Podcast: Why You Should Sell Your Company at Its Peak, an Interview with Sabina Teshler
Many of us wonder when the best time to sell our business is. Well, it's likely when your business is performing its best. Here's why.
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
Sabina Teshler is a member of the Women’s Presidents Organization and in 2014 was named Enterprising Woman of the Year by Enterprising Women Magazine. She began her career as a retail consultant and quickly developed a reputation for delivering results. After becoming a top account executive at Ivey Performance Marketing she realized there was a need in the market for a creative agency that would provide an experience tailored to each individual client and she founded SET in 2009.
Sabina is dedicated to driving the success of SET through delivering exceptional work and leading a diverse and highly creative team.
If you listen, you will learn:
- Sabina’s journey to entrepreneurship.
- The importance of meeting the client’s needs.
- The difference between “working on the business” and “working in the business.”
- The importance of hiring the right team.
- Building an executive leadership team that will add value to the business.
- Why Sabina and her partners sold SET Creative.
- How the sale affected the company’s vision.
- When to create an exit plan.
- When to call an advisor.
- How to negotiate a favorable deal.
- The importance of knowing what questions to ask.
- Why you need to be able to "walk away.”
- The 3 assets Sabina and her team brought to the negotiations.
- The deal structure that Sabina negotiated.
- Why business owners should expect some turn-over after a sale.
- Sabina’s new role as a cultural leader.
- What Sabina would have done differently during the negotiations.
- Sabina’s advice to the listeners
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 84. Have you ever wondered if you could pull the trigger and sell your company when you're on top and your industry and your company are just humming? Well, that is exactly today's topic because Sabina Teshler is on the episode today and we talk about how she was able to scale her company incredibly quickly across the US and then internationally top out of $38,000,000 in revenue and then sell to WPP when she was on top, and then because she had to walk away, ability and multiple bitters was able to back into all the different things that she really wanted through the sale, which was culture, legacy and control and some other different variables. So if you think you can sell your company on top and want to get what you want, it's about knowing what you want and then being able to go get it. So without further ado, here's my episode with Sabina.
Announcer: 01:08 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: 01:08 Good afternoon, Sabina. How you doin?
Sabina Teshler: 01:30 I'm doing great. How are you?
Ryan Tansom: 01:32 I'm doing good. Excited to have you on the show. You've done quite a few things that are pretty remarkable and you and I didn't get the chance to meet when we're in Sunny Palm Springs at the Entrepreneur of the Year award, but now we're here and I'm excited to have you on the show. Um, you know, for, for listeners who don't know your story and maybe it would, would you maybe go back to the day that you decided to become an entrepreneur and where were you and how did you decide to jump in with both feet?
Sabina Teshler: 01:56 So we are a creative agency. We specialize in brand experiences around retail live events. And bringing either concepts to life or partner with brands to help strategize what their experience map looks like. Um, so back when, I guess I'm leading into, you know, why I started the business, there really wasn't a lot of offerings around that category nine years ago where now a lot of in the industry we have even brands and now everyone's talking about experiences because it's just valued so much. So number one, there was that opportunity to um, really get, um, into that category and you know, have a niche out there in the market. But when I started the company I wasn't really thinking of myself actually as an entrepreneur. I was just really thinking of the clients and their needs and how to service them and really, you know, be that partner.
Sabina Teshler: 02:58 So it really what I discovered when I discovered I was an entrepreneur was after I started the business where the category itself experience had so much opportunity. And, and that's how I grew the company in, in, in the fast way because it's scaled very quickly from one location to another to a global company because there just, there was so much, um, opportunity or around that. So I would say I'd never thought of myself in the previous years of being an entrepreneur, but I really saw that there was an opportunity there. And, and now I do call myself an entrepreneur because I'm always thinking of opportunities to put out there that are niches and that are needs out there. So, um, but before I was a very client-centric.
Ryan Tansom: 03:49 Are you working with these clients that you saw the need or the, you know, how did you get to the point where you were thinking about them so much?
Sabina Teshler: 03:56 Well, I've um, been working with clients in this industry in many different aspects for, I'm going to date myself here for probably about 30 years. 25 years. I wouldn't say 30 years. And I've always been fascinated with how do we do things a little bit different? How do we go above and beyond and service? How do we, you know, really, um, understand expectations of the client? So I've always, everything I have done in my career has been driven by clients' needs, so it was just a natural, um, when I started the company was to evolve around clients' needs and um, I consider you, myself and my staff, we're partners to our clients and we need to, you know, go above and beyond and really help achieve their goals where different, we're even career builders for our clients, you know, where the behind the scenes where we help them become successful and help them get promoted. A lot of the clients I've worked with nine years ago when I started the business or VPs now for instance, and I don't think it all attests to what we've done, but the, but, you know, making them successful is as part of it and helping, you know, helping them is helping their brands. So that's really where it comes from because if you don't have clients, you don't have a business.
