Collaboration to Closure

Good afternoon, and thank you for joining us. My name is Mike Knoll, and on behalf of the 1,000 members of the Alliance of M&A Advisors. We're thrilled to have you as part of this special session this afternoon. One of the things we found over 17 years in the M&A advisor business is that 9 times out of 10, when one of our M&A advisors goes to visit a potential sell-side client, we found that 9 times out of 10, there's a big gap between what the client might like, want, or need in the way of sale value compared to market value. So most of the independent members of the M&A Association, when they see a big gap, what some call a bid-ask gap or a value gap, or there's a lot of words for it, but for many people, if there's a huge chasm there, most transaction people will drop it like a hot potato and move on to the next. And so what we have this afternoon is the start of a new way. Some of you have already picked up on this, and I learned earlier from Charlie Maskell today that it's become a valuable part of his practice, this whole process of profit improvement, value growth. Things that can be done to help a company improve profitability and increase value prior to a transaction, sometimes years prior to a transaction. So this is a, a whole leap of thinking for most of the independent M&A professionals. We're thrilled that we've been able to identify some experts willing to share thoughts ideas and best practices. And the person who has been working very diligently for the past several years now on this effort, Ken Sanginario in the back of the room, he and the committee have worked very diligently in being able to tee up some thoughts and ideas that I think you'll find very valuable if you have an interest in these more expansive profit improvement value growth services. So we've got 4 sessions at this conference devoted to this track, a number of experts that are very competent and capable and they're willing to share. And that's really what our organization is all about, is helping independent professionals learn and earn more together. Without further delay, this first session we've got being kicked off by Harvey Strode, a certified M&A advisor. Harvey is one of the transaction people that gets it, and we're very pleased that you've joined us for this session this afternoon. Come on up front. There's spaces up in front here, and we don't want to see anybody standing. This stuff you're going to want to take time to let it soak in. So Harvey, please help me in welcoming Harvey Strode.

Welcome. This session is really critical because 90%, as Mike was saying, 90% of businesses that are interested in transferring their businesses, they're not market ready. 90%. Now, depending on the data you look at, it could be 80, 85, but the point is the number is a big number, which means it's an opportunity for us as advisors to go out and work with business owners to get them prepped the right way to close once they're ready to close. The idea is to prep business owners where they can realize maximum value. And sometimes that takes 2, 3, 4, 5 years in advance to prep them properly. Today we're gonna tell a story. We're going to share stories. The reason I have The Art of War is because it's a story that talks about war. As you know, if you're an entrepreneur, you know it's tough. It's a fight. You're in a war. It's a game of war just to survive. Sun Tzu, we all know, wrote The Art of War, The Principles of the Art of War. And one of his key principles is survival. You can't grow and create value unless you first think about how do I survive. Sun Tzu has a philosophy of win-lose. Know yourself and know your enemy. If you know your enemy, then you can strategize a way where you first survive and then win. That's what the Art of War is all about. So today, the art of war, my experience in war, one of my colleagues' experience in war, hopefully will pull all this together where you can see the importance of integrating, integrating in your business model the art of collaboration The art of collaboration versus the art of war, but to integrate the art of collaboration into your business model where you can get more deals closed. So