Ep 493 Exit Story: Selling a 20-Person Agency for 5.5x EBITDA
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Hi there, and welcome back to another edition of Built to Sell Radio, the podcast designed to help you punch above your weight in a negotiation to sell your company. I'm the executive producer, Colin Morgan.

And today you're going to hear a bit of a different story. Most of the stories we cover are about spectacular exits, headline grabbing multiples, life changing windfalls. But those stories can give a false sense of what's typical. This week's episode is different. Jeff DeGarmo co-founded Cubic, a marketing and web development agency that grew to 20 employees and more than $4 million in revenue.

After 16 years, Jeff and his partners sold the business for five and a half times EBITDA to a public company. Now, it wasn't a flashy deal, but it was a profitable one. And in many ways, it's more of a realistic example of what selling a service business actually looks like. Along the way, Jeff shares how they structured their partnerships, what it looked like negotiating with a sophisticated buyer, and how one expected twist after signing the LOI changed the outcome of the deal. But

Without further ado, here is Jeff DeGarmo. Enjoy. Jeff DeGarmo, welcome to Build to Sell Radio. Thank you. Happy to be here. Yeah. So tell me about Cubic. How did you get into the business of marketing? So it kind of, I guess, happened by accident, to be honest with you. I was in the Navy for about eight years, a naval flight officer.

About the time that the Internet started to get big and web design looked like something that was pretty interesting to me. And so I stopped to do that while I was in the Navy. And then when I got out, I decided to forego the typical contractor route that most officers and the military go to.

post separation and just kind of followed the web development path and ended up at an advertising agency. Literally, October 1st, right after 9-11 happened. I was a three-month contract to hire. I was their new web developer. And by Christmas time, right before New Year's, obviously, that time, marketing, advertising, all kind of

went away and so they let go half the agency. So I was back out on my own doing web development. I actually ended up

With my business developer who hired me on the contract, he decided I'll go out and continue to get business if you'll do the work. And we literally rented 100 to 125 square feet in the basement of the ad agency that we had just gotten fired from and continue to do all the same work for them just as contractors. And that kind of allowed us to do our own thing.

for the next two years. Like I said, that was 2001. And did you guys formalize it at that point? Did you put like a, like a share ownership agreement in place or was it just on a handshake? It was still just a handshake deal. He went out and got the business and he's like, okay, and we would co-pitch together. So, you know, that part of the deal was there, but in terms of did we form an entity together? We did not. And what eventually happened is that we were getting some good work and we

Like I said, he was business development. I was kind of more coding backend, not much design. And we actually partnered with another entity that had three partners. It was more focused on the design side of things and kind of how we really kickstarted into Cubic, which was November 2003, is that our three groups independently came together and

and did a website with a custom content management system for our local Chamber of Commerce and Convention and Visitors Bureau. We built that out and a lot of people were like, when you guys work together, you guys do some great stuff. And so we got the idea, well, maybe we should formalize this. And that was the inception of Cubic.

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Wow. So you've got five partners. Did you guys each go 20% each? 20% each. There are five partners, one employee, other than the five of us, probably started out with 90 to 95% web development. And for whatever reason, Tulsa has one of the most respected and largest chambers of commerce in the country. And after we built their content management system, which this was pre-WordPress, people weren't doing these sorts of things.

They kind of gave us an in with a bunch of chambers and commerce and CVBs around the country. And that's kind of how we started. We did some obviously upfront project work. And then it was a kind of a maintenance and service agreement on the CRM side or the content management piece. And we worked everywhere from Jacksonville, Florida, Beverly Hills, California, on chambers of commerce and CVBs.

You guys became the gurus at Chambers of Commerce websites. That's really funny. Talking about a niche within a niche within a niche. No kidding. But it allowed us to kind of have some of that recurring revenue, which all business owners want to find. And that kind of ran the business and really allowed us to...

