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Doris Valade On How To Create A Successful Exit (#012)

Steve Wells: [00:00:00] Welcome to the Sell My Business Podcast. I'm Steve Wells. 

Jeffrey Feldberg: [00:00:06] And I'm Jeffrey Feldberg. This podcast is brought to you by Deep Wealth. Are you thinking about selling your business? Well, you better know that you have one chance to get it right and you better make it count. Let the Deep Wealth experience help and guide you to increase the value of your business before you sell.

Steve Wells: [00:00:27] Today, our guest is Doris Valade, a seasoned business operator who has recently sold her business. In doing our pre-show interview with Doris, we were really interested in some things that you want to listen to. For almost every entrepreneur. I'm always excited to hear how they got started and in Doris' case. she'll tell you about how she bootstrapped the organization, which always is nostalgic because Jeffrey, you remember, you know how we, we started, and it’s almost like the famous Steve Jobs in his garage kind of thing. We, everyone has those stories and I always love it when people share them.

So, we'll look forward to hearing your story, Doris, on that. But a couple of other things that I want you to address and I know you're going to talk about, but the amount of preparation and research and how you looked, Doris, when you were trying to figure out. How to educate yourself on the sales process.

Of course, your errors along the way. We all make them and we only way we learn is from each other. And that's why we do this. you know, as entrepreneurs we're kind of independent Cowboys and you know, we've got to stop sometimes and slow down and realize a lot of what we can do to improve and transform our business and our lives is going to be when we do things like this and we get advice and help from each other.

What, what was important to you that you want doors to address, Jeffrey?

Jeffrey Feldberg: [00:01:49] Steve, you've covered some terrific points and Doris, again, thank you for your time today and just being so open with us in the pre-show. Two things that Steve, I'd like to see us delve into for our listeners. Doris, you are, obviously successful because you're smart.

And you picked up early on that most business owners in our experience at Deep Wealth, they just don't get, and we'll talk about this with you of how you realize that the loyalty of your advisors was to themselves first and to you second which is just brilliant. That's a page right out of our book.

And I admire how you learned early on how you have to protect yourself from day one. 

Steve Wells: [00:02:32] So Doris, why don't we just jump right in there and, start at the beginning? How did it all begin? 

Doris Valade: [00:02:39] So I started Malabar Super Spice in 1982 in a small 5,000 square foot warehouse. The company initially was set up by my parents for my brother.

However, three months in, my brother quit because it was a new company. He had no idea what to do, and he said, it's going to fail. And so, he overnight quit. The reason the company was set up initially is my parents had a company called Modern Butcher Supply which was a equipment company providing large equipment to the meat and poultry industry in 1956 so they sold smokehouses injectors, all kinds of large equipment. But every time my father sold a piece of equipment, the customer would say, well, where do we go for spices and seasonings?

So that's where that opportunity came up. There was a need. It was identified and Malabar Super Spice was created. So, when my brother quit, I said, okay, I'll do it. I actually went through university to be a doctor. So needless to say, I'm not a doctor.

And so, I jumped in. Malabar Spice was down the road from my father's business. I was in a small little warehouse. I did the shipping, the receiving, the accounting, the blending. I did everything, cleaning the toilets, milling the peppers.

So, for the first few years, it was part time because there is no school of spice. I had to learn everything. And I remember contacting McCormick at the time, trying to buy spice for my blends, and my orders were too small. They told me to go away. So that's been one of the core philosophies that I've taken forward in business is that no customer is to small customer may pay more for our product, but that we would never turn away a small customer because all of us had to start somewhere.

Jeffrey Feldberg: [00:04:20] You bring up an interesting point. It sounds like you're a bootstrapping. right out of the gates. And you know, since then the environment has changed and, up until recently, anyways, money has been all too easy for many entrepreneurs to get. And, and they've been sold this vision of, Hey, start a company.

You will, we'll fund you all the way. Don't worry about profits, don't worry about customers. And at one point you'll sell it, then you'll retire rich and happy. And which goes against everything of what true entrepreneurial-ism is. What were some of the, the blessings that they came out of bootstrapping?

Had you received all the money that you would have wanted in the beginning so that you could have put that big order through with McCormick and they would have dealt with you by not having to do that by being the, the janitor to the board of directors to customer service, fulfillment, and CEO of the company.

How did that transform your future? 

Doris Valade: [00:05:14] There are so many, so many lessons learned there. because I took it all on, I had to learn it all from the very beginning. So, after 35 years, just before I sold the company, there wasn't any one job in the company that I could not do or did not fully understand.

