Laura Zander Named Her Exit Price

[Music] Hello everyone. Welcome to the 21 Hats podcast. I'm your host, Lauren Feldman. This week, Laura Xander tells Mel Gravely and Jennifer Karen how she and her husband Doug managed to sell their business for precisely the price they wanted. As you may recall, Laura and Doug started Jimmy Bean's Wool more than two decades ago as a tiny corner store and then turned it into one of the biggest brands in the yarn industry. years ago, the couple decided they'd be open to selling, but only if the offer was right. With that goal in mind, they made a deliberate effort to get the business sale ready and to keep it that way. And as Laura ran the company, she started cultivating relationships with anyone she thought might one day be a buyer. In fact, she tells us she was never shy about saying, "Oh, hey, Bob. It's really nice to meet you. Do you want to buy my business?" Eventually, someone said yes. Although getting to a signed contract, Laura says, nearly broke her. Plus, Jennifer thought she had her hands full running her business and then her own home went up in flames. Even in good times, owning and running a business can be a lonely pursuit. Our hope is that these weekly conversations will let owners know they are not alone in facing challenges. In fact, that's the whole idea behind the 21 Hats community, engaging with other owners to get the kinds of insights only another owner can offer. If you're interested in learning more, you can sign up for a free trial of the Morning Report newsletter, which highlights the most important news of the day for business owners and shows how other owners are confronting challenges and seizing opportunities. Just search the 21 Hats Morning Report to subscribe. And if you like the idea of helping out another business owner, on Tuesday, August 19th at 3 Eastern time, we're going to hold another 21 Hats brainstorm where we gather virtually, one owner presents a challenge, and we all try to offer support and suggestions, and then we turn it into a podcast. If you're interested, let me know by replying to your morning report, or by shooting me an email at lauren@21s.com. I'll send you all of the information. Joining me this week on the podcast are regulars Mel Gravely who is chairman of Traversity Construction, a construction firm based in Cincinnati, Jennifer Karen, CEO of SB Expose and Events, an events management business based near Baltimore, and Laura Xander, who until recently was CEO of Jimmy Beans Wool, a digital yarn store based in Reno, Nevada. The episode is titled Laura Xander named Her Exit Price and Got It. Welcome Mel, Jennifer, and Laura. It's great to have you all here, and we have a lot to talk about. First, Laura, you have been busy. We haven't seen you in quite a while, and that's cuz you have some big news to share. Want to tell us what it is? Yeah, we migrated our website to Shopify back in December. >> That's not what I had in mind, Laura. >> Well, that was big news. >> I'm sure that was a big deal, too. >> It was. We did that at the same time as we were in a transaction to sell our business, which finalized in April. So, we sold our business and signed away everything on April 4th. >> Congratulations. >> Thank you very much. >> Are you happy? >> Yeah. How's that feel? >> Well, have I ever been happy? I mean, that's a really like deep question. Um, am I glad that we did it? Uh, 1,000%. Do I have any regrets? I mean, sure, like there are things that I learned that I could have done better during the transaction. Um, but >> we want to hear about those. >> Yeah. I mean, it's just, you know, it's they're just things that you don't know until you know, you know, things that you haven't figured out. That's I guess it's why as we get older, we get so much wiser, some of us. Um, but no, I don't regret it at all. It was the best thing we could have done. Um, 1,000 billion trillion. I mean, just absolutely no regrets. It was the hardest thing, the most emotionally, mentally, physically taxing um roller coaster ride that I mean, it was like doing an ultra marathon on a roller coaster while you have malaria or something. I mean, it was just awful. Like, so awful. I mean, so many times I thought I was going to break, you know? It was rocky one for sure. Um, but we made it through. >> That's quite a description. We're going to ask you about that. Did you celebrate afterwards? What did you do? >> It's so funny that you would ask that. What a great segue, Lauren. Um, what I was going to say is what's so interesting is that you would one would think that on the day that you sell the business, you like this great weight is lifted off of your shoulders and you feel so much better and everything is just, you know, the sun is shining. It was it's not like that. It's so intense. I mean, it was it's probably was another 60 days. So, we are just now, now that we're about 100 days in, 120 days in, we are just now coming out of the unbelievably ridiculous amount of stress and work um that is required. Now, part of that is because I stayed on the parent business. We completely restructured. I'm an overachiever, so of course like I want to stay on. I do I want to, you know, I want to be helpful and useful. So, I'm doing multiple jobs, but Doug still I mean every single day he spends hours and we're still spending hours and hours every day tying up all of the loose ends, you know, every state that you've paid sales tax to, every state that you've had an employee. So, you've got like the Department of Revenue, you know, all the