Brian Steffens: The Full M&A Experience

Craig Castelli (00:06):

Welcome to The Close M&A Podcast with Cable Hill Advisors. I’m your host, Craig Castelli. Today my guest is Brian Steffens, Managing Director at Caber Hill. Hey, that name sounds familiar. Brian joined us earlier this year. He, he’s the newest member of the team and the first one I’ve had on this podcast, so I must think pretty highly of him. Brian’s been an investment banker for a long time and has spent the last decade really focused [00:00:30] on the buy side. So I’m looking forward to talking today about how he advises private equity funds and companies that are pursuing m and a as a growth strategy. Brian, what are some of the common characteristics of the companies you’ve had the most success with?

Brian Steffens (00:45):

Sure. A pleasure to be here, Craig, as always. Good question. I guess the thought process here, common characteristics, I guess it starts with they have a [00:01:00] problem they’re trying to solve and sometimes I’ve worked with groups that have a very defined problem, whether it be growth talent, competitions kicking their butt and they need to get ahead of the game or they’ve fallen behind. Other times they’ve sort of come to myself and my teams with, we’re not really sure, we just are kind of stuck. So I always look at is there is a problem that they’re trying to solve. [00:01:30] The quicker we can get to a point where we can set some clear goals, objectives, whether it be we can start defining those and translating those into specific products services, be it end markets, geographies, technologies, capabilities, that’s when we really start having the rubber meet the road where we can start getting very real and building out potential opportunities for them.

(01:58):

And more importantly, it can start to crystallize [00:02:00] with them and their team if there are any challenges that maybe they hadn’t thought about. But that’s really kind of the first thing. There is a problem that we’re trying to solve. And again, I don’t begrudge folks coming to us at different stages of really kind of defining or figuring that out. I’d say that groups that we’ve had more success with as well, they tend to have capital to invest. Again, they may not really know how much, or it could be very, very defined is [00:02:30] here’s our fund, here’s the amount we have to invest, here’s our parties we go to for leverage. So I always look at it as they do have a defined need and then they have money to invest to support it or they may not have enough and in which case we may need to go help find sources of capital for them as well.

(02:52):

But really starting to understand where that’s going to come from is going to be critical as far as challenges on timelines [00:03:00] and the authority to go spend that, how deep we need to go on diligence and certain factors. But certainly having capitals is helpful in doing deals as you can imagine. And then I’d say groups that we’ve had better success or have had tremendous success, they understand or collectively we know how to assess risks and opportunities in targets. And that all really starts with understanding the industry. It starts with truly understanding [00:03:30] what that business is, what the infrastructure is, what their needs, desires, and weaknesses and challenges are. I’d say that there is usually a learning process with each new client and then that’s going to evolve over time when it comes to alignment in understanding the biases and the views of where we come into it and what ours are and then sort of where they’re coming from.

(03:57):

So there’s always a fun process of learning kind of [00:04:00] alignment. And what’s fun is over time it can be very quick shorthand and in other words, our team could have a great conversation with an owner and a business. Maybe it’s one we’ve been tracking for a while, but we’ve had a good conversation and it could be as simple as a text, Hey, just talk to so-and-so off the charts and you list the two attributes, Hey, geography, size, growth, whatever. And it’s just like this other business. So there’s [00:04:30] that frame of reference so we can really get it very quickly and a text back, Hey, let’s set it up. Let’s go talk to ’em. So that’s always interesting and a challenge, but we will definitely get there. And then I’d say just a couple other quick thoughts on success that I’ve learned over time, even though we may be partnering with them as an advisor, I’d say their willingness to roll up their sleeves and get after it is critical.

(05:00):

[00:05:00] Yes, we’re helpful in the early days of building the relationship, but ultimately that’s going to have to transition over to the sponsor, to the portfolio company, to the strategic company that’s making the acquisition. So at some point we do sort of step back as a very active participant but in the background. And so they’ve got to be very willing to get after it. It’s not just necessarily serving up, especially in a proprietary process. It’s not serving up an opportunity with fully [00:05:30] vetted financials and a SIM that’s 50 pages with all we’re building it on the fly and it takes time. And the sooner that they can engage, the sooner we’ve got really an understanding of where the challenges may lead or may be, and ultimately what we may need to do to get this thing further to a decision point, whether that’s going forward with the deal or maybe it’s just moving on from them at that point.

