The culture of a firm you are acquiring is an essential factor to consider when trying to be successful in mergers and acquisitions. Today we are joined by the president of the Visus Group, Thomas Kosnik, the chief corporate development officer of TalentLaunch, Matthew Lyon, and the CFO of First Step Staffing, Reggie Harmon to discuss the staffing industry and their vast experience in it! Tuning in, you’ll hear all about what to focus on to succeed in acquisition, their biggest mistakes and greatest wins, how they structure their financial deals, how to grow organically, and so much more! We delve into their budgeting strategies before our guests explain how they develop compensation plans for staffing agencies. We even discuss how they go about hiring CFOs. Finally, Matt, Tom, and Reggie talk about their 2025 budgets and where they see the industry going in the near future. Thanks for listening!
[0:01:14.5] DF: Hello everyone, thank you for joining us for another episode of The Staffing Show. Today, I’m super excited to be joined by Tom Kosnik, President and founder of the Visus Group, Matt Lyon, the Chief Corporate Development Officer & CFO at TalentLaunch and Reggie Harmon, the CFO at First Step Staffing. Today, we’re going to be talking about a handful of things in the financial category of staffing with a little CFO group.
Super excited to have all of you guys here today. To kick things off, Tom, maybe I’ll pass it over to you but if we could just go around and give everybody a little bit about your backgrounds and some of the conversation we’re going to have today?
[0:01:47.0] TK: Yeah, great. Thanks so much, David for having us on the podcast. Tom Kosnik, founding partner of the Visus group, been in the – servicing the industry for more than 30 years now and we have two arms to the business. One, we do a peer roundtable program, so we’ve got close to a hundred C-suite execs and nine different peer round tables of ours, and happy to report that both Reggie and Matt are in our CFO roundtable.
And then, we do a lot of growth strategy organizational development, work in the staffing industry, which could include anywhere from strategic planning, sales planning, financial analysis, comp plan analysis, comp plan redesign, assessments. Myself, I’ve got a dozen or so subject matter experts that can specifically work in certain areas of a staffing company to help them. All about growth, baby, growing the business, so that’s who I am. Reggie, you want to go next?
[0:02:41.4] RH: I’m Reggie Harmon. I’ve been in the staffing industry now for about nine years, in finance for about 18 years, and you know, I work for First Step Staffing, and our differentiator, if you will is we are a mission-based staffing organization. What that means is we focus on supporting people who may have been victims of domestic violence, veterans, kind of the underserved population of folks typically and we provide wrap-around services such as transportation.
We also assist with housing and ultimately, we believe that economic stability is really the best path forward for people who are in those – impacted in that way and so, really excited to be here and look forward to continuing the conversation today.
[0:03:28.6] DF: Awesome.
[0:03:29.6] ML: I’m Matt Lyon, I am the Chief Corporate Development Officer and CFO for TalentLaunch network, a network of independently operated, staffing and recruiting companies. I’ve been with the company for over 20 years now and the first seven or eight years of that, we were majority-owned by somebody that had us operating as kind of a family operation. Eventually, our majority shareholder and myself and one other minority shareholder bought him out, and we started our growth strategy, most of which has been around acquisitions.
We’ve got about 30 offices across the country from East Coast to West Coast. The bulk of those came from acquisitions and we’ll be talking about growth I know and that was the avenue that we decided was more beneficial for us for a variety of reasons but I’ve been in finance for, I don’t know, too many years, 40 some years and prior to staffing, I started up an energy efficient lighting company organically and grew that very significantly and fun story behind that, and then prior to that, I spent 10 years in public accounting.
[0:04:31.5] DF: Awesome. I was super excited to have all of you guys here today, and for the conversation, I mean, for the audience I think the good thing about your financial strategy, budgeting, acquisitions, we’re going to be jumping into some key topics that are probably top of mind for a lot of you. I think that we’re going to start off with kind of going down the path on the acquisitions front. First question we’ve got for the group is, “What are the top three things to focus on to succeed in an acquisition?”
[0:04:55.7] RH: Yeah, I’ll jump in here. First off, I’ve got plenty of experience with some acquisitions. Previously, I’ve been through about eight different acquisitions, and so I think, one of the key focus components is really around the culture of the organization that you’re bringing in. You know, oftentimes, we obviously, you know me, being a CFO, of course, I’m focused on the bottom line and numbers.
But it’s really important that you have a good fit in terms of the culture of the organizations that you’re bringing together. I think the second thing to also consider is around the integration side. So, oftentimes, you know, you are on the front end, you’re looking at, “What’s my returns, what’s the EBITDA?” You’re thinking about multiples and if you’re working with private equity, you’re thinking enterprise value and those things.
But at the end of the day, getting the deal signed, that’s not the hardest part of the – having a successful acquisition. I would say that ensuring that you have a strong integration plan both on the kind of common people, technology, and things of that nature, I think that’s really important, and so I don’t know, Matt, do you have other kind of thoughts?
[0:06:02.5] ML: Yeah, absolutely. I would agree with your first assessment there. The first thing I think about is culture. I mean, if you do an acquisition and you get the wrong group of people, it doesn’t matter how great your funding is, your financing is, your integration, they will crush your acquisition if the culture is not good and the folks are not good. So, we always look at that first and foremost.
Secondly, how does this acquisition make your business better? Is it an industry or a GO or is there some reason that makes your business better that makes it worth doing that acquisition? And then, we have a high-level screening process that has about 10 or 12 things in it, and so picking three is tough but then we start looking at things after that about what’s their pricing philosophy and what kind of revenue and GM do they – would they bring to your organization?
I mean, I literally can get deal opportunities in certain cities and know before I even look at them that I’m probably not going to be too excited by them because of that, because they’re just in these super competitive areas where markups are tough, and to run a business appropriately, makes that harder but I would absolutely agree. I mean, culture and everything around the culture are the most important things and how good those people are that you’re going to be acquiring in the near event.
[0:07:19.3] TK: Hey, Matt and Reggie, so when I think about culture, I think in terms of like, if I’m going to do a cultural assessment on an organization, is it a team-based organization or is it more individually performance-based? Are they a decisive decision-making organization or are they more informal in their decision-making? Are they centralized versus decentralized? You know, there’s a number of categories in there, and one of the reasons why culture is such a big deal is because the clients, my clients, they match my culture.
