Clint Bundy on Why Selling a Business Is a "War over the Numbers"

Clint, good to have you here. And if we were doing this rather than at our respective homes today for a remote interview, where would be the venue of choice? Describe the setting.

Oh hey, Chris, first thanks for having me on today. This is exciting for me to do, obviously think very well of you and the podcast you lead. And great question. I will have to tell you I lived in London, England for two years. I worked in a job there, I was an expat, but fortunately I got to hang out with a lot of locals, and I lived in the Southfields area of London, which is actually not that far from where Wimbledon is. But I was in more what they would call the middle-class neighborhood down the street and not in the posh Wimbledon neighborhood. But we had a great pub called The Old Gage, not garage, the Old Gage, where myself, my roommates and buddies would go and have a few pints. So I think if I had to pick a spot, that would be my go-to.

That sounds awesome. It's been a while since someone has painted a picture of being at a London pub, so I'm all about it. I visited, gosh, it's usually when I fly to Europe, it's usually my jumping off point. I think I've been there four or so times now. Never lived there, would love to. Was just there a year ago, so gosh, would love to be doing this over London pub ales right now. So I can't think of a better spot to ask this next question. Then we're going to start with, as I'm going to describe it, a drinking story. What is one of the wildest M&A stories that you've encountered, been a part of? You know, this is, I can't think of a better way to do it than over some pub ale.

Well, I, and I will visualize having a pint in my hand as we're talking about this. I've got 20 years of stories in this business, but I'll pick one. I could probably pick a bunch, but I'll pick one, and it was actually one that happened early in my career. We were, myself and another one of our team members were helping two brothers sell a family-owned restaurant in Southwest Virginia. This is back probably 2003 and '04, when Bundy Group sort of worked on those kind of transactions. We had the business, good little business, so it was being bought by an individual buyer who was moving from upstate New York down to Virginia.

So the final day of closing, here we are in the restaurant doing an inventory count, which is very common on a restaurant deal. You're doing the inventory count, how much liquor, especially around the alcohol is really what you're focused on, because that's such a key part of what you're purchasing as a buyer. We do the inventory count. Next step is we all get in the cars and you go to the attorney's office to sign the documents, the purchase agreements, which by the way nowadays that's done virtually. I haven't been in an attorney's conference room in years to watch a closing, but we had to go drive to it.

Well, myself and my colleague walk outside, because the brothers had walked out in front of us, and lo and behold, one of the brothers is laying on the ground in the parking lot. His mother, who happened to be there for the inventory count, was sitting there with the magazine waving it over him like a fan, and the other brother was standing above him yelling at him to get up, get up, so we can go sign the purchase agreements and get this deal closed. And what had happened is he had fainted from the stress. It just shows how this could be a very emotional experience for business owners selling their business. He had fainted from just the idea of selling the business. And by the way, the buyer was there too, was standing off to the side just shaking his head, looking.

And so what transpired is my work colleague grabbed one brother, threw him into his car to drive into town to the lawyer's office, and I got the other brother with the mother into my car, and I had to basically, you know, feed him Gatorade I had picked up at the grocery store, and he made me stop and pick him up a pack of cigarettes to hopefully de-escalate him a little bit on his anxiety attack. Good news is everybody got in, documents got signed, but that was an interesting day.

Yeah, it's, we'll be talking about the emotional support that you provide during this process as well. I think that was a good preview to some of that. As an aside, I was getting my locations mixed up as you were telling that story. I transported back to that London pub, and when we were talking about someone lying in the parking lot, I'm like, oh good, someone's passed out outside the pub after this. Obviously not the case in this story, that was my own mix-up. But whether we're selling restaurants, selling automation companies, we're going to cover some good ground today, so appreciate the light-hearted way of getting us started.

My first question is around your background, because if I look at what you were doing before being the managing director at Bundy Group and getting into M&A in general, you know, you were doing other work in this space. So I'm curious, what early experience as a financial analyst at Accenture, you know, was there something that motivated you to get an MBA in finance and go into M&A? I'm just curious what that trajectory looked like for you.

