In this episode of B2B Marketing Methods, Terri Hoffman sits down with Erik Konicki and Lindsey Wendler, Managing Directors at 414 Capital, to discuss how marketing, sales, and strategy intersect when it comes to mergers and acquisitions. With decades of combined experience and more than 300 closed transactions, Erik and Lindsey share how business owners can increase company value, improve readiness, and attract the right buyers through smarter positioning and preparation.
They break down what drives value in today’s market—from strong margins and diverse customer bases to transferable operations and credible brand perception. You’ll learn why your marketing and sales systems aren’t just tools for growth, but key assets that influence how investors perceive your business.
Whether you’re years away from selling or simply want to build a more valuable company, this conversation will help you understand how to align your marketing strategy with long-term business goals—and how preparation can multiply your return when it’s time to make a move.
What You’ll Learn in This Episode:
- How marketing and brand strategy influence company valuation
- The most important factors buyers consider before an acquisition
- Steps to prepare your business for a successful sale
- Common pitfalls that reduce value—and how to avoid them
- Why clean financials and scalable processes attract investors
- How to build a strong deal team and trusted advisor network
To learn more about Erik Konicki, connect with him on LinkedIn at:
https://www.linkedin.com/in/konicki/
Or, email him at:
To learn more about Lindsey Wendler, connect with her on LinkedIn at:
https://www.linkedin.com/in/lindseywendler/
Or, email her at:
To learn more about Terri, connect with her on LinkedIn at: https://www.linkedin.com/in/terrihartley/
To connect with Marketing Refresh, visit: MarketingRefresh.com
Full Episode Transcript
[00:00:05] Terri Hoffman: Welcome to B2B Marketing Methods. I’m your host, Terry Hoffman, and I’m the CEO of Marketing Refresh. Let’s face it, embracing digital marketing is daunting. This podcast was created to make it more approachable. Join me as we talk to CEOs, sales leaders and revenue growth experts who will share lessons learned and tips from their own journeys.
[00:00:34] Terri Hoffman: Welcome to another episode of B2B Marketing Methods. I have an exciting episode today, this is the first time we’ve tried this out and I’m really excited to do that. We’ve got two guests on today’s episode.
[00:00:45] Terri Hoffman: Both guests are managing partners for a business called 414 Capital, and I’m going to let them tell you a little bit about their backgrounds. But overall, the company is in investment banking, and this is exciting for the marketing [00:01:00] industry because a major part of what can help a business grow is the way that their sales and marketing, you know, functions and operates and how big of a part that is in their business strategy.
[00:01:11] Terri Hoffman: And I think there are a lot of parts of M&A and investment banking that Erik and Lindsey, my two guests, can talk about today. But in particular, they have a lot of really awesome knowledge and experience to share when it comes to how sales and marketing connects into that strategy. Other factors that are important in terms of, mergers or acquisitions in that transaction, how to prepare for that type of transaction.
[00:01:39] Terri Hoffman: And a lot of other areas that we’re going to get into, but I’m really excited. Welcome to both of you, Lindsey and Erik. Thank you for being here today.
[00:01:46] Lindsey Wendler: Hello. Great to be here.
[00:01:48] Terri Hoffman: Hello.
[00:01:48] Erik Konicki: Thank you, Terri.
[00:01:49] Terri Hoffman: Yeah. I want to start, well the ladies first. Lindsey, I’d love to have you introduce yourself.
[00:01:55] Terri Hoffman: Both Erik and Lindsey are in Texas, but they do deals all over the country. But Lindsey, maybe [00:02:00] you could start by just introducing yourself and talking about your role.
[00:02:03] Lindsey Wendler: Sure. So I’m Lindsey Wendler. I’m a managing director at 414 Capital. I am based in Dallas, Texas. I focus on mostly sell side mergers and acquisitions, some buy side.
[00:02:16] Lindsey Wendler: And then our firm has a focus on valuation and private placements as well. Over the last 15 years, our company has closed over 300 transactions and our business valuation division, works with over 150 funds and values, around 900 assets on a regular basis. Our private placements group has raised nearly $20 billion.
[00:02:41] Lindsey Wendler: Again, I focus on sell side M&A. I work with family and founder owned businesses. I’m a generalist, so I work with all kinds of businesses, but they’re typically in the 20 to 200 million of revenue size range. And I happen to do a lot in service businesses, so roofers, [00:03:00] landscapers, legal services, staffing, really the range from blue collar to white collar.
[00:03:07] Terri Hoffman: Wow. Okay. And in a pretty hot market, Dallas has a lot going on in those different industries that you just talked about.
[00:03:13] Lindsey Wendler: That’s right.
[00:03:14] Terri Hoffman: So Erik, maybe you, you got off the hook a little bit by going second. But Erik, please introduce yourself.
[00:03:23] Erik Konicki: Sure.
[00:03:23] Terri Hoffman: And talk about, describe your role as well in Houston.
[00:03:26] Erik Konicki: Sure. I’m also a managing director, based in Houston. I would say, um, just to add on to what Lindsey had mentioned, we’ve done a, a lot of valuation work early in my career. I had, spent some time in valuation, a good amount of time in various ways. And so, that’s been a very, um, integral part of my practice.
[00:03:48] Erik Konicki: The industries that we work with, are based on the, what you see in the MSA here and Dallas is similar, but Houston’s got five industries that I think really stand out. And [00:04:00] we’re actually when, Michael Porter spoke to the local CFA society pointed those out. The obvious one is energy. But that’s such a big industry, you find things like industrials, services, technology, that all feed into that complex, whether it’s, we don’t do a lot of down hole, but the manufacturers of valves, pipe hose and fittings, thermocouples, thermometers, services like testing, go into that. A lot of technology actually comes from that industry, construction and construction materials, and I, I kind of lumped the roofing and landscaping folks in there, but fire protection, HVAC are pretty common as well.
[00:04:42] Erik Konicki: The other industries are, aerospace defense, logistics, we have one of the larger ports. So, in the logistics area, I would say the way I look at that industry is assets, services, and technology. So warehousing, transportation and [00:05:00] technology that feed into that. Aerospace defense, it’s a lot of manufacturing of parts primarily.
[00:05:06] Erik Konicki: And then finally, healthcare, uh, healthcare is a, a very big industry, but I tend to look at companies that are, like labs, things along those lines, equipment that feed into that industry. So more of a market weight there.
[00:05:20] Terri Hoffman: Yeah, I mean there is a lot, circling around everything, all the industries that you just mentioned in both the DFW market and Houston market, and it, correct me if I’m wrong, but you guys both also do deals in other parts of the country, right?
[00:05:33] Terri Hoffman: You’re just primarily focused on building relationships in your market.
[00:05:37] Lindsey Wendler: I would say that, like maybe 30 to 40% of my clients are in the Dallas area, and then the rest can be really anywhere in the country.
[00:05:47] Terri Hoffman: Right.
[00:05:48] Erik Konicki: Yeah. And over time, you build a network that reaches beyond your current location.
[00:05:54] Erik Konicki: But there’s just so much in each of these metroplexes that you really don’t have to go [00:06:00] anywhere else. And a lot of buyers are looking to come into this market in particular, so, that’s very helpful.
[00:06:07] Terri Hoffman: Yeah. So I have kind of a general question to start with. Then I’ve got so many different things that I want to ask you about, but kind of a general one is like, what is the market like right now?
[00:06:18] Terri Hoffman: What is the temperature in terms of the buy side and the sell side? Where is the activity happening or lacking right now?
[00:06:28] Lindsey Wendler: Do you want me to take it, Erik?
[00:06:29] Erik Konicki: Yeah, go for it.
[00:06:31] Lindsey Wendler: So it’s been an interesting year. We came into the year with M&A being really hot people thinking this was going to be a banner year. Then there was a lot of tariff noise. Of course, you know, that March, April period, a lot of deals really paused. Especially if there was any exposure to tariffs. Then around June and certainly in July, things have really picked up. I think [00:07:00] people are getting more comfortable with the tariff situation.
[00:07:03] Lindsey Wendler: Personally, I’m more in the services side of businesses, you know, I’m working more with service businesses. So there’s less of a tariff impact, but I did sell an industrial distributor of fasteners earlier in the summer, and that transaction went through really smoothly. We are seeing new deals come on board.
[00:07:24] Lindsey Wendler: We’re getting them ready to go to market this fall. So I would say that the market has kind of corrected in a good way and we’re getting back on track. What do you think Erik?
[00:07:36] Erik Konicki: I think that’s pretty fair. I’ve seen some reports and data about the first half of the market, being somewhat slow, but we’ve certainly seen an impact or an increase in pitches, and new opportunities towards the end of the second quarter.
[00:07:50] Erik Konicki: And so that means, going into the back half of the year, we should be able to bring a few to market and then, you know, for probably some in the first half or the [00:08:00] first part of first quarter of next year.
[00:08:03] Terri Hoffman: Got it. Well, so we talked, you guys each talked a little bit about the industries that you’re active in and the size, revenue wise, but I’d like to hear a little bit more about what, you know, what are those other maybe, non demographic type of characteristics that you look for?
[00:08:19] Terri Hoffman: Like what kind of mindset or situation you know, that an owner is in that really lets you know this is, this is going to either be good now and I can really help this owner or this company, or, you know, they’re going to be a great relationship for me to build going down the road. What are some of those characteristics you look for?
[00:08:38] Lindsey Wendler: It’s a really good question. We look for certain characteristics in a business that make it marketable for us to be able to take it to market successfully.
[00:08:49] Terri Hoffman: Mm-hmm.
[00:08:49] Lindsey Wendler: So we are looking for. Not only a business that fits our size parameters, but is willing to listen and [00:09:00] work with us on getting their books and records ready.
[00:09:03] Lindsey Wendler: That might require doing a quality of earnings report, hiring a CPA firm to be able to do that. Maybe going from cash to accrual financials. That’s something that’s really common. We really look for people who are ready and are ready to make an investment in the process.
[00:09:21] Erik Konicki: Yeah, and just to add onto to that, I think a couple things that, we do see a lot of businesses talk with a lot of business owners.
[00:09:28] Erik Konicki: I think, uh, expectations is a big, front loaded issue. Um, you know, if, if you, lead with high expectations or the owner has really, really high expectations. It makes it harder to, really transact on what could be a very good opportunity and so you just want to set those, right off the bat.
[00:09:51] Erik Konicki: And then there’s some pretty common things that people really should think about and as you build, as they build businesses, I would [00:10:00] suggest thinking about you know, customer concentration, that’s a big one. Transferability, what actually gets built into the business that can go on to the next owner.
[00:10:08] Terri Hoffman: Mm-hmm.
[00:10:08] Erik Konicki: And then, what’s important I think for, especially for our size of companies, is the growth opportunity, is you know, is there some low hanging fruit that could help the buyer increase margins? Is there some new line of revenue or something that they could do that could easily, if they added money and people to the company, could they easily grow it?
[00:10:31] Erik Konicki: Scalability? So those are, those are some really important things upfront that, that we look for.
[00:10:37] Lindsey Wendler: Yeah, we really want to value the business, at the start of the relationship and get on the same page about what our expectations are. We invest a lot into each deal, our whole team does. So we want to make sure that we are aligned with the seller on what, what we think is a good, what, what [00:11:00] we think are good price and terms, and making sure that the seller really understands the value drivers of their business.
[00:11:07] Lindsey Wendler: Like Erik said, customer concentration can be an issue. You know, it’s nice to see businesses that have a high barrier to entry. We want to see margins that look good. Maybe, you know, businesses that are resistant to technology changes, these are characteristics we look for in businesses.
[00:11:27] Terri Hoffman: That’s interesting. Tell me more about that.
