The Firm, Deal Review (Vol.7 | Issue 2)

VOLUME VII • ISSUE I

Deal Review

Blue Sky

Businesses

Intangible assets are no longer to be feared when there's no limit to success.

Look Who's

Talking

The Successful Transition of a Service-Based Business.

On the Fast Track Transportation-Based

Engineering Firm Changes Hands

Look Who's Talking Too

Translating One Iowa-Based Intepretation Company Into Two

Deal Review Magazine

Published by The Firm Advisors

Cortney Sells • President Anne Boonstra • Portfolio Associate Anya Roberts • Seller Liason Cadence Hollers • Office Admin Cassandra Powers • Chief Operations Officer Dan Hayes • Outreach Coordinator Jamie Heldridge • Office Admin Jared Olson •In-House Legal Counsel Jessica Hughes • Outreach Coordinator

Blue Sky Bliss

by Cortney Sells

When it comes to business, the term "Blue Sky" is often misunderstood. Buyers might shy away from blue sky because of the misconception that there is no real value.

Blue sky businesses get passed over all the time due to the question, "Why would I buy a business with little to no assets?" The answer: intangible assets are aguably more important than physical assets.

Brand Equity — A business can set itself apart from others based solely on consumer perception. How consumers feel about a product is imperative to a brand's overall value. This is a tremendous part of the premium paid as a goodwill by a buyer to a seller during an acquisition. While brand equity is not a physical asset, consumer perception of a business has value that helps increase sales in any company.

Intellectual Property — The value of intellectual property (creativity, technology, design) is immeasurable when it compares to physical assets. Patents, copyrights, trademarks, and trade secrets are all examples of this type of intangible asset that provides financial worth to a company.

Lori Hulshof • Client Liason Makayla Holliday-Kalagias • Brokerage Principal McKenna Thorngren • Portfolio Manager Rachael Rand • Director of Advisory

Customer Lists — It takes years to build a plum customer list and it has a decidely important future value for any business.

A solid business has the expectation of repeat customers, which creates value for customer-related intangible assets. All businesses look to build on interactions with previous customers to sell their products and services in the future. A customer list is invaluable.

Rene Rademacher • Senior Advisor Stefanie Baguian • Strategy Development Officer Susanne Miller • In-House Legal Counsel

Goodwill — The intangibles are more valuable than the tangibles. They can be challenging to value, but companies should calculate their fair value. They are the result of grit, dedication and backbone.

A word to the wise: don't shy away from the Blue Sky Bliss.

Editors • Cortney Sells & Stefanie Baguian Contributing Writers • Anne Boonstra, Rebecca Bowman, Makayla Holliday-Kalagias, Stefanie Baguian, Rachael Rand, Amy Goldyn

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Ta k e a L o o k 04

Brotherly Love

06

No Assets?

No Problem

07

No Such Thing as Typical

08

Feng Shui on Steroids

10

8 Businesses That Could Change Your Future

12

Answering the Call

16

Learning from a Pro

18

More than a Job Board

20

Speaking The Same Language

22

With a Bang!

Philadelphia Engineering Firm on a New Path

Nothing But Blue Skies Ahead

Who's out there searching for a business to buy?

KC-Based Commercial Interiors Firm Aligns With Longtime Goals

The Real Value in a B2C Call Center

Tricia Hoffman, Gulf Coast Small Business Lending

AIM's Growth Means a New Home for Careerlink

Interpretation in Des Moines and the Future

Entering 2020 on the Heels of a Successful 2019

Perfect Pairing in Pennsylvania How one patient purchaser placed himself to be profitable

by Makayla Holliday-Kalagias

Nathan Niles entered the professional world with an MBA from Harvard Business School.

From there, the companies he worked for varied, from audit strategies to financial planning to nursing homes to dental practices. One thing remained the same – he kept himself in a senior position. He had also owned and operated two companies over the span of his career before starting his search again. One of his businesses advised other owners and helped them to turn their business around. The other was in the healthcare industry, negotiating sales and helping business owners choose the right direction for them.

Before starting to work with The Firm, Niles had already signed over 15 NDAs and reviewed 20+ companies trying to find the right fit. He went into the process knowing exactly what he was looking for in a business. The perfect company would be local (in Pennsylvania); have a positive, steady, cash flow; have a great positive reputation; and have a diverse client base.

Being so specific can lead to some hurdles with finding the correct company, as Niles quickly found out, weeding through dozens of businesses to find the best fit.

“I also wanted to go into something I could understand,” stated Niles. “It didn’t have to be something I had done before.”

Niles did review a couple of different opportunities with The Firm before landing on Clifton, Weiss, and Associates. This company seemed like a great fit from the start. The business was well-founded, being around nearly 30 years, had a great reputation and relationship with clients, a strong team in place, and a solid profit year-over-year. After recognizing that this

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Deal Intelligence

company was the perfect fit, the process went smoothly moving forward, from meetings with the seller, putting an offer in place, and proceeding to the closing table.

Niles had plenty of experience previously with businesses whose success thrived on client relationships as well. The fit was natural from both sides.

