Why Deals Fail After the Numbers Look Perfect

Josh W: Good day everybody. Welcome to The Deal Podcast, man. This show is, is one of my favorites that I've ever done. We've built a bunch of 'em, but the reason I like this is I get to have face-to-face conversations with, uh, deal makers and we've covered topics with, you know, call Temple, you know, on sports and entertainment and moving from, from the world of.

Athleticism into deal making and, and now leadership. And then we've had conversations with, uh, attorneys and, and, uh, life coaches and all sorts of walks of life. And then we get to sit across the table from a guy like this, Andre, who has a phenomenal personality and he's so funny, and he's the CPA. So sometimes there's so mix, but man.

I'm so glad to see you, Andre. Good to see you, man. You too, 

Andre B: man. Nice to meet you. Yeah, it's to be 

Josh W: here. Meet you. Yeah. So we, before we, you know, hit record, we, you know, we're in the green room, we're in the hallway, and, and we have conversations and you know, but for the audience, why don't you let us know how, how did you meet the team over here?

Kind of walk us through that. 

Andre B: So, I met Judah I kind of mentioned before. Um. I wa I was in the off, I was in public accounting for 10 years. Went out into the oil field for a little while, and when I came back, uh, while in the oil field, I developed a relationship with some of the local bankers around here.

Not that I didn't have any before, but it's just I met this, this core bank. And, um, they introduced me. One of the young bankers there introduced me to a guy. He said, man, I've got an attorney who's looking to do quite a few things. He said, do you know a guy named Jude Davi? And I'm like, well, is he related to the attorney Blake?

He was like, yeah, that's his little brother. I said, alright. So we, we met and. We hit it off. We had a lot of things in common and it just kind of took off from there. And then it's ironic is not long after, uh, one of my coworkers introduces me. He said, man, he said, I got this roommate he's working over at, uh, at one of the other banks in town, a guy named Eric Billett.

And I'm like, oh yeah, I know that guy too. So we, I got to meet both of them in a very short amount of time, and it's. Ironic that we ended up kind of visiting in their, in their area right here. So, uh, but they're both very interesting guys, very good guys. Uh, good Catholic guys from South Louisiana, you know.

Uh, so everything I did kind of took off from there and Judy and I actually bonded con in a duck blind in January and. Cameron Parish in Louisiana. The, the bankers invited us and they're like, you and Judah going hunting? I'm like, all right. Well, we had a good time though. You guys eat some ducks? Uh, we actually only killed one that entire day.

So you shared a duck. Yeah. Yeah. But we, we had a very good dinner. It was one of the nice lodges in south Louisiana where you, you get taken care of, you have the good dinner, the good breakfast, and you have some good, uh, fellowship. So, I mean, it was, yeah, it was well worth it. 

Josh W: Yeah, man, it really is. So 10 years public accounting.

Were you doing PCA, OB eight Ks, 10 Ks, 10 Qs, and all that other alphabet suit? 

Andre B: So actually the firm I'm at, we're just, we're at the high, we're private equity venture capital, but we don't do any publicly traded information. That's, that's kind of above our, our coverage 

Speaker 3: uhhuh. 

Andre B: So we stayed down. We, we've kind of found a little niche down here.

Uh, the guys firm formed this form. 40 years ago. Um, they've all since retired and we've kind of taken in and gone on with it and, and it's been a blast, you know? 

Josh W: Yeah. So you, you found your niche and you said PEVC, that's kind of where you find your focus. 

Andre B: Well, it is, but I find, I, I kind of call it the CFO by the hour.

I have some clients. I'm the CFO of the household. I'm the CFO of the business, and then I'm the CFO. And general guidance. Um, but then sometimes, like for Judy and them, they, they have kind of all that background, so I give them some tax guidance, but it always depends upon the group, you know? Mm-hmm. I've had some, some companies that were bought and sold and it was.

I was the guy pulling the transactions, digging the dirt, getting the skeletons out, you know, showing the, the other guys, this is what we're doing. And then I've had some where I'm the high level guy and it, it all depends upon the group, you know? Yeah. That's the fortunate thing. 

Josh W: Yeah. You're, you're pretty versatile in, in how you approach things.

So let, let's start with PEVC as a, as a CPA, you know, uh, we just had. Maybe an hour ago, a, uh, student reached out to us asking us about, you know, uh, questions about deal making and the, you know, he's studying to be an, an attorney, I believe, but we have other students that are listening in that maybe one day wanna get into PE vc.

So maybe from the accounting side, what are some areas that they can go to to maybe study the financial side of PE or vc? 

Andre B: Well, that's a good question. A anything kinda, I would say a good starting point would be audit. Starting your audit department. I mean, it's, it's the grunt, right? It's to become a general, right.

You gotta start off in the infantry. So it's, it's one of the lower levels. Hey, I'm starting out, I'm learning about debits and credits. But at the end of the day, those debits and credits matter and a lot of the times a transaction and a handshake. You can't get measured in a de debit, in a credit, but when it's all said and done, you can measure it.

You know, it's, I've learned that accounting, what you see on paper is just a small portion of what we do. Like I tell people the two classes I use 90% of my day are the two classes in college. I said, why are they making an accounting major take? And it was psychology and sociology. 

Josh W: Really. All right, explain.

Let's unpack that a little bit because I remember my accounting. Professor Vern Allen in 2012. Oh no, 2002. Holy moly. We we're old brother Vern Allen. Shout out. That's a compliment, right? Yeah, yeah, yeah. All right, so kind of walk us through, you know, like he was teaching us debits and credits and where, where to put stuff on a financial statement and all that.

