From Lifestyle to Legacy: How Strategic Acquisitions Multiplied This Agency's Value Before Exit

Bruce EckfeldtWelcome, everyone. This is From Angel to Exit. I'm Bruce Eckfeldt, I'm your host. Our guest today is Peter Lang. He is a founder, an entrepreneur, and an investor. He's been doing some really interesting work with agencies, looking at how to sell, but also how to buy, so we're going to cover both sides of the equation today. I think this is going to be a really interesting conversation. Peter's had quite a bit of experience and has worked with several companies, so there are some good insights here and a good broad understanding of the market and some of the strategies. I'm excited to talk to him about that. So with all that, Peter, welcome to the program.

Peter LangThank you for having me, Bruce.

Bruce EckfeldtIt's a pleasure to have you on. Before we dig into what you're doing today with agencies, the roll-ups, and helping companies grow and scale and exit, let's get a little backstory. Where did you start professionally? What got you into the space? Tell us the story.

Peter LangI'm a problem child, and this probably stems from having grown up in a family business, a blue-collar business. Child labor laws don't apply to family members. My parents ran a small aquarium maintenance business. I was cleaning the office, doing all the things necessary to really hate the family business growing up, because it was part of discipline and upbringing.

My parents had no formal business schooling. They were theater majors running a small business. What was really interesting was watching two young, ambitious, enthusiastic people learn business with a real-world MBA. Starting a business is, if not the quickest way, definitely the real way to learn it. They were able to build a lifestyle and did it for 40-plus years, and I was very fortunate to have that as a role model.

I had various levels of success influencing me at a young age, but I had this little obsession, which was being more successful than my parents' business. They wanted me to go to university and business school and focus in that direction, and they were very supportive of it. And I had a problem. I was fascinated with what I didn't know at the time was M&A. Empire building.

How this was expressed as a child? The counselor in high school, and this is a true story, called my mom and said, "We need you to come in and talk to your son. We asked him what he wanted to be when he grows up, and he said the Kingpin from the Spider-Man comics." My business partners don't like me telling this story publicly.

Bruce EckfeldtI can see why. Interesting.

Peter LangWhat I didn't know at the time was that I was fascinated by that authority and power figure. My great-uncle played that kind of role in his journey as an entrepreneur and in business, and I attached to it.

Fast forward a bit. I'm a product of social media, and I had a blog. While I was in university, that blog was getting a million monthly visitors. And what's really annoying is when you're doing something for yourself and doing it really well, and then people older than you who don't know what you're doing ask you how to do it. You have to teach the older generation technology. It's like parents with the internet, or parents with a smartphone. That's what it turned into while I was in university: "How do you have a blog? How does it have so much traffic? How do you do this?" And I'd say, "Well, your website has to be able to do posts," all these very basic things.

Twitter was coming out, and I was building a following. I was doing a lot of things in the early days with ProBlogger and the internet. And my business school direction, joining a big firm and getting into corporate finance, turned into, "Hey, if we pay you to teach us how to do this, would you?" I thought, that's interesting. I was speaking at a travel writers' conference about Twitter and blogging in 2008.

So I was very fortunate to get the attention of a generation that was separated from technology, and "How are you doing it?" turned into "Can you do it for us?" and oops, you have an agency. You become a consultant, and then done-for-you becomes a function of that. "How do we generate traffic and create a blog?" "Well, you have to have a blog." "Can you do that for us?" "I could hire someone who could help you do that." So in 2010, we launched an agency. I guess my parents were proud. They probably envisioned me going in a more corporate direction, with a lot more security than the entrepreneurship side, but I turned out just like them.

Bruce EckfeldtAs much as we try not to, we all become our parents.

Peter LangWe all become our parents. I ran a digital agency from 2010 until I sold in 2022. The biggest milestone for me was going from a lifestyle business to a professional business. Like a lot of accidental entrepreneurs, I was learning as I went, even though I had a business school background. There's still what you have to learn to sell, what you have to learn to build leadership and a team within the organization, and professional development along the way.

Then in 2018, I went on an eight-month sabbatical out of the business. I call it the pressure test: how long can you leave your business? That's the typical definition for founders. I left for eight months, and that was the crescendo for what was going to be next. I was very fortunate to be in business with my wife, who wasn't my wife when she became my business partner, but in 2017 we got married, and we made the decision: we can leave the business. It's provided well for us. If you had a digital agency from 2010 on, that was the boom of digital agency land.

We were able to reevaluate how we wanted to orient toward the world. To make a long story short, we came back and said we were going to focus on growing through M&A, and finally use the business school knowledge and corporate finance knowledge we'd paid for in real business, day to day.

In 2019 we started doing M&A, and we basically converted this lifestyle business into a roll-up, doing eight transactions before selling. Doing eight transactions from 2019 to 2022 got me a lot of attention. Then after selling, I started a boutique private equity firm, an agency aggregator, with two business partners, buying Top Right Partners, which is our flagship agency, and then five other businesses. And then we got smacked in the face by the banking crisis in 2023.

Bruce EckfeldtWell, that is a lot.

Peter LangI went off and did two half Ironmans and a marathon while the team did five acquisitions instead of the 15 on our timetable. Then I was searching for what to do next. A lot of the preparation around how to do programmatic M&A, the things I'd obsessed about since the Kingpin days of high school, came out in what's going to be the book, The Programmatic M&A Playbook, which comes out next year. It's my manuscript, my storyline of how a small business can go out and do the things big businesses do, which is acquire growth rather than just focus on organic growth.

So I am completely biased, jaded, and slightly scarred, because I think all business problems can be solved with M&A. That's how I orient to the world. And I think that moving forward, the biggest thing we can do is support the transition of very critical aging business assets, and ensure that the people who can continue to create value from those assets are able to do so in a capital-efficient, leverage-safe way.

Bruce EckfeldtI love it.

Peter LangSo I teach businesses how to do M&A now. I still have my portfolio of assets. I own a business called Growth Hackers. We acquired another business at the beginning of the year that's running the operating business there. But I made a pledge to no longer be a CEO. I did my decade-plus as a CEO. I've done my tenure. I don't need to go back to a prison of my own design. Let's extend this version of focusing on what I do best and what I'm more interested in, and create value that way.

The last bit I'll give you, and this is a long-winded one, is that thousands of students have gone through my training program, which was the inner workings of the book in real time. I sit as a board advisor to three roll-ups run by former students of mine who are very proactive. I've had five divestitures. Two of them I call my own, and three were within our holding company, less financially lucrative divestitures, but meaningful ones for the portfolio. Within that, I get to see people do this every single day. We do about a deal a month within my own reach, and probably multiple deals a month within my community. So I have a very good pulse on the industry, and I'm always actively evaluating new opportunities.

Bruce EckfeldtLots of questions. I want to go back to when you decided to pursue growth through M&A. Give us more insight into what really drove that. When you sat down and said, "Look, this is the asset I have. I've created this business, and it's very lifestyle," was it not being happy with where you were? Was it the opportunity you saw? What other routes did you consider? I'm curious how you landed on that decision.

Peter LangThankfully, it's quite normal within the agency ecosystem. WPP was the poster child of aggregation throughout the '90s. Sir Martin Sorrell did about a deal every two weeks during their heyday. From an academic perspective, I was exposed to M&A and transactions through corporate finance. So it was always there, and it was very appealing to me. The problem was that even though I'd learned it and been exposed to it, I was stuck in the day to day.

The genesis was that sabbatical. I met a McKinsey consultant in the Peloponnese, at 11 p.m., which is not the most productive time to interact with a McKinsey consultant, but it leads to great discussions that could potentially creep into non-disclosures. He was talking about a company he was working with called Emakina, which most people don't know about. It was a group of agencies that came together and listed on the stock exchange. They were using Agile and Jira and Scrum methodologies, and they were buying assets and applying their efficiencies to those assets.

We ran an Agile Scrum agency, so we were very similar in how we approached the marketplace and how we thought about operating agencies as a system and as a business. And they were using M&A, and they were the proof point. I had obsessed about them. I didn't tell the guy this, because that would have been awkward. But I had obsessed over Emakina.

