The Wise Exit

Prof. Joe O'Mahoney - E52 | CASHING OUT M&A PODCAST

00:00:00:14 - 00:00:12:20
Prof Joe O'Mahoney
Because a firm with five founders who have, you know, 300 years of experience between them is not a sellable firm because, in effect, you're buying the people and you're going to get a very low multiple.

00:00:12:23 - 00:00:35:21
Todd Sullivan
Welcome to the Cashing Out podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, my guest is Professor Joe O'Mahoney, an industry specific business consultant who built and sold his own company in 2007.

00:00:35:23 - 00:00:58:07
Todd Sullivan
Since his exit, Joe has been using his personal experience in M&A to help business owners successfully grow and exit their boutique consultancy businesses. This is a unique niche and the type of M&A expertise we love at exit wise. Over the years, Joe has provided consultancy for many of the largest consulting firms, including McKinsey and Company, IBM, Deloitte and Bain.

00:00:58:09 - 00:01:23:13
Todd Sullivan
And today he is the professor of consulting at Cardiff University and Advisory Board member at several high growth businesses. In this episode, Joe shares how his personal exit helps improve his consultancy for his clients, how professional service firms are valued, what great companies do to prepare for an exit, and how AI is disrupting the M&A world and what we can do to leverage it.

00:01:23:15 - 00:02:00:10
Todd Sullivan
I hope you enjoyed my conversation with Professor Joe O'Mahoney. Joe, really appreciate you being here. I've been waiting on this interview for a while. Wanna just have this conversation with somebody, not only somebody that's built a business and had an exit, had great learnings from it, but then you've taken that experience and brought it into a very niche market, and that's what we love at Exitwise, like expertise into really niche markets of understanding how you use your experience and help our fellow founders in this niche market not only grow their businesses but also exit.

00:02:00:12 - 00:02:16:03
Todd Sullivan
I think that's going to be a fascinating conversation because each industry has its own nuances right, that founders really need to understand. So, you know, I was as you know, we are booked for the year. In fact, Mark Cuban had this spot and I bumped him just to get you in.

00:02:16:04 - 00:02:17:18
Prof Joe O'Mahoney
You charming man.

00:02:18:00 - 00:02:20:19
Todd Sullivan
Thank you for being here, Joe. I really appreciate it.

00:02:20:21 - 00:02:41:14
Prof Joe O'Mahoney
Todd I unfortunately, I listened to your podcast, so I do know that you say that all your guests, but I wouldn't be offended. Thank you so much for having me. As I say, I listen to the podcast. I think you do a fantastic job in sharing your knowledge and it's, you know, it's very valuable knowledge. So it's a real honor for me to be here.

00:02:41:16 - 00:03:01:08
Todd Sullivan
Thank you. You know, I got to say that as frustrating as it is for Mark sitting in the green room every week, I just saw him on Billions. I don't know if you watch that show, but it is one of my favorites. And I reference it often when it has to do with M&A and selecting your M&A experts.

00:03:01:13 - 00:03:24:08
Todd Sullivan
And I equate that to how we find the best M&A experts for our founders. And when we identify them, often we will say, how certain are you that you are going to deliver this outsized outcome and you get this look of I am not uncertain and it's because they know something that others don't. So I didn't mean to be jump on that.

00:03:24:08 - 00:03:30:14
Todd Sullivan
But, you know, seeing Mark on that show last night, I was like, wow, I hope Mark is okay with us doing this.

00:03:30:19 - 00:03:38:07
Prof Joe O'Mahoney
I think you were just mentioning him. So at some point he'd give you 10% as a as a marketing fee. But you never know.

00:03:38:07 - 00:03:56:09
Todd Sullivan
You never you never know. Our fingers are crossed. He'll come out of that green room someday. Yeah. So, Joe, I think one of the best ways to start right is your background and how you got into to entrepreneurship. You were doing some consulting, build a business, have an exit. Maybe you could give us that. Yeah, to start.

00:03:56:11 - 00:04:18:00
Prof Joe O'Mahoney
Sure. So I'll keep it short and sweet. So I wanted to be Indiana Jones. I wanted to be an archeologist. So I. I got into Oxford to do ancient history, and then surprise, surprise, I couldn't get a job afterwards. So my dad, who is a very supportive man, basically said to me, Joe, you're not going to get anywhere.

00:04:18:04 - 00:04:44:11
Prof Joe O'Mahoney
I mean, I wasn't in the top. You know, there's only a handful of those types of archeology around. And I wasn't bright or handsome enough to join that club. So my dad said, Look, go and do something business. And so I did a master's in industrial relations, and basically because history had taught me how to write. I came top of the course, which meant I got funding to go and do my PhD.

