How to be a Serial Acquirer from Scratch

Ashish’s Journey from Banking to Entrepreneurship

Kison: I'm your host, Kison Patel Patel, CEO and founder [00:01:00] of M&A Science. Joining me today is Ashish Akhlaqar, founder and chairman at NearU. Today, we're going to talk about entrepreneurship through acquisitions. Ashish, how are you doing today?

Ashish: Hey, thanks for taking time to have this conversation. You took me down the memory lane. I [00:01:30] remember meeting you in your office in Chicago. It was in 2018 when I was still at Wells Fargo and I was really contemplating the next move for me as it relates to the ambitions, aspirations, purpose of life. We met at the right time. We had a lot of dialogue. What you were doing at M&A Science, and it was very intriguing. So look forward to digging deep into some of the meat here relative to how can people use M&A as an expansion tool for business [00:02:00] building. That's a big part of what I did in the first leg of my journey, but just to tell you, since 2018, since we met to today, it's been life changing in many different ways.

Most importantly, it's been life changing because there's so much I learned along the way. And if you were to ask me, distill down your learnings into two or three things, and I'll contextualize that with the journey here. The first thing I would say is, I learned how great this country is. When you come to this country as an immigrant, [00:02:30] you have preconceived notions on, can you adapt to the culture? Can you adapt to the business ecosystem here? And how will people treat you? But for someone like me, that absolutely had no background in the skilled trades to jump into that industry and find resonance with so many people and be able to build a fairly sizable business is testament to how great and welcoming this country and the community is.

So that's the first lesson I learned in the last few years. The second [00:03:00] is business building. Unlike what we learn in the conventional business schools and whatnot, business building is a lot more than spreadsheets and numbers. Business building is all about people. Sometimes you learn it the hard way and sometimes it becomes so obvious to you that you realize that's the only way to look at these things. And I learned that lesson. I cherish the fact that people make great businesses and great businesses have to nurture people.

The third thing [00:03:30] was I was trained my entire sort of career in finance and entrepreneurship. And prior to NearU, my first entrepreneurial journey, I was an investment banker working in the M&A group. And people look at M&A, big companies and small companies and private equity firms. Oftentimes they end up looking at M&A as the end goal, but you should look at M&A more as an intervention tool in order to enable business building. It is the starting point and not the finishing point of anything. My [00:04:00] perspectives are informed by my experiences at NearU.

Ashish: We intentionally, while there was a tremendous amount of M&A opportunity — and there still is — we leveraged M&A as a means to partner with great minds, with great people, and we leveraged M&A as an action tool in order to build the scale, which allowed us the economies of scale and scope that we needed in order to do great things. That was the third lesson learned.

It's one of the very important tools in the hand of a CEO in order to build the [00:04:30] scale, the balance sheet strength, and the scope to actually be able to reinvest in the business. And M&A should not be just looked upon as a financial engineering tool in order to make three times your money. It should be leveraged as an intervention tool to build a great business.

And the last thing I would say, probably the most important thing I learned in the last 7–8 years is, previously, things like core values and culture were put in the first page of a [00:05:00] consulting company's deck, and they were just left at that. I learned, while building the business in the skilled trades industry, how important it is to emphasize and implement those things. Because without those, you're not going to be able to sustainably scale the vision, no matter how big or small your vision is. You're not going to be able to scale it all the way to the front lines.

So if you ask me to distill it down into three or four things, that's what I've learned since we met in Chicago.

I went and spent 18 months [00:05:30] conceptualizing this path to entrepreneurship. Skilled trades obviously was very interesting to me because it's a commercially viable opportunity. It's a large industry. It's mission critical. It cannot be replaced by AI. It cannot be outsourced or eliminated.

But more than that, I found a connection to my purpose. I felt like it's an industry where the biggest problem in the value chain is labor shortage, and it tied so closely with my desire to create jobs, to [00:06:00] provide people training, to bring technology to make people more productive. All of those things are sort of like the larger-than-life goals that we could accomplish in the skilled trades.

Besides being a commercially viable opportunity, I felt like it was so close to my heart and my purpose that I just wanted to give it all I had. And we built NearU from literally small businesses from scratch to several hundred million dollars of revenue now and several thousand team members that work in 12 different states. It's been pretty enriching, [00:06:30] exciting, full of learning. I'm happy to be here to dig deep into some of the more specific things you have on your mind.

Kison: I gotta tell you, don’t hold this back on me later on. I didn’t believe in you. I just — I meet a lot of people. I get introduced to a number of folks, and they have similar aspirations. “I’m working in banking, I want to go be an entrepreneur.” And 10 years later, they’re still in banking right now. They have a different title, but you actually did it.

