The Only Deal You'll Ever Do with John Mosser

David: Good morning, John. Welcome to the podcast.

John: Good morning. Th- thanks for having me on, Dave.

David: Sure. So what part of the world are you, located in at the moment?

John: I'm in, Raleigh, North Carolina, is where I'm based.

David: Raleigh. Now, are you a native of North Carolina?

John: I am. I feel like- I'm actually one of the, the first people that I feel like were actually born here and stayed and kinda came back. Most of the people that kinda live around where I am are from other parts of the world. but I am native, yes.

David: Yeah, that... It's like that in, in Texas too. There's not a lot of native Texans. They've, mostly transplanted from, from somewhere else. So, well, well let's talk about your business. So ta- talk to me, let's get in- into a little bit of background. when you got out of college, talk to me about the start of your career. How did you get into the finance arena?

John: Yeah. So, so after college, I actually started my career in Charlotte with, with an accounting firm called Dixon Hughes Goodman that's since been acquired by Forvis. But I joined,their valuation advisory practice where I worked with a lot of financial models, worked on private valuations, things for legal disputes, and then also a lot of purchase price allocations after transactions were completed. so I think, you know, starting the finance career that I've had really in the accounting space was a good kind of framework, but my interest had kind of always been in kind of doing deals and transactions and, mergers and acquisitions. So pretty early on in my career, after a couple of months, I actually had the opportunity to move to Richmond, Virginia, where I joined a, a lower middle market investment bank, that was, You know, I joined the industrial products team, and as part of that team, we were typically working with family founder-owned businesses that, had either started the business, or been in the business for several decades, and most of their personal net worth was tied up, actually in the business. But as folks are getting more towards retirement age, looking for a succession plan, you know, we would really get involved there to, to help them meet those objectives. So, when I was in investment banking, the kind of the first time around, we worked with probably eighty percent family founder-owned businesses and in what I call more of a generalist industry. So we worked with a lot of industrial consumer products businesses. kind of think older economy manufacturing, distribution, and business services.

David: Okay.

John: So being with a smaller firm, I think I was a little bit fortunate in my career with the team that I was on. They gave me a lot of opportunities to see a lot of different deal aspects, rather than really just kind of being the, the junior guy day one that's-

David: Sure

John: in Excel twenty-four seven. So I think really liked the relationship aspects of that. Unfortunately, had some kind of personal family health issues to where I had to leave and, move back to Raleigh where I'm based now.

David: that's where

John: I ultimately was, hired to join a, a, a metals company called Chimera International based here, not too far from me in Durham, North Carolina. And Chimera, they made-- Their, their history is making metal powders, which I didn't even know metal powders were a thing when I joined the company. But it was great experience, and we were backed by a New York-based private equity firm that really wanted to transform the company through, through acquisition into a specialty materials company. So spent a couple of years there with some really smart folks, really working in all aspects of the business from engineering, new product development, operations, commercial teams, and really got a, a good understanding, I think, a, a base level understanding because at the end of the day, I'm still a, a finance guy, I would say at heart. So by no means am I an expert in the space, but have learned enough about the industry to see how technical certain things are, especially when working with different manufacturing processes, understanding really what's adjacent, what's a good fit with us. and kind of through that process, being on the buy side and acquiring other companies, you know, seeing how-- We saw a lot of privately held companies that we felt like were, you know, maybe not represented appropriately, and understanding really what are the capabilities, the process technologies, and the potential with these companies. 'cause oftentimes it is a, it can be a pretty technical sale. And I think, after a couple of years and maybe a little bit more of a transactional-based environment, and looking back on really how I got started in my career with family and founder-owned businesses where it's a lot more relationship based, felt like there was a gap in the market from some more technical fields that You know, needed some support as they were going through sell-side processes. and, you know, kind of met a crossroads, a couple of years ago in 2023 where, we felt like we could-- we were really well positioned to be able to serve kind of this clientele, very nicely. So I left, Chimera and started TriSend, and we are now a, a boutique investment banking firm, that is focused on, I'd say, w-what we call specialty materials and surface technologies. which really what that means is, you know, anything kind of dealing with You know, critical materials has been a really big buzzword lately. anything dealing with metals, specialty metals, ceramics. and then, you know, where that's kind of related to surface technologies is a lot of those materials are used in different, coatings applications. So-

David: Okay...

John: we're a boutique firm. it's myself. We have, I have two other colleagues now, and we work on every transaction together. Our model is a bit more, we like to get quite involved early on with our clients, several months before they feel like they're really ready to move forward, really to help prepare. So, you know, we're not a really big volume shop. We probably work with four to five clients a year and are focused on getting really great outcomes,

David: Okay...

