Understanding Your Why in M&A | Meighan Newhouse

Exitwise (00:04.43)
As a business owner, selling your company is one of the most important professional and financial decisions you'll ever make. When is the right time to sell my business? What is my business worth? Should I hire professionals to help sell my business? And how much does it all cost? These are questions I hear every day. My name is Todd Sullivan. I'm a five -time founder and the CEO of Exitwise. I've created four exits on my own, and I've coached hundreds of business owners and executives along the way.

We created this podcast to simplify the process of selling your business, to open the M &A black box, to track down the inside information that I wish I had each and every time I sold my own companies. We want to give you an MBA in M &A. Today, my guest is Megan Newhouse, the co -founder and former CEO of Inspirant Group, a management consulting firm that was acquired by 10 Pearls in March of 2023. In our discussion, Meg shares,

how she and her partners established their North Star for why they were selling their business. She talks about how they decided on the type of buyer they were really looking for and the terms of the deal that they were willing to accept. And finally, she talks about how they kept the sale process private from their employees to not cause panic within their organization. So welcome to the Wise Exit podcast and this week's episode.

Exitwise (01:26.286)
Meg, thank you so much for joining us today. I've been pretty excited to talk to you. You built a really differentiated consulting firm and then sold the business to what I would term as an aggregator of consulting firms. And so I had tons of questions around that. Obviously, you and I have spoken. You had a heck of a time going through due diligence. There were many times when this deal didn't go through. And I think one of the things I'm excited to learn about and share with our listeners,

is that a deal does feel like it fails 10 times before it goes through, but you have kind of firsthand knowledge of this and would love to hear your story. So thank you for being here. And what I would tell you is I know we had to reschedule this once, but trying to get you on, Mark Cuban actually had this spot today and I bumped him just to have you. So thank you for being here. Sorry, Mark. It's such a pleasure to be here. I'm actually, I'm really looking forward to, I love.

the start of new years. I love new beginnings and I took some time to reflect on our story and our journey before joining today because I'm really excited to share that and it's kind of gone a little rusty because I've been so deep in the integration post acquisition that to think about what got us to there is really fun. So I appreciate being able to do that today. Why don't we start with kind of your background, your decision to be an entrepreneur and then tell us a bit about the company you built.

Yeah, you got it. You know, I have my origin story and I've said it a number of times, but I'm going to riff on it a little bit today because I think it goes back further from where I start in college usually. And the reason this is top of mind is because I was recently asked to be a judge at the local Future Business Leaders of America conference, which is a high school conference. So when I was in high school, I was part of the Future Business Leaders of America. I actually ended up being the state president.

I went to the national competition to be Miss Future Business Leader. And I never really thought about that foundational piece of my life until just the last couple of weeks when I've been talking about being a judge at this conference. So I guess it's always kind of been in my blood. I've always been very interested in business. I'm a people person, though. So I will always say that the most valuable resource that any organization has is its people. I was a psych major. I really wanted to figure out what made people tick.

Exitwise (03:44.462)
And I translated that into business. And I really focused more on the learning aspect of business. So first job out of school was, as an instructional designer, creating end user learning materials for new processes and new technologies. And I did that for a really long time. I discovered, though, that I wanted to have a little more flexibility in the work that I did.

and that I felt that I could do more by doing it my way. So I started my first business in 2012 and it was just a boutique learning and development consulting firm. And it was mostly me. I had a couple of subcontractors that would help me out here and there, but that was my original business. During that time, I also started a not -for -profit to give back to folks that were looking to pursue a career in education and have been doing that for a long time as well.

During that time, one of my clients actually happened to be one of my very good friends. And he pulled me aside one day after working with him for a couple of years. And he's like, hey, I'm going to quit. I was like, wait, no, we have a really good thing going here. Like, I'm doing good work for you. You know, everything's going well. And he's like, no, no, no. I'm going to start a consulting business. But I want to do it differently. I want to disrupt traditional management consulting because he'd spent some time at the big four. I'd spent some time at the big four.

