285 - Scott Bushkie - ENHANCED AUDIO
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Corey Kupfer: Scott Bushkei managing partner and founder of Cornerstone Business Services. With more than 25 years in the M& A industry, Scott is a recognized leader in the field, providing exit strategies.
Sell and buy side transitions and valuation services in the lower middle market. Over the years Scott has successfully executed hundreds of transactions domestically and internationally, working with private equity firms, family offices, strategic buyers, both public and private. Scott has the trust and respect of CPA and financial advisor alliances, investment banks, and other professional services firms around the M& A marketplace.
Scott, welcome to the Dealquest podcast.
Scott Bushkie: Thank you, Corey. Great to be here.
Corey Kupfer: So Scott, listen, obviously, you have such extensive, experience in M& A. You've built such a successful, phenomenal firm, and we're going to talk about the M& A market and, the services you provide and what you're seeing out there.
But before we get to all that, I want to take you back to when you were a little kid growing up, maybe eight, 10, 12 years old. [00:01:00] What did you want to be? Because I'm sure, and maybe I'm wrong, but I'm guessing it probably wasn't an M& A professional at that stage, but you tell me.
Scott Bushkie: No, no, the first one was a pilot.
I went, I was eight years old and went on my first flight down to Florida. You can go to Disney, of course, out of Wisconsin. Thought that was the coolest thing in the world. Actually wrote the pilot and he wrote me back about, how much money he made and everything else. And it was, I was dialed in there for a while.
Then, moved on to some other things, but always, ironically, early on, I did love sales. So I was the kid with the lemonade stand. I went to a Lutheran grade school and their big fundraiser was selling wrapping paper and Christmas cards, everything else. And most kids hated doing it.
And my parents would have to come find me in the dark cause I was going up and down the streets of little Horkin, Wisconsin, knocking on old lady's doors and selling them all wrapping paper and things like that.
Corey Kupfer: So, so you, like me had a very early entrepreneurial spirit, which is interesting. You know, in my case, I didn't know where it came from because both my parents would we had like no entrepreneurs in my family except for.
Except for [00:02:00] an uncle who I only sort of met late, you know, a little later, you know, so I don't know about you, if you had any models, but I'm always interested in, how we come to our entrepreneurial journey. Some people have models, some people don't.
Scott Bushkie: Yeah, we, my parents were very, my mom was the school teacher.
My dad worked in corporate America for 20 years at John Deere. So no, it was my mom's parents owned a music, music business back in the day. And, They picked accordions, to really go all in on. And, that wasn't quite the right play, but that's where I think I got it from.
Corey Kupfer: I love it. I love it.
One more question. Looking back, what was your first deal of any type? It could have been something small when you were young or early in your career on the M& A side, whatever comes to mind.
Scott Bushkie: Probably, I sold Cutco cutlery door to door in college. And, so selling, That and, it was to pay a couple of speeding tickets.
Then I got in college and there's a reason I got into it. And, but it was one of those things that was just kind of again, fought in the challenge and the first weekend I went out, I sold Friday, Saturday, went back to school on [00:03:00] Sunday, call them my numbers. And the guy's like, Hey, you know, they treat us on Wednesday.
Like you probably won't tell anything, but we'll learn what you could do next. And I called in the numbers and. The guy calls me back and he said, is that what you're selling? I go, yeah. He's like, well, you know, people do this for a living. You're like, no. And there was a statewide competition for a week and you won it in your first two and a half days.
And I got a big cuticle cutlery trophy that, I ended up putting on my boss's car as he drove away and never found it again. That's why I lost the trophy, but I did have it in my hands for about 10 minutes before
I drove away.
Corey Kupfer: You know, so it's really interesting because, Yeah. One of the things we make a distinction about here is, and it's funny, I literally, before, just before recording this podcast, I was having a conversation with some folks about the difference between, organic growth and inorganic growth, you know, deal driven growth versus things like organic growth with, which is like sales, marketing, providing great products and services, and how it is, you know, and how does inorganic or deal driven growth differ?
You know, so you've come to the deal driven growth, [00:04:00] the inorganic growth side through a pension actually for sales, which is much more on the organic growth side, right? Yeah. So it's interesting evolution. So how did you move from this natural, connection to sales at a young age where a lot of people are very uncomfortable doing that?
You know, like, I guess you could be in a business where you be doing sales and marketing, right? If that was an inclination, but how did you end up moving to the inorganic, you know, side of the ledger, so to speak?
Scott Bushkie: Yeah. And that was my major was marketing with emphasis and sales in college at Whitewater.
And and I've always loved sales. And I think it's because my dad was my coach through grade school growing up. And we were just, I'm one of the oldest of three boys and just the competitive nature that we had in our household was. Like nothing else and sales was competitive and you could keep score and I just love solving problems that other people couldn't do And so I did the cut gold thing the year after that I did.
I ran my own franchise did college to a junior senior year of college pro painters and then went out and got a corporate job for two years as [00:05:00] a district manager only because No one ever been hired by aldi to run four stores out of college of university of wisconsin whitewater So it's more but I'll bet that anything, yeah, because I did not have any penchant of, please God, let me be in the grocery industry at some point in my life.
And, but then I wanted to get back into sales and just through dumb luck, my, I was looking at real estate and I wanted to get into big ticket sales, something that I could really make a difference in and in my youngest brothers. Best friend's uncle was in this business and that's what got me from Milwaukee up to Green Bay, Wisconsin.
