Episode 125 – Tyrone Johnson
Beyond the Deal: What Every CEO Needs to Know About Private Equity Success
For many entrepreneurs, selling a business represents the finish line. Years of hard work culminate in an acquisition, a successful exit, and what appears to be the realization of the American dream.
But according to Tyrone Johnson, that’s where an entirely new journey begins.
In Episode 125 of The Covert Code Podcast, host Anna Covert sits down with Tyrone, CEO of Cascade Residential Services, Operating Partner at Thrive Capital, and author of Beyond the Deal: A CEO’s Guide to Private Equity Success, to discuss what happens after private equity enters the picture—and why many leaders underestimate the transition.
Drawing from decades of executive leadership and operational experience, Tyrone shares practical lessons on preparing a company for investment, leading through change, building scalable organizations, and embracing emerging technologies like artificial intelligence.
The Deal Isn’t the Destination
Many founders spend years preparing to sell their companies. They focus on increasing revenue, improving profitability, and making their business attractive to investors.
But once the transaction closes, expectations change dramatically.
Private equity firms aren’t simply purchasing financial statements—they’re investing in leadership, execution, scalability, and long-term enterprise value.
According to Tyrone, many CEOs underestimate how different life becomes after the acquisition.
The reporting structure changes. Decision-making changes. Accountability increases. Success is no longer measured solely by revenue but by operational excellence, sustainable growth, and value creation.
People Build Enterprise Value
While technology continues to transform business, Tyrone emphasizes that people remain the foundation of every successful organization.
Leadership teams, company culture, accountability, and employee development often determine whether an investment succeeds or struggles.
Private equity firms recognize that systems matter—but great systems still require exceptional people to execute them.
Companies that invest in developing leaders throughout the organization create stronger, more resilient businesses capable of scaling far beyond their founders.
Preparing Before Investors Arrive
Many business owners believe they’ll organize their operations after attracting investors.
Tyrone recommends the opposite.
Companies should build scalable systems long before entering conversations with private equity firms.
That includes documenting processes, improving financial reporting, strengthening operational consistency, investing in technology, and ensuring leadership teams can operate effectively without relying on a single individual.
Businesses that prepare early create more options—and often command significantly higher valuations.
Artificial Intelligence Is Changing Private Equity
Artificial intelligence is rapidly transforming every industry, and private equity is no exception.
Tyrone explains that AI is helping organizations analyze larger amounts of information, identify trends more quickly, and improve operational decision-making.
Rather than replacing executive judgment, AI becomes another tool that allows leadership teams to make faster, more informed decisions.
Organizations willing to embrace AI responsibly may gain a meaningful competitive advantage as investment firms increasingly evaluate technology readiness during acquisitions.
Throughout The Covert Code Podcast, Anna frequently explores how artificial intelligence can help businesses become more efficient while preserving the human expertise that ultimately drives innovation.
Culture Becomes a Competitive Advantage
Financial performance matters.
But investors increasingly recognize that sustainable growth depends on company culture.
Organizations with strong leadership, healthy communication, clear accountability, and engaged employees are better positioned to execute growth strategies after an acquisition.
Culture isn’t a soft skill.
It’s a measurable business asset.
Companies with strong cultures often experience lower turnover, stronger customer satisfaction, and greater operational consistency.
Scaling Requires Different Leadership
One of the biggest transitions founders experience is evolving from entrepreneur to enterprise leader.
The skills required to launch a business are not always the same skills required to scale one.
As organizations grow, CEOs must delegate more effectively, trust their leadership teams, develop future executives, and focus on long-term strategic thinking instead of daily operations.
That evolution can be uncomfortable—but it’s often necessary for continued growth.
Execution Creates Value
Ideas are important.
Vision matters.
Strategy provides direction.
But execution ultimately determines enterprise value.
Tyrone explains that businesses consistently delivering operational excellence, measurable performance, disciplined execution, and continuous improvement become significantly more attractive to investors.
Private equity firms aren’t simply investing in today’s numbers.
They’re investing in confidence that tomorrow’s numbers will continue improving.
Final Thoughts
Whether you’re preparing to sell your company, considering outside investment, or simply trying to build a stronger organization, this conversation offers valuable perspective on leadership, growth, and long-term value creation.
