Inside $2B in M&A Deals

There's a difference between coming to a new place as immigrant, but as a refugee is different. You're usually running away from something, right? I remember growing up in the '80s, it wasn't exactly popular to say, oh yeah, you know, my parents came from Vietnam, because I think that carried a lot of things with it. Geopolitically right now, Vietnam has some benefits in that there's a large population hustling out every day. There are many factories. Geopolitical issues with China now have presented some opportunities to move trade, commerce, and industrial parks south. They share a border and labor is actually cheaper in Vietnam than it is in China.

Today's guest is Jimmy Tran. He has a background in business and nonprofit leadership, and he previously served as VP of Corporate Strategy and M&A for CBRE, where he led over $2 billion in acquisitions and tripled earnings in just 8 years.

Jimmy also has experience as a management consultant with Bain and Company in Dallas. Hong Kong, and Singapore. We look forward to hearing from Jimmy and benefiting from his unique perspective and extensive experience. Jimmy, we were talking the other day and you were in between businesses. You just exited. So where are you at today?

Sure.

Well, I think the first, you kind of have to rewind a bit and I want to give you a little sense of my background, where I've come from and where I land today. But I am, Born and raised in Houston, first generation. My parents were refugees. They came over after the Vietnam War. So they landed here in the US 50 years ago, and I was born about 45 years ago. So I was born in Houston, Texas, born and raised. But my pathway led me to SMU where I was a Hunt Scholar. And post-SMU, I spent the first chunk of my career in strategy consulting. I was at Bain Company and the beauty of, of a place like Bain is that you get exposure to tons of industries. You do due diligence on deals, you help large companies with strategic planning, et cetera. And then that led to business school, which I was fortunate to go to Harvard for business school. And then the second phase of my career was around in-house strategy and M&A. So I was in-house corp dev, which is a fancy word for mergers and acquisitions. You know, corporate development is often what it's called. So I was there for the next chunk of my career. And then recently in 2020, I left and I'm more of what I call in my entrepreneurial advisor investor phase. So I did start a small business, expanded it through acquisition. Actually, funny enough, these are small-scale businesses, but I started one unit of a customer-facing franchise, and then we acquired two more. I ran them for a bit. You know, COVID was tough, and then we just sold them in January. So that's a little bit of a glimpse, but currently I'm advising and investing in a number of ventures and, you know, try to keep my ear on the ground when it comes to the deals and M&A activity and what's hot or not out there. Here locally and then, and then broader as well.

So you came to Dallas for SMU and didn't go back to Houston. Is that fair?

Oh, that's fair. Yeah. No longer a Houstonian. I'm firmly planted as a Dallasite. And as you know, many people here in Dallas, probably half of any given room that we sit in, are folks that are not born and bred here in Dallas. So we have a lot of— I'm one of them. Yeah, there you go.

Memphis, Tennessee. And I'm here because I have a daughter who graduated from SMU who didn't come home. So we came to her.

You came to her, but then she left you.

No, she's here. We have two daughters. One is here, an SMU grad. She just married. She's leaving on her honeymoon on Friday. And we have a daughter in Denver who's expecting her first child, our first grandchild, in June. So this has been an exciting 12 to 18 months for us. We've been transitioning into single daughters, married daughters, daughters having children. And it's all, it's all very exciting and fun.

Transitions in life phases.

Transitions in life.

You're in the end zone here, so keep your phone on.

Priorities are changing. So, your parents, what was it like transitioning here? I want to think in my mind that it was smooth and easy, but coming from Vietnam and into a new community, a new country, what was that experience like for them?

Well, it was difficult, I would say. And, um, you know, my, my wife and I talk about this a lot because there's a, there's a difference between coming to a new place as an immigrant, i.e., for economic reasons, for education reasons, um, any variety of reasons, but you know, you're, you're purposely going for opportunity to further your own ambition. Or your families, et cetera. But coming not as an immigrant, but as a refugee is different. You're usually running away from something, from war, from strife, from political issues. And so they were in that category and that was 50 years ago. You know, they actually, many Americans will remember April 30th, '75, because that was when the iconic helicopters lifted off the American embassy and the Americans fled and they were, you know, they were done, they were out of there. And what that left was a country in strife and communists taking over, of course. And if you were from the South, which they were, and you were involved in the military, which my grandfather and my uncle were, and if you had, if you were a professor, if you had commerce, if you had businesses, you didn't want to be around really because property would be confiscated, you'd be put in concentration camps, et cetera. So they fled and they got out and they were lucky. In, in many respects because they survived a strenuous journey. But they were sponsored by a Catholic charities group out in Denver, funny enough. So that's where I still have family and where they initially landed. Very large family. My mom was one of 11. She was the eldest. So didn't have an opportunity to get an education because you just start working and doing what you can. To help out and to put food on the table. So I think one of the beautiful benefits of coming in the generation after is one, appreciating that background, that history, and then knowing that I have so many more opportunities and I'm not burdened by some of the same things that my aunts and uncles and my parents were. So it's a beautiful thing, but it was tough because the sentiment in America, in Texas, in, you know, across the US was not great at that time. It was a tough war. Tens of thousands of American lives were lost. And then there were newly arrived people that started coming into our country. And there were— there's just a large diaspora of Vietnamese people that are in the US now. But they're also in Australia, in Canada, in France, and other places. And, you know, at the time, I remember growing up in the '80s, it wasn't exactly popular to say, oh yeah, you know, my parents came from Vietnam, because I think that carried a lot of things with it where you didn't— me personally, or many people, you don't want to have that burden, that invisible backpack to carry around with you. So, yeah, it was very interesting. But, you know, it's a new era now. Um, you talk— you— I've been fortunate to go back 4 or 5 times. There's a lot of business opportunity there too, by the way.

Vietnam?

Yes. Yeah.

Um, you, you connect culturally. Uh, you, you're able to go back. You have family that are still there.

That you're able to— extended family. Yeah. Um, some cousins, some, uh, you know, further off, um, relatives. And it's, it's hybrid where, you know, they clearly recognize I'm American. I was born and bred in America. I, I You know, that's who I am to the core. But obviously I also carry many characteristics of being culturally Vietnamese.

