Why do some companies grow by leaps and bounds while others only inch forward? Simple. They embrace Deal-Driven Growth in addition to organic growth! DealQuest is where you learn how to strategize, prepare for, find, and complete deals to grow your company faster.Listen in as host Corey Kupfer takes you behind the scenes with some of the world’s most fascinating deal-savvy business leaders. This is the one place where they can share openly the secret to deals they have done (or failed to do) and the issues, opportunities, benefits, pitfalls and lessons learned.Here you learn first-hand all about:Powerful deals that require little capital Mergers, acquisitions, and tuck-insJoint ventures, partnerships, and strategic alliancesLicensing, raising capital and onboarding key employeesNegotiating, structuring, finding, valuing, closing and integrating dealsDon’t be the one at the table who doesn’t grasp the power of Deal-Driven Growth! See acast.com/privacy for privacy and opt-out information.
Episode 185: How To Raise Capital For Your Company with Maximilian Rast
Maximilian Rast has over ten years of experience raising capital for different companies. He was CMO at YFood Labs GmbH, the 100+ million euro revenue brand with over 100 million euros raised by Jumia South Africa. After years of working as a stakeholder raising capital for other businesses, Max now raised funds for his own company. He is the Co-founder of Klar, a single source of truth for e-commerce brands in Germany. Klark combines its data to help track performance, scale growth, and increase profitability.
In this episode, Max shares his valuable capital-raising lessons from the perspectives of the stakeholder and the decision-maker, as raising capital in his own company. He is the ideal character to provide the best insights for entrepreneurs looking to raise funds.
Have A Clear Target For The Capital
Yes, your company needs capital, but do you know how to use the money that will be raised? You need to define your company’s simple needs and how that investment will be used, even before raising capital. Set this as precisely as possible for yourself and the investors.
There can be so many company needs in the beginning that it can be confusing to understand how the funds will be used. For companies that are just starting out and do not have market experience, Max gives a tip: when defining objectives, understand the model and alignment of expectations of where this company ought to be going. You will have a better destination for the capital raised.
If your company has been in the market for a few years, the targets are already clearer. Max shares that speed to market motivated him to raise capital for his company, as there was a market need for his product. He used the investment money to increase the chances of exploring that opportunity, getting more people on the team and getting out there before the competitors.
When Choosing Investors Think Strategically in Value
To finance his own company, Max chose one institutional investor and a dozen angels. Behind this choice, he strategically thought about how these professionals could add to his company. His tip is: ask yourself if the angel is someone you see yourself getting a call from every week to help you grow the business.
Max explains that choosing the angel isn’t about the money, as his company had a good track record.Raising money wasn’t the concern; the concern was the value the investor could provide on top of the money, especially in the early stages. It’s surprising the expertise you can acquire from your collection of angels.
Companies that are successfully raising money get a lead investor, who’s a significant player with some status. Once you do that, it’s a lot easier to raise capital from others, since it makes it possible to have more investor options. That’s a dominant position to be in because you can make strategic decisions amongst the people interested in funding.
The Idea Is Not The Most Important To Investors
Many people have the misconception that to get investors, the most important thing is the innovative business idea. Of course, the product or service ideas matter, but it is not the main one. According to Max’s career experiences, investors are attracted by:
60% team involved
30% market in which the business is inserted
10% idea or product
Max shares that when getting to know your business, potential investors want to know if the team involved can carry out the proposal, which is the biggest concern. Investors also need to know if the market for this product is viable and healthy for investment. These are the factors that sustain the success of a good idea.
When presenting the proposal to investors, include some aspects to give dimension to your project, so investors can trust their money on you. There are a few main things they want to know:
Who are you and what is your business?
What is your track record?
How big is the market you want to join?
Raising Capital Pre-Launch
You may wonder
Episode 184: When a Win-Win Deal Becomes a Win-Lose Deal with Steven Rothberg
Steven Rothberg is the founder and chief visionary officer of College Recruiter, a leading job search platform for students and recent graduates around the world who want to find career opportunities, such as internships, seasonal work, and part-time jobs. In business since 1996, College Recruiter has helped 5 million candidates.
In his career ahead of College Recruiter, Steven has been involved in hundreds of deals. Regardless of the deal, his goal is to provide beneficial and helpful candidate and recruiter experiences. CR clients are primarily Fortune 1000 companies - the largest companies ranked by revenues in the United States - federal government agencies, and other employers who want to hire newcomers to the market.
In this episode, Steven recounts how he created win-win partnerships to ensure that both organizations involved become strengthened. He also unfolds his experiences with what entrepreneurs fear most: breaking a deal. Steven gives professional tips on how to prepare for this end by having a mutually satisfactory agreement up front that provides a clear roadmap for how to end the relationship.
