Many entrepreneurs and businesses turn to wealth management firms for help in managing their finances and assets. Having an effective and trustworthy advisory service can certainly help ensure that one of the essential elements that fuels their business is properly monitored, arranged, and utilized. To learn more about this industry, Domenic Rinaldi interviews Tom Hine of Capital Wealth Management, LLC. He looks back on how he transitioned from being an independent insurance agent to starting his own financial planning career, as well as the lessons he learned along the way. Tom also shares how he builds his network, how he approaches every deal in a bespoke way, and his motivations in writing his book, The Zen of Business Acquisitions.

Listen to the podcast here:

Subscribe Now:

Subscribe to K2 Adviser on YouTube
K2 Adviser on Apple iTunes
K2 Adviser on Google Play
K2 Adviser on Stitcher App
K2 Adviser on Spotify

Tom Hine: Life In The Realm Of Wealth Management

My guest, Tom Hine has built a robust wealth management practice over many years. One of the keys to his growth has been his relentless pursuit of acquisitions. Tom shares his experiences acquiring and integrating seven firms over a sixteen-year period, but perhaps the most important lessons came from the hundred-plus transactions he walked away from. As Tom will tell you, his success has been every bit about the deals that he acquired, as well as the ones that he walked away from. Tom has learned so much about growing through acquisition that he authored The Zen of Business Acquisitions, which is available on Amazon. It was such a pleasure hearing Tom’s story. I know you will learn a ton from this episode.

I hope you enjoy our show. If so, please take a moment to subscribe and review our show. We appreciate it. By subscribing, you’ll be notified of new episodes and the bonus episodes we plan to release in the near future. In the meantime, if you have any questions about buying or selling a business or need to better understand the process, don’t hesitate to reach out to me directly at [email protected]. We are committed to helping you avoid the common pitfalls so you can maximize value and minimize risks. Please let me know specifically what kind of help you’re seeking. Thanks for being here. I hope you enjoy this episode.

Tom, welcome to the show. It’s so nice to have you here.

Thanks, Domenic. It’s great to be with you and your audience.

I’ve been thinking about this interview for a while now since we first talked. I’m excited because you are the epitome of what we talk about with clients in regards to buying a business, and then taking that business to the next level. You’ve done just that. It’s amazing and you even wrote a book about it. Why don’t we start off with if you could tell the audience a little bit about yourself, your practice, and then we’re going to dive into how you’ve grown it through acquisitions.

A little bit of background, I got out of graduate school, undergrad in MBA at the University of Connecticut in the mid to late ‘80s. I had a brief stint doing some programming in Lotus 1, 2, 3 so that dates me a little bit, but I also worked for Accenture. It was Arthur Andersen that turned to Accenture. Before I got into running my own businesses and acquiring, I had a very good corporate background in both insurance and financial services. That’s the background behind how I got into this. I had that background to begin with.

My first job was as a life insurance agent, peddling insurance and annuities. In the early ‘90s, anyone that’s in the wealth management career can share this with you, that the career exploded from insurance or investing into this wealth management ensemble, where you would work with the clients on their life insurance. Maybe you had a tax preparation service you integrated with. Maybe you had an estate planning attorney and then you did the asset management. Right around the early to mid-‘90s, that mushroomed from these individual silos to all of a sudden, all these wealth management firms started to spring up for all the right reasons.

You decided that at some point in time, you’re going to venture out on your own and you wanted your own business. Talk about that transition. How did you make that transition?

First of all, it was a great time in the late ‘90s to leave what I call the bubble of the insurance industry, where they paid you a salary and you had maybe a draw against commissions. I will admit some very important things. I was single at the time so I had no family to support and that is important. I had no pressure on me financially. I know some people make that jump at the right time and some, it can be more challenging. It’s a strong economy so I had the wind at my back. A very important part of it is I went from the insurance, what they call proprietary world, where you had to sell the products that your home office manufactured. I then went independent where you could offer anything from Vanguard to Fidelity to T. Rowe Price and do the best thing for your clients. Keep in mind those three forces behind me helped me go from the independent insurance agent into the wealth management, financial planning career on my own.

