The Real Bottom Line

Wendy: Hello and welcome to The Real Bottom Line where it's the show for entrepreneurs featuring entrepreneurs and we learn from their journeys and the things they've done in their business so that we can learn from them and maybe not make any the same mistakes or make better ones. Whatever it is along the way.

My guest today is the fabulous Donna Alteen. And, uh, she is a third time guest because she ran her business for 35 years. She has so much information and things to share that I had to have her back on, particularly as she just went through a transition event. Hello and welcome Donna.

Donna: Hi, Wendy. Nice to see you again.

Wendy: Oh, so happy to have you.

So, you know, If people would like to hear about your journey and the 35 years you've been in business, I can definitely put in the notes the previous podcast where we dig a little deeper into that. Today, I kind of want to focus on selling a business. It is such an interesting piece. A lot of entrepreneurs, they wait a little bit too long.

Sometimes they start thinking about it. They only get to do it once or twice, so it's not something that's comfortable for them. So I would love to hear about how you went about it. When did you know that you wanted to sell your business?

Donna: I would say I first started thinking about it 10 years ago. Um, knowing that, you know, uh, I wasn't, didn't want to do this forever and, uh, that I needed to make succession plans primarily for myself, but also for my, my, um, colleagues to ensure that their livelihoods were uninterrupted by my exit, potential exit.

And, um, so I started thinking about it 10 years ago, but not actively pursuing it 10 years ago. I think, uh, I went through a period where I got a coach. Uh, I started to, uh, look at, okay, what, what does a successful transition look like? Um, and started talking about it then.

Wendy: That's interesting. So you almost started painting a picture of what would have to be true for you to be able to do that.

Donna: And there's certain things that you need to do to prep your business for sale if you're an entrepreneur. Um, and they can be, uh, things like putting in the right processes, uh, putting in a leadership team. So the, so the company is not totally dependent on you, uh, for business development or operations. Uh, we looked at, you know, promoting our brand and, and, and maybe just enhancing it.

Um, so we did a lot of that work. Um, also I think, uh, you know, I started to think about what are the criteria that would make a sale successful for me. Uh, and, uh, so I started to, to list even down that criteria. I'm a bit of a vision board person. So I like to, I'm visual and I like to think about in pictures, what is, what would, uh, uh, my next chapter look like?

And I was very fortunate that over those, I would say really active five years before the sale, uh, you know, I, I made sure that, uh, I, I understood what was going to happen emotionally. Uh, so, you know, I've, this has been my baby for a long time. So what does, what does that mean for me? And I think by the time I sold, I actually felt really good about it.

Wendy: Okay. So there's a lot to unpack there that I think is so many valuable nuggets. First off, it's the timeframe. So you started contemplating 10 years ago and then got super almost focused and serious about it within five years. Um, was that enough time? And, um, would you say, oh, I wish I had been serious about it a little bit longer or

Donna: It was the right amount of time for me. I actually, um, we had a coach, uh, um, Nick Matheson who came in and he sat in our leadership team meetings as we were putting our leadership team together, uh, kept us focused on strategy. And, uh, I didn't actually talk to my leadership team 10 years ago to say, and my leadership team has changed over the years, uh, or even five years ago, but.

Probably a handful of years ago, I actually first went to our leadership team to say, uh, I'm thinking about this. Are you interested in a management bio? And while they were, um, they were younger and at different stages, uh, and it's a quite a financial obligation to take on a business. Most people, uh, you know, in their early forties are raising families and, and, uh, don't have huge amounts of savings put away for a transaction like this as well.

I think, um, You know, it requires a certain appetite for risk. Uh, so, uh, we did travel down that road a little bit and, um, you know, the decision came, um, that no, it wasn't the right move for them collectively as a team. In fact, two of my leadership team transitioned at that time. And, uh, and, uh, so, you know, it was kind of, they were,

Wendy: they moved on to other things? Is

Donna: went on to other things, other companies.

