E160: F. E. International CEO Thomas Smale Discusses Buying and Selling Companies - Watch Here
Sponsor:
Reconciled provides industry-leading virtual bookkeeping and accounting services for busy business owners and entrepreneurs across the US. Their team is experienced in M&A, and they hire the best talent available. Reconciled sets the standard for consistency and quality that you can count on.
Visit https://www.reconciled.com/
___________________________________________________________________________________________
About The Guest(s): Thomas Smale is the founder of F.E. International, a technology M&A firm that specializes in buying and selling tech companies. He has been in the mergers and acquisitions space since the early 2000s and has helped thousands of businesses navigate the process of selling their companies.
Summary: Thomas Smale, founder of F.E. International, shares his journey in the mergers and acquisitions space and how he started his company to fill the gap in the market for selling technology businesses. He discusses the changing landscape of the industry, the importance of consistency in business, and the factors that go into valuing a company. Thomas also highlights the international nature of his business and the challenges and opportunities that come with it.
Key Takeaways:
- F.E. International focuses on buying and selling technology businesses, filling the gap in the market for smaller tech companies.
- Valuation is based on comparable past deals and the specific variables of the business model.
- Founders today are more prepared than ever, thanks to the abundance of information and resources available.
- Consistency is key in business, and showing up and doing what you say you'll do sets you apart from the competition.
- F.E. International has a global reach and works with clients from all over the world.
Quotes:
- "Valuation tends to be based on real estate. What has a similar business sold for?" - Thomas Smale
- "If you're trusting your life's work to an M&A firm, do you want to do that with a firm that's done it thousands of times before?" - Thomas Smale
- "The American dream is a big stereotype. You can build a business out of almost anything in the US." - Thomas Smale
Article:
The Art of Buying and Selling Companies: Insights from Thomas Smale
As the world of business continues to evolve, so does the landscape of buying and selling companies. In this thought-provoking interview with Thomas Smale, founder of F.E. International, we delve into the intricacies of the mergers and acquisitions (M&A) space and gain valuable insights into the art of buying and selling businesses.
The Evolution of the M&A Space
Thomas Smale began his journey in the early 2000s, when he recognized a significant gap in the market for technology M&A firms. At that time, small technology businesses had limited options when it came to selling their companies. Traditional investment banks and business brokers were not equipped to handle the unique needs of the tech industry. Smale saw an opportunity to fill this void and founded F.E. International in 2010.
"Back then, if you had a technology business worth $20 million or $2 million, there was no way you could go to sell that business," Smale explains. "You could go to a big investment bank, like a Goldman Sachs, but they would not return your call because the business was too small. You could go to a mainstreet business broker, but they had no idea about anything in the tech space."
F.E. International emerged as a pioneer in the tech M&A industry, providing a much-needed service to technology founders. Smale and his team focused on representing businesses in the tech space, particularly those in the software-as-a-service (SaaS) sector. They recognized the growing demand for SaaS businesses and positioned themselves as experts in this niche.
The Power of Valuation
Valuation is a critical aspect of the buying and selling process. Smale emphasizes the importance of basing valuations on real data and comparable deals. F.E. International leverages its extensive database of past transactions to determine the value of a business. By analyzing variables such as profitability, growth rate, and customer churn, they can provide accurate valuations that reflect the market value of a company.
"Valuation tends to be based on real estate," Smale explains. "What has a similar business sold for? As time goes on, more businesses like yours have sold, which allows for more accurate valuations. We compare variables such as profitability, growth rate, and customer churn to similar businesses that have been sold in the past."
However, Smale acknowledges that valuation is not a one-size-fits-all approach. Different business models require different considerations. For example, SaaS businesses with recurring revenue may be valued differently than content-driven businesses reliant on advertising revenue. Understanding the nuances of each business model is crucial in determining an accurate valuation.
The Changing Landscape of Business Preparation
One significant shift in the industry is the increased preparedness of founders looking to sell their businesses. Smale attributes this change to the abundance of information available today. Podcasts, courses, and mentorship programs have empowered founders with the knowledge and resources to navigate the selling process.
