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

Navigating the M&A Industry

M&A navigation: compass leaning against wooden beam.

David DeVoe founded DeVoe & Company in 2011. The company supports wealth management companies with consulting, M&A industry guidance and valuation services. Since launch, they’ve assisted over 500 high-level companies. They were the most active investment bank for RIAs between $250MM and $3B in AUM in both 2018 and 2019. David’s previous positions include Schwab and American Express. David was named ‘RIA M&A Guru’ by Barron’s.

Interesting fact: David is my FIRST repeat guest! 90 shows ago, he was my first ever guest interview.

Early Deals (And Missed Opportunities)

David shares that, after starting a t-shirt business in college, he missed a deal opportunity. He had relationships with manufacturers and retail outlets, but when he transitioned he simply left the original business rather than selling it. I can share David’s pain here. I missed an early opportunity in deal-making as well when I didn’t sell a flyer delivery business I started at age 15. When I left for college two years later, I just gave it up. The issue? A lack of understanding enterprise value! I didn’t understand the financial power in contracts, cash flow, and existing infrastructure at the time.

As David matured, he realized that deal-making held huge potential for both business growth and relationship building. In fact, David had a meeting scheduled after this interview with a connection he made in his first ever deal he closed while running an M&A industry platform. That deal occurred over 17 years ago, and the connection is still serving both parties.

EP Wealth recently took on private equity, and as a result a reporter reached out to David. Why? Because about 17 years ago David’s second deal, while a part of Schwab, was connected to this company. By leveraging deals as a way of forming connections and creating relationships, David has come a long way since being the guy who missed his first deal-making opportunity.

M&A Industry Growth + Projections

The M&A industry is a complex field! 2019 was a healthy year in the RIA industry, and David would love to see that repeated in the future. In 2019, the field had about 30% deal growth. Overall it was in a good place, exhibiting strong and steady growth.

However, David notes that this industry will have hundreds and hundreds of advisors selling in the next couple years. This is partially because the average owner age is 62 years old. (The average adviser age is 53.) However, out of about 10,000 firms, only 30% have written succession plans.

With these numbers, David believes we should be seeing 300 transactions per year. Instead, we hardly see 100. With each year we don’t see a full 300, we see an increase in the backlog of transactions that will need to occur in the future. David would rather see a 30% year after year trajectory, rather than a flatline followed by a massive spike that overwhelms buying power.
I do note that everyone in the industry has expected more deals, faster. Listen in to the full show to hear David’s thoughts on that, as well as the extended age of retirement.

M&A Engagement Trends + Covid 19

David’s noticed that recently, advisors have been engaging with M&A not only as a retirement play, but as a scale play. Folks are realizing that the game continues to change, and are interested in perhaps becoming part of a mega-firm rather than staying smaller and growing more slowly.

Prior to Covid 19, David notes that January 2020 was an all time high of monthly activity. The year started with a bang! This was driven by valuations being at an all time high. Profitability and growth were unlocked, and everything was full steam ahead.

Deals began dropping, from an all time high to less than 50%, in February. By March, Covid’s impact was in full effect. David delineates a 3-phase process that the industry is moving through as a result. (For more numbers, I recommend the DeVoe RIA M&A Deal Books!)

Phase 1: Deals are getting done if they were already established or moving through the pipeline. Advisor’s are starting to look ahead a bit.

Phase 2: An overall lull of activity and a decrease in the initiation of new deals. Firms under a billion really slowed down; firms over one billion actually increased. Overall, this phase created a 4 month lull.

Phase 3: A surge of activity is common here, and is what we’re currently seeing. Many firms are back on track; David notes his firm had a record setting Q3. The surge from early in the year seems to be back, and ideally will be a V curve.

Covid is real, and is impacting deals and even as they pick back up deal structures. However, the market continues forward. David hopes the COVID 19 experience will inspire advisors and firm owners to mitigate risk by creating succession plans now that risks have unfortunately become all too real for some.

Next Generation Talent & Succession

Sometimes advisory firms don’t want to take a hard look for that upcoming talent in the next generation. This can be because they already have the sense that they don’t have the talent in place. On the other hand, sometimes they’ve waited too long, and they’ve reached a point where the firm’s size indicates an internal succession won’t be fiscally possible.

David’s question: If that’s the case, now what? If there isn’t someone in house who can afford a take over, what options does an advisory firm have?

A recent survey showed that 57% of advisors say that if they had to transfer ownership to G2 today, it would be bumpy at best. Many firms reported they don’t have a strong enough second generation in place to even consider that a feasible option. Only 10% said this transfer could lead to the company being run as well or better.

This could indicate firms can’t look within; however, David does encourage advisory firms to strongly consider the next generation when possible. He notes that this is a professional industry. Firms need to consider how they can train up leaders, and how they can migrate some responsibility so that the next generation WILL be capable of taking over. He also notes that this is beneficial for your clients. They want to know who will run their accounts, and they have more peace when they understand you have a viable succession plan in place.