reconciliation, blah blah blah blah blah. So, no, we we didn't celebrate. We're too tired. Um, so we will probably celebrate in I mean realistically, and I'm not trying to be pessimistic, um, or a downer, but I'm guessing January or February is when it might start to hit, but it may not be until April or May of next year once we get through the taxes of 2025 and pulling together all of that paperwork, you know, and all the complexity that comes along with it. There's just so much like I had no idea. >> I'm wondering will the listeners know about the business? Will they know what the business was and all that? Laura, >> Laura has been on from the beginning, so many of our listeners will know uh about her business, but it's a really good question and let me just say I I've known Laura for a long time. It's worth pointing out this is a business Jimmy Beans Wool that you started from scratch with your husband Doug, you know, like 22 years ago. >> Yeah. Is that right? >> 23. >> You started as a neighborhood store where you sold yarn and coffee. >> Correct. >> And you were both refugees from the dot bubble. You had been developers in San Francisco before the bubble burst. You started this neighborhood yarn store and then you took it online and you built an amazing business uh in 22 years with through both acquisition and organic growth. Um c can you tell us how big the business got by the time you sold it? Yeah, I mean I was always open with that um before, but I think you know at the end we were doing 134 million in sales, had about 70 60 70 employees and like you said over the last uh 7 years really is when we started to grow through acquisition as you mentioned um you know Mel, we stayed debtree that was something that was really important to us. We had a brick and mortar here in Reno and a warehouse distribution center. We had a building that we bought ourselves a couple years ago um here in Reno. And then we purchased a business in Fort Worth, Texas, five almost 6 years ago. So I was spending about half of my time or a third, you know, depending on the season, you know, a third of my time down in Texas. And that was a factory. So it was a manufacturing facility, 30,000 square ft. um you know we we dyed yarn there and then we slowly turned that into a distribution center um for B2B. So we had started B to C and then ended with half of our revenue being um B2B. So in the last five or six years, 5 years we had almost doubled our business. So it really put my foot on the gas then. Um, and I think, you know, you always you read the books that are build to sell. Um, you know, selling the business has always been on my mind. I mean, for the last 15 years, this wasn't something new. I mean, ever since I met Lauren, our approach was you'll end up with the healthiest business or we thought we would end up with a healthier business if we approached it as if we were going to sell it any day now. Because then that drove us to having really good financials and it drove us to having systems that could be, you know, replicated or picked up or folded under and, you know, even the portfolio of businesses that we acquired. Um, you know, there was some strategy in that and trying to fill the gaps and does this look attractive to somebody else. >> Laura, can you tell us a little about about that story? Like tell us were you actively going out and trying to find buyers or did the buyers come to you? Walk us through that story a little bit. >> No, but um No, I was not actively going out, you know, trying to find buyers. But for the last 10ish years, if I met somebody that either had the money or I knew knew somebody who had the money or I thought it could be a good strategic fit, I mean, I was never shy with, "Oh, hey Bob, it's really nice to meet you. Do you want to buy my business? Um, literally, like literally. And Lauren knows me. I mean, he knows that I'm not exaggerating. >> How many times did people say yes? >> Um, a couple. You know, a couple we should talk about it. I mean, there were a couple where we, you know, got a little teeny bit farther down the road. Um, a lot of times, you know, even let's say 10 years ago, I'd say, I'm not, and even in this case, I we're not worth what we want to be worth, but I want to put myself on your radar so that when we are worth it or when you are ready to buy something or, you know, add something to to your portfolio, you think of me. So, it was never a shortterm, you know, play. It was always a, hey, I'm here. Hey, I'm here. like, "Don't forget about me." Um, and I just figured when the time was right, the time would be right. So, yeah, I mean, the company that ended up buying us, you know, I we've been on their radar for years, you know, years and years, and they've been on our radar for years and years. But I had multiple I was polygamous that way, I guess. I don't know if that's the right word, but >> you Western people. >> Yeah. Yeah. Did you have evaluation? Did you Did you know the number you wanted um before you talked to them? >> Yeah, but I've known for years. I mean, that's you know, I've actively thought about I mean, every year we I value us, you know. I mean, I I know what I'm driving towards. I know what IDA I want. You know, we know I know what percentage we want for this and that. And I know um just kind of intuitively, I guess, like where synergies would be found. So, if I'm thinking about this company, you know, before I say, "Hey, do you want to buy me?" I mean, I've got some kind of like thought behind why it would work and why it would be a good fit for