Join us this week on "Shoot the Moon" as we explore Project Maya, an outsourcing powerhouse in the Philippines, diving into its success secrets and the vast opportunities in global outsourcing markets. Discover how this firm's strategic approach to application support and client service is setting new industry standards.
In this week's episode of "Shoot the Moon," hosts Mike Harvath, Ryan Barnett, and Matt Lockhart delve into a significant and exciting acquisition opportunity—Project Maya. The episode centers around the opportunity to acquire a specialized Philippine-based outsourcing firm renowned for its application support across various enterprise applications like ServiceNow, SAP, and Microsoft, among others. The firm, codenamed Project Maya, stands out with its $11 million revenue run rate and robust EBITDA profit margins, backed by a strong team of over 300 members delivering exceptional service, which has enabled it to secure notable global multinationals as clients.
The crew dives into not only the highlights of Project Maya's efficient operational model and its strategic market positioning but also explores the broader implications and opportunities of outsourcing in the Philippines—a premier destination known for its excellent English proficiency, cultural affinity with the West, and exceptional customer service standards. The discussion transitions into strategic insights on how companies can leverage such opportunities to enhance global service delivery and optimize cost efficiencies.
To learn more about Project Maya, click here.
Mike Harvath 00:06
Hello and welcome to this week's Shoot the Moon podcast broadcasting live from Revenue Rocket world headquarters in Bloomington, Minnesota. Revenue Rocket is the world's premier growth strategy and M&A advisor to tech enabled services firms. With me today are my partners, Ryan Barnett, and Mattt Lockhart. Welcome, gentlemen.
Matt Lockhart 00:27
Welcome, welcome. Very exciting time of the year here in Minnesota guys, because we have a we've got a professional sports franchise that is ready to make a deep run into the playoffs with our Minnesota Timberwolves. And so for all of you out there who are laughing right now, at the concept of a Minnesota professional team making a run, let's just see what happens here. So we're fired up, also fired up about our topic today, Ryan?
Ryan Barnett 01:02
Yes, it's a good one. And that's something that's near and dear to our heart, oftentimes, I'll actually I'll back up a little bit. You know, we're career advisors for IT services companies. And we spend our time working with tech enabled services business with mergers and acquisition out. And oftentimes, that is helping companies buy other companies or and sometimes it's taking a company into market and getting them in front of a potential investors. And one of the things we don't do a ton is actually talk about some of the mandates, as we call them, that we're working on. And wanted to give a little bit of an insight and one of the mandates we're we're working on now, that is on what we call our sell side, we're helping a company find a suitor for and I kinda find this next home. So for us, this is project Maya, and anyone who's listening to this podcast today, I'd love for you to take away that this is what a this firm is doing a lot of things right. And, and it's a really interesting firm and a really interesting opportunity. So if you're looking to buy a firm, listen to the to some of the things that this firm is doing. And if you're ever looking to sell your firm, understand this is a bit of what goes through the process and how it firm may go to market. So really exciting topic again, Project Maya, and we'll just get that started. Matt, you're the sponsor of this program, help us understand a little bit more about what this project might do. What are they? Oh, yeah, sure.
Matt Lockhart 02:35
And it's a bit of a unique one, which, which is why we thought that taken some time and, um, Shoot the Moon made sense. So project Maya is a Philippine based outsourcing firm for primarily for sort of application support. And, you know, broad span of an enterprise application focus, you know, think ServiceNow I Fs, SAP, Microsoft, et cetera, et cetera. And as as I talk about the capabilities of of project my I sort of conveyed, that it goes up the sort of maturity and complexity level of of application support, right, from being able to do trouble, ticketing related to the infrastructure, productivity or anything related to the environment, you know, up into deeper level application support related to the breadth of some of these enterprise applications, you know, including the implementation support, customization support, etc, etc. So, that's sort of the primary capability project, my again is based in the Philippines. It is over 300 You know, team members in the Philippines directly providing service to clients, about an $11 million top line, run rate organization, healthy profitability for for an outsourcer and then above 10%, you know, EBITDA profit margins. So, they have been around for over a decade. And, you know, some of the highlights is that they've got, you know, some real brand name enterprise customers, you know, think global multinationals which is great and through their excellent customer service and super high customer satisfaction, should have been able to have, you know, sort of year over year repeat relationships, you know, with, with a really strong customer base. And then conversely, and this is kind of one of the more important things, you know, and for for anybody thinking about a, an offshore destination, they do great by their people, and, and they've got much lower than average attrition rates with their people, which just, you know, it really speaks well, to building that sort of core team, but then also having great work and interesting work and, you know, super interesting client relationships. So, that's the sort of the generality, if you will, of Project Maya, you know, super interesting opportunity. I know, we'll talk more about the Philippines. But, you know, that capability around support of, you know, what you think of as top tier applications, is, is a really strong capability. You know, one thing to note, Ryan, before we move on is that this is a carve out of a, you know, subsidiary of a wholly owned subsidiary of a privately held us business. So there's some unique nature in that, that I know we'll talk about a little bit as well. So kind of general overview what I missed, Ryan?