And, um, and so, uh, you know, we, we started down the road, uh, myself and, and, uh, a vice president. And, um, we started down the road of, okay, Um, he was very in, uh, in terms of being in to the future of the business, uh, and was driving a lot of that growth. And so, uh, he and I talked about it and, uh, looked at what that might be.

We normalized, you know, we did all the right things in terms of normalizing your books and making sure that. You know, you've got the right processes and policies in place that your company can run effectively. Uh, and so we started that process and then we did meet with, um, a business broker or, uh, in our case it was Grant Thornton and started to put together what it could look a transaction could look like, and we, we danced with a number of partners.

And again, there were some, I think, really important attributes of the sale. I wanted to make sure that our leadership team, uh, could stay in place. I wanted to make sure that our, our colleagues were, uh, were also safe in that transaction. And I was kind of interested, not married to, but interested in keeping the brand intact.

It has a good reputation. And I was. I was interested in preserving the brand and then how, how might we scale that brand outside of our geographic, uh, area to, to, to see future growth.

Wendy: So it, I love the fact that you had go, no go, right? So that means an offer comes in, you can immediately slice and dice. This one's off the table or they, if they can't meet these conditions, then this is not a good offer at all. Um,

Donna: I fully expected I would have to compromise on some of those. Um, and I knew that I wouldn't know if the fit was right until I sat down with the buyer and, Uh, and so we had, as I said, several meetings with different people who are interested. It needed to be culturally a fit as well. So we wanted the organization or the people that bought us to be aligned from a values perspective.

Wendy: Well, it just is going to mean for a better outcome, right? If you are, if you're clashing from a cultural perspective, the results probably just won't be there. And then the, and then lose, then your, then your baby changes completely. And that's, where's the fun in that.

Donna: And it's not great for the people.

Wendy: No. It's interesting that you bring up the people that is actually kind of one of the top three concerns of business owners when they are contemplating a sale is what happens to the employees and, and, and how is this going to impact them? So you're right up there and that's a, a key concern. Now it's interesting.

So you talked to your leadership team at what point in the sale process. Did you bring the employees in? Because I know that a lot of times people wait until it's almost done before they start talking to the team. Was that what happened in your case or did you go a little

Donna: So our leadership team was, uh, was involved, but we actually didn't announce it to our full, uh, firm until the deal was done. And there's a number of reasons for that. I think when you hear news like that, the first question you ask is, what does this mean for me? And until I had everything, kind of all of that information to share with them.

I didn't want to worry people. So until I kind of worked through those things in this transaction, what does it mean for our folks, then I couldn't really go to them and give them partial information and have them sit with that and just wonder about their livelihoods.

Wendy: That can spiral and that can lead to, uh, behaviors, whether that's in the work or transitioning out as you happened before. You know what I mean? Like it can really change things. So I think a lot of people take that approach,

Donna: Yeah, that's not until it's done. So anything could go. So, so you don't want to get people, uh, either enthusiastic or worried about it. If there's a, even a small, um, chance that it might not, you know, that you might not find it. Finalize the deal.

Wendy: I, I, maybe it's my cynicism from a number of years. It's like, until the money's in the bank, baby, anything can happen. Yeah. Okay. So the ultimate successful bidder, did they come from Grant Thornton? Did they come from Connections? How did that conversation get started?

Donna: So the conver, the, our, our, um, the company that purchased us was actually, uh, a company that we have partnered with through the years. So, um, originally it was founded by, uh, three female founders who I'd worked with. 25, 30 years ago, uh, continued to work. Our team continued to work through that. They had sold their business to this organization many years ago, and we continued to work with them.

And, and while that road was rocky at times, we actually accomplished a lot together. We had a great deal of. respect for them. We collaborated on behalf of a number of clients. We had, uh, we were synergistic in terms of the services of the service compliment, uh, complimentary services. Um, so it was, it worked out really well from that perspective.

We knew who they were. Now, we didn't know. Who their parent company was. So we went through a process to get to know them, but, but we did have wise counsel through that in that we have these longstanding colleagues.