You mentioned business opportunities.

Yes.

What do you mean by that?

Well, I've had friends that have started businesses there and they've created joint ventures. They have acquired things. They've moved back. They've become part of this expat community to go back to Vietnam. Geopolitically right now, Vietnam has some benefits in that there's a large population, roughly 100 million people are there. Demographically, it is very young. There's a large, large workforce that is hungry, that's hustling out every day. So unlike Japan, which has older demographics and they're going to have to support many of the people retiring, Vietnam's a much younger population. Most of the population has been born since, does not have history or baggage from the war, for instance. So they just want to grow, they wanna set up businesses. You know, there's McDonald's, there's Starbucks, there's all, there's a lot of international brands there. So of course it's communist still, but it is, you know, there are many factories. You look at consumer goods and stuff that you buy, clothing, durable products, et cetera, you'll see that many of them are now produced and made in Vietnam. And China has, you know, a lot of the, a lot of the geopolitical issues with China now have presented some opportunities to move trade, commerce, and industrial parks south. And they share a border. So you just, you know, and labor is actually cheaper in Vietnam than it is in China.

So our last guest that immediately preceded you has a medical, a piece of medical technology. It's a low-tech, but, and it's manufactured in Vietnam.

Oh, well, there you go. So it's amazing.

Yeah. Uh, so your parents must be incredibly proud of, of you. Uh, they come to this country to create opportunity, and you're able to, uh, obviously, uh, go to SMU, go to Harvard, uh, work for Bain. Uh, you're, you're now an independent entrepreneur. So, uh, uh, congratulations. Uh, it's a great, it's a great story. You have siblings?

I do. I have an older sister. She's now a professor. Um, so she has her doctorate and she teaches in Florida at a university there. And then I have a twin brother who also is, he's an engineer by trade, but he's in business now in real estate. He's building and buying and selling property down in Houston. So, okay. That's what he does. He's my twin brother. Yeah.

So tell us about Bain and Company and your, you know, you, did you go straight from Harvard to Bain?

I did. So I worked what I say pre and post business school. Um, so right after SMU, I joined Bain, uh, put in my 3 years there. And the beauty of working for a firm like Bain is, uh, not all firms do this obviously, but a very small few will sponsor you to go to business school if you get in, if they like you and they want you to come back. So they'll foot the bill and pay for your for your schooling, which is the path I took. So I, I left for 3 years and did a joint degree in business and in policy. So the business school up there is HBS, and then the policy school is Harvard Kennedy School. So I was up there for 3 years, and then I came back post-school to repay my debt, if you will. So part of the deal was you sign up to return for a certain number of years. So I did 3 years back at Bain. So I did pre- and post- business school, but Dallas is a wonderful place if you work in a strategy consulting firm because we have large corporate headquarters based right here. And obviously you could be staffed on assignments outside Texas as well, which I was on some of those. But we have large industrial infrastructure here. We've got airlines, so without naming names, we did work for some of the large airlines. We've got retail, consumer goods. Now with healthcare and large healthcare systems, biotech. So there's a lot of activity here for strategy consulting. And the beauty about being in a place like Bain is that you learn a lot in a very quick amount of time. So typically they say a year there is almost like a couple years in industry because the pace of movement and learning is so fast. You know, you get staffed on an assignment and you're expected to know and learn the industry very well quickly so that you can go head-to-head, toe-to-toe with the executives that you're there to support, to help them with their strategic initiatives so that they can pull together often a growth plan or restructuring plan or something fairly, fairly complicated and fairly detail-oriented and give them and arm them with the power and the strength to get in front of their board or their stakeholders, their stockholders, shareholders, and present the plan. So that's what we would do. And you know, you get really comfortable as a, call it 20-something-odd individual meeting with and interacting with people, you know, decades your senior. So I really appreciate the value of that experience. You have to learn to be quick and to be adept at getting comfortable when you're uncomfortable.

So, Every time I'm on LinkedIn, I feel like you are doing something else. You're a part of another organization. It seems like you're on every single board or nonprofit or committee or something ever in the city of Dallas. And I know that's just perception, but it just feels like you're, you're part of a lot of, uh, organizations. Do you think being from a place like Bain where you're having to do multiple things very, very quickly gave you this mindset of like, hey, I want to be involved in multiple things. Is that why you do it? Or like, I don't really know what my question here is other than like, hey, how is it you're just, hey, I have Harvard, so therefore everybody wants you? Or like, how do you get involved with so many? And then, and then why?

Well, that's, you may have heard or seen Simon Sinek's.

Start with why.

Yes, start with why. And you have to ask yourself why, why, why at least 3 times to get to the underlying motivation and root. But I'll attempt to get there. So, you know, for me, I'm interested in a lot of things. I remember, this is a little self-serving, but, you know, in high school you have the superlatives and the awards at senior year. So I was voted most versatile, you know, so I just really enjoyed being I'm a, you know, a business is always be selling, but I'm also always be learning type person. So I really do enjoy being part of public, private, nonprofit. I think that there's some learning across those and I always hated being, you know, pigeonholed as one title, one company, one organization. And part of the beauty about where I am in my life right now, Ryan, is that I have some of the time luxury and some of the privilege, really I call it a privilege, to get involved in different things that I find interesting where I can bring, you know, whatever skills or experience or network or contacts that I have to bear to help further the organization in their aims. So I think that's why I have been conscious about saying no more though and to step back because at some point, if you try to do everything, you get so diluted. There's that analogy, mile wide and inch deep. So, I've been more conscious about picking some and going deeper. So, I'm honored to be part of this thing in the city of Dallas called the Economic Development Corporation, which I just noticed wearing this on the lapel here. But, the EDC is a public board. We were approved by the mayor and the city council, and I believe in its mission because we bring economic development opportunities to the city of Dallas to further job creation, to bring in companies, to have them based here in Dallas, not in our outer-lying suburbs, but right here in the city. And we want to bring growth and tax base and dollars down to a previously neglected area, which is the southern sector. So that's what's interesting and neat to me and things like that where I think I can lend a hand and make a difference. I really jump headfirst into, but I think it's, it goes back. I think if you kind of dig into the, for me personally, the privilege of all the advantages and resources and opportunity that I've been given, you know, I want to kind of share and help others get some of that opportunity. So, you know, I'm also on the board of a couple nonprofits that have tremendous causes either around poverty alleviation. I'm part of one that helps with foster youth. And so, I think if somebody else has been dealt a worse hand in life, and it's not like I'm saying I got everything because I clearly didn't from my personal background, but I've been able to achieve something and get this far, and I see all around me that others are not. So I feel like it's a privilege to be who I am, and if I can help others, why not? So I appreciate that. But I also will say that don't believe everything you see on social media. Yes, you have— we have the, we have the opportunity to kind of share what's, what's bright and interesting out there. But of course, there's— it ebbs and flows, and there's highs and lows. So, right.

