Unlock Value by Selling a Piece of Your Business

**Matt Gasses** (0:01)
I say, you have to be a little bit crazy to be a lawyer, and I think you have to be a little bit crazier to be an M&A lawyer. Both parties are motivated for the same thing. There's less of that personal insult that sometimes business owners, founders tend to feel when they get an offer from a buyer that they don't feel matches to their pride and joy.
But if the buyer does it, it's coming out of your purchase price. So you need to get ahead of these things to make sure that you control the narrative, the story, the business that you're selling, that you need to get ahead of it. Because if buyer finds out that the numbers aren't what they thought it was, you'll feel it on the back end.

**Jacob Oros** (0:39)
Welcome to M&A Talk, the number one podcast on selling a business brought to you by Morgan & Westfield, a boutique M&A firm specializing in the sale of small to mid-sized companies. I'm your host and president of Morgan & Westfield, Jacob Oros. If you're considering selling your business and you'd like to work with me throughout the process, you can schedule a free consultation at morganandwestfield.com. Or if you'd like my team and I to perform evaluation of your company for a one-time fee of $1,500, visit morganandwestfield.com or see the link in the show notes.
Today, we're going to talk with Matt Gasses. He is an M&A attorney and we are going to talk about the interesting subject of M&A carve-outs. Matt, welcome to the show.

**Matt Gasses** (1:27)
Jacob, it's my pleasure to be here.

**Jacob Oros** (1:29)
You're a long-time listener. Appreciate that very much, by the way.

**Matt Gasses** (1:33)
Yeah, long-time first time.

**Jacob Oros** (1:34)
Thank you. Thank you very much. We're going to talk about carve-outs, which we haven't discussed that in great depth here on the show.
Before we jump in though, for those that aren't familiar, what is a carve-out? I'm sure most of our listeners will be familiar, but for those that aren't, what is it?

**Matt Gasses** (1:51)
Yeah, so as the name indicates, it's the sale of a division or product lines or a business unit separated from the larger business enterprise. It's a sale of the piece, not the whole.

**Jacob Oros** (2:04)
Would really any less than whole sale of a business be a carve-out? Because I know there's some nuances here with some other similar types of transactions. For example, you could just sell half of the stock in your business, 70%, 80%. That's not a carve-out. So how would you define that even further?

**Matt Gasses** (2:23)
Yeah, no, it's a great question. Because I think the way to think about it is, it's a sale typically of assets. It could be subsidiaries and equity, but you're really taking a piece of your business and spinning it out. So you're losing control over that piece.
It comes in many shapes and sizes. Obviously, you can have a single asset deal or a couple of assets that maybe can stand on their own. This is really taking a piece of the whole and spinning it out and whatever that form might be.

**Jacob Oros** (2:53)
Let's talk about your background before we jump into this here. Tell us a little bit about your background when it comes to M&A.

**Matt Gasses** (2:59)
Yeah, absolutely. So I am a corporate attorney, M&A attorney, started right out of law school. I've been doing this for over a decade now. I started right out of law school at a small firm, moved my way up to a larger New York City firm, and joined Baker Hosteller where I am now, which is an Amlaw 100 big law firm. We're full service. We run the game.
We provide everything that business owners and our clients need. But my focus has been primarily in the middle market M&A, but all corporate transactions, fundraising, as you said, supporting sort of strategic private equity in their portfolio companies, and importantly founders in running their businesses.

**Jacob Oros** (3:43)
Not off the topic question here, but you do a lot of different corporate transactions. What to you is unique about M&A deals? How are they different than some of the other corporate transactions?

**Matt Gasses** (3:54)
Well, it's funny because I deal with a lot on recruiting on our side as well. And I think what I tell most of my up and coming associates who are looking to get into M&A, or maybe aren't sure about what they're doing. I say, you have to be a little bit crazy to be a lawyer. And I think you have to be a little bit crazier to be an M&A lawyer. I think there are, I say it kind of in a joking fashion, but I think what it really comes down to is these are major life milestones for people on both sides. There are confluence of factors. M&A deals, you might have a tax attorney who kind of works in tax, and that's no call out to my tax colleagues, but who deal strictly in tax. But an M&A deal involves tax, and we could talk a little bit about it, but employment, labor, IT data privacy, all of the factors come in. There's a lot of people at play. There's a lot of priority timelines, a lot of needs at play here, and I think what it comes down to is balancing all of those things in order to give your client what they need, but also to get to a mutual understanding of where this deal needs to go.