Podcast: Proper Documentation Is Necessary for a Good Exit, an Interview with Linda Nottingham

By Ryan Tansom
Published: June 7, 2018 | Last updated: March 21, 2024
Key Takeaways

Find out why you need the right person to draft up your legal documents as an entrepreneur.



About the Host

Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

Linda Nottingham currently serves as the President of JAX Realty Advisors, Inc., a real estate valuation and consulting company. She also serves as a Facilitator for CEO roundtables in the GrowFL Economic Gardening Institute. In 2010 she accepted an appointment to the board of directors of the Jacksonville Urban League. She also served for seven years as a facilitator for the Business Advisory Council program on behalf of the Jacksonville Women's Business Center.


She is the past-chair of the Jacksonville chapter of SCORE, Counselors to America's Small Business. In that capacity, she was responsible for the local management of a national volunteer organization serving the greater Jacksonville area in developing and supporting small business.

Ms. Nottingham has advanced degrees in education and management. She facilitated the development of a nine-volume instructional design series for educators, which received the Golden Apple award for the state of California. She has taught graduate-level courses in management development and educational psychology.

In 1987 she co-founded Syer & Nottingham, Inc., a healthcare consulting and insurance agency in Chicago. As the company diversified, she founded SNI Management Associates, Inc. in 1992. SNI managed multi-million dollar managed care contracts for physician and hospital groups. When she sold the company in 1996, the organization employed over 100 healthcare professionals.


Ms. Nottingham has served in senior management positions in the healthcare and insurance industries. She has lectured extensively on leadership, management training and organizational development. She was selected as the Alumna of the Year at her alma mater in 2000 and has been inducted as an honorary member of Delta Kappa Gamma, an international women's educational society for her contributions to women in education. She also serves on the Women's Resource Center Advisory Board at La Sierra University.

If you listen, you will learn:

  • Linda’s background in education.
  • How she stumbled into healthcare.
  • The small insurance agency Linda founded with her business partner.
  • How they build the largest private company in Chicago for the time.
  • Why Linda and her partner decided to go into insurance.
  • How their partnership was structured.
  • Why Linda’s partner left the company and how they handled her departure.
  • How Linda found the best people in her industry.
  • The process of the company’s sale.
  • The issues that surfaced after the fact.
  • The importance of finding a capable attorney.
  • Why Linda sued her buyer.
  • How she coped with the aftermath.
  • Linda’s time in retail.
  • What is SCORE?
  • The power of admitting mistakes.
  • How to be a good CEO.

Full Transcript

Announcer: 00:04 Welcome to Life After Business, the podcast where your host, Ryan Tansom, brings you all the information you need to exit your company and explore what life can be like on the other side.

Ryan Tansom: 00:14 Welcome back to the Life After Business podcast. This is episode 96. Do you want a peer of what it looks like on the other side of an acquisition and then hear someone else's 'gotchas'? Well, that's exactly why we have Linda Nottingham on the show today. She is an amazing woman, built an extremely successful business called SNI that negotiated and operationalized multimillion dollar managed care contracts for physicians and hospital groups in the Midwest. She had 100 employees when she sold. However, there was a lot of things that she learned throughout the process from the deal structure, the terms and conditions and what it was like working with that buyer after the fact and how the deal and the relationships changed after the fact. She was open and honest and she was absolutely amazing to talk to you because of how willing she was about sharing all the things that she wishes she would have done differently. So without further ado, I really hope you enjoy this episode with Linda.

Announcer: 01:09 This episode of Life After Business is brought to you by Solidity Financial's growth and exit planning. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe to the right buyer at the price you want.

Ryan Tansom: 01:31 Good Morning Linda. How you doing?

Linda Nottingham: 01:33 Well Ryan, I hope you are too.

Ryan Tansom: 01:34 I'm doing good and I'm excited to have you on the show because you and I met at a CEO Nexus of Florida retreat and you and I got talking. You're one of the facilitators down there and you have an awesome story and I loved your passion and so I couldn't wait to get you on the show. For the listeners that did not listen to our conversation down there, why don't we kind of go back to square one. You have an interesting background and how you became an entrepreneur and can you bring the listeners to that point in time and like what happened and how did you decide to go off on your own?

Linda Nottingham: 02:10 Sure. Much of my educational background is in education and early on I was a social worker. Ultimately became a school counselor, discovered I really could not make a living, especially after a divorce. I had the good fortune to have been able to participate in management training through the county's management training program for school systems. Much of that was much better actually than what I got in Grad school and so I felt like I had good skills, mostly surrounding project management, but really did not know too much about business. And employed a process to find a way to integrate my skills into the business environment and did that, putting myself into the healthcare milieu in the beginning. And I was involved in a number of aspects of, of healthcare in Chicago, which is where I had moved to when I began this trek and ultimately became an entrepreneur in a de facto sort of way because I lost a job and healthcare is a cyclical industry and I felt like I was at point where it was going to be a long dry spell and, and I was making a fair amount of money at the time and had a pretty responsible position and just did not think I was going to be able to replicate it.

