Well Capitalized

Business Owner Interview: First 100 Days With Private Equity

November 12, 2020 MCM Capital Partners
Well Capitalized
Business Owner Interview: First 100 Days With Private Equity
Show Notes Transcript

What really changes at a company after being acquired by an outside investor? The answer largely depends on the acquirer. We interviewed Matt O'Donnell, founder of North Shore Commercial Door, on his experience selling his business to private equity backed strategic Torsion Group Corp. Matt discusses the timing of the transaction, some of the emotions he dealt with throughout the negotiation process, trying to juggle running the business while negotiating the sale, and gives some advice for business owners contemplating a similar transaction. 

1:50 - What made it the right time for Matt to sell his business?
3:15 - What to look for in a strategic partner
4:15 - Transitioning into his new role with Torsion Group Corp
7:08 - What emotions did he deal with throughout the negotiation process?
12:35 - His goals for the company and how partnering with a PE backed strategic will help serve those goals moving forward
15:40 - His experience running the day-to-day operations of the company while being immersed in the M&A transaction process
16:34 - Advice for business owners contemplating an exit and things he wish he'd known more about prior to entering into the negotiation process

For further discussion on the M&A process, please visit 

hello and welcome to another episode of well-capitalized I'm your host Bobby kingsbury managing director at MCM Capital Partners today we have another business owner experience we have Matt O'Donnell from your short commercial door - Matt thank you very much for for joining us I wanted to have you on because you have a unique experience from the other business owners that we've interviewed and that you sold your business to a private equity backed strategic but first before we get into that would love to get learn a little bit more about you and your background yeah so I basically started the company and went from selling garage door parts and excess equipment one at a time to a substantial online presence in that in the industry yeah I mean you started off selling from one remote or remote out of a cabinet out of a cabinet in fact the yeah I've just moved the cabinet into my new office and yes I did yes I did yep so but yeah I mean that was really the crux of it I mean it we were rarely internet based and and dealt with business of consumers yeah I was a great success story I know when we looked at your business you know there was a lot of things that attracted us to it especially you know with our strategic initiatives to try to get more on to the the online side of it you built a great company you know we had talked probably four to two or three years you know just casual conversations going back and forth and then ultimately last year we were able to to get through the transaction have you become part of a torsion group core ultimately what why was it the right time for you you know we were we were growing and and getting better and better every year and there came a point where I I wasn't necessarily ready to give that up and then with because of some of the conversations we had even a year prior I started you know kind of realizing the fact that I really could use some help and we could go to that next level and the proper way to do that was gonna be by getting a strategic partner and really trying to push that envelope it just everything kind of fell into place and made made more and more sense I mean I I like doing the sales and marketing and and the website design and all the all the really the fun stuff and I found myself being an accountant that's not who I am you know not what I wanted to do yeah well you know a lot of business owners are in that position where they have a unique skillset they're very good at something whether it's engineering sales and marketing and then by you know just the the course of running a business you know they'd be wear many different hats you'd be done a lot of different things and you know when we talked a lot of business owners they tend to not enjoy it as much because they're doing less of what they love or and more of the managing of people becoming an accountant a bookkeeper and and things like that that was me yeah so what why I mean you you had some some options why did you think torsion group was the best fit for North Shore honestly was the team that was in place the CEO yeah the organization it's close to where we were so was gonna be somewhat of a strategic move as far as torsion they were one of our largest suppliers I need the products well yeah I knew that the synergies that would evolve out of that and that was gonna probably give us some more competitive edge and continued the the track that we were doing just there wasn't anybody else that made any sense as far as I was concerned I wouldn't have even probably considered it wasn't for for that team in yourself yeah oh thank you I appreciate that we're were you nervous and at all I mean it's a it's a big transition it's it's different right and now you go from being you know your own boss where you have to report to anybody to know you know you're part of marks executive management team then there's a board you're integral part of the team but I'm sure it's different than you know being an entrepreneur and yeah yeah yeah with you as far as being nervous prior to it yeah I mean that's that goes without saying there's a somewhat of an unknown there but again part of the reason I picked where I went is because I did trust you at trusted mark I think the team was they were gonna treat me right and do it we were supposed to deal you know it early on you and I had a conversation you look that means it's not going to be the same yeah you know I'm like okay I mean you're very honest very forthright I was like you know so I left that meeting kind of thought about it and you know hindsight after six months it's not the same yeah it's better it's it's I'm learning so much about about different things you know not that what we were doing was like Groundhog Day over and over and over again but I mean we're part of a lot bigger picture there's a lot more going on and and I it's exciting to be a part of it it's uh you know I don't think I've been this motivated quite some time it's great that's all and I would say it's you know in talking to to mark calculator the CEO of clerking group hey you know I would say it's the same for them you know but they what the team has done for you you and your team have have done for them I was complimentary without a doubt I mean I think that at one point I thought that I needed them more than they needed me know I think we actually probably needed each other there's this equally minutes it was a good marriage yeah so it's you know I don't want to put words in your mouth but it sounds like you've had a good experience so far is there anything that maybe wasn't expected or there there has to be something that's that's different that you don't like or you know it's different I'm looking a lot more hours than I am