We talk to Sanjay Chadda, Managing Director of Canaccord Genuity. Sanjay tells us how to prepare for the marathon of selling your agency, why M&A is like a marriage, how a sale changes the way a founder runs his business, and how Sanjay's sale of his own business helped him become a better banker. Enjoy the show!
We talk to Sanjay Chadda, Managing Director of Canaccord Genuity. Sanjay tells us how to prepare for the marathon of selling your agency, why M&A is like a marriage, how a sale changes the way a founder runs his business, and how Sanjay's sale of his own business helped him become a better banker. Enjoy the show!
00:05
David Rodnitzky
In this episode of Agentic Shift, we talk to Sanjay Chadda, managing director of Canaccord Genuity, a leading investment bank. Sanjay tells us how to prepare for the marathon of selling, why M&A is like a marriage, how a sale changes the way a founder runs his business, and how selling his own business helped him to become a better banker. Enjoy the show. Sanjay, thanks for joining us today on Agentic Shift.
00:33
Sanjay Chadda
Thanks for having me, David. As you know, I always enjoy talking to you.
00:35
David Rodnitzky
Awesome. Same here. You're a fount of knowledge about this world that we're going to delve into.
00:40
Sanjay Chadda
Happy to help in any way.
00:41
David Rodnitzky
Awesome. Okay, well, let's start out, if you would, give us a little bit of your background. How did you get into investment banking and tell us about where you are today at Canaccord Genuity.
00:52
Sanjay Chadda
Yeah, happy to. So I started my career at GE Capital, doing some unrelated things around strategy and finance, and then actually joined a boutique investment bank called Petsky Prunier. Early on in the foundation of the firm and had great partners and probably about ten years or so into it, really started taking a hands on approach to the direction of the firm and really became one of the larger producers of the firm. And the origins of the firm were really focusing on the broader marketing sector. And fast forward, we built a great, incredible boutique firm that I felt had lots of opportunities to expand beyond what we could as an independent investment bank and in 2019 sold the firm to Canaccord Genuity. Or I'll just say CG for ease in this conversation and really built an incredible practice across technology, media, marketing and information services. Personally, I've advised close to 250 companies in my career.
01:50
Sanjay Chadda
The vast majority of them have been companies across the continuum of marketing and technology services, digital transformation. As you know, lots of businesses in and around the technology enabled agency space. And we built a great practice. Today I co head our team and I'm happy to talk about our firm a little bit more if it's helpful for context. But I'd say also one thing is that having advised lots of companies up until 2019, preselling our firm, going through our own set of discussions and leading those discussions, selling our own business, was eye opening. And I would say that I'm probably more sympathetic to our clients than I used to be. It's an interesting process you go through when you're selling your business and meeting lots of interesting people, figuring out what's the right best thing for you and your employees and all your stakeholders. And I think that's made me actually, frankly, a better advisor than I even used to because like I said, I'm much more sensitive to our clients and what they're going through during these sale processes.
02:42
David Rodnitzky
Yeah, that is a differentiator for sure, being able to be on both sides of the table and I guess that you would say that would be part of your elevator pitch, if you will, to potential clients that you've been there, done there, been in their shoes. How would you round out that discussion? I mean, when you're talking to a potential client, what are the things that differentiate you and CG from other bankers?
03:03
Sanjay Chadda
Yeah, it's a good question. I mean, as you know, in a professional services firm, there's not necessarily like a technology platform or something that you can just point to that differentiates you. So it's typically not one silver bullet, but a number of different things. And look, we're a global investment bank. We're in ten countries. We have a one P&L approach. We're heavily integrated versus like a partnership or some of these firms out there that have different firms around the world that they work with, which is definitely a big differentiator. We've been expanding our firm. We actually just expanded our whole team by adding 50 people in the UK, partnering with a firm that we bought, merged with called Results International. But that global perspective is extremely helpful given the coverage areas that we're in from a vertical market focus. We are very industry focused and so we've built the largest and most active practice across the marketing sector.
03:48
Sanjay Chadda
We've got over 115 people around the world in that group. Last year we did over 100 transactions. Given that level of activity, we just tend to have more regular dialogue than other investment banks with the relevant buyers and private equity firms. And also, just given the number of transactions, we just have a lot of insight. Likewise, besides our focus around specific sectors, is also knowing who lost out in the last process that we ran for our next client. That was very relevant. So who is number two bidder, three bidder, four bidder, et cetera. That relevancy gives us just a competitive advantage as we serve our next clients in even better manner. On the private equity side, we have a pretty substantial team that just focuses on covering private equity relationships. A lot of the smaller boutique firms don't have that infrastructure that we bring to bear for our clients.
