S3E20 – Christine McDannell – Building and selling a company for $500K cash

Key Timecodes

• (00:53) – Show intro and background history
• (02:06) – Deeper into her background and investing path
• (05:34) – Understanding her business-focused career
• (07:00) – How she scaled the business
• (10:40) – How she did well through the recession times
• (13:50) – Her strategies to sell that business
• (14:47) – The importance of knowing the right size to sell  
• (15:58) – Deeper into her numbers
• (17:14) – How long does she use to keep the business?
• (20:42) – How she moved to her next business
• (23:20) – Deeper into the numbers on that one
• (25:54) – How to build and sell value on businesses
• (29:22) – The importance of moving forward instead of just planning
• (31:16) – How she sold that business
• (33:06) – What she did next on her journey
• (34:38) – What are the red flags on that business model?
• (36:47) – The importance of making moral decisions when needed
• (39:23) – How she started her M&A business
• (41:33) – Helping businesses to be sold and bought as the model
• (45:49) – The worst advice she ever received
• (46:20) – The best advice she ever received
• (46:54) – Guest contacts

Transcription

[00:00:03.880] – Intro

Hey, this is Sean Tepper, the host of Payback Time, an approachable and transparent podcast on business investing and finance. I like to bring on guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go. My next guest skipped college and started. Working in the corporate real estate industry. After getting sick of the slow processes, she stepped away and created a service business that grew to nearly 1 million in revenue. Thereafter, she sold the business, took the cash, and started a second company. Rince and repeat, she grew that next venture to 1 million in revenue and sold it for a much larger profit. Now, today she runs a mergers and acquisitions firm that specifically focuses on selling tech companies. In this episode, we walk through marketing tips, growth hacks, and lessons learned when selling a company. Please welcome Christine McDonnell. Christine, welcome to the show.

[00:00:55.510] – Christine

Thank you, Sean, for having me. I’m excited for this interview.

[00:00:58.020] – Sean

Appreciate it. Thanks for jumping on. So why don’t you kick us off and.

[00:01:01.440] – Sean

Tell us about your background?

[00:01:03.140] – Christine

Okay, we’re coming up on 20 years as an entrepreneur. It has been a very fun ride. Started in my early 20s. And yeah, I was born to do this. I was the girl with the lemonade stand as a kid. I was selling candy bars in my backpack and getting in trouble. My dad owns an HVAC company. So at age 11, he put me on the phone as a little secretary, and I loved doing that. Did property management. So I worked corporate for a short time from like 17 to 21, 22 years old. So I got a little taste of that and I learned a lot on that side. And yeah, I’ve owned, bought and sold, acquired over 20 companies now. Picked up a few during COVID, a couple of spas because that was a scary time for some people. I’m a wartime general, so I love recessions and I’ve been through ’08, and I work really well during those times. So yeah, I picked up a couple, sold it when the tide turned, when the the vaccinations came out and business was back to normal and sold them. But yeah, that’s probably the summary.

[00:02:06.050] – Sean

This is going to be an exciting call. I want to start, I want to rewind the clocks a little bit here and go back to ’17, you started working corporate. It sounds like were you working corporate in parallel with college, or did you just skip.College all of a sudden?

[00:02:20.070] – Christine

I skipped college. Yes, I love it. Thanks. There’s a few of us out there in the world. Now I get the high fives. But 20 years ago, a lot of my friends went to Ivy League schools, but they high five me now. And they’re like… And I built a significant network. It was probably more work. I think in college, you get an incredible network. I have that, but I probably worked harder at getting that.

[00:02:44.300] – Sean

I love it because you’re right. Nowadays, I do celebrate it. People, let’s skip opportunity costs, skip the four or five years or whatever and get right to the revenue generating machine and let’s start making some money. So you started in corporate. What were you doing at 17?

[00:03:02.280] – Christine

Yeah. So I was wrapping up high school and I went to high school, half day, the second half, worked for property management company. So I was leasing apartments. That sales, I loved it. I became really good at it. It was based plus commission. I’m really driven that way. If there’s commission involved because there’s no ceiling. And so, yeah, I did that on the weekdays and the weekends and then through the summer and then went full time, went up to leasing manager. Worked my way all the way up, worked for the Irvine company. That was the last one here in the state. It got me to move down to San Diego from LA County. I’ll tell you exactly why. I left corporate and I remember it. I just got sick of hearing, Well, corporate said… I’d find a more efficient way to do things multiple times. Oh, well, you can’t do that. You can’t do that. Corporate says, corporate says you can’t do that. Corporate says, and I’m like, But this is more efficient. I was like, I’m out of here. This isn’t fun.

[00:03:58.760] – Sean

Good for you. And you’re right because I’ve got over a decade in corporate and it’s a lot of broken processes, repeated steps, repeated meetings, redundant meetings, PowerPoints, and to the nth degree, shoot me now. Exactly. I’m done with that. But let’s lead into what you did next. So after corporate, what did you get into?

[00:04:19.760] – Christine

I got my real estate license also right out of high school. So instead of going to college, so the second I turned 18, should be 18, got that. Did a little bit of home sales. I think I sold one house and then I worked for a top producer in San Diego for a very short time. And then I’m like, okay, I don’t know about this. I don’t think this is what it’s going to be. So in the newspaper and I’m stating myself, I saw a little ad for a cleaning company for sale, and I was actually sitting in my car in downtown San Diego watching all these high rises condominium buildings being built back in 2003, which there was a lot, Petco Park opened that year. I was just like, Gosh, I could do this. Long story short, I couldn’t get the $50,000 loan to buy that cleaning company. So I’m like, I’m going to do this the hard way. So 300 bucks, I had credit cards maxed out. It was a nightmare. So I wasn’t really in the best position to start a business. But $300, hired a couple of women. They didn’t speak English.