He's like, I want you to come help me do it. I was like, oh, that's great. Yes, let's do that. So that was 2016. So I had my own gig for about four years. And in 2016, I joined up with two partners to create Inspirin Group. And that was our disruptive management consulting firm. And the three of us, the three co -founders, basically are people, process, and tech. I was the people, the co -founder of Mears Process, and then our third co -founder, Chris, was the tech piece. And our secret sauce was really finding very talented people and treating them well.

So I got to go back to my people roots and approach our projects and our integrations with our clients much differently. So really coming at it, very customized, very people -centric, and just wanting to be easy to work with and deliver long -lasting solutions that we could train people up on, get them using, and then leave behind, which is not traditional management consulting. Yeah, I love the moniker, the un -consultant. And you also...

Exitwise (06:01.038)
the champion of culture, right? So really being all about the people, that's fantastic. All right, so you're finding success and then obviously something, there's some impetus to selling the business. Was, were you approached to be sold or did the three partners decide, hey, it's time, this would be the best way to grow? Like, what was that decision process like? It wasn't easy. So, you know, starting the business a couple months into starting it in January, 2017 in March, we got.

board of advisors together. So some of our smartest friends in a room, 10, 12 of us, were like poke holes in this, tell us what we're doing wrong. Here's some of the things we're thinking. And so many people are like, so what's your end game? What's your end game? And I turned to Amir at one point, I'm like, what do they mean? And he's like, they're wondering when we want to sell. And I was like, oh, OK, we're not planning on selling this, right? We're going to build this and grow it and kind of see what happens. And so honestly, we did not create the company with the intent to sell. We took no outside funding. We bootstrapped at 100%.

And we were really happy with what we were doing. You our board of directors were the founders. We were just kind of running it the way we were running it. And it was successful. We had year over year growth, both in revenue and in headcount until the dreaded 2020. We saw a big decline as it happens. However, we saw a hockey stick coming back from that. So we had the right blueprint and we got to a point after five years, it's a hustle, it's a grind. You know, as folks listening, I'm sure know that.

We're like, so how much longer are we going to do this? And wow, we've created something really cool. We feel like we've knocked on all the doors we can maybe knock on right now. What if we found someone who could help us knock on new doors? So we thought of a couple of different ways to add fuel to the fire. But the one that made the most sense was really to go to market and find the right acquirer. And what I mean by that is we weren't looking for outside funding and we weren't looking to get absorbed into a larger consulting firm. So it really had to be.

And I guess third and most importantly is that cultural fit. It had to be a people first company and really we would be a value add to their already existing ecosystem. So we did that. We officially went to market like right before Thanksgiving of 2022. That's great. Thank you for sharing it. I think buyers would love to hear that answer too that, hey, you know, we got a bunch of smart people in the room and it's not so much an end game, but.

Exitwise (08:23.118)
if we want to grow this thing, what's the best way to grow it? And maybe it is with a strategic partner, somebody that can help enable growth, create more sales opportunities, right? That's music to buyers ears. So what was the next step? You decided to surround yourself with M &A advisors.

to shop the deal to create the materials to do that. I bet Mark Cuban would tell you that. No, we, so Amir had a buddy at the golf club that he started talking to that had done something like that. And so we met with that guy and had lunch with them and we're like, ah, you know, I don't, well, let's see how this shakes out. And honest to God, I got a LinkedIn message from this guy at a sell side only brokerage. And

you know, timing's everything. Because obviously, I haven't said anything to anybody about this. But I was like, hey, and I reached out to Amir and Chris, I was like, let's just talk to this guy. You know, let's just see what this is all about. And wouldn't you know, the sales guy did a great job. And so we just we went with them. So I wish I could say that we had a bunch of M &A advisors, we did a lot of due diligence, we did, we had a really great legal team that we engaged, you know, externally to all this as well that we enjoyed working with very much that provided excellent advice.

throughout the process. But we, for our first one, we did kind of wing it and got very lucky, I would say, but I would also say much of our business, you know, hard work, good people and luck, of course. Well, no, it's great that you decided to hire somebody, right? Because trying to do this on your own and run a business at the same time is way too difficult. So I'm glad you had some representation. I also love that you brought up the attorneys because

M &A attorneys are worth their weight in gold. I really don't care what those rates are. They're answering questions. The best ones are really presenting decisions for you from a risk -reward standpoint. You're obviously making the decisions as the business owners, but the best ones really understand consequences of what you're getting into. So that's a super important role. OK, so you've got the broker. The broker's bringing presumably more than one opportunity to the table.