(05:55):

And then lastly, two other things that I’ll mention is they’ve got to [00:06:00] like people, so they’ve got to be engaging. They generally, they enjoy talking to people. Those folks that are doing deals need to talking to people. It’s not hiding behind spreadsheets, it’s not hiding behind screens. They want to get out there, they’ve got to make those connections. Yes, they’re trying to do something here and it can be difficult, but those challenging conversations are always better when you’ve started to build that relationship. But they got to like people and then they got to be curious [00:06:30] and they’ve got to ask open-ended probing questions. And the only other thing would

Craig Castelli (06:36):

Be you could do business with people. At the end of the day, you have business owner on one side, you have potentially a former business owner who’s still the CEO of their now backed larger organization. It doesn’t matter if the company makes a widget or provides some type of service or sells technology, these two people have to come together and align, right? Otherwise,

Brian Steffens (07:00):

[00:07:00] Hundred percent,

Craig Castelli (07:02):

The deal never gets anywhere. And if you have a buyer who thinks that they can only be bothered to talk to the business owner once they reach a certain stage or once they know a certain potentially monumental amount of information, doesn’t that make it hard then to convince the business owner, hey, this is where this is going to be the right landing spot for your company.

Brian Steffens (07:24):

A hundred percent, a hundred percent. Technology tools, all this stuff’s great, but at the end of the day, [00:07:30] people are doing business with people. And so again, the more engaging you can, you can check your ego at the door, make those connections. And frankly, one of the dynamics that’s pretty common in this middle market that we as far as our client base and the people we advise is oftentimes it can be perceived the acquirer or the buyer or the potential buyer or acquirer is bigger, stronger, more sophisticated. Again, it’s not always the case, but that’s sort of [00:08:00] the perception. And so when you have someone that is perceived like that to a business owner, a business owner, it could be a $100 million business, it could be a $200 million, but still there’s that perception the more they can come to the table sort of hat in hand, being open-ended, friendly, engaging, and really frankly investing in that early stage of the relationship by sharing experiences that may be similar to what they’re going through. [00:08:30] Those are the ones that win long term. And again, they win because they’ve created this environment that the person is comfortable, they trust them, they build that credibility, and so they’re not willing to necessarily go out to the market and they want to try to see if they can hammer out a deal with this particular group. So a hundred percent agree with you.

Craig Castelli (08:51):

And when you talk about alignment, I think if there’s one word that speaks to success in relationships and in people doing [00:09:00] business with people, it’s alignment. I can think back to some of the most successful buy-side engagements we were a part of years ago before you joined the firm and really took the reins to supercharge this program here is when we had company CEO, private equity team, our team all rowing in the same direction. And this view that this really is a team approach. It’s not just Caber Hill, go source what you can source and then throw [00:09:30] ’em to us and we may be sourcing on our own. It’s let’s collaborate. You’re truly an outsourced extension of our business, and if you win, we win. We all win. The business grows and it’s successive. If you think back to some of the best relationships you’ve had with buy-side clients where you have this alignment, what did that really look like in those scenarios, whether it’s something that the business owner or CEO [00:10:00] did or the way they acted or it was coming from the fund top down, it’s probably different in different scenarios, but what did that alignment really look like that I guess for lack of a better word, made your job easier and therefore made you more successful?

Brian Steffens (10:14):

Yeah, so I’d say on the tactical side, it is truly understanding the, so again, full kimono, opening it up, being transparent, we need to understand the finances of the business. We need to understand how they’re making money. [00:10:30] We need to understand how they’re viewing. If it’s a platform, again, what does it look like? How is it piecing together, entry multiples, exit multiples, leverage ratios. We need to kind of understand that because it’s really, we are tip of the spear being out there and being a steward for the deal and really being a champion for them in the marketplace. In some cases, we are reframing maybe perceived biases [00:11:00] by others in the industry based on 40 years of them being out in the industry. In other cases, we may be positioning a unknown fund as being experts in the field based off their track record and based on who they’re partner with.

