Adding Value Growth Services To Your Practice

Now this next and last session is very important, so I would ask the panelists to come up because now it's how to take all this great know-how and apply it, how to make this all work in your practice. So we're kind of getting in this direction in terms of revenue and impact and how we can work together. So we're very fortunate and Certainly last on the program, and one could argue very impactful. I know you guys need to get set up here at the computer, so you can go ahead and begin to do that while we— one of the things I've done over the years is to do a lot of research on the internet.

Actually, we're not going to do— we feel like people are kind of burned out.

No more PowerPoint, okay. Matt Evans and Matt Clauser, the whole program that has been put together here this afternoon is really, I think, again, people willing to share. And for our last speakers, we've got Gary Umpolsky, Matt Evans, Doug Milner, and Matt Clauser. And one of the things that I think is helpful is just doing some research. I don't know about you, I've done a lot of research in this in this area. And one of the folks that is going to help lead this last session of the program, Matt Evans, I think has an extraordinary website that I would encourage all of you to connect with, Excellence in Financial Management. That's how I met Matt was many years ago browsing the internet for some free content of value, and then I called up the man who hosted it, and we've gotten to become friends and good business allies over the years. But now, taking all this good know-how and being able to put it to use. So for this last half hour, or the last hour rather, pay close attention because I think this is how you can pay for the whole trip and a whole lot more as you get back home. So without further delay, Matt, please.

Yeah, thank you, Mike. Okay, and once again, thanks for sticking around on this last session of the last day of the conference. I really appreciate that. Let me give you a little introduction about myself, and then I'll go over the 3 panel members briefly. I'm kind of a purist in the sense that I'm just a value Consultant. I help small businesses. They tend to be rather small, about $5 million in annual sales. I'm somewhat of a generalist in the sense that I wear a lot of different hats and cover a lot of different functional areas. I've been trained in so many different areas, I think I've lost count. I've been, let's see, a Six Sigma Green Belt, Certified Business Analyst, been trained in Competitive Intelligence by Folding Company in Boston. Business intelligence at Villanova University, J.L. Kellogg Graduate School in Marketing, et cetera, so it just goes all and on and on, which may not necessarily be the best way to develop a value growth practice, which is one of the things we want to discuss with the panel members today in this last session. Let me talk about the panel members and why I selected you guys. I felt since I'm not a merger and acquisition person per se, I felt it was very important to have someone really immersed in both worlds, merger and acquisition and value growth. And I really wanted somebody who's kind of working both ends of the candle, kind of working the ecosystem. So they are literally, their value growth practice is feeding their M&A practice. So the very first person I reached out to was Doug Milner. Doug is the founder and managing partner of Strategic Acquisition Advisors. He's outside the Sacramento, California area. And the thing, Doug, I liked about you was that you have 20 years of experience, but what Doug is doing, he's building his practice internally within his merger and acquisition practice. And so over the last about 6 years, he's built this value growth practice. And a little bit unlike me as a sole practitioner, I'm always grasping at different tools and things outside my practice. And I think Doug has actually built his kind of infrastructure internally and maybe has even branded it as EVO, Enterprise Value Optimization. So I thought he'd be a really good person to put on this team. The session. And then I needed somebody who I think of as maybe the quintessential value growth consultant, because I don't want to sit up here and do all the talking. I want these guys to do the talking. So I asked Gary Impolsky to join the team here on this session. And the reason I like Gary, and I think of him as kind of the quintessential value growth consultant is if you go back to the first session that we had, the MMA track on Tuesday morning, if you notice there were two guys there and they were Marines. They were operationally focused. And then if you notice the moderator on the value creation session yesterday is a Six Sigma Black Belt. I'm a Green Belt. So one of the things you notice is some of the better, not necessarily, but I think some of the best quintessential value growth consultants have very good process operational knowledge. So in Gary's case, he's been basically an operating executive. You've touched across a real wide swath, everything from like startups, internal growth, corporate development, turnarounds, M&A transactions, and then If you couple that with the fact that Gary is very well educated, which I think also adds to the, you know, a really good value growth consultant. I think you got a BS, an MS, PhD in physics, and he's got a couple of professional certifications to go with it. He's a CM&A and a certified exit planning advisor. And by the way, the name of Gary's firm is Midwest Genesis. He's in the Chicago area.

Okay?

And then finally I needed someone to kind of plug some gaps and really have their foot hard in the M&A world but also the value growth world because a lot of issues are kind of on the sell side and that's kind of the choke point in this. And that's kind of why I wanted Matt Clouser on the team, kind of round it out. Because one of the things, if you notice also, That first speaker in that first session on Tuesday morning, he also talked about, he said, you know, what I really do is I'm literally trying to identify these value gaps and plug those gaps. And that's kind of what Matt Clouser is about, especially on the sell side. Matt is with, he's a senior managing consultant, BKD, a national CPA firm. And some of the things that Matt's dealing with, he's providing guidance on structuring and negotiating letters of intent, does a lot of due diligence work, things like performs networking capital adjustments. And completes the sell side due diligence to kind of expedite the sales process. So that's a little bit of rationale as to the team that's up here, and I wanted to kind of mash up different people with different viewpoints from my own and just see how we can build and grow a really good value growth practice. And also, I want to put a bookend on something that has come up throughout this conference. I think Harvey Strode, he moderated our first session. He mentioned 90% of the companies are not market ready. I think Carrie Salls moderated our second session. She mentioned some of the issues. And Mike Noss touched on it. Everybody's touched on how enormous this problem is and why I think it's so important for all of us to really become value growth consultants. And I was intrigued by a comment Mark Cuban made this year at a conference. And he tends to be rather outspoken, he's rather opinionated, but he tells it like it is. And they asked him, what do you look for when you invest in a company? And he said, one of the most important things I look for, I want to invest— and these were his exact words— obsessed, obsessed with growth, not obsessed with trying to sell yourself. Because I don't have a lot of time, and I want to spend my time where the success rate is the highest and not where the success rate is the lowest. Okay, so that's why I would compel you to consider becoming a value growth consultant. Okay, so on that note, I want to go and get you guys in the loop and let you do the talking. I don't want to sit up here and do most of the talking, So let me start off with a real simple question for each of you and maybe just take, I don't know, 3, 4 minutes. Maybe Doug, you can kick this off. Explain to me and us what is your value growth practice about? Give me some descriptive information about it.

