The CEO Mandate: Turn Your Board’s Number Into a Plan You Can Defend
In this interactive working session, Bill Canady walks CEOs—especially those hired by private‑equity firms—through a systematic process for converting the board’s return target into a concrete, defendable one‑page CEO mandate. He begins by having participants surface their current EBITDA and the board‑mandated EBITDA, framing the gap as the CEO’s core job. Canady outlines a four‑pillar “command and control” framework—no surprises, stay on pace, be data‑driven, and make results count—and stresses that failure to meet any pillar erodes board confidence. He maps the journey from day zero (the moment a CEO steps in) to day 1,000, emphasizing the first 100 days as a critical period for aligning on the number, building a plan, and establishing cadence. The session dives deep into the financial mechanics: reconstructing the LBO model, calculating MOIC, sensitivity analysis, and using a live calculator to model organic growth versus acquisitions. Canady stresses that CEOs must own the board’s number, translate it into a team‑owned execution plan, and communicate in both board‑language (IRR, MOIC) and operational language (price, cost, working‑capital, M&A levers). He introduces a single‑page “CEO mandate” document that captures the target, assumptions, and key levers, and describes the Command 100 program—a four‑stage, 100‑day cadence that includes monthly business reviews, quarterly operating reviews, and ongoing board updates. Throughout, he highlights the role of operating partners, the importance of early board alignment, and practical tools (QR code, discovery call) for CEOs seeking further guidance.
Chapters
Good morning. Good afternoon, everyone, wherever you're calling from today. We're gonna calculate 2 numbers, the EBITDA you have today and the EBITDA someone has already decided that you would deliver. The gap between those 2 numbers is your job. It's actually why you were hired to come in. You're at point A. I like to think of that as day zero, and you're going to go to point B, which is what we call day 1,000. Like you are going to achieve this number. This is not in your strategy deck. It's not in your culture work that you get everyone to buy in. It's the gap. It's what you were hired to deliver. So bring your own P&L up on your screen. Bring the number that you're afraid to say out loud. If you don't have it in front of you, go get it now. This only works if you're using your own numbers, not mine. Now we're gonna run through our numbers together so you can see them.
And we're—
if you'll put your, um, Uh, your number's in the chat, or if you come on the screen, we'll actually use yours. Uh, but this is a calculator we're going to do, and it'll be a live demonstration. I'm Bill Canady. I've got 30 years operating companies. I'm CEO of a couple of big private equity companies in the powersports industry and in industrial products. Uh, this is just a credential, let you know that I've been doing this a long time. It's not the subject of this. The subject today, uh, is you and the 100 days that in front of you. Now, this is a working session. It's not a webinar. Type in the chat, turn on your camera if you want to. As I said before, I'm going to ask questions and hopefully you guys will join along. If not, Julio, Michael, and I myself, we will toss this thing back and forth. Command isn't a feeling. It's 4 things you either hold or you don't hold. There's no surprises in it. Your chair never hears no. He doesn't hear bad news. You're the person that sits between people looking at it financially. What's the return I'm gonna get to the people who are task-driven? That's your team and what they're gonna go do. The worst thing you can do is surprise your chair, surprise your team. Second, you gotta be on pace. Every quarter that you're gonna be going through has a gate. You need to know by day 30 where you're focused and where you're going, not day 80. When we look at this, we'll go through about 70% of CEOs get replaced during the hold period, during the period they're there to achieve it. It's not because they're not competent. You get the role because you're competent. It's that they get behind. That pacing piece is a big deal. You're gonna wanna be data-driven. And by data-driven, you know, the bridge is the math that we're looking at. If you have less than 20% of the information, you're simply, uh, uh, making it up. If you have more than 80%, you've probably taken so long, you're off pace. Other people have already passed you. You're gonna have to live in the ambiguity about what it takes to be successful. Your experience, your team working closely with your board, your advisors around it, people mentoring you. This is a big deal. And finally, I think this is the most important one. Results matter. Comp is tied directly to a number. If you If people are showing up and saying, hey, I did the best I could, I gave it everything I got, that's probably true, but you can't be a best efforts company. You actually have to score some points. You know, Michael and I have worked together across many companies, and I think he sees it more than anyone else. People come in and say, I did the best I can. Michael, what do you do when you see that?
Would you say the best they can? Well, I mean, Results matter. So, you know, we can't be a best efforts company. That's, we really have to go and countermeasure and find the root cause and do something else. Someone says we did the best we could, um, you know, it wasn't good enough. We really need to understand the root cause of it, get a countermeasure in place and do something different. Um, because we can't be best efforts only.