Bruce EckfeldtMore awkward than it already was.

Peter LangWell, he was pretty drunk. I had read their annual reports. One of the primary benefits I got from university was learning how to research subjects I wanted to expand on within the business: annual reports, SEC filings, a lot of the traditional things Warren Buffett touted as his common reading. So I had that inkling.

A lot of entrepreneurs don't have access to that level of transaction exposure, whether it's private equity or M&A, because the entrepreneurial storylines don't include it. All the scaling programs, zero to one, VC, don't include it until you sell. They don't think of M&A as a standard operating procedure for growth. But McKinsey does a lot of publication work on it, and so do Bain and BCG. There's a lot of documentation that I had obsessed over. I just hadn't been out of the business long enough to have the paradigm shift, meaning, "We're doing this." That time away gave that to me.

Then when I came back and said, "We're going to do this," it was a mutiny. "Where have you been, Peter? Vanessa, you haven't been around. And now you want to change everything up?" We read a book, we came back from a conference.

Bruce EckfeldtNot only have you been away, but you're coming back with these crazy ideas that are going to completely disrupt our world. Classic entrepreneur. "I went to a conference."

Peter Lang"Let me introduce you all to something we should already be doing." So I would say that time and space allowed us to feel confident, limited confidence, mainly enthusiasm, in doing something really meaningful. If you're going to do big moves, and I wanted to do big moves, I thought having a business was the big move. It was not. Having a profitable business was the big move. It was not. I realized I could do bigger, geometric things to this asset beyond the incremental. Once I unlocked that, I said, I'm not doing anything other than the geometric. How much time is wasted on the organic and incremental, and how much of the ceiling is caused by focusing on things that are not impactful or important? That was my shift.

Bruce EckfeldtOnce you decided, "This is what I'm doing," what became your action items? What did you need to figure out?

Peter Lang80% of my calendar was allocated to that activity.

Bruce EckfeldtSo you needed to put time into it. And actually running these deals, was it sourcing deals? Raising capital? What did that time get spent on?

Peter LangI was very fortunate that I didn't go for outside capital. I used my own balance sheet to do transactions, either by necessity or because I grew up in entrepreneurship in a family business that had a different relationship with debt. I had outgrown that relationship with debt. I learned how debt could be leveraged, but I was always cautious of it.

So the main bit was to talk to as many people as possible and tell them you're acquisitive. You don't do M&A in private, technically speaking, because opportunities are best when they're delivered to you or referred. The thing that got me a lot of attention in the marketplace was that I had proprietary deals. I didn't have to go to listing sites or brokers, because I amplified that I was acquisitive, and these deals were brought to me.

My first one was sourced by an outbound agency that reached out to me. I just flipped the script, took a call, and ended up acquiring them. Then my accountant brought me my second deal, which doubled the agency. And that was the aha moment, Bruce. It was a seven-day transaction, and I can unpack it if you want. I doubled the company, and I thought, whoa. If a CEO's job is investors and external stakeholders and thinking about the next version of the business, why would I do anything other than this?

Bruce EckfeldtWalk me through the first deal. How did you go from "I've got this idea and see this opportunity" to actually doing it? You mentioned you flipped the script. Give us a bit more of how you thought it was going to go, how it turned out, and what you learned. I find the first transaction is 80% of the learning.

Peter LangI think the first two are the most informative. I'll do the first one and then tee up the second, because the second one was the biggest learning opportunity. The first one was opportunistic. It was a business that had a team, and for confidentiality I won't unpack it fully, but they were doing Amazon services, helping businesses list and be found on Amazon. They had a Serbia-based outbound team that was the core of the service offering. That outbound team reached out to me, and I thought, I recognize this outreach. I like this outreach. It's done really well. So I took the call, and who I actually met with was the coordinator who administered the team.

They said, "We've reached out, we're trying to sell this product," but the business was actually not doing very well. I was able to build rapport really quickly, and they flipped and said, "Well, are you interested in potentially acquiring us?" Because I had said pretty clearly that I was acquisitive. I was very direct and deliberate in my first message to them: "I was really impressed. This reminded me of Marylou Tyler's Predictable Prospecting. You've shown you can do this at scale. You're using offshore labor here. I'd be really interested in a discussion about a strategic partnership, or acquiring the business." And they said, "Well, actually, a big competitor's technology platform has been dominating the market, and we've been really struggling to keep up."

