Martin Eveleigh – Building a Sellable Business | Charting Opportunities

[00:00:00] Welcome everybody. Um, this is our, for many of you now, you know, this is our, our wins or our, our monthly event series we call Charting Opportunities. Um, it is a series dedicated to towards business owners. Where we bring in, uh, various speakers to talk about things that we have learned are important to, to fellow business owners.

And so, um, this month we’re, um, we’re running one back that I tried to run by myself in June, um, at Martin’s house. Um, we had decided to take June and July off of hosting live events, and we were gonna do a podcast iteration of it. And I told, we did it on a Saturday afternoon sitting by Martin’s beautiful pool and I told John and Caitlyn not to worry about showing up and I’d run it by myself.

[00:01:00] Um, and it failed. Um, so anyways, um, needless to say, you need a team to get things done. So, um, here we are again, um, with another, um, awesome opportunity to sit down with Martin. I’ve known Martin for 13 years. Um, so Martin and I met in a Vistage group, um, back in 2012, where we met Anne-Marie back there as well.

Um, and it’s been a pleasure to know him. And over that time, Martin grew and ultimately sold a business. And so what we wanted to talk about today with Martin was a little bit about him, um, a little bit about his industry. ’cause I think it’s an interesting industry that people know a little bit about, but not a lot.

Um, and then dive into the process that he went through, uh, positives and maybe a few negatives along the way, um, of selling the business. Um, and. Maybe a few things he’s learned on the aftermath of it as well. So anyway, so before I go any further, I’d like to say, uh, welcome [00:02:00] to our wonderful, uh, global audience.

Um, we are live streaming this on YouTube live as well as LinkedIn Live. Um, so for those of y’all who have been able to join us online, we appreciate you jumping in and, and saying hello and, um, and watching from afar. So, um, anyways, without, um, without anything else, Martin. Thanks for joining us today. Good to be here, William.

Thank you for having me. Um, so Martin, as we talked about, um, I’ve known you for 13 years. Um, the audience in large part hasn’t. Um, if you don’t mind, give us a little bit of background on where you came from and how you got to be in the chair sitting there. Okay. Well, um, as you can tell, I’m a good southern boy.

Um. It’s, uh, south of another country, of course. So, uh, I’m originally from London, um, but, uh, I left the UK [00:03:00] back in 1998. We’ll get to that. Um, I started my professional life having been called to the bar. I didn’t practice. I went into the insurance business as an insurance broker, uh, with Willis, which was, I suppose.

Number three broker in the world at that time. I think it probably still just about is, um, in London. And so, um, working in the London insurance market, going, placing risks in Lloyd’s and the company market and so on. Um, for, uh, clients, uh, in the far east. Uh, so this was placing reinsurance, uh, business for clients in India, Japan, and many other places.

Um. I took a bit of a break to go and do some sailing in the mid nineties, and after that, uh, didn’t really want to go back to doing what I’d been doing. Um, so I [00:04:00] looked around and I thought, well, well, where, where might I end up? Uh, and I did end up or eventually in the British Virgin Islands, uh, with KPMG, who at that time had a small.

Business managing captive insurance companies. Um, so I took that job on and I was with them for about four years, uh, before I formed my own company, Atlas Insurance Management. Uh, which we started in The Bahamas actually. Um. We had a very warm welcome from the, uh, Bahamian insurance regulator. They rolled out the red carpet, said, oh, you have to come and start your business here.

And, um. Anyway, let’s just say things didn’t work out terribly well in The Bahamas, actually trying to get anything done with the regulators there that didn’t involve, um, anyway, perhaps I better not say it. Um, the red, the red carpet was short-lived. It was, yes, it was a very short red [00:05:00] carpet. Um. I then moved to the Cayman Islands, um, and, uh, I was there for seven years.

Uh, before moving here to Charlotte in 2011, um, I had a need for, uh, an office here in the United States. Um, and, uh, having. Tried to achieve that by employing people. Um, it was pretty clear that wasn’t working out. So I came myself, and here, here I am, um, in, I guess, sort of late 2017 probably. Uh, yeah, that’s right.

Um, I. Decided that I was kind of getting to the end of the road. I’d been doing it for long enough. Um, and I started to understand what the value of the business might be, which previously I really had not. [00:06:00] Um, and so round about that time, I, um, decided, okay, it’s time to sell. Um, and we did sell the business eventually closing a deal in 2020, uh, with Risk Strategies Company, a broker.

So that ja, January, 2020 to be precise. It was, yeah, it was right before COVID. Yep. Um, as we reminisced about last week, I remember the celebration, um, pre COVID. It was one of the last celebrations that people were able to have pre COVID. Um. So before certainly dive into the aspect of selling the business, um, and the highs and lows in the process of, um, interviewing m and a, uh, groups and everything else.

