13 Concepts We Can Learn About Value Creation From How2Exit's Interview W/ Jonathan Wilson CEO - Dubb Value Creation - Watch here
Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron
Concept 1: M&A is Fascinating Human Psychology
Mergers and acquisitions, commonly referred to as M&A, is a fascinating field that delves into the human psychology behind business decisions. In a podcast interview with Jonathan Wilson, the CEO and Chief Value Creator at Dove Value Creation, he shares his journey into the M&A space and how he became enamored with the emotional and psychological aspects of the field.
Wilson's background is in chemical engineering, a degree that he admits did not align with his true passions. However, he landed an internship with a gas company, which he found unfulfilling. He then went on to work for Accenture, where he started his career in technical management. It was during his time at Countrywide Financial, where he was the VP of strategy for a wholesale lending group, that he had his first taste of M&A. This experience piqued his interest in the field, and he eventually went on to work for Deloitte for three and a half years.
What makes M&A so fascinating to Wilson is the human psychology behind it. He saw firsthand how emotions can play a significant role in business decisions, especially during the M&A process. He notes that understanding why people do certain things, such as why they buy or sell a business, is still a conundrum. In technology, if something is broken, it's usually attributed to the person who wrote the code or the person sitting behind the keyboard. However, in M&A, there are often multiple factors at play, including emotions, personal relationships, and business strategy.
Wilson's experience in M&A has taught him that it's not just about the numbers and financials. While those are essential aspects of the process, understanding the human psychology behind the decisions is equally important. He notes that M&A is not just a transaction; it's a journey that involves people and their emotions. As such, it's essential to approach the process with empathy and understanding.
In conclusion, M&A is a fascinating field that delves into the human psychology behind business decisions. Jonathan Wilson's journey into the space has taught him that understanding the emotions and motivations behind these decisions is crucial. While the financials are important, it's equally important to approach the process with empathy and understanding. M&A is not just a transaction; it's a journey that involves people and their emotions.
Concept 2: M&A and Strategy Expertise
Wilson has a background working for Deloitte and Grant Thornton, where he gained experience working on deals worth billions of dollars. He now runs his own company, Dub Value Creation, where he helps small businesses grow and execute successful M&A deals.
Wilson emphasizes the importance of understanding the human psychology behind business decisions. He believes that empathy and understanding are crucial when approaching M&A deals, as it is not just a transaction, but a journey that involves people and their emotions. While financials are important, Wilson stresses the need to focus on the culture of the company being acquired and ensuring that it is a good fit for the acquiring company.
Wilson also offers a growth-through-acquisition model as part of his coaching and strategy creation and execution services. He helps small businesses grow by acquiring smaller shops and molding them into something that can help develop a one plus one equals three content.
Wilson's journey into the M&A space has taught him that understanding the emotions and motivations behind business decisions is crucial. He believes that M&A is a fascinating field that delves into the human psychology behind business decisions. While the financials are important, it's equally important to approach the process with empathy and understanding.
In conclusion, Jonathan Wilson's expertise in M&A and strategy highlights the importance of understanding the human psychology behind business decisions. His approach emphasizes empathy and understanding, as M&A deals are not just transactions, but journeys that involve people and their emotions. Wilson's growth through acquisition model offers small businesses a way to grow and develop into successful companies. Overall, Wilson's journey into the M&A space has taught him that understanding the emotions and motivations behind business decisions is crucial, and this approach is necessary for successful M&A deals.
Concept 4: Document Your Strategic Plan
One key takeaway from Jonathan Wilson's podcast on M&A and strategy is the importance of documenting your strategic plan. Wilson emphasizes that most companies do not have a documented strategic plan, which is the first step in identifying acquisition targets and understanding the gaps in your business. Without a clear plan, it is difficult to know where you want to grow your company and how many acquisitions you want to make.
Wilson suggests creating a three-year roadmap that outlines your goals and the timing of your acquisitions. This roadmap should be based on a documented strategic plan that identifies the areas where you want to grow your business. By creating a clear roadmap, you can ensure that you are on track to meet your goals and that you are ready to consider being sold or exiting the business when the time comes.
Additionally, Wilson emphasizes the importance of having minimum criteria for your decision-making. This means having a clear understanding of what you are looking for in an acquisition target and what your goals are for the transaction. By having these criteria in place, you can ensure that you are making informed decisions that are in line with your overall strategic plan.
Overall, Wilson's approach to M&A and strategy highlights the importance of documenting your strategic plan. Without a clear plan in place, it is difficult to know where you want to grow your business and how you will achieve your goals. By creating a clear roadmap and having minimum criteria for your decision-making, you can ensure that you are making informed decisions that are in line with your overall strategic plan.
Concept 5: Don't Sell If Unnecessary
One of the key takeaways from Wilson's podcast is the advice to not sell your business if it is unnecessary. While it may be tempting to sell in a tough economy or because you are ready to retire, Wilson argues that there may be other factors to consider before making such a big decision.
Wilson believes that there is always someone winning in every scenario and in every market. Therefore, it is important to find a way to hustle and look for your win scenario. This means putting in the effort to find solutions and opportunities rather than focusing on the negative aspects of the market.
Furthermore, Wilson notes that this is not the same economy as in 2008, where people were struggling to find their next meal. Therefore, business owners should not be as freaked out about the economy and consider other factors before deciding to sell. It is important to ask yourself why you want to sell and if it is for the right reasons.
Wilson also highlights the importance of not tying your entire identity around your business. Many business owners struggle with what they will do next after selling their business, which can lead to last-second reluctance and the deal falling through. Therefore, it is important to have a clear plan in place for what you will do after selling your business and not make the decision to sell purely based on fear or uncertainty.
In conclusion, Wilson's advice to not sell if unnecessary highlights the importance of considering all factors before making a big decision. It is important to have a clear strategic plan in place and to not tie your entire identity around your business. By doing so, you can ensure that you are making informed decisions that align with your overall goals and vision.
Concept 6: Prepare For Post-Exit Life
However, preparing for post-exit life is equally important as making the decision to sell. In a podcast, a business owner discussed how he struggled with the idea of selling his business and the impact it would have on his future. He initially believed that the sign outside his business was a sticking point and refused to sell without it. However, he later realized that his uncertainty about his future plans was the real issue.
To avoid this kind of uncertainty, it is crucial to prepare for post-exit life. This preparation includes working with a tax advisor to consider the generational wealth that may result from the exit, as well as the cost of future vacations and lifestyle choices. By imagining different scenarios, business owners can begin to picture what their life will look like after the sale, and this can be a motivating factor in the decision-making process.
Another important aspect of preparing for post-exit life is to have a clear understanding of what you want to do next. This may involve pursuing a new business venture, investing in other businesses, or taking time off to travel or spend time with family. It is essential to have a plan in place to ensure a smooth transition from the current business to the next phase of life.
In addition to having a plan, it is also important to maintain a healthy mindset during the transition. It can be challenging to let go of a business that you have built from the ground up, but it is important to remember that the sale is not a reflection of your worth or identity. By focusing on the positive aspects of the sale and the opportunities that lie ahead, business owners can avoid feelings of regret or loss.
In conclusion, preparing for post-exit life is an essential part of the decision-making process for business owners. By working with a tax advisor, imagining different scenarios, having a clear plan in place, and maintaining a healthy mindset, business owners can ensure a smooth transition from their current business to the next phase of life. It is important to remember that the sale of a business does not define your worth or identity, and by keeping a positive outlook, you can embrace the opportunities that lie ahead.
Concept 7: Higher Slowly, Fire Fast
However, before reaching the post-exit phase, business owners must focus on building a strong team and company culture. One key aspect of this is the "higher slowly, fire fast" mentality. This phrase emphasizes the importance of taking time to carefully select and onboard new employees, while also being willing to quickly let go of toxic or underperforming team members.
The podcast highlights the story of a business owner who failed to recognize the value of his office manager until after she was let go. Her absence caused the company to fall apart, as no one knew how to handle tasks that she had previously managed. This illustrates the importance of recognizing the contributions of all team members, even those in seemingly minor roles.
