Intentional Growth

Linda Nottingham joins me today to talk about her experience selling her healthcare insurance agency. SIN began as a joint venture with a like-minded business partner. After a successful growth in their business, and personal events, Linda’s partner left the company. She recounts what it was like to make that transition.

Eventually, Linda decided to sell her company to a larger insurance company. She had high hopes for the merger in the beginning, but she soon learned what is said around the negotiation table isn’t always honored after the fact. Linda tells me how she bounced back from her disappointing experience and found a new path as a business mentor.

Of all the things you wished you’d known to do, today’s guest has covered a couple of the super important ones in business. Linda Nottingham had the spectacular experience of being on bad terms with her acquirer — both in the sense of poorly worded terms in her sale agreement and being on bad terms with the individuals themselves (and going as far as lawsuits on both sides).

If that doesn’t catch your interest as an entrepreneur, I don’t know what will. Linda’s situation is all-too-common and can happen to anybody, but here are some key points to take away from her experiences.

Everything you do with your partners or potential buyers that pertains to the sale of the business should be documented. Despite wanting to see the best in everybody, you really have to protect yourself. And, honestly, if your buyer is upfront and honest with you, what issue could he or she have with committing verbally agreed-upon terms to paper? So you want to ensure those clauses and stipulations get in there in ink, not just a handshake or verbal agreement.

The one huge boon Linda had working for her was having a buy-sell agreement in place from day one. Before her company earned any revenue or had to make any big decisions, she and her partner sought a professional to write up a buy-sell agreement for them which covered what would happen should one of them need to leave the company. This saved them so much hassle when Joan’s husband got sick and she had to leave the company sooner than anticipated. By following the document they created before a time of stress and need was upon them, Linda and her partner were able to complete their buy-out discussions in 30-40 minutes.

Can you think of how many man hours they saved by doing this early? How much money? And also, how many personal relationships stayed intact by having this document agreed upon in times of cooler heads?

Co

My guest today is Cammie Greif. Cammie is a co-founder of TaxAct. In the mid-1990s, Cammie and three of her former co-workers decided to build a highly profitable tax filing software. With a focus on growth and profit, TaxAct was born.

In 2004, Cammie and her partners sold the business to TA Associates a private equity firm. During today’s episode, Cammie shares what it was like to run a multi-million dollar company and how the sales process worked out for them. She stayed with the company for fourteen years so she has seen a good chunk of the business cycle.

In the mid-2000s, TaxAct was sold again to InfoSpace (now known as Blucora.)  Cammie tells me about walking away and finding a new purpose. We follow Cammie’s story through their humble beginning in the first floor of a former mortuary to being the third biggest tax service software on the market. Tune in for this incredible story!

Profitable businesses. We’d all like one, but how many of us started out thinking, “My business is going to make a profit in year one”? Not many. For our guest today, Cammie Greif, however, that’s exactly what she did. She and her three co-founders decided that profit was their first and foremost step and that they would do whatever they had to do to run a profitable business.

You work hard. We all do. But when it comes to getting your enterprise off the ground, are you willing to go without pay for two years? Very few of us could commit to that just to see the revenue of our business grow so we can reinvest it in our company, rather than pay ourselves. However, Cammie’s own business plan was just that—go in with the bare minimum, work hard and cash in later.

The lessons new entrepreneurs should take (or even repeat entrepreneurs who want to focus on a profit rather than growing the business) from this is: you can make do with a lot less. You don’t need the newest and greatest, unless you’re in the highest of tech businesses. You really don’t need that fancy art, fashionable sitting area or expensive scotch — okay, the scotch maybe… but honestly, there are so many areas you can cut co

My guest today is Corey Northcutt, the founder of the Northcutt agency. The company is highly successful and Corey has built an impressive SEO and Cloud service. However, it wasn’t always that way. Before Northcutt, Corey was a co-founder of Ubiquiti, a web hosting company. That company grew wildly, but it became a nightmare once the four business partners involved began seeing dollar signs.

Corey tells me about his time in a highly political and stressful business. His story is a cautionary tale about how to structure your company in the beginning to maintain a fair balance of power. Corey left his company in a massive blow-up that left him aimless and shell-shocked. He tells me how he found his direction and how he’s done things differently this time around with Northcutt.

Office politics is a little more serious than we give it credit for. On today’s show, we talk through a ‘hostile work environment’ that’s hard to make a joke out of. Corey Northcutt experienced first-hand what it’s like to have your baby ripped away from you—and there was nothing he could do about it.

