Mergers And Acquisitions: Process, Pitfalls, And Profit With Ryan Goral | Ep. 207

COGE 207| Mergers And Acquisitions

Mergers and acquisitions (M&As) can provide construction companies with a fast track to significant business growth and expansion.

However, the process of completing an M&A can also be fraught with potential pitfalls.

In this episode of Construction Genius, Eric interviews Ryan Goral, Founder of G-Spire Group, who provides a step-by-step approach to successfully navigating the M&A process.

Ryan discusses how to:

  • properly select a target company,
  • create a comprehensive preparation plan,
  • and effectively integrate workplace cultures.

He also emphasizes the importance of managing human emotions throughout the M&A process to avoid potential challenges.

Watch the episode here

Listen to the podcast here

Mergers And Acquisitions: Process, Pitfalls, And Profit With Ryan Goral

Mergers and acquisitions, have you ever considered growing your business through a merger or an acquisition? If you have and you’re interested in the process and the pitfalls associated with a merger or an acquisition, this episode is for you. My guest is Ryan Goral. Ryan is the Founder of the G-Spire Group, a company focused on helping entrepreneurs, executives and small business owners acquire companies.

Ryan is an expert in the area of mergers and acquisitions from the buy side of the equation. He knows all about the importance of companies developing a clear strategic vision so they know which companies to go after, identifying targets for possible merger or acquisition, how to go through the due diligence process, how to manage emotions and how to make sure cultures are aligned so that a merger or an acquisition is successful.

All of those topics and more we cover in this discussion. If you want a step-by-step process for how to go through a merger or an acquisition, you’re in the right place. Thank you for reading. Enjoy my conversation with Ryan. Share it with other people. Give me some feedback. Is this type of episode useful to you? I know it was very informative and helpful for me and I think you’ll find it very impactful.

Ryan, welcome to the show.

Thanks for having me, Eric.

Mergers and acquisitions, it’s a great topic. We’re thinking about construction companies. I know you’ve worked with construction companies. Why is an acquisition an effective strategy for growth?

Every company is different. The reason for doing an acquisition is going to be different based on each company’s strategy and vision for their firm. I’ll caveat that but in general, positions typically allow companies to get to where they’re trying to go faster whether that’s pure growth in revenue, number of employees or whatever the core reason for going into an acquisition is from a strategic perspective.

You can go out and hire or go recruit. That’s the organic growth and should be part of your strategy but that tends to be a little bit of a longer road versus finding a company that has similar products, services or adjacent products and services with common in the construction industry. Maybe it’s labor that can do both skillsets for example. You go by that company and all of a sudden, you’ve got 10 to 15 additional labor folks on your team versus going out and recruiting 15. One of the main advantages is the speed at which you get to the size that you’re trying to get to.

Let me pursue that. Sometimes when we think about mergers and acquisitions or M&As, we’re thinking about behemoth X buying semi-behemoth Y. The way you described it there, Ryan, is 10 to 15 folks in the field is not a massive company by any means. Is a merger or an acquisition an effective strategy for smaller companies as well as larger ones?

It can be. One of the big misconceptions of M&A is it’s only for the Amazons and the billion or trillion-dollar companies and they do a lot of growth through acquisitions. It’s what comes into the news and what you’re aware of as a news consumer. The misconception is mergers and acquisitions happen all the time in the lower middle market and even in the small business market. It is an effective growth strategy as long as you do it right and be thoughtful about what you’re doing.

I use examples to illustrate my points often. If you have a business that’s doing $10 million in revenue and $1 million in cashflow, you’ve got a nice business. You’re not the Amazon of the world but you’ve got a beautiful business that’s operating well. To go acquire another $10 million revenue business to get to $2 million of cashflow is a great business. You would consider that as a small business type of acquisition. Those types of deals happen all the time.

Let’s pivot back to this idea of strategy. When I think of a strategy for a construction company, it revolves around some fundamentals such as I’ve got to build the right projects for the right clients in the right locations. Those are the three fundamentals and there’s tons of complexity underneath that.

If I’m going to be profitable, I’ve got to nail at least 2 of those 3 consistently if not all three. When it comes to mergers and acquisitions and the strategic perspective that a company should take, which 1 if any of those 3 would be more prominent in the decision to buy a company or to merge the right client, right project and right location?

It is equally important but to distill it down for the construction work that I’ve done, it isn’t usually just one. It’s at least two of those. I was involved in a project where the contractor wanted to grow geographically so there was a location aspect to it but also as part of that geographic expansion, he wanted to provide different product services to their customer base. When you do an acquisition that involves providing different products and services, you are also acquiring a different customer base in a diversified customer base from that acquisition.

COGE 207| Mergers And Acquisitions
Mergers And Acquisitions: When doing a mergers and acquisitions deal involving different products and services, you also acquire a diversified customer base.


You’re covering all of them in a way but it goes back into that strategic planning piece. Where are you trying to go and why? Which one is leading the cause? Is it geography? That could be a hiss. What I’m seeing more in the market is driven off of labor. That labor is also in part combined with sometimes having to provide another product and service as part of that acquisition strategy. That’s what I’m seeing a lot more of in the market.

