Deal maker

Scott Bushkie of Cornerstone Business Services guides business owners through selling process

Posted on Nov 28, 2018 :: Cover Story
Posted by , Insight on Business Staff Writer

Scott Bushkie describes himself as a problem-solver who enjoys finding a solution where everyone comes away feeling good. He isn’t a mediator or counselor — although sometimes it can feel that way — rather, he assists owners with selling their businesses.

“What bigger problem to solve is there than selling someone’s life work?” asks the owner of Cornerstone Business Services LLC in Green Bay. “Business owners come to you and want to sell what is arguably their biggest asset and you want to provide them with the best possible solution — a deal that provides them with the most money possible.”

Bushkie’s love of sales combined with that problem-solving fervor led to a job with a mergers and acquisitions firm not long after college. “I was just 24 when I started, and most people get involved in the industry in their 40s or 50s, but there was just something I loved about the work and the energy involved,” he says.

After a few successful years at the end of the 1990s with his initial firm, Bushkie launched Cornerstone Business Services in January 2001. The recession that year and the Sept. 11 terrorist attacks tested his mettle as the M&A market nearly came to a halt, but it allowed him to refine his process, leading to his business doubling in size each of the next two years.

“The Cornerstone process is really about quality first and then quantity,” Bushkie says. “I am not telling clients what they want to hear, but what they need to hear. It can be a big difference.”

Another gamechanger: Cornerstone doesn’t place a price on the businesses it is marketing for sale. Bushkie and his colleagues rely on the market to set the price.

Those differences allowed Cornerstone to become a big player in the lower middle market for business sales, handling deals not only in Wisconsin, but also the rest of the nation and around the world.

Cornerstone is seeing increased demand for its services as interest is running high among businesses thinking about buying or selling.

“The stars have aligned for business owners thinking about selling. Companies and equity funds are flush with cash and looking to invest in quality acquisitions,” Bushkie says. “There are a lot of buyers out there who are well financed. More buyers mean more bidders and a higher sale price.”

Filling a niche

When small business owners decide it is time to sell, they have several options to choose from: selling it on their own, working with a Certified Public Accountant or attorney or connecting with a business broker. But businesses worth between $2 million and $100 million had few options available. 

“I saw my niche in businesses that were too big for a broker to take on and too small for the big guys, primarily in the $5 million to $20 million in sales market,” says Bushkie, adding that large firms in Chicago and Milwaukee typically tackle the $100 million-plus deals, providing personalized customer service. “I bring that high customer touch that the big firms give their clients to mine as well, which is why we only work with three or four at a time.”

Bushkie’s team at Cornerstone includes M&A advisers, a research analyst, a copywriter and other specialists. He says for each client, employees spend 100 hours or more looking at potential buyers.

“It’s natural to look at competitors as possible buyers, but sometimes that is not the right fit,” Bushkie says. “Does the prospective buyer have a complimentary business so the purchase would allow them to expand and grow? One big difference with us is that we approach potential buyers that we have selected, we just don’t put it on a listing somewhere and see what comes in the door.”

Bushkie’s face lights up when talking about his clients and their success stories. It’s clear he enjoys his work.

That’s something Marcus Montenecourt experienced firsthand. A relatively young business owner, he launched Transolutions Inc., an engineering and consulting firm that made its mark in Russia. He built the company into a leader in its international market segment. From the outset, it was clear a Russian company would be the buyer.

“They deserve a lot of credit for the high level of service and integrity shown throughout the process,” Montenecourt says.

Entering the selling process, Montenecourt had no idea what his business was worth. He watched as Cornerstone staff carefully appraised and marketed the business and then negotiated a deal that was right for both sides.

“The net result was a sale price that exceeded my initial expectations by a factor of two,” Montenecourt says.

Time was critical in finalizing and closing the deal with the eventual buyer, Amsted Rail International, since it kept the momentum going, Bushkie says. “It was an exciting, fast-paced process,” he says with a smile on his face. “It was a bit hectic, but fun.”

Client focused

Telling a company’s story is a vital part of the sale process. Cornerstone’s staff works closely with clients, learning as much as possible from business owners about their companies, both their history and financials. A copywriter next interviews the client and puts together a 30- to 40-page portfolio. Initially, Cornerstone provides potential buyers with the portfolio’s executive summary culled from research about the business.

“At no time do we put a price on the business. We put the information together and have potential buyers put in bids,” he says. “Before entering the negotiation process, we ask the owners what is most important to them: Are they just interested in the money? Do they want their employees or management protected? Do you want to stay for a while?”

If potential buyers are interested in learning more, they sign a non-disclosure agreement before receiving the entire portfolio. Confidentiality is essential since word of an impending sale may affect the way customers and employees act.

Potential buyers next may want to seek additional information, talk with business executives or tour the facilities.

