Entrepreneur’s M&A Journal Episode 34-Interview With Jim Butler

Jim ButlerSummary:

Listen to the story of a man who watched a company start great but then with a series of bad decisions, run aground. Jim took those lessons and launched several successful businesses from that learning experience.  He is a font of information of how to keep things in check to make good decisions when you have your own company and are thinking of buying or selling. 

 

Main Questions Asked:

  • What was the business, what were you doing?
  • When you sold the company back in the dot.com days, did you stay with it through all the owners?
  • Did these guys have stars in their eyes when they took stock?
  • You’ve developed a real point of view on how to run a company, tell us about that.
  • When an entrepreneur comes to you and talks about selling a business, what is your advice? 

 

Key Points made:

  • I got into sales after college because I couldn’t get a job in my field. (:46)
  • We got the attention of several dot.com companies. (2:10)
  • We made these CD’s and multi-shaped business cards and presentations. (2:50)
  • It was toward the end of the dot.com phase and they just sucked all the money out of us. (3:39)
  • What they ended up getting was stock options, which were completely worthless in the end. (5:39)
  • Making a decision without knowing all the facts and getting excited about something, usually results in a bad deal. (8:09)
  • Learning how to control your emotions when buying or selling a business is a skill. (8:59)
  • 98% of CEO’s say their current business model is unsustainable.  Things are changing so fast now. (11:17)
  • I do coaching and consulting to help others not make the same mistakes I made. (12:10)
  • If you don’t know what you are trying to sell, then you are probably going to make emotional decisions that lead you where you don’t want to go. (14:06)
  • Understand your end game. (14:15)
  • For entrepreneurs it’s hard to stay still. (15:05)
  • If you don’t have to sell your business, you make more rational decisions. (18:35)
  • Use good competent accountants and attorneys and pre-qualify people who want to buy your business. (20:30)
  • Managing your emotions is very important. (21:59) 

 

Resources Mentioned

www.soundlawsofsuccess.com

 

Thank you for listening! Please subscribe to the podcast in iTunes and if you enjoyed this interview, leave a 5 star rating and review!

Entrepreneur’s M&A Journal Episode 33-Interview With David Phelps

Dr. David PhelpsSummary:

David and Jim take you through David’s M&A journey with all its bumps and lumps and learning experiences.  If you have ever wanted to hear what to do right and what not to do, listen to David’s story.  He has done it all.

Main Questions Asked:

  • Did you plan your exit at the time you started your dental practice or were you thinking you were in it for the long haul?
  • What made you decide to exit?
  • How did you go about selling your practice?
  • How long before you realized you had a problem?
  • So, you got the practice back, did you find yourself practicing dentistry again?
  • When you sold it the second time, did you retain an advisor of any type?
  • When did you reach the valuation?  How did you get consensus with the buyer?
  • What are you doing now?
  • What is the most fundamental piece of advice to someone that has capital to invest?

Key Points made:

  • It is interesting how people come into your life and they have an impact and they don’t even know it. (1:48)
  • Getting started and being hopeful to scratch enough together to pay the debts was my goal. (2:55)
  • There was no exit plan until the day I decided to exit. (3:15)
  • I was chained to that business. (6:44)
  • I was going to set my schedule and my life up around what was important and everything else was going to fit around that. (6:56)
  • I want an associate or buyer, I’m ready to transition out. (7:55)
  • You need a third eye, when you are emotionally tied to these things, sometimes you don’t make good decisions. (8:30)
  • I did not do enough due diligence, I didn’t know all the pieces. (9:11)
  • When I turned the practice over this guy, it was like giving the keys to a Ferrari over to a 16 year old. (10:00)
  • I had to wrestle this thing back. (10:20)
  • The practice had no value, once I got it back. (10:40)
  • This is the good side of the story, this is where you take adversity and turn it into opportunity. (9:45)
  • I was going to walk away and sell the hard assets for what they could bring. (9:01)
  • That wasn’t right, I had staff, I needed to serve them as they served me. (8:45)
  • I brought in 3 associates to bring my practice back. (13:27)
  • I’m a big believer in advisors. I had a broker, a CPA and attorney. (14:25)
  • I did an evaluation before I brought people in, then did another when we ready to sell. (15:45)
  • I have real estate holdings and we do focus groups. (17:58)
  • You learn how to orchestrate the management of your investments. (19:25)

Resources Mentioned

www.freedomfounders.com

Thank you for listening! Please subscribe to the podcast in iTunes and if you enjoyed this interview, leave a 5 star rating and review!

 

Entrepreneur’s M&A Journal Episode 31-Interview With Ace Chapman

AceChapmanJim and Ace go through Ace’s life as a business/buyer & seller starting in his college days. Ace gives a great tutorial on what to look for when buying a business and how to bring that business to its full potential using an example of one of the businesses he bought.