Tyrone reminds entrepreneurs that the acquisition isn’t the end of the story.
It’s often the beginning of an entirely new chapter.
If you’re building a business designed to last—not just one designed to sell—this episode provides practical advice every CEO should hear.
Watch the Full Episode
Watch Episode 125 of The Covert Code Podcast featuring Tyrone R. Johnson.
Learn more about Tyrone at tyronerjohnson.com.
Discover Cascade Residential Services.
Learn more about Thrive Capital.
Purchase Beyond the Deal: A CEO’s Guide to Private Equity Success from Forbes Books.
Explore more interviews with business leaders on The Covert Code Podcast.
Learn more about host Anna Covert and her work in AI, digital marketing, privacy, and business growth.
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Beyond the Deal: What It Really Takes to Win in Private Equity
The Covert Code Podcast
Host: Anna Covert
Guest: Tyrone R. Johnson
Book: Beyond the Deal: A CEO’s Guide to Private Equity Success
Anna Covert [00:00:04]:
Aloha. My name is Anna Covert, and I am coming to you from my battleship here on the beautiful island of Oahu.
This week on The Covert Code, the topic is Beyond the Deal: What It Really Takes to Win in Private Equity.
My very special guest is Tyrone R. Johnson, CEO of Cascade Residential Services, operating partner at Thrive Capital, and author of Beyond the Deal: A CEO’s Guide to Private Equity Success.
With more than 20 years of executive leadership experience, Ty has worked with Fortune 500 companies, private equity firms, turnarounds, and startups. He has deep expertise in the technology, industrial, and financial sectors.
Today, we will be talking about what happens after the deal closes, why execution is key, and how leaders can succeed in private equity-backed businesses.
Thanks so much for being here, Ty.
Tyrone R. Johnson [00:00:59]:
Thank you for having me. It is a real pleasure.
Anna Covert [00:01:01]:
To get us started, we love the CliffsNotes version of the Ty story.
You are such an interesting person. How did you get from where you were to where you are now? What do you think is important for our listeners to know about you?
Tyrone R. Johnson [00:01:13]:
I fell into private equity accidentally.
I came from a blue-chip corporate background. I worked at GE early in my career and moved around quite a bit.
Someone I previously worked with eventually joined a private equity-backed business. I went to join him, caught the bug, and have now been doing this for more than 20 years.
What I love about private equity is that it is very challenging but also extremely rewarding.
If you perform well, every few years you may receive a new opportunity. It is not monotonous.
I love the challenge, and I love building and scaling businesses. It is the perfect environment for me.
Anna Covert [00:01:50]:
Where are you located now?
Tyrone R. Johnson [00:01:52]:
I am currently in Florida.
Anna Covert [00:01:54]:
Why did you decide to write this book?
Was writing a book something you always wanted to do, or had you been working on it for years? Tell me the story behind the book.
Tyrone R. Johnson [00:02:09]:
It was not something I had always planned to do, and I had not been working on a book for the previous ten years.
The idea came from conversations I had with CEOs who were new to private equity.
At conferences and in other settings, people would pull me aside because I had experience and ask for my thoughts on being a first-time private equity CEO.
Over the years, I recognized a major gap in knowledge and experience.
As far as I could tell, there were not many strong resources available to help those leaders make the transition.
I decided to write a book that might make the transition smoother, less intimidating, and hopefully more successful.
Anna Covert [00:02:58]:
What are some of the biggest problems or challenges that come up for first-time private equity CEOs?
Tyrone R. Johnson [00:03:10]:
It is a very different environment.
Many of the companies our firm works with were previously founder-led organizations. They were built by entrepreneurs who are receiving institutional capital for the first time.
That creates a very different business environment.
Think about it this way: The founder may have a boss for the first time.
They are now reporting to someone and must answer to someone. That can be difficult for certain operators.
Private equity is also a very fast-paced environment, which can make the transition challenging.
There is also a different financial language associated with private equity.
There is EBITDA and a long list of other acronyms used to measure performance and determine whether a business is doing well.
The company may also need to enter growth mode in a different way than the founder is accustomed to.
Part of that growth may involve mergers and acquisitions.