Ryan Barnett 06:40
I think that's, that's a great, great setup. Because to pare it back, when I heard by you've got a company that it's grown to about 11 million in revenue, and it's profitable about 1.3 million and EBITDA. And that's been consistent. So this is something that's not new, but something that over time is built. And it's successful. And in order to do that, you have to have a really something we talked about a lot, a strong set of repeat customers, a strong set of delivery mechanisms and strong set of processes that allow you to be really, really good in this field. And then project my as he has done that has done this really well. Matt, you mentioned a carve out, we don't see a ton of carve outs. But when we're representing a company on the buy side, sometimes these are fantastic opportunities as that the company may have built a really interesting niche, but that they may have changed our focus over time, and there's opportunities for both the buyer and sellers to consider. So tell me a little bit more, you know, why would a company look to carve out an offering, and what's in what benefits might that give to a buyer? Let's look at that transaction.
Matt Lockhart 07:59
I think there's a variety of reasons, I think that, in general, when you see carve outs, it is that there is a an entity that is, you know, standalone, if you will, that truly isn't the in the strategic focus of the parent firm that is looking to carve that out. So, you know, sort of a recognition that while it's a really good business, and it's a profitable business, and it's, it's providing value to the bottom line and value to the end customers, it really truly isn't in line with the core strategy or core focus from the parent, more often than not, that is the, that's the situation and some carve outs can be quite honestly, it can be a little messy, right. And situations where there's, you know, sort of a lot of cross services across different businesses or business lines. You know, oftentimes you may see that in, you know, in a larger publicly held organization. And it can be, you know, can be a little bit challenging to view the carve out as a standalone entity in this case, it's it's not is it's very clean. There really is not a whole there isn't there really isn't crossover between this business and, and the parents, others other businesses and so, you know, that's a good thing. You know, why did Why do parents do that, again, focus on other areas, you know, raise capital for the focus in it in other areas and, and et cetera, et cetera. I think that You know, when you think of what the opportunity is beyond just the, the great capability and, and, you know, a super established destination in the Philippines, it can be a boost, if you will. And I think that's the case with Project Maya were by having a bit of renewed focus by having a new partner, if you will, in an acquiring organization. I think that that is, that can be a little bit of a rebirth, if you will, and and good springtime, right? Good springtime thinking about, you know, the opportunity for the team members and the employees. In addition, you know, the potential acquirers have an opportunity to gain some, you know, again, really top brand customers, and see the opportunity to sell other services and or other product and cross sell into a new customer base. So it I think, is a unique and clean and interesting opportunity in this carve out scenario.
