Chad Oakley and Sean Curley discuss the M&A market

We recently launched our new business, Charles Aris Transaction Services, which focuses on sourcing business acquisitions for our clients. In this episode of the Charles Aris Podcast, Chad Oakley and Sean Curley discuss this new venture and share what they are seeing in the M&A market.

Read the full transcription of this episode below:

Chad: This is Chad Oakley with Charles Aris. For those of you that I’ve not had the chance to meet yet, I have the honor and privilege of serving as the chief executive officer of Charles Aris Executive Search. Today, I am very excited to talk about the beginning of one of our newest divisions: Charles Aris Transaction Services. We are very fortunate to have the managing director of Charles Aris Transaction Services, Sean Curley, with us. Sean, how are you, man?

Sean: I’m great! Thanks for having me, Chad. I appreciate it a lot.

Chad: Absolutely. Sean, I will tell you it is March of 2023 and some pretty interesting times that we’re experiencing in the marketplace right now, wouldn’t you say?

Sean: I would say, oh my gosh, but you know, I feel like we’re always in interesting times.

Chad: Couldn’t agree more, Sean, and I want to get into that here in just one second as we go through this, but first and foremost, why don’t you start by just telling the listeners a little bit more about yourself?

Sean: Sure, Chad, I’d love to. Before joining Charles Aris, I was primarily an operator running a few different businesses in the U.S., Canada and Europe. Before that, I spent a lot of my career in sales and marketing roles, as well as operations roles. Along the way, I’ve both bought and sold businesses and integrated a bunch of them. From an industry perspective, I’d say I’m pretty comfortable with industrial and consumer products, as well as the back ends and applications that connect them, and certainly the service businesses that support them.

Chad: Well said, Sean, and, of course, your background is exactly why we recruited you to lead Charles Aris Transaction Services. You have the perfect background for it. Let’s talk about the transaction services group within Charles Aris. If you wouldn’t mind, give just a little bit of an overview to all of our listeners about what exactly is Charles Aris Transaction Services.

Sean: Sure, so actually explaining our services is pretty simple. If you think about it, just like Charles Aris Executive Search delivers great talent for our clients to hire, Charles Aris Transaction Services delivers great companies for our clients to acquire. It’s actually that simple.

Chad: Yep, I love it. I love the simplicity about it. So, let’s go back to the earlier subject, the big question that we talked about earlier, which is that we are in some interesting times, right? For our listeners, this is March of 2023. Jerome Powell and the Federal Reserve have made it incredibly clear that their number one enemy right now is inflation, and so they have dramatically increased interest rates in order to stem off that inflation, and that of course increases the cost of debt and lowers valuations. There’s a huge disconnect, on average, between the valuations that sellers are looking for, and of course, the new prices that buyers can pay. There’s talk of a looming recession that we’re dealing with, right, and a general feeling of uncertainty. What are you seeing in the marketplace and how are you thinking about that?

Sean: I feel like we spend a lot of time talking about things in the aggregate or in the macro: Markets and industries and businesses. That is extremely valuable, recognizing trends and understanding the environment, but the way I think about it is that deals are done by people, and people are individuals with their own priorities and circumstances and timelines. These articles, and I’ve read a bunch, describe and foster anxiety, uncertainty, worry, and to be fair, they also provide comfort, actually, in the confirmation that others are seeing the same things we are. But all of that potentially lowers expectations, and it causes us to think and doubt and wait. Generally, I think we need to not wait. Think about it this way: Eventually, we’ll all look back in awe of things that were accomplished during the next recession.

Chad: Sean, you’re bringing back good memories for me. I started my career in consulting. I spent some time at Deloitte, went to the University of Pennsylvania for my MBA and then I joined Bain and Company, and this was drilled into my head, this concept that you’re talking about, which is: On average, companies that invest in acquisitions during a downturn always outperform those that didn’t, once the recession is over. So, it’s hard to do, right? Fear for most of us has us pause and say let’s be less risky. But in turn, for companies that can overcome that hurdle and make those investments, by far they outperform competitors on the backend of the recession. History would indicate that making acquisitions in a downturn is a very healthy business decision, if you can do it.

Sean: Absolutely. Chad I’d be dating myself here, but I’ve actually worked through four recessions during my career.

Chad: I got a few under my belt as well.

Sean: In times like these, I think about fundamentals, you know, head down, work smart and fast. If we think past the brief slowdown of Covid-19, it’s been 14 years since the last time we were in a recession. We probably have really strong, experienced leaders in our organizations who’ve never worked through one. To them I would say stay the course. That’s probably stating the obvious a little bit, but we know there’s uncertainty, and we shouldn’t let it paralyze us. There’s actually opportunity in uncertainty. Once all this uncertainty clears up, everyone else will rush in. Now is the time to get great deals done. Our job is to create value, and that’s exactly what the market needs from us right now: Create value by doing smart deals. Deals are still everywhere. They just need to be uncovered by us.

Chad: What evidence have you seen that would indicate that?

Sean: Let me start with what our clients are doing. They’re moving forward by being very active and open-minded, and they’re winning by asking us to create more meaningful conversations between them and business owners. It’s that deep engagement that uncovers more productive ways to partner with each other and to land a deal. To get to your question about why I’m confident, I tallied up the results I’m seeing just in the last few weeks, and just for one particular segment, where we’re working on creating a new platform for one of our clients, of 120 business owners I reached out to, 60 of them were willing to have a meaningful conversation. Out of those 60, over 20 were interested in discussing a potential deal. Several of them are already progressing in the process. That’s just in one segment. So, I would say of course, do the diligence, use your models and refine your approach based upon the current situation, but then follow your gut and get good deals done. Connecting with owners personally on what’s important to them, their employees, their customers and their legacy is critical to getting to ‘yes.’ Charles Aris Transaction Services can help you get there.

Chad: If I’m just doing some of the math, if you just get out there and kiss the proverbial frogs at this moment in time, 20% of those frogs are saying ‘let’s talk.’ And not just talk with us but actually proceed further to talk to a potential buyer at that particular time. What I like about what you just said is that you can’t just make it about the money. If someone’s going to sell it has to be financially rewarding, but for the vast majority of owners that we interface with there’s so much more to it. There’s a trust building that has to occur in order for them to ever get comfortable with you because they want to make sure that their legacy, their employees or customers, that everyone is taken care of, even after they’re gone or maybe they may not be in the same role that they had before. That trust takes multiple conversations. So, start those conversations now. That’s how you actually get to a ‘yes’ at the end of the day.

Sean: You bet.

Chad: Awesome, Sean. We are incredibly excited about Charles Aris Transaction Services. If you would like to learn more about Charles Aris Transaction Services, you can reach me directly at chad.oakley@charlesaris.com and you can reach Sean Curley directly at sean.curley@charlesaris.com. Thanks everyone! Happy recruiting and happy transactions! We’ll talk to you soon.