Have the, you know, the cash flow to maybe do some other things that were a little bit more exciting. And, you know, over the next 16 years, we grew into a full service ad agency, pretty much doing everything but PR and did some copywriting in-house. But, you know, copywriting is pretty specific. So we even outsourced some of that based on the topic and the type of content that needed to be written.

But yeah, the inception was 90% web work and then that just came a piece of what the agency did long term. How big did you get this company 16 years on? Like how big were you when you decided to sell? So when we sold, we were right around 21, 22 employees. At that time, we had four partners. We'd gone from five to three and back up to four.

And, you know, revenues were north of $4 million total. And so it was a good sized business. And, you know, we were trying to figure out how do we get from, you know, $20 to $50. Kind of our goal was like $50 seemed like a good sweet spot. What was it about $50 that seemed like the right spot for you? I think, you know, from a...

It would allow us to work with bigger clients. Like we wanted to work on big advertising agency of record type of accounts. You know, we could do that with local companies and we did some, you know, across the country as well, but yeah,

A lot of times when you're bidding on projects with kind of the bigger clientele and the ones that everyone knows about, they want to know how big your team is. And a team of 20 is not going to satisfy, you know, Nike or Adidas. Not that we were ever going to get to that level, but it's like that was the vision is like, you know, how can we work with these big brands? And what's going to require some size and some capacity and the skills and expertise? And that wasn't going to happen with 20.

Walk me to that sample. So you're north of 4 million. Profitable? What would your margins look like? Even margins at that point? Yeah, I'd say probably about 20% plus margins. Yeah, I'd say, you know...

When we sold, our revenue, like I said, was North Forman. We were about five and a half times EBITDA. So I felt like we got a good multiple at that time. But yeah, our goal, like I said, was to grow. And one of the reasons we decided to go to market was we felt like we had reached the limit of our ability to grow organically. And initially, it was just how can we find an investor, which is all we went to do.

the market looking for to help us grow. There was not an intent at the outset to sell the business outright. Interesting. So you were like, let's go find an investor to help us go from 20 to 50 employees. Right.

Walk me through the difference in your mind. When you were looking for an investor, what was on offer? Were you all prepared to give up a little bit of equity in return for some cash? What was the ideal scenario for you? Yeah, the ideal scenario was probably when we first started talking was a minority investor, but we were all willing to give up equity equally.

to, you know, allow that investor to come in. And we were looking for someone who obviously had the network, which I think is being in Tulsa, Oklahoma, you know, we're not in the big time advertising and marketing markets. So, you know, we were looking for an investor that could come in with a little bit of money to help us grow from, you know,

new hire standpoint, really more than anything. But really we want to tap into someone's network that has kind of been in the business for a while and could connect us to the types of clients we wanted to work with. And so were you looking for...

When you say an investor, were you looking for someone that owned a marketing business that already had connections? Or were you looking for just a deep pocketed local resident that knew the Oklahoma business scene pretty well? I think the preference was, was it that time? I mean, even at that time, we were...

We had quite a bit of business outside of Oklahoma throughout the course of Cubic. So it was more someone that had the network connections within the advertising and marketing world, not necessarily someone who just had money to throw at us. We wanted that kind of expertise and knowledge and the network that made sense. I don't know that we would have just accepted someone that came in with the right amount of money that wasn't going to provide more than money.

Right. Because I'm looking at this and how much of the business were you willing to give up? How much were you hoping to attract? At that time, I think we had talked about, you know, we might give up up to 40% just depending on the, you know, who the investor turned out to be.

And how much of the business, uh, how much, uh, were you looking for that 40%? How much cash were you opening? At that time, I would say that we, we probably didn't know enough to even guess what that number was. Uh, we, we did, you know, end up using, uh, the brokerage firm, even to look for the investor. I mean, we've told them at the outset that, you know, that the goal is not necessarily to sell outright. Um, we would like to retain some equity. Um,

You know, at that point, we talked about, you know, still that five, five and a half multiple. And then, you know, willing to give up 40% or whatever that looked at to be. Got it. So, I mean, round numbers, you're four million, more than four million in revenue, 20% even in margin. So let's just round numbers, a million bucks times five. So you think the thing is worth around five. Right. And you're willing to give up 40% of that. Yeah. A couple million bucks would have bought it.