So, the good thing was I always tell people I was probably just too darn dumb to know I should never got in this industry as young as I did, but through sheer willpower and 60, 000 hours later and about 45 national international conferences later and hundreds of regional conferences, just absorbing and learning and giving back.
And We've really developed, you know, our shirts. We 60 process. We've gone from myself and my assistant, to a team of 18 and which is, we're still a small company, but in the world of [00:06:00] investment banking, we're actually one of the biggest firms in the Midwest that focus on that, this low brittle market that we're, we'll talk about later.
Corey Kupfer: Yeah. Absolutely. So let's get into a definition because, you know, we, you hear terms out there like lower middle market, main street businesses, large, and, you know, they're, I mean, generally it's a, you know, a general alignment on what that means but people have different definitions.
So what is that niche for you? How do you define it in terms of company size, deal size, you know, even a multiple, whatever it is.
Scott Bushkie: Yeah. So what we look at is a couple of different things, first one revenue. So most of our clients are that five to 150 million revenue range. EBITDA is probably the easiest, cleanest, but not everybody knows their EBITDA, but usually that's normalized EBITDA of one to 15 million.
Yeah. And enterprise value, like you said, there's a lot of business brokers that do more main street type deals at bars, restaurants, brick and mortar retail service companies, those deals are usually done in the zero to two, zero to 3 million space. And then we, well, why, what I found when I got it, when I started Coruscant is then the next big tranche really isn't to where these bigger investments go, you [00:07:00] know, Corey, we're not even going to get out of bed and talk to you unless we're going to make a million bucks or more to success me.
And I said, okay, so there's a bunch up here. There's a bunch down here. So who's taking care of everything here? That two or 3 million to 50, 75 million enterprise value. And what I found in green Bay, when I found it, Wisconsin and regionally and nationally was it is the most underserved marketplace out there.
And I said, well, I'm not the smartest guy in the world. But I think I found where my niche is going to be is that we're going to bring that investment making level quality of what a 150 million enterprise value client would want of limited clientele, high touch, high closure rate, a team to work for them.
We're going to work and build that and bring it down to a 10 million client or a 20 million client. And that's kind of how we, how Cornerstone was started and you know, the space that we play in nationwide and internationally today.
Corey Kupfer: Yeah. And you know, you're so right. I mean, the good firms in that lower middle market space are few and far between and what, you know, what traditionally happens to a lot of businesses in that space, [00:08:00] in the past, you know, is that, you know, they're too big.
They know they're too big for the main street business brokers because, and I'm not saying anything disparaging.
Scott Bushkie: It's just a different model. They know how to do a very good job of finding the individual. It's coming to take out the owner, put a new individual in where we're going after private equity, family offices, strategic buyers, and everything else.
It's just a different model.
Corey Kupfer: It's a different, it's a totally different business model, totally different deal. And you're right. You know, they're mainly focused on owner operators and some of them do a really good job on that mainstream business level, but they don't have it. It's totally different.
So they're not set up to do something of this. And then, like you said, on the upper end, the bigger investment banking firms aren't even going to look at you. So, this market was left where. And, either, they'd be working with a business broker who's trying to stretch, but really doesn't, you know, is it going to do a great job on it because they don't have any experience with it or they're trying to figure it out on their own.
Which obviously has. As it, you know, has its issues, or, maybe occasionally they know somebody and trying to call in a favorite, one of the bigger players, in which case they're not going to get the [00:09:00] attention, you know, on the deal.
Scott Bushkie: Yeah, I mean, that's what I've seen is that, oh, we'll let our second year, you know, our second year grad student cut their teeth on this deal.
This is my baby. This is my 30 years of my life. And we'll give it to some 22 year old and let's see what all they do with it. Or, you know, 24 year old.
Corey Kupfer: Exactly right. So yeah, finding quality firms in that space is crucial. Yeah. And there are so many deals that are done, you know, in that, you know, I want to go to say this interesting point because it's also in terms of that space and the mentality of the entrepreneurs and executive teams that run these kinds of companies, the bigger companies and the quickly scaled companies, they are more often, in a mindset, whether it comes later or whether it's even from day one.
Of preparing for exit, right? If you look at a bill that we, you know, I've got an entrepreneurialization buddy of mine in my forum, you know, who You know as a, I mean, it's one of many examples, has a, cutting edge, robotic construction company, whatever, venture back, you know, et cetera.
I mean, from day one, he knows that he's looking to build this thing to exit, right? Most companies in the middle [00:10:00] market don't really start, you know, with, with, with that mentality. And then many of them never get there. Right. And, what, so one of the things I always talk about that I believe like there's a difference in mindset from being an entrepreneur to being a, an employee, and again, I don't have any judgment on that.
I didn't know that myself, but there's a difference in mentality. There's also a difference in mentality of a deal maker versus a, and you could be a very successful entrepreneur without being a deal maker. You just be great at sales and marketing and organic growth. And. Many businesses build successfully that way.
I think they're missing out on this little bucket of growth opportunity, through acquisitions or joint venture strategic alliances, licenses, whatever it is. But you know, what have you seen about, the companies that, I, you know, and, founders, et cetera, who have that mentality or when they come to you, like how do you help them understand, you know, that mentality shift to be able to prepare their companies and think like a dealmaker, as opposed to, just an entrepreneur building, building something organically.
Scott Bushkie: Yeah, you're so right. Cause of course, as you see, like you look at a private equity group, they don't buy a company until they know how they're [00:11:00] going to build value and who they're going to sell it to almost. You know, and a business owner gets in, they're excited in this little bit of market and they take off like a rocket.
And then they go, okay, I've paid down my debt, I don't have any more bank governance or whatever it might be, and I've kind of had a good lifestyle here, and they're in this, call it a marathon, and, but there's no signs, there's no coaches, there's no water tables, they're just on their own out there, and all of a sudden, you know, what happens, unfortunately, is that all of a sudden somebody goes, oh man I just tweaked, I got a tweak in my hammy or it's I can't run anymore I've got a side ache, and it's not fun anymore.
And I got to get out, it's time to sell. And that's unfortunately what happens is most business owners in this space do not sell because boy, things are going so good, I could get a crazy multiple for my business right now. It's not, and usually not even a business issue. Most sides of this space is a personal issue.
Yes. I want to retire is obviously number one with all the boomers coming through. But unfortunately, number two is, I'm burnt out. I'm tired. It's not fun anymore. I've [00:12:00] had a health issues. Number three. Yeah. And when you're tired, you know, as you know, to sell a business is not like selling your house. It's not like, you know, today's market where I'm going to sell my house.
I'll get a realtor. They put a sign out there, you know, in three days that sold it. And I get 30 days. I fill up the, you all, I throw them the keys and I drive away and I don't have to do anything again. I, ideally there is a direct correlation because so many businesses don't sell and the ones that do sell, the correlation is typically they start planning earlier to your point.
They think that mindset of how do I want to make this something that's valuable and transferable, not just something that I could take cash out of. And then they start building a team around them. Yeah. Who is going to be, yeah. Who's the investigator I'm going to work with? Who's the, not just the attorney, keep your attorney, but who's your MNA attorney?
Yeah. Who's going to be the financial advisor that's going to take this sum of 10, 20, 30 million dollars? Is it the same person you work with? Sometimes yes, sometimes no. What about the exit plan or what about environmental, whatever it might be and building this team around them and they just don't, [00:13:00] they don't know what they don't know.
Most of them don't have boards of directors, even advisors. And it's just, you know, them and their spouse going through this and they've done extremely well for themselves. But I've talked to people that go, man, you're making 2 million bucks, but it's not a transferable company because you are the company.
And when you go away, well, I don't want to stick around if I'm selling, I'll just keep it. Well then keep it for as long as you want to keep it. But at some point, know that you're not going to have this big payday at the end. And that's what we try to really educate people on is to say, Hey, look, you know, the earlier you're start.
The earlier you build a team around this, I mean, we did a movie on it called M& A. It's the first motion picture rated documentary on, on mergers and acquisitions. And it just, it's trying to educate those business owners because the earlier they can start having what we call the conversation, it's not about the birds and the bees.
This is about. Yeah. How are you going to get out of your business? When are you going to get out of your business? How, what, you know, what are your options? Most people go, well, I bet either going to give it to my kids or sell it to the competitor out the street. Both could be absolutely the worst options possible.
They put it on several [00:14:00] factors. There's nine or 10 different options that you have that most people don't even know about. And, and that's what we try to do is just educate the owner. So they start making these well informed decisions because yeah, it's just this marathon and all of a sudden things start to tail off.
Because they're tired. Well, guess what? The buyer doesn't care what you did when you were really strong and you're kicking things off. In fact, they don't even care what you did three years ago anymore. What they care about is what is the last 12 months? So if you go, well, I've run this company for 30 years and yeah, I held on one year too long.
It's 3%. I did 97 percent right. But I held out one year too long. That could cost you 40 percent of the value of your company. It can make your company not saleable at all because once it does this, they smell blood in the water and it's like, Hey, I don't know what I'm going to offer less because I don't know where the bottom is before I can turn this thing around.
And unfortunately, that's why so many businesses, you know, those stats out there on the, especially the lower market or smaller are 20 or 30 percent successfully sell. Yeah. [00:15:00] I think if you went to school with the golf, Hey, 30%, that's a passing grade. It's like, it's insane, but that's what's going on out there right now.
That's why we're trying to educate through the book and the movie and everything else that we're doing in podcasts like this is that if business owners, cause you just learn a couple of key things, they would have so much of a better chance of selling their company. And that's, And that's the crazy thing is that I started this thing 25 years ago and I'm like, Oh, they're making those mistakes.
But now with all the knowledge out there at Google, you can Google anything in the world. They're still making the same mistake because again, it's confidential. I don't want to tell anybody that I'm thinking about selling my company. So I'm not going to talk to anybody and I'm just going to try to figure this thing out on my own.
And if I get taken by this, some big national firm that tells you what I want to hear and I pay him 45, 000 and they way over promise that they don't even deliver a buyer for two years. I'm not telling anybody that either because do I want to look like an idiot to my buddies? You know, it's like so every just Quietly tries to figure it out and they don't know what they don't know.
So that's why we work with a lot of trusted advisors and partner together to [00:16:00] help, you know, increase those odds of successive closing.
Corey Kupfer: Yeah. So listen, this is a great segue to a topic I know you're really interested in talking about, which is this concept of the unsolicited offer, right? So, let's take that classic example where you talked about with the entrepreneur is getting burnt out, you know, they're tired of the business that, I've been grinding for a long time and, you know, they make it a good living, but it's, you know, or they find out they have a health issue, whatever.
Right. And now suddenly they get this unsolicited offer. And it seems like perfect timing, right? You know, some big company or whatever it is coming in, maybe they're doing a roll up in the industry. Maybe it's a competitor, down the street or in the next town or whoever it is. Right.
