#414: How To Get Your Business Acquired At Maximum Value With M&A "Power Business Agent" Arthur Petropoulos
Arthur Petropoulos is the Founder and Managing Partner at Hill View Partners, and our guest on this very special episode of Sweat Equity
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Introducing Arthur Petropolis, managing partner at Hill View partners. 2:58
What advice would you give your 13 year old self? 7:27
Power business agent. 12:07
There’s a lot of emotional attachment in these deals. 15:10
Do you find yourself as a pseudo psychologist navigating through these situations? 18:46
Saturation of attention spans in the AI era. 23:14
Why do you like working in this small business environment? 27:41
Are we in the era of corporate consolidation in banking? 31:59
Arthur Petropoulos founded Hill View Partners in 2016 after a successful tenure on Wall Street as an Investment Banker, Private Equity Investor, and Head of Mergers & Acquisitions and Corporate Development for a high growth Operating Company. Of note, Arthur served as the Co-Head of the Internal Private Equity group at Cantor Fitzgerald / BGC Partners, and was the Director of Corporate Development for a diversified Business Services Company.
Arthur works hand in hand with all clients, and has led numerous successful transactions in our sole focus area of Selling/Exiting and Securing Capital/Financing for Privately Held Family, Entrepreneur, and Small Investment Group owned Businesses generating $400k to $4 Million of EBITDA spanning from Software to Diversified Business Services to Distribution/Manufacturing, and all industries in between. Arthur is keenly aware of the challenges and potential pain in undertaking the Sale or Capitalization of a Business, and is dedicated to serving as the go to resource and subject matter expert for clients seeking to optimize their outcomes in an impactful and expedient manner.
Arthur is a Rhode Island native, having earned his undergraduate Business Degree from Providence College and his Juris Doctorate with a focus of Corporate Transactions and Finance from Roger Williams University School of Law.
Arthur Petropoulos' calls-to-action
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Law Smith 0:02
natureboy there it is. Sorry. You didn't have the drops the whole episode with our guy Arthur Petro. We had to do it ourselves. protracted central Padres Petropolis the Webster guy's name before we got on.
Unknown Speaker 0:21
I said Papadopoulos. Yeah,
Law Smith 0:23
but it messed my brain up. Hey, this is sweat equity podcast and streaming. The number one comedy business podcasts in the world. Entrepreneurial advice real round dog talk. The trouble is right. Petropolis Yes.
Eric Readinger 0:39
Just let that go.
Law Smith 0:40
Do you like Mergers Acquisitions? Are you a small business owner dreaming about selling your business? This is a good one to listen to. And we're definitely having him back on. I like that guy. Me too. Yeah. Listen to us on iTunes, Apple podcast, Spotify, Google podcasts, Amazon music. A sure it sure the fuck out of the shows. Please just do it. Do it. I'm gonna say sincerely begging. This is a good show. To give us a compliment at the end. Guys. Listen. Tell them he'll tell us how good we are. I'm gonna cut that clarity. I'm gonna cut that clip. And then did my parents put it make an ad out of that? And put it out? Yeah, send it to our parents. Hey, we're not failing. This episode is sponsored by Squarespace all in one CMS website builder for your brand or your E commerce business. Hit up the link in Episode description. We're gonna say Webster builder, the Webster builder with a little dumbwaiter action if you want it ooh. If you call your mom Ma'am, this is the website builder for you. Hit the link in the episode description. You get the hook up, we get the hook up, holler if you hear me or other three sponsors or call rail call tracking for your website, get some call swap numbers going on deeply sales CRM plus marketing outreach and LinkedIn premium two months free. If you hit the description, Link, holler if you hear me make up say oh Hotty Toddy, it's called sweat
listening to the sweat equity podcast. We're recording. Right we just get to it, man. That's all right. Works. No need for pleasantries and you know, fake business. Like niceties and all that stuff. What are those? Yeah, it's business like, yeah, that's,
Eric Readinger 2:58
that's what we know. Yeah, that's what we meant to see. The slogan of the show.
Law Smith 3:02
It's definitely not because we don't prep or anything about the creative of the ship.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 3:08
No, I was actually listening to some of the old podcasts. First off, when you do the intro for this thing, you got to make sure you include one of the Ric Flair sounds snippets? Oh, yes. 90s WWF. Guy. And then. Secondly, I think one of the podcasts I listened to the guests never showed up. So we're already starting off at a pretty good point here.
