How Richard Phillips Closes More Deals by Targeting Fewer Buyers and Moving Faster Than Anyone Else

Anthony Codispoti (00:01)
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 Codaspodi and today’s guest is Richard Phillips, senior partner and co-founder of Crossroads Capital, a boutique advisory firm in Arlington, Virginia. They guide business owners through mergers, acquisitions, and growth planning in sectors like defense, cybersecurity, and government contracting. Their mission is clear. Give entrepreneurs straight talk and expert analysis

so they can make big decisions with confidence. Since launching in 2017, Crossroads Capital has helped clients close more than 30 successful transactions and raise hundreds of millions in growth capital. Richard brings over 20 years of finance experience to the table. He once served as managing director of Oberon Securities and founded Philcap Advisors. Early in his career, he sharpened his research skills at the International Monetary Fund.

He also holds a master’s degree from Johns Hopkins University. Now, before we get into all that good stuff, today’s episode is brought to you by my company, Ad Back Benefits Agency. If you run a business, you are likely stuck in the cycle of rising insurance premiums. You’re paying more, but your team is getting less, and many people can’t afford coverage at all. We do things differently. We offer a solution that provides your employees with unlimited access to doctors, therapists, and prescriptions that’s always free for them to use.

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All right, back to our guest today, senior partner and co-founder of Crossroads Capital, Richard Phillips. Thanks for making the time to share your story today.

Richard Philips (02:21)
Pleasure to be here. Thank you.

Anthony Codispoti (02:23)
So looking at your background, Richard, it seems like you’ve always been a big finance nerd in a good way. Was that interest there even as a child? When did that first appear?

Richard Philips (02:35)
Not really. You know, I came relatively late. When I was studying in college, I wanted to, you know, maybe work at the Fed, Federal Reserve, or even the State Department, or even, ⁓ you know, in the Defense Department in some capacity, or intelligence community. So I was more of a, I came relatively late to it, ⁓ you know, started as a quant that you mentioned IMF, ⁓ and then decided that, you know, wanted to be in

get a real job in business. And so, you know, and I just love all the ways you’re able to deploy skills in these kinds of environments, whether as a banker or any kind of entrepreneur, you’re solving problems and connecting the dots all the time. And that’s exciting. That’s fun. And, you know, you’re rewarded based on the problems you solve and the impact you make.

Anthony Codispoti (03:27)
So from IMF to Royal Bank of Canada, ⁓ Investment Banking Associate at Gardner Partners, kind of like connect the dots for us a little bit here.

Richard Philips (03:39)
So after the IMF and then grad school, I wanted to get, like I said, back into the business world, the real world, ⁓ and kind of had to ease my way into it. I needed at least one, know, bulge brackety kind of bank and then ease my way into what, you know, that was more asset management. then, you know, one, I couldn’t just get an investment banking job, right? That wasn’t going to happen for me. Didn’t have the pedigree, didn’t have the background, didn’t have the, you know, I I kind of had to get in.

to it the hard way. then so worked at a couple of boutiques and then out to Taylor, then started my own shop. And then the was more of a consulting shop and then put some capital and made a much more professional organization. I hope when I form Crossroads and the idea of what I had a lot more experience at that point, I had a lot more context, had buy side experience and cap raising and understood financial markets, capital markets, but also, you know, deep understanding of middle marketing and

And the deals are working were a lot bigger. the idea is, well, there’s more deals happening in that lower middle market. Those where you can make the real impact and those who aren’t getting the attention. We couldn’t make the economics work even at a small shop like one of the boutiques I was at before Crossroads, unless they were doing 120 million in revenue. And a lot of deals aren’t in that. There’s a lot of 10 to 30 and you can do those all day. those ones could really benefit from them.

professional help that comes from a intermediary. And so I saw that kind of blue ocean and that’s why I decided to form a firm to go after that market and use the skills I had learned in those other places, but deployed a bulge bracket kind of style banking, but in the lower middle market.

Anthony Codispoti (05:24)
And is this Phil Cap advisors that we’re talking about right now?

Richard Philips (05:26)
Yeah, fuel cap

was like, kind of morphed that into a bigger, put some capital into it. But why not just make a, it was just a more sophisticated corporate infrastructure. It wasn’t that sophisticated. probably, that’s a really heroic use of that word. ⁓ Put some capital and put some infrastructure behind it to kind of build it out. was, ⁓ because what I was doing with fuel cap was more just, what I would do is piggyback and subcontract with other bigger banks.

that didn’t have like we would do their selves. We would do sort of their grunt work when they couldn’t scale and they had over capacity. So like Indian River, some of the folks who formed out of focus, which is in West Bank here and really across the country. ⁓ We would work with groups like that. And at a certain point we can get our own deals and that’s why it was time to kind of make it just more, a more mature organization at that stage.

Anthony Codispoti (06:16)
So you went from

Philcap advisors, you kind of morphed that into Crossroads Capital as it is today. And when you were working at some of these boutique firms and you guys, even there you were saying like you kind of needed a company to be what, 120 million in order for the economics to make sense? Oh, so yeah, even different now. So what is it that you’re able to do differently at Crossroads that you can help folks that are at a much lower

Richard Philips (06:32)
Yeah, something like that was back in like 2008 or something 2009.

Anthony Codispoti (06:47)
you know, market cap.

Richard Philips (06:48)
Well, there’s a lot of, and I’ll give you examples, and I’ll give you concrete example. So there was a lot of stuff that was fluff in those bigger deals and a lot of deployed manpower and other efforts that were unnecessary getting the deal done, but just because it was the way it was done. So whether through technology, streamlined processes, early adopters of technology, course, and anything that could be streamlined, automated, workflow automations, and other things, always quick to adopt those things. want to…

be able to scale and work smarter, faster, better. So we could actually spend our time on them. And that’s why, you know, obviously we embrace AI with a full bear hug, because we think these can free us up to do the more impactful things and to do the things that were the softer touch issues that sometimes get overlooked are so key to making a deal happen. ⁓ But also too, I give it, I want to give you an example of

So that one shop I was at, would, you everybody knows, well, not everybody, but the SIM, so like a book on a deal when you’re selling a company. Well, what we would do there, and this was, like I said, this was in 1985. This is like 2009, 2010, or, you know, they would create these leather bound books, no electronic. Now imagine you’re a 25 year old at a PE firm. You want to the numbers into your model, do an LBO analysis and, you know, get your questions off that.

No, we wouldn’t do that. We’d make sure they got FedEx to them, a leather bound book, gold rimmed paper. I’m really not exaggerating. It would take two days for the glue to dry for the book to be sent out. And so like they asked for it, like, where’s the book? It’s like, well, yeah, we have to wait for the glue. Get back from the printers, the binding and the glue has to dry and then we can ship it off. And then they got this beautiful book, beautiful, but no function, without function.

Or useless book, right? Because as soon as was printed, well, maybe not useless. It was useful from the firm’s perspective because that made the deal look more exclusive. And it made the buyer think, oh, no, well, this is a valuable company I’m going to have to pay a premium for. That was the purpose. That was the rationale for doing that and giving it a sense of exclusivity. So me thinking as a buy-side person, that’s the way I kind of see the world.

