May 10, 2023

E120: M&A Advisor Mathew Saur's Journey from Thiel College to Co-Founding Woolery & Co. in NYC

E120: M&A Advisor Mathew Saur's Journey from Thiel College to Co-Founding Woolery & Co. in NYC

Matt Saur is co-founder and partner of Woolery & Co., a strategic legal advisory boutique based in New York City that focuses on serving as a partner to its clients as they navigate complex and critical business, governance and strategic...

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Matt Saur is co-founder and partner of Woolery & Co., a strategic legal advisory boutique based in New York City that focuses on serving as a partner to its clients as they navigate complex and critical business, governance and strategic decisions. Mr. Saur began his career at Cravath, Swaine and Moore and was most recently the chief lieutenant in the M&A, Shareholder Activism and Corporate Governance group at King & Spalding, where he co-led the family office initiative at the firm.

Ronald Skelton and Mathew Saur discussed the different roles that can exist in the world of business consulting. They discussed how they each got into the field and their respective career paths. Saur began his career in a large firm doing litigation but decided it was not for him. He started his own firm and focuses on the 'premium piece' of consulting- where there is a personal connection and understanding of the business.

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[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with Matthew Saur. He is co-founder and partner of Woolery and Co, a strategic legal advisory out of New York City. Thank you for being on the show today. 

[00:00:12] Mathew Saur: Thanks for having me. 

[00:00:13] Ronald Skelton: Awesome. So we were chatting before the show, and I always like to do that to kind of build a bond of stuff. You got a really cool backstory and a really cool, things you're working on and stuff. So I'm looking forward to this conversation today. Can we start with that backstory? Gimme a background like, my favorite joke is you were born and then you ended up on a show about mergers and acquisitions.

[00:00:30] Can you fill out the dash in between there? Not so much on the board side, but how did you get into mergers and acquisition? What is your history and, what are you working on now type of stuff? 

[00:00:38] Mathew Saur: Yeah, so I grew up outside of Baltimore. I grew up in the country, kind of northwest of Baltimore. I was a football player, high school, college. Ended up going to Thiel College. Got recruited to go to Thiel College, which is Western Pennsylvania, kind of between Pittsburgh, Erie and Youngstown. Up in that area to play. And I had always thought about going to law school and it was less about mergers and acquisitions and more about wanting to become a sports agent.

[00:01:13] And that was really at the core of it. And I knew I wasn't gonna be a NFL athlete and play long term. And one of my dad's college friends was a fairly successful NFL agent. My dad had always talked about that. It was also around the time where, Drew Rosenhaus and some of the other big time kind of agent personalities came onto the scene and were really front and center. And Jerry McGuire was out with Tom Cruise. I thought that was a, an interesting way to, keep the sports piece but also bring in the business piece into it. And putting the deals together it always fascinated me. And so, I went to college there, played football, got hurt my sophomore year and really kind of doubled down on going to law school.

[00:02:05] Ended up, going to Notre Dame for law school. Around the time I was going there, I actually had a conversation with my dad's friend that I mentioned. And he said to me, look, the business has changed from when you were growing up and when I got into this, it's not the same thing. You should go on the team side or the league side. That's where the money is. That's where the interesting business aspect is. And you should really focus on that. And to do that, you should get into corporate law. I said, okay, that makes sense to me. I'm gonna try to do that. So I had, from the time I stepped foot at Notre Dame for law school, I had to thinking I'm gonna get into transactional work.

[00:02:49] And that was reinforced through my experience there. It's law school, if you know anything about it or have had friends or other people you know that have gone through it. It's very litigation focused. It's hard to teach the transactional piece. And even my first summer internship was litigation. I was fortunate to through a professor's connection, get into the top firm in the world, Cravath, Swaine and Moore in New York City to do transactional work. They didn't recruit at Notre Dame at the time, but because of that connection, I got into that and then fell in love with mergers and acquisitions, corporate work.

[00:03:27] I actually do some dispute work now. Where there's a deal that needs to be cut or you need to use litigation to catalyze something else, or the threat of it. And so we do a little bit of that now. But that's really the core of my advisory practice is, family and founder-led businesses. And of all sizes, public and private. And helping them through catalytic, transformational and strategic events. And that could be m and a. Could be a governance issue. It could be capital raising. It could be some kind of dispute or a mix of all of those. And then, there's a piece of the business that looks more like, what you would think a McKinsey or a management consulting firm would do. That's more strategic, looking at the business, the operations, the strategy, and figuring out how to, either cut costs, make more money, or some kind of creative partnership for part or all of the business. 

[00:04:25] Ronald Skelton: It's interesting. I actually got into law school. I thought I was gonna be a, I thought I wanted to do intellectual property law. And, I was probably only one or two classes into it when I ended up in a divorce. And couldn't afford paying for the alimony and all the pros, like the divorce settlement cost and go to law school at the time. So I dropped off for a little bit. I'll come back when this is over with. There was a benefit to it cuz one of the consulting gigs I did, I was in IT like, running big projects, running big data centers and stuff.

[00:04:52] And one of the contracts I had, they were looking for a desk for me and I said, Hey, there's an empty desk in there beside your IP attorney. I said I was gonna start law school to become an IP attorney. You mind if I sit beside him? See what he does and I can manage my projects in there. I won't be bring any traffic into his office. I'll hold my meetings outside of there. And that way I can get to know the guy and see what he does. After watching him for about six months while I was managing that project, I'm like, this guy is about suicidal board. I don't like paperwork, paperwork, paperwork. And very little, little, I thought you'd get to mess with cool inventions and stuff.

[00:05:23] It's mostly, transactional paperwork and sorting through stuff and research and just not me. I'm glad I didn't. 

[00:05:30] Mathew Saur: It's funny you say that though, because the, my first summer, as I said, I did litigation and I kind of knew I didn't really wanna do it. But, when you're a litigator, people think it's what you see on TV all the time where they're standing up in the courtroom. Sure. There's a little bit of that. A lot of it is you're basically writing term papers all the time. And I, that summer, I wanted to, I was like, this is not for me. This is not my thing. Even on the transactional side, a lot of it, when you're in one of these big firms as I was, a lot of it is the paperwork piece of it.