Yeah, it's unfortunate. And you're the real piece is, uh, we're on a time clock and it's counting down. So you gotta land it. If you can't have all 4, if you don't have No surprises, be on pace, data-driven, results matter. You do not have command and control. Now, when I say command and control, I'm not talking about your micromanage. This is not the military, even though I use a lot of military examples. It's, do you understand what's going on? Do you have a plan? Are you on pace with it? That's command and control. You are in charge with it. All right, let me take us to the next slide here. One question before we go anywhere is, can you state your board's number? I had a call the other day from a gentleman who's running a big fund that invests other people's money. You know, you see these guys, they're out there, they're accountants or money managers, whatever. They sold the company. He came in as CEO, did a fantastic job with it, and the number one customer left. That number one customer is 56% of the business. So he calls me up and he goes, what am I gonna do? And I'm like, the first thing you have to do is get aligned with your board about what that does to the model. And I said, so what'd you ask him? And he gave me all his strategy. This is not a strategy question. The board, your investors, your LPs, your owners, what if you're private or public, whatever, you're owned by someone, maybe it's you. They, this is an investment for them. What does this do to that return? That's the conversation you need to be having. Yeah, it's great if you get working capital out and you have to go do that. It's great if you can get AP or AR going in the right direction. You can get growth. You've gotta have all that. That's just being a competent operator. But you have to talk to them in the language of their money's at work. They're looking at you maybe a few hours a month, maybe a few hours a year. Make sure that you understand wherever you are, that number that you're working to, Is actually the number that they are. And you need to be able to say it without actually, uh, uh, uh, having to open a file. You gotta be able to have it right at your fingertips. And not just the news, not just say, oh, it's 50. Let me tell you what it is. Let me tell you how I handicapped it. So does everyone have a number? Just type in yes or no if you have it. I'll wait a second. Because Brian, if I can get you guys typing on this thing, maybe I'll convince you to come on stage here and that'll be kind of cool. All right. I'll respond to them as we go through them if anyone would like to do it. But if mostly no, if you see, if you're saying that and you got it to yourself and your answer is mostly no, that's an honest and truly it's the most common answer. The first role I took, I would spend my time really with my team saying what we're going to go do to hit the number. I did not spend my time Thinking about how it was actually relating. Welcome, Michael. It's good to see you on here. I know we talked the other day. So if someone says yes, then you're gonna have the easiest hour in the room. Stay anyway, because I think you're gonna learn a lot about what you go do with this. All right, now let's go to slide 4. Andrew, hey, great answer. We don't have a board because we have a startup. Well, unless it's all you, someone put some money in there. Maybe it's just your wife and your in-laws, or you pass the hat at the country club. Somebody's expecting something. If not, at least hold yourself to it. So that's a, that's a great answer. The first 100 days isn't about, maybe you're a brand new CEO. If you're not sure where you are today, if you don't have a clear plan, you're at day zero. The moment that you embrace that you've gotta have a number, you've gotta have a plan to get there. Your strategy's gotta get you on and on. You're now at day 1. So whether you started yesterday or this is your 11th year sitting in a chair, let's get you to day 1. Let's get you a path forward without having to feel ownership of the things that maybe didn't work the way you want. All right. So you can be 4 years here, still batting. It is, uh, still batting at day 0. A lot of people never get out of it. Those are the ones who wind up leaving their role. Another piece If you're setting in the company as a new CEO, and I'm just gonna talk through private equity, and they've owned this business for 2 years before you got there, that clock actually started 2 years ago. It's not the day you started, it's the day that they started owning it. And they're gonna wanna be out the door typically within 5. The average hold period's about 7.3 years, and we build our plans to 3 years. We call it 1,000 days because you've gotta have time for maturity to set in. So if you buy a company in year 2, you're not typically gonna get your synergies and everything out of it in year 3 so you can sell it in year 4. It, you, you wanna buy your companies as an example, as fast as you can in that first year so you get the rest of the whole for them mature, or you buy 'em right at the end so you just get the multiple accretion there. That means you gotta buy low, sell hard. It's harder to do. We'll talk about that. But here's the part I want you to hear. You are not behind. You just have not started. These are different problems. And the second one, the second one is fixable this week. And I think that's critical to understand. Don't beat yourself up because you did or didn't do. That's just where you are. Start from where you are. The best time to plant a tree is 20 years ago. Second best time's today. We're at today. And being at day zero doesn't mean you have nothing. You have revenue, you have a team, this is a customer. You're building things. Andrew, I know you're doing a startup off of it, but you've already got the idea. You've launched. So you've gone from the hardest part, which is nothing, to something there. Some people on this call, like myself, Tullio, and Michael, are— been doing it in this company. I'm currently CEO. I've been at this one 3 years. The other one I've been at 5 years on it. So it gets harder to do it because Now I'm the problem, right? And then one more thing and then we'll get to work, right? Most of you've never been given a mandate. You get the job, you sign your contract. The thing I love about private equity, we're all typically on the same contract as far as what we're being measured against off of it. So we know what it is. It's surprising the amount of people who actually don't go look at that number, don't run that LBO math, and then take it back to the chair or the board, not in the board meeting, Offsite and say, am I thinking about this right? Did I handicap this right? Is this a sensitivity analysis? I know we're expecting multiple appreciation, but guess what? Rates are up. Or, and so it's not gonna have those conversations and have 'em on your choosing versus the board calling you and get, so, okay. Here's the 3 questions I have for you next. And guys, jump in, put it in the chat. Raise your hands if you like, and we'll invite you up so you can hang out with us. This is, it's what all the cool kids are doing.
