It’s never too early to have conversations on exiting your business. Whether you’re looking to retire or pass the mantle to the next generation, it’s important to understand the merger and acquisition process sooner than later. Listen in as Laurie Barkman and Miche Jean, CEO of Grotte Business Partners, discuss how to make your business ready for transition while readying yourself for your next chapter.
Listen in to learn more about:
- Clarifying the driving force behind your desire to sell
- Laying down your exit strategy
- Why you should work with experts rather than go it alone when selling a business
- Being flexible during the merger and acquisition process
Show links:
Podcast website: SuccessionStories.com
About:
The Succession Stories podcast is hosted by Laurie Barkman, Founder of SmallDotBig.
We’ll help you maximize business value, plan your exit transition, and get rewarded for all of your hard work by finding the right buyer or seller.
Transcript:
Laurie Barkman:
Miche Jean is the CEO of Grotte Business Partners, a mergers and acquisitions advisory firm. Miche shared his personal journey from Haiti to Wall Street, and his view of succession challenges in multicultural communities. We also dove into the common mistake business owners make by not considering exit strategies soon enough. The process can take years. Even if you think you are ready to sell, you might not be sell ready. If it’s time to retire or take some chips off the table, will your valuation be enough to fund your dreams? If not, you may need more time to work on reducing risk and increasing sellability. In this episode, there’s helpful insights for entrepreneurs considering a transition in the future, and steps you can take now. Thanks for tuning in.
Laurie Barkman:
Miche Jean, welcome to Succession Stories. We got connected because of LinkedIn, and the power of social media, and I love how you’ve connected with me because we found a common topic in mergers and acquisitions and how to help business owners understand how it works, so I thought you’d be a great guest on the show today. I look forward to our conversation, so welcome.
Miche Jean:
Thank you very much for having me. We do share a common passion to really help business owners in the community. It is really an honor for me to be here with you today.
Laurie Barkman:
Thank you. Let’s start with you. Talk about your family and where you grew up.
Miche Jean:
Yes, sure. I was born in Haiti. I grew up in a small and modest family in Port-au-Prince. My mother was an entrepreneur and my father was a teacher. When I was little, my dad would take me to the countryside and show me farms, which he said used to be owned by my grandparents from my mother’s side, particularly. I never knew my grandfather, because he died before I was born, but from what I learned, he was a very wealthy man. Unfortunately, after his death, most of those farms were sold by the sixth generation. I don’t think there was ever an estate planning done, or a succession plan thing like this. They were not very educated people, either. None of them had a high school diploma. But as I grew up, this is something that really stuck with me, that so much wealth could be dissipated so quickly. This is how I started to develop an appreciation for entrepreneurship and wealth preservation, particularly.
Laurie Barkman:
How old were you when you came to the United States?
Miche Jean:
When I came to the United States, I was just about 20 years old.
Laurie Barkman:
What led you to a career on Wall Street?
Miche Jean:
So the idea to go on Wall Street started during my last year in law school. I started Law School in 2012 during the Great Recession. A friend of mine, who was at a different law school around the Boston area, invited me to join him on a project. We wanted to interview business leaders, and understand how they were navigating the financial crisis. We also wanted to find out about their expansion plan. The project went on from 2013 to 2014. However, around 2014, as some of the students who were leading on the initiative graduated and went to work as lawyers, the project started to lose momentum. I did not want to abandon the whole idea, so I decided to go on my own. First, I wanted to create a private equity firm that would invest exclusively in small to midsize companies. I traveled around the country and talked to people whom I thought would be able to back me up. While many of them did appreciate the idea, and thought it was a really great and noble strategy, none of them wanted to go further. Part of the reason, I think, is because I did not have any experience in investing. So in essence, this is what led me to Wall Street where I worked for about five years for Morgan Stanley as a financial advisor, on M&A strategy more particularly.
