The Exchanges

Q Do you feel like it's a wise idea to put all of this stuff together from the beginning of your company, so you don't have to look for it when you're ready to sell?

A Well, I think that it's a good idea to have your house in order, no matter whether you ever want to sell it or not. So audited financials, contracts, your licenses, you need to have your paperwork and your documentation, uh, sales tax licenses and, you know, things that you're permitted to sell something, in our case, in different states, uh, state contracts to sell products to the state of Tennessee, Alabama, wherever it was and everything. Federal government. We sold a significant amount of equipment to federal government. So there's contracts and things Uh, like that. And then, you know, obviously the financial statements, you know, anything that they can track back to your company to make sure there's no surprises. That's in essence what a due diligence checklist is all about.

AI assessment note: “I think that it's a good idea to have your house in order”

Q How soon after starting the company did you start to think about selling it?

A Well, Sean, that's the most interesting part, I think, of, you know, this interview and for your listeners out there is I didn't. I mean, I was looking for a job, and I created one for myself, and in the hopes that it would make enough money to pay, you know, the mortgage on the house to support my wife and a couple of kids and a dog and all those kind of things, and then, you know, as time went on, we started building it up. After several years of being in business and some level of success, we started getting calls from people that Had an interest in potentially acquiring this, having this merge with somebody, whatever. And, you know, I just blew it off. I mean, for years and years and years and years. And then, you know, in 2018, you know, I had had a lot of time with the company, had gone through a lot of experiences and things, and I just got a call from the largest company in the industry. And, you know, usually I've blown these things off, like I just said, but this one I had to listen to. And once I listened to it and I actually had some help From my son, who was working for the company at the time, but kind of be the right side of my brain thinking, realized that it was something worth looking into in a deeper fashion, and we ended up, of course, several months later, concluding with a sale.

AI assessment note: “that's the most interesting part... is I didn't.”

Q I can definitely understand the flattery and things like that. When you had those calls, Did it change how you looked at your business? Did it change how you, did you go, hey, wait a minute, if there's people that want to buy my business, maybe I should start thinking about how to prepare it in case maybe down the road I do want to sell it.

A No, I think it's a great question, and it did give me pause to consider about if I ever did want to sell, what would that look like for me personally, but also why would somebody want to do it You know, Sean, I mean, that was a big thing was buzzing in my head was why would they want to do it? And I had people telling me, well, if they ever want to buy your business, they're going to look at service contracts, recurring revenue, and all these different things, and repeat customers. And I heard that through the years, and then I heard other expressions that at the time, I really wasn't that aware of EBITDA and earnings before, you know, interest and depreciation, all that stuff. I was getting almost like an annual education in that The terminology and the science behind if this ever did possibly happen, how would this work? So subconsciously, I think I was kind of thinking, okay, let's do some things here to continue to create value for the business, but at the end of the day, also be profitable and provide a good workplace for, you know, a lot of people.

AI assessment note: “it did give me pause to consider about if I ever did want to sell”

Q out to this. You had said that one of the things you noticed was that Your company was getting onto like the Forbes and Inc's fastest growing lists. And that's when you started to also receive calls about your business. So my question is like, do you know how a company can specifically target these lists so that they can be included in them in order to increase their visibility?

A Yeah, yeah, sure. So you apply for, to get on the list. So we, as a business applied to do that. So, and then once we made it, then these people made the calls, but yeah, there's an application process, Sean. And back way, you know, 2000 and whatever was one, when we made the list, it was a pretty complicated process. You had to have audited financials. You had to have some pretty gaudy type of, uh, growth. I think we grew like 1500 and something percent in a five year period of time, but which was crazy, but understand the way Inc looked at things in those days, they had a five year increment. So it was year one to five and you had to prove all your financials at that point. Well, if you sold, you know, uh, four dollars in 2001 and you sold a bunch You know, five years later, it always looks big, but we were very, very flattered because it still is a very prestigious, uh, list, but you had to apply for it.

AI assessment note: “So you apply for, to get on the list. So we, as a business applied”

Q What was the most obscure thing in due diligence they asked for that you didn't have prepared? You were totally like, uh, you know, blown away that you needed this and you needed time to prepare for it.

A They were asking about some kind of agreement we had with a storage facility in East Tennessee that we had a month to month deal going. So we just charged To the company credit card. Well, they were just obsessed about the fact that we had some sort of contract with them, and that we, you know, there's some sort of obligation going forward. We go like, no man, that's not it. It was such a weird discussion. I remember literally like being at my daughter's rehearsal dinner, and we're right before that, and they're still asking me questions. I mean, we're going to close in four days, and they're asking me questions about this stuff. So much so, Sean, that they literally Got so worked up about it. They talked to our attorney and our attorney tipped off one of my employees about something about looking at this lease and all of a sudden red flags. Oh, are you trying to sell? At that point, nobody in my company knew. And then it was like, are we going to blow this deal for a month, a month rental? So that was probably the weirdest spot of the whole deal.

