Selling your Business with Brandon Kuchta

Live Oak Bank — Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle-market companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.

Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected]. 

Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.

If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to August directly at [email protected].

Oakbourne Advisors– Oakbourne is an independent retirement plan consulting firm that helps small companies design and implement great retirement plans for their teams.  Whether you already have a 401(k) in place or are looking to start one for your team, please reach out to learn more about how Oakbourne can set your people up for success in retirement at oakbourne.com/think.

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(2:31) – What was the business you ran and what was the process for selling it?

(4:09) – How did you know it was the right time to sell the business?

(7:03) – What advice did you get from other folks about selling a business and planning for life after the sale?

(8:27) – How long was it between deciding to sell and selling the business?

(9:25) – What sorts of things would you do to prepare to sell a business if you had a 2-3 year runway?

(13:12) – Would you run a business differently if you knew you would be selling it?

(14:39) – What made you decide to hire a bank to represent the company instead of going directly to buyers?

(16:18) – How did you filter which bank you would partner with?

(19:41) – What types of offers were you fielding?

(22:11) – What were the typical terms you saw for seller financing?

(23:38) – How did you think through rollover structures within offers?

(26:04) – What were some expectations buyers had if they wanted you to roll over some equity?

(27:48) – What was your thinking on a strategic sale vs. a PE sale?

(29:33) – How do you think about communicating the process of selling with different stakeholders?

(34:28) – What was the reaction from your team when you announced the sale?

(36:32) – What did the consulting agreement look like?

(38:41) – What is your role today?

(39:16) – How have you relaxed and decompressed as the former CEO?

(43:31) – What are your health and fitness plans?

(49:10) – What’s a strongly held belief you’ve changed your mind on?

(50:59) – What’s the best business you’ve ever seen?

Alex Bridgeman: It’s good to see you. I think a good place to start would be kind of describing the business you ran and then a little bit of the process of selling. We don’t need numbers, but just kind of like tell us a little bit about the business model, process for selling, and then that’ll kind of lead into some of your thoughts that you’ve developed around selling a business.

Brandon Kuchta: Yes, so the business I acquired with my brother was a niche laboratory equipment service business based in southeastern Connecticut. So in essence, the company has a fleet of field service engineers who travel throughout the country performing maintenance on various types of fairly niche pharmaceutical biotech equipment that’s primarily located in research and development labs. And we were very focused on really two different types of OEM branded products that are pretty ubiquitous in labs. So our company was really a leading independent service provider that was an alternative to the original equipment manufacturer for service.

Alex Bridgeman: Gotcha. And then how did you kind of connect with the eventual buyer? Did they reach out? And then was this a relationship you had for a while? Like, how did that start?

Brandon Kuchta: No. So we had hired a bank to represent us in the process. And luckily, we did have a referral from a few people a year or many- or a number of years older than us who had sold their search company. And they gave us a lead of a firm based in New York that’s pretty experienced in selling companies among other things, but they were a terrific advisor for us. And via that introduction, we ended up formally engaging them to represent us.

Alex Bridgeman: Gotcha, gotcha. Was there anything- Like what told you that it was time to sell? How did you think through, okay, this is the time to sell the business? Was it anything to do with market cycle, personal life, place in the business? What told you it was time to start looking at selling?

Brandon Kuchta: Right. Yeah, I think actually, it was the intersection of a number of those things. So when I think about search fundamentally, I really associate it very closely with autonomy. And I think, as a business owner, at any particular point in time, if you think that for personal or other reasons, something else is kind of calling you, and overtime running a business, you think that your efforts would better be expended somewhere else, that’s a good indication you might want to start thinking about a sale. So, for me personally, I was kind of based in New York from a personal perspective but was also running a business in southeastern Connecticut and then eventually north of Boston. We did one add on acquisition. And while it was an incredible journey, over time that definitely does demand a lot of your time and resources away from some of my personal engagements in New York, and I have a lot of family in the area that I wasn’t able to see quite as frequently. So, I did ultimately want to return to a bit of normalcy in which I kind of be grounded in one area versus constantly traveling up I-95 many hours on Monday and Friday every week. So that was kind of on the personal end of things. In terms of the company itself, we definitely had a nice multi year record of pretty strong growth in both businesses. And when you are a young entrepreneur and you bought a business and if it does, luckily, go according to plan, I think there is something to be said about having a sort of a positive outcome happen earlier in your career that you can, in some ways, perhaps leverage for future endeavors. So particularly too when basically all of your net worth is sort of like tied up in this one particular company, there is, particularly when we did sell, when the market is a fairly seller friendly environment, it’s something that after some time, you have to consider, I think, in terms of de-risking yourself and thinking about how you can use those assets sort of going forward. And then also, I think from a sizing perspective, it seems to me the inflection point in search is kind of once you have a business that goes above 4 million in EBITDA, that’s kind of a barometer wherein lower middle market private equity firms will start to be interested in those sizes of companies these days. Below that, it can be a bit more challenging. So once we also got to that point, it was increasingly something that gave us conviction about selling.

Alex Bridgeman: What kind of advice did you get from folks who you reached out to, just to hear their thoughts on timing of selling and thinking about it and planning, perhaps even starting to plan your life after a sale? Like what advice did folks give you?

Brandon Kuchta: Yeah, most people I kind of sought their counsel on early on were supportive of it. I think many people understood that I had an interest in doing further things in the entrepreneurial M&A world beyond running this one particular business in this one particular end market, and my interests span the gamut. Ultimately, I hopefully endeavor to be sort of a serial acquirer of companies and work across different industries and perhaps different companies, different geographies, all that kind of thing. So while it’s an incredible journey and opportunity to be a small business owner, at some point, if you want to do more things at once, it is a little bit constraining in that respect. So, understanding that most people thought it was a wise time to sell. And also, particularly in 2021, we’ve had, in the broader economy, a very long period of growth since the financial recession in 2007, ’08 timeline. So we thought probably that wouldn’t last into perpetuity. So, given the wider market dynamics, we thought it was probably a good time to sell and people realized the same.

Alex Bridgeman: How long before you actually sold did you start thinking about selling? And then what sorts of things did you do to prepare the business?

Brandon Kuchta: Yeah, I’d say, probably four to five months before we sort of kick started a search to find a bank to represent us, we sort of were thinking about it. We were groovy, the add on acquisition we did, we’d gotten to the sort of the earnings level we thought was appropriate. And also from a lifestyle perspective, we kind of knew that we wanted a bit of a change in our sort of weekly routine. So yeah, it was about four or five months before we then basically had the full conviction on it. And then we went about actually trying to find a firm to represent us. And that in itself can take at least a month, perhaps two months, to properly vet and interview some of the intermediaries who were candidates and receive some of their evaluation materials, have conversations with them, and find the best mutual fit.

Alex Bridgeman: I want to ask you about choosing a banker versus going directly to buyers that you might be interested in. But before doing that, like four to five months before selling a business, you might have time to do some things but maybe not have time to do others. If you were looking to three years down the road and wanted to sell at that point, what sorts of things would you do to prepare your business for selling in two to three years?

Brandon Kuchta: Yeah, it’s a good question. So I think a number of things. I think, number one, you have to almost put yourself in the buyers’ shoes and understanding that they’re going to be evaluating your business in the same way you evaluated that business a number of years prior. What are the kinds of things that they might be looking for? What attributes of the business do you think they’re going to really hone in on and make sure that those are sort of accounted for. So for instance, most of these companies, there’s quite a bit of operational things to improve in those first handful of years. So I think you definitely want to focus on improving operations in a way that can extract meaningful data from the company. So for instance, I definitely would be keen on trying to ensure that I’m tracking key performance indicators and developing some sort of dashboards, things like that, that whether it’s a weekly or monthly basis, you’re able to extract data from the company that will be important to ultimately socialize to a buyer who’s really going to want to dig deep and understand certain elements of your business. You don’t want that to be an afterthought, where you sort of have to go back in time and sort of recreate the data. It’s much better if you’re tracking it and developing the processes to do so real time and you actually have a few years of data to present to buyers. I’d say another thing is regarding personnel. Understanding that many buyers will evaluate your company differently and have different thoughts on how to staff the business on a go forward basis. If there are some key sort of gaping holes from a personnel standpoint, I think it’s important to try to fill those in and give those people enough headroom in terms of having worked at the company leading up to the sale. What you I think probably don’t want to avoid is an area where you really understand fundamentally that a few key areas of the business are significantly understaffed in terms of middle or even senior managers and then only hire those people a handful of months before the sale. Because from a buyer’s perspective, perhaps those people don’t have too much experience yet in critically important roles. So while they may have their own ways to fill those gaps, if you can have people who’ve been there for some decent longevity in meaningful roles in the business, that’s definitely a plus from a buyer’s perspective. And then I’d say whatever your sort of- whatever the central tenets of your thesis of what you’re propagating to the buyer about what are the opportunities that lie ahead, I think you need to do things that are sort of consistent with articulating that. So for instance, if part of your sale thesis is not just the organic business, but there are a lot of M&A opportunities and add on acquisitions to be had going forward, I think it would behoove you a couple years before selling to actually go out and connect with some of those potential prospects, develop communication with them, if you haven’t done an add on acquisition, at least get some to a fairly developed point, take notes on all these conversations, really canvass the M&A landscape so that you have some tangible content, so to speak, to deliver to the prospective buyer of here’s a potential runway of a series of acquisitions you could do that have been given some serious thought before the sale.

Alex Bridgeman: And then I’ve even heard some operators say that if they knew that they were selling, they would operate the business a little bit differently. Maybe there’s less long term project investing versus more near term kind of shoring up certain processes. Is that something you subscribe to? Or how would you run a business any differently, if at all, if you were going to sell in the next couple of years?