All right.
Do you own the number or was it handed to you? That's my first question. Do you own it or was it handed to you? And have you ever defended it? Put 'em in the chat as we go. We'll answer 'em. Second one, can you name— all right, Andrew, you got it, man. You're owning it. Can you name the few things that still matter this quarter, or does everything, does everything look important? Brian, you were handed to it. That's the most common one, right? The deal, the partners figure it out. They run the math. You come in, they say, hey, it's 100 or it's 50 or it's whatever. That is the most common one. Handed to us. Yep. They've always been handed to me. I have never been far enough up the food chain To be the guy who was running the, uh, the, the model on the first one. All the deals I do after that, I own the number, right? The banker has to agree to it. The owner has to agree to it, but they're looking to me to see if I can do it. So once you sit in a chair a little while, you actually get a little bit more out of it. All right. Here's the third question. Does your team, does your team, not you, not the board, does your team own the plan? That's going to deliver that number, or is it still you? This is a big one. Does, is it you or is it the team? Did you build it, hand it to 'em and say, this is what we're gonna go do? Or did they build it and you made 'em defend it? That's, that's really the difference. If you answer these things honestly and you're at day zero, that is not a diagnosis to feel bad about. It's just where the clock starts, right? Be honest with yourself. All right. Michael, you build it. Uh, Bruce, you're accountable. Fantastic. That's exactly right. And Andrew is split across the team with, uh, you supporting the initiatives. That's very common. What I find that really works is you own the number that I call that the goal. You own it and you're the translator. You translate the board's data to the team's task. You're that decoder ring. The moment that everybody agrees that that's the goal and they believe it's possible, the team tells you how you're gonna get there because they'll have to go execute on it. And it, and it shifts. You go from maybe dominating the conversation to now you're actually, they're saying what they're gonna go do and you're opining on it. And that's when you can feel the shift in the room. All right. So, uh, let me go to my next slide here before I forget. Here's the math of the seat, guys. This is, this is what we're all facing wherever you are. It's not because you're not competent. You wouldn't have got the job if you weren't competent. But there's gonna be 2 formal check-ins. The first one is gonna be a honeymoon and they're going to not believe whatever you say. It's just gonna be taking the temperature. They're gonna walk outta that meeting saying one of 2 things. I have no idea how he's gonna do it, but man, he's a nice guy. The second meeting, when you come back, if you cannot connect the dots, and I'm not talking black smoke and mirror or white smoke and mirror out of it, right? This is not magic to say, my goal was the number of the board. We've already agreed. We've talked about it. The team's plan that they own gets us there by here, and you better handicap it unless you're betting for perfection. We like to talk perfection, but it, it really doesn't work, right? Now, you're not replaced for capability. What are you replaced for? You're replaced when they quit believing in you. When they don't believe you can do it anymore. This is a business and you're gonna be the one that's gonna do it. So Bruce, you said it earlier, you're accountable. They are looking for you to give them the plan. Do not expect them to come figure out what you're doing. You're gonna have to meet them where they are on it. All right. So when they start believing, you start looking and sometimes you don't know, but you'll know that them changes, right? Hitting the plan, by the way, buys you time, but it does not buy you belief. I have people come in on my teams and they'll be like, we had a good quarter. And I'm like, you don't have a clue why you have a good quarter. You can't even explain it though. You rode the wave. The whole market's having a good quarter, which is very common. I'm happy. You know, thank God it's better than But it's not a command and control situation. You did not pull the pricing lever. You didn't look at what the directs were. You didn't run your ratios around the right to grow. You didn't do any of that stuff. And so you're just reporting out the news. And when you do that, you become a very different type of CEO, right? There's 2 different types of currency you have. And the, uh, the most CEOs only ever manage the first one. I had a good quarter. Here's what happened. You just reported the news. And next quarter, our forecast is this. And if you're in any type of industry at all that has variability and you don't have vision to the, uh, end users, many of us use 2-step distribution or manufacturing. You're probably selling it to just a distributor who's then selling it to a dealer, or, and it goes on and on. You don't know what they're gonna do 'cause they don't know what they're gonna do. And the only way you'll know is if you're in a business with a backlog and depending on the cycle of that backlog. So one of my businesses, uh, there's projects. I'm not a huge project person, but I know 6 months. I got one, I know a year in advance exactly what it's gonna be. Now that's wonderful because I hit that forecast. It's terrible if the forecast isn't what I want it to be. Julio, you've seen a lot of these.
