In this episode of the M&A Launchpad Podcast, hosts Feras Moussa and Casey Minshew welcome special guest Stephen Marks, founder of Emmersion Capital and Apertura. Stephen shares his journey from managing family office portfolios to building a global advisory business focused on cost-effective due diligence and labor solutions through nearshoring.
The conversation dives deep into M&A strategy, talent acquisition in Latin America, and the mindset shift from high-growth investing to long-term wealth preservation. If you’re an independent sponsor, entrepreneur, or lower-middle market investor looking to reduce costs and access skilled labor without sacrificing quality, this episode is for you.
In this podcast episode, we discuss:
· How to dramatically reduce due diligence costs
· The advantages of nearshoring and talent pools in Latin America
· Why family offices prioritize wealth preservation overgrowth at all costs
· How independent sponsors can outsource administrative and technical functions
· Strategies for solving the skilled labor shortage in niche industries
· Building a hybrid model that blends U.S. leadership with offshore talent
· Why communication and cultural alignment matter in outsourcing
· Key lessons for working with family offices as an entrepreneur or sponsor
Connect with Stephen Marks:
LinkedIn: https://www.linkedin.com/in/sdmarks Company: https://emmersioncapital.com Apertura (Talent Solutions): https://apertura.co
Additional Resources:
· O’Connell Advisory Group – Financial diligence and Quality of Earnings experts for business buyers. Website: https://www.oconnelladvisorygroup.com
· Attend the M&A Launchpad Conference – May 3, 2025 in Houston Premier event for entrepreneurs and investors in the lower-middle market. Tickets and info: https://www.malaunchpad.com
Additional Resources:
Sponsored by O’Connell Advisory Group – Work with a trusted Quality of Earnings and Financial Diligence partner who focuses solely on business acquisitions.
Visit: https://www.oconnelladvisorygroup.com
Attend the M&A Launchpad Conference – May 3rd in Houston.
Premier event for entrepreneurs, investors, and dealmakers in the lower-middle market.
Get your ticket at https://www.malaunchpad.com and use code LAUNCH for $200 off.
M&A Launchpad Hosts Contact – info@equitylaunchpad.com
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Transcript
00:00 Hey, are you thinking about buying or
00:02 selling a business? Join us May 3rd for
00:05 the M&A Launchpad Conference. This is
00:07 the premier conference for
00:08 entrepreneurs, investors navigating
00:10 mergers and acquisitions in the lower
00:12 middle market. You’re going to connect
00:14 with top dealmakers, gain insight
00:16 strategies to take your business search
00:18 and your business acquisitions to the
00:20 next level. So, get your tickets now at
00:24 malaunchpad.com and use the code launch
00:26 for $200 off your ticket. We’re looking
00:28 forward to seeing you. Today’s episode,
00:30 we interviewed Steven Markx where we
00:32 talked a lot about due diligence, labor,
00:35 and nearshoring and how to really be
00:37 able to take advantage of just kind of,
00:40 you know, the lower cost of living in
00:42 other countries to be able to get good
00:43 quality work right at a fraction of the
00:45 cost. And so, if you’re out there
00:47 looking to buy a business, really
00:48 concerned about those due diligence
00:49 costs, we kind of dive right into a lot
00:51 of the ways to kind of help mitigate
00:53 those and get better pricing. So, Casey,
00:55 what were some of your takeaways? Yeah.
00:56 No, Stephen being coming from the family
00:58 office background, understanding the
01:00 language. He does his own investments
01:02 through his capital side, but really
01:04 understanding that labor conversation,
01:05 right? Because a lot of us think that we
01:07 have to do everything on US dollar
01:10 prices and then there’s just so many
01:12 other things if you the right group that
01:13 can help you get through it for a
01:15 fraction of the cost. Um just really
01:18 really good to know that there’s a team
01:19 and there’s a group out there because we
01:21 may you know some of us we we push to
01:23 close a deal because it’s very expensive
01:25 to get through due diligence and if you
01:27 could get to a quarter of that due
01:28 diligence cost then get through maybe
01:30 more than one or two deals it’s a game
01:32 changer or you skip a step or two right
01:34 because again the cost and so if you
01:36 could still do that step and get good
01:38 value from it right it makes it a lot
01:39 easier and I think the other good thing
01:41 to think about is you know they’ve seen
01:43 a lot they’ve done a lot and so they can
01:44 cross-pollinate knowledge and so oh
01:46 you’re buying a civil engineering firm.
01:47 Well, we did this architecture firm and
01:49 here’s why that deal blew up, right? We
01:51 have employees to help you there, too,
01:52 right? Because if I have to hire a civil
01:53 engineer, it can be very expensive and I
01:55 may not need that. And so, really opens
01:58 us up to even thinking about the buy box
02:00 a little bit using outsourced labor.
02:02 It’s pretty amazing. Yeah. So, this
02:03 episode will help you kind of think
02:04 about just expanding your labor box. So,
02:06 listen.