John: for those few that we work with.

David: And you're doing mostly sell side, all sell side?

John: I'd say we do about two thirds sell side, and the other third being buy side. although the buy side engagements we do are a little bit more longer term based. as an example, there's a, a metals company that's owned by an international family office that, you know, they see an opportunity to really grow their business through acquisition. but at one day they would like to, they would like to sell the business, as well. So we're engaged really as more of a, what I call an outsourced corporate development team that helps them to- really, what's the strategy? How can we create value for this business over the next couple of years? And, you know, really working backwards from how are investors, acquirers going to underwrite this business in the future if we're able to execute this growth plan. So, you know, we-- That's really more of the, the situation that we work on the buy side rather than a, a one-off, "Hey, can you come help us out with this one transaction?"

David: Understood. Understood. Well, and I love your background because you have been, you know, on that classic, sophisticated buy side end of the arrangement. So I'm guessing that you're, you know, when you're representing a smaller family-owned, privately held company and they're looking to sell, you're probably sitting across the table from a, you know, a person in a role like you used to have, I imagine.

John: That, that's right. That's... And we like to think that's kind of how we approach our sell-side engagements, is kind of using that experience that we've had from the buy side, understanding, you know, w- what are the, what's the lens that an acquirer will take to, to view a target's business through? How are they going to underwrite certain aspects of the business? So that way, you know, we can help our clients prepare adequately, but then also make sure that we're telling the story in a right way, that also appeals to folks. I think not only does that buy side experience help, but the, I think the accounting base that I had early on in my career also helps in being able to understand, you know, really the financial statements when certain adjustments need to be made, to where, you know, our clients don't always need to go through a full-blown quality of earnings as well because we're able to handle a lot of that work internally. so I think you, you're exactly right. We try to take kind of our experience and my experience from other stages of my career to almost work backwards with our sell-side clients and, try to get the outcomes they're looking for.

David: Okay. No, that, that makes sense. so what's been the feedback in the marketplace? I mean, you had this, this thesis that there was an underserved segment of the market that would benefit from the experience of you and your team. what's the re- reaction been from the market?

John: I think at least for the folks that we've been lucky enough to come across, it's been quite positive. I think aside from any of the, the transaction aspects, you know, we try to approach things as more of a business partner rather than, you know, the first questions we're asking you are, you know, financials, what's your revenue, what's your profitability, what's your EBITDA level? you know- really coming in maybe a little bit different of an approach from a typical investment banker and, you know, us being able to, you know, really talk about things that an owner is seeing in their business that they've going on from a day-to-day pers- just on a day-to-day basis, but then also understanding, you know, their process technology and their operation and being able to talk to them on that level. you know, coming in not in a blue suit, being able to connect a little bit closer with our clients to show that, no, we... Yes, we're finance folks, but we also, at least have a base level knowledge of what you do in your business. that tends to be really w- really well received, by the folks that we've come across.

David: Okay. And your, market you're focused on, is it mostly metals?

John: I would say It's probably 40% metals, and then 40% more service-based, highly technical coatings.

David: Okay...

John: so when I say coatings, it could be anything from a more chemical to a mechanical, based process. so, you know, couple of the processes being, plating, thermal spray, we'll work with powder coating companies as well. t- typically something where there's a, a material science aspect, but then also an, an application science where those two things come together for a particular component that needs a coating because it needs to behave in a variety of different environments. So-

David: Okay...

John: again, there's some overlap between those two segments for sure. but those are probably, you know, each make up about half of our business.

David: Okay. So let's think back to some of the transactions you've done. what would you say- The feedback from the clients has been. Has it been what you've hoped for? Like, you know, what's the feedback? Do they appreciate, you know, being with a boutique firm and, you know, the personal touch,from the partners? You know, just talk to me about what the client... You know, what do clients say make you all different?

John: I think the, the boutique touch is definitely, o- one of the top items. I think n- number one is definitely, I think, our knowledge in the industries that we're in. but second, the, the boutique feel that we have, and I think our understanding of this process and, you know, everything that it takes to go through it, and how daunting that is for somebody, to continue to run a day-to-day base- a day-to-day job, and keep the company going while trying to execute a succession plan. Those are two full-time jobs. So we w- I think that's why we really, you know, kind of focus on working with a f- only a few clients at once, with the capacity that we have, so that way, you know, all the information requests that are just coming at owners constantly, we try to take as much of that volume off their plate as possible, which is why we spend so much time upfront preparing. So that way, you know, we're in the system, are able to extract a lot of the information ourselves, but also have the knowledge for... You know, sometimes it can be complicated to see the numbers and how does that translate to the business to be able to tell the story of really what's happening. So being able to take that off of the plate, but also be able to position the business so that way acquirers can see, you know, really what's the full potential of this opportunity, I think have been, you know, probably the... Those, I would say, are the three things and the best feedback that we've had.