So that was fairly straightforward, because I had access to a business that was highly motivated. It ended up being more of a divestiture on their part. They were looking at how they could take this area of the business and sell it off to someone who could use it. I learned to create a financing structure, because it was an international deal and there wasn't going to be any debt on it. I already had an offshore team, but I learned how to bring on a new geography, which was Serbia at the time.

Then I said, the utility of this outbound team is providing outbound services to the agency's clients and providing outbound infrastructure for the agency to use at scale. And I thought, what if I took one or two of the lead-gen specialists and put them on M&A outreach? What if we used the exact same playbook to reach out to targets? That was the biggest opportunity created from the first transaction. I had a force multiplier. The first deal enabled outbound at scale for M&A. And with outbound in 2019, when email worked for everything, though it changes over time, I was able to book my calendar with new opportunities to discuss the future of people's agencies at scale, and that fills your calendar.

Bruce EckfeldtI love it. What was your pitch? How did you target and pitch these folks? What actually worked in your outbound for finding acquisition targets?

Peter LangThat didn't get going until after the second transaction, which was the most informative, so I'll give that context, because it's important. BBMD, a Ventura-based branding and design agency, had been bought out from Barbara, who founded the business 40 years prior. The gentleman who bought it from her was her business development person, so it was an internal buyout, and she retired. He then committed suicide, and the business reverted to his 82-year-old parents.

We had a shared accounting firm. Al, who was kind of my mentor and my accountant, someone who had formerly been in M&A and now had a small accounting firm helping smaller businesses, phoned me up and said, "Peter, I know you're acquisitive. I know you want to do this. There's a great opportunity. You could double the agency." He'd seen all the financials and had known them for a long time. "But you've got to parachute in, and you've got minimal due diligence. You've got to jump in, go to Ventura, meet the people, meet the clients, and take this opportunity."

Risk and opportunity are proportional and correlated. I said, this is a huge opportunity. If I can create a deal structure that accounts for the uncertainty I'm stepping into, what can I learn from that? What's the opportunity here? It started on a Thursday in August and ended in September. It was seven days of work: talking to the managing director who was there and to the parents, consoling them, talking to some key people, trying to digest what I could about the business, and then the purchase agreement. Everything was signed seven days later.

Bruce EckfeldtI'm curious about that, because I find you can handle just about any complexity or risk in a business with the right deal terms. You just figure out how to allocate the risk.

Peter LangWith risk comes value, and structure.

Bruce EckfeldtIt gets creative. Give us some insight into what some of the risks were, or how you handled some of this uncertainty to make the deal happen. Because I think that scares a lot of folks and probably causes a lot of deals not to happen.

Peter LangThat's what I was alluding to, and why I wanted to include the second transaction. It was very informative around assimilation, integration. In order to step in, we had to assimilate. There was no clear leadership or transition time. We had to step in, take over the technology and the infrastructure, and run the business pretty much from day one. So by design we had a very aggressive TSA, a transition services agreement. We had to transition everything over, and we had to help the 82-year-old parents wind down the business. Normally it's the seller's job to wind down the business after the transaction and close down the office. Part of my pitch to them was, "I'll take care of all of it."

This was where I learned what a motivated seller was. The first transaction was more opportunistic than motivated. A motivated seller was: "We are emotionally distraught. We had a terrible thing happen." Their other son was a quadriplegic. This family had a lot of things happen. And I just said, "I will take the entire burden of this off your shoulders. I'm going to pay you through an earnout. I'm going to pay you based on what I'm able to retain as net recurring revenue from the business."

They didn't need the money. They had already retired. They were fine. So it was also fortunate from that perspective. They weren't aggressively seeking some high valuation. They just needed help. And I learned that you can use a lot of other things, whether it's sweat equity, effort, intervention, to add value to an asset beyond purchase consideration or debt or cash. From them, I got a thank you. At the end of the day, this thing was taken off their shoulders. They were worried about the clients, and they were worried about the people employed there. They were more emotionally attached to what was going to happen next. That was a really important aha.

