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Transcript of:
Investment Banker Peter Kubasek On Everything You Should Know About A Liquidity Event But Probably Don't (#026)

Steve Wells: [00:00:00] This is Steve Wells. 

Jeffrey Feldberg: [00:00:01] And I'm Jeffrey Feldberg. Welcome to The Sell My Business Podcast. 

Steve Wells: [00:00:06] This podcast is brought to you by Deep Wealth. Are you a business owner who is wondering how to either grow your business, sell it, or both?

Or maybe in today's environment, you're wondering how to make your business pandemic proof. Visit deepwealth.com to find out how you can master the strategies to grow and extract the deep wealth from your business. Visit www.deepwealth.com.   

Jeffrey Feldberg: [00:00:27] Welcome to episode 24 of the Sell My Business Podcast. You're in for a real treat today with Peter Kubasek. Peter is founder and managing partner of ArkMalibu. Peter has been closely involved in more than 500 merger and acquisition projects ranging from $2 million to over $1 billion in sales, representing billions in transactional value.

Peter brings a vast background of knowledge and understanding to every engagement in which he is involved. His success stems from his ability to identify the core needs of his clients, developing creative solutions and applying sound analytical and negotiating skills to each engagement. He has advised clients on preparing for exit, valuations, divestitures and financing options in a variety of areas, including 3D printing, technology services firms, communications, manufacturing, consumer packaged goods, and distribution.

After earning an MBA from Pepperdine University, Peter began his career at Andersen Consulting in Los Angeles, moving quickly into corporate development roles at Nestle USA and the Loewen Group. 

Peter obtained his undergraduate business degree, Magna Cum Laude from John Brown university.

Peter is a member of the national Young President's Organization, the Cincinnati Association For Corporate Growth and the Business Growth Alliance Affiliate Board. He is the former president of the Cincinnati ACG.  He has also served with the boards of several local charitable organizations and has volunteered in a variety of service endeavors. Peter and his wife, Maryam had been married more than 30 years and have two sons, Hudson, and Luke. They live in Loveland, Ohio having grown up in Vancouver, British Columbia, Peter has a great love for the game of hockey and has coached his sons and other local youth.

Peter, welcome to the Sell My Business Podcast. We're delighted to have you with us today. Why don't we start with your story of how you got to where you are?

Peter Kubasek: [00:02:46] Thank you so much for having me. It's a pleasure to be with bright people that have done a lot of, deals and work. My starting point was, my favorite Uncle Bill. Bill Baher was an extraordinarily successful businessman back in the, 50s, 60s, and 70s. He's actually my great uncle, so, my mother's uncle. 

He was a fourth-grade education, but a multimillionaire. My dad who was a business owner, always said, listen and adhere to what Uncle Bill is trying to teach you. So, I would be pulled into caddying for him with bank presidents or teachers or janitors. Bill's view of life was everyone is equal.

And if you treat everyone extraordinarily, then you don't have to worry about it. I sat with him as he dealt with bureaucrats and inspectors and was gracious towards them, but also very clear of what he was trying to accomplish and why he believed what he was doing was correct. My Uncle asked me when I was probably 10 or 11, what I wanted to do for a living.

And at that point, the way I verbalized it is I wanted to be a deal lawyer. And he explained to me that I didn't need to be a lawyer to be a deal guy. And that potentially with the personality that he saw within me being a lawyer would not have been a great fit. So, I set about to achieve my desired goal of becoming an M&A guy.

I realized when I was finishing up at my undergrad and one of my mentors was a gentleman by the name of Don Soderquist, who was the vice chairman of Walmart. And I told him what I wanted to accomplish and he started laughing and he explained that you don't get there from where you're starting. So, you need to make sure that you go get your MBA.

And the best MBA program that you can get into is what you need to seek out.  So, I went to Pepperdine and got my MBA there. Their specialty is, relationship work. Don Sime and other professors from the sixties and seventies really worked around, organizational development. Of course, as a young cocky guy that wanted to be an investment banker, I had zero desire to learn anything about organizational development. It was HR, it was the devil. So, I, had the pleasure of sitting under their tutelage. And when I came out of grad school, I went to work for Arthur Anderson. I was in their strategy consulting group, got exposed to a lot of stuff, and then I went to work for their largest client in Southern California, which was Nestle.