Law Smith 3:32
Yeah, we're pretty sour about that one. So that actually was gonna be the first question. I forgot to ask that one. Did you listen? And what did you think? But it seems like a lot of people come on the show.
Eric Readinger 3:46
Did you listen? That's we got it. Yes. No. Did you think part? We don't have to you know,
Law Smith 3:51
I'm always surprised. I always if I get asked to be on podcasts, I was trying to listen to it. It's not like it's that hard to just even just for a couple minutes. See what it's about while I'm folding laundry you know, or something great, something cool like that. But Arthur, why don't we Why don't you tell our audience where they can find you. You know any plugs? We'll put them in the description of this episode. But we always have the guests do their own intro because you know, lack of product cruciate that.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 4:23
So my name is Arthur Petropolis. I'm the managing partner at Hillview partners were a middle market lower middle market mergers and acquisitions. In capital advisory firm we help companies sell themselves we help companies secure capital. We like privately held businesses, family entrepreneurs, small investment group owned companies typically generating 400,000 to 4 million a year pre tax profit. My person's our website Hild ups.com. You can find me typing Arthur metropolis on YouTube. I have upstart Twitter with not many followers but some good content there and putting got videos a couple of times a week on LinkedIn as well. So we want to be the most present. Marginally boring. Nope. But but helpful content to the audience. I appreciate that.
Law Smith 5:12
Well, I was saying to Eric right before the mics heated up, this is maybe the most professional bio we've been sent. And we're like, I couldn't be firing this booking agency for coming on. Our lowly dick joke Business Show. But
Eric Readinger 5:31
find out you're from Rhode Island. Oh, good.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 5:32
Rhode Island. Any connection? Nope.
Law Smith 5:38
I thought you had some because
Eric Readinger 5:41
it was a tiny state.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 5:43
That's right. Yes, I grew up you could tell from the bad Rhode Island accent but I'm a Providence native. spent about a decade in New York back to Rhode Island. So travel anywhere I can go to get a bad accent. So
Law Smith 5:56
yeah, I take all my facts for my family guy. I think that's about all I can Rhode
Eric Readinger 6:02
Island knowledge.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 6:05
My mother's a very sweet woman, but her accent and Lois is almost identical.
Eric Readinger 6:12
I think I'd like to hear that.
Law Smith 6:13
Yeah. Can you can you do that impression?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 6:17
We're calling. Trying to try to be geographically agnostic in my accent, but
Law Smith 6:24
I can't Yeah, I can't hear I didn't pick up. I don't hear any accent honestly. You sound like every kind of CEO. very polished I would say. Not like a news reporter. You know, that's a little light. Today, isn't it? That's a weird, fake thing.
Eric Readinger 6:44
I don't know why they decided that's how you do the news. Yeah, tonight.
Law Smith 6:49
What? We got to ask every guest that comes on for the first time as you know, because he listened. Although he listened to one without a guest. Oh, that's true. Oh, really? Okay. And by the way, Ric Flair lives in our neighborhood he's in he's down here. doing as many
Eric Readinger 7:12
appearances to us, Milton, that dry
Law Smith 7:15
buddy, because he's got four ex wives. I heard him on Brogan talking about it. And he's like, like, $2 million dollars a year that my ex like your ad. You're still
Eric Readinger 7:28
doling it out. Man. One of them's pregnant.
Law Smith 7:30
Whoa, Nietzsche, boy. Oh. Arthur, what advice would you give your 13 year old self?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 7:40
No. I would say two things. One, just don't listen to the noise. You know. So I would say, figure out what it is that you want to do and just relentlessly pursue it. Because at the end of the day, there's almost nothing you can do for 20 years and not be good at. So if you combine that with something that you really want to do you actually be good at it. Then the second thing I would say is that, you know, there's going to, I said in the last podcast, I did the beginning of things in the end of things, there's a lot of celebration, right starting companies selling companies, but there's an awful lot in between, that's just kind of your Don Quixote chasing windmills in the dark and, and so I say it's gonna be you and God, so you better find your God. And so those are my two pieces of advice, relentlessly pursue zoned out the noise. Have faith in God, things tend to turn out all right.
