Welcome to the Rialto Marketing podcast. Today's episode is a revenue acceleration series interview where we talk to seven figure B2B professional service firm owners that are actively trying to grow their business and get to the next level. We talk about the good, the bad and the ugly so that you can learn from their experience.

Join Tim Fitzpatrick and Pamela Miranda for this week’s episode of The Rialto Marketing Podcast!

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The Numbers Always Tell A Story

Tim Fitzpatrick
Welcome to the Rialto Marketing Podcast. Today's episode is a revenue acceleration series interview where we talk to seven-figure B2B professional service firm owners that are actively trying to grow their business and get to the next level. We talk about the good, the bad, and the ugly so that you can learn from their experience. I am Tim Fitzpatrick with Réato Marketing where we believe you must remove your revenue roadblocks to accelerate growth and marketing shouldn't be difficult. Thank you so much for taking the time to tune in. Super excited to have Pamela Miranda from Triella with me today. Pamela, welcome and thanks for being here.

Pamela Miranda
Thanks for having me. I'm super excited.

Tim Fitzpatrick
Yes, I'm excited to dig into this with you. You've got a really interesting background, which we'll dig into. This switches things up a bit because I think there's a ton for people to learn from your experience and how you got into what you're doing now. Before we jump into that, I want to ask you a few rapid-fire questions. Are you ready to jump in with both feet?

Pamela Miranda
Sure, let's do it.

Tim Fitzpatrick
Okay. Very quickly, what do you do? How long have you been doing it?

Pamela Miranda
Okay, so I am now the CEO of Triella. We're an IT firm located in Canada. I've been doing this for two years since we acquired it. And I'm essentially the chief strategy officer and wear many, many hats.

Tim Fitzpatrick
I think most of us listening are well-versed in that. What's the most important lesson you've learned in running the business since you acquired it?

Pamela Miranda
I think one of the most important things is the people aspect and the culture. It's all about having the right people and the right culture to make this happen. You have to have people believing in your vision and being able to take the same boat with you.

Tim Fitzpatrick
Yeah. We all know growing a business is hard. Do you have any mantra or something motivational you say to yourself, share with your team to push through those times when you run into challenges or roadblocks?

Pamela Miranda
I'm a bit of a geek, so I bought these inspirational cards called You Got This. I gave them to all my team members, and it's a pack of every day there's a new quote. So depending on the day, some days are worse than others. But the two that are on my desk is, Everything will work out in the end, and believe in yourself and you'll be unstoppable. Those are my two for today. But yeah, that gets me going. You have to be positive. You have to believe you got this, and you have to believe in the vision and go for it.

Tim Fitzpatrick
I love that. So what are those cards called again? They're called You Got This cards.

Pamela Miranda
Yeah, I got this from Amazon. It's called You Got This, words of inspiration. Here's the card, I don't know.

Tim Fitzpatrick
That is so cool. So it's just a box, and it's a year worth of cards.

Pamela Miranda
Essentially a lot of cards.

Tim Fitzpatrick
That is so cool. And so you bought that for every member of your team?

Pamela Miranda
Essentially, yeah.

Tim Fitzpatrick
Okay.

Pamela Miranda
Yeah, I got it for myself because I needed it, but I also wanted them because it's tough being an IT person. You get yelled at, clients are not the nicest at times. They're frustrated, so they need to feel the inspiration and happiness as well.

Tim Fitzpatrick
Yeah, I love that. That's awesome. So that's your daily inspiration?

Pamela Miranda
Yeah. Part of it.

Tim Fitzpatrick
So, Pamela, you touched on this a little bit. You did not start in tech. You were a CPA. You spent some time in banking and mergers and acquisitions. How did you get to where you are today? What spurred the entrance into the tech space?

