Successful M&A deals begin with a deal making mindset.
Find out the measures you need to take to make a winning deal. Corey Kupfer is an expert strategist, deal-maker, attorney and consultant. He shares how his background in law ultimately led to his success in helping clients iron out the most critical aspects of business deals. What does it take to truly build value and get offers that match your expectations? Listen in as Laurie Barkman talks with Corey about the mindset you need to adequately prepare for successful M&A deals.
Listen in to learn more about:
- The importance of having a deal-driven mindset
- What entrepreneurial freedom truly means and how it can create value for your company.
- Common pitfalls to avoid as you go about creating business value
- Factors that can lead to buyers making lower offers than anticipated
- How digital assets are valued when a deal is under evaluation
Show Links:
Transcript:
Laurie Barkman:
Corey Kupfer, thank you so much for coming on Succession Stories today. It was really great to meet you on your podcast. I was a guest on DealQuest a couple of months ago, and we got connected through other podcast friends and I guess there’s this network of us and we had a great conversation. Obviously, on my show, we’re going to talk about you. But if anyone wants to catch my episode on your podcast, obviously, I encourage them to do that. But I wanted to first welcome you and just a quick, brief background for the audience so they know a little bit about you. What I find really interesting about very skilled people like yourself, the last thing I’ll say is really for many people, the first thing they would say – that’s a little preview – you’re an expert, strategist, dealmaker, business consultant, and you have more than 35 years of experience as an entrepreneur, and negotiator. The last thing you usually mention about yourself, at least on your website, anyway, is that you’re an attorney and I just thought that was really cool, because you really emphasize the business side of your experience. So Corey, welcome.
Corey Kupfer:
It’s great to be here. Laurie, I’m really looking forward to our talk.
Laurie Barkman:
Thank you. Well, why don’t we start with your background? Where’d you grow up, and just tell us a little bit about yourself when you were younger?
Corey Kupfer:
Sure. I grew up in Brooklyn, New York to lower middle class parents. We weren’t poor, we always had food on the table, but it was paycheck to paycheck. If you asked my mother, she would tell you that she knew I’d be a lawyer since I could talk because I was always negotiating and advocating and convincing. I grew up in Brooklyn, actually went to a high school that had a special program on law, politics and community affairs in Brooklyn, which is pretty cool. I got into that, and that triggered my interest in becoming a lawyer. Although, of course, I didn’t really know what that meant at that time, but I went into college thinking that I wanted to go to law school, which is pretty unusual for a kid to have an idea. That’s what I ended up doing and then of course things evolved in very different ways than maybe I thought would be, but at least I had that vision that I was going to be a lawyer for a number of years.
Laurie Barkman:
So this negotiating that you were doing as a teenager, as a kid was that with siblings to get more of their candy, or with your parents about staying up later? What kind of things were they?
Corey Kupfer:
I have a younger sibling who’s five, six years younger, so I didn’t have to use a lot of negotiation on him because force worked until, of course, I grew out of that phase. But, definitely my parents and negotiating with them to stay up later and negotiating to get whatever I want especially because money was somewhat limited. My mom tells a story on how I convinced her somehow to come in and it was during the holidays and would it mother’s coming in during during Easter and Passover to cook and I convinced her to cook a potato lacus for the class and somehow didn’t fail to mention that she was going to be the only – she got the impression that we’re gonna be other mothers doing it and somehow I failed to mention that. So she likes telling that story on how I convinced her.
Laurie Barkman:
You convinced her.
Corey Kupfer:
My whole approach to negotiating that was authentic, I was probably in the third grade and a little less authentic than I probably should have been.
Laurie Barkman:
If you could only rewind. Let’s talk about the entrepreneurship gene. How did you decide on that course in business and doing your own thing and setting up your own shingle as an attorney, as opposed to just joining a larger firm?