[00:11:30] Lindsey Wendler: Certain businesses, like roofing for example, AI is not going to take over roofing. We’re here, we’re going to need people to do the roofing. It’s not going to take over water management, or landscaping, or you know, a, a lot of different kinds of businesses like that, that really require humans.
[00:11:51] Terri Hoffman: Mm-hmm.
[00:11:51] Lindsey Wendler: Um, and those are just a few examples, but that’s what one aspect of why service businesses are, like [00:12:00] blue collar services are so attractive.
[00:12:03] Terri Hoffman: Got it. Well, so you’ve, we, when we had our planning discussion about just different points we wanted to talk about, this seems like it’s steering us in the direction of maybe just understanding your process too.
[00:12:14] Terri Hoffman: That was one of the things that I wanted to make sure we covered. If you could talk about, you know, from the moment you meet a business owner and it starts to look like the type of relationship that has potential, what are the steps in the process look like?
[00:12:32] Erik Konicki: Do you want to I always start with evaluation. Yeah. Okay. Getting some, getting some financials. And usually both Lindsey and I can, take a look at, say, three years of financials, the way the company’s organized, and get a pretty good idea of how it’s been run and things that might be, um, uh, something to address.
[00:12:54] Terri Hoffman: Mm-hmm.
[00:12:54] Erik Konicki: You know, right off the bat.
[00:12:57] Lindsey Wendler: Yeah. And then we really move into [00:13:00] several phases of the process. So we are gathering all of the information about the company and creating marketing materials. Then we go to market, then we set a target date for indications of interest. Those are offers that generally tell us where buyers are, if they’re in the ballpark of our seller’s expectations. And then we’d move into, the management meeting phase where we take some of those parties that submitted offers into management meetings, and then we set another target date for letters of intent.
[00:13:36] Lindsey Wendler: That’s a more serious agreement, where kind of the terms of the final agreement sort of get agreed to at a very high level. It’s a non-binding agreement, but it is a serious agreement. Then once the seller signs a letter of intent, it often moves the deal into exclusivity, and we move into the due diligence phase, and that [00:14:00] typically lasts 60 to 90 days.
[00:14:01] Lindsey Wendler: And then you hopefully close. That’s kind of the, the, timeline of the deal life cycle from our side.
[00:14:10] Terri Hoffman: Okay. Yeah.
[00:14:11] Erik Konicki: Mm-hmm.
[00:14:12] Terri Hoffman: What, let’s say you start a conversation with a company and you start to see. You know, some of the, the drivers that you guys were both talking about a few minutes ago, if you start to see, hey, this could be an area where if you spent a year improving this or six months improving this, it would really have an impact on the value.
[00:14:33] Terri Hoffman: I’m assuming you guys have that type of coaching that enters into the process. And then of course, just from knowing the two of you, I know you have a really vast network of people you can connect the owner to. I would love for you to elaborate a little bit on that. Like what’s a typical scenario or something that you see happening, you know, quite a bit in new relationships?
[00:14:56] Erik Konicki: Yeah, so, we can, we do get a lot of companies that aren’t quite [00:15:00] ready and one of the reasons we get contacted is for market insights. Some strategy about, you know, what are the options, they can, you know, choose from what are the best options? What about timing? These are all things that are very common, in terms of what people seek out investment bankers for.
[00:15:21] Erik Konicki: You know, we give a, an honest answer. There’s no, there’s no benefit to going to market if the market’s really sour on a particular industry.
[00:15:29] Terri Hoffman: Mm-hmm.
[00:15:30] Erik Konicki: But, you know, to that extent, if a company’s not ready, we, you know, we suggest some things that they can do to get ready or, you know, focus on for a future go to market situation.
[00:15:43] Erik Konicki: I never try and talk somebody into going to market. I listen to want to. Hear what their objectives are and then really present options and we do a really good job of presenting those options. I think.
[00:15:57] Lindsey Wendler: Yeah, I mean, I would say the most common [00:16:00] issue we run into are, companies that have just really messy books and records, and so that is something that we would want to pause and get them.
[00:16:13] Lindsey Wendler: Organized, get them to a place where everything looks really, really good. That could take months. That could take a year in some cases, so it can take longer. And then, you know, if we saw that a business had really low margins for their industry, we might suggest working with a consulting group of sorts.
[00:16:35] Lindsey Wendler: You know, we definitely see businesses that are not quite ready, but, they’re getting there and
[00:16:43] Terri Hoffman: mm-hmm
[00:16:43] Lindsey Wendler: we, we, Erik and I do have pretty vast networks and we do our best to match those people up with the right professionals to help them get to a place where they are really marketable.
[00:16:55] Erik Konicki: Yeah. And we get real time feedback from, you know, the, the market from private equity [00:17:00] buyers, from strategic folks, in particular industries that, you know, we can share some information on a blind basis with them and, just getting really good feedback so that we can say, this is how someone might look at it in real time.
[00:17:15] Terri Hoffman: Yeah, I would have to imagine what you’re describing right now is a pretty big differentiator for the two of you in particular, right? You both have those relationships and you’ve built them over, you know, several years.
[00:17:29] Lindsey Wendler: I would say absolutely. It’s something that Erik and I, put a lot of effort into is, building and maintaining a really strong network of really every kind of professional that you’d ever need to refer to.
[00:17:42] Lindsey Wendler: We have someone, and that is a really valuable tool when you’re working with a company whose needs really vary.
[00:17:52] Terri Hoffman: Right. Yeah. So, just, especially for a lot of business owners out there who don’t know this or wouldn’t be aware, [00:18:00] describe the components of a deal team, you know, so when you reach that point that you’re preparing, to take offers, what are the different professions and groups that you put together to create a deal team?
[00:18:12] Erik Konicki: Sure.
[00:18:13] Lindsey Wendler: So I would say your typical deal team is, you know, ideally you have an investment banker, so you have us, well, we,
[00:18:20] Terri Hoffman: Well, clearly they’d have one of the two of you, or both of you.