Sure, well, you know, I had a couple different motivations for trying to tackle this issue. I apologize, I have a cold, so I might sound kind of funny. You know, as Ken Marks, Kenneth Marks, had said, there's the issue of where do you put a client that isn't ready to go to market, but you want to sustain that relationship. And then I was also looking at the issue of, hey, I want to create some additional cash flow as a small shop, and I'm the lead dealmaker, my staff supports me, so we're still, you know, bobbing and weaving through the, you know, the do we close 2 deals this year, 3 next year, and then 0 the next type of thing, and kind of bobbing through that financial management piece. And so I felt like, hey, this could be a great opportunity to kill two birds with one stone. Let's bring in some recurring revenue, some consulting revenue, and at the same time build our pipeline. So yeah, sounds like a perfect idea, right? It's a little harder to implement, but we've done it to a certain degree of success. But that was sort of the motivation— two things: cash flow and deal flow. Makes a lot of sense. What was the next part?

But what do you—

what essentially do you do when you do So if you go out and do a value growth engagement, what are some of the things that you're actually doing?

Sure.

Can you kind of drill down and help me out?

I think one thing that I would kind of start off by saying, and this is no offense to any of the CPAs in the room, I would deal with clients who said, well, I had an evaluation done for my company and it said it was worth $5 million. And you go in and you realize that all the salespeople are 65 years old. The owners, there's 3 owners, all of which are key to the business. Right. It's like, hey, forget about what that CPA said. Style valuation said your company's not sellable. It's not marketable. It might be worth that value putting it through the 7 methodologies, right? But that's not really helping you. Um, so kind of wanted to address that. So we came up with this concept of the EVO assessment, Enterprise Value Optimization. And what we say is that's evaluation on steroids. So we're going to do a similar to a CPA-style valuation, but we're going to look at all the other aspects of the business that are going to be either value depressants or value drivers. And then we organize those in our— in the report. We tried to— we have a certain amount of thumb factor. I learned that term a long time ago. It's impressive to have thumb factor. So we try and have it be robust. But it's all about helping a client then at that point decide, hey, am I going to hold and grow, or am I going to go to market now? And if I, if I want to hold and grow, if I need more, we include a walkaway value and after-tax estimate in the valuation. So if we're going to need to hold and grow, where should we prioritize our time first? So we deliver the report, and one of the summaries is every, every action item we list in order of value priority. So If you tackle number 1 first, it's going to have the biggest impact positively on the value of your company. 2, 3, 4, and so on. Okay.

Okay. That helps me out. Okay. And Matt, what about you? BKD. What kind of— describe your valuation, your growth value services.

Sure.

Sure.

So at BKD, you know, I like the feeder system. And we really at BKD kind of started from the end and have been working ourselves backwards into this value growth idea. So for those of you that don't know, BKD does have a full investment banking subsidiary, and they've been around for probably 20 years. So that's where, you know, the sell-side work started and originated within the firm. And then I would say, you know, 6 or 7 years ago, we started getting inquiries from our clients. So again, as Matt told you, my background, my day job was buy-side diligence. And so we started getting questions from our clients, and quite honestly, on the buy side, started getting presented from time to time, especially with international transactions, sell-side diligence reports, right? It's QoV. And so as the inquiry started coming, including from our investment banking shop internally, we developed a sell-side diligence team, which was kind of our second step into this. And that just moved the transition a little bit sooner before the transaction. Ultimately then, and that's where I, you know, that's where I sit. Ultimately we added another step in that situation. You know, we've got an internal team, basically your value creation, value assessment team that's really in there ahead of that, you know, where there's not a transaction in sight yet. There's not a defined buyer yet. And they're really doing, you know, some of the things that were talked about in the previous presentation about really helping try to identify items. That can be changed ahead of time. But I would say really my part, what I focus on, what I talk a lot about, is the expectation gap that exists. And so in the value growth, I mean, you've either— you've got one of two things. If a seller walks in with an expectation of what their business is worth— you talked about the valuation— you've got one of two things. You're either going to help them grow to meet that, or you're going to kill the deal because they're not taking anything less. So that's where I kind of view our, you know, our jobs. It's either we're trying to manage that sort of gap that we have there, we're trying to help the owner drive as much value, but I'm also honestly trying to help them look in the mirror and understand what their company's worth so that we don't just end up with a dead deal.

And Gary, describe your value growth.