Most people who come from ETA, entrepreneurship through acquisition, or traditional corporate finance and M&A, or investment banking, have a very strict experience of how transactions get done, and they build constraints around their creativity. Whereas if you're out there, opportunities come around every single day. It's significant. And if you're creative, meaning you understand why someone's doing a transaction, you can think through how to make a transaction work, even if you think you can't capitalize or fund it today.

That exposed me to creative problem solving. And I'll bookend this part by saying that's what agencies are, which is why I think a lot of agency people make for great private equity people, or great people in M&A, because it's critical thinking for problem solving. All M&A is, is a messy situation of two organizations coming together with a bunch of problems, known or unknown, that need to be figured out to create value, to unlock value. Anything that's just finance spreadsheets is lazy M&A. That's so easy. It's a Corporate Finance 101 class. The problems come from integrating people, the storyline, talking to clients, dealing with the emotional baggage associated with connection to a brand, and having the wherewithal and the desire to increase the probability of success by getting your hands dirty.

And most people who do M&A and say they have M&A experience don't know until five years after the transaction whether it worked, because value creation happens after the deal closes. So that informed my creativity. If I get in front of someone, it's about finding out why they're doing the deal and why they want the opportunity. If it's an economic benefit, a retirement, they want a certain amount of money, fine. I've gotten to, as of 2025, 20 transactions now by being really good at finding what motivates people to do a transaction and then giving them that in a way that generates a multiple return. The job of a buyer is to give the seller what they want in a way that you can quantify a multiple return. If you can't, then the deal probably can't get done.

Bruce EckfeldtOr maybe shouldn't get done. Maybe it could get done, but someone's going to be in pain afterwards.

Peter LangWell, again, the whole idea of transactions and investment bankers is to take the most out of the transaction, which is why they have a terrible success rate. If everyone's in it just for themselves, or just for the transaction, you can see why 70% of them fail. That's the statistic that's commonly thrown out. No one's going in asking how we maximize value creation, not how we maximize the transaction. Maximize value creation, then come up with what the transaction requires to get to that outcome. We don't normally do that. We do it the other way around.

So those are the two biggest ahas. One gave me scalability with outreach. The other was about the motivations of a seller, giving them what they want, and investing time in that, which a lot of people don't.

Bruce EckfeldtThe agency world has a history of M&A, and I think the nature of the business and the business model probably facilitates M&A to some extent. Are there any businesses or situations where you'd advise people not to try to grow through acquisition and to focus on organic growth instead? Or are you all acquisition, all the time?

Peter LangFull throttle, always. But it's not the execution of M&A, it's the paradigm shift of critical thinking using M&A. The first way we attack a problem is usually with intervention, and intervention doesn't scale. Most people can't problem-solve and jump into everything that's wrong with their business at the same time across all departments. So you have layers of delegation within a company as it scales, so you can solve more problems with more people. I just ask people to think, can we solve that with M&A? They don't ask themselves that. Most people don't have the ability to access things outside the organization for problem solving. You're limited to what's in the organization.

I don't say to do it recklessly because it's the default mode, which is how it comes across. It's more: present a problem, and I can debunk anyone who tries not to solve it through a transaction. How can an acquisition address that problem? You can assume it's already been solved before. Many times we think we're being innovative, and we're not. We're reinventing the wheel. A lot of people are reinventing the wheel within their organization. Sometimes it's lower risk, or an even higher probability of success, to acquire a solution that's already been researched and experimented with and is running and operating within another company. People just don't value it the same way because they don't own it. So it's a paradigm shift in problem solving.

Bruce EckfeldtI like it.

Peter LangAnd I will say, McKinsey did research for the book Strategy Beyond the Hockey Stick. Over a long enough horizon, a 10-year period, companies that do programmatic M&A, which includes divestitures, outperform all of their competitors. Period, full stop. So you also have to look at the timeline. If you're saying M&A in a one-year increment is very disruptive and doesn't solve things, what timeline are you measuring against? Three years, five years, 10 years?

