Jordan Gerber: Part CFO, Part Investment Banker, Part Psychologist

Craig Castelli (00:05):

Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli, and today my guest is Jordan Gerber, one of our own managing directors at Caber Hill Advisors. Jordan’s been with us about, I don’t know, three and a half years now, and covers a variety of different sectors, is a very diverse and interesting roster of clients. So Jordan, let’s jump right in. Before joining Caber Hill, you worked as a CPA, [00:00:30] you owned your own collection agency and you worked as a fractional CFO. How did each of those experiences shape what you do today?

Jordan Gerber (00:38):

Yeah, morning. Thanks for having me this morning. Yeah, it’s been an interesting path to where I’ve gotten to so far, but came out of U of I as a CPA. Everyone said, you should be an Accounting major. That’s a good background to have and just followed the path of everybody else and joined a CPA firm, learned a lot, but it wasn’t really for [00:01:00] me, but got thrown into some great clients very quickly, manufacturing clients and business services, and as a staffer you learned a lot from the partners. This was back in the day when everybody was in the office, so you had some good comradery between groups, but at the end of the day, it just wasn’t for me. I did a couple of years of turnaround work also, which I really enjoyed and again, got thrown in feet first into the fire where we learned a ton about businesses, [00:01:30] how not to run a business basically, and then took that to figure out how to run a business successfully.

(01:38):

My last client in the turnaround world was a collection agency. I saw how much money the owners could have been making if they were doing things correctly, and went on a journey to start my own collection agency with a partner of mine, and we ran that successfully for 12 years. The landscape changed in 07–08 with the financial models getting a lot [00:02:00] tougher to do our job and got approached by private equity in 2012 to sell our business. And so we took that path. I did it myself. I jokingly said I wish I had an older version of me to help me through that transaction because I didn’t know what I didn’t know. I kind of thought I knew everything, but definitely left some money on the table, was doing diligence requests till 12 o’clock at night. It was a really stressful kind of nine months I think, and ultimately sold [00:02:30] the business. So what I tell my business owners is I’ve been on their side of the table, I’ve been through a transaction and helped me shape again the path forward after I sold my agency.

Craig Castelli (02:41):

Hang on just one second. Let’s just double click on the collection agency in the sale process for a second because I’ve heard you make that comment. But going a layer or two deeper, what are some of the things that now that you wish you would’ve known back in 2012 that would’ve made it a more effective process [00:03:00] other than the obvious of hired an investment banker?

Jordan Gerber (03:03):

Yeah, I think just the whole courting process. We didn’t go to market. We took the first person that called us. I learned that the letter of intent really means nothing more than the ink that it’s printed on the page. We were offered a very generous sale price for our business and quickly realized once we signed that letter of intent, that that number was a moving [00:03:30] target. So we got retraded several times. We, again, just a lot of diligence requests that I was handling by myself plus trying to run the business. I mean, that’s the hardest part of trying to sell a business yourself is you also have to run the business. So if you have a down month during diligence, it gets reflected in the sale price. And so it’s just really hard to juggle a lot of things. And my partner and I were trying to do both the iBanking [00:04:00] role and running the business day to day, and we did very well. I don’t want to downplay that we didn’t do well, but we could have done better.

Craig Castelli (04:09):

And you had what, a 2-year-old and a 4-year-old at home at the time too, so a lot stress coming at you at all from all sides, I’m sure

Jordan Gerber (04:17):

Living in a small condo. Yeah, living in a small condo in Lincoln Park. It made for a stressful almost year.

Craig Castelli (04:25):

Yeah. Yeah, I can imagine. Okay, so then you sell the collection agency. [00:04:30] Tell us about the fractional CFO work and how that brought you to where you’re today.

Jordan Gerber (04:35):

Yeah, I hadn’t been out in the workforce in probably a dozen years and just kind of started having lunch and coffee with friends of mine and was kind of asking what their pain points are, and it kept coming back to we need to prep our company for sale. So light bulb went on in my head. I said, we’re going to create kind of an outsourced CFO business to prep companies for sale. And that’s where we met during that process is we kind of helped prep [00:05:00] companies and then helped send ’em over to Caber Hill to help them sell. And then eventually a few of my clients just asked me to help them sell and enjoyed that piece a lot better than the outsource CFO, but again, thrown into industries very quickly of companies that needed help on the financial end, and so learned a lot about a lot of different industries very quickly and then helped them clean up books and get ready. A lot of things that [00:05:30] I tell my current clients that they need to do is in prepping for a sale we were able to do, sold that piece off, then started just doing iBanking and then joined Caber Hill in 2022.