Exitwise (10:33.518)
And I think when you and I talked, you're so differentiated from the normal consulting firm fit, as you said, has to be so important. So can you talk to me about that process of weeding out who you actually want to talk to? Because I think a lot of business owners who go to sell, it's like, maybe I'll talk to everyone, and then that is a waste of time. How do you narrow it down of who you would actually sell your baby to and allow it to flourish?

Learn from me everybody. So we were so excited that so many people wanted to talk to us. And actually, can I take a step back? Is it useful to talk about what the entire process looks like? So from that initial engagement with the broker, you know, it's really getting to know your organization really well. And I love that you called it your baby because, you know, as the founder, you've put a lot of blood, sweat and tears into this and it is a big part of your identity, I'd say. So to be able to holistically explain that to somebody else and let them.

get all of the really key pieces that are gonna make you attractive for buying, takes time. It really does. So it is another job. And even with three of us as co -founders going through it, it really took a lot of our time to get interviewed and review the materials they were putting together. So there's something they create that's called a teaser and that doesn't have any sort of identifying information on it. It really is your revenue for the last five years, where you're located, your...

team size, what you focus on, et cetera. And then that goes out to market. And the organization we worked with had hundreds of thousands, if not more, people in their database that they could target in. And they were really thoughtful about who they wanted to put that in front of. Now, based on that, if somebody has an interest, then you sign an NDA. And it's mutual. So the brokerage would present to us, so -and -so from this company is interested in learning more. Are you all interested in that? And at first,

You know, yes, oh my gosh, we had so many interested people. It was so exciting and we felt really good about that. So we'd say yes a lot at first. What happens when NDA is signed is that they get a SIM, a CIM, and I'm sure you know what that stands for. I can't remember, but that is a like a marketing booklet. Ours was about 30 pages, incredibly detailed at this point, right? You know, shoe size. I'm just kidding. But it gives a lot of information about who you are, your growth story, your journey. And then then you decide, OK, now we're going to actually talk.

Exitwise (12:53.486)
And there's there was a lot of people that saw that and were like, oh, wait, this wasn't what we thought it was going to be. And we didn't move to that conversation. The brokerage did an excellent job of tracking, you know, interest conversations, you know, what it got to a certain point and when it failed, helping us through, you know, the interviewing process and all of that. So learning from that, I think before you get into who you want to talk to, it's helpful to determine what sort of buyer you're looking for. So we.

very quickly realized we still didn't want outside funding. So we did have PE firms coming and we were afraid because of what we built. We still wanted to be a part of it. I think maybe that's the first question to ask yourself. Are you looking to sell and walk away? You're looking to sell and to help be a part of that growth. And myself and my two partners wanted to continue to see where this growth would go. We just knew we were at a point where we needed some external assistance to do that.

So with that, we were afraid that bringing in PE would create a little bit of the chop shop mentality and maybe break out this culture that we had created. So we kind of tabled that one pretty quickly. We knew we didn't want to be acquired by a larger consulting firm. We had actually been approached in the past by a couple of local consulting firms and we just didn't want to get reabsorbed. We'd done the big consulting thing and that's not what we're trying to do. We're trying to be different and disruptive. So.

That was off the table. And we also, we wanted to still be kind of like the only player. So I know at the beginning, you mentioned, you know, the acquire our acquiring company is maybe an aggregate of consulting organizations. It's it's an aggregate. There is consulting, but they're more of like a tech shop. So we are the true consultants at the organization with that. Like they like to say tip of the spear. I don't I don't love those guys. You know, business speak. But.

