Not nearly talked about in M&A transactions is the critical role of mindset and emotion. Without realizing it, you may have overspent or even over-invested in a transaction or deal that is not giving you the results you expected. Tackling this very important yet often overlooked topic, Domenic Rinaldi sits down with Jason Abell, the President of Rewire, Inc., to help get you thinking about your mindset for a deal and how to be better prepared. Jason helps us better understand the elements of mindset, how it could make or break a deal, what role it plays to people going through major transitions in life, and how it impacts the ultimate culture of a business. Whether you are a seller or buyer, this episode will help you figure out how mindset can improve your odds of getting a successful transaction done. Follow Domenic and Jason as they share more.
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The Critical Role Of Mindset To M&A Transactions With Jason Abell
Mindset and emotion play such a critical role in M&A transactions, but it’s not talked about nearly enough. This can be a costly oversight if you enter into a transaction, spend lots of money on advisers only to realize you weren’t ready to close on a deal. I had the pleasure of talking with Jason Abell of the Rewire Group. Jason specializes in mindset coaching, Rewire’s brand. Mindset coaching centers on the belief that people don’t need more information to succeed, but instead can achieve or exceed their outcomes with a better way of thinking. If you don’t think mindset or emotion is an important part of M&A, talk with someone who’s had the other party walk away from a deal at the closing table. I hope this gets you thinking about your mindset for a deal and how to be better prepared. Before we get into the interview, please head over to K2 Advisors and take our free seller or buyer assessment. These assessments will help you understand how ready you are for an acquisition or sale. Being prepared is critical to ensuring that you maximize revenues and minimize risks. Thank you for being here. Jason, welcome to M&A Unplugged.
I’m happy to be here, Domenic. Thank you.
For the M&A Unplugged Community, could you give them a quick backgrounder?
I have a mortgage banking background of 21 years in Corporate America, at least professionally. I was being coached by myself when I was a leader in mortgage banking. I realized the benefits of being coached both personally and professionally. The person that was coaching me was a guy by the name of Steve Scanlon. He and I partnered up and started Rewire, which is a coaching and development company focused on mindset coaching. Now we coach executives and leaders and founders around the country. Professionally, that’s me. I’m a husband to an amazing wife. I get to be the father of two teenage children, which keeps me hopping.
Mindset interested me when we first started talking because in M&A, you have owners of businesses where the fundamentals are the fundamentals, but mindset about the transaction becomes important. On the other side, you have buyers when they’re coming into a transaction. Their mindset is not only in getting the transaction done, but their mindset during the transition and taking over the new company and how they’re approaching employees becomes critical. I’m hoping that we’ll bring mindset into the M&A world and help owners and buyers figure out how mindset can help them improve their odds of getting a successful transaction done. Let’s first start with the basics. What is the mindset? What is mindset coaching?
I think the mindset is everything. In your question there, you said helping your buyers and your sellers of companies with their mindset and using that to their advantage so that they can maybe have better outcomes than they would have had otherwise. I will tell you that mindset does play a role in every transaction that you do with the buyers and the sellers. Sometimes it works to their benefit and sometimes it works to their detriment, but you can be sure that it’s playing a role in not only how the actual transaction goes and then the forthcoming transition but also the success of it from that point forward. You know your business way better than I do, but sellers when you go through the transaction, they’re probably not done as of that date. There’s still some transitionary period and all of that. Mindset is everything, and it can be a detriment or a benefit or role with people that are going through transitions of life either personally and more oftentimes than not professionally. Mindset is the make or break type of deal.
Why is that? Why is mindset make or break? Help us better understand the elements of mindset and how that could make or break?Mindset makes or breaks a deal. Click To Tweet
I’ll give you a story about a client. I got a client that he’s top in his field in the State of Oklahoma. He’s already there. He’s the top. His mindset is good. He’s got a full morning routine that includes working out, health and wellness is in good shape. He meditates some praise in the morning. He sets himself. He has a positive attitude, forward-thinking type of person. There was one element of his business where he was in his head. He was sometimes in what we call it the monkey mind. It was overwhelming to him. He didn’t quite understand. He wanted to take his business to the next level using this one particular CRM and marketing technique.
