Equity, Conflict, and Opportunity: A Strategic Partnership Breakdown

I think just. Yeah, the issues, because there's the deal itself that just. What is the. Is it a good deal?

Hey, everybody. Welcome to another episode of Business Lunch with your hosts, me, Roland Frazier, and my business partner, Ryan Dice. Ryan, what's happening?

So good, so good.

How about you? I'm doing good. Doing good. Ryan's on a water fast, so he's barely hanging on. He's on his last day before he gets to have real food again. So, yeah, when it's done, I get.

To have, like, freaking yogurt. It's. It's not real food. I get to, like. I.

You know what I miss?

I miss chewing.

That's all.

You should just have, like, water and a piece of gum, and then you'll. You'll basically get pretty much the whole experience.

Yeah, yeah, that's. That's. That's not the whole experience, but yeah.

Thank you.

Thank you for the idea.

Appreciate the suggestion.

You're a good friend.

So we had a deal that came along for us, and we had a pretty long conversation with one of our team members and thought that it would be kind of fun to have this be the deal analysis episode where we basically talk about opportunities are coming our way pretty much all the time. I'm assuming that it's. If you are in business and listening to this, that there will be or is or has been an opportunity for you to grow your business through some sort of acquisition, strategic partnership or something like that. And so we thought that it would be kind of fun to do an episode where we share with you kind of how we approached a real live deal that was an opportunity for us and. And see if that could be of help to you. So that's. That's really what we're going to do. I'll set the stage. We had a. We had a deal, and some of the complicating issues I'm going to. That are. That can create hard discussions I'm going to talk about, too. So setting the stage. We had a opportunity come to us through one of our contractor vendors, and they brought us into a deal that. That they thought we could add some value to as an equity partner and ultimately the vendor. The vendor part of the deal didn't work out, but we. But our part stayed. And that was. That gave us this small interest in a deal, which, honestly, neither Ryan or I had a whole lot to do with because it was brought to us by, you know, one of our other business partners and people that we work with in things. And so then the person who had the company decided that they wanted to sell the rest of it. So the opportunity to do a full acquisition as opposed to a consulting for equity deal presented itself as. As that sometimes happens. And it became an opportunity for us to discuss. Now, the complicating factors would be one, the person that brought us the deal had another partner that was interested in doing different things that we don't do and maybe acquiring the company. The person that brought us the deal wanted to acquire the company with us. I brought Ryan in to talk about it because it came in through the vendor of a company that we own together. And then another company that, that we have an interest in is in a similar, arguably competing business to this one. It's not directly competitive, but it's, it's in a. It's in a similar industry providing different services and products. So. So it's kind of complicated and messy, which makes for the best, most fun things to talk about.

Right.

So, yeah, so that's like, that's the, the frame around it. Anything else you think would be helpful in that part?

I think just, yeah, the issues. Because there's the deal itself that just. What is. Is it a good deal? Right. That I think we got to get to. But there's also aligning. What do you do if you have a business associate or a business partner.

Who, even an employee, you know, or.

An employer, a contractor, who brought the deal, like, how are they going to be involved in that?

Like, so they brought the deal and they're thinking like, hey, because I brought this deal along and I kind of.

Had the conversation, I guess I'm in on the deal too. Right. And then other, other people saying, like, yeah, and I'm going to be involved as well.

It's like, but if you're involved in this, then how are you. How does that impact your work here? You know, which we've seen happen before. And then there's the whole possible conflict.

With another portfolio company.

Yep.

So these are all things, though.

If you start doing a lot of deals, they're just going to come up. They're going to come up where. What do you do when you're interested in doing a deal that is potentially competitive with another company that you own? You know, even a minority statement, how do you handle that? So I think we should tackle that first. So how do you deal with conflict, possible conflicts like that? That should probably be question number one. Question number two, how do you deal with related parties in the deal and their involvement in it? Whether, like, because they're going to add value to Some degree or another. But maybe in some cases they think the value that they add is higher than maybe it is, you know, or maybe the value that they want to add is in direct conflict with other work that they're doing for you. And then there's the deal.

So I think there's kind of three.

Phases to, to approach this with.

I don't know where you want to.

Start, but assuming you agree with those three phases, go nuts.