Well, you brought up the public, the private, and the nonprofit aspect. One thing that we were talking about last week is that you recently ran for— or maybe not recently, but you did run for office. What was that experience like?

Ooh, wow. That's a— I thought we weren't going there. No, I'm happy to answer that. That's 2 years ago, but in some ways it feels like yesterday. In other ways, it feels like a lifetime ago. Clearly I've moved on and have recuperated from that run, but running for office, God bless anybody that tries to do it in this day and age. I sincerely mean that. If anybody out there is looking to do it, feel free to be a resource. I'm happy to talk to anybody that's interested, but it's hard this era, I think, to run for office because of what we see on social media, how we observe that the friction and the ability to disagree without being disagreeable is really tough now. And I experienced that head on. So what was it like? I will say that, I think I read somewhere there's Pew Research, P-E-W, Pew Research on this, but less than 2% or something of people ever attempt a public office run. At any level, whether it's municipal, which is what I was involved in typically, city council or school board, um, county, state, federal, at any level. Um, and I understand why now, because, uh, for what I was pursuing, it was a non-paid seat. Not only was it not paid, uh, you have to go out and raise a lot of money typically. And yes, races have gotten a lot more expensive. Um, and, you know, the underlying truth when you run for a seat is that there's often a dollar requirement, you know, to run for a seat. If you wanna run for Senate, oh, you're talking about hundreds of millions of dollars, typically in a state like Texas. If you wanna run for state rep, you're talking about hundreds of thousands minimum into the millions. Even if you run for city council, depending on the seat, That's a six-figure seat. You're gonna raise $100,000 plus. So, you know, I didn't realize that that was a central part of it. And the re— you know, that, that's the, the state of play in politics. So you, there's a lot of money involved. There's, there's power and privilege in running for office, but you also experience that power and privilege display themselves heavily in our political system. And, you know, I'm not trying to be political here, but you go into DC and you look at the representatives we have, you know, there's a lot of power and privilege there just in terms of the average net worth of our legislators and things like that. So you, you learn a lot running for office. I highly recommend it for anybody, but proceed with caution is what I would say. It's, it's tough. And it's a labor of love. It was personally very significant to me going back because I think there's a why to everything because my parents left a country that no longer valued the right to vote or valued democracy. So, to go in, file this slip to run for public office, and I had never done this before and you kind of talk to a lot of people, but the reality is it's like being an entrepreneur. You have to go out and learn how to do it. And so to put a finer point on that, you know, you assemble a team, you raise money, but the problem is the product isn't a service or a widget that you're selling. Guess what you're selling? Yourself, right? So that is really hard to go out and say, I'm so-and-so, um, will you invest in me? Essentially, either with your vote, your money, your resources, etc. So I found it really interesting because you have to employ some of the same skills as an entrepreneur. But for me, first time running, you know, and a lot of entrepreneurs, they don't succeed on the first run. You know, sometimes it's the repeat, the serial entrepreneurs that catch it on the second or third iteration, or they have to pivot numerous times. And many people said to me, you know, don't expect to run on your first. You know, they use all these examples like George W. Bush didn't win on his first and Obama lost and this and that. So, you know, there are a lot of examples out there. But it's, it's painful. So I don't know if I have another one in me.

Well, I would say though, it feels like if you can go through that process, starting a business or your next business venture is probably like, oh, that's not that big a deal anymore. Because like, I mean, we talk about all the time the highs and lows of being an entrepreneur, you know?

Right.

You know, earlier I was talking about how it's on one hand it's an ocean, on the other hand it's a desert. And, but it feels like even that you're in this little, you don't have the full-on public cheering you on or screaming at you that you would in politics. So I feel like if you're even at the council level, if you're going through that, whatever your next business venture is, it'd be like, it's probably gonna be, you know, obviously it's not gonna be easy, but it's a different, different types of stressors.

That's right. I think you learn to grow a very thick skin. You let the water run off the duck's back, as they say. But, you know, I think you just have to because there's so much noise out there. And if you know in your heart that you're doing it for the right reason or that you don't have any crazy dark motives behind it, then just go wholeheartedly and let everything else sort itself because You're right, Brian. I mean, you start paying attention to some of that stuff, you'll drive yourself crazy. I mean, there's so much noise out there. So many, even in my little race, all these, you know, conspiracy theorists come out and people digging up stuff about you. I mean, it's just a wild time, this, this with social media and the availability of information and how easy it is for anyone with a keyboard to broadcast a viewpoint that may or may not have any any grain of truth. So that's the scary part. But I honestly, I was happy to have the experience. I learned a ton. I met tremendous people and I don't regret it one bit.

So the bad news is you lost and the good news is you lost. All right.

Because that's right.

If you'd won, that noise would be surrounding you every day, all day, every day in this very polarized world. And I understand it was a school board election. That's right. Schools have become a very, very dynamic political place, you know, in terms of what books can be in the libraries and, you know, lots of different issues. So I'm sorry that you lost. And at the same time, your life would be different and maybe not in a way that you would find to be positive.

