The Entrepreneur’s Banker Podcast

Greg Martin - 00:02 - Welcome everyone to another edition of the entrepreneurs expert we've got an amazing guest today, I have got Matt Gilbert with Gilbert and pardue. He is the founder of a boutique middle-market mergers and acquisitions firm. Matt thank you so much for joining us today and being willing to share your wisdom and knowledge with us.

Matt Gilbert - 00:22 - Thanks for having me I'm really excited to to talk to you and to your audience you've got a great audience.

Greg Martin - 00:29 - Well we definitely appreciate that and
you know I want to jump right into it I know that we've talked a lot and I think that we have a very shared mindset about helping entrepreneurs be able to really serve them and help them to succeed and I know that just from talking with you and in hearing some of the entrepreneurs that you have actually helped coach and guide and Shepherd toward success that you definitely see yourself as a critical partner in that business we talk a lot about how I spinners have a Fab five you know those five entrepreneur those five individuals that surround the SP door to push them towards success so what specifically do you and your team do in order to be worthy of being part of that fab five.

Matt Gilbert - 01:19 - yeah I think it's a I think it's a great question first of all thanks for having me definitely you know the Fab Five is so important most of our business owner clients and and and we work primarily in the lower middle market that's businesses generally with revenue up to about 50 million but could be you know way on down to 5 million 3 million in size most of these entrepreneurs haven't really got the organizational sophistication to have a board of directors or to have a really strong senior management team and so we find that that often times they're making decisions in a vacuum that kind of fill alone at the top and and so that fab 5 group is is really important for them to look outside of the organization somebody who's a little bit unbiased and say hey this is what I'm thinking you know and use those guys as a sounding board and my personal experience I've been an entrepreneur for different times I founded a company for different times I sold those businesses to twice to public companies once to a private equity firm and wants to a competitor so I know what it's like to be in those shoes you look it yeah yeah and you know it's very lonely at times especially when the pressure starts to rise you know and and and the decisions are weighty and and so having a banker an insurance guy and a wealth manager and an M&A adviser and and people around you that you can really reach out you know they understand business you know they can read a P&L and a balance sheet they care for you and your employees they care you know to see you be successful you know just having that community is so important and most honestly most of the entrepreneurs that I have a they have a fab one or a fab two mmm you know they just haven't cultivated by right and so the question kind of was why should we be one of the five right in and the answer is really speaks to why we founded the firm you know we believe that the best time to prepare to sell your business is the day you start your business and nobody does that right and so the next best time is now and why does it now well a business that can be sold for maximum value is enjoyable to operate right now it's profitable right now yeah it's got processes and  procedures right now you know it's got key employees that are kept clicking along they're safeguarded with employment agreements and non-competes and they're incentivized to align their interests with the business's interest all these things if they're happening right now you've got a great company and you should enjoy operating and running that thing right and so those are all the things that we really hone in on when we go to help somebody prepare to sell their company and so understanding that very often we we have dozens of them that we're working with right now will back the clock up three years or five years and say hey you know if you want to exit in five years let's do an assessment and let's give you some things to work on it will really increase the tangible better your business that's awesome but it'll also give you more free time it'll give you more transparency and visibility into your organization it allow you easier time of making decisions you'll be bringing people up that's a fun company to operate so you know long answer to your question but you know I really feel like we could be critical to that to that Fab five if we're utilized correctly right okay.

Greg Martin - 04:56 - so I've got two to follow-up questions. One - here you've been to that process four times does it get any easier?

Matt Gilbert - 05:05 - I tell literally in the first conversation or two when I'm speaking with a business owner who wants to talk confidentially about you know I'm starting to think about maybe wanting to sell my business the very first thing that comes out in that conversation is look due diligence it's going to be the hardest 90 days of your life I don't you're an Army Ranger I'm sorry that was a I'm sure it was a tough experience that one was shooting at you due diligence I think my where I will be at it's just it's awful and and so to be prepared for that by somebody who knows what's coming and and get all your ducks in a row and and and have your fax defendable so that you can go toe-to-toe with their quality of earnings people you can go toe-to-toe with their legal people you can go to go toe-to-toe with their HR people of the buyer and stand your ground that's that's what's going to lead to a successful exit and if you back up you know this isn't really an M&A show if you back up and you have all those things in order your corporate records and all that stuff you're gonna have a much more pleasant business to operate and beyond you're gonna really enjoy working again and so many of the guys that end gals that that I meet have they're just tired right they just been in the grind for ten twenty thirty years and and they're coasting along the last few years because they're just tired and you know if you surround yourself with that fab by then you start getting the enthusiasm of the banker and the enthusiasm of the insurance guy and here's what we could do with some new products and hey let's focus on these new you know markets they they become you know you get those juices flowing again that's an entrepreneur and and that drives the value of your business it drives your personal pay and it drives the quality of the workplace for your employees it's all tied together