[00:06:05] And making sure that's right. And they really run a leverage model where they push down all of that work because they want to get lower cost of labor on that. And then the fun stuff, or at least I think's the fun stuff, which is cutting the deals and negotiating all the old guys get to do that. And so I didn't get to do that at all. And then when we started our firm, part of it was our whole thing is, let's do that premium piece, that valuable piece where you need the personal connection. You need to understand the deal, you need to understand the business, and you are really cutting the deal and helping clients through that.

[00:06:41] And then we'll bolt on, if we need labor for a deal. Like if you're doing an m and a deal for the diligence and documentation work. We'll bolt that on and, have a partner firm do that for us and not carry that labor on our balance sheet and not have to do that ourselves. And it's worked out really well. It's to your point, like it's doubling down on the fun stuff and, kind of outsourcing the other piece. And you collect a little margin on the outsource and in my view, It's a model that fits my personality way more than kind of the big firm, high leverage model did. At least at the younger level.

[00:07:19] Ronald Skelton: It's interesting. One of the things my father was, I would say he was entrepreneur. He owned a painting every remodeling company. When I told him I didn't wanna do that anymore, he said, well, what do you wanna do? And don't know yet? The painting remodeling company I ran from the time I was 16 until the time I was 20 and I joined the military. But, we were always having the conversation like, this isn't what I want to do. Like you guys grow it. Cuz we had three crews at one point. We were doing pretty good. And, he like, grow this. I'm like, yeah, this is not where I want to be. And he is like, what do you wanna do?

[00:07:47] One of the things he said is go talk to, think of stuff you wanna do. Then go talk to people that are doing it. And that's always stuck with me is like, it's kind of how I started this podcast. I wanted to do mergers and acquisitions. I paid two mentors to teach me a little bit about it, but I still had so many questions. I started interviewing people and like they were good. And so I started putting 'em online. That said, go back to the, you know the other thing there. I started asking attorneys out there, like, I started going finding friends of mine who did law school and stuff.

[00:08:13] The other thing I determined was I knew a lot of people who went to law school. They went to law school. Right. Pass the bar, but they're not practicing law anymore. So I started doing the research of it, and there's a high percentage of that. And I was like, okay, I'm gonna do something else. That was a determining factor. It was like I could find intellectual property. I already knew that wasn't the thing, but I had already been accepted to law school. I thought it was gonna be pretty easy to get back into. When I went back, I didn't realize it'd make me start over again cuz I waited too long.

[00:08:40] Like new letters or recommendation and all that. That said, I really just like started trying to look at, okay, what area of law would I enjoy? That's why I went out and talked to all these different, probably talked about a dozen people. Started doing the research and found out a lot of the guys just don't practice law anymore.

[00:08:55] Mathew Saur: Yeah, that's right. My business partner went from partner in a big law firm to running m and a at JP Morgan as an investment banker. And you can do that. I always say to people, look, I wouldn't go to law school necessarily to say, you're gonna go do something else and not be a lawyer for a little bit. But if you're kind of on the fence and you wanna do it, it does give you optionality. And I think, and look, I'm biased obviously cuz I am a lawyer. But, that's the hard piece in my view to learn. The math is fairly straightforward and fairly simple. If you get a cut, there's a couple books you can read on it and you're pretty much there. 

[00:09:34] And then it's just understanding operations and business. But the legal piece is always, it's like a hidden skill, a little bit that, I think the really good business folks understand it enough a lot of times. And they, they know at least the right questions to ask and the right things to look for, to raise their hand. They might not always know the answer. I don't always know the answer and I'm a lawyer. But, I do think it is really beneficial, to doing deals, running business, and just being operating in the space that we do. 

[00:10:05] Ronald Skelton: I almost continued just because one of the things that stuck in my head, I had an economics professor who had a law degree. And he was a real estate investor. He taught college for fun. But he made most of his money in commercial real estate investing. And I asked him one day, I said, why do you maintain the bar? Why do you maintain your license? He says, well, in real estate, you're either the hammer or the nail. So when people realize I'm a practicing attorney, they're less likely to bug me about stupid stuff.

[00:10:26] So he goes, if I do something wrong, they're still gonna sue me. Don't get me wrong, right? But I have to do something wrong. Where if you are in real estate, they can just decide that they, they see money, in your bank account, and they want some of it, and they're gonna come after you.

[00:10:37] Mathew Saur: That's right. A lot of great real estate investors are lawyers. 

[00:10:41] Ronald Skelton: Yep. I don't regret not doing, I ended up getting a master's degree in marketing of all things. That said, at one point I thought, I had a real estate investment firm in Oklahoma. I sold it to my business partner. We split the properties. That's how we sold it. So it wasn't actually a sell, but we split the properties up. One of us got more properties than another, and that was our transaction to, to exit it. At one point we, we were doing so many deals. And we're using so many hours lawyer, one of our business expenses with lawyer stuff.

[00:11:05] And so I started looking around like, I'm just gonna buy a law firm. Turns out you can't. I don't know if it's all states, but in Oklahoma you cannot own a law firm, unless you're an attorney.

[00:11:13] Mathew Saur: So they just changed the rule in Arizona. Arizona is the only state you can do it. You can do it outside of the United States. So there are some law firms that basically are just professional services firms. They're rolling up accounting firms, law firms, consultancies, you name it. A lot of that is outside of the US because you can do it in a lot of other countries. Arizona's the only state that, and I don't know all of the rules, but that you can do it. And that's fairly recent. Like within the last two years or so.

[00:11:45] Ronald Skelton: Well, I was looking to put a way around it. I already was starting to study mergers and acquisitions. I hired a performance coach. That's how I got in the space. I hired a performance coach when I was kind of winding down the real estate thing. To figure it out if I was burned out or the, if I thought the market was declining. I was like, is the market really declining or am I just burned out on this? So I hired a performance coach and one of the things the guy said to me after knowing me for a little while is like, one of the things that, the part that stuck in my head is I should be playing a bigger game.

