The Wise Exit

E18: Greg Packer

Todd: [00:00:00] Welcome to the Cashing Out Podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve.
Today I have a fantastic guest from my men's league hockey team and serial entrepreneur, Greg Packer. Greg was born in Detroit. He graduated from the University of Michigan (go blue), and went on to build two large professional employer organizations or PEOs. Greg built his first PEO Amstaff right outta college and sold the business eventually to ADP, which rebranded as ADP Total Source, and at ADP Greg built the business to over $700 million in annual payroll which created one of the most profitable business lines for ADP. At the time, Greg left ADP for retirement, but in 2000, after a year of coaching his kids' hockey and lacrosse teams, he decided to get the [00:01:00] band back together and build another PEO. His latest company, AccessPoint grows not only organically, but also by acquiring other businesses.

Today, AccessPoint services more than 330,000 work site employees across all 50 states. In our conversation, Greg describes his entrepreneurial journey and how company culture, recurring revenue, and HR due diligence helped him to not only sell his companies, but how he measures the companies he acquires today.

I hope you enjoy my conversation with Greg Packer.
So Greg, thank you so much for being here. I really appreciate you taking the time particularly. We know each other, uh, outside of business on the ice, where, you know, some of my best friends are created. So, I appreciate you being here. I know you talking about your exits and your experience is gonna be kind of gold for our founders, but when you agreed to take this time slot, I had no problem bumping Mark Cuban.

So thank you for being here.

Greg: Hopefully I [00:02:00] provide a better interview than Mark, so Yes, yes, and happy to be here. Thanks for the, the invitation.

Todd: So, like I said, I like to start these interviews with how we know each other, and I think it was, we're probably both on the ice at Cranbrook, and you may have stolen the puck from me.
I slashed you in the back. You hit me over the head, and then we're like buddies in the locker room afterwards. But there's no better place right to, for me, making friends than, uh, On the ice and in the locker room. So I think that's, I think that's where we first met us out on the ice.

Greg: I probably would recall it differently. I, I doubt I stole the puck from you, . You're far more accomplished player than I am. Probably about half my age.

Todd: My one request out on the ice would get your son Spencer to slow down a little bit cuz I took a lot of heat. I think he walked around me three times. Four, three way breakaways and three goals like last week on Wednesday.

And I. I have still not heard the end of that.

Greg: He does have the gift of speed and the speed makes a difference on the ice as we have both done.

Todd: He's a phenomenal player, right? Played at Miami, Ohio. He did. That's fantastic. All right, [00:03:00] so although we like to talk about the exit, maybe you could take us back to, you graduate from the University of Michigan, from college Go blue, and you jump right in to starting a company.
Can you take us a little. Through that experience. Sure.

Greg: I'll give you a quick recap. I, uh, was actually trying to decide for sure what I was gonna do. I was contemplating, you know, going into a, a law school MBA program at Michigan. Uh, they had a special program, I dunno if they still have it, but it was a, a, an abbreviated program by doing both.
And, uh, somebody approached my dad who had a local. , um, business consulting sort of business about getting into this industry. That was at then, then called employee leasing. Yeah. Not a very good term here in the us so, uh, I went to a meeting with him, explored that.
It sounded interesting. It sounded like a novel, new way to do business. So I thought, well, I'll give it a shot. [00:04:00] So I put my academic career on hold and got into that business with a company called Omnist Staff out of Dallas, Texas. So I sort of introduced this business concept to the state of Michigan, and about 15 months later I got a call from someone I'd become close to in Dallas that said, Hey, the IRS is in here, raiding these guys.

They're probably gonna go belly up. Tell your clients not to send any more. So I sort of dealt with that, and part of dealing with that was to go around and meet with every one of my, I had about 15 clients at the time, meet with them all face to face and say, listen, I don't really know the answers to these questions, but I know you shouldn't send any more money and any checks that they've sent you for your employees should be cashed immediately. So we helped get through all that. And then, uh, it was sort of an odd scenario because here I went in there feeling like I just cost these guys four to five weeks worth of payroll and benefits and other expenses. Mm-hmm. , that's sort of tough to take. These are all smaller companies, typically, you know, eight to 12 employee size or organizations, but that's relative pain.
Yeah. [00:05:00] And. Almost every one of them said to, to me, some version of, gee, Greg, new industries often struggle, but you know, gee, if you could find someone else that could do this, we really liked the value we received from that business. You know, not having to deal with employees and compliance and headaches and shop for insurance.

Can you find someone else? And I'm like, you kidding me? 23 years old and you want to trust me again? Yeah. Yeah. And that was around the time that I think it was Paul Esther's son had defrauded a bunch of people. He was the former chairman of General Motors. Okay. And, uh, I was thinking I maybe had trashed my dad's reputation in the community.