David: Okay Yeah, 'cause I would imagine many of your sell-side clients, this is the only transaction they'll ever do

John: That is true for all but one of our clients so far when we started Trissend. Okay. so it's,

David: So you can level that playing field, right? Because, you know, they're, the acquirer oftentimes has acquired, has been through this dozens or hundreds of times, right?

John: Right. it's very familiar to them. They probably have a, you know, a process that they go through on their end as well. they're typically, you know, kind of well-oiled acquiring machines. So, you know, you're getting a lot of questions that can be a little bit uncomfortable because you've never had to divulge information. So it's, I think, the pace of which a transaction moves and the types of information that needs to be shared, it's... You know, we provide a lot of guidance there for what's normal, have the ability to push back for maybe when folks might be overstepping. but, you know, just I think having the comfort of somebody in their corner along the way for something that's not familiar is really helpful.

David: Okay. No, that, that makes a lot of sense. What, what do you enjoy the most about serving in your, in this capacity with a company that you, that you founded?

John: I, I would say the, maybe the biggest, you know, m- maybe sort of breath of fresh air that's been rewarding for me is I think the-- And we've been really lucky to have some awesome clients since we started Triscend. you know, I think seeing How much time and emotional energy goes into the transaction on their side, and us really getting to know them throughout the process and then seeing how, you know, f- they're going to be going through oftentimes what's a very life-changing transaction for them. They're now getting a liquidity event that is oftentimes well beyond what they ever really dreamed of for their business, and seeing them being able to take care of their families, and how life-changing that is probably the most rewarding. And then I think with TriSend specifically, we've been lucky enough to, you know, be a little bit more selective about the folks that we work with. And I think one thing that, really puts that into perspective, e- every one of our clients since we have,started TriSend has, also provided a, a transaction bonus to, all of their employees through as a, as really a thank you to all the employees that helped them grow their businesses along the way. you know, I think that's pretty rare in my experience in M&A to, you know, maybe not a transaction bonus for one or two key employees, but for how generous our clients have been and how we see them take care of their employees, I think we're really proud, to represent just genuinely really great people and great, get great outcomes for them when we see them taking actions, like that with their own teams and really their families.

David: Yeah, that's pretty remarkable because, you know, those bonuses they're paying are coming right out of their proceeds.

John: That's right. you know, and coming from a, maybe a, a larger corporate M&A, situ- like I said, that's a little bit more rare where it's a lot more transactional driven.

David: Sure.

John: where I think in the segment of the market and specifically the clients we work with, it's, it shows how emotional it is for them. it's, and that's really the environment that we enjoy working in the most and find the most rewarding.

David: Yeah, I could, I could see that. Yeah,and that leveling the playing field because, I mean, face it,that corporate development person, they're compensated to g- get the deal done for the best terms, for the acquirer

John: Yeah, that's exactly right. And, you know, there's... we have this conversation all the time, but there's so much more to a deal that is beyond just a headline purchase price. there's so many other terms and, you know, different components that can affect really what the final proceeds are, you know, when it comes to working capital, when it comes to escrow holdbacks or potentially having rep and warranty insurance on deals. you know, you're exactly right. A- and especially even more recently, we see, we've seen a lot more folks proposing earn-out structures. So, you know, there's a lot of different things that, and views that acquirers take on things. But,I really like the way you phrase it in terms of leveling the playing field, so that way you kinda, you know, go at things from a more logical perspective, when emotions are really high, and being able to negotiate, really with a sound mind.

David: Yeah. Yeah, I mean, it'd be like a person who sold their first house, and they sold it to a corporate acquirer, you know, who was buying houses and turning them into rental properties, and not having a real estate agent and just trying to do those negotiations themselves. You can just imagine how, you know, how they could be taken advantage of. Talk to me about re-trading. how much, how often have you seen that happening in a deal? and let me call it, sketchy re-trading, okay? 'Cause, you know, there's always... You hear these stories of companies that, you know, they'll, you know, they'll have a rosy LOI. You know, they'll kind of promise the moon knowing full well when they get into due diligence, they're gonna put a haircut on the deal. Do you... H- how often do you come across that?