[00:05:17.860] – Christine

I didn’t speak Spanish at the time. And the three of us went out and cleaned and built the company up. So in five years, I think we had over 35 employees, I believe, when I exited. So I exited in five years. So that was my first. Yeah, cleanology. It’s still around downtown San Diego, which is cool.

[00:05:34.610] – Sean

The name still retained.

[00:05:37.210] – Christine

The same brand new. Yeah, the same owner. So yeah, the same owners had it for 15 years now, the same guy. And now they do the whole county now. But yeah.

[00:05:45.170] – Sean

Isn’t that cool? I love it. A major lesson learned here is you focused on business. There’s people who start cleaning companies and the residential way can be maybe an easier entry point, easier sell. But you’re probably running into a lot of churn. You work with a client for a month or two and then they leave. Whereas a corporate situation, you probably, I’m guessing, fill me in here, you probably secured contract center, three months, six months, 12 months, something like that?

[00:06:13.450] – Christine

No, we actually did residential, condominium. You did? Really? Yeah. They were all brandy. They were easy to clean. I got into the commercial. I bought a Jannie King franchise, which wasn’t the best move, but to get into commercial, I was like, Okay, that’s going to be a shortcut. Let’s do them in parallel because they do see each other. I was a franchisee, glad I experienced that too. So you gain the knowledge by doing things is how I learn things. Didn’t have it very long. That was not fun. We had those long term contracts, hotels and whatnot. But being a franchisee, you’re paying such a cut. You’re paying this percentage out of your net. The margins were tiny compared to residential. Really? Yeah. I think within six months, I sold it back or whatever.

[00:07:00.530] – Sean

Wow. You totally proved me wrong there. I figured working… Because when you said high rises, immediately thinking of professional services, you think of like, maybe it’s CPA offices and attorney’s offices, maybe an ad agency, stuff like that, and you secure those. But yeah, interesting on the residential, you found the most success. So how did you scale this business? This is a basic service business, nothing glamorous. Warren Buffett teaches us boring businesses are good. This is a good business. How did you market and scale this?

[00:07:31.100] – Christine

I am a marketer. I’m a big Dan Kennedy fan. I followed him forever. Copywriting. You should see my… Okay, I didn’t go to college, but if you saw my library at my house, it’s like floor to ceiling. We just had it custom built and all my audiobooks too. Reading tons, learning as I went. The marketing was the key. I had about 35 different sources of marketing. That’s when Groupon launched back then. Right towards the tail when I was selling it, so I can maximize that. I did the same with my spa. Groupon was one of our number one legions. With the cleaning company fly, I still have the original piece of paper flyer that I would stick under the doors of all the condo. If we were cleaning a condo, I’d have the team because, again, I worked my way out. I cleaned for the first year and a half and I bartended at night. Once and all along, I knew I’m like, I’m going to make this big company and I’m not going to have to clean houses anymore. So we scaled super quick. Then I started working the office, then I got a manager in place.

[00:08:38.590] – Christine

So then I only did the marketing. That’s the hat I will never give up on all my companies. I will not give that hat up no matter what. So yeah, it’s Google PPC. Google PPC when it was $0.24 a click, which I don’t want to even know what it is now for a cleaning company. It’s extremely competitive. I networked. I found my competitors putting a little flyers on the doors. I swear I was like the mafia back then. I said, hey, look, stay out of downtown. I said it nicer. If you stay out of downtown because that’s my only territory, then I’ll give you all the referrals for the rest of the county, which we get calls all the time. And so he agreed. So we did. We sent him referrals. Long story short, I ended up acquiring that exact cleaning company two years later. So it’s cool. But yeah, you just scale quickly. There’s so many different… Anybody listening, just I mean, the more marketing channels you can have, the better. And there’s so many out there, print, social media, radio, Spotify ads. We’re going to test those Hulu ads. So you can have 30 to 50 different ways.

[00:09:43.000] – Sean

Be everywhere. I’m a big fan on that. The large corporates I’ve worked for all about omnichannel. You want eyeballs seeing you in different locations. It creates that perception, Oh, this business is well established. So you essentially did that. Hustled your butt off to make this happen.

[00:10:00.900] – Christine

Yes, without a doubt.

[00:10:03.360] – Sean

This is going back, it sounds like to the mid to late 2000s. Is that correct? Because we’ll get into the cell of this business in a moment.

[00:10:12.800] – Christine

Yeah, started it in 2003, sold in 2010. So I guess seven years total actually for that one.

[00:10:20.650] – Sean

Okay, got you. So you did well through the recession, it sounds like.

[00:10:26.990] – Christine

I.

[00:10:27.220] – Sean

Did.

