In this special episode of the Greg Albert Podcast, Rinalds Sluckis, the CEO of Digital Mind, discussed the acquisition of EIP Dynamics and its strategic implications.
The conversation shed light on the reasoning behind the decision, the unique qualities of EIP Dynamics, the challenges faced during the negotiation process, and the future prospects for the company. This podcast delves into the details of the discussion, providing a comprehensive analysis of the acquisition and its significance in the Central and Eastern European markets.
Timestamps:
00:00:00 Highlights
00:01:55 The Decision-Making Process Behind Acquisitions
00:04:24 The Unique Qualities of EIP Dynamics
00:06:55 Building a Regional Champion
00:08:02 Navigating the Negotiation Process
00:10:34 Managing Team Dynamics During Transition
00:12:25 Building Trust and Communication
00:14:58 Embracing Change and Growth
00:17:06 Learning Through Unique Experiences
00:19:02 The Importance of R&D in a Competitive Market
00:21:16 Crafting Solutions for Mid-Market Clients
00:23:01 Envisioning a Bright Future for the Team
00:25:18 The Influence of Sports on Business Leadership
00:27:00 Insights from the Swedish Institute Management Program
00:28:22 Valuable Lessons from Business Books
00:30:21 Final Thoughts
Transcript:
Greg Albrecht: Today, in this special episode of Greg Albert Podcast, we will have a conversation about an acquisition of EIP Dynamics by Digital Mind. My guest now is Rinalds Sluckis. Hello.
Rinalds Sluckis: Good morning, Greg.
Greg Albrecht: Great to meet you. You have decided to acquire EIP Dynamics, a company based originally in Poland. What was the reasoning behind the decision of that kind?
Rinalds Sluckis: I’ll start a few steps back. In 2020, when we as a company decided to go into the Microsoft Dynamics application business, we made the first acquisition. It was a company called Alna Business in Lithuania with a small operation also in Poland. We were successful in acquiring and then integrating the company into our group. And then it was the next question, okay, what’s next? What’s the next market?
We obviously saw the big potential here in Poland. And then when working on our investment thesis, on our hypothesis about what a successful acquisition could look like, we were looking at first the market, market conditions, number two, the company mechanics, and number three, the team at the company. So since we’ve decided and saw what big potential Poland has here in our region, because we had already some presence, we are looking at the right company and the right team. And when we met with Paweł (Paweł Prasuła) and back then with Bogusia (Bogusia Igielska) and Marta (Marta Osiak), we understood the mechanics of the company are right. But what we were most impressed with was the team, people who like to work together.
That’s very important, right? People who truly care for their clients and people that we believe we can build a great business together. So for us, that decision about going into this transaction, going into this acquisition was rather easy.
And then, you know, it took some time with Paweł (Paweł Prasuła) to negotiate, but now we are here. So Poland has the largest and strongest economy here in our region and our strategy for a company is to continue with further acquisitions here in Central and Eastern Europe. Because the companies in this line of business, Microsoft Business Applications, are still a lot of standalone and independent companies. The market is not consolidated. And together with our investor, the private equity company from Baltics, this is part of our strategy hypothesis that we want to grow through further acquisitions, but then add value to acquired companies, including them in a larger group and also growing them organically.
Greg Albrecht: What was so special about this company or what did other companies that you analyzed, did not have that you decided to choose EIP Dynamics? You mentioned the team, the mechanics of the company, and also the stage of growth, but I assume as you said, the market is very fragmented, so there are a lot of potential targets or at least not two, but more like probably 50 in the area. And from that perspective, what was the reason you think that that’s the first target after you acquired Alna Polska as part of Alna?
Rinalds Sluckis: You know, there is a mix of an opportunity and also a mix of the team quality.
So with opportunity, we are obviously working on multiple targets at the same time. And you know how it is in this business. So one year the company or the owners are not really ready to move, the next year yes. So number one I think we met with Paweł (Paweł Prasuła, CEO EIP S.A.) at the right time so he was considering and selling and finding an appropriate investor for the company he has built to lead the future and we were in the mood in the right position to do this next acquisition we were ready for that, and the opportunity was there. But what is most important, you know, the company was already when we acquired it the right size. So over 100 people with very strong local business here, but also a large part of revenue and business coming from outside of Poland. And for us, you know, coming from a smaller region like the Baltics, you can’t build a really serious and sustainable business only by focusing on the local market. And we saw that the qualities here in EIP Dynamics, they’re professionals, experts, and they know how to sell and serve customers also outside of their own country.
