How a financial advisor quarterbacked a transaction correctly

Rick Krebs and guest Josh Hogge discuss a successful business sale involving a financial advisor who effectively guided the client through the process as a "quarterback". 

The advisor, who typically consults clients on financial matters, demonstrated his value by coordinating with business brokers and CPAs. He facilitated a valuation, attended key meetings, and utilized the Business Sales Group "LOI Guys" AI tool evaluate the LOI, ensuring no critical details were overlooked.

The client received twice the appraised value, highlighting the advisor's strategic role. The advisor's confidence and expertise were boosted, leading him to focus more on M&A deals. The client expressed gratitude, emphasizing the advisor's crucial role in closing the deal.

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Transcript

Rick Krebs

Hello and welcome to M and A murders and accusations, the good, the bad and the ugly of selling your business. We dig into what you need to know and how not to kill the sell of your business. Now. Here's our host, Rick J Krebs mergers and acquisitions advisor. Hello and welcome to M and A murders and accusations, the good, the bad and the ugly of selling your business. I've got my cohort here today, Josh, who works at business sales group with me as our guest, and we're going to talk about in a recent transaction that we had anyway. Welcome. Welcome, Josh Hogge. Thanks, Rick.

Rick Krebs
I'm excited to be beyond I've been working together for a while, and that finally made its Podcast. I'm feeling quite accomplished now. Yes,
you did. He's done a lot of background work, and he's learning the business of business brokering. So let's, let's talk a little bit about what this is and why I wanted to bring up this important topic. So we've got a lot of financial advisors out there. A lot of people getting their SEPA and a lot of them are lost, to be honest, they just don't know what to do. They don't know how to play the quarterback role. They don't know how that should work. We had a transaction, a successful sale, recently, where I felt like the financial advisor was a pro, like he handled it just the way that it should be handled. The clients liked it, and it helped get the deal across the finish line, and he provided valuable advice at the needed time. Anyway, we want to talk about what he did right? You know, what we maybe could have done different or better, and learn from our mistakes, but also learn from our successes. So anyway, this was, this was a transaction that we did down in Texas, and let me give a little background story. So was introduced to this financial advisor, and he had a client who you're going to hear my Cinderella story about. You know, they're just first time at the ball. They've never sold a business before, and that's what this that's what this client was, and they're a little pest control business, and they had a buyer that just kept pestering them. Finally, the buyer came up with an offer. Business owner went to the financial advisor, and I found that interesting. They're going to their financial advisors now, more than they are their CPAs isn't that interesting? 