From the perspective of the person who’s initiating the transaction or beginning to think about a transaction, in your experience, when is a merger or an acquisition appropriate? Is it obvious because they’re saying, “Buy me. I’m not interested in being bought, I’d rather be merged?” Tell us a little bit about that, please.

It’s deal-by-deal specific. To try to put a silo around the difference between an acquisition and a merger, there are a million different ways you can do it in between but to provide some contrast. The acquisition is typically you’re buying an entire company 100%. The seller, after some transition period, is going to go sit on a beach somewhere and they retire now that you own the asset, you got the employees and the customers and you’ve acquired that business. Everyone has a little different opinion on what a merger of equals would look like if that’s even possible.

That’s a whole other discussion point. I was involved in the transaction which started to be more of an acquisition. Let’s say, we want to buy your company and the existing shareholders will roll a piece of the transaction into the new company as part of the transaction. Let’s say that it started as, “We’re going to buy 90% of your business and then the 10% is going to be rolled into our business.” That seller gets what they call two bites of apple. They get a liquidity event upon close and then they get the bigger company eventually sells. They got that 10% that will get another payday.

This transaction I was involved in started at a 10% roll and worked its way up. It was north of 30. As more equities get rolled, the more it looks like a merger, even though, in this case, it was an acquisition. This company was buying another company and they were going to own and control it. It comes down to control is the main point of the difference between an acquisition and a merger.

In construction, I see this a lot where the seller will roll a bunch of equity. Depending on how much it is, the more they’re rolling, the more it looks and smells more like a merger. A key differentiator is how involved is the seller and the management team of the seller in the business post-transaction, whether it’s classified as technically an acquisition or a merger.

There are two aspects here that I’m interested in. You’ve got the money issue and the control issue and those two are related. The more money I put in, the more control I get. If I’m pursuing a merger strategy from a financial perspective, that is either I don’t have the money or I don’t want to put as much money in and so therefore I’m willing to give up some control. If you can think of one, what is the pivot point where you have sufficient control so that the challenges of power are mitigated or reduced as much as possible? Am I clear in my question?

I’m tracking. Where you’re going is it is money and control. You’re right there. What you’ll see in the market too is with companies that don’t necessarily have the capital or want to expend their capital into a transaction but it is like, “Why don’t you just merge and I’ll give you X amount of equity in the business and we’ll run together?”

Part of that running together comes into how is this going to look from a control perspective. That’s where it gets pretty dicey because there’s no money coming out the door for the seller at closing or maybe there’s a little bit but it’s not at a liquidity event. What I look at is who’s bringing what to the party, what are the capabilities and then what are the needs of the business once combined.

The seller has some skillsets and know-how that can contribute to the overall organization as a combined unit. It’s more of an organizational design type of project. Who does what? Who’s going to be responsible for what? How do we cut down? How do we break up the distribution of profits? Who has control over what? That all is negotiated based on the specific needs of the business or the specific capabilities of each of the businesses that come and go.

As you’re advising someone and you’re going through the process and they have a strong drive to want to get the deal done but you are seeing red flags, which red flags are you looking for the most? I find that a lot of entrepreneurs sometimes get into fantasy land and people like yourself are there to give them a gentle slap upside the head and say, “Let me give you a little bit of a reality check here.” What are the red flags for you in a deal that tell you to talk to your client, even though it might detriment you personally, Ryan, where you don’t get a liquidity event as a result of your services? What are those red flags? Tell me about those.

One of the things about my business that I try to pride myself on is I’m not getting paid for the transaction. I’m a retainer-based model so I remove any messiness around. Regarding your question about the red flags, I love this question because as much as M&A, people are thinking about money, financials and operations. It’s all pretty tactical, black-and-white type of stuff. What makes these deals successful or a disaster is the human aspect of the deal.

One of the biggest red flags for me is culture and core values. It’s a tricky thing to assess but it’s important. You got to at least try to put it together when you’re a buyer looking at a target acquisition. The other red flag that I often see is the emotional side of a deal. “It’s so exciting. It’s a shiny object. I’m going to double my company.” I love the thought of telling people that I acquired a business. There’s that emotional stuff. A lot of the work I do on the front end of an engagement is getting clear on the strategic vision and making sure that the acquisition strategy is a part of that vision, not the other way around.

The strategy isn’t just going and acquiring. We’re trying to get to hear how acquisitions can facilitate that growth. When I see an owner fall in love with a deal, it’s break-pumping time. Not to say we won’t do it but when I start seeing the emotion of I want to do this deal, I start getting blinded to the objectiveness of does this deal fit?

Every deal has risks. Are we glazing over the risk here? Are we going to try to deal with it in a way around the deal structure or the integration project? Let’s not fall in love with the deal. Those would be the two big red flags and they’re both human and emotional pieces where I would say, “Can we need to talk about this? Let’s go back to the drawing board of why we’re doing what we’re doing.

COGE 207| Mergers And Acquisitions
Mergers And Acquisitions: When business owners fall in love with an M&A deal, they seldom glaze over its risks. This must always be handled objectively.


