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An Interview with M&A Source Member, David Dejewski

Tell us about your pre-M&A career and how it led you to doing this work?

Before joining the M&A community, I suspect my career was like the careers of many other professionals in this space. Focus, curiosity, a love of problem solving, and a desire to serve Community was a way of life for me. My core values made a transition into business brokerage and M&A inevitable – though I didn’t know it in real time. I enjoy solving problems, helping people, and keeping our country strong.

I found the M&A and business brokerage world in a unique way. In 2000, I left 9 years of Federal contracting to serve as the CIO for Navy Medical Logistics. I sat on the board representing a nexus between business process, law, and technology. After playing my part in the formation of a joint medical logistics command at Fort Detrick, I was recruited to one of five (5) key leadership positions established to lead a new Title 10 (military) program directed by Congress called Defense Business Transformation. Our mission, inspired by an over-leveraged American economy, was to improve investment decision making behavior in the Department of Defense. I joined my counterparts in the Army, Navy, Air Force, and Personnel and Readiness (P&R) as the Chief for Defense Business Transformation for the Military Health System (MHS) – the fifth of the five positions created. We had the strength of the Anti-Deficiency Act in our corner as the teeth we needed to get everyone’s attention.

My work in Defense Business Transformation gave me an opportunity to hire and interact with smart professionals. The instructions I gave my team were to find an existing decision-making model that got the job done and allowed us to affect investment behavior. We didn’t have the time, the will, or the horsepower to re-invent the wheel. The U.S. commercial real estate investment model has all the core ingredients we needed. We reverse engineered the process, re-labelled everything, and offered it as our (MHS Business Transformation) solution.

I was told by my boss to go break the model. So, I spent the next 4-5 years reviewing, synergizing, and scoring $1 Billion of modernization, enhancement, and development investments with our model – tweaking it as needed. We were not able to break the process, but we were able to send $200 MM of taxpayer money back to the Treasury – despite the politics and power brokers of the time. There were those who were not a fan of my work.

That assignment led to quiet moments at home wondering why I wasn’t using those same investment strategies to serve my family. So, I began investing as a limited partner in commercial real estate in Texas. After a series of CRE investments, a former Goldman Sachs banker helped me understand how to serve aspiring fund managers, sponsors, and operators chasing yield who were interested in acquiring alternative assets for their own portfolios. I opened a management company and a holding company on advice of counsel and began advising clients on commercial real estate (CRE) investment banking matters, crafting pitch books, capital placement, capital structuring (and recaps), capital introduction, and helping prepare clients who are new to fund raising for their road shows.

My father-in-law (and personal hero) had a stroke in 2014. I had the privilege of being his care giver for two years until he passed. I was unable to run my firm and be responsive to his needs at the same time, so I put the business on hold and switched gears. I was elected to serve as President and Board Chairman for a youth focused 501(c)3. That allowed me to take the time I needed and to spend more quality time with my kids. I served in that capacity until the bylaws maximum two elected terms expired and I transitioned out in December of 2022.

In anticipation of getting back into the business of helping business owners, I connected with Transworld Business Advisors, opened my first region, and began working in earnest in June 2022. I’ve since acquired two more regions, have several M&A lower mid-market deals, and have naturally gravitated to the M&A side of our business.

What personal characteristics and strengths have supported your success in this industry?

I like to read. Jack London, J.R. Tolkien, Susan Cooper, and the collective authors under the pen name Franklin Dixon (the Hardy Boys series) were favorite authors of mine when I was a kid. They helped me to frame life as a great adventure – meant to be explored. Ralph Waldo Emerson, Walt Whitman, Henry David Thoreau, Friedrich Nietzsche, and even Charles Bukowski added philosophy and depth to my adventures & spurred me to find meaning in whatever projects I took on.

Today, I read mostly non-fiction. History, finance, politics, accounting, marketing, leadership, mergers and acquisitions – even how to be a HAM radio operator. Each book becomes another tool in my tool kit. These books give me the ability to have conversations with a wide range of people, to understand the world we live in, and to cross pollinate from one domain to another when trying to find solutions to problems. David Epstein wrote a great book titled “Range: Why Generalists Triumph in a Specialized World” that talks about this concept in depth. I recommend this book to anyone curious about expanding their range.