Linda Nottingham: 03:25 And I ran into another woman and, uh, of similar genre and similar background and she, too, had gone through that same experience. And so we decided to cast our lot together and go into business. And so we formed a small corporation, a sub s corporation, uh, knew almost nothing about that. Um, you know, you learn as you go ,sort of. Our business was an insurance brokerage. We sold a benefits type product, product's life, health, disability, dental, that sort of thing. And we did that for a few years, uh, with some, uh, a modicum of success. And then as often happens, the big entrepreneurial moment came for us when one of our clients said, "oh, by the way, we need you to do something else." It was one of the large multi hospital systems in Chicago. And they said, "we need some other help, can you, can you do that?" And like any good entrepreneur, we said of course, even though we had no clue of what we might, how we might do that. And so ultimately my partner and I, we formed another company, a second company and that company was on the financial management side of the managed care industry. And um, my partner was in the business for a few years. She left because of personal reasons – her husband became ill – so the two corporations redeemed her shares and I became the sole shareholder. And by the time I sold the company we were, we were managing about $75 million dollars of physician money through capitated HMO contracts. And we were the largest privately held company of our type in Chicago. And about a third of the physicians in Chicago were my clients. And I sold the company ultimately to outside investors that were funded by the Carlyle Group. And that's kind of the long and short of it.

Ryan Tansom: 05:17 Long short of it. So how did you end up with your partner to go into that industry specifically? Was there something that led you into being a brokerage firm like that? And I'm just totally totally curious coming from the healthcare background that you had?

Linda Nottingham: 05:43 Yes, we had both been involved in the managed care arena when we worked for health care and managed care companies. And so we understood health insurance and benefits-related products. It was something that we knew and we also knew physicians, we understood them. We had worked with them. Um, and so we felt like that was when we had, we had good reputations and so we felt that it was a good market for us to go into because we had some knowledge of it. Neither one of us were at the time was licensed as a, an insurance broker, but we got our licenses. That was the first thing we did after we formed a corporation. And as a humorous aside, because I don't want to forget it later on, is that while we knew absolutely nothing at the time, we formed this first corporation, someone told us, and so we did do the work that it took to have someone put together a buy-sell agreement for us before we ever had a dime of revenue, and it was just simply formulaic. It had nothing to do with dollars so much as it had to do with the process that would be used in the event that it was necessary. And lo and behold, years later when Joan needed to lead the company, we just followed the roadmap that was in the buy-sell agreement. So we did do one smart thing when we started out.

Ryan Tansom: 07:05 It's something most people don't think about until they actually get into that situation. What was the. What was the story that was told to you guys that made you realize that it was necessary to do that?

Linda Nottingham: 07:13 It actually occurred in class in those days. We had to go to class to get our insurance brokers license, and the instructor told a horror story – always the most effective form of learning – about what might happen if two people were in business together and one of them died or became disabled and then the remaining partner had to work with the other one's husband and that that made all of our hair stand up and so we said we need to protect ourselves from that eventuality, and so we acted accordingly.

Ryan Tansom: 07:46 When you and your partner came to that situation, how… in the buy-sell agreement and then what was process? You know, maybe a little bit of context. What was the size of the business, whether it's employees or revenue, whatever you're willing to disclose, and then how did you guys go about valuing the business and actually figuring out how to buy her out?

Linda Nottingham: 08:07 I think it was the time Joan told me that she needed to leave. Her husband had a terminal illness and she had a nursing background and so she wanted to care for him. I think we had about 60 employees at that time and we were probably about three to $4 million dollar company.

Ryan Tansom: 08:26 Was there a certain specific way in your industry that you valued it and how did you get structured to get her to make sure that she was taken care of?

Linda Nottingham: 08:37 Well, again, the buy-sell agreement laid that out. It was strictly formulaic. Valuations were to be secured by individuals, have a decent reputation, to which we would each agree and there was a process. If for some reason one of us didn't agree with those choices and you know, almost like a mediation type of a process. And and I did not have any difficulty establishing the values and did we just sat down together and, and again followed the roadmap that had been laid out in the buy-sell agreement. It probably took us 30, 40 minutes to do it once the values had been had come in from external valuators.

Ryan Tansom: 09:17 Sorry, go ahead.

Linda Nottingham: 09:19 I was going to say that at the end of that day, I think Joan probably thought she got a little too little and I probably thought she got a little too much, which by definition made it a good deal.

Ryan Tansom: 09:30 Isn't that the truth? Did you guys go on and secure financing? I mean, did you go and secure financing to pay her out or did you do some sort of program?

Linda Nottingham: 09:40 No, we gave her a lump sum and then for portion of it, and then the company made periodic payments, you know, with interest in me, she, she financed it, as it were. We still had a very friendly relationship and so, uh, so she financed it in and over a relatively short period of time, based on our cash capability, we paid it off.

Ryan Tansom: 09:59 So what was it like then not having a partner and how did your perception of what… you know, what was the vision of the company going forward? Did you have certain things that you were trying to accomplish and what were, what did you end up doing after that had gone by.

