380 Channing Hamlet

Jeffrey Feldberg: [00:00:00] Channing Hamlet is a managing director with Objective Investment Banking and Valuation. He serves as an executive leader for the firm's M&A and valuation practice, and leads the firm's business service practice. He brings more than 25 years of experience with investment banking and business valuation to clients.

Prior to joining Objective, Mr. Hamlet served as the Managing Director of Cabrillo Advisors, where he was instrumental in both leading their M&A execution and growing the valuation practice from inception into a national entity, serving more than 700 clients in five years. 

Previously, he served as a Director of Visage, Principal at LLR Partners, a $260 million dollar private equity firm, and member of the Legg Mason's Investment Banking Group. Mr. Hamlet is active in numerous groups, including the Association for Corporate Growth, where he serves on the membership committee for the Los Angeles area.

He also serves as a group leader in ProVisors, and is active in philanthropy through his affiliation [00:01:00] with PEERS. He has a master's degree in operations research, and a bachelor's of science in mechanical engineering from Cornell University. He holds FINRA Series 7, 63, and 79 licenses, and is a regional representative of BA Securities LLC.

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com. Welcome to Deep Wealth Podcast. You heard it in the official introduction. Wow. What a background from a mechanical engineer, investment banker, we're going to go behind the scenes and talk about things you're probably not going to hear about anywhere else.

So Channing, welcome to the Deep Wealth Podcast. An absolute pleasure to have you with us. And there is always a story behind the story. So Channing, what's your story? I'm really curious. What got you from where you were to where you are today?

Channing Hamlet: first of all, thanks for having me. super exciting to be here and, show up to hopefully provide some value and educate the audience. Do you want the long version or the short version of the story?

Jeffrey Feldberg: We're going to roll with this, surprise us.

Channing Hamlet: Yeah, so I, started my education as an engineering student and really build a solid kind of technical foundation and got into investment banking early in my career thinking that it was like a really good. Kind of nerdy, technical, finance, accounting oriented job. [00:04:00] And I had like really strong analytical skills and I would be successful.

And over the years, I've learned that the technical elements are, really a strong foundation, but at the end of the day, the job, at least the way we do it is all around using a combination of technical. Skills, business acumen, and like negotiation and sales skills to help our clients create a great outcome.

And so we get to help our clients like turn their life's work into a successful exit and that's really rewarding and fun. And that's kind of what it's all about for us.

Jeffrey Feldberg: And Channing, you've really seen it all. And what you just said right now is really intriguing. I mean, firstly, your journey. As of late, though, when you're helping business owners really welcome their financial independence, their freedom, their legacy. When we look at the stats, they're not so great. And I know as entrepreneurs, we're usually, glass is half full.

In this case, glass is really half empty. So why don't we start there? When you're taking companies to market, why What typically, and maybe it's Pareto's Law, the 80 20 rule, are there 20 percent of the same issues that are [00:05:00] creating 80 percent of the same, some people call them problems, I'll call them opportunities, that you're seeing time and time again that could be avoided?

Channing Hamlet: Yeah. I think the reality is, and at least in the market, where our firm and I spend a lot of my time would be, entrepreneur led and family owned businesses that don't have institutional backing. These are typically companies that are sold for, between 25 and a hundred or 250 million in that sort of lower end of the market.

 I think generally speaking, the people that run and own these businesses are great business people. They've built great businesses. They've been very successful but generally speaking, I don't think they have a full. Appreciation for the level of preparation required to have a truly successful exit.

buyers come in and do nine or 10 streams of due diligence and it's, very rigorous and they're looking for ways to lower the price and take less risk. on a typical 75 million sale transaction, a buyer might spend two and a half to 3 million [00:06:00] on experts that come in and do due diligence.

And it's very rigorous. And so I think that a lot of the business owners just don't have an appreciation for the level of preparation on the business side that is required. And having the business prepared is only one part of it. There's tax issues. There's legacy issues. What do I do with my employees?

What do I do with my family? What am I going to do? And there's a lot of complexities that all come together in this pressure cooker environment of selling the company. And so the more time that people spend truly preparing and appreciating the process, like the better the outcome and the easier it is for all the advisors, to help them.

Most companies under invest in their finance and accounting infrastructure, and don't really have a clear way to describe the value proposition of their business through the numbers, and in most cases, the numbers really matter, and matter a lot, and that's something that the buyers really focus on and look at.

So Channing, practically speaking, I'm a listener. I'm in [00:07:00] Deep Wealth Nation. I'm hearing you speaking and yeah, Channing, you're right on the financial side. We don't put a lot of time or effort into that and we don't want to be caught really off guard for the liquidity event. So what would that look like?

