0:00

Any article on the essential characteristics of successful

0:02

entrepreneurs, will list

0:04

attributes such as creative,

0:04

passionate, resilient,

0:07

adventurous, decisive and

0:07

resourceful. Middle market

0:11

business owners are known for

0:11

their ability to get things done

0:14

and figure stuff out, which is

0:14

exactly what allows them to

0:17

build what they do. But what

0:17

about when they shouldn't do it

0:20

alone? How do you know when it

0:20

is better to ask for help? On

0:24

today's episode, we will talk

0:24

about how to get the most out of

0:27

working with your advisors, when

0:27

and why to use an advisor, what

0:31

to look for, and how to find the

0:31

right advisors for your

0:33

business. Welcome to Right in the Middle

0:39

Market, a podcast about

0:42

pragmatic perspectives on

0:42

running, growing and selling

0:45

your business. We talk about the

0:45

challenges decisions, and most

0:49

importantly, the actions

0:49

business owners can take to

0:51

create long term value in their

0:51

companies.

0:57

Welcome to Right in the Middle

0:57

Market, I'm Stephanie Chambliss

1:00

Gaffin, and I'm here with my co

1:00

host, Mark Gaffin. Over the past

1:05

several episodes, actually, I

1:05

say that too much, but in many

1:08

of our episodes there, there's a

1:08

different phrase, we talk about

1:12

using advisors. And it came to

1:12

our attention that we talk a lot

1:16

about using advisors, but we

1:16

haven't really talked about

1:19

using advisors. So that's what

1:19

we want to talk about today. Any

1:23

business owner is going to by

1:23

definition, be limited in how

1:29

many things they can know, be

1:29

expert, you can't be an expert

1:34

at everything. And that's really

1:34

where advisors come in, is to be

1:39

able to bring in specific types

1:39

of expertise. And there's some

1:44

other reasons that you use

1:44

advisors, but that's really what

1:46

we want to talk about today, is

1:46

using an advisor, why do you use

1:51

an advisor? How do you use an

1:51

advisor? How do you find one?

1:55

And how do you make sure that

1:55

then when you bring somebody in,

1:58

that you're using them

1:58

effectively? So Mark, I think a

2:02

good place to start is let's

2:02

make sure that we're again,

2:06

always looking to level set,

2:06

make sure that everybody's on

2:08

the same page, when we talk

2:08

about an advisor, what do you

2:13

think of when you think about an

2:13

advisor to a business?

2:16

So I just think

2:16

that in the broadest sense of

2:19

the term, it's it's someone

2:19

typically external to the

2:21

company, that brings in a set of

2:21

domain expertise, a certain

2:26

perspective, that maybe you

2:26

don't have full time on staff.

2:31

And I would argue that that's,

2:31

irrespective of the size of the

2:35

organization is in my former

2:35

life as a strategy consultant.

2:39

For a global firm, we worked

2:39

with fortune 50 companies that

2:43

brought in external people to

2:43

help on all kinds of fronts,

2:46

from HR issues, to M&A issues,

2:46

to tax issues, you know, all

2:52

those things. And you're going to see that even with the smallest companies, most of them

2:54

are probably already engaging an

2:58

advisor in some capacity, an

2:58

external advisor in some

3:01

capacity.

3:02

Right.

3:02

If you think about, again, most

3:05

small businesses are going to

3:05

have an accountant, or somebody

3:09

who helps them with tax planning

3:09

or with filing their taxes, they

3:13

probably have an attorney. So

3:13

even just starting there, they

3:17

may have an advisory board or

3:17

Board of Directors, right? So

3:19

all of those are advisors. And

3:19

then also when you start to

3:23

think about as you were speaking

3:23

of, you think about consultants,

3:27

you think about an investment

3:27

banker, right? You think about

3:29

all of those different

3:29

categories. So when we say

3:32

advisor, that's what I mean, it

3:32

sounds like Mark, you think of

3:36

it in in a pretty similar fashion.

3:38

Yeah. And I think

3:38

that if you just keep it simple,

3:40

where people probably have some

3:40

experience in this, even smaller

3:45

companies, which are obviously

3:45

our key listening group is the

3:50

tax, right? So there's tax laws,

3:50

change tax codes, change your

3:54

approach to doing that

3:54

efficiently, is going to change

3:58

over time. But for you to have

3:58

that kind of expertise, full

4:00

time on staff is extraordinarily

4:00

expensive. It is probably better

4:05

to have a good CFO and a good

4:05

accounting function internally,

4:08

but then you're going to tap

4:08

into that expertise over time.