Josh, that's like, Yeah, as soon as I started working, he's like, all right, how are we gonna go after CPAs? How are we gonna find the folks that are, you know, the CPAs, that have the inside knowledge? And I'm completely wrong. People are feel they have a much stronger relationship with the financial advisors. It's the financial advisors much, much more forward looking. So when you say, Hey, I got this potential offer. How does it change my future? They're going to the financial advisor, rather than the, you know, the tax guy or the CPA,
yeah, and, and are you pick on CPAs a little bit? You know, during tax season, they're really hard to get. You might go days without a phone call back, right? And financial advisors have inserted themselves, and kudos to them for doing that as as the trusted advisor. So that's what this business owner did. They said, You know what? We have this LOI. We don't know what we're doing. We've never sold the business before. We don't know what it's worth. So let's talk to our financial advisor. Financial Advisor knew it was out of his wheelhouse, and so he contacted us to do a valuation. And so that's what we did. We went and we did a we did a formal valuation of the business, and that valuation number, once we had it, we met with the client. And one of the things that that the financial advisor did right, in fact, it did many things right, but I think one thing he did very well was, from the beginning, he was involved in the process. So when we set up the initial call to review the evaluation. He was on that call, right? He had his secretary handled the Zoom call, and we did everything through his Zoom meeting, and he was on those and listening from the very beginning to the end. He didn't always have something to say, but when he was needed, he was available. And the client saw that, and I think that was a great thing that he did. So we did evaluate.
To add to that, Rick, I think he did a great job of being a facilitator. He, you know, he made himself as useful as possible. You know, he built on the relationship with the the customer, with the client. He introduced us. He stayed present throughout the process, and he always had his ear out, like you said. He didn't always have something to say, but he had like that spidey sense, because he knew the clients a little bit longer than we had, quite a bit longer than we had. Once things started to go just a little bit sideways, he just knew how to come back in and just get things back on the rails. And that was so valuable for everybody on the team. Yep,
and I would say the deal, had he not done what he did, I don't know that we could have got it done, or it would have been done entirely different. Let's go back to the to the end of it. So they had this loi, and we did evaluation, and they ended up getting twice what we valued it for. And when you run these processes correctly, I'm not saying we're going to do that every time right. I wish we could. I so wish we could. But. But when you run these processes correctly and handle these buyers correctly, it's possible, it's possible to get a premium for the sale of your business. But instead of panicking, we had the team of advisors, and we said we assembled a team early. Had a good CPA, that is financial advisors. Had you and I on the M and A side or and so by assembling that team early and getting them all on board, he was able to make informed decisions versus just shooting from the hip all the time. So what we did when the LOI came in, or we did the valuation, and then the second thing we did, and we're going to talk more about this, is we're the LOI guys, so we have an AI tool. Josh built this amazing AI tool. Tell us about the AI tool. What it does? Josh,
yeah, so AI tool is made to evaluate the strength of an LOI. And it's not so much the strength in terms of the market, but the strength of, hey, what's in the LOI? What's not what? What are the things that are maybe being forgotten or left out of this loi that could become a gotcha later, and within a few seconds we have no basically an expert level review. And it allows us to educate the client and the, you know, the financial advisor in this case of hey, this is what we need to start thinking about. This is what maybe the buyer is not thinking about. Here's our potential advantages that we want to make sure that we're we're capitalizing on, or just making sure that there's no stumbling blocks later on, so that that tool gives us very quick directionality of how to move. Of course, we still apply common sense. We're not just using the tools blindly, but it's, it's a great it's a great start, and it builds on a builds on the long history that Rick has of seeing hundreds and hundreds and hundreds of Lois and going through them a line by line. So yeah, it's pretty great tool. Yep,
I love that technology piece. So we plugged it in, we came up with an output, and we set up another phone call right with the financial advisor and the client. We went through once we had that, then we knew if it was a good LOI or not. We knew if the value or the offering price was right. Then we made a plan, and if I remember, I had one or two other buyers, we went out to them, making sure they're serious. We get these buyers going and let them know they're not the only game in town. What happens? It's like feeding piranhas. There's like a forensic and they just, like, they just want that, and the price goes up. It's a lot of fun to do from our side, but with that plan, we selected an LOI and selected a partner, and we're able to move forward and eventually get the deal across the finish line. We ran a limited engagement where we took them from loi to the finish line, and we're starting to do more of those now. We're seeing a lot of these business owners. The buyers are aggressive. They're just out there. They're aggressively coming up. And some of them are offering good money, like in this case, you know, they were offering really good money for it, and he was they were crazy. To not do it. One of the things I want to bring up to the financial advisor did is he inserted himself at every major decision. So if there was a major decision, he was, he was there to give advice, and sometimes to just listen. And sometimes listening is as important as giving that advice. The fact that you show up, you're there, he stood out as a team member of the advisory team, and he solidified his client relationship. So as we were talking about the money coming in and this big, you know, liquidity event, because they okay, you're going to take that money and you're going to, you're going to give it to so and so, and you're going to invest it, right? And he's going to put it to work for you. It's been locked up in the business. Now we're going to put that to work for your retirement. So he was there, and he was present at all of the major decisions throughout the process. And I thought that was very smart to do. And then the other thing we did, because he was on the calls, is we were able to