02:10 Welcome to the M&A Launchpad podcast
02:12 with your hosts Casey and Ferris with
02:14 Equity Launchpad. On this podcast, you
02:16 will gain insights on acquiring,
02:17 investing in, and selling profitable
02:18 businesses in the lower to middle
02:20 market. Whether you’re a business owner,
02:21 investor, or spying entrepreneur, at
02:23 Equity Launchpad, we will provide you
02:24 with the knowledge, guidance, and
02:26 capital to navigate the world of mergers
02:27 and
02:29 acquisitions. All right, guys, just take
02:30 one second here real quick. When you’re
02:32 buying a business, ensuring the
02:33 financial health of the company is
02:34 critical. And that’s where a quality of
02:36 earnings partner comes in. Quality of
02:38 earnings gives you confidence in the
02:39 financials of the company that you’re
02:41 purchasing. It aims to protect your
02:43 investment and ensure that you’re
02:44 stepping into a profitable business on
02:45 day one. Patrick of Okonnell Advisory
02:48 Group is your dynamic quality of
02:49 earnings partner. He’s here to help you
02:51 buy the right business on your timeline.
02:52 Patrick’s entire practice is focused on
02:54 business acquisitions. Your niche is his
02:57 niche. And over the past decade,
02:58 Patrick’s helped more than 200 buyers
03:00 like yourself successfully purchase and
03:02 operate enduring profitable businesses.
03:04 In fact, Patrick’s helped some listeners
03:06 of this show. So, if you’re buying,
03:08 looking for help with equality of
03:10 earnings, financial due diligence,
03:11 network capital, and more, head to
03:14 okconelladvisor.com or just click the
03:15 link in the show notes. Hey, Stephen,
03:17 welcome to the show. Hey guys, really
03:20 happy to be here. Yeah, so I know we had
03:22 a great conversation here right before
03:23 we jumped in and uh we’ve got a lot to
03:25 talk about that’s going to benefit, you
03:27 know, a lot of the people that are
03:28 looking for labor and we’re going to get
03:29 into some good stuff. But Stephen, why
03:31 don’t you tell um our our listeners
03:33 about yourself, your company, and uh
03:35 yeah, what you’re looking for.
03:37 Absolutely. So, I have a bit of a unique
03:39 journey. Um it started off really in the
03:42 family office space out of Chicago,
03:45 Midwest, think lower middle market, M&A,
03:48 and real estate. The the portfolios were
03:51 very heavy on those types of assets. Um
03:55 and I was in a at a very early age um
03:59 was put in a position of portfolio
04:00 manage portfolio management and I really
04:04 learned a lot through that initial
04:07 journey of how things get transacted in
04:11 the lower middle market. What um how
04:14 family offices structure themselves, how
04:17 they become efficient and resourceful.
04:19 And really I’ve I’ve sort of applied
04:21 that across my career. Um I I also
04:25 discovered at that time that I’m an
04:27 entrepreneur and and and I I I sort of
04:30 knew it prior to this experience, work
04:34 experience. Uh I started my first
04:36 company when I was 17. Um and have
04:39 formed a number of businesses after that
04:41 point. But really the experience of
04:44 working with the family offices, it
04:47 accelerated my learning and education
04:50 into I think what was possible at that
04:54 time in the United States. But what was
04:56 interesting about it is that I then
04:59 started to get pulled into let’s call it
05:02 crossber M&A starting in particular in
05:05 the Mexican market. Some of these same
05:07 family offices owned assets in northern
05:09 Mexico. This was early 2000s, mid 2000s,
05:14 uh, postNAFTA. So, a lot of production
05:16 going into that region. And I’ve been a
05:20 a Spanish speaker since high school. And
05:22 there’s there’s that pull on the
05:24 international side that always appealed
05:25 to me because it was just different and
05:27 and unique and challenging. And
05:29 sometimes sometimes things can be very
05:32 vanilla. uh in the United States a
05:35 middle market transaction. It’s okay. We
05:37 take it get a quality of earnings and
05:38 then let’s take it to the bankers and
05:40 then we underwrite the deal and and all
05:43 those things. Well, you know, I like it
05:45 when there’s there’s a little bit of
05:46 hair on it. So, you know, what are the
05:47 challenges and how can you overcome
05:50 those opportunities and then really
05:52 derive some value. So, the next step in
05:55 that journey is I actually created an
05:56 advisory business called Immersion. um
05:59 been operating that business for over 15
06:02 years where I work with middle market
06:05 companies um lower middle market uh
06:08 investors as well private equity family
06:10 offices and helping them both
06:12 domestically in the US but then also
06:15 with a nearshore component in the Latin
06:17 American market. So that was the that
06:20 was the start of really what became
06:23 Immersion Capital, which is now a series
06:26 of companies that we own um with some
06:29 outside partners that really take
06:32 advantage of a few things that the the
06:35 nearshore has to offer. And the big one
06:38 in my opinion is really labor and
06:41 technical labor to support M&A and the
06:45 lower middle market in the United
06:46 States. All right. So, so there’s a lot
06:48 to unpack there. So, really quick, so
06:51 you happen to be in Latin America,
06:53 right? Initially doing what? Let’s just
06:54 kind of really break it down for people.
06:56 So, let’s let’s starting on the
06:60 portfolio management side, it was either
07:03 managing the assets in Mexico and other
07:08 parts of Latin America that clients were
07:09 going to buy, right? Exactly. They were
07:12 going to buy or they were going to
07:13 divest.