Your ability and willingness to walk away from a deal is your greatest strength in a negotiation. Share on X

Did you open up shop with anybody else or did you do this on your own? How did you take that leap?

I opened up shop with two other individuals in my town. I’m in Central Connecticut, roughly two hours from Boston, two hours from Manhattan to place me geographically. These two individuals were both planners. We had a great team set up. One of them was a marketer and did brilliant marketing. The other gentleman was a CFP like with the technical people. In the beginning, it worked out phenomenal in the sense that we worked as a well-oiled machine and went from that insurance world where we did a lot of public seminars, and we grew our client base. For many years, that business model worked successfully.

Were you able to take clients with you from your previous firms? Did you have a foundation when you moved or did you have to start from scratch?

We started from scratch, but let me add this footnote because back when we moved, non-competes and non-solicitation agreements were almost unenforceable and hard to find. Now they’re more common. For anybody in your industry reading into wealth management, what we would do is we kept client relationships where we moved. It’s called an in-kind transfer. We didn’t sell anything. We became agent of record for all their annuities and life insurance. We weren’t crossing any compliance boundaries because we never told the client, “Sell this and buy this.” We maintained the relationship, which worked perfectly. We kept marketing to new clients. As those surrender charges decreased on those products and if we found something better, we were able to combine the client relationship with a better product. It was new marketing and keeping in contact with a pretty good user base that was installed.

How long were you running the business before you decided that maybe an acquisition was a path to grow? Had you tried other avenues to grow and you weren’t successful? What got you to the point where acquisitions were the way forward?

This is a great story within a story. When I made that comment that the three of us work together, it was a good business relationship for a while. What happened was one of the other partners, the more senior one, wanted to look at retirement. Myself and the other guy we were in our 30s. We were like, “We’re not ready.” I moved on to start my own firm and we had an agreement. I took the pre-arranged clients that I knew I would get. By the time, I was on my own for a little while, when all of a sudden, this first idea of acquiring companies came across my desk. It went from a three-person firm, broke away on my own for the right reasons. Within a year of that, I came across this practice that would be my first acquisition back in 2004, believe it or not.

Fast forward, 2020, how many transactions have you done? How many acquisitions have you made?

My firm now, my employees, we’ve looked at over 100. We’re working on deals Number 8 and 9. Meaning 8 and 9 are in the preliminary phases. It could be that 8 and 9 don’t happen with these two candidates. It could mean they both happen. You know how the business works. It could be one happens and the other one doesn’t. I said no so many times, but I said no because the deals weren’t right. One of the famous quotes I’ll share with you and your audience is, and I heard it from somebody else, “The best deals you do are the bad ones that you don’t do.” In other words, by staying away from the quicksand, the falling rocks, and the slippery road, and focus on the good ones, you’ll have a much calmer environment. Your employees and team enjoy it. In our case, we grow ten times the revenue over that 10, 12-year period without too many hiccups. There are a few but not too many along the way.

That quote is so accurate. Your ability and willingness to walk away from a deal is your greatest strength in a negotiation. We tell people that all the time. Whether you’re on the buy side or the sell side, your ability to be able to walk away when things don’t seem right is your greatest strength and will save you lots of heartaches. You’re on a path to do a transaction every other year, one every two years roughly. Let’s wind back to 2004, the first transaction or the first acquisition that you did. How did you go about it? Did you do well? What did you not do so well? Talk about that experience. Did you have a team of advisors or M&A people that were helping you?

MAU 84 | Wealth Management

Wealth Management: By staying away from the quicksand and focusing on the good ones, you will have a much calmer environment.