So, for example, in production, if they told me they couldn't do so many blends in a day, I knew how many blends you could do in a day because I've done them so. It gave me a perspective and an understanding of every role in the company. That I would not have had had we fast track the growth of the company and had to me bring on a blender and accountant earlier. profit margins, suppliers. That one on one also allowed me to build some very close relationships with our vendors over 35 years to the point where I could go to them for just about anything. If you end up with too much money right out of the gate looking at profit margins, that's one thing we have in 2008 was that our actual profit margin was too low.

We had gotten lazy in looking at our pricing on our products, and over the years we were making money. We just assumed everything was rolling and we lost sight of that part of the costing. So, in 2008 we raised pricing on all of our seasoning blends. As I recall, I think it was around 6% not a single customer complained, which means we were below market value against our competition.

So that was another lesson is if you grow too fast, you don't have the opportunity to learn what the foundation of a company needs in order to sustain that growth and to expand. And those are the fundamentals of costs, expenses, building your team. So, we built our team one person at a time, and then efficiencies, how to do more with less.

And by doing that, then we didn't look at buying huge equipment right out of the gate. That also allowed us to do more with less and allow us to put more money in the bank. 

Jeffrey Feldberg: [00:07:10] Doris, it sounds like what we hear from successful entrepreneurs that we speak to, and if I could summarize what you're saying is by rolling up the sleeves, getting in the trenches, not so pleasant, not so easy.

But you learned the hard way that resourcefulness trumps resources and that gave you the platform to build what became a large company. So if you fast forward, you took over a company that you were never destined originally to be involved in and found yourself on a different trajectory through your grit and determination that the company is now successful, you were involved in every step of the way in the early days. So, you knew what was what, and no one could tell you otherwise. So, you now have a successful company. How did you know that it was time to start thinking about your exit?

When, when did you know when and how did you know? Because we all have, as entrepreneurs have those days where we're like, there's has be something better than this. So what, what was it, was there a specific point in time that the light bulb went off and he said, okay, now it's time to exit, or what was that like for you and what, once you knew that, what did you begin to do?

Doris Valade: [00:08:18] I've always been interested in learning a lot of different things. So, going back to university has always been something I've wanted to do. Looking at other hobbies. Many people have said to me, how could you sell your baby? And like quick responses. Malabar Super Spice was never my baby.

It wasn't a business. It was a means to an end. It was something where I could learn and expand and provide for my family. But I have three children and those are my babies. The business was never it. And 2008 I did turn the company around with the help of some key people on the on our staff and who I brought on board.

But it also wore me out. I was exhausted after that. And at the same time, my father just previous to that looked, was looking to sell his company. He had the equipment company and it was very successful and he was, in is around 70, 71 at the time. And that's when he decided, okay, I've had enough. I want to sell.

He could not find a buyer. So, he ended up dissolving his company and I took the skeleton of the company and bought it and brought it into Malabar Super Spice, and for about five years we sold equipment as well under the modern butcher supply brand. We ended up selling that because we were trying to be everything to everyone.

And we realized very quickly we could not do that. So, we decided to focus on spices and seasonings, and we sold off the equipment business. But watching what my father went through and the fact that he was unable to sell the company, I said to myself, okay, I can't wait until I ultimately don't want to do it anymore.

I need to plan to sell so that I have the chance to do some other hobbies and maybe look at some other adventures. In being exhausted after that 2008 2009 and see what my father went through. I said, well, I'm going to now look at opportunities to sell the company. I was 50 or 51 at the time, and I kind of thought, okay, if I could sell the company by the age of 55 that was my goal. I would start working towards that. And as it turned out, I was 60 when I sold the company. I'm now 63. 

Jeffrey Feldberg: [00:10:20] Congratulations on selling of the company and you had a plan and you work towards that plan.

And you know, like with any plan, it sounds like you had to make adjustments on the way. So you made the decision you want to sell the company at that time, you thought within the next four to five years. and, and embark upon something else. So what do you do? Because what we find at Deep Wealth is that many entrepreneurs assume that hate is skills that built my business are the same skills to help sell my business.

And it's a very hard lesson to learn. if you're already in the process of doing that. So what was your exit journey like? 

Doris Valade: [00:10:56] One core business lesson that I've learned in general is that I am not good at everything.

I may leave the company. I may be very good at some things in the company, but recognizing what I didn't do well and hiring for it is a lesson I've learned many, many years ago, and in 2008 or 2009 when I decided we had to focus on increasing our sales, I recognize that we did not have a solid marketing plan.

So, I hired a marketing specialist. One of the smartest moves I've ever made. I have also over the years, hired an HR specialist because I know I'm not, I'm not good at HR. So, in realizing also that as an entrepreneur and a business owner, I know nothing about selling a company. So, I've learned, first of all, when I take on a project to learn as much as I can, to gather information to reach out to those that know more than I do about what I'm going to do.

