Category: Deal-Driven Growth

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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!

 

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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!

 

 

Categories
Authentic Deal-Making Authentic Leadership Authentic Negotiating Deal-Driven Growth

Providing Value as an Entrepreneur-in-Residence

entreprenuer-in-residence Ramon Ray sits with hands on legs, blue sweater, black pants, yellow tie, smiling

Ramon Ray is a leading expert on small business success. He inspires and educates thousands of business owners every year through his content, events and media interviews. He’s also a four-time entrepreneur who has sold two companies, and a best selling author. His latest and fourth book is Celebrity CEO, all about personal branding. Ramon has shared the stage with many leading business thought leaders, including Seth Godin, Simon Sinek, and Gary Vaynerchuk. Most recently, he’s been named as the Entrepreneur-in-Residence for Oracle NetSuite. Ramon has also been married for over 25 years and has two adult children. Listen to our full conversation now, or read the show notes below!

(He also shared about influencer and sponsorship deals back on Episode 3 of the podcast!)

Bit By the Entrepreneurial Bug

Ramon was born in the Midwest. From childhood he loved to tinker, play with electronics, and read books. As a young teen he moved to Brooklyn, New York. You can say Ramon’s part “well-mannered midwestern” and part “action-oriented” New Yorker. He studied business administration in college, and one of his first jobs was as a temp staff member doing clerical work at the United Nations. Ramon went on to serve at the United Nations for over 10 years, and was promoted to administrative officer. There, he managed the administrative functions of the NY Office of a UN Agency headquartered in Asia.

While at the UN, Ramon was bit by the “business bug” and started a few small companies. By day he worked hard at the United Nations and by night he worked on his side businesses. This included attending networking events and producing many of his own successful events. Eventually, he left the UN and became a full time entrepreneur. Although Ramon enjoyed rubbing shoulders with diplomats from around the world, his passion was entrepreneurship. His business education and thirst for entrepreneurship was nurtured through the pages of Inc Magazine, Black Enterprise, and Entrepreneur Magazine. Ramon credits much of his education and business influence to many New York area business owners, including Yacov Wrocherinsky. 

The companies Ramon started include a small tech consulting business, Small Business Summit (an event company co-founded with Marian Banker), and a well-known blog, SmallBizTechnology.com. Ramon eventually sold the Small Business Summit to another event company. In 2019, he sold SmallBizTechnology.com to a publisher. Smart Hustle Media, Ramon’s latest passion, allows Ramon to combine his love of entrepreneurship and small business success.

Entrepreneur-in-Residence: New Opportunities Emerging

Earlier this year, Ramon joined Oracle NetSuite as an Entrepreneur-in-Residence. He notes that many business-related brands are looking for mini-influencers. In commercial spaces, there are a lot of major influencers for products like clothing, makeup, and more. But in the business space specifically, things begin to narrow. There are a few big names that tend to dominate the space, and then a much larger middle ground. That’s where Ramon sees himself; as a small business influencer in that middle ground.

That’s where Oracle comes in. They have a board, of course, and they spend marketing dollars. However, they realized they didn’t necessarily have that strong personal, or human, element. They needed someone who could be themselves and do their own work, while also adding to who they were and how they presented themselves. As they say: “As part of our commitment to provide the resources and expert insights needed, we’re excited to partner with Ramon Ray, entrepreneur and founder of SmartHustle Media, as our first Entrepreneur in Residence. In his new role, Ramon will work closely with our team to help us inspire, educate and better serve business owners and entrepreneurs.”

Because Ramon had already built a relationship with Oracle, he was able to identify areas in which it would make sense for them to partner together. In fact, he was the one who proposed the Entrepreneur-in-Residence title as part of the shift in their relationship! There have been huge benefits for both sides — definitely listen in to hear more about these dynamics.

Building the Trust Factor

As Ramon shared about the ways in which his role with Oracle NetSuite had evolved, I was struck by how essential the trust factor had been. He had shown up as a speaker, gone live, offered feedback, and engaged with the organization on many fronts, over time, before taking on this larger, extended position.

Approaching the company and trying to start with where he is now probably wouldn’t have garnered much interest. By finding ways to engage while consistently providing value, Ramon set himself up to broker a larger deal when the opportunity arose.

He also had other strengths on the table, both tangible and intangible. Email lists, social followers, and a list of reputable connections, interviews, and appearances were key parts of demonstrating his value in the marketplace. Intangible components included his reputation, capacity to continue growing and expanding, and passion for entrepreneurship and small businesses.