Eventually I was able to make it into the M&A group. Everyone in the M&A group was, from Stanford and Harvard and Northwestern. So, as I applied, I did not get in, immediately, but I helped start the Nestle Crunch hockey team. And one of the players on that was a director in this corporate development group. And he explained to the senior leadership that, yes, I didn't have the pedigree, but I had the drive. I had the leadership; I had the smarts to be able to accomplish what they needed me to accomplish. So, I gained traction. I was probably fifth seat. And you guys understand that first seat is the lead negotiator, and fifth seat is the guy that sits in the data room, handing out materials to, the potential buyers or sellers.

I received an opportunity to join a company called the Loewen Group, which at that point was about 250 million in revenue. I moved from LA to Cincinnati. And I helped them grow to 1.2 billion. I bought over a hundred companies for them, and I had the opportunity to learn from extraordinarily bright people.

Ray Loewen with all of his foibles was an exceptional connector an exceptional, negotiator and a very creative financier. My boss there was a gentleman by the name of George Amato who was a former West Virginia football player. A big strapping gentleman, but what he taught me was it's not muscle that gets a deal done.

It's intelligence and connectivity. Relationship connecting. So, after being there for about four years, my oldest son Hudson was born and I resigned from the Loewen Group and started Malibu, which is now ArkMalibu. We have been doing middle market transactions in the U S in Canada, for, almost 25 years now.

Jeffrey Feldberg: [00:07:29] Peter, congratulations. That's amazing.  You're also an author. do you want to talk about that for a moment? 

Peter Kubasek: [00:07:34] Absolutely. One of my good friends, became the chairman of our board, Rene Robichaud in 2010 and then joined full time in 2015. He and I felt there was a need for a very simple non- MBA level book on mergers and acquisitions. And another friend Bill High who's written about six or seven books came alongside and together we wrote a very simple lots of pictures, you can complete it in less than an hour, Sell Well. It's been extraordinary. It's actually funny several of our competitors, have handed out copies because it is so simple and Rene and Bill are very good writers. So, it's very easy to read and the clarity, which is very similar to what I've read on your gentleman's masterclass. It's very similar in that it's telling the story and then giving illustrations of how you can execute. 

Steve Wells: [00:08:34] Peter, Steve here. So, what are some of the key points that you're bringing forward that you think, from the seller's point of view that they would need to hear? 

Peter Kubasek: [00:08:45] Again, it's very similar to what you gentlemen are doing, which is preparation. If you prepare, then you have a much better chance of capturing the multiple that you desire to get. Most people when they enter a process, it's because they've had an unsolicited offer.

So, if they historically were capturing a six or seven and an unsolicited offer came in at eight, they would jump at it. What we try to communicate in the book is that the people that you're dealing with are extraordinarily experienced and sophisticated. And they may come across as your new best friend.

But they're not. What they're trying to accomplish is to capture your company at the best possible value. So, it's very interesting. I'm sure you guys have seen it. Two deals that we currently have in market. The range of value on the one is from 11 million to 80 million. On the other it's from 33 to 100.

So, people are willing to embarrass themselves to try to get a deal and what we try to say in Sell Well is be prepared. And another thing that we try to communicate and Sell Well, is you really need to have detailed expert advisors walking alongside you. It's not necessarily the person that you've been with for 30 years and is a great corporate counsel.

That person should be still an advisor, but you need a detailed corporate M &A lawyer. You need a quality of earnings expert, not just your CPA. You need an investment banker that is watching out for your best interests. You need to come prepared to the table. Another key thing that we say is that you have to be prepared for what is next.

If you don't prepare yourself for what's next, then you have a potential of having a breakdown before the end of the process, because it's so difficult. But if you have what you're looking forward to, then you have a chance of succeeding. We often say to our clients or potential clients is yes, it's going to be a major difference going from running a $200 million company to potentially working for someone else.

We often say to them is potentially after you sell your $200 million company buy a $3 million company or a $5 million company, that way you can still tell people you're the president, you can still illustrate to your wife, that you have some place to go. The funny story I'm sure you've heard numerous times is most of our wives, married us for better or for worse, but not for lunch.

And the idea or the concept of being prepared allows you not to frustrate your soulmate. 

