Investment Banker Michael Butler Reveals Everything You Need To Know About Buyers To Capture The Best Deal (#260)

Jeffrey Feldberg: [00:00:00] Welcome to the Deep Wealth Podcast where you learn how to extract your business and personal Deep Wealth. 

I'm your host Jeffrey Feldberg. 

This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience. 

When it comes to your business deep wealth, your exit or liquidity event is the most important financial decision of your life. 

But unfortunately, up to 90% of liquidity events fail. Think about all that time and your hard earned money wasted. 

Of the quote unquote "successful" liquidity events, most business owners leave 50% to over 100% of the deal value in the buyer's pocket and don't even know it. 

I should know. I said "no" to a seven-figure offer. And "yes" to mastering the art and the science of a liquidity event. [00:01:00] Two years later, I said "yes" to a different buyer with a nine figure deal. 

Are you thinking about an exit or liquidity event? 

Don't become a statistic and make the fatal mistake of believing the skills that built your business are the same ones to sell it. 

After all, how can you master something you've never done before? 

Let the 90-day Deep Wealth Experience and the 9-step roadmap of preparation help you capture the best deal instead of any deal. 

At the end of this episode, take a moment and hear from business owners like you, who went through the Deep Wealth Experience. 

Michael Butler is a Senior Director at Footprint Capital and is responsible for leading the sell-side and buy-side engagements with business owners.

In addition, Michael cultivates relationships with clients, prospects, centers of influence, and private equity firms and family offices. Michael's previous roles include auditor and consultant with a Big Four Accounting Firm, corporate executive with an insurance and financial service group, president of [00:02:00] a securities broker and dealer, venture capital, business owner, angel investor, and board member.

These roles included numerous acquisitions and exits bring a wealth of experience to any engagement.

Welcome to the Deep Wealth Podcast, and I have one of those mythical creatures, otherwise known as an investment banker, but not just any investment banker. Michael from Footprint Capital is here. He's a friend of the Deep Wealth community. He's been on a number of times on round tables solo, back and forth, but he reached out, we were talking the other day with an absolutely fascinating topic, and he said, Jeffrey, I think this would be good.

And I said, absolutely, let's do it. So I'm gonna put a plug in it right there, Michael. Because since you've last been on, we've been growing a lot. It's all kinds of new members through the community. So firstly, welcome once again for our new members, for their benefit. There's always a story behind the story.

Michael, so what's your story? What got you from where you were to where you are today?

Michael Butler: Hey, thanks for asking that. Thanks for having me on again. I enjoy this so much. Yeah, my story, I guess I would say this I'm actually [00:03:00] a I'll say fairly new investment banker. I've been at it for five years. I'm a little bit of an older guy in my sixties now, but my career I felt like has kind of led up to this say capstone on my career.

I started out as a CPA out of college and worked for uh, well-known accounting firm doing an audit and consulting work. And in those engagements we were helping people start businesses and actually sell. Their businesses. I moved on from there to become a chief financial officer for a company.

And we actually did a number of acquisitions and then we got acquired. I went through the process of being acquired, being on that side of the table which was quite insightful and interesting and fun. I stayed on with a new buyer for a period of time. But then ultimately I moved on, I went to a big corporate worked for them for quite a few years.

But we did a number of acquisitions during that time and I was involved in those and I got to see how big companies acquire companies and what they go through in doing that. Usually through an area called their corporate development area. Most recently, right before investment banking, I was a venture capital partner, and that's all about [00:04:00] buying and selling companies.

And we were doing early stage technology companies in the Midwest make my home in Columbus, Ohio. And that's where I am. But with that, that's also led me up to being all different sides of the table. I've also been a business owner and an angel investor and, and so on, in addition to all those other things that I did as a career.

But it's led me at a good place, put me into a, I guess I'll say a uniquely qualified place I hope to help a , business owners sell their businesses. So, sorry for the long winded origin, but there it is.

Jeffrey Feldberg: Michael. I love that. And for our listeners, let me take you to step six advisory team of the Deep Wealth mindset roadmap. One of the questions that we have specifically for investment bankers, it's asking the investment banker outside of your subject matter expertise. So outside of being an investment banker, are you an expert in any other areas?

And so as you heard Michael go through, well, Jeffrey, yeah, I've been a buyer, I've been a seller, I've been a cfo, I've been a cpa. Look at all that. So if you are looking at Michael and a few other investment bankers and no disrespect to the other investment bankers, they've just [00:05:00] been tried and true investment bankers.

That's it. Why not give the tip of the hat to Michael? Hey Michael, come on board. Because he has those other backgrounds, you're not necessarily gonna hire him specifically that he was a buyer or a seller or CFO or cpa. But you are hiring him because he has all that and he brings that to the table and he is a business owner and he understands what you're going through.

So it's incredibly important when you're speaking to investment bankers. Hey, what have you done besides being an investment banker and how does that relate to you? So Michael, that aside with your interesting background, I mean, when you're at the deal table because you've been a buyer, because you've been an angel investor and VC and private equity and all those other kinds of things, I mean, you must have insights.

