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Business Observer Friday, Jan. 24, 2020 4 months ago

Shop for growth: Firm assembles formidable lineup of subsidiaries

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An e-learning company uses acquisitions — 10 in two years — to fuel organic development of its stable of offerings. The process is more complex than just cutting a check.
by: Brian Hartz Tampa Bay Editor

Quick, name a company that directly sells to clients in architecture, engineering, construction, industrial manufacturing, facilities management, public safety, casinos, IT and education.

Still thinking about it?

That’s OK. It’s not easy. The answer is Tampa-based Vector Solutions, parent firm of a stable of online training brands. 

Under the leadership of former CEO and now chairman Jeff Gordon, a veteran of Syniverse, another Tampa-based tech firm, Vector has quietly mastered the art of going horizontal, extending its range of Software-as-a-Service e-learning solutions to a kaleidoscope of industries, in both the public and private sectors. Gordon had been CEO through the end of 2019, and was succeeded Jan. 1 by Marc Scheipe, who joined the firm in 2017 and had been COO.

The results of the Gordon-led strategy, combined with some timely and shrewd acquisitions, has positioned the company to surpass $100 million in gross revenue this year, officials say. The firm declines to disclose specific revenue figures from past years but says sales grew by 16% between 2017 and 2018 and by 28% between 2018 and 2019. It has 460 employees, 194 based in Tampa. 

Golden Gate Capital, a San Francisco-based private equity firm, acquired Vector in November 2018. That's provided a base of capital for the acquisitions, of which, dating back to 2017, Vector has made 10.

“What we’re trying to do is find high-quality businesses that closely align with our mission and then integrate them and standardize our go-to-market model and our service-delivery model,” Gordon says. “We just want to take good businesses and make them better.”

Overall, Vector is probably best known for its TargetSolutions subsidiary, a training and performance management platform used by some 30,000 firefighting organizations across the country and worldwide.

“We serve heroes every day,” Gordon, 59, says of the company’s long-standing dedication to firefighters, first responders and law enforcement personnel. “We've expanded our reach to where we're serving well in excess of 40% of all the professional firefighting organizations in the country, including a huge number in Florida.”

Vector has managed to substantially grow TargetSolutions’ market share despite a decline in volunteer-based firefighting organizations. Generational change, Gordon says, has led to increased professionalization of firefighting because fewer young people want to follow in their parents’ footsteps as volunteer firefighters.

“As generations advance, the interest has continued to slowly decline,” Gordon says. “And as it declines, professional firefighting organizations have picked up that responsibility.”

However, fewer volunteer firefighters means their professional brethren need to be better trained, more knowledgeable, more efficient and more adaptable — and that’s where Vector fits in.

ADDITION AND EXPANSION

Going beyond TargetSolutions, CFO Scott Rosenberg, who joined Vector in mid-September, says the company can afford to be aggressive with acquisitions because of how far in advance it plans them. So what might look to an outsider like a flurry of M&A activity is, in reality, a carefully orchestrated progression.

“It really comes down to having your integration vision and your integration strategy identified before you acquire the company,” Rosenberg says. “If you start thinking about integration after you buy [a company], you're late to the game, and it usually doesn't go well. And by not going well, I mean it takes longer than it needs to, and the opportunity to unlock value takes longer.”

The integration process is also helped by the fact that many of the acquired firms do business in complementary markets. For example, when it snapped up Grants Pass, Ore.-based CrewSense earlier this year, Vector gained access to that company’s scheduling software for mission-critical organizations, like the firefighting agencies that Vector already serves.

“If you start thinking about integration after you buy [a company], you're late to the game and it usually doesn't go well.” Scott Rosenberg, CFO of Vector Solutions

The organizational management platform pioneered by CrewSense, Gordon explains, ensures properly credentialed staff members are scheduled to work the correct shifts. For liability reasons, a municipality wouldn’t want paramedics who lacked hazardous materials certification to be involved in a call that would expose them to that kind of situation.

“By integrating that, for example, with our platform that supports first responders, you tighten up the risk window,” he says. “What we're trying to do is surround all of this knowledge with software.”

STAY SAFE

But inorganic growth can only take you so far.

“We try to balance both organic and inorganic growth,” Gordon says. “One thing you don't want to do in business is you don't want to buy all your growth just to cover up the fact that your core businesses aren’t growing right.”

One way Vector has grown its core business, Gordon says, is to expand its value proposition. Training and certification for individuals, for instance, has always been Vector’s bread and butter — it offers some 9,000 online courses and 31,000 credentials — but it has augmented its offerings with more macro-level material related to risk mitigation, safety and compliance, operational readiness and organizational efficiency.

“That’s really helped us grow the business organically across all our divisions,” Gordon says.

Vector’s SafeSchools subsidiary, which offers a safety training suite for K-12 schools, has been one of the biggest beneficiaries of the company’s push for organic growth, growing from a $10 million enterprise in 2017 to well over $30 million today. Through a combination of employee training, incident tracking and tip reporting, the SafeSchools platform can save school districts hundreds of thousands of dollars in insurance claims.

To offer a sense of how popular SafeSchools has been, Gordon says about 6,000 of the nation’s 15,000 public school districts use it. The brand has been so successful with public school districts that private and faith-based schools are taking note, as well. “We’ve even sold a few to summer camps,” Gordon says. “We see tremendous growth in the education sector.”

Higher education, too, has been fertile ground for Vector. Modeled on SafeSchools, the company’s SafeColleges brand offers additional safety management courses and services tailored to colleges and universities, where research often involves the use of potentially dangerous equipment and chemicals. Also, as Gordon is quick to point out, the material is put together by highly trained subject matter experts, not amateurs and hobbyists. And that costs money.

“These are not the kinds of things you could go and learn by watching a YouTube video,” Gordon says. “You can’t go watch YouTube and become a certified engineer, or a certified paramedic.”

MAN ON A MISSION

Rosenberg, 56, moved to Tampa earlier this year without a job offer. He says he and his wife wanted to make their way to Florida before they hit retirement age. A recruiter introduced him to Vector Solutions, and he began to research the company.

Vector’s “mission-based” business model proved resonant, says Rosenberg, who previously worked in Atlanta as CFO of Kabbage, a tech firm that specializes in lending to small businesses. He was drawn to working for Vector’s end users, the unsung American heroes who protect and educate people.

“Advancing the social integrity of our country — that’s very powerful,” Rosenberg says.

Rosenberg is also keenly aware he’s joining Vector at a critical time. Not only does he have an important role to play in the financial integration of the firm’s inorganic growth, but from an operational standpoint, he aspires to help make the acquisitions’ individual strengths part of a greater, seamless whole that will maximize their value to the parent company.

And sometimes, he says, that process means taking a look in the mirror and asking yourself if an acquired company had been doing something better than the parent.

“It takes a little bit of wisdom, and it also takes a little bit of checking your ego at the door and just saying, ‘You know what, we don't know everything,’” Rosenberg says. “Part of the value proposition in a lot of acquisition opportunities is you're acquiring not only a product or access to a market or a certain clientele, but you're also acquiring capabilities. And as part of that, you do need to be honest about how that fits and what you can do to migrate, collectively, to a better kind of level of performance.”

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