04:34
Sanjay Chadda
And then I'd say that we are very size agnostic, which is I think, people sometimes surprising to them given the broader footprint of our firm. We work on small transactions, large transactions, we put the same resources against them. If we're taking on a client, it's because ultimately we're really excited about working with them and think we can see it through at a great outcome. We will not sign up a client unless we can put the proper resources and attention to it. And so hundreds of references would signal that. And I would say lastly, which is probably a harder thing to put your fingers on, we have a very hard working culture. If somebody does not respond to me in our firm in day or night, regardless of the actual time of the day or the day of the week. Someone doesn't respond to me, I'd say within 30 minutes or so, I probably think something's wrong with them.
05:17
Sanjay Chadda
And I think that our clients find our responsiveness as a very big differentiator and our counterparties know we're taking it seriously because we're so responsive and you add all that stuff together, we, I think, have a very dominant practice in this space.
05:30
David Rodnitzky
Absolutely. Yeah. And I would say as a client of yours twice over, I've certainly experienced if I don't hear from you in five or ten minutes, I think something must be wrong. And so the fact that we're doing a 30 minutes podcast interview may mean that many of your clients are going to be freaking out because you can't be texting while you're podcasting.
05:46
Sanjay Chadda
I'm trying not to, though. I'm getting a little anxiety when I see my emails pop up.
05:51
David Rodnitzky
Exactly. Well, I apologize to all your clients who are having a connection this afternoon. I will say one thing you said that I think is a really good point is you mentioned how you're part of the ecosystem and, you know, not only who's winning, but who's losing the deals. And from my experience, the first time we sold 3Q, that was exactly what happened. I called it jilted lovers. That was RKG that sold to Merkle, and a bunch of people had lost on that deal. And we knew that they were all looking for a digital marketing agency. And so sure enough, those were the companies that came on the strongest to make bids for 3Q. So I think knowing the ecosystem is really important.
06:25
Sanjay Chadda
Yeah, no, for sure. And we see that in every process. And at this point, after 22, 23 years, I've sold companies in almost every single segment of the marketing and the technology, services, ecosystems. And so if you think about that, some of that stuff from several years ago might be less relevant. But in the course of a group that does over 100 transactions globally across tech and marketing and related services and you're going to see lots of patterns, lots of people show up in those processes who lost out? And it's not just about who lost out from an economic perspective, as you know, in some of these businesses, it is very people driven organization and you've got to pay attention to the culture and who's going to be a good partner. And what someone's values and who may be a good partner for one company may be very different for the next one.
07:11
Sanjay Chadda
And so we spent a lot of time getting to know our clients and figuring out who might be in that shortlist. And you're not going to run a process the same way every single time. Like you referenced when were working with you the first time, we didn't go out and talk to 100 people. Right. We talked to ten or so parties that might be very different than selling another business where we're going to talk to 125 people. And we can do that given the infrastructure and our private equity sponsor coverage team. But we always want to think about what is the right outcome for our clients specifically and what are they trying to accomplish? Because, look, I mean, nine out of ten times the economics are going to trump lots of things, but those other things really do matter quite a bit. And you know that you've had a variety of different experiences yourself and I'm sure that you would do things differently each time and we would probably say the same thing at times and learn from those experiences and that really matters.
07:56
David Rodnitzky
I think that's a really important point. I always have said that whenever I'm thinking about selling, there's three things I ask myself is this right for the team? Is this right for clients? And is this right for shareholders? And if you only asked if this is this right for shareholders, you're setting yourself up for a world of hurt. I mean, number one, you can alienate your staff and your clients, which can cause problems. Number two is you end up having to work with people that you may not like for anywhere from two to six or eight years. And then number three is if there's really not a meeting of culture, I mean, there can be all sorts of bad consequences that happen. I mean, I've heard this said that one of the number one causes of litigation in M&A is earn outs. And if you don't work with people that you trust, you run the risk that you get to the end of the earnout and someone says, yeah, I'm not going to pay you that you can sue me.
