Paul Lufkin

Mergers and Acquisitions Professional

Paul Lufkin is a visionary and strategic thought leader with a 30,000-foot perspective which enables him to see and find opportunities and bring them to fruition. He is an entrepreneur, small business advocate, and an expert in mergers and acquisitions. He takes great joy and pride in bringing the founders of small companies’ real value and integrating them and their businesses into part of a larger organization. Throughout the course of his career, he has founded, purchased and/or sold 38 businesses. He brings small companies together by consolidating them. Paul is a specialist in exit planning, as well.

Where did the idea for your career come from?

My background is in mergers and acquisitions, particularly putting small companies together to garner interest from Wall Street firms that usually won’t mess with them. My current mandate is the cannabis industry, which I’ve been involved with almost since they legalized it in Colorado, where I now live. We’re eight years into legalization, and there are a lot of operators that are now into the business. They’ve been at it five, six, seven, and in some cases, ten years. As a result, we’re consolidating small cannabis operators into a publicly traded company in three mature markets, Colorado being one of them. The others are in Oregon, and, in a twist, Alberta, Canada. We’re bringing some interesting pieces together that will make us a diverse and attractive option to investors.

What does your typical day look like and how do you make it productive?

My day starts at about 4 am because I awake with my wheels turning. I work through all the aspects of putting together a transaction. I deal with lawyers, entrepreneurs, investors, and my job is to be the project manager, so to speak, that brings all the pieces together with the executive teams. I wear different hats all day long.

How do you bring ideas to life?

I’m a 30,000-foot guy. That’s my skill set. I take a macro look at things and see angles a lot of other people don’t see. That’s why I can look at an industry and I can see where consolidation, or other aspects of a business, could be an opportunity. To bring all that together, I start with doing a bunch of research on a particular opportunity and put a lot of thought into how an enterprise can be accomplished. It’s from those ideas that I can potentially translate things into a business plan, working the numbers to see if I can take the concept to the next stage.

What’s one trend that excites you?

I think what has happened with technology due to the pandemic and how we had to change and adapt to make all that work and now change again as people are coming out of the pandemic, is something I find fascinating. Like how it has changed some of the social ways we are engaging with our work life and companies now focusing more on work-life balance. How this all evolves and where it goes, I think will be very, very interesting. Technology, of course, affects all our lives but the pandemic was a reality check to remind us how the smallest things in the world, like a virus, can bring things to a total stop.

What is one habit of yours that makes you more productive as an entrepreneur?

I don’t sleep a lot. I survive on four hours of sleep a day and a meditation/siesta which allows me to work a 10-, 12-, or 14-hour day. It’s my modus operandi, but I’ve always kind of been that way. And now, if I must work on reading documents later in the day, then I’ll have a little siesta for 20 minutes and I’m good for another eight hours. I have studied health extensively, and now I have adopted an all-encompassing health approach that allows me to have a condensed amount of sleep.

What advice would you give your younger self?

My wife and I have two children who we’ve raised in the business world. They started their own coffee and donut stand when they were small children. We’ve taught them from the time they were very young about the basics of business. I would teach my younger self how to go about creating pools of capital. How to access business capital is not the kind of thing that is taught in business school. If you build a business, having a plan, constructing an exit plan, and knowing how to raise capital are all very important elements for success. I would pass that information on to my younger self.

Tell us something that’s true that almost nobody agrees with you on.

I get told all the time, “You can’t do that. That’s just not how it’s done,” because I’m a trailblazer in a lot of things that I’ve done in my career. Right now, I’m working on a dual border transaction. I have lawyers telling me “That’s not how we do it.” But they only say that because they have never done it before. There was a great quote that says, “just because you could see the endgame doesn’t mean that you’re wrong.” I live by that because I see things other people don’t see.

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

Pivot, plan, pivot, plan, pivot. In the business world, you must be adaptable. Now it depends on what kind of business you’re engaged in, but if you’re planning a business, know that you’re going to have to monetize it or have an exit. That means having a plan and working the plan, but always being ready to pivot, pivot, pivot.

What is one strategy that has helped you grow your business?