Laurie Barkman:
So you had the law background and you had your family experience where you were motivated to work with families to help them to grow their wealth and maybe preserve the wealth rather than then see it dissipate. That’s, like you said, a noble cause, and it sounds like you learned a lot from that initiative to put together a private equity group. Not everything works out the way we planned, but it sounds like you had a really good path forward because it’s led to… you’ve taken that initiative. You’ve said, “Hey, I am gonna try to do this.” So I guess bring me up to date on your current firm.
Miche Jean:
Yes, Grotte Business Partners. So first of all, we would need to break it down a little bit, because the name really means something to me. I chose the name because it is a French term, which means ‘cave’ and the English translation for that is ‘grotte’. So in ancient times, a grotte is what used to provide safety to humans, especially in times of great danger. I wanted my firm to be that safe haven for small business owners; a place where they feel they are being held and understood, and ‘Business Partners’, means that we don’t trulyy have a specific agent, but we are there to support entrepreneurs and business leaders however we can. If there is something we can’t do, we reach out to our vast network of trusted partners, including yourself, and ask for support. So in the end, we call it an M&A firm, because the ultimate focus is helping small business owners to grow, either through raising capital, succession planning or acquisitions.
Laurie Barkman:
When you talk about businesses and business owners you say small business, but I know that’s a really general term, is there any other way that you could describe the types of businesses that you’ve worked with in your career?
Miche Jean:
Yes, so what happens is that at Morgan Stanley, my official title was Financial Advisor. Because of this, because of the story I just shared with you earlier, I mainly work as an M&A strategist through my years at the firm. But since the focus was on wealth management, I did not really have a choice in terms of which verticals I was going to specialize in. So if someone came to us, and they needed help, we would find a way to help them. It goes without saying that we work with a very vast network of businesses, which included biotech, IP firms, real estate development etc. But one thing also I would need to… it is important for me to stress is that those were very, very small businesses. So the Morgan Stanley’s investment banking team did not directly handle those transactions because they were just too small for them. Instead, what we would do is, we partnered with boutique investment banking firms that would do those transactions on our behalf.
Laurie Barkman:
Gotcha. You’ve met a lot of people around the country, you’ve seen a lot of deals, what do you find are common themes? What are the types of deals that have the highest success rates, either in family succession, or in a mergers and acquisitions event? It depends how you define success in this context.
Miche Jean:
Definitely. So for family succession – and that is my experience, I know different advisors may have different experience – I’ve seen the highest success in real estate development companies. I think part of that may be due to the fact that this tends to be a very disciplined and close knit type of business. From my experience, the different family members tend to get involved very early on in the business, and different members are often very comfortable doing their parts. Also, for the family owned real estate companies I work with, be it a hotel or multi family housing development, the owners tend to be very structured, organized, and strategic. This, I take, helps to ensure that things go on very smoothly. For M&A, I had very good success with biotech companies. I had a client, for example, who was trying to spin off the government contracting service from his biotech company, because he wanted to focus on servicing the private sector. It was the fastest I saw a deal done. However, I did not really have much success in the medical practice space, a client of mine, who wanted me to help expand her dental practice portfolio, from three dental offices to 15 over a three year period, for many reasons, which I don’t want to really get into here, we were unable to reach that quote.
Laurie Barkman:
Gotcha. If companies want to be successful as they think about potentially selling their company, I know sometimes that there’s cultural aspects that are different. I’ve talked to you about this before we did the show. Another guest on Succession Stories has experienced in the African continent, Nike Anani is her name, and we talked about the differences in the African business community. I was curious if you could share any of your thoughts about the Haitian or multicultural communities? Do you see any differences in how they approach succession or how they approach wealth creation to the next generation?
