On-Demand: Buying & Selling Closely Held Businesses During a Pandemic
May 20, 2021
We discussed the secrets of successfully completing a transaction in stressful times, and the impact it may have had on valuation.
They will reflect on the normal risks and opportunities of a complex MNA transaction, which involves significant dollars and life changing events for many, but also how it was done in an environment different and more challenging than we have ever seen before. With almost everyone working remotely unable to do in-person things that are typically essential in such transactions, such as site visits, in person meetings between principals and their advisors to name a few. What will we do this morning, is you will hear from the three principals separately in one-on-one discussions with our respective hosts who work directly with them on their transactions.
Next, will be followed by a group discussion with the principles and the host. And lastly, we will take questions from the audience and we encourage you to send in those questions during the presentations.
Okay, well, so let's get started. Alan is going to give a brief market update of what's been happening during the last year and a half. So I'll turn it over to Alan. Alan, please.
Alan Scharfstein:All right, well, thank you very much, Frank, and good morning, everybody. You know, I'm just taking a look at the polling questions and the results. And what it tells us is that, you know, over half of you are considering some sort of MNA or capital raise activity. So let me take a few minutes and talk to you about really what's going on in the middle market today in terms of the merger and acquisition marketplace. Though, the pandemic slowed the MNA market in March and April of last year. It has really come back with a vengeance. My best way of describing this market is to say that it is hot. What does that really mean? It means it's probably as active as I have seen it in my 35 years of doing MNA. It means that the buyers are bidding up the prices of middle market businesses and paying near record multiples. But, you know, we always ask ourselves the question of why is this occurring? Is the market really this attractive? Well, I would say there are probably three factors that are helping us to experience this marketplace. Number one, we have strategic corporate purchasers, both public and private who are sitting with records amounts of cash on their balance sheets. And they are committed to growing their companies but organic growth is really tough in today's market. So acquisition is probably the safest and the best path to grow.
At the same time, private equity firms have raised literally trillions of dollars that they are prepared to invest in acquisitions. They also own many platform companies, and typically those platform companies owned by private equity firms are executing on one to three acquisitions per year. And if you had asked me a couple of years ago, I would have probably told you that that strategics are typically outbidding private equity firms in valuation. But today, many of those BE firms are competing. And in some cases actually outbidding the strategics. And finally, it's the foreign buyers, companies from outside the United States. The US economy is recovering from this pandemic faster than most economies of the world, certainly faster than the Western European economies. And these foreign companies want to be in the US. We are the world's largest economy. We're the world's largest market. And if you don't have a foothold here, you want one.
So from the buyer's standpoint, bottom line, lots of buyers paying high prices in a pretty broad array of industries. But let's just look at the sellers for a second as to what's going on, on the seller side. Why are we seeing so many sellers entering the market? Probably again, three reasons. One, lots of business owners really don't want to miss this opportunity to sell at a high price. Number two, there's just more optionality for buyers today. For sellers, I'm sorry, the business, I always tell you than there ever has been. Traditionally, you could sell your business. You could own your business, but today you can sell your business for cash, but you can also hedge your bets by selling through a private equity firm and takes some cash off the table and some risk off the table, but at the same time, retain some ownership and get a potential second bite of the apple. And probably the third reason that we see so many business owners looking to sell is what I would just simply term COVID exhaustion.
It's really been a brutal 18 months for all of us. Even business owners whose businesses have performed well during the pandemic are just spraying and many are rethinking priorities, trying to understand when enough is enough and have made the decision to get out of the rat race, probably just a little earlier than in previously planned.
So the bottom line on all of this, it's a really active market. With really high valuations. And the only question I'm not going to answer for you today is probably the most important question of all, which is the question of when will all of this end? When will this market slow down? You know, none of us really know the answer to that question, but I always just go back to the famous Commodore Vanderbilt quote, when someone has Commodore Vanderbilt, how he made all his money. And he said he made all his money by selling every business too early. So with that, I am going to now turn this over to my friend, Travis Epp. Travis?
Frank Cannone:That makes sense. The world of virtual meetings. So, and we're all used to it. That's what COVID was about right. Somebody threw us a curve ball, we sat back, we dealt with it. And, especially from a lot of the folks on the phone today or on the on the webcam today, they did well over the last 12 months by being resourceful. So again, it's Frank Cannon and I'm here now with Justin Nardone, he's the founder and CEO of Figure Machine Tools. What I'm going to do right now is give you a brief overview of Gibbons, and then introduce you to Justin, who will give you an overview of the sale of figure to desktop metals, that we Gibbons advised on. First Gibbons. Gibbons is approaching our hundredth year anniversary. And we've always been headquartered in Newark. We have over 200 attorneys. We operate out of eight offices from New York to Florida. We're a full service business law firm, commercial litigation, intellectual property, corporate employment, and services. And we operate throughout the United States and others. I will know what just to follow up on what Alan mentioned.
I would say I have close to five projects right now for foreign buyers that we're working on from Poland, Germany, Spain, and France. And so what Alan mentioned about the foreign buyers is incredibly accurate. And I will say though, last year it was incredibly silent. And I think Europe took a while to get where they are. So we've seen it firsthand in the corporate department. We routinely advise on MNA capital raising, financial transactions and commercial contracts of all types. With respect to a sale of a business, we'll advise on all legal aspects. And a lot of them, for many of the people it's, life-changing, we'll help you negotiate terms, evaluate financing alternatives, provide our view on what's good for you as a financial buyer, a strategic buyer, and offer you the best deal structure from liability tax and of course, estate planning aspects.
Last year, from a lawyer's perspective, COVID didn't change our practice too much. It just didn't because the technology had been available in recent years, we continued to negotiate matters online remotely. We didn't even have to do anything on site with respect to due diligence. You do it electronically. We had two virtual data rooms. So that was on the legal side, but I will tell you our clients down there on the other hand did face a lot of challenges. They were significant. They couldn't travel. There were no in-person meetings, no onsite visits, which made it difficult for them to gain their relationships, candidly, and the confidence to enter into a sale or a purchase of a business. I'll say that I'm often asked if I could get one representation in an MNA agreement, what would it be? And the other is always, if you're a seller or a buyer of a business, what would be the one thing that would help me as a principal, do that would make the event be successful?
Well, for the first one, I always say, you have to have a representation on financial statements. Those are the eyes of the company. The second one for principal, it's critical for them to get to know each other, the buyer and the seller, the decision makers. I suggest meet in person, spend time together, go to dinner, have a drink if you can. It'll help the process. You don't know when, but it will. Unfortunately last year that wasn't feasible. It just wasn't. So we had to assist our clients through these challenges.