I was surprised when we caught up, I was like, oh — he spoke — you actually did it. I want to dig into [00:07:00] that. I want to start from the beginning. What was that moment you decided to transition from banking to becoming an entrepreneur?

Defining Purpose and the ‘Why’ Behind Entrepreneurship

Ashish: It’s such a personal thing for me. It is a personal thing for me still.

I spoke about my experiences as an immigrant that later on became a proud citizen of this country. When you think about a society that gave you so much, allowed you opportunities to study in great schools like Booth, gave you great jobs, lucrative jobs in investment banking — you ought to ask yourself the question: how are you going to give back to [00:07:30] such a great society that welcomed you with open arms?

And there’s many ways to do that. I found the most compatible way for me is to leverage what I had — which is:

1. Knowledge — basic knowledge — about thinking about businesses.
2. Tremendous ability and willingness to work hard. People underestimate that as a competitive advantage — when you apply yourself fully, you can accomplish the impossible.
3. An open mind and naturally curious mind about new things.

And I said, if those things are compatible with entrepreneurship — which they are — and entrepreneurship can create jobs and impact other people’s lives, that’s a great way for me to give back.

Independent of the magnitude of success, the possibility and the probability of success — once you know that you're going to enjoy the experience because of the sheer virtue of why you're doing it — the why is more important than the what and the how and the when and how big.

For me, that was the aha moment. Once that dawned on [00:08:30] me, that became my lifelong purpose. Now we have many great entrepreneurs that have done great things in life, and they further become philanthropists.

So it’s my aspirational goal that one day I can do — for example — Mr. David Booth, he donated to the University of Chicago, and he set an example for what you can do in the field of education. I am aspiring to do something similar one day. It’s an ambitious goal, but it keeps me going beyond any kind of selfish goals or sort of tangible [00:09:00] milestones people can lay out for themselves.

That’s truly what I’m driven by, and that’s what I believe in.

Kison: Creating value, basically contributing to society, really defining that as your why motivator and then continue aspirations to obviously give back at the point you're at now. I'm different. I just want to buy a jet. But, uh, maybe there's some things I can learn from you.

Ashish: There's no one including me that does not like financial success, but I'll tell you from experience, entrepreneurship is such a difficult journey. And you know this, you are an entrepreneur, that no [00:09:30] amount of money will justify the amount of sacrifices you need to make, the risk you take, the sleepless nights, the punch in the gut when you get turned down.

There is no amount of money that will justify going through those things. But if you're fighting for moral wealth, if you're fighting for legacy, then you can keep going on and on no matter how many times you get knocked down. And that's why that inner why — the larger than life purpose — to me is defining.

Kison: That's true. That's what gets you to get back up. No matter how many times you get knocked [00:10:00] down, you get back up for that reason.

Ashish: It increases the longevity of your entrepreneurial badge.

Kison: I agree. Because you, you give up — like that's the number one reason entrepreneurs fail is they give up. You figured out that drive and then you probably already had that by the time we first met. And you're — we're learning, you're in learning mode, you wanted to connect with me, I was obviously tied into M&A, we were running a business and you were out there learning and networking.

Talk me through what that journey was like, because you went from day-to-day working in a banking role, your [00:10:30] VP level when we first met at Wells, and then your — shifted this focus. How'd you balance that? How do you get it when you're working? Are you still working full time and started getting the gears turning and putting things in motion? Or did you just like do a cold quit and try to pursue it? How'd the journey start?

Making the Leap from Corporate to Startup Life

Ashish: The takeaway there, Kison, is very simple. And I'm not sure a lot of people realize this. But thinking about entrepreneurship can be a part-time job. Being an entrepreneur is a full-time job.

The day you decide to execute, there is no choice [00:11:00] but to cut the cord and literally have no plan B and just jump into it.

Thinking can happen over a period of time and thinking is a healthy phase. But it's also — you need to have some fundamental naivety to really cut the cord. And maybe at that time I was a little naive, maybe at that time I was — my wife may call it a little rash. But you have to take calculated risks.

For me, I realized that the path to executing what I had thought about is only going to go through dedicating myself 24/7 to this cause and giving it all I had.

Once the conviction was there — look, you want to transition from being compartmentalized in a role that is defined by some corporation, some entity, whether it is a large company like Wells Fargo or a smaller company, doesn't matter — once you compartmentalize yourself into a organizational mandate set by someone else, and that's all you do, you don't think out of the box, you do not stretch your — you do not get [00:12:00] into your uncomfortable zone.

Entrepreneurship allows you to do all of that stuff. So once that functional conviction is there — that hey, I'm ready to get into that mode — then you just jump in.

And in fact, if you do not jump in, the probability that you will find the right answer and be able to execute to that answer is very low.

So I had that intuition and made my decisions based on that.

Kison: Jumped in with both feet?