And this was one of the, let’s say, qualities and skills that we wanted to acquire and also learn from. And now part of our strategy that we have redesigned and defined for a larger group is exiting strategically outside of our region, Baltics and Poland, by acquiring customers in Germany, the UK, so neighboring countries, but then being able to serve them with a combination of mixed team from teams here in Poland and Latvia and Lithuania.
So people who are willing and able to serve customers internationally, language perspective, travel, and so on. I believe we are working on providing them with this unique opportunity. Not everyone is excited about that. That’s not for everyone, but there is certainly a group of consultants, developers, and professionals in this area who are excited about this opportunity. And I believe by combining the previous experience of EIP Dynamics to find these customers externally and be able to serve, combining that with the management systems and process that we are implementing, we will be able to succeed and we’ll be able truly to get out of the region and become this, you know, regional champion in enterprise applications, getting also export money from other European countries.
Greg Albrecht: I wish you this and I’m quite certain that it’s going to happen with this level of commitment that you have. So good luck with that. Coming back to the process, was there something within the negotiation process or a moment that you remember right now that’s something that surprised you in a way?
Rinalds Sluckis: Paweł (Paweł Prasuła) is a good negotiator. He knows how to manage the expectations or push the pressure of the expectations or the process. But other than that you know, it went all in line as an average process could go like. So due diligence, then you have some findings that you discuss to understand more. And then for the selling side, obviously they know and live with the company for years. Those findings that we from outside are seeing are not as relevant and questionable as for us right so then we go into conversation we understand it more than we see okay so there are no risks everything was actually in line and you know we could have already closed the deal last year but uh since we are um now being backed by the private equity baltic’s company so we needed to get regulatory approval from the baltic states so It was a bit of a pressure time also, I believe, for the power when we signed the deal in December, but we were able only to close, you know, in February. So those 2 months, this was a bit of a limbo time.
So everybody is understanding. So the deal has happened and we’ll finally get there. the teams still work independently, but already with the announcement and with the information that this will be one company. So Alna Poland will be merged and is merged now into EIP Dynamics, right? So it was a bit of, I guess, emotionally harder time those two months, January, and February, until we got this approval and then finally closed the deal. And my appreciation goes out to the teams here and the management and also the whole team for being able to sustain these two months and being able to work this in a really uncertain situation, this limbo situation until we were able to finally make this one company.
Greg Albrecht: Yeah, I can imagine that for every team member, there is always this fear of what’s going to happen next and what is going to be the strategy and who’s really pulling the strings. In fact, in those two months when you’re neither on the one side nor on the other, you’re sitting on the fence and people are kind of a little bit hesitant about their future. So I can imagine that this was a critical moment for everybody to manage the integrity of the teams. But what was the most important practice or who do you think contributed the most in that moment that you kept people in the right mood, in the right mindset to survive these two months.
Rinalds Sluckis: You know our team work. So we have a strong management team there in Lithuania who were contributing a lot to supporting the Alna Business Poland team here while we were waiting on this closing transaction. And then at the EIP side, I believe still Paweł (Paweł Prasuła) and Bogusia (Bogusia Igielska) were truly supporting.
Then Marta (Marta Osiak) and Rafał Barnowski and the rest of the leadership team to manage the expectations, that’s number one, and then get through this process because I believe during this such transition period, so setting the right expectations and managing the expectations, that’s the hardest part.
Obviously, there are things that are changing and will be changing, you know. Now, as a part of a larger structure, larger organization, we are unifying the management systems, the IT systems, processes, and so on. There are changes at the organization, but, you know, having the ability to discuss those and maybe navigate the expectations, that’s the most important part. And I believe with the EIP Dynamics, Paweł (Paweł Prasuła) and Bogusia (Bogusia Igielska) helped definitely a lot to set the right mindset.