40%. That's kind of where our head was at the start. Ish. Okay. Got it. That's helpful. And, and was that, you know, a lot of people approach the market saying, Oh, we're looking for an investor when really they want an acquirer. But it sounds to me like you actually did want an investor. You didn't want to give up majority ownership. I wanted to find an investor, not an acquirer. That's correct. That's correct. And even at the end of the day, when we started getting interest, um,

you know, several of the people that we ended up talking to. And I'd say we probably met in person with seven or eight. The interest was far more than we thought it would be. Ended up with multiple LOIs and some of those LOIs included retained equity, not to the not retaining 60 percent. But that was still part of the piece is like, OK, if we're going to continue, because all of us wanted to continue work together.

None of us were like fed up with the advertising and marketing world and were retiring. That was not the case. All of us were like, let's do this in a way that we can continue to work with whoever the acquirer is or the investor. And so we looked at offers that were, you know, 100% to ones that were more like 80% was one of the LOIs that we looked at.

I want to get to that. But before I do, though, so there's five partners. You're all equal partners at this point, 20%? Yeah. So at that time, we were down to four. But yes, all equal 25% partners. 25% partners. Okay. And you know what it's like in service businesses. Sometimes if you've got a pretty cash-efficient service business, you can withdraw a bunch of dividends. Yes. You're making a million bucks give or take. Are you putting a quarter million dollars in your jeans every year? So you're...

You're basically already paying yourself or is the business thirstier than that? In other words, you're not able to kind of dividend out all that money. You've got to kind of reinvest. I would say we were...

Fairly healthy. I would say somewhat conservative part of my role, even though I was more on the technical side and my title was a chief technology officer. But I also did all the financials and so ran it pretty efficiently. But, yeah, we did the typical. We were an escort. So we had about a 50 percent split between our W2 salary and the regular distributions that we'd give ourselves. And then based on the performance of that year, there might be another distribution at the end of the year.

But yeah, I would say that, you know, we were easily taking a couple hundred grand out of the business each per year, which was nice. And, you know, to add on to that, the same four partners that were at the end of Cubic also did.

created a property management company and bought the building that we operated out of. So we were also paying ourselves lease rates to another business that we own together to, you know, build investment that way as well. Interesting. And did you all have the conversation as a leadership team, as an ownership group? Hey, why don't we forego

the extra kind of compensation, stick with our base salary and grow without selling equity. Like, was that a conversation that you all had amongst yourselves? Because you're clearing 200. But maybe you take home 100 and reinvest the 100 to grow. Was that a conversation you all had? I think because...

Like I said, four individuals, everyone's at different places in life, too. It wasn't like we were all the same age and kind of all going through the same things.

It made it harder to do that because if one person had that idea and they were okay with it, the others were kind of already living off of their lifestyle. It was already matching up with what they were taking home. So it was harder to go backwards. But I know exactly where you're going. And that's one of those things looking back, I was like, that probably would have been...

a smarter path. But again, even if we would have gone that route, reduced what we were taking out of the business and reinvested it,

I think we still would have missing the piece that we wanted the most, which was someone with connections and someone who had experience in the network that could give us advice on how to grow it. Yeah, I guess we could have used that money to go out and pay someone to do that. But I thought we wanted someone that was a little had a little bit more skin in the game. And so you went to the market looking for an investor and you had a lot of interest. Did you walk me through? Was everyone looking to buy the business or were there some, in fact, people willing to take a minority investment?

Yeah, I would say there were a couple that were OK with the minority investment approach at the beginning. And like I said, I think we had lots of people express interest. We ended up kind of vetting through and actually met in person with, I think, roughly seven or eight of those of the seven or eight that we talked to only one.