But you're saying that the, the most important, like classes were psychology and sociology, right? Like, why you gotta 

Andre B: be able to talk to people, right? So. A, a good example, if I'm sitting here doing just a tax return for you, a lot of people are so scared and intimidated by taxes cover up. I'm not gonna share anything with you because you're the enemy.

And I'm like, no, no, I work for you. Technically, the IRS is the enemy, but I'm saying it's more the government. Uh, tell me what you do and we can kind of help you because I'm here to help you. I'm not here to, to rape and pillage you. And it's like, 

Speaker 3: yeah. 

Andre B: You get them comfortable and you get them opened up.

And a lot of times I'll have clients that are farmers, maintenance men, whatever, and it's, you start talking their language and it's like, okay, well wait a minute. This guy knows what he's talking about. Mm-hmm. So if I can translate what they know on there. Technology and information and put it into a financial statement, all of a sudden, okay, well yeah, that's what I need.

And that's what I've been fortunate enough to do, and the psychology and sociology is, Hey, what, what, what do I need to do to open that person up? 

Josh W: Let's be real here. Not all CPAs or finance professionals would do that, have had that outgoing right. That, that, that spirit that you have, um. You have a unique blend, like you're, you're good with people.

Were you pretty good at sales? 

Andre B: I probably could have, but I've never been in sales really, believe it or not. Okay, got it. But you're 

Josh W: good. You're good with people and good with the financials, so you have a really good mix. Where do you get your energy from? Do you get your energy more as an extrovert being around people?

Does that fuel you or maybe that refuel by yourself? Or maybe a mix of the two 

Andre B: combination? Right. Yeah, so it's like I mentioned, we just came off of a big, big deadline. Yep. Right now, I'm kind of that introvert. I've had enough of people you know, and, and, and I'm not saying I have enough of people, it's when you're dealing with tax deadlines, no one likes it.

Like to, for me to talk to them and say, Hey, you owe X amount of dollars. Even though they love me, they hate me when they hear that, right? And I take the brunt of that abuse. Now, is it bad? I always tell people, look, I look at my fees. I split 'em a third. Right? Two thirds of a good productive stuff. A third is for you to complain about the government.

You can come to town with me and go to town, I'll listen to you all day and I'll, and I'll help you. But I'll just tell you at the end of the day, this is what it's gonna be. Yeah. And, and it's, when you do that, you make them realize, look, I'm not here to, to cheat you. My goal is actually to make you pay more taxes each year.

Why? Because I want you to make more money. Oh, that's an interesting look. I want, yeah. I don't want you to lose money. 'cause think about it, in business, you gotta have income. If you are losing money, it's not a good deal again. 

Josh W: Man, what a unique approach having A CFO tell you, you know, I actually would like you to pay more taxes.

And they're like, what? 

Speaker 3: Yeah. 

Josh W: Well that means you made more money. I think that's a different way of thinking it. Okay, let's side by side comparison, right? Shoot. So you know we're PE group, right? And we're looking at A CFO and one CFO is like, how could we make more deductions? How would we cost savings? How do we do all this?

Versus your approach? Why do you think your approach. Is superior maybe in the PE model. 

Andre B: In the PE model, yeah. They wanna buy somebody that's making money. Right, right. To be able to take it and expand. 

Josh W: Yeah. 

Andre B: If I'm looking at a company that's losing money, okay, I can get this for a deal or just let it doors close and pick it up for nothing.

Josh W: Interesting. Got it. So as A CFO, you know, there's the, the. The rear view looking CFO. Yeah. And then the windshield looking. C, FO. Kind of talk to us about the importance 

Andre B: of each. I think you need to look back in the past and, and you also need to look back at, okay. You never lose unless you lose the lesson.

Right. I've learned that from sports. There's plenty of times we do deals where we didn't make money or something didn't hit, but you know what? If you looked at what you did wrong or what went wrong, or what you didn't do right, or what you could have done right, looking back, that kind of helps you get ready for the next deal, right?

Because you gotta have a lot of short term memory, but you also have to have some of that long term to say, oh, or remember this. Mm-hmm. It might be 20 years from now and it might be a hundred deals from now, but. Yeah. You kind of have to, you have to have that niche somewhere and hopefully I, I, you know, once you get to a certain age, you might need memory upgrades for us, and, and I remember all those transactions, but, you know, it, it's, it's, it's a necessary part of the job.

Josh W: Yeah, for sure. When it comes to private equity model, the VC model. Right. The, the complexity of you have the, the person, the kind of the, the gp. Mm-hmm. And then you have a bunch of investors, the LPs mm-hmm. In this model. And then they both go do stuff with businesses and hopefully provide a return to the.

LPs, right? Yeah. That's the model for each one focuses more on high growth, maybe startup, the other one focuses more on cash flow and stability. Which model would you like to kind of explore? Uh, maybe on the, the podcast here, kind of digging in more. Uh. 

Andre B: I'd say let's do the, the growth. 

Josh W: Okay. So VC model.

Sure. I chose the right one. Yeah, yeah. I'm just kidding. 

Andre B: All right. If I would do either one for great, but 

Josh W: yeah. So in the, in the VC model, right. Um, let, let, let's go for kind of a growth VC, maybe, maybe, uh, pass seed or series. Maybe they, they've got some things. Let's talk about the, um. Uh, different things that you've seen that that has worked well for some VC groups and maybe some things that, 'cause you're looking at their books, so you, numbers don't lie, right?

Typically. Right. Uh, maybe some things that you saw worked really well and maybe not. So maybe in that model, where do you, where did you see, uh, from the accounting side? Things went better, 

Andre B: um, on there that, gosh, that's a, that's a tough one that to, to completely answer because there is some accountant confidentiality, but, um, a good example, you know, and you don't have 

Josh W: to use company names.

