Middle Market Mergers and Acquisitions by Colonnade Advisors

In this episode, host Jeff Guylay is joined by guest Mark Achler, co-author of Exit Right, to explore the critical decision of whether—and when—to hire advisors during the M&A process. Drawing on lessons from the book and real-world experience, Jeff and Mark outline how CEOs can maximize value by assembling the right team of experts, while still retaining control over strategy, relationships, and execution. From bankers and attorneys to financial planners and tax professionals, this episode offers actionable insights on selecting advisors who align with your values and contribute meaningfully to successful outcomes.

What You'll Learn in This Episode:

The spectrum of advisors involved in a typical M&A transaction
 
Why hiring early—especially pre-LOI—creates leverage and unlocks value
 
How to avoid becoming overly dependent on advisors
 
The CEO's role in maintaining judgment, relationships, and deal momentum
 
Why trust between parties is the foundation of successful dealmaking
 
How detailed LOIs and clear integration planning drive better outcomes
 
Real-world case studies showing how applying these principles boosted valuations

Key Discussion Points & Notable Quotes:

The Spectrum of Advisors in a Deal (00:43)

Mark and Jeff review the key players involved in M&A: attorneys, bankers, tax advisors, financial planners. Timing matters—especially when it comes to financial planning and structuring decisions.

"You want the best experts early—not just after the deal is done." – Mark

The CEO's Non-Negotiable Responsibilities (03:48)

Even with great advisors, CEOs must lead on strategy, decisions, and relationships.

"There are some things you just can't outsource. You can't outsource judgment or trust." – Mark

The Importance of Trust in Getting Deals Done (05:46)

Advisors can facilitate—but it's the trust between principals that often moves a deal forward.

"Trust is the lubrication that gets deals across the finish line." – Mark

The Role of the Banker and the Importance of Timing (06:17)

A good banker understands the full arc of a transaction and helps prioritize forward-looking rationale over backward-looking valuation.

"We're not just selling the past EBITDA—we're building the case for future synergy." – Jeff

When to Step in as a CEO (08:13)

The back-and-forth between attorneys can derail progress. CEOs must often step in to resolve what really matters.

"There's always a point in a deal when someone has to say, 'Enough—we need to solve this as principals.'" – Jeff

Detailed LOIs Preserve the Deal's Integrity (10:41)

Without a clearly written LOI, sellers lose leverage and risk misinterpretation later.

"The minute you sign the LOI, you lose 90% of your negotiating leverage." – Mark

"Our role as advisors is to make sure the LOI is translated accurately into legal documents." – Jeff

The Case for the Right Advisor (13:18)

Not all advisors add value—some derail deals. Founders must choose those aligned with their values and goals.

"This is your baby. Choose someone who gets it, who gets you." – Mark

"You're essentially choosing a best friend for a very intense experience." – Jeff

Real-World Success: A Valuation Doubled (18:54)

Mark shares a powerful case study of a founder who used the rationale framework to double their offer—by helping the buyer see the long-term potential.

"They shrugged and said, 'We're not paying you enough.' That's the Jedi mind trick." – Mark

What Makes an M&A Outcome Truly Successful (23:31)

Success isn't just the highest purchase price. It's achieving the intent of the transaction—alignment, culture, growth, and impact.

"Think beyond the number. Think about the next chapter." – Mark

Final Thoughts:

Hiring the right advisor can unlock enormous value—but only when paired with clear leadership from the CEO. This episode offers a roadmap for founders preparing to sell, highlighting how to build an aligned, expert team while maintaining ownership of the process. Deals aren't just financial—they're personal, strategic, and long-term. The right partner makes all the difference.

In this episode, we discuss the key questions sellers should ask potential buyers when considering a sale. Understanding a buyer's strategic goals, cultural alignment, and team integration plans is crucial for ensuring a smooth transaction and long-term success. Hosts Gina and Jeff dive deep into the due diligence process and provide sellers with a roadmap to evaluate fit beyond just price and terms.
What You'll Learn in This Episode:
How to assess potential buyers during management meetings
The three critical categories of questions sellers must ask:
Strategy: What are the buyer's long-term goals?
Team & Integration: What happens to the management and employees post-sale?
Culture: How well does the buyer's corporate environment align with the seller's?
How to prepare for buyer meetings and identify red flags early
The importance of understanding a buyer's track record with past acquisitions
Why employment agreements and compensation plans should be negotiated early
Key Discussion Points & Notable Quotes:
Developing the Buyer List (1:00)
Colonnade Advisors carefully curates a list of potential buyers, focusing on strategic fit and long-term plans. As Gina explains:
"We are spending a lot of time at Colonnade—an awful lot of time—thinking about which companies out there could be the best fit for this seller… A good fit from size, product set, and strategy."
She further explains why breaking buyers into categories (strategics, private equity-backed strategics, and institutional investors) helps sellers make better long-term decisions.
Understanding Buyer Motivations & Fit (4:00)
Sellers need to look beyond just financial offers. Jeff highlights the importance of knowing who you're dealing with:
"We have transaction execution experience with many of these buyers… we know who follows through on commitments and who is just going to throw out a high number to get in the mix but won't close."
Management Meetings & Key Questions for Buyers (7:15)
During management meetings, sellers should evaluate buyers as much as buyers evaluate them.
According to Gina:
"It's really important that it's a two-way street. The management team has the opportunity to evaluate the people across the table from them… Sometimes a management meeting goes poorly because somebody was rude. It's important that comes out because this is a low-stress situation for buyers—they should be on their best behavior."
The Role of Private Equity vs. Strategic Buyers (9:45)
Not all buyers have the same investment horizon. Gina explains:
"If you are being acquired by a strategic that's owned by a private equity firm, there's going to be another exit event at some point in the future… That private equity firm bought that platform with an investment horizon of three to seven years, typically five years, so you'll be going through this again."
Employment Agreements & Negotiation Tactics (16:50)
Some buyers delay employment agreement negotiations until the last minute, putting sellers in a tough spot. Gina warns:
"I've seen a strategy used by some buyers that absolutely infuriates me… they refuse to negotiate employment agreements for senior leadership until two weeks before close because they know they have the sellers over a barrel."
Evaluating Cultural Fit (22:59)
Culture can make or break a deal. As Jeff notes:
"The first date here is the management meeting, and we want to prepare our clients to be ready—ask great questions and get the most information they can out of these meetings."
Gina also suggests asking buyers tough questions to see how they respond:
"One of my go-to questions at dinner—usually after the first glass of wine—is, 'Tell me about the worst deal you've been involved in. What happened?' You'll learn a lot from their answer."
Final Thoughts:
Selecting the right buyer is about more than just the highest offer—it's about finding a partner that aligns with the seller's vision, values, and long-term growth strategy. This episode provides actionable insights to help sellers navigate this crucial decision-making process.

