Quarterbacking the Deal: Interview with Salman Husain

Elizabeth Shea sits down with Salman Husain, co-founder and managing director of Monument Capital Partners, to discuss the evolving M&A landscape for founder-owned government services companies. Salman shares his journey from government consulting into investment banking and explains how his experiences in this sector have shaped his perspective on mission-driven businesses and the founders behind them. He offers insight into what buyers are really looking for in today’s market, including strong leadership teams, scalable growth pipelines, and reduced owner dependency. Salman also discusses why preparation matters years before a sale, the importance of surrounding yourself with experienced advisors, and how deal terms can impact outcomes just as much as valuation.

Transcript

SPEAKER_01 0:00

Hello and welcome to Branching Out, a Tree Fork Strategies podcast. I'm Elizabeth Shea, the founder and CEO, and I created this show to help business owners navigate the ins and outs of an exit event. So each episode, I sit down with seasoned founders and CEOs who have successfully sold their companies through a strategic or a financial transaction. Together we discuss what went into their decision to sell, what worked, what they would do differently, and the valuable lessons that they would like to pass along to founders with a sale on the horizon. Our goal is simple to provide a playbook that you can use as you approach your own sale with confidence and clarity, knowing that you're not alone in the process. This is Branching Out. Thank you for joining me. Hello, everybody, and welcome to Branching Out. We are very excited to have a new acquaintance and Salman Hussein with Monument Capital Partners, who joins us today. How are you today?

SPEAKER_00 0:53

I'm doing well, Elizabeth. Thank you for having me here.

SPEAKER_01 0:55

I'm very excited to hear your story. So Salman comes to us as the managing director and co-founder for Monument Capital Partners, which is a local investment bank here in town. And I'll let you go ahead and describe some of the industries that you serve. But let's let's just start from the beginning. You know, tell us how you got into this industry with Monument Capital Partner to be a co-founder.

SPEAKER_00 1:15

So, you know, we st right now we serve um the MA market for the aerospace defense and government industry, but my path to get here was a bit circuitous. Um, and I never planned on focusing on aerospace defense and government when I started out my career. Um I actually started my career in 2008 and went into consulting. And, you know, 2008 was the great recession. As a consultant, a lot of government or sorry, a lot of commercial contracts were drying up and they were not hiring consultants anymore. And overnight, all of those opportunities and projects went away. Um, the only customer that was spending money at the time was the US government. So when it came to staffing on a consulting project, um, I got staffed on a government contract. And that's what kind of started my career in the government space. So this was back in 2008. It was supposed to be a one-year contract with the government. And 18 years later, I'm still in this sector. So I spent the first eight years of my career in the consulting space and um worked on contracts with the United States Postal Service, Department of Homeland Security, the U.S. Census Bureau, and built a really good foundation in this government space and really liked working in DC and the DMV and working on programs that serve the U.S. government and were mission-oriented. On one of my projects, I was working with a team from a company called SRA. And in the middle of my project, SRA got acquired by CSC. And that was my first real experience into MA. While I wasn't an SRA employee, I'm working on a project with them. I saw a lot of the post-acquisition integration happening. You know, I got to see a lot of the communications that happened between SRA and the employees. And that's what really sparked my interest in MA early on. So as, you know, I decided I wanted to pivot my career into investment banking and look at MA in earnest. And, you know, as most career pivoters do, I decided to go get my MBA and went to Georgetown to do that. And as I was looking at investment banking and I thought about ways to kind of merge my past experience in government with my new new career focus in investment banking, um, you know, I was pretty focused and it was, I knew it was a niche area that I was trying to target as a career. And through one of the information sessions, I met the founders of Kipps DeSanto and learned that there's an investment bank solely focused on MA in the aerospace defense and government market. And I said, well, this is perfect. Um, you know, I was lucky enough to get an opportunity an internship with them and then join them full-time as an associate. And, you know, for those that don't know, Kips DeSanto is one of the leading investment banks in this sector. Um, so I was really privileged to start my career in investment banking with them and really was able to build a strong foundation and the skills required to be an investment banker. Um, but I also learned about the market more broadly. And I realized this isn't a onesie, twosie type of market where there's only a handful of deals happening. This is a booming MA market with north of 100 deals happening every year. And there's a real opportunity to be an active player in this space. So I spent about three years there and built a lot of experience serving the market. And over my time, Kipsasanta was moving quite upstream. And I realized where my passion really lied was working with founder-owned, founder-operated companies. And again, as Kipsis Santa was moving upstream, they were working with larger companies, private equity-backed companies, things of that nature. And it was kind of shifting away from the founder-owned companies. And I realized my focus needed to be more on the middle market. And that's when I decided to join Aronson Capital Partners because, again, they were more focused on that middle market. And that's where I met my then boss, now partner, Philip McMahon. Um, we spent two years at Aronson together, um, you know, worked on several deals in that space. And in the two years I was with them at Aronson, we decided and realized there's an opportunity to branch out and start our own investment making platform. And that's what led us to Monument Capital Partners. You know, we're always surrounded by founders, owners, operators, and to have the opportunity to do that ourselves was um was too too good of an opportunity to pass on.