4:12

And that's going to be

4:12

employment taxation, it could be

4:16

things that change during the

4:16

COVID environment with the with

4:19

the deferral of some of the tax

4:19

payments there. Things like

4:23

that, you need to have someone

4:23

that that's what they do all

4:25

day, every day is keep current,

4:25

keep deep in those those topic

4:29

areas. And then you tap into it

4:29

as you need it.

4:32

Let's

4:32

talk about, and we're going to

4:35

really hone in on three things

4:35

during our discussion today. The

4:38

first we want to talk about, why

4:38

do you use an advisor and when,

4:42

what are some of the times that

4:42

you should think of using an

4:46

advisor. The second thing we

4:46

want to talk about then is what

4:49

to look for when you're

4:49

evaluating a potential advisor

4:54

that you're going to bring into

4:54

your company. And then finally,

4:56

how do you find an advisor. So

4:56

starting with, why would you use

5:01

an advisor? And, Mark, I'm going

5:01

to let you start and then you

5:05

know, I have some thoughts on this.

5:06

Well, I think the

5:06

Why is going kind of going back

5:09

to what I was just saying, is

5:09

that domain expertise, you're

5:13

looking for someone that can

5:13

answer a specific area, that's

5:16

it'd be a tax, be a law, there's

5:16

attorney involved, and there be

5:20

different types of attorneys,

5:20

right, you may have estate

5:23

planning, you may have any kinds

5:23

of partnership agreements, those

5:26

kinds of things, you need

5:26

someone episodically to come in

5:29

and help you with a certain

5:29

project. And then there's other

5:34

people that you may have over

5:34

time. And those are still people

5:38

that you want to have as a

5:38

sounding board. And that's when

5:41

we talk about advisory boards,

5:41

and even the boards of

5:44

directors, typically, where you

5:44

have the external advisors to be

5:49

a sounding board, when we like I

5:49

said, we've had this with even

5:52

big, big, big companies that

5:52

hire people to come in, say,

5:56

Look, do I open in South America

5:56

or not? You know, I want to ask

6:00

that question. The CEOs coming

6:00

up with that. And how do you

6:04

approach that? So there's a

6:04

bunch of reasons to bring people

6:06

in. Because you don't want to

6:06

have to have that kind of staff

6:11

full time all the time.

6:13

Yeah, I always think of it as three reasons. The first one being

6:15

expertise, which you just spoke

6:18

about, and to me, it's always

6:18

thinking about where is their

6:22

expertise, that does not make

6:22

sense for me to bring on as part

6:27

of a full time employee, right?

6:27

Either the expertise is so

6:32

specialized that you need, that,

6:32

it just, it just doesn't make

6:36

sense for you to bring that

6:36

person on, you don't need a full

6:38

person worth, it may be that to

6:38

get the true expertise that you

6:43

need, you just simply couldn't

6:43

afford that. Because that type

6:45

of person would be so expensive,

6:45

and you don't, again it ties

6:49

back to what you said, if you don't really need them full time. And in the other reason

6:50

that you mentioned is that it's

6:54

it's episodic, right, it's, I'm

6:54

going to need them for this

6:58

project or for this period of

6:58

time, but this is not something

7:01

that I need as a core of my

7:01

company. The second reason that

7:05

I always think of for bringing

7:05

in a consultant then is around

7:08

bandwidth. So the first one was

7:08

that there's expertise you don't

7:12

have that is going to be an

7:12

episodic or periodic need. The

7:17

second one is that there's

7:17

bandwidth that you don't have.

7:19

And again, if it's long term

7:19

bandwidth, then you probably

7:23

want to hire that full time at a

7:23

company. If it's short term, or

7:27

it's something that you need to

7:27

ramp up very, very quickly, then

7:30

those may be good chances to

7:30

use, you know, a very specific

7:34

type of consultant really in

7:34

that situation. So I always

7:39

think about the second one as

7:39

bandwidth. And then the third

7:42

one, and this one, this one's a

7:42

little bit tricky. But there is,

7:46

I think, a legitimate need for

7:46

bringing an advisor as a fresh

7:52

set of eyes, as somebody who can

7:52

be impartial. And you might

7:56

bring in somebody who is going

7:56

to help you make a tough

7:59

decision, right? They're coming

7:59

in with a fresh perspective, you

8:02

hopefully are coupling this with

8:02

specific expertise. So this one

8:06

doesn't stand on its own. It may

8:06

be somebody who can help you

8:10

navigate a difficult situation,

8:10

whether that's internal or

8:13

external.

