Posted by Matt Register

We had a chance to sit down with Peter Heydenrych, Chairman and CEO of Corporate Finance Associates, to talk about mergers and acquisitions.

Below is a hasty transcript, please excuse any typos.


Matt Register: Hey guys, welcome back to the show. Texas Business Radio, TexasBusinessRadio.com is where you need to go. You’re going to see links to all the guests.

We’re talking about mergers and acquisitions. Guys, if you build a business, the end goal of it is to either pass it on to one of your kids and have a legacy or sell the business. And that is not something, as a business owner, you need to do on your own. There are people that are very good at this, that do this for a living and I promise you, if you were trying to sell your business not using one of these investment bankers, you’re probably not going to maximize the value out of it. So that’s what we’re talking about today on the show. Get your calls in 844.814.8144 is our 24 hour call-in line. That means call in now, call it later, call in at 3:00 in the morning it does not really matter to us, we’re going to get the experts on here to get those questions answered. We also monitor hash tag #TBR on Twitter. T-B-R, Texas Business Radio, T-B-R. Or go to the Web site and get a question in that way and we’re going to make sure we get the experts on here. I’m your host Matt Register Jay Curry had to step out. In the co-host chair is my business partner at Corporate Finance Associates, George Walden. George, talk to me.

George Walden: Well I’m very excited to be here. I have beside me Peter Heydenrych. He is the chairman and CEO of Corporate Finance Associates. It happens to be an organization that Matt and I belong to. So I’m very excited to be talking to you and learning about what’s going on in M&A in the market today especially in Southern California.

Matt Register: And in Southern California, Laguna Beach. I’m not sure why I would ever leave Laguna Beach if I lived in Laguna Beach. But he did. Peter Heydenrych is the chairman and CEO of Corporate Finance Associates Worldwide and also runs the Southern California office. Peter welcome to the show, sir.

Peter Heydenrych: Thank you. Thank you Matt and George, pleasure to be here.

Matt Register: So tell me a little bit about what it is you do because you’re selling companies. You’re also helping people buy companies. Walk me through that a little bit.

Peter Heydenrych: Surely. So first of all understand that Corporate Finance Associates is a FINRA registered investment banking firm, 60 year old firm and we focused both on selling companies, advising business owners on selling companies, as well as acquiring companies. And we also do your raising of capital for growth purposes.

Matt Register: It makes sense. Now, there are a lot of people out in the market that put themselves out as “I can sell your business” now this is not a business brokerage. This is quite different than that.

Peter Heydenrych: Yes.

Matt Register: Walk me through a little bit of that difference.

Peter Heydenrych: So we we generally identify three segments to the broad market. First of all Wall Street which we went to need to go into right now but the play the number of players on Wall Street is relatively small. And of course the deals are big and they’re all public companies. At the other end of the scale of what we refer it is the business brokerage market. And then market operates a little bit like a real estate market where the opportunities are listed by brokers or agents and the need for absolute confidentiality is not quite so great. There are potentially a lot of players in that marketplace and the plays are connected through advertising and listing activities of different kinds. In the middle of those two segments is what we have to do, everyone refers to as the middle market. The middle market is too big to operate like Wall Street. There are too many plays in that market for any one party to feel like they know everyone there is to know, all of the opportunities. So is really critical in the middle market if you if you’re bringing a company to the middle market, it’s critical that a good amount of footwork be done some homework some footwork to access the marketplace and create another very important dimension of it is to create an auction. So the middle market is where we operate and have done for 60 years and we’re successful because we close deals. We sell a lot of companies.

Matt Register: Well and that’s the name of the game right. And we describe it very very simply and very easily, if you’re a company that the logical buyer is a person, that is not us. That is a business brokerage. if you are a business that the logical buyer is a Fortune 500 company, a hedge fund, a private equity fund, an institutional buyer, that is our type of a deal, correct?

Peter Heydenrych: That’s absolutely correct.

Matt Register: So what kind of sectors do you focus on because you know everybody as you know in CFA is somewhat of a generalist in that we do a lot of different types of businesses. However, each of the dealmakers kind of specializes in an area, right?

