The Wise Exit

The Cashing Out Mergers & Acquisitions (M&A) Podcast | E31 | James "Bud" Petcoff

00:00:00:18 - 00:00:22:05
Bud Petcoff
Yes. I mean, when you believe in yourself and you believe in what you're doing, make sure when you make the decision, you make the decision and you put all your efforts into doing it the right way and focus on that and realize you may not know everything and make sure you have the right advice and counsel around you to make the exit benefits on work as well as possible.

00:00:22:23 - 00:00:59:18
Todd Sullivan
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. On today's episode of the Cashing Out podcast, Brian and I speak to James “Bud” Petcoff, a prolific entrepreneur and CEO, but is more than 35 years of insurance industry experience, including founding North Point Insurance Company in 1986, taking it public in 2005 and ultimately selling the business to QBE Holdings in 2008.

00:01:00:07 - 00:01:22:01
Todd Sullivan
Today. But as chairman and CEO of Confer Holdings Inc, his latest insurance company that he founded with his sons, Nick and Andy. In our conversation, we talk about leaning on experts when taking on new challenges, his learnings from a lifetime of entrepreneurship and what it's like building his newest enterprise with his two sons. I hope you enjoy our conversation with Bud Petcoff.

00:01:23:22 - 00:01:50:16
Todd Sullivan
Hey, everyone, Before we get started, I want to tell you about another podcast I've been listening to lately. It's called Startup Savant, and it's put together by some friends of mine over at TRUIC. Now, similar to our podcast, Startup Savant is set out to better educate and support fellow founders in their startup journeys, but they do it by highlighting the day to day struggles and triumphs of current day entrepreneurs, and then they offer useful tools and topics to help level up business owners in any phase of their journey.

00:01:51:09 - 00:02:12:06
Todd Sullivan
Now I've listened to tons of these episodes, but personally I recommend Episode 53 with Adam Nash. Adam is a super interesting guy. He shares stories about his time at LinkedIn with Reid Hoffman. He has great experience working in Venture Capital and he talks about his new mission to enable more generous giving and his new company, Daffy. It's really a great episode.

00:02:12:15 - 00:02:35:19
Todd Sullivan
Once you finish listening to us, check out Startup Savant. We'll put the link in the show notes.

Bud, thank you so much for being here. I've been really excited to hear your story. I know you're friends with my partner Brian, and he's been giving me this background of building just an amazing company in the insurance space, having a big exit and then being able to buy it back.

00:02:35:20 - 00:02:54:10
Todd Sullivan
You've taken companies public. You started companies with. With family members. I know our our listeners and our fellow founders are going to get a ton out of of this conversation. So much so that Mark Cuban actually had this spot. And when we found out that that you wanted it, we just bumped him. So thank you for being here.

00:02:55:07 - 00:03:06:20
Bud Petcoff
Well, at least I was in good company. I mean, now I appreciate the opportunity and I don't quite look at it as quite that successful. But, you know, thank you for the kind words.

00:03:08:04 - 00:03:28:14
Brian Dukes
Well, but, you know, one of the things that I've been excited as we approached this conversation is is really kind of looking all the way back. And we've talked about this a couple of times, but, you know, a lot of young families moving into the same subdivision in the eighties and a lot of the kids growing up watching kind of the success of what what a lot of the households were doing.

00:03:28:20 - 00:03:56:07
Brian Dukes
I always saw you as is, I guess, one of the first kind of business owners that I really knew and understood. I'd always kind of looked at big business working someplace for 30 years as my path, but to see, you know, a different path of a business owner finding great success. I look back really fondly of those those days, and so I was really excited to kind of dip back into those those early years and hear the story about how you started your first insurance company and see where it takes us.

00:03:56:07 - 00:03:57:14
Brian Dukes
So why don't we start there?

00:03:58:17 - 00:04:28:12
Bud Petcoff
Well, back to starting the first insurance company that you kind of got to go back to college where I took insurance classes and decided that that was going to be my major at Michigan State. So when I got out, I knew that I wanted to be in the insurance industry or at least try it. I went to work for an insurance company and as I was working there and I trying to gain all the knowledge I could of what was going on in the industry, I thought being an agent provided an opportunity to build wealth and control your own destiny.

00:04:28:12 - 00:04:54:14
Bud Petcoff
So I left there to become an agent. And then I realized there's a part of the industry that deals with hard to place risks or things that made you companies don't want to write, and those are distributed by wholesalers in the industry. And it occurred to me that the wholesalers have all these agents who are actually working for them and producing the business.

00:04:54:14 - 00:05:32:19
Bud Petcoff
So I wanted to get into that industry and I was able to acquire one company to write Liquor Liability in the early 1980’s, dram shop liability for bars and restaurants, and I was able to build that business up. And at that time a lot of little insurance companies were struggling and it occurred to me that if you service your customers better than the other guy and most of the dollars go out in claims if you are able to put a claims department together that was better than everybody else, you could beat the industry and focus on these very niche businesses that the big companies weren’t in.

00:05:32:19 - 00:05:54:01
Bud Petcoff
So you get to fly under the radar screen of the biggest companies. You don't have to compete with them. And as they were going and getting in trouble, the state of Michigan needed a company and I was able to go borrow a ton of money and take a big risk and form an insurance company in their mid-eighties. And as luck would have it, the laws changed in Michigan in 1986.

00:05:54:01 - 00:06:17:13
Bud Petcoff
We started the company in 1987. Liquor liability became mandatory in May of 1988. We ended up writing in the first year about 25% of all the liquor licenses in Michigan. And over time, we grew that and varied into the property side of it. The general liability side of that, ultimately the worker’s comp side of it. The whole package policy.

00:06:18:15 - 00:06:37:12
Bud Petcoff
And early on it used to take companies a week or two weeks or three weeks to get a quote to an agent. What we were doing was not rocket science and the differences in the the risk were not that great. We were able to put a program together and back then we'd get them a quote within an hour.

00:06:37:12 - 00:06:57:15
Bud Petcoff
And if they found a policy, we'd get it out the next day and you guys would be amazed. But that was before we had computers. So all of this was done by hand on typewriters and with telex machines and all of the above. And by providing exemplary service, we were able to capture a big portion of the market.

00:06:58:04 - 00:07:26:17
Bud Petcoff
And then we really focused on claims. And in Michigan, we ended up hiring our own attorneys to litigate the claims so we could better control the legal cost. And what happened is they became schooled in the type of risks we wrote. So our attorneys were considered the better legal defense for all these lines of business that we were writing and that was kind of the secret sauce that kept us afloat for a number of years.

00:07:27:05 - 00:07:46:04
Brian Dukes
And I guess at what point, as you're finding success in that secret sauce, do you start thinking about exit? Was it inbound interest? Was it you thinking about what that that next step was in your career? How did you think about about that kind of exit process?

00:07:46:04 - 00:08:16:18
Bud Petcoff
I'm a believer that if you're building a great company, someone's going to want to buy it and you can only sell a company if someone wants to buy it. So we were never looking for an exit at that time, but there were inbound requests and it came a time in the late nineties that this company out of Canada kept coming to us, coming to us, coming to us and eventually offered a number that was a huge multiple of book value that I really had to take it.

00:08:18:06 - 00:08:38:11
Bud Petcoff
So that was, that was why we sold you know, I regret a couple of things. I took a large amount in stock which ended up not working out, but I was able to reacquire the business four years later at a big discount, which helped really enhance the returns. So.

00:08:39:00 - 00:09:00:06
Todd Sullivan
Hey, Bud, can we can we step back? So, you know, you've got inbound interest coming, it sounds like, from multiple places over a period of time. And what really triggers you is the size of an offer. So did you did you get an investment banking group? How did you have a sense of that? The value they were offering was really the right offer?

00:09:00:09 - 00:09:29:01
Bud Petcoff
Well, there's metrics and in the industry and there's plenty of data. But even though the computers were in their infancy, there was plenty of access to data to know what kind of multiples of book value and what companies were worth. And it was quite a high multiple of book value. And so I knew what it was. I really didn't use an investment banker the first time and that I regret that as well.

00:09:29:01 - 00:09:37:04
Bud Petcoff
I think I would have been better served to have a professional with me going that through that first sale.

00:09:37:14 - 00:09:37:21
Todd Sullivan
Yeah.

00:09:38:18 - 00:10:01:19
Bud Petcoff
However, having said that, I had purchased a company out of South Florida before that, as we were growing and getting into different geographies and that came through a broker. So I had worked with them, but I in retrospect, I could have used more expertise on my side for that first sale.

00:10:01:23 - 00:10:22:06
Todd Sullivan
But, you know, that's hindsight's 20/20, right? So you you get the number that you're looking for, you end up rolling a good percentage of equity that you think maybe you wouldn't do in hindsight. And maybe that's some of the advice that that a banker could have brought in, really understanding your buyer. Did you know the buyer pretty well when you went into that arrangement?

00:10:22:14 - 00:10:27:05
Bud Petcoff
I did not do enough due diligence on the buyer to understand their entire business.

00:10:27:12 - 00:10:27:20
Todd Sullivan
Okay.

00:10:28:09 - 00:10:46:01
Bud Petcoff
And that was where a banker would have given me better insight and possibly brought other purchasers, even though I knew I got a big number, I probably could have gotten to the same number from a more solid buyer.

00:10:46:20 - 00:11:07:01
Todd Sullivan
Yeah, I think it's a really interesting point. I appreciate you you saying it. The banker is going to do a couple of things for you, right? It's that person's going to have you really well organized. So you're not taking your eye off the ball as you're continuing to grow the business, which is really important. And they can certainly help create a favorable structure.

00:11:07:01 - 00:11:29:01
Todd Sullivan
But as you just said, their ability to bring someone else to the table to not necessarily like get your purchase price, that's higher because it sounds like you really kind of knocked this out of the park. But to get the terms that that are really advantageous to you and close the deal quickly. Right. So there are some big benefits even when somebody is approaching you and going to pay you a big number.

00:11:29:11 - 00:11:33:02
Todd Sullivan
You know, we always encourage our founders to do that, I think. Thank you for sharing that.

00:11:33:11 - 00:12:02:11
Bud Petcoff
Well, entrepreneurs are, I guess, inherently stubborn and they think they know a lot and think they can figure it out. And I have learned over the years that to value the input from other professionals who have experience in the areas they have experience. And I, I think in retrospect, in hindsight, I would have been better served to have more competent people working with me at that time.

00:12:02:23 - 00:12:21:01
Brian Dukes
So you you close on that deal. You, you have an earnout, right? So you're you're likely spending a lot of time with that team or what was that period of time that you stayed with them? Did you officially leave and then buy it back? Or how did you detect kind of it wasn't going the way that you would expected?

00:12:21:10 - 00:12:57:18
Bud Petcoff
It came pretty quick, actually. Some of their other investments they had made. I'm going to pick a number ten investments and insurance companies and probably seven were bad. So as these things started to go bad, the board of directors looked around for someone at the holding company level to figure this out. And so they tapped me to go in and I was kind of running after they moved the CEO out, they we had an accounting firm helping us to maximize value of what was remaining.

00:12:58:06 - 00:13:29:19
Bud Petcoff
And they had the CEO had obtained a significant amount of debt. And so without the underlying companies performing, they had a real issue coming up and we were able to satisfy all the debt holders, pay some of the stockholders back some money. And ultimately during that process, as people were bidding for the assets, our company was only as good as the people in it and the natural purchaser was us.

00:13:31:02 - 00:14:06:04
Bud Petcoff
So even though there would have been other people interested without us staying, they weren't going to buy it and we were a bidder. So that kind of made it difficult for everybody else. So we were able to maneuver our way into acquiring the company back then. One more regret. I should have bought two or three of the other companies at the same time, and instead of bed conservative and just buying ourselves, there is two others that we were offered that we could have acquired, but I thought it was taking on too much debt and it might have been too big a risk.

00:14:06:04 - 00:14:18:09
Bud Petcoff
And in which case, again, you know, as you go through things, I'm not saying I'm not successful, but I could have done something different there and made it maybe had a little bit bigger going forward.

00:14:19:08 - 00:14:43:14
Brian Dukes
I'm always fascinated by kind of the emotional perspective, post-transaction. How were you feeling at that time, having the opportunity to kind of repurchase what you had built, but also knowing that the financial outcome that you had kind of thought about when you entered that deal wasn't probably going to happen in the same way that you had expected.

00:14:43:14 - 00:15:08:03
Bud Petcoff
As you might expect, I have the approach that I don't look backwards. So, you know, in retrospect, I looked back and said I could have done things different, but I don't look back and have an emotional view of that. Missed opportunities. I mean, you can recognize them, so you see them in the future, but there's no sense worrying about what happened.

00:15:08:03 - 00:15:31:03
Bud Petcoff
So I would tell you, when we were buying it back, I was ecstatic and very hungry to make it work. And we were very successful in doing that. So that all worked out was a learning period in my life. But I don't look backwards. I really just look forward.

00:15:31:03 - 00:15:48:23
Brian Dukes
So now you're you're the owner again. What do you do over the next chunk of years to grow the business back? And I think what eventually, you know, I think makes it makes it even more successful than it was the first time around. You've eventually take public. And it's it's a whole nother story. Right? What's that next little run look like?

00:15:49:09 - 00:16:20:18
Bud Petcoff
I think right now, as time has evolved, we entered a couple other very successful niches. It's successful in the sense not that they're going to be $10 Billion dollar opportunities, but they're niches that are a few hundred million dollars available in premium that we can enter and we can be better at it than other people. And by that I mean better at the claims, better at the service, better at the underwriting, and really outperform the industry and a couple other niches.

00:16:20:18 - 00:16:38:10
Bud Petcoff
And there's some other things on the horizon because of all of the businesses that we had seen with the company that had gone bad, you know, seeing companies go bad really gives you an opportunity to see good and bad in companies and to find out what mistakes they made and what mistakes you don't want to make.

00:16:39:00 - 00:16:52:14
Brian Dukes
At some point, you decided to make it public. Right. Which is obviously a different a different path to selling it the first time. You know, what's the thought process there? You know, how are you evaluating the market at that point versus what you had done the first time around.

00:16:52:15 - 00:17:20:00
Bud Petcoff
Again, as you guys are probably aware, going public works when the windows open and at the time there were insurance companies going public at very high multiples and we were growing, you have to acquire capital in our business. It's capital intensive, not necessary people. You can only write so much premium against the capital you have. So if you have 10 million, basically 30 million of premium.

00:17:20:00 - 00:17:48:19
Bud Petcoff
So if we have opportunities to grow the business, you got to look at what the cost of capital is. Where do you want to get the capital and how can you grow the business and make sure that your ownership is growing at the value? Do you want it to grow? So we evaluate it and at the time public made the most sense because once you're public, you actually have access to public debt and that provides you a lot more flexibility and your cost of capital down the road.

00:17:48:19 - 00:17:56:00
Bud Petcoff
So we decided to do that and we grew we bought a couple of companies and we grew the business through acquisition at that point.

00:17:57:02 - 00:18:15:10
Todd Sullivan
That's great. You know, we don't typically work with founders that are going public, but in this case it sounds less like an liquidity event for you, and as more of a growth strategy, right? So it allows you to write more premiums, which makes a ton of sense, and then it gives you access to go out and grow inorganically, Right.

00:18:15:10 - 00:18:24:04
Todd Sullivan
Buying other companies. So it's a great growth strategy rather than liquidity. What we talked about was there any taking money off the table when you went public?

00:18:25:01 - 00:18:49:14
Bud Petcoff
No, no. And that's one of the sales points to the public market, right? Yep. I mean, if if the owners are totally invested, they're excited about that. I had taken money off the table with the first sale. So from a personal standpoint it wasn't - I don't live opulently per say and I was doing everything I wanted to do.

00:18:49:14 - 00:19:12:18
Bud Petcoff
So liquidity was not a necessary for me. I was focused on the business and family and all those other things that I'm not saying didn't require a lot of, you know, cash, but we were able to generate that anyway. So I didn't need to take anything off the table. I was still young, so I wanted to grow the business and see where we could go with it.

00:19:13:12 - 00:19:13:23
Todd Sullivan
That's great.

00:19:14:23 - 00:19:26:17
Brian Dukes
Now you're you're you're in a mad sprint with liquidity to start acquiring, Right? But it doesn't take too long for you to consider another exit. A couple of years?

00:19:26:21 - 00:19:50:08
Bud Petcoff
Yeah, a couple of years. We went public in oh five and we sold in oh eight. But again, it's opportunistic, right? There are, for whatever reason in 2007, all of these big international companies were trying to make get platforms in the United States so that they could, you know, use their much larger capital base to grow their business.

00:19:50:08 - 00:20:21:11
Bud Petcoff
And we were attractive because our loss ratios were good and we were on a growth pattern. So again, we commanded a pretty high multiple. So and once your public, you do have fiduciary responsibilities to the public that what is in their best interests. And if I think that the liquidity then at the time is probably better for them than how fast we're going to grow, you have to consider that.

00:20:21:11 - 00:20:38:09
Bud Petcoff
And you have an independent board of directors and you know, I'm I don't fall in love with things to the point of press on regardless. I think you have to be prudent and evaluate the opportunities as they come.

00:20:38:17 - 00:20:58:18
Todd Sullivan
So but that's that's such a great point for so many of our founders and frankly, a lot of our guests have pointed that out is like, when is the right time to sell a business? And it sounds like it's opportunistic is the best word, right? You start out with inbound interest and you wait for that to hit a certain number and you transact.

00:20:59:00 - 00:21:26:00
Todd Sullivan
And then you see an IPO window where the multiples are really high in your industry. You jump on that and now it sounds like foreign investors in 2007 are looking for U.S. platforms. And you recognize there's an outsized return there. And, you know, you execute the next transaction. So, yeah, it feels like the lesson here is being just opportunistic, waiting for those right opportunities at the right time and not being a emotionally driven to keep building and building and building.

00:21:27:07 - 00:21:50:04
Bud Petcoff
Yes. And I think you have to look at all the constituencies, shareholders, which if you're an owner and you own it all, it's you. I guess you get it right. But you have employees. But in my case, I had other shareholders, the other employees, and I would just say to other people, be aware and make sure you, you know what the best direction to go is.

00:21:50:04 - 00:22:04:21
Bud Petcoff
And don't don't be afraid of making a move. And if you are entrepreneurial and you want to do something else, that's okay. There's probably something else available, you know, But you need to do what's in the best interest of all your constituencies.

00:22:05:13 - 00:22:06:09
Todd Sullivan
That's great advice.

00:22:06:19 - 00:22:31:17
Brian Dukes
Yeah, you're obviously playing in a different game at that point, right? You're your public. You've got a board, you have fiduciary responsibilities. I guess anything from the first transaction that you wouldn't take in as you you know, you transacted. Now the second and third time's right. You have you have a board likely giving a lot more significant advice around the transaction.

00:22:31:17 - 00:22:40:02
Brian Dukes
But anything that you've you look back and say, boy, this is what I learned the first time around. I'm going to make sure that I you know, I think about it differently this time.

00:22:40:22 - 00:23:03:23
Bud Petcoff
Well, I would tell you this is going to more granular type of things, But when we sold the first time we were a private company and as you guys know, when you deal with people who are going to make a transaction, you read the first document, you think, I can't sign this. They're asking me to guarantee everything, right?

00:23:04:10 - 00:23:31:23
Bud Petcoff
Warranties and representations. And it's kind of a very scary moment for an entrepreneur when they look over that document. You have to be confident in knowing your business and understanding it. When you sell a public company that's not the case. You know, you sell the public stock. They're not looking for reps and warranties from the owners where they're personally on the hook for all these things.

00:23:31:23 - 00:23:37:16
Bud Petcoff
So I did learn that selling a public company is a lot easier. So that's.

00:23:37:16 - 00:24:10:05
Todd Sullivan
Great. That's great. I, I, I really hadn't thought of that. In all the private transactions that we're involved in, we really, you know, ask our founders, our sellers to listen to the best M&A attorneys in the world that we assign them because they're the ones that help kind of de-risk those contracts. And yes, it is is a little bit of shock when you first read these things and knowing that they need a lot of massaging, a lot of red lining to get them to a place that a seller can feel comfortable in, that a buyer can live with.

00:24:10:15 - 00:24:17:01
Todd Sullivan
But the public company really hadn't thought about really kind of takes you off the hook when you when you sell that, which is great.

00:24:17:12 - 00:24:43:22
Bud Petcoff
Yeah. And not that that's that meaningful of all the transactions we've done in the many companies we bought and sold. I've never gone back and looked at the contract again, right. So we've never had to deal with any of the contractual issues because obviously we knew what we were selling or you know, we knew what we were buying and the contract is only as good as the people that sign it anyway.

00:24:44:06 - 00:25:00:10
Bud Petcoff
But if you're confident in your company, I wouldn't worry about that and I would get the best legal advice you could get to make it as comfortable as possible. But I'm not saying you can't. Everybody does it. So ultimately everybody gets to a point where they're comfortable. But now it's a little bit easier when you're a public company.

00:25:01:00 - 00:25:04:04
Brian Dukes
So what is that kind of post transaction look like?

00:25:04:05 - 00:25:51:02
Bud Petcoff
This time they wanted to integrate the company into their operations. So if you if you take a company like ours that has underwriting and claims marketing, which is the basis of any company, whether it's a manufacturer of sales, manufacturing, you know, operations, right. That's the underwriting claims and marketing. And so the other I call them, you know, staff functions, the accounting, the all those other things, they can rationalize a lot of expenses, take the core businesses, hopefully leave them alone so they can operate the production in those those functions as efficiently as possible.

00:25:51:10 - 00:26:13:13
Bud Petcoff
And they thought it would be better if I wasn't involved because obviously we as a company built a culture and they kind of wanted to integrate the company into their culture so that in that case I didn't stick around. So the first day I was home at 2:00, I told Jan, my wife, I got to find something to do.

