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Sheldon Goodman built Spectrum Diversified Designs from the ground up, growing the company into a top design and manufacturing firm in the housewares industry. So it was an emotional decision when he agreed to sell the company in 2015 to Los Angeles-based Seidler Equity Partners.

“I wrote the business plan and went out and found the financing and put everything on the line,” Goodman says. “I look at this business as an extension of my family. It's hard to step away. For some people, it's impossible to do that.”

Following a heart attack in 2013, Goodman’s perspective changed on continuing to put in the long hours needed to operate a successful business.

“You have to be emotionally prepared to sell your business,” says Goodman, now the company’s chairman and CEO after his son, Aaron, took on the role of president in 2016. “You don’t think you’re ever going to expire, but you have to be pragmatic and realistic — especially after a heart attack. If you look at it from that point of view, it helps reduce some of the emotional aspects of selling your business.”

Smart Business Dealmakers caught up with Goodman to talk about the process he followed to find the right buyer and the importance of having expert advisers in your corner who can guide you to a more informed decision.

What was the process you followed to find the right buyer?

Our business doubled from 2010 to 2014 and was up over 35 percent in 2015. At that point, just serendipitously, somebody called from an investment banking firm in Cleveland. If you have a company that has a good reputation, a track record for growth and a good industry reputation, people tend to contact you. I agreed to talk to him, which started my investigation.

Additionally, I contacted an acquaintance in private equity for insight on selecting investment bankers and the process. After we met, he asked if he could review our financials and very quickly, we received a good offer.

I told him I'd need to get back to him because it happened so quickly. I said, ‘Look, I have to get back to you. I have to make a decision whether I want to go through a process or if I want to accept your offer.’ They gave me X amount of time and I said, ‘That's fine. I need to do it this way because I had never sold a business before. It's the only transaction I'm going to do whereas you do transactions like this throughout the year.’

I was given two weeks to decide. During that two week-time period is when we reached out and we went forward with an investment banking firm. We put together a book quickly, went to market with a limited number of people and received offers. We decided those offers were better than the ones that we had received and, ultimately, we sold to Seidler.

What’s the key to finding the right counsel?

When you’re looking at investment bankers to counsel you on potentially selling your business, you need to find somebody who has experience in your space. If you don't, that's a mistake. Some had experience in my space that was relevant, but it wasn't current. You need somebody who's currently active in your space and in your industry and knows the players and can make the right calls. In my mind, there's a big difference between somebody who sold companies in your space and in your industry 10 years ago as opposed to somebody who makes two or three transactions every year.

I went through the same due diligence process with the private equity firms, which was to make reference calls. I put together a list of questions that would make me comfortable with their performance, their ability to execute, their ability to find the best price and their ability to provide guidance on what's realistic or not. My philosophy through business has always been to be realistic about expectations. If you're unrealistic, you'll never get anything done.

I also turned to my consultants, such as attorneys and accountants or people that I knew in related fields, as well as people in my industry who had gone through the process. If you have confidence that they can keep what you discuss confidential, you can address those people and tell them what you're looking to do and find out what their experiences have been. So basically, I was extending myself out to find that insight from other people that could inform my decision.

How did you get comfortable with the decision to sell your business?

I had three constituencies that I was responsible to in the business. One was my employees, two was the shareholders — which at that point was me and my family — and three was my customer base. So one part of it was getting myself to accept the fact that I would no longer be the ultimate decision-maker. I also wanted to make sure that my employees were taken care of and we had long, hard discussions with Seidler.

We would give our employees bonuses every year and have other events and opportunities for people to increase their worth or at least, realize that the company supported them. The response from Seidler was to do what you would normally do, which was an important thing to hear. So from an emotional standpoint in terms of providing for my employees, there was going to be no difference after this deal. When I discussed hiring more family members, they had no issues with that either.

I also discussed that I wanted to reduce my workload and they were fine with that too. Going through the process, I continued to make calls so that I had a comfort level with these people. Lastly was the fact that I just liked the people at Seidler. They were just good people. They were more Midwestern in nature and personality. I've always found that in business, it's important that whoever you're working with or for or providing services to or expecting services from, that you're comfortable with those people.