I'll say that during COVID our corporate departments successfully closed over a hundred transactions, many purchases and sales of businesses. For example, we were a US council with the $4 billion sale of the German shoe company, Birkenstock the private equity, just recently finished that up. More particularly, we had the great privilege of working with Justin and his sale of Figure Machine Tools, the desktop metals, which simultaneously concluded a SPAC reverse merger to become a publicly traded company last December with a $1.5 billion market cap after the merger, it was an exciting deal.
We are thrilled to have Justin here. Justin, can you please tell the audience about yourself, your company and its sale to Desktop Metal? Thank you.
Justin Nardone:Yeah, sure. Thanks, Frank. So I started Figure a little over two years ago to develop some technology around digitally forming sheet metal. So we're in the 3D printing space. That is kind of a hot space right now, I suppose. There's a number of companies that have gone public recently. And so develop this technology, it was a true garage startup really out of my garage and basement. And over the time period of developing the technology, I met the CEO of Desktop Metal who had raised tons of capital, used to be a VC prior to starting Desktop Metals. So he was well versed in that space. And so I had met him. We had, as Frank said, one should spend some time together and just talk shop for a little while.
And that was well, well, before any acquisition was even looking to take place. And so Desktop Metals also in the 3D printing space, although we're not really competitors, we both developed technologies that are really about moving forward, the space of digital fabrication in 3D printing. And late last year, we started discussing this concept of an acquisition and it was in parallel with them going public via a SPAC. So there was, there was a number of SPACs that happened last year with, I think it was well over a hundred, something like that. And so thought of going from a single person garage startup into part of a large now publicly traded company was certainly interesting. There was a lot to navigate through the transaction, which I'm sure we'll discuss more with Frank.
Frank Cannone: Thank you, Justin.
Justin Nardone:Thanks Frank.
Travis Epp:Good morning and my name is Travis Epp. I'm a partner at EisnerAmper and I lead our manufacturing and distribution group. It is my pleasure to represent EisnerAmper. And our 2000 employees across the United States. As was mentioned previously by Frank and Allen, the current demand for MNA services is extremely high. As business owners are often exploring an exit. Businesses have had a very challenging year managing their way through the pandemic, addressing many issues, including supply chain and human resources. It is prudent for business owners to consider whether they should take some risk off the table. Our transaction advisory services group performance, both buy-side and sell-side diligence services that are designed to help the buyer or seller fully understand the value of the business being acquired or sold as well as identify key financial issues. Our diligence team also includes tax experts that can assist in a tax planning, compliance, and structuring.
A key service we also provide is a review of state and local tax issues. As there are often exposures that can impact the closing of the deal. And then finally, some additional services that we perform to provide value to business owners include IPO readiness, IT risk advisory services, including cybersecurity. We have a dedicated team focused on SPACs, and we have a team of consultants to help companies understand the value of ESG and CSR programs. And now I'm going to turn it over to Michael Charney of Colliers international. I am very fortunate to have started my working relationship with Colliers international and its related companies almost 25 years ago over. Over to you, Mike.
Michael Charney:Thanks Travis. So like Travis mentioned, I work for Colliers international, which is the public company up top. So on the strategic investments team, which is centralized in Toronto, where I am now, and we handle all of the balance sheet acquisitions or any sort of investments that Colliers makes across the world. We're currently in about 68 countries. And I'll go quickly into all of the different verticals that we invest across, because a lot of people view Colliers as just a brokerage and property management firm. And in reality, we're much, much more than that across the world. So we see ourselves as more of a professional services and an investment management firm, rather than just a brokerage and property management firm. So we invest across a whole bunch of different verticals in no particular order. It's commercial real estate services, which is leasing and sales, brokerage, property management, valuations, owner's rep, project management.
So that's overseeing construction of schools, hospitals, social infrastructure, commercial real estate, investment management, like I mentioned. So we manage about $40 billion of real estate and infrastructure assets for third parties, mainly large institutions like pensions and sovereign funds engineering services, which is how Travis and I were connected. This was a partnership that we entered into in the middle of COVID. And we did our first tuck-in acquisition, which is how I came to meet Travis. They helped us with the financial due diligence work of Bolton pres, which was a Miami based transportation design firm that we acquired through Collier's engineering a few months ago. And then our last vertical is mortgage brokerage. So we underwrite and place debt for a large number of US agencies, including Fannie Mae, USDA, HUD, FHA, and all of those. We're a very inquisitive firm. So in any year we'll do up to 10 or a dozen acquisitions per year.
We'll go into later how COVID impacted all of that. And we take a partnership approach to everything we do. Colliers engineering is a great example. So partnership extends all the way through our company, right from the public level, all the way down to how we do deals. So we're a little bit different in that we are a controlled public company, our management team and insiders control about 40% of the economics and 60% of the boats, which means we can kind of chart our own destiny. So we have a very long-term view of investing, which really helped going through COVID and we can make longer-term decisions that other public companies or even private equity firms can't really do because of a much shorter term focus. So again, speaking to you because of the Bolton Perez acquisition that we did get into the specifics of that through the questions later on.
Travis Epp:Thank you, Mike. I'll turn it over to Alan now.
Alan Scharfstein:All right. Thank you, Travis. And good morning again, everyone. I'm Alan Sharfstein, I am the CEO of the DAK Group. And the DAK Group is a merger and acquisition advisory firm dedicated to assisting middle-market business owners in maximizing the value of their company. We are totally dedicated to the middle market, the privately held and entrepreneurial businesses. And when we say that we're investment bankers to the middle market, what does that really mean? Well, it means that we help middle market businesses in a few activities. For those companies that want to grow, we are able to assist the companies in growing through acquisition. We help you understand the value of your business in today's M&A market. Because one of the things that we really find in today's market is most business owners don't really understand the strategic value of their business and what a buyer is going to be willing to pay for it.
If it's the time for you to sell, we help you figure out how to best position the business for maximum value to how to prepare the business for sale, what you have to do prior to going to market to make sure you get the highest valuation for your business. And when the time comes to take risk and money off the table by selling your business, whether it's a full or a partial sale, run that process for you in a highly confidential manner, finding the right buyer. Many people think they know who the right buyer is for their businesses, but most are really surprised by who's going to pay the highest price, whether that's a domestic or foreign buyer, whether it's a strategic or a financial, private equity buyer, whether it's a public or a private company. The bottom line is we assist businesses in finding the right buyer at the right time and making sure you're making the right strategic decisions for your business.
And one of the companies that we were able to assist in finding the right buyer was Astrix. And tonight we're really, really fortunate to have with us Rich Albert. Rich is an extraordinary successful serial entrepreneur. He founded US Biosystems, which he sold to a private equity backed company back in 2005. And after exiting US Biosystems, Rich decided to do it all over again. And he founded and became the CEO of Astrix Technology Group. Rich ended up, with our assistance, selling Astrix to Quad-C partners, a private equity firm in December of last year at that really height of the pandemic. So Rich, it's really great to have you here, and maybe you could just take a couple of minutes to tell us more about yourself and tell us something about your transaction.
Rich Albert:Sure, Alan. Thanks a lot. Really appreciate it. So yeah, I've sold two companies in my career, US Biosystems 2005. Small deal. It was a $7 million deal. The company, I bought it out of receivership for $2 million and sold it for $7 million. It was a difficult transaction, but we got it done. I started up Astrix from $2 million to $83 million in 2020. And basically Astrix is a services company focused on the pharmaceutical industry. We provide IT services and we provide staffing services to both the federal and the private sector. We went to market in, I think it was January. Then we stopped it in March because of COVID. And we resumed it in July with DAK. We went out to a short list of strategics and private equity companies. We sold the company to Quad-C Partners, private equity company based out of Virginia.
It was a good deal. I learned a lot of things during these transactions. One of my main reasons for selling the company is that we were really driving growth. The best time to sell is when things are going really well. And I think having the ability to walk away from it is very important also because I could have kept the company. We were doing $12 million in free cash flow a year, we were happy, the company was driving growth, but I was concerned about the capital gains potentially increasing. So I think that is a big driver for some of the sellers going from 20% in a federal level to 40%. That certainly was one of my issues. And I foresaw that maybe a democratic administration would come in and increase taxes. It seems like they're moving in that direction now. Really what I learned, it's mostly private equity so I can't really comment much on strategics.
I would just make sure that if you're dealing with private equity firms, make sure that they have committed money and not pledged money. I dealt with a pledged money private equity company with US Biosystems. You end up selling to just about everybody. All their limited partners, and it's a long, challenging process. So committed companies, they just do a capital call, they give information to their limited partners, but it's an easy way to move the process forward. I guess the other thing is with private equity and roll-ups, you're usually going to get a lower multiple. In our business, the multiple on a roll up would be six. We were purchased as a platform company. Platform companies, you don't get a higher multiple in the 10, 12 range in our industry.
I would clean up any litigation if you're planning on selling any material litigation so that the company is pretty clean. I also think during COVID, there was a big transition from brick and mortar to virtual. Our company was virtual. We had about 200 core employees. Only about 20 of them, 30 of them worked out of offices. So that really worked to our advantage. I think if you're thinking about selling a company, if you can do it, virtual footprint is kind of the post COVID thing to do.
And so we were very attractive with regard to having a slim down organization, most of the people work from home. Due diligence is a rollercoaster. Going through it, we only had a 45-day due diligence period, but I think that what I would do in your LOI, this is something I learned, is if they change the price, eliminate the non-compete so that you can end it at that time. So then they won't kind of deal with you on a price basis. So you've got the price locked in, you drive towards closing, you hit a lot of hiccups, you get over them and you just move the process forward. If you're a platform company versus I guess a roll-up, a lot of times roll-ups they want an earn out. I'm not really in favor of earn outs.
We were a platform company, so what we did is we rolled over stock into Astrix 2.0, and that was a good deal because it deferred capital gains tax. So there's all these little nuances, I guess, that you learn during the whole transaction process. That was great doing it. The team was fantastic. Everything was done virtual. And none of my team members or executive staff ever met any of the Quad-C partners in person during the transaction. We had a lot of Zoom meetings just about every day with them and the people that coached them. LEK, a bunch of their due diligence partners. We set up a virtual data room, it went flawless. What's nice about the virtual data room, you can really see what the activity is going on. So you could see who's really interested.
Alan Scharfstein:Hey, Rich, I'm going to bring it back to this in a few minutes, but let me break in for a second because I know that Frank and Travis have a couple of questions that they have, and we're going to come back to you in a couple of minutes, okay?
Travis Epp:While we're waiting, Lexi, to put the numbers up, it is sort of very interesting how there is a lot of commonalities in the different deals. A lot of what Rich was speaking about is a lot of what we've been talking with Colliers Engineer & Design when they are looking at their targets as well. Do we have the results, Lexi?
Travis Epp:Okay. It looks like it's an almost of a 50/50 mix, and there's always a lot of work to be done as you get ready for the transaction, and when it goes through the diligence. It's more than you expect. But we're going to move on now into the Q$A discussion, and this is where Frank, Alan and I will ask some questions of our guests and then our other guests will make comment on them as well. So I'm going to start with a question for Mike. And can you just comment on whether during the pandemic it increased or decreased your opportunities for targets?
Michael Charney:Sure. So Alan hit on a lot of the points actually that I was going to make. I kind of bucketed it into two timeframes. There was last March when everything basically stopped, there was so much uncertainty. Just because of all of that, a lot of the discussions stopped. So we still closed two of our largest transactions through that period because of the strengths of the business. Another thing that is pandemic highlighted is business models that thrive in these sorts of times of uncertainty and then ones that were more affected. One of the deals that we still closed was on our partnership with Colliers Engineering. So that was March to the late fall. And then just echoing all of the comments earlier, the spigot completely opened up in the winter and all of that pent up demand seemed to come back all at once.
I'm sure all of the other professional services firms can attest to that too. And since then in the US especially, it's been very, very frothy. There's been a lot of processes. A lot of the deals that we do are on a one-off proprietary basis. And all of those have come back as well. Unbanked is the term that the bankers use there because they don't like those deals. So there are industries that have been faster and slower to bounce back, but talking about engineering specifically, which is a large mid-market focus, they've come back in a very big way. On a global basis, we saw the pandemic kind of play across all of the 68 countries that we're in and everyone's more or less in different stages.
But when the US started coming back, that's when we saw a lot of the other regions M&A activity started to come back as well. A lot of global capital flows and everything key off of what happens in the US so that wasn't surprising. And looking forward, I think we see this activity continuing to stay where it's at for at least another few months, maybe six months or so. And especially in those industries, that show that they're very resilient. I think you're going to ask me a question about pricing a little later on, but there were some industries that maybe didn't fare as well. The deal flow hasn't come back quite as much for those. And there's a little bit of a bid ask spread in terms of what people perceive the value to be.
Travis Epp:Thanks, Mike. We'll turn it over to Frank.
Frank Cannone:Thank you. Sure. Thanks. Thanks, Travis. It's a question for Justin. Justin, while you're doing your transaction, how did the pandemic affect the process of the transaction while we went through it last year? Maybe you could elaborate a little bit on that. That'd be great.
Justin Nardone:Yeah, sure. Yeah, I think since we were already into the fall when we were doing the transaction, we were all kind of used to being on Zoom already and doing lots of meetings and things like that. The company that acquired me is up in Boston and I'm down here in New Jersey. So I think a lot of it would have been done remote regardless of the pandemic or not. I kind of look at it in three different sections. There is initial negotiations than just a pile of due diligence around legal business issues, intellectual property, which Gibbons also helped with. So there was that kind of middle section. And then sort of the final wrap up. There's always a number of different sticking points at the end that you have to go through. And I think that the big middle part was fine over Zoom. In fact, I think it's quicker to do that rather than going back and forth to Boston, to do a bunch of meetings.
The initial discussions, I think, would have been better in person. Luckily, I had already met the CEO of Desktop Metal and spent some time with him and had a number of discussions over the year prior. And I had met a number of other people from management and engineering as well. So having that prior meet in person certainly helped even though we had to negotiate remotely. I think where it would have helped to be in person was the final wrap-up of the deal, just to do the last little bits of negotiations and discussions that were really a combination of legal and business issues, would have been much easier in person to just go with you, Frank, up to Boston and sit down with their counsel and their principals and just hammer it out in a day versus a whole bunch of different meetings between different people over the last couple of weeks.
Frank Cannone:You have everybody collectively in one area because it's fluid. It's not just one topic.
Frank Cannone:It's multiple topics. That you're in a scrum and you're trying to get out of it. You're really close to the goal line and it's sort of collaborative and of course you're negotiating, but it's collaborative to try to get this resolved. Everybody wants the deal done now, and there's going to be hiccups how to resolve them.
Justin Nardone:That kind of stuff I think it would be more fluid for sure. But it probably would have wrapped up a couple of weeks prior, but I don't think it hindered it too much at the end.
Frank Cannone:I think that's right.
Alan Scharfstein: Thanks, Justin, Frank.
Alan Scharfstein:Hey, Rich, one of the things that you mentioned before when you were talking was the fact that your transaction occurred just totally virtually. You never met the buyer and selling team, never met. That's the first time in my business career I've ever had a situation quite like that. Can you just sort of give us a little insight as to what that was like and how you develop that confidence and how you allowed the buyer to develop the relationship with you that gave them the confidence to pay a great value for your business?
Rich Albert:Yeah, I think during COVID, we pivoted everything to virtual Zoom. So it was kind of a forum that I was used to. I would say the first thing, have a good internet connection. That's probably the most important thing. I think virtual closings much more efficient. You're not flying here and flying there. Basically to get through the due diligence process.
The data room helped out a real lot. I still haven't met any of them. I left the company after a three month transition, but none of our executives or senior management has ever met any of the members personally at Quad-C, but you get to know people online and we had many, many conversations and the hiccup issues, which always come up and usually near the end, it was just getting on the phone and working through the issues. It probably would have been done better in person, but we got it done. I thought it was efficient. We closed in 45 days. I thought the process was great.
Frank Cannone:Hey, Rich. This is Frank. Okay. Did they ever speak to any of your clients or customers or vendors?
Rich Albert:Yeah, they had Ellie Kay, which was one of their due diligence partners. They spoke with clients; they did a survey of all the employees. They did a very thorough due diligence. We gave them the appliance that really liked us. They spoke with people that were big fans of Astrix So I don't know how much value that is.
Travis Epp:That actually transitions nicely into our next question from Mike. Mike, you might want to add onto that. But the question was, were the challenges of performing the diligence offsite?
Michael Charney:Yeah. So I can maybe give the buyer's perspective. And I'll kind of split my comments into the nuts and bolts of diligence, and then from my perspective, the much more important part, which is getting to know the management team. So in terms of the nuts and bolts, I think most people pretty seamlessly moved to Teams and Zoom and all of that. For the businesses that we buy, they're people-based businesses. So there really isn't any hard physical assets to go diligence. So I'm sure my comments would be different if it was buying an iron mine or something like that, but we only invest in people businesses. So all of the financial diligence and the IT and all of the shared services, as Richard said, a lot of that, you're relying on advisors, partners just like EisnerAmper to do quality earnings and that sort of thing, which has always, even before COVID, usually been done fully remote.
We have boots in the ground in pretty much every major city in the world. And so for Bolton specifically, we were able to have a local team go in and look at some of the physical IT assets and all of that sort of stuff. And then maybe the more important side, which is getting to know the management team, which is really the most important part, it's the thing you need to get right the most when you're buying people-based businesses. And for us, focusing on culture is kind of the number one far and away most important thing. And a lot of the upfront diligence, someone mentioned this earlier, that stuff's always better in person. When you meet someone, look them in the eye, shake their hand, the video calls are a pretty good constellation though, versus just doing a phone call. So that was great.
But a lot of the people-based diligence comes through in how people manage conflicts and issues throughout the diligence process, which you're going to get either way. Issues come up when you're dealing with all of the definitive documentation and the purchase documents and partnership documents. And a lot of people DD comes through in how people respond to issues that come up. And it's a point that some people forget, but how you approach problem solving says a lot about how you'll be as a partner going forward. So to summarize everything, the nuts and bolts stuff, it really didn't change the approach that much. On the people side, it turned into a lot more video calls, trying to get a lot more face time just to understand the management team and learn who you're investing in.
Frank Cannone:Hey, Mike, this is Frank. I have a question since you purchased people-oriented businesses and service by the individuals; your assets go up the proverbial, up and down the elevator.
Michael Charney:Elevator companies, that's exactly how I describe it.
Frank Cannone:Yeah. I can't imagine anything more difficult than that because it's so hard. How do you due diligence it? And that's my question. So when you're looking at the management group, do you utilize outside personality tests or any of those types of devices to evaluate your targets?
Michael Charney:It's a really interesting question, and we don't. I like to think that's kind of our core competency meeting people and trying to get a feel for them. And it's something that we've been doing at Colliers and FirstService, which is our sister company, who we spun out of about six years ago. It's something that we've been doing for about 30 years, I'm using the Royal we here, long before my time. I like to think that that's a core competency that we have. and the way we structure deals as well is usually very partnership oriented. So Bolton was a tuck in, but Colliers Engineering, the management team there are actually our partners. So we don't own a hundred percent of that entity. The management team continues to own some portion of direct equity in that firm. And so you de-risk a lot of things. It's perfect alignment. So you get to know people, you structure it well, over the long-term hopefully you have a lot more winners than losers, which is thankfully our experience.
Frank Cannone:I guess I'll ask Justin a question. Hey, Justin, with all the uncertainty between COVID and the Desktop Metal SPAC transaction, did you ever consider ending the discussions?