So I, uh, thought about it for a couple days and went to my mom who had a. And the accounting degree she wasn't using. I said, Hey mom, if you can help me start a business that, and I pointed to the brochure, I said, I can sell what's in this brochure. Yep, yep. If that can sell it so well, people can lose a month's worth of payroll and they wanna do it again with me.

Yep. Yep. So that was the, the starting point for Amap. That's great.
Todd: Like I love hearing the stories where entrepreneurs are starting businesses with customers in hand. Right. Not dreaming about what a customer may want. [00:06:00] Right. And then testing it after you've built it and lost a lot of money. You're going in with people raising their hand saying, we bought this before.

we want it again. And trusting you, frankly, right? After having your, I guess, previous employer go bankrupt. Right? That's a freaking great beginning. All right, so that takes on a journey. You're hiring a lot of people, you're growing, and then you're getting to the point where somebody's interested in buying you.

And I think one of the things I'm interested is what did you build that was so valuable to somebody else? Or what are the attributes of that company that made it attractive for others to wanna.
Greg: Well, what I've learned over the years is that buyers, especially the buyers who ended up buying us like recurring revenue.

Yep. So, uh, I didn't know it at the time, but we were growing and scaling. I was sort of learning as I went on. I was 35, 36 years old, and we were looking at, gee, what, what should we do next? And by then I had hired [00:07:00] a cfo, I had a treasury management guy on my team. Actually, I had a COO and a cfo and they came to me and said, you know, we're seeing valuations in the marketplace.
You really need to think about exploring the market. Yep. Exploring the, you know, what options exist out there. So, you know, we were getting calls all the time, so we decided to start exploring and we had a discussion and decided, okay, if we can get X, then X will provide a safety net for my. That's consistent with what, you know, this business is generating for me now, I have to seriously consider that anything that's at X or above.

So we reached out to a, a local brokerage firm, Ron and Company, and engaged them to help us start looking at some different options. And the first, you know, out and out offer we got was like six times x. , the acts that we had identified as our Okay. You know, what we needed to be at. Yeah. So I'm a slow learner, but not that slow.

I thought , we, we [00:08:00] gotta go down this path. So, uh, I think I did adjust very quickly to not being caught up in the emotion of holding onto the business. I, I recognized that at that point that it was an easy decision. I, I needed to monetize that and then, you know, see where I went from there.

Todd: So I think two things I really like is that you have some, not necessarily external, but a CFO.
That's telling you, Hey, we need to evaluate what is the value of our company today, right? How does the market see it? So that's great to kind of get that advice cuz every entrepreneur really at each stage needs to understand. To either go forward or sell, that is a return on investment decision, right?
And if you take the emotion out, it may be better to sell today than wait four years and be incrementally worth more. And the world changes as we've seen, you know, in the last five years pretty dramatically. So valuations can really swing. So you really should be taking stock of what that value is. I'm interested, so when you figured out X, what you personally are interested in selling, We [00:09:00] take that number really, really seriously.

So we want all of our entrepreneurs, or considering a sale to go through an exercise with a private wealth manager, right? It can be somebody we introduce or somebody that they already have to say, what are the next stages of life? Do I wanna put my kids through college? Do I wanna retire? Do I wanna buy a house?

Whatever those things are. What are the. And then come back to a number that makes sense cuz maybe you shouldn't be selling this year, maybe you're not gonna get that valuation. So you had X in your head and did you come through to that number through like rigorous analysis? Did you have help coming to that number or do you just knew right.

This is enough to take care of me.

Greg: My CFO at the time was a pretty accomplished guy. Yeah. Bright guy. So, Helped make those calculations. I mean, I had a very comfortable lifestyle already. I mean, uh, you know, I had a nice car, I had a nice home. You know, there was, I had lots of the fruits of my labor already for the taking for me.
So really the [00:10:00] calculation came down to what do I need to be able to cash out for, to then in invest and maintain at least this, we're slightly, you know, continuing to have some growth. Yeah. But I was also 35, 36 years. So it was like, I'm not done working. Mm-hmm. , I'm not, you know, I don't have to be set for the next five or six generations of my family.

Yeah. Um, that was really what our thought process was at that point in time. Obviously, when we, you know, put our line in the water and the first, you know, fish was six x five, six times x, that changed our thinking altogether.

Todd: That's great. Now you figured out who. Buyer was through an investment bank that the group that you hired her.

Greg: The first one was, but then as we, we looked more at that particular buyer. Yeah. They had a really high, you know, valuation. They were willing to, but the, the terms were not acceptable and the, yeah. Yeah. The um, Strength and viability of them as a buyer was not very appealing. So our ultimate deal was not quite that generous.

[00:11:00] Yep. But it was with, you know, a much, much more solid purchaser.
Todd: Can you talk a little bit more about that, like the details, was it an earnout that was causing a problem with a group that was trying to finance an acquisition? Because it's a really important decision. You don't always want to go with top price.

Right? There's a fit and there's potentially an earnout. If it doesn't happen, can hurt you. Right.

Greg: So, I mean, this is quite a long time, you know, 25 years ago, 1997. Okay. That's when we actually sold, so we were contemplating these things in 95 and 96. I think every offer that was presented was a pooling transaction type offer.

So they were public entities, but as you know, there's all sorts of different forms of public entities. Yeah. The one in particular was a public entity, but it was a very sort of segregated. Sort of sub entity of that public entity. So they presented it as if their public entity, which is a name that probably you would recognize if I was to [00:12:00] share it, but they weren't really standing behind the deal.
Got it. So our industry was a new industry. They were a new player to our industry. And the biggest thing that I recall from that timeframe was that I didn't think that Wall Street in the investment banking world really understood our industry. Okay. And that was part of what the thought process was, is that if these guys are willing to.

This much more money. Yeah. Than I, as someone who've been in this business for 10, 15 years. Think it's worth. Yeah. That's how we'd come to X originally. Yeah. We have to take advantage of this confusion in the marketplace. In fact, I remember going to our, we had a, a trade association meeting. I was on the board of our trade association in Hawaii.

Yeah. And we went in and they were ready for the annual meeting for the vote. And I remember commenting to our executive director, I said, you got the signs wrong. He goes, well, I said, you have members and guests. He goes, well, what should they be? I said, they should be sharks. And. Because there was so much interest in buying companies in our space at that point in time.

Yep, yep. Um, you know, that's before TriNet went public. Insperity went public before Paychecks got in the space, before ADP got in the [00:13:00] space. So they were trying to figure it out. Now they maybe knew a lot more than I did because this recurring revenue model was so appealing to them. And I think that they were envisioning that you get to scale with that recurring revenue model, which is where we're at now.

Yeah. With my current enter. and each new client that comes on board, 85, 90% of the revenue drops to the bottom line. Yeah. So, you know, I think that was our thought process then was just maintaining a comfortable standard of living and protecting my kids, knowing they'd be able to go to co, you know, just like creating a safety net.

Todd: Yeah. And then that's great growing from there. Maybe just touch on, um, the recurring revenue piece. Right. So that's what we. Every day when companies come to us, what is the recurring revenue piece? What does churn look like? What is lifetime value of that kind of recurring revenue and the growth rate behind it?

So today those are pretty kind of well understood pieces of value, and it seems like when you were doing this, this was a little bit of a [00:14:00] surprise, but one buyer jumps out and says, oh my gosh, we want to pay big on that recurring revenue. Were there others? There are clearly others that saw the same kind of writing on the wall.

They valued it similarly, not quite as high.

Greg: I think the light bulb was coming out for just about everybody. The one company that, you know, out of the gate had the high offer for us. I mean, we, we closed our deal at probably 80% of that number. Mm-hmm. , so it was still great. A much more robust number than we had expected.

But you know, our business. We bring on clients and we manage their, their workforce, their employees, the compliance. So a big part of that is payroll. We have a very sticky relationship. Once they bring us on board, it's vastly easier just to stay with us. Mm-hmm. , you know, I like to say that the worst companies in our industry have an 80, 85% client retention rate.

In most industries, people would, you know, kill for that. Kill for that. Yeah. So my first company, our climate retention was north than 95. So, you know, we would measure client relationships in 10 [00:15:00] year increments to figure that with the clients we brought on today. Yeah. We felt there was a 90% like that they would be there in 10 years.

Wow. Um, and today in my second business, we have clients that, you know, that company's been in business for 22 years, and we have clients that have been with us for 22 years.

Todd: So you sell the business and then that business gets sold again? Is that how it worked?
Greg: Yeah. We sort of had like a little micro step.

We sold the business to a guy who I knew well. Who I would say was just a little bit ahead of the game from where I was also far more professionally trained. Uh, he was Harvard undergrad, Harvard b, he and his partner both had those designations. They had both been senior level executives with Pepsi. They were both Cuban in immigrants based in Miami.

They had a lot of connections. So I think some of those relationships helped them get access to private equity, investment and guidance on how to go about becoming a public entity. Yep. So when they approached me, they were guys I was comfortable with that I knew I had a [00:16:00] familiarity with. Still wanted to dot the is and cross the T's with some due diligence, but like the story, I respected them.
Yeah. So it made the transaction relatively. And the structure of the transaction was the pooling of interest transaction. So basically I wasn't monetizing everything right away. I had, you know, about a third of what the value I was getting access to. I could monetize, but the rest of it just became very clearly identifiable.

And then 10 or 11 months later, we all worked together to spin that into a transaction with adp. Nice. So they were starting a, a business in our. and had acquired a small company, but we were. That next acquisition of this company, Vincam was our name at that point. Yep. Spurred them to tremendous growth. And now I actually continue to be good friends with Carlos Rodriguez, who just stepped down as CEO, but I think that their PEO division, ADP Total Source is the most profitable.

Business unit within the whole ADP spectrum, so that's fantastic.

Todd: Yeah, I, I read a [00:17:00] little bit about that. I didn't know how long ago that was, uh, written, but yeah, the most profitable division for ADP is pretty impressive. That's amazing. Yeah. All right, so ultimately you end up working at ADP for a little bit and then decide, okay, it's time to.
To retire? Like what, what were you thinking?

Greg: Yeah, I like to say I worked at ADP long enough to confirm I was not a Fortune 38 executive. Yeah. Both myself and to them. Yeah. And so actually, uh, it is interesting because Carlos, the, the recently re uh, retired or stepping down CEO, he's gonna continue on the board.

I believe he was actually our due diligence guy when we did our deal with vin. . Okay. And so, you know, he was out. I actually took him, since we have the connection to hockey, I took him to the, uh, red Wings Avalanche Revenge game. That was his very first hockey game ever in his life. Yep. And about halfway through the the game, he turns to me and says, are all hockey games like this?

I'm like, everyone, Carlos, they're all just like this. It's like I'm getting tickets to the Florida Panthers when I get back to Miami. So it just wasn't for me. By then, Carlos was the president [00:18:00] of that division with the ADP Total Source. We had a situation where we had some copy machines breakdown in our office and we were advised that we had to work with the, uh, I think it was the office equipment requisition department.

Yeah. Yeah. That might have been the official title, but that's what they did. Yeah. And it was gonna be four to six weeks, and they had a line on some refurbished machines through, you know, the Detroit public school system. And I'm like, we need a copy machine today. Yeah. So I just used my American Express card, bought one and put it on my expense.

And so my first call with Casa Greg, we can't, you can't, you know, back then a copy machine was and printer was $10,000. You can't be expecting $10,000 pieces of office. When we have a, a process and a procedure and I'm like, . Well, my process fixed the problem. Yeah. We needed a, a machine. Yeah. , we were printing proposals over at, you know, the FedEx store.

Yeah. And then, you know, I was somewhat of an absentee [00:19:00] ceo, e o for my division. I was a responsible for the Midwest division. But uh, again, my area was one of the most profitable divisions within our subdivision. And, um, I sort of had glommed on to remote work a little early in the game and, um, some of the people in, uh, New Jersey and Miami weren't happy that I was taking calls from my boat on Lake Charlevoix and Lake Michigan.

And yeah, it's just a company like ADP doesn't have room for a lot of entrepreneurial mavericks within their fabric. They like, you know, you need to show up in your blue suit, your red tie, your black shoes, and you know, do your job. . I mean, your job might just be working from nine till five, but they just don't have that much room for uniqueness,

Todd: I would say.

Yeah. I mean, I guess that's the reality, right? When you have the entrepreneurial blood flowing through your veins, you're gonna just go solve problems and you're gonna get work done right in the rules that guide everyone else may not necessarily apply. All right, so anyway, you finish with ADP.
Greg: So we had, we had that conversation and agreed that I would, you know, step aside, I'd be available for consulting [00:20:00] and stuff like that.

And I had a non-compete agreement, but my non-compete agreement was peculiarly written and allowed me to consult and advise mm-hmm. , but not have equity or an employment position. So six months later I got a call from my former VP of Sales. He said, Hey, I'm, I'm miserable here as well. Can you know, we need to start a new.

Those calls started becoming once a month, then once a week. Then when they got to be like daily, like, okay, well let's get together and talk about it. Uh, my father-in-law coincidentally, was leaving, um, a mortgage banking situation that he had been a senior executive at, and they had been sold. So he was looking for something to do.

So the three of us got together and, uh, decided that we would help form this company. I couldn't be technically and specifically involved, but I could consult and advise. Sure. So I consulted and advise to that, and we started my company Access point. Yep. That was in early 2000, late 1999. Yep. I lasted at ADP from [00:21:00] 1997 until the middle of 1999.

Yep. End of the summer. And then, so six months later we, we ended up starting Access. And, you know, we, we were able to hire a lot of the, the people who had been with us before. Out of our first 25 new hires, 21 or 22 came from my old company, which actually got, I was in actually in a conversation with Carlos at a trade association meeting, and I won't name this other guy, but.