Anthony Codispoti (08:44)
Why was it useless?

Richard Philips (09:10)
from a a banker or finance purposes, probably because I’ve done more buy-side work, whether it corporate development work or just work for PEs or buy-side for strategics. What all I need is again, the numbers that pop into my model, know where the synergies are, know where the costs are, know where improvements I can make, and then drill down on the stuff I don’t know. But again, a dog and pony show I don’t need to determine if I want to buy make a bid on a company or not. And that was a point, create the dog and pony show.

Anthony Codispoti (09:36)
So.

Richard Philips (09:39)
create this kind of, you know, this sense of exclusivity and an auction and inflated, you like you walk into Sotheby’s and it’s got nice carpet and beautiful chandeliers and now you’re gonna have to pay more, right? Well, I always thought that was really not, I mean, you could argue that that would create more of a premium, but people didn’t value it like that, like they did in 1986. They do in 20, well, 2026, right? Because it’s…

And things have changed. I think a lot can be. The idea is to get the best fit, not the best price. The best fit, because they, in essence, will be paying the best price because it’s the most sustainable price and they’re going to be happy with their transaction. You’re going to get your earnouts. You’re going to get those things are deferred to contingent. Those are going to come more likely to come into and just people are going to be happy with the merger. If it makes strategic sense. ⁓ I should say this, no, cultural strategic.

financial that order, any deal, anytime, any market, any industry, any country, or any epoch of time, those are the three, you know, gaining things you got to solve on a deal. And if the first two fit, the financial part is a math problem to solve. ⁓ Often people try to leave, you know,

Anthony Codispoti (10:55)
So I want a better.

Yes, sorry for stepping in there, Richard. I want to better understand what separates you from some of the competitors. And I think what I’m hearing you say is, hey, ⁓ I don’t have that fancy overhead. Right. So that cuts down prices. I have figured out there’s a whole bunch of fluff that a lot of other folks have been including. We don’t need that. Right. We don’t need all these extra people and all these gold plated pages. And you’ve

given technology and AI, this giant bear hug, so that it’s able to make you a lot more efficient in your process. Yes, am I missing anything?

Richard Philips (11:35)
Yeah,

yeah, I mean, like I said, there’s a lot of you could do with less, you know, maybe with less folks, you but you but the folks you have, you got to make them you have to empower them. And you got to allow them to be able to make decisions and put them in a position to do so and with the background and the training that they’re confident when they do right. It’s so I find with a lot of kids that they have, they have far better resumes than I have when I see the resumes coming out from schools and and but what they don’t have.

is like they don’t have they don’t they’ve been almost trained and I think it’s part of the schooling not to take initiative never take a risk paint by numbers everything and not think on their feet at all ⁓ but so I try to get them out of that a great deal but yeah I think those are there’s always smarter you could do deal I’m trying to do deals cheaper and get to the the decision sooner and the end get to know as fast as you can because you waste too time too much time on the maybes for everybody involved

The is I want to disqualify that PE buyer as soon as I can, for their good and for mine and for the client’s good. Because they’re just kicking tires. And it used to be that the PE shops would get compensated, like the BB guy. How many NDAs they signed a year. They changed that because they know people game that a bit. So the idea is like, look, understand what this company is and what it isn’t. It’s not a fit. Sometimes I’ll spend time sort of ratcheting down that there’s a thinking that you go to those firms that do it. The broadest auction is the best auction.

best price you get for your company. I’m not of that opinion. I think the more targeted and I think buyers like this too, frankly, and I have a colleague who only even call it a sniper process is great guy. Yeah, but well, not necessarily. Yes, it’s buyer with strategic interest in the trend. And that could be a PE with a portfolio company or it could be that, you know, they just understand that market there in that industry. So I think it’s they’re not buying for cash flow.

Anthony Codispoti (13:12)
strategic buyer. That’s what you’re looking for.

Richard Philips (13:31)
They’re buying for customer. know, there’s some strategic purpose other than a cash flow. And the neat thing about a lot of the industry that I follow, companies don’t buy and sell on cash flow. Cash flows are important, but I can show you a three, four million, five million dollar, let’s just keep it from that. I show you a five million dollar EBITDA government contractor that is unsaleable. And I could show you a two million dollar EBITDA government contract that get a bit from Raytheon. And it really comes down to capability, capability.

just like location, location, location, and maybe customer access as a third there, but capability is what drives strategic interest and differentiating capability to put a more important point on it. And being able to describe that and being able to present it that people could have use for it is really where the value adder of a banker comes in. Why do they like it? Because like I said, I think like a buyer, so like, what would I do with this and why is it valuable? I’m not looking for scale.

or cash flow. And those are nice to have because it proves it works and it proves I can finance it. However, like am I really just adding scale without any strategic benefit? Well, that’s going to peter out and that doesn’t, you know, there’s a diminishing marginal return to that.

Anthony Codispoti (14:45)
So a big part of what you’re doing is you’ve got to truly understand the nature of your client’s business. It’s not just understanding the financials. It’s what are you guys manufacturing or what’s the service that you provide? So then you can think strategically about, who could get benefit from this beyond just a cash flow point of view?

Richard Philips (15:08)
Exactly. Yeah. And that’s a lot of, and this is where AI could make that, know, streamline that and find, look around corners where you might’ve had blind spots, find targets faster, smarter, better. The idea is to get the right targets and really understand what their strategic rationale is. And ideally in the ideal world, customize that marketing approach to that buyer with that purpose. And you could do that a little bit. It’s hard to do like with a huge buyer pool, but

That again speaks to the reason the rationale, smaller, more targeted buyer or a targeted process is much more effective because everybody’s done their homework and everybody’s kind of been briefed into what the company does and why they like it. I mean, often where I find deals don’t work, where I’m educating the buyer what the company is, if I’m doing that, they’re not going to, it’s not the right fit for them. Now, if I was advising them on the buy side and say, hey, maybe this isn’t for you.

There’s too much risk here and there’s a lot lower hanging fruit you should go after before this target, ⁓ especially if it’s your first acquisition.

Anthony Codispoti (16:15)
So at what point do you get involved in the process?

Richard Philips (16:20)
You mean with a company in like when they’re getting ready? I mean, the sooner the better is the short answer to that. Because like I said, there’s all this work that has to be done and the time kills on a deal, but the clock is on really doesn’t start to tick till you’re really in the market. Say, Hey, our deals are companies for sale or you’ve contacted, you know, a buyer target, ⁓ buyers, investors, that kind of thing. ⁓ so the sooner the better, because there’s a lot of things, well, like you just described with what you guys do.

Cost reduction, employee retention. Where are the holes in this business? know, pre-mortem it, if I like to call it. I actually stole that from a colleague. Why is this deal not going to happen? Where is the Achilles heel? Customer concentration. What can we mitigate? Okay, what can we put a boat around? What can we have explanations that mitigate why it’s not a big of a problem? How does it compare to peers? So all that, that takes a lot of time and effort. But the more you do with that and that takes…

in the soon you start the better story you could tell. And so you think about who are our buyers? Do we have, you know, build a, you know, a living data room to some extent, I would say build a living SIM, a confidential information memorandum that kind of tells your story and you know, it’ll change over time. But now you have give that to key employees as they join the firm. And now they know your story and what your value prop is. And, know, you’re all the more prepared because it

trying to do in the 11th hour you’re gonna get like anything else you’re gonna get a suboptimal.