Hey, Ryan Deiss here, co host of Business Lunch. And before we get to the show.

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All right, back to your regularly scheduled programming.

We'll start with the first one you said, which was the potential conflict with other companies that you've got. To me, it has to be. The difficult question, I think is.

When.

Is it an opportunity? And that is something that in this case was a bit of a challenge because the consulting for equity deal got done. I was basically just kind of told about it. You know, it's like, it's like, hey, we're doing this thing. It's an opportunity. Is it something that you're interested in? And the answer is, you know, yes, I'm always interested in it. Sounds cool. And then it got done and, and now we have this interest and. But I don't know anything about it. Like, I don't know. I don't know anything. I don't know, you know, like, do we make money from it? Anything? Because it was just basically done by, you know, by another business partner. And it was, you know, a very small interest.

So I got you. It's a. It's an. It's an exotic tropical fish. I got it for you for your birthday. It, you know, it requires very expensive and fancy food that you can't really buy locally. You're going to need to drive two and a half hours to get it.

But.

But you're welcome.

Yes, exactly. Exactly.

Kind of.

Which is my favorite kind of gift to give, by the way.

To give for the family.

That's what you give to your very close friends. But so the, I guess the issue there was one, the other company, basically, I don't know how they ended up talking to this person. And there's. Know there's some lack of clarity around where, where did this, where did this deal truly originate? Did it originate from there? Because the, the people in that company think maybe it did, but aren't sure. And it definitely didn't come to us through them. It came to us through a vendor and it didn't come to me. It came to somebody else. So it's very, it was very removed. Yet in conversation, when I mentioned that we had that CFE deal, the consulting for equity deal, the other company, it created challenges because they're like, well, hey, what the heck? This is a business. We're in and we're interested in that now. I don't even know what the company does at that time. I have an idea of the market they serve, but I don't really know what they sell or what the offer is or anything. And so all I could tell the other company was, if it's a conflict of interest, I'll sign it over. I, you know, I don't want to have a conflict of interest. So if that's an issue, you know, now you can have. We'll just take whatever I've got and we'll put it here and, you know, and we're good to go. But truth, truly, guys, I don't know what it does. I, I'm just very removed from it. So that's an issue. And I don't still know that I would take that. I will in that case, because I know they're hypersensitive to it. But like, if it was for you and me, I don't know that I would take it to you until I knew a lot more about it and whether it was an opportunity and what we could do. Because there's so many things like that that come up that to me it's just like until you have an idea of what it is, what, what is the value in presenting. So if you have a partner, I think that is sensitive to potential conflicts of interest, you should have a higher level of what you're going to tell them. You know, hey, this thing came. I don't know anything about it yet, but it might be a thing. Or do you develop an opportunity more to where you actually understand what it is and then bring it to them? I think that's just depends on the people you're dealing with. What are your thoughts on that?

Yeah, I think kind of at the first hint where you think like, ah, this could potentially be a conflict, I think when you first think about that. And that's a judgment call, right? I mean, so at some point you're trusting basic human judgment and there it is. Like, that's called being in relationships. So I think at the second that you think like, there could be a conflict here, I'm going to go and talk to this person, just give them a heads up. Hey, just so you know, this deal came across. I don't have all the details yet. I don't think it's directly related, but I just want to let you know I'm looking into it. If I find that it's directly related, I may loop you in and we can have a conversation. About it. But I just wanted to give you a heads up now so that if this comes up later on, if you hear through the grapevine, you know, you don't think I'm trying to, there's no shenanigans involved.

So I think the slight hint, when.

You think it's there, then you talk about it. But again, to your point, you didn't know about it. And even in looking into it a little bit and still to me, like I, I know the deal that we're talking about and I know the potential competitive party, I don't see, having looked into it, how there's really any significant competition. They fundamentally serve different markets. Even if there's a slight crossover in its industry vertical kind of thing, it's just very, that Venn diagram is still. You back up. It still looks like two circles. There's very little overlap, you know, in there.

But I do think at that point.

You have the conversation. Now what do you do if you believe that there isn't a conflict, but if the person you're in business with does, how do you handle that?

I mean, to me, I think it depends on how credible you think that is and how valuable the relationship is to you. So I'm going to throw it back to you. I think those are the considerations. Anything else that would factor into the capital.