Wendy: Absolutely. Okay. That's wonderful. Now, uh, we're kind of helping a company right now, guiding them through the process of selling. And, um, it feels like this is, There's a little sticker shock when it comes to the professionals they need on their team, the accountant, the lawyers, the things like that. What, um, what should people be expecting there?

I feel like you want to have the most sophisticated counsel you can have that's in your side to help you negotiate. Um, and I think it's little things that sometimes can get in the way, but. What are your thoughts on that?

Donna: Yeah, so I think the outcome is vastly influenced by who you have in your camp around you. So, like you say, the accountants, the lawyers, we had a really fantastic advisor who I'd known for Well, since university, and he guided a lot of this for us, uh, interfaced with accountants, interfaced with legal, and because he was so effective, I think it actually saved us a lot of time and money. But there, there is a cost to selling your business and you should prepare for that cost, um, depending on the nature of your business. But, you know, you, you want to make sure that you've got the most, um, sophisticated and, um, experienced people to help you navigate through the negotiations. 100%.

Wendy: actually save time. Um, I have a philosophy around, um, getting the most, the one person who has done it a number of times so that they have been there, done that they have a number of t shirts so that when they come to the table, they're going to be effective and fast as opposed to research and ask a whole bunch of questions of others.

They've been there, done that.

Donna: Yeah. And that team was It was really comforting to me as I was going through it because they knew what questions that I should go back and ask. And the due diligence process is long and it's

Wendy: How long was it for you,

Donna: forensic. Um, I think we started it in April and it was intense until we closed the end of September. So,

Wendy: June, July, August, September, so basically five months of intensity. Can you talk about what are you, what's happening during a due diligence process? And how much of your time did you need to be involved with that?

Donna: um, you definitely need to be, I was really, really fortunate. Our, um, director of finance was right there with me. And so he did a lot of the heavy lifting. Uh, as I said, I had an advisor who did work with him and did a lot of that, uh, heavy lifting, um, and then a fantastic lawyer who worked alongside that team as well.

Um, and. You know, um, you know, this is a testament to the folks that bought us. They, um, they've done this way more times than I have, uh, in terms of acquisitions. And so, um, and they're kind of forensic about it. So they didn't leave any of the rocks unturned. So I sort of had to follow what they were asking for and get it to it.

And none of it was outlandish, but they were very thorough.

Wendy: What was the biggest surprising thing they asked to do in due diligence?

Donna: I have to think about that. What was the biggest thing they asked in due diligence?

Wendy: Or like the most surprising thing. Like they're like, Oh, that's a great question. I never would have thought of that.

Donna: I think they, they went down into even client P& Ls and so on. And so I think how deep they went is, was a surprise to me. It really was. And luckily we, you know, our, our processes and our financial processes were so buttoned down by them that it was easy to get that information to them. Um, again, I credit our director for, uh, that, uh, getting us there, but it, you know, it was, I think the depth that they went into multi year depth.

Uh, on the financial side,

Wendy: Yeah. They're not taking, Oh, your word for something. They want to actually see it in black and white from your accounting system. That makes sense. Um, did you find, so you had a CFO. Um, for businesses that don't necessarily have that full time person at that level, maybe they just have a bookkeeper. Do you think, um, that there's a certain way to structure your books that made it easier?

Like, do Were they, you know, your chart of accounts, was it set up in a way that facilitated getting the information?

Donna: it was facilitated in such a way that so the parent company that purchased us have very different because of the nature of our industry. And there, as I said, in a synergistic industry, but, you know, we were good tuck in strategy. For them, uh, but they didn't totally understand our business. So a lot of the due diligence was helping them to understand how we use a enterprise level, uh, system, uh, and we can, uh, so that was helpful in terms of helping us to.

Uh, get the reports that they need because we could write the, we could, we could tap into those reports, uh, and slice and dice the data through our system. Um, I think, you know, uh, just helping them to understand what we do, the intricacies of it, and why we, uh, account for it in a certain way, because as I said, our business model is a little, a little different than theirs.

