How to negotiate like a Ninja With Mike Lander

Mike has a rare perspective on negotiating B2B commercial deals. He has worked on both the sell side and buy side of the fence as a Procurement Director, Managing Partner in a Procurement Consultancy, high-growth entrepreneur and as Chairman of an SEO/Content Management Agency (https://resignal.com/).

Hi experience includes:
- Ex-Procurement Director for a Private Equity backed outsourcing company which is now worth over a $1bn
- Negotiated over £400m of spend across 100s of deals
- Built and sold a special education needs school business for a 7 figure valuation
- Acquired and grew a Professional Services firm from £10m to £20m turnover
- Led the Private Equity practice at one of the largest UK mid-market specialist procurement consultancies.

Mike is an accomplished negotiator, entrepreneur, Chairman, Chartered Director, seasoned Board Advisor. Mike specializes in helping companies negotiate better commercial deals with their big clients, especially when Procurement get involved.

https://piscari.clickfunnels.com/piscari-negotiation-skills
https://twitter.com/PiscariLtd
https://www.facebook.com/Piscari-100545984632279/
https://www.linkedin.com/company/1136291/admin/
https://www.linkedin.com/in/mikelander/
https://piscari.com/

Transcript

Josh: What is up everybody, Josh Tapp again and welcome back to the lucky Titan and today we are here with Mike Lander and this guy, we've had a great conversation, and I am way excited for it because he is the founder of Piscari, which is really all about negotiation and for those of you who haven't done it, negotiation is about the funniest thing you'll ever do in business. We've been neck deep and an acquisition of this new company for quite some time. Now, three months now, four months. I've been learning a lot this is the first big negotiation. So I'm excited to really talk through this today with Mike and really get a feel for how he helps people in the negotiation process to actually make it not just a win, win, but like an actual successful acquisition strategy so Mike, I'm excited to have you here today say what's up to everybody and I will hop in.

Mike: Hey, Josh, thanks for inviting me fantastic, really, really looking forward to this and the kind of the pre interview call was great, just really, really interesting so yeah, so let's get into all things negotiation, including acquiring companies, selling companies, and improving your sales capability when you sell to bigger organizations.

Josh: Love that. See and that's, that intrigues me to death, especially being somebody who's in it. Now, you know, before I was doing this, I was saying, I don't know if this is something I want to do, but but walk us through really quick, I was going to sell people on this buy figure it's better to have you because you're here but why? Why should they be looking at acquisition? Over building, what What do you think is the big difference there and why?

Mike: Okay, so we had a really interesting conversation, Josh, about as you grow a business. So as an entrepreneur, normally, you start off with a great idea, some deep insight into a particular problem that a group of customers have got, hopefully, that's a growing group of customers that have an ongoing need, not a one off need, ideally so you build this business up, and you get to a million dollars, and you're found that ad selling so you get there and you go, this is brilliant and then you look at your take home pay at the end of each month, and you go, geez, this is really hard work for not a lot more money, what's going on now? So then you go, Okay, do I keep just growing organically and the problem is, is that you end up with found that it sells problems, where it's always the founder that selling and it's really hard to train other people to do that selling and then you have a breakthrough moment, which is actually what I kind of had as well, back in, wow, when did I buy that company back in 2006, I think it was and I when I know, I'll buy something, if I buy something that works and I can double it sighs I've already got a base to work off, that's already much bigger so I'll go and borrow some money and so the reason that they should be looking at your listeners should be looking at acquisitions is when you get to a credible size, what that means normally is your delivery capabilities pretty good. You know what you're doing, you can deliver the services, you get great, great client feedback, it's repeatable and then you're like, how do I scale this thing and an acquisition can be an amazing way by the way, it can be the worst thing you ever do in your entire life, and it can go horribly wrong, the acquisition integration post the deal is critical and the way you negotiate the deal, on the acquisition kind of point of completion, about how that transition occurs, is also critical and we talked about, it's not just price, everyone thinks negotiations about just price. and think of buying a company and say you buy it for a million dollars. Think of all the variables in that deal that are not price related about what can the founders do with their other businesses? Is that allowed, how long are the founders stay around, who are the key people in that business? What are their roles going to be? How are you going to integrate those roles with other people you've got already, there's loads of things to think about who owns the IP, you don't want to find you buy the company, and then they own some assets that you haven't acquired, and you go, what happened there all that stuff so I actually built on I'm launching, in the summer, I've built a workbook so I've built a negotiation workbook, because everyone says they love my templates, it'd be great if I had something to write him so rather than writing a textbook, my first book I'm releasing is, it's a negotiation workbook and you can buy the book and then right in negotiations in it, it's got four template sheets, and it's a how to guide as part of it because I thought there's a problem there that needs solving and it's a structured way preparation, the prepared mind wins the day in negotiation, it's about preparation.