Justin Nardone: No, I think we're all pretty confident that the SPAC would go through. That's kind of the beauty of SPAC transactions versus IPO is that they're, I think a little more solid, especially, and we saw a lot of them happening last year because they were an easier path to going public rather than an IPO. We were well into the pandemic when the acquisition of my company happened. So I think we were over that initial phase that happened earlier in the spring of everyone was nervous, everyone just shut down. We were starting to get in recovery mode, I think as a country and all these different companies moved into 2021. So I think we were always pretty confident that it would go through. The deal may have happened regardless of Desktop Metal going public. I think there was interest there either way. And so it might've been structured a little differently, but regardless, we saw it as a good pairing between the two companies.
Alan Scharfstein:Thanks Justin. Hey, Rich, let me ask you another question here. I know one of the challenges that most business owners have when they look at potentially selling their business is trying to figure out who the buyer's going to be. Is it going to be a private equity firm that's going to use it as a platform? Is it going to be a private equity firm that will be a bolt on to an existing acquisition they have? Is it going to be a strategic purchaser that's going to look at it a little differently? And I know that when we first talked about the possibility of selling Asterix, you were, I think fairly committed to the fact that the buyer of your business should be a strategic purchaser as opposed to private equity.
In reality, I think the deal turned out to be something different than that. So can you take us through your thought process and the deal process that got you to maybe a slightly different answer than you began this process with?
Rich Albert:Yeah well, the focus for strategics was really a financial focus because typically strategics pay higher multiples than private equity. But it turned out, I think with the amount of cash that private equity companies have, I think now they're on par with a lot of strategics with regard to valuation. So I was always a little hesitant about private equity because I had a little bit of a difficult experience with one quite some time back. But I think you have to, in private equity, you have to basically, not all of them are created equal. So there's really good, honest alignment with certain private equity firms. Other ones have expectations that are way too high. You just have to find the right one. I think we saw sold to Quad-C because one, it was a fair price, it hit our target. Two, they were genuine people, they had experience, they had a good track record. Their references came back good.
I think checking references is very important. Most CEOs of companies that have sold their company, there'll be straight shooters. It's not like getting a reference from a candidate, they'll tell you the positives and negatives and you got to hook up with a good one and we did. So that's why we went with private equity versus strategics.
Alan Scharfstein:I think that you made a really good point there in that, most people think that due diligence is a one way street, that the buyer does due diligence on the seller and the seller just answers all the questions, but in your case, and what we certainly advise clients to do is that, that you have to do due diligence on who your buyer is to make sure you're selling to the right person. So maybe just take a couple of seconds and tell us what you did in terms of making sure that that due diligence worked out well.
Rich Albert:Well yeah, I really had frank discussions with them about their funds, the amount of capital in it and how many acquisitions they've done, how many LOIs they went into and failed through the due diligence process. I really wanted to get a feel for their commitment and their ability to close the deal. I don't want to spend two months doing due diligence and run into a snag and have them decrease the purchase price. I was very upfront with that saying, "Look, if the purchase price decreases, non-compete goes away and we'll probably walk away from it." But see, I had the really unique advantage. I didn't have to sell. And we were making $12 million a year as an S-corp and it was a pretty high amount of income. So our interests were to get the deal done but if pricing was an issue, we would probably break off discussion.
So I think having just very frank discussions. We did reference checks on them. We knew about their fund. We met most of the partners virtually. We understood who they were. And I think you can get a good sense of who people are during Zoom meetings and like was previously commented, how people make decisions. When they hit an obstacle, how do they deal with it? And if they deal with it rationally versus blowing up or anything, I think you get a good feel for the people who are in the private equity firm and who are going to be overseeing the new company going forward.
Alan Scharfstein:Great. Thanks, Rich.
Travis Epp:Mike, you've talked about Colliers and FirstService a little bit, which are obviously very big companies, but you spend a tremendous amount of your time and your acquisitions really are in mid-market companies. I just wanted to maybe carry on this discussion a little bit from earlier, when you talked about exercising your core competency of really evaluating the management team. What do you look for? And are there any suggestions you could give to management teams that are considering selling that might be helpful from a buyer's perspective to close a deal?
Michael Charney:Yeah. So I mentioned earlier that culture's really the number one thing that we look for. And that usually revolves around entrepreneurial-ism or being enterprising as we call it when you're in a big company. And it's also having good values so making sure that whoever is selling their firm actually cares about what happens to all of their people and everything else. And then of course, focusing on clients. Aside from that, we're a growth company so we've grown earnings in our share price on average by 20% per year for the last 25 ish years. So in anyone that we look to invest in and bring into the family, has to share those same growth ambitions. We normally say that our aim is always to try and double your business within the first five years, or we're not too terribly interested, because as everyone's mentioned, there are actually a lot of opportunities and places to invest our capital right now.
And of course we're helping all of the firms that we acquire, we try and help them achieve that, plug them into the infrastructure that our global company has, help them cross sell to all of our clients, help them make acquisitions of their own perhaps. Any sort of benefits that you would think of as being part of a public company. And then the other point is, why would firms be attracted to come to us? And what would all of the people out there potentially look for when they're selling their business? So for sizable deals, we'll do this thing called a partnership deal, which is something what unique amongst public companies across all of those verticals that I mentioned earlier. So again, we don't need to own a hundred percent of the firm, we'll do 60, 70, 80% or something like that, have the management team own the rest of it, which is perfect alignment.
It's never a path to a hundred percent. We have minority partners that have been outstanding for 15, 20 years in some cases. And the minority equity just goes to the next layer down when that management teams looking to retire. So for us, its indefinite partnership. And then where we add value is overall strategy, help with acquisitions, access to growth capital, access to a global infrastructure and that sort of thing, and the management team, they're the experts in the business, they run it day to day. We like to think that we're the best of both worlds between actually everyone uses private equity and strategic, we, for the larger deals, we fit in the middle. For the tuck-ins that we do, a lot of times business owners hit an inflection point in the mid-market where they really need help growing beyond a certain size. And, there are a number of deals that management teams can do when they hit that inflection point.
One of them is looking to become part of a larger firm that can help them take their business to the next level. So that's what we focus on. And the benefit to them is they get to stay part of a pretty entrepreneurial firm that isn't overtop, command and control. So maybe to summarize, a lot of the things that would make us attracted to a firm, which is culture are also the reasons why people would look to become part of Colliers. And you can extend that to anyone out there who's listening and looking to sell their business. Corporate cultural fit is number one, our number one KPI that we look at. If you ask me if an acquisition is successful, there's all of the dollars and cents and hitting return and all of that, but probably number one with people-based businesses is all of the people that you partnered with, are they still working for Colliers five years down the road? If the answer is no, it probably wasn't a good deal. So if you're looking to sell your business, that's probably the number one thing to think about.