Human Capital & Thoughts on the Future

Devoe & Company has been creating programs, like their coaching accelerator, to provide coaching and guidance to advisors. David finds that human capital is key to growth, and is passionate about providing ways for advisors to grow in their ability in order to strengthen the industry as a whole.

Because M&A is a dynamic industry, David expects to see additional activity and continued growth. Eventually, he expects to see the numbers return to around 30% growth per year. He also expects to see the emergence of mega-firms with private equity backing that will increase creativity within the field.

This will likely create diversion and diversification, which David expects to lead to greater value being offered to clients. David does note that the small, medium, and large will continue to exist, and expects to see growth on all fronts. This also includes the use of technology to drive growth directly, as well as to aid in creative delivery and data usage. The application of technology and intelligence will only increase, and those in the field should expect dynamic changes as time progresses.

To hear more about trends, 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 Deal-Making Authentic Negotiating Deal-Driven Growth

Deal-Making Lessons

deal-making lessons

Jay Hummel is an author, speaker, and financial services executive. He specializes in leading through change and  building strategic relationships internally and externally. Jay also excels at articulating complex items in simple terms. He is the co-founder of Wealth Advisor Growth Network (WAGN), where he strives to bring growth to the independent adviser space. On today’s show, we dive deep to explore Jay’s deal-making lessons and experience.

An Early Start to a Financial Future

Jay shares that he would put on a clip-on tie at the age of 8, bring his calculator to the dining room table, and play with numbers. One of his earliest deals involved asking his grandfather how much it would be to “take that clock off his hands”. Even though he wasn’t able to make that deal, it signaled what was to come. Since then Jay has grown into his interest, pursuing higher education and moving into accounting and later wealth management. 

Now he works with WAGN, which is a consulting and deal-making firm. There, he strives to keep wealth management services connected with new developments in technology. Ultimately, he believes in the value of continual growth in an industry that can easily get a bit stagnant. WAGN specializes in minority stakes, which they acquire in order to become managing partners. From that position, the goal is to create an ecosystem of great people who are serving their clients and staying ahead of the technology curve.

Deal-Making Lessons from a Billionaire 

Jay’s first real job was as an intern for the Lindner’s, a billionaire family. He was able to work for their CFO and witness a lot of deal-making, including the purchase of amusement parks and the rolling up of insurance companies. They told him that as long as he stayed quiet, he was welcome to sit in the room and observe. What a deal for Jay!

He shares that he had a lot of respect for Mr. Lindner’s philosophy that you never take anyone to the wall with a deal. After all, the world is a small place! Even when Jay knew that his side was holding all the cards, he saw that they didn’t always play them all. When he asked about that, Mr. Lindner shared that just because you can doesn’t mean you should. You never know when you’ll be sitting at the table and be the one who doesn’t have the advantage…and you might be sitting across from the very same people you’re making deals with today.

Every negotiation in business is either the start of a new relationship, or the continuation of an old relationship. Just because you could beat someone down and walk away doesn’t mean you can do so without consequences. People build reputations, and you become known for the way you conduct yourself. A massive win that cuts someone else down may benefit you for a moment, but the long term impact of creating a reputation that makes others not want to do deals with you anymore is hard to overcome.

Powerful Deals Done Right

Today’s deal isn’t about tomorrow; it’s about the next 5, 10, 15 years. Take the long view, and think beyond simple financial profits. How can you make deals that are good for everyone: partners, employees, clients, and anyone else?

Jay shares that one reason he’s pleased to be out of the public sector and fully private is because he feels there is more leeway to really consider that long term view.

He also notes that when you sit down at the table to make deals, you need to understand why you’re there. What outcome are you seeking, and for what reason? When you lack clarity, it’s hard to bring a deal to completion. 

Even when he’s been part of a deal that fails, Jay has seen that showing up and being willing to fail is a key part of becoming a successful deal-maker. Know what you want, treat others with respect, and know how to walk away from the table with both success and failure. They are both part of the deal-making process, and you’ll experience them both if you’re serious about making deals throughout your career.

The second principle in my Authentic Negotiating book is detachment for this very reason! Of course you’ll have a preference that the deal gets done; but you also have to be able to release expectations and accept what happens during the negotiation. 

WAGN Deal-Making Lessons & Growth

WAGN started their deal-making with capital formation at the beginning of their company. However, they weren’t looking for only capital. Having the right partners around the table was of more importance than dollar amounts.

Jay and his co-founding partner John believe that the best deal people in the long run are “smaller pieces of the bigger pie” types. Understanding how each element comes together to create something better than any one part is a key part of becoming an expert deal-maker.

This also connects to shared vision. No matter how lucrative a deal appears on the outset, if it is not backed with shared vision, it will not serve the parties involved in the long term. In fact, beyond the capital partner deals, Jay and John founded WAGN by creating a shared vision and building a deal together at the outset. Without that shared view of themselves as smaller pieces in a bigger picture, as well as for where they could take a wealth management group, they would not be seeing the success they’ve seen.