[00:12:09] So I'd flip a freaking house. Sometimes the good flips $40,000 say, wired in our business account. I see the wire hit our business account and I hear his daggum voice, but you should be playing a bigger game. So I look for a bigger game. Started studying and researching this. That's how I kind of come over here. Done with real estate. Looking for something else. And then I reached out to, people that trained me on this space. One of the things we're gonna talk about here shortly is roll-ups. One of the first things I did out of the gate is teamed up with a group of, about eight of us, and we did, a fairly unique, I think that's unique in the rollup space. 

[00:12:40] And, so what is your experience in roll-ups? I know you have some strategies and stuff and that are prevalent out there.

[00:12:47] Mathew Saur: Yeah. I've advised on a lot of these and continue to. Mainly around, the m and a strategy of doing it, buying. And your typical roll up, you think a private equity firm. They buy a platform business, which is just a, it's essentially a business of some kind of size. Where, you get kind of that immediate chunk of EBITDA and revenue. And depending on how big the private equity firm is. We'll scale on where, how big that platform business can be. And then they bolt on other, and acquire other ancillary businesses.

[00:13:27] So, one of the spaces that is really hot right now is, is collision repair. So you have some of these guys, like Caliber Collision that buy, a either a large or a group of collision repair shops in a region. And then what they do is they buy it, professionalize it a little bit. Cuz a lot of times they're mom and pop, and there's some fat to cut on them. And then they continue to buy other shops. And what happens when you buy other shops is, you're able to share the overhead expense. So your corporate office expense, so to speak. And your margin increases as you get scale. You have more pricing power for parts. You have more pricing power for other things that go into the business.

[00:14:15] And then, after, call it five, seven years. And you've done those acquisitions and built this up. The idea is you've not only built a bigger company, you've built it with a lot of times with debt. So you get leverage on your money. And then, you're able to then sell that for a higher multiple because you have a bigger business. So it's multiple expansion. And there's billionaires that have made a lot of money. From Steve Schwartzman to Henry Kravis and you pick your big private equity firms. That's their strategy and they just implement that in, and they do other things now, obviously.

[00:14:50] But, from a roll up perspective, their bread and butter is, LBO, build it, sell it. And they've made a ton of money on that.

[00:14:59] Ronald Skelton: So what we did was marketing agencies. And the reason we chose marketing agencies is they're fragmented and there's a kind of a glass ceiling or a barrier inside of marketing agencies that exists. So if you're a small marketing agency, you've spent, years trading your staff, developing skill sets, and now you've got some people inside of your agency that are really highly skilled and they're ready for that next big contract. They're wanting to get their hands in on a Coca-Cola or a, a bigger name thing.

[00:15:28] Unfortunately, not a single one of those big companies will hire the smaller agencies. You're just not big enough to handle 'em. You almost train your own employees out of the ability to stay at your own company. So, you're big enough that you have the talent, but you're too small to actually bid on the right jobs. So that, you're talking about the arbitrage between, multiple levels. There's a huge discrepancy between firms under 10 million and then firm, the bigger firms. So we could look at, between three and five x, depending on their technology, on the, lower end, maybe six months, some of them.

[00:16:04] On the back end at the end, we could sell for 10, 11, 12, right? So that's what we were looking at. But we did it in a unique way. We didn't wanna raise funds, we didn't wanna do private placement memorandums or LBOs. So what we did is we started off with a, I told you a little bit about this before the record we talk about here. Our strategy is we came up with an idea, we took it to our attorneys and said, we wanna do A, B, and C. They scratched their head and goes, yeah, well A will work, but B and C's gonna get you in trouble. And then we come by, my time we got this thing done was a few months later, probably six or seven months into this. We finally had a working plan where, we were on A, X and Z. 

[00:16:39] And what it was, is we used, how do I simplify this? We were buying marketing agencies with zero money down. It was all a contractual. But we were, only participating in the uplift. So they were giving, we were doing, like a option contract with waterfall techniques. They had all this technology or terminology inside of there. But, what we would do is we'd come in and we'd agree upon evaluation now. They would get that evaluation ownership shares in the overall company we were building. And then our, well, how we participated in that, is we only got to participate in the uplift.

[00:17:18] And we had a way to calculate that uplift of not only just a multiple increase when we sold. Cuz they were 4x to 12x. But we looked at our last two or three years of their trajectory and anything we could increase them above that because of cross-selling up selling and working with the other agencies was part of that uplift. So we just participated in the benefit of the roll up. Agencies were loving it. Kind of tell us to shorten the story a little bit. The agencies were loving it. We lined up, I wanna say two hundred and fifteen, two hundred sixteen. I'm gonna get my numbers mixed up. Initial calls for agencies doing, a million to $10 million a year in revenue, in less than 180, 190 days.

[00:17:58] Mathew Saur: You know, as I said, most people think about they have to put money down and they gotta put all this money up, or they gotta get all this debt to do these deals. And I know we were talking before, I work a lot with big family offices and one of them I'm working with and talking to about, going to public companies. Because there's a lot of assets underneath the kind of main core business that they've either acquired or they've incubated internally, that isn't really core anymore because they've changed their strategy or, something happened with the business and it's not that great of a business anymore for them.

[00:18:38] And they're just not paying attention to it. Cuz it's, you're talking a billion dollars of revenue and it's a, this division's 40 million of revenue. So it's not really that significant. And there's also an opportunity there where they try to sell a larger division that has kind of sub pieces to it that buyers don't always want. And they're not gonna take in a deal, so they need to offload. And so both of those dynamics create an opportunity to go in. And what we're doing is actively coming up with a strategy and talking to people about, using earnouts and essentially shares. Like you were talking about to agree on evaluation. Not really pay any cash upfront. Move very quickly, which is important for them.

[00:19:25] Take those entities, stand 'em up. Either grow 'em or sell 'em, or do both grow, then sell. And capture some of that upside. And then the public company benefits from it too. There's other aspects of that and reasons, from an accounting perspective that it's attractive to them. And from a kind of a time and bandwidth perspective. But that's a strategy that we're looking at that's kind of creative and it's not. Let's go by mom and pop and try to do that in all the surrounding counties and then keep moving out. As you do that in whatever industry.