Craig Castelli (05:46):

And it’s been a great ride since then. You’ve had a lot of success here so far, working on a lot of interesting deals right now, and I think what is interesting and unique about you is we are largely a firm full [00:06:00] of specialists. You take a little bit of a broader approach, and you’ve touched on this a little bit, but tell us how you can so effectively cover a broader suite of sectors and get up to speed without really any noticeable learning curve. I’m sure it’s like a duck looking calm on top of the water and the legs are really moving underneath, but to me it seems like you just slide right in from one sector to the next to the next and you’re getting the deals done.

Jordan Gerber (06:29):

I like [00:06:30] to consider myself an expert in many industries, but we’ll use the term generalist, so I feel very comfortable jumping in from my background. We had to do that as I just mentioned, as a CFO, as a CPA, so I feel I can get up to speed very quickly, and it’s more of a trust factor. You really want to hire an investment banker that you trust versus kind of knowing maybe a little bit more about the industry. But our team at Caber Hill is great about, [00:07:00] again, getting up to speed as quickly as we possibly can and knowing all the ins and outs of industries. And at the end of the day, it’s revenue. You want more revenue and less expense, so that drives valuation. We can handle doing all that for our clients, but also being a generalist has its advantages. I think we pull from a larger buyer pool, we can be more creative.

(07:25):

We’re not locked into this little box of just industry buyers. [00:07:30] Sometimes some of the iBankers that are experts get, I don’t want to say a little lazier, but they know their path and they aren’t as creative as I think we are in what we do in our approach, and I think it has allowed me to be as successful as I can. Yeah, I think also, like I said, it’s trust with your clients. At the end of the day, you’re just trying to get the highest valuations for your clients while taking care of their employees, keeping the legacy of the business. I mean, these are all family owned businesses. We just sold a 50-year-old chemical company. It was really the kids’ [00:08:00] last hold on something from their father, and it’s an emotional, so I jokingly say part psychologist, part investment banker, part lawyer, part CFO, we wear a lot of hats at Caber Hill and are a resource to our clients no matter what industry they’re in.

Craig Castelli (08:18):

That was the time where I had to give the disclaimer that we are not attorneys and we do not provide legal advice.

Jordan Gerber (08:26):

The CFO a couple last year went in the hospital and [00:08:30] I had to take the acting role of the CFO and I don’t know what other iBanker would’ve been able to jump into that role and help get that deal closed on time. So that was something I don’t normally advertise, but it was something we had to do for our clients.

Craig Castelli (08:45):

No, you can’t advertise it because then you’ll be forced to do it in every single deal. But you’re right, very few out there would even have the ability to do that, let alone the willingness.

Jordan Gerber (08:54):

Right. Agreed.

Craig Castelli (08:56):

So tell us what sectors are you seeing hottest right now?

Jordan Gerber (09:00):

[00:09:00] I can tell you what’s not hot, but it seems like everything is hot right now, but industrials, staffing, HVAC, food and beverage, I think you’re seeing demand on the healthcare side. I know on your side of the court there, I think anything that has tariff or geopolitical influence is not hot right now, automotive, trucking. But as I say that, I think trucking is kind of coming back right now, but anything that has tariff implications, [00:09:30] people are pausing on. But I get dozens of emails from buyers every day looking for everything it sounds like. So I think it’s solid financials more than industries and good management teams.

Craig Castelli (09:43):

Yeah, it’s funny, I have a good friend. Without saying too much involved a senior level in a very large trucking business, it seems like they’re always under pressure. Yet at the same time we’re seeing appetite to acquire trucking businesses too, [00:10:00] I guess. I think it gets to the fact that there’s more than just the sector that is important here. So what are some other factors that make a business attractive in today’s environment?

