EP #3: Sealing the Century: The $100 Million M&A Triumph with Russell Cohen

Imagine clinching a deal that not only shatters records but also cements your reputation as a titan in the M&A field—that's exactly the story Russell Cohen unfolds in our latest conversation. As he returns to the South Florida M&A Advisors podcast, we get an exclusive behind-the-scenes look at his monumental $100 million deal, an 11-month saga that tested the limits of resilience and showcased what it truly takes to succeed in the high-stakes world of mergers and acquisitions.

Joining forces with co-host Jeremy Wolf, Russell gives us the inside scoop on the intricacies of the Campany Roofing sale—a narrative filled with suspenseful near-misses and triumphant recoveries. From overcoming the challenges of securing financing with a fledgling private equity group to the delicate dance of negotiations that kept the deal alive against all odds, this episode is a masterclass in perseverance and ingenuity. Tune in for a real-world tale of ambition and strategy, as Russell and his team prove that with the right mindset, even the most daunting of deals can be sealed.

Transcript

Speaker 1 0:01

Welcome to the South Florida M&A Advisors podcast , your trusted M&A team . Here's your host , Russell Cohen .

Jeremy 0:13

Hello , hello everyone . Welcome back to another episode of the South Florida M&A Advisors podcast . I'm your co-host , jeremy Wolfe , joined by none other than your host , the man , the myth , the legend . We have Russell Cohen in the house . How you doing , my man , hey ? Doing great . So good to see you . It's been a while since we did one of these . So nice to be back in the seat here talking to you , learning about what you're doing in and around our great community , and I know you have some exciting news to share on the horizon . You just assisted a business with a deal for $100 million , which is fantastic news . So congratulations on that , thank you .

Russell Cohen 0:47

That was the largest sale for myself and the company and myself and Sunil Chenoy were co-listers and we were able to go through 11 months of an M&A transaction and get to the finish line . No doubt .

Jeremy 1:06

Well , again , congratulations on that . May it be the first of many more to come . I know you had been trying to , I guess , take the business to that next level and start working on some of these larger deals in the M&A space . Clearly you're on the path to that place now , so congrats on that , brother .

Russell Cohen 1:24

Yes , and that's the goal , and that's why I formed South Florida M&A to service South Florida business owners with great service boutique M&A service , and that's what we're trying to achieve here . So a great start and it might be the largest sale I ever do , but I'm OK with that . But now we're poised for more successes in 24 and 25 .

Jeremy 1:53

Wonderful , wonderful . So let's get into it . Why don't you tell us a little bit about the deal I guess , frame it and then we'll get into some of the challenges that you had to overcome , because , as we know these processes , you got it . It's a long time to build up to a transaction like this . I think you mentioned it was like 11 months in the making , right , yeah , very complicated sale .

Russell Cohen 2:14

So the company that sold was Campany roofing out of West Palm Beach . The business was sold for a hundred million . Final down payment 80 million , with 10% roll over equity and at 10% earn out . So there are many complications , there were many issues along the way that we were able to overcome . It died like 10 , 12 times but we were , you know , somehow , some way . The business was extremely strong a great owner , great business , great management team . Everything came together at the end and we were , you know , on pins and needles all the way through the deal . No doubt .

Jeremy 2:56

Yeah , it sounds like it , so is that I ? I'd imagine that for a bit a transaction that large , the time frame on that is extended past a smaller transaction . Is it common in those cases for deals to kind of Die off and then come back that many times , 10 or 11 times , or is that ? Is that more uncommon ?

Russell Cohen 3:16

You know , in general when you're selling a , selling a business , it is someone's largest asset , typically on their balance sheet , so a very emotional ride . You obviously you don't expect to have issues . You know there's gonna be issues . In this particular case , this did take longer than we thought Because we were dealing with , you know , the buyers . The private equity group was trying to get equity , equity investors and debt lenders and there were specific challenges in raising funds for this particular transaction . So that's kind of the one of the major points that you know basically took from started with an LOI in February and closed at the end of November . So yeah , that was one of the many challenges in the , in the , in the , in the Journey to the closing .

Jeremy 4:06

I would call can you dig into that a little bit deeper to talk about how how you overcame the the financing challenges through the process ?

Russell Cohen 4:14

this particular buyer was a startup , private equity . They were a company called broad-wing capital and now they're officially a private equity group because they did their first platform Acquisition in the roofing industry . So basically , what was going on ? This was a couple , a couple of Gentlemen started this private equity group , had a great pedigree in the private equity space , so they started broad-wing capital . So they had to go out to the open market and raise funds and get those equity investors . So , outside of trying to find 70 to 80 million dollars for this particular you know kickoff , you know platform deal , they were raising funds for future add-ons and future platforms .

