Capital Tactics’ Dino Lucarelli on Why the Win-Win Is Not Weakness, It’s the Only Strategy That Lasts

Anthony Codispoti (00:00)
Welcome to another edition of the inspired stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. As you listen today, let one idea shape what you do next. My name is Anthony Cotaspodi and today’s guest is Dino Luccarelli, CPA and founder and managing director of Capital Tactics.

a Cincinnati-based financial advisory firm that guides business owners through mergers and acquisitions, capital raising, and financial restructuring. Along with &A support, the firm provides business valuations, cash flow planning, and day-to-day financial management, all to help middle market companies unlock lasting value. Since launching in 2021, Capital Tactics has already advised on dozens of successful transactions

And Dino himself brings over three decades of leadership as a CEO, CFO, and board member. Plus a longstanding role as an MBA instructor in business valuation and ⁓ &A at Xavier University’s Williams College of Business. His blend of classroom insight and real world deal making has earned him a reputation as a trusted voice in corporate finance. Now before we get into all that good stuff,

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All right, back to our guest today, the Managing Director of Capital Tactics, Dino Luccarelli. Thanks for making the time to share your story today.

Dino Lucarelli (02:23)
Happy to do it. Thank you, Anthony.

Anthony Codispoti (02:25)
So Dana, what first sparked your interest in finance?

Dino Lucarelli (02:30)
very simple. I was always worried as a young man about would I be able to sustain myself and live a happy life. And I was talking to an advisor in high school who said, if you go into business, you’ll never be out of work. I said, okay, I’m going to take up accounting in school and college. I did that and I’ve never been out of work since. So it was just a question of sustainability.

Anthony Codispoti (02:58)
Where did that initial fear come from?

Dino Lucarelli (03:02)
think growing up in a household where my father worked very hard and he was in sales and the sales ⁓ business can be very volatile and there were a lot of highs and a lot of lows and it taught me that I wanted more sustainability, more consistency in my life and in my career where I wasn’t ⁓ living and dying on the next transaction but I was able to build a knowledge base

and work from that knowledge base and help create value for organizations and companies where I had a continuing role.

Anthony Codispoti (03:41)
So let’s talk about some of your earlier roles before we get into what you’re doing now at Capital Tactics. You were at Arstead Young for a year, and then as the VP of Finance at a publicly held company, Edison Brothers Stores, you actually guided them through Chapter 11. Early on in your career, what was that experience like for you?

Dino Lucarelli (04:02)
It was amazing. It was an opportunity to expand my skillset and to challenge myself to be my best self. When working in a multi-billion dollar bankrupt company, one finds himself in front of very, very accomplished professionals, whether it be bankers, attorneys, deal people, strategists. And what was interesting about that opportunity was that it forced me to

rethink how I approached opportunities, how to ⁓ work for the win-win instead of the win-lose. It forced me to think about the dimensions of each facet, whether it be the legal or the financial or the HR component or the IT component, to become well-versed in a variety of disciplines instead of just simply focusing on finance. And in so doing, I was able to meet some incredibly interesting people.

who taught me a lot and helped fortify me for the next phases of my career.

Anthony Codispoti (05:07)
say more about that win-win philosophy because I have to imagine a bankruptcy, even though I’ve not been through one before, there’s a lot of tension, right? Things haven’t been going well. How are you trying to set up win-win?

Dino Lucarelli (05:21)
think about the constituents in a bankruptcy, of course, you have the financial partners who want their money. But then you also have employees who have worked hard for the company who didn’t really directly contribute to the bankruptcy. Oftentimes, in a situation like this, the bankruptcy was, at Edison Brothers, was a function of some poor decisions made at the top. And so when I’m looking for a win-win, I want a solution that doesn’t result in

termination of all the employees and closing of all the stores and breaking of all the leases and having a whole bunch of people out of money. What I was looking for is how can we satisfy the creditors, keep the employees working, build a sustainable organization, kind of a phoenix from the ashes and rethink how we go to market and continue to operate in the community, pay taxes, be a good corporate citizen.

and let our employees, vendors, and customers continue to have access to our services and products, that’s a win-win. Oftentimes, bankruptcy is a situation where it’s a pure financial play, shutter the doors, pull all the cash, send everybody home. That’s a very, very dire circumstance. And I had the opportunity, that is Brothers, too.

work with people who shared a similar philosophy and we ultimately were successful at doing what we set out to do, which was to keep the sustainability going.

Anthony Codispoti (06:58)
That’s great. And I presume that that continues to influence the way that you approach deals today.

Dino Lucarelli (07:04)
In every deal, Anthony, we look for the win-win. I put myself in the shoes of the other party on a regular basis just to understand how would I interpret this if I were on their side? What are their concerns? What are their fears? Is there an overreach on either side? And let’s do our best to not have an overreach. just, in fact, was just on a call today just a few minutes ago before this podcast with ⁓ the representative from another side of the deal.

and we were negotiating some things that had kind of popped up in the last minute of deal we’re supposed to close. And it was very collaborative conversation. It’s not like, ⁓ know, we’re stuck on one side and it’s this or we walk. We don’t ever take that approach. Now we’ve had people doing deals, threatened to walk the deal at a very early stage. That’s when it becomes even more challenging to show them.

that our intent is pure. We work from a posture of fairness and we want every party, every constituent to feel like they were treated with respect. And that I think is what has sustained us for 23 years, 22 years, whatever. Before it was Capital Tactics, that was Look Really Tactical Group. We basically did the same thing, different name. But that’s how we’ve been able to win favor with parties that otherwise could be in a contentious situation.

