Jeffrey Feldberg, Co-founder of Deep Wealth, joins us to share his experience helping sellers maximize the value of their businesses as they exit. Jeffrey provides us with some practical advice on how to have a successful “liquidity event” when it comes to acquisitions.
During this episode, we discuss the main things a seller needs to think about when considering selling a business, the importance of preparation, and the three things that happen without preparation.
Welcome back to Consolidate That. Ivan, I just had a wonderful experience listening to you on a webinar. I don’t know how much more of your knowledge I need today so I’m glad we have a guest. I enjoyed hearing from you and I’m looking forward to hearing from our guest.
Are you trying to say that you don’t want to hear me after the last hour? Is that that your polite way to do it?
Let’s have the producers mute Ivan for the rest of the episode and see if it still works.
Well, I’m glad to see you, Ryan. We have a very exciting guest today. We have Jeffrey Feldberg. Jeffrey is a Co-Founder of Deep Wealth which providing an M&A Advisory Service, giving you a certainty that you’ll capture the maximum value of your exit a liquidity event.
He has 25 years of in-the-trenches experience in owning and running and building businesses from scratch. Jeffrey graduated from the University of Toronto at Scarborough, which was exactly where I arrived 20 years ago as an immigrant in Scarborough and holds a degree and honors at Political Sciences and Economics and MBA from the University of Toronto, School of Management. Jeffrey, thank you so much for joining us. Thank you for finding the time.
Hey, Ivan, Ryan, so glad to be here. Thank you for having me.
This is a very interesting conversation. We to keep this podcast very diverse, we’re within the visionary domain but it’s interesting to talk about other verticals and other businesses that are going through similar experiences then that others, so we deal with consolidators, and that’s rapid trend right now in our industry. There’s multiple multiple hospitals that are being acquired. You deal with a lot of small to medium, I assume business owners, and you’re helping them to prepare for the liquidity event.
I just wanted to open up with maybe what main things— if you said, “Jeffrey Feldberg list the five main things you need to think about when you’re starting to consider selling your business? What are those three to five things?
Absolutely. It’s interesting on this podcast, because traditionally, we’ll be sitting at opposite ends of the table. For the listeners out there, you may be saying, Ivan and Ryan, have you lost it, you brought a guy who helps sellers maximize the value of their business onto your show, what what’s going on here?
Equal opportunity, love it. The reality is, that buyers as much as the business owners and the sellers, everyone wants to have a successful, I call it “liquidity event” and for all you veterinarians out there, this is really your one chance to make a count. It’s going to be the largest, single, biggest financial decision and transaction of your life, at least for most of you. You don’t want to drop the ball, you don’t want to blow it, you want to make it count, you want to have Ryan and Ivan come in and say, “Wow, I am impressed with what I see right off the bat.” And have that really lead the way for the rest of the liquidity event.
So the first point is exactly that, it is going to be the most important financial decision of anyone’s life. You want to make sure that this gets to the second point that you’re prepared, because the last thing, Ivan and Ryan, that I’m sure you want to see, you don’t want to come into a situation the business owner, veterinarian is not prepared, you waste your time, you waste your money, the other side waste time and money and you don’t get to a deal just because you both agree to disagree from something that never should have happened.
Not specific to both of you but generally speaking, when you look to the industry, when you look to the world of mergers and acquisitions, up to 90 percent of liquidity events fail. I’m sorry to say this for all you veterinarians out there, the root cause is generally on the seller side, lack of preparation. Preparation is key.
What I find when I work with business owners, and for everyone listening, this is not theory, it’s not from the classroom is not academic. This is from my own experience. I started an E Learning Company, right out of my MBA program had no business being in business. I was failing forward every day and my grit and my passion kept me in the game long enough to see success. When success started to happen, I had a knock at the door from a very sophisticated and experienced buyer. Threw me a seven figure offer. I said no to the offer and yes to mastering the art and science of a liquidity event. In my case, very fortunate, two years later, a different buyer, different offer. It was nine figures. I looked at my situation, I took what worked I made it even better. I took what didn’t work, I reverse engineered it. Now I work with business owners for their liquidity event to help make it a smooth transition.