Deal-Making Uncertainty

A lot of deal-making success isn’t about finances or strategy; it’s about timing. Jay shares that once he and John knew what they wanted to build, they could see that the window was closing. They needed to act with certainty to get in, and they did. Since starting last October (2019) they’ve completed four deals and are off to a strong start.

Early on, they invested in a Denver-based firm that they believed in, with plans to build out an entirely new firm. The break date? March 20th, 2020. That was the bottom of the equity market as a result of Covid-19, and things in the market were unstable. However, they knew they had planned and prepared for this. Yes, there was uncertainty. But there was also a great deal of vision and clarity for what could be achieved. 

Ultimately, WAGN was ready and they knew that clients needed what they were going to build. Since then they’ve done three acquisitions and are on their way to building a billion dollar firm. There are only 330 billion dollar independent firms in the country (with 330,000 independent firms in existence), and Jay shares that WAGN may reach that level in less than 10 months.

Deal-Making Lessons From Jay

So many deal-making lessons have fueled WAGN’s growth and drive along the way. 

Jay notes that you never want to chase a bad deal. He also comments that it can be really easy to get tempted into jumping into a bad deal in the “top of the 9th inning” because you feel like you need it. 

He reminds leaders that clarity around what you’re building and why is essential. If you pause a deal, you need to know what factor is going to allow you to reinitiate the process. Is it the stock market? An internal factor? If you hit pause and don’t know when you’ll be restarting, you end up in limbo land, which is painful for everyone.

To hear more about Jay’s thoughts on the future of the deal-making industry in the financial sector, listen in to the full episode!

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

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

 

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

Strategic Business Growth Leads to Deals

Strategic business growth

Lately you may have noticed that we’re having some guests on the podcast that are speaking about things you need to do in your company to prepare yourself for deal-related opportunities. This includes strategic business growth decisions like building teams and putting processes in place. It also includes building a company that’s less dependent upon you as the founder.

Strategic Business Growth Positioning

It is a myth that you need to be a huge company with huge resources and major capital to do deals. Why? Because deals are not only about financing. We’ve covered everything on the show! From joint ventures and strategic alliances, licensing deals, affiliate deals online, sponsorships and business partnerships. Everybody at any size can do a deal.

However, it does take some level of resources. In the very least, you need somebody with the time and focus and energy to get deals done. Are you in a position where you are working in your business as the founder, and you have to be there every single day? Is your presence required to make sure that the sausage is getting made, so to speak, or the products are going out? Or are you the one actually delivering the services to the clients? If so, then you don’t have the time to work on any kind of deal!

If you’re not doing those things and you haven’t built a team and you haven’t put systems in place, your ability to do deals successfully is extremely limited.

Scalable & Saleable

You’re probably familiar with the concept of scalable and saleable. You know that those principles ring true whether you’re ever going to sell your business or not. But even if you don’t plan to sell, why not be in a position where you can monetize at the end? Too people get to retirement and their business just sort of goes away.

No matter what your business is, ultimately there is a way to monetize it in some way that lasts beyond your ability to run it. But you have to be sure that it’s not solely dependent upon you, and that you build it in such a way that it has value beyond you.

When you build processes and systems and shift your mindset to build a team, that’s when you truly build a brand and something that has value beyond your own efforts.

So many experts and entrepreneurs have experience in doing that, which has allowed them to not only be in a better position to do that ultimate exit deal at the end, but also freed them up and made the company more valuable with increased profits while they were running it.

It also ensured they had the power to do deals during their operations, not just at the end when they were phasing themselves out.

Working On Your Business

The fundamental level of this is the concept of working on the business and not in it. People have to figure out what their highest and best use areas are. That means what it is that you are great at, and what you love doing.

And too many people stop there. But just because you love it and you’re good at doesn’t mean it is highly leveraged. It may not even make a big difference in your organization.

You have to assess whether it moves the needle. If you’re not doing stuff at that level, then that’s your first problem.

Second of all, build a team. I’ve built this phenomenal team. They do a lot of the work in the areas that they’re more talented in than me, or that are not in my highest and best use areas. It’s their highest and best use areas, though, and that allows me to leverage the high level things that I do.

I’ve had entrepreneurs tell me that they can’t do that because they haven’t got the right people. Usually they say things like, “I’m kind of a perfectionist”, or “ I don’t think anybody’s going to do it as good as I do”. Well, those are problems. Both the perfectionist thing, and also the lack of trust in other people. Ultimately you can find the right people out there, but some of that is a mindset thing. When you believe they aren’t there, and that no one could ever do the job right, you’ll always have a reason to turn potential candidates away. Or a reason to critique and run off the people you do have.