Ryan Tansom: 05:21 You need the revenue coming in the door to be able to build it. And I'm curious, you know, as you, um, you know, when you said you didn't think yourself as an entrepreneur and then as you slowly realized, what was the evolution of SET? I mean, were you, did you have a couple of clients that you started out and then you said you scaled pretty significantly, so maybe you know, a couple of questions are, what are the milestones that, you know, you hit as you evolved when you say scaled quickly? And then what was the triggering event or what was the foresight to when you, when you determined that you are an entrepreneur, did that correlate with the scale? Or just kind of explain the dynamics there.
Sabina Teshler: 06:01 So when you see the opportunity in front of you and when you see that, you know, you have a niche in that market, it's about going after that opportunity. So for instance, set started in Portland, Oregon. Um, my first client was Nike and that's a great claim to have, you know, in the, in the marketing world that's, it's a north star of its own. And so that was, you know, really, um, a great client to start with because it's a great portfolio know people see you already working with premium brand. So the next aspect of the business, how do you grow it and, and that's in business development and to scale it is to scale with other brands too, to diversify. So the plan after, you know, within well I would say within the first year, you know, seeing that there's such an opportunity and a need in the market is that we can take it beyond having beyond Nike and what that meant was that our story can resonate and our portfolio, can be used, you know, in, um, to help with that.
Sabina Teshler: 07:06 So our next step was to, to go to key market New York. So opening up in New York office where you know, for what we do, we work a lot in retail and that's the epic center of North America, is New York. And then we opened up an office in Los Angeles and then we acquired a company in London to be a global company. But the whole thing is, when I was really turning into, when I was scaling the company, I realized I'd have to step out of one shoe into another where, where I was explaining how client-centric was so I was really working in my business and in order for it to scale, I really have to step out of being in the weeds and the details of things and start hiring people, start bringing in a team that can take on the things that I wasn't, um, an expert on.
Sabina Teshler: 08:00 So when it came to things like operations, structure of the business, and then as we're adding offerings, um, I needed to bring in experts of these other offerings too because our clients wanted us to come to a one stop shop basically. But you can't pretend to do it all. You need to bring in the right talent to help you get there. So I stepped out of a lot of that and started building a team, a leadership team. And that's part of scaling the business is bringing in the right talent. And I call it bringing in smarter people, smarter than me to help me to scale of the company. And that's where I would say my, that's when I turned the corner of when I was really working in the business versus on the business. And when I started working on the business, it became different for me where I became more of an advisor and manager and more of, you know, more of the big picture person and um, and then have people come in for specific roles. Um, and then you were, I was able to scale the company.
Ryan Tansom: 09:12 No, I think, I think you hit on a bunch of really good points because I think that that is something that everybody wants to do. But they find themselves stuck in being able to do that. Whether it's the being able to take the money right out of the profits that are going to them to hire these, you know, the next level management or even, you know, trying to figure out what's the right approach and who is right people. Who... maybe take us through a little bit of that journey. What we know. How did you determine who to hire? How did you recruit them? What were some of the things get in first of all, what, what pushed you to hire these people instead of just being stuck in working on?
Sabina Teshler: 09:49 Well, fortunately the question you're asking is definitely a challenge for many, many people and many other entrepreneurs that I network with too. And I'm, I'm asking this question quite a bit. So I was lucky in one sense that um, I married a great guy who came on to my business. So I, um, I started my business before I got married and um, but I guess it's, it's not to make this conversation about my husband, but if more about a trusted partner. I think when you got to find that right trusted partner and I think that's, um, that can help you, that you can trust with your finances, that understands your organization, that actually treats your organization as if they're the owner of it too. And um, you know, people, the people aspect is the toughest part about business because you want to trust people. But then you know, poor decisions I made.
Sabina Teshler: 10:51 And then you have to reset. And so having, I call it in the executive level, um, of your leadership team, because they're, as you scale, you have different tiers of leadership to the executive level. We have to have that triangle of trust. And so finding that right person that you entrust that can make the decisions as you can, you know, as an owner of the business is key. So I had that. I had the trusted partner which happened to be my husband and it's about onboarding the right people and that's what it comes down to. So then finding that right next person that can own, you know, a capability that we have and um, and, and when they're not right, you gotta let them go and you've got a high. You just got to keep finding the right person partner. It really is. And, and I think that's a common problem with most businesses and you know, you got to find- it's, it's the business of the marriage of business, I call it, where you know, you gotta make... you have to make sure that the people that surround you in the leadership aspect to have the same goals, that they understand your goals, they understand your vision, where you need to go and what they're, what they're accountable for and you know, you bring people in. If you just make that one or two investment into, into these people that usually costs more money then you need... You should know you need to get a lot out of them and that they need to be accountable for, for, you know, where are they within the year or two where the business needs to go.
