Author: coreykupfer

Categories
Authentic Business Relationships Authentic Deal-Making Authentic Negotiating

Leverage Your Intellectual Property

Intellectual-Property

It might be hard to believe, but there was a time when people had to source knowledge without the help of Google and Wikipedia. There was a market for almost every kind of niche information, but there were not enough publishers to meet the demand. Bill Cates stumbled upon an opportunity where he could fill that need and he found himself in the publishing industry almost overnight.

Deals in the Publishing Industry

Bill’s publishing companies produced highly-specified cookbooks and humor books, and he encountered many types of deals while distributing them. Licensing was a major part of Bill’s revenue. He licensed content to cookware manufacturers that wanted marketing collateral for their products. He also paid for branding rights and created product-specific content for the masses. Very few authors take advantage of those types of deals, but it is important to acknowledge that you need to get creative with licensing to reap the benefits.

Licensing offers the greatest payout over time and Bill sees it as a foolproof, sustainable way to protect your nut. Licenses work continually for you, they have zero cost of sale, and they require minimal time. When Bill got out of the publishing industry and became a professional speaker, he put his training video content to work. Today, he is still generating income by licensing that content to different organizations across the country.

Intellectual property is valuable and it is an asset that you don’t want to give away for free. Business models that are built around speakers can fall apart if the speaker is unable to travel or perform. The income Bill sees from content licensing ensures he will live comfortably if anything unfortunate were to happen. It enables him to bring his expertise to clients in a way that is more affordable and accessible. That is why Bill recommends being proactive in leveraging your IP assets.

Summary

No matter what industry or discipline you are in, you have expertise that other people don’t have. There are a lot of ways to get your knowledge out to the masses, but Bill recommends using a combination of strategies that include monetizing your IP. Leveraging what you already have in place is a much more reliable process. It will generate recurring revenue and grow your brand with comparatively minimal effort.

Listen to the Fueling Deals podcast episode featuring Bill Cates’ interview about how to Leverage Your Intellectual Property.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Business Relationships Authentic Deal-Making

The Lower-Middle Market

Lower-Middle-Market

Gary Kane found a niche in the lower-middle market which tends to be overlooked by a lot of investment banking firms. Chimera Strategies has been thriving in that space since Kane founded it in 2011. Chimera works with businesses between $3M and $25M that are above the business broker line and below the typical investment banking line.

Kane doesn’t approach his prospects as a glorified business broker, but as a simplified investment banker who understands the need for advisory in a revenue range that can’t attract the attention of investment bankers due to the fee structure. A business broker usually follows something similar to a real estate model with listings on a buy-sell website that are marketed passively. The close rate is only around 20% and the deal is usually facilitated by an independent broker with varying motives. Investment bankers work on much fewer deals with higher close rates through controlled auctions and competitive processes and they use active marketing tactics to find a buyer.

Strategic vs. Financial Buyers

In the lower-middle market, Kane primarily works with strategic deals. Larger investment banking firms don’t play in this space as it is difficult to meet the minimum fees, a significant portion of the private equity buyer pool is not interested in the market, financials of selling firms are usually not audited, the business is often not growing and there are no lenders in that space. So that often leaves strategic buyers.

Strategic buyers are ideally in the same or similar industry and geography which allows them to pick up inventory, locations, and people, and 86% of Kane’s deals are done with those criteria.

Financial buyers don’t play in the lower-middle market because of size since it is essentially the same amount of work to do a $5M deal as it is to do a $500M deal. The other problem is that financial buyers are not operators and in the lower-middle market, many of the businesses lack a second layer of management which means that there is no one to run the business when the owner exits.

Terms

Since there are no lenders in the lower-middle market space, almost all of Kane’s terms include 50-60% cash with a balance of a seller’s note and/or an earn-out. An owner’s note is a promise to pay a portion of the purchase price on the back end and an earn-out is a percentage payout contingent on performance over time.

It is a seller’s market right now and buyers want to put their money to work, so with the help of investment bankers like Gary Kane, business owners are cashing out while the times are good. Just because a business is in the lower-middle market does not mean they have to forfeit quality advisory. Chimera Strategies is consistently proving the difference that it can make.