Brandon Kuchta: Aside from the things I just said, I think fairly steady Eddie. One thing I definitely would be maybe a little bit more attuned to is continuity of employees. I think if there’s a lot of employee turnover leading up to a sale, that can be something that is challenging. And clearly, you don’t want to hang on to people that perhaps are toxic or divisive culturally, but I think ensuring that your key managers are happy and genuinely satisfied in their job and really see the long term viability of staying at a company like that is important. So, whether you further incentivize people or you just have more frequent touch points with them to ensure that their job satisfaction is very high, that will go a long way to retaining your critical managers in a way that you’re not showing six months before the sale that three of your top five managers left idiosyncratically, and you may have been able to stymie that through communicating about their career prospects better.

Alex Bridgeman: Gotcha. Yeah, that makes sense. So moving into the banker versus direct to buyer conversation, what made you choose to hire a bank to represent the company versus going directly to buyers that you thought might be a good fit?

Brandon Kuchta: Yeah, so I think there are a number of things in relation to that. Number one is just from a bandwidth perspective, there’s a lot of work that goes into identifying potential buyers of the business. Potentially, in some industries, if there is a very natural strategic incumbent or there may be only a few of them in a very niche industry perhaps that you think would be very interested, it might be easier to kind of call those people up and start some dialogue. But I think for our business, it was unclear to us whether it would be a strategic or a financial sponsor. And given that we weren’t sure where the majority of the interest would lie, it was just it would be very challenging for us to really draw up what that list of potential buyers would be. And typically, if you want to make a process pretty competitive, you are reaching out oftentimes to a pretty large group of people on both sides, strategic and private equity. And I, frankly, just while I knew some strategics that might be natural fits that had companies or were companies in the laboratory equipment world at large, on the private equity side, I definitely would not have known where to start. And that’s where many of these investment banks can be extremely critical because they have great relationships with and have historically done many transactions with these kinds of firms.

Alex Bridgeman: And then what kind of criteria or questions did you ask to filter through which banks would be a good fit? Like what was important in considering what bank to go with?

Brandon Kuchta: Yeah, I think that’s interesting because at the outset, I wasn’t sure how important it was for someone to have healthcare experience. There aren’t many investment banks that specifically focus on the biopharmaceutical world or biopharmaceutical equipment service. Certainly, it’s probably too niche of a sector. But some did have pretty strong healthcare experience. And I was kind of uncertain initially how much I would value that versus my just sort of general conviction in the ability to execute timely. And ultimately, actually, we definitely did speak with some firms that had healthcare bends and perhaps had relationships with some potential strategics. But ultimately, actually, for us, I thought that more important was really just kind of the relationship with the senior individuals that would be running the process and the head relationship folks and people who had really kind of like a vested interest in ensuring an optimal outcome for us, whether it was reputation or having worked with other searchers from a similar business school or background. In my particular instance, I had a reference from searchers a few years ahead of me that spoke extremely highly of the firm we ended up using. And given that prior relationship, I had a lot of faith that they would sort of do right by that and ensure the process went as smooth as possible. So, at the end of the day, you definitely want to make sure a firm, the size of your company is in their bandwidth. I think working with a firm that represents much larger businesses perhaps would be suboptimal in the sense that they might not care about yours as much on a relative basis because their fees are going to be proportionately a lot less. But for me, it’s about execution. There’s so much that goes on in the sale process that it is a bit of a grunt in terms of populating data rooms and cutting information in many different ways for buyers and really adhering to the proposed timeline as it relates to the major milestones in that sale process. And when you work with a bank that really is sort of dedicated and committed to that timeline that they set at the outset, it’s a really nice feeling because you always just have peace of mind that the process is moving along at the speed that has been sort of socialized at the outset. You feel like you don’t have to be on them to execute certain things. And that ended up being the case. And in retrospect, I was very pleased that I picked a bank that while they didn’t necessarily have tremendous specific healthcare experience, their execution was absolutely top notch. And that really helped. You got to keep in mind here, when you’re going through the sale process, you’re also running the business at the same time. You’re kind of moonlighting with two wildly different roles. So to the extent you can economize on your time in terms of all the data requests and all the discussions with the prospective interested parties and actually make sure the business is moving along smoothly, that’s really helpful. And the bank can be instrumental in freeing up your time to actually work on the business and not spending the vast majority of your time on the sale process.

Alex Bridgeman: When you started to receive offers, after the bank helped put together all your materials, can you just share a little bit about what the types of offers you got were like? What interested you with some of the offers and then others? And what was the typical style offer that you received?