Pamela Miranda
That's a loaded question. It's a part of self-discovery, like what I want to do with my life. I feel nobody really knows. It was triggered by the pandemic. When COVID hit, I had just lost my job in banking. I had two small kids. One didn't even know how to type because she was in Grade 1 and they used to like the iPad. I was stuck at home figuring out, okay, what am I doing? Nobody knows what's happening in the world. Am I going to go back to banking and have a demanding life and being able to take care of my two young kids? That's not going to happen. My husband, although very supportive, it's not the same. Most of the role falls onto the mom, but he is wonderful. But again, the teaching, the dealing with the teachers, it's all a lot on me. I needed something that was able to give me flexibility where I can work from anywhere, ideally on a beach, but also be able to do something that I love. And I love doing M&A. That's something I discovered, just doing different roles in banking. I did my CPA, so I studied accounting. I know I didn't like bookkeeping. I love numbers, reading them from a strategic level, very numbers person. I love that. They always tell a story. I love people. And it was a process of like, What do I really love? I loved investing. I love entrepreneurship. I grew up in an entrepreneur household. I always had that bug in me, but I was never good enough to start a company because it was a lot of work to do that. I figured, okay, let me just buy a company that's established, that has clients, that gives me that flexibility and that will be around. That's recession proof. We looked into IT. It was the right fit because I wasn't tied to a factory or an office necessarily. I love the challenge of always learning and keeping up with new technologies. It was something that piques my curiosity, and so I was able to hone in on this industry. And we bought Triella in 2021 at the peak of the pandemic. So it wasn't your typical process either.

Acquiring New Firms

Tim Fitzpatrick
Right. Yeah, I can imagine. Yeah, this is awesome. So let's dig into this a little bit. So you picked IT because it was just a good fit for you and what you were looking for long term. Obviously, the IT space, it's a strong market. The demand is there. It's not going anywhere. How do you find the IT firms that you look to acquire? And I think more importantly, what do you look for in the firms that you acquire?

Pamela Miranda
Great question. So I find it's a combination. So before Triella, we used an advisor. So Triella, just like you're going to sell a house, you could try to do it by yourself. Or maybe someone knocks on you and say, hey, are you selling your house? But with Triella, it was more of a formal process where they hired an advisor to do the sell. Just like you'd hire a realtor to sell your house, it's the same idea. You hire a consultant or advisory firm to put a package together, make sure your books are in order, set clear expectations with the owner of what is a reasonable valuation. You're not going to get billion dollars unless you're very, very strong and you have to be realistic. That's the biggest challenge when I'm talking to a lot of business owners is like, what is realistic? If you only have one major client, huge concentration risk, and you have that entire relationship, don't expect $20 million for that. That's not going to happen. How do I find businesses? It's usually through the advisory network and also through networking. I try to reach out as much as I can to other owners that are looking for a succession plan where they don't have a key management looking to buy in or one of their children are not interested, then I'm happy to talk to them and explore an option because I'm pretty flexible. And usually I'm looking for majority for control so they can stay on as minority and eventually exit fully or I can buy them straight out. There's just so many variables in making it happen. So what I look for are, one is management team. So do you have a management team that's pretty strong that can be there without you? Can the business run on its own without the owner present? Ideally, that would be my ideal situation, because then I don't have to invest so much on the risks, the potential risks. So are all the, for example, client relationships, are they with the owner? Are they with key client representatives or client success managers? If they're with the owner, it's very risky because once the owner leaves, those clients will leave too, and then I'm stuck with nothing because in an IT firm, there's no assets. It's all intangible. It's all relationships. So I'm looking for contracts. A lot of IT firms have month to month and no real contracts that I'm not interested in because it's very risky. It's very risky, right? We're not a SaaS. We're not like a software company where it's very sticky that way. It's very competitive out there, so contracts are important. When I buy these companies, there's also financing involved. The banks and the lenders need to see some risk mitigatements like contracts and the longevity of your clients. Have they been around for a while? What's your churn like? Et cetera. I look for that and I look for also positive cash flows. By cash flows, I'm talking about generally EBITDA, which is your earnings before interest, taxes, and depreciation. I like to buy in the range of 1-5 million. Bigger than that, it's just more competitive. I'm dealing with larger PE shops that have tons of dry powder looking to buy. Smaller than that, I would maybe less like close to the million dollar range I'd be looking at. The lowest is 500K. Less than that is very hard because, again, I need cash flows to sustain any potential debt service.

Tim Fitzpatrick
Got it. So a million to five million.

Pamela Miranda
In EBITDA. Yeah. And so what does that mean? I'm not looking necessarily for VARs. I would love it to be more of an IT service, with some VAR component being the minority part, and also strong recurring revenues. So at least 50 % recurring revenues, and that's easy. That's very standard for most MSPs. Almost nobody's doing breakfakes these days.

Tim Fitzpatrick
Yeah.

Pamela Miranda
So it's that. And what makes... Is there a niche? Is there something different about them?

Tim Fitzpatrick
Yeah. Is there a typical revenue, multiple range in the MSP space?

Pamela Miranda
In terms of valuation?

Tim Fitzpatrick
Yeah, in terms of valuation. Sorry.

