By thinking ahead when installing processes for tracking, software development, quality assurance or configuration documentation — all items business leaders say they don’t have time for — Knowledge Center set itself up for success.
“It’s better to do it right from the start, than try to recreate it because you’re going out to raise money or do a recapitalization,” Degory says.
He also found good advisers, because, like many CEOs, he says you can be so wrapped up in running the business that it’s hard to step back.
Hiring an investment banker was expensive, but the bank had the tools and experience to bring in firms with the right culture.
“You can’t do it on your own,” he says. “I just about killed myself for about six months, because I was putting together the presentations — I had to be the one that did the presentations — and in addition to that, we were going to conferences and I had to make sure that I’m still running the company.”
Finding a match
When it was time to find a private equity group, Degory asked a lot of questions. If a firm wanted reference accounts, he asked for reference accounts in return.
“I think you’re interviewing them, just as much as they are interviewing you,” he says. “I’ve been doing this for many years, so you can tell (a lot) by the kinds of questions, the way they ask the questions and the type of information they want and why they want it.”
Degory says everyone wants to know about your prospects. But one group can say: “I want to see your pipeline because I want to see what we’re looking at.” Another might say: “I want to see your pipeline. When are you going to start to close all of this?”
The second group’s phrasing is a sign they’re worried about the bottom line, and while that’s important, Degory was looking for a partner who cared how he was getting to those numbers.
“I want to have a partner that I can sit down with and say, ‘I need some ideas,’” he says. “Because my partners are also on my advisory board, and they participate and they are very collaborative.”
Knowledge Center had five term sheets and offers, and Degory says he narrowed it down to his 1A and 1B choices. Neither offered the highest valuation, but they had the right story or culture that he thought would mix well with his company. He ended up with his first choice.
Since the recapitalization, Degory has noticed a few differences — beyond his own lower stress level now that the company is operating under his vision. He says the team has more focus and the workplace has become more collaborative.
He’s also added a bonus structure program to provide a sense of ownership.
“The employees see that everybody that’s part of this company is working toward a common goal of growing,” Degory says. “I’m really lucky, I have some really good people that have the same passion as I do.”