[00:19:59] Ronald Skelton: It's a very interesting thing cuz there are, especially in the tech world, there are constantly companies that are shutting down teams and divisions that are revenue generating. Have a decent product. Maybe they're only, I mean some of 'em are small, really small. Five, $10 million a year in revenue to a multi-billion. If Google buys a company and they bought it because they wanted, these five rockstar engineers and they do aqua hire all the time. They'll buy a company just for these five engineers that happen to be there.

[00:20:24] They have five leading AI engineers and Google wants 'em. So they buy their company that they're working.

[00:20:29] Mathew Saur: They've do that everywhere now. 

[00:20:30] Ronald Skelton: Yeah. And one of the side projects over here is a five or $10 million revenue, that they have. They'll just shut it in a blink an eye, they'll shut it down. Cause I, I know somebody, I've interviewed a couple guys that do divestitures. Like basically they hunt these things down. Like, how do you source the deal? That was my biggest question from em. How do you source the deal? And for most of 'em, they just came from the VC space. They come from those, they have fillers inside of these companies. So people reach out to them and go, Hey, we know you buy, this one bought computer security companies. Software security companies, like the software security tools. And so if Google has a software security tool they weren't gonna use, they were gonna shut it down.

[00:21:04] He's bought, I think one or two from Google, one or two from other big, big players. And he does 25 to million dollar, 25 to $50 million, like, that's the range that's kind of what he's looking for. But, these companies shut the stuff down all the time, they shut it down. The real question is, how do you let 'em know that you're interested? Because it's so little to them. They don't wanna put the effort in it.

[00:21:23] Mathew Saur: You got it. You really have to, your comment about being in the industry and being in the flow is vital. And that's with, you have to really pound the pavement with the corporate development folks. And talk to them, take them out. Have them understand what you're doing. How you can be helpful to them. It's a sales job to those folks. And then it's the investment bankers too. They cover those companies because, they know where all those assets are, what they want to do, if they're a good investment banker. I mean, that's their whole job. And it's oftentimes not big enough for them to collect a fee on. So they're not gonna pay that much attention to it.

[00:22:03] But they're gonna know, Hey, this company's looking to get rid of this big division. Buyers aren't gonna want these three pieces. Would you be interested in those? And you wanna start having a flow where you're getting those calls. And it's oftentimes helpful to the banker, even though they're not gonna collect a fee, because they're gonna solve a problem for their client. And that means they're gonna be looked at more favorably for the bigger deal that they really want. And so you need to really get in that network. It's hard. I mean, there's some people that hunt around, like a hedge fund analyst would in public filings. But the stuff we're talking about's often too small that it even, doesn't even get mentioned in a 10 k for example, or a 10 q.

[00:22:50] And so it's really a challenge. It's honestly getting in that flow, picking a couple industries. Really digging deep and getting to know the corp dev folks and the bankers in that space. At least that I've seen. I know that's not, there's no technology in that really. It's all human and personal, but, I've often found that's how you find that stuff.

[00:23:08] Ronald Skelton: I guess there's certain ways you get introduced those types of things. You could go to trade shows and stuff. But usually the trade shows are your sales reps and the, they're like just normally, not the CEOs. And a lot of times, I've worked for some of the big guys. I don't think some of the bigger CEOs and even know some of the smaller divisions, right? I was gonna say the decision to shut down a $5 million side project never even hit the CEO's desk of a million dollar company. It's just done. It's gone. Or 10 million or even a $15 million, 20 million something that would an acquisition entrepreneur, would love to get their hands on.

[00:23:37] And the other side of it, I think there's a missing too. Cuz if you were gonna go down this route, if you're out there listening and it's like, man, I'm gonna go out and do divestitures. I'm gonna go find these things. Understand that when you buy these, you're not buying. It's not the same thing as buying your mom and pop stuff. So a lot of times they're gonna keep, they're gonna keep certain talent out of that team. They're gonna pull talent outta your team. So you're not gonna get all the employees. You're not gonna get any leadership. Like all the VPs and stuff like that, that would normally come with a 25, $50 million company.

[00:24:03] You're gonna have to build that team yourself. There's a good chance that you might get the product manager and you might get, some engineers that wrote it and some other stuff. But the ones I've seen, I've talked to probably five or six people that have done these. It's like, you don't always get the team. 

[00:24:15] Mathew Saur: No. And it's even beyond team, it's infrastructure. And it's the things you don't think about. So the payroll systems or the CRM systems. Like a lot of that infrastructure is a, lumped together with the bigger corporation. And you're not really getting that because they don't have a dedicated team for that or platform for that. And so there's a lot of pieces. You have to figure it stand up and that's part of those deals that makes them difficult. And it's difficult on the diligence side because you have to figure out what's coming, what isn't. What's vital and critical when you're evaluating the deal. And if it's not coming then you can't do it. And then what services do you need that you, you're not gonna get, you can live without, but that you need to bridge a period. 

[00:25:03] So there's a lot of times what's called a transition services agreement that's put in place. I've seen 'em as little as a couple months to multi years where you're essentially contracting with the company that this piece is coming from. And for IT services is an example. Or some kind of product expertise that they cap and that they have that you need. And what that's doing is giving you a period of time where the business isn't interrupted and you can find a solution that you know is on your side. Whether it's another company providing the service. Cutting a long-term deal with the existing company or just hiring organically and building it.

[00:25:46] But it gives you that bridge period without interrupting service of whatever the business might be. It's vital. 

[00:25:53] Ronald Skelton: My first instinct would be like, okay, what's a team I need? Can I have a good lawyer? Can I have a good CPA? That's just any m and a deal. But inside of these divestitures, are like, I've got an IT background, but I've been out of it for 20 years. So I probably want somebody that like, who could, just a rockstar that could set up a CRM tool, could set up accounting tools, could set up the software tools I needed within days. If you're gonna explain this realm, who do I need on my team that would be unique and different from a typical m and a team?