Listen to the Fueling Deals podcast episode featuring Gary Kane’s interview about Strategic Deals in the Lower-Middle Market.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making

From High School Dropout to Entrepreneur

School-Dropout-To-Entrepreneur

At the age of sixteen, Ralph Peterson was told that he was a hands-on learner destined for manual labor, so he quit school and began working in construction. Despite the fact that he always wanted to be a writer, Peterson took these words of “wisdom” to heart and spent eight years on the mud-boots path until he woke up. Peterson always knew that he was capable of doing so much more with his career, but it wasn’t until twenty-four that he decided to finish high school and enroll in college, where he eventually received an associate’s degree in creative writing, a bachelor’s degree in U.S. history, a second bachelor’s degree in business administration, and a master’s degree in organizational leadership.

The Power of a Good Story

Ralph Peterson achieved his dream of becoming a writer, but with all of the accolades aside, he considers himself a teacher before anything else. At its core, Peterson’s role is to teach people in the ancillary departments how to make their processes better, but the ability to monetize his expertise came through an unexpected opportunity during his time as a sales representative.

One of the main reasons that Peterson was driven to become a writer was his passion for storytelling and public speaking, but he only got to employ a half-hearted version of his skill during a thirteen-year career selling housekeeping management systems. The client-facing role provided a means to showcase his skill in the art of speaking, and eventually, he was asked to fill-in for a keynote speaker at a seminar for “housekeeping as a business.” Peterson un-begrudgingly agreed to do the event for free and at the end, he was offered a consultancy opportunity by one of the attendees and his business was born.

Housekeeping in Long-term Care

Peterson deals with two competing business models in the realm of housekeeping and long-term care, but he was able to find a solution that spans both sides. With housekeeping, laundry, maintenance, and dietary, some businesses will come in and take over everything including staff, purchasing, training, oversight, management responsibilities etc. Other businesses choose to opt-out of paying for everything while still providing the management, training, and oversight. Peterson’s niche is right in the middle, where he comes into the same businesses and develops a program for them to follow, then provides oversight of the program moving forward.

Doing Deals as a New Small Business

Initially, Peterson was doing everything himself, but as his client roster grew and the territory expanded, he brought on a Director of Operations for support. The business had limited resources since it was just starting out, but Peterson forged a PTO and benefits package that no one could resist. He prioritized company culture at a very early stage, but he also learned the importance of doing deals internally to increase performance, morale, and employee retention.

On top of increasing his capacity with an additional employee, Peterson is moving a lot of his work to digital platforms so that he can travel less and do more. He hosts webinars with current clients to ensure the success of their new programs, but he is also using technology to bolster a new offering; education and breakdown of nursing home systems and processes. The new product is taking off right now, and 75% of it is done online.

Pay it Forward

Peterson wants to work with clients who are motivated, passionate, and want to get better. It is not about the size of the client so much as their intention since they are both fighting for better care. This includes prospective students for which Peterson is currently building a business model. He is extremely passionate about teaching other adults that there is more to a career than what they currently understand, and he wants to give them the tools to achieve entrepreneurial success in the same industry like he did, regardless of their specialization. Housekeeping used to have a negative connotation for Peterson but now, he understands that it gave him every opportunity and he wants to pay it forward.

You can learn more about Peterson’s story in his episode on Fueling Deals.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making

Learn From Your Deals

Learn-From-Your-Dreams

We have already explored a lot of different ways that you can grow your business inorganically through deals. This time, I want to look at deals on a more personal level. I have done many deals and negotiations for other people as an attorney. But I’ve also done them for myself as a dealmaker. Some have gone well, while others provided great lessons. However, every deal has increased my capability as an entrepreneur, investor, partner and attorney.

Lessons of Early Entrepreneurship

I was familiar with entrepreneurship by the age of fifteen when I started my first business and managed real cashflow. I built a book of accounts and a team of employees, and we distributed flyers and other marketing materials for local businesses. It yielded roughly $300 a week and provided my first lesson in doing deals. The experience didn’t sink in until later. I didn’t recognize the monetary value of the accounts themselves. I didn’t even think about selling them but, instead, just closed the business when I left for college – a lost opportunity and good learning lesson.