Two of those were kind of open to not purchasing everything outright. And the one that ended up did submitting an LOI, he was only leaving us about 5% equity each in his final LOI. So at that point, we were like, we had kind of already turned the corner that

OK, this is maybe worth more than we thought it was, because I think when we initially started talking about investor, we didn't realize maybe what we had within the marketplace. We didn't expect the value to reach the level that it did. And I did, you know, kudos to the investors.

The brokerage firm that we're using, you know, they found a lot of good options for us to talk to. And so I think we quickly kind of thought, well, if we can sell this and work into some sort of long term employment agreement where we continue to get to work in the business and continue to get to grow the business, but we kind of get a cash out. We became open to that. So at that point, we were like we told the brokerage firm we're willing to look at any and all offers regardless of equity.

Okay. And how did their approach change when you made that declaration? I think it allowed them to say yes to a lot more people that may be on the buy side that, you know, the buyers that they were vetting allowed them to allow us to talk to more people, I think, because they weren't excluding people that maybe were like, well, we just want to buy the whole thing.

You mentioned you sold for five and a half times EBITDA or thereabouts. What was the range of value people were putting on the business? You talked to several potential acquirers. Were they all around that five, five and a half? Or was it a fairly wide range? I would say for the ones that we actually talked to in person, they were all pretty close. But I would say on the low end, we had the typical...

People that believe that every time is 3x EBITDA. And so we had anywhere from about three to six. That's kind of the range of discussions that we had. And what were the terms that you agreed to? Walk me through that.

Cash versus earn out versus equity role. What did you ultimately agree? So the final LOI that we accepted and we ended up with two literally the same week. So we got to kind of look at them side by side. Like I said, the one that we ended up not going with was about us retaining 20 percent equity and it was a lower multiple value.

But like I said, it allows us to retain some equity and growth opportunity. So kind of that dream of the second bigger exit down the road was, to be honest, that's where my mind was. But then the other, although I was a public company with deep pockets that they weren't going to get a loan. And the final structure of that deal ended up being roughly 50 percent cash up front and about 50 percent in an earn out.

Okay, so they were paying five and a half, of which they paid 50% on 50% on earn out and they earn out tied to probability revenue. Yeah, there was a couple different, you know, metrics in there, primarily to, you know, revenue, profits, and then there was a couple bigger clients that were kind of tied to that as well. Retention type things.

Got it. And so what was it that made you decide to go with that deal for the public company five and a half times 50% cash upfront versus the other deal? I would say, you know, from the discussions of the four of us, like I said, I was probably leaning a little bit more towards the company where I'd retained some equity, might get a future bigger exit down the road. But I think just the safety maybe of the public company, you know,

kind of swayed the votes that way. How are they planning to treat you as employees?

So initially, all of our employment agreements were basically in the same roles that we had because all of us were 100 percent in the business day to day, all in completely different roles, which was that was one good benefit of four owners was that it wasn't like we were we all had the same skill set. It was for truly unique owners that brought different things to the table. So in that regard, it helps.

For owners, it's always hard to make company direction decisions, though. But yeah, at the end of the day, we retained our same titles, three-year employment agreements. And then those employment agreements is where the earn-out was built into. And it was a three-year earn-out? Yes. Okay. How did it go? Well, for me, I quickly learned that...

Being an employee owner of a 20 person shop is much different than being an employee of a thousand person public company. So I actually had my employment agreement bought out nine months after we were sold. So we sold in April 2019 and December 31st was my last day.

What does that mean? So one of the, one of our concerns with putting the earnouts and employment agreement is like, well, what if day two, they decide we're going to fire everyone. So we put some metrics in there that, um,

provided some protection to both of us. So it allowed them the opportunity if things weren't working out that they could let someone go, but they couldn't get out of necessarily paying them what they would have been due via the earn out if they had stayed. So the earn out was, like I said, written in a way that you still received a portion of it regardless of how you left within those first three years.