 

I reconnected with that original seller. He’s now in his 80s. We remained friends. It’s a great full circle. The analogy I use in my book for those of you that have trained in martial arts or judo is I was a white belt at the time in the M&A business. I was new at it. The story is one of my loyal employees had an email come across her desk randomly in 2004 saying that there was this business for sale in Connecticut. They were like a Charles Schwab institutional broker dealer. I was with a different firm at the time.

She said, “Maybe you’re not interested. Let me give the guy a call. He’s in Connecticut.” Lo and behold, I called him up. He was an engineer. I had an MBA in Finance. One thing I want to share with your audience, it is important that the seller and buyer have at least some commonality. You don’t have to have identical backgrounds. You don’t even have to have the same politics, but if you have nothing in common with a seller or buyer, that’s a potential red flag. In our case, he was analytical. I was analytical. We had a meeting of the minds. I call it the Vulcan mind meld. That was number one, that worked out well.

The second thing I’ll tell you, and this is like in the school of hard knocks, the deal almost didn’t go through because we were both white belts. He was selling for the first time. I was buying for the first time. It was like the blind leading the blind. What happened was the attorney I was using at the time, who was a good corporate guy, but didn’t know much about M&A and financial services. I joked that when we had the offering or the letter of intent, it was so many pages. It was like United Nations Security Council briefing.

I had many hooks and clauses that you couldn’t figure out what was the offer and what was the hook or the out clause. The good news was because the seller and I had a good reputation when he got my faxed version, he nearly had a coronary and said, “The deal is off.” I said, “My lawyer was trying to help me out.” We got together in person. We sat down. We realized what were his concerns and what were mine. We got rid of probably 11 out of 19 pages. We did go on faith, but I’ll share with your audience out there, you need a good corporate attorney who’s done these because you can scare the buyer or the seller with so much legalese that they become a deer in the headlights. That’s one thing I do different now.

You brought up a couple of points here. It’s important to surround yourself with an M&A team, advisors who understand mergers and acquisitions, whether it’s an attorney or an advisor like myself. The other thing you hit on here is rapport. We don’t so much say that you need to have commonality, but what you need to have is rapport. You need to have the ability to talk mano-a-mano with each other, respect each other and have that rapport. As you illustrated and I’ve been doing this a long time, every deal hits a speed bump. Some are big speed bumps, some are small. When you hit speed bumps, you have to have that basic foundation of rapport in order to get past it. If you don’t have that, the deal is dead. It’s not going any further. If you do have that, you’ve got a chance to get to the next step to see is that a material speed bump? Is it something we should walk away from? Those are two good points.

This will be a subject for a different episode but years ago, I had written a book about arbitration. I went through a very tough arbitration and I won it. It was a great quote from my lawyer. He said to me at the time, “Tom, I’d rather have two good business partners and a bad operating agreement, or a good buyer and a good seller.” Meaning good character people and a bad agreement because as humans, we can overcome that rather than one good buyer. Maybe someone who’s a seller who may not be working in the best interest and then had a perfect agreement. His theory was if you have two good human beings that are operating in good faith, that can overcome some bad wording in a contract. I want to share that with everyone as well.

It always comes down to the principles in the transaction. If they’re operating in good faith and they want to get a transaction done and everybody is motivated, you figure it out. If somebody’s not, then you don’t figure it out. It just happens. These deals die because they’re not motivated. You get that first transaction done. How did integration go? What did you learn along the way? That’s the other piece that we talked to people about. It’s not so much about getting a deal done, but now you got the tiger by the tail. How do you integrate it in? Do the cultures mesh? Is there a loss of clients?

At the time, I only had two employees. Now I have seven so I grew. I learned from my days in the Accenture Arthur innocent world. I wrote out a script to the seller and said, “Here’s what we should agree on before we meet with the clients one-on-one.” We reviewed it. I said, “Tell me where you’re comfortable. Tell me what are the not to dos. How do I not put my foot in my mouth and say the wrong thing to the wrong client?” All those things are important. We had a game plan. It’s almost like someone was writing a three-act play. The reason for that is I said, “If you tell me 2 or 3 things not to do, I’m pretty good at remembering that.”