somebody um and where we could add value. So, I didn't go get a formal evaluation. Um I didn't need to. I've been looking at this long enough that I need >> Why do you say that, Laura? >> Um >> why didn't you need evaluation? And and the buyer didn't want evaluation. because we said this is if we are not looking to sell it right this second. If you would like to buy us this is how much we need and they could take it or leave it and that's where we ended up. >> Did you end up with that number or did >> Yeah, we did. >> I heard one one CEO say to me, "I'll offer you any amount of money you want for your business as long as I can dictate the terms." >> No. >> Did you How were your terms? Well, I don't know what to compare it to, you know? I mean, ask me in 10 years. Ask me in two years. Um, so right now they're fine, but if we get sued in a year or two years or something comes up, I mean, that was something that I was completely unprepared for because all the acquisitions we've done have been small familyrun companies. You know, we're a small familyrun company. um you know, it's all boilerplate and this, you know, you're with the big dogs. Um and so their indemnifications and their like just all of the negotiating terms um were extremely detailed. If after we sell the business, somebody comes in and they sit in that chair and the chair breaks and they fall down and they break their pelvis. Who's liable? Is it the buyer who now owns the business or is it me because I didn't disclose that that chair was past its like lifespan and should have been replaced, you know? So you have to think through or at least we did pretty much like every class of scenario of something like that happening. >> Laura, did you want to stay on? >> Um I was um I could have gone either way. Um I mean I told I'm like if you find me useful and you think it would be helpful um for me to stay on, then I'm happy to stay on. If you don't want me to stay on and you think it would be cleaner and the business would be more successful if because you know as the founder um I stepped away then I'm happy to step away. We're still kind of in that phase, right? It's been three or four months. We did end up, you know, I took a role as an employee. I'm in I'm in the seauite. Um there are three of us and uh at this point like I think I'm being useful, you know, and I think that uh the business is benefiting, you know, from my experience. Um, and I am learning a ton from these other two women who, you know, went to business school and like they know what they're doing. So, for me, it's while it was unbelievably incredibly stressful for the first couple months, um, we're getting it's starting to like level out. Uh, and I'm getting to the point where I'm getting to start to read business books again. I'm getting to start to think about things at a slightly more strategic and higher level than I have in a long time. And that's super super exciting. >> I think the other term that Jennifer might have been referring to is whether or not there's an earnout. Did you get your price all now or is there a period of time before you get the rest of the deal? Um, we structured the deal so that if everything in the world collapsed tomorrow, if I don't know, there's some crazy thing like a pandemic, um, you know, and the economy completely collapsed, we were happy. So, yeah, I mean, we got the deal that we were looking for. So, you know, we were very lucky that way and they were very honorable that way. And we were lucky in that we were like, look, again, we don't have to sell. I know the business isn't as big and isn't where I want it to be someday. That said, I mean, I'd been shooting for a certain val. I wanted our business to get to a certain value and we weren't there yet. So, I was willing to take what it was valued at at the time. >> Laura, how long were the phases? Right. the phase where you're negotiating, then you agree on something and then the phase of all the documentation like can you walk us through that timeline? >> Sure. You know, we like semiformmally signed, you know, a non-disclosure I think in maybe October or so. Um, and then it was I think it was Thanksgiving. >> Wait, October of 2024. >> Yeah. Yeah. >> Right. Not that long ago. Oh, that doesn't seem that long. I thought you were going to tell me a year and a half ago. Okay. All right. Well, that's a long time. >> Is it, Bill? I have no idea. I I don't know. >> Well, it's it's because it's brutal. I mean, you just described what I mean, it's brutal. The due diligence to the back and forth negotiations. >> I mean, the process took 5 months like like from the time we like put it down on paper that yes, we were interested in formally moving forward. Um, you know, the dating process, if you want to call it that. I mean, we had been chatting casually and flirting a little bit, I guess, for about six months. Um, but I was also, you know, polygamous. And I was also in a >> dating others. Yes. Dating others. >> Yes. I was also in other conversations, you know, just coincidentally at the same time. Um, and had gone down the path with some others. But from the time I mean, we started the due diligence around Thanksgiving. I and I I remember that because that was our Thanksgiving, you know, were the 155 items that were on the due diligence list. Um, and then we originally had planned to close the deal in January. Um, but to your point, the negotiations back and forth and just, you know, the communication of their lawyer and our lawyer and you know, then me and the CEO would chat, you know, about