Brandon Kuchta: I’d say most offers were broadly similar structurally. There weren’t any super outliers in terms of requesting sort of things that would be atypical in a standard letter of intent. For me, the buyers who expressed a lot of interest at the outset and wanted in person meetings right away, that to me was definitely kind of an important test for people that I thought had real genuine interest in the business and would be the ones that would ultimately, probably be actually the most interested and want to move forward at a quick pace. So those in person meetings were very important. I think when you meet people in person, too, there’s that sense of trustworthiness, that human element that’s very important. And the people that I think resonated most with us definitely were people that were super high quality people, looked you in the eye, shook your hand, you just kind of felt like they would honor everything that they said. And that’s also important. Ultimately, at the end of the day, you can get as many offers as you want, as many purchase prices, but if you don’t close the transaction itself, it’s kind of for naught and actually can cause more disturbances to your business if you actually go through a busted sale process. And at some point in time, if you let employees know about it, and they think there’s an imminent closing and something goes awry, that can really derail things. So, I think you need to be very cognizant of who is going to actually close on this and hopefully on an expedited timeline. But most offers structurally were sort of similar in terms of there being a headline purchase price. And I think nowadays for lots of these private equity deals, there typically isn’t too much in a way of like seller financing or there’s some earn outs I’ve seen and things of that nature, but really the one thing I think you negotiate beyond purchase price is the amount of rollover equity in the business that you’re going to reinvest in the company and also the terms and really the length of the post closing consulting agreement through which you’ll continue to be a part of the company after you sell.

Alex Bridgeman: What are typical terms for the seller financing and rollover? Like what’s typical and what were you offered in terms of a range?

Brandon Kuchta: For us, there wasn’t seller financing. I think those are probably more common in sort of like search fund transactions when you’re buying a business at a little bit of a earlier stage in its development, when they’re smaller. I think for most seller notes, it’s kind of typical to be a five year seller note. Sometimes maybe you can negotiate interest only in the first or second year. I think in many search transactions, you’re trying to get the seller note to be somewhere between 10 and 25% of the purchase price, if possible. In terms of the rollover equity, I think my understanding is that kind of industry norm is that maybe in terms of the personal equity consideration that the searcher gets in the sale, that about maybe 30% of that would be reasonable to be asked to roll into the transaction. And then you’d obviously- it sort of aligns incentives in the sense that you have a significant ongoing investment in the company. And given that you’ve been an operator of this small medium sized business and have a lot of on the ground knowledge, you can help the next buyer to continue to grow the business, be a sounding board, maybe be on the board of directors, that kind of thing.

Alex Bridgeman: So even within like roll- you talked about evaluating different buyers and who would be most likely to close. If you have rollover equity, you also have to evaluate who’s most likely to actually have a successful exit since that’s now a part of your deal. How did you think through that with the different folks who offered some sort of rollover as part of the structure or part of the offer?

Brandon Kuchta: Yeah, that’s totally right. So in my particular instance, we valued cash upfront a little bit more than rollover equity in the general sense that it would allow us to then diversify the proceeds from the sale among other investments perhaps in the search ecosystem and other things that we had ideas to execute on entrepreneurially. But you’re totally right. I mean, you want to ensure that certainly, not only is the buyer someone who is a person of their word and going to transact quickly and make the diligence process digestible and not overly time consuming, but that they’re actually going to perform well. So yeah, I think you definitely want to ask questions about their historical track record and understand what areas they have been successful in in terms of industry and market. You should definitely feel free to ask them about prior deals, particularly if they have companies that while they might not do exactly what your company does, there are some adjacencies to it. Getting a sense of how those are performed is totally fair game. And I presume that most of these firms should be pretty transparent with that kind of information because it is sort of a bilateral courting process, right? I mean, they’re courting you, but you’re also courting them. And ultimately, these are people that you are going to be working with in some way, shape, or form for a number of years post transaction. And it’s ideal for you to always be on strong terms and even beyond the specified consulting arrangement, just be understood, you’re always going to take their phone call. You’d be happy to serve on the board if they asked you to. You want that kind of nice arrangement interpersonally. So you just want to make sure they’re people that you feel comfortable with from that social perspective. But yeah, you definitely do need to take into account particularly the more equity you perhaps have to roll, depending on the competitive dynamics or your personal proclivity for rolling, you want to make sure that that’s going to hopefully grow over time and be a source of income down the line once that firm sells.

Alex Bridgeman: What are some expectations that buyers would have if they asked you to roll some equity? Do they- If that happened, and that’s part of the offer, does that typically mean they want that previous owner to stick around in some advisory board capacity, actively work in the business? What do they ask you, and then what have you found to be typical?