08:40
David Rodnitzky
So not everyone's money is the same color. Green, I guess, is the way to say it.
08:44
Sanjay Chadda
100% agree the earn out. Comments very interesting because the world has changed. When I started my career, you would see these long earnouts, five years that's really gone away by and large, and you see lots of different structures that we can talk about. But the main point is that I always say to our clients, regardless of what it says in your purchase agreement, if you don't trust the counterparty, you shouldn't do deal with them. You just shouldn't because that's a bad setup, of course, for an M&A process. But ultimately this is a marriage and that marriage may not have the same length of hopefully personal marriages with spouses, but you are entering a time where you're going to be spending lots of time with people and life's too short to spend it with people that you don't trust. And so that's a very critical component of any transaction.
09:27
Sanjay Chadda
M&A is about confidence, it's about trust. And living with those people post transaction, it's really important to trust them regardless of what it says. In the contract and whether you have the ability to litigate or not. And I think the good thing is across a couple of hundred transactions I've done, the vast majority of them have gone well and there's been no litigation or anything. But you do this long enough, you're going to of course see those types of situations.
09:49
David Rodnitzky
Yeah. At the end of the day, all you can do is work with people you trust and hire good lawyers. And I always tell people, as my rabbi told me, trust in Allah, but watch your camels, which is all that.
10:00
Sanjay Chadda
Entirely, but I'm going to trust you on that one.
10:02
David Rodnitzky
Yeah, just no, the notion is just that you want to have trust in the people you work with, but at the same time you also want to back it up with a good contract.
10:09
Sanjay Chadda
Yeah, no, that's fair. I mean, look, you said something else before that was interesting, which is the different constituents that you have to manage. And it's really interesting because ultimately CEOs are people and people at times, in many cases will be thinking about what's best for them and maybe what's best for the closest people around them. And that's not a bad thing or an unnatural thing, but CEO has got a responsibility to look out for their shareholders, look out for their people, look out for themselves, look out for their future partner. And so it's a lot to manage, especially when you've got competing interests in these cases. We're trying to close a transaction on Monday. And you'll appreciate this because I know you're very technical, but a tax indemnity issue came up and the counterparty wanted to have an escrow. And my client was jammed up about it for a variety of reasons, including just the fact that it's, by and large, no indemnity deal, it's a rep warranty insurance policy deal and just didn't agree with the tax position that the Big Four accounting firm was taking on the other side of the table.
11:06
Sanjay Chadda
And I said to him like, well, look, they have a point around this nexus issue. You agree? He does agree. But maybe one tactic here is to go back to them and say instead of an escrow, let's take a much smaller amount as a small deduction to the purchase price because we're going to be aligned that way.
11:23
David Rodnitzky
Right.
11:23
Sanjay Chadda
We're not going to be aligned if we've got an escrow because I'm going to try and fight to get that escrow back and you're going to want to clean these tax things. And both parties actually came to the table very quickly. The last thing we ever want to do is have a different purchase price, but the dollars actually end up being a lot smaller and it will start the partnership off with 100% of the same goal versus having this issue out there for six to twelve months, which is going to create a lot of friction.
11:46
David Rodnitzky
Yeah, that's smart. I mean that's another big issue that a lot of acquirers have, I think, which is they don't want to create a contract that creates adverse incentives. The purpose of the acquisition is to have a merging of companies that work well together and not be fighting in different directions for the first six months or even two or three years depending on the terms.
12:03
Sanjay Chadda
Yeah, for sure. To be clear, like this was the buyer saying it was a several million dollar issue and we took a couple hundred thousand dollars ahead at closing which probably would have been a lot worse if we actually had this escrow out there. But the alignment was the right focus and I actually give a lot of credit to the potential purchaser, in this case a private equity firm because they were very much focused also on the same thing which is we want to be aligned with our future partner here.
12:28
David Rodnitzky
Yeah, that's fantastic. That's a good sign, I guess. One question I would have for you. Let's say that someone is considering selling. What's the sort of advice you give to someone when they call you up and say look, I'm thinking about selling. I don't know if I want to sell. How do you work them through that process?