Well, that's a great way to say it. I mean, there's always a blessing in disguise. And for me, I personally have 3 kids that are school-aged. So they're 9, 11, and 13. So although I truly believe in the value of public education and want to support our schools, it takes— that would pull a lot out of me personally, away from other endeavors, away from my 3 kids and what they need in their family life. My wife has a career as well. So it's a lot. It's a lot. And this is for a, what they what would be referred to as a thankless, non-paid position, right? You go, people are usually not applauding and appraising sort of our school board members. There's a lot of finger-pointing and blaming right now. And obviously there's very, very hot-button topics around books, around bathrooms, around trans, all this stuff that Frankly, closing schools on this side of the district, but not that, redistricting, cutting up, taking over school districts. There's the voucher. So it's a really tough time to be in the spotlight, specifically in schools. And it's gotten, I think fair to say, worse after COVID because a lot of these hot button items became more so after COVID with the masking and then health mandates and vaccination. So it just, it's tough. It goes on and on.

On that, on that point, I was recently at a World Affairs Council event on education.

Right.

And one of the things that they brought up was, to your point, there's all these things that people want to focus on, but why aren't we focusing on can they actually read?

Right. Right.

And the education component gets lost because, because of all the noise. And it's just like, how do we get back to the main component of education? Like, can they do math? Can they read? Can they spell?

That's exactly right.

And they brought up this— and I brought it up earlier in a different podcast— but the, this concept of grade inflation and how they're just, you know, your teachers are just passing people and giving them A's even if they can't.

Read, so that they don't fail as teachers and be graded, right?

Right.

Because they want to keep their, their job, their pension, their whatever.

Schools are tough. I served on, as a treasurer on the board of trustees of my daughter's, um, all-girls prep school in Memphis, Tennessee.

Oh. Thank you for your service.

Yeah, well, thank you. I was, I was recruited by a good friend who was on the board at the time to join him on the board. And then, and I remember going to the orientation and saying, how long is my term? And they said 6 years, right? 6 years, which I had a daughter that was in 6th grade at the time and one that was older. And I thought, well, okay, that kind of works because in 6 years, you know, she'll be graduating.

Sure.

As a member of the board and as an officer of the board, I was on the executive committee. In the executive committee, the board met once a month and it was kind of a big board and a reporting board, you know.

Sure.

But the executive committee— that's real work. You're in the trenches.

Yes.

And the things that can go wrong in a school.

Oh, my goodness.

On any given day are amazing. And I remember probably the most heat I got was over the issue of school uniforms.

Oh, yes.

So there was a dress code. And if the girls had dresses that came up a certain length above their knee, dollar bill, or they would be sent home and punished and change. And of course, they were furious about that. So we said, well, we'll just do a school dress code and not a dress code. We'll have a school uniform. Right. And, you know, half of the school really wanted the uniform because it'd make life simple. Wouldn't have to worry about having their skirts measured and all that stuff. The other half thought it was the worst thing they'd ever heard, that we were going to impose upon them that they had to wear this uniform. And I'm getting calls at home.

Oh my goodness. Yeah.

From people. Now, that was a private school. Yes. And very divisive. The amount of time and energy I invested, and I'm glad I did it. And my girls got a great education and it was a wonderful community, but it was a job. I mean, it was a part-time job to do that. So I know all the things you've done up until now would have made you a great representative. I guess the thing that makes me sad about this is you're the kind of person I want representing me on government and civic boards and school boards. And I think that a lot of people with your qualifications are discouraged from doing it because of the cost and because of how hot, um, that space is and the grind of doing it. But you've had a really interesting journey. We— you talked about Bain, and, and, and it's great that they funded your, your graduate school education. And then you did your tour of duty, and you were in Dallas, but you were also in Hong Kong and Singapore, which I imagine was a really interesting education as well, right? Um, and then did you go straight from there to CB Richard Ellis?, business.

School and then to CB.

Business school then to CB Richard Evans. And, uh, and so you, you had the 3 years at Bain. Yep. Where you're drinking out of a fire hose, right? And you're learning a lot and you're a 20-something, as you said, dealing with CEOs of, of businesses. And that's got to give you a lot of confidence and you learn a lot. Uh, and then you go to CBRE and, and you are in corporate strategy and mergers and acquisitions.

Yep.

Um, and not little deals, really big deals. Uh, tell me about that. Tell me what you enjoyed about it. Um, in your notes for this, you said, uh, due diligence was one of the critical factors. Uh, talk about due diligence. Talk about what it was like working deals for C.B. Richard Ellis.