Ashish: Jumped in head on.

Kison: Head on. You did that. I imagine you had some savings or some padding. And then you sort of went on this journey. Did you have an idea or sort of a thesis that you came out with that you wanted to explore, or were you just really doing all greenfield exploration to find a sector you want to focus on?

Ashish: That process is very torturous, because biggest pain point of an entrepreneur is lack of clarity of thought — where you are still trying to wrestle different things in your mind and you don't quite know what the right answer is.

Unfortunately, everybody is going to have to go through that phase at [00:13:00] some point or the other. So I went through that phase myself. I said, okay, do I buy a franchise? Do I start something from scratch? If that's the case, what industry should it be? What should I really be looking at? Should I get into something that private equity was trying to pursue?

So there was a hodgepodge of different things that I was looking at in the exploration process. There is the first principles analysis — hey, what are some of the fundamental things that I look for as an investor, as an entrepreneur.

Then [00:13:30] you proceed to some theoretical research. For example, when I thought — one of the sectors I was looking at that time was telomere care, eye care — I tried to find all kinds of research articles on eye care and dig deep and read it line by line.

When I stumbled upon the skilled trades as a potential opportunity, I printed the 10K and the annual reports of every single public company that was out there in the value chain and read it line by line.

So there is the whole process of theoretical research that one needs to conduct.

Most important piece, Kison, is how do you complement and supplement the first two phases with empirical research? There is no alternative to that.

So I would wake up in the morning and starting from five o’clock, I would meet operators in the space. So when I was looking at HVAC, I would set up meetings or find people on LinkedIn. I would go to conferences. And I must have met some hundred HVAC contractors before I started thinking through what is it that I'm trying to solve for.

Because you're not going to [00:14:30] succeed just because you picked the right industry. You're going to succeed because you're actually solving a real problem for someone.

And I wanted to get to the bottom of what is that problem that I'm going to solve for. It's not going to happen overnight. I don't even know whether I'll be successful in solving for that. But you need to have a plan to get started.

And that's how I kind of iterated my way. By Christmas 2018, I had made up my mind that the skilled trades industry is the right industry to focus on.

And that's when the philosophical foundation of the business came together — the [00:15:00] vision, mission, core values, strategic plan, all of that.

Selecting a Sector Through First Principles Thinking

Kison: Why skilled trades? Why’d you go there? Because you sort of gravitate towards there. Then you really started networking, and then we’ll pick up from there. But like, why skilled trade of any other industry?

Ashish: When you build a business, you want to have an opportunity that allows you, first of all, to have a—especially in the first one—you want to have a little bit of a downhill journey. You don't want to have an uphill journey. And the downhill journey, the definition of that is: you perceive that your absolute worst case is not as bad, that will completely bring you on the street, if you want to use that phrase.

If you think about the skilled trades industry, and we were talking about very specific, like HVAC, plumbing, electrical services—these are absolutely mission-critical services. It's a large industry, a hundred-plus billion dollars in market size. It's not an industry that's going to be easily disrupted by technology or some outsourcing trends or whatever. It's always going to be here. This industry has been around forever.

I said, okay, what's the worst case? If the contractors that I'm interacting with and could potentially partner with, if they wanted a successional planning solution—they are able to send their kids to school, take fancy vacations to Europe, buy boats and cars and houses on the basis of having this business—and by the way, take care of tens of employees, team members, and provide them benefits and things like that at their own local [00:16:30] level, to the extent they could provide it.

I was like, wow. If this business can support all this, and my first principles tell me that it's a large industry that’s not going to have significant fundamental risks, then I know that my journey, no matter how bad it gets, it's going to be still okay. My downside case is reasonable.

However, I also noticed that the level of customer experience that one needs to have and the customer wants to have is not where it needs to be—number one. Number two, we talked about labor shortage. Almost a generation of Americans skipped trade schools in the 1990s, and now we have a state of crisis in different industries—not just the skilled trades industry.

We have a crisis in the driving industry, we have a crisis in the nursing industry, we have a crisis in other types of trades. So if someone applies themselves over a reasonable period of time—long period of time—to solve this problem, not only are you helping yourself, you're helping a very valuable industry. And I would even argue that you're helping the country because these are very important trades.

So I said, my downside case is not that bad. And I have this asymmetric upside: if I could solve a meaningful problem in this industry, I'm going to help so many stakeholders. That gave me the conviction that, wow, look—we can get into this and still come out fine.

I would even say we are in the early innings of bringing the vision I laid out to life. But our team is doing a great job. There’s a lot more to do. By no means are we declaring victory. But we are on the right path. And one day at a time, [00:18:00] we make a mistake, we learn our lessons, but one day at a time, our team at NearU is going to get there.

