Podcast: How to Cross the M&A Bridge, an Interview with Hagen Rogers

By Ryan Tansom
Published: September 27, 2018 | Last updated: April 15, 2024
Key Takeaways

Preparing for and mitigating risks during the M&A process from both the buy-side and sell-side.



About the Host

Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

The more than 100 client assignments that Hagen Rogers has successfully completed in his 21-year investment banking career include sell-side, buy-side mergers and acquisitions, public and private capital financings, valuations, expert witness testimony, and fairness opinions. Prior to directing Watermark, Mr. Rogers served investment banking clients as Vice President at Wachovia Securities. He began his career with NationsBank in corporate banking and with Chase Securities in investment banking. He is a member of the Financial Executives Network Group. In addition, since 2007 Mr. Rogers has spoken nationally to hundreds of CEOs on the topic of “How to Win in Investment Banking Transactions,” in Atlanta, Birmingham, Greenville, Knoxville, Los Angeles, Louisville, Phoenix, San Diego, and Seattle. Mr. Rogers started Watermark Advisors in 2002.


If you listen, you will learn:

  • Hagen’s background in corporate banking.
  • What Watermark Advisors does for their clients.
  • The problems buyers have during the M&A process.
  • The problems sellers have during the M&A process.
  • What are contingency fees?
  • How to avoid these fees.
  • Why people agree to contingencies.
  • What is “the bridge?”
  • The ulterior motives of small investment banking firms.
  • The 3 phases of the bridge.
  • How to make your company a “top athlete.”
  • The 8 items that make a top athlete company.
  • Why strategy is the most important.
  • What is marketing positioning?
  • Why timing is everything.
  • The things that go wrong during the integration phase.
  • How buyers erode a company’s potential.
  • Why M&A is not like a marriage.
  • Hagen’s parting words for the audience.

Full Transcript

Hagen Rogers: That’s what really needs to happen. The owner needs to start thinking about how to make sure their company is the athlete and that takes several years to prepare and most of the time they don’t… They they want to do the deal, say in 2018, they step out on the bridge in 2018. They want to get it closed in 2018, not enough time to ensure your company’s an athlete and you’ve got to be an athlete to get top dollar.

Announcer: Welcome to Life After Business. The podcast where your host Ryan Tansom brings you all the information you need to exit your company and explore what life can be like on the other side.


Ryan Tansom: Welcome back to the Life After Business Podcast. This is episode 112. Today’s guest’s name is Hagen Rogers, and he is the Managing Director of Watermark Advisors, which is an investment banking firm, and they’ve got a really unique way of approaching mergers and acquisitions. He’s got something called the bridge and this analogy that he relates to have the bridge is that there’s three different phases of it. There’s the preparation phase, the transaction phase and the integration phase, so what a lot of investment bankers do is they go and they closed the deal, whether it’s on the buyer side or the sell side, and they’re supposed to do it for the top dollar amount with the best terms and conditions, but what really got me jazzed up about what Hagen doing is because he was able to relay some facts that literally 26 percent of the people that hire investment bankers to go sell their company don’t even get to sell their company.

Ryan Tansom: And 42 percent of those companies that actually transact or close that there was a good chunk of that purchase price that had contingencies, which is there’s earnouts, there’s escrows, somehow the money’s held back and that they’re tied to the integration. So Hagan has this very unique perspective from all the decades that he’s been in investment banking that you have to prepare, then transact, and then the integration is where the buyer is able to capture the return on the investment that they should be striving for. Above and beyond their costs of capital and that is super important as well for the seller because they want to get that money that is laying out there that is tied to contingencies and it, but if you do with the preparatory work, you will not have all that money on contingency, so Hagen walks us through all the different parts of his process and what I really liked about it is our process at GEXP Collaborative is really in-line with what he’s doing because you have to prepare and you want to engineer the outcome that you envision, so why not do all the preparatory work and then literally create the outcome that you want it to and his adheres to the strategy on the actual transaction, which I think is very much in line with what we’re doing so very excited to have him on the show. A very good perspective for you, the listener who is looking at what does the other side look like? What does integration mean? What are the buyers going to be asking and what should I be thinking about today? So without further ado, here’s my interview with Hagen.


Announcer: This episode of Life After Business is sponsored by GEXP Collaborative. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe to the buyer of your choice at the price you want.

Ryan Tansom: Hagen, how you doing?

Hagen Rogers: I’m doing well. How about you, Ryan?

Ryan Tansom: Doing good. Looking forward to having you on the show. You have a very interesting business model that you have been bringing to the crazy world of investment banking on the buy and sell side of M&A and you and I met each other at the alliance of M&A advisors in Chicago and you gave a presentation and I sat there watching you going, huh. All of this would have been extremely applicable to our situation until a lot of other people’s. But a lot of the… None of the listeners are probably sitting there or they might not have come across you, so kind of you know… Can you, can you just get into some background, like how did you get into this whole world of m and a and how did you end up to where you are right now?

Hagen Rogers: Great question. I’ll try to keep it brief. When I graduated college, I started my career in corporate banking but was interacting with the investment bank and I was intrigued by the different services of investment banking, from private placements to mergers and acquisitions. And so after two years of being a corporate analyst, I went on to business school and did an internship in M&A in Texas. And so for that whole summer I worked on selling a company, a privately owned company with a team and just had a fantastic experience. Loved everything I learned in that internship and went back to finish up business school knowing this is what I wanted to do. So for five years I was with what was Wacovia is investment bank and was in Charlotte and Atlanta. And uh, when the merger happened with First Union, I moved, or I was being asked to move back to Charlotte, but I was in investment grade debt, which is a service for really large public companies like a Walmart to issue corporate bonds and I had for the first two and a half years been doing m and a on an origination function, so helping the bank find deals and then bring them over into the product group and then help with the execution from time-to-time.

