Andy Cagnetta – How Business Brokers See the M&A World – Ep.128

My guest on this episode is Andy Cagnetta. Andy is the CEO of Transworld Business Advisors, one of the largest business brokers in the country. The typical guest on Think Like an Owner is an owner operator often running a business they acquired, although not always. And therefore, the buyer’s side of a transaction is where we have spent the most time as a podcast. I wanted to hear the other side and learn more about a broker’s perspective in the small business and search world. What do they care about? What do buyers do that is counterproductive, and how could they more effectively build relationships? We go over questions like this, along with what a good business broker looks like, why some listings never sell, how to impress sellers and brokers as a buyer, the perception of search funds, and how Andy himself is an acquisition entrepreneur who acquired Transworld and became CEO.

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Links:

Andy on LinkedIn

Transworld Business Advisors

BizBuySell.com

Closing the Deal by Andy Cagnetta

Halftime by Bob Buford

Never Split the Difference by Chris Voss

Topics:

(3:59) – Andy’s background and career before acquiring Transworld

(7:25) – What’s the business model of a business brokerage?

(9:24) – How do you find someone who is contemplating selling their business? 

(10:28) – What is your thought process behind growing franchises?

(11:41) – What are some of the most common questions or concerns business owners have when you start working with them?

(15:08) – What’s gotten more challenging about evaluating and buying businesses?

(16:41) – Do you find that sellers are consistently overvaluing their business?

(19:33) – What types of listings have a tough time selling?

(22:24) – What are some unique or vanity-play businesses that are tough to sell?

(23:49) – What percent of listings never sell?

(24:20) – How do you identify a good broker?

(25:50) – What are some common miscommunications between buyers and brokers?

(30:59) – What’s the broad perspective of buyers from the eyes of brokers?

(34:15) – How have you seen buyers distinguish themselves from a seller?

(36:41) – What are some ways buyers derail the acquisition process?

(38:44) – How much influence does the broker have over who the seller chooses to go with?

(40:09) – How impactful is a track record of previous acquisitions when compared to a new buyer? How can new buyers make themselves stand out?

(43:30) – What are some helpful tips for sellers to prep their business to be sold?

(44:56) – What should sellers do after they step away from the business?

(45:54) – How have you built relationships in different markets and communities?

(48:43) – What college class would you teach if it could be about anything?

(49:21) – What strongly held belief have you changed your mind on?

(50:04) – What’s the best business you’ve ever seen?

Think Like an Owner Sponsors:

Live Oak Bank — Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle-market companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.

Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected] 

Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.

If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to August directly at [email protected].

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