My good friends over at Fidelis and High Octane have started a really cool, highly-informative podcast geared towards helping organizations who are trying to figure out how to position their brands in crowded, noisy markets. Since they’re just getting the project off the ground, they asked me if I’d join them to record one of the first episodes. I was surprised how well they understood what they wanted to accomplish and thought they did a great job for an inaugural run. So if you’re interested in GaP’s genesis and how we found our footing in the sell-side M&A market, this episode of The Brand Manual is worth a listen. I enjoyed the experience and thank Mark and Tim Douglass for having me as their guest. Click here to listen to our discussion:
Mark Douglass: [00:00:03] Welcome to the Brand Manual podcast, exploring brand identity and messaging.
Mark Douglass: [00:00:07] We talk to business pros who have something to say about how creative strategies fuel the brands. Today on the show, we're talking with Matt Gilbert of Gap Advisors. Gap stands for Gilbert and Pardieu! He and his partner, Brett Purdue have been offering advisory services for businesses who are looking to sell. He's been a long time friend of Tim and myself, and we're delighted to have him on the show.
Mark Douglass: [00:00:36] Welcome to the show.
Mark Douglass: [00:00:42] All right, well, Matt, thank you so much for joining us today on the brand manual. Man, we are just pumped to have you. We are really excited about your business and excited to hear all about it. So I think first to kick us off, let's let's talk a little bit about Gap and how that formed.
Matt Gilbert: [00:01:01] Yeah, well, first of all, thanks for having me. I know you guys for a while and I love everything you do.
Matt Gilbert: [00:01:07] So happy to be here. Gap is where a merger and acquisition business and my business partner and I were operators our entire careers for about 30 years.
Matt Gilbert: [00:01:21] We we founded and built and sold a number of businesses.
Matt Gilbert: [00:01:25] And in twenty fifteen we had exited a couple of businesses that at the same time and kind of found ourselves looking for new ground, if you will.
Matt Gilbert: [00:01:39] And this idea had been in my head for a long time to to start this firm because we really felt like the community of business owners that we ran with was underserved from this market. And so that was kind of the genesis for the business, if you will.
Mark Douglass: [00:01:58] Yeah. And when you say underserved, I remember early in one of our conversations you said one of the distinctive competencies that you guys have and that you really wanted to push was that you wanted to distinguish yourself from sort of bigger firms that were doing a lot of sort of en masse talking to big groups of people, getting them to buy on to the list their business as opposed to actually sell. I remember that was a communication point early was look at listing your business isn't the same thing as selling your business, is that right?
Matt Gilbert: [00:02:32] That's exactly right. And in our space, it's it's it's been a business model for a number of years for a certain segment of our peers to just list as many businesses as possible, put them out on MLS and hope the phone rings.
Matt Gilbert: [00:02:50] And then when they've got a live buyer on the phone with a little bit of money, they can try to show them different properties in order to to make a transaction. We really felt like that was kind of a disservice to each individual business owner who was trying to sell their company. And we wanted to put together a more niche firm with with much higher results. And the model that you're describing, historical results, are that about twenty three percent of the businesses that actually get listed. So. Right. So if you're a business owner and you flip that statistic over and you say, man, there's a 70 something percent chance that I'm going through this process and spending this money and I'm not going to be successful. Right. That's a problem. And so that was that was one of the catalysts, if you will, for us kind of building the process the way that we do it, which is dramatically different. So so in our space, there's there's that business model and then there's another business model, which is kind of an investment banking thing where you've got one hundred million dollar business or nowadays maybe even an 80 million dollar business or greater than they have a business model that's going to serve you really well. And and the problem that we found is, is that if you're 50 million and less in revenue, especially if you're down at twenty five or thirty million in revenue, the options that you have to to list and sell your business successfully and do it lucratively, incorrectly, really get diminished.
