Brokering Your Business
Fresh-Start Business Brokers helps sellers reset their priorities
After 16 years of owning Clear Creek Mechanical LLC in Henderson, Colorado, a commercial HVAC business, Brad Ramig began entertaining the idea of selling his business, but he wasn’t sure where to start. He didn’t even know what price the business might command. So, when one of his employees expressed interest in buying, he was hopeful, but feared the financials might not meet a bank’s loan requirements. However, all those concerns were addressed when Fresh-Start Business Brokers Principal Brian Conaway reached out to Brad.
“I was at a point in my life when I thought it might be time to sell,” Brad says. “I was 56 and it was time to move on and pass on the business to a younger generation. With a location in the Denver area where we have a great business environment, the company was doing well profit-wise and I thought ‘now is the time.’ Brian had contacted me a few years prior, and he’d touch base about twice a year. It just happened that at the end of 2016, I decided this might be the right time to see what the company was worth.”
Gearing Up for a Sale
Brad and Brian connected in early 2017 and started gathering information to provide a value on the company and start the lengthy sales process.
“One of the things I liked best about Brian was that he qualified the buyers and eliminated a lot of the tire kickers,” Brad says. “It takes a lot of time to give facility tours after hours and answer all of a prospective buyer’s questions. Brian weeded the pool down to eight potential buyers.”
For more than 12 years, Brian has represented owners of privately held businesses with revenues between $2 million to $20 million in the construction, manufacturing, distribution and service sectors. His role is to help owners navigate all the steps involved in selling their business, both financial and emotional, he says.
“Nobody decides to sell their business,” Brian says. “They decide to reset their priorities, but don’t always know how. Whether they are retiring, taking the proceeds to invest in a new business or shifting away from the business owner role to focus on one of their other life roles like spouse, parent, son/daughter, etc., I help them understand their options and build the roadmap to what’s next. Most of my clients are Type-A personalities, and they’re accustomed to people coming to them for answers. This can make considering a sale really frustrating because they don’t know who to turn to or where to even begin in their personal-reinvention process.”
The business owners Brian works with are usually first- or second-generation owners who know how to run and operate their business, but don’t necessarily know what it’s worth or how to run the business to make it attractive to a buyer.
“In business there are three buckets: sales and marketing, production and operations, and finance and accounting. Every owner is usually good at one and struggles with the other two,” Brian says. “I spend a lot of time talking with them about whether or not they should sell or can afford to. Everyone likes to focus on the money in a sale, but that’s the easy part. Every owner has a significant part of his or her personal identity tied up in the role of business owner. It takes a lot of effort and courage to stop doing something they’re good at to have the time and resources to focus full time on what’s important to them now. That’s where I come in.”
Brian represents the seller and gets paid a straight commission. However, he says, he tends to spend 75 percent of his time with buyers qualifying them, listening to them and making sure they have what it takes to buy, run and grow the business. He may talk to more than 50 potential buyers before closing the sale.
Pairing Buyers & Sellers
For Clear Creek, Brad had an employee, Froy Olmos, who had been with the company for 12 years and knew the business but didn’t have enough money or all the skills needed to purchase and run it, Brian says.
Another potential buyer, Josh Rosenberg (now the Clear Creek CEO and owner), was already a business owner and interested in the company. He had a background in construction but not HVAC. So, Brian met with Froy and Josh to discuss the idea of the two of them forming a partnership to buy the business.
“Banks like inside buyers because they know the ins and outs of the business,” Brian says. “They know the equipment, the employees, the vendors and the customers. I put the two together and they formed an LLC, and I assisted them in securing the financing, suggested some language in their articles of organization, and even encouraged them to retain Brad’s accountant to help in the transition. I use my experience in other deals to try and think like MacGyver to anticipate what could derail a deal and get ahead of it.”
“Generally, in deals like this, the broker is solely on the seller’s team,” Josh says, “But Brian was helpful in giving us advice and helping us as well as the seller. His fiduciary duty is to the seller, but he provided wisdom, advice and things to look out for.”
Josh found Clear Creek on a website where Brian had listed the business. Josh was impressed with the company’s financials and its honest people. “It was a good fit. My bank didn’t want to lend on the deal, so Brian recommended lenders who got the financing done for us,” he says.
As part of the deal, Brad agreed to stay on in an advisory role with Clear Creek for a year after selling. “The first three months were tough, but having me stay around not only helped the new owners learn the business, it also reassured the employees. That was important to me because most of these people have worked for me for years,” Brad says.
During the transition, Brian advised the new owners about what to expect and how to deal with any speed bumps they encountered along the way. “He advised us not to have Brad continue with his daily duties, but instead to help us learn and take over his role,” Josh says. “He also advised Brad that no one will run your company like you have, but you have to learn to let that go.”
Brian, who is also a licensed real estate broker, says 90 percent of businesses listed for sale never sell, and 90 percent of buyers who look for a business never buy one. “I have sold each of my listings because I focus on two things: I work to get everyone on the deal—sellers, buyers, bankers, accountants, insurance providers, leasing companies, landlords, etc.—to understand each other’s point of view. I try to think through everything that the buyers and sellers need to do to get the deal done while optimizing the deal terms so it works for everyone,” he says.
“Most buyers do not have a broker, so I try and help them understand the business and any critical-path issues, as well and address any questions they have. If I do my job right, the buyer, seller and banker all grow to trust me. This is the key to my success, because at the end of the day, my reputation and my integrity is all I have,” Brian says. He adds, “Success to me is a year after the close the business is doing well and the seller, buyer, banker and I can have dinner, and everyone gets along and feels they were treated fairly.”