Jeffrey Feldberg: [00:11:37] Peter, there is a lot to unpack there and terrific wisdom. You're really preaching to the choir. You've had the advantage of being on both sides of the table.

You've purchased companies. And now you're helping business owners to sell companies. When you put yourself in the buyer's shoes and speaking to a business owner, most business owners mistakenly assume that the skills that built their business are going to be the same ones to sell the business. And it couldn't be further from the truth.

And we could focus the entire podcast on this one question. But if you were to pick the top three to five classic mistakes that you're seeing business owners make, I'm curious what those would be, because a great example of what you shared earlier, the first offer isn't necessarily your best offer or at least not in mergers and acquisitions.

In your case, you're sharing the two companies there's upwards of 70 to $80 million on the table either in the business owner's pocket or the buyer's pocket, depending on which way that would go. And so, what would be some of the classic mistakes as a business owner I should be aware of and looking to avoid?

Peter Kubasek: [00:12:41] One of the major ones that I saw over and over as a buyer was thinking that your investment banker was your advocate.  too often, if you choose your investment banker because they are an industry expert, they will be working that day, the next day, the next week, the next month with that particular buyer.

It is in the investment banker's best interest to keep the buyers happy. Not you because you're a onetime seller. So, one of the major things that we've seen is instances when I was a buyer, I would literally tell the investment banker, I don't disagree with you, that the company could be worth 80 million.

I'm going to pay 70. They'd say, I think it's going to go for 80 and I'd explained to them, we have some financings that are going to be happening soon. We have a number of other deals that they have in front of us at this particular moment. And I'm going to talk to them again in six months. And the investment banker gets the message very quickly and very clearly that $70 million is a really good purchase price for their client because they don't want to miss out on the financing and they don't want me not to talk to them about their other deals. So, the first issue is falsely believing, not a hundred percent of the time, but a large percentage of the time the investment banker is for their best interests.

Second thing that we have seen over and over is the notion that I don't want to tell my team. So, I will get everything prepared and I will release the information to my investment banker and they will be able to deal exclusively with the buyers. If we don't have access to a CFO, then we oftentimes say, okay, we're going to bring in an M&A CFO.

And that helps. Most of the buyers want to see some level of depth. So, when the seller views it, that they are a one man show then their values gets decreased significantly because every buyer looks at them and goes, if I give you $70 million, you're not going to be totally motivated for me going forward.

And if I don't know, who's behind you, then I'm not going to give you $S70 million. I'm going to have to put in a risk adjustment to what I think I can afford to lose when you leave. A third thing that we oftentimes see as a potential mistake for a seller is that they view that the tax benefit they have received by running a whole bunch of expenses through the business are easily explainable to the buyer.

The buyer doesn't really care. The buyer may accept some, they might even accept most, but they're not going to accept all of those adjustments. So, what we tried to explain to them is start paying your taxes because you're not getting a six, eight, 10, we have one recently, more than 50 times that adjustment.

So, if they were not paying a million dollars in taxes, it's a $6 million, $8 million or $20 million, a $50 million cost to them. Instead of just paying their taxes and having the opportunity to illustrate from a second source to the buyer that they truly did make $10 million a year in profit. So, there's three off the top of my head of common mistakes that I've seen sellers embrace. 

Steve Wells: [00:16:14] One thing you said earlier on, and it was threaded through this last discussion was about preparation, and how important that is. And I'm wondering, when people take the first offer that comes across their desk, is that because they don't want to prepare? What's in the mindset of the business owner or entrepreneur that doesn't want to naturally do this work and prepare? 

Peter Kubasek: [00:16:40] Steve. I think a big part of that is depending on the size of the company, I was on the phone with a seller. If you get $50 million or $60 million, and she said, no, won't change a lick. I said, if you are properly prepared and you roll additional equity, then you might get a higher purchase price because the buyer believes that you are wanting and are going to commit to be part of the solution going forward.

So, some people simply look at it and go, all I need is X dollars. About 2009 I was introduced to a delightful woman, a really special lady that had inherited the company from her husband when she was widowed. And she had missed the runup in the market in 2007. And a group that was doing a roll up in her space, approached her and said, I'll give you $12 million for your business.

And we had done an analysis and we believe that her business is worth more than 20. And she had given many millions of dollars to, her favorite college. I said, give the difference. Donate ahead of time for tax planning, 40% of your company to a donor Advised Fund a DAF and just be prepared, be a little more prepared.