I said to him, “Why aren’t we doing this yet?” He gave me fifteen excuses of why it wasn’t happening. This is a smart guy, intelligent, a lot of experience, tops in his field, well-regarded but there was a mental block with him where this wasn’t happening. What we did at that point is I can’t force somebody to have a good mindset around something or a bad mindset around something. What I can do is I can facilitate their mindset. I can ask questions that may unlock code in their brain where they’re looking at something from a different angle, thinking about something in a little bit different way that maybe they weren’t thinking about before because I’m an unbiased third party. I’m not in the matrix with them.
I’m not in their monkey mind. I get to see things from a different viewpoint and therefore, ask questions that they may have not thought of before. We were going through that process with him and I use something that we call the iceberg model. There are iceberg models for all kinds of different business applications but this particular iceberg model, if you think of the tip of the iceberg as the results that someone’s looking for, right below that before the waterline are the actions that we all need to take to get the results that we’re looking for. Below the water line is the rest of the big old iceberg. That’s the bulk of the iceberg. Those are thoughts and emotions and feelings. Our thoughts, emotions and feelings have way more to do with the actions that we take to the ultimate results that it is that we’re looking for.
For me to come into this particular client says, “If you do this, this and this, you’ll get the results that you’re looking for.” He and I can have an agree fest forever, but that wasn’t the problem. The problem wasn’t, “You need to do this to get those results.” The problem was he was overwhelmed. He was a little afraid of the technology. He didn’t think that he had time. He was in his head about it. We asked a lot of questions and I was in his corner facilitating his thought process where he was able to look at that activity and that project in a different way. In a way that he hadn’t looked at it before and he was creating his insights. He was changing his mindset where we were able to unlock a few things, take some baby steps to then lead it to bigger steps to walking, to jogging, to running. This example is a little older where he completed that particular project, got to the next level that he wanted to get with this particular phase of his business and it’s all because of the mindset. You asked a specific question, I gave you a story to illustrate the answer, but we’ve got examples of that time and time again.
When somebody is selling a business or somebody coming in to buy a business, these are major life events. Owner is maybe letting go of their baby, the money that is going to be for retirement, buyers coming in, risking their fortune. They don’t know what the future holds. What happens to mindset? What role does mindset play when people are going through major transitions in their life?
My wife is a health coach and I’m a mindset coach. We talk about coaching all the time. She has this saying that she brought to me years ago saying when emotions are high, logic is low. Even the way that you asked the question, it’s an emotionally-charged transaction life event. I don’t know this factually, but I’d be willing to guess that sellers sometimes, there are good circumstances where a person is at the pinnacle of their career and their business and they want to live well. It’s good but oftentimes it’s probably not. There’s a health issue, there’s a death or there’s a state plan or something like that where emotions are going to be involved whether they’re good or bad emotions.
Even for your buyers, it’s the same thing. You said their life savings, it’s a new business they may not fully understand or whatever the case may be. That inherently is an emotional decision. There are going to be emotions involved in that. It’s not just a math problem that needs to be solved factually by robots. You don’t have robots buying and selling businesses. We have people that are buying and selling businesses. With those people comes life circumstances, life events, emotions, community, other people that involved, and the mindset is involved with it. We’ve helped people through transitions like what you do with people, with buying and selling businesses. We’ll come in and we’ll get a baseline of exactly where they are. We’ll do a little bit of measurement on that emotional scale.
If the emotions are too high, the logic goes way down. That’s not going to end up proving for a good outcome for them. We’ll get a baseline measurement of where is their mindset? How are they feeling about this? If you think of my previous story, what does the below the waterline look like on that particular iceberg? Once we get a baseline there, now we can help that person create awareness for where they are. More often than not, they’re not even aware that they’re going psycho over this transaction or that they’re overly exuberantly positively thinking about it or that they’re depressed. They don’t even have an awareness around it. We want to create that awareness to begin with. We then say, “This is where you are. Where is it that you ideally would like to be?”
