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Why Business Acquisitions Are Bigger and More Complex Than Real Estate Deals

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Show Summary

In this episode, Lauren Drummond-Dale shares how she helps business owners buy and sell companies, often alongside significant real estate assets. With over 16 years of experience, she explains the differences between commercial real estate and business brokerage, how valuations work, and why confidentiality and due diligence are critical in transactions. Lauren also discusses working with investors, private equity groups, and commercial agents, as well as the growing opportunity in lower middle-market businesses. From liquor stores to agricultural companies, she highlights the complexity—and opportunity—of blending business operations with real estate ownership.

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    Investor Fuel Show Transcript:

    Lauren Drummond-Dale (00:00)
    Well then business brokering or M&A advising is the next step up because again, our work is much more complicated than a straight real estate transaction because there’s real estate and there’s the business. in our primary, one thing that’s really different about us is in the real estate market, you tend to represent the buyer or the seller. ⁓ Many times we represent the transaction.

    Michelle Kesil (01:55)
    Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Lauren Drummond-Dale, who is a business intermediary working on the buy and sell side of different businesses. So excited to have you here today, Lauren.

    Lauren Drummond-Dale (02:17)
    Thank you. Glad to be here.

    Michelle Kesil (02:18)
    Great. So let’s dive in. First off, for those who are not familiar with you and your work, can you share what your main focus is?

    Lauren Drummond-Dale (02:27)
    So our main focus is helping owners of businesses either buy or sell. And the factor of real estate comes into play because so many owners actually own their real estate. Or sometimes I have a business owner that maybe has a strip mall or a large restaurant and they need an investor to come in and buy the real estate and then they’ll come in and buy the actual business operations and operate that. So it kind of works hand in glove.

    I work with lot of commercial realtors and I work with lot of investors too. Sometimes I can sell a business but they don’t have the funds or the borrowing capacity to buy the building. This happened one time last year where I had a large liquor store in a building that they owned. The owner owned the building and the property but the buyer only had the capacity to buy the business.

    So we had to reach out into our network and find someone that wanted to buy the building and then charge the business owner, of course rent, for a nice cap rate normally.

    So Michelle, I’ve been doing this for 16 years. I’m a master certified business intermediary with International Business Brokers Association. I teach on negotiation. I teach on how to be a better business broker. We don’t have as many states that we’re licensed in as realtors are. Although I am a licensed realtor in the state of Mississippi, there’s many states that a business broker does not have to be licensed. So we work within our organization to bring…

    the caliber of business brokers and lower middle market mergers and acquisitions advisors up to the same ⁓ level of ⁓ transparency and education as our realtor

    Michelle Kesil (04:12)
    Awesome, and so which states and markets are you operating in?

    Lauren Drummond-Dale (04:17)
    So I operate all through the Mid-South. I’m actually business partners with lower middle market advisors across the US. I can actually work anywhere. I try to stay in the Mid-South to keep my travels to a fair minimum. I don’t want to go out to California on a regular basis to deal with a client.

    Michelle Kesil (04:36)
    And so what would you say are some of the main keys that have allowed your business to be able to grow and run successfully?

    Lauren Drummond-Dale (04:47)
    ⁓ So I’m pretty entrenched in my community for the small ⁓ storage units or laundromats or small restaurants. The last couple years, because I’ve been doing this so long,

    I’ve started dealing with larger businesses and I do a lot of outreach for those businesses and a lot of education. CPAs sometimes need me to come in and teach for their continuing education, sometimes commercial realtors.

    will have me come in for their continuing education. commercial realtors are going to deal, they’re going to see the businesses that are for sale. Or they may have a client, ⁓ one of the uses that I’ve been used for is maybe a large shopping center has a leasee that is not doing well or needs to sell or needs to relocate. Then they’ll reach out to me, the strip mall reach out to me and ask me if I can help that leasee transfer to a new owner.

    Michelle Kesil (06:30)
    Mm-hmm. Awesome. ⁓ And so what types of businesses do you work with? Is there like ⁓ any types that you specifically do or don’t work with?

    Lauren Drummond-Dale (06:42)
    Yeah, so I’m a generalist ⁓ and anything in the two to 40 million top line revenue range, you know, I’m perfectly ⁓ capable of working with and have experience working with them with the caveat that if it was a SAS, which you’re not going to run into in the real estate market, most likely a SAS, I would reach out to one of my business partners or business associates. If it was medical, I would bring in someone to work with me because there are.

    Michelle Kesil (06:51)
    Yeah.