[00:18:23] Lindsey Wendler: I mean, I hope so. Yes. And
[00:18:25] Erik Konicki: Sounds like good advice,
[00:18:27] Lindsey Wendler: you know, actually one of the most common ways we get brought into a deal is when, a buyer has gone direct to a seller and they start going down the road together and maybe there’s an LOI put on the table and then the seller’s attorney or CPA gets involved and they say, whoa, have you spoken to an investment banker?
[00:18:47] Lindsey Wendler: Do you know if you were getting a good price? And the fact is, you know, buyers go direct to pay a discount. They don’t go direct to pay a premium. You get a premium by running a process. And [00:19:00] so that’s where we come in and we do, we run a really tight process and we make sure that the seller is truly getting the best price in terms.
[00:19:09] Lindsey Wendler: But a couple other people you want to have on your deal team, you absolutely want to have an M&A attorney. I’ve had plenty of clients that have, a friend that’s an attorney of some kind. I had a client once that had a friend that was a former prosecutor, and I was like, whoa, whoa, whoa. We’re not, no, we’re not doing that.
[00:19:29] Lindsey Wendler: You need an M&A attorney. So we really encouraged that. And then, you know, an external CPA firm to do a quality of earnings report, which I mentioned earlier, that is a game changer in going to market with, a Q of E report is what we call them. And then I would say, the seller, having a good wealth manager ready for the transition is another really great person to have on the team.
[00:19:54] Lindsey Wendler: Erik, what would you say?
[00:19:55] Erik Konicki: Absolutely. I think you named the key folks. Certainly an M&A [00:20:00] attorney. You know, we do get a lot of referrals, so a lot of these people are already, set in place, or at least one or one of want to is a good M&A attorney can help, with terms and what’s market and just be another voice of reason on a deal.
[00:20:14] Erik Konicki: I originally came from wealth management many, many years ago and saw the value of where that could be, useful in, in deal, in, in deals and closing deals. And you know, a lot of these companies that we talk with that go through an M&A process have a lot of physical assets. It’s their biggest investment and, you know, what comes next?
[00:20:36] Erik Konicki: After you don’t have control and you’re kind of looking at putting all this large sums of money in, into, stocks or bonds or something else, it, it’s a very, very big, transition for most people and having, having, working with those folks, getting, you know, getting a, a good value in my mind and what, what that really means.
[00:20:55] Erik Konicki: I had one client that, had a number in mind and, you know, [00:21:00] we went through with a deal that, it didn’t on the surface, didn’t quite, look like it made that number. But over, over a few, turns of the transaction, we, we did get that number and beyond. And he found out that he didn’t actually need as much as he thought he needed to get and achieve the objectives based on what his wealth manager was helping him with.
[00:21:21] Erik Konicki: And so he was able to actually achieve and have some comfort, achieve his goals, have some comfort in the fact that instead of being. A very risky, uh, op, you know, next step, that it was more planned. So I think that actually reduces deal risk quite a bit. And from the buyer’s side, doing a quality of earnings or even some sort of, agreed upon procedures to verify, having a third party verify those numbers really helps buyers get comfort with the company.
[00:21:49] Erik Konicki: I think it allows them to stretch their value of the company too.
[00:21:54] Terri Hoffman: Yeah.
[00:21:54] Erik Konicki: Or at least have more confidence in what they offer.
[00:21:57] Terri Hoffman: Yeah. What are some of the common things that [00:22:00] not only questions, but just concerns that a seller has?
[00:22:06] Terri Hoffman: I mean, I think the obvious one would be the price, right? And are they going to be able to achieve that in, what are the other kind of areas beyond that that they’re really concerned about?
[00:22:17] Lindsey Wendler: I hear a lot of sellers concerned about the future of their employees, the people that help them build the business.
[00:22:24] Lindsey Wendler: They have oftentimes heard scary stories about private equity coming in and firing everyone, and when that’s often really not the case. In fact, they really, really don’t want people to leave the business as soon as they buy it. That would, you know, really not be great. So, you know, they, they want their, they often want their people to be taken care of.
[00:22:47] Lindsey Wendler: That’s something that I hear a lot and it’s a concern. They also, you know, a lot of times in these transactions. Part of the structure of the transaction is world equity, and that’s when the seller is essentially [00:23:00] reinvesting into the business and they become partners with the buyer they are concerned about what their role is post-transaction, how they’re going to be treated, and, that is often a serious concern.
[00:23:12] Terri Hoffman: Mm-hmm.
[00:23:14] Erik Konicki: Okay. Yeah, you nailed it, Lindsey. I think the, you know, I had jotted down price and terms, obviously they want to be, in the, you know, in the fair area for price and terms. And then their people, you know, just who’s, who’s key, who’s going to be able to stay, what that means to them. It’s another big hurdle for most owners to, you know, communicate properly what the transition would look like. And even, you know, it’s really hard to keep a secret. And you see all these people coming in and out of the business and so, there does have to be some communication and sort of a tempering of the fear of what these new groups coming in might do.
[00:23:54] Terri Hoffman: Mm-hmm.
[00:23:55] Erik Konicki: And then certainly, you know, the, the rollover part, which is [00:24:00] happens quite often, you know. How does current management work with, new management to grow the company, keep their legacy in, in place. People are hard to find. Good people are hard to find. So they’re very interested in, keeping a good business, running well.
[00:24:16] Erik Konicki: And so, that’s just something that I hear a lot about. Like you said, Lindsey, some of the, you know, horror stories of a PE firm coming in and just sort of, stripping things out or moving a, moving a location, it just doesn’t happen as often. And I’ve been fortunate enough to work with some really good company management and so, having some depth there and, some willingness to work with the new group because it is new.
[00:24:40] Erik Konicki: It’s, and it’s, it’s something that one person or the owner has, you know, controlled for many, probably many years and now the control has usually shifted to somebody new and that’s a, that’s a difficult proposition for most people. So understanding that transition, and next steps in role is super important as well.
