This IT services business is boosting its profits thanks to an acquisition

“Our annual growth is typically around 13 to 15% because we always hire some new talent. But with the acquisition, we got 12 experts all at once who were already busy with their clients. Plus, with the two teams joining forces, we’re able to go after more business,” says Vicky Beaudoin, Vice-President and General Manager of Rhesus.

Rhesus management was well acquainted with the Québécom team prior to the acquisition.

“We’re part of the same professional body, Millenium Micro Group,” explains Beaudoin. “Québécom’s partner, Martin Brault, wanted to stay on, but not alone. He told us that he admired Rhesus for its growth, that he liked our corporate culture, and that he’d always dreamed of working with us. He suggested selling us his business and continuing his mission as one of our associates.”

Choosing the right business to acquire

It was flattering to be approached like this. But Rhesus had gone through some tough acquisition experiences.

“Several years ago, we acquired two businesses in financial difficulty that had more of a marketing focus,” says Beaudoin. “We didn’t have the same expertise or culture, and we had to move fast to turn the financial situation around. It was exhausting.”

Rhesus ultimately withdrew from those transactions. This time, the management team of this SME, founded in 2001, wanted to optimize the chances of a successful union.

First, it carried out due diligence to make sure that Québécom wasn’t in any financial difficulty.

When discussions were first initiated in May 2023, Rhesus laid its cards on the table: the goal of the transaction was not to eliminate jobs but to keep the entire team and continue to grow together.

Next, Rhesus management wanted to meet with Québécom’s key employees. “I needed to speak with these people to see if they adhered to Rhesus’ values and very people-focused culture,” explains Beaudoin. “I wanted to make sure they were willing to stay in their job positions. We were ready to invest a few million dollars to acquire the company, but if the staff wanted to leave when the transaction was done, the project would have lost all its added value.”

Managing employee expectations

The meeting with Québécom’s key people went well, so the next step was to invite the whole team to a cocktail reception at Rhesus to build relationships.

“Each of the Québécom employees found their Rhesus counterpart who was in a similar role,” explains Beaudoin. “What we wanted was for these people brimming with expertise to talk to each other about how they worked so that we could ultimately preserve the best of both approaches.”

This major alignment phase lasted about a year. “We had said from the get-go that the first year would involve lots of ups and downs,” says Beaudoin. “It’s normal because it’s an adaptation phase. I had also mentioned that it would take a lot of listening and that we had to have the mindset that everyone was well-intentioned and working for the good of the organization.”

The result? “Managing emotions was definitely difficult at times, but the employees felt heard, and we didn’t lose anyone in the process,” says Beaudoin happily.

Collaboration that’s paying off

The transaction has also enabled Rhesus to do more with less. Two accounting employees left the company at the time of the acquisition.

“We didn’t replace them because our team was able to handle their work,” says Beaudoin. “So, we’re saving two salaries.”

Rhesus is also now benefiting from a larger volume of business, enabling it to get better prices and improved support from its suppliers.

The productivity gain in accounting and the better prices from suppliers partly account for Rhesus’s increased profit margin.

Plus, the combined strength of the two companies has made it possible to develop new markets. With its team of around 10 people, Québécom used to refuse contracts. For instance, the company wasn’t accepting manufacturing businesses. But Rhesus is highly active in this sector and has developed expertise in it.

“Now we search out many new manufacturing companies in the Sherbrooke area. We’ve also set up an office in Mirabel, a region with a lot of manufacturers.”

This momentum is obliging Rhesus to hire. “The results are exceeding our expectations,” says Beaudoin.

So, Rhesus's 40% growth in one year isn’t solely due to additional revenue from Québécom. The two companies joining together has also allowed them to better position themselves to pursue new contracts.

With the first year of alignment now behind them, Rhesus plans to focus on getting its various teams working together more efficiently.

“We want people who are in similar roles in the different offices to work in small committees, talk to each other and find ways to collaborate more effectively to better meet clients’ needs,” says Beaudoin. “There’s definitely room to increase our combined strength.”