Again, captive insurance is something I think most people have heard the phrase and understands a little bit about it. Um. High level overview of what captive insurance actually is, um, and [00:07:00] why people end up going that route. I’m disappointed, William. The high level overview. All right, you go. I mean, we could do the, uh, if I had the slide deck with me, we could do the, uh, two hour, you know, captive 1 0 1 presentation.

You asked for 30 to 40 minutes. Wow. Alright. Okay. Um, maybe another time, um, captives. So a captive insurance company is. A private insurance company. It’s an insurance company that is formed to ensure the risks, essentially of its parent or its affiliates. Um, we can broaden that Definit definition a little bit to talk about risks, which are perhaps within the control of those who own the captive insurance company, but.

If [00:08:00] we go back to sort of the very beginning and, and, and a pure definition, it’s a self-insurance vehicle, so that a company that chooses to retain some risk rather than transferring those risks to a third party, has a formalized financing mechanism to deal with any losses that may arise outta retaining those risks rather than transferring them.

So. Um, if you think about insurance, a business has risk and it can either ignore the risk or it can decide to do something about it. To finance the risk and the usual way of financing the risk is to pay a premium to a third party in exchange for transferring the risk to that third party. You buy an insurance policy, but sometimes.[00:09:00] 

The premium is too high. At least that’s your view. The insurer may think it’s too low, but you feel it’s too high, and you say, well, what can I do about that? Don’t buy the insurance is the obvious thing. But then you have an exposure, um, which is probably not terribly palatable. So where is the middle ground?

And the middle ground might come. This is probably as easy an example as you get where as a business you decide that instead of buying a policy that’s gonna pay every single claim that you have, you take a high deductible, um. We do this with our own auto insurance, you know, do you want a $500 deductible or a $1,000 deductible?

Then the premium will be less for the $1,000 deductible because you as the driver, are on the hook for that first thousand dollars. The insurer doesn’t come in until [00:10:00] you get past that. Similarly, in commercial insurance, whether it’s your workers’ compensation, your general liability or auto liability, you might go to an insurer and say, look.

I don’t need you to pay every claim. I’ll handle anything up to a hundred thousand dollars, at which point you ought to be getting a discount on your premium, but you also now have a risk exposure that you had previously transferred, and you can either just pay it out of pocket, pay those claims as they come along, or you can think a little bit more strategically about.

What to do with that risk. Um, and this is where you might think about saying, all right, well if I had my own insurance company and I take that premium saving and I’ll buy a policy from my own insurance company for that first $100,000 of risk, [00:11:00] what does that look like? Um, and the insurance company that you established there is the captive insurance company.

Um. That’s a very high level overview and you can ask some questions and have a little bit more detail, but that, that in essence is what we’re talking about. So it is a formalized way of ensuring risk rather than cash flowing it. Having the ability to accumulate reserves to pay it when you choose to, because you have the ability to accept or reject those claims.

Yes. Um, I mean, think about this. Um, within that sort of low level category of risk at a hundred thousand dollars over a period of time, it’s fairly predictable. We know that we are going to have, on average, let’s call it a hundred thousand dollars a year in claims, but [00:12:00] we don’t know whether it’s $20,000 this year and $180,000.

Next, we’ve, we’ve still got this going on. Um, and so really what we’re doing is say I as the CFO of this business, uh, I’ll never be a CFO of any business, but that’s another story. Um, I would like to be able to budget for this expense. I would like to take the uncertainty out by paying this premium to my own insurance company.

Which by the way, I’ve, I’ve put some capital into, and in that way I can do a couple of things. First of all, I now have greater predictability as to what my annual expense is going to be. Um, secondly, if things work out correctly, the premium that I pay to my captive, just like the premium that I pay to a commercial insurance [00:13:00] company, is gonna be a business expense and therefore tax deductible.

Um, and, uh, there may or may not be certain tax advantages in the captive insurance company itself. Um, what else? Uh. Insurance premiums typically are paid on day one. Claims are paid depending on the type of risk any time between day one and year seven, uh, which means that there is an opportunity to earn investment income on the premium between the time that it’s received and the time that is used to, um, pay claims.

Uh, so you know a number of different reasons why businesses go about forming captive insurance companies. So clearly, um, uh, we saw each other last week and I believe you told me you’re speaking at a captive, uh, uh, conference coming up, right? Mm-hmm. Um, so clearly still at the top of your game, um, or [00:14:00] maybe not the top, but near top, right.

Um, so and certainly was the case in 2017 and you alluded to it a little bit earlier. Um. Started to understand the financials behind selling it a little bit more, but how, um, I mean, in the 2017 for the math challenge out there, that was eight years ago, um, to make the decision that now was the right time.

How’d you come to that conclusion? Um. I think, I think because again, you’re top of game, right? I mean, in fairness then eight years ago, I mean, you’re still there now. It, it, it in, in a sense. I suppose I was, but at the same time I was also. Feeling I was getting a bit tired of the whole thing, to be perfectly honest.