We define the desired end result, “Here’s where you are. You’re saying through our facilitation that you want to be here. Let’s figure out a way to start closing a gap.” That would be some of those baby steps in the illustration that I gave you with our Oklahoma client. We start taking many steps. We’re not trying to solve the world all in one coaching session because we can’t. Coaching is an aggregate type of activity where we’re stacking on top of one another. I guess I would wrap this question up by saying the mindset does play a role and there are specific things that you can do to affect the mindset that then affects the outcome that they’re looking for.
It’s interesting because we will see some percentage of the time that an owner of a business or a buyer will launch into either selling or buying a business. It seems like they’re motivated. It seems like they have the right intentions. Everything seems to have lined up and they get halfway through or even sometimes all the way to the end. All of a sudden, they get cold feet and they pull out of the transaction. I’m thinking there was something way back at the beginning that could have indicated they weren’t ready for this step. Either they weren’t being honest with themselves or they weren’t in tune enough to their feelings to understand how they felt about this. If you’re a buyer, take on the risk or if you’re a seller look over your baby and that struggle is real. It happens because we’ve had deals fall apart. Are there 2 or 3 things that you could give to the audience to say, “Before you head into a transaction, whether you’re selling or you’re buying, ask yourself these questions to gauge are you ready for this big moment or not?”
We’ve worked with executive placement companies where they won’t engage a client unless they’re going through mindset coaching. It’s part of the package because of exactly what you’re saying. In those examples, they go through the interview process, they get all the way to where an offer is on the table. Everybody is feeling good about it and the person walks away for whatever reason. If they were either being mentored, coached or they had somebody that they could bounce ideas off of ahead of time, maybe that wouldn’t happen at the end. When you get to that point whether it’s your closing table or what I’m talking about with executives, those closings should be formalities at that point. It’s done, we’re feeling good but that whole cold feet thing, that is the mindset, that is the emotion. That’s the under the water line iceberg. If all of that was in alignment, then there wouldn’t be cold feet.
Were there a couple of questions that people can ask themselves so they know to pick up the phone and call someone like you to say, “I want this on one level. I’m not certain I’m ready for it. Can you help me think through it?”
The couple of questions for self-coaching is as you’re going into the transaction with your business if you’re a buyer or a seller, there is this idea of beginning with the end in mind. Even the way that I described we help identify somebody where they are today from a mindset standpoint and then at the end of the day, what exactly is it that they’re looking to achieve? If they were asking themselves this question, it might be something like, “In an ideal world on the day that this transaction closes, what do I want that to look like for me?” Detail out the answers to that. Not like, “I want to make a bunch of money or I want to be able to say that I own this business. I want to be able to say that I sold my business for this much money.” Not that. I want a detailed list for yourself in answering that question. What is it that I’m looking for financially? What is it that I’m looking for emotionally?
What are the conversations that I want to have with my spouse or my significant other or my group of friends? What’s the conversation that I want to have with them about this transaction? The one that I do and I end up using a lot is at the end of the day, what is it that you want to be able to tell the people that are closest to you about how this went down? If it went down perfectly, what would that look like? I want a handwritten out detailed description of that. Not me as the coach, I don’t care if they give that to me or not. I want your clients to be able to answer that question to themselves in writing. If I’ve begun with the end in mind and I’ve got a detailed description, I know what that day looks like. I know what it smells like. I know what the financials are going to look like. I know the emotions that I’m going to feel. I know when I go out to dinner that night, what I’m going to be able to tell my significant other about how that went down. If I’ve got that written out now, it’s like I’ve got a GPS. I know the destination. Let’s draw out the journey on the way to get there.
This is such a great point and a great answer because one of the first questions that we’ll ask an owner when they walk into our office is, “What are your plans for after the sale?” The owners who can detail for us what they’re going to do like, “I’ve got a ranch in Colorado, I’ve got a beach house or whatever. I’ve got five grandkids and I can’t wait for them to come.” They have thought about life after the business. The folks who come into the office and say, “I don’t know. I’ll figure it out,” I always worry about those folks because it tells me they haven’t thought through what life is going to be like after they sell the business. I was at a conference and there was a straw poll from people who had sold their business. The question was, did you feel remorseful or not about selling your business? Over 75% of the respondents said they were remorseful. It had nothing to do with how much money they got paid for the business. It had everything to do with what life was like after they sold the business. They didn’t have the next thing to go do. When you think about that, it ties your answer right into that. If you don’t know what life looks like at the closing table, then what happens next? You might be headed for some real trouble.
