A Buyer’s Perspective — Why the Human Side is More Important Than Money in M&A Transactions

About the Episode

This edition of M&A Talk offers a refreshing perspective on what really matters in a business – the people. Austin King discusses topics that impact a seller and what his investment firm considers when making acquisitions in the industrial services sector. He discusses how cultural diligence can ensure people and culture will mesh, how to balance qualitative decisions with traditional quantitative measurements, working with owners who want to remain with the business part-time, and how building relationships impacts business.

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“It’s refreshing to lift up the curtain and see what goes on behind the scenes and see what really matters. To the entrepreneurs out there, this stuff really, really matters. You have to know a transaction from a technical level, but ultimately it is about people.”

Jacob Orosz

In this Episode

1:59 Why does Steel River focus on industrial services as a search fund and independent sponsor?
4:16 How does Steel River function as a search fund and an independent sponsor? What advantages have they found about working with family offices?
9:44 What is it like working in a PE firm, and what’s the most enlightening part of the experience?
12:39 What are the major limitations to making acquisitions in the PE world?
15:50 Is it essential to go through spreadsheets, checklists, etc., and ultimately rely on intuition when investing in a business?
18:06 What made Steel River decide to focus on the industrial sector?
25:22 What potential exit strategies do Steel River offer business owners seeking to divest?
28:18 Are there benefits to having an owner consult part-time even after selling their business?
32:45 How important is the culture of a business when considering an acquisition? What are some areas to look at with the company’s culture during due diligence?
36:20 What issues does Steel River encounter that are specific to the sub-sectors they work with?
40:48 What is permanent capital, and why is it attractive for entrepreneurs?
43:19 Austin King’s biggest lesson learned in life and how it relates to business.
47:55 Austin King’s advice to people/entrepreneurs going through grief and difficult circumstances.

Learn More

Resources Mentioned in This Episode

Terms Mentioned in This Episode

  • Family Office: A privately held company whose sole purpose is to handle the personal and professional affairs of a wealthy individual or family.
  • Independent Sponsor: An independent (aka fundless) sponsor is an individual or group of individuals seeking to acquire a company but who have not raised the equity committed to the transaction in advance.
  • LP: Limited Partner in a partnership.
  • OSHA: Occupational Safety and Health Administration – national workplace safety regulator.
  • PE Firm: Private Equity Firm – a company that raises money from institutional investors and then invests these funds into private companies.
  • Search Fund: A pool of capital raised by a management team to acquire and manage a business.
  • CapEx: Capital Expenditures – funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.

Meet Our Guest

Austin King

Austin King

Executive Chairman of Steel River & CFO of CraneTech

Austin King is a Co-founder of Steel River and serves as Chief Financial Officer and Head of M&A at CraneTech. Steel River was founded out of a deep desire to acquire and operate businesses while providing founders with an alternative exit opportunity. Austin is focused on building the next generation of industrial services companies that will leverage cutting-edge technology, put employees first, and make the USA a leader in manufacturing again.

Before co-founding Steel River, Austin was Director of Business Development at Alpine Investors, where he was responsible for sourcing and closing over $200 million in enterprise value across various service industries. Prior to that, Austin was a consultant for Accenture, focused on driving operational efficiencies and cost savings for Fortune 500 clients. Austin graduated Magna Cum Laude from Providence College with a B.A. in Economics and Political Science.

Location Location: Los Angeles, California

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