Happy New Year and thank you for joining us in our first 2023 episode of Deal Talk with 7MA. In today’s episode, 7 Mile’s co-founders Leroy Davis, Andy Johnston, and Tripp Davis join Steve Sypek to reflect on the eventful period in the M&A world over the past couple years. They recount coming off a historic year in 2021, where M&A activity in the technology services space and the broader market was at all time highs. They discuss some challenges that 2022 introduced that they may not have expected heading into the year. They analyze the impact of geo-political events such as Russia’s attacks on Ukraine and the Fed sparking further caution as they aggressively drove interest rates higher following a prolonged period of near zero rates. Throughout the episode, they provide insight into how 7 Mile Advisors responded to these events and what they see on the horizon for the IT Services Industry in the M&A world.

💡 Featured on the Episode 💡

Name: Andy Johnston
What he does: Andy is a Partner and Co-founder of 7 Mile Advisors. He has advised on more than 50 business services and digital transformation transactions, including deals with Deloitte, Accenture, Valtech, and multiple private equity funds. He received his bachelor’s degree from Duke University and is a Certified CFA with the Chartered Financial Analyst Institute. Outside of work, Andy enjoys sailing, traveling, and spending time with his family.
Organization: 7 Mile Advisors
Connect: LinkedIn

Name: Leroy Davis
What he does: Leroy is a Partner and Co-founder of 7 Mile Advisors with 25 years of investment banking experience. He has managed transactions in the Technology, Consumer, Insurance, Healthcare & Infrastructure sectors. He began his career with Coopers & Lybrand and is a member of the AICPA. He received his bachelor’s degree from Hampden-Sydney College and his MBA from Wake Forest University.
Organization: 7 Mile Advisors
Connect: LinkedIn

Name: Tripp Davis 
What he does: Tripp is a Partner at 7 Mile Advisors with 20 years of investment banking and advisory experience. He joined 7 Mile Advisors from Hyde Park Capital Partners, where he served as head of the Business Services, Technology and Communications group while advising companies in a variety of industries on M&A and capital raising assignments. He received his bachelor’s degree from Hampden-Sydney College and Post-graduate studies at Florida State University.
Organization: 7 Mile Advisors
Connect: LinkedIn

Name: Steve Sypek
What he does: Steve is a Senior Vice President at 7 Mile Advisors with 9 years of international relationship management and business development experience. He previously worked for Wellington Management in Boston before moving to London to help grow their Global Wealth Management business, which included several successful Private Equity raises. He received his bachelor’s degree from Boston College. He is a CFA Charterholder with his CPA license in Massachusetts. Outside of work, Steve is an avid Boston Bruins fan who enjoys spending his time playing hockey and golf.
Organization: 7 Mile Advisors
Connect: LinkedIn 

⚡ Episode Insights ⚡

[01:48] The market’s improved resilience in turbulent times: Russia’s attack on Ukraine in 2022, had an impact on the market, the IT Services Industry, and the people of Eastern Europe. Leroy compares the market’s reaction from this event with the market’s reaction in the past with events such as Y2K and the financial crisis. Leroy emphasizes the market’s notably improved resilience and reaction to turbulence. 

[02:37] The firm’s continuing client success: Leroy discusses how even their clients with many resources in Ukraine and Eastern European have seen their revenue momentum has remarkably continued. 

[03:44] Private Equity and IT Services: Leroy discusses the trend of private equity becoming more interested in the IT Services industry over the past several years. He discusses the firm’s changes to recommit coverage and service to the private equity community.

[05:10] Effect on middle-market M&A: Disruptions from Covid exposed underinvestment in companies worldwide and particularly in technology efficiencies. The continued growth of these technologies has attracted private equity and strategic global buyers. The resulting competition has increased the volume of M&A in these assets and businesses. 

[06:56] The Fed raising interest rates and the impact on valuation: With the Fed aggressively raising interest rates, Tripp addresses the impact on public and private equities. He addresses some issues that could arise at the high end of the market without access to low cost debt to facilitate them. He lastly explains the reasons he believes that equities will still be given a good valuation. 

[09:18] Areas of technology services market that held up best last year: Leroy discusses the different tech service fields that were successful for the 7 Mile Advisors last year.

[10:54] Looking forward in the technology services M&A market: Andy discusses the change in buyers’ needs moving forward and predicts a shift in focus to the importance of EBITDA. He lists areas businesses should focus on and buyers will reward such as emerging technologies, recurring revenue, and the demand for expert service. 

[13:25] Future plans from 7 Mile Advisors: 7 Mile Advisors plans to continue professionalizing their approach to sector coverage and sponsor coverage in 2023. 7 Mile Advisors expects continued growth of the firm, continued growth of the customer base, and continued evolutionary effort of moving deeper into the portfolios of trusted private equity funds and the boardrooms of prospective clients. 

Connect with 7 Mile Advisors

☑️ For a custom valuation assessment using 7 Mile’s five pillars of strategic value, contact Lexi Papa at lexi@7mileadvisors.com.
☑️ Follow us on LinkedIn.
☑️ Subscribe to Deal Talk with 7MA on Apple Podcasts, Spotify, Google Podcasts, or anywhere you get your podcasts.
☑️ Let us know what topics you would like to hear about on Deal Talk with 7MA by emailing us at kathryn@7mileadvisors.com.

Deal Talk with 7MA, a podcast by 7 Mile Advisors that aims to give listeners a look behind the curtain of the middle-market Mergers & Acquisitions world. 7 Mile Advisors is a middle-market M&A firm based out of Charlotte, NC, that provides investment banking services and advice on mergers, acquisitions, and private capital transactions around the globe.