Well, um, it— you know, life comes full circle. We're sitting here at Old Parkland, which is, uh, you know, Harlan Crow's iconic masterpiece in many ways. So, Harlan's dad, of course, is Trammell. And I worked at CBRE for many ex-Trammell Crowe folks. Trammell Crowe was sold, spun off a good chunk of it to CBRE. This was, I think, 2006, 2007, a little bit before I joined. But my boss, came from the ex-Tremmel heritage, and he actually reported and worked for Tremmel himself for many years. So it's all a neat, fun, small world. But I was privileged to work directly under this guy named Bill Concannon, and he's an ex-Tremmel guy. He brought me in to lead corporate strategy and corporate development, which is M&A activity for Specifically what we call Global Workplace Solutions, which is a very large multi-billion dollar business unit within CBRE. And at the time, CBRE had 3 big business units. So one of them is brokerage, buy-sell transactions. So if you see a sign that says CBRE out there, that's that line of business. Our line of business managed and ran facilities for large corporate clients and facilities just like the one, like large corporate campuses, and they need facilities management, they need project management, they need somebody to run their transactions, et cetera, from in more of a corporate contractual manner. So, you know, we were a growing business unit and we were out there looking to develop strategic partnerships, which may or may not lead into M&A, but what we used M&A for was to shore-up capabilities, to expand market share, and to grow geographically. And so I think looking back, it's really important in M&A to figure out first and foremost what strategically is the underlying rationale. What are you trying to do? And some of it may be entering a new space. You know, CBRE just recently acquired Industrious, and when I was there, we actually, I did some work around this coworking environment. This was, you know, 10 years ago. So this is early on in coworking. And of course we've heard of some of the other players including, you know, WeWork, et cetera, at the time. So, you know, what are you trying to do? Are you trying to enter a new space? Are you trying to protect the current enterprise because you might be, blindsided by a new technology or a new product. Maybe you just want to expand into a new geography where you don't have presence. So I think first it's important to lay that out in a very clear, concise, crisp fashion. And thankfully, you know, some of my prior experience and background at Bain was really well equipped for that strategic rationale because that's kind of the work that we did at Bain and Company. So that's first and foremost. The second I think is to really understand and vet the company, which is due diligence, and vet the industry and vet the, you know, just space that they're operating in. This is where a lot of frameworks are out there. But you do strengths and weaknesses, you can do opportunities, you know, you can, you know, pull back the profit formula for that particular type of business. And even within real estate, you know, property management has very different underlying financials and fundamentals than brokerage or, or facilities management. They're all very different. So you have to really kind of break it down and understand that. And that's important because if you enter an industry, you're subjected to whatever headwinds, tailwinds, etc., that industry is in. You know, is it a rising tide? Is it is there competitive cost pressure? Are there a bunch of new entrants? So understanding that and doing due diligence around the industry and around the company specifically is really important. So we did a lot of that, you know, for every, you know, working at a place like CBRE, you get a lot of inbounds, but for every inbound that you get, you know, you probably go through dozens and dozens before you actually pursue and then not even to mention close a deal. And at CBRE overall, we were closing while I was there, you know, of various sizes, but a deal a month. So we would probably do like a dozen a year, but some of them would be small tuck-in, like, you know, in the kind of millions range. The biggest opportunity that I was involved in while I was there was we, and I was involved with this one heavily for the better part of probably 2, 2 years is kind of how long these things take. And of course, conversations and discussions happened way before then. But Johnson Controls is an iconic manufacturer, American manufacturer based in Milwaukee. Spent tons of time in Milwaukee just through this process. But Milwaukee, Wisconsin, and they are known for the thermostats that hang on the walls. But behind the thermostats are obviously HVAC units, which are chillers, coolers, and ventilation systems. So they produce the product behind that, which often sits in the attic or, you know, the basement of a building to cool or heat the building. So they're, they're known to make products. They had a business unit that also ran the building after they installed the equipment. So that was Johnson Controls Workplace Solutions is what it was called, but it was essentially a building management division or facilities management division of Johnson Controls. But they decided, hey, we want to focus again, their strategic rationale to exit was that we wanted to focus on making widgets, making the HVAC ductwork. And, you know, they own brands like Trane, et cetera. So they wanted to keep doing that and they wanted to exit the services building, services business, which is the business that runs and manages the buildings. Of course, that's what CBRE does. And so we wanted to expand our presence. They brought in some strategic gaps that we wanted to fill. So going back to the strategic thing, we wanted to grow in Europe, in Asia. They had a lot of clients, a lot of on-the-ground building engineers in those spaces where we were less strong. And so we went through a whole process, and this is a big deal. So with larger deals, as you all know, there's often an auction process as we would call it, but a bidding process where there's bankers involved. And so they're shopping and they're going out to public, private, private equity, all sorts of buyers out there. We were one of, we thought, more strategic and also more qualified buyers, but it was not a given. So we had to go through this whole process where multiple rounds of back and forth, and I was involved in part of that. And then I was also part of, you know, it was some deal that big, you actually have to go through DOJ and antitrust, et cetera. So you go through all that. And then that was part of our post-acquisition integration. And we had some revenue synergies we were trying to achieve because there's the 1 1 3 type dynamic. So there was some of that, there was some cost synergies, there were some other things, and it was a big organization that we brought in. They had 15,000+ people that we brought into CBRE. And most of these are building engineers, people working on the ground to service clients. And so we brought them in and they became CBRE employees on day one. So that was a big effort. And I learned a lot through that process from the beginning to end and I also learned a lot just observing, you know, working for Bill. It was credit to him, his vision that the two should be combined, and he started developing relationships, partnerships, outreaching to his, the CEO of that business unit early on, years before any deal or.

Any transaction took place. So what's the difference between an acquisition like that and acquisition like what you work on? 'Cause like when I hear 2 years due diligence, that obviously is a very long time. But when, with Lane, he quotes 6 to 18 months for his world. And then, and obviously I'm paraphrasing heavily, but in your world, your main function is to firm up the numbers and make sure that, hey, what we say is what's happening is actually what's happening. But in a situation like that where it's such a large corporation, Is it similar or because I would assume like the numbers are already there, like what is it that you are actually doing in those 2 years to kind of, you know, make the transaction happen?

Is it just verifying? So to clarify it, the whole process, once you enter an LOI or you start to get really deep and heavy, it, you know, that is probably a, you know, 90 days, 3 months to 6 months type thing to get to close. So all of the additional time before the, that equates to the 2 years is around, there's a little bit of dance before you get to the actual party. You know, there's a lot of pre-work and selling it to our own stakeholders, developing the right relationships, assessing their leadership, and they may not even be out to market at that point. And they are still kind of vetting internally whether they— what they want to do. Maybe they just want to, uh, you know, partition it out into a separate little business entity over here. Maybe they want to bring in an outside investor and take some chips off the table. They're still trying to figure it out. So, you know, we like to be at the table. It's always good to be close in at the table, be, be the favored interested party early on. And some of that takes, you know, time to develop the relationship, to go out, meet their leadership team, et cetera, before you get really into true due diligence, which often there's a time limit on that because often with two public companies, you know, they're not— you announce a deal and then you have a certain amount of time before you close. So it is not the whole 2 years, if that makes sense. But there is, I think if you do it right, the more comfortable both parties are and the more conversations that you've had beforehand, I think it helps culturally from a leadership and other consideration perspective, make the transaction much more smooth. There's this old saying from Peter Drucker where it's culture eats strategy for breakfast. Every day, right? So if you don't understand the culture of that company, if the communications isn't tight, if you don't put the right people in the right seats from day one, typically, you know, they have a head of sales, we have a head of sales, they have a CEO, we have a CEO, there's sort of a blending that has to happen. And rather than kicking the can down the road, often if you can assess all that and then lay out the new team from day one, this is how it's going to look and this is what the go-forward organization is going to look like, it actually provides a lot of— it inspires confidence in people that, oh, okay, they've thought about this. They've got a blend here. We'll bring— we had a saying that best of both, better together type of dynamic. So I think all that takes a lot of time. It's hard to do that type of work in just the core quality of earnings, financial due diligence and stuff, that kind of work in 90 days, you know, that, that could, that can be done. But all the, all the other stuff, the cultural fit, the assessments, the et.