Kison: First principles thinking helped you validate the sector to focus on. You got in there, you started talking to everybody, you talked to a hundred contractors, where you really fleshed out your investment thesis. Talk me through how you really define that investment thesis, because you mentioned that you're still searching for what to solve for. How did you really figure that out and build that into this investment thesis that you could act on?

Ashish: One thing I would say, Kison, is I'm by no means an expert in any of this stuff. But I learned that if you think about a bigger, much larger problem all at once, it A) appears very daunting, and B) it is very difficult to come up with the clarity of thought you need on your execution plan—the solution.

So I said, let's distill it down into multiple phases. The first thing was very obvious to me: it's a very fragmented sector. There’s a lot of different types of companies. Most of these companies are formed by very hardworking, good-hearted people, but they did not have any formal training in the field of business. They know how to take care of the customers and fix an HVAC unit or fix a plumbing system, but they were not trained in how to read a P&L. They were not trained in terms of codifying formal KPIs for business management.

All the things that are sort of not the end-all-be-all but are a necessary building block towards building a larger, scalable business—there was an opportunity [00:19:30] to partner. I never use the word buy or acquire. I feel it's partner. If there was an opportunity to partner with such people that are aligned with our culture and our core values at NearU, to help them bring that missing piece of the puzzle—so that someone that has a $10 million revenue company can make it a $20 million revenue company.

Someone that is only able to provide their team members dental benefits can now provide the full spectrum of health benefits that those team members deserve. Someone that did not know how to pursue a recruiting, retention, and training strategy now has a partner and a balance sheet to be able to do that.

To me, that is the end goal of consolidating the sector. That should be the end goal of consolidating the sector. So how do you find those like-minded people to join you? That’s the phase one, where we had to build scale, we had to partner with the right people, we had to plant our flags in the right markets that were aligned with our strategy.

Building the Investment Thesis for NearU

Kison: So investment thesis phase one is build scale with discipline, with an eye towards the longer-term goal and the vision that we had laid out. And build scale not at the cost of somebody else—build scale in order to build or further enhance what someone else has built and the legacy that they left behind, in order to do something better.

Now, are we perfect and can we do everything perfectly? No. But that's the intention. Our team has done a great job to be able to work on that.

Ashish: Phase two, in my view—and this is the truth, and I'm sharing with you stuff that I don't hesitate to share with anybody because I'm not worried about competitive landscape, because this is obvious, this is not rocket science—the phase two should be: you have a critical mass, you can do some basic things to professionalize these companies and bring to them the bandwidth, the capital, the know-how that they did not have before. And then you double down on two things.

You double down on training. You double down on technology. Why training? Because at some point, the workforce is going to shrink to the point where it is very difficult to not call it a crisis. You're just not going to have enough people to do these things. So phase two is all about training and bringing more technology.

Why technology? Not just to check the box and put it in some banker deck. Technology can play a very important role in this industry. And it starts with table stakes [00:21:30] and goes all the way to disruptive stuff. And we can double-click into that later on. That’s the phase our team is focused on right now.

Eventually, phase three of the investment thesis: if you look at the 21st-century ecosystem of consumers and service providers and you put that in the context of this industry, the customer experience needs to have transparency—so the customer knows exactly what they are being sold and why. First of all, they should not be sold anything but what they are buying and why.

Second is trust. The customers need to trust that the recommendations that are being given to them are reliable and are data-driven and that it's something they can verify and audit. The customers are looking for consistency of experience. If they move from Florida to California, they should be able to get the same quality of experience that they got in the previous location. That's super important.

And in order to develop that, the only way to address that problem—see, when Uber was doing their business model, they almost had an unlimited supply of labor, because their labor was drivers. You go to a DMV and get a driver’s license and you become a candidate to be an Uber driver. That’s not the case with our profession, HVAC right now, which is—we have to train people. They need to have certain certifications. And they need to be taught how to prosecute a very complicated work stream, including how to talk to the customer, how to treat them, but also take care of their comfort needs in their house.

So that's a very complicated work stream. We have to solve that problem—the underlying business problem—through training. And we have to solve that by creating a preferred employer, a place where the best of the best that want to be in the skilled trades want to pursue their career path at. And it does not stop just at training the people that currently have—it also includes bringing fresh talent in the trades.

These are the kinds of jobs that even women can do. So we can bring more women in the trades and expand our workforce by multiple times. So those are all the things—if done correctly—then we can truly create a place where customers, in a tech-enabled fashion, are able to shop for these services like a marketplace and are matched with the technicians that are going to be able to best provide their needs. It will bring that consistency, that trust I talked about in the customer experience that we're looking for.

Kison: The employees, the team members, they're looking for a place where they can nurture their career, they have a career path, they're treated with dignity, they feel like they're treated fairly—they are treated fairly. So creating that preferred employer and the preferred service provider is the ultimate third phase of this vision.

