Insights

Marty Fahncke | Finding Success in the Lower Middle Market
POSTED 7.20.22 M&A Masters Podcast

In this week’s episode of M&A Masters, we sit down with Marty Fahncke to talk about M&A for the lower middle market. Marty is a partner at Westbound Road, LLC and has over 30 years of experience in building and growing businesses.

Listen to learn:

●How businesses can double revenue without increasing sales

●How owners can leave a legacy with their business

●Marty’s takes on M&A trends for 2022

●And more

Mentioned in this episode:

https://www.westboundroad.com
https://www.linkedin.com/in/martyfahncke 

Transcript

Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority on executive and transactional liability and President of Rubicon M&A Insurance Services, now, a proud member the Liberty Company Insurance Broker Network. Welcome to M&A Masters, where I speak with the leading experts of mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today I’m joined by Marty Fahncke, partner at Westbound Road LLC. Based in Kansas City, Westbound Road focuses on providing lower middle market owners and founders advice and support for growth, job creation, and returning exponential value to stakeholders through innovative growth and investment strategies. Marty it’s great to have you on the show. Welcome to the podcast.

Marty Fahncke: Oh, I’m excited to be here..Patrick. Thank you so much for having me here.

Patrick: Yeah, I know you’re a veteran of this channel out here with podcasting. So I’m thrilled to have you as well.

Marty: I love doing podcasts, I love teaching and training and forming and helping others to be inspired. So I appreciate you giving me a platform to do that.

Patrick: So before we get into Westbound Road, let’s paint a picture real quick. Let’s talk about you. What led you to this point in your career?

Marty: Ah, so I had my first mergers and acquisition transaction long before I knew what mergers and acquisition was. When I was in my late 20s, I started a business with a couple of friends. And we had a great deal of success very quickly. And we, somebody came along, we were in business about 18 months, and somebody came along and said, you got a great business here, we’d love to buy it from you. And we said, okay, we had no idea, you know, what we what we were doing. They offered us a little more than a million dollars for the business. And we thought that was all the money in the world at the time. 

So we sold the business. And I thought that buying and selling businesses must be pretty simple, because that only took us like, you know, a month and you know, so we learned some things from that, or I learned some things later on. But I didn’t learn them at the time. Fast forward a couple of years. And I was working for a company that was PE backed. And we were on a pretty pretty aggressive growth strategy. And but we were primarily growing organically. And we were having some major successes organically from marketing and things like that. I was having some difficulties with a particular company that was both a competitor and a vendor. 

So very interesting situation. And I was in the CEOs office and just complaining about, you know, these guys are doing this. And they’re doing that. And they’re actually like running circles around my team. And they’re selling our own product at 10% less than we’re selling it and so they’re siphoning off our customers. And I’m just kind of ran on, and he goes, well, why don’t you go buy them? And I said, what? He goes, why don’t you go by them if they’re that good. So I’m like, okay. 

So I had had some conversations with the founder of that company a couple of times, mostly adversarial. But when I called them up and said, hey, would you be interested in selling your business? He’s like to you? I said, well, yeah. And he goes, Yeah, sure. So through, you know, did the due diligence process made an offer, bought the business, we wound up we wound up growing that division from a million and a half in revenue per year to 30 million in revenue per year in three years. 

Patrick: Wow. Oh, my gosh. 

Marty: And that was and that was my first kind of real taste of real M&A. But that was that was almost 20 years ago. We subsequently went on to to purchase about $300 million more in businesses over the next few years. And that’s when I really got excited about it. And really understanding that the power of scaling a business through M&A and not just organically and the power of an entrepreneur starting a business from there, actually in this particular business, it was the quintessential dorm room business. 

This guy and his friend had started this business in their college dorm room, and it had grown into where they’d leave some space. And then here I come along and offer you know, a couple million dollars for the business. And, you know, they were only 20. I think they were 24. 23, 24 years old at the time. Here’s the really cool thing about that is that he, so he wound up working for me because I bought his company. He he then we both then left the firm that we had helped grow. He started a company and I went to work for him for a little while. And we helped with an exit of a $300 million exit of a large CPG firm. 