[00:26:18] I think you need more systems and process guys like, IT systems and guys who can help document processes. Cuz you think about it, a lot of the standard operating procedures and stuff around companies, they're integrated with the bigger company. You gotta be able to extract that and make it its own. Like how does this thing run on its own? That's their strategic team that would be different. 

[00:26:38] Mathew Saur: And that's part of, I think any, any acquirer, right? No matter how small or large, needs to think about, what their skillset is. What role do they wanna play? Separate and apart from their skillset. And then what else do they need and how do they fill that in? And there's folks that, I just met with a friend of mine that is leaving a big private equity firm who's starting his own, search fund essentially. And he doesn't want to be the operator. He wants to sit on a board. He wants to help a little bit with m and a strategy, but really he wants to find targets and deploy capital.

[00:27:17] That's what he wants to do. And he needs a very different team around him, than someone that is, an operator themselves and they wanna buy business to be in it and operate it and be the CEO day-to-day, and then build it from within. You have to identify that from the start and then figure out what you need. Because a lot of people, and I'm sure you've seen this, but it's all over it. They don't do that. And then they get in a position where they're, they just want to deploy capital and find businesses. And really what they bought is either too small. So they need to be the operator cuz they can't afford one. Or doesn't have a management team. So they have to step in and do it. And I think that's how people get into bad deals. A lot of times. 

[00:28:05] Ronald Skelton: I've interviewed about 130 people at this point. And what comes along with that is people, even though I beg 'em not to, they come to me for advice. Like, you've interviewed all these people, what would you do? And one thing I will say is, I don't think like your friend who's doing the, wanting to be the operator. I don't think that works a hundred percent. Like people say in real estate's a passive investment. There's very few things on planet, on the planet are true passive investments.

[00:28:31] I think the idea of buying something and stepping back and having somebody else run it, is to some extent, a fallacy. And here's where I'm going with this. I would expect anything you buy, depending on the amount of capital and whose capital you're deploying, you got a lot at risk, right? Either you got personal guarantees for SBA loans, or you've raised money, or you've got your family money that you know should be for next generation that you're gonna leverage and risk against this thing. It's so critical that, it's so important that if things go sideways, if your operator doesn't show up one day and he's got a better job, who's going to that site, to run that until you bring in another operator?

[00:29:08] And if it's not you, if you're not capable of that, you better have one heck of a team that you know somebody can be a fractional operator and jump from site to site. Because somebody's gotta run that. Somebody's gotta to manage that facility while you're doing that new search. While you're doing an executive search. And if anybody's been in that space, that's not an overnight thing. It could take six months to 18 months to find a great executive. A great CEO or general manager or whatever title you want to give that individual. They're not lined up, they're not lined up on the side of the street looking for jobs that say, we'll work for food. Great operators have jobs. You're gonna have to steal it from some other company. 

[00:29:43] Mathew Saur: Yes, that's right. And you see it a lot too in the real estate space. And it's the same thing. People say they wanna buy real estate properties. Run a mountain and it's passive income. Well, who's doing the property management? Even if you have that, who's managing them? Who's, making sure everything's going right. And to give my friend a little benefit of the doubt, he wants to be involved. I think there is probably a gap there, right? Where there's a little bit of space and daylight between what he wants to do and what he probably will have to do.

[00:30:11] But I agree. I mean, there's no team, there's no acquisition of the size we're talking about. That's not a multi-billion dollar company or hundreds of millions at this stage that, you're not gonna have to really get in there and understand the business. Develop a rapport with the team, and be able to pinch hit where you need to. That frankly is the key, is finding the right spots to do that. If something catastrophic happens and you have a CEO leaf is an example, that you have to deal with, and you have to be able to adapt and roll with the punches. And that's what separates the good ones from the bad ones.

[00:30:48] In terms of people that deploy capital is being able to pivot like that and take those changes and roll with them and still make something out of it. But I completely agree. It is not a hands off or passive investment whatsoever. Especially, especially if you're putting your own capital in. You've signed a PG. And this is your first one and you're trying to figure it out. 

[00:31:10] Ronald Skelton: So, when people ask me the same thing, they'll ask me, like, we have these meetups where we meet up with people in the space. They're, acquisition entrepreneurs. The people looking to buy businesses. When I ask 'em what they're looking to buy, they're like, I'm looking for anything, anywhere. And I was like, really? Would you live anywhere? He goes, I'm not gonna be the operator. I'm like, I'll bet money. I'm a gambling guy. Said, I'll bet you five grand, you buy a company some. Sometime within the first two years, you're gonna have to be at that facility for more than 30 days.

[00:31:37] I'll give you a little leeway. You're gonna be at that facility for more than 60 days. At some point. So don't buy anything in any city or any area that you would hate to be in for 60 days. I hate cold weather. I'm not gonna buy something in Northern Montana or in Canada or something where it's, zero or Alaska. I don't care if it's making $10 billion a year. I guess, I'm a dirty capitalist pig. That was a bad example. Let's just say it's five or $6 million a year and it's very profitable. But if you told me I had to, I had to spend the coldest months of the year in Alaska with no sunlight, I would probably tell you, you know what, let's find something else.

[00:32:08] So I always tell people, start off with like, give me a list of places you just would not live. Cities you just don't want to visit. And we'll eliminate those. Once you start realizing there's certain things you don't want to do, even for money.

[00:32:19] Mathew Saur: It only helps people to do that as well. Because that bias is gonna come out when you're evaluating the deal and you're gonna waste your time spending that time to get to that point where the bias comes out. There are very few people I think that will look at a deal and say, I would never go to Ohio, as an example. And they're probably not gonna buy, go all the way to buy business in Ohio. At least not their first one because, and then they're gonna realize how hard it is and what they actually have to do.

[00:32:48] And then they're not gonna. But, I was talking to my buddy today again, the same guy and we were talking about, it's hard on the first one. Of figuring out how to do it and, getting the gumption to actually spend the money, especially when it's your money or your family's money to do it.