That trust factor allowed Ramon to negotiate a profitable deal that allowed both sides of the table to feel excited about their future together. (Listen in to hear Ramon’s thoughts on the “perfect deal”. It includes a consideration of the payoff for BOTH sides.)

Structuring the Deal

Ramon’s deal with Oracle is structured annually. As such, it consists of a variety of “buckets”. For instance, he’s been leveraging relationships with other existing brand ambassadors and influencers. That includes actively identifying ways they can work together, collaborate, or otherwise bring something new to the table. Ramon is also actively involved in helping the organization work on utilizing their brand story. And, of course, he’s a major part of events as a speaker and influencer himself.

One major intangible benefit to Ramon is the credibility provided to him through a deal of this nature. He has been able to remain independent as an entrepreneur, while also receiving the backing and support of a larger organization that instantly adds authority to his name. Although he had done quite a bit of work with Oracle NetSuite in the past, becoming their Entrepreneur-in-Residence was a major shift in that relationship. 

At the end of the day, Ramon keeps coming back to the power of showing value. Value, value, value. You can’t beat showing up and providing value to anyone, at any time. 

No matter what negotiation you’re heading into, knowing that you’ve provided value and will continue to do so will set you up for success.

If you’d like to find out more about Ramon, head over to www.smarthustle.com OR check out www.ramonray.com.

Listen in to the full episode to hear 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 Deal-Driven Growth

Speaker Management & Deal-Making Pivots

speaker management: a female speaker on stage, raised hands in the audience

Li Hayes is a returning guest (you can listen in to her previous episode, From Concept to Oscars: Overcoming Barriers to Entry in a New Industry, right here). Li is a phenomenal entrepreneur, television host, speaker’s agent, and inventor. After two decades in the corporate world, she summoned the courage to take the entrepreneurial plunge! She started by founding Go Leeward Speaker Management. Li works with associations, masterminds, corporations and more to help them make their events wildly successful. Her invention, the Cool Me scarf, helps to discreetly relieve hot flash symptoms for women dealing with menopause. (It was featured at the Oscars After party!)

The Impact of the Pandemic

Last time I interviewed Li was early 2020 — right before everything changed with Covid. She had just had her Cool Me scarf shown off at the Oscars, and was headed into larger scale production. We also talked a bit about public speaking, as Li continues to head Leeward Speaker Management. As you can imagine, both of those elements of her work went through changes as a result of the pandemic.

Li notes that the pandemic is something that happened to everybody; all business owners can relate to unexpected challenges, shifts, and pivots that have occurred in the last year. She’s no different!

In February 2020, Li was riding a post-Oscar high. Things had gone tremendously well, and she was really excited for production to ramp up. She was booked on Good Morning Connecticut to do a live interview, and everything was falling into place. Until, suddenly, it wasn’t. A week later, the interview was canceled. A few weeks after, she got a message from Amazon: “Please be advised, your product has been deprioritized.”

What many people don’t realize is that Amazon is a conglomerate of many businesses, in terms of who you’re actually purchasing from. When Covid hit, Amazon focused in on all products that were pandemic related. This included masks, gloves, disinfectant, groceries, and more. If your product didn’t pertain, it was not a priority. For Li’s Cool Me scarf, that meant you couldn’t even find it on Amazon at all. And if you can’t find it, you obviously can’t buy it!

The traction Li had been garnering died in its tracks.

Boom or Bust?

I’ve talked about this a bit over the last few months, but it’s worth mentioning again. Covid hit many businesses and industries hard. For example, restaurants and public speaking! Others, however, were able to use the pandemic as a catalyst for immense growth and success. Has terrible as it has been overall, it definitely hasn’t spelled disaster for everyone across the board.

Li’s scarf business died fast. Her speaker management agency also took a hard hit. She happened to be heavily involved in two industries that did not fare exceptionally well. However, Li notes that just because public speaking in general took a nosedive does not mean that all public speakers suffered. She shares that some of her speakers have done exceptionally well by finding ways to pivot with other strengths and abilities. For instance, one of her speakers also did website design and creation. When everything started shutting down, she pivoted into that capacity, and experienced a banner year.

Looking back now, Li sees two major waves. In Wave One, everyone hit the brakes hard. This was when the rule of thumb was just canceling any and all events, which was happening left and right. A few months into that, Wave Two came. This was mostly related to cautiously optimistic postponements. Rather than cancel a summer event, people were looking ahead and hoping to be able to hold the event in October or November instead.