And we don’t like contentious situations. We work very hard to jump to the other side and take their position and understand it and then make concessions that are fair. Interestingly, a long time ago, I ran into a person who I thought was very, very highly, highly respected. And he told me that compromise is the tool of the weak. And it was staggering to me as a young man to hear that what I thought would be a

a very admirable trait, is to compromise and look for mutual wins, mutual gains. That’s the right way to do it. And my upbringing and my schooling and my faith is one of treat people the way you want to be treated. It’s very simple, but it’s not always implemented properly.

Anthony Codispoti (09:22)
Yeah, it strikes me that there’s probably not a whole lot of your type of mindset in this line of work, right? There’s a lot of ego. There’s a lot of bravado. There’s a lot of I’m going to, you know, squeeze every last penny out of the deal that I can get for myself or for my client. Is that what you run into a lot?

Dino Lucarelli (09:43)
Sadly, that is so true. The prevalent behavior is for me to win, you have to lose. And early in my career, I read a book called Getting to Yes. It’s a very well-known popular book. And it talked about how do you cause all parties to feel like they’re being satisfied in a situation? So one of the things that I think sets us apart is the fact that we do work.

towards mutual success, mutual gains. And your assertion is absolutely correct. The majority of people who do what we do don’t behave this way. And so we sometimes have clients or would be clients who have a very aggressive posture towards deals. And I will tell you that we don’t take clients on who have that demeanor. We will just simply say, look, we’re not the right fit for you.

What we want to do is fair deals. We want to do deals where people are rewarded for having built great companies. We don’t want to disrespect them. We don’t want to try to job them because they don’t have the right attorney or they don’t have the right accountant, or they happen to be very kind-hearted. We just completed a deal where the sellers were not represented and they didn’t have a third party on the other side, you know, to represent them. And we worked very hard.

with my buyer and I did with them to make sure that what we did was fair and that I would be proud if it got published on the front page of the Wall Street Journal.

Anthony Codispoti (11:20)
that’s an interesting way to run a business,

Dino Lucarelli (11:23)
Well, the financial people, that’s a fairly common saying when people start thinking about financial reporting and what’s right, what’s wrong. And I always use that as a barometer. If this were on the cover of the Wall Street Journal tomorrow, would I be proud of it? And so when you hold yourself to a standard like that, things get exponentially harder.

Anthony Codispoti (11:47)
Yeah. So, okay, we talked about the Edison Brothers stores, chapter 11 that you helped guide them through, you learned a lot there about this win-win philosophy. Although it sounds like this is kind of baked into your upbringing, your faith, you’re just you’re kind of wired for this. ⁓ You also were the CFO of a publicly traded company, Pomeroy Computer Resources. Tell us about a powerful lesson learning experience that you had there, Dino.

Dino Lucarelli (12:17)
That was a very fast growing organization that was going a thousand miles an hour to grow, to become big in the early stages of the personal computer boom. was ⁓ essentially, and I hate to use this trite saying, it was definitely drinking from the fire hose. We had a company that in four years, three years of my tenure went from 400 million to almost a billion dollars in revenue.

And what happens when you grow is you have to learn, you have to continue because I was growing with the company. And so it puts a premium on your willingness to listen and to interpret and understand and venture into new worlds that maybe are new for you, but always work from a posture of what’s best for the organization, what’s best for our people, our customers, our suppliers. So it helped me create a holistic view of the world and also

helped me with risk-taking because there were things like that I had never done, like talking to Wall Street analysts about our stock and our stock price. ⁓ Financial reporting became very important. And one of the stories that I recite a lot is that there’s a report that gets done by every public company every year. It’s called a 10K reports, an annual report that gets filed with Securities Exchange Commission. And effectively our 10K,

was a bunch of words. It didn’t really stipulate what was going on in the company and what the risk factors were and all the things like that. So I took that out of the hands of legal and I wrote the 10K myself after 10 years of being a public company and I wrote it. And I did what the SEC asked you to do, which is talk about the good, the bad and the ugly and give us a forecast of what’s going to happen. Tell us what’s coming down the pike, what’s good or bad and tell us risk factors. So the

10Ks that I had reviewed prior to me taking authorship never talked about any risk factors. And so what I did is say, look, there are huge risk factors. There’s this convergence of data and telephony. There’s this issue of company named Dell that’s the big giant taking over the world. IBM is on the decline. And so we went from having no risk factors in our 10K to having pages and pages of risk factors. And it wasn’t that I was trying to downgrade.

the stock or downgrade the company, it was just, let’s be eyes open, let’s tell our shareholders what they deserve to know and let them make decisions. And interestingly, after we did that, the company stock had been trading at about $12 a share for the 45 years prior to my involvement. After my second year of involvement, the stock rose all the way up to $28 a share and stayed there for a long time. After I left, some things happened and the stock didn’t prevail at that level.

But while I was there and while we were being very transparent and telling the shareholders what they wanted to know, they felt like they were getting the best information.

Anthony Codispoti (15:16)
you think that transparency was what led to the stability in the higher stock price.

Dino Lucarelli (15:21)
I don’t

think there’s any doubt about it because in the past, when I went to Wall Street, they said, this is a family-run business in Northern Kentucky. And what I did is establish us as a real force in the technology world. And again, growing it from 400 to 900 million and telling them the things that they already knew, but wanted to know if we knew. I think that caused them to have more confidence that we had a 360 view of the world and it wasn’t just our way or the highway.

