Touchstone Talks: Ep 4 - Do I Need an M&A Attorney?

See? We are back.

So tell me what,

what you like
about working in the M&A industry.

What I like about working in the M&A

industry is,
I think working with the business owners.

Each one brings a different story

of how they started their business,
how they built their business.

Each one is a symbol,
usually at at least one thing.

And that's
what drove their success. Right?

I think you had,

Cosmo.

Cosmo's skill was

they were able they, they figured out
how to get in with Google early and grew

with Google and just rode that tidal wave

of appropriately managing their, their,

their Google AdWords growth
and using that to drive sales.

Right.

For each business owner.

It's a different story.

Yeah.

And one of the things
that I really enjoy is understanding

what is that special thing
that they brought to the table.

It's something that intellectually
I get to take away from me

and use with other business owners.

Right. True.

So you work with the 100, 150 business

owners
or founders or what have you, and you and,

learning the

difference between wisdom and experience.

Very true.

So, I really enjoyed that.

I love the opportunity to take them

and their life's work from here. Right.

They worked in it for 2030 for, you know,

five, ten, 20, 30, 40, 50, 60, 100 years.

If it's a multiple generation business.

And get them to that point

where they've wanted to get to hopefully
for some period of time,

which is that actual exit and,
that's really satisfying.

I think, you know, everybody
I know that works in other industries

that are adjacent to ours
says that ours is the best.

Everybody wants our job.

They don't know the best.

I was like, well, they might
change their minds after a little bit.

They they don't understand
that, you know, you're flying.

You know, you're jumping
without a parachute sometimes.

Thing that we work
operate on a success basis largely.

You know, if you're

not successful, you're not going to be
in this industry very long. No.

So you got to get people

to the finish line, not just down the path
but to the finish line.

And like I enjoy every part of it.

I enjoy it so much
that I didn't want to run touched down.

So that's true.

And then you joined us
and you run touched on now

and we, you know, I like doing the deals.

I like, that that's
where the to me, that where the fun is.

Excellent. Well, for those of you

that are just joining
us, Jeff just gave us a great segue.

We're doing a meet
the partner episode with Jeffrey

Rich, one of our three partners
that I touched on. we.

May be.

so you enjoy this component of it.

What got you here in.

Are you saying, like.

Like, what's career path?

Because you didn't have,
you know, you did do the the financial bro

component, right?

Like you came with the,
the finance degree.

So out of college, I was hired by,

well, given a job offer by, yeah.

A firm on Wall Street
called Cater Fitzgerald.

I did not take that job.

I ended up, over the course
of a couple of years,

coming to work for it on Wall Street,
but in a different role

as, like an independent
and proprietary trader.

And so that's where you go to a firm
and they give you

an amount of capital to steward,
and you traded, very actively.

And if you make money,
you get a percentage of that.

And if you lose money,
no paycheck and fired for you.

So I kill or be killed.

So it's kind of the ultimate form
of capitalism.

As a young person, I think it's
really attractive because there's no cap

on the income that you can make,
and you're surrounded with a lot of other,

you know, people that are in most cases

far more intelligent than I am,
but really smart people.

And, you know,
the ideas are just flowing and,

it's,
it's it's the job that I wanted to do.

And I got to do my life's,
you know, my life's

dream at 24, 25, 26, 27 years old.

That's pretty cool.
That is pretty cool to do that.

No. By 32, I was really done with it.

It's a young man's game, I would say.

Not that there's not a lot of older

people who are really successful traders
or portfolio managers, but,

there's definitely a,

negative, emotional component on it.

Over time, the good days feel less good,
and the days when you lose money

feel more bad and, it it

it, you know, I think it kind of
wore out emotionally on it.

And so by the

time I was in my early 30s,
I was time for a change.

I also had a view about the market
that was correct, but early and correct.

But early means
you're going to lose a lot of money.

So it was 2007.

End of 2006.

I went and worked in the hold out
the recession

that I anticipated
was coming in the insurance space.

That was good for a variety of things.

It definitely broadened me out.

It was also the change in pace was know
market from,

you know, from that high pace, high
stress environment.

Now you're in, you know, all
the disasters happened extremely slowly.

Fair category.

