The Secret Strategies of the Ultra Wealthy with Greg Smith – EP 151

Interview with Greg Smith

Brian Preston

The Secret Strategies of the Ultra Wealthy with Greg Smith

With a career spanning over five decades, my guest today, Greg Smith, is a master in asset management and strategic planning for ultra-high-net-worth families. His portfolio ranges from M&A in commercial banking to fiduciary responsibilities in tightly regulated sectors like aviation, chemicals, and real estate investment.

In our discussion, we explore a wide range of topics – from optimizing debt-to-equity ratios to the nuances of investing leverage and due diligence, from both the buyer’s and seller’s perspectives.

Whether you’re on the buying or selling side of a transaction, seeking to maximize deal flow, or aiming to refine your wealth management strategies, this episode is a must-listen.

In this episode, you’ll learn:

✅ How the ultra-wealthy strategically maximize cash flow, reduce risk, minimize taxes, apply leverage, and build long-term wealth.

✅ Best practices for engaging investment bankers for deal structuring, negotiations, property acquisitions, raising capital, and tax-efficient business exits.

✅ Tactical due diligence checklists for buyers and sellers to ensure you’re covering all bases.

Featured on This Episode: Greg Smith

✅ What he does: Gregory Smith is a financial advisor who has managed the business interests of ultra-high-net-worth clients across several industries. He’s led dozens of business mergers and acquisitions. He has been at the forefront of multiple bank acquisitions while leading challenging transactions in the aviation, chemical, automobile, finance, real estate, and insurance industries. Greg has worked with regulatory agencies of all types, including the Treasury Department, the DOT, and the FAA. Greg specializes in offering a nuanced perspective that considers all transaction elements, both human and financial. He is the author of the book “No Locked Doors!: Master the Keys to Transform Problems into Possibilities.”

💬 Words of wisdom: “At the end of your life, people are going to remember how you impacted other people’s lives.” – Greg Smith

🔎 Where to find Greg Smith: LinkedIn

Key Takeaways with Greg Smith

  • Why choose alt. assets over treasuries
  • Leveraging cash flow for risk mitigation
  • Why the wealthy skip personal guarantees
  • Smart tax-planning for exits
  • Margin loans without downside risks
  • Using failure as a launchpad
  • When to engage investment bankers
  • You only get what you negotiate
  • Relax and enjoy the ride
  • Relationships over transactions
  • Why listening is a superpower

Greg Smith on How to Achieve a Tax Efficient Business Exit

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Read the Full Transcript with Greg Smith

Justin Donald: Well, hey, Greg, great to have you on the show today.


Greg Smith: Justin, it’s my pleasure. Thank you very much.


Justin Donald: Well, this is fun. You and I got connected through a mutual friend, who you know very well, Kasim Aslam. And Kasim is a member of the Lifestyle Investor Mastermind. So, I’ve gotten a chance to know him. He’s a member of Front Row Dads. And so, we are in a couple of communities where we get a lot of time to hang out and have a lot of entrepreneurial type of conversations. And that guy is a million miles a minute with ideas and efficiency and hacks and is just such an impressive guy. So, I’m appreciative of him recommending you to us.


Greg Smith: Now, that’s great. He’s definitely on fire. We just recently sold his first company for a substantial amount of money, and I think he’s a serial entrepreneur with many more deals in him, so it’s been a pleasure to know him. I’ve known him since 2005 and we got to know each other and we began a little mentorship. He wasn’t sure that he needed it or wanted it, but he got it anyways. And I think the results have proven themselves quite well.


Justin Donald: Oh, well, he raves about you, and I had the privilege of hearing you speak in the Front Row Dads community. And I’m like, “We got to showcase Greg to the world. I want people to know who Greg Smith is.” And you’re unlike anyone else in your space because your experience spans so much further than most investment bankers because most investment bankers are kind of brought in to facilitate a transaction, either on the buy side or the sell side, right? Whereas you actually have experience running companies and you’ve owned the companies that you’ve actually bought or you’ve owned the companies that you’ve actually sold. And so, it’s a little bit different of an experience when you have that type of pedigree.


Greg Smith: Yeah, it turns out that most investment bankers have not run businesses, and much of my history, Justin, is managing businesses for ultra-high-net-worth families, and because their interests were diversified, I’ve been involved in quite a few regulated transactions. By regulated, I mean regulated by the federal government. So, I’ve worked on change of controls of applications for financial institutions, maybe some 40 or 50 community banks across the country. Airlines, we had a family get invested in an airline, which is an interesting story because I ended up running it, which I didn’t plan to do. Chemical companies, real estate, insurance, and this has brought about a great deal of depth in understanding the business owner.


So, when we get involved in an M&A transaction, whether it’s sell side, buy side, maybe recapitalization, we really look at it from the standpoint of the owner, the shareholders, the constituents to the company. And even the employees, their families, vendors, clients, customers, relationships, we’re trying to think about all those things because they’re important to what’s about to happen, whatever it might be.


Justin Donald: Yeah, your background is incredible. I mean, I haven’t met anyone that has run so many different types of companies and has had some sort of strong investment, whether it be via you directly or via the family office that hired you and brought you in as the operator. But I’m curious how you got into this space. What was early work life like for you? And how did you become an operator that could run such massive companies and some that have a lot more red tape on them than others because they’re regulated?


Greg Smith: Yeah, the regulation part is an interesting element. And even today, as a registered rep of a FINRA member broker-dealer, I’m regulated by the SEC. So, I just can’t seem to get away from it. But thankfully, it’s all worked out very, very well with me and the regulators of all types and all kinds, whether it’s the Treasury Department or the FAA or the Department of Energy or whatever it might be.


To answer your question, the short answer would be that coming out of college, I started working in a bank and it happened to be the predecessor to Wells Fargo Bank here in Minneapolis, which is Norwest Bank. And Norwest Bank ultimately merged with Wells Fargo Bank in 1998. But of course, this was 1972. So, that’s a long, long time ago.


And I started part-time while I was going to school. I graduated, took a position as a credit analyst. It was a two-year training program. They cut it short in about 11 months. All of a sudden, I was a commercial lender in 1972, and in that economy, you really couldn’t make a bad loan. Everything was booming in the early 70s, in the mid-70s, but I didn’t really see my career as a banker, and the progression seemed to be a long, long, long journey to ever become a president of a bank.


So, I vectored to the left and became a CPA. I didn’t have an accounting degree. I did not have a CPA license, but the firm knew I could bring in business as a banker. And so, they hired me more on biz dev experience than they did on any accounting credentials, which I subsequently got. And in two years, I was fully licensed and practiced the minimum amount to have a CPA license left.


Justin Donald: By the way, super clever of that CPA firm to hire you because that’s not normal.


Greg Smith: Not at all.


Justin Donald: I mean, major credit to them for having the foresight to recognize what you could bring in by just training you upright and utilizing your network. That’s really cool.


Greg Smith: Well, yeah, it was a slick move. And quite frankly, how that came about was I set it up, if you will, as an informational interview, and I’ll share this with your listeners because it was really not so much an accident that this happened. I set it up as an informational interview with the partner in charge of the firm.


And he was interested because he knew me at the bank and we were in the same building. He was just 12 stories over the bank, which is on the first floor. The CPA firm was up on the 12th floor. And he thought, “Well, this is kind of curious. I’ll take that meeting.” It was very impromptu, and he was kind of interested to know what was on my mind. And I just went in to stage an informational interview.


What I really wanted was to come and work for the firm, though, again, no accounting credentials, no accounting degree, and no CPA license. He made the decision on the spot. I mean, once we walked through everything, and I had to make the commitment that I would finish the education and get the license and take the tests and all the rest of it, at the time, it was a two-and-a-half-day examination to pass the CPA test. I mean, your head explodes just thinking about planning for it.


Justin Donald: It sounds rough.


Greg Smith: Yeah. Well, it was. And of course, no computers, no handheld calculators in the room. It was all paper and pencil. Again, this is 1978, 1979. We didn’t have the technology that we have now. So, there’s a chapter in my book, actually, maybe we’ll talk about this later, where the gentleman I ended up reporting to came in from vacation after two weeks, found me sitting there in the office. And here, again, I don’t have the academic credentials and the license that he would expect, and yet, I’m hired. And the decision is made by the managing partner.


It was an ugly situation for a couple of years, but I was there with intent and purpose for a goal and an objective, which then enabled me, getting to the answer again to your question, to present myself to several ultra-high-net-worth families, and ultimately, ended up working with one of them. And I got about 30 years of work done inside of 20, crossing a number of industries and interests and managing their investments through many, many, many different companies.


Justin Donald: So, what was the first company that the family office brought you into? Is that the chemical company? Or did they get you involved in real estate first? I found the family office is often, like they’ve got the hacks, they’ve done a lot of research, they know the game is real estate and private equity, and specifically, on the private equity side, that it’s likely insurance or outlying businesses with large margins.


Greg Smith: Yeah, in this case, it was really more about capital and how to leverage capital. So, the key investment was community banks. And at that time, there were almost 13,000 community banks in America. Today, there are fewer than 5,000, I think around 4,700, something like that. So, you can see there’s been a tremendous roll-up. And that’s in part because the regulators, they think we’re like Canada, which at one time, we had only five charters and could save a few more today. But clearly, the regulators have been shrinking the number of banks, which has fewer banks to regulate for the federal government, as I said, now, fewer than 5,000.