Okay. It was obviously less than the full earn out if you left early, but you didn't just lose out completely. Do you mind sharing what proportion of the earn out you were entitled to? It was roughly 50%. Oh, okay. So not bad. Yeah. It wasn't bad. Yeah. Yeah. So, okay. So let me see if I get this straight. So 50% cash up front of closing and then your employee, you hated that. And you're like, there's another bogey out there that I could, if I stuck around, I could maybe...

But I could get half of that if I just bailed now. Yeah. And I think my particular position was a little bit different than the others. The other partners, one was business developers. So critical.

critically important. One was the chief creative officer. So he wasn't going anywhere because they specifically bought our business because they needed the branding and messaging and creative aspect that they didn't already have within their business. And then the other one was kind of the branded messaging. So they had critical roles and were leading teams. I kind of was the

the handyman, so to speak, where I led the development team. But I also was, I mean, I acted as the CFO, I acted as the COO, did accounting, payroll, all the HR stuff, you know, even to the point of, you know, putting a PO in place. So I kind of managed all of the more administrative and operations tasks, which when you get bought by a public company, they have those people in spades. So a part of me,

My decision was also kind of seeing the writing on the wall. The roles that I fulfilled would not be hard to replace with people they probably already had there and people that already had long-term tenure. Now, I will say that one of the good things that we did negotiate is that because we got bought into a public company that had tenure and things like that, we maintained our 16 years tenure within the new company.

Right. So I don't know what it's like in Oklahoma, but that would entitle you, I think, to some severance if they like. Yeah. And so that was part of kind of the whole the earn out document kind of included that within there. Got it. Got it. Well, I appreciate you sharing all the detail. It's really helpful. Again, a lot of listeners would be very similar. They're in service businesses. They might have a partner to and try to stick handle services.

this is tricky, especially when there's partners at the table. Were you all generally in agreement or it sounds like maybe there was a little bit of, I don't know, dispute might be too harsh a word, but maybe a bit of disagreement at the stage of selling. Walk me through and maybe take me inside some of those conversations. What were they like amongst the ownership group as you evaluated? Yeah, I would say in terms of like,

The feelings about specifically the two people who submitted LOIs, I think in general, we both liked the people in the companies behind those offers quite a bit. It really came down to more personal situations and what each person felt like. This LOI served their individual goals more than this LOI did. So we had...

Pretty good conversations about that. And like I said, we've... The four...

Three of the four partners have been together since the beginning. The one that we added had been there six or seven years. So we knew each other pretty well. And we'd done a lot together. And, you know, in terms of being able to work together at the partnership level, we actually did a pretty good job. Like most people are like surprised that four partners could get along as well as we did. I mean, sure, did we have disagreements, but it's disagreements on like, are we going to track time or not track time? I mean, stuff like that. But at that level, you know, I think we had a pretty good,

great personal understanding of what where each person was in their lives and was important to them and you know we were all of the mindset that we're going to evaluate each offer we'll talk about the offers the pros and cons and then we individually come to the table with a vote and that's basically how we did it it was unanimous vote and um i was gonna say was it a unanimous vote uh well it was i should not say uh

I was pretty much okay with both of them. I probably...

Was like I said, leaning more towards the retained equity piece, but it wasn't hard for me to see that the others were, I mean, they were more very heavily leaning on the full buyout and there was no point in standing in the way. So, you know, if we were to actually like hold a vote, I may have started the first round of voting with voting for the LOI where I retained equity. But at the end of the day, it was, it wasn't a bad, neither one of them was bad. And so it wasn't like,

critical for me to really push in that one direction. Would I have liked it more? Maybe. It's funny. We talk a lot about this idea of if you're going to partner with somebody, it's ideal if you can kind of be at a similar stage and age with your partner, uh,

I did an interview last week with a guy who's quite significantly younger than his 50-50 partner in the growing business. And so they're writing to the wall that the older partner will want to leave soon. That's going to put him in a tight spot because he's going to have to effectively buy him out. Whereas similar, we've talked about situations on the show of

in the past where you've got one partner who's very wealthy and another partner who is more the operator. And of course that creates all this tension because the operator wants their brass ring. They want their shot at financial independence. Whereas the wealthy, you know, investors are like, I'm going to be meaningful to me. Right. And so it creates this natural tension in the deal. If you're not at sort of similar stages. Yep. Agreed. Yeah.