John: Yeah, we... I'd say it's a tricky question because I'd say often, but then if we're doing our job, we kind of prevent those from getting too far along in the process to where you're really giving them too much attention. so I think if you've got a good M&A advisor and are very thoughtful about the process you're running, I think, you know, you should do a good job of preventing those situations. I can share an example with a recent client. Yeah. Yeah. we... So for each one of our processes, we tend to run a two-stage process. So there's, really a first round offer, which is based on all the information that we prepare, that really serves as, you know, a, a critical- information point to decide, okay, who's genuinely interested and who should we spend more time with, that might be a good fit. And, you know, then you spend a little bit more time together, and you provide a little bit more information for folks to provide a second round kind of best and final offer. well, on, on one of our more recent transactions, we had one offer that was, I'd say, more than 40% north of the next highest offer on our first round.

David: wow.

John: So that right off the bat throws up a, a few flags for us and our antenna's up. Of course, you know, we're excited, the client's very excited. but typically when you've got something like that, you know, you're... One of my first questions is how genuine is this? if it is, then great, let's proceed. But, you know, we start to then supply a little bit more information, have a few more conversations, and then, you know, ask the acquirer to do a few things and, you know, maybe jump through a few more hoops to show us that, you know, their interest level at that valuation is really genuine. to the point where, you know, you can kind of see the amount of time and the line of questioning that's coming for, you know, who's really making the decision on their side of the table? Is this about information gathering, from a competitor to understand a new market? And before we got really too deep,you know, customer information was withheld or were really blind. so things were labeled, you know, customer one, customer two, customer three. but we ultimately got to the point before a, a second round offer to where they then revised to less than half of their initial offer. Whereas, you know, we kind of did a lot of the upfront work with them when we got that initial sense, asked for maybe a little bit deeper of a commitment before we committed, you know, kind of all of our time and attention on them, to where we were really kind of able to sniff out that retrade before, you know, getting to a lot of deal fatigue of putting them in front of our client through multiple sessions, multiple in-person visits, and spending money on external advisors. So y- you know, it's There's a lot of that. and I think i- if you're going down the path with just really one option, I think there's a greater risk of that because you feel like you're clinging to one acquirer a little bit more closely rather than really evaluating the best fit. So, you know, I guess short answer to your question is it's something that we definitely see, but we try to be really thoughtful before to make sure that interest is genuine and, to prevent a retrade really late in the game. now it's something that sometimes there's external factors that make it to where it's just, You know, everybody on both sides kind of expects it and understands it. So as an example, pretty early in my career, not with Tri-Send, but we had a, another, another deal where, kind of through our process, the company unfortunately lost a customer that was about 30% of their profitability. and with customer concentration like that and losing that business, it's pretty reasonable to expect an, an acquirer is probably not going to be at the same valuation. maybe they give you an opportunity through an earn-out to get back to that valuation if you're able to replace the business. But, you know, sometimes there are, just situations and characteristics about a business that, you know, even though retrade is potentially a, a bad word so to say-

David: Yeah

John: but, you know, maybe j- just the valuation changes as more information becomes available and, you know, a business is a living, breathing entity, so, you know, we've seen valuations change, and potentially they're warranted. but that's both ways. It could potentially be, negative to business value, but we've also seen, you know, huge customer wins that, you know, change business value for the positive.

David: Okay. Yeah, it's funny 'cause you don't tend to hear stories about the positive change to, to the value. so what would you s- what would you say to if you got a call from someone and they said, "Hey, we received an unsolicited offer. We think it's a good price. we can't imagine there's anyone else out there." You know, we know we... I'm sure you've heard this line. You've heard the some- "Oh, h- hey, John, we know all the buyers out there and, this is really the best one for us." What do you say to that person? Do you just move, you know, kind of follow their lead and move forward and try to get that transaction closed? Or do you try to push back and encourage them to run a, you know, let you run your process?

John: it's a m- I'd say it's a mix. you know, my first instinct would be to ask a bit more questions about where are they at with that acquirer that's approached them. what stage are they at? What kind of information have they already shared? and, you know, from there, our recommendation, I think, is always to evaluate multiple options. Now, that doesn't necessarily mean, "Hey, you've got to engage us to run a really robust process now." But, you know, a-a-another good example, actually, a, a client that we worked with, within the last two years had this exact situation come up. one of the top acquirers in the industry approached them, was talking in the ballpark of a decent, And valuation that they felt was fair. but really our recommendation was, "Okay, let's continue on with them. We can help you through that process. But also at the same time, you know, we don't necessarily want to You know, run a full auction process here, but let's-

