Finding A ‘Cusper’ To Run Your Acquisition

During his recent interview with Tobias, Michael Girdley, Executive Chairman at Dura Software discussed Finding A ‘Cusper’ To Run Your Acquisition. Here’s an excerpt from the interview:

Michael: Yeah. Our model is actually– we look for a very specific type of person, so we look for a man or woman that we call kind of a cusper. And what it turns out is a lot of those people have been very deep in being a specialist in a specific functional area inside of a corporation. They may have been head of sales, or they may have been head of customer support or ops or any of those type things. But they are interested in getting to a general management and CEO-type role.

We give them almost the– my first CEO job, which is we’re gonna take away some of the stuff that’s kind of boring, but we’re going to let you really cut your teeth to expand. And our view is that people who are making that transition, the thing you have to do is you have to go from being very deep in one functional area to being kind of deep in everything. You need to be able to talk about finance, you need to be able to talk about engineering, you need to be able to talk to engineers, even though you come from a sales role.

And my business partner and I, Paul, we really enjoy coaching these people so we wanna develop them into really good CEOs. That’s part of the value prop for them is, okay, you’re going to be entrepreneurial, you’re gonna have your P&L, you’re going to own all these responsibilities, we’re gonna measure the heck out of you, we’re gonna give you training wheels. But this is your chance to grow from that functional area specialist into somebody that is a general-purpose CEO.

Tobias: And do you have some sort of playbook for them? Or is it a case-by-case basis where you guys look at this particular business has this particular opportunity, and we want you to pursue that opportunity?

Michael: Every acquisition will have an investing thesis for us. We’ll ask ourselves, “What changes do we wanna make?” It could be as simple as like, “You know, what you guys should consider doing? Marketing.” Sometimes that is the– One of the business we bought didn’t even actually have an incentive plan for the sales reps. Have you ever heard of a sales rep never having a commission? So, guess what the sales rep did? They just were sitting around on their butt all day. Anyway, so after we bought that one, the sales growth momentum per month, tripled because it’s like, “Hey, we’re gonna align some incentives here.”

Anyway, to come back to your question, we try to give them that input, and then make a clean transition to that CEO of the business and say, “Okay, now you own this. Here’s what we think, but we wanna give you the authority and the responsibility to make those changes to really run the business like you want to.” And the way we’ll make that transition super smooth is, we have three CEOs in the company right now that report to Paul, our CEO, and those folks will be involved almost always in the acquisition of the new business. If we’re gonna give that to one of the CEOs as a second business, then they’ll have an opportunity to be part of the identifying the problem before they’re expected to solve it.

Tobias: So, they’re not necessarily coming from inside the business when you acquire them, you’re acquiring the business and sourcing the CEO to operate that business separately?

Michael: Right. If we’re buying a distressed or a business that we consider not performing as well as it could, our default model is that the CEOs of these companies are the ownership of the companies never come with. They like that, because we’re unique, because the leadership isn’t expected to stay on. And then we’re the only buyer because of our permanent hold model that they can trust is going to take care of their legacy and their people.

PE buys you or strategics buy you, a good chance your products gonna get killed in the next two years. That’s just the way that works. They like us for that reason. We’ll have our own thesis about the way the company should work, and by design, if somebody had their old way of doing it for the past 20 years, it’s not gonna work to bring them in and keep doing the same thing that we wanna do differently.

You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts