Buy-side investment banking with Mandy Prather

M&A
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Mandy Prather spent five years at BKD, staying until manager. She was considering partner track, but was convinced to jump into investment banking!

Contents:

  • Social impact investing
  • A typical day at a boutique investment bank
  • Pursuing non-accounting roles after public accounting
  • Translating experience to other roles

Thanks for joining us! Start by telling us about yourself.

I’m originally from Kansas City and went to Kansas State University. I started as a marketing major and switched to accounting my junior year. I was told that it would be a great base education to have and would be a value-add going forward. I finished my undergrad in accounting at K-State and got my Master’s in Accountancy at the University of Missouri-Kansas City.

How long were you at BKD?

I spent five years there and wasn’t actually trying to leave. I was considering pursuing the partner track. But I was looking at my colleagues who were 3-4 years ahead of me and saw that there were too many of them and not enough partner spots. That got me really thinking if being a partner was what I wanted. I didn’t love the accounting piece, so I was sticking it out for the sales aspect of being a partner. So, after more thinking and talking with friends, I decided that the day I became a manager I would start looking for a job.
I used an accounting recruiter and interviewed for a few accounting roles but didn’t end up liking any of them. What I liked about the audit world was learning about different industries and the client interaction; I wanted that sales and networking aspect. From talking with friends about what I wanted, I was turned on to investment banking. A college friend that I reconnected with post-college through our business relationships hooked me up with Kevin Lindsey at The DVS Group. Kevin and I talked over the course of a month and it turned out to be a really good fit. I started as an Associate about a year ago and it’s just been an awesome role that I didn’t know existed.

Tell us more about The DVS Group.

The DVS Group is a Social Impact Investment Bank. 80% of our clients are buy side; I’m working with individuals and companies who are looking to buy a business. Many of our individual clients have not bought a business before. So we act as an advisor to the process. We get to know our buyers, their backgrounds, and their business interests in terms of geographical location and industries. We look at companies that are on the market (listed through sell-side brokers) but we also search for companies that aren’t listed for sale. We’ll do an outreach campaign to companies that fit our buyers’ mandate, and we try to make it as personal as possible. We get feedback from owners all the time about how our intimate process is different from any other business broker that reaches out to them. In our communications we show the prospective selling companies who exactly will be buying the business. That part is super fun, hearing that a seller wasn’t considering putting their company on the market, but they decided to sell because they trust our process.
Then, we act as a filter for the buyer. We do some due diligence on the potential selling companies - review financials, model projections, analyze fluctuations, customer concentrations, all of that. Public accounting experience really helps here, I’m doing all of the same high level smell tests we do in audit, and can callout areas of importance right away. We also perform valuations by looking at market multiples and considering what the buy-side client can do in terms of financing. From there we just align expectations between the buyer and seller. If expectations align, we get a letter of intent written up and then start further due diligence to get the deal to closing. That’s another unique aspect of DVS – we stay with the buyer and seller through the whole process from search to closing, and check in after the transition to make sure things are going well. We want to maintain longstanding relationships with our clients.

What’s the social impact aspect of the company?

There are a couple of sides to this. One is that we’re trying to keep companies in their same communities. A lot of sellers want their employees to stay in place and don’t want the company to be moved. They need their employees and the money generated by the business to stay in the community.
We’re also developing social impact funds for Veterans, women, and Catholics. We’re still in the early stages of those, but the Veterans Fund is the furthest along. So some of our clients are Veterans who are interested in owning a business but might not have the capital to get a deal done by themselves. We have several deals in it right now and even have participants in the Fund that have reinvested their money back into the Fund. We also are building an infrastructure to where the Veterans in the fund have resources, such as a Board of Directors and Accounting help, to ensure the success of their new small business.

What does a typical deal look like for one of your buyer clients?

The average transaction size varies widely; this year alone, DVS has done deals from $2.65M up to $25M.  For our smaller deals, we have traditionally used SBA financing. The SBA will finance up to $5 million. We deal with all types of financing, though; the $25M deal had a mixture of mezz debt and other investors. Part of DVS’ value is ensuring our buy-side clients purchase a solid company that satisfies their needs. We want to make sure the owners can take a salary, can service the debt, and have at least a 20% return on their equity injection.

Can you describe your typical day?