Brandon Kuchta: So in terms of consulting period, the definitely standard, I’ve seen everything depending on the situation from as early as a six month transitional agreement to up to two years. If it does go beyond a year, year and a half, typically the time you’re required to work on a weekly basis will decrease over time. So definitely out of the gates, I think it’s very typical that you kind of like be working 40 hour work weeks, be physically present at the business if it’s a work in person kind of company almost as if you never left there for that first six month interval. And then you see, it’s oftentimes, I think, tapered down where maybe that 40 hours goes to 30 or 20 over time. And then after some other period of time, you can then start to work remotely. So it’s really up to you and the buyer to negotiate that. I think, generally, if there’s a strategic buyer, you’re likely to have a shorter consulting period because they are more likely to have staff and knowledge of the industry and people in their camp to pick up where you left off in a more seamless way. If it’s a private equity firm that may have not invested in this particular kind of business before, perhaps they want you to stay there a little bit longer and will be a little bit more reliant on you to distill more knowledge in that interim phase. So I think you just need to be flexible on that front.

Alex Bridgeman: And then so we didn’t talk about that. But what’s the- What was your thinking on comparing a sale to a strategic versus a private equity firm? How did they differ in your view?

Brandon Kuchta: I think a strategic, I think probably, I think we had a very sort of ordinary consulting term. I think, perhaps with a strategic, it could have even been shorter, potentially. I’ve heard instances, just anecdotally, where a strategic will buy a business, and basically, they don’t even necessarily want you there. And it’s not necessarily a personal thing whatsoever. It’s more just like they know what they’re doing, they’re experienced in the sector, and they want the employees of your former business at that point to really congeal around the new management team that they’re going to put in place. And oftentimes, it’s pretty typical for employees that you’ve worked with for many years to kind of be going back to you a lot because they’re just so used to working with you. And that can cause a little bit of a communication dynamic that’s not optimal for a buyer. So sometimes, it’s actually easier for them to sever that earlier than later and just have the understanding that those people, they’re great and all that, but they’re gone. And now we’re the new management team that is going to be taking the reins. For a sponsor, if they’re not as familiar with the industry, or even if they are, just from a bandwidth perspective, it’s often helpful for you to be on for a little bit longer and a little bit more consultative of a role in the organization post closing, even when you’re consulting. And I think it’s probably more likely for a sponsor to want you to be on the board going forward than a strategic.

Alex Bridgeman: And then you mentioned earlier that you’re kind of moonlighting two different roles, one managing the process but also still running the business. So in the running the business side, when you think of communication and who’s in the know, who’s not, I imagine a group like something like your board is probably pretty aware of what’s going on. But how do you think about communication of this deal process with your board versus key employees and managers versus kind of the whole team? What was your thinking on communicating different parts of the deal to each group?

Brandon Kuchta: Definitely, I think you definitely need to keep your board involved in this kind of thing. I mean, typically, in least most operating agreements, the board has to sign off on that. So you definitely need to keep them abreast of what’s going on in the sale process and even the initial decision to launch a sale process. As it relates to your employees, I think it’s challenging. I think at the beginning of due diligence, I think you almost have no choice to some extent, probably you might be able to get away with it until you have a signed LOI, but there forward once more intense due diligence begins, I think you have to at least bring in the senior person in your financial and accounting group. So for us, like a controller type person I think has to be part of it, because there is a lot of financial, there’s a lot of financial stuff they want to see and cut different ways and all that kind of thing. And it’s very challenging, I think, for that process to proceed smoothly without someone who’s in the thick of it, doing this stuff on a daily basis to get involved quickly. Also, they’re going to be dual tracking their own quality of earnings analysis and have their own advisors asking lots of questions on the financial side early on. So the idea of being the sole quarterback and not letting your controller know about those types of things seems to me very improbable. And even if you tried, frankly, to not do it, I think from- if all of a sudden, you probably haven’t been in your own QuickBooks file a tremendous amount and some of the relevant software systems that produce this data, if all of a sudden, you’re just asking a million questions about minutia details that you never would have asked before, they’re going to pick up pretty quickly that something’s going on. So, I think it’s better just to be straightforward with that particular person in your financial group sooner than later. As it relates to other employees, typically my instinct is to steer on the side of not communicating a sale to them until things are much more progressed. There are many reasons that a deal could die. And it’s oftentimes at no fault to anyone in the equation. It’s just that after learning certain things about the company, a buyer reasonably changes their mind about something, their initial thesis did not come to fruition. Perhaps there are, depending on the quality of your financials and what you’ve been articulating to the buyer, maybe there’s some discrepancy that totally, unbeknownst to you, they found. So, for all those reasons, a deal could just go away. And if you’ve just socialized your team upon signing the LOI or beforehand that you’re embarking on this process, it really does cause a lot of consternation and stress among the employee base at large. Oftentimes, people, even despite you potentially trying to allay their fears that nothing is going to change with their job, everyone is remaining on board, business as usual, many people might be skeptical of that. And what you don’t want is an ecosystem where everyone is fearing that some radical change is happening that they have no control over, and then they get spooked and try to look for other jobs. And you’d be shocked how quickly rumors and things can fly around these small businesses. So I think better to stay a little bit tight lipped about it until it gets towards the very end of the process. As the process evolves too, it’s very reasonable for any buyer to also ask to have some communication with some of your key personnel. So in that sense, you’re likely going to have to mention to some of your top managers what’s going on. But typically, you can structure that to be later in the process once things are much more formalized and you’re down to just kind of negotiating the last couple of things in a purchase agreement sort of thing. And there’s a lot of visibility to closing. At that point, you feel much more comfortable having a select group of people within the company knowing about the transaction and speaking to them about it with the buyer. But I wouldn’t typically tell- I wouldn’t really be an advocate of telling even the majority folks at the company until the sale is complete. And then once the sale is complete, you can have an announcement with the buyer and however they would like to do it. But then everyone can know once you formally closed.