00:04:44:13 - 00:05:13:04
Prof Joe O'Mahoney
So I came out of my PhD and although I loved, I loved teaching, I loved learning. And I'm a big, big fan of evidence based advice. I wanted to get some real world experience. So I went into corporate consulting and spent about seven years working my way up various greasy poles. My last big project was launching three, the mobile phone company where I was head of their internal consulting team, really creating the business architecture.

00:05:13:04 - 00:05:31:09
Prof Joe O'Mahoney
Anyway, basically at the end of that, I was knackered. I was so tired. I was doing six weeks, you know, 14 hours a day. And so I thought, well, stuff this, I'm going to go to academia. And I did and I loved it. I loved the teaching. Obviously you take a massive cut in your annual salary, but I got bored quite quickly.

00:05:31:09 - 00:06:03:17
Prof Joe O'Mahoney
I was using these long days, things happening quickly and you don't get that in any university, unfortunately. So I started a company I got a patent on a and this is going back to 2002, 2003. I got a patent on a a locker to charge mobile phones and it had various technology in it interest we patented. There were no competitors at the time and we started building these things called buzz boxes, where you, in effect, locked your phone in.

00:06:03:17 - 00:06:21:11
Prof Joe O'Mahoney
It got a charge. And if your phone got a message, you got a vibration on your key fob to let you know that someone was calling you. So it was fun stuff. I started it with an old school friend of mine. We grew the firm. We had an exit. It wasn't. It certainly wasn't in the tens of millions.

00:06:21:13 - 00:06:43:04
Prof Joe O'Mahoney
But I learned a fair bit in terms of what, what to do and what not to do next time, then what's been happening throughout this period and has continued to happen is that my friends, who I left in consultancy, often when bumped up against partner left and started their own firms and started to come to me for advice about growing a consulting firm.

00:06:43:08 - 00:07:04:11
Prof Joe O'Mahoney
And it's what I specialized in. When I came to academia, I was researching, writing and teaching about management consultancy, so they came to me for advice and I realized there was very little and you know this there's a lot of bad advice out there and there's very little evidence out there. So I thought, Well, I'm going to dedicate myself to finding out what works.

00:07:04:13 - 00:07:39:13
Prof Joe O'Mahoney
So since then, I've been specifically focused on boutique firms, how they grow and the challenges they face, and how to overcome those challenges, especially those inflection points that I've heard you talk about, you know, sort of on the S-curve. And from that I have built my own practice. So I'm part time at the university three days a week, and I do two days a week sort of consulting where I advise professional service firms specifically and most commonly management consulting firms on growth and access.

00:07:39:13 - 00:07:48:22
Prof Joe O'Mahoney
I don't deal with a transaction myself, but I help get them in shape, find a good adviser, and hopefully share some of the lessons that I've seen over the last 15 years.

00:07:49:00 - 00:07:55:09
Todd Sullivan
Thanks for sharing that. I'm feeling like I could have been looking at Indiana Jones here, right, if the career path went a little bit differently.

00:07:55:11 - 00:07:59:04
Prof Joe O'Mahoney
Carter Border. Indiana Jones.

00:07:59:06 - 00:08:30:10
Todd Sullivan
So what I think is interesting is you glossed over building intellectual property, getting patents, building a company around, getting a product market fit, creating sales and selling a company. And we often see our guests will say, Oh, you know what, I didn't make $1,000,000,000 and I'm not living in the French Riviera. And somehow discounting the amazing effort and success you had in this entrepreneurial journey and frankly, that's what we're about.

00:08:30:12 - 00:08:52:17
Todd Sullivan
You even mentioned there are things maybe you would have done differently. Definitely I would. I would love if you would back up a little bit. We have plenty of clients that come to us that have intellectual property. In fact, there's one that is just amazing right now, and yet the business case around that IP tends to be difficult from a startup perspective, particularly in health care.

00:08:52:17 - 00:09:07:14
Todd Sullivan
But you were able to commercialize this in some way in product form and take this to an exit. So I'd love to hear, can you take me through how did you decide to exit? How were you approached? How did you go about it? And then maybe some of the mistakes?

00:09:07:14 - 00:09:32:09
Prof Joe O'Mahoney
Yeah, Yeah, sure. Well, I can talk for days about the mistakes, but I guess, you know, you learn from the mistakes and that's that's, you know, a lot of advice I give to my own clients is not to do what I did. And so we got to a stage where we were selling these books or leasing these books boxes and the technology worked and people were interested in terms of the intellectual property.

00:09:32:11 - 00:09:59:16
Prof Joe O'Mahoney
It's it's obviously very different going down the patent route than is, you know, the type of intellectual property you get in. Consulting firms will typically be a method or perhaps even just a database of clients. And it is really, really hard stuff to protect legally. And I would encourage most consultancies, I'm talking about most of them in all of them, and not to bother down the, you know, perhaps go to the trademark, don't try and get a patent around any of this stuff.

00:09:59:18 - 00:10:20:09
Prof Joe O'Mahoney
Number one, patent lawyers are really, really, really expensive. Yes. And it's an easy way to burn through 100,000 if you're an entrepreneur trying to protect your property. And then, you know, if as happened, someone takes your idea and starts, do you then in a position say, well, do I want to spend a quarter of a million on patent lawyers to take this to the courts?

00:10:20:09 - 00:10:42:04
Prof Joe O'Mahoney
Or if it's a big firm, they'll just drag it out until you're bankrupt? We avoided that, but it was interesting. I ended up we did a brief spell on Dragon's Den in the UK. So the same thing is as the US, except perhaps a little bit more. A different accent, perhaps less.

00:10:42:04 - 00:10:43:04
Todd Sullivan
Mark Cuban ish.

00:10:43:09 - 00:11:14:07
Prof Joe O'Mahoney
Yeah, yeah, less, I guess. Less aggressive. It's more sort of cups of tea and passing the scones around. But why I went on that and everyone was obsessed about the of the intellectual property and asked you know, really good questions about it. But actually what we found and what I find with consultancies when they're growing in a lot of firms when they're growing is actually first mover advantage or even second mover advantage is incomparably value valuable rather than looking backwards, what do we own?

00:11:14:08 - 00:11:32:19
Prof Joe O'Mahoney
How can we protect it? It tends to stifle innovation. So when we actually sold the company, it was actually a guy I met in the pub. I was having a pint with my one of my business partners and we met this guy and got chatting and he was looking for a company in this area, something aligned to mobile phones.

00:11:32:19 - 00:11:56:21
Prof Joe O'Mahoney
He'd been very successful in the mobile phone area but was looking to diversify. We didn't go through any formal process. We didn't have any advisors other than our dads and each other. And so we ended up selling sort of on on a handshake and a couple of beers and it went through and we did, you know, we more than covered our costs, put it that way.

00:11:56:23 - 00:12:23:07
Prof Joe O'Mahoney
But, you know, looking back at perhaps a bit more advice, perhaps we should have gone down the private equity route and really got to scale before doing this. When I look at what the buyer has done with our intellectual property, they've done really, really well out of it. And I think we were a bit scared to go down the VC or the PE route and I think maybe if we'd done that instead of selling, we could have done better out of it.

00:12:23:07 - 00:12:30:21
Prof Joe O'Mahoney
So I guess there's lots of lessons there that I carry on, you know, above and beyond. I guess what my research tells me.

00:12:30:23 - 00:12:56:00
Todd Sullivan
You know, it strikes me as you're your consultancy, you must be evaluating talent all the time in these firms and how do they grow that talent to increase their own value. And when you're building a company, you got to look at yourself. Do I have the team to take it the next step? You're saying I should have gone VC or or PE, but maybe you found the right group, the one that was able to take it to the next level.

00:12:56:05 - 00:13:11:22
Todd Sullivan
Yeah. And I feel like, you know, that is part of your entrepreneurial legacy, right? Things die on the vine all the time. So to have it be successful later, I think that's a huge win, right? Money is one thing, but building something of real value contributes intensity because.

00:13:12:01 - 00:13:26:04
Prof Joe O'Mahoney
You know, every time I go into an airport or a train station now I see, you know, I see the model and I see the the and I think, yeah, you know, I had I had a small amount of impact on the real world, which I can is important, at least for my students.

00:13:26:06 - 00:13:35:22
Todd Sullivan
That's great. Can I ask, when you structured the deal, was there cash up front or did you structure and earn out where sales had to continue? How did you think about that?

00:13:35:22 - 00:13:58:12
Prof Joe O'Mahoney
It was all it was pretty much all upfront. And so the guys had they were much bigger than us. They had something that they was ready to go. They genuinely wanted to take our product, take our intellectual property and exploit it. And they did that really, really well. I think there was maybe a three month overlap where they kept us on to ask questions, you know, But a lot of that was really about design.