Greg Martin - 07:12 - So that's perfect but that leads me to my second question so have you ever had someone that you've walked that through that and then they've real then they fall back in love with the business and they're like I don't want to sell it?

Matt Gilbert - 07:21 - Yeah it's a long story I'll give you the really short version the very second company that when we started our firm that we took on as a client there were two partners and they had a silent investor and and so we met with the two partners and we did a valuation of the business and we said look you know this business oughta sell for about four or four and a half million dollars if if you would accept the check like that we'll go out to market we'll market your businesses absolutely if we could get four million bucks for this that would be you know just Heaven Sent yeah we're gonna take that so we go out we run our process we get a little competitive situation going and one of the competitive bidders is a public company big checkbook lots of money they run the thing all the way up to six million bucks I go back to my sellers and I'm like hey we got you we didn't get you four we got you six let's get buzzing let's go and they're like oh man exactly and they look at each other and they look at me and I'm like what what are y'all not telling me and oh well you showed us a pathway to to really enjoy our business again you showed us a pathway to greater profitability more prosperity a new market of course I was showing that to the buyers to entice them to come in these two guys fell back in love with their company and they said that we're not gonna sell so the very next day I trucked down to my attorney's office and I say hey in our contract we need a clause that says if I do my job and I bring you a bar and you decide not to sell I still did my job you know you need to compensate me something yeah we actually made zero dollars for that nine months worth the effort it was a lesson I won't soon forget but it spoke to the power of having outside influence come in analyze your business value your business look at the marketplace look at the competitive landscape look at the quality of your employees and dream about what could this business be in the hands of somebody who's enthusiastic who's well capitalized who knows how to market you know what could the b do and and that's the picture we paint it were a buyer you know why wouldn't a business owner paint that for himself every couple of years on this day more enthusiastic in your business have metrics that they can watch and monitor and and gauge themselves with and hold themselves accountable so we think all ties together really

Greg Martin - 09:58 - Awesome. what's maybe one or two things that others don't realize about M&A transactions and in really you know how your involvement really impacted them in their businesses

Matt Gilbert - 10:14 - Yeah so some we started the firm because four times I told you I was a seller nine times I was a buyer successfully so so that's thirteen personal transactions that I was involved in my business partner was involved in about a dozen transactions personally and there's probably 40 transactions between us that we tried to do we fail right so we have a lot of personal experience and and and the reason we started the firm was because through all those personal experiences we didn't feel like that the M&A community in the lower-middle market was well suited to serve business owners like us and let me let me specifically say confidentiality is a big deal right most business owners don't want their employees know and they don't want their customers know and they don't want the marketplace knowing what they're thinking and and rightly so that could that could harm their business if that gets out what about the the tenure of my employees not best six employees have been with me for you know eight nine and fourteen years right if I sell this company what's going to happen to them I love them like family they helped me be successful right and so most of the most of the M&A transaction space is very transactional and and those chips just kind of fall where they fall we started the firm because we know that there's those topics like that are so dear to to the sellers heart to the you know the business owner they just struggle with those things and so you know what what we do is is we get in there when we find out which ones that these things are most important to you and we build a program around making sure that we're responsive and sensitive to those issues and it's just kind of unheard of in our space you get up into Investment Banking and other parts of M&A yeah it's very common but when you when you come down to much smaller businesses most brokers will take a listing throw it up on the internet and wait for the phone to ring you know if your business owner that actually has a about a 17% chance that's been studied over and over and over again a 17% chance of being successful and so we don't recommend those types of

Greg Martin - 12:40 - yeah it probably frustrates them because any looky-loos that do come by or just you know looking to scrape the bottom the lowest cost and it's not a strategic fit it's not it has nothing to do we're not a fit from the get-go right but without someone like you'd be able to screen that in to say look I mean I'm not even gonna bring you because what you want to do is now the clients objectives are

