[00:00:04] Speaker A: Hello and welcome everyone. I'm Peter Lehrman, and this is Masters in Small Business M A. This show is an ongoing exploration into the vast and undercovered world of small business m a where we interview both the proven and the emerging owners, operators, investors, and advisors whose strategies and methods for transaction success have been put to the test. The show aims to us the nuanced intricacies, the key ingredients, and the important factors that can improve your decision making in your own journey in the world of small business M A. This podcast is produced by Axial, an online platform that makes it easier for business owners and their M A advisors to find, research, and privately connect with a diverse mix of professional buyers of small businesses. In addition to learning more about Axial, you can find this podcast show notes, edited transcripts, and many other related resources, all for
[email protected].
Peter Laraman is the CEO of Axial. All opinions expressed by Peter and podcast guests do not reflect the views or opinions of axial. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Podcast guests may have ongoing client relationships with Axial. Hey, folks, welcome back. It's been a few weeks. This is Peter Lehrman. I'm your host for Masters in Small Business M A. I'm really excited to sit down with Clint Fiore. I finally got a chance to meet him in real life about a month ago out in Columbia, Missouri. We were at a conference together. We had a chance to have some dinner together and get to know one another a little bit better. And thank you very much, Clint, for making some time here on Friday to sit down with me on the podcast. It's great to have you, Peter.
[00:01:46] Speaker B: Thanks for having me, man. Glad to be here.
[00:01:48] Speaker A: There's so many different places to start. Lots of interesting stuff in your life history. We're going to dive in on your professional life despite a very interesting history in aviation as well, which I got a chance to hear a little bit about when we were in Missouri. Some amazing stories there, Clint, but I'll save that for an aviator's podcast. I want to just get started with just having you take us through how you made the decision to go into M a brokerage. Just how would you characterize the way that decision took place? What led you to where you are now and then we'll take it from there.
[00:02:21] Speaker B: Yeah, the long and short of it was I didn't know this industry existed, so I was completely clueless. I didn't come from a background or an educational background where I was aware of M-A-I was a salesman and marketer by career at a few different places and then I kind of got the entrepreneurial itch and left my job. My last job was aviation insurance. I worked in that industry and when I left I started a manufacturing company with some friends, which was an angel backed startup. And what I knew of entrepreneurship was if you wanted to be an entrepreneur, which I did, all I knew was you're supposed to start a business and so I wasn't really aware that you could buy businesses. That just never crossed my mind. I didn't have much money. I had a lot of dreams and I had a lot of sales and marketing skills from my different careers I had done. But I thought it was kind of like have an idea, raise some money and start a business from scratch. So that's what I did. I did that a couple of times. So I started a business two years later. I ended up selling it and then that was sold actually to an investor group that had helped fund the business. So it was like the angel investor that funded the business then ended up buying us out two years into the journey. And so I didn't use an M A advisor on my first transaction and then I launched another angel backed startup company. And again, like, no clue that there's M a advisors in the world, no clue that there's people that do this as a career, but I was just kind of becoming a startup guy, a serial entrepreneur. And after a couple cycles of that and the high drama of fundraising, pre revenue angel backed startups and then trying to sell or raise subsequent rounds, I just kind of looked at my wife one day and was like, babe, this is too much drama.
I don't want to do this forever. This kind of rocket ship launch lifestyle of the startup serial entrepreneur. And it just kind of dawned on me, I've got enough money now from my first exit that maybe I don't need to raise money, maybe I don't need to do this. Maybe I could just find a franchise to buy or a more boring business to buy that can give my family a base of cash flow and use that as kind of like my pay my bills thing because I just didn't want to go back to working for someone else. I wanted to remain an entrepreneur, but I was just tired of raising money and launching stuff and so I just kind of stumbled into this. And once I did what many of your listeners have probably all know, just hit Google and say, hey, how do you buy a business or businesses for sale? Then you start stumbling across websites like yours, axial, biz by sell all these other marketplaces and you discover you can buy. And so I just went through this learning process as a buyer just looking to solve my own problem of the volatility I'd created in my entrepreneurship journey. And once I got into that, I didn't know what I was, but I was a self funded searcher for about a year of my life before I had a vocabulary for any of this. And I started meeting business brokers during this time and wasn't very impressed with most of them. Had a hard time getting taken seriously as a buyer, had a hard time finding good opportunities, and just was so frustrated by the process as a buyer that one day I just kind of snapped and said, someone should do this better. Someone should make this easier for folks, because here I am. I now have a little bit of entrepreneurial experience. I have a little bit of cash to buy a business with, and I, for the life of me, am having the hardest time finding good deals and getting people to call me back and et cetera, et cetera. I didn't know how hard it was, and so I did one more startup, and this was just to kind of scratch my own itch and saying, you know what, someone needs to do this better. I was a little naive still because I thought it would be easier to get in and find good people that want to sell their businesses and matchmake with buyers. And I had a little bit of tech background. I thought I could come in and just change everything really quick. And I discovered just how fractured this space is and how hard it is to find realistic sellers. Learned the ropes the hard way.
[00:07:04] Speaker A: Clint, when you decided to have your next startup be the creation of a business brokerage, did you buy a brokerage or did you start a de novo business brokerage?
[00:07:12] Speaker B: Day one, I started one from scratch. I toyed with the idea of joining an established brokerage, independent broker. There was one that wanted to make me his partner, that was an established San Antonio broker, but he was in his 70s, was needing an exit plan. And I figured out, like, I was kind of becoming his exit plan, but there wasn't really a lot of infrastructure there. It was kind of like his own practice and everything I wanted to do with automation and technology and adding sophistication to his firm, I realized I'm going to be doing 100% of that work for 50% of that benefit if I become this guy's partner. And so I decided not to pursue that route. And then I actually looked at buying a brokerage franchise as well, because that's an option of how a lot of people get into brokerage. I went to the franchise discovery days of most of the big brokerage franchiseors and ultimately that's a good path for some. But I just wasn't in love with their brands or systems or support either. And I just realized that the reason I was wanting to partner or franchise was kind of a lack of confidence as a new guy coming into this space. At the time I was, I guess, early thirty s and most brokers are in their 60s probably. And so I'm half the age of a lot of my competition. I hadn't been an M A advisor before and so I thought I needed to lean on one of these brands or established firms. But ultimately I think it was just a lack of confidence and I ended up making up for that with leaning on some of the trade groups and becoming educated by the IBBA, the M a source, and some of these other great trade groups that will help you learn the ropes in the space. And so I spent about a year earning credentials, reading every book I could, taking every course I could, and just deciding to go the independent path with my own brokerage after about a year of education.