But the game of capital leverage in a bank is simply to make an investment in a bank, a financial institution, which will require a capitalization of maybe 8% to 10% of assets, and then the other 90% or 92% or 93% or 94% of the capital structure is really the deposits of the customers. And so, if there was ever an analogy to OPM or other people’s money, this is it. It’s using the deposits of the bank, and then the leverage and the power of those deposits and the 7% or 8% or 9% capital that the investor brings to deploy those into assets that are earning 200 or 300 or 400 or 500 basis points more and not mess it up.


So, you can’t make too many mistakes if you’re investing in Treasury bonds or Treasury bills unless you’re on the wrong side of the interest rates or the interest rate curve. But you can make a great deal of money investing in loans or credit or alternative assets. And the banks that the family had at the time were only two or three at the end of 20 years, and we sold the group of banks that we’re on, there were over 114 locations in seven different states.


Justin Donald: Wow. They would buy the banks outright then, full ownership.


Greg Smith: 100% ownership.


Justin Donald: Yeah, that makes sense.


Greg Smith: Yeah. And my job was to go out and work with the boards, the owners, the officers, help them through the transition, affect the transaction with the regulators, get the deal closed, and then handle the subsequent conversion into the systems, policies, and procedures of the family that own those banks.


Justin Donald: And by the way, what a smart move that you buy these institutions that are profitable. You’ve got capital that you need to deploy. You can really kind of assess and mitigate the risks because you are in charge. You have 100% ownership. So, it’s a brilliant strategy. And then, for you, from an experience standpoint, you experience buying 40 to 50 different banks, and then you actually ran some of them, right?


Greg Smith: Well, I did. In fact, there was a transaction we did where I was able to get the family 100% approved for a publicly traded bank. So, it could have acquired all of the stock. And the first move was 24.9%. But everybody knew that the family could make a 100% move on the stock. It was publicly traded.


And at that juncture, the chairman of the board, who was a Goodyear Tire salesman and a franchisee, decided maybe being the chairman of that bank was not what he ought to be doing. And he asked me to be the chairman. Of course, I asked the family, “You all want to be on the board?” And they said, “Nope, that’s your job.” And I was out front on almost all these transactions. So, yeah, I’ve had a pretty wide experience.


And again, community banking was a real niche area for this family. And many high-net-worth families specialize in a particular area that they will more or less stick to. And then, occasionally, as their wealth expands, they will do a bit of diversification. You mentioned real estate, and certainly, ultra-high-net-worth families are invested in real estate. There’s no question about it because of the tax advantages. But this family also invested in deals that were just basically straight-up cash flow deals. So, if the multiple was right and there was a growth element that didn’t require a lot of capital expenditure and tying up a lot of cash, that was probably going to be the next investment.


Justin Donald: Oh, I love it. I love cash flow plays. That to me is the sweet spot. That’s kind of how I got started. And once you have enough cash flow, then you really do need to figure out some additional strategies because you can’t just have cash-flowing assets. But most people, I find, really don’t focus on the cash flow and they get themselves involved in all these businesses that may or may not have an exit for 15, 20, 30 years. But they don’t have the means today to live the life that they want to live. So, I love the cash flow angle. I know banks specifically aren’t probably kicking off a crazy amount of cash in the short term, but you’ve got a lot of capital to invest in things that do kick off cash in terms of loans.


Greg Smith: Yeah. And as investor goes, you can be asset rich and you can be cash poor. And it’s also a matter of evaluating risks and then how much leverage do you want to introduce. And in almost all the deals I’ve worked on, there’s a pretty hefty load of leverage. But we do it on the right side of the interest curve or we lock interest rates or go forward on debt cost and then have flexible exits on how to move things around as and when we need to.


And I’ll say another thing about families that are established, and I share this with your investors, is personal guarantees are almost essential for an early-stage investor or a young company. And if it’s two or more persons, then you’re dealing with what the bank will refer to as joint and several liability. So, you get to pick your partners carefully because if there is downside, one or the other may carry all of the risks of repaying the note if the company is unable to pay it either through its cash flow or a liquidation of its assets. That personal guarantee is a real liability.


And when disclosing a personal financial statement, it’s an obligation of a borrower to disclose contingent liabilities. And people that have established themselves rarely will agree to sign a personal guarantee for the business loan that they’re arranging. And the banks come to help those borrowers as established business people who will not default. Now, that isn’t always the case, but the trend for high-net-worth people is to avoid personal guarantees and recourse liabilities at all costs because it really hues the balance sheet in terms of the strength of the balance sheet. And any contingent liability is marked as a debt, even though it isn’t a real debt until it’s called on by the banks. And so, that can really harm your borrowing capability and your liquidity capability.


