The Wise Exit

Cashing Out Podcast | Episode 10 | Selling 1-800 Hansons | Brian Elias

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 special guest, friend and home improvement entrepreneur, Brian Elias, with just $5,000 in savings.

Brian started and built Hansons, a company selling replacement windows, siding and roofing in the Midwest, Brian built Hansons to more than $70 million in sales, and today, Hansons is one of the top 10 home improvement companies in the United States. In 2017, Brian sold the majority of his shares in Hansons to a private equity firm Huron Capital.

Brian is a marketing genius who understands how to connect with people on a personal level, and he's always willing to give back to his fellow entre. Today, Brian and I chat about his decision to sell his business, how he prepared his business to maximize his sale [00:01:00] price and his decision to roll some of his equity back into the business alongside his buyer in hopes of a second liquidity event.

I hope you enjoy my conversation with Brian Elias. Brian, thank you so much for being here. I really appreciate you taking the time. I. The message, the lessons that you can give to our fellow founders based on you building and selling a company, they're just gonna be invaluable. And what I have to say is when you agreed to take this time slot, I had absolutely no qualms about bumping Mark Cuban from this slot. So thank you for being here.

Brian: That's great. Great. So Mark, get outta my way. I'm coming after him.

Todd: Nice. I normally like to start these by talking about how we met, how we knew each. And so ours is kind of funny because the first day I really met you, I see this guy in a golf cart driving around my neighbor's property with a beautiful woman in tow next to him, and my neighbor's house is for sale, but they're [00:02:00] away and they're asking me, Hey, look over our house.
Right? I'm like, What is this guy doing? Right? So I run over and we, you know, we get to meet each other. We find out we're both entrepreneurs, and I give you like a very brief tour of part of our house. Get to meet my in-laws and when you leave, right. We exchange numbers and um, I think we decide we're gonna like grab a coffee sometime I go back in and my mother-in-law's like that was Brian Elias from the TV commercial.

She's like all excited that she got to meet the celebrity.

Brian: I'm a legend in my own mind.

Todd: Yes. Yeah. So, What I really wanna get to are the lessons from you selling your business, but it's such such a great beginning story. So maybe you could start with, you know, how did you get started? How did you kind of, kind of quickly go through growing this business?
It's 27 years and then we'll get into like decisions to sell and all the kind of lessons.

Brian: I, I'd love to tell you that I had this great master [00:03:00] plan, but I really just sort of wanted my own business and said, I can make a living doing this. I never even thought about selling my business. It never even crossed my mind until probably the last five, seven years I was in it.
I actually started off knocking on doors to drum up business. Hi, do you need windows for your home? No. Next door, Hi. Do you need windows for your home and you knock enough doors? Somebody goes, Yes, we. And I would knock myself into that customer's house or set up an appointment with them and I'd go and I'd sell it.

And then I thought to myself, if I wanna grow and scale this, I'd have to replace myself from being A, the guy that knocks on the doors, and B, the guy that sells it. So I started to think a little bit bigger, and I came up, I'd love to tell you I wrote an org chart, but I. Okay. But I was able to picture it in my mind of what it should look like.

So I knew I had really three facets of the business: lead [00:04:00] generation, selling the product, and getting it installed. And I knew if I could master all three and systemize that I'd have something valuable and something that I could grow, but not something I would. Because that wasn't there yet.

Todd: Were you doing that beginning piece?

Did you just recognize that you're running outta bandwidth, Like you can only knock on so many doors? And so how do I take this from a little lifestyle business into growth mode? Is that how you silo the events?

Brian: I, I think it was more recognizing that you couldn't do everything. Okay. Yeah. So I figure.
I'll get somebody to set my appointments and I'll be the sales guy, and then I'll also help schedule the jobs. So I actually started the business with my ex-wife, who, and her and I are. Good friends, and we went and she sort of ran the back end and she did all the books and things like that. And I took care of the sales, the hiring, and you know, I [00:05:00] hired people to go out and knock on doors because that's how I learned it.