[00:10:27.850] – Christine

I love those times, like I said. So this is how we did it. I remember this very clearly. I’ve never laid off a single employee. I’ve employed probably over 200 people at least in all these years, but I’ve never laid off a single person, knock on wood, in all 20 years. And what I did was I took the team and they were all really close. And again, by then we were probably 25 to 30 employees. I said, girls, I don’t want to lay anybody off, but we got to buckle down. And number one, we’re paying everybody’s cell phone. We had separate cell phones, $1,000 a month. It’s all my P&L, and I clean my P&L and everybody listening, you got to do that right now. You got to cut the fat and you can send it. I geek out on that for friends. They’ll send me their P&L and I’ll look and I can start cutting for them. Is this really necessary? Cut, cut. So I told the girls, hey, we’ll pay a percentage of your personal cell phone bill. I don’t want to pay the 1,000 anymore. Hey, girls, can we shorten your hours and then spread them out?

[00:11:28.500] – Christine

Not lay anybody off. If we could take some of you guys up instead of 40 hours a week, 30, then I can keep everybody. They all agreed. They didn’t want to see anybody go. So that was really cool. And the biggest change I did was I realized… So we were doing a lot of these condos in San Diego. These were vacation homes. They’re wealthy. They have a house in Arizona or somewhere else. The condo is sitting empty. Maybe they can turn it into rental or whatnot. Or most of our clients, a lot of the cases, the wife stayed home and that has been worked. Now the wife is going back to work. So they can afford to pay to have their house clean for 250 bucks a month if the wife goes back to a $10,000 a month salary. So that was a no brainer. So all our marketing, I started shifting towards that. Like, okay, let’s go towards that and justify it that way for them. So it ended up working out really well because our clients started dropping off rapidly. It was pretty good. really crazy. And then I just had to go back up.

[00:12:32.260] – Christine

So during the recession, we grew by 10 %. And when we sold that was we sold for a higher multiple because of that. We showed it was recession proof, essentially, because back then, house cleaning wasn’t as common. So it was like an extra for people. It was a luxury. And so, yeah, that would be the first to be cut normally. But people probably know this, the wealthy don’t get as affected by that. It’s hard for them to cut things. So when there’s a recession, they’re a little less inclined if that’s your clientele.

[00:13:04.740] – Sean

Yeah, good call. Now, I know with a service business, you can increase your acquisition multiple if you have contracts in place, creating projected earnings over time. Did you have contracts with these residential customers?

[00:13:19.830] – Christine

We didn’t have annual. I’m trying to remember. We might have had a six month or 12 month option to pay in advance for a discount. Don’t quote me on that. I did that with my spa for sure, because you’re exactly right. You want recurring revenue, you want signed agreements. Massive value to the bottom line.

[00:13:39.370] – Sean

That gives that buyer a lot more confidence that, yes, I have pretty much guaranteed revenue here over the next 6, 12 months, whatever the term is. So yeah, let’s get into that. You sold the business. Can you share what revenues were?

[00:13:55.530] – Christine

We’re right almost at that million dollar mark, the one that everybody wants, the gross ref. I think to the bottom, it was about close to 200K with good margins. And on service business, that’s high. In California, with workers comp, that’s super high. So somewhere around that on the adjusted EBITDA or the SD seller’s discretionary income because again, it was a smaller business. But yeah, I’m usually the person that gets it to a million quickly and then I’m ready for the next adventure because by then you’ve got team and managers in place. And then I’m bored, so I’m like, Let’s go to the next chaos in the startup.

[00:14:34.550] – Sean

You thrive at that right in the weeds.

[00:14:37.980] – Christine

Yeah, it’s a jungle. Recently, a really successful friend of mine, he said it’s the jungle. I’m like, That’s perfect. Never heard that before.

[00:14:47.980] – Sean

It’s really interesting. There are entrepreneurs out there who thrive in that state. They love the chaos. They love discovering what really moves the needle, achieving that flywheel, if you will. And then on the flip side, there’s entrepreneurs that they like that well established business, and they can scale it by 10 X, take it to a whole new level. Totally different breed of an entrepreneur.

[00:15:12.750] – Christine

You are exactly right. And most of our listings currently at the Magnolia firm, and we work on the sell side. I’d say every single one of them, it’s their first exit almost. And then again, they’re hitting a ceiling of two million annual revenue, three million. And they literally say, we do not have the skill set to go on. It’s a completely different skill set. And I’m there with them because I’m like, I don’t need them. I paid a very expensive coach when I owned my Spas years ago to teach me how to become a CEO of a 10 or 20 million dollar company to get to 10 or 20. And I’m glad I paid all the money because it showed me this is not what I enjoy. I don’t want to be that person. I don’t have to be that person.

[00:15:58.330] – Sean

Right. All right. Going back to the million, that’s what revenues were at. What did you sell it for?

[00:16:04.000] – Christine

What multiple? Again, it was so honest service industry, you’re getting anywhere between 2 % to 3 % typically on bottom line. And that one 3.5 %, I believe. 3.5 %, 3.8 %.

[00:16:19.950] – Sean

To back up a second, 3.5 %, 3.8 % million or?

[00:16:24.800] – Christine

No, multiple. And two to three on the net profit on this seller’s discretionary income. And for your audience to say no, because some people don’t know the term. Again, you’re running a lot of personal stuff through your business, which is fine. You’re doing it for tax reasons, but you got to add it back to the bottom because somebody is buying that.

[00:16:46.120] – Sean

Got it. So I’m jumping back to the 200,000 net profit there. So against the 200,000, you went 3.5 %.

[00:16:53.520] – Christine

Let me do the math real quick. We exit 580. So yeah, if you want to back that out. Got it. each of this, the sales price was 280. Sorry, sorry, sorry. I’m thinking of other companies. I’ve sold too many. 280 cash. Okay, got you. The net was probably lower on that one. Yeah, I’d have to look. I don’t remember off the top of my head.