Someone who was then running the Total Source division came up and was like angry with me cuz I was stealing all their employees. Yep. And I said, well, hold on, mark. I mean they're, they're leaving a Fortune 50 company. Yep. With fabulous stock options to go with a startup and taking 20% pay cuts. I mean, am I stealing them or are you pushing 'em out the door?

Yeah. So in Carlos turned him and said, he makes a good point, , what do you have to say for yourself? So started that company and. AVP is a fabulous company. I, I continue to be a, a, a shareholder, but what I learned from that process is it was really hard for them to manage and [00:22:00] support clients the way we were able to as a small, more nimble company.

Sure. And we could take risks, especially in the sales and underwriting process because we were sitting down with these prospective clients on looking 'em in the eye. And it was me deciding whether I wanted to partner with this. or not. Mm-hmm. as opposed to having to have a structure in place where you had people who were not shareholders, who weren't responsible for the downside risk making those decisions as part of a, an underwriting process and structure.

So, uh, it allowed us to bring on some clients that, you know, probably weren't as appealing to adp. So we had nice growth and, you know, I was back in, in between, I had gotten into the real estate world. Yeah. I was in real estate long enough to learn that it's not a people business, it's a transactional business.

I'm not a transactional Okay. Kind of guy. That's what brought me back to, to my roots, I guess.
Todd: I think it's probably worth mentioning, right? I'm, I'm, I'm guessing a little bit, right? But if you are chairman of your national association, you probably have built a lot of credibility, a lot of respect. You haven't [00:23:00] burned bridges, so it's not surprising that people have worked with you before, want to work with you again, even at a pay cut.

So you might have had the stars align with the father-in-law and you know, a former employee say, we gotta do something. We've gotta do something. But you clearly have this superpower, right, of bringing the right people together and then treating customers in a very kind of personal, handholding way that's making Access Point really successful today.

Right. You've been doing it now 23 years.

Greg: AccessPoint’s been around for 23 years. Yeah, I, I mean, I don't know if it's superpowers. I think. We care. We, that's actually our core value is care about care represe. You know, we're committed, adaptable, resilient, and exceptional. And it's not something that we like put on a memo and sent out to our employees.

Said, Hey, you need to start being more like this. You need to start caring more. Yeah. What we did is we looked at our best employees and started describing them in a group discussion, said, Hey, what, what makes them such a great employee? Yeah. And the first word I read in his mouth was all, was that they [00:24:00] care.

They just, they care about solving these problems. Cause at the end of the day, that's what we're doing is we're solving the problems for our clients and their. , but part of caring was being, you know, committed, committed to, to getting the job done. Because a lot of times we're dealing with a problem that relates to somebody's payroll or paycheck.

They need to buy groceries this week, or their health insurance. They may be having a baby this month. We need to be adaptable because a lot of times the client calls and they're screaming and yelling at us about a problem isn't our fault. It's we didn't create the problem. Yep. Their local insurance guy did, or somebody else did.

You know, we have to help solve it. So we have to also then be resilient as a, a result as well. And then we sort of stumbled upon a process. Uh, I was fortunate to meet Peter Nordstrom when they opened up the Nordstrom's here in uh, Somerset. I had lunch with him and a couple other guys, and one of the guys asked them about Nordstrom's u cuz they have this great, you know, customer service training center.
He goes, yeah. He goes, that sounds great. I wish we did. He goes, We just try to hire nice people that care and teach 'em how to run a cash [00:25:00] register. And that's kind of what I did in building my business. Just to try to hire nice people that care, but then also care about them, you know? And yeah. You know, tell them that, you know, if they get an opportunity to go somewhere else, help encourage them to do that.

Cuz then maybe they'll come back after they've learned what they can learn there and be of more value to us.

Todd: So what I'm hearing, right, culture is incredibly important to the success of your business now. , you know, your company has been growing, right? You're growing organically through your methods and your employees methods, but you also are acquiring companies, new business units, or just expanding upon your formula.

How important is culture when you are going out and, and buying companies to grow?

Greg: I think it's very important. You know, in the course of my career, I've been involved, I think in 13 or 14 different transactions. Wow. So I was on, I was on the, the selling side. Three. And on the buying side of the rest, and the ones that didn't work out well, uh, none of them worked out horribly.
But the ones that didn't work out [00:26:00] well are as well as I would've liked were because we didn't have cultural alignment going in. we acquired a company in, uh, grand Rapids, Michigan. And, you know, we lost most of the clients and we lost all of the employees. But that company had been rated by the I, we were literally in the middle of the transaction negotiating with them, and the IRS locked up all their bank accounts, so they were in a lot more trouble than we were aware of.