So from there it started to grow. And some of the things I learned by doing, I learned some of the things not to do. So I learned that there's bad advertising out there. I had a salesman once come to my office. Now this is gonna sound ridiculous, but the guy said, I've got the perfect way of you to get customers.
I said, What's that? He says, We go in the Kroger store and on the back of the receipts of the Kroger where you do business, we're gonna put your advertisement on the back of the receipts. Okay. And I'm thinking, Oh my gosh, what a great idea. Yeah. Okay. All right. In my area, all the people around here shop at Kroger.

It was perfect. Yeah. So I, they go, they design the ad and they put me in a year contract. And I'm thinking, this is great. Well, the first week goes by and I'm waiting for the phone. and it never [00:06:00] does. And I realized that people don't really do business off the back of a receipt. So I paid the price for a year learning before you do anything, you test it.

And I never forgot that story. I'm sure you've seen at some point or another, some coupons on the back of a receipt. Sure. But it's not really what engages people. So you had to figure out, or? I had to figure out what does engage people, what does work? Mm-hmm. . And so I became a chronic tester, so I would test anything for a couple hundred dollars and see if it worked or it didn't work.
From there, that's how I built the company is trial and error. I didn't have any mentors.
Todd: So it sounds like you had a, a several kind of lead acquisition channels, right? You certainly had TV and you migrated to the web when that was hot.

Brian: And that was long. All those things were long after the receipt, but yes.

Todd: Yeah, yeah, yeah. But you got [00:07:00] better at those things I got and they changed, right? So you gotta decide where to put the dollars to maximize the outcome, right? So yeah. So

Brian: So the obvious things are today of were to advertise. You got tv? Mm-hmm. . , you've got the internet, you've got social media, you've got direct mail.
Those are the obvious. Those are things that you see every single day. Yep. So then it's decide what dollars you're gonna put towards each one of those things. Cause you're not really in the, you know, I was in the window business. Mm-hmm. , I really wasn't in the window business. I was in the new business, business.

Yeah. And I had to be thinking to. Nothing about Windows. How do I acquire that customer? What do I have to say to that customer to have them raise their hand and say, Pick me. Hello, I'm interested. Yep. So we started marketing that way and TV was one of those tools. Obviously Google's been amazing.
Okay. Social media continues to grow and direct mail's always been there. So that's really how [00:08:00] we've, how we built the whole business. That's awesome. And never lost sight of knocking on doors. And the entire time I ran Hansons, we always had people out in each of our offices literally knocking up business.

Todd: So I mean, you built this kind of home improvement juggernaut in Michigan and Ohio, right? Michigan, Ohio. Okay. And what, how long is it before you start thinking, Hey, this has gotten big and I need to think about a next, I don't know if I wanna call it chapter or what would you call as a next stage of growth?

You're, you're making a decision to sell the business.

Brian: Mine looks a little different. My father died when I was 49. My mother died when she was 53. Wow. So, both died very young at the time that I decided to do this, I was right around that age, and I'm realizing that you don't live forever. You know, when you're a kid, you think you're gonna beat.
Okay. You think you're, you know, you might, okay, it's okay. It [00:09:00] feels like you're gonna live forever. But as you get to that point, you realize, well, what do I have here? And my fear was leaving if I had died before I sold the business. The business value plummets. Yeah. Yeah, that's for sure. So I really wanted to cash out for that reason.

And I wanted to see my business grow, uh, you know, under somebody else's watch.
Todd: I want to touch on that because when you say the business would've plummeted, right? In a lot of cases, a business can survive, right? If you have the management team, but you are the face of this, right?

Brian: I was the face of the business and, and I didn't think the business would go away, but I think getting the value out of the business without me there, Yep.
And being the one representing the business, I don't think it would've got the multiple that it got.