12:41
Sanjay Chadda
I mean, it's very interesting because the answer is it really depends. And the reason I say that is that it depends. Like is this a business that's owned by a private equity firm? Has there been already liquidity for the management team or founders? What are the actual goals that you're trying to accomplish? Right. It's a lot more simplistic if the business is 70% owned by a private equity firm. The management team has got their rollover equity plus their options typically speaking. In that case in the middle market at least that team has had a liquidity event. People are aligned. They're looking to either go out and find a private equity firm or sell to a strategic. Economics are going to drive a lot of that decision. It's a lot different when it's a company that has no institutional capital. They've never been through this before and they're really thinking about this as a life changing event and that in some ways is a more complex initial discussion because the reality is that it's a very personal thing.
13:33
Sanjay Chadda
And the questions start with, of course, the business. What are you doing? How are you adding value? What's the business model? What's the size? What do we think the growth opportunities are in the next 6, 12, 24, 36 months? And I will tell you a significant portion of the time we are not the people to say you have to go to market now, you have to sell, et cetera. I think that's a mistake. Good growing companies, which is basically 100% of our practice, don't have to do anything and we tend to say that up front like it's a business that's growing, you don't have a lot of outside capital or no outside capital, the world is your oyster in a lot of ways. And good growing companies can always wait. It's really hard to perfectly align with the market timing and market conditions. So we tend to ask lots of questions about the business the first, but then about what are you trying to accomplish?
14:18
Sanjay Chadda
And I would say that you've been involved in lots of M&A transactions, David, selling your own businesses. I would say that when somebody has a meaningful liquidity event and I think the world's gotten perverse, so meaningful can mean lots of different things to different people.
14:32
David Rodnitzky
Thanks. All those dollars that the government threw at us in 2021, it's now five times more than it used to be.
14:38
Sanjay Chadda
Yeah, exactly. I'm not going to get into a political discussion, but exactly. I mean, look, at the end of the day, that event tends to change how people run their business. And so one of the things I will say to people is that, have you taken some meaningful liquidity? Have you taken money to take care of your family, the next generation, et cetera? And I will say to them that some significant portion of the time, people who do that tend to run their businesses in a better way because they're not watching every single dollar. They're thinking about the business in a way where they're going for much more growth. They're taking more calculated risks in their business. And I would say that's where a lot of those conversations with companies that have not taken outside capital tend to go. And so I don't know if that answers your question, but it's a myriad of questions on the business.
15:23
Sanjay Chadda
But then also personally, what people are trying to accomplish, the ones that are much more straightforward are private equity firm that has been in the investment for two, three years at a minimum. They've accomplished their playbook and it's time to ring the bell and move on to the next thing. Then it becomes much more about market dynamics. Who's out there? What's the relevant experience? Who do we think can show up and what type of process can we run? Because as we talked about earlier, our processes are going to be very different and on a case by case basis. Sometimes we'll talk to one party, sometimes we'll talk to 200. And there's lots of, as you know, numbers in between, and the strategy might be very different in between. We represented a business. I'm not sure if I supposed to names, so you'll edit it out if you need to.
16:01
Sanjay Chadda
But a company called Bounteous, this great business in the digital transformation space.
16:06
David Rodnitzky
That was a Mountain Gate company, I believe.
16:09
Sanjay Chadda
Yeah, they did an incredible job. As investors grew the business, the management team did a great job. We were fortunate enough to get the assignment. We ran a great process, ended up being a record return for the Mountain Gate capital team. The management team at Bounties had lots of options, both strategic and private equity. They decided ultimately that were at a valuation range, that we'd already surpassed anything that we had pitched or other investment banks had pitched. And so Mountain Gate did a great job of saying to the team, like, we're going to let you think about what's best for you guys. And we ended up doing a private equity transaction. The point I'm making is that, well, we then turned around and represented Hero Digital for the second time, and Hero Digital was one of their biggest competitors. Well, that process we ran for Hero Digital was very different than Bounteous because we just had all this knowledge of who just bid on Bounteous.
16:54
Sanjay Chadda
And so, well, we turned around to the next bidders who lost out, and we gave them a running start. In the course of the process, we still talked to a lot of people. By the time we got to the first round bid, a handful of people had already done all their work. And so the point is, we're going to think collectively in a situation like that, what's the right strategy? But ultimately, we will tell people all the time, you shouldn't go to market, or you could go to market, and this is what it looks like. But you have the option of waiting because you've got a good growing business. And we're not going to be the people to push people to say, you have to do something today.