Josh: See and I love that, and I hope people are listening to that and saying, how could I do this in my own company and and you know, you kind of tease it there, Mike but the reality is that if you're trying to grow a company, and you're stuck, nine times out of 10, it's you You're the you're the problem, you're the bottleneck, you're the issue, in my case, it was I sucked at selling, and I had right selling so in order to move our company forward, Josh had to keep learning how to sell and get better at it but then every time we tried to implement a sales team, like he said, he was just so much harder because it was founder driven, I didn't know how to train salespeople 

Mike: Exactly. 

Josh: Don't even do it well, myself so it's, it's kind of this constant give and take but if you buy another company, you can share the costs similar company, you can share the costs, you can cross sell two, to both businesses and your revenues in both companies will increase without you having to be a crazy good salesman, or even sell in most cases,

Mike: I mean, a key thing, I think, in any acquisition that you make, so I used to work for your audience, I used to work quite a lot with private equity firms so kind of mid-market firms that have bought decent sized companies and we'd work on with the portfolio company to help them kind of grow those businesses and a really simple thing I learned was fat, two simple things so one was, let's say the company, you're buying Josh, I don't know who it is, I don't know what size they are but let's let's just say you're a fictitious company you're buying one of the key things when you buy it is you've got to be able to see how you can double the size of that business within two to three years of acquisition, if you can't see that, it means they've maxed out on the value that's been created in that business so buying it, all you're adding is bulk, you're not adding the ability to scale so they've got to be able to show you a path as a buyer, as to how could you reach the next can like doubling in size and the key thing to see if they're kind of not telling the truth, because everyone, of course tells the truth, but to see if it's credible, is looked back three years at their history and if you see the three year history kind of doing this, and then you see their forecast, and it does this, they're saying, Oh, yeah, you can double it easily because the forecast is doing this, you go, huh? So you've not managed to do this Have you and there's the opportunity to negotiate a deal at a lower price. If you think you can do something that they can't, because you've got access to markets, capable sales capability, something that they haven't got a new set of bolt that in, I know, I can double it, because I've got the capability or the access, and then you can buy businesses at better valuations.

Josh: Wow, see that that was a killer tip right there and I love that because with a lot of the companies we've been looking at, as we've been going through this process, that that's really where they've been, you know, 20 years of just, you know, 2 Million, 1.8 or 1.2 point 2 million back down to one point, man, it's just like this little teeny increments and you're saying, what, how do you could you possibly forecast a number of a double multiple or double the revenues because you have 20 years right? 

Mike: Correct. 