we're going to share our stories today. My personal story goes back nearly 50 years. I was in a little place called Vietnam in a little compound called Khe Sanh. Some of you with gray hair probably know and can identify with that. I was wounded twice with two Purple Hearts. I was diagnosed with 70% PTSD. The only reason I survived, this is my story, the only reason I survived was I was able to collaborate internally and collaborate externally. Again, the theme of war. It shaped my thinking as a military strategist to become a business strategist, because it's the same. You're in, as a business owner, your clients and you perhaps are in a game of war. First survive, then you can create value for your client base and yourselves. And interestingly enough, Sun Tzu, who wrote The Principles of the Art of War, was the creator of SWOT analysis. And we all know what SWOT analysis is. So our stories today is going to be a reminder of information you already know about. It's not a teaching session, this is going to be a reminder session, all right? And its primary focus is on collaboration. Collaboration, is incredibly important today because of the global marketplace. Everything is smaller, competition is fierce, the art of war, Sun Tzu's approach. We're not saying you shouldn't, you continue to focus on the art of war, what we're saying is that you integrate collaboration. They're not mutually exclusive. The art of collaboration and the art of war should be worked in tandem. But perhaps you can get Or think about utilizing collaboration as more of a priority in your business model than just assuming that you do it, but make it a priority. Collaboration to close, 90% of deals are not ready to close, right? So the 90% context is important to remember during this storytelling today. Very important. Because if we can get that number down, we can get more deals closed. We can get more deals done. Right? So we're going to try to focus on our stories to share with you the successes we had, first to survive and then to grow and to create value. And then maybe you can take some of these thoughts and go out and incorporate it into into your business model. Now, how— what kind of tools are we suggesting that you can use as resources to help you do that? It's the MidMarket Alliance. MidMarket Alliance connects business owners, advisors, and capital. It's a platform. I'm a part of MidMarket Alliance. There are other platforms out there. Use whatever you want. But utilize a platform that will allow you to collaborate with your peers, with capital providers, whoever that makes sense to bring value to your client base. And the collaboration, here's the key word, speed. What we haven't done in the ecosystem, in the M&A ecosystem, is focus on accelerating the process. Speed, that's what's going to make mid-market alliance more effective, and speed with credible advisors that you trust. If you can intuitively think about it, and I think about Vietnam and the Viet Cong, why were they so effective against the Marines? Speed, speed. Gorilla warfare, hit, gone, hit, gone, right? That's essentially the principle we're talking about improving the M&A ecosystem that we're involved with today because it's slow. 90% of business owners are not market ready. But if we are more proactive in talking to our business owner clients to do what's necessary to get market ready, that 90% goes down. My colleagues on the panel today, I— there's one gentleman, he's a former combat U.S. Marine as well. He's going to tell his story. He's going to give his perspective on the importance of collaboration, and I think it's under the framework of human— leveraging human capital and leveraging financial capital. My other colleague here is Tim Skelman. He's a business turnaround expert. He's going to give you his story on how he's helped companies survive first, then turn around, create value, and now they're at maximum value. So what we have here are 3 people that are people that are talking to you with stories that are on the ground. Not theory, not academia, but actual real people that have gone through this process. And with that, I'd like to segue to my first panelist, Mr. Carl— Dr. Carl Sheeler.