Buying companies, integrating them properly, and ensuring the management team can execute may all be new experiences.
I try to walk leaders through those transitions and help them understand the best way, based on my experience, to build a sustainable business that creates meaningful value.
Anna Covert [00:04:38]:
I can imagine that feels like a whole new world, as Aladdin would call it.
Tyrone R. Johnson [00:04:44]:
It is an entirely new world.
There is a lot of material about the deal itself: how to sell your company, how to reach the transaction, and how to position the company for success.
I did not see much material about what happens next.
That is what was missing in my conversations with CEOs.
The deal is finished, and perhaps the founder has received a large check, but now what?
This book answers the question, “Now what?”
Anna Covert [00:05:16]:
That is very important, especially when you think about operating with the end in mind.
We recently had another guest discussing exit planning, and this takes the conversation one step further.
People become very excited about selling or receiving the investment, but what happens afterward?
Is there sometimes a major letdown after a founder reaches that goal and wonders what comes next?
Tyrone R. Johnson [00:05:43]:
There can definitely be a letdown.
In some cases, there is also remorse.
Founders may miss their independence. It is no longer entirely their company or their baby.
They now attend board meetings, deliver presentations, and answer questions they may never have faced before.
That can be uncomfortable.
It is not always that they have become disinterested because they received a large check. The entire operating system has changed, and some founders do not like the new environment.
Other founders adapt and do a fantastic job.
You do not always know which situation you have until you begin working together.
I try to help people understand and prepare for the experience transparently.
Private equity may be great for you, or it may not be. It is helpful to understand that before the transaction, when possible.
Anna Covert [00:06:43]:
What separates a business that scales successfully from one that struggles under pressure?
Tyrone R. Johnson [00:06:49]:
I think it primarily comes down to two things.
You need the right team, and you need processes and procedures.
If you have those in place, you have a much better chance of scaling successfully.
When a company moves from a less professionalized environment into a professionalized one, people may have been operating largely through instinct, gut feeling, or a seat-of-the-pants style.
Experience matters, but if you are truly going to scale and professionalize the business, you need systems, processes, and technology.
You need tools that make the business more efficient.
You also need talented people who know how to implement those tools.
Finally, you need the data generated by those systems to tell you whether your strategy is working or whether you need to change course.
The businesses that perform well integrate quickly, build the right team, and then accelerate.
The businesses that struggle often hold onto underperforming people because they are family members, close friends, or long-standing trusted employees.
They may also resist adopting the technology and systems required to support a much larger operation.
Anna Covert [00:08:09]:
That makes a significant difference.
In a smaller company, leaders may make decisions based more on emotion than numbers.
There are many feelings involved when you have personally grown a business.
Are there certain personality types that perform better after a private equity acquisition?
Does the leader’s background in finance, technology, industry, or another discipline make a difference?
Tyrone R. Johnson [00:08:58]:
I do not think the specific discipline or industry matters as much.
What I have found is that competitive people who want to win tend to do well in this environment.
Private equity is fast-paced and hands-on. It is not for everyone.
In some cases, you have no idea what tomorrow will look like.
You need a certain level of calmness and confidence, while remaining focused on the end game.
In our terminology, winning means creating value and producing an exit multiple that exceeds what was originally paid for the business.
It also means increasing EBITDA and building a stronger company.
When you build a team of competitive A players, they tend to perform well in private equity.
People who are more laid-back or simply interested in completing a solid day’s work may not be as successful in this environment.
Anna Covert [00:10:12]:
Are those the people who eventually phase themselves out?
Tyrone R. Johnson [00:10:20]:
Sometimes they phase themselves out, and sometimes you have to help them.
There may be a gap between what they believe they are contributing and what the business actually requires.
Some people recognize that the environment is not for them and decide to leave. That is perfectly acceptable.
Other people remain in denial.
They do not realize they are failing to meet the expectations, and you eventually have to have a difficult conversation.
Anna Covert [00:10:49]:
Do you ever see so much resistance that someone almost begins sabotaging the business?
Tyrone R. Johnson [00:10:56]:
It happens more often than people might imagine.
It can occur with founders whose authority is no longer what it once was.