Ryan Barnett 11:13
Yeah, I think one of the things that project Maya did smartly, they did audited financials, for this business unit. And so when, when the company was set up, and the divisions were set up, I think they kept us to a point where they were able to look at the look and manage that division of the company separately. And then that allows, allows you to have better access on who you're gonna work with, it helps your financial control and allows you to do something like this in a clean manner. And then it kept, there's no sharing of employees between the headquarters and the division. And sometimes you see that quite a bit of intermix, and there's something I think, quite smart here is that the, what you see is what you're gonna get from the from the divisions. And, to your point, sometimes I carve out really is fresh air, I think that's one of the opportunities when we see a project, like Project Maya here where there's such you can, that's a new client base for a potential buyer to take a look at. And the opportunities to really dive in spend a lot more time with that customer understand the opportunities for cross sell, and upsell. You mentioned these marquee clients and those blue chip type customers that are producing stable revenue. In this case, I think they're producing almost $2 billion of IT spend. And so that's really exciting, or IT services spend. So it's exciting for a company to see this and say, Okay, how do I get deeper into that base? How do I get into a customer base? That's really smart? And how do I bring some attention that the employees will like the customers will like and be able to continue upon a growth path with a strong stable base? I think that's great, I think to carve out can be very, when it's done like this, it can be done. Done. Right. Let's switch gears a little bit. Man, you've done some work in the Philippines. And this is this project bias is based in the Philippines, their customers are in the United States in Europe, primarily. But the actual delivery is done in the Philippines, what's unique about the Philippines and in why do companies build technology practices, they're
Matt Lockhart 13:37
Sure. Well, it's actually one of the premier destinations for outsourcing and has become so in layout probably over the last decade or so, you know, that the start really came through call center operations and and it was you know, sort of very well recognized as a destination for call center operations and and you know, through you know, public private partnership, there was a real recognition that this could be a significant economic boon to the Philippines as well as as a means for sort of raising the overall standard of living quite honestly in the Philippines by adopt adopting and celebrating the Philippines as a destination for for outsourcing. So again, you know, started with that, that sort of old call center dedicated call center function. And you know, I think some of the reasons why one I know it because I've experienced it quite honestly, is it because I, I bought a firm in the Philippines and and grew that firm as our offshore destination and in a previous life and, and what we recognized is sort of three primary differentiators that as offshore destination, you know, sort of non English as a, as a first language destination. English skills in the Philippines are second to none of all, you know, sort of offshore destinations. And it's not even close. They start teaching English in at the earliest schooling, so we're talking literally kindergarten first grade. And they're very consistent with it. And, you know, so there's, there's just a foundation of education of English speaking skills. That is also then supported by it's almost like this competitive desire for professionals in the Philippines to work on their dialects and, and continue to work so that they sound and it's hard to differentiate, if you will, between English as a first language and not. So that is a that's a clear differentiator. We know that communication is absolutely key, you know, when working in a distributed work environment, and that's absolutely critical. And it's not just communication or the ability to speak well, but it's the ability to understand and that kind of leads to the second point is, is there's there's a cultural affinity between the Philippines and, and their destinations that they serve in, in some ways the us more than any other because of the US involvement in the Philippines, but but not just the US, sort of all to all Western countries. And part of the way that you see that is is there to super strong Catholic country, again, you know, some from some of the historical census. And so, there is just this deep cultural affinity with the firms that they are serving and the countries that they are serving. And then and then sort of the last and this is softer, and, and harder to measure, but but I've certainly experienced it, is you just get a higher level of customer service. And I'm not quite sure why it is. But there is just a desire to serve, and do a great job for the people that the Filipinos are working with. And so it is an absolute premiere destination, it is a winner that will enable any firm to you know, keep a super high bar for customer satisfaction, and customer service. You know, beyond that, obviously, it is all the other benefits that many other locations have certainly labor arbitrage capabilities. And, and the like.
Ryan Barnett 18:28
And I think that's, that's a great summary and Project Maya that did such a nice job of incorporating to that into a right size, good profitable business. And they they're able to employ people and keep those employees for a long time. They've trained and they've been able to utilize the infrastructure that the Philippines is built with the axis to call it the quality candidate. So I think it's a great opportunity for people considering this. And this is actually if you are considering even considering offshoring at all this is an opportunity to engage in in a profitable manner that allows you to to work in some really high value areas, like cybersecurity, like ERP applications, like machine learning and artificial intelligence and robotic process optimization automation. So I think that's a it's a great, great area to the end. If I was to think about this and talk to the people that were don't look like this, what are some unique things that project Maya brings to market Why would a buyer really be excited about this opportunity? Matt?
Matt Lockhart 19:50
Well, certainly beyond the opportunity to have a great team in the Philippines I mean, I think that is you know, let's let's highlight that as a as a The opportunity and, and the firm is has established and taken advantage of some of the economic benefits and that are in place, you know, for those that have looked at the, at the Philippines before, specifically the PISA benefits and, and the like. And then beyond that, again, I think that you've got this breadth of capability across these, you know, Premier applications, in addition to sort of the foundational support related to cyber and, you know, infrastructure support, and, and et cetera, et cetera. So you've got a good breadth, and then you also have a good depth, moving up into, you know, from higher skill level down into more support related skills. So, you know, comprehensive capabilities, breadth of capabilities, in in really one of the best destinations that you could find where you're going to be able to benefit from the Labor arbitrage capability. So, it is, and, you know, and then beyond that, I mean, you know, for those out there that, that maybe don't have a presence in the Philippines today, you know, it can be a right size by where you can get in with a good base, right, good number of people and then grow from there. You know, in some other cases, you know, if you've got a destination in the Philippines, you're just growing scale, and then broadening out, you know, capability. And, and then let's not forget, always good to pick up some enterprise top tier brands that you can build upon and continue to serve and, and gain some gain some wallet share.
