An Interview with M&A Source Member, Ron Edmonds
Ron Edmonds serves as a principal consultant for The Principium Group, Inc. He is a corporate finance professional with extensive experience in merger and acquisition transactions, including due diligence, negotiating, directing other professionals, and planning the integration of operations. Ron has significant experience with the health care, consumer services, financial institutions, manufacturing, distribution, and entertainment industries.
He is a member of the Association for Corporate Growth, M&A Source, the International Business Brokers Association, and the National Association of Landscape Professionals. He holds B.S.B.A. and M.S. degrees in accounting from Oklahoma State University. Ron has been designated an Industry Expert for the lawn maintenance and services category by Business Brokerage Press, Inc. and is a contributor to its Business Reference Guide.
He is a long-time member of the executive board and former vice president of the Chickasaw Council, Boy Scouts of America. He is also finance committee member and former director of The Bodine School, a specialty school focused on high potential students with language-based learning disabilities. He is a deputy to the 2018 General Convention of the Episcopal Church. He has also served on the council (board of directors) of The Episcopal Diocese of West Tennessee.
Hi, Ron, Please tell us about your pre-M&A career and how it led you to doing this work?
Like many of us, my path to becoming an independent M&A advisor was after a career in many related positions. I was pretty involved with M&A from the start, beginning with my time in public accounting for KPMG after completing a degree in accounting at Oklahoma State. I stayed about 13 years, beginning in Oklahoma City, transferring to New York City to work in professional development at KPMG’s executive office, and ultimately transferring to Memphis. After a number of years in the industry, I began consulting. My largest consulting client was the largest lawncare company in the U.S. I worked with them on improving their acquisition process. During that time, I had the opportunity to interact with business brokers and had a mixed experience. If more business owners dealt with professional and knowledgeable M&A advisors, I believed that there would more business opportunities for them. That inspired me to launch my M&A firm – focused on lawn and landscape-related businesses nationwide. It has been a great experience with some ups and downs, but I have thoroughly enjoyed it.
What personal characteristics and strengths have supported your success in this industry?
I believe that I have a very calming influence on clients and other participants in the M&A process. I have lots of experience and that reassures clients. People can be incredibly stressed – understandably so – when they are working on selling the culmination of their life’s work. For example, 25 years ago I had a discussion with an attorney on a deal we were working on together. I was a little agitated he hadn’t gotten as much done on my deal as I had hoped. I wondered how he decided what deal to move to the top of his list. He quietly told me that the project I had him working on wasn’t “ripe” yet. Then he told me that “every deal has its time.” I have learned that he was very right about both those observations. No matter how hard you work, if a deal hasn’t ripened and found its time, it’s not likely to get done. In this case, although there was an agreement in principle, not all of the parties were ready to move forward at that time. They had other pressing matters which were taking precedence. On the other hand, when a deal’s time does come, you had better be ready to do whatever it takes to make it happen.
What is your greatest M&A accomplishment?
Developing a strategy that resulted in a sales price of about 40% above our prediction on a relatively large transaction resulting in a very happy client and a very nice fee. That deal was easy because I had known the seller for ten years, and he always ran his business with the end game in mind.
When we started our business, I was not familiar with the term “inbound marketing”. However, that was the strategy I used. Rather than cold-call prospecting, I focused on techniques to make the phone ring with calls from potential clients. This strategy included basics like publishing a newsletter, speaking at industry events, writing for industry publications, and authoring books. Those techniques really worked well for me. Even in the early days, I was visible enough that people would call me and tell me that they had heard me speak at an event even when I didn’t even attend. Now that is brand recognition!
With regard to the majority of your engagements, do you work as a team, or do you handle things on your own?
I mostly work on my own, but I really appreciate the opportunity to work alongside others. I’ve been able to assemble a network of other firms that I work closely with – one on the East Coast, one on the West Coast, and one in the Chicago area. We support each other in both prospecting and deal execution. And I’d like to have more other firms in my network. I also had a full-time analyst a couple of years ago. He went back to graduate school and now works in corporate development. If the right person becomes available, I will do that again. Most of all, I hope to add a full-time person with a background similar to mine this year. The opportunities out there are enormous.
Do you just do M&A, or do you provide other services – valuations, consulting, etc.?
I do some valuation and consulting work, but my bread and butter is sell-side representation. Since I work in a vertical market, I initially really avoided competing with the established industry business consultants as I expected to get business from their referrals. Despite most providing referrals, a few have encroached on my business. I think they believe that M&A is a lot easier than it really is. We are established and I am not very worried about that competition.
What is the biggest mistake you have made when working on a deal?
I think the biggest mistakes I have made have been taking on clients without being as thorough in understanding their businesses. I have run into challenging accounting issues several times that I should have understood earlier in the process. And we all know that those are compounding problems – it takes longer to address them, which is likely to affect other items beyond the one that really caused the problem.
What are the three most important qualities that you think a good M&A advisor needs to have?
I believe that a good M&A advisor needs to have the right attitude and sincerely want to help the business owners they deal with. They must have the right technical skills. Those can mostly be learned through educational courses, training, and experience, and joining the M&A Source. They also must have persistence. Some deals are going to take time and effort to get completed. It can be easy to get discouraged, but it can be extremely rewarding and satisfying work.
What is your most interesting deal that you are working on today?
This is my year to work in resort communities with projects going in three different ones of them right now. Sometimes those are a bit more work because it may be harder to identify growth opportunities than in the more urban and suburban areas – but I am optimistic about all of them.
How long have you been an M&A Source member and what do you get out of your membership?
I have been an M&A Source member for about six or seven years. I enjoy the conferences very much and get a lot out of them. I didn’t make it to Houston last year, but I am all set for Denver. Like a lot of M&A advisors, I was extremely worried about how things would work out during the pandemic. Having a network in place helped me to see that the M&A world would keep moving along. The pandemic ended up being much less of a deterrent to deal making than I expected. Several times, I have had M&A Source members reach out to me when they were looking for information or insight on companies in my vertical market. I am always happy to serve as that kind of a resource.
As a seasoned M&A advisor, what changes and trends do you see on the horizon that will have an impact on M&A?
Well, I expected to see a deluge of Baby Boomer exits beginning years ago. It really did not materialize as expected. However, now COVID-19 seems to have changed that dynamic and many Baby Boomers are now getting serious about making moves toward exiting their businesses. I also see the business moving faster. The world has gotten comfortable with remote work and remote due diligence. As a result, the bottleneck of coordinating people’s schedules has diminished, and things are getting done quicker. It will continue to be particularly important to use technology effectively throughout the M&A process. Despite how busy we are today, I think it is also important to remember that M&A is a cyclical business. In recent years, the cycles may not have been as dramatic but there will always be fluctuations.
What advice would you give to new people entering the profession?
The most important thing is to develop your personal network and find a mentor. The M&A Source is a wonderful place to build your network.
Please tell us something about yourself that has nothing to do with your M&A career.
One of my biggest hobbies is book collecting – mostly about history and the environment. I am a huge history buff and like to study the history of any activity I am involved with. I should have been a history professor, but the truth is I didn’t take even one single history course in college. I tested out of American History and didn’t take any others. I have regretted that ever since. I expect to write a history book or two if and when I retire.