    Lauren Drummond-Dale (07:09)
    there are some nuances in different industries that you really need to work with someone that’s done a lot of sales in that business. know most of the questions to ask for most of the industries, because prior to doing this, I had a 30 year career in about 10 different businesses. So I have experience across the board. I was in the automotive industry. was in the wood and pellet industry. I was in the manufacturing home industry.

    did property management for a while. you know, one of the things that helps me explain what we do is, is, you know, we think of a residential realtor as being the starting, the starting point for someone to get into the real estate, into a real estate career. And then they get a little more sophisticated, a little more education. They move up to the commercial realtor range and the difficulty of doing a deal increases as the money increases, right?

    and the education that’s required increases.

    then business brokering or &A advising is the next step up because again, our work is much more complicated than a straight real estate transaction because there’s real estate and there’s the business. in our primary, one thing that’s really different about us is in the real estate market, you tend to represent the buyer or the seller. ⁓ Many times we represent the transaction.

    Of course, we have a fiduciary responsibility to whoever’s going to pay us at the end of the day.

    but we often handle both sides of the transaction because many times it’s the first time that someone’s been through a transaction. Now I currently have, I have a client that had three franchise locations and I sold them last year for them. They were in three different states. I’m sorry, two different states. ⁓ And now they’re looking to me, they want to make a passive investment in a real estate.

    maybe a little strip center or something that’s hands off operation with a passive income. So, you know, it kind of flows, it kind of flows back and forth.

    Michelle Kesil (09:03)
    Yeah, awesome. And so what are you most focusing on solving or scaling to next?

    Lauren Drummond-Dale (09:10)
    So

    I decided last year to increase the capabilities of the company through upgrading CRMs, upgrading my website, getting access to more data services for our business so that I can pull comps. Realtors can’t pull a comp on the last five liquor stores it sold or the last three tire manufacturers it sold where we can. And I also brought on a couple of new brokers.

    ⁓ So I like to teach and I like to mentor and this business is a tough business to get started in. So I brought them on and I’ll be working with them and helping them develop their careers.

    Michelle Kesil (09:52)
    Awesome. So what does kind of like the process look like when someone works with

    Lauren Drummond-Dale (10:35)
    So

    buyers reach out to us all the time. It’s amazing as you an investment area that you’re in, you well know there’s a lot of money out there. They’re not going to spend it foolishly, but there’s money that needs to be placed out in the market and they’re looking for the place to put it. So we’re overloaded with buyers. They’re coming to us every day in all different kinds of shapes, forms and fashions.

    Michelle Kesil (10:52)
    Thank

    Lauren Drummond-Dale (11:00)
    The difficult of our business, the first step is finding a ready, willing and able seller that has hopefully prepared his business to get the most value for his business when we put it on the market. Sometimes we work with the client for three or four years before we actually go to market because we want it to be positioned where the buyers are interested in it. And the next step for us is to value the business.

    We do an in-depth evaluation on a business. We don’t do just a market analysis like you do in the real estate market. We do a deep dive into other financials. We have a lot of interviews. It’s an intense process that we go to that takes several weeks for us to do. Similar to an appraisal, but not nearly as expensive. Then when we get, we start screening the buyers because a business owner or even a shopping center owner often doesn’t want anyone to know that the item is for sale.

    So we have to operate in a confidential manner. So we have to screen everybody that expresses interest in the opportunity that we’re presenting. Then once we’ve narrowed it down to a handful of potential buyers or a lot of potential buyers, then we begin by our interviews with the seller. Then we start going through negotiations. And then we finally get an LOI.

    Michelle Kesil (12:08)
    Yeah.

    Lauren Drummond-Dale (12:14)
    and we finally get a purchase agreement and then the fun starts because then unlike in real estate where you do a purchase agreement and you do a title search and off you go, we have a lot of due diligence that has to happen. Lawyers get involved, accountants get involved. So that process can drag out. We see a lot of SBA loans used. ⁓ And if property and the business are blended together and someone’s buying the business and the property, the SBA can do a blended rate.

    they might get 20 years on their business loan, which is huge as versus ⁓ a normal business loan without the real estate factor, they’d only get 10 years.

    Michelle Kesil (12:55)
    Yeah, definitely that makes sense. That’s a unique opportunity. Is it usually like investors that come to you or just anyone?

    Lauren Drummond-Dale (13:04)
    It’s both. Small businesses, sometimes someone’s looking to buy a job just to be perfectly frank about it. Larger businesses, you have private equity groups coming in. You know, sometimes we have to utilize a REIT process ⁓ to transfer the real estate for tax purposes for the owner. So everything we do, most everything we do is keyed around the business owner. But so many of them own their property.

    Michelle Kesil (13:06)
    Yeah.

    Lauren Drummond-Dale (13:33)
    ⁓ Or if property owners are leasing space to business owners, they’re another active area of expertise for us because they need to keep their spaces full, right? ⁓ And if they have to present, sometimes property managers, I’ve worked with some property managers that were trying to sell their book of business and we would reach out to other property managers and that’s kind of a niche market.

    Michelle Kesil (13:33)
    Okay.

    Lauren Drummond-Dale (14:00)
    ⁓ You don’t value a property management company like you would a boutique ⁓ or a small medical practice or a dental practice or a veterinary practice. There’s so many different businesses out there. It’s one of things I love about what I do is it’s different every day.