This goes one of the other points, Ivan and Ryan, when you’re not prepared, three things happen. You lose your health, your money and your time. For all you veterinarians out there, Ryan and Ivan, they’re going to come in and as they should. They’re going to be asking all kinds of questions to you otherwise known as due diligence. If you want to see a grown person cry, just say those two words, due diligence.
When you prepare ahead of time, you’re not forced to go to very expensive outside consultants, because you’re not going to have the time, you’re running your practice. You have a second full time job. Congratulations. It’s called a liquidity event. When you’re prepared, you do it at your own time, your own convenience. Ivan and Ryan walk in, you have your virtual data room ready, and they’re like, “Wow, pinch me, am I dreaming? This is terrific.” Nudge, nudge, wink, wink, Ivan and Ryan, maybe you’ll even have a higher enterprise value, when you see how prepared everyone is and how it’s going to make your life so much easier. A lot to unpack there but those would be some of the things to think about before you’re selling your practice.
Well, that makes sense. What are those things that are very important to prepare before the liquidity event? Is there a checklist that you want to go through and make sure that before you in approaching or if you were approached by someone. What do you want not to say or not to do before you’re prepared?
Everything that’s well done, really boils down to a very simple story. I can get all fancy on you with terms the nine step roadmap and all these other things. Really, at the end of the day, what are you doing? What is a nine step roadmap? Our nine step roadmap of preparation? It has you do two things. Number one, when you’re doing an internal due diligence audit, so before you’re having any kind of liquidity event, you’re saying, “I know, I’m going to be selling one point or partnering or having an investor come in at one point.” You start to look at your practice.
When you do the preparation ahead of time, number one, you’re finding those skeletons in the closet that are there, but they’re hidden, and you’re removing them. This way, whether Ivan been Ryan, it’s yourself that’s coming in, anyone else is going to be looking at this. You’re not having as a potential investor or buyer. You’re not having to deal with that, because it’s like anything else, we’re all humans. Buyers, sellers, it doesn’t matter. We’re all humans.
When you come into the scene, and you see something that’s there in the back of your mind, as a buyer, I’d be thinking, “Oh, my goodness. If Jeffrey had this over here, what else don’t, I know about? I better do a little bit of a deeper dive just to make sure I check off all those boxes.” That’s the other thing that comes out of it. Most sellers or veterinarians, please listen up? Because I put you in that seller group. Most sellers, we are selfish, we don’t care about the buyer. All we care about is the check going to clear, wrong, wrong, wrong. We have to think like a buyer, we have to take the mindset of a buyer.
When you can do that you make things so much easier. The second thing that the preparation does as important as removing the skeletons in the closet, you’re finding those hidden Rembrandt’s in the attic, and you’re putting them out for public display. What’s a Rembrandt? You may be asking, a Rembrandt is something that you are world class at your practice, is world class in, and usually it’s at least one but it’s typically three to five. What would be an example, your culture could be an example.
Money buys lots of things, but money cannot buy a rich and vibrant culture. Perhaps your practice specializes in certain areas that sets you apart from everyone else. When what your Rembrandt’s are and not only grows your business, because you can broadcast that to the world, but it lets Ivan and Ryan know how special you are and what a terrific practice that you have.
Jeffrey. I’m thinking about it in the same way that a political campaign goes and digs up, dig up your own dirt before the other side can find those things and figure out how you can spotlight those or address them. I guess for a business, it’s a really nice opportunity if you do have outstanding debts that are issues or some tax liabilities or things that, that you can clear out prior to going into the acquisition process, perhaps clearing those things out. Then you’re, as you said, highlighting the real positives and the benefits there.
I know I think probably a lot of people look at maybe hoping that they can hide those things under the rug or the bad things or keep them in the closet and maybe they won’t open the right door. I don’t think a lot of people look at the idea of really spotlighting the Rembrandt, as you said. That’s a really neat takeaway that I think a lot of people should look at.