Josh: So the negotiation

Mike: this is not believable exactly. So it puts you in so you've now got an ideal, you know, if you're buying anything, you start with criteria so as a as a buyer, I'd have, you know, three or four criteria the ideal target looks like this, it's got these characteristics and that makes it a really good purchase, I sold a business a number of years ago now, which was a school's business, I built a school from scratch so I actually built a special needs school that served this, Kids with Asperger's Syndrome, we built it up to that 45 people's 120 staff. It was a great business more importantly, it was great for the kids. It's a private school and you know, when I sold that business, I could demonstrate to the buyer that it could double in size, we have the physical capacity to get more children in, we had a great growth story, we had the long tail of of history, we had all the relationships in place, one of the key things, they said to me when they bought that business, they said, Mike, how important are you to that business day to day, if we buy this and took you out the equation would it still fly? I said, Yeah, I'm not involved in any more, I'm the chairman of the board so I chair the board meetings, I have an amazing operator that runs that business for me, she's extremely capable and she can easily double the size of that business with some extra support that you could bring as a larger bio and because they were looking to do I think a buy and build and it was going to be the kind of one of the cornerstones for the buy and build strategy and I said she'd be brilliant at that and you won't meet need me for a day past the day that you buy it so making yourself redundant, if you're going to sell your business is really important, or else you won't sell.

Josh: See, and that's such a brilliant statement because I mean, every company we've looked at, that's the problem is they can't even get themselves out the door, you know, and if you're if they're having to be there, I know I know at some of the acquisitions, we've looked at a lot of the owners like Oh, can we stay on for another year because we're going to need that and at that red flag to me, man like that just means you have no operational structure in place.

Mike: No systems, no processes. No operational capability in place, no scalability, none of it. and we know just the reality is, if they could do it themselves, they would have done, right but that can be an opportunity, the other side of the coin, as we discussed before, was that can be a good opportunity, if you've got systems and processes, and they've got a great market position and you think you can bolt it in and grow that capability, then great, but it's a risky strategy because typically, the people in that business that haven't built systems that haven't built processes, they may not fit going forward and that can be a huge problem. Why I like businesses that have got nice, sticky, recurring revenues of some kind,

Josh: right, love that. Well, so let me ask you this, because that kind of dovetails into it, where would you so let's just say, you know, knowing that most of the people who listen to this, listen to and watch the show their b2b service providers, so typically an agency of some sort, what type of acquisitions should they be looking at?

Mike: Interesting so so I do a lot of work with with marketing agencies as it happens and the chairman of a marketing agency, I do a lot of work with marketing agencies in the UK, and over in, in the States and I think if you're, if you're looking for an acquisition, Target, you said, right, we're gonna double in size, we've got to, let's say, it's $2 million of revenue, we want to get five, organic is going to take too long, because we're going to grow at 15 20% per year so we're going to buy something, and then we're going to integrate it and then we're going to sell and so the first thing is, we talked about Ebitda arbitrage, which is a very fancy word for if you can buy at five times Ebitda, double the size of the business, and make it truly more valuable, you'll sell at, say, seven or eight times Ebitda. So the act of acquisition and integration, if you get it right, can give you an an uplift in the Ebitda multiple, which is critical when you're obviously on the sell side when you're selling it the other side but the kind of criteria we're looking for is I know, I'm quite old school trained in strategy so I talked about kind of core strategic assets as a business so let's say you're in, I'd know, let's say you're in consulting with the consulting market, well, I used to be in consulting many, many years and let's say you're in operational efficiency consulting, that's what you do so all of your core capability is about efficiency improvement so if you're looking for another business, you might go, okay, what do buyers really, really value so when you say, What are you looking for as criteria you've got to take your hat off as the seller as the business, turn it around as a potential buyer, and sit there and say, What would a potential buyer of my company when it's 5 million really want? What are they looking for? Well, they want sector focus, they want geographic focus, and they want huge depth in capability, specialism so you go, Okay, so as a buyer, so let's say this consulting company is in North America, it's doing 2 million revenue, your business and you're in operational efficiency, but you only cover a certain, you know, maybe you only cover like 10 states so you might go, well, what about if we could find an operational efficiency consultancy, that was a million dollars in size that covers 10 states that we don't, then we'd have 20 states covered in operational efficiency so in something that we really, really understand, and we'd have grown our market geographically, many go about sectors so we're really good at operational efficiency inside manufacturing, what about we bought a company that was great at operational efficiency, inside FMCG, yeah, that would work because now we've got two sectors, and 20, geographic, geographic states with a real depth of expertise in operational efficiency. That's what I do, I'd look at it as a buyer and work out. What's the buyer looking for they're looking for expertise in your capability, looking for geographic coverage and they're looking for sector expertise that's what I would do. Does that resonate with what you can look at? 

