For many mid-sized companies it's a common challenge: They're too big to be small and too small to be big. But where some see challenge, Scott Goss sees opportunity. As president and CEO of Preferred Systems Solutions (PSS), an information technology, engineering services, and program management company based in McLean, Va., Goss has guided PSS forward with a solid growth strategy. First came news of PSS's part ownership by a private equity firm, CM Equity, in the fall of 2007. Now comes news of PSS's acquisition of Integrated Network Systems, Inc., an IT consulting firm with clients in intelligence and defense. On the heels of PSS's acquisition of INSI, Goss debriefs on his CEO role, and how private equity can help small companies grow in a competitive economic climate.
EB: You were CFO of Signal Corporation. How has that background helped you as CEO?
Scott Goss: Just to backtrack: I have a background in IT, operations, and accounting. So I was involved in operations [at Signal] and led a consulting practice. I paticipated in business development meetings regularly. A lot of CFOs may not, they should. A lot of opportunities exist for CFOs to get involved with operations. For example being part of program reviews, meeting with program managers, line managers, VPs at the site, also customers. Customers, of course, want information “” financial, billing, etc. “” allowing CFOs greater visibility into the programs.
EB: What else can CFOs keep in mind when considering the leap to CEO?
Scott Goss: Most CFOs get the finance side. Understanding the operational side of the business “” the people side “” is also critical. Second thing “” and this was the biggest lesson for me “” is understanding that operations requires accurate, timely information. Because of my IT background, I created a system, DataCall, that delivers online real time operational reporting to program managers. So, as a CFO, don't just focus on what you need from operations, focus on what you can give operations. Third: Networking outside of the CFO network, is beneficial. Start talking with other senior operation folks or CEOs of companies.
EB: When you became CEO, what's the best advice you received?
Scott Goss: When I was a CFO at Signal, its president and CEO Roger Mody would say, “Your job is to be the watchdog of the company.“ Later, when Veridian acquired Signal, and I became Veridian's president of IT services, Mody literally sat me down and said, “Remember all those years I said you're the watchdog? Take that hat off. Now you're the mediator “”you have to mediate between operations and the watchdog role.“
EB: Tell us about your recent acquisition of INSI “” how did it come about?
Scott Goss: I was introduced to Mark Turlik, president and CEO of Integrated Network Systems Inc. He had a smaller organization and wanted to be part of something larger; there was certainly a fit. His company was focused on the intelligence community and wanted a larger back office than it currently had.
EB: What should a CEO keep in mind before going through an acquisition?
Scott Goss: Every acquisition is different, of course. However, if the owner of the company wants to stay on, there's got to be a good fit. They've got to be able to provide value. There's got to be chemistry between yourself and that individual “” the same values and principles “” which in this case Mark and I had.
EB: PSS is partly owned by CM Equity. Tell us about that.
Scott Goss: Certainly a lot of equity firms like the government contracting space; it has proven to be fairly resilient even in an economic downturn. In PSS's case Robert Hisel [former president of PSS] knew he wanted to grow the company. CM Equity was able to infuse capital into PSS and bring in management opportunities as well. CM Equity has done over 30 deals in the government space so they understand it well and know how to assist companies strategically grow.
EB: What would you advise smaller companies trying to grow via private equity as well?
Scott Goss: For smaller businesses private equity is an opportunity. Many of the folks who feel too small to grow to the next level “” or maybe they've been at the same level 10 or 15 years and know they've reached their maximum “” can find in private equity a means to grow “¦ whether it's by acquisition, investing in business development or infrastructure or even bringing in key people in management.
EB: Where do you see PSS a year or two from now?
Scott Goss: Two years from now, between organic growth and acquisition, I would like PSS to double in size. At the same time, while I want critical mass, I also want to make sure it's the right kind of growth.
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