Obviously, that mostly didn’t pan out! Those Wave Two postponements mostly resulted in early fall cancelations when it became clear that things were not reopened the way we had once imagined they might be.

Pivoting to Virtual & Maximizing Hybrid Models

It used to be that “real” events with high calibre speakers and large turnouts were always in-person. After the pandemic was mid-stride, there was a boom of virtual-only events to compensate.

Now, Li is seeing the rise of hybrid events, and she says they are flourishing. She loves this! In her personal life, Li notes that she genuinely loves attending events. However, there is a cap to how many she can legitimately travel to throughout the year while also balancing the rest of her work and life. With the hybrid option, she can choose to travel to some, and attend others virtually.

As this model continues to grow, Li expects to see an expansion in the events industry, as well as in those who are seeking speaker management agencies.

I remembered a Miami event I was supposed to have attended in March 2020. This was immediately after the lock-down, and the host scrambled to convert the whole thing into digital. She also let us all know that not only could we attend the virtual event, we would also get to attend a live event when the opportunity was again available.

After day one, we debriefed and she got excellent feedback. In fact, she decided to take that event (which she typically offered live 5x per year) and convert at least two of those into virtual experiences to increase access. Many people are finding that there are major pros to attending events virtually, and that they are willing to attend at least some events that way moving forward. (Obviously there are lots of reasons to love in-person events as well, and I don’t think we’ll see those going away!)

Speaker Management & Deal-Making

Li notes that speaker-related deals have been changing! 

When things first went virtual, she had immediately recommended to her speakers that they look at price adjustments. Some refused to do so, which they based on the value of their speaking, which they argued remained the same whether they were on stage or on camera. Although Li gets that argument, she would return with the idea that you have to be able to flex according to demand and needs.

So many events needed decreased prices because they had had to significantly reduce ticket prices. An event they may have charged $500 per ticket for live was suddenly being offered virtually for $50 per ticket. With those sorts of adjustments, profit margins significantly change.

For speakers who were willing to be flexible and work with those new realities, there were bookings to be found. For those who refused, it was hard to find openings.

Li notes that she had a number of speakers who would typically charge $30,000 for on-stage appearances. When the pandemic struck and many events couldn’t work with that, they began offering $5,000 appearances virtually. They ended up with more engagements and a better bottom line than previous years, because they got a lot of opportunities.

In general, I absolutely believe in knowing your value and remaining firm with your rates. However, I know that I made different choices as a speaker last year as well. In the law firm, our rates remained consistent and we were busier than ever (deal-making, as an industry, stayed quite busy!). On the speaking front, the “hold firm” strategy wouldn’t have played out as well.

Rigidity Kills Deals

Something I write about in my negotiation book is the reality that rigidity is a major reason for deal failure. It’s one thing to own your value and stay the course….but another to fail to realize changes in circumstances that should necessitate adjustments.

Personally, I was able to do a number of talks that I deeply enjoyed, even though my rate was not what it normally is. In fact, I now have multiple groups that are excited to bring me in live when things open up again; all because they got to experience me virtually during this pandemic. 

By choosing to be flexible and acknowledging the changing circumstances that were impacting the market, I was able to continue making deals that benefitted all parties. A win-win that I’m proud of.

Li noted that one major deal-making shift they went through in speaker management was brokering deals with the long-term in mind. For example, a speaker might be willing to offer a deeply discounted speaking engagement virtually now, in exchange for an opportunity to be the featured keynote speaker at the next live event when things opened back up. In this way, they were able to leverage both current and future opportunities.

There were incredible insights on this episode — it’s a must listen!

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

Repeatable Processes For Organizational Success

repeatable processes: two men sitting on a park bench, dressed in business clothing, looking at an iPad screen

As CEO, Martin Hershberger has scaled two companies to 8-figures and beyond. As a small business owner, he’s sold to Apple, HP, and American Express, to name just a few. He has spent the last fifteen years of his career consulting for businesses in the 5-50 million dollar range. Today, he helps business owners and CEO’s prepare for successful transitions by developing and executing strategies for repeatable processes that lead to profitable growth.

Martin believes that many change initiatives fail because they only offer partial solutions. He’s developed a framework that allows every element of an organization to get into sync and support strategies, leading to success. As Martin knows, all too often people underestimate the profitability you can grow with repeatable processes and solid systems. (A few weeks back, DealQuest guest Joel Block talked about the move towards subscriptions. This is a classic form of repeatable processes that lead to profit!)

