Story of a Successful Exit from a Serial Entrepreneur [Transcript]
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[Plan Your Future Today]
[Teresa Meares, President]
[DDG Uniform & Work Apparel]
[FSBDC at UNF]
I started DGG Tactical Supply in 2007. And we had added it onto an already business that was existing. And we grew the company. When I started the company in 2007, I had already had a plan to exit in ten years after I’d started the business. So, that would have been this year that I started. However, I had the opportunity to find a buyer a year ahead of time. So, I was able to put together an offer and then start negotiating with a potential buyer.
Well, when I went into business, I had already retired after 20 years in law enforcement. And my husband and I had said, after ten years, we will do this business and then decide what we want to do afterwards. He wanted to retire. I kind of got bit by the bug and realized I was a serial entrepreneur. So, we had already worked, and educated, and learned about how to exit out of a business. And really the key to that was networking. It’s, when I met people that were in the industry, whether it be a CPA, or an attorney, or someone who worked in a capital venture, or equity.
And so, networking with these people, and learning from them, and getting to know them and how they work without really needing their services at the time really enabled me to continue to prepare and make sure that I watched the decisions that I made as I was continuing to grow the business and hiring employees with a thought process of, how will this look when I walk away? How will this look at a turnkey operation? So, I kind of started that very early. And I have to say that I think that it benefited me very well.
In my situation, the industry had kind of shifted. So, we had a lot of larger companies buying out smaller companies because they didn’t want to green field a location. They wanted to come in and buy a territory, a turnkey operation. So, I saw this kind of happening in our industry, which is law enforcement and government contracting. And it allowed me the opportunity to kind of exit a year early.
For my business, finding a buyer was very easy. I could imagine, if you were in a traditional type business where it’s not so specific or special to the customer, then you would definitely want to go and find someone to help you list it and find the right type of buyer. But, in my industry, I was actually very lucky in the fact that we have a very close knit community. And so, I was able to sit down and list out my top three buyers. Who would I want to buy me out? And then, I just started with number one. And I got lucky, number one wanted to buy. And we were able to negotiate from there.
So, I think the biggest challenge I faced was pulling together all the information, exposing myself, and our company, and every decision that we had made five to ten years prior, because they pretty much crawl up in there and get to know everything they can about you and the business, because they don’t want to buy into something and get a surprise at the end. But one of the biggest challenges that I had was doing that with my employees. It was hard not being able to tell them what was going on. You didn’t want to tell them too soon. You didn’t want to tell them too late. So, it really kind of kept me up at night because you build a rapport with your employees. It’s a family atmosphere, especially when it’s a small company. And so, if you don’t find the right buyer, it’ll be twice as worse. I personally found the right buyer and I knew that my employees were going to be taken care of. But it was still very, very hard doing that.
So, advisors are very important. I recently had an opportunity to speak at a luncheon in reference to advisors. And one of the things that I didn’t have when I started my business was advisors. And I had made a lot of mistakes. And I spent some time fixing those mistakes instead of growing my business and making it maybe more profitable on the front side. So, when it comes time to getting your business ready to sell, you need to have those advisors a part of your business.
And you don’t need to go find a CPA, or a good lawyer, or a CFO when you’re deciding to sell. You need to find those people ahead of time. Because, when you start a business, you have to first ask your question, what’s my exit? What am I going to do? What’s the purpose for me getting into this business? Is it five years I’m going to sell it? Is it ten years I’m going to sell it? Or I’m going to pass it on to my children, which is not always a solid plan. So, you have to know the answer to that question when you go into business. So, that way you’re always preparing yourself and making the decision based off of that.
So, you want to have your advisors on ahead of time because, when it comes time to selling the business, they need to know you. They need to know the culture of your business. They need to know the ins and outs of your business. They need to know what the struggles you were fighting. They need to know what your projections were, what your cashflow projections were. So, when you all sit down at the table and have a discussion with the buyer, then you’re working together as a well oiled team. You definitely need an attorney because of all the contracts and the wording. But don’t just trust the attorney to check into it. You have to sit down and read it yourself. It’s long, it’s daunting, but you have to read that entire contract and make sure that you understand what you’re agreeing to. You have to have a CPA. You have to know what are the tax implications. You have to find out what it is that you have to do once you sell the business to make sure that you minimize your taxable income or your capital gains.
And then, definitely, in my situation, again, I was very lucky to have a buyer that knew the industry very specific. But you definitely want someone that is managing, a business broker or someone who is in the venture capital arena, because they’re going to be the ones that do that hard negotiating back and forth. And they kind of take the emotion out of it. So, those are your three important people that you want.
Life after business of selling a company, again, I said I found out that I was a serial entrepreneur. And I actually enjoy starting businesses and getting ready to sell them. I actually thrive off of that, which is one thing that I found out when I sold the tactical side of the business. So, last year I relaunched another business. It was a uniform side. And I’m growing that. And my exit strategy is in three to five years, I’ll sell that. And then, I’m going to go and launch another business. So, I took a vacation. I bought myself a car that I always wanted and a couple of personal things as a reward that I worked so hard and made it through. But, right after that, I picked up the ball and started running with it again, so.
So, my advice to people that are in business is, from day one, know what your exit strategy is. Have more than one because things change. It’s a dynamic, fluid type business when you’re growing. But understand what it is that you want to do in order to get out of the business. And then, start educating yourself. And then, as you’re growing your business and working on your business, make sure that the exit strategy is always in the front part of your decision making.
And then, also just know that, like I said, the hardest part was the employees. So, when you hire employees and you build your relationship with them, just make sure that you keep that relationship to where they understand that you’re a business owner and there may be exit strategy in the future. You don’t have to necessarily talk about it when it’s happening, but if you could talk about it on the front side when you’re hiring them or when you’re onboarding them for the first 90 days of probation, just kind of let it slip in of small business, and my intention is to grow it, and I want you a part of my team. And then, find a buyer and make sure everyone is taken care of. So, just keep that in mind, because again, that was the hardest part for me. So, have a plan, have had an exit strategy, surround yourself with your advisors ahead of time to make sure that they know what your strategy is and they can work with you on it. And then, definitely keep in mind how hard it would be if you do have employees.
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