What are the specific criteria that we’re looking for? I’m seeing XYZ here. Doesn’t seem like that’s registering as a risk so let’s talk about it.” It’s slapping someone and waking them up. I like to pride myself on making sure that there’s an open line of communication where there’s no slapping needed. There’s a way to honestly have these discussions in an open format but sometimes, you got to shake the owner to wake him.

Ryan, you mentioned there, with the red flags, this idea of culture and there have been tons of books written about that and why it’s all important. For our audience here, what do you mean by culture?

It’s one of those things that it’s hard to define with words and you know it when you see it or feel it. It is a hard thing to assess when you’re sizing up an acquisition. As I look at it, I’m working with these buyers. They have a set of core values that sets the stage for their culture. When you look at a target company, you’re not going to find the same five core values on its wall. It’s not going to be a mirror image. What you’re looking for is some similarities because you can read those core values and there’s a story of how those became to be which can inform the culture. That’d be my first step.

The second step is when you talk to a target company owner or seller, there are questions that you ask and how they respond. It’s the nuances of the answers that will give you a little bit of a sense of what their culture is. When you start asking certain questions about employees and how they’re managed like, “Is there a bunch of overtime? How do they manage that,” usually, their answers will have an additional narrative that will suggest, “It sounds like you’ve got some challenged employees that are leaving too early. You’re pretty hard on these employees. I wonder how they’re taking that.”

You read through it but the answer to the importance of culture has to be at least some alignment. If you put two different cultures together, it is infinitely more hard to do an integration because it’s apples and oranges and pulling it all together. Venture to say, I’m sure there are ways to do it. It is hard to do an integration of two companies that have drastically different cultures.

COGE 207| Mergers And Acquisitions
Mergers And Acquisitions: If you put two different cultures together, it is infinitely harder to do integration. There has to be some alignment between the two.


Do you have an example in your experience of that culture fit in terms of a merger on acquisition?

I’ve seen it a lot. One example would be an organization that is typically working with, let’s just say some bigger companies. They’re used to selling to Fortune 100 and bigger middle markets. They also are very conservative in running a tight process and checking boxes. Everything is a process. There’s a lot of paperwork and it’s very formal. Let’s say that company goes and likes what company B is doing and company B’s culture is more Wild West. They don’t document things.

They do things with relationships. They work with smaller, fast-to-nimble, entrepreneurial companies. That would be one example where company A is buying company B, a lot of transformation would have to happen to make that situation work. They’re serving different clients and doing it in different ways. The processes are different. Not to say it couldn’t work but that would be one of those drastic cultural differences that would make that integration a lot harder.

I could see the difference where you might have some companies that are more family-oriented and caring. You also have other companies that are more competitive and driven where the expectations in terms of the amount of time you’re spending either in the office or on the project site are different from one other company.

That’s what defines those core values and culture. It’s the type of customers that they solve. They’re serving the types of customers that the company serves and it also attracts a certain type of employee. All of this is very intertwined.

Another aspect that you mentioned earlier in terms of the red flag is the emotions that someone gets and tend to overwhelm them and drive them. We all know that we’re all along the spectrum of our objectivity to emotion. Depending on the circumstances, it goes up and down one rules over the other. What are some of the main emotions that you’ve seen that negatively impact someone’s ability to objectively look at a deal and figure out if it’s the best for them?

That’s a tough one. In my experience, what I’ve seen is there’s something underlying the purpose and the why of going out and doing an acquisition if that underlying purpose is rooted in a place of insecurity. Let’s say my friend bought a company and I have to go do one or maybe it’s fear, “If I don’t go do this, my company will fail because of XYZ.”

Not to say that those are discounted because maybe there’s some reality there but it produces an emotion that puts blinders on what is being objectively looked at in a merger and acquisition. A lot of the prep work I do with my clients, there’s a lot of that readiness work that’s asking why a lot. Why do we want to do this? What does this look like when it’s done? Why is that important to you?

Fear puts business owners on blinders. This hinders them from seeing mergers and acquisitions objectively. Share on X

It’s trying to peel back the onion a little bit to try to get to that core of why. Not to judge it but so I can better help coach and mentor along the process of what that driving why is and what potentially could produce an adverse emotion that could derail a deal. The other side of it is to get a deal done that’s wrong for them and that hyper-focus on, “You got to do a deal.” That could be a pretty detrimental effect of that emotion.

Let’s say I’m listening to the podcast thinking, “I know I’ve got a competitor in the next town over and they seem to be a good fit in terms of the culture. I know that the guy or the gal that’s going to be retiring in the next 3 to 5 years could be a potential acquisition.” What does this process look like from start to finish? Where should I, as a construction company owner, start in determining whether or not I should pursue a merger or an acquisition? Walk a step-by-step through what something like that looks like practically.

The first step is back to what I was talking about by trying to understand the why. Why are we wanting to go by that competitor in a neighboring town? What’s the strategic fit of doing it?

That begs the question that you have to be clear on your strategy, to begin with.

Exactly. There is that strategy and I call it Strategy Readiness Work. It is readiness work but it’s more of making sure that the strategic alignment in your vision is clear and then let’s go then from that baseline to figure out if an M&A strategy is even right for you and then if it is, what specific companies would make sense?

