Just hours after the announcement of AVI-SPL's acquisition by private equity firm 26North, AV Technology content director Cindy Davis sat down with CEO John Zettel to ask him the questions on everybody's minds and more.
View the full video interview below.
Below are highlights from our interview. Please watch the video for the complete interview.
Cindy Davis: At a high level, what does the acquisition by private equity firm 26North mean for AVI-SPL?
John Zettel: It's always an exciting time when we get to announce a deal of this nature. We have had three previous financial equity sponsors in private equity, and they all have been unique and brought certain relationships and benefits to our company over the years. In 26North, after a wide and long vetting process, we really narrowed in on 26North for a couple of reasons. Their understanding of the industry, their extreme desire for the industry, and what is going to benefit AVI-SPL. Because ultimately, we'll be able to continue to do what we're doing. And that's the most important thing when you're looking for a private equity buyer. If you're on the right track, if you're doing great things like our company is doing, you want that momentum to continue, and you want a private equity firm that gives you the resources to enhance that growth, to even make it a more secure outcome going forward. And we just feel like 26North gives us that opportunity. It gives us visibility in new markets, and it gives us different resources at their firm that we can leverage to assist us in our growth. It gives us access to different portfolio companies, and it really is just an affirmation of what we're doing and maybe a little more octane to continue to drive forward even faster.
CD: Acquisitions can definitely make people nervous, especially employees and your partners. So, let's get the questions right out of the way that everybody's going to be asking. So often, when there's new ownership, there's consolidation of operations. AVI-SPL has 4,400 employees across 70 offices worldwide. Do you anticipate any changes?
JZ: Only changes in terms of growth. This is different than our last transaction because, in our last transaction, we simultaneously merged with Whitlock. So there was a combining of two companies, and that represents a little different dynamic than this, where we're simply changing financial sponsors or owners of the company. So we run the company; we're the management of the company. What we do every day is done within the offices of AVI-SPL. For the 70 ones you mentioned, there are no cost synergies in this deal because two like enterprises are not coming together. This is just a simple change at a level that doesn't really involve the operations of the company and what we do for our customers. So, no, there'll be no changes of that nature in this transaction.
CD: I'm assuming that's any concerns or questions your partners or customers would have? The same goes for them as well?
JZ: A hundred percent.
CD: As you mentioned, AVI-SPL is no stranger to PE ownership. Talk a little bit more about the synergies that you see between 26North and AVI-SPL.
JZ: When I say synergies, I want to be really clear that these are growth synergies to enhance our strategies. The cost of reduction synergies that we just talked about was not contemplated at all in this transaction. So when you look at growth synergies 26North—our discussions with them present multiple avenues for us to really amplify the strategies that we have in flight today. Whether that is expanding into new geographies where they may have relationships already established that we can then leverage upon in terms of getting guidance in new international markets, or whether it's leveraging some of their resources that we don't have as many of, they have an alpha creation team that can come in and help us with special projects that we may want to improve on certain technologies we have in place. And we wouldn't have a full-time staff to work just on special projects that come up. So, we leverage them when the time is right. So again, we see them as being confirmatory to our strategies and initiatives, and having resources that we can pull when needed to be able to drive those. But they are also very committed to us continuing our development of our platform to continue our strategic initiatives in pursuit of what we offer our customers.
CD: Does the acquisition change the AVI-SPL playbook?
JZ: No, not at all. We are committed to our strategies. We currently are the largest in our industry—forget about the revenue. We're the largest in our industry in terms of reach, in terms of the platform of what we offer our customers, and in terms of global customers. And that strategy is what was enticing to 26North and was the differentiator for them, saying; We believe in this industry. We believe what this industry is doing is changing the future of work and the workplace environment. And because of that, we want to be in this industry, but we want to be with the leader in this industry. So their strategy is, where can we help you continue to drive that? Not how can we drive short-term value creation by doing something different here or changing things here. They want us to continue on the trajectory that was so attractive to them, and that's why they acquired us.
CD: Are there specific markets that you're going to be focusing on as you expand AVI-SPL's global reach?
JZ: There are some that we have targeted. We just recently targeted South America in what has turned out to be just a fantastic merger of ICAP and AVI-SPL. There are other markets that I won't quite name yet, but all of our expansion into new international markets or even new domestic markets is driven by our customer demand. And we want to be where our customers want us and need us. We continue to talk to our customers on a regular basis for those strategic discussions.
CD: Finally, what are you most excited about going forward?
JZ: I'm excited. I'm always excited about the future of AVI-SPL. I'm excited about our 4,400 employees doing a great job every day for our customers. When it comes to this transaction, this will be the fourth time I've been involved in a transaction of this nature for AVI-SPL, so I view it as business as usual. I'm excited about staying focused on delivering for our customers, giving them the thought leadership that we have, giving them the platform to meet their needs of transforming their business, and then executing at the highest level possible, which we do on a daily basis at a scale that's never been done in this industry. And I just look forward to continuing that message and continuing to drive that to new heights because the opportunity is certainly in front of us. Our industry's in a great place for that.