And candidly, that phase—it does not need you to go and buy companies. You can actually mobilize this space. So the investment thesis, you don’t have to execute all of that at once, but you have to think about it at once so that you know that what you're doing today is relevant to where you want to be 10 years from now.

Ashish: You really built this thesis around a vision of what this business is going to look like at scale. You are creating a platform for entrepreneurs to continue growing their business. You are bringing financial competency—or enhancing the financial competency—for these businesses that are joining the platform. You're improving the training. You're also bringing in technology to improve their operations. And then you got this grand vision of really being the best employer.

Kison: And by the way, it’s not just true about the HVAC industry or home services. This applies to anything and everything—whether M&A is a part of the game or not, doesn’t matter. Business building—and that’s where my new holding company Alpha K, we can talk about that—the soul of Alpha K is business building the right way.

This philosophy translates to anything that anyone wants to do in the field of business. Because somewhere along the way, the corporate world lost track of the fact that businesses are made up of people, and they lost track of the fact that the organizational glue that keeps visions intact is culture and core values. And we need to bring that back. You need to bring that philosophy back and implement it. And then our businesses will be long-lasting.

Executing the First Deal with a Bootstrap Approach

Kison: Can you walk me through the first deal you did? 'Cause you got this investment thesis, and I remember it was a little unique. You didn't run around pitching every private equity firm—unless you did and I got it wrong—but you ended up really taking this almost like bootstrapped approach to doing your first acquisition.

Ashish: My thinking was that there is no shortcut in this journey. You have to take the risk. You have to put in the blood, sweat, and tears. And that philosophy basically informs a lot of the decisions I took. The first thing I really wanted to do was maintain a lot of autonomy in being able to do things the way we wanted to do things. That was fundamental to the journey. That meant keep taking a lot of equity risk. I had millions of dollars of SBA loans on my personal balance sheet—personally guaranteed SBA loans.

So really, really spent 18 months, Kison Patel, before we bought the first company. We spent 18 months. First order of business was a vision that I had conceptualized—I wanted to make sure it is not just my vision. It becomes the collective vision of a lot of people—basically believers. Those people have the capability and the willingness to help me in my journey.

So I traveled the country, met with CEOs of OEMs and distributors from the industry, and through those conversations, A) I was able to refine the vision and validate that what I was thinking was correct and it would create value, and B) somewhere along the way, I met people that became very instrumental in helping me bring this vision to life.

And then with their help, we started looking at different things—not just M&A opportunities, but okay, when we partner with the business, how do we truly add value? What does the framework look like? What are those playbooks look like? How do we think about integration? How do we think about technology? How do we think about training?

And then what is the right way to get a transaction executed in this industry, given the psychology of stakeholders and what they're solving for and what their pain points are? So we put a lot of thought into codifying all of that while fully knowing and acknowledging that any plan does not survive day one of your execution.

We've had a lot of plans. We looked at maybe three or four deals that were almost about to close and did not close for various reasons, right? And it happens—it happens in every journey. Literally, when it happened the third time, I was thinking, oh my God, is it worth doing this? Should I just—I'm a human being—I was down. But that's when my wife supported me and some of my friends supported me and we kept going.

But you're a human being. It invariably happens that you're going to have a down day, a bad day. When I woke up in the morning, I said, this vision is larger than me. It's larger than my family. I got to keep going.

So the fourth time—this was, by the way, two months before COVID hit our shores—the first COVID case was found in the U.S., somewhere in California maybe February or March—we acquired our first business on January 10th, 2020, in Fayetteville, North Carolina. Great company—small company, but great company. Great entrepreneurs. Great team of people.

And they were really looking forward to this change because they had realized that we've hit a wall. The business owners were getting older and didn't really have a succession plan necessarily in place. We wanted to jump in and roll up our sleeves and see what we can do with that team. That's how we got started.

It took, I don't know, 90 days maybe to do the first deal because our diligence was done in 15–20 days because we had all these playbooks. But to get the SBA loan, it takes time. It takes a few weeks to get it all approved, for the right reasons, obviously.

Kison: You met people that helped you, almost like a mentorship, that helps you think through the deals, the value creation aspects, and those things that are learning curves. And then you bootstrap the financing, getting an SBA loan. And I guess the way I would look at it, you're putting your own capital up there and working with some of the government-backed debt products they have.

Sourcing Deals Through Relationships & Reputation

Kison: How’d you find this first company? Was this something you sourced? Did it come up through some kind of bank process?

Ashish: I was very fortunate, Kison Patel, to have met a gentleman called Doug Wilson, who has become a tremendous friend of mine now and a great mentor and advisor—very reputable person in the industry. He believed in this vision and he joined my journey.