He said to me, for example, “Don’t tell them I’m retiring overnight.” We had a four-year earn-out. I said, “It was a multi-year engagement.” We choreographed what each one said. I said, “I know when I get off the phone or we leave lunch, they’re going to call him back one-on-one and ask, ‘What do you think of this?’” I wanted him to know that when I leave lunch, I don’t want them to have a different answer from you privately on the phone than they saw us in person. I did take my time on that part and I nailed it. Ever since then, we’ve had a rehearsed Q&A that I put together for all the sellers. Before the deal is done I’m saying, “Are you comfortable with these answers to the questions? If they’re not, let’s edit them now before the deal is even done.”

Approach every transaction with an open mind. Share on X

Were there people issues that you had to consider?

Yes. There was one admin person on his side that did very good work, but there was almost like a personality conflict. They were the big boss. Afterwards, when I talked to him about this individual, he agreed with me and said, “I should have taken action a long time ago.” Within two months, I had a minor severance package, let the person go on good terms. He said, “I should have done that a decade ago.” I felt good about that. It wasn’t easy. I don’t want to give your audience an idea that I love letting people go, but I learned and there’s a famous quote that says, “Hire slowly and fire quickly.” Take your time on hiring, but let go. There are a lot of personality tests to find out who that is. That was number one.

Number two, because this firm was only an hour from my corporate office, still in Connecticut, I was able to play almost like, “I’m right down the road from you guys.” Connecticut being a small state, this wouldn’t work necessarily in Houston, Austin or Dallas, where we are hours apart. Here’s a brief story I’ll tell you. A lot of people in Downstate in Connecticut, near New York, they first said to me, “You’re all the way in Hartford, Connecticut.” It was an hour away up the Merritt Parkway. The analogy, and you’ll appreciate this, is I politely said to them, “Do you go to New York City?” They go, “Yeah.” I go, “Do you mean you’re an hour away from Manhattan?” They said, “Yeah.” I said, “You’re an hour away from where you want to go to work. I’m an hour away when I want to visit you.” Finally, they made the connection that I’m not that far away.

Although the Merritt Parkway can be a parking lot. I’ve been on the Merritt. It’s only two lanes each way. A lot of people in Fairfield County are going one way or the other. Did you know fairly quickly after consummating this transaction and integrating it in that this was the path forward for you, that acquisitions was one of the ways you built your business?

I do. Let me share something with your audience. It was fun. First of all, I got a surge of energy that to this day has not mitigated. It’s not just the art of the deal. I love trying to work with them around any challenges, let them know their clients are taken well care of. The fun part for me was it wasn’t even the fact that it would be very profitable and it was. I got a real kick out of meeting new people and letting them know that, in this case, the seller wanted the best environment for his clients and all of that.

Number one, that worked out fun. Number two though was I did not anticipate that even though I came from Arthur Andersen as a consultant, I wasn’t a tax guy. I became cashflow rich and tax poor in the year 1 or 2 because those deals were different than the ones we do now, which we’ll circle back on. My revenue jumped in the second year and then my tax bill hit. I felt like I took a step backwards. Luckily, I was always conservative. I had a lot of cash in the bank.

A hint to all of your readers out there, you want to have your tax person run the numbers. For example, I had a lot more ordinary income coming in, but I couldn’t write it off in year one. Whereas the seller had capital gains but in the end, within four months of taking over that practice, I grew up by 25% because one client had a huge private trust account or what we called outside money. I convinced that client that it was better with my firm. That wasn’t even on the radar. That was what we call a lucky jump. The second big one for me was this was a wealthier clientele Downstate in Fairfield County. All of a sudden, my skillset for advanced estate planning and everything else went through the roof because I had to get smarter working with a clientele that had a larger net worth. Number one, other than the tax issue, it was profitable. Number two, my confidence and my skillset went up.