Anthony Codispoti (15:51)
So you were just mentioning before that Lucarelli Tactical Group founded at end of 2018 was basically the precursor to Capital Tactics that you run today. Walk us through sort of the connection between those two companies and how the idea to start Lucarelli Tactical Group came about.

Dino Lucarelli (16:11)
It was really a resource planning issue. As a small firm, Luke Riley Tactical Group, I started it effectively after I left my last corporate job in 2003. And I grew it to eight people. And we worked closely with accounting firms, big accounting firms. And accounting firms are constantly looking for new opportunities, new business lines. So we did a lot of work with a particular firm here in town that’s very large.

wanted to buy us because they felt like that was a new line of business they could take on. And we did, so we sold our firm into their company and then I ran the business unit for them. And after about three years, was, there’s nothing wrong with either side. It just wasn’t a good fit. Accounting firms bill by the hour. We don’t bill by the hour. I might bill.

at the end of a deal, that’s when we were success fee based. So I might burn 200 hours that would otherwise be billable by an accounting firm, but I’m gonna get paid till maybe nine months, 10 months, 11 months, 12 months down the road. And I think that over time, that expenditure of hours ⁓ became worrisome to the leadership of the firm. So we parted as friends and we still do lots of referral work between the two farms.

And it’s fine, but not every merger is successful. And while I wouldn’t say that ours was unsuccessful, I would say that we’re better off apart and independent. So now I can use their work to do audit work that otherwise they couldn’t do for my clients because there would be a perceived conflict of interest. So we separated, I bought my company back and I renamed it because I felt like

It had, we had established a broader appeal and I didn’t want it tied to my name so much. wanted more of a, more of a corporate name because the companies with which we work tend to be sizable companies. And, you know, they don’t, I don’t really feel like, ⁓ running a business with a single person’s name is the best. I feel like it’s better to have a corporate presence where people recognize that you, you’re growing like they are.

Anthony Codispoti (18:35)
And that way, when a client comes, they don’t insist on talking to the guy whose name’s on the door. They understand that there’s lots of folks that are there who can help them in a similar way.

Dino Lucarelli (18:45)
That’s exactly right. My team are very talented people. And I stand as advisor to deals, but my people run deals and they’re very talented. And I don’t wanna be the critical link in the chain. To me, that’s a single point of failure is inappropriate. And so that doesn’t happen anymore. And when people hear Capital Tactics, of course they think of me because I’m the founder, but they also think of Lisa or Chuck.

or Eddie or Chris. And so we do have, I think we have a broader footprint and I think we stand as a firm instead of as an individual who’s looking for success.

Anthony Codispoti (19:30)
You said that you do sizeable deals, Dino. Tell us what kind of size we’re talking about.

Dino Lucarelli (19:36)
We purposely, so my background is coming from multi-million dollar company, 100 million, 200 million, 500 million. ⁓ What I recognized in those roles is that the smaller companies anywhere from 5 million in revenue up to say 50 million were underrepresented. They didn’t have a professional CFO. They didn’t have corporate counsel and staff. They might’ve had a good… ⁓

⁓ tactically skilled accountant, but they didn’t really have a professional CPA firm. And so I recognize that that size of company, five million to say 50 million in revenue, were not represented properly in the market. And they didn’t have the level of professional advisors. know, a company at a billion dollars in sales has a $400,000 CFO. A company at $20 million in sales, maybe they have an accounting degree person.

who’s learned QuickBooks. And so it’s not to demean them, it’s actually to help them. My father had a small business in the Cincinnati market. I helped him set it up and he’s been very successful. And I recognize that he didn’t have the kind of skill sets and couldn’t really afford a $400,000 CFO. So it taught me that there was a niche, there was a space where I could do great work and feel like I was creating real value instead of working in a corporate giant so we could…

have a dividend increase of a nickel next quarter, we’re saving companies. We’re helping companies go borrow $5 million and buy another add-on company in St. Louis. So we’re doing things that are really ⁓ organizationally changing development of companies.

Anthony Codispoti (21:18)
Okay, so let’s talk more specifically about everything that you guys offer. You’re helping companies sell their business. You’re helping folks buy businesses. You’re helping them finance these deals. What else am I missing here, do you know?

Dino Lucarelli (21:33)
Buying, selling, financing. We also scrub the books to do the due diligence. There’s a whole body of accounting and financial science. You look at a company, you really want to do a forensic review. You want to dive in and look and make sure that you’re getting what you’re getting. we look at that. Along the way, sometimes companies approach us and they’re not ready to sell. We look at the company and they’ll say, let’s sell and we’ll do an analysis and we’ll find out, well, there’s some challenges. And you have some…

rather significant opportunities for improvement. And if you make these changes with these improvements, you’ll be a much better company. You’ll optimize the transaction for yourself and you’ll deliver a better company to the buyer than it is today. So we’ll do a ton of restructuring work. We’ll help companies look at themselves, look at product lines, look at their operations, look at their staffing. And we do pretty detailed assessments of readiness for sale.

And if they hit a certain score, we’ll take them to market. And if they don’t, we’ll help them implement these changes so that they are ready to go. What you don’t want to do is have a seller go to market. And this is one of the areas that is rife with deception. You take a company to market that’s flawed, you get a quick check and the seller is suboptimized. That’s just not in our DNA. And we see that a lot where

buyers will take advantage of companies that have flaws. And our ethos is that you’ve taken the challenge, you’ve taken the risk, you put your whole financial career at stake for your business. We’re gonna help you exit the right way and fairly. And then we’ll tell them eyes open, you’re not ready. You can get an additional 30 % in value and you can create more value for your associates and more sustainability for your company.

