Show Me the Money!!!

Friends of Branded!

Happy Saturday and I hope you had a great week.

I have a 9-year-old daughter and if I had a dollar for every time she's told me that "Daddy, I got it," or "Daddy, let me do it," I'd have a decent stack of dollars.

And b/c my wife, mother-in-law, and my own father are loyal readers of this newsletter and believe this kid is a one in a million, I want to be clear that nothing I wrote above should suggest that my daughter is anything less than a fantastic kid. In the eyes of her family, the sun rises and sets with her, and I’ve heard that she once even walked on water, but that doesn’t change the fact that she's at that age where doing things on her own is what she wants and feel a deep need to do. I believe, as a parent, that it's my job to help her become an independent thinker, a doer, and as self-sufficient as possible.

But here's the thing, companies are NOT our kids. And despite the time, effort, and care we pour into them, the rules we apply to raising our children are not the same rules we should apply to our business. 

So in an effort not to bury the lead (which I've been known to do, just ask my friend Brandon Barton, CEO at Bite), here it is, business leaders need to know their own limitations, recognize that not everything is a DIY (do it yourself) opportunity, and understand that there are things they most certainly should NOT do on their own. Selling their company without the support of a professional service provider holds a high-ranking spot on that list.

I know there are many here who just read than and will disagree with me on this, and I respect that we can have healthy disagreement. But as Papi told Kramer, “On this there can be no debate," a CEO or Founder will not maximize the value of his or her company by going down this most important path alone.

So, let's dive into it. 

From my experience (and I am not a youthful man, despite how I view myself in the mirror each morning), I've seen my fair share of CEOs move forward with the conviction that they know enough people, or that they can leverage a few relationships to get a deal done, without committing to and engaging a banker to drive the process.

One of the most common responses I hear when a CEO tells me they're moving forward on their own is that they received an unsolicited offer to acquire the company. And in that moment, the CEO believes a good attorney is all they need, b/c in their mind, the buyer has already been sourced.

No. No. No.

First, the CEO doesn't "know" enough people. Second, leveraging loose relationships to "help" is soft, and the cliché "you get what you pay for" feels most appropriate here. Third, that unsolicited offer you just received is probably the best number you're ever going to see from that particular buyer (and it most certainly does not mean the buyer has been sourced). The words “non-binding” that appears at the very top of letter of intent they sent you should make that crystal clear.

And while I have enormous respect and agree with the need to secure legal counsel, an attorney does not address or fill the role of a banker. They don’t play the same role, and they’re not interchangeable positions.

Here's something I've observed that I want you to file away, the buyer is going to tell you that you don't need a banker. Consider this a “tell” that should tell you everything. They'll do it nicely, of course, in the spirit of partnership, and as professional courtesy. They'll frame it as an act of goodwill on their part, to way to keep things moving efficiently and collaboratively.

Don't let the camaraderie fool you. You securing a banker is not in their best interest but it’s absolutely in yours. 

The moment a buyer is convinced there’s no one else at the proverbial table and that the CEO is more focused on closing a deal than running the business, the dynamics shift, and they shift fast.

I've seen acquisition offers drop by 50% from start to finish. The erosion rarely happens all at once. It chips away, little by little, as the diligence process grinds forward. But the most meaningful degradation almost always accelerates when the buyer senses they're the only one in the room. And even if the valuation itself doesn’t change, there are other ways for the buyer to improve its position in the deal. Sometimes it shows up late in the process as an increase in the hold-back amount (the amount not paid at closing) or an extension of the hold-back period. Sometimes the buyer may use a strategic pause, where the buyer goes quiet just to see how the CEO responds to what’s intended to signal a less than enthusiastic acquirer.

Mary Poppins doesn't live in the Hospitality Headline, so feel free to rent the movie if you want things to be all smiles and cheers. But this is real life, and in real life, you’re selling your company and other than they day you started it, this is among the most important days of the life of your company.

Here's what people miss when it comes to hiring a banker, they think about the banker's fee and they see a cost. What they should see, if they hire the right professional, is an investment, one that pays for itself many times over. 

A banker doesn't just open doors, a banker architects a process. They create the competitive tension among multiple buyers that no individual CEO can manufacture on their own. And it is precisely that tension, the knowledge that there are other parties at the table and that this is a real process with real competition, that drives valuation. Remove the tension, and you remove the premium.

Think of it this way, you spent years building something valuable. The banker's job is to make sure the market fully acknowledges that value. Without them, you're negotiating against a counterparty who knows your business, has better information than you about deal terms, and has done this many, many more times than you have.