And she was like, I missed the 2007 market. I am willing to accept this number. I am going to close. The interesting part of that story is several years later, I was on a panel speaking with the roll-up CEO. And he told that story as an example of people being so desperate to get out that they weren't prepared. They didn't know what was going on and they accepted the first offer. 

So, most people do it because they're tired that it's an offer that they believe is more than their competitors historically sold for. And they don't want anyone to know. And if you're not properly prepared, it's really hard to do a deal without a lot of people in your organization knowing. 

My personal opinion is they already know, they have a sense. The reason you're gone more often, you're behind more closed doors. You're asking for reports you've never asked for. They have a sense, a sixth sense that you are selling. So, come prepared. 

Bring the information to them and say, I'm going to pay you $50,000, a $100,000, $200,000 post-closing if you help me prepare for this and do that for your three or four top employees. Give them a bonus for their historic work and for helping you become ready to execute, and you might pay a half a million dollars, even a million dollars, but it could bring an extra $10 million in your purchase price.

Jeffrey Feldberg: [00:19:32] Some terrific stories there, Peter. Thank you for sharing those. Let's circle back to one point most business owners when you speak with them and you ask the question, hey Mary, are you thinking about having a liquidity event? The standard answer is well Jeffrey, yes, at some point down the road, I'm thinking of a liquidity event, but I'm too busy right now to do anything about it.

I'll worry about it when I worry about it. And they're not realizing that preparation and the preparation process itself, that's really the key that unlocks the enterprise value that's going to increase what their business is worth. How would you speak to a business owner who's thinking, yeah, Jeffrey, that's all fine and good, but still I'm going to just get there when I get there and I'll deal with it once I have the time and some money to spend on the preparation?

 Peter Kubasek: [00:20:20] What I normally do Jeffrey is I walk them through three or four examples of people that did prepare. And how much it captured for them. There was a group of five business owners that we dealt with a number of years ago, and they had an unsolicited offer for 13 times EBITDA. And they felt like that was reasonable.

It was good, but three or four different people asked them to visit with me and Rene. And we did some analysis of their space and realized that they were the world leaders in their space. So, what we tried to do is walk them through that if they codify that, so we introduced them to a former CIA operative who did research with their competitors, and their potential buyers.

Asking if there were three people in the world that you would ask for help in this area, who would they be? So, it was a relatively simple exercise for the former CIA operative. She talked to probably 50 people around the globe and two of their names came up almost every single time there was an interview.

So, we brought that information back to them and said, you were viewed as the world leaders. A 13 multiple is not appropriate for the world leaders. Here's some things that we would ask you to consider doing. And they hired some people to help them execute some of those processes so that when we did have other buyers come in, that they were a different looking company.

The whole idea of culture. We talked before we firmly believe that culture drives value. It's the number one reason that heals crash post-closing for the buyer. And if you explain to the buyer what the culture is, they're either able to embrace it or say I'm not going to be a participant. So, helping them do that simple exercise.

Another example from almost 20 years ago was two young baseball players. They're both in their twenties and they literally were running a Yahoo finance site. They weren't incorporated, they hadn't done any of the blocking and tackling, but they were brilliant. We introduced them to a group that created a black box.

And we would not allow any of the buyers to see the black box, but it was mysterious. They spent a million dollars to develop the black box and they ended up getting paid a fortune, six or seven times more than they expected, because they took the time to prepare to quantify the processes. To explain their culture and to illustrate a broad range of ways that they were making money, rather than going to the buyer and going, Hey, I'm on Yahoo finance, which every single buyer would have gone, I'm going to open up a much more complicated website tomorrow, mimicking what you're doing, and you're going to be out of business. 

Steve Wells: [00:23:25] I've got a question, but it's really a question before the question, you mentioned CIA operative. That was intriguing. How did that work?  How did you find that? 

Peter Kubasek: [00:23:34] So, I was on the phone yesterday with someone from the West coast that was sharing with me, the passion they get on making introductions. That really mimics what Rene and I have done for 25 years, is build relationships. You gentlemen, at some point will get a call from me or an email saying, I'm trying to figure this out.

