MAU 19 | Acquiring A Small Business


Have you bought a business and are unsure of what to do next? This episode features a couple who tells the tale of what led them to acquire a small business and how they grew it afterward. Phil Stout and his wife, Ashley, are the new owners of Sizzle Productions Home Staging since November 2018 after purchasing it from the VanOvers through Sun Acquisitions. In the first year of owning the business, they were able to beat the company’s previous sales while maintaining existing customer relationships. Phil shares that it is important to have a list of requirements of what’s important and have realistic expectations when thinking of buying a business.

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Phil Stout: Acquiring A Small Business And Growing It

Who doesn’t like an M&A transaction with a great outcome? That’s exactly what this episode is all about. I have with me, Phil Stout, the owner of Sizzle Productions. Phil, along with his wife, Ashley, acquired a home staging business. In an interesting twist of fate, Phil and Ashley acquired this business from another husband and wife team who had started the business at about the same age as Phil and Ashley are. Our firm represented the sellers in this transaction, and I know how excited the owners were to sell to Phil and Ashley. I should also point out that you and Ashley left substantial careers to buy and operate a business and I’m excited to have you share your journey with our community. Phil, let’s start there. Can you talk a little bit about your background and the careers you and Ashley left behind to acquire Sizzle? Welcome to the show.

Thanks for having me, Domenic. Ashley was an HR professional. She had her Master’s in HR and had been working in various manufacturing facilities. I had been an engineer, transitioned into management consultant with an MBA and was working with one of the large four consulting firms doing mergers and acquisitions consulting. It got to a point where Ashley and I had one daughter and another on the way, and I was on the road five days a week. We said, “We need to do something different,” and something that gave us a little bit more flexibility and potentially more upside. We started looking at buying a small business and that’s what kicked everything into motion.

Your mergers and acquisitions experience, did that give you the bug to go out and do this on your own or had you always had the desire to own your own business?

I’d say 50/50 there. I come from a family where my father, his brother, my aunts and uncles on both sides, all have their own businesses. Ashley’s family is the same way. We have entrepreneurial blood. Within the M&A practice that I was in, I worked for a number of different clients. Sometimes, looking at any job, sometimes you’ve got clients that are appreciative of the work you do and you have others that are maybe a little bit less. In those cases where I had the ones that were maybe a little bit less, I was thinking to myself, “Why am I doing this for you, when I could be doing it for myself?” That’s where I got another part of the itch to go out and look for a small business and to do my own merger and acquisition.

How long are you into owning the business?

It’s been months, we’re coming up on a year.

What’s the early feedback? Are you happy you did it, scared that things haven’t gone exactly the way you had hoped? What are the early returns here?

I’m very happy we did it. The amount of flexibility I’ve got from a professional standpoint is fantastic, from a family perspective as well, which was important to Ashley and me when we’re looking at buying a business. A part of it was initially upfront. We were looking to do something that was potentially more upside from a return on investment standpoint. We were also to an extent looking for a lifestyle, one where I wouldn’t be on the road as much to be able to spend more time with family and we’d be together more. Through and through we’re hitting all the check marks on these items and we don’t regret and haven’t looked back at all.

Let’s talk a little bit about the company you acquired. Talk a little bit about Sizzle and what it does and how the business is doing and then we’ll move over to the process that you and Ashley went through to plan for and then execute on the acquisition.

Sizzle Productions is a home staging business. We work throughout the greater Chicago land area. We staged close to about 400 properties a year and that’s the same as what the previous owners were doing. We can talk about what our objectives were maybe a little bit later when we took over the business and what we’re hoping to do in the first year. Sizzle does about 400 staging a year. We have a crew that will do the installs and the de-staging. We’ve got our own trucks and our own furniture. There are companies out there that will do the interior design, but they rent the furniture from other people, from other companies. Ours is a one-stop shop. Ashley and myself, we play both the designer roles as well as the owners, operators of the business and we oversee all of our installations. In short, we’re a hustling group of people that are always on the move, always running around the city of Chicago. You’ll find us on the North side in the morning, then you’ll find us in the Western suburbs in the afternoon sometimes. We’re all over the place.

