Recorded at NFPA 2024 in Orlando, Paul Giannamore talks with transactional attorney Mike Stanczyk about legal strategies for fire protection business owners considering a sale. Topics include choosing between LLCs and C Corp structures, non-compete agreements and employee agreements amid regulatory changes, private equity roll-ups and rolling equity, sellers' rights and limitations in equity participation, differences between private equity and strategic buyers, and drafting and modifying operating agreements and partnerships. Also covers transactions, compliance, documentation, and legal frameworks across states. # Channel Identity Observations: PIDTV (Paul Giannamore) ## Explicit Self-Description by the Creator - **Channel name and host**: Paul introduces himself as "Paul Giannamore" and references "PIC TV" / "PIDTV" (transcript variants) as the channel. - **Stated historical focus**: > "historically pic TV has been focused on business and operational information and interviews for residential and Commercial Services business owners" - **Stated expansion of scope**: Following the "sell side M&A master class" publication, he announces new content: - > "Dylan and I will be sitting down filming more extensive m&a master classes both focusing on the sell side as well as the buy side" - Topics named: choice of process, "m&a psychology," "buy side practice approach and due diligence." - **Viewer-driven framing**: > "this channel is largely driven by you the viewer and what you want to see from us" — invites comments and subscription. - **Contact mechanisms referenced**: Email distribution list link in description; subscription CTA; LinkedIn inbound ("my LinkedIn inbox has been inundated"). ## Intended Audience (Demonstrated) - **Owners of service businesses, specifically fire protection companies**, addressed directly throughout (e.g., "if you have another owner in your fire protection company..."). - **Owners contemplating exits or PE partnerships**: recurring framing like "a lot of guys here are eyeing an exit... 6 months from now a year from now two years from now." - The interview guest (Mike Stanczyk, transaction attorney) confirms this audience: "we represent a lot of people who own a company who are selling it... fire protection being one of them." ## Claimed/Demonstrated Scope - **Interview format with industry specialists**: This episode is a conversation with a transaction attorney recorded at an industry event ("thanks for joining us today here at the show"). - **Themes covered**: entity structuring (LLC vs. C-Corp, QSBS), non-competes and FTC trends, private equity roll-over equity, partnership/operating agreements, M&A diligence differences between PE and strategic buyers. - **Creator's professional adjacency**: Paul indicates long familiarity with M&A ("you and I have actually worked together for... 15 plus years"), positioning himself as a participant-observer rather than neutral journalist. - **Personal aside demonstrates industry engagement**: Mike's volunteer firefighter anecdote is framed as relevant credibility ("this is a side but maybe relevant"). ## Presentation Patterns (Observable) - **Conversational expert-to-expert interview**, low production formality, with direct second-person advice to business owners ("you should consider like a business marriage"). - **Audience engagement and growth tactics**: subscription prompt, email list capture, request for viewer topic comments. - **Long-form, single-topic deep dives** (this video: legal strategy for fire protection M&A). ## Notes on Trust and Limits - All identity claims above are the creator's own statements; no independent verification of channel scope was possible from this single video. - No private motivations were inferred; the LinkedIn/M&A master class framing is quoted directly from the transcript. # Delivery Observation: Private Equity Deals and Legal Strategies for Fire Protection ## Overview A two-speaker interview format hosted by Paul Giannamore (channel host) featuring Mike Stanczyk, a transaction attorney. Delivery is conversational, advisory, and heavily Q&A-driven, conducted live at an industry event. ## Tone and Register - **Plain-language, advisory tone**: complex legal concepts are explained in everyday terms. - > "if you have a partner if you have another owner in your fire protection company you should consider like a business marriage" - **Informal, spontaneous speech**: frequent filler words ("um," "you know"), self-corrections, and unfinished sentences. - > "right now I don't actually know what it is i' have to look but um it's worth it if you if you know you're going to sell" - **First-person framing of recommendations**: the guest consistently positions advice as personal judgment. - > "I generally recommend to people if you have your employees sign either in the handbook or generally to have them sign a non-solicit agreement" ## Teaching Habits and Recurring Patterns ### 1. Hypothetical scenarios as explanatory devices The guest repeatedly uses invented situations to illustrate legal points: - > "I I use a hypothetical because it's it's easier to talk that way" - > "if you get a $10 million offer and $2 million has to be rolled you really get an 8 million to Clos" - > "say you and I own a business and we sell it it's and it's in New York" - > "a Texas option where if one guy wants to buy the other out he can make an offer" ### 2. Conditional, "it depends" reasoning Answers frequently pivot on the owner's intent or circumstances: - > "it depends what you want to do with the business if you know you're going to form it and you want to sell it within five years" - > "I know I'll put it this way a lot of people form their first company and they'll do it the standard way" ### 3. Colloquial metaphors and vivid idioms - **"business marriage"** for partnership obligations - **"take some chips off the table"**: > "you can take some chips off the table now and keep rolling it" - **"along for the ride"** (repeated twice): > "you're you're along for the ride you have you have no real" ... > "usually you're along for the ride you own the equity" - **"spaghetti at the wall"**: > "it's better to not throw you know spaghetti at the wall and see what sticks" ### 4. Repetition for emphasis Words and phrases are doubled or tripled rather than varied: - > "it's very very flexible" - > "that's rare that's rare" - > "they're going to want to see every piece of paper" - > "things happen to businesses things happen to the owners" ### 5. Lists of concrete document/policy items The guest structures advice as enumerable checklists: - > "you have to have you know employee handbook and your form agreements with your customers are probably the most important thing" - > "who owns the equity how you split profits and losses which could be different how you do um allocations for tax and otherwise who manages the entity how you can buy in or out of the entity" ## Host Delivery Patterns (Paul Giannamore) - **Channel intro with calls to action**: welcome message, subscribe prompt, email list, comment solicitation. - > "feel free to put a comment below on the types of things you want to see I mean this channel is largely driven by you the viewer" - **Structured, topic-hopping questioning**: signals topic shifts explicitly ("I want to talk about," "let's talk about that," "I want to talk to you a little bit about Partnerships"). - **Pre-emptive scoping of questions**: > "I'm not talking about the value of the equity I'm just talking about the legal aspects" - **Confirms understanding back to the guest**: > "so you're pretty much defaulting to L LCS is that right correct correct" - **Personal familiarity framing**: > "you and I have actually worked together for I don't know 15 plus years now" ## Communication Structure - **Long guest turns** following short host questions; the host largely defers and lets the guest expand. - **Self-interruption and rephrasing** from the guest: > "if I'm find out let me speak frankly on some of the private Equity companies" - **Wry, hedged humor** from the guest: > "I possibly midlife crisis I don't know" (on joining the fire department) ## Uncertainty Notes - Speaker attribution between host and guest occasionally overlaps due to transcript run-on formatting; the host/guest split above is inferred from turn-taking context and repeated self-identification ("I'm Paul jamore," "I'm in New York"). - The transcript contains apparent transcription artifacts ("we SP things," "Kn be," "c to a certain amount"); quoted passages preserve these as-is where used. - Some guest repetitions may be transcription duplication rather than spoken repetition; the "repetition for emphasis" pattern is supported by multiple distinct examples, so it is treated as a stable feature. # Observation Document: PIC TV — Private Equity Deals and Legal Strategies for Fire Protection **Speakers:** Paul Giannamore (host) and Mike Stanczyk (transaction attorney, Apex/"Stanczyk Law" not named in transcript; identified as transaction attorney based in New York). ## Entity Structure - **Mike Stanczyk:** Generally recommends an **LLC** for fire protection businesses — flexible, allows investors, and virtually unlimited allocation between owners. - **C Corp exception:** Only recommends a C Corp if owners plan a ~5-year hold and want **QSBS** (qualified small business stock) gain exclusion. - Qualification: The exclusion percentage "is set by Congress and they do change it year to year" — "you don't know what it's going to be in 5 years," making it "somewhat of a gamble." - He cites possible exclusion levels of "20%, 60%, 80%" depending on timing, but admits "right now I don't actually know what it is." - Repeat sellers "always will form a C Corp and try to do QSBS." - **S Corp note:** An LLC can elect S Corp status; the only real tax difference is payroll tax vs. self-employment tax — worthwhile only if owner salary levels are known. ## Non-Competes / Non-Solicits - Mike distinguishes **employee non-competes** (target of FTC/state legislation) from **sale-of-business non-competes** (not the legislative target). He expects exceptions for "high level executive level folks." - Current recommendation: - All employees: **confidentiality agreement + non-solicit** ("that's the minimum you need"). - Non-competes only where "very specifically tailored" (e.g., a manager who knows all customers). - **Warning:** An overreaching non-compete can cause a court to invalidate the *entire* agreement absent severability language — "better to not throw spaghetti at the wall." - Non-solicits of customers are "enforceable in every state." ## Equity Rolls with Private Equity - **LOI awareness:** Some PE buyers *require* a roll (10–20%); a "$10 million offer" with $2M rolled is really $8M at closing minus debt and costs. - Rolling equity means signing the PE firm's **operating agreement** (100+ pages) containing a **broader non-compete** than the purchase agreement — covering all service lines, everywhere the firm does or ever will do business. He calls it "an expanding non-compete." - Attorneys should ask sellers about **post-close plans**; "a lot of times attorneys don't ask them." - **Seller rights post-roll:** "You're along for the ride" — information rights (P&L, balance sheet), but no real votes; buyout cannot be forced; board seats are "rare." - Hold period typically **5–10 years** depending on the fund's life cycle. ## Buyer Landscape - Mike: shift from strategics to PE-backed buyers over the last 5 years — now "more than half, if not three quarters" of transactions. - PE deals involve big law firms, full disclosure schedules, full diligence — "it is a lot of work." - Sellers should weigh a **valuation premium against a much harder process**: "you're going to have a much easier sale to this strategic buyer." - Frank observation: some PE funds put companies under LOI partly **to learn the industry** and sometimes don't close — "I have seen that." - PE diligence is partly an **insurance policy** for fund managers ("I hired the best attorneys... and they missed it"). ## Partnerships / Operating Agreements - A partnership is "like a business marriage" — all eventualities (exit, buyout, death, disputes) should be documented up front. - Operating agreement must cover: equity ownership, profit/loss splits (can differ from ownership), tax allocations, management, buy-in/out triggers. - Tools mentioned: **buy-sell provisions**, "Texas option" (offer that the recipient must either accept-and-buy or sell at that price), mediator/arbitrator deadlock breakers for 50/50 votes. - Reality check: many small/midsize businesses lack adequate documents; attorneys sometimes must "recreate" them at sale as if signed years ago. - Amendments are easy **if everyone agrees**; consent rights, once granted, effectively persist — "have everything in it from day one." - PE diligence will