And I’ve used that word a lot in this podcast. Sustainability is the key. ⁓ know, one hit wonders are not interesting to me. The ability to build something that sustains and lasts is where real value is created. And that’s the thing that I’m proudest of that we’ve been able

Anthony Codispoti (23:50)
So tell me about the timing of all of this work. Because I’ve been through some exits myself, and I know the way that a lot of entrepreneurs are wired. Like, when you come up with the idea that you want to sell, you want to start marching towards that as quickly as possible. But it sounds like you’re coming in and saying, hang on a second, we got a lot of work to do here first. How is that generally received?

Dino Lucarelli (24:13)
There’s a fair amount of work that’s necessary to prepare a company for sale. We do presentations to chambers and the like and talk about this. I would, not to dumb it down, but to put a visual to it. If I’m hosting a dinner party and I’m going to have our local congressmen attend and some dignitaries, I want to make sure that we use the fine China. I want to make sure that the house is right. The yard is right. Everything’s just perfect. want…

I want everybody to walk in and feel happy on the upside, you know, that this is as good as it can be. And so we want our companies to look as good as they can look. And sometimes that means we have to make some structural changes. The typical deal that we do, whether it’s a buy or sell, you’re probably looking at a year, a year to get it done. We do some things internally to create additional sustainability. We will put together the story and tell the story. And that takes…

some time back and forth. We will put together the financial history and then we’ll put together the financial future forecasting. And in that respect, we’re able to come to the market with a very robust offering. And with that offering, we then feel like we’re providing real value to our buyers. if we happen to be on the buy side, we’re helping.

them to understand what their real criteria are. We have people come to us and say, ⁓ gosh, I’m gonna buy a company. like, what do wanna buy? Well, I don’t know, I don’t care. I’m like, well, no, that’s not the right answer. The answer is we have to buy something that you have some particular interest in or some particular experience in or some secret sauce that you bring to the table. I had a fellow come to me a couple of years ago and he had some serious money, but he had never run a business. And he had developed his money through some very successful.

sales in a large organization. He several million dollars of investable cash, but he had never run a team. He had never operated a business. He didn’t understand finance. He understood how to sell. And I said, look, keep your money in the stock market. You’re not a good client. I don’t think that you’re going to bring anything special to the table. And if you can’t bring improvements to a company because of your particular orientation, your skill set, your background,

You probably shouldn’t buy a company. You should probably just invest.

Anthony Codispoti (26:38)
Dino, you

actually talked yourself out of a client in that case.

Dino Lucarelli (26:42)
I did, but at the end of the day, you always want people to feel like they were treated fairly. I always want my constituents and the people who follow me and trust me to tell them the truth. You don’t stay in business for 20 years by turning a quick buck. You just don’t. You have to look at the long-term, look at the win. And this may be a bit of vanity, but I’m very proud of the reputation we’ve established. I’m proud of the fact that we have built

and sustained for a number of people, not just growth companies, but sustainable and sustaining wealth, family wealth, generational wealth. Recently, I received a call from one of my former clients. He bought a company in 2018. We helped him. At the closing table, he said to me, gosh, we’ve been at this so long, I feel like that when I pay you your fee, I will have paid you $8 an hour for your work. We laughed.

Well, that was in 2018. He just sold the company for $40 million. He has now generational wealth and he came back and said, let’s do it again. So let’s go back and buy another company. that’s, you know, in a nutshell, that encompasses who we are. You know, we want to do great deals for great people, help them build and be referenceable that they can come back to us.

Anthony Codispoti (28:01)
Give us an example of a client situation that was kind of messy and how you navigated the path for them.

Dino Lucarelli (28:08)
So we often run into situations where the client’s disciplines are suspect. And so we’ll run into circumstances where we have some highly intelligent people who are not playing by the rules. And we will discern this over time.

So we had a very well-spoken, highly educated, successful entrepreneur who wanted to sell his company. And as we started peeling back the layers of the onion, we became more comfortable than originally that what we saw was right. But as we got deeper and deeper into the situation, what we learned is that we were being used as a pawn.

to help them sell their story, which had some significant inconsistencies in it. So we dispatched that client. We decided after nine months to detach ourselves. And you say, well, gosh, how did it take nine months? There’s some very smart people out there, some very deceitful, deceptive parties out there that can be very convincing.

And they’ll build a whole team around them to be very convincing. But ultimately we found the truth and we decided that this was not a good client for us and we exited.

Anthony Codispoti (29:47)
what can you say about what you were finding? Maybe as a lesson to folks listening on things to look for.

Dino Lucarelli (29:55)
⁓ When someone surrounds themselves with ⁓ otherwise highly skilled professionals who are in on the deal and they have a piece of the action, I think about what the motivations are for people to

shade the truth or to hide things. And when you, in a nutshell, I’ll say it this way. When things don’t make sense in dealing with a client from a logical basis, they do make sense. It’s just that I’m missing an important fact. I’m missing a material fact. And when I have that uh-oh feeling, I dig in and I’m very,

accomplished at digging in with my audit background and my CPA certification. We dig in and unfortunately what we did is we did find, we found some very strong, ⁓ I’ll just say fraudulent behavior and it was inappropriate and that’s not an area that we play in and now if he would have said let’s fix it, I’d have fixed it

Anthony Codispoti (31:00)
Okay, so let’s stop talking about that client, you know, because I can tell that you want to be very careful about what you say and don’t say. Let’s talk more in hypotheticals. What are some red flags that you have found in deals in the past that have given you reason to pause?