Do I believe in luck? Yes, I do. Luck is hard work mixed with preparation. You were in the battle and you were making it happen, right place, right time. You were also mixing that up at the same time. The next deal comes around, did you source it? Did it fall in your lap? How do you go about finding new opportunities? A hundred deals to vet over sixteen years, that’s a lot of deals if you’re looking at a good number of deals every year. How are you going about sourcing opportunities?

It depends. If your audience is in financial services or investments, I have one answer for them, then for the other people, another one. If you’re in financial services, everyone in my line of the business will know the term institutional wholesaler. I was proud that myself and my team made these wholesalers, the ones that we wanted to work with, our best friends. They were people that were calling on dozens of people like me every month, all around Connecticut, Mass, Rhode Island, you name it. I made them my best friends because they had good products. They were like a salesforce that was not on my payroll. That was huge. That was a biggie.

MAU 84 | Wealth Management

Wealth Management: Without a good corporate attorney, you may scare the buyer or the seller with so much legal ease that they become like a deer in the headlights.

 

The second thing I did is I start doing some direct mail marketing and it worked. Getting my name out there, but this a big thing. My team and I wrote one letter a year. I had a former friend of mine who was an author of a book who has his own resume service, he would pick apart the letter and make it sing, make the grammar perfect. I only wrote 1 or 2 letters a year. To this day, a lot of people tell me, “I get your letters every year. You’re one of the few letters I read because it’s not salesy.” I will say that was a big impact.

Now with social media and podcasting, it’s different, but having a lot of business contacts, keeping them up on LinkedIn or in person, and then making yourself visible. In this case, I did seminars. It was like a lot of different things added together, multiplied over time. I now routinely get calls from people. Even if I’m no longer taking the call, one of my team members is the director of acquisitions. Over several years, we built up those contacts and it does matter.

Combination of networking, leveraging your network, and then sending direct mail pieces out to folks to see if they’ve thought about selling would generate an opportunity and a conversation.

If I can tie it back to your audience and this is important. The last great lead that I had, which could be my biggest acquisition ever, that’s why I said, it’s deal number 8. Think of this story, this particular person within 200 miles of my office remembers getting my letters over the years. They told me that. I met them online at an FPA forum, where you had your breakout sessions. I was talking about M&A and succession planning. Going full circle, this person said, “I’ve been getting your letter for the last eight years and I always read it.” They met me online in the last few months and that could become my biggest deal ever. This stuff does work but like anything else, you’ve got to stay with it.

You’ve got to plant seeds and keep them watered and keep them going. When you look back on all of those experiences, all of those conversations that you’ve had, the deals that you’ve walked away from, what are the top three things that you’ve learned along the way about consummating an acquisition that would resonate with the audience?

This a little bit of a plug for my book, which is The Zen of Business Acquisitions on Amazon. I have a chapter called How to Hack This Book. I’m going to give you the six takeaways of that chapter. I’ll give you two other things I’ve learned. The six takeaways were culture, number one. I don’t have to tell that if anybody in your audience understands this one lesson, they’ll save themselves, their employees and their spouses a ton of headaches. The culture of the firm you’re buying or selling to doesn’t have to match identical, but it has to match. If you have to work too hard during the due diligence or the LOI, if that’s too difficult, don’t be afraid to back away because you’ll be like the salmon swimming uphill the whole time. Culture is number one.

Perseverance, we know that not every deal works out. You have to be able to walk away. The more you’ll walk away from, the old expression, “When one door closes, another one opens.” Third one, valuation, either yourself, your accountant, or your attorney, you have to know how to get valuations done. Client service is important. Who is your team that’s going to take care of either clients or customers, or whatever term that you use? Two more parts, the beginner’s mind, which I call the white belt. You have to come on every transaction with an open mind.