Main Questions Asked:
➢ When you went to college did you major in business?
➢ Let’s dig into the spa deal you did? What led you to buy a spa?
➢ How did you find the transaction?
➢ Did you buy the business with the expectation of an exit?
➢ Did you plan to sell in 6 months? Did someone just walk in and say I want to buy it?
➢ Was the buyer a customer that just liked the business?
➢ How did you determine the value?
➢ What kind of advice do you have for entrepreneurs?
➢ When you have done a “bonehead” deal, what was the mistake you made?

Key Points made:

➢ I was a political science major so one chance opportunity changed my whole life. (2:40)
➢ We want to find deals where there is a motivated seller. (3:30)
➢ This was a really strong business but there was an urgency to sell. (4:00)
➢ I didn’t have to put any money into it up front. (4:35)
➢ The spa deal came through a referral. (5:00)
➢ I wasn’t interested in being in the spa business for a long time. (5:38)
➢ I like to buy businesses that have been around a long time. They have brand recognition in the community. (6:17)
➢ They had a database of 15,000 customers. Not just leads, but people who had used their services. (6:30)
➢ I asked the seller how often do you contact these people? The seller said “never”. (6:48)
➢ I knew that was a huge opportunity. (7:15)
➢ You walk into a business and see that the employees or doing homework and not upselling. (7:33)
➢ A lot of people don’t see that as an asset that is being underutilized. (7:42)
➢ We ended up tripling the revenues in a couple of months. (8:10)
➢ We sold that business within 6 months of purchase. (8:15)
➢ Most people look at the broken elements and say it’s broken, the smart people look at it as an opportunity. (8:40)
➢ If you can go in and improve something, then sell it, it’s easy to sell. (9:45)
➢ People are afraid that they won’t know what to do. (10:25)
➢ I put a couple of employees to work creating an SOP (Standard Operating Procedures). (10:50)
➢ We ended up with a large notebook, similar to an SOP if you bought a franchise. (11:32)
➢ You have everything you need to not only keep it going but to grow the business. (13:10)
➢ It is easier to sell an asset than a job. (14:00)
➢ As an entrepreneur, it’s easy to get in the mindset of being a martyr and slaving away in the business. (14:13)
➢ I took the most recent 3 months average, and annualized that average and sold at a multiple of the net EBEDA at 2.5. (15:00)
➢ If you can buy something that has been around a long time and have good terms. (17:40)
➢ Go out and create a SOP and show your buyer that they can take the business and grow it to the next level. (18:13)
➢ Sticking to the rules you come up with is important. (20:01)
➢ It had terms, but if it goes to zero, your down payment is gone. (20:25)

Resources Mentioned

http://www.acechapman.com/

Thank you for listening! Please subscribe to the podcast in iTunes and if you enjoyed this interview, leave a 5 star rating and review!

Entrepreneur’s M&A Journal Episode 30-Interview With Brandon Epstein

Brandon Epstein was a partner is a very successful mobile app business that was serving 500,000 users. He sold his 50% share to start a multi-disciplined business focused on entrepreneurial health. Brandon is very transparent about the mistakes he made in the process, and how those lessons learned affect his business planning today.

Entrepreneur’s M&A Journal Episode 28-Interview With Jason Silverman

Jason SilvermanJason M. Silverman is an entrepreneur starting his career as an owner of a martial arts clinic. Upon selling that business he moved into a new business with his wife and coaching other entrepreneurs on how to move forward with their businesses.

Summary:
Jason talks about how came to own his business and the decisions he made while owning these companies, both good and bad. He explains the lessons learned and how he applies these lessons to the business he owns now and he helps other businesses streamline for success.

Main Questions Asked:
➢ Why did you open the particular business that you opened?
➢ When you started the business were you thinking about an exit?
➢ What led you to consider selling the business?
➢ How did you determine the value of the business?
➢ How did you find the buyer?
➢ Did the broker change your valuation expectation?
➢ How long did it take to close the deal?
➢ How do you help people that are thinking about selling or even buying a business?
➢ Are you developing your business right now for the purposes of selling it?

Key Points made:
➢ When I got sick and tired of being sick and tired of my life and my job my wife and I agreed now was the time to make a change. (2:40)
➢ Let’s open a holistic center where we can teach the whole person. (3:40)
➢ I never looked at it (my business) as an entity that first year. (5:00)
➢ Anybody that I coach today, we start with the end in mind, how are you going to sell it? (5:05)
➢ My wife created a Powerful Words character development system. (5:35)
➢ We saw the demand for this at our facility. (6:10)
➢ Everything was executable by someone that wasn’t me. (6:20)
➢ I was no longer paramount to the success of the business. (6:32)
➢ We finally, said let’s pilot this out and see who else is interested in it. (6:50)
➢ I did everything the wrong way. (7:47)
➢ The reality is whatever you get for it is what someone is willing to pay for it. (8:19)
➢ You need to show the extra value. (8:38)
➢ I didn’t want to hold paper on this, but I wanted someone who would keep the business alive. (9:18)
➢ After 6 months of doing my own due diligence and then I went to find a business broker. (9:17)
➢ To close the deal it took 5 months, 3 weeks and 4 days. (10:32)
➢ I did wind up carrying paper for 6 months. (11:08)
➢ Know what you are getting involved in. (11:38)
➢ Go to a business broker first. (11:48)
➢ Understand what the process will be. (11:50)
➢ The problem is we have our own perception of what it should be and when it is different we get pissed off. (11:59)
➢ You may be a great business owner, but you might not be that great at selling the business. (12:22)
➢ Do your research so you are not surprised. (13:40)
➢ Everything I do now is run backwards (we plan on how to sell the company then build it to suit). (14:20)
➢ I know at the end of when it is done, who I can take this business and sell it to. (14:45)
➢ You don’t want to be saddled with a business you can’t sell. (15:00)
➢ We work with the afterschool activity industry. (15:45)
➢ Powerful Words system is how to teach character skills such as respect, empathy, impulse control. (16:08)
➢ They love everything about their business except the business part. (17:25)
➢ There are certain things you do to increase your soul and certain things you do to increase your bank account. (18:25)