[00:17:14.690] – Sean

Got it. Okay, so $280,000 cash you walk away with. Did you have any time period you had to stay with that business or could you… All right, you got your cash, you’re off to the next thing.

[00:17:25.770] – Christine

Yeah. I know 280 sounds small, but I was still in my 20s and I started with $300,000 billion. So the happy camp for it.

[00:17:32.260] – Sean

That’s huge.

[00:17:33.310] – Christine

Yeah. Here’s a mistake. And I had a business broker on that first deal because I didn’t know how to sell a company back then. And I’ve only used a broker that one time. He tells me in the purchase agreement, he says, Okay, we’re going to put 90 days training. And I was like, They’re not going to need 90 days. I’m never there. There’s a manager that knows more than I do. It’s only going to take me a couple of weeks to train them, to be honest. He goes, Christine, let’s just leave it in there. They’re never going to take those 90 days. Long story short, first time business buyer out of the mortgage industry and he’s like, Okay, Christine, you’re with me full time, 90 days. I had already started my next venture. I almost died. So I had to come with… I’m like, Come on. So I had to come to some agreement. And back then, I don’t remember what it was that long ago. I have no idea. I mean, we settled on something because there was just no I think it was part time training. And I think he realized, okay, Christine, we don’t need you to train.

[00:18:28.370] – Christine

There’s nothing more to train on. But that was probably the biggest mistake I did. So for my sellers, we try to push for it depends on the complexity of the business, obviously. But if the owner is not super involved, then they don’t need to try. I try to get two weeks of training first, or a month or 60 days, but I’ve never had my sellers do longer than that.

[00:18:51.770] – Sean

Good for you. I know in the software world’s My space, some of these they sign up for a year, two years where they’re stuck to the business they just sold. And the amount of things that can go wrong and the amount of corporate BS you can deal with in that time period, oh, my gosh, I can’t stomach that.

[00:19:12.330] – Christine

Sean, I’ve had so many colleagues, so many of my closest business friends do have big exits, have the two year earn out or the three year. And I swear, I’ve had two recently. They just finished it. I would have put money down that they would have bailed out. And these are large corporations, acquire them, corporate BS. But then they got a nice, great salary and they just sat around. They said they didn’t have to really do anything. So they collected that check and then they collected that final payment. There was five million on the table at the end of their earn out. Here it’s just these golden handcuffs for two years. So we’ve never done an earn out for our clients. We’ll do a seller carry, which is just like a loan from the seller. But no, we try really hard not to do that.

[00:19:57.430] – Sean

Got it.

[00:19:58.430] – Sean

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[00:20:40.230] – Sean

All.

[00:20:40.570] – Sean

Right, back to the show.

[00:20:42.520] – Sean

What I’d like to do next is… And thanks for breaking down. The first sale is a big win. Like you said, 280 doesn’t seem like a lot, but in your 20s when you have pretty low overhead, I would imagine that’s a lot of money. Well, I should say, regardless, that’s a huge chunk of change. Cash it in your bank account, and then you can have this freedom with what am I going to work on next? So what did you do right after that?

[00:21:08.590] – Christine

So 2010, social media. When people would tell us Facebook was just a fad, it’s funny, but nowadays it’s funny. It was B2B. B2b, I’m not the fan of. I learned that. I’m a B2C person across the board because it’s different marketing. It’s more emotional purchases from a consumer versus logical. So social media with a boyfriend at the time who hated his job, I was like, Oh, let’s start it together. That’s the joke. A couple of my boyfriends have ended up with companies back then. I’m just like, It wasn’t working out. We broke up. We try to keep it together, the business for six more months. I’m like, Hey, just buy me out. But it was like pennies on the dollar of what I put in, which, again, is fine. And to this day, he owns it still. And he’s very grateful, good guy. So did that two years, social media. And I had put all my money into that.

[00:22:05.700] – Sean

It went back. Was that a social media marketing agency?

[00:22:10.000] – Christine

Exactly. Got it. Okay. Yeah, in San Diego. And so I just blew through the 280 cash so quickly. Didn’t know any better. Didn’t diversify, Sean. See, I should have.

[00:22:21.780] – Sean

Bought some stocks. You should have.

[00:22:23.310] – Christine

Had Tykr on back then. I should have had Tykr. Exactly. So I did not have much at all left to live on. So I said, hey, give me 10 K. I’ll scrape by for three months living on the 10 K, and I’m going to start a spa. I knew nothing about spa. I didn’t know how to spell the word esthetician. I’m not kidding. But I don’t know. I just had this concept in my head of a luxury spa that was French themed and not Asian themed like other spas and that was built around colonics and in front sa nas. A gain, think back, this is 2012. There was no wellness craze yet, but I was really into it. So I usually start a company if something I need to do. Even the cleaning company, I want this cleaning company for myself. So yeah, ECHO Chateau was born here in San Diego, grew it to 37 employees over five years, two locations, and exited in 2017.

[00:23:20.520] – Sean

Wow. Okay. And revenues on that one?

[00:23:23.740] – Christine

Right again at the million mark.

[00:23:25.710] – Sean

Was it? Nice. I try.

[00:23:27.500] – Christine

To get into EO every time. They’re like, I sold it because you have to hit a million gross revenue. And then they’re like, Well, you just sold it a week ago. I’m like, If I would have gotten in, they’ll grandfather you in. I’m like, Okay, that’s funny. Don’t remember here. Yeah, again, you guys helped to back out the math, but that one was $580 cash. That one was cash off. So the buyer got a SVA loan, $580 cash, and then $4.7 multiple, which was insane. So I overpriced it.