What made you and Ashley comfortable that you could operate this business? The design work, had either of you done that previously? What was the litmus test for you to know that this is something you could do?

MAU 19 | Acquiring A Small Business

Acquiring A Small Business: Doing the accounts receivable, accounts payable, sales, marketing, and delivery is a full-time gig.


I almost want to take that back one step as to, “When we were looking to buy a business, what were we looking for?” We weren’t necessarily looking for a home staging company. We were looking for a company that was going to meet a number of our criteria. What the cashflow was for the business, what the hours might be like for the business, the seasonality of it, the size and the scale of it. It’s something that we’d be comfortable taking over but would also yield the right amount of return for us. We had been looking at a number of businesses.

At this point, when we started talking with the prior owners of Sizzle, we had probably spoken with already ten different business owners, inquiring about their business. We had submitted a letter of intent on a separate business and then Sizzle came up. I looked at it. I thought we got it from an email from you guys saying, “Here’s one of our new listings from Sun Acquisitions.” I showed Ashley the email and I said, “Ashley, we’ve got to pursue this.” Prior to owning the house that we’re in, we had flipped two homes that we lived in ourselves. The first one was a foreclosure and we had flipped it ourselves. I slept on a tarp for a month and we ate out of cooler for about a month as well, as we waited for appliances to come in. We had this background in it. On the weekends, we would go to open houses for the heck of it. We had a passion around real estate and design. When we saw this we thought, “This is something that we could execute.”

In your general search though, was real estate something that you had on your radar or you were looking for different types of businesses and then this fell in your lap? We know that because we presented it to you but had you been thinking about in your early criteria real estate?

No, because I’d even think about the home staging market as an option and there are not a whole lot of home staging companies in the Chicago land area either. I didn’t see other opportunities out there until this one came about. What we were looking for were professional service companies or manufacturing companies. I sometimes liken it to people when they’re buying a house, they say, “I want to have a home with three beds and I want to have a big backyard.” They come across a home that’s got two beds and it’s got a humongous backyard, all of a sudden they make a concession. We had that same thing. Initially we said, “We don’t want to be busy in the summer. We want to be a little bit slower in the summer.” It turns out, the business we ended up buying is extremely busy in the summer, but that’s fine because everything else about the business is fantastic.

Phil, let’s wind back a little bit. When you and Ashley first decided that buying a business was a path you wanted to follow, what was the first couple of things that you did to start to prepare yourself for that eventuality?

I had a book by Harvard Business Review that I used almost as my Bible through this. It’s titled Guide to Buying a Small Business, and it was a step-by-step guide. The first thing I did was I started a legal entity. From there, I then made a website to credentialize ourselves essentially and then built out the resumes and built up this foundation then we would be able to present to sellers or business owners and say, “We’re serious at pursuing this. You can gather that from the website I pulled together with all the information, my background on it, what our objectives are. You’ll see that we have a legal entity set up and that we’re sincere about moving forward here.”

Did you seek out the advice of your family and friends who were business owners to talk to them about things that they thought would be important as you went down this path?

You’d think I would have, but Ashley and I did not do that.

That’s surprising. Is it because she grew up around entrepreneurs, you had a good sense for what it took?

I had a good sense of what it took. Most apparent are Ashley’s parents worked together. We spend a lot of time over at their house for Sunday night dinners and throughout the week for the other dinners. We’ve seen them talk about shop over dinner. We see how busy they are. I gathered from that, husband and wife duo, what it might look like for us when we took over a business when we were a husband and wife duo ourselves. I didn’t fully comprehend the amount of work that would be required behind it. It’s definitely a lot. I don’t think people appreciate the fact that you’ve got to do the AP/AR, accounts receivable, accounts payable, sales, and marketing. In our case in our business, you have to deliver the product. It’s a full-time gig. There’s no person to fall back on. You can’t say, “I’m going to defer this. Maybe Jane will pick it up.” There is no Jane in this situation.