Ryan Tansom: 12:30 So is there anything that you did Sabina? So I mean it's very unique that you worked with your husband and I've been out a family businesses and there's lots of dynamics and I think would you mind, you know, peeling that back and what was your skill set and what was your husband's and then how did you guys actually work and whose role was within the organization? And then even the next level deeper of what were the different roles and responsibilities and then how did you determine what those would be and was there any unique things that you did to align their compensation or their motives or their goals to you and your husband's and the company's goals? Because I think getting all of that stuff in line, um, there's a lot of unique ways to do it, but I think it's a big challenge. I don't know if you wanna.. if there's anything interesting that you did to make that all happen?
Sabina Teshler: 13:25 The way everything evolved... So in my company, we have an executive leadership and, and it's comprised of three people and that's my husband, Kurt, myself and the CEO, Allister. And so in my role, I come from the industry. I know the business really well, um, and I know the experience side of the business more on how to take a design concept to, um, and bringing it to life. So that's where a lot of my expertise comes from and that's how it started. What Kurt brought- his expertise is operations, where he brought in a structure and an org chart, you know, things that I, I, I'm not an expert in. And he brought in project management systems, you know, he comes from the technology world in other words, but at the same time he also wears a business development hat and he's got that dual brain. He was thinking, OK, we need to scale, we need to grow, we need, you know, and we need to do marketing, we need and so forth.
Sabina Teshler: 14:24 So he was driving a lot of the business development and then then also the operations and finance of the business. So, um, so there was that. So operations also, you know, is inclusive of OK, you know, we need to find a space in New York, you know, negotiations. And that part is so critical to making sure you get the right deals and then you also have the right advisors such as the right lawyers, the right accountants and so forth. So He's, he was very instrumental to that part of the business so I could focus on the clients and the other part. So that was very helpful. And then as we were going into next levels, hired, um, Allister Lloyd Jones, who comes from the traditional world of advertising and I would say the world of strategy, but he really knew the experience circle too and saw the future that brands are going to need, you know, more of where traditional advertising lives, the in, in media and spending money in, um, TV commercials that that industry is going to shift where brands really need to engage consumers around different experiences rather than TV commercials because now we have so many different touch points.
Sabina Teshler: 15:47 And so Allister brings that expertise to the table, you know, where he's worked with many cmos and VPs of marketing. Um, because, you know, that is a different, that's a different audience. Um, so we, so we brought in somebody who can, you know, be quiet, futuristic and help set a tone for our message and how to keep us ahead of the game, basically.
Ryan Tansom: 16:12 That's an awesome team that you had. And I'm, I'm, I'm curious because your husband and I had already, I mean you guys owned the company technically probably together or you owned it and he treated it like his own because indirectly he was benefiting from it. So there was an maybe, I don't know if there's anything that you did there on how you guys worked on your agreement, but like I think that the reason I'm asking these questions because a lot of people know that they need to hire a CEO or there's a, there's a book out there called Traction that talks about this visionary or integrator when there's this gem or however you wanna label that CEO and how do you align them to make them feel like it's your company as well. Whether it's phantom stock options are slightly, you know, equity or certain things. Did you, is there anything that you did to align his incentive program to the entire company's goals?
Sabina Teshler: 16:59 Yeah, so my husband and I, we both own the company now together. In the beginning he wasn't, um, but, but now we have a different, you know, we are now both shareholders in the company. Um, and as far as like key talent as far as um, you know, when, especially when it came to leadership, um, we did work through a unit ownership plan where our key leaders, we want them to feel like they're invested in or vested into the company and to that, you know, the, the, as it's, as we hit our goals, our revenue goals, our succession, you know, we wanted it to also be shared too with the key, the key players. So we did that and, and you know, coming into the selling of the company, we had to really make a lot of decisions about, you know, who that is. And we wanted also our team, you know, our key players to be part of it because we wanted to keep them too. So we did come up with a unit ownership plan.
Ryan Tansom: 18:01 Well that's interesting in that when I want to peel that back to when we kind of move into the transition because I think you're getting the key leaders involved in the accident is extremely important. It sounds like you guys did some unique things there. And so as we, as we kind of migrate that way in the story, you know, with you, your husband and your CEO, especially the CEO being futuristic, what was, I mean, did you guys start with the end in mind or was it grow, grow, grow, and then all of a sudden there was a triggering event? Where and what actually was the triggering event to lead to the eventual acquisition?
Sabina Teshler: 18:34 So it was different, many different things. Um, but I would say the key aspect is that we were, we were just in the right time. And I think that's how a lot. I think acquisitions is about timing. You know, when I, when I look in hindsight, where we had a unique offering in the industry that... we came from the experience, we were the, where we were truly an experience agency and we came from that and it wasn't a lot of experience agencies that doing what we did. And so that became a trend and we felt like this is the right time because two years or three years later, there's going to be a lot of agencies like us and sure enough there, you know, we have a lot more competition now than we used to. So that was one thing that we felt that, that was, um, that was going to be important.