or dead but that part of that's part of the transition some of the things that we're doing you know so I'm not I'm not necessarily as hands-on as I was at home with my kids and the wife and not that that's bad by any stretch but I'm not it's a little different I yeah I used to drive my son to school every day yeah you know because he was his goals five minutes up the street from the shop I don't do that anymore cuz I'm driving out to Strongsville yeah yeah so you know some of the downside would mark be more just getting used to my new normal and then really anything on the business side yeah and you know I talked to mark you know but you never told me I couldn't its self-imposed some of the stuff right you know the direction I've done I want to make sure I give everybody what they what they deserve okay you know I think some things that aren't really talked about especially or maybe even a business owner doesn't consider its kind of the the softer side you know the the emotional side of it the the attachment emotionally as as you went through it you know you talked about being you know naturally a little bit nervous but what were some of the other emotions that you had to deal with or go through you know as you were looking at this this process I'm sure you talked about it with your wife oh yeah you know so as we as we went down and we started getting through the due diligence and some of the things that we were working in you know in a sense I kind of felt like I was giving up and and kind of bailing out on some of those but you know again I went kept rolling back to the reason I was doing it was to actually free me up to actually do what I really enjoyed you know there was some obviously a little bit of pain points with my son I always thought that you know he'd follow me up we'd have that going yeah and you know we sell him short am i doing the right thing you know that type of thing so that that was kind of an emotional part of it but you know we came to transaction Dame by the time we got there I was I was pretty confident we were doing the right thing and you know they get them to call us as the wires been transferred I look at my bank I'm like huh it was kind of like yeah so huh all right so you know I went home and and took my wife to dinner yeah and showed up to work Monday morning and nothing really changed as far as that one I was still doing what I was doing and so it was it wasn't as an emotional or as exciting as you think it would be it was kind of a more transactional at that level yeah but if it was there any point during the negotiation process where you the other sat down herself or you looked at your wife you said you know I I don't know if this is the right thing to do and you you know you top solutely and it's so what what got you and I I know a lot of business owners are gonna be thinking the same thing there's always that that point or even after if there's you know sellers remorse you know sometimes there's even buyer's remorse yeah right but it what what helped get you over that emotional hump I guess yeah so you know if you'd run into meeting during the negotiations and you hear something you don't like you kind of fold back well I don't need to do this yeah you know and that's that's a pretty natural thing to do and then yeah you're going you cool off a little bit and then you kind of realize that well you got to understand the other side's point on that you know then you go to the next and go she Asian period or whatever that is and then talk about some of those pain points or whatever and then you can you work that out and that's the best part about negotiation I mean if you have a pain point you know don't stick to your guns you can write you can do that you know then if it doesn't work out it doesn't work out not no one's holding a gun to your head saying you've got to do this you know and that's that that was one of the the easiest parts for me is it was very low pressure you know we you explained I mean you probably over-explained a website which I do appreciate why we're very very much you know this could happen that can happen you know I'm like he's being like a debbie downer and some of this stuff but you know and then mark saw the optimistic that's never gonna happen that's a good thing but but you know I appreciate it and I really been I thought it was it was a great experience I don't I have no regret no regrets oh good I'm I'm glad to hear you know it it makes us feel good you know for you know that that emotional side is something that you've given your heart and soul to for a number of years that has a good home and you're still enjoying what you're doing right now and helping you know tgc significantly over the past six months and I know moving forward it's it's gonna be great but one of the things that I wanted to get back to which I think is is interesting and a good point of what you did that the way you looked at it in terms of negotiation I think everybody can take something away from that it's a not be myopic and be so self-serving on one side both from a buyer and a seller standpoint is you know you might go eh well you know I I'll need to do this mmm but if you look at the underlying reason why the other side you know it's having yeah and that's the I think the key to negotiation getting something done exactly it's to sit in the other person's chair and how would you view that very hundred percent I mean you have to step back and put yourself on the other side of that you know a lot of the things that I did have pain points on made complete sense I wasn't if I was buying somebody and doing something like that I'd run the same way so you just did it you know there's certain things that are that way for a reason and you can't change that and if you can if you can accept it you move forward and I think to the other point that you made I think is a good one for the business owners is is your pain points or even I guess further understanding your goals and what you want to accomplish and if those goals aren't met you know again nobody's holding a gun to your head then it's not the right time or it's not the right transaction or maybe some terms need to be changed in order for for it to happen yeah I'm sure there's there's a lot of people have different reasons for doing different things and you know mine was I would not I wasn't ready to retire do anything like that I wanted to continue on and I wanted to continue on building my baby basically and then really the I felt the best way to get that done was by joining tortion group and and we are we're off to a pretty good start good no I mean it's a good honeymoon right right yeah yeah well six months I don't know we still the honeymoon period I think we're getting close maybe we should do it again in two years yeah but you know we were first talking and we had talked about this before you had mentioned you know I suggested Matt I think you need to hire a legal counsel to vote that's experiencing going through this M&A transaction process and weed in another episode we were talking with with Brent P trophies from Cathy and he mentioned the importance of having the the proper team initially