Matt Gilbert: [00:04:28] If you're right, investment banker and you happen to get their attention, you're going to get their trainee's and you don't want that. And if you're in the other business model where they're just throwing it up on the Internet, wait for the phone to ring, you know, odds are that you're playing the game wrong. And so we felt like there was kind of an untapped market there that that we wanted to go after peers of ours in the business community that built nice companies, you know, 30 million dollars and less in revenue. Generally, we have some outliers that are much larger. And and with that, you know, think about all the issues that this group of business owners is going to face in the last giant decision of their life. They want to sell in their 30 year old business. We've got to do that right. Got to get it right. And so, so so we went into this thing with a blank slate and we kind of rebuilt the business model. The way we market it, the way we talk about it. Right.
Matt Gilbert: [00:05:28] Hmm. So if I can get a little clarity to the bottom end of that number is three million annual did it three to 30 is the space that we play in.
Matt Gilbert: [00:05:39] We've taken smaller ones that that had a good reason to be in in here and we've taken much larger ones.
Matt Gilbert: [00:05:47] We have a couple of much larger ones now that that have the characteristics and the qualities of this three to 30 million.
Mark Douglass: [00:05:53] Ok, so I bet I bet that business owners are just shocked to hear that the the likelihood of them actually selling their business after going through all of that legwork. And after all, you know, the care of building a business is only like twenty five. Twenty seven percent. Very low percent.
Matt Gilbert: [00:06:13] It's a it's a hidden statistic in our industry.
Matt Gilbert: [00:06:19] If you're in my chair and you're in one of those business models, you're not going to talk about the success that you're getting. The old model is kind of a volume thing and we're completely different. We said, you know, we want to build this business the way that we want to be treated as sellers. Right. And so we put together a team of data analyst and a CPA and a former CFO and a and a business partner. And that team comes in. And literally, by the time we get your business listed, we know that company better than our owners, you know, so that that brings up a second point.
Mark Douglass: [00:07:06] And I'm kind of stepping on one of Tim's questions. Here is another core message that you have is that you're not just, you know, working with a new advisory firm. You're actually actually able to use all of the years of experience that you and Brett bring to the table. You're able then to find and use your network of people who are really fantastic in their field with a ton of experience. You actually sort of install a team of thinkers into that business, or that certainly in an option is to help them to actually push that valuation higher, to be able to show clear value to the market. And, you know, that's that's unique. Not not everybody is able to say that they offer that.
Matt Gilbert: [00:07:54] Yeah, it's it is kind of the secret sauce. We we did.
Mark Douglass: [00:07:59] I did. I did. I did. I reveal something I shouldn't have revealed. Sorry. Can't they can't duplicate there.
Matt Gilbert: [00:08:07] They're really we've identified eight drivers to what we call transferable value. And regardless of if you're a startup or if you've been in business thirty five years, you should be focused on those eight drivers of transferable value because they they they're what make a good business. Great. And so we kind of have put together a format, if you will, where we act as the quarterback and we're able to bring in specialists who are experts in their field as needed to accomplish this task of positioning the company to be so going through the process of getting multiple offers from different types of bidders who are going to see that opportunity differently. And then in bringing in somebody who we're going to try to close with. And that's when we go into due diligence. And this is where we're really set apart from everybody else in due diligence. Your your buyer is going to hire a CPA firm to review your financials and the quality of earnings and all that stuff. Traditionally, there's a guy over here who's acting as your broker who interfaces with that CPA firm, and that's a real problem. So in our case, this is an example of how we work. We have a CPA on your team dealing and speaking the language with the buyer, CPA. And so that really promotes an air of quality on both sides where we can understand what we're trying to achieve.
Matt Gilbert: [00:09:39] And and the odds for us are greater than 90 percent of the businesses that we get involved with, we're successfully transferring.
Mark Douglass: [00:09:47] That's that's pretty amazing. Yeah.
Mark Douglass: [00:09:50] So you have kind of a I mean, maybe I'm misspeaking here, but you have a kind of a golden rule type business you want to do for your clients what you wish that somebody would do for you.
Matt Gilbert: [00:10:01] I mean, that's that's pretty great. Yeah. There's a there's caveat to that, too, is that we're incentivized.