SPEAKER_01 5:42

That's that's a great story. And it's interesting because um I remember the SRA CSC deal, and I that was a really big, big transaction, as I recall, like billions of dollars or something along those lines. And then I'm of course I'm very familiar with Kip DeSantos and Aaron's. And so so hats off. You had your you had your your training ground in very, very strong places. So well, congratulations to you. You say you focus on government services. I think it's really unique that you bring that perspective of having been inside in a consulting capacity, so you really understand the nuts and bolts of it. So I imagine you can appreciate then what a founder might need to go through when they're going through an integration.

SPEAKER_00 6:18

So you bring up a good point, right? Having been on the other side of it, being, you know, being a consultant for a government contractor or serving the government, I've seen kind of how these contracts function and how the work is done. And, you know, again, like I said, I'd never planned to be in the sector, but having been in the sector, I realized how much of a focus there is on the mission, how much technology is constantly advancing. And then being on the other side now where I get to work with the founders and owners, I get to see how committed they are to enhancing and advancing technologies for the government. Um it's just a really great kind of opportunity that I've had to see both sides of it. And I and I get, I have it, I have a chance to bring both perspectives into the work I do today because I think I just have a different appreciation for the work that's done on the ground by the companies, by the employees of these companies that I'm representing.

SPEAKER_01 7:11

So, how do how do founders find you? How do you bring in the clientele? What's what's the typical process?

SPEAKER_00 7:19

So, you know, we work with folks in a few different capacities. There's some owners that we've known for quite some time and work with them several years before they decide to go to market and sell their business. Um, what we do in that time is really help them establish the right processes, the right metrics that they would need to become a compelling, exciting opportunity for these buyers to go pursue and would be interested in acquiring. So we look at their pipeline, we look at the technologies they're working on, the contracts they're pursuing kind of across the board operationally, and give them some guidance to make sure they're maximizing value for whenever they are ready to sell. And then we have some other clients that we get introduced to through referral networks, whether it's lawyers or accountants or former clients. And they usually those individuals are much closer to pulling the trigger on a sale. So we come in right before they start the process and work with them. And but in either case, when they are ready to sell their companies, right? We work with them throughout the entire process. We are, we're the ones that kind of we call it quarterbacking, the process where we come in and review their financials historically. We help develop a forecast, we build all the marketing materials, we we go and um establish the buyers that we're planning to contact as part of the process. And we take it all the way from you know call making the first call to the buyers, all the way to negotiating the LOI. And we're not done until the deal closes. So we're involved from beginning to end to make sure that our clients, you know, are have a successful exit with their companies.

SPEAKER_01 8:55

So on that point, do you have a preference as to whether someone might want to come to you earlier versus later? Or what's your perspective on that?

SPEAKER_00 9:05

Not a preference, but we definitely the ones that we've worked with longer, we see how much their value changes from the time we first meet them to the time they ultimately decide to make an exit. Right. We've seen companies that have doubled and tripled their valuation from when we first met them to the final sale at the time of closing. And that's just a combination of a few things that they're implementing early on and thinking about proactively as they run their business. And that's where we think there's a lot of value and just planning for this earlier and pulling the right levers throughout the process to maximize value whenever they are ready.

SPEAKER_01 9:47

Totally makes sense. Um, and could can you talk about what some of those value drivers are? What are the things that, particularly in the government services industry? I love the fact that there's the focus on the mission. What are other things that are really important and critical that would improve enterprise value?