In college, I managed to strike a deal with Clare Rose that gave me one of two distributor’s slots for beer kegs on campus. That provided a variety of perks, as I’m sure you can imagine. But in undergrad, law school, and beyond, the enterprise mindset was always present. Whether I purchased equity in small businesses or pursued side projects like real estate, I was always looking for new ways to do deals.

Higher Stakes Deals

With great opportunities, you need to act quickly, and I lost a few of those when I was younger due to a lack of capital. Partnerships can be restrictive, but they can also be a solution. I went into a real estate partnership and raised a fund so we would have money available to be able to act quickly on good deals. However, in real estate deals, everyone is exuberant when things are going well and they run away when a down market hits. We had to pull out of those investments after the investors refused to double down during the recession – another huge opportunity lost.

There are significant challenges for dealmakers of any experience level, but they will always prepare you for the next opportunity. Whether you are doing deals for your business or on the side, there are lessons you can take away from my mistakes and successes alike. Those lessons have led me to a number of deals that have been very successful for me. If you are interested in hearing more about some of the deals I have been apart of, listen to my podcast episode, Growing as a Dealmaker, with Corey Kupfer.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making

Corporate Therapy

Corporate-Therapy-2

Dr. Rachel Headley is the type of person who always wants to dive into the next project, and she has never been content in stagnant situations where her skills and processes aren’t being pushed to their limits. That said, entrepreneurship is kind of a double-edged sword. But the type of work Dr. Headley’s company focuses on is in alignment with her need to tackle new challenges regularly.

People-First Solutions in the Workplace

Rose Group International helps people work, by providing companies with organizational efficiency coaching and training to address challenges around teamwork, productivity, time management, and retention. Dr. Headley was inspired after she identified a major disconnect between executives and their employees and knew that there was a solution. With Rose Group International, she examines the organizational deficiencies on a case-by-case basis and tailors a solution that will help her clients achieve their aspirations and transformational goals.

People are the main culprit when a company is experiencing inefficiencies, but it is often addressed by leadership in the wrong way. M&As and other types of deals provide a window into the abyss because productivity usually tanks in these types of deals. Different types of deals have a major impact on the employees because executives generally do not approach them in a way that allows their people to thrive.

Visualizing Employee Traits to Create a Strategy

You can draft the best legal agreement or integration plan in the world, but if the people are unable to work together it is not going to yield the desired results. This is where Headley comes in and her process starts by understanding how the people work. Her first step is to identify the different personality types including fixers, stabilizers, organizers, and independents. Headley assesses all of an organization’s employees so leaders can start to understand who is on their team, who is going to pose a challenge, and the strategies that need to be developed to get different types of employees on board.

Once you understand how people are going to react to change, it enables you to form a strategic plan to roll out your deal to the rest of the organization. It doesn’t have to be utter chaos, and that is why getting Dr. Headley involved sooner than later will only help smooth out the transition. This type of coaching and training is much more effective as a preventative measure than a restorative measure, but it will help either way.

Leverage Your Employees During Periods of Change

Whether it is an internal reorg or restructuring a marketing plan, a lot of CEOs are willing to roll over and accept that it is going to suck for a few years instead of taking the initiative to tackle the problem right away. Dr. Headley and her team come in and help employees adjust to these organizational changes and thrive in ways that you haven’t seen before. If you can get everyone on board with change the effects are powerful because it enables employees to enter an innovation stage, where hesitations are overcome and creativity flourishes. The same change that was a force of destruction becomes an agent of growth, and the company will benefit drastically in the long run.

Dr. Headley developed this assessment to reflect who your people are in a way that is actually relevant to your decision making. The whole point is to problem-solve with your people in a way that no one else does. Change doesn’t have to be hard or take a long time and once you give people a toolkit that works, they will take it and run with it.

Listen to Dr. Headley’s interview in the Fueling Deals episode.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making

Evolving With the RIA Industry

RIA-Industry

From an early age, David Selig was exposed to financial advisory because his father was a thirty-five year veteran of the stock exchange. But, after a significant life event took place that essentially forced his father to retire on the spot, Selig was inspired to pave his own way and help others avoid falling into a similar fate with no succession plan.