Thank you. Can you hear me all right back there? So there's a lot of ways that you can start a story, and one of the good segues that was brought up before about human capital, let me even further simplify it than that. How many people think that they're offering value to their clients if they were just to sell the companies at book value? I don't see any hands going up. I wouldn't be in agreement. And I get a phone call and they said, no, we took a look at your OQR, that's your profile as an officer. We've seen that you've done a lot of staff work. And unfortunately, I was reasonably proficient in strategy, so I joined a small group. You may have heard this guy called Schwarzkopf. His Chief of Staff was my boss. And I was one in a group of individuals that were the force fires coordinator. So what the heck does it have to do with making more business? Because there's lots of gaps. So what's force fire coordinator? As Harvey will tell you, you have fast movers that are jets. You certainly don't want jets flying in the same trajectory as the artillery round and the naval gunfire that's coming in at the same time. Otherwise, somebody comes out of the sky. Now you add to that, obviously, eye in the sky. Artillery, naval gunfire, fast movers from multi-countries, and you have to coordinate that. And that was the shock and awe that was the first Iraq conflict. I was involved in that group that did that coordination. The point being is, is that you start off with one thing. Where are all the gaps? One of the things that we do— this will be the only academic thing that I'll ever mention in this entire presentation— is we operate with gaps. The business owner operates with gaps. And what do they do with those gaps? They put assumptions in there. And then they thread along the assumptions and then they make a decision. And how do those decisions work out? Well, 90% if I've decided I'm not ready or I defer, it's because I'm operating on the defensive. I'm afraid. I don't know what I don't know. And actually, we would argue that's wisdom. The question is, is do you know how to recognize those same gaps within your own practice as well as that person? Because if you can answer that question, where are your gaps and why aren't you acting on them, is the difference between a deal being made and a deal being deferred or not being made at all. That's the presentation. Thank you. No, I wish it was that fast. Okay, the point that I'm trying to say here is that what my role is, and again, I'll give you an example, but fast forward. I'm not happy making 6 figures a year. So what do I try to do? Make 7 figures a year. How do I do that? I solve bigger problems. I have to turn down smaller problems. And that's a decision that each one of us have because the one thing I can't do is bend time. So what I coined myself as is a strategic value architect. It's not enough just to identify risk or measure risk, that's valuation. It's also to manage risk, which is where the big dollars are, or mitigate risk, which is the litigation because somebody didn't take advice or they're in trouble. That's where I do the majority of my time is in the management and the mitigation of risk. An example, how many of you read the Wall Street Journal by show of hands? I'd imagine the majority of you. Did you notice that there is going to be an exit from Intel of the president? Strategic advice to the chairman of the board. I'm on the strategy team that made the advice. I'm not saying that all of our clients are Intel. Most of my clients are small-cap or private mid-market companies, but that's an example of some of the things that we do. We fill in those gaps. The point being is that if you have a plan, great. If you have a poor plan, not so good. Needless to say, as you move in the direction of no plan at all or a bad plan, value declines. So if you don't have a strategy in place, if you're doing this ad hoc and tactical, you're almost guaranteed a failure. Does everybody understand that? You can't just go in there and say, well, geez, I'm just one of 12 people that have knocked on your door this month saying that, is your business ready to sell? That's not a plan. That becomes a numbers game. How are you adding value is really what the question is. So you have to make a decision, where are you going to play? If you say, well, I'm in the mid-market, does that mean in the lower mid-market? Does that mean in the mid, mid-market? Does that mean in the upper mid-market? Are you doing pipes? Are you actually working with family offices? Because that's a very small population of the group, but if that's the only thing that you do, you get deep and you get good at that. This is an example of me getting good at strategy, unfortunately. I would have liked to have been behind a tank. But the point being is, is that as you make these decisions, you also are answering questions of where the business opportunities are for both yourself as well as your clients. You cannot be a jack of all trades, master of none, and expect somehow to differentiate yourself amongst your peers. Does that make sense? This is how I was retained. These are the 6 reasons that majority of businesses will go from one generation to the next, whether they'll bring in a minority equity piece Whether they're going to need to have some tax considerations. Think about everybody that's helping them along the advisory continuum for each one of these. You'll find that's in common mostly attorneys, accountants, wealth advisors, life insurance. What's your relationships with those constituencies? Commercial bankers. And if it's, "Hey, I know a guy," go to combat with one guy that's probably not going to do it. It does take a village. And everybody has a different optics and a different specialty. So if you have one guy and you're offering yourself as being a national player, it's not going to work. So that means you've got to deepen your bench, widen your bench. This entire presentation is about me misspelling the word Greek. The acronym: Governance, Relationships, Risks, Knowledge. The notion being is that if you can remember those 4 words, you will be able to provide the continuum of conversation that's a little bit different than, "What do you think your business is worth?" "I'm not sure we can be able to get you that, but I can tell you how we can get from here to there." That's a better dialogue. I will make more money getting them from here to there than likely the person that's actually going to sell the business, and I'm not an investment banker. I get a piece of the participation on the back end for success fee, which is why I'll go after a larger company. All things being equal, 10 times the size of the company does not mean 10 times the work. So where are they coming from? Where are you coming from? The culture. If they're about, 'I'm the smartest guy in the room, I don't need anybody,' why are you taking the time to try to convince