Todd: So, uh, you make this decision, right? Life is looking at you saying, Hey, maybe it's time to see what else is [00:10:00] out there. How long from that decision, like, Hey, I'm, I'm ready to start thinking about this, to actually going to market.

Brian: Oh, it was probably four or five years.

Todd: Yeah. So what were you doing in that period of time? Cause I think like, knowing you, you're very strategic, so you probably took those four or five years to do some important things.

Brian: The decision was made, you know, relatively quickly to do it, but then how to do it. So I started inter interviewing investment bankers till I found the right person to do the job.

Todd: That's great. How did, can you talk about that process? Cuz it is, it's one of the things that we really work on and why we're here is that it is a very d. Process to find the right group, and you ended up finding gold.

Brian: I, I found super guy. Consider him a friend. Mm-hmm. and I make jokes all the time that I underpaid him.

Yeah. Okay. Because when somebody helps you market your [00:11:00] business okay. And takes you to a level where you don't have to work another day in your life and they package your business and they learn your business better than you know your own business. That is something that you cannot live without. Yeah.

And I know after talking to you, that's what you do every single day. Yeah. And when you do that type of work and create that type of value for somebody, okay, you're changing their life. So I interviewed people until I found the person that's, that could get me there, that spoke my language, that could relate with me, that understood my needs.

Okay. Yep. And that person did that. And that's why, you know, I have such a passion towards.
Todd: Him and his team, it's fantastic to hear, right? Because we hear so many of the other stories where they didn't understand my business, they didn't know the buyer pool, they didn't market it appropriately. Like the best [00:12:00] guys will say exactly what you just said was they understood our business better than we understood it.

And more importantly, when they get to know the business that well, they can position it a little differently for each specific buyer. , and then they're speaking the buyer's language. Right, which is driving competition and price for you.

Brian: And that's exactly what happened. Yeah. And on top of that, he also understood my needs.
Okay. Which was, you know, a lot of people could figure out the business, but how to package it and figure me out and figure out what my needs were. And before he ever looked at his own needs, he looked at my needs. That's great. And to me, that to me is exactly. What a good investment banker does is they make sure that they're taking care of their person.

Yep. And there was not one minute that I ever thought that he was thinking about his check. He made sure that he thought about my success, [00:13:00] which in turn made his success.

Todd: That's great. A lot of examples of that. I've actually asked founders, how come you decided to work with exit? And one of the quotes I remember very specifically was, you were the fourth investment banking group that we interviewed, and you were the only one that I could tell was not calculating his fee in his head while he was speaking with me.
So yeah, making that connection is really important and saying, Brian, this is a life changing event. What are you really looking for? What do you want? And working towards that. And frankly, it's totally your decision. You can pull the plug anytime. So you gotta describe exactly what you are looking for right outta the gate.

And sometimes that's hard to figure out. Did you, have, you had a pretty good sense of what you wanted?

Brian: I got more than what I expected. Okay. Because there was competition. because they positioned where people were lined up wanting my business. Mm-hmm. , and that felt great. Yep. And then you have choices [00:14:00] at that time to pick which road would be best for you.
It's not always the money. Okay. It's the right partner. It's the one that's gonna close. Yep. If you don't look at things like that, you're making a mistake. So the thing that you have to do is find the right partner. Like, you know, an exit wise where you're passionate about making a difference. I wouldn't be here today and you wouldn't have asked me for this interview.
Yeah, okay. If that's not what the message that you wanted to get across, because you know it, I would say, Okay, I would look at you today and say, I'd hand my business to you anytime, because you know what you're. You got a great heart, okay? And that heart translates into the work that you do. And that's what I love about you, Todd.

Todd: Oh, thank you. I, I didn't actually realize you were speaking about me, but yeah. Yes. That's

Brian: That’s what I love. I appreciate that you're so passionate about doing it, and that's probably why you're doing podcasts like these to get [00:15:00] that message out there.