Talk about the husband and wife dynamic. What were the conversations between you and Ashley when you were deciding you were going to go into business together? Were there ground rules that you set on how you were going to work together? Tell us a little bit about the thought process that the two of you went through.

Sometimes you've got clients that are appreciative of the work you do and you have others that are maybe a little bit less. Share on X

We set up initial rules saying, “We’re going to try and talk about this as minimal as possible at home.” That’s not always a successful rule. We talk about it quite a bit at home. Generally, Ashley and I appreciate each other’s strengths and weaknesses. That goes back to having a strong marriage. We respect each other’s opinions. We leveraged that for the most part of this business. There hasn’t been a huge fundamental change in the way we operate together, we spend more time together. She has a background in HR and in operations. She’s worked with hourly employees when I hadn’t done that. I had come from more of a corporate world where I was working with executive C-suite individuals, my management consulting role versus what we’re doing now. I do more of the sales, marketing, client relations whereas Ashley does more of the employee relations and the delivery of the services as well.

It’s a good division of labor, not a lot of overlap and it allows you to both manage to your strengths.

That did take some sorting out initially. For the first three months, there were times where we’d be bumping into each other and say, “Hold off. This is my realm. I’ve got ownership of this.” That took a little bit of time to sort out, but now we’re in a place where we’ve got that figured out and we have our own areas that we own.

It sounds like you guys have great boundaries too around that, that you’re able to say, “This is my area of expertise.” You have enough respect to say, “You’ve got it. Go for it.” Let’s go back to your criteria. You started to hit on that a little bit but in the planning stage, this is one area that people maybe don’t give enough attention to. Let’s talk about what your actual criteria were. What did you lay out? What were the things that were most important to you? What were the things that you know you didn’t want? Sometimes that’s important, knowing what you want.

More than anything, we knew what we didn’t want and that’s where I started the process. I said, “I do not want to do anything with perishables. I do not want to be in a restaurant business. I don’t want to be doing anything food related.” I had initially said, “I don’t want to do certain types of services,” but we parried back on that a little bit when we started to learn more about what those jobs were. When we looked at what we wanted, most importantly, it was cashflow.

It was important to me that we had a business that had strong cashflow that would then be able to replace what Ashley and I both bring home at our current jobs and also be able to service the debt that we are going to have on the business. We were fully intending on financing this business. We didn’t know at the time how we would go about that, whether we’d be looking for potential investors through family and friends or if we’d be pursuing an SBA route, which we went. It was cashflow, revenues, hours in the day and the general type of work that we’d be doing as well.

When did you line up the financing? Did you get a prequalification before you started your search or did you come to that later after you started to look at businesses and then uncover your lending options?

We did not have a prequalification early on, but we did start conversations with various lenders early on saying, “I’m reaching out. I’m trying to understand what types of options your bank has. This is what we’re looking to do. We don’t have an exact timeline as to when this is going to be occurring, but we expect it to occur within the next year. Are there other things that we can do right now to get ahead of any paperwork? Anything that you might need from us so that once we do hit the ground, we can hit it running.” That was the conversation we had.

Did you find that the banks were helpful in not just giving you a heads up on documentation and things that you would need, but did they help you think through the acquisition process?

Ashley often will say that the bank is our second line of defense and the diligence process. If you’re pursuing an SBA, that bank is making you provide a detailed business model to them that outlines the exact cashflows of the business, how you’re going to service the debt, what your expected expenses are, and revenue streams. You have to then talk to them in detail about each one of those line items. You have to show historical prior two years, we showed up month to month and why you go on forecasting, why there was any variation off of that and what was your logic behind that variation? There’s a lot of thought put behind that financial model. Being able to understand that and explain it back to the bankers was an important part of both determining what the right fit for us was with the business and making sure that we got through diligence and understood what the business was that we were taking on.

Lenders can be helpful in that way. Your comment about the second line of defense is right on. The fact that you had seen almost a dozen businesses before you came across Sizzle, let’s talk a little bit about that. Maybe a little bit about what you learned in the process. How did that help inform you so that when you got to the Sizzle transaction, you knew, “This is the one for us?”