And they come and now, especially for those entrepreneurs who are either burnt out or have that health issue or close to retirement, haven't done anything, whatever. This seems like a godsend. Right. Yeah. Oh my God. This is perfect. Right. Somebody's interested in buying me. Why, you know, and listen, I mean, the way I've described it, it sounds like this is fantastic.
They should just go negotiate that deal and take that offer. Tell me [00:17:00] why people shouldn't do that.
Scott Bushkie: Yeah. There is a reason why, you know, these buyers, strategic, private equity, family house, all of them, why they spend a bunch of time, energy, and a bunch of money to try to get to you, Mr. Business owner.
Before Cory, Mr. Bizarre talks to someone like us at Investor Bay, because they clearly know that I'm going to talk to a hundred people, spend a hundred thousand dollars. And if I can find one, if I can get one to buy it, I get a catch about the right day. I know as a buyer, I am going to get the absolute best deal I can get because it's one on one.
I've done this hundreds of times. You know, somebody told me like this once, it was burn hardest for me, you know, a founder PO said, think of it like this. You're a great athlete, Corey, and you may be a basketball star, whatever it was, and go, Hey, let's go. I'll go golfing. You've never golfed before in your life, but you're a great athlete.
One of the best. And you go, you know what? I'm feeling [00:18:00] pretty good today. I'm going to rent some clubs. I'm taking on the club pro and I'm going to bet my business, my income stream, and pretty much 85 percent of my net worth on this one round to go. Well, he's played that course thousands of times. He's a professional.
He's taking lessons. He's taught lessons. This is all that he's done for 30 years. And you're going to pick up a club for the first time. I think you're going to win. And that's what happens with business owners is that they go, this is my baby. I'm emotionally tied to this. It's my biggest financial transaction in my life.
And just because I know my business better than anybody else, running a business and running your specific business is completely different. That's selling the business, especially when it's your own business, when you're solely emotionally tied up in this and buyers prey on that, that, you know, no buyer gets a bonus for paying higher than what they can or should.
And so they tell you exactly what they want to hear. Oh, Corey, yes, you've got a great business. Yeah. We're going to take care of you. Hey, when's. [00:19:00] You know, what do you want to do? Oh, I want to buy a boat down in Florida. I'm going to get a place in color. Oh, yeah, we should talk about that now in it and they're getting you picturing you spending the money already and They might tell you what you want to hear verbally They might even tell you what you want to hear in an offer and then going okay now We've got night once they sign the letter of intent That's all we want to get to is that signed letter 10 is in the letter 10.
It's all non binding except for the cop shale agreement and the exclusivity agreement. And now they've got you locked in for 90 days. Now it's one on one. You can't bring in an investment banker because they can't do anything for you anymore. You've already set the deal on the table. You can't bring in any other buyers and now they've got you.
And what I've seen groups do, and some are very ethical. There's a lot that aren't just like any industry. They'll ask for stuff, and ask for stuff, and grind you, and grind you, and grind you. Oh, we'll get this done in 60 days, no problem. Six months later, they're still asking you questions and it said, Oh yeah, we told you you'd pay a five multiple or a six multiple, but you're even, it was two five when we, [00:20:00] what you told us and through the QV and everything else, now we're seeing this dip and now it's 2 million.
So we're not going to pay five times two and a half, but five times two or one eight or whatever it might be. And you're in that, and this is at the 11th hour. Now you've just spent six months. Do you want to have all this information? Do you probably miss key things with your family? Your business is going off because your eyes off the ball, you're emotionally drained and they know they've got you.
And, I've got a couple of examples. You know, like one was a financial advisor that tried to bring us in. They said, Hey, I, my client just got a call from a finance, from a private group that's rolling up an industry. Who's in the jewelry manufacturing space. So he's doing about 23 million in sales, about 6 million to the bottom line.
Obviously you've got 7 million to the bottom, 7 million normalized EBITDA. And, so we did some original, just some high level research and we thought, Oh man, it's probably at least a seven times with those kinds of margins, space is rolling up. So it's seven types, seven 49 is to call it 50 million company.
We tried to get a meeting, a call set up 10 days later, the [00:21:00] financial advisor finally calls the bank, goes, Hey, I couldn't get all my client. I now found out why in 10 days, he went from a phone call from a buyer that's interested to a signed letter intent. And I said, there's nothing I could do. And I said, tell me he got a good deal.
I knew he did, but I was just curious. I go, well, I said, I can't tell you the number, but he goes, the multiple was about a 4. 2. So four times seven, 28, but we were talking 50 and we, and that was market. We typically, we get above market when you bring all these buyers together, competing against each other.
So he left a lot, 20 million on the table only because he was tired and burnt out and just wanted to be done. And that's it. It closed at the number he started. Once you get 11 or 10, that's only going down in Dell. It's never going to go up no matter what you do. That's right. And so we've had another deal just last quarter, that we worked on.
They had, we have been introduced by the attorney and, got in, we'd met with them and they said, yeah, we think if we work with an investor maker, we're going to work with you [00:22:00] guys. And of course that was on a Friday and Monday. Nope. We can do it ourselves. We don't need anybody. Well, they got an offer from the band because they said, look, we've got the two biggest firms in our industry, both interested in our business.
And we think we know that they know us, we can work the deal. So I said, what if I can, I'm here as a resource, if you need me, the first offer came in 25 million. Yeah. And I knew it was low. And I said, look, at least let us do our estimate of value just to help them understand what we see as market and why the other offer was coming in.
And we did that. We thought 43 was the 43 and change was the number. We thought that was market. Well, the other offer came in at 36, but it was 26 million at close right next to the other one at 25 million at close. Five in an earn up, which they may or may not get in five in a seller note. I said, will you please let us go to market?