Linda Nottingham: 10:16 Well, the vision of the company is that don't look back because somebody's probably gaining on you if it's a very competitive marketplace. The primary thing that I would say not to be too, too frivolous about, that the primary thing that that contributed to our success because at the time I sold the company, we had about 100 employees and we were on it close to being a $6,000,000 company at that time, but the primary thing that, that I think were contributors to our success was that we were willing and able to, to recruit really high quality people because we paid them very, very well. Number one, and number two. It was because of our corporate culture. Most of the people, the high level people that came to work for us in the managed care industry, had worked for a big insurance carriers, big multi hospital systems, big managed care companies – thus our interest in them because they really knew what they were doing. But in their prior lives, those people were all in highly bureaucratic organizations. And Joan and I were able to sell our vision of running fast and loose and not being drug down with, with bureaucratic systems. Uh, we wanted to be the most effective, most efficient, good place to work. And, and so that really bode well for us. We were able to recruit wonderful talent and, um, and that, that, that I think is the primary contributor to our success.

Ryan Tansom: 11:50 Was there anything interesting that you did to retain these people? I mean, was there any kind of profit sharing plans or incentive plans or phantom stock or any of that stuff? Because I think one of the biggest things that people struggle with, and I know you see this with other companies that you work with, is how do you keep and retain those people? And always keep them energized and in the game?

Linda Nottingham: 12:13 Well, we, we had been on the cusp of developing a profit-sharing plan when ultimately I sold the company. And so I don't believe that was implemented. We did have a 401k and, and again, we were, we were generous with people, uh, in terms of their compensation. They made more when they came to work for us than they did in their prior employments.

Ryan Tansom: 12:36 So, you know, as you're… along with the culture, people – you and I both know that people is one of the biggest determining factors of success and how you're moving the company forward. With your partner and how you, how you bought her out, you know, with your, with your insight on valuations and such and when you were doing this, were you're starting with the end in mind, was there things that you were striving for? Was it, you know, EBITDA numbers was it clients and what were you, what was the, what was getting up every single day to it and what were your marching towards?

Linda Nottingham: 13:08 Well, it was, it was a very exciting time. Um, you know, this goes back Ryan, you know, 20 years or plus ago and managed care was still formative in a number of respects and I think that one thing that excited us was to be able to find better ways to help our clients to circumnavigate the managed care industry. Again, our clients were physicians and hospitals and so we, we did everything to, uh, to enable them to participate in these commercial HMO products, not to be part of the panel. And, and so for us it was like brave new world. It was finding new ideas, new methodologies, new and better ways of tracking and understanding data. We were some of the first without wishing to get too technical, but this particular type of product is a capitated product and so the physician organization receives a flat amount of money each month for a member who chooses one of their primary care physicians to be their primary care doctor and capitation has to be successfully managed that flat dollar amount and so the primary care physician gets a part of that and that was pretty standard operating procedure, but then we also developed methodologies to be able to do sub-capitations for other types of specialties. So we were doing, within the industry, we were experimenting and working with our clients and doing leading-edge types of development and we were all excited about that.

Ryan Tansom: 14:54 Well, and that's crazy. You were managing some serious complexities decades ago before there was a lot of really good tools to do it too. I mean, was there certain proprietary things that you were like had developed or how were you guys actually?

Linda Nottingham: 15:08 Well, when our client originally multi hospital system asked us to do this, we went and were really frightened people to think about it, but we bought a software program from a man, a single individual who developed this in his garage.

Ryan Tansom: 15:08 Yes.

Linda Nottingham: 15:25 We paid $12,000 for it. I mean, it was very little at the time, but the funny thing is it worked really well. It did what we needed it to do. Unfortunately, as we grew, the exponential rate of growth that we had, this man was not able to maintain our needs. He wasn't able to, you know, to build and to continue to grow this program so that it would do what we want. And as sometimes happens in business, we did our, made our best efforts to collaborate and work with him and he was finally unwilling to work with us in a collaborative way and so we successfully sued him for the source code and employed a larger and more capable company.

Ryan Tansom: 16:11 Did you end up giving the new company they code then?

Linda Nottingham: 16:17 Well, we, he had. He was required to give us the source codes and we took those source codes and we use them through another larger, more capable software management company to further our needs.

Ryan Tansom: 16:34 Any reason you guys didn't decide to take that in house and bring it underneath the umbrella of services so you can control the actual. You didn't have to go through that whole situation again.

Linda Nottingham: 16:43 No, don't. We did. We did. We controlled it. It belonged to us. We just hired someone to manage it. We didn't want to have the internal people to run it. We wanted to have capable people outside the company to manage and to care for the software on our behalf. And we paid them to do that.

Ryan Tansom: 16:58 Got It. Got It. So kind of the context of my questions is as you think about these entrepreneurs that are listening, are the people that are in the associations that we talk to, it's- you know, the proprietary things are the different things that'll build their company value because even though you're delivering these really unique services, how are you protecting it so it's more transferable? You know? Is there other things, I mean because you had saw going through that thing with your partner, how things are valued, was there, as you're building these, these systems and these different things with your clients and the products and services, was there an end in mind and did you have an idea of along with accomplishing the industry, the competitive things that you're doing, how that tied to enterprise value and transferability?