[00:09:12] Speaker A: When we were in Missouri together, there were probably 125 presentations over two days that any one of the multiple thousands of attendees could choose. And you presented on something that I think is really interesting for us to dive into topic. The title of the presentation was how to do good deals with bad brokers. And you just mentioned that your foray into becoming an advisor to business owners in M a brokerage was an artifact of your experience yourself with a whole bunch of bad brokers. So let's just dive into that. I don't think anybody needs to hear from you or me that there are bad brokers out there. Everybody already knows that. I think what's more interesting is to dive into how to work well with them, how to just embrace reality as it is and work well with quote unquote bad brokers. The other thing that I'd like to do is maybe, just maybe just create a little bit more nuance to the conversation. And instead of just sort of thinking that all these brokers are bad, I think it'd be interesting for us to also just maybe help people understand some of the behavior of brokers that everybody considers to be sort of quote unquote bad. But maybe there's something more to it. Maybe there's a little bit more behind that behavior and just sort of helping people understand, well, why do brokers do certain things? And maybe it's frustrating to you, but that doesn't necessarily mean that they're bad brokers. So there's a lot to pull apart here. But when you think about if a buyer somehow books 30 minutes with you and says, hey, what's the a's, b's and c's of working with business brokers, how do you start that conversation and start to give somebody advice, good, concise advice on the topic?
[00:10:53] Speaker B: Yeah, I mean, I could talk a long time on this topic. It's near and dear to my heart, so you'll have to cut me off if I get going too far too fast. But I think that good and bad isn't really a fair description because I think most of the players in this space are actually good people. But most experiences with brokers can be bad experiences, even if they're good human beings. I would say, for the sake of this conversation, let's just call a good broker one that makes your life way easier as a buyer or a seller and adds a lot of value to the process. And let's say a bad one is one that feels like they make it more difficult to get a deal done or actually feels like they might subtract value from the deal process, sometimes that's by them just not knowing, just by ignorance, not by deceit or malice or bad intentions. And so there's different people along different parts of the learning curve. And I've always been like, I'll tell people I've always been a good guy to work with. But my first few deals, even though I had worked hard to educate myself in the space, I was still very much learning as I went. And there were some times I would run up against buyers that knew a lot more than me and they would bring up topics that I was just not very well educated in. And I realized I had to keep stepping up my education game to kind of be at the level of some of these people, because a lot of these sellers are very unsophisticated. They're self made, bootstrapped owners that built a main street business around just treating people right and building a great company by doing what they say they're going to do, and just salt of the earth people. And then you have a lot of the buyers are coming from finance, investment banking, or all these different backgrounds. The MBA schools are putting out really smart candidates that are going into the ETA world to buy businesses. And so a lot of times, as a broker, you're kind of between those worlds. And I was kind of a self made entrepreneur. Bootstrapper or startup guy. And so I was always really good at connecting with the sellers, but I wasn't always good at speaking the buyer's language, especially the more sophisticated buyers that came from a finance background. But over the years, I've raised my game and I now feel like I can go speak intelligently to both sides of that equation. So for the sake of this conversation, basically how I broke it down at Main Street Summit was I tried to just kind of stereotype the bad brokers or the ones that feel like they make your life harder into different buckets and help the buyers kind of recognize which stereotype they're likely working with and then how to overcome that situation. Because the crux of the matter is, if you're a buyer, your job is to buy a great business and to get a good deal done. Your job is not to fix bad brokers. Your job is not to educate them on how to do their job. Your job is to build a relationship with a seller and find a business that's going to work for you and get a good deal negotiated and get it closed. And so you're going to encounter different casts of characters along the way. And I think the 80 20 rules in effect, I think the great brokers that add tons of value are like the 20 percenters that are true professionals. They can speak both languages and just add tons of value. And then there's 80% that are coming from these different stereotypical backgrounds that are going to maybe present some challenges. So is that a good set up? I can jump right into the stereotypes if that works for you.
[00:14:38] Speaker A: I think that's a great set up, especially because even though maybe only 20% of the brokers are, quote unquote, great brokers, clearly the remaining 80% are signing up clients who have interesting businesses. Right. It's not like only the good brokers are the ones who are selling good businesses and attractive businesses to different kinds of buyers. The balance of the 80% is finding their way to representing owners in a sale process where the business is interesting and it's compelling to certain kinds of buyers. And so, yeah, that's the basis of the conversation that you presented on in main street, is that it's not like you can only work with great brokers who do a fantastic job because there's a lot of assets that are sold by brokers that are maybe across the spectrum. So, yeah, let's go through the stereotypes, and then let's go through sort of Clint's one two threes for how to manage those stereotypes, how to maybe understand them better and meet them a little bit more where they're at and ultimately have productive relationships with them, too.
[00:15:41] Speaker B: Yeah. So as a buyer, you want to probably start with the great ones. You want to figure out who the great ones are in your industry, in your geography, go to them for deals first, and be on their distribution list, because they do make your life way easier if you get a great broker. But, yeah, like you said, good deals can be represented by any broker on any end of the good to bad, useful or useless end of the spectrum here. So the stereotypes I wanted to start with. The first is I call them in the presentation, the old guy that never calls me back. And this is a lot of brokers. This is modeled after one of the first ones I met in this space in Texas. And he had a bunch of listings. He did not sell very many of them, and they tend to sit for a long time on his marketplace or on biz. Buy, sell. I was asking him about this, why hasn't this business sold? Everything about it looks good. Why hasn't it sold? And basically, the stereotypical old guy that never calls you back is they're not using technology very well, and so they make it hard for you as a buyer to basically climb the wall to get to the confidential information of the deal because they don't have enough time to sort through what they would call tire kickers. And so this is directly from the source, from the guy that was explaining this to me, I was like, okay, you have an ad up for this business. It looks like a good business. Why have you not sold it? He goes, tire kickers. Everybody that reaches out is just tire kickers. I'm like, what's a tire kicker? Explain this to me. And it turns out, basically, he would put it on biz by sell. A couple of hundred people would fill out the contact me form. He didn't have time to call and figure out out of those couple hundred people, who's real and who's not real. He doesn't have any employees. It's just him. And he's semi retired. And so basically, he would send all 200 people an email that was a template that would have a personal financial statement attached, an NDA attached, and he would want them to. And I think it was on purpose, like print and sign or scan and sign the NDA. And I think he made it hard on purpose, and he wanted you to fill out this financial information because he was like, you know what? Most of these 200 people are tire kickers, the ones that are serious they're going to follow my directions. They're going to fill out these forms, and they're going to do it my way. And those are the ones that are serious enough that if they can't do that, they're not going to ever buy this business. I'm not asking that much. I'm just asking them to fill out a few forms for me and do things my way. And so these deals would sit there. But I ended up calling a lot of those 200 folks just to see, like, are these truly time wasting tire kickers or are there some good buyers in here? And most of the people I called were very serious buyers. They had money, they were interested in the deal, but they just didn't know enough yet to feel comfortable filling out all this personal financial information and details. And so they had looked at dozens and dozens of deals, and the broker that made it too hard for them ran them off. If you come across what looks like a good business that's represented in that old school manner where they're kind of making it onerous for you or hoops to jump through, one of the best things you can do is comply.
