Deal Team Six TKO Miller

Your hosts, Tammie Miller and Tim Oleszczuk, welcome you to another Deal Team Six podcast. Today, they address the difficulties an entrepreneur endures when it comes to funding and starting a business, and how incredibly attractive it can be when a large corporation or big competitor offers up capital. Let’s listen to the different possible scenarios!
 
[2:06] What is a Strategic Buyer? It is another company or potential acquirer in your industry, it can be a competitor, or someone doing something similar to your business. [3:05] What happens if a larger business is interested in yours? If your company is struggling with capital and resources, it may seem like a great opportunity for a larger player to be part of your company. [4:22] Why do big companies care about investing in smaller companies? Sometimes a bigger company shows interest in a smaller one due to its technology.  An acquisition of a small company can be quicker than dealing with large company bureaucracy and red tape. [7:11] What ways can a bigger company invest in your company that do not necessarily look like an investment? A specific customer arrangement could be one way (some companies can ask for exclusivity in a particular market or ask for the best pricing offered). Some companies can take a lot of your company’s manufacturing capacity, which in the long-term could really be a growth constraint. [11:45] Tammie and Tim address the Right of First Refusal. [14:50] How do you make it work with a large customer investment? [17:05] If you are thinking about selling a part of your business to raise capital today, it can be very difficult to sell your business later when you are trying to exit.  Make sure you structure those relationships correctly.

Tammie Miller and Tim Oleszczuk, your hosts, welcome you to another episode of the Deal Team Six podcast. Today they talk about management presentations, those situations when you are starting to bring back prospective buyers, and they are getting to the next layer of a sale process. This is an excellent opportunity for them to listen to specific aspects of the company. During management presentations, the sellers get to know the potential buyers, which is a great time to ask questions. Tammie and Tim are disclosing the questions discussed in today’s episode in a blog post titled “Questions You Should Ask the PE Firm During Management Presentations.” Check out the blog at www.tkomiller.com/blog
 
[2:09] First Question - How often do you visit your portfolio companies?
[9:03] Second Question - How big is your fund? Where are you in its life cycle?
[13:22] Third Question - What are some things that a private equity group might offer to a portfolio company other than cash?
[16:48] Fourth Question - Are acquisitions part of the growth strategy?
[21:02] Fifth Question - Can I call the current or former CEOs of your other portfolio companies?
[22:58] Sixth Question - How do you typically finance your transactions?
[24:21] Seventh Question - Which tools do you have to compensate managers?
[26:15] Last Question - Do you charge a management fee?

Tammie Miller, your host, welcomes you to another episode of the Deal Team Six podcast. In this episode, Tammie has conversations with two entrepreneurs/business owners about their experiences with Advisory Boards.


Today’s guests are Jarrod Lopiccolo, CEO and Co-Founder of Noble Studios, a creative digital performance marketing agency based in Reno, Nevada and Tom Nelson, President of Nelson Container Corporation, a privately held high-quality, full service, box manufacturer based in Germantown, Wisconsin.


(9:27) As an interesting aside, both Jarrod and Tom work with their wives in their companies. They share their secrets to successfully integrating family and work and  knowing when to separate the two. (15:24) What is the difference between an Advisory Board and a Board of Directors? An Advisory Board provides advice or insight but has no governing power or control and no fiduciary responsibility for shareholders or owners. Some companies have both an Advisory Board and a Board of Directors. Jarrod talks about how he decided to have an Advisory Board rather than a Board of Directors. (19:03) Tom shares how he inherited an Advisory Board but later decided he needed to have his own. (22:51) How do you best use your Advisory Board? Jarrod shares his three-problems method. (30:33) Tom talks about the specific talents he was looking for when searching for members for his Advisory Board. (33:00) What should the board composition look like? Jarrod shares his interesting perspective about it: “Never put a lawyer or an accountant on your advisory Board.” (36:10) How do you ask people to be on your Advisory Board? Tom shares his experience when asking people to be part of his Advisory Board, which is usually met with curiosity and gratefulness. (41:25) Jarrod shares his perspective on Term Limits (since an Advisory Board shouldn’t be thought of as a permanent commitment). (47:01) The entrepreneurial life can be a little lonely. Advisory Boards provide both positive and negative feedback, which is greatly needed for entrepreneurs to keep on learning. (52:23) What about entrepreneurs that dislike the idea of having an Advisory Board? Where should they go for guidance? If an entrepreneur does not like the vulnerability implied in having an Advisory Board, they could network; Tom explains this idea.