Matt Gilbert: [00:10:09] So we talked about the processes of these two ways of doing business in our market. They charge differently, too. And we didn't like either one of those. So we took them both out and and we said, look, you know, this is a this is the last great decision that a business owner is going to make. It's going to affect his legacy. He's going to see his trucks with his name on it, driving down the road for the next ten years and on the business anymore. So this has got to go, right? That's right. And in that way, deeply it's deeply emotional. It's incredible. Emotional, so we look at ourselves as a partner, but there are clients instead of a vendor or supplier, and in that partnership we've actually kind of adopted the business model where we're going to take a similar amount of risk as our client financial risk for sure. And so we're incentivized to really get them the best deal, the deal that is best for them. It may not always be the most amount of money. Sometimes it's a certain lifestyle. Sometimes it's, hey, you've got to employ my kids for the next 10 years or, you know, things like that. So understanding what's important to that owner and then striving to achieve that with a suitor who understands it and agrees to continue the legacy.
Mark Douglass: [00:11:21] So it's true that no two sellers are really the same. They all they all have specific things that matter the most to them, right?
Matt Gilbert: [00:11:29] Yeah. Let me ask you about your kids. Do you think they're beautiful things? Your kids are ugly. I tell him that and vice versa. So, you know, this is everybody's baby. And they they they had it. They made it.
Matt Gilbert: [00:11:48] They nurtured it. They fed it. Then with it. When it was sick, they took to the hospital. Yeah. And to let that baby go is a huge emotional thing and done right.
Mark Douglass: [00:11:59] So that brings up this point, I would imagine if because it's their baby. Right. They tend to possibly overvalue. Do you think that sometimes that a lot of your clients say, oh, it's got to be worth at least this and then for you to come in and give a really candid, objective assessment? I mean, is that shocking to people? And I know that you're able to say, don't worry about it, we can help increase that value. But just how often does that happen?
Matt Gilbert: [00:12:29] So it's super interesting. A couple of years ago, I would have answered this question differently. But now I can tell you for certain, the smaller your business is, the more you think it's worth. And the larger your business is, the less you think it's worth and you're wrong. OK, and the point is, almost every business owner I meet thinks he knows what his business is worth. And we get him in there and we do an actual valuation with data points and proven methodology. And we come up with a value range and it's always either above or below what the owner thought. It's never in the ballpark. They never nail it. OK, this is the current market. We're in a historically unique market period. And so valuations are higher right now than than historically they've ever been. So and that's going to skew the results a little bit. But it really is right here. The smaller the guy who's putting blood, sweat and tears and to answering the phone at midnight is on his trucks in the morning. He's doing all that on his cell phone. He's just making this happen because of that emotion that goes in to the business every single day. This thing is more valuable than it is, right. The other guy who's got staff and he's got vice presidents and he's got a controller and he's got a sales manager and all that, you know, he doesn't know either, but he undervalues his business. So we see it go both ways.
Mark Douglass: [00:13:55] That's interesting. OK, all right. Well, could you tell us about some early hurdles or a few stories that might help our people understand how you found your voice and how you position your brand?
Matt Gilbert: [00:14:09] Yeah, great question. It was a struggle. So when when Brett and I decided to start the firm, I think I turned to him and said something like, hey, we don't need any clients. We've got to we've got to reinvent the process. And once we reinvented the process, we were kind of proud. And that was a struggle. And one of us turn to the other and we said, you know, the fees aren't right the way that that the traditional guys in this market built. You know, we got to fix that. And so we went a good amount of time working on our mousetrap before we ever went out and tried to get a client in. And so once we got our mousetrap together and once we got our fee schedule together and we were really proud, we knew we had something and we went out and we told the marketplace and nobody cared. And, you know, it was like and not only that, you know, you're going to you've been building a company for twenty five years. Do you want to be the first one to test this new model? How? Right. And so it was very hard for us to to to get the attention of sellers in the market. And so those first couple of months were a challenge. And we were really trying to figure out how how are we going to get this thing off the ground, get this rocket launched. So thankfully, we landed a couple of engagements. We were successful. The the business owners don't really know what. Think they've never been through this before, right? But the accounting professionals and the legal professionals really took notice of what we do and how we do it.
