Finding a buyer for Killer Shade was relatively easy. Closing the deal — and getting paid — was a whole lot harder.
Mike Campion had built Phoenix-based Killer Shade up to more than $3 million in sales and $700,000 in profits when he decided he wanted out. Killer Shade was in the business of constructing shades and awnings for playgrounds, patios and parking garages. They did large, profitable jobs but city hall paid slowly and Campion was always stressed about cash.
Campion was able to find a buyer and agree to a price, but that’s when the problems started.
At the age of 22, Mike Campion used his life savings to create his first business. Mike persevered, tripled the business, and within three years sold it for 3x what he had paid. He used the proceeds to buy his next business, Killer Shade.
Killer Shade exploded and was sold for a 7-figure payday. Mike then went on to start a car dealership, which grew to over $4M in revenue in its first year. Realizing how much work the car business was, Mike sold the dealership in 2014 for another 7-figure deal and turned his focus to helping other small business owners become not-so-small business owners.
About Killer Shade
- The business was based in Phoenix, Arizona and sold big commercial shade structures for pools, schools, and playgrounds.
- The average project was around $100K and the projects included a lot of government and contract work.
Focusing On One Thing
- At first, Mike had an awning fabric company and he had five tiny businesses, each doing about $500K each.
- After his divorce, Mike decided to focus on big commercial shade structures.
- Mike found that having one big business was better than having a lot of little businesses.
- This approach might be counterintuitive for some people who believe it’s better to have lots of diversity.
Prior to Selling
- Killer Shade was on track to do $3-4M revenue and was doing $700-800K in profit.
- The business had the huge competitive advantage of being right in the middle of the competitive landscape.
- There were two or three $60M companies that had hundreds of employees, and the biggest project Killer Shades had taken was about $1M.
- There were also smaller companies that couldn’t handle a $500K project.
The Trigger Event
- The company was small enough that Mike still had to deal with the contractors, city managers, and architects.
- Killer Shade would do $100K of work one month and bill for it the following month, but would not get paid for an extended period of time due to the lengthy approval processes with the architects, the city, and other players.
- If you have $1M in receivables, that figure is $1M in profit that, as you keep growing, you won’t realize until you sell it.
The New Lifestyle
- Mike is now doing consultant work where he doesn’t have to build offices, inventory, or employees.
- He helps entrepreneurs build their businesses and lives vicariously through them.
Divorce and Business
- The divorce had a role in shaping the outcome but not the desire.
- Mike was all about business but neglected his family in an effort to provide for them.
- If you lose the family, then the money means nothing.
Selling the Business
- Mike used a business broker to sell the business.
- It took a year to 16 months from first speaking to the broker to completion.
- There was a number Mike was interested in, but he wasn’t desperate; so if he couldn’t get the number, he was willing to continue to run the profitable business.
- The number was driven by what he thought the business was worth, and the multiple was close to 3X.
- The only person Mike met face-to face with, and the only person that came to the shop and met the employees, was the ultimate buyer.
- Once the contract was closed, it took 3-6 months.
Lessons From Selling
- Make sure to have two years of solid books.
- When people try to hide money from the government, they end up hiding money from the buyer.
- The bank and the buyer want to see the profit and clean books.
- When under the contract, work hard to make sure the company is more valuable than before.
- Until the check clears, it is your business, and you need to make it as valuable as possible.
- The best place to be is where you don’t need to sell the business.
- There weren’t a lot of sticking points that didn’t involve the bank.
- Mike gave the buyer a recommendation on what working capital was needed.
- The buyer took over the receivables. This was part of the dispute.
- The deal was that everything that was billed before the buyer took over, Mike would collect; and everything billed after, the buyer would collect.
- The only thing that could have been done differently was to write a tighter contract.
- The buyer wasn’t allowed to meet the employees until the check had cleared.
- The only animosity was that the employees weren’t told ahead of time.
- The concern was the changeover, but Mike stayed on for the transition.
- The buyer wanted Mike to run the company during the transition.
- Mike encouraged the new owner to start selling rather than focus on previous work.
- The post-sale didn’t go well, as the buyer stopped paying Mike.
Links to Resources Mentioned
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