17:23
David Rodnitzky
Yeah, I mean, I think this is stating the obvious a little bit, but like, private equity companies are mostly unemotional sellers. If you give them a mathematical base for this is the time to sell, this isn't the time to sell, and they're going to make their own calculus. Not to say that they're heartless people because they're not. There's great people in private equity, and they can be wonderful to work with, but it's much different than a founder who maybe has no liquidity and for whom this is his or her baby. It's a much different conversation, I would imagine. I would ask along those lines. I mean, part of the time it sounds like you're telling a founder, hey, you don't have to sell if you don't want to. You can if you want to. Sometimes you're telling them outright, you should didn't sell. But this is a very long question, by the way.
17:57
David Rodnitzky
I apologize, but when you tell a founder you shouldn't sell, I assume sometimes that's because the market demand isn't there. But is there also a time when it's like you can kind of sense that the founder maybe isn't emotionally invested in selling or some other reason other than just market dynamics?
18:11
Sanjay Chadda
Yeah, for sure. I mean, one thing I would make a comment on the previous discussion really quickly is that you're right. By and large, private equity firms, they are especially in the middle market. Like, they're great people. They focus and help build businesses. They have to be a little bit less emotional because they're investing other people's money. And so they have to look out for, as we talked about before, their constituencies, which are going to be their investors and their management teams. And so, yeah, they've got to be a little bit less emotional by nature. Entrepreneurs who haven't been through this before, their blood, sweat and tears are in their business in a lot of cases, the vast majority of their net worth, their wealth, is in these businesses. And so they're going to be more emotional from that perspective. There are business reasons why sometimes it doesn't make sense, right?
18:52
Sanjay Chadda
You might have a business where you've got incredible client concentration and that's going to really be a huge deterrent to valuation, but also just interest in the company. And so you might give people feedback, like, you've got to go fix these things, or you might have were advising a company once, and they had too many people who were like third party contractors versus full time employees. And it was like more than 50% of the business. And they actually run a process before that failed with another investment bank. And they said, look, we never got that feedback before. And they went out and they spent six months actually converting contractors to full time employees. And went to market six months after that and we had a great successful outcome for them. And so there are always going to be very specific reasons sometimes. Look, you have a business that's growing so fast and it's going to be hard to capture the full value today, but there's an inflection point where they cross a certain threshold.
19:40
Sanjay Chadda
Or we know that there's a couple of things that are going to come to fruition in the next couple of months that we want them to get credit for. And so, again, without naming names, like there was a business were advising in 2018 and were hired, I think, six months before that calendar year, and we told them to wait and the value ended up doubling and we can't take full credit for that at all. Team did a great job executing against their plan. The advice was good, they took it and that business was 120ish million dollar transaction and that business sold for over a billion dollars four years later. And so there are lots of reasons to wait. There's lots of reasons to go. Look, sometimes we give people advice like, you should wait and they don't like that advice and they go out and they hire somebody else and that's totally fine, right?
20:21
Sanjay Chadda
It's got to be a good match at the end of the day with people and you want to be align with your clients. Like not being aligned is not a good setup. It's the same reason why we're not going to come in and tell people their business is worth X just to get hired. That gives people in our business a bad reputation, a bad name. And we've done this for a long time. I've been doing this for a long time. I plan to do it for many more years, god willing. And so you have to think about the long term view here, not just the short term view.
20:43
David Rodnitzky
Absolutely. Lifetime value play?
20:46
Sanjay Chadda
Yeah, for sure.
20:47
David Rodnitzky
One thing I want to follow up on. You mentioned the example of the agency that had a bunch of third party contractors, and that was a reason why they weren't ready to go to market. I mean, in a perfect world, how far in advance do you want to talk to? Or how far in advance should an agency retain you to prepare to go to market? I guess it depends, but, I mean, it sounds like there's often, like, six months or more of work that needs to be done before an agency is really ready to sell and get top value.
21:10
Sanjay Chadda
Yeah, I mean, look, our preference, and this Is a little bit old school, we tend to have long term relationships with our clients. Some private equity firms have now hired myself and our team seven or eight times over the course of my career. We've got entrepreneurs who have built multiple businesses. One person, I've sold five companies for Him over the course of the last 15 years. And so at the end of the day, we tend to take an old school approach about having long term relationships. And there's a company I once talked to for nine years, and I'm not suggesting if we meet someone today, we want to sell their business in 2032, but at the same time we get calls sometime, hey, we want to hire you or can you come meet with us? And we're like, within days we're hired and we're starting a process.
