Subscribe
Share
Share
Embed
Tired of being stuck in the trenches while watching others build empires? Welcome to the 50/50 Accelerator Podcast, where we're flipping the script on the traditional trade business model. I'm your host, Josh Patrick, and like you, I've spent countless nights wondering if there's a better way.
We bring you real conversations with business owners who've transformed their companies from time-sucking struggles into well-oiled machines. They'll share their exact blueprints—from finding reliable teams to creating systems that actually work. There is no theory, just battle-tested strategies that have helped them double their free time and cash flow.
Think of it as your weekly meetup with mentors who've cracked the code.
00:01 - Josh Patrick (Host)
Hey, how are you today? This is Josh Patrick and you're at the 5050 Accelerator podcast, and my guest today is Rand Selig from the Selig Capital Group. Rand is an M&A advisor and he has done some very, very interesting stuff. But before we get to that, I have to ask Rand my famous first question. So let's bring Rand on. Hey Rand. How are you today? Rand, my famous first question. So let's bring Rand on. Hey Rand, how are you today?
00:25 - Rand Selig (Guest)
Thanks, Josh. Everything is well here and I appreciate being your guest today.
00:40 - Josh Patrick (Host)
So my first question I love to ask people is what is the problem that your business solves?
00:44 - Rand Selig (Guest)
My clients, for over three decades now, have been primarily private companies where the owner, and often founder, is looking to exit. In some cases, that means a series of things, first like buying out a partner, but ultimately they're looking for a liquidity event and moving on. More often than not, these people contact me through their law firm or through their accounting firm, or, in some cases, through a referral from a previous client of mine, and the first thing they say to me is I want to retire.
01:33 - Josh Patrick (Host)
So, rand, I wanted to stop you there, because what's the problem that your business solves?
01:36
Not the reason people work with you or what you do.
01:39 - Rand Selig (Guest)
Yeah, we help companies with the transition to a new owner and build value in the process.
01:48 - Josh Patrick (Host)
I have to stop you again. You're describing what you do. Now, I have to tell you this because I do this with every person I've ever talked to that owns a business. Almost none of them can tell me what the problem is they solve. They continue to tell me who they serve or how they do it. So let's try it one more time.
02:05 - Rand Selig (Guest)
02:06 - Josh Patrick (Host)
Your business is in the M&A world, so the problem that you solve is
02:18 - Rand Selig (Guest)
The problem that we solve is that companies don't know how to get the liquidity they're looking for and don't know how to build the value that they think their companies represent.
02:34 - Josh Patrick (Host)
Okay, so what you're saying is, the problem you solve is business owners who need advice on how to leave their business.
02:46 - Rand Selig (Guest)
Correct.
02:47 - Josh Patrick (Host)
Okay, so just for the listeners here, this is something that I do all the time and it's a really important thing, because if you don't know the problem that you solve for your customers, how are they going to know whether you're the right person for them or not?
03:07
Does that make sense?
03:08 - Rand Selig (Guest)
Well, I think it does, and there's probably a reason why I'm ,you had to ask me three times and you probably have other guests. You're asking three times the same question and that is that these are not completely separate arenas. The process matters a lot, because if your process is not a good one, if you're not communicating well, then you're not gonna work well with your client and you're not resolve the problem.
03:40 - Josh Patrick (Host)
There's no question about that. But here's the challenge that I think businesses have and I think almost all businesses fail. In this is that the amount of M&A firms is in the thousands in this country. So when someone's choosing an M&A firm, how do they know your firm is the right one versus another firm? For example, you won an award as the best. Again, I'm drawing a blank on this, I'm sorry.
04:12 - Rand Selig (Guest)
The best sustainable investment banking firm in the San Francisco Bay Area.
04:17 - Josh Patrick (Host)
Okay. So my guess is, the problem that you have, that you solve, has something to do with that.
04:27 - Rand Selig (Guest)
Right
04:28 - Josh Patrick (Host)
Which makes you unique among the other folks. So I'm curious what is a sustainable M&A firm?
04:52 - Rand Selig (Guest)
Well, that's usual the category as well finding a International adds. It reflects the fact that we've done a lot of work with quite a variety of industries, but we also spend time with environmental firms, firms that are concerned with products and services that are, in their view and in our view, doing more than just making money.