Alex Bridgeman: What was the reaction from your team when you announced the sale to the full company? What was kind of a mix of reactions? I’d be really curious to hear.

Brandon Kuchta: Yeah, I think people took it in good stride. I mean, I’m definitely fortunate to work with a great group of people. Some people were definitely a little surprised or thought it was a little bit earlier than they expected. Maybe they expected it a few years away but not at that particular moment. Some I think weren’t really phased at all. It’s just sort of they’ve been in companies before that transitioned ownership. And some that have many times in prior jobs they’ve been at, and it wasn’t really a big deal to them. But credit to them, I think they took it in stride. They were very reasonable about it. And yeah, they did everything they were asked to in terms of the transition. It is always a little challenging from a interpersonal perspective because you do develop these, at least I was lucky enough to develop great relationships with some of my key employees, people who I deeply respect and still do to this day, and that part of it was always tough because some did know about it coming into the final bits of the sales process because they were incorporated into discussions with the buyer, but some didn’t fully. And you do feel a little bit strange about not telling people that you’re close with and work hand in hand with every day about it. And also, you just become friends with many of these people. So there’s an element of that friendship, while hopefully it can remain intact in some way, shape or form in the future, it’s not going to be the same type of relationship perhaps, and they know that there is a term after which you’re not going to physically be on site at the company anymore. So it can be a little bit sad in that way. But there’s also excitement about the path that lies ahead and hopefully the next level of the company that can be hopefully fruitful for everyone involved. So it’s a mixed bag of emotions, for sure.

Alex Bridgeman: Yeah, absolutely. Can you talk a little bit more about your consulting agreement? What was kind of the rough time period? And what did those kind of day to day responsibilities look like maybe at first, and then after three to six months, how did that start to evolve?

Brandon Kuchta: Yeah, for sure. So ours was kind of like down the middle, 12 months overall. But the six months, the first six months were the most weighty. So, I definitely spent the majority of my time working closely with the new CEO of the company. It was actually a very fun period of time for me. I enjoyed working alongside someone who was very smart, who I respected a lot, and you learn, honestly, it’s really an opportunity to continue learning from someone new and get a new perspective, a new angle on things, see how they leverage some of their past experience to implement new processes and procedures that sometimes you might be like, how’d I never even think of that over my prior four to six years being there. So yeah, the first four to six months were sort of normal business hours, but I was on site every day kind of thing, working hand in hand, and then being delegated any tasks that came up and trying to run those down. So really just at the owners and the new CEO’s request being flexible. I think that’s one thing you really got to be sort of available to intellectually and emotionally, it’s just you’re not the owner anymore. And it just happens like that. You close the deal and your role radically changes. You’re there to help support the new owners, the new managers, etc. And you really, I think, should just do what they say, do a solid by them as they’ve presumably done by you during the due diligence process and just try to be amicable and help them out as much as humanly possible. So yeah, the first four to six months were on site, normal business hours, that kind of thing. And then after that, it was more ability to work remote, and the responsibility levels tailed off as the new group got their wings underneath them and really understood the business and then took it from there.

Alex Bridgeman: And so then, what’s your role today? How much communication do you have today? Or is there- what’s the extent of your responsibility today now that that consulting period has ended at this point, right?

Brandon Kuchta: Yes, yeah. So I’ve continued to be on the board. But yeah, more or less now, it’s kind of going to a board meeting once a quarter. I’m always open to be an advisor in any way, shape, or form they’d ever want. But they’re totally self sufficient and doing their thing. So at this point, they don’t need me too much beyond some board help.

Alex Bridgeman: Gotcha, that’s good to hear.What’s the way so far that you’ve relaxed and kind of decompressed from being a CEO? Every CEO seems to have their own different kind of couple of months or couple years after selling that they either go on some spiritual trip or they relax on the beach for a little bit or just play with family and it’s kind of business as usual. What was your method for just relaxing?

