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Former Hubspot VP Acquires 7-Figure eCommerce Business
Katie Ng-Mak is the Former Vice President of the Global Solutions Partner Program for Hubspot, an inbound marketing software company, before she ventured on her own to purchase a purification business. She has experience in business and earned her BA in economics from Columbia University and her MBA from Harvard Business School. Katie worked for Cummins Inc, where she conducted due diligence, risk analysis, financial analysis, and market research. She was a Credit Risk Analyst for Bear Stearns and an Analyst for BlackRock.
Here’s a glimpse of what you’ll learn:
- [05:38] The inspiration and motivation behind why Katie Ng-Mak entered the world of entrepreneurship
- [10:38] Katie talks about building communication skills and buying a business
- [14:07] Why buying a business requires a diligent process
- [19:21] Katie explains why trust is crucial when buying a business
- [24:54] How leveraging your expertise for due diligence can generate a smooth transition
- [28:45] Katie describes harmoniously working with the previous owners during the transition period
- [34:05] How to keep your letter of intent simple while still showcasing your best qualities
- [38:47] What attracted Katie to buy a purification business?
- [43:49] Why you shouldn’t waste time on trivial items and instead focus on what can be successful for your business
- [47:34] Katie gives a detailed example of growing your business responsibly
In this episode…
The process of buying a business may feel like a formidable task if you’re unfamiliar and uncertain with the process. How can you ensure you’re buying the right business? When Katie Ng-Mak purchased her first business, not only did she leverage her skills, knowledge, successful tools, and network of professionals, but she also followed her intuition.
As an entrepreneur, you accept a particular degree of uncertainty when running a business. It is crucial to hire the right people to help you plan — especially when purchasing a business. But what steps can you take to generate growth? For Katie, seeking support, seeing the possibility, and engaging with a business plan is the best way to recognize and respond to uncertainty.
In this episode of the Quiet Light Podcast, Joe Valley sits down with Katie Ng-Mak, Former Vice President of the Global Solutions Partner Program for Hubspot, to discuss the ins and outs of a business purchase. Katie talks about leveraging tools of expertise, why your conscience should be your guide, and focusing on growth and opportunities in your business. Stay tuned!
Resources Mentioned in this episode
- Katie Ng-Mak on LinkedIn
- Quiet Light
- Quiet Light on YouTube
- Joe Valley
- Mark Daoust
- Walker Deibel
- Paul Andersen
- Resources to Help You Grow Your Business | Quiet Light
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
- Acquisition Lab
Sponsor for this episode
This episode is brought to you by MyAmazonGuy, an Amazon agency to help level up your PPC, SEO, Design, and manage your entire Amazon catalog.
This episode is also brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
Not sure what your business is really worth? No worries. Quiet Light offers a free valuation and marketplace-ready assessment on their website. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!