SPEAKER_00 10:03

Yeah, I I hit on um, you know, the mission and technologies quite a bit. And there's obviously a lot of excitement from buyers for companies that are developing advanced technologies. AIML is obviously a big, big one nowadays. But that aside, what really differentiates companies is you know a few things. Uh, and oftentimes what our clients think is buyers are just buying the portfolio of contracts they have today. But really, what buyers are looking to do is grow that company and expand beyond that base of work that they're acquiring in that moment. And to be able to achieve that, you need a strong pipeline. You need to be looking at opportunities one, two, three years out at any given point and know what's coming down so that you're building up your ability to actually grow in the future. And that's what buyers are really buying is the opportunity to grow and scale that business. And I think that's what really differentiates good companies from great companies and companies that can really help buyers achieve their goals as well.

SPEAKER_01 11:07

Couldn't agree more. Um, various two points. I think from the standpoint of evaluation, let's say, for a for a government services company, do they tend to differ if you're looking at a strategic buyer versus a financial buyer, a private equity buyer? Has there been any change from that regard?

SPEAKER_00 11:25

So what I've seen is the band has really narrowed. Um, historically, and this is what I kind of learned early on is you know, strategic buyers are able to pay more because they can recognize cost synergies. So they're willing to pay a little bit more. What we've realized, though, is private equity has kind of learned that they have to keep up. And there's a lot of private equity in this space now. So what we've seen is the range of valuations have really narrowed. And strategic buyers and private equity buyers usually come in at similar valuations now.

SPEAKER_01 11:58

Oh, that's really interesting. So let's shift gears for a second. Let's say that I'm a business owner. What advice would you give to me in terms of how to better prepare myself, either emotionally, financially? What kind of things should I be thinking about?

SPEAKER_00 12:12

Yeah. So we talked about valuation. There's a lot of things we can do early on to help maximize valuation. Pipeline is, like I said, is an important one. The other key component is kind of building a strong team around you. And that's internally and externally. And I say that because, again, when you're an owner, operator, and a founder, you're employee number one. So you're responsible for the accounting, the operations, the HR, everything to keep the company running. But what happens as you scale up is there's a lot more people, and you need the right people around you within the organization to have the right skill set for each of those different areas that are that are required to operate a business. So we find it incredibly valuable to hire the a right CFO, have a strong BD team and capture team, have a COO and a HR representative so that your company is operating efficiently. And we all and what happens oftentimes is buyers come in and when they when they make an acquisition, the owner will exit the business. And it's this leadership team that continues to operate the business going forward. So the stronger they are, the more ingrained they are in the day-to-day and and are aligned in the growth strategy, the more excitement the buyer has in pursuing that that acquisition.

SPEAKER_01 13:34

Yeah, I was gonna ask you about that because we talk a lot on the show about reducing the owner dependency. And so what I think I'm hearing you say is is is that, but but of course being around to drive the growth and to drive, you know, the vision and those sorts of things. But having a leadership team that can that can carry on in the event that you decide to exit. Do you see it that often that's that's the CEOs will exit?

SPEAKER_00 14:00

More often than not, they will exit. There are some situations where buyers are have a a very big growth plan ahead of them and want to continue executing on that plan. But oftentimes these owners are, you know, this is the single largest um liquidity event of their lives. So it it becomes a little bit difficult to stick around when that happens. But you know, more often than not, our clients do step away.

SPEAKER_01 14:25

Aaron Powell And they're probably entrepreneurial and want to go off and start something else anyway, right?

SPEAKER_00 14:30

Well, usually yes, but you know, sometimes they have to wait for the non-compete to clear.

SPEAKER_01 14:33

But that's fair fair point. So on that note, talk a little bit more about what you think the CEO should be thinking about in terms of building the right support structure.

unknown 14:43

Yeah.

SPEAKER_00 14:43

So we talked about building the internal team. The other component of it is also having an external team. And that that includes your advisors. That includes the accountants that you're using, the tax specialists that you're using, lawyers, investment bankers, um, things of that nature, because you want the best external advice that you can, again, early as early as you can have it. So you're preparing your company for diligence, you're preparing yourself for the documentation that's required as part of the MA process. So the stronger your team is around you on the external side, the more access to information resources that you'll have throughout the MA process. And again, the earlier you bring them in, the more institutional knowledge those advisors will have about your company and can speak to the things that have happened in the past. Through an MA process, there's a lot of diligence that takes place. And we oftentimes loop in these advisors to provide some more context and guidance on key questions that come up. So again, the the stronger your team is outside outside of your company, the better prepared you'll be for the MA process.