Trust Me – 80% Works for Strategic Business Growth
So here’s something to keep in mind. Some people do it differently than you. And it doesn’t seem like it is as good, but you know what, maybe it is as good, sometimes even better. If they can do it 80% as good as you, let them do it. Even if that means you come in at the end and tweak that final 20%, you’ve saved a significant amount of time and started the process of training someone who will get better and better at understanding what 100% looks like.

When you’re in a position to have a successful business that’s grown organically and that scales in a way that’s not dependent upon you, you get to have a better lifestyle. You’re not working 20 hours a day, you’re not under extreme stress all the time, and you’re bringing in expertise and surrounding yourself with people who are better at certain things. If you have systemized things so that you’re acting in your highest and best use areas, you’re now leveraging what you’re best at. That means that you’re going to be producing more revenue. And then you start to build this team. They are either producing revenue, or helping get the work done. Not only are you going to have more time, but you’ll also be more successful.

And then of course that increases your enterprise value and valuation on the back end.

In your business, that can look like whatever makes the most sense for you. There is no one right way to scale or grow, or to run day to day operations. And you certainly shouldn’t feel obligated to grow past the point that you want your business to be at. What’s important is that you have clarity about what you’re seeking in your business.

I’m speaking from experience here and saying that it starts with us. It starts with addressing our own limiting beliefs and our own willingness to be open to learning and growth. All of that mindset work is stuff that we need to learn as entrepreneurs. This is especially true if we want to continue to develop in a way that will allow our businesses to scale.

Grow Your Mindset

Over on my website I have a whole list of mentors and leaders in the mindset and development space. Want to be able to grow more and experience more deal driven growth? It’s vital that you get your business running in such a way that it’s organically successful. That makes it less dependent upon you. That starts with a mindset shift and a willingness to do the personal growth work to make that shift. And that feeds back into your ability to continue to scale, build your team, and put new processes in place. Those components are key when you get to that next level.

What I am committed to is not only deals and growth, but really entrepreneurial freedom. I think you’ll see that in some of the stuff we’re doing with our upcoming Entrepreneurial Freedom course. If you have any questions about that, definitely reach out. At the end of the day, I love working with entrepreneurs. I love helping people achieve their dreams and visions. It can be some tough work, but it’s always easier when you have guidance and support.

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

Building Interpersonal Skills to Make Better Deals

Building Interpersonal Skills to Make Better Deals

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.

Negotiating Television and Radio Deals

Steve started out by founding a sports media management firm. He represented sportscasters, retired athletes, and coaches, and found himself doing deals for and with those wanting to break into sports broadcasting. About 6 months in, he realized that local stations were looking for more than just sports broadcasters. They were looking for weathermen, anchors, and reporters.

Recognizing that he was limiting himself with his niche, he decided to expand the scope of what If Management did. More recently, he merged If Management into The Montag Group and now serves over 250 clients from all walks of life. From sportscasters to medical correspondents, they’ve helped develop the careers and opportunities of hundreds of professionals.

A huge part of Steven’s role is to prepare clients to negotiate deals with networks and other media outlets. You absolutely have to create leverage at all times, and consider the totality of every possible deal.

One barrier can be limitations related to location. For example, a family man in Miami who doesn’t want to relocate may be limited to only 2-3 major outlets. Depending on the location, there may also be non-compete clauses that limit transitioning to a competitor. Because of this, some negotiations have to focus on individual strengths, and what value a person can add to their network. That’s why skill building and growth are such vital parts of preparing for a solid negotiation.

Indemnification – Thinking Beyond Salary

In a public-facing career like broadcasting, there’s more to think about than just salary + benefits. One major potential issue that may arise for on-air personalities is a legal battle connected to libel or slander. It’s vital that indemnification is covered during negotiations, in order to protect each client.

Steven shares that one of their clients (Dan Shulman) is an ESPN broadcaster. During one game that Dan was announcing, a sleeping fan who had been eating a lot of food fell asleep in his chair. A picture was taken, and a blogger made a joke of it. The fan was angry, and sued the network. Dan was included in the suit (even though he hadn’t made any direct comments about the fan).

Because Steven’s had negotiated indemnification into the contract, Dan was able to have the legal battle covered by the network. In addition, he would have been fully reimbursed for any damages that might have resulted from the ordeal.

The Power of Personal Change

Steven is a great example of the power of personal change. He’s leveraged his own unique communication gifts and interpersonal skills in order to build a small start-up company into an industry powerhouse, where part of what he does is to coach and motivate others to help them become the absolute best version of themselves. His clientele includes CEO’s, lawyers, entrepreneurs, and young professionals.

He realizes that many people who come to them are looking to go further in life. Often, they think that procuring an agent will be a way of elevating their potential. Steven points out, however, that agents are not magic genies. Who you are as a person is absolutely key. Having someone like an agent vouch for you means nothing if the narrative going through the grapevine is that you’re unethical or have a bad reputation.