Before his interview with Pershing in New Jersey, Selig truthfully didn’t know what an RIA was, but despite mispronouncing the term and pulling terminology out of thin air to sound well-read, he landed the job. As Selig began his journey, he became familiarized with the world of RIAs, its opportunities, and its challenges. The RIA industry is extremely fragmented and there is a lot of difficulty surrounding the fundamental concepts of expansion, succession and scale, but Selig learned to navigate them while acquiring valuable lessons to take into the next chapter.

The Formation of Advice Dynamics Partners

After Selig left Pershing, he ended up in a consulting role for one of the industry’s largest aggregators, and the nine-month project forced a shift in mindset that would lead Selig to entrepreneurship. He liked the aggregator’s business model and the work he was doing, but he was faced with a huge window of opportunity that he couldn’t ignore. Selig started to look at the aggregator as his first client instead of his employer and was hungry for more; eventually, Selig would found Advice Dynamics Partners, where he is currently CEO.

The Evolution of the RIA Industry

At Advice Dynamics Partners, Selig has been focused on M&A advisory and succession planning from day one, and is approaching the eleven-year mark with undeniable success. Part of the reason for that it ADP’s ability to evolve in alignment with the evolution of the RIA industry. The statistics surrounding companies that have a viable succession plan has not necessarily changed during Advice Dynamics Partners’ lifespan, but what has changed is the number of options those businesses have in forging a succession partnership. The options for monetizing a business has expanded far beyond the banks and NFPs to include things like private equity firms with short or mid-duration investment timelines. In addition to bespoke M&A advisory, ADP has a specialty in helping large wealth managers navigate the complexities of evaluating financial sponsors to find the right permanent capital partner.

The buyer landscape has also evolved and afforded RIAs more choices, but with more complexity comes more challenges. Nevertheless, ADP’s job is to help their clients navigate the different options so they can articulate their value and choose the best partner for their business; the industry may have evolved but ADP’s fundamental function has just been adapted to match the changes.

There are a lot more options for external succession nowadays, but internal succession is extremely high on the menu for most advisors and their clients. However, there is a major gap as approximately 80% of businesses would prefer an internal succession plan while only 20% have the ability to carry it out. In order for internal succession to work, businesses need to have certain things in place such as the ability for the parties involved to compromise. There is always a tension between buyers and sellers when it is an internal context and the price becomes an issue, but it is still a lot easier to finance now than it was before.

Doing Deals in the RIA Industry

Aside from succession, there are some exciting things happening in the deal space of the RIA industry. A lot of entrepreneurial firms with younger management teams are seeking an outside partner to buy them and help them achieve scale. These deals are more attractive now because it is no longer a binary choice. Outside partners can enable these firms to achieve succession, growth, and scale while helping them accomplish their long-term vision. There are at least fifteen options in the investor category, and ironically, it is a lot more common for investors to prefer a lower-risk minority stake nowadays. The industry has matured as a whole, and it has been mutually beneficial for both the management team and the partner because the management can run the business with financial backing that will help them reach the next level.

Listen to David Selig’s interview on the Fueling Deals podcast episode.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making

Deal Design: Creative Real Estate Strategy

Real-Estate-Strategy

Gary Wilson developed a passion for drawing houses and architectural floorplans at just eight years old, but as Wilson grew older he would discover a much stronger affinity for the wealth that could be generated by them. His business sense and entrepreneurial spirit have been there through it all, and Wilson was always inspired by the simple exchange of providing quality service and getting paid for it.

The idea that you gotta wake up and show up to get paid is what shaped Wilson’s work ethic and prepared him to be a dealmaker as an adult. Wilson made his first real estate deal within a month of graduating college by assuming the previous owner’s VA mortgage, getting a second mortgage to refinance the seller’s second mortgage, then giving him a third note for his portion of the equity – so he put no money down. It was a very creative deal that was anything but conventional, and Wilson was even able to rent two rooms which paid for nearly all of his other bills.