[00:33:04] Ronald Skelton: It's like, so the second one I told him, says, now make a list of things you won't do. He says, well, if the money's right, I'll do anything. I said, okay. One of the last businesses, this is years ago, but one of the first businesses I evaluated, one of the ones I evaluated right before the guy asked me the question was a company that did porta-potties and septic removal. I used to go, yeah, that's fine. I said, and it made a lot of money. It was seven figures. Do millions, in a place like Oklahoma, where that's a lot of money. Cost living's lower. He was like, for millions of dollars, I'll do a septic. I said, okay. He goes, I'm the operator. I'll never have to, I'm the owner. I'll never have to go out and do it. 

[00:33:34] So I was like, I said, I visited the owner. Two or three different times, and I promise you I'd never met the man, where he didn't smell a little bit like, like septic. If somebody doesn't show up or something like that. Even at a company, he's got a few dozen employees, somebody doesn't show up. Guess who's gonna go out there and pump that stuff out? Right. You have a spill in the, like, somebody dumped over one of the trailers in the car and spills the, porta potties. You got an inspector coming by, or especially in other states where EPAs really active. EPAs coming by in two hours and somebody just spilt something toxic in your yard.

[00:34:03] You're gonna roll up your sleeves and help your guys? Or are you gonna lose your business? Your choice. So don't tell me you're not gonna do it. So there's this whole concept, I think there's a fallacy that like, I don't ever have to roll up my hands and get into the business. I think that's a mistake for most people. Be willing to get in hands on with anything you buy. You can engineer it to where you don't have to. You can engineer it where you're the operator and you get to stand back and run it. I'm hands off with one of mine right now. It's 1800 miles away. But, if it came to a point where I was gonna lose it or something like that, I'd fly back to Oklahoma in a heartbeat. And help make sure it succeeds.

[00:34:33] I own a little pest control company in Oklahoma. That said, you gotta be able to go and I've never touched chemical. I don't like the idea of chemicals. But I'd fly back there in a heartbeat and start interviewing new techs if I, if my techs quit or something. I might even grab the pump truck and go deliver it. I know how to, I'm trained on it. I just don't want to. But don't want to and need to are two different things. And just be understand, like in this space you own a business. You've got people's jobs on line and stuff like that. Are you willing to cross that line and don't want to, and don't need to and get in there and do something you need to do even though you don't want to?

[00:35:05] Because I hear that conversation all the time. It's passive, I'm gonna stay behind. I'm gonna be the operator. Like, yeah. Until you're not.

[00:35:11] Mathew Saur: Yeah. I mean, look, I don't wanna look at insurance policies for my business. That doesn't, get me up in the morning to go do stuff, but guess what? I'm doing it. Because it's important and you have to. And, I do think that there is this like, fantasy dream of, I'm gonna buy something and it's gonna be passive. Or I'm only gonna get to do the fun stuff in it. Where really there's a lot of stuff beneath it.

[00:35:38] When you're working at a big company, is kind of automated or at least, it's not automated, but it feels automated. Because you don't have to worry about it. Even a lot of times the CEOs or the senior executives in this companies don't have to worry about it because it's just such a big organization. That it runs itself to where, If you're, in a small business or even a mid-size business, a hundred million dollar business. A lot of times it's still, you're still rolling your sleeves up in areas you don't, you're not thinking about or other people aren't, that are in big organizations or middle manager somewhere, or whatever.

[00:36:11] Ronald Skelton: Right. So, I don't wanna run out of time without talking about some of the stuff, cool stuff you're working on. Because I know you're an attorney, you help other people. But, from having a few other conversations with you, I know you have some of your own acquisitions. You do some really cool little things. Let's talk about some of the stuff that, you're looking at in the acquisition and how you got into that space. 

[00:36:32] Mathew Saur: So, I have a vehicle armoring business, with a buddy of mine from Maryland. For some reason when I grew up, a lot of my friends in the country, they all had separate autobody and collision repair shops. It was a weird coincidence. I always joke around with people I know more about that industry than a lot of other industries just because of, I had all my friends that were in it. And they all did really well. And so kind of taking that and then marrying it with my advisory business, I deal with a lot of, in that business, a lot of, high net worth families.

[00:37:10] A lot of them have their own family offices. Which basically is a company that just manages their own wealth. And deploys it just like a private equity firm would. And some of these people are, hundreds of millions of dollars into the billions of net worth. So very significant folks. And there was, I saw an opportunity on that side where, there was really essentially one player in the vehicle armoring space, in the United States at least. And a lot of their customers were outside of the states. Over the last few years, without getting into the politics of everything, I think at least the sensationalization of, if that's even a word, of violence and a threat to of bodily harm or of harm in general. It has kind of increased. And on a global scale, but particularly in the US. And people are looking for different ways to improve their own home safety.

[00:38:07] And that's from cyber to physical. And with ring doorbells is a great example of that. You see those videos all the time. And so we saw this opportunity where there was one player in the vehicle armoring space. I had a client that was looking for one, and I literally called my buddy that had a collision repair shop and I said, could you do this in your facility if we could source the materials and figure this out? And he said, let me go do some work and I'll come back and tell you. I've never done it. And the answer was yes. And so we then just launched into doing that. We have, right now it's the ability to do custom for people. From glass to Kevlar to run flat tires. Everything from handgun grades, to assault rifle grades and bomb grade, on different things.

[00:38:55] And then we're building a Suburban right now on SPAC as well, that will, we'll end up selling, that we'll probably showcase in some kind of media. And then, as an adjunct to that, I'm looking with him at a collision repair business that has a towing component and a used car component to it. In the single digit millions range of business. So a smaller one that he'll operate. I'm gonna be involved in it, but I would've never probably done it without having that operator there. Because I, it takes time. I run my advisory business. That takes time and, he knows that business inside and out. And I trust him.

[00:39:35] We have an existing relationship there and have since we were younger. And so we're gonna jump into it together but maybe, probably scale it and see what happens with it, at that point. But it's essentially just a, it's a cashflow roll up play on that. But it's, we're not gonna, at least the idea right now is we don't wanna raise outside money. We don't wanna do all that. We'll get debt to buy it and all that. But we're gonna use our own money and do it and try to build it ourselves that way with him being the operator. 