Anthony Codispoti (17:51)
So a client hires you today. How long before typically you’re taking them to market?

Richard Philips (17:58)
It depends on how prepared they are and what that market is. I mean, we put our heads down, we can go to market. Depending on how complicated big businesses within, you know, I’d like to get it done. And there’s a certain seasonality to it too. I mean, within 60 days. still, yeah, that said, I’d rather not. I’d rather do it the way we do. Sometimes we don’t have that luxury. I’d rather be working with them for 18 months beforehand, trying to fix things, trying to determine.

Anthony Codispoti (18:15)
⁓ okay, that’s pretty quick.

Richard Philips (18:28)
Hey, do we fix the kitchen or we leave it as is? Because according to our research, ⁓ the buyers see that your house is a knockdown. Not as a, you know, so like we don’t, that’s the ROI and that is not positive. Or, you know, and sort of start to have conversations with those big strategic buyers and maybe on a no names basis or in a very informal ways, like, hey, just get on their radar because companies will do business with

and buy the companies they kind of already are kind of familiar with. It’s very, you know, I, there’s a school thought that most deals happen with companies that never met. I don’t know how true that is. ⁓ Especially now when there’s so much publicly available info and waste. And I think the market and Wall Street, you know, they like pure plays and those companies that buy you will understand that pure play and they know who you are because they, there’s, they’re looking for you and just get on.

Getting on the radar of the right buyers and knowing who they are, whether that the government contract in what that could mean getting on teaming arrangements or just again, being part of that conversation. So when they do does come time for them to make an acquisition, they’re familiar with the company. You don’t have to introduce. They’re not a stranger and you’re not a stranger to them. And that really that little, that little part helps so much in just that, initial trust factor, which is the hardest, that first little speed bump is the hardest one to get over, even though it’s.

See you guys.

Anthony Codispoti (19:56)
And so a lot of times before the company’s ready, you’re just going out and having conversations anonymously. I mean, they know who you are. They don’t know who your client is.

Richard Philips (20:02)
Yeah,

exactly. It’s like, would you like a company that has we think there’s value here. We’re testing our thesis. I’ll talk to what I call my friendlies, PEs that are somewhat, you know, I could have a conversation with that. We’ll return my calls. But no, PEs, one thing about PEs they do, they’re actually very, ⁓ it’s hard to talk to investors, like venture groups from an investment banker perspective, but it’s very easy to talk to PEs. They’re waiting for your call. In fact, they usually call you.

Anthony Codispoti (20:29)
Why that

difference? Why that difference?

Richard Philips (20:31)
That’s a good question. I would say it’s the dynamics of deal flow. And PEs have too much capital and too few quality deals invested. And remember, they’re making control investments. VCs are inundated with technology plays. They don’t need any more slide decks to look at. And they got, you know, they’re making investments, but they’re not making $50 investments. They’re $2 million, $10 million investments. And they’re making follow-on investments on top of that. And usually in club deals with other firms that

So they’re not starved for deal flow. For them, where they, I guess, have trouble is vetting the target and understand the technology is differentiated and a banker isn’t going to be able to be, I would argue that’s not necessarily the case, they don’t think, and they think a banker’s in the way. Whereas a PE shop sees a banker as a conduit.

Anthony Codispoti (21:19)
That’s their perception.

Got it. And you combine what you do, traditional transaction execution with innovative technology transfer partnerships. Can you explain, first of all, what is meant by a technology transfer partnership?

Richard Philips (21:39)
Yeah, well, that’s a

good question. I mean, we have done that. You know, it’s not something we do a lot of, but I think it’s fascinating because, again, this is where we see these technologies, especially in what they call the cyber world and the GovCon defense world. Companies have really cool technologies. It’s not a company, though, but it could be commercialized. It’s like phase two SBI, a cyber where let’s find somebody who could find it valuable, who can commercialize it or can take it to phase three and bring it out to the broader market.

place. so we have done that with, so those companies really, but you’re, you’re licensed, you’re monetizing IP. And we don’t do a ton of that like we used to, but it’s, it’s a really, it’s hard to do in all honesty. But that is, those companies say, ⁓ do I raise capital? It’s like, no, you have no idea how to run a company. I don’t want to raise capital. Even if I gave you all the money in the world, you were on the right people. Or they would tell me that before, you know, there’s

Anthony Codispoti (22:35)
They’ve come up with great

technology. They’ve got a patent on something.

Richard Philips (22:37)
But they don’t want to it

doesn’t mean like why would I borrow money or why would I put capital in for you to build an infrastructure? But really what you have is sell it or license it to radio or to Amazon or to somebody it plugs in it’s a small piece and it by itself It’s meaningless but plugged into a power system or some other integrated You know system that may not be obvious and that’s where we let that research those that research muscles help

Because that’s not a traditional sale. That’s like really understanding the IP What makes it special and who could use it and that really becomes a it’s very popular We don’t do it that said but you see it a lot in life sciences. You can see it a lot Medical devices we’re building a whole company infrastructures. It’s not it’s not wise. It’s unnecessary piggyback onto what somebody else’s built Distribution that was production all this a sales like you have a great technology

monetize it this way. It’s a much more fit than building a whole company around it. Because A, you’re not the right people and B, that takes a lot of time and effort. And what we’re trying to do is shorten that time to market. De-risk a transaction for everybody involved. And yeah, sure. It would be an ideal world. You build this huge company with it and you’d make more money in the long run. But like that’s, that’s a roll of the dice. There’s a ton of risk time and you could fall off a cliff a thousand different ways, thousand different times. This de-risks for everybody involved.

Anthony Codispoti (23:52)
There’s a ton of risk involved there, ton of risk.

So who’s the ideal client for you? What’s your sweet spot? Industry, size, what other criteria?

Richard Philips (24:10)
Well, know, the neat thing is, there’s really the size doesn’t preclude us from working on things. It’s just the other bigger guys go after those things. So, ⁓ know, I think, but again, I don’t think you should be going, you should not be trying to sell your company if you’re under two million. Because that buyer pool completely collapses. You’re dealing with less sophisticated buyers who really don’t have the diligence and they grade accordingly. And so when they can’t diligence, they basically, the punt position is to say,

Well, if I can’t figure it out, that’s why I pay four times instead of five, because that’s how they make up for that uncertainty, right? They just by paying a lower multiple. But I would say the most of the deals we look at are in that enterprise value column 12 to 25, and probably even tighten that up a little bit more. The buy side’s a little broader because it’s like we’re sometimes doing aqua hires, we’re doing merger of equals.

Sometimes it’s a JV. yeah, not in a single transaction, mind you. Like I’m not on a single deal. I’m not representing Bicidin. but we would. yeah.

Anthony Codispoti (25:09)
you work on both sides of the transaction.

No, sure. But you’ve got some clients who are like, hey, I’m looking for

something, you know.