Into the other side of the table that they either don't know that you have and you're keeping it to yourself and you're seeing some things. How is that, before we talk about the different buyers, I mean, what's that like for you now that you're at the deal table on the opposite side?

Michael Butler: Oh, it's so helpful. I think what it allows me to do, it allows me to really put myself in the mindset of that [00:06:00] buyer and the seller and just really kind of think of what's going through their mind when they hear this and what sort of information do they want to hear? And what information Is irrelevant and a waste of their time, if you will. So I think with that perspective, it helps just make doing these deals if you will much more efficient and hopefully effective. So thanks for that accolade. I do think you're right on with that advice in terms of asking what else has your advisor's been involved with and what else did they bring to the table?

So really good point there.

Jeffrey Feldberg: Hey, Michael, you can share if Jeffrey, you're spot on or you're not, because you've been in the other side as a buyer and I know you and I and a Deep Wealth and at Footprint Capital we really take the same, it's not a zero sum. So either the buyer wins, the seller loses, or the seller wins, the buyer loses.

We all, collectively, we all say, how do we create a win-win win, so everybody wins. And correct me if I'm off base here because you've been a buyer, because you know what buyers look for? Okay. How do I minimize my risk? How do I maximize my ROI? That when perhaps a deal point, a [00:07:00] difficult one, something that's a little bit emotional going on there that you can bring it home for all parties and find the common ground to keep the deal moving forward.

Thoughts on that?

Michael Butler: Absolutely. Yeah. I think that you mentioned about there's so many emotions involved in selling a business. Many people identify with their business. It's their baby, if you will. And with that, it can get challenging at times. I remember one particular quick war story on that.

We had a gentleman and he was very close to the end of his process, very close to his closing date, and everything was going well, but he asked, we got asked about one topic, about the third or fourth time by a different person. And he said, doesn't this buyer trust me, Michael, I'm just about ready to throw in the towel here.

I've been asked that question so many times and we kind of just refocused the conversation. We said, Hey let's keep our eye on the prize. You've got a great Exit going on here. If it closes, and we hope it will, they're gonna have a uh, lifetime of hard work coming to a culmination.

 And so we were able to get 'em kind of calm down, if you will, and get 'em through the process. So,

Jeffrey Feldberg: It makes all the difference. So speaking of the other side of the table, [00:08:00] speaking of buyers, Michael, what's been going on? You've been doing a deep dive on this and taking a look at what every seller should know about buyers. Because maybe you'll agree or disagree at Deep Wealth, our sense is that for most business owners, and at one point in time I was like this too, I'll put myself in under the microscope.

All I care about the buyer is the check going to clear, so to speak. And that's so wrong. It's gotta go above and beyond that. So what's going on with the world of buyers? What should we know as business owners and the sellers?

Michael Butler: Well, thank you. I'll give you the conclusion in advance. So as I kind of build this out a bit and I guess I would say this the headline is knowing the different types of buyers can make a big difference in the price, the terms, and the type of sale you will have in really taking your goals as a seller.

And then really targeting a buyer type is gonna be very advantageous. It helps me as an investment banker helping me cast. I mean, we certainly like to cast a wide net that includes all types of buyers. But if we know what's really important to a seller, [00:09:00] and I'll get into the details of that, we can do a better job of really targeting and stressing and adding more of those types of buyers into our search.

Jeffrey Feldberg: So, Michael, are you saying if I can use an old saying, beauty is in the eye of the beholder? Is that what you're saying?

Michael Butler: You got it. You got it. Absolutely. Absolutely.

Jeffrey Feldberg: Interesting. So again, for listeners, as you pick up on what Michael was saying, depending on the type of buyer, if you know the type of buyer that you're dealing with, that is gonna be the lens that they're looking at your business, and perhaps it'll be a higher enterprise value, a lower enterprise value, but at least you'll understand why.

So Michael, what's the art and the science that you've put together on this? What's going on here?

Michael Butler: Yeah. Let's talk about the seller goals first and then we'll talk about the buyer type. so seller goals if you think of it this way, You really have to be introspective what's important to you. Clearly. Like you said, Jeffrey, the first thing that a seller thinks of is a big check.

And a big, you know, frankly we hear a lot of times it'd be a big check, all cash at close, no obligation after the closing, that sort of thing. That would be, you know, somewhat of a perfect world if [00:10:00] you were for certain sellers. But what's really important, Because once you get down to it, if we're able to find, let's say four or five or six offers that really are all sort of in the same, ballpark or range of value, but what's gonna make the difference, what's gonna be the other differentiators there?

And I would contend there's a couple different things. Number one that is loyalty to your employees and the management team that got you there.

Making sure that their world is gonna be stable after this event. As the owner may, fade off into the sunset pretty quickly, you know, what's the world gonna be like you know, if you sell to a certain type of buyer?

And we'll get into the details. It may be another change for that company in the next couple of years. And change isn't always bad, but it's change and it's, it can be challenging for certain people, but making sure the management team and the employees really have a good work environment, a good continuation of the culture and the chemistry that has made that company successful.