Josh: Yeah, 100%. I love it and I'm here to learn so I like like to hear that and what I love about that, as you said, you know, that's their sector, geographic and specialization, those are kind of the three big things are looking for and and I love that because I know, especially with marketing agencies, in today's world, we're not geographically limited yet the problem is, we're also not specialized in anything half the time and so we run into this big issue of why can do everything, but you know, Master of None, right? Right.

Mike: That's the problem as a buyer, I'm like, yeah, you know, not that interested If you say you're an expert agency in App Store optimization so you've got very deep expertise sn ASO or podcast kind of optimization, how do you get people's podcast to rank at scale, I'd be like, okay, we're a big network agency in the States, and we're the WPP or someone, you'd go. Okay, we could bolt that in, that'd be a great capability for our clients. Perfect.

Josh: Yeah, I love that. See, and we've run into that problem, even in our own company, you know, saying, how do we get so specialized, you know, we're not looking for an acquisition as far as being acquired with this company but, how do you differentiate yourself in a way, you know, and, and the companies that we're looking at, you see that a lot of times with marketing agencies like, oh, we have five major sectors, and they're only at a million dollars in sales and that to me just says, how you can't be you haven't mastered it yet, I mean, 

Mike: so impossible, exactly right. 

Josh: Right, yeah and I love that, I'm learning a lot here, I'm taking a lot of notes too so

Mike: that's good, I love these conversations because it's not there's a theme, but there's no structure so the conversation goes where it can, like takes itself,

Josh: right. That's the beauty of podcasting and that's why the show because it's like a phone call between me and you basically. 

Mike: Exactly. Yeah. 

Josh: So let me ask you this, though, Mike. I mean, especially where you've done so many acquisitions, with your personal acquisitions. Um, tell us a little bit about the story of how those came to be and why you decided to acquire what you did?

Mike: Sure. So obviously, there's quite a lot of confidential information so I'm under I'm I'm definitely under NDA on all the deals that I did, in fact, regarding valuations, etc. But let me tell you the story of what happened this first one was a consulting company that I bought and I'd realized I was a freelance consultant, I was earning good day rates, it was going really well. I was an expert in kind of project management, running big change programs for clients and the as it happened, the company I was working for as a freelancer was looking to exit and I realized that actually, if I could raise some money in the capital markets, as debt, I had a small amount of equity I can put in, maybe I could do a deal and back in this is in 2006, in the UK, and I think also probably in the US, a lot of the financial institutions were looking to deploy capital into entrepreneurs, because they realize the, alright, it's a bit of a portfolio effect but if you get enough of them to win, then you end up you back them on the first round, and then they're going to borrow more and then they're probably going to want equity investments and then one day, they're going to float. So obviously, it's a permanent diminishing numbers but you know, they were like, this is great so they were backing entrepreneurs and so I found a bank in the UK that would back me to buy this company that I'd found, because we'd agreed a price, a headline, price and outline terms, and binding the money so they're like, we could do a deal, Mike, but you've no money so how are you going to solve that problem and I said, if I can solve that problem, would you summon the company and they said, Yeah, based upon certain conditions, maybe and I raised the money, I went off, and I raised debt from the banks, I put my own equity in and I did a deal with this company to buy their business and the couple of things that were a bit unusual, I'd worked as a freelancer this business so there were like, 50 of us that were all freelancers in this business and then I bought it so the next day I turned up, and they were like, What? What do you mean, you you've bought it? I'm like, Well, I own the business now and they will lie, but you can't done and I'm like, Yeah, and I have and they all went well, why didn't we do that? I don't know but I did and that in itself is you know, just people that have self-limiting beliefs and the self-limiting beliefs are reconfirmed by their friends. So I can't tell you how many of my friends said before I did the deal, are you mad? What are you doing? You're putting your savings at risk? Are you crazy? It'll never work. You've not done this before. It's too good a deal. There's something wrong with this deal all sorts of things and then I bought it and they went, Oh, okay, maybe you weren't. So a get rid of the self-limiting beliefs be taught to your friends absolutely, make sure you get their counsel but don't just go with the tribe because a lot of people haven't been on that journey so the advice they're going to give you is from their own perspective, that's not wrong, it's just they haven't done it, the guy you spoke to forgotten his name, who's done hundreds of deals, i'd listened to him, I definitely listened to him.