AI assessment note: “They were asking about some kind of agreement we had with a storage facility”

Q What do you think the next five years looks like? Are you invest planning to invest in early stage startups or to do some, uh, charity and give away some money or looking to develop passive income to help, you know, maybe your kids or your grandkids, future grandkids? Like what, what is your plan to, You know, with the money.

A Well, Sean, actually all of the above. So we're going to up our charitable, uh, things and donations to, to, uh, causes and, and organizations that we, you know, believe in, that we invest with our heart and everything. And then also, I don't know if we talked about this before, but I'm involved with an organization, uh, SCORE, the Service Corps of Retired Executives. So I'm doing mentoring for a number of startups there. I am also involved with a number of incubators and different Groups around the local area here and in, uh, the Tampa area in Florida. So I, uh, have already invested in a few startups, and I will believe that I will invest in more in the future. I want them to be successful. I want them to chase their dreams like I did mine years ago and, and keep doing that kind of stuff. I want to, I want to stay very involved as much as I can in the entrepreneurial community, not only just in Memphis, but in Tampa and Chicago and some of these other places that I've got, you Interest.

AI assessment note: “Well, Sean, actually all of the above. So we're going to up our charitable”

Q Did you look for the buyer, or did the buyer find you? And if so, how did they find you?

A The buyer found me through industry research and what have you. I had no interest in selling. They knew that up front, but they also, you know, had some parameters and things they were interested in, in a company, uh, in our area and everything, and I will tell you, geography had a lot to do with Them picking us because they needed an office in our area and everything. The process was, I got a call from, I guess, a person that represented them that didn't really work for them, but wanted to see if I had any interest. And if so, could we meet at this big industry conference called Infocom to talk about a potential, uh, acquisition. And the funny thing about it is Sean, when I got the call, I told him, I said, well, I said, I appreciate the call. I'm very flattered. I don't take these calls a lot of the time, but I'll appreciate you, you know, uh, Contacting us, and I said, the conference, Infocom, and out in Las Vegas, I said, I appreciate the invitation, but I'm not going to go to it. I've got some other things going on. However, my son will be out there, and if you want to discuss any future kind of plans or whatever, he'd be the person to talk to, and let him vet it. If there's anything to the, the conversation, discussion, then he'll get back to me, and we'll move to the next step, and that's really the way it happened. Uh, you know, the initial conversation certainly, uh, l…

AI assessment note: “The buyer found me through industry research and what have you.”

Q missed this before, and I just realized I wanted to know a little bit more about this. Did they come, so they came to you, did they go, hey, we love what you're doing, we want to pay you fifty million dollars for your business, or were they like, hey, we're interested, how much do you want? Like, how did the, how did that start, and how did you negotiate?

A They had a very big interest in the state of Tennessee. In fact, their words out of their mouth were, we paid a lot of attention to Tennessee, so it was a target geographical play. The other side of it, though, was that, you know, in terms of the money, I mean, we never really talked about money until they made their offer. I mean, I never said I need, you know, it gave them a range or anything like that. They just made the offer, and, you know, I contemplated it, then ended up countering like any salesman would, right? And then, you know, we turned around and agreed upon the number, and that was that. My benchmark in that, though, frankly, was the fact that I'd had an offer several years before that from another company that I knew was pretty much a lowball offer. But it also made me think about, okay, if I ever did want to be taken out, what would be the right number? And you know, these people, the number I had in mind, they beat that by a good amount of money. So I was like, okay, you know, they beat what I had in my head that I was going to be willing to go out for. So, and the way I looked at it, Sean, and then my wife and I talked about it a whole lot. It was like, if you're going to turn your life upside down in a life-changing event by selling the business, You know, we determined the offer has to be life-changing money. It has to be that, and that's what it was.

AI assessment note: “we never really talked about money until they made their offer.”

Q What's like the most important thing you wish someone had told you all those years ago when you were starting out with thinking about and selling the business?