Yeah, you know, we're in the story business on behalf of our clients, and so it's funny you're asking me about my story, and I don't get a chance to tell my story that often, so thank you for asking. And, you know, certainly being what was effectively a financial controller managing budgets of a team at Accenture was a part of my story. Getting my MBA was a part of my story. Working at Wachovia in their M&A group was a part of my story. But I would say kind of the foundation for everything leading me into what is my chosen profession of mergers and acquisitions advisory and investment banking is really growing up in that business, because my father started our firm back in 1989 when I was in middle school.

So I was, you know, in my high school years and college years, I was doing everything from cold calls to potential clients and referral partners. I was tagging along with my father to buyer-seller meetings. I was doing long car rides to places like, you know, Wheeling, West Virginia, or Mount Airy, North Carolina, with my dad, and talking about, you know, sales strategies or buyers we should target, or how do we manage clients who, you know, may be a little more challenged on selling or not. I mean, this is really where it built my DNA and my interest level, to then ultimately what led me to say, probably in my mid-20s, after I kind of checked out consulting and a couple other things, I said, you know, I think I really do want to go into what my dad does, which is investment banking.

All right, so you had some parental background in this as well. That makes sense. You know, you were talking about being a younger gentleman getting into M&A, being in London. Let's reflect back on those earlier years one more time. What was something you wish you knew about M&A in your 20s or early 30s, you know, when you were just getting started in that space?

Yeah, got a whole lot. You know, we could turn this into its own podcast, because we're very much in a business where experience is the best teacher. I would say, I'm going to maybe slightly tweak my answer to the question and say what I wish I would have done a better job of, or would have known to do a better job of, is when talking to our clients and potential clients, which are business owners, doing a better job of articulating what it is we are delivering to them from a value-add standpoint. At the end of the day, why are you better, Mr. Client, with us than without us? And I felt in my 20s I did a good job. I thought I was doing a great job in my 20s. Now sitting here in my 40s, I look back on that and say, could have done a better job. And at the end of the day, as a service provider, we have to be able to nail that question down, which is how, Mr. Client, are you better financially, how are you better outcome-wise, and on numerous other levels, with us than without us?

Yeah, no, great answer. I appreciate you going back in time with us. We're going to go more to, let's say, present day now, or some timeless topics around M&A. And mergers and acquisitions is something we talk about on the show periodically. It's mixed in, but certainly something I think that comes up on an annual basis, so this is a great way to be kicking off 2024. And I think if there's one thing that I've learned, or what seems to be a theme that the Manufacturing Happy Hour audience might have picked up on during some of these discussions, is, you know, the things you need to do to make your business sellable or valuable to a buyer in the future often align with, let's say, the trends in manufacturing and automation that we hear about all the time, right? Industry 4.0, having a data-driven business where you have clear numbers and analytics that allow you to make decisions.

So that's kind of the background of what we've talked about from an M&A standpoint on Manufacturing Happy Hour before, which is why I think this next question and the way it's phrased is particularly relevant, because when we were chatting before this interview, you described that buying and selling a business is often a war over the numbers. So tell us what you mean by that a little bit.

Yeah, and it probably sounds like a bit of a draconian statement when I make it, but there's a lot of truth to it. And so let me, from the investment banker chair, let me give my view on what happens when a buyer and seller, a sophisticated buyer and a seller, are looking at some kind of sale or acquisition. A buyer first and foremost, and buyers we deal with today are usually financial sponsors, i.e. private equity groups, or strategic buyers, i.e. operating entities that are very seasoned at doing acquisitions. And whether you're talking about a strategic or a financial sponsor, they are in the arbitrage business. Their goal is to buy good companies at the best buyer-friendly price possible. And, you know, most if not all these firms are very good at finding good companies and then trying to buy them as cheap as possible, just to be blunt about it.

The starting point for valuation negotiations, not necessarily the ending point but the starting point, are going to be seller financials and operational data. A buyer's incentive is to take that information and try to, you know, if we want to use the word manipulate, you could try to use that word; if you use the word position, you can use that word. But whatever way you want to look at it, they're going to try to position that those numbers are not as strong as the seller would like them to be, or thinks they are, or we think they are. So effectively what they're trying to do is use that against the seller to get a better price. And my seat as an advisor to a seller, and from the seller's chair, what we want to do is show the strongest possible financials and the strongest possible story, past, present and future, to run that arbitrage playbook in reverse, to get the seller an above-market price. And so really, at the end of the day, when we talk about war over the numbers, that's kind of at a very high level what I'm referring to.