demand every organizational document — run the business as if an outsider will review it. ## Governing Law & Multi-State Practice - LOIs and definitive agreements are typically **New York or Delaware law**, especially for PE-backed buyers; choice of law is itself a negotiable point of contention. - Rationale: acquirers know the well-adjudicated body of law in those states. ## Compliance & Customer Agreements - Customer form agreements and employee handbooks are "probably the most important thing" — warranty, service level, pricing, payment terms. - Fire protection requires tracking **NFPA standards vs. code** (code = legal authority adopted by municipalities, which varies by locality). ## Personal Note - Mike is a **volunteer firefighter** (~3 years, upstate New York): completed BEFO/IFO training, now mostly administrative/board roles, still authorized for calls. Reason (self-stated): possibly "midlife crisis," friend's recommendation, wanting community involvement beyond nonprofit boards. - Paul notes paid departments serve large cities; outside them it's "almost all volunteer." ## Qualifications & Contradictions Preserved - Mike's uncertainty on the current QSBS exclusion percentage is stated verbatim ("I'd have to look"). - He simultaneously calls non-competes "important in limited situations" while saying most owners don't need them — dependent on tailoring. - LOI-driven learning by PE firms is framed as his suspicion/experience ("sometimes I think," "I have seen that"), not a universal claim. # Speaker Attribution and Provenance Record ## Video Metadata - **Title:** Private Equity Deals and Legal Strategies for Fire Protection with Paul Giannamore and Mike Stanczyk - **Video ID:** `01a168c8-3bc5-7804-a13a-e75c596f867f` - **No curated metadata supplied; all facts below derive from the transcript.** ## Identified Speakers and Roles ### Paul Giannamore — **Creator / Host** - Opens with a channel welcome; identifies himself: *"hi I'm Paul jamore [Giannamore]"* - Hosts the channel (referred to as "PIC TV" / "PTOC TV" in auto-transcription), describes it as focused on business/operational content for residential and commercial services business owners. - Conducts the interview, asking questions throughout. - Notes prior collaboration with Mike: *"you and I have actually worked together for I don't know 15 plus years."* ### Mike Stanczyk — **Guest / Interviewee, Transaction Attorney** - Self-described role: **transaction attorney** representing business owners selling to strategic or private-equity-backed buyers; general corporate practice; acts as **outside general counsel** to service-industry businesses, including fire protection. - Based in **New York** (references Upstate/Syracuse area); practices across the US. - Personal provenance note: **volunteer firefighter** for ~3 years (certified "Firefighter One," BEFO/IFO per transcript), joined a local fire department after moving from NYC to Upstate New York; serves on the fire department board. ### Dylan — **Referenced, not speaking** - Paul states *"Dylan and I will be sitting down filming more extensive m&a master classes"* — a channel collaborator, absent from this interview. ## Channel Promotional Segments (Flagged) Paul's opening monologue contains **explicit promotion**: - Request to **subscribe** to the channel. - **Email distribution list** signup link in the description. - Request for viewer **comments** on desired content. - Reference to a published **"M&A master class"** (sell-side/buy-side) driving this content. ## Referenced Sources and Third-Party Claims - **FTC / federal government** — cited (via Mike) regarding non-compete enforcement posture; Mike attributes pending legislative/regulatory changes to Congress and the FTC. - **QSB (Qualified Small Business Stock) tax exclusion** — cited as a **Congress-set** provision subject to change; Mike explicitly states uncertainty about the current exclusion rate. - **NFPA standards and fire codes** — cited as compliance sources for fire protection businesses; Mike describes municipal adoption of standards. - **New York and Delaware law** — cited as governing most LOIs and definitive purchase agreements. - **Texas option (shotgun buyout clause)** — cited as an operating agreement mechanism. - Interview appears recorded at an **industry event** (Mike: *"put on a nice event here... good to see different people from the industry"*). ## Unverified / Uncertain Items - Exact QSB exclusion percentage: Mike states he does not know and *"would have to look."* - Channel name rendered inconsistently in transcript ("pic TV" / "PTOC TV") — auto-transcription uncertainty. - Proportion of PE vs. strategic buyers in Mike's deals: estimated *"more than half, if not three quarters"* — practitioner estimate, not a documented statistic. ## Comment Availability - Comments are **solicited** by the creator: *"feel free to put a comment below on the types of things you want to see"* — indicating comments are enabled. if you have a partner if you have another owner in your fire protection company you should consider like a business marriage like you should both know you're in it for the wall ball and any eventuality that happens or when he wants to get out or how things can be covered should be fully documented and thought through a lot of a lot of times people will not do this they'll sign a piece of paper says we SP things 50/50 6040 what whatever that number is and when it when there's an issue they don't have any document to look at to to follow hi I'm Paul jamore I wanted to welcome our new subscribers to the channel you know historically pic TV has been focused on business and operational information and interviews for residential and Commercial Services business owners but after the publication of the sside m&a master class last month my LinkedIn inbox has been inundated with a variety of different request so Dylan and I will be sitting down filming more extensive m&a master classes both focusing on the sell side as well as the buy side I intend to talk about the choice of process delving deep into m&a psychology uh as well as extensive buide practice approach and due diligence for those of you who have not subscribed you can click below and subscribe to the channel furthermore we've provided a link here in the description where you can get on our email distribution list and if you do that you'll receive an email right in your inbox with our latest Publications feel free to put a comment below on the types of things you want to see I mean this channel is largely driven by you the viewer and what you want to see from us again thanks for joining us here at ptoc TV Mike it's great to see you at fire you too Paul I'm been laugh we're talk some legal stuff today so your transaction attorney what are you mainly focusing on these days so the practice is mainly uh buying selling companies so we represent a lot of people uh who own a company who are selling it to an acquire either strategic or private Equity backed uh buyer we do General Corporate practice we assist companies um when they bring in different investors different owners buy sells between them assist with some contracts and General Corporate practice basically react is um an outside General Council to a lot of business owners in different service Industries um fire protection being one of them what do you think about the fire protection businesses um when you deal with your clients how are you typically organizing these businesses when you think about a choice of enity yeah so this comes back to it depends what you want to do with the business if you know you're going to form it and you want to sell it within five years you're going to hold it and try to sell in five years it's we usually always recommend it to an LLC it's it's more flexible you can bring in different people you can bring in investors you can allocate things between the owners in an infinite amount of ways it's very very flexible the only time we'd recommend maybe a sorp is if if the owners say I know I'm going to sell it's going to be 5 years and they want to get qsbs a qualified small business stock so if you actually own stock in a C Corp that you sell after 5 years um you can have gain exclusion on it and there's it can work out very favorably for it the problem is you're in a C Corp for the 5 years until you sell at least 5 years until you sell um but these days if I was recommending it I generally would uh push in LLC which you can also elect if you wanted to to be an escort so let me ask you about that how does the qualified small business uh classification work so you form a sequ and then if you sell after a 5year period what's excluded what gains are excluded from tax so it's uh it's an exclusion and it's set by Congress and they can and do change it year to year so the problem is you don't know what it's going to be in 5 years so there's some somewhat of a gamble sometimes there is um 20% and that's 60% 80% of capital gain and it depends really when they sell um right now I don't actually know what it is i' have to look but um it's worth it if you if you know you're going to sell you probably should do it if you I know I'll put it this way a lot of people form their first company and they'll do it the standard way and after they sell the first time I get it's some second round people who have already sold a company and gone through it and know what it's like and they always will for a SE orp and try to do to SVS but you're pretty much defaulting to L LCS is that right correct correct llc's I mean sometimes llc's we we prefer cuz you can do you can do anything that you can do under law with an LLC if you know you're going to be an escort because that's just what what it's going to be you only if you know how much salary you're going to pay to the owners uh then you that escort doesn't make sense just save a little just save a little bit of tax on it if if you forward as an escort um you save it on the paying the payroll tax instead of the self-employment tax that's that's really the only difference I want to talk a little bit about set up non-competes so you practice around the country but you're based in New York so when you think about the the new legislative regulatory dialogue around non competes what does this mean forers now what what are you suggesting your app is yeah so the Ned's situation is the FTC the federal government is not in favor them uh eventually we'll see something come out of believe to potentially abandon our limit that with respect to employees so there's there's a big difference between a non between an employee somebody if you or I own a business and we say you have to sign this to be employed here versus if you sell your company and I as the acquir say you have to sign a non company with me so the former is really what the legislators are going after so they want to prohibit people who need a job they're going to go be employed here and they don't want the employer to be able to tell them you can't work in the same lotel in the same industry that you're working at right now there is a little fundamental unfairness with it so that that's why it's there um I do think there will be exceptions for M high level executive level folks um but right now the landscape is it's a state-by-state issue so I'm in New York and most of the time whenever you buy or sell in business the um Loi the definitive purchase agreement is covered by New York or Delaware law and a lot of of attorneys practice with Delaware law it's we're we're conversing in that um so a lot of times we will represent companies that are located in different states a lot of what we do is setting up the operating AGS for or the other internal documents um we can do from New York there are certain things like certain um employment issues certain regulatory issues that are State specific one of them being not but now honestly I generally recommend to people if you have your employees sign either in the handbook or generally to have them sign a non-solicit agreement and a confidentiality agreement meaning you're going to keep everything confidential you won't solicit the company's customers or other employees or contractors that's really what that's the minimum you need at now compete I generally say if you have a a manager who has specific knowledge all the customers and you're worried he's he could go and take your book of customers start his own company and take them all in that situation now might word you have to get invented under state law M BL appointment orw in that state that's that's generally what I recommend these days but I mean we've seen the service industry go that way for a long time no it's not that big of a deal it's just a non-solicitation I mean it do the business owners really at Jeopardy now that the FTC is croing down on this meaning should you really care as a business