Absolutely, Ryan, and you’re spot on. Two things with what you said. For all the veterinarians that are listening, get out there. Let’s put on the head of a buyer. Let’s think from Ivan and Ryan’s perspective. As an example, if you’re going to buy a house, would you just walk in sight, unseen and buy the first house that you saw and just write the check whatever’s being asked for? Or are you going to get an inspection report? Are you going to look around? Are you going to kick the tires so to speak?
Ivan and Ryan, I mean, you’re in business to be in business and that’s a good thing, but in order to do that, you have to make sure that your investment is going to be here today, tomorrow and for many years. So the questions that Ivan and Ryan are asking you, are what you would do if the situation was reversed?
I’ll let you in on a little secret that most business owners, most veterinarians, for your practice, you’re not going to necessarily realize it until now. The strategies and the tactics of preparation are one in the same for growing your practice. Ryan, back to what you’re saying, when you do a deep dive, whether it’s you find you have a taxes issues, maybe you have some environmental issues, you look at the overall quality of earnings report, all those things, as you’re looking at that you’re cleaning up your practice, so that you can be more efficient, which leads to higher profits, and everyone’s happier. So, it really the preparation does a wonderful thing. It helps to grow your practice your revenues and your profits, which leads to down the road a better day for you, when both of you come along and look to invest in that practice.
As you mentioned, the real estate things, I’m married to a realtor and so, very familiar with how crazy the real estate market is, right now. It’s interesting, because some of those things are people putting in offers, and they’re scared, “Are we going to be able to get the house someone going to swoop in and buy it before us? What are we going to do to make our offer look more attractive?” It does mirror a lot of what’s happened in the veterinary consolidation, where people are saying – are people skipping the due diligence a bit? Or are they not looking at things as well? Or maybe from the sellers perspective, “Oh, my gosh, do we need to hurry and rush and make sure that we capitalize on a deal while this consolidation market is still so hot? Maybe not do the sellers due diligence into the buyer?”
Do you think that that’s maybe a mistake that the sellers are doing and that they’re not making sure that they’re asking the questions of the buyer, that they’re the right cultural fit. That they’re just looking at how many zeros are on there, versus who are they’re going to be working for and with for the next 5, 10, 15 years, maybe longer and who their team is going to be working with?
Ryan, have you been through that experience? I mean, that is a page right of our playbook.
I’m swimming in the deep end with you right now.
I love it. You are spot on. Excellent, excellent point, in our nine step roadmap, step number three, the future buyer. One of the things that we talk about our investor in your case, one of the things that we talk about is cultural alignment, because the offer that’s the highest, the offer that has the most numbers in it isn’t necessarily the best offer. What’s more important is the cultural alignment with the future buyer, particularly, Ryan, as you pointed out, for the veterinarian practice that you team up with, everyone is now working together for a good number of years.
What’s been interesting is with the pandemic, if we leave the veterinarian industry for just a moment, and we go to some other industries, what I’ve seen is that businesses that have partnered in a similar situation when there wasn’t a cultural fit, that pandemic just made things even worse, because you had different beliefs and different core values. Conflicts arose. You don’t want that.
What’s been interesting with the pandemic? I had a guest come on to my podcast, and he was sharing with me how the pandemic illustrated to him why cultural fit is so important. This client, much your community was out there looking for someone to invest in his business, and they would be working together for many years. When the pandemic hit, this individual was in the airport logistics business. You can imagine in the early days of the pandemic, there’s no flights, airports are closed, there’s no business. What is this fella want to do? He wants to fly across the country, to all these different airports that are his customers and speak to people on the ground, see what’s going on, speak to his employees see what’s happening.
It would have been very easy for his investor to say, “Hey, are you crazy? You want to spend seven figures to do this when revenues are down? We’re not even sure we’re going to be in business this time next year?” However, because it was a cultural alignment, they share the same core values, the answer was an absolute, yes.
Ryan, back to your insight, which is spot on. The highest offer isn’t always the best offer and what you absolutely must do as a veterinarian is your own due diligence. Just as Ivan and Ryan are asking you questions, you better be asking Ryan and Ivan your questions to make sure that you have a fit, because you’re all going to be working together. You want to make sure that the cultures are going to align with each other so that everybody has a very long, bright and prosperous future ahead of each other.
I then wanted to go back a little bit to your comment about doing the due diligence prior to due diligence by acquire, I did a course in Harvard on M&A and there was a phrase that I really liked then. I use it about the acquisitions that, they rarely find good surprises after the sale of the house. The house is so low when you know what to find, you know, “Oh, this basement is actually finished, and it was unfinished in the deal.” Now you’ll find the leaky roof, the full septic tank and things like that.
What’s interesting, and I went through the acquisition process a couple of years ago, as a seller, what was interesting, it’s different feelings when you’re going through it, and you want to be maximum transparent and find everything you can, because usually, the agreement does lock certain caveats to the deal that if something is found later, you can actually default on the deal. So it’s important to do that process with full transparency, and doing it in advance, I think an excellent recommendation, that’s a great way to do it.
We have about 60 plus console leaders in the veterinary domain, and everybody is going after the veterinary clinics. We actually know that there’s about 30 to 40 brokers that are calling on each clinic simultaneously. It’s nuts what’s going on right now. What we see a lot that the sellers are walking away from the deal without really disclosing, why. It’s a cold feet deal.
I understand if that this is not the best offer, maybe in price or the culture or something that. Sometimes they just walk away and not sell.
Jeffrey, in your experience, what are those reasons that sometimes people decide to sell the business and then after shopping around like what is it out there? Then they change their mind. Are there common trends across the different industries? Or is it specific to us? Or is there some reasons that people internally have the day might say, “No, it’s not the right time for me?”
It’s a wonderful question and insight and before jumping into that. The one thing, Ivan, that you’re saying that you really you are, again, both you and Ryan are spot on with everything that you’re saying, transparency has got to be key. All you veterinarians out there, don’t lie, put it all out there, chances are Ryan and Ivan, they’ve seen it a thousand times what you think is your worst nightmare. It may not even be a concern for Ryan and Ivan. You always tell the truth, because in any kind of deal, any kind of transaction, the currency isn’t money, it’s trust. When everyone trusts each other, that’s when a deal happens.
So, Ivan, back to your question of why would a business owner or a seller walk away even though they initially said, “I want to sell.” I mean, we see this across the board. One of the things that we do at the deep wealth experience for every participant, every business owner that’s going through it, we actually go way past the liquidity event afterwards finishes and go even beyond that. We have one question. It’s called the “Now what?” question.
Then the, now what question is this, I want you to imagine, Ryan and Ivan have walked in under the best game in town, you guys know that. You end up doing a deal with them. It’s terrific for you, you check off the boxes. You now imagine, “Okay, what does that look for my life? What does that mean? Financially? What does that mean for you? Schedule wise? What does that mean for you? How does it change your life? What’s going to get you out of bed motivated and happy?”
By doing that, before you actually go through liquidity event is powerful, because the last thing that you want to find out after you’ve spent all this time and money, going through due diligence, going through negotiations, and then you’re saying to yourself, “You know what, I don’t think I like how this is going to look for me. How my life is going to pan out after this deal. Maybe I should just walk away.” Wouldn’t be better to do that upfront before you spent a dime on due diligence. All those hours and meetings and taking time away to figure out if this deal makes sense or not to do that in advance.
Look, there’s nothing wrong in saying, “Right now, at this point in my life, I’d prefer not to do a deal. I’ll just keep on doing what I’m doing. Perhaps at another time, I’ll revisit this.” Nothing wrong with that. It’s all a personal choice. There’s no right. There’s no wrong, it’s what’s best for you. It is best to do that well in advance so you’re not having to tell Ryan or Ivan, “Hey, thank you but no, thank you. I’m just not going to move forward with a deal.”