Yeah, no, no, no. That's right. Okay. 

Andre B: I'll always kind of harken back at times where that GP will come in and, and their ego is, man, I've got the MBA from, I'm just gonna use Harvard School of Business. It's accredited, you know? Right. I'm, I'm smarter than the guys that are doing this. 'cause they're a third grade education.

It's like, I, I, I'm gonna win on this deal. And it's like, well you probably overpaid, or you should, you should have learned more about what's going on. Or had an ops guy, you know, and from the accounting side, you look at it and you say. There's nothing wrong accounting, but yeah. You didn't account for that guy that you needed to, to know how to run it, to generate the sales or to make it efficient, you know?

Right. Yeah. So there's, there's, I guess you could say that's more managerial, but I still function. It's management is, accounting is a function of management. I'm just reporting what management did. Right. So in, in 

Josh W: that. I think ego has its place in terms of, it takes, I think it takes ego to take something from zero to one, zero to three.

I think it takes a lot of humility to build a team and to take something from three to 10 and above. Um, we see some unicorns that, that do it, you know, ego all the way through, and it just crazy, you know, burns, burns, bridges and relationships along the way. And I might be wrong, if I am, please correct me, go to the deal podcast.com and, and share your thoughts there.

But for the, the, the model itself. Uh, you have seen, you know, people come in, you know, a GP will come in and they have to evaluate what they think the business is gonna worth in the future. Right? How in the world do they do that? When looking at maybe something that is just starting to get revenue? So we don't have three years financial, we don't have a pass.

All we know is that they're starting to gain traction today. How do we know what it's worth? 'cause they're willing to put money in it. 

Andre B: A lot of times it's the industry. A lot of the times it's their knowledge of that particular business area, et cetera. Yeah. A a good example, I've seen some come in with, you said a three year book of business.

How one, one that's been in business 40 years. It's just a mom and pop never stayed, never went beyond this certain level, but they, there was a businessman that came around and was like. Man, this is a seed that I can plant and this tree's gonna grow like an oak tree in South Louisiana. You know, why don't I do this?

And it's like they were able to see that and just go from there. And good example we're of that age, I think most of the people in this room. Worldwide web wasn't a big thing when we were in college. Right, right. So I know when I was in, I had to get, when I got out of college, I learned Microsoft because it wasn't in college at the time.

So that's a good example of, okay, this is something in business you'd have never learned and you didn't ever thought of, and it just took off. Right. 

Josh W: You know? Well, we'll talk about new things. So we're gonna stay in the path of maybe vc an industry. That's hot topic right now is, is ai. Mm-hmm. How is AI affecting the world of accounting?

Andre B: AI is affecting it in, in backroom accounting. You know, it's getting to the point where, um, there's a lot. W-C-O-V-I-D hurt our industry tremendously because we had a lot of baby boomers. That decided, you know what? There's a whole bunch of new laws that are coming out and me having to stay away and work remote, I'm just gonna take it and retire.

Speaker 3: Yeah. 

Andre B: Well, you lose 300,000 senior accountants and you're replacing 'em with 40 to 50,000 accountant graduates a year. Numbers don't add up. Yeah, right. You know? So how's AI come around? Now we were able to integrate, we can scan in documents on the front end of our office and it auto-populates some of our tax packages.

So for instance, if you are, um, a retiree, right? Mm-hmm. You're coming in with your 10 99 Rs, your retirement distribution, social securities, and a couple of brokerage statements, it'll scan it in and autopopulate. Whereas 30 years ago when I came out. I was the guy key punching it in, AI's taking it and auto-populated, and now it's like, okay, now I'm reviewing the return versus manually entering it.

Yeah. 

Josh W: Let's go back 30 years. You're sitting in front of your. Desktop computer with your ma dot matrix printer. Ah, were you pretty good at typing with one hand and reading the paper or the other, like on the numerical side of it? 

Andre B: So one of, one of my good friends and I, we shared an office probably a little smaller than this room right here.

Speaker 3: Yeah. 

Andre B: And we had one laser printer for the firm. Now there's literally a laser printer for every staff member. Yeah. I mean, what, a couple hundred bucks? Yeah. But we had one for the firm and then we had the old Rolodex printer, and it was in January. Hey, I'm printing a W2 from this accounting package. Can you line it up on this one and show?

All right, go ahead. Run. And then we'd run like two or 300 w twos, tear 'em up, and it's like, okay, what's the next one? So, mm-hmm. How much has automation changed our industry? Yeah. Yeah. And, and it's all also probably made the tax law that much more complex and there's that much more compliance because we can keep track of more things.

Right. Why did, why is it making it more complex? I thought it would probably simplify it. It should, but what they've said is, okay, well now, instead of when I was in, graduated 10 99 divs dividends mm-hmm. Were roughly seven or eight boxes. Big Now I'll get a 10 99 dividend with a 200 page statement. And it's that much detail broken out between 1 99 8, uh, distribution, capital gain, distributions, qualified dividends, ordinary.

I mean, it's a litany of things and it's like, okay, this used to be a simple form a long time ago. Now it's complex. Yeah. Yeah, 

Josh W: man, I had such a bad assumption that the government was gonna get more simple over time. That, that, that's on me. That's on me guys. It's people. Yeah. Right. It's people for sure. I'm guilty of it too.

Uh, when it comes to, we, we talked about AI and, and the, the, uh, fact that it's having, what about the world of. Blockchain when it comes to maybe online ledgers and, and the need for maybe A CFO or accounting or maybe even the IRS, what, what are your views on 

Andre B: some of that? Um, I, I think especially right now with the IRS, with a lot of their budget cuts and their staffing, you're replacing people.