00:13:58:12 - 00:14:08:14
Prof Joe O'Mahoney
Where's the file and who do we speak to about this and that, You know, that went on for a year or so, but it was unusually in these situations, it was all cash up front.

00:14:08:16 - 00:14:30:00
Todd Sullivan
Okay. I mean, that's that's great. A lot of our founders come and ask for that ideal situation, right? I want cash out. I'll have a little transition, but I'm done. So congratulations on that. I think one of the things I really wanted to talk to you about is that how you use that experience, right? You said, Hey, I can talk to founders about what not to do on the exit.

00:14:30:02 - 00:14:55:10
Todd Sullivan
I know you're not necessarily part of the exit team yet, but what we see is services like yours, particularly in very niche categories. If you can help those businesses grow in a certain way and be ready for exit boy, when they come to us, the job is so much easier. Maybe you could talk about like what is the process when you're working with a client who has, you know, an exit to three years out on the horizon?

00:14:55:12 - 00:15:15:21
Prof Joe O'Mahoney
Yeah, sure. So, I mean, I start off, so if we take that scenario, I start off I've got as a lot of advisors do, I typically join as a as an advisory board member that's focused on growth and exit. I start off with a deep dive. So I have a 300 question questionnaire which people groan at when they see it.

00:15:15:22 - 00:15:33:12
Prof Joe O'Mahoney
Number one, it allows me to get a really deep understanding of the company and the strengths and weaknesses and what it needs to do to maximize its value. But number two, it's a good settlement because a lot of founders and you know, this will think that they struck gold, they've got this wonderful company and it's ready to sell.

00:15:33:14 - 00:16:03:12
Prof Joe O'Mahoney
Just by going through that process of answering questions. They'll realize that actually, you know, they might be really strong in some areas, but some areas they have paid no attention to, They weren't even visible. And so it's about those known unknowns, but also the unknown unknowns. And so that questionnaire helps. And so what I do then I get the questionnaire I produce, I've got sort of these and you would have something similar, I guess, all that all advisors would these big levers of growth and company value.

00:16:03:14 - 00:16:27:22
Prof Joe O'Mahoney
And so I put it into the model and then I generate a set of recommendations which ends up as a plan. Throughout this, obviously, you're discussing with the owners and the CEO about about what their priorities are, what's worked, what hasn't worked. But what you want to end up with is a plan for maximizing value over a specific time frame and a discussion around the investment it's going to need in order to achieve that.

00:16:28:00 - 00:16:51:07
Prof Joe O'Mahoney
Sometimes during that conversation, you, the founders or the owners realized that actually maybe they don't want to sell. Maybe their eyes have been open to the opportunities of private equity or even as as has happened recently, taking over another firm instead. And so it's really they're getting to know you thing and once that plan is established, I do two things.

00:16:51:07 - 00:17:16:21
Prof Joe O'Mahoney
One is holding them to account. Are you focusing on the right things? And if not, why not? And number two is holding their hands through that process, because, as you know, those two years coming up to sale, the founders are inundated. They can take their eyes off the ball. They have all types of existential crises. And I'm really there to say, you know, number one, here's a set of templates that you can use to ask the right questions or structuring the right things.

00:17:16:23 - 00:17:41:04
Prof Joe O'Mahoney
But more importantly, it's reassurance. You know, saying you are doing the right thing, stick to the plan. Remember what we said and and really reassuring them about giving them confidence in what they're doing because very often it will be people's first rodeo and they really want someone to bounce things against and say, yes, this is right. You can you can feel confident in doing this.

00:17:41:06 - 00:18:05:06
Todd Sullivan
Joe, I love the beginning, the questionnaire, right? That 300 questions of begrudgingly founders might say, oh, that's going to be a lot of work. It's nothing compared to due diligence that they will go through in any kind of sophisticated M&A process. I love that you get that up and allows the management team or the owner to really question, Oh, wow, these are the things I'm going to need to think about.

00:18:05:06 - 00:18:32:07
Todd Sullivan
In fact, what I love is I think you've incorporated some of that into the valuation calculator that you've created on your site. And we also have a valuation calculator, but I think yours is it's very specific to your industry. I was reading through some of the questions and what we've tried to do. We put one on our site and we're trying to be be specific for over 300 different industries and that is challenging and we're getting there.

00:18:32:12 - 00:18:56:05
Todd Sullivan
I love your your focus and the questions and how you ask them are very focused for your niche and made me think a lot about your niche. So I would I would encourage people to check that out on your site. So where I'm going is that your industry boutique consultancies has unique methods for growth and exit, and so you are the expert in this.