[00:40:05] Ronald Skelton: That's awesome. You could even, there's verticals you could go into. You have armored vehicles. You can secure vehicles. The thing I was thinking about is, for like SWAT teams. For all the big cities. For, even patrol cars, just doing the door. Even if a cop had a door to get behind of something. Something that was, he knew with the glass is bulletproof and the door had some armory in it. That would be extremely beneficial. Somewhere to take cover in the event of open fire. Cuz most doors aren't. I don't know if you, I'm a redneck kid, grew up in the country. Abandoned cars left in the woods were always fun to shoot at. And I'll tell you that doors are not, doors don't stop anything. It goes in and out. In one side and out the other.

[00:40:41] Mathew Saur: That's the next phase of this. You talk about systems, you were talking about that before. Part of what we wanted to do, and frankly part of why we did this one on spec is we want to get our systems down. To where we know how the intake's working, how supplies working, how the process works, and what we can do, what we can't do. Because then the next phase is exactly what you're talking about. Where you go get government contracts. You go get security company contracts, and you do fleets. And you do, it's b2b, not b2c.

[00:41:12] And that's really the next phase if we wanna kind of really take that to the next level and grow it. Is you get some of those security company contracts where you're outfitting a whole fleet of cars. And you're gonna have a steady stream and you get a couple of those. That's a significant business. Because this stuff, as I said, there's not many that do it. And it's premium work. You have to get it right. It takes craftsmanship. And it's a, it's life or death if you don't get it right. There's not in, that's premium work and it doesn't take many of those to really scale it.

[00:41:45] Ronald Skelton: I know people who have safe rooms in their house and stuff. And where I'm from in Oklahoma, it's got dual purpose, right? You wanna hide from the tornado. But that's another thing. Maybe storm chasers. Like, if the velocity of things coming out a storm chasers car is the same. So the storm chaser vehicles, that stuff. There's all kinds of cool things you can get into that space. So I like that vertical. What else you working on? 

[00:42:05] Mathew Saur: Looking at that, I just had a, a medical imaging equipment deal. It's kind of a distributor deal come across the table. It's too new. I haven't spent much time on it. But, a buddy of mine brought it to me, wants to see if we can do it and have me help him do it. But doing that and doing that public company strategy. Which is mainly business services industrial focused. Because that's where a lot of, I think there's cash flow value and trap value inside of these companies. And so we're trying to get that, that going as well. But, that's kind of, across the spectrum. I mean, that plus the advisory business, that's enough for a few people. 

[00:42:43] Ronald Skelton: Any particular markets you're looking? Like the imaging? I know somebody that has, he's a MD and he owns an imaging center. And, he actually, I'll give him away if I say anything else, but he's got some other very interesting careers. Where's that located at?

[00:42:57] Mathew Saur: The northeast. 

[00:42:58] Ronald Skelton: This guy has businesses in Oklahoma, Tennessee, and some other stuff.

[00:43:01] Mathew Saur: We should talk about that. If I move forward on the diligence on it. It's like radiologists, machines and things like that. The stuff that would go into a hospital or a radiologist practice and all that.

[00:43:13] Ronald Skelton: His specialty is, he owns, I think an MRI type of, and other imaging center because he does the spinal injections for pain management.

[00:43:21] Mathew Saur: Yeah. It's the distributor business on the medical side is interesting because you've seen some of the rollups in that space with private equity. Where they essentially, you have the same end customer, right? It's a hospital. It's a clinic, same kind of clinic. Or a physician and you build out that network of those end customers. And then you just add on to your catalog of things you sell to them. So you're seeing, there's private equity firms all over the place that are doing that. And frankly, public companies that are doing that. And they just build really good and customer relationships. A lot of times they're telling them what they want and what they're buying. And then they go out and acquire a company in that to add to the, essentially the catalog under the umbrella. And there's people who've made a lot of money doing it. 

[00:44:07] Ronald Skelton: I'm intrigued by it. But the uncertainty of where our economy's going. There's a few industries that probably won't get hit as hard and like health is gonna be one of those. People are always gonna want the best healthcare they can afford. So health and wellness is one of the areas where I don't think that gonna get hit as hard by. I don't think anything's recession proof. But I don't think it would get hit as hard as some of the other industries. Like I wouldn't be looking to buy an amusement park right now. People running outta money to buy food.

[00:44:32] Mathew Saur: Well, Disney just laid off 7,000 people. I don't know which part of the business it was in. But, they have an amusement park.

[00:44:38] Ronald Skelton: The trick is that now might be the time to buy 'em, cuz it'll be on sale. All economies are cyclical. If you can afford to buy 'em and wait 'em out, you might be able to find some bargains on some of these things. 

[00:44:46] Mathew Saur: That's exactly right. You have to have the capital and the conviction. Those are two hard things to get. And we're seeing this up and down the value chain. You're seeing a disconnect still between buyers and where they think the world is and what prices look like and where sellers' heads are at. As you said, there's tons of dry powder. But until you close that gap and have people meet, none of it's gonna get deployed.

[00:45:13] Ronald Skelton: In the smaller deals, I would venture to say, it's not always about the money. The bigger deals you get outside players, especially public deals, it's like I get outside players. There are a lot of, external forces in play. On a small business deal, meaning if it's 10, 15, $20 million and below and it's a single family, there's a lot of stuff that come into play. One of the things I've learned after interviewing a, like I said, 120, 130 people at this point, is the highest bid doesn't always get the deal. 

[00:45:41] I would venture to say the people that are not getting there, because the seller thinks the numbers should be here and they're there. They should really lean into what else does that seller need? What is the seller trying to accomplish? There's a lot of creative ways. Like I just do it all the time in real estate. Somebody says, I'm looking at a house and I think the house should be worth 200 K, and then the owner says, I want 350 K for it. It's like, okay, I'll pay you $350 a month for a thousand months. Will that work? When they're like, no, I can't do that. I was like, well, you wanted 350 K, we can get you there.