 Actually, you did. Recently, I asked you, I'm trying to find a pricing expert and I introduced you to someone to help them think through a pricing problem. The former CIA operative is now a college professor and they believed that they could add value to the M&A process, and they tried for years to get in to see me.

I'm just shaking my head going. I want to stay away from CIA operatives. I don't want to be going to their wedding, which I ended up going to her wedding. And we've become great friends. The idea is if you have access to unique areas of expertise, then you're able to introduce your clients to them at the right time, that adds value because it adds process.

It adds perspective. It adds flavor. It's not Peter, the M&A guy that's doing the research and no buyer's going to view it as, acceptable. It's a former CIA operative. So, they have their reputation, they have their credentials, that they penetrated places that most buyers aren't going to penetrate. And it was a fabulous success. 

Steve Wells: [00:25:01] I guess what you're saying is, it's along, this preparation line. How do you find the right angle? How do you find the real value? And you've shown that, if you just look at numbers the variance is huge. So, my question is this preparation process. 

It's got to take some time. So, you're just not going to do this overnight. What should you be expected to prepare you and your company before you exit or liquidate or whatever you're going to do?

Peter Kubasek: [00:25:27] Several thoughts on that, Steve, one, our belief is, in culture, but it's in the four boxes. The four boxes are culture, which very few people look into. Secondly, it's their operations, then it's their go to market. And finally, it's their financials. If you understand those four cornerstones about your company, then your company is worth a lot more because you're able to illustrate it and you're able to have processes around how you make your money.

So, what we do on all of our clients is we do an analysis of the four boxes and where we see weaknesses then we reach out to experts and ask them to spend time with our client. What we say to clients is you can do this work in the midst of your exit strategy, and it's going to cost you a fortune.

It's going to cost partially your health because you'll be working around the clock. It's going to cost you a lot more to hire the CIA operative or pay people $500 or more an hour to execute the work rather than you and your team getting an outline from you guys from going through your master’s class then taking the time during the process to sprint. So, in our opinion, start today. And if you never sell, we've had extraordinarily intelligent sellers that after we've worked with them and did the analysis of the four boxes, they said you have brought alive our company and we no longer have any desire to exit.

Obviously, that's a breakdown in our business model because we get paid most of our value upon exit, not in preparing them to exit. That's just a small portion of what we do. We always try to find experts like you guys to help them do that. So, the key thing is the if you have time then start today, if you really need to get out then ask your advisors who are experts that can help me in a shorter timeframe, do the hard work that I should have been doing for the last three years. 

Jeffrey Feldberg: [00:27:34] Peter, once again, a treasure trove of information that you're sharing. One of our recent podcasts, guests, Ben Richter has this term that we absolutely love.

And he says, you need to find the Rembrandts in your closet. So, in other words, when you're doing your preparation, and you're going through your diligence. And one of the things that Deep Wealth, when you go through the Deep Wealth experience we recommend before you start any formal process, do your own diligence on yourself.

Number one, and number two, put that in the data room, your own virtual data room. Because through that process, you're going to do a few things. Number one, you'll find most of the skeletons in your closet. So, when you show up to someone like yourself, Peter, you're coming with more or less, a clean slate.

Then the second thing that you'll do is you will find those Rembrandts in the closet that you thought everyone else in the world does, but it's uniquely you that's doing that in nobody else. And from the preparation side, that's where the enterprise value is going to be coming out. 

Part of the preparation and what a lot of business owners in our experience tend to overlook and full disclosure. We had a terrific exit, but we also made mistakes along the way. And looking back at our own exit, we now realize that our communication, particularly with our clients could have been a lot better than what it was. Based on what you've seen and where you've been, Peter, what advice would you give to a business owner who's going through liquidity process of the timing of speaking to key clients and what to say when you're speaking to key clients?

Peter Kubasek: [00:29:06] I will answer the question on key clients. I have a funny story on Rembrandts. I worked in an internal audit, more than 30 years ago for Pepperdine University. And when I was doing that, I, because of what uncle bill taught me, I always have an insatiable desire to understand everything and anything I can around me.

And I went down into their vault. And oftentimes when they were receiving donations from alumni or friends of the university, then they weren't cataloging it as well as they could have 30 plus years ago. And I literally found, a Picasso, and the stuff that was down there, it's like, anyone's closet you just forget.