A Well, I wish somebody had told me how emotional it was going to be. I wish somebody had told me that you need to think about if, even if you're have the remote thought about selling what life's going to look like for you after the sale, because I mean, it's just, it's a life changing event. In our case, I think I was so caught up in the sales process. I mean, I'm a salesman, my heart and everything. So it's kind of like once we kind of had a legitimate offer and these kinds of things, I'm the salesman. I'm trying to take it all the way to the close. Okay. And I didn't really comprehend what life would look like after the sale. And it hadn't been bad, but it's been very different. It's a big deal. Money doesn't buy happiness, man. I mean, that's all I can say. And I'm not saying I'm not happy now. I'm doing fine. But I just think that when people have this whole notion of when you sell, you're going to instantly just, you know, this wand, magic wand comes over you and you're just instantly happy and everything's, you know, perfect. Doesn't work like that. And I've heard a lot of people talk about, you know, some difficult times after the sale and emotional stuff and, you know, all kinds of things. And I wish I'd known that. I wish I'd really kind of grasped that whole thing. I, again, got caught up in the sales process and bringing it to a conclusion and all. And, uh, wish, wish…

AI assessment note: “I wish somebody had told me how emotional it was going to be.”

Q then I have two questions for you, and we did talk about this before, but I want to have it on the air. When those other companies came to you earlier on when you weren't ready for it, how did it make you feel, and did you ever keep in touch with them, or did you just let them go and say, like, goodbye, and you ignored them forever afterwards?

A Well, the interesting thing, Sean, I mean, anybody that says that those kind of calls that they just blow them off and blithely, you know, just move on any entrepreneur out there. I don't care who you are. Give me a break, man. I mean, the reality of it is, is that you're flattered that you've created something that somebody has an interest in. But as I listened to the people and I just, I kept thinking that we weren't that big of a company. The time I started getting the calls of, I don't know, five million dollars or something in sales. In the back of my mind, I kept thinking, well, what can we do next? Through the years, I kept asking myself that question, and then lo and behold, you know, we, ah, I guess it was a, 2011, we went from whatever those millions of dollars to twenty-five million in sales, and then we really started getting the calls, and I still blew them off. I just said, you know, Sean, at the end of the day, I love being an entrepreneur. I mean, it's in my blood. I mean, I, I never was fulfilled working for other people, and when I started My business and started to grow it and everything with a great team behind me. It was the most professional gratification I've ever had. And so it wasn't like it was, there wasn't a price tag on it. And they're still really at the end of the day, even though I sold still wasn't, I sold my business for the most part to actual…

AI assessment note: “the reality of it is, is that you're flattered”

Q So what are some of the things that you did to continue to drive value from that point forward to, I guess, help with increasing the bottom line?

A Acquiring companies, they want to have a business that's making money, but there are other things too. Beyond making money, this is just something that people don't think about, but if you're positioning the business to be out there in the market to potentially sell it, you can't have lawsuits. You can't have anything against the business. You can't owe the IRS money or something like that. That's not good on the report card. So what are the components they're looking for? What, what do businesses consider beyond profitability? Well, they want to look at the fact that customer base that you have and you created, it's not just one customer. It's a lot of them. The other thing is, how does that money come in? In the case of recurring revenue, in my industry, that was a big deal because being project-based and design, build for video conferencing, audiovisual, you kind of almost think about that as a series of one-offs. Acquiring firms want to know, okay, that's great, but what if those projects, you never have another one that's that big and whatever, what do you have behind that? What does the company's reputation look like? Do they have a lot of repeat customers? How about internally? What's their turnover rate look like? Are they turning people over right now? Maybe they're making a lot of money, but they got 40% turnover. So if somebody acquires them, is that going to become …

AI assessment note: “In the case of recurring revenue, in my industry, that was a big deal”

Q How do you determine what your reputation in the market is, and how do you decrease turnover among employees in order to make your company continue to look sexy?

A You build it over time by the quality of work that you do. And I think in our case, we had a lot of great word of mouth advertising. They're promoted, that kind of thing. In the case of the employees, I mean, Sean, some of this is just, again, common sense. I made it a point to treat my employees like I wanted to be treated if I worked for this company. We made sure that we took care of our people. That all sounds very plain vanilla to anybody that's listened to. I think we took it to a different level. You know, as an example, in my new book, I talk about, you know, we had a gal that worked for us who got a bad type of cancer and had to undergo a lot of treatments and things like that. And w we had a choice to make about how to, you know, to deal with it, whether we could take the recommendation of an HR company that was supporting us that, you know, policies and payroll and all these kinds of things who said, just pay her for vacation days and Personal days and then, you know, cut her off, or we could do what I felt like was in the best interest of the company and me personally, and really lead with your heart. And in our case, you know, we decided to, no, we're not going to just pay her for vacation, let her endure this healthcare challenge of a lifetime and just set her aside and everything. We didn't do that. So we paid her, I don't know how many months it was, probably ni…

AI assessment note: “In the case of the employees, I mean, Sean, some of this is just, again, common sense.”