Justin Donald: Yeah, 100%.


Greg Smith: Hey, we’re getting into a lot of details here, Justin.


Justin Donald: I love it.


Greg Smith: I didn’t know we were going to drive down too far. But if we’re down too far, we can come back up a little bit.


Justin Donald: Oh, this is awesome. This is great content. And I think, I mean, anyone who’s not doing a personal financial statement with regularity is definitely missing the boat. I mean, I think it’s good. There are a lot of people in our community we talked to, kind of doing it once a month, but at least, a couple of times a year, I think it’s really smart to know where you stand, what is your net worth, what are your liabilities, what is your cash flow. Any type of statement that you would ever want to figure out if you should invest in a company, you want that for yourself to understand how banks want to invest in you, for whenever you need money to be able to start something to buy an asset. So, I think this is all great content.


Greg Smith: Yeah, it’s essential. And let me add too, Justin, that not only is our balance sheet important for now and knowing what am I going to do next. But if a business owner or business partners are contemplating an exit, they’ve got to start planning the tax consequences well in advance, or they’ll just take an absolute shellacking thinking that they’re coming out with a certain dollar amount net of the bank debt or whatever the financing might be. And then they find out the tax consequences weren’t carefully planned for, which, I mean, we look at the tax consequences in every transaction that we work on for every client that we have.


If we’re on the buy side or the sell side, we try and move as much of the tax obligation over to Uncle Sam as we possibly can and make the deal tax efficient. So, I would just add that in terms of individual investors looking at their own balance sheet, whether it’s highly diversified or not, to look at the tax consequences of any exit because liquidity is great, but there’s no free lunch.


Justin Donald: That’s right. Yeah. We talk all the time in the Lifestyle Investor Mastermind community about optimizing for taxes, especially when you’re about to have an exit, and the strategies that can be employed prior to that exit, so you can take home more cash. And so, it’s funny, we started this episode talking about Kasim’s business that you helped him sell. And interestingly enough, we’ve got about 145, 150 members in the Lifestyle Investor Mastermind, and we ended up having double digits of them close, like sell their company. I think the final number ended up being 23 people sell their company last year after a strong recommendation that the market’s probably going to tank. And it makes sense if you can get a good offer to sell it.


And we had so many people, we had people in our community all the time that come in after they’ve had an exit and they’re always like, “Oh, I wish I had found you ahead of time because I would have used these strategies to mitigate some of the tax implications that we were in when we sold our company.” And some people, they do more of an installment sale, so there’s a little bit more time. I’d love to talk to you about some of the tax code impacting a purchase or impacting a sale, pretax versus post-tax dollars on an exit, like any of that, I think, from a strategic standpoint would be really cool to discuss.


Greg Smith: Sure. And we can do that. In a sell side transaction, if the owner has engaged an investment banking firm, the investment banking firm will cover all types and kinds of transactions as part of the arrangement for the engagement because the investment banker and the owner of the business really have no idea when they begin the process how this is all going to evolve. And if the investment banker is exclusive, meaning he’s solely working on this project for some sort of a success fee, he’s going to be pulling out, or she, all the stops in terms of exploring what is the highest and best transaction that can evolve for the company.


And as I mentioned before, I always take a look at the consequences of the successor employees. Will the jobs be there? Will the factory be closed? Is the building going to be leased off to somebody else? Those are all factors. And the owner of the business is driving the bus, but we try and ask all the right questions so there’s no surprises. If I bring in an offer and 30% of the workforce is going to be cut, maybe that’s not such a great idea for the seller.


On the other hand, he may say, “If it’s the best price, I’ll take it. I don’t care about the employees.” I mean, it does happen. So, you have to get all that aired out ahead of beginning a transaction. And then once you start, well, you’re kind of out in the marketplace.


Now, as to the tax consequences, it really depends on the currency that you’re selling your company for. So, are you selling your company for all cash at closing? Are you selling your company for stock in another company? Maybe your company will become a division of another company. Maybe you’re selling it for cash and stock. Maybe you’re carrying the note, maybe you’re selling it with seller financing, or maybe the loans you have in place are now assumed by the buyer.


So, let me give you an illustration of one transaction as an example. We had a company that went to the market to sell. They were open as to cash or stock. They sold the company, this aggregate of companies, it was a conglomerate of companies, for a negotiated number of shares in a much bigger company. So, Justin, it was a stock-for-stock exchange.