Matt Gilbert - 13:06 - yeah I hear so many stories and about failed transactions whatever where the adviser and the  business owner get a couple of weeks before closing the deal falls apart and due diligence because some facts come out that weren't out before well you know in if you do this right all that happens long before you start marketing and you and your advisor craft a way to deal with that right I hear so many horror stories about people getting two weeks before closing and I find out that the seller can't qualify for financing where the seller doesn't have any money why would you be talking to anybody who doesn't have any money you're enjoying them your business you should you should that should be the very first thing you want to know is hey can you can you execute a transaction of this size oh you can okay well let's talk about a cultural finish okay that works pretty well okay let's talk about an operational fit you know let's find the ideal person to buy your business and we're getting off track a little bit into M&A and this is kind of like you know best practices for being an entrepreneur but all of these things are tied together yeah you know a lot of a lot of buyers want to come in and look at your company and find out who your employees are and they want to approach your best employees and take them from you right yeah I want to see your cousin customers and they want to go and your price list and they want to go compete with you they don't really want  your business and those are some unscrupulous tactics that are in the marketplace but they're very very common and so you know somebody who knows the landscape kind of has a process a check and balance system and a protective cocoon to to help you deal with and come back those things is going to be somebody that can get you to the finish line right and and honestly they should be set up in your business long before you think you need an M&A advisory right and so that's where our coaching and our CEO mentorship and our CFO fractional where call comes in is to help good organizations proactive organizations put all those things in place so that they can be a great business while the owner enjoys it and then eventually someday everybody's going to exit one way or another and the exit can be strong.

Greg Martin - 15:22 - Well if your industry is anything like the entrepreneurs that I served across the industry is always changing so is there one thing it you've really seen it in trend or something's really top of mind in the M&A world that you think is important for Oscars no yeah so in the
M&A world

Matt Gilbert - 15:46 - All right I'm gonna give you a real live example something that happened last year we just closed this transaction and and and what it is is people are reaching out to a decent business or a reputable business all the time it could be vendors it could be competitors and it certainly M&A people are reaching out to those business owners saying hey I want to talk to you about acquiring your company hey I want to talk to you about selling your company a lot of people will call a business owner it's a very common tactic say hey I have a buyer for your company you know start showing me your P&L let's talk about stuff don't buy into any of that the best way to manage this process is to be in control right don't let control get in the other camp right so if you're gonna have those talks with somebody who's calling you up or emailing you out of the blue or they meet you at a conference or a trade show you probably even know them you probably even trust them you know that's that's probably the worst thing you can do and here's my example last February we had a husband-and-wife team and on the business they called us up they got my partner they they had heard of him and through reputation and somebody said hey Cobra they call my partner and they said hey we have an 18 million dollar offer to buy our business we like it we know the company we think we want to take it and here's the catch our banker suggested we talk to you and see if it's a good deal and and so partner met with with that couple came back to us we have CPAs on staff we have research analysts were you know well equipped to analyze these things we kind of picked it apart we did a financial review we did a valuation we went back to the couple about three weeks later and we said hey you know I know you're never by this eighteen million dollar offer but in a normal market we think your business would bring probably thirty oh my god so you know I we don't think you should take that 18 million dollar offer if you hired us to run a process we feel like we can get you at least 30 million for this business so they thought about it for about 12 seconds and they said just sure yeah go get us 30 and so we entered into our process it it's very methodical modular process that we built to take a business all the way through and and about I don't know two thirds into it we said hey this isn't a normal market from a historical standards money's cheaper there's more people with it there's a lot of clamoring in this particular industry to make acquisitions this Gulf Coast region is the hottest region on the planet for this particular stuff alright and so we think this is a really frothy we can be way better than 30 million dollar market we kind of position the company that way we took it out we got offers all the way up to mid 60's and that particular high offer was from a public company didn't pan out to be a good fit culturally didn't pan out to work so we pulled back we regrouped with our business owner we went out again eventually we ended up selling the selling the business on Christmas Eve last year at 650 or something at  you know we had all these people working Christmas Eve and we closed for a number in excess of 50 million no one saving them very yeah so in February this these books were taken an unsolicited call for 18 million and they were like yeah and then you know you get into a process it's run well it's run professionally you create some competition you put some guardrails and parameters around it pull in a great attorney pulling a tax advisor the banker started all this but I recommended it he was on the team right here comes a CPA and we surround this these couple with a Fab five and wego all the way up and and we get them three and a half four times the original offer it was a little girl they weren't even they weren't anything about selling their company when they overcame that I that's an extreme example but it's real but I here's a version of that story every week from some business owner that I met because if you have a decent business you're getting those calls and you're getting those emails right now