Hagen Rogers: And I missed that. So I had asked to get back over to this world when we got bought essentially by First Union. I left the bank, uh, because I wasn’t happy in the product group I was in and so moved back to my hometown of Greenville, South Carolina, and launched what is now Watermark Advisors and that was 16 years ago and did that with the help of the managing director from Wacovia practice, which he was an ex-Solomon Brothers, M&A banker. And so I could not have had a better partner for the first eight years of Watermark. He basically oversaw and mentored me further in the role of, of doing deals. I had the experience of signing in, winning the deals, but, but doing the deals, it’s a whole different science or art will say, and so for eight years Watermark looked. We’re a boutique M&A firm.

Hagen Rogers: We do sell-side, buy-side M&A, also private capital raises, we’re a Finra member and we looked like everybody else but a leading up to when a or what not shared in Chicago a couple of months ago after years of doing this 16 years to be exact, I’ve discovered there’s some real problems with M&A that the clients experience, not necessarily that the service providers experienced with the clients both on the sell side and buy side. So what I’ve done over the past several years is, is completely revamp how I do M&A and that forced me to change my business model, which may be less interesting than talking about what changed from a service perspective and why is that, why is that relevant to the user of M&A, whether you’re selling a company or buying a company? Uh, and that’s what I presented in Chicago at the meeting where you met me.

Ryan Tansom: So let’s… you had so many valid points and let’s set some context for the listeners. So 16 years of doing this and you’ve been in the M&A world a lot and what were some of the biggest problems that you saw? Like you’d said like, you know, you and I, right before we jumped on the call, it’s not that the market’s not fixing this, there’s, there’s this big gaping hole and there’s, I mean, I’m assuming you dealt with lots of headaches. So maybe describe like what were some of the, you know, the headaches that you experienced. What are some of the big problems that you see?

Hagen Rogers: Great, I’ll use a metaphor that I, when I sit down with a potential client, I had this him and a simulation board, which is a board that, uh, have literally blocks on this board, that visual. It helps visually understand the problems, understand where the deals create challenges for the client. So let me first speak to the buy side. and I’ll share this pretty quickly where you’ve been focused on the sell side strategic buyers. Uh, so I’m not talking about private equity. Private equity has mastered the process of, of M&A. So let’s focus just on operating companies that are not in the business of doing M&A, but they need to execute mergers or acquisitions from time to time to execute a strategy to grow their company.

Ryan Tansom: Well, Hagen, let me interject for a sec because you know, as you go into this too, I think it’s super important for the listeners to understand the buy side’s motives too and what means success for them. So I know a lot of the listeners are entrepreneurs that are going to eventually end up selling, but like it’s so important because I think that in the marketplace there’s a lot more M&A ramping up because in order to continue to grow or to evolve and innovate with different products and services we’re getting forced to. So I think you alluded to a great point which I think you’re going to get to, is that they don’t do this all the time. So like they’re getting forced into it. So I think what you’re about to say is an important note for the listeners to really understand that there’s the reasons behind this and then there’s a lot of challenges that you’re going to allude to.

Hagen Rogers: Great. So, uh, acquirers do M&A for, for various reasons and if you boil it down to several kind of general reasons, they’re doing it to execute a strategy whereby they cannot organically grow or expand into the areas of business that you need to expand and create products and services quickly enough by themselves. Um, and so they acquire as opposed to building it. And so whether it’s market expansion or product expansion or, or R&D, acquiring R&D as opposed to developing R&D. those are reasons why strategic acquirers do M&A, but they have really several key problems when they metaphorically walk across the M&A bridge. And that’s the metaphor I use on this board. The problems are… the problems show up in the results. When they step off of the bridge, 70 to 80 percent of the time they do not create a return on their investment that is at a hurdle rate or above a hurdle rate. And most of the time, it’s not even in the delta that what did we call the hurdle rate Delta between at the bottom of imagine a line, a horizontal line, and that let’s say that hurdle rate is 12 percent go down about 500 basis points down to seven percent, and maybe that’s their cost of capital cost and doing the video. They’re not even showing up in that Delta between the seven and 12 percent. They’re hovering around the cost of capital, which means it’s a wash. They’re not actually creating financial value from doing acquisitions most of the time. In much. Not only are they not creating value, they also may not be creating a strategic, uh, strategic success where their an acquisitions. So you want as an acquirer to okay do acquisitions to where it’s a strategic and financial success.

Hagen Rogers: And what I’m saying is studies show time after time, the return or the financial measure is not happening for that strategic acquirer. Why? It’s because they make fumbles. They crossed the bridge and they have fumbles. Fumbles happen in three areas. Three phases, as I call it, the preparation phase, the transaction phase, the integration phase, which by the way is the same three phases seller’s cross when they do them in a, when they sell their company, they crossed the same three phases, preparation, transaction integration, but the seller problems or different, uh, and I’ll cite the problems in one particular study, but this is going to be indicative of, of happens to sellers and year after year, looking at Pepperdine University’s a 2018 private capital market study, comes out once a year and it’s very thorough, they surveyed investment bankers who led M&A deals on the sell side. So we’re just thinking about investment banker-lead deals. Twenty percent of the time that investment banker was not able to sell the company that they were hired to sell to. That owner goes out on the bridge, they to a varying degree expose their trade secrets, market information to potential buyers twenty six percent of the time, and maybe more concerning is that 42 percent of the time of those companies that did sell last year, 42 percent of the time, the way that deal got done was with what are called contingency fees. So let me give you a simple example of that. Let’s say that you sold your company for $10,000,000, the, uh, the buyer to get the deal done. The buyer’s not willing to pay you 10 million in cash. They’re willing to pay you 7 million in cash and they’ll structure what either an earnout, seller debt, seller notes and, and for that $3 million in incremental value, you don’t get that unless certain things happen with the company after it’s out of your control. And I can tell you after being in the business for 21 years in M&A and investment banking, it doesn’t typically materialize completely. Meaning that seller doesn’t cap the full value. So top dollar is not happening for the seller a majority of the time. Okay?