Sabina Teshler: 19:23 Um, so what we did was we reached out to an M&A advisor that's in our industry, just change, just understand, you know, is this the right time or not? And we found out that it absolutely is. And that same advisor also knew the larger holding company. So there was a couple of decisions we could take. Either we go the equity route or we go more of the strategic partner route. And um, so that led to, you know, what is this all about, why did we go with a strategic partner because we went with WPP. Because I was looking for growth and SET has always been a cash foreign company and in order to grow you need the right partner. And two, we wanted to move more into the above the line communications of brands and WPP being the largest holding company in the world, owns a lot of great relationships with um, Sir Martin Sorrell, you know, he's very much engaged with, you know, who he's, who he works with and has been a great advocate for us.
Sabina Teshler: 20:32 So, you know, for me it was about the right culture fit. It was about going into the future. It was about having that right partner to take us there the same time it was the right time to sell because WPP actually never had an experienced agency. So we were a unique proposition within that whole entire holding company that was massive. And we saw an opportunity within them, too. So those were, those were the decisions where, OK, there's only so far we could take ourselves being a cash-run company that then if we want to keep scaling and keep going further, what is the best option and, and then the timing of things, it felt that, you know, and, and going through the whole interview process with WPP, it felt that was the right partnership to take us there.
Ryan Tansom: 21:27 I think it's an awesome story and if we can take a couple of things in chunks. One of the things that I think a lot of entrepreneurs, they have this vision of their baby that they've grown and they've got this vision for the company. As you went through this journey, did your vision change of what you wanted with the ultimate goal? What, how did the vision of what you wanted this business to be? Did it evolve? Did it change? Did it change as you were having these conversations? Because I think when you realize that the opportunities are different based on the every different kind of potential acquirer brings different things to the table, you know, did, did it line up with your vision that you already had or did your vision change?
Sabina Teshler: 22:06 So we're fortunate that we have a lot of control over what our vision still is. So WPP doesn't really get too involved in our business. Um, they let us run, you know, um, and continue building our goals as quite the independent within the organization. Um, but just to answer the question in a different way. Um, I never thought that this was coming know when I started this, that I never thought it was going to turn into what it is now. So there was a lot of adjustment and then also you, you know, each year you have, um, as you see the opportunities in the market, your vision changes. So you have to, I think rest and reset with the times and, and how brands are changing and you have to just keep resetting. But we, we do that at SET in WPP, we asked for advisors when needed, but we still do that as um, as quite independently.
Sabina Teshler: 23:07 Um, but we can also, um, but they help us too, you know, the big reason was that we wanted more access to, you know, a bigger market and you know, and, and, and it takes time, you know, it didn't happen overnight when we... we're three years into it right now, but we've, you know, you have to network, you have, you know, you do all the same things but you just have a different style and different way of doing it. But it's, it's definitely, you know, in hindsight it's been a great decision and it's being part of a larger network, the larger team.
Ryan Tansom: 23:41 And it's awesome to have a... That sounds like you've got a good partnership. I know there's a lot of stories where someone sells it and they lose the control and the vision changes and all of a sudden they're there. They're not able to make the decisions that they wished they would have. And if we were to go back and, you know, when you and your husband and your CEO are saying, OK, they might be time he reached out to the M&A advisor, what was it that like, was it a conversation around dinner or at the office where you wanted to hit a goal or something like what actually, uh, like gave you the push to call the M&A advisor?
Sabina Teshler: 24:17 Well really... when you have a business that's scaling so quickly, you know, we were in our prime time and the question I think every business owner needs to think about is their exit plan. And um, Kurt, my husband coming from that world, you know, we need to, we need to start drafting that exit plan. And so that's what I came up, um, because the business again was doing really well. Then that's when you want to start thinking about things like that. And so then you start exploring the options and, and finding the right advisors on what that looks like. And it just happened that when we just reached out about that, um, we found out that we were actually a hot ticket. So this is a great opportunity to, to, um, and great timing to actually do this because, because if we wait one year or two years from now, it may not be the right timing.
Ryan Tansom: 25:20 It's interesting that you guys did that because it is. So I think the thing that I run across and so, you know, Sabina, when we were at, you know, EY's deal, the common trend that I hear is that, you know, working on your exit plan, I'm not going to sell now or ever. I don't plan on it and that there's this kind of like this, you know, voodoo around even thinking about it. They feel like they're cheating or being, being deceiving, you know? What do you, what kind of advice do you have two people that think that way because I think you guys did the right thing obviously. And people don't want to sell when they're on top because it's growing and there's always another, uh, another year. How, how did you, how did you know, how do you get over that? Did you have any idea?
Sabina Teshler: 26:00 Well, I think one of the biggest, one of the biggest things that people fear is that when you sell the company, you lose your baby, basically. You lose your control. You lose any right. But my advice back is that, you know, not all contracts are made the same and you can actually write, you can actually write your contract where you can still be part of the business when you sell the business. You know, there's just different things that you can do. Now, it all depends on everybody's goals. You know, what their personal goals are. Of course, you know, maybe some people do want to sell and they don't want to be part of the business, you know, so. But I think there's, that perception is when you sell the business, that's it. You know, we have a brand new boss and you don't have any say so and the company and you actually do hear nightmare stories around that.