Ryan Barnett 21:57
Yeah, that's a great summary. Matt, Mike, is you've been listening along here. There's a few things I know that I picked up on the that feels like there's a few plays from the revenue rocket playbook at work here. One is a specialization in the ability for company to be working in high, high caliber markets. And I think, if you're listening to this podcast, as someone who's who's in IT services that they learn from that specialization. Yeah, we didn't talk a lot about here. But there's there's some market expertise. So within the energy related markets within kind of laboratories, project, Maya is built to base and understand those markets very well. And then ultimately, they've been able to productize their offerings. Mike, is there anything else you've heard in kind of the revenue rocket playbook that other sellers can learn from?
Mike Harvath 22:52
Well, certainly, as you think about the world becoming much more global, in and opportunity to deliver globally, and take advantage of leveling out, if you will, on labor costs, I think this is a great opportunity for that with very skilled technical workforce. And I think as the cost of delivery, will continue to ultimately go down, I think, as more globalization occurs, and tools like AI and ML get more embedded in the work that we do in that world of IT services, having an ability to bring more talent, to the table at one is a, you know, maybe a more cost effective price point than other markets in the world, we'll be super critical on it, and some you can argue is going to be a requirement for your ability to be successful long term. You know, so the globalization of delivery, which has been going on for a long time, gets further accelerated and required, I think, as an ML model embedded into the work that we do, and IT consulting and, and tech enabled services. So this is a great way to step into that market with, As Matt mentioned, really good clients, and we can add to your portfolio of good clients for opportunity to cross sell and upsell. And, you know, we think this would be a great add on for all kinds of services companies that are looking for this, this type of opportunity.
Ryan Barnett 24:38
One thing I'd note too and that just anyone listening to this while I admire the company for having the resolve to focus on a core business. And sometimes when you're doing strategy, it's choosing what you're not going to do and For the parent company of project Maya to, to actually have resolved to say, Okay, this is a great asset, it's money and make it as profitable. But it's not, in my future to make that decision is something that is smart for the company. And I think there's gonna be a lucky buyer here who's out there who's going to be able to have an asset here, that is incredibly profitable. And they're, it's, it's profitable, it's got great customers, great repeat business, all the hallmarks of a great business in itself. So I think that's something to consider. Matt, if someone's interested in this opportunity, what's what's the process look like? And what could someone do to be engaged?
Matt Lockhart 25:46
Yeah, well, let's talk. You know, make inquiry, you know, I hope that you are on our distribution, direct distribution list already. If not, you need to be, but, you know, just get in touch with us. Revenue rocket, and we'll start out with a conversation, we'll talk a little bit more about the opportunity and the color, some of the color behind it and, you know, quote, unquote, get to know each other, if you will. But then obviously, you know, we've got a detailed, confidential information, memorandum detailed financials, we'll get in touch, you know, we'll put people together with the, you know, the ownership team and the executive management team from project my end. And, and yeah, let's, get going this, this isn't going to be around for long.
Ryan Barnett 26:46
Absolutely. If you want more information, you also have revenue rocket.com/project-maya, we'll make sure that's in the show notes. And, and if this is something that you're interested in, please reach out. And also, if this is a business, if you sound like a business like this, let's talk this is a, there's a lot of opportunities in the marketplace today. That are, it's a great time to to see what suitors are there. There's a ton of interest on projects. This project itself has got a great deal of interest. And we're seeing a lot of activity in this space right here today. Matt, Mike, thank you so much for being here. Today. I'll turn it back to matter any closing thoughts? And then over to Mike for for closing?
Matt Lockhart 27:29
No, we appreciate it. We appreciate you guys listening in. Hopefully this is helpful for understanding the broader context for some of the things that we look at with our clients as we're bringing them to market and and then distinctly a great opportunity with with Project Maya, and
Mike Harvath 27:50
Mike. All right. With that will tie rimonabant like we do every week here at the shoot the moon podcast once we get done. Big thanks to our loyal listeners that are tuning in every week. We know there's lots of you out there. If you have any topics that you'd like us to cover part of this weekly podcast that we do, feel free to send them to us at info at revenue rocket.com We wish you a great day and week and we look forward to you tune in next week. Thanks a lot