Interesting. Interesting. Well, I appreciate you sharing the story. Are you up for a quick lightning round of questions that I usually ask everybody and you get to just get a quick answer? Let's go for it. I'll do my best to be quick. You've been great so far. Okay. So you talked to a bunch of potential acquirers, some minority, some majority. What was the slimiest trick someone tried to play on you to prey on your relative naivete about the process? Gosh, I don't know. I mean,

I don't really feel like anyone was necessarily sliming. I will say that, you know, even the one that we went with, because they were so sophisticated, we were the fifth company out of seven they ended up buying to kind of build the business they were trying to build. They were obviously able to present information, had inside-outside counsel, had inside-outside CPAs.

just at a level that was maybe above our heads. And to be honest with you, probably above our broker's head in some situations, even though they were a pretty big firm. So I don't know that I was initially at Slimy, but there were some nuances that we probably didn't understand in the way that they looked at the financials that maybe we could have done better for ourselves, specifically within the structure. Because the earn-out piece actually came...

You know, that was like right. I mean, we had talked about a lot of things and it was right at the end, like right before, right at either the final LOI or right after we signed the LOI. It's like, OK, we're going to move some of this to earn out. So I would say that just the structure changed in a way that maybe we weren't anticipating. And I think it's just because of the sophistication of the buyer compared to us. So let me get this straight. So they got you to agree that.

to a price five times you know whatever you know in that in that range and then after you agreed they kind of changed the yes because initially we were thinking you know the five times five and a half times multiple was an all cash deal and then the the earn out piece kind of came after we had kind of agreed that theirs was the direction we were going to go so we kind of felt a little bit

I mean, obviously, you can always go back to the table pre-closing, but we felt like we'd gone so far down the road that we kind of just saw it out to the end. In retrospect, knowing what you know now, do you think that was disingenuous? In other words, they kind of always were going to play that card. They just chose not to tell you until you were sort of a little further along? I mean, looking back at it, I...

I would say they probably knew what they were doing and that was always kind of the plan. And my guess is because that's how they had done it with the previous companies that they had bought. And they had both them all pretty in pretty quick succession. So, so my guess is that that was, that was always in their playbook, whether it was playing one or two or three, it was up there though. Yeah. Yeah. It's a,

It is a bit disingenuous in the sense that it would have material likely changed your perception of the other offer. Right. Had you known it was just a 50% upfront, that might have made the other offer look more attractive in retrospect. For sure. Yeah. Interesting.

You were kind of alluding to it earlier, but I'd be curious to know if you had one mistake that you might be able to do over or a mulligan, as they say in golf, what might you do differently if you had it to do over again? Probably push back, like I said, on the structure of the deal. I don't think we knew enough about different ways that a transaction could happen from a structure standpoint. So, yeah.

Putting so much into earn out, it could have been as simple as, well, let's do 70% upfront and 30% in an earn out rather than splitting it the way we did. So I would say that reducing the amount in the earn out would have been the first thing or potentially even going the route of seller financing versus an earn out with... Sure, maybe we can put some sort of forgiveness clause on part of the seller financing, but

Um, at least in the situation like I, who left early seller financing would have stayed and I would have still benefited from that as opposed to having that earn out tied to an employment agreement. Um, that even though it was my choice, you know, at the end of the day to, you know, have them buy my unemployment agreement, I would, I lost that whereas in a seller financing situation, I might not have lost that money, even though I left.

