people who who make it play professional golf are incredible. Uh and uh yeah, I just couldn't get to kind of that next level. Um and uh had to get a real job, but I'm I'm I'm glad it worked out the way it did.

2:06 >> Okay. Now, you got you got your first experience with private equity after graduating college. Your boss there taught you the the world business and you said you fell in love with it like right away. and uh this idea that you could buy private companies uh you didn't even know that that was a thing and now if we look what you have built like you've you've come a long way so tell us who is Ramsey and who is Jeff Todden your co-founder and the story of Evergreen and we go from there into all the details >> yeah yeah sure so uh yeah like I said I I thought I wanted to be a professional golfer from um god the the time I was I don't know probably nine years old or thing. Um, and so that kind of consumed my my life for the subsequent 10 to 12 years. Um, and then yeah, like like you said, I uh you know, but by by the end of my college career, I realized golf wasn't going to be my career. I I initially took an unpaid internship at a uh firm after I graduated college. So, it's pretty bad to like graduate college and and take an unpaid internship, but I had to had to start working a normal job somehow. Um and uh I I got this opportunity at a firm called Revolution Capital Group and um you know was there they were funless sponsor um doing kind of more distressed deals and carveouts.

3:29 Um and I was tasked with cold calling bankers and business owners trying to find uh acquisition opportunities and yeah I I just learned the the business of buying private companies. um at Revolution they would hardly put any equity into uh the the deals that they did and that I think that kind of blew my mind like you could put in basically no equity but own um own 100% of a business. Um so it was like kind of a free option um on on the upside of that business. So, um, yeah, that that, uh, that kind of blew my mind. Um, and I I learned the business there. And then about a year, uh, into that, I I got the opportunity to join Alpine Investors.

4:14 Uh, Alpine was building out their sourcing team at at at the time. I think I was the second person they hired um on on when when they were building out a dedicated sourcing team because historically everyone would kind of do some sourcing and then they would do deal execution and they would sit on a few boards um and they just found that their pipeline was not consistent um because they didn't have you know they would get busy on a deal and then um and then the pipeline would dry up and then that deal would get done and then you'd be back to sourcing. So, it was just kind of lumpy.

4:50 And so, they recognized pretty early on the need to build out a dedicated sourcing function. So, I I joined Alpine um and Jeff was the first person that sent an email to me welcoming me uh to the team. And um you know, I I spent three years uh doing doing sourcing at Alpine. And Jeff and I got to work closely together on on a number of um on a number of uh deals at Alpine. um many of which went went really well. Um and we just had a lot of fun um working together. Um, and then we uh we both kind of had realized we had a a passion for uh Berkshire Hathaway and read all the uh Warren Buffett's shareholder letters and um eventually uh together with a number of other number of other folks made the trip to to Omaha uh for Bergkshire and um yeah that kind of all came together from there but uh yeah that that was kind of how we how we met and how we got started.

5:53 Okay. And it all got started like the first acquisition was in December 31st in 2017. Could you give us an overview of the portfolio today as of uh end of first quarter of 2026? >> Sure. Sure. Yeah. So, uh we we um we're we're focused on technology services businesses. We've acquired 160 companies um that we're very decentralized. So we have um you know we've done a few tuckin acquisitions over over the years but um for the most part we we buy businesses and operate them independently. So we've got you know call it 130 independent brands and then we have three uh types of companies that we invest in within technology services.

6:40 The biggest of those uh is MSPs. Um so MSPs are companies that provide outsourced IT um for small and medium-sized businesses. That's under Lyra. Um so that's our holding company for MSPs. Um the second area that we focus on is um ERP consulting and implementation. So companies that help um help you implement and support you know uh ERP application. Um and that is within our uh pine we we call these groves. Each each of our business areas we call them groves sticking with the tree theme. But Pine is uh ERP consulting and then Cedar is uh government. So these are uh variety of companies that provide um IT solutions to different government agencies from you know federal government agencies in the US to state and local and municipalities as well. So, um, those are kind of the three business areas that, uh, that that we focus on. Um, MSPs are are the biggest. Um, it's probably about 70% of of the overall business. Um, and then the remainder is is is split between um, pine and cedar.

7:55 >> Now, about the early days when we met in Stockholm, we were discussing a bit like uh um, you said you leaving you and Jeff leaving Alpine. So could you could you share the story like how how did you come up with the idea and you said they were extremely supportive and now you're also part of the Alpine. So how was the story in the early days? >> Yeah. Yeah. Let's see. Um so so we had the inspiration uh after after the Bergkshire meeting is when we really had this inspiration to start a holding company. Um, and Jeff actually wrote uh Graham Weaver, the kind of pitch for Evergreen when we were on the flight back from from Omaha to San Francisco.

