MAU 22 | Retiring From Business

 

What comes next for you after selling a business, venturing into a new one or retiring altogether? Kathy Miller did the latter when she finally sold her own business, Total Event Resources. Kathy lived in the world of events for more than four decades, doing projects for Fortune 50 corporations, major trade associations, and nonprofit organizations. During her time, she has received multiple awards while the business also received awards in the industry. She eventually decided to sell and fulfill her dream of traveling the world as a retiree. In this episode, Kathy shares key things in preparing a business for sale and planning for retirement just like she did.

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Kathy Miller: Transitioning From Selling A Business To Retirement

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At the end of the day, A3 was able to find some faulty findings and got the report thrown out and a clear to close for the seller. They were able to get to the closing table. They’ve got the bright resources and the right people. If your acquisition is in the industrial space, automotive, dry cleaning or plating, and the deal includes tanks, tubs, vats, drums, silos or storage of any hazardous chemicals, you’ll definitely want A3 on your M&A team. Their motto is, “A3 Environmental consulting by assets, not liabilities.” I hope you enjoy this episode.

I have to admit to a fair amount of personal gratification in introducing our guest, Kathy Miller. Our M&A firm, Sun Acquisitions, got to play a small role in helping Kathy achieve her dream of selling her business and seamlessly moving into an active and happy retirement. She is a force. She built her global woman’s certified meeting and events management company from the basement of her home into one that managed premier events for many Fortune 50 companies around the world. Her company, Total Event Resources, became synonymous with excellence evidenced by more than 60 industry awards her and her company garnered.

She is a graduate of the inaugural Goldman Sachs 10,000 Small Businesses program. She aspired to deliver outstanding support to the most prestigious companies in the world. Mission accomplished. Kathy realized one of her dreams of selling her business and ensuring that her legacy will carry on. Kathy and her husband, Dick, who played an integral role in the sale of her business are enjoying the fruits of all those years of hard work and sacrifice. Kathy, welcome to the show. It’s such a pleasure to have you here and I’m excited to have you share your journey.

Thank you, Domenic. That was such a great introduction. I appreciate it.

It is well-deserved. You are a force. Getting to know you the way I have, I respect what you built and how you built it, building a family and a business. It’s an amazing journey as I got to learn what you did. For the M&A Unplugged community, could you talk a little bit about the business and your journey of building it?

It’s unusual. I didn’t start a business to start a business. I’ve started a business to refocus my life because I have two small kids at home and both my husband and I were traveling and working like crazy. An au pair is living with us and I thought, “There’s got to be a different way.” Back in the day, I set out to produce twelve special events for the year. I thought, “With that, I could make a decent living.” Fortunately, in 1995, the meeting and event business and the special event business was booming. I started building my business based on that.

You’ve got to start. You built some events and all of a sudden, it starts to take off for you?

It did. It’s interesting because 90% or more of my business was word of mouth. I was fortunate at that time. The phone would ring and say, “I’ve been at that event that you did in Orlando and it was fabulous. I’d like you to do this for a national sales meeting or a new product launch.” It was just me and I would say, “Yes, this is great.” I’d hang up the phone and go, “How am I going to make that happen?” After my first year of flying solo, I realized that I needed some help. I hired an intern and that intern turned into a freelance person. I went back to school and the freelance person came and worked with me. She left and started her own business and then I was like, “I need a full-time employee.” I hired my first full-time employee and fifteen full-time employees later with big businesses all over the world. It kept growing, fortunately.

Preparation starts with understanding that no matter what, you should always have an exit strategy. Click To Tweet

Talk a little bit about what Total Event Resources did and the clientele that you were handling because it was impressive to see what you had built.

In the beginning, we started out as a special event company. That meant any corporate association or non-profit organization that was doing something in the events world of a gala incentive program where they were entertaining their app salesforce. We would come in and produce those special events. When I sold the agency, we were producing marketing live events all over the world from 9 to 18,000 people and everything in between. We’re involved in the strategy, creative, production, logistics and the analytics of them.

You were doing this for Fortune 50 companies around the world on a global basis. You’re dealing with clients that have high demands and high expectations who want things to be perfect and your company was delivering amazing events all over the world.

That is correct. Our client base was diverse in terms of the types of organizations that we represented.

Kathy, you built this business that you’ve worked at for many years. There are tons of sacrifices. Talk about how does your retirement feels? Is it what you thought it would be? How has the transition been out of the business?