Yeah, and I think it's funny that you mentioned it sounds draconian the way that we phrased it, right? But no, both sides of the table are trying to say, no, our numbers are really good, and the other side of the table is trying to be like, hmm, I don't know if the numbers are that good. Are you sure that's what you're operating at on a regular basis? So this is where my follow-up question comes on this topic today. How are companies leveraging data and technology to ensure the integrity of these numbers, right? So that way they can go into this conversation and be like, no, no, no, actually, Mrs. or Mr. Buyer, these numbers are pretty darn good. Here are all our records, here's our ERP, our MES, whatever it is, right? I'm adding more words than I need to here right now. Clint, what do you think on this?

Yeah, I mean, you're going right to the heart of a key topic near and dear to our heart, which we advise owners on very frequently, which is from pretty much the day you start a business or buy a business or take over the leadership of a business, you need to make sure you've got great systems in place, financial and operational, so that you can track the data, so that you can provide good supporting information about company performance, so that when you get one day into a potential sale or capital raise, that you can handle just about any due diligence request that comes your way. And I'll tell you, part of good systems may also include having good team member support, either full-time or fractional, like a good CFO. A really good CFO can pay for themselves multiple times over. A really good controller who knows how to manage the financial systems can absolutely pay for themselves multiple times over.

One other kind of tool that we use in our processes is we recommend clients get what we call a sell-side quality of earnings report oftentimes, which is effectively a financial audit on a seller's books that has kind of an M&A lens to it, which at the end of the day should prove to buyers, hey, these guys have very tight, strong financials, very defensible financials, and it shows the highest possible performance. So, you know, again, I would tell sellers, be talking to advisors about what can you be doing to better prepare your company from a sales standpoint, value-building standpoint, from a systems perspective.

Yeah, that's, so I just learned something right there: a sell-side quality of earnings report, as you said, an audit that's done through an M&A lens. I also appreciated how you highlighted how important a good CFO or controller can be, because I can imagine during this process, if you have that type of team member or that type of team on your side, you know, multiple years at your business, etc., like you said, they can make themselves exponentially valuable during that process when they have their act together. So good to highlight some of the tools, the activities, the human side.

Let's get tactical here, because I know there are folks listening to this episode that either work for, let's say, a small machine shop, right, something where the owner is going to retire at some point, maybe the transition plan's not there, they know they need one or they know they need to create one. Or certainly people listening to this know people that are in that position that could send this episode their way. So what would you say are some of the key steps in selling a business, if you were to break it down without getting, you know, too detailed? Because we could probably just do a whole webinar series on this right now. But what would you say are the key steps?

Yeah, another one we could do a whole podcast on, just this one. I will give just kind of the very broad strokes from my chair as the M&A advisor, the investment banker. If I say M&A advisor, investment banker, those are synonymous terms. You know, first there's what we would call a preparation phase for us as the investment banking representative and the company that's being sold, to help make sure the numbers are certainly as defensible and tight as possible. This is where a sell-side QoE is often utilized. Making sure that we as the advisor understand the story of the company, that we can almost talk about the business as well as the owner. We'll never be able to talk about it as well as the owner, but as well as the owner.

Then what we do is, once we have kind of confidential marketing materials together, a data room together, we go to market to an agreed-upon group of buyers that us and the seller client agreed to, and our theme is driving competition. At the end of the day, what we want to do is get offers. Sometimes we'll do what we call a two-round process, which is indications of interest followed by then letters of intent. Sometimes we'll do a one-round process, which goes straight to letters of intent, which are the formal offers. And the goal is educate buyers, narrow the pool down to groups that we

think are really the most relevant, who are going to be the most aggressive, and then ultimately use the offers against each other to figure out how do we maximize value for the seller and how we help them find the best fit. Client's a decision maker; we're there to run that process so that once a letter of intent is signed and we go into due diligence, and then the attorneys are involved negotiating the purchase agreement with us and support, that it's a fairly smooth path to close. And so that hopefully at the closing table the owners look at us saying, you know what, I maxed, I didn't leave any money on the table, and I got a buyer that I'm very happy with. And so that's kind of soup to nuts at a very high level of process from my chair.