They may not have the same influence or support from employees because the environment has changed.
They begin to quiet quit.
Sabotage may be too strong a word in some cases, but their engagement declines.
They are not as helpful as they could or should be.
Eventually, it becomes apparent that they are working against the new direction, and the company may need to exit them.
I would say that, more than half the time, this is the reason an incumbent leader is removed.
They become despondent and nonconstructive.
Anna Covert [00:11:48]:
Nonconstructive is a good way to describe it.
When you are evaluating or stepping into a company, what are you looking for to determine whether it is ready for private equity and capable of moving to the next stage?
Tyrone R. Johnson [00:12:05]:
There are many factors, but I focus on two in particular.
The first is the team.
How capable is the current team of accomplishing what we plan to do?
When a private equity firm acquires a company, it has conducted due diligence on the business, team, market, and competition.
There is an investment thesis and a reason to believe that, through the partnership, two plus two can equal five.
After that process, I determine whether the team can make the journey with us and reach the outcome we envision.
You have to evaluate that clearly and without emotion.
There may be many genuinely good people in the company.
The question is not whether someone works hard or is a nice person.
The question is whether that person can do what the business needs to reach the desired outcome.
I spend a great deal of time determining whether we have the right athletes to perform at the level we need.
When we do not, we try to make changes quickly.
Those changes should still be handled in a way that allows people to maintain their dignity.
There is no reason to be rude, cruel, or insensitive.
You can have honest conversations and help people position themselves for success somewhere else.
The second factor is infrastructure.
Is the business sophisticated enough to support the planned growth?
If we plan to acquire ten companies, introduce a new product, or build a new plant, does the infrastructure exist to support it?
Is there an enterprise resource planning system?
Is there a professional accounting system?
Is there a customer relationship management platform?
If not, much of my early work involves building the team and infrastructure required to scale.
Anna Covert [00:14:04]:
That is one of the areas I specialize in.
I work with large organizations, including Fortune 500 companies, and conduct technology audits.
Many people may not realize that a large company can have approximately one hundred pieces of software.
Employees may not be using half of them, and different departments may be using duplicate tools.
There can be significant economies of scale from consolidating or removing unnecessary platforms.
Companies can save substantial amounts of money very quickly through licensing reductions and better system integration.
Tyrone R. Johnson [00:14:42]:
That is extremely important for another reason as well.
It is not only about creating infrastructure that helps the business perform better and scale.
It also matters when the company exits.
One of the truths about private equity is that the company will eventually be sold.
A potential buyer will want to understand the infrastructure that has been built.
That may influence whether the buyer wants the company and how much the buyer is willing to pay.
If the buyer must spend significant additional time and money building that infrastructure, the business may be less valuable.
Getting the infrastructure completed quickly and correctly can enhance value.
Anna Covert [00:15:29]:
That makes sense.
It also makes me think about the Peter Principle.
In smaller companies, someone may hold a role they are not fully equipped to perform.
They may have been promoted repeatedly because they worked hard and did their best.
Then private equity enters, and it becomes clear that the person may not have the capabilities required to serve as a CFO or another senior executive.
Are those situations usually easy to identify?
Are people relieved to step out of those roles, or is there often resistance?
Tyrone R. Johnson [00:16:12]:
It is a mixed experience.
Some people are relieved.
They may say, “Thank goodness. I did not want to admit this role was not right for me. I was going to give it my best effort, but I knew deep down that it was not a fit.”
Other people remain in denial and believe they have the capability to do what is required.
Sometimes you recognize that a person is not ready yet but may be able to grow into the role.
With development, mentorship, and meaningful support over a reasonable period of time, they may succeed.
I have seen that happen.
However, when it is clear that someone cannot attend board meetings, communicate with investors, and establish trust, the company must make a change.
The CFO role is one of the most important positions in a private equity-backed portfolio company.
The CFO may interact with the private equity firm even more than the CEO.
The CFO is responsible for the allocation of capital and serves as the fiduciary link between the company and the investment firm.
If the books cannot be closed correctly, the numbers are inaccurate, or management cannot receive timely visibility into performance, that CFO is highly likely to be replaced.
Anna Covert [00:18:01]:
The world is moving very quickly, especially with artificial intelligence.