As you know, Domenic, there are no cookie cutters. There are some similarities, but every deal I’ve looked at, no matter how similar they look, they always end up being vastly different either in the details or the onboarding process or some combination. Lastly, I studied a lot of successful people along the way, and I copied or emulated what they had done. Those were the six themes in my book. The second thing is of the three points you asked me, that was number one.

Do not be in a hurry to achieve everything, especially at the time of the pandemic. Share on X

Number two, don’t be in a hurry just because you hear everybody is doing M&A. Do not rush these deals. In fact, like a martial artist, yoga or a music teacher, take your time and let it curate. In the end, the more you absorb, the more you understand, the better the deal. The third thing I would say is early on, have good tax and legal counsel because I would vet my acquisitions early on against that. They would tell me, sometimes my accountant, my attorney would say, “Tom, unless this is a bargain basement, don’t go after it,” because they had wisdom of their own to share. It wasn’t just my own, it was also other professionals in my circle of sphere of influence that helped. Sometimes they were the ones correctly that killed the deal and looking back, I was so glad I listened to them. Sometimes I overruled them and it worked out too. It goes both ways.

It’s such a good point. I was advising a buyer to walk away from the deal because what the seller was representing was not matching what was in the tax returns or the financial statements. I said, “He’s giving you his word, but it’s not in any of the documents. He could be a very honest guy and that’s great. If you can’t put back at the end of the day, how do you do that transaction?” My client was excited about this business. I said, “I can’t tell you to do this transaction. I can’t endorse it. If you want to, I understand, but I can’t get behind it. I can’t advise you to do that.”

He went back to the seller and said, “Nothing is matching here. Something is off. I can’t move forward.” Long story short, the seller came back and said, “I understand. I’ll finance the entire transaction for you. If you don’t find what you think I’m telling you, we’ll ratchet back the price.” It was great. My client was able to move forward knowing they got risk mitigation, downside mitigation if it doesn’t pan out. That only happened because he was able to say, “I’m not moving forward.”

I would say with you, it might sound a little bit hokey for people, but having studied martial arts my whole life and there’s a Zen aspect. As you were telling your client, “Let go off this deal.” He or she did let go of it. When they did, the new door opening was the same client, but with a different deal structure. If you had said, “Let’s try and work around it.” I called the term shoe hoarding. I know you wouldn’t, but if you had done that, you never would’ve gotten the same deal as if letting go. A brilliant recommendation and for your audience, it’s okay sometimes for the right reasons that you let go because sometimes that deal comes back in a different form like it happened or sometimes the next deal you see clearly, “Yes, this is what I want.”

One example that you cited where you hired this attorney who wasn’t an M&A attorney, gave you a twenty-page agreement and you whittled it down, but only after the deal was falling away and falling apart. Are there some other things that have happened along the way during your acquisitions where you walked into lemons, and you were able to turn it around and make lemonade, and it was a big a-ha moment for you?

Let me give you a positive one that I walked away from. I’m going to show the audience that over the hundreds that I’ve looked at, I could tell you many lessons I learned of the ones I walked away from that I then applied to the next deal that I did. On the one that I walked away from was in Fairfield County. At the time, I had $250 million of AUM and they had $100 million of AUM. It would have been a big one to digest. The point was one of the reasons we walked away was that the seller and I got along great, but it turns out he was trying to engineer a way that I would pick his senior guy and make his senior guy who was younger, a partner in my firm.

His senior guy couldn’t afford to buy his firm. Two things struck me right away. One, it wasn’t that I didn’t like the guy. He was very good but I said, “No, if I’m financing and buying this, I want to take on another partner that dilutes my profits.” The second thing was I asked them, “If he wasn’t able to buy you out, that means I probably was the second choice.” That’s a deal that didn’t work out for the right reasons. The flip side, the one about lemons and lemonade. There was a story not too long ago or several years ago where this particular seller had dawdled for a year and a half.