And then he went off and he and I went off separate ways and did different things. And then he went and started another company and he sold it to Adobe for $560 million. So his very first exit was a pretty small exit in comparison. And that was when I bought him. And then we were together on an exit. And then he went on and did a massive exit on a really cool company. And it’s been really fun to watch his career progress from literally a kid who was just out of his dorm room to, you know, a $560 million exit.

Patrick: So that nonstop innovation is just breathtaking. You think you get a big liquidity event, you run off to find some island somewhere and sit there. And and just those creative juices keep going. And yeah, the great things about what you just said, it underscores my philosophy of mergers and acquisitions, because most people out there when they think mergers and acquisitions, they think about Amazon buying Whole Foods. And it is not  Company A buying Company B. 

It is a person or group of people choosing to partner with another group of people. And together, you know, one plus one equals five or more. And you just personifying exactly your backstories exactly there. Now, as we switch over to Westbound Road, I mean, you didn’t name this Fahncke Advisory or Fahncke Services. So how you know, in talking about Westbound Road and what you do there, how’d you come up with the name?

Marty: You know, it’s funny, nobody’s ever asked me that on a podcast. So that’s a really cool question. And there’s actually a couple of there’s a lot of thought into it, and a couple of reasons why. So, first of all, it’s inspired by a Bob Seger song, Roll Me Away. And the opening, the opening line of the song is took a look down a westbound road, I was tired of my own voice. So I’m a big motorcycle aficionado, I ride a motorcycle, there’s a picture of my, picture of my bike right there. And, in so, um, you know, Bob Seger fan, it’s all about riding your motorcycle. So that’s kind of cool. It’s that song is written about a real life trip that he took from his home in Michigan, to out to Jackson Hole, Wyoming. 

And it’s really reflective of a time and so I’m, I own properties in a couple of different states. But I’m in the process of consolidating everything and buying a big place in Wyoming. And that’s eventually where I want to retire. So it’s kind of pointing towards Wyoming. But also, the concept of going West is always, it’s kind of the American spirit, right? There’s opportunity in the West. When when you think about, you think about the land of opportunity, you think about going forth and going forward. Right? You always think about going West and I live here in Kansas City now. Not not far from here is St. Louis, which at one time was called the Gateway to the West. The Arch is called the Gateway Arch. 

Because that was that was the difference the boundary between the civilization and the wild frontier back in the early days. So so there’s a lot of thought that went into it. And why it doesn’t have my name is because one of the problems I see, especially with lower middle market businesses and smaller entrepreneurial businesses is their businesses where the owner is so involved in the business, and it makes it very difficult to sell. Because you handed out and basically somebody’s just buying a job. And so the best kind of businesses that have small businesses are business to sell and do mergers and acquisitions deals with are businesses where the owner is not involved daily. 

And oftentimes, you can tell the business is this like that, because the owner’s name is on the front of it. It’s them, right and without them, the business may struggle. So I built Westbound Road, or started Westbound Road intentionally to eventually leave that as a legacy business. And I won’t always be here to own and operate, I hope I’ll always have the influence in it. It’ll always exist in helping businesses acquire and be acquired. But it doesn’t have to be me running it. And so I didn’t want my own personal name on it, because someday I want it to be bigger than me and last longer than me.

Patrick: Well, great. Well, now before we get into the size,and ideal client profile and things like that, let’s talk a talk about what Westbound Road provides. What are you delivering and offering to members of members of the lower middle market first and then second, why lower middle market? Because you’ve been doing this for a while. There are a lot of PE firms that started there too. And they’ve grown in appetite has grown. You haven’t done that.

Marty: You okay, if I answer those questions in the reverse order?

Patrick: Help yourself. I think that’s great. Please.

Marty: Okay. So why lower middle market? Okay, so, you know, 1999, I was working for a big, big company, we had grown very substantially. We grew from from zero, literally zero in 1996. And in three years, we had grown that to a $300 million company. It was it was one of the most meteoric fastest tracks I’ve ever been on it from a startup standpoint. But after a couple of years, I realize that I don’t like working with big companies. I love entrepreneurial businesses. And so I started, I started a business, primarily providing consulting services to entrepreneurial businesses. And I just love working with entrepreneurs. I’ve worked with 1000s and 1000s of entrepreneurs. 

