Ca$hing Out 15: Reviewing the LOI & next steps

Exciting news, an LOI has been signed.  Dan Humiston, his co-host Dena Jalbert from Align Business Advisory Services and the MJBulls legal advisor Larry Mishkin from Mishkin Law and Hoban Law Group talk about the terms of the deal and the next steps.  To learn more go to MJBulls.com 

Produced By MJBulls Media

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Dena Jalbert:
They were super accommodating and I think it speaks to they see that value that we're talking about. They see how great this can be. And they feel good about everyone who is a part of this process. So they're excited to move forward and we're excited to work with them so it can be a lot of fun.

Dan Humiston:
Hello everyone welcome back to cashing out brought to you each week by hope and law with me today is my co-host Dina jailbird from online business advisory service. Hi Dina.

Dan Humiston:
Hey Dan and our legal advisor attorney Larry Mishkin from Michigan law and hoban law groupLarry.

Larry Mishkin:
Hi Larry. Hi dan.

Dan Humiston:
Well we've been bogged down for the past few weeks in negotiation and it's made it very difficult for us to build a show around what's going on. Because things are changing sometimes hourly. But the good news is we've wrapped up our negotiations and drum roll.

Dan Humiston:
We have a signed loi I sell very very exciting. So we're going to do a show today about the loi I and where we are from there. We were hoping to get the buyer on the show but the buyer doesn't want to be disclosed who they are.

Dan Humiston:
I can understand why they certainly don't want to be a guest on the show just yet. So where to keep their identity confidential at least for now.

Dan Humiston:
I can say that it's going to be a strategic acquisition in everything points to this is going to make both entities stronger. Dina you've been in the middle of this since its inception. What can you tell us about this deal compared to others.

Dena Jalbert:
Yes you hit it right on the hand. This is a true strategic synergy. And if I certainly ever seen line going up the market we talk to so many different varieties of buyers and they all would have their own version of strategic value. And essentially this particular buyer has a unique place an ability to add a ton of value to the show and to the partner and that is really what came out in the end. And everyone's really excited because I think it's going to mean great things on a go forward basis. It's one of my favorite situations where everybody wins. That's you look at structural along the way with the biggest shake a lot of terms we went around and around it kind of talked about there's a lot of clashes if there's a time component to try to get it in a certain day in time that can always bring anxiety and I would say it did a bit down at the end there.

Dan Humiston:
We got to right down to the wire but I got to say the buyer is super professional and really really accommodating they were so good to work with. I mean just give everybody sort of an behind the scenes look. An example is that my partners weren't comfortable about sharing a lot of information until we had an ally. So we were kind of in a bit of a catch 22. But fortunately the buyer broke the stalemate and gave us of the ally without a lot of the information that they normally would look for. So it just really says a lot about this type of the partner or the future partner and just the type of business people they are just real real professional real straightforward shoot straight shooter type of people.

Dena Jalbert:
Absolutely. They were super accommodating and I think it speaks to they see that value that we're talking about and they see how great it can be. And they they feel good about everyone who is a part of this process. So they're excited to move forward and we're excited to work with that. It can be a lot of fun.

Dan Humiston:
Yeah. Again we can't disclose everything but the deal is is kind of broken up into essentially three parts. There's some upfront money there's some stock and there's some earn out.

Dena Jalbert:
Yes exactly. Contains the mechanics of them are structured in various ways. There there's an overall value that's placed the sale price if you will. And then that value is broken up into a certain point to find a common structure where there's some money and clothing that can cash in the races are doubt and earn outs over a period of time and usually tied to some condition or other.

Dan Humiston:
Yeah. And as you know as a seller in a cannabis industry I know I feel this way and I talk to a lot of other people that feel this way is you're kind of in that position where you're a little bit of a seller's remorse because you're like wow this industry is exploding and you know you don't want to walk away yet but the nice part about having stock especially in a company like you know the buyer is that there's a huge potential for upside because these guys are really making things happen so that's an exciting part for me is just knowing that Yeah while you're kind of stepping away from your baby you still have stock you're not giving it up completely I guess is what I'm saying.

Dena Jalbert:
That's a good point. Yes absolutely. All right. A lot of people in this industry they're quintessential tiny question is it is it too soon. Way. What's going to happen and what is funny for that matter. First of all the great shock is a way to still much consideration in your book and you'll get to ride the grouch.