So, when you acquire a firm where the culture is not a good match, you typically get a lot of fallout. Not only fallout of internal employees but fallout of clients. Do you use an assessment or how do you assess a culture that you’re going to buy? Do you have any kind of a formal assessment or tool or is it all kind of informal by asking questions and –
[0:08:12.6] ML: Tom, that’s a – if you don’t mind me, Reggie, I’ll jump in there real quick that that’s a great question and of the acquisitions we’ve done over the years, and even those that we haven’t done, a lot of things we’ve learned, I kind of break it down into three buckets and three categories. I’d look at the owner’s culture, what I call the owner’s culture, the visible indicators, and then policies and procedures, the culture that comes from those.
And when I talk about the owner’s culture, I talk about one of the things that we try to do in our acquisitions and understand, “Why is the owner in business? What did they start the business for? How are they involved in their community? How are they helping others? What are they doing to get better? Are they involved in EO and Vistage or YPO or things of that sort to make themselves better?”
Because part of the core philosophy we have is that however – whatever their philosophy and their culture and the reason for being, usually filters down into the type of staff that they have and how they run their operations. Do they utilize professionals or are they just lone wolves? Things of that sort. What do the employees think of those owners? And then, the second category is the visible indicators.
I mean, go to their website, go to the LinkedIn of their leaders, become a secret shopper, stop in their offices, see how you’re treated, things of that sort. You know, any available industry, reputational stuff, and then what’s always fun in this process is the third one, it’s like the policies and procedures. That’s the tactical stuff we’re looking at an integration. When an owner says one thing about how great they treat their employees, and all the good stuff they do to their employees.
And then you look at the employee manual and it says, “Hey, you barely get any vacation and you get to pay all your medical bills.” And things like that, you can really see a lot of that in the employee manual and the training investment, the employment longevity, and their financial integrity, assessments, and we do, do some core assessments. Like, we will get the owners to, you know, for their own benefit, not revealing acquisition-related.
But do things like a cultural index or a PI index, a predictive index, or some different type of assessment just to kind of get a sense of what kind of people are in the organization. So, there are a lot of steps that we do our best to dive deep into in that process of determining culture.
[0:10:17.0] RH: And Matt, if I may, you know one of the things that I think is also important is an acronym called TAO. I will have to give credit to Monica Block, who is our founder’s wife and so, it comes down to when you think about culture, it comes down to “Trust” which is the T in TAO and what kind of trust exists in an organization, and I kind of relate that to the transparency, right? So, I think, you can definitely see trust when someone makes a mistake and they’re very transparent about it and how the team reacts.
The next is, A, it’s the “Action” right? And so, what kind of action do you take as a team to resolve when issues come up, are you guys proactive in terms of how you are approaching the market and things of that nature? And so, what is the action for the organization? And then finally, “Ownership.” Do you own it both ways, right? When things go great, when things are not as well, how is the ownership for the organization?
So, those things collectively are a great little acronym that I learned, I can’t take credit for that, that kind of identifies the culture and you can compare that with some of the tools that I think Matt touched on, and I think that’s a good way to approach things there.
[0:11:29.5] ML: Yeah, I mean, actually, Reggie brings up a good point there too, is when you see recessionary cycles, whether it’s COVID or the last couple of years here, even ‘08, ’09, or ‘10 if they were around then, how did they manage their business through that? And not just financially but standing by their people, standing by their customers, things of that sort, gives you a great sense of their culture too.
[0:11:50.5] TK: Matt and Reggie, I don’t think I make a lot of mistakes, but my wife, she says, I make a lot more mistakes than I will admit to.
[0:11:58.7] ML: That’s why they’re not on these podcasts, right, Tom?
[0:12:01.5] TK: Exactly, exactly, but when I reflect back, gosh, I learned so much from my mistakes when I reflect. What are the big, you know, any big mistakes, what are your biggest mistakes that you’ve made, and what are the learnings from those mistakes in this whole merger and acquisition conversation?
[0:12:19.1] RH: Yeah, I mean, I’ve got a couple of ones that are large. I think underestimating the amount of work that’s required from an integration perspective, particularly on the systems. We think about staffing world, you know, somebody’s on one ATS and you’ve got to integrate them to a different ATS, that is a very, very large undertaking. Obviously, for us, payroll is critical for our success.
And so if you think about different systems, it’s important to make sure you consider that and the second, I know we just spent a bunch of time talking about it but we thought we had it right from a culture perspective but it wasn’t exactly what we thought it sshould, what we thought and so, we had a miss there. So, I’d say, those two points for me.
[0:13:03.4] ML: Yeah, I would – I’ll add on to that Reggie. Yeah, the missing on the culture, probably our second largest acquisition, which is a little example share, yeah, you get a limited amount of time to talk to the employees, and usually in these acquisitions, you get access to the owner and one or two key individuals at the top and so, really understanding what it is you’re buying, and just missing.
Just having a total miss on that and then going back and asking yourself, “Okay, what did we not see and how do we fix this mistake going forward in the future?” So, yeah, getting the culture of the employees is huge and that could sink a thing. I mean, again, they could make all the money in the world and if the employees aren’t working out for you, right? And they’re gone, then you’re making nothing. Your acquisition is useless.
So, not knowing their work ethic, their commitment to their customers and their fellow employees, things like that. I think a couple of other things too was just that not really understanding how strong a relationship is with their customer base that you’re acquiring. Again, a lot of times you’re acquiring culture but you’re also acquiring the book of business here and not really having a good pulse on how strong that is, and maybe not paying enough attention to the big picture geo things going on there.
Is business and employee populations moving into that area or moving out of that area? So, you could buy something that’s got a great track record but it’s in some place where because of whether industry changes, things of that sort, business community and populations moving out of, or vice versa, they can be moving into, so you might hit a, you know, hit something successful there.
[0:14:33.9] TK: The market, the market research aspect, huh?
[0:14:36.3] ML: Yeah, yeah. That’s a better way to put it, the market research and not really giving that enough due diligence of knowing what’s going on in that marketplace.
[0:14:43.3] TK: Hey, you know, in terms of financing, do you pull from a line of credit? Do you get a loan from a bank? And typically, in your deal structures, what do you guys – do you try to pay 50% cash down, 50% and an earn-out, or 70% cash? What kind of – is there a rule of thumb that you shoot for? Where do you get your financing? Is there a rule of thumb?
[0:15:02.6] ML: All of the above.
[0:15:04.6] RH: Yeah, we’re thinking the same thing. I’m like, every single option you said there, yep, those are all on the table now.