Are you seeing changes across private equity?
What are firms investing in, what are they avoiding, and what trends do you see developing?
Tyrone R. Johnson [00:18:22]:
I would answer that in two ways.
The first is how businesses and private equity firms are using AI to improve operations.
The second is how AI affects decisions about where to invest.
We are using AI tools for customer service, and many portfolio companies within our firm are doing the same.
I am not ready to say that AI can completely replace a person.
However, when a company has capacity constraints or cannot answer phones during certain hours or weekends, AI assistants can be very capable.
We are seeing more deployment of AI agents, particularly in customer service.
We are also using generative models for analysis.
When I am evaluating a company as an operating partner, I might take the confidential information memorandum, or CIM, and place it into Claude.
I can ask for a summary of the merits of the deal.
Within two or three minutes, I may receive three or four pages of strong analysis.
Anna Covert [00:20:06]:
It is incredible.
Tyrone R. Johnson [00:20:07]:
Previously, I would have read seventy pages, taken notes, highlighted important sections, and called several other people to ask what they thought.
Now, within minutes, I can receive a comprehensive analysis that helps guide further review.
It does not replace conducting due diligence or making your own evaluation.
It gives you a significant head start and helps you identify where to focus.
The second trend is that private equity firms are increasingly focusing on residential and commercial services that still require human labor.
In my business, someone still needs to climb into an attic and turn a wrench.
Landscaping requires someone to mow the grass. Painting requires someone to work on the house.
Private equity has been moving into these blue-collar service businesses for several years.
Even with AI, those services still require a human being to perform the work at a high level.
Some investors may be becoming more cautious about software-as-a-service and cloud-based businesses because AI may quickly disrupt or surpass certain offerings.
Meanwhile, more money is moving into professional and residential services that require someone to physically touch, repair, maintain, or improve something.
Anna Covert [00:22:07]:
That makes sense.
I have heard that some companies are attempting to attract investors simply by changing their names to include the term “AI.”
Tyrone R. Johnson [00:22:20]:
There has been a lot of that.
During the dot-com boom in the late 1990s, people did something similar.
The term “vaporware” was used for products that appeared impressive but ultimately disappeared because there was no real substance.
I am not sure what the current term should be for companies dressing up ordinary software businesses as authentic AI companies, but there should be one.
Anna Covert [00:22:56]:
They are trying to ride the wave.
In technology, there used to be more interest in prototyping, discovery, and development.
Now, many people want to move immediately to the finished product.
If the product does not already exist, they may not want to invest in the discovery or research required to create it.
Tyrone R. Johnson [00:23:28]:
That is happening across industries.
People are skipping steps and racing to the end.
With AI, someone may claim to have built a product that is really powered by Claude or another provider without understanding whether the company itself has any meaningful substance.
I receive calls and emails every day from new AI companies claiming they can solve a particular problem.
Six months earlier, many of those companies did not exist.
Anna Covert [00:24:04]:
That is frightening from a data perspective.
A free trial may appear harmless, but businesses remain responsible for their data.
If you connect an unfamiliar service to your CRM or ERP and give it access to company or customer information, you may become liable for how that data is handled.
We are seeing increased privacy enforcement and legal activity.
I specialize in privacy protection and data mapping.
One of my clients in New York recently received a claim involving the California Consumer Privacy Act because a website pixel had been misclassified in the cookie preferences.
The company was not even actively conducting business in California.
AI is making it easier for attorneys and other parties to identify alleged violations.
When a private equity firm acquires a large company and later discovers a data or privacy violation, who becomes responsible?
It does not seem like responsibility is always clear in the United States.
Tyrone R. Johnson [00:25:29]:
It is not always clear.
There may be state or federal laws that apply, but this is why legal and human resources due diligence are so important.
You may know what company you are buying, but you do not always know who you are buying.
The people and their character can be difficult to evaluate.
During the deal process, everything can feel romantic.
Everyone says the right things. Everyone is excited. The seller may receive a large check, and the deal team wants to complete the transaction.
There is a sense of euphoria around the partnership.
The real moment of truth occurs after closing.
If something was missed during diligence, it can have a major impact on the investment between acquisition and exit.
