John Ziegler on insights for the investment sector

John Ziegler, CEO of Acclaro Growth Partners, a consulting firm that delivers targeted insights for the investment sector, recently joined our podcast. Acclaro helps middle market clients in the mergers and acquisition ecosystem focus on the right companies and helps management teams focus on the best options for growth post-close. In his role, John uses his experience in management consulting to drive Acclaro's strategic direction, focusing on the firm's continued transformation. Read on below for an edited transcript of our discussion. 

Michael Howard:
Thanks for joining us on the show today, John.  What's the most significant thing you're going to share with us today? 

John Ziegler:
I'm going to talk a little bit about how we do what we do from a research perspective, which I think some mainline market research professionals would find to be a little bit off base. 

It's not 100 percent what you would consider to be by the book,  but it's a research approach that works for us, works for our clients and has been very repeatable and successful over the years, about 22 years that we've been in business. 

Michael Howard:
Congratulations! So can you tell us a bit about these 22 years before we get into this alternative approach you speak of?

John Ziegler:  
So, 22 years ago, our founder, Kit Lyle, wanted to start working with middle market CEOs and wanted to be a strategic, trusted advisor for them and tripped into working for the middle market or lower middle market of mergers and acquisitions and did a lot of what we call buy side commercial diligence, which is when a private equity investor finds a target company that has agreed to the L.O. I. stage. And then we would get hired to determine whether or not what they think about that business is true. So that could be things like this business is big, it's growing fast, it's in a great market, it has loyal customers, and so on and so forth. And we would go out into the market and determine whether those things are true or not. And if they're not, are they opportunities for the company to grow, you know, after the transaction closes? 

Michael Howard:
Okay, with that in mind, thinking about this alternative approach, what exactly is it?

John Ziegler:
Our team full of senior researchers goes out into a market and they'll pick up the phone. They'll call you, Michael, and say, Michael. This is John from Acclaro growth partners. I love to talk to you about the marketing space. We're doing some work around the company and in widgets, for example, and I found your name on LinkedIn. It looks like your background is perfect for what we're trying to learn. I'd love to share with you what I know about the market and hear about what you're seeing. 

That's how we would start and then we have a list of objectives or what I'll call “questions” loosely, but it's mainly objectives where we're going to try to collect data points based on what we think your company knows about the market or what your company knows about the target that we're investigating or what your company knows about competitors to the target that we're investigating. And so it's really a one on one focus group, or you could call it investigative journalism. It's a conversation, it's not where our team has a list of questions and they say, I have 10 questions they need to ask you. I need to get answers to them and when I'm done, we'll move on. It's a relationship-building exercise. Where we're trying to collect data and insights. It's a lot more art than it is science. Some people are really good at building those relationships pretty quickly with somebody, for other people it's a little bit harder.

That's the high level of how we go about doing what we do - a lot of time ‘applying quantitative rigor to qualitative data’. So we're collecting data points. In many cases, it's a qualitative descriptor. Our engagement directors are asking questions of our research team, and then they're answering them in the documents that we create for them. So it's really us asking our internal team.

What's the answer to this? You interpret what you heard from your interview and then put it into the form that we create. It's a lot of art. There's a lot of back and forth internally. So what exactly did they say  for you to give them this rating for this particular question, whether it's net promoter score or whether it's loyalty or whether it's how likely are you to switch - those types of questions. Then, we're applying a score to each of these things. Sometimes it's numeric, sometimes it's qualitative, but that's based on it. What our research team interprets from what they're getting from the person that they're interviewing.  

Michael Howard:
So that's certainly a unique approach. How do you find these respondents?

John Ziegler:
I guess it might seem a little bit of a challenge. It's a grind. Yeah. The first thing we ask our clients when we start an engagement is, can you provide a list of customers? Can you give us an idea of who your top competitors are? They're not going to have a name, phone number, email address for competitors, but they will for their customers.

And knowing that we're not going to pick up the phone and call and say, ‘Hey, by the way, our client is X, Y, Z. And we're investigating a transaction’. We never do that. In some cases we don't get those lists, and in some cases we get fantastic lists and it's our job to sort of navigate through that.

So we use LinkedIn. We use zoom info. We use other proprietary databases. We have access to our own networks. In some cases, we'll pick up the phone and call into a company looking for somebody in marketing and knowing full well that that person is probably not the right contact, but that person may be able to refer us to who we really need to talk to. Sometimes it's just a dialing for dollars exercise until you get to the right person and sometimes you have the right person right away and you can get them on the phone but it's one of the hardest parts of what we do. There's a lot of companies out there now that do appointment setting for you and in some cases, those are, those are worth it for, for how we do what we do, being able to  tell somebody we got to you through, you know, a referral from somebody, or I saw you on LinkedIn or you're in my network. Those are the things that help open the door for us to have a conversation. 

Michael Howard:
So you mentioned before you don't have incentives for this approach and I'm aware that the interviews can be lengthy. How do you strike that balance? 

John Ziegler:
Well let's go with the first part. We don't provide incentives. That makes it extremely hard, but also makes it extremely valuable. If somebody is not getting paid to participate and have a conversation with one of our analysts, they're not preparing any sort of pre-canned responses to anything, so they're going to be a little more open. They're going to be a little more honest and that's what we want. Our clients are expecting unfiltered, unbiased responses because our job is to help them reduce risk in their transactions. So that's the first part. 