I think you're right. I mean, I think at some point if a relationship, I think we're relational people. I think there's a lot of people who are transactional in business. So the I think the transactional answer is I'm going to make it, I'm going to have a conversation with the person, we're going to have a discussion, I'm going to make a judgment call. And if at the end of the day, if I disagree with them, I, I'm going to move forward and I'm going to tell them, hey, I disagree with you. I'm going to move forward on this deal because I think it's important. I don't think it's in conflict. And if you disagree, well, I guess you can freaking sue me. That's the transactional response to it, right? I mean, that's kind of it. It's like I'm going to do it because I don't agree with you. But there are some people in our lives who, they get to be irrational. Yeah, right. I mean, certainly that that happens with spouses. I mean, I know I'm irrational.

We're suggesting in any way that our spouses, either of them are not at all irrational.

I'm the irrational one.

But I know there's been plenty of.

Times, you and I, where I've been irrational and stuff, and you've bent to that.

I mean, the very first deal that we did together was a terrible deal. It was a completely, like, take emotions.

Out of the side.

It was a super crappy deal, like, in every way, shape, and form I really wanted to do. It was completely irrational.

Again, not emotionally irrational, just wanted to do one. And you were like, all right, we'll.

Do it because you want to. And I think that there are some people in your life who you. You will let.

You will lean into irrational things, and you will say yes to stuff you know, you shouldn't say yes to and no to things that you shouldn't that you would like to say yes to for the sake of that relationship because it's valuable. Now, that's. To a certain point, if the person's.

Like, I want to do this illegal thing, you're like, it's irrational, but I love you, so yay.

I'm obviously not saying that. I am just saying that I think the criteria that you had is thing number one is, how valuable is this relationship to me? And if it's valuable and it matters to them, then it's got to matter to me, even if I think they're being irrational. And so you just like.

I generally err on the side of passing. So, like, to me, it's like, yeah, if somebody that I. And really, I don't. I can't. I can't think of any transactional relationships that I have because I really. You don't like them with business partners, so. So I'll say I believe that if it's anybody that I was a business partner with, if they felt that way and felt at all strongly about it, or even I felt that there was a tiny dilution in the, you know, relationship, I would pass. I would just say, you know what? Life is full of opportunities, so I'm. I'm not gonna. I'm not gonna do it.

Yeah, I think that's. Especially since most deals don't work out. I mean, the worst thing in the world you could do is. Is pursue and be like, to both ruin a relationship for the sake of a crappy deal. So I agree. And. Or I think you try to loop them in on it. Like, what. What if. What if you're involved in this, right. Maybe it makes sense for you, which.

Is what I did. I said, look, I'll just sign it over, so no issue. I mean no, no hesitation, no argument, because it's not worth it, you know, to damage the relationship. So that's, that's the first thing I'm trying to remember the second thing of your three finger.

I think the second thing is just what if they're somebody who brings you the deal or they're in some way involved in the deal. How do you, how do you deal.

With multiple stakeholders within a deal?

Yeah.

Where the division of labor is a.

Bit unclear and some people think that maybe they should have a bigger part of the deal than, than they should. And this happens a lot of times with partners coming together with where you've got, you've got one business, so you know, we've got multiple businesses together, but.

Then there's an opportunity for a new deal. You're the one who brought the deal.

Maybe you're going to be doing the bulk. I'm doing some. How do you kind of deal with the equity splits and arrangements from a practical purpose and then from a relational. How do you communicate that?

Yeah, that's a like tough, tough, tough question. I think that the first thing would be, is it a core, is it core to what you do? If it is, then it comes in at whatever the pro rata ownerships are. So if it's.

So what do you mean by that? Break that, break that down a little bit.

So if you're, if you're, you know, we, we own a company that has a business operating system. If we're, if an opportunity comes along that is an enhancement or, you know, significant complement to that, then to me that's an opportunity of that entity. And however it comes from, whoever it comes from, if it gets, for, number one, it gets presented to that company as an opportunity. And then number two, if that company takes advantage of it, it's just owned in the same proportions. And you know, if there's a, you know, a significant additional requirement of effort or participation or investment. Yeah. From, from outside, you know, from the individuals, then that you can have a conversation about how that might work. But generally that would be, you know, hey, we're going to buy this. I found this seems like something cool. Do we want to buy it? Yes, we do. Great. Let's buy it. However that works out, you know, whatever the documents that you've already got or the relationship that you've already got, it's going to be pretty much pro rata.

