The Two Most Important Things You Can Do Today To Sell Your Business
Welcome to this episode of The Determined Mom Show. I have with me the lovely Stephanie McLarty and she is the head of sustainability at Quantum Life Cycle. She’s also an eco-entrepreneur and the owner of Wealth of Family.
You’re one of the few people that have been on more than twice or more than once. That’s really exciting. Today we’re gonna talk about something that’s very interesting. The last time that you were on, you were talking about your business.
My business was efficient. It was a company that I started in 2010, and it was all about reuse in the telecom space. So we helped telecom c. To resell their equipment that they no longer needed and smaller companies to buy it. It was like modems and set-top boxes and cables and stuff called head-end equipment. It was a wide range.
That’s awesome. Things that we don’t actually know about, but that are very important in the business world.
It’s, yes, it’s the infrastructure that delivers your internet and your cell phone, and your tv.
They were all very expensive too. Order for a smaller company to acquire those, it’s a huge investment.
For the small companies, and there are still many small companies around outside of the major centers, it’s unaffordable to buy with the big companies that we think of, the big telecom companies. They have huge budgets. The small ones do not. So we created a mechanism to allow those small companies to get access to technology too.
That’s awesome. I love it. So the reason that I asked you to be on is that your business was acquired by a larger company, which is now where you’re the head of sustainability, quantum life cycle.
So tell us about the backstory there. I’m very fascinated by this. I’m in the baby phase of my business. I’m gonna be five years old this year. Next month it’ll be five years since I started considering myself to be a toddler. I think a toddler would be from five to 10 years old.
And then, I don’t know. That’s just me, in my head. But, so we’ve made it past the baby phase and we’re going into toddlerhood all, A lot of moms listening might be in that same position. And maybe we’re not thinking big enough. Maybe we’re thinking, this is just what I’m doing right now.
There’s gonna be something else that comes after it, but we don’t know what that thing is yet. Right? So, what I wanna talk about today is how in the world we can get from, like our baby phase of business in the first five years to eventually, maybe 10, 15 years from now, selling our business to another company or selling it to another entrepreneur.
Let me just say, first of all, to make it past five years, you’ve overcome the odds, so congratulations. That’s huge. And I would say you’re probably into the, you’re well past baby, I think. Into the toddler, if not older than that. As you’re, as you evolve. Yeah, it’s a good thing to start planting the seeds with yourself about where you want your business to go.
When I first started re-efficient, I did not think about the future of what I wanna sell when? What does that look like? But as the years progressed, I started to think about it and I started to make certain choices and in a sense, positions.
The business and myself so that at some point I could sell. And 11 and a half years later, after starting Efficient, actually happened that I had someone come to me, with an offer to buy my business, which was really cool.
Like starting back. There are some things that you can do, and first of all, I think the first question to ask yourself. Would I want that in the future? And I’m sure from most people the answer is yes.
Yeah, exactly. Yes, I would like to sell my business and be able to either do something else or, relax for a minute, if that’s possible.
Absolutely. So I would say when I, about three or four years after I started Efficiently, and we’d made it past, maybe it’s in a similar stage to where you are. Like we made it past that initial phase of starting up and getting the business off the ground.
And we had really grown. And to be honest, we actually grew so fast and I lost control of the company that we almost went bankrupt. And it was actually during that period when I realized that.
We’ve built a lot of great things here that could be of value to someone else. And so I started speaking to my business advisor about the different options of what the future might look like. And one of those options was having the business be a part of another business.
And usually, there are a couple of ways why a business would buy another business. One is because of. The intellectual property of the brand. Another is because of the talent for getting people to work for them and be a part of something bigger. And so it was during that period when I really started to think about that.
At some point, I do wanna sell one day, and what are the valuable pieces to someone else? And in our case, From a technology standpoint, we had built out a software platform that we had used to run our business to sell the telecom assets, but also to get the sustainability data out of the process.
Because for me, I’ve always had a passion, for sustainability and frankly, I would not have done that business had I not had that passion. And, kept going with it too. That was really important. In that period, I realized that in our case, our telecom niche in terms of the type of equipment that we dealt with was of value.