Because the flip side of the coin is you have to realize sometimes those deals represented by the old guard or the old school mentality broker, sometimes they're very good businesses and they just cleared the deck of all your competition by not doing a good job with their systems and processes. If you have a ready to go personal financial statement, just have that handy that has the information you're comfortable sharing with legitimate brokers. A lot of these guys are legitimate, they are knowledgeable, but they just don't have enough hours in the day to screen through and process everyone. So if you can kind of self select of like, hey, I'm here, Mr. And Mrs. Broker, I've got my ducks in a row. Flash some cash. Show them I've got a down payment ready. I signed your, you know, and just be the squeaky wheel and jump through those hoops. Then sometimes you can get in on a really good deal and not have much competition because it's ran by someone that does business this way.
[00:20:02] Speaker A: Does that make sense? Yeah, it does. I mean, it sounds like a lot of buyers just decided that they had better uses for their time and that this business that he was representing was fundamentally not compelling enough or attractive enough to endure his information request process.
I was going to ask you. On the one hand, I totally understand the intentional friction and the idea of intentional friction that he's putting in the process. But to me, it seems like that ultimately gets in his way and isn't necessarily the ideal process from the owner's point of view, because if a lot of credible buyers are just tapping out before even entering into dialogue, then that creates a smaller pool of genuinely interested buyers who are going to compete for the asset. And that makes it hard for the broker at the end of the day, to drive the optimum outcome for the owner.
I get it all, but it seems like the buyers vote with their feet, and if the asset is really compelling, then they're probably going to climb through that really high wall. But if they can't tell, or if it's on the margin, or if there are other really interesting assets out there that they can more readily access more information more quickly, they move along pretty quickly.
[00:21:15] Speaker B: Yeah, that's true. They run a lot of people off. I'm often the second or third broker behind people like this because that's what the sellers that didn't sell with them will tell me is, yeah, I signed up. The guy seemed really credible, had a good resume, knew what he was talking about. He put it on the market and then just never brought me a buyer. Like, never heard from him. And that's what a lot of these old school guys will do, is they'll just get as many listings as they can, put them all out there, and then have this kind of like spaghetti at the wall approach. Some are going to sell, some won't. So what? But they kind of put it on you as the buyer to come to them on their terms. The biggest thing to realize about these guys is they're averse to overhead. A lot of them are in the sunset of their careers. They don't want to have employees. They don't want to have an office and overhead. And they're just doing some deals as their sunset career. A lot of them are former cpas or former entrepreneurs or whatever. And this is like something to do when they're not golfing, like part time thing. Some of them are really smart, good business people, but they just don't hire folks to help. And so when you call our firm, hopefully you'll get a friendly voice on the other end of the phone. But it's almost never mine because I'm younger and I'm trying to build a company that's more responsive and can beat some of these entrenched old school players. And so I hire people.
I have an office, I have a team. I have a CRM system. And we can spend more time with those couple hundred buyers that inquire about every deal, getting to know them, filtering them and sorting them and putting them in our CRM system and trying to nurture those relationships long term. And these older guys just don't have time for all that and they're not going to spend the money on that. And so you just have to realize they're bandwidth constrained and once they get a buyer on the hook that they like, they tend to just ignore everyone else. It doesn't mean to write them off altogether. It might just mean they've already got a candidate they really like on that particular deal. They may be completely non responsive on one deal, but then you call them about another one and they don't have their favorite buyer figured out yet and you can become that and all of a sudden they'll latch on to you and be super helpful on this other deal because they didn't have their one. So that's what they tend to do is they tend to latch on to somebody that they feel has the down payment, the skills and the seriousness to get this deal done and then just ignore everyone else. And so you just have to get in quick with them, follow their process, and that's going to give you your best chance of getting a deal from one of those stereotypical old guard brokers.
[00:23:48] Speaker A: That's a really good summarization of that template. What's stereotype number two or archetype number two?
[00:23:54] Speaker B: Okay, stereotype number two, I called the mic broker, so I'm imagining the younger one, like the young, green, wet behind the ears broker. Often I hate to throw franchises under the bus because there's some really good brokers in the franchise systems. So I have friends that are brokers with VR, Sunbelt, Murphy, all these big franchise names and there's some good ones there. But the downside of a lot of these franchises, they'll kind of let anyone in. So they're recruiting machines and they'll get people coming in to try their hand at being a broker and they'll teach them how to mass market and get a bunch of listings. But they're very much not picky about them because they're usually young, hungry brokers that don't know what they're doing yet, but they're doing mass mailings, they're sticking letters on the side of, they do drop letters, they actually hand letters off. They tape them to the doors of businesses, they do telemarketing and cold calling and everything, and they drum up lots of interest. They will list any business at any price and they definitely take this quantity over quality approach and so they get lots of listings and they lean on the name of their firm or their franchise to give them credibility. But they typically have too many listings. They're usually moderately overpriced because they're not valuation experts. And they'll kind of let the seller determine the asking price more often than not. How much do you want for this? Okay, we'll give that a try, see how that works. And I don't do that at my firm because I know the biggest risk for me is wasting my time. And the biggest waste of my time is taking a much overpriced deal to market without the correct valuation expectations. So most of the people that we run off at our firm, it's because they wanted $5 million for their company. We said it's worth $2 million and they didn't want 2 million. So they said, you know what, I'll come back when it's worth 5 million or when I'm ready to take 2 million, or some of them will go to another broker that will list it for 5 million, but that's not going to be me. We won't risk our reputation like that. But the mic broker stereotype, because it's all a numbers game to them. They'll take almost any listing at any price. So they'll slap price tags on things with very little analysis, just a very lightweight recast, if that. And they just don't know what they're doing on the valuation front. But they have a lot of deals. So if you come across that situation where you've kind of got this naive broker that doesn't add a lot of value, but has 30 or 40 listings and they're spinning too many plates, but they might have a deal that looks like the right one for you. The best way to deal with this situation is to follow their process and then escalate. So that means go to their website, fill out their forms, jump through the hoops, because that's how they're also overwhelmed, like our previous stereotype, because they have so many deals they're working on, they don't have time to get to everybody, but they're going to prefer the people that follow their process. When you get in a jam and you get stuck and you can't get called back, go to their website, look who owns their franchise or who's a more senior person there and reach out to them. Because a lot of times the juniors have a lot of the random grab bag of 30 or 40 deals. And the more senior ones they've learned through staying power. And getting through the hard learning curve here, that they only take on five or ten deals at a time and they're priced better than the younger, greener brokers deals. And if you're having a hard time with the junior, go up above their head to the senior person at their firm or the franchise owner or brokerage owner and say, hey, I reached out to Jim three times. I really think deal number seven on the website here is the one I want. Having a hard time overcoming this, and sometimes you can kind of rally support from a more senior member of their team. But in general, when you're working with a person like this, don't overcomplicate it. So I said in my presentation, don't start trying to teach them about what net working capital is, how you don't want to bring like a middle market deal structure that's got earn outs, working capital, capex considerations and all that. They're thinking, I want to get this deal under contract. I want it to be a simple deal structure. And they don't speak the language of high finance, they don't speak the language of middle market. I would just say use a very simple loi. I'm going to pay this much for this business, this much in cash, this much in seller financing. I need this much days of exclusivity, et cetera. Kind of hit the main deal points. But if you can get them an loi quickly, keep it simple, and then do your own internal math on how are you going to come up with working capital. Don't try to do that formula in your loi. Just keep it as clean and simple as possible and move quickly and escalate as necessary. Then a lot of times you can get great deals out of these volume shops by just kind of being that type of buyer.