And this very, very accomplished person, Ruth King—she’s one of the best advisors to HVAC companies in the industry. And everybody has their own way of doing things, but she, at that time, I was very impressed with her clarity of thought on certain topics and she was very intrigued by this vision. She has become a great friend of mine.

Well, Doug and Ruth are a big part of what I will do in the future at Alpha K—and having these two people, industry veterans, on my side was a true blessing. First of all, their reputations in the industry and the fact that they were supporting this vision meant a lot to people from the industry that were selling their companies or considering selling their companies.

Because it's important to know that these people are hanging out with us for genuine reasons. It was not just a gimmick that, hey, we put their names on the website and all. They truly believed in it. I spent hours every day talking to them, thinking through the philosophy of this venture. That helped a lot in terms of building confidence in the industry, especially as we get started and don’t quite have a track record.

Ashish: [00:31:30] But then as time went on, I’m very proud to say, Kison Patel, that our team did such a great job at NearU. A vast majority of our deals were proprietary in nature. The deals actually came from people that partnered with us, and they recommended our name to somebody else that was interested in succession plans.

So we benefited from our work, and being genuine, and honestly trying to implement what we have told people we are trying to implement. Along the way, there’s always something or the other that goes wrong in these things. But despite that, keeping the intentions honest and working hard towards that helped us. And people recommended us to other colleagues of theirs. And I’m grateful to all the people that partnered with us—the tremendous entrepreneurs, true operators, honest people that really cared about their customers, they cared about their team members, and they are the ones that helped us build this.

Kison: [00:32:30] You worked the network.

Ashish: Yeah. And I, again, look, nobody’s perfect. Am I foolproof? No. It’s important—everybody will support people in the good times. But it’s when you make a mistake—do they still believe in you? Do they still believe in your intentions? Do they still believe that you are going to bounce back up and do the right thing?

That becomes very important in the journey because people judge you on that.

Kison: That’s true. Your persistence and strength and discipline of your acting in the market. So you get introduced to the first company you acquired. What was the pitch? How did you convince them to sell to you? Or were they just, "I got to get out of here, here’s the keys"? What was that situation?

Ashish: [00:33:00] The biggest key, Kison Patel, was transparency. Everything I just told you—I told them.

Kison: Same thing. This is what I’m trying to do. Trying to build a big platform.

Ashish: Yeah. This is what I’m trying to build.

Kison: The American dream I’m chasing here. You want to be part of that?

Ashish: And look, it’s not my dream. There is an industry dream in this American dream. Because if you talk to anybody that truly cares about this industry, they would agree with 100% of the things that we’re trying to do. Number one. They also told me it’s not easy to do. I applaud their honesty and candor regarding that.

And someone honestly wants to do something great for such an industry, and they also understand what hurdles you can face in execution—those are the people that are going to be most likely to believe in someone that is genuine and honest and authentic.

So we just exactly told them what I just told you. And there is not a page in my PowerPoint presentation that my board members and advisors would see that a seller would not see, right? We would tell everything.

In fact, I have done a podcast—where I spoke almost 45 minutes, I think, with Ruth King—about how to improve valuation of these businesses. Now, I’m not a broker. In fact, I am a buyer. I’m someone that wants to acquire, you know—buyer. It’s in my best interest to have a counterparty that is not as knowledgeable about these things.

But I don’t believe in that. I believe in doing the right thing. We educated people and said, "Look, here’s how you can increase the value of your business." Because we do not want to make money at the cost of other people’s money. We want to make money through our own hard work, our integrity, and bringing more value to the table.

Challenges in Early and Scaling Phases

Kison: [00:34:30] Real value creation.

Ashish: Real value creation. There’s no playing games. I don’t get stuck.

Kison: Not just a valuation triaging. It’s more than that. There’s a separation here. Like, let’s break it down—because I tell you, I talk to a lot of companies, a lot of roll-ups—and that’s purely all it is. They will put the synergy, but they don’t mean it. They put it on paper just so they can get some backing from a PE firm. And there’s a lot of capital out there. So they put that as a little thing, but it’s just execution by companies. And you got some heart and soul about, hey, there’s some real synergies and value creation that you want to make meaningful in your strategy—which is what I like. And that’s why I wanted to have this conversation.

Ashish: [00:35:00] Yeah, it’s important. Super important. These things teach you so much. You see all this gray hair because of that. These things teach you so much—not just about M&A, not just about integration, not just about a specific industry. We had tremendous organic growth in our portfolio. It also teaches you about business building. And that became really the impetus for my holding company, Alpha K. And we should probably have a separate podcast on that topic alone, because like I said to you before, this applies to anything—whether it is a buy-and-build venture, whether it is a different industry—it’s all about trying to think about frameworks that will lead to better business building.

