Drop the MBA shtick
August 30, 2017
by a searcher from University of California, Los Angeles in Brooklyn, NY, USA
One of my best pieces of unconventional advice to any new searcher would be to stop acting corporate, consulting, Wall Street, MBA etc. and be yourself.
Drop the buzz words.
Stop trying to do diligence like it's a public company.
Don't overcomplicate analysis and decisions.
Shorten the legal docs.
Do the term sheet over dinner.
A core reason for our success over the past four years has been an ability to relate to owners.
From inception, we had a genuine care and empathy for owner succession desires and legacy.
Owners saw this and agreed to between 50% and 75% seller financing on our 8 deals to date.
However, it took a couple years to 'de-banker'. 7 years of investment banking was hard to shake off.
A colleague told me pretty directly one day: "you need to talk more like a tradesman".
If you are looking for businesses with $3M or less of EBITDA, it's unlikely the owner will relate to a "smartest guy in the room" approach white collar work teaches us.
Be plainspoken. Keep it simple. Get shit done.
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We've made a ton of mistakes over the past four years. But we've also gotten a few things right.
If you want to benefit from our experience, check out our advisory services overview by clicking this link
Here's our sneak preview track record:
- -- 8 acquisitions closed in 4 years, all under 4x
- -- 100% close rate on signed term sheets
- -- 50-75% seller financing achieved
- -- Deal financial expectations largely met at 2 year point (no blow-ups to date)
- -- $9M of capital raised between equity and debt (private, bank and seller)
- -- Near perfect retention of customers and employees
- -- Reduced legal fees from $100K to ~$10K or less on deals 2-8
in Denver, CO, USA
AMEN! Although...really depends on the area of the business (Tech, Mfg, Dist, AI etc.). I don't know how many calls I get or have gotten over the past 20 years and all start out with pitch and quickly into school credentials, intern stints etc. Very few if any have ever run a company, started a company with outside funds or bootstrapped with their back pocket (ha, not recommended :). Most have zero idea how to build a company from nothing to something significant other than what the prof told them in school. or what was experienced in a silo intern. At the end of the day, it is the relationship and alignment you create together that drive you through the low points in any organization. It is simple, organic growth or M&A, get aligned quickly and cut the crap. CEO's like myself are busy as hell running companies and want hard facts quickly to determine the next steps. Don't lose site of the prize through distractions. I tell my employees at every level "it is not the problem stopping you" rather "how you are solving the problem". Get out of the box, be creative, add value. I am on my 3rd company, this one is complete scratch/bootstrap and growing. At some point, it will require some M&A complexities, but at the end of the day, numbers/people/expertise/execution are what drives your P&L and Balance Sheet. Good luck searchers :)
from Emory University in Austin, TX, USA