It was really good
from a family perspective, etc.

I did not find it
very intellectually satisfying at all.

And I was looking for a change

and I found,
the founder of touched on by Cammarata,

who, you know, had started to build
the small mergers

and acquisitions company
in northern Connecticut.

And Mike took a shine to me
because I reminded him of his son,

who went to the same college

that I went with, went to,
but he couldn't work with this.

So that's very true.

And so I sort of became Mike's
putative son,

and so was kind of Mike and son
for a couple of years.

And Roy joined us as you remember.

And then
and then Steve joined us and, and others

along the way and,
and you joined us and others since.

And so Mike really wanted to build a firm
and but he needed somebody

to do the work of selling the companies
because you might want to do that more.

And so he built the firm.

I sold the companies,

and then he brought in more people
to sell the company companies

that had sort of went from there. Yeah.

So I've been with touchstone now
close to 15 years.

I guess I'm the longest dated.

I think you are.

I think I think you are.

But, I'm planning on being here
at least another 15.

You better be.

We're not getting rid of, you know,
keep closing the deals.

So you are not only someone
that likes to close the deals.

You actually acquired a company
from someone else within the firm.

I did.

He regrets this.

No. Yes.

He was selling a small company.

At the time, I was looking for

a small company to buy, and yet,
we bought it.

We owned it for about ten years.

It's been a really good investment for us.

I think we are.

If we were to exit the company,
I think we would return something

like 30 times the, initial investment
we made on it.

So that was that's a healthy growth.

Continues to pay dividends for us.

I also have,

a logistics startup, that we are
working on that I'm the majority owner of

and a, a couple other businesses
that I'm involved with as an investor.

Mostly in the sort of startup
realm, either software or medical devices.

Yeah.

So it's safe to say that you like
working with owners because you are one.

I do think that there's
a little bit of the triad mentality.

I think most people or our owners

would not want to have to go back
to working for somebody else.

I think there is an autonomy,
from a decision

making perspective,
that I think is important.

And one thing that I did realize
at the insurance

companies that I worked with,
which were really, really big,

you know, companies
with thousands of employees

and really a bad fit for me
is that I would always do my best.

When I was just talking with the decision
maker at the company, either

the CEO of the company that I worked for
or the, you know, the CFOs

or CEOs of the companies that, you know,
we were administering insurance for.

It's just for me
a lot easier to just come through

and speak directly,
candidly, good, bad or indifferent and,

I like that,

you know, I, I do like,
I think to get sort of beyond some of

the red tape and just get to the point
where decisions can be made cause

in the decisions is,
I think, where progress happens.

That makes sense. That makes sense.

So one of the things that I've noticed
working both with you and with Steve

is that you read businesses differently.

Okay.

So you tend to come
from a financial standpoint.

So talk a little bit about how

financials impact

planning for an exit.

Sure. It's true. I can't help it.

You know, that Wall Street background,

and CFA chartered holder background

does cause me to look at things probably
less operationally initially than you do.

Steve does it more
from the financial perspective.

I will say that I can read
an income statement or a balance sheet

and tell you many things about
how the operations are running, including

probably how your organization,
from an organizational standpoint

is set up, whether people are happy,
whether they're not.

You can tell a lot
just from reading financials fluently.

But, yeah, I'm
typically more focused on the bottom line

and like, what it is
and what we need to do to make it better.

And probably less astute
when it comes to some of the, like,

we know that market
like fair, fair, you know,

you know, I, me to be more focused on

what we need to do
to drive the financials forward

and less on some of the operational
or softer sides of it.

Yeah. Very fair.

And that's one of the reasons
that I touched on.

We work as a team. That's right. Right.

So you know, our advisors come
from different different vantage points.

And pairing them
appropriately gives the clients the best.

That was one of the things that I think
was a really important change

that touchstone made along the way

from going sort of as a solo entrepreneur
on every deal.

Right.

Maybe supported a little bit
by back office

to really bringing a team to the table.

I think that's something
that's important.

I think it's also a differentiator.

There's a lot of soul practitioners,
who are really good.

But they can only be one place at once.

They might be one of those places,
might be a needed vacation

or every now
and then, every once in a while.