some stuff and then some of the stuff would go back and forth. Yeah. Just all the paperwork just ended up taking and then with the election. Um, so not only did we do this over the holidays and a Shopify migration, so a complete platform migration that we had worked 11 months on. So we changed our entire platform that we've had for 20ome years >> that your husband built >> that my husband built. So he's driving that election Christmas uh or I shouldn't say election but inauguration um but election and post election. And then Doug's parents, his dad is not doing well and, you know, is got Alzheimer's now and blah blah blah. I mean, it was just brutal, brutal, brutal. But that took um it ended up taking 3 months. So, I actually signed the paperwork. I mean, at the end of the day, on a Friday, when I was in Vietnam for business, um, the Friday that I got to Vietnam, we got word that the paperwork could all be signed and the deal could be done by the following Friday, but we were going to have to push it, you know, to get just all the last stuff, all these last schedules, you know, so it's document every single, you know, all of your assets, document all the computers, document and it's just all the, you know, all the paperwork. So, we signed it and the deal closed when I was in Vietnam in North Vietnam in the hills. Um, trying to source some like really unique fabric and filming a documentary thing. Uh, yeah, it was exhausting. Just exhausting. >> You know, though, there's so many things, Lauren, that I would tease out of this that just are so unusual just to begin with. The intentionality on building it to sell it is rare. Um the patience to keep building the value of it so that it gets to a place where it is more valuable to someone to buy, which means keeping your books clean and all of that. >> I mean, there's just so much that goes into prior to dating and flirting and then finding a a proper mate. I just don't I hear people say they want to sell their business and they decide it today and they think it's ready to sell tomorrow. And the truth is most of them just they just aren't they just aren't ready for that. >> No, I mean you got to go to the gym for a while, you know, >> to get bikini ready. Is that right? >> Yes. Yeah. I mean, you just do. And and again, at least my thought process was and I think it was like the E-Myth or something that I read like 15 years ago that was like I think he his was like build your business as if you're going to franchise it. um you know in terms of like systems and processes and everything else and mine was and then there was a book built to sell build to sell or something but it was this is just best practices even if we keep the business for the rest of our lives and we always had that open you know I mean again we didn't need to sell we weren't actively looking to sell it but I always wanted you know I wanted my legs to look good if the right person came along um and you know I wanted to be attractive Laura, did your employees know you were going to the gym or flirting around? >> You know, some of my leaders, yeah, I've always been open about that. And I had been open about Doug and I will not have this forever, you know, so whether we do an ESOP, whether, you know, we don't know what it's going to look like, but we're not Jay, you know, I'm not going to do this until I'm 65. >> When did they find out that you sold it? the day that you the money was in your bank or >> No, before and that is what created a bit of the complication is because I did already have this trip to Vietnam and we had this like film crew going and everything. I mean, it was something that I couldn't get out of, it wouldn't have been right for me to get out of it. So when the date came around that we were going to close on the 4th and I was going to be in Vietnam, it added a layer of complication in that we had to do a lease back because we didn't want to tell all of our employees while I'm in Vietnam, right? And my general manager of the Reno location was with in Vietnam with me and she's the one who like you know that everybody works for um on the Nevada side. So, what I did is like for the month before um we closed, I spent time with each of our leaders. So, I flew to Texas and I told our general manager down there, hey, I this is there's a 95% chance this is going to happen. And then, you know, I sat down with our leader in Reno. So, I gave them a a few weeks to process and to think about it and, you know, for me to be around for us to talk about it and stuff. But then um what we did is um after the fourth, you know, I was still in Vietnam and we spent uh a week and they leased back the employees from us so that we didn't have to tell our employees for a week and so they everybody still got their paychecks from us. I mean it was effectively invisible, right? Um, and that just created a ton of complication, you know, and in all kinds of different ways, like who's liable if somebody slips and falls, who's liable if, you know, there's a discrimination claim or, you know, whatever. Um, uh, who's paying the health insurance, who's paying this, who's paying that, who pays workers comp. Um, so figuring, you know, paying the lawyers to figure all that stuff out. But we ended up telling our teams I I want to say it was like on the eth or the ninth ninth or 10th about a week later. >> Laura, we should say who bought your company. Uh if I'm not mistaken, it's a a larger company in your industry. So it was a strategic buy for them. Is is that right? >> It was. Yeah, it was a strategic