september/october/november 2015 the firm deal review

Cradick’s Husker PowerTEXAN RETURNS HOME FOR BUSINESS OPPORTUNITY PG. 8

Marlon Lofgren Koley Jessen P.C., L.L.O.KEEPING THE FOCUS WHERE IT BELONGS PG. 4

Seasoned Advice for Buyers(THE BOUNCY KIND) PG. 5

PLAYING BIG EDITION

Fall

2015

A Publication of The Firm Business Brokerage

2

Volume 1 Issue 5

Published by The Firm Business Brokerage, LLC

President/Editor • Cortney Sells

Director/Assistant Editor • Cassandra Powers

In-House Legal Counsel • Susanne Miller

Outreach Coordinator • Rene Rademacher

Marketing Development • Rachael Rand

Business Broker • Breann Becerra

Referring Broker • Elizabeth Jones

Marketing Division • Adam Jaime

Development Liaison • Holley Garcia

Client Services • Nycole Wandvik-Tolle

Client Services • Julie O’Brien

Community Relations • Mike Sells

Contributing Writers

Marlon Lofgren • Kathy Rygg • Maureen Tierney

Design • OBI Creative

Photography • Bill Sitzmann

To Subscribe:

The Firm Business Brokerage, LLC

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The Firm Deal Review Fall 2015

Columns

4 Seller Financing

Koley Jessen P.C., LLO Keeping the Focus Where it Belongs

14 Executive Impact Getting Into the Big Office

Departments

5 Seasoned Advice for

Business Buyers (The Bouncy Kind)

12 Building a Legacy while

Building Racks New Chapter to Beckler’s Career

The Bottom Line

Sells Insights

Playing Big

Husker PowerTexan returns home to

Nebraska for business opportunity

pg.8

Many business owners have marginal experience in the trades in which their

organizations specialize. While it may seem counterintuitive to buy or start a company situated around an industry in which one has little experience, there is a certain com-petitive edge to the equation. A buyer or president need only know enough to begin before surrounding him or herself with the right personnel to tackle the minute details. What is paramount is the grander scheme of

management and operations, which allows one to flex refined business acumen. Not only does distance from fieldwork free up time to put in place a robust and refined plan, but it leaves open other avenues for portfolio expansion. Grow your business, expand operations, or begin other busi-ness ventures. The possibilities are only as small as the mindset held by your team. The FIRM

Special Section

7 Fresh Off The Firm The Firm Business Brokerage has

over $80 million dollars in assets under

management of current cash flowing

businesses for sale – from medical

practices to commercial services to large

manufacturing companies.

by Cortney Sells president/editor


3Fall 2015 The Firm Deal Review

4

IF PROPERLY STRUCTURED AND DOCUMENTED, SELLER FINANCING IS REALLY NO DIFFERENT FROM FINANCING THAT WOULD OTHERWISE BE PROVIDED BY A BANK.TYING IT ALL TOGETHEREven the most savvy of “numbers people” need a leg up in negotiating a purchase. As with so many aspects of doing business, retaining experienced legal counsel enables you to keep the focus where it belongs—employing your entrepreneurial skills in the identification and acquisition of profitable business ventures. The FIRM

Seller Financing: Keeping the Focus Where it Belongs

written by Marlon M. Lofgren, Attorney & Partner, Koley Jessen P.C., LLO

Seller financing can often be a criti-cal factor in getting a business sold.

If properly structured and documented, seller financing is really no different from financing that would otherwise be provided by a bank. Below is a brief guide to navi-gating the issues normally encountered in seller financing.

FIRST THINGS FIRSTThe first question is usually that of how to structure and document the financing. The buyer should be expected to sign a prom-issory note evidencing the loan from the seller, with interest and repayment terms mutually agreeable to both parties. The seller might also require that the buyer grant the seller a security interest/lien in the pur-chased assets to secure the loan. It’s also not unusual for a seller to require that the individual owners of the buyer (assuming the buyer is an entity) personally guarantee the loan. In most cases, the documents are usually pretty straightforward and do not need to be overly complicated.


Marlon M. Lofgren, Attorney & Partner, Koley Jessen P.C., LLO

ADDITIONAL LAYERSIf a bank is also financing the sale, the seller will most likely be required by the bank to sign a subordination agreement. This is an agreement between the bank, usually referred to as the “senior lender,” and the seller, referred to as the “junior lender.” A subordination agreement sets forth the terms between the lenders as to each entity’s right to receive loan pay-ments from the buyer and the priority of their respective security interests/liens in the purchased assets. The document will usually state that the senior lender’s loan and security interest/liens shall at all times be superior to those of the junior lender until the senior loan is paid in full. Most lenders are willing to discuss and negoti-ate the junior lender’s right to receive loan payments from the borrower. Lien priority status, however, is rarely compromised by senior lenders in subordination agreements. The senior lender will insist on having a first priority security interest/lien in the pur-chased assets.