Linda Nottingham: 17:43 Uh, you know, really not a fault and a glaring omission on my part, but we really were running so fast just to stay up. I don't mean that we were behind in our work. I just mean that the industry was changing so rapidly that, that in order to keep up in order to be able to maintain the quality of service that our clients needed, we really, it and I'm openly confess my lack of business experience from, from any kind of depth, uh, prior to that circumstance. But we principally were involved in, in providing an excellent service at the time, working in a collaborative way with our clients. Typically the way, as an example, typically the way if you're a primary care physician, if you're Dr. Ryan and you're a primary care physician and you want to be able to take HMO patients, then the capitation that's paid to you, uh, is based on what are called CPT codes, which is a code for every type of service that a care physician would render. And unlike other competitors, we allowed each of our client groups to establish their own list of CPT codes. So we were fine-tuning the capitation based on the groups particular needs. Some groups might want to include the CPT codes that other groups did not want to include in the capitation, and so the dollars for the captain had to be actuarially adjusted in relation to those modifications. So we were focused on, on things of that sort so that we were giving the, the…[Ryan interjects: Good service.]

Linda Nottingham: 19:34 It was just good service. I never thought about enterprise value. I really did not. In fact, quite honestly, I never, I never really contemplated the idea of selling the company. I was approached by a buyer and I just didn't anticipate that that was ever going to happen. [Ryan interjects: Can you take us through that?] I have not thought about enterprise value.

Ryan Tansom: 19:34 Until someone said, "hey, here's a check."

Linda Nottingham: 20:02 Somebody said, "Are you interested in selling?" In fact, I had anticipated that. Because again, my, my background, my experience, I without wishing to sound presumptuous, again, I was good at managing. Okay. Everyone that worked for me knew more about managed care than I did, but and that was by design. That was by intent and so I was happy managing the company in its early years and then as I felt that I was going to not want to be so involved on a day-to-day basis. I had already hired an individual and and had worked with her over time I hired her as a VP and then I made her the president while I retained the CEO function and I was intending to spend more time away and she would be running the business on a day-to-day basis and I had a lot of confidence in her. But it was shortly after that that I was approached about selling the company and then began to contemplate that is an option.

Ryan Tansom: 21:00 What was the triggering event was what was… did they just reach out to you? What was the intention of the person that reached out?

Linda Nottingham: 21:13 This was an out of area, a group, a company. They had had some success in buying and selling surgery centers. They wanted to get involved in managed care and they specifically wanted to be in the Chicago market and so they approached… they approached me.

Ryan Tansom: 21:31 How did that whole journey progress? Was it conversations and just Oh! That's interesting. How did your perception of you and the business and where you're going and change and evolve throughout that process?

Linda Nottingham: 21:44 Well, I'd never been through this before and herein lie some of the mistakes that I made. It was conversational in the beginning and we seem to be aligned. I mean it was important to me that that the values that they professed to have aligned with the values on which my company had been built and initially it seemed that there was a, that sort of camaraderie as it were. And the process is a pretty standard process. Once we had some general agreement about the, you know, what might be entailed in the sale of the business, then through the, uh, uh, execution of nondisclosure agreements then they came in and conducted due diligence and at the end of the due diligence things were found to be in accordance with what I had represented to them as to the size and profitability of the company. And so then a purchase agreement was developed. And I thinking, thinking to regain control had my own attorney do it and that was number one mistake because he is a great guy, but he was not really, I don't think that familiar with mergers and acquisitions. I think he was principally a business and real estate type attorney.

Linda Nottingham: 23:06 And, and there were some errors made in the purchase agreement. What turned out to be dangerous and costly errors. Um, and so we proceeded through the purchase agreement and it was, it was executed and monies were transacted. It was not a complete buyout. There was a good downstroke. And then I was personally to receive a percentage of profits, you know, going forward for a period of time. You know, not unusual. And I was to remain on as CEO and one of the first things I discovered is that there was no provision within the purchase to protect my operating unit. Uh, and, and one of the first things they began to do after a few months was to start to load their corporate operating expenses onto my- [Ryan interjects: Oh, Jesus.] Oh Jesus is right! I mean, it's embarrassing to sit here and say that.

Ryan Tansom: 24:05 It's so common. So was so was the other come compensation tied to profitability then?

Linda Nottingham: 24:12 Well, of course. And it became clear that there was not going to be any additional profitability, based on how they were conducting themselves. And that's when I realized that I had placed naively too much faith in the things they said to me. Uh, but in any case, I, uh, so I sued them for breach of contract and um, and I was removed as the CEO, not surprisingly. And uh, and ultimately there was a settlement derived where they, they did, they did pay more money.