them otherwise? So that becomes part of your conversation. Tell me a little bit about what this business is about, how you got started, why do you operate the way that you operate? Do you rely on trusted advisors? Do you rely on key individuals? Do you rely on staff? Do you see your relationships with clients as something more than transactions? Every one of those will tell you something about the cultural makeup of that individual, and you're looking for a profile because that profile says, 'I succeeded because I leveraged others' knowledge.' Not financial capital, others. The human capital, obviously the financial capital is a given. Everybody here is a technician, you understand the finance portion, We tend to be a little bit soft on the human capital because, oh geez, really, that's the right side of the brain. Who really cares about that? I do, because that's how they're going to make a decision whether it's you or somebody else. Do you get me? And here's the things that they're really after that way and above past 'I just want to sell my business and get the biggest possible check possible.' They have to make decisions as to what's this going to look like afterwards. So if you have 50% of transactions that should have closed but don't at the 11th hour, it wasn't because they weren't ready to do it alone. The wrong questions were asked or no questions were asked about what's it going to look like post-transaction. And these are the issues that are the most common that need to be addressed. I'm not going to read the slide, but if you can remember the 6 C's, I guarantee you, if you're not operating in that platform, you're looking at the business opportunity as a transaction. They're looking at it as a transition. How many people like using the term exit strategy? Just by a show of hands. Okay, there's a few hands that went up. Okay, you're the brave ones to admit it. It's not an exit strategy. Take them out back and have them shot. Okay, let me explain to you why. Hi there, would you like to buy some death insurance? Because that's a much more accurate description of what the insurance actually is. I'm looking at changing my life. This is all I've known, how I've defined myself. And oh, by the way, you're just going to reinforce that to me because you're not just going to change the chapter in the book, you're closing the book. Geez, that makes me feel wonderful. Thanks for reminding me about my mortality. So that human capital element, I think, is a pretty relevant point. What do you think? How about transition plan? Just going to the next thing in that journey they call life. Okay. My point is, is that we tend to be tactical, transactional, technical, and so does everybody else. So if there's not a strategy that's behind this that's driving it, guess what you're going to do? You're going to go to tactical. You cannot one— You don't win wars on tactics. You win wars based on strategy. So what you're trying to offer to not only your own practice but the business owner is that they can sense, seize, and transform, okay? Because maybe they're not right now ready to sell the business. That doesn't mean that you don't have a role or to bring in somebody that does have the role that says, 'Well, what would make you more passionate about the business? Are you experiencing burnout? Is that the reason that you want to sell it?' 'Well, geez, I've hit my $10 million in annual revenues and I can't figure out why I've capped out up there.' What if you could? What if they found out that, 'Well, geez, as a result of a recap and maybe bringing in some, a little bit better management, they may be able to scale to $50 million.' Oh, really? What would that look like? 'Well, I can tell you about the financial part, but all that other part, that's what other people do and I don't know anything about it.' That's not a solution. We're not here as order takers. If it was that easy, we wouldn't be in this room right now. We'd all be essentially making tons of money. The point being is obviously relationships. One of the questions that I ask the typical business owner is, tell me about the most important relationships you have in the business. Well, other than my clients, well, of course my family. And so I'll ask them, tell me about your banker. Well, that's Bank of America. Well, tell me about your relationship with Bank of America. Well, rates and terms. That's not a relationship. Okay, what kind of value-add have they provided to you, looking at your business through the perspective of not just the bank's risk profile but your risk profile? How about producing twice the widgets in half the time as a result of a recap because they've noticed you've got no debt nominal line of credit, and your repair and maintenance is 300 basis points, which should have been flowing to the bottom line. Oh, we don't get paid to do that. Well, then maybe you should be asking for a banker that does. I'm just using the example of the commercial banker. I'm not picking on bankers. Same comment for the accountant, same comment for the attorney. Well, we do transactions. Lovely. How are you creating value for the client? Well, I charge them an hourly rate, and then we get the result, and everybody's happy. That's not value-add. I charge you commission and this is what I'm gonna get. That's not value-add. The question is, is can you show them where value-add is? We have individuals in the room that specialize in that. But you can if you know the right individuals that can help them, which oftentimes includes their suppliers. Okay, so I'm in metal fabrication. Well, let's talk to some of the suppliers. What are some of the best things that you see when you're calling on some of their competitors? What are they doing? They never asked me that question before. I'm asking you that question. I then go back to the business owner and say, these are the best practices of some of your competitors. Were you aware of that? One of them happens to be the current chair of the national association of which you're a member. Do you think that they have more inside information than you do about opportunities? Oh, yes. That's an example of a relationship out of the box. The point being is that why we don't usually have this is it's harder. It requires alignment between the advisors. You can have a bunch of smart people and get advice from 8 of them and you'll get 8 different perspectives. Why? Because their optics differ. How about getting them all in the room at the same time? And the client's saying, "Well, geez, I don't want to really have to pay for that." What if they would be able to give their first hour for free? And then the client realizes that if they get the actual value from getting an alignment from every one of those advisors so they're all on the same sheet of music, doing what? Rowing in the same direction. How about not at the same time? That's probably not realistic, but in the same direction?