Todd: Yeah. I mean, it's less about trying to drive customers as it is educating.
All our fellow founders out there, right, that are building a business, it's the most important asset in their whole lives. And so many of them have failed M&A processes. And I just, I, I've always seen that as absolute shame on the industry and we know how to change that. So I appreciate you saying that cuz it really is about creating better outcomes for people like us.

So when you were marketing your deal or your investment bankers were marketing Hansons for. Do you ever get concerned with the potential buyers that they are sharing your information with?
Brian: I absolutely was concerned with them sharing my information with one of my competitors and a well known competitor, it scared me for a minute and my banker got me to get comfortable with it.
He says, Brian, what's the worst they're gonna do? Know your numbers. [00:16:00] At the end of the day, they have businesses to. Either they're a real buyer, they're not, and you'll find that out in the letter of intent. But don't let fear be your enemy. Okay? Let fear be your guide. Okay? But make solid business decisions.

I have no regret showing my competitors my stuff. It didn't change one thing in my life, and it wasn't the route that I went down. Don't let it stop you.
Todd: That's great. Can I ask, um, when you say the letter of. Was there a different level of sensitivity of the information that's shared, uh, before somebody enters a letter of intent to buy your business and then they share more later?
Sure.

Brian: But the majority that they got, they got a lot of it up front. There's not a lot of secrets. Okay. You look at somebody's financial statement, you got a pretty good idea what the business does. Yes, the data room provides the proof of that data, but it didn't really, it, it turned out to be nothing.[00:17:00]
Todd: Generally what we see is that you protect a customer list or maybe a secret sauce behind your marketing, right? Real detail on how you drive those numbers. But sharing those numbers, a buyer needs to be able to see what they're buying.

Brian: A as you know, I was in the consumer business, so my customer lists were all one-offs.
So there was nobody buying from me, quote unquote, twice. Right. You know, if they, if they bought windows from me, they only needed them once. Yep. But your competitors have a pretty good idea who your customers are. Got it. Okay. They know. So that being said, there's gonna be no real secrets there. What they don't know is how much, how much they're spending.
And that comes after the letter of intent and there's some risk. But if you're good to your customers, customers don't wanna switch unless there's a reason to switch, and that's why your competitor wants to buy you in the first place.

Todd: All right, So you've made this [00:18:00] decision. You've got the ideal M&A team in your corner, and they've driven competition for your deal.

Brian: There's something I did before that that I didn't. I went and got a quality of earnings first. Yep. Because I didn't wanna be blindsided later with something that I didn't know. Yep. So it wasn't my strength, but I wrote the check because I thought it was important that if there's something that's gonna cause me a problem later, I wanna know now because that to me was just good planning and people tried to talk me out of it, but I insist.

Todd: I gotta tell you, that is a discussion we have with founders that are in the middle of a process. And what I love about being kind of the Sherpa of a deal is an investment banker will come to us that, that we've put in as the quarterback of a deal and say, we really need a quality of earnings done right?
And people will hear Q of E, right? And so I go and talk to the founders. Here's the value of it. The fact that you saw the value of [00:19:00] that, of having every one of your numbers correct, Right? You never want to present a number that isn't right to a buyer because as soon as they find one thing that's wrong, they're gonna look for everything and it just works against you in negotiation.
So yeah, it's an expensive process, but in the end when you're going to market with everything, absolutely fully understood. And they can't poke holes in it. That's what the Q of E is for.

Brian: And presenting that to the prospective buyers. Yep. Okay. We're happily to share it. We did it for ourselves. We were very open about it.
We didn't wanna be surprised by anything. Yeah. So, you know, you're looking the same thing that we looked at and we think that, you know, we now have something tangible. They still did their own. Oh, of course.

Todd: Yeah. Which is, which is fine.

Brian: Yep. But it didn't come back much different.

Todd: And you're really doing a favor to your whole M&A team, your investment banking group, when you're arming them with truth and yes, for the audience.

Private equity firms are always gonna do a Q of E. They've gotta check that box, their investment [00:20:00] committees require it. But doing one, the seller doing it ahead of time, it's a big advantage. Right? It pays dividends for sure. So, and it did. We're big fans of that.

Brian: I would do it again over and over if I do, if I go through the process again.
Going through the same thing, I'm gonna present it the same way.

Todd: Yeah, that’s a great piece of advice for people to understand. All right, so you've prepped the business in that way. Was there anything else that you did, because in your industry it was really like multiples of ebitda, how the businesses are valued, Right?
Right. So were you doing anything ahead of time to say, Hey, let's prep the business for a higher exit. Where you or, or were all the kind of cylinders firing.

Brian: You seem to turn it up at the end, you know when, because as you're, you know, you realize that every dollar you make, you're gonna get multiple of it.

Yeah. So you, you're really pushing that bottom line really hard. Yeah. And you start to look at your business, say, Okay, where can I trim fat? Because for every dollar you save, it could be anywhere. [00:21:00] Five and 12 times multiple. Yeah. So save that dollar. Yeah. It's really important and Right. We probably should do that anyway in our businesses all the time.

But, uh, we did look at it that way, so we, that last year we were able to turn it up pretty good.

Todd: That's great cuz I, what I think is funny is the buyer's gonna do that. If you don't, Right. Right. So you might as well go out and create those efficiencies and just like you said, for every dollar you drop to the bottom line, you're getting a multiple, five to 10 to whatever the number is Correct.
In your pocket. So it's a, That's a huge lesson. And it's not really a lesson, It's kind of inherently obvious, but people don't quite think about it. So planning the exit is pretty important, right? To maximizing your. So you've got, you've got the economics where you want it. You've got the best M&A team in the world on your team.

You've done the quality of earnings, you're creating competition or your investment bankers are creating competition for the deal. What happens next?

Brian: You go through what I call the dog and pony show.

Todd: The dog and pony [00:22:00] show.

Brian: Okay. And you're, you're basically pitching your business to these people and you're really not doing the pitch cuz the pitch is designed for you by your team.
So it follows a, you know, a process, but you have to be prepared for every question that they may ask. Yeah. And what I learned from the group that I worked with is, I don't know as an acceptable answer.
Yeah.

Todd: It is an acceptable answer.
Brian: Yeah. Okay. It's better not to try to bullshit some of the smartest people I have ever seen in my life.

I'm gonna put that out there. Yeah. The people that will buy your business in these private equity firms are the smartest human beings I have ever seen. Bar none. That being said, I don't know is fine. I certainly can get you that information. I'll get back with you. I don't know, and I got really comfortable saying that.

And I think they appreciate that.

Todd: Oh, for sure. Yeah. I, I think a lot of our US entrepreneurs, right, we're sales [00:23:00] people. We want to have the answer. We wanna make the other person feel comfortable. But like you said, these very smart people out the other end, they already know what the answer is. They're looking for problems, right?

They're, they're gonna find the red flags. There's no pulling the wool over anybody's eyes. So yeah, it's great.

Brian: And when they would have sessions, how come you didn't do this? Or how come. Back to the matter is sometimes you're in the weeds. Yep. Okay. Instead of working on the weeds or working in, you know, you're working in your business, not on your business.
Mm-hmm. , and now that you suggest it, I question myself why I didn't do it five years ago and now I'm a little embarrassed. Yep. Okay. and I got comfortable with that because they asked great questions.
Yeah.

Todd: You know what, Brian, one of the things I think is amazing about you is that you exude confidence in success, but at the same time, you can bring, be self-deprecating to your advantage.
You can humble yourself and suggest like, Wow, what a great idea. Right. I, I should have thought of that before. That's fantastic.