I consider my leadership style to be the results of a storied evolution. I’m a strategic farmer and coach. On the strategy front, I’m naturally tuned to the long game and pattern recognition. Connecting the dots is something I’m good at.

The farmer in me believes that all people will grow if they’re provided a healthy environment, sunshine in the form of strategic praise, and an occasional dose of fertilizer – as needed. One of my favorite things about leadership is helping people and the organization they’re a part of to become the best version of themselves.

The coach in me is both formal and organic. I am a nationally licensed coach for both soccer and swimming and have 30+ soccer seasons under my belt. I’ve also raised two kids and hired and developed more than 1,000 employees. I’ve always been drawn to see people as individuals, a “skill” that Gallup Strengths Finders refers to as “Individualization.” My job as a leader is to understand the strengths that each person or party brings, assemble teams, and help them to optimize for highest and best results.

I pursue my career and life with passion – always balancing paid and non-paid activities with learning, helping, expanding my own understanding. I do more than expected and never settled for where I am or for just getting paid. Scuba diving, flying airplanes, firefighting, emergency medicine, martial arts, starting businesses, reading, podcasting, back country hiking – all enjoyable means to good career and a balanced life.

What is your greatest M&A accomplishment?

This might sound a little strange, but I think the moment that I’m most proud of is when I made the decision to leave what I was doing before. Not the nonprofit work. I love the nonprofit work and I plan to continue doing that. But instead of climbing every ladder as high and as quickly as I possibly can, I decided that my place is serving people and putting my natural talents to work. I’m working with Main Street and lower mid-market businesses and I’m working with private equity, family offices, government… all connecting and facilitating. I can sleep at the end of the day knowing that what I’m doing is creating value.

There’s a whole lot of things that happen during deal creation and deal management, but I really believe that the decisions that we make, especially those key milestone decisions like deciding to join the M & A community and put my skill sets and my passions to work – are probably the most important ones. That has to be my greatest accomplishment.

With regard to the majority of your engagements, do you work as a team or do you handle things on your own?

I’ve never done a single deal on my own – pre or post M&A – and can’t see how that would be possible or even fun. Being part of the Transworld culture, I find that we have a readily available depth of bench that gives me a tremendous advantage in client engagements. When there is something I don’t know, there is always someone willing to help – often without any form of compensation, but of course, we happily co-broker deals with whomever is genuinely rolling up sleeves and sharing the work load.

My local small business community also provides a rich pool of resources to draw from. From attorneys and accountants to lenders, real estate professionals, business development professionals, and planners – my deals don’t get done without connecting with at least a handful of these pros. It’s always a team – both in-house and with external professionals.

Do you just do M&A or do you provide other services – valuations, consulting, etc.?

I have a rolodex full of capital providers. Coming from the commercial real estate (CRE) investment banking world, I tend to be quick to see financial engineering opportunities and understand how to introduce and structure capital. Since the recent passing of the Brokerage Simplification Act, I’ll need to avoid syndicating capital for any projects I’m involved with as an intermediary, but I often find myself consulting at arm’s length on building capital stacks, strategic approaches to financing, risk identification and mitigation, and structuring sales packages so they are more attractive to the buy side.

What is the biggest mistake you have made when working on a deal?

I think my biggest mistakes up to this point have come from not being discerning enough from the beginning of each engagement. There’s a lot of deals that are just best not done at all. Sometimes I want to get involved. I want to help people. I want to do something to improve people’s lives. So I get involved sometimes in these distressed deals.

Distressed deals can be a heavy lift and they don’t necessarily offer a very good financial return. As a matter of fact, a lot of times they don’t. It’s not a case where risk always equals a greater return. Sometimes distressed deals are beyond saving.

It’s hard to tell when a deal isn’t worth saving, but when you do come across one of those, sometimes it’s better to walk away. My biggest mistake has been not walking away when I probably should have.

What are the three most important qualities that you think a good M&A advisor needs to have?

I started this interview with a few qualities I believe are important & were instrumental in my own journey into M&A: focus, curiosity, a love of problem solving. I don’t think my answer would be complete without including service, ethics, and motivation.