Corey Kupfer:
Well, so what’s really interesting, and it goes back to way before me being an attorney, just to use the word ‘gene’, because both of my parents worked for somebody their entire lives so I didn’t have that model in any way. So it’s hard for me to understand where it came from because I didn’t have a lot of models for it in my family. But somehow, when I was 15, I ran a business with, let’s call them contractors, I wasn’t withholding taxes on their pay but I used to deliver flyers door to door in Brooklyn. Supermarket circulars, and whatever print stuff that you would go and stick in people’s screen doors and I’d get paid by a company to do that. When I got hired, I was like 14 I think, and I’d get paid a penny apiece to deliver these things. I started stopping in stores on the route and telling the store owners “Hey, we deliver flyers if you need it,” and I got my own accounts, and I hired my friends.The business model of that business was that you’d have an older kid who would drive and drop off the younger kids and then check up to make sure that they were actually delivering the flyers as opposed to putting them in the garbage of the sewer. But I didn’t drive at that time so I rode around on my bike and checked up on my crew. In 19, I’m going to date myself now, but in 1976 at 15 years old I was making 300 bucks a week, running this flyer business, which was a ridiculous amount of money, certainly a low middle class kid. I did that for two years, and then went away to college and just gave up the business. I didn’t understand enterprise value back then and the fact that I probably could have sold those accounts to another kid. But it was good. So I was an entrepreneur before I was an attorney. and I had that something about it, it drew me, and in college, I ran businesses. I won’t get into detail. But so for me, I did start out at a big law firm and then a medium-sized law firm, but I always knew I didn’t want to work for somebody for the rest of my life. I was clear on that. I was just getting the experience and the context and then I actually made a decision about well, a little less than six years ago, I left. My decision was, I knew I wanted to do something on my own. But did I want it to be a law firm? Or did I want it to be some other type of business? I took off about three and a half months, and skied up at Killington, 40 something days and after I left the firm and just really thought about it and said, “Hey, what do I want to do here?” And I realized that I liked the practice of law, I just didn’t like it working for someone else and I figured if I did it on my own, that’s when my skills and contexts are and that’s what I ended up doing after six years at other firms.
Laurie Barkman:
And was it pretty clear from the get go that you wanted to focus on corporate and business law?
Corey Kupfer:
Well, what’s interesting is, when I first graduated law school, I was sure I wanted to be a management side labor law attorney. I don’t know why. I took courses that sounded interesting, I got a job, was very fortunate, I graduated from a good law school, NYU in 1985, was a boom time I had. The way it works with law firms if you go to good schools is that you get summer offers for your second summer and then if they like you, then then they offer you a permanent job and you actually go into your third year of law school, knowing you have a job when you graduate, which is kind of crazy. So I have like 17 job offers, I could have had more and I picked what was the top management side labor law firm in the country at that time, was the prime pick. Then as life has it, within a year, between the fact that this was 1985, corporate deals were hot. It was the tax year change that came in in 86. The firm I was at brought in a new partner to head the Labor Department who was a terrible person to work for. So I had a pole to go to the corporate side instead of driving me out of the labor side and that year, I ended up splitting time, and then I switched over. So within a year, I ended up moving to corporate, but that was not what I thought I was gonna be doing.
Laurie Barkman:
You have a passion for deals, you have a deal-driven mindset, you talk about a deal driven mindset. What is that? Why is it important?
Corey Kupfer:
Well, so you know that there’s really two fundamental ways that businesses can grow, right and whether you’re an entrepreneur, whether you’re an executive at a bigger company you either grow organically or inorganically. The organic way is that it’s sales and marketing and providing great products and services. If you can’t do that, as a business, you can’t be successful unless you’re one of the tiny percentage companies that is formed just to do acquisitions. But most businesses are operating businesses, you have to get a client or customer and be able to get another one another one, and provide great products and services. But there is such a smaller percentage of companies that actually grow the other way, inorganically, which is deal-driven growth. There’s all these misperceptions out there about, “I need to be big, I need to have capital, it’s only M&A,” and these strategic alliances and joint ventures and licensing deals and online affiliate deals, and I can go on for the rest of your podcast, just listing the types of deals that companies can do.