05:10 - Josh Patrick (Host)
So do you find that these owners are different than, say, the run-of-the-mill owner who just wants to sell their business?
05:26 - Rand Selig (Guest)
Yes and no. The problems that they have and the the difficulty they have in uh just pressing a button and having a new buyer show up and uh having more, more money to offer than they had anticipated, is the same for everybody regardless. Uh, there's a lot of personal issues. They need to go through a lot of anxiety about what am I going to do after I have sold my company. I've spent 20 years building this company. It is my identity if I rip my business card in half and throw it in the trashcan. I turn invisible. I'm very anxious about that. So there's all of this kinds of things are cross the board, this is a very comments said of stage. The issue of what kinds of steps need to be taken to resolve problems to having answers or actually will get the problem remove in prior to a buyer coming along and discovering those problems themselves and then being discouraged and maybe losing interest in the opportunity is also something that all these companies face.
06:54 - Josh Patrick (Host)
So what's different between your clients and the run-of-the-mill client?
07:00 - Rand Selig (Guest)
Well, I don't know what a run-of-the-mill client is, necessarily.
07:07 - Josh Patrick (Host)
Somebody who could care two less about the environment when they go to sell their company?
07:13 - Rand Selig (Guest)
Well, we deal with more than just environmental issues.
07:17
The lens that we look through and it's a very subjective thing is this company doing something that we think is gonna be helpful to run the planet, or you know or is it just simply, uh, a commercial enterprise that's just making money and they don't care about their employees and they don't care about really their customers or their their clients either?
07:39
Those are companies that we prefer not to work with and and typically don't uh, so, uh, yeah, it makes makes our life good. When we're working with somebody that believes in what they're talking about is demonstrating that and we can help them go through our process to achieve their objectives. How we differentiate ourselves in process from every other investment banking firm I've ever come across and I worked with several before starting my own firm is we start with understanding our client's objectives, and in some cases, that's a challenge for them because they're really not thinking about it that way. They're thinking about the operating issues that they're facing, and so it's really important for us to have them understand their objectives, for us to understand their objectives, so that we can work together to meet or exceed those objectives.
08:46 - Josh Patrick (Host)
So when you talk to a business owner I am going to bet that nine times out of 10, and you ask what are your objectives, they're going to say huh. And when they say huh, what do you do then?
09:01 - Rand Selig (Guest)
Well then I break it down into pieces, because the objectives is a big word and it can be daunting. So you know I talk about things like you know, when we find an attractive buyer, do you care what they do with your employees? Do they care about keeping your name on the company? Do they do? Do you care that they do, how they honor the quality of what you've been doing for all these years? You know those kinds of things helps them a lot, and we also, of course, dial into financial considerations. You know are you willing to take anything other than cash? Are you willing to take the stock of a company, and so on.
09:57
So there are many, many aspects to really clarifying their objectives. A really important one, Josh, is do they want to stay with the buyer or do they want to exit after a very very short transition period? You know, do they want to have an employment contract which may be three or more years long? These are really important things for us to understand and for them to understand. In some cases, you have to like question is it very much depends on who the buyer.
10:33 - Josh Patrick (Host)
So, when you ask somebody do you care about your employees? And they say not really, what you do at that point? Do you say we're not a good match, or do you just try to or you just move on?
10:44 - Rand Selig (Guest)
Well, I try to understand why they're saying not. It could be that they say that they have a very good team, but the team has been well compensated. They have many other opportunities and if the buyer has other people who can do meet all together objectives that this owner has set out, that they're not gonna be captive to that particular thing. They're going to make the case, and, with my help, about these employees and the organization, and they do hope that the buyer or the merger partner will keep these people on.
11:22 - Josh Patrick (Host)
Are most of your sales to private equity or to other private buyers or public companies?
11:30 - Rand Selig (Guest)
Well, that's a whole other process that we go through. You know a lot of investment banking firms seize on the obvious low-hanging fruit, the obvious candidates who's going to be the merger partner or the buyer and we say that's too easy. What we need to do is set up categories of potential partners here and then fill out those categories and then prioritize them. And in some cases our client says we don't wanna even have a first conversation with this firm, and this firm and these firms that are on your list should be bumped way to the top because we've experienced them and they fit. They're very aligned with how we go about business and what we believe in. So it's a process that becomes our joint marketing list. So there are strategic buyers for sure. There are buyers who are very concerned with expanding their footprint, so they're only say this close firms and I really wanna waste this presence. There are surely financial buyers. And there are all different kinds of financial buyers. Some have a very long leash on what their own exit strategy is and some have you know a five-year clock and that's it. They're really unwilling to budge with that.