8:33 Um and then uh one thing kind of led to another and and we kind of made this pitch to aggregate service companies under a holding company and we didn't specify an industry and then one of one of the that the the main piece of guidance that Alpine gave at that time was hey pick an industry that you like and focus on it and get really good at buying an operating companies in that industry. Um so I remember yeah we had a um we we we pursued a number of different industries. We actually had an opportunity in the MSP space and we had an opportunity in another industry. Um, and I I remember, you know, it was, yeah, it was probably around December of 2017, we made the decision to kind of go pencils down on on that other industry and and focus on um focus on MSPs and and get really good at uh at that. So, that that was kind of how it how it came about. Um but yeah, you know, I I I think um I it never like felt like we were leaving Alpine necessarily, like we were we were leaving like working at the head office of the private equity firm and we were essentially going out into the portfolio. Um but we were doing it with their their full kind of backing and support and we were aligned on the thesis and everything. So, um, you know, it it really felt like they were backing us to go do something versus us leaving and they happened to raise c like give us capital like it was we were kind of aligned um you know the the whole way through >> thanks to this uh accountant podcast a lot of I have a lot of conversations with people who work in a bee firms thinking of leaving they have the experience they've seen how to put together the deals because uh uh they've seen how to raise capital. Some have done it, they've left, but uh still 12 months, 18 months in, they still haven't been able to close a deal because it's it's it's very hard and it's uh there's a lot of pressure financially. So, you were just 25 and 27 with Jeff. Like, where were you f financially where where you decided when you decided to leave? I mean, probably where a lot of people 25 and 26 uh were. Um, let's see. Uh, yeah, I mean, I I was living in a apartment in San Francisco.

11:09 I had roommates like, you know, all the all all the stuff. Um, but but I also didn't have any, you know, I don't didn't have a family or kids or anyone relying on me except uh except myself. So, so that that was good. Yeah. Yeah, I mean I I I think we're in a good we we we didn't have a bunch of money >> saved up or anything. At least I didn't. Um but you know, I I think we were in a good place to start the company because we had no other responsibilities and you can just kind of be very single-minded and uh in in running towards building the the company. Um, I think about that a decent amount because, you know, now I have a a wife and I have a a young daughter at home and um, you know, you want to spend time with them and and that takes a lot of time. And so, you know, I I don't know if we would have been as I don't know, maybe we would have been as successful if we started the company at the current stage of our lives, but I think it was kind of a blessing to start it that early when you could just, you know, run super hard at uh, at at building the business.

12:18 >> Okay. Now tell me about how was the first maybe 6 12 18 months post close because you've seen it all in Alpine and now you are we can say independent doing it for yourself. So how was it like how many acquisitions did you do? What were the lessons? How did it feel? I mean the pressure must be must be serious like when when you own own own a company versus just representing another firm. >> So the first acquisition we did was company Wolf Consulting. It's the company we bought on December 31st, 2017. Um, that has been a just incredibly successful acquisition. Um, I I mean, I think we've grown earnings of the business four times or something like that. Um, and and we bought it at a reasonable price and um, it's just been like you you can't draw up a better uh, first acquisition. We also made um some mistakes in in the early years like we um a mistake we made in the first year is we we tried to um roll up a few smaller MSPs under a single platform in a certain region. Um and and that that was kind of in the middle of 2018 um I think is when we started that. So on one hand we did this amazing deal with Wolf Consulting. It was it was off to a good start. We' done a few other deals in kind of the decentralized model that went well, but we tried this um kind of more um kind of roll up what people kind of traditionally do or they integrate these companies under a single brand and it just went horribly. And um and we can kind of get into what you know why that was, but it it it um you know it it it it really reinforced our our belief in decentralization. And we always believed in decentralization, but we got kind of excited by this opportunity to roll up um small MSPs under under a bigger platform. And uh it it didn't go well. And um that really reinforced, hey, you know, it it it's interesting like when you see one business going super well and another business in the exact same industry going not well, like it it does you can draw a lot of conclusions from that. I think we did. Thankfully, we we kept buying companies aggressively in the in in the MSP industry. Like we didn't let um the challenges with that one business um you know keep us from believing in the industry and believing in the in in the thesis and we could have at the time. Um so I'm I'm grateful that we didn't. Um perhaps that was a benefit of being 20 25 or 26 years old is uh you just kind of stubbornly keep going. Um but yeah, >> so what went wrong if if you compare those you had this decentralized model worked working extremely well and now you're trying to do a rollup like can you share more details because I think that's that's a big one for for folks listening.