[00:24:59] Terri Hoffman: [00:25:00] Okay. I was hoping we could dig into the issue of customer concentration a little bit more. It seems like there could be a natural connection to sales and marketing and maybe the sales and marketing strategy and how that led to the current customer concentration. So what are, what are some of the questions, if you go a level deeper on customer concentration, what are the things the buyer is asking about?
[00:25:25] Terri Hoffman: Is it industry, company size? Like what, what are those, I guess pieces of criteria that they’re curious about?
[00:25:34] Erik Konicki: I’ll take this one Lindsey, or at least start it. I think cus as far as customer concentration goes, sometimes it’s good, sometimes it’s not. You know, if somebody’s trying to acquire a relationship with a particular company and this is an add-on, you know?
[00:25:50] Terri Hoffman: Mm-hmm.
[00:25:51] Erik Konicki: There is a good possibility that that customer relationship might be beneficial to the buyer.
[00:25:56] Erik Konicki: The risk is the part that most people are hearing about [00:26:00] when they hear the term customer concentration. What if that customer decides to leave? And it’s represents a very large, large piece of the company’s value. So, yeah, just, you know, it’s, there’s a lot of, due diligence now on, on marketing, sustaining the current, current business, and then how do you take that business and grow it? And diversify, you know, you, you definitely don’t want to be beholden to one, group in particular. But that, that oftentimes happens in smaller businesses where they get a contract or some court serve agreement with a big conglomerate that, feeds the company and, or maybe takes over in terms of a percentage of revenue.
[00:26:39] Erik Konicki: That can certainly happen and we try to manage those, and, and set expectations based on, what what they have.
[00:26:48] Lindsey Wendler: Absolutely. you know, for a lot of smaller businesses, the way they start growing is through a major customer relationship or several major [00:27:00] customer relationships, which creates a certain amount of concentration
[00:27:03] Lindsey Wendler: That’s the reason you do see it in a lot of small and growing businesses. Businesses that are in the lower middle market where we are often working. You know, they don’t always have these issues, but it’s not unusual for them to have these issues. And getting a sales plan in place is something that would be really beneficial to them if they were going to take a few years before going to market.
[00:27:29] Lindsey Wendler: Being able to diversify that customer base is going to raise their valuation significantly because the risk associated with customer concentration is going to create a discount. Um, it’s just, you know, most, most buyers are are not going to take that risk lightly.
[00:27:49] Terri Hoffman: Yeah. But I, I’m sure there are just different life situations and different circumstances involved that would lead your seller to maybe realize it and have you point that out and give them some options, but [00:28:00] it’s just not something that they’ve got the time or priority to address. And I think when we were preparing, you even talked about how that can often be viewed as an upside to the buyer because they see an opportunity then to implement a sales and marketing strategy that could help propel the growth. It am I, am I saying that correctly? Am I capturing that the right way?
[00:28:24] Lindsey Wendler: Yeah. I think when we were talking earlier, one thing we touched on was that in any of these smaller businesses, smaller and growing businesses, there’s going to be a value driver or two that are just kind of off.
[00:28:38] Lindsey Wendler: if they weren’t off, they’d be bigger, right? So,
[00:28:41] Terri Hoffman: Yeah, yeah.
[00:28:42] Lindsey Wendler: It could be that sales and marketing needs to be much more robust and we look at a lot of these issues as opportunities. So if a business has been fairly successful and barely has a website and no formal sales or [00:29:00] marketing strategy, that’s potentially an opportunity.
[00:29:06] Terri Hoffman: Great. Yeah, exactly. but if they’ve, if they’ve got the time, obviously those are, when I’m selling to a business and talking about marketing services and adopting A CRM and having a sales process, I think that is a way that you can drive the value. If you’ve got the time and you’ve got, really the commitment to making that part of your business strategy, I think it’s a, it’s a great way to drive the value and be one of those drivers, one of those components, you know, of the plan.
[00:29:36] Lindsey Wendler: Yes, for sure.
[00:29:37] Erik Konicki: And yeah, buyers do spend a lot of time figuring out what the right price for a particular service or product is and what they can actually extract from the market. Probably more so than most lower mid market businesses have and you know, and then just, you know, what the, what if, what are the, what are the avenues for growing the business?
[00:29:59] Erik Konicki: They pay a [00:30:00] lot of attention to that. And that really is what makes an opportunity attractive, in the long run, having those sustainable, and maybe, you know, those sustainable revenues and earnings and, and then like, how do you grow it? You know, how do, what are the next things to grow this.
[00:30:16] Lindsey Wendler: And are the right people in place to grow it too. You know, Erik, you kind of touched on this, but. Succession planning is really important if the whole business relies on the owner showing up every day, there’s a problem there, or maybe there’s not a problem. But if you want to sell, that’s going to be really a really difficult transition to a new owner.
[00:30:38] Lindsey Wendler: But if there is a succession plan in place, if there’s already management in place that can run the business without the owner being there 24/7, that’s really valuable.
[00:30:50] Erik Konicki: Yeah. That, that’s, to me, that’s the difference between a practice and a business. You know, if, if a customer calls in and only talks to one person, [00:31:00] and that’s the majority of the way things are done or how things are done, um, maybe not so good.
[00:31:06] Erik Konicki: If they, you know, are able to call in, you know, other people and, and have some depth there, that’s a, that’s a lot better, in general.
[00:31:16] Terri Hoffman: Yeah. Can you, maybe talk about some of the things that happen in some of your, like if you think back over your career about some of the deals that really stand out to you or could be something recent that you’re working on.
[00:31:32] Terri Hoffman: What are the things that you think the seller was, how they were operating that you think really helped to make that successful? And I’m not necessarily talking about the value drivers, but just in terms of like how you were interacting with them. What are some of the things that you think make that successful?
[00:31:52] Lindsey Wendler: So on a recent deal that closed, I would say that having really good communication with the client is
[00:31:59] Terri Hoffman: mm-hmm [00:32:00]
[00:32:00] Lindsey Wendler: super important. And, in that case, my client called me almost every day at some point and just wanted to make sure that they were doing everything they needed to do, that everything was on track.