[00:28:58] Speaker A: Do you then need to find a way to be able to dig into the reality of networking capital when you're under exclusivity. Is that effectively? Sort of. Because I'm curious whether or not your recommendation here is a good one for getting a deal under exclusivity. But what it ultimately does is kind of kick the can on some of these really important matters to the post Loi period. And then you get into the post Loi period, and then the broker's ability to help you, or the owner's readiness to help you with those key points is either nonexistent or it's highly variable from deal to deal. And then you're doing a ton of work on the buy side. And while you're under Loi, you're under Loi, but you've just got a huge hill to climb in order to really understand the business.
[00:29:46] Speaker B: Yeah. So the easiest way, because you're right, you don't want to derail your deal down the road with the hard conversation that you didn't prep them for at Loi. So the way I would approach these unsophisticated brokers that are these volume shops that don't speak the language of working capital pegs and these types of things is to come up with language that's just plain English. Use that in your Loi. So I like to write offers that explains in a few sentences how you're going to deal with working capital and doesn't even use the word working capital.
That's the way I think you should address it. So I might say, hey, we're going to buy this company as an asset sale. We're going to do it cash free, debt free. So you keep your cash, Mr. Seller. I want you to pay off all the company's debts. I'm not taking on any of your payables on the receivables. I want the receivables for any work that hasn't been completed yet, anything that's been completed that you just haven't gotten paid for yet, that's going to go to you. You'll collect your own receivables on that. And then I want a normal level of inventory. And your Sim or your CBR that I was sent said that that was normally about $250,000 of inventory. So I'm expecting to be able to count the inventory before closing. And I want to see at least $250,000 of inventory there. And so you're just kind of, in a few sentences hitting the main points that comprise working capital without having to teach them what that even means. You're just speaking English to normal people. And I think that's the way to structure an Loi with these folks. And that's something that a seller and an unsophisticated broker can look at and be like, oh, yeah, that sounds like common sense. Yeah, of course they're going to expect there to be some inventory. Of course, my cash that I already made is my cash and not their cash. And you may have to budget the first month or two of operating capital, but you've got lenders and you've got lines of credit and ways you can do that and just price that into your deal structure. And that's going to go over much better than trying to get them to leave cash behind and doing a more complicated working capital formula. So that's how I encourage people to address that situation.
[00:32:03] Speaker A: It's great advice. Anything else on Mick Broker?
[00:32:06] Speaker B: Yeah, Mick brokers are fun. They're usually great people. They're usually just young and naive. So it's just all about getting on their side. Don't talk down to them, ask them for ideas. So a lot of times just being humble enough to say, hey, Mr. And Mrs. Broker, I think I want to offer something like this. Do you think that's going to go over well? And a lot of these younger brokers are so deal hungry, they're so anxious to get deals closed, they know what the sellers will say yes or no to. And instead of trying to be arm's length across the table from them, I would put your arm around them and just really try to make friends with them and get the inside scoop from them because they'll often give it to you and they're not as close to the best as some of the more sophisticated m a advisors are in terms of not giving away the inside baseball of their own client. A lot of times these people will so just kind of snuggle up to them, be their friend, ask them a bunch of questions, make yourself naive when you're dealing with them and let them feed you a bunch of information and then feed them a simple deal structure with plain English and that'll get you top of the list.
[00:33:20] Speaker A: Is the next archetype the really good 20% or are there more bad archetypes?
[00:33:26] Speaker B: The bad one I wanted to talk about next was the real estate broker that dabbles in M and A.
[00:33:33] Speaker A: Perfect, let's hit it.
[00:33:35] Speaker B: The real estate broker that dabbles in business brokerage is becoming increasingly prevalent, especially in the last twelve months. As you, I'm sure, are aware, the commercial real estate market has been somewhat frozen because of the interest rates and work from home. Yeah, the transaction volume in residential and commercial real estate has fallen off a cliff. Realtors are leaving in droves. We're kind of on a down cycle for them, but a lot of them don't want to go back to traditional employment. They're looking for ways to up their transactions and find new revenue streams and they're turning to business brokerage. Because our segment has not been as hard hit by interest rates like I'd say our segment has remained very hot even through the rate changes like M A activity has been very strong. And so I think a lot of them that usually would have referred a business listing to a business broker or an M A advisor, because they're just busy with real estate deals that they know are now starting to say, you know what? I can do that. What most people don't know about our industry is most states. All you need to sell a business is a real estate license. So there's not like a special license for business brokers. Most states either need nothing or you need a real estate license, and that's it. These people are technically in compliance with all regulations and they can technically sell a business, but they just don't speak the language of M A. They don't speak the language of finance, and they're used to selling real estate, which is really a whole different ballgame. You're going to know you're working with one of these people. When you click on an ad or you click on that broker's website and you see they call themselves a commercial real estate or real estate person and they're representing empty buildings or they're representing residential properties, you can pretty safely assume they're not going to really know the SBA loan world, just the business finance world.