21:52
Sanjay Chadda
I would say that happens all the time. It's totally fine. Those tend to be companies that are buttoned up and probably have done some prep or have some institutional capital. I Would say if A business has no outside capital, there tends to be More work that we're going to want to do around the positioning, around the numbers. Look, frankly, you Want to make sure that what you're talking about in the business is aligned with how people are talking about their business, in their press releases, in their marketing materials, in their websites. And so I would say ideally it's at least a quarter, but we Just got hired on something we're not going to market at a minimum for a year. But they just want us on the team. They want us to give them perspective. And we very much enjoy those relationships.
22:30
David Rodnitzky
Yeah, that makes sense. Yeah. Someone told me that sort of the number was six months before you go to sale. And obviously, like you said. It depends a lot on yeah. How buttoned up you are.
22:39
Sanjay Chadda
I mean, 45 days is usually the kind of minimum prep period. I remember once were hired by this really cool company in New Orleans and they had like two term sheets at the table. It was a technology business in the research space, and were in the market in less than two weeks because we just kind of had to be and we knew the space really well, so we just jumped on it, put a SWAT team together and flew down there and spent a week building the materials. And we just kind of had to do that because we had to react to this really serious inbound interest. But that is not the ideal scenario.
23:07
David Rodnitzky
Yeah, makes sense. Just stepping back a little bit. Have worked with as many founders as you have. What are the aspects of the sales process that are the most surprising to founders?
23:17
Sanjay Chadda
I would say that we try and do an excruciating job up front of telling people where they're going to need to be involved and where we can take time off their hands or have them focus on the business because ultimately that is the most critical thing they can do to help facilitate a great outcome. And we tend to put big teams on things. Many hands make light work, as my parents used to say. And so I would say that the thing that they're surprised about is that there are some very key moments up front where they got to spend a little bit of time with us. But I would say, like, during the process, what a marathon it is, right. The fastest these things go are a couple of months, and they're typically going to be about four to five month processes. Sometimes they go longer, as you know.
24:00
Sanjay Chadda
And so for them, I would say what they have a hard time fully appreciating up front is what a marathon it is because you're juggling basically a brand new job while running your business. As much as we can take off people's plates, like there's going to be times where they're going to have to be involved and then also the emotional aspect. Right. You're a bit in limbo is the truth.
24:19
David Rodnitzky
Right.
24:19
Sanjay Chadda
You don't know exactly where you're going to end up during this period of time. And as I referenced at the top of this discussion, I went through that myself when we sold our firm. And that's where my sympathy comes in because I think that most people who run businesses have a certain type of personality. They want to be in control. They're typically Type A in some capacity, and they are out of control in some fashion during this period of time. And there's as much as we can explain that nobody really appreciates that until.
24:46
David Rodnitzky
They go through it. What was the emotional roller coaster for you going through selling? What were the highs and the lows.
24:51
Sanjay Chadda
It's very funny because I would say that it's interesting. I'm not trying to make this too long of a story, but I had to present to the board of CG and fly back and they're a public company and basically tell our employees before I hit the wire and there was a snowstorm up in Canada and I had to fly back. And you can imagine the nerves that people were actually going to hear about this on email without you telling them. And we're doing some type of town hall. And so that in itself was just this big emotional thing and you're keeping this amongst a growing circle as you're getting closer to it, but still not everybody. And so get to the town hall, we make this announcement. And I think, as you know, I spend basically 100% of my time advising companies, so doing stuff outside of that is frankly less interesting to me.
25:36
Sanjay Chadda
And so doing this stuff on behalf of our employees and all that kind of thing, it was the right thing to do, but it was a little bit of a distraction for a couple months. So for me, when we did this, we had this big dinner that night with some of our key people and with the folks at CG, and I got home and I slept so hard for five or 6 hours. It wasn't a long period of time, it was just like very deep sleep. And I will tell you, I had a little bit of the opposite effect the next day when I was in my office with this behind me, just working on what I like to do best, which is advise companies, I was so happy. I was just so happy for this to be over, have a direction and be back to work.
