Strategies for Sustainable Growth: Insights from Clairvest’s Leadership

[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and real time trends. I'm Sean Mooney, BluWave's founder and CEO. During this special episode, we replay a fantastic conversation from our Ahead of the Curve Growth Strategy Symposium with my colleague, Keenan Kolinsky, along with Mitch Green, Managing Director with Clairvest, and two of Clairvest's leaders within their portfolio companies, Tyler Bowley.
Managing Director with Acera Insurance and Randy Rowland, Chief Innovation Officer with Meriplex. Enjoy.

[00:00:53] Keenan Kolinsky: All right. So let's get started. I want to welcome everyone and thank you for joining today's ahead of the curve growth strategy webinar. We have some great content and perspectives to share and we're excited to get into it. But before doing so, it's my privilege and honor to introduce our three expert panelists for today's webinar.
Tyler Bowley, Mitch Green, and Randy Rowland. Gentlemen, thank you so much for taking the time to join us today. Uh, I'll turn it over to Tyler to start with a brief introduction on himself.

[00:01:22] Tyler Bowley: Thanks, Keenan. Happy to be here today. So yeah, Tyler Bowleyy, I am the Managing Director of Growth and Expansion at Acera Insurance.
We are a national insurance brokerage, which covers and targets a very wide swath of the sort of market. And in my role, I'm responsible for overseeing a wide portion of our growth strategy.

[00:01:43] Mitch Green: Mitch Green, managing director of Clarivest. I'm responsible for bringing these two fine panelists on as they're both Clarivest investments through our portfolio.
I've been at the firm over 20 years. We have a domain based approach where we identify industries first and then leading companies within them to execute growth strategies. So very excited to talk about this topic today. Clairvest manages over 4 billion of capital and is typically a minority investor alongside owner operators.

[00:02:15] Randy Rowland: Alright, hello. My name is Randy Rowland. I'm the Chief Innovation Officer for Meriplex. Meriplex is a national IT solutions provider. Our mission is to level the playing field for mid market companies so they can punch above their weight. We do this by letting them leverage our large scale IT services.
Technology platforms, they could focus on their business and meet its potential. And in my role within Merriplex is I have, I lead the connection between our go to market strategy and the delivery of our services, focusing on innovating our products. So everything we package, once it's contracted, we can actually sell it and meet all the customer requirements.

[00:02:55] Keenan Kolinsky: Thank you all again. We're honored and excited to have you with us today. Uh, and we look forward to the great insights you have to share from the breadth of your experiences. And finally, my name is Keenan Kolinsky, your moderator for today's webinar. I lead BluWave's research and operations team, and I've had the privilege of supporting thousands of our clients and their projects over the course of my four years with BluWave.
Let's go ahead and dive into the interesting stuff. Firstly, starting with some key trends. When we look at today's macroeconomic environment, uh, there are really several promising signals of stabilization, suggesting an environment, really better positioned for growth activity than we've seen perhaps over the past 24 plus months, firstly, year over year inflation has certainly cooled.
And while we're not close to the lows that we saw, you know, um, 2020 and early 2021, we've certainly seen inflation steady and hover in the low to mid three percents over the past 12 months, which is encouraging. Secondly, we're seeing strengthening consumer sentiment, which can of course be a leading indicator to increase consumer spending, boost the business investment, higher revenues and profits, and in turn, further business investment and expansion, new projects, and et cetera.
Thank you. And finally, we continue to see positive GDP growth, noting and acknowledging, of course, the slight slowing of such growth in the most recent quarter over quarter. But nonetheless, these signals ultimately suggest we're pulling the nose up and leveling the wings, if you will, certainly from where we were mid 2021 through most of last year.
And when we look at BluWave's proprietary data set, which comes from the thousands of projects that we support annually, we see promising signals supportive of growth as well. Specifically, over the last 60 days, we've observed a 70 plus percent increase in proactive businesses investing in growth strategy projects.
But what does that mean? You know, while every project has its nuances, these projects have most often included our clients engaging strategy consulting firms to perform market analysis, for example, understanding the current market landscape, growth rates in the space, market trends, competitive analysis and also evaluation of customer insights.
In addition, these projects have included The evaluation of expansion and growth opportunities, for example, evaluating both organic expansion levers, their expansion into, let's say, new geographies, new channels, selling new products or services, but they've also included the evaluation of inorganic growth levers.
through acquisition. Ultimately, the increase in growth strategy activity is encouraging, uh, but I would say it's also critical, especially with the volatility and shifts that we've observed in the market, uh, and across industries over the past two to three years. Every business should really consider revisiting their growth and go to market strategies regularly as your answers to the core questions such as where to play and how to win are likely different today than they were two to three years ago.
Other similar key trends BluWaves observed include 12 percent and 18 percent increases in demand for strategy and sales and marketing projects, respectively. For context on BluWave service taxonomy, examples of strategy projects would include not only growth strategy projects, But also activities such as commercial due diligence, strategic plan facilitation, and voice of the customer activities, among others, of course.
Whereas examples of sales and marketing projects include initiatives such as pricing strategy, sales effectiveness and training, rev ops optimization, digital marketing enhancement. And more. These increases suggest that not only are proactive businesses taking action in this more stable environment, but they're making meaningful investments in their commercial infrastructures as well, and optimizing their tactics around how to win in their respective markets and industries.
So having discussed these key trends, I would like to pass the baton to Mitch Green from Clairvess to share his perspectives regarding how to determine the extent to which a business is well positioned to achieve and to support growth, and also what activities are oftentimes most critical to execute on immediately post acquisition.
Mitch?