That’s why personal growth and taking personal responsibility for your own change is so key. Over the years, Steven has identified two major differences between those you rise to the next level, and those who don’t. Here’s what he learned about those who succeed:

They WANT to look within to identify the internal factors holding them back.
They analyze and grow their communication skills, especially their small group and 1-1 ability.
These two areas are the basis of Steven’s new book, Don’t Take Yes for an Answer, where he digs into these concepts.

Interpersonal Skills & Communication

Steven believes that AWE is the acronym that best represents the skills needed for skillful interpersonal communication.

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.

No matter what deals you’re doing, you can absolutely create more success by developing these interpersonal skills. 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!

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 Negotiating

Transforming Small Businesses Into Highly Profitable, Great Places to Work

Transforming Small Businesses

This week I was honored to interview Dr. Sabrina Starling, The Business Psychologist™ and author of the How to Hire the Best series. She is also the founder of Tap the Potential, a business that specializes in transforming small businesses into highly profitable, Great Places to Work, then sending business owners on a 4 Week Vacation to celebrate that accomplishment.

How to Hire the Best

Dr. Sabrina has been coaching small business owners for over 15 years. She transitioned from her psychology practice because she wanted to work in a field with clear results. Small business coaching gave her that!

With her company, Tap Your Potential, she gets to work with top-tier small businesses and entrepreneurs. The business owners she works with are intent on building highly profitable places to work that do NOT depend on their constant present and oversight. This enables business owners to have more freedom and actually enjoy living their lives. When the business can run profitability on it’s own, it’s much more likely to be well-positioned for an eventual sale when the time comes.

Dr. Sabrina’s interest in authoring the How to Hire the Best series came about as a result of her desire to solve the toughest hiring challenges. She realized that these hiring challenges were constantly interfering with her clients’ growth and profitability.

Eventually, her work catapulted her into becoming the world’s leading expert in attracting top talent in small businesses. Regardless of what hiring challenges those businesses were facing, How to Hire the Best philosophies were able to make a difference and transform their businesses. This work also established Tap the Potential’s reputation as the go-to resource for entrepreneurs committed to creating Great Places to Work with thriving coaching cultures. Businesses who hire the best benefit from highly engaged team members working from their strengths.

The philosophy of Tap the Potential boils down to this: work should support life, not the other way around. This connects to my own belief that every business should be a lifestyle business. A healthy, profitable business should be supporting your life, not taking it over.

Creating a Sustainable Business

Dr. Sabrina’s upcoming book is all about how work supports life, not the other way around. She is on a mission to end the hustle and grind mentality and disrupt the dominant discourse about what it means to be a business owner and entrepreneur. She believes there is too much focus placed on growing top-line revenue, and not enough on margins. At the end of the day, she points out that it’s not how much you make, it’s how much you keep!

The focus should be on how much of our revenue consists of profit, and how much life our business gives back to us and our team members. After all, if we are building businesses that are not sustainable, we are setting ourselves up for failure.

Work sustainability is a huge concept to dig into. You can start by asking yourself:

Is it sustainable to work 90 hours a week?
How sustainable is it to sit at your desk behind a screen for hours and hours on end?
Is it sustainable to be the only person who can keep the business running?
At the end of the day, no!

Laying awake at night worrying about cash flow and payroll while chasing bigger deals just to keep it all afloat is NOT sustainable. The real focus should be on increasing profits and margin, not just pulling in high dollar deals.

Creating a sustainable business is also key to creating enterprise value for an eventual exit deal and being freed up to have the time, focus and creativity for deal-driven growth.

Transforming Small Businesses: Optimize Success and Focus Your Time

Dr. Sabrina has run her business on 20-25 hours a week for the last 15 years. Every single year she’s grown her business by 30% or more (other than the two years she took a step back). She had to be highly focused and productive in order to maximize those working hours.

She understands there are limits on her time, and she has to be highly selective about where she put her focus and energy. By letting go of the day-to-day distractions and focusing on the most valuable uses of her time, she has seen massive success in her life and business.

The flexibility to be highly focused and work-oriented while also raising her children and parenting, was key in Dr. Sabrina’s success. I realized during our conversation that some of my own most effective hires have come from giving employees the flexibility to work at the times that make sense for them.

One way to create flexibility? Focus on employee results, rather than hours behind a desk.

Dr. Sabrina shares that all of her team members are virtual, part-time workers. Everyone works flexibly, and she understands that work can get done alongside the other priorities that people have in their lives. She also creates clear work/life boundaries for her team. If she sends emails or Slack messages after 5pm or on weekends, her team knows that she’s doing so because those things were top of mind for her, not because she expects them to drop everything and respond.

So many entrepreneurs are currently running remote businesses, either by choice or due to the Coronavirus. A common question she keeps hearing?

How do we know our employees are getting things done?

Hours vs. Results

She recommends shifting the conversation to results. Know what results you need from each team member, and communicate them. If they are getting those results, then they are doing what needs to be done. The details of when and where they are working aren’t relevant if results are happening.

Hire great people. Trust them as professionals. Hold them accountable for results.
When that is your method, you don’t need to micromanage or hover over anyone’s shoulder.