What's the number one mistake you're seeing sellers make right now throughout this process? Right, it makes very much intuitive sense right now, but I imagine when you're in that seller's seat, it feels a lot more daunting than those steps.

Yeah, not being prepared. And really, I would advise any owner, in a perfect world you're probably going to know three years out when you're targeting to go to market to sell. So that means you're talking to key advisers like Bundy Group, or talking to an experienced transaction accounting firm that does quality of earnings reports, or talking to an experienced M&A attorney. And then of course making sure you're looking internally to make sure you've got those systems and processes in place.

I'm not a great golfer, but let's use the golf analogy. You want to make sure you're lined up on the tee box the right way, you've done several practice swings, so that when you actually are ready to pull back and swing it, you hit it 300 down the fairway and you don't shank it off into the woods. It's all about preparation. Preparation does increase the chances for a great outcome.

Yeah, how much of that, because this is a manufacturing podcast and we've got our automation audience out there and our machine shop audience, how much of this preparation or lack thereof is technology related, not having the right systems?

Very much so. I mean, Chris, you and I have known each other, as Bundy Group's expertise is in manufacturing and industrial technology. And so, you know, technology today, I mean, everyone, certainly if buyers are looking to sit at any kind of acquisition target and saying, well, how advanced are they in their manufacturing capabilities? Is there room for, have they proven that they and their team can implement efficiency improvements, technology improvements? Is there still room to implement more? Buyers sometimes call that gaining synergies. So what they want to know with an acquisition and management team that they're buying or investing in is, does the firm show some kind of level of progress, of change, and using systems and technology to do that, to better service their clients, to better increase scale, and frankly increase their profit margins.

Yeah, and I don't think I've thought about it exactly this way before, but I like that you highlighted how they've proven that they can implement new technologies, but you want to have synergies that you can gain, right, that there is room for more. Because if I'm a buyer and I'm looking at a business, you know, if I'm buying one that is just already operating as best as it could today, maybe there's not as much upside for buying that business, especially if I've bought other businesses that are like that and I'm like, oh, I know how to get more value out of this when it's at this state, right? So yeah, I could see that being the balance of, hey, yes, there is a proven track record here that they do know how to make change, but I also see some incremental changes I can make to get those, as you said, gaining synergies.

So the reason I asked this question around technology is my second question is almost on the exact opposite side of the table. And you told a great story right at the start of this interview, and you mentioned that you have a lot of stories you could share. In some cases, you know, we were talking with one of your team members at Bundy Group, Alex Chovsky, he was on the show just about a year ago, and he said in some cases you're a therapist during this process. So can you share a story of a client that had every reason to sell, but maybe the emotional hurdles were the bigger issue that you dealt with, and how did you help them overcome that?

Yeah, and Alex, very wise in his comments. We are. Sometimes people think, you know, investment banking's about 50% analytics and 50% psychology. I think the older I get, the more I say it's about 90% psychology and about 10% analytics. So Alex is right in that comment.

What I would say is, a good case study is we had an automation business, a very good business. Actually the owner had taken it over originally from his father, taken an HVAC business over from his father back in the 70s, and he had an automation background, the son did, and so he turned it into an automation firm over the next 30 years that did software, did manufacturing, and did system integration. And when we were introduced to him, which is by the way one of our first automation engagements we took, he said, I'm ready to sell, I'm ready to do this. Well, we got about halfway through our process, we had a lot of interest in buyers, we were looking at offers one day trying to decide who do we invite to the next round, and he just looked at me and said, Clint, great work, I just realized I'm not ready yet, I'm just not there. And to his credit, he said, I can't really explain why, but I'm just not there yet.

And motivation is, as my father has said for 35 years, motivation is the foundation of all transactions: a motivated buyer and a motivated seller. And so what transpired is we took the company off the market. He continued running it, continued growing it, did a great job continuing to grow it. Ten years later he called me back and said, okay, now's the time, let's do it. And within about a year we had the business sold. So that's kind of the underlying, back to your therapy question, it just proves the point about motivation is key.