That’s great. I totally agree with that. The one thing that we did here was he was exactly that. That people didn’t understand what it would look after and there was no plan. I think that one of the things that we’re finding with veterinarians, which is similar situation when someone wants to become a veterinarian since they were a child. For the most part, people decide to become a veterinarian when they’re eight, 10 years old. Then they set out this very far goal from where they are and the people that do become veterinarians, they’re very diligent on following their goals.
When they arrive to that point where they get the Diploma of veterinarian, they go to practice and now it’s nine to five poking vaccines or whatever, especially is they didn’t really think about that. They had a dream about becoming veterinarian, they didn’t really plan in their head what it would be like to be a veterinarian day to day. What are my next goals? I think this ties into that experience as well as, yes, getting a check is good but then what are you going to do with it? What’s the life look like? What’s my morning going to look like? I think that’s an excellent advice to play that tape and understand what’s going to happen after that.
I do want to ask, can you please tell our listeners and especially veterinarians that are interested maybe to work with you? I don’t know if you work internationally or only in Canada? Jeff, you’re based out of Toronto, which I love. I lived there for a while. Can you just tell us about what do you do? Or your customers? If they hear how they can find you?
Sure. Absolutely. Thank you. Deep Wealth and the Deep Wealth experience, we are industry agnostic, because we really focus big picture wise on the strategies and the tactics. The truth is, as a veterinarian, you are the world’s expert on your particular practice, you already have the answers, you may not have the questions. What we have is a 90 day system, industry agnostic. It’s for business owners who know they’re going to have a liquidity event, but it’s not going to be tomorrow, or next week, or next month, it might be a year or more away.
When you go through the 90 day system, you have access to all of our strategies and tactics, these are the same strategies that I use for my nine figure liquidity event. You’re in a mastermind group. You’re with other business owners from different industries, who are not competitors, smart and successful, like yourself, also looking to have a liquidity event. Then you have a success coach, which for the first few number of groups that are going through, it’s myself and my business partner.
Over the course of the 90 days, what you’re doing on the 91st day is you walk away with a blueprint to optimize the value of your business. Then, as important, I would say even more important, you’ve also created a certainty within yourself that when the time comes for your liquidity event, you know, you absolutely know that you’re capturing the maximum value, it’s one thing to believe it’s another thing to know. When you have one chance for the most important financial decision of your life, you better know.
It’s okay to believe after but not the other way around. That’s what the default experience is all about. It’s really worldwide. As long as you’re speaking English. We’re terrific across time zones, and we’d love to have you and welcome you.
That’s great. Well, two questions that we asked at the end of each one of our episodes is first, what book or podcast or YouTube video or any knowledge base that you have, that you think people should get into and either read or listened to?
That’s a terrific question. My goodness, I have so many books that are just floating through my mind. I’m going to go back to a classic, classic book. It’s one of my favorites. It’s, How to Win Friends and Influence People. Yeah, Dale Carnegie. We don’t do business with strangers. We like to do business with friends. When you have the ability and the skill set to communicate, and how to communicate, and how to be a conversationalist, both in business and in life. Life just becomes so much richer. Business becomes so much better. That’s one of my favorite books and topics.
That’s a classic. Yep. Then our last question is, who else would you recommend that we have as a guest on our podcast? I know you have your own podcast, we probably had some wonderful people on there but who should we have?
As I think about it, I’m thinking of Jess Todtfeld, who is a world-class individual. He comes from the world of television hosted a gazillion different TV episodes, and then got into communications for business professionals, because when you think about it, again, going back to the Dale Carnegie, How to Win Friends and Influence People, all about communications. Well just takes it to both an art and a science of how do you communicate with people? How do you present? How should you be talking with your patients? When Ryan and Ivan walked through that door? How can I communicate with them in a way that gets them excited about the opportunity that’s in front of everyone here and Jess is truly exceptional.
We really appreciate learning from you. This was super insightful and lots of great information to learn. I think a lot of the listeners that we have could learn a lot of great things from you as well. Jeffrey, thank you again for joining us. I know that people should listen to your podcast as well for more insights and again, hope you guys have a great day, and thank you again.
Thank you. It’s an absolute pleasure and honor to be here on the show. Thank you so much and please everyone stay healthy and safe.