Ryan Tansom: We’ll end like there’s been so many people in stories about burn out there. You’re not going to hit it. I mean all of the things that I know you told me the price, I’ll you tell you the terms because that’s, this is where all the hair comes out and you know what I think you’re going to probably do this, but what are the ways, you know, like, and maybe this is kind of bridge, but like the ways of mitigating that that earn out or that they contingencies because they didn’t do a lot of things right. Or there’s risks coming from the buy-side and that’s where we’ve talked on the podcast about value drivers of the opposite of the discount reasons on the buy-side. So you know, is there, is that Kinda what you’re going through into this bridge? Maybe you want to kind of now that you’ve given this whole overarching. Yeah, there’s a lot of problems. No one’s really ready to be making sure that these work and it’s a lot. I mean he can. Do you think it’s a lot of people playing the short-term game more than it is anything else that just trying to get the deal done?

Hagen Rogers: There are two… specifically about sell side there are several problems that are fundamental problems with the owner or the seller when they sell their company, they believe most often that understanding their company and running their company well and their company doing well is enough that they can because as we know, owners were very busy people. They lead complicated lives and it’s hard to own and run a company, much less a successful company. So they believe when they step on the bridge that that’s enough that they, they’ve, they have a profitable company, but what they don’t realize is that the market is looking for athletes, metaphorically, and, and while their company may be financially healthy, that doesn’t mean that their company is an athlete or even more an elite athlete. So the market is looking for elite athletes and so what often happens is that owner talks to a few trusted confidant in their sphere of influence, a centers of influence, and then they ask, who should I talk to about selling my company? I want to keep this very confidential. They talk typically to an investment banker maybe banker’s with they, they get referred to a banker, but that from that bankers part of a boutique firm, what we call boutique firms or small specialized firms or large brand name firms, those firms, as smart as the investment bankers are, their goal is to get on the bridge with their client and cross the bridge in the most efficient manner possible and make the most money while they’re on the bridge. And they do that through success things as as that’s how are my business compensation works. You get some level of a retainer fee and then you get a large success fee when you close the deal, but guess what? That client is still on the bridge. The deal’s closed, but most of the time that seller owner has a often can be the most challenging part of the bridge ahead, which is the integration phase and if they have contingency fees and they’re still tied to the company financially and maybe even operationally, they have a very difficult road, but the investment banker is done.

Hagen Rogers: They’ve exited, they helped structure the deal, but they’re not incented to the top dollar, they’re gonna put in contingency fees, which is a way to get the deal done, but it’s not really in the best interest of the seller, of the client. So, um, the kind of the root problem here is that owner hasn’t truly prepared himself or herself or walking across the bridge and, and neither has that owner really prepared their company to be quote unquote the athlete. And that’s what really needs to happen. The owner needs to start thinking about how to make sure their company is the athlete and that takes several years to prepare and most of the time they don’t. They want to do the deal, say in 2018 and they step out on the bridge in 2018. They want to get it closed in 2018. Not enough time to ensure your company’s an athlete and you’ve got to be an athlete to get top dollar.

Ryan Tansom: That is well said and I think you gave some really cool. I love the analogy of the bridge. I mean, because it’s really what it is. You’re stepping out and know, some people call it the deal train, but I think the bridge is a way better analogy because yet you’re going across into uncharted territory and there’s a, there’s a power dynamic shift, there’s a change in ownership shift. All these things are shifting. And Hagen, can you walk us through the preparation, transaction and integration phases and your whole thought process behind the bridge and what’s included and all these and maybe with some context through that. You know, I think we’ve had, we had mark Jordan on the show who he was an investment banker that very clearly went through kind of the whole process of taking a company to market that’s a little bit different than how you’ve laid it out too. So you know, we don’t have to spend as much time on the first part, but I think it’s great context that leads up into the integration and actually I love how you have both the buy side and the sell side because it’s the same bridge. It’s the exact same thing.

Hagen Rogers: Yes, same bridge; same three phases, different steps on the bridge though. So I’ll quickly summarize the bridge for sellers. When you decide to sell your company, you step out on the bridge. There’s really, when I talked about preparation, there’s the technical side of preparation, which is what some investment bankers will do, some of those steps, but there’s some that are missing and, and um, but then there’s a whole element that really is not being done well in the marketplace that will, if you do it well, it will set up success if you run a process well of crossing the bridge and that is what does it mean to be an athlete. And I say there are eight different areas that you need to look at and this is what we do with the client we’ll look at with the client at these eight areas and identify because I’ve been doing this for over two decades now while I’m not an expert in how to fix the challenges and that’s where I bring in a collaborative group of partners to help with that I can identify where they’re not a top athlete or an elite athlete. So there’s eight areas are strategy and market positioning and those really go together. People process an annual results, culture, innovation, momentum, and it doesn’t matter what industry you’re in, it doesn’t matter if you’re large or small company. These are the eight areas that in my experience, I can boil it down to these eight areas and say, okay, how much of an athlete is this company? And I will — and strategy is the most important, uh, strategies, the heart of health, of the athletes. It’s the heart. It’s got to be top shape that is about business model. It’s about vision, it’s about, uh, the leadership and, and, and, and how you’re executing strategy. And it’s all of those things and that to, for, for business owners, we’re not strategy experts.

