#HRTechChat Explores isolved’s Acquisition of AAP

This past summer, isolved acquired AAP, an administrative services organization (ASO) and significant member of isolved’s large network of similar companies using isolved’s software-as-a-service solution for human capital management to carry out part or all of HR for their clients. Demonstrating why AAP is an especially good match for the vendor, this in-network acquisition underscores several of isolved’s strengths. Joining me on the video podcast to explain were Andy Osborne, who was CEO of AAP for 20 years, and Lina Tonk, who has been with isolved for many years herself, becoming the organization’s chief marketing officer shortly after her previous appearance on #HRTechChat.

This acquisition of AAP reflects an important element of isolved’s growth strategy. Bringing members of this network fully under the isolved brand is typically smooth and straightforward for these ASOs, professional employer organizations (PEOs), payroll service bureaus, and similar providers. Already using isolved’s solution, they see business tending to continue as usual, and easily, for their clients. In the process, isolved grows in a highly sustainable way.

In recent years isolved has built a wraparound ecosystem designed to cultivate this network. Firsthand, I’ve witnessed extra-exemplary ASOs and PEOs et al. from this network receive public recognition at isolved’s annual user conference. As for AAP, infusing its culture into isolved’s proved intuitive, a natural step benefiting from the strength of relationships between leaders at both organization.

“Andy and I go way back,” Lina said. “From the moment they deployed the isolved platform, I remember thinking, ‘They will be such a good fit for us. And, when he made the decision to move into an acquisition with us, we knew that he had checked every single box to ask, ‘Are my customers going to be okay? Is my team going to be okay?’ They built such a strong culture for their customers that, as we transfer them through, you can see it; you can live and breathe it.”

Lina’s words make lots of sense as you hear Andy speak of looking past just the paycheck. “We see through the paycheck. We look past the electronic file. We try to take into consideration every day, what we did that impacted the person behind what was printed on the check or what was in an electronic file. We want to understand the impact if we didn’t get our job right. If we missed the child support or the direct deposit, you know that those things are key. That is the culture that we built.”

The story of AAP’s relationship with isolved is a powerful anecdote speaking not only to the cultural fit between the two, but also the usability and capability of the vendor’s cloud software for HCM.

“We started reviewing the software options that were out there in 2014,” Andy said. “The platform that we were on at the time was not meeting client demand. It was not evolving and developing at the speed that the market required.” In 2016, AAP made the selection to move to the isolved platform, “which checked all the boxes for all of the things that we needed.” So superior was isolved for AAP’s needs that, just to be sure, Andy asked his team to re-analyze all the isolved competitors that AAP had considered. “After two reviews of everybody else, isolved still came out as the clear front runner.”

Incidentally, one of those needs stemmed from Andy’s decision early in his tenure as CEO at AAP to target quick-service restaurants (QSRs), a vertical market that eventually accounted for approximately 65 percent of AAP’s client base. This aligns with goals at isolved, which targets QSRs, too, with a solution especially well-tailored for their challenges in HCM.

As usual, the blog entry captures only a sliver of the depth of thought and conversation on display on the #HRTechChat video podcast. Do yourselves a favor and watch this episode, a very deep dive into what it takes to make an acquisition of this kind successful.

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Brent Skinner 00:00
Well, hello, everyone, and welcome tot this latest episode of the HRTechChat video podcast. And today I have with me two very interesting. Guests, Lina Tonk, who is Chief Marketing Officer of isolved, which is a new role for you since last time you were on the podcast, Lina, congratulations. Yeah, absolutely, absolutely. And also we have Andy Osborne, who is former CEO of AAP, which is an organization that isolved acquired earlier this year. Welcome, Andy. Thank you. Yeah, absolutely. And in our discussion today is going to be around that acquisition, what AAP which is now part of isolved, what it does, what the rationale was behind the acquisition, and, and a bunch of other really interesting things around acquisitions, like culture fit and these sorts of things. And so really looking forward to that. So maybe we can start with you. Andy, would you please describe what AAP now which is now part of isolved of what the business model is?

Andrew Osborn 01:17
Yeah, Brent, thanks for the introduction. Our business model was built over a 28 year period, I joined the organization just over 20 years ago. And we were very similar to a lot of other service bureaus, Certified Partner type organizations around the country were many of the decision makers that we worked with many of our clients were within probably a 3040 mile radius of our home office, I came from a very different background, I looked at things in a very different way. And I decided to take a gap in the direction of specific targeted markets. And we focused in the quick service restaurant vertical, we started that focus just over 20 years ago. And that built to probably around 65%, of our total client base was in a quick service restaurant market.