Yeah. And we then just scrambled, I wouldn't even call it an acquisition, we just offered. Begin taking care of the clients. Yeah. And so as a result, there was no clean handoff. Yeah. So I think culture is incredibly important to, to the equation. Got it.

Todd: So maybe for listeners or fellow founders, is there any advice that you have around kind of preparing your company to be sold?

And not just right before you're [00:27:00] thinking about selling, but you know, you've got certainly. Culture is a big piece. You touched on recurring revenue as drives a lot of value. Are there any, any other things that you think of when you're building a company to make it attractive to buyers?

Greg: I think eliminating surprises.

Okay. Buyers don't like surprises. Not at all. Sometimes it's hard to eliminate surprises because sometimes there are surpris cuz you aren't aware of them either. Yep. But sort of looking at it from that perspective, I think. Sometimes people get caught up too much in trying to massage their numbers to prepare for a sale.

Yep. I think sometimes that generates surprises because the numbers have to be real and achievable, and I think, you know, it's probably wise to go into these transactions recognizing that in most cases, this isn't the first dance for the buyer. For sure. It might be the first or one of the early dances for the seller, but the buyers usually have a pretty.

Knowledgeable team that have seen most things. Yeah. So they're not gonna fall for, [00:28:00] you know, a company that's been losing money for seven straight years, then all of a sudden they're wildly profitable. Right. And half their deaths are empty. So I just think eliminating surprises is good. You know, having a, a good well thought out story, but then also thinking about how can that business run most effective, especially if you're, if you're selling.

a strategic buyer as part of a bigger business unit. Mm-hmm. , like what, how will you blend in and what role can you play or do you want to play in that transitionary process? Yeah.

Todd: Yeah. I think that's a a great point. Certainly the financial side buyers are really sophisticated. So as a founder presenting your business for sale, you are not hiding anything and frankly, If you're hiring the best investment bankers in the world, they're never gonna let you do that.
Quality of earnings is becoming even more important in these sales buyers wanna see it. They want to know the numbers are true, cuz the second you present something that isn't true, they question everything else. And you talked about projections, you're gonna be held to that, right? Your [00:29:00] ultimate outcome is gonna be based on some of those projections.

So you want to be very realistic and be, you can be optimistic like most entrepreneurs are. The one thing that I think access. Brings to an m and a transaction, frankly, is de-risking all of the HR surprises that you could have. We continually are in transactions where an employee raises an issue that probably should have been dealt with years before.

You are paying people the wrong way, whether they're 1099. Contractors, interns, employees, right? It's complicated, and the buyers want to do HR due diligence, and your company really streamlines that for some of the smaller businesses, certainly our clients, right? We have clients today that use your service.
Can you talk a little bit about the benefit of what you're offering today to business owners that are contemplating an m and a transaction?

Greg: The biggest value that we bring is peace of. There aren't gonna be any labor [00:30:00] or HR related surprises if you go into a transaction. Our business model is ideally best delivered to companies that have some sort of a middle management layer, so like 15 to 20 employees or so, and a little bit larger.

but we have all sorts of clients that start out with us with 1, 2, 3 employees. Uh, and we actually would like to get in with a new client then, rather than have, you know, a lot of times they'll say, well, I'm not ready for you yet. I'd like to wait. But what ends up happening a lot of times is clients wait.
And then, especially when you're in a growth oriented startup business mm-hmm. , there are so many other things. that are drawing your attention. Sure. And you know, you can use Augusto or a paycheck or something like that, and payroll is no longer a problem, but it's not really ideal. It's not preparing you to expand other states.

And in this day and age, post Covid, we have all sorts of clients that have three or four employees and they're working in three or four different jurisdictions. Yep. For employees, they've got a West Virginia employee and a California employee and an Austin Texas employee. [00:31:00] And they're based in Michigan or they're based in.

And so employment rules and regulations drive necessities for compliance in every single one of those jurisdictions. Yeah. So I can tell you without a. A client that has 10 or fewer employees that operates in more than two jurisdictions, they can't possibly do it on their own for less than we would do, and they can't possibly be as compliant as they need to be by doing it on their own.

There's just too many moving pieces. But what it does is, is our model prepares them not only for that exit, but it also prepares them to grow. We're able to deliver a benefit solution, a 401K solution, long short-term disability options, things like that to make that small growing employer look and feel like an employer with, with several hundred employees.

Yeah, with the employment package they offer. And also provide them with an online H R I S system that allows them to tap into whatever. Job boards they're searching for talent on so that when the first person first responds with a name and a cell phone [00:32:00] number, that information is captured and never has to be reentered again so that when the person is hired, They get an email, please complete your onboarding experience below.