15:25 >> Let's see. So, uh, I I think what the the main like the overarching thing that that went wrong is and and this applies generally, I think, when you roll up companies, at least in the MSP industry, is you lose customer intimacy and you and service quality degrades because you go from if if you're a customer of a small business, you go from being serviced in a way that you like with that small business to uh, you know, your your relationship changes to someone at cor the cor corporate office who doesn't know you, who doesn't know your business, who's less responsive because they've got a lot of things on their plate. Um, and who often times is more is more junior in the in the organization. So, you you kind of lose that customer intimacy, that high level of service. You know, MSPs are trusted technology advisors for small businesses. So they're helping them with what tools should I be adopting? How do I keep myself, you know, secure from cyber threats? You know, when something's broken, I I, you know, I need it fixed quickly. So um, you know, you you just lose a lot of that when you um centralize certain functions in a in in a single corporate office that um isn't as close to the customer. So um that's that's what happened there. Um, one kind of interesting thing we we observed is that all the branch offices thought they were doing great. Like the numbers were good, like you know, like profitability is good, but the corporate office, this one corporate HQ was doing terribly. Like it it was just absorbing all the cost. Um, and so you had this crazy thing where like the business was doing wasn't doing well, but all the people at the branch offices thought they were doing well because it was just, you know, they they were doing their jobs, but there was a bunch of costs that they couldn't even see. They had no visibility into that um were being absorbed by corporate. So yeah, I mean the these are just classic things. We see a lot of roll-ups in in our industry and and by and large they uh they struggle to grow organically um and sometimes they shrink organically um pretty meaningfully um and it's it's always due to that loss of customer intimacy which drives up churn um and and then there's there's all these kind of costs that corporate absorbs and then there's bureaucracy and you're just less responsive to the customer um and and it doesn't work. So we we learned that lesson in 2018 and uh haveve thankfully taken it to heart.

18:07 >> And how quickly were you able to like pivot change the strategy? >> It wasn't really like a pivot. It was it was more like okay we'll never do that again. Like we we we were kind of buying for the most part we were doing what we've always done which is buy companies, operate them independently in this decentralized strategy. We tried this other thing over here of rolling up these companies and it didn't go well. So, so it was more like just don't do the don't do like the typical roll up and just focus on the the decentralized [snorts] strategy. So, um it it was more of like just don't do that again and less of like we have to pivot our our whole strategy. Um so that was good. Now let's talk about sourcing because um I was posting on uh Twitter that you're coming on and I I received quite a few uh direct messages people wanting to know the sourcing part. Uh yes now you have this San Francisco HQ 40 plus people mostly focused on sourcing and deal execution but how was it when it was 2018 189 20 in early days based on your background?

19:16 >> Yeah. Yeah. Uh it really it was just me until kind of the tail end of 2019. Um which is when uh uh Sydney Haw came on board um who's now a a VP here. Um uh but yeah, it was just me. Um and uh yeah, we we had some interns that that would support in like the research and identification. And I think now a lot of this stuff you could automate with uh with with AI and um like web scraping tools and stuff like that. But um back then we we you know we did I think you know more old old school like googling like managed IT services in you [snorts] know Los Angeles and uh you kind of build your list that way. You try to find who the owner is. Um and we had goals every week as far as how many companies are we adding to the database?

20:11 um how many qualified companies are we adding to the database? How many outreaches are we doing? How many introductory calls are we having? Um and I I it was just all me doing that. Um and then uh yeah, I mean I would talk to, you know, 10 business owners a day. It's gotten harder to get in touch with business owners now as as as the space has gotten more competitive, but back then you could kind of send just massive amounts of emails um and get pretty good responses and and and talk to people. So that was what we did. Um and and we've kind of scaled it from there. But I think because that was really the core of my job for the first couple years um at Evergreen and I I still do a lot of sourcing today. like uh I I I think that's that's shaped um that's shaped us and that we just value sourcing tremendously because it's the thing that gives us the opportunity set to choose from which is how we're going to make good investment decisions. Um and I think a lot of people just don't do the dirty work to find opportunities. It's hard. You have to like, you know, beg people to talk to you. you have to, you know, it's just it's just scrappy. Um, and it's a lot easier. I think a lot of people think it's a lot easier to like, you know, just get a nice prepared book from an investment banker talking about a company like um that company's ready to sell and like all the numbers are cleaned up for you and everything like that. Well, it's like if that's your sourcing strategy, like you're going to pay for that. like everybody else is looking at the exact same information.

21:49 So, you're not really getting a differentiated opportunity. Um, and we've always believed that you can hustle and um if you roll up your sleeves, you can get opportunities that um yeah, that other people don't see. Um, and today I think 80% of our deals are um are proprietary. So, you we're we're just getting um you we're we're seeing opportunities that that other people aren't aren't seeing. Um and we're doing that because, you know, we work we work to do that. Um and we we don't just kind of sit and let deals come to us.