Peter Heydenrych: And I won’t mention them all because we have some 60 senior dealmakers in North America we have an equal number probably across Europe and elsewhere in the world. So we have a worldwide footprint, first of all. Secondly, focusing more on the US than we identify industry practice groups, is what we call them, where individuals either apply a lot of focus on an industry on a sector or they come with specialized skills and knowledge. One the one thing to recognize, and I think a point of differentiation for Corporate Finance Associates is that a lot of professionals are actually operators or ex operators so people who come to what we do with a knowledge of owning and running businesses, many of us, are are and have been entrepreneurs.

Matt Register: Well and that’s a key differentiator because it is you know a lot of our deal makers did not turn Wall Street analysts turn dealmaker. They turned CEO and entrepreneur returned dealmakers so they have made a payroll before, they understand what it’s like, a lot of them are gone through transaction sitting on the other side of the table.

Peter Heydenrych: Exactly right.

Matt Register: And a lot of these guys there that certainly we compete against, that’s certainly not the case and somebody that has never actually run a company never made a payroll is trying to come in and tell that operator and that CEO how it is they need to do and it doesn’t necessarily work real well.

Peter Heydenrych: Right. That’s absolutely right. And I think along along with that that connectedness we have a style of doing business, an approach to doing business which involves a depth of capabilities we have. We strongly staffed, we have good backoffice and support people, but we also lead up projects with a very strong principal to principal connection. So if I use my cellphone as an example when I work deals with clients I get to know my clients. They get to know me and we really work very very closely together for whatever period of time it takes. Selling a business is, by the way, is not something you do overnight or over the weekend. You can find yourself and need to putting six months or even 12 months into that exercise. People often say to me “why does it take so long? Can you sell my business in three months.” The answer is I could sell your business three months. What you may leave behind though is opportunity.

Peter Heydenrych: That’s it. You don’t want me to.

Peter Heydenrych: You don’t want me to. Exactly because it takes a certain amount of time to engage with that marketplace. The marketplace is not lined up in some yellow pages where you’re instantly accessing them. It takes takes a little bit of time to get the attention of the market and at the end of the day one of the real value-adds that we bring to this process is, I referred to it earlier, is the auction.

So you really want to allow us the time it will take to gather the best that the market can offer and to bring those parties to a point of competitive bidding.

Matt Register: And well see who really wants it.

Peter Heydenrych: Exactly. You know that’s remarkable and we have offices all over the world. See we, as in myself and George are members of corporate finance associates. We’re talking to Peter Heydenrych the CEO and chairman of Corporate Finance Associates Worldwide and the guy who runs the Laguna Beach California office. How you how do you see entrepreneurs mess this process up? Because I’m sure you’re not dissimilar from us. Sometimes we get clients where they have attempted to do it themselves and it didn’t work out the way they wanted it to.

Peter Heydenrych: Yeah. Look I know, a couple of things. First of all, a lot of entrepreneurs, because they are doers, wanted do this themselves. Sometimes we will say to clients or would be clients, this is a fishing exercise. We’re not saying we’re better fisherman than you. But we have a big boat. We cover more of the ocean and have a lot more lines in the water. Let us do this. You run your business and let us do what we do and we’ve done it for a long period of time, as we’ve said. So I think the lesser concern is just the usual caution that if you going to do something this critical, and it is critical, right? We’ve made that point. Don’t be overly concerned about how to approach it as a cost cutting exercise. At the end of the day.

Matt Register: Cheap is not the criteria.

Peter Heydenrych: Cheap s not the answer. There’s going to be a couple of points of commission involved. You get to earn and cover that commission multiple times if the process is done correctly.

Matt Register: Amen. Peter Heydenrych, CEO of Corporate Finance Associates, cfaw.com is the Web site. Peter, thank you very much for joining us.

Peter Heydenrych: Thank you, Matt, it’s been a pleasure, and George.

Matt Register: Absolutely. Guys we have to go to a break. We have to pay a bill or two. We’re going to be back right after this. You really don’t even have time to go anywhere. We are just getting warmed up. We’ll be back right after this.

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About the Author
Matt Register

Matt Register

In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.

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