Eric Readinger 8:32
I don't think I've heard that where you say if you do anything for 20 years, you'll be good at it.
Law Smith 8:37
Yeah, I thought of it that way. I immediately I thought of the TSA. There, they get worse,
Eric Readinger 8:45
immediately are like what is what are the ones are the exceptions to this?
Law Smith 8:48
I thought of everyone at the airport. That is a career airport employee. You're terrible at that. And then you don't you start better than when you you have 20 years in? Yeah, actually,
Eric Readinger 8:59
I could imagine there's some you ever had like, attrition going on
Law Smith 9:03
old stewardess? whatever they're called now, whatever supposed to call them flight attendant. Sure, whatever. They're, they're sassy. But don't help. Right? Like, I'll deal with a Southwest sassy lady with big hair from Dallas. You know, giving you those extra peanuts, giving you a wink to make you feel nice. Like you got something still got it. She'll do a joke on the intercom that's not really funny and everyone laughs and then I die a little bit on the inside. Because she's murdering in this in this tube being at that. So you're basically the way I was kind of going through your bio. You know, you're you're coming in to help people through an awfully difficult transition. It sounds like Is that fair to say? Are you Yeah, you're working in the SMB market. It sounds like but you had a corporate background.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 10:00
Yeah, so, look, I think it's kind of the combination of things. So my, you know, if I go back a couple of generations of my family, you know, I always joke, the Greek stereotypes are largely true, right, one of my grandparents had a pizza place one at a diner. And so you saw this entrepreneurial spirit, but ultimately, somewhat of, you know, needing some guidance, you know, as business kind of rolled along. So I went to law school here in Rhode Island, and ultimately went out to New York for about 10 years in finance, helping, both helping companies sell themselves as well as helping companies on the private equity side of buying companies. And then I did work in a larger corporation and midsize Corporation buying companies. But what you saw was this disconnect of these two universes, right, where you have people who are building companies, developing businesses, who are doing some really neat, innovative things, and you have these kinds of, you know, mega companies on the other side, or private equity firms or whoever looking to buy things. And there's a bit of a disconnect at times, whether it's, culturally, whether it's just knowing that the other parties exist. And so I always thought it was a very inefficient space. And that was the idea of starting our business was that we could be kind of that connecting element there where, you know, we can, you know, communicate with the business owners intelligently, but in a way that's authentic, and that they know, look, we're really advocating for them, and they are our client. But at the same time, we speak the language of, you know, the private equity and corporate development world. So, in many ways, it's that sharp up the mountain, right? So you're right, it is, it's a lot of emotion that goes into it, it's a lot of years of dedication, and it's picking their head up and saying, Okay, what's the larger strategic objective here? And how do we even kind of penetrate that field? If you will? And how do we know we're gonna get the right outcome, and not get taken advantage of. And so that's kind of where we come always representing the client in that conversation. So I always joke is you have to be able to, you know, have the Ric Flair conversations and then talk about private equity firms. Right. But, you know, you deal with a pretty broad spectrum on both sides of the equation. And that's what we like to do.
Law Smith 12:07
Yeah, I, it sounds similar. In my head, I'm trying to get a metaphor for those listening. My head went to sports agent. Because yeah, those two worlds are really kind of disconnected, honestly, like, because the leagues are so professional now. And so big wig and a lot of money. And then you've got these, these kids that are, you know, let's face it, they don't know a lot about any of the financials, any of that. And you have an agent, that has to be the go between.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 12:38
Yeah, I think that's a good. It's a good analogy, because we're always, we're not always selling against other people that do our job. You know, the biggest thing we're trying to advocate for people as they should not be pursuing this on an unrepresented basis, because you wouldn't sell your house without a broker. People don't even want to sell their car themselves. But oftentimes, these businesses that are generating millions of dollars a year sell, unrepresented to an unsolicited offer that comes in, just because they don't really know how to feel the market, they don't even know to some degree that there are people like us that that represent them at this size of company. So that's what we're oftentimes advocating against is, hey, look, bring in a professional, because you're just the result is going to be that much better. And whatever our fee is going to be whether they use us or someone else is going to be a fraction of the incremental value created. So you're right, I think that's a good way of doing the agent is party that they don't even know at times what they don't know. That's the dangerous part that you need to solve for.