The reason I’m passionate about it is because I’m very tied in the entrepreneur community as a member of an entrepreneurs organization for over a decade as President, New York chapter. I love working with growing companies of any size, not just entrepreneurial companies, even big companies, as long as they have a growth mentality. Because they’re building, they’re building something, they have a vision, they want to create something new, or they want to build on something that they built. It creates jobs and it creates new products and services, which are hopefully good for the world. So that’s just a passion of mine. One of the ways to help them do that, I’m not a sales person – like you can be a sales consultant or help people grow organically – that’s not my thing. I love the strategy. I love negotiation, I love thinking out structures. I love figuring out how there can be synergies between different parties and that’s just my gift and my passion and I think it’s so underutilized by companies who maybe aren’t growing as fast as they want, or they get stagnated or in ownership succession situations. I know you do a lot of family business stuff. I mean, it comes up with family businesses, comes up with other businesses, “What do we do as things evolve and as founders want to roll out? Do we sell internally? Do we sell externally?” I love helping people figure that stuff out and I find deals and negotiating and growth through that route just exciting so it’s something I’m passionate about.
Laurie Barkman:
You’re also passionate about entrepreneurial freedom. I’ve seen that phrase in your work, also and we did talk a little bit about that in terms of what entrepreneurs can do to really create enterprise value. You hinted at that earlier with your flyer business, and so for somebody wondering, they might think, “Oh, well, it might mean growing top line revenue,” and it might. Certainly the size of the company matters, or it might mean profitability. Of course, the profitability of your company matters, too but there’s other factors that come into play. So let’s start with entrepreneurial freedom, what does that mean to you? Then we’ll segue into some of the other things that I want to dive into related to enterprise value.
Corey Kupfer:
Sure. Some of the things you mentioned could be ways that some of that might be measured, or metrics that you’re shooting for, but ultimately, what I think it comes down to, and it’s interesting to me, how many folks go on what they say is the entrepreneurial journey, and they don’t have freedom. They bought themselves a job, they’re self employed, they’re really not entrepreneurs and I wanna be really, really clear. I don’t say that with any judgment. There’s a lot of judgment out there, in the entrepreneurial world, “Oh, you just have a lifestyle business.” For me, it’s a matter of what you want, like self awareness. If you’re very happy, being a solo, whatever, whether it’s a solo practitioner, or as a lawyer, or a consultant, whatever you are, and you’re thrilled and you have a nice business, you make a nice living, it gives you the lifestyle you want, more power to you. If you’re happy, you’re better off than most people out there. I don’t care what size company they have. In fact, my thing is everybody should have a lifestyle business. That lifestyle business could be the next Facebook or it could be working out of your home bedroom with a few clients and making a decent living. The question is what lifestyle you want to create and what’s aligned with who you are? For me, there are so many folks who become what they call entrepreneurs and then they’re not happy with it, because they bought themselves a job and because there’s all the ups and downs and struggles of being in entrepreneurship without that regular paycheck and they haven’t really taken advantage of a lot of the benefits of being an entrepreneur because they don’t feel free.
So for me, I say, “Why start your own business unless it’s going to provide you with freedom?” and then, “Listen, take it with a grain of salt,” because I wear this bracelet here, it says ‘freedom’ on it. It’s the only piece of jewelry I wear, it’s from myintent.org, great organization, when you get anywhere to put on one of these things. Freedom is my highest value in life, period. Not just in the entrepreneurial context I’m talking about freedom for everybody in the world from oppression, to the reason I’m an entrepreneur. So for me, what I value most is, somebody said, “You can make 10 times the amount of money you’re making now, Cory, but you’re gonna lose. Forget 10 times the freedom, you’re gonna lose half the freedom you have now.” What I have started my businesses for is to be able to create the life I want. That means lifestyle. That means, if I want to take a vacation and go somewhere to spend time with my wife. It also means if I have passion projects that I want to work on, it also means how I handle my clients, who I hired, the kind of culture I create. I want the freedom to have a vision and fulfill that vision without there being impediments in my way and that vision is a holistic vision, not only of what my businesses look like, but what my life looks like in relation to those businesses and the opportunities that provides.