SPEAKER_01 15:50

So I have a question on that. Um, what if what if a business owner has had an accountant for a long time and is does all the taxes for the family and what have you? Like when is it when is it appropriate to s to switch or to augment versus going with the people that have always known you for a long time? Do you have a perspective on that?

SPEAKER_00 16:11

I don't know if I can answer that one. That one's a toughie.

SPEAKER_01 16:14

Okay. Well that's that's cool. I mean, it's it's it's a real challenge because it is a challenge.

SPEAKER_00 16:18

That's why I don't want to give any thoughts on it. That's very unique to each individual. So that one's we we do have folks that have switched advisors like that. But it it's hard, right? There's you lose institutional knowledge. Um, so we always have to balance that quite a bit. Or or sometimes we'll say, keep your advisor, let's bring in this other third party, but it's it's very much case by case.

SPEAKER_01 16:43

Yeah, no, I I legitimately am just very curious about that because I have people that have had that have asked and and I think you might be right. It might be that you you continue to work with your advisor that's been with you a long time, but you really want to have someone that understands MA transactions and does them for a living, because if you don't, you run the risk that something's gonna get missed. So yeah, I was just curious if you had a perspective and I haven't seen it happen that often, but it is it is something to consider and probably a question at least for your external advisors to deal with appropriately and openly and transparently. So um let's talk about today's marketplace. What are you seeing today in terms of um trends? Are you seeing any it's it's been a you know, it's been a tough year for government contractors. Are you seeing anything that that people should be looking out for or be hopeful for?

SPEAKER_00 17:32

Yeah, the last um year, year and a half has been been interesting from Doge coming in early last year and and cutting a lot of contracts. You know, we saw a lot of our clients and a lot of companies generally in the sector that had their revenue decrease substantially as these contracts were were eliminated. Um that's been tough for a lot of folks to navigate that. On the back end, we had a government shutdown, which caused a lot of operational issues for these companies where they had to move employees to the bench or have layoffs because they weren't required to work and it was tough to continue paying their their salaries. So it was definitely a tough year. And what we noticed is especially in the middle market, a lot of folks decided to pause the sale process or push it to 2026. So, you know, now that things have settled a bit in terms of the macro environment, we're hopeful that the the activity picks back up. Even though, you know, there was a lot of concern last year. We still had decent MA activity. Um, but we think a lot of deals push to the right in 2026 should pick back up. And we expect kind of that MA activity to continue going forward.

SPEAKER_01 18:43

Oh, that's terrific. Yes, I know that there were there was lots of speculation last year as to what's going to be happening to the market, particularly in an MA. So, you know, we're hopeful. We're very hopeful. So, what about some gotchas? Any gotchas that you can think about that people should be should be considering if they're looking into this process?

SPEAKER_00 19:00

So surprisingly, I will say there's not a lot of gotchas, but it's a little self-serving because I think part of the reason we don't see gotchas is because the buyer knows there's an MA advisor behind the seller. Okay and they can't get away with one. Um and especially when you're working with an MA advisor that knows the market and has worked on a lot of deals, we know what market terms are and what deal structures look like. So usually we don't get anything that's too complicated or too out of market in an initial deal term. There's always something that we need to negotiate, but no gotchas, right? There's every every buyer and every seller will anchor high or anchor low on certain things, and then we negotiate, but there's nothing that's completely out of market that we usually see.

SPEAKER_01 19:47

Yeah, I I am surprised by how many folks that we've even had on this podcast that haven't used a representative like yourself or haven't used a banker. And so I I think that there's there's a certain a role that you serve, and a lot of it is about the terms. And so can you talk a little bit about the terms versus the price? Because that's always a piece of speculation, you know? They might there might be a valuation, but then there are also terms.

SPEAKER_00 20:11

Yeah, I mean, oftentimes the enterprise value is what what gets all the attention, but to your point, how that enterprise value is structured is critical. And typically there's three buckets of value in a deal, right? You'll get cash at closing, you'll get rollover equity, or you'll get an earnout component. And, you know, depending on the company we're selling, the forecast, the opportunities ahead of the company that we're building into the forecast, those three levers will get adjusted a bit. If you're expecting a ton of growth three months after the sale, we expect some sort of earnout tied to that. But if you're relatively steady state, we expect less earnout tied to your future performance. So, you know, we look at those components and we try to balance all of that. But you're exactly right. We we have to look at all of the deal terms in aggregate, and it's not just the sticker price that we need to that we focus on.