Um, uh, I, I guess we all feel this from time to time. Life can get repetitive. Um, and sure, we were trying to move things in a different direction and broaden the scope [00:15:00] of what we were doing with some success, but at the same time, eh, you know, sometimes you feel you’ve been doing it long enough. But apart from that sort of, you know, and, and I think that’s an important thing.

I mean, I think you have to be personally ready to give up your business. Um, equally, you look to the future and you say, at some point, I want to de-risk this. I wanna take the money off the table. Um, so that’s another consideration. But specifically back then when a, you know, the penny dropped. Uh, I think the two, two things, um, I think we’re probably all familiar with the idea of a business being valued, uh, on a multiple of its ebitda.

Um. I guess there were two things that I had [00:16:00] not realized at that point. One was what sort of multiple, uh, was prevalent in my industry. Um, I mean, we probably think in terms of. Multiple of five being sort of fairly common or garden, don’t we? But in the insurance industry, it is actually potentially significantly higher than that.

And if you are a large insurer, it might be well up in the teens, it will be well up in the teens. Um, that didn’t apply to us, but nonetheless, it was the realization that it wasn’t gonna be five x, it was gonna be better than that. Um. The other was the realization that EBITDA doesn’t mean ebitda, in this case, it means adjusted ebitda.

And at that point I thought, well, [00:17:00] hang on. My EBITDA is this, but my adjusted EBITDA is, uh, potentially about two times. At which point you think, oh, well this might be worth something. Thank you.

So adjusted EBITDA and multiples are important. Um, so is finding. A group to help you through the process. Um, my understanding of after knowing you for 13 years is it was the first time you sold a business. Yeah. Um, and so having that trusted partner to walk you through that process was an important step for you.

Right. So did you just go on LinkedIn and, and type in how to sell a business and, and find somebody? Or how did you, how did you sort through? The opportunities that were coming your way from an, uh, m and a firm to sell at that point in time. LinkedIn sounds a sort of fairly sophisticated way of doing it.

William, I went to Walmart. Um, [00:18:00] there, it’s one option. We, I, I, I suppose, I dunno whether this happens in all industries, but certainly in our industry. Um. There is a constant stream of people knocking on your door, asking whether they can invest, whether they can provide you with the finance you need for growth.

I got two emails today. There you go. There you go. Um, most of them are time wasters. Um, and you really wonder why they’re bothering. Um, I, we, we never needed money for growth. Uh. Might have been a different story if I’d borrowed some money to grow the business at some point, but I never did. Um, it was all entirely organic.

Uh, nonetheless, um, you know, after a long time in the industry having that sort of approach, meeting people at conferences and so on and so [00:19:00] forth, you start to know who the specialist players are. Um, and I, again, depending on your, your industry, uh, I think it, it may or may not be important whether you go with a specialist player, but certainly if you’re operating in the financial services sector and specifically in the insurance sector, I think you need a specialist.

Um, so somebody who, you know, sells widget manufacturers is probably not going to be the right person to help you in that instance, especially understanding the complexity that you had. Um, having still an entity in the Caymans in multiple of the islands down there, you needed somebody that understood the Cayman, um, the insurance and the complexity that went into it.

Um, so how’d you find them at a conference? Um, I think I had, or Walmart, well, I’d certainly met the people, uh, that we ended up [00:20:00] with on one or two occasions previously, uh, at conferences, I’m pretty sure. Um, I think we spoke to about three firms, uh, fairly quickly, narrowed it down to two and. The two that we had narrowed it down to, I think either one of them would’ve done a very good job.

Uh, we, uh, we went with the firm that we went with in the end, partly because of personalities that comes into it. Who are you comfortable working with? But these guys were sell side only. Um, and so I felt that, you know, that removed a sort of potential conflict element. Um, and uh, that’s, that’s why we chose who we chose.

So the [00:21:00] process, so you select the group is Chicago based group, wasn’t it? Do I remember that quickly? No, no. Um, I think head office is New York, but actually they had a couple of guys here in Charlotte as well. So, uh. We, we were working very much really with the, uh, with the Charlotte team. Okay, awesome. Um, so you select the group and, um, you start the process.

Um, and for you the process was fairly, um, fairly simple. Um, you put together your book, um, and you ship it out there. Um, right, yeah. I mean, simple in the sense that. Your advisor is asking you for information, um, you know, numbers mostly, but you know, it’s, it’s, it’s details about how many employees you have, what do they all do, um, what do they do?

I’m just, that’s just a joke. Good. [00:22:00] It’s one, it is that one of your dad jokes, William? Something like that? Yes. Um, they’re asking for a lot of information. And they are then taking that information and preparing a financial package. And this is where the adjustment of the EBITDA comes in. You know, they’re saying, well, what’s it gonna look like when, um, what that person stay?

