Episode 47 – Anatomy of a Deal with Stephen Heiner Part 1

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In this two-part episode, we are joined by Stephen Heiner to share his experience as a seller working with Apex. Part 1 goes into the pre-listing process, valuation, and marketing of the business. Next week, we’ll discuss what happened after a buyer was attached, the offer process, due diligence, closing the deal, and what happened post-sale.

Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.

7 Rules for Keeping a Deal On Track

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Keeping a Deal On TrackThere are ways that business deals can get off track that occur due to chance or something unexpected. But very often deals blow up because either the buyer or the seller fails to follow an unwritten rule. We’ve put together a short list of those rules to help you keep your transaction where it belongs: on track to a closing.

1. No Surprises

Surprises are fun in real life. Not when you’re going through a business transaction. Disclose everything you think you should and when in doubt, ask your broker. When you uncover a “surprise” in getting the paperwork ready, disclose it as soon as possible so that everyone can make a decision to carry forward (or not) with that knowledge in mind.

2. Silence Isn’t Golden

A transaction is a process built on momentum and part of that momentum is having an open line of communication. This doesn’t mean that you’ll be able to get an item requested for due diligence right away, but it does mean suddenly going radio silent for a week or two in the middle of the deal is unacceptable.

3. Speed Matters

Yes, there’s a mountain of paperwork required for due diligence and for the banks. Yes, getting these bits of paperwork put together faster rather than slower makes a big difference, not just for your own stress, but for the confidence of the other party.

4. Emotions Don’t Help

While you might be very attached to your business — understandably so, as it often represents years of blood, sweat, and tears — you need to set any emotion you have about the business to the side when having conversations about it. 

Don’t take requests or questions personally. This is part of a process that many have gone through before you and many will go through after you. Stay professional.

5. Beware of Texts and Emails

There’s an old rule that says if you think something would be better said by voice or in person, do so. Email and text will always lack the nuance of voice tone or the reality of body language. Mitigate this by refusing to deal with critical, possibly emotional (see Rule #4) issues by email and text, opting either for voice memos, phone calls, or even a Loom video.

6. Face-to-Face Meetings Win

While it’s not always possible to meet face-to-face, the normalization of video meetings because of the pandemic has given us an extra tool to keep both parties talking and seeing that everyone is on the same page. 

When possible, do meet in person as this will help establish rapport that can help you get through tougher parts of the transaction or when you want to hammer out deal points.

7. No Such Thing as a Stupid Question

We all know the hackneyed line about why we don’t “assume” things. Lean into that in a business transaction. If you have a question, ask it. If you have several, ask those. The more clarity there is about every aspect of the transaction, the easier and smoother it will be when it’s time to finally cross that finish line.

We’ve saved a few rules for our clients. Interested in becoming one? Give us a call.

Episode 46 – Misaligned Expectations, The Ultimate Deal Killer

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Throughout the year, the three main reasons deals fell apart at Apex during due diligence were Landlord, Franchise, and Misaligned Expectations. Often, the issues are the Seller’s perceptions of when things should be done versus the actual time it takes to complete the tasks for a buyer. Today, Andy and Doug discuss how aligning expectations and ensuring the lines of communication remain open are critical to a deal’s ultimate success.

Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.

Case Study #69: Know When It’s Time to Go

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Case Study #68: Know When It's Time to GoSaaS businesses have developed a reputation in recent years for being all about the numbers as well as a relentless drive forward. Natalie Nagele and her team at Postmark had been in SaaS for many years and she went the other way, establishing a four day work week and confessed that before getting the business metrics in place for acquisition, she couldn’t tell you customer LTV. That didn’t stop her from getting acquired for a life-changing amount of money by Active Campaign earlier this year.

Built for Speed 

Ever had to reset a password? Or got a notice to retrieve an abandoned online shopping cart? Or clicked on a button that allowed you to send a link from a website or app to someone’s email? That’s transactional email, and most people don’t realize there are services operating that help deliver those emails.

Put another way, a transactional email contains information about an action the recipient has already taken. Broadcast email usually wants to nudge the recipient into taking an action. Particularly in the case of a sale, you want those transactional emails to go out as soon as possible, and Postmark built its reputation on speed.

