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In this episode of The Inner Chief podcast, you’ll hear from Ben Simon, Partner at Rose Partners, on diffusing heated negotiations, identifying red flags during a deal, and managing founders.
Ben has spent his entire career at Rose Partners, and has worked his way up to become a Partner at the professional services firm.
His specialties are in Business Advisory, Mergers & Acquisitions, Business Valuations, Tax and structuring, and Large business transaction and he has performed these duties across many industries. This is critical for all executives to understand strategy and getting ahead.
As a testimony to his wealth of knowledge, Ben has also been asked to sit on several clients’ advisory boards.
In this episode we talk about:
- The role of an advisor and bringing transacting parties together;
- What a good advisory team looks like;
- Identifying red flags during the deal process; and
- Managing founders after a sale.
Connecting with Ben Simon
You can connect with Ben via email
Books and resources
“If you want money, ask for advice. If you want advice, ask for money.”
On what roles advisors play
- We've positioned ourselves as that trusted advisor with our clients. We're involved with our clients, we know everything about their lives. Most of them become friends, we're all about quality over quantity, and really knowing what goes on in their life and what drives them, and what drives their businesses, and we have regular interactions with them.
- Nobody knows their business as well as the business owner, but we're that sounding board. Sometimes they may get caught in the weeds or lose track of where their priorities are or what's right for them.
- Once in a heated negotiation, the Chairman and Corporate Advisor blew up at one another. My role was to diffuse the situation, so I said, “All right, let's work out where we agree, let's work out where we don't agree.” And basically I worked to remove the emotion from the situation.
- And that's probably the key, finding out what the real issues are. And sometimes people either don't share the real issues, as they’re either too embarrassed or don't know what they are. Often, the issues are nothing to do with the business.
- What makes a great advisory team is you want some industry expertise and you need some good tax advice.
- Find a great lawyer who understands the commerciality of what you're trying to do. You can't get rid of every risk. People think, “Okay, now we've got lawyers, now we've got a document, there's no risk.”
- In terms of risk management, I ask, “What's the absolute downside?” Try and get a deal to a position where you're happy with the worst case scenario.
On what holds people back during the deal process
- We're really good at coming up with ideas as the advisors or accountants, and even the clients. And the lawyers, to their credit, document it. And sometimes things that you've sort of agreed and done a handshake on don't actually make sense.
- And that's what lawyers can be great at, making sure things make logical sense. On the flip side, sometimes trying to document every possibility, you can absolutely kill the deal.
- If you've been in a career all your life, and getting a wage all your life, there's a huge element of safety to that. If you've been in a great career, you're a well paid, high level exec, you've got something to lose.
- People get caught up in things that aren't that important, like wanting to control how the business is going to be run after they've sold it. It's their baby. So people get caught up in it emotionally, which is fair enough. But maybe I've got to question whether you should be selling or not selling.
On networking between entrepreneurs
- You're so used to your peers being similar to you. But that all changes when your peers become people that are in business; they are taking risks and look at opportunities differently.
- Business owners tend to be in the same basket, they love to talk about business because they don't have anyone in their own businesses, often, to talk about it. And generally, people are pretty open and want to mix with people from other industries and have a chat, they just want to share similar experiences.
- Starting something from scratch is really, really hard. It's that simple. Having done it before myself with other businesses, I don't think I'd ever want to do it again. It is far easier to take something that's maybe a less than ideal business, but has infrastructure and has some resources in place.
On managing founders after a sale
- I think you do want them around, but you need them incentivised the right way.
- You want them to play nice, because some are past their use-by date, the business needs a reinvigoration, it's not going to happen while they're still there. Because they'll also fight against it once the transaction happens.
- The most important thing I think I've learned is that it's not the deals you do, it's the ones you walk away from. It's learning to say no. Too often people get caught up in the deal; we've started the deal, we've got to finish the deal. And then they get stressed, “Well, what happens if we don't do the deal?” But they lose sort of clarity over what happens if they walk away.
On red flags in deals
- When you are selling your business:
- Working with some clients that I thought were completely unreasonable, is them saying no and moving the goalposts. It's amazing when someone really wants to buy your business, how much they will move with you on those goalposts.
- Or the buyer will start the transaction promising the world, and this amount of money up front etc. But by the time it comes to transact, the money's different or there are vendor terms, or actually understanding whether they even have the money.
- When you are buying a business:
- One of the really interesting ones is when you start due diligence. Seeing how quickly the information comes back to you, because suddenly you get a really good feel for how organised the people are. And when you start talking to the vendors about their business and whether they can answer things easily off the top of their head or not, it's almost less important what's in the documents you get given, but how quickly you get given them and how organised they are and the depth of the answers that you can get.
- In some cases, say, “Let's do a binding or even a non-binding terms sheet, but let's get all the details out.” But sometimes working through the terms sheet will actually push the deal further apart, whereas sometimes it's better to get everyone committed and actually moving on the transaction.
- It depends on how well do the parties know each other, how well do they know each other's industries?
- There’s also the risk that if we don't do this deal, what will the other party do with the information? Are they a threat?
- Stop and think, “Why are we doing this, and what happens if we don't do it?” Or, “What are our alternatives to making this move?” And I think that would probably be how I think about strategy.
- It's funny, some of the best operators I've seen are people who are completely neurotic. Because they actually worry about every element of what's going on in their business, they second guess themselves. But not to the extent it stops them taking the risk, but just to the extent that they feel like they've thought it out from every possible angle.
On the best advice he got
- Keep things simple. It's amazing how many times I've been with a problem, and I’ve got all these solutions and ideas and ways to deal with it, and my mentor will walk in and within minutes he'll turn around with one step, “Let's just do this.” And it's something completely out of left field, and again, it's with an extra 20 years of experience on there.
- Find win-win outcomes. There are plenty of people out there that they feel like someone needs to lose to win. I think if you always look for a win on each side it's a lot more fulfilling and a lot more exciting.
- It doesn't matter how many knockdowns you have, no one can take away those experiences from you. I've seen clients go from having a business fall over and bankruptcy to, two years later, they're far wealthier than they ever were, and in a much stronger place.
Final message of wisdom and hope for future leaders
- There's still no substitute for hard work. Just turning up and doing the hours isn't going to get you there. So work hard but smart – if you can do some extra hours without burning yourself out, you're going to get where you're going a lot quicker. You're just going to have more experiences.
- The other one is you're going to have to do a whole lot of crap first in your career. That’s just life. And it doesn't matter what industry, I see so many people change, whether it's industries or jobs, every two years. And it kills me, because it takes two years just to get settled in a position.
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