"Today, founders are more prepared than ever," Smale states. "There's a wealth of information out there, and people are actively seeking it. They're thinking about selling their businesses in advance and planning for an eventual exit. This is a significant shift from 10 years ago when the market was less developed, and founders were less aware of their options."
The rise of entrepreneurship through acquisition (ETA) courses has also contributed to this shift. These courses provide aspiring entrepreneurs with the knowledge and skills to acquire and grow businesses. As a result, more individuals are entering the market with the intention of buying and selling companies.
The Competitive Advantage of Experience and Consistency
In a crowded market with numerous players, F.E. International maintains its competitive advantage through experience and consistency. Smale emphasizes the importance of longevity and a proven track record in the industry. While new competitors may enter the market, few can match the depth of experience and expertise that F.E. International offers.
"We've been in this industry for over a decade," Smale explains. "We've consistently represented businesses of all sizes, and our average deal size continues to grow. We've built a reputation for delivering results and providing exceptional service to our clients. While others may try to compete on price, we focus on delivering value and expertise."
Consistency is another key factor in F.E. International's success. Smale emphasizes the importance of showing up, doing what you say you'll do, and maintaining open lines of communication. By consistently delivering on their promises, F.E. International has built trust with clients and established itself as a reliable partner in the M&A space.
The Global Reach of F.E. International
True to its name, F.E. International operates on an international scale. With offices in New York, San Francisco, London, Miami, and recently Austin, the company has a global presence. Smale explains that their choice of locations is driven by the tech industry's hubs and the availability of talent.
"We follow the talent," Smale states. "Our team consists of individuals with backgrounds in investment banking, accounting, and law. These professionals are based in cities like New York and San Francisco, where the tech industry thrives. By being in these locations, we can tap into the expertise and networks that are essential in the M&A space."
The global nature of F.E. International's operations is reflected in the diverse range of clients they work with. Smale notes that they have represented businesses from almost every country, highlighting the international appeal of the tech industry. Whether a founder is based in Moldova or the United States, F.E. International is equipped to assist them in their selling journey.
The Uniqueness of Every Deal
One of the most intriguing aspects of the M&A space is the uniqueness of every deal. Smale highlights the wide variety of businesses they have encountered, each with its own niche and value proposition. From sales CRMs for dentists to specialized software for shrimp sorting, F.E. International has seen it all.
"Almost every deal we do involves a business that you wouldn't even know existed," Smale explains. "These businesses cater to specific niches and industries, providing solutions that you wouldn't think of unless you were directly involved. The tech industry is full of such hidden gems, and we have the privilege of uncovering them."
The ability to identify these unique businesses and connect them with the right buyers is a testament to F.E. International's expertise. Their extensive network and industry knowledge allow them to navigate the complexities of each deal and ensure a successful outcome for all parties involved.
The Future of Buying and Selling Companies
Looking ahead, Smale sees a promising future for the buying and selling of companies. As the industry continues to evolve, new opportunities will arise, and the demand for tech businesses will remain strong. The key lies in staying informed, building relationships, and adapting to the changing landscape.
"The industry is constantly evolving," Smale concludes. "New players will enter the market, and new trends will emerge. It's crucial for founders, buyers, and advisors to stay ahead of the curve and embrace the opportunities that arise. By leveraging technology, expertise, and a commitment to excellence, we can continue to navigate the complexities of the M&A space and drive successful outcomes for all parties involved."
In conclusion, the art of buying and selling companies is a dynamic and ever-changing field. F.E. International's experience and expertise position them as leaders in the industry. Through their comprehensive approach, they provide valuable insights and guidance to founders and buyers alike. As the world of business continues to evolve, F.E. International remains at the forefront, helping shape the future of the M&A space.
Contact Thomas:
https://www.linkedin.com/in/thomassmale/
https://twitter.com/ThomasSmale
Website:
Free Stuff:
https://feinternational.com/market-reports/
---- MORE COOL STUFF ---
Are you ready to take your podcast listening to the next level? Subscribe to "DEEPER by How2Exit" newsletter and never miss out on our latest episodes. Join our newsletter HERE
Want to stay in touch with what's happening in the Main Street M&A Space? Subscribe to The Hub - Acquisitions Hub