00:26:14:00 - 00:26:39:17
Bud Petcoff
You know, I'm too young. I'm not going to retire because there's only so many guys to hang out with anyway. I like to play golf. But golf’s way more fun when you're supposed to be working and you know what I shoot doesn't matter to me that much. I want to be keeping busy, keeping active and building something. So I started to embark on figuring out how to do that.

00:26:40:06 - 00:27:01:00
Bud Petcoff
You know, the first day. And my son Nick did not want to stick around. He went back and got his MBA and he and I decided a year later to go to them and say, Hey, we're going to start a company. It's not going to be in the businesses we were in. You know, my non-compete ran for basically five years, so we had to start a company in moving that different direction.

00:27:01:00 - 00:27:04:01
Bud Petcoff
So we started slowly and went out and look for opportunities.

00:27:04:14 - 00:27:11:13
Brian Dukes
So that's what and, and that was within weeks of, of the transaction.

00:27:11:19 - 00:27:25:04
Bud Petcoff
Well, the decision to do that was within days of the transaction closing. But the, the actual accomplishing all that took years. But yeah yeah that's amazing.

00:27:25:04 - 00:27:44:13
Brian Dukes
I love that. And I think on a lot of these conversations and with founders that we're working with actively you you hear this idea that I'm going to go retire, I'm going to go play golf, I'm going to go relax, sit on the beach someplace. And it's surprising how many how many times it's, you know, weeks to months that it's yep, it's time to go build something new.

00:27:44:14 - 00:27:49:01
Brian Dukes
I'm I sat on the beach for a month. I'm good. It's time to go. Go back to work.

00:27:49:09 - 00:27:59:18
Bud Petcoff
Yeah. So true. You've been really active. It's hard to go from, you know, 95 miles an hour to 25 miles an hour. It doesn't work really, with me.

00:28:00:00 - 00:28:21:20
Todd Sullivan
So it's. It's really consistent, right, Brian? The people that we get to talk to that have had that level of success just don't sit on the sidelines like, you know, we're just Rob Emery, right? He has the walk off home run and thinks like, Oh, now I'm retired and then makes a bunch of investments and ends up owning these companies and building something even even more special, right?

00:28:21:20 - 00:28:45:13
Todd Sullivan
It's that entrepreneurial drive that that is in people. And it's just incredible to have these conversations, Bud, just just fantastic to be able to share that story with you. Is there is there anything that you would share kind of overall with our founders that haven't been through exits that may be fortunate enough to to sell a business someday?

00:28:45:23 - 00:28:48:06
Todd Sullivan
Anything overarching that you'd share?

00:28:49:04 - 00:29:12:05
Bud Petcoff
Well, yes. I mean, when you believe in yourself and you believe in what you're doing, make sure when you make the decision, you make the decision and you put all your efforts in and doing it the right way and focus on that and realize you may not know everything and make sure you have the right advice and counsel around you to make the exit as beneficial as possible.

00:29:12:13 - 00:29:31:20
Bud Petcoff
And I think that would be my advice to them and listen to listen to people who really know the business. And you you know, if you're an entrepreneur, you're going to make those decisions on who that is for you, right. Which attorney makes sense for you and how you interact with that attorney is important. How you interact with a banker is important.

00:29:31:20 - 00:29:47:09
Bud Petcoff
Who you really believe knows what they're doing. But I would rely on them. If you go to a doctor, listen to the doctor. If you're going to sell a company and you're going to have a legal document, you might want to go to an attorney that knows what they're talking. That's how I look.

00:29:49:00 - 00:29:50:03
Todd Sullivan
That's great. That's great.

00:29:51:06 - 00:30:07:23
Brian Dukes
So I guess one of the things that I love so much about kind of where you're at today professionally is that you're you're able to not only, you know, build your next thing, you're also able to do it with family. And I think you said it in our in our pre-discussion, right. Everyone has to choose their own path.

00:30:08:11 - 00:30:22:15
Brian Dukes
But I love that that has worked out in the in the way that it has you want it can you talk a little bit about that experience and and your view where you're at now in building this this next one with family.

00:30:23:20 - 00:30:53:21
Bud Petcoff
Building with families is interesting because the young people or the kids that come into the business have to be exceptional. They can't just be average. If they're average, no one takes them seriously and it makes their life harder and they have to outwork everybody else so that everybody has confidence in their abilities, has confidence in them. They have to earn their own stripes.

00:30:53:21 - 00:31:21:12
Bud Petcoff
And in a lot of ways I think it's harder for them in the sense that the people are going to be more critical of what they do. And I see it in other places where it doesn't work out so well that someone new has to come in and a kid is relegated to a position in the company. I've been fortunate with the two boys that are in the business with me right now.

