Episode 143 – Selling a Business: Your attitude can impact your legal bill

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Welcome to the latest episode of the Apex Business Advisors Podcast!

The episode kicks off with an anecdote from Andy about a prospective buyer, emphasizing the significance of clear communication and setting proper expectations in business dealings. Andy and Doug explore the challenges that arise when parties involved in a transaction fail to follow through on commitments and the importance of being a “good steward” of time and resources.

As the conversation unfolds, they discuss a case involving a lengthy purchase agreement that sparked concerns over potential legal costs. Andy and Doug highlight the critical role of attorneys in these situations and how a client’s attitude can significantly impact legal expenses. They offer insights into how paranoia and mistrust can complicate negotiations and drive up legal bills.

Throughout the episode, Andy and Doug share valuable tips on effectively managing attorneys and legal documents to ensure a smooth transaction process. They emphasize the importance of focusing on key negotiation points and maintaining open communication between buyers and sellers to avoid unnecessary complications.

The Raising Cane’s Phenomenon

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Photo Credit: https://www.flickr.com/photos/dave77459/1000050348 License: https://creativecommons.org/licenses/by-nc-sa/2.0/

Not too far from our office, on 69 Hwy, there’s a billboard which has a picture of the rapper/actor Ice T on it, holding an iced tea from the restaurant Raising Cane’s. The tagline reads: “The official iced tea of Ice T.” It will elicit a chuckle from most people, whether or not they ever go into a Raising Cane’s restaurant. But that little piece of advertising points towards a culture and attitude that has made it one of the fastest-growing chains in America.

The Numbers

The company’s first location opened in 1996 in Baton Rouge a few steps from LSU and is known in the company as “the Mothership.” It was an instant hit and on its first day it stayed open until 3:30am. To this day the Mothership closes at 3:30am Thursday through Saturday.

Just under 30 years later, and the franchise is at nearly 900 locations. In the first half of this year, it did $2.3B in revenue, with same-store sales increasing more than 17% in that same period. Average unit volume? $6.2M, which is more than double the quick-service industry average.

The Concept

Founder Todd Graves (who still owns 90% of the chain) originally presented a business plan in college for a restaurant that served chicken finger meals and nothing else. His professor gave him the lowest grade in the class and told him it would never work. He wasn’t daunted and went to numerous bankers anyway. No one took him seriously. So he decided to save up his own dough.

He moved to California and worked 90-hour weeks as a boilermaker, then to Alaska, to work 20 hours a day fishing for sockeye salmon. With enough money in his pocket, he came back to Louisiana, took out an SBA loan, and after being dissuaded not to call it “Sockeye’s Chicken Fingers,” it became “Raising Cane’s,” after his dog.

While it is primarily a chicken finger restaurant (strange to even read that phrase out loud), it does also feature Texas Toast and a chicken sandwich. Fans of the restaurant will tell you about how good Cane’s sauce is (Google will tell you it’s probably mayo, ketchup, Worcestershire sauce, pepper, and garlic), and even more interesting, people are fans of the pebble ice that goes in the cold drinks (like the aforementioned iced tea).

Success

So what were the keys to success for Todd, and what we as business owners can take away from this story?

  1. Mentorship: Todd was mentored by Andrew Cherng, co-founder of Panda Express. Todd was inspired by Cherng’s story and took to heart the importance of investing in employees, customer service, and quality real estate. Cherng also provided a model of growing methodically, not quickly.
  2. Do One Thing Well: Let’s be fair to Todd’s professor: a chicken finger restaurant probably never really occurred to anyone as a recipe for success, and in the hands of less committed people, it might have failed. Todd focused on winning on the chicken fingers front and fans often call the fingers “crunchy on the outside, juicy on the inside.” He’s created a category of one.
  3. Have fun: You won’t find boring decor inside the restaurants. From an Elvis picture near the soda fountain, to Texas sports memorabilia, to bright interiors and high ceilings, customers often find the interiors of the restaurants “comfortable.” The fun isn’t just aimed at customers. Employees are known as “Caniacs” and are known for friendly and enthusiastic attitudes. They are empowered to go above and beyond for customers, and that attitude is often reflected in reviews about the restaurants.

A friendly reminder: you don’t have to move to Alaska after getting turned down by a bunch of bankers, work 20-hour days, then save up and build a business from scratch. We can help you buy one from someone who already did all that. Give us a call today.

Episode 142 – Your best ability is Availability

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In this episode, Andy and Doug focus on the critical role of availability of buyers and sellers. The episode highlights a real-world scenario involving a stalled deal due to lack of availability from both parties. Andy and Doug discuss the importance of prioritizing communication during the due diligence phase and the potential consequences of neglecting this crucial aspect. They share insights from their experiences, emphasizing the need for timely responses and adaptability, even amidst personal commitments like vacations or conventions.