It’s so good. That was my short pithy answer. I was in the industry for 40 plus years and I started my career with Hyatt Hotels. I didn’t know about this industry. I grew into it and became extremely passionate. They say, “When you do what you love, you love what you do.” This side of the business was extremely gratifying for me and a lot of people thought that I would be extremely challenged by retiring because they knew me well. I was involved and spent a lot of time building the business, but I’ve enjoyed it quite a bit. My passion for traveling that I did professionally, I’m working on personally.

Are you surprised at how seamless it has been to move away from the business?

I am a bit, yes.

Did you do anything prior to selling the business or while you were in the process of selling to mentally prepare for the next step?

MAU 22 | Retiring From Business

Retiring From Business: People are buying your systems, processes, client base, and reputation. All of that has to be in place to a point where someone else could take over successfully.

 

Absolutely. It was a process because ultimately, I’ve started out probably three years prior on my own to think about it. At that point, I went out independently looking for buyers. It’s limited, but I thought I had a couple that would be a great fit. I think that helped me get my head around what it would be like to sell the business. This is like people talking about raising a family and then you’re going to give away your baby.

There are some statistics out there that are alarming, which is over 75% of the owners, after they sell their businesses, have remorse but not from a financial perspective. They might’ve gotten the number they wanted and happy with the financial outcome, but they weren’t quite ready for this next step and they had nothing to go towards. Did you do anything specific or was there something that was pulling you that made it easier to step away?

We had bought a house in South Carolina and my husband was living there and I was living in Chicago. Perhaps four years of commuting and traveling might’ve done it. We also have a son who lives in Australia and he had a second baby boy. That was tugging at my heart to travel to Australia for an extended amount of time. I got my head wrapped around it because of the things I wanted to do outside of work.

You just gave the M&A Unplugged community a real key nugget here. You did have things that were pulling you away and as an owner, you can just do a quick emotional readiness to ask this. What would you do after you sold the business? What’s pulling you in? You had another home in another state and grandkids. Those were two of the key things we hear when people are emotionally ready. Those are the things that are pulling them.

My other son just started medical school. He spent three years in Africa and we went to visit him. When he came back to Chicago, I left. It was also time to help him in a way that we could get him set up for medical school.

I’m happy that you and Dick are retired and enjoying it. I know you’re about to do some significant travel. That’s all awesome. Let’s talk about the actual sale process. You started to think about selling and maybe even started to dip your toes in the water a number of years before you earnestly go down the process. What did you do to prepare the business for a potential sale? When you look back, do you think you did enough or do you think you could have done more?

Knowing my personality, there’s always more to do. It’s interesting because if I go back to my beginning days, my preparation started with an understanding that no matter what, you should always have an exit strategy. I started with that. Even though my exit strategy changed on numerous occasions, it wasn’t like I was ready to exit at any given point. I just knew that someday, what I was building, I was hopeful that a legacy would carry on. It started with my kids and I thought my boys would want to take over the business and in which case, that did not happen because one went to Africa and one went to Australia. That was one preparation, which seems a little weird when I tell people about an exit strategy. It’s having that in mind. In order to do that, there were things that had to happen. You’ve got to have your house in order. You have to be able to have operational systems and procedures and standard operating procedures, all of that in place from a business perspective.

There are a lot of different entities to have that setup. In that three-year prior period before we came to you, Domenic, we had a lot of work that we did on the backend. We were establishing our client base, making sure that we knew that the client base was indeed strong and that contracts were in place. People are buying your employees, systems, processes, client base and your reputation. All of that had to be in place to a point where someone else could take over successfully.

Kathy, that puts you in the small percentage of all owners who are thinking about it and actively doing something about it. There’s another statistic that less than 25% of owners take steps like this to prepare their business so that they can exit in the way, time and amount of money that they want. It’s amazing that you took those steps and it sounds like you took them from early on.

When you do what you love, you love what you do. Click To Tweet

One other thing that I did was always learning, whether it was about the industry or business. I had a board through an organization called Tech. I received this scholarship with Goldman Sachs, which helped me to understand where my business was in terms of the things I had in place, the things I needed to, and learning about the financial peace, EBITDA and cashflow. All of that was critical to running a business and being able to sell it.

I’ve heard great things about the Goldman Sachs program. I’ve met a number of people that have been through it and hear nothing but great things.