Sabina Teshler: 26:56 And I've met some that have that. But what I say is that you can actually challenge and negotiate the contracts differently and, you know, when we, when we were negotiating with WPP, I had a great negotiator, which was Kurt, but for me, my part where I wanted to make sure to protect the culture of SET because we have a certain way that we deliver and how we engage with clients and that actually, um, you know, and I can't get into any details about contract, but I had to, to um, I had to actually call those out, you know, to, and, and it was all in negotiation. And so what I tell people is that, you know, I'm sure you hear those stories and that's why you just have to be, you have to understand all your options and you have to have the right advisors too.
Sabina Teshler: 27:52 You can go with an equity partner who's not going to help you grow your business, for instance. They're going to be just all about numbers mostly. Or You could go with a strategic partner that can, you know, it's still about in financial reports of course. But also, you know, there could be other partnerships, you can have a strategic if you sell to a strategic partner, they also get the right lawyers, get the right accountant, you know, that that can deliver, you know, all types of options and um, on how you negotiate, you know, the selling of your company. If you don't actually invest into that, then you're probably gonna make some decisions you regret.
Ryan Tansom: 28:34 Bingo. I totally agree. And I'm curious because you sound so wise about how you went into this with eyes wide open. And one of the biggest challenges I've seen people have is that they don't know what questions to ask. So you were asking the right questions and knowing how the difference between equity and a strategic partner and how they're gonna manage it and how they're going to deal with the culture, you know, where were you getting these insights into ask those questions on how all of that's going to effect. Because if you don't ask the right questions and you don't know the answers, you can't even draft him in the negotiations and the contracts. Right? So you have to understand all those different things. Were there resources or how did you, how did you get the ability to ask and have those insights?
Sabina Teshler: 29:15 Maybe people are just afraid to ask. Like, I just know what's important, um, for the business, you know, being a business owner and what makes it successful and I understand if when you sell your company, you're selling it to another way of doing things and different type of culture. And so, you know, I think it's important that, you know, people know that, you know, you aren't going to be dealing with different people. You are going to have a different boss and, but it's clear that, you know, what makes your company successful? Is that how you currently operated it? And, you know, do you want to immediately change that? And if you do, you're going to affect your business, you know, in different ways. And so, you know, those were important questions on my end. Now there was a whole nother financial side of, you know, that you have to think of that, that um, you need the right advisors for.
Sabina Teshler: 30:06 And I wouldn't even know where to start asking those questions unless I had the right, you know, attorneys there by your side, helping you get there and, and you leave it to the experts, you know, to guide you through, you know, to making the best financial deal as possible. And, and so I would, I would say that, you know, don't be afraid of, you know, asking for what you want. And I think that's what happens. People don't, people don't- they just think it's, you know, it's status quo, but you can actually negotiate a lot of different things in contracts.
Ryan Tansom: 30:43 You hit on a bunch of amazing pieces there and when you think about, because you knew what you wanted for you and the business and the culture and your legacy and what you wanted to continue doing. And then you've got all the technical stuff, right? And it's like two sides of the same coin because some of the things that you might want have a ripple effect more into like the contracts or the financial dollar amount or whatever it might be. You know, did you have the ability to say, OK, let's say I want to make sure I have the culture, whatever this might be. How did that impact the financial outcome? So maybe even before you answer that Sabina like without having the disclosing to the actual dollar amounts, but how did you value the business and once you had that benchmark, how did these things that you were asking for swing the outcomes? So if that makes sense. Maybe two parts to that question was how did you value the business and then how did you understand the things that you were requesting impact that dollar amount?
Sabina Teshler: 31:37 You know, just to answer the question in a different, maybe a different way. In hindsight, looking back and, and if it's advice about selling the business, if you, if you want to leverage in negotiation, you have to have leverage points. So if your business is doing really well and you have a niche in the market business or product business and you have, you know, you have a nice margin in the business and you have a great client list, then you have an audience, whatever that your businesses and you're just going to have a better negotiation- leverage for negotiation. And, and so that's why I think it's important when to actually put your business on the marketing to sell your business when you're a top. And so I think that's that way you have a better negotiation angle with whether it's equity firm or a strategic partner.
Sabina Teshler: 32:35 And that's what it was for us. Like we were actually winning really new, exciting business. We had a great client list. We had, you know, we, we ran our business really well. It had a nice margin to it. And, and um, and you know, we, um, so we were able to [Ryan interjects: Walk away if you need to.] exactly because we actually had a bidding war on us, the, and, and so when people say, you know, hang on, I don't want to sell my business, it's going really well, that's actually when you show, because trends happen in the market, you know, you got to think, you know, two, three years from now your business may not be the same. Business goes up and down. It's never, it's never stays high, you know, you always have to make adjustments. And so, you know, I hope I'm answering your question, but you know, we were able to negotiate probably more of a bit of the control aspect of it because we were, you know, we had a good business.