Hagen Rogers: We developed a product and service, we built a business around it and we’ve been successful, but a top athlete revisits the business model that really protects those products and services every year. And they’re, they’re, they’re tweaking it, they’re tweaking it where they, when, and where they have to. So market positioning is, is, uh, we’re, how are you positioned in the market to have competitive advantage? And when the client client’s dollar, let’s say, a over your competition. And so those two things go together. If those were very healthy, then I’ll look at people and processes, people from leadership to your teams and how you hire, how you fire, how you compensate, what processes run the company, how many processes do you have, and how do you advance those processes that the more… and processes for processes’ sake are not what I’m talking about, it’s processes that execute the strategy week in, week out most efficiently and having people that can do that. When you have those two things really behind the strategy you’ve got, you’ve got the makings of an athlete and it shows up in your financial results. You want to have profitability margins that are at par or really ideally better than the average company in your marketplace. If you’re not doing that, why not? Where are you off? Culture is what I say is the organization of business decision making inside a company that is designed to execute the most efficient way to run the strategies. A lot of lingo here in business terms, but all these are important to you. Grasp. Let me pause and see what questions you have.

Ryan Tansom: Well, I think it’s, I think the more and more everybody hears about these, you know, their value drivers are growth drivers are, it’s all the stuff that makes it a machine. You know, I always go back transferable EBITDA or cash flow, right? So I mean this is a machine that is no longer just a really high paying high risk job. And like I like the analogy of the, of the athlete as well and I think it’s, you know, whether you call them the value drivers, wherever, wherever they’re coming from is they’re making they’re intentional. Right. And I think what I mean with the 21 years Hagen that you’ve been doing this and a lot of the… I’m assuming you’ve got a lot, a lot of stories but you can’t walk on the bridge and not have this stuff figured out because you can’t fix this stuff overnight. I mean I think it helps with the negotiation, knowing where your big weaknesses are going to be and how those are going to be torn apart and due diligence or the Q&A part. But like you can’t fix this stuff overnight at all.

Hagen Rogers: Correct. That’s why you really need to be thinking about if you want to exit your ownership of your company, it’s more than just hiring the right person to sell your company and doing a valuation and then getting a book together. Those are, those are important steps, but much more important is, is your company an athlete? Is it a top athlete? And, and where you need to work on those, any of those eight areas, you have time to do it and you have people that help you do it because you know your business. But we’re not, you know, a CEO and a president of a company that doesn’t mean there outstanding it all these areas. And, and so having advisors come in and, and give you tools to use. That’s what my model is about, is a collaborative, comprehensive approach. So I want to help them identify these problems early so they can and I can help them, introduce them to who I believe are the best people that can, can work with them and, and, and get that company in tip-top shape. And then we can think about the mechanics of crossing the bridge, the M&A bridge.

Ryan Tansom: Well, and this is what I’m super interested in to kind of tying this because I think, you know, what we work with our clients on and I, and I tell everybody, even on the listeners that you can do all these, you know, these eight drivers that you’re calling them or the athlete, the athlete characteristics, but it’s, you know, going towards, and I want to, I think there’s a lot of correlation to your integration knowing like what’s your ideal exit? Is it PE? Is it a strategic competitor up the up and down the stream of your supply chain? Because all of these things and what you do intentionally should have some sort of target towards that ideal buyer because how you launch new products or strategies that your business model, their culture might have a different, you know, angle or different path based on all the different buyers which will impact the integration, right? Because if someone has these certain things you’re not, you might not need to do them because you’re going to be a bolt on or whatever. I mean, I think there has to be a lot of reverse engineering into the outcome that you want.

Hagen Rogers: That’s a great point too. To that point, I say my advice to the client is on the technical side of preparation. It’s let’s come. Let’s build a buyer list now, well before we market the company, and so you know the, the list of companies you’d like to approach when the time is right and you actually start to build connectivity with those buyers. Not that you sit down with them and say, Hey, I’m thinking about selling my company in a few years, but you build rapport with them. Let’s say trade shows, conferences you, you intentionally run into them or schedule time to meet with them just to talk business. Just to understand how they think about the world and it helps you when you are on the bridge and you are on the bridge doing that. I say, but when you move into the transaction, say you have a better sense of the top prospective buyers are going to be by building that buyer list early and being intentional about the approaches, so to that end, the technical side or preparation, moving away from those eight areas, I say you do get evaluation early. You do get educated on it, what it looks like to cross the bridge we offer that we help will of tell them about the bridge and what to expect. I say build that offering memorandum book early so that she really. You tie that with the projections. You’re building out a projection model that aligns with strategy and where you want to take your company and you build that offering memorandum, which is the written story behind the numbers and they go together, so that you’re really living this. You’re living what you’re going to share two potential buyers when you’re in the deal phase, you’ve been living it and you’ve been, you’ve been steering your company towards a very defined vision, competitive advantages, and you have certain buyers in mind. Maybe not one, but you have a group of buyers in mind that should want this company if and when it goes on the market.

Hagen Rogers: And uh, so you even build out your virtual data room early. So that you get some of these technical things knocked out way before the transaction phase so you can, it frees you up to really focus on really running the business well when you’re in the transaction phase and you’ve gotten some of these things that really kind of just problematic toward the owner to have to spend so much time on the virtual data and data gathering of all the docs… you’ve gotten that done already and do that in the preparation phase, you’ve got that wealth manager at the table and they’re collaborating with the investment banker. We’re working together to figure out what type of structure is going to work best for you, best for your wealth planning. And so that allows you to move into that transaction with a lot of momentum and you can really then kind of sit back in time the market to the best that you can. So you’re waiting for the market to head towards a peak or high and you are the athlete. When you combine those two, when you are the top athlete and then you’re combining that with market timing and you have the strategy down and that story that you’re going to share with potential buyers you’ve already identified you’re going to get top dollar or you’re heading towards that great possibility that you’re going to get top dollar.

Ryan Tansom: Top dollar and no contingency fees.