It’s an amazing program. I’m glad I did that.

Let’s talk about the process that you went through once you decided to sell. Looking back, what are the things that surprised you in the process in a good way and in a way that frustrated you? It would be helpful to hear it from both sides.

The thing that surprised me was in the end, we sold the business. It was not a surprise from the standpoint of, “Was it valuable and viable?” I had never sold a business before, so the end result was a success and that was quite a pleasant surprise. In our industry, entrepreneurial companies can be difficult to sell, which is probably a whole separate conversation. You told us that it was going to be potentially, a lengthy process, a roller coaster and a lot of work. We went down that path and all of that did come true. In some way, that was surprising

What went the way that you thought it would go? Were there things that happened that you’re like, “I thought that would happen,” and it did?

This may sound strange, but I don’t know if I had that insight to think about it because quite frankly, if I take a step back, the credit for selling this business, it needs to go to my husband because fortunately, I had him do all of the hard work and leg work. We were great together doing it where I could keep building, running and working on the business while he was working on selling the business.

Even when you hire an advisor to sell your business, there’s still so much to be done. Your husband, Dick, took on a lot of the data requests, information and coordination with the attorneys when the time came for that. Also, with the accountant and it allowed you to stay focused on the business right up to the end where you were doing one of your biggest events ever and signing a huge contract, which the new owner was happy with. He could see the momentum in the business was continuing because you were allowed to be focused on it.

It was important. That momentum piece can be difficult because if you get your mindset out of selling your business or you get it into selling your business, then you ultimately are thinking about what you’re going to do beyond your business. You have to keep your business going all the way to the end.

MAU 22 | Retiring From Business

Retiring From Business: Entrepreneurial companies can be very difficult to sell. Once the process starts, it’s going to be a lengthy process, a roller coaster, and a lot of work.

 

We’ve been in situations before in our firm where businesses are in decline because owners have taken their eye off the ball and it becomes difficult when that happens. Buyers get nervous, either disappear or start to ask lots of questions, which now takes the owner even further away from their business. It can have a multiplying effect when that happens. What pieces of the process, as you got into them, did you see created leverage for you in the sale? Whether that was external resources or the process. As you look back on it, leverage is such an important thing when you’re looking to sell a business. What provided the largest leverage as you were going through the process?

If you get down to some of the things that maybe sound basic or trite but are important, the reputation of our agency was important. We’re well-established. We had a great reputation in the industry. Our buyer knew about our reputation. We had an extremely strong client base and quite a diverse client base as well as the types of projects that we were working on. The fact that we were producing meetings and events all over the world, not just in the Chicago land area. The fact that our employees were tenured and you could look at that and be like, “I can walk away and the employees are in place,” and that’s an important aspect of a seller. Those would be the top things.

You spent a lot of time and effort making sure that your client base was diversified. Your employees were solidified and your operations were running smoothly, which gives you tremendous leverage as you’re taking the business to market. Let’s talk a little bit about the dance of meeting with buyers. You met with quite a few. There were quite a number and different types of buyers. You had large companies interested right down to high net worth individuals. Talk about that process for you. What was that like? What were those meetings like? Maybe your first ones and then as you got into them, you were doing more.

Maybe that was part of the surprise and the piece that was most surprising because there was such a diverse group of people. You did put a lot of different individuals and companies in front of us and it gave us an opportunity to also think about the right buyer, which is important also. The first couple of individuals that came forward, I was like, “No. Those aren’t the right individuals.” That became a significant piece that I don’t think I thought about until it started to happen and I got to evaluate also. It wasn’t just a one-sided evaluation of, “Do they want to buy us,” but, “Do I want to sell to them?” I did want the company to live on and have a legacy. For the gentleman that bought the company, he has an opportunity to grow it for another 25 years, which makes me happy. There were some buyers that are not going to be the right buyers and I don’t think it could be successful.

Kathy, you bring up another key point, which is when you’re in those meetings with buyers, there’s an introduction back and forth and then the buyers launch into a whole host of questions. Those meetings can go for 1, 1.5 to 2 hours. It’s important as the owner of the business to also be vetting the buyer back and coming in with your own questions. In most cases, your legacy matters and you want to know that the person that’s going to take over is going to take care of the company that you’ve spent all these years building, your employees, and your clients who are probably friends.

We’re well-rounded and I made sure that they did all of that, not just the clients being mindful of the business and the employees. All of that was important.