owner that a non-compete is not enforceable is it really not the confidenti confidentiality Clauses and the non solicitations which most important so I think the answer to that is the non-competition is important it's important to have that un limited situations what what you really don't want is the solicitation you don't want anyone soliciting your customers and those are enforce those are enforceable in every state and you should have them non-compete I I generally don't think a lot of business owners need them unless it's very specifically tailored to individual situations so as a business owner if you don't have a KN be with everyone it's almost better not to have some business own is going to say I want to make every employee sign this and it's going to say confidentiality non-solicit non- compete even if the non competes overstepping you shouldn't you shouldn't do that because a court can come in thank you very mon cour a port can come in and invalidate the whole agreement meaning because you have a nonr and under the state law you're in it's not enforceable meaning the whole contract is not enforceable not just the non provision unless you have specific language in the agreement that's um says yes right so it's better to not throw you know spaghetti at the wall and see what sticks it's better to tailor the agreement specifically to what you want it to cover the fire protection space we to a lot of private Equity back platforms doing Acquisitions and um and you do a lot of sort work what sort of considerations do should owners think about as they start to you a lot of guys here are eye in an exit be 6 months from now a year from now two years from now what should guys think about when they're potentially faced with a private Equity rooll or rolling of equity what sort of advice do you provide your clients when it comes to that in determining whether or not to rule Equity or just what they should think about with I'm not talking about the value of the equity I'm just talking about the legal aspects okay you know you partner with a private Equity back platform now you've rolled 20% of your Enterprise Value into that so you're a partner what what's what are some important things to think about yeah okay so first I guess whether or not you want to roll equity and some some of these private Equity buyers will require a certain amount of equity is red so in the Lo Loi stage you should be cognizant of that fact some some offers you're getting they offer you a certain purchase price and it looks attractive but really like 10 20% of that has to be rolled so that's cash you're not getting a closing that they you know if you get a $10 million offer and $2 million has to be rolled you really get an 8 million to Clos it minus the debt lest transaction costs so you have to weigh that and and then yes obviously the value of the private Equity Firm that you're rolling into that has to be analyzed it's basically you can take some chips off the table now and keep rolling it and hopefully they will continue their growth plan and buy more companies along the way and sell at a bigger higher multiple later down the road so it's somewhat of a a Gamble and you have to analyze the risks and see what they've done in the past make sure that you agree with their business case what they want to do and how they're going to do it and I say if if if you if you're comfortable with it you can do that sometimes we have Lois and and transactions where P where you don't have to roll equ but you can up a c to a certain amount and that's really where I get into it with them is whether or not you want to but a lot of times if you do roll Equity you're going to have to sign an operate an agreement of the the private Equity buyers um Council drafted it'll be a private Equity document 100 pages as long it's going to have more strict non-competes than you may have gotten in the purchase agreement let's talk about that what does that mean so think about it I I use a hypothetical because it's it's easier to talk that way is if there's a private Equity buyer out there they may do fire protection they may do some other uh investiga they may sell other products other services and a lot of them have different arms of the private Equity um under the their umbrella they do different things if you're can sometimes you're going to get equity in not just one platform but in the higher level entity that's going to cover different Industries and when you sell your company say we sell say you and I own a business and we sell it it's and it's in New York we are going to be restricted in the purchase agreement from competing against the acquirer in New York usually some other states sometimes you surrounding states and for 5 years of least however if you roll Equity you're going to have that same P have that same non compete in the purchase agement then you're going to have a separate non compete in the operating enement where you're rolling the equity into that's going to cover everywhere all the lines of service all the lines of services anywhere they do business now or they ever do business so it's kind of an expanding non complete that grows and grows so I tell guys if you're going to retire and you're getting out of these IND and none of these service Industries are a problem well like if if you if you think you're going to go start you know some other Service Company in a nearby State you won't be able to you will be prohibited from doing so that's really what we get into and some of these guys you have to understand what the seller the owner of the business wants to do after they close and a lot of times attorneys don't ask them you know I always do because I want to know that you're saying well I'm going to go and help my son start a business you know once St over you have to you have to know what that is you have to be able to address it in the documents and sometimes those guys shouldn't roll Equity or if they do they're they're looking a problem that they could avoid so when you if you're a seller and you sell a private Equity back poot for you roll out with it say 20% of the purchase price you've decided it makes sense um what sort of rights do you have as a sar um when it when it comes down to exit do you have the ability to do you have to wait till the private Equity Firm sells the platform are you able to exit early typically like what are you normally saying in these Equity participation