When you get their listings, a lot of times they get the financial terminology wrong. They'll kind of over index on just like pictures of the property, the square footage, the location, the traffic, the physical attributes, and then flowery descriptions of the potential and the reputation and things like that. But they don't have very good financial recasting or financial analysis in their presentations. It's very superficial and they tend to go with an asking price. That's a finger in the ear. Guess that sometimes is derived from the seller and sometimes it's derived from the physical attributes of the company. Like they're just trying to add up the real estate value and the inventory and assets. And so sometimes they're obscenely mispriced. And that can be either direction. Occasionally we'll see they don't know how to value goodwill and so they can underprice the deal. And that's huge to your advantage if you're a buyer, if they don't understand that. But then sometimes they can go the opposite direction and run the net profit through a cap rate like a commercial real estate deal. And now instead of the three to four x multiple you were hoping for, that small business, they've ran it through a five cap and it's a 20 x, and now you're mispriced by a factor of five times wrong. It can be crazy either direction with them. When you come across a realtor or commercial real estate agent that is clearly kind of dabbling in M A. My suggestions on how to get a good deal out of their hands is to, first off, make an offer much sooner than you normally would. So you got to understand, when you're dealing with me and my firm, that's all we do as business deals. We know this is a relationship game. I don't even want you to make an offer until we've brought you together with the seller, at least on a Zoom call, but usually a face to face meeting. My sellers want to know who this offer is coming from, and I want to make sure that you pass the vibe check that we like each other, trust each other, and I would encourage you to meet whenever possible with the seller in advance of making an loi or putting an offer on a business. But if you come across a real estate person representing a business, remember, they're used to representing real estate. They usually like to keep the seller and buyer apart, and that's their world, right? It's more of this, like they're in the middle. They don't like them meeting, and they would rather you make an offer before they make you that introduction. It's kind of opposite land sometimes when you're dealing with them. So the steps I encourage is to make an offer sooner. I also recommend putting your offer in a format that looks more like a real estate contract. And this is kind of a unique twist on my advice. But again, it's opposite world with these people. Every other m a advisor we're used to lois non binding letter of intent. And these folks that come with a real estate background, a lot of times they think an Loi is a joke. They just don't think it's real. They don't think it's a real offer because they're in the bring me a contract and then we'll talk kind of mindset. And so if you send them an loi, and if they laugh at your loi because they don't think it's real, and they say, hey, I want you to bring me a contract. Get with your attorney, take a standard real estate contract, insert the language you need for exclusivity, for being able to pull out in the diligence window. If you find something that you need to walk away, but make it look more like a real estate contract and less like an Loi, and then that's going to get you. If there's ten buyers competing for this deal, and nine out of the ten bring an loi, and every single one, the realtor is like, hey, these aren't real buyers, these aren't real offers, but this one looks like a real offer to me. Then all of a sudden you're at the front of the line because you just played it more like a real estate deal, and you can still get the appropriate language to give yourself the outs you need to get your due diligence done. So that's my second piece of advice for that type of broker. The next piece of advice is if you get an offer accepted, then the walls come down. They don't know how to run a due diligence process. They don't know how to do the complicated conversations that happen between offer and closing. So they can't kind of orchestrate all that, the transition plan, the diligence work, the legal work. And because they're kind of out of their depth, once they feel like you're under contract with them, they'll give you full access to the seller and to the seller's attorney. And that's at the point where you should just take over the deal and they'll be content as long as you loop them in and are respectful and they see that you're moving in good faith to try to close this deal as fast as possible. They'll let you take over and they're not going to be standing between you and the seller anymore. So that barrier comes down as soon as you've got that signed piece of paper, and that's where you take over. So just be respectful, move quick, get your diligence done, make sure that they know they're going to get paid and that you didn't forget about them, and that sometimes you can get a great deal through one of these commercial realtors that's representing a cash flowing business opportunity.
[00:41:03] Speaker A: That's great. I want to spend some time covering what is the right way to work with Clint and an organization like Clint's. And I want to spend some time talking about the future of M a advisory future of M a brokerage. Some of the things that you've talked about in the early part of the conversation related to automation, sophistication, having a team around you. So let's cover them in that order before we get to kind of like, what is the m a broker of tomorrow and what does that professional look like and what is different about them than some of the archetypes that we've already gone through? Before we go there, let's talk about just you and your organization. What are the buy side professionals look like and act like that, do really well with you, and do really well, with the sellers and the owners that you guys are bringing to market.
[00:41:56] Speaker B: Yeah, I think the buyers that we like are. I feel like just the more you have your ducks in a row, because I think that their misconception is it's the biggest dollar offer wins or like whoever offers the most money is going to win. And it's actually sellers care about that, but they also care about is this the right person? Do I trust this person? A lot of times you're asking for seller financing or an earn out component or something, so they've got some skin in the game on the other side of the deal. So the buyers that really stand out to us care about the relationship with the seller so they can click speak the language of the seller. And you got to remember, every time we bring a buyer to a seller, we're kind of sticking our neck out because it reflects on us, the broker. And if we bring in poor buyer candidates that aren't qualified financially or don't have the skills or can earn the rapport and trust of the seller, then it reflects poorly on us and we run the risk of losing our opportunity on the deal if we bring too many duds of buyers. For me, I'm looking like I know most sellers really want to sell to a younger version of themselves as much as possible.
They'll never say that, but that's how they behave. It's a great way to put it, yeah. So can you speak that seller's language? Do you care about this industry? Do you care about these people and aren't just coming in saying, hey, you got to go with me because I can write the biggest number on this piece of paper. That attitude goes a long way. Feeling like your brokers really care about besides purchase price, we care about speed and surety to close. So if your offer has a shorter due diligence window, a shorter exclusivity window, you can show that your ducks are in a row on your financing and you're not just starting from zero trying to get a deal tied up under an Loi and then go. In about a week you'll start courting investors to pitch them on it. And then once you get some equity investors, then you're going to start shopping banks and it just feels like you're going to drag us along forever. I want to see that you already have your source of down payment figured out, that you've already got lending institution one, two, three on board figured out. So the more that you can present yourself as like, no, I'm the right human to connect with the seller and then I'm the right buyer. That can not only give you the right price, but I can give you confidence in the surety to close and the speed of close. That's what we want.
[00:44:35] Speaker A: When are you trying to ascertain whether that is the state in which a given buyer is in?
Are you doing some of these things? This essentially sounds like sort of your vetting process for a given buyer. Right. So are you doing this after you've signed, after they've executed an NDA, and before you are making available a Sim or other confidential materials? Are you doing it after you've shared the sim, but before you begin to introduce the buyer to the seller for a conversation? Just, I want to hear more about the vetting process itself and then kind of like when it's taking place in your process.
[00:45:17] Speaker B: Yeah. So we have a process that looks like we put non confidential information out on our website and newsletters and social media properties and all that. And that always funnels to an NDA to sign on the website. When you sign the NDA, we don't automatically send a sim just because you signed an NDA. A lot of our sellers are very sensitive on the confidentiality front, and they don't want like a competitor that thinks they know whose deal that is to just be able to get the sim with all the confidential information. And so they want us to stand between that NDA and that Sim and make sure. So we do like a light vetting, usually between NDA signing and emailing the full sim. And that's where we're just going to want to verify like you're a real person. We're going to probably google your name, look up your LinkedIn, kind of check what you filled out on our NDA form versus what our Internet search shows about you. And if it looks right, then we're going to call you and just make sure we get a few basic bits of information just to feel like we've got a good feeling about this person and that they could be a legitimate candidate. So we want to send the sims out to people that we feel have the financial ability to conduct this transaction and are a real person that's moving in good faith to try to buy this business. They're not just trying to get inside information on a competitor or fish for data. And so we have an inside team that usually handles those conversations that's just trained to screen and interview buyer candidates. So with us, you'll sign an NDA, then you'll usually get a quick phone call from usually not me or not one of the lead brokers on a deal. It'll be from one of our inside teammates. And they'll get you the sim after a quick phone call, usually 1530 minutes, just get to know you. And then from there, they'll follow up, ask you if you had a chance to look at it, what did you think? And they're going to try to get the people that pass to pass, and then the folks that they like that have read the sim that seem legit, then they're going to put them on the calendar of the broker. So that'll be me or dusty or one of our more senior folks that are kind of the main liaison with the seller. And we're going to talk to you at that point and try to answer your hardest questions and let you know the deal killer stuff. Because I want as many people to pass as possible before they get to the seller. So if I've got, like, a tricky customer concentration problem on a deal or something that I know is going to be a problem for a lot of buyers, I don't want to get you to the seller and get you all to fall in love, and then you tell me you're going to pass after that because of customer concentration, right? So I'm going to have that in my conversation. I'm going to be like, hey, I'm sure you saw this, but page 17 of the sim we talked about, we've got one customer that's got 40% of their revenue. Here's how I think I would handle it if I were you. Can you get comfortable with this, et cetera? So I try to talk you out of the deal or make sure that we've covered the hardest stuff. And if you're still saying no, I think I'm in agreement.