Josh: See and what I love about what you're saying too, is listen to your friends but listen to the right friends and yeah, get yourself around the friends that are going to give you an educated opinion for everybody knows this, who listens to the show, but that's why I do the show. It really is for me, so I can ask my genuine questions and Get Genuine feedback and people like Mike, who has great experience in this so, yeah, improve your circle. That's really what it comes down to.

Mike: Exactly and then if you look at kind of like negotiating a deal, so we talked about kind of negotiation when you're buying companies so this is something that I've developed more recently, in the last kind of two or three years, but I was taught it, I did a brilliant course at Harvard, in the States on negotiation skills from an organization called palms, they have this program on negotiation, which is between the business faculty and the Law Faculty, so amazing, amazing people, if your audience haven't read it, they should read a book called Getting to Yes, by William URI and it's a seminal piece of work. Two or three hour read a brilliant piece of work, that was all about basically, how do you construct better deals but you know, one thing that I've constructed for my clients now is negotiation success, over half of it, is in the preparation some people say no, no, no, I'm just like, brilliant negotiator, I'm brilliant on my feet and I'm like, he, maybe you are, maybe you're brilliant on your feet, that's great and one of my old clients was brilliant on his feet, like really, amazingly capable negotiator on his feet but didn't like doing the preparation but I teamed up with him and I did the prep work, and he fronted it and that was a very powerful combination because when you sit down and write the deal structure through, see start with something simple so what are the goals here? What are the goals? What are the constraints of doing this deal? What the criteria by which we're both going to judge, but a good deal looks like, see, write that down so, in fact, I've just, I'm going to reference my own piece of work, because I've got a little, little circle that I use so context and goals, then the kind of the process and the timescales so a really important thing is, what's the process for doing this deal negotiating this deal and how long is it going to take, see, write that down and then you sit down, and you work out so what does the kind of like what I what's often called the the most desirable outcome, and the least acceptable outcome, it's an old negotiating framework, MDO, LEO you get this paper, and you write down all the negotiating variables so let's say it's a sales deal that we're talking about here so you've got price sure, on price you've got Well, what's the best outcome I'm looking for, what's the what's the, what's the worst outcome I'll accept and then in the middle, you say, Where are we and so as you're negotiating, you put down the number, but then you've got payment terms and then you've got IP rights and then you've got contract duration and then you've got notice period so I've got five or six variables already, before we start, if you write all variables down, and then for each one, you write down, what's my most desirable outcome, what's my least acceptable outcome? Where are we, and then as the negotiation unfolds, so now you're at stage four so you've done your goals, you've done your process, you've done your prep, now we're sitting here, Josh, now, I'm in the chair, I'm negotiating with you two things will happen, I feel massively confident, I've prepared the act of preparation makes the mind much more confident, you feel more confident, you feel less anxiety, second is gonna happen is you're gonna start talking about the price one so I say, Okay, let's say it's 20k a month for trainer so this is a marketing agency selling a service into a brand, it's a $20,000 a month for trainer and you go, so I'm the seller, you're the buyer, and you go, I'm not paying 20,000. Yeah, it's only worth 15. So I'll say 15, okay. So I'd say right so in the scope that we've agreed, which part the scope Do you want to take out and you'd go, Well, that's ludicrous, none of it and I'd go, so you just want me to keep reducing the price to you and you think you've gone far enough but the same scope, and the same deliverables and the same outcomes and when you say that to someone who's buying, you kind of it's not a shaming thing, but it's a recognition that that's not a fair deal so then you get back into, okay, what's the right scope for that price and then as that price changes, I might go Okay, so it's not 20k? Maybe it's 19 but if it's 19k, then I need a three year contract and you're like, no, it was a one year contract, I'm not Yeah, but you've just changed the price. So the scopes the same, the price has gone down, so the terms gone up. They're like, No, no, no, no, no, you can't do that so I'm like, Well, you know, you can't take it all, you know, you're gonna take something off the table, I want to take something back and that's why you write down those variables when you're negotiating and that's why you write down, what's my most, most desirable outcome, my least acceptable outcome, and you move like you would if you're a DJ with, or if you're a producer, in a mixing studio, you'd move the sliders around until you get the deal structure that you want.