The other question I would say is, do you wanna do a full. Are partial sales. Sometimes [00:11:00] people don't think about partial sales. We see a lot of a hundred percent sales. We do quite a few, but we also do quite a few that are selling 70% or maybe, 51%. But there's also, you know, minority sales that can occur as well, meaning less than 50%.

And those have certain stipulations to them. So think about what's most important. A lot of times we'll find. We have a business owner working with one right now that has a great situation where they've grown a great company. They've been restricted by how much money the company throws off as to how fast they can grow the company if they had a financial partner.

To help them, invest in the company and take it further. They wanna hold a portion of that. They don't wanna sell a hundred percent of that company. They wanna stay on for a while and reap the benefits of that and use the capital and the expertise of the management whether that's private equity or, some other strategic to take that company to the next level that they haven't been able to do on their own. 

Jeffrey Feldberg: Yeah, I'd love those. And for our listeners, what Michael's talking about in Deep Wealth, we say the same thing really in different words. Step three, future buyer. We [00:12:00] talk about having deal points and no-fly zones. So a deal point, what must absolutely be in the deal if it isn't, I'm walking or no-fly zone, what cannot be in the deal?

Because if it is in the deal or the letter of intent, I'm walking. And Michael, what's important for the listeners of what I'm hearing you say? There's really no one size fits all when it comes to buyers. And the more clarity that as a business owner, as a seller, that we can have, okay, here's what I'm looking for.

Here's what I want, here's what I don't want. That helps you as an investment banker to go out there, cast that wide net, and find as large as possible the best and the largest number of qualified buyers. Thoughts 

Michael Butler: You got it. You got it. Yeah. And I guess one thing I'll do, in terms of understanding buyers let's first of all break them into kind of two major categories. One is financial buyers. Meaning they're really buying the company as an investment, if you will, with the hopes of selling it in the future, or reaping the benefits in terms of dividends, things like that.

So really the goal with a financial buyer [00:13:00] is a rate of return. All right. Number two, or the other type of major category is strategic buyer. And we've heard this phrase thrown around, but you know, strategic buyers are somehow involved in the same business, if you will as the company and the adage is that old one plus one is equal to three.

If we bring these two companies together, we're gonna get some advantages. Those advantages usually fall into two categories. One can be cost advantages. There's economies of scale at operating at higher levels. There can be a reduction of administrative costs. You only need one payroll provider, if you will, or one payroll clerk.

And also it might involve buying power if you're able to buy at a larger level from suppliers that hopefully will result in lower cost. The second synergy I can think of is the category of revenue increases. This is where you can leverage a customer base. So let's say two companies are in slightly different you know, markets if you will, but they're leveraging or working with the same customer.

So being able to [00:14:00] take that customer, share those relationships across a now combined company will allow them to do a better job. Commanding a larger share of the market usually means that you can have better pricing power in terms of what you can ask for in the marketplace. So those are some examples of some of the synergies.

Not to just, you know, beat to death here, but, let's think about one thing about synergies. Usually look at it in terms of six different types of synergies. The first one is a horizontal acquisition where one company's really buying another company and really the same industry.

They might be in different geographic markets, as an example. But they're just really acquiring that to gain share in that space. It could be a vertical acquisition where you're buying the let's say the supplier of your goods, the raw materials, or you could be going the other way in your chain of business and working with buying distributors or you know, someone who really serves the end customer. There's also a conglomerate strategy. We are buying a company that is not necessarily [00:15:00] they're in a different market but they might have some synergies between the two.

There's geographic expansion there's a product or service line acquisition. And lastly, I'm just running through these quickly, is a talent acquisition. This is becoming more and more important these days with good talent being at, at a premium. If you see a team, let's say you're working in a marketing services type of a company, and if there are great people on this other team that you lack or that you could really take advantage of in terms of the customer, not take advantage of the employees, but take advantage of them in the marketplace in terms of customer acquisition and so on.

That talent acquisition is a really strong reason why some acquisitions get done.

Jeffrey Feldberg: And so for our listeners, these are really subtle points. They're important points. And Michael, I'll pick randomly you, one of the characteristics . If it's a talent acquisition that a company's looking to pay top dollar for, because they're maybe having some gaps in their leadership or in parts of the company.

So while the company can say, wow, look at all of our revenues and our profits, and I'm sure that's important to the company, but if they're [00:16:00] not talking, well, hey, look at this talent that we have. It's really unique. It's world class. You're not gonna find it anywhere else. That's what gets that particular buyer excited as opposed to a buyer who, well, hey, show me the return on investment.

How are you gonna minimize my risk? How are you gonna get me the most? Amount of profit. So can you talk to us of, okay. Now that you've identified, generally some buyers are looking for return on investment, others are looking for talent, others are gonna be looking for a horizontal expansion, perhaps with clients or whatever the case may be.

Broadly speaking, how would you group that into different buyer names or types?

Michael Butler: Yeah. Yeah. Let's break it down a little bit further. So, when I talked about financial. Investors, sometimes people think of private equity. That's a very typical category. And those folks are, you know, as in many cases, running a fund and have investors, some private equity folks have maybe a single investor, if you will.

