The role of an entrepreneur, says JBC Technologies Founder Joseph Bliss, is a bit of an enigma.
"You have to be arrogant enough and autonomous enough to be able to start a business in the first place, but you also have to be humble enough to realize it's about the business, it's not about the individual," he says.
Between the company's founding in 1988 and its most recent transaction in January 2020, Bliss was working toward trying to surround himself with the best possible team.
"The key to success is through other people, not through the entrepreneur," Bliss says. "The entrepreneur has a real problem though because they're always the smartest guy in the room."
Speaking at the Cleveland Smart Business Dealmakers Conference on a panel titled, The Value of Preparation Before Liquidity Events, moderated by BDO Managing Director, Business Restructuring Services, Robert Berdanier, Bliss says every entrepreneur feels as if they know everything that's going on, and are often telling people what to do. Recognizing this, Bliss began adding talent, starting with the CFO.
He had hired a tax-centric controller who helped him run the organization as a lifestyle business for years. That person moved on and he hired a high-caliber CFO who came from a very large, publicly traded organization who had done M&A and who recognized the company's potential.
Acknowledging that he's "getting a little long in the tooth," Bliss says he begins to work toward a transaction.
"I don't have any family that's in the business that's going to take over the business," Bliss says. "I really need to work toward coming up with a continuation plan for the company because I'm responsible for all these employees' families."
With a talented CFO on board, he says he found out was good people attract good people. Work began to improve the company's operational excellence and through connections found another operations person to come on board. That move, he says, shifted his perspective.
"I was in a meeting with these two guys and they're meeting with all the mid-level managers," he says. "Again, I'm an entrepreneur, always been the smartest guy in the room. They had a meeting and during the meeting I wasn't really following what they were doing. They were talking about executing plans and implementing KPIs and operational excellence, which I had never done before. And I felt really diminished as an entrepreneur. I walked out of the room and I'm thinking, They think I'm a village idiot because I didn't understand what they were talking about. But then that night I realized I was the luckiest person in the world because I had people within the organization that are experts in their area. I had a guy that was best-in-class operational excellence, best-in-class financial aspects. I'm an engineer and I'm a really good engineer. They can't do what I can do. So we melded into a team. And what I realize that was kind of the tipping point for the company when I realized that we have these departments now and I have a support system around me."
The folks he brought on board, however, wanted to grow and be challenged, not run a lifestyle business. Not wanting to hold the company back, he started thinking about a future transaction.
He says he put together a lucrative incentive plan based on the value of the transaction for the key people who are driving the organization. The company built out its IT and sales and marketing department. The company was performing well, he says, its trajectory was a perfect slope for a sale. He met with Proformex Chairman Lou Schneeberger who managed the transaction process.
Schneeberger says entrepreneurs are really good at running their business, but probably have never sold a company before.
"It's a weird thing to sell your business. You're doing things you've never done before, and it's my role with Joe is to walk them through the steps," Schneeberger says. "The key thing here is preparation. How do we prepare JBC Technologies for a great sale? What do we need to do?"
Schneeberger says Bliss and his team had already done several things that usually aren't done by a business ahead of a sale, such as having a team already set as well as their compensation, which meant they didn't need to put in programs for retention bonuses and such that he'd normally have to do.
BNY Mellon Wealth Management President, Ohio Region, Ronald Ambrogio says he and others in a similar role will work with people that are about to sell or have recently sold their business to prepare them not only for the technical aspects, but the emotional aspects.
"It is a very emotional transaction. You get wrapped up in the transaction, the sale, and then when it's finished the phrases that I hear the most from the CEO is, I've lost my identity, I'm no longer the guy, It's no fun to be the prince after you're the king," Ambrogio says.
It's a consistent theme with those preparing to sell: they build a team of smart advisers to help sell the business, who will do the personal financial planning so the owners can take care of themselves and their family. So, something that's important throughout the process is communication.
"Communication is king between your management team and your family," he says.