(11:16):

And so I’d say the alignment comes to understanding sitting down with the sponsor, the portfolio company, the owners, and really helping them understand how the market [00:11:30] probably will perceive them and what are our strengths, what are our weaknesses? I mean, it’s kind of basic Business 101 or Porter, but understand the strengths and weaknesses and then how we overcome some of those. And then in some cases maybe it’s perception, other cases it’s real. And I always say that in my opinion, yes, you want to put your best foot forward, but it’s not always bad to have a few weaknesses or to share certain things where you’re still learning or kind of putting them in a position, them being the [00:12:00] potential targets in a position of power or influence or strength where they can then share their knowledge. And again, now it really is an equal footing conversation that we’re moving forward. So again, going back the tactical, we do need to understand the finances, where the money’s coming from, how it’s being spent, challenges in the business that may be pulling focus or ultimately bandwidth away from this effort, because again, we can be very helpful in shaping the development [00:12:30] and the evolution of a relationship if we know that. So again, full alignment if they’ve got,

Craig Castelli (12:35):

And you’re talking about your client being willing to be transparent with you on some of these aspects. Yes, hundred percent. You really understand how their business is functioning and making money, and therefore you have more clarity on how a potential target really fits in there.

Brian Steffens (12:50):

A hundred percent. And I’d say kind of getting into what does that business look like three to five to seven years, what is the end goal? Is it [00:13:00] ultimately transitioning, exiting to another potential investor or is it again, what we want to be in Europe in five years? And to do that, we need to, whatever it is, frankly, we have clients that come to us in many different shapes and forms, and it’s more like, can we be successful in helping them execute and achieve the goals that they’re looking at and then putting in the right pieces along the way. And the ones we’ve had the best success are the ones that have [00:13:30] been, again, the clients have been transparent. We have a full understanding, which then allows us to have better, more quality conversations earlier with potential targets, give them more guidance as to what we’re trying to accomplish.

(13:46):

So they’re coming to the first conversations, the first series of conversations with more education and comfort that they’re actually on board with the strategy. It’s a lot easier to be [00:14:00] trying to solve these problems and ultimately putting a deal together where it’s going to get sensitive when you get into deal structures, when you have that level of foundation. And it really does start with our clients being fully transparent to begin with. And then if not, it’s our job to make sure we get what we need to do what I’m talking about. So again, sometimes it’s a little bit more behind the curtain, that’s fine. Over time it may take us a few months, few weeks we’re going to learn it, we’re going to be more dangerous. And again, we’re [00:14:30] going to do that because it just makes it for more actionable, quality conversations when we actually are putting targets and clients together.

Craig Castelli (14:40):

It’s pretty amazing that we even have to talk about this because it’s not like you’re working for free. You’re charging market rates, but market rates are a real investment and for them to commit to the investment and not fully enable you to do your job is a little alarming. Yet I’ve been there too. I [00:15:00] know it happens. I think what I want to ask you about next is just the competitive landscape. As we’ve seen private equity funds raise, or firms I should say, raise increasingly larger funds as we’ve seen the growth in the family office space, the growth amongst independent sponsors and searchers, everybody’s scrambling to find deals and find ways to put money to work. And I think to the business owner, it’s a lot of noise [00:15:30] to sort through. They’re getting inundated, whether it’s from sell-side advisors telling them they have a buyer for their business, it’s from buy-side advisors reach out on behalf of a find and it’s from find source sourcing deals on a proprietary basis. What are you doing to help your clients stand out in the marketplace?

Brian Steffens (15:51):

Yeah, I guess I’m always thankful when an owner responds, whether that even is in some cases not right now [00:16:00] because they are being bombarded. There is a lot of noise out there. It is active. But what I would say is what are we doing to set our clients apart? And a lot of it has to do with first and foremost being relevant. And what I mean by that is both Caber Hill and the client. So again, we’re investing in relationships in industries that we know well. We’re investing in associations, we’re [00:16:30] giving back to the industry, we’re building our own relationship. One, likewise, our client needs to be relevant to what it is we’re searching for. I’d say that as inefficient as some cases, the middle market M&A landscape, it has gotten a lot more efficient. So I do think that from the sponsor community perspective, they have really honed in on where they have succeeded.