00:31:22:00 - 00:31:59:21
Bud Petcoff
They they've kind of gone in different directions. They don't want to work for each other. They want to build their own businesses and they've created their own culture to a certain degree. And I'm very happy with how they've performed and they have a long way to go. That's all the positive sides. The negative side is, yes, there is problems, but when you're an entrepreneur and it's just you and there's a problem that's hard - when you're you have a father around who you know, can at least tell him it's, you know, eventually all this does go away.

00:32:00:10 - 00:32:22:00
Bud Petcoff
I mean, it might be painful. You may have some loss of money. You may have this or that, but it is going to work out if you put your head down and we do the right things, the right thing will happen. So just keep your nose to the grindstone. So from that perspective, they don't have the opportunity to learn from hard knocks as hard, I guess, as an entrepreneur does.

00:32:22:00 - 00:32:41:19
Bud Petcoff
But I think they disagree with that, that they've had plenty of hard knocks and but I guess that's an old guy's perspective, their life of which may not be totally accurate. But but I do think that it was harder on them and they have to work twice as hard to to gain the respect and the position.

00:32:42:05 - 00:33:06:23
Todd Sullivan
You know, I feel like a sports analogy makes a lot of sense here. I, I was fortunate enough one of the highlights of my hockey career. I think I was in ninth grade and Bobby Orr came out on the ice and scored on me. I think he had his eyes closed when he did that. And what's interesting about it is that his son Darren Orr, he was in my school and he did not play hockey.

00:33:06:23 - 00:33:41:06
Todd Sullivan
And people would ask like, you know, why does this kid not play hockey? And it was just so obvious to the authors and not to projected because they didn't say it, but it's like, what is this the standard that this poor kid has got to live up to, to the greatest hockey player ever? Right. And so when we look at business owners and we have really, really successful a really successful generation and then the next family layer of family stepping in, what you typically hear about, right, is the bickering between two sons who who's going to get the CEO role and you know, who's doing what.

00:33:41:13 - 00:34:06:21
Todd Sullivan
So I think it is just really, really challenging for that next generation, particularly when there's more than one. And Bud, it seems like you've been able to to manage that minefield and create really successful situations for both Nick and Andy. Right. Going in slightly different directions and giving them kind of the support of not just financially but the guidance in the in the the bruises you've taken along the way.

00:34:07:04 - 00:34:18:16
Todd Sullivan
So this sounds like incredibly successful. I know I got to work with my dad and that was just, you know, incredible pleasure that I get to look back on all the time. So I think it's very special that you've been able to do that with two of your kids.

00:34:18:18 - 00:34:42:16
Bud Petcoff
I would tell you that they're the ones that made it work, right? They're the ones that could have behaved in different manner and not or accomplished that the opportunity was there. Yes. But that they're the ones that have to execute on the opportunity and Andy going off in his own direction, they respect each other and they like each other.

00:34:42:16 - 00:35:11:13
Bud Petcoff
And Nick didn't want Andy to report it to him and Andy didn't want to report to Nick. Right. So they were able to find a way and carve their own niches out and have their own paths. And I expect they'll be far more successful than anything I've ever done. I would expect them to be smarter and do things a little bit better, you know, and not make the same mistakes I've made, you know, along the way.

00:35:12:12 - 00:35:33:18
Bud Petcoff
So we'll see. But I think I wouldn't take credit for that. I would tell you it's them that deserve credit for figuring out how to work it out and not complaining and not being, you know, putting they're checking their emotions at the door and making sure that the business is successful and not worrying about their own individual positions at any point in time.

00:35:33:23 - 00:35:54:14
Bud Petcoff
You know, I am blessed because that that's my perspective, of course, and I probably live with a little bit of rosy eyes or rosy picture. But there were challenges and obviously there are challenges and there were disagreements and everything else, but they're the ones that that have made it work.

00:35:54:14 - 00:36:04:20
Todd Sullivan
Yeah. So Bud who is really the first person when you sold the business the first time, do you remember calling somebody or letting somebody know, Hey, we just did this, We accomplished this?

00:36:05:18 - 00:36:29:04
Bud Petcoff
Well, you know, I had a board of directors back then. I've always had an independent board of directors on my company. Even when we weren't public, we were just private. And I got as quality people as I could in different areas. And I called my longtime friend, George Morales. Well, Jorge Morales, I guess, but he's always gone by George.