First of all, I appreciate the opportunity of being here. I think that this is a great learning process for all of us, and it's one of the things that attracted me to this practice that I have, is that I was fortunate enough after graduating from school— and I stayed in school for a long time because there was a war going on— wound up with a PhD in physics. And so a lot of people ask me the question, how did a guy with How does a PhD in physics wind up in business? And the simple answer was, you know, I didn't want to come home smelling like an electron or a proton for the rest of my life. And so I got involved in a lot of high-tech startups, and that led to other things, some turnarounds, you know, as big companies progress, if you do something good at a low level, you get rewarded by a promotion, and ultimately I found myself in a CEO position where I had an opportunity to move up and move out and become a CEO of a public company, which wasn't as good as I thought it would be. I'm a victim of the grass is greener syndrome in almost everything that I wind up doing. So I got involved in a couple of going private transactions as a CEO of public companies. So I understood what it was like to sell a business. I sold a couple of businesses that I had started. Those businesses back in the '70s that were started then, fortunately, are still in business today, earning profits and generating a return for their owners. But I, you know, from that it evolved into, gee, maybe I should try my hand. I got a couple of opportunities to cash in on some stock options. I went into venture capital, the worst part of venture capital that you could possibly think of, which was seed capital, at a time just before the savings and loan crisis hit in the late '80s, and suffered through that. Went back into corporate America, wound up selling another business, becoming another CEO of another public company, and in the early turn of the century, around 2004, I started working with Chicago-based private equity firms on valuations of their platform potential acquisitions, add-on acquisitions, and became sort of a pseudo-expert in operational due diligence. And so from that, when the recession hit, all of the deal flow dried up. There was nothing more to to consider in terms of selling, but quite separately, two separate business owners came to me and said, "Hey, while this economy's in a tank, would you be interested in helping us grow the value of our existing business so when the economy turns around we're going to be much better positioned going forward?" So I thought, gee, you know, that sounds like an interesting thing, and I was very, very busy through the whole last recession doing essentially sell-side business value enhancement. And I didn't call it that until I enrolled in an A&M AA course and got certified and learned that, hey, there's really a formalization to this process. And then from that, I led into exit planning and done a number of other things. So we do 3 things for our clients. One is we do a buy-side operational due diligence support. We'll work with accountants that do quality of earnings and attorneys that will do, you know, the legal due diligence on deals. We'll work with sell-side owners, getting them ready for a transaction process. We don't— we're not investment bankers. We work with investment bankers and we work with a lot of people that really have an interest in increasing the value of their business before entering into a formalized process. And then the last thing is the exit planning process, which helps us prepare the owner for life after business and what Jack Beauregard calls the platinum years.

Okay. So let's— go ahead.

I had an interesting comment. You know, it's funny. Innovation comes from necessity. When you mentioned the Great Recession in 2009, that's when I did my first EVO assessment because I was panicked. All my deals just immediately had evaporated, my pipeline. I had just gone independent from a larger firm and I thought I had everything set up beautifully, and then Lehman happened. Um, but so it's interesting how much innovation and new, new, new, new things you can do when you don't have any transactions to work on. And that's exactly where I was in 2009.

Okay, so let's drill down a little bit and understand. Can you give me any examples of methodologies, tools, techniques, software, anything you might use in your value growth practice? Gary, I know when I talked to you, you mentioned things.

Yeah, I'll start on that. We actually use a lot of different tools. Depending upon what phase the project is in, we try and boil everything down into a 3-phase process. This is on the, for example, on the buy side. There's a whole bunch of activity that has to do with evaluating the business, looking at synergies, looking at SWOT analysis and combining all of these things to try and maximize the value of the business after the transaction closes. But on the sell side, we break it down into 3 components. We do an overview, which is a 20,000-foot assessment, and we use a tool that's commonly available. It's called a sellability score, but it comes out of an hour-and-a-half interview with the owner. And out of that 1.5 hours, we can extract a lot of information around what the needs of the businesses are, how to help the, the seller look at his business through the eyes of a buyer, which is a real contributor to the gap that you talk about. There's all kinds of gaps in this business. There's a gap between what I need and what I want. There's a gap between what the seller is going to ask for and what the buyer is willing to give. And the more education we can provide, the better we have as an chance of narrowing that gap.

If the—

and we charge about $2,500 for that initial assessment, and it's a 1-week kind of activity that, you know, I think we'd love to do those all day long because there's a process involved and it's very structured and rigid and we can automate the reporting and so forth. Beyond that, if a buyer wants to go on And then we do a deep dive. And with that deep dive, there are a number of tools out there. The biggest one is one that we use a lot of benchmarking. We work benchmarks on valuations. Everything that we do starts with evaluation. And valuations vary all over the map depending upon what the owner motives are, but in reality, We try very hard to understand what does the owner want to do with the business first, and that will then dictate the process and the valuation criteria that's used. If the owner goes through an ESOP process, for example, to sell the business to his employees, then it's fair market value, and that's already predetermined. As to what the valuation is. If it's through a sale process, we try to look at the discounted cash flow. We'll use the VOP efforts from, you know, the folks at Ken Zanginero's organization, and that helps us really identify the discounted cash flows and puts a roadmap together for things that focus primarily on risk. We will bring experts in to help us grow sales and business process optimization people to help us reduce inefficiencies and get risk and from a cost standpoint out, but that's the second phase. And then the third phase of course is an implementation phase if they want help implementing the plans and recommendations that we make for them.