“We want to protect our clients and be that buffer. Selling a business is very emotional,” Bushkie says. “The Holy Grail is to get multiple people interested in the business so there are multiple bidders at the table, which drives up the final price.”

Once the seller selects a buyer, a letter of intent is signed, and due diligence is conducted.

“We always try to negotiate from a position of strength,” he says. “One client we worked with in Iowa received 18 offers.”

It can take anywhere from 30 to 90 days to get a business to market once a decision has been made to sell. “Time kills all deals. The buyers or sellers get fatigue,” Bushkie says.

For owners who want to sell, but are not quite ready — or their business is not quite ready, Bushkie will work with them on a month-to-month contract basis.

“It can be a time for them to prepare for sale — to make sure their company is in the best position it can be for sale,” he says.

Education is an important part of the process, he continues.

“Prospective buyers need to be aware of everything it takes to sell a business and what to be on the lookout for,” says Bushkie, who is frequently interviewed by publications and also writes about the M&A industry.

When talking to Bushkie about working with clients, he fills with excitement talking about being able to turn a client’s lifetime work into a financial reward.

“One client, after he sold his business, went and paid off his sons’ mortgages,” he says. “That was something he always wanted to do. Travel is also something high up on many sellers’ lists.”

When selling a business, Bushkie does not limit his scope when it comes to potential buyers. For Personnel Connection in Green Bay, he thought outside the box and brought a nonprofit organization into the mix. That option surprised owner Mark Gigot.

“Scott found they had a synergy with my business, showed them the benefits of a merger of this magnitude, walked them through the whole process and got the deal done,” he says.

Building a trusted relationship with clients is essential to Bushkie. 

“The biggest thing is that you don’t promise what you can’t deliver. No fee is worth losing your reputation over,” he says. “When we do what we say we’ll do, the CPAs, attorneys and other professionals in the room remember that and will recommend us to their clients if they’re thinking about selling.”

Finding the right time to sell

When a business owner decides it is time to move on, Bushkie knows he’s responsible for selling his client’s biggest asset. That knowledge inspires him to do work in his clients’ best interest, and sometimes that means telling them the time to sell is not right, he says.

“Some owners put off selling or just get burned out and they’re not putting in the energy they used to, and financials suffer,” says Bushkie, adding buyers not only focus on financials from the past three to five years, but also more recent months. “That can affect the selling price. Selling a business is something you need to think about and plan for.”

That is one reason the market is so busy right now. Baby boomers thinking about selling have several years of strong financials to show potential sellers, while business owners who may have thought about selling eight years ago needed time to build their company back up after the recession, Bushkie says.

“Business owners have only one chance to do this right,” he says. “If owners are thinking about selling, they really need to start thinking about it one to two years ahead of time.”

According to a 2016 Family Business Institute survey, approximately 40 percent of family businesses expect their companies’ leadership to change by 2021, and 56 percent expect change by 2026. That means there will be plenty of businesses on the market in the coming months and years, so owners need to do what they can to set their firm apart.

“I have had more confidential meetings with business owners thinking about selling in 2018 than ever before,” Bushkie says. “The market will stay strong for 2019, but every time interest rates go up, it gets a little harder.”

Expanding reach

As Cornerstone continues to grow, Bushkie is taking steps to compete for larger deals as well as ones involving buyers or sellers overseas.

“Sometimes, people won’t look at you since they think you’re too small to do the deal, but I knew we could do it,” he says.

Last spring, Bushkie teamed up with other M&A firms across the country to launch the Cornerstone International Alliance.

“Now when someone says, ‘you’re not big enough,’ you can show them a map with all of these dots on it representing the different partners you’re working with,” he says, adding all alliance members are dedicated to supporting one another’s success and helping when needed.

“While the alliance is about helping members land bigger deals, the goal at the end of the day remains the same: getting the best deal for our business clients.”

Bushkie frequently attends and speaks at national conferences to stay fresh on the industry’s latest trends. “I am always asking people about how they do different things. I am constantly refining my process,” he says. “You don’t know what you don’t know, so I’m always interested in learning.”

The M&A industry also is shifting as private equity groups and funds are showing increased interest in purchasing companies. Previously, individuals and other businesses were the main buyers when a company came up for sale.

“It has definitely changed the dynamic of the industry, as has the willingness of banks to lend more money,” Bushkie says.

The talent shortage also affects the industry. Bushkie says some companies acquire another business as a way to expand their employee base.

“You’re getting that talent to help your business grow,” he says.

With businesses flush with cash while some owners are looking to retire, the M&A market is expected to remain busy for the foreseeable future.

“Trust me, it’s a lot more fun working in this market than a down market,” Bushkie says. 

 

Cornerstone Business Services

What they do: A full-service mergers and acquisition firm specializing in sales of businesses with revenues between $2 million to more than $100 million.

Year founded: 2001

Location: Green Bay

Number of employees: 15 full-time, 3 part-time

www.cornerstone-business.com