[00:32:12] Lindsey Wendler: And I think that’s helpful for a process there, especially during due diligence. There’s so much going on, there’s so much information flowing in different directions that regularly touching base and making sure we’re all on the same page is helpful. I mean, M&A really is kind of a team sport in the end. You’ve got multiple professionals working on multiple diligence streams once you’re at that part of the process, and you, you need to be able to work together efficiently to get the deal done.
[00:32:51] Terri Hoffman: It is interesting because at the end of the day, you know, the, the price and the terms are going to start as the most important part of the process [00:33:00] and end is the most important part of the process. But you’re talking about so many things that are just human being things in the middle, right.
[00:33:07] Terri Hoffman: And communication and like really taking their time to be thoughtful about a value driver area. Having the relationships in place that can really help give them the right advice and the right guidance. Those are really human being problems and solutions, right? And I don’t know that a lot of people in the business world think of the M&A people as the people who are going to actually have solutions to the human being problems, right?
[00:33:33] Terri Hoffman: Like you’re not just numbers and spreadsheets, people.
[00:33:37] Lindsey Wendler: We are like part-time counselors,
[00:33:39] Terri Hoffman: Right.
[00:33:40] Lindsey Wendler: Yeah. I mean, it is so, for the seller, it’s probably the most important transaction they’ll ever go through in their lives. Most of their net worth is tied up in this one asset and you have people telling you what you’re worth.
[00:33:57] Lindsey Wendler: And, you know, this creates [00:34:00] a lot of, stress for the seller and there’s often a lot of anxiety around different parts of the process. And having someone like us being able to say, Hey, this is totally normal, or this is off. Let’s do X, Y, Z, I think is really helpful for the seller while they’re managing, getting all the information to the right people and their emotions.
[00:34:28] Lindsey Wendler: there, there’s definitely a very human component of what Erik and I do.
[00:34:34] Erik Konicki: It can be quite mechanical in the beginning. You know, you set your terms, you set your price, you do your due diligence, but then you start negotiating, within the LOI what the final, purchase agreement looks like.
[00:34:46] Erik Konicki: And what people don’t realize, I think a lot of times, at least the ones that go direct, is that there’s something to our process beyond just touching base with a lot of people and, and getting a high [00:35:00] price. we really do spend a lot of time to connect with folks that can be successful, that are good match for the management.
[00:35:08] Erik Konicki: We want to limit the amount of time spent in due diligence that can really wear down on an owner because it is a heavy lift. You know, it’s not just throwing a bunch of data out there, you gotta do it in the right way. and really it makes a big difference on a lot of, key components, of the deal.
[00:35:24] Erik Konicki: But, you know, being a buffer between the owner and the investor or the buyer. They’ll have to work with this group afterwards and, you know, maybe some of the direct thoughts, from either side, would be better served through an intermediary. in my opinion, they are.
[00:35:41] Erik Konicki: But we, you know, we keep the due diligence process to a reasonable amount of time. We have leverage through a process if something doesn’t go through with a particular buyer. We have other buyers that are ready and interested in that company. They saw the, they saw what we put forth, and we probably received an indication of [00:36:00] interest or a competitive LOI from them.
[00:36:02] Erik Konicki: So having that, leverage as you’re in those negotiations can help shorten the process of, all the due diligence that occurs, it wears on an owner. the last thing you want to do is do a lot of work and have a bust on a deal. You want it, you know, if you find a good deal, it takes some time and, uh, some effort to, get these things closed.
[00:36:23] Terri Hoffman: Right?
[00:36:24] Erik Konicki: That’s the qualitative part.
[00:36:26] Terri Hoffman: Yeah. And it sounds like it, it absolutely pays to work with people who have been through this a number of times. They have those relationships. They know how to get you to maybe slow down a little bit at certain points, and here are those options that you have to offer.
[00:36:41] Terri Hoffman: And then you know how to guide them when it’s time to, to go and, you know, evaluate different, offers that they’re getting and how to go about that process. I mean, it’s, I think what you guys do is very complicated on the mechanical side of it. That’s complicated enough. But I have a feeling that your [00:37:00] real differentiator is the way that you’re able to manage and guide that relationship and make those connections.
[00:37:07] Terri Hoffman: And not, not everybody in your industry has those. Those relationships in place.
[00:37:13] Erik Konicki: Yeah, I, I’d agree with that. We’ve got a great team supporting us. They’ve all worked on big deals with big groups, but they also work on our small deals too, in lower middle market, say small. But, yeah, it’s a high level, of service coming to, usually an entrepreneur.
[00:37:30] Lindsey Wendler: Yeah, when you’re working with family and or you know, family members, founders of a business directly instead of kind of a, maybe a more distant management team. With larger businesses, when you’re working direct with the founder, the owner, there is a very big human component. And I think, and that, you know, coming back to the communication, I think that makes all the difference and the experience. And for the, for the seller there’s a lot of [00:38:00] options out there of advisors who they can work with, but at the end of the day, I, I think one of the criteria they should really look for are it is chemistry. Someone that they feel confident in and they feel like they can disclose, you know, all the things you’re going to have to disclose to sell your business.
[00:38:18] Lindsey Wendler: someone you’re really comfortable with.
[00:38:20] Terri Hoffman: Yep. That’s really, it’s interesting that you say that because I think what you just described is so important with any type of professional services relationship, right? It’s, the way that they connect with the two of you. that is really important in our client relationships.
[00:38:36] Terri Hoffman: If we are communicating using the same style and we have the same. Kind of sense of urgency around working on projects. we’re comfortable communicating in email sometimes and texting sometimes, and calling sometimes. Just having those qualities line up, I think is difficult to find. But when you do find it, it’s worth working through [00:39:00] other challenges in the relationship because that chemistry is there, right?
[00:39:04] Terri Hoffman: Mm-hmm. It’s like any big relationship that’s going to be the case. You’re going to have challenges to work through. Yes.
[00:39:10] Erik Konicki: Yeah. I’d agree.