A big focus getting to the closing table was ensuring that SBA financing could be secured with this deal. This engineering firm for public and private communication networks was not an asset-heavy business. When speaking with Niles, he surprisingly stated that, “the financing was fairly easy to secure.” One thing that both the bank and the buyer wanted to see was that, “there was some skin in the

Deal Review:

Clifton, Weiss & Associates • Location: Gwynned Valley, PA • Cash Flow: $1,175,467 • Loan Type: SBA • Number of Employees: 11 • Client Base: Railroad, Transit, Architecture, Engineering, Construction • Website: www.cliftonweiss.com

BLUE SKY

• • • •

Bliss

Sale Price: $3,900,000 Asset Value: $649,640 Blue Sky Value: $3.25MM Key Intangible Assets: • Long-standing relationships with clients • Superior Reputation • Technical Experience • Cash Flow The Firm Deal Review

NATHAN NILES Buyer

“Being prepared is key if you are looking to purchase a business.”

The future of CWA is bright with new growth measures already taking place. According to Niles, a new engineer and an auto-CAD technician have recently been brought on board, and they continue to look for a couple of new team members to expand their team.

A new system is being implemented to help modernize the business and help with practice management. There is also a CRM sales system coming into play soon – it is all about keeping the business moving forward.

On further growth and expansion, Niles said that they will “continue working organically for now, but it may make sense to buy another similar business in the future.”

Based on his history, we have likely not seen the last of Nathan Niles. •THE FIRM

I like going to the meetings internally and meet with clients as well, when needed.”

"I wanted to go into something I could understand. It didn't have to be something I had done before.

- Nathan Niles

This has allowed Niles to easily integrate himself into the thriving company. Clients and employees have both taken to the new presence, which lends to the idea of continued success for Niles and everyone else at the company. In short, “everything is going well.”

When asked what advice Niles would give to a new buyer, he stated that, “I was pretty selective. I didn’t just jump at the first thing I saw. Also have the right professionals to back you up.”

game for the seller after the sale.” This was Going into the process of finding a business a huge piece of getting both the buyer and with a team of trusted advisors saved quite a the bank on board. With the true value of the bit of time for Niles in the long run. business lying with the relationships built over 30 years, having the proper introduction and transition into the company was paramount to Niles’ success.

Elizabeth Clifton Seller

The buyer and seller were able to finalize the sale in October 2019, and Niles got straight to work. To help the transition period, he has decided to be, for the time being, “pretty hands on. I am attending the trade shows,

TheFirmAdv.com

Deal Intelligence

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Post-Sale Prosperity

Jaye Firmature McCoy and her spouse sold their service-based business through The Firm Advisors, and Jaye bought another for herself one week after. Five years later, FirstLight Home HealthCare has grown beyond her imagination. Congratulations on your success, Jaye!

Experience you can count on.

- 149 Current Opportunities - $325 million in assets under management - 121 days - average time on the market - 248 closed deals - Voted Top Brokerage by the International

Business Broker's Association - 21 industries represented 6

Deal Intelligence

The Firm Deal Review

What is Blue Sky? Structuring a Transaction with Little to No Hard Assets

by Rachael Rand

The term "blue sky" comes up often when referring to selling a business — What does it mean?

Assets:

More often than not, the seller agrees to assist

as computers, dump trucks, printing presses, lab

the new owner for a pre-determined period of

equipment, or similar.

time, anything from two weeks to five years, depending on the type and size of business.

Blue sky and goodwill are often used interchangeably. They refer to intangibles, whether

Transition:

Anything tangible related to the business, such

Inventory: Blue Sky/Goodwill:

this is via reputation, processes, procedures, etc.

The sellable merchandise a business keeps on

Examples include a software system, large con-

hand. For business such as plumbing companies

This refers to the financially justifiable portion

tracts the business won but then turned down due

or electrical contractors, their inventory is the parts

of the purchase based on the company's

to timing or capacity, brand equity, customer lists,

they keep on hand to service their customers. This

processes and procedures, name recognition,

intellectual property or another revenue line that

would include conduit, pipes, wire nuts, etc.

recurring clientele, et al.

has started but is not yet showing profit on the company's prior year's tax returns.

Non-Compete:

How is a purchase structured that involves blue sky?

non-compete or non-competition agreement as

A portion of the business is allocated to the persuant to the negotiated agreement between both parties that the exiting seller will not impact There are several ways to go about buying a

the business.

company with blue sky. This can mean proving the perceived value to a bank through a structured business plan, or an earn out where the seller is paid for that portion of the business based upon how the company performs after acquisition. Of course, an unfinanced transaction — commonly referred to as an all cash deal — can have as little or as much blue sky as the buyer is willing to pay.

What is an example of a purchase structrure?

Largely, the purchase of a business will be allocated into different "buckets" by the attorneys and CPAs involved. These allocations are very important as there are large variations in tax strategy. For instance, a business could be broken down as follows:

TheFirmAdv.com

Deal Intelligence

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Courtesy: Interior Enhancement

Empty Nest to Full Succcess

Couple takes opportunity to turn day-trip destination into full-time home

by Rachael Rand

It’s a nontraditional story for a nontraditional business. For St. Louis residents Bob and Christina Urberger, who were looking to become first-time business owners, an interesting catalyst drove them to make the journey into entrepreneurship.

When their college-aged son’s internship at Elon Musk’s SpaceX in California went from a university credit to a full-time position, the Urbergers looked around their home in St. Louis and realized that for the first time in decades, they had an empty nest.

Bob was a broadcast engineer, focusing on technology installation for corporate clients. Meanwhile, Christina had a diverse background of design, running a construction company, developing an internal team at Anheuser-Busch, and creative problem solving. She had also sold furniture as a passion for her entire adult life.

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Deal Intelligence

Deal Review:

Interior Landscapes • Location: Kansas City, MO • Cash Flow: $547,381 • Loan Type: SBA, USBank • Number of Employees: 8 • Client Base: Healthcare, Government, Education, and Corporate • Website: www.interiorlandscapes.com

What was next? Bob and Christina put their heads together and decided it was time to have something new they could call their own. After a call with Cortney Sells, President of The Firm Advisors, they were introduced to a professional business located three hours to the west, in Kansas City.

A month to the day after their initial

call, they met The Firm’s broker at Interior Landscapes in KC’s Crossroads Arts District and introduced themselves to the company’s current owner, Mike Hodes.

Hodes hailed from a diverse background himself, working in several different industries and having multiple business partners before eventually becoming the sole owner of Interior Landscapes.

With his own life changing, and his adult children already “contributing to the GDP” in their own ways, it was time to wind down and find a transition plan for the company he had built with his team.

It felt like kismet. Bob and Christina were impressed with not only the quality of the work and their clients, but the strength of the company’s financial history and the employees who each treated the business as if it were their own.

Founded in 2004, Interior Landscapes provides modern furnishing solutions for clients small and large during renovations or after new construction.

Their furniture can be found all over The Firm Deal Review

the Kansas City area and beyond, from schools in Topeka to medical facilities in Lee’s Summit.

It was a strong company, the buyers were qualified and the business was profitable enough... however, Interior Landscapes did not have significant hard assets to collateralize a traditional commercial bank loan.

The opportunity made sense, but there was one challenge left: bank financing. It was a strong company, the buyers were qualified, and the business was profitable enough to give Bob and Christina a comfortable lifestyle in a new city; however, Interior Landscapes did not have significant hard assets to collateralize a traditional commercial bank loan. As is the case with many service-based businesses, the inventory was custom-ordered for each job, sometimes sitting in storage for months while the plumbers, electricians, and other contractors did rest of rior Landscapes, with the help of Hodes their build-out work. and the incredibly strong team he “Furniture is the last to go in, so some- had built. times we end up waiting,” said Hodes.

“I can’t say enough good things After being denied by two banks due about this team,” Christina exclaimed. to the very nature of the blue business, “They really made us feel like part of the Urbergers worked with US Bank to the family.” find an acceptable financing solution.

At the end of 2018, the company was The new owners were now in the drivtheirs. They got to work quickly to learn ing seat of a well-oiled machine. The the day-in and day-out of running Inte- changes in the business were few, as

Hodes completed a six-month transition period. The Urbergers celebrated his retirement with a party for clients and staff alike in September.

Since the deal closing over a year ago, the company saw revenues increase and completed several large projects, such as the Jardine Elementary/ Middle School for the Topkea Public School District. Interior Landscapes’ next big endeavor is the Wyandotte County Juvenile Justice Center, a new construction project on which they are the lead furniture supplier.

How are the Urbergers feeling after their relocation to Kansas City?

They’re thrilled that their favorite city for a day trip from St. Louis has become their new home. Christina is ecstatic.

“KC is such an up-and-coming, vibrant city. The restaurants! I can’t get over how good the restaurants are.”

•THE FIRM

BLUE SKY

Bliss

• • • •

TheFirmAdv.com

Sale Price: $1,800,000 Asset Value: $22,840 Blue Sky Value: $1.64MM Key Intangible Assets: • Great Reputation • Ongoing Contracts

Deal Intelligence

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8 Businesses That Could Change Security and Automation for Commercial Buildings Location: Missouri Price: $6,150,000

These specialty contractors focus on power, automation, and data/security installations with associated maintenance. The team works with large companies and projects include security system installation, industrial machine installation and maintenance, complete electrical installation, data center electrical work, and the installation of building automation with controls.

Owner Profit: $1,375,134

Vancouver Area Architecture Firm Location: Surrey, British Columbia Price: $6,387,000

This architecture firm specializes in multi-family residential and mixeduse designs. The team of 20 creates beautiful properties for developer/ contractors who are building office buildings, residential towers, senior care facilities, and public buildings, in addition to multi-family homes and mixed-use developments.

Owner Profit: $1,344,708

Pet Boarding & Daycare Absentee, Non-Franchise Location: Reno, NV Price: $540,000

This company has fostered a loyal following with many happy customers. The open play spaces accommodate dogs of different sizes and temperaments and the boarding area is comfortable and spacious for those staying the night. An experienced groomer offers baths, brushings, cuts, and nail trims, and kennel staff can bathe a pup while they are boarding or at daycare.

Owner Profit: $148,439

HVAC and Plumbing in Sacramento Location: Sacramento Valley, CA Price: $9,700,000

This growing company completes HVAC and plumbing projects for new construction as well as renovations. With an on-site fabrication shop, this company can meet any HVAC needs of their customers located throughout Northern California. The owner currently focuses on lead generation, estimations, associated negotiations, bonding, PR, and financial oversight.