Dino Lucarelli (31:18)
When a company is ⁓ executive centric, there’s one or two key executives that control the company. Those people then control the future of the organization. So if we find a company where there’s a hero and that person is referred to on a regular basis as this is the person to talk to, that typically ⁓ is a weak link. As I said earlier, in my organization, I don’t wanna be a weak link in my organization. I want other people.

to have skill sets to do what we do. If we find erratic financial performance without explanation, that’s a problem. If we see that the IT environment has not been refreshed, then the company has not been maintained on a current basis. That scares us. If we see that there’s a ⁓ heavy concentration in a customer or supplier, we get worried that that could dry up or they could hold us hostage. If we see that there’s high turnover in the employee base,

That means that the company probably has a culture that needs fixing. So those are some of the red flags and we run up, we actually have 12 attributes of highly successful companies and the opposite of those attributes is what we look for to decide if we want to do.

Anthony Codispoti (32:31)
How about red flags in terms of indicating possible fraud?

Dino Lucarelli (32:36)
The ⁓ concentration of financial reporting into a single person is usually the scariest thing we’re going to do because they control everything and it all comes off their desk. ⁓ The unwillingness to expose us directly to their financial people is a problem. If they don’t have a third party’s tax firm or if they do and they don’t want us to talk to those people, those are…

very scary situations. ⁓ If you see a company that is constantly churning, whether it’s vendors, customers, or associates, culturally, that’s a challenge. And so these are things that come out. Smart buyers know what to look for. So we don’t ever hope that they don’t ask the question. We assume they’re going to ask the questions. And if we haven’t answered the question in advance to ourselves, shame on us. We didn’t go to market prepared.

So there’s an awful lot of psychology, important psychology that goes into selling your company. For instance, one of my clients, he’s a bit grumpy. And so we got in front of a buyer, prospective buyer, and he was a little grumpy. And I chided him afterwards and I said, listen, you’re not like this all the time. You’re a little guarded. Let your guard down. We’ve got a confidentiality agreement. Talk to them the way you would talk to a friend.

and tell them what you like, what you don’t like, what you challenge yourself with, what the next buyer would do, and let’s treat these people with kindness and respect and don’t be scared of them. And so that works. that’s, we often want very, you know, the ultimate transparency. Tell the truth, be very clear. ⁓ we have a great new customer, except he’s starting to get a little edgy with us. He’s looking for price concessions. ⁓ well, let’s deal with that. It’s better that you told us upfront. We can work that into the transaction.

But let’s not just assume everything’s fine and you hope we don’t find it. Because ultimately, I guess this is a philosophy, all things come to light. All things become known in time. And from my perspective, if I want to stay in business and do great work, I want to make sure that I’m as transparent as humanly possible.

Anthony Codispoti (34:56)
Hmm. Let’s talk about the work that you’ve done in the past with Xavier University. It taught there for 20 years, MBA level, ⁓ &A and valuation courses. Is it unusual for this there to be this like one foot into academia and one foot into corporate America? Or is that pretty common in that space?

Dino Lucarelli (35:21)
No, it’s not common. think there are adjunct professors that contribute to universities all over the country. But in terms of what we do, I think I was the only adjunct in the finance department for a number of years. And the reason that I was able to do work there is I have a particular skill set. I do exactly what I was teaching. I do it every day. So for me, was an opportunity to perform in front of a group of

really smart people who were gonna ask an awful lot of questions. And it gave me the opportunity to challenge myself to instead of being preachy, you be helpful, be a coach and coach these young people. Now, over the last 22 years or whatever, we stopped in 2021, the COVID thing really killed their enrollment. But over the last 20 years in teaching, I developed so many…

wonderful friendships and been invited to sit on boards as these people have become matriculated through and become executives and companies. It has paid dividends in terms of just enjoying the social aspect of feeling like I contributed to their success. And I have a number of people in the community, there’ve been over 800 MBAs come through my class. I’ve had a number of people who routinely call me up, thank me, tell me about their new success, tell me about their new promotion, invite me out for drinks.

You know, it feels good. It feels good that I’ve contributed to their success. we, you know, no adjuncts teach for the money. That’s not, that’s not the game. You teach because you have a passion inside yourself. I was fortunate to have gotten outstanding education all the way through. And I think that was one of the things that helped me propel me to my success.

Anthony Codispoti (37:09)
Let’s talk about capital raising because a lot of businesses really struggle with this. What do you think is the biggest misconception when it comes to securing funding and how do you help your clients with that?

Dino Lucarelli (37:22)
Probably the biggest misconception is people think that banks are out there and all I have to do is show up, give them my tax returns and they should lend me money. It’s not like that. 25 years ago, it was kind of like that. You could go into a bank and with a signature loan, could borrow $250,000 and write your name on a loan application and give them a personal financial statement. Now, you have to come prepared. You have to show successful history. have to show…

great financial library. You have to show all the hallmarks I talked about. Good IT, low turnover, no customer concentration, strong financial underpinnings, good team. And those people think they can just go to the bank and because they’ve been around for 20 years, the bank’s going to money. That’s not the case. The banking industry, they’re all about risk. And the fallout of 2008, 2009 taught us a lot. what people…

people don’t want to have to take the same risk. So I’ll have somebody say, well, you don’t want to buy this company. We need to borrow $5 million, but I’m not going to sign a personal guarantee. And I say to them, well, now let’s just think about that for a minute and not be controversial. Let’s think about it. They’re going to take $5 million risk on you, but you’re not willing to take the same risk on you. You want them to be all at risk and you don’t want the risk. Why would they do that? And do you think that’s a fair expectation?