What about you, yourself? And so. You know, they’re making the adjustments that they think are fair to present, uh, a, a reasonable picture of what the company really looks like for the purchaser, um, and all sorts of information, as I say, number of employees, where are they? Um, do you [00:23:00] have any litigation going on?

What’s your pipeline look like? And so on and so forth. Um, they do a lot of work on that back and forth, back and forth, back and forth until we’ve agreed that yes, this is indeed correct and it’s fair and we are happy with what you are presenting. And then we also had, uh, a discussion as to who they should be approaching.

Um, and they came up with a list of potential, uh, acquirers, um, some of whom we knew, some of whom we didn’t know. Um, we came up with a list of people that we had no interest in speaking to whatsoever because we knew that we wouldn’t enjoy it. Um, and so that meant a couple of theirs came off the list. We added one or two to their list, and at that point.

They sent it out. What was it like when they sent [00:24:00] it out? Martin? Um, excitement, nervous, um, joy, anxiety, frustration, um, relief that you were at least past that part. Um, like the moment that they say, Hey, we’re, we’re good. We’re done. We’re sending out your packet. Um, do you remember?

I don’t. I, I don’t remember terribly well, but I do know this, that the moment that packet goes out, you are super keen to see responses coming back in. Um, and is anyone going to respond favorably or are you gonna get a whole load of people saying, no thanks, not interested. They like the look of this, um. I think we got responses fairly quickly.

Uh, for the most part. I mean, obviously there are some who take more time. Um, and we did [00:25:00] get quite a number of, no, not interested, not for us, but we also got some others who are coming back saying, well, we’d like a bit more information. Um, and it was. It was pretty positive, I think. Um, we got to a point where we really had got to, okay, these are people who have some serious level of interest, um, at which point a bit of information back and forth, followed by meetings.

Um. You can ask it here, you can ask it later. How disruptive was this for you, for your team? How disruptive was the, the entire sales process, um, from the business at large? You oftentimes hear that selling the business is like running a second business, right? So for you, what was that process like? [00:26:00] And then how many folks on your team knew.

At, um, up until the point that the transaction was it, was it you and a handful? Um, was it you and one other? What was so, um, kind of combo question there. Um, I’m pretty sure it was only two of us. Yeah. Um, so it was myself, um, as chairman, CEO, whatever. Uh, and, uh, Elaine, who was my number two, um, who’s also a small shareholder, right?

Yes. Yeah, yeah. Small shareholder. Um, and, uh, who really sort of, go ahead. So y’all, the two of y’all ran the process and, but she did a lot of the dirty work. She did the leg work. Yeah. Yeah. I mean, she provided all the information. She. Dug into everything and gave ’em what they needed. Disruptive to [00:27:00] the business at large or were y’all able to hold it together?

No. Okay. Um, part of that goes to the fact that you spent five years in Vistage understanding how to delegate, um, and get the team around you to work, work the business while you oversaw it. Yes. I think at that point I was in the quite fortunate position of having a team of people who could do. Most of what was needed in the business.

Um, and that meant that my own role, uh, yeah, dealing with new clients, dealing with, you know, major problems as they arose, but on a day to day level, um, having, I suppose, a fairly easy life. So that when it came to having to spend time thinking about and working on the sale of the business, it didn’t really detract from [00:28:00] operations.

Is there anybody in that Vistage group that really had a, um, fundamental role in helping you? I’m just kidding with Anne-Marie sitting over there. That was a joke. Another bad dad joke. Um, so anyway, so you, you’re going through the sales process. Um, you’ve got a couple of folks that are interested in buying the business.

So what’d you end up with? Three or four that came back with serious offers? Is that what ended up being Martin? Do I remember right from our June conversation? I think in the end it was probably two and a half. Two and a half. Um, one almost made an offer. Um, but I sort of probably blew the interview as it were.

Talk about that. I love the interview that you blew. Um, so. We were approached. We had approached and put, put the pitch to, uh, a pretty large, uh, insurance brokerage operation. [00:29:00] And they had a very keen interest in what we were doing and actually having a captive management operation for themselves. Um, and.

I went and sat down with them, together with, uh, one of the guys from the, uh, you know, the, uh, from the bank. And one of their questions was indeed about, well, why are you selling the business? Et cetera, et cetera, et cetera. And being a sort of, you know, I hope, fairly honest kind of guy, I said, well, I kind of like to retire before too long.

Which was not the answer that they wanted to hear. I think they really would’ve liked me to be thinking more in terms of, well, you know, I want to be part of a larger group, take advantage of uh, what you can bring and, uh, I want to be here and grow this business for the next seven to 10 years or what have you.

Um, but that wasn’t the [00:30:00] case. Um, and uh, so they dropped out, uh, just on the basis of that. So tell ’em you wanna work for the next five years, is what you’re saying, even though you might not want to work for the next five years. I think just be aware that you are almost certainly going to be re most people are gonna want you to hang around for at least a certain period of time, whether it’s 18 months, whether it’s three years, whether it’s five.