I promise you, we will more than pay for our fee. They finally allowed us to go. And again, on a Friday, they said, yes, we go to a limited group on Monday. They said, you get one buyer, one buyer to go to. I'm like, [00:23:00] okay, we're going to yell. So with our process, we created urgency. We create scarcity, even with just that one buyer, because they didn't know how many buyers were going to have to say, look, there's a market out there.
And we created offensive moves. Why the shoot also defensive moves of, Hey, if you don't do this, Guess who's coming in and gonna knock on your back door and make your life hell for the next several years while you're trying to build this thing up and eventually sell it because it was a strategic play backed by private equity.
And long story short, in 45 days, now this is much quicker than most deals get done. 45 days.
Corey Kupfer: Don't create unrealistic expectations for most deals.
Scott Bushkie: This is the weight loss guy. He's 500 pounds and he's always got a six pack of abs. Results are not typical every time, you In 45 days, 25 and 36, we got a deal done at $51.3 million.
Nice. Nice. And that same group went to them a year earlier, said, we wanna buy your company, Corey. We love your company. But our private equity firm mandated we could not pay more than a five multiple. Guess what? They paid an eight and a quarter multiple because they knew they needed the deal. And that's the [00:24:00] kind of stuff that it's amazing how many times that I've got, story after story, small companies, big companies that if someone, and we actually put together a process in the last about two, two and a half years, just catered to these unsolicited offers.
Cause there's so many, there's so many more buyers than there are sellers. And there's, you know, record amount of money out there, 2. 5 trillion globally, all looking to buy companies. That's what they're every day they wake up to buy companies. And so we actually put together this process. And every, we talked to, it was like scared, like, Man, Cory's been, you know, this buyer isn't bad.
It's not great. It's not bad. Should I sell? Should I sell? What if, you know, I don't want to scare if you guys bring other buyers, you're gonna scare off Cory. With our process, the way we run it, we keep Cory, the buyer, warm, the lowball offer, warm. Not once have we lost that buyer. Again, anything can happen.
Never once have we lost it. Not once since we've done those deals has that buyer been the buyer that ultimately buys the company because they know, Hey, we're going to sit around because we can get it for our price. It's a good deal for us. Oh, you're going [00:25:00] to get market or above market. Yeah. We're all to get the next sucker.
We're done. We're, you know, we're moving on. So. So there is, you know, so if you're a business owner and you get somebody that's interested, you know, talk to an investment banker, cause there's, you know, there's so many things you could do. And if we ever get one of where we say, Hey, the market's 43 and you offer 45, take it.
We can't do better. Cause the last thing we want to do is tell you how to take the 42 million offer and then bring an offer for 35. We look like morons and that word gets out, you know, so, but it's, or if you're a trusted advisor and you hear your client talking about. Which they, I'm almost anybody doing, you know, five to 10 billion in sales is getting calls.
And because there's just so limited good quality companies, talk to an investment maker, get some advice, understand what the market is. And then typically by bringing other party, other buyers to the table, you create that urgency, that scarcity. And that's what we do very well at cornerstone to drive up those values.
Corey Kupfer: Yeah, you know and you raised the biggest thing I was going to raise it. You beat me to it on, because I hear that all the time, right? You know, because obviously [00:26:00] as an attorney, you know, we do a huge amount of M& A, you know, I'll get that, from client, they'll say, Oh, I got this, great offer from, you know, whatever.
I'm solicited and I'll say, well, how do you know it's a great offer? And almost always they, I mean, they're obviously some of my most specific clients who may have been in the market, lucky, whatever, but for a lot of these folks, they're like, yeah. They don't know what the market is, they think it's a great offer only because it's more money than they ever thought, you know, that it's, that they would give to the company.
Doesn't mean that the market's not twice that, or 50 percent higher, 20 percent higher, or whatever it is, right? They just, it seems like a lot of money to them, especially if they, somebody who, started from, you know, from nothing or never, like, is successful beyond whatever they imagined when they were growing up, right?
So, and the first, and I'll say to them, listen, you know, it's great. You have this offer. That's great. They're stalking us. Right. But you should get a professional involved, right. You should get, and have them run a process and the first thing that they'll say to me is, well, I'm afraid I'll lose this buyer.
Right. And, you know, you already answered it, but I really want to highlight this because, you know, you said, and [00:27:00] again, best, performance doesn't guarantee future results. We guess that. Right. But you've, you haven't lost that buyer and they haven't ended up to be the alt, you know, the ultimate buyer.
And you're right. People have to understand that. These professional buyers, and again, some of them are very, very good. They're not being unethical per se, they're just looking for the best deal.
Scott Bushkie: Yeah, if you're going to buy a house or a car, you're not going to get, well, you know, you want 20, you want 200, 000, I'll pay 120, 000 for the car cause, cause you look like you're a really nice guy and I want to be.
Corey Kupfer: That's right. Everybody wants to get the best deal. And, you know, and these professional buyers have corporate development people whose job it is to do exactly what you're talking about and, and find good deals for the company. And they might be. They might be very ethical.
Otherwise, it might be a good place to work. They may honor their word, but they're looking to get the best economic deal that they can, not even to mention the ones who are unscrupulous. But, it's like, you know, looking for an off market real estate, you know, on the buy side, you're always looking for the off market deal, right?
Scott Bushkie: It sounds like you don't want to be that off market deal.
Corey Kupfer: Right, exactly. So I think that's, I think that's really important and not [00:28:00] to be in that scarcity mentality because the truth is, you know, even if you were to lose that buyer, the truth is, most of the time they, you know, with the right professional helping you, they will stay in the process.