Recently, a lot of managers have been forced to put aside their micromanaging ways. Will this last when employees return to the office?

Post-Coronavirus, Dr. Sabrina believes that there will be micromanaging leaders who simply return to their old ways. However, she suggests that thoughtful leaders who are paying attention will recognize the benefits of running virtually and releasing control. If they are wise, they will find ways to reevaluate what work has to happen in the office, how important it is (or is not) to clock in and out at rigid times, and how flexibility can enhance everyone’s performance. There is going to be a desire to maintain some elements of this new-found ability to accomplish at least some work from home!

In addition, we can consider trust, which really is the foundation of all of this.

When we can extend trust to our team members, we’ll get better results and behavior in return. If you’ve strategically hired the best, extending trust causes people to step up and work harder for you. When team members feel distrusted, they become fearful of making mistakes, and are unlikely to operate above bare-minimum baselines. Trust creates better interactions, more safety, and more support. And those are the conditions that are required for anyone to create their best work.

At the end of the day, your team members are your biggest investment. Treat them with the dignity and respect they deserve!

Profitability Vs. Revenue

About 5 years ago, I shared with Dr. Sabrina that I read the book Profit First. (I had no idea that Tap the Potential was a Profit First business!) This is a great resource because it has you break things down in a way that enables you to not only pay yourself, but also have profits within your business. Too often, we are operating under a self-created cycle of stress, debt, and uncertainty.

It doesn’t need to be this way! Every check that comes in needs to be segmented into taxes, operating expenses, owner’s pay and profits. This will lead to greater clarity about what your margins are, and allow you to operate with more breathing room. When you can stop accumulating debt in your business and finally gain clarity on your profit margins, you can focus on growth that truly matters.

Hiring in a Down Economy

As we’re experiencing a down market, hiring and profits are changing. Many organizations are scaling back in order to focus on the sweet spots in their businesses, and this may involve hiring decisions.

With a clearly defined sweet spot, businesses can let go of all the extraneous elements. Growing from this spot decreases overhead and “drag”. The resulting layoffs can mean the market is saturated with A-players who are looking for a new position.

Dr. Sabrina recommends that, as an entrepreneur, you have a “shopping list” handy. This list will help you consider your long term vision, and what you will need to fulfill that vision. From platforms, tools, and new hires, you shouldn’t be making decisions based on what you can get a great deal on. You need to consider your business’ long term impact and needs.

It’s also key at this time to position yourself as an employer of choice. You can interview amazing people all day, but if your organization isn’t set up to attract them, they won’t accept your offers. Work to build up a presence and communicate the sort of environment you provide for employees.

Another recommendation? Don’t use the “opportunities for advancement” line. It’s vague and meaningless. Set yourself apart from other organizations by creating a clear, results-based path towards growth. You can start an A-player around the 65th percentile of pay when you can show them the clear path to the 90th percentile.

Dr. Sabrina also recommends that, at the end of an interview, you give candidates you’d like to hire a sheet that breaks down their advancement path for the first 18 months. On the back of that map, include testimonials from current employees about why they love working for the organization.

Payment Structures

In structuring acquisitions, an earn out offer is a common way of increasing purchase costs while also protecting the buyer if profits don’t manifest as expected. Dr. Sabrina’s hiring plan for A-players essentially creates an “earn out offer” for new hires.

Employees who rise to the challenge and perform well are rewarded, and if the results don’t come through, the pay rate remains stable and payable for the business owner. Back-end upsides help mitigate risks for both parties, which is key in establishing trust and bringing in top candidates.

If you attempt to take advantage of the current down markets by hiring an A-player at a low rate of pay, they may accept your offer…but they will jump ship as soon as possible when the market turns! They will know that you took advantage of them when you had the chance, and they won’t remain loyal to you when the field clears and they have more options.

Another option in this market is to bring new employees on as part-time, remote employees. They can start learning the business and going through the training process, which is a great way to get them started without committing to a full-time hire.

No matter how you go about it, be sure to consider how you can add value to both your organization AND your new hire.

Transforming Small Businesses Without Entrepreneurial Burnout
So many entrepreneurs are operating under a high-risk of burn out. Dr. Sabrina urges you to put your own oxygen mask on first, and don’t forget to take care of yourself!

You can take a free assessment to determine your level of burn out here: www.tapthepotential.com/assessment/. This assessment also serves as a screening tool for what you need to work on next. After all, you want to impact both the quality of your business AND your own life.

Listen in 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 Leadership Authentic Negotiating

Capital Structuring – Founders’ and Other Classes of Equity

Capital Structuring – Founders’ and Other Classes of Equity

Are you structuring an acquisition in which the seller’s want to participate in the same class of equity as the buying company’s founders? Or trying to figure out the proper class for retiring partners who are retaining equity? Whatever you’re doing, you’ll find that making the right equity and capital structuring decisions for your business is extremely important.