    Michelle Kesil (14:14)
    Yeah, absolutely. Is there like a typical type of business that you normally work with? ⁓

    Lauren Drummond-Dale (14:20)
    No, again, it’s the revenue size. The two to 40 million top line revenue is our sweet spot. Not that we won’t work with someone that’s under that or over that. Not that we won’t work with a ⁓ landlord that needs to for us to try to find them a new tenant for a location. Those are all things that we’re perfectly willing to

    Michelle Kesil (14:32)
    BOOM!

    Awesome. And so what do you feel are like some of the biggest opportunities in your industry right now?

    Lauren Drummond-Dale (14:52)
    So how many realtors are there in the nation right now? What is the number on that? Do you know, happen to know commercial or? There’s many, right?

    Michelle Kesil (14:59)
    I don’t know. Not sure.

    Lauren Drummond-Dale (15:44)
    Tens of thousands, tens and tens of thousands of realtors. So there is about 3000 business intermediaries that do lower middle market and Main Street. So the competition is not nearly what it is in the real estate market, but it’s more difficult.

    Excuse me. ⁓ The paychecks are big, but they can be spaced out quite far apart from each other. But I think if someone is coming out of a career, ⁓ the two really nice paths to this are a corporate executive that’s getting out of the corporate world and would like to run his own business. ⁓ I’m currently working with a young man now that’s in the medical field and he would like to step out.

    Michelle Kesil (16:12)
    Yeah.

    Lauren Drummond-Dale (16:28)
    and own a business and operate a business. And he has experience. we’re looking at a medical based company for him so that his experience, although not business operating, will help him move forward. There’s no real estate in that deal. then I’m working with an agricultural company that actually has four locations across the Southeast. And there’s a big real estate component in that. We’re thinking we’re going to be looking at an investor to buy the

    real estate and then a private equity group to buy the actual business operations.

    Michelle Kesil (17:02)
    So do most of your clients, seek you out.

    Lauren Drummond-Dale (17:05)
    For in my community, know, within probably, you know, 100 miles of the Mississippi Gulf Coast, they searched me out. They know I’m here and I’m about the only one here. So they reach out to me. And when it starts getting up in businesses that do 10, 20, 30 million, that’s more of an outreach on our part.

    Michelle Kesil (17:08)
    Pfft

    got you. And so how do you normally like find your clients?

    Lauren Drummond-Dale (17:34)
    So we have access to know and that people are searching for words like, ⁓ how do I sell my business? ⁓ How do I value my business? So we reach out to those people through drip campaigns and that sort of thing. We also know who’s coming to our website. We reach out to them. In some instances, I’ll actually attend a conference. If I have a business in a particular industry, I might go to that industry’s conference so that

    Michelle Kesil (17:58)
    Thank

    Lauren Drummond-Dale (18:03)
    I can meet people that might want to buy that business.

    Michelle Kesil (18:06)
    Yeah, so sounds like networking is an important aspect.

    Lauren Drummond-Dale (18:08)
    Yeah,

    it is, it is, yeah.

    Michelle Kesil (18:11)
    Awesome. And so when it comes to like the real estate side, ⁓ are you working with agents as

    Lauren Drummond-Dale (18:19)
    Yes. Yeah. So one of the networking activities I do is the Mississippi ⁓ Commercial Realtors Association. I work closely with them. We tend to co-broker on things where they’ll mostly represent the real estate side of the transaction and I’ll mostly represent the business side of the transaction. But we have different flow that we can reach out to buyers. So it’s a value to both of us to market that way. And it’s no harm, no foul if

    they sell the property and I don’t sell the business or vice versa. they, you know, for many years, I thought they were my competitors because sometimes commercial realtors will try to sell a business, although they don’t really have the experience or the knowledge to do it in the best way. ⁓ But I have found out the ones that are educated and the ones that are experienced, they immediately reach out to me because they know that they’re better to stay in their lane.

    Michelle Kesil (19:14)
    Yeah, absolutely that makes sense. Awesome. So before we begin to wrap up here, if someone wants to reach out, connect, learn more about what you’re up to, where can people find you and reach you?

    Lauren Drummond-Dale (19:30)
    So pretty easy to find if you Google Lauren Drummond-Dale. There’s a lot of Lauren Drummond’s, but there seems to only be one Lauren Drummond-dale. We also have a website at www.coastalconsult.org or they can email me at [email protected]. We’re on LinkedIn, we’re on Facebook, we’re pretty easy to find. Coastal Consult.

    And Coastal Consultants, it’s just the website is just Coastal Consult, but we are Coastal Consultants.

    Michelle Kesil (20:04)
    Perfect. Appreciate your time and your story. Thanks for being here.

    Lauren Drummond-Dale (20:08)
    Sure, Michelle, glad to be here. Hope it’s helpful.

    Michelle Kesil (20:12)
    Absolutely. And for the listeners that are tuning into our show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Lauren, who are building real businesses and we will see you all on our next episode.

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