Buy small. Consolidate. You’re worth more that way. If you buy a small business that comes with two-to-four times profits, and then repeat, and you consolidate enough of them and you’re big enough, you’re now worth eight-to-twelve times.

What is one failure you had as an entrepreneur, and how did you overcome it?

Oh, I have lots of failures. There is the venture capital world and the private-equity world. Venture capital is building start-ups. Private equity is taking existing bigger businesses and putting them together with other bigger businesses. That makes two different capital pools and folks at each end of those investment markets think differently. In a venture capital world, six out of ten of their investments are going to fail. Three will do okay. One will knock it out of the park. That’s just the nature of venture capital. In private equity, investors almost never want to fail. They want as close to a sure thing as is possible. As a result, it’s just a different model.

What I do is kind of a combination of those two. I refer to it as Venture Equity because we’re acting like a private equity firm because we’re putting a business together but there’s more of a risk profile with a venture capital company. Out of 38 transactions in my career, 30 of them have been successful. I’ve had a pretty good deal. I don’t have a 60% failure rate, but I have a 10% or 15% failure rate. That means I’ve had 5-6 transactions that were just horrible. It’s those horrible ones where you sit back and ask yourself, “What did I do wrong?” Well, in putting things together I probably gave too much power to certain people, or picked the wrong partners along the way, or picked partners that thought they could eventually steal from me. I have some wild stories. Being an early bird into the cannabis space was probably the most painful thing I’ve ever had to deal with because I dealt with people that created a business and got lucky. They were in the right place at the right time, but they were still conducting business like they were in an illegal industry.

What is one business idea that you’re willing to give away to our readers?

First look at what are the evolving trends. Today, crypto, and digital assets and things like that are trendy. Cannabis is very trendy, too, and emerging as a big growth industry. You must look at where the opportunity lies. Some of the things that appeal to my teenagers, that they think are great investment opportunities that should be pursued, are things I don’t understand. But I’ll make the effort to understand. Cannabis is an example. I have not been a cannabis user, but through it I’ve learned all the benefits of CBDs and I’m now a big advocate for CBDs. Find what’s emerging and then figure out how to build a business and tie in the old businesses to it. That really helps accelerate growth.

What is the best $100 you recently spent? What and why?

I put a hundred dollars into Coinbase. It’s a cryptocurrency exchange. My hundred bucks turned into a thousand dollars in weeks.

What is one piece of software or a web service that helps you be productive?

My favorite is called Todoist, which is an online multi-platform task manager. I can look at it on my phone or my computer and everything is synced. It has great features. It’s integrated with other services, and it allows you to move your tasks around. That is a big thing for me, because I’m prioritizing my tasks around all day long. Pivot, pivot, pivot all day.

What is the one book that you recommend our community should read and why?

A great book when it comes to mergers and acquisitions is Mastering the Merger by David F. Harding and Sam Rovit. Patrick Lencioni has several books I’d recommend. One is called The Four Obsessions of An Extraordinary Executive, which is an excellent book about the concept of cultivating a corporate culture as an important piece of your business puzzle. The first place you really must start when you’re building your business is your corporate culture. Either you define it and say this is how we’re going to operate, or it will be defined for you. Another great one that Lencioni wrote is called The Five Dysfunctions of a Team. These books go over all the important basics of starting a company, and I’ve used them in team-building many times over the years.

What is your favorite quote?

“When it looks like there is no way, there is a way to do the impossible, to survive the unsurvivable. There is ALWAYS a way, in the face of the impossible, there’s ALWAYS going to be a way to do the impossible. So, in the face of the impossible, be inspired. So today, if you become frightened, instead become inspired.”

I have that quote on my wall. It’s from Grey’s Anatomy. There’s some profound writing that comes out of that show. It was a scene where a patient who was about to have brain surgery was encouraging the doctor who was about to perform the operation which had never been done before. Life is all about cycles, and you just must remember that when you’re faced with an obstacle you need to be fearless and be inspired.

Key Learnings:

  • When it looks like there is no way, there is a way to do the impossible.
  • You know you’re going to encounter adversity, so plan for it.
  • If you’re starting a business, have the monetization or exit as part of your plan. Always see the endgame.