Early Deal-Making 

Martin shares that being a business consultant wasn’t on his radar as a kid. In fact, he wanted to be a baseball player for the Red Socks. Although that never came to be, he’s pretty happy with how things turned out.

Martin was part of a team of three that shut down a supercomputer division of an organization. As part of that experience, he negotiated settlements for over 300 members. He notes he learned a lot about negotiating there! 

Upon starting his own company, he started signing major deals quickly while experiencing rapid growth. (Their first deal was with American Express!) Of course that feels amazing, but that kind of expansion early on can also lead to all sorts of struggles as well. Martin notes that there were often logistically difficult clients and a lot of specific needs that had to be met as part of these deals. Learning to navigate those was a major deal-making feat that required ongoing strategic planning.

Early Partnership Mistakes

Now, Martin works with industrial manufacturers and supply chain strategies. He notes that he transitioned from corporate to consulting as part of having experienced downsizing in the 4 billion dollar company he was working with. As part of his services for them, he had brainstormed solutions to major problems; problems he realized that everybody was having. He put together his own business plan, based on his prowess at solving systems problems, found a partner, raised funds, and launched his first company.

Building a partnership and raising funds were two major deal experiences he had early on. Martin notes he was incredibly naive when it came to raising capital, and that ultimately it would have been difficult to choose worse partners! Because of how he structured those early deals, Martin ended up with negative net equity almost immediately. Although he was able to sell to major corporations (like Apple and HP), he found he was having to do major “explaining” when it came to his balance sheets. 

Martin’s strategy was always to cash out of that business within 5-10 years. Unfortunately, with five offers on the table, his early investors wouldn’t accept any of the proposed deals. Having come out of the mainframe business, Martin knew that electronics prices were going to fall. As a result, he wanted to be able to get out of the business while it was at a peak, rather than waiting for prices to lower. Eventually, he ended up cashing out; his investors stayed in and ended up losing ground with failing internet sales.

Navigating Those Dotcom Bubbles

I remember the days of the dotcom bubbles and crazy inflation as well! Martin noted that the investors passed on a 20 million dollar deal for the business, because they just *knew* the company would be worth over a hundred in another 5 years. 

In my own 30+ law career, I saw clients navigate huge amounts of money, and put major deals on the table. I also remember how inflation rates were such that you could generate huge revenues but never make any profits. A client of mine was in exactly that position; even though there was a massive amount of money involved, he wasn’t taking anything home. Since then, he’s been able to create businesses that actually create more profit; on the flip side, he’ll never be able to sell them for the kinds of money that his early business went for.

Martin notes that he was seeing those same things, which is what motivated him to sell his shares and move on when he did. His original partner was able to do all right as well, and they left the investors behind to wait for those phantom larger numbers.

Building Partnerships

Although his investment partners didn’t work out, Martin notes that his early business partner was a great fit. Their skill sets and abilities complemented each other well, and they were able to work together to create success. Between them, they had a strong understanding of what they were looking for in a business.

Looking back, however, Martin also notes that they had a verbal understanding rather than a written one. Even though things ended well, that was more luck than anything. If there had been problems, it would have been really difficult to navigate them since nothing was in writing. Now, Martin would never do that again!

Finding That First Deal

When Martin was getting his business started, he knew that everyone was going to be worried about working with them. After all, no one wants to be the first to work with a new company, no matter how innovative their ideas are. (Or maybe especially if their ideas are innovative!)

Their first deal was based on a combination of solid systems, great salesmanship, and strategy. Martin knew that the client wasn’t going to be able to find anyone else who could offer what they could in terms of shipping. In fact, he sent them to FedEx to ask about their options so they could hear it from them themselves! He’d have them go there first, then he’d get them at the table and present his own value proposition.

Martin notes that he had some advantages here. He deeply understood the problem, and he had an excellent value proposition. Because he understood the larger picture that the industry operated within, as well as the more specific picture of how he could shrink a particular company’s pipeline, he was well positioned to make deals. 

Not many people can say that, as a competitive advantage, they actually sent people to the competition to learn exactly what their options were!

Repeatable Processes & Systems

Creating repeatable processes and systems makes a major difference when it comes to selling out or making deals! Martin’s philosophy is that any company should always be ready to sell if needed, and part of that means having systems in place.

An early client had commented to Martin, “You know, when I want to sell my company, no one wants to buy it.” Why? Because he wanted to sell in a downturn. By having systems and processes in place, as well as a transition plan in the back of their minds, business owners can actually position themselves to sell when they have the most leverage. (Which is much better than having to settle for what you can get in a buyer’s market!)