And,
I think allowing for some specialization,

you know, thinking of Joe from our team,
such a unique resource,

in the finance space, correct.

Others, you know, to to allow people

to specialize somewhat,
I think helps drive a better

overall experience for the business owners
that are looking to exit.

Agreed? Agreed.

It's something that that we do quite well

is getting the right parties on the deal.

Talk a little bit about

the difficulties
within a transaction time.

Where do you see hiccups
the most frequently?

Okay.

Well, I do think that was at, conference
last week.

With that,
we belong with a lot of other M&A

and advisors and investment bankers,
both nationally and internationally.

And one of the, one of our friends
there said something that I think is

very true, which is it's harder than ever
to get deals over the finish line. And

it's easy to bring them in

and and to sign them up as clients.

Right? There's a lot of people,
demographics, whatever.

There's a lot of people
that are looking to exit their business,

but so many of them are taken off
track along the way

by either known or unknown

factors,
right agents or endogenous factors.

And you can't do anything about the things
you couldn't plan for, like,

I don't know, Trump tariffs,
which is definitely creating some issues

for it, is prospective clients or clients
that would like to come to market

that are dealing with those
you can't deal with,

you can't do anything
about what happened to us.

I think in 2011, where we had a closing
scheduled for a business being acquired

by a Japanese company and the,

Japanese
were coming for to sign the paperwork.

They get off on the tarmac,
at Bradley Airport and find out

they have to go back
because there's been an earthquake.

And what turned into the Fukushima
nuclear crisis?

You can't do anything about those things.

You know,
there are a lot of things that you can.

Yeah.

Although I would say there is one thing
that you can do about them.

Probably the true adage within the M&A
business is that time heals all deals.

So if you're a tech business, right,
and like people are more

attuned to it, I think in technology that,

if you're all the way everywhere
and always in embrace,

and if you don't think you're in a race
you lost, you just don't know you lost.

Right? Exactly. So but,

over a long

enough period of time,
a bad thing will happen.

Torpedo would deal.

Either your it will happen
to your prospective acquirer,

or it will happen to you as the party
looking to exit your business.

So we've adopted this sort of measure
twice cut once.

Approach, as you well know.

And we go through and we're really careful
to try to go through and structure

and understand what the good is
of course, that the business.

But what is the bad and the ugly, right.

Where are we a little bit under?

Where do we need to get ourselves
from the business perspective?

Is it, you know, to talk about financials?

Is it our financial reporting.

Right. Is it do we have a sales problem?

Do we have, an owner dependency problem.

Do we have a to you.

Do we have minority shareholders
who don't agree.

Right. Who could be a deal?

If they're not treated or,

you know, kept in the loop appropriately,
there's a lot of different,

there's a lot of different factors
that have to be evaluated.

And, you know,
I think that if you do those,

try to address as many of those
before you go to market as possible.

That's the best way to try to avoid
hiccups between, say, a letter of intent.

Right. Closing.

Yeah.

So how and we've touched on it
a little bit, but how long do you see

a transaction
like actually happening these days?

Okay.

So I think it's getting longer overall.

I think buyers are very worried
about making a mistake,

spending money on due diligence
not to get to the finish line.

What does the seller or their investment
bank or M&A advisor know that?

I don't know that information asymmetry.

Right.

But I think that they're more cautious
about that a little more suspicious.

Generally feel like everybody
is a little bit more after Covid.

A little shorter with

you know
with, with their I guess with their,

I guess with the sense of

grace that you give another team
that you're working with.

But, I think it's a situation

where, it's just,

I guess the biggest issue that

that I see between the, the, the signing,

even the signing of letters of intent
takes a lot longer than it used.

We've all right.

You know, that's

one of the things where we always take
a little bit more time than some people.

We really try to,
we want to make sure we have a deal.

Right.

We don't just want to sign them up
and then find out

two months later that there are all sorts
of rats running around that.

All right, let's figure it out and realize
that this wasn't the right fit buyer.

The seller just not the right.

All right.

So we take more time than most,
but even even that process

takes longer, I think for us, many times
than it used to.

Lately I've noticed the same. Right.

Everybody wants to agree,
but nobody wants to incur a cost to agree

and nobody necessarily
wants to meet in the middle to agree.