So the more we can automate the more. Good example, when I graduated school, you mailed in your tax return to the IRS, they had a staffer that went in and processed it into their system. 

Speaker 3: Mm-hmm. 

Andre B: Now we can e-file. It's all integrated in, so you kind of get rid of that, that one job right there. So, um, how much has it changed?

A lot. Yeah. Another example. If I get everything set up, I can go to irs.gov and pull up a lot of information about your personal return, and you're gonna say, well, wait a minute, can you pull it up? Only if I have a signed power of attorney. So it's not like I can go in and hack, but Right. I can access a lot of your records that I'll tell some clients, Hey, you're missing this 10 99.

They're like. Well, how'd you know about it? And I was like, well, I was able to pull your wage and income transcript. Right? So that's how I, AI has helped as far as for the service in my industry. Um, nowadays with everything, if you need, you have a good web browser, you can access a lot of people's accountants, um, accounting books online.

So they'll share one link with me 

Speaker 3: mm-hmm. 

Andre B: And then my whole office now has access to it. So you now. If one, if Jude were to go in and say, Hey, I've got this business. I want you to take a look at it. Okay. You're on, say QuickBooks Online. Sure. Send me an invite. I get the invite. Well, now you have my whole office that can look at their books.

Right. And assist with them if they're having issues in-house. 

Josh W: The speed of deals due to technology, from AI to the The worldwide web, yeah. Has accelerated. Like back in the day you would get a binder. With, you know, like 150 pages of financials and stuff like that. The bank statement boxes, bank statement.

A shoebox filled with receipts, right? Oh yeah. I'm sure you got that as a tax guy. Uh, when it comes to the speed of deals, where could that go wrong? 

Andre B: Where could it go wrong? I find. With this, it's tougher to track stuff down sometimes, right? Because I know, all right, well, I see all of these bank statements here and I'm looking for one particular check.

Well, I can probably look into bank statements. When you're on, when you're in the web, you're storing things in. In virtual reality, if I just mislabel something, then I literally have to click on that file to find that particular file. Oh my gosh. Yeah. So it has a negative effect, but you'd be surprised at how often.

You click on a file sometimes, oh, this is, this is the file I was looking for. And all it was was just someone labeled it wrong. Labeled it wrong. Yeah. So it, it's, it's an interesting take. It's, it's very good. And it, and, and it expedites things tremendously because a lot of times, you know, you, you, your equities are coming from the major metropolitan areas.

Why would they come to South Louisiana? Well, if you send everything on a portal and we can upload everything through there, it's quick and easy, you know? Yeah. Why not? 

Josh W: Lemme ask you a personal question. Sure. Yeah. Do you still manage your own checkbook? Like do you have an actual checkbook that you write the right side and left side of it?

Uh, 

Andre B: so I, I do Simply because you have a joint checking account, right? Yeah. And it, it, it ends up, Hey, did you write a check? Yeah. Because that way I at least have about, now I'm an accountant, so I can log in on my phone and check my bank balance every day just to make sure, hey. She's paying her bills that I write, a check that we might, we might bounce.

Yeah. Make sure it covers, uh, for sure. I, I, I do for one, beyond the one. No, I don't. Yeah. Got it. What do you think is your superpower in the world of business? Believe it or not, the ability to talk, kind of what you mentioned is I, if I can sit down and have a conversation with something, I can get a lot out of it.

Yeah. And just, just easing their fears and, and getting comfortable with someone. Makes a deal happen and it everything from a deal when I'm saying a tax return to a financial statement, to a bank loan to closing a private equity deal. If you can sit down and talk to someone, it's amazing how much it'll work.

Josh W: I'm gonna put you on the spot here. Shoot. Give us your best accounting joke. 

Andre B: And I heard some good jokes the other day, but accounting jokes now gonna put me on the spot. Uh. I'll text you later. I'm sorry. Alright. Hey man, that happens. 

Josh W: I have so many of these dad jokes. And then when someone, oh yeah, yeah, no, I can do You got a dad joke?

Andre B: Oh, well I heard one this morning. Why did the chicken cross the road? Why is that? Because

I like it. I 

Josh W: like it. I like it. So when we let, let's go back to the VC model because, uh, I want to, uh, you're welcome everybody, uh, the VC model. So, all right. So you've been working with the VC group for a while. Uh, the, you know, the, the humble, you know, gp after he had his, you know. He or she had their, you know, 10 years of failure.

Now they're like, okay, we're humbled now. We wanna have a CFO and have those good conversations and love working with, you know, different groups like this. But let's just say they, they've invested in, you know, their model. 10 companies and they have one that's really taken off and they're, they're kind of looking to go, all right, we gotta start looking at some options for this business.

And let's just say it's a mid-market deal and we're looking to maybe sell it. And you're talking to, you know, me, Jude, Scott, and Chase, and, and we're looking at helping one of these companies exit, okay? Mm-hmm. Talk to us through the how to. You know, 'cause they have a cap table, they have gps, they have LPs, they have all these things.

They have the, you know, safe note moving in. They have the convertible note, they have all these, you know, their cap sac is built. You're right. And now we're exiting. Talk us through what, how you would approach that. 

Andre B: Um, it's gonna depend upon kind of like I said, how well I know that gp, 

Speaker 3: right? 

Andre B: Mm-hmm. And, and, and how well they work with certain things.

Because if it's one that I'm stuck in this way and I'm gonna do it, Hey, you know what? They're usually successful in doing it, so you kind of get out of the way. But if it's ones where you, you get a feel like, all right. I know what I'm doing, but I'm, I'm still hesitant on some of this. It, it, it's just a kind of a read.