(16:55):

You see less generalists than you did five years ago even. So today people [00:17:00] are getting more specific, here’s where we won in the past, here’s what we know. Well, they’re building a lot in the ways of investing in operating partners and building out in some cases in advance of even having a platform, sometimes building in and bringing in industry expertise to help shape. And so that makes our job much easier when it comes to we’re now positioning a partner that may be known in the industry. Now, again, we may need to reset some expectations around [00:17:30] who they are and what they’re looking to do here, but the reality is be relevant first and foremost. You’re not wasting anybody’s time. It’s not a generalist. You’re not getting an email that’s got four or five bullets and we know nothing about you. And that kind of leads to the next thing is,

Craig Castelli (17:43):

Which is amazing that you even see that anymore, that people don’t really know about the businesses they claim to want to buy, but it happens.

Brian Steffens (17:51):

Well, and that’s as a business owner, I mean, that’s got to be frustrating. Seven to 10 times a day, I’m getting these random emails from someone that [00:18:00] clearly hasn’t even looked at my website. And so I acknowledge that. And again, part of it is persistence in making sure they realize and taking a longer term view of I need to get in front of this owner. I need to share something exciting, who I’m working with, what we’re trying to accomplish and why we think they fit with it. So again, 10–15 no’s, that’s fair. I mean, at some point we’ll get in there, we’ll get a chance to give them a little bit of an understanding. [00:18:30] But part of the reason why we can do that is again, the dogged research. It’s painstaking research. And so in other words, not a shotgun approach, not downloading a thousand names and just blasting out a bunch of emails.

(18:45):

No one’s making their way to a market map with our clients without a lot of logic behind it. And that could be everything free and paid that we can get our hands on when it comes to research that’s talking to people in the industry, our relationships, [00:19:00] that’s our own relationships that we’ve built over decades in the business. Here’s why we may not know. And so it is one of those things where there are certain things we’re still not going to know, or maybe our information might be somewhat stale. It may be six months, a year old, but it’s going on there. We’re asking our client to take a moment to give us the approval to go out and talk to ’em because of some reason. So I’d say when we are finally getting a chance to talk to you [00:19:30] live, do a Zoom, do a meetings, or frankly take the time to write an email to send it to you, it’s a lot of thought goes into it.

(19:38):

And I always view it as we take the time to share and share what we’re trying to do so you can know what journey you’re joining or even if it’s early stage, I don’t think everyone does that. And I always view it as being respectful, their time to do it. But again, we’re relevant. We’ve done the homework and [00:20:00] we’re upfront sometimes with some of the things we don’t know or what we last talked to them about and why we think it might be a fit. And then the last thing I’d say, how do we separate is just being easy to deal with. Again, when you have two dozen, three dozen, four dozen people out there talking to you, reaching out, it’s so funny to me how difficult certain buyers can be. And again, not realizing, and again, there’s two different, there’s the auction process, there’s the proprietary process, proprietary.

(20:30):

[00:20:30] You are creating the urgency with which you’re driving that deal. And likewise, you’re not going to force any owner to sell their business or engage with you. So you need to be easy to deal with. You need to be responsive, transparent again. So we spend time with our clients and each one of our clients at times have different comfort levels with the amount of information they need at different points in time. This isn’t, we get a [00:21:00] chance to review, we go in front of the investment committee, bids are due in two weeks. No, no, no, no. This is very much we need to be comfortable with. Well, verbally, we know these six things plus our research. Now we’ve learned a little bit more. Now we’re going to get NDA. So again, being easy and making it comfortable for an owner to engage in a way where we can get more substantive quality information that is moving us towards a decision point, [00:21:30] which again, valuation deal structure. I mean really when it becomes we’re going to throw our shot over, now we’ve finally got enough information where we need to figure out if this is for real or not. And so I’d say being easy to deal with would be the third most important thing along with just relevancy and then understanding and being really good around the research and really understanding your target. And then again, we’ve talked about earlier, but understanding what your client’s trying to accomplish in all those things.