But with that, they are really the ultimate of financial investor. With that their goal is to find a way. And particularly for [00:17:00] fund type investors that usually would have a. Let's say a 10 year life on their fund. They might buy a company and then they need to, resell it in the future.

Sometimes people call it flipping it in the future. And that flipping can occur between, I'll say three to five years to seven years out. So there's gonna be a little bit of kind of back to my comment about change. Private equity might involve a second transaction or second sale of the company to somebody else.

So that does involve a bit of change there. The other type of, back on a strategic for a second. Strategic investor being involved in the industry, let's say you know, acquiring a company for the talent like we talked about or maybe the customer base, things like that.

You know, sometimes they'll have a bit more of a longer term horizon. They're really not looking to make another sale of the company. Doesn't mean they won't, but it just means that's not necessarily their game plan day one. With that that is a bit more stability for your company if you're a seller and your employees and your management team that you know, essentially in [00:18:00] some cases leaving behind as you go to retire.

So it hopes, it starts to put, some framework on, if one of your goals is is the stability of the organization for the future, thinking about those buyer types. Now between those two, one thing is interesting. There's also sort of a hybrid strategy here. There are private equity owned, or invested in strategics, meaning this could be someone that's in your business, if you will or has one of these connections, like we've talked about, but is also backed by private equity.

We sell a lot of companies to private equity backed strategics. They're looking to grow them. They sometimes are called add-ins or tuck-ins, things like that. And what they'll do is they may make an initial large investment in an industry and then go about adding smaller investments into that to gain that scale.

We talked about grow the EBITDA and to grow as a result, the value of that company ultimately. But at some point in time with private equity, if it is a fund, that will have to be sold again to somebody. Could be a larger private equity fund, could be an i [00:19:00] p o, could be a number of different things as the next phase.

But knowing all those kinds of things is just gonna guide you towards you and your advisors towards the right type of buyers to put your emphasis behind.

Jeffrey Feldberg: Yeah. Michael, it's interesting you brought up the hybrid of private equity and they're now getting together with the strategic, so you're really, you're taking the best of both worlds. Putting them together. I know another hybrid that's relatively new on the scene would be these family offices. So what's going on with the family office that's now in the world of mergers and acquisitions?

Michael Butler: Thank you. So, family offices if you're not familiar with the terminology, this is really a high net worth individual or family that they might've had, let's say they might've grown in business and had an Exit of their own, and now they are going about managing that pool of money. And they invest in, as you might guess, public equities, the stock market, all those sorts of things. But frankly, they've got a lot of valuable business expertise and they think it's a little bit more interesting and fun to buy companies and help to grow them and to use [00:20:00] their sort of maybe do it a little bit more at almost like a board level or strategic level to help them grow those companies.

The great thing about family offices is a lot of times they don't really have a time horizon. They don't have to cash out, they don't have to sell the company again in order to acquire their goals. They may get to the point where they're just happy, taking distributions and dividends from those companies into the future.

So that's a lot of times what we call patient or more enduring type capital. And it's becoming, as you said, Jeffrey, a larger and larger number of buyers and an attractive, alternative to private equity can be these family offices. But it doesn't always meet all the needs. It doesn't sometimes have maybe all the management expertise that you see with some of the private equity funds or the kind of synergistic effect you could have by being acquired by a private equity back strategic.

Jeffrey Feldberg: Sure. And just to round things out on these new hybrids or these new kinds of buyers that perhaps weren't here, not that many years ago, I've been hearing more to a lesser degree, but still more of what [00:21:00] some people would call the individual buyers. So, an individual not as wealthy as a family office.

But is still out there now in the world of M&A looking to the deal. So what's going on with this individual buyer? What should we know about that?

Michael Butler: Yeah. Great additional topic here. Yeah. So an individual buyer, and this might be a very typical kind of fact pattern for that type of buyer we see. Let's say it could be a wealthy individual that came out of corporate America. Maybe they're a high level executive socked away a lot of money during their tenure.

And they're either taking their own money or their money and also friends and family money and putting that into this next investment, if you will. And so the great thing about them is you'll get a lot of personal attention from those individual buyers. They really, in many cases, are going out there and targeting and really only buying.

 One company to put their time, attention, and focus on. Some of them we here want to work in that business full-time and others just wanna play more of a director level or advisory and strategic type of a view or role for the company. And so they can be quite helpful.

like I said, they [00:22:00] will be a little bit more hands on just because usually this is their only investment. The biggest thing with this is you have to make sure if you are gonna sell to one of these, that you know, if they're planning on financing the transaction, we're in an environment these days where financing is expensive, a little bit more expensive than it has been historically.

And also it's a little bit more challenging to get it these days. banking situation where we see in 2023 here with regional banks getting some pressure and that sort of thing. If it is dependent upon financing you wanna make sure that is lined up before accepting that letter of intent a buyer such as an individual.

Jeffrey Feldberg: And Michael, before we move forward, I wanna put a pause here for just a moment, because I know at Deep Wealth, we speak to a lot of business owners and there's a myth out there that I'd like with your help to dispel. And let me take it from two sides. I'm sure some of the listeners are saying, oh my goodness.