22:27 >> Do you still do some of those calls yourself today just to make sure you're not forgetting the the skills? >> Oh, yeah. Definitely. Definitely. Yeah. There there there's a lot uh there's a lot of people that I talked to, you know, years ago, 2017, 2018, that, you know, they still haven't sold us our business, but I've developed a relationship with them. So, um, a lot of that I I I do a lot of that's good ch good chunk of my time. Um, and yeah, I I love it. I love talking to business owners, um, even on that first initial call when they might not be ready to sell. So, um, yeah, it's it's a significant portion of my time today.

23:04 Um, and I I think it always will be. >> What is your take on um you've said something previously when like now you have this database of 15,000 MSPs on your on your like the list of companies uh uh and you've said something like uh not people are not giving themselves an option which now you have this huge list. So what I'm trying to understand is >> how has it grown over the years and what you see people uh why they may be making this mistakes of not giving them enough database to choose from when it comes to great companies and how has it changed over over the years for you?

23:45 >> Yeah. Yeah. Yeah, I think what I was talking about there was like usually when I this is specifically in like the MSP industry there there a lot of business owners um will will come to me and they'll say hey you know I want to buy I I want to buy companies and they will you know they'll they'll meet a company at a peer group or something and they'll they'll explore that as an acquisition opportunity.

24:16 Um, and you know, it might work, it might not, but it's like you've seen one company like that. You're you're you're you're not going to make a good investment decision if you're just looking at one one company. You're going to make you're going to make a much better investment decision if you're looking at a hundred companies. You can pick the best one. Um, or you can pick the the ones that sort of meet your bar. um and and you can pursue them. And then also, you know, you can um you can be rational in in the deal process if you know you have other opportunities. And if if you have negative findings in due diligence, like you find that, you know, customer satisfaction isn't isn't great and some customers are about to leave, you can um you can pass on an acquisition opportunity and um and know that, you know, you've still got other other opportunities behind that. So, I think it just has all these giving yourself options um as far as acquisitions to do is just so so critical. and there there are just so many effects downstream um that yeah I I think it's important. So I think it's just valuable to have a system that generates a substantial amount of investment opportunities um so that uh you know you can you can really you know so that there's a real opportunity cost um so yeah that that's kind of why I think what I meant by that >> now there are different phases when it comes to buying those businesses there is finding there is closing there is operating and very obvious is and you've said that as well is like when you simply do a good deal, you're just d-risking other components. So trying to get maybe a bit more practical here.

26:09 You've you've seen a lot. You've talked to a lot of business owners. Uh going down to the very basic level, what have you seen is is the best ways to break the ice to to build a rapport. like something I posted the other day. I've talked to hundreds of business owners myself as well, is I always do the the research trying to find an article or interview about them where there's something personal. There was a guy who was really into watches. So, I brought it up in the intro call and it really helped.

26:36 >> So, what's what's maybe something uh which you can share which is like the secret sauce which which works well when it comes to breaking the ice, building the rapport with a business owner. >> Yeah. Yeah. I I think doing doing your research and and coming up finding some something that you know you can talk to them about um I I I think is great. Um you know I I I think talking about you know we pay a lot of attention to what's going on in the MSP industry with new technologies or vendors um and like kind of what the [snorts] um what kind of the key topics are so you can really come and kind of talk shop with a business owner. Um I think just being will being like open willing to share uh what you're doing that's working. Um al also like sharing your your challenges. Um so make making a business owner feel like hey that you know I I don't have to like put up this like facade of like everything is great. Like we all know like that there are challenges in business. So, I think just being um being open about that. Um just I've always felt like being willing to say things that are not selfserving um I I I think can build trust and make make people feel like, hey, this this guy's not trying to like sell me or spin anything. So, you know, I I'll tell people all the time, you know, hey, I don't I don't think you should sell the business right now because, you know, you're probably not going to, you know, cuz it's might grow a lot and you could sell it for a lot more in the future.

28:14 Like, that's that's a very uh not self-s serving thing to say, like I'm trying to buy the the business, but if it's like what I really believe, then um you know, I should I should tell somebody that. So, um, yeah, I I think it's just a lot of little things that, um, that build trust and and build credibility over time. Um and then the the last thing I'll say is a increasing number of our acquisitions are coming through referrals like um from either people that have sold their business to us or people that have you know vendors in the industry that have seen what we're doing and and um and and kind of like what we have to offer to business owners. Um, so that's that's been really cool and that that's helped a little bit with you're not coming into a relationship totally cold. You have sort of a mutual connection that can start the conversation. So that would be the other thing I would I would say that uh has has started to work um well as as as we've developed our reputation.