The tax consequence of a stock-for-stock exchange, essentially a cashless transaction, is there’s no tax. The tax is deferred. Now, the seller exchanged his stock for 9 million shares of the buyer’s company. And it was a minority interest, and the stock was trading at $36 a share. So, you can do the math on that, it’s probably around $350 million. But there was no tax paid, so the entire value of the transaction was pretax. And as it turned out, that stock moved from $36 to $72. And it’s just a coincidence that it topped off at exactly 2x the number. Now, did the family that held those 9 million shares sell at 36 or 38 or 42 or 51 or 72? I don’t know.


Justin Donald: I’m guessing not. But I would take some money off the table for sure.


Greg Smith: Let’s say that they probably took some money off the table and they would have paid at the then rate, long-term capital gains tax rate, as opposed to ordinary taxes. So, for example, just a sidebar for a moment, if they had taken some of the sale proceeds in the form of compensation on an employment agreement for the next two or three years, let’s say a million dollars a year for three years, that would be ordinary income.


Justin Donald: That’s right.


Greg Smith: At that time, the tax would be almost 2x, what it would have been at long-term capital gains rate at that time. But they put all the chips on the table and they said, “We’re out, you’re in. We’re now a division of your company and we’re leaving the scene and we’ll take it all in stock.” And it just happened to be that they got a 2x return or, as said in the industry, a double balance on their investment without a single dollar of tax paid.


Now, if they had sold at $72, and actually, top picked the market, which rarely anybody can do or should try, by the way, then they would have paid capital gains tax on the delta from their basis, which, of course, was very low. They were founders of the company, so there was practically no basis whatsoever, all the way up to 72. But as things go, Justin, the economy turns and moves, and that’s why we have to think about global markets and put things in context because we ran into the subprime market for mortgages in 2008, and that stock is $72, at that time was trading at $8 a share.


Justin Donald: Oh, my goodness.


Greg Smith: So, did they sell? Did they buy more? We don’t know. But we have to take all those things into consideration when we’re starting to put the transaction together, particularly leverage transaction. We have to be very clear in our mind, what currencies would we take? If somebody needs cash and they need to get it over with and they have a higher and better use for it, they may not mind paying the tax and getting it over with, so they have the cash to do the next deal. We work with many serial entrepreneurs who will rarely take equity in somebody else’s company because they have no control. They’ll trade their company out, they’ll take the cash, they’ll pay the tax, and now, they’re liquid and they can apply that cash along with leverage to the next deal and the next deal and the next deal.


Justin Donald: I love it. And when I look at a strategy like that of taken capital, I probably dollar cost average out over a period of time for hopefully, like a better-blended stock rate, but I would be really inclined at a double bounce to take the majority of the chips off the table and just pay the long-term capital gains tax. And the other interesting thing is what a lot of ultra-high-net-worth families will do is they’ll hold on to the stock, and instead of selling it, they’ll borrow against it, they’ll use margin. And that way, it doesn’t cost them anything. There’s going to be a lockup period on a transaction like that. So, they really probably can’t do anything for six months or so, maybe a year, but you can borrow against it immediately, right?


Greg Smith: It’s called a Reg U or universe. It’s called a Reg U loan. And depending on the type of loan, a bank can lend 50% or up to 70% against a publicly traded security. So, that’s basically on margin. And we have a very good friend who’s just a wonderful person, an immigrant to the United States from another country, and built a very successful business, owned it, got capital, private equity. The business expanded. It’s in multiple states, not a franchised organization, and decided to take the company public.


And as it became public, obviously, he was diluted as more and more shares were sold, but he still had a very substantial interest in the company and the company was trading at about $20 a share. And so, he wanted to support the stock and support the company and support the whole momentum of the growth of the company. And he started doing exactly what you just said. He was borrowing against the stock that he owned and he owned a lot of it, and he was borrowing 50%, 60%, 70% against the stock. Incrementally, a little bit at a time, and the stock rolled on up to about $63 and he was borrowed against it.


And the stock that he was buying had to be from people that were selling. And as it turned out, his key officers were selling while he was buying. Think about it. He had many officers and many people in the management and middle management and upper management of the company, as it turned out, their transactions had to be disclosed later on, were selling as he was starting to pay $25, $45, $55 for the stock, $65 for the stock. They were exiting, he was buying, but he was doing it on borrowed money.


And as it turned out, when he stopped buying the stock, the stock price started to come down. And it came down a lot faster than went up. And the banks started selling out his position. And pretty soon, they had sold a substantial part of his portfolio. He maybe had 30% of his holdings left after all the debt was paid off. So, margin loans are great. But if you’re on the wrong side of the economy, it’ll eat your lunch. And it’s interesting how that all evolved. He ended up working for free for the next two years but for stock options.