Right.

If it comes from somebody else.

Just real quick on that, Roland, because I think this. So hypothetically speaking, um, let's say we wanted to, there was an opportunity to buy a company and it was a million dollar deal. Like, to, to buy the company was a million bucks. The company itself really is only comfortable putting up a half a million.

Yeah.

And the other partners who were involved are like, I like the deal, but I don't know that I love, love the deal. If one of those partners like, hey, I'll put up the other half a million, then it might make sense for that company to be owned 50% on its cap table by the partner who put up the half a million and, and 50% by the company.

Which means that partner who put up.

The extra kind of gets a double dip because they're also a partner in that.

So they might, might wind up owning.

More than 50% and that's totally appropriate. I think it's important people think that equity is a function of effort and it's really not. It's a function of risk. Right. And so, and risk can take the form of like risk capital, so money that other people aren't putting up. And so if that's disproportionate, it can also take the form of, it can take the form of effort with opportunity cost. So yeah, I'll do this deal, but.

Me doing this deal means that there's a lot of other things that I.

Can'T do I got to say no to that could potentially be valuable. So I feel like I should have more. And so I just.

Anytime you're doing these negotiations, I think.

You always want to start, you know, with partners and friends, especially if they're less sophisticated with. Can we all agree that equity is not a function of like effort or hey, I found it. It really is a function of, of risk. What's going in.

Yeah, yeah. And most of the like, from a legal standpoint, most companies that have documents will basically say that, that you have to offer it to the company first. If the company says no, then you can, you know, then the individuals that want to pursue it in the company can pursue it. And if none of them want to do it, then the individual that brought it can pursue it. And if that doesn't want to do it, then it doesn't happen. Right.

So.

So that's a relatively clean way of doing it. If it's somebody that's bringing the deal that's not going to have any continuing involvement, there's a relatively standard 2 to 5% finder's fee or a bounty that you would pay them for bringing the deal. And typically we wouldn't if there wasn't going to be any ongoing involvement. We wouldn't really want the, that person to be involved in the company because they're just debt equity on the cap table and you know, it's better to give them some amount of money and you know, and to say thank you and then let them go do other things. So I think that's a, a fairly standard thing on that side of it. And then the, if the person, as in this case, if the person works with the company as, you know, a partner in, if there are different deals that you're doing and it's messy because they're an employee of maybe the company the deal came from and their partner and you know, and other things too, then you, you have a little bit different thing to look at. But if it came through the company, whatever company it came through, it's an opportunity of that company first. And so I think you have to have a conversation about that.

And yeah, let me, so let me give you an example, a hypothetical example to maybe bring this home for the listeners. So our, one of our business partners, Richard Lindner, and by the way, he has nothing to do. And so this particular deal he's safe to use because he has nothing to do with this deal. But let's say Richard, who he does his own networking, he's involved in, as we encourage all of our operators, all the CEOs that we have to be involved in, CEO peer groups and things like that, he comes across an interesting deal that he's going to go and do. And so this deal could potentially be a decent tie in, into one of the companies that, that he's running in our portfolio group. And so he wants to bring this deal to us, you know, and he's saying, I think it's a really great opportunity, I'm willing to put some money in.

So I would like to have a.

Majority, you know, I think it's appropriate for me to have a, a bit more stake in it because I want to put the money in and the company doesn't. So the company would own some, I'm going to personally own some more. And you know, I also, you know, I'm going to, I'm going to be, you know, actively kind of running this thing. Right. In that case we'd probably wonder, yeah, okay, but what about the fact that you run these other businesses that we all own pro rata? Because my fear then is if you.

Go and do this deal with this.

Other company that you put some skin in the game, you know.

Love you, Richard.

And I think you're Very talented and I think you are highly productive. But I also know you still got 24 hours in a day and you'd like to sleep some of those. So if you add in this new thing, what is the opportunity cost? You know, we basically wind up acquiring an entity that you have a majority stake in. That we know that if, you know, push comes to shove, you're probably going to focus more on that because you've got more of your money in it.

So how do you handle that?