set up the next steps after closing, so when the money comes in, it's all wired. Then what's the next step? Well, we wired into the investment account, rewire to the to whatever account he specified, so they knew, and they had it in their head. It wasn't just sitting there. Sometimes clients will just have money, large amounts of money, just sitting in their account, and they're checking not making any money, not making any interest in that. That's not what you want to do. The outcome was we doubled the appraised value. You ran the LOI guys AI tool, which is awesome. Josh did a great job with that. This is what happened at the end, after we were done the client. I called the client and talked to her, and she said, and I quote it, we don't know how in the hell we could have closed this without you. That was a pretty amazing moment. Yeah, yeah. That was, that was amazing. And there were some things where the deal wanted to die, and we inserted our expertise to keep it alive. I call CPR. We give these deals CPR, right? But when she said that, I thought, You know what? We've done a good job here. We've got this across the finish line. We got them double what it appraised for. They have their money, and they've sold to a partner. Being there, we're able to step in at that crucial moment and save the deal. And there were some times early on where the financial advisor was able to give them some direction because they didn't know where to go. These business owners are constantly getting bombarded with questions like, Where do I go? What do I do? Who do I trust? Right? So, yeah, actually,
to add to that, when they first had their this this buyer reach out to them, they got over. Well, they got so flustered they didn't know what to do, so they started doing something. There's also the earth people there. They're fantastic people to work with. They were great through the whole process, but I think they got a little bit overwhelmed. They didn't have anybody in their side that has ever done a m a deal before, and before we even talked to them, they had shared their entire customer list with the with the buyer, full full names, numbers, everything. And Had this been a shark buyer, it had been to been done that had been absolutely so we, as soon as we jumped in, we jumped in and we handled damage control and tried to make sure that we, you know, could hold their hold the buyers feet to the fire in other places. But then from there on, like, Hey, we gotta, we gotta work it as a team. We gotta make sure that we're, still on our first date, right? We can't show them the color of our underwear yet. Go slowly and let this information out at the appropriate time. Yep,
exactly. And they didn't sign an NDA. They just gave up all the client information. And this was somebody that could potentially be a competitor, right? And when they realized what they had done, it was, they know it was already out, can't take it back, but they panic. You're exactly right. These business owners go out there and they just, they panic. They make the bad decisions, and they they're vulnerable. It puts themselves at risk. And I say this over and over, but it's like your 14 year old daughter dating a 30 year old man. You know, they don't know what they're doing, and they're vulnerable, and they're innocent and and the rogue buyer will take advantage of that. It can hurt them in many ways.
Yes, and then this deal was, it was even, it's the that Cinderella is a funny picture, because there's an older, an older couple, you know, ready to be retired. And the all of the purchasing company was a bunch of young guns. They're all young, you know. So it was the opposite, you know, these young guys, these young guns buying an older folks business. But, you know, they came well healed. They were ready to go. They had a they had a mission, that they wanted to buy this company. They were organized and ready to go forward, and we were able to provide that level of professionalism that the buyers were looking for of, Hey, okay, let's make sure we let's hit the hit the main points. Let's make this thing go as smoothly as possible come and handle some of the, you know, the interpersonal things outside of buyer meetings, right? If we were able to really provide a good interface between between the buyer and seller, so that we get this thing done? One
key takeaway, so the financial advisor had never seen one of these transactions from start to finish before. This was his first one, and after he's like, Oh, I'm excited to go do another one. Now, I know how the process works. I know what's around the bend. I know what's coming up, you know. And so his in his talking to his future clients, having done one now, his whole demeanor changed, and his confidence level went way up, you know. And his voice changes energy when he's speaking to him. Client asking, Well, have you ever done one of these? No, but I'm working on yours. You know, that's an entirely different story than Yes, I just did one, and we got them twice. And what the what it appraised for? You know, that's a different story. And the clients love our stories, and they love that confidence in the advisor, that same
advisor, now he's, you know, he's full in he wants to, he wants to work with exclusively business owners. He wants to pivot all of his marketing make sure, like, now that he knows the process and the value he can add, and honestly, the fun that's in the process. He wants to do it all the time, so we're hoping to do a lot more deals with him. He's great. Yep,
yep. He's on fire. I love it. Is there anything else I've forgotten that you can think
of? I do want to capitalize on like, these were salt with earth people. They've built this business from nothing. Remind me of so much of you know, family, fruit, you were just frugal. We're trying to get get things done, make things happen. Typically, they would not never have gone out, reached out to an M, a professional, until they needed one and used one, and they said they'll never look back, right? Like, you know, they said we earned every bit of our fees. They didn't think the deal would have got done without us. And I that was that was great. You know, sometimes your fees can be a little high, but in the as long as we're providing more value than the costs, it makes me so happy, and I just want to do it more and more.
Yep, well said, Josh. Well said, and I can't share the name of the financial advisor, but kudos to him and a great job in being the quarterback and helping these clients across the finish line. So until next time, this is Rick the M and A cowboy. And thank you for joining us today at M and A murders and accusations, the good, the bad and the ugly of selling your business. Have a great day. Thank
you for attending our podcast. We invite you to join us for future episodes of M and A murders and accusations the good, the bad and the ugly of selling your business. You can also visit us at www dot B salesgroup.com or email Rick directly at Rick at B salesgroup.com you.