And a friend of mine in Austin, Texas, Darin Brannan, whose big successes were ClearData and Web.com, did M&A in VC land. He said, "If I acquire a service business into our venture and get positive cash flow from it, I don't have to dilute the cap table as much in fundraising." So he uses M&A in venture capital. And I thought, whoa, that's extremely interesting. I hadn't done that.

That's what led me to acquire Growth Hackers. It was purely because I hadn't done that type of transaction yet. I said, can I do the same thing here? Can I take the SaaS business, which I had carved out, and the media, buy a service business to reinforce it, and then maybe fundraise against that? We closed the service asset at the beginning of the year, and they're fully running the brand. It's like, wow, because most couldn't get to that size without raising millions of dollars and spending it on marketing and growth.

I think most people have the limitation that all the literature, all the books, all the conferences are about marketing, growth, internal initiatives. Not many people are thinking about how they can use M&A, because M&A can really only be delivered in an organization through the stakeholders or the CEO and C-suite. So a lot of people in other areas don't even know it's an option to go ask for. A director of marketing can't go buy an agency.

Bruce EckfeldtThey don't see it as available to them.

Peter LangExactly. But if they could... If your marketing department is under-resourced, and how often does an organization say, "Our marketing department is over-resourced and we spend way too much on marketing"? Probably not that often. If the marketing director acquired the agency instead of just leasing or renting it, or owned a portion of it, they could invest in the competency of that labor force as if it were internal, expand and diversify, and it could contribute profit. Again, it's just paradigm shifting.

Bruce EckfeldtI like it. When you went to sell, how did your experience buying influence your strategy for selling?

Peter LangIt made it so much easier. Buying is selling in reverse. The interesting thing I learned was that when I sold to a PE-backed strategic, I was impressed by how unimpressive they were. When you're buying, especially with your own money at risk, you're very careful. You spend a lot of time on the details. You document things. You hopefully over-invest in making sure it goes as well as possible and that people feel informed. That's not always the case, but at least that's how we did it.

Then there are career M&A people working for big firms, and they don't really run a process. They don't really have standard operating procedures. It's maybe one or two lone wolves in the C-suite, the chief strategy officer working with the CEO and the CFO, and they rent departmental resources to do due diligence, or outsource it completely. They do the QoE and everything outside the organization, and then they just show up with an asset. I find that's a predictor of eroding value. You want organizational buy-in to the deal. You want as many people as possible contributing to due diligence and to onboarding and integration, so they feel they contributed to its success, are motivated by it, and understand why they're doing the deal. What I found was that I was just better at it than they were.

I knew that from my own transaction. Then, when I started taking board advisory roles with people who were buying but also selling, they ran my process in reverse, and they were able to compress time. We ran a sell process last year that's one of my favorite examples. It was a sale to a PE-backed strategic that had $100 million to go out and acquire agencies, essentially buying accounts. The chief strategy officer who was leading their M&A did cold outreach to one of my mentees. My mentee phoned me up and said, "Hey, they reached out to me. This is the company we've been talking about potentially acquiring us." From LOI signing to fully funded, at 70% on a revenue multiple, it was 30 days.

That's because we ran the standard operating procedure we execute when buying businesses, but as the seller, and we held everyone accountable to the process. Like anything, if it's disciplined project management, you can typically hit deadlines. But that's not how a lot of the M&A industry is executed by private equity or even strategics. Even if they have M&A experience, they have someone who's the expert, sitting in the role like in any marketing department, and maybe not as structured and disciplined as they need to be.

So that was my big aha. I was just better at it than the buyers. But I can't signal that. I don't show up and say, "My process is better, Bruce." What I said was something like... our line was that prospective buyers were going to get my LOI before I even told them they were going to get an LOI. I wasn't going to wait for them to send me one. Once we got to a certain point, we had found a private equity-backed strategic that had a good relationship with our US company, and we were very confident. It was a global company. We said, "How about this? How about we send you the LOI we'd be willing to sign?"

Bruce EckfeldtAnd in the end, they said yes?

Peter LangThey said, "Well, that's nice," and sent it to their attorney.