[0:15:11.1] ML: Yeah, generally, Tom, I mean, our philosophical approach has been we have not had private equity involved in our business. We’ve done all of our acquisitions with our own created organic capital and/or senior debt lending, and then you start the negotiation dance with the owners, you know? Earnouts, those payables, seller notes, things of that sort. A lot of times, sometimes, those work and they’re part of the equation, sometimes when you get near the end, it’s like, “Well, how much do I really know you, are you going to make your note payments?”
Are you going to do something to hurt my earnout ability? And then they just want the sure things so it involves more down to potentially straight cash and then you do that at some kind of a discounted rate because cash now is more costly than potential cash down the road within or without a note, so. But essentially, all the things you said above except that we’ve strategically said as of this point, we don’t have private equity involved, and so we don’t have their funding available.
[0:16:07.6] RH: And if you do have a situation where maybe private equity is involved and you’ve got kind of debt and things of that nature then obviously, you want to make sure that from a leveraged perspective, if you stay within three, so you – not greater than three times levered there but you also want to forecast out over the next five-year period where your debt to leverage – debt leverage ratio is going to be in.
And so, I think it’s important that as you’re forecasting your future growth for the acquisition, that you make sure you’re very realistic in those numbers. I think, oftentimes, as you’re having the conversations and you know, where there’s the demand for meeting initially or you’ve been just seeing a – the initial sim that you’re provided oftentimes, you want to make sure that you come up with your own forecast so that you can ensure that your expenses, your cash, and just the whole equation is going to be something that is aligned with your expectations.
[0:17:08.7] TK: Real quick, if you’re a guy that owns a staffing business in the industry and you’ve never done a deal before, where do you go to for advice on some of this – these more technical details?
[0:17:16.7] ML: The first place I would send them to would be a broker. I have had so many conversations that are people without a broker, endlessly the topic comes up to, well, they sat down and had what they call the cocktail evaluations. They had a drink with somebody that said, “Ah, you’re worth a billion, you’re worth 10 times your multiple or 20 times your multiple.” And then you get down without a broker and you try to have these conversations.
And they’re like, “Well, what do you mean you’re only going to pay me out of three to seven times my multiple?” Depending on their segment. So, you know, if they can talk to a broker who then, explains what the business community is really going to pay for and what the business community really values, and what the market rate is out there, you’re just many steps ahead. That’s my personal opinion.
[0:17:58.7] RH: Yeah, I’d echo exactly what Matt said. The first step will be the broker, the first stop would be a broker.
[0:18:04.1] DF: One question I had as you guys are talking about this and some of the mistakes with acquisitions and culture-fed all of those things but when it comes to the – if you think of your most profitable acquisitions, the best ones that you did, are there any specific attributes, profile elements that when you think about it you’re like, “Wow, that was, when looking back, these are a handful of things that really made it. So that was dialed in for us.”
[0:18:27.7] RH: For me, one thing that kind of sat down and you actually made me think of this one, we had a very good culture from our customers, maybe that’s the best way to kind of describe it. We had good synergies with the customers that we brought on, they were with the acquisition, right? And so, that was something that stood out. Obviously, we knocked out the culture piece that was a home run there.
But as you think about the growth and kind of how you’re able to say, “This is a big win” it was kind of getting some of those synergies from the internal side but also, the customers were definitely aligned in terms of we already had the experience of how to perform well with those customers, types of customers. They were already performing well as well.
[0:19:07.9] ML: Yeah, David, I would say that our most successful acquisitions have been strong cultural alignment and being able to realize that but also, and this is part of the cultural assessment is folks that have a really good work ethic and a really good stringent discipline and accountability around their processes and procedures and they continue to take that to market and they continue to operate under those hospices and they produce, and when they produce, good things happen.
So, you know, sometimes you can buy companies that a lot of things are loosie-goosy, and you know, the right hand doesn’t know what the left hand’s doing and that’s where it just costs you money, and it’s not cultural alignment. There’s not accountability, there’s not discipline, there’s not leadership. So, the successful companies have had the discipline, the accountability, the leadership, and the commitment to strong processes and procedures to make sure customers are taken care of, the talent‘s taken care of, and their employees are taken care of.
[0:20:01.4] TK: Do you prefer to exit the owner of the business sooner rather than later?
[0:20:06.4] ML: I would say, in our case, the majority is yes, sooner rather than later but at the same time, the majority of the acquisitions we’ve done, that’s been the intention from the get-go. We’ve had a couple of acquisitions where the owner has stayed involved for a little bit and ultimately, you start to get into a clash of, “Well, this has been my baby for 25 or 30 years, and now you want to change something and I’m not sure I agree with that.”
Well, we just wrote you a big check for the ones to change that, and you know, we’ve made the assessment that our little tweaks and changes will help you grow and that’s part of the reason why you sold the company is to grow and to give your employees a bigger chance and better you know, part of a national footprint and things like that, and then all of a sudden. So, you do, honestly, get into those philosophical clashes that generally are not the best use of everybody’s time and effort.
[0:20:56.9] RH: Yeah, I mean, I would agree with Matt on that one as well. One thing, as you’re thinking about the owner and having those discussions, I think it’s important to ask the owner what is their motivation for selling, and oftentimes, that will kind of help to facilitate your thought process. One thing about owner, kind of organizations that are ran, run organizations is you want to ensure that your sales that you’re acquiring, the book of business you’re acquiring – acquiring, are not tied to that owner.
And so, Tom, while I do agree with Matt, it comes up to your diligence and the initial kind of process there to make sure that the book of business that you’re acquiring isn’t tied to one particular person.
[0:21:39.3] TK: And just real quick, David, the other thing I would add to that is that that’s been our realization as it relates to acquisitions but absolutely would be looking for somebody that wants to sell, that has the capability of understanding their role and maintaining for the interest and wanting to really partner with somebody else but that takes a unique personality and a unique culture, and it takes a unique ability to check ego too on both sides.
[0:22:06.2] DF: Yeah.
[0:22:06.9] ML: Absolutely, we would be very interested in things like that but like I said, the bulk of what we run into are people looking to retire and step out.
[0:22:13.9] DF: I feel like most of the time by the time the entrepreneurial person is ready to exit, they’re ready to exit.
[0:22:20.4] TK: Yeah.
[0:22:21.0] DF: They’re not looking to go get a job somewhere outside a lot of the time, so.