Pamela Miranda
Yeah, so usually, I'll tell you the difference between a software valuation like a SaaS for business, like most of our vendors, versus a service business, which is what we do. So in software, our firm's valuation is based on revenue, and that can be from one to two times. Some public companies go much higher, but they all took a hit this year. For service businesses, it's an EBITDA multiple typically, and that can range from three to eight times. If you're in the 10 million and up range, it could be 10 times an up. But if I'm looking at a company of 10 million in EBITDA, the multiple is very high, but you know who's buying it? It's the large PE shops or large family offices or large strategics. I'm not in that space. I'm more in the lower mid-market, and that's why it's 1-5 million. If it's a tuck-in, it can be less than a million because it would go under, it would be merging with the existing company. But my goal is to just have a portfolio of great businesses in North America and have synergies at the top of the house. So we have one finance department, one accounting department, maybe one marketing team that can support all of the portfolio companies and one HR department. The stuff nobody wants to do. All the administrative headaches and keep the brand separate depending on the end verticals or end industries.

Tim Fitzpatrick
So on the smaller side, typically around 3X of EBITDA.

Pamela Miranda
Yeah, on the really small side. And that depends on, again, client concentration. So if you have higher concentration, the multiple takes a hit. If you're well diversified, then it's better. Also, is your end industry retail or is it oil and gas? Is it seasonal or is it government contracts? Are they long term or is it more sticky? Then those multiples tend to be higher because your client base is stronger and stickier?

Tim Fitzpatrick
Do you look at an average of EBITDA over a certain number of years, or is it just the prior year EBITDA?

Pamela Miranda
I always look at historicals because I need to know people could just bump up the number. I do my due diligence and all of that, but still people can be creative with numbers. I always look at the, What's the storytelling? Is it straight hockey stick? It doesn't have to be. If there was a dip, why was there a dip? Was it because of supply chain issues that we experienced last year? Was it maybe you lost a major client? Maybe they went bankrupt. What was it? I know that the healthcare industry is very strong, but they were all had massive multiples because of the COVID pandemic. So healthcare was higher demand, and I guess MSPs at service that were able to benefit from that. But is that sustainable? Is that realistically for the long term? So if not, I'd have to do an adjustment for that.

Tim Fitzpatrick
This is fantastic, Pamela. I want to pull a few things out because I think are super important that you touched on that I think some people might miss. And this is really for if you're thinking about eventually exiting and selling your business, Pamela, you just touched on some really key things. One, which I think a ton of people miss, is you cannot have any one client that is a significant portion of your business. Super risky for somebody to buy. I don't know what you look for specifically. I know one of my buddies is in construction management, and they're a large company. But he told me at one point, he's like, Look, our CFO looks no one client that's more than 10 % at most of top line revenue. I actually talked to a company that was buying other companies. This was before the pandemic, and they had just bought a company. I was shocked they actually bought it. One client was 80 % of their revenue. And I was like, that is mind boggling that you actually bought that business. They obviously saw something that I didn't.

Pamela Miranda
Yeah, maybe it came with the great people, great talent that they wanted, or do you have a graphic footprint? There's a reason, but they would have paid much less, right? Than a more diversified client.

Tim Fitzpatrick
Yeah. So if you want to maximize, you need to have a broad client mix. Yeah. Who you touched on was the management team. The way I think about it is like, if you're the owner and it is an owner-centric business, there is not a lot of value there. Like you said, if you pull the owner out, they're keeping the wheels on, they got all the relationships. That is a very risky thing for somebody that's buying a business. Contracts, longer-term contracts, recurring revenue, that's a really good thing. The other thing, and this is the reason I asked you about how they're valued, there's this balance where owners, a lot of times we want to make as much as possible. So we may not really be all that concerned about net profit and EBITDA. But the reality is if you want to maximize your sale price, you're going to have to start thinking about increasing your net income and EBITDA for a period of time prior to sale. Otherwise, you are not going to maximize the sale. Am I missing anything there?

Pamela Miranda
Yeah. And I say just focus primarily on EBITDA. Net income is after taxes and depreciation. But it's essentially… There's two ways of looking. I know a lot of MSPs that are owner operated, they're trying to pay as little tax as possible. They'll have massive expenses that their accountant recommends and their net income is very little. When I'm trying to reconcile your net income to EBITDA, I have to make adjustments to, okay, you did this for tax reasons, but what should have been the amount? If you're taking a massive bonus or a massive salary, that's not market, I have to adjust for that. Or sometimes you're underpaid and you take all the cash and dividends. Again, I'd have to adjust for that. I'd have to adjust for rent. If you own the building that you're renting from, a lot of times that happens where the owner owns the building and the business is renting, is your market value of rent lower or is it market? An adjustment needs to be made for that as well. It's really a combination of art and science that a lot of South Side advisors will help you on, but also they get paid on sale price. So I still have to make adjustments to their numbers as well, like what is reasonable, what makes sense.