The Pitfalls of a One-Size-Fits-All Deal Structure

From that point on, Wilson was determined to forge his own path outside of conformity. There are many ways to buy real estate but Wilson’s success is largely attributed to using the right strategy, at the right time, for the right deal. A lot of people tend to shove everything into a universal deal structure and that can be detrimental to their progress because every deal has the potential to be more lucrative if you get creative.

The ability to create tailored deal structures is a necessary component to becoming a great dealmaker, but mindset plays an important role as well. Getting creative with your strategy and taking risks are not comfortable ideas for everyone, but Wilson has picked up on some key characteristics that define a dealmaker.

Transferable Skills

Every year that Gary Wilson spent in the corporate world made him more miserable because he had to suppress his entrepreneurial mindset until he got out. When he broke away from that lifestyle, Wilson was finally in a position where he could pursue the unquenchable desire for financial freedom. The ability to look at things creatively and the desire to make them work are what set successful entrepreneurs apart, and it is a mindset that Wilson brings to every opportunity in his path.

Those skills define business leaders and entrepreneurs across a wide array of different industries, so there is an open door to real estate investment even if you aren’t going to put 100% of your time into it. The skills, attitudes, and talents needed to run a business are the same ones you need to succeed in real estate, and when you have both you gain an asset to borrow against to keep leveraging your business and vice versa.

A Cycle of Abundance

It is an amazing combination that creates a cycle of abundance. So, if you want to get into it, the resources you want to have are as follows: a tax accountant; a solid general contractor or contact in the construction/remodeling business; a good attorney; an investor-agent. The investor-agent is a key player in your venture because they can go beyond listing services to find the best deals that aren’t even published. Off-market deals are crucial in this space and Wilson’s entire brokerage company was based on that practice.

This industry has a learning curve and Wilson has made his fair share of mistakes, but if you are diligent and self-reliant you can avoid simple, costly screw-ups. It should not be a deterrent because the same risks apply in all facets of entrepreneurship. If you approach this business with a concrete strategy, mentorship, and a strong team, there is no telling what you will be able to accomplish with your current business and new ventures generating income simultaneously.

Listen to the interview with Gary Wilson on the Fueling Deals podcast to learn more about Gary and how you can apply your dealmaking skills in the real estate industry.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making Authentic Leadership

The Echelon Partners Deal and Dealmaker Summit

Dealmaker-Summit

A couple of weeks ago, I had the opportunity to attend the Echelon Partners Deal & Deal Makers Summit, which was an invaluable experience as both a speaker and an audience member. Echelon’s summit focuses on doing deals in the RIA space, and it was kicked off by expert sessions with 30+ industry experts, enabling us to provide audience members with a half-hour to pick our brains, get to know us and explore any topic that piqued their interest.

Kickoff and Buyer/Seller Challenges

The expert sessions and the dinner that followed were great opportunities for the conference participants to get acquainted with the experts, speakers and each other and network. The next day opened with “Buyers of the Round Table,” featuring Rush Benton of CAPTRUST, Dave Welling of Mercer Advisors and Kurt Miscinski of Cerity Partners discussing the low cost of money and the growing volume of deals. The panelists talked about the challenges associated with evaluating cultural fit with a focus on getting a collective buy-in from leadership and the rest of the team. One of my favorite quotes from that panel is that “culture cannot be acquired or mandated, it must be embraced,” which highlights the problems many executives face with integration. Check out the podcast episode to find out who said it.

Other areas of focus included buyer and seller challenges. On the seller-side, the panel explored why people sell and how selling to a bigger firm can solve problems with time management, talent acquisition, and growth. On the buyer-side, they talked about whether or not it is a seller’s market, why sellers are leaving money on the table, and the impact of funded buyers with impatient capital who are overpaying for deals. The discussion of whether or not we are in a deal bubble in the RIA market and what is contributing to that capped off a well-rounded discussion.

Keynote Debate

The next session was the keynote debate between Pershing’s Mark Tibergien and Echelon Partners’ Dan Seivert which has been a staple of the conference since its inception. Regardless of whether or not Mark and Dan actually believed the stances they were taking, they conducted a formal debate of seven different topics such as “the ideal way to grow with recruiting vs. acquiring” and “sharing synergy value and how it is split.” After each debate topic, they opened it up for questions and discussed their real views on the same topics which provided a lot of insight into the way they see deals.