Ryan Tansom: 24:46 So I think it is a very common thing unfortunately because a lot of people have never been through it. It's their first time and you know, the acquirers are a lot better at it. They got, you know, the advisors that do it all the time. You know, you had said originally as you were kind of talking and starting about the process that you, that your- the values that you have built the business on. So you know, with 100 employees and you conquering the industry, I mean that you've probably got a lot of pride in that baby of yours, you know, what values were you looking for in them? And then how did they change throughout the process?

Linda Nottingham: 25:21 Well, the principle thing that concerned me – they did not necessarily treat my employees poorly – but these folks, and, and I understand this, our numbers driven and they became so focused on numbers that honestly no one was minding the store. And by that I mean the clients. My biggest fear was that, you know, midwesterners, you know, this Ryan, midwesterners, you know, we're, you know, we're a little suspicious of people that come from other places. And so, uh, I did not want my clients to be scared off as it were, and I went to great pains to introduce these people and to represent the efficacy of their operations and the experience that they brought to the table. And, and I did a really pretty good job of that. And then I felt that that began to be dropped in the grease. I mean, the woman that I had hired to be president did nothing except crunch numbers all day long, every day.

Linda Nottingham: 26:20 And, and so the, you know, in my mind, again, I'm admittedly a small business owner. I probably, even if it had been worthy of ultimately ever going through an IPO, I certainly lacked the depth of experience to do that. So I, I recognize my small business focus. But the one thing I did understand is that you can't take your eye off the ball. The clients are important. And it was a really competitive industry. Uh, and so I felt that that was the primary place where they, you know, as we jokingly say, put the emphasis on the wrong syllable. They numbers are important, but numbers are not the only thing.

Ryan Tansom: 27:04 Well, what's interesting too… so, first a couple of questions. Did you have contracts with your clients? So was it easy to transfer those relationships because there was, or was it just ongoing transactions?

Linda Nottingham: 27:22 No, we had contracts, but it certainly wasn't, you know, any stalwart, a protection of the business. They were year-to-year contracts and so they might have been one, two or three years long if memory serves me. So they were not lengthy, into perpetuity contracts and if things. And if there was malfeasance, if there were failure to perform, then they had rights to be able to terminate the contract with cars. So it, you know, there, there were contracts but they were not inviolable.

Ryan Tansom: 27:50 What was it like when you, as you're now underneath the umbrella of this company and you're going out there and talking to these customers, how… Explain how it was different for you? Because I've got my own experiences where, you know, I'm just thinking like, you out there, you're like, originally you said, yes, we can do this. And then you knew you were going to deliver on what you promise because you controlled the ship, right? How was that experience different when someone else was controlling the services and you representing them? Did you know, did you feel the same way? Was there internal conflict? How did you deal with that?

Linda Nottingham: 28:31 I have to tell you Ryan that in the beginning, I was real "rah rah shish boom bah" about everything. I felt in my own mind that the fact that we had been chosen, I mean there were other companies that, you know, that were privately held companies in Chicago that could have been selected is acquisition targets. But I felt that the fact that we were selected, uh, and that we struck a deal was a mark of, of, um, of, of high level capability for us. I mean, I felt that the fact that we were sought after and that we were acquired by a national company said good things about us and added to our credibility as it were. And so I was very enthusiastic about it in the beginning, but it was over a relatively short period of time, just just a few months when I felt that, again, the emphasis was changing and moving in a direction that I thought ultimately would not be successful from a business standpoint.

Ryan Tansom: 29:27 So when you close on the transaction and you were in the rah, rah stage, you know, in your head, what was your vision for your involvement? Was it like you wanted to, you had enough energy and you love the business enough to indefinitely be there a long time versus… where did you see yourself fitting into that? And then how did that change as things happened as things progressed?

Linda Nottingham: 29:52 Oh no, I did. I did expect to be there for some time to come, you know, at least at least a couple of years I had expected to be there and to effectuate a good transition to be able to participate and the contemplation of areas for growth and development. Expansion. I was excited. I was relatively young at the time and I was excited about all those prospects. I was excited, I thought I was partnering with an entrepreneurial group that shared my same values, but it just had, had a bit more time and had more experience than I did, so I felt like it was a good marriage at the outset and, and the, the representative of their company with whom I worked with someone for whom I had great respect and I, I felt I felt good about all of it… until they blindsided me by starting to load their corporate expenses onto my operating units platform.

Ryan Tansom: 30:49 Did any of those red flags like through due diligence and stuff like that, and then like the price and the valuation, how did you value it and through due diligence, was there no red flags in any of this stuff?

Linda Nottingham: 31:01 No. And again, I think in part because I was, I was leading the charge myself and did not know enough to, to secure and rely on the advice of legal counsel that would have had more experience than I. That was, that was my largest error. Um, and in fact it was, it was promulgated even further by virtue of the fact that when I ultimately brought a lawsuit against the acquirer for violating the purchase agreement, uh, I used a litigation attorney that was recommended by my business attorney and he too proved to be unsatisfactory.

Ryan Tansom: 31:40 What were some of the biggest issues that you saw in them? Now I'm assuming you've got lots of scars of wisdom. What, what, what didn't go well and what would you have done differently and what should have been actually in there for the listeners that might go through this situation at some point?