What are you waiting for? Quiet Light is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals
Joe Valley 0:32
Hey folks, Joe Valley here. Thanks for joining me for another episode of the Quiet Light Podcast. today’s podcast is sponsored by My Amazon Guy. I know Stephen, personally, we’ve been on each other’s podcasts a number of times. If you own an Amazon business, you can learn an awful lot from My Amazon Guy on YouTube. He’s got a ton of great educational content. If you want to level up your PPC, your SEO, your design any aspect of your Amazon business, My Amazon Guy can help you check him out at myAmazonguy.com. Okay, so onto the podcast. Our guest today is Katie Ng-Mak she is really, really impressive. Let me just say that first of all, she she went to Columbia for undergrad, she has her MBA from Harvard, she worked for BlackRock she worked for Bear Stearns was the first 100 employees at HubSpot rose through the ranks here, ranks there over a 12 year period, and then ventured out onto her own, decided she wanted to buy a business not necessarily an online business, she looked at all sorts of different businesses. And one of the interesting things that we talked about here is that she did decide to join Walker Deibels Acquisitions Lab. Even with her educational background and business background, she made the choice to join the lab and get some real experience and education on how to buy an online business, which I think was a very smart move. She looked at about 20 businesses, the one that she ended up buying, she bought with some of her own funds and SBA funding, she talks about that process a little bit, go into detail about due diligence, what she learned there, again, with her background as a Harvard MBA and all the business experience that she has, she still hired two different types of due diligence experts. And we talked a little bit about the challenges that she’s had what she did during the training and transition period. All aspects of it. It’s just fascinating to see somebody with her level of expertise and maturity and education and background. To go through the process, and how focused and diligent she was about getting it right. She took nothing for granted. didn’t take anything. I want to say risk. Much. I mean, there’s always risk when you’re buying an online business, she talks about that as well. You just have to accept some aspects of it. But she talks about a little bit what she learned in the due diligence period and considered it you know, a bit of a roadmap on how to improve the business as well. It’s just fascinating. So let’s jump to it. Again, this is a acquisition, a seven figure acquisition that Katie Ng-Mak made. Her advisor was Paul at Quiet Light. So let’s take a listen. See what she’s got to say. Katie, welcome to the Quiet Light Podcast.
Katie Ng-Mak 3:27
Hey, Joe, thanks for having me today.
Joe Valley 3:29
I’m so excited. You came to us via our mutual friend Walker Deibel from the Acquisition Lab. You were a I almost want to say a patient that No, you weren’t a patient. You were a student at the acquisition lab. But you know, I’m looking at your first of all, I’m looking at the email that Walker sent me. And then I’m looking at your LinkedIn profile. And Columbia, Harvard, you went to work for Blackrock Bret Bear Stearns top first 100 employees at HubSpot, and we know HubSpot. Well, because Sam sold to help Sam Parr sold to HubSpot, and then to the acquisition lab to become an online entrepreneur or actually, that’s not the case. You became you wanted to become an entrepreneur, period. Normally Katie, I’m asking people to give some background on themselves, but I just kind of did it for you. What, what a journey. Tell me Tell me, tell me a little bit about how you grew up and how you decided to go down this path. business wise, this is a very impressive resume you’ve got here.
Katie Ng-Mak 4:35
Yeah. Thank you. I’m glad you shared the background, Joe, because I’m generally not comfortable. Like, you know, bragging about myself, as you mentioned, so I’m glad we got that out of the way. I enjoy terms of a little bit about myself. I’m Katie. I grew up in New York City in an immigrant family, so I’m my family and I am relates to the United States when we were one, I would say that I grew up in like, a low income like family, though I never felt poor. And in that community, like, I remember when I was young, like one of the things that I’ve always been curious about are these small businesses, right? And, and I remember like, very specifically, there’s this one noodle shop that, like, is very popular in Chinatown in New York City where I grew up. And it’s like, it’s very popular, as I mentioned. And I remember thinking, I was like, Oh, that’s really cool. Like, you know, they’re like, employees hair that are like serving these delicious noodles to the community. And one day, my mom told me, she’s like, oh, yeah, like, they’re not employees, those are the owners. And in fact, like, they just they don’t own like, just this noodle shop. And this noodle business, they actually own like, a couple of buildings down the block. Like their landowners, they actually, they just, they don’t only sell noodles here, they actually distribute them nationally. Right, like, they make a lot of money. And for me, it wasn’t just about like, not being able to make a lot of money. Like, I just thought it was really cool. Like, they sell noodles to the community. Like, they actually have a distribution business. They also, even though I didn’t know what I was what it was called. And like they clearly did very well, right. And they like made enough of a name for themselves within this immigrant community where people usually have like, low paying jobs. And I also thought it was really cool that like, you know, they didn’t really have to run this noodle shop, like their owners, like they have buildings, you know, but I think they found a lot of joy in being able to offer this low cost food that’s really enjoyed by this community. And, and, you know, I think that’s why they do what they do. And they, you know, they work hard over the weekends to do that. And to be part of one of my impressions of like, a small business, and it stayed with me, I don’t think I ever had felt like I had an opportunity to do this, just because as I went on to college and thought about what I wanted to do, one thing that was really important to me and my family was that, you know, I would move into a high paying career, just because I had students that I felt like it was important for me as like, you know, for immigrant to just be able to be a success story, I felt like it was important for me to one day be in the position to support my parents if they needed my support. So just, you know, entering into, like, a career of success, and like, you know, that offered a little bit more reassurance and predictability was important. And that was what led me into a career into finance and eventually into tap,
Joe Valley 7:51
did you find that you were working harder than your non immigrant peers? Because you had to prove something, or you just had the drive within you versus somebody that, you know, has been in this country for several generations?