I don’t think anyone’s gonna ask for a longer commitment than five years, unless you are really quite young at the time that you are selling your business, and you are talking about, okay, we’re really gonna do something with this. You get to later in life. I, I hope people are a bit more realistic, but

they’re looking for at least some sort of commitment. But the odd thing is, is you found the right, you found a group that you enjoyed working with, and you ended up staying on board for four and a half. [00:31:00] A half years. Yeah. Four and a half, five years. Yep. Um, so you were ready to retire except you started to enjoy the, what you got to do after selling the business?

Uh, up to a point. Yes. That’s right. I mean, I, well mean, I, I might have been ready to go, uh, a year earlier, but, you know, looking at other things going on in life. The timing in the end seemed about right to, uh, give it all up. Uh, when was it? October of last year. So October 24. So I’ve now been retired for almost 14 months.

Yeah. So, um, so you blow an interview. Um, did you know it as soon as you walked out? No. Um, I think. I, I didn’t know it’d blown it. Yeah. But it, it was clear it wasn’t, you know, hadn’t [00:32:00] gone as well as one might’ve hoped. So you still had two on the hook though. Um, so, and I mean, obviously, um, process worked out.

It, the process worked out. Um, one of the things that was very interesting was the, the wide range of offers. Um, I mean. Our, the offer that we eventually took, um, which I was very happy, came from the people it came from ’cause I thought culturally it was a very good fit, was about 50% higher than the next Best Alpha.

Um, so. It was maybe a close call. I might have ended up the whole lot less, but we did okay. We were happy. Yeah, no, it was one of my questions was the, the variances for you were, um, were so large. [00:33:00] Um, I mean, I don’t, which, do you remember which one came in first? Were, did they come in first or the, um, the next, the, or did the lowest one come in first?

Do you remember? No, the highest one came in first. Okay. Yeah. Yeah. So I said, oh, okay, good. I gotta, the higher one, I’m, I’m in good shape. And then, yeah, no, it was quite easy when the second one came in to say, well, that’s not gonna work. Um, yeah. Yeah. And then there was a third that was. Didn’t put anything in writing, but it’s sort of given some indications about this, that, and the other, and they clearly were not gonna get there.

Yeah. So, um, the process from there, um, your process, how did it go once you identified, yeah, we’re gonna move forward with the highest offer, which also was culturally fortunately, like you said, culturally was a great fit. Um, the process from selecting that to the end, easy, smooth hiccups, anything, anything to share that process.

Um, well, the process basically works that, you know, [00:34:00] they give you an offer in writing, um, and you take it or you don’t take it. Okay? There may be a little tweak here or there, but you basically sign. Effectively a letter of intent, and now you are gonna move towards closing, which means that, uh, they’re gonna do a ton of due diligence because all they’ve really seen to date is that pitch.

Um, but now they’re gonna want to make sure that everything that was put into that pitch was accurate. They’re not being misled and so on and so forth. So they’re gonna take the drains up, basically. Um, and they do. Um, some of that is alright, you know, send us all these documents. Um, some of it is in-person interviews and discussions and so on and so forth.

Um, that actually didn’t take terribly long, I don’t think. [00:35:00] Um, but when we got to the sale agreement and their, them dealing with the, uh, the foreign aspects of our business, that’s when things really started to get a little bit more difficult. Um, so, um, the non-competes. I wasn’t thrilled with my non-compete because it was a lifetime non-compete.

Um, their view is we’re paying you a lot of money. Uh uh Okay. Um, good point, good point. Um, but they took a long time looking at things like employment contracts in the Cayman Islands. And they simply didn’t understand. I mean, you know, you’ve got [00:36:00] a law firm sitting up in New York thinking that it can draft an employment contract for people working down in the Cayman Islands.

They hadn’t thought that maybe the Cayman Islands has its own own employment laws. Um, and this really was a bit shocking to me that, um, I dunno, there is perhaps an attitude. Uh, here that these little offshore jurisdictions don’t really matter very much and that you can just do what you like. You can’t, um, they have their own laws, they have their own courts and, and you know, you gotta follow the rules.

And they’re rather proud of them. What’s that? They’re rather proud of ’em. Those little jurisdictions, they’re rather proud of their courts and their laws. Absolutely. Yeah. Yeah, of course. Yeah. Yeah. So that slowed us down. Um, and in fact, they, they bought three captive management businesses. One they’d already bought before.

Uh, they even, you know, had seen our pitch. So that was done and dusted. [00:37:00] Um, but we agreed, whatever we agreed in, oh gosh, February of 1919. Yeah. Um. About three months later, they agreed a deal with another captive manager. They closed that deal in three months. So those guys got closed about five months before we did.

Um, so that whole offshore element really threw them. But there we are. I mean, we got there in the end. Yeah, no, I mean, it’s a good point. I mean, we had, you know, David, an attorney come in and talk in, um, in August just about tying up your, your documents and agreements and things like that. And really important to have in place in this particular instance, Martin had in place.