How did you know that the buyer that ultimately bought it was the right one? Was there something in particular that happened or a moment in time or something that he said or did where you said, “I hope we can get to the closing table with this buyer.”

His background. He was someone who had been on the destination management side of the industry, had run an office, had owned a business before and was extremely passionate. I could tell he had some strong drive to continue to keep the momentum going for the company. All of that came out in the conversations that we were able to have with them through the process.

You’ve had a whole bunch of buyers and you’ve had multiple offers on the business. Did that surprise you? What did you think about the negotiating process? What did you learn from all of it that would be helpful for the M&A Unplugged community to know?

There’s more than one way to get a deal done. It's not all about the price necessarily. Click To Tweet

There’s more than one way to get a deal done. Meaning, what you were talking about is it’s not all about the price necessarily, even though that’s important because that sets you up for the future. What I mean by it’s not just about the price is that there are multiple ways to get a deal done is that, “Are you staying on for three years? Are you going to stay on for two years? What do you want your involvement meant to be? Do you want to be gone in 3 or 6 months? How do you get paid out?” All of those things are part of what the process is. Hearing how somebody is going to grow your business, change your business or bring forward their own ideas, not that you’re going to be deeply involved in every single thing, but from a high level of understanding what their strategy is about the business. Those were all important in making that decision. What I learned was that in the end, there isn’t necessarily only one way to make a deal.

Kudos to you because you had an open mind to all of that. We got a fair number of offers that had crazy deals structures to them and you were curious about all of them, asked all the right questions, and went through them. That was exactly the right way to approach it because it does go beyond price and terms. All those other little things matter and sometimes can make or break a deal. You signed the deal with the ultimate buyer and then you move into due diligence. I know Dick was instrumental in that process because he took on a lot of the heavy lifting of providing the documents for the data room and so on and so forth. Looking back on the diligence part of the deal, what surprised you there? What did you think about that particular step in the process?

You gave us a good heads up about due diligence. Even though you did, all of it was still surprising. We knew that it was going to be a lot of work and a lot of information required. Dick chipped away at it hour by hour, minute by minute and day by day. I still think that we had no idea about the amount of due diligence and that one thing would lead to another question. We spent a lot of time in our due diligence for sure and I don’t know if that’s average normal or not, but in any case, it’s still the thing that was surprising like, “This is a lot of work.”

Diligence is intrusive and time-consuming. You like it to go fast, but it rarely does, especially when there’s a bank involved. They’re asking lots of questions. The buyer did secure a loan from a bank and SBA loan to acquire this business. It’s not just the buyer asking the questions, it’s the bank and maybe other people as well. It goes back to your point of the more preparation you can do in advance of a sale, the better. If you have somebody that can help you deliver on a lot of those requests, it helps you maintain your focus on the business. Thankfully, you had that situation.

I was lucky to have Dick in place to help with it.

If you were to give some high-level advice to the folks in the community who were thinking about selling now or in the future, what advice would you offer to those sellers?

Have your house in order, so be prepared. That’s important. The second piece, you don’t know how prepared you are until you enlist. It’s what I advise my clients when they came to me. Sure, they could do it themselves or they could hire the experts. We were the experts in our field and fortunately, we found the experts in our field for selling a business to help us, including you, Domenic. It also included our attorney and our CPA. I had a business advisor that I also worked within all of that. That’s a critical piece. It is making sure that you have your desires for the future of what you want to do, what that exit strategy looks like for you and what you’re willing to accept and not accept. Staying active in the business was critical for the success of our sales. The last piece was confidentiality. Keeping the confidentiality of this deal was one of the hardest things that I ever had to do and yet, it was one of the most important pieces as well.

When you talk about confidentiality, what do you mean specifically? What were the issues that you were grappling with around confidentiality so people can understand that?

Make sure you tell no one that you’re trying to sell your business because that ultimately can make a deal go away in a heartbeat. It did for us once because we bring our team involved for a merger and it didn’t help the process, it hindered it. When we wanted to bring in our key executive to help us with the financial peace, she had a lot of information because that was her job. You have a chief financial officer and they’re managing all of that, but you got to get it out of their hands without asking them and not telling them why. That became a huge struggle of being able to get the information that we needed. Don’t tell the employees because then they get scared and they don’t know what’s about to happen. They want to leave and you need them.

