Navigating Tribal 8(A) Acquisitions

In this episode of "Game Changers for Government Contractors," host Michael LeJeune talks with Emil Hinkefent, president of Kaiva, a portfolio of Tribal 8(a) and HUBZone small businesses located in Ivins, Utah. Emil shares his unique journey from managing a family-owned chain of health food stores to leading a rapidly growing government contracting business. He discusses the importance of empowering employees, the key differences between small and large business operations, and the challenges and opportunities of integrating with a tribal entity. Tune in to gain valuable insights on scaling a business, strategic growth, and the impact of strong partnerships in the GovCon market.

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Michael LeJeune (00:00) Hey everybody, Michael LeJeune here with Game Changers for Government Contractors. I have an exciting guest on with us today. Emil, I am excited to hear your story, but before we hop in and talk about your story, why don't you tell everybody a little bit about who you are, what you do, where you're from, all that kind of good stuff.

Emil Hinkefent (00:15) Yeah, absolutely. Michael, thank you for having me. Very excited to be on the podcast. My name is Emil Hinkefent and I am from just outside of Tulsa, Oklahoma. I'm currently the president of Kaiva. We are a portfolio of Tribal 8(a) and HUBZone certified companies. Currently, we have two subsidiaries and are looking at standing up our third here shortly. So growing rapidly, but very excited to talk about my history and how I got to where I'm at today.

Michael LeJeune (00:44) Yeah, that's very interesting. So, walk me through a little bit of your journey. How did you even get in the market? And what were those first few years like?

Emil Hinkefent (00:55) Yeah, so my journey is a little different than most. My family owned a chain of health food stores for a majority of the last century, and I was able to grow up in the stores. So nutrition, those types of things, were really important to me, very far away from GovCon and where we're at today. Through that, I was able to really get my teeth cut in the corporate world as well. My father was the CEO of the company for many years. So when I worked there, the first time I was in the front end store doing everything from cashier to sales to warehouse management, inventory control.

He enabled me to be able to touch a lot of different departments but held me to a higher standard than anybody else in the group. So fast forward, I came back and worked for Atkins again for about 10 years. I started in the corporate office and touched just about every functional department that was working to make the business successful. So everything from AR to AP to operations to higher-level finance to marketing.

Eventually, I fell into IT, which I spent the majority of my time working in. And, you know, IT was something that excited me. I really enjoyed learning about new technology and seeing it implemented in our different stores, how it not only helped the customers, but it helped our employees. So it was something that became near and dear to my heart.

I did that for many years and around 2016, it was time for a change. The company sold in '99, so it wasn't technically a family business anymore. When I went to find something new, I had an opportunity to move into the contractor world. I understood about low voltage technology because I had subcontracted all that stuff out—the fire alarm, the access control, the CCTV camera systems.

But I didn't have a full understanding of how it worked, you know, understanding how it was installed, what the true benefits were from the different programming aspects that you can do with these different systems. So I had an opportunity to go into a sales role, but I opted to go into the field first. And through that first year in this new adventure, I was able to get all my certifications and really touch the field, learning hands-on how these systems work.

Before moving into sales so that I really knew what I was selling and was able to talk to the customers and explain to them why it's doing what it's doing rather than just saying, "Hey, here are the features, advantages, and benefits, and here's why you need to buy this." So I did sales for quite a little while there and then had the opportunity to move to another contracting firm.

I managed IDIQs. I didn't know what an IDIQ was at the time, so I had to Google it, of course. From there, I immersed myself into the federal contracting phase. I think I ordered a FAR manual so that I could read it at night when I was in bed. I didn't realize that was a reference manual; it wasn't something I needed to memorize. But through that process, I really got a lot of insights into how things worked in GovCon and surrounded myself with a lot of people like yourself, where you can seek knowledge and understand how others are doing it, how they've fallen short sometimes, and they've learned from those mistakes and how they got to where they're at today. Looking at those different folks that

had done it well, I was able to adapt my own learning style to what I was doing in my daily role as a project manager, program manager. But also, I had this big business mindset from the chain of health food stores where I saw processes and things that I thought, "I'm not in the role where I can make these changes right now, but I'm at least going to vocalize that I think we might be able to do better if we implement this."

So through that, I had the opportunity to get some of my ideas heard. At a point down the road, they said, "You're already suggesting this stuff. Why don't you just become the director of operations and implement some of this stuff?" So I moved into the role of director of operations with that firm. From there, we did really well.

That company was Banning Contracting Services, which was the company that the tribe acquired back in April of '21. Through that, I was able to work with the great team we had around us. We refined the team, we drew it back to where it needed to be, but we were able to really put some good processes, procedures, and strategy in place on how we were going to continue to grow and scale the company.