[00:07:31] Mitch Green: Thanks, Keenan. And I'm interested in this subject because I don't view it as a transformation of our industry and our portfolio companies. It's really just the next I would say step of what's been a layering process and private equity and private equity backed portfolio companies. When I joined the industry and the firm Clarabest in the early 2000s, much of our value was created by identifying good industries and reasonably well positioned companies in those industries.
And from there, we gave them the capital to go do their thing. And the first I would say added complexity was when a layer of financial sophistication was required, uh, for either competitive reasons or supply chain and, and then we had to do our first couple of things, find the good industry, find the good company and then really strengthen the finance teams.
And from there, the next thing we needed to make sure was we. Took the next step in I. T. And as long as we were good on some of those infrastructure building investments, the company's ended up doing pretty well, and we had a good run. And as we look at 2024, you know, the fact is, money is still more expensive.
Consumption is a little bit slower. Uh, there are, I would say, systemic changes in the in the ecosystem where we can't count on the same drivers to get great returns from good companies. You know, a great return in private equity is going to be reserved for the best businesses and this go to market sales.
Strategy is really that next evolution of what we need to do and the companies we work with. So these are the tests that we're putting as great importance on as anything else in diligence. Is there not just a good industry, but is is the plan logical with the dynamics going on? Are are they saying we're going to do direct sales in an industry that's been intermediated on sales for a long time?
For the last 30 years might be a good idea, but is it logical within the constraints? Just as an example, and is the company positioned in the good old days? If you had a scrappy small business in a, in a growing industry, they could automatically gain share. Well today, without the proper people and resources and technology, just being able to hustle doesn't do it.
So we're, we're looking for those things. And then it's really about the people and processes and technology. And they all need to hang together. You need to have the right leadership that's got experience with the game plans, the systems that can properly implement both. And for example, in systems investments, the CRM was the first layer.
Now you want CPQ to tie in with CRM and marketing automation. And we see that in, in all the different companies we work with and in different forms, but without the leadership, it doesn't happen. Yeah. And of course, the finances of business partners, as I would say, that's the one thing that's kind of carried through my whole time in private equity.
So with those points, I'm excited to have Randy and Tyler weigh in on their activities at our portfolio companies, because these are hires we probably wouldn't have made 10 years ago. But we couldn't live without them today.

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[00:11:14] Keenan Kolinsky: Thank you, Mitch, for those fantastic insights. As Mitch indicated, we're now going to move on to our third and final topic.
We have the pleasure of hearing from Randy Rowland with Meriplex and Tyler Boley with Acera Insurance on some tactics involved in crafting and importantly executing on a winning strategy to achieve sustainable growth.