perits so you're you're along for the ride you have you have no real I mean you're an owner you get information rights you're going to get the pnl you're going to get the balance sheet you're going to get some of the reports that they want to give you um generally will have full information rights that the investors get but they generally treat you like any other investor so you do get a little more than you would as just a regular member but you have no say I mean you don't really have a lot of votes sometimes if you if you're sell a platform or you sell a big enough company you may be able to get you know a board seat or an advisory seat on the board directors of the actual platform but that's rare that's rare usually you're along for the ride you own the equity you get the information rights you even if you want to get bought out they don't have to buy you out you're literally have a la the ride until they sell it now and you have to understand the the the life cycles of the the private Equity platforms you know it's 5e to 10 year um plan for and you have to figure out where they are how much money they deployed how how much money they're going to get to understand that time TR so there there's a couple different levels to it and each acquires different but generally the whole the whole thing is similar as to how how it works on the m&a side if you think about the last five years how much of your your transactions are done with private Equity firms now or private Equity backed firms today versus five years ago yeah that's a good question so we used to do a lot of transactions with strategics which are the large large companies in the industry which come in and built by smaller companies in areas they want to add on as a new platform or to to pull in and have under their one of their existing platforms uh and recently I mean within the last 5 years it's really changed private Equity private Equity has gotten hungry they've got a lot of money and they're coming into new Industries to buy things up which is a great opportunity if you own a business in one of these industries that they're targeting fire protection being one of them um but now we most of the buyers now are private Equity backs I would say more than half um if not three quarters right I want to talk to you a little bit about Partnerships because I know you deal with that all the time and you know you and I have actually worked together for I don't know 15 plus years now I can't even remember and I feel like sometimes the most complicated transactions we do are transactions where there's Partners involved so H how do you get involved with people well first off what do you think about Partnerships in general start the entity or dealing with part irrespective with the entity two individuals work two or more individuals working together and owning equity and a business yeah so we always talk about if we were going to start a business how how would I recommend you do it we would generally have this come in and clients come in they want to forign business in a certain Ministry say it's a fire protection company and startup people people want to get going they don't want to think about the bad things that will happen so unfortunately lawyers think about the bad things will happen so if you have a partner if you have another owner in your fire protection company it's you should consider like a business marriage like you should both know you're in it for the LA of all and any eventuality that happens or when he wants to get out or how things can be covered should be fully documented and thought through a lot of a lot of times people will not do this they'll sign a piece of paper says we split things 50/50 6040 what whatever that number is and when it when there's an issue they don't have any document to look at to to to follow so what is that document what you talk about LLC operating agreement operating agreement has to lay out who owns the equity how you split profits and losses which could be different how you do um allocations for tax and otherwise who manages the entity how you can buy in or out of the entity and things that trigger a right to buy somebody out so a lot of guys say listen I want to buy you out like can I get some people come to me they have a partner things went sou they want to get out and then bring AB them in and say you have no ability to get out because in the operating you can cover it if when you start the entity you can when you start the entity you can have attorney draft things like certain triggers like a buyout right like a Texas option where if one guy wants to buy the other out he can make an offer and the guy that receives the offer he can accept it and pay that amount to buy that guy's offer or he can sell his Equity to them so there's a number of different things to have in the agreement to cover when things go wrong cuz things do go wrong it life should happens things happen to businesses things happen to the owners guys need certain money sometimes may one may want to sell the other one doesn't may one may want to expand the other doesn't you have issues with employees so you generally have to cover all that and we seen a lot of things go bad so you should sit down you should go through you should cover who determines what in what situations and even if it is 50/50 and vot you can have things in there because there will be a time where well I'll put it this way if you have 50/50 vote there will be a time where one will vote Yes the other will vote no and that's essentially the guy that votes no wins cuz nothing happens if there's not affirmative consent from both you can have uh you can have something in the operating that will will allow you to go to an independent party a mediator arbitrator to make a decision to bring in a separate party three three different people vote just for the vote so there's a lot of different things you can do but you have to work that in up front if you by the time you come to a lawyer later on it's it's it's almost too late of the small and midsize businesses you see how many actually have a Bonafide operating again or formal shareholder everything well some of them may have one but actually like wait it's not sufficient like it might not it might cover the basics if they're lucky a lot of times it won't it won't have a lot of the normal kind of we call it buy sell just general term is it covers the Buy Buy and selling of