Because we want our team members to, we want our operating partners and things like that to bring in deals. We want that to happen, but we don't want it to happen at the expense of what we have right now. So that. How do we handle that?

I mean, I think you can't do it if it's going to take away from what you've already got. It's like saying, and we talked a little bit about this with the ghost jobs, I think it was called or something like that in another episode of employees that are working for you but also have two other full time jobs. You can't possibly, if you're being paid for a full time job and you're going to go, or you have equity, you know, as an operator for full time and then you have this other interest, it just doesn't work. It. You would have to change the relationship and not be a full time employee anymore if that was acceptable and you could have a conversation about that. But I don't think it's possible to continue to take your full salary and have less time to focus on it. Even if you believe, as I used to, that, you know, you subscribe to the myth of unlimited capacity. You know, like I can do everything anytime, you know, it's. You just can't. And you will make decisions that will damage both businesses and so, you know, can't be status quo. And we're just adding this giant new thing that you have a significant capital investment in and you're going to have to give a time investment to because you can't do it. That's. I think that's. It's got to be a conversation. What are your thoughts on it?

Yeah, same. I mean, I don't believe that somebody can have two full time jobs. I just don't. And so the argument is, is this going to be a full time job or not? And what a lot of people, oh.

No, I can kind of do it.

In addition, what I'm doing. Yeah, but can you? Right. And I think that's where there really doesn't need to be that honest conversation because ultimately if it's too full time jobs, then you got to pick. And so now the conversation, if you're really excited about this, then that's okay, you can go over here and do this. And if this company can afford to pay you the same salary, fine. We would just need to shift that salary burden because this company that you're.

Leaving is going to have to hire a new person.

And we would simply ask that if.

You'Re going to bring this deal into.

This company that you replace yourself before you exit into that company.

Right.

And so it's not enough to just say yeah, no, I'm fine to make the shift. Okay, but are you able and willing to replace yourself before you do that? Because that's a part of the, of the job too. You can't just hopitate and be like, you know, yoink, I'm out. You have to be able to replace yourself. So I think having that transition plan is really, really important.

And that also it's not just the.

Salary, the income that they're earning from the job they're leaving. Was there some type of equity incentive comp? I mean if they were on some type of a profits only interest or they're on some type of vesting schedule, there'd have to be some acknowledgement that you're leaving that behind because you're basically trading this opportunity for another. And that's I think the big difference between having being an operating partner who is bringing a company in and being more of a, you know, more of the passive working above the business, not on, you know, the org chart. Yeah, I mean that, I think that's a big important distinction. It's why, you know, private Equity folks and VCs, they can be in multiple deals because they're more passive investor. They got to go to some board meetings maybe, but that's it. It's not the same. If somebody is currently employed by that, by that business and they're drawing an active salary, it's not the same. Even if they're a majority owner, it's not the same. If they're fulfilling a critical role and they want to leave that role to go and do something else, they've got to create the space on the payroll to replace them in that role.

Yeah. And there will be a need to replace. That's the thing, you know, and in this case it's, you know, it's a key person who, who has, you know, has a lot, a lot of capacity, but the capacity would have to be diminished to focus on the other thing. And in this particular case too it was as, as we had the conversation was, you know, well, they might also be the face of the thing and it's like, well, you and I know being face of different companies. Yeah, that is a lot as full.

Time a job as it gets.

So you can't, you really just, you have to have the conversation. So does it mean that they can't do it? And I said they can't do it. I should have, I think, I don't mean that. I mean they can't do two things that are literally physically impossible to do. What they could do is there could be a deal. But as we were talking and as you, as you talked about it's going to have to be, there's going to be some changes. So you could, you know, elevate yourself off the org chart if you can replace yourself or if you can continue to add the value. But you'd have to continue to add the value and if your value is operational and now that's going to be cut in half let's say. I don't even know that it's acceptable. It's like it would be really hard decision to say this person who I had full time and I need full time for this job isn't going to be there but they'd still like to be here halftime. I don't, you know, I'm open minded and hard to convince on that. I think it'd be really hard to make that work because we need a full time person. We need somebody. Because we need somebody whose thoughts are always conscious and subconscious on this thing. Because when you add all these other things in, if it's an operator that you're bringing in as opposed to like a strategic. If it's an operator you're bringing in, you want them thinking about your stuff because their brain is going to be thinking about it subconsciously even when they're not there. But if they're switching on and off and multitasking we know multitasking doesn't actually work that you're processing at the same time we know it's that you're focusing on this and now you're switching to this and now you're switching back here and, and there is a loss of productivity every time you switch. And so if you've got this significant other thing that you're doing you're going to have a significant just switching productivity loss. In addition to prime time that can no longer be developed devoted here in addition to Subconscious time processing issues from here that will now become shared with this as well. And so it's a significant diminishment of your contribution. Capability.

