#16: How Private Equity Backed M&A Works with Raj Choudhury, Alloy

Building a business requires a strong goal, proper management, sourcing, teamwork, and leadership. But success doesn't guarantee the absence of failure and the number of unwanted outcomes after the other.

In this episode, Raj Choudhury, the CEO of Alloy, shares his background in merge and acquisition and how he started Spunlogic before eventually selling it to a private equity firm. Alloy is a marketing agency specializing in technology brands. With the support from private equity firms, they made several acquisitions to create Engauge. The acquisitions were funded through a combination of cash consideration and rolling over equity into the new unit. Engauge made five acquisitions over five years before ultimately being sold again.

Raj also talks about his experience working with Publicis Group and different companies. Raj reiterated the attitude that a team must have which involves people management, leadership, sourcing and evaluating potential acquisitions, integration processes, and future deal sourcing to aim for success in a business. In terms of valuations for service-based businesses, it depends on factors such as revenue growth trajectory and product market fit rather than specific multiples of EBITDA.

Raj talks about the factors to consider when valuing a business, such as revenue and expenses. He includes the importance of looking at the potential for growth and time value when considering acquisitions. He also shares the acquisition strategy to speed up their overall path to success such as a clean number and transparency are highlighted as crucial elements in preparing a business for sale. Additionally, it is advised to communicate with the management team about objectives and recognize one's strengths and weaknesses to facilitate growth.

Looking to sell your business? Raj offers valuable advice, stressing the importance of clean financials and transparency. Get ready for a rollercoaster of entrepreneurial wisdom, and uncover the key elements to build a successful business.

WHAT YOU WILL LEARN:

• Strategies on how to assemble a larger unit

• How meeting with entrepreneurs and allotting enough time to source and evaluate potential acquisition targets affects Alloy's vision and strategy

• How does a private firm work

• The roles of cultural and work integration

• How to build units to create firms

• The importance of having clean numbers and a well-structured balance sheet

• The importance of transparency and openness from entrepreneurs in a business

• Knowing strengths and weaknesses is essential for building and growing a unit.

CONNECT WITH RAJ:

• LinkedIn | www.linkedin.com/in/rajchoudhury

• Website | alloycrew.com

• Twitter | @rmchoudhury

THE EXIT PLAN

The Exit Plan is for business owners that are interested in learning more about how to sell their business. Each episode Barnaby Cook interviews someone who has bought or sold a business - either a creative agency, or a production company. The conversation gets under the skin of why they wanted to sell, or were looking to acquire, how the deal was structured, how they agreed upon a valuation and what lessons they learnt along the way.