[0:22:24.8] TK: Yeah, but Matt and Reggie, I talk to a lot of people with stars in their eyes that want to do acquisitions. A lot of my clients that have grown into the enterprise size level, meaning, north of a hundred million in revenue, at some point, they enacted an M&A strategy. Now, there’s some folks I talk to and I’m thinking to myself, “Oh my Lord, an acquisition would be disastrous.”
They have so many foundational things that they’re working on in their own organization but is there a rule of thumb, in terms of gosh, on that 25 million in revenue, I’m at 50 million, like when? Is there a rule of thumb in terms of the best time to proceed with an acquisition strategy?
[0:23:03.8] ML: I would say that – Let me share my experience, we spent some time building our foundation, and when I say foundation, I mean our corporate structure foundation, our IT, our marketing, our accounting, learning and development, risk management, so that we would have the ability to bring an acquisition in and help it be successful and help it continue its operations successfully.
I think, if you don’t have those support systems and that structure behind you, it makes the integration, it makes the continued operations a little bit tougher. So, I think you got to really assess, do you have leaders of those departments, in those departments that are capable and competent enough to both acquire and as Reggie has said a couple of times, the integration is not child’s play.
It is a long hard project that you have to pay attention to and if people have not done it, and don’t know how to project manage it well, it can blow up in your face and be very painful.
[0:23:03.8] RH: Yeah, Tom, I mean, I would say that a couple of things you want to look at internally before you decide to go out and do an acquisition. The first is, do you have standard processes in place that are replicable in other locations that are not your headquarters or where you may have may be at? That is very important as you look at possibly expanding. A little test that you can try to do is, say you want to open a new office somewhere.
A new branch in a different location that’s a city that’s far away from wherever your main headquarters is at, seeing if you use those systems, those processes, those procedures that you have in place and see if things from an arm’s length reach are working well for you internally. You know, I’d give it a year to kind of understand and see if those – that’s working well.
And if you’re able to do that on multiple occasions, then it seems like you may have the infrastructure in place to be able to look at an acquisition but by and large, I wouldn’t say there’s a hard and fast number of you know, a hundred million, 200 million, 25 million. I think it’s just about internally, are you ready to bring on another culture and do you have that strong culture and systems and things of that nature to be able to support that?
[0:25:24.3] ML: Yeah, and I would add to it that I think you really got to assess if you’re a 30-million-dollar company and you’re trying to buy a 50-million-dollar company, can you really digest that, can you do that? And think about you know, the first acquisition we ever did was very small and Tom, you talked earlier about failures, it’s like, “Okay, let’s do this, we know we’re going to mess some things up.”
But let’s go learn on a small scale what we’re going to mess up, so it’s not fatal, and then, learn from that and grow from that, and then that’s how we did. So, I think you might be pretty strategic about the fact that if you’re whatever, 30, 40, 50 million, then maybe you want to go do a six, seven, 10-million-dollar acquisition and not something that doubles your size right away because there’s a lot of learning to go in and even as we all want to think, we know it all.
[0:26:04.8] TK: We’ve heard some fun horror stories in the CFO roundtable, haven’t we?
[0:26:09.6] ML: That, we certainly have, yes.
[0:26:11.2] RH: We sure did.
[0:26:11.9] TK: A lot of horrible things in that group.
[0:26:16.0] ML: A lot of bumps and bruises and more than that.
[0:26:18.0] TK: David, you want to move to the organic?
[0:26:20.4] DF: Yeah, well, let’s jump in. What is the one or two have to succeed at things that make organic growth successful?
[0:26:26.4] ML: I would say, you’ve got to have the – a team or really good leaders and you got to have good leaders, you got to have good research on the market and the customers in that market, and you got to have the funding. If you’re going to do organic growth, you know, you’re going to open a door or open a brand and try to take a national, regional, or local, whatever you’re going to do, you’re not going to be producing money and dollars from day one.
So, you’ve got to have the funding available to sustain the cost period of that. You really have got to have great leaders and employees with great vision and great strategy too, and that are committed to making that growth happen, and I think you really got to do some serious market research to know if you’re going into a geo area, do you know what’s going on in that geography.
If you’re opening a brand that you’re going to take regional or national, do you really know how to get that brand exposed to that regional or national audience you’re trying to get it to?
[0:27:18.2] RH: I think, success comes down to, obviously, people as Matt kind of touched on, you need to make sure that you have the appropriate team in place that can help to push forward your results, and then you also want the process to ensure that that’s something that’s replicable but the thing that I would add that I think is new here would be the visibility. So, I’d like to take your top performing branches, maybe the top 25, top 10%, whatever that number is, and look at their KPIs.
It may be gross profit for desk, it could be EBITDA, whatever metric it is that you want to have in terms of your fill rates, whatever metric that you’re looking at, and try to understand why they’re performing so well. What is the why behind that, and then replicate that throughout your organization, and ultimately, you’ll get a lift across the entire portfolio.
[0:28:10.0] TK: Thanks Reggie, that’s great stuff. Matt, you talk about leadership. Can you just qualify? I mean, there’s a thousand and one leadership books that I’ve read in my days. What does it mean when you said you gotta have good leadership in place? I mean, just qualify that for us.
[0:28:24.2] ML: Yeah, I would say that it’s leadership specifically in the sales arena and then somebody that’s going to fulfill those orders. You’ve really got to have people that are going to put in the effort and have the skill set to truly go out and if it’s brand new organic growth, if it’s in a new area or a new brand, I mean, these are people that are comfortable just hitting the street with no background and no reputational background in that area, and are comfortable.
You know, obviously hearing “no” a lot and building something. They’re strong enough to build something from nothing and then, obviously, when they get something, you’ve got to have great fulfillment folks in the backend, making sure those brand new customers are taken care of in great order so that you can start building that foundation. So, really, it’s you know, without getting into the qualities of what’s a good sales leader and what’s a good recruiting leader and things of that sort, it’s people that you trust in your organization do that.
And on the flip side, if you’re taking them from another marketer or another area, you need to understand the ramifications of taking them away from that other area because you may be sacrificing one thing to try and attempt to grow something else, so you may be taking them from a known success area and putting them into an unknown that may organizationally and structurally be a net negative if you don’t pay attention to that.
[0:29:41.4] RH: I would also add that it’s important that you have someone that is in the right seat on the bus if you will, right? And so initially, maybe you had a person when you were a smaller organization that was sales to kind of piggyback off of Matt but now you realized that the territory is getting larger and maybe they’re not able to touch as many places as you would have liked and so you see that they’re very strong however in the recruiting aspect of things or on the operational side of things.