Okay. Matt, what about you? Anything specific you use?

Yeah, and I'm glad you mentioned benchmarking because that's a good segue. So what we have really found when we're talking to sellers, when we talk about the value gap, this expectations gap, one of the core concepts around the work that we do is part of what drives that difference in multiple is, you know, one, how well a seller knows their company, and two, how well they can explain it to somebody and can prove it. So, you know, the valuation that gets slapped on your desk, depending on whether it's right or not, a lot of it depends on how well a seller can tell their story, I think. And so when we sit down with a seller, we're really trying to answer two things with them on this side. One, what do you do better than most, and how can you tell that story to a buyer so that they know that they need to pay for it? But two, what do you not do as well as others that you need to improve, you know, the whole value growth situation here? And so about 7 or 8 years ago, BKD developed an internal— we use a third party to provide BKD ClientLink is the name of the software we use, but it's a benchmarking software, right? And so we used to go out there to all the public information you guys all have, and we would benchmark the companies as well. But what we found was it's difficult to really hone in on the exact industry that this company is in and the size that they are. And so if you don't match those two things, I think a lot of the benchmarking loses its weight. And so what this software really does is it allows us to go in, we can benchmark any company against the 7,000 BKD clients out there that have been uploaded, so all the audit and tax clients are uploaded from the firm. And then it also allows us to benchmark against other companies that have been uploaded, you know, through other service providers that are using the same thing. So that's one thing we do. The second thing we do, and there's no earth-shattering technology behind it, but I liked the previous presentation that talked about moving the TTM average conversation to the forward-looking conversation. And again, I completely agree with that. I think that, I think that's right on. Going back to my comment, I think the only way you can move that conversation to a forward-looking sort of conversation is again to tell the story and convince a buyer why that's realistic. Again, we've all been in situations where you get handed a set of projections and you have the hockey stick projections and the seller wants you to pay off of it. And it gets really uncomfortable, you know, for any buyer to try to get in a situation where they can, you know, to use Basil's example, historically, but it's $1 million, but you want me to pay you off of $4 million. It's hard to do that. And so one of the ways we try to help a seller get there is by breaking down their business a little deeper. I talked about we have a couple IT guys on our staff. That really go in and mine raw data from these companies as opposed to just getting system-generated reports. But the best example I can give you is on a recent transaction, and this company was essentially a consulting company. So 85% of their revenue was just consulting services, the stuff that quite honestly we all do, and another 15% of it was software-related, database-related, that they had access to, that their customers subscribed to. And the buyers came into the situation expecting basically, as I think a lot of people do, maybe just blindly, that, oh well, this software piece, it must have a much higher margin than just your standard run-of-the-mill consulting. But that had never been proved by the seller. They didn't, they couldn't document that. They are a service company like all of us. The biggest cost was payroll on the system. And there is no report out there that says, here's my margin by consulting and by service. And so that's, that's one of the processes we tried to help them go through and to show, well, what kind of costs really go into this consulting business? What kind of costs go into this software business? And the answer contradicted what what the buyers came in thinking. The software business, because they utilize some third-party service providers and some internal personnel, didn't actually have the margins that the consulting business did. And so I just, you know, we call it a key performance indicator analysis. I'm sure it has a lot of different names out there. But I think if you're just approaching a business saying, well, it's going to be top-line growth of, you know, 25%, EBITDA is going to go from 15% to 20%. I don't think that's good enough. I think you have to go a few levels deeper to really be able to convince somebody of it.

Doug, any specifics you want?

Yeah, I kind of just get to get back on the theme for the people that are independent intermediaries that are looking at adding value growth to your practice. Um, it doesn't have to be fancy. I mean, it's just doing it, because what you're doing is you're finding a point of entry to that client 3 or 5 years in advance. So there are some off-the-shelf tools that if you don't want to create your own, that are— I haven't used them because I have my own, but I know that they're fairly reasonable in cost. They're certainly better than nothing. So what I would say is, again, if you're here wanting to know what do I do to create a value enhancement piece of my practice, start simple. Look at some of the off-the-shelf things. You know, we have created our own product and our own tool But it— but anybody that has been an intermediary for a number of years, you know what kills deals. You don't need a tool to tell you what kills deals. You've all had deals that have died, and you all know exactly why. You don't need a software to know that. And so at that point, you can create— you know, just based on your own track record, you can consult with a client and I decided to create a report and called it a branded name. You don't need to do that. It's just about finding your own way to get in, and you look at your own price points. We charge $20,000 for what we do. Sometimes I think it's expensive, and other times I get done with one and I think they should be $50,000. And that has to do with the client. But, you know, pick your price point. But the whole concept here, I think, that we're trying to express today is if you're banging the phone and saying you're an intermediary or a broker, whatever you call yourself, investment banker, and I want to sell your company, you're going to get hung up on 99% of the time. And I'll tell you what, when you call somebody, or if you meet them socially, or you're at the Rotary Club or whatever you do, and you say, well, you know, we— I am an M&A advisor, but what we really do is we really help people create more value when they're ready to sell, whether that's 3 years from now or 10 years from now. That immediately takes their defenses down because you're not a broker trying to get a contract to sell their company. What you're saying is, I have a solution, I can help you. I'm not trying to get you under contract today. I have a methodology where if you're not ready to sell for 10 years, if you start working with me now, I can assure you that you're going to get a better outcome. And the other thing I would say is we sell it all on ROI because we've looked at, you know, a lot of the private equity seminars this week that have been great. They talk about culture and things. One thing that has not been successful for us is when we want to help people with their people and their culture. For whatever reason, the soft fluffy stuff, they don't want to spend. And that could be just the types of companies we're talking to. But when I say, hey, we're gonna do an EVO assessment for $20,000, and if you're a— if it's a small type of company, it's a million dollars in EBITDA, and we get you one extra turn, you just earn 50 times on your money.