Miche Jean:
Sure, definitely. So I would need to take you back to my earlier introduction about succession planning. If you go back, we don’t have any such concept as mergers and acquisitions. In Haiti, we do not really have any such thing as a publicly traded company in Haiti so when people buy businesses, you don’t have an established standard of valuation, except for very few Haitian professionals who may be working on Wall Street. These are very foreign concepts in our vocabulary. For many of the Haitian community, they may take that once they die, their son, or daughter will automatically take over the business and just start running it. They don’t know that there is a lot of work and preparation that needs to be done. They don’t know either that there are tax and legal implications that they need to take into account before transferring the business. We have a lot of Haitians, Laurie, who own thriving businesses in the country, whether it is a small restaurant, a government contract, IT firm or a trucking company. So these are either first or second generation Asian American. The need, therefore, for education, and sensibilisation is extremely great. I will also put out just like we mentioned earlier, in my experience, this is not just a Haitian problem, but something I’ve encountered while dealing with other ethnic groups as well.
Laurie Barkman:
I think that makes sense. Because let’s face it, if you are a business owner, it’s hard enough to get the business off the ground, grow it, it’s your livelihood, it’s probably helping with your family income, maybe you’re helping to take care of the greater numbers of family members that you have, especially if people have immigrated to the United States, and so they probably don’t have an idea around how to or even thinking about taking it to the next level, the next generation, if it’s beyond Main Street and what do we mean by that? It could be a barber shop, it could be a bakery, etc. but companies that have a view towards creating sustainable value, and that when the owner is gone, the value of the business isn’t gone. Getting to that next level is really hard. From an education standpoint, what would you say? What would you advise? How would you advise a business owner if they’re thinking about this maybe for themselves? They have a company or a business that they’re thinking, “Oh, okay, maybe there’s a future here. How can I increase its value? What do I need to be thinking about?” You mentioned the tax and the accounting side, but what about some of the practical side of the people?
Miche Jean:
I will start off like this. The first thing is, it is great for business owners to know that they cannot do it on their own. If you are a business owner, and are thinking about selling your business, the best thing you can do right now is initiating a conversation with an expert. Here are some ways and this is important. The first reason Laurie is the reason for selling the business. Every business owner that is selling a company has a reason. For example, are you selling the business because you want to retire? Or because you want to start a new venture? Are there any values you want the business to continue to support beyond selling? The answer to each one of these questions has a very different implication.
Let me give you an example. I spoke with a small business owner who passed on the opportunity to sell her bookstore simply because the buyer would not commit to certain community activities she used to engage in. For her that was a deal breaker. A second thing that a business owner should keep in mind is the time horizon; when they want to exit the business. The most common mistake business owners make is thinking it is too soon for them to start having a conversation about the exit strategy. Even if you are not planning to sell your business or to exit your business it is helpful to have an exit plan in place, because there are unforeseen circumstances that could be way beyond your control.
This is your life work Laurie, as you know, as an M&A advisor, you want to always be ready when the right opportunity presents itself. Third, I would talk about the price. For many business owners I know I’ve worked with, selling their business is what they are relying on to fund their future retirement. If you are selling your business because it is time for you to retire, then you want to ask yourself this question, whether the current valuation is enough to fund your retirement lifestyle. If it is not, then that means you may need to work a little bit more to boost its enterprise value. On the last note, what I would ask is the post selling plan when you retire whether you start a new venture, your life does not end after you sell your business. But if you want to have that, when you are going to, it’s always good to plan it well ahead of time. It is helpful to have a word map of the things that you plan to do during your retirement years. For some people, it is traveling for others, it is doing more charitable work, whatever it is that you plan on doing it is best if you have a plan, and more importantly, as well, it’s always good to have a project in place.
Laurie Barkman:
Those are great words of advice. I love how you structured that. It’s very, not only logical, but it’s got empathy in it too, because you’re trying to understand, and I have the same philosophy; understanding what’s important to them, their goals, their values, and recognizing that, yes, this transaction is just a one time thing, but your happiness is going to be about what’s next. There’s all kinds of information out there about what makes for a happier transition. It’s when they feel like their business is well taken care of on the other side for their people and their legacy, but then also for themselves pulling themselves into the next thing and being excited about it, as opposed to thinking about the past and maybe missing what they used to have. So I like how you think about that, too.