29:18 >> Okay. Now, one very interesting thing you've said that uh if you could only be excellent at at one stage of M&A, you'd still be choosing the the finding part. So, my follow-up question on this would be as there is so much more competition in the MSP space now when comparing the when you started in 2017, how do you still remain so disciplined doing great deals when there's so much competition? >> Yeah. Yeah. I I would say maybe my my answer has evolved on that. I'm still not sure like exactly which one I would I would fall on, but I I think finding is is critical, but as things have gotten more competitive and you had to pay higher prices for businesses, we we haven't been immune to that. We've had to pay higher prices for businesses, too. Um we uh we've gotten a lot better at creating value postc close. So, like we're paying higher prices for companies today, but we're actually generating the same or better returns on those acquisitions because we're we're doing such a better job growing them organically. So, that's been an interesting uh uh phenomenon. But I I I mean, I think I think sourcing like the finding part is is how you stay disciplined.

30:36 Like if if you just don't have enough opportunities, you're not going to be disciplined. you're not going to be willing to walk away from opportunities when they no longer make sense. So, um you know, I I I think it's um people think it's I I I think there's a temperament element, too, but I I think more than anything it's it's just having opportunities. Um so, I think sourcing creates opportunities and then that creates discipline. So I think that's that's uh that that's that's how we think about it. And and then I yeah I I think value creation has just become so much more important because you you've regardless of how disciplined you are um at least in our industries like there's more buyer interest in them and um competition has gone up. So uh we've had to grow the businesses faster organically to generate the returns we we want to generate. Um, so that's become a lot more important. Um, you can't just like win on a good deal the way the way you used to before.

31:41 >> I think we got here a crazy like an overview of the market because the the previous interview you did was like a half a year ago and then you said you're still in a finding phase and probably within the next four or five years you're going to be in the operating phase in a value creation space. But now we're six months. It's it's just it's been just six six months and you now you're already saying it's it's all about value creation. So pretty pretty fascinating how fast it changes.

32:07 >> For sure. For sure. >> So, uh you've said you you you have to pay more for for those deals. Um >> yeah. >> Now the cost of capital has also moved higher. How how has it changed your your day-to-day returns everything? How much you can you can share? Yeah, I think thankfully like we, you know, we we've been pretty disciplined. So, um, you know, we we didn't, you know, that I mean the the cost of capital and interest rates going up is like a real it's a real interest expense is a real expense. Um, but uh, you know, I think we were disciplined in in our acquisitions when rates were, you know, close to zero. Um, and I think that led to, you know, a healthy balance sheet.

32:55 um and and you know being able to keep going when when rates went up you know four or 5%. Despite that prices for businesses um really kind of held steady I mean I I think our valuations that we've been paying have been pretty consistent over the last like four years or so. Um prior to that they were a lot cheaper. So there was kind of this moment in 2020 2021 um where valuations um expanded and they've they've held pretty steady um from there. But that was really the point at which we said okay we got to we got to be really proactive in how we create value um in these businesses because we have to we have to grow the earnings of these businesses faster now that we're we're having to pay a little bit more. So, um, yeah, that that really, uh, yeah, if if you just look at our data, it's it's pretty stark that kind of pre2021 period and and the post2021 period as far as valuations of of of companies.

34:02 >> Now, Jeff was sharing a slide on on the conference in Stockholm, which is your economic engine, a repeatable flywheel that compounds growth and value. And it starts with M&A then there is a talent and then there is a playbook. Let's talk about the talent part which is the post acquisition. So now trying to understand do you acquire always majority 100% uh what's the ratio there and uh what happens post post close? How much do you change? What do you do maybe first 30 60 90 days?

34:38 >> Yeah. Yeah. So we we always buy 100% of the business. um we allow sellers to roll um a portion of their proceeds in into Evergreen um at the hold level. So we have one cap table. Um I think that just um makes things a lot simpler and and cleaner. We have 100% ownership of all the companies under underneath the evergreen umbrella. Um and then people can participate in the overall success of of the company through their their rollover equity. Um and on talent tal so talent's a big one. Um we in every deal we do we're recruiting somebody into that business a senior management capacity. Um and that can really take two forms. One about half the time people are selling their business to us to retire or to transition out of it and go you know onto their next entrepreneurial adventure. Um uh so in in those cases uh some of the time they've groomed a successor um that can can uh transition into the the CEO role. A lot of times they haven't. Um and so we will recruit a CEO into that business to be their successor. Um and that's that's something Alpine has done for a long time. Um and you know we learned kind of how to do that um well from from them. But even in cases where the founder is going to continue to run the business, you we're trying to grow the the company. We're we're extremely focused on organic growth um on the top and the bottom line and that um you know often requires investment in the in the senior team. So, um, you know, we'll we'll work with each business and figure out, you know, and in a lot of these businesses, you know, a lot of times sales are owner. Um, and so there's an opportunity to bring in a chief revenue officer or chief growth officer to really um kind of inflect the the the revenue growth engine um at the company.