Good ROI.

That, when you sell it based on an ROI, we've had much more success. And so I've completely— that's the only way we sell it. It's all about ROI. You want to make 50 times on your money? Pay me $20,000. To get into your business and tell you all the things that will dilute value. So that's what's worked for us.

Okay. And Gary and Doug, they touched on pricing. Matt, do you want to touch a little bit on pricing while we're at it?

And we're probably a little unique in this situation, and that— or at least unique compared to these two, because my, you know, the benchmarking software that I talked about, that's just something we use. That's not something we sell. So that's not something I put together. That's part of the work that I do. So we don't have a fixed fee for here is, you know, here's the solution and here's the cost or anything like that. You know, we talked before about the monthly retainer. Again, I'm not an investment banker either, so they have their own fee structure. Mine is based on an agreed-upon scope and based hourly rate. So it really is, you know, the gentleman asked before, well, how many hours do you spend doing something? And again, I've, I've had the sell-side work where I spent 90 days with the client and we were in and done. I've had them where I spent a year and a half with a client, you know, consistently, month over month over month. So it's impossible for me to come and say, you know, here's the fee for the engagement, but we do, you know, kind of build that up the same way we would on the buy side.

Okay. What about capabilities that you think are critical for someone to really stand up a successful value growth practice? What kind of capabilities? I know, Doug, you were talking about HR as a soft point. I noticed when I went to your website, you had an HR person. Is that a critical—

a human capital person, right?

Yeah. Is that a critical capability? I have evolved this part of my practice over time, and I, and I sit and I hear other people in some of these, and I think, God, I got a long way to go, right? Um, but we have done some good things. One of the best things that I did was I actually partnered with a local management consulting firm. I, I do not— I don't come from any sort of a management consulting background, uh, and so that's really not my— when you talk about hourly and things, that's just not how I've lived you know, how my world works. So I did do that, and that has been helpful because it's sort of the extra hands on deck so that when we have an EVO assessment project, we hand off certain pieces of that. I still am very involved. I want to get less involved in it, but that I would— that for those of you again in the audience that are looking at doing this, you know, look at some of the other practitioners in your market that are management consultants because they're going to bring a lot to the table that you would never bring. And that way, when you land one of these jobs, for whatever you're charged, you can do it on a variable cost basis. And that's, that's worked very, very well for us. For now, for me to go to the next level is where— and why I haven't to this point— it really is a different business. And I have been reluctant to start a full-fledged consulting line of my business, but that— I'm at that's really where I have to go to take it to the next level, to increase the volume of what we're doing. But that's just part of the evolution.

Matt, what do you think? Critical capabilities for a successful practice?

You know, yeah, it's funny. We've added some specialty, but I will tell you, we also— so we've got this thing at BKD about knowing what you're good at and not stepping outside of what you're good at. So the operations background you mentioned, like you said, that's not what we're good at. I'm not going to walk into a company and tell them, well, boy, let's look at your line here and I can tell you that that machine needs to go over there. You know, I just, I don't do that. So I honestly, I'm a numbers guy. I'm a CPA. I know what I do. The biggest, the biggest strength that I can tell you we added was the IT strength. Because again, if you go back to when I first started, when a seller told me, I can't give you that information, you know, the information I talked about wanting to be able to tell the story. When they said, I can't give you that information, I was done. It was game over for me. And I said, you know, okay, well, if you say you can't give it to me, you can't give it to me. So the biggest, you know, probably skill set that we added that we did not have was the IT person that is now a part of our value growth team. And now when they say, I can't give you that information, I say, okay, hold on. And then we set up, you know, a half-day, maybe one-day visit with our IT guy to go out there and get me the data that I want. And so that actually allows us— it takes a seller from saying, I can't give it to you, and it puts me in a dead end, and it gives me the data I need to actually be able to help them get the value we're trying to get out of it.

Gary, what about you?

You know, it's kind of interesting. A lot of really great thoughts and ideas coming from the two gentlemen on my left here. And I will tell you that when it comes to trying to estimate the amount of time that you will take to help a business owner, whether it's a buy side, sell side, whatever it might be, is always going to be underestimated. And they can't afford to really pay you for the time you're going to put into it at what you're really worth. So you're stuck between this, I can't make any money at this, at what I'm really investing, because you're making, you're trying to build a practice, you're investing in things, and what you realize very quickly on is that it's a team effort. You've got to be able to work with teams. I'm not really any smarter than the guys and operating guys that I work for. I mean, the reality is, if you ask the right questions, and that's knowing what you don't know and knowing what you should know, it starts from that, and asking the right questions, the answers will come up. And yes, like any paid consultant, the owner always says, "You're just giving us our answers back." But in a formalized structure, you can sort these things out. In such a way that the real valuable answers rise to the top. So it's a team within the organization that does their own benchmarking against— we give them the rules as to what the benchmarks that they should be comparing with. And we'll go out and we'll subscribe to all these financial opportunities that are out there, some of which have been presented here during this last session. And I'll tell you that, you know, that's all great information, but if people don't believe it, you know, it's not really valuable to them. And if it comes from them initially, they're going to say, aha, thank you for helping me structure it. You made my complex problem sound simple, and I don't know why I didn't think of it that way earlier. Okay. And it's outside members as well. I mean, we work with, financial planners, tax and legal advisors, real estate folks, insurance guys, you know, and they're all interested in follow-on business. One of the most interesting relationships that I've got is with a firm that you would never suspect would be interested in business value enhancement. It happens to be an executive search firm. Because that guy is interested in building a deal flow based on succession planning, and that generates lots of revenue for him. And especially if we go in and, and he'll bring me a client and we'll work together on this, and he'll say, you know, we, we have to build this team because one of the big risks that a buyer is going to see is the lack of management depth. Okay, so that's a, that's a huge issue, and there's partners like that all around.