Yeah, yeah. But it doesn't sound like in this case, it was a matter of them struggling to come up with the cash to public trade company. It sounds like they were trying to kind of defer or lessen some of their risk. Yes, definitely miscritication on their part. Yeah, yeah. And did they come clean in that? Like, was there something that happened during your negotiation, some material thing that they said, hey, like,

we're going to pay you cash, but now that this thing has happened or you missed your goal here, this target was missed, therefore we're going to make it an earner. Was there some justification for their decision? I think as we got into a little more understanding about the nature of our agency of record agreements and how long they were, and because at the end of our cycle for about the last four or five years, we had

quite a bit into the niche of destination marketing and placemaking. And we're really working with cities and counties and tourism agencies across the country from New York to Texas to the West Coast. And so we're

Because those are kind of city and county local government related, they were usually, you know, one year agreements with some sort of renewal clause. So I think that part of the earn out was related to the long term earnings.

uh, viability of those agreements we had in place. And some of them are pretty big contracts. And so it was like, well, if these don't hit, that's what a lot of the KPIs were turned, you know, were connected to. And that earn out was, uh, revenue goals. And some of them tied to some of the bigger agency of record agreements we had with these local city County government entities. One of the most common things I hear on the show is just how emotional both

on the high side and the low side selling a business can be, what were your highs and lows emotionally? Um, the lows, I think in, I wouldn't say this is like super low, but just the, as the deal kind of changed and I felt like it went, you know, less and less in our favor. Um,

You know, part of it was like, man, I should have stuck to my guns on going with this other LOI at some stages. So I'd say, you know, from a low standpoint is like, did we make the right decision? And the highs were just it was exciting. I learned a lot. I actually came to love the whole due diligence and learned a lot about the M&A process so much so that that's what I ended up doing after I left.

So I'd say that was a high, just kind of a lot of good self-reflection that kind of led to my next career. And it was exciting to think that, you know,

It was always a big responsibility for me to be responsible for 20 other people's livelihoods and their families and how they paid their bills. But then to think back and say, okay, we built this business from literally nothing from the days that I pulled money out of my own personal checking account to pay payroll in the early days, just so we could continue to operate to selling something for five and a half times a pretty healthy EBITDA. So that would, I'd say it's the high.

Did you buy yourself a trophy to commemorate the win? Trophy. What did I do? Gosh, I don't even know that I did. I was so focused on what was next that I don't know. I didn't really buy anything specific. I think I really just reinvested it, to be honest with you. Let me give you permission now to go out these years later. Now, I will tell you that I did...

I kept the money because I, especially when I kind of saw the writing on the wall that I was probably not going to be staying for the three years. I always knew. And part of that was like, I'm just not built to be an employee. I've never really, other than my time in the Navy, I've really never been an employee before.

So I knew I was going to do another business at some point. So in the back of my mind, it was like, I just need to keep this money. So when it comes time to invest in something else, and actually I ended up investing in some, a couple of franchise locations, which oddly enough timing in two days, I'll be selling those.

Oh, wow. Congratulations. That's awesome. Were there any resources that you turned to for sort of learning about the M&A process as you're going through this? Were there courses, lectures, YouTube channel, like anything you can point our listeners to that might help them get ready to go to market? You know, at the time, it would have just been just some

online research into, you know, industry multiples and things like that, looking at other businesses like ours. But in terms of actual resources, we relied pretty heavily on the opinions of the brokerage firm that we used. So, you know, looking back, that's probably something that's

probably should have spent a little bit more time looking at. Now I did look at a lot of different ways to value companies, trying to make sense of how they were valuing was to see if that made sense compared to the way the brokers did it. So, but in terms of, you know, resources out there, at the end of the day, finding a,

A good broker for most people is probably the best resources. A broker you can trust that has the experience selling your type of business in the markets that you want to sell in. You know, that's a pretty critical.