In this episode, we discuss strategic steps for Equipment Leasing and Finance companies as they grow and evolve. The leadership of some of these businesses may decide to remain a certain size and complexity and be " lifestyle businesses", providing healthy cash flow to the owner(s) while they continue to run the business.
However, other options exist, and exiting the business for a favorable multiple to a bank or other buyer can be an excellent strategy, the dream plan for many entrepreneurs. 
In this interview, we interview Bob Rinaldi and discuss the potential to grow and leverage a business to realize a win-win exit strategy. 
This episode is a great follow-up to our previous show, Start Early & Exit Right, as we dive deep into many of the concepts of M&A rationale. What's unique about this episode is that it is geared toward a specific target audience, our friends in the Equipment Leasing and Finance (ELF) industry.
In this episode we cover:
How partners such as Rinaldi Advisory Services (RAS) and Colonnade work with Equipment Leasing & Finance (ELF) companies to prepare for a successful sale (1:00)
What are the biggest challenges for the independents as they look to be "bank ready" for an acquisition? (4:00) 
What are some of the biggest challenges for banks pursuing an acquisition of an equipment leasing company? (9:30)
What determines the level of a premium in the sale price that an ELF company can expect? (20:00)
What has M&A activity looked like in recent years and what are the prospects? (23:00)
What about Private Equity buyers in this space? (26:30)
How partners such as Rinaldi Advisory Services (RAS) and Colonnade work with Equipment Leasing & Finance (ELF) companies to prepare for a successful sale (1:00)
Bob: My practice has evolved around three target audiences in the equipment leasing space. About 60% of my clients are independent leasing (ELF) companies that I work with through the Confidential CEO Resource℠ model. This is multi-year exit strategy planning. Whether the company exits or not is not important. The idea is to get them from point A to point B so they're prepared if that time comes.
The second part of my practice is working with banks, predominantly community banks who are looking to get into the ELF space.
Third, I work with a handful of service providers in the industry, as well.
Rinaldi Advisory Services (RAS) offers the Confidential CEO Resource℠ (CCR) as a robust, full-scope advisory service that provides clients with a broad base of support for long-term strategic management. RAS works with CEOs and Principals to provide meaningful analysis and actionable insights. The aim is to help ELF senior management arrive at strategic and tactical decisions geared toward managing growth as well as operational and financial efficiencies.
Colonnade has deep experience in the ELF industry. Colonnade is a leading investment banking firm that has completed over $9 billion in M&A transactions for clients in the business and financial services industries. Colonnade has advised many companies in the EFL sector on strategic transactions. Please see our Quarterly Updates on the ELF industry here.
What are the biggest challenges for the independents as they look to be "bank ready" for an acquisition? (4:00)
Bob: The biggest challenge is predominantly that these founders/owners are very much entrepreneurs. They started the business. They're very much involved in the everyday transactional nature of their business. They don't have the time to gain the perspective to look at their company objectively and determine what needs to happen to be a better company from a non-transactional standpoint or to be a better company for the purpose of acquisition.
Jeff:  Let's drill down a little bit on some of the biggest challenges for the independents. There's size and scale, where are you today and where are you going? Banks are the natural resting home for specialty finance companies, and ELF companies are such a great asset class for banks in particular. Obviously, they're a number of large independents, but from the bank's perspective, what are the other things you see where companies need to focus? Is it finance and accounting? Is it operations? Is it servicing?
Bob: Yes. Yes. And yes. It's really all those things. But even before you get to that, let's look at the business and find components within the business that definitely will never, ever fit in a bank. I'm able to identify those things. You then have to decide what to do with those things. Do I jettison those things completely? Do I sell those off? Do I break it outside of the company and put it in a separate entity so that what is left is sellable and simple to understand? Compare that to a buyer looking at the company and thinking, "I like this, I like this. I hate that. Therefore, I'm not doing it [the acquisition]."
For example, say that there is a heavy services component of the (ELF) business; services component being something that has morphed, be it operational leases or servicing equipment that is leased. A bank can't be in that business. If that is an absolute key critical component to your leasing business, then a bank buyer is probably never going to be the buyer, which is going to leave you looking at non-financial institutional-type buyers, and they're fairly limited, so that's a problem. That is when you look at it and go: "If that's what we're always going to do, then this maybe is just going to be a lifestyle business. Let's just find ways to improve the income generation, the profitability, and keep it as a lifestyle business."
What are some of the biggest challenges for banks pursuing an acquisition of an equipment leasing company? (9:30)
1) The banks must use experienced advisors who understand the appropriate valuation models.
Bob: If the bank has not been in the business before and their only experience with acquisitions has predominantly been buying other smaller banks, the first challenge is the valuation models. Banks are used to paying a multiple of book value. Leasing companies are not valued that way; their valuation is based on a multiple of earnings or pretax adjusted net income. In a typical leasing company, most of the leases are on a fixed term, fully amortizing type of a structure; therefore they just generate income. But the assets don't stay on the balance sheet that long, they continually roll-off at a rapid rate, so you've got to keep putting on more. It's really not an asset play as much as it is a net income play.
Jeff: When we talk to banks as acquirers of these businesses, from either the buy-side or the sell-side, you're absolutely right. It's all about the income-generating opportunity. Yes, there are assets associated with it, but much more importantly, it's "What's the potential earning stream for this business within the bank?" (See: Discover the Rationale for a Synergistic Business Merger).
Bob: That really comes down to the financial institution's advisor, a buy-side advisor. If they've not had much experience in the equipment leasing space, especially current experience like Colonnade has, they're already at a very big disadvantage because now you've got two entities that are blind and stating the same thing and focused on book value, so they're getting bad advice along with their own preconceived ideas. That's like a double whammy right out the gate.
It's common when you find that a bank or their board, for whatever reason, have just got very comfortable with a buy-side advisor, who has never had that much experience at it but they've just gotten very comfortable with them and they wouldn't even conceive of going outside. A lot of this gets really back down to, "Is the bank nimble? Is the bank flexible? Does the bank have a CEO that has cut a bigger vision?" The same thing with the board, the death of any kind of an institution is just getting so stuck in your way that you just can't get out of it.
2) The CEO of the bank must have a visionary leadership style that allows the acquired company to thrive.
Bob: It all still goes back to the CEO of the bank and how progressive they are, how aggressive they are. And aggressive does not mean they're careless.
Jeff: The folks that we generally work with on the banking side have made that decision. They said, "Okay, we're going to get into specialty finance. We want to do it in X, Y or Z asset class, and we have the headset to bid accordingly, and that these businesses are valued differently than bank deals. The multiples are different, the metrics are different. We're committed, we've got board approval, we've got senior leadership approval and we're going to go ahead with it."
Bob: You and I know one of the smartest, most aggressive community bankers: Chuck Sulerzyski ​of Peoples Bank of Marietta, Ohio. Peoples Bank is located in the Southeast corner of Ohio, squarely in Appalachia country.
How does a bank that size, originally ~$1 billion in assets when he took it over and roughly $7 billion today, make such successful leasing company acquisitions? One located in Vermont and one located in Minnesota? If you take a look at the numbers, the ROA and ROE of the bank have improved dramatically. Their yields and spreads have increased dramatically. Their asset growth has increased significantly in the commercial real estate (CRE) and in the commercial and industrial (C&I) sectors. His shareholders are being rewarded handsomely and will continue to be.
Jeff: Chuck sets a great example. He has been aggressive in good ways. Peoples Bank also acquired an insurance premium finance company, and they're diversifying. 
Chuck has the right headset in that he looks to acquire businesses to expand and diversify their geographical footprint. That's a real success story, in my view. 
Bob: If you're going to acquire a leasing company that's growing, that's used to growing assets, the last thing you want to do is turn them into a bank. That's the whole premise for why you're going to buy a leasing company – is to expand the scope of the bank, not to contract it. It requires an introspective look of the CEO and his team: can they make an acquisition and not micromanage it and end up turning it into a bank?
3) Banks must be able to create objectives around diversification of geography and asset classes. 
Bob: Equipment leasing is not a geographic-specific industry unlike, let's call it, commercial real estate. Banks are very familiar with commercial real estate. Real estate is always local. Commercial real estate is local, you've got to know the geography that you're in very well so that you understand the commercial real estate in that market.
Banks must understand what they're trying to achieve in three to five years in terms of what percentage of their (Commercial and Insurance) C&I assets they want in various sectors.  How much do they want to get to in ELF? What do they want it to look like in three years, four years? Depending upon how big that number is, that determines the modality of the type of equipment leasing business you could get into. There are multiple facets to the equipment leasing industry: 1) small ticket, (transactions less than $250,000), middle-market/mid ticket (up to $5 million per transaction size), and large ticket (above $5 million per transaction).
Jeff. Take Wintrust. They're not really "a bank". More than 40% of their loan portfolio is insurance premium finance. They've got a big equipment finance business on top of that. There's probably 50% to 60% of loans that are non-traditional banking assets. As a result, the ROA on that bank is considerably higher than its peers; and as a result, the stock trades higher. 
And Peoples, as we've discussed, has the right headset that they need to acquire or look to acquire national platforms outside of Marietta, Ohio. Obviously, they've done some bank acquisitions too in footprint, but expanding to get national business is part of the CEO's strategy. 
What determines the level of a premium in the sale price that an ELF company can expect? (20:00)
Bob: It falls under the quality of earnings, platform, and quality of human resources.
Quality of earnings: I think about the repeatability of the earnings, as opposed to having a trend line of earnings that is a sawtooth (up and down, up and down). Quality of earnings should be fluid and show continued ramped-up growth over a period of time.
Platform: The ability to scale. What's their technological capability? What's the platform built off of, is it homegrown? Is it well protected? Is it SOC compliant? If you had more capital, can you scale it?
Quality of human resources: What does the management team look like? What's the average age of the team? What are their qualifications? What does the core management team look like behind them?
If you cover all three of those pretty darn well, you're going to get the higher end of the premium scale for sure.
What has M&A activity looked like in recent years and what are the prospects? (23:00)
Bob: Activity's been strong for the past few years. Part of the activity was exacerbated when everybody thought that in 2021 there was going to be a new tax act and capital gains were going to go up.  The biggest reason over the past four to five years is because you've got an aging-out (in the midst of the Great Resignation) of the Principals of these companies. It's just a normal progression, and it happens every five years or so. You get a number of individuals who have had their own leasing companies who started them 20 odd years ago. If they started 20 years ago, here we are 20 years later, they're in their mid-60s to late 60s. If they don't get out now, when are they going to exit? Because typically there's going to be an earn out. If you wait till the age of 70 to get out, you may be working on an earn out between the ages of 70 and 73.
On top of that, there's the aspect of an ELF company having a capital constraint. At some point, their capital is not going to hold them to keep borrowing on their line of credit because the debt-equity ratios will get too high and they'll have a hard time borrowing. It's really at about that time when they have to start thinking about what's next. Do we bring in another equity partner? Do we bring in some sub-debt? All that does is kick the can down the road. And I always tell them at that point: "You're already selling part of the company. Just sell the whole thing."
Listen to this podcast episode/read through the shownotes to see the Four Reasons Company Owners Consider a Transaction (15:25)
What about Private Equity buyers in this space? (26:30)
Jeff: We regularly get calls from folks looking to find platforms to acquire and build upon. There are some opportunities there: To remain independent, nimble, and flexible outside of the bank model, and take in additional capital to grow and potentially enhance the financing capabilities through securitizations and others.
Bob: The equipment leasing industry is a fairly mature industry. It's fairly sophisticated. For an independent leasing company to bring in private equity, I see that as only a solution if you don't believe you're able to sell the whole company right now. The PE firm is investing to get double-digit returns, so that means they're going to come in and put you (as the owner/operator) on a huge ramped-up treadmill. You are going to have to keep up or they're going to lose interest. And you've sold part of the company.
Now, granted, you've got a smaller piece but now have a bigger pie. 
Jeff: That makes sense. There are some examples of successful private-equity-backed equipment finance companies, but as we have found – the universe of financially oriented sponsors that really want to put a lot of capital into the business and are willing to wait a long time to get their return – is quite limited. Most folks attack it from the financing standpoint. It can be a good option if you have an aging founder that wants an opportunity to take some chips off the table and let the next generation continue to run it. But you're right, it is a different exercise being put on that treadmill.
Bob: It's a much different exercise. On the other hand, where it does work really well, is when a PE firm is backing a very experienced individual or a team who is going to start up a new entity. They could start this new entity and scale quickly with the help of private equity. They'd have a chance to really leverage that with some serious growth. Then it makes complete sense.