It’s not a fair expectation, but 20 years ago, personal guarantees weren’t nearly as prevalent as they are today. And now, you know, it’s just, if I have somebody who doesn’t want to sign a personal guarantee, we don’t work with them.

Anthony Codispoti (39:03)
That’s one of your filters. What are some of your other filters? Like what’s a good fit for you guys, Dino?

Dino Lucarelli (39:09)
When somebody has unrealistic expectations, we’re worth this. And we say, well, no, you’re not. We have to look at this eyes open. So someone has an unrealistic value expectation. When someone says we’re going to sell our company and I wanna be gone in 30 days, inappropriate. Somebody’s gonna buy your company, they need you to stick around. They need you to stick around for six months, nine months a year. You can’t take a check and run. So that’s important. ⁓

sloppy financial records are a death knell to doing banking, to getting financed, to getting deals done. ⁓ And then absentee owners, know, ⁓ recently we had a deal fall apart. We worked with this client for a year and he decided that it was gonna take ⁓ and leave, go to Florida every other week and sell real estate down there. And so when we started watching the company performance, it started,

waning and as his interest declined in the company and increased on the personal side, the company ultimately became less valuable and we were not able to sell it because he left it unattended. He did not have a strong team behind him. And so the absentee owner is also very scary.

Anthony Codispoti (40:32)
So in a situation like that, you’ve done a whole bunch of work for a year, you guys are paid on a success fee, what happens in that case?

Dino Lucarelli (40:40)
We eat it. We eat it. know, again, and what I want on my tombstone is somebody to say he treated us fairly. If we don’t get the deal done, you don’t get the deal done. So I have to be judicious in how we take on clients, who we take on.

Anthony Codispoti (40:41)
Really?

That’s why you’re so selective upfront. You’ve got all those filters. ⁓

Dino Lucarelli (41:04)
You

do have filters in it and that’s a rarity. mean, what I just said to you, it’s probably happened three times in 20 years. But at the end of the day, most people are really trans, they’re fair. They’re fair. And when we talk about it and I say to them, look, we will get you fair value. And that’s yours, here’s what it like. And if you are willing to do that, then let’s do it. And by the way,

Anthony Codispoti (41:11)
Okay.

Dino Lucarelli (41:31)
doing it the right way is far less expensive than doing it the wrong way. You might save a little bit on a purchase price, but you’re have the lawyer’s paper in that deal and your lawyer bill is going to be excruciating. And so it’s, you you’re gonna pay one way or another. And ultimately think about the process of trying to ingratiate yourself to a seller. You’re a buyer. You want them to want you. They have their legacy at stake. They have their friendships at stake. They have their relationships with their vendors and suppliers.

companies and customers, they want to be sure that you’re going to treat everybody with respect. So how do you demonstrate that? Treat them with respect.

Anthony Codispoti (42:13)
So in the 20 years that you’ve been doing this, do know what are some of the biggest changes that you’ve seen in the way that &A deals are done?

Dino Lucarelli (42:25)
probably different structures to get deals done. In the past, again, speaking in generalities, in the past, deals were mostly cash deals. Now we see deals that are cash, some future earn out perspective. Sometimes there’s a seller financing, where the seller takes a piece of the pie.

Sometimes there’s a rollover of equity where the seller sells 80 % and keeps 20%. And so the currency that we use for deals is far more creative. And it opens the door to getting deals done that otherwise would not get done. So for instance, we recently had a transaction with ⁓ a company and the owner had built a really strong company, very successful, 35 years in business, great. He had more work than he could do. And he had several people, like 50 people on his team.

He had one guy in particular wanted to buy the company, but the guy didn’t have the skill set. So what we did is I brought in a buyer. We granted him 15 % equity in the deal to stay and run the company. He was happy because he didn’t have any financial investment. He now had a strong financial backer in the main buyer. The owner was like, gosh, this is as good a transition as can happen because my general manager is the face of the company. So that was very different.

And those things didn’t happen with nearly the frequency that they do now that allows deals to get done where it’s not so reliant on the bank lending. And so one other point I’ll make, the other thing is we see a lot of companies trading stock for stock. So, you know, we’ll give you so much money and so much of our stock as currency. And so now, you know, there are tax benefits to be accrued on that.

And so we can be much more creative with deal structures than we were or than was true 25 years ago.

Anthony Codispoti (44:26)
So as you look forward Dino, do you think there’s other areas for ⁓ innovation and how deals get done?

Dino Lucarelli (44:36)
I do, I’m still toying with the notion of how AI helps deals get done. But we have some diagnostic tools that are AI based that we use to shorten the cycle of understanding the companies go to market where we can create in a 10th of the time now, the story about the company and the market in which they operate so that we can be quicker, more prompt to market.

And we have better data than we had if we were just researching through internet searches. So recently I had a ⁓ fellow call me from Cleveland, Ohio, which is, 300 miles from us. And he had an interesting company. He had a company that was infusing certain foods with certain other foods. And he asked if I would give him some help with the capital raising. So I did a very deep dive into AI and we produced a 25 page report about the industry, the market.

what was going on in the competitive landscape. This guy’s been around for five years. He said that was the most comprehensive analysis he’s ever seen on his business, including all the work he and his team have done over the last five years.