Richard Philips (25:20)
Yeah, we probably like I said, we probably do more buy side work than sell side. Not necessarily by design, but you dance with who brought you and I think we have pretty good muscle memory in the buy side world. And because a lot of my guys were trained in that world as well. So that that’s helpful. And I kind of like it because those clients problem with sell side, you do a deal and everybody forgets who you are because like the client goes away. They’re absorbed by another company. ⁓ The buyer doesn’t want to talk to you at all.

he probably ate it. There’s a little animosity left over. ⁓ they and they weren’t you’re like the lawyer on the other side of the argument basically. you know, it’s not animosity. No, I shouldn’t say animosity. It’s like, what’s the word? It’s yeah, I mean, there’s a little deal fatigue and like, you know, like, it’s if they like you, if they probably think you were a pushover.

Anthony Codispoti (25:59)
Where’s that animosity come from? Because they didn’t get everything that they wanted.

Everybody’s stressed out from the experience.

Richard Philips (26:18)
So you know what mean? There should be a, ⁓ what’s the word? There should be some friendly animosity. That’s such a concept ⁓ there. I mean, that relationship, it’s not like they hate, they won’t talk to you again, like, you’re a known quantity for, but there’s nothing you can do. They’re not gonna sell their PE or, you know what I mean? They’re just bought, maybe they are gonna do some acquisition work.

and, I’ve never had it, ⁓ well, that’s not true. That’s happened once. I know I think about it, but it’s, yeah. So site work you do and you go away by side, you’re plugged in yourself and all these other problems, like, cause it’s a longer term engagement and they don’t have to buy something. Right. So you’re really part of the team. You’re bought into the thinking you’re figuring out other corporate development issues. Maybe there’s workflow automations that can be deployed here. Maybe there’s just a recapitalization. Maybe this company needs some, some, ⁓ you know,

capital for growth and for other things. Or maybe we need to help them with some acquihires or some capabilities to bring to the shop. Maybe we need to put them into, like what I’ve gotten good at is doc boosting problems. But one thing I am not good at or able to do is solve them myself. So what we’ve spent a lot of time, I’ve spent a lot of my career just figuring out to connect those dots. There’s an expert out there and putting folks into, whether it be like a group like D8 that does great work on business development for government.

Anthony Codispoti (27:22)
Mm-hmm.

Richard Philips (27:45)
or folks who do tech audits and really rationalize the tech stack, which is a really growing part of a company’s expense and stuff they need and stuff they don’t. Let’s rationalize what we’re spending on with AI tools, networking tools, telecom, what have you, software. There’s a lot of things that are redundant, underused and overpriced and they get grandfathered in and people forget, just like your subscriptions, I’m sure you may have. You probably have three or four you forgot about and you’re paying every month.

And if you thought of like, oh, maybe I don’t need that anymore. I mean, that’s something that I think we’ve all experienced that at various times and levels. And so there are a number of ways to focus on cost cutting, making the organization more efficient and, you know, building that trust and building that rapport with the client, you’re going to be their house banker. When it does come time to sell, going to, you know, you know, the, know them as well as they know themselves, which is a big part of being successful in this. You want to know where the bodies are buried to be able to be proactive with diligence and

Anthony Codispoti (28:33)
now.

Richard Philips (28:45)
know what the right fit is and who the right fit isn’t. And then think that’s a big, getting to know quickly, getting back to that concept is a big part of being effective at this.

Anthony Codispoti (28:55)
What are some of your favorite cost cutting moves for your clients? Come in, you do for a big percentage of them. That usually works.

Richard Philips (28:59)
Yeah, no,

mind you, we don’t we again diagnose handed off the folks in order to handle that. So there’s a company that’s been great with workflow automations in Kansas City we’ve worked with ⁓ that that will do sort of low code solutions. And it works really well. They really work well with like HVAC companies that do everything on the back of like a piece of paper or a sheet that came from a technician from the field. And how do you digitize that?

are things that are really heavy on the manual side. ⁓ workflow automations have had some good success deploying that, especially the companies that are less tech savvy, because they’re the most you could do. There’s the most delta there, right, where you could fix. ⁓ I think the tech stack is becoming a bigger thing and rationalizing what you’re spending on and where. More tech spend is not better tech spend necessarily.

And how many cybersecurity solutions do you need? And are you even better, you know, ⁓ what is your, what really is your risk exposure? Are you dealing with the core issues in the organization? HR kind of solutions. Do you have the right team or do you have the right people in the right team? We’ve seen this on integration issues where company buys a company really, we work with a company that does what I would call these human systems maps that when you buy something, you plug it in.

You’ve already disrupted the organization. Now, how do you put that map back together so you don’t knock down the Jenga ⁓ formation? so finding the right strategic partners we could plug and play. just, again, we identify the issue or the problem. No, can’t solve it. And we can try all day. It’s a waste of everybody’s time. knowing the right, again, connect the dots, talk to these guys, see what they can do for you. And we’re objective about it because we’re

kind of evaluating these service providers for the client. And I was like, okay, these guys, we’ve seen them, this has been effective before. And so I think on the tech side, I think you got that. You mentioned some the healthcare costs are out of control. And I think what you guys do is a big part of that. you take, especially companies are self-insured and what you’re seeing is premiums explode and they’re going to really, really high deductible plans. So what can you basically divert away from

the major medical onto systems that make it a little bit more affordable. Maybe it takes the urgent care thing off that system. So next, when you re up, the premiums aren’t going to have a 30 % increase because the loss ratios are lower, that kind of thing. So, I mean, you’re expert in that area. I I don’t know a ton about those, but those are, again, I know those are pain points because I hear them every day and I can point folks in direction. I sell them myself? No, absolutely not. I’m not an accountant.

I know I can speak accounting, but I’m not supposed to.

Anthony Codispoti (31:57)
Yeah, you spot the problems,

you’ve got the service providers that you trust that, hey, here’s somebody who can help you with this.

Richard Philips (32:01)
Yeah, and always expanding

that and sort of evaluating that. And that is helpful because these companies aren’t always doing &A. They’re always in business though. Their lights are always going on and the elevator is going up and down all day. And so what can we help? And that’s how we gain trust and build credibility. We solve problems. And then what we’re playing for is the &A transaction, but we’re not gonna win too many pitch. ⁓

they call big sales in our business against like Kip’s, the Santa or the big, and they’re fantastic banks. So we shouldn’t be able to beat Kip’s. They’re fantastic. do. Nobody does what they do better. Maybe them and Raina James and Baird in our industry, but, and defense tech and gov tech. But at the same time, we know the companies were kind of embedded that, that familiarity is going to win us deals. And maybe we don’t win as many because we’re not going after as many. ⁓ but that said, we, we, that you know, what you’re taking to market is a big part.

success.

Anthony Codispoti (32:58)
Yeah, you were talking before about deal fatigue. It’s getting closer to the end. know, like people are just tired. What are some ⁓ interesting stories that you’ve witnessed as people are getting closer to that close date? What happens to people?

Richard Philips (33:05)
Mm-hmm.

Well, it tends to be more drinking. People let their hair down in ways that aren’t really… You want to see people as human, but sometimes it may be better if you didn’t. Because there’s a certain level of familiarity and people start to get comfortable and maybe a little too comfortable. ⁓ That said, I think there’s places and deals where you could re-energize a process, manage some presentations when done right.