If I can put a bookmark here for everyone reading, the idea there is, fundamentally, as a construction company, I need to know the right client, right project and right location and have built a plan for success around those things where I currently am before I look to spread my wings through a merger and acquisition.

It’s having that clarity of who you are and what you do well and having that dialed in before we even say if that competitor in that neighboring town is the right fit. They may be available or have a relationship there but we don’t know if it’s going to be a good strategic fit until we know what we’re looking for. That would be step one. Let’s figure out, dial in our strategy and our vision and then we build out the plan. What types of companies? Where are they located? What do they look and smell like? We then build out a target list for companies to start talking to and building relationships with.

Before you know if a company is a right fit for a mergers and acquisitions deal, figure out what you want first. Dial in your strategy and vision before building a plan. Share on X

The second step is the target list. Tell me a little bit more about that target list.

As part of that mapping process, we’ll get clear on what types of companies we want to go after. What do they look like? Where are they to your location? What customers are they serving to the extent that we know? We then do the research. We go out and find a build of the list of companies that are in those geographical areas. There are tools out there. I use a tool that can build lists pretty efficiently based on certain demographics, size estimates and that kind of thing. You build that proprietary list, which is these companies are not for sale. These are companies that aren’t currently listed for sale.

You’re building a list of companies not for sale but that could be targets.

That would be a list that we would reach out to, to say, “Are you interested in a dialogue about selling?”

Why would you do it that way as opposed to just looking for companies that are for sale?

There are several reasons. You have to go look at the companies that are for sale because these are companies that are ready.

You should look at those companies that are for sale.

You’re doing both. You’re looking at the ones that are for sale. You’re working with the brokers, the investment bankers and the community where they’re listed. There’s a process there. Those are what’s available. All these other companies aren’t for sale but maybe you’re thinking about it. That could be a better fit.

In your experience, Ryan, with the deals that you’ve been involved in, what percentage are the ones that were already for sale and you identified the ones that aren’t for sale but became a deal as you went through the process? Do you have an idea of that?

Most of the deals I’ve worked on have been deals that were ready to sell. They were with a broker or banker but there is a minority of those off markets. I’d say minority, not as in 5% but there’s a healthy amount of transactions that happen that are not on market.

Would you say upwards of 20%?

I call it 20% to 25%. Not insignificant but not a majority.

Do you have any clients who have a long-term perspective where they’re saying, “Ryan, I’d like to make an acquisition in the next year to two years and then maybe another one in the next 3 to 4 years. I want to cultivate these long-term relationships with people where a deal may not get done this year?”

I often advise that to my client because these things take time. The best deals I feel like come from relationships, especially these off-market deals, it’s relationships with the business owner. You get to know their business through the lunches and the dinners or the relationship-building stuff that you do. Over time, you can pretty much get a sense of whether that company is going to be a good fit through that relationship. Once the relationship is bonded and that person is ready to sell, you’ve got the relationship and you’re in point A.

Do they want to go down the marketing process? If they know that you’re going to come in and take care of their people, their customers and their employees, there’s already a good relationship. You’ve already determined there’s a good match. I’d say that you’re in a good position. Not to say it would always work but you are in point A to get a company that you know is a good fit due to that relationship. Oftentimes, it doesn’t happen. The minute you start looking for an acquisition, it’s usually 1 year or 2 down the road.

When it comes to building those relationships then, are you advising your clients to go in, contact the people and say, “I’m interested in possible acquisitions down the road. Do you want to grab lunch and get to know each other a little bit?” Is that how you approach it or is there another strategy?

There’s that strategy. If they’re comfortable with that, it’s part of the service that I offer. I may bring in a third party or someone who is part of your team and say, “I’m here to specifically drive growth through acquisitions. I want to make sure we know each other. Let’s build a relationship and let’s grab lunch. Let’s start a conversation.” Start a conversation and see where it goes.

For your clients, are you going to that first lunch just to get to know them and vet them a little bit or are you directly introducing the president of one company to the president of another?

A lot of times, for efficiency and for time’s sake, I’m handling the first couple of meetings myself to fact-find, build a relationship and understand a little bit more of the details of that company before I bring in my client. If it’s not a good fit, I don’t want to waste my client’s time. It’s part of the reason why.

When do you reveal who your client is? Right up front or later on? How does that work?

It’s personal preference and art. Some clients are like, “Use my name.” Some are like, “It might be beneficial to say you have a client. You want to spur up a conversation and see how far you can go without.” Maybe we get an NDA down the road. It depends on my client’s desire and strategy around it that we all configure before I start doing outreach. We put together very defined do’s and don’ts on how we feel comfortable going forward with these off-market conversations. They can be sensitive, especially with competition and get into that mix.

COGE 207| Mergers And Acquisitions
Mergers And Acquisitions: If you don’t want to reveal your name to a target company yet, ask your facilitator to spur up conversations first and see how far you can go without an NDA.