Rare.

How about if you were the steward to do that? Do you think that those advisors would have other opportunities that they would love to have you involved in? Because somebody's got to shepherd that. Leverage. That's what you bring, that's what they need. Human capital leverage. Let's take a look at some of those L's. This is what they're looking for. This is what you should be looking for. These slides are going to be available to you. I strongly urge you to consider them. Okay, we're at risks, then we're at knowledge, and we're wrapped up. Risk, in my mind, is the 800-pound gorilla in the room. Why? Because again, as finance people, we have a tendency to take a look at the top line and the bottom line. Why? Because we have metrics for it. It's called an income statement. Show me where the intangible assets are on a financial statement. Now, you could make the argument, yes, there are some people that will show the goodwill and the goodwill impairment, But generally speaking, the relationships, the culture— what's one of the things that venture capital looks at before they even look at the financials? Anybody want to hazard a guess? Who's on the team. Where do you see that on the financial statements? I want to know somebody that's been there, done that, and can do it again. Is that part of your due diligence? I mean, they're doing the due diligence after the deal. How about the due diligence before the deal? Make sure that this even makes sense. The many reasons that sometimes things go not to plan, what I call an unplanned transition event. This is where the mitigation comes into play. If you could provide solutions to these types of problems, which are real-time, real-life risks— intra-family squabbles, squabbles with the taxing authorities, and sadly I've been involved with squabbles with the DOJ and SEC, not me personally, but as a retained expert. The point being is the smartest people in the room probably don't want to go head-to-head with a 3-letter entity because what they have going for them is they get paid the same amount whether they win or lose. These are real-world issues that they're constantly dealing with. Let me ask you a question. If you've got a business and you're trying to grow it, can you do that on the defensive? Seriously, it's not a rhetorical question. Think about this. You can either go on the offensive or you can go on the defense. If you're trying to do both at the same time, let me know how that's working out. Kind of picture that as a boxing thing. I'm going to block my face and I'm going to try to do this. It doesn't work out very, very well. You have to choose and that entrepreneur that you're serving wants to stay on the offensive, has to stay on the offensive. The moment that they're thinking in the defensive means that they're afraid. Can you make them feel not afraid? Risk measurement. If you can identify the risks of a business, and there are tons of them, you can reduce those risks. And if you can reduce those risks— anybody familiar with something called discount rate, cap rate, price multiple? Lower the risks, The higher the multiple, identify those risks early on, and most of those are not on financial statements. This is the question that they're really asking. Remember I said it's a book? Okay, it's the next chapter. Get me from here to there. They have to decide what there is. Your job is to help them get there. Now, I'm not expecting that you're going to be the only one doing that, but be recognizing that it will take a village to do that. And that's why collaboration isn't just a C-word, it is a meaningful word that we cannot do it alone. I cannot do it alone. Last thing, knowledge. I don't know how that 1 came up there. I do know how to spell knowledge, I really do. The thing that I try to make as a point, and this is a very difficult thing, and I'll do this for accountants and attorneys in presentations. Please tell me the difference between these 3 landing sites on 3 different law firms. Which law firm is which? And they will be law firms that are in the audience. You know what the answer is? Can't tell. Guess what I just demonstrated? Your knowledge is common. What you're offering is vanilla to me as a possible purchaser? If I could find that information on the internet, and that's obviously the great equalizer, so whether you're an 800-person firm or a 3-person firm, it is the great equalizer. What must you then do? You have to provide me something that's uncommon, and that means more work. And if it means more work and you're unwilling to do that, then stay with the herd. But if you don't want to be part of the herd, if you do want to actually generate higher dollars, more closes, you're going to have to do something differently because that insanity definition of Einstein, doing the same thing over and over again expecting a different result, not so much. One of the reasons, okay, war story, Marines tend to get brought in when things kind of get bogged down is because not just dogged, they think smarter and faster on their feet. It's as simple as that. You cannot just follow The script, remember the linear battlefield? It's a war of attrition. If nothing else, the Viet Cong obviously understood. That's what we understood. That's why we won the Revolutionary War. It was guerrilla warfare against the Brits that only knew what? Linear war. For those of you that have been in the military, recognize these as the badges that are used by the intel services within one of the Army units. The point being is that it needs analytics, not just information. We can't just do research. What does it mean? What should we be doing now? What should we be doing next month? What should we be doing next year? Which you will not do if you're not thinking strategically. Wrapping it up is your constituents are the knowledge. We're just essentially nothing more than facilitators of the knowledge so that the right knowledge at the right amount at the right time goes to the right person and they say, you in the collective offer me something that's unique that no one else— everybody in this room, when you bring in your team of constituents, it is different than anybody else. If you don't have that, It's a no-win proposition. Wrapping up. Backing up. Okay, the point being is that governance relationships, risks, and knowledge is something that everyone here can do. There's no special degree, there's no special designation, but it is rethinking your approach to the marketplace, which means that it's not just about my next deal my next transaction, but to think about how do I tap into an ecosystem of all these constituents that are attending this conference and that you can put together to provide value-add to your business-owning clients that are looking for some kind of transition event. And with that, I thank you for your time.