Everything from inventors who have come up with a great product that we’ve put on QVC, to people have come up with a great business idea and turn it into a business, etc. The passion, the fire, the devotion, the live, eat, sleep, drink, your business passion of an entrepreneur is what I thrive on. And so I have served that market for for over 20 years. From a from a business growth standpoint, primarily, which was the core the core element of my business. For the most of the time. 

When I decided to turn my attention and focus more on M&A and overall growth strategies versus just marketing strategies, I knew that I wanted to serve that same market. Entrepreneurs are often underserved in, in a lot of different ways. But one of the ways they’re really underserved is with with exiting their business and mergers and acquisitions. Like we said, people think of big things, right, Elon Musk’s buying Twitter and things like that. But I’ve seen time and time again, where an entrepreneur has built something of great value. And then when it comes time to retire, they thought their kids were gonna take it and they find out their kids don’t want it. 

And, and they don’t, it’s shocking to me how many of them just turn off the lights and walk away. And yet they’ve built something that has value. And so why don’t we extract the value from that and let somebody else carry it on into the future? And, you know, I think the statistics is like 80% of businesses just go out of business, right? Even if they’re successful and profitable, they just turn off the switch and walk away. Why is that? And so I really wanted to serve entrepreneurs and lower middle market businesses that have that fire. Help them all the way through the process from growing their businesses, and then exiting their businesses in a way that helps them be as successful as possible. So, so that’s the why.

Patrick: Yeah, well, that’s the that’s the compelling reason why, you know, I’m so excited to have you here, because I’ve been in a lot of other previous episodes been talking about how for the lower middle market, and they don’t know any better because they’re too busy working their craft, not seeing what’s what options are out there. A lot of times, they just default to an institution or to a competitor, you know, a strategic acquirer who may not have their best interests in mind. 

And then I come talk to you, and the reality is there are a lot of owners and founders that literally just turn off the lights and walk away. And what a shame. I mean, just all that work that was like, instead of a legacy, that was a paycheck, now I’m moving on to the next chapter in my life. This is why I’m so thrilled to have you here. Now, let’s talk about some of the sorts of, what are you doing out here for these people? Because you’ve got some real distinctive value adds that you provide.

Marty: Yeah, so thank you. Well, well, first of all, we are we are not to be confused with business brokers. So business brokers, you know, Joe entrepreneur has a business, says I want to sell it, a business broker goes out and puts it up bizbuysell and, you know, collects the commission. We are advisors, and and we are much more strategic. So couple of differences. Number one, we’d get involved very early in the stage and the earlier the better. So we often are involved in in a potential business exit years before the actual exit. Why? Because we’ve through through doing, you know, interviews with with, with podcasts, such as yours and magazine articles and that we’ve reached out to entrepreneurs, said if you’re thinking about exiting your business, the time to be thinking about it is three years before you’re ready, not three days. 

Because if you’re if you just decide to sell your business and you put up there’s a lot of stuff that has to happen. And you may not have done the right things to prepare it for exit. So we work with a lot of entrepreneurs who are planning their exits in ’23, ’24, and even ’25 and beyond. And so we’re advising we’re making sure okay, how do you build this business so that it’s going to have the highest enterprise value? And then what does that look like? And making the decisions from the end in mind, right? What’s the outcome? Who do we want to sell this business to three years from now? Is it a PE firm? Is it you know, is it a is it a strategic acquirer? Is it a large, you know, multinational? And who is it that we want to buy this business and what do we do to make it at most attractive to them in the timeframe you’re thinking about? 

So we’re getting way early into the end of the process as early as possible. And we’re providing that strategic advice and counsel to to our clients so that they’re, they’re equipped. That’s on the sell side. On the buy side, we’re working with clients and helping them grow through acquisitions. So a lot of entrepreneurs if you want to, if you’re doing a million dollars a year, and and next year you want to do $2 million, every entrepreneur out there says, How do I do that? What’s the one thing they all say that they’re going to do to to get from 1 million or $2 million? What’s the what’s the most logical conclusion? 

Patrick: Double sales.