Katie Ng-Mak 8:06
Yeah, that’s a tough question. I, you know, I think that there are a lot of hard working people out there, right. Like, I do think that the so like, you know, even when I was working at HubSpot, a lot of the employees, they’re, like, they don’t share the same like, you know, recent immigrant story, but super hard workers. And I think the motivation was different, right? Like a lot of the my peers there were driven by, like, you know, passion, and just really wanting to make impact. I had that in me, for sure. But I also think that there was this like, separate narrative. That was a big part of my life. And, and so I wouldn’t say that, like, I had to work, I don’t think that I had to work harder. You know, I feel like, I’ve met a lot of people who have worked very hard. But I definitely feel like there was this, like, need and desire to really like lift myself out of that community that I grew up in. It’s kind of ironic, like, I love that community. My parents still live there, right? That’s where their lives are. But you know, I think the story of every immigrant family is that they want their children to be able to lift themselves out of it, not forget it, and come back and you know, be able to help that community but they, they really want their children to be able to lift themselves out of it.
Joe Valley 9:25
Well, you’ve clearly done the undergrad at Columbia, MBA from Harvard, Black Rock, BlackRock, Bear Stearns, and then more small business with HubSpot. What led you from the likes of Blackrock and Bear Stearns? To
Katie Ng-Mak 9:41
HubSpot? Yeah, it’s a good question. So, I will say this, like I think I always kind of had this entrepreneurial edge. I never felt like I was in a position to stretch it, to follow through with the analogy, but I always felt like I should prepare for it. Right and coming out of this In school, like, honestly, I wasn’t sure what I wanted to do, it’s really easy to tell the story of my career by saying like, hey, you know, during that time, I just saw that hot Tech was gonna, like take off. And I just put myself in a great position. It really was not the case. Like I didn’t know what I wanted to do. And I so focused on what I wanted to learn. And one of the things I wanted to learn during that time was I wanted to learn how to sell because I knew that one day, if I were to own my own business, or if I were to, like, you know, maybe just even climb the career ladder in corporate, like, being able to sell is just such a critical skill. And I’m a natural introvert, I’m actually very shy. So I never felt comfortable conversations. So I wanted to challenge myself to just like, you know, build that skill, get that under my belt, and then you know, maybe put it to use Monday. So that was actually an I got in contact with HubSpot, because they had a sales job available. And I got connected to to Bounders through a connection, started my career there and just ended up being there for 12 years, because it was a great company with a lot of opportunities. Well, it’s
Joe Valley 11:11
incredible what they’ve accomplished during that 12 year period, new as well. So congratulations to everything that you did there. I’m looking at your LinkedIn profile, and it’s talking very, very impressive on the number of different things that you did there. But let’s jump to the entrepreneurial side of it fully. Katie, you bought a e-commerce business from Quiet Light, in June of 2022, just about four months ago, through Paul, I’m looking at the details of the business. It was a seven figure purchase. There were a total of five offers on the business. Congratulations, you were chosen. The right person made that connection with the owner of the business. But prior to that, I think you went through Walker Deibel’s Acquisition Lab. What What led you to that? How did you find Walker? I know he’s obviously part of the Quiet Light team. He was on the podcast a couple of weeks ago. How did you how did you find the acquisition lab? And I mean, by all rights and purposes, somebody is going to look at your resume. She doesn’t need the lab. She knows everything she worked at Bear. She worked at BlackRock, she’s got a Harvard MBA, why? Why do you need to go through the lab? So tell me tell me about that aspect of why you why you chose to do the lab?
