Terrence Oprea had been preparing to sell Mort Crim Communications Inc. for quite a while prior to announcing the sale on Jan. 7. He says if you want to make a good deal for both you and your business, that’s the way it has to be.
“The moment you start to think maybe it’s time to retire in terms of private ownership, it’s usually too late,” says Oprea. “You need to be thinking about what you’re going to do when you want to retire years before you seriously encounter the idea of taking that action.”
Oprea sold MCCI to his executive team, which includes former COO and CFO Christopher Heaton, who now leads the firm as CEO; former Senior Vice President Richard Donley, APR, now president; former Senior Vice President Todd Haight, now chief strategy officer; and former Senior Vice President Jennette Smith Kotila, now chief marketing officer.
In this Dealmakers feature, Oprea, Heaton and Donley take us inside the process of negotiating the deal while still maintaining day-to-day operations of the award-winning integrated marketing agency.
Work the process
In the earliest stages of the transition planning at MCCI, a number of options were on the table.
“There was an effort in Terry’s mind to begin setting a path for succession,” Heaton says. “That included looking at many options, from outside acquisition to potential purchase to owning the company forever and hopefully making lots of profit. Over time, we built a core group of leadership, a coalition of people that was primed to continue the legacy of the company.”
Oprea had been with the company since 1993 when it was founded by Mort Crim. In 2008, when Crim retired, Oprea bought the business. Now, he embraced the idea of bringing in the next generation of ownership for MCCI.
“It wasn’t tough at all,” Oprea says of the decision to sell. “The harder thing is making sure that you have a management team on board that is personally confident and capable of actually leading and driving the future. So once that became evident, the decision became easy.”
With the framework of a plan in place, the process shifted to negotiating a deal. Heaton, Donley, Haight and Kotila knew the ins and outs of the business from their time working with Oprea. There was a negotiation, and each side had certain things it wanted in a deal, but it was an amicable dialogue among people who had grown to know each other quite well.
The tricky part was financing the deal, which was reliant on outside parties.
“The biggest challenge was the unknown, for instance, once you start investigating funding sources and talking to banks and understanding the timing of when that might happen.,” says Heaton. “When will funding be approved? Will it be approved? You never really know until the day they actually have you sign that paper.
Another challenge was the fact that, technically, Oprea was still the owner of the business.
“He owned the company and was an active participant,” Heaton says. “He was still making day-to-day decisions as the owner. We’re trying to prep for the next phase, but we’re not sure when it’s actually going to happen. There were a lot of decisions being made, and thankfully, we were mostly on the same path. But setting the table, so to speak, for those decisions is probably the most challenging thing.”
It can be both difficult and revealing. In other words, if you find there’s a lot of conflict at this stage, perhaps it’s a sign that there are bigger problems that need to be addressed. In this case, everything moved forward smoothly.
“If you’re going to start this process, you have to have the conviction, you have to understand your own motivations and the motivations of the other party,” Heaton says. “If you don’t, you’re in trouble because you’re not going to be able to connect. It’s hard to do a deal if the two sides aren’t connecting on the finish line. In our case, we did, and that’s why this was able to happen.”
Wear the hat
Donley is confident that MCCI has completed an ownership transition that will be a positive for the company, its employees and its clients.
“It was a smooth handoff that was very strategic and calculated,” Donley says. “For some companies, it might be better to acquire another company or merge in order to get scale with competitors. This was definitely a good approach for us to take and has been well-received by the market.”
The one cautionary note Oprea offered to his successors centers on the difference between taking ownership in a company and actually being the owner.
“When you have equity in the company, there is a significantly different sensibility, especially when it comes to making the hard decisions,” Oprea says. “I know these folks are up to that, but it is different when your personal assets are involved. Not dramatically, but it’s significant enough.”
MCCI’s executive team poses in the 4,000-square-foot expansion of its downtown Detroit headquarters. From L to R: Jennette Smith Kotila, Christopher Heaton, Terrence Oprea, Richard Donley and Todd Haight.