Right.

Your capacity to contribute. So then you've got to say, is that okay, Do I, you know, could I transition maybe from operator to strategic? Maybe, you know, what is that? What if you already, what if you're already full on strategy, you know, and you got like.

Exactly. Do we need more strategic? Yeah. And that, that, that. Does the company actually need that or is that just what you want? Yeah, the thing that, what I come back to, fractional executives only work if the role is part time. I think that's so important.

We've had multiple fractional executives and none of them have worked.

Exactly.

None of them have worked because we've.

Wanted to put fractional people into full time roles. I think that fractional can work if it's a stopgap and you're basically saying we need somebody, anybody in here to fill a spot until we can find somebody new. And ideally that fractional person is fractional to full time. So they're going to be fractional while they kind of tie up some loose ends with the intent of sort of a test drive for all involved. So I think fractional to full time can be great. I also think fractional to replace. So a fractional person comes in, they're setting up the systems, figuring out stuff with the intent to replace themselves. That can be fine. Fractional to consultant can be fine. I'm going to be fractional in this for a bit. A replacement is going to come in.

I will still linger around as a consultant for a while to provide you that outside perspective and maybe fill some.

Gaps at the full time person. All those are fine.

Fractional into perpetuity doesn't work, has never worked.

I mean we just recently parted ways with a really great solid, somebody we liked very much, fractional executive at one of our companies.

Because as hard as they worked and.

As involved as they were, it wasn't their primary focus. And that is the difference between being an investor and being an operator employee of a company. And I just think as these, you know, if your people are going to bring you deals you that you just have to know they're not. And if you're off the org chart. Right.

The same applies to you by the way, if you're the CEO.

Yeah, right.

If you're the CEO of the company.

You may have a really great solid team.

But I don't, you know, unless you're, I guess, Elon has managed a CEO, but probably you ain't Elon.

So there you go. And at great sacrifice to his personal life, I think you know that, that, that's a decision you kids and lives.

With none of them.

Yeah, but look at the value he brings. I mean he's, he's kind of also as strategic as they come, you know. So basically can he run three companies as CEO? I mean he certainly brings the value because of its connections, his brain, his experience, his, you know, money, everything. So that. And most of those are his ideas also. Yeah, so there's that.

Exactly. And he, and he is simple to team. But again, you're probably not Elon. So if that's your example, bold play tiger.

But also think of it that Elon is basically a holding company and he has three companies that are under the holding company that he's running and he's got different cap tables on him. It's not his situation isn't really that he's a full time operating CEO at all those companies. It's. He wants the control title and his operators are reporting to him. That's really what that's about, I think. So it's not, it's not like he's actually doing the jobs of three CEOs. He's, he's got his companies that he created and brought people into his investors and has operators for and he's a significant player in all those companies because he should be because that's where all his wealth is tied up.

Right?

Yep.

But that's how he can do multiple deals because he, and you know the other thing he's not doing at most of these companies. Drawing a salary.

Yeah.

You know, he's not drawing a salary. And so he's not, I think that's the thing and the conversation to have with your people when they want to bring deals to you if they want to do this is okay, great, you can't do two roles, but you also can't be a burden to this one or resentment is going to build. And I never want to resent you. So you're probably going to have to make a choice.

I think, I think that's a pretty good place. Did we covered all three of the things I believe? Yes.

Yeah. I mean, because the deal itself is like any other deal, right. You got to do due diligence. You got to figure out why is somebody selling, you know, they got some debt over here. Why does that exist? I mean there's a lot of questions to ask that, that we cover, you know, and what we Ultimate. Yeah, that's beyond. Kind of beyond this. I mean, what. And what we ultimately said is, sure, let's get a. Let's get an loi, let's get a letter of intent, let's go into diligence. Let's. Let's see what's hiding behind the furniture, and we'll see if it's a deal worth doing. But before you can resolve these other things.