Wendy: So it's, it's part research and verifying, but it's also education through that even though you're in similar industries, there were nuances that they

Donna: Very much so.

Wendy: Oh, that's very interesting. Um, okay. So did you ever feel, That there was, uh, any gender bias or anything because you were a woman owner that may have affected the sale at any point or how they, how the sale was contemplated, how the

Donna: Actually, no. No, actually, I didn't. I actually felt that this, uh, firm was, you know, uh, the fact that I was a female founder, um, wasn't, wasn't, additive, not something that was, you know, a problem for them. Uh, I think they look for leaders, um, and they're, they're, they look for diversity. And so no, I don't think that was an issue for them.

I also think, you know, they've been around for 50 years. And so the fact that we've been around for 35 was also comforting to them.

Wendy: That's interesting. I asked that question because I was at a dinner a few months ago with a woman who sold her business. Um, Yeah. I'm going to say a decade ago. And at one point, her lawyer said to her, you need to be more reasonable. And so she hunted the lawyer out of the room and took over that part.

But I, it felt like a very, a question asked of a female more than it might be asked of a male who might be more assertive, right?

Donna: Yeah, 100%. No reason to build. I was not called unreasonable through any of it. And ironically, um, You know, it's, uh, it's ironic to me, but I was the least emotional of the lawyer and the accountant in the room. And I think part of that is I had prepped myself for a lot of years. I felt like I had done what I needed to do.

Uh, people say to me, and I'm still, I'm a consulting CEO in the company still. And people said to me, like, was it hard to let go? And I thought, Actually, no, because I was ready. The last thing you want to do when you're selling your business is be forced into it by an illness or financial reasons. I think then it can get a much more emotional, but by the time I did it, I was really ready.

And I was really ready for it to continue to be successful under, under, uh, under the Guidance of this, uh, of this very global firm. And at the thing that I felt was it, we were getting a lot of, uh, counsel from people who had done it. And who had scaled businesses. And so all I could see was opportunity and that made me feel really good.

So I, I felt like we were, they were getting something in terms of, uh, these additional and deeper services that they could add to their portfolio. And we were getting something in terms of how effectively they run their portfolio. Um, we are. Uh, you know, we have a number of sister brands across the, uh, globe, and, uh, they were really, really, uh, interested in the founder staying for a few years, uh, in a consulting CEO capacity.

Um, so that suited me as well and, uh, in helping with the integration throughout their network. Uh, and looking at how, how to grow it with their, their companies. And I think, uh, the other thing was that they, they understood the value of, of maintaining stability. During the transaction.

Wendy: there's a bunch of things I want to unpack there, but I, for anyone listening, um, I actually have a tool that will help you understand how ready you are to sell and some of the strategies you can take. So we'll make sure that's in the notes for people to take that assessment because, you know, it's true.

The statistics around how many people actually regret selling their business. It's like in the high, it's in the seventies percent because they haven't done that work to prepare for a life after work. Right? So it is a process much like preparing your business. You have to prepare yourself, which is what I feel like you, you, you took that on very effectively to prepare yourself.

Donna: I've been doing that all along. Like I, I, I do sit on boards. I coach, um, a half a dozen, uh, uh, entrepreneurs. Like I had taken on some of those roles outside the organization while I had a president in place. And, uh, so I knew that. You know, at this stage of my career, that mentorship and board experience was, um, really, uh, interesting and valuable to me.

Wendy: Yeah. So it's almost like, cause I feel like people are like, Oh, if I prepare then what do I do? But that's actually a good testing ground. Get your business to the point where it can run without you, then go off and engage in other activities that really give you joy and fill your cup and all those things.

So that that's what you're going to do even more of potentially once you're completely exited the business.