We're at the front of it having those strategic optimizing conversations. And then we have now other full resources that we can bring in to help deliver on that. So knowing what you're trying to get out of the sale, there's a little soul searching. And maybe you won't know until you start having the conversations like us, but maybe what I just shared can help you reflect on how you want to go into it. Meg, I think that's awesome to have that kind of internal discussion of how do we...

Exitwise (15:08.04)
accelerate our growth, what partner allows for that, but at the same time, keep certain core values in place. And so I think what you're talking about is a strategic acquirer, somebody that has a piece of the puzzle maybe that you don't have and one and one together truly equal three. And maybe you are the front end, when you say tip of the spear, maybe we could find another analogy. But yeah, that's what makes so much sense because

not only are they buying you for the value of your business, but the value that you bring to their business. And that can be modeled. And when you model that, that's where you get kind of outsized outcomes when you go to sell. And typically, you have pretty good alignment, right? Your goals tend to be their goals. Yeah, so strategic acquisitions are absolutely what we shoot for. It doesn't mean it can't happen with a private equity firm, for sure. No shame, no shame. This yeah, understanding that. Yep, no, totally understand.

I also really like how you talked about kind of the exit readiness, right? So you've got the broker and then there are all of these steps. And a lot of it is creating a data room, but it's getting your house in order, right? All of your documentation, which is easy to say and a lot harder to do. And that's, it's, it's an enormous challenge for a lot of companies that have just been kind of flying by the seat of their pants. You know, maybe they're using QuickBooks. They just.

things are not as well organized, their operating agreements, all of these employment agreements, the confidentiality, all of that can be overlooked when you're running as fast as you can to build a business. I'll touch on the SIM that you talked about as a confidential information memorandum. It is the long document that you reveal only, right, after you said, yes, we want to talk to these people. Yes, we want them to know who we are, but still it's totally confidential, right? And a great broker.

understands who will maintain that confidentiality because it isn't always maintained. So you really need to know who you're talking to and your broker should know who you're revealing all that information to. I got a question. So a lot of people took a look, right? A lot of people were interested after seeing the sim and a lot of people passed. I think we see that all the time and it's disheartening when people pass, but there's usually a couple of reasons. Was your broker giving you an idea of what

Exitwise (17:21.965)
wasn't a fit for the people that would pass? Most of our revenue came from three main sources. So it wasn't diversified enough for them. Yeah. So we would call it customer concentration. It's just too tight. And it's risk, and people back away from that. But those are really important lessons for people to understand the value of a business is not necessarily just the financials. In your case, it's like, OK, where is that coming from? And if one customer leaves, ah, right? That could be a scary moment for the health of the business.

Okay, so thank you for taking us through that process. Now you're talking to the people that you actually want to talk about, their sincere interests. How do you narrow it down? For us, it was all about culture. So that was how we built our business, people first, and we had core values that we lived by. We talked about often that we expected the team to show up and behave in a certain way and treat each other in a certain way. And I mean, truly our secret sauce. So we had to find an organization that...

put people first. And so our acquire, when we when we talked to them, it was it was crystal clear, you know, in doing our research. And then, you know, you talk about the strategic acquisitions, we were acquisition number, I want to say eight for this organization. So they already had their blueprint. It was all founder led acquisitions and all of the founders were still there. And as part of our acquisition process, we were able to speak to those founders of the previous acquisitions and, you know, get more information from them.

as part of our due diligence. So, you know, it was really, as soon as we started talking to them, we're like, really? Is this really, this is a little too good to be true. It was the people piece, you know, not only with the way that their internal team was treated, but they have, you know, community facing initiatives and, you know, ways to give back to the, to their community. And so it just, it felt very right, even from the first conversation. Let me riff on that because you're touching on things that are so important.

All right, so not only have you not sold a company before, right? You're kind of rookies going into this. You do not want to make it more difficult by having a buyer that has never done it before either. So the fact that you had kind of a serial acquirer, they have a playbook. They know how to run an M &A process, makes the process run more smoothly. But the risk of a failed deal, which is horrible on everybody, right? You're spending so much time.