Marty: Double sales. Thank you. I, I’m always, I’m always worried when I, when I ask that question, because I’m not sure if anybody’s gonna know the answer. That’s right. The only way to grow your business is to increase sales. Wrong. You can overnight, double your revenues by acquiring another million dollar business. And here’s the problem. If you’re a million dollar business owner, and you think I want to acquire another million dollar business, you think you need a million dollars to go acquire it. Wrong answer. But most people don’t know that. Most entrepreneurs and business owners have no idea about this. So we we can help that business owner who’s doing a million dollars a year, turn it into a $5 million a year business very, very quickly. 

And oftentimes for zero cost, because we have ways of finding money for them that that, you know, tapping existing resources, inventory, things like that. You know, the SBA, you know, it’s a little known, little known fact, a lot of people don’t know that. So you can actually use an SBA 7A loan to go and acquire, if you’re acquiring a business that’s in the exact same zip code, that is an expansion loan, it’s not an acquisition loan. You don’t have to put a downpayment down. So if I’m a million dollar business, and I want to go buy another million dollar business, I can literally do that, for not one penny out of my own pocket. Why wouldn’t I? So that’s just one of the many. So we help businesses grow through acquisition, we help businesses who want to exit. 

So we’re very much on the on the advisory and strategic standpoint. We also, something that sets us apart, is we do a lot of partial partial acquisitions, or strategic acquisitions, where it’s not the full business. So I just was working with a client today. So we helped them sell 30% of their business, it was an agency. We helped them sell 30% of their business to a larger, larger agency who didn’t have a service that they wanted. So that agency is now funneling all of this white label service down. And now this, the smaller agency has now tripled in size. 

Okay, so the owner sold it. Sold 30% of it, took cash off the table, partnered with a strategic buyer, has grown the business substantially. And now they’re looking at selling the rest of the business for a substantially higher multiple, and they’re, they’re double dipping. So we’re helping with that. So you don’t always when you sell a business, it doesn’t mean you always have to sell the entire business. Sometimes that means you’re selling part of it, and you have an opportunity to double dip or triple dip three different ways. So we’re helping and advising on all of that sort of thing.

Patrick: Well, I can imagine also, when we’re in this low, lower, almost micro market level, you don’t have all the big SEC compliance issues and regulatory issues in there. So you’ve got a little more time and more options that you can deliver. It’s just everybody at that level, unless they’re coming to you has to do it themselves. And that’s, that’s a real challenge.

Marty: Right. Yeah. And it can be it can be tricky. Yeah, you’re dealing with companies that aren’t public, they aren’t, you know, they aren’t generally, they’re usually, you know, private, privately held, generally LLC, sometimes s corps with, you know, with just very few ownership in their, in their, in their cap table. And so you got to be you got to be creative, but it’s, it’s just, like I said, it’s people don’t think about this stuff. And I just like turning the light on, you know, I love having this conversation with, with an owner of a lower middle market business and kind of showing that. And then all of a sudden, they just go, well duh, like, it’d be a lot easier to buy a million dollar cash flow than to go double a sale. Right? And so and then as soon as they understand it, you know, they’re like, how do we how do we get started? Let’s go.

Patrick: And you already preempted me, because I usually ask this question off script, but it’s just when a professional like you comes in, you’re looking at things from a different viewpoint. You know, have you experienced those light bulb moments with your client where you can do that? I didn’t know that can happen. And I mean, you’ve just done that. And and those are the types of things is, as you and I talk, I hate to steal your thunder but you’re creating money out of thin air.

Marty: Well, that’s. Thank you. Yeah. And that and that is that is a superpower that I have. I’ve been told I have many times. I have I have literally, I can look at just about any business and figure out how to help it grow or how to how to create cashflow. Whether it’s through marketing, whether it’s through M&A, growth by acquisition etc. Strategic Investment you name it, and that’s one of the things that’s just that’s my passion. 

That’s what I wake up every day just excited to see what what comes next because I love the creativity of putting deals together, putting ideas together and making making things happen for my clients. I’m one of the lucky lucky that gets, you know, I love my job I, I’ve always loved my job. And I’ve, you know, I’ve never been in a place where I hate my job and I don’t think I, man I bound out of bed every day just excited to do what I do.

Patrick: Well, you have creative juices flowing. And that always gives you a you know that joie de vivre going. So, now for all these great services. Give me a profile. Who’s your ideal client? Both buy side and sell side?