It was getting back to me, but not that quickly. They came down with a major health issue. Fortunately, they’re still alive now, but it was a major health issue. It was a scare. I hate to say it, but you know this too, sometimes it takes that to motivate them. I was patient with the seller. I’d been in touch. I said, “I’m not going to push you, but you’re not giving me the right signals. I don’t want to chase you down for phone calls, etc.” When that doctor’s information came to him, he and his wife agreed, “This is a message. We’re going to let go and move on.”

MAU 84 | Wealth Management

Wealth Management: Every deal hits speed bumps; you have to have a basic foundation of rapport to get past it.

 

I was right there patiently waiting. I also had changed the deal terms saying, “It’s okay you said no a year and a half ago.” This is another hint for your audience. When that same suitor comes through the door, politely the deal structure is never going to be as good as it was. They have to know, otherwise, they’ll put you off another year on the same deal. If somebody says no to you the first time, vow out gracefully, but remind them. If you like them and you like the process, say, “I hope our paths cross again, but I have to tell you now so you get it out there, the next deal is not going to be the same deal structure that we have now.” That tells them there’s a little bit of a price to pay.

Let’s talk about that structure a little bit. Do you approach your deals with the same structure elements or do you look at it deal by deal and decide, “This one, I want a little more seller financing. This one, maybe you don’t need any seller financing?” Is there a pretty set construct that makes these deals work for you?

If you would ask me that question ten years ago, I would’ve said, “Domenic, I can systematize anything as entrepreneurs. I can create an assembly line,” and nothing could be further from the truth. The short answer is no. The long answer is hell no. The reason is because each deal, the person is a different age. They have different needs, someone to relocate. I can tell your audience that the fun part for me, which is the art of the deal is that when you come across the willing seller and you’ve got a willing buyer, you could work on the deals like I did years ago were more of a small down payment, large earn-out. We had the discussion before we got on about the banker that you talked to, the people in banking. Now, the deals are much more allowed, but whether it’s an SBA, ten-year loan or any other conventional loan, the seller can get a lot more money upfront and I’m still protected by covenants in the agreement. To answer your question, it’s morphed to be more seller-friendly but no, every deal is different no matter how much you try to systematize.

I’m glad you said that. I was hoping that’s where you were going because my advice to the audience was going to be, you can’t approach every deal the same. For all of the reasons you named, you have to be more fluid than that. Even though you might have some boundaries within your deal structures that you’re paying attention to, understand that every deal is different. The one thing that should be consistent is you should have a return-on-investment model. Some calculation that matters to you that you apply to your deals. You can get there in lots of different ways, but always have at least some ROI targets for your deals. You have a way to measure whether this was a successful deal. Was this not on the margin? Otherwise, you won’t know how to go do them moving forward.

Depending upon the type of business you’re in and I’ll give you some examples. One of the deals I did early on was not going to be financially that lucrative. I knew going in that there were three things, accrued benefits from the deal that I knew I was going to get that weren’t just tied to the numbers. Number one, I got more experience because we used a different law firm on his side. We had new language coming in that I hadn’t seen before that my lawyer and I loved working through that. We knew that there was new IP, Intellectual Property.

Number two, this was in a new area within a couple of miles from my office. It was a new geographic area, which would then set the stage for other acquisitions in that space because I could say, “I already have clients in that area.” Number three and more importantly, this was an easier transaction where I have a reference, someone who could say two years from now, “I worked with Tom and his team. I had a great experience.” The numbers should always be profitable, but if you have other valid reasons why or acquiring good talent, don’t be afraid, whether it’s your firm, Domenic, or others to let people know, “Here’s where I think I see some hidden value,” and then let your accountant and your attorney vet that as well.

You could make acquisitions for lots of reasons. It doesn’t always have to be because you’re trying to grow your EBITDA. It could be talents, technology, geography, lots of other reasons. Tom, I could sit here and talk to you all day. This is a great conversation. You wrote this book, The Zen of Business Acquisitions. What motivated you to write that book?

