Doug (Host):
Well, hello again everyone. I hope you’re having a great day or night, wherever you may be. And I say that because my guest is graciously joining us. It’s nighttime where he is. But, this is another episode of Leadership Powered by Common Sense. And I’m your cruise director, Doug Thorpe. Today, we’re going to turn our attention to capital markets and many activities going on there.
As any of you who are regular listeners of my show know, I never make the show about politics. I let other people do that. But, in respect to what’s going on in the world of Finance today, I think there’s undeniably a lot of uncertainty, speculation. I’ve heard people talk about all ends of the spectrum. And my guest today is someone who’s the leader of a very good capital firm originally based in Dallas. It’s called Raven, and his name is Paul Scribner. Paul, welcome to the show.
Paul Scribner (Guest):
Thanks, Doug. Pleased to be here.
Doug:
Yeah. So I know it’s kind of maybe an overloaded question. Let me dive right in. Where do you see the capital markets these days? Are there sectors that are more stressed than others, or do we have a lot of capital on the sideline waiting to jump in for something? Where do you see things?
Paul:
Sadly, Doug, I think this is a situation where it’s just continuing on from what we saw during the pandemic. So many people during it, because of uncertainty — I’m talking about Retail investors, institutional investors, private equity people — are on the sidelines because they don’t know how to measure risk. They don’t know what’s going to happen. Things that they used to be able to count on — momentum in the market, certain actions or reactions — are now no longer as certain, clear, and settled as they were in the past. And I think that’s what we have going on here in capital markets all across sectors.
I think there are niche pockets of activity that we’re seeing. But overall, we’re seeing a lot of people pare back, hold back, make credit decisions that you weren’t expecting. So it’s a time that’s not for the faint of heart to be out in the market.
Doug:
Yeah. So I probably should have asked as a little bit of a level set — help folks understand the dynamic and the part of the market that you serve.
Paul:
Sure. Previously, my team and I, both at General Holdings and at Raven Resources, served large corporates borrowing in institutional markets, or small and medium enterprises borrowing in both private and institutional markets. Everyone on my team is either a recovering banker — ex-investment bankers, commercial bankers — or existing lawyers. So while our firm acts for itself as principal, all of us have a client-centered background, and we’re used to servicing clients.
We still try to approach our own business that way, and see ourselves, even though now we’re hopefully writing checks to buy companies or purchase financial assets, as very much in the customer service business. Raven Resources is based in Dallas and active in the US market. So that’s the focus of our capital markets.
Doug:
I chuckled at one of your comments — recovering banker. I resemble that remark. I spent 20-plus years in banking and financial services and know very well that customer-centric idea. The Legacy bank I was part of was more oriented as a commercial bank than a retail bank. We were famously, even in TV commercials, walking the shop floors, warehouses, shipping docks with our client companies. So that mode of operation was ingrained in me.
There are so many places to go and talk about in this space right now. But my concern is trying to address and level set a little bit. You did mention experience in small and mid-cap sectors. What are you hearing? Is that mainly in the acquisition space, smaller companies being dumped on?
Paul:
That’s what we’re in now. Raven is a purchaser of small and medium-sized businesses. We’re also an active borrower in the financial markets, sometimes a sponsor in deals, and we work with others to structure finance and borrow. We’re very active in a few states in the US.
Could you clarify a little what you mean by what you’re hearing or seeing?
Doug:
Sure. The basis of my question is that there has been much written about what some call the Silver Tsunami — Baby Boomers who built businesses, held them for 20-plus years or longer, facing their own Aging out and wanting to exit. Maybe there is no Family generational handoff. So they’re considering putting businesses up for sale. Many players are running to that market to facilitate buy-sell transactions. That’s the basis of the question.
Paul:
Yes, there’s definitely a Silver Tsunami. I hope Raven is positioned to take a few of those silver hairs into its quiver, and we’d be fortunate to do so. Many of those businesses were brought up like children, with the blood, sweat, and tears of the aged owner. You can really feel it when you walk in.
One of our objectives is to honor the legacy of the owner and what is often not evident when dealing with a 20-plus-year-old company. They’ve gotten through cash flow crises, the times when mom and pop had to clear out their savings accounts to make payroll.
What we’re seeing is the need to really come alongside those sellers. But inside some deals we’ve looked at, the seller — and not every business broker is created equally — sometimes doesn’t get treated as a customer. Many brokers want to commit to their own process and earn fees based on getting you to a letter of intent. Businesses are purchased unless you’re already in that industry; it’s a function of mathematics. Unless we’re paying a premium because we’re already in the space, we’re trying to eliminate a customer or acquire revenue to grow.