Greg Albrecht: I’m sure you also had to have a strong will and a lot of energy to withstand this transition period because in a way you were trying to protect the asset that you have just acquired and the largest part of this asset, honestly, is probably the team. And then people have their emotions, their challenges, their perspectives, their own story that happens in their minds. And then this can lead to some issues. So I assume that from the acquirer’s perspective, it was also a challenge to mentally deal with this feeling of uncertainty in this transition period.
Rinalds Sluckis: You know, what we were trying to do is to start building the relationships with at least the leadership team already from last year when we started, you know, with due diligence and so on, you know, assessing and understanding people. trying to get more into this trusting mode right and we obviously still are working on this and learning about each other so with every iteration with every meeting that we have we learn something new about each other right but the main idea is that um Also during this transition, so December, January, February, we were in a pretty intense contact discussing some of the future changes and systems that should be there. Because obviously before the closing, we weren’t able to do much to change something. So the company still hasn’t been acquired fully, right?
But it is a time where you basically have to communicate and, you know, these old cliches that there is not such a thing as too much communication and so on is really hitting the rubber then when you are in this kind of period. So communicating and explaining and being ready that there will be misinterpretations. You can give a message three times and either way, three people will definitely understand it completely differently to each of them. So it is the situation. So just be patient, and be stubborn. And then if you are starting on the starting line of a marathon, you understand. So you will have to make 42 hard kilometers and only then there is a finish. So it will not end quickly.
Greg Albrecht: So you guys are already running together using this metaphor. So the whole, let’s say, a short period of uncertainty is behind you. And now the integration has started. You’ve already made some changes. What are the first outcomes or the first things that you feel the team has already achieved over the time since the acquisition?
Rinalds Sluckis: So, on many aspects, we already work based on the same processes, principles, and systems that are there in the whole group of the companies in all the four countries, all three Baltic states, and Poland.
But definitely what’s happening right now is the team is going through some process of, I would say, confusion. And I have full empathy for that and full understanding because like half a year ago it was one company here in Poland owned by one owner and run in a certain way how the company was run and now it has become a part of a larger group let’s say with the colleagues in other countries with the opportunity and possibilities to consult and involve also colleagues from other countries to do some things together And definitely, we are coming in with the idea how we want to build and develop the company further. And this requires structuring some more things. This requires paying attention to, for instance, ESG-related topics like risk management, employee well-being, and so on. And this brings more structure. And this is a learning path for people who have never done this before.
But I’m happy that we can have an honest and open conversation. And I’m trying to encourage more and more colleagues to be willing to ask questions and not be afraid of the changes. Because what I was saying in the very, very beginning to my team there in Riga when we just started this whole process of the journey of acquisitions is that what we are doing here is to some extent unique for the people who have never done this before. Because we are doing and learning at the same time. And I encourage to use this opportunity to learn how bigger companies are being built, and how some of the modern management systems are being built and run because we are all still young. We don’t know where we are going to be in like 10 years. But this experience that we can gather right now is definitely our asset that will not depreciate. It will only appreciate it. So let’s do this together. Let’s go together through some difficulties, some problems, and some issues during this journey but each of us individually the leadership team will be able to learn from this and benefit from this. So that’s my view about you know how I see why we are doing certain things and what can be the individual benefits for each of the leadership team people doing and going through the journey.
Greg Albrecht: I can empathize with that. I imagine that everybody wants to do the best they can, and that’s the principle. And when you have this awareness of this, then it’s way easier to appreciate the differences and then learn probably both ways, because there are some best practices that you can also inherit from this company, and then they can inherit something from the HQ, and you can all, in a way, blend the best practices together. But of course, this requires a lot of openness to change. And by design, we don’t want to change when we’ve operated in a way for 10 years and it worked. And it’s extremely difficult from a psychological perspective to change something that works because you really don’t want to change it. Well, obviously, this is a trap, a mental trap, because if you don’t change, you will become, you know, kind of a dinosaur. Yeah, obsolete. So that’s the emotional and mental paradox that’s probably part of the process and also internal negotiations on what is the best practice that we will finally agree on both sides to implement, right?