The second part is, yes sometimes they are lengthy. The more the merrier, as far as I'm concerned, as far as we can go as deep as we can go with a conversation, the better. There are times where our interviews might be three minutes long, but we've got one data point that we're looking for. And that's, that's fantastic. In other cases, they're an hour and three minutes long, and it just takes a long time to filter through or really separate the wheat from the chaff to get to what we really need out of that interview. But the more we have, the better  for sure.  AndI'll add that - our engagement director's job is to filter through all of that. And so we're, before we even start, we're already preparing what our final story is going to look like from a storyboarding  perspective. 

We also can do a post-interview interview, where our engagement directors are then picking up the phone and saying, okay, Michael, you did this interview a week ago.I really need to understand what they meant by this quote or what they meant by this number or what they meant by saying this particular competitor is much better at this particular service area. What exactly did they mean? Can you peel away the onion for me a little bit so that I can, so I can understand how to interpret that and build that into the analysis. So there's a lot of back and forth. There's a lot of follow up interviews. The last thing we ask someone before we get off the phone with them is, do you mind if I follow up with you if I have a question about something that we talked about? That's pretty standard. Sometimes these interviews take the form of two or three discussions, not just one.

I guess the more value comes with each subsequent callback as well.  Sometimes, sometimes what you think about the progression of research, right? You start with your first couple of interviews and you learn a little bit more. And as you go, you learn a little bit more and you realize, Oh, what I asked in the first interview probably wasn't the right way to ask it, and maybe I should go back and re-ask it. And as you get to the end, you really understand more about what was being said - so it's a creative knowledge base that we're building. We sometimes have to follow back up and circle back to make sure we really understand what we heard. 

Michael: 
So after you've collected all this data, what's the next step? It's not like a typical survey where the same questions are asked. I imagine building the insights is definitely part of that art you spoke of. 

John:
Most of the time I tell clients we're narrative tellers or narrative builders. So a client will come to us on our buy side work that we do and say, I want to buy this company. I have them under LOI at 30 days to finalize the deal and we'll ask them, well, what's your thesis? What do you think you know? What excites you? And what scares you? And we'll go out to figure out whether those things are true or not. Then what we do is we take all of those insights, all those interviews and augment that with labor statistic data or economic data. Or some third-party reports. If we believe the data that's in them and we build a report and the report is my view, it's a narrative. We're telling the story of this company from the lens of our client. Is it actually run by a really good management team? Are the relationships sticky? Is it growing in the channels you think it's growing in? So we're putting together a hundred page research report or analysis of that company based on what that set of thesis points was.  

Michael: You tend to work on both sides of the transaction as well, then there's a little bit of the buying and the selling. How does your story differ, um, between the two? 

John:
That's a good question. And I failed to mention this when we talked about what Acclaro is- we're really three service areas, right? You think about the life cycle of a business. A business gets started and eventually the owner eventually wants to sell it. So that's the buy side part where somebody comes in and is going to buy the business. And I've talked about that a lot. Then, once they own it, they want to grow it. So at some point they can sell it. So during that growth period, we call that growth consulting, value creation, you call it a lot of different things. And that can take the form of a lot of different objectives. Then the third is sell-side market studies. So an investment bank is helping a company put their business on the market to be sold. And this is a, this is a newer phenomenon, probably the last five, 10, 15 years where companies before they have a buyer, they go out and get a third-party to build a market study on their business. So, from the lens of what that business is, so, you know, what's the business, where are the competitors, what's the market that they're in. Is the market growing? Are there other opportunities ancillary to that market? So that's the sell-side portion of our business. 

So I mentioned the thesis points from the buy side. There's a buyer that has all these things that they think are great about this company. On the sell side, there's a seller that thinks all these things are great about their company. And they have an advisor, an investment bank that says, here's how we're going to position you to the market.  Our job is, okay, well, whatever the positioning is that you want to tell to the market, we'll go out and try to determine whether those things are true or not.

And the ones that are true, we will tell a positive narrative about that which has a lot of facts to support it. The things that maybe aren't true, or maybe are potentially negative, we'll position those as opportunities. So, you'll hear me use this analogy all the time: I'll use a baseball analogy. Hopefully most of the listeners are baseball fans. And if not, I can explain it in more detail, but if you have two people running down the first base and they both get there at the same time, and one has perfect form and one has terrible form, investors want the guy with terrible form because if they teach him any form at all he's going to be faster than the guy with good form. So, our job then from a negative or opportunity perspective, is to say, look, they're not doing this really well, but if they did do it well, this is the opportunity that they have. And this is what it would do to their ability to steal share, their ability to grow, their ability to go into other markets. So, a lot of what we're doing is telling the narrative from a, from a fact-based positive perspective and the things that aren't positive - we have to figure out how those things can be turned into opportunities and the things that aren't opportunities. We identify them, but we just don't talk about them a lot because that's what the investment bank and the seller will talk about when they get to that part of their deal process.

But, so we're thinking of the same, the same approach. You have this list of things. One's a list of hypotheses about a business and one's a list of your thesis about buying the business. And we're really going about it the same way. We're just looking at it from a different lens. 

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Michael and John go on to discuss how the type of data Acclaro collects can help its clients make strategic decisions on both sides of the transaction. John says, “Keep an open mind about what's the best solution for the particular situation and about the best way to go about collecting insights.” They also touch briefly on data quality, chatbots and some other trends in the industry. Listen to the episode for more!