Brian: It’s funny [00:24:00] because as a visionary or entrepreneur, I understand what I'm good. I also understand what I'm weak at, and that's really important as a leader to know where you're weak.
So you have to surround yourself with the people that fill in your weaknesses. You're not looking for yes people. You're looking for people who will help grow the business. So on your financial side, you need a solid CFO. On your marketing side, you need a solid marketing. Okay, on your sales side, you need a solid sales guy on the tech side.
You need a solid tech guy, hr, et cetera, et cetera. And if you don't have the right team, you actually don't have a business. And the best businesses are the ones with the best team. People lose sight of that.

Todd: How do you think that translated in the M&A process you have? You've got a very well rounded team in place.

Did everybody end up staying? Were they signing employment agreements?

Brian: I actually lost my marketing director a couple of months [00:25:00] before the process, and it was a big bump in the road because we had to account for that. And so we had to put that on as a potential slot that needs to be filled.

Yep, yep. Scored against us because their wage, et cetera, et cetera. But nonetheless, we're able to get through it. But it's important that they feel you have the right team. Now, the ironic part is there is nobody left at my company that were, you know, on my leadership team, They're.

Todd: How long? How long did they last?
Yeah, relatively fast. And it strikes me though, I mean, you're the CEO of Hansons, but you're really the brand. Right. So it seems like an obvious fit for you to fall into that marketing role, right. When you got a new boss, essentially. Right. Right. So is that, that's essentially what happened.
Brian: I think they wanted to go their direction. Okay. And I think we knew that beforehand. They were pretty clear about it. Yep. There was no, I didn't get [00:26:00] blindsided by anything. I still sit on the board today and I think they wanted to take it and put what they believe are experts. In the positions and they've done a good job.

That's great.

Todd: So Brian, you are clearly the face of Hansons, the company or the brand, and then you go into this M&A process and they've gotta know what they're buying, they're buying the future. How did that play out, you being such a strong brand in your company?

Brian: Well, part of my deal was they wanted the rights to my face, to my voice, and to my.
To this day, I'm not able to go on TV for any other product. For anything. Go. Hi, I'm Brian Elias, President of 1-800-HANSENS. I'm not allowed to do that. And for good reason because they bought that. Right. And I actually thought they were gonna continue doing that and that was part of our contract, that they had [00:27:00] the right to continue, but they opted not.
And they, they went a different direction, but they still own the rights to my, to my voice, to my name. Okay. Yeah. And to my face. Yeah. However, they've been pretty flexible with me. In fact, I'm doing some voiceover work for my new company with their permission because it really doesn't affect them. But what they don't wanna do is they spent a lot of money to buy my brand.
They don't want me capitalizing on the name again. Hi, I'm Brian Elias with Relo. They don't want that and I don't blame 'em. But they won't recognize if I'm just talking about flooring, they won't put, the consumer won't put together, Hey, that's Brian Elias, without me saying my
Todd: name, and certainly not gonna prevent 'em from ordering windows and roofing and siding from Hansens.

Brian: Right, right, right. But they don't want any conflicts. They bought that right today. Knowing what I know, I'm not gonna put myself front and center because I don't think it helped me. I think you have to build your [00:28:00] business where it's not all tied directly to you, so I wouldn't be my face again. I think I learned the lesson.
Todd: All right, so we covered your decision to sell and prepping the business for sale. Now you've picked your partner. In private equity typically, right. There's a purchase price and they're gonna ask you, Hey Brian, we want you to have some stake in the game. So I'm assuming because it was private equity that you rolled some equity.

Right. So I did roll

Brian: equity. Okay. And it was planned from the beginning. Yep. Um, when you build something like this, you're sort of passionate about your business. And I wanted to go along for that second ride. That second bite of the apple is, I believe you call that in your world. Yeah. I want them to kill it.
I want them to take the foundation that I built. Okay. And kill it. So I'll get another check and I'm looking forward to getting that next check and it's coming.