The podcast also discusses the challenge of letting go of toxic employees. While it may be difficult to part ways with someone who is familiar with the job, it is crucial to prioritize the well-being and productivity of the rest of the team. The "higher slowly, fire fast" mentality reminds business owners to be strategic in their hiring and firing decisions, and to prioritize the overall health of the company.
In conclusion, the "higher slowly, fire fast" mentality is a crucial aspect of building a strong team and company culture. By taking time to carefully select new employees and being willing to quickly let go of toxic team members, business owners can create a productive and positive work environment. This, in turn, can lead to a successful post-exit phase and a smooth transition to the next phase of life.
Concept 8: Culture Fit Is Crucial
Culture fit is a crucial aspect of any successful business, especially when it comes to mergers and acquisitions. In a recent podcast, the importance of culture fit was discussed in relation to the acquisition process. The podcast highlighted the challenges that come with acquiring a new company and integrating it into an existing organization. While getting a business to say yes to an acquisition is one thing, ensuring that it functions well within the acquiring organization is another.
One of the biggest challenges in the acquisition process is ensuring that the culture of the acquired company fits well with the culture of the acquiring organization. This is because culture is a key driver of employee behavior and performance. If the cultures of the two companies are vastly different, it can lead to a clash of values, which can ultimately result in a loss of productivity and revenue.
To ensure a successful integration, it is important to take the time to carefully select new employees and be willing to quickly let go of toxic team members. This "higher slowly, fire fast" mentality is a crucial aspect of building a strong team and company culture. By taking the time to carefully select new employees, business owners can ensure that they are bringing in individuals who share the same values and work ethic as the existing team. This, in turn, can lead to a more productive and positive work environment.
However, even with careful selection, there may still be instances where a team member is not a good fit for the company culture. In these cases, it is important to be willing to quickly let go of the individual. This may seem harsh, but it is necessary to maintain a positive work environment and ensure the success of the company.
In conclusion, culture fit is crucial in the acquisition process. It is important to take the time to carefully select new employees and be willing to quickly let go of toxic team members. By doing so, business owners can create a productive and positive work environment, which can lead to a successful post-exit phase and a smooth transition to the next phase of life.
Concept 9: Focus On Long-Term Fit
The podcast emphasizes the importance of focusing on long-term fit when it comes to mergers and acquisitions. The speakers discuss how M&A advisory and consulting differ from business brokers, as they are not solely focused on completing a transaction, but also on ensuring that it is the right fit for both parties involved.
The speakers note that it is essential to consider the strategy of the M&A process from both the buy and sell side. This involves targeting the right companies or buyers and assessing the potential synergies that could be gained from the transaction. It also requires a thorough evaluation of the company's current systems and processes to determine if changes need to be made to align with the market.
Furthermore, the podcast stresses the importance of having a checklist and routine to regularly assess how close the company is to achieving its exit goals. This includes evaluating the management team, customer relationships, and the owner's involvement in the business. The speakers note that if customers are too familiar with the owner, it may not be the right time to sell.
One example given in the podcast is a business owner who took five years to prepare for a sale. During this time, he ensured that customers were familiar with the CEO and not himself, demonstrating the importance of establishing a strong management team and culture fit.
In conclusion, the podcast highlights the significance of focusing on long-term fit in the M&A process. It is crucial to carefully select potential buyers or companies and evaluate the potential synergies and necessary changes to align with the market. Additionally, creating a checklist and routine to assess the company's readiness for exit is essential. By focusing on long-term fit, business owners can ensure a successful post-exit phase and a smooth transition to the next phase of life.
Concept 10: Exiting a Business is Possible
Moreover, the podcast emphasizes that exiting a business is possible, but it requires careful planning and execution. The speaker shares examples of successful exits, where business owners were able to engineer a less stressful environment and move to a drier climate to deal with their health. The speaker also highlights the importance of having an efficient management team in place, which can lead to a smooth exit and a written check.
The podcast also sheds light on the current market conditions and how they impact the valuation of businesses. The speaker notes that multiples are not there for companies in the middle of the pack or lower, and buyers are being very picky about how much money they spend. However, the speaker believes that there are still opportunities to sell to private equity firms or strategic acquirers, particularly in recession-proof industries such as veterinarian services and products.