Family office, an individual investor, private equity strategic, a hybrid private equity. My, my head is spinning, where do I go? What do I [00:23:00] do? On the one hand, and on the other hand, the myth is business owners believe that they are responsible to know who the buyer is and a Deep Wealth, we say, absolutely not.

Don't even put a seconds, more time or effort into that. It's really the role of Michael and team as investment bankers. To find the buyers. What would you say to all those business owners who are thinking of a liquidity event, but are worried, geez, where am I gonna find the time to, number one, find these buyers and even understand what they're all about?

Michael Butler: Right. Well, thank you. I tell, you I can't imagine going through a business sale without some advisory capacity or some knowledge like, I've been able to acquire. And because we do this all day long, this is all we do. Knowing that we will be at you know, an entrepreneur's side or business owner's side, if you will, and helping 'em through this process.

Really what we want to do today is really just acquaint you with some of these terms so they don't come off as something totally Greek or totally out of character with your process. So knowing enough to answer, ask your Advisor some good questions and knowing how to steer your business in the right direction [00:24:00] as you're still growing it.

Towards one of these models or towards one of these buyer types is really the main thing that you should do. I say to anybody who's considering this, if you don't hire us as your M&A Advisor, hire somebody don't try to go it alone. There's a lot of risk there's a lot of benefit that we provide to mitigate those risks.

Such as our objectivity , our ability to really tell you what we see in the company and what's gonna have to be done to market the company appropriately and package it up for the marketplace.

Jeffrey Feldberg: And Michael, for the benefit of the listeners and perhaps asking an obvious question, but it's not that obvious. So what can an investment banker do? That a business owner either can't do, shouldn't do, or it's just simply off the table, it's just not going to happen. What, as an investment banker are you able to do for all those business owners saying, yeah, you know, Michael, you sound like a nice guy.

You have a great story. I got this down. I built my business. I know how to market. I know how to do high level [00:25:00] negotiations. I got it. Thank you. But no, thank you. What would you say to that individual?

Michael Butler: I guess first of all, one thing is when you hire an investment banker, you really don't relinquish control. You ultimately decide whether you like the deal that's being put forth and you're gonna accept it or not accept it. Okay, so you don't, feel like it's a loss of control. What it really is is just like anybody else it's an Advisor, it's an a helper, it's a guide.

To the process of getting through all of this. But to answer your question more directly, Jeffrey. The number one thing I can think of is confidentiality and objectivity, I should say more than just one thing, but in confidentiality, you know, if you were to, as a, business owner decide, I'm gonna sell this myself, and you started picking up the phone and reaching out to your competitors.

Or sending emails to your competitors saying, Hey, I'm looking to sell. Think about how poorly that's going to go. First of all, it's gonna spread like wildfire through the market. If it's a competitive market and your competitors who don't decide to pick up on your offer or look at your company, are gonna say, Hey, do you know that x, y, Z companies for sale.

Do you really want to go with them? How [00:26:00] stable is that company gonna be? What's the future? So with that, that's part of the risk is the confidentiality. And that ultimately gets back to your employees and employees. If they hear about change and really don't have their mind satisfied that it's a good change they might jump ship on you and you'd hate to be losing your best people, right?

As you're entering the phase of wanting to Exit the business. Number two is objectivity. Like I said, we're able look at your company, tell you what we think is going to be attractive or unattractive to buyers, knowing buyers like we do and getting through that process. And maybe lastly, I'll give you one more is, which is being able to sort of play the bad cop, if you will, between, you know, for a buffer the negotiations between buyer and seller.

We can help. You know, Really as the name says, we kind of help broker a deal. Help bring the two companies to the two sides together, if you will, on a common deal. And with that we can really relieve some of the animosity or conflict. Cuz one example you can think of is many times you sell your company and you're immediately gonna go to work for the buyer for let's say a couple [00:27:00] of years.

If you'd had a rough negotiation in the final stages, that sometimes can be an uncomfortable way to start out that new relationship, if you will. That buffer we provide is quite helpful. It really serves a great purpose for both buyer and seller.

Jeffrey Feldberg: And for listeners, I hope you picked up on that because what Michael is sharing, it is so invaluable. It's not gold, as platinum as I like to say, because think about it, Michael and team will throw themselves. On the sword, under the bus for you to get you the best deal that you possibly can get. So this way you can walk in like that white knight of, Hey, I had no idea Michael was such a jerk.

I had no idea, but hey, that was you and me. Let's do some great things together. So it is an important role there. But Michael, before we go on, Two things come to mind and let's talk about as an investment banker, as you, because there's two types of investment bankers, as we like to say, Deep Wealth one, which is transactional, where they have all the buyers on speed dial, they're buddies, they're doing deals together, and they're loyalties to the buyer, [00:28:00] not to us as a business owner, the seller, 

Then the advocate, which is what you're doing at Footprint Capital with you and the team, or your loyalty is to the seller.