I think we could do this. I think we're the right fit. And when we're clicking and we're liking each other, that's when I'll set up the seller a meeting. So that funnel usually goes from several hundred signing an NDA to maybe dozens getting the sim that just, like, took the phone call of the team and met the basics. And then that turns into maybe a half dozen that get through that next call and have a seller conversation. And then that might come down to two or three offers from really good candidates. And that's how we kind of run that funnel. And so as a buyer, your job is just to kind of, like, run that gambit and get in, work the website system, get on the phone with the team, be respectful, show that you're the right person, you've got your ducks in a row, and then impress the broker, impress the seller, put a good offer on the table, and then you've got yourself positioned to win the deal.
[00:49:15] Speaker A: That's so much more work than the mic broker does, or the real estate broker, or the broker who never calls anybody back because he indiscriminately thinks they're all tire kickers. How do you make that work? That seems like a pretty reasonable process. Probably a great process from an owner's perspective, because you're doing a lot of work for them and also probably pretty good. Maybe you're holding the buyers at arm's length from the seller for a little longer than maybe some of the buyers want, but probably pretty attractive process from their perspective. How do you do that work when everybody else or the other 80% aren't doing that work? Do you charge differently? Do you have to charge differently?
How do you make that work? Because that seems like a good template for all m a advisory. But we know that not everybody's doing it that way.
[00:50:11] Speaker B: Yeah, my way.
It is thorough. It does take overhead because you've got to invest in the people and systems to run that kind of process. In my opinion, the only way it works is being extremely picky on the front end.
We charge about the same as other advisors. Sometimes I think we should be able to charge more if we're doing more, but the market doesn't really see it like that.
[00:50:35] Speaker A: Right.
[00:50:36] Speaker B: It's almost like real estate or something, where there's kind of a general expectation that the fees are going to fall in a certain percentage range based on the deal size. And so we tend to be kind of at market kind of normal on our fees. But I think the way we're able to be profitable with that set up, and that's a great question, is our main KPI we care about is sell through rate or closing rate. And so we need to keep that high. Historically, we're over 90%. And the best brokers, that's the thing they care about the most. They want to be like 80, 90%. And that's a ratio between how many engagements did you sign up to represent sell side versus how many actually closed. Historically, our industry, depending on which source you ask, you may have more data on this as well, but from what I've seen from biz by sells data, from the Ron west data and these other players that aggregate information is, they're typically saying like 30% or 20 30% of deals that go to market, actually sell.
The closing rate is very low, and especially with a one year term on an engagement, like a lot of these volume shops that don't do as much, they just try to play that numbers game. They know, hey, 20, 30% are going to sell. So I just need to get a whole bunch, and then the rest are just going to go away. And they don't act like that's their fault. I think that's their fault. I think that's your job as a broker to. The reason those 70% don't sell is because they're mispriced or expectations aren't set correctly, or they're not packaged up or analyzed correctly. I think if you get a properly motivated seller with properly set valuation expectations, properly packaged, properly marketed, running a good process, there's more buyers than there are deals out there, and you should sell it if you do it right. And so my goal is for that 10% that get away to never be our fault. I want that to be the seller just decided not to sell. The business took a nosedive or Covid happened and the whole industry froze up or something like that. And that's why we didn't sell that one. But I don't ever want it to be because we drastically mispriced it. We drastically didn't get it in front of the right people, didn't do our job right. And so I think that's how I preach this. I share my playbook openly. I teach at the IBBA and these other organizations, our process, how we work as a team, what technology we use, how we do this. And I think we've made an impact on the industry because there's now not just us, there's dozens of other good shops out there. And I'm a part of several best practices groups with really great brokers. And we're all enjoying the fruit of that. We share our sell through rate, and a lot of us are in that 70% to 90% range. And it just comes from being very picky with who we work with, pricing it right, and running a good process. And that's how you're able to kind of do more commission on less quantity of deals is just by the quality approach.
[00:53:44] Speaker A: Yeah, I got that. I'm curious. I understand that the reasons that some don't sell is the seller decides to not sell, or business takes a nosedive to use the two that you used on axial, roughly speaking, on axial, which are sort of typically sort of five to $50 million deals in size, roughly speaking, in any given year, about 50% that go under exclusivity close. So between like 40 and 60%, roughly speaking. And a lot of the reasons why they don't close is not necessarily because the business takes a nosedive or the seller backs out. That happens occasionally, but what we see happen a lot is there's a diligence breakdown that somehow either there's some element of diligence which is significant. Usually it's some form of earnings, sort of earnings discovery. The earnings power of the business is not as it was represented, or it's not appropriately being appreciated. How do you deal with that as a broker? How do you assess the risk of a business where everything else looks good, but you have to take the business owner's word that the way in which they are recording the financials and the financial performance of the business, you have to take them at their word when you take on the assignment. Or are you going deeper when you're evaluating an owner to work with? Are you assessing the veracity of their financials before you take on an assignment?
[00:55:09] Speaker B: Somewhat. I have to be careful because I can't ever claim that I'm doing due diligence or that I'm verifying information. The stance of brokers is, hey, we're just a conduit of information. Do your own due diligence. We're just passing on what our seller said. Okay, so that's like every broker's official stance. The truth is, I am deathly afraid of that.
We sometimes put nine to twelve months of really hard, skilled work into these deals, and we're left holding an empty bag of nothing. If this deal falls apart because we said it was a million of EBITDA, and then it's actually 500,000 of EBITDA. Once the buyer's CPA goes behind the curtain or whatever, we're screwed. And we just wasted a year of time if that happens. And so I'm definitely afraid of that. What we do, and what a lot of the better brokers do, is we start building our data room out the day we list the business. So we'll start going ahead and doing, basically, I would call it pre due diligence. And we'll often value the company, build the SiM, and take it to market based on the company's internal financials, like their quickbooks and things like that. But I'm going to be gathering their tax returns, I'm going to be gathering more detailed information from multiple data sources, and I'm going to look for those discrepancies. And so I know enough and my team knows enough. We've got certified valuators on our team, and we know that even the under 5 million SBA loan deals, they're going to have to go through a third party valuation. And so I just want to put on my valuator hat. I want to look at the tax returns, I want to look at these other data points and say, how is an appraiser going to appraise this deal? And then I might take my opinion of it and run it by a banker and make sure I've got banks that are okay with it. So I want it to pass my sniff test. I want it to pass a bank's sniff test. I want to have a bank lined up that already likes the deal and says, hey, yeah, if you bring me a buyer with good credit and the right down payment, we're ready to finance this thing based on everything you've showed us already. And so I want to get some smart bankers or loan brokers into the data room. I want to put on my appraiser hat. We try to find all skeletons in the closet that we can before diligence, and so that diligence goes smooth. And so I like the day that Loi is signed to just say, okay, here's a password to this secure data room. You go in there, I've already pre populated with probably 80% of the things you would want. Send us your request list at that point. Whereas I feel like a lot of other brokers that have a lower success rate from Loi to closing, they just don't do that prep work. And they've just kind of taken the seller's internal quickbooks at their word, built pretty graphs around it, put it on the market, and then they've got an empty data room. And then when this huge diligence list hits, then they're just populating it. But they've never really seen it with their own eyes. They've never really teased out the skeletons or the red flags. And so I want to catch stuff as early as possible and ensure the highest chance of that success from Loi to closing. And that's the way I would encourage any broker to do it at any level of the game, whether you're main street or middle market, is just as much as you can do prep work to build that data room out and to look at it critically through the eyes of a buyer and try to anticipate the things that are going to be the deal killers and address them up front before you get under Loi.