Craig Castelli (22:00):

[00:22:00] Yeah, funny aside here, but I got two phone calls yesterday alone from people who want to buy my wealth management business. I don’t own a wealth management business. Caber Hill, for those who may be listening who don’t know us as well, we’re not in the wealth management business. We do have an advisory evaluation and some related services there, but nothing else. But these are clearly people who bought a list and just decided to blindly call it. And maybe there’s something to that numbers game, but what are the [00:22:30] odds? I returned that phone call pretty clearly it’s a zero. And if I had another business that was in a sector that was also going through a consolidation period, they may have just blown all credibility with me right there by making the call and miscategorizing the business. It is, call this what you want to call it. It’s a sales job at the end of the day, and you need to make it easy for the business owner to trust you and to want to move [00:23:00] from step one to step two to step three, to get to the point where you can have more conversations, potentially make an offer, potentially go down the path of getting a deal done.

Brian Steffens (23:10):

Yeah, it makes me think of one thought too. I had say the one thing that where if the market has moved to a point where money is truly a commodity, so I’m trying to think how to word this now, when money becomes truly a commodity, meaning there [00:23:30] are 30,

Craig Castelli (23:30):

Which it kind of is?

Brian Steffens (23:31):

Well, it is, but it isn’t because the way I view this as not all money is attached to the same investor and really frankly, that opportunity. And so what I’m always like where we’ve had the most success is truly being able to differentiate our money from others. And yes, I do agree. Where I’d say that at times our clients don’t necessarily succeed is when it is truly a commodity where you take these three numbers and here’s the multiple, and here [00:24:00] you go and you’re gone. And three months I’d say those aren’t the type of buyers that I, frankly, those aren’t the type of opportunities I enjoy. I mean, I enjoy building a business with people to sum end goal, whatever that may be, 3, 5, 7, 10 years from now. That’s what we do. That’s what we like to do. When it becomes something where you can send out an email, take a list of thousand numbers games, send out the a thousand emails, give me these four numbers, I’ll give you a bid, I’ll give you, here’s our offer [00:24:30] the next day. If I’m a business owner, that’s not the person I would want to sell my business to personally. But at the same time, that’s not why you would invest and work with a partner like us. I mean, the types of businesses we’re helping clients buy are the ones that they want to buy, not the ones that are available for an email and a quick formula calculation.

Craig Castelli (24:54):

And I think we’re seeing that the platforms that have been built solely [00:25:00] on financial engineering and winning the add-on war by paying a half a turn or a turn more than everybody else, or the platforms that are now stuck—and having the PE firms are having a hard time getting those companies out of their portfolios because all they did was accumulate a bunch of random businesses and a bunch of EBITDA as opposed to building a business that is cohesive and can stand on [00:25:30] its own two feet and can be equally as attractive to a number of different types of buyers in that next tier.

Brian Steffens (25:37):

Correct, a hundred percent agree with that statement.

Craig Castelli (25:41):

So let’s shift gears a little bit thinking about the same topic, but while you focus on the buy side, you’re not a one-trick pony. You also work on the sell-side on a select basis as well. How does working on the buy side actually make you better at doing sell-side [00:26:00] work?

Brian Steffens (26:04):

I hadn’t really thought about it, but I’d say, I guess I feel like it does, but I put it in the same context of operational experience as well. So if you’ve come from background where you’ve run businesses and you understand that I think any of those additional experiences above and beyond truly being a sell-side investment banker will make you a better sell-side investment banker. [00:26:30] I’ll say that as an intro, but I certainly think buy-side, having worked with dozens of buyers in different classes as far as sponsors and independent sponsors and strategic buyers that have never acquired business strategic buyers that have acquired dozens of businesses, portfolio companies within, I’d say that it is helpful and it helps with truly understanding the [00:27:00] value drivers of the business, not from an academic perspective as to what your books tell you it should be, to really truly understanding how you should segment, what are the value drivers, how to position this business and realizing that, do we really have, we’re going to market and do we have 2, 3, 4 different types of buyers and do we need to go through and create customized SIMs or [00:27:30] customized experiences for them to plug into the opportunity?

(27:33):

And then really frankly, getting into it really highlighting specific things for specific buyers that maybe isn’t intuitive. So I think again, coming at it from the buy side, and then I think those are some key things.