And so, you want to make sure that you continue to have your team as you grow kind of aligned in the right positions within your organization.
[0:30:20.4] TK: Yeah, good stuff, good stuff. You know, in terms of alignment within your organization Reggie and I know that I don’t know how many PNLs I’ve looked at, I don’t know how many companies we’ve helped with financial analysis and budgets and things like that and I had a client one time, not a small one, and I said, “Yeah, do you guys budget?” and the owner said, “Yeah, we tried that one time, it didn’t work, so we just gave up on it.”
Quote unquote, that’s it, the plan, but obviously like budgeting and forecasting you guys can do this with your hands tied back behind your back walking backwards, how do you develop your budgeting and all that with others in the organization? How do you get them to understand the budget? How do you get them to live by the budget? How does that all work and yeah, Reggie, first up?
[0:31:04.8] RH: Yeah, so look, it’s budget season, so I’m in the midst of this right now. So hopefully, I answer this one correctly. So, for me and what we do is we kind of take a bottoms-up approach and we create, I create the budget by customer and we also create it in a language that’s not financial and so for us, what I do is, “All right, here’s customer A. How many hours do you think you’re going to be able to have with that particular customer?”
“How much headcount do you think you’d be able to have?” I talk in that type of language to the team and I allow for them to come back and say, “Look, this is the operations team I’m referring to.” They come back and say, “We’ll be able to do X number of hours.” I then can translate that into what the revenue is because I know pay rates and things that mark up and all that stuff, so I translate it into a revenue number.
And then, if we have a gap to what we want to do for the next year, so let’s say you have an internal target that you think, “Oh, we want to grow five percent.”
[0:32:08.6] ML: Those again, budgets and as Reggie said correctly, are seldomly related. Some do poorly, so let’s put it that way. So, budgets by nature or forecast or your best guess at that point in time with the knowledge you have in that point of time but what we do with our budgets is we spend time talking about this is our agreement between our operating company leaders, our department heads, and ownership in the organization.
What an operating company leader is going to produce allows the organization to have in theory the funds to invest whether it be in technology or market or L&D or risk management or talent acquisition, or things like that that we might want to spend money on, so we integrate those leaders that way. The part that makes it circular for them is that the agreement they enter into also reflects – is the ability.
It also kind of gives them an indication of what they can earn for their efforts and for what their company does for the year. So, that’s how we get them invested into it. Now, tactically, I would agree with Reggie. We do this bottoms-up depending on the operating company or the branch. If we have large customers, we spend a lot of time making sure we focus on what we expect out of those large companies.
In a lot of our areas, we’re very retail-ish, so it’s hard to say, you know, exactly how that retail so we do some market research to understand where customers and industries go in that area and what we expect out of our retail business and how the general economy is doing and things of that sort. So, there’s a portion of it. It’s not necessarily bottoms-up or customer-specific. So, that’s tactically how we do it, we vest the leaders in the way that that’s going to help determine their own sense of realization that they get out of it.
And it’s our agreement to be able to go to places and have the funds to do the things that they think would be really helpful to them. There’s a lot of communications, back and forth processes, and as Reggie said, we’re in the middle of it right now too, and then there’s also the opportunities to adjust it significantly if you’re doing the budget. We’re sitting here on October and December, you get a big customer, you lose a big customer, or something happens in the area that causes you to say, “We’d probably better tweak this.”
And then, you’d go into January first with your budget and your plan and you know you’re going to make it happen, and then January happens and six snow storms go on and plants are closed down and the budget goes to hell in the handbasket just like that.
[0:34:26.6] RH: The additional item is whatever gap that we have from operations perspective to the number that we want to hit for the year, that’s fueled by the sales folks, right? So, we say, “Okay, here’s your sales team target at this point. Here’s where we need to go and achieve.” And to Matt’s point, part of the way to get the buy-in is that they’re from the team is they’re incentivized to make sure they get in their budget, so.
[0:34:49.2] TK: At the last CFO Roundtable, somebody was talking about this rolling 12 budget. They’re looking at January of this year, January last year, and so it’s like literally month by month by month, which makes that, “You know, I lost a big client. I gained a big client.” It makes it a lot easier to adjust the budget on the fly so to speak. You guys do any kind of a rolling 12 or?
[0:35:09.8] ML: I wouldn’t say necessarily a rolling 12 but we do kind of constant re-forecasting based off what may have transpired over two or three months and what does that indicator mean for the next nine to 12 months. So, maybe we roll up more quarterly as opposed to monthly.
[0:35:26.1] TK: Yeah, got it.
[0:35:27.2] RH: Now, what I do, do is I do a trailing 12 month, rolling 12, whatever you want to call it, related to our sales and gross margin. Specifically, I’m looking at customers that we have previously been doing business with, are they performing better or worse and also I’m looking at the new customers and customers that we may have lost to try to understand how the organization is performing. I do that on a rolling 12 basis and it helps display some of the drivers for any variants to our budget.
[0:35:56.5] DF: And Reggie, you earlier were talking about like identifying where you’re getting that peak performance, you know, and saying like, “All right, this is the highest gross profit” from a – whether it’s the employee, you know we look at it from a talent source perspective a lot of times but it sounds like you’re doing that on a customer level then do you look at where did that customer come from or what is it about that and how do we replicate it? Are you doing kind of helping to guide strategically with the team on that front?
[0:36:20.7] RH: Absolutely, so from an operations perspective, the team is having probably like many folks, a quarterly business review, whatever acronym you may want to use for that, and through that process, we get to understand some of the pain points that maybe our customer may have and as a result, we’re able to figure out the appropriate pricing associating with particular customers, and so I think that goes a long way to try to understand the why behind strong performers for a particular customer.
[0:36:51.9] TK: Let’s move on to the customer side of the equation. I picked up a client not too long ago, middle market company but interestingly enough, the director of finance was not involved at all in the pricing strategy or okaying or denying the pricing, at which like a big red flag popped up in the back of my head on that. So, pricing, quarterly business reviews, I mean, I’ve met a lot of CFOs in the roundtable that for the key clients, them as a CFO are connecting with the CFO of the big clients.
They’re involved in these quarterly business reviews, things like that. Tell us about that part of your job, are you doing the QBRs? Are you involved in the pricing strategy?