[00:39:12] Terri Hoffman: Mm-hmm. And you guys can be a different set of eyes and ears and probably spot things that they may not be either aware of or realizing or maybe underestimating the importance.
[00:39:25] Erik Konicki: Yeah. we try and, even the playing field that just, you know, the folks that are on the other side of the table do this stuff day in, day out, you know, they’re really smart about what they’re looking for. And usually pretty fair, I think,
[00:39:40] Terri Hoffman: mm-hmm.
[00:39:40] Erik Konicki: that’s, that’s the nice thing. but you want to make sure that it’s an even playing field, and that you can represent your client to the best of their interests.
[00:39:49] Erik Konicki: And so I really enjoy that aspect of it. I have been fortunate to work with some really good management and some really good buyers that’s [00:40:00] probably not, luck. You know, we do, we do work hard to, identify both, both good sellers, good buyers. so yeah, that’s really a rewarding part of it.
[00:40:13] Terri Hoffman: I think as the, I’m not in this generation anymore, but I think the younger generation calls that, good vibes, Erik.
[00:40:21] Erik Konicki: Yeah. Good vibes.
[00:40:23] Terri Hoffman: Good vibes.
[00:40:24] Erik Konicki: Vibes.
[00:40:25] Terri Hoffman: Yeah. There you go. Yeah, well, I don’t know, are there other areas, you know, I’m hoping that we covered the majority of what we had planned to cover, but are there any other areas, you know, that you guys feel we overlooked that are important?
[00:40:42] Erik Konicki: I don’t think we really overlooked anything,
[00:40:43] Terri Hoffman: Okay.
[00:40:44] Erik Konicki: One of the most important things I will say is, preparation before going to market,
[00:40:49] Terri Hoffman: Okay.
[00:40:50] Erik Konicki: We spend a lot of time on that and for good reason, you know, if you are able to answer questions quickly, have your, [00:41:00] documents prepared and look professional as you go to market easily accessible.
[00:41:05] Erik Konicki: These are, these are things that give an investor or buyer more confidence. And from a buyer’s standpoint, if you see that, you know, just try and walk in the other guy’s shoes for a minute. If you see everything’s organized and ready to go and looks professional, feels professional, meeting timelines and deadlines, that helps build confidence in the deal and just really gets the relationship off to a good start once the deal is closed.
[00:41:30] Erik Konicki: A lot of time in preparation.
[00:41:33] Terri Hoffman: What would you say if, there is a business owner listening to this, what would you advise as a good way to start? What does that first conversation sound like, because I wouldn’t even imagine the first conversation is, Hey, you should get a valuation. There must be a little bit of a build to that, unless they have a specific timeline in mind.
[00:41:52] Terri Hoffman: What kind of mindset or things should they be thinking about and just even having an initial outreach and talking to you guys.
[00:41:59] Lindsey Wendler: I [00:42:00] do think one of the first things we talk about is valuation.
[00:42:04] Terri Hoffman: Okay.
[00:42:04] Lindsey Wendler: And so that usually does sort of kick off the conversation with us. They might have other conversations prior to the valuation discussion with other professionals, but by the time they get referred to us, they want to know what their business is worth, what they could expect if they went to market.
[00:42:23] Lindsey Wendler: And so the very first touchpoint is often a valuation conversation, and that really helps us identify areas of maybe, let’s call them opportunity.
[00:42:36] Terri Hoffman: Mm-hmm.
[00:42:37] Lindsey Wendler: And help them, help guide them on, you know, are there areas that they can improve on? Or is the business really, you know, likely to get the value that they’re looking for in the market?
[00:42:49] Lindsey Wendler: Should we go to market now? it helps with that conversation. But, that being said, even if the valuation is right. Back to Erik’s point, preparation, you [00:43:00] cannot be understated with M&A. And a lot of sellers feel really anxious about getting to market. You know, once they, sign the agreement to work with us.
[00:43:10] Lindsey Wendler: They want to be in the market like tomorrow. and that’s really not ideal for the most part. You really want to do as much preparation on the front end as possible. It makes the backend, it makes due diligence so much smoother, which makes your deal a lot smoother and, better to have issues come up on the front end and deal with them than getting all the way into a process and have it come up the last minute, which kind of, you know, destroys trust and can affect valuation and, that’s just not what we want. So preparation cannot be understated.
[00:43:49] Terri Hoffman: Okay.
[00:43:50] Erik Konicki: Yeah, I, I would say, just to add on to that. You know, start early, as early as you can.
[00:43:57] Erik Konicki: there’s going to be things in the interim that [00:44:00] happen. things that are parts of a conversation I listened for are, you know, questions of value or concerns about value. That really just means that they’re doing some planning or maybe they’ve received an offer. And like Lindsey said, most PE firms go direct for a discount.
[00:44:19] Erik Konicki: Which is very true. I think starting early and looking at, and finding out where you’re at and then working from there, we do get a lot of referrals that are interested in going to market much sooner, much quicker, and that’s fine. But you can really do yourself, a big service by starting a little early, getting your plan in place.
[00:44:42] Erik Konicki: Then when it’s time, pulling the trigger and go into market, that’s, you know, that’s easier said than done for a lot of folks. And, but you want to understand, as a business center, you want to understand what your options are and, what’s realistic. You know, there’s a lot of talk out there [00:45:00] about a certain multiple or, well, you know, maybe you get a big multiple, but that group, had a different mix of business.
[00:45:08] Erik Konicki: You know, maybe that group. doesn’t have the owner that, or the new investor relationship that you want, you know, that, that’s super, super important. Super important because especially if you have a rollover, you want to be able to, work with that new management. And sometimes that could, if things go well, that could be a much bigger piece of the, of the pie in terms of the value, that the owner receives.
[00:45:32] Terri Hoffman: Okay.
[00:45:32] Erik Konicki: So, start early.
[00:45:35] Terri Hoffman: Okay.
[00:45:36] Terri Hoffman: Yeah. Start what is early give me a little bit of a definition to that.