Katie Ng-Mak 12:28
Yeah, that’s a good question. So I would say that probably like around eight years into my HubSpot career, I started to get the idea of buying a business. And it was actually because I was being recruited by a private company. And like, I got a call the guy, the founder, and CEO of the company, also graduated from Harvard. And it was clearly in recruiting call. But he was like, hey, you know, I was wondering if you’re up for meeting for coffee on tap your brain for some expertise. We had a great meeting, he told me about how he had bought that company, that business when there were only two employees, that we really liked the product. And then he grew it over the last 10 years to be like a very sizeable private company. And actually, I believe they were acquired by like a public company over the past two years. And I just remember him telling me that story. And I walked out of that meeting. And I believe I actually said this to him. I was like, Hey, I just want to let you know, I’m actually not interested in becoming your chief revenue officer. Because he did mention that there was going to be a role opening. But I want to buy a business like you. So can you give me some advice. And that began kind of like this. It just planted the seed of the idea of buying a business. And then after that, like, you know, I just went into like, kind of like my network, like basically asked, asking the right questions is like, Oh, I wonder who has bought businesses and how they did it. And, again, like I fell back to my Harvard connections, and I found out that a bunch of my classmates actually bought businesses through a search fund, started look into search funds, and came upon one of Walker’s friends who was running the search on during that time. And we chatted a bit, and I began to realize that a search one wouldn’t work out for me because, like, my family, and I live in Massachusetts, in a city in Massachusetts, everyone’s happy, my kids are happy. My husbands are happy. I’m like, I’m not moving. And I knew that that constraint when worked out while was search fund investors. So one of Walker’s friends mentioned to me she’s like, well, you know, I have a friend who Ashley started something called the acquisitions lab. He actually wrote this book called Buy then Build, why don’t I introduce you to him? And that was how I formed a connection to Walker and and then that’s how I get pulled into acquisitions lab. And then to answer a question directly about like, hey, like, why do you need something like acquisitions lab? When you got like a Harvard MBA, the dangers at buying in business and everything that you cover in MBA, like it’s completely different, completely different, like, I like today, like when I explain to my friends who have never bought a business like, like what that process is like, I actually describe it as like, being really like a process that’s very similar to buying a house. The only thing is that you know, you want to buy a house, I actually feel like the process of doing so in a lot of markets, it’s actually quite like it’s quite mature. So like, you’d go, like you go on Zillow, you look at a lot of listings, like, you can probably like call up like, a real estate like agent, and then, you know, the entire process is actually quite mature. But then what I’ve learned is that if I wanted to buy like a business, more like on main street level, right, like, there’s actually like, I really didn’t have like a real estate person I can call up to be my advocate. And then that entire process is actually like, not that clear. And, in fact, the acquisition acquisitions lab and the walkers, but I didn’t have the clearest resource resource to me around, like, what needs to get done, how, why, when, and all the mechanics around that. And that’s why I found the book and the labs so incredibly important.
Joe Valley 16:23
Well, you’re not the only one that I think they’ve done close to 100 million in acquisitions at this point, or people within the group. So it’s, it’s true, you know, the real estate market is very mature, you know, how to buy you know, how to sell, it’s pretty well known. And what we do through selling online businesses, or people acquiring them, it’s immature, right? I think Katie, probably, I mean, of the 100 million in transactions that I’ve done personally, maybe one transaction had a buyer representative. No, it just, it’s just generally not what happens in this world anymore, or not anymore, ever. And so the people on the sell side have to have the experience to help the buyer through that process and doing what you did, you’ll learn an awful lot about what’s ahead of you, how to analyze a business how to how to present yourself how to prepare in advance, right, the, the aspect of, you know, the search fund, if you don’t have the funds all lined up and ready to close, and you’re not the decision maker, and there are five offers, you’re probably not going to be the one buying the business. So let’s let’s address that. You know, this is a seven figure business. How did you fund it?