Bruce EckfeldtI'm curious, what did they change on it?

Peter LangThe first response from the counsel on the other side is always, "No, no, no, let's not do that. Let's send them our LOI." But we ended up signing the LOI we wanted, with one redline. That was because we also do a lot of pre-due diligence. There's not a lot of keeping things close to the chest or not disclosing. The LOI was really well prepared. We knew each other really well. We'd been talking for over a year.

The thing I teach is that everything is a standard document. All LOIs are standard documents at the law firms. When you're a programmatic buyer, you probably use the same LOI, because, especially if you're buying growth, you're buying the same types of businesses and adding them to yours. So it's the same templates throughout the process, refined to fit the deal dynamics. So what if we just reflected that back to our prospective buyer and gave them the LOI? That was our standard. Same thing with the purchase agreement. We said, "We have a purchase agreement. We've been buying."

The advantage you have from being a buyer is that you're really well prepared when your buyer shows up. If you know all the reps and warranties and all the component parts of these deals, you know how to interact with them, and it makes things more efficient. Instead of the average transaction taking 181 days, you can do things in 30 days, and your M&A team turns into your divestiture team, your exit team.

Bruce EckfeldtGive me a quick overview of the process, the formula you go through when doing a deal.

Peter LangLet's presume for a moment this is a proprietary deal, so we would have sourced it. Most sourcing comes from LinkedIn. It's the most informative platform in terms of context about a business you're reaching out to. We typically have a first conversation, and the first conversation is, do I like this person? You typically can't do a deal with someone you don't personally like. It's really hard. If you don't like them in the beginning, or it's contentious, or you have different core values...

Bruce EckfeldtIt's not going to get better.

Peter LangIt is not going to get better as you do due diligence. So we try to do a sniff test right off the bat. It's also a validation. We're trying to qualify that the things we assumed about the business from public data are true, so we can move to the next step. Then we do a deep dive into the business. What we're trying to understand is the actual motivations, the meaning or reason they would do a transaction, and to highlight that. Sometimes you can get that in the second call. Sometimes you can't.

I built what's called a due diligence audit. I call it a pre-DD audit, because if it were due diligence, it would come after the LOI. Pre-DD means before the LOI. I created the audit out of necessity during COVID. I was unable to travel and have dinner with someone, so I needed a way for them to share information with me beyond a data room. So I created this questionnaire, and I ask them to complete it. It's 126 questions, and the investment bankers and brokers all hate it. They say, "Show us the deal structure and terms." I say, "Well, if I'm presenting this person with an offer, that offer is going to be based on the value creation I can do with this business."

And most of these sellers don't have investment bankers or brokers. So I need as much information and context as possible. Otherwise I'm limited to the information you shared with me in two phone calls, and maybe a light data room with some financials and case studies, and you're asking me to predict the future of this asset over five or 10 years, depending on the deal structure. I need more information. They didn't create a CIM or a data room, so they share this with me instead.

From there, we present a pro forma model of their business. Most don't have one. We ask them to confirm that that's the direction they see the business going, we align it with the audit, and we present a deal structure. I present deal structures. I don't send LOIs. I'd rather collaborate than negotiate. From there, we usually have a verbal agreement on deal terms, and then it's, "Hey, can I put that in my standard LOI?" I'm not going to kid you, I'm not going to have some lawyer draft an LOI. I've got standard documents. I'm going to fill in the information, tailor it to this transaction based on what we've gone through so far, and send it to you.

That's when they usually bring in their attorney. Their attorney then vomits a first draft of redlines on it. We reject all of that and say, "Well, you showed up late to the party. This is what we're going forward with," maybe with one or two modifications, because we know what we're doing. We get the LOI signed, and three phases of due diligence begin. Phase one, high priority, takes two weeks. One week for the seller to provide what we need, and the second week for us to allocate resources to go through what the seller provided. Phase two covers less urgent but still important aspects. But we would already have been able to kill the deal in phase one. It's the high-priority, deal-killing due diligence.

Bruce EckfeldtSo you're doing it in tranches, so you can figure out whether to proceed.

