Dealquest_episode_277 - Gina Cocking
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Corey Kupfer: [00:00:00] Gina Cocking serves as chief executive officer. She returned to Colonnade Advisors as a Managing Director in 2014.
Gina began her career in investment banking at Kidder Peabody and was an analyst at Madison Dearborn Partners and an associate at J. P. Morgan Company. She was a vice president at Colonnade Advisors from 1999 to 2003. She then left to gain operating experience as a chief financial officer of Colborne Finance, a specialty finance company.
She went on to become the chief financial officer and health care laundry. Systems, a private equity backed company for which she oversaw the successful sale to a strategic acquirer. She serves on the board of directors of CIB Marine Bank Shares, a bank holding company based in Waukesha, Wisconsin, that operates banking offices in Illinois, Indiana, and Wisconsin.
Listen, she holds some licenses, she's got a great educational background, obviously she's worked at some great firms, , Gina, [00:01:00] so happy to have you on the podcast.
Gina Cocking: Thank you, Corey, for having me.
Corey Kupfer: So listen, obviously huge amount of, , M& A experience from various vantage points. You and I were talking , prior to going on air about, , the fact that, , I said our teams, , didn't, , get a, , , a full time off during the holidays because of how busy we all are.
, we want to get into what's going on in the deal market and what you do and things like that, but I want to take you back before we do that to when you were a little kid growing up, maybe 10, 12 years old. , what did you want to be? Because my guess is a, a banker and deal maker and, , CFO and all that kind of stuff probably wasn't it, but you tell me.
Gina Cocking: I thought I wanted to be a lawyer because, medicine kind of grossed me out and I'm like, what is a professional field? I could go into. I'm like, well, of course law. So I went to college thinking I was going to go to law school. And in fact, , graduated from college and didn't get into the law school of my choice.
So I'm like, Oh, I'll work in investment banking for a couple of years. I loved it. And at the same time, my boyfriend, [00:02:00] who's now my husband was going through law school and I'm like, that looks at the worst job in the world. I would never do that. So it worked out perfectly. He's a lawyer and he's great at what he does.
And I am so glad I'm not
doing it.
Corey Kupfer: I love it. I love it. That's funny because you went into, , college thinking you, , , that you might be interested in and then chose not to. I actually think the most people, the funny part is I actually went into college thinking I want to be a lawyer because I was in a special program at Tilden High School in Brooklyn called LPC, which is law, politics, community affairs.
Gina Cocking: Okay.
Corey Kupfer: And that convinced me I want to be a lawyer. Of course, that was like, mock. Trials and going to jails, but nothing to do with what I do now. , but I think most people, most of the people I know who became lawyers were like reasonably smart people who went to school and they were like, okay, now I'm done with college.
What do I do? MBA or law school. They were much less, , actually thinking coming into the school that they want to be a lawyer. , and then, they ended up that way. So any case sounds like you ended up in the right places as your husband did as well. , one more question. Looking back, , what was your first deal of any type?[00:03:00]
Could have been something small when you were younger or early in your career as a banker, whatever comes to mind.
Gina Cocking: Okay. If you really want to talk about the first deal, it's one that I've gotten a lot of trouble for. So I grew up in the seventies and star Wars was kind of big and we had star Wars playing cards, you know, like you do baseball cards.
I stack of star Wars. playing cards. And we also had an acorn tree in the backyard and I walked around the neighborhood and sold kids bags of acorns and one star Wars cards for a dollar a bag. And so I was making a ton of money and my mom found out and she's like, you're doing what? She made me give it all back.
So that was my first
bad deal.
Corey Kupfer: Oh, no, I see. I think that's great. I'm not your mother. I'm sure there was a list, but I don't know. For me, that's a great entrepreneurial story.
Gina Cocking: Yeah. But my first like big deal that kind of really was a lot of fun. It was when I was at Madison [00:04:00] Dearborn partners. We were on the buy side and we were looking at buying six flags corporation.
Corey Kupfer: Oh, wow. Okay.
Gina Cocking: And at the time, Six Flags, , was owned by Time Warner. So they took us around. Time Warner took us around in the Time Warner jet. And so that was pretty cool. Flying private to amusement parks around the country. We hit six parks in three days and we went around with, of course, the finance people because we did a half day of finance or a couple hours of finance.
And then we would go. And ride the coasters with the chief rollercoaster designer. It was incredible. It was my all time favorite deal and we didn't end up investing, but it was a lot of
fun.
Corey Kupfer: Eve rollercoaster designer.
Gina Cocking: Oh yeah. So we were at, I don't remember which park it was. One of the parks, they had one of those coasters.
That's a free fall. You get in and you just fall flat. He wouldn't go on it. And I'm like, why aren't you going on it? And he said, well, I didn't design it. I think those things are crazy. Like, oh my gosh, [00:05:00] I am not getting on that either. And I never
have.
Corey Kupfer: No. No. No, cheap rollercoaster design is not doing it.
I'm not doing that. I think that's a smart move. Oh my God. That's funny. , so usually I, , talk about, , people's careers and their histories, whatever. , and then, we might get to what's going on in the market, but for whatever reason, , , maybe it's a new year, switch things out.
Let's go the other direction, , because I did mention in the intro that, , prior to going on the air you and I were talking about how busy, , us and our teams were at the end of the year. , a lot of the second half or a lot of last year, we were, we were talking about how there was sort of these mixed factors going on, , where you have cost of capital going up significantly last year, , you've got, , , some of the led this pulling back.
, on the other hand, there was still a lot of private equity money out there that needed to be deployed. , you had mixed single, inflation high, other parts of the economy good, certain sectors looking stronger, overall deal volume down in the macro level, certainly on the public company side.
A very mixed bag. We were busy all, year.[00:06:00] , obviously the feds indicated, , that is maybe they're going to reduce rates this coming year. , So with all that mixed going on, like what were you seeing at the end of the year? I know we don't have a crystal ball, but what's your feeling in terms of what's what it's looked like for 24?
Gina Cocking: So the, end of third quarter, beginning of fourth quarter, , we started taking on a few more new transactions and some are coming to market. , here in the next 2 months, and we found that some companies have been waiting on the sidelines, but they have been continuing to perform well. And we have found that for companies that have been performing well, especially in segments where some of their competitors haven't been over the past.
14, 16 months that they are very saleable right now, and they are coming out of a position of strength. Now, when I'm looking into 2024, I agree. Interest rates are coming down. That's going to fuel MNA activity. But almost more importantly is in [00:07:00] 21 and 22, there was a lot of PE money going out and doing acquisitions.
There were platforms being acquired add ons. They really were able to use. Those companies were able to use 2023 as a time to go through integration and get their house in order. Now that everything has settled down, I expect that those roll ups will continue. As soon as interest rates start coming down.
Those will go like gangbusters because they will be well positioned. They'll have that playbook in place. Number one. Number two, there was a lot of deal activity in 2018 and 2019. Those companies are starting to age out in the PE portfolios. So we're going to see some M& A activity
happening there.
Corey Kupfer: Yeah. No, I think that really makes sense. And it's consistent with what You know, with what we're, , we're seeing, , definitely and felt like it's some of the industries where, we play heavily in, in financial services, , in tech, , and I've done, you name an industry, I've probably done a deal on it from [00:08:00] illegally vitamins to whatever, but we do a lot in financial services and tech.
And, what we did see, you mentioned the roll ups, we did see that the serial acquirers, , being the ones doing a lot, a lot of the deals in, in, in the more questionable markets. And I don't think, my experience is that's not unusual, right? You're seasoned buyers are more likely to be active when things are questionable, whereas you're.
A first time buyer is unlikely to wade into a,
Gina Cocking: ,
that's right. That's right. It'll be an act inactive
here.
Corey Kupfer: So what talk to me about the, , the sectors. , I mean, you smiled and nodded when I said, you know, every industry. , but are there other focus areas in terms of sectors, , that you guys, , you
know,
Gina Cocking: there are here at colonnade, we focus on business services and financial services, the business services segments tend to be more where they overlap with financial services.
So in financial services, we work with companies that are. Balance sheet, heavy balance sheet, intensive businesses like equipment, finance companies, [00:09:00] and we'll work with fee based businesses within financial services. We will do work on the business services side with data analytics, companies, marketing analytics, companies, marketing technology companies, as they've related to financial services companies.
Then we've also been doing a lot of work. In automotive finance and insurance, auto F and I. So this is, we estimate about a 93 billion industry. So it includes companies that offer vehicle service contracts, tire and wheel contracts, appearance protection products. A lot of MNA activity has happened in that space.
So we work with the entire vertical in that space. We work with the auto F and I administrators, the agencies, the insurance companies, the agents, , and the technology companies in the space. So. At, that area we see picking up in terms of in 2024, because new car sales were down 2nd, half of 22. and then in 23, we had [00:10:00] high interest rates and lower car sales on the higher interest rates.
I'm sorry and high car prices really left very little room. In the auto loan in the loan to value to add in F and I products and so the beginning of 23 most of 23 was a tougher year for some of the auto F and I companies, but they've come out strong. I think at your end.
Corey Kupfer: Got it. Yeah, it's interesting.
, how different things affect the space is like, yeah, but with the cars, but yeah, I guess you're right. I mean, prices. So first of all, they were coming out of the pandemic. They were inventory issues, right? So think, because there was scarcity, prices were up. I remember I actually had a car coming off lease and, , and looked at it and I said, I mean, I had a low mileage or whatever.
So there were a lot of reasons to buy it. But I also looked at the prices of, , But because I'm like, you know what, this is looking pretty
good.
Gina Cocking: We did the same thing. We did the exact same thing. I'm like, yeah, I'll keep this one.
Corey Kupfer: Yeah, exactly. , yeah. Yeah. Listen, there's some parallels. Like, [00:11:00] it's similar to what happened in the home market, right?
Because a lot of folks will have low interest loans. , I was looking at what it would take, especially if they were going into the next house, if they were, , you know, retiring or going into rental or whatever. So, it's interesting, but, , with some people I think over, I mean, I'd be interested in your view on this.
Cost of capital obviously makes a difference, interest rates make a difference, but I do think that some people overplay any single factor, including that one, in the markets. And certainly. With your background of not only, , being, , on the M& A side, but also being on the CFO on the finance side.
Yeah I'm curious as to your thoughts on, , on that comment.
Gina Cocking: Well, I think interest rates really work for, seasoned buyers, the private equity firms and others. It caused them to be more disciplined about pricing. They have to hit their returns. So it's. We did see multiples come down in the segments we cover compared to what we saw in 21.
And they're back to [00:12:00] normalized levels. And, that will continue. It didn't mean that funding necessarily dried up, but there were also buyers were disciplined and really wanting companies that had strong stories. And in. Auto F and I for example, there's a little bit of uncertainty in the market still in 2023, so they didn't know how companies were going to do, so it wasn't necessarily the best time to go to market, , for some of those companies.
We do a lot of work, as I said, on the balance sheet side, equipment finance companies. , one of my favorite segments is automotive refi. So. Auto refi companies in this area, we sold a company called open road, letting to carry on a Clary on capital, , in 2020, , 2020, 2021. And what they do is they, market direct to consumers.
We will help you refi your auto loan. And they work with money center banks and credit unions, large lending institutions, and the underwrite to the lending [00:13:00] criteria of those banks and put the paper directly on the banks. It's a great deal for vehicle owners because if you have a car loan and you're 6 months into your car loan, you have better credit.
And if you got your car loan through your local dealership, you probably didn't get a national rate. And you also had the markup on the right. So by refinancing auto loan, consumers can save. Sometimes a couple thousand dollars a month, a year, sorry, a couple hundred dollars a month. So what we're going to see is those companies are going to do really well as interest rates come down.
And there was, there were a number of PE led deals in that space in 2020, 2021. Those companies are going to do great. And I expect them to then kind of flip, I would think at the end of 24, early
25. Yeah.
Corey Kupfer: Do you focus more on the buy side or, , sell side or,
or?