So the first year I was there, I think we did $1.3 million. The next year we did $3.5 million, and then we jumped up to $7.5 million the following year after that, all the way up to $9 million, right around $9 million the year that we were approached by the tribe to be acquired. So that's kind of how I got to this point today. I had been promoted to president just before acquisition.

And from there, when we did the acquisition, I retained my title as president in the new firm whenever it was stood up and the acquisition took place.

Michael LeJeune (06:50) That's a really interesting story from where you come to how you got in. I love always hearing people who talk about going into engineering first and then into sales. That was actually my path into sales. I actually wanted nothing to do with sales, and I started out as an engineer. The next thing you know, I wind up in sales on the full dark side of things. I really enjoyed it because now I had the power to help customers, whereas an engineer, a lot of times you don't. You're restricted by a lot of different things.

And so that's a really interesting path to go down. It seems like the really successful people have taken some form of that because they really understand how the product or service works and all the things behind the scene that the customer doesn't understand. Then they wind up seeing the customer side of it, and they can put those two together in a really unique way that most people can't. So I love hearing stories about that. You mentioned for a minute there about how

You grew up with that big business mindset. What did you see as one of the key differences between working in a small business and a big business? What are some of those gaps there that you're like, "Man, if small business could adopt this, they would become bigger businesses"?

Emil Hinkefent (08:09) Yeah, I think the biggest thing was how functional departments were leveraged. In a small business, everybody's wearing a different hat and sometimes wearing a lot of hats. Decisions happen a little more rapidly in a small business than they do in a large business as well. Being able to still maintain that agility of a small business, but also make sure that you're structured in a way that you don't fall flat.

There's a lot of pitfalls that can happen if you're just firing from the hip. What I wanted to see and what our team was able to really implement was more of a structure with how we're recruiting, how we're retaining, how we're ensuring that the projects that we're spending a lot of time bidding and putting effort into, that we've got a certain percentage

of wins that we know we might actually get this project. When you're first starting, I think everybody just wants to get a contract. Everybody just wants to get whatever contracts we can get as long as they look good on paper. We think we can win this; we should go after it. That's not always the case. There are a lot of barriers to entry that we need to take into consideration before we spend that time and effort.

But that was probably the biggest key differentiator. The risk that's taken into consideration in a large business is not always the same risk taken into consideration in a small business, but the risk still exists for the small business. So you have to think through that as you grow and scale.

Michael LeJeune (09:54) You talked about some of the ideas you had and how the team said, "Well, why don't you just move over to the director of operations and start implementing some of those ideas?" What did you see as maybe the one or two things that were like, "This was the pivotal thing that helped us start doubling"? Because as you describe the revenue, it's like basically doubling. To make sure that is consistent year over year, what were those couple of key changes that you made?

Emil Hinkefent (10:23) Yeah, I think it really comes down to empowering the employees that are at the field level. As you grow, you get more employees and the personal touch starts to not be as personal. My goal was to keep that personal touch regardless of the employee or head count that we have. That all comes down to whoever that functional manager is or the person that's leading that team, they need to be empowered.

Just the way that they're empowering downstream from there. What we were seeing was we were bringing on so many people, and they weren't getting this immersion into our culture. By empowering everyone from a project manager to a superintendent below that person, where everybody's speaking the same language, everybody's got the same messaging, that's where we started to see a shift because then they wanted to be on

the team. They wanted to be a contributor to the team. So I would say that's probably the biggest. Outside of that, it was a lot more financial controls, budgeting for cash flow, a lot of the things as we moved into some of the commercial data center projects we did. It's paid when paid, and sometimes that's a long time to float employees and

being able to weather the storm per se, a cashflow storm is what I call it, and make sure that you're still making paychecks for all those employees and that they're all still happy and all working towards the same mission. Just because we're not seeing money flow in, that's not their problem. Their job is to get out there and execute. So as we

really built that team-first mentality, we started to see a positive shift. It all comes down to your frontline employees. If they're not out there executing and doing a good job, then what are we doing? It doesn't lead to long-term results.

Michael LeJeune (12:32) Yeah, I think a lot of small businesses really think about the cash they have on hand and what's coming in the next month. They don't necessarily think about long-term. I've always been a big fan of having anywhere from a 12 to 18-month cash projection of what's happening. I can tell you right now, I can pull up the spreadsheet and look in our system and tell you what our balance is going to be next February, next March, whatever. I can look at it and say,

"Based on what's going on in the cycles and different things," because that allows me to plan for different things or say, "Hey, we can spend this money." I've seen too many clients where they spent some money and then next month they were like, "I don't know what I'm going to do this month." Because they haven't looked at it from a long-term perspective. They've only looked at it from maybe a month, maybe 90 days. But most of them haven't looked that far ahead and they're freaking out.

Cashflow management is definitely something I think people miss out on. The other thing about empowering employees is really good. We did a session one time with one of the directors at Four Seasons, and he was talking about how they have empowered every employee at every level to fix a problem at a certain dollar threshold. Back then, it was like $100. So if it was under $100, you could fix it on the spot without asking anyone.