Craig Castelli (27:47):

It gives you that perspective. The way that I think about it, you were talking about alignment and you were talking about intent and how the buyers really need to understand the seller’s business. They need to understand what [00:28:00] they’re buying, they need to really understand and be able to articulate how it fits. Well, the opposite is true. I find that on the sell side, we spend a ton of time educating a business owner as to what is actually valuable to a buyer and what is just the fluff and where their business stacks up. And the more each side can take the other’s perspective, the more we can get to that win-win. And we get out of the zero sum mentality.

Brian Steffens (28:29):

And [00:28:30] I agree with you, and I’d say the other thing that I’ve found is because I’ve done so much of it and because buy-side is such a low probability, percentage, probability of interaction to deals closing, I’m always cognizant that they have people and layers and things. So trying to understand what their process truly is, what are the decision points they need to make, what additional information they may need to make [00:29:00] it easier in some cases. So basically just not resting on the SIM or some of the answer, really truly trying to understand how I can make it easier for them to come back to us with a definitive no or definitive interest. And then we can start clicking through the buts and starting to answer those. I have always respected those owners that I’m reaching out to that either tell me, not interested, now’s not a great time, hey, I want to accomplish this, I want to do [00:29:30] that.

(29:30):

But at least being responsive and again, kind of understanding where they may fit in the future. So I get a chance at that point to say, well, hey, understood. Hey, this is somebody that’s going to be in here for a while. We’re going to be not just acquiring, but we’re looking to grow. If now’s not the right time, it’s fine, but at some point it may be we’d love to stay in touch, we’d love to share some additional materials. We’d love to continue to share what we’re doing and where we think you may fit. Likewise, I’d love to learn more about how you’re winning out there, how [00:30:00] you’re growing, because inevitably what’s cool about these things, and you do it for a while, and now I’m off on a little slight tangent here, but what’s cool about it is that inevitably the businesses may start to grow together without them even knowing it if you don’t have those conversations.

(30:15):

So again, kind of going back to the question around does it make you a better sell-side advisor? I think it does. I’m always trying to get at where is that connection point? And it may not be this one, it may not be now, but certainly at some point [00:30:30] it will be, and it may be in this case, I’m always understanding it may not be this deal that I’m working on, but let’s still talk. What else are you working on? Where else are you guys looking to acquire? Because at some point those may align. So again, always kind of thinking through. And I think at times, potentially from my experience, there are sell-side advisors or those that focus more often on sell side that don’t take the long-term view, [00:31:00] that each one of these is an opportunity to build a relationship, to open up and share what you’re working on and what has Caber Hill excited other clients we may be working on. And without even knowing it, we may be working on something that’s actually more relevant to what they want. And again, so again, just trying to take in that open mind and then being more open to making sure it truly is a no and why.

Craig Castelli (31:26):

Yeah. Yeah, that makes a lot of sense. [00:31:30] Well, right now you’ve got a number of things going on. What are you working on right now that you’re most excited about?

Brian Steffens (31:38):

Yeah, I’d say the things I’m most excited about right now, right now, they tend to be several businesses we’re building in the business service space. So they’re traditional kind of blue-collar business services. And so spaces that we excel in that we know well, we know how to win, we know the players, we know [00:32:00] how to handicap and different types of deals and sizes, and we can be very helpful to businesses. So it is natural for us to come at these opportunities in a consultative way, both for the client and the potential seller, which is a very comfortable place for us to play, and more importantly for our clients to win over time. And frankly, I think ultimately create really good outcomes for people that aren’t our clients, that are the potential seller that we’re not representing, [00:32:30] but we’re creating really good opportunities for them to solve the problems that they have. And so right now we’re building a really cool book of business that business services related businesses that again, we understand really, really well. And then we’ve got a couple others around the manufacturing space, again, industrial space that we know well that again, very natural for us to help build clients that are eager to move the [00:33:00] needle, but we’re in there as true advisors and partners, which is always exciting. So not just kicking over a lead. So those are always fun for us.