Anthony Codispoti (45:48)
So how are you guys gonna leverage this more going forward?

Dino Lucarelli (45:52)
That’s an interesting challenge. think it’s not imperative that we do it, but I think if we can become more efficient and we can leverage our skill sets and leverage the tools out there, I just think that we’ll be faster responsively to requests. And I think we’ll be able to take on a bigger book of work ⁓ without having an exponential increase in staffing.

Anthony Codispoti (46:15)
Where does that extra work come from? Where do you guys find your clients or how do they find you?

Dino Lucarelli (46:21)
We do some outbound marketing, the effectiveness of which I’m not sure. So we’ve done some podcasts locally, we’ve done some radio advertising, we’ve done some public relations work where we hired a firm that we were published in a number of journals.

The answer is, and this may not be the best answer, but it’s my truth, is it’s reputation based. When somebody goes to buy or sell a company, it’s probably the most important financial decision they will have made in their life. And so I can hire, and not to demean this industry, I could hire an insurance broker, I could hire a wealth manager, I could, but if I’m talking about the most important asset that I have, I wanna talk to that person. I wanna look that person in the eye.

I want to know that they’re referenceable. So I would say 98 % of what we get is reputation based. People know us. I’m constantly posting things on LinkedIn to talk about what we do. Having, again, taught over 800 MBAs in the community, being active in various associations, you’re just constantly in front of people. when people recently, we have a…

I have a writer doing a success story in one of our deals. That’s what we do. We write a success story and talk about how we make something happen. And the writers come back and said, my gosh, the people were so gushing about how well you treated them. And I think that’s the thing that causes people to want to work with us. Virtually everybody who comes to me has talked to somebody about us. They already have vetted us through the court of public opinion or whatever it is.

I don’t get cold calls to do deals. We just don’t.

Anthony Codispoti (48:14)
You don’t place cold calls to get deals is what you’re saying. Or people don’t come to you cold. They’ve come to you through somebody that knows you.

Dino Lucarelli (48:16)
No, what I’m saying is we don’t have customers. Right.

Right, I constantly have people say, want to, you know, let’s beef up your website. And I’m like, well, my website is there as a proof point, but nobody’s going to look at my website cold and say, I’m going to, you know, I’m going to trust my biggest asset with this team. What they do is they’ll look at their website and say, well, at least they might be quasi legit. And then they make some calls to people they know. And, you know, as I said, we’ve done so many deals and we’ve been known for so long that it’s not hard to find a reference for us.

Anthony Codispoti (48:53)
I’m gonna shift gears on you now, Dino. I’d like to explore a serious personal challenge that you’ve overcome in your life, how you got through that and what you learned going through it.

Dino Lucarelli (49:03)
So I’m five feet, five inches tall. And you know, as sometimes little kids get picked on. So I developed early on a fairly ⁓ straightforward and direct approach to people. And ⁓ I learned at a young age in my early twenties, I took the Dale Carnegie course and

In that course, what I learned is that I was coming across in a way that was oppressive, offensive, too strong, too direct, not thoughtful enough. It didn’t reflect how I felt inside. What it reflected is my reaction to being bullied as a kid. And so what I had to do is start working very hard on self-improvement to be a kinder person, to be not defensive.

in meeting new situations and to work really hard to soften my language, soften my approach. What I want to do is marry up what I felt inside with how I behaved on the outside. And it was a hard challenge to me. I would say I still deal with it. Oftentimes clients are happier to talk to my people than to me. I tend to be very direct and I don’t think it’s a bad thing, but I think it comes off sometimes as

too, too, too much. And that’s, that’s something I work with every single day to be, to let people know that I really do care about what their future is and what we do. And I really do want to play by the rules. And I do really do want to be proud of our engagement together. And that’s, and I think we make progress. I’ve made a lot of progress, but it’s not been without consulting a number of mentors who have helped me in my life.

to be my best self.

Anthony Codispoti (51:04)
What do you think has been most helpful to you in kind of smoothing out the rough edges of Dino Luccarelli?

Dino Lucarelli (51:13)
I’m constantly seeking feedback. Are you comfortable with what we just said? rarely do I get off a phone call with a client without saying, are we together? Are you, you know, we in agreement? Is there something else you’d rather do? I’m constantly second guessing myself to make sure that they’re happy. I can be totally sated in what I do and think, oh, I’m right. I did the right thing. It’s all done in a hundred times. But unless the party on the other end of the line or the other side of the computer is happy.

then I’ve sub-optimized the result. So my sense is, I want people to feel good and I want them to tell me, if I’ve said anything that’s offensive to you, let me know. If I’ve done anything that you don’t like, let me know. Here’s our approach and let’s talk again such and such day. And I do my best to get agreement and consensus on what we do. And it’s worked. mean, clearly I’m a different person than I was in my thirties. In my thirties, was chop chop. I was good to go and…

you know, always on edge. Now, you know, sometimes it’s just, I’ll call a client, let’s just go out and have a drink just to have a drink. We don’t have to talk business. And that’s the difference for me.

Anthony Codispoti (52:24)
you’re mellowing a bit as you get more mature.

Dino Lucarelli (52:28)
I would say yes, but it’s probably also a conscious decision. It’s ⁓ natural, think, as we get older, but I really do believe that in the past, there have been situations where I’ve given people the wrong impression, and the impression was detrimental to our relationship. And so now I’m like, let’s just be really, really careful, and it’s worked.

