Sheri Tackett wasn’t prepared when she sold Delta Energy in 2012. When it came time to sell Delta Energy Services three years later, she didn’t make the same mistake twice.

“It is absolutely imperative to have everything in order to work with advisers,” Tackett says. “I didn’t do that the first time.”

Using the lessons she learned the first time around, Tackett experienced a much better sales process the second time. “Hindsight is 20/20,” she says.

Tackett — now retired but helping operate Mrs. Goodman’s Baking Co., which she acquired last year with her daughter-in-law — took time to compare and contrast the two sales at the 2018 ASPIRE dealmakers conference.

Caught unprepared

Tackett started Delta Energy, a natural gas supply operation, for Ashland Inc. in 1997. She bought the business from Ashland in 2003.

It was a dynamic time in the industry with the opening of shale deposits leading to 10 straight years of increased natural gas production, starting in 2005.

But Delta Energy wasn’t a producer. It didn’t have assets. Instead, it bought natural gas from producers, transported it and resold it, primarily to industrial end-users.

“When you have a flood of gas coming into the market, what does it do to a guy like us?” Tackett says. “A little company like us, the margins started getting squeezed fairly quickly.”

Working in the business every day, focusing on strategy and growth, Tackett didn’t read the tea leaves as well as she should have. When margins shrank, Hess Corp. approached her about a sale, she says.

The good news was Delta Energy and Hess were friendly competitors. Tackett understood their culture, so she felt confident Hess would keep employees in Central Ohio.

When you’re creating a list of potential buyers, don’t forget to include your competitors, she says. Hopefully, you’ve maintained good relationships with them because you may need to knock on their door.

Delta Energy’s financials were in good order. But in an industry where many things are done with a handshake, other documents like contracts and governance weren’t in equal shape.

“As we looked down the major checklist of everything you need to sell a business, we probably had two or three of about 15 to 20 that we should have had done really well,” Tackett says.

Most sales take about a year; the Hess deal took longer because everything wasn’t in order.

“They would call us on a Friday and say, ‘Sheri, I need this by Monday morning.’ We were literally scrambling,” she says.

Second time around

After the Hess sale, Tackett focused exclusively on Delta Energy Services, which she founded in 2005. She found it great fun after the stress of selling the supply business.

“I wasn’t waking up in the middle of the night thinking about the credit lines that I had all around town and running from every banker because I think I owed everybody money at that time when we had Delta Energy,” she says.

But when things started changing, she recognized it.

“I’m going to learn from some of my mistakes from the Hess deal,” she said she told herself. “I see the writing on the wall. I see that all of the small independent energy management firms are being swallowed up by the big guys. I’m going to do it right and actually go through the process with an investment banker this time — take the time needed and make sure that we extract the multiples that we believe the business is worth.”

By hiring an investment banker and other expert advisers, she was able to keep everything on track and use intermediaries to minimize conflicts.

Because the consulting business had partnerships in South America, Australia and Europe, Tackett looked for an investment banker with global connections.

“Now certainly that does not come without cost,” she says. “I truly believe that at the end of the day, the multiples that we secured through having them help us through that planning process to make sure that every i was dotted and t was crossed before we started in the negotiations was huge for us. We also had six or seven parties that were very interested in our company, as to opposed to me dealing just individually with Hess.”

Her biggest mistake was wasting too much time on the offering memorandum because she wanted to put her best foot forward.

“Most of us that own businesses tend to have type A personalities and we want everything to be perfect,” Tackett says. “And so, when we were putting together the offering memorandum, I think I spent three months putting it together. That’s something that could have been done easily in three to four weeks.”

Staying transparent

The other big difference was how Tackett interacted with her employees. With Hess, she wasn’t sure the deal was going to come to fruition.

“I didn’t let any of our employees know about my conversations until I was fairly comfortable that we were going to be able to work out a transaction,” she says.

She eventually involved the senior leadership team to see how they felt about the Hess culture and take their temperature about working for a large corporation. Tackett also let them know she was including retention agreements with key parties, whether or not they decided to go with the buyer, so they knew they would be taken care of.

Her approach, the second time around, was to be more open because there were some hard feelings with the Hess transaction.

“Not 100 percent of the leadership team was ready to jump on that bandwagon when I felt like it was the right thing to do for the company as a whole and our customers,” Tackett says.

With Delta Energy Services, she brought the senior leadership team together to explain what was happening and share a list of the parties she believed would be the best buyers. Tackett then took a handful of leaders on a roadshow to all prospective buyers.

“They got to sit across from potential buyers and learn more about what their strategies were, what their cultures were like, how they treated their employees, how they treated their customers, and what did the growth horizon look like,” Tackett says.

Then, she asked them to write on a sticky note who they thought should be the buyer and talk about who they picked and why. It needed to be about more than dollars. Everybody around the table, including Tackett, picked Edison Energy LLC.

“I felt good that it was a collaborative process and everybody was rowing in the same direction,” she says. “I felt absolutely 100 percent certain that they would work out for everyone, given that.”