Exitwise (19:45.198)
and you're distracted from your business, you know what it's like running two jobs at the same time, right? And for a failure is catastrophic. So having a really experienced buyer is, it is a great reason to select that buyer over somebody else versus, you know, shopping for price. The idea that you get to, we do this, you know, as exit wise, where bankers don't often do it, where we will reach out to the people that used to work there and were acquired and are currently employed.

And you're gonna get kind of the company talk track on the ones that are there, but you can sense, right? Is this a place where I can enjoy the growth, enjoy being employed there? And then the ones that aren't there will be even more revealing. And I think that that is some of the best reverse due diligence you can do on a buyer. And it's so important. When you go into due diligence, it is not just them doing due diligence on you. You have to do it the other way. So I'm so glad that you found somebody who are like,

this is perfect, it's almost too good to be true. So many points of verification. Okay, so I get it now why you selected this group. But, right, you know, the journey is not over. It gets really hard. Can you talk to us about, you signed an LOI, right, presumably, and now you're under that exclusivity period. Can you talk to me about the challenges there? You know, I honestly think the fact that, as you said, they had this, they

this blueprint like they've acquired, it made it a lot easier. I mean, it really was, you know, there was a lot of negotiations with our very talented attorneys, but it was all very, I don't want to say easy. Easy isn't the right word, but it definitely was not contentious. And what I appreciate about that is that, you know, we knew it was a good fit. Like think about, and I liken too many things in business to dating. Maybe that's probably why I didn't stay in HR very long, but you know, like, you know, you found...

You found the one, right? Like you found one and you really want to make it work. And maybe, you know, they leave their socks all over the place or whatever. But you can overlook that because you know, long term, this is going to be a really good match. It was kind of like that, right? Like we found the one and we could kind of work through all those little nitpicky things to get to where we want to be. And I would say that's even continuing through post acquisition. I know we're not there yet, but, you know, the hardest part, honestly, Todd, I know we talked about this in some of our prep was,

Exitwise (22:09.038)
not being able to tell the team. So we built this culture of transparency and the three founders were very close to the team. It was a small team. We had full timers and contract based workers that had been with us for much of our journey at that point for the five plus years and not be able to talk to them about this. I mean, we told them even in COVID when like revenue was pretty low, we're telling them everything. We're like, gosh, we've got these five steps that we're taking to make sure we can keep the lights on, but you guys were at step three and a half.

So to not tell anybody on the team, really anybody, and I think I told you one of our co -founders, brothers on the team, and he did not know, was really, really challenging. And we didn't tell them until the day after we signed the contract, after it was already done, the purchase agreement. So that was the most challenging part, honestly. Like in retrospect, getting all of the materials together, although I would say to your listeners,

If you're thinking about selling as much of that cleanup you can do prior, I think it's going to help. We were lucky again in that downturn of 2020. We kind of cleaned house a little bit. We're able to get some of our stuff in order. Not with the intent to sell though, you know, in retrospect, it was the right thing to do to have that. So I'd say as much as you can, you know, figure out where you're going to need to bring to put in that data room and try to get it. Cause doing it while you're navigating the interviews and all the other things is just another headache.

You know, I felt like at the beginning of this that we would talk about just the challenges in your due diligence process. You found the perfect buyer. You know you want to make it a match here, but still there are all these obstacles and you're equating it to socks on the floor. I can overlook that. I know, I know it is way more than socks on the floor because, and I love the fact that you said it's not necessarily hard or easy. It's super time consuming.

it's duplicative, and you're trying to run a business, right? So the things that they are asking for, you don't even see the rationale around. And the more organization that you can have of that material upfront is really, really helpful. I think that leads into your privacy concern and the way you approach it. I think many founders like myself, you have early teams and you're sharing like...

Exitwise (24:28.238)
are we going to live tomorrow? And then you're celebrating the huge client and the huge check that just came in that buys you six more months. So you have this kind of culture of sharing the highs and the lows. And now it's very against your culture to say, this has to be private. Because it's really true. You can't have your head of sales, your lead developer job hunting because they don't know if they're going to have a job after it's over, right? You have to protect the integrity of the organization.