And if you burn a bridge with a buyer, that's okay. I don't have any loyalty to them. I'm not gonna likely deal with them again. Anyways, Jeffrey, I'm representing you. I'm gonna get you the best possible deal. Not any deal. So really, it, it's seller beware in this case of the kind of investment banker. And I know we talk a lot about this in the Deep Wealth and the mastery program of, of what we're doing, but what should our listeners know about a transactional investment banker, as well as what you're doing as an advocate investment banker?

Michael Butler: Yeah. Yeah very good question. Really a key point that someone just starting in this process may not realize that conflict of interest that's baked in there. But really what I would say is this is wanna find somebody who, understands your business.

Of course maybe through experiences of selling similar type businesses. But really is not so, ingrained in your business that they're beholden to that buyer, if you will, a little bit like you said, Jeffrey, if I'm [00:29:00] only selling my businesses to XYZ company, I'm gonna give x, y, z buyer a better shot, or he or she's gonna have more of my attention than the seller might. So with that, You wanna find somebody that, like I said, has the sufficient level of experience. We always pride ourselves in saying we work across a lot of different industries. We work in logistics and business services and light manufacturing, all these types of things.

But we aren't doing just one industry. And with that, we understand the process of selling a business and for lack of a better term, just wrapped up with a particular buyer or group of buyers. And we have to have the seller's interest at heart.

We're their representative.

Jeffrey Feldberg: Hey, and so for our listeners, be careful and if you're asking, well, what exactly is a transactional investment banker? If you hear someone who calls you up and says, okay, Jeffrey, listen, I have done all the deals in your industry. I know all the buyers. I can get you in and outta market very quickly. I will get the deal done.

I'm already familiar with your business. This is all that I do. On the surface, it sounds terrific. They know all the buyers, they're in and outta market quickly. For me, they've done a lot of the transactions in my industry. [00:30:00] But what they're not telling you is, yeah, I'm gonna get you a deal, but it'll be the best deal for the buyer because I have a book of business.

You're a one hit wonder, Jeffery, you and your company, but the buyers I work with, I do a book of business year in year out, and it's into the billions with a B, you know of dollars. And then on the other side of it, Michael, the other question I had before we go on 

offline, you and I were talking, this could really be in an episode in and of itself.

I know there's some listeners that are saying, okay, Michael, I hear you on all these different types of buyers, and even getting someone like yourself to represent me, I don't really need to worry about either of those because I know my competition, they've told me a number of times, anytime I wanna sell, just pick up the phone, call them, they'll gimme the best offer.

They know my company, they know the industry, and they'll just buy my company. So I don't even have to worry, and maybe I'll even get these unsolicited offers from my competition or other people, and they're telling me, Hey, sign the exclusive with me. You're not gonna get it better anywhere else. What's going on with that, Michael?

What should we be doing and not doing?

Michael Butler: We hear that quite a bit. I think of it this way, the best analogy or think I can [00:31:00] think of is we run what we consider to be a private or closed auction, if you will. And how effective is an auction with one bidder? Right. Not very. So with that, you know, we try to bring competition to the case.

We've had situations where it started with an unsolicited offer, or somebody got the ball rolling with that and they seem like the right partner. And we've opened it up. We say, Hey, you know what, we've talked to those buyers and said, Hey, you know what, we've been brought in here to kind of check out the marketplace and add validity to your offer.

And if they've been able to put forth a great offer at first, that's wonderful. A lot of times what'll involve, as you might guess, is them having to really sharpen their pencil, if you will. And now we're gonna have to really come in with a very strong offer, meet the competition and so on.

And we hope that we can drive better price, better terms, and better chemistry for the, seller. Through that process of opening it up and it, with regards to our, cost we will find in many, many cases probably all cases I can think of. And it's really kind of hard to know the difference, to tell you truth but, we will drive much [00:32:00] more value than we will extract in terms of fees.

In fact friend of mine did a, bit of a. Somewhat unscientific study, but he basically said that investment banker will generally pay for their fees seven times over by doing some math around unadvised clients versus advised clients and the difference in a pricing that they receive.

And that's a pretty big difference. I know it sometimes can be painful to have to pay a fee to someone who you think you can do, think you could do it yourself. One thing you don't wanna do is you certainly don't wanna take the eye off the ball of running that company as you approach, let's say your final quarter or half year, let's say, in the process of running that company.

We've seen that situation as well where people have lost attention. They've gotten so wrapped up in the acquisition that they, their company has stumbled a bit. Towards the end, and that just is an opportunity that a buyer could come in and say, Hey, I'm not able to offer you the price that I originally thought I could, because the numbers have changed and they've got every right to do that.

We call it retraining, if you will. 

Jeffrey Feldberg: And Michael, to your point on the [00:33:00] podcast, I've had a number of different guests who are buyers. Some of them are even buyers who put together systems where they train other business owners how to buy businesses, and the number one criteria, they all say find a business owner who's not in market.

They don't have professional representation,

Michael Butler: That's 

Jeffrey Feldberg: and you know that they're thinking about selling. And when you dig down, okay, why are you looking for those characteristics? Well, Jeffrey, it's obvious. They tell me these are their words, not mine. It's on the podcast. You can listen to the episodes that they're saying, well, Jeffrey, if they don't have representation, we're gonna get a better deal.