Owner Profit: $3,864,684 10

Deal Intelligence

The Firm Deal Review

Your Future

Opportunities Presented by The Firm See our website for over 140 additional deals!

Commercial Plumbing in Omaha Location: Omaha, NE Price: $940,000

This plumbing business has been serving the Omaha area since 2011. Their service extends roughly 60 miles from the office, allowing them to work in smaller towns outside of the metro if needed. They currently work fully on commercial projects. 75% is large commercial plumbing, and 25% is installing utility lines, also for commercial clients.

Owner Profit: $257,545

Specialized Trucking, Civil, and Mining Support Location: Midwest Price: $17,800,000

This plumbing business has been serving the Omaha area since 2011. Their service extends roughly 60 miles from the office, allowing them to work in smaller towns outside of the metro if needed. They currently work fully on commercial projects. 75% is large commercial plumbing, and 25% is installing utility lines, also for commercial clients.

Owner Profit: $257,545

Expert Masons, $4MM in Sales Location: Eastern Iowa Price: $3,200,000

This company has mastered bricklaying since 1988 and works with both commercial and residential customers. Projects include home exteriors, campus dorms, high schools, churches, community centers, and commercial buildings. Most work is completed locally. In addition to laying brick, the team also completes decorative concrete projects that include everything from grocery store floors to a pool deck.

Owner Profit: $792,485

Advertising Firm: Visual, Media & Communications

Location: Toronto, New York and Montreal Offices; Ontario Production Facility Unmatched in terms of technology, production capabilities, and product diversity, this firm is serviced by the most experienced and knowledgeable team of display graphics, digital signage, video production, and print professionals. Reputation for reliability, quality workmanship, professionalism, and customer service is well earned and reflected by the trust and loyalty of clients served.

Owner Profit: $5,932,295 TheFirmAdv.com

Deal Intelligence

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Jonathan Ratliffe, Buyer

Nita Chisari, Seller

BUY? SELL? PARTNER? The Firm Shakes Up the M&A Industry with an

Innovative Opportunity for Two Business Owners

by A. R. Goldyn Nita Chisari had been working as a senior claims adjuster in the corporate insurance industry for several years when she decided it was time for a change: She wanted to start her own business.

“In 1996, I got downsized from a company,” Chisari said. “They went bankrupt, and that caused me to examine the industry and figure out what I wanted to do.” That same year, Chisari’s husband would retire from his 25-year career with the Orlando (Florida) Police Department, and they planned to move to a farm in Tennessee with their young son.

Maybe Tennessee would be the right place to start a new business as well.

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Deal Intelligence

Chisari had a penchant for claims handling, and she was passionate about discovering call management services and solutions that could improve customer service and job efficiency for the first-notice-of-loss (FNOL) industry. Those interests led her to consider starting her own claims reporting business.

“A gentleman was trying to teach me how to load the software,” Chisari continued, “when they got a call from a company called Georgia Casualty out of Atlanta looking for a firstnotice-of-loss company, and the gentleman says, ‘Here she is.’ I was taking their calls 24/7 the next day on my cellphone.”

“I always thought that first notice of loss was a very important part of the claims process,” Chisari said, “and I didn't think a lot of emphasis was being put on first notice of loss outside of the worker’s comp industry. So, I decided to go to Birmingham, Alabama, to buy the software to do first-notice-of-loss [reports].

In March 1999, with a couple of telephone lines, Chisari started Quality Resource Management (QRM) in the living room of their home and the company grew by word of mouth.

“By the end of the year, I had five phone lines in my house with different ringtones so I could

The Firm Deal Review

Deal Review: Quality Resource Mgmt • Location: Nashville, TN • Cash Flow: $7,949,406 • Loan Type: SBA Loan • Number of Employees: 160+ • Client Base:large clients,

business-to-business, na

tionwide footprint • Website: www.qrm-inc.com

“When I talked to Nita, she was adamant that she was not ready to retire or sell her business,” Sells said. “She wasn’t sure she was prepared to buy out a competitor, either. But she did ask about what options she might have for expanding her service offerings.

“I had an idea,” Sells continued, “I wasn’t sure whether Nita would be interested, but I knew that if she liked it, we were going to do something groundbreaking for M&As. So, I said, ‘Nita, what would you think about forming a strategic, symbiotic partnership with a company that complements yours and has the services you’ve been talking about wanting to add?’”

you can have partnership contracts with our giving away the farm, so both companies prosper for the next 20 years. You can hold on to your company’s integrity and stay involved.”

By engaging in a strategic partnership with Ratliff, QRM, Inc., makes it possible for adjusters to look at completed claims, which they can adjudicate and manage in a onetouch manner.

With the strategic partnership, Chisari can offer pricing that’s beneficial to QRM, Inc., clients because of the business they do with Ratliff's company, and QRM, Inc., receives a volume discount.

determine which client was calling in on Chisari was interested and engaged in an “Our goal is not to integrate the companies,” which line,” Chisari said. “After the first year, agreement with The Firm.