[00:45:40] Lindsey Wendler: At least a
[00:45:41] Lindsey Wendler: year. Yeah. Okay. I think if you’re a business owner, you’re listening. And maybe it’s been in the back of your mind. I would say start, you know, get in touch with an investment banker.
[00:45:53] Lindsey Wendler: They can point you in the direction of, you know, a great accounting firm that can do the quality of earnings, that can look over your financials and [00:46:00] make sure they’re really defensible. you can start working on the narrative. You can maybe make, some tweaks in the business that will, you know, look really favorably once you go to market.
[00:46:11] Lindsey Wendler: So I would say at least a year is ideal. But you know, that being said, most of the time what happens is a seller comes to us when they are ready and maybe there’s been some sort of, you know, health situation or. Maybe a partnership issue or there, there’s usually some catalyst and the transaction needs to take place sooner rather than later.
[00:46:37] Lindsey Wendler: But still, if, if you can give yourself time and do everything right and invest in the process, because it will pay a, a multiple, literally in the end.
[00:46:50] Terri Hoffman: Okay. Anything to add to that, Erik?
[00:46:53] Erik Konicki: One more thing. I would suggest thinking about how you would like to go to market if you’re a business [00:47:00] owner, what your objectives are?
[00:47:02] Erik Konicki: We don’t do, a blast. We do a really fine search on, potential partners. And that, I think has led to better relationships with us. We’re not going to put your business out on a website. We, you know.
[00:47:17] Terri Hoffman: Yeah.
[00:47:18] Erik Konicki: We’re going to take the time to present professionally. The business to the right people and we definitely don’t just blast it out there.
[00:47:27] Erik Konicki: It’s, and that, I think that’s an important point for owners if they want to make a transition, how, how do they want to approach the market? If it’s a type of business that you do, do that great. There’s nothing wrong with doing that. It’s just that’s not their approach that we tend to take.
[00:47:43] Terri Hoffman: So it’s interesting ‘because it sounds like you’re saying think about more than just the price and the timing.
[00:47:48] Terri Hoffman: Think about, make your wishlist, right? and because of the experience the two of you have, if they’ve put things on their wishlist that create a mix, that would be more [00:48:00] challenging. You at least can point those things out during that conversation. Right? But at least if you know their wishlist, and don’t limit it to just the price and the timing.
[00:48:08] Terri Hoffman: Think about the employees and how long they’re going to be involved and what the company culture would look like in their vision. Like I’m, I’m sure those are all pieces that as a seller, don’t, don’t sell yourself short. Right. Think about those wishlist items and have them in your mind, and I’m sure you guys even point out things that they might not have thought of.
[00:48:33] Erik Konicki: Yeah. As well, key employees is a big one, you know, if you have key employees and you don’t have. contracts with them.
[00:48:40] Terri Hoffman: Yeah.
[00:48:41] Erik Konicki: You know, think about that. You know, you don’t want to sell your business or the, you know, you don’t want to have, a transaction and then all your people leave, you want to make sure that they’re staying.
[00:48:52] Erik Konicki: And, you know, sometimes you can be creative with the, counterparty on what the terms look like for that. if they want to, [00:49:00] you know, take somebody in particular and promote them, you get a chance to work with and put your 2 cents in on that.
[00:49:07] Lindsey Wendler: When a seller has, clear vision of what they’re really looking for, in a wishlist that also can direct the exit channel that we’re looking for.
[00:49:14] Lindsey Wendler: So is it a strategic buyer? Is it a private equity buyer? Financial buyer? is it some sort of hybrid that would be ideal for them? do they want to be a platform acquisition? Do they want to be an add-on acquisition? if they’ve thought through some of those things that can really help direct the direction of the deal.
[00:49:31] Terri Hoffman: Okay. What, so with the episode we’re going to publish your LinkedIn profiles, and the website address for the business. What would that be the best way that you’d like people to get in touch with you if they’re interested in a conversation and getting in touch?
[00:49:49] Lindsey Wendler: Yeah, I think that that’s good. Yeah.
[00:49:51] Erik Konicki: Yeah. Same here. I’ve got my number and email address on there.
[00:49:55] Terri Hoffman: Okay.
[00:49:56] Erik Konicki: And a really nice picture.
[00:49:59] Terri Hoffman: Most important, more [00:50:00] good vibes. Yeah.
[00:50:02] Erik Konicki: Good vibes.
[00:50:03] Terri Hoffman: More good vibes. Well, this has been really helpful. I mean, I think this is going to give a lot of great information. the purpose of my entire podcast is to break down different fears and resistance that people have, mostly to sales and marketing.
[00:50:18] Terri Hoffman: But this connects, right? And so it could be the sale of your business or, preparing for the sale of that business. And I think the more people feel comfortable and confident with the subject matter. The more willing they are to enter into those types of conversations. Because you’re ultimately helping people reach some kind of end dream, right?
[00:50:38] Lindsey Wendler: Yeah.
[00:50:38] Terri Hoffman: And so they can only do that if they start the conversation with you.
[00:50:42] Erik Konicki: Yeah. And you make a good point. the growth, the marketing of the business, those are all very, very important to most business owners, but, you know, having a good, solid plan in place and, a wishlist of how they could grow it.
[00:50:54] Erik Konicki: if they’re 20 years younger and had a blank check to, you know, put into the business. those are nice to [00:51:00] have in order and be able to talk about fluently.
[00:51:03] Terri Hoffman: Yeah. Well, thanks to both of you. I really appreciate it. Thanks for being the first two guest episode. We’ll get some extra hype for that, which I’m really excited about, but I, I really appreciate y’all’s time and willingness to participate and be part of the episode.
[00:51:19] Erik Konicki: Thank you, Terry. I enjoyed it.
[00:51:21] Terri Hoffman: Thank you for listening to B2B marketing methods. Please be sure to follow us on your favorite podcast channel and leave us a review. We’d love to hear from you and connect. You can find me on LinkedIn or visit our company [email protected].