36:38 So, that's probably the most common nonCEO role that we place into uh into businesses. Um but yeah, we're we're always looking to um you recruit somebody in in into the business because we think talent is uh obviously a critical ingredient to to growing um to growing companies organically. So um we we always try to you know pull that lever. >> Is there anything else you can share when it comes to talent? Why I'm asking this is uh maybe trying to get some of the lessons you learned yourself, lessons you learned from uh Alpine because they've been doing that for even longer. I'm asking this maybe there is a potential seller watching this interview, listening this interview and they're thinking of whether to sell to uh someone else or whether they should be selling to you and they are very interested in rolling equity into Evergreen because it's a it's a growing asset and uh they're very excited about this. So what they can expect maybe when it comes to this talent part maybe you can share more.

37:43 >> Yeah. Yeah. I I you know I think um typical private equity will be like you know we'll buy 70 or 80% the founder will uh you know maybe roll some equity and then we'll sell it again in in three or five years. Um, but they're not really uh making the business better. They're just kind of like riding the existing team for like one last 3 to 5 year run.

38:17 Um and and I think um what what Alpine noticed and instilled in us is just this belief that talent drives investing, you know, management talent drives investing outcomes. And so um it's not acceptable to just focus on, you know, the levers you're going to do on pricing or sales and marketing or cost like without addressing the talent piece. Do you have the right talent in the business? How can you supplement? Like what talent can you add to the business that's just going to change the trajectory of the company? These are small businesses like one person can move the needle uh on on the results of a business. So um you know I think first and foremost we we we think [snorts] about that. Um, and we just try to have a a a view into, you know, what talent can we add to this business to help it get to the next level.

39:17 >> You have so much data. Um, it's it's it's a question for maybe listeners. What have you learned about the difference between motivating a founder who rolls equity and motivating a non-founder CEO you install after the acquisition? Maybe you can share some of the data you have seen. I I I think with a founder who has already had a big liquidity event, the uh there are things you can do on incentives of course like roll rollover equity helps um and uh we have a long-term incentive plan um that I'll talk about a little bit um and and and that those those things help but I think with founders there needs to be some intrinsic more qualitative uh level of motivation.

40:06 like they got to feel connected to the company. They got to feel empowered. They got to I I think it with with a founder, I think it's a lot more qualitative. And then I think with a a hired manager that hasn't had a big liquidity event, like they can be, you know, more motivated with incentives. I think that would be kind of like my overarching learning. As far as like how we incentivize people that lead our individual businesses, we have um a incentive plan. I won't get into the specifics, but we call it the multipliers club. It's it's all about um you know doubling the the earnings of a business within a 5-year period. Um and then there's you know it it's rolling.

40:48 So obviously you could do more than more than double uh a business uh after that. Um but it's entirely within the control of the operator. Um, and I think that's really an important aspect. Like it's not at the hold co level. It's it's focused on the individual business that that CEO is running. Yeah. So I think that's another important thing is to just make it um you know you need to have incentives that um people can actually affect the outcomes on like it doesn't make sense to you know judge incentivize someone based on you know what acquisitions we're doing and it doesn't make sense to like incentivize someone that's running a MSP in you know Washington DC with you based on you know how much M&A we do in the ERP consulting space like that that doesn't that doesn't make sense. So I think tying it to something that um that the operator you know can really have control over is critical.

41:54 >> Now again when it comes to all the data you've seen and if we take uh the acquisitions which uh which are so-called best performing and maybe we take the ones which haven't been as you expected. So obviously there isn't like a red line between there. It's it's about those small um small things. But what what would you bring out when it comes to the ones which which did very well and the ones where may maybe you made a mistake with this uh certain acquisition specific acquisition. I think there are things that are you know [snorts] we we do these post-mortem analyses uh of and and we do have a lot you know we have over 100 data point you have 160 data points now on on acquisitions so um yeah I I think um maybe a few things that that we've learned through those um customer concentration you know that that is a that is a thing that people pay attention to like how much of your revenue is concentrated in one customer or five customers. Um, that's a risk that people pay attention to for a reason. Like that we we've it it's it's pretty clear that like businesses with high customer concentration tend to underperform um businesses with lower customer with a more diversified customer base. I think we have actually found another counterintuitive maybe counterintuitive thing we found is that our businesses that have generally lower profit margins when we buy them um we're able to grow those businesses more more quickly and expand margins. Um, and I think that sometimes businesses are highly optimized before they're sold to you. And that can be tough because you don't get an opportunity to optimize those businesses and you're having to invest a lot um in some cases just to stabilize the business. So um yeah, we we've been focusing a lot on companies where um there's been real investment in the team and growing the business and maybe that's translated to lower profit margins. um but we can benefit from that in the future by not having to hire as much when we grow um when we add new customers. So um I think those those are a couple things that uh are kind of top of mind for us right right now. Um we just uh our most recent postmortem analysis was just sent around and those were a couple of the takeaways.