Gina Cocking: Sell side. 70 percent of our work is sell side M& A, 25 percent is buy side, and then occasionally we'll do a capital raise.
Our [00:14:00] capital raises are more often related to one of two factors. This one less often. Yeah. We're working with a company, the owner's thinking about selling and then we're like, you know, you could just do a dividend recap. And that works out pretty well for him. We haven't had that happen recently, but not in this interest rate environment.
And other times it's more of a capital raise related to an acquisition.
Corey Kupfer: Yep. Got it. , So let's talk about how your background informed, it was interesting in your bio where, you started out right on this side. In fact, it ended up at this company, , at some point, and then
Gina Cocking: I was employee number one.
Corey Kupfer: Oh, okay. There you go. , and then your bio said, you left to get, , experience in operating companies, doing, , one of the finance side, things like that. I always like. To interview people who have different perspectives because, I find that, it's so easy, no matter how high quality the place you're, you get trained at, you know, if they're investment bankers, they look as a certain way, they look at it, [00:15:00] lawyers look, accountants look at certain ways, right.
And so talk to me a little bit about the different perspectives you were able to get because of your experience and how that's informed what you do.
Gina Cocking: So I had the opportunity to be the CFO of an equipment finance company going into the financial crisis. So we had raised preferred equity. We had big bank lines.
We were doing great. And I should caveat. Not only were we just an equipment finance company, we were a class eight truck finance company. Leading indicator in financial markets, right? So in 2007, our voluntary surrenders were just through the roof, December of 2007. So we saw the writing on the wall. I learned a lot through that process of being in the CFO seat and just an impossible market to be doing equipment finance.
So I have the scars on my back from that one. , I then became the [00:16:00] CFO of a private equity backed company, healthcare laundries. HLS was the largest industrial laundry in the country at that time. And the PE firm that came in, , blew off capital came in and they took it as a not for profit. It was a not for profit owned by seven hospital systems and made it a for profit.
So that one was just a ton of fun because it was like a business school case. I got to walk in and say, okay. What needs fixing? And by the way, the rest of the leadership team was outsourced to a third party company. Just some confusing things about the industry. So I was the only executive who was employed by the company and reporting to the private equity firm.
So I walked into the warehouse and like, Why do we have all this inventory when our leading supplier is 45 minutes down the road? So we cleared all that up and sold things. We started actually collecting on past dues. , the operations team reconfigured the lines. We [00:17:00] added new, more, we did some analysis and was the most profitable business at a more.
More profitable business. And we were able to basically triple EBITDA pretty quickly. And we sold the company, the private equity firm sold the company in under two years. And during that time, we also did a dividend recap. And so it was a strong cash flow. So that was great. I had a lot of, and I saw the company through the sale process.
I actually got to work with an investment banker selling company at Duffin Phelps and, , kind of be in that seat. So that was a lot of fun. Now, when I work with clients and we're going through what they can expect, I'm like, look, I've been where you are. It's going to be horrible. It is going to be a terrible experience.
At some point, you're going to yell at me. You're going to hate us. And in the end, you're going to always remember us fondly, but it's a hard process to go through. And having, having that experience, I think helps our clients because they can feel a little more comfortable. They [00:18:00] know when I'm asking for something or I'm telling them they have to do X, Y, Z.
It's not only because I'm, wearing the pinstripe suit from Wall Street, but because I've been in their seat and I know why it really
matters.
Corey Kupfer: Yeah. And I'm sure that makes a big difference with, with clients and also I'm surprised. I mean, I think in the, , certainly on the, on the larger deals, the really big deals has always been true.
I think in the low and middle market. It used to be less true. It's become much more professionalized. , I used to be a much more amazed and it still happens now, , but not as much where how unprepared some sellers were, even when they were represented, right.
To go to market. , and one of the things that I always say to my clients is whether it's the kind of pre due diligence we do for them as lawyers or what I tell the finance people to do, or when I'm working with a banker, , Is, you know, I would say to them this, listen, you got to understand something, , the way you present and how comfortable you make the buyer feel or uncomfortable, right.