Marty: That’s yeah, great. Thank you. So on the on the sell side, if you’re looking to sell your business, our ideal client is going to be somebody who is we don’t do a lot of bricks and mortar. So we’re not we’re not looking for the dry cleaners, restaurants, things like that. Those are those are for the workers. Yep. So we primarily focus on digital, virtual and product based businesses. So digital and virtual would be ecommerce businesses, SaaS agencies, D to C businesses, and things like that. And then on the product side, we do, so meaning, you know, businesses kind of like singular product focus, or they have a product line, we do a lot of CPG, consumer packaged goods, some food and beverage and a lot of health and beauty, and things like that. 

So if you are an inventor that’s come up with something great, and you’re selling really well on Amazon. And you’ve go, and this happens a lot. You’ve got some great idea, and it starts selling well. And suddenly you have a business. And then you realize I’m not a business person, I’m an inventor, right? And so I need I need to move this off of my plate. So I can go in and invent some more things, which is very common. Those are the kinds of things we’ll we’ll get involved in. But like I said, we don’t really do gas stations and restaurants and, you know, beauty salons, things like that. We do work globally. So we have businesses that transactions all over the globe. 

We’ve got businesses right now we’re doing in the UK, we’ve got Germany, France, the Ukraine, which has been an interesting one. Luckily, it’s, luckily, the the owners had the foresight to incorporate and headquarter their business in the United States, but they’re all in Ukraine operating it. So that’s, that’s been a tough one. And buyers and sellers. So from a from a seller standpoint, that’s that’s kind of who we look for. On the buy on the growth through acquisition standpoint, we’re a little more a little more open minded, because, again, it’s got to be something that has has growth opportunities, but but we work with a lot of different clients. 

So we you know, we’ve got interior design firms, we’ve got a big Airbnb based business that’s, you know, that that’s in that that’s area that we’re working with. And then we have obviously the same clients that I mentioned on the sell side, ecommerce businesses, agencies, digital businesses, things like that. So so on the growth through acquisition side, we’re a little more flexible, because there’s, there’s ways we can I don’t want to go out and sell a gas station or whatever, but I can help somebody that owns a business like that grow.

Patrick: I mean the buyers are more prepared and have a better platform.

Marty: Right, yeah, they if they have a platform business, then it’s a lot easier for us to help them grow that platform substantially.

Patrick: One of the things that’s happened with mergers and acquisitions and how things have actually accelerated over the years is that there are two issues that are coming out, you know, both the sharing of information professionals like you that are helping, and then also the insurance industry is come in to help remove a lot of the risks that would otherwise sidetrack a lot of deals. And remember, you’ve got owners and founders, they’re dealing with their own money and their own future. And so there’s going to be those two elements of fear and greed that I can conspire the side sidetrack things. Now the insurance industry came in with a way to insure mergers and acquisitions transactions called reps and warranties, insurance. 

And it essentially takes the indemnity obligation away from the seller and brings it to an insurance company so that if there’s a breach of the seller reps, the buyer suffers financially, buyer knows that they have a recourse and they’ve got remedy and they know exactly where they go. Seller gets a clean exit. And so it’s been moving very well. Now, reps and warranties was reserved for nine and 10 figure deals only. Okay, you had to be north of $100 million in enterprise value to qualify. Over the last four years, that eligibility threshold has come down, but it’s only come down to about 20 million. At the bottom, maybe 15 for an exception. And you’ve been involved in a lot of good size deals, Marty, good, bad or indifferent, what’s your experience been with rep and warranty?

Marty: So obviously I have I have done some big deals in the past. That’s not my focus anymore. But I’ve been involved mostly on the buy side. You know, when we when we’ve been PE backed and we’ve done a lot of big acquisitions, and we’ve had obviously we’ve had those those types of insurance policies available and have utilized them. One of the reasons I’m really excited to be talking with you today is because I learned about your transaction liability program which is unbelievable, it’s unbelievable. I’m so excited about it. So going way back in my history way, way, way back, I used to be a real estate agent. And I was, I was eventually I was one of the top real estate agents in my entire state. And I loved I loved helping people get into homes and sell their homes and achieve their dreams that way and all that good stuff. 