I, I mean, I hate to say it, it's, I, I still, it's, you gotta judge the room. Okay. And there's a personal feel to it that I can't ever quantify and I can't ever say, and there's plenty of times where I've been, I've been involved with deals and it's like, okay, I think this is gonna happen and this looks like a win-win, but.

All of a sudden the deal just blows up and it, it's a little thing, but you know, it's something we didn't know about. Um, and like you said, when you got that, when you got the notes, the convertible notes and all the other stuff, it's going through all those details. And if I'm dealing with a GP that knows all of those details, chances are it's gonna go pretty smooth because they know what they want.

Right. Whereas if I'm going in and saying, Hey, did you notice about this? This node has this term. Oh, and it's like, okay, well then we, we might have some rooms that, that we could have, we're gonna need to have discussions on, and it's just, hey, the sooner you have those discussions, you clear up. Are you okay with, are you okay with how this might work out?

Mm-hmm. Sure. Yeah. And you try to, try to get 'em as soon as possible, but. 

Josh W: Let, let, let's maybe look at some of those terms that could blow up. And we're not given any financial advice here. We're not given any tax advice, but, you know, just in, in general, what are some of those things that maybe come up that might kill a deal later on?

Like if they're looking to do an exit to a strategic buyer? 

Andre B: Um. Everything from, okay, there might be a priority payout on some of the known, the, the, the notes. Uh, there might be, well wait a minute. I found out you're in this group. I'm not in this, this preferred stock or whatever. And I, you, you name a way for it to happen and it can happen for sure.

However, it's, if you like we mentioned, if you can kind of have those conversations with as many people as possible. Now, granted, you don't want to. Leak it out. Right? You're the gp, you, you inform the limited partners and you keep 'em abreast of, Hey, we've got a transaction going on. But how much you don't know.

Josh W: Yeah. All right. So we we're working through preparing a company for. For sale. They come to you and they go, Hey, we're ready to, to make an exit. What are some of the thoughts that you have to prepare that company on the, uh, accounting side as 

Andre B: the CFO? How, well, how well is your accountant averse of your financials if they know everything inside?

Now, it's gonna be a quick deal, like I mentioned, because they're gonna have majority of the answers already in advance. Yeah. Um. If it's one where there might have been a transition to a new accountant. Okay, well, we might need to help introduce them to what data they might be missing or some historical facts that they don't know about.

Um, it's just kind of a, a, a play by play. In other words, a a, a transaction by transaction scenario. Mm-hmm. I've had some where, Hey man, these guys know everything that's going on, so it's quick and easy. Then I've had some. Even some just smaller companies where it's a mom and pop selling, but hey, I, what are you looking to do later on in your life?

Mm-hmm. And a lot of people don't realize, well, wait, I'm selling, but what am I gonna do next? Venture capital private equity is just another deal. Right? Right. They're gonna keep going. 

Josh W: Yeah. 

Andre B: They deal, 

Josh W: deal people. 

Andre B: Some of, some of the businesses that sell, it's like, okay, well wait. I actually gotta, I'm not young enough to completely retire and go away.

What you gonna do? Right. Hmm, I didn't think about that. And then all of a sudden the deal falls through. Right. Because I can't, I can't stop that cash flow from the other scenario we were talking about. Sure. For sure. 

Josh W: Yeah. Let's unpack that one a little bit because I think that that happens a lot. Is name a number, right?

And you're talking to a business owner, you're like, what do, do you have a number in your head? I looking at your financials, I'm looking at the potential growth, I'm looking at the op, but you got a number in your head. And they're like, yeah, it's. 15 million and then the offer comes on the table for 15 million cash and they start to have those second guesses.

I'm giving you exactly what you're asking 

Andre B: for, right? Yeah. 

Josh W: Why do you 

Andre B: think that happens? Well, it's exactly what happened the first time, and it's like, wait a minute. I asked the girl and she said yes to go to the dance right away. Oh my goodness. Oh no. I've got the homecoming queen or something, you know?

Yeah. Uh, it just happened, you know, and it's like that psychology, sociology. Wait a minute, this might actually go through and get everything I want. Yeah. But it can't be it true. Yeah. As something's wrong. So yeah. I should asked for more. I should asked. That's always the first one. 

Josh W: I should have asked for more.

Yeah. That, that retrade, that that, oh my gosh. The, the FOMO of this, the, what did I lose rather than what did I gain? 

Speaker 3: Yeah. 

Josh W: That happens. That psychology really does happen, and, and you're right. Yeah. Studying the psychology of human behavior, I think we'll do more to avoid pain. Then we will to go get new pleasure or to, to accomplish more.

Andre B: Well, you ever noticed there, I'm, I'm sure all of you guys have been to Casino and you've had your buddies that play blackjack. Never been. No. I'm just kidding. I didn't. All right, go ahead. My favorite is, I got it from the blackjack table. The next hand, everybody got blackjack. I should have stayed. Did you win money or did you lose money?

'cause if you won, get out. These places are built on people losing money. 

Josh W: Right. The house wins. Yeah. It's like the, the slot machine. You, you see someone hit a big, and in your mind you're like, Ooh, that's a winning slot machine. Yeah. I'm gonna jump right behind that person. No, that's not the way the slot machines work.

Or you're working it all day. This is a losing machine. You get up, walk away and someone hits it right after you. Yeah. Yeah. How do you think that affects that, that psychology? How do you think that in, in the world of business? How do you think that could 

Andre B: do us wrong? Exactly. Like you said, I got the 15 million I wanted and it's a very good number.