As a [00:19:00] big, big, , influence on one, whether the deal gets done at all. And second of all, whether they're going to try to renegotiate or shave you down and due diligence in terms of price or deal terms or whatever. And I said, what I try to explain to them is psychology wise. And I mentioned this on this podcast before.
I said, listen, at the buyer level, let's say it's the CEO or the, you know, the acquisition, guy, gal, whatever it is makes, who makes the decision that they're moving forward. Then they have a whole due diligence, due diligence teams that come in, whether it's the finance people, legal people, the HR people, whatever, right.
And the mentality of those people are, they'd actually rather, and I'm making a generalization on this thing, everybody's the same, whatever. But again, their job is they would rather have the deal not go through than to have it go through and have them miss something. Right. And let me say, why does it you right?
So they're looking for things. And the problem is, I would say, well, there's smoke. They assume there's much this fire. , so talk to us. I know I did a long set up there, an entity but I'm such a. Like this pre due diligence [00:20:00] process, or even before you're in due, it's even pre, pre getting a company ready for sale when you're, especially in your role, when you're representing them on the, on the sell side, the people that don't know here, they just talk about packaging a company.
They think that's much more. So just putting together the marketing materials, the book and the whatever, but getting them ready is such an important part of the process. , , I think the industry is getting better, but not everybody does as well as other people.
Gina Cocking: We like ideally to start talking to a company a year, two years before they're even ready to engage us to go to sale.
We have a presentation we go through with companies called how to prepare for a sale. And it's, an hour long, we go through like. Everything to how you should organize your files to digitizing, get your licenses in order, et cetera. , that's why my partner, Jeff and I did a podcast two years ago on basically how middle market MNA works because we wanted [00:21:00] business owners to be more prepared for that process once we, and then once we have those conversations, we also want to be there.
For these middle market companies as basically a trusted confidant, you know, we find that at larger investment banks, teams turn over a lot. Colonnade has been here. This is actually 2024 is our 25th year. So we've been here for 25 years. We're not going anywhere. We have a wealth of knowledge.
And so we are, we meet companies where like, we're here for you. Give us a call. We worked with one company. For 10 years before we finally sold the company. So we're here to bounce ideas off of think of, think through issues, et cetera. But then once we get engaged, the first thing we do, like any other investment bank, is we start going through our diligence.
And, our base list of document requests is about 300 items for some companies and, clients are like, oh, my God, like, you [00:22:00] cannot possibly want all this. And then so we prioritize it and they're like, they look at, the. 3rd category 3, and the 3 is like, oh, we're never gonna have to get those.
We have learned to insist that before we go to market, we have 80 percent of those number threes because otherwise we end up having missteps in process and it was great. We were recently involved in a transaction on the cell side. And when the buyer came in with their extensive diligence list, we had 85 percent of it in the data room.
And it was, probably a thousand documents at that point, but that deal is going along nicely. And, the company killed themselves. In working with us and got to the point of hating us probably earlier than most of the time in transaction. But right now they're like, Oh, thank God you had us do that.
This is, we would have been really embarrassed and stressed if we had to be answering all of this now. Okay. So it works, but it takes a lot of work and it takes discipline on our part and our client's part to be willing to [00:23:00] hold back and going to market until we have that all
in hand.
Corey Kupfer: Yeah. Yeah. No I, you and I are so aligned and it's not always, , I've just seen, I've seen too many deals, , you know, run into trouble because, , because and really where, listen if there are issues.
That kind of due diligence, there are real issues and that's a problem, but hopefully doing the pre work, you're going to avoid those, you're going to clean things up, you're going to figure it out. , but what's really even frustrating more is when there's just some small, there's like something that appears to be an issue.
It's not really a problem if you really got down to it, but it slows the deal or it spooks the buyer or it delays things. And then the mortgage like this, they have it in a deal. And, , I often talk about there's a pace to a deal. And if you artificially slow it down or artificially push it forward, you can run into trouble.
And that's really an art to have that sense of the
rhythm.