Sometimes, there’s a benefit for a third party to strike up a conversation and say, “I’ve got an interested client. He’s XYZ of no name but this is what we’re up to. We’re capitalized. We’ve got the right strategy. We think that you would be a good fit. Are you open to a conversation?” You don’t share their name upfront until you get down the road. Maybe there’s an NDA that’s needed to protect everybody. It’s personal preference on a case-by-case basis.

You understand the why, you’ve got strategic clarity, you have a target list and you begin to reach out to people. Let’s say there is some interest there. What would be the next step? Regardless of whether or not I’m using someone like yourself, if I know that there’s an interest there, how would you advise someone to proceed so that they don’t get over their skis and everything is as rational as possible?

Once you find a target company that you’re interested in, there are usually NDAs. What you would want is some preliminary financial package so you can understand the revenue and maybe some cashflow figures. They’re at that stage probably not sharing customer names and some of that stuff. You’re trying to get a sense of, in general, how much revenue and cashflow this company produces.

When you’re looking at the financial package, where are you directing your clients to look immediately to raise those red flags that are going to go/no-go from the financial statement perspective?

A quick analysis of revenue trends is where my eyes go. It then goes immediately down to the cashflow trends in margins to pretty quickly size up. Is this thing going in the right direction or are they trying to sell because their revenues dropped 20% a year for the last few years? I’d be like, “It looks like there’s something wrong here.”

You can easily determine if a mergers and acquisitions deal is going in the right direction by quickly analyzing revenue trends Share on X

In construction, when COVID hit, we took a little dip for 90 days. Generally speaking, construction has been doing pretty well. At the time of this interview, we’re in October 2022, teetering is happening at the moment with the financial markets and the economy. How do you balance all of that when there are maybe some either regional or national ups and downs that a company may be experiencing and yet fundamentally, they’re a strong company? How do you discover that from the financial reports perspective if that’s at all possible?

It’s challenging but knowing the industry and its sensitivity to certain things like COVID, you have to be able to underwrite through it. It is a particularly challenging time to wrap your arms around the fluctuations of business. In the ‘80s, we have the longest tenure bull run, you have COVID, you’ve got this rebound out of COVID and then we’re staring at this potential recessionary environment and inflation environment. You got to underwrite forward thinking out of this noise historically. It’s not easy but if you have a sense and can wrap your head around it, 2020 is the quantifiable effects of COVID.

We understand that XYZ happened and the business couldn’t function for 3 to 6 months then you chalk it up to, “That was the event and did they recover.” The other flip side is some of these companies did better through COVID so there’s the reverse. It’s what is normalized going forward. The art of the exercise is figuring out what is this thing on a normal basis and then you’re throwing what are the guardrails on normal inflation or a recessionary environment. It’s challenging but you are mapping it out and trying to make sense of it the best you can.

I’m going to ask a dumb question here and this is a relevant one. Let’s say 2020 to 2021, you’re looking at a company and they got some PPP. We know that depending on your size and a substantial amount of cash, in those statements, would it be easy to see where that PPP is? Are some companies able to hide it and stuff it in a project to make a project look more profitable or revenue-driven than it is?

It comes down to the quality of the financials that you’re getting from that target client. Quality of financials is a huge part of this process and there’s also a little bit of asking questions to the target company. Did you take PPP? That’s a normal question. Hopefully, they’re telling you the truth but you can verify later if they didn’t.

That type of information is public but don’t quote me on that. There are ways to uncover it. To your question, you got to understand those types of things and be able to either back that out of performance or add back certain things that were negatively impacted. Reduce things that were maybe a positive impact and try to normalize them to the extent that you can.

Once we’ve sat down, we’ve taken a look at the financials that say, “There are no glaring red flags. I want to continue the process.” Give us the next step please, Ryan.

I typically advise getting your legal counsel involved and putting together a letter of interest that you put in front of the seller. The letter of interest is non-binding outside of confidentiality and some other points in the letter but here’s what we want to offer your business. Some folks call it an indication of interest before. There are some nuances there but essentially, you’re going to put in an offer.

You should be using a lawyer to make sure you have proper protections, outs and language in those letters. The financials will tell you what you think it’s worth. If you’re using debt, how much debt service can this company service? Some analysis goes into what you think that offer should be. If you don’t know, sometimes the seller will give you a couple of numbers throughout the process of what they’re hoping for.

Sometimes they don’t. Sometimes they want to see what you are going to bring to the table out of the blue. Every situation is different. You put out an offer and a structure. You let them respond to what you’re offering them. That ends the pre-part of that phase. If they don’t accept it, then you’re moving on to the next one. If they do accept it, you kick off due diligence. That’s the next step.

Tell me the essential elements of due diligence.

It’s trying to understand the business to the best of your ability aspect, like financial, operational, all the technology, human resources, leadership, employees and all of it. You want to get your arms around.

Would the culture piece go in?

It’s all of that. You’re saying, “Is this a business that we want to buy? Does it fit with our organization? What are the risks of this business that we might need to be able to?” Hopefully, by that stage, you’ve had a sense of the business but you’re trying to flush out if there are any big deal breakers as early as you can.

