How Deal-Makers Evolve
We have a returning guest on the podcast! Damon Gersh is the President and CEO of Maxon's Restorations, Inc., an innovative property damage restoration industry leader.
Damon is a winner of the Ernst & Young Entrepreneur of the Year Award, the Fast Company Award for Leadership, and Inc. 500 and Inc. 5000 awards. Damon is also a past president of the Entrepreneurs' Organization New York City Chapter, the Co-founder of the Gathering of Titans annual entrepreneurial conclave, and the Co-founder and Past President of Restoration Affiliates, LLC.
Damon was a guest on episode 25; you should go back and listen to that episode; it was an insightful one - you'll see the evolution. The last time he was here, Damon had put some things in place for his management structure and had his cake and ate it. He wasn't spending much time with the business, he was running it, and he wasn’t planning on selling. He's since sold the company to First Onsite Property Restoration, the second-largest company in the industry. They have over 2000 employees, and he now serves as a strategic adviser to that company.
I’m excited about this episode; it’s a live example of the deal-maker mindset we often talk about. It’s instructive and fascinating!
How Deal-Makers Evolve
One of the things we often talk about is that you want your business to be scalable and saleable. However, it doesn't mean you're going to sell it. The fact that you set it up that way helps you whether you're going to only spend 30 days or a year in the office and have a management team run it or you want it to be more attractive to a buyer because the business is not dependent upon you.
It's the same set of actions that benefits you if you're going to sell or not. Just like what happened with Damon, the whole occurrence also set him up for what ended up to be a very positive and lucrative sale, not only for him but for his management team.
Deal-making isn’t all about the numbers; there’s more involved. These include:
- The structure of the deal
- Your role in the deal
- The other party’s plan for your team. Are they going to break up your team or absorb them?
- Are they going to invest in the company?
- What’s their strategic plan?
- Have you done proper due diligence?
Before jumping on any of this, you need to build good relationships. It’s not just about knowing the CEO when doing deals; you need to get to know and understand the management firm - get comfortable with them. The terms of the deal and your role in it are significant.
Your primary motivator shouldn’t be the money. Yes, we love making good money, but it shouldn’t be about that alone. You need to consider your team and clients. Is this going to be a good deal for them? Striking a deal with the wrong party could ruin your legacy. Money shouldn’t be the only factor!
Things To Do Before Exiting
Reach out to other entrepreneurs: Don’t leave things to your judgment alone; reach out to entrepreneurs you know that have sold their businesses before - this is key. Reach out to similar-sized firms, not necessarily in your industry. Ask them what they think they knew at the start but knew when they were deep into the deal.
Have difficult conversations early: Have all difficult discussions early in the process. Without this, you might get stuck with terms you might not want to accept. Have that talk, and know what you’re getting into!
Learn from other people’s experiences: This is vital, especially if this is your first sale. Learn from other people’s experiences and leverage your network - this is a valuable thing that’ll save you from many heartache and regrets.
Don’t be desperate: Build up your company’s value; ensure you already have a profitable business. It’s going to be a different conversation if your future independence and financial wealth are locked up in the business - you’ll get stuck, and there’ll be a different energy in the negotiation. This type of desperation is what you should avoid while doing deals. Don’t be attached to the outcome.
You’ll be in a better position in your negotiations if you build a company with an excellent management team, sound system, reasonable structure, and brand good. You’ll get a deal that meets your standards - a deal fair to both parties.
My negotiating book has something called the classic framework, which is the CDE - clarity, detachment, and equilibrium. First, you need to be clear on what’s acceptable to you in the deal; then, you should be able to detach yourself from the outcome. Finally, you need to maintain equilibrium - don’t get thrown off during negotiations.
Read the landscape: Make a research on other companies that are consolidating in the industry. Check out other opportunities - outway your options.
Don’t sacrifice other areas of your life: Other areas like family and friendship shouldn’t be left behind. You probably do not want to be a one-trick pony. You can achieve this by delegating and understanding that your role is to make things happen, not get things done. It will also improve your team’s confidence and make your company more valuable.
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.
Take the Deal-Ready Assessment today if you want to find out how deal-ready you are!