Brandon Kuchta: So I’d say to start, even in a transition period, you’re typically, I guess, starting here, when you’re the CEO of a company, you often work a lot, and it’s just sort of in your DNA. You get outcomes of the fruits of your labor every day are so tied up within what you do. And I think once you get to that consulting stage, you kind of can appreciate the fact that my consulting agreement’s more or less a 40 hour work week, and you don’t need to necessarily be like pulling the long nights or working on the weekends and doing those kinds of things that you ordinarily might have. So, provided your actually fulfilling the requirements of your consulting arrangement, I would definitely encourage people to not be overly exerting themselves. You don’t need to be responding to every email at 11 o’clock at night or midnight, right? That’s not your role anymore. And you can do that stuff within normal business hours. So even starting right after the sale to try to incorporate a little bit of more healthy things in your life that perhaps may have been missing or subdued, so to speak, is great. So getting a regular workout schedule back in place if maybe that went adrift, diet, other kinds of things that during a stressful sale process, in particular, when you’re really working a lot to keep running the business and the sale process, getting back on track physically, mentally like that, I think is really important. Once I got more extricated from the consulting agreement and was back in New York full time and my responsibilities decreased, yeah, I think it really is important to take some time to enjoy life, and that can be so different for so many people. But for me, personally, I hadn’t spent as much time with my family as I had wanted over those years. So, it’s been more time with my immediate family. I have a number of family members who live in the Long Island area, some in Texas. Being able to schedule some trips with them was really, really important for me. In addition, I was only seeing my now fiancé on weekends for an extended period of time, particularly during the consulting period when I was definitely up there five days a week and getting back super late on Fridays and going out at the crack of dawn on Mondays, being able to spend more time with her was really important for me. Yeah, I was able to take on some new hobbies, some new sports things that I was interested in doing. I started playing a little more squash over the last six months, a little more golf and some of those things that I’d always said to myself I would take more time to invest in but never really had, I was able to avail myself of. And then yeah, definitely threw in a few fun trips, a couple international trips, things like that, that were a great way to spend time and see the world, which was much more challenging when you’re running a business with the intensity with which we did. Yeah, I think you really got to hold yourself to that standard. And as tempting as it might be sometimes to just jump back full throttle into the fray of things and alright, what’s the next deal, what’s the next deal kind of thing, you genuinely do have your whole life to do that. So in that very special moment, when you come out of that consulting period, I think you really got to assess your life and what your priorities are and if you’ve been living consistent with those or not during the last four or five years, and if you haven’t, really try to change the pie chart of your life. And it requires thought. It requires deliberate acts every day. It requires you to fight some of your instincts to perhaps keep working or working late at night or weekends that sort of ingrained in your DNA. But you got to start setting some boundaries in terms of work and personal and make sure you’re living a balanced life.

Alex Bridgeman: I hear the travel and the health one a lot. And it’s kind of interesting, too, because you now have a lot more financial security either to choose what you want to work on or not work at all, if that’s what happens, but also, this tremendous amount of personal freedom that’s really opened up that you haven’t had for many years. With the health one, I hear that one a lot. Are you going to- like in six months if we have another podcast, are you going to be ripped and just in the best shape of your life? Any thoughts there?

Brandon Kuchta: It’s all in the eye of the beholder. But no, I mean, I definitely have taken my- I definitely have been trying to prioritize working out. For me, I played sports since I was a young kid and really enjoy athletic activity. So squash is something that, for me, I really sort of picked up more in the last six months. And I absolutely love it. It’s the combination of I love racquet sports in general, but it’s also just an unbelievably incredible workout. So I think my cardio has definitely improved drastically just from that alone. But yeah, I’ve always enjoyed physical activity. For me, it’s very cathartic mentally, physically. I think it actually helps me focus better when I am working and helps regulate my sleep better, which was something during the first couple years in particular of this entrepreneurial endeavor I was not doing well on the sleep side of things, due to ordinary course stress and other things on my mind. So, for me, exercise is like very, very important. And I think while- this is kind of backtracking a little bit, but when you’re a CEO of a company, you can say you’re going to work out after work. But so many times you show up to the office, and a million things hit your plate that you never would have expected. And there’s a million fire drills, and you oftentimes can’t fully control the trajectory of your day. So I think one thing I did not do a good job on was establishing a morning cadence of workouts that you can at least control the timing of, because oftentimes, after a long day, you’re just so beat, and as much as you are well intentioned to go work out, it just is the last thing on your mind when you’re so depleted of energy. So yeah, it’s been fun for me to be able to do some of these things more consistently than I have. And now that I’m not physically working in an office, I can also do some of these things like during the day, at noon or 2pm or at times when many other people are working. So while this won’t last forever in my life, there is this nice little window that you should, I think, take advantage of and try to do those things that are holistically helpful for you.

Alex Bridgeman: Yeah, definitely doing errands at odd hours like 2pm on Tuesday, definitely been there before. I worked on the podcast full time after getting married until this past March. And I remember like my favorite time to go grocery shopping was like Monday at 9:30. That was the absolute perfect time. Absolutely nobody is there. It is really quiet. I love doing that. The health piece is really interesting especially exercise, and I agree, like afternoon, there’s just so much that’s piled up at the end of the end of the day that I don’t really feel like I can take the time at the end of the day to work out, so morning tends to occupy that time. Do you think that’s a habit you could have developed as a CEO but just didn’t prioritize at the time? Or do you think that’s just something that life as a CEO just won’t allow that most of the time and that’s just kind of a fact of life you have to work your way around?