Ryan Tansom: 33:35 It's the ability to walk away because you can keep running it and keep making money and because other people will buy it, so you'll be able to actually get what you want in the contracts. Right? So going back to the other part of my question, which is I'm just curious on when you know there's a lot of different types to value ways to value a company and you know, there's the, when you got a strategic partner, there's the return on investment that they're going to make being able to cross sell. Um, so however that dollar amount in the strategic, so then there's like multiples of EBITDA or discounted cash flow or whatever it might be, a certain methodology that you used in your specific sale. And then were there other methodologies that were being used with these other buyers?
Sabina Teshler: 34:14 Um, it's good to, again, going back to I'm getting the right advisor because first thing's first is you need to understand the value of your business and how you get there. So in particular SET is a service business. So there's a certain multiplier that goes around, you know, what a service businesses versus maybe a product business is probably got a higher multiplier and, and understand that, you know, you need to, you know, audit your own, get your books straight. Basically, you know, get an auditor in to get yourself ready because that's going to happen anyways. So you're going to go through and due diligence process so you know, you need to be, you need to understand your value. And um, and so for us it's, um, we went with a strategic partner because, because, um, they understand what relationships mean, so what clients mean and the potential of growth you can have with, you know, your company versus a, um, an equity firm that's just looking at numbers. They're not valuing, you know, in my, well we experienced like they, they weren't valuing where we could be in, in three, four, five years from now, if that makes sense. They were just, you know, looking at OK, you know, numbers and um, and so that could actually bring the value lower, if that makes sense. Um, so it's also about where you can take your business in the future that helps you value your company. And um, so anyways, so again, you know, knowing, knowing what your value is and bringing in those right partners like the M&A and negotiating the right outcome of percentage with that. And you know, some people use lawyers, you know, to help them with that, you know, it's, it all. It all depends. I hear many different things.
Ryan Tansom: 36:08 I think that's awesome because I like how you're explaining it. A strategic at what I've seen - we sold to a strategic and they get you and you're able to almost like sell your, it's like one big sale, right? So instead of just looking at the numbers and having it being very dry and number based and not opportunistic, it's, you're actually looking at all the potential synergies and the upside. So you're able to hopefully drive the value up too and the future relationship.
Sabina Teshler: 36:37 Right, exactly. Because they understand your industry and that's key.
Ryan Tansom: 36:42 So as you're going through this, what role did you want to play in the business afterwards? And how did you, I mean, you've mentioned that you've got your stress, the control, was it, how did that whole structure work because it's a holding company that kept you autonomy and was there certain things that you did in the contracts or the equity structure to be able to make sure that you were able to have the part that you still do?
Sabina Teshler: 37:06 Well, there's always the next phase. So, um, one thing when we sold the company, I still remained CEO of the company for about two and half years. I've recently stepped out and now chairman - I call myself a chairperson - chairperson founders, my new title. But it was always the intention when we brought Allister in into this role. Um, he was one of the, you know, when you, when you saw the package, it's in services about selling to people too. And it's important that you know that when WPP bought us for three reasons, that was the three of us. So it was Allister Kurt and I and, and knowing that, you know, they're, they're, they're acquiring talent. So I did remain the CEO, um, and then Allister was grim to, to become CEO, which is now and my, my role has changed. I'm more of an advisor now and I work closely with Allister, but then we also have certain other lines of businesses and I call them offerings really within SET and you know, I, I'm still engaged with key clients and I'm helping the lines of businesses, the offerings and um, we just launched an advisory board, you know, there's... and so there's still a lot to do and um, but we're all working towards still the future and, and, and, you know, our businesses ever changing.
Sabina Teshler: 38:42 So, so it's, it's key that, you know, that we're all still work is that triangle, I call it the Kurt, Allister and Sabina Triangle and move it into the future. It's just things have changed, you know, so Kurt has stepped out of operations role too and he focuses also on, um, lines of the offerings which are, you know, a growing and becoming a solo type of growth within the business. And I'm still in business development and analysis center has now, you know, he's in charge of operations. He's in charge of the, um, the managing directors at the locations. And I'm also business growth, you know, so, so it's been a transition from, but um, I don't believe it was any surprise to anybody because we've been working on this for a while within WPP and in our company.
Ryan Tansom: 39:39 So when you know because you had said in the services industry it's acquiring people and it's acquiring the talent and you guys as the management team, when you look at how that whole structure works, I'm just kinda curious on like when they actually did the deal structure and then also making sure that they kept you was uh, you know, was the deal structure for, was it cash up front, was it kind of tied to earn out or promissory notes? I'm curious on how that worked to make sure that you guys stayed because obviously that's a big need for them. And then how did they align that with everybody else going forward? I mean, is there a way to keep everybody? Um, so I don't know if there's a... and then how did, how did that affect your number? So did you go and actually knowing the number that you needed personally with you and your husband and layer that into kind of the deal structure? And then how to align that with you staying?
