← Becker Business
Becker Business
Trends and Tensions in Business Deals with Michael Weis and Michael Burney 9-9-25
00:28:41
In this episode, Michael Weis and Michael Burney, Partners at Weis & Burney Law Firm, share their perspective on market trends, deal structures, and the dynamics shaping today’s mergers and acquisitions.
Loading summary
Transcript25 lines
- [00:00]
A
This is Scott Becker with the Becker Business Podcast and the Becker Private Equity Podcast. We're thrilled today to be joined by two brilliant corporate lawyers who have done just a tremendous amount of both legal work and business thinking. We're joined today by Mike Weiss and Mike Burney and they're going to talk to us about sort of the trends, are watching a business, what they see in M and A and a lot, lot more. Mike. Mike Weiss, why don't you take a moment first, introduce yourself and tell us a little bit about WeissBernie and then Mike, I'll ask you to do the same thing.
- [00:35]
B
Great. Thanks Scott. And thanks again for the opportunity to be here today. We really appreciate it. My background is as an accountant and CPA from many years ago and went straight to law school. And I've always practiced for 37 years in the legal transactional field. A lot of corporate ma, corporate governance, commercial real estate, things like that. Representing privately held companies, closely held businesses, private equity groups, financial institutions, not for profits, and so on and so forth. The core of our practice is transactional mergers and acquisitions and all the legal work and business related work that goes with that. We are pretty much industry agnostic. We're active in professional services, health care, manufacturing and distribution. We're based in the Chicago metro area, but follow our clients wherever they and their transactions may go, including over international borders. Pleasure to be here.
- [01:51]
A
No, thank you so much. And Mike, before I get started asking you a few questions, can you take a moment, Mike, Bernie, to introduce yourself?
- [01:58]
C
Yeah, absolutely.
- [01:59]
B
Hi.
- [02:00]
C
Yeah, Scott, thanks so much for having us on. It's a privilege. Mike and I started our firm about a year and a half ago, having worked together really successfully for a couple years at a prior firm. And we just sort of took stock of what is it that we do and what is it that our clients need us to be able to do. And you know, and really just sort of reducing things down to what is it that people want their lawyers to do. Right. We're not here to build the world's most complicated mousetrap. We're here to solve people's problems. We're here to help people accomplish their goals. And, and you know, in the last year and a half, I think we've been tremendously successful in trying to bring that ethos to everything that we do. I've been in practice for about 15 years. I've worked at mid sized firms in the Chicago area. You know, I grew up in a legal family. I've, I've seen the industry, I know the industry you know, my background is a little bit more real estate focused, but also plenty of M and A work under my belt as well. And yeah, you know, Mike and I, you know, just really take pride in being able to do, in first off, being able to be extremely responsive to our clients. You know, you know, our, our numbers are, there is no middleman. You, you, you pick up the phone. You, you give us a call, we pick up the phone, you know, we're, we're going to talk to you, we're gonna be able to get back to you, you know, as quickly because, you know, we, we recognize that nobody's in the business of doing their deals for the sake of having the, the best legal documents that there ever were. The point is to get the deal done. We are here. We, we know it, we know the levers, we know the pain points, and we know the way through it. And, you know, and we, we relish the opportunity to, you know, to assist our clients in achieving their goals.
- [03:50]
A
And you guys have built great careers and now building a great practice together. Mike, Bernie, I love something you said about, you know, we're here to solve problems for clients. We're not here to do law in an ivory tower. We're not here to, to do something you don't need done. We're here to solve problems. Talk about that a little bit more because sometimes I think professionals lose sight of that, that their only real purpose is to take care of client problems. Can you talk about that a little bit further and how it hones, how you practice?
- [04:18]
C
Absolutely. I mean, I think a lot of lawyers, I think the way that lawyers are trained and then I think the way that lawyers are incentivized through the bill of Blauer is to make things as complicated, easier know, as complicated as you can get away with in, in some respects, you know, do we need to go down this path? Well, there could be, there could, you know, do you need to, this is not to say that, you know, we, we advocate for being cavalier or reckless, like, by, by no means, but, you know, with experience, we, we can learn where, you know, what are the aspects of transactions, what are the aspects of negotiating the, are just a waste of time. What matters, you know, it's, it's quickly being able to determine from the client what matters to them and advocating and using that as sort of your true north for, for everything that, that stems from that, you know, I mean, I, I, I don't know, maybe I'm getting a little bit too inside baseball here, but how many transactions have you been a part of that go through 10 turns of a document over meaningless changes, over meaningless liability provisions that are never going to get triggered with all hands calls and people pounding the table. And maybe that feels good, maybe that's the way that people, you know, feel like the representation should be done. But how often is that ever? I mean there is a time and a place for it. Absolutely. But to make that de rigueur on every transaction is it in my estimation is a questionable ethics?
- [05:51]
A
I think not so much even questionable ethics, but I think from a business perspective. You are so right on. I the best lawyers could tell the client here are the five to seven issues that count. Let's not spend incredible amounts of time on the other 93 issues that almost never become an issue. And people could take, they could take objection to that approach. But I think that is 99% the right approach and I think you're just right on. Mike Weiss, Michael Weiss, tell us a little bit about general market conditions. What are you seeing out there? I know you guys do a ton of M and I M and A in business for a ton of founder owned companies, a ton of investors and so forth. What are you seeing out there? Reasons to be optimistic, reason to be pessimistic. And then if you don't mind also talk about there seems to be a backload of transactions to be done both on our private equity side but also baby boomers starting to age out looking to sell and trying to figure out what to do with founder owned businesses. Give us a sense of your feeling about what you're seeing in the marketplace, both good and bad.
- [07:03]
B
We'll start with, we'll start with the good. Scott. I think optimistically it's still generally a pro business environment in administration. And you know, we're not political of course, and I feel like it's been that way even in the last administration. It's been a number of years of pro business and you know, trying to keep tax rates and interest rates reasonable. You know, Covid threw a little bit of a curveball into everybody's world for a year or two. But you know, I think the recovery is nice. Inflation's a little bit of an issue, but that's seems to be declining. Interest rates are steady, the US Economy compared to the rest of the world. Our observation is really still doing well, despite what sometimes we hear about or read about. Overall I think business is good. The pessimistic signs are there's been some tariff uncertainty which affects different industries different ways. It hasn't affected our industry that much because people still need the legal services and the legal work. And there's of course, a few global conflicts, you know, going on that give people a little bit of uncertainty and, you know, some regulatory changes. If a certain business is in that industry, there could be some question marks, but I think it's, it's always, always been that way, you know, demographics with the baby boomers. Scott, you bring up a terrific point. I. The population is getting older, businesses want to monetize and liquidate and you know, not everybody's sons or daughters want to be in that business. So there is a definite marketplace for transactions. You know, there's, there's a little bit of, in the private equities. Absolutely. Want to do deals. There's a lot of what we call dry powder out there. There is definitely, I feel like a disconnect in valuations, you know, ever since the onset of private equity, you know, really exploded, you know, 20 years ago and started paying higher multiples. That's carried over a little bit to the closely held world. Everyone believes their business is worth really high multiples and it's, it seems a little bit hard to get deals done. But I expect for the next, you know, X number of years and really across the board that M and A will continue to be active, you know, financing is there, the financial sources of the world, the investment bankers, everybody's hungry for deals and ready to finance deals. It's just a matter of getting to the finish line in a lot of up and back. So I think, I think times will be good in the M and A world for, you know, the foreseeable future.
- [10:13]
A
Thank you very, very much. And any reasons for concerning. We touched on a little bit, but not hitting too hard. Anything that's reasons for concern?
- [10:22]
B
Yeah, there's a little bit of uncertainty on the regulatory framework and what's going to change. And of course, always global conflicts and tariffs. I am not overly concerned about that. I think there's always been some headwinds, different governmental or regulatory type of issues and the markets really sort of plodded through there. So there's always the risk of something unforeseeable, major coming along. But we, you know, we, we all maintain confidence that it's going forward. Now I will add one thing. Business models, it seems to me, especially in consumer and retail and so forth, are changing pretty rapidly. In its simple form, there was no Amazon 30 years ago and we all walked through the malls and the malls are empty. So some businesses I think are at a risk of becoming obsolete. So either evolve or your business may become quickly obsolete. For our business though, you know, there's still transactions on the positive side and sometimes there's distress transactions we keep busy. But for the business owners really need to pay attention to what's going on in the marketplace. And if you do not evolve, and I know in healthcare you see this a lot too, Scott, you can quickly become outdated and you're business value can sink.
- [12:06]
A
It is so true. And you and I both live in the greater Chicago area and we've seen for example the mall area that's such an interesting area because one of the malls in our area has just thrived and thrived over a 50 year period where one which was the more elite, fancier mall has literally almost died in the vine and there's so few stores left in it. And it really is fascinating how this, there was this need to evolve or die and keep on finding ways to serve your customers needs. It's really a remarkable observation and so true. I Michael Burning, let me ask you this question. You guys work across industries, you're fantastically generalist in M and A. What's hot, what's not what, what are you seeing where there's, where it's busy, not busy. What kinds of things are you watching?
- [12:51]
C
I think that manufacturing is, is, is poised to be on the upswing. I think that this sort of, is the secondary effect of trucking and shipping being, you know, really in free fall. I, I have some friends, I have some clients that, that are in the trucking business and, and you know, trucking, trucking is sort of the, the sort of the first canary in the coal mine in, in this, in terms of international trade, right? If, if things aren't coming in from China, they're not aliving in Long Beach, California, they're not going on over the road trucks, they're not going on trains, you know, that, that trickles down to everybody. But there's still things that need to be done, there's still things that need to be built. And so if the economic system shifts such that it now becomes more economically feasible to start producing things domestically, I think that's long term a good thing for the country. And I think that your investors who are taking a longer play or taking a longer look, who have a further horizon before maybe they need to reach some sort of capital event or some sort of benchmark, you know, or are starting to put assets there. I mean, I think the hot money is obviously chasing AI and data centers and you know, there's, there's I don't know, it seems like the, the, the returns there just sort of keep shrinking just because there's so much more money. Is that going to, you know, I don't know. The, the, the trades that I read seem to indicate that yeah, it's hot now, but this is sort of taking the same trajectory as the dot com boom circa about 25, 27 years ago. So you know, I'm not, not here to, to, to throw water on anybody's fire. You know, the smarter, smarter people than I are making a lot more than me. But no, I think, I think manufacturing is, is poised to, to be sustainable but probably maybe a little bit more boring growth for people in the, in the, you know, 3, 5, 10 year horizon.
- [14:50]
A
Mike Weiss, could you fill us in on markets? What industries are you seeing that are hot, not hot? What do you sort of see out there?
- [14:59]
B
Yeah, I would agree with Mike. We represent especially being in the Chicago metro area where the heartland of the country, a lot of manufacturing companies and that does seem to be increasing and more products are being manufactured here. Technology is always interesting. Interesting. It is, it is hot. It is evolving and there's you know, a lot of new venture capital money and a lot of interest in technology and we're doing some business in technology, you know, not, not as much as in the west coast of course, but, but Chicago is becoming a little bit of a tech hub. I think there's a lot of at Cubs now, I think health care, we do some work in health care which you're very familiar with, Scott. Always a very steady industry and a lot of activities and a lot of, you know, models changing and a lot of transactions. I see sort of consumer and retail type of businesses really sort of not hot as businesses are trying to figure out how to compete on the logistics piece of it and you know, the margins are not, are not really that great. Professional services, I think everyone loves, you know, asset light businesses where you can. Investors, you know, are not tied into a bunch of fixed assets and always very attractive and hot multiples across all sorts of sub industries. Media and communications. Very, very hot as it, you know, in, in your field, you know, different ways to transmit and different audiences all the time. And I see the financial services industry as relatively steady, you know, sort of the backbone of the country. Always will be. We do some work in the energy industry and that's really sort of up and down based on commodities prices and regulatory issues. Distribution, logistics, as Mike mentioned, a little bit of a question mark as to supply chain and how goods are going to get transported around. I'm probably missing a couple industries overall. I still think American business and American economy, especially North American. We have some clients working in Canada also is ahead of the game. And we're, we, you know, we're hearing about different issues and problems in the EU and Europe. And as much as we complain about activity here, I think we have to be thankful.