When people realize that’s what you’re trying to do—even if you don’t have a track record—there are companies that had offers from other larger firms that are larger than me at that time. I’m grateful and thankful to them that they decided to still partner with us because of this belief that, okay, they may be smaller, they may be still trying to figure it out, but they have the right intentions. They’re really, truly trying to do something longer term. And I, to date, I truly believe in this. And anything and everything I can do to bring it to life, I’m going to support our management team.

I’m not day-to-day in the business anymore. As a chairman, I’m more involved in strategy and the board-level sort of execution. But we have a very capable management team led by a CEO, and anything they need to bring this vision to life—I will.

Kison: [00:36:00] So, a lot of challenges you went through to do the first deal. You had some three failed attempts, and then the fourth one worked. What about afterwards? What other challenges did you encounter? Any pivotal challenges?

Ashish: [00:36:15] Dissect the challenges into different buckets. There is the type of challenge, and then there’s a dimension of time. As you scale, you encounter different types of challenges in different proportions.

So when you’re smaller, your challenge is more around how to make sure that your business is capitalized in such a way that you can continue to make the investments that you want to invest in the business. So that becomes more of the black-and-white challenge that you have in the early phases.

You also have a challenge of learning—learning fast and experimenting and pivoting. And then you have a challenge in the early phases of being able to find the right foundational team, motivate them, and make sure that everybody is rowing in the same direction. So that’s more of the initial sort of entrepreneurial challenge that you face.

As your organization grows, whether it is through M&A or organically, information flow in organizations scales exponentially. Then your challenge becomes how do you make sure that DNA—the nucleus because of which you were able to get it up and running—how does that DNA scale? And how does that DNA not get diluted?

Instead of having 300 team members, if you have 2,000 team members, how do you make sure that those 2,000 team members are really behaving the same way that you want them to behave?

And then if you double-click into that, it creates challenges around processes. It creates challenges around technology. So your entire infrastructure that is going to allow your team members to behave the way that they need to behave...

Kison: [00:38:00] That’s a good point.

Ashish: People often say the biggest challenge we face in these businesses is people, which is true. But I believe—and I’ve experienced—that 99% of people have the right intentions in their mind. And if they are failing, it is not because they are bad or because they have the wrong intentions. They’re failing because your organization did not support them the right way.

And I take the blame of that. If anyone—and there are people that have not been as successful at my company—I take the responsibility of that. Our organization should take the responsibility: okay, we could have done something better for them.

This comment is pointing to the fact that as the organization scales, your challenges are more around processes and infrastructure—technology. How do you scale that and how do you maintain the cultural glue that really brought the company together in the first place? It’s a very complicated set of challenges and it changes over time.

I don’t think there’s a formulaic answer to get everything right. But if there are two things I would say that sort of allow you to keep moving forward, it’s staying extremely humble.

There is instant gratification in the journey. You keep on either growing through M&A, organically, you have a name in the market, and you feel like you have arrived. But staying humble despite that—because the ultimate end goal should be that third phase of the vision—staying humble is very important.

Second is staying nimble. Your strategy should be steadfast, but your tactics have to be flexible. As you think about all different types of decisions—capitalizing the business, thinking about markets you want to enter, types of M&A opportunities you want to prosecute, your integration approach, how do you think about newer revenue streams you want to get—all this whole thing that people discuss at the board meetings. You have to be very nimble about that so that you are relevant to what the market landscape looks like at every point in time.

Working with Private Equity While Preserving Vision

Kison: [00:40:00] I like it. Those are setting up the pillars you have to really act on to execute a vision. Can we talk about private equity? Because at some point in time, you’ve been through the private equity ecosystem and now work with PE sponsors. Can you tell me about what that journey was like?

And I’m curious too, because you preserved a lot of wealth. A lot of people don’t preserve as much wealth as you did. They sort of worked with the sponsor from the beginning, and they’re sort of like another level of a fund manager essentially. But you sort of came in as a real entrepreneur. And when you did work with these PE firms, you got some good terms that I think is a little unique. And I’d like to hear about how you manage that. And you’ve actually went through a few partners now already.

Ashish: [00:40:46] There is a general notion in the main street America, small business world. Because now PE is not a new entity anymore. It’s been around for decades now. They have been through a few cycles of booms and just being able to deploy a massive set of capital. So they have touched a lot of industries. There’s a preconceived notion about private equity in these companies. And a lot of it is bad.

Hey, they will come in and they will do layoffs. They will come in and they will try to spoil the culture of the company and so on. So my emphasis was only partnering with people that are aligned with what we’re trying to build—from a vision perspective, from a culture, core values perspective.

How do you then ratify what they’re telling you with actual evidence that makes you feel like they’re actually going to behave like that? So I was very fortunate to have found such partners in my journey.

