How to Hire a CEO Without Losing Your Company

How to Hire a CEO Without Losing Your Company

“This is an excellent example of how a founder brought in a CEO to take his business to the next level,” states Sam Thompson, a Minneapolis business broker and president of  M&A firm Transitions In Business. “This story also explains the most important thing a M&A advisor does in representing you”

When we discover a vaccine or reliable treatment regime for COVID-19, there will inevitably be an unscrupulous gang of counterfeiters trying to make a quick buck by selling fake remedies.

Systech International could provide a defense against these crooked operators. Systech has developed technology that allows drug makers to create a unique bar code for each of their products, which stops counterfeiters from ripping them off. The technology is used by drug manufacturers and just about any company that needs to ensure its packaged products are safe and authentic.

In March of 2018, Ara Ohanian was brought into Systech as the CEO and tasked with creating some liquidity for its shareholders, which he did in January 2020, when Dover Corporation (NYSE: DOV) acquired them.

Ohanian described two big strategic moves he made, which should be in every value builder’s playbook:

  1. Build a moat: Upon joining Systech, Ohanian realized their point of differentiation had been melting away as the company focused its sales and marketing on how they helped drug makers serialize their bar codes. A lot of companies offer serialization, but very few have the digital anti-counterfeiting technology that Systech had developed. Ohanian realized customers bought from Systech because they helped ensure their products were Authentic, Safe and Connected. He mobilized the company away from talking about serialization and focused on using the acronym ASC in its marketing, which provided a more compelling competitive advantage.
  2. Find new markets: Systech got its start with pharmaceutical companies, but Ohanian realized that any company that dealt with counterfeiters could benefit from their proprietary technology. That insight led him to Markem-Imaje, a product label printer owned by Dover, his ultimate acquirer. By going after new growth markets, distribution channels and partnerships, Ohanian juiced the sales of Systech, but he also found a strategic partner that turned into an acquirer.

There are lots of gems in this interview, including:

  • How to hire a CEO for your company.
  • Why your CEO’s severance plan should be the opposite of a rank and file employee.
  • How to minimize strife between a founder and hired gun CEO.
  • A surprisingly simple analogy for a successful exit strategy.
  • The most important thing your M&A advisor does in representing you in a transaction.
  • How your valuation varies by product and service line.
  • Valuation benchmarks for hardware, software, consulting, licensing, maintenance and more.
  • The one personality trait which is Ohanian’s superpower.

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