[00:58:32] Speaker A: And deep in the deal. I think we've nailed all those really well. So I want to spend just maybe a little bit of time thinking a little bit about, I mean, I'm interested in talking to you about this concept of the broker of tomorrow. And how does the broker of tomorrow, which is maybe already partially here today and represented by firms like yours and others who you were talking about? I want to talk about that, but I think if we're shorter on time, maybe it's more interesting for audiences to, particularly because there's a meaningful number of professional buyers in the audience. What has been your experience at how buyers win deals without paying the highest price? I mean, how do you think about what buyers can do to be the preferred buyer for a given business owner without it being just a function of writing the biggest check? And are there ways that buyers can select their way out of processes where the seller truly is only motivated by purchase price? I'm just curious what you sort of seen in those two areas. How do the buyers win on something other than dollars? And if dollars are the only thing that matters, which probably sometimes is the case, although a lot of times isn't the case, is there a way for the buyers to sort of suss that out sooner rather than later in a process?
[00:59:53] Speaker B: Yeah, I'll drop a few new ideas, but some of the other ideas I've already mentioned, it's like speed, surety to close rapport relationship, being easy to work with and just making sure that you're an enjoyable. If you're the buyer we like talking to that is responsive, your offer is going to be more valuable than the one we don't enjoy talking to that we don't enjoy working with. Regardless of what the dollars and cents are like, if you're in the ballpark, you're going to put yourself front of the line with just those soft skills.
[01:00:30] Speaker A: The reason that I ask it is because the professional buyers of small and mid sized businesses, in many cases, they're raising capital themselves, right? They're raising capital from lps, they're raising capital from universities, from endowments, from institutions, and they need to be able to defend their value as well. Right. And so part of what they do is say we are a differentiated buyer, we don't pay the highest price. Right. And they need to be persuading people that that's true in order for them to be successful at raising capital and raising investment funds and raising capital on a deal by deal basis, et cetera. And then in a lot of cases, these same buyers are using newsletters websites, a platform like axial in order to source deals. Right. And so there's a real conundrum there, right. Because they're saying we are not paying the highest price. But then in a lot of these cases, a lot of these professional acquirers are using platforms where a meaningful audience of buyers can congregate. Right. And so what a lot of the lps say is, well, if you're going to use biz by seller, you're going to use axial or you're going to use some platform. How are you going to create value in a transaction if you're using platforms like that to source deals? Don't you need the deal to be proprietary so that you can buy it at a lower price or something like that? So what I'm curious is you use social media, you have like, 25,000 followers on Twitter. You've got real marketing chops. You're using platforms to go to market, and yet you're saying that a lot of the buyers who you work with, who ultimately win deals are not the highest bidder. And so there's something that's lost there. Right. Because the general consensus is if a deal is on a platform or if a deal is Clint's Twitter page, it's going to be perfectly priced to perfection and only the highest bidder will win. But it doesn't sound like that's true.
It sounds like there's more to it than that.
[01:02:28] Speaker B: Yeah. So let me hit a couple of points. So I did think of what I was forgetting. First off, there's two different universes here. There's middle market and main street. A lot of middle market deals which are, I would think axial is kind of a leader in this space. I draw the line around $5 million just due to the. I think that everything starts to change around $5 million asking price because you get beyond the SBA financing world. And a lot of those deals don't have asking prices.
Some, it's just kind of like an auction type process controlled by the investment banker or the m and a advisor. The main street deals, when we put a price tag on something, we typically get it.
We'll average 95% to 100% of asking price at closing. And so it's not always who offers the most. It's just if you see that the deal pencils out and it's got a reasonable asking price and you want to get it, you just make the offer and you make it quick and you show that you're the right person with the right speed and surety to close. When we're dealing with an unpriced deal that's probably north of 5 million enterprise value. And we're kind of doing this beauty contest. Where is it going to be one of these differentiated buyers that's got to raise lps, or is it going to be a private equity group, or is it going to be an institutional buyer? The way you can win versus some of these buyers that might make higher offers is to not be a pain. So we look for red flags like we have an NDA. It's not perfect. It's simple. It's got like five or six bullet points on it. It's on our website. You can see it on all our deals on buysonbusiness.com. We've had it signed thousands of times. Like thousands and thousands of people have signed it without doing any modification. Sometimes when we get to the middle market, we get these buyers that are institutional buyers that have retained legal services, and they don't just sign NDAs, they're going to review it and redline it. And instead of just signing the form on our website, which takes 2 seconds, they'll sign their own or they'll download ours and do a bunch of red lines. And now we're like talking about it and starting to go back and forth. Once I've played lawyer ping pong three times on an NDA signing, I'm starting to not care how much you offer for this business. Because in the back of my mind I'm thinking you could offer a billion dollars. And I don't believe this is ever going to close because we're going to be stuck in lawyer hell with this buyer. And so I think that's how you. One of the ways you can win, especially with, I would put myself in the kind of premium main street normal guy representing some nice deals. But I'm not overly lawyered up. I'm not super sophisticated. I can speak the language. But we started main street and we've moved more upmarket and we do some middle market. Yeah, that's a big turn off for sellers. If they feel like, can you sign an NDA that thousands of other people have signed without bringing lawyers into the mix? Can you send us an Loi that has plain, easy to understand language in it that's one to four pages long, or do you need to send a twelve pager that my seller is going to have to have several weeks of their lawyer racking up thousands of dollars of legal fees, redlining it, and are we going to have to get into red lines immediately at NDA and again at Loi, then I'm starting to already predict where this is going. This is headed towards 100 to 300 page purchase agreement. That's going to be tens of thousands of dollars of legal fees.