What could I start doing today that I show up to you, Channing, and you're all smiles. Yeah, guys, you hit this out of the park. This is exactly what we're looking for.

I think there's a couple things to really be thinking about. Early in my career, I worked at a private equity firm. And we would either acquire a controlling interest or invest in minority interest in a company. And we were typically the first institutional capital to invest in a company.

And one of the things that we would do right after we made the investment is we would go in and sit down with the management team. we would put together Hey, here's what we think is going to make our investment successful in your business. These are the value drivers of the company and different industries, different business models, businesses at a different stage of growth.

All have different value drivers. And one of the things that we would do is we would ask the management team to prepare either a monthly or a [00:08:00] quarterly kind of key performance indicator sheet. And it wasn't necessarily like just revenue and profit. It was the underlying metrics in the business.

that would drive value that were part of our sort of investment thesis on what we wanted to see change in the business in order to make it a great investment. And so every board meeting and every month, when we would meet with the management, we would look at these key performance indicators and value drivers, are these still the right things to be looking at?

How are we making progress on these? What are the initiatives, where do you need help? Et cetera. And. What often happened with our investments is, my professor in business school, what gets measured gets done comment. We got people.

Jeffrey Feldberg: yeah.

Channing Hamlet: really focusing on like the right metrics and we had a really good outcome with the fund.

The fund I worked for returned more than three times our capital and was a top quartile performing fund. I have yet to go to a private company and ask them like, what key performance indicators do you look at? And how are you like thinking [00:09:00] about building the value? Most people look at me like I have three heads.

They're just not. Appreciating or doing the work and thinking through what are the things I need to change in my company in order to increase value and they don't have a plan for that. So that's one thing. And I would say what I just talked about is not easy to do. It requires some work.

It requires some thought probably requires bringing in some outside experts that have. Some expertise, but it can be truly valuable in terms of increasing the value. So that's one thing that I think is like really important that business owners should, and could work on. And then the second one is.

I'm often the first person that's helping a company put a budget together. A lot of businesses don't really run with a budget and, putting a budget together is really hard. And so we often come in and it's What's, what do you think your revenue is going to be this year?

I don't know. Well, what are the drivers of your revenue when we model those out and we look historically at what happened and what the trends are, and if you do this today, you're [00:10:00] going to get this much revenue tomorrow, and once you figure out the revenue, you can figure out the resources you need to support it, to come up with a projection.

And having a rock solid projection is like super important in general to understand the levers and the operating metrics in the business that create the results. And then in the midst of a sale process, which takes six to nine months like if, if I was going to work with you to sell your company today, it's June, by the time a transaction closes, it would be Q1, 2025.

And so what we would be trying to do is having the buyers. Make an offer based on your projected 2024 and your projected 2025 financial results. the stronger we can build a budget, that's like really supportable and defendable, the more likely we are to get the buyer to buy into the extra growth and get a higher valuation.

And if I'm the first person that's helping you put your budget together. And we've never really done that before. Like you don't have a true and good understanding [00:11:00] of how to meet your numbers, et cetera, et cetera. And if you miss your numbers during a sale process, that is an absolute disaster because it, it calls into credibility everything else.

And so I think business owners having the discipline to put budgets and plans together and understand if I exceeded the budget, why did I exceed the budget? If I missed it, why did I miss it? What decisions should I be making differently? How should I be thinking about my business is also really healthy.

And so those two things I think are common things that most business owners don't and executives don't take the time and effort to really think through, and they can both make a massive difference in terms of just operating the business generally. And in a sale process, they're absolutely invaluable.

Jeffrey Feldberg: Channing, what you're saying, it's not gold, it is platinum. Deep Wealth Nation, I want you to hear that from Channing because, again, Channing, let me really paraphrase in my words what I'm hearing you say, and you can tell me, Jeffrey, on base or off base. You're running the business or hopefully your team is [00:12:00] actually running the business.

You're working on the business, not in the business, but either way, when you're working with Channing and team, as an example, you're going into a liquidity event, welcome to your second full time job. Because in addition to the business, you've now got the liquidity event and Channing to your point, the projections that you're making, some of them are going to come to fruition during the liquidity event.

And wow, if you miss that, either the game's over or there's a huge penalty that's going on board. So, Channing, what I'm hearing you say is. Before even speaking to an investment bank or an investment banker like yourself, get your KPIs created, make sure that they're really good ones, put some budgets together, start preparing so you're not caught really off guard for the liquidity event.