Law Smith 13:35
Yeah, the small business owner and they're often times in my experience, just hearing from men in your position. The small business owner that works its way up the founder usually that we this last episode we had we talked a lot about succession planning in the show sucks session. Did you finish it?
Eric Readinger 13:56
To show yeah, no, I did listen to last five minutes after work. And the show succession? Yeah. So you've been our show?
Law Smith 14:03
Oh, no, no, you're zoned out, like five minutes in your? Yeah, yeah. You had you had Zika. It's okay. It's it's one of those things where I was just talking to someone about this founders get I stopped trying to pitch when they're on a retainer with me, stop trying to pitch a rebrand or refresh of their brand because they're very tied to it, because they usually made it even though analytically they might go. I know it's a little ugly, but it works and you're like, this actually hurts both of us. This hurts my performance to help you and this hurts your business. I feel like oh, I just came up with a new title for you, Arthur power business agent. I like that. Okay, yeah, throwing it out there.
Eric Readinger 14:53
Let's see if it sticks. We'll put it in the episode description for business power
Law Smith 14:57
agent Workshop. I feel like a lot of people or a lot of founders, a lot of people that came up with the small business, they're very emotionally tied to it. That's their baby, for a lot of men work is in their life, right. And so, so trying to exit, I've heard this from the acquisition side, actually the marketing, some PE firms, some VC firms, and they, they've told me, there's a lot of way more emotional attachment than I would have thought with. Now, this is under 4 million kind of companies that they're buying, but you know, they don't have someone as a go between like yourself, so you're coming in for both sides to kind of maximize.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 15:44
So the companies or our clients, we're always representing the people that are either selling or seeking capital. But irrespective of that, you're still kind of being the interface. And it to your point, like it's always this battle of, there's a difference you have to pay. Because, again, these are the people that were in the trenches in those dark days, like, we're no one had any love for what they were doing, building the company. And so when they come out the other side of that there's a earned amount of pride that comes with it. But at the same time, it's, you know, we always try to characterize it, it's evolution, not revolution, right? It's not the getting rid of things that work. It's not the completely rewashing things. It's just the evolution in the progression of something. So it's, it's, it's a balance, but But you're right, I mean, look, for many people, this is, in many times the biggest asset that they own, many times the thing that they've spent the most time with and their whole lives besides maybe their spouse, right. And so you're right, it carries with it a lot of weight that goes beyond just dollars and cents in this situations, for sure.
Law Smith 16:46
Yeah, we built in a lot of language. And I helped with this to preserve legacy for the acquisitions that are doing, because that it's a strange thing.
Eric Readinger 16:57
What does that mean?
Law Smith 16:59
That they're going to carry on the brand, you know, probably for a little bit, but they're telling them they're going to keep it going for a long time. But
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 17:08
Warren Buffett's made in Berkshire, Hathaway, almost all of their acquisitions for situations like that, where they said, Look, we don't want this thing getting just absorbed into some other company changing the brand. So there's value
Law Smith 17:19
to it, for sure. Yeah, the relationships these owners have to if it's a local services, especially, you know, that's a little bit different than a product company, where they might be more to their vendors and employees.
Eric Readinger 17:34
Just wanted to clarify, it's a burden basically not gonna give uncle Raul a job until he dies sort of thing.
Law Smith 17:42
Yeah, well, Uncle Earl, he's, he might get cut. But as soon as the acquisition happens, because it sounds the way you said Uncle Earl sounds like he doesn't do shit. And he's easy, bro. He's had a security now. So at the toll at the booth outside Rob five tires.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 17:57
You know what we always say there's multiple variables. I think, oftentimes, when people think of a business exit deal, and only think of one thing, and it's $1 amount, right, but that's only part of the equation. And so what is the structure of that look like? Is it all up front? How much if it's over time? What are the contingencies to the part that's over time? And then what is the transition for ownership? And then do you guys point, what's the stakeholders and legacy considerations to and you'd be, there's some companies where there's more concern for that than others. There's some were similar for employees similar for transition periods, every situation is unique. And it's just important on the front end to kind of quantify and qualify all those things that will go without finding offers companies, were making sure that they kind of tick the right boxes.