Cetera, take, take longer. The culture is so important, particularly in deals that size. I'm an instructor at the Business Leadership Center at Southern Methodist University, which is how I met Ryan.

Great.

And I do a seminar on mergers and acquisitions and I do a case study on the merger, which I tell the students the difference between a merger and an acquisition is a merger supposed to be two equal businesses coming together. Right. And it's agreeable. It's not hostile. And an acquisition is, is an acquisition where one, one survives, the other doesn't. And oftentimes it's not friendly. But in the case of Chrysler and Daimler-Benz from some 20, maybe 30 years ago, They merged and Chrysler wanted to get into the European auto market. They, they didn't have any presence there, and Ford and GM were dominant over there for American cars. Mercedes wanted to come into the U.S. Well, they wanted a lower-cost vehicle to add to their line, and they wanted greater access to the U.S. Supposed to be a merger of equals, but Daimler dominated the C-suite after the acquisition. In fact, the CEO said to the Wall Street Journal after it was over with, he said, we said it was a merger, but, you know, basically it was an acquisition. We never intended for, you know, their people to stay. And one of the— when, when the Daimler people came to Chicago and sort of this Midwestern Lee Iacocca culture. Yeah. One of the first things they did was tear out the smoke detectors from the offices because they like to drink and smoke cigars. And, you know, and again, you've got this Lee Iacocca Midwestern values So all the, all of the Chrysler people left Chrysler, by the way, at the time was the most profitable automobile manufacturer in the world. And the Jeep Grand Cherokee, the Town and Country minivan, they had the Dodge Ram pickup truck. I mean, they were a dominant automobile company and everyone left. Daimler ended up paying a private equity firm to take Chrysler off their hands. So it basically just completely disintegrated and it was just a clash. So that process on their end obviously was not well managed. There was not a clear understanding of the surviving culture. And that's kind of a horror story. But clearly, and I assume that acquisition went well and served the purposes of both organizations. You know, when in my world, the difference between mine and his is there's at least one more zero on the deals he was doing and probably a lot less emotional involvement because I'm working with founder-owner operators. And we talked about this a little bit before we went on air because you've also owned and operated a small business. I have, yeah. And gone through the sale of a small business. And it's a very different feeling and emotional experience when you own a business and you bought it and you started it and you ran it and you're selling it to someone. Sure. Versus two corporate entities that are, you know, maneuvering.

Tell us about that.

What was, what was it like to.

Acquire a business, run it, and sell it?

Sure.

So, yeah, you know, first I'll say that the steps involved may be similar, but some of the intricacies, obviously you get a lot more parties involved and lawyers and there's a lot of back and forth. The larger you get, the more hands in the, more cooks in the kitchen. But my own experience with business ownership was in 2019, actually this is, you know, obviously pre-COVID. I signed a, I always wanted to own a small business. I've been passionate about education for some time and I, I've done some, I did some diligence out in the marketplace and I said, I want to own a kids education business. And I thought, you know, of course you could go out and start something, but there's so many franchises out there that operate in this space, whether it's Mathnasium or Kumon or, you know, C2 Education, the name, the list goes on and on. I found a concept around kids' STEM, which is science, technology, engineering, math, where they teach kids computer coding. So I signed an area development agreement, which means I'll commit to owning and operating multiple units, multiple locations in 2019. And so that when you buy or purchase a franchise, terms were 5 years. So I have 5 years, this territory, these territories to open, start, and run. So I brought Code Ninjas, which is the, the concept, to Dallas. We opened up our first location in Preston Hollow. Now, mind you, I signed the lease in 2019. Yeah, something happened after that. Yes, uh, indeed, something happened in March or so of 2020, and COVID hit, uh, businesses were closed, uh, not popular to own any customer-facing, not to mention education and kid-facing business. And you know, for as much prep work and diligence that you could do, you did, you know, very, nobody saw that coming. I certainly did not. But I signed the lease, I committed and we had contractors working, we were building out the space and we had to go. So you have to get, you have to pivot and get really innovative. But we rode through all of that and just started building slowly up. And then I had an opportunity to acquire. So I went out and acquired 2 other centers from an exiting owner. And frankly, it was a tough time to own a business like that. So he was looking to get out and it was very attractive in some ways for me because it, valuations were, you know, very, very difficult. And at that point it was emotional for for the owner where there's all this underlying stuff, right? But they've just gone through a really tough period. They have old debt. They have, you know, these leases that hold personal guarantees. You know, when you start a business, when they say it's lonely at the top, it's true because you've got a lot riding. You've got personal guarantees. You've got SBA loans.

Maybe you have, you know, where your.