he said you know I I don't know if I want to spend that kind of money on a I'm a lawyer I still want I don't want to spend that kind of money anyway anyway time that's money I ever spent yeah I couldn't have done that I don't know you know that's just the being naive and not realizing really the the whole process is it's going down I mean now that I've been through it I feel like I have an MBA but it just yeah that was it was very misguided on my part to think you could transverse that I mean from the just the the my new details of as far as the legal change in the company name when you're done the employment agreement yeah I mean it wasn't just a sale the business contract I mean if he took care of me as well I mean it was there's a lot more involvement that I never would have I would never would had done the thing was a nice note about me at the beginning of this interview I trusted you guys I wasn't necessarily all that concerned on that that end yeah but and I don't think we did any arm wrestling as far as that one but we just got everything in writing in it and it's very clear what do you expect for me and what I'm supposed to expect to you right I think it it was it was worth the money yeah we you know just from from our perspective you know there's there's a lot of folks like you that have started something from scratch from their garage or whatever it was from uh from a filing cabinet with run remote remote and built a very successful business and you know at some point there's going to be an exit whether or not there's a family's transition or or not and this happens once once in your life we want it to be a very good experience a I you know we all just try to put ourselves in that position and if it were me so I think that's the impetus of of kind of this educational series is for business owners like yourself and you if you could rewind the clock you know kind of to to a year ago and maybe watch some of these and kind of have a better idea and better handle of of what might be going on I think it would it would certainly be you know huge yeah very very beneficial so that was I was somewhat you know I was also in the heat of the moment I was running a business I mean when I'm trying to juggle a lot of things raising kids yeah you know it's busy yeah I think - that's a good point where a lot of business owners you know don't realize this during this whole process that takes it you know as little as three months all the way to probably six to nine months you're negotiating a transaction there's all these documents there's all this information that's flying back and forth right that you're supposed to be reviewing and on top of that the buyers expecting you to continue to grow and build that business in hit your numbers right and there's just it's pressure a lot yeah right so it didn't to be as you know I always said when in my former life that pressure as a result of not being prepared and if we can prepare business owners for this I think it would relieve a lot of the pressure so for the folks viewing at home if you could rewind that clock back to 12 months what what were some of the things that you wish you would have known going in that you did not that you could tell them at home to think of it I think the important thing is learned what working capital is getting it get into that rationing them have a video on that it's now the net and I think that's gonna be a great video I know I had the again because I was so busy running the company and then feeding all the documents and going back and forth on that stuff that piece of the pie was something that I necessarily never did fully grasp until it was all said and done and over so that's I think that's an important piece of the pie especially when in our in our scenario but no I think that I would have slowed down a little bit even a month just to really kind of grit everything kind of in line a little bit better we were but at the same time I mean some point you got to pull the band-aid off so we I mean we we did what we needed to do but there was it was it was fast and furious I mean what do we do they took us about three months and we got the deal done something like that I mean that's that's pretty rapid-fire you know as far as that went and what's you know typical is you know the the vast majority of the work 80% of the negotiation or although all the legal stuff really happens in the last five days yeah yeah you negotiate negotiate negotiate and then there's just a flurry of information and it can be overwhelming maybe we could slow down the last five days what you know that's that's a great point you know just so you can digest everything as you go through but yeah but you know it was still a good experience for me it's not like there's any negatives coming out of it it was just you know some things that that it was somebody's looking to sell their business just make sure you're educated on it yeah in in if possible you can probably try to slow it down especially those last five days but generally you're marching towards a closing day you know sometimes there's exclusivity period within the letter of intent a date that the deal needs to get done by and then you're also dealing with funding from from the banks as well internal I know I know there's a lot to it so that's just my my you know one of the things that do you yeah you asked me I told you so you've had a good experience so far and you know I I think what a one of the other questions I would ask is you know now going back and being a part of of tgc would you still do it all over again and if the answer is I I guess either answer y-yeah I would definitely do it again you know that I'm doing what I what I enjoy I'm doing more of the marketing and working with the sales teams really taken out some of the accounting and the the financial side of things that was a burden to me it's actually freed me up to enjoy it again I mean so it's a lot of fun yeah so I I would I would do it ten times over I guess the final question that I would ask you you've already brought up a lot of points but for the the business owners that are in your shoes that were in your shoes 12 months ago what what piece of advice could could you give to them you know what what are specific about negotiation or just in in general well I think I've already loaded the know the process understand the working capital piece some of the legal side of that stuff just if you have a question to ask it don't don't assume anything you know as far as that goes you owe it to yourself to make sure you dial through every detail on that and that that was part of the piece when I said earlier maybe slow down a little bit and try to smell you know smell the roses and make sure that you you're you have all your ducks in a row so okay I appreciated that thank you so much for taking the time of all we'll do it again it's two years we'll see how this looks right shirts when we also I appreciate that thank you thank you thank you for taking the time to watch another episode of well capitalized please subscribe to our channel below if you have any additional questions please leave them in the comments section thank you