Channing, my next question, you can say, Jeffrey, it's not really a fair question, because every business is different. Different industries, different businesses in trajectories. That said, though, generally speaking, When it does come to KPIs, you're right, some business owners give you a look, what's a KPI?

Other business owners will show you their KPIs and it would take a [00:13:00] month just to go through them, there's too many of them. What would be perhaps some of your tried and true KPIs that could really benefit every business?

Channing Hamlet: You were right, it's not necessarily a fair question because it varies quite a bit by, industry, economic cycle, et cetera. However I, when I meet with a new company, I have a checklist that I keep on my desk that I look at and this may not necessarily be a true KPI, but understanding your industry and your market cycle and what's going on in your industry is really important.

And every industry has trade associations that publish data. That, that are drivers of the industry. And so understanding where you are generally speaking in your industry, understanding there's, every industry has public companies that participate in the industry, understanding the valuations, their growth, just being smart about what's going on in the industry and tracking some metrics there.

So, whether you're in a, an upswing or a downswing, tailwind, headwind I sold a commercial printing business in the 1990s. And at that point in [00:14:00] time, there were seven or eight bigger companies doing a consolidation. And if you had a commercial printing business and you wanted to sell it, you could get seven offers and get seven well capitalized buyers competing and really get a good valuation.

15 years later in the, late 2000s, and you know, the, the internet is more mature printing and all that stuff is like massively changed. The industry had largely been consolidated. We took on a printing company client that was arguably a better company, better technology. Their clients were the who's who of Silicon Valley, Cisco, Apple, Microsoft, really a great company. The buyer universe was very small. All of the consolidators that were having growing pains, there wasn't a lot of acquisitions. There was a perception in the world that printing and paper was going to be less of a thing. And so even though it was a better business, the multiples were quite a bit lower. Paying attention to what's going on in the industry and thinking about the right [00:15:00] time to sell, that's one set of KPIs that I think people should really be looking at and thinking about. So they're not blindsided. a couple other value drivers are thinking about the desired business metrics You don't need to listen to this podcast to know that revenue growth EBITDA margins are important.

That's kind of par for the course for any business. I think being able to demonstrate that you have operating leverage or economies of scale with growth and tracking some metrics around that. It could be efficiency metrics like, revenue per person or gross margin or some other metric for the business.

And then there's other considerations like, software companies and e commerce companies have a whole series of cohort analysis, lifetime value, retention rates, cost of customer acquisition. Tracking those and figuring out how to have a really good metric relative to your industry can be massive value drivers.

Another massive value driver that a lot of businesses think about would be building in predictability, reoccurring [00:16:00] revenue, and figuring out how to predict your revenue streams. So the KPIs could be. Number of leads we're getting, dollar value of proposals sent out recurring revenue, backlog, et cetera, et cetera, et cetera.

I was aware of a construction company that was doing HVAC installation they built a whole service business and did long term maintenance contracts. And so they went from a very low margin, kind of difficult to predict business to a very stable. predictable business because they changed their business model and built, long term maintenance contracts and recurring revenue, and that sold for a much higher multiple than any other HVAC company would have, because they put in place real strategy that was tied to valuation and then, I think there's a couple other value drivers that are harder to put into KPIs, but are really important to pay attention to having a management team that you can transition the business, Buyers don't like to buy a business from an owner operator because the owner operator suddenly has a big pile of cash and they're on the golf course, or on their [00:17:00] yacht, and they don't have the next generation to run the business, so there's a continuity risk. So that's another very significant value driver and, even though you, maybe you have, an extra overhead element of a president and a CFO and this and that you've created continuity, which, buyers value more. Intellectual property is another one. A lot of companies don't invest time and effort in in really defining their proprietary knowledge, patents. The more defined that is and the more you can like clearly articulate to a buyer what's like unique and proprietary, that's worth extra multiples. It's KPI, but that's something to really Think about, the last one is, I think, and this is clear differentiation from competition.

A lot of business owners and executives. haven't really gone through the thought of this is my market. This is why people hire my company or buy my product compared to any other product in the world. And I'm the best in the world at this like one [00:18:00] thing. And Mr. or Mrs.

Buyer, if you want to be in this market, you have to own my company because I'm the best in the world at it. A lot of people haven't really figured that out with their business. And it's I'm this generic company that does like whatever. A buyer sitting there well, I can buy any number of companies that do that.

And so if you can really figure out your message and why you're special and build that into your marketing and your sales and really leverage that, it makes you unique and unique is valuable. That's another one that we look at. That's hard to put into a particular KPI, but you know, it's also hard to figure that out.