This business produces a lot of Dopamine. Ask any “deal maker” about the high that we enjoy right after the final closing documents are signed and we put a deal in the win column. The car ride home is a smile for miles.

We feel it again in the retelling of the story, in the acknowledgement we get at company meetings and conferences, and in the deal tombstones we might collect and revisit later. Dopamine is powerful, it can be addicting, and it can be a distraction.

I believe one of the most important qualities of a good M&A advisor is the ability to reflect and recalibrate our internal compass. Despite the distractions, we serve a critically important role in the health of our nation and in the lives of the people affected by the transactions we facilitate. I’m not saying don’t make money or get excited or even distracted from time to time, have a great time! But those who find ways to come back to the things that really matter will not only last longer in any business, but will sleep better at night and make a bigger difference in the long run.

What is your most interesting deal that you are working on today?

I have a 132-year old lumber operation that comes with $1.5MM in real estate, $1.7MM in inventory, and an EBITDA that is North of $800k in 2022. What delights me about this business is the history.

In the attic of this business – a business that survived every conflict, every economic bust and boom, and every natural disaster this country faced in the 20th and now 21st century – are boxes full of slips of paper they used for receipts. Every receipt represents some building project in the region. Those bits of paper and the minds of the employees – some of whom have been there for decades – one of who is second generation and started working there at age 16 – contain the literal records of the building of this region. The construction of the buildings remains unchanged and still strong since the days of horses and wagon carts. This business embodies the history of the people and industry of region in so many ways. I find it mind expanding to consider.

How long have you been an M&A Source member and what do you get out of your membership?

I’m a new member of M&A Source as of November 2022.

As a seasoned M&A advisor, what changes and trends do you see on the horizon that will impact on M&A?

I don’t think of myself as a seasoned M&A advisor. I could make a case that I have seasoning in areas that affect or result from M&A advisory, but I’m new to the title. Changes and trends are something I have an opinion on.

The big change for this year will be the implementation of the Brokerage Simplification Act. I expect we’ll be talking about this for a little while. 16 years in the making, those behind making it happen deserve our thanks and a good solid year of discussion.

The trends are concerning. Heavy handed government tops the list. Small and mid-market businesses are whiplashed and choked by new legislation, weakening social cohesion, and disincentives to an honest day of work. Lockdowns, government injections (and ejections) of capital, inflation, deteriorating relations with trade partners and suppliers, polar electrification of our speech and behavior, and a slide towards a war economy – are all conspiring to make it harder to be in business. At the same time, these pressures are also driving W2 employees to take up the entrepreneurial lifestyle in search of greener grass.

Natural trends like the aging of our baby boomers are making trades, rollups, other M&A transactions more likely. It’s hard to drive a single town where the passing of the small business baton isn’t a part of the landscape.

What advice would you give to new people entering the profession?

Force yourself to adopt good habits early. If money is the only draw, it’ll lead to shortcuts and not serving our clients the way we should be serving them. Make the time to do things the right way. Take care to make friends in the industry and hold one another accountable. Get involved with the industry at whatever level you feel comfortable. Go in with a goal of elevating our industry and serving to the best of our ability. Our next reward is only one happy client away. Make them happy.

Please tell us something about yourself that has nothing to do with your M&A career?

I had the opportunity to swim with Navy SEAL Team 4 when I was still active duty. Every year they used to host an even they called the Vieques Swim. The swim traversed 8.2 miles of open water between Vieques Island and Puerto Rico.

A former youth competitive swimmer, I was one of about 300 to try out and qualify through all 6 qualifying swims. 30 of us started from Mosquito pier at 5:30 AM off a Navy YFU. 5 hours and 43 minutes later, I washed ashore, barely able to stand, on All Hand’s Beach in Roosevelt Roads. My partner, the first woman to complete this swim and a Navy LT pediatrician, and I finished 15 out of 30. The swim required 9 months of training, suffering two weeks of sleeping on my stomach due to the blistering sunburn I got from the Caribbean sun – despite the squall and heavy winds.

I remember swimming over schools of hammer head sharks, the floaties in the water that kept us company, and the grit from the sand we failed to remove from the BBQ sausages the wind had blown off the grill when we landed. I believe everyone should try something that others (and often we tell ourselves) is impossible.

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