David: Yeah

John: at least talk to the other two to three top acquirers in your industry, because they almost certainly will also be interested and it's not going to hurt, to just see what your other options are. And so we-- The client agreed and ultimately moved forward with that plan and, you know, we kind of ran a, a mini process that was a little bit more informal, but ultimately the acquirer for their business wound up being, you know, one of the other parties that we talked to, and it happened to be an asset that, fit very uniquely in where the acquirer, was headed as part of their own growth plan, and they wound up getting a, a valuation that was, just about thirty-five percent more than what the initial valuation range was. Not only that, but we tend to think the, the culture match of the two businesses was probably better as well. So, you know, e- even though, you know, oftentimes in the industries we work in, there are, you know, maybe what we call serial acquirers that are genuinely interested and will get a transaction done, there's potentially still other options and other better options still out there. But having options is, I think the main point that allows us to, you know, negotiate from a position of leverage rather than, you know, somebody that approached us and feeling the pressure to, you know, maybe be a little bit more, accepting to every ask that an acquirer might have. So at the front end though, you know, we, we'll-- our recommendation will always be to Add other options for you to consider. but-

David: Okay...

John: so we're gonna, you know, try to be a, a, a true partner and give you our thoughts on where you're at with the current acquirer, and if that's, you know, kind of in your best interest to move forward with that one group, we'll be as supportive as we can and, as helpful as we can with that, with those, maybe deal restrictions that our client might place on us that we'll, of course, always, respect.

David: Yeah. No, and that's a, that's a great outcome. Pretty easy to justify your fees when you've gotten them, 35% more than the other deal.

John: And it wound up being the additional value that we added for them, I actually just looked at this last week, was about 14 times the fee,that we charged. So it's,it's always great when you have those scenarios because it's just a, it's just a win-win for everybody.

David: Okay. Well, I, I appreciate that background. Was there anything, I didn't ask you about the business that you wish I had asked you, or d- or did we pretty much cover

John: everything? Well, I'd say m- maybe one thing I would probably add- so o- one of our clients in the metal space, I think one thing that, when I talk about options, one thing that we really try to instill in our clients is it doesn't have to be as black and white of you need to sell the business or not sell the business. And I think being a, you know, the, the boutique firm that we are, every process we do brings a variety of options to the table, and sometimes those options are things that maybe you didn't consider or maybe we didn't even consider. It's just something that somebody else puts forward. So as, as an example, our most recent client, we had options for them to consider that were anything from a full sale of their business, a sale of a majority of their business. We had minority partners, folks that were interested in joint ventures, and then we also had an acquirer that was thinking about completely transforming their business just because of their capabilities to use them, as a captive in-house processor. So I think- that's one thing that we, you know, always try to educate our clients on very early is there's a lot of options to consider, and w- we really try to bring all of those so that way they have a full menu to pick from. That would probably be the only other thing I'd add though, beyond the two-

David: Okay. so, last question. What, what do you wish you knew or y- yeah, let me rephrase it. If you could go back in, in time and give advice to your 22-year-old self, like, what advice might you give with the perspective of, you know, having had a few years pass, since you got out of college?

John: I think, for me, maybe the biggest thing I've learned is, I think for working with the types of clients that we work with, family founder-owned businesses, what I touched on earlier about how emotional of a process this is. And I think, you know, it's something that, you know, ensuring that you're being, you know, respectful to listen to- You know, every objective that the client has, and I think really leading with an approach of education rather than, okay, really numbers driven, how are we gonna sell your business? I think,

David: Okay...

John: working with clients through that emotional rollercoaster that they're on, it's really important to have patience through that and, you know, kind of take a step back, think about things logically, even when emotions are high. So I think, the biggest learnings are really about working, I think, with the type of clientele that we work with, where I think we really now excel through, a couple of the experiences that we've had.

David: Okay. So, if someone wants to reach out to you, what's the best way? Like LinkedIn or email or...?

John: Yeah, we're very responsive. I think, email. Email or LinkedIn we're very responsive to. can shoot us a, a message directly and,we're always, excited to talk to other privately held family founder-owned business owners, you know, whether they're thinking about potentially needing our services or not, just really passionate about these types of situations.

David: Okay. Yeah, we'll put that information in the show notes. but if somebody is now looking, that's John Mosser, M-O-S-S-E-R, with TriSand, right? If they just go to LinkedIn and search that, they should be able to find you.

John: Yep. Absolutely.

David: Well, that is great. Well, John, I really appreciate the time. I really enjoyed the opportunity to meet you, last month at the, the IPMI conference in Orlando. That was a really great event and, and I appreciate your time then and, your time today.

John: Yeah, no, great to meet you as well at the show and, appreciate you having me on. yeah, thanks Dave.