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Lessons Learned on Selling a Business After Dozens of Exits

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About the Episode

Why does a $5 billion company sell some of its business units? What can you learn from them? Russell Iorio was the former Senior VP of Corporate Development at Leggett & Platt, a $5 billion diversified manufacturer with 15 business units in 18 countries. Russell was in charge of deciding whether to divest the companies’ business units. He is an expert at selling businesses since they did this regularly. Join us as we take a deep look at the process of selling a business from a professional’s point of view.

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In this Episode

5:50 Does corporate development only include inorganic growth?
6:00 Do you prefer organic or inorganic growth?
6:30 What are your thoughts on buy vs. build?
7:25 When do you prefer to buy vs. build?
8:45 How often do you pursue partnerships as a corporate development strategy?
9:30 Why would you sell (divest) one of your businesses?
10:10 What percentage of your acquisitions do you ultimately divest?
11:35 What drives the decision to divest?
12:25 How did Leggett & Platt get so big?
13:30 How critical is the institutionalization of M&A knowledge in corporate development?
16:20 What is the most difficult aspect of strategic planning?
18:00 How do you make the decision to divest one of your business units?
19:50 Can most divestitures be prevented?
21:00 Management buy outs (MBOs)
22:25 How do you value a business?
23:25 How do you decide whether to use an investment banker?
24:30 What is the biggest value investment bankers provide?
25:30 Is the decision to sell usually straightforward?
26:20 What is the next step after you have decided to sell?
28:55 How do you structure a stay package for a management team?
32:30 How common is it for the management team to not like the buyer?
33:50 How often does the buyer have no interest in retaining the management team?
35:15 What role does the management team play in the transaction?
36:35 How do you maintain confidentiality?
39:10 Do you need to sell the management team on the reason for the divestiture?
40:00 What are the next steps after you have decided to sell?
42:00 What does the dis-integration process look like?
45:45 How important is timing the sale?
47:50 How long does the sales process usually take?
48:35 What are your favorite valuation models?
49:45 What are the most common problems you see in valuations?
50:35 How has COVID impacted valuations?
51:30 What role does the management team play in the process?
52:10 Is the management team involved in negotiations?
52:40 Do you more commonly sell to strategic acquirers or financial buyers?
55:00 Do financial buyers usually have synergy with the target?
55:30 Divestiture vs. carve out
56:40 Who pays more – financial or strategic buyers?
57:15 Does the buyer usually divulge their sources of synergy?
57:45 How do you determine a transaction structure?
59:40 Asset vs. stock sales
1:01:40 How do you maintain competitive pressure amongst buyers?
1:02:30 What’s the most difficult aspect of divesting a company?
1:03:30 Where do you see the future of divestitures?
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Highlights

  • It’s easier to sell to strategic buyers because they know the business and industry much better than financial buyers.

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Meet Our Guest

Russell Iorio

Russell Iorio Share on Linkedin

VP of Corporate Development at Leggett & Platt | Dallas, Texas

Russell Iorio has completed over 200 M&A transactions in his career across multiple geographies and industries, with a transaction value in excess of $3.0 billion. As the former Senior VP of Corporate Development at Leggett & Platt, Russell served on the senior executive team and drove strategic initiatives. These included acquisitions, divestitures, corporate and business unit strategic planning, and new growth platform development. While at L&P, Russell built a robust global M&A program across their 15 business units in 18 countries, realizing returns that consistently outperformed the existing company portfolio. Russell also played a central role in a corporate-wide strategy review that led to a new strategic framework, capital allocation policy, repositioning, and the ultimate divestiture of 25% of the company’s business portfolio.

Before Leggett & Platt, Russell led acquisitions, strategic alliances, new ventures, and corporate strategic planning at PennWell Corporation, a privately-held B2B media company. His prior roles focused on M&A, investment banking, and business/financial turnaround in the communications and consulting sectors.

Russell earned an MBA with an emphasis in Finance from Rice University, and a Bachelor of Science in Business Administration, magna cum laude, from the University of Tulsa. Russell lives in Dallas with his wife and two daughters.

LinkedIn LinkedIn: https://www.linkedin.com/in/russell-iorio

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