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Before you begin negotiating a business deal, you need to be clear about what you’re willing to give up to make it happen, says Flack Global Metals Founder and CEO Jeremy Flack.

“You'll never get a deal done with the attitude of, ‘I'm not giving anything up and I'm not compromising,’” Flack says. “I was uncomfortable about all three deals I've done so far. I'm working on one right now that I'm scared to death of, but it might be the best deal I've ever worked on. If you’re not uncomfortable, you’ve done something wrong.”

Flack launched Flack Global Metals in 2010 after divesting his interests in Lawson Steel. The $300 million company has offices in Cleveland and Chicago, as well as Scottsdale, Arizona, and Kennesaw, Georgia. The business averages about 23,000 tons of outbound steel and aluminum each month. Flack’s balanced approach to dealmaking has played a big part in the company’s success.

In this Dealmakers feature, we spoke with Flack about his appetite for risk and a valuable lesson he learned from his father.

Risk vs. opportunity

You need an attitude that you would rather try and fail than not try at all. That’s where your mentality needs to be, because if it isn’t, you can’t make effective decisions. You’ll always be trying to cover yourself. Do what everybody else thinks you can’t and then really believe in yourself. Take the risk.

I never thought of myself as an entrepreneur. I was backed into a corner at Lawson, which is why I started this business. That business was going to close, and there was nothing I could do about it. At the end of the day, I didn’t care if I lost everything I made and failed, as long as I tried and knew in my heart that I’d given it everything I could. Unless you’re prepared to lose everything, don’t start a business. You have to feel like it’s all at risk, or you’re not going to pay attention to it.

You’ve got to stay out in the community so that there’s always a sense of activity at your company. That way, people are more likely to bring you opportunities. It’s one thing to have the checkbook. It’s another thing to be perceived as someone who will work to get something done. In dealmaking, your reputation precedes you. So if you’re always out kicking the tires and you never close, people are going to know that, and the banks are going to know that. The community’s going to know it. Deals beget deals begets more image begets more opportunity. The market perceives you differently once you have gone down this path and started to do things.

Make deals for the right reason

My dad once said, ‘Some people can make money in spite of themselves, just because they happen to be in the right place at the right time.’ Last year in our business, the price of steel and aluminum skyrocketed when Donald Trump announced the tariffs. Suddenly, we just started minting cash. It happened in 2004, it happened in 2008, and it happened again in 2018. You’re sitting here, you’re doing the same thing as you’ve always done, and then bang, the market takes off and you just start making money.

When that happens, the tendency is for the business owner to think that it’s because they’re so smart and such good businessmen. That’s why they’re suddenly making more money. ‘Look how smart I am and look how much money I made.’ What I learned from my dad is to not fall into these false traps. Try to see things from a balanced perspective and not get in these situations where the ego takes over.

Dealmaking is the most important thing that we do. We have made three fantastic M&A deals by staying really focused on what the business needs and what’s good for the business, not ego or personal vanity. I just walked away from a deal because I just couldn’t get there with the strategy. From a vanity standpoint, it would have been a great deal. I would have had a bigger company and would have been in charge of more things. But the reality is it was not the right cultural fit. It wasn’t the right product fit. It sounded really good because we found millions and millions of dollars of savings on selling, general and administrative expenses. But you shouldn’t do a deal for SG&A savings. You should do deal based on the strategy of servicing your customers. Do what’s best for the business.