13:07 - Josh Patrick (Host)
So the five-year clock tend to be private equity.
13:11 - Rand Selig (Guest)
That's right.
13:11 - Josh Patrick (Host)
So, the sounds like most of what you sell to are other private companies.
13:23 - Rand Selig (Guest)
Yeah
13:23 - Josh Patrick (Host)
If you're a strategic buyer, you're likely a competitor. In my opinion, that's actually the best buyer for business all the time.
13:30 - Rand Selig (Guest)
Yeah
13:33 - Josh Patrick (Host)
Especially if the strategic buyer happens to be a billion-dollar company. But we won't get into that. There's a whole strategy that a friend of mine uses in the M&A world with that. But, when I find is that fit is just a hugely important thing and you know I've been, you know I don't do M&A work. We don't sell businesses perceive, but we advise on it and have over the years and what we have found is that having cultural fit is a hugely, hugely important piece in having a successful transaction. Um, and I find that you almost never get that selling to private equity because they're they have a different motivating force then your competitor down the street, who you've known for 35 years and you work in a relative similar matter.
14:40 - Rand Selig (Guest)
Well, I think the difference for financial buyer which records PE firms are big part of uhm they often buying a firm that they think they can through to capital and maybe through an injection of a senior, maybe a chief executive officer, somebody like that they can enhance value over time. But that's not a cultural thing necessarily. That's more about they like the company, they like what it's doing and they and I see in it at a certain level and they believe that in their time frame they can bring additional value, which is then they're going to benefit with. And the structural element for a lot of PE firms, of course, is they want the seller to play along with them over some period of time so that it's not a hundred percent cash out so.
15:29 - Josh Patrick (Host)
In my experience with that is, it rarely works out well for either the seller or the buyer.
15:37
And the reason is, even though a PE firm says we like this business, as soon as they buy it they change it and they don't listen to the owner and they ignore the owner. And if they have a three-year agreement, the owner's going to be there for a year before they fire them. They load up the company with all sorts of unnecessary expenses. Now this works great. If you have a billion-dollar firm, you're buying if you're buying joe schmoe, twenty five million dollar plumbing company. And you think that joe schmo twenty five million dollars company who came up through the plumbing business without ever going to college is going to interact with an MBA, I don't know what these guys are thinking.
16:17 - Rand Selig (Guest)
Yeah well, that's a classic mismatch and if I were involved in advising and doing a transaction, this would show up very quickly in our objectives. We probably wouldn't be even talking to a financial buyer or PE firm because they wouldn't show up on our priority lists at all, and we'd be looking for people who are going to resonate and appreciate and probably keep the integrity of the firm in place.
16:51 - Josh Patrick (Host)
So let's talk about philosophy for a while, because this is something that is unusual, in that most M&A people I know same thing with headhunters, by the way they know nothing about the company values, nor do they especially care about them, because they think company values are relatively unimportant. At least, that's my experience with PE firms. I mean, there are exceptions out there. There are some PE firms that are great at integrating.
17:21 - Rand Selig (Guest)
Yeah.
17:27 - Josh Patrick (Host)
Most are not in my experience, and what I think happens, and this is really a mistake almost everybody I've ever met who's sold a business has seller's remorse. And the seller's remorse often comes around with what the buyer does with their business.
17:48 - Rand Selig (Guest)
Well, I know what you're talking about. I'm pleased to say that's not been our experience by and large. Again, because we are so adamant about this objectives and we don't just do it upfront, we return to it periodically. We return to it when we've got after finishing a meeting and we say let's go back to the objectives. Do these people meet that objectives the way to the end? So we can hold it true and honor that. And it's fine if an owner wants to adjust their objectives as they learn more about what the opportunities are and who they are and what the possibilities are. But they're not going to just willy-nilly change this thing. So I think seller's remorse is something that happens, because one of the key objectives is that the seller wants to retain things about the company that the buyer either doesn't care about and we know that or they say that they care about those things and then they really don't and and they're you know the money trumps, uh, other kinds of commitments um and just just going back, one more thing about integration with pe firms.