I wrote my first book years ago with a coauthor. It was about that arbitration. I survived the securities arbitration. I’m proud to say I won it. I wrote about it for other advisors. This one, my daughter had graduated from Georgetown University and she met this amazing professor who was teaching her graduating class how to write books. I said, “Let me meet this professor.” Long story short, I got involved in a writing program and they said, “Pick anything you want to write?” I thought of fiction, non-fiction. I realized, “I should write about acquisitions. It’s what I do every day.” That was the idea, that was the a-ha moment.

If a deal is not going the way you want or too hard for you, don’t be afraid to back away. Share on X

Along the way, they gave me the idea of interviewing the top 8 or 10 people in financial services, that $2 billion, $10 billion acquisitions all the way down to the ones in my level. Between my idea and their help, that’s what got me the motivation and the talent to get that thing written, which was fun to work on. The audiobook comes out in January 2021. I’ll have that ready to go. You don’t have to read it. You can listen to it on Audible.

That was great when people were traveling to work, but I’ve seen more people reading the actual books.

They have an audiobook, a written book, and an eBook so they can pick whatever they want.

Tom, any parting advice or comments that you would have for the M&A Unplugged community?

MAU 84 | Wealth Management

The Zen of Business Acquisitions

Number one, if you’re like me and you love to meet new people and new ideas, you should get excited about M&A even if it takes two years to do your first deal. Get out there and meet people. As we covered the legal of EBITDA, intellectual property acquisition, balance sheet, or income statement, get to know the language of what we’re doing. Number two, don’t be in a hurry, take your time, especially with COVID. Everything is going to reopen at some point. There’s going to be a huge explosion of deals of people who maybe don’t want to be in the same business they were before COVID, meaning they want to sell. Get educated and get out there. The third thing is to maintain or retain a good firm like yours or someone that has the experience to guide them. For you to be objective and tell someone walk away, I can’t tell you how important that is to have someone that’s in your corner, but that can be totally objective and look at a deal without any emotion. That would be a huge game changer for your audience.

Tom, if folks want to get the book, where’s it available?

It’s on Amazon. You look for The Zen of Business Acquisitions. It did get to number one in its early release in its category when it came out so I’m proud of that. That’s one way. Otherwise, my firm is Capital Wealth Management in Glastonbury, Connecticut. That’s pretty much an easy way to find us. The third thing is search Tom Hine, CFP or adviser and we’ll come up there too. In the meantime, I look to do more with Amazon as they broaden what they’re offering. It’s called KDP, Kindle Direct Publishing. That’s the division you work with and I’m learning so much more about how that backstage process works. It’s very exciting.

Tom, it’s such a pleasure to have you here. Congrats on all the success. You’re a model. I’m glad we could bring your story to the audience.

Thanks, Domenic. I had a great time sharing with them. I look forward to sharing new ideas as they come up.

Thank you.

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. Until then, please remember that scaling, acquiring or selling a business takes time, preparation, and proper knowledge.

Important Links:

About Tom Hine

MAU 84 | Wealth ManagementTom Hine is a 25-year veteran of the financial services industry, and the CEO of Capital Wealth Management, LLC. Tom founded Capital Wealth Management in 2001 with the goal of operating an investment firm where he could develop personal and lasting relationships with his clients.

His firm has acquired 7 wealth management firms and conducted due diligence on more than 100 other firms. Tom’s journey in wealth management started after he graduated with his MBA from the University of Connecticut in 1986.

Tom’s main goal is to help others succeed in retirement planning, succession planning, and future mindfulness. He hopes to do this by sharing some of the nuggets of wisdom he’s learned over several decades of successful wealth management practice and extensive martial arts training.

Love the show? Subscribe, rate, review, and share!

Join the M&A Unplugged Community today: