Podcast: Stephanie Breedlove Shares Real Numbers and Tips from Selling Her Business in this Interview

By Ryan Tansom
Published: January 24, 2019 | Last updated: March 21, 2024
Key Takeaways

Hear a real-life example of a profitable business sale, alsongside the key takeaways for the next venture.



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

Stephanie is an authentic voice for women entrepreneurs. She has been walking the walk of a successful entrepreneur for over twenty years. After launching a career in corporate America with Accenture, she found her true calling as co-founder and CEO of HomePay (previously Breedlove & Associates), the nation’s largest and most comprehensive household payroll and tax firm. Her startup grew to national leadership, was later acquired for more than $50 million, and plays a vital role in the quality and professionalism of the in-home care industry.


Breedlove and her husband founded and self-funded their entrepreneurial endeavor with no prior experience running a business. During the journey of building a company, she also built a life that integrated family and business as complements, not competitors, to one another. To create the life she desired, she often found herself at major crossroads—the kind that alter the direction and outcomes of life and require you to go all in to get to where you want to go.

If you listen, you will learn:

  • Stephanie’s background in business and entrepreneurship.
  • The beginnings of her payroll and tax firm.
  • The 2 year, 4 month growth trajectory and bringing Stephanie’s husband into the business.
  • How they found their first clients.
  • Switching their mindset from “small firm” thinking to “big business” thinking.
  • How Stephanie and her husband learned about their industry and market trends.
  • Why “what-if” talks were beneficial to Stephanie and her husband when discussing the future of the business.
  • How they went about preparing the company for growth.
  • The conversations Stephanie and her husband had before going to market.
  • Why they decided to sell.
  • How emotion and ego can ruin a deal.
  • The relationship with and how the sale negotiations started.
  • Why Stephanie and her husband didn’t tell their executive team about the sale.
  • The team of advisors that Stephanie took into her negotiations.
  • The start and stop talks with and how Stephanie handled it.
  • The hang-ups that stalled the sale and how they were resolved.
  • What it was like to work for
  • The positive effects of Stephanie’s earn-out and why it was good for the company.
  • Stephanie’s book All In.
  • What she does now to keep busy.
  • The natural high of entrepreneurship.
  • What’s next for Stephanie?

Full Transcript

S. Breedlove: They were at 39, we were at 65, they wanted 80 percent cash, they wanted 100 percent stock and we just kept talking in circles around this. And finally we were on a Skype conversation one day and I just said, you know what? We're just too far apart.


Announcer: 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: Hey everybody and welcome back to the Life After Business podcast. This is episode 129 and I know you're gonna love this episode and the reason is because of my show, if you've been an avid listener for a long time and been a truthful fan, I very much appreciate it, but also the things that you realized that I interview a lot of advisors who are technical experts on things that have to do with growing and selling companies and the other half of the people that I interview are entrepreneurs who are willing to share their story of growing and exiting their company and the ups and downs and the pros and cons that they've had along the way. And one of the biggest struggles is to find entrepreneurs and owners who have sold that are willing to lay it all out there, be transparent so it's valuable to you, the listeners so that way you're not just getting the fluff, but you're actually understanding what the inherent challenges are of growing and selling a company.


Ryan Tansom: And a lot of times entrepreneurs and owners who have sold have earnouts or they've got rolled equity in the private equity or they're in the ESOP. So there's ties to that business, whether it is financially or even their reputation where people have a hard time disclosing the actual problems with it. And there was a laundry list of people that I would love to have on this show that we've communicated to and they have horrible stories or big challenges and they can't share it because they are still owed a bunch of money or they have a big reputation issue because of who they sold to. So it's very difficult to find these people that are willing to share everything. And Stephanie Breedlove is on the show today. And what was awesome about Stephanie, how she shared her story is how unbelievably authentic she is, real and sharing what worked and what didn't work, and it was awesome because her company that she sold to now is public, so all the numbers are disclosed.

Ryan Tansom: So she shares how she bootstrapped the business to grow it. Finally hitting that million dollar mark, determining what they're going to do next, growing it even more into literally a cash machine that was doing top line $9 million in bottom line, four point five in EBITDA to selling the business to for over $50,000,000. And she shares her ins and outs of the entire journey and it was absolutely a blast and an honor to have her on the show. She is also an author now of a book called All In, which is her way of giving back to women entrepreneurs that can now get the resources to help them grow and scale their businesses. And this episode is absolutely a must listen to. So before I kick it off into the interview, a couple of last little notes is one is we are close to the first phase of our book being done, which is going to be an absolute awesome event.

Ryan Tansom: Then we launch in, I think it's going to be mid summerish I think we're shooting for and it is going to be the entire manual of our process of how to grow an exit a company, so it's going to include all of our five principles and the process so that way you the owner can put all of the control back in your hands. And then the other final note is I've got a couple more slots of people that I want to open up to specifically engage in a one on one or I'm sitting down with people on a zoom or in person call depending on where they're at for one on one weekly calls to help them accelerate where they want to go into growth and exit plan. They're not ready for a large engagement, but they just want help connecting a bunch of dots. This is more for the it yourself or is that are just really looking to accelerate where they're going, so I'm doing one on one calls each week and that is 2,500 bucks a month. They got a couple slots left. If you're interested, reach out to me. Otherwise, I really hope you enjoy this episode. It is everything you want out of a story from someone that has grown and sold the company. Stephanie's the bomb. So without further ado, here's definitely breedlove.

Announcer: This episode of Life After Business is sponsored by GEXP Collaborative. 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 buyer of your choice at the price you want.

Ryan Tansom: Good Morning Stephanie. How are you?

S. Breedlove: Good morning, Ryan. I'm great. Happy to be here.

Ryan Tansom: I'm a super excited for this because you and I actually, I saw you speak. First of all, I actually saw or listened to you on more of those podcasts. I think there's over two years ago and then at John Warrillow's value building summit. You shared even more of your story and there was so many reasons I wanted to have you on the show and one of them is because you have just a ridiculous success story and I guess success, success is relative and you'll be able to share with us in your definition but also is how transparent and open you are about your story, which I think is very rare because as you mentioned, you're the company that you will do it as now public, so there's a lot of stuff that's public and you're able to share with us some of the things that some people on the show might not be able to for various reasons, but so I'm excited. And so the people that do not know your background, like where did you decide or not decide or how did you. How did you start as an entrepreneur? Like what? What triggered… What was the triggering event?

S. Breedlove: Well, I'll start with saying thank you for the kind words and I really do believe that when people come on podcasts like yours, we play things close to the vest, uh, whether we have to legally, you know, we just want to because we don't want to out the good, the bad and the ugly. And the reality is we all have the good, the bad and the ugly that actually informs the best parts of the journey. And I don't have any trouble sharing next. It's real life. So, um, so thank you for those kind words. But background, I will start off by letting listeners know that I've been an entrepreneur for 25 years, so it's not been new journey for me, um, and stepped into entrepreneurship in the mid 1990s. So to give some context, um, and the reason I share that is in coming out of business school in the late 1980s, technology had really not enabled, you know, the entrepreneur that could scale.

S. Breedlove: So you were either going to go to work for a small regional or even local firm or you were gonna go to work for corporate America. And the Fortune 1000 literally, and that's what I did and my husband and I went from graduate school, married, um, into the Fortune 1000 and really thought that that was going to inform the direction of each of our professional careers. And by the mid 1990s I had two children born 16 months apart in 1991 and 1993. And I was working for now Accenture, but it was Anderson consulting at the time. And in the early 1990s was one of those few women not yet in upper management who had kind of made a life choice to go back to work and pursue a career and not pay the mortgage, you know. But uh, you know, as you know, as a core tenant of the way we wanted to live our life.

S. Breedlove: And I know this sounds awfully philosophical, but that was the, that was real angst in the early 1990s and pivotal points in life. So now fast forward into the early to mid nineties and I'm sort of living this life of this full time career person with two sons that are 16 months apart. You know, with a spouse who had signed on for this equality in life, he had left consulting and Ernst and Young at 60 hours a week to take a job in finance with Kohrs, which was a very family oriented company. Great job. But 45 hours a week instead of 60 hours a week. [Ryan interjects: Yeah. Big difference.] And the reason I share this is, is that I think entrepreneurship came out of sort of this life commitment of, okay, we're going to look a little different than most of the couples around us in the early 1990s and if we're going to focus a core part of our life on a professional career, which is very standard today for, for almost all women, then then where's the true calling?

S. Breedlove: Where are the real talents? Where's the most fun? And we started having all of these crazy discussions. Notkidding it would be like on the way to the OBGYN office or while we're on maternity leave. What if we did this? What if we did that? What if we started our own gig? What would that look like? And we were these two corporate. Um, and really what that translated into is I had gone back to work in business out of our own personal need and passion, which I think some of the best odd, entrepreneurial ideas come out of that whole experience. And we'd hired a full time nanny, which was not a common thing to do back in the early 1990s. I actually had a Pierce and Anderson consulting say to me, you hired, hire what your grandma did he actually come over from England if she's a nanny? And just to give you some context.

S. Breedlove: And we decided we wanted to do the right thing. We wanted her to hopefully be a part of our life for long period of time. And we wanted to pay well and we wanted to give her benefits and we wanted to pay her legally and we wanted her to have retirement someday. Um, you know, something most of America doesn't do. And we basically stepped into paying nanny payroll and taxes and we thought this could be a business idea. And, you know, maybe women will return to work with regularity on and build careers and hey, maybe the elderly will age at home, which had not yet started to happen with the advancement of modern medicine. And cheap talk was cheap because I love talking about it. I love talking about this idea of maybe we do payroll taxes and benefits for people with in-home care. I mean, how odd and rare is that?

Ryan Tansom: How did you land on that out of all those, out of all the challenges and the fact that it was a newer market and stuff like that, how did you land on that specific?

S. Breedlove: We landed on it because we were doing it for our nanny and it was a nightmare. We both had MBAs. We both worked for, had worked for audit and tax companies with Ernst and Young and Andersen Consulting, Arthur Andersen, which now doesn't exist, um, and it was an absolute nightmare to figure out how to do it right. As we kept calling this and we kept having friends say, Hey, can you help us with that? We think we want to do that. Right? Might Run for office some day, I think it's the right thing to do. Um, and we thought, you know, maybe this is a business idea and for me as I said, talk was cheap.

S. Breedlove: I loved talking about it and so maybe there was a calling in there to be an entrepreneur because I love talking about it was one of my most fun things to do and I have to admit that my husband was one who said, yeah, I think we should do this. You should take the lead to take this company national. You could do this. I think it'd be fun. And if it doesn't fly after about three years, well no big loss, you know, we won't, we won't have any college fund and we won't have any savings. And hopefully you don't have too much debt and your parents will invest and you just go back to work if it doesn't work. And I was like, yeah, okay. Right. And, and then finally, after about a year, I said, okay, this was, this was 1995. So fast forward in 1995, I took the leap to try to start this nanny payroll tax and benefits company national in its space when about two percent of America actually paid their in-home care legally. Today it's about 15 percent. So it's not a lot. It's a lot more than when we started. We, we were in a space where, you know, entrepreneurship is not a real common career and a bank wasn't going to give us a loan and to be honest with you, even though both of our parents were in a position to be able to invest a small amount, neither wanted to. They didn't want to touch this idea with a 10 foot pole.

S. Breedlove: Yeah. There were two different conversations with, with which we were like, well okay then. And so we had, I'll be honest, we had about $45,000 bank, we had my husband's salary and we did a really, really detailed formal budget of what we thought revenue growth and and the personal side of expenses would look like. And we could make it for two and a half years before I had to go back to work and we began to turn the corner in about two years and four months. And that's the start. Um, and I probably gave you a lot more information.

Ryan Tansom: One major followup question on that. Did you pay your nanny is salary and benefits and payroll and all that stuff while you're doing that?

S. Breedlove: Absolutely.

Ryan Tansom: In that formal budget, you're like, what an amazing situation. So how, how did you acquire your first clients and some of the major milestones, two years and four months or whatever it was. And then how, what was the turning point?

S. Breedlove: So the biggest challenge throughout the duration of our 22 years before exit was acquiring the client. Um, when you're at the end of the day, a, a, B to c company, I hesitate there because it was kind of a B to b, a c, which we're trying to reach a family who has hired either a full-time nanny or full-time elder care at the time that they make the higher with the right level of education to help them pull the trigger and make the decisions not only paid legally, but to use your term looking for a needle in a haystack. So marketing was really hard and the focus that we put on marketing was twofold. One was what could we do with out any capital to invest in broad-scale blitz-like marketing. So we focused on building business development partnerships with small companies across the country who place in home, childcare and elder care. And that was the focus in marketing for the first two years. I got on a plane every four to six weeks, um, and would go to two or three cities and stay out for about five days because we couldn't afford to fly back and forth. And I would basically meet, educate, train and form a little bit of trust and relationship with these small companies who were placing in home care to be our referral arm, if you will. And over two years I looked up and we had 125 relationships and that's when we were off and running. That was the turning point.

Ryan Tansom: So a couple of questions on that when you were doing this, Stephanie, especially because you and your husband are MBAs, you know, diving into the numbers and all that stuff. And I know a lot of entrepreneurs, I just go, hey, let's give this a shot with zero thinking behind it but what you know. And then this is Kinda what the, the, the reason behind my question is what was your vision? So you said you love talking about the problem, right? And you wanted to go solve it. Did you like. And it might be difficult to look back on it. Did you intend on the next. Was it like let's create 100 million dollar company? You had said you wanted to go national, but like what drove you and was there foresight in the eventual outcome or the end part of the story?

S. Breedlove: You know, the, the answer is at the outset, absolutely not. We did not have that vision. Um, we did not have that goal. It was an evolution. And, and I don't want to say we were small thinking, but I think it was an evolution. When you're a bootstrap entrepreneur. Goal number one is, is to, you know, simply break even.

Ryan Tansom: Pay the bills.

S. Breedlove: Pay the bills, have a little bit of money to plow back into the company to see if that's enough to get it, to continue to grow. Goal number two was once we became profitable was to be able to successfully grow out of profitability, which, you know, that's a rarw concept in today's Day and age of, you know, I, I need lots of funding in order to do what I want to do. And learning to grow out of profitability I think was a goal achieved that really informed the rest of the evolution, the journey. And to answer your question about the time that we realized that we weren't just going to make it, but we were crossing over that million dollar mark. Um, and I will say this, I took the leap into entrepreneurship on my own as the first co-founder and it took three years to be able to crossover breaking even and say, okay, we're going to make it. How do we hire, how do we grow, how do we build next? And um, the decision that we made was not to hire a lot of folks to work underneath me with the, you know, the, the little bit of mistake that we had to start to invest in our human capital. We actually took the leap by bringing on a second co-founder and that was my husband and we had the discussion of should I bring on an equity partner and give them 10 percent, you know, should I bring on a middle-level manager style person to offload some of the, the, the mid to high level work.

S. Breedlove: And I just had this gut sense that if we were really going to do something big to go back to answering your question, we needed to power at the top. And my husband had been burning the midnight oil behind the scenes, had the passion, understood the business, was really to sacrifice. And we decided we were willing to put all the eggs in one basket because of those pros because of what he could bring to the business and his mindset. And we saw it through the same lens. So three years in we hired two people and he joined the business and that was the best decision we ever made because that commitment at the top helped us to, to really explode. And so now fast forward to we did, we want an exit, you know, we went from breaking even to learning to grow out of profitability to crossing that million dollar mark and actually having an acquisition offer from a competitor, um, who really wanted to take us out.

S. Breedlove: Um, and that was the reason for the acquisition offer. And we were below the million dollar market cap point in time. And that was a little bit of a wakeup call when we said, you know, what, we really like doing this. Back to my story in the very beginning. We, we are passionate about this. We love building growing businesses. We loved the industry we're in. I had had a new found passion for it. So when call me a civil rights advocate, if you will, advocating for a group of workers in America who didn't really have professional pay retirement benefits, um, it, you know, and that kind of… And I mean that sort of built that social entrepreneur side of me a little bit. One day we were probably, I would say about six years in and we sat down and said, okay, we have a thousand active clients and you know, have a half a million dollars in revenue. And um, we're a small business and we're making it and you know, we've got, we in the payroll business were very high margins and I don't mind sharing this with you. We had EBITDA of a couple hundred thousand dollars. And this was the late 1990s.

Ryan Tansom: Plus 500 grand in top line.

S. Breedlove: Exactly. Ended up. And we said, use this, who we want to be and what does the industry look like. And we stepped back and said, okay, let's not be the small thinking small entrepreneur anymore. Let's take big. Um, we have an industry with $10 million in home care workers. Uh, we know that 500,000 people currently pay legally and we have them on our surface. So why can't we have 10,000 active clients or 50,000 some day or 100,000 some day and grow this business to be a midmarket level business and grow it to be our legacy. And our legacy being, you know, who knows? Maybe we'll end up in a joint venture. Maybe we'll end up being acquired. Maybe we'll end up setting up an ESOP and becoming the board of directors. So at about six years into the 22-year journey, we really began to think strategically. At least once a year when you pull your head up from running a small business about what a big next looks like, those things like exit and acquisition, you know, were on the list someday.

Ryan Tansom: Where were you getting your information from, Stephanie? Because like you just rattle off a bunch of stuff, like between the ESOP and the stuff that, you know, the different things like that or like an acquisition or a partnership or stuff. Was there stuff in the schooling that you did or was it resources back then to even have the awareness that those were possibilities out there?

S. Breedlove: Ryan, that is an excellent question and I sit here today talking like I'm an expert, but the reality is neither me nor my co-founder, my husband, you know, were really well versed, but we felt we had a responsibility to become well versed and total transparency. I come from a software development background in the finance and tax rules, so I had no brushing up a little bit of, uh, against the, the financial industry to know where to go to get some information. And my husband jumped into our business from doing joint venture work with Kohrs. Uh, that was his responsibility when he was with Kohrs. And so he had some background understanding that was instrumental in the Co founder team. Um, but what did we do? We really, we really just went to school and learn if somebody bought our company some day, what would that look like when we didn't have the sophisticated conversations about, you know, what an exit looks like and how it would be structured and what would be the core tenants it was that it was, okay, if somebody wanted to buy us someday, what would that look like and who would those people be?

S. Breedlove: And we would just kind of read, you know, the Internet had become our friend, you know, in the early two thousands. Um, and we really just went to school and we just continued to read and I don't mean we sat around and read deep books on a regular basis. We were busy running a business, but we made sure that, you know, on a quarterly basis or even on an annual basis, we were reading about what is private equity and if we ever get to a point where we need capital or we have a good size that would fit them. And who are they? And, and would that be a good avenue for us if we were acquired, who would acquire us and who would be interested in acquiring us? And we learned that probably be a financial services firm because most of our clients were upper level management in c suite and they would love to have access to those people. We had a couple of calls from other large payroll companies who simply would love to add us to their book of business. Um, we didn't entertain acquisitions with those folks or partnerships, but we get to learn from that. And then we watched our own industry carefully who in our industry was doing something bigger and better than us, you know, that might want to partner or acquire us. So it wasn't real sophisticated. We just made it a priority to learn what we didn't know about what, what could be hours in the future.

Ryan Tansom: Well, I think you hit on something that's really, I think, crucial for the listeners or anybody that's in this position. So you don't have to be an mba or someone that has got all these security license or any of that stuff. Because what I, what I took away out of that, which as you and I were chatting before the podcast is like just being aware and like in like learning and like asking those questions, he doesn't mean you're committing to a timeframe or a specific person, but I think it's so challenging to, to talk to an owner that doesn't have any awareness where like all those things that you just mentioned, how you sell and what they're going to do with your business and your relationship with that person afterwards is so different on all of the spectrum. So how do you know who to say yes to for marriage if you've never dated before? It's like it's literally just kind of shopping. Doesn't mean you have to have a specific thing in mind, but like you just said, you just talking about a loan can be beneficial.

S. Breedlove: Absolutely. You hit the nail on the head and I'm just going to offer us some tough talk that I really believe in right here early in our conversation as a, as an owner of a company, whether you're five years in or you're 15 years in or more, if you aren't at least talking about or even doing a high-level of information gathering, as you said, becoming aware about what your company could do next, not just you, but what your company could do next, then you're what's holding it back. And the beginning, it's the understanding of formulating efficient operations with departments and job responsibilities, um, and valuation and accountability and real basic stuff that takes your company to the next level, which a lot of small business owners don't do, you know, to investing at the right level in technology. And for small companies, it's difficult.

S. Breedlove: We embarked on a $2 million dollar technology enterprise development endeavor when we were only 5 million in revenue. Um, and we had been reading and learning and thinking and talking to partners that could help us do that too. Like you said, just being aware of once we were 15 year old company, we weren't talking about and becoming aware of what the world might look like for the company to grow beyond two co-founders. Then we were going to be what was holding it back and there are too many small and mid level size business owners that don't take the time to do that. And it's half the battle.

Ryan Tansom: There's two questions. I want to get into and ask, but like to go back. I'm curious because you mentioned that the $2,000,000 investment and I think there's this hump in revenue and profits and I think it also ties into a lot of the, the, the energy levels of entrepreneurs where you get to this point where like if you're x amount in top line and you're saying, okay, you're making a half a million or maybe 700 grand and even today and it's like almost like finally I can buy the stuff that I want and I can take a deep breath. And then it's like, you know, there's. I think there's, there's that threshold that they allow. You know, as you and I were kind of going over some stats before we got into the show of how many people go get above the 5 million in revenue because I think you get above 5 million revenue now you're getting to the point where you've got surplus cash flow to continue to pile back in. How did you guys finance at 2 million or get past that hump? Or like how, what was some of the things that you did to get to that point where you're now got no additional cash flow to keep reinvesting,

S. Breedlove: you know, for that, the founder who is either financing their company initially with debt or self-funded, in other words, you're beholden to nobody else. The biggest challenge every time you get up over a, a financial hump is to not let yourself get comfortable with the income. Um, and continue to have that discussion of, okay, if I can grow this company smartly, uh, how much do I plow back in? Which is basically not in my pocket anymore. It's that simple. You know, if I'm going to invest in taking the company to the next level, it means that I have decreased my income and that comfort level, like you said, buying the stuff you want to buy. I mean, I ended a paycheck for 27 months. Um, so, so you know, when you get to that $500,000 mark and there's this little voice sitting on your shoulders, don't do it. Don't do it! Buy the new car, go on a vacation. And to be honest, I mean, I think I would be an absolute liar if I said, oh, I didn't do any of that. I put it all back into the business. There's a balancing act.

S. Breedlove: We muddled along, um, without the right level of investment in marketing or maybe taking the plunge into the next level of technology investment because we were, we were really comfortable and it felt good and we didn't want to take the risk. But then you have a wake up call in and you say to yourself, actually, not just this is the right thing to do. You say to yourself, and this is capitalism at its best, okay, you know, now we're, we're at 5 million in revenue and 7,000 clients and unless we invest and take some risks, then we can't go to 10 million in revenue and 12, 14,000 clients and I want that and I want that. And I actually think that we can achieve that with the right level of investment and the right level of pace and it's not just pie in the sky and we're not just, you know, drinking our own koolaid.

S. Breedlove: And that's what brought about the technology investment. We, I, the context there and whether it's technology or it's something operationally or marketing in your business. We were at a point, we were about a dozen years in at that point. And um, we had just begun to explode. Um, I really get to talk to a lot of entrepreneurs and I feel like without that fast growth infusion of capital from angel investment or venture capital, that it takes about 10 to 12 years of laying the foundation and we were beginning to explode and our technology was drowning. And we're either going to stay about the current size that we were or we were going to invest at a big level, um, to try to take advantage of what we felt was an opportunity with that word explosion behind it. So it was a huge risk. Um, you really, when you have 5 million in revenue and you invest 2 million over an 18 month period, um, in technology that you hope is going to double the size of your company, it's a huge risk. But for us, the notion of I could double the size of my company versus I could sacrifice a vacation or two. This scales the scale and the scale tipped towards, okay, I want to double the size of my company.

Ryan Tansom: Well, and so what we're gonna do a couple things that I want to do here. One is that we'll get into some of the milestones because you did some where where you guys ended up with your revenue and your EBITDA and then the sale we'll get into. But before, before we jump into some of those concrete facts, I'm curious, Stephanie, as you were in junior husband, you know, as you're investing in the business, are you putting the $2,000,000 in there and at the same time having these quarterly conversations, these conversations with other people… As you were refining what you and your husband wanted, I'm curious, was it like, okay, we want x amount sale or we want to sell to these people or we want this much market share. What were some of the variables or data points that you remember were core objectives that you wanted out of the next stage of the business? Did you consciously come to those or did they come up after the fact?

S. Breedlove: No, we, we consciously came to those. Um, and I, I will say, and consciously forcing ourselves to have, to learn, to be aware, to be honest and transparent and true to ourselves about what we wanted and what we, we were willing to take more sacrifice in order to execute an exit. You know, those are our really, really soul-searching times. And I think, I think they really, they make a difference in how you feel about stepping into selling a business or private equity or joint venture. And here's Kinda how it, when we had, we had the benefit of time, we were, now I'm fast forwarding through the journey. I've been talking about a dozen years, so now we are about 18 years into the business and we had taken the step to do two things. Um, we had begun to grow an executive level team. We've gone from about 30, 35 employees. So this was not a large team, but we needed to go from having good department managers, you know, two people who could actually run the company and not just because the founders wanted to step out. But um, as I said, people who could be at the helm of taking it to whatever next was. And when we started to do that, we spent about a year kind of grooming up a, a core group of people, about seven people. When we started to do that, that began to organically create conversations around, you know, okay, gosh, you know, what, we're, we're almost 50 now, we've been at this almost 20 years. We love what we do. Um, but we see two avenues in the next, you know, five or so years. One is we in and we okay potentially bringing on large scale diversification and maybe we bring on some debt.

S. Breedlove: Maybe we partner with a private equity firm. Things we've never done before. The stuff kind of big business, you know, or you know, maybe we sell the company, you know, or you know, maybe we set up an ESOP, executive level team, you know, takes equity, ownership and uh, we become the chairman of the board. And when we started to grow this team, it started to force us to talk about a big next, which was possibly an exit, you know, possibly big diversification. And what happened is we said, okay, if we had the good fortune to be acquired, what would that look like and who would it be? And what do we think we're really works? And Ryan, what we did is we went out probably a year before we were acquired and we tried to find comps which were not easy because we're in a space in which there weren't really to compare directly. Uh, there weren't many to compare directly.

Ryan Tansom: Can we get, maybe this is a good time to because you're comfortable sharing these numbers and like, first of all, you're in a unique space because you're the industry leader in something that didn't exist when you started, but like you would a ridiculously profitable. So share some of the numbers with the, with the, with the…

S. Breedlove: Yeah, yeah, yeah, yeah, I'd be happy to, I was going to a share numbers. I was gonna I was going to wrap up though while on the second thing that we did is we went and we found two valuation experts. That's what they did for a living. Um, and we just said, hey, we're going to keep this really simple for a few hundred bucks. Each one of them charges probably seven or $800. We want to keep it really simple once you to. We're going to open up the Kimono. We, we want you to look at the details of our business and we want you to tell us what you think it's worth. Multiples of revenue, multiples of evident. Why? And we did that and we just filed it on the shelf.

S. Breedlove: And before you did that with them, did you have to have some range going in there? Right? Was it like a scratch off hoping you're going to win because you got the number, but like our range was way higher than what they keep every single business owner. And even if you are aware and you've been working at being well educated and you've been working at learning this very complex, you know, financial world that, that you want to understand a little bit if you have an opportunity to step into acquisition or, or private equity. Even with all of that, because we sound, we sound pretty diligent, pretty educated, right? We got the valuations back at. We were just like, oh brother, they don't know. And the reality is every founder does that. I mean that's where the ego comes in. That's where you say, oh my gosh, we're 18 years in and there's still so much potential, and then that's where you just, nothing would drink your own koolaid and say, can everybody see it? And again, that's the reality, you know, and that's the ego and the emotion. Do you go back to answering your question to share numbers? And I'm happy to number one in the payroll tax and benefit business

S. Breedlove: margins are very high period. Um, I don't want to say that, that, you know, we were so incredibly rare. However, I will say that I learned along the way that uh, I just, I have a strength in perational efficiency, invested all of this money in really strong technology and it really allowed us to maximize, um, our profitability and our EBITDA. So for probably the last 10 years of the business, we had 50 percent EBITDA margin which allowed us to grow so easily at a profitability. And at the time that we entered acquisition talks, we had revenue. I'm just over 9 million. So we were just under that $10 million dollar mark. Um, and we had a compounded annual growth rate over about a 10 year period of just under 20 percent. So that's low if you're just chasing topline growth, but that strong, I won't use the word high, but that strong for, you know, a 19 year old company, you know, over the most recent 10 years if it's business.

Ryan Tansom: I was gonna say let's ask, let's ask the listeners who wants a 20 percent rate of return every year.

S. Breedlove: Exactly, exactly. And you know, some years, I mean obviously the economy impacts every business. Then some years we had five percent growth and you know, some years with, with a good marketing and a strong economy, you know, we had 45 percent growth and we averaged just over 10 years. So there's, there's the numbers I think that you were hoping for.

Ryan Tansom: And will the that'll be a good foundation as we kind of get into the triggering event. What was the process that you took to go to market and like when did you… So a couple things that kind of in the sequence of events that you can share to expand on each of them as you cared if there's a story, but the, as the executive team is, you know, pushing you to have these kind of more, uh, in depth, um, you know, self-reflecting questions and stuff like that were they a part of this. And then what was the valuation that the evaluators came back with? And then how did the, maybe just you can just walk us through, did you hire an investment banker and all the way to like, you know, what, what kind of led you to the, to the, um, to the altar.

S. Breedlove: Right? And I love telling this story because the path that we chose on, on the answer to all of these questions is not necessarily, um, the tried and true right path. Um, one thing I've, I've, I've learned is it's different for every business and given your business and your opportunities and potential acquirers and your own team and the size of your business, you know, you could, you could go a myriad of different ways and it still do it right. So I will say that in telling the story, I don't think I'm right, but here's what we did. First of all, uh, we were not up on the blocks to go to sale, um, but we were probably 12, 18 months into these heavy strategic philosophical discussions of the next decade of our business. And what would that look like in an exit was absolutely on the list. So there'd been a lot of conversation and we obviously was strongly on the list because we've even taken the steps to get a valuation. We felt to answer the first number, we felt that we could sell our company to a strategic buyer, which is very different from a financial buyer. And there were very few of those out there. We could sell those synergies in with, with good data of the possibility with the future could look like where the synergistic buyer and, you know, we thought we were worth, oh, I don't know, 60 to $80 million, um, that, that was in our head, to be honest with you. That number 100 kept floating around, which was only floating around in our own conversations. We never heard it anywhere else.

Ryan Tansom: That's a really awesome number.

S. Breedlove: Yeah. And you know, and to be, to be fair, I was talking about ego and drinking our own Koolaid, but I also think you have to dream big because think I'm worth that. Then, then the next logical question is will prove it, you know, and, and, and we actually really couldn't even prove it to ourselves. So we had to, we had to then force ourselves to step in into reality, but the valuation experts came back, um, if we sold to a strategic buyer, a synergistic buyer, you know, with somewhere between 40 and $50 million, which is where the valuations, both of them came back. So we did our own homework and of course applied, you know, our own 20 year knowledge and our own ego and we felt that if we had the opportunity to sell to a strategic buyer that selling for somewhere between 50 and $70 million would just be a, a great, great success. To be honest with you. The valuation experts said 40 to 50, we would have been happy with that, but it was our job to sell our story and maximize that if we had the opportunity.

Ryan Tansom: Well I'm curious as you're doing that Stephanie, and I think there's a, there's a component of this that a lot a lot of business owners don't really wrap their head around is there's the money, but then there's, as you guys had had these deep conversations over the last year and a half the money and the dollar amount is correlated to different types of buyers and then different outcomes of how they treat your business and what they do with it. Right. So like, and then I don't know how it made, you know, as you're kind of telling the story of how you related those different things that you determined that were important to you with the different types of offers.

S. Breedlove: Absolutely. We talked about that front and center on a regular basis and you know, I'm gonna, I'm gonna share the thought process from a purely emotional side. I'm ignoring the financial side. We really felt that an exit wouldn't just be because we were tired of running a company and you know, we're 50 years old and we're 20 years in and it's time to be done. We also felt that an acquisition, I would have to represent some kind of next level of success for the company that we built. We just, you know, we drank that kool aid and were really committed to that and you know, at the end of the day, who knows, we could have gone into an, you know, another economic downturn in business wasn't good and we would have just said sell for, for whatever is logical. But if we could have our cake and eat it too, you know, we wanted the business to be valued. Not just for it c-suite of clients as I mentioned before, um, but for what the business delivered and hopefully, um, would be valued for potential you growth that it could experience, you know, as a payroll tax and benefits company in the, in home care industry. And I even found myself saying sometimes, you know, listen, I really enjoy what I'm doing. We have this amazing growth. We have this amazing profitability. I'm creating generational wealth. Just running this business. I mean, I think the listeners are probably gathering that and I can put my egotistical foot down and say I'm not selling unless it's to the right person, you know, the right company, the right buyer. And, and that's purely emotional. Um, but it was a part of the conversation and that was on the list that it would have to be a good move not just forward the co founders but for the company. And we got lucky. Um, and we were able to execute that. But I realized that that doesn't always happen.

Ryan Tansom: Well. I think it's important to note though, like in what you've proven is that if you build a healthy good business, you have the ability to have that conversation where a lot of people get stuck into selling to whoever because it's the one right buyer and they don't get all the, I wish I had done these kinds of things. So it's, it's, it's the, it's the result of building a very healthy business and you wanting to go back to when you were saying you didn't do it the traditional way. So maybe walk us through how you ended up taking it to market. I'm curious on what that meant.

S. Breedlove: I love telling this story. Um, and when I get to tell it in front of a live audience, I always get lots of laughs. So I'm going to pretend I can hear the laughs when I tell this story.

Ryan Tansom: I don't have one of those, what do you call it? The laugh thing.

S. Breedlove: So as I set the stage here on where we were as a business, we were at $9 million in revenue. We were really feeling confident as an industry leader we needed to diversify. We built this executive team, um, we would potentially be a good exit candidate as you know, in many of your listeners know, once you approach that $10,000,000 mark, you start to become very attractive to a lot of potential buyers. And we could feel that, but we weren't on the blocks, but we've been having these strategic discussions and we had a marketing partnership, very low level, mid-level management marketing partnership with Care Dot Com who is, was founded in 2006, so a lot younger than we were, venture-backed chasing top line revenue growth.

S. Breedlove: And it was… is a technology play to allow families and caregivers to find each other and match, um, resumes, background checks, they facilitate the interview process and we were providing content for their website, um, around legal and financial responsibilities when you hire an in home caregiver. And, uh, we had been providing content and having basic marketing conversations back and forth when one day the CEO of, Sheila Marcello, she picked the phone and called and asked to speak to me. And um, how often, even when you're running a small business, are you available? And I happened to be available, I took the call and that turned into about six weeks of just get to know your phone calls, you know, who are you, what is your company about? Yes, we have a marketing relationship. Could it be a stronger relationship? We fit really well together, you know, helps to bring the relationship together and then you help manage the relationship.

S. Breedlove: Could be a great marriage. What does that mean? Finally, after about six weeks, I finally just said, you obviously have a motivation here and you're being very respectful and very kind to, I guess what you're perceived as a small business owner who might be uncomfortable with a much larger company breathing down their necks saying, hey, you want a partner? Hey, you want to be acquired? Hey, let's get into talks. And I finally just said, I said, I appreciate how much we've learned about each other and your respectful of, of where I am in, in running this company, but what are we doing here? And if we want talk joint venture and we want to talk acquisition, I'm open, let's talk. And she said, absolutely, we're in a space to acquire the board, thinks that you guys might be a good fit and are you ready to step into, you know, very detailed, sophisticated acquisition talks.

S. Breedlove: And I said, well, I'm just reading some ever going to be. I'll learn as I go. And what happened was at that point you asked me what we did with the executive team. We did not tell the executive team, and I'm not saying that what we did was right. There's lots of books written on this subject matter right now, have include the team, bring them on the journey. It's the right thing to do. We are a believer that knowledge is power, the right time and the right level. And we felt that handing over knowledge of acquisition talks to a team of people who is only exposed to small pieces. Um, and would have questions I couldn't answer. And that the acquisition may not go through. And it could be detrimental to that. The culture and the progress of our company. We opted to hide it from the executive team and the rest of the company for that matter until we knew it was actually going to go, um, and that was really, really difficult because if it had fallen apart, we would have told them and if, you know, a 30 minute management team meeting, um, and let the master questions and gone on about our business, um, rather than spending months having to feel hours of stressed out questions of whether or not this acquisition was going to go and what it would look like for them. So we didn't tell them. You asked me that and I've been waiting to, to share that.

Ryan Tansom: It's interesting too because Stephanie like, um, and for the listeners who are in, I'm curious on your thoughts on this, but like, you know, I've gotten questions on this and with my dad and I, I mean for like four years. So I was like running the business, right? So four years we'd be like, we're selling, we're not selling, we're selling, we're not selling. For me it was such a mind like just whiplash because you're like, I'm going, let's do this. And then I'd wait a second, I'm going to switch. It's so detrimental to just your, your, your, your motivation and your ability to like be the cheerleader as an executive team. So I think it is…

S. Breedlove: You're absolutely right. And you don't realize how emotional it is. You try to tell yourself it's just business emotional. Here's the laughable part. As I stepped into this process, my, my husband and I have coped. We had one other executive with a pretty nice sized equity stake, but we did not include him in the negotiating process. So they were just two of us from a Co-founder point of view, we decided that I would take the lead because I held the role of CEO and the company and he would not join in the conversations. Um, when we had to do hardcore negotiating, we would play kind of a good cop, bad cop. I just shared that he had a stronger background in this world than I did. So I'll tell you what I did. Um, I took three days off of work when we decided we were going to jump into this plate sick at home. And I read two investment books, one very simple one, really pretty sophisticated, and the first one was Mergers and Acquisitions for Dummies. I've got it on my bookshelf right here and you know what, I would recommend that to anyone because number one, it gives you that basic foundational level of terms and understanding. And number two, it makes you realize that as a business owner, you understand a lot more this than you think you do because you're involved in every aspect of your, of your business from negotiating to sales to finance and you're, you're much more well versed than you think you are.

S. Breedlove: Um, and then the second thing we did coming out of that is we had a strategic discussion about whether or not we hire a broker. We're an investment banker. And the interesting thing, there were three factors that came up in our decision and one was and kind of kicking the tires with, with brokers, which we didn't understand the brokerage world really well except for their fee structure on exactly what they were going to bring to the table that we couldn't bring to the table and negotiating a deal. We a little big, um, for most small business brokers, I mean we were almost 10 million in revenue and most of these folks are really working in the more one to $5 million our space and we a little small for an investment banker, you know, we were not going to get an investment banking firm.

Ryan Tansom: Even with the EBITDA of four and a half million bucks like that in the valuation and like that?

S. Breedlove: Sure, a broker would be dying to work with us. And I think…

Ryan Tansom: The investment bankers, you know, usually like from the ones that I've heard, you know, they hover around two to three maybe, maybe the market's a little bit different, but it's because it's so hot right now, like two to three and EBITDA and people are kind of pounce… lots of investment bankers will pounce all over it.

S. Breedlove: I think so, but I'll be honest with you, I think we were, we were a little afraid of uh, using an investment banker. I think mostly because there was a, um, a, a level or a lack of understanding, I think. And you know, the large fees and that they're going to charge and how, how in charge of the negotiation are they going to be and is there motivation going to match ours? Um, to be honest with you, I think some of the investment bankers that we talked to, um, they probably played in this space in which we were too small for and we didn't step down to a more regional sized, you know, investment bankers. So on our part. But what we decided to do based on the work and the conversations we did have is we actually decided not to use a broker or an investment banker for one reason alone.

S. Breedlove: One of the major services that both of those entities bring it to you is they really step in at the lead of the negotiation, um, because this is what they do for a living. And we looked at the world a little bit differently and we decided that nobody knew our business. I'm better than the co-founders and that the co-founders were the best mouthpiece, the best negotiators, the best litmus test of logic and emotion and ego and all those things that come into it as we went through it and we should be at the lead, not a broker, not an investment banker, but we weren't so small minded that we didn't realized we needed a very professional team. So what we did instead is we hired I consultant who was a, a previous partner at a venture capital firm. Um, we hired a very strong, um, M&A attorney and Accountant. So we had this team of three people standing beside the two co-founders who we were paying for their services by the hour, uh, as we went through this process.

Ryan Tansom: Little bit different than 5% or whatever. Well, I think is interesting, Stephanie. We did the same thing for various reasons and I think however you articulated, you know, everybody's journey is different because of, um, of, uh, of, of the Plethora of different options that are presented to them. And strategic sales I think also present a unique situation where the owner's got, if the owner is an emotional ball of craziness, then the per any eating mediary is going to provide a ton of advice just because the, because the buyer doesn't see it, but I think, you know, in the strategic sale like that when you're literally taking two puzzle pieces to push them together, the lack of industry knowledge that comes from an investment banker broker is very… Kind of bubbles to the top because of what your truth that the jigsaw puzzle that you're trying to put together.

S. Breedlove: Very well said you're, you're, you're exactly right. The industry knowledge and experience becomes the key in, in a strategic acquisition. And you asked me to share some of the numbers and I'm, I'm, I'm happy to do so. So we were being acquired by a company that time was about six and a half years old and raised about $100,000,000 in venture capital. And they were just flying as fast as they could to capture the marketplace, uh, and revenue stream. And they weren't profitable. If you know, most, um, you know, VC-backed endeavors are not profitable in their first five to 10 years and so they really wanted to negotiate the sale based on a multiple of revenue and um, you know, as you know, we've discussed at length now the strength of our company was the EBITDA, so we wanted to negotiate the sale on a multiple of Ebitda and then of course projections of what growth could look like with this synergistic buy. And that was a real sticking point.

S. Breedlove: We went back and forth and back and forth and back and forth and um, you, you can't have everything. You'd have to choose your top priorities and how you've chosen. Right. And stick to those and let the other ones either go or compromise. And one of the things we chose not to compromise on because we felt we had a much better story and to get a, a higher consideration if we negotiated on a multiple of Ebitda. And so we ended up selling for 11 times Ebitda and that's where we focus the negotiations. And they finally agreed to talk in those terms.

Ryan Tansom: Did you have other people at the table that were like, because first of all he had was you could walk away, which I think is always a key variable in all of this, but you have other people that you had been even having preliminary conversations too that you can use as leverage in that, um, that in that sticking point?

S. Breedlove: What do you mean that I could use as leverage?

Ryan Tansom: So as in like because of it? Because you're dancing while in specific terms and conditions and how you were going to be doing the valuations. I'm just saying that like if you had another potential buyer at the table, you'd be able to say, hey, you know, like we don't have the, the scarcity or the. It's not like a closed deal.

S. Breedlove: That is a commonly asked question and I realize now several years down the road that we may not have had chosen as well as we should have. But we did make a conscious choice and asked us right off the bat when we began negotiations to, to sign a no shop agreement. And while we. And they knew that we weren't shopping prior, we were not on the blocks, and so while we were in negotiations with them, we had zero leverage. We did not entertain, convert even conversations with another potential buyer. Uh, the one thing that we did have was we did have a comp in that, uh, intuit had recently purchased a payroll company called pay cycle, um, who was a small business payroll company, but at a similar model with a high level of client service. And I'm a, a very sophisticated enterprise technology solutions

Ryan Tansom: Do you know who Cammie Greif is?

S. Breedlove: I don't know them.

Ryan Tansom: She sold tax act to as you tried to sell it to intuit, but doj blocked or not. It was H&R block anyways. So yeah, very similar set structure,

S. Breedlove: That acquisitions has gone very successfully. So we were able to use that as a comp. But what I was going to share with you, which I think gives a little bit of that authentic insight that people are listening for because we didn't have that leverage. We were a couple of months into the negotiations. We've signed NDAs, there's no term sheet yet. One of the things we did do also in our acquisition is a lot of people would get a term sheet on the table right off the bat and then start trying to hammer out or change or add to what is already on paper. Uh, we took the approach that we didn't want to term sheet until we'd hammered out all the details which made us have to ask lots of detailed questions. What do you mean by that? Why, why won't, why aren't you interested in this tenant of what we want in the agreement?

S. Breedlove: And we did not entertain a term sheet until we had hammered out probably 80 to 90 percent of the terms of the deals so when the term sheet came through. It wasn't a starting point. It was the launching pad for the detailed agreement, but we were a couple of months into these detailed conversations because we were not pushing a term sheet yet and we were too far apart. Um, and as you just said, you know, we had the ability to walk away and we absolutely put that at the top of our priority list and reminded ourselves that we didn't have to do, this is probably the right thing to do, but we didn't have. And the uh, board and the valuation experts for to come back and they had offered us a price of 39 and 100 percent stock in And you know, we're business owners who bootstrapped the business and something you have to realize about that is there's no way a co-founder or set of co-founders like us, we're going to drink somebody else's koolaid completely.

S. Breedlove: Um, we also had to realize that they were VC-backed and you know, they believed in their mission and we probably couldn't get 100 percent cash either, but they were at 39, we were at 65. We wanted 80 percent cash. They wanted 100 percent stock and we just kept talking in circles around this. And finally we were on a skype conversation one day and I just said, you know, we're just too far apart, you know, I don't, I don't want to argue. And by the way, I love your story and I think you love ours. And I really like what I'm seeing about the honesty and integrity and the plans for growth and strategically, you know, how you're running the company, but we're too far apart and this isn't the day. So maybe we need to continue the marketing partnership. Maybe we strengthen a joint venture kind of a partnership over the next year or two.

S. Breedlove: And we give it a run at another time because I'm not willing to compromise at the level that you would like for us to. And I don't think you are. And um, the conversations ended and they ended for about two months. And then for whatever reason, I still don't know the story to this day. I think maybe the board went to work and did some real data crunching on the synergies and the growth that could occur. And they came back eight weeks later and they said, okay, we are now willing to talk about an acquisition that is a 50/50. 50 cash 50 stock, um, and we're willing to negotiate within your range.

Ryan Tansom: So a couple things. One is, what in the heck happened to you and your husband go founders mental state after that for two months. Like what? Like energy levels, like dog between you two, like what was going on in your guys' conversations, you know, he, um, a few years down the road and you think I would have good clarity and reflection in it?

S. Breedlove: It still is like this crazy that time was a blur of, of emotions and second guessing and I still feel that way. So I remember walking in the door at home the day that I had shut it down and we had talked about it. It wasn't like I just was running rogue. We had said, okay, we're going to have the conversation, you're going to have the conversation, Stephanie, and we're going to say we're too far apart and we're going to see how they respond. So I walked in the door and my husband looked at me and he said, so where are we? And I said, it's over. And, and I mean, he, he and he looked at me and I looked at him and I said, we probably shouldn't talk about it till tomorrow. And you know, and that was probably a good thing because I don't know, there might've been a great big glass of wine and some crying and the spilled milk in that moment.

S. Breedlove: And you know, the next day we sat down and we said the two things you would expect the extreme of, okay, we said this is what we were going to do and we were going to accept the outcome and we have to accept it. And then we said, oh my God, do you think we've just thrown away the best opportunity that we in the company could ever have? And um, we went to each other and said, well, it's done. So we can't go back now. And so we actually made a decision in that moment. This is one thing I do remember clearly that we would let ourselves just go back to work and settle on it for about a month and then we would come back together and say, okay, do we want to go back to them and say we're willing to entertain a negotiation talks on your terms? And we came back together after about a month and the one thing that got us to say no is that we were not willing to sell the company for 100 percent stock and we knew that that was just too risky for us. It was just far too risky and then they came back to us. So it went our way. You know.

Ryan Tansom: Going back to when your comments earlier is can you imagine like think about with you guys, even though you have generational changing wealth, that you're producing still and you had the walkaway ability. So I do. I do think that even though you didn't have another buyer at the table, that is definitely having another buyer the table because it's yourself. You're making a bunch of money, but still you still had a, an emotional rollercoaster to go over with you and your husband and could you have imagine had you told all your executives what that would've done to them? And so I just think, you know, it's kind of put an exclamation point on our point earlier because this, regardless of how practically you are, it is an emotional rollercoaster.

S. Breedlove: It is. It is an emotional nightmare that you have to get in check and keep it from being a nightmare. And I have to tell you to fast forward through this, maybe this doesn't happen to most people being acquired, maybe we were so practical and so logical and so grounded for a period of time that when we snapped it was in an odd place. The negotiation of the earnout almost undid me. That was one of the hardest things I've ever done. And I don't know why it's very typical. It's very standard.

Ryan Tansom: Can you explain that? What do you mean by that?

S. Breedlove: You know, we had, we had agreed to the, the total consideration, um, we had agreed to $55 million to give you the terms, 50 percent in cash, 50 percent in stock and then the term sheet came and we had not discussed the details of an earnout in our negotiation. We probably should have, we knew there'd be some kind of an earnout, but we really had not addressed that in detail. And maybe that was why it was so alarming because it was a new topic and the earn out was 20 percent of the total value over a two year period and bill and I would stay and do whatever was needed to integrate. The larger company was looking to IPO and needed revenue and acquisition in order to IPO. And we knew we were, um, that icing on the cake and that that would be a journey. But then we got into the earn out discussions. And this is where I think my ego flared for the first time in an unproductive way. We got into the earnout discussions and all those terms I just quoted are very typical. But then there started to be discussions, okay, well we expect you to have 15 percent more growth and has been your cadence for the last 10 years in order to get the earn out.

S. Breedlove: And we turned it right back around on them and said, well, you know, we're used to investing at x levels and all of these areas, you know, in order to have the growth that we've had, what if you pull the plug on that you will own us, you know? What if you just clamp down on the expenses that are absolutely necessary for synergies to come true and to experience growth and for us to deliver the quality that our clients are used to. What if you derail the ability for us to grow? And so we were polarized, a really throwing daggers at each other, you know, of, okay, well if you guys are so great, then as soon as you combine with us, we don't even do anything and you'll just double in size. And you know, I mean, I'm not saying that's what they were saying, but that's what it felt like. But we're turning it right back on them, you know.

S. Breedlove: Well, you know what, if you guys just come in here and fire everybody except for the two of us, you know, and expect us to somehow run this business which is extremely… I'm speaking to the emotions that were on both sides and I, I literally called the CEO, um, maybe about 10 days before we signed the agreement, which for the listeners out there, if you haven't been through this now, once you start into the detail of the agreement, this is a 100 page document with lawyers coming up with worst case scenarios that have you on the ledge every hour, which is also a part of the process. You have to try to keep in check. And we were in the thick of that and I called the CEO. I called Sheila Marcello and I was just real honest. I said, look, you know, we've been having these really ugly 'what if' conversations around the earn out and I just have to be really honest with you. There isn't anything in the agreement that actually commits to your level of investment. Um, your level of buy-in that the company runs really well. And you should only improve upon that, not derail it. Um, and, and I, I'm not saying that deal's not going to go through, but I'm feeling really uncomfortable and I'm a few days from telling my executive team and I want to feel confident in telling them that we're being acquired by a company who sees the world through our lens and not be lying about it. And she was speechless. She didn't know what to say to that. That was more of an emotional conversation than it was a business conversation. But what followed that is we added tenants to the agreement of the level of investment that they would not only allow to continue, um, but tangibly would enhance.

S. Breedlove: They were going to put a million dollars of larger company funds into a marketing campaign that we didn't have the dollars for previously. And we just basically tangibly started to put things in writing. What bill and I were going to do. One of their biggest fears is that we were going to leave, you know, we, we didn't really have to have maybe the last year of the earnout. And you know, that happens. And we're just sitting here talking about the fact that we were already creating generational wealth prior to sale. They were really worried we were gonna leave. So we strengthened the language around us seeing our full two years through and everything, everything worked out. But that two week period and discussing the earnout was really, really difficult.

Ryan Tansom: It is emotionally and technically from a negotiation standpoint, I just keep going back to because you had the ability to walk away, allows you to get through that word. So many times I see Stephanie, we're like, you know, even if it's an investment banker, broker going up or whoever the other person is negotiating behind the for the, the, the seller is that you end up giving up because you're going to lose everything if you don't have alternative options because the emotions are totally overtake the entire process.

S. Breedlove: Yes. And if you don't feel, and that's a, that's a really good point, Ryan, if you don't feel like you have another option. Um, and really at this point for a business owner in life, I mean you feel like this is your life and there is not, there's one option that's directing and controlling and you're in your entire life and the future of it in that moment it's really stressful and you're right, if you've got a broker or an investment banker and who is not aligned, that's even more difficult. You feel like there's another human being in this mix who is going to derail your future.

Ryan Tansom: Or, or, or push you into. Because again, there's pros and cons of everybody that's at the table, right on the team advisors. But just knowing this dynamic that we're talking about is so important because they get paid to sell the company, right? So if you pulled that off the table, like they're losing a ridiculous commission. Right? But it was right for you. So I think it's just something to so be aware of. And so let's, how after you close, what was the, what was it like in the, after the event of, of selling, you know, whether it was telling your executive team to like you and your husband's roles in the business and what was it like being an employee?

S. Breedlove: There's two extreme sides to my thought process and I'll share the one that everybody's expecting first when you decided to become an entrepreneur and you have the good fortune to grow a successful business and to be captain of your own ship. You know, what's the phrase that you're professionally unemployable. Reality is you want to be professionally unemployable. It is really, really difficult to work for someone else. Um, I'll never do it again. And by the way, um, the transition and the integration with, it's very professional and very well thought out and very respectful of the company that they'd acquired and learn. Giving them time to learn us and grow us appropriately. And yet there's one CEO. Um, I think that conversation even came at my naivete and I'm, I'm, I'm authentically outing my naive when I was the CEO of a midsize company for many years and all of a sudden there was this discussion around titles and I just thought, oh gosh, we really need to be talking about titles. We're only gonna be here for a couple of years. And I think I said off the cuff, you know, well, you know, I'm, I'm the CEO of now rebranded home pay. And I think the response I got back was, no, there's only one CEO.

S. Breedlove: So easy. It is not easy. However, on the other side of this, and I think I've mentioned this throughout our conversation, Ryan, that it was imperative for us to not only execute an exit that was great for the co founders, but was great for the future of the company. And I really worked hard at never losing sight that I believed that this acquisition was going to be great for the future of the company. And I had responsibility over the next two years to maximize what I could do to achieve that in combined new cultures in growing the executive team and making sure none of the executive team felt threatened in left on. They had to talk a lot of people off the ledge for the first couple of months after the execution in the acquisition was executed. Um, and, and I went on a, a 15 months traveling junket speaking.

S. Breedlove: I'm a teaching anywhere I could get into the public eye as now a division of in order to lift the image and the PR, marketing and sales, you know, of us now as an entity of And I mean literally for probably the first, the 18 months, the 24 that we stay. I mean I was engaged 50 to 60 hours a week and that is hardcore and I will say this, I do it again, as hard as it was, I'd do it again. And I say that because here we are. I have now been, we have been out of the company for four years. One hundred percent of the executive team is still there, no one has left. The company has tripled in size from an acquisition point of view, you know, a buyer would love to say that the perfect acquisition would set the stat is that you have a return on your investment within seven years and just, you know, in running the math in my head with the information that I hold, I think their return on investment occurred probably between five and six years and I really do believe that bill and I staying for was instrumental in getting the information I just shared.

S. Breedlove: While you're doing that, that PR campaign for a couple years and working that long, which probably helped with not getting lost in your thoughts of what you, what else you could be doing, where did your mind take it? When you started having a foot out the other door? Where were you thinking about what you should start doing? I mean, with the, with the, you know, generational wealth that you have, like what was life after starting to crystallize or was there kind of a fuzzy picture that you were starting to focus more on as a, is that a next chapter was getting closer? Where, where was your head at and what was some of the thoughts?

S. Breedlove: So, Ryan, I'm four years past the exit, uh, and I still don't have that answer and I don't know if it's common or not, but I'm just sharing transparently. I will say we took a year and just did things that you think you should do when you have an exit. We read, we traveled, we visited family, uh, we played golf and then after a year we were like, oh my gosh, this is totally overrated. We've got to be busy. But the next comment that I'm going to share, and I'm still in this space is one of the things I miss most is running and growing a business. I just love it. And so did my husband and I really miss it and I don't want to do it at that level again. It's the strangest dichotomy. So I, I really do think that there might be another business, but I don't, I don't think I have it in me to work at hard again, um, you know, when you bootstrap for 22 years, you know, two lifetimes in that time period. And it's really funny because, you know, I really miss it and neither my husband nor I are willing to jump back in yet. So what in the world have we been doing? I lifted my head up after the acquisition and realized that there really aren't very many women in entrepreneurship who really taken the path to grow a business, the scale and I felt a little bit of a responsibility to give back.

S. Breedlove: So I've written a book that has business in life strategies, um, for women entrepreneurs who are looking to take the leap or the risk of scaling a. we've become serious angel investors. And I also teach around, um, Angel Investment. I mentor entrepreneurs as well. Um, so I'm dabbling in things, keeping me very busy working at trying to become strategic and thoughtful about, you know, what is, what is our philanthropic strategy. But it keeps us very, very busy, but as you can see I'm not doing anything that's, that's earning, you know, a sizable amount of money and the capitalist in me, it's a little bit hungry so I don't know what's next and it's part of the reason that I love talking to people like you because it keeps, it keeps me learning and aware of what's out there and where we, where we make go next road business point of view and what that looks like.

Ryan Tansom: For the listeners, the book is called all in and we'll have a link in the show notes for that. And you know, it's interesting Stephanie is like, and maybe I'll share kind of my two cents after hundreds of interviews and kind of going through the same stuff myself. Is there are some data points about us and our DNA is entrepreneurs that I've kind of started to get wrapped my head around in. There's a Shawn Core wrote this book called the Happiness Advantage. So it kind of give you a couple of ideas where I'm pulling stuff from. And his definition of happiness is not just happiness itself, but it's the joy we experience in pursuit of our fullest potential, which I thought was unbelievable. It's the journey and it's the joy we experience along the way. And Ray Dahlia was, got a couple of ways of articulating that as well.

Ryan Tansom: And um, so then another layer on top of that that I, I very much enjoy. There's a guy named Miho [unclear] I, which if you ask me to spell that, I would have zero idea. Um, but he wrote it, he invented the term called 'flow' back in the day and then in the mid seventies. And I can put a diagram in the, in the show notes too, but it's [Stephanie interjects: I've read the book.] Isn't it amazing? So for the, for the listeners, it's like, it's the tension between your skills and your environment and your in your, uh, in the challenges and being in that perfect tension. So here's my, I'm curious on your, because you've read it. Stephanie is, I believe. And so extra. One more point on that is it's the, it's the perfect tension between the challenges that you have in your skill sets that are perfectly intention, but that your environment gives you feedback on how you're doing in that state of flow and I believe Stephanie, that entrepreneurship provides that environment so we as entrepreneurs live in a state of flow which is like a high, like 80 to 90 percent of the time because it whether there's winning that new client or implementing that $2,000,000 project or doing these things that we're risking, so our challenges and our environment are perfectly intention, but then we get feedback almost immediately on whether it worked or not. So there's this cycle of just being on the high that is a natural high that I think when we sell, like you kinda go through this withdrawal that people don't know how to deal with it.

S. Breedlove: You're right. It's… natural high is a good way to describe it. And as an entrepreneur you are a jack or Jill of all trades regardless of the size of your company, big or small. And that presents, as you said, from flow, constant challenge and then constant skill building and you know, you're talking about the feedback loop for personally you get to see experience and get that high, as you called it from, from growing a new set of knowledge, a new skill that you know, you apply to some level, um, in your business that creates accomplishment and that, that cycle in flow that you're right, entrepreneurs get to have that on a regular basis because they're not doing the same thing over and over and over again. And I have a quote from flow, but I think it sums up this notion, and it's not my quote. I wish I could, I could claim it, but I'd like to say that life is not about the pursuit of happiness. It's about happiness that comes from pursuit.

Ryan Tansom: Very similar to that one. It's about the enjoying the creation along the way. And then you go back to your point among the, you know, the capitalists in you. I think the wrapper around all Stephanie is that it's not just the knowledge that is gained throughout all the challenges, but you literally have feedback from society and the marketplace that what you're doing is valuable because you have a balance sheet that actually shows how well you're doing.

S. Breedlove: That's a very simple way to say it and it couldn't be a more correct. And I'll use an example from my current life in the release of all then now I was fortunate enough to get to go on a speaking junket, which is what you folks do now rather than book tours. And I was speaking two or three times a week around the country, um, for about a year. Um, and I enjoy speaking. I've always used it as a tenant for growing the business and I'd like to teach and I like to leave messages behind. It's something I'm very comfortable with and I have since dialed my speaking down to two or three times a quarter, not two or three times a month. And the main reason is, you know, when you're speaking really to give back, which is what I've been doing, there isn't a balance sheet that's going to give you a measure of business you just grew from speaking at that conference with business development partners that you brought on and I call it that. There's really no thrill of the hunt. And I really liked the thrill of the hunt.

Ryan Tansom: No, I love it. I, like you said, it's the dichotomy and then you know, because again, you don't want to go risk everything, but you still want to be like shown that what you're doing is impactful and people care about it other than just the feel good.

S. Breedlove: Exactly. So, so in a couple of years you'll have to have me back on the podcast when I've found the level of business life once again, because I hadn't yet.

Ryan Tansom: Well, Stephanie, with the. If there's one thing that you want to leave the listeners with because we talked about a bunch and I absolutely love the, the APP, the transparency they give. If there's one thing you wanted to reiterate or leave our listeners with, what would it be?

S. Breedlove: We talked a lot about, uh, growing the company and then the deal on the acquisition. I think what I leave the listeners with is that you're looking towards an exit in the next two to five years, uh, that it's not only a nice to do, but it's a responsibility in order to navigate the most successful exit possible to just, as you said, become aware to get educated and to spend, um, a few days a year really a learning about what your business is worth, where it could go and who might be interested in it. Uh, and I think that would be, it will be instrumental. I'm in executing an exit.

Ryan Tansom: Well said, and if our listeners want to reach out to you, get a book, what is the best contact information for you?

S. Breedlove: So the best way to find the book is on Amazon. Almond Stephanie breedlove. Um, I'm really active on twitter. I write a couple of columns that I'm constantly hawking and posting and my handle is at breed love steph. And I have a website in my email on the website is very simple. It's Stephanie at Stephanie Breedlove Dot Com.

Ryan Tansom: Stephanie, thank you so much for coming on. One of the favorite, my favorite episodes I've done so far.

Oh, thank you Ryan. It was really fun.


Ryan Tansom: I hope you enjoyed listening to that interview with Stephanie. As much as I enjoyed interviewing her and just learning from her about what she went through, how she did it. I can't tell you how many takeaways that I had out of it, but if there's a couple things that I want to regurgitate and dish back to you is she built a really healthy business and she thought about a lot of these things along the way. As you can tell, even someone that has two co founders that have MBAs, that talked to everybody that did everything you possibly can think of to do things right. You still don't know what you don't know. So being open to new events and new data as it comes through you and knowing what's important to you will literally help you get to where you want to go faster.

Ryan Tansom: Because as things happen, as buyers pop up or as things happen in the negotiation and you are having that anxiety and you have in the emotional roller coasters, you have determined what's important to you, whether it's the numbers or the employees, the people, or what's going to happen to your business. You've thought through this because it takes a lot of time to figure out what's important and if you built a healthy business, then you've got the ability to walk away even though there's a more emotional turmoil there or you've got the ability to choose a different buyer or you just have choices which puts you back into the driver's seat. So just think about this stuff. I had a call with two people in the last 24 hours where they're choosing not to think about it because they liked their business than they like the cash and they like to show up to work every day.

Ryan Tansom: Yes, I get it, but think about this stuff because it's going to happen faster than you think. And if you don't think about it, and if you don't put the work into it, like Stephanie did, think about how much work she did and she still went through ups and downs, and so just a challenge you to think about the things that are important are putting the plan in place between the advisors, the technical advice, and just work towards something that you want to accomplish because otherwise reactionary stuff is going to happen and you're going to be a victim of circumstances instead of choosing the outcome that you want. If you want more of this kind of information, go to GEXP Collaboratives website. If you really enjoy these episodes, please shoot this to anybody that you know that's a business owner. Share it. Bring anybody that you think I should interview, whether it's owners or technical advice, shoot them my way.

Ryan Tansom: I'm happy to interview them. I'm always trying to get out more content that's valuable to you guys. If you're interested in potentially signing up for one on one consulting, reach out to [email protected]. If you think you're ready for the full blown growth and exit plan, reach out to me and my team on our website. Otherwise, go on to Itunes, give me a rating. I really appreciate your support and being an avid listener, we hit, I think it was 300,000 or close to it, downloaded episodes by this episode and I'm assuming this one's going to accelerate that, so please everybody share the love and I appreciate it. So with that 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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