What it takes to cross the search fund finish line in under a year.
A Q&A with Booth alum and new CEO, Asim Aleem, MBA ’12
Even as the number of active and successful search funds continues to grow around the world, the life of a searcher remains highly individualized. In hopes of growing and solidifying the community of searchers within the Booth network and beyond, the Polsky Center is committed to sharing different stories and perspectives of active and experienced searchers at various stages of the process.
The below is an interview with successful searcher and Chicago Booth graduate, Asim Aleem, MBA ’12, who acquired a company in mid-September and switched his fund’s focus from searching to operating. Below, he shares his experience and some of the most important lessons he learned along the way.
Polsky: Tell us a little about your background.
Asim Aleem: Before I started my search, I was focused on lower-middle market principal investing on behalf of a range of family offices at a local entrepreneurial firm called Avondale Strategic Partners. That was when I developed my passion for working with small companies. I started to see that I could be that person or catalyst that helps them unlock their real potential.
Polsky: What made you decide to pursue a search fund?
Aleem: Prior to my work at Avondale, I worked with Fortune 500 management teams in a management consulting capacity, helping them with broader strategic topics. And then, once I started working with smaller companies after investing in them, I realized that many of the same principles of working with Fortune 500 companies applied — but that there was significantly more leverage in the decision making at the smaller-scale companies.
It was during this time that I really started to enjoy working with management teams of smaller companies and seeing the large impact that I could have with some simple fact-based analysis and strategic thinking.
Over time, I realized that my real dream was to own and manage my own company, to be able to be that key decision maker in a growing business. Based on my experience, and given the close-knit search fund community of highly successful mentors and advisors, it seemed like the perfect model through which to make this goal into a reality.
Polsky: Let’s talk a little about the company you recently acquired, ISI Telemanagement Solutions.
Aleem: ISI Telemanagement Solutions provides unified communications management software and solutions that help companies measure, analyze and optimize their communications across all of their communication platforms. So our software provides our customers with a dashboard displaying key analytics for all voice, video, instant message, and telepresence communications both internally between different groups of an organization and externally. We do well with financial institutions, healthcare organizations, and government entities, because a lot of them require it for compliance purposes, but many more utilize our software because they are able to utilize the analytics and metrics we provide to drive better business outcomes.
The easier way to put it is that we help companies obtain actionable insights from their communications data that helps them advance their usage, expense, and people-based objectives.
Polsky: What drew you to this company in particular?
Aleem: During my search, I was looking for a tech-enabled B2B business, specifically in software, and ISI satisfies those qualifications. Plus, it’s a great company with a high rate of recurring revenues, profitable economics, and a diverse, strong customer base. The former CEO and controlling shareholder is in his eighties. He really cared about keeping his employee base in tact but didn’t have the energy or desire to invest in the business to take it to the next level. It was a good time for him to exit and hand off the business to someone who had the energy and passion to take it into its next phase.
Polsky: What was the most challenging part of your search?
Aleem: Managing my time was definitely a sticking point. The uncertainty that resulted from my inability to control what the other party may decide to do was also incredibly hard for me. I was always looking at a few deals simultaneously, and I got strung along quite a few times by “Sellers” who took up a lot of my time but who turned out to be not actually interested in selling anything.
Polsky: And what about the highlights? What did you find to be the most enjoyable part of the process?
Aleem: The opportunities I had to interact with other members of the search fund community were real highlights of the entire experience. I was able to forge real relationships with many individuals, ranging from my peer searchers, to operators and investors. It is a humbling group to be around and I can only hope to be a fraction of the help to others as they were to me throughout my process.
Polsky: Tell us about your relationship with your investors?
Aleem: That’s a tough question for me. I guess the most straightforward answer is that it was complicated. There were some investors who I leaned on considerably, and some who caused me some added stress, but all were integral in helping me think through different opportunities and consider different industries on which I should focus my search.
Polsky: What do you think is the most complicated part of an investor relationship?
Aleem: It can be very confusing and difficult at times to navigate the “right” way to interact with investors. I never wanted to be too vulnerable or too open about my fears and concerns — because at the end of the day, they were still my investors, and I always wanted them to be confident that I was a good investment.
However, I did have a couple of investors who were real rocks for me. I had one investor who I felt like I could go to when things weren’t going well or when I faced some challenges. I was always completely transparent and candid with him as he is with one of the more traditional funds who back search fund entrepreneurs. He helped me navigate the process and served as a real mentor.
Another one of my investors was a real life saver when I needed it most. Interestingly, he wasn’t a part of my original investor group; he came on after I had already found the company, but he was integral to getting the deal closed. One of my other investors who had previously committed to their pro-rata backed out literally four days before we were supposed to close and this particular investor was the one who found someone to fill the gap over that weekend.
That was probably the most stressful moment of the entire process, but it just goes to show how integral a few key investors can be. There were a handful of investors who really tipped the scale for me and helped get it all done when it mattered most. Not coincidentally, these same investors now sit on my Board.
Polsky: How was the transition gone since closing at ISI?
Aleem: The transition has been busy, but relatively smooth. I am less than three months in, so the transition is very much still in process. Thankfully, I have a great board of directors, and the company has a high rate of recurring revenue, which eases some of the pressure.
Right now, we have 88 employees, and most of them did not know what was going on until the deal had closed. And because things were so crazy right up until close, we’ve had to do a lot of the transition work after the fact. The biggest thing I’m working on right now is the culture of the place. I think culture is so important at any company, and I really want to rework some things so we’re more progressive and nimble. The place needs some more energy. But it’s really important to me to get the right buy-in at the right time.
I believe there’s a key window of opportunity after any big change like this when people are kind of nervous, wondering what’s going to happen. And it’s during this window that we have to over-communicate what we are trying to achieve and show everyone that things are only going to change for the better.
I’m extremely thankful that there hasn’t been any big turnover — people seem really energized by the transition, which is really good. One of the things I’ve done so far is I just announced that we’re relaxing the dress code — it will still be professional, but casual. So people can wear jeans, which was extremely well-received. There was a very strict dress code before, which I don’t think really made sense because we didn’t have a lot of clients coming around. I also updated our PTO policy to make it easier to understand and rewarded the employees who have been here for over 10 years with more days off.
Polsky: What was your biggest source of guidance or help as you navigated any portion of this process, from raising your fund through the acquisition of your company?
Aleem: My wife was an amazing source of guidance and support throughout the entire lifecycle of the search. Searching can be a very lonely process, filled with a lot of rejection, especially as a solo searcher. She helped me extract meaning from conversations that I had with the seller and provided her own perspective, which was uniquely helpful. She was also very supportive during the most stressful days from the letter of intent (LOI) to close. She picked me up on the days when I felt down, offered unconditional support on the days when I was sure the deal was going to fall apart, and ultimately we were able to celebrate the success of closing together.
Polsky: What is the one thing you know now that you wish you knew at the beginning?
Aleem: I wish I knew how better to screen prospective sellers and better manage my time. When I started, I was overly eager to hop on a plane to anyone who had a decent business and responded to my outreach. It took me a few trips (and a few thousand dollars down the drain from my search budget, not to mention the days preparing and traveling) to realize that I needed a better screening system. A searcher only has two years, and while it may seem like a lot of time at first, it is not a lot of time to find a great company, convince the owner to sell it to you, and then put all the pieces together to get it closed.
Polsky: Any last words of our wisdom for others interested in the search fund path?
Aleem: Be intellectually honest with yourself as to why you want to pursue this path. It is one that is certainly rewarding, but it is not a simple one. Talk to as many searchers, operators, and investors as you can before you get started. Figure out if this is really what you want.