Law Smith 18:45
Do you find yourself as a pseudo psychologist navigating through these?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 18:53
Look, I think that's the case in any professional services business, whether you're an attorney and accounting, any business, we're all dealing with people in some variation or another, right? So I'd say in every process we have, there's things that I learned from the clients, there's things that I hope the clients learn from us, but it's a two way road. And it's interesting, because at this size of company we deal with, I think it's the broadest spectrum of participants where you could have somebody that's a Ivy League PhD, you could have someone that never graduated high school, and whoever's wealthier or smarter and each situation is not always what you may resume. But, you know, a lot of these meetings are interesting, because there's not many companies we work with that are owned by private equity, when we're helping them sell, right that's 5% on what we do. 95% are called UNsponsored situations, bootstrapped, owned by the founders owned by the family. So there's a lot of a lot of time spent together and some pretty deep, you know, in depth stuff. So I'd say that learning processes both ways and, you know, I've asked a lot of deep life advice from it. Well, it's just as much as they may be getting some from us.
Law Smith 20:02
Yeah, I will say I do enjoy that part of having diversified sectors that I'm helping I enjoy that kind of variety is the spice of life. I have that next to my live laugh, love in my kitchen.
Eric Readinger 20:18
Do you ever have any crazy sales contingencies that you're like, I'm not going to ask him to do that
Law Smith 20:24
you ever help an uncle sell his diner? Anything? That's just like, really weird. Man, the Greek diner thing is a stereotype I've been sleeping on for a while. But I realized this, like, last couple of years, it's like, oh, yeah,
Unknown Speaker 20:36
got your place. They got it.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 20:39
You know, you won't.
Law Smith 20:42
We're more waffle house down here than diner?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 20:45
Yeah, sure. Yeah. But uh, you know, you don't see too many crazy contingencies. Because you do try to kind of head some of those off on the front end. But when you will say that there are situations that there's just an old school way of doing business in some places where, you know, you'll have a client out and I already mentioned some of the areas but you know, that the documents we need to get on the front end of it, it's usually it's, Hey, I set up a Dropbox send us the files, but who No, meet me in the parking lot of the business and I got a box for you. Right, so you
Law Smith 21:21
guys, all this stuff. We don't unload. I call it low tech. Right?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 21:25
Yeah, well look at it. I tell you one of the first deals I ever did, after law school, when I was in New York, we were I was working for a small investment bank, helping family owned businesses sell themselves and it was a an industrial distribution company out of Hackensack, New Jersey. And we're sitting there, and it was like a multi generational family, but the old man still in the business. And we're sitting there talking to him about it. This guy didn't use a single piece of never used the computer, nothing. He had all of the business basically, in this one notebook that he'd show me. But he could name anything, how much of the inventories work? What's the AR, what's the accounts payable, and this guy knew it through and through. So like, the tech component is not always correlated with knowledge of the business, you'd be amazed that, you know, when I'm sitting in there in the parking lot with the guy with the banker's box full of papers, the level of specificity and recall and clients and context. I mean, remember that, remember, in the office, when Michael Scott had these cue cards, where he would have, you know, the clients name the things to say that they had to say what color it was at all? Right, it's, it was that you'd be amazed that. So it's really unique to see some of these situations because the tech component of it, irrespective of it, you just see people that are masters of these businesses, and they've done it so long. They can do it blindfolded at this point,
Eric Readinger 22:45
to somebody who has one of those notebooks give you like, heart palpitations that you're just like, Oh, my God, what happens? What if the notebook goes away?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 22:53
Yeah, yeah, look, but by the same token, when you see someone like that, you know, they know their stuff. I've seen guys, I can run circles around some of the some of the firms that are looking to buy these things sometimes in how much they know the business in and out. And the history, the stories and kind of the ebbs and flow of the industries.