The other part of due diligence is it’s understanding the business, the numbers, the employees and the culture but you’re also prepping for, “What are the opportunities? Why am I interested in buying this business? What are the opportunities that we want to get after right after we buy them?” That goes into the integration process once you close. The other part of due diligence is usually the capital. You’re going out and organizing banks and maybe some equity investors if that’s part of the capital needs and then you close. There’s then integration. That’s the last phase of it.

Going to the due diligence, looking at the initial financials is the first go/no-go. Let’s say that’s good. You go into the due diligence. Do you recommend a particular order that someone should do their due diligence in or is it depending on the individual company who’s doing the acquisition and which order they go in? What’s your experience there?

At least the lens that I bring and I’m not saying I do it perfectly every time, to a transaction is, “What are the big things? Let’s identify the big muscle movements.” If you reviewed the financials and there was a downward trend in 2022, a year to date and that information of doing due diligence on why that trend is happening will blow up the deal, you start there.

You want to identify the things that are most concerning as early as possible. It follows the 80/20 rule. What 20% of information can you get that’s going to tell 80% of the story? Start there. Every deal is going to be different. You might start in operations at human resources first if there’s some reason to do that. I’d say down the middle of the fairway, what typically happens is you start that financial due diligence.

Financials is a big part of the due diligence process but you’re not necessarily having to do that alone. There are financial CPAs and even contract CFOs who can do some work to reconcile financials. There’s the quality of earnings you can get. Is a CPA firm come in and do a deep dive on the financials to make sure everything ties out? I typically would advise it is a good idea.

It’s not always the case but in a lot of cases, it does help to have the quality of earnings. It’s financial and then you go down the list of its operations. What’s their technology? What are they running on? How are the employees managed? Are they W-2? Are they 1099? What platforms are they on? How are they getting paid? Do they have organizational docs and employee manuals? You’re trying to gather all this and digest it over the due diligence period, which can be 120 days. It can go longer if there are hiccups but call it 4 to 6 or 4 to 7 months. It’s taken a while. It shouldn’t take that long but 120 to 150 days for these smaller transactions is typically doable.

When you say smaller, what dollar amount are you talking about?

The transactions I’m typically working on are with companies that are doing anywhere from $5 million to $40 million in revenue. Those are companies that are probably doing $500,000 up to $2 million to $3 million of cashflow a year. Most of my transactions are less than $10 million transaction sizes so those are $1 million to $3 million cashflow companies that are being acquired.

As we’re going through this, I’m thinking of the analogy of the couple that always talking about getting married but they never get married. One side of the family is always bugging them, “When are you going to get married?” As you are working with someone in a merger and acquisition, let’s say one of your clients is pumped about buying this company but you can tell that the other company is maybe stringing them on for whatever reason or it’s not going to happen. What are some of those warning signs that you look for in the person who’s being acquired that tell you that, “I need to have a heart-to-heart with my client and let them know? I’m not sure if they’re going to make this?”

That’s a good question and it’s hard to answer because part of what I try to do is set expectations with my clients. These deals are not done until the ink dries on the paper. It can fall apart to anyone or any knight. The M&A process is different for every deal. It’s what I love about it. It’s also what’s super challenging with it because with every deal, you can have ups and downs.

You can have the seller go dark for a period and you’re like, “What’s going on over there? Are they off?” You’re always making these, “Where are they? Something has changed. I don’t know.” It can be that bumpy, emotional rollercoaster and then you find out they went on vacation and didn’t tell anybody. There’s nothing wrong with the deal. They’re okay. They’re still gung-ho. Things like that will pop up.

It’s one of those things that you don’t want to be too high or too low but keep your expectations in check. Know that the deal could fall apart at any point. Keep your excitement in check. The thing on the seller is when you see someone change. If they were super responsive, getting you information on the front end and then something changes where they are not giving you information, they are giving it to you super slow or the quality has changed, it might not mean anything but it could mean something.

Those are the things that you’re watching out for. Is there a change? Is there a reason for the change? What kind of communication do we have lined up with the seller? What’s that relationship like? There’s a lot that goes into the management of that process. To answer your question, what I try to do is make sure my client has their expectations set upfront where they’re expecting the worst but hoping for the best. I’m there to help them through that and identify when things are filling out of whack. We’re doing the best we can on a case-by-case basis.

Set your expectations upfront if you are in the middle of a mergers and acquisitions deal. Be ready for the worst but always hope for the best. Share on X

Do you ever advise that a company go after two acquisitions and tandem with the expectations that one may not go through? Is it worth doing that kind of stuff going after 2 deals at once as opposed to 1 at a time?

That’s situational. Up until a letter of interest is accepted, yes, as long as there’s a fit. To go into a letter of interest and due diligence with two different companies, maybe there’s a situation where that makes sense. Unless you have a huge team and the capacity to look at all that. The capital providers are okay with it if you’ve got the capacity and the know-how.

When that happens, you’ve already built the M&A muscle as a core competency in your business. If you’ve done ten deals before and you’re like, “We’ve got our playbooks and cadence, we know what we’re doing,” then maybe. If you’re on your first one, it’s not. You pick one and go at it. It would probably be my recommendation.