Laurie Barkman:
Yeah, and I think a lot of entrepreneurs can relate to that. A lot of people who start a company or as you’ve just said, maybe they’ve acquired a company, maybe it’s a franchise, or maybe they’re the next generation that has acquired ownership of their family company. So yes, you can be in that role where you are striving for the next thing and it’s the freedom to choose whatever that next thing is, or it’s, as you said, funding a lifestyle that’s important to you. So whatever that choice is. So freedom is a great word. I’m glad you showed your bracelet there for anybody watching on video and YouTube, you’ll see Corey do that. That’s really cool.
When we talk about creating enterprise value, sometimes owners think about themselves as the differentiator; they are the special sauce, they are the ones who have the client relationships, they understand what the needs are, the customer needs, they might be then developing products and services, even delivering the value. Then what’s happening? Well, the problems are coming back to them. We call this ‘the owners trap,’ and a company that cannot survive without its owner, or the person at the helm, is essentially a worthless company. You’ve probably seen this, and let’s reflect on that. What are the most common pitfalls that entrepreneurs face when they’re trying to create value but maybe they’re in their own way?
Corey Kupfer:
Yeah, there’s no question about it. The person you’ve described, has, at best made themselves more valuable as an employee to be hired by somebody. Later, they have not created – I mean, in fact, it’s the exact opposite thing that creates enterprise value and entrepreneurial and growing companies. They become less dependent upon their founders because if you can’t systemize, if you can’t build a team, if it’s less transferable, if it’s dependent on any one person, whether that’s you or anybody else. This conversation of freedom that we just had, for me ties very much into that, and it may seem counterintuitive because a lot of times people think of freedom as, “Going to take time off, I’m going to do this stuff,” well, they won’t be as effective in building their business so it won’t be worth as much. There is a balance, obviously, and there’s also stages. I mean, listen, it’s a great theory to talk about entrepreneurial freedom if you’re in startup mode. I remember when I first started, I was hostile, I was going to every networking event there was. I was figuring out how to buy supplies and staples because I had nobody to do that so trust me, I know, I understand that. That real freedom is a luxury and it comes at a point after a lot of work. But those conversations are consistent. Because the more free you get to be as an owner as a founder, the less dependent your company is upon you and then the more valuable it is. By the way, it also frees you up. I have this whole other conversation that I have with executives, owners and entrepreneurs, about highest and best use, and for me, I think our goal always is to get into doing ideally only our highest and best use areas which has to be something we’re great at but that’s not enough. We also have to be passionate and love it,. You’re talking about how I love structuring deals and negotiating so I’m good at it, I love it. But then there’s a third factor, when you’re the founder or owner or executive leader of a company, it’s also got to be high leverage, it’s got to make a big difference in the business, because there’s gonna be stuff you’re great at, and you love doing but it doesn’t move, then it doesn’t matter, it’s not important.
So when you can focus on those three things, first of all, you feel much more freedom, because you’re doing what you love, you’re doing what you’re great at, you’re doing what’s making a difference, it’s growing your company, but you have other people who are running it, building it, etc. and for the most part, I think entrepreneurs find that those areas that they focus on, are things that are only getting increased the value of the company even more, because they’re going to be future-focused. They’re not going to be putting out fires, dealing with HR issues, dealing with that client issue today. They’re gonna be forward looking and being able to stay in vision and doing what, if you’re a founder, hopefully you’re best at.