Whether you’re a first-time entre-preneur or an experienced business

owner, purchasing a company is a critical investment financially and emotionally. To help increase the likelihood of it being a success in both areas, there are a number of aspects to keep in mind when evaluating if a business is the right fit. >

Seasoned Advice for Business Buyers(The Bouncy Kind)

written by Kathy Rygg


Jerry Rachwalik


6


< Jerry Rachwalik has been researching companies for the past three years, waiting for the right opportunity to arise. His search was the result of spending his career work-ing for larger organizations in a number of areas, including delivery, installation, cus-tomer service, inventory, accounts receiv-ables, and scheduling, where he managed up to 35 people at a time.

Policies and philosophies can change when working for a corporation. Sometimes they become less family friendly. “With the previous companies I worked for,” Rachwalik says, “they switched from caring about em-ployees to making money and the bottom line. I stuck it out for several years and then decided I needed something different.”

An entrepreneur by nature, Rachwalik has, over the last seven years, built up a rental business buying foreclosed homes and duplex properties, completely reno-vating them, and then renting them back out. He now has 15 properties and enjoys helping families by providing nice homes that are affordable. “I want people to feel good when they come home at night after a long day at work,” he says. Rachwalik want-ed to find a business that allowed him the flexibility to respond to his tenants when needed, from simple plumbing issues to furnaces going kaput.

When he first started looking for a new business, Rachwalik was drawn to home health care because of his experience help-ing to take care of relatives. And it was a growing field. Nothing was available at the time, so he expanded his options and be-gan researching businesses in a variety of industries. Those included a flooring com-pany, sandwich shop, and even a hair salon.

“I was open to anything, and if I could make the numbers work, then I would consider it,” he explains.

Then The Firm Business Brokerage pre-sented him with an opportunity that was the right match: Bounce U in Omaha. There were a number of factors that appealed to Rachwalik. First and foremost were the financials, but it would also offer him the flexibility he needed for his rental business. A big advantage was that an entire team was already in place, one seasoned in man-aging staff and scheduling parties. “They do a great job,” he says. “I don’t plan on making any personnel changes.”

But what he’s most looking forward to with this new venture is the fun, positive environment. Bounce U’s primary business is its birthday party packages featuring the company’s oversized inflatibles, and Rachwalik said he can’t wait to watch the excitement on the kids faces when they walk through the door. “Everyone there is happy,” he says. “The kids are happy, the parents are happy, and the employees running the parties are happy. It’ll be a big change from the environments I used to work in.” He’s already planning to have his twin grand-daughters’ birthday party there too.

His transition included a week of training with the company’s corporate facility in Ari-zona as well as on-site training. Even though the Omaha location is an existing store, all of Rachwalik’s training was structured as though it’s a brand new site.

Bounce U has traditionally partnered with local restaurants to provide food for birth-day parties, but Rachwalik wants to explore the option to build a kitchen of his own.

He also hopes to continue to grow the business by at least 5% annually. “Anything I do I will communicate with my employees and get their input and suggestions first,” he adds.

For anyone who is considering buying a business or is going through the process, Rachwalik stresses to be open minded and not rule anything out. “If an opportunity is presented to you, run the numbers and see if you can make it work,” he says. “I did a complete flip-flop on the type of business I thought I wanted versus what I ended up purchasing. But if you keep looking, you’ll eventually find a match.” The FIRM

“THE KIDS ARE HAPPY, THE PARENTS ARE HAPPY, AND THE EMPLOYEES RUNNING THE PARTIES ARE HAPPY. IT’LL BE A BIG CHANGE FROM THE ENVIRONMENTS I USED TO WORK IN.”

-Jerry Rachwalik


Fresh Off The Firm: Featured Listings for Sale

Suburban Bar & Grill with VolleyballOWNER’S PROFIT $26,413 PRICE $115,000

Take advantage of this fantastic opportunity in an area with only two other bars nearby! Serving up a gorgeous and well-maintained volleyball court along with pool tables and a jukebox, this bar and grill is a favorite with the locals. Business is fully staffed—owner works very part time hours.