We're going to pay less and be able to do more with that. So for our listeners, keep that in mind. Now, Michael, let me ask you this question. Going back to buyers. Is it at opposing ends? So if I wanna get the highest enterprise value, so in other words, I wanna get the highest number for the deal, the highest multiple for my company, is that at opposite ends of doing what's best for my employees, for my legacy, and all the things that go along with [00:34:00] that?

Or is there something more to that?

Michael Butler: You know, obviously I would have to say it could be okay. Depends as the old right in the middle there. And I guess I would say this, when we start conversations with a seller, that price at close, that high dollar amount for the business is certainly paramount in their mind.

They've worked so hard their whole life to build this asset up for themselves, and now it's time to monetize that asset. Our goal is to hopefully bring to the table many competitive offers. And if they're all within, let's say, a couple million dollars of one another and I'm talking about these are multi multimillion dollar deals, sometimes that's where you can then start to look at what are all the goals here?

What are all the things I want to get satisfied? like I said keeping it consistent. Positive workplace for my employees. you know, I was dealing with a gentleman and he got an offer from somebody and the buyer was straight up saying, we're gonna have to close down your plant and consolidate it with our plant, which was about two hours away.

And he knew that many of those employees are not going to relocate. This is in the Midwest here. And so that buyer became, obviously one [00:35:00] that they didn't wanna do the deal with. And that buyer might have had the best offer. If you will, but relative to everything else, you really have to, I go back to this price terms and chemistry and that chemistry is my word for the culture and the future and all those kinds of things for the company and the legacy.

Also someone may be very interested in their company name, living onto the future. It might be their family name and they want that to exist in the marketplace in the future, even if they're no longer running it. So that legacy is important. And so getting back to your question, Jeffrey.

Yeah. I think that you do have to consider all those things relative to one another. We hope to bring enough competition to the table that we can have the buyer you really want to choose from a chemistry and terms point of view, and we can hopefully help coach them along to get to the right price.

Jeffrey Feldberg: Michael, that's really a nice way of starting to pull all these things together because what you're saying is, okay, if we know what you want, if you have certainty and you have clarity of what you want, okay, I want X, Y, Z dollars. I care about my [00:36:00] employees, I care about my legacy. On the one hand, you're keeping that in mind, but because you're running a competitive auction, a competitive bid where there's many qualified buyers in there, and on top of that, because we know what each of the buyer is looking for as best we can.

I don't know all of it, but we know enough of it. The buyer doesn't always put all the cards on the table. They keep it close to the chest, but we know enough of, okay, well this is this kind of buyer. This is what's important. We've done our due diligence on the top buyers here. That's where the magic can happen, of where we can play them off of each other, all these different moving parts to really get to the best deal.

Thoughts 

Michael Butler: Yep. Yep. I totally agree. Yeah. I think, you know, one of our steps in our process, Is getting the parties together and doing that outside of a business meeting, when we get down to some of our finalists in buying a company, we ask the buyers to come in to come.

They always want to come in, obviously see the office, see the facility, see the plants. Sometimes that occurs after hours. So don't have a bunch of suits walking through the business. And people start to say, who are they? But with that, then spending [00:37:00] them usually an evening together going out breaking some bread, having a glass of wine or two, getting to know people, getting to understand.

What's behind their desire for the company? What do they plan on doing with the company? And obviously they could always change their minds, but you have to, as a good business person, you usually have a good sense for when people are trying to smoke you and trying to tell you something that's not real.

So with that those are very important meetings, and those dinners are ultimately important. I've seen those sway the deal one way or another for people, either good or bad, sometimes.

Jeffrey Feldberg: Sure, and I imagine post pandemic, this is now back to people meeting and breaking bread together and do all the things that we used to that were put on pause for a short

Michael Butler: Yep. Agreed. Agreed.

Jeffrey Feldberg: Yeah. Michael, let me ask you this. As we go into wrap up mode very shortly. I'm just wondering are there any questions that perhaps I didn't ask or any points you'd like to cover that we haven't spoken about for our listeners?

Anything that you wanna put out there?

Michael Butler: Well, I tell you, I think you've done a great job, Jeff, for you guiding me through this process. Obviously, you and your Deep, Wealth [00:38:00] process of that. Take people, get a greater understanding of all these topics and all this and you've heard this. With your own great successful Exit and so on.

But no, I think you've done a great job of us introducing these concepts and reinforcing them. For many people they've heard of them before. But I guess I would just say this, it's always about I go back to a Stephen Covey, the old seven habits book that now is a bit dated since like I think it came out in 82 or something.

Was it just begin with the end in mind. The concept of knowing where you want to go and I'd like to use the analogy of if you could wave the magic wand, what would this Exit look like? And let's try to get it as close to that magic wand kind of moment as possible.