So you know, you had your SIM, that book I described, and then you do a management presentation when you’re talking to the company. The ones that are not successful, or the ones that aren’t really value add are just a rehashing of the SIM. And there’s like a little level of detail where it might say, instead of customer A, B, and C, you actually name the customers. Okay, that has some value, but it’s limited. It’s not worth the trip across the country to go sit in for hours of a meeting for that.

But people are talking about what are the three opportunities we’re going after together, day after acquisition. That energizes the room. That gets everybody rolling in the same direction. That creates a mission, ethos, whatever you want to call it. And everybody starts to get excited. And the people are getting bought. Say, hey, I’m going to have a role in this company. I’m going to have a say. And it gets buy-in. It’s amazing. These little things, you can just see it in a room. it’s…

But people get exhausted and that deal fatigue is with the same question 50 different times. you correct for it also, but you don’t burden the client with paper cuts or you don’t burden the target with paper cuts. Like, give me this, give me this. Batch it to the extent possible. Ask for something once and then do your homework to figure out. Don’t bother your client with endless diligence because that will wear them out and that will demoralize them. they’re going to… Deals lose value by being in the market because the…

companies, management, the company itself is distracted. And they’re thinking about being in Tahiti, at least the owner is in three months. So how do you keep everybody on board as time kills? And so that part of it, you want to be responsive on diligence, you want to make it quick, as painless as possible and get to questions quickly and being as responsive as possible. And part of the big part of that is the preparation beforehand.

Anthony Codispoti (35:35)
any ⁓ eccentric personality stories that you want to share as you get closer to that close date.

Richard Philips (35:41)
Well, you know, so your average business owner is a headstrong individual, especially a founder. Now they will lose about 30 to 40 IQ points the closer you get to a deal before it closed. I mean, these are intelligent, rational people that you would never expect to be illogical. But ⁓ I remember one situation where somebody had the bright idea of doing a closing dinner before the close. That’s like the Gatorade before the game’s over.

Anthony Codispoti (36:10)
Yeah,

jinxing it.

Richard Philips (36:12)
And sure enough, there was already bad, there was in the back of people, subconsciously, people had issues and a couple of scotches and somebody of importance said something to somebody else of importance that put the deal on hold for a month. So, there’s a certain, you don’t want to spike the ball. And I think that’s what it was. It was a little bit of spiking the ball by the buyer because they thought they had won and like,

Anthony Codispoti (36:30)
Ooh.

Richard Philips (36:41)
Basically, we own you now kind of mentality. And so you got to just man the beam that buffer. Then at the day, all the money’s dollars and cents and all the really smart people, it’s still human beings that are flawed, have whatever they bring to the table. And you kind of have to, you know, you’re that buffer and that’s why what we do, we’re an intermediary and you got to be coach. You got to be therapist. You got to be priest, diplomat.

And ease things over and not and be that like that lightning rod and be that Absorber of all those shocks throughout because you’re gonna hear a lot of you got a lot of roll off you I know people that you need a thick skin because they’re gonna curse at you. They’re gonna throw stuff You know, there’s there’s bad behavior because these a lot of these folks that I shouldn’t say bad be able to bad manners. There’s people who act like very pretty, you know, would never

Anthony Codispoti (37:31)
What kind of bad behavior? Give us an example.

Richard Philips (37:39)
their leaders in their church or what have you. I mean, they, these are good people. 95 % of the time. And like you, they were, they’re nice neighbors and you would love to have them as a neighbor. But boy, you put the stress, you put the time, they’re overtired. And now they have an existential crisis. Cause what the heck am I going to do again, after I’m, I sell this company, I can’t golf 50 hours a week. They’re like going to lose their identity. And then they start to act up if you will. And it’s like in a little ways. And sometimes they’re more.

Anthony Codispoti (37:58)
Uh-huh.

Richard Philips (38:08)
And I’ve seen my boss.

Anthony Codispoti (38:11)
Do you think they’re subconsciously

trying to sabotage the deal?

Richard Philips (38:14)
A little, just like a little. ⁓ Not in a way that almost in a passive aggressive way. your role is to make sure that doesn’t become an aggressive way. And you kind of keep it under, you you attempt tamp that down a bit. But there’s always a little bit of that. they’ll nitpick and it’s just once again, human nature is so fascinating because it’s so predictable. And it’s so, you know, no matter what you’re dealing with, like I said, really intelligent people you would love to have as neighbors start to act like barbarians.

or irrational just like folks. it’s just because they, you had stress, had time, you had overtired. And now you also, they don’t know what they’re gonna do with their life. And nobody really thought that through with them ⁓ beforehand. so now, again, you’re gonna be a therapist more than you’re gonna be a financial analyst.

Anthony Codispoti (39:04)
What do you see

folks do in that situation? I’ve been through a few exits, not at the end of my career, but taken some gaps in between. I think existential crisis is a good word for it. Sort of like all the identities wrapped up in this company that you built. And so how are you seeing folks deal with that?

Richard Philips (39:19)
absolutely. And look, I’ll…

You know what? Getting them early to check, now I to say check out, but this is another problem. You can see it in a company or an ownership or a culture. The owner’s got everything in his head. The business development, because he knows guys. He calls with them on Tuesday or Wednesday or whatever. And none of that’s institutionalized. And so the more that’s cooked in, it’s not sort of

built into the company and institutionalized, like I said, the more that becomes a problem when that guy leaves. But the idea is to have that conversation early. like, need to, the most important part of preparation, yes, have that data room and a sim and have your financials in order and knowing where your holes are, what your customer concentration is, being data ready, but being institutionally prepared for that change. And these guys have trouble letting go. So the earlier you can have that conversation and

What they’re gonna do after this, I think is a big part of that. Like, what do you like to do? And this is where you’re kind of playing coach therapist. you ⁓ kids, you you’re in charities or you’re, you you want go back to teach, you want to travel. Okay, like this will make that possible. And this also speaks to what you need. And so often I, you know, I have business owners, they think their company is worth what they need. You know, to retire on. It’s like, that’s not how it works at all.

⁓ But you don’t say exactly like that. But ⁓ that is this is what’s worth and this is what you can do with it. Get them talking. This is why I think the most important ally you have as a banker is the wealth manager, not the attorney. The attorney is helpful, obviously. ⁓ But the wealth manager is going to tell them what they actually need, how they can do with tax-sufficient. And you’re going to look like the hero as the banker because again, they’re going to judge you by the take-home pay. So the less taxes and cap gains and all the other stuff they’re exposed to.

in the structure of the deal, the wealth manager guy is going to help with that. And so, and then that wealth manager guy, that’s what they do well. They can help them plan for their future, tell them what they’re going to do, create generational wealth, and that’s going to get them excited about that next stage. But the idea is, again, to bring in those parties. Maybe coming from you isn’t the best person, but that wealth advisor, you know, the RIA or the Merrill Lynch guy, you know, and often,

lot of these guys have liquidity all tied up in their business. So they don’t have a Merrill guy. They have an E-Trade account. So they don’t, which is fine. They have an E-Trade account. We’re happy with it. the thing is, whole life’s going to change the way they manage money. Their liquidity is going to change. Now their liquidity is going to be liquefied. It’s going to turn into an asset that some professional on a higher level than the one they’re dealing with now is going to have to handle.

and making that again, bringing those other professionals in early, accounting wise, estate planning wise, wealth management, probably the most important part of that equation. And that will help mitigate those fear that existential crisis will help smooth it over because they’ll see what happens afterwards. And someone will model and show them what that looks like.