House is pledged as collateral. Your house is pledged as collateral. They could go out even if you file bankruptcy, any asset that you have, even including your personal residence, is subject to, to play. So he wanted to exit. And so I acquired two more. So, so I started a unit, I acquired two more, ran them, grew them. And then just recently in January, I sold to a small group of buyers here and I've exited that. So it was quite a learning experience, as you can imagine, in a couple of years. But in that process, you know, even to sell a small business like that, you need a purchase and sell agreement. Yeah. We had escrow, we had a lawyer involved, and you go through some of the same stuff. They had a due diligence request of, you know, 10-odd items. They wanted customer lists, they wanted financials, they wanted the lease terms obviously, and some other things. And, you know, I was on the sell side. I submitted to them and we went back and forth. We came to terms and then, we sold and exchanged keys, and then there was a short kind of training, a ramp-up period. As a small business owner though, you can appreciate this, I wanted to make sure that, you know, I had a, we had about 15 total staff. I wanted to make sure that our center managers and our staff were taken care of, that they were, you know, there was a smooth transition between myself as the owner and the new group of owners. That, that worked out well. And I wanted to make sure that our customers— because frankly, some of them were friends of mine that sent their kids to our local centers, and some of them had been our customers since the very beginning in 2020— I wanted to make sure that they were well taken care of and that they felt like it wasn't, um, you know, leaving them and all that. So there are a lot of other things, um, that come into play, whether it's, you know, a 6-figure transaction all the way up to a 10-figure transaction, which we always just— the billion-dollar transaction that I was a part of at CBRE. It taught me a lot. I'm very grateful for the experience. I have some new battle wounds and scars. You know, when, when you are a small business owner, we were B2C. Of course, there's a lot of B2B small businesses now that are being transacted from the baby boomer generation as well. But when you own a small business, you know, the buck stops with you often. And I because it was all me. I didn't have partners. I funded the business with my own equity. So the buck stops with you. If the air conditioning goes down, which it did, they call you. The lock breaks in the front door, something happens, somebody breaks in, whatever, theft, all this stuff, it goes to you as the owner or me as the owner. So it, that it's hard to remove yourself personally from that. Whereas if you work in a large corporation, even if you're at the highest levels, you know, of course you do have sleepless nights and stuff and you're thinking and stressing about this stuff. But at the end of the day.

They'Re not coming for your house.

They're not coming for your house. You can walk away, you know, everything will be okay. There's all, you know, you're, you're just a, you're, you're putting the corporation and all your stakeholders, you're acting in their best interest as a as a fiduciary, but you know, you're not the principal.

So one of the things Lane always talks about is when people are selling their businesses, they always have an inflated, what they think it should be worth. And coming from your experience of going through these multi-billion dollar transactions and then going into your own situation, were you, what lessons were you able to port over what was new? And then also, did you also suffer from this concept where it's like, well, I should be paid at least $20 million for this thing, you know? And they're like, well, I'll give you a dollar. And you're like, but it's worth 20. And they're like, it's worth a dollar.

Right?

Like, how do you navigate that process.

Even though you've been on that larger side? Oh my goodness. Yes. Well, we've— I saw so many times on the buy side, we were buyers when I was working at CBRE. So many people come, and if you've created something in the property space and you're trying to exit, one of your strategic buyers is probably, you know, you're probably looking at CBRE, Jones Lang LaSalle, Cushman Wakefield, Colliers. There's a small group. And then maybe you can exit to private equity, maybe you can exit, but there's only so many paths. So if a company is selling, it lands at your doorstep and often they have as, as sellers, we were buyers, they're sellers, they have unrealistic expectations, right? Because they just have this vision that they've built this thing, it's their baby and it's worth infinity, but I'll let you have it for $100 million, whatever it is. And you, I saw a lot of that. And then on the flip side, I have so much appreciation for that because Um, I have 3 kids, and at one point I was like, this is my 4th kid, the center here. I saw it built, built it, and this is my 5th kid, this is my 6th kid. I had 3 centers at one point, and each of them have different, um, intricacies involved with the demographics, the, the customer base, the, the, the, the layout. This one faces the street, this one faces inward, all this stuff. But they're, they're your baby, right? And it's when it comes to putting a value on that thing that you've built that you have emotional attachment for and that baby, it's challenging and the value's in the eye of the beholder in some sense and it's only worth as much as somebody's willing to pay for it. So there's a market for these and an industry for these and Regardless of how much you've put into it or how much you think it might be, if there's not a willing transactor on the other side, it's not worth that, right? So I think you have to come to terms. I certainly did with that. And for me personally, this is all very interesting because when I came in, I wanted to own a small business. I wanted to have some independence and work away from what I call the man, the corporate machine. And so I wanted to be a small business owner and kind of run my own thing. During the process of 5 years, this is how much can change in business and commerce. Lane and Ryan, this may not be no surprise to you, but the guy who started, he grew this thing to 250 locations. I happen to own 3 of them. He grew this franchise to 250. Guess what happened during those 5 years? He exited, he sold it to private equity. So a middle market private equity firm went in and bought it. They changed the terms, you know, the royalties had suddenly gone up. I was faced with the end of my 5-year contract. So it was flipping from a 5-year to a 10-year thing that I had to re-up on at higher royalties, et cetera. And so personally, you have to reconcile, well, I either do this or I exit at this, you know? So that's when the rubber hits the road and you have to have a more realistic, for me, you know, what's your, next best option, right? What's your alternative? And if you don't want to go down that route, you've got to readjust, recalibrate your expectations.

Yeah, on that seller expectations that you talked about, the best alternatives— Harvard has a program, your alma mater, and I don't know whether it's a formal program— I think it is a formal program on negotiation strategy. Yeah, they publish some books and white papers on it, and I read Sorry, I can't remember the name of the book, but very well written. It's kind of a kinder, gentler, let's figure out a win-win for both sides as opposed to a zero-sum game. And we're just adversarial. I want this and you want that, and one of us is going to win and the other is going to lose. But I used this recently with a client who said, I don't think this is a fair offer. And we had one bidder, one, right? We had one buyer, right, for this business. And we had talked to pretty much everybody in the industry that could potentially be a buyer. And this was it. Sure. And I said the term they used at Harvard is the best alternative to the negotiated agreement. Yes, that sounds very familiar. Right. And so I said, okay, so what is your X years of age? You want to retire, you don't want to run your business anymore. We've, we've gone to market, we talked to every possible buyer. We have one offer on the table. You're going to put you know, X amount of dollars in the bank, you're going to have an employment agreement, you'll get to work for a few years, transition out. What is the alternative? What is your best alternative, right, to this offer? Right. And ultimately, I think he came around and went, well, I— because I said, you're either going to sell your business.

Or the business will close, right?

That's right. And that does happen, right? And we have a buyer, a ready, willing, and able— as a private equity firm, you know, ready, willing, and able. They have the funds, they're going to write the check, you know, so, but I think that's probably the biggest challenge I face in the lower middle market. I mean, I work with business typically $10 to $50 million enterprise value. Sure. People that have been successful in business, but they've never sold a business. They don't have that skill set. They don't know what their business is worth. Whatever offer they get, probably they think it's not fair. They feel like they're being outplayed by private equity, right? And they've heard bad things about private.