Laurie Barkman:
We talked a lot about the seller side. Now let’s switch over to the buyer side. What generally do you find when you’re doing these deals? You work on both sides, seller and buyer and you’re also – understanding from your experience – you work with a lot of different size companies, privately held, and also, I think, some publicly traded ones too. But for the purposes of this discussion, let’s talk about private companies and so a company that’s looking to be sold, it’s good to look at their value from the lens of a third party. Like, ultimately, the value of your company is going to be determined by whoever’s willing to pay for it. Ultimately, they want to get this predictable future flow of profits and they’re looking for reasons to discount your multiple and your value. What are those things that tend to surprise the seller? When offers come back and maybe the number doesn’t match what they had in mind? What are some of those reasons that you see?
Corey Kupfer:
Well, let’s start at a fundamental level, which is that many sellers overvalue their business. That’s a starting point and I’m going to give people the tough, bad news. The bad news is that the market doesn’t care how long it took you to build your business. Yes, there’s some value in longevity in terms of if you’ve built a brand or reputation, I’m not discounting that. But the fact that you slaved for 20 years or 30 years, the company is going to look at somebody who got there in 10 years – the same place you are – maybe as more valuable because of their growth rate. It doesn’t matter that this is your heart and soul. For many entrepreneurs it’s like their baby and because it’s their baby, they put so much value on it. Ultimately, it’s what somebody will pay and somebody is going to look at your business much more objectively than you are. They’re also going to see some of the problems that you don’t see. One of the things that come up other than just starting point differences in valuation, there’s a lot you want to do to prepare yourself.
First of all, we talked about it being less dependent upon you so if you’ve really created a business that’s less dependent upon you, then you probably have a core team, executive team, management team, whatever. That is really important and what you want to do is be able to structure a deal where those folks are going to be interested and happy in coming along because in many deals, it’s not always true. Sometimes there are acquirers who have all kinds of infrastructure, an executive team, whatever, and they’re just buying up your client list, or buying your technology but in many, many cases, part of the big value that you’ve created in your company is the management team that you built. So you want to structure a deal and approach a deal in a way and approach them in a way where they’re gonna come along with the deal. Because if they don’t come along with the deal, then it’s not as valuable to folks. Obviously, having your house in order. I can’t tell you how many times we’re doing cleanup on companies, legally, the accountants are coming in and cleaning up the financials. If you are going to sell ideally, you’re going to look at this as a multi year process. You’re going to get yourself in shape for sale years in advance. Which means that you’re going to have somebody come in and look at your financials, you can have like three years of really nice financials, which have been, if not audited, at least reviewed. At a heavy level, we do a lot of pre due diligence with our clients, like we know what buyers are gonna be looking for as opposed to going in and have something blow up. Let me take a step back. You mentioned Laurie, the buyer’s always looking for reasons to discount and frankly, at certain levels, looking for reasons not to do the deal.
Very often you have a buyer where some level of executive has made the decision, “I’m interested in this company, let’s do it,” but the people who are coming in and actually getting the deal done, the ones who are doing the due diligence certainly, they are financial people, they are legal people, they are operations people, they are HR people. A lot of those people, you gotta understand that mentality, right? Unlike a lot of the founders, some of them, I’m not saying all of them but some of them are looking at this and saying, “Hey, if this deal goes through, and I’ve missed something, and something blows up, my job’s in trouble.” They are very cautious and they’re very worried. They’re very, maybe over indexed on what could go wrong, because some of them are not the kind of people who are looking at the vision on the upside. So you need to prepare for that and then when you work with good professionals, they’re going to know what the buyer is going to be looking for. We put our clients through a pre due diligence process so that we basically put them through the due diligence first, so we catch anything, that’s gonna be a problem. We get them really set up well to do it.