And so if you hire an investment bank to sell your company and we're trying to write all the materials in two months. Figuring that out and incorporating the materials in two months is like really hard. If you've spent years figuring that out and building a strategy around it, it's a lot easier story to tell and it drives value.

So I just said a lot, but that's like a, there's a lot in there as far as kind of thinking about what the value drivers are and how to characterize it. For your business and your [00:19:00] industry,

Jeffrey Feldberg: What you're talking about, Channing, it is a page out of our playbook. We call it step two, X Factors in the Deep Wealth nine step roadmap. And you're so spot on because oftentimes, as entrepreneurs, one of my sayings, and they can kick me out of the table here, as entrepreneurs, we can be so smart yet so stupid at the same time.

In the sense that Well, Jeffrey, sure, we're going to take you to market. How are you different than everyone else? Well, we're not really different. We're all the same. It's just a different logo, a different color. And that couldn't be the furthest thing from the truth. Every business has at least three to five areas that they are world class and we call those X Factors.

But Chenning, as you're talking about that, in my mind, I was doing a checklist. Okay, if I'm a prospective buyer or investor, to your point, I want to see a company that runs without the owner. So they have some kind of a leadership team. I really want to know what makes them unique and world class. You've been at both sides of the table.

So for the Deep Wealth Nation, can you share with them, when it's an investor or a buyer, it's really one and the same, let's, for keeping it simple, let's just call it a buyer. A [00:20:00] buyer's at the table, what's going through the buyer's mind of what they're looking for to say either, yes, I want to learn more and move forward, or, you know what, I'm going to cut my losses short, I'm not going to move forward, because, For the Deep Wealth Nation, you have to understand it's expensive for a buyer to go through a diligence process.

It can take months. It could take hundreds of thousands of dollars, if not more, to go through that. So there's some caution that's going on. So what would be some of the inner thoughts that's going on with a buyer?

Channing Hamlet: It's interesting. There's, two categories of buyers that we tend to work with. Like about half of the companies that, we work with sell into private equity where a private equity firm is going to take, an ownership interest, usually a controlling interest.

And partner with the management team to continue to grow and build the business. There's a whole set of criteria there. And then the second category of buyers that we often sell to would be what I call industry or strategic buyers. And on the industry and strategic buyer side, and this is a really interesting discussion on the industry and strategic buyer side, they're looking at a combination of things, [00:21:00] but when I've seen premiums paid, it's usually because of the strategic buyer.

Has a gap in their capability, or a gap in their product line, or a gap in their service portfolio that they're looking to fill. And so, an example that comes to mind is I, had a client that was in the lab equipment space, and they had a very strong specialization in one area of mapping the human genome. And then so if you went to a scientific lab, there's a workflow of 10 pieces of equipment. We had the largest market share in one piece of equipment and the buyer had six of the other 10 pieces of equipment and they were looking to consolidate across that whole value chain.

And so it almost didn't matter what my client's revenue or profit was because this buyer was a global company with thousands of salespeople and they needed the technology and the capability. in order to fill that gap in their product cards that they could sell it globally.

And, you have that strategic [00:22:00] need, you can negotiate a premium, sale that. buyers are always going to look at the financials and I need an ROI on my money and all that stuff. As a seller, you can really sit down with the buyer and talk about, post acquisition economics.

So we can sit there and say, look, hey, I know our client's making 10 million a year, but because you have a thousand salespeople and you're in all these countries and you're already calling on these customers and you're doing this and you're doing that, like you can easily grow this to 50 million in three years.

And that's going to create a billion dollars in shareholder value for you. So open up the purse strings and pay a little more, otherwise you're not going to have this. And if you can create that scarcity through the use of a strategic rationale you can really negotiate a premium. And so I think, that's one of the really biggest things that buyers are looking for on the strategic side is a capability or what have you.

And so. A lot of business owners don't really spend the time thinking about who are the buyers? Where is the strategic value? How can I really, [00:23:00] optimize what I'm doing to be attractive to somebody? don't think like just focusing on that is healthy, but having an eye on who the buyers are and what the strategic value is, as you're making strategic decisions in your business is important.

And then, you know, you also have to do the right things to build your business for your market, for the long term as well. But looking at that can be really important.

Jeffrey Feldberg: Channing, fascinating with what you're talking about with the buyers. I can take it in so many different directions, but let me ask you this. I like to dispel a myth. In our 90 day Deep Wealth Mastery Program, when it comes to Step 3 Future Buyer, one of the first things we are dispelling in terms of a myth, and I'd love for your thoughts on, yeah, Jeffrey, you're on base, off base.

So many entrepreneurs believe, wrongly believe, and we love to say Deep Wealth, you've got to stop believing, you have to start knowing. They start believing that it's their job. To know who the future buyer is going to be, that they have to source out these buyers, they've got to figure that out. And what we're sharing with them is, Hey, that time is not well spent.

Channing and team, this is what they do all day, every day. They will cast a [00:24:00] very wide net. They're going to find all kinds of buyers that you never in a million years would have thought of, put your time, your effort, your energy, you and your team back into the business, it'll take you to a better place.

So where are you on that? For someone who's listening and saying, yeah, you know, Channing, I'll find the buyers, I'll let you know about it. And then we'll move up from there. What's going on with that?

Channing Hamlet: I think again, this is a little bit fact and situation specific depending on the industry and the niche and, all the other standard disclaimers I would give you. But generally speaking, I think that where we've had the most success is we collaborate with our clients to figure out the buyers.

Often they have some relationships they can bring to the table. They know their industry and their niche better than any outsider ever would. And so, really listening to them and understanding like who they're competing with, who their vendors are, who their customers are, how does the value chain work?

What are the relationships that you already have that could be buyers? That's really valuable and we spend a lot of time on that. And then the second thing is just, old fashioned [00:25:00] elbow grease and research. there's always adjacent industries, like what companies would value this capability, what industries would value this technology, what would value this, what would value that, and we can build like a pretty interesting and robust strategic buyer list.

and that's like real team and collaborative effort with our clients. And we often find buyers that are a good fit that they hadn't thought of because it's adjacent to their industry or outside of their market that wants to get into their market and, so on and so forth.

And then the second element of it is private equity. Over the last 20 to 25 years, private equity has gone from a very small cottage industry to an absolute behemoth. And there's trillions of dollars. And 3,000 or 4, 000 private equity firms in the United States with so much money looking for a home that finding the right private equity firms and telling the right story.

They're almost always interested in cashflow, positive businesses. And, we wouldn't expect our clients to even have a clue about that because it's [00:26:00] a completely different world, but they can be great buyers. And for a lot of businesses they're motivated to pay more than strategics.

And so we like to do a dual path where we talk to both strategics and private equity and line them up against each other.

Jeffrey Feldberg: It's interesting you're talking about strategics and private equity, Channing would love your thoughts because it seems as though both on the buyer and investor side, the world has changed. Once upon a time, it was strictly strategic or strictly financial, then came others like family offices, then you had hybrids such as strategic with family offices or financial with family offices.

So as we record this today, and of course, anything can change tomorrow and beyond, where are we on the buyer or investor landscape? What are we seeing today?

Channing Hamlet: Yes, there's a lot, think what we're seeing is there's a lot of capital out there. The strategic buyers have a lot of capital. family offices that have set up that have A lot of interest in acquiring businesses, and then, private equity has really been institutionalized, and there's a lot of money there so I think [00:27:00] generally speaking over the last couple years as we've had, interest rates go up, and the economy maybe has been a little bit more choppy deal flow has been down, and I think what we're seeing on the private equity side is they've raised a lot of money, And they're struggling to deploy it.

So there's a strong motivation for them to deploy the capital.

Family offices are the same, a lot of them have built teams to go and deploy the capital and they're having trouble finding opportunities, so they're very motivated as well.

So if you have a good business.

It's a really good time to be talking to the market cause there's a lot of capital out there right now. And I think generally speaking that we're seeing a supply and demand imbalance in terms of just deal flow.

Jeffrey Feldberg: Interesting. Yeah, I love that perspective in terms of what you're seeing out there and how things are changing. So, Channing, let me ask you this. You've done a terrific job of really putting the foundation out there. We've covered off some typical mistakes of where business owners, sadly, they're making too many of these.

And the flip side is, hey, if you don't want to be like that, this is what you should be doing. Let's talk a little bit now with you, the [00:28:00] team, your secret sauce. So imagine for a quick thought experiment, I show up, we have a discussion, it looks like there's a fit, there's some chemistry between our two businesses, and now we're going to be working with you, you're going to be taking us to market.

If we're honest about it Channing, there are lots of choices out there for business owners, not that at Deep Wealth we agree with many of those choices, we can talk all about that, but with what you're doing, I know you're sell side only. Which is a huge check for business owners that you're really representing them.

You're not transactional where the investment banker is best friends with the buyers as opposed to the actual sellers. So Channing, what's some of your secret sauce? What are you doing for us? That's really going to make a difference for me that I'm likely not going to find elsewhere. What's going on with that with you and the team and your leadership?

Channing Hamlet: It's interesting. I think there's a number of pillars of success that are required to put together a premium sale. And so I think we've really built and designed our firm to work with the lower middle market, not institutionally owned companies. And so we really have the capability to [00:29:00] roll up our sleeves and dig in and understand their business and, work through some analytics and, help guide them in terms of getting finance and accounting and the resources they need to be really prepared and buttoned up.

So that's one of the things that we're really good at and we have some internal resources and we have some external resources that we bring in to help with that. I think second thing I would say that's really unique about us is we put two senior people On every project and we really believe in collaboration and we've designed our compensation systems internally so that our team is highly motivated to collaborate with each other.

And so, these are really complex projects in selling a company. There's a lot of. Uncertainty and choices that have to be made without the best data. And so we really believe that having multiple senior people, looking at these things and debating them and working with our clients helps come up with the absolute best solution.

So that's the second thing that we do. A third thing is our firm is called Objective. And we [00:30:00] really believe that business owners should make decisions based on their objectives. And so we spend a lot of time upfront with our clients helping understand and clarify their objectives.

And when you sit down with most business owners who have built a business over a long period of time and ask about their objectives one thing that comes out, which is painfully obvious is I want to get the most money when I sell my company. That's like a. That's like an easy one.

But, when you peel the onion back, a lot of people are I've got customers, vendors, employees that have worked with me for 30 years. I want to see them well taken care of under the next phase of ownership. I've got family members in the business. I've got certain affinity to someone maintaining my brand or doing this or doing that.

And so trying to really understand the big picture of what they're trying to accomplish for themselves, their business, their legacy, and their life, and designing the transaction along those lines is really important to us rather than just, showing up like, what's your EBITDA? [00:31:00] We can get you eight times.

Let's go. I think there's a real like holistic and strategic thought to design the process to accomplish there. Objectives. And then I mentioned this earlier. One of the things we do is we use this term post acquisition economics, and we spend a lot of time, we might go out to a broad range of buyers and narrow it down through initial offers.

And once we have the initial offers figured out and we know who like the real serious buyers are, we spend a lot of time asking them a lot of questions about their business. How does this fit? What's the go forward plan? And then we work with them to help clarify and understand their plan going forward.

And we develop a view on what the business is worth to them, which is often beyond the numbers. And then we can use that information to negotiate a premium transaction or negotiate different terms or something like that. That's a lot of work and it requires someone who.

Can really ask the right questions, listen well, understand what the buyer is saying versus [00:32:00] what they want to develop a really good, tailored, insightful negotiation strategy to create the best outcome. that's something I think that we do really well, and we work really hard on that, and we've done it a lot. that's something that, is unique and interesting to what we're about. 

Jeffrey Feldberg: It's really interesting how you're going through that. And Deep Wealth Nation, were you listening to what Channing was saying in terms of, this isn't just, okay, Channing, here we are, take us to the world, let's see what's going on. There's a lot of preparation behind the scenes. Generally speaking though, when you're working with a client, what's the most, let's call it the most important thing that can really move the dial on the enterprise value that just makes it not easy, but easier to communicate that to the buyers to really get the best deal instead of any deal.

Channing Hamlet: I don't know that picking the most important is easy. I think one element is creating a competitive process. And again you can do that through a formal auction where you go to a lot of buyers. You can do that through going to one [00:33:00] buyer with the threat of an auction.

If they don't step up, there's a bunch of different techniques, but putting pressure on the buyers and creating a sense that they're going to miss out unless they step up with a strong deal, creating that, that framework is really important so that you have negotiation leverage. I think that's a really key piece of getting enterprise value that has nothing to do with the business and the industry and the story you tell. It has to do with running a really good tight process and creating the feeling of urgency for buyers. And so that's really important. And I think that's a really big value that investment banks bring that's often overlooked.

And then I think the second the second thing that really helps drive the value is when we get down to the nitty gritty where we're down to a final smaller number of buyers, Getting the buyer to fall in love with the management team and having the management team be [00:34:00] really prepared about and excited about working for the buyer and having a plan.

When you own this company, here's what we've accomplished with our current owners, but when you own this company, these are all the things I'm excited about it and we are going to crush it for you. Really having that management team that can be credible and tell that story and have them like well rehearsed and prepared is absolutely critical to gaining confidence with the buyer. And the more you can gain confidence and trust with the buyer, the more they're going to be comfortable paying and the more they're going to be comfortable when you're negotiating all these different. Liabilities with the attorneys, the more they're going to be comfortable trusting you and taking on more liability. So those are the two things that come to mind that apply in almost every business and every situation. And then there's a whole host of other issues around things I've already talked about, KPIs, financial metrics, clean financials, et cetera, et cetera, et cetera. The process and then telling the story credibly and really well with a solid management team are two things that always drive value.

Jeffrey Feldberg: [00:35:00] Oh my goodness, Channing, where do I start with what you said? So much to unpack there. But again, I love what you're saying of, hey, leave it to us, we're going to create a competitive process or a bid. We're all about that. Once again, we're off the same playbook here with Step 3, Future Buyer. And to really emphasize a point for the Deep Wealth Nation, Because it's a nuance that's so easy to miss, because you're right, if it's just one buyer at the table, well, they're probably not putting their best foot forward.

They know they're the only ones there. That's why they love these unsolicited offers. So, Channing, when you have that competitive process going, you have multiple buyers, as many as possible, they're all qualified at the table. Can you share for the Deep Wealth Nation the difference that makes in terms of how quickly they're going to turn things around, the closing time, what the enterprise value is going to be, how it can really become a bit of a bidding war to skyrocket the overall enterprise values.

What's going on with that?

Channing Hamlet: Yeah, it's interesting, a lot of times we run this sort of, I'd say two step process where, we create the materials, we go to market and we go to a larger number of buyers [00:36:00] and we ask for initial offers. And we get those initial offers and we sit down with our client and, look at them and decide, based on a combination of what our client's objectives are, strategic fit, financial capability, price, terms which of these companies are we going to work with further?

And then we share more information and we'll do management meetings. and so forth, et cetera to get people to a best and final offer, which we would then sign a letter of intent with, and that, process which could include, two or three, 10 or 15 buyers It gets the buyers to fall in love with the business, the people, and the opportunity and gets them really like emotionally invested.

And we get them to start spending money and time. And once they've done that, you can really push them hard on terms and value. The other thing that process does is it allows our client to interview the potential buyers. Cause oftentimes there's going to be a very significant post closing relationship.

And so they can pick. Hey, [00:37:00] which of these companies or buyers would I actually enjoy working with? Who's going to be a good steward of my company going forward? Do I like this person? Do I not like that person? There's a whole dating concept going on where you can really get to know and understand the buyers.

You wind up with, a multiple number of. Competing offers. And once you have that's gold, you can really push and push really hard on both the terms and the price. And you can truly, you can go through multiple rounds of negotiation like, Hey, the other offers are 15 percent above we're going to need you to raise your offer 20%, if you want this deal and oftentimes a buyer will say no, I can't do that.

The best I can do is X. Oftentimes you can, really push the value higher through that process. And you can know if the buyer says, no, you have a, you have a perfectly good backup. And so that's a really great situation to be in. And it's actually a lot of fun. I

Jeffrey Feldberg: Yeah, it certainly can be and [00:38:00] Channing, we've both been privileged enough to go through that process and to see the dynamics of what's happening there. And again, at Deep Wealth, that's why we say the unsolicited offer is likely the worst offer you're ever going to get. Don't do that, find a professional, get a competitive process going.

So Channing, before we go into wrap up mode, if there was one thing that a Deep Wealth Nation listener could do coming out of this podcast that would really make a difference in their business, so when it's time for that They're that much better ahead. If you had to pick one thing from your toolbox of all the different tools that you have, all the different strategies, what would that be?

Channing Hamlet: this is kind of bright or cynical or whatever, but failing to prepare is preparing to fail,

I think the one thing that I would encourage people to do is start talking with transaction experts. M& A attorneys can describe their due diligence.

They can look at your business and figure out risks and issues and things you should work on investment bankers. When we take a client on, it's a nine to 12 month relationship for us. We don't make money unless we [00:39:00] close a deal. We're very careful about which clients we take on.

Cause to 12 months with a client and fail. And so investment bankers, generally speaking, are willing to spend a lot of time and do some free work for you early. In the process, in the interest of getting to know you and creating a relationship. And, you can understand a lot of the process and the value drivers for your company and, different decisions you're making, you can get some outside opinions.

Really carving out and creating time to, prepare and research so that you're truly ready and prepared for the process is the one thing. And every company has different opportunities, different risks, different issues, and spending the time to prepare and understand what those are and build plans around each of them is, I think that is the absolute most important thing.

And if there's like any one thing from what I said today, I think it's the failing to prepare is preparing to fail.

Jeffrey Feldberg: Channing, we could not say that any better ourselves. Deep Wealth Nation, I promise you, I absolutely promise you that [00:40:00] Channing and I ahead of time did not talk about this. There's no check in the mail. Channing, you're never a profit in your hometown. We always say that if you're not preparing. You are welcoming a world of difficult situations, challenges, problems.