Also, the sustainability aspect was as well, and I remember the first time I actually reached out to a company of ours. Or sorry, to a competitor slash collaborator of ours and actually had the initial conversation during that period of my business, like I don’t know what the future is because we’d grown so quickly, had lost control, as our expenses had far exceeded our revenue.
I was in this period of goodness, where do we go next? Panic. Yeah. Yeah. And so selling the business for the assets that it liked that we had and the value that we had was an option. And in the end, we ended up not only recovering but going on to have a record year, and like it took the pressure off of needing to sell.
And so I just stepped back and just kept running the business. One of the things to start thinking about if you wanna sell your business in the long term is who might buy your business. And for most companies, it will often be a. Collaborator that you already have. So it could be a partner, it could be a supplier that you work really closely with where it would be a natural fit to merge together.
It could also be a competitor. That you’ve been competing against and if you put the two companies together, you could actually do so much more. And then there are also companies that do something, similar, complementary to what you do. And if you merge the two companies together, you could bring two pieces of the puzzle together to do something more.
And in the case of efficient, eventually, Acquired by Quantum Life Cycle, it was pretty much that case, an electronics recycler that wanted to get more into reuse. And so by bolting us onto them and leveraging each other, we can do more, and frankly, that’s happened already in the few months since the acquisition.
Starting to think about those types of companies, your collaborators, your competitors, those other complementary. Companies and industries are a really good idea because then you can start networking with them. So yes, connecting with them. Who knows where things can lead?
And speaking of networking, how did Quantum Life Cycle find you? Like how did the owner of that company or whoever, I don’t know if it was the owner how did they reach out to you? How did that whole, cuz I know they reached out to you? You didn’t even have to find them, it was just ah.
Like fast forward a few years and another company approached us about a possible acquisition. They caught wind and I had a discussion with them. So that was my first time meeting the president of what’s now called Quantum. It wasn’t back then. And we connected over LinkedIn and stayed connected and thinking back to September.
Of 2021, right? A little over. 2021. So like a little over six months ago, he reached out to me via LinkedIn because I think I posted something on LinkedIn and it was this little light bulb in his head. And where Quantum was at, they were looking to start growing through acquisitions and it was like, Oh, right Stephanie.
And then he reached out to me and we had a conversation. That’s a really interesting lesson to learn right there, because it’s not only about networking, making sure that you’re continually putting yourself out there. Frankly, I actually don’t use LinkedIn on a regular basis.
It’s a product for me, but you never know. So it’s important to have that online presence and stay connected. And I would say so we’ve had a few instances over the years where it was the possible acquisition, and a few cases I reached out and a few cases people reached out to me.
For one reason or another, it was just never a fit. But this time when Quantum reached out, it was a time when. It was a fit for them, for me. And I’m really excited because culturally Quantum and the company that I grew efficiently were very much aligned in many ways.
So it’s been easy from a cultural perspective, and I think that’s one of the key ingredients for success in any acquisition. Are your cultures aligned? Because if you don’t, then it’s going to be really hard to make the new alignment work.
Also if you’re taking your employees over or any of those things, for there to be a completely different culture, that’s just gonna be really difficult for them.
We were really lucky. So in September we reached out and had an initial discussion over LinkedIn and then the team at Quantum came out to visit us in person. I would say this acquisition went really quickly because. I had known them before. It wasn’t brand new, who do you like needing to get to know one another there?
There was a little bit of history there. And it did go really fast. So it was the end of September when they reached out. They came out for a visit in early to mid-October and they concluded from their side that yes, they wanted to do this. I was open to it as well, and one of the things I’m really proud I did in hindsight, in that very first conversation that I had with the president, was very open about it. I had a really good situation going on in my life because I was running efficiently.
I was also running my mom’s entrepreneurial community, like the wealth of the family side of my business. And I had a really great work-life balance, and so I put that out there. Listen, like I’ve got a great thing going on right now. I don’t wanna work full-time in the future. And I laid the ground for here’s how it’s gonna work for me.