This week on the podcast episode we talk all about the sort of negotiation options you have. Take a deep dive with us and look into some of the big decisions you’re facing.

Capital Structuring & Founder’s Class of Equity

Acquiring another firm has its challenges. If you’ve done it before, you know how many nuances there are!

For example, bringing in people who want to be involved with the management team of the new entity. Structuring and negotiating this type of deal can pose a number of different challenges.

One scenario we discuss involves a client who is interested in acquiring a firm that offers additional products or services. This deal could potentially bring in 30-40% of the total revenue of the firm. The buyer has a capital structure with a founder’s class of equity. This means that they have certain voting and economic privileges.

One key structuring decision is whether the principles of the acquired company are treated as founders, or if they’ll get a different class of equity. If the acquired company doesn’t represent a material portion of revenue and profit, the decision is easy. (Very likely no founders equity.) However, if they do and are founders of their own firm, then it is a tougher decision. The negotiation to follow might be a bit trickier as well.

Elements like these, as well as the related level of participation in decision-making, are two key factors. Expect to navigate through them in the process of getting more material acquisitions done. When handled correctly, you are much more likely to have them work long-term.

Negotiations like these are completely possible. In fact, both parties can walk away feeling really good about the deal they’ve struck. Prepare well, and try to enjoy the process.

Capital Structuring & Retiring Partner Equity

In many cases, when a partner/owner retires, there are provisions in the company’s operating or shareholders agreement. These provisions ensure a complete purchase of their equity.

There are times, however, when retiring partners may retain some equity. They may want to continue to have some benefit from the continued growth of what they founded or helped to build. It could also be because the company is not in a financial position to buy them out entirely.

There are many decisions regarding the proper class of equity and rights. There are also many preferences about that equity. These decisions are crucial in situations like these. In addition, there are many negotiation solutions.

Figuring out the balance is tricky! You must consider the retiring partners’ right to protect their equity value by maintaining some say over certain decisions. You must also consider the working partners’ needs and desire to be able to control decisions. This is vital for the benefit of the company moving forward. Often, this balance is not easy.

If the retiring partners are founders, they are likely used to controlling decisions. Often it is even more challenging for them to cede control to the next generation. Should you treat the retiring partners more like investors with typical investor controls, or like passive former partners who are just along for the ride?

Often, the practical solution lies somewhere in between. Get the full episode here!

Learn 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 who is passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

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

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

Going Virtual in the COVID-19 Crisis

Going-Virtual

From an early age, Manuel Pistner dreamt of becoming an independent entrepreneur. He started his first company in 2006. It has since grown to over 150 freelancers worldwide. As you can imagine, it was not an easy road to get there. Manuel’s unique business model, however, streamlined the process. His company, Bright Solutions, is a virtual team of freelancers. As a result, they each bring unique skills to complex projects. Consequently, this eliminates barriers that many static organizations cannot breach. Of course hiring freelancers often poses many of the same talent acquisition challenges as hiring full-time employees. Manuel utilizes different business management systems to maintain control and transparency within his organization. This ensures that everything gets done. It’s also means he has a clear understanding of how to best go virtual in the COVID-19 crisis.

Three Steps to Managing a Virtual Team

Managing over 150 people in 67 different countries might seem like a nightmare for many entrepreneurs. Manuel’s system, however, is tried and true. According to him, there are three things that need to be in alignment if your virtual team is to operate at maximum capacity.

One

Provide each team member with a detailed description of their role to hold them accountable.

Two

Ensure clarity around how each team member should collaborate.

Three

Provide each team member with the necessary tools to support your workflows.

This simple process has enabled Manuel to scale his business successfully. He did so while working remotely with people he has never met! You can apply these same methods in your own company as well. This is vital, especially during this COVID-19 crisis.

Working Remote in the COVID-19 Crisis
As the COVID-19 crisis takes hold, more and more teams are forced to go virtual. However, these teams are not hired or trained to operate on their own accord. As a result, there are a lot of challenges posed by this large scale transition.

Manuel provides some tips that might help ease the tension as things fall into place. First, make a designated work area where you won’t be interrupted or distracted. Next, you should structure your workday to avoid over-communication or panic. In addition, leaders must lead by output and not by availability.

All of these best practices will help your team manage their time, output, and communication. This is essential as they adjust to their new work environments. These tools will help you push through these difficult times and weather the COVID-19 crisis with success. 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 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!

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

The C.P.R. Framework

Framework

So far, we have covered a good portion of the main topics from my book, Authentic Negotiating: Clarity, Detachment, & Equilibrium the Three Keys to True Negotiating Success & How to Achieve Them. On the show we have discussed the fundamental framework of clarity, detachment, and equilibrium, as well as the six reasons negotiations fail. We’ve also talked about the top five steps to becoming a great negotiator, and how to deal with inauthentic negotiating tactics. In the latest solocast episode of Fueling Deals, we cover the final topic from Authentic Negotiating: the C.P.R. Framework. The three elements of the framework are context, purpose, and results.