buy. It's called it's called Local Crafts Group and they own another um a number of other uh formerly familyowned craft brands in the industry and I had seen what they had done with some of the ones that they had purchased over the last few years and they had done a really phenomenal job and so I you know that's again Doug and I were like h you know should we just wait and try to build the business more because there was so much growth growth to be had or are we ever going to find somebody that's going to be a better fit? And we just were like, we just didn't think there'd be a better fit. We didn't think there was somebody like a group of people that could do a better job with our businesses um and kind of activate or execute on all the things that we all the dreams that we had had than these guys. So yeah, so I am now the chief brand officer of the local crafts group. >> Are you excited about being the chief brand officer and being part of this mission going forward or are you hoping to do something else fairly soon? >> I mean there again because we just went through this. I am coming out of the exhaustion. Um, and it hasn't been fair for me to judge because I've been doing my old job, you know, parts of my old job in addition to doing the new job. So, I don't have a super clear um vision of what this new job is going to look like. That said, it is becoming more and more clear every day. And I just think there's so much we could be done. I mean, or so much to do. Like, we are finally we finally have an opportunity. I finally have an opportunity to have all the resources and the expertise and like, you know, just the backing to do all these things that we've always wanted to do. >> Is it different thinking that you won't be the owner? >> Oh, I love it. That that's the best part. >> Correct me if I'm wrong here, Laura. I think early on in this podcast, we did an episode where you expressed the thought that there are times when you just get tired of having to make every decision and you wish somebody would just tell you what to do. >> 1,000%. >> Amen to that. >> And somebody else would just pay the bills. >> And is this what that is? >> Yes. It is so nice. like every day I and I told you you know I told our CEO I'm like I mean the what got me through these first couple months really I mean again cuz it was just it's so intense. I don't think there's any way around it but it's just I woke up for a month and I'm like oh my god I could quit my job today. I have not felt that feeling in 22 or 23 years. Like for 23 years you can't quit your job. like you can close it down, but you know there's all this paperwork, there are all these things you got to do. I mean, as we're learning right now, but I haven't had the freedom to just walk away in decades. And that freedom, ironically, like really really motivated me um and is still very very motivating. Like it just it's so nice to know and it's so like I feel so much more balanced. Like I mean God Lauren like now I wake up in the morning. I do I read a little bit. I do yoga. I go for a run for an hour or two and then I come back and I start work at 9:00. I mean I work late, you know, and there are days that I'll put in 12 or 14, but I have figured out this is a job, you know? I haven't had a job. Like I don't have to be here. I am here because I want to be here like I want to learn. I want to, you know, push, you know, whatever. I want I want to make things happen. I want to make this better. I want to see what impact we can have. And I want to see this work. You know, I'm really excited to like see to have this experience and like work in a much much much bigger company and just level up and see if I can do it. I don't know if I can fight at this weight class. Laura is your husband with the new company. How did that relationship, your marriage go through this process? >> He is not. I mean, he's still consulting, you know, so he's still um doing a lot because he was a, you know, a software engineer and so he's still helping migrate some of the data. Yeah. He just, you know, he really wanted to retire. He was done. Just done. So, as far as how our marriage made it through, how do you make it through anything after 25 28 years? You just do. >> I'm curious of what the team of of what your team looked like when you were going through this cuz it sounded like you were involved in a lot of the detail gathering yourself, all the due diligence. I'm sure they had a data room and all that kind of stuff you had to put crap into. >> Yes. >> Was there anybody internal that could help you there or >> No. >> Okay. So you you were you were doing the data gathering, the HR stuff and the financials and the Oh boy. >> Yes. >> Oh boy. >> Yes. >> Yeah. You should teach a class. I mean, people who want to sell, it's just funny. Then they get in it and you know, the buyer has all these questions and and and everything you give them, they've got three more questions about everything you gave them, right? Because they looked at it, right? >> And so every one document turns into three requests. And um the data mining just goes on and on. If you're pulling that stuff yourself, oh my lord. I get it. I totally get it. >> Well, and I don't know if this is right or wrong. Um, one, nobody's going to know the data better than I do, um, or Doug, and two, nobody has the same skin in the game to present the data. So, I don't know that I would want anybody else because I really want to make sure that we're te I mean, obviously, I'm going to do give them the correct data, you know, and accurate