If you get the right professional involved, even if you did lose that buyer, there are other buyers out there that are gonna pay more anyway. So, you know,
Scott Bushkie: buyers, finding buyers is not the problem right now. There's buyers and there's money. And, it's just bringing the right buyers to the table and presenting the right picture for your company, putting that company in the best possible light, not just being reactive, reactive, reactive.
Being proactive, put the whole package together. So now people know that, Hey you're working with a professional. You got your stuff together. It's much better than piecemeal and a bunch of stuff. And they're just, you know, a couple of years of my QuickBooks or whatever else it is, and what do you think it's worth?
And, oh my gosh, I'm so excited. I can't believe somebody thinks my company's worth something, you know? And it is, it's your baby. So it's like, oh, you've got such a cute baby, you know? Yes. You should be flattered by that, but at the end of the day, you get one chance. To sell, to sell your business, you get one chance.
There's like Delft. There's no Mulligan. They tried [00:29:00] again. It's, you get one chance and this is when we went to the film, we had somebody we interviewed and the woman's like, you can, you can make a wrong hire. You can lose a customer. You know, you can miss, you know, have a terrible sales presentation.
You can all recover from all those different things. This is the one thing you can't F up because you get one chance. And after that it's done, and, and that's what we see. Some business owners try to do is like, well, I'll try it myself. And then if it doesn't work at all, call Corey, the investment banker.
Well, you put a price out there. Number one, now you set the ceiling. You burned a bunch of buyers by asking too much or whatever it is. And now it's like, now you're damaged goods. And even a really good investmaker might have trouble recreating that, that marketplace. So there is no, there is a harm to you going out by yourself.
It's like, Hey, let's bring all the buyers together. Let's bring the right team together. Yeah. And that's all, you know, work in the client's best interest. And the craziest one I've ever heard. And I was not a part of this, but I just was talking with a financial advisor, a month ago. He said his client sold their marketing agency, [00:30:00] by the way, there's a digital marketing agency and he must've had something special about it because he didn't know it.
So he was excited. He sold for 10 million. He was like, I got no assets. I just sold for 10 million. This is amazing. One year later, 365 days later. Private equity group sold it for $150 million. Right. I would just throw up, I'm sure they didn't think about that.
Corey Kupfer: I'm sure. Even though if they added value, I'm sure they didn't add 140,
Scott Bushkie: did not add 140 billion value.
No. So they knew something that was scalable or they could take it somewhere that he or she had no clue about. That if they would have worked with the investment maker could have possibly uncovered that, Hey, you've got something special here. Or again, let's bring some buyers together. Cause obviously that company would have paid 75 million and still thought they got a good deal.
If they sold it for 150 a year later. I mean, think about that. It's like, Hey, I'm done. I've, I'm getting out of the industry. I'm sitting on an Island after that deal, from a private equity standpoint. So yeah, these people are [00:31:00] all, you know, like you said, there's some bad actors in every industry.
But there's a lot of good buyers, but again, their job is still to get the best price for their company or their P firm or whatever else it is. And, they all look the same. A lot of them all sound the same. You know, they're all going to say good things. They're not going to act like jerks in the courting phase.
After that LOI is signed, it gets a little bit more interesting in a lot of cases or after the deal. And that's where we just try to help level that playing field by bringing that knowledge and expertise. That they get to go through and that's where we work. Most times we work with his first time sellers, you know, very, very sophisticated, great people, great business owners, but first time sellers that are typically, this is their retirement play it in most cases.
And, And retirement could be X, 11 in Wisconsin and shoveling snow, or it could be Y, you know, down in Florida, wherever else they want to go and enjoying the, with the winters in some place warm. So that's what we get excited about is, you know, kind of really changing people's lives is, as a, as a company here.
[00:32:00]
Corey Kupfer: Going back to the comment you made about, that there is a cost of. Like, you don't really get a do over in this industry, and there's a cost to do it wrong in the first place, whether it's trying to do it on your own or working with a real professional. I want to elaborate on that as well, because there's a couple of other things that happened in addition to the fact that you burned the bio pool and, you know, things like that.
First of all, there's a risk word gets out, so now you have the key to understand, and other people know you're in play, right? Also, word gets out too early to your employees and you start losing, I've seen, you know, play a company, you start losing talent because people get worried, right? If you don't have an internal communication plan on a definitive, direction, you're going in a deal or whatever, and a way that you're going to incentivize those boys to stay on and show them how it's going to be good for them after the deal.
We all know that people in general, and certainly people, I mean, one of the things is entrepreneurs. We tend to be better at is dealing with uncertainty. But you know, employees are less good at that. And, you know, when they think things might be in play, but there's no clear [00:33:00] direction and certainly if there's a failed attempt that they're that they're available or you know, you have risk of losing talent.
I mean, there's so many downsides to doing this wrong. So I really want to, just reemphasize the point you made and bring a couple of points around that.
Scott Bushkie: Yeah. Corey, you are so right because ironically, if Copperjell gets breached, It's not from the investment banker. It's typically not from the buyers.
Cause what we'll say, if you've got a good competitor or, private equity knows that they can't reach it because if they do, they get blackballed and this is how they make their living. So they're usually pretty good about it. Companies are pretty good mouth, but if you've got an unethical, Competitor and they deal unethically.
Well, why would you think they're going to do anything different in this process? So we usually black will list them and keep them out of the process or we took the very end and go, okay, we've got these offers. Do we really need them to come in or not? And, but most times it comes from the seller. It, you know, the seller talk, you know, well, don't say anything.