26:15
Sanjay Chadda
And so I think that speaks to the thing were talking about before, which is like, being in limbo is, I think, tough for certain personalities, definitely my own. And so that was probably the biggest challenge and the stress of that announcement, how people are going to react. And we say this to our clients all the time, 9.9 times out of ten, people are fine. They're like if you show confidence and you're happy about the decision and it was the right thing and your heart of all hearts you felt is the right thing for you and your employees and all your stakeholders. And you can say that and sleep at night, people tend to follow along and be very happy with the decision, and that was my experience. But you always conjure these things in your head about how are people going to react and is this going to be a disaster or whatever it is.
26:55
Sanjay Chadda
And so me having that behind us and just at my desk working was just like the best moment ever.
27:00
David Rodnitzky
Yeah, I 100% agree with the reaction comment. I used to say in job interviews, when someone asked you, why did you leave your last company? The answer could be, Blah, blah. As long as it wasn't I was in prison or I stabbed my superior. As long as you give them a reasonable response, they're fine with it. And that's kind of the same with, I think, actually selling your company. It's like, look, this is right for everyone. This is a good decision. We great cultural fit. People accept it, and clients accept it too, by the way. There's always that worry that a client is going your biggest client is going to say, well, fine, then we're firing you. It very rarely happens. The other thing I was going to say was, there's a rule that I learned from YPO, the young president's organization, when you have a business forum with other executives, they have this rule tell no one nothing, never.
27:41
David Rodnitzky
So it's how you define confidentiality. And in a deal, this is very crucial because if anyone starts to find out that there's a potential deal happening, it can cause all sorts of uncertainty and distrust and whatnot. And so I guess my last question to you on this point is you work at an investment bank where everyone involved in that bank is used to the deal process. And inevitably, when you were selling the company, you were out of the office, you were flying places. How did you keep it secret? I mean, you're working with people who know all the signals of a company being sold. So how did you do it?
28:10
Sanjay Chadda
Yeah, it's a good question. I mean, first of all, I travel a lot, and I'm with clients basically all the time. So from that perspective, it probably was no surprise having me out of the office, et cetera. But I did this probably a little bit differently. We did this very differently than maybe what we would advise our clients, in part because I didn't want to give up 1oz of spending time with our clients and doing our day job of advising our clients. And I will tell you, the number one reaction I got from our existing clients that were working with was, I had no idea you were doing this. We felt like you were giving us 110% of your attention, which to me was like the best compliment because that was the goal. And so I would say that we did this over a little bit longer period of time because we're a professional services organization, and I wasn't worried about our business, something happening to the business or anything like that.
28:57
Sanjay Chadda
To me, it was about really finding the right partner. And were flattered. We had a lot of interest from people who were interested in partnering with us, but we felt really great about the culture and the decision of partnering with great people at CG that's turned out to be a home run on every single front. Can't say that about every single acquisition we've done, of course. And I would say that because of the fact that I do travel a lot and tend to be with clients and the fact that we did it over a little bit longer period of time than we probably advise our clients to do. So I don't think people figured it out. And as we got closer to this, it was really important we decided partnership to bring some other key people under the tent and make sure that they had buy in.
29:35
Sanjay Chadda
And ultimately, because this was not just about the ultimate financial transaction economics, it was about the next continuation of our firm and taking a boutique firm and making it a much bigger opportunity for ourselves and our clients. It just was a very natural thing and I wanted to make sure we had our key people on board before we made any kind of final decision. So, I don't know, it was probably not perfect from that perspective and not what we would advise our clients to do in every single facet, but for us, it was the right thing to do.
30:01
David Rodnitzky
Yeah, no, it sounds like a good outcome for everyone and you have definitely scaled the business. So I think CG is very excited to join forces with you. Well, Sanjay, as I said, you're so good at responding to clients that just this interview has probably gone on too long and I've made some clients angry at you, so I really appreciate the time. I mean, you are one of the leaders in the space and this is going to be really valuable to all the founders who are listening to this who are contemplating a sale. So, really, thank you so much for the time today.
30:28
Sanjay Chadda
Well, look, I know you have a lot of choice to be able to bring on here, so thanks for the opportunity and as you know, I'm always happy to talk to about anything and I do have a little bit of anxiety. I've not responded to some folks in about 45 minutes, so I am going to get back to that, spend my Friday night doing so, I'm sure.
30:42
David Rodnitzky
Thank you. I really appreciate it.
30:44
Sanjay Chadda
Thank you.
30:49
David Rodnitzky
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