Rain Gutter Sales & InstallationOWNER’S PROFIT $145,200 PRICE $415,000

This business is a dealer for high-end rain gutter covers. These products are con-structed of high-quality aluminum and sur-gical-grade stainless steel, and are strong enough to hold up to four feet of snow or 20 pounds of debris. Profit margin is 48%!

Large-Scale Assembly & InstallationOWNER’S PROFIT $743,732 PRICE $2,200,000

This well-established installation and assembly business in central Nebraska prides itself on providing many numerous building solutions for businesses and building owners in their area. They install and assemble metal frames, including grain silos, pole barns, and buildings.

Photo Booth Business Running on Autopilot OWNER’S PROFIT $36,419 PRICE $88,900

Photo booths are the “in thing” at weddings and parties! In business for seven years, this business is one of the largest in town. Wedding couples hoping to capture the fun memories of the day make up 67% of the clients. Includes four booths and one trailer.

Southwest Omaha Dental PracticeOWNER’S PROFIT $129,745 PRICE $380,000

Professional staff and excellent customer service are the hallmarks of this practice. Using the latest technology, the business offers an array of dental services, including teeth cleaning, veneers, crowns, bleaching, and trauma services. The owner is currently working only 20 hours a week!

Small Animal Vet Clinic in Omaha OWNER’S PROFIT $158,287 PRICE $440,000

For over 30 years this animal care clinic has prioritized customer care. They are currently offering services to over 2,000 families and are the second largest veterinary clinic in the area. The business is split 70/30 between dogs and cats.

Builders’ Material & Supply CompanyOWNER’S PROFIT $364,880 PRICE $933,000

This highly reputable company established in 1976 and located just north of Omaha provides quality and reliable services and supplies. Building supply inventory includes garage door, lumber, windows, trims, siding, roofing materials, and more. Approximately 90% of customers are repeat clientele.

High-Growth Plumbing Company OWNER’S PROFIT $157,774 PRICE $445,000

This non-union plumbing company has consistent growth of over $130,000 a year in sales. The full service plumbing contractor has business that is currently 50% commercial and 50% residential.

90+ available business opportunities for sale. Please visit TheFirmBusinessBrokerage.com for details.



Matt Cradick

The Deal ReviewReason For Sale: Fresh start after 25+ years in the industrySeller Transition Period: Over eight months!Type of Sale: Asset Purchase AgreementLender: Access Bank, Mack LaRock

“YOU SHOULD INTERVIEW FOR A BUSINESS JUST LIKE YOU

WOULD FOR A JOB,” CRADICK EXPLAINS. “IT HAS TO BE THE

RIGHT FIT. YOU DON’T WANT TO BE ONE OF THE MANY FA-

TALITIES THAT HAPPEN SO OFTEN IN NEW BUSINESS.”

-Shaun Heldt

From Retail to RoofingHow to be Successful When Buying a Business

written by Kathy Rygg | photography by Bill Sitzmann

Spending almost 20 years working in retail for major corporations and then

buying a siding and roofing contracting company may seem like a major leap, but for Matt Cradick, owner of Husker Ham-mer Siding, Windows, and Roofing, it was the best business move he’s ever made. And that’s saying a lot for someone who moved 11 times in 19 years across nine different states.

Cradick had been living in Houston, Texas, where he worked for Target Corporation. He had worked his way up through the com-pany and another promotion was on the horizon, which meant another move. With three young children at home, Cradick de-cided it was time to put down some roots. Having grown up in Lincoln, Nebraska, he wanted to be near family and Midwestern values. He started researching businesses for sale and was eventually led to The Firm, which, in turn, led him to Husker Hammer.

The move from a big corporate environ-ment to a small contracting business didn’t intimidate Cradick. With Target he oversaw 200 people, so he knew he brought strong management and operational skills. The challenge, he says, was learning the ins and outs of construction. He didn’t need to be the one hammering away on the roof—he needed learn a new business segment.

“Switching industries can be nerve-rack-ing,” Cradick says, “but the owner was will-ing to stay on board for six months during the transition.” That partnership was an invaluable tool during the changeover. >

A Publication of The Firm Business BrokerageA Publication of The Firm Business Brokerage


10

< Husker Hammer was started in 1998 as a one-man operation and had been built up to a multimillion dollar business. Cradick was impressed with the mission statement, values system of the company, and the strong workforce that was already in place. And the price of the company lined up well with the financials. “What Husker has that others in the industry don’t,” says the man whose faith is central to his deal-ings, “is a strong ethical foundation with a Christian background.”

There were a number of other elements Cradick sought when buying his business, ones he believes all potential business own-ers need to keep in mind. The first is to make sure you have a proper support team in place to help make a sound financial deci-sion. That includes having a good business valuation and a good business broker who can point you in the right direction to ensure a match for both parties.