And today, he’s worth probably $800 million. And it all has come back to him because he decided he’d move all of his chips in and say, “I’ll work for free. Just give me stock options and I’ll rebuild the company.” And everything worked out fine. But what a ride that was. Can you imagine?


Justin Donald: No. And that’s putting a lot of your eggs in one basket, which most entrepreneurs do, is they put all their eggs into one basket instead of diversifying. You see, a lot of wealth is developed and created really via concentration, but a lot of wealth is maintained over the long haul through diversification. So, it’s fascinating to hear the stories, see the risk profile. You don’t hear too much about the people that don’t make it, which is the majority. But you hear about the small percentage that do and how it worked out. So, to me, I have a hard time being too concentrated in any certain thing or having anything, even if I got chips on the table and they’re all in one space, all on a single exit, I feel like I need to diversify immediately.


Greg Smith: Yeah, yeah. Well, I would add this, Justin. What you said makes all the sense in the world. I mean, it’s Warren Buffett 101, right? Diversify, being Coca-Cola, own trains, being the food business, own industrial buildings, I mean, that is a good way to manage risks. We have also seen those families that were singularly focused in a single industry and happen to get completely wiped out and go into bankruptcy and hit the absolute bottom and be completely insolvent and come back and make fortunes. I mean, not hundreds of millions, but billions.


And the harder they fell, the higher they come back. Not everybody can do that. But going to the bottom doesn’t mean you’re done. It means that you’ve got a lot to think about. You probably learned a lot along the way of both the ascent and the descent. And now, you have a choice to climb back out. And these people that climb back out are, I mean, they should be writing books because those are the greatest lessons in life as now you come back out of a complete wipeout like that.


Justin Donald: Totally. So, I’m really curious and I think our audience would be interested to learn, how do you know when you should bring on an investment banker? And should you be engaging a top firm? Are there mid-tier firms? And then how do you know when you should not be engaging an investment banker?


Greg Smith: Well, I don’t want to be accused of a self-promote here. So, with all my disqualifiers up front, I am licensed as a registered rep. And this is not about promoting investment bankers in any way. But I would say this, if a seller has built a business and is considering his options, he should at least engage in a conversation with an investment banker.


And to be practical about it, there are some investment banks that are just too big to take on some companies, they’re too small. You have to find the right fit. And there are companies that are too big for an investment banker who may be too small to represent or doesn’t have the acumen perhaps to represent that particular type or kind of business. There are investment bankers that specialize in different industries, in different verticals, and it may be that you want to specialize with that type of banker for the representation.


I would generally say, and I’ve said this to all my clients and to many others, that a business owner is often going to fail at the task because he has no experience in how to run what we call a competitive process and manage it, which we can do as a third party, though we’re engaged by the seller if it’s a sell side transaction. The conflict with the owner selling his own business is he’s got all the bias in the world and he can’t be independent to the transaction.


Justin Donald: And he has to continue running the business. And if you spend all your time doing it without an investment banker or a professional, then that takes away from the business.


Greg Smith: We’ve seen it happen time and time again. I don’t need a banker. I can do this myself. I’m a sophisticated individual. I know five guys that I shoot birds with. Any one of them would like to have my business. I’m going to sell it to a friend. We’ve already had that conversation. I met this guy in a pub the other night. I mean, it just goes on and on and on.


But what inevitably happens is at the most sensitive time for the business to be showing lots and lots and lots of black ink, it doesn’t. The margins start to fade. People start to question, what’s going on? Where’s the guy’s head at? It’s running the business. It’s not in the business. It’s in selling the business. He’s having all kinds of clandestine meetings. He’s nervous. He’s anxious. His mood changes or her mood changes.


And it’s just a really tough spot for everybody, for the owner of the business, to start parlaying the business out into the community. I mean, the first transaction I ever did in the M&A business was to sell an operation as a dairy, meaning they had cows and they made cottage cheese. And we sold it to a company in Europe. And this was even before 2000. I mean, this is in the late 1990s.


And we had the hunt all over the world to find this company that had this particular type and kind of interest in this particular dairy because of its particular products. And we got the absolute best buyer, and the seller was shocked. They couldn’t imagine that they would be engaged in a conversation like that with this particular company. The buyers, the name you would know, I mean, they’re a big yogurt company all over the world at this juncture. But this was 23 years ago, 24 years ago.


So, if the bank is doing a good job in this digital world, they’re all over the place looking for the right buyer. And again, as I said before or started to say, it’s not just the price, it’s the terms. And many times, the terms are going to be more important than the price. And of course, who is the buyer? What’s the outcome? Well, my employees have jobs and all the rest of it.