Don't be upset, take it. You know it. It's, I don't want it to be you. Then become the guy, the looking in the rear view mirror uhhuh versus. What this $15 million could do for me. Right. 

Josh W: For sure. 

Andre B: Yeah. So it's be happy and content with what you have. Yeah. Because you never know. It might, it might not be there.

It might not be there. And that the next offer might be 13. Yeah, 12, 10. And who's to say to you got the 15 million offer? Does that mean the deal's closed right there? Because if it is, we are a lot, we're outta business, right? Because there's plenty of transactions that have happened. Plenty of transactions that have not happened where everything sound looked perfect.

Yeah. And it just stopped for sure. 

Josh W: And I think that's why it's so important to have A-A-C-F-O or someone who understands the financials to, to kind of look through things and, you know, and then you, you know which teams to loop in. Yep. Let's talk about financial teams. So you're working with a business owner, you know, mid-market deal, and they're going, I'm thinking about one day.

Selling. What are you gonna start doing the moment that they sell or the moment that they say, Hey, I'm thinking about selling. They bring that up. What? What happens in your head? 

Andre B: First question I posed to 'em is exactly like I mentioned before, if it's a guy you and i's age. Yeah. What you planning on doing after?

Yeah. 'cause is this enough for you to go away? Yeah. If it is, then we, we, we can go forward. If it's not, then you wanna reevaluate. If it's an older couple and it's like, okay, what's, what's your reasoning? Mm-hmm. So it's usually what I circle back to is why are you selling, why? What is a bad reason to sell a business?

Bad reason to sell a business is you think there's a problem that doesn't really exist. Gimme an example. I've had some where, all right, if I stay in this business, I might end up with an estate tax problem. 

Josh W: Really, so they get rid of the business just for that reason. So they, 

Andre B: well, they liquefy. They okay, liquidate, well, they do it.

Then all of a sudden, well wait, I don't wanna pay that much in taxes, so I'm gonna get in five other deals. So now they're 

Josh W: chasing. 

Andre B: You made your estate tax that much more complicated. Yeah. 

Josh W: Sometimes running from something is Yeah. Is not the, the right plan. So they come to talk to you and they say, Hey, this is where we're at.

I'm looking at a potential estate tax. We're kind of right on that border of where the, the wealth of this, my net worth and the, the, the value of the company. And then you might have some strategies based on that person to kind of say, yeah. Maybe you can do that. Yeah. Are there any of those maybe you can dos, that you can discuss here on the show?

I know tax code's always changing. I know things that are always moving and I'm not asking tax advice. Yeah. But are there some strategies or things that you've seen work for people before selling a business that usually ends up better for them? 

Andre B: Well, it, it all circles back to do you have anyone interested in coming in to replace you?

Right? Yeah. Do you have someone, some key employees. ESOPs, I mean, you got private equity and venture capital work with those guys quite a bit. Um, do you have some management? Do you have even some family that might be interested in coming in and taking over? Because if you can create that generational business, then it might be, you might have solved your estate problem right there.

Josh W: Yeah, man. Do you know why, uh, six was afraid of seven? No, because 7, 8, 9. There's my accounting joke. That's all I could come up with. That's terrible. I thought 

Andre B: it was gonna be solo of my kids. Are you? I don't know if y'all have kids, but the 6, 6, 7. We hear that all the time. 

Josh W: So now a shout out to my daughter, Lily, that I, I, I wrap that into today's episode just for you, sweetie, so you can make fun of me.

So 

Andre B: you might have an accountant that might have been cool to a kid for once. 

Josh W: I didn't say that. I just said the joke. Ajay, man, you are so fun, man. So what do you do for fun? Besides crunching numbers and playing on Excel, you probably have a video game called Excel on your 

Andre B: computer. Yeah, that's what I was gonna say.

Uh, an an accountant's form of fun is Excel, right? Yeah. Right. Um, I love to hunt fish. I love to play golf. Um, I like to do more sports than that when I was younger, but now that I'm older, you know, the bones don't. Wake up and move as quickly as they used to. So, um, I have, my wife and I have five kids, so every day that it ends with y we have something scheduled to do and they're active and involved.

So it's usually, we were at the ballpark last night from five till eight 30. Yeah. And then we will be at basketball practice tonight. Cross Country Wednesday, dance Thursday. So, yeah. 

Josh W: Are you the kind of dad in this? How, what kind of, what kind of athlete father are you in the stands? 

Andre B: Uh, I'm the one that enjoys it.

I would li, I would, my dad was one of my coaches all the time. Okay. So I always wished in a way I could do that. However, I've also saw some of my friends' dads that were really talented athletes and they could have probably been some of our best coaches, but they were tough on their kids. So I'm like, you know what?

I want to sit back and enjoy watching the kids. 

Speaker 3: Mm-hmm. 

Andre B: I, I do get the aspect of man coaching them is a great thing too. But 

Speaker 3: yeah, 

Andre B: you know what? I coach 'em from the, from the, from the stands? Yeah. Not necessarily from the stands. I coach them when we're at home. Do you yell like in the stance? Are you like, come on ref, what are you doing?

And like, you clap really loud and shake tambourines and stuff. I do yell for 'em. Congratulations. But I try not to criticize 'cause it's, you know, I, I've been the, the official, I've been the athlete. It's like, you know what? You're out there doing it. Way to go. Good for you. Yeah. You stepped into the ring.

Josh W: Yeah. I think that there's a lot of arm, what do 

Andre B: they call 'em? The armchair 

Josh W: quarterback 

Andre B: arm chair. Quarter Mondays morning. 

Josh W: Yeahs, my gosh. I sometimes I, I sit around my friends and they're talking, you know about this quarterback should have done this or that. I'm like, man, you've never even thrown a football.

