I sold my largest business, BerylHealth, a health care call center company, a couple months ago. I co-founded the business nearly 28 years ago, so the decision wasn't easy, but I felt it was right for my employees, my company, and my family.
This wasn't my first time to the acquisition-suitor dance, however. In 2003, I was approached by a competitor. After a couple of months of discussions, I walked away from the negotiating table because I felt that the investment bankers were not honest with me.
In 2009, I decided for the first time ever to seek outside capital. The business had grown significantly, and I had a tremendous opportunity to accelerate that growth in the health care industry. I had recruited a group of senior managers who were chomping at the bit to take advantage of that chance. I had also diversified my own time by writing and speaking about culture and employee engagement, so everything seemed to be lined up right. I went through the process of hiring a banker, putting a pitch book together, and conducting management presentations.
Then, I signed a letter of intent to sell 85 percent of Beryl to a Chicago private equity firm. But during the due diligence, I quickly realized that the business model of private equity executives (which essentially requires them to flip your business in five to seven years to make money for investors) was incompatible with Beryl's culture. So I walked away a second time.
I worked out a new plan, which included me putting money back into the company, and maxing out a line of credit. But I was on a journey I could largely control. Then, about a year ago, I was approached by a public health care company called Stericycle. It's primarily in unrelated services businesses, but had recently gotten more into patient communications, and was very interested in bringing Beryl into its family.
I resisted at first. But then I opened up to the idea when I realized that Stericycle had a completely different perspective on Beryl's business and its future--in a good way. For example, because Stericycle was new to the patient call center industry, it trusted and would rely on Beryl to help grow this new segment. Stericycle gave me credit for all of the investments I had made, and trusted the plan I had for the future. It also valued my people--from management on down--as essential to upcoming success. Stericycle not only respected Beryl's culture, but considered it a model that could be rolled out to more than 12,000 employees in 12 countries.
So I sold BerylHealth in November. Not only has this sale proven to be a good decision so far, I can now reflect on--and impart--the most important lessons I learned along the way:
1. Go with buyers in it for the long haul.
Stericycle entered patient communications because it recognized the opportunity to make a big difference in health care. Of course, the financial prospects are important, but Stericycle believes in a bigger purpose. I found private equity firms to be focused much more on a short-term financial return, which could force decisions that are not in the best long-term interest of a business.
2. Due diligence is validation, not renegotiation.
Stericycle sent a large team to Beryl during the due diligence process. But I can say that it was a reasonable and fair process. The due diligence team was here to learn Beryl's business, validate the numbers, and start building relationships with my team. When I went through a simliar process with private equity, I found the executives were distrusting of Beryl's numbers and projections, and were looking closely for opportunities to lower the purchase price.
3. Find suitors whose values jibe with yours.
When I met with private equity folks, they drove fancy cars, ordered expensive bottles of wine, stayed in high-end hotels, and had marble countertops lining their offices. That might be impressive for some, but did nothing for me.
Stericycle has had tremendous financial success as a public company and made people a lot of money, but its employees don't flash it. The Stericycle business development guy picks me up in a Honda, its executives stay at the Marriott Courtyard just like everyone else, and the corporate offices are non-descript.
4. Humility is huge.
The private equity people talked about how they respected Beryl's culture, but I could tell it wouldn't survive if Beryl didn't hit certain financial goals. It's just not the way they're wired. When the newly-appointed CEO of Stericycle met me for the first time, he admitted that while the company had great success and a customer-centric model, Stericycle didn't have as much employee focus as he would like, and asked for my help. That attitude goes a long way.
5. It is all about the people.
As I began to interact with the Stericyle team members, I liked them. They seemed like down-to-earth hard workers who care about each other and their company. I'm naturally drawn to people who would help me and my company grow.
6. Know what matters most to you.
Above anything else, look for partners who can help you achieve whatever your dreams are beyond the dollar signs.
It's unfair to stereotype or generalize about the differences between strategic and financial buyers. I can only tell you what I learned during the courtship process to help inform your decision-making and relationship-building. Sure, I'll face challenges as I integrate Beryl with Stericycle, but I'll go into this next chapter feeling I have been a good steward to my employees. They're the reason I got into business in the first place.