They click on the link, their cell phone number, their email is already there. They just fill in the blanks and every other form is prepopulated. It's just an experience that you aren't able to deliver as a five or six employee company, and it builds confidence that you're, that you know, you get got your act together.
Yeah, to grow. You know, you only get that one chance to make a great first impression with your employee. . And as I mentioned to you earlier, your first four or five employees are gonna come to you because they believe in your message. Right? You know, they're, they're related to you, they went to school with you, whatever the case might be.

Yep. But when you get to the point where you're hiring, you know, somebody who's, you know, a specialist in a particular area, and they're looking at how do their kids get fed and what are the benefits look like and what's their spouse gonna say? , they're comparing your package to their package that they're, they're with currently, and we make that package a lot more appealing.
Todd: Yep. There's absolutely the value. I see it [00:33:00] hands down, but for us as managers of exit wise, it lets us focus on the things that we're really good at, absolutely. What we wanna focus on and grow the business. From an M and a transaction standpoint, I can personally attest to HR problems being red flags in these transactions at the goal line, right?

So to be able to do the due diligence right, and understand that everything is compliant is hugely valuable. Yeah. I can't understate that. For one of our listeners and our fellow founders, how important getting this stuff right is particularly, like you said, there's employees. You're gonna have employees in every jurisdiction around the country.

In today's world, if you're really truly growing,

Greg: Probably the best example for our local market is, as you know, I mentioned earlier we had done some work with one of Dan Gilbert's groups. Yep. And Dan put it best. He said, Greg, I don't want these founders that I'm investing in being distracted by shopping for health insurance.

Yep. And dealing with workers' comp [00:34:00] audits. I want them focused on growing the business. And we take all those things off the plate and allow that business owner, that entrepreneur, to be focused. Things that are either growth or profit oriented, not distractions.

Todd: Got it. All right. Maybe you can just say where people would find access point, like email, phone, whatever you wanna share.

Greg: Well, my email is greg.packer or gpacker@apteam.com. I can be reached there. So always really enjoy talking to entrepreneurs and founders of businesses. It's, it's really one of the great gifts that I get from being in this business.

We have a thousand or so clients and I'm, I'm constantly amazed at how many different ways there are to make a living in this country. It's, it's a great, the greatest country ever, but it's just, it's amazing because people will always say to me like, what do you specialize in? And until probably three or four years ago, I would say, we don't have more than five or six clients that do the same.

We [00:35:00] now have maybe like 15 dentists. We have like 20 so or so charter schools, but still largely, we don't have more than 25 clients that you could describe as the same type of business.
Todd: I think we're the same, right? I get so much enjoyment about learning how people are making a living and the businesses that they've built, and they're.

Very, very unique. You can say, oh, we've got 10 e-commerce businesses, you know, that we're selling. They're all so different. And to that point, our model is about finding the best investment banker, the best m and a attorney for that specific client. And the best makes such an enormous difference. It's frankly the difference that we talked about before.

You want X, what about five x? That is the difference that real specialists in an m and a engagement can create for our founder. It's hugely rewarding just to learn about how people are. Oh, I love, love it. It's fantastic. All right, so we're trying something a little bit new. We're like, we're, we're on the ice, right?
We're tied, we're going into overtime.

Todd: How did you celebrate with your team?

Greg: We had a little party. It was relatively modest cuz we didn't wanna, you know, rattle everybody's cages.

We were concerned. So it was a very, you know, subdued low key sort of a thing when we did the exit. With ADP, we had much more of a grand celebration. You know, I will say that selling to an experienced buyer is a whole different ballgame. ADP were pros. Yeah. They knew how to roll out the red carpet and have a nice celebration

Todd: Nice. So if you did, how did you [00:37:00] reward yourself for kind of completing that piece of your entrepreneurial journey?

Greg: Ididn't really, like in the moment, I don't know that I really did anything. I mean, within a few months I. What I would call sort of a legacy property up north in Lake Charlevoix.

So it's 20 acres of property on the lake. So it's probably, it's something I wouldn't have done if I hadn't had the, the comfort and the liquidity that that transaction brought. So that was probably my celebratory purchase.

Todd: That's great. The legacy property, I love that family view, be able to use that. And for generations, we've had some guests that come out with pretty cool cars. What was the first car that you bought post transaction?

Greg: Well, I already had a pretty cool car probably in most people's mind. I had a Porsche c4 little convertible, so, so probably the transaction was, I was able to orchestrate having the buyer continue to pay for that and having end up being owned by me.

Todd: That's great. Did you go anywhere on vacation? You said you went to Aspen to kind of ink the transaction, but did you go anywhere, especially with your family?

