Team NEO’s Bill Koehler
Business owners willing to work the dealmaking process typically come out ahead
Bill Koehler understands the thrill of making a big business deal and the sense of competition that tends to arise when leaders gather around the negotiating table. But he prefers not to view dealmaking as an activity that requires a winner and a loser.
“Typically you would find the best deals, the best transactions, the best relationships — they are where everybody knows enough about what everybody else is trying to accomplish,” says Koehler, CEO at Team NEO. “Yeah, you give and take here and there. But at the end of the day, both people leave feeling like they are in a good position to move forward.”
Koehler uses his knowledge and expertise to attract businesses to Northeast Ohio and encourage innovation. He wants to build a stronger economic development system and engages numerous partners who are striving to reach the same goal.
In this week’s Dealmakers Live, Koehler talks about one of the most gratifying moments of his dealmaking career and the value that a formal M&A strategy can bring to your business. What follows is a transcript of the above video, edited for readability.
A journey of discovery
So one deal I remember that I think back very fondly about was a business that was called Kellermeyer. It was owned by nine investor managers. It was really a partnership even though people had titles and there was a hierarchy. At the end of the day, it was a partnership of people who were so proud of what they had built together. And yet, they knew in order to take that business to the next level, they needed help. They needed access to new markets. They needed access to additional funding. They needed to build a new level of sophistication in their business to get to the next level.
What was very interesting was we saw that. As bankers and financial advisers, we saw that was an issue. But we had to convince the team to see that and to see the benefit of going down the path of a financial recapitalization with a private equity partner who would truly be their partner. We did the transaction over a period of time and those partners were able to stay on. But they also were able to take some cash out of the business that they had earned and grown for such a long period of time.
What was very gratifying, was about a year later after having been with that new partner, I was meeting with the gentleman who we had coordinated with on the transaction for most of the time. What he admitted to me and what he acknowledged was that all the things we had told him turned out to be true. The partner they found was truly a partner. And because of going through the process, they ended up finding themselves in a position where they now knew way more about their business than they did before because of the experience they had and the new insights that partner had brought to them. All that being said, now they are positioned to go to the next level and they were very excited about the new opportunity they saw in the business, even though together, they only controlled part of it.
Good dealmaking leads to good business
The best attributes that real high-quality dealmaking entails or good dealmakers have tend to be things like curiosity, the ability to problem solve, a willingness to look at a situation and maybe pick it apart and then put it back together in a different way. There is a certain amount of creativity involved in that. The ability to see opportunity where there is not readily apparent opportunity. People who have been very successful in dealmaking on either side of the table, or even as advisers in that environment, bring those kinds of attributes.
A lot of that is just good business, good business sense. There is a certain amount of intrigue or curiosity that goes with that and doing it well. I do get concerned when we have people who romanticize dealmaking in a way, so it’s about a win-lose situation. Typically you would find the best deals, the best transactions, the best relationships — they are where everybody knows enough about what everybody else is trying to accomplish. Yeah, you give and take here and there. But at the end of the day, both people leave feeling like they are in a good position to move forward. I think that’s critically important to be sustainably successful in the dealmaking business.
Special note: It’s easy for business owners to become attached to the people who took risks to put their company in a position to be sold or to raise outside capital from investors. That sense of family can create uneasy feelings about that next step in the life cycle of the business. In this bonus video, Koehler shares his thoughts on how advisers approach this type of situation.