Tim, please come aboard and share your story. These are stories. These are not— you know, you're not just— we're not just throwing out data and stuff you already know. Remember, this is a reminder session, not a teacher session. All you guys know this stuff. We're putting it in more of an aggressive context. Tim.

Well, now you've listened to the thoughts from the military strategists We're getting down to the foot soldiers now. We're going to talk about tactics. I'm with Deloitte's Corporate Recovery Group. We are change management people. We get involved when businesses need to change. And when we're talking about driving value, change often is the best strategy to get there. Just quickly, what we're going to go through is kind of the resource requirements, when you need to bring someone on board, how do you identify who's the right person to help you with this, whether it's pitching the business, preparing the business for a sale, or getting the deal closed. Who are the right people to get involved? And then from my perspective, why performance management performance change management matters. Why bother with that? I want to go through a couple of examples of driving value through collaboration with people that bring something to the table in the discussion. And then if we've got some time left, I can talk a little bit about our organization. Starting with how do you decide who to bring on board when you need help with the transaction? And to my way of thinking, there's really 4 things that drive that decision. First of all, you've got to figure out, do I need a lawyer, do I need a banker, do I need a valuation expert, and how does that work with the company? But what drives the decision of who you bring in is what is the nature of the transaction. Is it an expedited sale? That's where I live, you know, bankruptcy 363 kind of transactions. Or is it some sort of estate planning decision? Dad's— what did you say not to say? Dad's exit strategy is to leave it to the kids, so how do we structure that transaction? Anyway, what is driving the decision to complete the transaction, and then what's the timing? Is the company ready? Can you drive more value? With more time. And as Harvey and as Mike said earlier, 90% of the companies that you walk in the front door of, you'll say, oh, if only this, that, and the other thing, we'd have a deal here next week. So is it ready? What do we need to do to drive more value? How much time will that take? How big is the transaction? Is it a corporate carve-out? Is it a roll-up? Are you doing a merger of equals? With some sort of restructuring of the back office. And then, you know, sort of the final point when you're thinking about who you're going to bring on, do you need industry expertise? Do you need a regulatory perspective that you don't have on your team? So those are the skill sets you need to think about where you get those. And then, you know, this is just kind of a list of all the possible resources you might need to drive incremental value, create incremental value, or expedite the sale transaction. Investment bankers, lawyers, your various due diligence— I mean, as you look at this, no wonder these deals cost so much money to get done. Appraisers, M&A appraisers, Mike's out there, he hires those guys all the time. Valuation experts, performance improvement people, Do people like myself, do they come in? You know, all the tax implications of the transaction. Is it an international transaction that has international tax implications and so forth? So I would suggest that when you're figuring out your plan of execution, your tactics for getting the deal done, you might just pull this list up and say, is there anybody on here I do need? Then when you figure out who you need, then it's time to figure out who's the right resource for this transaction. And I would encourage you to think about your personal career, not just the transaction. Somebody might be perfect for this transaction, or he might be perfect for the next transaction that that buyer will be involved in. So, like everybody knows a guy, Carl was talking about that earlier, but the question of whether he is the right person to help you is, is he available? Does he have prior experience? Do you have prior experience with that person? Do they exceed your expectations? Do they finish the job on time and in budget? Are they reasonable from a cost perspective standpoint? Do they have a good reputation?

You don't want to get in bed with anybody who doesn't.