- [17:56]
A
I think it's just an absolutely, it's an absolutely great, great perspective and I think it's amazing to me how some of the areas change over time. For a period of time, logistics was so hot and now it slowed down a decent amount as you mentioned with trucking and so forth and as Mike Burney mentioned. And so for talk a little bit further, let me start here with Mike Weiss, then go to Mike Burney. Mike, who are the buyers? Who are the sellers today?
- [18:19]
B
What are you seeing out there as far as buyers? You know, clearly the PEs are front and center and that's everybody who wants to sell a closely held business or a division of a public company is looking to the, the PE funds. As you know, your first buyer, you know, a lot of activity, paying the highest multiple, quick to pull the trigger, lots of capital, lots of dry powder and the pes. The problem we, we could talk probably for hours. The one of the problems with the P is is just, you know, private equities are generally in business to own businesses and platforms for, you know, X number of years and then to and their problem is selling, which is a different subject but, but definitely on the buy side. You know, the private equity groups are, are front and center and also other strategic buyers. Everyone, I shouldn't say everyone, but I will say everyone is looking to grow their business organically, of course, or you know, often acquisition makes better bang for the dollar than trying to start something officially. You know, why not buy that cash flow or buy that competitor or buy that that other business marketplace or buy talent. So they'll always be a bunch of M and A activity from the strategics and so a lot of buyers out out here. No no problem. With no shortage of buyers on the sell side. You have, you know, the pes, of course they're sellers and buyers, you know, they, they've owned companies for a long time. They've either it doesn't fit what they're doing now where it's just time to monetize or liquidate. So you have pes on both the buy side and the sell side. And the demographics as we touched on when we first started the podcast, you Have a lot of, you know, family owned businesses that it's just time to sell. People want to retire, people want to monetize and you know, go play golf. And then you certainly will always have a lot of strategic businesses where, you know, some business line or division they have just doesn't fit where they're evolving to. So they want to sell also. So we really do have a lot of buyers and sellers.
- [20:51]
A
Fantastic. And Michael Verney, could you talk to us a little bit about sort of the deal environment today and alternative structures and decision making and some of the things you're seeing there. And also obviously free to touch on any of the previous subjects too, but talk to us a little bit about what does decision making look like, what are alternative structures? What are people doing there to make the bridge the gap in deals? Give us a sense there what you're saying.
- [21:16]
C
Yeah, sure. It seems like there's a lot of deal size dependent structuring that goes on on one hand, on your smaller deals. We're seeing a lot of things. SBA lenders are still great. It's just, it's a different deal. SBA makes it kind of tough in a cutthroat market. You know, they move at their own pace. The pricing, there's different controls, you know, so you know, for people that want that option, it's available, but you're not going to be able to out compete a private equity in terms of great, you know, we'll do our 60 day diligence and close 10 days after, you know, we're seeing, you know, not seeing too much retained equity for sellers, seller note, you know, seller financing is, can be a component in some of what we're seeing. But yeah, I mean, just especially with, as Mike Weiss said earlier, you know, I think just sort of coming into this year there was some uncertainty. But you know, the sort of levers of power are such that, you know, if you're a fund manager and you were allocated $100 million to deploy this year and you don't deploy your $100 million, that's not going to look good for you next year. So the deals have to get done to a certain extent. But I think that people are really sharpening their pencils and I think that you're really seeing people getting more bogged down in details when it comes to conducting their due diligence on their acquisition targets. And I think sellers are aware of that. And your savvier sellers will to a certain extent try to, especially when you're dealing with a mom and a Pop or a closely held company who maybe haven't had the same sort of institutional controls that you'd see with a fund controlled asset. You know, the, the savvier mom and pops, so to speak, are, you know, doing that transition, you know, doing some of that legwork on the front end. You know, not because it necessarily is going to give them a return immediately, but because it can sort of make their asset both more valuable and more sellable so that you don't have, you know, the, the albatross of, of being the, the company that's been under contract three times and, and, and terminated three times hanging around your neck because that's no fun for anybody. You know, it's, it's a waste of diligence, it's a waste of legal fees, it's a waste of time, energy, emotion, all of that. And, and you know, and I think that's, that's part of just the game right now is just trying to make sure that you can, you know, grade the road so that, so that things can go as smoothly as possible. Because you can't control everything. But if you can try to anticipate what people are going to want, you can avoid obstacles before they are gonna crash 100%.