07:15 and I was positioned to help advise
07:19 those groups on those acquisitions. Like
07:21 I said, I’m a Spanish speaker. I have
07:24 some really good relationships in in
07:26 markets like Mexico and Colombia and
07:28 Chile and Brazil. And I was put in a
07:31 position at at really at a very young
07:32 age to work with those family offices to
07:36 advise them and help support that M&A.
07:39 Yeah. So, so maybe so a company wants to
07:41 go buy a stone production company in
07:43 Mexico. Let’s just make that up, right?
07:46 You’re there to advise them. As part of
07:48 building out your team, you started to
07:49 hire on your own labor that happened to
07:52 be essentially in Mexico based, right,
07:54 in this example. And then that’s
07:56 ultimately where you saw the opportunity
07:57 as they were asking you, hey, how do we
07:59 get to leverage your team? And you kind
08:01 of realized the opportunity that, hey,
08:03 maybe there’s something here to start
08:04 this kind of nearshoring ability of
08:06 labor. Exactly. Did I get that right?
08:09 All right. Yeah. Just trying to trying
08:10 to ground the the listeners here. Okay.
08:12 Yeah. you got it. So it started off very
08:16 organically. Um I had also been a part
08:20 of some transactions where middle market
08:23 companies in the US were moving their
08:27 near their operations to from Asia into
08:31 destinations like Colombia and Mexico
08:35 Costa Rica because there had been a
08:38 pivot from Asia to more let’s call it
08:41 US- ccentric or timezoned aligned
08:45 markets and through that those
08:48 experiences, we started to really see
08:51 that there was an opportunity to take
08:53 advantage of the local, let’s say, the
08:56 local talent pool that wasn’t being used
09:01 in a in a in a in the right way, I
09:03 guess, in these local markets and
09:06 applied them into the US market. But it
09:08 started off very organically just as an
09:10 idea. Okay. You know, one of the things
09:13 kind of just off of that, you know, talk
09:15 about family office, right? So the guys
09:17 that I’ve known that have been taught in
09:20 the family office mindset, you’re really
09:22 get a great perspective on, you know,
09:25 family office is about wealth
09:27 preservation, right? They’re not trying
09:28 to get a 10x. I mean, they have some
09:30 allocation for that, but you’ve got to
09:33 be thinking on your investment strategy
09:35 more of that, you know, hey, I don’t
09:37 want to lose money, right? I want to be
09:39 able to preserve money and get a get a
09:41 good yield. So with your business and
09:44 all you’re doing in this M&A side, so
09:46 taking from when you grew up in the uh
09:48 the family office side, how’s that
09:49 helped you? Like have you created kind
09:51 of your philosophy around how you invest
09:53 and how you think based as if you were a
09:55 family office yourself?
09:58 Absolutely. I would say that I’m more
09:60 like a family office than I am private
10:02 equity in so many ways that I operate
10:05 because of what I learned in my in my
10:08 first work experience. And really it is
10:11 I think that wealth reservation um uh
10:14 topic is is is so accurate because
10:17 that’s what a lot of these family
10:18 offices do. Their horizon in some cases
10:22 um they may not even have a horizon.
10:24 They just might be holding some of their
10:27 assets for the next generation or the
10:29 generation after that. In some to your
10:32 point, Casey, like in some cases, yeah,
10:33 they do have their their their buy and
10:37 flip strategies as well. Sure. But
10:39 really, for the most part, it’s it’s
10:41 about it’s about building long-term
10:43 wealth. And then also, I’d say another
10:45 point, which is being resourceful. A lot
10:48 of these groups are very resourceful in
10:51 how they use um the let’s call it their
10:54 holding structure or their family
10:56 offices available resources and talent
11:00 and apply it across the portfolio. So,
11:03 yeah, I think I took a I know I took a
11:05 lot from that experience.
11:07 Yeah, I I I was meeting with a guy the
11:08 other day. He’s he’s in the private
11:10 credit side and he was in uh family
11:13 office for about eight years. Uh my
11:15 uncle is a part of that family office.
11:17 It was a small world and and and and and
11:20 my and we had that conversation and he
11:22 was like, “Man, you know, that family is
11:24 all about like the the discipline that
11:26 they taught me about investment and how
11:29 we evaluate and all that stuff.” He
11:30 goes, “It’s allowed me to, you know, to
11:32 grow my career in this space.” I I just
11:35 so it’s it’s fascinating because I did
11:36 not come from the family office side.
11:38 You know, I’m the high-risisk,
11:40 highreward entrepreneur that’s trying to
11:41 strike the, you know, the gold mine. And
11:43 so that the mindsets are very different.