When Is It a Bad Day vs When Is It Time to Sell?

All business owners have experienced a bad day or a bad week or a bad month. You could lose a key employee, have had to fire a bad one, or just not hit your numbers. You pick yourself up, dust yourself off, and handle what needs to be done. Sometimes you even feel refreshed and rejuvenated when you work through those challenges.

Natalie says that the dividing line between those regular ups and downs and a signal it’s time to sell is the thought, “I can’t do this anymore.” She was nearing that point before the pandemic hit, which temporarily put everything on hold as she focused on making sure the company — and all its team members — were fine. 

She also found herself often dreaming of hotels (a future business venture) which she knew meant that her focus and energy weren’t being put in the company, which wasn’t fair to her team.

But once things stabilized she and her husband (also her business partner in the company) realized that it really was time to let go, and that if she stayed and the team could see that they didn’t really want to be there anymore, that the company would be harmed. The 22 years they had spent building the company came to a happy conclusion when, unsolicited, Active Campaign reached out to see if there could be a deal, and after outlining her “must-haves” to the Active Campaign team, all else in the transaction went smoothly.

Natalie’s Must-Haves

Natalie had quite a few conditions as part of the sale, but the three that really mattered to her were:

  1. No working for the new company. She felt like she had the income she wanted and as we noted above already, after she took time off she wanted to look at a hotel venture. She was happy to have a brief transition period but after that she wanted to head off to retirement.
  2. Four day work week had to be preserved. This was an important step Postmark had taken years earlier and she felt that her employees had built their lives around it and didn’t want a sudden disruption.
  3. Bonus plan. The employees were used to a regular bonus that was tied to performance and she wanted to make sure, at least in the first 12 months, that this was honored. She ended up doubling down on this by sharing 10% of the proceeds of the sale with the team, some of whom also received life-changing amounts of money.

If you’re feeling like it’s finally time to let someone else take your business to the next level, we’d love to help you! Give us a call.

Episode 45 – 2022, A Retrospective

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On this episode of the Apex Business Advisors Podcast, Andy and Doug reflect on a really good 2022 and set the stage for an even better 2023.

Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.

2022 Trends in Business Transactions Continuing into 2023

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2022 Trends in Business Transactions Continuing into 2023Interest rates, buyer confidence, inflation…these are statistics that don’t care about a new year. They will continue whichever way they want whether a ball drops in New York at midnight or not.. But humans do see a lot of significance in a new year, and that invisible line between December 31st and January 1st can be an accelerant for a seller to get a deal closed or a final push for a buyer to finally get serious about buying a business in a new year.

Interest Rates

Interest rates are on a trend line up, which means that the cost of operating a business is going up. So, unless sales are up and margins are staying the same, profitability will be down which means valuations will be down…unless proper steps are taken.

Remedies: work with your bank on strategies to deal with interest rates, whether it be on your line of credit or even a loan you might have.

Buyer Confidence

Before the rain comes you can often smell it or sense it. Market forecasters don’t entirely agree about what is going to happen or when it’s going to happen. That uncertainty translates into “feels like rain” so that is leading to a dip in buyer confidence.

Remedies: Sellers need to continue to stress their fundamentals and brag about their performance in 2020 or 2021, if there’s braggable material there. Unless buyers think whatever is coming next will be worse than extreme Covid lockdowns, they may be able to see through their feelings to the hard, cold numbers.

Inflation

Prices are going up in almost every sector. That means if you haven’t raised prices, you are likely making less money, because your costs have gone up. Some businesses have held the line on pricing in part not to shock customers, in part not to lose market share. But two years on with inflation continuing on, those businesses are seriously considering a price change.

Remedies: raise prices. Raising your prices periodically is a healthy business practice anyway, but even more so when inflation is not a secret. You can also find creative ways to offer customers more perceived value, whether that might be offering a discount on a larger advance purchase than they are used to or asking them to renew a contract for a longer period before you raise prices. Remember that keeping a solid profit margin isn’t just about your business surviving and thriving in the short-term, it’s about a narrative of value in the medium and long-term, particularly if you want to sell.