One of the things that I had as a mandatory piece of any transaction I did was I always required my sellers to provide a home warranty which covered you know, the furnace and the plumbing and electrical and made all the things in the home, for the buyer. And I would just, when I would do the net, the sheet and net that out, I would just include it. I wouldn’t even give them an option, I’d say this is this is how much it is. And you know, here’s your here’s your bottom line. And after all your fees, this is what you’re going to have in your pocket. And they go okay, sounds good. And and I never, it was never an argument because I’d already built it into the price. And why did I do that, because I learned early on that things can and will go wrong. 

And if you’re a homeowner, whether you’re on the buy side or the sell side, it’s probably one of the biggest transactions if not the biggest transaction financially you’ll ever have in your entire life. And there is a lot at risk. And so I had some problems, I had some deals go, you know, after the close, I had buyers that you know, hey, turns out this is a problem and it’s gonna cost $30,000. And, of course, the seller has already gone and spent all the money and it’s it’s a huge problem. So I just said, I want you to do a deal without a warranty period, and never had a single problem since. Now as far as enterprise level, you know, reps insurance. Yeah, it’s never been really available at the at the lower middle market range. 

And so when I learned about your product, I got so excited because it is a must, I am going to be requiring it on all my transactions. Why? Because, yes, I have you know, insurance and liability insurance and all that kind of stuff, but I’m at risk, my sellers are at risk. And so why why wouldn’t we protect ourselves? I have car insurance, I have life insurance, I have home insurance, I have motorcycle insurance, why wouldn’t I insure my livelihood? And why wouldn’t I ensure that my sellers are protecting the biggest which is even bigger than their home usually, the biggest transaction of their life. 

So I am a big advocate of insurance. And I love, I love the fact that we can insure a deal where for 10 grand, you know, especially if we’ve got a deal that’s maybe which was very common, we’ll have a deal that’s that’s on the fence because through due diligence, you know, the the prospective buyer may have found something. Oh, I don’t know about this. And what if that happens? And what if that happens? And I don’t know, maybe I’m gonna short you, I’m  negotiate down and, and, you know, let’s reserve 100 grand or 200 grand or something. 

That’s a big chunk of money. Well, okay, let’s let’s talk about this, if we can insure that liability and if it actually happens, you’ll get paid out. And on the sellers, the seller side, you know, it might be 10 grand to make $10,000 insurance policy to exclude a $200,000 reserve or deduction that that math is a no brainer. So I’m really excited about that type of product becoming available to lower the market.

Patrick: Yeah, we’re very excited. It’s called transaction private and transaction liability, private enterprise TLPE. 

Marty: TLPE. Okay.

Patrick: Unique is that it’s a sell side policy. So the policyholder is the seller, not the buyer. Because it’s the seller, the seller needs to provide some information to the underwriters in the application and their financials, and they’re gonna get a quote, for up to $10 million of the enterprise value. We get deals up to 20 $20 million are eligible. There are certain classes that aren’t eligible. But in most small businesses, this is the area. And what’s nice is I’ve had all these experiences where a SaaS company or $7-8 million owner founder firm is getting bought by a very large strategic and you know, big box company or something like that. 

And the strategic is not going to get rep and warranty. They’re not going to expend the the costs, even if the seller offers to pay the expenses themselves. The buyers like we’re not putting it up because we don’t want to share our diligence with underwriters. The elegant part for TLPE is we’re going to insure the seller, we’re going to make sure that the seller is protected and they don’t require the buyer’s approval, they can just go ahead and get the protection there. And oftentimes what we see is beginning to unstick deals. 

And as we want to get the word out, you know about Westbound Road and the services you have, let’s also getting the word out about this is this was something that has not been available until just the last year. So it was a great opportunity and work with people like you.  You’re representing a lot of sellers, this is a real good way for them to be best positioned to move forward, reduce reduce risk, and hey, you know, they could also negotiate that deduct or the withhold from the buyer down to match the deductible of the policy. So it works out, it works out very well.

Marty: Yeah, I love it. I’m really excited about it.

Patrick: Well, that’s why we’re talking out here today. I really, really appreciate this. Now, as we go forward, you know, we’re midway through 2022. What trends are you seeing going forward? You and I just before the show, we’re talking about how business is up, but you know, what do you see down the road? Either macro or, you know, for Westbound Road specific?