Jeffrey Feldberg: Absolutely. And that's where preparation, as we like to say, Deep Wealth is the gift that keeps on giving. When you're prepared, you get that clarity, you get that peace of mind, you get that confidence. And for our listeners, really the big picture takeaway because at Deep Wealth and the Deep Wealth Podcast, we always like every episode, Michael, to have at least one takeaway, one actionable item.

That a listener can do before they go into the next phone call [00:39:00] or email or meeting, whatever's laying ahead for them and coming outta here. The big takeaway as business owners, we love this rhetorical question at Deep Wealth, how can you master something you've never done before? So if you haven't had a liquidity event before, you haven't sold your business, spoiler alert, the skills that built the business aren't the same ones to help you sell it.

And so why struggle? Why gamble with your future? Bring on a professional investment banker like Michael and team at Footprint Capital. They'll help you navigate through, okay, who's the best buyer for us? Let's get the best buyers to the table. How do we find the best deal? Let them worry about that. You run the business, you'll collaborate together, and that's really how you cross a finish line.

So the takeaway is no one person is an island than to him or herself. We all need help. We all need a community, people around us, and we can start with advisors, in this case, investment banker like Michael and Company and Michael and team to really help get you out there and get that going. So big takeaway for our listeners.

Michael, let me ask you this. You've had a few kicks at the can before with [00:40:00] this. Maybe your viewpoint has changed, maybe it hasn't, I don't know, but I'll ask that question. It's a tradition and you can change it up any which way that you like, and I'll just remind you of the question. It's a fun one.

When you think of the movie Back to the Future, you have that magical DeLorean car that will take you to any point in time. So imagine now, this is the fun part, Michael is tomorrow morning and you look outside your window. Not only is the DeLorean car there. But the door's waiting and it's open and it's waiting for you to hop on in.

So you hop into the DeLorean car and you're now gonna go to any point in time. Michael, as a young child, a teenager, whatever point in time that would be, what would you tell your younger self in terms of life lessons or life wisdom or, Hey Michael, do this, but don't do that. What would that sound like?

Michael Butler: Oh, I'll tell ya, I think in the past I've answered the question that I would've gotten into investment banking earlier. But as I think about it, you know, it's having got into it now after the great experiences I've had up to this point has really equipped me much better for it.

So I don't think I would've wanted to do this right out of college, let's say. I'll [00:41:00] switch and give you maybe a personal answer. I would've spent maybe a year or two in Europe before I went to work. I think I graduated on a Friday and went to work on a Monday for the accounting firm.

And didn't take too much time off and see the world. So there's something that's off tangent from our topic today, but my good piece of advice is the world's a big place and spending time in it is, super important cuz it'll just build you as as an individual.

Jeffrey Feldberg: Enjoy the journey. Take some time out. Smell the roses.

I love that. And Michael, before we wrap this up, it'll be in our show notes and for our listeners, it'll be a point and click. If somebody has a question for you or they're thinking about doing something with a liquidity event, where's the best place online somebody can reach you.

Michael Butler: Yeah. Thank you. Thank you. You can go look at our website, of course footprint capital.com. see myself and the rest of the team and some of our transactions and our process there myself. Feel free. People can always. Email me at m butler footprint capital.com and I'll even give my phone number.

Six one four five eight one. 5 0 [00:42:00] 88. I really do welcome phone calls. I'm always really enjoy talking to people. And I'll be candid with you if, if your business is not a fit for what we do, I'll tell you right up front but I'm glad to give you some advice and help you along the way.

I've had many calls like that with folks think they all walked away feeling like they got something out of it.

Jeffrey Feldberg: Terrific. Really, folks. Does it get any better? He gave you his phone number, his email address, obviously the website, and again, in the show notes, you can go there, it's a point and click or a copy and paste, whatever works for you. Well, Michael, it's official. It's now a wrap on this episode. And as always, your generosity in sharing your insights and your wisdom with all the, in the trenches experience it's just made all the difference.

And as we not like, but love to say here, Deep Wealth, may you continue to thrive and prosper while you stay healthy and safe. Thank you so much.

Michael Butler: Thank you. 

Sharon S.: The Deep Wealth Experience was definitely a game-changer for me. 

Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of [00:43:00] a hundred times that. Anybody who doesn't go through it will lose millions. 

Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity 

Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

Lyn M.: Compared to when we first began, today I feel better prepared, but in some respects, may be less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix. 

Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately. 

Sharon S.: There was so much value in the experience that the time I invested paid [00:44:00] back so much for the energy that was expended. 

Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

Kam H.: I've done an executive MBA. I've worked for billion-dollar companies before. I've worked for smaller companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even. 

Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at [00:45:00] this.

It's five-star, A-plus.

Kam H.: I would highly recommend it to any super busy business owner out there.

Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever. 

Jeffrey Feldberg: Are you leaving millions on the table? 

Please visit www.deepwealth.com/success to learn more.

 If you're not on my email list, you'll want to be. Sign up at www.deepwealth.com/podcast. And if you enjoyed this episode, if it added value, if you walked away with some new insights and strategies, please leave a review on your favorite podcast channel. Reviews help us reach new listeners, grow the show. And continue to create content that you'll enjoy and as we wrap up this episode as always please stay healthy and [00:46:00] safe.