Before you sell your company, even the odds.
This episode features guests Mark Achler and Mert Iseri, authors of the recent book, Exit Right: How to Sell Your Startup, Maximize Your Return and Build Your Legacy.
Exit Right demystifies how to conclude the startup journey, a perfect complement to our podcast, which focuses more on the exits of larger middle-market companies. As Brad Feld states in the Foreword, "Mert and Mark set the roadmap for how entrepreneurs and business owners can proactively manage the process of getting to a successful exit along the way".
As Jeff says at the start of the interview: Mark and Mert cover so many great informative topics in the book. There is a wealth of tips to guide business owners through what can be a tumultuous process, getting through the exit. There are also so many topics we align with: relationships matter most, planning for wealth, time kills all deals, and the importance of following a best-practice process. 
In this podcast episode, we focus on three topics with a lot of meat to each: 
FAIR, Mert and Mark's framework for a successful exit, (3:00) 
The"Exit Talk" and how we suggest that all companies adopt this practice with their board (15:00), and
Who is involved in the Exit Talk and why? (28:00)
What is FAIR? Why does it lead to the best transactions? (3:00)
Mert: What we realized as we started to gather stories and experiences from M&A bankers, lawyers, serial entrepreneurs, etc is that the real question isn't, "Let's find out who's going to pay the most."
The real question is, "What's the right home for this business? What's the right home for my people? What's the right home for the vision? Who is going to serve our customers the best?"
Our view of an exit went from being a short-term transaction to a long-term partnership. The term "exit" is a poor word choice.  You're not really exiting anything. If anything, it's the beginning of a brand new relationship. So when we ask ourselves, "What makes a great home for a startup?" we focus on these four elements that make exits great.
FAIR. Fit, Alignment, Integration, and Rationale. 
If you have all four of those, it just so happens that you've also found the person who's willing to pay the most for your business, because they will realize the long-term value and they'll price the deal accordingly.
Fit is the cultural fit between the two companies. Amazon and Zappos are a great fit. Time Warner and AOL, are probably not a great fit. It's easily described. Can you sit next to this person for four hours and not want to kill them by the end of the meeting? Can you actually make decisions without written rules? Are cultural values aligned? Are the DNAs sort of similar, cousins to each other between those two companies?
Alignment is about being aligned with your co-founders, board, and shareholders in terms of the direction of where you want to go. The acquiring company also must be aligned. 
We almost always dismiss the alignment that we need from all sides of the table. This isn't two sides looking at each other. This is two sides looking in the same direction.