Greg Martin - 20:15 - That's right that's right well so tell me what what really defines the customers that get maximum value out of you I think just talking with you and in the previous conversations you realize that that you can't be all things to everyone and so to be able to say okay how can how can I work with people that maximize your value can you describe that customer

Matt Gilbert - 20:47 - Yeah for for one I'm gonna I'm gonna tell you a quality about us then I'll describe that the quality about us is we're very extremely disciplined to stay in our lane right we're not gonna get over here and give you legal advice we're not gonna get over here and give you tax advice we're not gonna get over here and give you banking your insurance we're gonna bring in the best professional we know for your situation and create a team of experts that all can handle their own areas so that's number one and and in our industry that is kind of unheard of it just doesn't happen very much so so that's our approach for being you know really able to stay focused and stay on our lane and then the question is is you know what value do we bring or go ahead ask me the question again cuz it described a customer some characteristic as customers that maximize your relations so it's it's a family-owned or a privately held or a couple of partners that own a business they've been in business a while they've got a good track record in history they've built a name and their community or their geography or their business sector some well tenured employees that they're proud of that other employers would want to have a customer list it's envious may be master services agreements with customers and contracts with customers certainly these people are kind of how we open this podcast they're not well advised internally they're kind of at the top of the pyramid in their organization there's no board of directors there's no people to sound board off up hold them accountable bounce ideas off of and so really that's the best customer that we can serve it and and and maybe I'll ask why are they the best customer that we can serve well one is is they can they can benefit from all the different disciplines that we bring to the table right we're the only M&A group that I know of in the lower middle market it has full-blown legit CPAs on staff right we have for accounting professionals at this time two of them are actual CPAs now our contract says hey even though we have CP on staff we're not working in the capacity of a CPA you know consult your own but we got this this week we can convert to GAAP accounting if we need to all right we bring in the attorney we've got research analysts we've got data and we've got industry experts we got safety people we've got former CEOs we're gonna surround you with and you grace and I Braille there's five former CEOs on our team Wow to represent about it probably about five hundred million dollars worth of historical business so we're gonna surround you with these guys and we're gonna brainstorm with you right cuz cuz it's not what we want right we want to come in there and say okay what are you trying to achieve business owner right and have you thought about this you thought about that and there's risk here and there's a pitfall there and well you need to back up two steps and we need to you know bring your banker in and we need to reorganize this and we need your insurances are weak and we go through this whole process the same process if I are going to go through right if they vet you right we do that on the front end so so that we can you're not bulletproof but you're darn near your very very strong going into the process and so our ideal client is it is that privately held business owner or group of owners or family that just isn't as well advised as the company are you down the street that has a Board of Directors and has consultants and has advisers on staff right right we become that for them.

Greg Martin - 24:12 - You said it a couple times you focus on the lower-middle market what is that what does that mean to you?

Matt Gilbert - 24:49 - Yeah so to me it's a really the easiest way to say it is a revenue of five to fifty million dollar revenue business now we've got a handful of smaller than five million dollar revenue businesses that fit our process well and we've got a smattering of much larger than 50 million dollar businesses that fit our process well but but generally if you're in there you know I'm 250 we've custom-built a shop to deal with the problems that you have you know the the four businesses that I had the two that my my partner had they ranged from the at exit the lowest was a 7 million dollar sale and the highest was a hundred million in revenue and I won't say what that sold for sure and so we've experienced all the growing pains al the mistakes you can make that the the turbulence with the financial crisis and you know credit crunches and all  things and so we come in and surround these business owners and we we really help them kind of shore up the weaknesses that they have personally most business owners will plateau somewhere you know and and it's really kind of plateaued at their own desire to continue growing themselves right I'd rather play golf right and so we come in and we give them the knowledge to continue growing and where they can make decisions off of that knowledge we stand beside them and help them with that and and so we kind of break through those plateaus a lot of times with our clients just by bringing in people who've been there and done that right oh man that that's

Greg Martin - 26:43 - I love that point I love that that thought process I just recently interviewed another podcast that I do one of my favorite clients and he says that he spends 50 percent of his time either investing in himself or his team happen this is an entrepreneur that is leading a fast growing dynamic extremely profitable con company like look in there correlation right oh extremely profitable dynamic company just because they're putting their investment in the right place yeah right you know