Gary brings up a good point though. You're not going to get rich doing this unless it was, you know, something where you were— it pays bills. So the cash flow piece, at least the way we do it, makes sense. But you always end up— and that's one of the frustrations of when it gets to my desk and I take it from 80% to then getting it 100% deliverable to the client. That's my role. Yeah, you always end up putting more time into it than you're really getting. You're not getting paid what you're worth. But again, the endgame is that you're getting future success fees, and so that really is what it's all about. But it will help you pay some bills along the way.

Okay, so in the remaining 10 minutes or so we have left, let me ask one final question which I have struggled with, and that is, how do I market and sell this service? How do I convince business owners to do this? Any bright ideas that can help me and other people out to sell this service? Doug, do you upsell?

Yeah, you know, we're just opportunistic with it. You know, as a part of our normal sale process within the transaction business, it's really more about when we uncover a client that isn't ready, or that has a piqued interest. You know, we talk about all of the suite of services we provide, one of which is the value growth. And that's where I say one of the key things for us has been that that gets your foot in the door for a lot of companies or CEOs that just aren't willing to talk to you. You know, they don't want buy-side advisory, they don't want to go through acquisition, and they're not ready to sell, but they want to grow the value of their company. So again, that's one of the other pieces that's important. So we're more opportunistic.

Opportunistic.

Taking it to the next level, like I said, right, we're at that point again. Okay, do I— do we hire a dedicated team and we market this independently? That's kind of the decision point that I'm at in my practice.

Matt, how do you market the service?

Yeah, so for those of you who have received case studies from BKD, I'm sorry, but that's how we market the service. Is it's like Doug said, I mean, we slap evidence right in front of these business owners that say, here, let me just, let me give you an example of somebody else just like you, right? Because you're right, I mean, we're just consultants up here, you know, and, and we cost money, and people don't want to spend money as business owners. I get that. What they're willing to listen to though is tell me about somebody else who was in my situation and how they benefited, and then all of a sudden it's not a, it's not a cost. Anymore. It's a value. So if you're at the very beginning and just forming this practice, then, you know, by default, you kind of have to use industry information and say, well, here's, here's the value, you know, to you as a seller. But I mean, as you start to kind of build that, you now have a library where I can go say, hey, here's an example of a company we worked with in your industry, and here's what their problem was. And they didn't think they needed phase 1 value assessment, from us, and they didn't think they needed Phase 2 sell-side diligence from us. And they called me once they had an LOI from their buyer, and unfortunately that LOI had a purchase price that wasn't going up. You know, let me know if you've ever seen a purchase price go up from the LOI. And one of the things that they completely overlooked that comes out in this whole process is that they had just started a new product line about 9 months 9 months before the LOI was signed. And for those of you who have started new product lines, you know they are not ramped up 9 months after you start them. Not only do you not have a full year included in there, you're nowhere near an annual ramped up level. And so it's that story that resonates with a seller. When I said they completely overlooked the boat and I quantified it for them, they were mad at me. It was too late for them to do any good, but it was $4 million that it cost them by not going through the process. And so you said, well, if you can increase the return, you know, here's what it is. To me, it's case studies. It's having those, having that ammunition with you to say, here's somebody that's been in your example. Here's the dollars that they left on the table by not doing this. You know, the previous presentation said perfectly, most sellers leave so much money on the table and they don't even know it. This was a prime example They just looked at me with the deer-in-the-headlights looks when I told them about this. So it's building your ammunition of case studies and being able to find something that relates to them better than we relate to them.

Gary, what about marketing?

Yeah, I think that the whole case study thing is absolutely essential to get recognition and the beginning of credibility. I think another thing that would be very helpful for anybody interested in getting in this business is to get out and learn. Learn with someone else. I think that if you can do that and get some articles published in various trade journals, those are ways to get some visibility. And I think marketing is the toughest thing that I had to face in, in this business. You know, there are two pieces to success here. I think relationships— I mean, this is a relationship business, right? I mean, it's those people that have got them are so protective of them that they don't want to share that with anybody else. And yet those people that have the relations quite often don't have the ability to execute. So I'm going to make you an offer, alright? I would be happy to partner with anybody in this room who has got relationships with companies that are over $10 million in sales and are generating a reasonable profit, and I'll work with you and your relationships. You can continue to manage that relationship and keep it as close to your vest as you want, and I'll be your execution partner. And I'll take all these tools—

I'm the one.