Now, listen, sometimes circumstances happen, and you don’t have the luxury of being years in advance, markets change health changes for an owner, whatever it is and you have to scramble, but the point is, you still want to do as much as you can in advance to get the company looking as good as you can. Because you don’t want to be in a position where the buyer comes in, and sees some smoke and thinks, “Where’s the fire I don’t know about,” even if it doesn’t exist. So that’s really important. The final thing I’ll say is that you get clarity as a seller. I always put total clarity on exactly what you want and how you want it. But also with sellers, I work with them in a very different way to get clarity on what they’re going to do next. By the way, that’s okay if it’s 250 rounds of golf or to travel the world or to start your new company. But I’ve seen deals go bad on the seller side where they think they want to sell, logically they know it makes sense to sell and then time goes on a little bit and they go down the deal road and there’s something emotionally, something spiritually, something mentally, whatever it is, that just doesn’t allow them to do it and they either sabotage the deal, or they’re miserable through the process. You really want to make sure you want to sell and then figure out what’s next for you. Because if you don’t have something to live into Sometimes it could backfire.
Laurie Barkman:
100% and I can understand that from the vantage point of my clients where they talk about that. This is the second or third generation or they are the founder, their name’s on the door. So I see a range of all of those things and I find the what’s next conversation is really important and I work with clients on this business readiness. How do we get your business ready, and then also the personal readiness? So glad you brought that up, too. I think we’re definitely on the same page about that. I think you have to let it percolate, it’s not a microwave oven process. It’s more like a slow cooker.
Corey Kupfer:
That’s right.
Laurie Barkman:
I’m curious about your experience working with technology companies. You mentioned you are very tied in with the entrepreneurial network. When a company is looking to buy a technology, they might be doing it as an aqua hire, they really want the talent, not so much the tech, but in other situations, they want the technology. It’s filling a strategic gap in their offering. Ultimately, when the seller is hearing across the table, all these wonderful signals, might be thinking “This is great, this is great,” and then the potential buyer leaves the boardroom, they go back to their offices, I’m wondering if the conversation is, “Hey, should we just build what they have?” What have you seen around that when tech is being evaluated and the digital assets from a build versus buy standpoint? What makes a deal go through or not go through? What examples might you have to share?
Corey Kupfer:
It’s a great question because the buyers are always making that build versus buy analysis. Then on the seller side, especially if it’s a bigger player, there’s always a concern so part of it is just how you create value, and then how you protect yourself? Let’s talk about a great value. One of the biggest things that you want to do when you’re a new technology company that is looking for acquisition or sale to be your exit is your ability to get as much – well, first of all, obviously, quality. The product helps but the truth is, if you’re dealing with a buyer who’s bigger, usually they could, especially if they’ve seen what you’ve done, they could figure out a way to build it. There are exceptions, but for the most part, trust me, they could pay developers who are as smart or smarter than the people that’ll build your product. Obviously, the better it is, the more advantage it is, it does change the buy versus build analysis a little bit but the bigger thing is speed to market and access to customers and adoption. It’s why in the online world, and people don’t understand this they just get crazy about the valuations that are paid for companies pre revenue, you know, but they have a lot of users. A great example that we’ve seen over the last number of months, and no matter when this airs, it’s going to be true for a while, is Clubhouse. Clubhouse is in beta still at this moment while we’re recording but even when it comes out of beta, when they have millions, they’re getting the attention, they’re getting the eyeballs, they’re getting whatever, they haven’t figured out how to monetize it, yet, they may have plans, etc. Clubhouse is worth a ridiculous amount of money now. They haven’t earned $1 I don’t believe because I don’t see how they’d monetize it. I’m just using that as an example. We’ve seen it with other social media sites, other technologies. Why? Because attention, because clients, customers that you can monetize in the future, either directly through that platform, or that you can then cross sell, upsell, or whatever, where you get their information for other products and services is super valuable.That’s the biggest single thing that you can do and some tech founders forget that, because they get enamored by their cool technology and how innovative they are. The truth is, most of the time it’s easy, you can knock that off.
