The next time Bobby George feels completely confident upon closing a business deal will be the first time he feels that way.
“I have never experienced a deal where I’m 100 percent comfortable,” says George, founder and president of Corporate Management Group and owner of the popular downtown restaurant TownHall. “It takes tough negotiations, a lot of faith and just trust in yourself that when things do go wrong, if they do go wrong, you’re going to outwork your problems.”
George owns another popular downtown hotspot, Barley House, located on W. 6th Street, as well as several other restaurant concepts throughout the country. But he’s about more than just food. Corporate Management Group also has a real estate division and a private equity division and George has an ambitious plan to build a powerful private equity company over the next several years.
Dealmaking is in the blood for the George family. Bobby’s father, Tony, is a longtime restaurateur and real estate developer who recently bought the historic First Methodist Church at Euclid Avenue and E. 30th Street.
Smart Business Dealmakers spoke with the younger George about what he needs to see in order to buy a business, the discipline to say no and the respect he has for Cleveland’s top dealmakers. What follows is a transcript of the above video, edited for readability.
Take control of the deal
The way I would approach a potential deal in the restaurant business or the hospitality business or any other industry is if I can understand the business based on my past experience, that’s the first step. If I can’t understand it, I’m not interested. Once I understand it, I want to see how well the company is positioned and I want to understand the leadership. If I believe in the leadership and I believe the leader is the right person, I take the next step. If the leader is not the right person and I don’t have a leader who I believe is the right person, I don’t have the resources to move forward and I won’t.
The third step is just evaluating the financials. I want to see what their margins are, what potential growth opportunities there are and what their revenue is. The last thing is I have to make sure I can make the right deal. Any deal I do, I like to take control of and have majority ownership. If I don’t have majority ownership, I like to have the right controls in place where if they don’t hit financial benchmarks, I have the right to take over operations — immediately.
Be willing to pass on a deal
The best way to continue to be a dealmaker while not losing focus on the businesses that you own is just to have discipline. Be willing to pass on deals, even if you know they are good deals, because you don’t feel comfortable that the company you just bought or the company you are chairman of or the company you had to become CEO of is healthy. One of the rules I have is I will not do another deal until the company I bought — No. 1 is, I’m comfortable with the leadership and if I did use leverage, the debt is down to a comfortable amount. If I’m still highly leveraged, it’s not right. It’s not responsible of other peoples’ money or of your own money. So I make sure we get the debt paid off to a certain benchmark that I’m comfortable with and then I’ll go look at other deals.
Strength through humility
The stereotypical dealmaker to a lot of people is flamboyant and loud. See, to me, it isn’t. Because I know the real dealmakers. There is a saying from a movie: ‘The loudest man in the room is the weakest man in the room.’ The dealmakers I know are not loud. They are not. They are bold, they are aggressive. They’ll make tough decisions. But they are not loud. Those are the people I admire.
If we all named the top deal guys in Cleveland, the Steve Demetrious, the Stewart Kohls, the Umberto Fedelis — and I apologize, I missed a lot – these guys are not loud guys. They get a lot of attention because of some of their bold actions. But they don’t need all the attention in a room. They’re the first ones to give. They all are hugely, hugely charitable. I think that’s just the stereotype because we see it in the movies and we hear about it on Wall Street. But servant leadership goes a long way and the greatest leaders are usually the most loving because they stick with them when things are tough.
Understand your own limitations
One of the most important things in making a deal, there’s a saying that you make your money when you buy the company. How you buy it. You have to be a great negotiator. You have to be willing to lose the deal. You have to push it and push it and push it and you have to be OK if at the end, you lose the deal. You have to be at peace with that. You have to have faith that it wasn’t the right deal because you didn’t feel comfortable with it. You also have to be willing to move forward with a little bit of uncomfortableness.
No deal — at least for me — I have never experienced a deal where I’m 100 percent comfortable. It takes tough negotiations, a lot of faith and just trust in yourself that when things do go wrong, if they do go wrong, you’re going to outwork your problems. It goes back to a point I mentioned earlier. You have to leave yourself enough time where you’re not tied up in so many deals. If the company needs your attention and needs you to step in and take a leadership role, at this point in my career, I have to be able to do that. I’m just not there where I have $6 billion under management. If a percentage of my deal is lost, it would wipe me out. I can’t have any complete losses. I can have some singles and doubles. But I can’t have any strikeouts. Not yet.