the equity if something happens and all the other eventualities of management and everything else that come into play so very rarely does it cover everything we want to see a lot of times we end up selling businesses that don't have them and we have to go back and recreate them and'll be have you know we'll deem this as if you drafted this 20 and signed it 10 years ago when you started the company um because when you sell the company this is going the side but when you sell the company you want to make sure he primate Equity buyers are not they go through every detail they're going to want to see every piece of paper your business created including organizational documents later employment issues they're going to want to see you know records compliance reports they're going to want to see everything so you should run your business and keep track of everything as if someone some outside person is going to be looking at it because if you sell your business they will be and we've seen a lot of companies that you know don't keep the best records don't have can't find the operate agreement oh we agre on it we agreed on it with John but you know it's it's a problem so that's what I tell people once you get an operating agreement in place how difficult is it to change it it it's it's very easy if everyone agrees um you can you can all mutually agree and have an amendment to it um sometimes you have a right to a manager or maor have a right to make certain changes to it that don't negatively affect any of the other owners um and they wouldn't need the consent but um when you actually want to make a change to that benefit one and not the other you need their vote so you can't make anything that's going to help you and not help the other and hurt someone else without their consent so you should have everything in it from day one so once you give consent rights to one party they're kind of in there unless that party decides correct corre what are some hot button issues you think on your mind that fire protection business owners should know in general transactions business organization yeah I think I think it's important what you should set everything up I guess what we normally do if somebody came to Le a full on a new company that they wanted to run or they wanted to sell down the road you would say you're organization documents if it's a single owner easy enough if you have a partner you have to have an operating agreement shareholder agreement whatever it is to cover those mentalities we've talked about you have to have you know employee handbook and your form agreements with your customers are probably the most important thing and those should cover you know the type of warranty you give the service level the pricing um how you get paid when you get paid all that should be because if you're going to have an issue when you're operating the company it's generally with a customer that's not paying you or wants to make certain changes or isn't happy with what you did and your agreement should cover a lot of that um the other issu going to run into our employees so like non solicit should have a full employee handbook things of that sort um and then there's some compliance issues you know there's NFPA there's all these things all you know each there's a Code which is um there's a standards in the code and the code is more the code is a legal Authority that municipalities have a lot of times they'll adopt or incorporate a standard and a lot of the fire protection guys that own these companies know these very in depth occasionally there's a change occasionally some Town County city state will make a change and adopt another one over the other or they'll have their own so um you kind of have need to know what you're doing to make sure you're complying with you know what you install in certain commercial properties in the area of servicing so um it generally assists with that and um that's about it that's about it you know you're in New York if you do transactions all across the US I mean how does that work from a licensing perspective yeah so even before Co but certainly after Co things things you know remote work and all that change but most of the acquisition documents most of the Lois are going to be covered Lois and then definitive agreements be covered by either New York law Delaware law especially the private Equity back companies that's that's where they are a lot of their a lot of their attorneys are even if they're not in New York Delaware they still have the agreement covered by New York or Delaware law so it it occasionally we'll have one and it's it's kind of a negotiable element too but if it's not specific in the looli as what the definitive agreement will be covered under and it's not always it's you actually negotiate it we say I'm negotiate this under New York law and then that they'll say no we want to cover something else and it's actually a point of contention that we can go back and forth so um we have we represent custom we represent um clients in in I wouldn't say every state but we we're might be up there and in many different Industries and a lot of them are not in New York state where we're located in and it's very similar as as if you're dealing with an attorney in your own State maybe not down the road but in your own state that you know you see here and there with zoom and all zoom and all the communication you can do it's it's like we're right there with you why are these transaction document that's typically New York or Delaware La generally from the acquirer side they and their Council are very aware of what those States will do in a court if there's a breach of an agreement they know they can go to the court and enforce a certain provision One Way versus if it's covered in a state they're heavily adjudicated already in New York and Delaware corre there's a body of law in each of those states where they know almost know exactly what it come so say I have this agree I have this provision we trying to enforce so we know we can do that in New York we know we can do that in Delaware and there's certain things you know that that are different different in purchase agreements and operating agreements so you can do certain things in Delaware and not New York vice versa and we all know that and we generally it's where it's not covered by New York or Delaware a lot so what's the big difference for you in dealing with the private Equity