44:22 >> Did you ever expect to grow this thing so large in in short 10 years? Was it like a plan or you just did your work, gave your best, learned from each other, learned from Alpine and just went went doing this day by day or how has it been? >> Yeah. No, no, it was definitely a plan. Like we we we set uh big hairy audacious goals um you know the the first one that we set before we owned any companies was to get to 100 million of EBA by 2023. Um and we did that. Um, and you know, we're going after our next bee hag right now.

45:00 Um, and uh, and and so, um, I I one one thing Alpine in instilled in us is these bee hags. So, look out, you know, five or 10 years and set a big hairy audacious goal. Um it might feel impossible or far out but then work back like take the the important thing after that is not just to have the goal it's to backwards plan from the goal like okay you know if we want to get to 100 million of by 2023 uh you know and and we assume a 10% organic growth rate like how many companies do we need to acquire you know each year like what is that acquisition waterfall look like? Okay, next step.

45:48 How many companies do I need to talk to to buy one? You know, and so so you really got to go through that um that backwards planning exercise. I think a lot of people throw out a big hairy audacious goal and maybe they continue to talk about it, but they don't kind of get into like, okay, like what are the inputs that I need to to get there? So, I think we're pretty like methodical about that. I think that's been a a big key to our success is like, you know, we we put these these big goals on on the page, but then we like hold ourselves accountable to achieving a goal this quarter that we think will, you know, contribute to that outcome occurring in seven years. Like, so I think that's a that's that that's just been a an important thing. I know some people are, you know, take take a more approach of like just take it day by day. Um, and and I get that and you want to be nimble and adaptable and everything. Um, but I do think the the goal setting and being very systematic about that. Um, has has uh allowed us to get to this point without it being like that surprising that we're here. How much time have you actually spent on uh putting together the systematic plan?

47:11 And it was just uh like Yeah. >> Yeah. >> A lot of time. A lot. That's actually a good question. A lot of time um we spend a lot of time working on the business. So every quarter uh is another thing we learned from Alpine. So, so we we have a one-page plan and that onepage plan has our, you know, on the left hand side of the page, it's got our vision and values, and then it's got like your five-year goals on another column, your one-year goals, and your quarterly goals. Um, and so we kind of run the business on that on that onepage plan. And then every quarter we're getting the holding company team together um to you know uh it's a little bit different every time but we call them renewals. So basically we we look back at the quarter what went well? What didn't go well? Where are we tracking?

48:11 Where are we not tracking? What do we need to change? Um yeah. So, so like I mean it it's kind of I think it's kind of extreme to take the whole company for a couple days a quarter to just work on the business like basically you know taking time away from the day job to to go um work on improving the business and um goal setting and things like that. So we we spend I think kind of an now I think about it we spend an outsized uh amount of time on that. Um and I think that's that's served us >> served us very well.

48:53 >> A few people reached out to me knowing that Alpine is an investor in this uh uh platform um saying that you must know this uh charismatic leader of Alpine Graham Weaver very well. So yes, there are those Stanford speeches which he has given and the goal setting which you just uh said it's there is actually a presentation about this which which I recognize. So but what else have you guys learned from from the guys in Alpine because uh uh they're doing so well and they have this charismatic leader in the BE space. I think we we've touched on on on a lot of these things, but um you know, I think with Graham specifically, like I think he's a great investor. Um and I think because you know he has a lot of content on things like goal setting and um and you know a lot of other stuff that I I don't think he uh you know doesn't talk a lot about like investing but in in my experience he has a >> a real knack for um understanding like what are the key kind of two or three two or three things that are going to make or break this this investment thesis. Um so I think he's a really good investor. Um, ta t t t t t t t t t t t t t t t t t t t t talent is another one. I mean, Alpine is just obsessed with talent. And I I I think like it's um it's around Alpine like it's not okay to just ignore the talent side, which is I think what like most private equity firms do. they focus on like the playbook and the playbook is is is critical but like Alpine starts with the talent and who's executing the playbook and do we have the right leader in this business like that's they're they're just like obsessed with that. So I think that creates this environment where it's never okay to like ignore the ignore talent as an input um to to investment success. Um and then I think the other thing is um just the the push on value creation. Um Alpine um and Graham are always asking us the question of like why are businesses better after they join Evergreen than they were before? Like make that clear. Um, and I think that's um that's that's been really helpful as we've started, you know, over the last four or so years to like really get good at value creation post acquisition. I think it was it was really that that push um from them. So yeah, those were a few a few of the key ones.