[00:24:04.050] – Sean

That is pretty good.

[00:24:06.040] – Christine

Thinking, hey, I’ll have room to negotiate, which I love to negotiate. So I’m like, okay, it gives room. It’s sold in six weeks flat. I sold it myself. I wouldn’t use a broker. Even my advisors were like, Christine, you need to use a broker. This deal is bigger. It’s half a million, blah, blah, blah. I built it from scratch. I’m a marketer. If I can’t market and sell my own business, we’re going to sell to person am I? It’s like the biggest transaction. One of the biggest of my life. Back then, yes, so six weeks flat sold, SVA loan took over 90 days. Very stressful process and I knew it. First time buyers again, they still have the business to this day. They just opened their third location, which is exciting. That was a fun one. That was probably one of my favorite startups. Again, backing up, 580 cash, I had 10K to live on. I borrowed 25 from a friend. When you talk about contracts and recurring revenue, I presold… How much was it? 25,000 worth of annual luxury wellness memberships. There was no such thing back then. My advisor had pushed me to do that.

[00:25:20.160] – Christine

Presold monthly and annual memberships. I was cash flow positive before we even opened the doors. It was crazy. I signed the lease without having any money yet. Sorry, I presold them memberships and then I signed the lease. So I was selling before I signed the lease even. Built it out. Yeah, 50K we launched with it, which is crazy if you saw that build out. If you walked in that spot, nobody could believe I did it all on 50K. So yeah, that was a fun ride too. I am a bootstrapper. I’m always a bootstrapper.

[00:25:54.620] – Sean

You are. And you hit on a key take away here for the audience. And I see a lot of entrepreneurs, I call them when and wait entrepreneurs. They’re going to do something when they have this, and then they wait, and they wait, and they wait, and wait. What you did is you found a way to sell value before the business even opened. And I tell you what, 1, 2 % of entrepreneurs I’ve talked to can actually do that. It’s very rare. So let’s drill into that. What were you… It was these luxury memberships. Were they yearly? Were they monthly? And what did they get?

[00:26:29.090] – Christine

Most of them were the bulk, I think they were all annual. It was called the founding VIP membership. So we cut the price in half because, again, you have to make it super appealing. They want to feel special. Again, I had a good network here in San Diego and everybody’s watched me over the years. They know I’ll overdeliver. I keep my word. You provide amazing services, customer service. All my companies had like five stars on the app. That’s big for me. Even the spa, which is very hard. I didn’t like my massage or whatever. We would just bend over freaking backwards. We had over like 205 star reviews. It was insane. So yeah, I think it was… Yeah, I should have wrote these numbers down. I’m great at remembering names, but not numbers. So yeah, it was probably for the year, I can’t remember, 1200 or 2000, and then we just splice it in half, which still covered our expenses. Because not everybody necessarily uses… They got two treatments a month for the year. They can use them anytime during the year. They didn’t have to wait each month, which is cool. It had some other extra benefits.

[00:27:36.520] – Christine

People just wanted to support me in the spa, I think when we signed up, everybody. We launched that one within 72 days from the day I started marketing to the day we opened our doors to build everything. 72 days hiring seven people, like we were on a rocket ship. And to your point, backing up a little bit, I am the build the parachute as you’re falling. I am. We just launched a massive initiative in my firm, the Rapid Acquisition Club. I was really excited. I have a business partner now in this firm, and he’s just very like, he’s an engineer, right? So he’s like, No, Christine, we have to lay the whole thing out. And then you start building it. I go, C allen, I literally, over the weekend, I physically cannot do that. I literally sat with him. He’s like, Take a piece of paper and just write it out. I just staring at the paper. I’m like, I just can’t. I just have to do step by step by step. And it’s like, Okay, we need a check out. Here it is. Wait, how did they pay? Oh, shoot. Hook up the stripe.

[00:28:38.730] – Christine

Wait. And then somebody paid this weekend. I mean, this just happened. I was shooting little parachute emojis on Slack to my team. Anytime I had it, I was like, Oh God, we forgot the thank you page because the guy’s like, I paid but now what? Oh my gosh, guys, we got to make a thank you page. Little parachute emojis and he got it. He’s excited because it went really well. And again, I’m like, team, you guys know me. Yeah, it’s going to be thrown together. It’s going to be chaotic. But I’m telling you, the client will never see that chaos. We’re going to overdeliver. We’re going to be amazing about what we’re going to launch. And I want everybody to love it and perfect reviews, and I’m going to deliver. But I’m telling you right now, it’s going to be one step at a time, and it’s going to be a little hectic.

[00:29:22.040] – Sean

And it’s going to be a hustle. And you’re moving… It’s like that metaphor spinning multiple plates in the air at the same time. And what I love about this is you’re moving forward. You don’t care if it’s perfect or if it’s not perfect. And there’s a lot of coming from the corporate world. So many people have to have their plans. They have to have all their plans and their Excel sheets and everything listed out perfectly. And then we look at them for the next three years and then we execute. I’m being facetious here in the three year timeline. But they’re planning and they’re thinking and they’re dwelling and they’re not taking action. It just drives me nuts. And so when I can see somebody like you that’s like, I don’t have a plan, but we’re moving forward. That’s what I’m g rinning ear to ear. I mean, you got a general idea of where you’re going, but it’s not like every little step to the nth degree is documented. No, you don’t need that.

