The Smart Business Dealmakers Awards were presented at the 2021 St. Louis Smart Business Dealmakers Conference recognizing dealmakers for their achievements.

Among the award winners were Thomas Hillman, managing partner at Lewis & Clark Capital, who was recognized as a Master Dealmaker, and Jim Eberlin, founder and CEO of TopOPPS, who was recognized with an award for having the Best Exit. Speaking during the conference, the two offered their perspective and approach to dealmaking, as well as some of the lessons they’ve learned over their decades-long careers.

Looking back on his career, Hillman says he’s discovered that dealmakers are really in the people business.

“It’s really about understanding relationships and having alignment with people,” Hillman says.

Eberlin says his lesson learned is more about the importance of perseverance — never giving up.

“You always hear these stats of all these failures of startups — 80-90 percent sometimes — but it’s the entrepreneur giving up,” he says.

Eberlin has also learned the importance of identifying your venture’s unfair advantage. In the three companies he’s founded, he says there were plenty of times each could have failed. But instead, there was always a move that was made that led to a successful outcome. That advantage is what attracts buyers and investors

“You’ve got to have this unfair advantage about your company, otherwise, (LPs aren’t) going to make any money off you, and so that’s a key thing to look for,” Eberlin says.

To find that unfair advantage, Hillman says you have to look at how people are positioning themselves in the marketplace and how they differentiate. That’s one of the advantages of having a fund — it gives the fund managers an opportunity to look broadly across a sector to understand who’s doing what.

“So you have an advantage, and I’ll call it more calculated risk, because we see more of the landscape,” Hillman says. “You can do all the underwriting you can do, but ultimately it comes down to fundamentals of having a good business model, and having the leadership that can execute on it.”

Picking teams

When it comes to management teams, Hillman says people are ultimately measured by their leadership abilities. And part of that is they have to have really good emotional quotient, and be able to attract and inspire.

“The best leaders can build a great C-suite, and set people up for success,” he says. “Part of this is to put people in areas where they are their best selves, and sometimes they don’t even know what that is but leaders recognize their special gifts. So I always say from an HR side, hire the right person at the right time, get them in the right seat on the bus, and then do everything you can to set them up for success. It’s really important to get that dynamic right because the ultimate leader is going to be measured by the effectiveness of the team and their ability to understand strategy and execute on that.”

Eberlin says in choosing the executive team, he prefers one that’s on their way up moreso than those who’ve done it before.

“I like ‘done it before,’ but I just know that the same recipe doesn’t work all the time.”

Experience is a good thing, he says, particularly when it’s more specialized in key areas such as sales, product, marketing or engineering.

“I’ve done three companies now and the recipe was never the same,” Eberlin says. “Experience helped, but that was some of my mistakes was trying to apply the same recipes as the previous company.”

Sizzle vs. Steak

Working as an investor with an operator-first mentality rather than an investor first mentality, Hillman says you’re really relating and empathizing with the CEO or the management team, and you’re understanding their challenges.

“And more importantly, the chances are if you’ve been through enough different businesses there aren’t that many challenges that you haven’t been faced with,” he says, “And so when you’re problem solving and you often have a lot of recommendations of a best strategy, not just to manage through something but to lead your way out of it, then you create a trust and a bond and a working relationship that creates more power of working together.”

Over the years, what Hillman says he’s learned is to understand the difference between sizzle and steak.

“All fluff and no substance, you don’t have a business. All substance and no fluff, you’re not going to build the brand equity and get the enterprise value that you’re deserving of.”

Being a great storyteller is very important for entrepreneurs. It’s a skill to know how to message and tell the company’s story. But there’s got to be something underneath all that.

“You want a great leader and story teller, but it has to be more than that.”

Catch the full conversations with Hillman and Eberlin in the video above.