That's right. And I think that what you were saying is really important to have a clear goal in mind, because it's the only way that you can ask your team to develop the plans. And I think that it's worth pointing out that maybe it wasn't said before, that the reason why you as the leader don't want to personally develop the strategy or do the plan to achieve that number is because you want your team, who is the one who is going to execute in all these actions, Uh, to own the plan, to, to really get to that number. And when you do that, then you really notice, and the board can tell that the business is, uh, heading in the right direction, and then you buy credibility. If you don't do that, uh, you can really tell at some point that you don't have your business under control.
Absolutely.
Well said. So what's the issue? The board speaks in math. That means they put a dollar in, they're gonna want $3 back. Sometimes it's $2.50, sometimes it's $4. Certain industries, they want $20 back. More is always better. They talk in EBITDA, they talk in exit multiple. They want a bridge that reconciles the tactics, the task your team is doing, controllable tasks, which means it's not market. We always put market in. We're, we're, we're price takers there, if you will. It's not geopolitics. We can't control what anyone's gonna do. They talk in math. Your team talks in tasks, headcounts, roadmap, daily fires. They want clarity and timelines they can hit. You sit at the intersection of that and you have to have the language of both sides. The most common thing that happens is the CEO really becomes an operator, which is very good, but they're running that business. Now that makes you competent in it, but that really doesn't get you a seat at the table. And driving the long-term vision of the company. If you're that, and if you're private equity, you're gonna get this lovely thing that they have. It's called an operating partner. And all of a sudden you're gonna get a call and Michael, who acts as an operating partner in many situations, calls you, hey, I'm just gonna sit in on your meeting. It's not because they don't trust you. It's because you're not giving them the information on it. You are the only— this is the only role in the building that is required to speak both the numbers and the tasks to get it. And you gotta know the audience that you're with. The translation is unpaid, it's invisible, and it runs through your calendar. And you know when you're doing it right or wrong by who's starting to show up in your meetings. All of a sudden, are you getting an every 2-week, 30-minute, uh, with the board or, you know, someone from the sponsor saying, hey, let's just walk through that plan. I just, I wanna see how you're growing. Again, it's not that they don't trust you, you're just not giving them the answer. And when you see you get extra help, you know, I'm here to help. You should look internally. These people aren't curious that way. They want to run, they want to run their business. The private equity firm we're with manages over $50 billion and there's like 40 of them doing the whole thing. And there's like 24 principals. These guys are geniuses. I mean, absolutely best partners I've ever been with. The last thing they want to do is come run my business. So if they show up, the message is there. Look for that. The cost of the gap for you is 6 to 12 months if you don't have that aligned for it. So now all of a sudden the plan they put in was 5 years. That's probably what you signed up for. Now it's 6 years, 6 and a half years. That's how you get stretched out, uh, with it. Uh, uh, then now that they realize it's gonna take longer, time value of money. They're gonna start coming in, they're gonna start showing up to your meetings, and your autonomy is gone. Okay, let's go to the next slide. So we've talked about this. There's one document here that hits it all. I think I just covered this slide, so I got all excited and went too fast. There's one document that ends it all for you. And this document is a single artifact that I like to use. Your board is never going to require this. I've never seen one. They should require it. They think they give it to you through your contract and the models when you came in, you know, send you the strategy. Has anyone ever used a document that they created to go back to the board that walks through the math of the investment thesis? We call it the CEO mandate here, right? Anyone ever did that? Just put it in the chat. Andrew, did you do it with your, uh, with yourself or your investors? Michael, how about you? Have you given them back their own math? Let me know. Just put it in there. There you go. No, it is worth the time. If nothing else, this is not something you really do for them. This is something you do for yourself. This is something that you need to understand with it, because if you don't understand it, how are you gonna get anyone there? The unaimed arrow never misses. So what we're gonna do next Is we're gonna walk through how you get these, uh, how you get this document, what it looks and feels like, uh, from it, how you start with the LBO model and it goes through it. So we're gonna try to build that first page for you, uh, first page for you. Now I say things like, this is for your board. You should get it signed. You should sign it. All that is just making sure people knows what's going on. They're not gonna require it. They think they've already given it to you. Uh, and, uh, needing to do more isn't, isn't that big of a deal for them. All right. So the board's number, you're gonna reconstruct the LBO. Since Bruce, you're new at it, I'm gonna, uh, be a little bit, you probably know more than I do, but that's the leveraged buyout. So when you're doing a deal, they'll have a, uh, a, a, a junior partner, an associate or something like that. They're gonna