MAU 19 | Acquiring A Small Business

Acquiring A Small Business: If you’re pursuing SBA, the bank is making you provide a very detailed business model to them.


The best way to describe is, you’re going on your first date and then you go on your next date and you learn how the dating game works to an extent. In the first meeting, I learned how to do my elevator pitch a little bit better. That elevator pitched up from when I’m coming to these business owners and I’m saying, “I’m interested in buying your business.” I’ve got to make sure I’m succinct and credible the way I come across. The first couple of conversations or few, I was probably missing the mark on that and you can tell right up front in that first five minutes that I’ve already lost some and they’re no longer interested in the conversation.

Once we got past that, the tables turned a little bit and now I’m looking at their businesses and I’m saying, “Is this something I’m interested in? I’ve got their interest, but am I interested in them?” There were businesses that I came across that had deep family ties, while it may be a man that owned it, he had his nephew and his cousin in the business and it was a ten-person shop. If I take over the business, I don’t necessarily want those two family members in the business. When I came across those types of situations, I was a little bit more hesitant. If I came across any hesitancy in myself going through that process, I would cut ties at that point saying, “This isn’t the right fit for myself.” If I’ve got any concern or risk around it that I’m seeing this isn’t it.

You hit on a key point here, Phil. Many buyers will approach the initial buyer-seller meeting as the seller having to convince them that the right business for them. I can’t tell you how often that will turn the conversation sour. It’s important as a buyer to go into these initial meetings trying to create a rapport and trust between you and the seller. Get their attention and let them know that you’re a real buyer. It will create a much smoother process later on, especially if in your deal you wind up having issues. If the buyer and the seller both have gotten to like each other and there’s a good rapport, you can usually overcome those issues and if not, deals usually die there.

A lot of the sellers, at least the ones that I came across, they’re Baby Boomers and they started these businesses when they were in their 20s or 30s or whatever it might be, but these are their babies and they don’t care necessarily how deep your pocket is. They want to make sure that you can take care of their baby and that’s where it’s most important in that elevator pitch to say, “Here’s who I am. I’m a person. I’m going to care about your business and I’m going to respect it and we’re going to fix things that need to be fixed but if things work, I’m not going to change it.” That was the approach that we took.

On the twelve that you looked at before Sizzle, did you go down the path with any of them? Did you get a letter of intent stage with any of them or due diligence?

I did. We submitted a letter of intent on one business. We went back and forth on that a little bit and it ended up fizzling out. The seller tried to push my hand a little bit further then he said he had a cash offer come in double what I had offered and I was looking to do financing and that was maybe him trying to get a little bit more out of the deal. I had given him my best offer upfront and I wasn’t going to play that game. People say this all the time, in the end, that one didn’t work out and that’s for the best. It wasn’t the best fit for us. We wanted to do this together, Ashley and me as a team. I was making a concession on that transaction that I was going to be taking over that business by myself as she was going to stay in her current role and I was going to run that business. There wasn’t enough cash in the business to sustain both of us. We ended up walking away from that one. Two months later, we exercised some patience and we came across Sizzle. It was the deal we had been looking for.

Phil, you gave the M&A Unplugged audience another key nugget. If you’re in the market and you’re trying to make an acquisition, your ability to walk away from a deal when it doesn’t make sense for you is key. Sometimes people get caught up in trying to get an acquisition done that they lose sight of what their original criteria were and what was important to them. Kudos to you for sticking to your guns and walking away, it’s all worked out in the end. Let’s move over to this Sizzle transaction. You find Sizzle, another husband and wife team were running it for many years. You come along, they were grateful. They loved the fact that their business could potentially transfer to another husband and wife team and they were excited to have you. Talk about that process for you, how did that process go? Were there surprises along the way, good or bad things that you had to overcome? Talk a little bit about what you and Ashley went through.