11:45 But raising capital and talking to a
11:48 family office, you have to know how to
11:49 communicate to them because they have
11:51 different desires and needs than I do as
11:53 an entrepreneur. And Ferris and I run,
11:56 you know, really we operate as an
11:57 independent sponsor. And so when we do
11:60 run across the family office
12:01 conversations, you know, there’s certain
12:03 product that we can bring to them and
12:04 there’s just certain things isn’t going
12:06 to ever make sense for for their
12:08 capital. It may be a great deal, but it
12:10 doesn’t mean it’s going to be a good
12:11 investment for them. Yeah. I I would
12:13 also add too I think that there’s more I
12:16 think that there’s some flexibility in
12:18 terms of how they approach their
12:21 investments that sometimes doesn’t exist
12:24 in the private equity space where things
12:27 because middle market private equity
12:29 funds are are reporting to LPs and
12:33 especially the larger ones where they
12:34 have institutional backing they they’re
12:38 buy box is is is really tight whereas I
12:42 what I’ve seen in in the family office
12:43 space. Yeah, there there there are
12:46 certain criteria that they do want to
12:48 stay within, but there’s also an
12:49 understanding of, hey, we’re backing
12:52 this sponsor, so who is this sponsor?
12:55 Who are we investing into? And why would
12:58 that maybe make more sense than just the
13:00 business itself? I don’t know if that
13:02 makes any sense, but they’re looking at
13:03 things more holistically, I think,
13:06 rather than just, hey, what is the
13:08 business? What are the returns? And you
13:10 know, how are we going to how are we
13:11 going to realize that return in the next
13:13 seven years? No, I mean people need to
13:14 understand risk adjusted returns, right?
13:16 A family office already has money. It’s
13:18 not about creating new money as much as
13:20 it is about making sure the current
13:22 money doesn’t get lost both in terms of
13:24 principal or even lost inflation, right?
13:26 Like that is their barometer and then
13:27 you’re building on that. And so you got
13:30 it. So maybe to kind of shift it back
13:31 from the family office conversation,
13:33 right? So you know you kind of mentioned
13:35 obviously you saw the opportunity right
13:37 to start to nearshore right labor you
13:40 know did you start that from scratch or
13:42 you sounds like you did a few
13:43 acquisitions right and so what was that
13:45 first acquisition what did it look like
13:47 and you know how has that kind of gone
13:50 so the way it actually started was very
13:53 organically so and it was almost
13:56 serendipitous from the perspective
13:59 of our advisory clients had a technical
14:03 need for let’s say financial analysts or
14:07 accounting support or whatever it might
14:09 be. They were looking for cost savings
14:12 as well. They were looking to solve
14:15 let’s let’s call it that labor issue
14:17 that was impacting them. And what they
14:21 noticed is that through our company
14:24 immersion our advisory business is that
14:26 we were able to provide solutions beyond
14:29 just the beyond just an acquisition. So,
14:33 okay, we have an acquisition. We’re
14:34 going to support you in due diligence.
14:36 We’ll support with the integration. And
14:38 then usually an adviser, they’re out.
14:40 Um, but in this case, we started to
14:43 notice that they were coming back and
14:44 they’re like, “Hey, remember that
14:45 analyst that helped us out with due
14:47 diligence? Maybe we could deploy them on
14:49 a long-term basis to help build this
14:54 business that we just acquired.” And so,
14:56 it started off that way. It actually was
14:59 was very, very organic. And then we we
15:02 took it step by step. So we started with
15:05 the financial services segment because
15:07 we thought well most of our clients on
15:10 the advisory side, private equity,
15:13 independent sponsors, family offices who
15:16 are doing acquisitions, we know that
15:18 space. So we started offering that
15:20 talent as a service and then from there
15:24 we started adding things like
15:25 engineering, um IT engineering, cyber
15:29 security. Then we started getting um I
15:32 get diversifying a little bit more into
15:34 things like civil and commercial
15:36 engineering, architecture, fire
15:38 protection because we we noticed that
15:41 this was just this recurring theme
15:43 around having a need after an
15:45 acquisition. Hey, we want to grow this
15:47 business. We want to make it more
15:48 efficient. Well, we can’t find any civil
15:51 engineers to grow the the business that
15:54 we just acquired. But what you know, and
15:58 if we did, we’re paying them US rates.
15:59 So it’s it’s it’s already going to be a
16:01 little expensive. What if we were to dip
16:03 into the Latin American market, find
16:06 sustainable solutions there that we
16:09 could then deploy which will make us
16:11 more efficient and solve our labor
16:13 issues. So it actually it started with
16:15 organic growth and then at that point we
16:18 started looking at okay well what can we
16:19 do with joint ventures? What can we do?
16:22 We sold um a minority piece of the
16:24 business to a family office in uh
16:27 Colombia who owns one of the largest
16:29 privately held recruiting and HR firms
16:32 called Letos in Latin America. So we had
16:35 a strategic partner who could help us
16:36 recruit. So yeah, it really started more
16:39 organically versus acquisition.
16:42 Got it. And so then you know as you guys
16:45 have scaled that into that, right? So
16:46 today really what does a company look
16:48 like, right?