There's a lot of buyers that I would say like they might be willing to pay the highest multiple, they might be the highest dollars at the end of the day. But if you make us have to go through that type of legal hell to get a deal done with you, then it starts to feel like for me, the broker, and for the seller, especially if they're a self made person, that you know what, you're probably just not the right person. It sounds like you don't really trust us. It sounds like you're trying to over lawyer this thing. It sounds like you're not the person that can reach across and shake hands with me and I can trust to take good care of my people and my team. So at some point the dollars stopped mattering because we just lose trust that you're going to close. And then it also gives this feeling, the more corporatized, over lawyered it starts to feel like. So brokers suffer from a bad reputation, but so does buyers because of some of the shenanigans of private equity groups and others that have done the really bad retrade attempts at the last Friday night before it's supposed to close.
If you start doing stuff that plants seeds of like, oh, this person's slick, this person, they're putting all this fine print in here. They're going to do a really long, they're going to lead me down this primrose path over the next few months and then at the last minute they're going to try to pull the rug out from under me. So anything you can do to show that that's not who we are and that I can point you to, if you're a serial buyer, give me referrals to ten other companies you bought and show me that we did it on time. We hit what we said was our timeline and our loi. I can call those owners and they'll tell me, you didn't retrade them. You did what you said. You're going to do all that matters and all that can add up to getting the deal done without having to pay the absolute top dollar by just being a cool person, easy to work with, reliable.
That's what we want. So in a perfect world, that person also pays the top dollar when we're sell side.
But as long as I don't feel like we're leaving just eye watering sums of money on the table. We'll leave a little money on the table for those added benefits of people we trust with that we feel good about is the right person to do the deal that's going to how do.
[01:08:40] Speaker A: You size up somebody who's got a really fantastic angle on a business? They've either bought a lot of them before or they're adding it into an existing business that they already own, or they grew up in the industry and they've got a credible history.
How do owners think about that profile of buyer versus a buyer who's kind of more generically interested in it, but is, to use your word, like just a really easy to do business with buyer? They're generic buyers. They're interested in buying the business. They don't have a clear reason to love this business based upon their background or their professional history, but they're easy to do business with. What has been your experience with business owners in terms of at the end of the day, what might matter more? Is it like the unique angle that a buyer brings to a particular transaction or does kind of this easiness to do business with and this reasonableness sort of sniff test? Like which one do you think kind of trumps the process? I know they're not mutually exclusive, but how do you size those two up when they're competing against one another?
[01:09:46] Speaker B: I don't care as much about the industry expertise and the angle of I'm more caring about the financial firepower and the easy to work with surety to close reasonable buyer. And I've seen buyers come into completely new industries and do great. I'm not very judgmental about people being first time buyers in an industry they haven't bought in before because it's very common. I've seen it a million times. But sellers are proud. Sellers think their industry is hard and different, almost any industry. And I think if you have industry knowledge, you show really well to a seller. And so I think that from a broker's perspective, I favor that one side, the easy to work with buyer. From a seller's perspective, it might be opposite.
They might think the most successful person for my manufacturing company needs to be a manufacturing person or a plumbing company. If you got some plumbing in your resume, you're going to have a huge advantage. Or if you own a bunch of other plumbing companies and you're buying one and you can speak the language, you already know the issues inside and out, you're going to click immediately because the seller is going to see this is the younger version of me, that's what I said they want. They already speak the language. And so if you're that person, that's like a good buyer, but it's a new industry for you. One of the best things you can do is to take a little bit of time to research, learn the vocabulary, learn the industry specific questions, and show that you've got some care about this industry and that you have a little bit of passion. Maybe you haven't done it before, but you've at least researched it. You've got a reason that you're interested in it. It's not just you're buying EBITDA, but you really want to be there. You've already started learning about it. You're excited to learn more about it because you're going to have an uphill battle versus an industry person because sellers just, they really gravitate to people that have that vocabulary already.
[01:11:56] Speaker A: Clint, this has been great. We're at an hour and 20 here, and it's Friday afternoon in December.
I know you have four children. I do, too. I've got some Christmas shopping ahead of me. You probably got some stuff to do, too. It's been great to just sit down and talk through the details of working with brokers and you know the market and you know the personas so well. And so it's just been a terrific conversation. I've learned a ton and I feel like just kind of laying out these archetypes and the different ways to approach this kind of deal making and plenty of common sense in, you know, as Charlie Munger says, most common sense is.
So it's really great to just hear you take us through all of this. I really learned a lot, and I think a lot of people who tune into this will have this influence, the way they go to market on the buy side, hunting for deals. So it's been great. Is there anything else you want to share? I mean, I'd love to make sure that people know how to reach you.
[01:12:50] Speaker B: No, I mean, this has been great. I think we've covered a lot of ground. I don't want to bore people cross side by belaboring the points, but I think this was good. I feel like I've been on other podcasts where we've spoken in more general terms, but I think this has been a more substantive in the weeds conversation that I think some of your more sophisticated audience members will hopefully get some really good takeaways from that are actionable. So I appreciate you kind of diving in, nerding out with me, and I appreciate all you listeners that were patient enough to nerd out with me and Peter, and I hope this has been useful for you.
The things I'd like to point out, Peter, is just for people that want to connect with me. My name is Clint Fiori, so it's Clintfiore. And I'm on all the social networks, usually at Clint Fiori, Twitter X is the one I'm most well known on, but I'm on a bunch of others as well. And my company is called Bison business. It's Bison, like the animal bisonbusiness.com. And we do sell side, buy side, and a search for you program where we help people find off market deals as a proprietary search as a service program as well. So those are the three things we do as a company, and it's all explained on our website. We kind of serve that gray area between Main street and the lower middle market. Like most of the companies we represent or do work on, buy side or sell side are usually like two to 20 million revenue, quarter million to 2 million. EBITDA is usually very common. The size range. So if you're a buyer or a seller that's in that size range, we want to get to know you. People bigger than that can be better served usually by some other shops, and people smaller than that can usually be served by some other different main street shops. But we like that area right in the middle, and that's where we play, and we feel like we do a good work there. But we'd love to get to know you and be sure you follow us on social and reach out to our team if you need anything.
[01:14:41] Speaker A: Thanks again, Clint. I'm looking forward to bringing you back. We can talk about where business brokerage and MNA advisory goes over the next 1020 years. We didn't really talk too much about technology, the future AI, what you guys are using at your brokerage firm to be productive and all those things. So we'll have you back for a round two on a new set of topics, but this is a great place to put a pin in it for today.
[01:15:05] Speaker B: Yeah, that'd be a great topic to dive into at a later time.
[01:15:07] Speaker A: Yeah. All right. We'll look forward to it. Thanks so much, Clint. This has been great.
[01:15:11] Speaker B: Awesome. Thank you, Peter.
[01:15:17] Speaker A: If you enjoyed this episode, check out axial.com. There you'll find every episode of this podcast, as well as our recorded axial member roundtables, some downloadable tools for dealmakers, Axial's quarterly league table, rankings of top small business acquirers and investment banks and lots of other useful content that we've created over the course of time. If you're interested in joining Axial as either an acquirer, an owner considering an exit, or as a sellside M A advisor, you can get started for
[email protected] as well. Lastly, if you have ideas for showgues, feel free to reach out to me directly at
[email protected] I promise I will respond. Thanks for listening.