data, but I also uh, you know, I'm not dumb. I want to make sure that it's telling the story that I want to tell. And again, I don't know. Um, but this might be one of those cases where the best person to do it is us. Um, but we are also very financially involved. you know, we we really know our financials. We really know um you know, the information systems. >> You know, Laura, I think it's a fairly common thing in in the course of a business sale, even when the owner isn't as fully involved in every detail as it sounds like you were for the owner's attention to be so completely on the possible sale that it's easy to lose track of running the business and the business suffers during that period. Was that an issue for you at all? >> Oh, absolutely. Yeah, 1,000%. And that's something that we've talked about, you know, and I mean that was a source of tremendous anxiety January, you know, our numbers. One, we had just migrated to a new platform, so we lose all of our organic rankings. Um, so site traffic, you know, has gone way down on the e-commerce side of our business. Uh, I am not focused. I'm, you know, I'm working on this transaction. Doug's working on the transaction. I mean, it's so I'm not focused on how do we compensate? How do we figure it out? And frankly, I don't have the energy. Um, you know, I don't have the energy to push because I'm already pushing like as hard as I possibly can. And so when your numbers come back and they're not as good as they were and then you're just like, "Oh my god, are they going to walk away because the numbers aren't as good as they are?" And it was really harrowing, you know, every little thing. Then I'm in Vietnam and the tariffs get announced and I'm in Vietnam sourcing and they're like, "Yep, 45% tariffs." And I'm like, "Well, you know, the deal is going to get cancelled." I mean, there were so many things that popped up that you're like, "Well, I mean, Joann's Jo-Ann's went through bankruptcy and closed, you know, while we were going through this again, you know, the new administration with some things in place that weren't favorable, you know, to the business." Um, so you just every step of the way you're like, "Well, there it goes." Um, I, you know, it's not going to happen. And then you got to try to dig out and repair all of the things that you've been neglecting, you know, for the last couple months cuz you just simply only have so much energy. Yeah, it was fun. >> The longer this stays on the market though, um, the longer the process is, the like you say, things happen because life just keeps happening. And >> Yep. We're in weird times now, but you know Jo-Ann's could have closed any time and it just that can't be helpful to the conversation of where you're what you're trying to do. So, >> and Mel, you say long close. I wonder how long a typical closing is. I I have no idea. And so, Laura, did you think this is an average time? Is this longer than normal? What's the average time to close a sale a business? >> Well, I would assume that it's I mean, it's based on the size and the complexity of the business. Um but under a year I mean even if you I was just watching like Bob Iger's master class right and he talks a lot about the acquisitions that he's worked on. Um I mean obviously it depends on are you on good terms you know with I mean does the other side really want to want this to happen? Um and can you agree on some things but I think 6 months 6 n months you know is pretty maybe nine months is the average. We did it in five. We were trying to do it in three or four, which maybe we didn't even do it in five. Maybe we did it in four. Um, one, two, three, four. Yeah, like four, four and a half. So, it was probably pretty quick. >> Did you have a broker helping you? >> No. Mm- No, we did not. >> Interesting. How did you decide not to use a broker? >> Because most of the smart people that I've talked to told me, don't ever do that. That it's just a waste of money. Did you have other adviserss? Like did you have a whole slew of tax advisors and lawyers and stuff? Who how many adviserss do you think you had? >> Probably not as much as we should. Um I mean we you know we found a lawyer or our our tax people did help us a little bit but not a ton. you know, we just send them over the agreements and one, I mean, the first step is, okay, if this is the price that we get, how much are we going to end up with, you know, and are we okay with that? And then the second part was just can you look at these agreements and see if there's anything in here, you know, that's that is a red flag. And then we found a local lawyer. I mean, we, you know, Doug's from the Midwest. Uh, he's a he's a frugal dude. our tax people had had had referred us to, you know, a high-priced attorney in Atlanta who wanted a couple hundred grand, you know, to do the transaction. And then we found a nice local guy in Reno and he wanted 30. So, you know, and I'm like, yeah, I mean, for 800 bucks an hour, I'll do some of the work. in a home. >> I've seen that be all over the place um on time wise and level of help you get. The only thing I would say people considering it is I I've learned this the hard way. Start with the tax implications. So there's certain ways to structure a deal. >> But the thing that's going to hurt you the most is considering how you do it to make the most tax advantageous for you >> because people don't think about that, right? So that checking with your tax folks as you did probably helped a lot. At least you knew here's what I'm going to end up with. And >> at the end of the day, we didn't want to ever have to work again, right? I mean, otherwise, why bother? Then I'm just going to have to go get another job. And you know, so we just had to do a lot of thinking. And my husband is, he's such a nerd, too. But he put together a whole Monte Carlo um of like if we get this and then after taxes we get this and we live to you know what's the standard deviation of you know if we live to 92 versus 87 versus this and he ran it 2,000 times between you know looking at interest rates uh from 1929 or 1921 or whatever to 2024 and like what are the all the averages? So, what's the probability that what we end up with is going to be enough for us to lead a comfortable life, not an extravagant life, but a comfortable life until we're in our late8s, you know, and once we were okay with that, then we're like, okay, you know, but we didn't do anything until like that because you got to have your bottom. I mean, for us, we had to have our bottom line and we had to we had to be able to say, "Look, we are not going below this." Like, it we're just not. And if that's not okay, then that's okay. But we can't. >> Did that become a point of contention? >> Not really. I mean, I'm sure there's some famous quote out there, but it's basically like once you make a decision, then it's easy because it's just like this is I mean, it's just math. Like this isn't emotional. It's not preferential. I'm we're just telling you this this is it. >> Were you surprised by anything in the due diligence period? Did you learn anything about the business that you didn't know? >> Yeah, we did. We found a couple things. Um and it was really helpful, you know, and so me the eternal the eternal like positive spin marketer uh was like, Doug, even if this doesn't work, look at these great things that we've learned. Like is so worth the time that we learned, you know? I mean, I don't want to go into details, but there were a couple things we should have been doing that we weren't doing that we didn't know we were supposed to be doing. I mean, it was nothing that like affected anybody, you know, daytoday, but there were some paperwork that we should have been filing that we didn't know we were supposed to be filing. Just little stuff like that, you know, buttoned up stuff. Um, that was really helpful. And you know, again, in the spirit of if this doesn't work, this process has taught me a ton about what I need to, you know, what we need to do better for the next time. And that's, you know, when we would have those moments where we're like, "Oh crap, this isn't going to go through. It's not going to work." And I'm like, "Look, this is then this is just a dry run and let's think about like how much we've just learned from this process." like it was cheaper to do this than to go to Harvard Business School. Um, and we actually just got to experience it firsthand. And so, let's set our files up so that the next time it's much easier to do like to supply all this due diligence stuff because we have it, you know, we basically know what somebody's going to ask for. I mean, just little simple stuff like that. >> How did your employees react when you did tell them? Uh my leadership team um they you know were a little bit stunned. Um but over talking about it a couple times um they were actually really pumped. You know, I mean, I really positioned it and believed and and do believe. I'm like, all of these things that we've wanted to do that we haven't had the resources and we haven't been able to do, we're going to have we're getting help. I was just like, look, we're going to get help. Like, we're going to have a whole accounting department that can help us instead of it just being me, you know? We're going to have a whole HR department. You know, we're going to have a whole IT department instead of it just being Doug. Um, so yes, it'll be an adjustment, but yeah, I mean, they were okay. You know, honestly, we only had a couple people who were who didn't make it through who basically opted not to come along with us and, you know, I mean, I think out of our numbers, that was really great. >> Did you have to make any tough staffing decisions as part of the sale? >> I did. Yeah, we did. Yeah, as we consolidated things together and there was some redundancies, you know, so the CEO and I spent time, you know, I spent a lot of time with our org charts, you know, figuring out what the consolidated organization should look like. So, I mean, that's awful, you know, super awful. But, I mean, it is it is what it is. >> Congratulations. I mean, you do sound exhausted, >> so it probably hasn't completely set in yet. No, no, it hasn't. >> You do sound that way, but it's, you know, for all those CEOs who are not yet at that situation, it's an inspiration, right? I mean, for all the things you said, we work hard. Every business owner that's listening to this podcast, we work hard and to know that somebody else can make a decision and there's other resources, you know, and that you have the financial compensation for all those late nights, right? the times away from your your I think you have a son, right? Your son's time. The times where you had to work during vacation. >> Um it it's inspiring to hear this story so often. >> You know, we talk about how are we going to get out of this mess? How are we going to fix something? How are we going to create something? So, it's it's it's lovely to hear that you did so well and congratulations. >> A thank you. Amen. I >> Yeah. I >> I mean I really really really like I couldn't be