[00:30:18.000] – Christine

Yeah, we do the playbook as we go. We have a master checklist we’re building in the firm right now, and it’s a living document because there’s so many tiny components of a deal. There’s so many little points we have to hit. So we’re building that. We were working on it again yesterday, and it’s just been a living document for 14 months. To the plate spinning, another mentor of mine years ago, he must have known me better than I knew myself. He said, look, if Christine doesn’t have multiple plates spinning, if she only has one, she’ll literally break it on purpose. And I’ve seen myself, and he’s right, all messed stuff up just to fix it. I know, isn’t that funny? I’d never heard that saying. And when he said it, I’m like, oh, my God, he’s right. So he’s like, you’re a parallel entrepreneur. You always have to have… So a lot of times I have two ventures running simultaneously, not two startups at the same time. I tried it once, never doing that again. The one business is very stable. I can go to the next venture simultaneously. So it’s funny he said that.

[00:31:15.070] – Christine

He was right.

[00:31:16.420] – Sean

I love it. All right, so then let’s continue on the timeline here. So you sell that business. Did you have any time period where you have to mentor that business? Was it the two weeks or was it three days?

[00:31:27.680] – Christine

It was two weeks. I learned my lesson. It was two weeks. And then I got… And again, we had three managers in place. I took a trip to Europe for an entire month. They never called me. They had their biggest sales. They broke the $100,000 mark for the month. I was actually first and sad. I wasn’t there to be a part of it. Sad because I was always the driver of sales. And they did it without me. My friend in Europe, he’s like, Dude, this is the best part. You should be so happy. That’s what you wanted. I’m like, Oh, they don’t need me anymore. T hat’s when I decided to sell. I give two weeks in the purchase agreement. Of course, I ran my whole deal on my own. They did. It’s insulting. He’s like, Okay, a week and a half in. He’s like, Okay, Christine, we don’t need you anymore. Because again, there was SOP’s standard operating procedures in place. Solid team, solid. I was just doing the marketing by that point, so it’s fine.

[00:32:24.050] – Sean

Right on.

[00:32:24.430] – Sean

Let’s take a quick commercial break. Hey, this is Sean. I’d like to say thank you for taking the time to listen to this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for taking the time to listen to this one. I have a quick request. If you have a moment, could you please head over to Apple Podcasts and leave a five star review? The reason is the more ratings we get and the higher those ratings are, the more Apple will share us with the world. So thanks in advance for doing that. And then I have a quick comment. If there are any questions you want me to ask the guests, please head over to our Tykr Facebook group. You could drop a question right there. I’ll go ahead and make a note and I’ll do my best to ask that question on the podcast.

[00:33:04.490] – Sean

All right, back to the show. All right, so you get out of that. Then what did you do?

[00:33:10.970] – Christine

Went into… What did I do right now? Co living. I was like, it’s the order tracker. co living, which was just coming up at that time, which is people co living, deciding to collectively live together in community internationally. Started working on that, wrote a book on it. And then there was no technology backing that industry at all. And the property management software wouldn’t fit correctly. So people were just hacking spreadsheets together. It was chaotic. And then I saw the need. I was like, Oh, my God. This is a massive need. And then I said that was going to be my last rodeo. I’m like, Okay, Christine, what would be the biggest, most exciting, hardest company to do? International tech company. So we got into Tech Stars four months in, which was insane. I had no tech background. I had two technical co founders I brought on who were amazing. Yeah, got into Tech Stars, which is like a top accelerator out in Amsterdam, Europe. I moved there. We had an LOI on the table for 9.2 million within 10 months. It was insane. That means we had a 10 million valuation we were raising on. Once we came not in Europe, you can’t raise like that over there.

[00:34:19.500] – Christine

Rush back to Canada, had to walk from the LOI. It was not a fit for me. I would have had a four year earn out with a nightmare horrible, horrible humans. And it wasn’t worth any money in the world.

[00:34:31.280] – Sean

Good for you for seeing through the forest on that one.

[00:34:34.650] – Christine

Yeah, that could be a whole… I should write a book chapter on that. Madness.

[00:34:38.920] – Sean

Go ahead. If you can, sorry to interrupt you there. What red flags jumped out at you?

[00:34:43.720] – Christine

This is unbelievable. They were bringing me on to the M&A team. They were in the co working industry, which is parallel to co living. They had, again, German based company. They were swooping up co working spaces around the world. They took it to a billion dollars within a couple of years in Rev. It was insane. These are the best M&A guys I’ve ever seen in my life. I got to see them work a little bit. They were bringing me on their team to be the lead, to do the same thing with co living because I was like the expert and the leader, thought leader in the industry. I hate the word influencer, and I wasn’t trying to be, but I wrote the first book. So everybody knew me and they trusted me. I would have been the face. Those guys were sharks. So they would have just… And a lot of them wouldn’t have known any different. So they would have pretty much lost their company. But these were the red flags. Other than that, I was excited to be in M&A. I was like, Whoa, this is great. I went there two weeks before signing.

[00:35:41.010] – Christine

I signed the I didn’t sign purchase agreement yet. We didn’t get the lawyers involved. I go, Well, let me go there now to try it out. Thank God. My friends were like, Don’t do that. That’s not smart. Sign the purchase agreement. I’m like, No, let me just move to Berlin, try it out. I swear to God. They’re all cheating on their wives, all four of them have to hear about that in.