Is it someone you would trust with your own reputation? And then finally, think about this relationship. Is this someone that can help you in the long run? Assuming they've got the resources, they're available, they're cost efficient, then you think about how can they help you in the long run. That's the collaboration, the personal collaboration for your own career. What I do is change businesses, hopefully, to prepare them for a transaction, to hopefully drive value. And the way we do that is focusing on cost reduction in the first instance. In turnarounds, it's very rare that turnaround is affected through revenue enhancement. But that's certainly part of it, particularly in growing businesses. Focus on performance management and obviously leadership development. If you don't have the right leadership team, you won't get a sale done. So that's really where CRG, Deloitte CRG Group comes in. We focus on each of these verticals in driving incremental value. Since we're kind of out of time, let me just flip to some of these examples of where we get involved to drive value. And think about this. You've got a deal. You just did a valuation on this company. It's a, you know, $5 million EBITDA. In this market, maybe it's a $35 to $50 million transaction. Well, what if you could drive another dollar of EBITDA into that business? $7, maybe $10 of additional value. Here are some examples of stuff that we've done. 3PL businesses, we created a strategy and market analysis business plan, investor presentation to roll up 3— it wasn't 3, it was actually 4 different third-party logistics companies into one, eliminated all the back offices and drove a billion-dollar new company. Consolidated facilities, Increased operating profit by $25 million in 9 months on a $300 million cryogenic equipment company and so forth. These are just examples of, gee, wouldn't it be nice to sell that company after these guys drive this performance improvement. Here's how we do it. I mean, typically we get involved with a Phase 1 assessment. What are the opportunities? And then you do a heat map of those opportunities. Where are the best places to create the most value with the least amount of risk or least amount of investment? Prioritize those projects and then execution on those projects. Harvey asked me to put together a couple of examples of where collaboration has created value. I could stand up here and say where the greatest and driving performance improvement, but that's not the answer. In most cases, it takes a team of people, people with relationships, people with specific areas of expertise. This is a recent example where we were advising a referral hospital. It was one of two hospitals in a mid-sized market. They had a financial advisor that they had retained to to address a near-term liquidity problem. They hired a CEO. That CEO determined we got problems here, not enough liquidity to fund a standalone turnaround plan for this business. Ultimately, a bankruptcy was filed and the board of directors retained a financial advisor, bankruptcy counsel, and investor— investment banker to conduct a sale process. This was a situation where the creditors in this case had a very important role to play in providing incremental funding to bridge to a sale transaction. And bless their hearts, they agreed to support the sale process and made incremental capital available during the sale process. The team that had to be put together on this was kind of unique in part because there had been DOJ oversight of a prior effort to sell the company. And the only other buyer of this hospital was a crosstown rival. The DOJ said no dice, can't do it, it's restrictive in trade or whatever it was. So in order to get this deal done, we needed someone who could manage that relationship with the DOJ and convince them that there was only one solution here, which was a sale of this company to somebody. And lo and behold, the crosstown rival was by far the most likely candidate. Ultimately, what happened is, um, with the DOJ oversight, we focused on overcommunicating with them to make sure that they were comfortable with the process we were going through. The bondholders allowed us to use sinking fund money to bridge to the sale process. The crosstown rival submitted an offer. We had one other offer. And ultimately, a sale to the competing hospital group was completed while protecting the sale process from the impact of the prior failed transaction with the DOJ. Had we not had this team of people involved in this, it would not have happened. We had to have people that could manage the DOJ relationship and had the credibility there. The corporate finance people to evaluate competing opportunities and so forth. This is another smaller recent transaction. And this is a mortgage servicing company, a tax certification and flood certification company. The acquirer in this case provided a full suite of real estate tax services for residential and commercial loans. They identified a real estate tax service division of a troubled mortgage servicing company that was under regulatory pressure. They identified it as a potential acquisition. The target was operating at about 50% of capacity and losing a great deal of money. The acquirer decided to hire an investment banker to help them evaluate the opportunity and structure a proposal, an unsolicited offer for a competitor. The acquirer retained the same team that had helped them 10 years before for because— why? Trust. They had a great deal of creativity on the last transaction that helped them, and they needed an approach, they needed to approach the seller on a confidential basis.

Didn't want them to know.