So, a hundred percent agree take the time to do that development.  

It's an extraordinarily complicated situation communicating with key clients. One of the key things that you need to be looking at is will the buyers need to talk to the clients pre-closing? So, that is a huge issue that you need to be vetting out. If you have someone that's more than 10% of your revenue, good chance that the buyer is going to ask to speak to them pre closing. If you have a whole bunch of clients that no one has 1%, then it's unlikely, other than a marketing survey that the buyer will use as a ruse to talk to your client base. 

Deepening on your level of intimacy with your clients really comes down to when you need to talk to them. We had a situation recently that, we were asked to represent a very successful company. It just so happened to be that their largest client was a close friend of mine. And I called him up and I said, here's what I'm trying to find out.

Didn't name their client. He said, I'd prefer not to know the name of the client, because if I knew the name of the client, I would start working away from them tomorrow. So, he was a very ethical gentleman.  but that was an illustration that if you have a significant position with a large client, they may take the opportunity of you selling and no longer being their key contact to open their opportunity to the world.

And the buyer will be very afraid of that. So, you need to figure out will they need to talk to them. And secondly, how do you go about that process. In that particular example I don't know how it could it come out well for that seller because they were going to lose that client.  Unfortunately, I don't have any magic pixie dust on that one on how to overcome it, but it's doing the analysis to know, is this going to be a problem in the future?

And if it is going to be a problem in the future, working to make sure that your contract is long-term, making sure it's greenfield doing things that you can to protect yourself.  And if they have been a long-term partner, then work with them and maybe even give them part of the company, part of the proceeds so that they do stay or commit to stay.

So, you pre-buy their loyalty. I have seen that where someone was going to get paid a hundred million. The key clients probably were $10 million or so a year.  The business is probably worth $80 million without them. So, they gave them several million dollars ahead of time. They pre-bought their, satisfaction over the next 12 to 24 months.

Steve Wells: [00:32:44] Wow.  That's a good idea. I've got it. I've got a couple of questions. I'll ask them all at once so you can pick the one that you like. One is, you mentioned the four corners and you put a lot of emphasis on culture. So, I was curious do you have any ranking or does it vary and also a sub question to that.

What makes deals fall apart? We've talked to people and depending on who you are and what you're doing and how aggressive you are some people close 10% of the deals they go after. Are these corners and deals falling apart, is there any relation that you see between them? 

Peter Kubasek: [00:33:16] Thank you. So, we do see a significant uptick in deals falling apart during COVID during the season, because there's an underlying fear, an underlying inability to build relationship. We have had $7 billion plus companies that were participants in our process.

And the HR department said to the CFO and the general counsel, you are not allowed to stay overnight and you're not allowed to share a meal with the people. Our view is we want our clients to know who the buyers are. We want them to have some level of a starter relationship with them, so there's trust so they can look through and see if I believe Peter, that most of them are on their best behavior. Can I at least get a sense of, are they generally good people? 

The second part of that because of the underlying inability to connect underwhelming nature of relationship building during COVID that if you present the four boxes, culture, go-to-market, operations, and financials, if you present that to a buyer and it lowers their risk, they have a better understanding of what they're buying and we're uncovering for them most of the issues that they're going to have to present to their board of directors. So, that raises the chance of closing dramatically. So, rank order, I believe that if you're able to understand and then explain your culture to the buying market and have a sense of what the buying market's culture is, then that's the number one factor that you help curtail or eliminate on why a deal could go sideways.

I don't think it's financials because most every buyer does all the financial analysis known to man. I think you're able to explain your secret sauce, your go to market, your intangibles, your Rembrandt's, if you're able to experience that with the buyer. So, it's an aha moment where you're not giving away the complete secret, but you're drawing them in.

So, one of our clients, did something that was so simple that everyone in their industry would want to do it if they could understand it. They have something called a BombBomb, which I believe the name of the software or the app where they video record, a 30 second, 90 second message to people within the organization.

So, anyone can do it to anyone, but they have people that are trained and they're doing these BombBomb every day and they're sending them out to their hundreds of employees. So, the people are feeling emotionally connected. They're feeling edified, they're feeling encouraged. And the chances that they leave that organization is zero.