I’m glad I did that because then it just laid the groundwork for the conversation moving forward. And in the end, they agreed to give me a flexible working arrangement. I work 80% which is still a lot in comparison to what I was working before, but I will say that it was revolutionary to even do this.
I’m glad I lead those seeds. So the next step of the process was, Coming to an agreement on what’s called a letter of intent, a lot. So the letter of intent is basically a document that you negotiate and agree upon saying like here, that like high-level terms of what the sale will be, so the price and how that will be structured and what your employment will be like looking ahead, those kinds of things.
That’s really important to get to that stage and get beyond it because you don’t give away your details until after you have that signed after you have that commitment of I will buy your business, provided that due diligence checks out. And here are the terms of how it will buy your business.
Kind of like a property or any of those transactions, like a major transaction. You wanna make sure like the inspection is right and all of those things, the numbers are right, and you don’t have to put $300,000 into a $200,000 home,
Thank you, Amanda, for bringing that up because that is the perfect analogy. It’s like the offer to purchase your home. Once, both parties sign that then you move into the house inspection phase. So that’s exactly this. So the letter of intent, like, that initial offer and then due diligence is the house inspection FA phase. And that’s where a lot of deals fall apart.
Because once you start looking under the hood, like a house, you discover all these problems, it’s gonna cost a lot of money. Like you have the option to back out. So in our case, we got the letter of intent signed later in November, and then due diligence started and they gave me, the lawyers gave me 18 pages worth of questions which we had to answer and upload information to.
And I was like, Oh my goodness. And for it was a simple company. So as part of this due diligence, There were 18 pages of questions to answer, which was overwhelming, to be honest, and there was a real intent as well to move this along as fast as possible.
One of the things, one of the pieces of advice that had been given to me many years earlier was to start putting all of your important documents into an online folder so that in the case of an acquisition, you weren’t searching for documents, they were there.
And so I will say that I did that for a certain period of time. Didn’t necessarily keep it up to date, but it did help a lot when I went to look back and find things like trademarks that we had filed early on in the business.
And like legal agreements and things like that. So when thinking ahead if you wanna sell your business, start doing that. Start creating an online folder and making sure all of your important information is saved so that it will be easy to access in the future.
It was great advice. I responded to the questions. It took me a couple of weeks to get through all of them, and then from there we moved into the purchase and sale agreement For some companies, from what I understand, due diligence can last a long time, like months.
In hindsight, what happened in our situation was that we did it concurrently with the purchase and sale agreement. So they basically were verifying things while we were preparing the purchase and sale agreement. Ours was a very simple acquisition. I was the only owner. We had no skeletons in our closet.
It was very simple. We’re a small company. And so it really wasn’t that difficult. But if there are complexities there, you can expect that process in itself can take a lot of. Interestingly, one of the issues that did come up that I’ve heard in hindsight like other companies has really struggled with, and you wouldn’t think this, it’s around the environmental aspect.
If you own a building, if you like, in our case, we don’t own, we just lease space in a building. Like they look at all of the environmental implications. Of, soil contamination and things like that. And we’re like, but we only lease our space. Like, how can that be a factor? But there are so many liabilities. In an acquisition they wanna make sure they’re, they know what they’re buying and their nobilities to risk.
Yeah. And I have a question about that. So were they taking over your space and still using it? The re-efficient office or the RET office? Yes. And okay.
That was so that’s a really great question. And in our case, yes, they were keeping pretty much everything as it was. Interestingly, Quantum made another acquisition at about the same time, and with that one, they moved the company into the existing quantum facility and closed. The other one. So it can happen both ways, but in our case, they kept the facility.
Okay. And I wonder if that other company had that same issue with their due diligence process, Out of curiosity, if they knew that they were closing that if that was their plan from the beginning. I wonder if they had to go through that part of it.
That’s a great question. Yeah, I would think. Probably not to the same extent as us because they were moving out of it pretty quickly. But I know of another company locally that was acquired a few years ago, and that acquisition almost did not go through because they found these potential issues. And again, you would not think like they had nothing to do with the business.