I would say the first—my first brush with private equity sponsors was through SkyKnight. Just a phenomenal firm. Great people. Very entrepreneurial. Core values. And they gave us a lot of autonomy, supported us in every way we asked for, let us run the business.

In fact, we were, what I say, improvising oftentimes in our board meetings, where I said the board works for the company, the company doesn’t work for the board. And—but we have to then be fiscally responsible. We have to be accountable to all stakeholders, including shareholders and investors. That really won the trust and the confidence.

And it’s very important to select the firm the right way. But you also have to deliver for them. If you tell them this is your vision, and this is what you want to execute, and you tell them the potential pitfalls in that journey—and also make them alert about what might be potentially going wrong, because it’s never a linear path—I always had this philosophy: bad news travels faster than good news.

That really cemented the bond—the trust—between me and my partners. Freeman Spogli & Company was the second investor that came in. They’re great people. They have a lot of resources that they have at their disposal, and they helped the company in many different ways through those resources.

I was fortunate, not purely because of luck, but because I followed a methodical process to choose the right partners. And the story’s yet to be written. There’s a lot more this company can do, and I’m looking forward to how they can add value here.

But it’s just not enough to bad-mouth a certain set of investors and say, “Oh yeah, because of these investors, this is happening.” We’ve got to take the onus. Trying to partner with them in the right way and trying to figure out how to navigate some of the challenges that will come with working with an institutional investor—because they have their set mandate and they have a certain structure in which they work—is the onus of the entrepreneur and the management team to navigate that.

It is also the onus of the investors to understand what the entrepreneur and their team are going through so that we don’t damage the culture of the company in the quest of making progress. So private equity, if applied correctly, can be very good. The lens that all private equity is going to do certain things is not correct.

But it is very important that there is that right filter between an institutional investor and the organization that is going to allow the good things that the institution can bring to the table to go to the company, and prevent some of the overhang that happens because of things that are exogenous to the business from entering the business. That’s the onus of the management team.

And people that get that right can achieve tremendous success.

Transparency, Integrity & Doing the Right Thing

Ashish: [00:44:00] But I'll also say this to you, through my learnings—and fortunate because of my team members—I'm now in a position where I can think about creating a very attractive alternative to all institutional investor categories. And that's Alpha K. And we can talk about it in a separate podcast, but fundamentally, we can bring a lot of the good that having strategic capital brings to the table without giving up a lot of the good that these businesses have—not losing the tribal knowledge, not losing the culture because of which the business was in that place in the first place.

All of that—the best of both worlds—can be achieved. It's not going to be an easy journey, but that's the next mission of my life: create that ecosystem that the conventional institutional investor ecosystems do not provide a lot of these businesses. And then those preconceived notions can be quenched.

Kison: [00:45:00] Definitely things to improve the models. Really excited about learning what you're working on now. One sidebar on the private equity—did you shop it around? Was it competitive for you to find the right PE partner?

Ashish: [00:45:10] To be candid, not at all, Kison. Unlike what people might think, when SkyKnight came in, it was purely my cultural fit and alignment.

Kison: [00:45:17] Did they give you good terms right off the bat? Or did you negotiate with them? How did the finance component work? Well, with India, we like to negotiate. You got to tell me there’s a little bit.

Ashish: [00:45:30] No, no, no. I mean, look, we were smart about it. It was not just me, it was the management team of the company. We were first and foremost concerned about retaining the autonomy so we can do the right things by our team members, our employees, and our customers. And more than the terms, I was more concerned about how that pans out. There was a lot of conversation on that.

We obviously wanted to make sure that we were being treated fairly, which they did. Yeah, so we didn’t really shop it around too much. I didn’t even hire a banker necessarily at that time. We felt pretty comfortable and confident that these were the right partners for us.

But look, at the end of the day, when companies become big, there's a lot of stakeholders, and you can't just make decisions based on intuition. You got to do what it takes to go through the process. As this company is going to get bigger, that's the right path to pursue—find the best option. But I would always prioritize cultural fit, core values—making sure that people that are not in the boardroom, people that are not necessarily in the cabinet—and without forgetting to change all that—we can have employee ownership in every single company we're involved in. We have a lot of employee ownership at NearU as well.

But people that are not necessarily on the front and center of the equity-based value creation that happens in these businesses—and they are not necessarily in the board meetings—those are the people we need to think about first. Those are the people that build this business.

So at the NearU board meetings, I used to have this empty chair. One for customers. One for contractors. Those contractors that are fighting for us every day, serving our customers, putting themselves out there in the extreme heat and the cold—really doing the right thing by the customers. So if you prioritize them, automatically you'll find the right fit. And then we're all taught what we need to have learned in business school about numbers. And so we get the numbers right. We don't mess around with that.