Yeah, I'll take all these tools that we have worked on, and by the way, you don't have to do this as a lifelong experience. You may all decide you're going to do it as a couple of times until you get comfortable enough where you want to invest in the software, you want to invest in the process, and by then you'll have some experience of having done it a couple of times that you'll decide, you know what, this outsourcing of the backend processing stuff is not a bad idea because I can go out and use my relationships and do more of this. So I'm always worried about how do you scale the business, how do you take it, you know, and I'm a small shop, but I can't spend the time building relationships and at the same time, you know, working the operations side and doing the execution on this stuff. Which is what I really enjoy doing. So I partnered up with a number of people who want to maintain relationships because there's something in it for them. They increase their value to their client, and their objective is, you know, basically to be the most valuable advisor that the client has. You know, what I really want to do is really be a part of that. And I think there's a way to work together to accomplish that in short order.

That one last thing on sales, I totally forgot. You know, one of the key pillars of my overall marketing strategy is public speaking, and that is all about getting the engagements to speak, right? That's the challenge. And with— I do it with trade associations and things. It's much easier to get approved as a speaker talking about growing the value you're company than some sort of an M&A activity. Again, people are much more receptive, trade associations are much more receptive to you going and talking to their members about how they can improve their company than, hey, if you ever want to sell. That you're never going to— so that was one key piece. I like it. Good point.

I don't know if we have time for questions, Mike, or not. Any questions from anybody? Ideas? Comments? Yes, sir.

In my experience, talking to business owners, if you have some operating experience in that industry or if you've been a service provider for those verticals, that creates a lot of immediate credibility. Then you can talk about value enhancements. Otherwise, A business owner almost always thinks they know more than you do unless you have done something. In your case, you know, you were a CEO of a public company in the past, so you can go and talk about that, especially those industries. So are the value enhancement tools you're talking about, are they just cross-sector? Generic or do you have industry-specific approach to it? And in that case, do you take someone with you from that industry to add additional credibility? I know you talked about management consultant. Is that an industry consultant?

Yeah, the tools that I use are typically focused on either manufacturing or business services. And those are the only two verticals that I— I mean, those are very broad verticals, but those are the ones that I typically focus on. I don't know, you guys probably have different verticals as well.

First of all, the CEO does know the business better than I will, no matter how much time I spend with them. But I think the thing that we probably bring to the table is what I know better than them is how a buyer is going to look at them. So they know their company, and I don't ever, you know, want to pretend to know their company as well or even their industry as well as they do. But I am very familiar with how a buyer is going to look at them and judge them. And, you know, nobody likes to be told their baby is ugly, but unfortunately, if it's going to be told, you better get ready for it. So that's really what I think we bring to the table. Absolutely agree. We do, you know, my team is about 25 people and we specialize in industries because people want to know that you're experienced in them. So we absolutely do specialize. My asset, I guess, in my situation is our team's only 25, but I'm part of a much larger firm. So I've got, you know, 2,500 people that I can call if I need to.

Do I have any comments?

Yes, they do have to be customized. And ours is pretty generalist, so we'll have anywhere from 10 to 15 areas of the business we look in. And We look at kind of 90 to 100 different points. And then we shuffle that based on what type of company it is. So if it's a manufacturer, we're going to look at certain things that we're going to not look at if it's a business services company.

Anything else? Anybody else? If not, I think that's it, I guess. Mike, do you want to do some closing remarks? I'll turn it over to you.