[00:35:59.920] – Sean

The office. Is that all good old red flag?

[00:36:03.590] – Christine

Yes, yes. Racist. Third red flag is when the guy’s 11 AM, Thursday morning, sits down, the analyst does a line of Coke right next.

[00:36:11.700] – Sean

To me.

[00:36:13.820] – Christine

Seriously. Okay. I couldn’t sleep for those two weeks at all. Couldn’t sleep. I’m like, Oh, my God. I got to get out. But my partners were going to get a chunk of money. We were just going to cash off the table. A lot of it was on paper, right? The 9.2 million earn out on paper. But there was going to be cash coming off the table. My co founders were really excited about it. I’m like, God, I’m going to let everybody down. And I’m like, Yeah, but look what’s going to happen to me. This is a horrible couldn’t sleep. The second I walked, everybody’s like, Oh, my God. You probably lost sleep. I go, No, it was the… I could sleep again.

[00:36:46.650] – Sean

Good for you. Yeah, the moral decision there, making the right goal. So what happened then? Did you just continue building this business or did you walk away completely or what happened there?

[00:36:57.030] – Christine

No, great question, Sean. So it was SaaS. So it was going to be recurring revenue again. So I rushed to cash. We were out of cash. That was the other problem. It’s like a lot of stress. Don’t make a decision based on… Your brain can’t even handle it. You’re in fight or flight. You make horrible decisions. And I knew that. I’m like, Oh, my God. We’re out of cash. What do we do? It was bad, bad position for pre revenue. And then I’m like, Okay, I got to Zoom back to California and start raising money. Again, these were the hey days. That’s 2019, ’22, ’22 that’s 2019. I mean, $10 million valuation cap on a freaking prerev company, which is ridiculous. I knew it at the time. I’m like, Oh, good. This is crazy. So we raised additional capital. I think we had in total, and I put a big chunk of my own money in the beginning, sold my dream car, which is fine. I’m like, I got to buy another one. When I sold the spa, I bought an Audi R8, which is my dream car. A year later, tech company, more money, boom, sell it.

[00:38:03.010] – Christine

No biggie. Again, I’m scrappy. I’ll do whatever it takes. And everybody knows that. And I got skin in the game. So then when you get to go to the investors, they see that, right? My limit was going to be 500K in before hitting revenue. We went to 600, unfortunately. We’d raise another 100K during the middle of COVID year, July. We went to a couple of the angels that were already in to get more capital. And I told everybody, if we don’t hit revenue by the end of the year, then we just can’t do it. Exited the company 2021, pennies on the dollar, but I would not close it. But I did not want to shut it down. I was literally because I kept giving myself a deadline. By the end of the year, if we don’t have revenue, I’ll shut it down. I’ll sell it or shut it down. Didn’t happen. Okay, by March first, okay, and my team saw this, but I just don’t want to shut it down. We had worked so hard. Then October 2021, finally, because I physically could not shut it down. Could not. I don’t know why. I guess because I’ve never shut a company.

[00:39:06.250] – Sean

Down before. Wow. In that case, you sold it for pennies on the dollar. You got out of it. Gosh, a SaaS business. There’s so much I want to talk about here, and we’re coming up on time. We’re going to get you on again. We’re going to dive into this a little further. But after that, is that when you started this M&A type business?

[00:39:29.550] – Christine

Exactly. Those three years were the tech company hardest years of my life. Waking up in the fetal position, not sleeping 80, 90 hour weeks. It was insane. And again, that’s what I wanted. So I don’t regret things I did. I would regret something I didn’t do. So I gave it a try, tech, as big as you could get. And so, yeah, long story short, now we helped SaaS company sell and now we help tech and I fully understand it. I learned how to raise capital. I didn’t know how before. So I learned so much in those three years, so much that now it’s massive benefit. Now we can sell companies between three to 10 million purchase prices because I understand how to position it and how it works. Again, cash flow. So Magnolia firm launched after that. I launched again, parallel entrepreneurs. So when I was… I had already started launching it as I was selling that one. October 2021, launched the Magnolia firm and I’m Lauren, my right hand for five years, who’s been through multiple companies with me. She’s incredible. Shout out to her. She came along, we started it. I started doing deals very rapidly.

[00:40:44.480] – Christine

I did a few for my friends to start with before I even started my firm. They were like, Hey, can we pay you as a consultant? Can you help us exit? So 2021, a lot of my friends exit. That was a hot year for exits, in my opinion. I don’t know if your listeners agree, but we were coming out of COVID and people were spending money again and buying cash flow businesses. I sold five that December. I had five closings in one month, which was insane. To put that in perspective, the average business intermediary broker does two a year. So I made it official that October and then yeah, close five in December, brought on my business partner 12 months later, so recently. And he’s amazing. He’s the implementer integrator, and I’m.

[00:41:30.920] – Sean

The visionary. Got it. Okay. All right. So that’s what you focus on strictly today is helping businesses sell. You’re at the sell point or transaction, correct? Yeah. And sometimes it.

[00:41:40.310] – Christine

Will help the buy side also if they’re looking for a venture and we could do outreach for them based on their criteria. We only strictly work with digital based businesses, remote based globally. We have clients in other countries. Got it. Okay.

[00:41:54.060] – Sean

Now that I’m sure you could totally lean into your history of going back to the service business, the brick and mortar, probably be very easy. But you’re in a whole different world now with global tech.