What I’m seeing is business brokers causing trouble on deals that should close, and sellers treating the deal like “make me an offer.” It’s a function of math — the offer has to be defended by the seller and advisors. I’m seeing things unwind because of these issues.
Doug:
I agree.
Paul:
We’ve been very close to financing, ready to go, on a couple of deals that unwound. One due to process, the other due to a lack of understanding that signing the purchase agreement can be overwhelming. We’re learning how to approach deals and how not to. We’re fortunate to still be looking at deals; next week we’re underwriting a deal in the municipal sewer space.
Doug:
I agree with your broker landscape comment. There are great brokers who champion both parties, but many cause noise in the system. I’ve been involved in about 30 deals over the last three years, mainly representing buyers. Sellers often feel the need — it’s their baby — and emotionally it’s about connection with employees and customers, not Money.
Many don’t know what their business is worth and come to market with unrealistic values, locking that in their minds. Good brokers level-set and set achievable prices.
Doug (cont.):
I’ve met brokers who accept the seller’s asking price, but like residential Real Estate, if the seller thinks their house is worth $300 a square foot but the market is $150, they won’t get it.
Paul:
We had a seller dreaming of $10 million in the bank after closing. The business didn’t warrant that. The deal didn’t happen because the seller held out for that price, maybe hoping a competitor would pay more than a financial investor.
Doug:
Of those 30 deals, about 12 actually closed.
Paul:
That’s a high closing ratio.
Doug:
Sometimes sellers come with positive cash flowing businesses, but they lack sophisticated systems or processes. Much of the operating knowledge is in the owner’s head.
Paul:
We purchased a company where the owner pointed to his head when asked about inventory or pricing systems.
Doug:
Exactly. Sellers sometimes need to hang in for a year or two to make changes that increase value, but some can’t due to urgency or Health issues.
Paul:
Right.
Doug:
Do you have a vision for conquering broker challenges?
Paul:
I echo your points. We’re working with one broker who is professional, providing good due diligence documents and advocating for our side.
We’ve tried hiring brokers to talk to other brokers but that didn’t work. We’re taking referrals from banks, lawyers, and accountants now, which helps avoid the hard work with some brokers.
Being exceptionally nice hasn’t worked either. Some broker groups share cultures that are problematic.
Doug:
I don’t have a silver bullet either. It’s unfortunate. Boomers selling need to be aware of the noise and wasted time trying to close deals.
I coach young buyers — corporate folks burning out but with cash — to start with an emotional connection and meet sellers. If the broker doesn’t allow that access, it’s a red flag.
Good brokers facilitate that meeting and assess chemistry between parties.
Buyers should be proactive in honoring the legacy.
Paul:
Good advice.
Doug:
When you get a dinner meeting with the seller and spouse, ask about their journey and story.
Paul:
Yes. Many sellers, often husband and wife teams, don’t know what they’ll do after selling.
We emphasize our willingness to have the founder stay on as a consultant or employee to help with SOPs, KPIs, and Relationships. We want them to know they still have a place.
Doug:
I encourage buyer clients to create service agreements with sellers — sometimes short-term, part-time, or on-call. The new owner wants to lead, so negotiations can be tricky. Sometimes relationships post-sale are challenging, but usually not. Sellers often want out but don’t know what’s next.
Paul:
It does create challenges.
Doug:
Paul, we’re about out of time. Thanks for sharing. How can folks reach you?
Paul:
You can reach Raven Resources Corp in Dallas, Texas. Visit our website at RVN.rs. There’s a contact form, emails, and our team info. We’d Love to hear from sellers, buyers, investors, bankers — no haters, please.
Doug:
Let the haters hate.
Paul:
It’s been great to be with you, Doug. You’ve got a great background. I’m sure your viewers enjoy the show. Thanks for having me.
Doug:
You’re welcome, Paul. Thanks so much.
Folks, remember, there’s a video version on YouTube: Leadership Powered by Common Sense. Check the archives and drop me a line if you have guest ideas or want to be on the show.
That’s all for today. Goodbye and make it a great day!
Closing:
You’ve been listening to Leadership Powered by Common Sense, hosted by Doug Thorpe. For more on Coaching and advisory services, visit DougThorpe.com
Doug is a trusted advisor and coach for CEOs, Business Owners and Senior Leadership Teams. He has over 30 years of business and leadership experience. He is the President & CEO of HeadwayExec, LLC and the Doug Thorpe Group. Doug is also a podcast host.
He helps owners understand the ways they need to reshape their thinking and attitude to make a successful break through the invisible wall of management.
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The post Navigating the Silver Tsunami: Strategies for Buyers and Sellers in Today’s Market | Ep 411 appeared first on Business Advisor and Executive Coach | Doug Thorpe.