Matt Gilbert - 27:17 - I've owned a number of businesses we've invested in pickup trucks and equipment we've invested in fixed machinery we've invested in inventory right the things that catapulted us in hindsight was when we invested in a better safety program right when we invested in better training for for our personnel when we took senior management and we went through a OS or something like that yeah to where we can kind of break the lid off the potential of our business every business I believe has potential that's just completely untapped right and it's and and it's a mystery to the people in the grind every day of how to how to untap it they feel it they know it's there but they just can't you know and so a fresh set eyes from the outside somebody who's been there and seen other companies do it and and helped others go through it they they could come in and and and and push the buttons and turn the wrenches and and break that out you know and then your CEO that you were you were just talking about you know the people that invest in themselves and then their knowledge and then their understanding they go the farthest every time that every time.

Greg Martin - 28:31 - Well you have shared so much I love that you you've got real-life examples I mean you're not just faking the funk you're actually going through as a this is this is how it really is this is how I pushed I skewers for success and we start with what a success for them what's one thing that that the world may not know about you personally / professionally \well let me give you two

Matt Gilbert - 28:57 - Well let me give you two things okay you said one I'm gonna there's a bonus the the easy answer my favorite answer is is there's nothing more important to me than my family and and God in Christ so I've come up to five grandkids already Oh congratulations I got my mom lives across the street I got one of my daughters and her family living next door and so every Thursday night as a matter of fact we have family dinner night at our house a whole bunch of people show I'm coming tonight show up it's it literally is bringing friends bring you know if you got a guest in town whatever so we never know who's gonna show it's always a at least a dozen or more people in to blast it so if you invite me after hours or go go then or something like that honestly I'm gonna decline because I'd rather be playing Barbie or kickball and backyard with all these kids our grandkids yeah nothing against the invitation are you the the other thing about me is one of our earliest businesses was environmental services we sold that company to a public company after the non-compete ran out we started another environmental services company and here's the thing if you own your property if you deal with any hazardous materials if you've got processes that have chemicals in them or air emissions in them or waste disposal in it or anything like that it's gonna make your transaction much more complex of course so having an advisor in your fat 5 who really still understands the environmental impact and the regulations the insurance is the rules around dealing with those things to make sure that you don't trip and stumble in half of your generational wealth that you think is going to come in goes to the IRS into the environmental cops you know that's something that really needs to be looked at seriously in the beginning and and so that's one of the things that think sets myself and my firm apart from our peers is we have that background of owning and operating environmental service companies a phase one phase two sampling every chemical known to man we've been a hazardous waste transporter we've been a hazardous waste handler so we could come in in and you know in this part of the world with the ship channel in the oil field and all the industry that we have is there so many of these companies have these issues and they don't know it you know they're trucking a long day today even if you're just parking a forklifts out on a gravel yard and you got hydraulic stains out on that yard you know that's gonna put a bump in the road between you and refinance and your property with the bank you got to clean up the hydraulic stains right and it just gets more complicated from there do you have songs do you have storm drains run into the retention pond you know all these issues so the second thing that
people don't know about us that they probably should is is we've got some really niche areas of expertise on the team that we can come in and and really help you improve your business reduce your liability prepare yourself to have an enjoyable rest of your career and a great exit.

Greg Martin - 32:12 - Well I think that I could I could talk to you all day this has been so enlightening and so much fun I love your passion I love your priorities I love your willingness to serve entrepreneurs and be able to say look I want you to take my experience and I want you to gain from it and I want to bring value so thank you so much for joining us today really really appreciate it and everyone watching if you if you think that you might be looking to sell your business or maybe you're looking to acquire business or maybe you don't even know I'll have mats if it's alright you may not have your contact information after the video yeah definitely reach out to Matt and his team and just Matt we just thank you so much for for being here today

Matt Gilbert - 33:10 - Yeah yeah one one more shameless plug if you put our website bail in there if they'll go to the bottom of the website we have a newsletter and a podcast the podcast comes out every Monday newsletter comes out once a month and they're completely edge a tional aimed at business owners and we're hitting them with topics that are relevant all the time and just kind of best practices real life experiences professionals that they might want to talk to those kind of things all that's free if they want to sign off they can go to the bottom of the website

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