This is achieved by preparing yourself personally and your business organizationally to be ready to sell. Too many owners have a vague idea that of course they’ll want to get out at some point….but when they feel ready to sell they are so enmeshed in the business that it’s not clear what would happen if they left it.

Repeatable processes, clear systems, and the understanding that you will have to leave at some point can help remediate this. Martin recommends that business owners focus on repeatable success, which comes from systems and processes!

Listen in to the full episode here to hear more insights about repeatable processes and systems. They are the force that will enable you to exit when the time comes!

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

Capital Gains Rates and Deals

capital gains rates: black coffee mug sitting next to a legal folder with a paper reading "tax withholdings"

In this solocast, I talk about how potential increases in capital gains rates can have an impact on deals. Last year we started seeing this, and it’s only continued to grow coming into this year. We don’t know if capital gains rates are going to continue going up. However, we do know the Biden administration is proposing increases. The marketplace, of course, is watching and waiting. Regardless of your politics, you’ll want to be thinking through the business and deal-making implications of capital gains rate increases.

Capital Gains Rates & Deal-Making

When we started seeing the potential significant increases in capital gains rates at the end of last year, many businesses pushed deals through quickly. They were able to get them done in November and December of 2020, just in case the rates did change. It was a very busy time for deal-makers, despite the pandemic.

That acceleration has continued into this year. Now, possible increases in capital gains rates now appear to have been pushed back to 2022. As a result, many deals are occurring, and many businesses are positioning themselves to pursue active deal-making. On the M&A side of things, that means we’re headed for a robust year. Pair that with the reopening economy and the increased gains in Covid vaccinations, and I believe we’ll see deals continuing to move ahead full force in the upcoming months.

Other market factors are driving deals as well, such as valuation trends. However, an awareness of potential increases in capital gains rates is certainly present on everyone’s minds.

Deal-Making Timelines 

If your timeline for selling was about 5 years out (or more), you likely don’t need to make any major adjustments. However, if you were hoping to sell within the next year or two, it would be wise to have some awareness of how things are changing, and how that could impact your plans. It’s wise to be aware of how tax rates will impact you as both a seller and buyer, and it makes sense to mitigate losses when you’re able to.

Something worth noting, however, is that the primary driver of decisions is not tax policy. There are so many other factors impacting deals, including strategic reasons to buy/sell/acquire/merge, that tax policy cannot be considered the primary driver of deals.

When capital gains rates go up, there can be a depression of capital available for people wanting to invest. The increased rate of taxation makes returns less attractive, which can change people’s actions on the market. However, results and trends do show that these rates are not the only factors on the deals and investments people are making. Many factors contribute to deal-making, and taxes are only a single factor.

Should You Accelerate?

If you’re in the position to sell your company and you have a short term horizon, it may make sense to look into accelerating and taking action this year. Although capital gains rates may not increase, we do feel pretty sure they will either stay the same or go higher. They aren’t going down!

I definitely don’t think there is any call for panic though! Just because capital gains rates might be going up, you don’t need to feel pressed into selling if the time isn’t right for you. It’s wisest to make a measured, wise decision that takes both short and long term considerations into mind.

Maximizing net returns on capital is key for investors, for example, and their ability to do so is a more compelling decision-making factor than capital gains rates alone. Again, there are so many complex factors in deal-making that surpass tax rates. Although capital gains rates can impact things, the reality is that investors will be looking to deploy capital and get back multiples on that capital, and they’ll do it via investing.

Now, they may also choose to take the higher tax rates into consideration when coming to the deal table. This may change deal structures and offers, and may be something worth considering. The opportunity for growth within the market, however, will still be the largest factor in whether deals get done.

Overall Impact

There is a knee-jerk logic that says raising capital gains rates will automatically depress investment. I don’t think that is necessarily true, an idea that historical rates supports. Now, if the rates stay high for an extended time, we may see more negative results.

At the end of the day, it may happen or may not happen. In business, we have to deal with what is and minimize adverse impacts as we’re able to. Ultimately, entrepreneurs will keep building companies, investors will keep investing, and deals will be made.

Short-term, deal-growth and acceleration are being spurred by the possibility of capital gain rate increases. In the long-term, we’ll have to see whether the rates increase even gets passed at all. If it happens, I believe most operational business owners will find that there are many other factors that have more primacy than these rates over whether deals happen or not. 