What is the C.P.R. Framework?

The C.P.R. Framework consists of three main elements.

Context: The context of a negotiation determines the person we need to show up as in the negotiation. It pertains to our state of being, and how that ties into our purpose and our results.

Purpose: What is the underlying ‘why’ of this negotiation? The purpose must be something positive that speaks to you because it will be your primary driver at the negotiating table.

Results: Any time you go into a negotiation, you want to be clear about the results you want to get out of it.

Effective Frameworks

Many of us know our results before we ever enter a negotiation. The context and purpose, however, are things we need to memorize. If both of these components are no more than a sentence long, you will be able to remember them no matter what factors are thrown into the mix.

You will also benefit from distilling these ideas into short sentences. This practice will help you get to the essence of your context and purpose. The C.P.R. Framework is the single-most effective framework for applying my negotiation tactics, but it is also extremely effective beyond negotiating. To learn more and hear examples of the C.P.R. Framework being used, listen to the latest solocast of Fueling Deals.

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

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

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

Five Ways to Accelerate Growth

Five-Ways-To-Accelerate-Growth

After one year and more than sixty episodes, we have gathered countless insights from the most talented negotiators, speakers, and dealmakers across industries. And with so much ground covered, we decided to introduce a series of ‘best of’ episodes. Here we’ve distilled the main talking points from our Fueling Deals guests. Today we’ll focus on how to accelerate growth as we learn from our deal-driven experts.

The Experts Take: How to Accelerate Growth

Each quarter will bring a new theme that combines different topics from each interview. This time, the theme is “accelerating growth”. We explore some of the major talking points from my interviews with Carl Gould, Bruce Eckfeldt, Phil Buchanan, and Matt Wavro.

Carl Gould dives into the growth and sale of his two businesses. His creation of monthly recurring revenue, as well as his branding and networking accomplishments, enabled him not only to sell the companies, but also to affiliate with the company and earn an income post-sale.

Next, Bruce Eckfeldt and I had a conversation about how to scale a company. We highlight points from Les Mckeown’s book, “Predictable Success.”

After that, Phil Buchanan shares advice for small onboarding deals and acquisitions. Our focus was on geographical expansion.

And lastly, Matt Wavro explains how he has utilized strategic alliances to accelerate growth. This includes partnering with minority and women-owned business enterprises.

Get the Full Experience

The excerpts from these conversations only represent a small part of the invaluable information from each episode, so make sure to go back and give them a listen if you didn’t get a chance.

Carl Gould, Bruce Eckfeldt, Phil Buchanan, and Matt Wavro each have unique perspectives on accelerating growth in their own companies, or by working with other companies. Make sure to check out the latest episode of Fueling Deals, and keep an eye out for a new ‘best of’ installment every quarter.

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 Authentic Negotiating Deal-Driven Growth

New Industry? No Problem!

Great-Negotiator

Li Hayes has always been an entrepreneur in one capacity or another. She has never limited herself to just one niche. Her main business is in the public speaking arena. It is here that she began supporting a group of amazing business speakers, as well as helping event managers create wildly successful events through her business, Go Leeward Speaker Management. Her approach to any new industry is best summed up as: No problem!

She has done a lot of major deals to book speakers. She has also helped orchestrate many seminars, bringing audiences unique experiences that change their businesses or their lives.

Recently, however, Li embarked on a new entrepreneurial journey. It all started with the development of an innovative new product, the Cool Me Scarf. In the latest episode of Fueling Deals, Li joins us to share about her journey. She also talks about some of the deals that grew her businesses substantially.

It’s All About the Value Exchange

Talented speakers are the backbone of Go Leeward Speaker Management. Li knows that very single one of them has a powerful story to tell.

Good stories are the key to success, because a good story gives something to the audience. (As opposed to making the experience all about the speaker!). Her speakers also never speak for free; not necessarily in terms of money, but in the value exchange that opens new doors and builds your brand. Li’s ability to construct a powerful business model that generates growth opportunities gave her the experience and the resources she needed to pursue the Cool Me Scarf. Despite having no experience in manufacturing/distribution, she has been able to enter this new industry with confidence.

Barriers to Entering a New Industry

The Cool Me Scarf is a solution for hot flashes designed for busy, working women.

It is elegant, understated, and made from moisture-wicking fibers that pull heat and perspiration away from your body with a very effective built-in cooling pack. As opposed to Go Leeward, a service-based business, the Cool Me Scarf presented Li with a slew of new manufacturing challenges. She’s had to navigate these by forming strategic partnerships, as well as by doing other inorganic deals.

One of the most notable deals was her partnership with Alibaba.com, which allowed for rapid and safe solutions to manufacturing, business transactions, and logistics. It enables manufacturers all over the world to connect with entrepreneurs like Li to help realize their visions. To hear more about Li’s journey and learn how she got her product in the Oscars, listen to the latest episode of Fueling Deals.

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

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