I got some good advice, some not so good advice. I had one advisor tell me. That I should approach some of my competitors directly and let them know that I might be interested in opportunities. That was a big mistake. I would never recommend that to anyone. First of all, as a business owner, I don't know how to present my company to somebody else.

And the first question from just about all of the competitors I approached, three of them was, okay, show me your financials. Well, that's something else you learn. You never show your financials. And that happens much later in the transaction. Never at the beginning. 

Jeffrey Feldberg: [00:12:18] So some terrific learning points. You mentioned some bad advice that you had of going to the competitors directly and sharing your, your financials.

That that's definitely a do not do. Looking back at the experience, what would be two or three things that if you had to do it again, you'd put that at the front of the list. So, you've now found at the professional investment banker who's going to be representing you and you've got that locked in.

Looking back, what for someone, if you could tell your younger self to go back in time and say, okay, you're going down this path. You've already selected who's going to help you represent and sell the company. There were two or three things that you should definitely do. What would that, what were those two or three things be?

Doris Valade: [00:13:00] Well, as you know, I did hire an advisor completely separately. To just act as my sounding board. He was another PEO member who was involved in M&A's. He was not directly involved in my transaction. I just brought him on board. I hired him just to be my guide and my sounding board, and that was very helpful.

I got quotes from three different law firms that were just all over the map. So really doing due diligence, very important. Never go with the first law firm. Never go the first, well, even the first M&A company really do your homework. I think the most important thing back to I would say to myself is, don't be in a hurry to sell.

It's a process. It's going to take some time. It's got a learning curve. They're all looking out for themselves first. They're not looking out for me. Or my company. I'm a customer. They provide a service, but I need to own the information and the transaction. So for example, in looking back over the mounds of legal paperwork that came out of the final sales agreement, I should have looked at a few things a little more closely.

I made some assumptions that the lawyer knows best and that he's got my back. Both the law firm didn't fully understand my company and so I put a little too much trust in some of my advisors. Where I really should have done my own due diligence and read everything a little more closely and asked a few more questions, but I was in a hurry to sell because it all looks so good.

I was getting what I wanted. It was six times EBITDA and they wanted to close in six months, so I got all excited about the savings and I lost sight to some degree of understanding the process and maximizing my position. 

Jeffrey Feldberg: [00:14:50] Some terrific learning lessons there. And, and you know, my takeaways of what you're sharing is, what's interesting is you became creative and you essentially hired an advisor to the advisors.

 At Deep Wealth, we called it the chief exit advisor. That's our term where you have someone who isn't directly a part of the process, but it's like your own personal board of directors. They report directly into you. Their loyalty is to you, and they have a lot of experience in mergers and acquisitions to tell you what, you don't know or prevent you from going down a path that could potentially harm you and not be in your best interest. So that, that was one key takeaway that you did. And you also mentioned, don't assume and you can't outsource the entire process to the advisors that you hire.

When you're looking at the buyers or the potential buyers for your business, any insights that you can share? 

Doris Valade: [00:15:46] We had one international buyer. They were also in the food manufacturing space. They were overseas. They were huge. They were in the middle of acquiring so many companies.

Their president came to meet with me and he was all excited about buying Malabar. He put a letter of intent on the table. The initial price was excellent. It was very fair. However, the communication back and forth was not consistent and some of the details were vague. He had one of his assistants then take on our eminent project, and I didn't feel comfortable.

I wasn't getting answers to my questions. They gave us 235 due diligence questions. We replied back to all of them within two weeks or so. We were really prepared for that, which in hindsight we've been told is unusual, and then they kind of went off the radar for four weeks. They would ignore my email.

Then they came back, Oh no, no. We're still working on this. You should hear back. So, I emailed back after about four months of back and forth and said, I do not wish to proceed any further. And we, moved forward with negotiations with one of those other two 

Jeffrey Feldberg: [00:16:55] Doris, a few things that come out of there. So it, it sounds like you had your exit team assembled and ready because I mean, my goodness, you had an encyclopedia of due diligence questions.

It also sounds like the company was running without you at that point. you had key people in on your team so that you could focus on the sales process itself so that you can have a quick turnaround time. Firstly, congratulations on, on your exit and you, you did a lot of things right. And this was your first, your first go round at the time, you shared how you simply, you knew what you didn't know.

And as a result, you, you spoke to people who did know. And that led you to find an investment banker to represent you and take you to market. You were prepared for due diligence. You had your exit team to help you through that process, and you've prepped internally ahead of time. Your company was running without you, which I'm sure was important to the future buyer to know that one stores was riding off in the sunset, that the company would still be there for, you know, for another day to do a bigger and even better things. And you hired what we called it, the chief exit advisor, to give you some advice along the way.

Knowing that, your exit team and your advisors, you're not necessarily their first concern. They're going to look out for themselves first and then you went. All those are aren't so common out there. So, congratulations. That's absolutely terrific. If you'll, no one's perfect, things always happen along the way.