Brent Skinner 02:06
Oh, interesting. That’s really great. When did AAP start using the ISIL? Platform, does it when did that? How did that sort of come to pass because I understand that that that occurred quite a quite a bit before the acquisition by isolved.

Andrew Osborn 02:25
Yesterday, we, we started reviewing the software options that were out there probably in 2014, by about that point. And the platform that we were on currently was not meeting client demand. It was not evolving and developing at the speed that the market required. And you can only push development of a software platform from the position we were in as soon as period so much. So we had to start looking, it became more complicated for us to close opportunities, sales pipelines, were starting to back up, because we had difficulty meeting the need with the product offering that was available at the time. So we started looking around late 2014 got really serious to the end of 15. And then in 16, we made the selection to move to the isolved platform. Now I’m

Brent Skinner 03:13
just curious, what was it exactly about I solved that? That sort of was attractive to you.

Andrew Osborn 03:23
In the analysis that we did, I solve checked all the boxes for all of the things that we needed. And all of the deficiencies that our current platform at that time prior platform did not have. In fact, it checked all the boxes so much we I made my team when we did the analysis of the other competitors, I made them go back through their presentations, an additional time to make sure that we were giving them the you know, the best assessment of their capability compared to what Eisav was, and after two reviews of everybody else. Eisav still came out as the clear front runner.

Brent Skinner 04:02
Oh, that’s a glowing endorsement. That’s wonderful. Yeah, yeah. So how did the acquisition come about? What are the benefits that it brought to AAP and, and what’s you know, your role now that AAP is part of isolved?

Andrew Osborn 04:18
That’s a great question. The aquas it, we never moved to the ice off platform to to consider selling our business to ISIL. We moved to the isolved platform initially, because if the solution met all of the needs that we needed for our client base and to this day, it still does, it still does. We never came across a situation where there was a client need that the software could not fulfill. We had such tremendous success with the Eisav platform as a company that when we joined them, I remember them saying they wanted to build a product that customers would seek out to use the very, very bold statement. And I can confidently say after almost seven years on our platform, customers did seek out the Eisav platform, they sought out companies that were using that platform like AEP, and they came to us because of the technology solution that we were using. They also told us at the time, that they wanted to provide a pathway for people like me and others around the country who, you know, need a succession plan. You know, building a business is one thing growing and sustaining and developing it as another bid, finding an exit strategy that meets the needs of your clients, is critical for me, in our mantra was your people matter to us, that’s what made us different. We lived and breathed that every day. So you can’t say your people matter to us if you don’t actually deliver on there. So where you, where you send those customers to when you decide to exit this business, this industry is almost as important as how you started. And ISO provided a pathway for AAP to exit very seamlessly, and have a an excellent customer experience, you know, many months after the acquisition is complete with with high levels of customer satisfaction. And hardly, there’s no background noise that I’m aware of. I’m not getting any calls.

Brent Skinner 06:28
Well, that’s great. That’s great. Yeah, sounds like a very sort of smooth transition, which is what you were looking for. And that’s one of the many benefits that isolved brought to the table is beyond the fact that it’s, you know, a comprehensive solution for the customers. Lina, what’s it been like working with Andrew, since he became part of the isolved family officially are acquired? I understand that his role now is very evangelistic for isolved

Lina M. Tonk 06:58
Yeah, so I think he answered touching on a couple of them. And I can’t call me manager, I call him Andy, so that this just sounds weird to me. Sometimes. I you know, there’s just so many things that he said that I can touch on, obviously, number one was a testimonial for us to, to always have bad behind the scenes and in front of us on the experience that he had as a business owner, on being able to have this acquisition, but everything that we did along the way for it, but we go way back. And that’s the reason, you know, Andy and I, from the moment they joined the isolved, you know, the eyes a platform, I remember the early days with his team. And I actually remember him telling me that story, when they were through the, through the chair and a process of looking into who and I remember thinking, Oh, my God, they will be such a good fit for us, like they will be such a good fit to have on their network. But all along, when you look at a business owner, you know, this is what they have built in all along the way he and he was so proud of what he had done for his customers for his team, that when he made the decision of moving into an acquisition, we knew that he had checked every single box and that acquisition model to knowing are my customers are going to be okay. Is my team is going is my team going to be okay? What has been very similar to ours has been the fact that he built such a strong culture. They build such a strong culture for their customers, that as we transfer customers through you could see it you can live and breathe it. We have our roadshows that we go on all year round, and we invited some of our AP customers to it once the timing was right. And I haven’t spoken to customers like this. And you know, in an acquisition period, they have proud they felt of a p, but how excited they were to be now part of the ISIL family because the AAP team rally around that. So you know, it was almost like we used to call it a match made in heaven when we heard about the AIP acquisition because we do live and breathe our culture from the inside out. But I believe they did too. So that when they came in, it was all in for the customers like how do we take care of them? How do we lead our culture? And how do we take care of her of his employees? So then one of the greatest ones I always say the more you do acquisitions that are better you get at it, but this one was a very, very special, I think for all of us.