Josh: Love that one and I hope everybody's been paying attention, hopefully taking notes on this, because that negotiation tactic is absolute gold, I know the preparation is absolutely important, I'm not a prepared person, I am a very off the cuff person but with this, because it was my first time I was like, I've got to come at this, yeah, I was trained on having six potential offers that I could give them and okay, that that would all worked and they'd be kind of mutually beneficial and that that has held true for me is the confidence level when they're like, well, we want this like, okay, cool. If you want that, I just have to do this and it makes it so much easier of a dance because you're not constantly having to go back and look at it and say, Well, what would work and everything you're prepared, you're prepared for it, you're prepared?

Mike: Exactly, right, I mean, Blair ends who lived in the states now, in the marketing world, you know, Blair's, I think a very, very talented guy and he talks about, you know, having pricing options so when you're talking to clients, you know, the brains trained to look at different options and then they choose so if you only give a client, one option, so it's this service, it looks like this, it's this price, well, that was surprised when they go off to a competitor and starts to get them to provide a benchmark and some alternatives, if you give them three different options, about the kind of service the way it's delivered, the scope, the scale, the timescales, the outputs again, they'll probably they'll discuss it more with you than they will with someone else because you've presented options to them, they can start to shape with you, it's all about, we call it in consulting, you want to get the fingerprints of your client all over your proposal so that when you give it back to them, they go, I recognize this, this is exactly what we agreed and that's your job, when you're negotiating a deal, send me your selling agency services, you've got to get the clients fingerprints all over the deal strike so that then they effectively sell it internally.

Josh: That's brilliant. I love that. Well, and everybody, if you've been getting some real value from this and saying, hey, I need help with negotiations, which I'm just gonna say it we all do, if you're if you're even been stuck anywhere from 300,000 to a million dollars, Mike's your guy, he's the type of guy who's gonna help you either increase your negotiation capacity with your sales team to close more deals, acquire other companies, or maybe get acquired and do something different, right? That's always an option for other people as well. So make sure you go check it out so it's piscari.com, which is piscari.com on top of that, we will have all the links around the show notes or wherever you're watching this, it will be around here but Mike, I want to wrap this up with one little bow so if you could give one final parting piece of guidance for our audience, what would that be?

Mike: It would be about having structured preparation, don't walk into a negotiation in the 11th hour, great example so I'm the client, you're the supplier, you're an agency, I write you an email. Hi, Josh. It's Mike here. Yeah, we'd like to talk about your contract your existing contract and the extra work we're going to put put your way, could you be available, please, tomorrow morning at 8am for a call. That's it. If you say yes, that's a really, really, really bad mistake because I've prepared a my side. You've got no time prepare on your side and what you do is you say I'd love to salt you can't do it tomorrow morning, I need time to prepare, tell me What's on your mind, tell me who's going to be on the call to what your expectations are and we'll have it on Friday morning, they won't agree to it, it's a game. Preparation, that's the key