Doesn't matter what the problem is, right? You can erase a bill, a fee, or whatever, if that's going to make the customer happy. You don't have to ask for permission. If it's over $100, then you have to ask for permission. But even when you look at most of the problems in a hotel, they're under $100. So most of the problems that would have to bring in a manager and pull them off their job, these people are able to fix on the spot, no questions asked, and the customer is able to just be like,

"Oh, well, that was nice." And then it's over with. Even the little decisions that people have to make on a day-to-day basis where you have to go back and ask your mom or dad for permission to do something, you know they're going to say it's okay and it's the right thing to do. You're wasting everybody's time and frustrating the customer. So, I love being able to empower the employees to do those right things. Talk a little bit about how you were approached

by the tribe and what being integrated with them was like and just kind of that process a little bit.

Emil Hinkefent (15:03) Integration is always a spooky word for me, right, with acquisition. But there's a company called Strategic Growth Advisors. It's one of a few companies that are part of a shared services portfolio. One of their focuses is helping disadvantaged tribes and disadvantaged communities. What they do is identify these disadvantaged tribes,

tribal communities and say, "All right, do these people have a federal contracting arm already?" If the answer is no, let's talk to them about how we might be able to help them break into that market. John Cook with Strategic Growth Advisors is one of my mentors, my friends, and he's really helped me a lot through this process because

our previous company was an SDVOSB. So we were not their typical acquisition target. Typically, they're looking for somebody that was an individual 8(a), ran a good 8(a) program, understands the sole source, and that makes them a viable target. We were not their typical target, but we had a lot of good things going. We had a great team in place and

Basically, what the tribe does is, or what the shared service group does, is they go out and they find the outside capital to help fund the acquisitions so that the inorganic growth strategy works for the tribe. They're able to tap directly into the federal market and start springboarding into contracts pretty quickly rather than the organic strategy where they hire a manager, they figure out what their team's going to look like. How do you get a contract without past performance? How do you get past performance without a contract?

By doing it with the acquisitions, you bring in companies that have strong CPARs, strong past performance, and the management team that has the wherewithal to go out and get it done. It puts you this far forward in your growth pattern. That was really how it all came about. The previous owner, I was a minority owner along with a few others that had the opportunity to buy into the previous company.

It was a team decision, but there was a lot of back and forth. Should we do this? Should we stay over here? Should we do this? Should we stay over here? So in April 2021, we finally moved forward, and the acquisition took place. From an integration standpoint, acquisitions are hard. They're hard leading up to the signed documents. They're hard after the documents are signed. Everybody's excited because it's a new shiny object, but

you have to think about what that roadmap looks like to where you're an established business again, and there's not all of this merging of systems. Getting people on board with this new messaging, the new pitch, right? If you're an SDVOSB, opportunities are going on sam.gov all day long for these massive facilities where you can go out, get them, execute the work. The bid pool is fairly small, you have a good opportunity to win.

It is a little different if it hits sam.gov, somebody's usually got that opportunity wrapped up. So we really had to go back to the conference room and learn the playbook. SGA was instrumental in helping us really understand and develop our own strategy and playbook that we could take out and sell in the market. They also, SGA, one of their big things they do is bring in other partner

companies, 8(a)s, individual 8(a)s, as well as non-8(a) companies that have relationships or they have a certain agency that they're working with and they need connection to a tribal 8(a). So being able to snap us on to individual partners as well as individual deals really helps springboard our growth even further. But all that really didn't take place until I would say a year after acquisition. That first year was just getting our house in order.

We made some massive changes from an operations standpoint. We realized we had a lot of managers that were managing managers that should be managing themselves. So overhead was something we put under a microscope and made massive adjustments and changes so that fast forward to a year, we started on a firm foundation, we knew who the players were that we needed to have in the right seats.

and everybody that was still in that conference room whenever we were ready to go out and sell, they wanted to be there, they were ready to grind, and they had a purpose and a mission. So that's it in a nutshell, but yeah, there's a lot more to unpack inside of that acquisition and integration, but yeah, it was a fun time.

Michael LeJeune (19:59) Yeah, I bet it was. I've been through two acquisitions early on in my career. In the first one, it was really nothing more than we got new t-shirts and our paychecks had a different name on them. That was really how it operated. GTE was sold to General Dynamics.

Such a massive sale and we were so far down the line in that we were this one little teeny program that again, that's all it was. You got some new t-shirts and actually I don't even think I got a t-shirt. I think I just got my paycheck changed. Not everybody got the t-shirts. And then the next acquisition was kind of what you described. It was actually they sold off a portion of the company and when they sold it off there was...