Donna: Yeah. I have a very different view of retirement than a lot of people. I get asked the question all the time. So when are you going to retire? When are you going to retire? And I think to myself, you know, I definitely. Uh, transition into other activities and at this stage of my career, mentorship is really valuable, uh, to offer back.

And, uh, so I never, I didn't struggle with that. I struggled more with when I sold my business, people saying, well, when are you going to retire? And, you know, they said, Oh, then you must be in a situation that are buying you over years. And actually know it was a share sale. Uh, I got my equity out of the business.

But I, I never felt like, Oh, as soon as that's done, I'm done. I, and I don't know that that's my, ever going to be my way of thinking. I will just learn new things and, and, uh, um, you know, try to find ways to get back from the experience that I've had. Yeah,

Wendy: I feel like there's a big emphasis on retirement and, and honestly, like you're doing what you want, when you want and how you want, aren't you not technically retired anyway?

Donna: absolutely. Yeah.

Wendy: You're fired from obligation. You do, you run your own show. Like that's, that's freedom, right? And which is, I think what people equate to retirement is freedom, but you already have that.

You've just constructed it in a way that is different than the traditional retirement.

Donna: Yeah. And you know, we, you We still run our own P& L. We still operate independently. Obviously there are efficiencies in IT, finance, back end, back, back end, uh, stuff. But I don't, I don't feel like they came in and exerted any kind of control, cultural shift over us. As I said, I think both sides in this transaction spent a lot of time, probably six months.

Um, even though we'd known the office in our, in our city, uh, and I collaborated for a matter of 20 years, but get it, we got to know the parent company and the, and the most senior people there. And they actually came to visit us when this first started. And. They have a very much a focus on people and leadership and ensuring cultural fit.

And I, that same to me, that was for me really important.

Wendy: I also think that, um, what is interesting to me too, is you didn't wait until you were so tired that you just needed to get going. Do you know what I mean? Like so many entrepreneurs are burned out and then they make these snap decisions to sell and they definitely do want right out because they've burned themselves out.

It doesn't feel like that drove you and that may have given you more space and grace to do this in a way that really worked for you.

Donna: Yeah. I think that every entrepreneur, myself included, goes through periods where they're just like, uh, have enough. I think entrepreneurship is really difficult. challenging road at times. It can be very lonely. Um, leadership can be lonely. Um, but I kind of kept myself inspired by taking on some of these.

outside activities that, where I was learning and bringing back to my organization as well. Um, so I, I kind of avoided that, although there were times I, you know, I'm not going to lie, over the last 10 years when I thought, Oh yeah, I'm, I, you know, this is enough now. But, um, but I, you know, as long as I've got a new challenge to solve or a new problem to solve, I still do.

Super curious enough to want to, want to do that.

Wendy: So the people I don't necessarily always see at the table or engaged at the right time is the financial planner in the whole piece, right? Um, because so much of what a financial planner can bring to the table can really mitigate taxation, can make sure your longterm goals are in place. You know, they really add a lot of value.

At what point did you engage? Financial planning team. Um, in terms of starting to figure out structure for after the sale.

Donna: I've been doing that all along. So you have to say, like, I don't think you can be successful on your own. I, I try, uh, to understand where my areas of weakness or where I need to bring people in and I surround myself with a team and still to this day, uh, that can offer me perspective and strategic advice that I can.

That I can use, uh, for the betterment of the organization. So I really started with this advisor that, um, I had a few years ago and. It was, I cannot tell you how important it is to have a financial advisor there for tax mitigation strategies. Um, you know, it was very, very important. And, um, this particular financial advisor had sold businesses before.

So he also had that going for him. But yeah, a few years before I really started to get my, I mean, I've done it all along, but I really started to get serious about. Uh, about it a few years, uh, before. And I, my husband and I also own another, uh, company and we had two and we looked at it, we had a couple of trusts.

And so we really consolidated, uh, all of that before this transaction.

Wendy: Perfect. Yeah, I, I appreciate that you did that work Donna, because I think it's almost like, okay, I'm ready to sell, but you're not ready. So you're going to pay more in taxes and you're going to pay more in fees. So get the, get the advisor and the planner at the table at least two years ahead of time, maybe more.