Russell Cohen 5:01

So you know , while while they were talking to equity investors and debt lenders , we were also you know you were seeing the interest rates rise . You know the Fed has been raising rates . Everyone's interest rates are on on , everything that affects life has been going up . So you know , capital raising gets , gets challenging . So so you know we start this deal in February and we're going through the quality of earnings , which is kind of the colonoscopy of the M&A deal . Basically go through all the accounting and many different levels of diligence and you know we get , you know , pretty , we get through it , which is great , a very complicated process , as I said before , and what happened was the sellers CFO resigned in July . He had an eye disease , he was overwhelmed with the process and he you know he was , you know had to make a decision because , you know , he had health complications . So in the middle of our you know , of our deal , we lose the sellers CFO and we had to bring in a fractional CFO that take over the entire Accounting department of this roofing company . So you know , we were basically chasing our tails on the financials .

Russell Cohen 6:20

The Broadwind capital was trying to raise a lot of money based on a hockey stick growth of from 21 to 22 and the 23 numbers . They were talking to equity investors with first quarter numbers , which is like a no-no , basically . So it got very difficult to get the 630 profit and loss because that when they're raising money , they want to see how the business is doing in the current year . So we're sitting in the summertime and they're trying to raise money and they only have the first quarter numbers . And so by the time we finally got the 630 numbers , we were deep into August , heading into September , and and so that became the challenge that we were chasing our tail on on the numbers , even though we were moving along in the quality of earnings . The buyers had to go through 200 , 200 investors to finally land at a few . And so now we're sitting , you know , and you know we're sitting on edge the entire way .

Russell Cohen 7:20

So so , basically , it was now sitting in September and the equity investors and debt lenders are coming into town interviewing the seller . We're going for meals , they're seeing projects , we're going on job sites , and , and you know this is going on pretty consistently throughout the months of September . And then so we , we think we're going to get to the finish line , and they're telling us they're going to pick a particular equity investor and they give us a support letter saying that they have the money . And then they said , wait a minute , we have someone else . So another group came down and and and , once again touring them around lunches , dinners and meetings , and by the mid October they got the support letter from Tree Line Capital , which funded the you know the , the initial upfront money for the private equity group , and they secured their you know their debt lenders .

Russell Cohen 8:16

So you know , we're talking about mid to late October and we've been running this deal since February and you know we we fit , you know , at the end of that timeframe we're like , oh my god , we , you know , we got the funding and now we're an erased , a close . But while all this was going on , the sellers EBITDA , the earnings of the company was growing from 13 to $20 million . So in 22 , he made 13 and he was like exceeding on tracking to over 20 million dollars . So now you start thinking seller's going to reprice the deal because now he can get 100 , you can get a hundred and 20 , hundred and 40 million . So we're like , okay , are we going to pull the plug on the deal and try to go back to market ?

Jeremy 8:56

So many moving parts there , it's no surprise how the deal almost fell apart a dozen times , nearly a dozen times . A lot of things need to go right for a deal like that to materialize for sure .

Russell Cohen 9:08

Yes , a lot of stars have to align and and the the the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the , the . The seller was happy with the price . He did not want to go through the process again of re interviewing buyers . You know there was so much money spent on attorneys , the CFO , all the advisors that were involved , from from you know , to M and a advisors , sunil and myself and his uh , uh benefits advisor . You know his insurance advisor . You know the two attorneys on the transaction .

Russell Cohen 9:38

So , yes , so it was . It was incredible amounts of calls and meetings and it got done November 30th , but it , you know , we really weren't skiing downhill , as I say , until we knew that we got the funding , uh , so , so that , yeah , that's what caused the deal to go longer than we thought , you know . But at the end of the day , we're sitting here on , uh , february 8th and you know we're looking back and you look back at what , what went wrong , and and you want to improve upon the process , um , and and be better for the next deal , and and we , you know we all went into the LOI thinking , you know , this would not be as as challenging . You know we all went , feeling everyone's in love with each other and you know deal fatigue gets involved in any transaction . It could be a small business and a large business and that's where you run the risk of the seller just calling , calling the deal off .

Jeremy 10:38

Well , congratulations again on this deal . May may you have many , many more to come in the future , in the years to come . And was there anything else you wanted to to share before we wrap up here ?

Russell Cohen 10:51

Uh yeah so so love the opportunity . Whoever is actually clicks on the podcast ? Uh , it's very important that you prepare your business for sale If , if I can meet with a business owner in advance , I can give them the proper tips , how to be private equity ready . Because you don't know what you don't know and you might think your books are perfect , but I could promise you there are things that you probably never thought of that will happen in transaction . So we really got to get in early , get the right team together , get the books in order , make recommendations so you don't have to go through craziness in the transaction 100% .

Jeremy 11:37

Yeah , I'm learning a lot through this process and and it's definitely important to have a professional such as yourself on your side through this process , because it is wildly complicated for sure .

Russell Cohen 11:49

All right , that's only a few of the . That was only one issue , you know , so we could probably do , you know , five or six podcasts on on the challenges , on this , on this , on the final , uh , final sale of this company . So , but this is a . This one was a good start .

Jeremy 12:04

Good start , All right , everyone thanks for tuning in and we will catch you all next time . Everyone , take care . Have a wonderful day .

Speaker 1 12:13

Thanks for listening to the South Florida M&A advisors podcast . For more information , visit South Florida MAcom or contact 954-646-7651 .