[00:11:35] Randy Rowland: All right, so I'll start a little bit about Meriplex. We've grown quite a bit organically, but we've also done a number of strategic acquisitions.
And our mission is to deliver consistent service across all the different markets that we execute into. And what we needed to do. Is actually rebuild our go to market engine. We've had a number of strategic initiatives that we've focused on, but I feel like one that was really powerful for us is a focus on the ideal client profile, which I'll call ICP for short.
And so as you can imagine, if you acquire. Those many different companies in different markets, you have 14 different go to market strategies, different pricing models, value propositions, product bundles, and you know, one of the most effective ways for us to kind of bring all of that together is say, okay, What is a 10 customer look like?
What are the attributes of that customer? And so we actually kicked that off really to, to focus on our go to market investments, but then we quickly streamlined our product offerings. Based on that effort, we actually, when you streamline the product offerings, the ones you hand off to operations are easy or to execute and, and provide service delivery on.
And so we spent some time going through this. It was a very impactful. Exercise for our business. We even created scoring systems and we'll talk about this later. When we talk about KPIs to make sure that we are talking to customers that fit our value proposition, because there'll be the happiest. And what we found is we were able to revamp our messaging, revamp our Our product value propositions are pricing.
And once you, customers are willing to pay for value, if you get the right messaging correctly, the pricing just reinforced the value proposition. So this was something that was a huge benefit for our business that we continue to get a benefit from.

[00:13:30] Keenan Kolinsky: Very interesting, Randy. Thank you for that. Tyler, do you have any thoughts and kind of practices you've deployed at your own business when it comes to tools and resources for crafting winning strategies?

[00:13:41] Tyler Bowley: Yeah, I mean, if we're talking about ideal client profiles, I mean, we do certainly have, I mean, Sarah covers a very wide Sort of, sort of birth in terms of industries that we, that we represent, uh, businesses within those industries, sort of small, medium, large. So, you know, we, we do profile clients and we do sort of have an ideal, but it often will change within sort of different segments of the market.
You know, Acera, when we were formed after, you know, our partnership, you know, through the transaction, we sort of really came out as a new looking entity. We sort of merged two entities. And when we reentered the market, we, you know, we had an opportunity to sort of foundationally go to market as though the firm itself was a new product offering.
So we have hundreds of products, like I say, in hundreds of industries and different specialties, but sort of coming out of that transaction, the fact that we sort of maintained a certain core structure of employee ownership with Clairvest in a minority position, as well as having some new scale sort of allowed us to approach and go to market.
Uh, really as a whole entire firm and communicate a value proposition really on the fundamental basis of, of how we're sort of owned that translating into a whole bunch of different sort of segments of our market in the same way. We're in a, I'd say we're in an industry that is really hard to differentiate in, right?
If you take the 10 largest insurance brokerages, all focus on many industries that have specialization and claim to sort of be able to serve as the best. And I think for us, we tie back a lot to, or we tie back a lot in our go to market to our platform and why the platform itself allows us to sort of create value for clients.
And I agree with Randy, when you do that, pricing becomes sort of one of the lesser considerations. Very interesting. What

[00:15:35] Keenan Kolinsky: about when you're crafting your, your, your row strategy, who, from both of your perspectives is critical or key to involve in the, in not only the planning, but then also obviously the execution.

[00:15:47] Tyler Bowley: Yeah, I can start on this one. You know, I mean, for us, right. It's. You know, it can be various again, groups within the firm for various segments that we're targeting, but certainly our, our internal marketing team, our sales leadership team, you know, our operational team plays, plays a big role in crafting our strategy as well.
Inbound outbound, you know, we have, you know, a sort of, uh, an online presence, which is, which is managed in a different way. So, so we're effectively involving leadership from just about every significant sort of area of the business would be probably the answer.

[00:16:20] Randy Rowland: Yeah. So luckily we had some folks that have been through this exercise before.
So we did the same thing. We brought our whole go to market leadership team together. We kicked it off at the summit and then followed on with a number of workshops. And really what we were focused on is what does a perfect 10 customer really look like if we were to pick it? And then let's define the attributes because if you do a good ICP, you can actually target those customers, but you can actually.
Broaden the scope a little bit to, to get others that may not have all the attributes, but are close enough. And so we were able to leverage our, our private equity partners. They were heavily involved in this process. They had resources, experience, and ideas that allow us to look at from a lot of different angles, things they've picked up from their other investments that were leveraged.
And then finally, this about, uh, how do we reinforce? So once we've gone through the exercise, we've We actually used our annual national sales kickoff to actually train the entire go to market engine on what we've come up with. And then we've done follow on training on a weekly basis. We've had some in person summits that are specialized for specific things, but we've been able to reinforce that and, and actually create alignment.
And so, you know, our mission is that 80 percent of our. Customer facing sellers are providing the same value proposition and that we can hone and improve and increase our conversion ratio.