Donna: I think even more, and I, and I honestly have to say, if you're worried about the price when it comes time to transaction time, I saved hundreds of thousands of dollars by having the right people, giving me advice at the right time in advance of even going to market.

Wendy: Perfect. So Donna, um, having gone through this process, how long is, it's, it's not an earn out. So are you obligated to stay for a period of time or you want to stay for a period of time?

Donna: I've been asked to stay for a period of time. Um, I have a contract consulting contract, and, um, it's, it's flexible enough that it allows me to pursue other things, uh, while still providing, you know, just that CEO kind of oversight, um, and so, um, It wasn't tied to, um, so I had to buy out, um, there is an earn out component.

It's not what drives me, um, at all. Like, uh, you know, I am quite satisfied with, uh, how I, uh, how I play. So, uh, you know, transitioned the business. Um, I think at any time, if it's not working, we would sit down and just, uh, make the, make those changes. Um, but for the most part, it kind of suits me because we do have a presidential leadership team in place and they're super capable.

So it's not a hardship for me. I am interested in this parent company. There are other brands. How we might integrate, how we might see, um, just growth across all brands. So I am really interested in helping to make it successful.

Wendy: It sounds like as long as there's something intriguing, you keep learning and you get to grow, it seems like that's, those are your kind of important things when you're staying involved.

Donna: Yeah. And there was absolutely no drama, no, no, no drama around the sale. No drama. It seemed like everyone went, yeah, that makes sense. Um, and my staff, um, there, there has been no, um, No remorse. No, do they do things differently than I would do in some areas? Yeah, but I'm also learning, uh, from belonging to a larger enterprise on, on, You know, just corporate, um, uh, structures that I, I've not considered before.

Um, I, I look at some things and go, Oh, I might do that a little differently. Or so it's, you know, it's interesting and they're all very, uh, everyone I interact with in the system is absolutely lovely. So, uh, from all around the world, smart leaders. Yeah, there's no downside.

Wendy: Donna, it sounds so amazing. I, and I'm so pleased that you were able to basically continue your legacy of helping client of businesses grow through the work you've done and that this business will live on past you. What is your parting comment to all the entrepreneurs listening today as when it comes to selling a business?

Um, what is your final piece of wisdom you'd like to impart?

Donna: I'd really like to say plan early. Like even if you think, Oh, it's not for 10 years, really start to, you know, get a coach in your business. Like you said, get a financial advisor. Who's looking at your, um, structure, uh, that may be involved putting trust in place or dissolving truck. It may be, but do that because you will have an event that will trigger taxes.

And as much as we all love. CRA, we want obviously to keep as much in our own bank accounts as possible. And so one of the things that I did that I didn't realize, uh, and I didn't get great counsel on this probably for a number of years was I love too much money in my business. And so as we're coming up to a sale the year before a sale, you know, you can't just.

Take that money out with tax implications. So it was like, how do I get that money out? And we found some strategies for doing that, but I love too much equity in my business. so you really want to be thinking of those things. So it's like,

Wendy: Yeah, it was around, um, you were breaking a little there Donna. So it sounds like the big thing here is to begin early enough so that you can actually, I think it's called purification, is to get some of that extra cash out of your business so that you have time to get it out in a, in a tax advantaged manner so that you're not getting a big bill just from moving stuff out of the company.

Donna: Absolutely. And I, and I, I think you've got to start that process early and you've got a, I think like any big event in your life planning. So if you were planning a wedding, you might be two years out. I would even take a five year view if you're planning to sell your business.

Wendy: Awesome. Donna, thank you so much for coming on today and sharing your experience. I know that our listeners will take a lot away from that. I think the real bottom line here is give yourself time and prepare your business, but at the same time, prepare yourself for the sale of the business. And that's the real bottom line here today.

Thank you, Donna.

Donna: Thank you, Wendy.

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