00:36:30:01 - 00:36:51:14
Bud Petcoff
And I called him and, you know, he was equally as happy for for me to do that. And we've been friends since we met in first grade. So that's the first person I called. I would have called my wife, but I never discussed business with her and she was busy taking care of the family so that you find you got to be home at five.

00:36:55:22 - 00:37:15:01
Todd Sullivan
You called somebody, they would care. And that's great. That's great. So that's that's awesome. That a lifelong friend, right, that you're reaching out to who is just rooting for for your success the whole way. Yeah. Yeah. That's fantastic. That's fantastic. So how did you guys celebrate family, friends? Do you do anything special?

00:37:16:05 - 00:37:42:00
Bud Petcoff
Not really. I you know, we went out to dinner, Jan and I, and I didn't. I kind of looked at it as a new beginning. And then the challenge, as I said, you know, it's. You have to go from there, right? I was still young. I wasn't interested in retiring. I thought retiring or that would be a very negative have a negative impact on my kids and on the family.

00:37:42:00 - 00:37:58:18
Bud Petcoff
And so I didn't I didn't really want to do that. I just I didn't want to change my life. I want to live in the same spots and, you know, coach and start another business. So I was interested in moving forward. I didn't really celebrate that much.

00:37:58:18 - 00:38:17:23
Todd Sullivan
You know, I don't know what we're expecting when we ask that question, like, Oh, I went to space or I bought a yacht. Like, it's pretty consistent that it's in people's make up to say, you know, like I'm, I'm happy I've built a business, I've been successful along the way and I have this exit and now I want to do the next thing.

00:38:17:23 - 00:38:33:12
Todd Sullivan
It's not about kind of rewarding myself. Maybe it's more the journey that is what is so rewarding for entrepreneurs. Maybe we'll just kind of ask you one last question. Is there somebody in your life, a person that you would want to thank for all your personal and professional success?

00:38:35:04 - 00:39:08:11
Bud Petcoff
There's probably a ton of people in my life that I would thank. I would tell you, going back, my parents, they were very much interested in having us appreciate every individual, no matter who they were. We were very a mother taught blind kids in the city of Detroit for 40 years. And, you know, and she would take me in the summer when I was out of school and they weren’t out of school.

00:39:08:18 - 00:39:32:17
Bud Petcoff
You appreciate a hard life can be for other people. And she always taught me to just appreciate everyone and their abilities. And I think, you know, appreciating other people, understanding other people and finding good people to work with came from my mom and my dad. They kind of taught me that. And then the work ethic, you know, I saw my mom and my dad work hard their whole life.

00:39:32:17 - 00:40:02:00
Bud Petcoff
And I, I also believed in education. So they got me into education. There are a couple of professors that I had when I was getting an MBA at UofD (University of Detroit) that really kind of I don't know, they struck a chord with how they looked at the world. I don't really stay in touch with them or anything, but one of them really motivated me to finish or to go get a law degree after my MBA and ended up doing that in the early nineties at night.

00:40:02:14 - 00:40:24:15
Bud Petcoff
And not that I want to be a lawyer, but I believe if you have as good a background as possible and understanding things, you can really be much more successful and much more open to understanding what's going on. I'm not saying I know everything, but I know enough to ask questions and understand the questions. I think that's really served me well.

00:40:25:00 - 00:40:31:07
Bud Petcoff
So I would say my parents are the first ones teaching me how to appreciate other people.

00:40:33:00 - 00:40:55:12
Todd Sullivan
Bud, that's fantastic. That's a great way to kind of tie this up. Really appreciate you sharing the story. And I know Brian from hearing him rave about growing up, having, you know, you as a friend, family friend and seeing that entrepreneurial journey was really eye opening for him. And and I was fortunate enough to grow up in a family that was, you know, filled with entrepreneurs.

00:40:55:19 - 00:41:08:13
Todd Sullivan
So I kind of take it for granted. But hearing Brian's, the impact that you've had on him is really inspiring. So thank you for sharing this story with everyone. I know they're going to get a lot of great learnings out of it now.

00:41:08:16 - 00:41:14:08
Bud Petcoff
I hope so. I think Mark Cuban would have been way better, though.

00:41:14:08 - 00:41:14:21
Brian Dukes
That's great.

00:41:15:01 - 00:41:17:06
Bud Petcoff
That's okay. Thank you. I really.

00:41:17:06 - 00:41:17:21
Brian Dukes
Appreciate it.

00:41:19:12 - 00:41:42:15
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. For more found her exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcasts. And please remember ex it was dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.