Frank Cannone:Hey Mike, I have a follow up question. I was going to ask Mike a question. So Mike, when you bring in a target and an organization and you want them to grow on their own, do you have dedicated management teams that are responsible for that target to help them not only grow their business, but to also interface with the Colliers organization, because of the integration aspect to it?
Michael Charney:Yeah. So if it's a tuck-in, they're coming into an established business and there's going to be, Bolton and Colliers Engineering is a perfect example. So they're plugging into the Colliers Engineering platform and they're going to have all of the national infrastructure that Colliers Engineering has built out. They're going to help them cross sell to Colliers Engineering clients for the larger partnership deals like when we invested with Colliers Engineering, the real benefit to them is they continue to run their business day-to-day. They've forgotten more about how to run an engineering business than I'll ever knows. So they run it day to day and we help them with overall strategy, helping them with tuck-in acquisitions, so that's where our team will orchestrate the process. We help them really any sort of growth things. We're on the phone, one of my colleagues and I speak to them at least once or twice a week and we just help them with whatever they need help with.
Frank Cannone:That something, because now not all partners do that.
Rich Albert:About culture. It's a very important thing, and I agree with Travis that the culture of a company and its entrepreneurial aspects, it's probably the most valuable asset if you've got a really good, positive, open, transparent culture. And it almost is like the immune system in the age of COVID. When things go bad for a company, if you have a really good positive culture of growth, they can get through just about anything. So I think it's very important to have culture when you're acquiring companies. We just acquired Asterix, we're acquiring a company right now and the culture fit is important. We never did personality tests, I always thought that was offensive. I've had people ask me to take them and I did not want to know who I was, I guess. But culture is real important.
Michael Charney:Yeah. In my view and in our view with a people-based business, the only thing that keeps a group of people together over 10, 15 years is really the culture.
Rich Albert:Yeah, absolutely. And the alignment of rollover capital selling like 80% of the business and then having the principal's roll over whatever 20%, that creates great alignment for a long-term future. I think it's a great model. Yeah.
Frank Cannone:Yeah. In light of that, because relationships are important, Justin, what brought you and Figure together with Desktop Metal? I'm assuming relationships were an important component to this?
Justin Nardone:Yeah, absolutely. I had met the CEO of Desktop Metal, Ric Fulop probably about two years ago now, and through colleagues and different connections and, and had spent a good chunk of a day just hanging out and talking shop and kept in contact basically into last year. And I think having that relationship certainly helped as we got into discussions on this acquisition. And being able to meet people at least prior face to face, that was certainly helpful. And our technologies aren't really competitors, so there was never anything really adverse there about, we weren't really concerned about looking under the rug for each other's technologies, I don't think too much because we weren't direct competitors. But the way Figure fit into their portfolio of acquisitions and a couple other companies that they've folded in now, it fits really well with their methodology of trying to be a one-stop shop for anything in this 3D printing, digital fabrication space. So I think having prior relationship and then also just company fit of product and IP and everything, that was very important for the transaction.
Alan Scharfstein:Hey, Justin, when you were doing this, did you consider any other potential acquirers or partners in your business or were you just really focused on this one?
Justin Nardone:Yeah, so originally I was trying to raise money, which was obviously difficult in COVID. That was happening last year and looking into that space, I guess, VC space, this actually ended up being a much better fit just from a number of different perspectives, the backing of a bigger company. I think going this route versus the money raised route was very beneficial in the end. From my perspective, it was a very small company, it was really just me prior and being under the wing of Desktop Metal, I can focus on product development, customers, the engineering versus having to worry about the multitude of other things that a small business has to deal with moving forward.
Alan Scharfstein:Great. Justin, thank you for that insight.
Justin Nardone:Yeah sure.
Alan Scharfstein:Let me maybe turn too Rich for a second, because Rich, you also had a unique knowledge set over here as a result of the fact that you've actually sold a business twice. And I imagine that there's probably a learning curve that exists between sale number one and sale number two, hopefully you're a little bit smarter about the process and the like. So maybe you can just give us a little bit of insight as to really what you learned from your first transaction or from your first and second transaction that just made you a smarter seller when you went about selling Asterix.
Rich Albert:Yeah well, the first transaction was US Biosystems IO and the Environmental Lab. It was 30,000 square feet in Boca Raton, Florida. And I bought it out of receivership, grew it and sold it. I sold it to a private equity company that was recently formed, they did two acquisitions. I didn't really know the difference between committed and pledged money. They had pledged money so you had to sell to every one of the partners and it was a long process. And because it was only their third acquisition, they were very careful about everything and they elongated the due diligence from 45 days to 90 days. So it wasn't that good of an experience. We got the deal done. And over the years I was in contact with a lot of private equity firms that made offers on our company, unsolicited offers and I got to learn a lot about them just through negotiating LOIs and stuff.
And I think the real issue is that you really have to do due diligence on who's acquiring you, whether they're a strategic, strategic should probably know what they do and everything, but private equity is a different set, a different type of acquire. And you just basically have to ask all the difficult questions upfront. You've got to be transparent. You got to be honest. I told them that I would be leaving and that we would transition to a new CEO. And I stated that up front because I quite frankly didn't want to work for a private equity company, not to say that they weren't a great one, but you just learn a lot. I think just being yourself and being honest and being upfront and transparent and not hiding anything, I think you start to form a really good solid relationship.
And if you're dealing with really up-front guys or ladies, you'll get to know them pretty well over the first prelude due diligence process, when you're doing presentations and Q and A. So it's a process. You learn a lot during it. And I think it's easier after you do your first sell, it's probably much easier after the second one and I think it just gets easier as it goes on.
Frank Cannone:Hey Rich, I have a question, did you consider, and Alan, did you consider where the private equity folks would recapitalize the acquisition and you would be receiving equity in the combined entity? Was that ever discussed or evaluated?
Rich Albert:Well, we wanted to sell the majority stake in it. So basically what we did is, we wanted to take most of the risk off the table so we sold 85% of the company. And myself and the executive management team, which were the shareholders, they rolled over. We also did something with the non-shareholders which were option holders. We had them roll over a portion of their options to get alignment. So it was really a matter of cashing out a majority of the equity and then investing in the future of Astrix because we all believe it has a great future and it defers capital gains taxes. And it's just a good structure. The structure of the deal is very important and the structure has to conform with what your interests are. We didn't have an earn-out because we're a platform company. We did a rollover, it was a leveraged buyout. So we had to deal with their banks and do some presentations with that. Cause they loaded with 3.5 times EBITDA on the debt. But, structure is very important and the attorneys can really work with you on what makes sense.