Sabina Teshler: 40:26 Yeah, it does. So, um, I think when service industry, it's very common to do an earn out because you need the key people to people to stay in. And um, so that's, that's a very standard. So we're, we have the standard, I would say contract when it comes to that. Now there is cash up front and one thing, one thing. So you initially buy the business and all, all negotiations are different because we had also different, we had different holding companies that actually were interested in us and they all come in different ways, but in particular there was an actual down, a cash down and then then there's an earn out as well too. So, um, so that's the structure we're in and that helped, you know, incentivize people to stay. Now not everybody stays. That's one thing you learn as, you know, I think the p- um, but, but all I'll keep people, um, have stayed.
Ryan Tansom: 41:33 How did you tell your employees? I'm curious. And how many did you have at the time and said, what was kind of the overall like infrastructure size and then how did you tell everybody?
Sabina Teshler: 41:44 What you want to do is you want to hold off telling until the deal. But you know, this is a small world and people find out otherwise because they see, you know, people coming in and out of your office and they make sense of it, but you know, you need to tell the key people and um, you know, what your intentions are selling the business and, and why you're doing what you're doing and you know, in all truth it's not always going to resonate with everyone. And so, um, one of my surprises was how many people did actually end up leaving because they were scared or just thought, Oh she's selling business and, and that's it. You know, now she's going to buy a home wherever in Hawaii and be done with it. But it really wasn't the intention. So you are going to be, I think people will be affected by it. You know, your employees and you're going to have a certain turnover. That was when I spoke to others that, that um, the sold the business, you know, it's, it's, I think it's part of that.
Ryan Tansom: 41:44 Did that affect you at all?
Sabina Teshler: 42:53 Well, I mean, in an emotional sense. [Ryan interjects: yah that's what I mean] You know, that that happened because, you know, I knew what my intentions were, but you know, it's, that's business for you sometimes, you know, it just doesn't always go the way you want it to go. And um, but um...
Ryan Tansom: 43:08 I had like the hardest time tell my employees because we had about 90 and it was just like really tough and then everybody like treats you differently like you said. And, and emotionally it's, it's a tough deal.
Sabina Teshler: 43:21 Yeah. I mean I was sad to see some good people go and it did turn into some other things that, you know, I didn't, I didn't anticipate. And that was, that's one of the advice I give to people, you know, anticipate that you will have turnover, that you will go through this and you're going to probably have to rebuild part of your team. And we had to do that too. But in hindsight, sometimes that's a good thing too. Where, you know, you can reset your company, you know, to the new, you know, to your new vision when you, when you do sell. So, you know, there's, there's multiple ways of looking at it when you look back. Um, but I was, you know, close to a lot of my employees because um, a lot of them were with me since day one. And then, you know, when we sold the company, it was, it was sad to see some of them go. But um, but everybody's well now. So.
Ryan Tansom: 44:16 How many employees do you have when you get sold?
Sabina Teshler: 44:18 Um, we had about a hundred, about a 125 people. Roughly a hundred people. I actually don't know exact numbers, but I think roughly 100 people.
Ryan Tansom: 44:30 OK. So you know, as you're had been shifting more to the founder and the chairperson, you know, what's on the, on the agenda for you right now and in the future? I mean, I think some of the people that go through this, they have a challenge of kind of reinventing themselves or keeping the fire burning within. Is there some things that you're doing to keep your eye on a future target or future passions or hobbies or within the business?
Sabina Teshler: 44:55 Yeah. That's funny how you mentioned reinventing yourself when you are, when you don't mean to be an entrepreneur and you then you start a business and you at scale so fast. I feel like I've reinvented myself every year and this is another year for that because when you go into different levels, you know, you have the different responsibilities and, and so, so yes, I am there of reinventing myself because I'm stepping out of the role that I've been in for almost nine years and um, and now I see my role as something of an advisor.
Sabina Teshler: 45:31 And then also getting my stuff out more and being a cultural leader for my company and really helping my team in more in the big picture of where it's going in the future. Bringing in, helping bring in the right talent and then also be in contact with key clients too. And listening to these, to our clients and making, you know, each state better for us, you know, from feedback. And so bringing in an advisory board which we've actually never had before and building that and you know, making us better and, and I, I just see this role right now is going to evolve. It's just being really working closely with the leadership I was more with the CEO than anything and, and really help him become successful in the company.
Ryan Tansom: 46:25 So as you look back at this journey over the last nine years and specifically the last three or four, is there anything through out the exit or the pre or post that you would have done a little bit differently now that you look back?
Sabina Teshler: 46:43 I look at... I think one thing that I didn't expect was how distracting the whole process was for selling the company. For how much it takes you out of the business. And in hindsight, I just wonder if, you know, if I knew how much you know, I needed to travel and, and um, you know, you can, when you have multiple bidders, you know, there's just, there's a lot to that process and you'd have to keep it as quiet as possible and um, you know, but you know, it's emotional too because it's your baby, you want to make sure you're making the right decisions. Um, so I didn't realize how much of a distraction it was. So I would say in hindsight, if I had somebody tell me how much it was, I would have probably approached it a little bit different.