Brent Skinner 09:49
Yeah, yeah. Yeah, I think so too. And you know, just hearing you describe the culture of a pea in knowing what I know about the culture at isolved. It’s a That sounds like a really, really good alignment, there might be an understatement. How does Lena, the acquisition of AAP fit into isolved long term strategies acquisition or strategy because I know there’s something there and wanted to give you an opportunity to kind of share with our viewers how that fits into the bigger picture.

Lina M. Tonk 10:23
Yeah, so when you look at the network, it is such a beautiful model to be able to be bringing in an acquisition on customers that haven’t already on eyes that people cloud, but that business owners like Andy actually come in and have done a big part of the lift up the work with customers, you know, training them, bringing them into the platform, building a strong culture. So when you look at the model of acquisitions into our eyes of network, it makes more than sense, it’s very similar to us. You know, we grow our customer base, through that acquisition, but also, it is such a tremendous opportunity for us to be able to, and I’ve heard Andy said this, to me before is for us to have that opportunity for this customers that have been so well taken care of. But now they’re part of something that is able to provide them even more. So why additional things as a customer, are they taking such good care of me, I’ve grown along with a P, for example, I heard this from a customer at the roadshow in Charleston. So he said to me, I’ve grown, I’ve grown my business with a P, they’ve taken such good care of me. And now I’m learning of additional things that I actually could be doing, as I continue to think of growth ahead. So it’s a beautiful model, because it’s easier for us to just bring in those customers that have been already in people cloud, but how beautiful is it that we are able to bring in even more opportunity for them as they continue to grow, expand or, you know, of how they want to do things or automate the processes as they move along? So it’s an beautiful, the whole acquisition model, it cannot be more seamless to us.

Brent Skinner 12:26
Yeah, that’s really interesting. And, you know, I agree, I think you said it’s, this might have been the word you use this inelegant model, but that’s the word I’m gonna use anyway. It’s, it’s an it’s, what I’m noticing is it is a quite enough efficient. But I think a better word for is it is an intuitive way for isolved to grow as well. Bringing on customers and Nast users, excuse me, users in the US who are already on the on the solution through these great cultural fit acquisitions. To me, that makes a lot of sense. This question is for Andy and Lena, I guess both of you. What was the dynamic when a company like AAP works, becomes a part of isolved? Is there something maybe a little bit more to that dynamic that we haven’t touched on yet? Is it like, how does maybe there isn’t? I’m thinking sort of operationally, maybe I’m answering my own question. Maybe we’ve answered it already. But How do things change for I guess, the user base that was formerly AP versus now isolved? How does that change for them? Or? Or Is there really no, no real discernible change?

Lina M. Tonk 13:46
However, and the answer from his perspective,

Andrew Osborn 13:51
I mean, that there’s going to be changed. And the changes are positive change. I mean, in terms of familiarity with the platform, how they log in, how their employees log in, how they interact with the technology, that unless they’re really, really paying attention and look really closely in the corner of the screen. They won’t notice any difference at all. The real the real difference is the fact that we were like a scout ship. For isolved. We were out there roaming the Galaxy doing our thing. I’m a Trekkie, apologist do it and doing it well. But you know, we came back we came home and we docked with the mothership, and the mothership has much more available to us and to and to what my clients were, you know, the resources, the technology, the support, the infrastructure, you know, ultimately independent companies like ours, no matter how hard you try, you if if you’ve got a good sales model, we had a great sales model. We outgrew our operational ability to support it. Labor Markets are tight. We work hard for three years to find the right labor in a tight labor market. And ultimately, when you have significant opportunity, they’re lining up to join, you know, the team. And, and you can’t support it, then it’s foolish Annette. And so for me, it’s an improved enhanced experience for the customer base. Is it for the former AAP employees? Is it something new for them to learn? Yes, it is. Because they’re very familiar with isolved as a technology, but they have to become familiar with isolved as a company. But that’s, that’s understandable. But for the for the clients, they only get to see an enhancement, in my view, and I’ve had significant amount of feedback from my clients, I’ve known them for a long time telling us that we put them in a good home, that they are aware of things that they weren’t aware of before, even though we could take that person and say, Hey, we told you, you know, about this product or service, we you know, you its size does matter when it when it comes to your ability to deliver a very, very calm, comprehensive solution across a large client base when you only have 4748 employees, which is what AAP had. And hence that was the reason for the marriage. The reason for the merger, and I have no regrets over it whatsoever.