Integration has to do with the plan for how these two companies will come together. We've seen so many examples of this plan of integration being done as an afterthought. It's not just product and sales integration but people integration, finance integration; many, many layers. And all of these stakeholders have different agendas that need to be individually managed. 
Rationale. Can you explain to your grandmother why this acquisition makes sense? How are we going to deliver more value to our customers as a result of this partnership? How is two plus two equal to 100 in this context?
Mark: There are profound financial implications to the FAIR framework. Let's take Integration. Integration is the ugly stepchild. People always say, "Oh yeah, we'll deal with integration afterward." 
Turns out that in many transactions, it's not always 100% cash. Sometimes there's an earn-out for future performance. If you're not integrated well (you don't have the resources you need to execute your plan), there are some significant financial implications to the earn-out.
Then there are the financial implications to Rationale. Transactions are typically based on looking backward using a multiple. When you create a rationale that says one plus one equals a hundred, if it's a strategic investment, you take your product and we plug it into the larger company's sales force or the larger company's customer base. What could we do inside the larger company?
What's the impact of your product on the larger company? The way to maximize value is not looking backward as a multiple, but looking forward using the rationale. Strategically, why is the combination so valuable? If you can get everybody aligned around the rationale and the financial implications of that rationale, that's how you're going to drive a better price for an exit.
Mert: No one's going to just sit down and tell you, "This is our rationale." You uncover it. You unearth it over years. That's why we urge entrepreneurs to put their party dresses on. Talk to many competitors. Talk to strategics. Get out the door.
You need to build this trusted relationship over time with fundamental questions.
How can I help?
How can I help you push your agenda forward?
How can I help my customers?