Understanding Win-Win Partnerships
To understand partnerships and start using them in your career, Steven warns that the best partnership is the one in which both companies come out stronger than they came in. The alliance must bring profits and/or other benefits to both for the life of the partnership. If, at any point, that is no longer true, at least one of the parties will be looking at how to end the deal.
Let’s say you’ve started a great partnership and for a while nothing seems to shake it. Does that mean it will be like that forever? Steven says that it’s very common for partnerships to be win-win at the beginning, but if one partner starts to lose profit over time or the deal no longer fits their business model, then it no longer makes sense to continue in the deal. Business models change, the market changes, and people change - turning what was a perfect fit into a detrimental partnership. This is where you should look for how to amicably and cooperatively work together to end the deal and be freed up to find your next partner.
As an example, let’s take the first strategic alliance to increase organic growth that College Recruiter made in the early years of the company. The company had already launched the job board, but the site was not very good - if it had over 25 people using it mutually, it would crash. Can you imagine?
The solution to making College Recruiter improve their software issues was to team up with a technology company that provided everything they needed for the platform on a white label basis. Like most businesses, College Recruiter hasn’t built all of its company resources from scratch, but buys and licenses parts of the company.
The service included all the development work, customer service, and processing of credit cards with customized services and heavy customer support. All this was for an extremely cheap price in hindsight! As the partner company providing these services grew and developed, they realized, within a couple of years, that this was not a sustainable business model for them anymore. It wasn’t a win-win deal, as it was very profitable for College Recruiter alone; this is why the partnership ended. This often happens in business, and entrepreneurs must be prepared for it.
After the partnership ended, Steven had to deal with another scary part of the business: parting ways at the end of a deal. There are some ways to be ready when it comes to ending the contract. Steven shares key principles for every entrepreneur:
Face reality - a lot of entrepreneurs don’t want to look at the possibility of something potentially going wrong. It’s important to be a realist when doing business deals. Whether it’s because of speed or saving money desires, they don’t evaluate their contracts carefully and it can bring issues when it is tim
Episode 183: How To Invest In Real Estate with Kent Ritter
Kent Ritter is a full-time real estate investor, a former management consultant, corporate executive, and startup owner. After successfully exiting his first company, Kent turned his focus to real estate. Now, he is the CEO of Hudson Investing- a multifamily investment firm that helps professionals scale and diversify their real estate portfolio with cash-flowing wealth and building assets. He has achieved financial freedom and is dedicated to teaching others how to make good investing decisions. Whether you are new to real estate or have years of experience, this episode includes some valuable real estate lessons to help you along the way!
Increase The Value
Commercial real estate is an income-based evaluation. If you increase that income, you increase how much it’s worth; this is an important investment tool that allows you to achieve financial freedom. Kent shares that one of his favorite aspects of real estate is the ‘forced appreciation’- by infusing the property with capital, renovating units, and taking care of deferred maintenance, you will be able to increase the rents and decrease expenses, which drives up valuation.
It is similar to buying and selling businesses: the higher the quality of the property, the more profit. Not only do you make more cash flow, but if one day you exit that business or sell that property, you’re getting a multiple on that cash flow.
Stay Away From The Bigger Players
A valuable lesson learned over the years in Kent’s career is that unlike the open stock market, where everyone is trading all over, real estate is more about the broker’s network. Investing in real estate allows competitive value, as there is not as much exposure to these types of deals. A lot of opportunities in real estate are not on a national platform, so this is a benefit for minor players!
To help lessen investment competition, Kent discovers strategic moves with opportunities that others may not see. For example, Kent and his company are strategically staying under an ROI of 200 units when investing. Reason being is when you go above 200 units from a multifamily standpoint, it will attract the bigger players who usually go 200+ units and the competition becomes unfair to small entrepreneurs. ROI, or Return on Investment, is a formula to evaluate how an investment has performed compared to your initial cost.
Buy Off-Market And Sell On-Market
In his career, Kent has been buying properties directly from the seller, because there’s no broker in between, which means there is less negotiating and competition for the deal; however, the same logic does not apply when reselling. Kent rarely sells directly to a buyer since it is not the most advantageous way for the reseller. If you want to maximize the value of the property you are selling, put it on the market.
If your property is out on the market, you can create a competitive environment. For example, to resell one of his properties, Kent’s company hired a broker and went through the marketing process, which allowed negotiation from a strong position and the profit was much higher. That wouldn’t have happened if they had sold off the market without intermediaries.