Additional Panels and Final Thoughts

Following a short break, the conference transitioned to a panel format with the first discussion being centered on working with private equity investors and included Jeff Dekko of Wealth Enhancement Group, Jim Gold of Steward Partners, and Larry Roth of RLR Strategic Partners. The next panel focused on recruiting and breakaway deals, and it featured Bill Willis of Willis Consulting, Jeff Bischoff of Old Greenwich Consultants, and Robb Baldwin of TradePMR. Last up was an interview format of Manny Roman of Pimco on the people’s side of dealmaking.

Next, Dan Seivert took over with a solo session on deal structures, valuation, and transaction trends. Dan discussed the net reduction of advisors each year, the stage where there are peak margins, and what private equity firms are looking for before they invest. We moved back to the panel format in which I was one of the speakers. The topic was the “Battle of the Outside Council,” where Ted Cohen, Chris Frieden, and Dave Mrazik and I conducted a negotiation of a purchase agreement live for the audience. It was a phenomenal experience in which we addressed topics including purchase price adjustment, non-competes, reps and warranties, and employee agreements. Each of us took one buyer-side and one seller-side issue and got into an actual negotiation with real-world scenarios. It was lively, fun, engaging for the audience, and we received great feedback and were told that it was a very highly rated session.

Finally, the last section was on financing options for fueling deals. The panel included Aaron Hasler of SkyView Partners, Ed Swenson of Dynasty Financial Partners, Dustin Mangone of PPC Loans, and Rick Dennen of Oak Street Funding, who talked about capital availability in the market, types of deals they fund and who they focus on.

The event was a tremendous success with great networking opportunities and quality speaker from whom the participants learned a lot. I would highly recommend checking it out next year, and if you haven’t already, tune into the latest episode of my Fueling Deals podcast for a detailed breakdown of valuable takeaways from the conference.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Business Relationships Authentic Deal-Making Deal-Driven Growth

Strategic Partnerships in Wealth Management

Deal-Driven-Growth-3

When Lisa Rapuano was twenty-five years old, she managed to talk her way into an investment management position at a startup in Chapel Hill, NC. As the third employee of Franklin Street Partners, Rapuano wore many hats and handled everything from reception and IT to sales and marketing; the experience she gained at FSP unearthed a new passion for investment research, which quickly became her focus and paved the way for her future as a business leader.

Facet Wealth is an RIA that focuses on people with less than a million dollars in investable assets, and that is important to note because $1M is not a significant amount of capital in this industry. Their niche encompasses thirty-three million American households that have between $100k-$1M in investable financial assets, most of which are excluded from the traditional, holistic financial planning side of the business.

A Market-Cooperative Business Model

As CFO, Lisa Rapuano describes Facet Wealth’s business model as market-cooperative because they are driven by highly efficient, back-end technology that enables their financial advisors to provide a wholesome customer experience to lower net worth clients. As a result, peripheral partnerships are developed with other RIAs that focus on more complex investment strategies. Facet Wealth takes the segmented clients off of their partners’ hands to provide adjusted white-glove service without sacrificing the partners’ consumer relationships or causing them to use company resources disproportionately.

If RIAs make too many exceptions for less wealthy clients, their businesses won’t work because they aren’t set up for that. Too many advisors are trying to be all things to all people, but the most successful ones define their niche very clearly and Facet Wealth has done exactly that. Because financial advisors are inherently helpers, Facet offers a way for them to provide less profitable clients with a solution instead of segmenting and leaving them to fend for themselves.

Referral Partnerships and Revenue Replacement Opportunities

Deals are a driving force behind Facet Wealth’s success, and there are two primary types that they use to generate growth. The first is a referral partnership, where Facet pays for referrals if the prospective partner signs a solicitation agreement with them. This offers Facet’s partners a way to continually serve the segmented clients while freeing up capacity and resources to focus on their niche. The second way is a revenue replacement opportunity. This is also a sequential deal where Facet signs an asset purchase agreement with an RIA to acquire their client relationship, but Facet sets terms for how long the revenue will be replaced after the client transitions to them; this is the most transformative for advisors.