Todd: That's fantastic. So that's kind of the private equity playbook. Did [00:29:00] you look at any potential strategic buyers that might have not wanted you to roll equity, or was that always on the.
It was always on the

Brian: table. Okay. But it didn't stop me from taking an offer from a strategic, without me rolling anything.
Todd: Got it. So you're just, you chose the partner based on all the elements, the price, the rolled equity, the fit, all of that, and will it close? Super important point. Maybe we could drill into that.
Right. That decision will it close? Typically in our world comes from the investment banker having a really good relationship with all the buyers, right? There's only a few times where you can pull out of a deal and expect a banker to come back to you and work with you again. So the banker really should only be bringing you deals that will close.

Well, was it you? You said it like it's a really important point because of private equity.
Brian: Guy says it. Doesn't make it so, Okay. You have to take your own knowledge and your own thinking. You have to trust your guy. Mm-hmm. . Yep. [00:30:00] Okay. Yep. But trust yourself. Okay. And if you have to also look at yourself in the mirror and say he thinks it'll close with this guy.
I don't. Oh, okay. Okay,
Todd: Okay.

Brian: Yep. I mean, I had a few choices and one of 'em they like. . They liked the one I liked too. Yeah. Which was good. Yep, Yep. Okay. But they liked a different one as well. Yep. I didn't, just weren't feeling it. I didn't think it would make it to the finish line. Just an instinct. The questions that they asked, how it felt when I was done.

Yep. Okay. The little apathy, like, you know, the person at the other end of the table, couple of the people on their team didn't seem to care. And when I see a. That's a red flag to me when I see passion and people saying, We're gonna take this business and grow it, and they start discussing how they would, those are the things that, you know, excited me.

Todd: That's great. The, Okay, so the bankers present 'em a couple of [00:31:00] options. They believe in the ability to close. It's also not just the ability to close, but it's to close at the price that's and structure that's in the loi, right? We can see buyers come in and say, Oh, we didn't know that and we didn't know that.

And what they're trying to do is negotiate, right? Part of that quality of earnings, that report that they'll do. They'll put that in front of you, and if you haven't done yours and know your numbers right, they're gonna say, Well, it's not worth what we thought it was worth. We still want to close, but at a lower number.

Right. So it's about you found the guys that close, but also close at, you know, the numbers they put in
Brian: front of you, the, the LOI made it all the way to the end to speak of. That's awesome. There's always a little of Johnson's, but. I would not call it re traded as you guys call it.

Todd: That's great. That's great.
So, um,

Brian: I didn't even know what a CIM was when I started this

Todd: process. So you didn't know what a CIM had No idea. Yeah, yeah. Confidential Information Memorandum. Right, right,

Brian: right. For right. But I had no, they said, Well, you know, we're gonna build the CIM. I'm like, What's CIM? And I'm thinking, What goes in your phone?

Okay. Uh, you know, I had no idea. [00:32:00] Yeah. So, but it was a good learning experience. Now I know how to. You, you know how to do Thea process, right? I didn't have to clean up anything. Everything was, you know, this time around. Yeah, I'm gonna do it again. Yep. And now I know
Todd: what to do. I mean, you, you have all the instincts.
The fact that you were pushing for Q of E is enormous. For me, what I think the most important thing is, is the team that you put in place by interviewing a bunch of investment bankers. A hundred percent. And it's not investment banks, right? It's bankers. You talked about the individual that you think didn't get paid well enough, right?

That's that's the, the resource that you want, right? That's the quarterback on, on your team and you found 'em. Right. Good for you. That's a good, that's.

Brian: It's really, it's really all about the people you hire. It's not, you know, they, when they talk about themselves all the time, that doesn't interest me. When they talk about me and what the result's gonna be for me, and they're gonna come along for the ride, that's what sold [00:33:00] me.
When they talk about, Well, we've done this deal and we've done this deal, and they've all done deal. Okay, who's gonna best take care of me? And that's who I chose. And that's why I'm here doing this interview with you cuz you feel the same way. Yeah. You have a passion for partnering with people who have no idea how to do a process like this.