They just want you to agree with them.

Yes. And I do think that buyers are
a little bit more I think they're pickier.

What true huge success for them.

And I think the buyer community is also
a little more unyielding in terms of,

like I've always said, deals either
close or don't close

about whether people get jerky
over the last several percent of the deal.

Right, right.

Well, that was the very first deal
that I worked with you on.

And, we gave up.

Yeah, we gave up.

We got down to the finish line

and we were arguing over $1,000.

It was a no. It was a no.

We had gotten them to agree,

and it was down to it
because it was a $3,000 bill

and they're like,
Will each pay a thousand?

And I'm like, good, there's a third left.

So we gave up a thousand
of our of our fee,

which was the people
getting the least out of the deal.

Right. Like, yeah.

And I
it changed the dynamic of the entire room

because we gave up a fee
and they both felt quite silly.

And I think
a lot of times it does come down to people

getting emotionally anchored
into their position and just starting to.

I think that's one of the things,
the reasons, the biggest reasons to hire

an M&A advisor or an investment banker,
whether it be touchstone or somebody else,

is to put on my old Boston
accent to be the buffer.

Yep. You go bone on bone
throughout a transaction, you know,

like you're going to hate each other
by the end of it.

And God forbid they have one of them has
to stay in work for correct to happen.

So you know
I can think of a couple transactions

right now where my buyer and my seller
don't necessarily

like or trust each other that much,
but they trust us, right?

They trust that we're running
a fair process that we are going to be,

even though we're advocating,
you know, traditionally on the South Side,

we're advocating
for the benefit of our clients, as,

you know, as we have to
from a fiduciary perspective,

that we're not just,
taking everything to the brink, right?

That it's not like,
that there's an understanding

that in order to win the war,
you lose some battles, right?

And that a really good deal
is probably one

where everybody walks away from the table,
mostly.

Right, but a little bit unhappy
about certain things.

Yeah.

And then if you just
dominate the other party,

even if you win
and get the deal to the finish line,

the question is

what is the cost on the other side is that
is that seller

who got dominated by a buyer
and just beaten into submission?

It's her deal. Fatigue or whatever.

Are they going to give you what you need?

Post-Closing
are they going to you know, if you

if there's an area of expertise,
for example, and you've paid them,

they may not bother to pay any attention
to you.

Right. Closing.

So I don't know. Yeah.

Yeah I agreed.

And I think we play a role
in avoiding a lot of those scenarios.

And, and it's why it's not unusual

for us to sell a business the first time
and then sell it again when?

Five, six, seven years. Yeah.

When they're ready for an exit
the second time.

You know, it's a good it's a good feeling

to know that the buyer trusted
you enough to come back to you.

Yeah, that's a great point.

I'm thinking of,

a compliment
our team got from a, publicly traded

foreign company
this past year in a transaction.

We did, and we loved the investment
bankers on the other side.

They were great people, and I think
they did a great job with their client.

But, the we got the
the comment afterwards that, you know,

we could not have gotten this deal done
without touchstone, that, you know,

your fairness, your diligence throughout,
you know, understand taking the time

to understand all sides of the issue
and then try to help diagram a solution.

You know, was really unparalleled.

And we look forward to hiring you
to do a deal.

That's fabulous.

I don't want to take away from my
our rights, by the way.

At this other investment bank,
you did a great job.

But I think, you know, when the other side
is complimenting you on

what a good job
you did to manage a difficult deal.

And, you know,

some of these are almost like giving birth
to these deals is really hard.

Yeah.

Some of them a little bit, you know,
some of them go relatively easily,

but some of them are.

I'm not sure I think any of them like,
I don't maybe,

maybe they all have their own
idiosyncrasies.

They definitely do.

And but there are patterns. Yes.

Personality type.

There are patterns in terms
of how a deal's going to go.

Different sectors have Jim Styles
as to how the deal may be constructed or.

Right.

And I think that's one of the advantages
here.

If you're a business owner,
maybe you've had 1 or 2 other exits,

but what you're an expert on
is running your business.

What shirt on is selling it, right.

That's our business 100% or 500 times.

We've seen all the movies before.