Mark Douglass: [00:15:50] So that's that's unique, right? I remember early on talking to you and you thought maybe that manufacturing would be a great place to play. I know that you did some industrial services. I know that. I know that that really look like that might be the route. But it sounds like you found a really great fishing hole in the legal accounting. Were you surprised by that?
Matt Gilbert: [00:16:16] Those aren't the services. Those are the people who said, hey, these guys have something else. And then they recommended their clients, Fracture's years and plumbers and all different trades, fantastic business sector. So we're pretty agnostic from from what we've gotten involved in and what we sold. There's a there's a way to finish the earlier story. The next thing that we we found is even when a guy's attorney would recommend us to to to be the seller of the business or or a woman has a manufacturing company and their banker recommends us, they still don't know us. And there's that that relationship that hasn't been built. And so somebody has got a huge market presence. And you just know the name and you've heard it for years in the back of your head. You're going, you know, that's established and I know what do. And so for us, we really decided that we had to get in and build rapport with these business owners before they were ready to sell the business in order to have credibility and for them to understand our model and all that. So so the very first year, we pivoted just a little bit and we started doing fractionate CFO work for businesses who either wanted to acquire, to grow or divest in the next few years, because what we found is that every business needs some financial work instead of them, a lot of financial work in order to get ready to be under the spotlight and under the microscope of the buyer and get in as a fractional CFO advisor means that a couple of years, maybe, maybe six to 18 months before the event of wanting to sell my company, then we're building that relationship with these people. And it's much easier to engage with us to be your listing agent once you lose a relationship. So, yeah, we had to make that pivot right away in order to survive.
Mark Douglass: [00:18:23] Really. And and that's a pretty long sales cycle, though, right? So it because you're building that relationship. It is.
Matt Gilbert: [00:18:31] And what's interesting is we don't want to say we turned down, but we see a tremendous amount of opportunities to help companies who are struggling. You know, their banker will call and say, you know, you're breaking your covenants. You don't even understand your accounting. You're doing it wrong. Go get some help. Or, you know, there are there's a catalyst, maybe a landlord negotiation with the lease. And you've got to present your financials and they're not in order. A lot of business owners think their financials are pretty good. And then they find through a bank or a landlord or somebody that maybe they're trying to get credit that that they've got to do some work. And so we get that call pretty regularly and that opens the conversation for us. And that's been a game changer for for this firm to get a flow of leads, if you will, in. And really, we don't want to work anywhere where we're not bringing high value. Right. For us, this is it's a unique position. None of our peers do this. We've got CPAs and former CFO on staff that we do that with. And and that's built our credibility in the marketplace. It's given us the bread and butter line of business. And then when the M&A comes, we're naturally there to be in the conversation.
Mark Douglass: [00:19:54] Yes, yeah. Yeah. So when you're in those spaces, it sounds like, you know, as far as primary communication tool, this relational network that you're building, that that sounds very key. Is there? You know, maybe it's maybe it's something that you throw into your speech regularly. Is there some sort of tool or some sort of mechanism that helps communicate what you're about, who you are and kind of get that message across really quickly?
Matt Gilbert: [00:20:27] Yeah, you didn't you didn't know you were step in here, but but you did. And I'm glad. So all of last year, working on a tool and and this tool is basically a. An assessment that an owner can go online, it's multiple choice, takes 13 months on average for an owner to do it. We've had about forty six thousand business owners take the assessment. Oh, my gosh. And so what we do with this tool is we say, hey, Mr. Banker, Mr. CPA, the lady who is a is a business attorney who's a generalist. If you want to know more about the health of your client and they're in there where they sit on these eight drivers of transferable value, ask your client to go and take this assessment and then they've got a task to match it up with all their peers in the nation. And it'll say, you know, you're your Joe's plumbing. Joe's plumbing goes in there. They take the assessment out of all the plumbers in the nation that are your size doing what you do, you score in the seventy two percentile of businesses as far as being valuable and ready to transfer. And then we have a twenty seven page report that follows that. It shows you. Exactly. And in each of those drivers how you scored, whether you're high or low against your peers. And then we can take that, we can sit with your banker, we can sit with your CPA and we can say, look, this is what this means to us and this is how together we can help that client strengthen their business and fix the cash flow or, you know, change from a cash cycle where their invoices and waiting forty five days to a recurring revenue cycle, things like that. And so that that particular tool, we better tested it for a whole year last year. We rolled it out in the fourth quarter of twenty eighteen. And it's been a game changer for us, providing value to those trusted advisers who will then believe in what we're doing and recommend us speak with their clients. Absolutely.