Justin Donald: Yeah, love it. I mean, so much great insight there. And whenever I go to buy a business, whether I’m buying the whole company, whether I’m investing in a smaller piece of equity in the company, maybe it’s a bigger company and I’m just getting a few percentage points, maybe it’s a medium or small-sized company, I’m buying the whole thing, I’m always wanting to have the best due diligence process to evaluate this company, make sure that there’s no bias on my end, make sure that I’ve got advisors around me that can speak to me. I’d love to hear your thought process or any hacks that you have on the due diligence side.


Greg Smith: Some of the best advice I got on this was, in the late 90s, from a gentleman that was known to just burn lots and lots and lots of time looking at deals and not buying them, and he would frustrate people like crazy. But he had a family office, he had resources on his team, he had CPAs, accountants, lawyers, people in insurance so he could assemble the team of people that worked for him and represented his interests, or he could bring in outside third parties if it was Deloitte Touche or Coopers or CPA firm or whatever resources he would need.


But he told me if I was going to be successful in business representing ultra-high-net-worth families, which he was one, was that you have to look at a lot of deals. That means if you’re going to look at a lot of deals, you have to get through it quickly and efficiently and find something that either is going to work or it’s got too much risks and you have to move on. And it’s very costly and painful to get tied up in somebody else’s process who’s a seller and you may be a buyer if it’s going to drag on and on and on and on and on. And momentum and inertia are powerful forces, and they can go both ways. They can help you and they can hurt you.


So, when we’re working with anybody on the buy side, we try and zero in on exactly what they might be looking for. And we do work on buy side transactions. Investment bankers work on both sides of the transactions. But as a buyer, whether you have a team assembled or not, it takes a lot more than just common sense in terms of evaluating what the seller is showing you, what he didn’t show you, what you need to ask for.


We typically work with a pretty standardized list of documents that we have to have before we can even spend any time at all. And if we can’t get them or there’s a delay in getting them, we just put the deal on hold until we can get them because we’re just not going to waste the time until we have pretty much a full deck of what it is we’re looking for. And again, you could probably find checklists like that on the Internet, but then it’s the skill set in asking those questions, knowing if you’re getting a real answer, you’re getting a lot of smoke in the room and it’s getting cloudy.


And of course, sellers have representatives as well. So, they’re going to put people up in front of themselves to represent the material, the information, the questions that are being asked and answered. It’s kind of a game back and forth to figure out how this all works. And at the end of the day, you get what you negotiate, Justin. You don’t get what’s fair, you get what you negotiate. So, you better have good resources on both sides, whether you’re the buyer or the seller, to know what you’re doing and what the results are going to be before you get stuck with it.


Justin Donald: Oh, it’s such great insight. And by the way, I’d love to talk a little bit about your book, No Locked Doors! So, you’re making a statement here in the title of this book and I know that you discuss a lot of deals, a lot of strategies, a lot of the things that you’ve experienced success with. But I’d love to have you share with our audience some of the content that’s in this book and even why you decided to write it.


Greg Smith: Happy to do that. The book started out as a book of obligation, as the resources for the book were given to me by someone I started mentoring in 2005. And having run a lot of companies, I’ve had the opportunity to mentor quite a few young people coming into various businesses that I’ve been managing.


This gentleman really didn’t come to me as an employee or resource within a business at all. I was running a bank at the time and he was introduced to me through a mutual family friend. He was transitioning from one single parent to another single parent. He was 20 years old, had not completed college. He was unsure about what he wanted to do, but he did not want to work in his father’s business. He wanted to find his own way and be his own guy and have his own place, but he had never done any of these things.


So, this mutual family friend said, maybe you could mentor him a little bit. So, we got to know each other. We spent some time with each other, and as the years unfolded through various fits and trials and successes and failures, he finally was able to land on a successful business platform that he built and developed. We enabled a few resources along the way to help him, and it turned out that he became very, very successful in his niche area.


So, he said, “Greg, you really should help others as you’ve helped me, but there aren’t enough hours in the day. So, would you write a book?” And I thought, “Well, I got plenty to do. And I’ve just been a pilot. I’m mentoring you. And I got to get back to work and do what I got to do. And I had no time to write a book.” Well, he gave me a beautiful leather book filled with 200 blank pages and a lovely pen. And he said, “Here you go. Just start writing your book well.” I would take it with me when I was traveling, but I never really got anything put together as a book.


So, he gave me a gift one day, and it was a lovely gift. And it was from a company in Austin, Texas called Scribe Media. And they have resources all over the world that it’s kind of like a who’s who of some amazing people and they’ll pair you up, and my mentee gifted me these resources. So, it was a gift of obligation because it was paid for. And Scribe partnered me up with some amazing people, and 18 months later, experiencing the journey of writing a book, we came up with a book. And that’s the book, No Locked Doors!