And then they go to the bar after here and go have dinner with their buddy going, where were you at? Oh, I was just at [00:34:00] cornerstones office. I'm selling my company. Well, don't say anything. Well, okay. Then he opened, tell their spouse and, or, you know, the clients do it themselves. The business owner had a certain routine he or she had, for the last several years.
And all of a sudden now it's different and they're asking for weird information. Why are competitors coming to our office? Or, you know, and it's just like, people are only so gullible for so long and yes, if the word gets out, the risk of employees leaving, you know, and for whatever reason, again, in the low middle market.
The vast majority of employees keep their jobs because it's so hard to find employees. That's part of what you're buying is those trained, talented employees. But again, you're right. Employees think, Oh, there's something going on. I'm going to lose my job for sure. We're all going to lose our jobs because they see the big picture when these mega, billion dollar deals get done.
And Oh my gosh, 20, 000 people lost their jobs. Well, that was 2 percent of the workforce, but that's what they see. And, or. Hey, you know, my competitors also start poaching our clients. Well, [00:35:00] I've, I'm Corey's been my guy. Well, I heard Corey selling. He's having to be around for another six months. Well, if that's the case, yeah.
Why don't I give you a shot? You know? And, so competitors, customers, it just goes right down the line that nothing good happens. If the word gets out that you're selling like zero, so you want to keep it confidential. We can talk about when you start to tell some people on your team, your leadership team, or even a couple of people, but you typically do not want to tell the shop floor to manufacturing space or whatever it might be.
Cause again, people's minds go to now to, Oh my gosh, this is a good, exciting. I get a, you know, a raise or it's all negative. I'm going to lose my job or they're going to cut my pay or they're going to trash my benefits or whatever it is, which is typically not the case, but that's. Perception is reality and that's what happens.
So yeah, we, everything we do, there's always a confidentiality tied to it. So we're even with people are going, I just email me, call me those email me, you know, at my work email. No, let's set up a personal email for you. I don't have one. We'll set one up for you. We'll show you how [00:36:00] to log in.
We're going to call you on your cell phone. And if someone's there, it's okay to say, Hey, I'm busy right now. Can I call you back? Versus. Trying to talk and code and everything else. So we key them up for all the things that could happen. Or if someone asks you, are you selling your business? Well, if you're not selling, you go, what are you talking about?
Yeah. Everything's for sale. You want to buy it? But when you are going through that process, all of a sudden they say that it's like deer headlights. They don't know what to say. So we, again, it's just some of the training and things that we can do to help the business owner get through all of those different stages as best as possible.
Corey Kupfer: Listen, Scott, we could talk for hours, you and I, because we've both been doing this for decades. We love talking deals. We love talking about it. But I only have time to hit one more topic and we're not going to be able to do it justice, you know, really, before I ask you my final two questions, but let's hit it a little bit.
So, right now, in terms of what you're seeing out there, I mean, and, I don't know if there's any particular industries you're focusing, seeing that are, you know, that are, more active. I don't know, if we're seeing obviously PE buyers, [00:37:00] strategic buyers, owner operators, for, you know, they're all different kind of buyers.
I don't know if there's more activity. We obviously have. Some cost of capital, headwinds and things like that. Just, hit, you know, and again we don't have a lot of time, so I'm not going to cover the whole thing, but, any highlights or trends or things that, you know, that you're seeing that would be interesting, in terms of what's going on in the marketplace, and we're recording this in late February of, 2024.
Scott Bushkie: Yeah, I would say, the markets coming back, you know, we obviously it was record, you know, 2020 was what it was, but by July, the market was, every market was warming up and it was crazy. All of 21 was the craziest year our record year after 21 years of our existence in 22, the first half of 22 kind of still had some horsepower and then we just saw things really slow down and the second half of 22.
Rolled into 23 and ironically almost till like September and then things a fourth quarter for us in talking, we, we had another company called course in the national alliance. We have 27 other M& A firms that all work underneath the same alliance. So we get to talk with people over the country and internationally and, Canada seemed to do well for whatever Canada's doing great.
But the United [00:38:00] States, they, they really, things really slowed down the second half of, 22 and most of 23. And then now things are picking back up again and we're seeing a lot, you know, a lot of roll ups. So. Where we play in this little bit of market space, that's actually where we see the most activity right now, because as you talked about with higher interest rates and just credit tightening, the bigger deals are usually the word of the banks want to do the bigger deals.
They're actually going, Nope, that's, there's too much risk in one deal doing deals. It's actually the low, smaller deal. So if you're a five to 50 million revenue company and you're doing one to five, one to 10 and even down, there is a ton of interest for your companies because the strategic buyers are looking there.
The price, especially the private companies, but these private equity firms. It might do one or two platforms, which are a larger company. But then for that one platform, they might do five, 10, 15 add on acquisitions. I mean, that's all in the low middle market space. So like we just did that deal, that 51 million deal.
That was their 13th add on [00:39:00] in four years that they only did one platform, you know? And so I think that the add on that add on space, this little bit of market space is going to have legs. For quite some time, if interest rates drop in March and April, three times or whatever, they say this in 2024, that's going to throw us a fuel, I think on the fire, because then people, okay, we're bad banks.
So, it just, please come down. Cost capital comes down a debt a little bit and it's, it all will work itself out, but manufacturing has been strong, but our distribution construction, we just did the deal and, road safety and payment marketing because of the 1. 2 trillion infrastructure package that got passed by the fed, you know, so people like, Hey, we're going to get our piece of that for the next three to five years as that comes through.