have these big spreadsheets that everything's going in. That's the math of the fund tied to what they've committed to their LPs or limited partners or GPs and all that. And many of these guys have their own money in it. If you're a good part, a good fund will, but that math, you actually own delivering it. Now, the thing that gets people is you want to do the deal. You really, really want to do the deal. It's exciting. You're a master of the universe. So you will agree outside of that call, you and your CFO will be sitting there going, I don't know, but if we can't get this thing to 4x, it doesn't work. And you come back and they go, yeah, yeah, we got it. 4x. Well, you just committed, and that commitment's real off of it. You got to do this math. Now, if you're coming in and Bruce, you that math's already done. I bet you're are you going into an existing company or are they buying it and you're coming in with it? Do you know yet? You might you might not know yet. All right, we'll keep going. So off of that, right right on Andrew. Congrats. So so. The SEC is the MOIC. That's the inverse investment on invested cash. All that is saying, what return do they expect that they want? Many of your contracts will have escalators in it. So we put a dollar in. If you go from a dollar to $2, you get no payout. That's very typical, right? There's costs that go in all that stuff. So if, like, just getting their money back, they don't care. All right. It was, it's a loser. Getting to 2 generally gets you paid out, but it's at some percentage of the max. So it's not gonna be 100 typically. Sometimes it will, particularly if it's a turnaround, but it might be 80%. It might be 50%. So if you don't get above 2, you're generally at a zero. 2 to 2.5, maybe you're 80%. 3, you're 100%. And then a lot of times you'll have escalators. That take you up from there. So we know this isn't about that. Just know that how far you overshoot, it gets really great. And then, so you know what the thesis was, that's the LBO number's gonna give you that. Then you got the MOIC, that's how much that you have to make or you have to deliver to get paid and your team, what they're expecting. And then you wanna lock it on one page. It sounds so simple, But putting a document between you and your chair or your investors or the whole board, uh, is really powerful. I like to do it outside of the board meeting so I can have a back and forth. It's more of a safe environment. And then on the board meeting, I'll include it in the packet. That's generally how I do it because it just memorializes it. All right. So where do you get the LBO number? They have the model, uh, if they haven't given it to you. But go back to the original SIM. That's the, uh, uh, confidential, uh, information memorandum. They'll, they call 'em SIPs and SIMs. It's the book. It's what comes out, comes from the bank. The banker typically builds it. Use that, get the model, do it yourself, or do it with you and your CFO or whoever your finance person is. It is really important to own that, to feel it in your soul so you understand the triggers. Because as you get into it, you're gonna need to know what they are. Run the MOIC conversion. Make sure you understand where the breakpoints are. It's the equivalent of knowing your forecast. You're coming in, see, we're in September. I got a quarter and about, you know, 18 days left in the month. So I got, you know, and plus I got Christmas and Thanksgiving. So I kind of know what I gotta hit and I know where my levers are. Well, it's the same thing with, uh, your, your, your number. What ha— what does it look like when I've got the full year? You know, I'm using as an example in forecasting versus I'm in my last quarter. My options get limited. You want to know all that up advance so you're making your decisions early. It's like the speed of acquisition. If you don't actually run that and look at it, you think you do acquisitions in year 3. They gotta be great for year 3 if I'm on a 5-year period. Lock it into one page. The target, the timeline, 5 assumptions, the 3 unknowns. Sign it by you, even if you never give it to the guy, sign it by you, right? And then land it with them. If the number is wrong, if they don't agree, everything that you built is wrong. The most common thing many of us are going through today is the businesses were bought, uh, in during the pandemic. Multiples were high, crazy high. Uh, that's come down. Interest rates have gone up and we're underwater on our balance sheet. Now, if you're going in, so 18 months ago, Bruce, you know, they didn't buy this during the pandemic, right? That's 2 years ago. We've kind of been out of it. That doesn't mean they didn't overpay or whatever, but the situation today is vastly different than it was 2 years ago. Make sure the math is still working because what they put it in is what they put it in. You want to set that number where it should be and then create a path that gets them back it is. So they understand the hill you have to climb so the expectations are met. Nothing worse than disappointment. All right, so let's go to slide 10. So this is really for you. I do this every day with it. So entry EBITDA, I picked round numbers. I tend to be in the middle market side. So most of the businesses I run are generally around a billion dollars. You'll get 'em, they're $500 million, $200 million. And my goal is to get 'em a billion to $2 billion, right? So, uh, revenue, I like the spaces that come in at $50 million EBITDA, $75, $100 million, and then in essence doubling that. Part of that's gonna be organic, part of that's gonna be inorganic. The math all works the same. I just tell you that. So I'm just using numbers that I talk to a lot and how we think about it. Okay. So $50 million EBITDA entry, we're gonna try to run one of yours. So if you got a different number or if