Gina Cocking: That's right. That's right. I
agree.
Corey Kupfer: , Yeah it's so interesting to me because, , I do think that, You know, [00:24:00] that does come with, with experience and I know that experience you had in the other roles you played, it gives you that, additional perspective.
So it's not surprising to me that you start with folks a year or two in advance and have this whole process you're taken through, which is a great service to, , to clients because, , that's, that, that's what it takes. , I remember a deal, , and also that pre-research, I remember a deal, mm-Hmm,
We had a client privately ill company, typical sort of. I mean, it was a main guy and a couple of minority, owners, but it was really run as a mom and pop, we, and this has gone back about 20 years. So it was when things were less standardized and we really spent a lot of time making sure that they were buttoned up and cleaned up, whatever they were selling to the public company also.
So,
Gina Cocking: that's extra care,
.
Corey Kupfer: And fortunately, we did a good job. We, , we even let us. Part of us to do some of the work for the, we identified every contract and the assignability and whatever and tagged it for them. Yeah, we did like their due diligence for him because we want to press him and we ended up coming down with it was an issue.
It turned out to be a [00:25:00] disagreement, . From the buyer's side where their accounts thought something was should have been characterized differently or treated differently purposes and our accounts thought differently, but it turned out properly. The buyer's accounts were right. And it could have been, this wasn't, this was a, it was a, this is probably a, , I think it was about a 25 million deal purchase price wise.
But, listen, this is, the far majority of that was going to the one guy, right. It was a nice, , and there was about a 3. 8 million discrepancy. And frankly, I think the buyers were right. But the thing that we figured out in our due diligence, , was that the public company needed to get this deal done.
That year is projections. It's promises to, , projections to a shareholders. So, , we ended up, even though I think, , the buyer was right. We were ended up holding firm on that. And my comment to them was, I understand what you're saying, but this is the number that my client. As is mine. He's not, and, , and because we knew there was no one else in the industry that fit that slot, [00:26:00] that would have them be able to get that deal done that year and be able to hit their numbers.
You know, we,
Gina Cocking: that is fantastic.
Corey Kupfer: Right. They didn't jam us a penny down. So,
Gina Cocking: , your client must've loved
you,
Corey Kupfer: especially because he was kind of the guy, so funny how clients are so different. He was one of the guys who was like, he's like, Corey, listen, I know myself. I want to be as minimally involved in this process of whatever I don't want to be in negotiating meetings.
I don't want to, I want you to handle it for me. He said, you know, he knew he was too nice. Like, not that I'm not nice, but he would give in too easily. He's not, he wasn't a good negotiator. You want to, , so that actually served us well. And in those cases,
Gina Cocking: what I always try to remind my clients is especially when our clients, the management team or the owners are staying on with the new buyer, you, you.
They don't want to have, they don't want to, and they shouldn't be in a position to be in conflict during the deal with their potential employer or who they're selling to. [00:27:00] It just, I mean, that's a, that is a bad mix for future, future working environment. And we are here to be the bad guy.
That's what you pay us for. We'll say and do whatever you need us to do. And frankly. If later on, somebody is giving you a hard time about, how your investment bankers handled something in the negotiations, just say I have no idea. Couldn't control them. They went, they just went off the ranch I'm okay with that.
You know what? We're just
here to protect you.
Corey Kupfer: I'm like, listen, if you got to throw me under the bus at some point, throw me right ahead. I like that's part of what you paid me for. Exactly.
Gina Cocking: Yep. Yep. We're tough. We
can take it.
Corey Kupfer: Love it. Love it. a Lot of times on this podcast I talk about mindset. , and I have this thing that I talk about frequently.
I always like to get people's perspective on it. Where, I think there's a different mindset that an entrepreneur has than an employee. And again, I don't I don't judge this, right? There's no one's better, know thyself, right? There are some people [00:28:00] we, we're very big in the financial services space in terms of investment advisors.
We're one of the leading firms in the country to help people break away from Merrill Lynch, Morgan Stanley, UBS, Goldman Sachs, Wells Fargo, , for people who want to leave Mother Merrill, so to speak and become entrepreneurs and manage, their own business money. And, , I'm a big advocate for that space.