Law Smith 23:14
Yeah, they may not be distracted by so much Tech, I feel like we were AI era that is saturating attention spans for sure. And that I mean, I don't know if that's a good thing or a bad thing. Honestly,
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 23:31
I think it changes it changes that dynamic in the sense that like, look, historically, we dealt with a lack, right, like, there wasn't enough information. There wasn't enough data. There weren't enough metrics right now. It's the opposite, right? It's like we're dealing with like the obesity of knowledge, right? There's just so much information thrown at you that our job now is to try to drown out noise versus trying to scrap up the information and stuff. So I guess it's more different, I suppose to some degree.
Law Smith 23:58
I agree we have morbidly obese brains. Well, I think it is that we've hit a saturation point. For sure. We've talked about this a lot on this show like I've bitched about Google for years now. It's just, it's, you look for information, you can't find it. So these other things pop up. And just like you kind of began with your intro, you saw a need and fulfilled it right there is, you know, you're you're helping these small businesses, work out the deal and get the most value. On the other side, you're making it efficient for the buyer on their side, which ultimately, probably saves a couple bucks. So it does drag on what I'm going to ask Eric, this question that we got for your booking agent. Ahead of this all right, I'm gonna sit
Eric Readinger 24:51
a quiz or is it like my own personal answer?
Law Smith 24:53
Well, they give us some bullet points to talk about and I was, I thought it'd be fun to ask you first and then see what the real answer Here's the three what are the three primary reasons? A company is acquired?
Eric Readinger 25:07
They want to be able to manage their growth.
Law Smith 25:11
What? Yeah.
Eric Readinger 25:16
When they're just sick of it,
Law Smith 25:18
okay, that's to manage their growth. They're sick of
Eric Readinger 25:23
it. Take back the first one. That one doesn't count. Okay. Yeah,
Law Smith 25:25
I think I finished the question. And
Eric Readinger 25:29
I was just like, I don't think you'd finish it. You didn't think it was last one? No, but I mean, it might be a
Law Smith 25:36
trudge, why would why three businesses three reasons. A company is acquired.
Eric Readinger 25:42
Well, another larger company might want to acquire the competition. Okay, that's three, right?
Law Smith 25:51
What were the what was the so no, I
Eric Readinger 25:53
threw away the first one. Second, well, I forgot it already did. Oh, they were just sick of it. Okay. Okay. I feel like I'm playing Family Feud. Yeah. Can you do for the Barbie? Show away? They're just sick of it.
Law Smith 26:12
I gotta give you a Steve Harvey stare. Really? Sorry. Arthur,
Eric Readinger 26:20
we I was never gonna get to sir. Just so you
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 26:22
know? No, I think you hit one of those nails in the head. So the first reason I always say is it's just the the numbers, the fundamentals of the business, how much does the business generate? Cash Flow. Yeah, EBIT done, what is the yield employed and the acquisition price. The second to your point is kind of acquiring something for access. Right. So whether it's getting into certain customers getting into certain end markets, certain geographies, right, if you're the widget manufacturer on the East Coast, do you want to acquire the West Coast guy so that you can sell all your widgets and all their customers as well. And then lastly, is the capabilities or aptitude, you know, the neat thing and, you know, a business that's generating 400,000 $4 million, right? It's small in the grand scheme of things and so it's not competing on price, it's not a commodity product that typically is something that's very unique about it something proprietary, something that it does better than anybody else. And so you've got these big public guys and large privately held companies that move like glaciers to some degree. And so they need to buy innovation oftentimes via acquisition and so we've got the small number of companies doing stuff in very unique ways and so even though you hit it on the Access Bar, but we always say fundamentals access capabilities remain reasons why companies are typically required
Eric Readinger 27:40
to nailed it
Law Smith 27:41
or the working capital went up the owners knows that would be I've given that forth, you know, the party a little too much Ric Flair style. And they go this these are capital expenditures alright. Why do you like working in this small you know, I don't even know man, we need to really get these terms down what a small businesses what a medium, what a large is, but I'm just talking in general what we need to have define because it's like, what some people call a small business, the AMEX commercial about small business Saturday's like, first off, this is gross. More, I bet more small businesses. Oh, Amex way too much money, right. Then this artisan coffee shop you're talking about in this commercial? And that's it. That's how micro or local business to me, you know, that's the Greek diner that with the squiggly kind of pattern on the coffee cup, whatever that's called.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 28:46
The Corinthian column coffee cups. Oh, wow.