[00:42:04.160] – Christine

Yes, I love it. This was my retirement plan. People knew that in the back of my head I said I wanted to own a boutique M&A firm, do my own deals when I want. It’s great, great money. Now, what do I do? I told my colleagues, I’m like, Guys, I have a mastermind. I’ve been in for a decade. I’m like, I’m only going to do boutique. Me, Lauren, that’s it. I’m like, I’m just done. I want to be semi retired. It’s been a long journey already. They’re like, You’re going to go big. We know you. You’re going to go big. That’s what you do. Y eah, I brought the business partner on, so I’m like, Let’s do it. W e just want to be the global leader in M&A Advisory because the business brokerage, it is such a dated, horrible industry, bad reputation. W e’re just changing the game with Magnolia Firm. So our vision is to have 60 business intermediaries under the Magnolia Firm within five years. So it will be a good size. And we want to just attract top talent and people that have strong ethics and values like we do and just doing deals the right way.

[00:43:08.490] – Christine

So it’s fun. I’m excited to build the firm out, or we are building it out. Automation’s just a great team. Now we’ve got six, seven people on our team already. I was going to ask, how many people? We’re ramping up.

[00:43:20.920] – Sean

Well, I’ll definitely have you on again to dive into lessons learned of some of the sales you have gone through in your business. I think it’ll be a lot of fun to get you on in a few months. Again, what I’d like to do next is dive into the rapid fire round. And if you can try to answer each question in 15 seconds or less, you ready?

[00:43:39.190] – Christine

I’m ready.

[00:43:39.610] – Sean

All right. What is.

[00:43:42.020] – Christine

Your favorite podcast? Oh, gosh, I have so many favorite… It’s weird. I have favorite guests. I binge certain guests. So every time they’re on a podcast, I know it’s a unique answer. So I’ll name a few. David Gauggans, he just released his second book. I’m a massive fan of his from way back and living with his steel days, that his name was not even mentioned over 10 years ago. David Gauggans, he doesn’t do a lot. Unfortunately, I wish he did more. Then Alex Hermozi, I’m on a huge… Because he’s doing the circuit again. He’s been on a bunch recently again. So let’s binge listening to Alex for two weeks straight. Who else? I like Lex Freeman as a host a lot, depending on the guest, who he has on. Obviously, Joe Rogen, he’s amazing. He’d be my top as far as him as a host and how good of a host he is. I listen to the MMA fighters podcast, not so much interviews, but some of the other cool guests. Elon, if Elon’s on any of them, I’m going to listen to it. Sure.

[00:44:46.230] – Sean

What is the recent book you read and would recommend?

[00:44:49.430] – Christine

It was that one, Can’t Hurt Me. It was David Gauggens. His most recent, How am I Drawing a Blank on It? Can’t Hurt Me is his first one. Then his second one, I’m Drawing a Blank, but it just came out a couple of months ago. Just finished it. I’m about to relisten to it. Oh, For Our Work Week, sorry. My all time favorite out of all the years, For Our Work Week. Tim Ferris. Yeah, Tim Ferris.

[00:45:10.570] – Sean

I love how David, he just does not care about the opinions of others. A major lesson learned. I think everybody should.

[00:45:17.270] – Christine

Take away. I love, yeah, everything he says.

[00:45:21.540] – Sean

Listen to him talk for an hour. All right, next up, movie question. What is your favorite movie?

[00:45:27.130] – Christine

Wolf of Wall Street.

[00:45:28.570] – Sean

Is it really? You didn’t like the group of guys that worked at that firm doing lines on the desk, and here you are. I have to admit, I love the movie too. I thought the screenplay writing was actually.

[00:45:46.050] – Christine

Really good. Yeah, definitely.

[00:45:48.730] – Sean

That’s funny. All right, a few business questions here. What is the worst advice you.

[00:45:54.660] – Christine

Ever received? I found it such amazing advice given to me all over the years, which I’m grateful for. But it taught me a lesson. Every bad advice always teach me a great lesson. I would say probably people pressuring me to be that CEO of a $50 million company. I think that would have been the advice. Then me learning by having that coach work me through it.

[00:46:20.070] – Sean

Flip that equation. What’s the best advice you.

[00:46:23.560] – Christine

Ever received? Three real quick, high or slow, fire fast. Fastest way to the cash. That’s a mantra of mine. And that’s great for salespeople, like, move, move, move. What’s the fastest way of the cash from day one? So don’t paralyze yourself and then kiss. Keep it simple and stupid. My team hears it all. Just keep it simple and stupid. Stop over complicating things.

[00:46:45.930] – Sean

I love it. Speaking my language, so many entrepreneurs want to work on all these random things that don’t produce cash. It’s like, no, drive right to the cash. All right, we got to end it off here. I know there is another question we’ll get you on again. We’ll ask the time Machine question, but I have to ask, where can the audience.

[00:47:03.930] – Christine

Reach you? Linkedin, I’m on every day, so you guys can message me there, connect with me there. Yes, that’s the best place.

[00:47:10.720] – Sean

Awesome. Well, thank you so much for your time, Christine.

[00:47:12.740] – Christine

Yeah, thanks, Sean. I appreciate it. All right.

[00:47:14.760] – Sean

We’ll see you. Bye.

[00:47:16.710] – Sean

Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing.

[00:47:36.950] – Sean

If you do.

[00:47:38.020] – Sean

Hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buyer sell decision based solely on what you hear. All right.

[00:47:49.330] – Sean

Thanks for your time. Talk to.