Cybersecurity is one area where we spend a significant amount of time.
When a private equity investment is publicly announced, bad actors may recognize that the company now has a major investor behind it and decide to attack.
We also conduct background checks on individuals.
People would be shocked by what sometimes appears in those checks.
We have walked away from deals because a person’s background did not demonstrate the value system we required.
People may have changed, and that is admirable, but we do not necessarily want the investment to become the test case for whether previous bad behavior has ended.
In some cases, the background issues involve serious crimes.
AI creates additional risks because bad actors are using these tools for harmful purposes.
That makes comprehensive legal, cybersecurity, and HR diligence even more important.
We spend significant money on those reviews because we want to get them right.
Anna Covert [00:27:57]:
I can understand why that is especially important now, given how quickly everything is changing.
Tyrone R. Johnson [00:28:02]:
To answer your question directly, after the acquisition it becomes our problem.
There are different transaction structures.
In a stock deal, the buyer generally assumes the company and its liabilities.
In an asset deal, the buyer may purchase selected assets and receive some protection from past liabilities.
However, an asset deal does not necessarily protect you from people who join the new company and continue behaving poorly.
There is a chapter in my book about a management team that spent company money on lavish trips, expensive dinners, five-star hotels, and first-class flights.
They treated the investor’s capital like funny money.
The company was not performing well.
During diligence, everyone had shaken hands, appeared happy, and seemed like the right partner.
Three months later, we were reviewing the profit and loss statement and wondering what had happened to operating expenses.
It was shocking.
Anna Covert [00:29:10]:
That is unbelievable. They were living beyond their means using someone else’s money.
Tyrone R. Johnson [00:29:18]:
Exactly. It was other people’s money.
Anna Covert [00:29:21]:
That reminds me of the controversy involving the book Three Cups of Tea.
The story involved raising money to build schools for women and children in Pakistan.
I remember sending a small donation because the mission sounded beautiful.
Later, questions emerged about how much of the money had actually gone toward building schools and how much had been spent elsewhere.
It is unfortunate when people use a good cause for personal benefit.
How important is value alignment between a private equity investor and the company?
How do you preserve company values while also creating consistency with the investment firm?
Tyrone R. Johnson [00:30:28]:
It is extremely important.
If a company does not have a value system, it does not have much of anything.
For me, the company’s value system must align with the private equity firm.
I have worked with this particular firm for more than ten years, and one of the best aspects of the relationship is the team’s character, integrity, and values.
Even during difficult periods or disagreements, people remain respectful.
You are challenged, and you are expected to produce and perform.
However, you can be demanding and maintain high expectations without being a jerk.
Those qualities are not mutually exclusive.
I look for the same value alignment in the people I hire.
Everyone who works with me must demonstrate the values that will define the entire company.
We also evaluate values when acquiring companies.
Can we trust these people?
Is their character similar to ours?
What happens when they face adversity?
Will they remain honest?
I ask open-ended questions and present scenarios to understand how people might respond.
Values also have to be demonstrated consistently.
We once had a general manager who had been asked several times to make an operational change that would create consistency across our businesses.
He disagreed and believed the change would damage the division he was running.
We provided analysis and examples demonstrating why we did not believe that would happen.
We also explained that we could reverse the decision if it did not work.
A member of my management team met with him.
In front of his entire staff, the general manager became defiant, cursed, and behaved unprofessionally.
When I learned about it, I said this was a direct violation of our culture and values.
There was only one appropriate response, which was termination.
The individual was producing results and running a good business.
However, everyone was watching to see whether we truly stood behind our values or would ignore the behavior because the numbers were good.
You have to walk the walk if you talk the talk.
Values must be core operating principles, not merely words on a wall.
Anna Covert [00:33:51]:
I agree.
I recently had another guest discuss how much longer hiring cycles have become.
Companies are afraid of making the wrong executive hire.
Some searches now take nine months or even a year and involve several interviews and assessments.
How long does a private equity acquisition process usually take from initial interest to signing the final documents?
Tyrone R. Johnson [00:34:20]:
The rule of thumb is approximately six months from the time you begin evaluating the company until the transaction closes.
There are several steps.
First, a banker or sell-side advisor provides a teaser.