So as people get in on that, anything tied to the boomer. So, a lot of, the professional services and physical therapy and hospice and those types of things continue to roll up, you know, it used to be just the dental practices were the big rollup going out because just cause you're a good dentist, it's me a good business owner.
Well, now they've figured out that. [00:40:00] That can be in any professional services. And what's probably the most unique in the last five years is 10 years ago, you couldn't give away an HVAC or a plumbing company or roofing company. Now those things, just like the dental office, just because you're a really good roofer doesn't mean you're really good business owner.
So now the roofing companies and the HVAC and the plumbing and the landscaping companies, those are all rolling up like crazy right now. So that would be. There's a lot of spots. I would say trucking is one industry that's kind of got beat up pretty bad. But for the most part, you know, it's been pretty good across the board.
Corey Kupfer: Love it. Love it. So, my, before I ask my final question, I want to give you an opportunity to talk about how people can find out more about you. And I know we didn't really have time to, you mentioned the movie, you mentioned the book, we didn't get time to really delve into that. Use this opportunity to tell us a little bit about those things as well and people, you know, where people can find those resources.
Scott Bushkie: Yeah. So what we created was, you know, for the business owner, you know, finish strong, sell your business on your terms. And not only the book, it's simple, 130, 140 page book, but I've seen a lot of [00:41:00] entrepreneurs. I'm one of them that will read a book, ton of great ideas that put on the shelf and never bled a one of them.
Right. So here you read it. Read a chapter and then you go in here and do a couple of exercises. It might take you five, 10 minutes, but what it does is it helps that business owner start to take real steps and just learning, you know, what are all my exit options? What are the pros and cons of each of those?
What, maybe my top two or three, geez, I didn't know that was a possibility. What do I want out of a sale? You know, it's funny because everybody talks about value, but then when you really look at it going, it's like the tip of the iceberg. You know, it's value, but then underneath what's under the water, protecting my employees, my legacy, me sticking around for six months or sticking around for five years, all of these other things that come into what makes a good deal for you.
And because there's no right or wrong answer, but it's not always just about value. So helping people reflect on. What that is, because again, that's where the people that even sell, you know, Bo Burnham, we worked with him in the film. He says, so many people [00:42:00] still have cellular remorse, a lot of times they're just going after the buck, and they don't think about, oh yeah, I got top dollar, but My employee team got wiped out after a year or whatever it might be, or it's different things.
So it's a holistic approach. So the book you can find on Amazon. Again, it's fit as strong and you can't bundle them. So it's fit as strong the book and then fit as strong with the workbook. Sell your business on your terms. The film, you can go see the film, trailer at www. ma for murders and acquisition M a decade.
.Com and you can reach, our website is, www dat cornerstone, and then a hash or a dash or a business.com. So cornerstone-business.com. And if you want to call me, office here, (920) 436-9890. Get everything's confidential. Our goal is to educate business owners and to help them just understand so they can make a well informed decision on what it is, and we work.
With a lot of financial advisors at all, as well as the trusted advisor. So a lot of times it's the CPA, the attorney, the wealth management person. [00:43:00] And that's really why we created these books is I've been working with CPAs and financial advisors for now two decades. And we found that so many of them are great at what they do, but they're scared to death to have this conversation because they don't know all the answers.
So we've created this book and workbook that they buy and they give to their clients and potential clients to help start that conversation and just build that goodwill with the client and create some value. So. That's kind of who we are. We work all over the country, so that's not a problem. And, we'd love to, help anybody else that we can.
Corey Kupfer: I love it. So folks, if you missed any, all those amazing resources, they'll be in the show notes as well. Scott, my final question on the podcast is always about my highest value in life, which is freedom. And for me, that means everything, from freedom around the world, from people, from oppression to, why I've been an entrepreneur for decades and haven't had a boss.
What does freedom mean to you and how does it impact your life and business?
Scott Bushkie: That's a great question. I, I think it is it's probably twofold. One is that, that freedom is that, you know, two years of my life out of 49, almost 50, I was corporate [00:44:00] America. I just not net made for me. I, or I was a made for, I should say.
So I, having the freedom of do what I want to do, but really the freedom or the gift that we get to give to business owners is probably, I love helping people and seeing a smile on their face and going, you know, at the closing table I, with tears, big tough guys going. I don't know how you did what you did you and your team, but I couldn't have done this without you You've changed my life and my kids lives and my community and my church whatever it is, that's what gets me up early in the morning and to be able to Tell people truly get to their next best chapter of their life We say, you know exits always talk about oh, it's an exit Where at the end we're just gonna sit on a rocking chair now and i've done We say exits are just the beginning now You have the gift we hope to give you the gift of both time and money And that people to your point about your freedom most people either have A bunch of time, but no money to do anything or a bunch of money, but they're in that rat race, just running, running, running, running.
We get them out of that rat race. And I think be able to spend the time and yes, I get to help people, but then also get to do things like this. I get to [00:45:00] coach all three of my kids. I love coaching basketball. So it's, I've got, nine games and three tournaments this weekend. So I will have that. That's why I'm going to do it later in the week.
Cause I won't have a voice on Monday, Tuesday, Wednesday. So, I'm glad we got this in on a Friday where I still have a voice and, and just living life to its fullest. So, I appreciate your time today, Corey.
Corey Kupfer: I love it. Scott Bushkie, thanks for being such a great guest on the The Dealquest Podcast.
Scott Bushkie: Thank you. Have a great day.