Craig Castelli (33:13):

And some of these, what I think is pretty cool too, are not just your tried and true sectors where there’s a hundred platforms and you just rinse and repeat trying to do what everybody else has done. There’s a little bit of that in what we do at all times. But some of these sectors I’ll get into specific, [00:33:30] are more emerging areas, which always makes the job a bit more fun.

Brian Steffens (33:35):

And again, I think the other things that we’re hunting in to find partners, if I may be so bold, is some more on the industrial services, environmental services. So those are sectors that tangential or adjacent that we’ve definitely come in contact with in the past that we’re actively looking for partners. And certainly spaces we find very exciting that are attractive, that [00:34:00] are, I guess, attracting investors and money and capital,

Craig Castelli (34:05):

Some of those environmental services, some of those testing, inspected / inspection controls type businesses, great areas. Okay. Last question, and I’m tempted to ask you to tell us some of the dad jokes from that book that I see over your shoulder, but I’ll stay on script here. What’s one piece of advice that you would give to business owners listening here? Perhaps something that they’re not going to hear [00:34:30] somewhere else?

Brian Steffens (34:31):

Oh, everything’s already been said, Craig.

Craig Castelli (34:36):

I figured you’d just say, take my phone calls.

Brian Steffens (34:38):

Well, I would be happy for that. I think one thing I’d say would be, I was trying to think of the basically success changes over time. And so I think we’ve talked a lot about alignment here. I’d say trying to understand and [00:35:00] drill in as to what success looks like, both for those maybe potentially selling their business, and then success for those acquiring, trying to understand what that looks like. And then for business owners on the sell side that we come in contact with or I come in contact with, if I’m represented advisor, where we have the most challenge at times, and it’s heartbreaking at times to talk to an owner, and frankly we get it when we do early consultation with sell side is like they built [00:35:30] a business, they’re making a couple million dollars a year, maybe it’s 10, 20, 30, pick whatever number you want on the top line.

(35:37):

They’re making a couple millions, great lifestyle business. And then to come to them and really let them know that, well, it’s great. Comfort does not equal success in that scenario. And helping them understand what’s a successful transfer of the business, sustainable cash flows, layered management, bulletproof when it comes to systems, processes, et cetera, scale, succession [00:36:00] planning, all those things. So again, definition of success changes both from the idea of a seller going through their stages as they grow a business, they get to a point, they get comfortable, and then all of a sudden maybe they stop investing or so again, trying to build a successful business that is successful in the sense of transferring different definition than comfort, different definition from those you’re acquiring. And then I’d say success may change as you make a couple acquisitions. Now the needle may [00:36:30] move, the milestones may move.

(36:31):

What is it today? And so again, going back to that theme of alignment, it’s like trying to figure out, now we’ve made a couple acquisitions, let’s go back to our strategy. Do we need to change it? We’ve been successful, but now tomorrow we’ve got nothing or whatever it may be, or what are we trying to do now? We’ve blown through two milestones now we need to find. So thinking through the idea that success and winning may change daily and always trying to go back and [00:37:00] revisit what does it mean to you today. I think that’s kind of important. Again, probably been said a million times, and maybe it’s not in the right frame, but those are one things that kind of comes up a lot. But it goes back to kind of

Craig Castelli (37:14):

What I, yeah, I mean, I agree. Look, the beauty of owning a business is you can do things the way you want to do them, and there’s no real right or wrong answer, but we do see a lot of owners who get to the latter stages of their career that pulling a couple of million dollars a year out of their [00:37:30] business, and the focus becomes preservation over continued growth. And that preservation can be great for your lifestyle. It can be great for your stress levels and your peace of mind. It may cost you a little bit when it comes to the eventual sale because by the nature of being in preservation mode, you’re probably not maximizing the growth and maximizing other areas of your business. And again, that’s okay, but you need to understand and make this a conscious choice, not just something that’s [00:38:00] passive and happening to you. Brian, this is a lot of fun. If anybody listening or watching here wants to get in touch with you, what’s the best way for them to do that?

Brian Steffens (38:10):

You can reach out at brian@caberhill.com or I’m on LinkedIn and you can call me.

Craig Castelli (38:22):

Great. Well, thanks for joining today and thanks everybody watching and listening to the close.

Brian Steffens (38:27):

Great. Thanks, Craig. Appreciate it.