Larry Mishkin:
Well Larry David just said it the ball just got thrown right into your core. Yeah. And that is not your first clambake. But tell us a little bit about what happens next after an Alawite has been signed and now the fun. Gains for the attorneys are shrewd.

Larry Mishkin:
This is the real nuts and bolts lows in the negotiation and what the deal is going to be. Hopefully with two sides you negotiated the labels in good faith that gives us a good starting point. But as you add in other challenging conditions to fill out full agreement and everything else that's required. People look at it and all of a sudden terms of the yellow line may not seem like they were. So we sit down with the attorneys and the negotiation within the spirit of the Alawites in this case.

Dan Humiston:
Not only you have a buyer and the seller you have a third party involved the Nets the managing partners of the show. So we have a whole nother set of dynamics and I think that's at least in my mind one of the reasons why I selected this buyer or agreed to a deal with his buyer is because as I said earlier they're so accommodating with three entities in the negotiation that's going to make it even more complicated for you.

Larry Mishkin:
Well it does but by the same token that's exactly the purpose of the alleyway in this instance. It's important for you guys you're able to share your managing partner you've actually got a real deal. If you've got a real property out there and there's a real chance for all of this and that they need to take it seriously. And this is interest small talk. You know you're ready to bring a real player to the table and now we count on the managing partner for cooperation in helping issue this thing through to the conclusion that everybody's best interest. You're ready to move on. You have somebody who's ready to step in Australia from the managing partners perspective. It would seem to me that they would want to be partnered up with somebody who wants to be there. So it would seem to be a natural fit all the way around. But this is where negotiations can go sideways right. The managing partner division roles you want me to do this and I want you to do that. You pick me for this one credits on what I owe you for that were the case. At the end there's a certain amount of leverage that they have in that instance because of their position as the manager of the agency. But again it swings both ways because if they make the deal too onerous and you say Screw it I can't do this and you walk away. You know you're still in a situation where you don't want to be and presumably they don't want you there if you don't want to be there but they just interfered with your opportunity to move on and give them a happier partner let's say. So it is very important but I do think that it helps a lot to be able to walk in to the managing partner's office and sit down and say here's a fully completed and saying otherwise. Now you can see that were all serious about this you're ready to move forward these guys are going to be real players in this deal and it's time to cooperate.

Dan Humiston:
Yeah. I also think it's super important if that's a strategic deal so we're not just replacing one with the other you're replacing one and they're bringing in some advantages that I might now have been able to provide. So that's another plus sign. So right. Yeah. Anything else Larry from your end that this is really early. I mean we have a feeling that a lot of twists and turns in the next couple of months but anything else that you wanted to touch on right now in the early stages.

Larry Mishkin:
Well I see that the other important thing to keep in mind is you know there is this sense that oh my God thank God we've reached this point in time and thank God we've got here and I thank God that we've got a real offer on the table. So it's kind of like winning the first battle but you have to remember not to draw the analogy out the wrong direction you know. That's just one of many and it's really the first one and I was trying to do is open the door to start focusing on the second one and the second one is really much bigger much more involved. It's going to make this initial negotiation look like good stuff because right we've all negotiated the Alawites say Look even if we don't necessarily agree with this for now let's just say we agree with it we know it's non-binding and that gets us to the next stage after this. There is no next stage other than a signed agreement that both sides have to live with. So this will be the period in time where people are getting off. If there is anything they want. This is what we're going to hear about it.

Dan Humiston:
Yeah. This is probably less than the first quarter of a football camp first in the first five minutes of the game. Yeah well at least the game has begun right.

Dena Jalbert:
Putting that. And you saw that very well we were just more in that early innings. There's a lot of game right to be played. And luckily prior to our the we did that so we talked to the third party and I'll find they're hopefully pointing to cooperation. But Larry there is a point when the rubber hits the road and change things change isn't the end. Bring em on right.

Dan Humiston:
And the answer that a US to us to so for our listeners if anybody has any thoughts or ideas or suggestions please email I said connected MJ balls dot com and Larry and Dina's email information and contact information is on the MJBulls website so if you need to talk to them about anything that they're doing or anything you're doing and you want their advice you can always reach them there. And last but not least quick thank you to Jamie Humiston for composing the music for the show.

Dan Humiston:
I have a feeling the next few weeks are going to be a lot more interesting. So stay tuned everyone Larry. Dina thank you for again for being on the show and all the work that you've done up until now.

Dan Humiston:
And when we. And we will see everyone next week and cashing out.

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