You don't even know what a football looks like. That's correct. Yeah. What sport did you play? 

Andre B: I played basketball and baseball growing up. Um. And picked, kind of picked up golf. It's ironic, I had some friends I played baseball with that we were at their house one day and they were like, you wanna hit golf ball?

Yeah. What y'all doing? Sure enough went out in the front yard, hit golf ball and then you like it. That started me out. 

Speaker 3: Yeah. 

Andre B: But I, it's, that's, I grew up playing that. I grew up in a neighborhood where we had probably 20 kids and I was the smallest one. So I was always, I'm not gonna say I was picked last, but.

You are the youngest kid, right. You beat up on and you, you, you pound it into. So I learned, all right, if I don't want to hurt, I gotta, I better get good in a hurry. Yeah. So why did you choose accounting? So, I chose accounting because when I was in high school, I found out that a lot of sports agents and reps were CPAs by trade.

Really? And I, yeah, the generic, yes, I was good in math. Yeah. Math has always been one of my strong suits. I enjoyed it. And it was like, you know what? It seems to fit. Graduated accounting then passed my CPA and I'm like, well wait a minute. Uh, okay, I guess I need to do something now. And it kind of took off from there.

And when I went to work for the, the, the firm I'm at right now, um, this was, Microsoft was first coming out, QuickBooks was first coming out. These guys didn't know, know any of the QuickBooks packages. And I remember still going to help some of the senior partners 

Speaker 3: Yeah, 

Andre B: do their tax returns the first year because it was.

I know how to do a tax return and I know how to plan everything, but I don't know how to do QuickBooks. Can you come teach me how to do that? And it was like, 

Speaker 3: okay. 

Josh W: Yeah, man. That's so cool. It's wonderful. Yeah. I guess, what is, uh, what is a mathematician's favorite food? Oh. 3.14 pi. Ah, yeah, that was another one.

Gosh, man, the audience has just, 

Andre B: I'm not as cool as I had 

Josh W: the audience. Just our numbers are, I'm watching our numbers go down, Chris, by the freaking minute. Oh my gosh. Chris is just shaking his head. Our director is, uh, he, he knows me very well and he's just shaking his head. He's like, please stop, Josh. All right.

Let's get back to the, the PE side of things. Okay. So we talked vc. Now let's talk PE when it comes to a private equity group. You know, kind of maybe give a high level overview of their model and maybe how they're different from vc. 

Andre B: So the private equity groups I've kind of worked with have come in and it's been alright.

We're trying to make these investors a long term cash flow and also a long-term business growth, right? Mm-hmm. So is it a quick. Get in and get out. Sometimes it is, it's just if the market's Right, right. But they're usually there to try and build something. I feel a little more long term, thus the term equity.

I, I kind of, I don't know if that's how it came up. I don't know that for sure. But the way I sense it is, you know what? Venture, they're out in a adventure. They want to do something good and quick. Private equity is like, okay, I'm here to stick around. And I might be wrong on all of that, but that's, yeah, that's kind of how I've always viewed things.

Got it. So when it comes 

Josh W: to managing a portfolio of businesses right. I run one business and dang, that's hard. Right? Yeah. So, you know, being a private equity group who might have a portfolio of 10 different businesses, what are some, you know, what are some strategies that you have seen not work when it comes to managing portfolio?

You know, on the financial side, the C FFO side of, you know, you're getting brought into consult a PE group that has 10 portfolio companies 

Andre B: that I haven't done, however. Okay. Where I would tell you just kind of viewing from all the business owners that I've dealt with. Yeah. That have. Yeah, in a way, been their own private equity firms, right?

Is people, you know, do you have the right people in place? Do you have the right setups? Because if you do, it usually works out. Yeah. You know, I do. I do, I do. And and na naturally, AI and some of the other stuff creates different. S aspects of it, but I still think it's, you gotta have some, somebody there to manage and someone knows what they're doing and, and that's the big key.

Josh W: Yeah. Andre, if you could go back and, and choose another career, you're not allowed to pick accounting. If you were to go back 18 years old and choose another career, what would that be? Can't be a professional baseball player I, a 

Andre B: golfer or anything? You could be, yeah. I mean, if you would, I could, well, I'd be broke.

Right, right. 

Josh W: If you were talented maybe, right? 

Andre B: Yes. I couldn't. Uh. What would I choose? That's a pretty good, interesting conversation. Um, I would probably choose engineer. 

Speaker 3: Okay. 

Andre B: You know what, what kind? Why? I don't know whether I want mechanical, chemical. That's just, I find they're problem solvers. Yeah. You know?

Mm-hmm. Like accounts and engineers usually butt heads, but usually once you realize what the engineer's there is, they're trying to solve a problem. Yeah, and the accountant helps 'em because they're always the engineers crunch numbers just as much as we do. If I can help them solve a problem on the accounting side, great.

You know? Yeah. 

Josh W: What's the last good book or show or article you read? What give us a, in view of, of intake input. There 

Andre B: was a good article I read the other day, and God, you, you, you're putting me on the spot. Um, yeah, it was, oh, I want to say it was a golf one. 

Speaker 3: Okay. 

Andre B: But it, it, it kind of pertained to life. I wanna say it was Gary Player and it was talking about he doesn't get fancy on chipping and everyone says, well.

Chipping is pretty straightforward and short, but you know what? That saves a lot of rounds of golf just by being able to getting up and down from somewhere. So you keep it simple. Mm-hmm. Get it on the green, get it as close to the hole. You don't necessarily need to make it, you just try to make it basic and doing the, the, the other article not in, I remember this, it was too many decisions.