We’re very small and going through a lot of changes. The idea is that analysts are marketing to sellers, talking to them to get the high-level summary of their business, getting financials, and acting as the first filter. If a company passes that filter, Associates are in charge of matching them up with our buyers. I have weekly updates to buyers and when appropriate, get them on the phone with sellers. Between the analyst and the associate, we’re spreading financials and modeling out different deal structures to take to banks for financing. And thenI’m doing everything from LOI to close. In that LOI to Close process I’m handling communications between attorneys, requests from bankers, collecting due diligence requests, and everything in between. There’s also a lot of handholding of buyers; it’s an emotional rollercoaster, thinking this will be the biggest investment of their lives.
My day will start with what is most important. Did I get financials that I need to spread and see if this is a deal we need to jump on right away? Or is it talking to sellers, setting up meetings with my buyers? Researching companies or industries, doing valuations? A lot of things change with my day. A lot of balls in the air atone time. Ideally, I only work with 4 buyers at a time, but I have 6 active clients right now and 3 clients I still am checking in on and giving attention to. That’s why we’re hiring

How does your role compare to public accounting?

Public is just more rigid and you know exactly what you need to get done today. But here, at The DVS Group, there are so many things going on that you need to reprioritize all the time. There's not near as much structure, not near as many big deadlines (that you know about ahead of time). I think the biggest learning curve here was having so many projects going on. But also, now being part of a small company, I have to strategically think about where the company is going. It’s cool to be a part of those conversations.  
I would also say that the accounting and financial mindset change from public to the investment banking side. In public, you’re looking to see if the company is following GAAP. On this side of things, I’m thinking from the perspective of a business owner. Sure the current portion of long-term debt isn’t broken out from the LTD line item in a company that I’m doing due diligence on, but what are the capital expenditures required in this company that the debt is financing, and what does the new business owner need to purchase to continue to grow? Those questions are more important to the buyer.

How did your time in public accounting help in your current role?

I can't imagine doing this role without public accounting experience. If I didn’t have that experience, I think my mind would just be jumbled. Public accounting helps you compartmentalize and figure out what needs to get done. It provided the structure and the process to get things done and the knowledge of how to prioritize. Also, the work ethic you get from public accounting. It’s just a different kind of “working hard.” We just have this mindset of getting shit done.
The technical accounting skills are also very helpful. And having the CPA behind my name makes people have more trust in me. Having that financial mindset and knowledge to be able to communicate with buyers and sellers is very important. I do wishI had more tax experience. I get a lot of tax questions from business owners.

What advice would you give to anyone working in public accounting?

Try to look at every industry possible. The firms will try to niche you out. But seeing other industries, how they operate, how their CFOs think - that can be invaluable. The firms will also tell you that you have to stay until you make manager to have a good career. It’s just not true. It’s about what you do and the experience you gain while you’re there. I’m glad I left when I left, I would not have rather left earlier. I wanted to absorb as much information as possible while I was there, because I knew I wouldn’t have the same trainings and learning experiences going into industry. Public is a great place to get tons of different exposure in one place.

How would you advise someone on how to explore non-accounting roles?

Talk to people. I got this job by talking to a friend. Just get the ball rolling talking about your interests. Someone might suggest other fields you find interesting and make intros to people in those roles.
I love that Kill Busy Season exists because you provide the insight that other companies value public accounting experience. It might not be an accounting job, but these companies know the value public accounting brings. Accounting isn’t the end-all, be-all. It’s a fantastic base that will stay with you throughout your career even if you’re not actively practicing accounting.

If you could go back in time, would you change anything about your career?

No, I've learned here at DVS that any experience is good experience. We love resumes that have a large variety. A lot of what I do now is translating a buyer’s experience to a seller’s company. For example, if we have a seller who receives freight from China, they have to transport that across the US. We might have a Veteran who was moving troops and equipment overseas. That’s logistics - we’re doing the same thing in the civilian world. Being an expert in a field is great, but the more experiences you gain, the more opportunities you have to translate your skills to any situation.

Who do you call upon for business advice?

I try to keep a lot of different mentors. Not long ago, I had this problem and I needed to talk to someone. But I didn’t have anyone off the top of my head, so I was scrolling through my LinkedIn and I found the perfect person who I had a relationship with several years back, so I reached out and they were excited to help me. Problems come in so many different flavors, and nobody can be an expert at everything. So I try to keep a variety of people.
I also stay in touch with some people who haven’t figured it all out yet, but are working really hard right now. We bounce ideas off each other and it’s more of a collaborative thinking session.

What does success look like to you?

That's a good question. A connector - someone that has resources. If they don't know the answer, they know where to go find it. If you know where to find the information, you don't have to have it. And I think people that are successful know how to get information.

What are your long-term career goals?

Being my own boss. At DVS Group, I get to see the success of my campaigns for my buyers and get them to be a business owner someday. I’ve loved learning about what it takes to be a business owner.
Ultimately, I want the freedom to pivot. If there’s a fun project that I want to chase, I want the ability to go do that. Whether that’s having the money to invest in a company or pulling people together to help on a project.
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