Chisari continued. “See, everybody, when we obtained an office suite and [the business] they acquire stuff, they think of integration. just started taking off from there.”

Sells started calling The Firm’s qualified con- That is not us. We are remaining our own tacts. While speaking with Jonathan Ratliff, brands but leveraging and working together QRM, Inc., partnered with regional companies owner of Collateral Holdings, LLC in Tusca- to bring new ideas [into the] space we’re opthat were either carriers, third-party administra- loosa, Alabama, she heard him saying a lot of erating in. We're looking at things that each tors or self-insured employers. The company the same things Chisari had said. He wasn’t company does well and saying, ‘OK, how do also partnered with vendors serving the indus- looking to sell his business or acquire a com- we fit? What could we add, should a client try, such as independent adjusters and nurse petitor. But, like Chisari, he suspected he desire this? How would we work together to case managers — vendors that also needed could be doing more to diversify his business deliver that type of cohesive service?’ So, 24/7 dispatch and notification services — ef- and enhance his service offerings. we're taking the best of both worlds.” fectively providing triage or exposure controls Continued page 14  based on the severity of an incident.

“I said, ‘Jonathan, I have someone I think you need to meet,’” Sells said. “I told him I rep“We became known as the 911 of the casu- resented the owner of another family-owned alty business,” Chisari said. "Our whole focus business who was looking for a strategic was to control the ultimate loss on the claim.” partner that could help her diversify her service offerings, and I thought they Twenty Years Later … could help each other.”

Not long after QRM, Inc., celebrated its 20th anniversary in March 2019, Chisari started Ratliff said that was something thinking about her next strategic move for the he’d really like to hear more company, how and whether she should diver- about. sify her service offerings, and how she could preserve her legacy at QRM, Inc. A New Type of Deal • Sale Price: $11,000,000 “Not all acquisitions Around the same time, Cortney Sells, presi- are black and white,” • Asset Value: $445,000 dent of The Firm, learned that the insurance Sells said. “There claims industry was experiencing spectacu- can be hybrid deals.

• Blue Sky Value: $10.5MM lar growth. Always on the lookout for oppor- As with this partner• Key Intangible Assets: tunities to match up business owners, Sells ship, two family-owned reached out to owners of leading insurance companies can work to• Long Term Clients claims services providers to see if any were gether to grow without giv• Streamlined Operations preparing for retirement, planning an exit strat- ing up their family’s legacy. egy or looking to expand their businesses.

The biggest takeaway is that

BLUE SKY

Bliss

TheFirmAdv.com

Deal Intelligence

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◄ from page 13

“We were not going to find a strategy that would put any changes to current workflows,” Tips for Landing a Strategic Partnership Chisari said, “because we were already When businessowners first decide to look great-performing companies and administerfor a strategic partner, they should out- ing the core services that we already had. But line what they’re trying to accomplish. looking at what could we add on to those core Chisari recommends also defining the services and putting together those roadmaps managerial weaknesses.

— that was really the biggest obstacle.”

Chisari said of her experience working with The Firm. “[It was] everything that I wanted, Jonathan felt like he came out with a big company. I've already made a sale for the new company. He goes, ‘Nita, working with you is a hoot!" We've got a good relationship. And I just couldn't say more about Cortney and her staff. They have been wonderful.”

“I recognized that I had grown the company,” she said. “I had brought the company to a point where I needed to look at the landscape of the industry, understand the changes, and then scrutinize my strengths and weaknesses as a CEO and decide how I was going to respond to those weaknesses."

Chisari also said that she and Ratliff remain in close communication with one another, and they communicate frequently with their direct reports to ensure that each company’s culture continues to develop in positive ways.

Although she describes the formation of a strategic partnership as “a journey,” Chisari said it was a positive experience because she, Ratliff and Sells all worked together to make it happen.

“The challenges, I don't know if I would really call them challenges because Cortney's staff did such a good job in vetting and bringing to me partners they thought would fit the model I was looking for,” Chisari said. “They actually brought me companies that really would be good partners for QRM. So, they didn't waste my time.

“I think the challenge with anything is trying to work out a contract that really emphasizes partnership, my ongoing involvement, their ongoing involvement, how we were going to work together to enhance each other's offering,” Chisari continued. “It really worked through those dynamics purely on a high-level basis. By analyzing and spending time understanding each other's capabilities, and visiting each other's locations, we were able to work through those questions and get concepts for future products.”

"It was everything that I wanted.

Jonathan felt like he came out with a big company. I've already made a sale for the new company."

“I think one thing that played very well in QRM's favor was that they’re a lot larger than the company they’ve partnered with,” Sells said. “QRM has such a strong positive culture, and Ratliff really admired that.” In fact, he plans to enhance his company’s culture with many of the employee programs that QRM, Inc., has implemented, well-positioning his company on the employee side as he and Chisari move forward.

Sells offered some additional advice to businessowners seeking out strategic partnerships: “Visit each other’s locations and spend time analyzing how to build a roadmap to work together to enhance products while maintaining your individual brands,” she said. “Put together a shared business plan with shared goals and a good roadmap.”