Too many options leads to bad decisions. When you only have one or two options, it usually leads to good decisions because as humans, a good example they used was there was a sale in a grocery store, and if you had 60 jars of jelly, they found the sales were not as productive as if you only had five jars of jelly.

Of 

Josh W: different 

Andre B: types of the jelly. Yes. Yeah, because it was. Hey, people focus in on, Hey, this is all I have to choose from. Okay. I, I don't like these two, gimme these three, but if I got 60, they're kind of overwhelmed. 

Josh W: Yeah. So you really do like to study the psychology of humans? Yeah. There's a really good book.

Uh, it was Freakonomics. And there's a lot of I've heard of it. Yeah. Yeah. There's, there's a lot of, uh, statistics in there and, uh, really just, if, if you enjoy that, you might like that. That's a good, you know, recommendation to the audience, uh, at least for this show today. What's a good book or a good recommendation?

It could be a show, a movie. What's a good recommendation that you have for the audience? 

Andre B: You are asking an old accountant and reads the IRS tax code, um, who just made it through, uh, a, a big October 15th deadline. Yes. Yeah. Uh, I would say something that interests you and I, and I, and I hate to not give you one example because Yeah.

Unfortunately with five kids, we don't get to sit down and read a lot of books. 

Josh W: Yeah, true. 

Andre B: Um, but I, we're, as accountants we're required to have 40 hours of continued education each year. I take that as an advantage to read and to learn something because it's the very few times that I get to sit down and read something.

Speaker 3: Yeah. 

Andre B: So. I would tell you it would be the big beautiful Bill tax act. But yeah, I mean, it's in, Warren Buffet is a, a good one. He's always said, invest in himself, right? 

Josh W: Yeah. Yeah. 

Andre B: Because your, your education, your intuition is what's gonna drive your, in essence, capital gains. Right? And knowing who you are and what you do.

Is a very valuable tool. 

Josh W: So Andre, one of our favorite things about this podcast is, uh, we have guests on, we've had 40 now, Chris, a lot, and we're rolling 'em out two a week. Uh, we were, we were going one a week, but now we demand has been high, so we're. I'm trying to go a little bit faster. Um, but one of our favorite things about this is the, uh, the questions that are left behind by the previous guest.

Okay. So earlier today we had, uh, Lance Strother, uh, I think I pronounced that right. Strother. Yeah. Strother. Okay. He came on the show and. A guest passed him a question. Now you are gonna get a question from, uh, Lance Straw there. Okay. I'll read it to you just in case. I never like to put people on the spot in case you can't.

We saw much eaters. Okay. Yeah. In case you can't read. All right. Do you feel like you are living out your purpose? Why or why not? Man, that guy is deep. Look at job, Lance. Alright. Do you feel and in the audience too. This isn't an altar call, but I, I really like you to answer that question too. Do you feel like you're living out your purpose?

Why or why not? What say? You say 

Andre B: why? Because I had a very good conversation yesterday with, uh. I brought my hunting boat to the, to the shop to get it fixed, and the place I bring it to is the actual place they manufactured. It's a very old boat, and I was actually able to meet with the owner and when he saw how old it was, he was kinda like, man, this thing's still running.

And he and I just started talking about how what we love about hunting is we take our kids. And when we're done, they're out playing in the field. They're out playing around and it's like, okay, do, do I feel like I've done what I need to do by teaching my kids to go outside and play teaching 'em the outdoors, teaching 'em respect for Mother Nature.

I hope I have, I'm sure someone else will be able to judge me later on and tell me that whether or not I've been as successful. And that's kind of gonna be when the kids grow up. I, I feel in a way that's, that's where I've succeeded and that's what I'm hoping. That's what I succeed in, you know? And yeah.

And that's, I, I hope my, my wife will gimme grief every day. Right? Yeah. But at the end of the day, I think she's very happy and I hope I make her happy with what she's gotten. I know. She makes me very happy. So. 

Josh W: Ooh, you got some brownie points there. Yeah. Yeah. I'm gonna give you one more. Oop. What's your favorite thing about your wife?

Andre B: My favorite thing about my wife is. She's concerned more about me. 

Speaker 3: Hmm. She's very 

Andre B: and selfless. Yeah. And it, and when she gets frustrated with herself, she's good at, Hey, can you go away to take some personal time so I can have some personal time, you know? Oh, that's good. She cares for you. Yeah. And I, I, I wish she would schedule on Sunday afternoons for golf, you know, or hunting and so forth.

But yes, a little bit more specific on the time. Now that's good if I, if I got timing outright. But no, she's, she's a wonderful woman. She works with more pe. She's a pediatrician, so she spends more time with people than I do and it, and she's amazing at what she does, so, 

Josh W: yeah. Yeah. Super cool. Ladies and gentlemen in the audience, fellow deal makers as always, reach out to her guest.

Their contact information will be in the show notes below. Uh, if you have questions or you have comments, or maybe you even just have a joke to share with us 'cause ours ran out. Very quickly, uh, just reach out to our guests and say, thanks. If you've enjoyed these, these conversations, we would love to get your feedback, and you could do that by giving us a rating.

An honest review might've been good, might've been bad if it's bad. I don't know. We'll send you to the wrong website, but if it's good, head over to the deal podcast.com. Up at the top, there's a thing that says, rate. Uh, we do love having conversations with, uh, fellow deal makers, maybe people in the private equity world.

This will be a call to action for you. We'd love to hear how you manage portfolio companies and your approach to financials. So if you are a private equity company, reach out to us and, and, uh, maybe we'll get you on the show till then. We'll talk to you all on the next episode. Cheers, everyone.