Yeah, no, I like that he articulated that he couldn't really put it into words yet. He's like, I'm just not ready to sell, I don't know what it is, it's probably a lot of things. That makes perfect sense to me as someone that has, you know, really built my own business and my brand, albeit on a smaller scale, over these past handful of years. It's like, what happens when it's time to, or if it's time to say goodbye to it at some point? And I can only begin to imagine what that would be like.

Something popped into my mind as you were sharing that story about one of your first automation transactions, and you mentioned that earlier on you were giving the example of selling a restaurant. And I'm curious, since our audience is manufacturers, what is something that you learned from, I don't want to say the general M&A world, but the M&A world outside of the industrial space, that is now helping you as someone that's focused on M&A within automation, manufacturing, etc.?

Yeah, a good question. Just for the viewers' benefit, our other key verticals are healthcare and life science and business services, in addition to our work within what I would call advanced manufacturing and technology-enabled services. But here's what, there's a bunch of takeaways I've got that apply across all industries, but one key one is that good companies, big value drivers we have, of stable, profitable, growing companies that have scale. And scale is a relative term; that doesn't mean you have to be 100 million in revenue, but you've got to have some size. Companies that are ticking those four boxes, or have those four legs of the stool, there will always be a market of buyers or investors or financial sponsors for those companies, and I don't care what industry you're talking about.

So the M&A market, even in, for instance, 2023, was, from an overall M&A market perspective, a down year in the M&A market. But we still had a number of good clients who sold that year because they were just good firms. And, you know, I'd like to think we did a great job, and I think we did, in our processes and pushing buyers, and we got a great outcome, but the foundation of that was they were good companies. So that's my big takeaway I would give to any seller in any industry, especially industrials and manufacturing.

And one more time, for my own benefit as well as the audience, can you quickly recap what those four items are, just so we've got those front of mind?

Yeah. Stability: a lot of that for us is stable client base, stable revenues, hopefully some kind of recurring-like revenue. Profitable: are they generating strong what we call EBITDA margins, earnings before interest, tax, depreciation, amortization margins, profitability. Growth: are they growing, past growth, and can they talk about the future? We have to remember when a buyer is buying a company, they are buying the future. That is what they're buying, not the past. And then scale: do they have a sufficient scale? Have they kind of moved beyond what I call that mom-and-pop phase? They've got some level of size and sophistication. And my view is, if those four components are there, in our experience, then you've got a company of real value.

I'm going to come back to these four points here in a little bit as we start shifting to the M&A market today. This interview's coming out at the beginning of 2025, so even though there are going to be some topics that are really specific to this time period, I'm going to mix it in with some things that I think will help people regardless of when they listen to this. My first question is a general one: what is the current state of the M&A market, with focus on industrials, automation, and advanced manufacturing?

Yeah, I'm going to start with the macro and then I'm going to drill down into your question around manufacturing and automation. First, macro M&A market: the pandemic of course, like the economy, had kind of discombobulated things a bit in the M&A market, but the M&A market rebounded quickly, and 2021 was actually a high-water mark, one of our record years in the M&A market in the past 30 years across all industries. Valuations were very high, buyer activity was very high. Some of that was due to pent-up demand of deals that did not happen in 2020 because of the pandemic, so that was in part what you saw in 2021. Then after that you had a little bit of a hangover effect going into '22 and then '23, where you just saw a decline in number of deals, especially financial sponsors. With interest rates going up, with some challenges on valuations with the larger deals, you saw a lot of the financial sponsors not selling their companies in '22 and '23. That being said, there were still a lot of privately held company deals being done; family-owned businesses, entrepreneurially owned businesses certainly were transacting. And then where we are today in 2024, almost at the year end here, it should be a better year than '23. I think with the election now behind us, heading into '25, I think you should see, based on the tea leaves that we're reading, a strong M&A market in '25.

So that's the macro. Now I'll address more specifically your industrials and automation question. Automation, we've been active in the space for close to 15 years now, and it is as in demand now from a financial sponsor and strategic buyer standpoint as we've ever seen it, and that even occurred in 2022 and 2023, where the M&A market backed off. And we track on a monthly basis the number of automation transactions for a couple different publications, and it was a robust level of transactions that we saw even in those years. And there are a lot of reasons behind why it is that buyers continue to flock to the automation space and the advanced technology space, advanced manufacturing space, but ultimately it's that buyers like to invest in growth markets, and automation is a growth market.

Industrials in general, if you're looking at a broader level, continues to be a very attractive space, whether you're in no am industrials, industrial service, general manufacturing. But I will say buyers are especially attracted to any value-added services that are being provided in the industrial space, and they're attracted to being tied to kind of advanced manufacturing and Industry 4.0.

Okay, all right, I'm following along. I have another question that ties into this: who's selling and who's buying right now? You talk about financial sponsors, you talk about strategic buyers. Who are these people more specifically, right? Are these private equity, etc.? I think that's something that would be helpful for the audience to hear and understand as well.

Yeah, great question. Financial sponsors first, let's talk about that buyer community. These are effectively private funds that have money to invest in privately held companies, and their goal is to buy a platform investment and then turn around and do a lot of add-on acquisitions, further professionalize the company, and then eventually they will resell that platform at a much higher valuation because it's a much larger company.

So let's give an example and name probably a lot of your listeners will know: E Tech. I knew E Tech Group back when it was owned by two individuals out of Ohio. They did what we call a recapitalization, or a sale to a private equity group out of Charlotte, North Carolina, called Falfurrias. Falfurrias turned around and successfully did a number of add-on acquisitions. That included Glenmount Global, was one; another one was Superior Controls, which was tied into the kind of life sciences space; did a few others that they've acquired. They professionalized the management team even more, and that company was just sold last year to another financial sponsor called Graham Partners. So that playbook I just outlined, that is a textbook financial sponsor 101 playbook. And by the way, E Tech, not only was it a financial sponsor company, but it became a strategic buyer because it was an operating entity acquiring other add-on acquisitions.

So really today the punchline, Chris, is that a lot of the strategic buyers that you see out there, whether you're talking about eye automation or Convergix or E Tech, most of those strategics are backed by financial sponsors. You have a few of those companies out there that are publicly traded, like an Actemium, which is backed by Vinci Energies; that's a strategic buyer that's not owned by a financial sponsor. But in short, that's the punchline on the buyer community.

Yeah, no, so I appreciate you giving what you referred to as a textbook example, right, of a financial sponsor: a fund with money to invest, get add-on acquisitions, add some additional value to that operation, and then basically sell this new package at a higher price, right? I follow that example. The other thing I want to ask about, I mean, we hear about the amount of people retiring in manufacturing. You can't go through an episode of Manufacturing Happy Hour without talking about it these days. How much activity are you seeing from, let's say, smaller shops, smaller operations, smaller automation companies these days in terms of selling? Yeah, in terms of selling specifically.

Yeah, I've seen a lot of interest. Automation, and when we say automation, as you and I know, that's a broad market. I mean, there's system integrators, there's machine builders, there's panel fabricators, there's IIoT-driven firms, there's SaaS-driven firms, there's automation consulting companies. I mean, it's really a broad universe. But what we do see, and we work across really all those sub-verticals, I would call them, within automation, is that there's a lot of fragmentation there. There are a lot of firms, anywhere from a million in revenue up to 30 or 40 million in revenue, and then the air starts to get a little bit thinner when you start to get into

The kind of above, let's call it, 30 million of revenue, now you go from a lot of companies down to a less, a smaller, more select group where there's fragmentation. A lot of these companies don't have exit strategies in place. They don't have kids in the business, or the management team that may be running it, they're not capable of buying out the owner, or at least not fully buying out the owner. And so that's where opportunity presents itself, frankly, for a professional like me to advise those owners on the best way to seek a good outcome, but also for the buyers out there to offer that outcome in terms of, hey, we could be a viable solution. At the end of the day, for a seller, the best way for them to figure out what's the best path, outside of having good advisors in place, is you got to go through some kind of competitive process to figure out what is the best outcome for you and your company.

So Clint, my last question for you. I like that we just went through the financial sponsor example. We talked about, hey, there are a number of fragmented companies that don't necessarily have that plan for selling in place yet, where advisors are still needed. There's a reason I wanted you to recap the stability, profitability, growth and scale as those four pillars, we'll call them, for making a business sellable at any time, right? My question is, can you think of a scenario where maybe the economic landscape wasn't an ideal selling market, right? Like a time where, hey, this is probably when most people aren't selling their business. But I want you to think, is there a specific case where selling the company still made a lot of sense because either their ducks were in a row, they had those four pillars? I'd love to hear it from you in terms of where you've seen maybe some unconventional sales happen, or maybe unconventional timing.

Timing, yeah. And great question, one I could give a lot of examples to as well. I think one, I'll go back to the Great Financial Recession, which was really a tough market and a time frame to sell a business, in kind of 2008 to arguably kind of 2012 or 2013. But we had one client that was actually, it was what I would call an advanced manufacturing component to it. Did a lot of assembly work and manufacturing for battery packs, so think of battery packs going into like a defibrillator for the medical industry. Good firm, owned by one individual. He had a good management team in place. Company was based in the Carolinas. The owner was just at a point where he said, I need to retire, I need a liquidity event, and I need to get this company in the hands of a new owner.

And we made it very clear. We said, look, we feel like we can deliver options, but the options we deliver now probably won't be quite as good as we could than if you maybe waited a year or two. And there were some specifics to that deal that made us say, this is a good company. It may not be an A+ company, maybe it's an A- company or a B+. And what transpired is we got the deal done with a great buyer, a strategic. The management team, who I think, now many years later, is still there. The owner accomplished his goals and he was very happy with the outcome. All those boxes were checked, in what was frankly a tough market to get a deal done in.

So you follow the same playbook, right? Your job is to create a competitive process, and even if the timing is not ideal. You highlighted that this organization had a good management team. I think what was interesting was you said they were like an A-, B+ company, right? So it wasn't the perfect company.

I could clarify that if you want a little bit more. Please do. Yeah, I think that would be helpful to understand.

Yeah, I think that's one I don't want to leave hanging too much. The big variable we had against us on that was the size. It wasn't a mom and pop company, but I would say it was probably just a notch or two above that. And so because of the size issue, and buyers at the end of the day, we talked about that scale, right? Stability, profitability, growth, scale. Because that scale component wasn't there, that is what impacted us most, in addition to a challenging market. But it really impacted us that they didn't have a lot of scale, which meant we had a lot of buyers say it's just not quite big enough for me.

Sure. Well, I think it's helpful to mention that because whether we're talking about mergers and acquisitions, upgrading technology or recruiting the next generation on this show, right, I want folks to understand that it's never going to be a perfect scenario. And while, hey, you want to have stability, profitability, growth and scalability, what I heard was even if you don't check all of those boxes, you can still do it, right? It's more ideal to have them, but I would assume the reality is no one has all four of those perfectly.

Yeah, well, I'll call you the day I meet a perfect company. By the way, you're going to be my first call. No, there's no such thing as perfect, but it is doing your best to make sure that you can tick as many of those boxes as possible. And frankly, it's a big part of our job when we're taking a company to market: before we go to market, advising the company on where they sit on those four legs of the stool, and then when we go to market, making sure buyers understand we do think they fit in all four legs of the stool and therefore you need to pay up for this opportunity. So that's a big part of the story in selling a company and supporting it with information.

I think you did a great job of giving us a real down-to-earth perspective on M&A, some actionable advice, some things that manufacturers that are listening to this can bring to their businesses, to their friends that are in situations or might be in a situation like this down the line where they're going to be selling a company. And I appreciate the current outlook on everything as well. Is there anything you wish I would have asked you that I haven't yet during this discussion?

Yeah, I thought you were very thorough. I've really enjoyed this and had a blast. So no, I think you've covered the bases well here.

Well, I'm gonna head up to the bar, talk to the publican, grab us another round as we continue our consumption of some London pub ales. I appreciate you again setting such a great location for our virtual happy hour today. So Clint, thanks so much for jumping on Manufacturing Happy Hour.

Yeah, thank you. This round's on me, not you, Chris. So thanks for having me on. Much appreciated. Cheers.