It sounds then that there’s an importance to having a clear funnel defined with go/no-go’s so that when you’re in the deal-making part of the funnel, you’re doing one deal at a time. Particularly, you’re getting going on this process.

That’s why it’s so important to do the strategy work. Know exactly what you’re looking for and build the funnel of those companies. Once they get down to the bottom, it’s a company you want. It doesn’t guarantee you’re going to get it but at least, you’re not spending time on something that you haven’t done that prep work on.

Let me ask you about the integration. How much work do you do with your clients when it gets to the integration phase? If the deal is done, there’s been an exchange of money or whatever the case is, what do you do with them there?

Every company is a little different there. It comes down to their team. Who’s got capacity? Do they have someone that wants to run point on it? My role has been, during due diligence, you’re gathering all this information and then you’re identifying what needs to be addressed in the first 30 days. I’m building a project plan that’s the first hundred days integration plan in parallel for due diligence for my clients.

Once we acquire it, “Here’s day one. Here are all the things we need to do. Here are all the things we want to accomplish in the first 30, 60 or 100 days.” It’s project management at that point but someone has got to put it. That is naturally something I do. Who’s the project manager? Who’s doing what by when and staying on top of it? It can be me. Sometimes they have someone on their team that wants to do it so it’s situational.

Tell us from an implementation perspective, what are some of the high-level things that I should be hitting in the first 90 to 120 days as I’m integrating this new company into my company?

The first 100 days, in my opinion, are the riskiest because there’s the reputation of the company. For the employees and the customers, you want to come in with a plan and communicate. A communication plan is a big part of it. It’s how are you communicating with your employees from day one? How are you communicating with your customers from day one?

It’s all the tactical stuff, like bank accounts, getting switched over and making sure all the systems are okay. It’s all that stuff. I’d say that in the first 100 days, every deal is different and you’re trying to accomplish different things but you’re trying to take two different companies. Hopefully, they’re not super different and you’re trying to create one platform. You want everyone on the same system, running the same process or a similar process. The customer is navigated over. It’s acting as one or at least, moving in the right direction of acting and being one company as much as you can as long as that’s part of the plan.

Some companies want to operate separately for a period, which sometimes can make sense. What you want to do is make everybody, mostly employees, suppliers and customers super comfortable with who you are and how you do business. You continue to execute your services or products if you’re a product company in a way that they don’t have a reason to think that the acquisition is creating a negative thing. For them, it’s their life and their business. Keeping executing is probably the main fundamental thing with that integration. Don’t mess it up. Keep executing, keep providing service and try not to let the impactful happen.

COGE 207| Mergers And Acquisitions
Mergers And Acquisitions: Make sure every employee, supplier, and customer is comfortable with who you are and how you do business. They don’t have a reason to think that a business acquisition is negatively affecting their lives.


To back up to the top of the funnel, you begin with understanding the why and the strategic perspective of why we’re doing this acquisition or an acquisition. You then develop that target list of either available companies or companies that may not be available. Some of those diamonds in the rough perhaps or those hidden gems.

You then begin to establish relationships. From there, if there’s a fit, you go to take a look at the financials. You then get the legal council involved with an LOI at some point, a Letter of Interest. If they accept that, you go through the due diligence process that goes into negotiations. If the negotiations are successful, you then go into the integration. Did I get that process just about right?

Perfect. That’s roughly the process.

In your experience then, as you look at that rough process that I outlined, in your experience, give us the 1 or 2 points where most people fail.

The definition of failure is an important one. For buyers in the market, it’s finding a company. Building a relationship with the right type of company takes a lot of time, discipline and consistent effort. What I would say around that is most companies are not doing the work needed to uncover the types of opportunities that are the right fit. They’re relying on things falling in their lap and a broker network. Those things are okay. You can find stuff that fits in that. It’s like going to the gym. If it’s not a muscle you’re building and not actively working at it, the chances of you finding that being successful are going to be a lot lower.

Mostly, it’s not putting in the work needed that will result in what you’re trying to accomplish, which is a successful merger and acquisition or multiple mergers and acquisitions. That’s the big one. The other one, the integration that we talked about is the other place where it gets a bad rap because integrations get fouled up. Integrations get fouled up because it’s considered an afterthought. It can’t be.

It’s where the model comes in and it’s real. You got to pay attention to all the details. What ends up happening is everyone’s so focused on getting the deal closed. It’s a big lift. You’ve got multiple parties. You’ve got the seller, you’re negotiating, you’re doing due diligence, you got the banks, the documentation, their requirements, the process and the timelines, which is all the stuff you’re trying to manage. It’s hard to go. If I’m going to spend all this time building out a first 100-day integration plan, that’s a lot of work to handle. A lot of people will say, “I’ll integrate and we’ll figure it out.” Those two things would be the two places where if attention isn’t put, your probability of success is lower.

Those are two pivot points. One up top with not doing enough hard work there and then one down bottom not doing enough hard work at the end. It’s like when you hire someone. Sometimes when people hire people, they’re like, “My job is done.” I’m like, “No. Your job just got started.”

That’s a good analogy. It’s exactly that way.