Marty: Man, I wish I had a crystal ball, I’ll tell you. You know, we had a really, really good 2020, even with COVID and everything else, because a lot of people were like I’m out of here. I’m done with this. And so obviously, that was a great M&A year. 2021 was a record year, globally. I mean, everybody is, you know, it’s just insane. You know, more more M&A transactions than ever before. 2022 is really interesting. On New Year’s Day of 2022, which was a Saturday holiday, everybody’s supposed to be off, my phone, and my email started just going crazy. It was like everybody made a New Year’s resolution to buy a business. I don’t know, it was weird. And I was like, well, this is a weird anomaly. 

The next day, which was a Sunday, my phone and emails were still going on. I was like, what is happening? It has not slowed down since then, and I’m like ’21 was a record year, how’s ’22 going to look? Now, obviously, you know, at the time of this recording, we’re in June of ’22. There’s a lot that has changed since New Year’s Day. You know, we got the Russia Ukraine thing, inflation is going through the roof, gas prices are ridiculous. You know, interest rates are going up. There’s a whole lot of uncertainty, there’s a whole lot of unknown. But here’s what I know, there are 10s of millions of businesses in the world. 

And at any given time, a certain number of them are eligible to be sold. At the same time, there are 10s of millions of potential buyers in the world who want to a acquire business and have that security and peace of mind and the entrepreneurial spirit. And so that’s not going to change. Businesses were always going to be bought and sold no matter whether it’s up or down. Now, is it going to be tougher? Yes. It’s going to be tougher, money’s gonna get tighter, with interest rates going up and leverage leveraged buyouts are going to be tougher to do. Lots of things are going to be different. 

Do I see the market changing drastically? Yes. But do I see the underlying business that we’re in, which is buyers selling businesses and or owners selling businesses and buyers acquiring, but that’s not going to change. It’s really not. It’s always, you’re and we have the Baby Boomer generation is is, you know, the largest segment of business owners and they’re all retiring. And so they’re selling. So it’s a weird market. It’s been a fun market for the last couple of years, right? Like it’s been it’s been a party. 

The party’s about to end, but not the opportunities for success. Because the best deals are bought in a down market. And the smart money is investing in a down market and not not pulling back. And so I’m looking forward to actually some some weeding out of the people who are just kind of, you know, along for the ride, and leaving room for the people who are really committed to helping buyers and sellers of businesses accomplish their goals.

Patrick: Well, I think also down in the micro market, too, because there’s just a vast number of opportunities there. And you’ve got a lot of buyers who they’re bypassing careers working for somebody else to own their own shop. So you have that whole search funder, independent sponsor, all these other prospective buyers in this universe.

Marty: Yeah, oh absolutely. I, it’s funny, I literally have to search funder. We actually we’re pretty active in search funder. So yeah, we’re seeing a big trend in that with with especially with with younger buyers is that they like I don’t why would I have a job? I’ll just if I’ll either start a business or they’re smart enough to renew it for I’ll just buy a business, I’ll buy the cash flow. Yeah. And with the financing programs, and things like that, that are available. And I mean, we have we have over 200, now I think we’re up to 240 something different ways we can help somebody fund a deal. And so we’ll figure it out. We’ll make it happen. If you want to buy a business, we’ll help you buy a business, so.

Patrick: Marty Fahncke from Westbound Road, how can our audience members find you?

Marty: Well, so if you have the spelling of my name on the, you know, connected to this blog, I’m the only Marty Fahncke in the entire world and I can’t hide it. Yes, yes. So link LinkedIn is a great place to find me. My, my website is westboundroad.com. w e s t b o u n d r o a d.com. Westboundroad.com. There’s a contact form. It’s best way to reach me find me on LinkedIn. I’m very proud of the fact that I have, I think now 71 or 72 recommendations not which are which are customer testimonials of people who’ve worked with me and publicly said, you know nice things about about me. And I’m very proud of the fact that I’m the only Marty Fahncke in the world is a very unique name. I can’t hide. You Google me you’ll find 1000s of results, not a single one of them will be negative, and I’m very proud of that.

Patrick: Marty Fahncke from Westbound Road LLC, thanks very much for being with us today.

Marty: Patrick. Thanks for having me. I hope I was able to add some value to your listeners.