Tammie Miller and Joe Froehlich, your hosts, welcome you to another episode of the Deal Team Six podcast. In today’s episode, Tammie and Joe discuss ways to think about real estate in your M&A transaction.
(1:41) Why a buyer may or may not want the real estate. Buyers can be interested in owning a business and its real estate if it is a central part of the strategy, if it is crucial for the business operation, or if there is a high cost of moving. Also owning real estate assures some predictability in the cost going forward in terms of growth and expansion. (6:07) What happens when the business is not “tied” to the building and can be sold apart from the real estate? What is the benefit for the seller in this case? Most business owners want to sell the business and real estate together, but in some deals, the buyer does not want to own the real estate. Currently, valuations for real estate are considerably higher than valuations on businesses, which is a great opportunity to take advantage of that incremental value. (11:42) Is it hard to engage in two different transactions (real estate and business)? It is definitely extra work but they do not have to be done simultaneously. (13:00) What is the role of an investment banker when it comes to the sale of the real estate? (14:30) Once the real estate is sold, what is the impact on the business sale from an EBITDA point of view? The earnings of the business will be reduced by the amount of the lease payment. This lease will have to be looked at carefully by the buyer of the business. (20:22) What due diligence can you expect if the real estate remains with the business? The buyer is usually not interested in taking any liabilities pertaining to the real estate. (23:23) CAPEX decisions: Should a seller make major capital expenditure purchases/changes/additions to our building prior to selling our business? This is a very common question. As a business owner, you have to continue to run the business as if you are going to own it forever, however, you don’t have to make substantial long-term decisions about the business when you are not going to be the beneficiary of them.

Tammie Miller and Tim Oleszczuk, your hosts, welcome you to another episode of the Deal Team Six podcast. Today, they are diving deep into misfortunate events. Both Tammie and Tim have worked in M&A for more than two decades and they have experienced some strange behavior from their clients. Management presentations and dinners have proven to be very stressful moments. Listen to this episode to have a little fun and learn how to ease these crucial moments during a transaction
 
(2:15) What is a management presentation? (3:59) What happens in a management dinner? (5:44) Tammie presents examples of management presentation and dinner fails.  (12:47) Rule #1 for management presentations and dinners: Don’t be gross. (17:43) Rule #2 for management presentations and dinners: Don’t be rude.

Tammie Miller, your host, welcomes you to another episode of the Deal Team Six podcast. In this episode, Tammie is accompanied by Scott Wolf and Julia Papastavridis both from Willis Towers Watson, to talk about Rep & Warranty Insurance in M&A transactions, and specifically what sellers should know.
(2:04) What is Rep & Warranty insurance? How to use it and what are its benefits for both buyers and sellers. (6:32) Why is it better to use insurance vs your new employees for indemnification? (8:54) What exactly are we insuring? (17:47) Can the underwriting jeopardize your transaction? (19:24) What does underwriting entail from the seller and buyer's perspectives? (25:12) What is the cost and who pays for it? (42:08) If you are a seller, what does subrogation mean? (50:13) Why Rep & Warranty insurance is completely different from normal insurance. (51:18) How to choose the right broker.

If this topic interests you, check out these other resources:
Blog "An M&A advisor will scare away my buyer, complicate things, and cost me a lot of money. If you think any of these things — you're wrong"
Blog "An M&A Advisor Will Not Muddy Your Sale Transaction"
Blog "4 Experts to Turn to During a Business Sale"
eBook: Rep and Warranty Insurance for Small to Medium-sized Transactions