So I hear you, that is a very tough decision. We're always asked, who do I tell? And what I always say is you want to bring in the person that really understands the financials and potentially the head of sales, because that financial person, that CFO, is going to make your life way easier in an M &A transaction. They're going to handle a lot of the heavy lifting and due diligence. And your head of sales, that person drives revenue, and that person needs to be on the other side. They're essentially

buying cash flow and if you have, you know, one person that is driving a lot of it, that person's got to be happy and you got to approach that and make sure that person feels incredibly comfortable as that there's a huge opportunity on the other side. It sounds like you had three partners that served a lot of those roles, right? So you really could contain this, which I think is lucky. Like I said, I said earlier, it's a lot of luck. But yes, that is true. And our concern was not only with folks job hunting, but really,

the distraction from their day -to -day work, right? The spin that can happen, even though we're a close team and we could do all we could do to alleviate any concerns that they would have, it was just opening yet another, I would say probably another job, right? Would be controlling the spin or answering the questions or alleviating concerns, which we had to do post -announcement, of course, but we were prepared to do it at that point. We'd already kind of gotten most of the...

you know, acquisition piece taking care of at that point, and we really could then give the focus and concentration we needed to our people. You know, I've heard you talk, you know, on other podcasts and on YouTube about this idea of taking emotion out. And this is such an emotionally charged moment. There must have been times where the frustration overloads and you're not making decisions really on kind of facts.

Exitwise (26:51.084)
Were there points in the negotiation or in due diligence where you're just saying, this just isn't going to happen, or this isn't for us? Were there any of those moments? Well, so I would say emotion is very natural, and it's going to happen. I think something that we've worked on a lot with our team is this idea of emotional intelligence and having that level of self -awareness and how your behavior and reactions affect the people around you.

So something that we're always very, very mindful of and try to create both internally and externally with our interactions. And I think that that was evident on both sides throughout the negotiations. So I think that was another match when we were talking to our choir was they seem to also have this level of emotional intelligence that we've always prided ourselves on and our team on. So again, I think that helped make the conversations go well. Again, the socks on the floor, there were things that were going to be deal breakers. And that was also part of the reason that.

we knew that we wanted to wait to tell the team was that maybe it wasn't going to go through. As a services provider, we know that about all of our contracts until the ink is dry. Anything. There was a guy that we used to work with that say like a hundred ways to lose a contract. So we kind of applied the same mindset to our purchase agreement as well. And we really wanted to make sure that.

what we were doing was going to be for the benefit of each person in the organization, right? It wasn't just about the founders selling the company. It was about the future growth of the organization and the people who make up the organization. And if we were approaching this with that mindset, we had to make sure it was everything that we wanted it to be for the team. And that came down to...

8pm the night before we announced it. When I finally got that docu -sign or whatever coming through. So, you know, we're texting furiously and then here it comes. And it's like, okay, okay, good. We can tell the team tomorrow as we planned to. We weren't sure that was going to happen. Yeah, we see so many of them that like you have a close date and it's nice to have a goal that you shoot for. But boy.

Exitwise (28:53.582)
you know, it is hurting cats at some point and very, very difficult to hit those dates. So yeah, when you're planning on telling a team at a big in -person event, right, because you're not in person a lot of the time, flying people in and you don't know that you can announce it until the night before. I feel like that is typical and people, sellers of businesses should know they often come down to the wire. And it sounds like you stayed really core to the principle of all of our people have to be excited about.

what is going to happen to them in the future and the success of the business going forward. It's a great place to live. There's so many little terms. It's not a number, right? It's not just a number that is transferring, doing over wire. There's so many terms and expectations that need to be agreed on and set in order to get a transaction done. It is just not for the light of heart. Well, listen, I appreciate you sharing with us all of this. I was fascinated by the story. I hope people really get something out of this.