Once you’re in the process of purchasing, he adds, make sure you have a capable net-work of attorneys, a seasoned financial team, and solid internal help to ensure you’re suc-cessful from the start. “You should interview

for a business just like you would for a job,” Cradick explains. “It has to be the right fit. You don’t want to be one of the many fatal-ities that happen so often in new business.”

To help ensure the company continues to be successful, Cradick plans to main-tain Husker Hammer’s competitive edges, which he says includes his 11,000-sq.-ft., state-of-the-art showroom in Elkhorn. He reformatted the space to better fit his busi-ness model before building out additional second-floor space that is now rented to other entrepreneurs.

The showroom features all of the window, siding, and roofing products available to customers. Samples are one thing, Cradick says, but he knows the power of customers seeing actual colors in actual sizes.

“Our philosophy is to build peace of mind for homeowners and be with them every step through the process,” he says. “Word of mouth is our number one lead source, which was true in retail as well.”

Happy employees, to Cradick, are just as important as happy customers. He sub-scribes to a simple philosophy—listening to employees and doing so with respect.

“With big corporations you deal with a lot of politics,” he says. “Now if there’s politics, it’s because I’ve generated it. It’s a nice change to be in a small business where you have more leeway to ensure you’re creating a positive work environment, which creates a happy workforce.”

Working for a smaller company also allows for more opportunities to become involved in the community. Husker Hammer is active in local chambers of commerce, the Open Door Mission, and is currently helping on a Habitat for Humanity build in Waterloo. They have also been accredited by the Bet-ter Business Bureau since 2000 and won the Better Business Integrity Award.

Cradick’s business is currently 90 percent residential and 10 percent commercial. He hopes to increase their reach in proper-ty management and general contracting while maintaining the high-quality residen-tial sales that built the business. “Because of our showroom,” he says, “people come



to us. We don’t do the high pressure sales at the kitchen table. We listen. We let the homeowners do the talking.”

Growing geographically is also a goal. Cradick hopes to expand to surrounding areas, including his hometown of Lincoln.

“So far it’s been a great move,” he says, “and I look forward to continuing to be known as an ethical, long-lasting company. My daughters and wife are excited to be back in the Midwest around grandparents and family. Their school district is great, and the full year-round climate has been a welcome change from living in the south. Plus, I was averaging 50,000 miles per year in travel, so it’s nice to sleep in your own bed every night.” The FIRM

For more information on this or any for sale listings call The Firm Business Brokerage directly.


The Deal ReviewBusiness Established: 1987Reason for Sale: Retirement (Transla-tion: More time with a fishing pole.)Owner’s Profit: $495,004Type of Loan: SBA with Core Bank

12

Back to the FutureBuilding a Business Legacy

written by Kathy Rygg | photography by Bill Sitzmann

It’s not uncommon for someone who has spent a number of years in corporate

America to shift gears into entrepreneur-ship. Being your own boss certainly has its advantages. But for Scott Beckler, who recently purchased Lewis Installers in Gret-na, his reason for taking on a new business venture had more to do with honoring not only his father’s legacy, but building one of his own.

Beckler started his career as a business education teacher, then moved to a corpo-rate career in technology. But for a number of years he kept an eye on businesses for sale, hoping that just the right opportunity would come along.

“My dad was an entrepreneur who owned his own real estate insurance company,”

Beckler says. “Despite the fact he had on-going health issues, he still got up every day, put on a coat and tie, and went out to make a sale. He was a very successful busi-nessman, and I wanted to honor his legacy.”

After contacting The Firm and discuss-ing what he was looking for in a business, the team suggested Lewis Installers, which specializes in industrial conveyor and rack systems. At first it seemed like a big de-parture for him. “Shelving and logistical systems isn’t something that jumps out at you,” Beckler says. But the more he looked into it, the more he realized it had many of the elements he wanted in a business. The most obvious advantage was that the company was located in Gretna, where he lives. Add to that the fact that the seller lives just up the road from him.

Scott Beckler


For purposes of this article, this overview is based on the buying and selling entities being corporations or entities taxed as corporations.


4420 Izard Street, Omaha402.293.8707 • 888.738.0296

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“After meeting him and hitting it off,” Beckler says, “we quickly realized it was a match on both sides.”

Other signs also pointed in the right di-rection. The financials were good. The size of the business was ideal. The competitive landscape was promising. Beckler also real-ized that his corporate background fit well with this new business.