Hagen Rogers: That is the goal. That is the goal. And so, uh, we, that in our mind defines top dollar when you can get a high valuation when you’ve, you’ve sold it to a buyer that you really admire and you know they’re going to steward this company well after they own it and you get top dollar all cash deal. That’s the ideal experience for being on the bridge. And I’m, I’m speaking to the ideal scenario and that’s where I think the business owner should shoot for because I mean it, they put their lives a building these companies and their life maybe for the last five years, 10 years or 50 years or maybe it’s the intergenerational. Why not good for the top, the best experience because so many people just don’t get it. They don’t get that.

Ryan Tansom: A lot of people don’t, and it’s unfortunate that even the 42 percent of the ones that actually close. So going into that, so that transaction, because the transaction, the integration is I think even where you have more of your special sauce and how you articulate this. So is the transaction pretty much the normal status quo and how you actually go through with the actual deal and then how does that relate to the bridge and then how does that tie into the integration piece?

Hagen Rogers: Great, great question. And so yes, the transaction phase, a lot of the unique attributed, the M&A bridge, happens in the before and the after the preparation phase and the integration phase in the transaction phase. If we’d done our work well, we’re gonna, we’re gonna run that process most of the time like most other investment banks, which is a an auction process, targeted auction, we’re going to approach a group of buyers that creates leverage in a process for you. And while there are unique circumstances when a negotiated sale with one buyer makes sense, most of the time, I think it makes more sense to to run a broad process. So that’s about the investment banker approaching the buyers, sharing the information with the buyers, receiving the indication letters. The management meeting, in my opinion, is probably the most important part of that process. And I’ve learned that by experience that that’s when the companies on stage and that’s when you really had the best opportunity to shine and and where the buyers, you want the buyers to leave that meeting with the seller and probably a couple people from the seller management team, they walk out of the room, they said, we have to have this company because you want that and you so, so everything builds up to that one meeting and you want that meeting to be… There’s an emotional element to that meeting where when you’re telling your story, the, the investible story of why this company is a going to be… has a very bright future, that’s the time to do it. And so all of that work, that preparation work goes into that, that, uh, that, that one day, half day experience with the buyer. And if done well, it just creates this momentum for the latter half of the transaction phase.

Hagen Rogers: So the letter of intent, exclusivity, due diligence, uh, negotiating and closing documents, and closing, that’s not to say that is all easy to do, but if you’ve done your work really well in the preparation phase, which is not many people fully do that, uh, you’ve really, you’ve set yourself up to just run the company well and outperform your numbers during the transaction phase. So that tees up the integration. And so we actually have advisors and partnerships that we have because integration for sellers is actually very important. And you would say, why not, you know, you sold your company because of those reasons I described earlier. Forty two percent of the time, you’re still tied to the performance of the company you just sold to get your top dollar and you’re most likely going to be a part of the transition for some period of time. So we actually have integration, uh, advisors that most of the time do sell side or buy side work, work with the seller or owner to really be their coach and help them as they go through week to week of this very new world of that you’re no longer in control they’re part of a larger entity now and yet it really matters what happens to this company they just sold. So we have these integration experts that can help the seller understand and get in the mind of the buyer and sometimes talk them down from kind of ledges, emotional ledges. They’re about to jump off a bridge because they’re so frustrated and, and feel trapped. They feel trapped. They want to move on, they want to move onto the next part of their lives. And yet they still have to see this through to the end. And that end can be one year, two years, three years or more after they closed the deal. We want to be there with them. And so this model that I’m talking about, more Marquez, we’re not done until we step off the bridge with the client and can measure, did the client get full purchase price or top dollar capture and was the, was it a successful hand-off? And that’s going to, if they get both of those, that’s the best I think you can do while on the bridge. And you should walk away very satisfied that you did. You didn’t, uh, you know, absolute best in your companies now. And great hands hopefully with a buyer that you admire.

Ryan Tansom: All right, so based on what… I totally agree with what you’re saying on the top dollar and the good hand off. And uh, and I, and I think a lot of these owners and a lot of listeners and I would never have understood until we went through. Like, what do you mean by integration, right? So there’s like, okay, there’s the emotional things that you alluded to. Hundred percent. Very Real, very valid. That trap, the mental feeling that you feel when you’re no longer control is super real. And that takes a lot of lot of mental prep work and where you just have to go through it. But like you know, when, when I, when I had it and I even talked about our integration with the AP and the AR and collecting AR and paying the bill, but like specifically what integration stuff and what is the biggest mistakes and blow ups that you see in this where people don’t get the capture that… the buyer doesn’t get their ROI and the seller gets screwed or gets, you know, there’s just all of this muddied water, especially when people don’t do it all the time. So do you have specific stories that are common themes?

Hagen Rogers: Okay, so integration… If I put my buyer hat on, that is probably 50 percent of failure with M&A happens in the integration phase. So what you have to realize as the seller is that integration is the hardest part of the M&A bridge for the buyer. So just knowing that and being the that the recipient of, of that problem for the buyer, you’re going to be in the middle of the storm or on the edge of the storm as it happens. So the storm typically starts day one after the close of the deal and the buyer hasn’t planned integration well. So you just sold your company, all the people who’ve been loyal to you, they’ve learned possibly and likely many of them. So the first time that you just sold the company and they feel betrayed, they feel like you kept this a secret from them. And now their job is at risk. They don’t know who the buyer is, they don’t know what their future is. And until you or the buyer actually solves that question, answers that question for the employees, they are paralyzed. They’re paralyzed for some period of time. And so buyers, infrequent buyers especially, don’t do a good job of planning integration. And therefore, um, you know, that first month, two months is, can be very disruptive when they, when your employees are not doing their day-to-day job due to the level they had been doing there partially paralyzed, the company starts to suffer and you start to see your competitors try to poach not only your clients, but your best people. And they, they plant the seeds of doubts like, uh, you know, it’s not going to be the same going forward, don’t you want to explore a better place to work?