As Corey found out, it didn’t matter one little bit that he was the originator for Ubiquity, his web hosting company. Yes, he owned the domain name and he had done a lot of the back-end work to get their servers up and running, but in the end, that wasn’t enough to get him anything better than a buyout.

Unless you have the right operating agreements or other paperwork in place that cements roles, expectations, salaries, etc., you lose a lot of your authority (and in this case importance) to a company when you bring on partners. And most of us need partners! Someone has to fund the expansion or figure out how to distribute on a wider scale.

And here’s the other fun factor. Once you bring on your partners, you become a voice among many. While there are a lot of ways this can work for you, there are also a lot of ways it works against you. The biggest detractor to multiple partners (especially without a tie-breaker) is decision making. Your voice, which used to be 100% of the decision making process is now only 25%, for example. So unless at least two of your other partners agree with you, you’ll never have final say on something.

This bleeds into the exit process as well. If everyone is after something a little different, it’s hard to align operational goals, let alone exit ones. Someone wants the most about of cash possible, someone wants to stay on as a developer, someone wants to sit on the board with stock options and earnouts. That’s

My guest today is Anthony Bahr, the vice president of Strategex, a customer research firm. Customer research dives into your customers’ experiences and compiles your strengths and pain points into a presentable report. Our conversation focuses on two aspects of customer due diligence. We look at it from both the buyer’s and seller’s perspective. Strategex serves both parties in a sale to give an honest bigger picture of the company’s worth.

Anthony highlights the benefits of using Strategex to give both the seller and the prospective buyer peace of mind during the negotiation process. He walks through the process his company undergoes when doing customer due diligence and reflects on some of the recurring themes he is seeing in recent research.

Today’s guest provides lots of real-world experience regarding customer due diligence—and he should, as he works for a company that provides in-depth, unbiased reports on this very topic to clients before they buy (or sell) a business.

Let’s start with the big question…

Honestly, this is something I wish we had done before we sold our business. It’s not that we would have wanted to restructure all our contracts or even add a few new customers; rather, we would have been able to address any risks associated with the clients we had at the time and therefore address any possible concerns our buyer had, leading us to possibly better terms or price.

However, we did not, and this is why I started the show.

So what is customer due diligence? It’s something that comes up eventually, usually after an LOI or some other legitimate expression of interest, when a buyer inevitably contacts the clients he or she will be gaining once this deal closes. Essentially, customer due diligence is contacting your current customers and finding out how satisfied they are with your services and if they have any plans on increasing, decreasing or maintaining their present contract with your business.

Sounds simple, so why doesn’t every business do this anyway?

Today’s episode is part 2 of my interview with Bobby Kingsbury, a principal at the private equity firm MCM Capital. During this half of the interview, we are joined by Marc Calcaterra, a shareholder of the Torsion Group. We explore the private equity process from the perspective of the seller. Marc tells me why he chose Bobby and how Bobby helped make the best decision possible for his company. Also, he explains why private equity was the best solution for his situation.

Marc and Bobby walk us through the process they went through to make Action Industries a healthier and more successful business. If you missed part 1 of this interview and topic, go back and listen to episode 91 to get caught up with today’s guests. Trust me, you’ll find some really valuable information in these conversations.

You will remember from last week’s episode with Bobby Kingsbury that we discussed the private equity process and why they might be the best fit for you when it comes time to sell or get funding. Bobby went on to explain his role and that of his company, MCM, in the process and how a seller can best attract this kind of buyer.

Well today, we’re going to see if that’s all bunk from one of Bobby’s own clients. Marc fills us in on what it was like deciding to use private equity, why it was the right choice for him and his businesses and the aftermath of the sale.

In Marc’s very specific case, he had a pre-existing relationship with Bobby and so had already built up a significant amount of trust in him personally as well as professionally. However, even before Marc approached Bobby about the sale, he consulted his business partners about the right avenue to take in terms of the business’ future.

The first key thing here is figuring out what’s in the best interest for the business. Marc didn’t have the capital to buy out all the other owners, and no one else wanted sole proprietorship to take the business to the next level. So, in order to grow the business, they knew they’d need to get an investor or a buyer.  To that end, they explored the various types of buyers out there and found that private equity best aligned with their goals based on the types of deals they offered and the struc