SPEAKER_01 21:08

Right. So, what other roles do you find that you you serve in this process that are important for a buyer to consider?

SPEAKER_00 21:16

So I said it earlier, we're we're kind of the quarterback in the process. One, we're organized up front. We make sure all the documents are in order, all of the financial documents and reports are available. We do our preliminary diligence up front and prepare the buyer and clean up any questions that come up before we reach out to any groups. There's a lot of upfront preparation that goes into going through a sale process. And then the other thing where I think we add a lot of value is just creating a sense of competition, right? When a seller is hiring an investment banker, there is monetary investment that's made to bring someone like that on. And our job is to maximize competition and ultimately drive up valuation as a result. And buyers know that. They know if an MA advisor Advisors in the mix. They're calling a lot of other groups that are similarly interested in this company that that's a right fit for the profile of the client that we're bringing to the table. And they know that if they, if they're serious about pursuing this, they need to be ready to pay at least market rates, right? They can't get they can't they can't get away with a lower valuation, which what we see oftentimes is a seller will get contacted by a buyer and it ends up working out. But there's two things that end up happening is deals take a lot longer when it's a preemptive in that way, because you haven't done the preparation up front. There's no one there to kind of force activity. And that's where we come in oftentimes as driving a lot of that activity. But the buyer also knows there's no one else in the mix. And that's when the gotchas come in. That's when there's more risk on deal structure because there isn't someone there to provide guidance. Right. And one of, again, the value of bringing in someone that's worked on several deals in this space is they've seen all these different structures. They've seen different deal terms, and they can come in and give guidance on what's what's reasonable and what's not. And what we see oftentimes is hiring an advisor pays for itself because you get a valuation that is much more competitive than you would have gotten on your own through a preemption. 100%.

SPEAKER_01 23:24

Yep. 100%. Um I think if if that's the way that a company is looking at it, then that's then that's the right mentality because you're probably incentivized to have to drive more competition. So absolutely. Okay. So we're almost at time here, but I'd love to hear if you have any success stories that you'd be interested in sharing. Any any fun facts on deals you've recently done?

SPEAKER_00 23:45

Yeah. So we hit on this earnout thing earlier. And I actually have a success story with a client of ours that that did have an earnout component. So our client, again, very mission-oriented, really wanted to have a positive impact on the agencies they were serving and had a really strong pipeline of opportunities. And we knew there was a lot of growth ahead of them. But our client also knew they needed to sell and find a partner that would bring resources and scale and access that they didn't have independently to really go win some of this work. And that's what prompted the sale for them in the first place. But as part of that growth plan, we were able to structure a deal that had a very large earnout component with targets and metrics that were kind of a few years out at the time. And once those two companies merged, all of the access resources scale that they were looking for allowed my client to achieve all of the earnout metrics in half the time that initially was planned for. And, you know, that's a win-win for both sides, right? The buyer achieved the growth that they had forecasted. And for our client, they achieved the earnout. And we were also able to negotiate accelerated payments of the earnout. And we were able to really help them achieve the full value of the company when we ultimately sold. And at the end of the day, the earnout was a multiple of the cash they received at closing. And those types of deals are just life-changing and build generational wealth for these founders. And again, that's what that's what we love doing. And that's why we love working with founder-owned, founder operated companies, because it's a meaningful transaction for them. It's the one liquidity event they will go through in their lives. And we're we're happy to be part of that process with them.

SPEAKER_01 25:34

Oh, that's great. So, Monument Capital Partners, congratulations to you. Thank you. I appreciate you being on the show today. Thank you for having me. So, how how can people get a hold of you? What's the best way for people to reach out if they are interested in having a conversation?

SPEAKER_00 25:48

Yeah, the best way would probably be through our website, monumentcapitalpartners.com. There you can find my email and phone number. And um my I think there's a link to my LinkedIn as well. So feel free to contact me one of those ways. But we'd love to chat with folks that are thinking about an exit. Um, again, earlier is better, but um feel free to reach out.

SPEAKER_01 26:08

But I like the fact that you have a niche. I think that's very unique and and strong. So congratulations. Well, thank you for being on the show today.

SPEAKER_00 26:15

Thank you, Elizabeth.

SPEAKER_01 26:17

All right, thanks.