There is honestly so much money out there that is ready to be deployed; deals aren’t going to dry up overnight because of increases to these rates. However, if you are positioned to make a deal this year, it makes the most sense to close it out before the end of the year. This way, you can avoid potential losses as a result of capital gains rate increases. We’ll be ⅓ of the way through the year when this episode goes live. Because deals take time, you’ll want to get moving if you know that you want to complete yours this year. If not, there’s no need to rush into anything based on this one factor.

Those are my thoughts. I’d love to hear from you how you’re choosing to react to the possibility of capital gains rates increases!

Listen in 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 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 Authentic Leadership Deal-Driven Growth

Coaches, Deal-Making, and Buyouts

coaches: mans hands holding a business newspaper. Wearing a suit and gold watch.

Remy Blumenfeld is one of the world’s leading business coaches and advisors. He’s contributed more than 50 articles to Forbes. Remy was also listed by an independent newspaper as one of the Top 20 Most Influential LGBTQ People in the United Kingdom. He’s been featured in Forbes, Inc., The New York Times, and more!

Listen to our full interview here.

Getting His Start

Remy shares that, as a kid, he knew he wanted to be in the communication business. He had a little cassette recorder, and he would go around interviewing his friends. (He even found the old tapes from it recently!) His first real job was actually as a reporter for The Wall Street Journal television show in New York City. He didn’t stick with it for his full career, but it was an enjoyable start!

His first deal-making experience was at a school fundraiser. There were all sorts of little booths, and people were selling things to raise money for the school. Remy spent 5 pounds and purchased a set of prints that had been connected to a puppet show theatre. He then resold them for a few hundred! Ebay wasn’t in existence yet, but he was still flipping goods.

Remy and I also discussed the difference between looking 4 years into the future versus a hundred or more years into the future — you can listen in to hear about that!

Later, Remy transitioned into what he’s known for now: coaching and advising. While running multiple businesses, he had found that he was naturally fulfilling a sort of coaching relationship with his employees. (The only difference, he joked, was that he had no coaching training and they hadn’t actually hired him for his input!) 

Now, however, Remy coaches leaders, primarily in the creation sectors. He finds they are usually looking for a combination of coaching and business advice. As a result, he provides a hybrid model based on their needs. 

Early Deal-Making Experiences

Some of Remy’s largest deals include the businesses he’s sold. He started his first production company out of his bedroom in Brixton because he was out of a job. Remy decided he wanted to sell ideas to broadcasters. However, he realized that he couldn’t get companies to invest money into him as an individual person. As a result, he rebranded as a company and kept on trying. Looking back, he notes he was doing many things he now advises his clients to do. At the time, though, he was doing it by accident. In essence, he was making programs about where he lived and what he knew best. At the time, Remy was living in a rough area as a young, gay Jewish man. The shows he was making were often about the edges of society. (Those edges have since become the middle in many ways).

The production company that started in his bedroom made the first Black music show on Terrestrial TV in the UK, the first Asian pop culture show on the BBC, the first gay dating show, and more. He notes they did quite well by doing what they knew best. They understood it, they loved it, and they did it the best.

That lesson holds true in any sort of business and sales endeavor: you’ll do best by doing what you know best. It truly helps to be an expert in whatever you’re doing, as the buyer realizes that you are truly the best choice for them.

Years later, Remy sold his bedroom-started company for a high-multiple figure to a larger production company. Later, they became the company that produced Big Brother!

Leaning Into the End Game

Remy notes that, at a certain point, he understood that the production company had a saleable value that he hadn’t initially recognized. When he had started it, there wasn’t really a true market in the field. 

About 6-7 years into running things, however, independent production companies became something that investors were interested in. Big companies started buying up smaller companies, and he realized he was ready to sell. This required facing many realities about the business that their team had never really thought about before. For instance, Remy and his team realized that if you don’t have processes in place, big companies aren’t interested in buying you. Strangely run companies with weird or lacking systems get overlooked in buyout opportunities. Remy suggests running your small company as if it’s a big company in terms of utilizing systems, procedures, and watching the bottom line. (Watch your growth line!)

Now, Remy always advises people to imagine, from day one, that they are going to sell. He notes that you should be attempting to create a story with numbers — a story of growth, consistency, and profitability.

Remy now works with founders to implement checklists early on so they can create something others would actually want to buy from the beginning. (Rather than trying to “dress the bride on the way to the altar”!)

I noted that it’s possible to get deals done with a last minute scramble, but it’s surely not ideal. Preparing in advance is the best!

The Psychology of Buying a Company

Beyond the numbers, Remy thinks psychology is the most important aspect of the sale of a business. (In fact, he notes that ego tends to get in the way of the best and truest job quite often!)