00:18:56:05 - 00:19:01:07
Todd Sullivan
And so I would love to hear more about how this industry is just so different. Cool.

00:19:01:07 - 00:19:21:19
Prof Joe O'Mahoney
Thank you. Thank you. So, you know, occasionally I'll put things up on LinkedIn and people say, well, actually this Joe, this isn't just consultancies, is every company. These you know, if you're talking about the marketing funnel or you're talking about finding great people that you know find, but consultancy and professional service firms are different generally for two reasons.

00:19:21:19 - 00:19:48:06
Prof Joe O'Mahoney
One is that they are what is called a credence good by economists and a credence good is a good that you are buying where the seller knows more than you about what's no and that and you think of doctors, think of accountants and lawyers, you know, management consultants. And that means that there are very high levels of trust required to buy.

00:19:48:07 - 00:20:12:12
Prof Joe O'Mahoney
So you'll often get these guys and I'm sure you have seen them in different areas, but you get these guys in pretty cheap suits, promising to scale your business to, you know, $1,000,000 or more in three months. Yes. And in effect, most of them are selling a marketing funnel. Now, marketing funnels don't work very well for consultancies because trust is so important and there's only so much work you can do to build trust.

00:20:12:12 - 00:20:32:06
Prof Joe O'Mahoney
The built in a digital funnel and a lot of it is still relationship based and that doesn't mean that it needs to be the founder, but it means that the partners need to be able to build relationships, build trust and become that trusted advisor, someone that you would go to. You're happy to spend the money. And in fact, sometimes high costs are an indicator of high quality.

00:20:32:08 - 00:20:47:16
Prof Joe O'Mahoney
If you need brain surgery, you're not going to look for the cheapest brain surgeon that's out there. You're going to look for recommendations, you're going to look for testimonials, case studies and all the rest of it. So it's a credence good, which means it's a different type of firm, a different type of organization to many of the companies.

00:20:47:20 - 00:21:15:05
Prof Joe O'Mahoney
And as a consequence of that, and supporting that is the fact that there is no tangible asset. So, you know, most consultancies will say, well, people are our greatest asset. Well, to be honest, if that was true, no one would buy because people could walk out the door. So there needs to be something beyond the people and it's usually stuff that can't be protected is your reputation.

00:21:15:05 - 00:21:35:11
Prof Joe O'Mahoney
It might be your methods, you might have some intellectual property around, you know, your marketing system, but it's not stuff that can be protected. And so consultancies compete in two markets, really. One is for the clients in terms of getting the money through the door, but the other one is really their brand, their people, their values, their culture.

00:21:35:13 - 00:22:18:08
Prof Joe O'Mahoney
You know, you can see this in companies like McKinsey, Bain, Boston Consulting Group. They spend a huge amount of time and effort molding the right people in the right way doing this mentoring relationship so that you get highly skilled people that can have that conversation with clients. So I mean, a lot of the stuff isn't unique to consultancy, but certainly when it comes to growth and, you know, forming the right people, they're building the systems and processes that allow you to have an asset in the firm when you haven't got products or software to own, that type of stuff becomes quite important to maximize your value if your consulting firm got it.

00:22:18:08 - 00:22:41:11
Todd Sullivan
I think what resonated with me was, was trust right? And what I love is you can at the beginning, you could instill trust by saying, I've been in your shoes, right? I have built a business, I have exited a business. I knew what it took to grow a business. And so that credibility probably lends itself very well in the early days.

00:22:41:13 - 00:23:11:21
Todd Sullivan
And then as you put wins on the board, clients having great outcomes, great performance, speaking highly of you, that trust builds and builds and builds. So I can see how when you say intellectual property, you will be building that reputation really is your IP over time and how valuable that is and how you go about leveraging it. Can I ask when your clients get to that point where the exit is really, really on the horizon, how do you value that type of intellectual property?

00:23:12:00 - 00:23:37:23
Prof Joe O'Mahoney
Yeah, I mean, it's a tough call and to quote you from earlier, you need to get under the floorboards. And that's something that most sellers aren't prepared for. The level of detail that of good due diligence will look at. And this is especially so in consulting firms, because there isn't a product and there isn't software, there isn't a thing, you know, for people to go and inspect, you know, how good is this product, What markets can we sell it and all the rest of it and is a lot more subjective.