- [24:00]
A
And Michael Weiss, let me turn back to you. In terms of some of the decision making from a seller perspective, family owned businesses, corporate owned spin offs. What are some of the things you see in terms of decision making, in terms of trying to move forward with deals and then maybe on the buy side too. A couple comments there.
- [24:20]
B
Thanks. One word I, it just occurred to me I would use for deals now. I mean, you know, there's a lot of buyers, a lot of sellers, a lot of capital. I think everybody agrees. But what I'm seeing, you know, in the second part of my career, even more than the first part of my career is I'd like to use the word tension in deals. It seems like there's more tension these days because each side really wants to get it right. You know, the buy side wants to buy right. The sell side wants to sell right. So on the decision making on the sell side, it's, you know, hey, let's do a quality of earnings which you know, private equities do all the time and let's get this sale right. We don't want to sell for, you know, too low of a purchase price. Just focusing on purchase price right now. And we don't want to hold out for too high of a purchase price. So we want to, you know, we want to get it right. And we want to have our house in order. And from a governance standpoint, there is a lot of debate and consideration going into, you know, the governing the board of directors of the powers that be, you know, how do we sell the company, when do we sell the company and so forth. And there's a lot of negotiation which Mike and I get involved in our governance practice as to how that board of directors or board of managers will operate, who is decision making authority. And there's, you know, a lot of negotiation and everyone wants a seat at the table. You know, the private equities are now, you know, lenders, mezzanine lenders, equity investors, preferred equity. So there's, there's a crowded boardroom really focusing and drilling down on issues to make decisions on deals. And they want to, you know, everybody wants to get it right. And on the flip side, same thing on the buy end, same thing on the buy end. And may have always been that way, but it, you know, now their information is moving so quick up and back that. And we're noticing on deals, you know, sort of the tension, which actually makes it fun. And we try to focus on the main issues. You know, the buyer wants to get it right and the seller wants to get it right in the agreement. And hopefully, you know, each side wants to transact. And that's sort of what I love about our practice is when we're done with the closing, you know, a buyer has obtained what they wanted to obtain and a seller has obtained what they want to obtain. But there's a lot of little issues along the way way and some tension and a lot of people sort of deciding and putting input into what that should be. And it's the clients, it's their BPAs, different sets of attorneys. So yeah, a lot of, lot of thinking up and back and it's more instantaneous than ever, Scott, just because, you know, people don't need to get together in person. You know, people are talking on the over zoom and so forth. So that's what I think makes it challenging. Even though, you know, both sides have a common interest. You know, everybody, everybody wants to get has their list of boxes they need to check to get the deal done. And no one wants to get it wrong because they, you know, they have, everybody has to report to somebody and they don't necessarily want to win everything, but they don't want to lose 100%.
- [28:07]
A
What a fascinating situation and a great overview. The deal environment. Some areas that are hot, some areas that are not hot. Michael Weiss. Michael Bernie, congratulations. On the development of the law firm. You guys have had tremendous success. It's really incredible to visit with you and hear what you're seeing in the overall deal environment, in the business environment. Thank you for joining us there on the Becker Business podcast, the Becker Private Equity Podcast. Can't wait to visit with you further. Thank you both very, very much.
- [28:36]
C
Thanks for your time, Scott. Really appreciate it.
- [28:37]
B
Thank you, Scott.