It’s funny you talk about this because when I talk to my clients about succession planning, for instance, I advise them that they should start succession planning as soon as they start their business even if they’re going to be running it for 20, 30 or 40 years, whatever the case may be. It’s also interesting for a company. Would you recommend that company when they’re beginning or early on even if they’ve never even thought about a merger or an acquisition think in those terms because it is a legitimate strategy to grow your business?

Succession planning is interesting. At least part of the discussion is about the benefits of making an acquisition. What those benefits translate into is value. The value of the business depends on what industry. The size alone will enhance the value of the business. If you’re trying to exit in 3, 5 or 7 years, you’re going to want to try to do what you can to enhance that value. It’s a natural part of the discussion.

It’s not right for everybody and there’s a whole host of reasons why it wouldn’t be. There’s a whole host of reasons why it could be a sound strategy to grow your business. What I often say is I’m working with a lot of these owner-operators who are head down in the weeds. They don’t have time to work on this. A lot of the discussions I have is there’s a lifestyle improvement. If you move out of the day-to-day of the business, you’re going to make the business more valuable.

It doesn’t necessarily mean you have to sell it. It’s just you’re improving the value and you can make that decision when you get to that point. I’m with you in the camp of it’s smart to always improve the value of the business, prepping it like it might need to be sold tomorrow in a pinch and doing the things that are necessary to prep to sell it. Even if you don’t have any intent on selling it, prepping it to sell a lot of times translates into good business practice.

It's a smart move to improve your business value by prepping it like it will be sold tomorrow in a pinch. Most of the time, this translates to good business practices. Share on X

You’ve been very generous in outlining the whole process in a very helpful way. Can you tell us a little bit more about you, the work that you do, your business and all these kinds of things?

This is what I do for my clients. I come in as a part of their management team and help grow their businesses through strategic mergers and acquisitions. I help with these owner-operators who don’t have the time to do this work but there are tons of opportunities to go out and grow this way. I come in and drive this specific growth strategy. I’m part of their team on their behalf. Everything from helping with the strategy alignment, target list, outreach, due diligence, capital and integration, I’m head of the spear on all those efforts throughout the process.

We do that as a fractional executive so we come in. We’re a monthly retained type of service. Our passion and my passion is building businesses. I love this stuff. There are opportunities for smaller businesses to grow this way. I’m excited about unlocking this growth channel for companies that maybe never thought about it and never had time to explore it.

Just so we have it clearly stated, what geography is your clients in that you work with? What are the sizes of the companies that you work with?

I work with companies all over the country. It’s location agnostic. A lot of the work I do can be done anywhere and then I get on a plane for the times that it’s important to be in person. It’s pretty flexible that way. The size of the companies I’m typically working with are revenues of $5 million to $40 million, which translates to $500,000 to $700,000 of cashflow up to $2 million in cashflow.

It is the sweet spot of companies. Owner-operators have great businesses and lots of great growth opportunities but may be stretched a little thin at the leadership level. I have done a lot of work in the construction engineering space so this show is near and dear to me. I work with all kinds of different industries.

How can people get in touch with you, Ryan?

My website is It has my information. My email is [email protected]. I am active on Twitter and LinkedIn. I’m pretty easily found. I would love to help those who are interested in potentially looking at this as a growth avenue.

I appreciate you coming on, Ryan. Thank you for sharing your wisdom with us here.

Thanks for having me. It was a lot of fun.

Thank you for reading this episode with Ryan Goral. Check my new book, Construction Genius. It is available on Amazon and it is the one book that you need to read if you are a construction leader. It’s all about how to be more effective in your leadership, how to develop strategies that enable your business to grow and succeed and how to master one of the greatest challenges for many construction executives and company owners. That is sales and marketing. All of that is packed into one book, Construction Genius. Buy the book for you and the people in your organization. It will have a tremendous positive impact. Thanks for reading.


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About Ryan Goral

COGE 207| Mergers And AcquisitionsRyan Goral is the Founder of G-Spire Group, a company focused on helping entrepreneurs, executives and small business owners acquire companies.
Ryan has an extensive 15 years of experience focused on working with small businesses. In addition to providing creative financing solutions, Ryan’s expertise is centered in adding value to entrepreneurs and executives with all aspects of executing their organization’s growth and mergers and acquisitions strategies. From capital structuring and advising on strategic fit to conducting thorough due diligence through final transaction execution and integration, Ryan brings a value-producing mindset to a company’s growth ambitions.
As a career sales professional, Ryan enjoys building, coaching and inspiring high-performing sales professionals. As part of G-Spire Group’s integration offering, Ryan focuses on helping businesses build, lead and integrate the sales and marketing function of the target firms his clients acquire.
Ryan graduated from the University of Denver where he was a Division 1 student-athlete and earned his MBA from the University of Colorado at Boulder with an emphasis on Entrepreneurship. Ryan has two M&A certifications. He is a Certified Merger and Acquisition Advisor through AM&AA (Alliance of M&A Advisors) and a M&AP (Mergers and Acquisitions Professional) certificate through the IMAA (Institute for Mergers, Acquisitions and Alliances). Ryan enjoys spending time with his family and, in his down time, can be found doing something outdoors and likely running, biking, fly fishing or golfing.