And No Locked Doors! is a book of various experiences I’ve had with challenges in my life, mostly business-related, some personal-related, some family-related, but situations where I was approaching something that was getting to be so complex and so difficult that it would have been, I would say, generally easy, though, maybe difficult from the shame of failure to walk away. And I learned along the way that when you have a locked door and you are trying to find the key, you have to change your perspective. You have to change how you think and you have to change maybe your expectations in terms of what the outcomes might be.


I found that you have to look at the light coming through the keyhole. You have to look at the light coming from underneath the door and the frame around it, the ceiling and the floor, and maybe, Justin, even go around to the other side of the door and look at the light coming in from the other side. And what does that look like? And what’s the translucence and the glow of what’s coming around the perimeter? And then come back around and ask yourself, are you really ready to walk away from this thing? Or can you really find a way to manage it?


And maybe it’s about being a better listener. Maybe it’s about asking better questions. Maybe it’s about being more patient, maybe resetting timetable and resetting expectation. And at the end of each chapter, we evolve a key and we describe and sum up what the chapter was about in two or three pages and really try and isolate the action item that was essential to unlock that door. And these are just simply illustrations in my life, but I think they’re illustrations in anybody’s life in terms of the challenges that we all face and what are we going to do about it.


We have to own our problems, we have to solve our problems, and we have to move on. And at the end, we conclude that our journey really becomes our destination. And that’s what the book tries to bring about. It isn’t about how much money you make or which title you got or which company you got to run or how many hundreds of people reported to you because no one’s going to remember those things. At the end of your life, people are going to know how you touched people, how you impacted other people’s lives, and how did you do it along the way of your life. And that’s the journey. And that’s why we say your journey really becomes your destination. It’s not about those goals. It’s not about the transactions. It’s about the relationships.


Justin Donald: Well, that is beautifully said, and I couldn’t agree more with you. And I’m excited for people to learn from you and really experience this tremendous amount of wisdom that you’ve stored up over the years from all the experiences that you’ve had, Greg. Where can people learn more about you, learn more about your book?


Greg Smith: I’m on LinkedIn, so I’m pretty easily found there. The book is at Amazon and most of the other booksellers, Barnes & Noble, and so forth. It’s available in a digital paperback and hardcover format. It is a bestseller on Amazon, which shocked me because in two days, it had already sold over 100 copies and was a bestseller in many different categories, three different categories, I believe.


Justin Donald: Congratulations.


Greg Smith: Thank you. Thank you.


Justin Donald: Yeah, that’s a very rewarding feeling to have the courage to put out. And I know this because it’s nerve-wracking to put something out that’s so close to your heart and you’re like, “I hope other people appreciate it as much as I do or appreciate the amount of time and effort and energy that it takes to write a book.” So, that’s just tremendous. If there was one bit of wisdom that you haven’t already shared that you’d love to leave our listeners and those watching with, what would it be?


Greg Smith: I think it’s pretty easy for me to tell you that, I think, the biggest challenge I have found that people have in their business lives, personal lives, in dealing with the challenges that they have, is that they’re horrible listeners. I mean, I rarely find a good listener, and I always learn more when I’m listening than when I’m talking. But it’s human nature for people to talk and then talk again and talk again.


Dale Carnegie teaches us, I think, in 1934, the book How to Win Friends & Influence People, that if you are just listening and not interrupting and not getting in the way of somebody’s conversation where they’re telling you, that person telling you will start to build trust in you as a listener because there are so few listeners among us in our society. It’s just the way it is. It’s our human nature to want to talk, but it’s our human nature and we don’t think about it that as we talk more and more, we start to build trust in the person that’s listening.


So, as an investment banker working on mergers and acquisitions, we’re very keenly interested in listening to what we’re going to hear because we often hear what we need to hear in order to make an informed decision about something that we maybe didn’t know about when we started. But because we listened and we maybe asked the right questions, we now know way more than what we knew before. And maybe we need all we need to know, know all we need to know to either move forward or, Justin, to walk away, and maybe in some cases, run. But being a good listener, I think, is one of the big keys to success. And it’s a big, big key to solving problems and unlocking doors.


Justin Donald: Well, I think that’s a profound takeaway and a great reminder to me to continue to work on listening over speaking. So, part of why I love being a podcast host is that I get a chance to ask questions and sit here and listen to smart people like you and I can be a student every single week, which I love. And last but not least, I always end each episode with a question to our audience and that question is simple. This is for those of you watching, those of you listening, what is one step you can take today to move towards financial freedom and living a life that’s truly on your terms, one that you desire to have, so not a life by default, but rather a life by design? Thanks so much, and we’ll catch you next week.

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