As we start to wind down this conversation, I wanted to just make something open-ended for you about what else you’d like to share and offer up to anyone listening who is thinking about how businesses are sold, and wondering about this black box of what we call M&A or mergers and acquisitions. You’ve been in this space for a while, and you’ve seen it from a lot of different angles. What would you like to share?
Miche Jean:
Many business owners assume the process to sell a business is as simple and as put forward, as selling a house, or a car or any other type of tangible property. As a result, based on my experience, a lot of those deals that we go through, I was working, for example, with a North African client who wanted to sell a small trucking company. I found several buyers who were interested in buying the business and most of those buyers actually were my wealth management clients. So I did have a high confidence that the deal would go through because I knew they had the assets. I also knew their interest level in buying the business. However, because the seller did not want to provide updated data about the company or even budge on the asking price, the deal never went through. This was probably my most difficult experience working as an M&A advisor. I think what I ask business owners is a sense of flexibility in the process, because M&A is the most complex transaction in finance. There are a lot of moving pieces and things never go as planned. So while working with a team of advisors just keep in mind that you know, there are different people and sometimes those valuations don’t match just because you have a valuation of the business and the price. You want to sell it. Understand that the buyer as well has their own valuation and target price, they want to pay for it and there has to be a middle ground for the deal to go to fruition.
Laurie Barkman:
I can understand your frustration in that deal, because it was probably a really good fit for some of those buyers, but the seller didn’t necessarily accommodate the process to move forward.
So I love to ask everyone if they have a favorite quote that they’d like to share. Do you have one about entrepreneurship or leadership you’d like to share?
Miche Jean:
I don’t know if it’s a quote. But let me share something with you. When I was a junior in undergrad, I walked into my communication professors office, her name was Dian Bifano, and God bless her soul, she passed away when I was in law school. She was also associate dean of communication for the school and she was the first person who put in my head the idea of going to law school. But I was having second thoughts, whether as an immigrant who barely spoke English, that I could succeed in the legal profession of this country. So when I shared with her those concerns and told her I was going to do something else, she said to me, “Miche, the impossible, you have done it. Now for the difficult, just give yourself a little bit of time.” She walked me through the work I was doing, including my grades in her class, and helped me understand why I should have had more confidence in myself. As a business owner, sometimes we have plans, whether it’s an annual plan, whether it’s a more long term plan, and things never go as we want them to go. I’d invite you to take note of this experience or this lesson Diane Bifano shared with me. Starting your business is always the impossible, and you’ve already done it. If something isn’t working right now, I just ask you to give it a little bit of time. Just work harder. Don’t give up just because one thing is not working.
Laurie Barkman:
That’s beautiful advice. She was nice, she left a lasting memory with you as a mentor and that’s a beautiful thing.
Miche Jean:
She did.
Laurie Barkman:
Thank you for sharing that. So Miche, if people want to connect with you, what’s a great way to find you?
Miche Jean:
The best way to find me is on LinkedIn. I am an open networker and one thing I like the most about LinkedIn is commenting, or liking, whether it’s a live update, or whether it’s a business update of my network. So I would please invite anyone listening to this to please connect with me on LinkedIn, I’d love to really stay in touch.
Laurie Barkman:
Miche, you have become a nice friend to me and we are collaborating in a variety of ways and I look forward to many more conversations with you. Thank you so much for coming on the show. You’re very impressive and just to underscore, to move to this country at age 20 and get your advanced education and create a career here that is not only benefiting the immediate people around you, but then the people that are in their lives is a special thing. So thank you for coming and sharing that.
Miche Jean:
Laurie, let me thank you as well. I’ve listened to a lot of your podcast before being a guest here. The work you are doing – because your presentations are not just helpful to people in the M&A world; when I was in law school, I took a lot of classes on M&A and I wish I’d listened to your podcast before – whether it is a business owner, you don’t have to be thinking about selling your business to know what is happening in this world. This is something that can really help, the materials, the information you are sharing is really excellent whether you are executives, this is something that also helps. So thank you very much for having me and it is an honor.
Laurie Barkman:
Thanks, Miche.