Now, in terms of protections, there’s always this chicken and egg conversation. Some people never get a deal done because they’re so afraid that somebody’s going to steal their technology that they’ll never sit at the table. On the flip side, some people go totally unprotected. The problem is, the challenges that especially big companies, and if you’re really small, and they’re big companies, they’re often not going to sign. You can do an NDA – non disclosure agreement, but big companies are often not gonna sign that line because they got 100,000 things going on and research and development and they don’t want to be held back so there’s got to be a way that you are guided to share certain things at some point, and then if they express an interest, then you can get an NDA in place to try to get some protections but I will tell you upfront that there’s always some level of risk, if you’re looking to do a deal, especially with bigger companies. There’s always some level of risk that they are going to go down this road and then decide the build or sell, so you’ve got to understand that. That’s part of the game.
Laurie Barkman:
That is part of the game for sure. Let’s talk about trusted advisors. If there’s an entrepreneur founder, somebody who’s owning a company thinking about potential sale, at what point should they enlist the support of let’s say, for somebody like myself, hopefully, I’m already working with them, ]where we’re working on the value of their company. But at what point is it probably too late if they’ve already got an ally in hand, and they’re looking to react to it. Talk about this phase of readiness, where they’re feeling really ready, and they want to bring it to market, or perhaps an offer has come their way unsolicited.
Corey Kupfer:
I feel very fortunate because – there’s exceptions, obviously – sometimes I get referred in deals at a later stage. I was just referred, but with my clients that I work with regularly over the years, they bring me in very early, and frankly, there’s a hesitancy, especially with lawyers, to bring them in early because lawyers have a reputation, which by the way, most lawyers will deny. I think it’s actually valid because there’s some portion of the profession, I’ll be honest, as deal killers, now, every lawyer says they’re a deal maker, because they have to say that because they’ll try to combat that. The truth is, and I’ll come back to your question, but I mini rant. The problem with my profession is that we go to law school, and we are over indexed on risk. Evaluating risk, understanding risk, trying to mitigate risk. Making clients aware of risk is a super important part of what we do but the thing with lawyers is that you don’t read cases on all the deals that went well, because there are no cases on deals that went well, the only thing you learn in law school is everything that went wrong so it’s easy to be over indexed on the risk side. You need to balance the risk side, which is important like I said, versus the opportunity side. That’s what great business leaders and entrepreneurs do. You can’t be successful in business without taking risks. You just want to make it knowing that you mitigate the best you can, that you’re aware of it etc. The reason it relates back to your question is that some folks are hesitant to bring in certain professionals like lawyers too early because they feel like they’re gonna mess up the deal.
The problem is, even when you go into an LOI some people say, “Oh, it’s non binding, what do I need a lawyer?” Well, first of there’s the minor point, most LOIs actually have at least a couple of sections that are binding. It could be exclusivities, it could be non-shops, it could be confidentiality, there’s something. Second of all, most importantly, it’s very hard to go back later in the deal, even though the LOI is non binding. Say, I want to change this major part of what we agreed on the LOI because your counterpart on the other side of the table feels like you are retreading the deal, and can they trust you? Do they really want to do business with you? That’s a fundamental deal point so we get involved early, because we want to anticipate some of those things that may affect the LOI. A lot of clients call us even just to say, “Hey, I’m thinking about doing this deal. Should I do it? What do you think?” Ideally, you have the relationship with counsel and with your financial people, especially, and with any kind of business, a coach, consultant. Those folks should be with you all the time. Hopefully, those folks are your brain trust, your trusted circle, and you’re gonna bring them in early on, Ellison. If you’re just bringing somebody as a hired gun to do a specific thing on the deal, sure, bring them in later, but I think legal, financial, and consulting, are crucial to bring in early, and then obviously, if you’re of the size company, or it’s appropriate, where you’re going to bring in an investment banker or business broker into the process, then, they’re also going to be in early because they’re gonna help shut the deal.