We know how they all that.

Yeah.

And honestly,
if it's something we haven't seen before,

intellectually
it's like we will figure it out.

But surprise and say,
can I do it this way?

Yes, yes I can.

So you are kind of king of that.

You will sell a business that

can't be sold.

I am the patron saint of businesses
that are difficult to sell.

Yeah.

What keeps you going
to get to that point?

Like, you keep going past the point that
most of us would have stopped the check.

Makes all this money
after every rational human would give up.

Yes, yes.

Okay.

So getting back,
I think it sort of gets into personality

types.

Somebody that chooses to do trading

without a parachute, right, with no salary
and take a job and like, risk their job

every single day is
probably somebody who a has confidence,

maybe too much in common capabilities,
but also has,

an intellectual curiosity.

And likes to do hard things.

I think there's some of that for me.

There's also an element of service, you
know, without getting into my background,

you know, I'm one of those people
that wasn't supposed to live this long.

And you know, when you do that,
you sort of have to figure out

why are you still here?
And what are you here to do?

And one of the ways
that I've come to terms with that is that,

you know, I'm here to serve
just like you're here to.

And one of the big ways that I serve in
life is through the medium of finance.

Right.

It's the medium
that allows me to serve people.

And so I'm not going to say it's like pro
bono work.

No certainly.

But that's not the goal though.

But you know when we do work, you know,
there are times that we take on

businesses that it might be easier to say,
you know,

I don't think
that we're the right fit for you there.

You know,
you can't take on only impossible

or mostly impossible right, to sell.

But I think there is a, component of that
that is service oriented

because there's only so much time
that we have.

Right.

So I think there is some of that.

But also I think

when somebody tells you, like,
we had a client

this past year who had, their business
burned down, right?

And we sold them in four weeks because
we had to because they they needed it.

We've been at market for them
had been a really long transaction.

Couple different buyers
hadn't worked out and they

he said he said, I feel sorry for me.

And of course we did too.

But I feel sorry for you
because you and Joe worked so hard on this

and it's not going to close.

And I said, yes, it is.

And we had a deal done

in four weeks
now, obviously wasn't at the right price,

but we had a deal
and an exit for a gentleman who was 70,

78 years old and and needed
to exit his business, it was time.

So I mean,

what could be more satisfying than that
when they tell you it couldn't be done

and you get it done for them,
that that that's a blessing in life.

It's always great when they come back

and you find out that
they are actually happy with it as well.

You know, that's that's
kind of the warm, fuzzy feeling.

But I mean, you look at
we spent a lot of time typing emails,

looking at spreadsheets, building sims,

going through buyer lists,
which is a huge yes for us.

But to actually,
the human side is not to be lost.

No. Definitely not. Definitely not.

I think it's kind of a key area
that touchstone brings to, to our clients.

So in a wrap up conclusion,

we, we do this every day.

Let's say
you weren't going to do this every day.

And you weren't going to go back to trading because you didn't get any younger.

So so what career?

What would be your career path?

Well, I have three screenplays
that I want to write.

Okay.

Based on three people
that I've met in my life.

And, I'm totally convinced that
at least two of them are Oscar winners.

So I do want to do that.

If I had never lived
the life that I lived,

the alternative life
that I think I would have lived.

Now you see it, you know, because now
we have phones and smartphones and.

Right, you know, video logs and stuff.

But I would have wanted
to travel the world

and be like a writer
for National Geographic.

I'm a really good writer.

Okay.

And I would like a travel writer,
a travel writer.

But really what I would have liked
to use that to springboard on.

And you can do it now, you couldn't really
do it back then is to go around

and kind of what you see
people like Anthony Bourdain

or people like that doing
where they go out and meet with people

and they're they're in a country
and they're doing something,

but they're really understanding
people's lives.

I would like to write about people's
lives, meet interesting people

around the world and write an interview
them and write about their lives.

Excellent.

Well, I think I just helped
you find your retirement plan.

Well, don't wait too long.

Oh, excellent.

Well,
thank you very much for coming today.

I hope that that our owners enjoyed
getting to know you and, Me too.

Yeah. Thank you very much.

All right. Thanks.

Meet. Him.

Maybe it.

Means we.