In this article, Craig McAlister, Managing Director at The Alpha School system (TASS), shares his acquisition story. TASS is a School Information Systems (SIS) business serving the K-12 Independent and Catholic school market in Australia.
Are you considering retirement or moving on to a new venture? It’s time to think about exit and succession planning.
If you have a manager in mind that you want to take over the business, you may consider conducting a Management Buy-Out (MBO). This is when you sell your company to a manager or group of managers that work for you today. However, selling to an internal buyer isn’t always the best option – for seller or buyer.
Craig McAlister has been the Managing Director at TASS since 2002. In 2015, the company’s majority shareholders began exploring exit strategies. Shareholders considered selling to Craig and a fellow board member, but in the end, chose to sell the company to Volaris. Though Craig initially wanted to purchase the company himself, he tells me he is very pleased with the outcome.
“The sale to Volaris personally worked out very well for me. I’m now able to enjoy the rewards of leading TASS without the personal risk of debt, and I’ve become a more effective leader.”
— Craig McAlister, Managing Director, TASS
Q&A with TASS’ Managing Director
I spoke with Craig to understand why he believes the sale to Volaris was preferable to a Management Buyout. Here’s what he had to say.
Q: TASS’ shareholders initially offered you and a fellow board member the opportunity to buy the company. Why did the MBO end up not moving forward?
A: To start, I would say that I really wanted to buy the business, and I did just about everything I reasonably could to achieve that. The business was successful and had strong recurring revenue and profitability. But even with strong financials, the lenders I approached would only lend me the purchase price if the loan was fully secured – and this was not attainable for me.
TASS’ shareholders considered vendor financing, that is, to loan me the money, to enable the sale, but they heard some bad stories and started to see this option as too risky. After working so long in the business, they really wanted to ensure their invested capital was secured.
Q: How do you think the company would have fared under an MBO compared to how it is faring now?
A: If I had been able to buy the business, the company would not be in the same position it is now. The business is much stronger today because Volaris knew what to do with it.
Volaris’ leaders taught us how to make operational changes that have made a massive difference to our bottom line. I can honestly say we would not have thought of making these changes on our own. Best practices are also being absorbed and the business culture is in a better place than it has ever been.
Q: How have you personally been affected by the sale to Volaris?
A: The sale to Volaris personally worked out very well for me. I’m now able to enjoy the rewards of leading TASS without the personal risk of debt, and I’ve become a more effective leader. In addition to adopting Volaris’ corporate best practices, I’ve learned so much from other business leaders thanks to the sharing culture of the group.
Q: How has your role changed since the sale to Volaris?
A: In less than 4 years, my role has progressed from being the leader of TASS to that of a Group Leader overseeing multiple businesses across 3 countries.
A Transaction that Benefits All Stakeholders
At the end of the day, Volaris was the right acquirer for TASS’ shareholders, because we could deliver what mattered to them. Volaris was able to structure a transaction that allowed all of TASS’ shareholders to achieve their goals while sharing best practices that are helping Craig’s team continue growing the business.