Category: Authentic Negotiating

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Authentic Deal-Making Authentic Negotiating Deal-Driven Growth

Master the Inner Game to Broker More Deals

Mastering the inner game

As a husband, father, friend, and serial entrepreneur, Tony Grebmeier’s current ventures include co-founding ShipOffers with his childhood friends, and being the creator of the Be Fulfilled Brand. Tony notes that the journey to finding fulfillment is often filled with stories of stuff we never thought would happen. You may even feel like giving up entirely; that was his story, until his friend John showed up and saved his life. Now, Tony is passionate about teaching you how to master the inner game so you can experience more success of your own.

One of the companies he created from the lessons he’s discovered over the past 24 years as an owner/operator was the Be Fulfilled Journal. This journal has enabled over 5000+ entrepreneurs to develop a fresh vision for their life and take action right away. Tony is also the host of the popular Be Fulfilled Podcast: The Real Stories Behind Success. He’s been on a quest for the past four seasons to redefine how we determine success. It’s the perfect show for anyone on their journey to personal or professional fulfillment who might be looking for some additional motivation on the climb up success mountain.

Early Ambitions & First Deals

Tony remembers wanting to be a firefighter, a policeman, and eventually an archeologist. Around 13, he got really set on becoming an architect as well. Although those dreams didn’t technically become a reality, Tony shares that he now advocates for each of us to become archaeologists and architects in our own lives. That’s powerful!

His first deal-making experience was a baseball card show he ran out of his garage. He’d make flyers, and hustle to get people to come. Eventually, he sold that concept to others after it had grown. That early wheeling-and-dealing to get 50-6- kids to his house on a Saturday was Tony’s entrepreneurial start!

Looking back, Tony notes that his parents had completely different backgrounds, and even came from different countries. As a sort of hybrid, he feels he combines the engineering and artistic talents that have run through his family for decades. When reflecting, he also shared that his emphasis on mastering the inner game and really digging deep into your own life have been instrumental in his ability to understand the impact his family has had on him. 

Saying Yes (A Lot)

Throughout his life, Tony noted he’s learned to say “yes” a lot. By the time he was in college, he’d had 14 different jobs. One day, walking past a radio booth, he realized he wanted to do radio.

He first got turned down, but he persisted. At his core, he knew that if he believed he could do something, he would absolutely make it happen. That resulted in 4 college radio shows, and an eventual career in radio.

While working at a Silicon Valley radio station in the 90’s, Tony got asked if he wanted to design a website. At the time, they were so new he wasn’t even sure what a site was, much less what would go into making one. However, he said “Yes” again. Before you know it, he and his business partner were selling websites for $50,000.

After a repeat client purchased yet another site, Tony finally asked him what he was doing. The client told him about fulfillment sites, and shortly after Tony launched a supplement fulfillment company.

Although he no longer has that initial organization, Tony has been running ShipOffers for the last 20+ years with one of his childhood friends. (This guy dates back to the baseball card show days in Tony’s garage!)

Deals Gone Wrong

After launching supplements, Tony and a friend realized there was a content gap between the ages of 13 and 16. Along with a group of others who saw the need, they created a web series designed for the 13-16 year old demographic. It quickly acquired 20-60 million hits, and garnered a ton of attention!

Shortly after, they started receiving bids and interest in getting bought out. Large media companies were looking to purchase what they had created.

That’s when the problems occurred. There were 10 “leaders” of what they had built, and egos got in the way of being able to achieve a meaningful deal. That taught him to be very careful about who you go into business with, and how many people should be involved.

These lessons still apply. In 2017, Tony’s company did 12 million in sales. He looked around, and realized that some areas were getting bloated. There were too many decision makers, and a lack of clarity. After making shifts, growth took off, and they’ve surpassed the 60 million mark this year.

Seasonality Data

In the early 2000’s, Tony’s company created virility pills. Now, it’s testosterone. The trends have shifted, and what people consider “problematic” and “normal” changes significantly.

A major benefit to having been in the game for 20+ years is that ShipOffers allows Tony’s team to use the seasonality of data and major trends to make decisions. He’s seen how things shift over time, and he’s not in it for the short game.

Understanding that data can have both short- and long-term purposes. You can use it beyond “just” outreach, which is powerful. Tony notes that ShipOffers has hired data analysts who can study the trends they’ve documented over years. Then, they help them think about what positioning could help them reach the next level. He contributes these high-level reports and big picture thinking with ShipOffers’ continued ability to grow.

Master the Inner Game

To hear more about Tony’s personal struggles, what he’s learned about mastering the inner game, and how he continues to grow, listen in today!

 

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. He is deeply 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!

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Authentic Deal-Making Authentic Negotiating Deal-Driven Growth

5 More Steps Towards Deal-Making Success

Deal-Making Success: white shoes on red carpet

As I discussed in Episode #134, there are 10 steps I consistently promote for deal preparation and readiness. Combining these steps will lead you towards deal-making success! Having already shared the first five, in this solocast I’ll focus on the five I had left to cover. Listen in to learn about how you can take advantage of the repeatable, scaleable deal-making opportunities.

The First 5 Steps Towards Success

Our first five steps from the last solocast were:

  1. Know Why You’re Making the Deal
  2. Determine Who You Are Targeting
  3. Build Your Value Proposition
  4. Get the Right Resources in Place
  5. Choose a Deal Model

If you haven’t had a chance to listen to that one yet, please do! Those first five are really the foundation you’ll want to ensure you’ve set before you move forward.

Step #6: Choosing a Deal Structure

A lot of people want to jump to this step first! They’ll have a deal on the table, or be considering a deal, and they’ll already be focused on their structure. It’s always one of the first questions I get!

When asked, however, I always bring clients back to steps 1-5 before I spend time on establishing structure. If you don’t know the basics, like why you’re making the deal, what the value prop is, and what resources you need in place, then you’re not ready to be establishing a deal’s structure yet.

Finally, you’ll want your deal model in place before you choose a structure. The model gives you a template that allows your deals to be scalable and reproducible, which is key to making strong deals.

Once you know your model, then you’re in good shape to start structuring your deal. This includes legal documents that reflect that deal structure. We can take care of all of that before a deal is officially taking place. Even if the deal is already underway, we always encourage clients to use this opportunity to let us draft a series of template agreements that can be used going forward. The advantage to having these template documents is that you put yourself in the position to make powerful deals (and take fast action) in the future.

Although there are many more details regarding deal structures, this is the basic overview that will help you understand why it’s not a first step.

Step #7: Enter the Due Diligence Phase

General due diligence takes place even before you have a deal in place, and includes how you find people and what you need to know about the industry. It might also include locating conferences, finding professionals you’d like to work with, such as lawyers and brokers and bankers, and preparing internally for the deal.

If you’re already in a deal-making discussion, you’ll also want to do the necessary due diligence with your possible partner. You should thoroughly check any person or organization you’re considering making a deal with, whether it’s a joint venture, acquisition, or something else altogether.

Other areas to do your due diligence include legal, financial, cultural, systems/integrations, technological, investment approaches, and more. Be sure to think through what your situation calls for!

Step #8: Start Negotiating

This is an area I’m passionate about, as witnessed by my best-selling book, Authentic Negotiating, and the many podcasts I’ve done on this topic. This includes both actual negotiations and the process of getting the deal officially closed.

If you have a few deal-making templates based on your structure, for instance, this may be where you make some tweaks and customize the deal to the person or company your working with. Although you need to remain open to who you’re working with, you also want to balance your own needs and process against that. 

Ideally, you won’t fundamentally alter your deal-structure during this process, because you want to be able to use those templates to make deals scalable and repeatable.

Once negotiations are done, ideally your lawyers are able to complete it easily using the templates you’ve already put in the work to create.

Step #9: Think About Positioning

Once you’ve closed your deal, you’re not done yet! (Even though it seems like it might be.)

Even before you close the deal, you want to start thinking about positioning. This includes how you’ll announce the deal within your industry or marketplace. You should think through how you’ll want this communicated, and how you want it to be received.

If you’ve completed a merger, for instance, you should be communicating about what major partners may be staying on (or leaving), how you’re going to talk about it, and what you want the market to know from your part of view. You may also need to consider how your deal partner would like this positioned.

In addition, you’ll want to consider internal positioning. Often high-level executives are at the deal-making table, but there are many employees and personnel who are going to be impacted as well. How can you position the changes well and create employee buy-in so that you can retain (or begin creating) a strong shared culture.

Your people may be worried about increased workloads, new technology, changes to the pay scale, or decreased opportunities for promotion. Positioning is a way to address these things and create positive momentum.

Step #10: Start Integrating

Acquisitions, mergers, and many other deals require many parts, pieces, and team members to integrate. From choosing a cohesive CRM to selecting a method for communicating between team members or closing out a sales process, you’ll need to ensure that you have a strong integration plan.

Affiliate deals, joint ventures, and more also require integration because they’re asking people to work together. So many clashes, including technological and financial, can keep an otherwise great deal from succeeding. It’s vital that you’re taking the necessary steps to ensure that you’ve planned for your deal to last long into the future. 

When you follow these deal-making steps, you’ll position yourself for long-lasting, successful deals. That’s the best way to ensure ongoing success.

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. He is deeply 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!

 

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Authentic Deal-Making Authentic Negotiating Deal-Driven Growth

Acquisitions and Exits

brick wall with blue exit side and pictures of white stairs: Acquisitions and Exits

When Jessica Fialkovich sold her first business a decade ago, she had no idea where to start. Fortunately, she was able to exit successfully and then buy her next business. For almost ten years, she has built the fastest growing and most successful business brokerage firm in the U.S. But she also realized that business owners that came to her firm to sell were often not prepared. Although thousands of experts will teach you how to start a business and how to grow one — very few will teach you how to sell. So she decided to pull back the curtain about how the business sales process works and give buyers and sellers the tools to successfully (and profitability) complete transactions, including acquisitions and exits.

Jessica is passionate about small business and the entrepreneur community, and holds board positions for Entrepreneur’s Organization and The Fight Back Foundation. Over the past 7 years, her team has completed $250 million+ in transactions. This includes working directly with over 1,500 business owners, being involved with 350+ deals, and giving over 10,000 entrepreneurs guidance about buying and selling businesses

Early Aspirations

Jessica grew up on a horse farm, and dreamed of being a large animal veterinarian. After experiencing blood, however, she realized she didn’t want to go into a career that involved surgery.

Eventually, she moved on to an early high school job as a telemarketer at a gym. She was able to close a few memberships, and was proud of her success. (She also remembers how scary sales felt to her at the tie!) Those are some of the first deals that Jessica remembers donig. It reminded me of some of my early deals with gyms. When they first moved to a 30-day subscription model, some people thought it was ludicrous. After all, they had previously had people locked into annual contracts!

It was a great move, however, because people were more open to entering into a contract that they felt they could end if needed….and hopeful enough about their habit changes that they would tend to maintain the membership anyhow!

Lessons Learned

Jessica started her first business in 2009, which was mid-recession. Her and her husband had seen friends do well with wine, and they decided to open a wine tasting bar in Naples, Florida.

They quickly got into luxury wine dealing, including bottles that sold for $25,000 each. In addition to being a great business, they got into at the right time. As online wine buying started to take off, they decided to close their physically located business and relocate to Colorado.

When she started asking around about how to sell a business, she was only able to find one person to guide them through it. Although it was a great deal (60 days, all cash, 2 weeks of training), Jessica also felt that she had done a lot of the leg work. The broker wasn’t that involved, and a lot of the process steps, like due diligence, fell to her.

A Whole New Industry

The experience showed Jessica that there was an entire industry that was going largely untapped and unnoticed. 

After all the work to start, launch, and grow businesses (things there was plenty of support for in the market), there was little guidance for how to exit one well. No one seemed to be talking about it, which piqued Jessica’s interest.

Upon moving to Colorado, they launched their business brokerage firm there. In the process, Jessica decided to pull back the curtain about how the business sales process works. Her desire was to give buyers and sellers the tools to successfully (and profitability) complete a transaction. 

I’ve seen this as well; too often, we’re not taught how to create enterprise value and position ourselves for a strong close.

Business Brokerage Market Research

In the process of doing her market research, Jessica found that the acquisitions and exits process always tended to be similar, but the experience could vary widely. She wanted to bring support and assistance to every level. After all, many business owner’s retirement was tied up in the sale of their business.

Jessica set out to deliver investment banking level services for small businesses. One way this was accomplished was by providing their brokers with a whole back office team, including buyer reps and other resources. This team approach was designed to offer the ultimate support and comprehensive services.

One reason that services had tended to lack in this industry is that larger deals are more lucrative for brokerage firms. 

When the deals and organizations involved are smaller, Jessica shares that they have to be much more process oriented so that they can close more deals than a larger firm would. Last year, in fact, they closed over one hundred! One positive thing about this business model is that their risk is much more diversified.

Working at that scale also means that processes are key.The back office and admin team allow the brokerage team to do more deals, while still providing highly personalized services.

Starting as a Franchisee

When they got started with the brokerage, there was a defunct office in Colorado that they acquired. Their growth continued as a result of ongoing acquisitions. Eventually, it led to offices in Dallas and Vegas.

Jessica notes that the franchise’s owner had a very similar outlook in terms of where the industry was going. In addition, he emphasized process and resource pools as well. Being able to work with offices across the country has helped Jessica and her team access necessary resources and continue to position themselves well in the current marketplace. 

Scaling and fast growth have been beneficial outcomes that have resulted from the systems and expertise of the network as well. Jessica notes that, whatever deal comes up, she knows there is something in her network that will be able to offer guidance if she wants extra support.

Once you understand how to operate a business within an industry, deal-flow naturally comes to you. Jessica notices that many opportunities have come to them as a result of their reputations as top-performing franchise owners.

A Tale of Two Markets

After the last year and a half of chaos and pivots, Jessica feels that she’s seeing two markets emerge.

On the one hand, it’s a buyers market in many regards. In terms of picking up second and third markets, or breaking into an industry, well positioned buyers are making gains. Because of low performances over the last 18 months, many industries are more accessible than ever. A deal that would normally cost hundreds of thousands of dollars for a buyer could happen today for fifty.

Alternately, industries that remained stable or performed well during the last 18 months are in a seller’s market. There is a lot of money being poured into garnering deals in industries that have proven to work. Lending has also  been more available than it sometimes is, which allows sellers to walk away with much more cash than normal.

In terms of industry, Jessica notes that the winners and losers have been very clearly defined due to the current economy. 

To hear more about her thoughts on acquisitions and exits, as well as on today’s market, listen in today!

 

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. He is deeply 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 Authentic Negotiating Deal-Driven Growth

Emotional Intelligence & Deal-Making

emotional intelligence: two business women sitting face to face in chairs, talking

Dr. Patricia (Pat) Baxter is a corporate veteran and femtrepreneur, as well as an award-winning, certified emotional intelligence (EI) coach. She’s also a professional NSA speaker and recognized workshop/retreat leader. Dr. Pat equips women leaders to lead boldly and intelligently. This is done using the undeniable power of emotions. She works with women leaders at all levels who want to use emotional intelligence to build stronger, SMARTER work environments and connections that more fully engage their teams, partners and clients.

With 25+ years of corporate/entrepreneurial knowledge and know-how, a doctorate in business leadership, and multiple published books, Dr. Pat is a deal-making force to be reckoned with!

Early Career Aspirations

Early on, Pat knew she wanted to be rich. Beyond that, she wasn’t quite sure what direction her career would take her!

She did remember an uncle who lived with her family when she was young who. He frequently told her she was too emotional and cautioned her to calm down. At the time, she found it frustrating. Having learned so much more about emotional intelligence now, however, she looks back and laughs. She realized that, in some ways, he was right. Calming down truly does make a difference!

As she has continued to learn more about the brain, emotional intelligence, and human responses, Pat has continued to grow her ability to help others use the power of emotion to lead well.

The earliest deal-related exchange that Pat remembered was related to helpfulness. She realized that, by engaging in chores and doing things that were being asked of her, she could alleviate stress from others. In doing so, she positioned herself to take advantage of the implicit trade-offs present in taking care of business. Even as a kid, she could see the benefits of being viewed favorably by others and building relationships before it came time to make an “ask” at the proverbial deal-making table.

Emotional Intelligence and Deal-Making

When making deals, Pat notes that emotional intelligence practice and awareness is very useful. She’s realized that she’s able to quickly tap into the other person or business’s interests, and to understand what they may be seeking.

Another useful skill? Picking up on the language being used and incorporating that into how you’re communicating. However, she notes that the key to this working is to ensure that you understand the full meaning of that language!

Pat encourages deep listening, which includes watching expressions and body language in addition to listening to words. It also requires that you manage yourself! You should know how your own tone sounds, and be aware of what you’re communicating with your own body language. After all, communication is a two-way street.

True deal-makers need to do the hard inner work of knowing why we react the way we do, why we think the way we do, and how our own tendencies may impact our deal-making success. This sort of self-knowledge can also prevent us from sabotaging our own deals.

Mission Critical Skills

  1. Self-Awareness

Headed to the deal-making table? It’s essential that you have enough awareness to know what you actually want. You also need to know how you come off.

2. Self-Management

You have triggers that may derail you, spiral you into limiting beliefs, or cause you to shut down or lash out. We all do. It’s your responsibility to know what yours are and learn to manage them in order to best equip yourself for deal-making success, no matter what comes up.

3. Empathy

Empathy opens the door to understanding both others and ourselves. It is what allows us to express ourselves with vulnerability and to make connections that make powerful deals possible.

Why Deals Die

After years of making deals, I’ve found firsthand that personal client triggers can be a major reason deals die. The sensation of immediate dislike, distaste, or frustration that can rise up within us when we encounter certain triggers are powerful deal-making hurdles, even if there is nothing explicitly wrong with the deal’s terms or logistics. 

Deals die when we cannot overcome these triggers.

Even if you’re technically “in the right” or your frustration is legitimate, you can choose to manage yourself and your emotions if you’d like to close on the deal you’re making.

The reality is, our behavior is guided by all sorts of deep, unseen emotional triggers and responses. Often, these triggers come from the most unexpected things, which means that our own lack of awareness can cause us to cycle into unintended responses without even realizing it’s happening. 

In fact, Pat shares that our emotional triggers actually set off a chemical reaction in the brain. This can trigger fight or flight responses, which can take over our more rational responses. Once we learn to realize that this is happening, and that we’re feeling out of control, we can learn to create more space for ourselves and to respond in a way that will enable us to pursue the outcomes we’re desiring, even if we encounter an unexpected trigger.

Listen in to learn more about Pat’s tips for handling triggers!

Raising Your Awareness

Pat recommends that being aware of your body can help you begin to more easily recognize your own triggers. From sweaty palms to a lurching stomach, tingling ears to a foot that won’t stop tapping, you absolutely get physical clues about what’s going on emotionally. Learning to be more aware of what’s happening in your body when you’re getting triggered can help you  begin to prepare for the self-management aspect of being triggered.

Obviously we can see that being over-reactive can blow a deal. However, how emotional triggers can also cause us to go through with deals that we shouldn’t have gone through with.

Pat notes that our bodies give us signals about bad situations as well. Learning to watch our bodies, to get in tune with what they’re telling us, and to respond with compassion and intelligence can help us avoid going off the rails in either direction.

People who find themselves in an “endless loop” of failing or not getting what they want often have something, somewhere “disconnected”. At some point, it’s time to hold up the mirror and start to examine what internal work can be done to help you break through and begin to reach the next level. This is especially important for deal-making!

To learn more about the specific tools I use to get myself back into the right place, and to learn about Pat’s suggestions, listen to the full episode here.

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. He is deeply 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 Authentic Negotiating Deal-Driven Growth

DealQuest’s Best Of: Deal-Maker Mindsets

deal-maker mindsets: two men in black suits facing each other

This week’s episode features DealQuest’s Best Of Deal-Maker Mindsets. Tune in to learn about interpersonal skills from Steven Herz; deal-maker mindsets from Daryle L. Johnson; and how to not end up resenting your investors with Jeff Dennis. If you hear a “best of” snippet and want to dive into the full interview, you’ll find links to the guest’s feature-length appearance in the show notes below. 

Listen in to the “best of” interviews.

Meet Steven Herz 

Steven Herz is the author of Don’t Take Yes For an Answer, as well the founder of IF Management and the president of The Montag Group. He also believes that anything is possible, which in his own life has included losing weight in order to compete in the treacherous Gulf Coast Triathlon. During this time he also raised thousands of dollars for the Leukemia Society. Steven is also a huge proponent of leveraging interpersonal skills in order to make better deals.

What Sets You Apart?

Why does one person rise and the other doesn’t? Well, you might think there are many variables that contribute to this. However, Steven found that, even with variables like age, work ethic, natural talent, and so on accounted for, there are two major factors that seem to play pivotal roles in whether someone is playing at full capacity.

  1. Internal Awareness & Self-Responsibility
  2. Communication Skills

No matter what deals you’re doing, you can absolutely create more success by developing your interpersonal skills. This includes practicing personal awareness, upleveling self-responsibility, and practicing your communication skills (both public and private speaking skills). Steven believes that AWE is the acronym that best represents these major skills.

A — Authority, presence, substance

W — Warmth, trust, connection

E — Energy (your own, and how you energize others)

He also believes that these skills CAN be taught. And once you’ve really started to understand and use them, you’ll see a difference in who you attract, how you sell, what you build, and what your outcomes are. To learn more about Steven’s book (including the bidding war four major publishers engage in to get it!), his work, and how you can improve your own negotiating skills, listen to the full episode!

Tune In to the Full Episode For:

  • Negotiating Deals with television and radio stations and networks
  • Other Key Deal Terms – Thinking Beyond Salary
  • The Power of Personal Change
  • Interpersonal Communication Skills
  • And more!

Meet Daryle L. Johnson

Daryle L. Johnson is the president and co-founder of SmartIT Mobility. He’s also the owner of Ideation to Valuation. Daryle is responsible for setting overall sales, partner, and supplier alliance strategies. He’s also empowered to leverage corporate assets to deliver value with integrity and quality. With the mindset of a deal-maker, he is an innovative, energetic, creative, and very charismatic intrepreneur AND entrepreneur. 

Deal-Making Mindsets

Daryle shares about a deal he negotiated for schools that took all of their needs into account. From pricing to software, he covered every possible problem that could have created issues for the school board. He partnered with T-Mobile (for both software and sales teams). Then, he brought in a training company to work with teachers, and he leveraged long-term marketing strategies to bring up front costs to the school down to $1 per device.

He also anticipated parent issues, teacher frustrations, and student needs. The final deal was the result of dozens of smaller partnerships, leveraged resources, and connections. Also key? His mindset. Rather than seeing the problem as too big, the partnerships as too complicated, or the schools as too difficult to negotiate with, he chose to see the possibility. 

Every challenge was faced, and solutions were created. Why?  Because he believed that it could be done. Ultimately, the program provided technology to over 60,000 students. It also spawned other local deals for Daryle, as a result of ongoing negotiations and collaborations.

In theory, Daryle could have gone into the school and said he had a solution he was selling for X price. If he had, he wouldn’t have been successful. Instead, his deal-maker mindset enabled him to create a full package. He provided a comprehensive solution in a way that made sense for his audience, and they bought it. You can hear the full episode here.

Tune In to the Full Episode For:

  • Building the Mindset of a Deal-Maker
  • Innovative K-12 Deals
  • Following the Process
  • Crafting Strategic Deals
  • And More!

Meet Jeff Dennis

Jeff Dennis is the trusted advisor to the CEOs of fast growth companies, where he provides strategic and financial advice. He is a lawyer, serial entrepreneur, best selling author, and public speaker.His book, Lessons from the Edge, is a collection of stories by 50 entrepreneurs who share their biggest mistakes in business and the lessons that they have learned. He’s a sought after public speaker for audiences across the world. Here, he shares about the deal-maker’s paradigm shift that has helped him grow throughout his career.

Resenting Your Investors?

One think Jeff has noticed is that sometimes founders turn around and resent their investors. In the moment, they’re willing to give up larger percentages of their companies, or take on more unfavorable terms, because they’re desperate to get started. Down the road however, and with a bit of revisionist history, they forget the desperation and feel taken advantage of or frustrated with the terms they agreed to.

To Jeff, this sort of conflict is unnecessary. He encourages business owners to map the process early on, and to consider what they are willing to give up for investment capital. Once you’ve made the deals, it’s too late to go back and retrieve what you’ve given up!

As we note in the interview, every step of the way is based on decisions you are making. A clear head and vision make a world of difference! On the show, we also talk about Jeff’s family business, mindset growth, and deal-maker’s paradigm shifts.

Tune In to the Full Episode For:

  • Creative Problem Solving as an Entrepreneur in Residence
  • Discovering a Deal-Maker’s Paradigm Shift
  • Always Growing
  • Creating Services & Products That Work
  • And More!

 

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. He is deeply 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 Negotiating Deal-Driven Growth

Wealth Management

Wealth Management

Elizabeth (Liz) Nesvold is the Managing Director and Head of Asset & Wealth Management Investment Banking for Raymond James. She joined the Raymond James’ team in 2019 as part of the acquisition of Silver Lane Advisors. Liz has been described as “the most experienced female investment banker specializing in the investment management and securities industry” by Mergers & Acquisitions magazine. 

Liz’s Background & Experience

Over the past 25-plus years, she has advised on approximately 170 completed M&A, valuation and strategic advisory assignments for a variety of clients. These clients include institutional managers (both traditional and alternative), trust companies, multi-family offices, investment counselors, financial planners and investment consultants. Prior to joining Raymond James, Ms. Nesvold founded Silver Lane in 2007. Before Silver Lane, Liz spent 15 years at another investment bank, where she co-founded and led the first wealth management specialist M&A advisory group in the investment banking industry. Ms. Nesvold was one of only two female partners at the time of her departure, and also served on the operating committee. A member of Young Presidents’ Organization, she earned a BA in Political Science with a minor in Economics from Binghamton University and an MBA in Finance (with high honors) from Fordham University Graduate School of Business.

As the M&A industry has matured, there has been an increase in attention and opportunity. As an early adopter, Liz has been part of shaping the industry and has significantly contributed to its growth and direction.

Earliest Deal-Making Memories

Growing up, Liz expected to go into construction and run her dad’s company. She grew up around the industry and always assumed it was the direction she would go. Instead, however, she went into finance with great success.

Liz’s first remembered deal was connected to what she learned in her home economics class. She learned to sew, and started a quilted bag company she called Designs by Lizzie B. She sold her bags to local merchants, who then resold them. Quite a strong start for a 15 year old!

Her commitment to entering the M&A world started as a fluke. Post-college, Liz interviewed at all sorts of firms, ultimately receiving an offer from a firm engaged in all sorts of mergers and acquisitions. They were deeply involved in the securities industry, as well as in asset management.

Gaining Deal-Making Traction

As she moved through the ranks, Liz noticed that every specialty seemed to be “covered” by an already-established expert. (Big insurance companies, big broker dealers, big asset managers, big mutual fund complexes, etc.)  In addition, there were no real training programs being offered in-house. The only space Liz could see there might be a bit of room was investment council. It seemed like a good place to get her foot in the door, and she went for it.

There were production requirements, and Liz started to get in the habit of calling small firms. (At the time, a “big” firm in the field was around three to five hundred million in assets. These days, that’s almost considered small!) As she gained traction, it was clear no one was really covering the space, and she leveraged it into a practice group to help other colleagues learn more.

Clearly she succeeded! Although she attributes it to “dumb luck all the way in”, Liz certainly knew her industry and identified an area that had been overlooked for too long.

Liz also noted that she’s always been willing to take a look, and never quick to say no to something new. In fact, she’s done five deals with one firm that cold called her when they were sitting at around five hundred million in assets. In the most recent deal she assisted them with, their assets were over eight billion in assets. Case in point: Never say never — you have to get started somewhere!

Deals at Raymond James

Liz noted that now, at Raymond James, she makes deals of all sizes. She’s worked with franchises valued around thirty million in assets, as well as those at five hundred million and beyond. In the last two years, with around 28 deals completed, Liz estimates the bulk of them are between twenty five and a hundred million dollars in size.

Massive deals occur, but they certainly aren’t the bulk of transactions. (Even though those are the deals that everyone is always reading about!) Deals range from family office mergers, wealth solutions, fee-only, and more. Liz notes that it’s all over the map, and she enjoys being kept on her toes as a result!

Transitioning away from Silver Lane and joining Raymond James was also a deal in and of itself. Liz reports that being on the other side of the deal-making table caused her to become much more in tune with elements of deal-making that she hadn’t typically experienced herself. The insight has been great, and she’s been able to utilize it in her work now.

Liz also notes that Silver Lane did exactly as they advise others to do; they got an advisor and navigated towards what they were trying to accomplish in terms of making their own deals, rather than simply matching the marketplace. The major focus was on growth and the ability to continue to build.

Getting Deals Done

Liz and I have worked together on multiple deals, including one we worked hard to push through before end-of-year last year. (The push was connected to possible capital gains increases.)

Now, Liz notes that a changing tax landscape would never be a reason she would encourage someone to rush to the deal-making table. However, she notes that potential changes are a piece of the puzzle for firms currently pushing to get deals done this year. She’s also seen it speed up the continuity planning for many businesses. Liz notes this is something that needed to happen in an industry where key principles are aging.

If you’re in the middle of a deal, Liz thinks it’s probably a good idea to complete it in the current tax year. Contemplating starting something now? Well, she notes it would be quite a tight timeline to run a thoughtful, strategic process. It’s important to understand that it takes time to engineer a well-crafted deal that makes sense for your business in the long term.

Historically, there are always examples of people panicking because they are fixated on a single factor. There is a big difference between taking something into account, and allowing something to overwhelm your common-sense decision making. Capital gains increases might influence your next deal, but there is no need for them to become the primary reason for the choices you’re making.

The Capital is There

In this day and age, there is no good deal in the wealth management space that there is not capital available for. The money is there!

There are more solutions today, across the entire spectrum of financing, than Liz has seen in the last 30 years. 3-4 years ago there were a number of strategic gaps, but those are closing quickly. In some ways, it’s excellent that this dearth of choices has been filled in. However, Liz also notes that the increase in options and strategics has also created confusion in the industry. As a result, the need for due diligence is higher than ever!

In Liz’s perspective, in some ways the industry had become flooded with choice about 5 years ago. The largest lack of choice, however, was coming from the minority solutions space. Now, there are many clients looking for elections in minority financing, partners, and sponsor investors. These are great choices for firms who want to perpetuate the independent model, which had been missing from the table.

The last 10 years have been great for deals. Listen in to the full interview to hear more about Liz’s perspective on acceleration trends, succession, and more!

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. He is deeply 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 Negotiating Deal-Driven Growth

Pitching For Profit & Deal-Making Wins

Pitching for Profit: Empty room with white tables, chairs, and screens prepared for a speaker

Precious Williams is a returning DealQuest guest (you can also catch her on Episode 79) who has successfully appeared on Shark Tank and is a 13x Elevator Pitch champion. In less than two years she grew her company from zero to multiple six figures, and her clients have received national, international, and corporate recognition. She’s a world class speaker for brands including Google, and Microsoft, and is a 3x number one bestselling author. Precious is truly the queen of pitching for profit.

Last time Precious and I spoke, she discussed her Shark Tank experience and how she trains people to pitch. We’re not focusing on that today, so feel free to visit our first episode if you’re interested in those parts of her journey! Now, Precious is here to share about deals, especially book deals.

What Would it Mean For You?

Precious notes that she’s published all three of her books with the same publisher, including her most recent, Pitching for Profit: The Bad Bitches’ Playbook to Convert Conversations into Currency. However, this time some things were different.

She notes people often ask how she went from being virtually unknown to being a major power player in less than three years. Television networks and media reach out to her, and she’s spoken for Google, LinkedIn, Microsoft, George Washington University, Intuit Quickbooks, NBC Universal, PwC and more. With success like that, people want to know!

In return, Precious has a few questions of her own: 

  • What would it mean for you if you could rebuild your network to make it more lucrative for you? 
  • Would you benefit if someone could pitch you in a space you didn’t even know existed? 
  • What would it do for your business if people were coming to you for referrals and opportunities?

Ten years ago, Precious notes she was pitching to raise money and gain relationships. Now, she teaches women how to never be broke again. One call, that’s all. Building relationships is a key part of this — listen in to hear more about the impactful client relationships Precious builds.

Pitching For Profit

At her recent live event, Precious shared how attendees got to meet people and make connections that they wouldn’t have otherwise had. Relationships are key. In fact, she even pointed out that the DealQuest brand inherently speaks to this idea that it takes more than one person. Deals, after all, require at least two parties at the table.

They also require trust, which is something that Precious strives to build with both her clients and her readers.

Her latest book, Pitching for Profit, serves as a playbook for women who want that coach in their corner, running them through plays. Precious notes that this is different from her first two books, which were all about pitching and only pitching. This time, she’s offering guidance, support, and actionable takeaways that really help you move the needle. It offers a step-by-step approach to getting people into your network, attracting VIP’s, and making yourself attractive. 

In a nutshell: It’s a must read for anyone making deals and crafting pitches.

(We both give a shout out to Ramon Ray, who has major knowledge on using influence to create deals.)

Lessons From Three Book Deals

After meeting with several big publishers, Precious realized she was hearing a lot of deals that sounded good up front, but would possibly feel like mistakes later on. Her solution? Finding a smaller publisher that would work with her to create a deal they both felt great about. 

Enter Pen Legacy and Charron Monaye. 

In their deal, Precious has full rights to her books and isn’t having to split her profits at all when people buy her book. (Of course 3rd party sellers, like Amazon and Target, always get their cut. But that’s not in addition to the publisher taking a chunk too!) After watching the impressive distribution and marketing of her first book with them, including Forbes Magazine doing an interview with her, Precious was hooked.

She also notes that most people don’t have that. In fact, your average author is lucky to sell 500 books in a lifetime….and still lose royalties to their publisher. Precious, however, is still selling copies of her first book, years after publishing. That’s the power of a strong deal with a strong publishing house, regardless of size.

Quick Tip: When she’s pursuing speaking contracts, she always tries to add in an expectation for the organization to purchase a bulk order of her books to give to attendees or use internally. This adds to the gross number of books sold, and keeps them circulating.

I noted that, in my own publishing experience, I didn’t write the book to get rich. I never intended for it to be a major money maker. Instead, I planned to leverage it into speaking and other exposure opportunities, which I have absolutely been able to do. My wife Rha, however, did a major book deal with a significant advance when she published The Calling. For her, that was the right call. When it comes to book deals, stay open minded and be willing to look beyond the obvious!

Leveraging Relationships and Influence

You don’t need millions of followers or fans to make a deal or have influence. Instead, you need to grow your own niche audience and prove that you have influence within those circles.

Precious’ first pitching engagement was with a non-profit, Bottomless Closet, who then referred her to Viacom. She was able to walk into that room as a trainer and subject matter expert. Precious notes that she strives to have a measurable result to the work she does. Whether she is teaching how to pitch, or focusing on some other element of communications or business or boundaries — she wants her presentations to be memorable and her audience to walk away with something powerful and tangible.

As she taught and trained at one place, she’d get an opportunity, another open door. She found that, if the right people know you, it doesn’t matter if the whole world doesn’t know you.

By growing her reputation, Precious was able to utilize those contacts by asking for recommendations, introductions, and testimonials. As the group willing to vouch for her grew, it became easier and easier for her to gain traction with new leads.

Making Speaking Deals

Last year, Precious spoke at LinkedIn and was voted the best speaker at the event. This year, they called her back. They said they wanted her to speak…for 4 minutes. In 4 minutes and 17 seconds, Precious saw her DM’s and inbox blow up with requests for her rates, requests to have her speak, and requests for interviews.

In an opportunity so small it was less than 5 minutes.

You don’t need hours on the stage to gain traction if you deliver value.

I noted that many speakers get caught up with speaking on stages. Covid taught them that that is a weak business model. The stage can disappear, and with it your income!

Although Precious does leverage speaking on stage as part of her income generating strategy, she doesn’t rely on it as her sole source of income. Instead, she believes in leveraging it into other opportunities.

When organizations started announcing they wouldn’t be having live events, she learned to adapt to virtual offerings. She also learned to use those initial speaking engagements as a platform to offer more services. Corporation training, for example, is a great offering to add.

Precious also has a LinkedIn Live show. It’s virtual, and it gives executives, CEO’s, and other connections a chance to get a feel for her energy and style. As they learned from her, they also followed up about bringing her in to speak and train.

When she’s preparing to speak, she also looks to include book purchases into the contracts. Having those books circulating helps Precious build a tribe and create even more connections. Recently, she started selling merchandise as well. She’s also started expanding to speaking to teenagers, mixed groups, and up and down the employment hierarchy ladder.

She’s able to say: If you like what I did here, I can also offer to do that over there. 

Precious showed up for our interview with passion and wisdom. This is a must listen, with more takeaways than I can list here!

 

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. He is deeply 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 Negotiating Deal-Driven Growth

Making Deals in the E-Learning Sector

E-learning sector: a table top with laptops and people working

Jon Tota started as a screenwriter, then went to Wall Street and found his way into computers in the late 90’s. He then co-founded Edulence in 2002, and created Knowledgelink as one of the first e-learning video training platforms in 2004. He sold that company in 2020, and is now back to creating original scripted content at his new production studio, Syntax + Motion. In addition, he’s the host of the Learning Life podcast.

He’s truly been able to blend his passion for learning with his dream of creating original, meaningful content. Along the way, he’s been a major deal-maker! Now, one of his major passions is helping the next generation of entrepreneurs learn how to develop and scale their own e-learning solutions.

Early Dreams & Deals

Jon shares that, early on, he had dreams of being a pilot and astronaut. It didn’t take long for him to realize that wasn’t the path! In school, and later in college, however, he found a passion for video production. He really loved the art of screenwriting, and he thought he’d get started with film.

In real life, he found out pretty quickly that he was going to have to find a money making job once he graduated. That kicked off his journey through Wall Street, entrepreneurship, and founding companies that he was later able to sell. Now, he’s in production with Syntax+Motion, which he’s loving.

The earliest deal Jon remembers making is from his senior year of college. He closed the deal on an option to his first screenplay; a major accomplishment! Not knowing anything about deal-making, rights, and other legalities, Jon now realizes he probably screwed up the negotiation piece.  At the end of the day, though, he did get the deal done!

(Jon also noted he hasn’t done a major deal in the last 20 years that my team and I haven’t been a part of — we have a long history together!) 

Planning the Path of Edulence

Jon shared that, when planning a business, you try to envision what it will become. Then when you actually build it, you encounter all sorts of twists and turns along the way. Many of those junctures include deal-making!

The first time Jon and I worked together, he was at a technology consulting company. The deal involved a contract to produce training materials for an insurance company, which is what sparked the seed of an idea. Jon and his co-founders realized that they might be able to create an e-learning business to offer these services. They were planning to create training services and then license it to companies.

Jon was excited to write scripts for the videos and take on the shooting and production elements. This was early enough in the industry that they were burning the training onto discs and mailing them out! (Eventually, the cost of burning and shipping these discs would become too much. It was a starting place though!)

Keep in mind: This was before YouTube hit the market, and video training was not really conceived of yet. It was groundbreaking….and included all sorts of hiccups along the way.

After their first round of production, however, they started to genuinely think there might be a real business in front of them. Shortly following this revelation, they started raising capital. First they did friends and family rounds, and later realized they were going to need even more to reach that critical growth point they needed to reach.

Listen in to learn more about Jon’s fundraising and early experiences.

Subscription-Based Online Learning

As they built through the major boom and bust cycles of the economy (2002 and forward), Jon’s team navigated all sorts of challenges to bring the company to an eventual exit point. These include major market shifts and various access to capital. It didn’t take long to realize they weren’t going to be working with a 3-5 year “unicorn” exit. Instead, they buckled down for the long haul.

When they decided to build a subscription-based online learning system, SaaS wasn’t even developed yet. Everything was new, and they had a lot to work through.

In one of their earliest deals, Jon suggested they move part of the business into New York City. The consulting portion was able to stay put, but it was clear that to generate momentum and reach the next level they needed Jon to be able to really take on the production side. This shift was focused on creating revenue by producing content for companies. Even though they didn’t have their own training content library yet, producing custom content generated much-needed revenue.

Another major step? Charging for the customized content and giving companies the platform for free. Because it was still so new, it wasn’t clear yet how well it do. Rather than put companies in the position of having to take a risk, they got started by integrating them into it free of charge. This allowed them to stop burning DVD’s and start really implementing their online platform.

Once they had major companies invested (and integrated!) into the platform, they were able to leverage that into building the real concept they had envisioned.

Scaling to the Next Level

Eventually, Jon launched Knowledgelink as one of the first subscription-based online training services. For the next 15 years, he focused on growing the software platform to enable experts and corporations to deliver training videos to employees and customers anywhere. Knowledgelink has gone on to deliver tens of thousands of online courses to several hundred thousand users each year. In fact, it’s become the leading video training platform for multiple vertical industries. 

The team at Edulence scaled the Knowledgelink business to earn the company several industry awards over the years, including consecutive years on the Inc. 5000 list of fastest growing companies in America. In 2020, Edulence was acquired by eLearning Brothers to make Knowledgelink the LMS platform for one of the most trusted brands in the Learning & Development space. 

Jon remembers that at one point, the company hit a point where they weren’t really growing their profits. They were generating more revenue,  but it was all being sucked into growing expenses. They kept growing, but they weren’t seeing the fruits of that in their bottom line numbers. Finally, one of the board members pointed out that it was key they found an exit for their investors. It wasn’t an option to just continue as a lifestyle business that wasn’t truly showing the numbers that were needed for a strong exit.

Being able to show that meaningful profits were being made was key. This realization caused Jon to realize that they needed to pull back on scaling and focus on meaningful growth. Listen in to learn more about Jon’s thoughts on planning for a strategic exit. I also share my thoughts on the value of competitive income as well.

Launching Something New (Again)

This eventual successful exit allowed Jon to launch a new media production company to create innovative client work and a collection of our own episodic shows. 

Syntax + Motion produces online courses, interactive video series and podcast shows of all shapes and sizes. Jon’s small team of highly skilled producers is as adept at producing an interactive video course for a major thought leader as they are at launching an original scripted fiction podcast show.

One major thing he learned from his other endeavors was the strategic business side of creating and running a company. Jon notes that he has had amazing co-founders, partners, investors, and strategic teams surrounding him. Their guidance has been a huge part of his growth, and he continues to leverage past lessons into his current and future business ventures.

Listen in to hear about Jon’s perspectives on having hard conversations, including with investors who might be sitting at the family table looking for answers.

One of my favorite things we talked about was the creative way we worked with investors to get them their money back in a way that worked for everyone. Definitely worth a listen if you hope to eventually exit from your business!

 

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. He is deeply 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 Negotiating Deal-Driven Growth

Wealth Management & Deal-Making

wealth management: a bar graph made from parts of a dollar bill, trending upwards

Peter Nesvold is a lawyer, CFA and CPA by background. He’s also a multi-disciplinary finance executive with 20+ years of Wall Street experience. Now, Peter is the Founder and Managing Partner of Nesvold Capital Partners (NCP). This merchant bank that specializes in the asset and wealth management industries.

He’s come a long way from his early start on the farm! Listen in to our full interview here.

Getting Started

Early in his life, Peter remembers being on a date with a girl who asked what he wanted to be when he grew up. At the time, he said he wanted to be an accountant, a stock broker, or a lawyer. Although he didn’t fully know what those professions were, or what people did, he knew that was the direction he was headed.

Later, Peter got his start in the industry as a sell-side equity research analyst. Eventually, he rose to Senior Managing Director at Bear Stearns, a fete he accomplished in less than six years. Over the course of his sell-side career, Peter covered more than 50 companies and ranked in StarMine’s “Best Analysts” poll across three industries. This versatility carried over to Peter’s role as a portfolio manager/analyst at Lazard Asset Management, where he was one of three managers of the firm’s SMid-cap product. During his tenure, the team grew AUM more than ten-fold and earned Morningstar’s coveted “five-star” rating.

The first deal of significance that he remembers making was between WorldCom and NCI Communications. It was his first day of his career as an attorney, and he was starting out in a mergers and acquisitions group. As he was getting dressed in the morning, he saw a newsflash about WorldCom offering a hostile bid regarding taking over NCI. When he got to work, the partner in charge of the British telecom account came bursting in. He had just gotten a whiff of the hostile bid, and Peter was able to offer valuable information in the moment. (Listen in to hear how that bit of intel got him on board with his first big deal, and what he learned about international deals.)

A Developing Career

In 2013, Peter became Managing Director and COO of Silver Lane Advisors. This premier investment banking boutique specialized in the asset and wealth management industries. In this role, Peter managed business development and institutionalized the firm’s business practices. This was all to support its exponential growth (i.e., revenues grew six-fold in seven years, firm was ranked #1 by deal volume in its vertical). In April 2019, Raymond James acquired Silver Lane. This move allowed Peter to become COO of Financial Services Investment Banking, where he helped to manage approximately 56 investment bankers in seven cities across four subverticals. That includes: banks, insurance, specialty finance and asset/wealth management. He departed in May 2020 to launch NCP.

Something Peter noticed while directing at Silver Lane was the pressure to increasingly go upmarket. They got to a point where the minimum deal side was at $750,000 in terms of fees. The ROI’s needing most assistance seemed to be hovering between two million and five hundred million in assets. That just wasn’t exactly who Peter most wanted to work with. Selling to Raymond James allowed him to return to focusing on owner/operators and entrepreneurs, along with other smaller entities he was more passionate about serving.

Now, Peter looks for firms that are trying to go through institutional change. Although their practice may be successful, they are often struggling to leverage it into being a real business. Although he has a huge amount of respect for the street-fighting mentality it takes to start a business, Peter has also seen how that can become a hindrance in terms of building the institution that enables you to scale into the higher millions and billions. 

Taking It To the Next Level

His own entrepreneurial cycle, from startup to exit to starting a new business all over again, enables Peter to come alongside these business owners with a great deal of experience and understanding.

This jump is a huge hurdle to navigate! That’s why there are so many books, podcasts, and other resources designed to speak to this change. From transitioning from organic growth only, to building infrastructure, creating systems, and generating deals: growth comes with major changes.

Peter notes that firms moving from the 750,000 mark to that next level of income generation are deeply impacted by two factors. These are the people and the culture. Want to make major shifts? The people on your team and the culture you’ve created in your business are determining factors in how far you can go.

The amount of time you are able to personally leverage is directly connected to the talent and culture you’ve attracted into your business. Problems on either of those levels require large amounts of time and energy that could otherwise be going into building your business.

Listen in to learn more about how Peter views this, along with issues of recruiting and growth.

Reinvesting for Growth

In a small practice, it’s important (and common) to focus on recruiting nimble people who can wear many hats. After all, you need your team to be able to take on many challenges. However, as the business grows, you need to start compartmentalizing some of these responsibilities and needs.

This is expensive.

You can’t hire “half” a marketing person, or any other speciality. As you start to unbundle the roles you had enmeshed in the beginning, expenses begin to increase. This is challenging, and requires a commitment to investing back into your business.

As you’ve grown and become more profitable, you eventually reach a plateau that almost requires you to take a “hit’. You might see a temporary decrease in terms of profitability and profit margins. This is necessary so that you can prepare for that next level of growth. Sometimes there is a lag here before growth accelerates; however, if you didn’t do it right, it can also signal even larger problems.

Peter calls this the “valley of death”. It can be stressful. However, he notes that passing through this and coming out on the other side is where you find the true rewards.

Listen in to the full show to hear more about Peter’s thoughts on growth, profit, and deal-making!

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. He is deeply 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 Negotiating Deal-Driven Growth

Capital Gains’ Impact on Deals

capital gains: Black man in a suit sitting in an outdoor courtyard with a black suit, blue tie, looking at his phone

A few weeks ago I came on and shared some thoughts on capital gains rates and deal-making. It ended up being one of my most popular episodes — apparently capital gains are garnering a lot of interest in the marketplace! Today, I’d like to go even deeper and drill down on capital gains’ impact on deals.

Capital Gains Overview

At the end of 2020, there were many people rushing to get deals done quickly. Now, I think it’s important to note that these were mostly folks who had deals on the table prior to the end of the year. When it came to timelines, it made sense to push through in November and December, rather than wait till January and face new rates.

Many of us felt, however, that there wouldn’t be increases until later, if at all. After all, the new administration didn’t take over until January, and there are all sorts of legislative steps to go through. That turned out to be accurate; capital gains rates might still go up for 2022. At the moment, however, the likelihood and uncertainty are impacting businesses.

We’ve had a number of clients expressing an interest in deal-making and getting things closed out by the end of this year. Similar to in 2020, these are business owners who are ready to make deals, and who are just taking an extra precaution by timing it to close in 2021. If you were planning to get another 3, 5, or even more years out of your business before selling, possible capital gains increases are not, in my opinion, a reason to rush into selling early.

If you’re planning to sell in the next 12-18 months for sure, it might make sense to move forward with a slightly accelerated timeline.

What Kinds Of Deals Are Impacted?

Capital gains rates apply to the sale of a business or entity. When you sell the assets of a business (which is how most deals are done), whether in full or in part, or the equity, there are generally going to be capital gains rates assessed. This applies to real estate as well. Essentially, anything you’ll be selling at a gain in relation to your business might be affected by capital gains rates.

Any gains above your tax basis are taxed at capital gains rates, which are currently significantly lower than other rates. (Check with your tax advisor to learn more about your specific situation here.) This can be the difference between 20% in capital gains, or 37-39% at higher rates. That is a significant difference in terms of what you walk away with! 

Personal Goodwill Sales

One option many people aren’t aware of is the personal goodwill sale. 

Note: The IRS allows these sales under their current regulations, but they do look at them very closely. This means it is extremely important that you go about doing it the right way.

If someone is an employee of an asset or financial firm (Goldman Sachs, Merrill Lynch, etc), or in trades like insurance, law, and anything else that includes a client portfolio, many people mistakenly think they have nothing to sell that would classify for capital gains. However, this isn’t true!

I recently had a friend in the wealth management field who assumed his best or only option would be revenue sharing based on his past list. This means any money you get is ordinary revenue for you, and the person who took over your book can write off the payments they make to you for your share. This is less ideal for you (the “seller”) and better for the person who took on your clients (the “buyer”).

However, I helped him see that it’s not the only way. If you can show that, if you left, a majority or large percentage of your clients would come with you or otherwise take their business elsewhere, you have leverage. This is true even though you don’t “own” the list, per se. Rather, you have built up “personal goodwill”. If you (as a person) have built up the goodwill within the list (rather than the goodwill being simply vested with the overarching company), then you may be able to benefit from capital gains rates as part of a deal.

The friend I mentioned above had built a deep list with a great basis in personal goodwill. Rather than set him up with a revenue share deal, we created a transfer of personal goodwill sale. 

Other Factors That Impact Selling Decisions

In the 90’s, capital gains rates were much higher than they are now. There were still lots of deals going on, however! Why?

Well, there are many factors that impact deals. One of those is access to capital. Whenever there is ready access to capital (which there is now), deals will be made. Increases in capital gains rates won’t necessarily dry up capital, and deals will likely continue regardless of increases in rates.

Also, investors are always looking for ways to get returns. If they can invest a million dollars and get back fifteen million, even with an increased rate they’re still netting 60% for a very healthy net profit. If you can get multiples on a return, that will take precedence to the tax rate.

(Not that they won’t consider the rates; just that the ability to turn a net profit will still be compelling.)

In addition, there are many reasons people sell businesses. They may be ready to retire, or need to sell for health or other reasons. If that time comes, owners will be willing to make deals regardless of the capital gains rates. After all, they can’t (or won’t want to) stay in business forever.

Listen in to the full episode for more ways on getting creative with rolling businesses over and deferring capital gains payments. I’m expecting some of those creative exchanges to gain strength if we do see capital gains rates increase.

Time to Panic?

In my professional opinion: no. Pay attention to the market, get personalized tax and deal-making advice, and make decisions that make sense for you and your business. Rates may increase in 2022, so it could be wise to complete deals that you planned to make in the next year or so prior to the end of the year. If you didn’t have a major move in mind, I wouldn’t advise rushing into something just to avoid possible capital gains increases.

Have questions? I’d be happy to connect! And if you listened to the full episode and are interested in learning more about my white boarding sessions, feel free to reach out about those as well. 

 

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. He is deeply 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!