00:23:38:01 - 00:24:00:15
Prof Joe O'Mahoney
And so what you what you have and don't get me wrong, intellectual property is crucial, but it's just reframing that in terms of away from, you know, patents and trademarks and copyright and the old stuff that actually works for your firm. And so I typically my advice for a client is, number one, do you know your market? Do you know your buyer?

00:24:00:17 - 00:24:34:07
Prof Joe O'Mahoney
If you know those two things, then do you know your service? Have you commodified it yet? Have you standardized it? Do you have something that is taken out of the heads of the founders of the owners, and is then codified such that junior people can follow it? Because a firm with five founders who have, you know, 300 years of experience between them is not a sellable firm because in effect, you're buying the people and you're going to get a very low multiple consulting firm multiples at this size sort of boutique level.

00:24:34:09 - 00:24:44:18
Prof Joe O'Mahoney
And and that would be between 50 to 500 people are typically between eight times seven, eight, nine times EBITA.

00:24:44:19 - 00:24:46:23
Todd Sullivan
So, yeah.

00:24:47:00 - 00:25:24:06
Prof Joe O'Mahoney
Obviously the more you can build a system that produces, you know, a steady pipeline of clients, that produces a steady cohort of great, well-trained people that can service the clients and can generate that money like a machine is harder to do in a consultancy again, because you know, because of the the trust relationship is so important, the higher that the multiple is going to go up and what you're getting now more and more because the cost of software and data analytics and AI has collapsed over the last five years, you're getting more and more consultancy, say more or less.

00:25:24:06 - 00:25:42:23
Prof Joe O'Mahoney
And we've got we've got this template, we've got this process. Let's see if we can turn it into software. And then then you start to question what type of firm is this? Do we want to put it in the software category where we're going to get a multiple of 20? That's a massive risk and you might need private equity to get you there.

00:25:43:01 - 00:25:49:02
Prof Joe O'Mahoney
Or do we stick with our bread and butter and still be in the consultancy category?

00:25:49:04 - 00:26:10:04
Todd Sullivan
Yeah, I think I think I really understand it. This idea of product positioning, the process that you create, that you really hone, that is essentially an engine that other maybe employees or new hires can step into. So it isn't just the five guys that know the secret sauce. Yeah. And so it is a system that you've built, it seems to me.

00:26:10:04 - 00:26:33:16
Todd Sullivan
I'm wondering how brand are you able to kind of brand that over time based on reputation? And now I think one of the most fascinating things is, you know, how much of your business could be software and how is it disrupting that? Yep, I would love if you don't mind, just educating our founders around how you see I really disrupting service based businesses like this or consultancies.

00:26:33:18 - 00:26:56:23
Prof Joe O'Mahoney
Yeah it's it's it's really interesting now for a long time I mean law has already been disrupted. So if you look at you know and any of us can go online and get a will now and I that's just, you know, basic access to the knowledge. And so the legal industry has already been disrupted that they rates. I lived in a house with a load of lawyers when I was at Oxford or would be lawyers.

00:26:57:01 - 00:27:22:02
Prof Joe O'Mahoney
And incredibly, they're all, you know, scraping around trying to find decent work apart from the one that went into merger and acquisition law. And so technology has disrupted some professional service firms. Some are slower to be disrupted than others because they are less contained. So with the law, if you think about the body of law, is actually quite a self-contained unit.

00:27:22:04 - 00:27:49:23
Prof Joe O'Mahoney
It's these very fixed ways of changing. You know, the Senate and the House of Representatives needs to pass some legislation in order to change the law. Now, in medicine, it's slightly less self-contained. You know, diseases mutate, viruses evolve, and so you've got a less contained system, but is now the state where it can produce better medical prescriptions than doctors can in many cases.

00:27:50:01 - 00:28:11:15
Prof Joe O'Mahoney
Management consultancy. Is that a step further? And I'm not saying that organizations are more complicated than the body or more complicated than law, but they are less, much less self-contained. So, for example, if you had a room of a thousand consultants and you said, Hey, listen, my supply chain is less effective than it should be, you're going to get 100 different ideas about what to do, methods to solve it.

00:28:11:17 - 00:28:34:00
Prof Joe O'Mahoney
And the only reason that is, is because consultancy is much less of a science than medicine or law Consultancy is one of the last professions that is being disrupted. And for years no one thought it was going to happen. All of a sudden we've got lambs and and we've got lots of different types of AI. So, you know, there's there's been a great data analytics stuff out there.

00:28:34:00 - 00:28:42:16
Prof Joe O'Mahoney
There's predictive software. That's the whole madness of crowds thing is all great. But the thing that has made it most visible are these AI chat bots.

