EP #3: Sealing the Century: The $100 Million M&A Triumph with Russell Cohen

Imagine clinching a deal that not only shatters records but also cements your reputation as a titan in the M&A field—that's exactly the story Russell Cohen unfolds in our latest conversation. As he returns to the South Florida M&A Advisors podcast, we get an exclusive behind-the-scenes look at his monumental $100 million deal, an 11-month saga that tested the limits of resilience and showcased what it truly takes to succeed in the high-stakes world of mergers and acquisitions.

Joining forces with co-host Jeremy Wolf, Russell gives us the inside scoop on the intricacies of the Campany Roofing sale—a narrative filled with suspenseful near-misses and triumphant recoveries. From overcoming the challenges of securing financing with a fledgling private equity group to the delicate dance of negotiations that kept the deal alive against all odds, this episode is a masterclass in perseverance and ingenuity. Tune in for a real-world tale of ambition and strategy, as Russell and his team prove that with the right mindset, even the most daunting of deals can be sealed.

Transcript

Speaker 1: 0:01

Welcome to the South Florida M&A Advisors podcast, your trusted M&A team. Here's your host, Russell Cohen.

Jeremy: 0:13

Hello, hello everyone. Welcome back to another episode of the South Florida M&A Advisors podcast. I'm your co-host, jeremy Wolfe, joined by none other than your host, the man, the myth, the legend. We have Russell Cohen in the house. How you doing, my man, hey? Doing great. So good to see you. It's been a while since we did one of these. So nice to be back in the seat here talking to you, learning about what you're doing in and around our great community, and I know you have some exciting news to share on the horizon. You just assisted a business with a deal for $100 million, which is fantastic news. So congratulations on that, thank you.

Russell Cohen: 0:47

That was the largest sale for myself and the company and myself and Sunil Chenoy were co-listers and we were able to go through 11 months of an M&A transaction and get to the finish line. No doubt.

Jeremy: 1:06

Well, again, congratulations on that. May it be the first of many more to come. I know you had been trying to, I guess, take the business to that next level and start working on some of these larger deals in the M&A space. Clearly you're on the path to that place now, so congrats on that, brother.

Russell Cohen: 1:24

Yes, and that's the goal, and that's why I formed South Florida M&A to service South Florida business owners with great service boutique M&A service, and that's what we're trying to achieve here. So a great start and it might be the largest sale I ever do, but I'm OK with that. But now we're poised for more successes in 24 and 25.

Jeremy: 1:53

Wonderful, wonderful. So let's get into it. Why don't you tell us a little bit about the deal I guess, frame it and then we'll get into some of the challenges that you had to overcome, because, as we know these processes, you got it. It's a long time to build up to a transaction like this. I think you mentioned it was like 11 months in the making, right, yeah, very complicated sale.

Russell Cohen: 2:14

So the company that sold was Campany roofing out of West Palm Beach. The business was sold for a hundred million. Final down payment 80 million, with 10% roll over equity and at 10% earn out. So there are many complications, there were many issues along the way that we were able to overcome. It died like 10, 12 times but we were, you know, somehow, some way. The business was extremely strong a great owner, great business, great management team. Everything came together at the end and we were, you know, on pins and needles all the way through the deal. No doubt.

Jeremy: 2:56

Yeah, it sounds like it, so is that I? I'd imagine that for a bit a transaction that large, the time frame on that is extended past a smaller transaction. Is it common in those cases for deals to kind of Die off and then come back that many times, 10 or 11 times, or is that? Is that more uncommon?

Russell Cohen: 3:16

You know, in general when you're selling a, selling a business, it is someone's largest asset, typically on their balance sheet, so a very emotional ride. You obviously you don't expect to have issues. You know there's gonna be issues. In this particular case, this did take longer than we thought Because we were dealing with, you know, the buyers. The private equity group was trying to get equity, equity investors and debt lenders and there were specific challenges in raising funds for this particular transaction. So that's kind of the one of the major points that you know basically took from started with an LOI in February and closed at the end of November. So yeah, that was one of the many challenges in the, in the, in the, in the Journey to the closing.

Jeremy: 4:06

I would call can you dig into that a little bit deeper to talk about how how you overcame the the financing challenges through the process?

Russell Cohen: 4:14

this particular buyer was a startup, private equity. They were a company called broad-wing capital and now they're officially a private equity group because they did their first platform Acquisition in the roofing industry. So basically, what was going on? This was a couple, a couple of Gentlemen started this private equity group, had a great pedigree in the private equity space, so they started broad-wing capital. So they had to go out to the open market and raise funds and get those equity investors. So, outside of trying to find 70 to 80 million dollars for this particular you know kickoff, you know platform deal, they were raising funds for future add-ons and future platforms.