Ryan Tansom: 46:43 In what way?
Sabina Teshler: 47:35 I would have paid more attention to the business and the people in the business because I was quite engaged with the business that I'm at a certain level, you know, it maybe people would have felt more secure about it rather than, you know, not seeing me as much or... [Ryan interjects: It's a challenge, isn't it?] It is a challenge. So I would say that that would be probably my, my, my advice to people who are selling. You know, just be prepared that you're gonna not be focusing on your business. And it will affect your business.
Ryan Tansom: 48:12 Exactly. It's keeping your eye on the ball the business, but also that it's a foot in each bucket and it stretches you thin. And I think the one thing, and I don't know if you experienced this with the different bitters or you know at all during the journey, but is, it's difficult to say that you want to, it's difficult to pull away because there's so much momentum that called the deal momentum because you're so distracted that you just want to get it done with. So did you experience that at all in the process or was it just, just overall taxing?
Sabina Teshler: 48:42 I think what you were saying, yeah, they don't experience that in the process were like, OK, let's move on, let's get this done and go to the next chapter. But it took a while. You know, I, I think, um, our deal just took a lot longer because we were the, we were stuck in a lot of negotiations because it was probably not a simple deal. There was things that, you know, we, like I was mentioning, I really wanted to protect the culture of the company. You know, there was a lot of rewriting of, of uh, um, of the deal, so, so it just took longer, it kind of dragged on, so I was happy when it was done and we came to a good agreement between both companies and we moved on. So...
Ryan Tansom: 49:29 Did your advisor help you along that way? Because I think one of the biggest challenges that people have is making sure that the other, the buyer doesn't see the fatigue because then there's, that could affect the price. So do they help manage that, you know, that rollercoaster?
Sabina Teshler: 49:45 They did, they did. And Kurt, too, he was a lot of part of that, but yes, the lawyer, we had really good lawyers that helped us through that process of, you know, the back and forth and I think that that was honestly really key. That's why you hire them.
Ryan Tansom: 49:59 Yes. Provide their return on investment. Right, exactly. To Sabine, as you know, we've talked about a bunch of stuff. Is there anything that you want to highlight of something that we said or maybe something that you want to leave our listeners with?
Sabina Teshler: 50:12 Oh my goodness, that's a good question. let me think here for a moment. Um, you know, I think when it, when it just comes to selling the business, just really know why you want to do it. I mean just because you want to craft the, the um, the deal that way. So just know your intentions. If it's something that you want to continue in the business and grow their business, just know that, you know, you can, you can actually negotiate that and, and also, um, but if you just want out, you know, you can definitely, you know, craft that as well and I think that you just, you just, you just got to know what you want too. And I think that's, that's key.
Ryan Tansom: 50:57 I think you literally nailed it because there's a book out there called Finish Big by Bo Burlingham. I don't know if you've heard of that before, but it's like the best way to exit and they've, it'd be happiest to know what you want and why. That's literally the way. Like how he boils it all down. So if there's a way for our listeners get in touch with you, what's the best way?
Sabina Teshler: 51:17 So, um, I'm, I have an email address. Um, it's s teshler at SETcreative dot com.
Ryan Tansom: 51:25 Perfect, well thank you so much for being on the show. I really appreciate it.
Sabina Teshler: 51:29 Well, thank you. Thanks for your time.
Ryan Tansom: 51:33 Thanks for sticking in there to the end. I really hope you enjoyed the episode with Sabina. I think she had some crazy amounts of words of wisdom throughout the show. The three big takeaways that I had is one is that she actually planned her exit. She thought about it, she thought about what things were important and then she started doing the due diligence and calling the M&A and looking at the pulse of the market without actually thinking that there was a bad time. So she knew that selling on top was going to give her the most amount of control throughout the negotiations.
So the second thing that I thought was extremely important was that she kept referring to advisors and understanding the importance of advisors to help you mitigate the rollercoaster, help you understand what questions to ask and to be able to facilitate in draft the stuff that you want. And I think one note in there is that you should know what you want the most. So don't let the advisors drive the entire negotiation because you're the ones that understand your business and what you want more than anybody else, but understanding how to get the advisors that can help implement that is crucial.
And then the last thing that was absolutely beautiful that she said was that knowing what you want and why will get you to the point where you can actually ask for what you want because the deal momentum and the buyers and all these people are going to be involved in the process, but knowing what you want, we'll help you feel that the questions and drown out the noise of the stuff that does not relate. And then out again, having the ability to walk away if you're not getting that or doesn't line up with your goals and objectives is huge. So if you enjoyed the episode, going to Itunes, give it a rating. Otherwise I'll see you next week.
Written by 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.