I’ll start at the beginning of this where we saw that our initial flyer saying, “Here’s an opportunity for a home staging business.” We had been working with Sun Acquisitions on the buy side pursuing these different twelve businesses that we talked about. I called up everybody I knew that’s on acquisitions and said, “I need to get a meeting with these people.” A lot of times, as you’re well familiar Domenic, a good opportunity they’re going to get calls left, right and center all day long and it’s hard to make sure that you get on that short list that gets to meet with them.

That was my number one priority that day when I saw that. I need to make sure I get a meeting lined up with these people. When we got that meeting lined up, Ashley said, “Why don’t you go to the meeting yourself?” I looked at her and I said, “Ashley, this is a husband and wife duo, we need to present ourselves as the team we are. It’s important that you and I both go to this.” That was a critical decision at that point because when we got in front of the sellers, we mirrored them about 20, 30 years younger and that made them relate to us.

It made them relate to us and understand who we were and we were sincere and that we were a husband and wife duo and we wanted to take over the business and run it the way they had been doing it. Further down the line, since we have built up a rapport with them and the credibility, there had been some small things that had come up, concerns. There were some things around their tax structure and we made accommodations, they made accommodations and it was a cordial relationship between the two of us that there weren’t any tense moments. That was huge and rare maybe in the transaction.

You took the right move at the start, built the rapport, took the time for them to get to know you and vice versa and you hit a bump in the road but you had that foundation. How about due diligence? You got to an accepted offer. After a short negotiation, you enter diligence. You come from an M&A background so this is not unusual for you. What was your experience like in the diligence phase?

Deal fatigue is a real thing. Making sure that you're not overwhelming the sellers who have to run a business is a thing to focus on. Share on X

While I’ve got a lot of background in diligence and I would run operational and financial due diligence for large corporations, I had to pare that back significantly. My diligence request list is 300 line items. This one, I ended up submitting to Joe Beers for the initial discussion with the sellers was maybe 100 line items. I still think that was too much and we ended up paring that back a little bit more along the way. I had my playbook I rolled out. It was focused on understanding the ins and outs of the business. Any liabilities or things I need to be thinking about in the future, any potential capital expenditures that might offset my cashflows throughout the upcoming years, understanding the revenue streams, relationships.

This is a home staging business where we work hand in hand with realtors and understanding if these realtors are going to still continue to call us and how strong are those relationships between the realtors and the sellers? Ashley and I both would say that our biggest concern was that on day one on this transaction, we were going to find that maybe those relationships were much stronger than we had expected. Our book of business would disappear because the owners had disappeared. That wasn’t the case, but that was our biggest concern.

Generally speaking, the high level diligence went smoothly for you.

Diligence went smoothly. The sellers had the business set up under two different legal entities and I had to do it quite a bit of legwork in taking their two different PNLs and their balance sheets and pairing them together so that I can present it to the bank and tell them, “Here’s how you should be thinking about this from a profitability standpoint.” Without that legwork I did, the banks weren’t understanding what was going on between the two businesses.

You highlighted something that’s important. These smaller and lower middle-market companies are not like Fortune 100 or large companies. They don’t have, even in many times, reviewed financials, let alone audited financials. Taking a big business approach to a small or lower middle market transaction is a mistake. The fact that you pared back your expectations but still applying the proper discipline to make sure that everything was there that the seller’s promised was smart on your part. It led to a much easier transaction than you would have experienced had you come in with a 350-point checklist. In this case, 200 of them wouldn’t have applied anyway. It would’ve been over overwhelming for everybody.

That’s a great point you make there. Deal fatigue is a real thing. Making sure that we’re not overwhelming the sellers who have to run a business still, was a huge thing that we try to focus on. We would push certain questions on our data request lists or in the diligence list that we said early on, “Here are the most important ones.” Once we got those back, we would then maybe push another few their way or we take a couple off our lists, but we wouldn’t expect them to deliver on all 90 or 100 requests that we had upfront.

One of the things that I oftentimes see when a large sophisticated buyer comes in to look at a lower middle market company is, they’ll start asking for things that the owners have never produced in 20, 30, 40 years, five-year forecasts. In most cases, there’s no forecast. Asking somebody to develop a forecast when they’ve never done it before, they don’t have the expertise internally is a sure way to bring the deal to a screeching halt, if it doesn’t exist. That’s not to say that the buyers shouldn’t maybe build their own model once they get enough information but to ask the seller to do something that they haven’t ever done and don’t have the expertise around is a big mistake in that regard.

