Ross Silverstein: An “Intentional Entrepreneur”

Ross Silverstein is one of the most intentional entrepreneurs we have ever met. He was willing to risk it all several times to become an entrepreneur and run his own show.  Self-made with a humble upbringing and unshakeable confidence, Ross wove an unusual path to becoming one of the dominant business leaders in the promotional products industry.

Ross grew up in Massachusetts and went to Boston College where he excelled and graduated in three years. He immediately enrolled in Boston University Law School and MIT Sloan School of Management creating his own combo JD/MBA years before it became fashionable.  Post graduation, Ross joined Goodwin Procter as an attorney and married his wife, Amy, and they looked forward to starting a family. After 5 years, Ross was approached by a client (RE/MAX Integra) about joining them full time. Ross was excited about the opportunity and thought very highly of the successful founder. Ross went home to discuss with Amy who was pregnant with their first child. While this was obviously a risky move, leaving a budding legal career to start over in a new company, Amy agreed that Ross should go for it and they would figure it out together.

Ross had a great seven-year tenure with RE/MAX Integra where he acted as general counsel and Executive Vice President, helping expand the largest residential real estate brokerage franchise system in parts of the U.S., Canada, Europe, and the Middle East. Ross found the RE/MAX franchisee model compelling and had been on the lookout for another industry that could use such a transformative model. When Ross discovered the promotional products distribution business, it checked off all the boxes he had been looking for. It was a large, growing, extremely fragmented market and the supply chain was complicated. There were no dominant players and Ross sensed that there could be a role for a new type of company.

Ross brought up the idea to Amy that he wanted to branch out on his own and start a new company. Like clock-work, this time Amy was due with their fourth child, but still agreed with Ross for another bold career move. Ross founded iPROMOTEu.com (iPROMOTEu) in August of 1999 and hired Rick Badiner, a long-time promotional products industry veteran as employee number two. The first years were quite challenging after the dot-com bust, but what eventually emerged was an industry disruptive business model: iPROMOTEu would support independent distributors through an affiliate model. iPROMOTEu centralized the functions that needed scale such as vendor relationships, order processing, invoicing, technology systems and order financing — but left the selling to the local independent distributors. This affiliate model allowed small independent distributors to outsource all their back office functions so they could focus on selling, and realize greater efficiencies.

By the end of 2017, Ross had built a network of over 600 independent distributors utilizing iPROMOTEu as their Business Process Outsourcing (BPO) order entry and back-office support; the combined network’s sales approached $200 million annually. iPROMOTEu was growing rapidly and was recognized as one of the top 10 promotional products distributor organizations in North America.

 

 

Bigelow was introduced to Ross in January 2018 by one of Ross’s longtime advisors. Ross and his board concluded that it was a good time to find a new investor that could provide liquidity to over 20 individual investors that had invested in the business over the previous fifteen years. Furthermore, private equity investors had recently become active in the space, and Ross and his team wanted access to capital and resources to better compete for acquisitions.

While Ross had been courted by the so called “industry expert” M&A advisors for years, Bigelow was asked to provide advice on how to unlock the Company’s value. Ross wanted to remain the CEO and keep a significant ownership stake, so finding the right partner was critical beyond just the economics.

Ross and the board chose Bigelow as iPROMOTEu’s exclusive M+A Advisor because Bigelow had several unique positioning themes. Bigelow repositioned iPROMOTEu away from a promotional products distributor to a technology-enabled business process outsourcing partner with an affiliate network. With excellent recurring revenue from 600+ independent affiliates representing over 100,000 unique orders annually, the business model was consistent and predictable. The only real question was how to optimize the operating leverage, technology investments, and growth trajectory. Bigelow was hired to proactively find the right next investor.

Bigelow thought that the Company’s strong business model, proprietary technology, historic growth pattern, and deep management team would be highly attractive to many potential investors. However, there was quite a bit of necessary preparation to have those conversations go smoothly. Could Bigelow restate iPROMOTEu with GAAP financials? Should we get validation about the market opportunity? Can the management team create a compelling five-year plan? How do we prepare the management team for eventual meetings with potential investors and not have this just be the “Ross” show? Could Bigelow find an owner that would match Ross and his team’s enthusiasm for the business? Would a new partner be able to bring capabilities, strategic advice, and capital?

Bigelow recommended, and the Company agreed to perform, a Quality of Earnings Report from RSM (a nationally recognized accounting firm) as well as a market study from STAX (a leading consulting firm) to validate the Company’s markets and competitive position. Bigelow challenged the industry status quo to properly align iPROMOTEu’s high-margin financial performance and high-value technology platform.  Armed with strong financial foundation and market intelligence, a thoughtful growth plan was constructed by the management team and stress tested by Bigelow.

Bigelow approached a wide range of investors both strategic and private equity. As anticipated, the strategic acquirers did not see obvious paths to improve the business and couldn’t provide Ross an opportunity to remain an owner of the business. Interestingly, private equity firms that had strong experiences with tech-enabled business process outsourcing businesses saw the most value. These groups were very keen on iPROMOTEu’s proprietary technology, along with the evolving business model and transformative nature of the affiliate model. The true believers understood how iPROMOTEu was leveling the playing field for the benefit of small, local, independent distributors.

Ross and the management team had numerous meetings to explore potential partnerships. Ultimately, Ross and the board chose to invite Align Capital Partners to become the new institutional investor in iPROMOTEu. Align Capital Partners has an excellent history of supporting growing businesses, and their partners and investment professionals resonated exceptionally well with Ross and the management team. The individual investors that supported the Company over the previous 15 years were able to receive a good return on their investments. iPROMOTEu found a new partner that could provide strategic insights on scaling the operations, technology, and organization while having additional “dry-powder” if the right acquisition presented itself. Ross continued as the CEO and the entire management team remained to execute on their more aggressive growth plan.

Ross’ career path may have looked risky to an outsider at any one point along his journey, but his intentions, unwavering dedication, and entrepreneurial spirit allowed him to build a transformative new business model in a well-established industry.