Anthony Codispoti (42:36)
Hmm. I want to go back to our earlier conversation about AI. You’re talking about, you know, ways that you guys are giving it a big bear hug, embracing it. You know, a lot of talk about AI, a lot of hype, a lot of fear. How do you see this sort of playing out big picture in the business world? People are to lose jobs en masse. What do you see?

Richard Philips (42:46)
Mm-hmm.

I’ve seen a lot of fear with that, even with people who, you know, are, I was at a conference, a small little conference in, in Tyson’s corner, which, and all these people, it was a McLean, you know, if you look at the zip code valuations there, these people were used to succeeding their whole life. And now they’re smart enough to see around quarters and say like, wow, I don’t know if I’m going to succeed in the, this new world that I like, I used to. And part of that’s true. Part of it’s not. I think they’re being a little, you know, you know, the.

There’s the human element, you’ll never get away from that because the human element is what creates the trust. And so many of these transactions don’t happen without that, right? No matter how the numbers line up. Yes, it reduces the need for as many people. Like you don’t need as many analysts, you still need bankers. You still need people to sort of broker and buffer all those elements we talked about, right? That human element, managing personalities, all that is a human fix, not a computer.

AI one. AI can help you target better. AI can keep you out of the mundane. AI will help you focus on what diligence is important and work through that quicker. Like I said, that deal fatigue, a real source of that is diligence overload and diligence mismanagement and diligence ill-preparedness. It can solve a lot of those problems and allow you to engage with more buyers more effectively in a shorter period of time. All those are value creating. Yes, it means a little less manpower.

But the manpower can be redeployed in smarter, faster, or better ways that you’re to get more out of them, and you’re to get more out of the deal. I think it’s, so yes, I think a little less manpower, but the manpower deployed in other ways. And so I don’t think it’s going to take too many jobs. It’s going to take, this is, think that the issue is you’re going to not have a job if you don’t deploy it yourself. You’re going to get replaced by the person using, I’ll give you an example in our industry.

So I described to a colleague even this morning as what AI really is for our business. Think of it, when I first started as an analyst, they said, OK, you could use the models to build your models, or you could use these hotkeys. And you’ll be twice as fast, you’ll make less mistakes, and you’ll get your models done in half the time. That’s what AI is. It’s just like a really super steroid version of that. you’re faster. And now you can actually look at the model you made. You can think about the context of why certain assumptions.

You could take the time to research and be creative about how you’re presenting, making sure it makes sense, like logically, where, you know, it just makes you more effective. And yeah, so you do the model, like the example of the hotkeys in two hours instead of six. And now you just got more time to do other things or like you’re not overwhelmed. And a lot of the deal that comes in by people are just overworked and overstressed. And again, when you get that, you start to lose.

You kind of have to take guys off the line because they’re battle fatigued and they’re not fighting at full capacity. they’re not, you know, it’s just a guy needs, reps are good, but too many reps, you start to get like, you know, stress injuries, if you will. Like if you think 162 year game baseball season, guys don’t break their arms. They just get sore and they’re start to, and it’s not catastrophic industry injury like at a football game, but like it starts to wear you down. And now your bat speed is a little less.

Now you can’t hit a 95 mile fastball inside. That’s impactful, right? It’s hard to exactly see, but you can measure it in the stats. So sometimes, part of working less hours is gonna make those hours that you have all the more effective and all the more useful in production.

Anthony Codispoti (46:40)
What are some of your favorite AI tools to incorporate in the business?

Richard Philips (46:44)
Well, we’re trying to design our own. mean, yeah, sure. We use Claude and we use the chat versions, the chat GPT, but the idea is we make our own kind of, you know, GPTs a little bit, but also trying to design our own with workflows and agentic AI work with someone who does a lot of agentic AI work or built a lot of these things from the insurance agency. But can we use that to query, for instance, data rooms, but get to answers quicker instead of me spending six hours or an analyst spending 12, you know.

trying to find out what’s there and getting really, know, writing SIMS faster. So using it to sort of format. So, I mean, I like a couple of the big ones, but we’re really trying to design our own. And the idea that’s, and also too, we don’t want, you can’t put this stuff out there on JetGB. The world isn’t supposed to know companies, financials and all their, you know, their special sauce. So like, you can’t put these things in an open AI format. gotta.

keep it in-house and you got to keep it data protected and privacy issues. Well, you don’t put it out in the cloud. You kind of have to keep it in a kind of data. Oh yeah, you got to have to create your own. My colleague Paul right now is spending a hell of a lot of time building what will be a super analyst and what it will be when we play. Yes, we’ll still have analysts, but it’ll make our analysts be better and it’ll make me not be overwhelmed.

Anthony Codispoti (47:44)
How do you do that?

You create like your own LLM or what’s?

Richard Philips (48:10)
So yeah, we’ve seen what tools work. know enough about programming. I I started as a quant, so I know a little bit of programming, but you got to build these tools yourself. still, I think that the broadly used ones are good, but there’s also way to do it in chat GPT. We never put client stuff there or like deal stuff, but like general research and you can put in your own, I forget what it’s called. just, create your own GPT basically. It’s like keeps it on.

Anthony Codispoti (48:37)
Got it. Yeah, yeah.

Richard Philips (48:40)
You know, it’s and who knows how sick that is because I don’t know what could argue that still in the cloud and it’s somewhere, you know, it’s a little bit there’s a little bit of a boat around it, but still would never put it sensitive there but ⁓ There I mean I got a these tools are kind of out there for folks to use you know, and so You don’t have but you don’t have to be an expert in it necessarily You got to know how to use it like I don’t know how the computer works But I know how to use the big just like any tool, right? I don’t know what makes the VCR work, but

I knew how to program, which made me like a God of Unmanned, or a King of Unmanned when I was younger, right? So if you knew how to program, please go.

Anthony Codispoti (49:17)
I love that you pulled out the VCR

example. There are some people listening that are going to have to go Google what that is right now. Richard, tell us up to this point, where has most of your deal flow come from? And how do you see that evolving going forward?

Richard Philips (49:20)
But.

Yeah, I know. As soon as I said that, I aged myself over time. I’m getting to that point in my life.

And it’s mostly come, well, certainly from referrals, from relationships. Folks I’ve known, and it’s just, you can’t just talk to someone, right? You’ve got to really refine and cultivate and get them to know you and be, even them, it’s not good enough. You got to be front of mind all the time. So it’s having a big network and being engaging that network in a way that’s helpful to them. Cause you got to give before you get like anything else you.

The income comes when you make an impact and these are all cliches. You’ll know it, but that’s how you got to approach referral source. You got to be adding value to them. So you’re front of mind because there’s a thousand other guys who do what I do or just as good, if not better. And so how do I get front of mind for that guy? you you like, you know, no like and what’s the, I forget the word and trust, right? And, and so, yeah, they have to be like-minded or maybe I should say like-minded, but you have to have a rapport, right? There’s got to be just like in a deal.