You knew you were on the market. It was almost like putting your house on the market. You knew you were on the market and people were coming in and you're like, "Who's that guy? Oh, that's a potential buyer." That kind of stuff was going on. Then when they sold, it was like it just went quiet. "Hey, the sale happened. Maybe we'll get t-shirts this time. You're definitely getting new logos on the paycheck." Some of those things happened, but then it was probably a solid six to eight months

before you really started having meetings with people and trying to, like you were saying, hammer out those things in the conference room and all that kind of stuff. Then there was chaos for another year of trying to figure out things and go in different directions because they had a business and we were another business and they were trying to figure out, do we keep going in this direction? Do we shut that down and go in this? There were so many questions. For somebody who's gone through this,

as we wrap up here, what is some advice for people that are hearing your story and say, "This is probably a path that I want to follow," whether it's winding up with a tribe or being acquired by somebody else? What are some pieces of advice that you have for somebody that wants to follow in your footsteps?

Emil Hinkefent (22:08) I'd say for an individual, seek knowledge. There's so much information out there to be learned and that you can gain from and help you in your individual career as well as your business. The other thing is to surround yourself with wise counsel. You've got to have smart people in your corner. Open your ears, listen to them. There are a lot of folks that have

started a course before us. If we can gain insights from how they did the things they did, lessons learned from when they fell short, those are all things that can help guide you. You don't need to mimic or duplicate what people are doing; build your own path. There are a lot of folks out there that can help and want to help too. That's something that I would always advise people to seek is wise counsel.

For us, our core values at Kaiva are that we're passionate about people, partnerships, and performance. If you think about those three things, people, partnerships, and performance, it's really what it all boils down to. For us, we have the tribe that we represent. Those are our people. We have our employees. Those are our people. We have our customers. Those are our people.

All of these folks are partners—consultants, your network. All these things are so important as you grow a business and as you grow personally and professionally. Honoring relationships with people and then partnerships as well. It takes partnerships to help you grow. You're stronger together than apart a lot of times. Lastly is performance. If you don't perform,

why are you doing what you're doing? You've got to execute, and the government feels the same way. If you don't execute, you're probably not going to get another contract with them. All of those things contribute to a successful business. If you're an 8(a), think about what a tribal 8(a), if they're looking for you as an acquisition target, they're probably looking for somebody that's done sole source. So get immersed in your ability to sole source up to your threshold.

Michael LeJeune (24:02) Right.

Emil Hinkefent (24:27) And find ways to capitalize on that and run a good 8(a) program because that's going to be marketable to a company that's trying to find acquisition targets to snap onto a tribe. Partnerships are huge too because if you walk in and partnerships can be other contractors as well as agencies. If you're working with an agency, I'm partnering with that agency to make sure their mission is executed and carried out the way that they want it to be carried out. So when

somebody's looking for an acquisition target, they're also looking for your relationships. They want to make sure that you can take this new threshold of $25 million for Fed Civ and $100 million for DoD, and you can go into your network and say, "Hey, I've got this high-threshold sole source ability now. I've also got a white paper that can solve problem X, Y, and Z for you. Can we put these things together and make something happen here?"

So a company and its leadership's ability to go out and do those things are going to be something that is almost like a gift on a silver platter for a company looking for those types of acquisition targets because they know that, maybe not day one because acquisitions do have their quirks, but let's say day 90 or day 365. They know that you can take what you've done over here and execute over here, now under this tribal banner.

The other thing is the humanitarian aspect. Are you passionate about doing something greater than just doing it for yourself? For me, I was blown away by the opportunity to serve this community and find a way to help it grow. We've got 120 members or so on the reservation. What I tell our employees, our partners, our customers, everyone is that you're part of the impact on that community.

We're going to see a tangible impact on the growth of this community through the work that we're doing. That contract you're giving me is not just you giving me a contract and me executing the work. There's something over here that's happening because of the work being performed over here and the dollars that are flowing back into our company. So all of those things combined, you walk in as a viable acquisition target and you have that passion and that drive to be a game changer.

Michael Lejeune (26:50) Yeah, thanks for the plug there. But I think that's a great way to end the show today. I think what you're doing is great. I love following your journey. I'm curious where you're going to be 10 years from now. It seems like you're roughly 10 years into the government at this point. It's still like you're an infant in the community. There's so much more.

Emil Hinkefent (26:51) And I didn't say that just because that's the name of your show.

Michael LeJeune (27:15) Beyond this. I mean, with the acquisition in '21, that was like yesterday. I mean, it's still fresh. A decade from now, it's going to be interesting to see where you're at and to just keep following this. So thank you for coming on and sharing a little bit about that journey and the acquisition and all that kind of stuff. Some lessons learned. I think it's going to be helpful for folks to hear that. So I really appreciate you coming on and talking today about this.

Emil Hinkefent (27:35) Yeah. I appreciate you having me, and let's do it again sometime.