“My legacy hope for my company has not changed,” Chisari continued. “I feel that I put my company in a great position for its legacy. I still work in the company...I've got more tools to help pursue the legacy of my company...I think 20 years of experience in understanding the needs of my clients has allowed me to put that knowledge to work. I think we found the Chisari also had one last piece of advice for best partner, and I'm excited about our future.” entrepreneurs considering a strategic partner- •THE FIRM ship or other type of hybrid deal. “I just want young entrepreneurs to not look at acquisition like people have always looked at it,” she said. “Yes, there was money exchanged, but it's different; it's more of a hybrid agreement because we share so many common philosophies. It's really the best thing. Even better than the monetary gain, it's the ability to partner with a company that you share so much heart with. I don't know how to explain it.”

Chisari said that the most difficult part of the deal was working through a roadmap of how she and Ratliff would work together to bring Don’t You Love a Happy Ending? those enhanced products to market while “I'm very pleased at the agreement and the still preserving their individual brands. contract, the contract terms, the selling price,”

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Deal Intelligence

The Firm Deal Review

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D L

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D L

SO

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Flooring & Installation - Absentee Owned Sale Price: $4,615,000 Cash Flow: $1,089,012 Multiple: 4.24 Business Location: Phoenix, AZ Buyer Location: Lincoln, NE

B2B Sales of Industrial & Automotive Equipment

Sale Price: $1,200,000 Cash Flow: $543,874 Multiple: 3 Business Location: Columbus, OH Buyer Location: Leesburg, IN Blue

Blue Sky Value: $4.35MM

Sky Value: $575,0000

Successful Deals Closed by The Firm !

D L

!

D L

SO

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Design & Architecture with Hotel Focus Sale Price: $3,200,000 Cash Flow: $1,693,152 Multiple: 2.57 Business Location: Nashville, TN Buyer Location: Columbus, OH

Blue Sky Value: $1.55MM TheFirmAdv.com

Luxury Dog Daycare, Boarding & Grooming

Sale Price: $2,708,604 Cash Flow: $272,858 Multiple: 4.5 Business Location: Washington, D.C Buyer Location: Highlands Ranch, CO

Blue Sky Value: $2,435,746 Deal Intelligence

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LEARNING

FROM A

PRO:

7

QUESTIONS

3

You have mentioned standard addbacks several times. What exactly are standard add-backs?

For business acquisition transactions, we have found that transferable/relevant management experience is critical. We also look at the buyer's personal credit and the cash flow of the business (using standard addbacks). OF course, this isn't everything we analyze, but experience, personal credit, and cash flow are typically the top three.

Stand addbacks would include such items as: interest payments, depreciation amortization, seller's compensation, and other expenses that will not continue under new ownership. Of course, we need to factor in appropriate compensation for the buyer since we are sure you want to be paid for all your hard work!

4

This edition is all about cash flow lending. Some lenders call this "air ball Tell us about your lending lending" and tend to steer buyers institution. away from businesses with blue Gulf Coast Small Business Lending (a sky. What is Gulf Coast Small Budivision of Gulf Coast Bank & Trust Co.) siness Lending's policy regarding is a nationwide SBA Preferred Lender blue sky?

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that thinks logically and moves quickly.

We provide great terms and competitive We commonly refer to the "blue sky" rates to borrowers across a wide range component of the deal as "goodwill." of industries on loans up $10,000,000. Gulf Coast Small Business Lending is definitely a cash flow lender. When a Would you rather loan on transaction has good personal credit, postclosing liquidity, and relevant ina business with heavy dustry experience along with excellent hard assets or on a busibusiness cash flow (With standard adness with a heavy cash flow and a dbacks and an adjustment of approlot of blue sky? priate owner draw), we put no limit on Well, both collateral and cashflow wou- the amount of goodwill that we will conld be nice! However, if we had to pick sider financing. We would rather rely one, Gulf Coast Small Business Lending on excellent cash flow (which, let's be definitely relies much more heavily on frank, is what really repays loans) than business cash flow. Unlike some len- collateral. It is our greatest hope that ders, we are very comfortable conside- the excellent cash flow continues, the ring transactions with large good com- borrower pays the loan as agreed, and ponents. Question four discusses our we never need to depend on the business assets to pay off our loan. approach in more detail.

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5

What are some of the key attributes you look for when assessing a loan request?

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What are the most common reasons for an SBA loan to be denied?

SBA loans are denied for a whole host of reasons, but the most common are: business/buyer not eligible for SBA financing, buyers with insufficient management experience, poor personal credit histories, and/or inability to demonstrate adequate cash flow (with standard addbacks) to service the debt obligations of the business.

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What are some costs that are common with an SBA loan?

SBA loans include all of the standard costs assoicated with any commercial term loan (so collateral appraisals, business valuations, legal fees, recording fees, and the like). Although SBA loans are not assessed "points," there is an SBA Guarantee Fee that is comparable to "points."

Borrowers should be provided with an estimate of closing costs during the underwriting and/or closing process. Note that in many cases, the closing costs can be paid with loan funds which reduces the borrower upfront, out-of-pocket costs.

Tricia Hoffman Vice President Business Development Officer

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Deal Intelligence

The Firm Deal Review

The plan you needed; the partner you didn't expect.