Anthony Codispoti (52:51)
Tina, what’s your superpower?

Dino Lucarelli (52:57)
I’ve said it already before, would say transparency. I just tell the truth, you know? And it sounds silly in the construct of a deal, but… ⁓

People aren’t stupid. People get it. We all have people different times trying to run a game on us or trying to convince us of something that they may or may not believe is true, but there’s a financial incentive. I’m just open about everything. if there’s a problem with a deal, I’ll tell the client, hey, I don’t agree with you. Here’s why, and here’s what you should be thinking. Tell me where I’m wrong. I mean, I’m not afraid to have the hard conversation because it always comes from a position

of decency and kindness. And I used to joke, if you have to talk about ethics, you probably lack them. But I’ve changed my perspective on that. There’s a lot of people in our business who do really bad things. And I fight against that every day. We had a deal. I’ll give you an example. We had a deal with another person like me on the other side of the deal. We worked for four weeks to get to an agreement. We signed an agreement to get a deal done. Now we had a four week period to get the

the documentation done, called me two days later said, hey, I got a better offer. I’d like to take that offer. You okay with that? And I said, no, our contract exclusively says you cannot do that. He said, well, can we just do it this one time? I said, sure, you can do it that one time. So I have my buyer. So I said, go, go with it. Well, that deal fell through. He came back to me and I said, hey, ship is sailed. We bought another company. And so that is so common. when I told the fellow on the other side, he’s a very well-respected guy in the market.

I said, know, 22 years, I have never done what you just tried to do to me. I’ve never done that. I would never do it. It’s the worst thing you can do. It’s called retrading the deal. You got, know, I got $10 million on this piece of paper. I’m gonna go sell that down the road. I’m gonna get 12 million. I’m gonna sell, you know, retrade the deal. And that’s exactly what they did and it turned out to their detriment. So that’s a really bad thing. And so I have to be really careful to not be considered as doing those kinds of things. I’ve been accused of it, you know, because

People are so used to people doing it. There are real circumstances where things change in the construct of a deal. Somebody loses a customer, picks up a new customer, gets a big award, big government contract that changes the dynamic of the company. So there can be reasons why things change, but I have never yanked a deal out from under a buyer or had a seller go the other direction because there’s more money in it. We make decisions with people we wanna work with. We work with them, we work with them to success. And if they start to show,

challenges in our ethical behavior, we’re out. We’re out.

Anthony Codispoti (55:44)
Yeah, it’s clear Dino that your your ethics and the transparency that you provide is something that are really cornerstones to what you guys are doing at Capital Tactics.

Dino Lucarelli (55:56)
Yes. And again, when there’s several bad actors in the market and you distinguish yourself as being not that. So again, I hired an author to write this story and she’s calling around and talking to people in the industry. she said, you know, one of my clients told her, he talked to like 25 people about me before he signed us up and…

Anthony Codispoti (56:07)
where it gets around.

Dino Lucarelli (56:23)
Everybody had the same refrain about how, you know, I was good to work with and all that. And that’s, that’s there. There’s, I don’t know if you can put a monetary value on that, but I certainly put a lot of relationship value on that, that people feel like when we deal with them, we can, you know, we’re going to shoot straight.

Anthony Codispoti (56:43)
Dino, what’s your favorite thing to do outside of work?

Dino Lucarelli (56:46)
Well, certainly I have a great family. We’re Italians. So I have three children and nine grandchildren. So I love spending time with them. But my individual hobby, I’m an avid cyclist. I love riding a bike. I used to race competitively on a bicycle. ⁓ And I still have an enormous group of friends that I ride bikes with. It’s a social activity, but it also keeps me healthy. And so that’s, you know, when I die,

I want my bike to be buried in my casket with me.

Anthony Codispoti (57:19)
And what’s the tombstone gonna say other than transparency?

Dino Lucarelli (57:24)
He did it the right way.

Anthony Codispoti (57:27)
Dino, I’ve just got one more question for you today, but before I ask it, I want to do three quick things for the audience. First of all, to get in touch with Dino Luccarelli, his website is capital-tactics.com, capital-tactics.com, and his email address is dino, D-I-N-O, at capital-tactics.com. We’ll have links to that in the show notes. And speaking of the show, if you’re enjoying it today, please take a moment to subscribe wherever you’re listening.

it sends a signal that helps others discover our podcast as well. So thank you for taking a quick moment to do that right now. And as a reminder, you can be the hero advisor that helps clients give their employees access to therapist doctors and prescription meds while paradoxically increasing their net profits. Real gains that can change how a business is valued. Contact us today at addbackbenefits.com.

So last question for you, Dino, a year from today, what is one very specific thing that you hope to be celebrating?

Dino Lucarelli (58:28)
We have expanded our footprint to working with larger private equity firms. And I’m looking to do a deal north of a hundred million dollars in value. That not just in from a financial perspective, but from a developmental perspective, that would put us in the big leagues in the investment banking world. And I think that’s always been my objective is to

have a sustaining company that when I decide to retire, which could be three, four, five years, this company will continue on with the people that I built and the relationships we built and the clients that we have so that we don’t leave them high and dry. And I think going into that next level of size of deals is a big objective of ours.

Anthony Codispoti (59:19)
Dino Luccarelli from Capital Tactics. I want to be the first to thank you for sharing both your time and your story with us today. I really appreciate you being here.

Dino Lucarelli (59:27)
And thank you, Anthony. This was a great experience.

Anthony Codispoti (59:30)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us. And if one thing stood out, put that into action today.