Yeah, I'm sorry, go ahead.

We can't even. I was gonna say, before you can.

Even get to the LOI stage, in.

The diligence stage, we had to go.

Through all of those other things. And good chance, if you're doing a lot of deals with partners, you're gonna have it too. So that's, that's why we want to talk about it.

Yeah. And then we get to go through it again. If we do the LOI and it looks like it's a deal that goes forward now we've got to actually come to contract on all of those issues. We've had the discussions then, you know, so I guess that's. It is basically identify that it's an issue, discuss and share with the people that you need to share with and discuss, but don't think that you can have a resolution because you don't know yet what the deal is, then chase the deal. And if it looks like it's going to get to, to be an actual deal now, you got to go back and resolve the things that you raised as issues. So it's, you know, issue spotting is, do we have a deal now that we have a deal, how do we resolve the issues and then move forward? So it's a. An interesting process and, and pretty complicated because you'll find yourself stumped several times and you, you know, maybe in a position that you're not happy that you're in, but you're in it. And then you're trying to, you know, to keep all of the stakeholders across the various companies happy. And, you know, that's. It's not the easiest thing to do, but I do think it's worth it, long run. And especially if you're going to err on the side of if it doesn't work for somebody, I'm not going to damage any relationship to make it happen.

I completely agree. And then it's funny because there's so many people who say, I don't want to go and run a business. It's so much easier to just go and buy one and do a deal. It's like it is sometimes but not always. And sometimes some of the best deals are the hairiest because nobody else has been able to get at them. So I agree. I think it's worth trying to unwind the tangled up ball of Christmas lights to see if, when you plug it in, if it'll actually light up. The thing to remember though is that once you do the deal, that's when the real fun begins of integration and of actually getting this thing going. So yeah, there is a lot there. It's not the simplest thing and that's why there's margin in it. If it were super simple and super easy, anybody can do it, then guess what? There would be no money in it whatsoever. So if you see a deal that's complicated, it might be worth doing, might be worth looking at.

Yeah, I agree with that. And, and I, I will say too, like, if, if it goes through all of the people can add tremendous value. It would be worth a lot more if all of these players that have these potential conflicts, those are also opportunity. That's the other side of the conflict.

Right.

The conflict exists because there are some common threads. If you can turn the common threads and into benefits for everybody, which I believe exist in this deal that we talked about. It's just, it may end up getting split into two or you know, different parts of it doing different things. But, but there's definitely benefit to, to all without conflict. And so that's the other part of it is because as we, as you and I looked at this and got really just last night, all the information on it, or at least a lot more information on what they really did and how it worked, it was. Well, this is completely different from what these other guys do. But these other guys could send business here to the people this company serves. So that might be a separate thing or it might be something that like it might be completely separate that they just do that and this company wins because its customers get more customers or maybe there's value that can be added there or you know, and, but, but they are primarily different things that, that exist. But also for you and I looking at it is like there may be potential compliance and other issues that cause us to say too much risk, not interested. And then maybe, maybe the other people go do something or don't because they wouldn't be in that side of it that had, that has the compliance risk. But we don't know what's going to happen until we see what does the seller actually feel like they're willing to do. So that's, that's a It's been an interesting case. It's probably one of the more difficult ones for me that I've had to deal with in a while because I'm trying. I definitely want to stay on the side of keeping all of my business partners happy and, and including the people that brought the deal. And, and you know, there's a lot of, a lot of different interests to keep aligned.

You saying it's one of the more.

Complicated ones is definitely saying something. So, yeah, it should be fun. And we'll keep you all posted. Maybe one of these days if the deal goes through, we can announce it and if it doesn't, we'll never talk about it again.

Unless it's a failure.

Case study.

I hope that you guys enjoyed this episode. I thought it was really, to me, this is really interesting to see behind the scenes of how things work with multiple partners and you know, in a deal and, you know, all the different moving parts and interests and everything. If you guys found it interesting or you've got your own stories, we'd love to hear about them. Share them with us on Social. If you thought this was valuable, please share it with other people and we'll see you next time on Business Lunch.

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