Know Your Broker: Tina Youngblood

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Know Your Broker: Tina YoungbloodAll our brokers bring their career experiences into their role as brokers. One of our newest brokers, Tina Youngblood, has experienced firsthand what it takes to get a business ready to sell and then take it to market and sell it. She has M&A experience in large deals (>$400m) and in small deals (<$2m), but as she says, “The size of the deal doesn’t matter and the industry doesn’t matter. What matters is that the buyer understands the importance of protecting legacy and that the seller trusts the buyer to do just that with his or her life’s work.”

Tina’s understanding of protecting legacy comes from a software development company that she was asked to lead through a financial and cultural turnaround. During the turnaround, she got to know the employees very well – including their spouses, children and even their pets. They became the legacy that she wanted to protect. So when the time came to search for a buyer, she sought those who would embrace the family culture that her team had created and who would value the employees.

She found that buyer in an unlikely place (she thought at the time) – a private equity firm that was consolidating software development companies with the intent to hold them for the long term. Her prior experience with private equity was quite different, so this notion of a long-term investment horizon surprised her. “I think private equity firms had a reputation for buying, leveraging, and then quickly selling in 3-5 years, which didn’t allow for companies to think strategically in terms of growth opportunities. I truly believe that those firms are changing, and I see them now investing more long term, being strategic partners, not just financial investors, and working alongside sellers to achieve growth goals.”

She enjoys bringing her diverse management experience to the broker world, and her Ph.D. in Accounting along with her CPA designation has made her the “numbers doctor” in our office. While it’s been a minute since she taught accounting at Miami University, she says that the foundational knowledge is still there and helps her gain a deeper understanding of the sellers’ businesses that she gets to represent.

When she’s not at work (sometimes alongside our very own Chuck Campbell) you’re going to find her cooking, shaking up some cocktails, or hitting balls out on the golf course. She splits her time between Palm Springs and Kansas City, and has a cockalier (this is a cocker spaniel/Cavalier King Charles spaniel, for the uninitiated) named Oliver who she firmly believes is “the sweetest dog ever.”

Episode 141 – A Smooth Transaction

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Welcome back to the Apex Business Advisors podcast, where hosts Andy Cavanaugh and Doug Hubler discuss the intricacies of a successful business deals. With insights into the sometimes tumultuous world of business transactions, Andy and Doug offer a refreshing look at a deal that went right, emphasizing the lessons learned and the factors contributing to its success. This episode is a testament to the power of effective communication, preparation, and the right buyer-seller chemistry in achieving successful business deals.

6 Leadership Styles to Deploy In Your Business

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6 Leadership Styles to Deploy In Your BusinessSports is perhaps the most obvious example of the need to change tactics and strategies based on the situation. The same is true for parenting and business ownership: one size does not fit all when it comes to the people you manage. The best leaders change their styles to fit a situation in their business or a given employee.

In his article Leadership that Gets Results, Daniel Goleman shares these six leadership styles:

  • Coercive (aka “do what I say”)
  • Authoritative (characterized by “come with me” actions)
  • Affiliative (a people-first approach)
  • Democratic (getting input)
  • Pacesetting (sets high standards and personally meets them)
  • Coaching (prioritizes personal development)

As you read through these styles you not only may realize that all these styles are necessary at some point in the life of a business, but that great leaders cycle through several of them in the course of a day. Now let’s briefly look at each style and the best times to deploy them.

Coercive Style

This style is best for a crisis or to get moving on a turnaround. Team members need to be told what fires to fight and when they need to be extinguished by. However, outside of a crisis this style will have an overall corrosive effect on company culture and will be ill-remembered in the long-term.

Authoritative Style

This style is related to casting a vision that your team can follow. This can be to pivot within products and services you already offer, or to create an entirely new line of business. This is a style that works both short- and long-term.

Affiliative Style

While many “team-building” activities are horrible, the goal behind such activities is laudable: making sure your team members know each other not just as technicians and colleagues, but potentially as friends or at least acquaintances. This leadership style seeks to create relationships and open alternative lines of communication not just for conflict resolution, but for business initiatives. This is a leadership style that should always be running in the background for a company that values culture.

Democratic Style

The downside of this style means being drowned in committees and endless meetings, but when deployed correctly, it ensures that employees feel included in decisions and future planning. For management, it also ensures buy-in and consensus for the most important decisions. This style should almost always be deployed with key staff at major turning points for the business but is not wise for ongoing daily operations.

Pacesetting Style

This style is best deployed for a demoralized team that has been led poorly. A pacesetting leader can come in, work side-by-side with the team and offer a “reset” from previous poor leadership. The danger of this can be in burnout, and in the pacesetter not being self-aware (not everyone can or should work 12 hour days). This style is best deployed for a sprint or a deadline but in the medium to long-term it will have a damaging effect, like the Coercive Style can.

Coaching Style

If you’re not deploying this style with your team members, you are, as the young people say these days, “doing it wrong.” While almost all employees value a paycheck, they also value interest in their personal and professional development. How much do you know about what motivates your team members or where they see themselves in the next 3-5 years. If you don’t know the answers to these questions (or even basics, like the name of a spouse or children) you’re not going to retain staff.

Willpower can build a business, but it’s management and culture that helps scale and become sustainable over the long term. Do you have the right culture in place for a future sale? Let’s talk.