In fact, I did a whole solo episode, I call it Exit Wounds. We'll put that to a link in the show notes and follow Channing's advice. Absolutely, prepare well in advance whether your liquidity event is a year away or ten years away. The best time to start was actually yesterday, so today is the next best time.

So let's follow Channing's advice and get that done. So Channing, we're going to go into wrap up mode. Sadly, we could have gone down so many rabbit holes. You've been absolutely incredible with this. That said, we're starting to bump up again some time. And it's a tradition here on the Deep Wealth Podcast, every guest, I have the privilege, the honor to ask the same question.

Here's the question for you. It's a really fun one. Let me set this up. Imagine in the movie Back to the Future, you have that magical DeLorean car that can take you to any point in time. So Channing, the fun part is, it's tomorrow morning, you look outside your window, not only is the DeLorean car [00:41:00] curbside, the door's open, it's waiting for you to hop on in, which you do, you're now going to go to any point in your life.

Channing, as a young child, a teenager, whatever point in time it would be, what would you tell your younger self in terms of life lessons, or life wisdom, or hey Channing, do this, but don't do that. What would it sound like?

Channing Hamlet: what a great question. There's so many different directions I, I could go with that. And I think to the extent that you have aspiring investment bankers

In your audience if I could go back in time, I think the technical degree and all the technical work I did has served me so well. I wish I had spent a little bit more time on sales, marketing, put myself in positions where building some interpersonal skills early in my career and early in my life. that would have helped me a lot early in my career. And so, you know, from the outside, looking in the investment banking thing, a big part of it is technical and geeky and nerdy finance stuff.

And being like, really good at that is important, but I think the soft side and the sales skills and the, and building like [00:42:00] real strength and interpersonal relationships and negotiation is is equally important. And think people didn't really mentors I had, and, People I had didn't really push me in that direction.

And that's something I wish I had experimented with early on.

Jeffrey Feldberg: Very interesting. So Channing, I think you're being hard on yourself, but I hear what you're saying. Hey, you know what, wherever you are in your career, but the earlier, the better master the sales and marketing side of things that can open up more doors for you, Channing, I think you've done really incredibly well, exactly who you are and what you've been doing, but I appreciate what you've been saying and Deep Wealth Nation.

You heard it from Channing, who really brings together all these different disciplines. I mean, my goodness, Mechanical Engineer, Investment Banker, everything else in between. You found something that really works for you and a huge congratulations. And Channing, before we wrap this up, for a listener, they have some questions.

Maybe they want to even work with you and the team. Where's the best place online someone can find you? 

Channing Hamlet: We've put a lot of time and effort into content and our website. And so that's a really good place to look. It's um, objectiveibv. com

[00:43:00] You can find my contact info there and lots of content and articles and information about us and. Always happy to have a conversation with someone who's thinking about an exit or wants to learn more about the process from a no pressure education standpoint.

So please feel free to reach out if you have any questions. I'm happy to help.

Jeffrey Feldberg: Terrific. Well, thank you so much for that. And listeners, it doesn't get any easier. It's all in the show notes. It's a point and click. Well, Channing, congratulations. It's official. This is a wrap. And as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe.

Thank you so much.

Channing Hamlet: Yeah, thank you. I really appreciate being here. 

Jeffrey Feldberg: So there you have it, Deep Wealth Nation. What did you think? 

So with all that said and as we wrap it up, I have another question for you.

Actually, it's more of a personal favor. 

Did you find this episode helpful? 

Have you found other episodes of the Deep Wealth Podcast empowering and a game changer for your journey? 

And if you said yes, and I really hope you did, I have a small but really meaningful way that you can actually help us out and keep these episodes coming to you.

Are you ready for it? 

The dramatic pause. I'll just wait a [00:44:00] moment. Drumroll, please. Subscribe. Please subscribe to the Deep Wealth Podcast on your favorite podcast channel. When you subscribe to the Deep Wealth Podcast, you're saving yourself time. Every episode automatically comes to you, and I want you to know that we meticulously craft Every one of our episodes to have impactful strategies, stories, expert insights that are designed to help you grow your profits, increase the value of your business, and yes, even optimize your post exit life and your life right now, whatever you want that to look like.

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So all that said. Thank you so much for listening. And remember your wealth isn't just about the money in the bank. It's about the depth of your journey and the impact that you're creating. So let's continue this journey together. And from the bottom of my heart, thank you so much for listening to this episode.

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Thank you so much. 

God bless.