Travis Epp:Before I transition to the next question, what's interesting, you spoke about culture a lot. When I first worked on your company 25 years ago, the CEO and the top guys who were there 25 years ago are the same guys there today. So that says a little about the culture on your company. You alluded to earlier, one thing that's interesting, one of the areas that everybody's interested is pricing. Can you talk a little bit about the impact of pricing on the pandemic and sort of how you viewed the EBITDA adjustments during that period?
Michael Charney:Yeah, absolutely. So I'll split this discussion up into two parts, which is how we view value on most businesses. It's a multiple of EBITDA. So you got to find normalized EBITDA and then what's the multiple you apply to it. It doesn't need to be any more complicated than that. In general, the multiples that we would pay for a business aren't really correlated with the valuation multiples of large public companies, because they're very different diversified, global, all of that. The multiple for a 50-100 person real estate services or engineering firm, isn't really intrinsically in a change that much. Save for private equity coming into a space and just kind of naturally bidding it up. So the multiple side of the equation throughout the pandemic didn't really change much for us with the exception of engineering.
We saw a little bit of uptick because of supply and demand. Again, all of the private equity comments that have been made where you see multiples is kind of what Richard described. Which, is it a platform? Which is large and diversified and a lot higher earnings quality versus a smaller firm.
So on the EBITDA side, though, in your question about adjustments and all of that, there was a little bit of a disconnect in some cases in terms of people's go forward profit projections. Because remember, what you're trying to solve for is, well, what's the profit of the firm going to be in the next year, 24 months, five years, that sort of thing. And the best we can do is look backwards and make some adjustments. So a lot of times what people do is the adjustments say, well, this is what we did last year, but this particular thing happened. So let's ignore that. And then the profit would have been this. That's what an adjustment really is.
And with COVID, that's a very, very hard thing to do because it affects the revenue side of the equation. It's very easy to quantify a cost that you added due to COVID. So you hired more cleaning staff, you have more vehicle leases because you want to make sure all of your employees have their own vehicle and they're not sharing, so that sort of stuff's really easy to quantify.
Where it's hard is lost revenue or opportunity cost. And from my experience, that's where people disagreed the most, is trying to say, well, at a 100% efficiency, the revenue would have been this. And so the EBITDA impact would have been that. For us, I think our really long-term investing horizon and our long-term focus helped us kind of manage some of that uncertainty and structure as well. So if there's a disconnect, you can always do an earn-out or, or something like that, that helps bridge a little bit of that. In a lot of cases, what we ended up doing for businesses and things that we were comfortable with saying, "Okay, yeah, we're okay to focus on 2019, but we still can't really forget the 2020 happened." So let's deal with that uncertainty through the structure of the deal, rather than the pricing, and that maybe leads to a higher earn-out percentage, less money up front and more in a few years, depending on what the business actually does. So that was kind of our experience on pricing through the pandemic.
Travis Epp:Thanks, Mike. Frank?
Frank Cannone:Sure. Thanks. Justin, there were obviously lots of ebbs and flows in the trunk. We went through different stages, capital raising, and then went with an acquisition. And the acquisition was not only with just an ordinary company, joint venture strategic. Oh, and public company. It was all of them. And then tossed into the fact that it was a SPAC, which, last year had an incredible year for SPACs. This year, first quarter, even bigger. So maybe you can highlight it like some of the biggest challenges to getting the deal done.
Justin Nardone:Yeah. I think there was some previous discussion here about doing due diligence from both ends. And I think for us you and with the help of Gibbons there, just being able to better understand the structure of what was going on with the proposed SPAC with Desktop Metal. And by the time we were in discussions, it was already public that they were going to go with a SPAC, but it hadn't quite happened yet. So just understanding how that structure was, if there was uncertainty there. After I think we got into the details, we were pretty comfortable with how that whole deal was structured. And in fact, they're probably more likely to go through a SPAC than an IPO, especially last year. The SPACs themselves, they're a little more fluid, I guess, a little easier to move ahead.
So I think that was one of the challenges, is better understanding that from our end to make sure there wasn't any curve balls. And for me, it was also, as a single founder of the company, just dealing with a lot of different issues from IP to legal, to business, which the guys at Givens handle quite a bit of. Certainly on the legal and also the IP, because my company was primarily, a big portion of the transaction was around the IP.
Alan Scharfstein:Okay. So Rich, one last question, as we bring this part of our program to an end. I know one of the things that you talked about was the fact that you've built a really strong management team, and that fact that you were in fact, exiting your business shortly after the closing, can you give us some insight as to how your management team really reacted to this process of selling a business? Was getting buy-in easy? Was it a challenge? Were there significant issues that you had as you try to make sure that everybody was pointed in the same direction?
Rich Albert:Yeah, I think because we have a culture of transparency, the executive management team knew about the process. They knew about the target exit valuation. They were kept informed of what was going on. There was an heir apparent that worked for me for six years that was going to be taking over as the CEO position. I had him take the lead in a lot of the presentation so that they really would get to know him.
So I think it's just a process of getting everything lined up, getting people kind of focused forward. At the level below the executives and below the shareholders, that was a little more difficult. There's fear associated with a sale. "Rich Albert's not going to be there." "The company is going to change." And you just have to basically talk to all of the people, tell them your rationale. And our rationale was basically, "Listen, the company's at 83 million. We want to get to, three, 400 million, it's going to take a different set of skills to do that." And Quad-C is the company and here's why. So you have to sell them on Astrix 2.0 and the new management team, as well as your partners, which are the private equity companies. So you just got to work on it. It's not easy. You got to work on it. People have different reactions.
Travis Epp:I think what we'll do now is transition a little bit to a couple of questions we have from the audience since we have about 10 minutes left. And then after a few questions, we'll give each of the speakers' a minute or so, just to make some closing remarks. A couple of people asked the same question, what's the pricing on a deal like this, really? I guess the real question is going to an investment banking firm. And I'll put a plug in for Alan so he doesn't have to say it. They get paid a lot because of the value they provide. But Alan, do you want to comment on how the pricing works?
Alan Scharfstein:Pricing in terms of how people get paid? Or how we evaluate the pricing of businesses that are better off in the market?
Travis Epp:What would a client, if they're selling their business, what would they expect to pay back?
Alan Scharfstein: Okay, again, what a client should expect to pay is some sort of monthly retainer. But 90 plus percent of our compensation is success-oriented. Meaning that we get paid at the closing if, and when a transaction actually closes. So that we are very much aligned with the client in terms of making sure that a deal is going to happen. And also, very important is also just making sure that in addition to that, that we're all aligned before anybody engages us in terms of what the value expectations are. We spent a lot of time with clients before they ever engage us to make sure that our view as to what's achievable in the marketplace and the client's view as to what achievable marketplace are very much aligned. Because no one wants to waste a lot of time, effort and money if we're not going to end up being successful in finding the right buyer who's going to pay the right price.