Brent Skinner 16:31
Yeah, yeah, that’s great. Thank you for sort of adding that color to this in context. And I remember, I should have mentioned earlier on in the podcast here that we all had a conversation offline back at connection. I solve connections back in was it early September, it seems it feels like forever ago and also last week, it’s crazy. event of I know, we had this conversation. And I think Andy, you, you shared something that that struck me and maybe you could just reshare it here for us just but how what’s the word? I think that that your user base, their user base at AP was very, very. They were eager to do the transition, there was not there was there was sort of a sign off process that you described, I think, and it was very, very smooth, maybe you could just go into that a little bit more.

Andrew Osborn 17:31
Yeah, it’s like, everything we did a he was almost like a healthy competition, you know, we wanted to deliver for the customer. I spoke back in September about how we see through the paycheck, how we look past the electronic file, we try to take into consideration every day, what we did impacted the person behind the what was printed on the cheque or what was in an electronic file, understanding the impact to them if we didn’t get our job, right. If we missed the child support or a direct deposit, you know that those things are key and, and that was the culture that we built. So when we announced that this merger was going to occur, obviously, there was the initial shock, surprise, but then it was one of excitement and anticipation. And without when we when we migrated to the isolved platform, we did, we had some very creative people who created the Time Square ball. And we created it in such a way that as we migrated clients, the ball would fall down the pole just like it doesn’t New Year’s. And when we migrated the last client, you know, it would set off in some pyrotechnic way, which we won’t tell the fire marshal about that. But it was very, very successful. And we achieved our goal. We migrated to the platform almost two years ahead of schedule. So when we were Yeah, so when we were transitioning to Eisav, we sat about in exactly the same way, you know, the decision was made, everybody was on board with that decision, you know, and if they weren’t, they did a very good job of hiding it. But we set about and they created another piece of artwork, which was slightly less dangerous. And it was a really cool poster board with pictures of everybody from the company across the 20 years. And they come up with that picture with a post it note, a teeny post it note for every single client that we had, and they peeled them off one by one as we migrated to uncover what was behind what we’d achieved as a company. And when we took off the last post, you know, we had a great many laughs looking at all the things that we’d achieved but at the same time, we’d also achieved something else we’d migrated our whole client base in record time, not because we would Desperate to do it, it’s because that’s the way we approach business, we’re in the service industry, we provide a service, people don’t tell you when you’re doing it, well, they tell you when you’re not doing it well. So we liked our clients being quiet because it meant we were doing it well. So our migration that I saw was handled in the exact same fashion, we turned it into a healthy competition, because people wanted to know what was under those post it notes, and the only way to see was to migrate those migrate those clients successfully.

Brent Skinner 20:29
You know, what I love about that is it’s, it’s also pays really close attention makes every single client important. So it’s a competition, and yet everyone is important. And it occurred to me while you were describing that, you know, in terms of preserving and advocating for a strong culture, you know, there’s, there’s sort of the sort of the umbrella stuff that you do, but a lot of it is, is one to one, it’s just paying attention to each and every single, you know, whether it’s customer or employee or whatever. And that’s what I love about that story. It just kind of really, it really illustrates it for me, Lina, just thinking about this in terms of, you know, in the future, as I saw, it brings on more players like, like AAP what, what kind of what kind of processes and or sort of best practices do you have in place or philosophy you have in place, just to kind of helped ensure that that can be replicated?