Yeah, yeah, yeah. I often say you wouldn't sell your house without an agent. I mean, most people wouldn't. Of course, there are some Fizbo sellers out there, but it's your biggest asset. It's an emotional sale. So having an advisor...

an M&A professional or broker, I think makes a ton of sense. So that's great. Where can people learn about you now? What are you up to now that you've sold? Now you're selling in the franchises. So I'm assuming you've got even more time on your hands. What are you up to now and where can people find you online? Yeah. So, you know, like I said, I kind of fell in love with the process. And, you know, I mentioned that my...

exit from the Navy into the advertising and marketing world was great timing right after 9-11 happened while I exited into being self-employed again in January, February of 2020, right as COVID hit. So it was kind of like perfect timing. And at that point, I was like, you know, I'm just going to continue to do some consulting with some friends and family and former clients. And

past clients and kind of did that and actually got into franchise coaching because I had a friend who was in my CEO roundtable group that had a franchise system with about 160 franchisees. And so she connected me with some broker network. So that was kind of my first step into consulting in the entrepreneurial space was helping people look at franchises that might be a good fit for them.

Over the course of 10 months, I found one that was a good fit for me and started a couple locations in 2021. What franchise did you buy? What's that? What franchise did you buy? Stretch lab location. So assisted one-on-one stretching. I've heard about this. Similar to physical therapy, but not with the...

Not with doctors, it's just more of a maintenance and injury prevention and flexibility, mobility, just more of a way to improve your life along the way and allow you to function better within your daily activities. So I really kind of love the health and fitness space in general. That was just a personal passion. So it allowed me to start a business in that space, which I've enjoyed. And then along the way, I got into...

coaching, so helping small business owners figure out how to grow and scale their business for a future exit, just like I had done, whether that's two years or 20 years down the road. So I kind of enjoy helping businesses there. And along the way, I kind of said, well, this business brokerage thing looked like a lot of fun and gone through all my coursework to get my CVI and do valuations of brokerage for a brokerage firm out of Rochester, New York. So

So basically, I kind of serve the entire gamut of the entrepreneurial space. And even my volunteer work is with an organization called Owners in Honor, which is an entrepreneurship through acquisition space. And it's really helping veterans from learning about entrepreneurship to helping them develop a buy box, buy a business, and then help coaching them through growing it to a future exit. So kind of like a... Say the name of that again, Jeff. Entrepreneurship through honor?

It's Owners in Honor. So it's started by a veteran in the Special Forces area. And like I said, we're focused on the ETA path to business ownership and just helping veterans navigate that path from beginning to end. I've heard a lot of talk about...

getting into ETA, entrepreneurship through acquisition or buying a business because it plays to many of their strengths, right? Leadership, discipline, the ability to kind of manage people, all different stripes and different walks of life. And so some of these businesses are where there's a management component

Oftentimes people who have military service are in a great spot to run. I'll check that out. Owners in honor. And where can people learn more about you, Jeff? Are you a LinkedIn guy or Instagram? Definitely on LinkedIn. But I do have a website that kind of talks about all the different entrepreneurship areas that I work in. And it's just simply jdegarmo.com. J-D-E-G-A-R-M-O.com.

Awesome. And we'll put that in the show notes along with your LinkedIn profile, owners in honor, and some of the things we talked about today, all at builttosell.com. Jeff, thanks for doing this. All right. Appreciate you. And there you have it for today's episode with Jeff DeGarmo. If you enjoyed today's episode between John and Jeff, be sure to hit that subscribe button wherever you're listening to today's show. As a reminder, you can watch this full video interview online.

Over at our YouTube channel at Built to Sell. For show notes, including links to everything referenced in today's episode with Jeff, you can visit his episode page over at BuiltToSell.com. There you're going to find show notes for all the links mentioned, plus definitions for some of the more technical terms.

that were used. Now, if you know of someone who'd be a great fit to be a guest right here on the podcast, you can nominate them. You can head over to builttosell.com slash nominate where they're going to have a chance to nominate yourself or someone else to be a guest right here on the show with John. Special thanks to Dennis Labataglia for handling today's audio engineering and thank you to our community of certified value builders who help us bring our message to you. Our advisors are experts in helping you build the value of your company. To get in touch with one or learn how to become one yourself, head over to valuebuilder.com.

I'm Colin Morgan, and I look forward to talking to you again next week.