Brandon Kuchta: I think sort of intermediate there. I think it is a little bit harder when you’re a CEO because you just have so many tugs on your time each day, so you’ll be incrementally maybe more tired than in prior jobs. But I think if you’re disciplined, you can. You can just kind of suck it up and say, alright, I’m going to be at the gym at 6:30, 7:30, something like that, shower, get into the office, and I’ve seen other people do it much better than me and who are doing it very consistently while they’re a CEO in a stressful job. So I think it is attainable. I tend personally, I’m just not great in the morning. I’m not a morning person by nature. So it’s a little bit harder for me. But I think with discipline, you can do it.

Alex Bridgeman: It’s interesting you mentioned that you tend to focus better if you exercise that day. I find the same thing. So I wonder if for the CEOs who have stronger morning exercise routines with a healthy diet, if they find that they have stronger mental clarity throughout the day, or if your emotions are more balanced, and you kind of take hits a little more gently than you would otherwise. I wonder, have you found that to be just anecdotally something that’s true across CEOs you’ve met or talked to or know?

Brandon Kuchta: I think so, yeah. In my limited experience, I do think so. I think people, if you can get a good morning workout in, a good sweat in, I think it brings almost like a feeling of equanimity, of stability kind of, and you’re able to address things during the day with a little more poise. And that level headedness, I do think helps you make better decisions, but also when things are going a little bit awry potentially in a day to take them with a little bit more a sense of calm that things are going to be fine, and just to step back and let’s think rationally and sort of battle through this without getting too flustered.

Alex Bridgeman: Yeah, absolutely. My first closing question for you is around beliefs. What’s a strongly held belief you’ve changed your mind on?

Brandon Kuchta: Yeah, so as it relates to business management, I think that when I got to ATG that personalities are malleable and that even if there were certain people there that perhaps were a little bit toxic culturally or wouldn’t sort of play by the rules in certain areas, that you could fix those kinds of things. And to my chagrin, that proved to be not the case, I think, in a lot of instances. So, I distinguish that from like skill set development. I think that there are certain people that have a lot of potential that are being under optimized for any number of reasons – they are in the wrong role, or they don’t have certain skill sets that you can help them develop over time and really become a better performer as time evolves. So, I think you can absolutely, as a good CEO, motivate people and help them to perform their job better or expand our skill set and perform other areas of jobs better. But from a fundamental personality perspective, I think that the people who very early on are clearly demonstrating that they are less likely to abide by your employee handbook, for instance, and do things in a timely manner and sort of just the basic nuts and bolts of sort of respect for employees, that kind of thing, I think it’s harder to change people to act as a team player, have that mindset. And that’s where you might have some tough decisions early on about who stays and who needs to go.

Alex Bridgeman: Yeah, that makes a lot of sense. That’s a similar kind of theme we’ve heard through the podcast, too. That’s definitely not just you. What’s the best business you’ve ever seen?

Brandon Kuchta: So I’ll say, without naming a specific business, I do think that the kind of business we were engaged in but more broadly speaking, independent service providers on sort of niche mission critical equipment in certain end markets, whether they’re laboratory, health care. I’ve seen a couple businesses that service certain industrial kinds of equipment where the maintenance schedule on them is mandated by things like OSHA requirements, those ones where there is a lot of predictability where sometimes- where they’re very important or fundamentally important to whatever process is being done at that company. And where you have original equipment manufacturers that have a significant amount of the aftermarket service share but are a little bit perhaps asleep at the wheel and taking a lot of time to get on site and disappointing customers and charging a fortune. Those are really good opportunities where an independent service provider with strong technical acumen can come in and disrupt that market and take some market share. And oftentimes, those businesses have things like contracts where customers are signing up for one or a multi year period. Oftentimes, you’re billing them upfront, so there’s good cash flow dynamics. So for many reasons, I like those kinds of companies.

Alex Bridgeman: Yeah, Crane Tech is a good example of one of those. We had Eric and Austin on podcast a while ago, and they certainly have a business that’s kind of like that, too. And I think they rebranded. I told them to let me know when I can buy a t shirt from them, but I don’t know if that’s happened yet, so it’s a good reminder to send them a text.

Brandon Kuchta: Yeah, absolutely. Their business is terrific, and those guys are great. So 100%.

Alex Bridgeman: Yeah, that’s a fascinating one. Well, thank you so much for coming on the podcast. This has been really, really fun to chat about selling your business and all that. There’s so much here that we could keep going on. But I really appreciate you sharing your time. It’s good to get to chat again.

Brandon Kuchta: Yeah, likewise. Thanks so much for having me on. Pleasure.