Lina M. Tonk 21:33
Yeah. So I think I mentioned this earlier is, the more we do it, the better we get at it, I think, early on, we learned that we needed to embrace customers a lot sooner than we did. The, when you mentioned the word users. You know, I always kind of like, stand up when it comes to m&a. It’s very common for everyone to, to speak of them as users. And we learn this very early on, like, we have to be thinking of them as our own customers. So I might not be talking to AP customers every day before the acquisition, but the things that I innovate or I provide, or I develop, or that I will provide to partner like AP to provide to their customers, I have to think of them as if they were our customer. So I think that’s so important, as we do more of them like think of our all our customers, our as our own customers as we build things ahead for them. But more importantly to embrace them is the culture here. You wish talked about this on several podcasts together is how do we build how do we build a strong culture that is not an outside culture inside culture is the same from the inside out. And to be able to provide the feel the disrupt them around the eyes from very early on to our new customers is absolutely critical. I know that from a PDS specifically, I think I shared this when I was connected with the two of you. The Day The acquisition was announced, I happened to be Bitcoin incidence, of course, ziplining with one of the AP customers. In he mentioned, you know, I had an ISIL shirt, and he said, You work for us all. And I saw justifier AP, I’m like, Oh my gosh, this happened today this morning. And he said, Yes, I got my email. And then we got on talking on. He had no reservation on normally a customer will be like, Well, I don’t know what’s gonna happen. And the more we talked, the more I realized, like they’ve been with their arms around them for a really long time. How do we make them feel that way? So I think the secret sauce is what the more you do it, the more you’ll do better. But the early on that you wrapped her arms around those customers and communicate with them. It’s absolutely critical, but the secret sauce. And I think we found that with a P the secret sauce was the transition that AP gave us as a company to access the customers. So the way Andy rally around us rally around our team here at isolved. They of course, with the same way they take on any competition, when we were going through the transaction and transferring customers over. They were exceeding every single deadline. So we were able to access customers a lot sooner than we would have for any other acquisition. So the secret sauce to me was that an APK Was that is the closer the owner and the team at ADP work with us and we work with them to provide ease to them and each other, then the easier it gets for customers along the way and for the future of those customers.

Brent Skinner 25:16
Yeah, yeah, that’s, that’s, that sounds like it just went really, really smoothly and, and it sounds just like a wonderful process that you put together. Andy, do you have anything to add there?

Andrew Osborn 25:31
I mean, leave it Lina put it extremely well, I mean, the way the way I looked at it, as I gave my farewell speech to my staff into a lot of the clients that I’d become actually friends with over the years was, you know, it was like, it’s like raising a child, you get their child through grade school, you get them through college, and then, and then they go off into the world. And the only differences is, this child’s not technically coming back to visit, but, but I’m going to know where that child is, because that child’s going to be out there in the Eisav. World, and I’m going to be following very closely to see the continued success of ice off because they’ve been unbelievably successful in the time that I’ve been on the platform. And my company was unbelievably successful as a result of being on the ice off platform. So I see no reason why that success won’t continue. So whilst the child may not come back to visit, I’m going to be able to see what they’re doing and how well they’re doing in the future. And I’m excited about that. That’s

Lina M. Tonk 26:36
analogy, that’s so good.

Brent Skinner 26:38
I like it too. It really, really kind of like, brings to fore, you know, the, the importance of, of, of customers, you know, to get isn’t it is useful to think of them as, as, as children in a way in terms of, you know, how you how you care for them, or, or how you value them. Yeah, so I love that. I love that. Any anything else that that either of you would like to share that maybe we haven’t maybe touched on yet, this has been a wonderful conversation.

Andrew Osborn 27:12
I mean, I can add that, excuse me, you know, I sold her, they have their eyes and ears open as well. So they don’t, they don’t just think that their way is the best way they are prepared to listen, you know, they’ve taken some suggestion from a P from my team, and from myself. And they have built a dedicated vertical in the quick service restaurant space, which I’m super excited about. So I will still get to check in on my child from time to time by assisting when needed, you know, the isolved team with regards to how we built the quick service restaurant model at AP and how we can scale that and replicate it and improve it within the Eisav network. And that’s super exciting for me.

Brent Skinner 28:01
Yeah, Lina, anything, anything else?

Lina M. Tonk 28:05
I think for me to close it up is probably just the end. Wow. Like, what we’ve done with the transition and the acquisition is, it’s a great, a great True Love Story of acquisition is the way I call it, the it, it probably had a lot to do with the connections you had with ISIL how we build relationships, while how many of us became friends along the way. But it is it’s something that we’re very grateful for, I think we’ve learned so much through your acquisition. And a lot of times we think that we learn only from, like, the mistakes or the challenges, but in this case, we also learn from, you know, how strong relationships can bring you to the finish line so much faster. And this was a really long story of acquisition for ISIL some something we’re very, very thankful for.

Brent Skinner 29:03
Yeah, sorry, I interrupted you. But yeah, I mean, this is has become readily apparent on this conversation just how well this went and really, you know, a sort of an unofficial case study even on how to do this kind of an acquisition it was a wish the best to you to both your the organization’s now emerged obviously. And, and, and I’d love to just learn a little bit more as it continues to evolve thing. Thank you both for joining us on the podcast. Really appreciate it.

Lina M. Tonk 29:41
Thank you for having us.

Andrew Osborn 29:43
Thank you so much. I appreciate the opportunity.

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