Mark Douglass: [00:22:32] Yeah, yeah. You're taking the first step.
Matt Gilbert: [00:22:34] They're super cool. And really, again, it's all about us figuring out how can we do something for you that's going to be valuable and worthwhile for you. And if it is, you're going to find value in us and who we are. And when the conversation turns to what we do, the introduction should be natural.
Mark Douglass: [00:22:53] That's fantastic to see the shift between or away from. I have to be able to address the end user, the people that I actually will be helping to sell that business and then saying, no, actually, I need to be addressing our accounting legal. That's huge.
Matt Gilbert: [00:23:11] Yeah, it was a it was a complete shift for for Bratten I when we just we figured out we were not in the selling business. I'm not trying to sell you on my services. I don't want to go meet a business owner and try to push what we we do on that. It's more about that. We provide a level of service that's pretty much not existent in this marketplace and it's more about awareness. Yes. And if and if the more professionals that are dealing with you and helping you with your insurance and your banking and your accounting and your legal and your wealth management, you know, if those guys are aware that when you get into one of these little situations that they can call us and we'll come in and we'll help educate you. I spend seventy five percent of my time providing free education to business owners and their advisors because because this isn't an area that they think much about right now, most of their lives. And so there's a lot of what if how do we do? What does this mean? I'm here in terms I've never heard before. And so that whole education thing, we just that's a branding thing for us. And and we're out of the selling business, the opportunities, the right opportunities. Now we're able to.
Mark Douglass: [00:24:30] Yeah. And if you've you know, you're talking to people who deeply care about their own clients, they're the ones that have had twenty five year relationships. And so they're acutely aware that whoever it is that they hand them to, that they have to really believe that you guys are who you say you are and that you deliver the kind of value that you deliver.
Matt Gilbert: [00:24:52] Yeah. So my question is this. I hear this almost every time I'm going introduce you to this guy. He's been a client for fifteen years. But more than that, over these fifteen years, he's become a really good friend. And the only reason I'm introducing is because I trust that you're going to take as good care of him as I am. That's right. Especially attorneys in case they tell me that regularly. And I get it. You know, all the guys that I've done business with over my years, they show up at Thanksgiving because that's that's my posse. That's who.
Mark Douglass: [00:25:24] Right? Yeah. You can't you would never violate that trust. So that's that's fantastic. So my question is, is early on, you guys are really targeting Houston, but it sounds like, gosh, this is national, right? I mean. Is that so it's really been changed geographically.
Matt Gilbert: [00:25:42] Yeah, in the last year or so, we've we've been in Oklahoma, we've been in Michigan, we're currently in Wyoming. We're we're doing a deal in Ohio right now. Now, don't get me wrong, probably 80 percent of our work is within two hundred miles of Houston. OK, and and and we would frankly, we enjoy those engagements because we're able to get face to face. We're able to go to dinner, those kind of. Right. But we found that this resonates coast to coast. Yeah. I've got a CPA in New Jersey who recommends me exclusively probably every other week. She's referring a client to have a conversation with me. Yeah. Because she says there's nobody like us in the country and we've got one on the East Coast. That's kind of the same way. So I think it's a message that has kind of been absent in this market for a while. And we were able to kind of hone in on it. And as we did, we were sellers. We were in those shoes and we were frustrated. So so we've been we've had that experience. I'm not an insurance guy or an expert. I'm an ex business owner. And I can tell you exactly what happened to my two hundred and eighteen employees when Obamacare was forced upon us. So I can sit with a business owner and and relate. Right. And then the other thing is, of course, the team almost everybody in our space operates. One person will take on eight or ten clients and that one person will carry the whole deal all the way through. Right. And and we just don't think that a person can be a legal expert, an accounting expert, sales expert, business metrics expert, customer concentration experts. Sure. All these things for eight or ten different clients simultaneously and do a good job. Right, so that we react as quarterback and we really bring those resources in as individuals. So that's where testing I don't want to get off base, but yeah, all the differentiators and and what has allowed us to to to bring this idea to life?