It's a new skill set that you were learning. If there were one or two missteps that that happened that. You just wouldn't do when and whether speaking to other entrepreneurs out there or to your younger self, what would be one or two things that you would say, whatever you do, don't do this. 

Doris Valade: [00:18:45] Don't rush to, to agree to different clauses in the sale that you're not comfortable with and that you haven't read thoroughly from my renumeration after the company was sold.

There's a lot of details that come into play. And in hindsight, I really should have negotiated more of the details rather than just accepting the terms that were brought forward. I was quick to agree to many of the terms again, because I was so excited and so. Eager to actually sell the company and I didn't fully recognize that negotiating the terms does not mean that the term that the sale is going to fail in any way, and again, don't hurry.

Towards the end there was a couple of fine points that came up at the last minute and there was some compromises made that in hindsight may not have needed to be made. Ultimately though my underlying philosophy going through it all is knowing the ultimate selling price and the terms with which I was being paid.

I was very satisfied with both of those and my voice to myself was, when is enough, enough? And that's what I took with me through it all. Well, 

Jeffrey Feldberg: [00:20:16] Some wise words from a, an entrepreneur and business owner who has been in the trenches. So, as we wrap things up, tell our community what you're doing now and where they can find you.

Doris Valade: [00:20:32] So I stayed on with the company two years after I sold it, which is unusual. And in hindsight, I probably would not recommend staying on that long. The company, asked for me to stay on and I loved what I did and I loved my team. But one year would have been plenty. In the two years, there was a transition to a new president and when somebody new comes in, everything changes.

And so, I would have done that part a little bit differently. But ultimately, yes, I am now out of the company. It's running, under new management and going to some new directions, which is exciting for the company and I certainly wish them in the team really. You know, all the best. And what I've done since then is under the Malabar Group Inc, I am now coaching business leaders and entrepreneurs to help to teach them some of the lessons that I've learned and to provide them with a sounding board and a mentor that I feel is instrumental to growing a business.

I did a lot of sports when I was younger. And competitive sports. I was a competitive badminton player for a number of years. I always had a coach. I always had someone to push me to learn more, to practice more, and to continue to improve. And that commitment to continuous improvement, I then carried into running a business. So many business leaders don't have a coach, and that really surprises me when athletes know they need a coach to get better and to be competitive. Business leaders don't realize the importance of that. So that's what I am now focusing on and bringing to other business leaders and having a lot of fun with it.

And it's, it's nice to be able to share and to carry it forward, 

Jeffrey Feldberg: [00:22:16] Doris, that is terrific. Is there a place that you call home in the virtual world where people can find out more about you and your business coaching and what you're up to?

Doris Valade: [00:22:27] So it's It's my website. 

Now I'm in the middle of all the challenges that every business has. I have some business leaders reaching out to me just for support right now. But looking forward to maybe as you are doing maybe some podcasts, I'm also looking at writing a book on my business adventures over the years.

Certainly, being a woman entrepreneur brings some unique challenges, but success is definitely available to those that see the opportunities and who believe in themselves. As a side note when we were in Kenya last week, we visited the first college in Kenya, sponsored by and built by the ME to WE group.

When we got to the ME to WE group of about 25 young ladies that are in their second year of tourism coming out of the ME to WE college as the first graduates, and we had 30 women around the table asking me about how do they get into business? How do they get a job? How do they do interviews? How do they manage a family and a business?

And I had so much fun talking with these young ladies. The energy in the room was amazing. And interesting to see that the challenges for business in general and for women in business specifically is a global challenge and they're rising to it in a small village where they don't even have running water.

A medical clinic is an hour away and they're excited about learning and college and going on in their careers. So that's been just instrumental now in providing me with additional energy as I move forward. 

Jeffrey Feldberg: [00:24:14] Doris you've been filled with lots of wisdom and wonderful takeaways, a terrific exit success journey for you.

Congratulations and wishing you only the best. Thank you so much for your time today. 

Doris Valade: [00:24:27] Thank you, Jeffrey. It's been my pleasure and I wish everyone listening continued success as well.

This podcast is brought to you by the Deep Wealth Experience. In the world of mergers and acquisitions, 90% of deals fail. Of the successful deals, business owners leave millions of dollars on the deal table.

Who are we and how do we know? We're the 9-figure exit guys. We said "no" to a 7-figure offer based on 3-times, EBITDA. Two years later, we said "yes" to a 9-figure offer based on 13-times EBITDA.  In the process we increased the value of our company 10X.

During our liquidity event journey, we created a 9-step preparation process. It's the quality and depth of your preparation that increases your business value.

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Doris Valade On How To Create A Successful Exit (#012)