In this day and age, it’s a very, very hot topic for risk and liability. So in our case, in December we started working through the purchase and sale agreement, and that process took four to six weeks. And when I look back at those four to six weeks, it’s probably the most. Or one of the most intense periods of my life.
I say one of the most, I like dealing with a newborn. So in this case, there was just so much to do and it was also layering on the emotional side of it, which was on the one hand, preparing myself what I was. Like ready to let go of a business.
That was like my baby. That I’d nurtured over 11 and a half years. My first baby. Yeah. So there’s not an emotional aspect of it, but something that was, that I also had to manage was the fact that these things are never done until they’re done.
So until. The day of the acquisition, when everything is signed and the money is transferred and all that, like you, never can fully bank on that. They’re gonna get done. Cuz like up until that point, something, can happen, and like they can pull out. It’s also managing that aspect of it too, where it’s okay, I think this is gonna happen, but I still am not gonna hold my breath.
I still have to like it, Just be very conscious of that. And I remember thinking it was about the second week of December in terms of my mom, entrepreneur community. I don’t wanna make any changes until I’m quite certain that this is gonna happen. These changes are gonna happen on the other side of my life.
And by that point, I was starting to get the sense of, no, this is gonna happen and fast and I need to at least position myself. I’m not gonna be spending the same amount of time as the mom, and entrepreneur staff, and I gotta stop coaching and, thinking about how that’s gonna look for the future.
That emotional side of it was really challenging. And we also had our dog die in that period and it was like. It was just a really crazy time. So when on the day of when. The sale actually happened. The biggest emotion that I felt was.
Then it was like, yeah, all that pent-up anticipation and uncertainty is just taken away.
So it’s been a process of coming down off of that emotion. Craziness. Of that period. And I wondered too, if I had a day job when I hadn’t worked for someone, and if that was gonna be really hard to manage and if I wouldn’t like it. And honestly, it’s been better than expected, I think because I prepared myself for the worst.
Because like I’m sure. Like you’ve been an entrepreneur for five years. And thinking back, did you go work for someone else again? Like you get used to a certain freedom and flexibility. And, but in my case, it’s actually, it’s been better than I expected. Cause I expected the worst, which was maybe myself, like protecting myself.
But it’s been fine and I’ve been relieved and I do feel relief from things like, Thinking about sales and like how much sales we have coming in and do we have enough to cover staff and all those things, which I’d learned to manage very well over the years there. Now that I no longer have them, at least not in the same way, I do feel relief.
That’s awesome. Cuz you know that you’re still gonna get paid no matter what happens. you have that no matter what, I am an employee now. There is that interesting difference and I don’t know how to describe it.
There’s so much freedom in being an entrepreneur, but there’s that I wouldn’t say that because there is still uncertainty in being an employee, right? Because what if the company, Covid, likes what if the company closes? What if they get bought out by a bigger company?
There are just so many variables there in being an employee. But there is, I guess maybe it’s a false sense of security when you think about it.
You just can’t necessarily see them as an employee, but they’re still there. So one of the things my advisor had said many years ago is that in selling your business and getting a financial payout, it’s having, how do I say this on a podcast, but it’s basically having money in the bank where you don’t have to depend on someone else.
And in a sense, it’s. Freedom screws you money. I dunno if you wanna keep it on the podcast. Or there, the original word that was given to me was even crasser than that. But in a sense, there is a freedom in having that now, no matter what happens, you got some money in the bank you built this up.
There’s freedom in that as well. So getting to this place, it’s. It’s awesome and it’s like freedom in a different way. Like now I’m working for someone, but I also have more freedom and other respects And I will say one thing too. So when you sell your business, usually you’re expected to stay on for a certain amount of time, and often it’s a defined period like this.
Your contract is for a year or two years, in my case, there was no defined period given they wanted me to be part of their team. I think they wanted, to think of me as a longer-term employee, but it’s often the other case where you have a set amount of time that you’re expected to stay, to help transition the business.