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Investing In Marketing and Sales

Tim Fitzpatrick
I love it. So you bought Triella, you jumped in. Initially, you were spending very little on sales and marketing. That's increased significantly. You did a brand refresh and update. You've invested in trade shows, social media. Why did you choose to do this and what have you learned throughout that process?

Pamela Miranda
Well, first of all, there was no investment in marketing or sales at all prior to me acquiring Triella. Very, very little. We didn't do anything. And most of the business was through referrals, and it is today as well. We still get referrals, which is amazing. I love it. But in order to scale and be a national brand, which is what we want to be, I have to make it a recognizable brand, brand that today's consumer, which is the younger generation, they're very tech savvy. They're not going to necessarily respond to direct mail or necessarily trade shows, but it's what's the marketing content out there. The first thing people look at is your website. I'm still playing. I had different iterations of the website. I think I landed on something that works for now, but you constantly have to improve and constantly seek feedback. So that's one thing we did. The second was the logo refresh. It just needed an update. And LinkedIn is huge for us because our end clients are professional service firms. So these are law firms, accounting firms, professionals. They tend to be on LinkedIn. They're not going to be on Facebook. Not necessarily on Twitter or X. So LinkedIn is the main one, but we also use X. And it's honestly the same content. I just copy paste it, put it there. I would love to get, so my next phase of growth, I'd like to hire a marketing man or someone that handles the marketing for me. It's a lot of us doing it in-house. But I need to get like a young student or someone that really knows their stuff and enjoys it to just post content. And I think that's what most of us need to do. And I'm trying to do that. I know with the advancement of AI, it's making things easier, but marketing is everything because people are not going to make a decision. You're going to call someone, they're probably going to hang up on you or may be interested. They'll be like, send me an email, send me more information, and then they'll check out your website. They'll want to read all about you before they even decide to do an IT discovery call. I think that's key.

Tim Fitzpatrick
I'm biased, obviously, Pamela, but the way I think of marketing is whatever you're in the IT business, you're really in the marketing business first and foremost, and you're in the IT business second. Because if the marketing is not bringing in leads that are converting to sales, then what you're doing on the back end doesn't matter. And you're at this place where a lot of people get to where they want to continue to grow. They've grown through referrals. You hit a ceiling, right? It's not scalable. It's not predictable. You have to have a more comprehensive marketing engine if you really want to scale more predictably. Now, referrals should be an important part of that, right? It's not like you're just going to get that up, but you've got to have other lead gen sources that are bringing in leads. I think it's exciting to see that you're going down that path. Marketing is a process, right? It's a marathon, it's not a sprint, and we just need to keep doing it. And we constantly iterate, right? Most marketing fails, but we learn from those fails. We make adjustments, course correction, we just continually optimize. So I love that.

Pamela Miranda
And I think the biggest lesson for me, anyways, in marketing is I need to be patient because I want results right away. And that's not how people are. They take their time. They have a life. So it's constantly being in their face.

Tim Fitzpatrick
We all do, right? We all as humans were wired for the short term. Frankly, I think that's why a lot of business owners struggle with marketing is because they don't go into it with a realistic mindset that it is going to take time. Frankly, a lot of marketers don't help that because there's all kinds of promises of quick results. But the reality is in most cases, that's just not... It's not realistic. It's not going to happen. And a lot of people give up before they've given the tactics they're investing in the time to actually work. So thank you for bringing that up. You just threw the softball for me.

Investing in People and Business Processes

Tim Fitzpatrick

So since acquiring Triella, you touched on that you were your shift in more of an investment on the sales and marketing side. What other priorities have you been focusing on?

