#275: Peter Lehrman - Founder of Axial: The M&A and Capital Raising Platform for the Middle Market

My guest today is Peter Lehrman the Founder and CEO of Axial, and we’re going to be talking about the market of buying and selling privately held companies, the inefficiencies as well as the progress.

Peter is CEO and founder of Axial, responsible for delivering the company’s vision to become the trusted platform where private companies and their trusted advisors connect with capital. Prior to Axial, Peter worked in private equity at SFW Capital Partners and was part of the founding team at Gerson Lehrman Group, where he helped to build the company’s global technology platform for on-demand business expertise. He earned his undergraduate degree from the University of Virginia and received his MBA from Stanford Business School. He lives in New York with his wife Eve and their four children.

If you’re a business owner thinking about selling for the first time, and you have no idea where to start, this episode is for you. There’s a ton of information out there about how and when to sell your company, but not all advice is weighted equal. Bad advice goes a long way to souring your view on selling your company. Let’s turn to a market expert who will share how to find and assess M&A advisors that align with your goals. Peter Lehrman is the Founder and CEO of Axial — a marketplace where small businesses can find their next M&A advisor, investor or buyer — and he’ll help clarify what areas you need to educate yourself in and how best to achieve that education in time to make a positive difference in the sales process. On today’s show, we talk about inefficiencies between the buyer and seller, the state of the marketplace and the trends with entrepreneurs through acquisition (ETAs) in the lower middle market space. This is an awesome episode full of smart insights into the booming market of mergers and acquisitions.

What You Will Learn

The inefficiencies in small business M&A and Peters solution
The valuation process Peter takes when working with a small business
The process of the buyers and sellers engagement within Axial
Why it’s important to know what the buyer and sellers want and why right from the start of the deal
How you can make more money as an M&A advisor in middle market organizations
Why selling a bigger business can be easier than a smaller one
The structural challenge with small businesses that Peter is striving to solve
Why Peter sees ETA (entrepreneur through acquisition) as a growing category in the M&A industry and what that means for the M&A market
The trends on the buyer’s side of an acquisition - and what a lot of acquisition entrepreneurs want and why
How sellers have so many options in today's market dynamic do to the amount of investment capital right now

Bio:

Peter is CEO of Axial and responsible for driving the company’s vision to be the trusted platform where private companies connect with capital. Prior to Axial, Peter worked in private equity at SFW Capital Partners and was part of the founding team at Gerson Lehrman Group, where he helped build the company’s dominant global technology platform for on-demand business expertise. He earned his undergraduate degree from the University of Virginia and received his MBA from Stanford Business School.

Quotes:

12:01 - “The number one goal for Axial is to create a set of introductions for buyer and seller, at the right points in time, on the right opportunities, with the right types of buyers and the right types of sellers.” - Peter Lehrman

16:38 - “I think we’ve made a huge leap forward in terms of the amount of people making content in the form of podcasts and books.” - Peter Lehrman

21:15 - “Sellers are reviewing a variety of indications of interests typically from a variety of different buyers and trying to get a sense of, ‘who do they want to spend time with?’ Because you can’t spend a huge amount of time with a huge number of buyers. I think that process can happen within the first month of a formal engagement with formal buyers.” - Peter Lehrman

24:13 - “You have to understand that, if you’re a financial intermediary, and your profession [...] is to sell businesses, if you’re extremely good at that and you’re extremely well trained [...] you’re going to make a lot more money as an advisor, advising bigger companies.” - Peter Lehrman

31:32 - “The reason you became a buyer is because you wanted to buy businesses.” - Peter Lehrman

32:56 - “[Axial] think businesses are fundamentally different because there are employees there. There are a lot of sensitivities. People often want to sell businesses very often confidentially or quietly.” - Peter Lehrman

35:34 - “I wouldn’t say that [FBA or Shopify] businesses can be bought and sold like publicly traded stock. But those businesses are more templatic.” - Peter Lehrman

43:39 - “You have this class of highly educated, highly capable and upwardly mobile but somewhat disenfranchised young talent that’s saying, ‘I don’t want to work for KKR for the next thirty years.’” - Peter Lehrman

47:41 - “You really have to do something different with that business once you own it, in order to get the return.” - Peter Lehrman