Just the difference in the legal personalities, I guess, um, caused it to drag out a little bit longer than, um, we’ll say you would’ve liked. [00:38:00] Yeah. I mean it was, it was frustrating. Yeah. Um, you know, they’d said, oh, we’ll close within three months. And we thought, wow, that’s pretty quick. Thank you very much.

We like it. It ended up being, you know, more like a year. Yeah. Um, but hey, it closed. We closed and fortunately it closed because again, two months later after closing it was COVID. COVID. Yeah. Um, yeah, I think the timing was probably quite good. Yeah. No, it was fantastic. Um. Employees, how’d you tell your employees?

Um, so you, how many, so you ended up, so you came here in 2011 and you ended up with how many employees in North Carolina then? How many employees did you have in the Caymans? It was about 14 here and 11 there, something like that. 14 and 1215. Did you pull everybody together? Did you tell the North Carolina office and then you pop ’em in a plane and go tell the Cayman office?

Or how did you handle it? I can’t remember. Sorry. That’s okay. [00:39:00] So I think we had it in June. Um, so I’m just kidding. Um, but, um, anybody upset, disappointed, um, pick up and leave? Um, or how did the, how did the employees handle react after the announcement? I think the great majority of them were fine, um, with the principle of the thing.

Um, uh, I’ve, I’ve talked about the, the fact that I thought there was a good cultural fit. That was something that I emphasized at the time of making the announcement. Um, and also the fact that we were going to be, at least for the time being pretty much autonomous and so nobody was gonna be interfering, uh, in our day-to-day lives.

So. I, I think from that point of view, people were fairly comfortable. Um, [00:40:00] the other thing that we were emphasizing was what we perceived to be the new opportunities that would arise from being part of a very much larger organization. Um, and so all of that I think was positive. Um. Later on as we got towards closing, or I suppose probably immediately post-closing.

Now you get to, alright, well you have previously had this employment contract, you’ve had these benefits. Here’s our employment contract and here are our benefits. I think quite honestly, that for the most part, the benefits that were offered by the acquirer were at least as good as the benefits that we’d previously been offering.[00:41:00] 

Um, I will say that we always offered very good benefits, um, for, for a small company, you know, it was top notch. Um.

I think for some of those in the Cayman Islands particularly, but also for some here in, in, in, in the States, there were personal circumstances where the new benefit regime was seen to be a little bit less advantageous here or there. And sometimes you, you, you get somebody for whom that’s important. Um, so yeah, there, there were one or two people who were less happy.

I think most people were reasonably happy. Um, I think we had one that left. Um, but I think it was anyone. [00:42:00] So, um, again, not to harp on details, but I’ve known you for a few years. Um, you, as you pointed out earlier, you’re a fairly honest person. You’re also a fairly direct person. Um, you, um, um, in a good way, um, ask Martin what he thinks of a restaurant.

I tell you. Um, so around here it’s not necessarily always positive, um, but um. You, you have an independent streak associated with you. I’m obviously right. You started your own business, you sailed. Um, and so when you sell your business and they want you to come inside the organization and be a part of that organization for somebody that is strong-willed, um.

How did it, how was your transition from being the owner, um, and being able to control, um, the direction of what y’all were going to do to [00:43:00] now being subject to somebody else’s direction?

It was, it was actually pretty comfortable, uh, for the most part, um, because. They genuinely did not want to interfere on a day-to-day basis. They really were saying, carry on doing what you are doing. We would like you to grow the business, but we are not gonna tell you how to do it. Um, certain functions moved across, um, over a period of time.

Uh. Uh, accounting, this, that, and the other. Gradually moved over. HR moved over. Um, but how to go about. [00:44:00] Generating new captive insurance management business and how to look after existing clients. Uh, nobody was there telling us how to do that at all. So really we were running a business within a business.

Um, and, and that was fine. Um, which is part of that cultural fit, right? Like they still wanted, like, um, they wanted that entrepreneurial spirit to still shine through while you were there. Yes. Um, and of course, you know, part of the, part of the deal was that there was a three year earnout, um, know, measured against growth.

We didn’t do very well. It was COVID. The other two captive management companies did rather better, but there we are. That’s alright. So we’re coming up on, on time, right? So I’ll turn it over in a second to audience in case there are any questions out there. Um, any, um, anything you learned? [00:45:00] Regrets, um, tips, tricks, um, over the course of, um, I mean, I don’t know, we’ll call it kind of went into market at the end of 2018, beginning of 2019, um, over the course of the last six or seven years.

I guess we’ll keep it simple. Regrets and um, and tips.

I think having learned, having learned that you, you are gonna have to stay on, as I say, it’s gonna be different for different businesses, but for, for us, they wanted at least three years. The other guys might have wanted more. I don’t know. Um, that makes me think that I probably should have done this two years earlier.