Pamela Miranda
The key ones are the people and the processes. So Traila had great processes, very good documentation, and to me to streamline that. We did a design, we did a whole process where we designed, okay, when someone calls in, what does that process look like? We didn't really have documentation, so we use visual and we did a whole diagram. I'm a very visual person. I need to see things and I need to see the process from the beginning to the end. And so we did that for the help desk team, for the server team, for projects, for all of that, that was key. And also to identify our staff. Who do we have that is willing to go with us to be on the ship and sail to where we want to get and who's not on board? And so whoever wasn't on board, we had to get rid of them because they were just not living up to expectations and they were impacting our client service, and we don't want that. I had to hire for the gap, so hire a new IT manager, create new roles, and constantly tweaking that. I'm constantly looking at my people, and that's something I underestimated because you have your idea, you have your vision, you think, Oh, yeah, it's going to go smoothly. But people are people, and some people have different skills. Some people oversell themselves and it's not until they do their job that you figure out, okay, what is their real strength and what's their weakness? That's a constant challenge that I'm facing with every day.

Tim Fitzpatrick
How many people do you have in the company at this point?

Pamela Miranda
Right now, we're 15, and I'm looking to add, yeah.

Tim Fitzpatrick
Are any of those people in-house marketing folks?

Pamela Miranda
No. So a lot of that has been me and our assistant. It's... Well, first of all, I love marketing, so I'm biased. I'd rather be doing marketing than a spreadsheet and financial finance. I love creativity. So one tool that we love, I love, love, love is Canva. We use the premium version. It's amazing. It's also one of the partners of the female. So that's been great and it's so easy to use. So we're using that and we also have different subscriptions to different content that we can tweak and adjust and tailor it to our clients.

Conclusion

Tim Fitzpatrick
Cool. I love it. So what's next? Where's your focus going to be moving forward?

Pamela Miranda
Well, moving forward, I definitely want to grow, get new clients. I just came back from Miami, so I would love to have an office in Miami. I joke about it, but I'm half-joking because it's where all the businesses are going to. It's very tax friendly, and so would love that in the near term. But also I'm looking at expanding our sales team to really nail that process down to acquire new businesses. I'm talking to different companies right now to either have a merger with Triella or have its own standing sister company. I'm always interested in those discussions into growing our portfolio at the My MSP, which is the holding company of Triella.

Tim Fitzpatrick
How many sales people do you have at.

Pamela Miranda
This point? I have three. So technically three. But that's not including our assistant, who helps us out a lot, and one of our VPs who helps us out as well.

Tim Fitzpatrick
Got it. Okay, cool. I love it. So knowing what you know now, anything you do differently?

Pamela Miranda
Yes, a lot. So for me, I come from a world where everyone's type A. So when you say you're doing something, you do it and you're driven, and you're not forcing people to do things. And so coming to this, my expectations had to be reset. Not everyone is like me, and that's okay. And not everyone has the same values as you, and not everyone has your back or the same interests as you. That's one thing I'd say I do differently is be careful who I trust and who I bring on to this. That's the one key thing is know who you are partnering with, know who you're bringing to the table, and don't be so trusting. Unfortunately, I wish everyone was wonderful and had strong integrity, but that's not the world we live in.

Tim Fitzpatrick
No, it's not. Pamela, this has been a fantastic conversation. I really appreciate you taking the time and sharing your experience. Where can people learn more about you if they want to connect?

Pamela Miranda
Yeah, definitely our website, Triella.com or my holding company, which is miiimsp.com or Miii, which is right there and scrolling. Happy to chat for any owners looking at a conversation on succession, what that would look like, happy to chat with them.

Tim Fitzpatrick
And hopefully, somebody pops up that wants to sell their MSP in Miami, right?

Pamela Miranda
That would be ideal. Yes, please.

Tim Fitzpatrick
Calling all MSPs in Miami. Reach out to Pamela. So ,Triella.com We'll make sure that both those links are in the show notes, but ,Triella.com And then miiiMSP.com. Pamela, thank you so much. I appreciate it. It was great chatting with you. You shared a ton of good stuff, and I love how you're coming into the MSP space from a different side of things. I think that uncovers some rocks that a lot of MSPs probably haven't turned over. So thank you for doing that. Those of you that are watching, listening, I appreciate you for doing that. We were talking a lot about what Pamela looks for in companies that she grows, what she's doing from a marketing standpoint. When we work with clients, we help them remove the nine revenue roadblocks that slow down growth. If you want to know which of the nine are slowing down your growth, go to RevenueRoadblockScorecard.com. You can also always connect with us over at Rialtomarketing.com. Be happy to chat with you. Book a Free Discovery Call there. Thank you again, Pamela. Appreciate it. Those watching and listening appreciate you. Until next time, take care.


Connect With Pamela Miranda


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About the author, Tim Fitzpatrick

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