Is there anything that you would want to leave us with? You know, your top three pieces of advice on M &A. People are definitely going to identify with this story. And I think you've given some really good lessons already. Is there anything else you want to share? Yes, I'd say the best thing you could do before embarking on this journey is to really pause and reflect on why, be crystal clear on why you're doing this and what your...

what the intent is, right? What the end goal is. So as I mentioned, you know, we wanted to grow our business. We wanted to stay a part of that growth and we wanted to create more opportunities for our team. And those were non -negotiables. So what are your non -negotiables in this? And of course they don't need to be the same as mine, but make sure you're crystal clear on that. And whoever is assisting you in these conversations from your team is that you are all aligned on that. I mean, that was key as well.

The joy of working with my two co -founders is that the three of us have always been aligned and supportive of each other. That's why the business has done so well over the years. But it's important, I think, to make sure that your team going to market or looking for the acquisition is clear on the why and what the end goal of this is. And that will help, I think, with the process. And if you can stay true to those goals or those pillars throughout the entire piece, I think it'll just... You can always use those as like your guide rails, right? Well, does it...

Exitwise (31:16.686)
Can I filter it through these things and does it meet one of these? And if it doesn't check all the boxes, then it's probably not right. It's great advice. I think we're often working with individual owners. So understanding their why before they even enter a process makes a lot of sense, right? And there are a lot of things that you want to challenge. Is that really the why? Is it a health concern? Is it a retirement? Is it truly growth? I think the element that you're adding is getting alignment.

with your partners, your stakeholders. Because the worst thing to happen is to have one person who has a really important voting right say, ugh, I'm not sure that's really what I want. So I love that you bring up the why, but alignment with the team that's making the decision. That's perfect, Meg. I appreciate that. Listen, I want to be respectful of your time. This has been awesome. Thank you for sharing. It was, like I said, so fun to start the year reflecting on this journey.

Gosh, it is not for the faint of heart, you're right. I mean, we learned a lot, but really proud of what we've done and where we are and let's see what's next. Now that you found this partner where it was like, this is the match, how has it been post acquisition? Was it really the match or are there too many socks on the floor? I would say it's probably like any first year of marriage. We're getting used to living together, right? And that's great. Again, we have each other's best interests at heart.

at the base of it. So we're going to figure out all the other different lumps and bumps. It's taking a little time to get ramped up. But honestly, Todd, I think about starting Instagram Group. Like we didn't hit the ground running, you know, one, two, three, five, six, ten, you know, like it takes time. And so that's kind of where we are. We have all of this expertise and knowledge and connections and deliverables and everything we've done as Instagram Group behind us. But now we're learning how to run this new business in this new ecosystem.

we're starting to realize what we went in it for though. We're starting to get those doors opened and learning how to talk about our business in this new world as well. I mean, it takes some time and I think, again, both sides are really excited about what the future holds and want to see each other be successful and that's really what it's all about. And all the other things I think tend to work themselves out. I love that you answered it that way in that.

Exitwise (33:37.678)
you know, if I asked that question, a lot of people would say, oh yeah, my job is great. I'm going to hit my earn out. I, I, I, and you're approaching it from, well, you got to see what their shoes are like too. Are they seeing the strategic value? Are they seeing the alignment that they were hoping for? And you kept saying we, and so you really get a sense of like, this was a true partnership. So, you know, like not to psychologize the answer.

or that is not a word, but to analyze the answer. A lot of what we're doing is the psychology of M &A and helping people think through the whys and what is going to work. And this is, it's a human game, right? There are companies coming together, but it's all about people. So yeah, thank you for that answer. It's perfect. Can you talk to me a little bit about the structure of the deal? Not necessarily the numbers, right? Don't say anything that you know is private.

But is there an earn -out component? So you guys are really driven to be successful as a unit, but also drive success for the acquirer. Any structure like that that would be kind of interesting and enhance the relationship? Sure, and I think this is beneficial for those founders that want to stay on because it is incentivizing. What, again, was kind of like, is this real? Is this actually how they want to do it? Is.