Seller Fatigue

When we look back at this period in years to come, we might lead the narrative in this way, “And then this happened, and then this happened, and then this happened.” We saw in the last two years that some business owners were already contemplating a sale, but Covid made them tap out sooner. As the issues we mentioned above continue on, many are looking at 2023 with the thought that they don’t want to be in this same position this time next year.

Remedies: explore selling. It’s okay to admit that you’re tired and want to give up. Nobody is supposed to run a business forever. That doesn’t mean we’re going to be able to list and sell your business before the new year (though stranger things have happened) but you should talk to us now so that we have a plan for the new year. When everyone comes back from the holidays you will be ready to go with your listing and be energized that an exit plan is in place.

Pondering other trends we didn’t mention here? We’d love to talk to you about them. Give us a call.

Know Your Broker: Doug Hubler

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Doug HublerDoug Hubler has been a broker for over two decades now, so you might be forgiven for forgetting he had a whole other life before he ever started selling businesses, a life that took him all around the Midwest and up the ranks in the financial world.

Doug’s degree was in finance, so a job with GE Capital was a great opportunity out of the gates and he stayed with them for 14 years, going to Dallas, then Denver, then on to Chicago, where he made a switch to Ford Credit, once again heading back to Colorado (this time to Colorado Springs) to help Ford open up an office under the name Fairlane Credit. But three years later, realizing that not coming up in the auto business or with Ford family connections made it difficult to get things done, he decided to come back to Kansas City and start a remodeling business. Doug admits that back then he didn’t know you could buy a business instead of building one.

But those of you who’ve had experience know that the remodeling business isn’t an easy one, and a couple bad situations later, one with a subcontractor and one with a customer, Doug decided the remodeling business was probably not for him, and decided to see what was available out there.

Want Ads

Younger people will need to ask their elders about these things called “want ads” but there used to be such a thing in printed newspapers, and in between the pages of the Kansas City Star was a sales job for Sunbelt Business Brokers. It had all the expected verbiage of such an ad, including “unlimited earning potential” and “make your own hours.” With a young family to support, Doug grabbed the opportunity.

The big problem? Doug joined in mid-2001 and September 11th happened later that year. All business transactions were paralyzed and for a while, no one was thinking about buying or selling anything. For business brokers, it’s all about surviving your first year or two. That time allows you to build up rapport and a network, and a pipeline that you can begin to harvest in good time. But Doug held on, then thrived, and by 2005 he became a manager at Sunbelt and by 2010 he was in a position to buy the franchise.

Apex Begins

While the franchise model may have made more sense in the early days of Apex, Doug decided to go an independent direction which would allow him to do some marketing and outreach that made more sense in the local market. Since then Apex has gone from strength to strength and is one of the first names people turn to in the area when considering a business transaction in the Main Street and Middle Market sectors.

When he’s not leading the team at Apex (or trying to recruit new team members), Doug keeps busy with his wife, three children, and two grandchildren. He also enjoys acrylic abstract painting, something he does fairly regularly (check out some of his work on Instagram) as an outlet for his own thoughts about what’s going on in the world. When asked about what he enjoys the most about what he does, he responded, “What gets me to come to the office every day is working with a great team of brokers, collaborating and strategizing on their specific deals. Those deals often end up with a seller reaching his/her ultimate retirement goal, and a buyer starting a brand new adventure.”

Doug is always looking for the next Doug Hubler. He can’t put a want ad in the newspaper anymore, so feel free to call us instead!

Episode 44 – Why Do I Need a Business Coach?

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On this episode of the Apex Business Advisors Podcast, Andy and Doug are joined by 15+ year Business Coach Shawn Kinkade. Shawn is a full-time licensed Professional Business Coach and the President of Aspire Business Development, a business strategy, consulting, and coaching company. He joins us to talk about business planning and the purpose and value a business coach can bring to a Small Business owner. You can find out more about Shawn’s work here.

Are you considering selling your business? Are you considering entering the world of entrepreneurship? If so, please get in touch for a FREE consultation. The best way to learn about us is at our website, which includes connecting with Doug, Andy, or the rest of the Apex Team.