Laurie Barkman:
I think that’s a good list, I would also add wealth management, because once the deal closes, you really need to plan for where the funds are going.
Corey Kupfer:
That’s a big sector for us; financial service. We represent hundreds of independent investment advisory firms. It’s a big niche for us and yeah, so great that you added that.
Laurie Barkman:
Well, we covered a lot of ground. Is there anything else that you would want to share today that I didn’t ask you about?
Corey Kupfer:
I think the only thing I would say is that – we started to get into it early in the interview -one of the things I was talking about is the mindset of a deal maker. What makes somebody a deal maker? Some people look at dealmaker as this thing where there’s a wheeler-dealer. That’s not what I’m talking about. The question is, are you the kind of person that if you’re running a company selling products and service to customers, your value proposition for that, you have a vision for that?
You’re going to grow on that side, you know how you’re going to create marketing materials that align with that value proposition, hopefully so customers and clients can see. It’s the same body of work to do deals. Why should somebody want to do a deal with you? Why should they let you acquire them and do a joint venture with them? There’s a certain approach, a certain mentality, a certain way of thinking, where you apply some similar things to what you do on the client.
What is your value proposition to that company that you want to acquire? Why should they join you? Why should they want to do a joint distribution deal with you or whatever it is? Then, how do you create the value proposition? How do you communicate that to them? Also, how do you build a team and resources to be able to focus on that? Because your operations team is not going to be able to do that, and still run and grow the business. I just want to bring in that mentality, and that is something like entrepreneurship, like things that some people are much more natural at, and they have an advantage, but it is also a learned skill for those folks who are willing to do it and take the risk.
Maybe they may not be as natural, and I think that’s an important piece of the puzzle; to start. It’s frankly the reason why I started the podcast. I don’t monetize it, I don’t have advertising. I just want people to be able to listen in and hear from all these different deal makers and people who have done deals and whatever and start to get that mentality shift and start to open up their mind to the possibilities so that they can potentially look at that. It may not be right for everybody, but at least it becomes something on the menu.
Laurie Barkman:
Yeah, and I definitely say that the DealQuest podcast, I think is great. Not only because I’ve been on it as a guest. You have great guests but also you do solo casts, which I think is where you get a little deeper on a specific topic. So if people want to find you online, Corey, what’s the best way to find you?
Corey Kupfer:
Yeah, so the hub website is coreykupfer.com. They can get to the law firm site through there and then all of my social media is @coreykupfer for LinkedIn and Facebook and Clubhouse and all that stuff but coreykupfer.com is the hub. It’s got everything I’m doing in terms of my speaking and training and workshops, and also links, the law firm stuff, it’s got my books and got the podcast, so that’s the best place to go.
Laurie Barkman:
You’re probably the most entrepreneurial lawyer I know. Absolutely. Last question for you, do you have a favorite quote about entrepreneurship that you can share?
Corey Kupfer:
It may not be directly on entrepreneurship, but it’s totally related to me, and it’s used in the context. It’s about jumping off the cliff and making your wings on the way down. Because for me, that is my approach to life. But it’s also definitely entrepreneurship. I started my firm with no clients with no debt, with nowhere, and I just had, I think those of us who are really true entrepreneurs and I don’t mean that in a judgement way, there are situational entrepreneurs who become very successful. Essentially, launch because they get laid off and they have a few clients, whatever. But for those of us who are excited about creating something out of nothing. That’s part of what you have to do. I mean, you can only see so far ahead. And if you wait for everything to be perfect, it’s never going to be the case. So you got to jump off that cliff and make your wings on the way down.
Laurie Barkman:
I love it. That’s a great quote. Corey, thank you so much for joining me today on Succession Stories. It’s awesome to talk to you.
Corey Kupfer:
Laurie, it’s a pleasure to be with you.