Thank you. Thank you, Matt. Doug, Matt, and Gary. This is some of the things that were said today, I think, were so revealing because all of us in this room recognize there's a fundamental market need of grand proportion here. Everybody knows that there's a lot of other groups out there There's at least 3 exit planning, transition planning groups. There are many executive coaching programs, thousands of management consultants. Many people get confused because they look at certain CPA firm websites and they talk about the ability to do this impact and create value. I put myself in the mind of so many people. I know even a lot of M&A shops and investment bankers claim to be able to do all of this, and as I've drilled down and asked them who and how and what, you find a lot of people dabble at it, backpedal pretty quickly. I think as Doug said, it's probably easier to get a speaking gig If you're talking about value and growth with the trade association, then you are in sale M&A, because what trade association wants to see their members be sold or go away? I know we don't. We want to keep you. We want you to grow. And that's really where I mentioned earlier this whole question of help me Help us help you. That's really where we want to go. We've organized a group we call the Mid-Market Alliance, and it's to tackle this fundamental issue because this is a tough one. When you step back, we've been talking about this and working on this for years. We're not at a dead standstill because people are implementing they're working on a project-by-project basis, on sort of an ad hoc basis. Oftentimes it's regional in nature because it's close and convenient. So the client may not end up with a world-class best of breed, but it's someone local. And if it's someone trustworthy and local, I find a lot of solutions in this space really end up being good enough. If you will. I mean, I've talked with— and of course it all depends on the needs of the client. I've talked with business owners who've said, Mike, I don't need to get top dollar, maximum value out of this. My kids are spoiled. I got all the suits I need. And that's okay, because if somebody wants to do it on a very low-profile, quiet, convenient basis, You all know of hundreds of people that you would have met at the conference this week that are very happy to pay you a very nice finder fee for the introduction to somebody that's got an attractive company that isn't looking for top dollar, right? I mean, that's called proprietary deal flow, and everybody in that room this week would love that. And they'll be happy to incentivize you very nicely. But many companies do need help in this area, and I thought some of the words today came up so important because you really— it's hard to get them to recognize the need, hard to get them to write the check, and hard to be able to be paid what you're worth now. Now on the other hand, we all realize the results of this work lead into a transaction, and one of the things I've learned over the years is most companies, if they sell for at or above what they would like, they will pay a very handsome success fee of a million dollars or more. Not unusual in our market space. They tend to be very very generous when it's Christmas time for them and there's lots of goodies to go around. As Chris Bleeze and others teach in our training program, the cashier checks, when it used to be done that way, now it's done by bank wire transfer, but the point being, how can we tap this market opportunity on a more meaningful way to help you help your clients and those out there. And I realize we're not going to come up with all the answers at the end of a 3-day conference, but I also can tell you that we're pulling together a group of very highly qualified, capable people, and together we're going to find a way to figure this out together. We're starting to work on projects. Again, we call it the Mid-Market Alliance. It's positioned as a sister organization alongside the Alliance of M&A Advisors. So you all know when they— you call the office and they answer the phone, it's simply the Alliance, because we don't want to complicate things in the minds of most clients. Frankly, they are all seeing everybody in this room and all of us really as a bunch of suits that are in between them and their justly earned pot of gold. So even though we put labels on all each other in terms of our specialty and our credentials and all of the things we do, what they really like is somebody that can lead the way through this process, and it really comes down to maximizing value, the maximum value process. So you become an MVP, and I like what Gary said, and that was really that we just simply begin to work together. I think a big part of it relates to awareness and trust. We're developing a little peer-to-peer rating system amongst our group We've got a code of ethics. We're in the process of being able to add some capital in order to build market recognition and to help you get found. We're exploring on how to create web-based collaborative workspaces so that we can easily, on a project-by-project basis, communicate with one another without overload of emails. There's so much coming on in this area now. And then of course we're also looking at adding executive talent to the team because we believe that this mid-market alliance, as we build it out and as we create value, we're going to create more opportunity for the independent members of the Alliance of M&A Advisors. And if somehow we could get all those deal-type people with the Alliance of M&A Advisors, who most of them, they recognize that what we've talked about here is a genuine need. They're not likely, for the most part, to want to take the time to be able to wrestle with all these problems, because I thought everybody here was pretty accurate in terms of talking about the reality of marketing, sales, payment, collaboration and all, but we are convinced there is a way and we're very well positioned with a great start because of our relationships with trusted people and certainly if we can begin to build the relationships with the investment bankers and the M&A advisors we can help them. Let's see, if they're now walking away from 9 out of 10, what if— is it possible that we could get them one more deal so that instead of doing 1 out of 10, if one of those other 9 could be connected to our mid-market alliance group and we start a project with any of the experts on this panel or any of you that choose to be part of this new collaborative exercise, is it possible that instead of them just getting 1 out of 10 at-bats, if they could get 2 out of 10 for the independent M&A professionals, if that began to happen and they improved their batting average, that would have a dramatic impact, wouldn't it? Or the same way with the private equity investors that we We have his members and friends, and they now have a big challenge. Everybody's aware of the fact that there's a lot more money than there is deals. And so we want to be able to talk more about the Alliance of M&A Advisors as well as the MidMarket Alliance. Is Diane Niederman in the room? I had— Diane has been a very key resource. In helping us with this new division. So when you call the office, I want to be able to get you introduced to Diane. We're expanding and growing the organization, and, but most of all, I think as Doug said, you know, he's looking at moving this to the next level, and he's wrestling, I'm sure, with choices and options, and Eric, we as an association are going to move this to the next level. Diane Niederman in the back of the room has been a strong advocate for the Mid-Market Alliance for a number of years, so we realize it's been the end of a long 3 days here, and that hopefully you've got an abundance of ideas floating around your head. But do keep us in mind as we ramp up the Alliance of M&A Advisors as well as the MidMarket Alliance. One is advisor growth, the other is of course the best investors and transaction people in the world. But we think that there's a much more comprehensive solution that we can generate for all, so we're going to to follow up with you after the conference if you choose, and we want to be able to plug you into the Mid-Market Alliance. The educational effort for this new group and the people that are working on this, again, the education committee, the leader of that is Ken Sanginario, and we're really looking to be able to identify other leaders that might have an interest in this new part for the mid-market. And some people believe it's not possible because it's so daunting, but they said the same thing when we started the M&A Association 16 years ago. They said, Mike, there's lots of other M&A groups, lots of other ways to do this. What makes you guys think that you're going to build something something special. Well, the only thing we know is through the wisdom of the crowd, collective intelligence, peer-to-peer capability, I think we can do anything. So we're thrilled that you've hung in there over the long haul. We hope you decide on how you want to move it to the next level and that you're willing to work with us as we do it together. We're We're big believers that together everybody accomplishes more. And not everybody sees it that way because we are a very open-source collegial group. But we'll follow up with you on the Mid-Market Alliance. Please do take the time— Thank you, Diane. Diane is in the back of the room, so any interest on the Mid-Market Alliance, please give her the card, and also give us the evaluations from this conference because we need to be able to get your thoughts and ideas. Starting on Sunday, Mary Lou and Kristen fly down to Orlando and we begin all of the specifics for our conference come mid-January in Orlando. A lot's going to happen over the next 6 months. Hope it's all good for you. Travel safely. Godspeed. And thank you for being part of our growing community. And please help these guys with another round of applause.

Thank you.

Take care. See you in Orlando.