As it turned out, the investment banker and I had lunch one day, and he started talking about this, and I said, you know, I know that company. So he retained me to make the introduction. I mean, this is kind of how this collaboration works. It's— there's obviously much better ways to do it, but when two people meet with a like objective in mind, amazing things can happen. I was able to make the introduction, and given the distressed condition of the company, with my restructuring capability, I persuaded the the seller that they had no value. They ought to just give this company away. Essentially that didn't happen, but they created a tremendous incentive for the buyer to take an underperforming subsidiary off of their hands. And as a result, the transaction was completed and everybody was very happy. The mortgage servicing company walked away from probably $6 million annual cash burn in this one division. They consolidated into the acquirer and that cash burn went away and on a combined basis drove an incremental $3 million of value for the— of cash flow for the acquirer. Those are just a couple of examples of pulling together, finding the right resources to address the specifics of the transaction that you're involved in. And I think we're just about out of time. So thank you all very much. I'll stick around if you have questions.

Tim just gave you an example of what I was talking about and what Carl was talking about earlier. Your enemy during 2,000 years ago or even 30 years ago your enemy is your competition. The art of collaboration suggests to you that your enemy, your competition, could eventually end up being your partner, your merger partner. So it's all about how things have evolved where collaboration, the art of collaboration, is even more critical to think about than simply thinking about, I mean, you're in a war and you've got to beat your competition, you've got to put them out of business, so forth and so on. Collaboration has to be integrated into your business model. Now with that said, are there any questions for the panel?

Ken.

Harvey, I have two points that I'd like to share with the group. One might tie together a couple of the presentations and then the second one is more about what this session is all about. But the first point I'd like to share is a lesson that I learned about 7 years ago that changed the course of my career. And I just— it's a very simple but very powerful lesson that goes right back to what Karl was talking about. And that is that every— just about every private business owner is starving to have one confidant, one most valued advisor. They have a team of advisors, their accountants, their attorneys, their insurance agent, their banker, and so forth, but typically none of them are stepping forward to become the most valued advisor. And it is far easier owner than you can imagine. Put yourself into that role. All you have to do is sit in front of that owner and open the dialogue to ask questions broader-based than what your— maybe your particular field of expertise is. Ask them about the rest of their business, even if you don't understand the answers. Just ask them, give them a chance to open up and trust you, and you will very quickly become their most trusted advisor. And you'll put yourself into that position of being able to coordinate all the other advisors, get them all onto the same game plan that you devise, that you develop. And over the span of 2 or 3 or 5 years, you can make a huge impact on that client And then you'll have a transaction at the end of that period that can sell with more success at a higher value, and that's how this whole process works ideally. But it starts by you putting yourselves in that position as most trusted advisor. It's really, really easy. I have to tell you, it's far easier than I ever imagined, and I learned that about 7 years ago, and it works every time. The second point I'd like to make is more about this session and what this collaboration message is all about in terms of the Mid-Market Alliance. You mentioned the Mid-Market Alliance. How many people in the room are familiar with what the Mid-Market Alliance is all about? Maybe not even half. So the Mid-Market Alliance, is part of the AMNAA. It's sort of a sister organization under the same umbrella. But where the AMNAA historically has been focused all on the transaction itself, the Mid-Market Alliance is a growing part, a growing subset, if you will, of advisors from a whole broader spectrum of functional experts. So not only transaction advisors, but operational advisors, financial advisors, HR experts, insurance experts, lean manufacturing experts, anybody who has an expertise that can bring value to a client. And we're trying to build membership of the Mid-Market Alliance to have this network of collaborators, collaboration, network of expertise that will be at the disposal of those transactional folks to tap into when they have the 90% of their clients that are not market ready. They can turn them, sort of refer those clients into the Mid-Market Alliance so that this broader network of experts can work with that client to get them market ready, bring the deal back to the referring transaction advisor who can then take it to market. That's the Mid-Market Alliance. It's membership of transactional advisors and all of the other functional experts. If this resonates with anybody in the room and you'd like to be part of that, then find one of us, whoever in the Mid-Market Alliance, just if you could just raise your hand just for a minute and find somebody who's raising their hand if you're interested and give them your name or your business card and we'll follow up with you. But there are 3 more sessions that are all going to continue this theme and cover the rest of the process. So hopefully you'll be able to join us for the rest of this. One more immediately now and two more on Thursday afternoon. So please, please consider joining us for all the rest of the sessions.

Thank you, Ken. The session that's going to follow this one is being moderated by Carrie Salls, and it's about transition planning and transaction execution. So you can see how the theme connects with the collaboration session that we've just completed. So with that, we're adjourned. Thanks very much.