[0:37:31.9] ML: Yeah, absolutely. I mean, my experience has been a lot of that, and certainly with the larger clients and one of the things I always view myself as an extension of the sales team and not the compliance police. You know, a lot of times people correlate accountants with compliance and regiment. You know, my job there is to compliment the sales team and the sales effort, and the objective of the organization.
But also, at the same time, to help educate the customer on things that they’re not well versed at and well versed in and again, I mean, it’s you know, there’s – when we’re talking about fill rates and things like that, I let the sales team and the protection team talk about that. When we’re talking about things like pricing and better service and things of that sort of things that impact the business, that’s where our opportunity comes in to talk about what’s going on in the macroeconomy, what’s going on in the labor market.
What’s going on specifically in their area’s labor market and labor cost, what’s going on with burden cost and things of that sort, you know making sure the customer understands that if you’ve got sloppy, safety policies or weak claims management policies or if you’re letting people, our people go all the time, you’re costing us money and the churn of having to refill positions, handle employment claims, and then explain to them the cost of that, and if they want to keep their prices down, help us do our job better too.
So, there’s a lot of conversations around those kinds of things. I mean, over the years I’ve been involved in company safety committees to help achieve better safety processes and just better safety culture and philosophies that helped them structure how to manage unemployment claims and things of that sort and how to find modified duty and things of that sort. So, I think you can play a lot of roles in the support structure to your sales organization.
[0:39:16.3] TK: Reggie, how about you with QBRs and pricing strategies, what’s your philosophy or involvement there?
[0:39:22.7] RH: Yeah, so I’m very similar to Matt in that you know, I try to consider myself a partner here. I don’t want to be the kind of person that is putting the stop to anything or anything of that nature but it is important to look at obviously the pricing component and all the factors that Matt hit on, whether it’s worker’s compensation and you know, some of the regulation from a state requirement, things of that nature.
But the additional piece is also our cash, right? And so, when you think about pricing, I’m checking DMVs and trying to make sure that I’m able to help protect the organization but you have to have those discussions, right? It’s a part of the partnership and the management team, management decisions in terms of, “All right, we have a really large opportunity.” Maybe we’re going to get a little bit better price in this particular scenario.
And we’re going to get a little bit better terms and so, you kind of weigh those options there as you’re having the discussion but definitely involved with the pricing and want to make sure I’m supporting so we can grow the organization.
[0:40:24.9] ML: Yeah, and negotiation when your sales team comes back and says, “Yeah, so and so staffing company is going to give it to him for 1.27.” Yeah, come on, Reggie, this is going to pay for the lights.
[0:40:39.4] RH: Yeah, sorry, we’re not doing that way.
[0:40:43.2] ML: Reggie brings up a great point too. I mean, part of those QBRs is the opportunity to talk about payment history, payment issues, cash flow of the business, understand the business a little bit better, so salespeople are not generally really good at drilling into some of those things to understand how healthy the business is and we as financial folks have a better chance to do that in an indirect way and in a salesy way as opposed to otherwise it never gets addressed.
I mean, I know we might talk about some things that make you walk away but if customers have industry problems and payment problems, better to know that now as soon as possible.
[0:41:18.5] TK: What’s the walkaway point, Matt? What’s your walkaway point?
[0:41:21.9] ML: Well, I mean, for me the walkaway point is always a lot of things. I mean, in this QBRs and in like a walkaway decision, I always want to understand and again, this is what the major clients, “Am I a partner of yours or am I just a vendor, okay?” If they’re constantly beating you up on price, if they’re making your fulfillment process hard, if they’re constantly causing you to churn employees.
If they’re operating an unsafe environment, if they’re not paying their bills timely, if they just don’t really seem to care about your pains and struggles, then they’re not really a partner with you. You’re the next vendor that gave them terms and then they’ll move on to the next and I want to know what kind of business partner I have in the large customer like.
[0:42:03.2] TK: Yeah.
[0:42:03.7] ML: And those things all weigh in. There’s not one particular factor but those things all can weigh into whether you walk away and say enough is enough and we’ve all done that.
[0:42:12.7] DF: Is any of that standardized or is it all kind of instance by instance?
[0:42:17.0] ML: Well, I think it’s – a lot of times it’s instance by instance because the fulfillment folks, the recruiting folks, the operating folks know how hard it is to fill orders and how much churn that customer is causing, things like that. The backend knows the payment problems and the payment pains and the song and dance stories they gave us that they didn’t hold up to and all that kind of stuff.
And when you mesh that together and then how much you have in claims and how unsafe their work environments when you get to risk management people involved, when you start putting that all together is like, okay, we either go to them and say, “Fix these things or give us a better rate for taking on more risk” or we make the decision of enough is enough and walk away, so.
[0:42:53.4] DF: Got it.
[0:42:54.0] RH: To me, one of the biggest things is if you’re not being safe at the end of the day, we’re all in this business. We want to help people, right? And so, if the organization that you are partnering with is just has a very poor safety record, then that’s definitely going to be a lever for us to we may need to walk away from this one.
[0:43:12.2] TK: David, Matt, and Reggie are on the edge of their seat wanting to talk about compensation.
[0:43:18.6] DF: Yeah, so what tips do you guys have or what’s the philosophy when it comes to developing compensation plans for staffing agencies?
[0:43:27.6] ML: Go ahead, Reggie.
[0:43:28.6] RH: Yeah, so –
[0:43:30.8] DF: They’re both excited, favorite part?
[0:43:35.5] RH: Well, look, first as you think about any type of incentive or bonus structure that you may want to put in place, you need to consider a couple of things. A, does it benefit the organization if that person hits whatever milestone or metric that you put into play? What I mean by that is you don’t want to give away all of your profit in terms of a bonus that you may pay out to some folks within your organization.
So, that’s one thing. The second is I like to incentivize for that year and so as you think about kind of the sales engine there, yes, it’s awesome that you brought on a large customer, we definitely don’t want to lose a large customer but we want you to bring in another customer the following year. So, I don’t want you just to continually have kind of live off of that initial large customer that you may have brought in.
So, those are a couple of things that I think about initially. I don’t know Matt, do you want to take a stab for this one too?
[0:44:31.7] ML: Yeah. I just chuckle and laugh because whether it’s in staffing or my previous businesses, commission plans are all over the place all the time but ultimately, I think it comes down to having, for us, having a very clear focus on what behaviors you’re trying to influence. This is usually for a time period and obviously, we all try to make it, like 2024, what are we trying to influence? 2025, what are we trying to influence?