Linda Nottingham: 31:57 Well, you know, I do a lot of work with women business owners these days in my semi-retirement, and I find that women typically are not and I would include myself in this, I mean, as much as my ego was involved in my desire to be in charge of what was going on in my company before I sold it, nonetheless, it was not hard for me to ask for help. Women business owners – and not to the exclusion of men – but I find that my experience that women business owners are more than often ready to willing to get outside assistance and expertise in an area where they may lack that. And so it wasn't that I was, that I was so ego-driven that I was unwilling to secure other help. It was just one of those unknown unknown. I didn't know what I didn't know. And, and so today, um, you know, I, I have a far different view because I've been down that road and see now, uh, how important it is to have legal counsel, uh, who have experience in this regard and who understand how to advise a client. Because I would imagine that in, again, more often than not, an attorney who does this sort of work is working with a client that's a divergent, that's a first time business seller and, and so they need the benefit of that experience and advice and, uh, and the horror stories that they can tell that will explain to their client.

Ryan Tansom: 33:34 When you and I are talking about in Florida and around the presentation, but you know, like I, I've admitted that our advisors, some of them were learning about M&A on our dime. You know, whether it's the tax or the legal or the financing, any of that stuff. If they're not familiar with the situation, they don't know going through once or twice is not enough. You know, there's so many different things that are different with the acquisition space that you just don't know where the landmines are going to be.

Linda Nottingham: 34:05 I'm sure. I'm sure that if you've seen one acquisition, you've seen one acquisition. I'm sure that's probably true. And, and again, it was just my own naiveté. I just, I just did not understand the things involved with that and I relied on the folks I knew and if I had to do it over again, I would certainly do some things differently there.

Ryan Tansom: 34:26 Yeah. And going back to the due diligence and the valuation, how did you value the business? Was it an actual multiple of EBITDA? Was it coming from someone that wants to go into a marketplace? Was there any strategic value that was placed above and beyond like normal cash are mean? I mean, assuming because you knew the competitive landscape, you probably brought a different angle to that. How did you guys come to that conclusion?

Linda Nottingham: 34:53 Yeah, I mean, EBITDA was not such a big thing back then, at least in, in my experience, you know, they, we were discussing, you know, multiples of, of profit. Uh, we were looking at multiples of revenue, uh, you know, there were a number of things being considered and, and I guess for me it was kind of arbitrary. It was kind of what was I willing to accept, what was I willing to take and what were they willing to pay. So they did their own valuation. We did not have external, external valuations at that point.

Ryan Tansom: 35:26 When you say it's a little arbitrary from your end, what was there like a gross dollar amount that you thought you needed to feel proud? Was it, was there a certain number in your bank account that you were striving for and was there any discrepancies after taxes hit?

Linda Nottingham: 35:43 No, I don't think I had a specific goal in mind. I guess in my own mind, again, I was sort of looking at it from the standpoint of – and this is relatively primitive. Again, I've already confessed my, you know, my limited experience at that time – but I was looking at it from the standpoint of what level of profit. I had a pretty decent percentage of profit. We were running at 10 to 12 percent, which was good, and I was looking at the growth because we'd always experienced growth every year. And so I was thinking in my mind I was sort of projecting out, you know, if I did this another five, 10 years, what might I have in my pocket versus selling it today? But there was one compelling thought that I, as I sit here, I, I, I do recollect with, with great clarity, and that is this: the nature of what we were doing and our company was such that it was my considered opinion that it was a process. It was a function within the managed care environment that was not going to be on a continuous basis run by mom-and-pop companies like mine, uh, external to the mainstream managed care industry. I suspected that either payers, we're going to want to take it over or is it multi-hospital systems, physician groups. We're gonna want to take it over? Uh, you know, I have friends that are in real estate. Real estate is real. Estate is real estate. As long as there's real estate, they're going to be functions for people in the real estate industry. But I felt that the particular niche that I was in, if I can see, I think I can say it, and I'm not creating a word, we were about to be commoditized. And so it was my belief that this wonderful wave that we had ridden was probably not going to be there at a perpetuity. How long? I didn't know, who could say for sure, but that's part of what I was weighing off in my mind.

Ryan Tansom: 37:46 I think it's very valid too, because I think there's a lot of people that think their industries are just gonna. Be around forever and they don't treat their business like a, like an asset. You need to look at the competition and what's going on and you know, are you gonna be able to fight the fight going forward and make sure, like, no, you actually going to be able to put this stuff in your pocket over the 10 years. Going back to the, the lawsuit Linda and you leaving and stepping down, when you, where was your head at and then how did you cope with what had happened because you know, your vision of what you were going to be doing in the future probably changed drastically. And so how did you go through that? What did you end up doing afterwards and how did you end up, you know, calibrating and recalibrating and moving forward?