00:28:42:18 - 00:28:46:13
Todd Sullivan
Joe When you say LPM, you're talking language models, right?

00:28:46:15 - 00:29:19:20
Prof Joe O'Mahoney
Yeah, look at large language models of the chatbot for and Baade and their ilk and they have been obviously they've been trained on billions of points of data and they are giving, to be honest, they're giving answers to questions that are continuously getting better, that are as good as most juniors could give. Now. Sure, I've just trained up a bot using my own writing, so I've had published over the years, I've published about a million words on management consultancy.

00:29:19:22 - 00:29:48:05
Prof Joe O'Mahoney
I've taken all of that and trained the bot up on it and I gave it to a whole load of very skeptical CEOs on LinkedIn to to play with, and they've all come back saying, Well, and I'm not, you know, I'm not selling this, this is really an experiment. But if he can do that with a professor who spent 20 years studying the consulting industry, maybe the potential is to go beyond the consultant and get to some advice from partner level.

00:29:48:07 - 00:30:05:16
Prof Joe O'Mahoney
And that's really quite worrying Now with the big firms. You know, if if you're a big client, you're not going to go to a chat bot for a strategy on should we launch this product in South East Asia, You're going to get some McKinsey consultants behind it. Those McKinsey consultants are probably going to be using AI in order to answer that question.

00:30:05:21 - 00:30:31:18
Prof Joe O'Mahoney
So sure. Types of implications for brand for cost, The dependency on some of these models and also for the the pyramid structure, you know, the big leverage structure of a consultancy shaped like a triangle has been the basis of consulting. C for 150 years. And all of a sudden, if you're getting rid of a lot of juniors, you're changing the shape of that model, which has again, a lot of implications.

00:30:31:20 - 00:30:51:01
Todd Sullivan
You know, just a couple of things. That model, right, is similar in the investment banking world where you have the juniors doing a lot of the work. And what we've seen is that kind of that is the industry agnostic model dump all of the the modeling on the juniors who don't really know any of the businesses really for, for real.

00:30:51:03 - 00:31:13:09
Todd Sullivan
And I think that there is an enormous opportunity for those bigger firms to use AI and get real insights and offer of the right marketing materials for businesses. That's why we love working with boutiques because they are people like you doing the actual work, presenting the businesses as they should be presented to the right buyers, not lists that have been scraped by juniors.

00:31:13:12 - 00:31:38:13
Todd Sullivan
Yeah, I want to jump back because you made the comment your classmates, all of that were trying to be attorneys maybe struggling except for the M&A attorney. I wanted to point out as we give advice on this podcast, that the M&A attorney that is a very specific type of law and that when you go into a transaction, no matter who you're using, your family attorney is not the one to do this.

00:31:38:13 - 00:31:57:00
Todd Sullivan
It is an M&A attorney that will protect you and be very, very efficient. It might seem more expensive when you're signing up, but worth all every dollar you spend in spades. So, yeah, that isn't really interesting topic. How A.I. is going to change so many industries so quickly. I know a lot of people are are kind of leaning into it.

00:31:57:00 - 00:32:24:10
Todd Sullivan
I've yet to see it effectively change the M&A world. But but it's clearly coming. So I'd love to give you the opportunity just to be respectful of your time. Is there anything that you want to talk about? Talk to our fellow founders, the advice that you would have as they are thinking about an exit on the horizon, the parameters that they should think about that make those businesses more valuable in the future, things they should be working on today.

00:32:24:12 - 00:32:50:15
Prof Joe O'Mahoney
Yes. So I guess there's there's two things underlying It all is to and I'm not saying this because you've very kindly invited me on the podcast, but you know, dang good advisors, you know, people are exit wise and I've had this conversation, of course, you know, and it's the same with your point about lawyers. You might pay a tiny little bit more for an advisor that you know, may or may not be the by 0.001%.

00:32:50:17 - 00:33:12:00
Prof Joe O'Mahoney
But my God, it pays dividends. And if there's if there's one thing I've learned throughout upheld the hands of I don't know, 50 odd companies, you know, either through growth or through the exit process. And good advice can make multiples of difference, literally. So that's that's the first thing.

00:33:12:02 - 00:33:32:07
Todd Sullivan
I would just comment when you're making that evaluation, any individual's making that evaluation, you're really should be focused on outcomes, right? Whether it's management consulting or M&A advisory. Right. It is the outcome to focus on because that is a magnitude difference that you will receive in versus what you're going to pay for a premium service.