So, having very good focus on that and also understanding that that’s going to change annually at least, probably even quarterly depending on what’s going on. I also think you have to have a really clear understanding that within every business, I don’t care what size you are, you have X amount of bucket of dollars or percentages of your sales or gross margin, however you measure it, to spend on that total compensation package, which includes base salary, incentive plans, auto allowances, training, medical costs, 401(k) matches, all those kinds of things.
Usually, the most variable piece of that is the incentive plan. Based is kind of market-driven and medical expenses is market-driven and 401(k) match sometimes is market-driven, there’s a little variability there but – so it’s usually the incentive plan of which you have to kind of use to fit within those structures to keep the company profitable and also produce a win-win and then I think you spend some time making sure that you explain to the leaders of how this is a win-win.
This plan should influence this behavior, you win, the company wins, everybody gets stronger so that we take a stronger company and results into the next year. Yeah, and that’s just a candid conversation with the employees and the leaders that are impacted by that incentive plan, and what you’re trying to focus on achieving is from the business and what you’re trying to focus on achieving for the individuals also.
[0:46:14.1] TK: I heard from the – I’ve got this group but anyway, they were a comp study group that said that 90, 90% of the companies across the board in the United States change their sales compensation plan annually and 70% of the 90 make significant changes, and of course, you know your business is not the same every year. Your client base is not the same, internal operating expense is not the same.
So, it is the best practice in terms of tweaking that plan on an annual basis. Do you guys agree with that?
[0:46:44.6] ML: Absolutely. I mean, yeah. I mean, there’s times where the focus is we want to motivate and incentivize sales and then there’s times we want to motivate and incentivize fulfillment you know, okay? And that could be regional and that could be national, that could be specific, you know just as this, a couple big broad areas but yeah, the fundamentals of the plan might stay the same, or the fundamental structures might change or stay the same.
But there’s always these kickers and SPIFs that come into play as to how we want to tweak and impact specific factors including having them be focused on more than just their operating unit and potentially the whole organization.
[0:47:20.8] RH: Yeah, I think one thing that’s really important here though, you need to make sure you’re communication of those changes to that plan is got to be provided early as early as you’re able to kind of provide that information to your staff so that they can kind of get on board and I think it’s equally important to explain kind of what Matt just touched on, the why, right? So, we have an evolution in terms of where we’re at today.
You know, last year the focus was on fill rates, I’m making up something here, right? And we’re doing great there in fill rates now. Now we need to focus on giving new customers or whatever it is what you want you kind of touch on. So, I think it’s important that communication piece to the organization.
[0:48:02.2] TK: A little fun fact for you two financial wizards, SPIF, you know where the concept of SPIF came in?
[0:48:08.4] RH: No, I do not.
[0:48:09.5] TK: And do you know what SPIF stands for?
[0:48:11.1] ML: I can only guess.
[0:48:12.2] TK: Special Incentive For Sale and I know you guys are going to remember this, Radio Shack, remember Radio Shack?
[0:48:19.3] RH: Yes.
[0:48:19.4] ML: Oh yeah, yeah.
[0:48:20.1] TK: Yeah, they were the ones that – were the first ones that created a SPIF in their compensation plans to sell extra little of electronic this or electronic that.
[0:48:28.1] ML: The question is where are they now?
[0:48:30.4] TK: Yeah, exactly.
[0:48:31.8] ML: How those SPIFs work, yeah.
[0:48:33.4] TK: They over-SPIFed.
[0:48:34.7] RH: Over, exactly.
[0:48:36.4] TK: It’s often what.
[0:48:37.2] RH: Yeah, you talk with the Radio Shack reference, you’re kind of dating me here a little bit because I know what that means.
[0:48:42.2] TK: Yeah, I know. Yeah, exactly, exactly, oh my gosh.
[0:48:45.3] DF: When it comes to hiring CFOs, you know I know there could be a couple different types, kind of the accounting side of it, the entrepreneur side. If you’re a business owner, how do you know which persona to hire? Any advice or thoughts on like how to approach that from a hiring perspective?
[0:48:59.2] RH: Yeah, I mean look, I like to think there’s a couple of different CFOs, right? There’s one that’s more kind of your tactical blocking and tackling, getting your month-end closes, your kind of accountant if you will and so, for that particular type of CFO, I tend to think of a smaller organization that is just trying to kind of make sure that they’re keeping the lights on. The second CFO, I would describe it more, I think the cliché term now is CFO plus, and so it’s a person that obviously knows the basic blocking and tackling with how to keep the lights on, the month-end close, those types of things.
But they also can help to identify those operational drivers that push forward your financial results and so, they’re the strategic partner and so I think that as you continue to grow your business and you’re thinking about going to the next level and trying to whatever that next level may be for you, you may want to consider kind of that CFO plus.
[0:50:02.0] ML: I’ll add in there. I basically agree with the two prongs that Reggie was talking about is that the owner really needs to know if they want somebody that’s strictly an accountant, kind of a tactical procedural compliance focused accountant and there may be organizations where they – where that is a value and that’s what they need or do they want a business partner.
Do they want somebody that’s going to have them put into the business strategy and the execution of the business with that financial acumen as Reggie was referencing that they kind of know the financial impact of the strategy and execution and can help and lend that to the owner to the owner. You know, do they value an accountant that will dive into the business and help them solve operational and execution problems and organization process and procedure problems?
Do they value an accountant that brings industry knowledge, macro, that focuses on the industry that has some focus and pays some attention to the macroeconomic environment, technology changes, legal tax changes, and how those things may be coming down the pike and how that can impact the operation and help you get your organization ready for things that may come in any of those areas?
So, it’s structurally very, very different. We just want somebody to be compliance, you can find those folks. If you want somebody to really be a strategic partner with you and a valued advisor with you, those are two different types.
[0:51:22.0] TK: You know, it’s so interesting because the staffing industry is a sales-driven organization, right? Sales organization, a lot of – people that start staffing companies they think that the second most important executive on the C-suite is the vice president of the sales, and I’ve talked to a lot of people who have grown, you know, hundreds of millions of dollars in staffing companies that will say, “You know, at some point, they realize the second most important person on the C-suite is the CFO.”
Because those are the guys that are really – those are the men and women that are really helping me grow the business in a way that I could have never grown it exponentially in a way, whether that’s focusing on business model, whether it’s doing M&A, whether that’s restructuring processes and procedures to make things more efficient, more effective, they have that capability, right?
