Matt Kaulig has a magnetic personality that seems to fit a guy who was the quarterback of the football team, owns a company that competes in NASCAR and built a $100 million business. Oh, and he was also named an EY Entrepreneur Of The YearÒin 2017.
“If I come across a deal, I’ll read the financials or I’ll read the reports on the companies or I’ll study up on the industry — that stuff is fun to me,” Kaulig says with exuberance. “I just love it. It’s more of a hobby. You’re going to be good at things you enjoy doing and I enjoy doing that.”
Kaulig built LeafFilter Gutter Protection into one of the nation’s leading gutter protection companies. Last May, he sold the business to Gridiron Capital, a Connecticut-based private equity firm. Since then, he’s more than doubled the value of the business. He’s also been busy with Kaulig Capital, the private investment arm of Kaulig Cos., which he leads as chairman.
“I’m an entrepreneur with heart and I love building businesses and I love building companies,” says Kaulig, who spoke about the growth of LeafFilter back in 2016.
Smart Business Dealmakers spoke with Kaulig about the challenges he overcame to position LeafFilter for sale and the passion he has for making deals. What follows is a transcript of the above video, edited for readability.
The sale of LeafFilter
My best dealmaking success story is when I partnered up with two of my business colleagues, Tim Clepper and Gregg Eisenberg, and we got involved with the private equity company, Gridiron Capital. We chose Gridiron Capital to be our private equity company in selling my business, LeafFilter. We sold it for more than a nine-figure deal and even since then, we’ve more than doubled our business. It’s been a year and a half and we’ve more than doubled the value of the company. That’s my best success story by far.
Professionalize your business
If you’re looking to sell your business, some of the things you can do to make your business attractive to buyers is professionalize your business. One of the things I did — a lot of people don’t know this — but I was basically doing the books for my company for several years. I’m not a CFO. I don’t have a financial background. I had to learn how to do QuickBooks online. As my company, LeafFilter, got bigger, I had to hire somebody to run our books. So I had my dad do it. He doesn’t have a background either in finance. He had to go night school at the University of Akron to learn QuickBooks. He didn’t know either.
For nine years, we ran what became a $100 million company without a CFO or professional help that way. One of the things I did was hire a professional CFO, Larry Napolitan, who is our current CFO, to professionalize and bring everything up to being professional in order to sell the business. That would be my advice to people is to get your stuff tight and to professionalize whatever you need to. Most companies have grown from — I don’t want to say a ma and pa shop — but they are small businesses. Entrepreneurs. They’re good at marketing, good at selling and doing things like that. If people are really serious about going to that next level, find out what your weaknesses are, handle those and then you can take your business to market.
Know who you are selling to
When you are selling your business, you’re really de-risking yourself. You’re making a decision to go into that world. Somebody is investing in your company in order to grow the company. So it is important that you choose the right partner. But you have to realize you’re giving up some management, some control. That’s just the way it is because they are in control.
Typically, the private equity company or whoever is investing in your company, they are smart business people. They know how to run companies as well. That’s all I would say, not so much as advice, but rather, that’s the reality of the situation. If you are selling equity in your company, especially the majority of the equity in your company, you’re definitely giving up control. So you just have to choose the right partner and know if it’s somebody you want to work with or work for.
When dealmaking is in your blood
The way I balance having my own company that I’m running and other companies and deals that we’ve made and companies that we’ve invested in and how I study and how I learn is I have my full-time job. And then I don’t want to say my hobby would be dealmaking and other companies, but I’m passionate about it. I’m an entrepreneur with heart and I love building businesses and I love building companies.
When some people go and play golf or other people play video games or they go on bike rides. I do business deals. I like business. That’s what I study. Even on Sundays, that’s what I watch. I watch educational videos on business and private equity, just learning as much as I can. Even if I come across a deal, I’ll read the financials or I’ll read the reports on the companies or I’ll study up on the industry — that stuff is fun to me. I just love it. It’s more of a hobby. You’re going to be good at things you enjoy doing and I enjoy doing that, so we’re going to be good at it.