In that case, the proper thing for the buyer to ask is, “What are your expected headwinds in the business? What potential risks are down the line? What upsides are down the line? What are you expecting?” That’s more of a conversation that you can have over the phone, instead of asking the sellers to document something in a detailed Excel sheet that’s going to take them two days, if not forever to pull together.

That’s a practical approach, a logical approach to the alternative. Phil, as we wrap up here, looking back on your experience, you and Ashley, what advice would you offer to first-time business owners? Whether they be individuals or investor groups or other husband and wife teams. What would you tell people are the top 1 or 2 things that they should pay attention to?

Having a realistic expectation as to what will be required from a cashflow perspective is important. Cashflow is most important. Cash is king, that’s the top thing to be looking at a business. The second after that, if you’re like myself, I was looking for low multiplier businesses and what I mean by that is, the cashflows aren’t that expensive. For lack of better terms, I was looking for non-sexy businesses. I was talking with people that were in the steel industry and I was talking with window washing crews. I was trying to understand what was out there and these different realms that weren’t necessarily being targeted by the investors that are looking to spend top dollar and that want to be in the sexy stuff. Those two criteria upfront, if you can focus on those, that will help you find a deal that is going to be a great return on investment.

Phil, that’s great advice. I’m happy for you and Ashley that you found this great business. It’s going well and the prospects look great for the two of you. If anybody out there in the M&A Unplugged community has a need for home staging, both residential and commercial, how would they get in touch with you?

MAU 19 | Acquiring A Small Business

Acquiring A Small Business: Having realistic expectations as to what will be required from a cashflow perspective is important.


They can give me a call personally at (630) 319-9600 or email us at [email protected]

Phil, thank you so much for being here. I appreciate it.

Thanks for having me, Domenic. It’s always a pleasure to speak about what we’ve done and how you guys helped us and pass on the knowledge that I’ve gathered through this process.

Thank you.

M&A Unplugged community let me summarize a few key points, things, some of them that we’ve heard before from other folks. Make sure you have your criteria set upfront before you go out to make a search and knowing the things that you don’t want are as important as the things that you do want. You heard from Phil that he and Ashley looked at almost a dozen businesses before they found the one that was right for them. It’s important, especially if you’re a first-time buyer and you’re not as strategic and you’re not looking for an add-on, you go out and look at a lot of businesses. That will help you inform your decision so that when you do see the right one, you’ll know it and you won’t waste any time.

For any of our readers out there who are husband and wife teams, you heard Phil talk about setting some ground rules upfront. Don’t talk shop at home, division of labor, know who’s good at what and then stick to those things and don’t bleed into the other person’s roles and responsibilities. Phil also offered up a great nugget, have an elevator pitch pre-prepared before you go in and start meeting with sellers. It’s important that the sellers have confidence that you’re a motivated buyer, that you know what you want, that you’re serious.

It’s a great way for them to look across the table, respect you, and it is the foundation to build rapport. Lastly, as a buyer, your ultimate strength and leverage in any deal is your willingness and your ability to walk away when you know something is not right. If your gut is telling you something’s not right, you have to listen to it. Maybe you have to get a little more information, but don’t gloss over things that are important to you. I want to again thank, Phil, for joining us and sharing his journey along with Ashley’s journey.

If you would like to learn more about the process of acquiring or selling a business, please visit our website at or feel free to reach out to me at [email protected]. I look forward to seeing you again on the next episode of the show and until then, please remember that scaling, acquiring or selling a business takes time, preparation and the proper knowledge.

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About Phil Stout

MAU 19 | Acquiring A Small BusinessAs the new owners of Sizzle Productions, a 16-year-old staging company, Ashley & Phil Stout stage vacant properties across the Chicagoland area, catering to homeowners, developers and real estate professionals.



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