Weekly Recap

E221: Michael Mufson Discusses Investment Banking and Business Exit Strategies

About the Guest(s):

Michael Mufson is a seasoned investment banker with a distinguished career spanning over several decades. He began his career working for a U.S. Senator and transitioned into the financial sector with Ernst and Young in their consulting group. Michael holds a CPA and an MBA from George Washington University. Throughout his career, he has been instrumental in underwriting IPOs for family-held businesses and tracking the evolution of private equity. Currently, Michael is a partner at Mufson Howe Hunter & Company (MHH), where he specializes in mergers and acquisitions and provides expert advisory services to clients looking to achieve successful exits.

Episode Summary:

In this episode of the How2Exit Podcast, host Ronald Skelton converses with the accomplished investment banker Michael Mufson about the significance and process of selling a business through investment banking. With an illustrious career that started in the early '80s, Michael shares his journey from working in the Senate to becoming a leading expert in mergers and acquisitions. The discussion dives deep into the evolution of the capital markets, the rise of private equity, and the intricate process behind selling a business.

Michael elucidates the importance of having strong financials, such as reviewed or audited financials and a quality of earnings report, for businesses looking to sell. He also stresses the necessity of understanding the valuation of a business, customer concentration, and other factors that can affect a company’s saleability. With a practical approach, Michael provides insights into what buyers look for and how sellers can prepare their businesses for the market. The conversation wraps up with the importance of selecting the right investment banker and how early engagement can facilitate a successful exit.

Key Takeaways:

• Preparation is Key: Businesses should have reviewed or audited financials and a quality of earnings report before going to market.

• Customer Concentration: Having a diversified customer base protects the business's value and can attract more buyers.

• Accurate Valuation: Understanding the true market value of a business is crucial; consult multiple investment bankers to get a clear picture.

• Industry Cycles: Timing the market correctly and preparing for cyclical changes can significantly impact the success of a sale.

• Engagement Timeline: Start conversations with investment bankers early, ideally when your EBITDA is around $1-2 million.

Notable Quotes:

1. "EBITDA is, we talk in adjusted EBITDA. So there are... biggest one is typically compensation."

2. "When you've got good numbers and you've got growth ahead of you, you don't have customer concentration and you're at an age where you really want to get a liquidity event."

3. "The accounting is certainly key. If it's, you know, certain, if it's a regulated portion of your business, OSHA and other government agencies you have to comply with."

4. "Knowing the markets, when things are good and when things are early in the cycle, not late in the cycle."

5. "Talk to a lot of investment bankers and understand the rules of the road when you're going out to sell your business."

Article:

Unlocking Value: Navigating the Investment Banking Process for Acquisitions and Exit Strategies

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E220: From Corporate to Trailers: Shane Ehrsam Discusses His Journey to Trailer Dealership Ownership

About the Guest(s):

Shane Ehrsam is a seasoned business operator and entrepreneur specializing in mergers and acquisitions within the B2B services sector. Raised by entrepreneurial parents, Shane began his career studying entrepreneurial management in college before spending eleven years climbing the corporate ladder in an industrial uniform provider company. After being laid off in 2021, Shane pivoted to business ownership, acquiring a three-location trailer dealership in the Dallas-Fort Worth area. Today, Shane actively manages this operation while discussing growth strategies and sharing insights on entrepreneurial journey and business management.

Episode Summary:

In this engaging episode of the How2Exit podcast, host Ronald Skelton sits down with Shane Ehrsam to delve deep into the world of mergers, acquisitions, and the hands-on experience of operating a business. Shane shares his journey from being laid off during a corporate restructuring to successfully acquiring and managing a multi-location trailer dealership. Interlaced with practical advice, Shane's story highlights the importance of perseverance, informed decision-making, and operational excellence in the entrepreneurship acquisition landscape.

Shane Ehrsam provides an in-depth look into his strategic approach to identifying and acquiring the right business. From leveraging his experience in the B2B services to navigating the complexities of SBA loans, Shane's journey is filled with invaluable lessons for aspiring business owners. He emphasizes the significance of understanding the business fundamentals, building strong relationships, and being a hands-on operator to ensure smooth transitions and sustainable growth.

Key Takeaways:

• Entrepreneurial Background: Shane's upbringing in a family of entrepreneurs and his extensive management experience laid the foundation for his successful transition into business ownership.

• Effective Search Strategy: Utilizing a combination of personal outreach and education programs, Shane efficiently identified and acquired a viable business within a few months.

• Navigating SBA Loans: The importance of understanding and working closely with multiple banks during the deal-making process to secure favorable financing terms.

• Employee Relations: Smooth transitions involve clear communication and building trust with existing employees to maintain operations and morale.

• Growth and Expansion: The potential for geographic expansion and professionalizing sales processes to double or triple business revenue while enhancing customer and employee experiences.

Notable Quotes:

1. "For me, it was like, all right, I've decided I'm going down this path, so let me absorb all the information as fast as I can so that I can go out and execute a search with as much efficiency and as quickly as possible." - Shane Ehrsam

2. "Look for those things where I can help in that way versus changing the technical aspects of anything that we did." - Shane Ehrsam

3. "I very much love what I do. It's very rewarding work. I will never, knock on wood, I will never go back to a large corporation as an employee." - Shane Ehrsam

4. "I wish I had unlimited funds for a number of reasons, but a big part of that is so I can continue to invest in searchers." - Shane Ehrsam

5. "I'm long on Texas. I'm long on trailers." - Shane Ehrsam

Article:

Inside the Acquisition Lab: Journey to Buying a Trailer Dealership with Shane Ehrsam

FROM THE Editor:

Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. We are not attorneys, tax, or financial advisors and not qualified to give any such advice.  

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