Hosted by John Warrillow
Part of building to sell is knowing who you are going to sell to, otherwise you may end up growing an entire appendage of your business that an acquirer will neither want nor value. Take Northern Lights as an example: after selling to Cool Brands, they immediately sold or shut down the 60 company-owned stores because they wanted Northern Lights’ wholesale distribution channel – not a bunch of expensive retail stores.
Part of building to sell is knowing who you are going to sell to.
If you don’t start thinking about your potential buyers list early, you may end up growing an entire appendage of your business that an acquirer will neither want nor value.
Take Northern Lights as an example: Michael Glauser started Northern Lights to offer low-fat frozen yogurt through a growing wholesale distribution network of stores selling his desserts. At the same time, he built up a network of 60 company-owned stores under the Golden Spoon brand. The company-owned stores were expensive to start and complicated to manage.
Glauser went on to sell Northern Lights to Cool Brands International for five times net income. Cool Brands turned around and immediately sold or shut down the 60 company-owned stores because they wanted Northern Lights’ wholesale distribution channel – not a bunch of expensive retail stores.
During our interview, I couldn’t help but wonder how much more Glauser and his shareholders would have gotten for their company had Glauser figured out what a buyer would value and then invested all of his limited resources into building his brand and its wholesale distribution channel from the start.
Creating a list of potential strategic buyers for your business is something we’ll do during Module 11 of The Value Builder System – get started for free by getting your Value Builder Score.
About Michael Glauser
Mike has extensive experience as an entrepreneur, business consultant, and university professor. He is the cofounder and chairman of My New Enterprise, an online training and development company for aspiring entrepreneurs. His is also the founder and former CEO of Golden Swirl Management Company and of Northern Lights. Both companies were sold to CoolBrands International. Mike has consulted with hundreds of startup companies and large corporations in the areas of business strategy, organization effectiveness, and leadership development. His clients have included Associated Food Stores, The Boeing Company, Department of Workforce Services, Esso of Inter-America, Syntek Global, Max International, and USANA Health Sciences.
Mike is currently the Executive Director of the Clark Center for Entrepreneurship in the Jon M. Huntsman School of Business at Utah State University. He has published numerous articles in magazines and three books on entrepreneurship: Glorious Accidents, The Business of Heart and Main Street Entrepreneur, which chronicles his 4,000 mile bicycle ride across America to interview 100 remarkable entrepreneurs who have successfully merged livelihood and lifestyle in places they want to live. Mike has appeared on Great Day America, First Business from Washington, Voice of America, Good Morning Chicago, Bloomberg’s Business News, and Associated Press Radio. He received a Ph.D. from Purdue University, and BS and MS degrees from the University of Utah.
Some Highlights Of The Show
Business: Golden Swirl Management Company and Northern Lights
4:09: “When we sold we had about 60 stores in the Western United States and we were shipping the product across the country and even over seas.”
5:00: Selling to grocery stores, hotels, casinos, stadiums, arenas and restaurants.
6:35: “I continued to say no, that was the essence of our business, our unique [proprietary] product.”
6:55: “[After a few calls] I thought you know what? We can spin off a new business, the Northern Lights brand came out of those conversations.”
8:57: As a capital intensive business, it became hard to create value. “We shifted from large retail stores to small grocery store kiosks… I could build a little kiosk for $30,000 and it would do the same amount of revenue as a big store that cost $150,000 to $200,000 to build.”
9:45: “We can scale significantly without the need for capital… we made that transition about 5 years into the company.”
11:45: “We would have regular taste panels… we were very confident in any taste test we would win 70% to 80% of the votes.”
12:55: “We had about 60 retails stores, we had some licensed stores, and we had thousands of wholesale customers. We were doing about 12 to 13M in sales… exceeding $1M in net income.”
14:01: “We weren’t out looking for a buyer… as our brand reputation kept growing.. we had buyers just show up and say they wanted to buy the company.”
18:00: Financing the business.
22:00: Cool Brands and Mrs. Fields submit offers to buy.
25:30: “We started to flatten out a little bit, we are a specialty food. There was always concern, how long was it gonna last.
25:42: More than 5 times EBITA and an all cash offer.
27:20: “By this time I had left the University [teaching], 10 years later I felt I had the academic credentials and the real experience… to go back and be credible.”
29:15: “Unless you find a big company to buy you your not gonna see those [6,7,8X] multiples… it was fair, we felt good about it.”
30:05: “They didn’t want to own retail stores, in fact all of their stores in Canada were franchise units… They wanted the product and distribution.”
31:50: The acquirer wanted to enhance the financial value & opportunities for their company… so they bought us.
32:20: “I would have gotten the partners onboard a bit better… said, hey do we want to sell this, when do we want to sell it, what do we want to sell it for, whats a fair offer, who would be a good buyer?…
32:35: “We may have done better if we had done more planning for the exit.”
34:49: “I paid myself the same as [the executive team].”
36:00: There is nothing more powerful than an entrepreneurial team.
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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.
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