Law Smith 28:50
We're just checking if you're Greek. Just making sure we didn't know if the name the last name was real or not. You know, we had to check. You need to come down to Tarpon. Springs down this area.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 29:02
Yes. You've heard of it. Well, yeah, the greatest place in Florida, right?
Law Smith 29:07
Yeah. We'll go whoop. So we'll go with you to watch the epiphany cross throw. We're all these high school kids beat the shit out of each other for Jesus to get the cross the Vaseline up. Gotta man guy. My football team got it one year. Yeah,
Eric Readinger 29:24
use it greasiest. One of them all.
Law Smith 29:26
Shout out Luke Pappas, what up? That's his name for real. I swear to God, of course. Luke Papp. He's middle linebacker I was outside linebacker. And he'd come up to me and he built put some stake on it.
Speaker 1 29:40
What? How do we get in the best position for an accident of a business? If we're small business owners, he meant the interview. I was like, Dude, that's how we dismount this interview. How do we leave without petering out,
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 29:55
leaving on a technical difficulty? So I would say There was actually speaking of Greek guys, your television show The Prophet Marcus Lemonis. Yeah, love them. Ya know, like, he's obviously a bit of a character. But he had a good framework of thinking of profit people process. Yeah, people process product, right? Yep.
Eric Readinger 30:18
Like I nailed it. Two out of three. Yeah,
Law Smith 30:22
I got 66 I passed. That's all right.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 30:25
So he would say, Look, if you can have, if you're setting up a business to leave, you know, the biggest risk oftentimes, is a key woman key man risking a business, right? It's a head person, how much of the knowledge of the business is in their head? How much of it's kind of written out? And how much of it has been delegated to other people? So when you look at the people part, you say, Okay, is there some overlap? Is there some redundancy? You know, because it's not big, you know, when people think of mergers and acquisitions they think of, I was saying in a YouTube video today, we think of Telde, our paper from Wall Street, Michael Douglas, right? Where there's tons and tons of fat on the bone. But in these businesses, there's not there's their run pretty lean. And so it's really preparing. Are there people that cover all the tasks? Are the processes well defined? Right? Is there a sales process? Is there an execution and customer retention process? Are their operations is their financial stuff? Right? And then lastly, it's how well defined the product is or the service of the offering? What is it? Why is it special? And so whenever we're preparing for a company, we say, Look, can we spell out these things? Can we clearly define how all of these things function today? And then assuming ownership is going to transition out at some point? How does it continue to function in a in an optimal manner, kind of post your exit from the situation? So if you can define all of that pretty clearly, you know, means it's prepared. And to the extent it's not those are the things that need to be solved for often.
Law Smith 31:52
Yeah, so it's not it's not near what we think, by any TV or movie on a large scale. I mean, you know what the movie that comes to mind for me is American Psycho. You mean murders in assassinations?
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 32:08
Know I picked up my business card originally.
Law Smith 32:11
Bill Cillian rail, one of the best comedies I would say, hilarious. When the ATM asked him to feed him a cat, you see that for the first time high as shit. You're like, Oh, my God, I gotta do what's going on. Whitney Houston, 10 albums. Sorry. I can't do lines. I don't, I was about to get into it. And I was like, Oh, I haven't done this one in a long time. I'm gonna have to watch out with my kids. Anyway. Oh, good.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 32:40
But you know, I'd say look, I think, yeah, I think part of the stigma of like, m&a, and finance is that kind of like waiting. And he's like, Richard Dreyfus, you know, Julia Roberts, you know, hey, I buy companies, and I break them into pieces. And I think there was a time in corporate America where things were somewhat inefficient. But you had that whole wave of Henry Kravis and Carl Icahn, and all of that Mike Milken might kind of come in and I think break down a lot of these businesses and make things more efficient. And so the world that we live in today is the public company is much bigger than it used to be right. And even if just think of banks, right, like, if you look at like JP Morgan Chase, and you saw how many different banks and it gobbled up over the last 50 years. I mean, it's outrageous. And so corporations have done the same thing, you've got very large companies, you've got a lot of kind of neat middle market and lower middle market companies. And there's a bit of a chasm in some, some instances. And so it's much more about kind of filling the gaps for the larger companies oftentimes, or for portfolio companies or private equity firms kind of building out capabilities. And so the emphasis is a lot more on, again, the aptitude and the access, and the people than it is historically and kind of the financial engineering and trimming the fat and stuff like that. I think a lot of that lemon has been squeezed over the last 30 years. And now it's much more about efficiencies and I think being competitive on a global landscape.