This is what great partnerships really look like. We're not saying go share your financials with your competitors or give away all your IP to a larger strategy, but you need to be that trusted partner that advances the mission on all sides and creates a situation where everybody wins.
Mark: We wrote the book about exits, but it turns out that the decisions that entrepreneurs make at the beginning of their journey have an outsized impact at the end of the journey. Even though this book is really about the exit, there is really good advice there about the beginning of the journey as well.
Jeff: That's exactly right. This book is really about the journey.  All of the steps on the journey influence the end. There's so much wisdom in the book and insights about all the things that you can do to proactively get to the right end. Management meetings are oftentimes the first time that business owners meet their potential acquirers, whether they're competitors or strategics, or investors. But the longer that relationship can be developed, the more that you can uncover in terms of the shared common goal of what can we do together. And the best valuation and the best terms will just naturally evolve.
What is an "Exit Talk"? How can founders use it to reach alignment in their boardrooms? (15:00)
Jeff: The Exit Talk really struck a chord with me. Let's encourage clients and future clients to have these discussions and this thought process through the FAIR framework to really think ahead.
Sometimes we as investment bankers get brought in late in the game. But most of our transactions and our best relationships really span years. We get to know the business, the goals, and importantly the people involved, the operators, the owners, the founders, and the investors. Some of these relationships for us span a decade or more. We give them advice on how to grow their companies.
This concept of an exit talk is missing from my perspective. Exit discussions are often secretive or clouded in secrecy. It is a very small universe of folks within a company that knows that a transaction is imminent. It's rarely discussed openly among the senior leadership team until late in the game.
What you guys propose is proactive. Through your work and sharing your work with my future clients, I'd like them to embrace this philosophy.
I love this quote that you said, "Instead of fueling the awkwardness of the exit topic by staying silent, we are putting forward a new norm that we believe the entire industry should adopt, which is the Exit Talk."
Mark: This is one of our favorite topics. But before we dive into the Exit Talk: We are such big believers in trust. Every deal has its ups and downs. It has its emotional turbulence, it's the journey. Trust is the lubrication that gets deals done through to the conclusion. I just wanted to put a fine point on that topic of trust because it permeates everything we do.
The Exit Talk. 
It turns out that there's a stigma to talking about exits. CEOs are afraid. They're afraid that if they bring up the topic of an exit that their board and their investors are going to think their heart's not in it. They've lost hope. They've lost faith.
In the Venture Capital or Private Equity world, we have a time horizon. When you take our capital, you take our agenda, and you take our time horizon. We're looking for X return over Y timeframe. And if you're in year one of a fund, we've got plenty of time.  Let's go build and grow. If you're in year 10 of a fund, we've got to start returning capital back to our LPs.

With the Exit Talk, what we're proposing is that once a year, maybe your first board meeting of the year, you have a regularly scheduled annual talk where the CEO, without fear of being perceived as their heart's not in it, can talk about the exit.
The reason it's so incredibly helpful is that you have the luxury of time. If you had 18 months or two years, you have the luxury of saying, "Who's going to be the most likely acquirer? Is it going to be a strategic acquirer? And why? Who is it and why would they want to acquire us? Or is it going to be a financial buyer and what are they looking for? Are they looking for top-line revenue?" 
If we're going to sell to somebody who really cares about growth, we may invest a little bit more heavily in sales and marketing. If it's somebody who is more financially oriented and really cares about EBITDA, we might tighten the ship and focus on profitability. 
It gives you the luxury of time to get your intellectual property in order, make sure that every single employee has a signed agreement, and make sure that trademarks and patents are filed appropriately. Get your data room pristine. If you have the luxury of time, you can optimize and present your business. And you could take the time to find the best bankers and attorneys who really are going to represent you well.
Mert: An outcome of this talk doesn't necessarily have to be "we're ready to sell, or we're not ready to sell". It can also be an opportunity to start prototyping some of the theories around how you add more value to your customers. This is a great centerpiece for what we believe an exit should be reasoned around. This will help our customers faster/better than what we could do on our own by just raising more money or gathering more capital or resources.
For instance, if you are going to have a strategic alignment with a larger company like Google, but you're not ready to sell, it's still an opportunity to start a relationship. Maybe we work on a mutual customer together. Maybe we create some content together where we tell our stories and we share our wisdom with theirs. You want to start charging up that trust battery over time. When you are ready, you are a known entity.
The reality is these M&A (Corporate Development) leaders want to buy companies from trusted entities. They don't want an egg on their face either. They want to know the company that they're investing in. They're not viewing this as an acquisition, they're really viewing it as an investment. They want to know they can trust you. They want to know that you can go the distance.
It's a really difficult thing to do to create that kind of trust. You're not going to rush through trust. You're going to build it incrementally over years. Even the identification of a strategic partner when you're not ready to sell is extremely valuable because that's an opportunity to generate a relationship. Find out what their priorities are. See if your solution helps move those numbers forward. 
Mark: We're big believers in empathy. We have an empathy framework. There are three rules of empathy:
1) It's not about you. It's always about the person sitting across the table from you.
2) Do your homework.  Deeply and truly understand what's important. Mert just said, "Go listen to the quarterly earnings report." They're going to tell you what they care about.
3) Bring a gift, add value. When I say bring a gift: what can you do? If you're an industry leader, provide some thought leadership about where the market's heading. Share new bits of technology. Not only can you gain knowledge about their strategic direction, you can also share knowledge and be thought of as a trusted thought leader. 
If you take those empathy rules and apply them to building relationships over time, that's how you're going to earn trust.
Jeff: I love the idea of a trust battery and charging that up over time. You can't do that overnight. You can't do that in one management meeting. You can't do that in a really compressed timeframe. You really need to start early and think about what you can bring to the table. What can you bring as a gift to add value to somebody else so that they can see the value in what you are bringing? 
That's really the roadmap that you guys layout in your book: what steps can we take proactively to get to the best outcome.
Who is involved in the Exit Talk, and why? (28:00)
Mark: Let's separate out the annual exit talk from an actual transaction process. The exit talk is a board of directors-level conversation. Maybe you bring in one or two top lieutenants into that conversation, depending on the relationship between the CEO and maybe one or two C-suite members. But that's a board-level, strategic conversation that's not for the whole company.
(For an actual transaction process), there are lots of different ways of handling it. My own personal opinion is that there is a dance that takes place starting as an aperture that broadens over time. One of the challenges with telling any employee about a transaction is human nature. "What's that mean to me? Am I going to have a job? Am I going to get fired? Am I going to become rich? What are my stock options worth?"
One of the challenges is that not all deals happen; deals fall apart all the time. So the team has to have their eye on the ball. For the CEO, when they're going through a transaction, it can be all-consuming.  We've seen instances where companies started slowing down, missing their numbers because the CEO was distracted and not focused on running their business. 
The way I think about it is starting with the CEO and the board, keeping a really tight circle of information. And then as the conversations start to broaden and deepen in a transaction, then people are going to start the due diligence process. 