19:33
You know, most of the pe firms that we've dealt with and we've dealt with with a number now, um, you know are not buying a company or uh interest in a company on its own. They have a portfolio already and they have some other firm they've already um, have, uh, an ownership stake in that they now want to have this new target our client, our client be connected to, and so our investigation and due diligence on them has a lot to do, not just at the high level of what the PE firms about and how they go about business, but who this, who, this other company, or maybe it could be more than one company in their portfolio is going to be the, uh, the key relationship. You know who. Who then is going to be the succeeding CEO? How are they going to do the? The personnel? Uh, you know matching, um, uh, you know, I, you know that that's a really important thing, and for our client to understand that they are going to now be reporting to somebody else.
20:53 - Josh Patrick (Host)
I have a question for you what's the size transaction you guys normally do?
21:04 - Rand Selig (Guest)
Oh, our, you know, we're in the private company, we're a world in the middle market, which we define as a value of 5 million to about 50 million. After that it just invites in a lot of the, you know, national firms that we don't, we don't want to play with, we don't want to compete again.
21:20 - Josh Patrick (Host)
Right, right, that makes sense. And my guess is your $50 million value buyer is pretty much significantly different than the $5 million value buyer. Yeah, yeah, For the most part that's exactly right, and sellers for that matter too.
21:38 - Rand Selig (Guest)
Yeah, exactly right, exactly right. They're different.
21:42 - Josh Patrick (Host)
In my experience this is why sellers mostly experience seller's remorse. Their network disappears overnight when they sell. This is especially true if they leave the business when they sell, and in a strategic transaction that's usually what happens. The owner doesn't stick around because the buyer says I've got my systems, I've got my people and we're going to move all that over here. When I sold my business, they wanted all my managers, all my systems, but they didn't want me and I didn't want them. So it was really easy for us to part ways. But still it became a very lonely year for me when I sold my business because my social network from business fell off the cliff overnight
22:30 - Rand Selig (Guest)
It's something that I talked to our clients about helping them prepare for the, the year, the year after.
22:38
You know, the bucket list is just not sufficient Just for the reason you talked about the, the social network, falling apart. That sense of getting up in the morning with something that's, that's a little challenging, something to do, that that you know makes your mind expand. I mean, you know, a lot of my clients are very smart people and you know like to read. But I say, you know, you just can't be waking up in the morning and, after your cup of coffee, start reading a book and sit in your easy chair. For you that's not going to be enough. And so we've got to. We've got to have this conversation and multiple conversations about who the new you is going to be, x, this business card and that's I become the trusted advisor to these people. I mean, after our transaction is finished, they still keep in touch, they will call up, they will refer other clients to me. It's been a most marvelous thing.
23:37 - Josh Patrick (Host)
That's great. So unfortunately, Rand, we are out of time and I'm going to bet some folks who are listening to this might want to contact you. So if they did, how would they go about doing that?
23:48 - Rand Selig (Guest)
Oh thank you, Josh.
23:51
Well, actually the best way to contact me is through my book website. We haven't talked about that, but I've written a book called Thriving how to Create a Healthier, happier and More Prosperous Life and you can take a look at that by going to www.randselig..com R-A-N-D-S-E-L-I-Gcom. There's a lot of information about the book and also more information about me.
24:23 - Josh Patrick (Host)
Cool and I would like you to do two things. First, please go to wherever you're listening to this podcast or watching it and give us an honest rating review. If you love us, you can give us five stars. If you hate us, you give me one star and you can watch me cry a little bit, but you might even find that amusing if you give me one star and you can watch me cry a little bit, but you might even find that amusing if you give me one star.
24:47
And the second thing I'm looking for is we're looking for private business owners that are willing to come on the podcast and talk to me about their business, the challenges they've had, the successes they've had and what they did to overcome the challenges. Because if you create personally, an economically sustainable business, you have had challenges. Some of them what you think minor. Some of them could have been what I call life-threatening challenges, which means you could be looking at bankruptcy. I've had them, you've had them. Come on my show and tell me about it. Send me an email at jpatrick, at stage2solutioncom. Solution has the number two in its singular, jpatrick is stage2solution.com, and we'll set up a time to talk and see if this podcast is right for you. So this is Josh Patrick. We're with Rand Selig. You're at the 50-50 Accelerator podcast. Thanks a lot for stopping by. I hope to see you back here really soon.