Not only will they go into that 75% bucket that you talked about, but I would submit to you that those are the people more apt to have cold feet right at the table. All the work has been done on your end, on their end on the sellers, the buyer’s end. If you don’t know what the next step is for you, I would say I wouldn’t even take that client on at that point. Let’s get you some help and let’s figure that out. You’re going to end up having a better life afterward if you think about it now. This transaction that you’re entering into, it’s going to be a more pleasurable, positive experience transaction if you know the end game of what you want life to look like afterward.There are specific things that you can do to affect the mindset that then affects the outcomes that you're looking for. Click To Tweet
We’ve had our M&A practice for many years, but we started K2 Advisor. K2 Advisor is all about helping people prepare and one of the first legs on the stool is where are you emotionally about this? If they can’t get their heads wrapped around that, they’ve got to do work there and we help them think that through before we go on to what your business looks like, your personal financials. On the other side are buyers. We’ve had buyers get into deals where they take over the business and they didn’t realize some things about business ownership. They didn’t fully understand because they hadn’t thought through how it was going to change their life. They had seen the numbers on the paper. They know the type of company it is, but they hadn’t thought through, “Now I’m the owner of a business.” The buck stops with you and if the bus book hasn’t shopped with you before, you need to think through that because there is nobody else to go call. There’s not a lifeline, you are the lifeline.
I helped a good friend of mine. They started a farm brewery here in Olney, Maryland. They did a phenomenal job with it and fortunately, it was able to open up and they’re off to the races. They’re completely crushing it. My role in the business is their ad hoc mindset coach. Their numbers are phenomenal. They’re from a purely business standpoint, they’re off the charts. I’m asking them almost daily, “How are you doing? How are you feeling? Are you taking care of yourself?” We’re talking through those types of things. They’re having business success, but we don’t want it to be to the detriment of them personally, because if it is, that will at some point down the road, if not sooner than later affect the business. We need to take care of that piece of it as well, the mindset.
How does mindset impact company culture? How does the mindset of an owner of business impact the ultimate culture of a business?
I love questions about culture. I’m holding this pen and it’s tangible. I can describe it to you. I can’t hold culture to you. You know in your organization what the vibe and the feel and the touch of the culture is, but it’s not tangible. I love talking about it because it’s similar to mindset. What is the mindset? Describe it to me and I can give you stories. I could give you the science if you wanted to geek out on that, but a positive mindset versus a negative mindset. There is a vibe around that and culture is the same way. The first thing that I would say is it does start at the top and it trickles down.
You’ve got a vibrant founder and leader that is positive, a go-getter and is servant leadership-based and those types of things. The organization, more likely than not, that culture, that mindset is going to permeate the organization. I’ve seen some great people with good personalities and bringing good culture to the table, go to work for organizations where the leader is not that and they’re the opposite. It doesn’t work out. Rarely do I see the bottom-up culture happening. I almost always see top-down culture happening. First of all, it starts at the top. I did a branding show a couple of weeks ago, The Branding Expert. She had the same thing. She’s like the personal brand of the founder or the executive, the C-suite or the person that permeates the rest of the organization. Everything goes back to mindset, but I do think a lot of culture does go back to mindset.
This is another good point because one of the things that we tell buyers oftentimes is you need to make sure that the business you’re buying doesn’t fit from a financial and strategic perspective, but it also has to fit culturally. If you try to put two companies together or if you’re an investor group and you’re coming into a business and it doesn’t have the right culture, it’s going to be a nightmare to get through that. To change culture means you probably have to swap out people. One of the big reasons you buy a business is for the people. Their knowledge and their experience and their relationships with your client base. If you’re saying that mindset starts at the top, then as a buyer, you have to take your clues and figure out who is the person you’re buying this business from. That will tell you a lot about the culture of the business and whether or not that’s a good fit for you. Not to say you shouldn’t do more investigation and due diligence around culture, but it should probably start there.