Linda Nottingham: 38:31 Well, I'll tell you, that it was a time of great stress, really terrible stress. Um, the acquirers counter sued me for huge amounts of money and made terrible allegations about me. And um, and, and that was, that was very difficult for me. Again, it, and I'm embarrassed to say this, but if, if I had not been quite so naive, I might have looked at that differently or it might have affected me differently, but it was a, it was a very disturbing time for me. And uh, and couple that with the fact that when I had, I had to leave very unceremoniously when they, when they fired me as CEO – you'll laugh at this. I thought this is so ignominious I, I just cannot bear it. And so I, I threw myself an elaborate retirement party and invited all my clients to come. It was, I thought "They're not going to- the acquirer's not going to throw a nice retirement party for me. And so I'm going to have one myself." And I sent out a beautiful invitation that said "thanks for the memories" and had a wonderful- hosted, a wonderful cocktail party for my clients and my staff. And so we had a great time. But having said that, and I had been in the process of, of moving down to Florida at that time and uh, and, and it was, it was a very depressing time. It was very stressful and terribly, terribly depressing. You know, leaving my work, the exciting, enthusiastic team that I had, the exciting things that we were doing, uh, when I stopped doing that so abruptly, it, it, there was a sense in which it was like free-falling. Um, it, it took me a little bit to kind of get my sea legs as it were a afterwards. And so it's uh, you know, I can appreciate that when people sell their businesses that and some don't, some hang on forever probably for that very same reason. Um, but it, uh, yes, it was, it was a difficult time.

Ryan Tansom: 40:39 What were some of the things. I love how you phrased it like 'free falling'. What came to my mind when we sold was phantom anxiety. I was like, where is all the motion and commotion and chaos and emails? What were some of the things that you did that helped you get your sea legs trying to recreate a new vision? Was there books, was there people? How did you… and how long did that take?

Linda Nottingham: 41:07 Well, I entered into another business fairly quickly with a different business partner and that was totally different. It was retail in Key West, which is the story we won't go into today.

Ryan Tansom: 41:07 I want to hear it at some point.

Linda Nottingham: 41:18 It was very, very, very different. And so I did have some involvement there, although I hate retail and no offense to those who are in it, but it was certainly not my cup of tea. So I was involved in that. And uh, and so I relied on my spiritual roots, I relied on friends. I had a friend who came to Key West from Chicago and she said to me, she said, you know, Linda, she said, loss is loss even if even if there are good things that come, you know, you've lost your opportunity in your circumstance, in your business there in Chicago is gone, but you had a wonderful capital gain event. And I couldn't understand why I was so depressed when I'd had this wonderful capital gain event. But she said it just takes time to adjust to that. And she was right. And so it did take some time and it did take the help and support of my family and then beginning to engage in other things. You know, exercise, which I almost never had time to do when I was working. Um, you know, being able to play golf again and some of those kinds of things. So it's a process.

Ryan Tansom: 42:27 I'm wondering, you know, some of the things that I know that a lot of entrepreneurs get kind of, I don't want to say addicted to or they love is the game and the competitiveness – which I do believe you got a solid chunk of that in your soul – and the community of their employees and such is. Is there ways that you were able to find that afterwards?

Linda Nottingham: 42:48 Oh yes, yes. I would say so. I, I know one thing in particular that I've been involved in, not to necessarily put it in a commercial here, but it's okay, is that when I ultimately did settle in Florida, I joined a national organization called Score and in Score we provide… it's an invitational organization. To be a member as I am one has to have either owned was owned business or been at the higher levels of corporate management and those of us who are volunteers and there are probably 10-12,000 of us and three or four chapters across this country. It's been around for more than 55 years. We volunteer our time to work with people who are in business to help them. And so that's been a great source of joy to me. It's, it's what I continue to do all these years is to work with people in business and, and, and to share the… you know, I, I won an award here in Jacksonville where I live today, not too many years ago. And, and in, in my acceptance, very brief acceptance speech, I said, you know, I suppose it's proper to say that I've received this award for the mentoring work that I do, but the thing that makes me a good mentor is to share all my mistakes. If you're not, if you're not afraid to talk about your HR meltdowns and you know, legal disasters and your, you know, your contractual failures and, and your, you know, your, your failure to, you know, to estimate things properly. I mean, if you're, if you're not afraid to talk about the mistakes that you made, then you can really be a good mentor for someone else who's in business. And, and so that's, that's how I spend a fair amount of my time.

Ryan Tansom: 44:30 Was it, it was, it tough for you to actually get to that point where you're comfortable with what happened and to, to share your mistakes versus pretending like it went a different direction? Or were you comfortable right off the bat?

Linda Nottingham: 44:48 No, I, I felt comfortable right away. I mean, it's, you know, what it is, is what it is. You know, I felt that my business certainly had a level of success and I'm proud of the success that we had. I'm proud of the people we were able to recruit. I'm proud of the trails we blazed and uh, you know, the standards that we set – I will always be proud of that. But, you know, mistakes are the mistakes and it's not because… everybody makes mistakes. And again, usually it's because of things that you didn't know or didn't understand or, or miscalculations. But I don't, I don't find those things to be ashamed of. It's just part of life. It's part of what happens to most of us in business. [Ryan interjects: That's a good way of looking at it.] And so yeah, if by sharing those then I help someone else avoid something then then it's, it's a blessing all over again.