8:14

Yeah, and I think

8:14

the the part that's important

8:16

about that last one, is that you

8:16

still own, if you're the CEO,

8:19

the owner of the company, you

8:19

still own the decision, you can

8:22

bring somebody in to help with a

8:22

fact pattern help you with the

8:26

analysis, you usually typically

8:26

have a hypothesis about which

8:29

direction you need to go. But

8:29

you want to have someone come in

8:32

and give you the complete, you

8:32

know, to your point fresh

8:36

perspective, data analysis on

8:36

why do I have to do a certain

8:40

thing. Let's just say it was

8:40

spin off part of the business

8:44

portfolio, you really want to

8:44

make sure that you're doing the

8:46

right thing? How would it look?

8:46

How would you communicate? So

8:49

those are all kinds of people

8:49

that you might bring in, you

8:52

figure, you might bring someone

8:52

in to value the company run the

8:54

process, you'd have a

8:54

communications person. So you

8:58

have people to come in for that.

8:58

We haven't even touched on

9:00

things like crisis management,

9:00

where people do have to come in

9:04

and help with communications

9:04

along those lines as well.

9:07

You know, it's funny, I've been doing consulting for a long

9:09

time. And there are situations I

9:13

remember a situation years ago,

9:13

and I would not name this as a

9:16

best practice. But I always

9:16

think about a hospital that I

9:19

came into work with as a

9:19

consultant. And there was a

9:22

particular situation where they

9:22

had one individual on the

9:25

executive team who was pretty

9:25

tough to deal with and they

9:28

needed to try to get this person

9:28

on board with some pretty tough

9:31

changes that they knew needed to

9:31

be made. And honestly, even the

9:35

CEO, COO, the rest of the

9:35

executive suite, it was going to

9:38

be very difficult for them to

9:38

push this person on that

9:41

decision. And so part of the

9:41

reason that they hired our firm

9:45

was to come in and help navigate

9:45

that situation, help to bring

9:50

some of the outside perspective,

9:50

outside research, outside data

9:53

and impartial perspective, to

9:53

then be able to help make that

9:58

data driven decision to be able

9:58

to make some changes in an

10:02

environment that was very tough internally.

10:05

Yeah, that's right.

10:05

We are talking about this in our

10:08

culture episode coming up. But

10:08

you know, sometimes you have

10:12

people that have a number of

10:12

reasons, it may be inertia, it

10:16

may be self interest, and maybe

10:16

a couple different things that

10:18

the current state is where they

10:18

want to stay. And they're going

10:23

to fight tooth, claw and nail to

10:23

stay in the current state.

10:26

Whereas most people realize that

10:26

we have to evolve, we have to

10:30

move to the future state. And

10:30

you have to bring them along.

10:34

And sometimes it's like, Look,

10:34

we'll meet you halfway, we'll

10:36

provide more of the data, more

10:36

of the facts, more of the

10:40

analysis and that bridge to the

10:40

future. But, you know, you got

10:43

to get there at some point.

10:44

Well, and this is part of the reason that we always say, the CEO is

10:46

the loneliest job there is,

10:50

because often, not always,

10:50

again, even if they've

10:53

surrounded themselves with a

10:53

terrific team, if they're facing

10:57

a difficult decision that is

10:57

going to impact those people in

11:00

one way or another, it can be

11:00

difficult to have open dialogue,

11:04

it can be challenging to

11:04

sometimes feel like, Yes, I can

11:09

fully explore that. And the

11:09

people around me are going to

11:13

give me fully unbiased opinions,

11:13

not because they're not great

11:16

people and really good at what

11:16

they do, but they're personally

11:19

invested. And so being able to

11:19

have that outside perspective of

11:24

somebody who can be totally

11:24

unbiased, can be that sounding

11:28

board, can help somebody think

11:28

through, it doesn't mean that

11:32

you ignore the impact on your

11:32

team by any stretch. But to be

11:35

able to think through what is

11:35

the right decision, what is the

11:37

right direction, taking that

11:37

into account, along with all of

11:42

the other strategic implications.

11:44

Yeah, that's right.