CAP vs Interest Rates
The most common misconception about real estate investing is that if interest rates go up, then CAP rates must go down, but Kent warns they are actually not correlated. A CAP rate is mostly used as an evaluation metric. It is what’s expected to return to your capital. As an example, if you had no debt on the property, with a million dollars invested and made 100,000, the CAP would be 10%.
The other way to look at the CAP rate is the inverse of the multiple. If the CAP rate, for example, is 5%, that means the multiple on each dollar is 20 X 20. For every dollar that increases in income, it is also increasing value 20 times. CAP and interest relate to the amount of money that is chasing a deal. When interest rates are lower, money is che
Episode 182: How to Prepare for Deals with Corey Kupfer
Congratulations on finding a deal! Now what? Whether the deal is a company you’re going to acquire, a buyer for your business, a joint venture, a strategic alliance, or licensing, you want to be prepared to make yourself deal-ready; think of it as even being pre-prepared. In today’s solocast, I discuss some practices to help prepare yourself and your team to get you deal-ready and how to minimize unforeseen issues that may arise.
1 – Pre-Due Diligence
To prepare for a deal, do pre-due diligence on your end to avoid unforeseen issues during the actual deal process. In this process, your goal is to find and solve any issues beforehand. The counterpart in the deal will look at financials, past litigations, team members, company history, and much more. Different deals have different levels of diligence and tackling this head-on, will prevent a great deal of stress and help your deal to be executed and integrated much more smoothly.
2- Manage Resources
Keep in mind what resources, in terms of team members and outside sources, you need to make the deal. Depending upon the size and type of the deal, you may need to pull in more people from your firm or hire professionals outside your company, such as advisors, accountants, lawyers, consultants, or investment bankers. Once you’ve decided which people you need, make sure they have time and availability to help you. Doing deals takes time and you don’t want to risk someone not being available when you need them most or have it interfere with other projects or tasks for which they are responsible.
3 - Plan The Integration Stage
Successfully preparing for a deal also means preparing for the integration once the deal is complete. The integration happens post-deal, but to prepare for it, you want to consider what resources and implementations the integration will need, such as team members, finances, strategy, communication, and even cultural integration. This may include some very difficult decisions, which you want to execute or plan for beforehand instead of during the actual integration.
4 - Do Your Research
There is preparation in terms of your own due diligence on the deal’s counterpart. Do research on them; not only from the legal and financial regulatory due diligence but also the cultural and personality differences that you may have to bridge. Research thoroughly so you are aware of all potential legal risks and what their objectives are. Figure out what the working relationship is and how that’s going to affect the culture of your company.
Preparation Will Save You Time & Money
During the deal process, most business owners are also concerned with running their company and managing the day-to-day processes, so the more advanced planning and strategic thinking you can do, even before you have a particular deal in mind, the easier the process will be. When you get a particular deal, you can deal with deal-specific items that you couldn’t do in advance, but at least the general ones are done. Get yourself deal-ready to avoid wasting time, money and energy.
Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
If you want to find out how deal-ready you are, take the Deal-Ready Assessment today!
Episode 181: Growth Through Acquisitions With Ryan Goral
Ryan Goral plays a unique role in the M&A space. He is the founder of G-Spire Group - a company focused on helping entrepreneurs, executives, and small business owners to grow through strategic mergers and acquisitions. He provides fractional corporate development executive services, which means he comes in as an executive fractionally. Ryan’s expertise is centered on adding value to entrepreneurs from capital structuring, advising strategy fit, and conducting through final transaction execution and integration. If you’re an owner, or operator of a smaller and middle-market business trying to grow through acquisitions, this episode will help you. Growth Through Acquisitions Matters Organic growth is a great strategy. However, according to Ryan, it can’t take you too far, as small or midsize businesses usually lack a large and qualified sales team. The way out is to expand through acquisitions, not simply to be a bigger company, but to avoid being absorbed by larger companies . When entering the acquisition process, Ryan shares some advice to think more strategically about your business… First, You Need Strategic Thinking Ryan explains that before starting their acquisition process, business owners should conduct a strategy review. To begin this strategy, ask yourself: -Where do you want to be three, five, or ten years from now? -Where are you going with your business and why? Those questions will make you set your schedule and be able to get plans off the ground by making it easier to see the goals. Investing in An Integration Plan Due diligence processes can suck you in - especially when you are dealing with banks, or raising some equity, or maybe you have lawyers and CPA reconciliations. It can be difficult for an inexperienced small company to get involved in a larger transaction. Some important details cannot be overlooked. An integration plan is required - a plan that details step by step for this acquisition. To begin this planning, schedule the first 60 or 90 days. That way you avoid eroding the value of what you just spent. A tip to start this planning is to keep these questions in mind: - Who is communicating what to who? - What are the key messages you want from the people you are trading with? Understanding Enterprise Value Do people in the corporate world really understand the concept of buying to create enterprise value for eventual sale, or are they more driven for other reasons to do acquisitions? To explain this, Ryan uses an example from a million dollar company. You can buy it and over time, turn it into two or three million dollars’ worth. In this way, you just created value through the transaction. Some people don’t understand why those multiples, which is the business' valuation, goes up. This is mostly because these companies are less risky, as they have more customers and cash flow. We don’t want to go buy a box of parts and say we did an acquisition; we say that we did a value enhancement. The Right Way of Growing Through Acquisition If you don’t have the executive team - like most smaller and mid-sized companies - planning acquisitions can be an enormous distraction for the owner which should also focus on the day-to-day operating demands of the company. In many negotiations, business owners without experience can get carried away by emotion and do not have a technical view of the deal they are in. Ryan's final lesson is that entrepreneurs should focus on building a support network when making acquisitions. Ryan recommends hiring experts, as they have a different perspective and can take the weight off your shoulders in dealing with these acquisitions. Build an advisory board with CPS, lawyers, and other consultants to make a better deal.