That’s something to be aware of as well. If, in most cases, you don’t sell and walk away. You sell and you stay for the transition at least. And one of my colleagues at Quantum, sold his business to Quantum.15, 20 years ago, and he’s still there. You never know what the next chapter will bring.
I think that the nice thing about selling is that it closes one chapter of your life and opens you up to redefining yourself or doing something new or different. Yeah. And seeing what else comes up.
I love that you set that boundary at the beginning for them. Okay, this is how much I’m willing to work. I don’t wanna have, I like my lifestyle. I need to maintain at least some of that.
I love that you did that, and I think that’s really great advice for any of us that are potentially thinking about selling our businesses in the future to make sure that you define going into the negotiation instead of making it an after.
Absolutely because you know the financial terms, like that’s all great, but if you’re not gonna be happy or if it’s not gonna be successful, then nobody’s gonna be happy. Like you want, I viewed it as efficient, was like my baby, and I want the legacy of that to remain strong. So it’s about finding the right fit.
And in my case, there were a few times over the years when I had these conversations and we got to every stage of the process. Looking back, glad it didn’t work out before because it was the right time and the right fit with Quantum for when it happened.
Things are just meant to be, and I know. I keep thinking about the house-buying process, but it’s so similar and so parallel to this. Like even when you’re looking for a house and you find that perfect house and then something goes wrong and you don’t get that house, it’s just not meant to be, and it’s very hard in that moment to see.
That wasn’t meant to happen. So those sales that you had been offered before were not meant to happen. And it’s just, you just have to trust, I think, trust the universe, trust God, whoever you believe in, whatever you believe in, just trust and know that it’s gonna happen the way it should.
Absolutely trust in the process. And also like it always starts with a mindset, right? If you have the mindset, the intention that this is possible for you. Then at some point, it’ll show.
Yeah, definitely. I love it. And I wanna go back one more time to what you were talking about LinkedIn. The only reason that this happened he might have remembered you eventually, but you stayed at the top of his mind because, He saw your post on LinkedIn, so you bubbled back to the top and he was like, Oh yeah, she has a company that you know is super aligned with what we do and, maybe she would want to sell, so let’s talk to her.
So posting and networking are gonna be really important for everyone. I feel like business networking. The most important thing. And then also keeping up with those contacts because you never know what position they’re in, who they know, how you can help them, how they can help you, all of those things. I just think that’s a really critical part of your story.
Absolutely, Yeah. It was building those relationships and then like in some way staying top of mind. And on this day it’s online. And. I would say in the company acquisition space, it’s probably more LinkedIn than others. I doubt Instagram and Facebook are gonna be super Good for that. You never know, and if you have a personal connection with that person, but definitely for business.
LinkedIn is. Number one for sure. All right. Thank you so much for sharing your entire experience with your acquisition, and I absolutely love everything that you shared, and I thank you for being willing to talk about it because I know it’s something that just happened. It’s super fresh and super new, but I’m very honored that you chose our audience to listen to the story.
Yeah, this is my first time actually talking about it. In a venue like this. So thank you for giving me this opportunity and I hope it’s helped someone and just to think a little bit differently and think about what’s possible for them.
Yes. I think that a really important part of this episode is just reframing your. Your thoughts around, Okay, act like I am going to sell my business in 10 years, and how should I be structuring it now? What are the things that I should be doing every day that’s gonna set me up for that, and how can I build my network to make that easier?
I think those are the two biggest takeaways that I’m hearing from what you’re saying. How can people get in touch with you? Where do they find the wealth of the family, which is your mompreneur group?
Wealth of family.com is my mom’s entrepreneur business, and my main community is my Facebook. Which is now 5,500 moms, and that is mom, Entrepreneurs, Supporting Moms, and you’ll find it linked through the wealth of family.com web pages.
Perfect. That’s where most of us hang out. Yeah, and connect and collaborate and all that stuff. Yes. Awesome. I will put that in the link in the show notes, so then that way people can easily access that.
Connect with Stephanie McLarty
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