back to choire versus the old school strategics what what what's what from a legal perspective you know what are the big differences for you I I mean I know it's it seems like it's a lot more work yeah it certainly is I mean the the private Equity backed companies they will use gener a bigger Law Firm medium to Big law law firm and they treat it as if they're you know what what are the size of the purchase price the size of the target company selling they treat it as if they're buying a you know a Fortune 500 company full you know full purchase agreement full disclosure schedules team of attorneys on it and they'll they'll they'll grow it and and I understand if I if I ran a private Equity Fund you know they hire kind of the bigger firms law firms accounting firms they hire deoy they'll hire um one of these accouny firms to do the accounting review so that if anything happens later down the road where something was missed in diligence and it's and it's a a company they bought and there was something it was missed and it came back the private Equity guy the guy that runs the fun can say I hir you know the best attorneys to do this and they missed it so it's un so it's kind of like this insurance policy for the private Equity guys but they will hire them and they'll have them run a full process meaning they'll go through they'll have full disclosure schedules they'll have a full legal diligence checklist and it's it it is a lot of work they they go through everything again they go through every piece of paper they wanted diligence everything they want documentation on everything and it's very tedious um takes a lot more time and I generally tell people if you're selling to private Equity fir versus a strategic you're going to be spending a lot more time uh in legal diligence I also tell people when you're valuing Loi you should consider you're going to have a much easier sale to this strategic buyer than you would if you sold to this private Equity buyer so think about that 1 billion extra I get why is that well so if I'm buying a business I I will if I'm buying a fire protection company I'm going to want we'll put it this way if I'm find out let me speak frankly on some of the private Equity companies they come into different Industries some of which they're not familiar with so they will come in to say the fire production industry new private Equity Fund is coming in they're going to try they're going to buy a company get it under Loi and then they are going to basically they and their agents and representatives have to Le how the business is run sometimes I think some of them get things under Loi just to learn more about the industry and maybe they don't move forward with it have seen that um they get it under Loi to learn about the company to see how the business runs and then they want the owners to educate them about it and then the whole process is even after the closing you're still I you're probably still running if you're an older you're probably still running for the private equ company in that situation because they're going to need and then might be part of the LOI I say you have to stay on for 2 years after closing to run this so that's what we've seen recently can I tell you I actually this is the side but maybe relevant so I when I um moved from New York back New York City back to Upstate New York where I am now one of the things I did was um I joined the local fire department so I went through the I remember this yes so I am a card carry uh firefighter they call it firefighter one it's called Uh defo which is basic exterior firefighting operations and ifo which is interior firefighter operations and so I'm familiar with all the NFPA regarding that and uniforms and all all the things that a volunteer firefighter would do so you you did this when did you join 3 years ago okay why just curious I possibly midlife crisis I don't know but my one of my friends did it and he said it was I put this way is attorney the all these not for-profits ask you to be on the board and to contribute to the contribute and to you know get involved in the community and figured this would be interesting and fun and different and it won't be just sitting on some board of directors for a local nonprofit it' be actually doing something so one of my friends had done it um he's an attorney too and he convinced me to do it and I did and it was you know a class at night once a week for a couple weeks and a test which the written test I did find on the physical test was a little little harder but I passed and um it's been fun I I'm more involved now with the less physical stuff more administrative stuff it's on the board for the fire local fire department and you know help with some of the um legal aspects and some of the financial items as well do you still go out on fire calls when I can it's rare I'm still I'm still uh authorized to yeah you know I have two young kids so it takes a lot of time from that when I'm not working which you know there's not not a lot of time left after that but yeah the pager goes off and you can make the call if you can it's volunteer department so you're based in Syracuse I guess out Syracuse would be an actual real fire department versus outside of Syra so in New York state and a lot of other states um cities large cities are generally paid you know they had their employees and the firefighters actually work for the city they stay there they're on a couple different shifts outside of large cities um it's almost all volunteer which you think about it it's there's no pay there's no compensation there is uh so it's really people that want to give back and this is everywhere outside of a city Upstate New York so there's a couple cities throughout Upstate that have their own departments but everywhere else is um a volunteer department and I see some firefighters here and um they're everywhere there's there's all they cover a smaller geographic area than you might think in each each Town Village may have their wrong do all right so you're still doing that I'm still doing it when I tell okay well Mike I appreciate your joining to us today here at the show especially you being a v a volunteer firefighter well I'm happy to be here it's been this good time put on a nice event here and uh it's good to see different people from the industry firefighters fire protection owners so yeah appreciate you having me here right up thanks Mike thank you you