To connect with Corey for more:
Episode 180: How Communication Affects Deals with Brenden Kumarasamy
Brenden Kumarasamy is a communications expert. He coaches ambitious executives and entrepreneurs to raise venture capture and become their industry’s top 1% communicators. He also has a popular YouTube channel, the MasterTalk, dedicated to giving access to communication tools to everyone in the world.
In this episode, Brendan will talk about how communication should be applied to deals, including how to deliver the perfect presentation and pitch to raise capital. With some daily communication exercises you can use, Brenden provides valuable information for any business owner!
Communication Is Key
You can have the greatest product or service, but it won’t do much in the market if you can’t communicate. Brenden says that most CEOs are very good at building products, finding the tech gizmos, and creating a solution to a problem. But that doesn’t make them excellent communicators.
Many leaders and business owners cannot communicate their products or service in a way that a non-technical person can understand. Many who are starting out focus too much on the feature set, instead of what’s the benefit to the end person and how that relates to people. This is a recurring failure in all business fields with most founders.
Fundamentals for Better Communication
A lot of founders have goals with their career and business, but not with their communication skills. To start a more communicative career and be able to communicate your product or service more effectively, Brenden gives some tips:
1 - Make a list of the top three CEOs and leaders you admire. Brenden explains that whoever it is, the personalities chosen are all exceptional communicators. By noticing the chosen CEOs, you can model them and establish communication as the priority.
2 - Know how to communicate well in general. You could tell the best story in the world, but it’s not enough. Focus on the filler words, delivery approach, and eye contact. Train this in all communication you do, not just in business. That way, you’ll build confidence.
Exercises to Improve Communication
Brenden lists some exercises he uses in his training to help leaders improve their communication:
The question drills exercise
This is an exercise in imagination. Put yourself in a situation with the toughest audience who just asked hundreds of questions about your business. Think of answers to each of these questions. The exercise doesn’t end until you have an answer and backup slides for everything. This helps to be prepared for any situation, demonstrating confidence in your business.
The investing community is a tiny community. One recommendation is: to assume that if you screw up once in front of an angel, VC, or PE firm, word will get around. That’s why preparation is so important.
The random word exercise
Pick a random word like ‘phone’ or ‘avocado’ and create presentations out of thin air. If you can make sense out of nonsense, it will prepare you to communicate about anything and react calmly. Especially when you’re in a room where they ask questions about your business to which you don’t know the answer.
The Structure of the Perfect Pitch For Investors
Brenden coaches leaders in making formal and informal pitches. Regardless of where you are, when structuring your pitch, break it down into pieces: problem, solution, how it works, competition, traction (how much progress you’ve made), and closing.
It is essential to communicate the traction, even in the early stages of your business. You want to give the illusion that your rocket ship is taking off with or without the person’s money.
Whenever you close the pitch, don’t just summarize and open for questions. Instead, help your investors imagine a world where all your ideas come to life. What does that world look like?
Easy Daily Practice
To achieve more and more visibility and investment, it is very important to prioritize communication as your businesses scale. The best thing i
Great Content but Lacking Speech
If I had every penny for every time I heard “You know”, I’d be rich! Almost half of the podcast is filled with “You know”
It is well done, This podcast is one of my favorites. The length of each episode is just right and keeps me engaged. Plus, their topics are interesting!