happier. I And I will use the word Lauren. I mean I really couldn't I am so grateful. I can't even describe it like so grateful. And I'm just I'm even so grateful for this job, you know, a chance to like be around some like just really smart people and learn like how to operate and see what life is like, you know, in on this side of the fence. You know, I needed it. I needed something new. I needed something fresh. I needed like a change personally, you know, selfishly. Um, and I think the business needed it. You know, the business is going to be so much better. and I can't wait to like watch and see that happen and be part of it. >> Well, you earned it. >> Thank you. >> I want to talk about something else. A very different situation, but also dramatic in a very different way. Jennifer, you've had a lot going on. Tell us what happened to you. >> Two weeks ago, I was in the house when lightning struck my house and my house was on fire and basically it's standing, but everything inside of it burnt to the ground. So, unfortunately, like couches, paintings, all of that I don't really care about. But I have two kids. Every Christmas decoration, every Mother's Day gift, every painting they did with their hands, every Thanksgiving little turkey, all of that is gone. >> But everybody's okay, right? >> Everybody's okay. I got out. My smoke detectors. I did a um >> You were the only one there. >> I was the only one there. The smoke detectors went off as I searched through the house. Here's me thinking it's a problem to solve. I I thought the power went out. So, I'm looking to see how to turn off the smoke detectors until I smelled the smoke and I thought, "Oh, no." And then I ran out of the house and got I I called 911 and and um the very odd part of this is um as the firemen came, my daughter is in the fire academy right now and she volunteers at the local fire department. And who came but all of her friends. And so they were there battling the blazes, the flames coming out of my house. And I'm thinking, "Oh my goodness, I do not want any of my daughter's friends to get hurt on this." Right? Um, for those who don't know, something like 75% of the fire departments in this country are volunteers. So just remember that next time you call 911, they're not career firemen. >> Wow. And the hard part was, you know, as business owners, um, 5 days later, I had an annual staff retreat. I had 30 people coming, flying into Baltimore, and friends of mine had said, "Cancel it." Well, as CEO, you can't cancel something like that, right? So, I had to deal with the aftermath of of trying to I had jeans and flip-flops um as I walked ran out of the house with the smoke. That's all I had left in my name. And in five more days, I had to put together uh I mean, the savage retreat was mostly put together, but the buck stops with you as a CEO. And so I had to come to the place and and you know come to the hotel and come and talk uh present my financials to the the team you know the CEO type stuff inspire them to talk about the future and give them vision and hope. So uh in between talking to insurance adjusters talking to my daughter talking to my son trying to buy clothes trying to you know get anything I could in the meantime. It was it's been a rough couple weeks. >> Where are you staying? Um, we are staying at friend's house right now. Um, and we have a long-term rental coming up in the next few weeks. So, it's um, the interesting part too from a business side is if you're a remote company like we are, what your business insurance will cover versus what your home insurance will cover and where they cross over and where they don't. I'm sort of learning uh, learning some of that. Just trying to figure out navigate that path. I'm taking a lot of time off and my leadership has been really stepping up. Um, and people in the events industry and my clients have really been unbelievable to me, you know, sending me notes, sending me they sent me Uber Eats gift cards. I mean, just great support from my community. >> Have you learned anything through this process that you wished you'd known before all this happened? >> Um, I don't know, Lauren. I think I'm still in the midst of this chaos, you know. I don't think yet. I think ask me in like six months. >> I will. >> The one thing is if you're a business owner, you have a couple pillars of equity for your retirement. One, hopefully you have some sort of 401k plan. Two, your house, and three, your business. Well, when one of those house goes up in flames, you start to really think about your retirement, right? And how much equity is in the business. cuz I'm hoping my insurance pays for everything, but who knows, right? And so, you really have to your business, you put your life's work into this and you really hope that you'll eventually get the payout, right? Um, and because the same thing with my house, um, my house was nearly paid off. Nearly paid off. And we're so close to having it paid off with just a couple years and now it's inflame. It's smoking timbers. So, it's it's it's a hard thing to think about. Your financial security um sometimes can go up. >> All right. Well, my thanks to Mel Gravely, Jennifer Karen, and Laura Xander. Uh as always, appreciate you guys sharing your stories. [Music] One thing before you go, everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd, or by becoming a founding member and joining our monthly Zoom forum, where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the Morning Report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone. [Music]