Rinalds Sluckis: So, you know, the pressure and changes coming actually from outside is one thing, the pace of innovation that the technology develops. Take, for instance, our core vendor or core partner, Microsoft, you know, the pace of innovation, various improvements in technology now especially with ai and so on is that big that non-individual company in let’s say smaller size can really adopt and absorb it so it requires certain size and a scale and company’s ability to invest money and also talent into following these innovations so therefore one of the one of strategic choices for us is clearly promoting the internal r d function that is based here in Warsaw at EIP Dynamics, but that’s R&D function for the whole group and a team at this R&D competence center. They are the ones who are then tasked now with absorbing the newest technology, how we can use all the, for instance, AI tools for improving our internal processes, you know, code development, review, testing, and so on, and sharing the knowledge. but then also what are the innovations that we can take in, build into our solutions, and then provide to our customers. And this is a solid investment, as you can imagine, right? And we believe that the companies who are on a smaller scale and so on, they simply can’t allow to do this or will allow to do this at a slower pace. So, therefore, the external pressure is already there. the way how the systems change and what are the requirements of the customers also change very quickly so therefore this change in the way you’ve been doing business for the last five to seven years comes from let’s say especially from my side that I see that you know if we want to be ready for the next three to five years is coming we need to start doing doing some things in a in a certain way. And it definitely creates pressure and creates a big stress on the organization. But that’s probably the only way to prepare for your next competition, right?
Greg Albrecht: Yeah, I get it. I wanted to ask you about the competitive advantage and the opportunities for the team and you somehow answered this already. that in order to be unique, you need to also design your own solutions, not only be a great salesman, right, to be able to sell and serve clients, but also to develop solutions that are in a way better or faster or, you know, more modern. This is where you can build a certain unfair advantage over the minor players which can be probably more swift and maybe have some other techniques of doing the sales that can work in certain contexts but in the end, the solutions for the biggest clients have to be based on the best technology and this is where you want to put the resources right.
Rinalds Sluckis: Yes, look, what we have defined in our strategy that we are focusing on, we have called so European mid-market clients.
So if you just take the pure technical definition, the mid-market is the client with between 10 to 750 million euro revenue a year. So this is where we see where we are strong, where we can best fit our knowledge, and competence to the customer needs. But even these customers are becoming more and more demanding in terms of more complexity in their business solutions.
The whole trend of moving to the cloud and the integration between cloud and on-premise systems, the trend of utilizing more data in filling in the decisions, and so on. So the demands are more complex, and the solutions become more complex. This complexity is something that requires a certain size and scale of the company, also the financial strengths and managerial capacity. So I believe it’s hard to imagine nowadays that a smaller company where all people are involved in doing projects, even the management and leadership can also develop as fast enough. So I still very strongly believe that there should be a management capacity that constantly thinks about what’s next. And there are teams that are developing and implementing projects and serving the customers that think about what’s today. This has to be split, but then again, requires resources, and requires a team.
Greg Albrecht: So what’s the future dream for the team? So how should they think about the future of the company and their opportunities if you were to draw a picture of the best ultimate outcome in the perspective of the next few years?
Rinalds Sluckis: Definitely a large and multi-country international team that is there. So getting out of the, I would say this proximity bias, but starting to understand that the team is not only the team here in Warsaw or Opole or Riga, Vilnius, but this is one large international team that is not serving only the local customers, but looking on the customers outside. So a team that is working in a modern company that is being managed by modern standards, modern management systems, and that is working with the vendor, in this case, Microsoft.
That is leading in this area. So combining all of this, I believe we can have unique projects and highly interesting and complex projects. And those are the elements that are motivating, I guess, dynamic and ambitious professionals. You know, if I would be able to. to kind of really sell in on and then deliver on this vision and the management team and the leadership team would be also uh then following this vision and dream I believe we can create an environment where true professionals can really realize themselves and grow professionally I believe for the engineers, for, you know, those more technical people and the solution-oriented people, the most dangerous thing when they start thinking about, you know, changing something in their life is when they see that they are stuck with their professional development, they cannot grow anymore and they are doing the same thing for the last, like, five years. That is the situation where they start thinking, okay, oh, is it the right place for me now? My goal and duty is to put a constant healthy stress on the organization in terms of changing, improving, and building the next things. But then through that being able to provide an interesting and exciting environment for people to work and develop their professional skills.