Jaime Heldridge Cassandra Powers-Satterfield Rene Rademacher

Susanne Miller Makayla Holliday-Kalagias Rachel Rand

Cadence Hollers Jessica Hughes Jared Olson

Stefanie Baguian McKenna Thorngren Anya Roberts

Anne Boonstra Dan Hayes Lori Hulsof

TheFirmAdv.com

Deal Intelligence

17

For the Greater Good of Omaha

A DEAL 30 YEARS IN THE MAKING

by Stefanie Baguian

The AIM institute was started almost 30 years ago to address a shortage of tech talent in the Omaha metro. Careerlink started as one of a variety of projects to create funding for the greater good of the AIM Institute's mission. At a time when most job postings were merely in newspapers, the AIM Institute created Careerlink as one of the first online platforms to search and apply for jobs.

As Careerlink became financially successful, the Board of Directors at the AIM Institute shifted their goals in a new direction, wanting to focus more on their not-for-profit missions and their educational programs. Unfortunately, Careerlink took away the focus from the main missions. They decided that Careerlink needed to stand on its own.

Courtesy: AIM Institute

“Careerlink itself wasn’t perfectly aligned with our mission,” said Levi Thiele, the Vice President of Program and Resource Development at AIM. “We were also growing more sustainable funding sources for mission related activities, so the board's advice was to sell Careerlink off, take the proceeds from the sale, and invest in growing mission related services.”

“We have trademarks that go along with it,” said Thiele. “We have the intellectual properties, we have the platforms and we have all the contracts with customers, so that’s really what we were selling.

It might seem to be a rare moment in a business’s course when they realize that only a portion of a business needs to be sold and not the entire business. Business owners A perfect example of a blue-sky business, who have different divisions may not realize Careerlink carries a minimal amount of phys- that this is an option for them if they are not ical assets and really focuses on the services willing or ready to sell off the whole business. they provide.

The Board of Directors reached out to a plethora of brokers, had phone calls and heard pitches. After a referral from the Vistage Network, they ultimately met with Cortney Sells, President of The Firm Advisory.

Deal Review:

Careerlink

• Location: Omaha, NE • Cash Flow: $927,113 • Loan Type: SBA • Number of Employees: 10 • Client Base: Small to large businesses looking to acquire

employees, individual job seekers • Website: www.careerlink.com

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Deal Intelligence

The Firm Deal Review

BLUE SKY

• • • •

Bliss

Sale Price: $2,770,000 Asset Value: $900,000 Blue Sky Value: $1,187,000 Key Intangible Assets: • Brand Recognition • Great Reputation • Ready for Expansion

The Firm tries to make this a smooth process and deliver an outcome that leaves both buyers and sellers feeling satisfied.

“I have no experience selling businesses before,” said Thiele. “It’s not my background. It’s not something I have a lot of experience with...so what I really appreciate is that we could reach out [to The “Cortney’s [pitch] was just the most persuasive and got us the most Firm] with a lot of questions, like newby level questions, just beexcited,” said Thiele. “She has a lot of energy and enthusiasm and cause we didn’t understand the process. No one at The Firm ever she spoke very knowledgeably about carving out a piece of a busi- made us feel stupid for asking.” ness and doing that with as little disruption as Thiele offers some advice to others selling possible to the rest of the business and that’s their business. something that was important to us. It wasn’t like we were selling our entire company. It was “If I could go back and do it again, one a carveout.” thing that I would have done differently, I would have spent more time prepping for Through The Firm’s process, they met with the carveout before we ever put the busiseveral prospective buyers. All coming from ness on the market,” said Thiele. “I think a national level, the buyers were anything what happened in our case, we weren’t from investment groups to staffing agencies ready for a lot of the questions. We hadn’t to people who just wanted to own their own split out some of our books and our prosmall business. cesses in a way that made them easily shareable when we started getting down In the end, a single buyer was decided upon. the road with some of the potential buyers.

I think it made some of the process drag “There were two main out longer than it should have.” reasons,” said Thiele.

“The first was financial, As Careerlink transitions away from AIM just the deal itself, in a and starts a new chapter, that doesn’t mean it will not be rememfinancial point of view, bered at the AIM Institute. best aligned with what we were looking for and “Because it serves so many customers across the region, I think I’ll the value of the busiLevi Thiele miss having that connection to such a wide audience,” said Thiele. ness. The second thing “Because oftentimes, it did provide us the opportunities to get our we were looking for: the not-for-profit mission in front of that wider audience.” •THE FIRM buyer’s vision for what he wanted to do with Careerlink sounded really good to us. This particular buyer wanted to keep Careerlink running in the Omaha area. He wanted to take on all the existing employees.

He had a vision for growing it more into a staffing model. All of that sounded like it would be really really good for Omaha. That was compelling to us as well.”

"We have the trademarks that go along with it. We have the platforms and we have all the contracts with customers... that's what we were selling."

TheFirmAdv.com

Deal Intelligence

19

Passion, Translated

A new business owner takes leap and learns the language of a new industry

by Rebecca Bowman They say if you love what you do then you will never work a day in your life.

That could not be more accurate for International Translation Services President, John Bryant. Starting out his career in the insurance industry, but his position was eliminated due to a company closure. Bryant then looked to business ownership as a solution. Having other family members who had gone that route in the past, it seemed like a good option.