Your goal in selling your company is to maximize its value and do right by your shareholders, your team, and yourself. That's the obligation you took on the day you started the company.

The sale is the final chapter of the journey you began as a founder and is arguably the most consequential chapter. Treat it accordingly and with the respect it deserves. Secure the professional help you need, run a real process, and don't leave a premium outcome on the table b/c you thought you could go it alone. 

The African proverb tells us that “if you want to go fast, go alone, but if you want to go far, go together.” For purposes of this week’s Top of the Fold, I’ll offer a proverb of my own that I expect will never be quoted “if you want to secure a base standalone value for your company, go alone, but if you want to achieve a strategic-fit premium or even better, the competitive tension premium, go with a banker.”

I realize, of course, that my quote is not remotely as inspiring as the African proverb, but embracing it has the potential to deliver a most meaningful premium when it comes to where you sell your company versus doing it on your own.

It takes a village.

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Everyone in hospitality seems to be chasing the same things right now: AI; Loyalty; and Guest data. 

Respect. That’s fine. And Branded agrees with each of the above as important pursuits. But I want to use this week’s Deal Room to put a spotlight on a lesser-known shift that’s happening in a place nobody is looking at, underwriting.

The old model was built on guesswork and for decades, insurance in foodservice has been a blunt instrument. Historical losses, static audits, self-reported data and a broad “category risk” assumptions.

What does that really mean? Underwriters weren’t pricing risk. They were approximating it. And when something went wrong, especially a recall, the response wasn’t precision. It was panic. Pull everything. Shut it down. Sort it out later.

But something has changed b/c now the data Is showing up.

Enter Starfish, the platform building real-time supply chain connectivity and traceability across the food industry.

But zoom out, because this is bigger than one company. What we're watching is the emergence of an entirely new underwriting layer, one built on data that is real-time, product-level, and system-generated. Not self-reported. Not audited annually. Observed, continuously. 

This is the shift, risk is no longer inferred. It’s observed and recalls just got rewritten.

Let’s keep it simple (Schatzy).

The old recall playbook: “We think it’s this batch…” pull product across regions; overcorrect, overpay, overshoot claims.

The new playbook: identify exact lot; trace exact path; and isolate only what matters.

But here's what most people miss about why that matters, to insurers and operators alike. It's not just about accuracy. It's about speed. The difference between a company that can identify and contain a problem in three days versus three weeks isn't a linear difference in outcome, it's exponential. For the insurer, claims compound the longer a recall runs unchecked. For the operator, every additional day means more product pulled, more shelf space lost, more headlines written. A targeted recall isn't just cheaper. It's the difference between a contained incident and a brand-defining crisis.

That’s not optimization. That’s the difference between a bad day and a balance-sheet event.

Recall risk just got a score and here’s the real unlock: a standardized rating for food risk. Let’s call it what it is, a credit score for your supply chain.

Starfish has created the STAR Index: a recall readiness rating that converts traceability, compliance, and response preparedness into a single number. It creates comparability across operators and gives insurers something they've never had before, a clean signal. And once you have a signal, you can price it. 

This isn't about insurance. It's about capital. And this is where most people miss it.

Better underwriting doesn't just mean fewer claims and tighter policies. It means capital flows differently. Think about what this means if you're an operator who has invested in your supply chain infrastructure. For the first time, that investment is legible to an insurer. A strong STAR score isn't just a compliance checkbox, it's a competitive asset. It lowers your cost of coverage, signals trust to retail and foodservice partners, and demonstrates that when something goes wrong, you're the company that responds in days, not weeks. That's worth real money on both sides of the policy.

The flip side is equally true. Weak operators face higher costs, or no coverage at all. Carriers that are more confident can be more aggressive.

And the real twist? With better information, insurance starts funding prevention, not just losses.

Here's what makes this even more interesting: this only works at scale. As more suppliers, distributors, and operators plug into networks like Starfish, visibility improves, blind spots disappear, and systemic risk declines. The operators who move early don't just get scored, they get ahead.

And insurers? They don't price individuals. They price systems.

Friends, investors, operators (and insurance carriers and brokers), for years we’ve been focused on the front of house. But the next edge isn’t just better marketing, better tech and a better UX (user experience).

Here’s the money-shot (that’s for you JB), your supply chain is now your insurance profile. And your insurance profile? That’s your cost of capital.

If you’re still thinking about insurance as a line item, you’re missing it b/c in this next cycle, the operators who can prove their risk, and will outperform, are the ones who can explain it.

To learn more about Starfish, it’s Star Index and opportunities to engage with us, please click here (or contact me directly).

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