A Calculated Conversation: When Entrepreneurs Meet Opportunity

Forbes

3 days ago

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Jeff, the founder of J-Rock Company, had always known his firm was building something special. In the quiet blue ocean of specialized manufacturing consulting, his company stood tall—disciplined, trusted, and uniquely positioned. But even visionaries need a sounding board. That's why he called me.
"Hey, Lewis," Jeff said. "I need some help. Have you ever heard of a private equity guy named John Byron or a private equity firm called AER? They joined forces with Gold Capital to buy out our main competitor, and now they're coming after us."
I leaned in. "I don't know them personally, but tread carefully. Conversations like this—where someone says, 'We just bought your competitor and now we're calling you'—that's the beginning of a script I've seen too many times. And it doesn't always end well."
'Conversations like this—where someone says, 'We just bought your competitor and now we're calling you'—that's the beginning of a script I've seen too many times. And it doesn't always end well."
Jeff nodded. He knew I wasn't just playing devil's advocate—I was issuing a caution born of experience. I explained that the capital markets were overflowing—$2.5 trillion globally, all in search of returns. "Firms are constantly reaching out to companies like yours. The danger is that confidence, which you've earned by building something great, can also cloud your judgment. It's easy to get caught up in visions of exits and retirements without realizing you're underprepared."
Jeff smiled. 'I appreciate the timing, Lewis—really. We've got our first sit-down tomorrow night.'
J-Rock, Jeff explained, had always kept a tight focus—serving manufacturing companies with revenues from $2 to $50 million. Their closest competitor, Three Bridges, had always been a respectful rival. But when Gold and AER bought Three Bridges, installed their own CEO, and retained the founder as president, Jeff realized something bigger was in motion. Now the same firm wanted J-Rock, and they weren't being subtle. Patty Grant, the new CEO of the conglomerate, was flying in to make the pitch personally.
"They want us because of our licensing, team experience, and credibility. They even want me to take over consulting across the ecosystem—replacing John, who's retiring. I'm planning to go in and listen, not talk. No valuation numbers, no expectations. Just ears open."
"Smart,' I said. 'But how much do you know about the firm? How have their previous funds fared? What's the schedule of the current fund? Do you know people who have sold to them or partnered with them?'
Jeff didn't have any answers. 'I guess I'm not so prepared for this conversation.'
'Business owners rarely fully understand the game that is being played by private equity. These firms approach business owners knowing that a big number will do two things: get their attention and make them drop your skepticism, stop asking the hard questions.'
I explained that business owners rarely fully understand the game that is being played by private equity. These firms approach business owners knowing that a big number will do two things: get their attention and make them drop your skepticism, stop asking the hard questions.
As a first step, Jeff and I went over the questions Jeff could ask about the firm and their past performance. Afterwards, Jeff would have to check what they said about their performance against publicly available data. This was a good early test to see if they were honest or if they played games.
But most of all, I cautioned Jeff to listen ten times more than talk. Don't offer up information, ask questions. Act like a buyer, more than a seller, since, as I explained, if a deal were to be struck, Jeff was buying into this firm's guidance and capabilities.
Above all else, I told Jeff to go into this conversation assuming there would be no deal to be struck. Most of the time, I explained, when you are approached by a single suitor rather than running a formal company transaction process with years to prepare before going to market, the buyer was in a more advantageous position than the seller. But, I reminded, Jeff, the seller always has the power to walk away.
I explained the following to Jeff: 'Just because you built a great company doesn't mean you know how to sell it. They buy 10 companies a year, you sell one company in your life. You are outmatched by a mile.'
'Just because you built a great company doesn't mean you know how to sell it. They buy 10 companies a year, you sell one company in your life. You are outmatched by a mile.'
The next day, the meeting took place. Jeff followed up with me soon after.
"The meeting went great," he reported. "Very high level, no deep numbers yet, but the intent was clear—they want us in the fold. And they want me at the helm of their consulting arm. Our research on their past deals checks out, and we're heading into NDA territory now."
Jeff was optimistic. I was measured—this wasn't the finish line—it was the starting pistol.
'Next, they'll start asking for certain rights. You'll see a letter of intent from them soon. Have someone else who knows about these things read it alongside you. Because you're about to give them something —an exclusivity period—but they aren't giving you much back.'
Jeff had never thought of it that way. Once again, he realized he was getting excited while I was telling him about dangerous pitfalls he was about to drop into.
I reminded him. 'Jeff, this will work out fine if we just make sure we play our game, not theirs.'
'This will work out fine if we just make sure we play our game, not theirs.'
The mentorship was clear: Listen more than you speak. Own your role in the process. And above all, don't let momentum become a substitute for strategy. Jeff had a big decision ahead—but thanks to his preparation, and a timely conversation with me, he wasn't going in blind.
COOL TECH NOTE: I put this entire conversation into Google's NotebookLM and then asked NotebookLM to use the conversation to create a podcast between two commentators. I posted the entire conversation on Youtube. Check it out here.