yours is just, 10, you know, 10%, then just divide. If it's 10 times bigger, then we'll just multiply, but it'd be great if somebody wants to put some numbers in. Okay. So $50 million EBITDA. This industry pays out an EBITDA. It's the language you use. EBITDA is not the same thing as operating income. It's not the same thing as net income, but proxies that work. This industry talks in EBITDA. All right. We are generally going to do something about 50% debt, 50% equity. If the markets are rolling and we're doing great, then we might get 6 on it, right? So instead of putting 50%, maybe put 60% debt in. You bring in a really good plan, the bank might give you credit for another turn of it. And banks love it because the more you can lever it up, the more it juices the return. So anyway, $250 million in debt, we put half in. We, so we, $500 million, 10 times, half in, in debt, half in, in cash. And we wanted 2.5 times off of that. At a 10 times exit, I needed to get my EBITDA to $75 million. If the multiple took one step back, it's gonna cost me about, I don't know, $8 or $9 million more bucks. So this is just how to think about it, right? Okay. So I'm going to, if I'm really good here, we'll, we'll, we'll, we'll see. I'm gonna switch this over to a live demonstration. And, uh, you guys can, uh, see how good it is. All right. So here is the tool. You run your own numbers. It gives you this. This is the organic side. This is the sensitivity analysis. If it goes for you or against it, this is how much the return, where it comes from. Then this is the, you're going to buy businesses, right? If you're going to hit your number, right? Because if you're at $100 million and you got to get to $200 in 5 years organic, in an industrial company, that's going to be hard. I mean, at 10% a year, it takes you 7.2 years, right? So, so we, that's way outside of what we want to be. No one's going to accept that. This is the inorganic side. You buy and hold, and then this tells you which ways to get there, buy and build it or do it organically. Then this gives you the bars, right? The waterfall chart. Walks you through it, tells you the MOIC that's delivered. Uh, and then if you deliver the full results of the organic plan, what would it be? So this is your, it does all the calculating for you. You only need a couple of numbers to come in. By the way, that filling, you got to get rid of that filling. You got, you got to not just quit filling it. You got to go fix it. Start talking them through the now. If you've taken the job, if you've signed the contracts, start talking now. You know, it's rare to say yes on Friday and start on Monday. Generally, there's at least a few weeks. Tell them right now, send me the model, send me the strategy. They may or may not want to share some of the confidential stuff, but you should have signed all your NDAs and everything. They'll give it to you. Just tell them what you're doing. Say, I want to understand this logic behind it. So, okay, so I'm going to do mine. So I said this $50 million, actually, this is one I did. It was $70 million. I came in, our entry multiple You're at SVP level. That's okay, man. Just, just get in there and help them. You, it doesn't matter what, what level you're at today. This is, uh, you're here on this call. You can become the trusted advisor to this. Uh, and if you're coming in speaking this language, your stock value, your personal value is going to be extraordinarily increased. You start having a much more interesting, sophisticated conversation.
Okay.
So we were at, 12 times when we bought the business off of it, which when we sold it, we sold it for 14. So we got, we did well. In terms of EBITDA that we put in there. So this is, you can do percentage, net debt and everything. So we put in 50% is where we wanted to be.
You see that?
You see, and it's It's a little bit sensitive.
Okay.
We wanted to hold it for 5 years. It took us a little bit longer than that. The MOIC we were looking for, the return on our capital was 3. The exit multiple at the time, we thought we would exit at 16. So calculate it. The other piece on it. So, so your required exit EBITDA at 70 to get a 3 times return, I had to get it to $91 million. $91 million. That was it. All right. $92 million. That gives me a 3x. So they put in, you know, the amount, $25 back. Growth per year, EBITDA grows 6%. I like to lever my EBITDA. So that means I got to be at least getting 3 to 4 on the top because you won't flow through. If you're getting 5 on the top and 2 on the bottom, you are not getting flow through. You're going to get a good talking to. If you're getting 5 on the top and 10 on the bottom, good job. What we love is 10 on the top, 20 on the bottom. We want 2 exits, right? Then this tells you what the enterprise value was, how much equity we put in, how much debt we put in. Target it. I gotta get that thing to 1.2. Whew. That's a big number. Turns out to be easier than you think it is if you do it right. Check this paydown. So cost of debt, 20% of EBITDA. So that's just telling you the math behind it. If I get it to 17, I need $86 million. Well, guess what happened? I sold it at 14.92. Wasn't enough. I needed 105. Now here's the interesting thing. I actually got it to 180, but I had acquisitions in it. And okay, where did the return come from? It came from 31% in this case was EBITDA that was worth $262 million. A debt paydown. I got 25% of my value back by I kept my cash flow good. I paid it in there. And when you think about what does that mean, it tells you here how it's paying it down. So you're deciding, I paid down 50% of my debt. It's valuable to you and you get return off of it here. And then the rest of it was the re-rating, taking it from this whole thing, 44% I didn't get, right? I did not get 16. I got 14. And so instead of that, look at that. It went down to 25%. It was