I personally have not seen almost anyone do that. We take a lot of time. We have our senior leadership team meeting in about four hours. And part of what we're going to do is everyone has been assigned two people that they're going to, edify. They're going to talk about what is a key trait about that person that they admire and appreciate every time we get together, we talk about what's going good.

And during birthdays and other key celebrations, we edify the person. We tell them this organization has done it to a million times better that they're sending these videos, that person can save. And they're seeing the simplicity of what they're really good at what they're admired for. 

Jeffrey Feldberg: [00:36:57] Peter that's a wonderful story on culture. Let's talk about culture, but specifically at ArkMalibu, because you made a deliberate decision and it circles back to what you were talking about earlier of what you don't know in the mergers and acquisitions world can hurt you when it comes to your advisors. And what I mean by that is that ArkMalibu, you focus exclusively on sell side transactions and one could argue that when you made that decision, you were limiting yourself and hurting your future revenues and profits, but there is a method to your madness and it's important for the community and the listeners to hear why you did that. And why a business owner, I would think twice before working with any other kind of investment banker and advisory firm that may be on both sides of the table.

 Peter Kubasek: [00:37:48] Thank you.  The reason that we decided to be sell-side only is because of our experience where the investment banker became part of the general community of the buyer world. So, because they served them all the time, even though they were “the sell side advisor”, they did so much financing and buy side work that their money really came from the buyer over and over. So, our vision was, we want to cut out that conflict. We want to be unconflicted. So, our culture at ArkMalibu is that we are unconflicted. We've been around the block. We've seen it and most buyers, see it immediately.

And the sellers take a while because they don't necessarily want to believe that they're not sophisticated enough to overcome that, bias or conflict. The second thing that we do is we're unorthodox. We take the time to have senior people and people that are on our advisory board and people that are friends of our firm, take a look at our client opportunities and give us their two cents.

So, you guys have been around investment bankers. The investment banker is always the smartest person in the room. Just ask them. We tried to be unorthodox so away from that orthodoxy in being humble and inviting people that are extraordinarily smart to look at our client opportunities and tell us what they're seeing. 

What are they seeing in the area of growth? What are they seeing in the area of pricing? What are they seeing in the area of innovation? What do they see in the area of supply side? So, a gentleman that just joined our team is a gentleman by the name of Mike Chaney. Mike managed $70 billion plus at Proctor and Gamble supply chain. The guy is so connected, is so knowledgeable that any time we ask him to look at something, he comes up with multiple ideas for our clients or potential clients on how they could improve prior to going to market. How they can secure prior to going to market.

 The last thing that we do is we're unrelenting.  As our clients and our potential clients talk to other people, we don't have no in our vocabulary. When something goes wrong, we figure out an alternative. When we're told, no, we figure out, what are they objecting to? How can we accomplish this?

We humble ourselves and go to the buyer and go, what did we miss? How could this have worked for you? So, I had breakfast with a potential buyer that backed out of, one of our deals. And I said, what did you see? What was your range of value? And what could we have communicated differently? And they were strategic and they said your confidential information memorandum screamed to us that you were wanting a family office or a financial buyer that they could roll equity into.

And none of us could even see in our CIM where we said that, but it was just finding out from them where it was that they were seeing a disconnect. So, when we look at the culture of ArkMalibu, we're for our clients, we've set up our business model to be unconflicted, unorthodox, and unrelenting.

 Steve Wells: [00:41:17] I don't know you well, Peter, but I bet you love going to work. You look like you're enjoying it so much and I think it's because you've made it so creative. Normally people say, Oh, these M&A guys are just a bunch of accountants and you’ve got the CIA, you're interviewing people, you're looking at models and what a good way to do that.

 One of the things we help our clients with, and I just wonder if this is something you run across. You've mentioned the black box. That's a word I use all the time, even when it's not a black box. And I love people to have black boxes and I love blue oceans.

Because, you have such opportunity when you have something new that you're not competing with to have such a huge up value. When you look at your go to market corner, do you have much opportunity to help people look at that? How they're going to market? 

Are you bringing in other people? And not everybody can create, blue oceans, but do you ever see that opportunity, what do you do? 