00:33:32:07 - 00:33:52:02
Prof Joe O'Mahoney
Yeah. And you know, off the back of my, you know, my own advice, which you asked for and I guess, you know, there's there's dozens of things, but I wouldn't play the game too much. And by that I mean I've seen a lot of companies, you know, think, well, this is the final year, so we've really got to maximize EBITDA.

00:33:52:05 - 00:34:17:01
Prof Joe O'Mahoney
So, you know, let's let's hold off spending on X, Y, Z, let's, you know, psych a few people who haven't been performing so well. Now any buyer worth their salt would do a due diligence that will find this out and correct me and this goes for any other secrets you've got. You know, if any of your directors have been in trouble with the law, if there's any, you know, things hidden, these people are paid to find out about it.

00:34:17:01 - 00:34:37:13
Prof Joe O'Mahoney
And the thing that would destroy a deal is a surprise. If you're upfront and you build trust, you know, talking about it's Credence Goods And this is a trust industry. If you build trust, you're going to get a much happier, less stressful and more successful outcome than if you try and hide things. And then these things pop up and ruin the deal.

00:34:37:13 - 00:34:57:11
Prof Joe O'Mahoney
And as you know, once you've ruined the deal, that was pretty much it because you've then got to start the process again. Your eye has probably been taken off the ball, your sales might have a little bit. Certainly they'll dip after the process. And so that's another thing. And on that point of sales, really just try not to take your eye off the ball.

00:34:57:13 - 00:35:09:03
Prof Joe O'Mahoney
The other thing that a great advisor will do is take some of the pressure off for you so you can make sure that your growth story is one that continues rather than one that takes a dip whilst you're selling.

00:35:09:05 - 00:35:27:09
Todd Sullivan
Joe I love that advice, are truly playing games with you, but to try to maximize an exit, you're right, it doesn't work. They're all going to see every buyer is going to dig in and see, Oh, you stop making investments here. All you ditched all the health care plan, the health care plan that kept everybody here in the first place.

00:35:27:11 - 00:35:51:16
Todd Sullivan
There are so many little things that you could do. And what you really need to be doing is building your business as if it is not for sale. And through that process, right, you cannot let it slip. You made a really interesting comment when I'm not sure what was your word? Was it surprises you, right when the surprises come out, the red flags go up and you have not shared all of that which could be anticipated ahead of time.

00:35:51:21 - 00:36:12:08
Todd Sullivan
If you haven't shared that with your advisors, you're sending your advisors into battle with their hands tied behind their backs. You really have to trust, trust, trust the people that you have hired. Give them everything so they can address these surprises, have good talk track to it. And so the buyer who's going to figure it out knows about it going going in.

00:36:12:10 - 00:36:34:04
Todd Sullivan
And what's interesting is if they do back out and your process is dead, trying to come back to market, everybody's going to know, hey, we saw you went to market last year. Why didn't that work out? And the same thing surfaces again. So you really should think of it as you got one shot. I think you've made comments about trust all throughout this podcast, which has been awesome.

00:36:34:04 - 00:36:54:23
Todd Sullivan
You have to trust the people that you're working with and not play games. It is fantastic advice, Joe. I really appreciate it. I'd love to ask you this one question that I ask some people, which is who you would like to thank for this kind of professional success that you've had, not just the exit, but the career that you've built.

00:36:55:04 - 00:37:07:14
Todd Sullivan
Becoming the professor, when originally it looked like Indiana Jones route was on the path and you got diverted into and created enormous brand and success for yourself, Is there someone that you would like to thank?

00:37:07:19 - 00:37:33:00
Prof Joe O'Mahoney
Yeah, that's a really nice question. And it will be my dad, who without me need to be too about it. He's a he's a wonderful, good, honest, kind man who, you know, just believed he's got five children and he believed in us more than you can imagine. And, you know, we didn't have a lot of advantages growing up, but he was always fighting our corner and fighting the battles when they needed.

00:37:33:00 - 00:37:39:16
Prof Joe O'Mahoney
So if there's anyone that can take any credit for my modest success, it's. It's him.

00:37:39:18 - 00:37:48:03
Todd Sullivan
Oh, that's great. I'm aware of that. And it is quite a gift. Joe, thank you so much for the time today. Really appreciate you sharing your expertise with us.

00:37:48:05 - 00:37:51:10
Prof Joe O'Mahoney
Todd, thank you so much. Has been a real pleasure.

00:37:51:12 - 00:38:13:15
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. For more founder exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts. And please remember exercise dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.