Hagen Rogers: And they already are. They’re kind of the competitors are playing to that emotional angst that the employees have. And so they, they, they poach. And so integration is really a combination of several things is executing what, what we call a playbook. The playbook is the buyer’s playbook for how to execute integration. That playbook is, is a series of processes to integrate people, processes, leadership into the buyer’s organization. And it is a, it’s a change management process, it’s very challenging to do. It’s very time consuming. And the buyer really, the best buyers do well because they know the importance of integrating the people, the processes, culture, uh, authority. Do you keep the leadership team that ran the seller company? Do you continue to empower them with the authority they had? Or do you strip it away? Do you consolidate processes? Do you change the processes or do you keep them the same? Do you close down certain operations? Do you relocate people? All those things for seller employers, employees, it’s a tough time. So as the owner of that company you just sold, you’re going to experience that and, and, and you, you’re typically, let’s call you, you wear this hat of ambassador a smooth out all the problems that happen in the integration and you want to make sure your company that you just sold is really performing well because you still have money tied up in this. So they’re now you can see the problem integration or the real, uh, just troubling time that can be for the seller who’s exhausted. They just, they just weren’t through a very trying time.

Ryan Tansom: Well, there’s such a blend of emotions and like actual emotions, but then there’s financial ramifications of those emotions and like going and speaking from my own experience in watching multiple clients go through it is, you know, what I see a lot of good leaders do, Hagen is good leaders provide clear, transparent visions and consistency to make a working environment, safe for people, right? And which is why they get buy in from their employees and they have a bunch of people that literally love them and love where they’re working. And then the moment that you take that all away and then you smash two groups of people together, I mean like you’re bound to have an absolute shit storm. And like, I mean I, I, it was very interesting because I had on the manage IT side of the old business, we had no engine it engineers are impossible to find because they’re super highly qualified, zero percent unemployment. And by the way, the ones that can actually talk to people are literally like, you know, Unicorns. So my, one of mine, he was amazing. We took them forever to find him. He got calls all day long from recruiters, right? And he said he, I don’t remember how Hagan he worded it to me, but he said “I never once picked up the phone until you sold the company.” And so then here’s this guy that we were paying them like in the nineties. And he’s like, all of a sudden the culture changed. My team changed. My day-to-day activities changed and I was like, hmm, I wonder what else is out there? Pick up the phone. And he’s getting, he’s getting paid over twice that now somewhere else, but like this, it’s this whole doubt in this whole not knowing that just I think screws everything up.

Hagen Rogers: Yes, you have to solve that fundamental question that your key employees have. What about me? Until you answer that as a buyer and the seller owner again is tied to the success. You have problems because the top employees don’t know if they will be successful. They start to question their confidence in the new environment they start to. It’s for the best of them. There’s typically a chipping away, chipping away. Suddenly your confidence going through an integration because there’s just so much uncertainty. So bring it back. Let’s step back and you know we’re talking about the last phase here of the bridge, but what I’m saying is, is that to be successful as the seller, it is so much about preparation and how to do the transaction phase well and then how to do integration phase well. You’ve got to think holistically, not just about the deal or trying to get the deal done in the next few months. It’s how do I walk across this bridge and get to the best outcome, uh, because this is not going to be easy and I know that’s why we believe a collaborative comprehensive approach is a better approach and we think it’s the better way to do it, not just try to quickly, you know, very effectively help the client and, and minimize your time as an advisor on the bridge. But it’s really more of a relationship and council across the bridge.

Ryan Tansom: The whole point, you know, like when I know the whole point of view taking all the risks as an entrepreneur is because you want control and you’re willing to do the crazy one of risk in order to have that kind of control and you don’t know what it’s like not being aware of all these things. You know, when you look at all the different parts of the phases and all the different things that you can’t engineer your outcome if you don’t know what you should be focusing on and what should it be, spend time looking at versus just going, hey, I know I want to say. I mean honestly, like I, I get my heartbreaks or these people that call and they’re like, Hey, I want to sell my company in six months. I’m like, you’re so effed. You know what I mean? It’s hard to even talk them off because literally they’re on the bridge right? They’re on the bridge with advisors and there’s no other side of the bridge is broken and it’s going off of your athletes store. It’s interesting like if you think about an athlete or it’s so it’s the same bridge as the same race, but can you imagine trying to run a 400 with no exercise, no practice, and then you go and then you throw up, you don’t win and the afterwards is horrible. It literally should be almost like a non-event, right? I mean you should literally just go run it and then it’s literally just like another practice round. Right?

Hagen Rogers: Right. And that’s, that’s where I challenge the seller owner the most is you know, oh, you know that everything in life to be successful, it is about preparation. Why are you willing to forego that wisdom? Now in this most important transaction, which is, and I think that the false thinking that happens is my company is doing well, I, I, you know, they get a valuation and they think that’s enough, but it’s not. There’s more… to really excel. You’ve got to be a top athlete as a company and you’ve got to, I believe on the technical side do something steps in a preparation phase so that when you move into the transaction, it’s kinda coasting. It’s not easy, but you’re coasting through those technical steps.

Ryan Tansom: It’s like a non-event.

Hagen Rogers: Exactly. Exactly. And therefore, and then to have some coaching in the integration to really help you understand this kind of crazy time that after you sell your company, uh, it really, I think you can win, you can win at M&A and then you can help others realize how important it is to really think holistically about the process.

Ryan Tansom: Well, it’s interesting too talking about the non-event and actually tie it and tying this into our process too because I think we have very similar processes but different approaches. And what I find interesting is that we actually do onsite interviews with all the key executives and he’s now investors or stakeholders kind of talking about literally how do we engineer the ideal outcome and the people is the biggest part. Now all of a sudden you get buy in to the, you know, becoming an athlete with the executive team and you know, what do you see? I mean, I, I can only imagine what was in the decades of experience where all of a sudden you know, your top executives that are super important when they get blindsided, because I remember doing it with mine. We sold to our mortal competitor, which happened to be an amazing company obviously because we’re going to competitors, but the betrayal that they saw, I can’t imagine if they would have been bought into how this all works. What are ways that you see people correctly, bring the people in the fold?