[00:17:43] Mitch Green: And Keenan, if I can jump in just observing both businesses from a board perspective, there's a lot of shared attributes.
In that managed I. T. Is a service that almost any small to mid enterprise customer can purchase an insurance. Of course, they all need it. So, you know, differentiating, attracting the best clients for for their organizations. And I would also add the cost of getting it wrong is really high because Sarah's measured on ultimately the performance of the risk that they're underwriting for their insurers.
If they're getting bad clients in there that don't look after safety or whatnot and drive up claims, it really hurts the whole organization and the same thing for Meriplex with, you know, subpar IT infrastructure, the cost of dealing with those clients and moving them onto the better platform. So it's, it's a huge success factor, getting that right.
Makes

[00:18:43] Keenan Kolinsky: a lot of sense. Obviously, whenever, you know, a business is establishing its strategy and executing on it, obviously, it's critical that these businesses measure and monitor how they're tracking towards their goals and towards ultimate success. Randy and Tyler, what are some of the key KPIs that you've deployed and kind of monitor in your own businesses?

[00:19:05] Randy Rowland: Yeah, so to piggyback on some of the things Mitch says, I actually would reinforce what he said. If, if you don't get specific about what you're targeting, you can, you can be very inefficient with your spend. And so we've created what we call our ICP scoring system. It's how we score all new leads and new prospects.
And what we found just in the early days of adoption is that opportunities to get low scores, generally, are We have lower win rates or less than ideal contract terms, or maybe even deeper discounting. And so we're using this information earlier in the sales cycle to maybe even abandon opportunities more quickly, right?
And reinforce and make sure we get the right resources on the right opportunities. And we, you know, one of the things that we've learned over time is that we track our win ratios. Our win ratios are going up. So, um, We get actually better pricing for both the customer and for us and that continues on.
And then what we also find is that when we're selling to the right client profile, the customer satisfaction numbers are naturally higher. And so I think those are all little mini taxes you pay if you don't get focused that could make your investments less impactful. And that's why we, we continue to hone this and the scoring system has really helped us.

[00:20:21] Tyler Bowley: Yeah, I would, you know, sort of, we don't have specifically a scoring system, but we put a lot of time and effort into qualifying opportunities for sure, and making sure that we have, you know, a pipeline that is, that is sort of fit for purpose to where we believe we can add value within the market. So, we certainly track and we do a lot of training around how, how our people qualify opportunities to make sure that we have alignment between those opportunities and the value that we think we can generate.
We off, we of course, you know, very, very closely watch sort of conversion ratios and of course we see those go up when our opportunities are qualified and we avoid the tax that Randy sort of alludes to, you know, we do like to look at lost opportunities where they're qualified and get a good sense of, you know, why didn't we win in an area where we think we can, what sort of went wrong.
So we do do some KPI tracking around that. Then of course, we're obviously looking at, you know, the big things like revenue, which of course is an obvious KPI, but also the margin that we're sort of getting and making sure that the business that we're, that we're writing is business that's profitable. And then we want to continue to write because I think.
You know, you can be winning sometimes in areas that isn't overly lucrative to the business. And so we do watch that as well.

[00:21:32] Keenan Kolinsky: And also when it comes to setting a strategy and executing on it, there are not only short term kind of quick wins, if you will, or the low hanging fruit, but there are also longer term, longer term items included in your strategy and in your plan.
When it comes to growth oriented activities, Tyler and Randy would love to get your thoughts Thoughts on, you know, potentially some of the short team short term initiatives businesses can pursue to achieve growth as well as longer term initiatives that they should consider to achieve growth.