Peter LangWe have an entire data room built around a due diligence list we've designed, curated, and invested in quite considerably. It's broken down into phases that give each department what they need at certain levels to make decisions. Phase one, phase two, phase three. After phase one clears, the investment committee, or whoever the stakeholders are, approves that we've done the due diligence, the QoE, and departmental verification. Then we can do the purchase agreement and all of that.

Then it's a purchase agreement walkthrough. Another thing we do that other people don't is that we don't send a purchase agreement over the fence and say, "Have your counsel vomit all over this one next." The same way we do with the deal structure, we actually present the purchase agreement. We screen share and say, "Here's why we've set it up this way. This is what we're trying to accomplish with this structure. These are the component parts. This is how it maps to the disclosure schedules," which they provide to us, but which we've created through the due diligence process in the data room. So we teach them.

What I've found is that experienced buyers are experienced, and sellers are not. If you want to increase your probability of closing and compress time, every interaction should also be education. You need to explain, in context, where we are in the process and what went into each step. Their lawyer's job is the same as my lawyer's: tell you all the ways the other side is going to screw you and all the ways they won't do what they're promising. I'd rather be the person educating them, and then let their lawyer say all the things that could go wrong, coming from a foundation of education instead of ignorance about transactions.

So it usually takes us a month to go through due diligence when it's a priority project being focused on. If the company isn't prepared, or there are multiple layers or parallel due diligence, it gets elongated. But typically it takes about a month and a half.

Bruce EckfeldtI'm curious about the market these days. We've obviously had economic situations, tariffs, world conflicts, interest rates. What's your view of M&A over the next couple of years? Are you bullish? Do you think it's going to be challenging?

Peter LangUncertainty. Warren Buffett has a great line: when the market goes down, you can buy more things. Nothing we're experiencing hasn't happened before. The main thing is the crescendo of timing that's happening, because the market factors alone aren't really relevant. We've experienced them before, so there's some precedent for what happens when the market shifts and there's uncertainty.

The number one thing driving transactions now is that we have so many assets owned by an aging demographic. The Silent Generation still owns assets, owns businesses, and owns a crap ton of property, too. But at the end of the day, they can't own it forever. Everyone talks about the silver tsunami, the older generation needing to transition to the younger generation. Real estate gets most of the talk, but people are forgetting that a significant percentage of businesses are owned by that aging demographic, and not everyone has succession.

Bruce EckfeldtAnd it's a lot easier to transfer property than it is a business. I can transfer a deed and someone else can take the property, but a business?

Peter LangThe uncertainty tied to the future ownership is so much greater than with property. And the debt markets are more oriented to real estate in general. The US has the SBA program that supports buying cash-flowing businesses, but I don't think it really knows what's coming. You're either going to wind down the business or attempt to sell it to your team, or do an ESOP, and most team members have been delegated responsibilities, not gifted with responsibilities and problems. So they're not really well prepared.

So I'm a big believer that, A, we have the most dry powder sitting on balance sheets that we've had in a long time. You couple that with an aging demographic that needs to transition assets over the next five to 10 years, and you're going to see an increase in M&A. You also see the proliferation of content about business buying. It's more accessible. With AI, you can learn to do things. AI has made a lot more people comfortable with their levels of incompetence, but they're still going out there and doing it, and the information is there to do it. So by default, I think M&A players are going to be the ones who win. You're either the aggregator, or you're being aggregated.

Bruce EckfeldtGood. We're going to hit time here. Peter, if people want to find out more about you and what you're doing, what's the best way to get that information?

Peter LangLinkedIn is number one. I invest the most in that platform. And go to digital agency business. My holding company is Lang Acquisitions, if they want to investigate how I built what I have. I have free resources for people in preparation for my book launch. I'm trying to provide as much value up front with no obligation as possible, so people can become more aware of the potential and then go to their little ChatGPTs and ask really insightful prompts about how to do these things. So reach out there, through those forms and ways to connect.

Bruce EckfeldtAwesome. I'll make sure all the links are in the show notes so people can get them. Peter, thank you so much for taking the time today. It's been a pleasure.

Peter LangThank you, Bruce.