Law Smith 34:01
Or do you believe we are in the era of corporate consolidation? Speaking of the banks, I just I just saw something from I want to say us facts. On Instagram, they just threw up charts, it was showing how many are not visual cap, visual capitalization, Instagram, and it was showing how many different banks that were like 30 years ago, and now it's like, it's they're all kind of funneled under the the big ones.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 34:30
Right. Right. I mean, look, I think it's, it's a it's a tough balance, because it depends on your kind of perspective of the global economy, if you will, right. Like, is, are smaller businesses more kind of in the competitive nature of like what you'd think of as like the Adam Smith kind of free market laissez faire, more libertarian, invisible hand? Yeah. Yeah, exactly. Right. I think so. So when you think of the global economy and the necessity to compete with, you know, kind of state run industry or state subsidized industry and like China or something, it's almost impossible not to have humongous companies because again, it's that differentiator of industry where, if it's an industry based on just pure commodity cost of pure pricing power, it's really difficult to be a medium sized commodity manufacturer in the States. And that's why largely that's vanish. So, I think that, you know, and I see what kind of some of these mergers and acquisitions that people are trying that governments are trying to intervene on, whether it's like Microsoft or was Activision and blizzard or, you know, you see them interject somewhat oddly, to say like, why does it matter in this industry, but not that industry? And so, I think that there's, like, that's a much deeper conversation as to whether the government really knows what it actually wants. Or
Law Smith 35:54
you just want a second date, sir, we gotta get you back on. Yeah, but I didn't even know about the video game. Production companies of Blizzard and what was the other one Activision,
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 36:06
Activision Blizzard that there was some they wanted to combine. But then there was a, someone stepped in as like whether it's fair trade. And so you get these real you get these real war brings, though of capitalism, because then what happens is, so like, let's say in the venture capital world, where they backed a lot of like, newer video game businesses, right? If they feel like there's not an off taker, for those in a public company, like they, they feel some of that m&a is gonna get held up. Now, all of a sudden, they're for big business, right? But if they want protections against the pricing power, and the, you know, they want to only protect small businesses. So I think it's the unfortunate thing is we just when I was in law school, once saying that stuck out of my mind was that like good facts make for bad law, right, where the law would kind of warp around the facts and circumstances just to try to do the right thing. I think in business, when it comes to consolidations and stuff. A lot of the government agencies look at it on a case by case basis, but are much more inconsistent than they might think and kind of their applications of things. So
Eric Readinger 37:06
you mean, that's gonna die. I'm not gonna be able to sleep tonight. You mean that people employed a bird membrane
Law Smith 37:11
at the government that don't have incentives to do things unless they're lobby? Weird. All right. Well, Arthur, we could I think we could talk to you again, and especially teasing that government part out because now I get hardcore libertarian. When I hear all this stuff. Yeah. I'll make my own roads. Appreciate you coming on. We'll have you on another time. And yeah, you just gave me nightmares.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 37:40
That's all right. That's facts. That facts you and I will be sleeping just as little. I say look, I guys i i appreciate the time. You're doing great stuff here. I think you really meld kind of the serious business with some of the light hearted stuff. And it's good, right? Because I think sometimes this stuff gets a little too cerebral for the normal audience. So this is good stuff. I appreciate the time and look forward to coming back on at some point.
Eric Readinger 38:07
Thank you. Very nice. Definitely.
Law Smith 38:11
We're gonna fly you out here. Yeah.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 38:14
You got to play on the outro here because I run the wrestling kick. You got to play the old Ted DiBiase intro music
Eric Readinger 38:22
to take notes.
Law Smith 38:24
You can't take creative notes it's a little it's a thing.
Eric Readinger 38:28
If I remember if I remember right,
Law Smith 38:30
yeah, work. Alright, guys, I appreciate you coming on Nature Boy. Whoa.
Arthur Petropoulos, Founder | Managing Partner at Hill View Partners 38:38
Be well James, take it thanks.