[00:46:10] But I have to be able to make money on the house too. So you can either name the price or the terms of my, I was always been the inside, like you get to pick the price or the terms.

[00:46:17] Mathew Saur: That's definitely right. And a lot of people miss that. Even seasoned deal makers miss that. And I will say to your point about, larger companies or even public companies. You'd be surprised at how personal that can get. And you're talking about big egos, you're talking about people that care a lot and put a lot into their jobs and what they're doing. And they really wear it on their chest. But to your point of the family owned businesses. It is, there's a ton of human psychology in it. And it's not always about price. It's about how does it feel? What's gonna happen to my legacy? What's gonna happen to the brand? What's gonna happen to my people?

[00:47:00] Is X, Y, z gonna get taken care of? And a lot of people just come in and miss that. They don't wanna spend the time to build that relationship and that rapport to understand, to your point. What do they really care about? And is there a creative way to get to that without giving on, just throwing more money at 'em. Or pounding your fist and saying you can't do a deal because it's too expensive. At the end of the day, obviously it has to pencil out and it all has to make sense for both sides. Both from a financial and an operational perspective. But, there's a lot underneath of that you can play with and levers you can pull. And I think that's what really makes a skilled deal maker, is someone that understands both the human element plus the financial and operational elements. And can pull all of those levers in the right way and get a deal done.

[00:47:53] And look, not every deal's gonna get done. And no matter how great the company you think it is, and there's things outside of your control. But, really spending time with the people is extremely important for that.

[00:48:06] Ronald Skelton: Another thing I've found, and we'll wrap this particular topic up with this one. Is a lot of times when somebody has a high evaluation, there's external forces to, they don't necessarily wanna sell, they've been told they need to. Their wife's trying to get 'em to retire. So they set a price above, like, okay, I'll sell if I get this. And they're not really in the game. Right? So if you can figure out what they're in the game of, like everybody's in a game of something. If you can figure out what they're trying to accomplish, what they're in the game of. I've evaluated least a dozen deals where the owners in the game of appeasing their, the wife's need to sell the business. And they had no intention.

[00:48:39] As soon as I determined that, I was like, okay, well this conversation is done here. When you're ready to really sell, I'd love to chat with you. You got an interesting business and stuff, but how can I help you right now? He said, submit an LOI. A really low LOI. I can give it to my wife and say, nobody's wanting to offer. Like, I really don't wanna do that. But, yeah. A lot of times there's, if they're really high valuations or like the number's just kind of out there. There might be another reason why that they're, it's even on the market. Like, they're being pressured to do it.

[00:49:07] They're being pressured to retire. They're not quite ready. So like, as a real estate investor, we'd send out letters, people have a vacant homes or something. Like people call you and it's the guy that says, I'll show it to you if you gimme a million dollars. Well, like, they're looking for the idiot. They would pay two times what the house is worth. They don't have any intentions. They're not motivated to be in the game. So the real question is, in my world anyways, what game are they playing? Where are they motivated to move towards?

[00:49:28] Like, can I help 'em get there? We are at the top of the hour. Let's talk about, how do people reach out to you? What do you wanna work on? Let's go both sides. Cause you, you're both an acquisition entrepreneur and an attorney that helps with these deals. So let's spend a couple seconds here, a couple minutes. What are you looking for acquisition targets for people that bring to you? If they've got something interesting. Kind of what location, demographics. Whatever you wanna say on that side. And let's talk about your ideal, customer as far as the firm goes. And let's get both of those out there. 

[00:49:55] Mathew Saur: On the first piece, I would say, look, for myself, it's a high bar, just cuz it's my own capital. Or friends and family, that to deploy. It's really the, single digit, mid the EBITDA businesses that are really interesting. Would look at stuff below that. But it's it's really in that range that where you can have an operator. Cuz like I said, I have a day job. But with that said, I know a lot of people that are in this space and looking all over the place. Geographies, types of businesses, sizes, all of that.

[00:50:25] If there's something that's bigger than that, I know people. If there's something below that I know people. And I'm happy to make connections with, no strings attached on that. So I would say I'd love to just see deal flow. I like seeing deals, what interesting businesses that are out there. So, feel free to send 'em to me. And then on the advisory side, that's chunkier businesses. Or call it, 75 million and up, that are looking for strategic advice. And that could be m and a. It could be, like I said, capital raising some kind of dispute. Would love to talk to people.

[00:50:59] And if it's not a fit for me, same thing. I work with a ton of folks and I'm always connecting people to the right, to the right end market, or the end provider. So I would say, I'd love to be contacted. I'd love to see stuff. Don't be shy about it. And my mind's been changed on a lot of things. So if there's something that comes across the desk that doesn't fit what I just said, who knows? I would say the easiest place is either, my Twitter, which is just my name Matthew Saur on there. If you search that, you'll find me. Has my headshot and everything. I think the same one you have for the show notes.

[00:51:35] And then, our website, Or my LinkedIn. Again, just my name, search, Matt Saur, WooleryCo, New York City and you'll find me. 

[00:51:46] Ronald Skelton: Okay. That sounds great. Had a great time today. Before we into the show though, I always like to ask what are three things that if somebody couldn't remember anything else from the show, but they only remember those three things, what would you want 'em to walk away with? 

[00:51:58] Mathew Saur: Based on the audience, I would love for them to walk away with, Matt is someone that wants to look at businesses that is active in the market, that is a resource for advice. I've seen stuff big and. There probably isn't anything that is too esoteric or that I haven't seen before or can't wrap my head around. And I'm always happy whether I'm digging in formally or informally.

[00:52:21] If it's part of the network, I'm always happy to give advice on that and wants to connect with people. I would love to be a part of the community and deepen that. And like I, I gave out all my, my contact channels and things like that. And I would love for people to be active, reach out, follow, talk to me, engage with my stuff. Would love to be a part of the community.

[00:52:43] Ronald Skelton: That's awesome. Well, I appreciate you being on here today. Thank you. 

[00:52:45] Mathew Saur: Thank you.