Frank Cannone:Can I just add to that? With respect to the investment banker.
That and DAK, and in particular on behalf, is that when you've got a complicated transaction, having access to individuals that can bridge the impact, either between the lawyers or between the principal than being able to go to a solid expert investment banker is incredibly valuable in addition to getting greater multiple on the value of the business. I just wanted to highlight that in particular.
Travis Epp:Rich, did you want to comment?
Rich Albert:Yeah. I just wanted to make a comment. So I worked with DAK on this deal and you do pay a small retainer on a monthly basis. The amount of work that they do far exceeds the value of the retainer, how they get paid is on a success fee. So, if that business sells, they get a certain percentage of the sell price, the amount of value that they contribute from a financial, legal. When you get it, they can be your middle person. It's just invaluable. I don't think I could sell the company without having a DAK behind us. They did a great job through the process. Everything was professional. They kind of held your hand right through to the end and even after the deal closed. So it's a good relationship.
Travis Epp:Another question that was asked, and I think both a number of people on the call can answer this is. Is there danger in trying to deal with more than one potential buyer at a time? And obviously there might be exclusivity upfront, but maybe Frank, do you have any comments on trying to deal with more than one buyer at a time?
Frank Cannone:Well, you hit it in part because of the exclusivity aspect to it. So, but if someone's looking to chop the business around using an investment banker like DAK to orchestrate that is incredibly valuable. And so it's not so much an auction, but it's evaluating the buyers. And as Rich mentioned earlier, especially when you're dealing with private equity or financial buyers, money's money. But buyers are all different. And being able to evaluate the nuances, it's not just the purchase price. It's also the commitment that the buyer is going to put to it, who their advisors are, how well they can execute.
One thing that we always do, again, going back to what Rich said in part is diligencing the buyer. We typically see if the buyer has a litigation past, because if they're difficult buyers, they may have been part of a lawsuit. And everybody can get caught in a lawsuit, but if they've been party to multiple lawsuits, you want to know that upfront. So the challenges of dealing with multiple buyers and shopping around with business, it's involved. Especially since you're running your business at the time you're trying to sell your business. And a lot of times you're not even telling your employee and your management team, you're selling.
Alan Scharfstein:And by the way, there's nothing like competition to try to move the price, the valuation up. I think we are pretty good at guiding clients as to what the expected value of their businesses are. But there are cases where we have found a buyer because of competition, who is willing to significantly exceed any of the market metrics in terms of pricing. So having competition is a very powerful thing. It also, you know, it also gives you as a seller optionality. It gives you the power in the negotiations. If you know you have a strong backup, you can be a lot more demanding in terms of what the deal is going to look like than you do if you're dependent upon only one buyer. And again, given the technology that we all have today of virtual data rooms and the like, it really gives us a lot more power to keep multiple buyers in the process until much later in the process.
Travis Epp:Since we're right at the end, I'm going to give it to Mike and then Rich and Justin. Mike, maybe if you could just address how you deal with this or the multiple buyer situation quickly, and then just go into any closing remarks you have.
Michael Charney:So multiple buyers where we may be up against other potential buyers?
Travis Epp:Yeah. Or how you control that. What do you prefer and how do you deal with that?
Michael Charney:Well, I mean every buyer's going to tell you that they prefer just dealing with you one-on-one. And I mean, it's usually more efficient, but, recognize all of the comments that were made around, you're probably only going to ever sell your firm once in your life. And so getting good advice is worth much more than what you're probably going to pay for it.
In terms of closing remarks, I think there were a lot of good points made today. If you're looking to sell your business, focusing on culture is in my mind, the number one thing that you should look at and making sure that you're comparing bids on an apples to apples basis. So this is something that DAK or any financial advisor would be able to help you with. Things to consider, someone may be willing to pay a little bit more money, but is it in cash or is it in something less certain than cash? Someone may be willing to pay a little bit more money, but do you see yourself or your employees working there for the rest of their careers? And then lastly, I thought Richard's points about doing a better reverse due diligence, checking references, making sure that you're comfortable with the cultural fit of whoever you're going to work for the rest of your careers or your employer you're going to work for, for the rest of their careers is very important. And thanks a lot for having me on.
Travis Epp:Thanks, Mike. Rich?
Rich Albert:Well, I just think that the process of selling a business, it's like changing the tires on a car going a hundred miles per hour. You've got to keep the car going and you're trying to sell the business. So it's long hours. They're 12 hour days going through the due diligence period. But selling a business can be a lot of fun. If you like business, which most of us do, if you're an entrepreneur, it's a lot of fun dealing with the obstacles. And it sales to a certain extent.
I would also say, companies and services, businesses, they buy the management team. So they really want to know who they are, what the culture is. They do surveys, they ask employees. If your employees are saying the culture is crap, they're probably not going to be very much interested. So you really have to develop a very good positive culture. And I think the last thing I would say, during the due diligence, it's not over until the deal closes and the money flows, I've seen deals that have gotten halfway through and they closed down. So you've got to keep the process going, you've got to keep it fluid, and you've got to keep your foot on the accelerator. And you've got to look to the end game, which is getting the deal closed.
Travis Epp:Thank you. Justin?
Justin Nardone:Yeah, I would second a lot of Richard's comments there about keeping the deal moving and just kind of working through. Ultimately, if the goal is, whether it's a partnership or selling outright, but always look to that goal of what you're trying to accomplish. And don't worry about every little tiny nuance. And also just have good partners to help you work through the deal from both sides.
I think it's important from the acquiring to be working with good people on the other side of the aisle. The Desktop Metal had a great acquisitions team. And so working with those guys almost every day, answering various questions, that was great. And then having a good legal team is also very helpful, especially one that's experienced with just a wide variety of business issues like Gibbons, so that was super helpful throughout the process. And it was a lot of fun at the end, it was a little nerve-wracking, bits and pieces. But like Richard says, it's a lot of fun once you get it done
Travis Epp:As I wrap up and before I close I'll give it to Lexi to do the official close. Number one, thank you to everybody who joined in on the call today and listened. Hopefully we provided some value and some good ideas to you. I really want to thank Rich and Michael and Justin for giving up their time and sharing their experiences, which we believe can create a lot of value to you. And again, on behalf of EisnerAmper, I am thrilled to be able to work with such great firms like Gibbons with Frank and Alan at DAK to put something like this together. So thank you to all of our partners and thank you again, to all of our attendees today.