Hagen Rogers: Well, that’s a great question. It has to start top down and typically the executive levels of integration or where the biggest battles happen. It’s not at the mid-level management or, or the, the team members have mid-level management. Biggest problems really come from the executive because you’re changing their world, their level of authority. So imagine the buyer integration plan may be to increase the role of particular employees’ duties. Imagine that anchors the anchors to have, now you, you’ve had a full plate, but now we’re empowering you to do more. Uh, and, and so imagine they now have more on their shoulders than before. That’s unnerving, but also equally unnerving maybe even more is stripping away of authority, uh, with the executives. So when that happens and that uncertainty of what does that mean for me, my family, my future, my career, you really, uh, kind of chip away at their confidence. And so, you know, as I think about different experiences, actually go back to one of my own, which was when First Union literally bought Wacovia. And the process by which First Union integrated Wacovia was top down and you started to see executives that you admired, it was great to see ones you admire, get new positions in the combined entity. And this was really essentially a merger, not an acquisition, because these are two back, you know, this is way back in the year 2001, so this is a lifetime ago for today’s world. But you saw, you saw, you know, the leadership start to fill and then it started coming down your level and I can tell you the day that it was just such an impersonal process by which they say, you know, you, you felt like you were part of this kind of cog machine. You were flown to Charlotte to meet with your potential new team members and they spent 15 minutes with you…

Ryan Tansom: It’s like an arranged marriage.

Hagen Rogers: Yeah, but they’re not really focused on you. They’re staring at their computer while they’re trying to talk to you. And it’s like, okay, do I really like this person? Do I want to move to, to work for this person? And you meet your future boss who doesn’t really live in Charlotte, they live in Utah and they fly in and out of Charlotte every week for four days. And I have. What kind of bosses are they going to be that they don’t even live in Charlotte. And so you start to an end, just the actual day where we were hired. I tell this story a lot. They, um, the executives came down on our floor and I was on a big bond trading floor at what could be in Atlanta. It’s the, everybody saw everybody and there was kind of like a, you know, bond trader, bond trading is crazy. Anyway, crazy fun people. But um, you know, the, the executives who you had probably shaken their hand once kind of marched in and it was like a march back to this office and one by one they called us back to the office and guess who was first? Me. And they called me back, randomly picked me first to go back and I did get an offer and but they said, you have to go back and sit at your desk and you can’t say a word, you can’t look at anybody else. You can’t kind of put any kind of sign that you got an offer. Not until we, until we’ve brought everybody back and either given them a job or not. So it was very awkward to walk back and everybody’s staring at you like they’re looking for some signal, did I get hired or not? And it hadn’t had a stone face is sit down and stare at my computer and I can tell you it just set really unfortunately a bad tone that they experienced of either getting hired, but then your friends did not get hired and you know, just the awkwardness of that process was just, it, it, it really. I’m glad I went through it though because it makes me work that much harder for clients to help them through bringing in the right advisors to help them through integration because it is a very unsettling time for everybody, for everybody involved. You can’t deny that.

Ryan Tansom: Well, you know, when you have that layer, which by the way, I think the people part of it. I mean, Jennifer from day one consulting, I don’t know if you’re familiar with her. Um, she does. She focused on the human part of this. So it’d be an interesting. I’ll have to do an intro to you guys; feel like there’s. There’s the people thing which I think is a huge percentage of the challenges of this and it just clear expectations and being able to describe all this stuff like grownups, but then it’s the think about the lost data in when people get manipulative or they become toxic or they go away and you fire them and you know, all of a sudden you didn’t know that there was a bill out there that was a payable that didn’t get paid or this relationship or this vendor and all that stuff. Tentacles go deep and wide and when you sour the people part, I think it just trickles into all of it. I mean like you can’t and that’s where I think that the financial ramifications are pretty great.

Hagen Rogers: And now you think about it’s easy to see how buyers, especially strategic buyers, don’t create that, that significant ROI, the return on investment. It’s so easy to pay top dollar, but then Kinda week-to-week begin to erode by your decisions and not doing integration well. You start to erode that value and before you know it, you’ve wrecked a company and you’ve, you’ve, um, you’ve all those millions you pay and the resources to get a deal done. Don’t matter, you’ve lost it or you’ve, you’ve, you’ve wrecked a, an investment essentially, and it’s easy to do.

Ryan Tansom: I know! Have you heard of this book called Capitalism Without Capital?

Hagen Rogers: No, I have not.

Ryan Tansom: It’s really fascinating. Bill Gates wrote a Linkedin blog article about it and then there was like 25,000 comments on under something like that and it just talks about the balance sheets of these companies these days. Are those more intangibles and tangibles and intangibles are people, processes, culture, all this stuff. And really, and this is just totally my, my own two cents and opinion about it, but companies are living organisms of people, right? And so I think about like trying to digest and emerged to living organisms like that, you have in order to capture that value because you might have $2,000,000 in free cash flow, but it’s coming out of an organism essentially, right? People and culture. So you have to literally understand how that thing lives and breathes in order to absorb it, to keep that cash flow, otherwise you totally screwed and you’re just playing the short game and the Wall Street game and you’re never going to be able to get it. But it’s a super interesting book because that’s, you know, I, I, like I said, I’m articulating as a living organism.

Hagen Rogers: That makes me think of the M&A is like a marriage. Well it really is, when you think about it, marriage is just between two people who really want to be together. M&A is about potentially thousands of people who are disrupted because of this transaction and they really, day one, they’re the most hesitant to walk through the door of the company and interact with their quote unquote spouse. It’s the opposite of marriage is it’s, it’s a, it’s a very troubling transaction. So I think that kind of the, the kind of rosy colored glasses of M&A’s like marriages is really not telling it like it really is.