Um, not to say that I would’ve necessarily wanted to have retired two years before I actually did, but I might have liked to have had the option. Um, so that’d be one thing. Um, [00:46:00] I think business owners probably ought to think about the exit sooner rather than later. Thinking about it, knowing what the options are is a good thing.

It doesn’t mean you have to execute on that. So that would be one slight regret, but it’s a very small one. Um,

otherwise, no. I mean, I don’t, I don’t Your big proponent in, um, of, of Vistage mm-hmm. And what you learned as a result of that. Um, you just wanna talk about that for a minute and how it helped you get ready? Yeah, I think there were two things. It was Vistage to begin with and then it was EOS. Um, and I joined a Vistage group about a year after I arrived in Charlotte.

So that would’ve been [00:47:00] 2012 or 13. 2012. Thank you. Um, and I stayed in that group actually for 10 years. Um, so I continued for a couple of years after the acquisition. Um, at my own expense, I will say that was not deemed to be, uh, something they wanted to pay for, but there we are. It was worthwhile to me. Um, yes, I mean.

The whole experience of sitting down with other business owners and with the Vistage Chair and just taking time once a month to stop and think about what you’re doing and to focus, you know, just, just. Not be immersed in the day-to-day hullabaloo of, oh, I’ve got this to deal with. I got that email to deal with.

I’ve got this [00:48:00] meeting. You know, just to get outta that and look at what you are doing and be more purposeful about it was really very helpful. And then I think about five years into being a member of Vistage. We implemented the, uh, EOS system, which most of you are probably somewhat familiar with. Um, and that gave a structure to our business.

It gave a sort of methodology to what we would were doing as we went about managing the business. That I think made a tremendous difference to us. I really do. Um. I don’t know at what point that system. Is not applicable in terms of the size of the business, but certainly for a business of our size where we were employing at the time, we implemented probably 20 ish people.

Um, it was perfect. Worked really well. [00:49:00] Yeah, I mean, it’s one of those things that, you know, Vistage NAS are really good because so many business owners, um, start off as practitioners and they happen to be really good at their trade. Yeah. Um, and then as a result of being really good at the trade. The business grows up around you, but it turns out that you might not necessarily be all that great at running the business.

Um, and then so having those business owners around you and then adopting that system, EOS or whatever it ends up being, starts to provide that. Structural integrity to the business that allows it to succeed beyond the practitioner just being really good at what they do. So, um, and it’s, it’s a great testament.

I agree. Um, so any, we got a few minutes. Um, John’s waving his hands dancing. You should have seen him dance pat there. It’s a pretty good dance, um, to try to, uh, to try to get us to stop. So, yeah. Any questions for Martin? So, so Martin, we had an, an virtual question [00:50:00] here, right? Jeff is asking as the seller of the business, and William, you can pipe into, is there anything that you can do to speed up to make the transaction close any faster?

So I’ll let you answer that and then if anybody else has a question, I’ll take the microphone to you. John just wanted to be on the camera. Um, curious. You know, John, I’m honestly, I’m not sure. Um, I think that. Had we not had elements to our business that were not well understood by the acquirer IE the foreign elements to the business, uh, I think it would’ve gone within the sort of timeframe that they were talking about, which was three months, and how you improve on three months in closing, uh, a transaction like that.

Uh, I, I have no idea. I think we were well prepared. Um, what we weren’t prepared for was their [00:51:00] ignorance, I suppose.

Easy to say that now that you’re beyond the, the earnout and the buyout, right? Yes. Easier. Yes, for sure. Anybody else,

David?

I had one question for you, and that is, if you’re looking back at when you were working through the deal, was there anything you think you left on the table that you should have fought for, or that if you could go back and talk to yourself, you would say, don’t give up on this, or push harder on another thing?

No, I. That’s a great answer. No, I, it was, it, the offer we got was, I thought, a, a very good offer. Um, [00:52:00] I, you know, the, you gotta think about your personal circumstances and, and, and all the rest of it. I mean, that’s important for everybody. The structure of the deal, whether it’s lots of cash, not very much.

Stock or lots of stock and not very much cash is, is gonna make a big difference. Um, I was very happy that the stock component was not all that high. It was about 15% of the deal was in their stock. The rest of it was cash. Um, and so that worked very well. There was nothing to negotiate there, really. I mean, did I want 15% stock or 20% stock?

For my own purposes at the time it was 15. If my circumstances have been different, I might’ve taken 20 and might’ve been glad to take 20 because of what happened to that stock afterwards. But, um, no, I mean, I, as I said, I pushed back a [00:53:00] little bit on the, uh, you know, the lifetime non-compete, but, uh, got nowhere with that.

There was one other area that I. You know, had a go at them about, I can’t honestly remember what it was. And, um, I think they just clarified it. So, no, nothing, nothing significant. Great. Thank you. Do you attribute that to the, um, do you still wanna be able to spin again? You have, you have another question, Leah, do you attribute that to the team, the m and a team, um, that you work with not having a lot of regrets?