Jordan Gerber (10:12):

Yeah, I think it is with the size companies we deal with, which are $2 to $10 million of EBITDA, the owner who’s looking to sell does a lot of the day-to-day work. So you want to make sure you have a strong management team in place underneath the person that’s selling or the family that’s selling. You want to make sure [00:10:30] you’ve got the latest automation. Strong financials are always key. If you can’t read your own financials, the buyer’s not going to easily be able to read your financials. And so I think all those lead to the highest valuation for transactions.

Craig Castelli (10:49):

Yep, yep. Makes sense. So what are you working on right now that you’re most excited about?

Jordan Gerber (10:53):

It’s like asking me my favorite child, but I’ll tell you when we just closed that we just sold a chemical company, [00:11:00] nicest family in the world. They were very particular about they wanted to buy them, which made it harder for us, but they were very specific about we want this to be a generation owned business that’s buying us. They want to make sure they keep our employees, they want to make sure they keep the legacy. And we were able to go find a great buyer that was in Germany that was looking for their first opportunity in the U.S., the buyer and seller mesh quickly. We got the deal done in six months, [00:11:30] I think, which is a record for me, high valuation. They bought the real estate at a high valuation and it was just a great transaction. And this happened a few weeks ago and the owner and his wife were still texting me how happy they are. And that one is great. I’ve got some really good things in the hopper I don’t want to just mention just yet, but more to come on deals that are upcoming.

Craig Castelli (11:54):

And I want to just be clear that six-month figure was from the time we engaged with them [00:12:00] till the time of closing, it was on the market for considerably less time. You can see that deal and some more information on it. On the Caber Hill website, it was the sale of CLC Lubricants to Bechem. And yeah, I agree. I mean, when you can take a second-generation business selling to what’s Bechem, a fourth-generation business, six, even more impressive, the fact that they’ve made it six generations is a whole story in and of itself. But you have that strong legacy [00:12:30] component that when everything else falls in place, the valuation, the timing, the ability to sell both the business and the real estate at the same time, and you continue that family legacy, you can’t always pull that off. I guess we’ll just leave it at that.

Jordan Gerber (12:43):

And they were actually the second highest offer, but my clients cared about. We knew that the top offer was kind going to gut the company and my clients were aware of that. And so we went with the second highest offer very close in dollars but [00:13:00] was going to buy the real estate, cared about keeping the employees and wanted to grow the business CLC instead of just kind of gutting it and the highest offer didn’t want the real estate. And so it was a perfect fit for us and I’d like to say we did the best job we could. We found them, but it was a great transaction,

Craig Castelli (13:21):

No question. So we’re wrapping up here. Last question. Give the listeners a piece of advice, specifically the business owners and the audience, [00:13:30] something that they might not hear elsewhere.

Jordan Gerber (13:34):

I don’t want to be cliche, but kind of always be working on your business. It’s your largest asset. You always need to be kind of thinking about a sale process once a year. You should sit down with either your board or your consultants or your in-house management team and just kind of go through what happened last year, what the projections look like, what a sale would look like. Make sure you’re doing that [00:14:00] at least once a year, if not more than once a year. Again, have the latest automation. You want to stay active with trade shows and conferences. You want to know what’s happening. You want to be an expert in your own industry, so you want us to be experts. You should also be at the top of what’s going on in your own industry. You want to make sure you have clean financials. Again, if you can’t read your own financials or you’re reconciling inventory once a year or ar once a year, it’s hard for a buyer to [00:14:30] understand that. And so I would just say always be working on your business. We are all recommending to get a physical for our own health. We should do a physical of our company every year and just make sure we’re resetting expectations every year.

Craig Castelli (14:46):

Yeah, that’s the quotable line right there. You need some diagnosis of your business on a regular frequency so that you can measure your improvement and you can constantly make improvements [00:15:00] from there. So love that. Jordan, this has been a lot of fun. Thanks for joining us here on The Close. Before we hop, if anybody wants to get ahold of you, what should they do?

Jordan Gerber (15:10):

My email is Jordan@caberhill.com. LinkedIn, but yeah, email is the best probably.

Craig Castelli (15:18):

Alright, great. Jordan Gerber, managing director at Caber Hill Advisors. Thanks a lot and thanks everyone for joining us on The Close.