Basically, the acquisition was, so now you are a virtual business unit of this greater organization and you get to continue to run your business as you were with the benefits of this greater organization. I was like, really? Okay. So we have our P &L, we have where we can hire, we can fire, we can promote, we can, you know, incentivize, compensate. Like that's still all in our purview for X number of months that we have this earn out. And then we also are incentivized by revenue growth and EBITDA.

So it was structured really well, and again, we're acquisition eight or whatever. So clearly they came up with the formula that works that they want to find companies that are successful and they want to retain the founders because I think they think a lot of that success lies in the founder or founders and the teams that they've built. And so how can they best do that while also then working to integrate those groups into the greater organization? It's great because...

Exitwise (35:55.894)
you know, earn outs are tough to negotiate. And what typically causes them to fail is that the resources to achieve the goals that have been put in front of you are no longer in your hands most of the time, right? And it sounds like they're really letting you run autonomously. Who knows who's paying for what, but it sounds like growth is in your hands and therefore, you know, it's a right to incentivize you that way. I think it takes.

a really good advisors and attorneys to make sure earnouts are structured in a way where the levers are in your hands once you're on the other side. We hear so many stories about earnouts not working out. I've been through that myself. It's horrible. And really listen to your advisors on that. If you're going to sign up for an earnout, sounds like you guys structured it.

in a fantastic way. Yes, we got a lot of good advice as we're going through it. But again, you know, I love how you said like a mature acquirer, right? Someone who had a blueprint that made sense to us. So I you know, that was something as well. And I think, you know, also let your listeners know, like not to be afraid to explore unique options, right? You just never know. Someone I had talked to as we were going through this had worked into their LOI. And I would say going back to the LOI.

Try to get as much as you can in there in writing as the understanding of moving forward. So, you know, if something was said on a call, try to get it in there just to make sure everyone is on the same page. But something that he put in one of his was as part of the purchase of his company, he was very closely tied to a non for profit. And so like the the support and sponsorship.

had to be included as part of the acquisition, the acquiring company had to continue to sponsor that non -for -profit for X number of years, X number of dollars or whatever. So, just don't be afraid to think through what's really important and valuable to you. And I wouldn't settle. I mean, again, going back to your why, you've built something pretty amazing and you should definitely realize it's worth. I think that's its own podcast.

Exitwise (38:04.11)
And just that advice of saying, right, there are many ways to M &A, right? In an LOI, that is the document that the attorneys are gonna use and the business people are gonna use to negotiate everything. So you want as much in there and as much clarity as you can get to a certain extent. And we have seen the creativity that you're talking about from, hey, there's somebody over on your side of the fence that I never wanna have to speak to, right?

It got I've seen that. Yeah, it's amazing the detail that sometimes is necessary. But yeah, it's a it's a really, really good point. That LOI is the blueprint for your purchase agreement. And it's very hard to go against what was agreed on in the LOI. So getting those things that are truly important to you, even it's not necessarily employment agreements, but we've seen bonuses, I want to be paid X in the first month, right?

So yeah, do not be afraid to ask your investment banker should give you the guide rails of what is going to be accepted or what is not. But really, that is a very important document. And sometimes people want to rush to get something signed to jump into due diligence. So thank you for sharing that. Meg, this has been great. Thank you so much for sharing so much, right? I thought we were going to kind of cover one topic. I think we've covered eight, which is awesome. Oh yeah, please, if I could ever return the favor. You to keep it short. I'm sorry. We just kept...

chatting. Thank you. Thank you. Yeah, if I can ever return the favor. No, this was awesome. I'm so glad we were able to talk and thanks to Brian and if you need anything at all for me, don't hesitate to reach out. Thank you. Have a good rest of your day.

Exitwise (39:53.742)
Well, listeners, that's all the M &A wisdom we have for you today on the Wyze exit. But the conversation doesn't stop here. Head over to our website at exitwyze .com and sign up for our weekly newsletter to stay informed on upcoming exit wise events, newsworthy headlines and M &A advice to support your journey towards exit. And remember, the Wyze exit podcast is intended for entertainment purposes only. We appreciate you listening and we'll be back soon.

Understanding Your Why in M&A | Meighan Newhouse
Broadcast by