Greg Albrecht: You have been an athlete. You’re competing in an endurance sport, which is called triathlon. Tell me, how does that influence the way you run a business, make decisions, and withstand pressure?
Rinalds Sluckis: I guess there is a solid portion of stubbornness and ability to get through some of the problems and harder times. There is definitely a lot of discipline because, you know, sport teaches you that or the military service teaches you that. And it’s not like you can be good at everything. Your personal life and then miserable in business and then again, good in sports, and so on. I guess that’s a part of the personality that defines a person in whatever area in a person’s life, right?
So, and I guess if you have the discipline to get up at six o’clock, do your morning training and so on, be there in the office at nine o’clock and do the work. It creates structure, it defines you as a personality that is being then spread out in every area of life, and also people around you are kind of noticing this. Some of them are inspired by that, some of them are a bit frightened by your kind of ambition and in some form also kind of aggression and getting through and getting things done and not being, let’s say, modest in what you want to achieve, but really go full in. So, yeah, I believe that’s a very important part of my personality. And, you know, when I’m competing in triathlons, it’s some of the most lucky that I am in my life.
Greg Albrecht: We both graduated from the Swedish Institute Management Program. I would like to get your short first memory from the program that comes up to your mind and why do you think it’s valuable for people to participate?
Rinalds Sluckis: Probably the first thing is a great group of people. You meet their colleagues from all three Baltic states, Poland. Back then when we graduated, still Belarus and Ukraine. I’m not sure about what’s the combination and structure right now of the teams. During the program, there is a lot of discussion about sustainability and how to build the company, your leadership style, and the world around you in a more sustainable way. And that comes a lot from… the Swedish way of seeing what sustainability is right so maybe um you wouldn’t buy all the things at first but now over time you graduated in 16 I’m 17 and now over time i see a lot of valuable learnings from this program right that starts making a lot of sense so as with all of the education and training and so on I guess when you realize what you have read and heard is when you start doing and facing this practical in your life. And now what we are doing is building a larger organization, a sustainable organization. And then I see there is a lot of wisdom in those programs and in the courses that we’ve done together.
Greg Albrecht: What’s the one book that you find valuable if you look back that helped you a lot in business?
Rinalds Sluckis: It’s constantly like two or three books that I’m reading in parallel. You know, to look at one, maybe just the recent, you know, the Disney CEOs, Bob Iger’s autobiography, you find, you know, there’s a polished story about how he is this star CEO has developed a company and then built the business that Disney was at one time. But there are many elements there from his story, personal growth as a CEO, how he saw that with the growing company, how he should grow and change and also the team around him, how should grow and change and what his role was in growing the team. So I wouldn’t maybe cite one or two of the findings, but that was to some extent inspirational just to step out of My everyday and just to read and just to think about that, you know, we are not unique in what we are doing. The companies are being built like in thousands worldwide every day and companies appear and disappear and so on. That’s a constant cycle. But the problems that we are facing seem to be super unique because it’s the first time for us. But then if you have a chance to talk to mentors and coaches like yourself or to read a book or just to consult with other people who have been in these situations, suddenly this huge problem becomes apparent. rather solvable thing because you start looking at this from the other angle so therefore reading these I believe especially autobiographies, not this you know self-help books yeah thank you yeah so it is very very helpful so you have to have you know a bit of uh salt and pepper in this because obviously those autobiographies normally they are very polished and very very kind of you know very present but there are things that you can take away from that.
Greg Albrecht: Great. Rinalds, what would you like to add that I haven’t asked you about?
Rinalds Sluckis: Read more books and do more sports. That’s always, you know, when going home on Friday and wishing a nice weekend to the team there. That’s always what I’m saying. So do more sports, and read more books over the weekend. You will enjoy your weekend definitely.
Greg Albrecht: Great. Thank you very much for the conversation.
Rinalds Sluckis: Greg, it was my pleasure. Thank you. Thanks.