That capability, “Hey, there’s a hill over there, there’s a mountain over there, and there’s three hills, and I’m going to figure out how to climb those three hills and get to the top of that mountain.”
[0:52:18.8] ML: Or, Tom, there’s a wave coming at you, and if you’re thinking about how we can get through the wave.
[0:52:25.0] TK: Boy, isn’t that the truth? Crazy. So, Reggie, anything else? Did you want to say anything else on that?
[0:52:30.9] RH: Yeah, no, I think that when you talk about that CFO plus that I was referring to, probably one of the biggest components is they’ll provide that visibility so that you can see the wave that’s getting ready to come towards you, so that you can be able to say, “All right, look, for 2025, nobody has a crystal ball, but if this scenario happens where we’re going to grow next year, how are we structured for that?”
“If a scenario happens where we’re going to kind of stay in the same space we’re in, what do we need to be thinking about in terms of our cost structure and what plans should we come up with to protect the organization?” So, I think that’s really important.
[0:53:07.9] TK: Yeah, right.
[0:53:08.6] ML: Tom, you’ve certainly worked with enough owners of all sizes in this industry to know that they generally are very involved in their community, know the sales process but just don’t have the bandwidth, care, desire to know all the other things that it takes to make an organization successful.
[0:53:27.6] TK: Right, yeah.
[0:53:28.4] ML: That’s not a detriment, that’s not a derogatory comment, that’s just their skillset and others have the skillset to –
[0:53:35.6] TK: Yeah, at some point, you have to professionalize the operation.
[0:53:38.2] ML: Yup.
[0:53:38.8] TK: In order to keep all the stuff that we’ve been talking about, policies for procedures, replicate methodologies, all that stuff.
[0:53:44.9] ML: Comp plans, all that kind of stuff, yup, absolutely.
[0:53:47.3] TK: Well, let’s see, Reggie is – Reggie is from Atlanta and let’s see, Georgia is four, and one pull five in the other. Man, I know you’re an optimistic out of big Notre Dame fan and –
[0:53:57.1] RH: Yup.
[0:53:58.2] TK: It’s like the, it looks like Notre Dame is at number 12. So, not sure what you guys are predicting with your football teams but 2025, for the staffing industry, like what are you budgeting for? By the way, my CFO roundtable, we didn’t – the question didn’t even come up this year. It went so good, deflated in the last two years. [crosstalk 0:54:15.3] But 2025, what do you guys – you guys are smart guys, what are seeing, what are you budgeting for, what do you think we’re going to get here?
[0:54:25.7] ML: So, look, Tom, I touched on this earlier, we do some analysis internally to look at our existing book of business and customers that we already have, whether we’re growing with them or we aren’t growing with them, and for me, I like to use as an indicator of what’s going to happen in next year, it’s one of the indicators I try to look at and so, we’re starting to see some slight growth with some of our customers that we’ve been doing business with.
Slight, so not aggressive year but I do think that in 2025, the industry should hopefully start to turn a corner, probably in the back half of the year. So, from a budget perspective, I think, we’ll probably land somewhere in that space where we’ll see some slight growth in the back half of the year.
[0:55:14.5] ML: Reggie’s froze up, I’ll jump in and address the initial comment you said there, Tom, is that yeah, Notre Dame does play Georgia Tech down in Atlanta this year, and my prediction is that Notre Dame will win. I hope. [crosstalk 0:55:25.9] But that’s going to happen in 2024, I would say that you know, for me, 2025, there’s a couple big things that I always look at. One is, and I’ve said this a lot of times, you and I have talked about this.
Whenever you have a national election like this, people just freeze for the longest time because they have no idea which way the national policy is going to go. So, getting the election behind us, regardless of who wins, business leaders are smart people. They know how to operate the business under any kind of administration. So, that should help build some confidence and at least, some general direction.
I think when you throw in a few more interest rate cuts, that helps confidence, that helps cost factors. If things can be done, obviously, to maintain inflation and reduce supply chain bottlenecks, that certainly should help some things, and in general, I will say this because it’s true in every industry, you know, the staffing industry’s been in a slump for so long over time, things just don’t go down forever, no different than they just don’t go up forever.
So, when they’re up at the top, they come down, when they’re at the bottom, they come back up, and what level and what speed that will happen is kind of the unknown. I know, the ASA and SIA have their predictions but they’ve had their predictions last couple of years and they’ve been shot to hell pretty quickly.
[0:56:39.6] TK: Yeah. I agree with what the election, get the election, the election over but yeah, this is a historic length of a downturn for the staffing industry. It’s going to be like three plus, 36 plus months, that’s the typical recession, 24 months for us in the staffing industry if you look back over the last 50 years but just on the note, the ITR guys, all their leading indicators, if you look at their recent, you know, monthly updates, all their leading indicators for 2025 will be, they’re predicting are going to be in growth mode.
So, I mean, manufacturing has been in a recession for the last two years, staffing, last three years. Yeah. Could we use a little – a little joy in this industry?
[0:57:19.9] ML: You know, to go along with my comment about industries not staying in the slumps forever if you look really at the last 18 to 24 months of employment growth, they’d been in three core sectors, government, healthcare, and travel and leisure, and that’s not going to stay that way forever. I mean, governments can only employ so many people. I mean, I guess, I shouldn’t say that, they employ lots of people.
And manufacturing and distribution and construction, those have all been down, plus or minus, positive, negative for the last year and a half, two years. It’s not going to stay that way forever. Interest rates will help the construction industry, which will help the manufacturing because all the products needed within the construction industry, and that cycle will start up again at some point in time. So, those are the positive things that I’m planting my flag on and hoping that bring us a little prosperity.
[0:58:05.7] DF: Yeah, absolutely. Well, it’s exciting to see some good positive forecast. I feel like the market – it feels like there’s some trends that we can see coming our way. Really enjoyed having you guys on the show today, Tom, Matt, Reggie. I think there’s some really deep insights and I just appreciate you guys a ton. It was a great conversation.
[0:58:22.6] ML: Yup, great conversation. I’ve enjoyed it.
[0:58:24.1] TK: Good to be here, and hey, to 2025.
[0:58:27.7] RH: To 2025.
[0:58:28.3] TK: Post-election in 2025.
[0:58:31.0] DF: Onward and upward.
[0:58:32.3] ML: To a great year, finally, in the industry.
[0:58:35.3] DF: All right, thanks guys.
[0:58:36.5] ML: Thanks, everybody, take care.