Anthony Codispoti (50:22)
Trust. No like and trust.

Richard Philips (50:31)
cultural, strategic, financial, that order. And figuring out who those folks are and being able to have touch points with them in an organic way. And just find out what they’re up to and you have to do it in a systematic way, which is hard to keep discipline there. But it’s mostly come from other old clients or through referral. We don’t do much lead gen from scratch, very few.

of those ever turned it because I just we don’t have the resources and frankly, it’s that’s a tough you got to that at scale. just don’t

Anthony Codispoti (51:04)
What does the future of Crossroads Capital look like?

Richard Philips (51:09)
Well, think doing, you I like to say you don’t have the skill, but a little scale would be nice. Be able to, you know, to be able to have a lot of the, you know, reinventing the wheel is very time consuming and very, it can be difficult. And so having some better automated processes, doing deal. think we started this thing and we started this conversation, do and deal smarter, faster, better. Let’s, let’s take that to the next level. Let’s reduce the time. Let’s figure out like when I told you it took two months.

There’s no reason it should be two months. It should be one month, right? To prepare the book and all this. Now, there’s a lot of work that may have to go on before that, but when they hit the go button, be ready to take that to market within a month. So I think there’s tools, technology and otherwise, to really understand what we’re bringing to market. And just for me, it’s about building better ways to do deals. Because I never am satisfied with the speed, the processes. There’s always ways to streamline. There’s always ways to do it better. There’s always better ways to engage buyers.

and get them to know quicker. And there’s ways to get them to understand what they’re buying and where the value is in a much more ⁓ efficient way than have them just stumble upon.

Anthony Codispoti (52:18)
Yeah, you want to find efficiencies because as you said, time kills deals. So wherever you can shave off days.

Richard Philips (52:21)
Time kills deals. We’re never going

to be a huge firm. But what I want to do is do deals smarter and punch above our weight in that regard and be just, you know, with the least amount of brain damage to everybody involved. ⁓ And so that’s my goal. And I don’t necessarily want to do bigger deals. Like bigger would be nice because I would say they’re bigger fees. I like to do more deals, to be honest. And that’s what I really would prefer to do. I’d rather stack pennies than collect five dollar bills, if that makes sense.

and find with technology things, can we do this at volume efficiently with quality? ⁓ That would be where I would want to take these, what we built.

Anthony Codispoti (53:03)
Richard, what’s a big challenge that you’ve had to overcome in your life?

Richard Philips (53:09)
⁓ Let’s see, in my life, or I guess in the business and when you run your own shop, it’s kind of the same thing. When I first started, like, who the hell is this kid thinking he has started his own shop? ⁓ And you hear everybody talk about that imposter syndrome. Every influencer talks about that kind of thing. ⁓ I think there’s always like, are we good enough that this is an important decision for companies? And can they really

Anthony Codispoti (53:12)
Business, personal, yeah, either one.

Richard Philips (53:39)
trust us to get it done or go to, why don’t they better hands at JP Morgan? So there’s always that self doubt. Am I good at this enough to be able to take such an important thing as a company’s, somebody’s livelihood, like what their company they built and be trusted and trusted to do that. I’m always, when you have a small shop, you’re just humbled every day about, you get your ass handed to one or another, you lose deals, you lose, you know.

It’s difficult on relationships, you know, because you have been able to kill for 20 years. It’s makes it hard to plan and it creates some life stress for sure. And what what what overcomes that is like, I love what I do and I don’t love doing it every day. I love running the deals. I don’t frankly love running the shop. But, know, so there’s, you know, are we good enough? Are we, you know,

you know, are we for real? we just pretend, you know, there’s a little bit of that kind of, you know, do we have all the things in place? Do we have our clients well protected? Or, you know, are we, you know, there’s always, did we do enough? Are we doing it the right way? And there’s always a little bit of doubt like, who the hell am I to be doing this? I should maybe just stayed as an analyst and just been a bean counter.

you know, worker B, you know, am I, do I have the right mentality to be an entrepreneur? You know, am I maybe too passive in some ways and too aggressive in others? Like, do I have the right temperament? You know, it’s always a question I have. And every day I’m kind of like, you see things like, oh boy, you gotta walk that back. But so, you know, we’re all broken and perfect, but we try, you know, to just overcome and be smart and always be earnest and make mistakes and try to overcome them with.

Anthony Codispoti (55:24)
Yeah.

Richard Philips (55:31)
just working that much harder.

Anthony Codispoti (55:33)
we talk a lot about self doubt imposter syndrome on this show. And I had a guest many months ago that actually kind of turned the script on me. He said, you know, I actually view imposter syndrome as my superpower. He says it’s the thing that kicks me in the butt every morning to get out of bed and continue to prove myself, to get up and make myself better, make my business better. And he’s like, so when I’ve been able to reframe it as a superpower, rather than this thing that

is like weighing me down or holding me back. He’s like, it’s it’s a lot more empowering. And it’s it’s interesting to me, you know, as I look at you and, know, we’ve talked about the number of deals that you’ve done. We’ve talked about, you know, some dollar amounts, the number of years that you’ve been doing it. And and I’m laughing, I’m smiling because I’m the same way. Like still you’re questioning yourself. Like, do I have what it takes? Do I have what it takes to be doing?

Richard Philips (56:30)
yeah.

Anthony Codispoti (56:33)
The decades of, you know, there’s like documented decades of experience here that shows that yes, you have the temperament, you have the skills, you have done it. But as human beings, we continue to question ourselves even when there’s this body of evidence that says otherwise.

Richard Philips (56:50)
Yeah, I mean, I self doubt is important. I think it’s helpful. don’t you know, being sure of yourself is not, know, a hubris is not never worked for any of the the the the, you know, the characters in mythology, that was always what dropped brought them down, right. And so there’s always smarter, better, faster folks out there. Can you learn from them? Can you work with them? I mean, I’ve always had the opinion that we’re small enough, we don’t compete with anybody. We collaborate with everybody who will answer the phone.

and willing to take a call. because we don’t have, just like the other examples with the going out to those professional service providers or experts and scenarios, we don’t have the answers. We can diagnose or cease issues. We bring in partners because they’re trusted and they know what they’re doing. We can evaluate them. And I think that’s part of it. Having a ⁓ network of folks you can rely on helps offset that a bit.

gives you a little bit more credibility and also gives you confidence that, okay, you don’t have the answers, but you know where to find the answer.

Anthony Codispoti (57:50)
Have you had a particularly powerful mentor in your past or present?

Richard Philips (57:56)
No, you know, be honest, not really. I’ve gotten good advice and bad advice and examples, good and bad. And I kind of borrowed for every shop I looked at and every shop I’d been at. I like certain things I do. I hate certain other ones. For other reasons, I started this. I kind of was looking at best practices. And so I’ve copied or borrowed or steal things I liked and completely jettisoned the things I did not and mentalities I didn’t like about, you know, approaching clients or approaching deals.