Ryan Tansom: 45:44 I just think there's so many entrepreneurs were their, the ego is so tied up into the company and their identity and all that stuff that they're not as comfortable as that because they think it's like a direct reflection of their validity and their value in society. And I think that's a bummer, because I do believe that everybody can learn a lot from everybody sharing like that.

Linda Nottingham: 46:04 Oh, absolutely. Absolutely.

Ryan Tansom: 46:07 Well, as, as we're kind of wrapping up here, Linda, with you having this platform right now and to mentor all these people and the listeners, when you look back at your whole journey and we've talked about a lot and you shared a lot of good things, is there one thing that you wanted to highlight as something that everybody should rethink or learn or think about or is there something that we missed that you want to leave our listeners with?

Linda Nottingham: 46:31 Well, I will tell you this: part of the work that I do today, is I work with round tables. As you mentioned, I'm part of the GrowFL program and I facilitate round tables. And the thing that I see, I think two things. I would say that the thing that I see most often for people who have well-established businesses and have employees is that there's uh there's this odd sort of transition from being an entrepreneur into being a CEO and it's a tough transition in, in, in, in many respects, at least in terms of what I've observed, the skillset and the native capabilities that come with being an entrepreneur are not necessarily replicated in the CEO role. And to be a good CEO, the CEO has to at all times consider the health and the well-being of the entity, the company and and sometimes that makes decisions all the more difficult to make when one has to do that. It's very easy to let emotions sway or past experiences have a bearing on one. And so I see that transition as being difficult one. But at the end of the day, for me, it's really, it's really all about people, the people that you work with, the people you work for, the people to whom you provide service. Uh, it's, it's all, it's all about people. Most of us, most of us in business have involvement with people at, at some or many levels and uh, and the recognition of what it means… Going back to the very beginning when we just began this conversation that when my partner and I started our business, we were astounded to realize two women in business working with big insurance companies, little bitty, tiny brokerage that we had, we were astounded to learn that a solid work ethic and that honesty were really important things. And, and that we thought in a sophisticated world there was less consideration of that. But the fact is, those are still important values. And, and it pertains largely to and how you work with people when you are in business, whether they are your employees or your clients. And so that would be my closing thought,

Ryan Tansom: 49:03 Amazing gold nuggets and words of wisdom there. And taking that one step further to, you know, making sure that you took all of those morals and values and whoever you decide to sell to or partner with or whatever, the transition, making sure that that is consistent, finding out after the fact because you took a lot of work to build that.

Linda Nottingham: 49:28 It did. It did. We were just, we were fortunate. The truth is, we were fortunate. When I sold the company, Somebody said to me, "Oh Linda, you know, you worked hard and you were smart and you deserve this." And I said, "well, we worked hard and we were smart, but I don't know that deserving has anything to do with it." But we were in the right place at the right time and we had some good opportunities and we didn't do poorly with them. And so for me it's less ego and more just the recognition of what, how fortunate we were that we had those opportunities because a lot of people maybe don't have that. So we always felt a sense of gratitude about that. And I still do to this day,

Ryan Tansom: 50:12 I love it so much. If our listeners wanted to reach out or get in touch, what would be the best way?

Linda Nottingham: 50:16 They're welcome to email me at L Nottingham. That's l n o t t i n g h a [email protected]. They can connect with me through Linkedin. I have a profile there. That would probably be the best ways.

Ryan Tansom: 50:35 I love it. Thank you so much for coming on the show. I had a blast.

Linda Nottingham: 50:37 My pleasure. And I did, too, Ryan. Best wishes.


Ryan Tansom: 50:43 I hope you enjoyed the episode with Linda. Linda had so much amazing wisdom that she shared with us. I think if there's a few things that I really took away and I want to highlight from the story with Linda and what she had to share is that you don't know what you don't know until after the fact. You know the small nuances in contracts, whether it's the earnouts or what people talk about in jumping into the deal momentum and all the different parties from the advisors to the buyers and to everybody that is sitting down, as the owner you have the right and the ability to be cautiously optimistic and also extremely paranoid for various reasons and making sure that you're asking the questions to protect yourself and making sure that the advisors or the other people at the table are answering the questions for you if you can't get to them because you don't know what you don't know until after the fact and then it's too late because buyers can tell you all the things that they want, but then once the deal is done, they have the keys and they can do whatever they want unless you've predetermined all of the things that you want ahead of time.

So I think really just knowing what you want, having the right people at the table and structuring the deal exactly the way you want so there is no surprises after the fact. I hope you were able to take a couple good gold nuggets out of the interview with Linda. Go on to Itunes, give me a rating and I will see you next week.

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Written by Ryan Tansom

Ryan Tansom

Ryan runs industry-specific podcasts on his website which pertain to mergers and acquisitions, and all the life lessons he wish he had known then. He strives to bring this knowledge to his listeners in a way that is effective and engaging by providing new material each week from industry experts.

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