Make sure your C-suite is involved and your executive team is involved. The people who are going to be part of the due diligence process, obviously you're going to have to inform them. I don't think it's a great thing to just wake up one morning and say to your entire employee base, "Hey, guess what? We just got sold." There's a middle ground someplace in that continuum. Try to keep it confidential through most of the process. As you start to get to certainty you need to start opening it up so it's not a surprise to everybody.
Mert: There's one major stakeholder that hasn't been discussed and I just want to bring that up, and that's your family. Most founders overlook that and think of this transaction as a business event. This is a life event.
Your family is a humongous stakeholder. We want to highlight that this is a critical component of whether an exit happens or not. What's happening with your family is just as important as what is happening with your board and other stakeholders.
Mark: I couldn't agree with you more. It's not just us, it's our families and our loved ones too that have a stake in this.
Jeff: It goes for all key constituents, starting with the family and then moving down to the board members and the C-suite and figuring out what's the right communication style and method and frequency. These things are really critical decisions that most folks don't really spend the time thinking about.
Mark: One of the questions we ask CEOs is: when you're done with the transaction, will your employees come back to work for you in the next company you start? Will your investors want to invest in you in the next company you start? Will the biz dev lead of the large company who goes on to the next company, are they going to want to buy your next company?
I think what many entrepreneurs fail to understand is that the relationships you build and your legacy live on way past the deal and the transaction. 
We're big believers in servant leadership and that the best CEOs don't view life as a zero-sum game. They make sure that they take care of their customers, their employees, and their investors. They try to find the balance of supporting all relationships over time.
ABOUT OUR GUESTS
While a successful entrepreneur may exit a handful of companies in their lifetime, large buyers close deals all the time. Without decades of experience in mergers and acquisitions, founders don't have the tools they need to get the best results for themselves, their teams, or the new parent company.
Through dozens of interviews with M&A leaders at the biggest Silicon Valley acquirers—as well as attorneys, bankers, and founders who have been through the trenches—Exit Right delivers the hard-earned lessons that lead to successful exits. From negotiation to valuation to breaking down a term sheet, managing legal costs, and handling emotional turbulence—this unparalleled guide covers every critical aspect of a technology startup sale.
Learn where deals get into trouble, how to create alignment between negotiating parties, and what terms you should care about most. Above all, learn how to win in both the short and the long term, maximizing your price while positioning your company for a legacy you can be proud of.
Author Biographies
An early employee of Apple and Head of Innovation at Redbox, Mark Achler has been creating and investing in tech startups since 1986. Today, he is a founding partner of MATH Venture Partners, a technology venture capital fund, and an adjunct professor at the Northwestern Kellogg School of Management.
Mert Iseri co-founded SwipeSense, a healthcare technology company acquired by SC Johnson in 2020. Prior to that, he co-founded Design for America, a national network of students using design thinking to create social impact, now part of the IBM Watson Foundation. He is currently an Entrepreneur in Residence at MATH Venture Partners.
Socials
Mark Achler
Mert Hilmi Iseri
Book








About the hosts












Gina Cocking serves as the Chief Executive Officer of Colonnade Advisors. Gina began her career in investment banking at Kidder Peabody, was an analyst at Madison Dearborn Partners and an associate at J.P. Morgan & Co. She was the Chief Financial Officer of Cobalt Finance, a specialty finance company. She went on to become the Chief Financial Officer of Healthcare Laundry Systems, a private equity-backed company for which she oversaw the successful sale to a strategic acquirer. Gina served as the Line of Business CFO – Consumer Banking and Lending at Discover Financial Services. Gina serves on the Board of Directors of CIB Marine Bancshares, Inc. Gina received her BA in Economics and an MBA from the University of Chicago.









Jeff Guylay is a Managing Director of Colonnade Advisors. Prior to joining Colonnade in 2000, Jeff was an investment banker at J.P. Morgan in the firm's Mergers & Acquisitions and Fixed Income Capital Markets groups in New York. He also spent several years in J.P. Morgan's Chicago office. Jeff has over 20 years of M&A and investment banking experience and has served as lead execution partner on over 25 M&A and financing transactions at Colonnade. Jeff received an MBA from Northwestern University's Kellogg Graduate School of Management and a Master of Engineering Management from the University's McCormick School of Engineering. Jeff received a BA from Dartmouth College and a BE from Dartmouth's Thayer School of Engineering.









About the Middle Market Mergers & Acquisitions Podcast











Get the insiders' take on mergers and acquisitions. M&A investment bankers Gina Cocking and Jeff Guylay of Colonnade Advisors discuss the technical aspects of and tactics used in middle market deals. This podcast offers actionable advice and strategies for selling your company and is aimed at owners of middle market companies in the financial services and business services sectors. Middle market companies are generally valued between $20 million and $500 million.
If you enjoyed this episode, please subscribe and consider leaving us a short review:

This episode continues with our "industry spotlight series" where we focus on specific trends and opportunities in middle-market M&A transactions. Our previous episodes have covered four industries in which Colonnade has played a significant role as an M&A advisor to both buy-side and sell-side clients. We add F&I Agencies & Payment Plan Providers as industries where we deeply know the dynamics and players so as to provide exceptional service to clients who hire us to assist them in a transaction. Colonnade has studied the F&I Agencies and Payment Plan Provider markets for the last 20+ years. We have worked on nearly 30 M&A transactions on the buy-side and the sell-side. We have gotten to know the industry players and the buyers. We've identified some high-opportunity M&A plays that could help to drive even more value, scale, and customer satisfaction in the industry.
Spotlight on F&I Agencies (1:00)
In this first part of our episode, we answer the following questions:
Where do F&I agencies sit in the F&I ecosystem? (1:00)
What does a typical F&I agency look like? (7:00)
What is going on in terms of M&A and what are the value drivers in the industry? (9:00)
What is driving M&A transactions right now and what are some potential M&A plays? (12:00)
Where do F&I agencies sit in the F&I ecosystem and what value do they provide? (1:00)
Gina: Between the F&I administrators and the F&I office and the dealership, there are F&I agencies. They are independent agencies with independent agents. They are like insurance agents. They bring together the product administrators and the dealers. 
Gina:  The agents have deep knowledge about the products they represent. They can train the F&I office on those products and how to sell the products. They also act as the middle man or the interface with the administrator. They are one distribution arm for the administrators, which makes them critical in the ecosystem. They are a valuable component of the overall F&I ecosystem.
Jeff: The F&I agency is a particular point in the value chain. It's a differentiator. Some administrators sell to dealers through a direct sales force, others use F&I agents. 
Gina: There are administrators who go direct to dealers, but most administrators also use independent agents. They may have a direct sales force, but they have independent agents also. The only sector where that seems to not always be the case is selling into independent dealerships. You tend to see more direct agents that are employed by the administrators selling into the independent dealerships.
Gina: An important component of what the agents do is help the dealership with reinsurance. Reinsurance is an important component of a dealership owner's profits. For every contract, every F&I product that is sold, there is a reserve set aside for future claims. F&I agents are usually very fluid and educated in talking about reinsurance and making sure that the dealership has the right reinsurance programs. So they deal with reinsurance, they do training on products, they do training on how to sell products. They sometimes help with staffing in the F&I office, and they'll help with some of the technology that is between the F&I office and the administrator.
Gina: F&I represents a third of a dealership's profits. Everybody within the organization and affiliated with the organization is going to make sure that F&I runs smoothly.
What does a typical F&I agency look like? (7:00)
Gina: There are well over 100 independent agencies, and approximately 75%-80% of F&I agencies are less than 10 employees. There are very few large agencies. There are a few that are scaling, but there really aren't many. There is only one national agency that comes to mind and that's Vanguard (owned by Spectrum Automotive). Vanguard has been very acquisitive in building out its agent network.
We also see Brown & Brown, which is a P&C insurance brokerage. They've been acquiring F&I agencies over the last few years. I don't know if they have a national footprint yet, but they're probably getting pretty close. And then you have acquired a lot of small agencies.
​​Jeff: The Brown & Brown example is an interesting one that we've watched over the last five to six years as they've entered the industry. We've always thought their participation in the F&I agency world makes a lot of sense, given the parallels to the P&C distribution market.
What is going on in terms of M&A and what are the value drivers in the industry? (9:00)
Gina: We think that the M&A market for F&I agencies will continue to be hot in 2022.