“Although it’s an entirely different indus-try,” he says, “many of the business princi-ples are the same…project management, customer service, delivery, vendor man-agement, and cost containment. I’ve been doing all of those for years.”

His background in technology will also be a valuable asset in his new business. Not only has he established relationships with large vendors built over the years, but his from-the-ground-up experience with data centers means that he is already eying in-novative automation and other technology differentiators. At the same time, he’s look-ing forward to learning the daily operations of the company and having a hand in every part of the business, from bidding to closing to payroll.

“It will be challenging coming from a big business background where I’ve only been involved in the periphery,” Beckler says.

“Now I’ll be involved in all of it.”

Lewis Installers being a family-owned business is what he’s most excited about. He says it’s a company with a good repu-tation that’s known for quality and meeting deadlines—all driven by a strong Midwest-ern work ethic.

It’s the sort of company, Beckler believes, that would make his father proud.

“I want this business to be a legacy for my family,” Beckler says. “My hope is that it could stay in the family with my own kids and grandkids.” The FIRM


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When considering the purchase of an existing business, very few realize

that lack of experience in an industry can actually lead to success. One simply needs a sound financial plan and a good team to fill in the gaps. Removing the added stress of fieldwork and focusing solely on the management of finances and operation allows for greater opportunities. It makes for the dynamic advantage of some outside impartiality when seeking areas of improve-ment and growth.

One man who has made this transition from having marginal knowledge in an in-dustry to leading a successful plumbing and HVAC operation is Mark Evans, president of Burton Plumbing. Before taking over Burton, Evans had a successful plumbing distribu-torship serving four states, but it was his desire to own and to travel less that put him into the hands of Burton Friesz. The founder of Burton Plumbing, Friesz had been a customer and friend of Evans’ when the two discussed a possible expansion into residential service. Evans put his busi-ness experience to work for Burton in July 1995, and his education in the minutiae of plumbing and HVAC began.

While he hasn’t worked in the field as a licensed plumbing contractor, Evans has dipped his feet in several areas within the running of Burton…and often at the same time. Before hiring the essential personnel that have enabled him to narrow his role, Ev-ans served as manager, marketer, customer service representative, and dispatcher. Such a list of duties for one man is a daunting task, but “I worked my way to being able to work on the business rather than in the business, [a strategy] taught to me by my business coach,” says Evans.


REMOVING THE ADDED STRESS OF FIELDWORK AND FOCUSING SOLELY ON THE MANAGEMENT OF FINANCES AND OPERATION ALLOWS FOR GREATER OPPORTUNITIES.

Executive Impact: Moving Into the Boardroom: From Employee to President

written by Maureen Tierney | Co-written by Mark Evans and Julie O’Brien

Eventually Evans was able to step back and bring on a general manager and a ware-house operator that has allowed him to

“focus on growth opportunities, marketing, and cash flow.”

Evans’ experience is not unique. It is com-mon for brokerages to deal with buyers seeking to own companies within a cer-tain field, but “only two people out of the nearly 100 closings [we’ve had] have come in for the same business that they ended up purchasing,” says Julie O’Brien, client services and paralegal with The Firm. What it comes down to is as simple as the bot-tom line. Buyers are looking to leverage their talents and experience in a marriage between a management philosophy and business model. Those in the market for an acquisition are “buying based on profit, number of staff, ability to get financing, and mostly their strengths and passions,” says O’Brien. Experience in a particular industry is certainly valuable, but is no predictor of success when the right financial mind comes along.



Even so, making up for a lack of practical knowledge requires the proper equipment, most notably in the form of managers and employees. The right talent in the field can be a growth experience and provide an opportunity to learn the ropes before taking a full swing at things. A total deficit in knowl-edge hardly makes for good leadership, and for this reason many “new business owners like to take a bird’s eye view of the operation rather than diving in and getting their hands dirty right away…giving them the opportunity to watch [how] things have been done before implementing changes,” says O’Brien.

Approaching ownership in this way also allows for further financial acquisitions, an avenue which Evans has taken. In addition to owning Burton Plumbing, Evans operates four other companies. One might assume this much responsibility to be a stretch, but Evans sees his role as “keeping a pulse on things. I like to lead people in growth, per-sonally and on the business side.”

Getting started can be a challenge, which is why O’Brien works closely with potential buyers to find the right fit. “We assist all the way,” she says. “We work with the buyer on projections, business plans, [and] we introduce them to trusted advisors,” from attorneys and CPAs to financial advisors and insurance agents.

It’s this helpful backing of experts that eases the difficult task of ownership, and only proves that one can certainly switch from a blue collar to a white one. The FIRM

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