Equity and, you know, and, and so.

Yeah, but sometimes, rightly, rightfully, sometimes, yeah. And look, they're, you know, like every other industry, there's some good players and some bad players.

Sure.

And, and, uh, I've dealt with some great private equity firms that I think have an alignment with our sellers.

And I mean, I'd really like to.

Go to Red Lobster for dinner. Yeah, I'll find one of those for you. Uh, but, you know, just trying to manage those expectations I think one of the other things, and maybe a contrast to those very large transactions you worked on, is there's a sense that when they get to the LOI that it's done, right? Oh yeah. Yeah.

And look, it's just getting started. It's just getting started. Because most of the time it's, they're non-binding too, which means you can walk away. Absolutely. Until they are. It's just, you know, your intent to.

Purchase XYZ and, you know, this. You got engaged, but they may not show up at the altar. You know, when it's time to get married, I think that Firmex, who does a survey of the M&A space, said that for $50 million roughly sized transactions, 7, 3 out of 10 fell out between LOI and closing. So 30% are falling out after the LOI is in place. And this is in medium-sized deals, right? This isn't the mom-and-pop grocery store where maybe the due diligence turns up that the books aren't accurate or, right, you know, there's something going on that they didn't know. So But the failure rate in, in that small to medium-sized business space is 60, 70, 75, 80%. And you sort of think about that, there are 28 small businesses in the US. Most of that owner's net worth is tied up in that business. They've decided they want to sell and retire and they're unable to affect a transaction. Sure. Just think about the consequence of that, how that, how that plays out.

Right.

So getting it right is really important. But due diligence in that space is probably very different than the due diligence with Johnson Controls, right? Because they got audited books and records, they got a team of lawyers, they got great accountants, you know, and so probably is more about, although you got to dot the I's and cross the T's, you can always argue about purchase agreements, right?

Right.

And reps and warranties, but all those, yeah, you know, indemnities. All that. The interesting thing about that one that created some complication is with a large carve-out, often there are services being provided to that entity that you want to carve out and take it off and own as a separate entity, but you can't just disentangle that from day one. So often there is a— oh my goodness, there's a term for it, but There's service level agreements and SLAs where you as a buyer have to agree and make some contract to pay the seller for 6 months, 12 months, however long you need to disentangle this thing out so that it can survive on its own as its own little entity. But, you know, you still might need a couple of services here and there, legal or HR, etc., during that time frame because the business is not partitioned off enough because they've been operated together under the Johnson Controls umbrella, which also makes products and chillers and other things. So it's not as easy as, as just cutting it off on day one. So that created some complications because you have to come to agreement around what that's gonna look like, how much you're gonna pay them over what time period, and what kind of service do they have to deliver during that time. So, you know, it's all— M&A is interesting. You spoke of the Daimler Chrysler example, but you know, it just reminds, should be a good reminder to us all that you can destroy a lot of value in M&A. Just as I think in some ways it's a 50/50. I've seen just as many fail spectacularly as become really successful, you know, with the combination of two. But if you're not careful, you just because you buy and squeeze two things together or forcefully to do it, it doesn't mean you automatically create value on day one. Customers could get spooked and customer concentration's a big deal in M&A. And if you haven't vetted that out, understand what that risk is in the 5 customers that make up 80% of revenue, you could be in a really tough spot if 2 of them decide and they have some 30-day trigger, right? After the close that they're gonna walk because they don't like You being the new owner and you haven't interviewed and vetted them and, and kind of done the risk assessment there. So I, I think the, the value creation and destruction is, is real in M&A for sure.

Yeah. So, so as we come to a close, uh, I'm glad you, you, you brought up the whole destruction of value.

Yes.

Because it end on a great point. No. Well, I don't wanna end on that. I, I wanna use it as a segue to the opposite of that, but this is, but we do need to wrap up, which is like the fact that, you know, you led $2 billion of acquisitions and grew EBITDA by 3x over a period of 8 years. Like, because that's literally the opposite of what you were just talking about. You know, the risk is destroying value, but obviously if you get a good team or good management or a good process, it's the creation of value. So I guess my question would be is like, what are the tried and.

True proven ways to create value?, after a new acquisition? Um, I think assessing and understanding cultural fit, thinking really long and hard about, um, the communication plan and how you're going to lay it out to your stakeholders. So, you know, it's very tempting and easy to, to roll out a 40-page deck that has all these charts and graphs and, you know, showing how the, the deal's gonna create a lot of values and synergies and customers, this and that. But for the frontline worker, that's not always what's top of mind or what's important or what will really drive what they need at that point in time. So, I think it's simplifying the comms such that it can be delivered to the audience wherever they're at and where they're coming from. So, distilling the combination in or the merger, the combination, the acquisition, in ways that the stakeholder can understand. So comms is critically important. And then getting the right leaders in the right seats quickly and empowering them to take charge. I think one of the— I've seen this go both ways, but the worst thing sometimes is you get a combination of equals and then you've got two equals across the table from one another. And you know, who's on first? Are you leading this? Am I leading? Where were we dividing? You know, it becomes really, really tricky. And an organization in limbo is value destruction in my mind, because for each day that goes along without certainty in who the leader is for whatever domains and specific areas, the more confusion and chaos it causes, and that just spirals and it creates rumor mills, uncertainty, and then customer defections and all of that. So I think those are a couple of things I would call out. Really assessing and understanding the cultural fit, getting the comms tight and rolled out on day one, and then the leadership, the right people in the right seats right away.

Perfect.

Well, thank you so much for joining us today. Thank you. Pony up. This is great. I appreciate the opportunity. This is wonderful. Thank you, Jimmy. Congrats to you on this platform and.

This podcast that you've built.

Yeah, thank you so much for you. Thanks. It's fun. We get to sit around and do.

This with guys like you, right?

Wonderful.

And learn is, I mean, is it all about learning? And the best way to learn is from, like, like Lang said, people like yourself. Yeah.

Thank you so much. Oh, you're welcome.

Yes.