In the creative sector, Remy notes that people often want to show they’ve done the best possible job tapping into every possible revenue stream and protecting their rights. You won’t feel very proud of yourself if you’ve just “forgotten” to access a revenue stream or market. There is a level of pride involved that can make owners want to emphasize that they’ve done everything.

However, a buyer wants to feel there is room for growth and improvement. If everything has been done that can be done, and growth can’t occur, it will be less attractive to them. A buyer wants to believe they can run the company better than you, or at least that there is room for them to do something bigger and better!

Remy does note, however, that sometimes in show business people forget the business and run the show! In a business deal, it’s key to be able to show that the business elements have been well handled so they can be moved through.

(Listen in to learn more about Remy’s thoughts on how the buyers will be approaching your business just like a home they recently purchased; there will be changes!)

The Power of Coaches & Coaching

I noted that I’ve worked with coaches myself, and asked Remy to share a bit more about the power of coaching. 

Remy noted that one of the things he finds to be most powerful is helping people commit to their own goals and standards, independent of anybody else. It’s key to be able to hold these apart from your partner, parents, clients, or anyone else in your life. As a coach, Remy also finds it useful that he’s not involved in his client’s lives or goals in a personal way. He’s able to provide feedback and accountability that is received differently than that of a friend or colleague would be.

I see that as the deal clients and coaches make between one another, in terms of how they will hold one another accountable and show up.

Listen to our full interview 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 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 Negotiating Deal-Driven Growth

Specialized Asset Management Firms

asset management: a man and a woman dressed in business clothing giving one another a high five

Brett Hickey is the Founder & CEO of Star Mountain Capital, a specialized U.S. lower middle-market investment firm with approximately $1.5 billion in assets under management that has completed over 100 investments to date. Star Mountain employs a data-driven approach to provide value-added debt and equity capital to established small and medium-sized private companies leveraging its scale-driven resources and longstanding relationships. Star Mountain also has a secondary investment business providing early liquidity for investors in U.S. lower middle-market private credit and private equity funds or direct assets. Brett has over 20 years of investment and advisory experience, with over 15 years specifically focused on investing in the U.S. private small and medium-sized business marketplace.

Throughout his career, Brett has been structuring, analyzing and managing private equity, mezzanine and U.S. Government sponsored investment funds for nearly 20 years. He also has extensive experience performing due diligence on, selecting and building small business fund managers. Brett has helped structure over a dozen larger funds representing a few billion dollars in assets.

Early Ambitions

Growing up in small-town Canada, Brett was very involved in the local community and sports scene. He admits he didn’t think too far ahead about the future; mostly, he enjoyed competing, practicing, and having fun. In hindsight, he figures those early interests helped him build grit.

The first business activity Brett initiated involved a small, empty classroom at his highschool. He approached the principal and asked if he could use the classroom. Thankfully, he also had the foresight to note that being able to use the classroom was going to support the curriculum of the entrepreneurship class he was taking at the time. The principal said yes!

From there, Brett approached a clothing company and convinced them to give him clothing on consignment. He didn’t have the money to pay up front, so he needed to be able to sell the items first. They agreed, it turned into his first business!

Around the same time, Brett started a roof shoveling company. He would garner business (and in snow-heavy Canada, many roofs needed to be shoveled!), and then take a cut from his labor team. All this was happening around 15-16 years old; Brett had an early start to business and deal-making!

Star Mountain Capital

Brett built Star Mountain Capital primarily to bring large market expertise down into the private lower middle market. Upon moving to the US, Brett had seen the sort of buying and selling that was occuring, and where there were opportunities for growth. He found he loved working with the access and resources of big firms…but also noted the many inefficiencies of the lower middle market. With Star Mountain, he wanted to build a specialised firm that focused exclusively on the lower middle market and its challenges and opportunities. To do this, they pursue two primary approaches:

  1. Star Mountain provides flexible capital solutions. This includes having both debt and equity investing capabilities. They can sit down with business owners, gain clarity on their desires, needs, and goals, and then come up with the structure and expertise needed to grow.
  2. With a separate division for that same market, Star Mountain uses a secondary funds business to purchase limited partnerships interests from those looking for liquidity. Across that platform, the company has closed over 100 separate investments.

Although exact definitions may vary slightly, Star Mountain thinks of lower middle market companies as not being start-ups, but also not yet a highly efficient market. This often applies to companies with over 15 million in annual revenue, and under 30 million in annual EBITDA (earnings before interest, tax, depreciation, and amortization). 