Resources Mentioned:
Jason Silverman – www.jasonmsilverman.com
Powerful Words – www.powerfulwords.com
Robyn Silverman, Ph.D. – www.drrobynsilverman.com

Thank you for listening! Please subscribe to the podcast in iTunes and if you enjoyed this interview, leave a 5 star rating and review!

Entrepreneur’s M&A Journal Episode 27-Lessons Learned So Far Part 2

With 25 weekly podcasts in the books, we thought this was a good time to reflect on the lessons learned about buying or selling a business from 25 entrepreneurs who have been there, done that. We came up with six lessons learned. In last week’s episode we looked at lessons learned one through three, this week we talk about lessons learned four through six.

Entrepreneur’s M&A Journal Episode 26-Lessons Learned So Far Part 1

With 25 weekly podcasts in the books, we thought this was a good time to reflect on the lessons learned about buying or selling a business from 25 entrepreneurs who have been there, done that.  We came up with six lessons learned, listen in to this week’s episode and you’ll hear lessons learned one through three.

Entrepreneur’s M&A Journal Episode 25-Interview With Jim Lackey

Jim LackeyJim Lackey sold his company Passport Health Communications to a strategic acquirer twelve years after the company was founded.  Jim takes us through the process of launching the company with an angel investor, then through a growth phase with the help of venture capital, then going through hyper-growth with two rounds of private equity investment before being sold to a strategic acquirer.   Jim offers four practical pieces of advice to entrepreneurs who might be considering going through the M&A cycle.  A visit with Jim Lackey is like an MBA in successful business development.

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Entrepreneur’s M&A Journal Episode 24-Interview With Joel Iglehart

Joel Iglehart is a partner at an Atlanta-based private equity firm, Third Century Investment Associates.   Joel and his partner just completed a growth equity investment is a Texas-based company, and he takes us through the process by which they found and valued the acquisition.

Entrepreneur’s M&A Journal Episode 23-Interview With Jay Binkley

Jay Binkley is general partner of Hermitage Equity Partners, and he explains an innovative recent deal where management of the company he acquired invested with him.  Jay explains when it makes sense for the company owner and/or their management team to stay invested after acquisition by a private equity firm.

Entrepreneur’s M&A Journal Episode 22-Interview With Rick Apple

Rick Apple ran a $15 million venture capital fund before becoming Chief Operating Officer of a fast-growing telecommunications company.  Having evaluated about 200 deals during 2013, Rick uniquely understands the state of private equity and venture capital investing, and very specifically describes how a buyer/investor will evaluate a potential deal.

Entrepreneur’s M&A Journal Episode 20-Interview With Richard Brock

Richard Brock practiced law for a few years before starting a nationally known legal search firm.  When Richard decided to sell the company he had a number of offers, and ended up accepting one that involved cash and rolling over equity into the acquirer’s company.  Hear Richard’s story of how he’d handle that equity rollover if he had it to do all over.

Entrepreneur’s M&A Journal Episode 18-Interview With Steve Vogt

In episode 18 of Entrepreneur’s M&A Journal we take a look back at one of our most popular episodes so far, an interview with Dr. Stephen Vogt.

Dr Stephen Vogt starts a business offering IV infusion care in the home, and within two years an unsolicited buyer makes an offer that was so attractive the ownership group didn’t even need to be negotiate the terms.  Dr Vogt tells the story of going from working for a salary in a hospital pharmacy to relaxing on a golf course in less time than it takes to get a college degree.   Pay particular attention to his advice about preparing your company for sale before you intend to sell it.

Entrepreneur’s M&A Journal Episode 17-Interview With Mason Myers

Mason Myers is a Silicon Valley based private equity investor who follows the acquisition strategy of Warren Buffet.  In this week’s episode Myers does a deep dive on how he recently invested to affect the generational transfer of a 25-year old business.  His insight and lessons learned could a business school case study on creativity and patience in the deal process.

Entrepreneur’s M&A Journal Episode 16-Interview With Marc Fortune

Marc Fortune had no money when he bought his company, but nine years later he took it to market when it was generating annual revenue of $150 million.  His advice to check your ego at the door and rely your management team is timeless, though often forgotten.  Sell when the market is ready, not when you are is another gem in Marc’s insightful story.