But no, mean, it might have been, might have made less mistakes if I had a good one or had one that was proactive about things. But I’ve had great teachers my whole life. And for that, I’m quite grateful. And people who believed in me when there wasn’t a good reason to, so.

Anthony Codispoti (58:44)
What’s your superpower, Richard?

Richard Philips (58:47)
You know, maybe connecting the dots, like being able to have this sort of sense of a, it’s a German word for it, think, fingerspitzgefuhl. Just having a real sense of an open situation, be able to know what a solution is almost instinctively, and then build that, then find the data that sort of backs that up and then be able to pivot. So part of that’s connecting the dots, part of that is standing back and being able to see the whole field and know where things are generally going, what will work won’t work.

won’t, won’t, that comes from a little bit of experience, also a little bit of, don’t know, I, some have a sixth sense about deals and about what works and what doesn’t and kind of not wasting time and what doesn’t. And so that’s a little connected dots, but that’s a little bit of almost instinctive strategic. you.

Anthony Codispoti (59:35)
What’s your favorite thing to do outside of work? You have any hobbies?

Richard Philips (59:39)
No, I’m a boring person. love the idea. I’d like to read. Sure. I I like to stay up on current events, even though they’re depressing as all get out. ⁓ But one thing about humanity, never hit. You have low expectations. You’ll never be who said you’ll never be disappointed by people. But, ⁓ you know, I don’t I love what I do. I really do. And that’s where I spend most of my time energy thinking.

And it’s not it’s not you know, I didn’t get into this and I have I don’t have the the bank account or the cars that show for it mean, I think this isn’t a glamorous job I tell you people is not at all like what I do looks more like blue-collar consulting blue-collar sort of Yeah, it looks more like the office then then Wall Street like the office the ship. Oh, you know in

Anthony Codispoti (1:00:31)
So say more about that because

a lot of people they want to get into this because they think it’s sexy, it’s super profitable.

Richard Philips (1:00:38)
I mean it can be and it is for a period of time for those at the bulge bracket I mean the but look if you’re in for those reasons you burn out or move on to something else because if you’re if you don’t love this It’s too taxing on your on your psyche for all the money in the world so I mean, you know, I don’t do it for the money and You know sort of that worth that maybe shows it a little bit and look when you have a small shop you have lot of expenses you’re

There’s not a lot of scale you could deploy. Most of that money goes out. You got to keep people happy and keep people paid. But that’s fine. mean, for me, when I get a kick out of getting something done, making an impact. when I always say, impact first, income second, if you focus on that. yeah, you start, but having my autonomy, don’t have to answer to anyone, but God and the client, that is, I’ll trade that any day for what a managing director at a big bull’s bracket has.

Anthony Codispoti (1:01:40)
Just one more question for you today, Richard. But before I ask it, I want to do three quick things. First of all, anybody who wants to get in touch with Richard Phillips from Crossroads Capital, his email address is rphillips at Crossroads Capital DC dot com. rphillips, two L’s, at Crossroads Capital DC dot com. And we’ll have that in the show notes if you missed it. If you’re enjoying the show today, a quick comment or review on your favorite podcast at

goes a long way towards helping others discover our show. 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 therapists, doctors, and prescription meds that, as paradoxical as it seems, actually increases net profits, real gains that can change how a business is valued. Learn more today at addbackbenefits.com.

Okay, last question, Richard. A year from now, what is one very specific thing that you hope to be celebrating?

Richard Philips (1:02:41)
⁓ well, let’s see. I have two grandchildren. So I guess that they’ll be a year older. ⁓ One just born one. So that would be nice to see it now that the least one of them is talking. So seeing how those that they get older and gross, but also to on a professional level, think the deals that we have a couple of deals are really interesting. We have a couple of projects that are really interesting. ⁓

that are going to be impactful. Some of the defense world, some of the energy side of things, we’re trying to bring back, for instance, the nuclear power ⁓ to Europe in a big way. so we, it’s really, this is more about a herding of cats of bureaucrats, think tanks, big conglomerates, infrastructure, PE, like Carlisle’s, the big infrastructure players, and necessarily Carlisle, shouldn’t have mentioned the name, but not them. But we’d love to have them part of it, of course.

But, you know, so that, again, know, lower energy costs, whatever your leanings are, better for, I think, you know, is a good thing. And it’s going to make, you know, make real industrialization possible in Europe again. And I think there’s security aspects. think there’s good, you know, political outcomes that are good for, you know, a successful, prosperous Europe, is a prosperous world, and prosperous America.

And I think a lot of what we’re trying to do with tanks and guns, we can do with lower energy costs in the war in Ukraine, for instance. So that’s a big, like, in progress there. that is huge. And I bring it up. It’s not really &A, but there’s like all the skills I’ve learned in &A and connections I have at the big sort of infrastructure companies and other places. Part of them are defense. Part of them are energy, you know, of ⁓ in conglomerates.

Anthony Codispoti (1:04:19)
That’s huge.

Richard Philips (1:04:36)
And part of them are, you know, I’m in DC. So a lot of, you know, kind of lean heavy into the lobby world and political think, you know, groups in Europe that are, everybody knows this is so obvious thing you should do. How do we make it happen? And I mean, it’s kind of just like in any deal, I got to herd the cats, got to manage the personalities and bring all these disparate parties together, which I do in deals and whether, you know, sources of capital, line them up with strategic buyers.

Anthony Codispoti (1:04:51)
I was going to say, what is your role in making this happen?

Richard Philips (1:05:06)
get our strategic targets, lining up the right regulatory folks, you know, this is gonna, a project like this is gonna have a thousand fathers and it’s gonna take a long time and I’ll just be a a little cog in the machine, but it’s an important thing to do. And I think there’s gonna be ton of business and a ton of deals that come out of this for a lot of folks. So I think it’s, I mean, it’s one of those things that it’s like a no brainer and it’s gonna create a lot of.

deal flow for a lot of folks and there’s going to be so much picks and shovels sold in this, if you will. I mean that in the more figurative sense of word, but maybe in the literal one as well. So like things like that. I think I want to focus more on those big sort of ⁓ projects that I’m getting to a point where I want to make an impact, you know, in these kinds of things that I could use my deal skills to kind of help steward along. And I’m just like a small player in it. And ⁓ but, you know, we got a lot of smart people pushing this forward.

If I could be a part of that, help make that happen with my connections or my ways of lining things up, all the better. And happy to be, even though it’s not, I didn’t even think to bring that up, but you know a colleague I had in Frankfurt called me and he’s like, hey, we got this weird project. Do think you could do something with it? I like, you know what, that sounds fun. Let’s see we can do with that. the easy things, they’re no fun.

Anthony Codispoti (1:06:12)
We saved the best for last here. Tell us more. What is your role? How did you get involved in this?

Richard Philips (1:06:32)
Selling a $5 million pool toy company, $5 million EBITDA pool toy company isn’t fun for me. Someone will buy it and I’m sure someone will make a ton of money. But that’s not what gets me out of bed in the morning anymore.

Anthony Codispoti (1:06:33)
Give me a giant mountain to climb, right?

All right. Richard Phillips from Crossroads Capital. 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.

Richard Philips (1:07:01)
Thank you, it was a pleasure. Thank you for your time.

Anthony Codispoti (1:07:03)
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.