Mark Douglass: [00:27:57] Well, that that leads me to my my next question, actually, which was your building team you are building. It seems like every couple of months. I see. All have added a new team. No, that's fantastic. You're expanding your geography. What's next? Tell us what you're excited about.
Matt Gilbert: [00:28:14] Yeah, you know, what I'm really excited about is, is that there seems to be this this entire community. There's professional buyers all around us. You don't know it. I didn't know it. Our our our clients don't know it. But private equity firms and financial offices, public companies, large strategics who might be in another region and want to be in this region, they're all what I would term a professional buyer. And I spend a tremendous amount of my time now in conversation with those guys. And what what I can tell you, especially coming out of the holidays where you're standing around eating a sausage bowl or something at a party with a guy and they're telling you what they're looking for. It's quality. There is there are very few quality businesses in any category that are on the market at any given time. And so what we get really excited about is, is to to find a business that ticks the check boxes on those eight value drivers in a certain way. And they don't all have to be perfect. But knowing that that they've survived a couple of decades through the ups and downs and they're doing something right, I built the value and now we have this network of professional buyers who we can match these things up with. And so what we're actually seeing is when when there's a really good fit to a core plan for a for for a bigger firm. Right. We're going to pay more. They're going to close faster. They're going to value the deal.
Matt Gilbert: [00:29:47] They're going to give on things like allowing your employees tenure, your business to transfer to tenure at their business for your workforce. Right. All those little things. Now we're able to kind of to put this mosaic together in a way where the deals that we're involved in are life changing. Yeah, a lot of people for for the employees and the owners as well. And so it feels really good to be doing what we're doing. And honestly, we're we're cherry picking. A lot of the opportunities are coming to us where we're able to really size up the opportunities and say, you know what? For our process and our team, this deal is probably not right, right when you're young, you can only you can only handle so many, right? So yeah, you take it, you take revenue where you can get it most of the time. And we're at this place now where we're really able to stay in our lane. And what's that word be discipline to only engage where we know we can bring the most amount of value. And that feels great because we're not you know, we're not having to get outside the guardrails to do a wonderful job. That's wonderful. That's the key thing, right? We we've we've got we've got enough assets now under the roof that we can put a key person in play where we need to. And so that's huge. It's not bragging. It's a discipline thing, but we struggle through it. I'm pretty proud to be where we're at right now.
Mark Douglass: [00:31:22] Of course. Yeah. Yeah, that's wonderful. Well, I'm really glad that you came on and answered our questions and engaged. And it's it's I knew it was going to it was going to be easy because I knew that you bring a lot of passion to to Gap Advisors. And I know that I don't know. It's it was wonderful. I really appreciate it. Yeah.
Matt Gilbert: [00:31:40] Thanks for coming on. Well, I wouldn't do it. I might, but I would say I went with anybody else. You guys are tops up there on my list.
Matt Gilbert: [00:31:48] Anybody listening wants company to help them with their marketing and branding. This is the best one I know of. So I do. That's genuine.
Mark Douglass: [00:31:59] Appreciate that. Thank you. Well, thanks, Matt, for for coming on. And we'll we'll be talking to you soon, I'm sure. Take care. Thanks a lot, man. After we get.
Mark Douglass: [00:32:12] Thanks for listening to this episode of the Brand Manual podcast, we hope you enjoyed it. We'd be super grateful if you shared you can find the other episodes on Apple podcast and Spotify. We'll see you next time on the Brand Manuell podcast.