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Positive Enterprise Value Blog Many Industry Specialists Hate Bigelow’s Guts. Why? Because We’ve Got Guts
Many Industry Specialists Hate Bigelow’s Guts.  Why? Because We’ve Got Guts

Many Industry Specialists Hate Bigelow’s Guts. Why? Because We’ve Got Guts

December 12, 2023

2 minute read



From time to time, I am asked by expert advisors calling to refer a client business, “How many deals has Bigelow done in the _________________(fill in the blank: packaging industry, or aerospace and defense industry, or staffing industry or…whatever”)? It’s the wrong question. In 2024 is there any advantage to engaging an advisor who specializes only on businesses in one industry?”

The notion goes to the question of whether those who work only with clients in a single vertical industry bring more necessary knowledge or wisdom than those who work in multiple industries. It is an intriguing question to us because our Firm, now near its 90th year, obviously could have devolved into vertical industry specializations but has intentionally chosen not to. We do have a clear specialty, but not by vertical industry. We arrange and architect capital gain transactions in the private transaction market for companies in a variety of industries, but in each case, exclusively for those which are owned and governed by Entrepreneur Owner-Managers (EOM)—only those who have their own capital at risk—their skin in the game.

We used to think having more and more data or information in a specific vertical industry might result in wisdom. Over the years, motivated by our clients’ experiences, we have changed our minds. Candidly, we refuse to be limited by an industry specialist’s lack of wide-ranging experience. It’s limiting to our creativity in finding the best fit investor (regardless of industry that the new investor is in). Instead, our track record is that we leverage hard won experiences and creativity earned in certain fields or industries to bring fresh perspectives and inspired solutions to our friends/clients in different industries. There’s a great deal of hard science that concludes the largest determinant for success is not knowing the most about the client’s industry (after all, they are the experts there), but rather gaining intimate understanding of the client’s personal and professional goals, and then translating those into obtaining the best fit investor (which usually values the firm most highly and increases the probability of sustainability of the business).

The private transaction market (where we operate) is a little like the weather. It is a chaotic, complex, adaptive system. Frequently a given input does not result in a linear output—you have to have perspective. The private transaction market is most of all characterized by fat tails. Luckily, technology has utterly leveled the playing field. Where it used to be true that you had to spend your entire career in a vertical industry just to know “who’s who,” today we access information on literally every company in every industry in the world at the same time as the largest or most specialized firms do.

Industry specialists tend to rely on memory and stick with their comfort zone: “what has worked in the past.” They get productivity out of going back, over and over, to the same ideas, the same companies, the same people. They are able to leverage their most junior people. BUT they get “average outcomes.” Of course they do, because they are going to the same industry average investors over and over again. And the unintended but dangerous consequence of their behavior (routine that comes with specialization) is their cognitive bias that creeps in without notice and blocks them from seeing how to do things any other way than what has worked in the past. On the other hand, our deliberately multi-disciplined teams stay in the “constant now,” seeing possibilities to which the industry expert is blind.

It's axiomatic that M&A industry specialists have an inherent conflict of interest. They call on the private equity groups that are interested in your vertical industries, but… someday, the M&A firm hopes to represent the PEG, in a sale transaction of one of their portfolio companies. Will they negotiate as fearlessly as they would if they didn’t have that conflict? With this built in conflict of interest, can an industry specialist M&A firm fearlessly and tirelessly advocate for you the EOM to assure that you’ve received the fair market value price, terms, and conditions you are hoping for?

Entrepreneurial success is a bricolage of character strengths of the head and the heart; it is impossible to mathematize. Scar tissue has shown us that broad synthesis across many industries unlocks inventive strategies that prove vastly more valuable for Bigelow clients. By going from industry to industry serving seasoned successful Entrepreneur Owner-Managers, we are re-fueled; our endurance enhanced.

When considering engaging the help of an M&A expert (for any domain), it might be worth asking, “What is the consideration set? What characteristics should I compare firm to firm? Are they the most creative? Will they find the best fit investor no matter where the investor is in the world, no matter if the best fit investor is not currently in your industry? Do they understand my personal and professional goals? Are they candid, honest, ethical? Are there any unseen incentives that I do not understand? Who within the Firm will be leading my engagement? What’s their track record of success? Do they do what they say they will do? Do they have twenty years of experience—or one year’s experience repeated twenty times?”

Industry Specialization: a great strategy for the advisor firm. For the client? No, not at all.

What I am Reading / Listening to

Going Infinite (2023)
By Michael Lewis  

“I would never read a book.” – Sam Bankman Fried.

Never thought I’d write this about a book authored by Michael Lewis but here it is: Holy Crap did I despise this book. Not the reading of it, but the horrifying story, and the laughable whitewash that Lewis gives it. How the heck did he fall for this?

This is an alarming narrative; incredibly painful to read. It reminded me of the “sick to my stomach feeling” I got from reading about the rise and fall of WeWork, or the Theranos saga and the books and videos that were created about them. There is no defense for this kind of con artist, shyster, liar, cheat, overgrown brats of “corporatism” gone wrong.

Here’s a question for you: why didn’t anyone ever tell SBF to stop playing the f%$^ing video games and sit up and look them in the eye when he spoke with them? He had carefully cultivated his “odd-ness” as part of his brand. Who would dare suggest he wear long pants to a Congressional hearing? You don’t seriously think the shorts and wrinkled tee shirt and wild ‘fro were because he was a mad professor and didn’t notice his appearance, do you? Nay nay, those were carefully cultivated cogs of his personal brand. (Reminds me of some of the wannabe entrepreneurs who show up for funding meetings with hoodies and jeans uncreatively/ mechanically copying Zuck?)

Lewis got completely sucked in by SBF’s pablum. It was only when things began to unravel that Lewis got a clue. How the hell did an experienced and usually cynical Michael Lewis completely trust SBF's verbal explanations of his own actions and his motives? Nowhere does Lewis challenge or even engage with the large-scale lying and deception that SBF practiced hourly. Where was his scholarship? Where were his investigative chops? Sam Bankman-Fried has been found guilty in court of all the charges against him. He stole money from unsuspecting customer accounts to fund his personal lifestyle (including huge personal contributions to liberal political candidates).

You don’t have to be an MBA, just an independent thinker to ask yourself, hmmm…FTX has no Board of Directors? No Securities licenses (where is the SEC and / or FINRA)? No known named auditors? No headquarters? At FTX, they worked and slept where they deliberately made sure was out of reach of US laws and regulators (they thought).

This isn’t merely shoddy investigative journalism. Lewis became so enthralled and attached to SBF that…he was duped. Wouldn’t you have thought that the famous author Michael Lewis would’ve had the good sense (and be protective enough of his own reputation) to at least wait until the jury reported its verdict before publishing?

Entrepreneur Owner-Manager Quote

"I look forward to working with the team at Benford to help grow BSC’s capabilities, continue to expand our service offerings, and better serve our customers. At BSC we are seeing a multitude of opportunities to expand our offerings into additional segments and end markets, and partnering with a firm like Benford that has experience supporting private company growth will only improve our likelihood of success. I’m excited for this next chapter.

-Peter Fitzpatrick, Shareholder & Chief Executive Officer of BSC Industries, Inc.

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