Facet Wealth as a Partner

Facet also has a couple of different ways that they’re willing to work with financial advisors who are considering M&A activity on their own. One stage that they can help with is the preparation for M&A. If you enter a partnership with them before you go to market, Facet can acquire your smaller clients to create more capacity, raise margins, and improve the overall value of your business. Another stage where Facet is a great partner is for buyers in the midst of a transaction. Part of the deal might be very attractive, but if there are smaller clients that aren’t a great fit, Facet can help take them off your hands.

There is a lot of consolidation taking place in wealth management and investment management, and it is largely because of the natural evolution of the industry. But, advisors need to consider whether or not they are adding value to their clients, and if they are charging a fair price for the services offered. Personal service is expensive, but it is one of the current trends in this day and age, and companies like Facet Wealth are making it a fundamental part of their strategy.

Click here to listen to Lisa Rapuano’s interview on the Fueling Deals podcast.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!

Categories
Authentic Deal-Making Deal-Driven Growth

The Seven Figure Club

Seven-Figure-Club-2

Back when Julia Pimsleur was attending film school at La Fémis, she discovered an affinity for entrepreneurship while orchestrating international producer conferences on campus. Pimsleur took the initiative to manage all of the logistics, marshal resources, educate paying attendees, and ultimately reap the rewards of her events. It was an experience that enabled Pimsleur to discover a new skill set, and she used it to pave the way for her career as an entrepreneur.

Learning on the Fly

Julia Pimsleur’s first major role as a business leader was with her company Little Pim, a children’s language learning program that she was able to grow into a multi-million dollar company. It was a difficult journey with tremendous obstacles, but all of the challenges and failures provided her with an arsenal of personal experiences to bring her audience. Pimsleur is maximizing the impact of her lessons she shares in the Million Dollar Women book with her Million Dollar Women Masterclass, where she coaches female entrepreneurs and teaches them what it takes to hit $1M in annual revenue.

She didn’t go to business school or come from a finance background, so she was forced to learn everything on the job, but the success of the Million Dollar Women Organization shed light on the need to reach a larger audience with her lessons. Pimsleur created an online group-coaching program to make the obstacles she faced more surmountable for other women under similar circumstances. In four months, students can learn how to restructure their organizations, so that they’re doing less work, improving their close ratios and scaling their businesses faster.

Strategic Deals for Small Businesses

A lot of the work with women entrepreneurs is focused on mindset because there are major hurdles with mental conditioning that must be overcome to achieve success. After that, the MDW programs cover the following: finances; sales and distribution; making deals; raising capital; marketing; efficiency, being in powerful networks. Million Dollar Women rounds all of the bases and covers these topics strategically, but bear in mind that all of the content is coming from someone that lived through them. Pimsleur had to distill everything she came across so that she could teach herself effectively, and you don’t have to be a savant or a prodigy for these tactics to work for you.

Strategic deals played a significant role in rocketing Pimsleur past the seven-figure mark because she was always looking for opportunities. At Little Pim, she was able to partner with PBS to develop a language learning game that created a strategic alliance worth hundreds of thousands. This is the main reason ‘mindset’ is the pinnacle of Pimsleur’s program; doing deals means figuring out where you can be the missing piece in someone else’s puzzle. If you are not trained to actively seek these opportunities and prepare yourself for when they are presented, you will not experience success as a woman entrepreneur, and Pimsleur’s programs are determined to disrupt that.

Why Not Me?

Many entrepreneurs simply feel like they’re not ready, but Pimsleur encourages everyone to stop waiting and jump in feet first. When you get to see other people do it, it’s a lot easier to ask, “why not me?” and that is why it is so important to build the right network. Pimsleur helps entrepreneurs surround themselves with other business owners and dealmakers who will amplify their potential. It doesn’t take long to realize that everyone around you did not achieve success without a long list of failures, and once you start to accept failure as a part of the process, the hesitation and fear begin to fade away.

Listen to the Fueling Deals podcast episode featuring Julia Pimsleur’s interview about The Seven Figure Club.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!