Yep. And that's what I like the best about you is you get it. Most of these guys, well we work for this firm and we're outta New York and da da da da da. At the end of the day, Okay, you're just a. Okay. I'd rather deal with somebody who's gonna, I know is gonna be focused on my deal. Yeah. And that's Utah, period.
Todd: Thank you. Yeah. We very much value the personal relationships that get developed. Right. We go into situations where we can bring the best team in the world, and so we don't have failures. Right. Um, that's real. It's really important if you're gonna put an entrepreneur through what you went through. Right.

Was it six months, seven months, Yeah. To get a deal done. Right. And all that distraction from. [00:34:00] Potentially being able to build your business further. Right. Um, you can't fail, right? And, and, and if you get something over the goal line, it better be everything that you want, right? That is the job.

Brian: Well yeah. It has to, it has to fill your needs.
Yep. And mine filled my needs, and when I do it again, It's could even feel a better, That's awesome. Yeah.

Todd: I mean, the fact that you knew how to do it the first time, the

Brian: next time I learned was gonna be learned. I, I, I did. I wish some, I wish I had listened to this podcast. Yeah. Or something like it when I first started my business.
Yeah. Okay. Because it was all, for the first 15, 20 years, it was just how to make a living. Mm-hmm. . Yep. It wasn't building a powerful brand that I could sell to somebody else. And if you think of your business, As the asset, and you realize that that's your biggest value. Yep. That's what you know. That to me is what, you know, what drove me.

Todd: So what I typically like to ask people, is there one piece of advice that you would've told yourself, right, [00:35:00] 15, 20 years ago to set yourself up for this kind of success? There's one thing that surprised you. What lesson would you give to your former self and then to all of us understand your business?

Brian: Number one, put the right people in place. Number two, and realize that EBITDA does everything because that's all anybody really cares about is how much money you make so they can figure out how much money they can make off of you.

Todd: That’s great because we tend to think. Entrepreneurs come in and they have all this emotion behind their business, and all the buyers are thinking about is what you just said, the financial profile of the business, whether it's EBITDA or revenue, it's all they care about.
Right? And getting to that understanding, you gotta get there and you gotta get there quickly. I mean,
Brian: most people don't understand the whole concept is they borrow money, they lever it up, hence the word [00:36:00] leverage buyouts. Okay, borrow the money for a $50 million business or whatever your number is. Yep. And their goal is to figure out how to sell it for $150 million or more.
So they use the other people's money, Okay. To create that leverage. Okay. To repay their investors and to walk away with a ridiculous amount of money. Using your business as that tool. And when you understand that, That's what you know. That's why today I could do it much quicker because I know what they're looking for.

Todd: That's great. Yeah. That leverage, when they're going out to borrow money, they can only borrow money against the profitability of your company. Correct. It isn't imaginary emotional thing. Right. Yeah.

Brian: It isn't how much credit you have. Exactly. Exactly. Borrowing against what they see as the history of the business and they got a pretty good idea.
If the history was here, they got a pretty good idea where the business is.

Todd: Brian, this is great. I really appreciate you doing this. My pleasure. Consider you're [00:37:00] a friend and now you're a neighbor. This is fantastic. It might be a little while before I'm that neighbor, but yes. I can't wait. You're working on it.
It's looking amazing. It's ideal spot, so it's great. It's great.

Brian: Thank you very much. Thank you for spending time with me.

Todd: Thanks again for listening to the Cashing Out podcast. For more Founder Exit stories, please subscribe to the Caching Out Podcast on Apple iTunes, Spotify. Or wherever you listen to your favorite podcasts.

And please remember, exitwise.com and the Caching Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.