MAU 22 | Retiring From Business

Retiring From Business: Make sure you tell no one that you’re trying to sell your business because that ultimately can make a deal go away in a heartbeat.

 

You always advised us to don’t lie when that time came, but don’t have the conversation. The week before the deal, something strange happened. Our new buyer was out to try and get some checks with our company name and the check company called my chief financial officer and said, “Somebody is trying to get checks.” That was the week before and it was like, “I have to tell her what was happening.” You never know where it’s going to come. Even my children, they had no idea until we sold the business. All of that is difficult because you want to say to people, “This is happening,” but the minute you do, someone tells somebody else and then next thing, the deals off the table.

We talked to people about this all the time. We’ve seen many threatened breaches and it doesn’t help the process in any way. There are thoughtful questions that come back around, “I’ve worked with my employees for 30 years and I feel like I’m betraying them.” Yes, but there are counter issues to that. You can’t answer any of the questions they’re about to ask. Who’s the new owner? Does everything stay the same? You can’t answer those questions and when you can answer questions for employees, they get nervous. The last thing you can afford to have happen when you’re selling the business is to have people leave because then the value of your business will inevitably decline. Maybe even to the point where you can’t sell it. It’s a hard thing to do, but it is in everyone’s best interest. I can give you countless examples of that. It’s great advice, Kathy. From time to time, I like to ask guests what their favorite book is that they’ve ever read and I’m curious to know what yours is.

I have two. One was given to me by a friend when I first started my business. It’s called the E-Myth Revisited by Michael Gerber. They also have a whole series of training and education, but they started with this one easy book. It was about working on your business versus in your business, so that was great. Another one for leadership was Fierce Conversations. It helps you to understand how to have conversations as a leader and a business owner that you don’t necessarily want to have. I’m going to give you two podcasts since you’re doing podcasts. You do M&A Unplugged podcast, which believe it or not, I’ve read every series. I’m retired and loved them. Our meeting and event industry has a great podcast called GatherGeeks. Those would be my recommendations.

Kathy, it’s been such a pleasure having you on the show and I’m happy that you are enjoying retirement and about to do some big traveling. I’m excited for you.

Thank you for having me, Domenic. It’s been a pleasure.

To summarize a few key points that Kathy brought up. She mentioned that three years prior to selling, she started mentally preparing. We’ve seen statistics that over 75% of owners when they walk away, have some remorse about selling not from a financial perspective, but it’s more around they didn’t know what they were going to do next. Kathy took the time to think about that and get ready. It has resulted in a seamless exit for her and transition out of the business. Kathy built the business with an exit strategy in mind from the beginning. She made sure that her operations were in place. She had documentation, financials, contracts and all those sorts of things. It’s rare that I hear that but it’s important.

It makes it easier when you go to transition the business and it gives buyers a ton of confidence. The other thing Kathy talked about was maintaining momentum in the business while you’re selling. It’s critical that the business continues to do well while you’re in the process of selling. She also talked about meeting with buyers and making sure that it’s a two-way street. Buyers are going to come and ask you a ton of questions, but you should be doing some vetting back to make sure that you’re comfortable with those buyers taking over and running your legacy. They’re going to take care of your clients and your employees for the long-term.

I appreciate having Kathy on. If you would like to learn more about the process of acquiring or selling a business, please visit our website at SunAcquisitions.com or feel free to reach out to me at [email protected]. I look forward to seeing you again on the next episode of the M&A Unplugged podcast. Until then, please remember that scaling, acquiring or selling a business takes time, preparation and the proper knowledge.

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About Kathy Miller

MAU 22 | Retiring From BusinessTotal Event Resources is a Chicago Event Planning Company producing award-winning events for Fortune 500 companies, not-for-profit organizations and major trade associations around the globe. We have a reputation for making waves.

Whether it be re-engineering a supplier trade show for PepsiCo’s 1,000 partners that saw 23,000 business cards exchanged, 19,000 booths scanned, 2,300 surveys filled out and a whopping 97% approval rating or launching a multi-million dollar medical facility to 16 unique audiences over the span of 8 days, embracing cultural and community groups and delighting our client as well as the local community, we believe the world needs more events that provoke change.

Our work has spanned across 5 continents and have produced internationally-recognized events for PepsiCo, Abbott and Navistar. We’ve also given hundreds of thousands of dollars and in-kind services to both community as well as industry organizations.

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