(See Gina's cover article in Agent Entrepreneur, 2022 M&A Predictions for F&I Agents)
Agent value is driven by a couple of different factors. One is diversification. One of the challenges for these small agencies, just like any small company, is having all of their eggs in one basket. An F&I agency may have one dealership group that represents 40% of sales. That is a gating factor to trading and getting the highest possible value. Agencies that have significant concentration, which I call greater than 15%, trade at a lower multiple than agencies that have little concentration.
Another value driver is size. We look at the number of W-2 employees (as well as financials).
Jeff:  Important when you go to sell these companies: Who owns the dealer relationships? And what's the risk of attrition in a transaction?
Gina: A lot of diligence needs to be done in these transactions to really understand the nitty-gritty of who, not just on paper but in practice, owns the relationships.
What is driving the M&A transactions right now and what are some potential M&A plays? (12:00)
Jeff: It sounds like an industry that could be rolled up further. Following the playbook of the P&C insurance distribution market, you got a lot of mom and pops out there and a few large players. 
Gina: Both Brown & Brown and Vanguard Dealer Services (Spectrum Automotive) are rolling up agencies. The rest of M&A activity we see is not a roll up, but administrators buying agencies. National Autocare and Portfolio Group have been very inquisitive. There are many other administrators who bought one, two, three agencies, as they attempt to lock in their distribution channels. 
Gina:  There should be another roll up of F&I agencies. There should be a private equity firm that's coming in here saying, "I'm going to put a hundred, $150 million to work and we're going to leverage it. And we're going to buy up 20 F&I agencies. We're going to make a super-agency with national coverage." That could be uber-successful for everybody involved. It just hasn't happened yet.
Jeff: The folks that are acquiring are paying pretty high multiples, and that's a challenge. Any new entrant would have to go in and go big pretty quickly. They'd have to find a platform that they can scale and put a lot of capital to work while holding their nose as they pay big prices upfront.
Gina: A lot of the M&A activity we have seen is with an older generation that is retiring. There's also some leakage happening where the younger, talented, hungrier F&I agents are like, "I get it, I can do this." They leave and go start their own agency. I think we'll see that next-generation starting to trade in about a year or two.
Gina: I have one last point I want to cover about F&I agency M&A: what's driving the activity.
First of all, there's a lot of money looking for deals. There are private equity firms backing administrators that need to grow inorganically. But we also see a lot of M&A activity at the dealership level. They're getting bigger. Big dealership groups are buying up other dealers, independent shops, and dealership groups.  Every time one of those transactions happens, the agent that represents the target dealership is at risk of losing that client. Dealership M&A is driving F&I agency M&A.
I think that this is the question that keeps a lot of agents up at night: Are they one or several M&A transactions away from losing a significant portion of their relationships and their livelihood?
Spotlight on Payment Plan Providers (18:00)
In this second part of our episode, we answer the following questions:
How do payment plan providers add value to the auto F&I sector? (18:00)
How big is the industry and who are the biggest players? (23:00)
Why are payment plan providers a favorite industry of Colonnade? (25:00)
What is going on in terms of M&A and what are the value drivers in the industry? (29:00)
How do payment plan providers add value to the auto F&I sector? (18:00)
Jeff: Payment plan companies came out of the ground around 20 years ago. They started as an offshoot of the insurance premium finance market, which we've talked about in a previous podcast.
Fundamentally, this market is designed to help consumers purchase F&I products cost-effectively.
Whether you're in a dealership (point of sale) and the F&I person says, "This VSC is going to cost you $3,000" or whether you get a piece of mail about an extended auto warranty (aftermarket), once you get sold on buying the coverage, the questions is always: Do you want to write a check for three grand or do you want to finance it over two or three years? 
In most cases, the VSC/extended auto warranty gets financed. That's where these payment plan companies come in.
Jeff: At the dealership (point of sale), the payment for an F&I product typically gets rolled into the auto loan. It's just one of the line items in the auto loan, and you (as the consumer) pay it off as you go. There are some payment plan providers that focus on point of sale at the dealership, allowing a consumer to finance the product outside the auto loan.
In the aftermarket, which is really where we see these payment plans flourish, it's a different dynamic. If you're on the phone with a direct marketer and you agree to buy the coverage, you can put 10% down and pay over 18 or 36 months, depending on the payment plan. Interestingly, they're interest-free and cancelable at any time.
And as you continue to drive your car and assess the usefulness of the product, you can cancel it at any time. If you cancel it, all you do is call up the seller or the administrator and say, "I want to cancel my payment plan." 
In that case, you get a portion of your money back (the unearned premium). It works in a similar way to the insurance premium finance market. The contract is earned over the life of the product. If it's a five-year product and you're one year into it, you might get 80% of the money back. The payment plan company is indifferent because it will just get their pro rata share back from the administrator and seller.
The seller will sell the product to the consumer, and if they attach financing to it, the seller will collect the 10 or 15% down payment. The payment plan company will insert themselves and front the rest of the money to the administrator and to the seller.
The administrator has to front some money to the CLIP (1) provider, but the revenue to the seller and the admin fee gets fronted by the payment plan company.
Jeff: Our Industry Report on this sector goes into much more detail about the industry.
How big is the industry and who are the biggest players (23:00)
Jeff: We estimate this is about a $5 billion a year originations market. There's not good data. We've done a number of studies over the years and think that's the size of the market. It grows with auto sales and the adoption of products. It's grown considerably over the last several years.
There are probably 10 independent players in the market. There are just a small handful of large players.
The biggest players are PayLink, which is owned by Fortress and Milestone. Walco is the next biggest, and they're growing nicely. This is the Walder team that previously ran Mepco and Omnisure, and they've started up a new finance company that's growing quite rapidly. Mepco is a large player, they're top three, that's owned by Seabury.
There are other smaller players like Budco, Line 5. Service Payment Plan is a big company in the dealer space, again different dynamics but similar product offering.
PayLink, Omnisure, and Mepco really dominate the aftermarket space. Folks like Service Payment Plan dominate the dealer (point of sale) channel.
Why are payment plan providers a favorite industry of Colonnade? (25:00)
Gina: I love the payment plan business because it is so low-risk. What the payment plan companies do is hold a cash reserve on each funding in case the underlying consumer cancels. And that happens. There are a lot of cancellations in the direct consumer marketing of vehicle service contracts. As we've discussed before, it's not because the contracts are bad contracts, but it's because consumers actually have transparency. In the case of vehicle service contracts rolled into an auto loan, consumers don't get a breakout every month of the components of their auto loan that they're paying. They don't see that 80% of your auto loan payment is for the car, 10% is for the vehicle service contract, et cetera, cetera. But when a consumer is financing or using a payment plan for a vehicle service contract in the aftermarket, they have complete transparency as to what that cost is for.
And if they decide as a household, they no longer need that product (they need to redeploy that payment to something else like their mortgage), they can cancel. The payment plan businesses have a cash reserve for this. So it is a very low risk business and has great returns.
Jeff: Some of these companies have several hundred million dollars of portfolio and each contract starts out at $3,000 and burns down. These are very granular portfolios. You're not going to take a big loss on any particular contract. Unlike the insurance premium finance industry, the incidence or likelihood of fraud is negligible, and the risk here is quite low given the granularity.
We like the short duration of these assets. We like the low loss rates. Generally, these transactions are priced at a 15% to 20% unlevered return. They're very high-yield. There's no credit risk. We're not doing anything with consumer credit risk.  We really don't care. We're just managing relationships with sellers and administrators.
All those dynamics are favorable to this lending universe. I love this business. It's a niche industry, $5 billion is not the $50 billion commercial P&C market, but it's meaningful and growing.
What is going on in terms of M&A and what are the value drivers in the industry? (29:00)
Jeff: There really hasn't been much activity as there's a limited universe of players. Some of the administrators are vertically integrating and getting into the payment plan industry.
We worked on the initial sale of Mepco to Independent Bank almost 20 years ago.
We sold PayLink (which used to be called Warranty Finance Company) to Oxford Financial. It's now owned by Milestone and Fortress.
Omnisure: Ed and Paul Walder started up that business from scratch and grew it to a couple hundred million dollars of receivables. We advised on the sale to Fortress. 
PayLink and Omnisure merged in 2017 and put together two leading players in the industry.
The other important transaction to mention is Seabury's acquisition of Mepco out of Independent Bank in 2017. 
Most recently Walco has come out of the ground. Walco was started in early 2020 by Ed and Paul Walder again, starting up another competitor in the sector. They've grown considerably in recent years and are doing a great job building out that business.
We don't see a ton of M&A activity per se, but it's a really interesting market. Part of the challenge from an M&A perspective is that there has not traditionally been a deep bank buyer universe of this product and that confounds me a bit. For all the reasons we mentioned, this is a really interesting, dynamic asset class. It's very similar to insurance premium finance, which has a number of large banks in the sector and a number that want to get into it.  The collateral structure looks very similar, except that payment plan providers have higher yields, higher return on assets, and even lower losses. And there's no fraud.
I think there's a real opportunity for forward-thinking banks to embrace this asset class and do quite well with very little risk.
(1) A CLIP is a commercial liability insurance product that covers the contractual obligations of the insured. A full reimbursement CLIP would indemnify the insured commercial entity for all monies it expends to fulfill a contractual commitment.
 