Overall, the podcast provides valuable insights into the M&A process and highlights the importance of careful planning, long-term fit, and efficient management teams in achieving a successful exit. It also emphasizes that exiting a business is possible, even in challenging market conditions, with the right strategy and execution.
Concept 11: Safe Valuations For Top Performers
One of the key takeaways from the podcast is the importance of safe valuations for top performers. The speaker notes that in the current market, valuations are leaning towards safe money, meaning that buyers are looking for companies with great operations, systems, and processes, as well as recurring revenue. These companies are seen as the best value, with steady contracts and revenue streams that make them less risky investments.
The speaker notes that for A players, the valuations are still out there, but the second there is a chink in their armor, the valuations drop. Buyers are looking for the safest bets possible, and are taking fewer risks in a down economy. This means that medium-run companies with chinks in their armor are at a higher risk of losing value, especially if the economy continues to decline.
However, the speaker notes that there is still a lot of money sitting on the sidelines waiting to be deployed. The trick is that investors need to deploy their funds within a certain time period, and they are under pressure to get a return on investment. This means that they are looking for safe bets that will give them the best chance of winning.
One of the challenges in the current market is the dead space between $5 million and $25 million, where there are fewer buyers and less competition. The SBA will go up to $5 million, but private equity firms typically only invest in companies with valuations above $25 million. This creates a gap in the market that requires cash or lenders lined up to pull off a successful sale.
The speaker notes that the SBA could make some changes to address this gap, such as doubling or tripling their lending power. This would allow them to provide more support to companies in this dead space and help them find buyers. The government guarantee on SBA loans is also important to note, as it provides a safety net for buyers and lenders in case of default.
In conclusion, the podcast highlights the importance of safe valuations for top performers in the current market. Buyers are looking for companies with great operations, systems, and processes, as well as recurring revenue, and are taking fewer risks in a down economy. However, there is still a lot of money waiting to be deployed, and the SBA could make changes to address the dead space between $5 million and $25 million. With careful planning and execution, it is possible to achieve a successful exit even in challenging market conditions.
Concept 12: Nurture Relationships For Success
One key takeaway from the podcast is the importance of nurturing relationships for success. As the host and guest discuss, half the game is simply showing up and making sure that you are visible to potential partners or clients. This means being proactive in networking and keeping lines of communication open with those in your network or those you have created relationships with.
The guest emphasizes the value of regularly sending emails and following up with people, even if their services or products may not be relevant at the moment. This can lead to opportunities down the line when the timing is right. Additionally, the guest suggests that companies should engage experts when considering M&A services, whether they are buying or selling.
Another important aspect of nurturing relationships is having a clear integration and separation strategy. Companies should think about what their exit strategy looks like and plan accordingly. This can help ensure a smooth transition and maximize value for all parties involved.
Overall, the podcast emphasizes the importance of building and maintaining relationships in order to achieve success in M&A services and in the current market. By being proactive and strategic in networking and planning, companies can achieve their goals and thrive in the ever-changing business landscape.
Concept 13: Interest Rates May Decrease Soon
However, one specific topic that was discussed in the podcast was the possibility of interest rates decreasing soon. The speakers agreed that at some point, interest rates would have to go down because they cannot go lower than zero. They also noted that since interest rates are currently up, it will have the ability to have them go down in the future. They predicted that this would happen within the next year or year and a half.
This prediction is significant because interest rates play a crucial role in the economy. When interest rates are low, it incentivizes borrowing and spending, which can boost economic growth. On the other hand, when interest rates are high, it can lead to a decrease in borrowing and spending, which can slow down economic growth. Therefore, a decrease in interest rates could potentially have a positive impact on the economy.
Furthermore, a decrease in interest rates can also have an impact on the stock market. When interest rates are low, it can make stocks more attractive to investors because they can earn higher returns. This can lead to a rise in stock prices. However, it is important to note that the stock market is unpredictable and can be influenced by a variety of factors.
Overall, the podcast's discussion on the possibility of interest rates decreasing soon highlights the importance of staying informed and aware of economic trends and changes. By keeping up with these developments, individuals and businesses can make informed decisions and potentially benefit from any opportunities that arise.