Although Bryant had no previous experience in the language services industry, he was blessed with a bilingual wife.

Stumbling upon International Translation felt like a natural fit for his family. Being around non-native English speakers, Bryant saw the positive impacts language services can have firsthand.

With any business, there are challenges in this industry that Bryant is still navigating his way through. Most language services professionals have been interpreters themselves, which gives them a huge advantage of having existing clients to work with. Additionally, employing quality translators isn’t cheap. This is a professional service where you get what you pay for and Bryant only wants the best.

International Translation Services provides face to face translation services which can struggle to compete with online translation services; however, that face-to-face contact is one his biggest assets.

Being able to hear tone and see facial expressions while translating makes a huge difference. How many times have you copied something

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Deal Intelligence

into an online translation tool and the results are something completely different than what you meant? It can be safely assumed that the answer to that question is often.

from the beginning that his home state of Iowa didn’t offer a lot of translation service opportunities, he has always had it in mind to expand to other states.

Knowing what your end goal is up front can help outline what day-to-day deciAs seen with other blue sky businesses, sions will get you there. a translation services company has minimal to no physical assets, with the big- Two years after Bryant’s initial purchase gest intangible value being those inter- of International Translation Services, he preters working face-to-face with people has returned to The Firm with interest in need of help. This was a business that in another translation service business. didn’t need a brick-and-mortar location Now with experience in the industry, or a large amount of inventory on hand.

Bryant feels comfortable purchasing a business that was originally located When planning long term, it is vital to hundreds of miles away. An industry he know what your limitations are and what knew very little about has now become resources you have available. Knowing his new career and passion. •THE FIRM

BLUE SKY

• • • •

Bliss

Sale Price: $625,000 Asset Value: $1,000 Blue Sky Value: $624,000 Key Intangible Assets: • Long Standing Contracts • In-Demand Field • Scheduling System • Diverse Set of Languages Offered • Recession Proof The Firm Deal Review

John Bryant's Advice to those New to Business Ownership • Do your own research...digging into the financials and physically touring the business gives you a much closer relationship with the opportunity to really see if it’s right for you.

• Talk to people that do the same type of business in another state. Not being seen as a competitor they most times have great advice to give.

• Be on the look out for potential customers (specifically large organizations) – this gives you a starting point for growth opportunities • Pay attention to the news! What is going on in the world can have a large impact on business owners.

• Being excited about a new opportunity can sometimes give you rose colored glasses.

Don’t forget to also consider worst case scenarios while you daydream about the possibilities.

• Expect to lose Deal Review: some business International Translation due to the change Services, Inc. in ownership.

• Get the seller’s • Location: Des Moines, IA buy-in. Having a • Cash Flow: $656,000 good contact to • Loan Type: SBA Loan • Number of Employees: 1 help you through • Client Base: Healthcare, the transition is in• Insurance, Banking valuable.

• Website: www.translatorsiowa.com

TheFirmAdv.com

Deal Intelligence

21

T

he past year was a successful one for everyone with many things to celebrate. Here we look

back at all the huge milestones we hit in 2019:

ROARING PLENTIES: A Year of Success in [July 2019] We were featured on the cover of the Midlands Business Journal celebrating our international recognition and our impact on the Business Brokerage and Advisory Industry.

[Jan. 2019] We earned a place on the BBB Honor [Aug. 2019] Roll for the ninth year running.

We were named one of Inc. 5000's The Most Successful Companies in [Apr. 2019] America. These are business that We earned Best Business Broker in are privately-held in the US that are Omaha for the eighth year. experiencing fast-paced growth.

[May 2019] We cleaned house at the International Business Brokers Association Awards. Out of 2,000-plus brokers, we won Top Deal Maker, Top Global Producer of the Year, Closing of the Year, IBBA Chairman's Circle Award, and IBBA Deal Maker Award.

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Deal Intelligence

Photo Courtesy: IBBA.org The Firm Deal Review

Review [Sep. 2019] Cortney Sells, President of The Firm, was featured on The Real Deal, a podcast put together by tthe IBBA. She discussed her method to success for The Firm and how to measure it. This podcast had over 1,000 listens and Sells received over 300 thank you notes from various brokers around the country congratulating her on a successful year and for sharing valuable knowledge to experience success in the advisory industry.

TheFirmAdv.com

[Oct. 2019] Sells was named to Midlands Business Journal's 40 under 40, a celebration of the Omaha Metro's leaders. Sells was honored to be on this list dominated by women in 2019. Sells is committed to her job and the Omaha Community.

[Dec. 2019] The Firm ended the year on the highest note celebrating an alltime high in transaction dollars for businesses sold in 2019 and The Firm looks forward to another year of continued success in 2020.

Deal Intelligence

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The plan you needed; the partner you didn't expect.

At The Firm, we set ourselves apart by offering 100% confidentiality, personalized attention, and a complete team dedicated to you and your business from start to finish.

Local HQ. Global Leader.

The Firm sold more businesses in 2018 than any other M&A advisor in the world.

Contact our office here in Omaha for expert guidance on your exit or acquistion.

402.998.5288 TheFirmAdv.com