[00:22:02] Tyler Bowley: Yeah, for sure.
Like from our perspective, you know, with a sarin where we've sort of been coming to market kind of post transaction with a new brand, a big part of our initial sort of go to market and grow strategy was just sort of getting our name and getting some awareness out there about what had occurred, who we were making sure we didn't lose sort of part of what was important, which was two very strong legacy brands.
So, so in the short term, you know, a lot of effort, a lot of efforts already went into sort of that, you know, logo branding, sort of, you know, color schemes, things like that. And then as well, a lot of focus with our sales teams put on how we're articulating, right? Post transaction, what our new platform sort of provides and how it might add value.
So that'd be sort of the very short term things that we really focused on. Obviously, as we get out of the gates, we're looking within our ideal client profiles and in areas we're targeting to see what sort of penetration that we can get. And then as we start to have success with some of that, we're looking at, you know, how are we going to expand into other areas of the market where we're proving out sort of a growth strategy and we're saying, yes, we're having success here and executing.
The logical next step for us is, okay, how can we, how can we now move up or down market where we see other opportunity to add value? How can we expand geographically? And for us, some of that comes organically. Other comes through, through M& A activity and other partnerships with other businesses. So those would be some of the short and long term things that we're sort of focused on.

[00:23:26] Randy Rowland: Yeah. And so for us, now that we've kind of got our ideal client profile in mind, we've spent a lot of time changing our brand identity to follow through on that. And so just in the, in the it services market, there are, uh, from a mid market perspective, there are MSPs that are local, that are owner led, that are really designed for more smaller businesses.
And then you have the large it outsourcing companies. What we've really done is focus. Our brand on, we have no plans to go up market. You're a big fish in our pond. You're important to us. And there's a little bit of a, a identity in that mid market where mid market companies, they don't want the unsophisticated partners.
They also don't want to get lost in the fray with a large. And so we're reinforcing our brand in a way that, you know, we plan to be the, the juggernaut to enable us based medium sized business and you're in the right place and you're important to us. And so that's what we've really done. Our initial focus is been on new logo acquisition.
And what we've seen is our cost. Her lead has come down and our wind conversion ratios have gone up just because we're a little bit more targeted in what we're, we're going after our next phase is to go through our existing customer base through the renewal process. Good news is, is most of our customers already fit the ICP, which is where.
Most of our ideas came from, is from our existing customers. Um, but then you will find from time to time that you have a situation where you may have someone outside the ICP have an opportunity to renegotiate pricing or get more capacity back for, for the core ICP that we're after. And then I agree, you know, we use this information as we go into M& A, we may look for acquisitions that could expand our ICP from a capability perspective or take that same message to a new market.
So it definitely informs our growth, both organically and inorganically through M& A.

[00:25:21] Keenan Kolinsky: Fantastic. Mitch, before we move on, any, any additional comments from your side?

[00:25:26] Mitch Green: I'm just watching from my seat. I see the spinoff effects of doing this right in some other things, in terms of everybody's sophisticated now.
It used to be. You offered someone a job and, you know, they maybe did a little checking, got a reference from a friend and took it. Now, you wouldn't believe the diligence we get from mid level management and up. And they're asking all these questions. You know, how are you differentiating? What is the go to market strategy?
You know, am I going to be on the winning team? It's not just, you know, a nice dinner anymore and I'll sign and when we're acquiring companies of which both these companies have made many acquisitions, they're asking the same thing. They're selling their, their baby into this platform. They want to know it's going to be the right thing for their people for themselves.
So it's, it's critical and we, we, it's not just for winning customers. Agreed. Agreed.

[00:26:27] Keenan Kolinsky: Well, Mitch, Randy, Tyler, thank you for those great insights on how you all have approached growth strategy and the execution of that strategy at both Acera and Meraplex. Fascinating and incredibly helpful. So that concludes today's kind of core content of our webinar.
And I want to once again, thank our three fantastic panelists, Tyler, Mitch, Randy, for sharing their perspectives and knowledge with us today. And finally, thanks again to our audience for taking the time to tune in. And we absolutely look forward to seeing you next time. Special

[00:27:06] Sean Mooney: thanks to Mitch, Tyler, and Randy for sharing their insights, along with my colleague, Keenan Kolinsky for hosting. If you'd like to learn more about Clairvest, Acera, or Meriplex, please see the episode notes for links. Please continue to look for the Karma School of Business podcast, anywhere you find your favorite podcasts.
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Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.

BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.