I think the independent space is really the way it's at. There's a million reasons, fiduciary, , all these things. But I also, I'm the first one to say it's not for everybody. There will be employed advisors at Merrill Lynch or the like, right, for a long, long time. And that's the right, space for them.
, but I also think there's this additional. Mindset shift, , or mindset that you need to have to be a deal maker. Not every entrepreneur is a deal maker. So entrepreneurs are phenomenal at building businesses organically, right? Sales, marketing, products and services. , what do you think has, what's the difference between those clients you work with who are.
How about dealmaker mentality, , versus the ones that don't. [00:29:00]
Gina Cocking: So, it's more something that I see. We work with a lot of entrepreneurs, but it's more something I see on the buy side and I see it between private equity firms and strategics that are doing acquisitions, , you know, I think it was, , Richard Thaler, the economist who won the Nobel Prize in behavioral economics, who talked a lot about this.
It is much more painful for somebody to lose something than to win something. And if you are an employee and you make a mistake in diligence, as you were saying, or you really advocate for a deal that goes bad, that is bad for you as an employee because your bonus is going to be hit or you could lose your job.
If you do a good job. You're like, you get your 10, 000 bonus that year. And so strategics, we are, we always look at strategic offers versus P offers differently because the strategics were like, they're not in the business. The people are not incentivized to get deals done. P guys. P guys have got to get a [00:30:00] deal done to make their move.
So they will figure out ways to work through it. And so I see massive differences there between those two groups. Corporates, especially you're dealing with corporate M& A team, we're always wary and we kind of take everything they say with a grain of salt because there are a lot of reasons that we really won't ever be privy to why a deal could go south when it's a strategic buying a company.
Corey Kupfer: Yeah. But so let's push it to that a little bit. Financial buyers versus strategic buyers, , because, there are benefits of a strategic buyer, right?
Gina Cocking: Oh, absolutely.
Corey Kupfer: , there's other, sometimes you can get, often you think the financial buyers are giving top dollar and in many deals that's true.
But sometimes that's not true, right? Sometimes you just have the value to a strategic buyer because it's strategic, , is a lot higher than the value to a financial buyer or the ability to have flexibility and deal structures or terms or things like that. Because he firms out where they did. So talk to me a little bit more about, that, [00:31:00] that tension and that decision buyer and a financial
buyer.
Gina Cocking: Yeah, well, the strategics that the appeal with a strategic can be number one, they're more willing to pay all cash. And so if you have an owner of a business that is interested in walking away because he's retiring or there's a generational shift, they, a strategic can be a great home for the business because they can get all their cash basically at close.
It can also be great for the employees. So it could be a small company, , middle market companies making five or six million in EBITDA, and they could become part of a 200 million in earnings company that's publicly traded. The career path for the young people is totally different. So you know, it's, it can be pretty exciting for those types of companies, a private equity firm.
Yeah. Oh, and a strategic may be paying for the synergies. So we always like that. Now, a private equity firm, you have more certainty to close them with a strategic. Generally, I think that's the case. , but with a private equity firm, [00:32:00] they will want rollover and equity and try to figure that out in some ways.
So sometimes the owner, you're looking at two bids and you're just going to have to leave more capital in the business in a private equity deal. Working under a private equity firm, having worked more. At a private equity firm and having been, worked as an executive for a private equity backed company, , it's tough, you, I, every single day I was on the phone with the P firm and they were calling me up 5 o'clock.
Do you know what's the update? Do you know what's this report? What's that? They are intensely focused on what's going on in the company. And so if your leadership team has been. A little more relaxed, a little looser, maybe in how they did things, being private equity driven is not for everyone.
And it can cause a lot of tension or even failures, , for employees at companies. So, sometimes when we are working with a company and during the process, we [00:33:00] get to know the leadership team and the management, we will even, we will lay out for them kind of what their new reality will look like.
Under these buyers, that's one of the reasons that we kind of stick to our knitting in the industries we cover. As I mentioned, auto F and I is a big space for us, equipment finance. Another big pillar of our work is insurance premium finance. We know all these industries really well. So we know the buyer universe really well.
So when we talk to our clients and say. Look, we have heard X, Y, Z. This has been my interactions with the company so and so from so and so. Company says this about them, just so the buyer's going, the seller's going in with their eyes wide open to what life will be like day
two.
Corey Kupfer: No, that really makes sense. And listen that, . That industry experience, right? There are, it's always interesting because to some extent, and listen, we do it as well. I always say to folks, sometimes I get a client comes and says, Hey, have you ever done a deal in Ohio [00:34:00] for a manufacturing company that produces this on you know, every other Tuesday, it's like so specific and, and on the one hand, I push back on those people to say, Hey, listen, if you know how to do deals, you know, how to do deals in the industry, et cetera.
On the other hand, we do have a couple of niches where we do a lot of it and there is a level of industry experience and, , and connections and, and understanding that's, that's, that, that's valuable. So I think, , I think there's an argument on, on both
sides.
Gina Cocking: Right. You know, my partner, Jeff and I, , always say, like we grew up in investment banking doing, , a little bit of everything, I did food deals. I did industrials. nutraceutical deal at one point. I obviously didn't use on park and you can do, deal structuring, steel structuring, learning how to ask the right questions and to tell a company story.
That's all skills and talents that we have developed over time. , yeah. But we believe that our focus, it gives our clients a little bit of an extra edge. We, our tagline is focus, expertise, results. [00:35:00] And it's really played well for our clients. Frankly, when a deal lands in our laps that is not, in one of our sectors, sometimes we actually take it on because there's a compelling reason.
And we're like, okay, well, you know what, we know how to do this deal. Maybe if we do this transaction, we'll do 10 more in this space. So it's a worthwhile
investment.
Corey Kupfer: So before I ask you my final two questions, , is there anything else that you, whether it's in terms of what's going on in the market, whether it's an interesting deal story that you've had on success or a failure or whatever it is, , anything come to mind that you want to share before we go to the final two questions?
Gina Cocking: I would say that, my biggest advice for companies, , as they're getting ready is just to get organized and be prepared, , and do the work before they go to market. It makes a big difference, not, it makes a big difference in how successful, what these successful outcomes will be for the company can make even a [00:36:00] turn or two on the multiple difference.
Yeah. And. We spend a lot of time coaching clients or potential clients on how to be ready for the
transaction.
Corey Kupfer: Usually valued. , so people wanna find out more about the company, where
do they go?
Gina Cocking: Sure. The best place is our website, , www.C-O-L-A-D-V.com. So Colonated advisors, C-O-L-A-D-V.com.
Or on LinkedIn. So we are pretty active on LinkedIn. And what we do is we post a lot of content about the industries we cover. So we do a lot, for example, in, automotive. So you'll see a lot of posts about. New car sales, what the CFPB is doing in the finance industry, what's happening in equipment leasing this quarter.
And so, we find that we have a lot of followers, both on the private equity side and just companies that want to see what's happening is they can also learn more about their own
industries.
Corey Kupfer: Yeah. That's great [00:37:00] stuff. My final question on the podcast is always about my highest value in life.
My highest ideal, which is freedom. And for me, that means everything from freedom around the world, from all, for all people from oppression to why I've been an entrepreneur for decades and have had a boss. , what does freedom mean to you and how does it impact your life and business?
Gina Cocking: Oh, that's a great question.
, I think. I think freedom to me means being able to make my own choices. And that's why I'm here at Pollinate. I can help. I can drive the business. I can, help shape where we're going. But with freedom there's cost. I'm the one who wakes up in the middle of the night and goes, Oh gosh, we've got to close the next five deals or else, these bad things will happen.
So freedom is not free. There's a lot of work that goes into it. A lot of, , there's a lot
of pressure.
Corey Kupfer: It was not free. Love it. [00:38:00] Yeah. Thanks for being such a great guest on the Deal Guys podcast.
Thank you very much for inviting me. I really
enjoyed it.