I think it goes along with something that you said earlier is sometimes you’ll look on paper and you go, “The financials are great of this organization.” That’s the quantitative research and things that you can do. “We want to be in this business and the numbers look great. That’s great.” You cannot overlook the qualitative measurements, which is exactly what you’re talking about. What is the culture like? What is the person that you’re buying from or the group of people that you’re buying from? Are these people that are in alignment with the way that you are currently running your company or the way that you would like to run a company? If it’s not, if the quantitative research works in all checks out, but the qualitative doesn’t it, I’m sorry to say it isn’t going to work. The opposite is true. I’ll talk about the other side of the coin of my mindset approach. If you are in alignment with someone from a qualitative standpoint so your buyers and your sellers that you’re dealing with, but the quantitative piece isn’t working, I see often, “It will work out because he’s a great guy or she’s a great person. It will be fine. They’re passionate about what we do.” If the quantitative part isn’t there, you shouldn’t do the deal either. It has to be both of them.
We see buyers being more guilty of that than sellers, where they get enamored with the business and they lose sight of the fundamentals. They let their emotions take over. Some people reading to this show know that I cover a lot of fundamentals. Valuations and how to do a deal and the technical aspects of it but this stuff is critical to a transaction mindset and emotion. A buddy of mine and a previous guest, Jay Myers, is about to launch a book and he asked me to provide a quote for it. He had sold his business. It was his baby a couple of years ago and he came on and he talked about it and we’ve become friends ever since. He sent me an early draft of the book and I read it. The book was about all the emotional stuff that he went through. In my quote I even said, “I’m glad you did this book because emotions are not talked enough about in transactions.” It’s oftentimes the technicalities, the fundamentals, the economics. Whether you’re a buyer or seller, you have to be in tune with, “Is this transaction going to be the outcome that you need it to be emotional?” The financial stuff is one thing but if both equations are not there like you said, it’s not going to work out.
We’re getting back to where we started. Begin with the end in mind, not just the financial piece, but also the qualitative piece, the culture piece that you’re referring to, the mindset. All of that is important.
Any parting comments or thoughts that you can leave the M&A Unplugged Community? I’ll ask you to leave your contact information in case folks wanted to reach out to you.
I love the work that you’re doing. As a business owner myself and with all the clients that we have that own their businesses, I know that in the back of every business owner’s mind is this topic, but we don’t think about it at the forefront of our mind often enough. I appreciate the work that you’re doing. Not only when somebody is ready to do the transaction, you’re there to help them with that but with your new venture, you’re going upstream to help business owners like me think about it ahead of time. You’re doing the show that gives little morsels of education along the way. I think it’s important to work that you’re doing. I’m happy to be a part of it. I’m glad that you’re not just having accountants and CPAs on, you’re having people like me on because you’re covering the full spectrum of what this transaction entails.
I appreciate that and thank you. I appreciate you sharing these thoughts and all of your experience and knowledge, which I know is extensive. I didn’t know that your wife was also a coach. You’re bringing a lot to the table here. Jason, if folks want to get in touch with youh, how could they reach you?
Our website is RewireInc.com. I’m on all the socials as @RewireJason. We have all kinds of free tools on our website. People can go to our website, take the free stuff. We love positively helping people. If anybody wants to be a client, that’s great too.
Thanks for being here.
Thanks, Domenic. I appreciate the time.
I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review our show. I look forward to seeing you again on the next episode of the M&A Unplugged Show. Until then, please remember that scaling, acquiring or selling a business takes time, preparation and proper knowledge.
About Jason Abell
Jason Abell is a dad and husband who also happens to write and speak while serving as the President of Rewire Coaching. Nationally recognized for his sales and leadership skills Jason coaches and presents to thousands of professionals monthly on topics ranging from growth minded leadership to the mindset of top sales people all leading to authentic and sustainable growth.
Rewire powers in-house coaching programs for America’s growth minded companies and was recently ranked #73 by Entrepeneur Magazine on their list of Best Entrepreneur Companies In America. Rewire’s brand of Mindset Coaching is taking the business world by storm in that today’s professionals do not need more information to succeed, but instead are able to unlock exponential growth with a better way of thinking.
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