Greg: Yeah, we didn't really [00:38:00] ink it there. We just sort of finalized it in negotiations, and then the inking process was done with. The PWC guys and everybody else all in a room and back and forth and last minute doting of eyes and crossing of ts.

It's weird. Probably a, a failure on my part. I'm not a big celebratory guy, so we didn't really have any big celebrations. It's just sort of, um, in fact, I, my kids have all done pretty well as athletes and I've always tried to teach them, you know, act like you've been there before. Yeah, yeah. Like you expected it.
Yeah. And so I guess that sort of drives me. Having these huge wild celebrations.

Todd: So yeah, that’s kind of like you on the ice, you, you, you net a few and you just kind of skate back to the ice. I mean, I scored two or three goals the morning.

Greg: You just act like I've done it all the time.

Todd: Absolutely.

Greg: That’s a lie. Just so everybody knows ,

Todd: I was playing golf with this guy who was just fantastic and I was in a bunker, 80 yards out and I'm like, I, I am terrible at golf and I pick some wedge. I don't even know what it is, and I swing. You know, like sand in my face, I don't know what's happening. The ball lands like 10 feet from the hole.
And [00:39:00] like for me, I throw my club up in the air. I got my hands in the air, and he comes over to me and he says, you know, you learn a lot from somebody after they hit a bad shot. And even more after they hit a good one. Act like you've been here before. Yeah. And I was like, I have literally never been here before, so this is my celebration.

Greg: It's kind of funny you say that. I think you've skated with my daughter, uh, Madison as well too. Okay. She is for the audience. She's a, a professional hockey player. Tell me. Done really well. Helping to develop the women's professional. Yep. League and game. So it's kind of a funny story for her because she's literally scored thousands of goals.

Yeah. Now in her career. Yeah. But she, her first year playing organized hockey mini mites, as we all know is what it's called. The teams got invited to come down and scrimmage at the Joe Lewis Arena Ice. Yeah. And then have a little mini scrimmage between periods. Uh, no a shootout, but shootout between periods.

So she had not scored a goal all season her first. She never scored a goal. She's always like, you would just miss, let's just be out. Yeah. Um, you know, she was a girl playing in an all boys game and [00:40:00] sport and, um, so I was kind of shocked when the coach invited her to be one of the shootout players. I'm like, don't you want some who knows how to put the puck in the net?
He goes, he goes, I got a feeling. I got a feeling. So, um, so we now have captured. Forever. A video of her skating down the ice with the announcer at Joe Lewis calling the play. Yep. And he calls her, he refers to her as a young glass, and she goes in, she shoots, she scores and she skates behind the net just like I do this all the time.

That's awesome. No celebration whatsoever. That's awesome. And that's how she scores her goals. She's the leading score in the, the women's professional league. So that's how she acts today still. So, yeah.

Todd: That's unbelievable. So yeah, my, my partner Brian, his son scored a goal in a four one loss. The only goal, And not only does he score, he ends up in the back of the net himself.

Right. So this kid in mini mites, yeah. He lifts it over a goalies pad ends up in the, in the net. So, uh, Sawyer is the one that scored it. So he, we got a very proud dad over here.
Greg: Did he celebrate or did he just walk [00:41:00] away like It happens all the time. The little fist bump… he did the fist bump.

Todd: Nice. So is there one piece of advice that would you would give to your fellow founders? People building businesses that may be going through an m and a process in the near. [00:45:00]

Greg: To be honest with that, listening to what your business model's all about.

I would, I would, honestly, this isn't just to be self-serving. I would encourage 'em to talk to guys like you guys that have, thank you, have, have been involved in a process like this and have the connections. Uh, you know, when I look back at, at the road I've traveled, I'm a hundred percent certain I could have generated more financial value for myself if I'd had guys like you to consult and advise and work with.
Again, I'm not signing up for food stamps next month, anytime soon. Yep. But, um, you. Certainly left some money on the table. So I think having guys that you can trust who aren't just the investment bankers, but are people who have, who've been on the business side of transactions and know how to identify the best financial advisory team.

Todd: Yeah, I appreciate you saying that. I think, uh, you know, we love our sports analogies, so I always like to say, right, you're operating a business that's like the regular season and, but when you, it's time to go sell, you're going into the playoffs. and you want the best possible experts on your team and for us, if you wanna win the Stanley Cup, we can put a [00:46:00] Sidney Crosby on your team.
Um, and that's what we're all about, giving you the best possible talent surrounding you with the dream team in order to create the best outcome. And we know that just absolutely works. So I appreciate, appreciate you saying that. Greg, thank you. This has been really fun. Thank you. Appreciate the time and the advice.

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