harder. But what did I do? I started buying and you, and you do it fast, right? I'm gonna put 50. This is a round number. The multiples we were running was, I had, I bought a couple as low as 3 and 4. Those are just kind of tuck-ins. Then I bought some at 8, 9, and 10. That, that's where I do it. But most of the time we were running right about a 7 multiple. My synergies, in other words, the cost I got out, the growth I got rid of it, most of it's gonna be consolidation size of it. Uh, okay, so what did that mean? The arbitrage, I created $560 million worth of value by doing the deals. The multiples I really paid were 8.8. Off of it. And the effect on my EBITDA was 5.4 times. So I acquired 50, I got $15 million worth of synergies. That was mainly cost out and pricing. I added $65 million, I deployed $350 million, and when we sold it worth $910 million, that's just about exactly right. And so my acquisitive side added 5.4 turns. That's a big deal. That's a winning hand. Okay. If I stayed just doing organic, just doing organic, I had to deliver $35 million of EBITDA. I had to grow it with the ability to do the deals well. And that's hard. You know, you can do the deals, doing well. I could actually have $5 million less. I only needed $30 million to get there, but you gotta integrate these things. So, uh, instead of it being $30 million. So $35, you read this, I was able to take 5, that $5 million off, and the rest of that was the acquisitive. So you go faster and you can go further. The biggest issue I see, people overpay for the deals, and when you overpay for the deal, you cannot recover. You'll never get that back. So the debt at the exit, you remember I was going to pay some of it down? Well, I went up. I did pay down debt. I just, Uh, uh, uh, uh, put $65 million on it through acquisitions. And I actually didn't have to grow it organically at all. That's kind of crazy, isn't it?
Okay.
So this is what it looks like. So where does it come? So I started at 70, I acquired 50, my synergies got me 15. I need to get 130. My equity exit at, uh, was 1.2. We sold it for about 2.4. That's where we wound up at. And we were a little bit over 3. Everybody got paid. Great, great outcome. Banker's happy. Not a home run. It wasn't like Yeti or somebody. This is a working industrial company that we took it to the next level. That's how this works. Now, if you know that, the impact is terrific because you come outta that meeting with your chair or whoever's on your board. The next thing you're gonna go do is, Guys, we gotta do deals. That's what you're gonna go back and say. Now, if your company's in shambles and the operation's it, you go buy more. A baby doesn't make a bad marriage better, right? You gotta be able to handle it. You gotta organically get the business where it can handle it with it. If you take a year to get started fixing your company and then a year to buy the deals, you cannot recover. This is why your first meeting is get a goal is in week 1 of STAR. This is why you do it. So those are the numbers. That's what it looks like. Where are you at? And, uh, and, uh, and what are you gonna do with it? Right? So, uh, the number, this is just understand your team. This is about how much labor does it take to actually go get it? What resources do you have to own? This is looking at it through the labor, uh, piece of it. We want about $2.50 coming out every time for a dollar you put, you put a dollar in of, of total employee costs, you should be getting back $2.50. We run, it's called the right to grow ratio, uh, RTG. It's, you wanna improve it. If you're at 1, well, it's not great, but that's where you are and this is what you're getting. Imagine if you get it to 2. If you're at 3.5, well, that's great, but you still gotta grow it. So you gotta get it to 4, right? Does that make sense? So it's a, It's a, uh, it's a, uh, it's a, where are you at? How do you improve? Here are the levers you get to pull. Price, cost, organic, M&A, and working capital. It's in this order. The reason is how fast it comes through. Price, the day you pull it, when that thing ships at the new price, it flows through and it's frictionless. It is the most powerful. You might pay a little bit extra in commission, but you don't need a new warehouse to do price. Cost is contract driven. If it's a direct cost, It might take long. If you're making pumps, you gotta get new castings, might take 2 years. If you're a FedEx contract, it's as quick as you can get it negotiated. So you can typically get that done 90 days or less. Organic growth, we talked a lot about that. If it's an existing customer, you can get it quickly. They already know you and trust you. If you've gotta go take it from someone, they're gonna fight you. The customer's gotta trust you. It generally takes 2 to 3 years, particularly if it's an engineered product. If you're selling a service, might be quicker. M&A, well, that takes the longest to get. You have to court these folks. And if it's a deal, so Bruce, you're going in, they probably already got a pipeline. Now, if your company's in shambles, you may, may slow play a little bit, but you're gonna have to play it because it takes a while to go through. It's like getting married. Imagine how long that took you. So, and then working capital, you wanna release it. You walk through your factories, you walk through your warehouses. That is just stacks of cash there. Release that so you can invest in the business. All of these stack up. Every one of these, every one of these are controllable by you. The only thing you can't control is the market. You have no idea what weather, uh, geopolitical wars, tweets, nothing. You have no idea. Control and focus on what you can. You lock that number with your team. Uh, you know, you make sure that they understand it. You've got it. It's There, make sure this is the big one, that