Ryan Tansom: Well, it’s ecosystems, right? It’s a complex, you know, complex organism like I said.. You have to think about all the different facets and then that’s what I think is very interesting about, you know the bridge analogy because you’re literally, if you do it right, you understand what all those facets are and you can engineer the perfect integration as what you’re trying to because the perfect integration is where the, where the ROI comes.

Hagen Rogers: There you go. And that’s what PE has figured out. The partner that we use in integration is a global integration consulting firm and they do a lot of work for PE firms. PE firms by the way, are getting great results from M&A and they’ve figured out all these fumbles on the bridge metaphorically and they, they solve those problems by having experts like and integration consultant come onboard and help them and all these due diligence consultants help them at the right time and they’ve created this collaborative partnerships and that’s what we’re doing at Watermark. We’re creating a collaborative approach because you need people who know what they’re doing to advise you and you stepped to that next part of the bridge and PE’s figured it out.

Ryan Tansom: Well, it’s interesting and I think some of them, I mean I think there’s still a learning curve because I had a, I had lunch with Mike O’neil who I had on the podcast and um, you know, he is about to close a transaction and literally he’s, he’s flying normally where it’s, everything is as is, this is a financial transaction that he is literally going in there having a barbecue and they’re like literally integrating the people because it’s like, I hope it’s gonna work. I think I’m doing the right thing. Well for sure, man. They, they just want to know that they’ve got a friend because they’re now partners with you even said like, I don’t want them to hide stuff from me. He goes, I want them to be okay telling me stuff and to respect me and feel bad about it. Not being manipulative about it. So it’s a contract between people, man.

Hagen Rogers: I was just going to have, maybe I’ll end with this. Sometimes those kickoff parties can backfire unfortunately, because the buyer has such a different culture than the seller. They blow. They had this massive party and the seller’s kind of a conservative, they’re tight on their budget and they’re like, oh my gosh, who’s just bought us? Because it backfire. Those blowouts can backfire when they don’t think that the buyer doesn’t think it through well.

Ryan Tansom: Maybe there’s a running company joke, where like everybody loves it, but like a different culture. They might absolutely hate it. I mean it’s literally destroyed something. We talked about a lot and I love the process even putting together and you know, if you want to, is there something that you want to highlight from the different things we’ve talked about or maybe if there’s something that we might have not touched that you want to leave our listeners with?

Hagen Rogers: Just that it starts with education. And so we believe that you’ve got to learn about the bridge first and that’s we believe, uh, is really one of the best first steps on the bridge to learn what, what does this mean to do M&A. because it’s such a fragmented market. There’s meaning. There are so many providers of M&A services out there. And what I’d say is why not start with just education and get smart about what, what does it mean to cross the bridge? What are the blocks are the steps that I need to take? And uh, so we offer for buyers, we offer a five day event for buyers to really infrequent acquires to have an immersion for five days and we have a lot of our collaborative partners is teach that and it’s going to be in February next year, hosted by Clemson, their center for corporate learning. And it’s a, if you want to learn more about that, you can go to and look under programs in M&A. For sellers. I teach privately, it’s a half day class that I teach and I can break that up actually into video, a meetings and I can break it up into three meetings. So for that as a seller to learn about M&A, you can call me or email me. Our phone number at Watermark Advisors is eight, six, four, five, two, seven, five, nine, six, zero. Visit us on the web or Linkedin. We have a a page on Linkedin, but it’s Watermark and you’ll learn more. We have video videos, interviews, and a lot of clients that we’ve worked with in the past, but it’s important to start to think about this as a seller. Like I said earlier, several years before you actually want to do the deal. That’s, that’s, that’s the best step you can take is if you start to think about this well in advance.

Ryan Tansom: Couldn’t’ve said it better myself, Hagan, I really appreciate you coming on the show.

Hagen Rogers: Oh, it’s been a pleasure. Enjoy talking about this, so thank you for having me. Hope I can come back again.


Ryan Tansom: Well, I hope you enjoyed that interview with Hagen. I think he had a lot of amazing pieces of input about understanding what’s important to you. And that’s why we’re doing what we’re doing at GEXP Collaborative, because it’s the biggest challenge that all of us entrepreneurs have is you’ve never done this before. You’ve never ran the race. You’re an athlete and you’re training for an event that you’ve never experienced before, so you have to have someone sitting there telling you what it’s like to run it all the time. So when you actually go through that transaction or that transition, it’s a non-event. So if you want to know more about how to determine what’s important to you, go to our website, check out the five principles. There’s five principles that really make a difference and if you are aware of what are the five things that are really important to you when you exit, then you can put into context and then you can design the outcome that you actually want. You can actually go get it.

So when you step out into that bridge, it’s not a big deal. When that gun shoots and that race starts and you’re that athlete, you’ve prepped for it and it’s literally something that you’ve trained for and it’s a not a big deal because you knew exactly what you wanted and you have the team that wants to help you go get it. So go check out the website, Check out the five principles, check out the process because I really believe it will bring context and clarity to what you’re looking to do and then if you actually want to go transact through a third party, looking at an investment banker like Hagen who understands what’s going on before, during and afterwards is super important because if you’re going to have someone sit there with you, make sure they get it and make sure they’re looking out for your greatest outcome because you’ve already done the hard work and you understand what you want. So I hope this was a really helpful episode. If there’s anything that you do, think about what’s important to you and what do you want and what do you want that outcome to look like. Going onto Itunes, give me a rating. Otherwise I will see you next week.

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Written by Ryan Tansom

Ryan Tansom

Ryan runs industry-specific podcasts on his website which pertain to mergers and acquisitions, and all the life lessons he wish he had known then. He strives to bring this knowledge to his listeners in a way that is effective and engaging by providing new material each week from industry experts.

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