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Episode Summary
The macro numbers look fine. Your customers are telling you something completely different. That gap is the whole story right now, and it’s why your gut feels off even when GDP and unemployment read the way the news wants them to. I brought Brian Beaulieu from ITR Economics and Jeff Buettner from ButcherJoseph back for our quarterly economic and M&A update, and we got into all of it. The near-zero rate of change that averages a bunch of up-10s with a bunch of down-10s. The inventory drawdown still working its way through industrial production. The consumer savings rate at 3.2% with $7,000 average credit card balances carrying 21% interest. The refinancing wall nobody wants you to ask about. On the M&A side, Jeff walked through why 2023 was slow, why strategic buyers are out-bidding PE right now, why bigger is better but quality trumps size, and why we’re seeing seller notes structured with warrants to bridge the gap when senior debt costs 9% and mezzanine can’t fill the rest. Owner fatigue is the quiet thread underneath all of it.
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## Top 10 Takeaways- Headline GDP looks fine while your specific vertical sits on the wrong side of the zero line.
- Stop generalizing from your peer group. Your sector exposure is the only data that matters now.
- Inventory drawdown is still working through the system. Soft first, then firmer by year-end.
- The consumer savings cushion is gone. $7,000 average credit card balances at 21% won’t hold long.
- Look past the near-term mess. The real question is whether you capture the next upswing.
- The labor shortage is structural for six more years. Plan your growth around that constraint.
- Bigger is better in M&A, but quality trumps size when buyers tighten diligence.
- Platform multiples beat bolt-ons. Bolt-ons stack synergies that feed the next platform valuation.
- When senior debt costs 9%, seller notes with warrants bridge the gap mezzanine can’t fill.
- Owner fatigue is a real strategy input. “I want someone else to do it” is a valid answer.
Sound Bites
“It’s a very strange economy right now Ryan. The macro numbers look pretty good most days but then when we talk to individual customers they say… it’s very bifurcated when you’re running close to that zero line on our rate of change.” (@00:01:12) — Brian Beaulieu
“You’re not supposed to ask that question because they don’t want you to ask it.” (@00:09:17) — Brian Beaulieu
“We’re already encouraging our people to look past the near-term mess because the big issue is, are you going to capture everything that can be captured on the next R?” (@00:14:01) — Brian Beaulieu
“Unemployment really is low. If somebody wants a job they can get a job. They just don’t want that particular job.” (@00:18:12) — Brian Beaulieu
“Bigger is better, but quality trumps size.” (@00:29:23) — Jeff Buettner
“I don’t want to go through that again. I don’t want to make those tough choices. I don’t want to spend another 18 months and two years slugging through lower revenues… I want someone else to do it.” (@00:58:44) — Jeff Buettner
About This Episode
A recurring quarterly format Ryan runs with two guests in one episode. Brian Beaulieu is Co-CEO of ITR Economics, one of the longest-running and most accurate independent economic forecasting firms in the country. ITR was recently acquired and Brian opens by talking about the deal and what it means for the firm’s continuity. Jeff Buettner is a Managing Director at ButcherJoseph & Co., an investment bank that specializes in ESOPs and lower-middle-market M&A. The two segments connect: Brian sets the macro and demographic picture, Jeff translates it into what’s actually happening in deal flow, buyer behavior, and capital structures.
Resources Mentioned
- ITR Economics — Brian’s firm. — itreconomics.com
- ITR’s Great Depression 2030 forecast webinar — Broken down by age segment so you can plan your moves around your timeline.
- Prosperity in the Age of Decline by ITR Economics — The book Ryan recommends for navigating demographics and long-cycle economics.
- The Outline of History by H.G. Wells — Brian’s book pick.
- ButcherJoseph & Co. — Jeff’s firm, with white papers and deal structure resources. — butcherjoseph.com
- Ryan’s prior episode on warrants in ESOP deals — Referenced when Jeff brought up warrants on seller notes in third-party deals.
Connections
Phase + Module:
- Module 3 — Owner’s Playbook — Where the quarterly economic and M&A pulse-check lives in the owner’s operating rhythm
Milestones:
- Milestone 8 — Quarterly Boardroom Rhythm — The cadence this episode is built for: sit down quarterly, refresh the macro view, recalibrate the bets
Concepts referenced:
- Capital Allocator — The seat that makes the buy / hold / sell / refinance call from the macro picture
- The Multiple & WACC — Why 9% senior debt and 11-14% mezzanine reset every valuation conversation
- Enterprise Value vs. Equity Value — The difference between the price tag and what actually lands in the seller’s pocket after the cap stack
- Net Debt and Working Capital — What the buyer is actually taking and leaving when interest rates double the carrying cost
- Value Gap — Where seller notes with warrants get used to bridge bid-ask
- The Four Value Levers — Strategic buyers pull different levers than financial buyers, and that changes what your company is worth to whom
- Three Lenses of Value — Owner-value, market-value, and transaction-value all move differently in a high-rate environment
- Owner’s Scorecard™ — The constraints (cash flow, valuation, energy, timeline) the macro and M&A inputs feed into