11:44

And I think that we'll use a

11:47

real quickly, if you think of

11:47

someone that's going from, maybe

11:50

they're a smaller company, and

11:50

they may be very state based or

11:53

very small, regionally based, if

11:53

they're actually going to go

11:56

national, or take that next step

11:56

and become International, there

11:59

are certain things that you

11:59

might want to take advantage of

12:03

that other people have already

12:03

learned from that experience,

12:05

whether you're doing that through M&A or you're doing that through organic growth. If

12:07

there's any way for you to not

12:10

repeat mistakes people have made

12:10

doing that in the past by

12:13

bringing in an external advisor,

12:13

why would you not do that? I

12:16

mean, often, the cost of the

12:16

advisor, winds up getting lost

12:21

in the noise because of all the

12:21

money you didn't have to spend.

12:29

Well,

12:29

that's exactly right. And so you

12:32

know, I think, to bring it back

12:32

to what we said, we wanted to

12:34

talk about in this section. If

12:34

it's not just why, but what are

12:39

some of the things that should

12:39

trigger to a business owner,

12:41

Gosh, maybe I should think about

12:41

bringing in an advisor. You keep

12:45

finding yourself saying, gosh, I

12:45

know there's some specific

12:47

expertise probably related to

12:47

this, that just you don't have

12:52

internally, it doesn't make

12:52

sense for somebody internally to

12:54

learn when you're facing a

12:54

significant decision. Or, you

13:00

know, as a significant milestone

13:00

in the business. What are some

13:04

of the other hallmarks that you think of Mark?

13:06

Well, no, I think

13:06

that covers a lot of what you're

13:09

driving to, right? I think that

13:09

if I use the CFO, for example,

13:13

in a company, in a growing

13:13

company that's coming from a

13:15

small company to a larger

13:15

company, they're learning about

13:19

increased needs of the CFO role,

13:19

right, it becomes more and more

13:24

complex, as you start to think

13:24

about different states and

13:27

maintaining sales tax and all

13:27

the different things and Use Tax

13:30

across different states. So

13:30

they're learning all the time,

13:33

it's all the sudden you add M&A

13:33

on top of that, you know, you

13:38

maybe push those people too far.

13:38

Same thing with HR, if you start

13:41

to think about we've got a fully

13:41

employed pool of people. Now

13:46

we're moving to independent

13:46

contractors and remote workers.

13:49

How do we do that effectively?

13:49

And there are probably there are

13:52

people externally right now that

13:52

are really working hard to think

13:55

through those structures. How do

13:55

we get the best out of remote

13:58

workforce? How do we move people

13:58

back? And our people, that's

14:00

what they're doing 24/7 right

14:00

now, so why not leverage that,

14:04

right? That someone that's doing

14:04

that and has experience of

14:06

implementing this over 10s of

14:06

scores of companies, why not use

14:12

that that learning curve that

14:12

they've gone through?

14:14

You mentioned M&A, and it may be worth taking just a moment on

14:16

the role of the investment

14:20

banker, it's one of the the

14:20

types of an advisor that we

14:23

mentioned at the beginning of

14:23

the episode. And I think it is

14:25

one that a lot of folks don't

14:25

necessarily understand. So I

14:30

think maybe, and this may be its

14:30

own episode at some point and

14:33

ties into some of the things

14:33

we've talked about, about the

14:36

process of selling your

14:36

business. But if we think about

14:39

when you would want to to bring

14:39

in an investment banker, again,

14:43

if you're thinking about selling

14:43

your company, if you are

14:46

thinking about raising capital,

14:46

and investment bankers sometimes

14:50

called an intermediary, because

14:50

what they are really intended to

14:53

do is to be someone who can help

14:53

shepherd that process on your

14:57

behalf.

14:58

Right. I think that

14:58

that's one of the things and you

15:00

know, a little self serving

15:00

that, we try to take a very

15:03

consultative approach to that.

15:03

Because you want to be thinking

15:08

about some of this before you

15:08

actually need to do it. And so,

15:11

if you're thinking about doing

15:11

M&A, if you're thinking about

15:14

doing some large organic growth

15:14

programs, and you're going to

15:18

need additional capital to do

15:18

that, that's something where you

15:21

bring somebody in to say, Look,

15:21

this is what I'm thinking of

15:24

doing, how do we lay that out?

15:24

How does that process layout

15:28

with raising capital, to support

15:28

it ahead of time, so that none

15:33

of those, there's binding up the

15:33

other side of things. So

15:35

bringing the people in the that

15:35

actually can sit down and be

15:37

thoughtful about it. What I

15:37

think is important with

15:40

investment bankers, is you want

15:40

to be wary about someone that

15:44

that's just trying to do the

15:44

transaction. You never want to

15:49

push a transaction at all costs,

15:49

there are times when we're not

15:52

ready yet. And I can get you

15:52

more money that the investment

15:57

thesis is not put together yet.

15:57

So it may be say, Look, I'm

16:00

gonna be honest with you, the

16:00

better part of valor right now

16:04

is to pause, get the place in

16:04

order, you know, more so for

16:07

external capital or an external

16:07

sale, that bit then could help

16:12

the process go that much more

16:12

smoothly, when people are doing

16:14

M&A, due diligence, that can

16:14

also help you then, with

16:19

credibility, people believe

16:19

believing that if I buy the

16:21

company, it'll run on Monday

16:21

morning when I take it over. So

16:25

all those things can actually

16:25

help. So if you bring someone

16:27

in, that you can trust, and I

16:27

know trust has to be built, even

16:31

with an external advisor, but

16:31

you bring someone in that you're

16:34

like, I believe that they're

16:34

trying to do the best for me.

16:37

And I believe in their approach.

16:37

That's why the work can be

16:41

really important.

16:42

And I think that's a great bridge to the next big category that we

16:44

wanted to cover today around

16:47

what to look for in an advisor.

16:47

And so let's continue with that

16:50

point right after this word from our sponsors. Right in the Middle of Market is

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your company.

18:02

Welcome back, you're listening

18:02

to Right in the Middle Market.

18:06

And today we're talking about

18:06

how to most effectively use an

18:09

advisor. So we just finished

18:09

talking about why you would use

18:15

an advisor, when in your

18:15

company, what are some of the

18:18

things that are common times in

18:18

your company to be thinking

18:23

about using an advisor. And

18:23

Mark, I think some of the

18:26

comments that you were just

18:26

making, we're really getting to

18:28

our next category of things we

18:28

wanted to talk about, which is,

18:31

so what do I look for? Right? I

18:31

think- it's interesting, you

18:35

know, recently, we had somebody

18:35

ask us for some recommendations

18:39

for an accountant. And I think

18:39

part of that, you know, it's

18:42

always the subtext is, I don't

18:42

want to get taken advantage of.

18:46

I don't want to pick the wrong

18:46

advisor. And so we often have

18:51

people ask us for, Gosh, Do you

18:51

know anybody who does x? And I

18:56

guess that's one of the things

18:56

you were starting to talk about

18:58

trust. What are some of the

18:58

other things that business

19:02

owners, business leaders should

19:02

be looking for in selecting an

19:06

advisor?

19:07

Well I think the

19:07

domain expertise is super

19:09

important. I do think that most

19:09

accounting firms, most law firms

19:14

of a decent size are going to

19:14

wind up having that. You don't

19:18

want to ever take sides, it's

19:18

just a perfect signal for domain

19:21

expertise. But I think it's the

19:21

domain expertise and then

19:26

there's there's the fit. When I

19:26

say fit, you got to kind of go

19:29

with the CEO or whoever's taking

19:29

that advice, and maybe the head

19:33

of HR, because it's an advisor

19:33

that they're using. But you want

19:36

someone that, can you handle

19:36

tough love? Some people have an

19:41

ego that can handle that. And if

19:41

someone looks across the table,

19:45

and says, Don't do that and

19:45

here's why, other people may

19:48

need it done a little bit

19:48

differently. So find someone

19:50

that's got the domain expertise,

19:50

but then kind of talks at your

19:53

wavelength, so that you can get

19:53

the best out of that, because

19:56

there's the domain expertise and

19:56

there's the communicating that

19:59

domain expertise to the decision

19:59

maker, which is still the person

20:03

that's hired that advisor.

20:06

Earlier in my career, as I was talking about earlier, when I was

20:07

working for a larger consulting

20:10

firm, and we would have a team,

20:10

it was interesting, we would

20:13

actually try to shape within the

20:13

team, and matching the

20:19

particular person who would lead

20:19

an engagement with the culture

20:23

of that organization. Being a

20:23

native Midwesterner, I would

20:27

sometimes be brought to

20:27

Midwestern clients, but it was

20:30

just, you know, you and you

20:30

would always kind of try to

20:33

balance finding the expertise,

20:33

right, the person who had the

20:37

right expertise, but it also has

20:37

to be somebody who can have that

20:42

effective communication, because

20:42

you can bring in the person who

20:45

absolutely knows all of the

20:45

right things. And if the

20:50

audience can't hear that

20:50

information in the way that it's

20:53

being communicated, then it's

20:53

falling on deaf ears. And so

20:58

it's so much of bringing in an

20:58

advisor is not just getting the

21:03

advice, not getting the

21:03

expertise, but being able to put

21:06

it to use.

21:12

of analysts in the

21:12

early part of their year,

21:20

they're dealing with a lot of

21:20

analytics, right data, and

21:23

you're transforming that into

21:23

knowledge. And then you might

21:25

have a manager on a consulting,

21:25

engagement, taking that and

21:29

synthesizing that across a

21:29

number of different projects.

21:32

Ultimately, you get a partner or

21:32

someone at that higher level,

21:35

that's taking all that

21:35

information, and presenting it

21:38

in such a way to the decision

21:38

maker, we will use a CEO, for

21:41

example, right now, in a way

21:41

that they can communicate.

21:44

Because they don't need a sea of

21:44

data, they may want to see some

21:47

of the backup in the appendix,

21:47

but at the end of the day,

21:49

they're like, no, no. Does this

21:49

make sense? If I want to expand

21:52

to South America? Does that make

21:52

sense? If it does, what are the

21:56

things I have to look out for?

21:56

And can we get around those

22:00

barriers? So you never have

22:00

certainty, right? We're always

22:06

making decisions with unknown

22:06

information as a CEO. That's why

22:10

it's such a tough job. But can

22:10

you bring someone in that helps

22:13

reduce the risk of those

22:13

decisions. And then ultimately,

22:17

you can have a good decision and

22:17

a bad outcome- that happens,

22:20

right? There are things that could happen, if you were launching a project on February

22:22

29th this year, it may have made

22:28

all the sense in the world. But

22:28

the wheels came off, and it was

22:31

a good decision, bad outcome.

22:31

But that's you know, you can

22:34

only do what you can do to make

22:34

good decisions. And I think

22:37

that's where the advisor should

22:37

be an input, they shouldn't make

22:41

that decision, you should still

22:41

own the decision, as the person

22:45

in the company that hired that

22:45

advisor.

22:48

But it's interesting, because I think there's also the flip

22:49

side, which is you sometimes see

22:52

people hire an advisor or select

22:52

an advisor based purely on fit.

22:57

And they haven't pushed hard

22:57

enough on the domain expertise.

23:00

And we see this in particular

23:00

as, you know, you may have, I'll

23:05

give an example, an attorney or

23:05

an accountant who's been a

23:10

really good partner for your

23:10

business, but then you get into

23:13

a specific project, a specific

23:13

episode, it might be M&A, it

23:18

might be a patent or

23:18

intellectual property issue, but

23:21

something where there's very

23:21

specific expertise. And it can

23:25

be challenging then to say,

23:25

Well, I want to stay with this

23:28

person, because they've been

23:28

with me a long time I know them,

23:31

I trust them. But in reality,

23:31

they haven't gone back to think

23:35

about that the domain expertise

23:35

really does matter and may not

23:38

be there in that situation.

23:40

I think you have to

23:40

look at it as there's no fortune

23:45

100 company, fortune 50 company

23:45

that is maintained same advisor

23:49

set over the entire length of

23:49

their program. That's just a

23:53

fact of the matter, right? So

23:53

you do look at different folks

23:58

and how it doesn't mean loyalty,

23:58

loyalty is important, but it

24:02

shouldn't be blind. And I think

24:02

you have to say, look, there's a

24:05

trade off of having someone

24:05

around for a long period of

24:08

time. And some people can grow

24:08

with the company. But you know,

24:11

if you're talking about a patent, you can bring somebody in for the patent and then move

24:12

on with your life, but if you're

24:15

starting to get to a point where

24:15

your external advisors are

24:19

actually holding you back, you

24:19

know, that's, that's a challenge

24:23

to you, you really have to address.

24:25

So,

24:25

let's move to the third big

24:28

thing that we wanted to talk

24:28

about, which was, how do you

24:31

find an advisor? So it might be

24:31

that you are bringing in this

24:34

type of an advisor for the first

24:34

time or it may be as you said,

24:37

Mark that, Well, I've outgrown

24:37

my accountant, attorney,

24:42

whatever. And I need to start to

24:42

find somebody who has a

24:46

different set of expertise for

24:46

the way the company has evolved.

24:48

How do you go about finding a

24:48

good advisor?

24:52

Yeah, so I think

24:52

that we all work with different

24:55

advisors on hundreds of

24:55

different deals, right? So I

24:59

don't know what my Rolodex, I'm

24:59

dating myself because I have a

25:01

Rolodex, but, you know, if you

25:01

think about the number of

25:04

attorneys, I think we just had a

25:04

situation, what was it, last

25:08

week where someone was looking

25:08

for attorneys. And it's not that

25:12

they didn't have a good

25:12

attorney, but they were moving

25:14

into more M&A, and this is

25:14

actually capital raise. And

25:20

their attorney does a good job

25:20

doing contract law and things

25:24

like that, but they needed

25:24

someone that understood VC

25:26

capital raises venture capital,

25:26

capital raises, and they needed

25:30

someone to help on international

25:30

issues, and also how that fits

25:33

with a capital raise. And so we

25:33

were able to give them I don't

25:36

know, four or five names right

25:36

off the bat, people that we work

25:39

for, we make an a policy for our

25:39

firm, never to recommend anybody

25:45

we give people and you can't

25:45

help but be shaping your mind.

25:49

But what does that person like?

25:49

You know, I've got some hard

25:52

edge people that are, you know,

25:52

maybe it looks like your New

25:55

York, New Jersey attorneys that

25:55

are gonna be really good with a

25:58

certain amount of people. And then you've got some other folks, they're like, I need

26:00

somebody that can hold my hand,

26:02

take me forward, educate me,

26:02

which is perfectly fine. I love

26:05

those people as well. That's

26:05

big, big on my list of skills.

26:10

So yeah, so I think that's how

26:10

you do it is you look at your

26:13

other advisors, and say, Hey,

26:13

I'm thinking of, maybe, and I

26:18

don't want to say upscaling, but

26:18

I'm thinking of evaluating where

26:22

I am with it, whether it's, you

26:22

know, an M&A firm or a lawyer or

26:27

an accountant, and just saying,

26:27

am I getting the best? Or maybe

26:30

it's not the time yet to move.

26:30

But just taking that on, at

26:35

least thinking about it is okay,

26:35

no, I'm actually good with where

26:38

I am right now. But maybe in a

26:38

couple years. Or you may say,

26:41

no, I really need to think about

26:41

a broader set of services and

26:45

expertise.

26:46

Right. And I think that's where if we go back to really the two core

26:47

aspects of what to look for;

26:51

domain expertise, and fit. And

26:51

so part of this is saying, if

26:56

you're talking to some of your

26:56

other advisors, they will likely

26:59

be able to help you find

26:59

somebody who has the domain

27:01

expertise to be able to say,

27:01

look, here's four or five names,

27:05

three or four names of people

27:05

who have the domain expertise.

27:08

Now, you should talk to them and

27:08

find out who first of all, do

27:12

your own due diligence, always.

27:12

And secondly, to find out

27:15

whether there is that fit. Is

27:15

this somebody that you feel

27:18

comfortable with? If you get on

27:18

the phone, you know, for an

27:21

introductory call, and it's just

27:21

a tough conversation, always ask

27:27

yourself, Is this somebody that

27:27

I'm going to feel comfortable

27:29

taking advice from?

27:30

Well, I think one of the things we always talk about being the right size fish

27:32

in the right size pond. And this

27:36

doesn't matter whether you're

27:36

talking about a commercial bank,

27:39

a law firm, or anything, even in

27:39

M&A if you're talking about a

27:43

big M&A shop, right? Where are

27:43

you in that? So if you go to a

27:48

really, really big bank, as a

27:48

small company, you're going to

27:51

be, you know, a little tiny fish

27:51

in a big, big pond. Now, they

27:54

may have a business banking

27:54

group, or middle market group,

27:57

but you still have to ask

27:57

yourself, how important am I to

28:01

those people, and they may make

28:01

it right. So there's, there's

28:04

super regional banks, and there's regional banks that do a very, very good job at that. But

28:06

you do have to make sure that

28:09

you are getting the attention

28:09

that you really deserve. And

28:13

that's across, it should be

28:13

bespoke or customized to your

28:18

situation. So there's a balance,

28:18

right? It's not always the

28:21

biggest firm, that's the best.

28:21

It's being people that I think

28:25

that can help me now, and that

28:25

can help me two or three years

28:29

down the road with anything I'm

28:29

contemplating doing, is who I

28:32

Before

28:32

we wrap up today, I want to

28:32

want to be with. spend a little bit of time just

28:36

talking about some of the common

28:39

pitfalls. I know, Mark, you and

28:39

I have both done consulting for

28:42

a long time, we have seen and

28:42

been part of a lot of consulting

28:47

engagements that have gone

28:47

really well. And I know you and

28:49

I both seen some that were a

28:49

little rockier. And so if we

28:52

think about what are some of the

28:52

common pitfalls, and what are

28:55

the lessons that can be learned

28:55

from them? I think I'll go ahead

28:59

and start, I think one of the

28:59

ones that I always think of is

29:03

not getting the right balance

29:03

between keeping the

29:07

accountability, and therefore

29:07

the ability to carry on whatever

29:12

change it is that's made long

29:12

term, within the organization,

29:16

and putting too much on the

29:16

external advisor. So to make

29:21

this a little more tangible,

29:21

what I mean is I've seen

29:23

situations where somebody brings

29:23

in an outside advisor, they you

29:28

know, they are really busy with

29:28

other things, and so they don't

29:32

have a strong commitment

29:32

internally, the consultant does

29:35

all of the work. And then at the

29:35

end of the project, the

29:38

consultant leaves nobody

29:38

internally then has really

29:41

bought into what's been done.

29:41

And the changes fall apart very

29:45

quickly after the consultant departs.

29:47

Yeah I think you hear that all the time. In the strategy world, people talk

29:49

about great strategy engagement,

29:52

and it sits on the shelf and

29:52

gathers dust. And then the

29:55

question is, whose fault is

29:55

that, really? It could be either

30:00

side, right, I think the fault

30:00

is on both of them. Because

30:03

clearly we didn't we didn't take

30:03

that next step and get it so it

30:06

was operational. We talked about

30:06

in an earlier episode, What do I

30:10

do on Monday morning? So what is

30:10

it, a strategy that's 80%

30:14

implementable, is better than

30:14

one that's 100% that's not. So

30:19

what we really try and do is

30:19

figure out how do you take that

30:22

last step? I think, to me, I

30:22

think it's kind of related to

30:26

that, to me, it's like, if you

30:26

don't have the information,

30:31

let's just say you're a CEO, if

30:31

you don't have the information,

30:34

but you've made your mind up,

30:34

and all you want to see the

30:37

external advisor to come in and

30:37

say, whatever you say, then I

30:41

think that that can be a rather

30:41

be hypothesis driven to say,

30:45

This is kind of what I think I

30:45

need to do. This is where I'm

30:47

leaning, convince me that I'm

30:47

not right. But you got it, you

30:50

got to be able to give the

30:50

external advisor an opportunity

30:53

to say, look, you know,

30:53

valuation, if you just came back

30:58

from the, from the country club

30:58

and said, My buddy just sold his

31:01

high tech sass company for, you

31:01

know, absurd multiple in the

31:05

teens, and you're a completely

31:05

different company. If you're

31:09

like, I needed someone to come

31:09

in and tell me that my company

31:11

is going to sell for, you know,

31:11

15 times EBITDA, someone

31:15

somewhere in the United States

31:15

will come forward say, Oh, yeah,

31:17

I can tell you that, right to

31:17

get the mandate. I would I'd

31:22

rather have the advisor that

31:22

said, This is why you may not

31:25

have that experience, rather

31:25

than just you know, tilting a

31:28

windmill.

31:29

I think we'll take those as our two pragmatic tips for today.

31:31

I'm Stephanie Chambliss Gaffin,

31:35

and you've been listening to

31:35

Right in the Middle Market, a

31:38

podcast about running, growing

31:38

and selling your middle market

31:41

business. We'd love to hear your

31:41

comments about today's episode

31:44

or ideas for topics you'd most

31:44

like to hear in the future. Send

31:48

me a message on LinkedIn or drop

31:48

me a line at

31:50

[email protected], and

31:50

don't forget to subscribe to the

31:54

podcast to hear more pragmatic

31:54

tips. Until next time, be well

31:58

and be collaborative.