Russell Cohen: 5:01

So you know, while while they were talking to equity investors and debt lenders, we were also you know you were seeing the interest rates rise. You know the Fed has been raising rates. Everyone's interest rates are on on, everything that affects life has been going up. So you know, capital raising gets, gets challenging. So so you know we start this deal in February and we're going through the quality of earnings, which is kind of the colonoscopy of the M&A deal. Basically go through all the accounting and many different levels of diligence and you know we get, you know, pretty, we get through it, which is great, a very complicated process, as I said before, and what happened was the sellers CFO resigned in July. He had an eye disease, he was overwhelmed with the process and he you know he was, you know had to make a decision because, you know, he had health complications. So in the middle of our you know, of our deal, we lose the sellers CFO and we had to bring in a fractional CFO that take over the entire Accounting department of this roofing company. So you know, we were basically chasing our tails on the financials.

Russell Cohen: 6:20

The Broadwind capital was trying to raise a lot of money based on a hockey stick growth of from 21 to 22 and the 23 numbers. They were talking to equity investors with first quarter numbers, which is like a no-no, basically. So it got very difficult to get the 630 profit and loss because that when they're raising money, they want to see how the business is doing in the current year. So we're sitting in the summertime and they're trying to raise money and they only have the first quarter numbers. And so by the time we finally got the 630 numbers, we were deep into August, heading into September, and and so that became the challenge that we were chasing our tail on on the numbers, even though we were moving along in the quality of earnings. The buyers had to go through 200, 200 investors to finally land at a few. And so now we're sitting, you know, and you know we're sitting on edge the entire way.

Russell Cohen: 7:20

So so, basically, it was now sitting in September and the equity investors and debt lenders are coming into town interviewing the seller. We're going for meals, they're seeing projects, we're going on job sites, and, and you know this is going on pretty consistently throughout the months of September. And then so we, we think we're going to get to the finish line, and they're telling us they're going to pick a particular equity investor and they give us a support letter saying that they have the money. And then they said, wait a minute, we have someone else. So another group came down and and and, once again touring them around lunches, dinners and meetings, and by the mid October they got the support letter from Tree Line Capital, which funded the you know the, the initial upfront money for the private equity group, and they secured their you know their debt lenders.

Russell Cohen: 8:16

So you know, we're talking about mid to late October and we've been running this deal since February and you know we we fit, you know, at the end of that timeframe we're like, oh my god, we, you know, we got the funding and now we're an erased, a close. But while all this was going on, the sellers EBITDA, the earnings of the company was growing from 13 to $20 million. So in 22, he made 13 and he was like exceeding on tracking to over 20 million dollars. So now you start thinking seller's going to reprice the deal because now he can get 100, you can get a hundred and 20, hundred and 40 million. So we're like, okay, are we going to pull the plug on the deal and try to go back to market?

Jeremy: 8:56

So many moving parts there, it's no surprise how the deal almost fell apart a dozen times, nearly a dozen times. A lot of things need to go right for a deal like that to materialize for sure.

Russell Cohen: 9:08

Yes, a lot of stars have to align and and the the the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the. The seller was happy with the price. He did not want to go through the process again of re interviewing buyers. You know there was so much money spent on attorneys, the CFO, all the advisors that were involved, from from you know, to M and a advisors, sunil and myself and his uh, uh benefits advisor. You know his insurance advisor. You know the two attorneys on the transaction.

Russell Cohen: 9:38

So, yes, so it was. It was incredible amounts of calls and meetings and it got done November 30th, but it, you know, we really weren't skiing downhill, as I say, until we knew that we got the funding, uh, so, so that, yeah, that's what caused the deal to go longer than we thought, you know. But at the end of the day, we're sitting here on, uh, february 8th and you know we're looking back and you look back at what, what went wrong, and and you want to improve upon the process, um, and and be better for the next deal, and and we, you know we all went into the LOI thinking, you know, this would not be as as challenging. You know we all went, feeling everyone's in love with each other and you know deal fatigue gets involved in any transaction. It could be a small business and a large business and that's where you run the risk of the seller just calling, calling the deal off.

Jeremy: 10:38

Well, congratulations again on this deal. May may you have many, many more to come in the future, in the years to come. And was there anything else you wanted to to share before we wrap up here?

Russell Cohen: 10:51

Uh yeah so so love the opportunity. Whoever is actually clicks on the podcast? Uh, it's very important that you prepare your business for sale If, if I can meet with a business owner in advance, I can give them the proper tips, how to be private equity ready. Because you don't know what you don't know and you might think your books are perfect, but I could promise you there are things that you probably never thought of that will happen in transaction. So we really got to get in early, get the right team together, get the books in order, make recommendations so you don't have to go through craziness in the transaction 100%.

Jeremy: 11:37

Yeah, I'm learning a lot through this process and and it's definitely important to have a professional such as yourself on your side through this process, because it is wildly complicated for sure.

Russell Cohen: 11:49

All right, that's only a few of the. That was only one issue, you know, so we could probably do, you know, five or six podcasts on on the challenges, on this, on this, on the final, uh, final sale of this company. So, but this is a. This one was a good start.

Jeremy: 12:04

Good start, All right, everyone thanks for tuning in and we will catch you all next time. Everyone, take care. Have a wonderful day.

Speaker 1: 12:13

Thanks for listening to the South Florida M&A advisors podcast. For more information, visit South Florida MAcom or contact 954-646-7651.