Star Mountain focuses on industries that have positive macroeconomic tailwinds and in which they have competitive advantages.

They tend to stay away from real estate (highly competitive) and gas & oil (highly volatile), and focus more towards technology companies, business services, transportation and logistics, education, and healthcare. Because they have deep expertise in those sectors, they can most confidently command the best deals for their clients.

Overall Market Trends

Recently, I did a solo-cast on the SPAC explosion, which has been a major trend in 2020 and moving forward. Brett noted that this seems to him to be an indicator that there are a lot of bubbles in the market right now. As you see abnormal dynamics and valuations, you’re also seeing higher risks, reminiscent of the late 90’s. This might signal a number of “black swans”, and there may be some bubble bursting. 

Some people are going to make a lot of money, but others will lose a lot. 

Based on current valuations, there is a lot that could happen. That’s going to probably include some hard drops.

Conversely, however, the valuation arbitrage between smaller companies and larger businesses is larger than it’s ever been. (SPACs are a great example!) Essentially, you’re taking private companies and reverse merging them into a public shell, with private owners giving up about 20% of their company. This allows them to move much more quickly to the public marketplace, often at higher valuations. If you can find 2-3 good quality smaller businesses, each with about 5 million in annual EBITDA, and effectively combine them and bring them to market, you can set yourself up quite well.

(Listen in to the full episode to hear more about Brett’s thoughts on this!)

Pressure to Deploy Capital

People who deploy funds don’t want their money to just sit in a bank account collecting interest. They are looking to get it invested in quality companies that will yield good returns. In overheated markets, however, this can create a pressure to deploy fundcapital in order to get things moving. That can result in entering into less-than-perfect deals.

Brett notes there are a few angles here.

For one thing, if you’re a wealth manager for a lot of people, it’s really hard to time the markets. History shows, in fact, that you really shouldn’t try to time them. As a result, a lot of the capital in the world will continue to stay invested. However, when people do pull out, the market can drop fast — last year we saw it go down about 35% over just a few weeks. We’ve seen that in 2008 and in other recessions as well. Even if things are frothy, however, a lot of money will stay on the market with the assumption that things will turn around and go back up again.

In the alternative investment market there is less obligation to stay invested. However, it’s worth remembering that zero investments equal zero chance of profits. 

Star Mountain focuses on simple premises and alignment of interests. 100% of the senior team has personal capital invested in all of Star Mountain’s deals, and every employee owns part of the company, making them completely employee owned. They find it essential to structure their funds appropriately relative to capital, market, and time. If you have many years to put your money to work, you can be more selective and identify better deals. Having your team fully aligned also allows for better deal alignment. Rather than seeking aggressive deals, or feeling pressured to deploy capital, you can then enter into opportunities that are best suited to your investment and return needs.

They also ask questions like:

What if there is a problem? How would I solve it? Could I lose my own money?

That sort of mentality is critical to ongoing growth and sustainable results. Brett also notes it’s a harder mentality to maintain in larger firms where employees are only employees and don’t tend to have the same level of skin in the game.

Specialized Asset Management & Investment Decisions

Every investor talks about management and the importance of the team behind a possible company to invest in. 

Brett and I wanted to talk about a few other factors related to making investment decisions. Last year, Brett notes that his firm looked at around 1,500 investment opportunities. They invested in about 30 of them. Some of the options just didn’t fit their focus at all, which is always a possibility.

For those companies that did fit the general picture of what Star Mountain was looking for, however, Brett noted a few distinguishing factors. 

Start with a business plan that has the highest probability of success as possible. This means considering the industry, sector, competitiveness, what the product or service actually is, and other factors. If that doesn’t make sense, the rest of it doesn’t matter.

If the probability of success looks good, Brett’s team turns to looking at competitive positioning within the business. What dynamics are at play? How does the business fit into the market, and in what ways can it set itself apart?

From there, the current diversity and quality of the customer base is key. This includes what relationships and contracts already exist, how sustainable the base is, and how long-term the relationships have been.

As those areas are clarified, then Brett notes you’ll start to get into the alignment and makeup of the team as whole.

Ultimately, you’re looking at the predictability of revenue occurring, as well as what can put revenue at risk. Brett states that revenue can solve a lot of problems, in that it gives you the time to work through issues and work through challenges.

You can listen to our 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 who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

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The information provided in this podcast should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this podcast or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities, transactions, or holdings discussed were or will be profitable, or that the recommendations or decisions made in the future will be profitable or will equal the performance of the securities, transactions, or holdings discussed herein.