Um, or do you again, is it, I mean, you hate to say it like this, or is it the, the dollar was the ultimate determinant? That it was a good process? I think we were very lucky that we got a very good offer from people that we liked. Um, you know, we might have had a good offer from people we didn’t like. Um, and then you would’ve fought, there might’ve been some [00:54:00] things that would’ve been more contentious at that point in time.

Yes, I think that’s probably right. Um, and as I say, I mean the split between cash and stock I thought was pretty generous actually. Um, I mean, I’ve seen a lot of people offered stuff where, you know, there’s a lot more stock, not very much cash. There’s stuff in escrow and goodness knows what have you, and we really didn’t have to.

It was a great offer from people that we liked, so I think we were lucky. Uh, yes. You can attribute some of that success. Absolutely. To, um, to, to the, uh, in investment bankers who handled the deal for us. Um, they knew the buyer extremely well. Um, but I don’t think that they were influential as to the structure of the deal or the amount that was offered.

I mean, they were. They knew that this was a buyer that was looking to buy. Yeah. And they put [00:55:00] it in front of them and we got an offer. It’s interesting. I, um, I wonder how much of it too is attributable to the business that was being sold. Um, you know, you go back to, um, your time within EOS, um, your time within Vistage.

You didn’t just decide, um, you didn’t wake up one day and decide to sell the business. You actually spent several years getting it ready. You weren’t truly getting it ready for sale, but you knew you were institutionalizing the business, which by nature got it ready to sell. Um, and so I wonder if that made it a little bit smoother as a result, right?

Yeah, I think it probably did. I mean, you know, uh, a well-managed business that’s making X as opposed to a business that’s making X but you know, perhaps looks a little bit flaky to an outsider, you know, it’s, it’s not gonna hit the same value, is it? Yeah. Um, who’s the best EPO team? The best what? [00:56:00] EPO, English Premier League team.

Oh, well I’d, I’d like to say Chelsea obviously, but I, on the basis of the last couple of weeks is a bit of a difficult thing to say with a straight face. Who’s the best F1 driver. Oh, well, Lando Norris, obviously. Yeah. Besides that, any other questions? Gerald?

What was the, uh, the lifetime non-compete? Was it limited to the Cayman Islands geographically? Was it, uh, what did it look like in terms of you couldn’t ever have a competing business anywhere in the world? I think that’s pretty much what it looks like. Um, they’re, they’re an insurance brokerage. Um, so it’s anywhere they do business.

I think it probably is. And unfortunately, um, [00:57:00] you know, they themselves having just been acquired by, uh, a larger, uh, insurance broker that is more international. Um, I think geographically it’s probably pretty, pretty broad. Um, I don’t think it means that I can’t consult, I don’t. I’m comfortable with the, the few bits and pieces that I do, um, because I do continue to do a little bit here and there.

Um, but, uh, you know, I have to be mindful of not treading on their toes. I,

we good. Anybody else? All right, well thanks. Thanks again. Um, so Martin, I mean, great story. Um, and I mean, again, from the process of getting the business ready to sell the learning, I love the fact that you sat in the, um, [00:58:00] office and told ’em that you’re ready to retire. Um, that’s, I mean, it’s, you know, it’s, um, you, you almost wonder whether or not.

You. Um, but the m that’s like one of the things the m and a group should have told you, Hey, don’t say retirement. Right. Um, and so like you, you wonder like what other tips and tricks, um, can be picked up. And I mean, fortunately for you, the offer was strong, it didn’t really matter. Mm-hmm. You ended up with the right group.

But you do wonder about little things like that along the way. So. Um, Martin, um, is, um, dealing with a little bit of a sore back. Um, so he’ll we’ll probably remain seated afterwards for a few minutes. Um, we’ll he’s got, um, half a beer, although he is English, so it goes pretty fast. Um, but next month. I think it’s, is it January 14th?

Is that right? Is that my date on January 14th? It’s the last possible day. It could be in January. So again, second Wednesday at every month we do it here at Triple C. Um, next month we’ll actually have a bartender here, so you don’t have to walk across the street in the cold [00:59:00] rain if it’s raining. Um, we’ve got Jorge who spoke last year in January, um, who is a functional medicine doctor who will come back and talk about health and wellness as an entrepreneur.

I don’t know if you happen to notice how you treat your body sometimes, but it’s not always perfect. Um, and so Dr. Jorge will be up here and this year we’re gonna add a little bit of a diff different flavor to it. We’re gonna have his wife, um, na naturally sit up here with us as well. She’s a nutritionist.

Um, so we’re gonna have the dual component of an, of a doctor, um, and then what he considers to be the more important point of nutrition. Um, so the two of them up here talk to us about health and wellness as we move into a new year. So it’ll be a lot of fun.