they're tied to it. If you're paying on revenue growth, but you're getting measured on EBITDA, you got a comp problem, right? And then one accountable and one person, they say one throat to choke. Have that, make sure you understand it, you're all over it. Then stay, develop, or exit, right? That is, do you have the right team? You probably do, but you're most likely gonna have to make some changes on it. We'll talk about that later. Install the rhythm. This is the operating cadence that you need if you're gonna be successful. These are, I have monthly business reviews, MBR, some call 'em MORs, depending on what you do. That is a KPI meeting looking in the rearview mirror. Did you get it? The second one is a QOR or quarterly operating review or quarterly business review. That is a strategy meeting saying, given what happened this quarter, what am I gonna do about it? We have those every quarter, so our changes are small. Then the crucible is taking this document with those numbers, you, your team, your board beating up on it. 2 versions of the same board meeting. One, you don't have any idea. You're happy to be there. You're so smart and smiley, and you go and tell 'em you're gonna raise prices and they're gonna be thinking, what is the IRR gonna be? Or what is the MOIC? Or, but how am I getting paid? With this, doing this type of thing, you're in command and control. We have a program, we call it the Command 100. Uh, we work with people to do this, but coming out of this, you can do a lot of it yourself. We have some free tools. So whether you wanna work with us or someone else, you need to get yourself aligned. You get 100 days, you get that till that first board meeting, really to have the information. I told you they'll give you 6 months, but within 100 days, you need to have the beginnings and you need to start on it. Right? Get your number signed, get your team aligned, get a strategy around it. Sounds like a lot, and it is. That's why you have to go fast. Our program that we call the Command 100 is actually, it's really a 4-stage program. The first one works around getting your number. The second one is the strategy to deliver it. The third one is the structure that you need. And the fourth one is the cadence that actually gets you there. We've talked a little bit about these. If you're interested in it, At the next couple of slides, there's a QR code. Click on the QR code. We'll talk with you about it. I don't know if we can help anyone, probably not, but if we can, we will. If not, we're happy to talk with you on it. So, okay. One more way to do this. You can do it yourself. You've learned a lot on here. Bruce is, uh, he's got, he's already got his LOI. He's got to go through. Brian is here. I mean, guys, you, this is, it just, it's experience. That's the only difference, right? Do it yourself. Do it with your peers. Do it with me. I'm sure there's other people out there. Difference between them and, and, and, and us is, well, we've done it.
Okay.
What does it do? What are the results? We typically deliver 350 basis points. Every 100 basis points is 1% more, right? It's the way to think of it. In the first year, we typically find, that's what I deliver in my businesses. That's what we deliver with people. You generally will experience 30% in one quarter. That's because you start with pricing. You, there's a way to do, you can't be heavy-handed. They'll stick with certain amount. You go too far, they'll leave you. And over about 420 basis points or 4.2 points, you'll identify, do you get it all in? Sometimes depends on your cycle, right? This is not for everyone. This is not for everyone. You know, we are for people who are focused. They're at that day zero. They need to get command and control. They need to get to day one. And then there is a cadence to go through on. You can go through whatever pace you want. We run this over 100 days every week. There's deliverables. We do it through a cohort program. You work with you, you work with your team. We actually see each other. So Brian, you, Michael, Andrew, you're coming, you're using what you're doing and you have a partnership that you can really grow and people really do love that. So, all right. So here's the QR code, uh, here on it. You can also see it's billcandy.com. Book a discovery call with me. Julia, can you put that in the chat? If you may not have it handy off of it, but scan it right here. Let's see if it's on the next page. There you go. Still on this next page. So just do that. It's a 30-minute call. I book it for an hour because sometimes I go long. You can tell already that I've gone long here. We'll talk about scope, what we can do. If we can help, great. No problem. Okay. That's it, guys. That's the whole thing. Any questions?
I hope this 1 hour was useful to you. Bruce, best of luck with your new job. Something that I'll say, because Bill is too humble to say it, is that honestly, Bill is a guy who knows a lot. He's been through this, both sides of the equation. He's helped a lot of CEOs and up-and-comers to take control of businesses with great results. So if that's your situation, Being the CEO is a lonely job. So, if you need someone to, you know, get some advice, a sounding board, Bill is a great guy to do that.
Tulio is extraordinary. Tulio and I have been together, oh my God, going on 20 years or something. I think we were, I was 10, so I'm gonna go with that so I sound younger. Brian, that's, uh, that's very kind. I, there should be 800, but we've had good attendance today. You know, this is nichey stuff. It will be on YouTube and everyone who didn't attend, the link should be mailed to you. Thank you all for being here. Thank you, Bruce, Brian, Andrew, Michael, and on and on. The rest of you I didn't get to. Uh, this was a great day and, uh, have a great day, everyone. Take care.
Thank you guys.
Bye-bye.