About the hosts












Gina Cocking serves as the Chief Executive Officer of Colonnade Advisors. Gina began her career in investment banking at Kidder Peabody, was an analyst at Madison Dearborn Partners and an associate at J.P. Morgan & Co. She was the Chief Financial Officer of Cobalt Finance, a specialty finance company. She went on to become the Chief Financial Officer of Healthcare Laundry Systems, a private equity-backed company for which she oversaw the successful sale to a strategic acquirer. Gina served as the Line of Business CFO – Consumer Banking and Lending at Discover Financial Services. Gina serves on the Board of Directors of CIB Marine Bancshares, Inc. Gina received her BA in Economics and an MBA from the University of Chicago.









Jeff Guylay is a Managing Director of Colonnade Advisors. Prior to joining Colonnade in 2000, Jeff was an investment banker at J.P. Morgan in the firm's Mergers & Acquisitions and Fixed Income Capital Markets groups in New York. He also spent several years in J.P. Morgan's Chicago office. Jeff has over 20 years of M&A and investment banking experience and has served as lead execution partner on over 25 M&A and financing transactions at Colonnade. Jeff received an MBA from Northwestern University's Kellogg Graduate School of Management and a Master of Engineering Management from the University's McCormick School of Engineering. Jeff received a BA from Dartmouth College and a BE from Dartmouth's Thayer School of Engineering.