16:50 you know like how do maybe and how do
16:51 you maybe two questions how does a
16:53 prospective customer come to you and how
16:54 do you go find a prospective customer
16:57 what historically it has started with
17:00 the advisory side of our business so
17:03 let’s say US lower middle market uh
17:08 private equity independent sponsors
17:10 family offices who are looking some for
17:13 some support uh for for an acquisition
17:17 could be quality of earnings support
17:19 could be um high level due diligence
17:22 just analyzing numbers looking at
17:25 financials developing projections
17:28 financial models and that always
17:31 transitions into some other function and
17:34 I’ve said this before to our team the
17:37 company’s called opportura we’ve said
17:39 this before to the team that when it
17:41 when we start with one service it’s like
17:44 the client gets it and then it leads
17:46 into other other services, other
17:48 verticals, other labor pools. And so
17:51 where we’re at now is that we’re
17:53 continuing to add more and more
17:56 services. We’re recruiting and we have
17:58 talent in probably 10 or 12 different
18:02 countries, um, heavy in Colombia,
18:05 Brazil,
18:06 um, Ecuador as well. We have some cyber
18:09 security analysts there. And and and and
18:11 now it’s turned into a service. So we
18:13 have inbound um lower middle market
18:17 companies, middle market companies who
18:19 are coming to us saying hey we want to
18:20 hire a bunch of cyber security analysts
18:23 we have no idea how to do it in Latin
18:25 America.
18:27 Got it. And so and so you guys are very
18:29 active in just you know kind of placing
18:31 heads into roles right as needed. So
18:34 exactly we’re we we have to adapt to
18:37 whatever the client might need
18:40 because each scenario is very different
18:43 and they have to be well trained right
18:45 it’s not just a generic it has to be a
18:47 trained not only in their discipline but
18:49 then even trained to that customer right
18:51 so not easy by any means right but it’s
18:53 getting the right it’s the right head
18:54 and the right seat maybe is the best
18:56 better way Stephen we we have we have an
18:58 experience ourselves with nearshore with
19:00 with the with the near sourcing model.
19:02 So, I have a good friend of mine. I
19:04 should connect you with him. He’s from
19:05 Colombia originally, uh, but he runs a
19:07 company called SC CFO. And when we went
19:10 to close H&M, the biggest challenge was
19:13 the the previous owner had acquired four
19:15 companies, but he had never really
19:16 merged all the financial data. We were
19:19 using a line of credit on top of the AR,
19:22 and if you don’t have your accounting
19:23 right, you’re going to just get
19:24 hammered. So, we brought them in, they
19:27 rebuilt all the accounting. As the day
19:28 of closing, we had a whole new fresh
19:30 accounting books that we rolled out and
19:32 we had then the the US team did the main
19:35 and then we were maintenanced by a
19:38 controller and a admin accounting level
19:41 out of Mexico and uh it dropped our
19:44 costs just dramatically to do that. But
19:46 then they had a system of all the
19:48 management and we ran that for a good 12
19:51 13 14 months and then we found our
19:53 controller. we had a system and it just
19:56 le it just laid out very nicely for us
19:59 and so that experience was really great
20:01 to work with a company that uses
20:02 nearshoring and we had a positive
20:04 experience. Yeah. I’m actually curious
20:06 to get to get your impressions of of how
20:10 it went. I mean, did you feel as if it
20:12 were very seamless? you were working
20:14 with great talent that just was able to
20:18 understand or or or did it take a little
20:20 bit of massaging to kind of get the team
20:23 to a point where they could really
20:25 understand what the the business case
20:27 was and what needed to be done? Like I
20:29 I’m just curious. No, it was it it was
20:32 it was it was it was not seamless every
20:34 I think every transition to new groups
20:37 and new people. But for me to go from
20:41 acquiring a business to laying in a new
20:43 financial system and then if I brought
20:45 in a controller, they would have had to
20:47 figure all this stuff out and for the
20:50 cost, right? I got two top level
20:53 accounting people that were were
20:55 working, you know, really hard to make
20:57 our accounting all day long work. And so
20:60 there was some transition. There were
21:01 some processes. We had a lot of but the
21:03 tools and the resources were at a
21:05 fraction of the price for us to then be
21:07 able to bring in a controller and
21:08 transition and then they were there
21:10 along the transition. Yeah. And and I
21:11 would say what made it what made it a
21:13 little bit less bumpy than it may be
21:14 Stephen is it was a hybrid model right
21:16 there was someone that was state side
21:18 that was meeting at the business closely
21:21 really you know much more sophisticated
21:23 obviously knows it all then he is kind
21:25 of helping work and train up the team
21:28 right we weren’t as involved in that
21:29 aspect and so that made it you know it’s
21:32 another again there’s a lot of ways to
21:33 do it I’m sure Stephen you’ve seen and
21:34 done it all and so yeah you know but
21:36 again it’s it’s a very valuable way to
21:37 drive a lot of value from not too many
21:39 dollars right so Yeah, totally agree
21:41 with that. And and we also offer that
21:44 that hybrid model as well because we do
21:46 see the value in that. Absolutely. You
21:48 have someone states side who can kind of
21:50 be the gobetween and and and help make
21:53 sure that the the quality is is what it
21:56 needs to be. Uh but I’m glad to hear
21:58 that you had a positive experience with
22:00 it because that’s that’s what that’s
22:02 what we see and and a lot of our I mean
22:05 we’ve had we’ve had clients that have
22:06 stuck around with us since the
22:08 beginning. um I mean going on five six
22:12 years where there we’re just always
22:14 layering in new technical talent but
22:17 what’s interesting is that the the needs
22:19 are getting more and more unique where
22:22 it used to be oh we need some financial
22:25 analysts and maybe a controller
22:26 fractional
22:27 CFO these are I’m not saying they’re
22:30 easy profiles to find bilingual
22:32 experienced working maybe with US or
22:35 European companies they’re not easy to
22:37 find in the Latin American market,
22:39 they’re easier to fund. But now what
22:41 we’re getting are things like, yeah, we
22:43 have a we have a we have a a a company,
22:47 a manufacturing company that makes
22:49 specific gaskets for hydraulic systems.
22:52 And what we need to do is we need to
22:54 create a lab with engineers in a place
22:56 like Colombia where they could test
22:59 these gaskets. And so for us, it’s like
23:01 finding a needle in a hay stack. But
23:03 that’s the business model. The business
23:05 model is to find the really hard to
23:07 locate profiles and then offer them into
23:11 the US lower middle market middle market
23:14 at typically a 30 to 40% discount of
23:17 what you’d see in the United States.
23:19 Yeah, it’s powerful. I mean, it really
23:21 is. Being someone that has used the
23:23 system and seen it, is it perfect? No,
23:26 nothing’s really perfect. Everything’s
23:27 done it. But we could not have gotten
23:29 from A to D without that process.
23:33 Because by the time we got the
23:35 accounting process done, the shift over,
23:37 really consolidating four companies,
23:39 getting a system and a process and a and
23:41 a 13 weeks and a model and a budget, all
23:43 this stuff that we didn’t do, we paid
23:45 for. And then to cut that cost
23:49 dramatically by then handing it to a
23:51 controller and handling it to an admin
23:54 and then those then them managing it
23:56 allowed us to move on to other things to
23:58 then come back and then bring in our
24:01 controller and them to train that
24:02 controller to then level it out. And it
24:06 just was I I felt like very beautiful
24:08 system. It did take active demand. We
24:10 had to be on top of it. And it wasn’t,
24:11 you know, all those things. But God, I
24:13 wouldn’t, it would have been an arm and
24:14 a leg and I might have gone through two
24:16 or three controllers that would have
24:18 cost me, you know, hundreds of thousands
24:20 of dollars. Plus, you know, it’s more
24:22 expensive to let go of some. I mean, it
24:24 becomes a very burdensome process
24:26 because that person you’re letting go
24:28 isn’t going to train the next person.
24:30 Our our team in Mexico, as a as a
24:32 plating company, your discipline is not
24:33 accounting, right? And so, but but they
24:36 stayed in as long as we needed them to
24:38 transition and train and all that stuff
24:40 because the the near sourcing was like,
24:41 “Shoot, you’re paying us. We’ll we’ll do
24:43 it.” There was no animosity because
24:45 that’s the model. It was to move in and
24:46 out. It was it pretty amazing. So, I
24:49 think what you’re doing is outstanding.
24:50 And you know, it it can help anybody.
24:52 And on that same vein, before we run out
24:54 of time too, maybe what you know, you
24:55 mentioned kind of independent sponsors,
24:57 one of your largest customer base,
24:58 right? What are the most common things
25:00 they’re using you for? And then and that
25:02 same question too. What are some of the
25:04 things that they’re not that they should
25:05 be thinking about?
25:07 Wow, great question, Ferris. So I I
25:09 would say
25:11 yeah, that first point is is is clear to
25:14 me. It’s always starts with due
25:16 diligence. It always starts with some
25:19 type of M&A thesis with an independent
25:21 sponsor. I want to acquire this small
25:24 business or lower middle market company
25:26 in the United States. And sometimes it
25:29 could be as as simple as I don’t know
25:32 how to do it or it could be I need some
25:35 additional resources to help with that
25:38 transaction. And then what we do is that
25:40 I take it to my team through opportura
25:43 and then they can go in and help with
25:45 whatever function is needed through due
25:47 diligence. But then what usually happens
25:51 is that we then start to see that
25:53 there’s other services that that the
25:57 independent sponsor needs as well. And I
25:60 would say that the bigger ones that
26:02 maybe independent sponsors aren’t really
26:04 thinking about, but really outsourcing
26:07 their their their management, I’d say,
26:11 I’m sorry, their administrative
26:13 administrative functions is something
26:15 that an independent sponsor should
26:17 absolutely be considering. And and a lot
26:20 of the time they don’t know that. um or
26:23 or sometimes they try to do it on their
26:26 own by hey I’m going to go to a place
26:28 like Upwork and try to find this
26:30 accounting person or this virtual admin
26:34 but really when when you there are
26:36 companies not just us but there are
26:38 other companies out there who can help
26:40 with that and and can take that burden
26:43 off of an independent sponsor because in
26:46 some cases you guys know this it could
26:47 be one or two people who are in that
26:50 group and nobody else. Well, you know,
26:54 you’re you’re not going to hire a large
26:55 staff in order to do that. So, outsource
26:58 it. Work work with someone who knows
27:01 what they’re doing, who can also give
27:02 you flexible solutions as well. That’s
27:04 another critical point because they’ve
27:06 seen a lot and done a lot, right? So,
27:07 they can apply learnings from one thing
27:09 into the thing that you may not have the
27:11 context around. Exactly. It’s going to
27:14 be more cost-effective. And then also, I
27:16 think Casey, you were just mentioning
27:18 this, you don’t have to
27:20 employ talent. Like, you can actually
27:22 just outsource that through a contract.
27:25 So, you can move pieces in and out much
27:28 much easier. And and and I go back to
27:30 this the financial example. You know,
27:32 Case, you mentioned this as well, like,
27:34 yeah, you can find controllers and you
27:36 can find bookkeepers and CFOs in the
27:38 United States. Absolutely. But let’s say
27:41 you’re an independent sponsor trying to
27:44 buy a civil engineering firm. Where are
27:47 you going to get civil engineers? All of
27:50 the middle market firms and the and and
27:52 companies like Jacobs, they are highly
27:55 competitive on their recruiting and
27:58 they’re going after talent in in as
28:01 they’re in university. So an engineering
28:03 program, thirdyear engineer is getting
28:05 hired by those companies. How are you
28:07 ever going to compete with that? You’re
28:09 not. So look for outsource solutions
28:12 that can help you both grow and then
28:15 become more cost-effective as well.
28:18 Well, in that civil engineering example,
28:19 actually, I want to ask you, how do you
28:21 get around the certification aspects of
28:23 it? You’re always going to need a US.
28:26 So, if I’m buying that civil engineering
28:27 company, I still need to have a plan for
28:29 a person to give the final stamp, but
28:31 somebody’s doing a lot of the the heavy
28:34 lifting, right? And then that person is
28:35 still reviewing, right? But instead of
28:36 needing to solve for 10 civil engineers,
28:38 maybe I solve for two, right? And I have
28:40 another eight offshore that’s doing the
28:43 same kind of bandwidth wise. And what
28:45 I’ve also seen, especially with lower
28:47 middle market or small business civil
28:49 engineering firms, is that usually the
28:52 senior engineers are are are sticking
28:54 around or they might not quite be at
28:57 retirement age yet, but what’s really
29:00 hurting them is the backlog is not being
29:03 able to do junior level design work that
29:06 can easily be done offshore. I I’ll just
29:10 give a a very quick example of this.
29:11 We’re negotiating a contract now with a
29:14 middle market private equity firm. I
29:16 mean, this is more of a larger player in
29:18 the space. Um, and what they’re telling
29:21 us is that actually it is really hard
29:24 for even them to find that junior to
29:27 mid-level segment. But you go to a place
29:30 like Brazil where we have we have 50
29:32 engineers in Brazil, it’s actually
29:35 fairly easy to find civil and commercial
29:37 engineers there because they’re
29:39 graduating more. Um, and the the trick
29:43 though is trying to find those who are
29:44 bilingual, maybe have experience working
29:47 abroad or can easily be put into the
29:50 system to deliver that work. But they
29:53 exist and whereas in the United States
29:56 it’s much harder to find. No, it’s this
29:58 is a incredible incredible idea. It’s
30:00 actually rung a couple ideas for me. So,
30:02 from a due diligence standpoint, I we’ll
30:05 talk offline, but why don’t you just
30:06 tell me or even just tell our audience
30:08 because I think a lot of people are
30:09 thinking, “Wow, due diligence.” Uh
30:11 Stephen only works with, you know, size
30:13 companies this size. What about the
30:15 people that are on the on the lower end
30:17 side of the guy doing their first deal,
30:18 a $5 million purchase? Yeah. How do I
30:20 Oh, yeah. So, what like I mean, I know
30:22 you a fraction of the cost, all these
30:24 things. Tell us real quick about that
30:26 before we jump into our our next segment
30:28 here. Um because I think that’s the
30:30 person that’s listening right now,
30:31 Stephen. They’re thinking about, man,
30:32 I’ve got a 1% due diligence cost of
30:35 whatever I’m going to buy. So, if I’m
30:36 buying a, you know, $5 million business,
30:38 I’m going to have at least 50 to $60,000
30:40 worth of due diligence. How do I talk to
30:42 Stephen and knock that down to maybe
30:44 2030? That’s really the the question
30:47 here because I’m interested in that,
30:48 too. Yeah. So it’s it’s we were talking
30:51 we were talking before the podcast about
30:53 Maguire Woods the independent sponsor
30:55 conference which I know you were at
30:57 Casey. I I attended it this year as
30:59 well. And I mean, so you have all these
31:01 meetings and I had probably 25 meetings
31:04 a day. And every small independent
31:07 sponsor, I mean, no, no life, even those
31:10 looking at $5 million acquisitions, were
31:14 all interested in that model because of
31:16 what you just said, that they’re already
31:18 looking at some cases $75,000 in due
31:21 diligence costs, whereas we’re coming to
31:24 the table and saying, “Yeah, we could
31:25 probably do it for 20.” Um, and not only
31:28 20, but but we have also subject matter
31:31 experts that we can put into this to
31:34 give you some qualitative data points on
31:37 the acquisition as well. So, it is I
31:39 think our sweet spot in many many ways.
31:42 It’s not even the big boys, it’s the
31:43 middle market. It’s actually the the
31:45 smaller lower middle market independent
31:47 sponsors. Love it. Quality of earnings
31:50 and all these other things we can get
31:51 into. Yep. Yep. That is great. We’re
31:53 going to put that company uh link in the
31:55 bottom of the show notes so people can
31:56 get a hold of you on that good stuff.
31:58 But um right now let’s jump right into
31:59 our rock to our rockaround where we ask
32:01 our guests the same three questions. So
32:03 Stephen, first question, what do you
32:05 like to do in your free time?
32:07 I have most recently I it’s been writing
32:11 um I actually have been writing a lot
32:13 about macroeconomic and political
32:16 considerations surrounding investment um
32:19 both lower middle market and middle
32:20 market investment in the US and Latin
32:23 America and I find it just to be so
32:26 relaxing to be able to just write and
32:28 then also read um on those subjects. So
32:30 yeah that’s the that’s all I do in my
32:32 free time. are you blogging and stuff
32:33 like where where where can someone read
32:35 your stuff because I I love that. I love
32:37 that stuff man. I just finished a book
32:39 called uh end of the world is just the
32:40 beginning and it talks a lot about you
32:42 know globalization and a lot of the
32:44 changes and this book was written 10 12
32:46 years ago and now you’re starting to see
32:48 a lot of what he was talking about
32:50 happening in today where what at least
32:51 where America is trying to push to and
32:54 uh it’s just fascinating to I just love
32:56 reading that stuff.
32:58 Yeah, I’ve been I’ve been starting to
32:60 blog more and more Yeah. more and more
33:02 on LinkedIn. Sorry, but yeah, I’ I’ve
33:04 been starting to use that more and more.
33:05 Absolutely. I’m gonna follow you on
33:06 LinkedIn. Uh and now what’s your most
33:08 memorable moment in your business
33:09 journey?
33:11 I’m going to give you a recent example.
33:13 Um, I would say one of the more
33:16 memorable um, experiences was going into
33:20 a it was a it was a true middle market
33:23 company with our offshore team without
33:27 that didn’t have a finance department
33:30 and essentially in 30 days. Now, this
33:33 was this was a company that was pushing
33:35 $400 million that had scaled so fast
33:40 that they didn’t have an internal
33:43 finance function and my team within 30
33:46 days created it. It was and to me
33:49 especially when you’re you’re you’re
33:51 dealing with high growth company
33:54 significant challenges in just
33:57 structuring the finance department and I
34:00 was able to get a group of 12 Colombians
34:03 and and and and Mexicans and and and
34:06 Chileans and and everybody on on board
34:09 to to then roll that out in a very short
34:12 amount of time. And and so I mean I
34:14 could go into the the monetary examples
34:16 and tell you, hey, I advised on this
34:18 deal and that deal. That to me was
34:19 special because it showed that the model
34:21 works. Okay. Fantastic. Awesome. And
34:25 then last but not least, what’s your
34:26 favorite tool or resource?
34:30 Favorite tool or resource? I’m going to
34:31 give you two. So number one, LinkedIn. I
34:34 I still I I know it’s become a little
34:36 spammy, but I still find a lot of value
34:40 in that. And I’d say going back to
34:42 Casey’s point, um, you know, thought
34:44 leadership is really interesting on
34:47 there. A lot of CEOs, a lot of capital
34:49 providers are still using it as a
34:51 platform to to to talk and I think that
34:54 as a as a tool has always served me well
34:56 and it still continues to in terms of of
34:59 technology and tools that I use for my
35:01 team that has I think been a game
35:02 changer. Slack um for for whatever
35:06 reason and I know it’s kind of a hybrid
35:08 tool but I’m finding it to be very very
35:11 u useful in terms of of managing
35:13 multiple teams in in multiple countries.
35:16 Absolutely. I love LinkedIn by the way.
35:18 I live on it. I think it’s fantastic.
35:21 Awesome. Stephen, thank you very much.
35:23 How can people get a hold of you? So you
35:25 can check me out Stephen Marks uh
35:27 immersion on LinkedIn. You can follow
35:29 our portfolio company.c
35:33 co and you can also look me up on
35:35 immersion capital.com.
35:38 All right, awesome. What a great what a
35:40 great call here and uh really enjoyed
35:41 meeting with you, Stephen, and uh thanks
35:43 for being here. Absolutely. Yeah, thanks
35:45 guys. Good conversation. Thank you very
35:46 much. Appreciate it. Thank you for
35:49 listening to the M&A Launchpad podcast.
35:51 If you’ve enjoyed today’s podcast and
35:52 would like to support us, please leave
35:54 us a rating and a review after you
35:55 listen. If you’re looking for guidance
35:56 on your next business acquisition or
35:58 sale, capital to support your next
36:00 business transaction, or to invest in a
36:02 private equity opportunity, visit
36:04 equityaunchpad.com to learn more and to
36:07 connect with our team. If you know of an
36:08 individual who would be a great guest
36:10 for the show, head over to
36:13 equityaunchpad.com/nominate where you’ll
36:15 have the chance to refer yourself or
36:16 someone else to be a guest on our show.
36:18 I’m Casey Mchu and I look forward to
36:20 talking with you next week.