51:27 >> Now you and Jeff are the talent which you're describing here. So I'm trying to understand now building this large firm, this institution, how have your roles changed over time? >> Yeah, I I think like one of the surprising things like we we always when we started this like we wanted to keep the holding company small and I think we we do still have a small holding company team relative to the size of the business with with 40 people. Uh al although the the the folks in Sweden might say that uh we have a big holding company team relative to uh the Swedish serial acquirers. Um we we we look up to how small they keep their their corporate teams. But I think um just uh building out the team was was kind of a I think that's been a surprising thing like just how how much um how important that is. Like I mentioned Sydney earlier like I you know she's just been a just a game-changing person that I hired you know uh five and a half years ago now. Um and and you know there are a lot of other people that we've brought on over over the years that have had just incredible impacts on on the business.

52:47 Um and so so I think that's been attracting people like that and training them and developing them. Um you know we we wouldn't have done 47 acquisitions last year if it was just Jeff and I running around trying to do them. Um and we were able to do it. Um, and and I think we'll be able to do that pretty consistently. Um, and it's because we have a great team of people that can represent the company well. Um, and, uh, can work with business owners through these transactions. And so, um, yeah, I think that's that's that's been the main change is just going from like me cold call, you know, cold calling business owners and emailing business owners to uh developing a team that that does that. Um, does that effectively um and probably better than better than I ever did now. Um, so yeah, I think that's [snorts] um been a fun part of it. As we're closing uh very soon, I have three questions here. I'll just say them out.

53:51 You will just choose what you what you want to answer because I don't know what to ask like there is one which is like Ramsey today versus Ramsey at 2017 like when starting the firm what what have changed maybe belief wise what holds back people doing so many deals because again not too many firms are doing 47 acquisitions per year and the last one is what do most people misunderstand about evergreen? just you can choose one like these were just the questions I had on my on my on my list which I wanted to ask.

54:21 >> Maybe I'll go in reverse order there. What what do people misunderstand about Evergreen? I think people um pe people see our our acquisition velocity and they're like, "Oh man, Evergreen's just buying everything." And what they don't see is like we are probably the most disciplined acquirer in this industry. um we just see so many more opportunities than than anybody else because we put a lot of effort into that. So I I think um that's that's something that I think people see the high volume of of acquisitions but they don't see the things that we pass on or they they I think they don't see the discipline um in in our acquisition engine. Um and then what were the other >> you today versus you 10 years ago because a lot has changed >> 10 years ago. Uh yeah I I um I I I didn't want to manage people like if you talked to me 10 10 years ago like I met my wife when we started Evergreen uh like like we met around the same time um and she she remembers me always saying like god I just never want to manage a single person. Um, and uh, now that's that's not uh, [laughter] you know, now I manage a lot of people. Um, and it's it's fulfilling like seeing people succeed and and working with people that you really like. And so I think that that's been a a big it was very much like I just wanted to do just want me and Jeff to like just do this by ourselves and like you know this holding company model is so scalable and you know we'll never have to like manage anybody. it'll be great. But like I think like me today is more like I I love our team.

56:07 I love the people that I get to work with and managing great people is is fun because you get this insane leverage out of what they can do. So uh that's one. >> Okay. Excellent. Very very glad I asked asked the questions and uh or you wanted something to add. Sorry for interrupting. >> No no I think you had one more. Uh >> I I had one more but I think you answered the one which was like what is the belief which is maybe holding a lot of people or or firms back uh when it comes to M&A and the amount of deals you're doing. But I think you answer when it comes down to the team and you've been just doing that for such a long time.

56:45 >> Totally. Totally. Yeah, for sure. >> Okay, Ramsey, thanks a lot for doing this. Um very very happy we we we met in Stockholm now. Got to do this. I'm sure we'll meet again. I'll I'll come back to you as uh much more often. Uh fascinating what you built and uh thanks a lot for for uh sharing the story and um the fact that you go into went into details and shared so much. I'm I'm sure it provides a lot of value for people who who buy businesses.

57:14 >> Yeah. Awesome. Well, thank thank you for having me. I'm just super super impressed with like the research you did on on on our company. I I uh you know there are a lot of people in our industry that uh that don't know nearly as much about Evergreen as as as you do. So I I just yeah I just appreciate the the interest and and the kind words about uh about our company. Um and appreciate the opportunity to talk to you.

57:39 >> I hope you enjoyed this episode of Buyers and Builders. Uh please remember to subscribe wherever you're listening and leave a review. It really helps the show reach more buyers and operators. And if you already haven't, go back and listen to some of the other episodes of Buyers and Builders. This podcast is built for people who buy, build, and hold great businesses long term. Every guest you hear on this show has real hard one experience acquiring and operating companies. And the goal is again very simple to give you ideas you can actually use in your own journey.