That may be a one-page document with five or six bullet points about the company.
If the opportunity is interesting, you ask to learn more.
You then sign a nondisclosure agreement, agreeing to keep the information confidential.
After signing the NDA, you receive the confidential information memorandum, commonly called a CIM.
The CIM provides extensive information about the business.
You review it and determine whether you want to continue.
If so, you submit an indication of interest, or IOI.
The IOI says that you are interested in meeting management and provides a high-level range of what you might be willing to pay.
You may also describe the proposed structure.
For example, you may request that the sellers retain rollover equity.
You may also propose an earnout, where the seller receives additional proceeds if the company continues performing over a certain period.
If the advisor and management team are receptive, you are invited to a management presentation.
That meeting may take place in person or by video and typically lasts two or three hours.
You ask detailed questions about the company and clarify information from the CIM.
The meeting may also include tours of facilities.
Afterward, a virtual data room is opened.
It contains extensive information, including employee data, locations, financial records, contracts, and other supporting documents.
After reviewing that information, you determine whether to submit a letter of intent, or LOI.
The LOI includes detailed terms describing what you are prepared to pay and how quickly you believe you can complete the deal.
The first phase may involve approximately four months of meetings and evaluation.
Once the LOI is signed, everyone races toward closing.
That is when the buyer begins confirmatory diligence.
A third party may conduct a quality-of-earnings review.
Attorneys conduct legal diligence. Internal and external teams conduct business, HR, technology, and other reviews.
The buyer may have another two months to complete those steps before closing.
The total process is generally approximately six months: three or four months of evaluation followed by two months of intensive confirmatory diligence.
Anna Covert [00:38:10]:
That explanation is very helpful.
Once the deal closes, is there a short resting period, or does execution begin immediately?
Tyrone R. Johnson [00:38:19]:
There is no resting period.
Toward the end of diligence, a team is already preparing the integration plan.
They are determining what day one, day thirty, day sixty, and day ninety will look like.
Immediately after closing, the team begins executing.
Bank accounts and banking relationships may change.
Vendor agreements may need to be transferred into the name of the new entity.
If management changes are planned, those processes may begin.
The team has developed a playbook in anticipation of closing.
Once the transaction is complete, the integration team moves into action.
That can be extremely disruptive to the existing management team because many of them have never experienced anything similar.
At the same time, they are still expected to remain focused on the business and continue performing well.
The first three or four months after closing can be very difficult because many legal, financial, and administrative changes must be completed.
Anna Covert [00:39:25]:
Those are always exciting things to work through.
Even setting up an LLC involves a long list of forms and administrative details.
Tyrone R. Johnson [00:39:37]:
That is right. It is not insignificant. There are many details.
Anna Covert [00:39:40]:
This has been very interesting.
What is next for you, Ty?
Are you working on another book or doing public speaking?
Tyrone R. Johnson [00:39:47]:
My primary focus is my job at Cascade.
I am working to create the best possible outcome for all of Cascade’s stakeholders.
During nights and weekends, I speak with people about the book and how I may be able to help them.
I have accepted several speaking engagements and podcast appearances.
I am trying to let people know that, if they are thinking about selling their company or have already sold it and want to understand life on the other side, this book is a resource.
The main thing remains the main thing, but I enjoy helping people whenever those opportunities arise.
Anna Covert [00:40:36]:
How can people contact you, and where can they find your book?
Tyrone R. Johnson [00:40:40]:
The book is available through Amazon, Target, Barnes & Noble, and other major booksellers.
People can find me on LinkedIn by searching for Tyrone R. Johnson.
My website is TyroneRJohnson.com, where additional information is also available.
Anna Covert [00:41:08]:
We will include all of those links below this episode.
Thank you so much for joining me, Tyrone.
To everyone listening, if you have not subscribed yet, please do so.
We recently surpassed 200,000 subscribers, and I am overwhelmed with gratitude.
It is because of you and your aloha.
Please continue sharing this content with your friends, family, and colleagues so I can bring more great guests like Ty onto the show to share their wisdom.
I cannot wait to see you next week in the pixels. Aloha.
Tyrone R. Johnson [00:41:39]:
I am a big fan. Take care.