 Peter Kubasek: [00:42:13] Oh, absolutely. Thank you for the kind words I do love coming to work. I love our clients and our people and helping them, see the current chapter and the next chapter. We don't view that, a lot of our young people are going to be here in 30 years because they have goals that might not necessarily mean that they want to be sacrificing and taking calls on Sunday and working around the clock and building relationships. But we always try to remain in relationship with them. And that helps over and over when they've landed at large corporations. So, the go to market aspect, one of our other advisors was the head of innovation for Proctor and Gamble for a dozen years.

When he looks at someone's go to market, he sees avenues that I never thought of in a million years. So, we absolutely try to work and walk alongside our clients and say, if you had $10 million for marketing, if you had $10 million to exercise against a new avenue that you think would be productive, what would it be?

And then quite often we realized it's not $10 million that they need to do it. It's a person and it's $500K. And we just say, if you can show green shoots before the management meetings, we will have an area to be able to convince the buyers that they are exponentially going to benefit. 

Jeffrey Feldberg: [00:43:42] That's a wonderful story Peter and goes to show how the culture at ArkMalibu extends into every facet of your operations. We would love to go on and hear all the stories that you have and these adventures that you've been on. Alas, we start to wrap this interview up. One of the questions that we like to ask every guest and your answer could be on the personal side, it could be on the business side or somewhere with a mix of the two. Given where you are today, if you could go back to your younger self and tell yourself two or three important life lessons, success, lessons, anything at all, what would you be telling your younger self? 

 Peter Kubasek: [00:44:13] The first thing I would tell my younger self is what I've learned now that I'm 56, which is the story's wisdom, relationship skills that Uncle Bill taught me on a golf course, and around his dining room table, and talking across the fence to his next door neighbor, and in meetings with bank presidents and other things. I need to embrace those.

There were times in my career, I looked at it and thought Uncle Bill had a fourth-grade education.  I can't talk to people about Uncle Bill, because even though he was a multimillionaire way before his time, he didn't have the pedigree that most of my advisors today have. So, the first thing I would tell a young Peter is, embrace the reality that what Uncle Bill helped create a new is valued.

Second thing I would tell a young Peter Joseph Kubasek is take the time to enjoy your family.  My youngest turns 21 in a couple of weeks. And he's still reminds me that I missed one of his birthdays. The value of putting family above career, cannot be weighted or reviewed deep enough. The number of times that I flew away from vacation to try to save a deal.

I do not believe, and I don't know this statistically, but I do not believe a single one of those deals that I missed a kid's birthday for, or flew away from vacation for, added long-term value to my life or to my company's life. 

The third thing I would tell a young Peter Joseph Kubasek is laugh.  Every day I write down 20 things I'm thankful for.

And one of the things I write down every day is laughter.  We all work in extraordinarily stressful worlds. It's been a delight to have my sons home because they see me on a day in, day out, process in the morning and at the end of the day. And they oftentimes say, dad, your life is so full and so stressful.

We are concerned. When we did a renovation on our house, we put in a steam room and I steam with my sons at least three or four times a week. And we sit in there for 20 plus minutes talking and telling stories. I walk with my sons, I walk with my wife. I take the time to help them accomplish what they want.

Have the cornerstones, the Uncle Bill's. Be proud of them and embrace that reality. Take the time to really understand yourself and understand that making sacrifices is not always worthwhile and laugh.

Jeffrey Feldberg: [00:46:53] Thank you. Thank you for those life lessons and words of wisdom. If our listeners would like to reach out and find ArkMalibu, as well as yourself, where would be the best place for that? 

Peter Kubasek: [00:47:03] The best thing for them to do is look at our website, ArkMalibu.com or email me at Peter[at]ArkMalibu.com.

I am always willing to take a few minutes, make sure they mentioned that they heard the podcast, and brainstorm with them. And if it's not a deal that we can help them with to help them figure out who could help them with it. And I always offer that and I believe that we fulfill that. 

Jeffrey Feldberg: [00:47:30] Wonderful.  As we wrap things up here, a heartfelt thank you for your insights and your time.  

Steve Wells: [00:47:36] Thank you Peter, I enjoyed meeting you. 

Peter Kubasek: [00:47:38] Jeffrey and Steve, thank you for the time. Thank you for asking lots of great questions, bringing me down memory lane, and again, appreciate what you guys are doing to help people become prepared because it is invaluable.

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Investment Banker Peter Kubasek On Everything You Should Know About A Liquidity Event But Probably Don't (#026)
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