Katie Ng-Mak 17:38
Um, I so do a lot of personal savings, and also an SBA loan. Okay. You know,
Joe Valley 17:45
savings and SBA. Good. So, so you had it all lined up you probably knowing Walker, you probably worked with somebody like Steven spear from was it econ? Econ lending or somebody else that you used? I ended up working with multi funding multifamily know them well, okay. So you had it probably pre approved in advance, you did your due diligence, you got yourself pre approved, they told you how much you could spend, what you could afford. And then you went out and hunted for that business, or a business that would would fit that. Tell me about, you know, that process? How many businesses did you look at? Before you made your first offer?
Katie Ng-Mak 18:24
Yeah, that’s a good question. So it’s interesting, like, I have a lot of peers in the, in the lab, who actually, I think, were much more diligent in the process and looked at a lot more businesses, I would say, beginning to end. I’ve only looked at around 20
Joe Valley 18:42
Wow, that’s impressive. Excellent, you know, you know, when somebody tells me they want to buy a business, you know, within the next year, next year, I mean, it’s it’s almost like a full time job. So yeah. Did did going through and this is, folks, this is not a sales pitch for the acquisitions lab. It’s just happens to be that Katie went through it did did going through the lab, short circuit that process in terms of, you know, other people that you know, that did not go to the lab that ended up buying the business, do you think you were able to analyze what you wanted a little bit more quickly and, and sort of narrow your search a little bit, too?
Katie Ng-Mak 19:21
I absolutely think so. So, so there were a couple of things that were really important to me as I started, like analyzing businesses. The first one I almost feel like people don’t talk about as much I think it’s highly important. It was super important to me like I just had to trust it broke ground on our side. Like and you know, for better or for worse, like I think this segment of the market I was operating in in like, it’s kind of messy, you know, I like it because it means that there’s a lot of opportunity you just have to like do some sifting, but like you know, I I basically contacted brokers, whenever I saw that there was a listing that was interesting. And, and I, I took a lot of, I took a lot of like listings to the point of having conversations with the sellers. But like, if along the way, I just felt like, you know, there’s something here that’s not transparent. We’re not on the same page. Like, I was like, nope, not including, like, so that trust to me is super important. Like, I think, you know, the foundation of business is trust. Absolutely, absolutely. Like every part of the transaction and like, the brochure, like, it’s like the number one person, I feel like we’re on like, opposite sides of the table. Like, you know, there’s, that was not how I wanted to engage in my first transaction, maybe later down the road when I’m a little bit more experienced, but not the first one.
Joe Valley 20:54
Yeah, listen to that people that are out there listening, that are entrepreneurs owning their business, forget about the broker aspect of it for now. But the number one foundation of it is trust, you’ve got, you’ve got to build a business. That’s not just great for you. But it’s going to be great for the next owner as well. And you need to be a trustworthy, likable, honest person, or highly qualified buyers, like Katie are just gonna walk away, they’re just not going to trust you. So, beyond the broker, were there any opportunities where you had conversations with the sellers of the business? And after the conversation? You’re like, Nope, I’m out, because you just didn’t trust them? You didn’t feel good about the owner of the business?
Katie Ng-Mak 21:34
Yeah, like, I think I felt like, I’m not sure that like it was that I didn’t fully trust them. But there was just something in like, the presentation of the vitamins that didn’t add up. Right it like, like, I think it’s either like the financials, or like, a strategic decision. And, like, the information just didn’t add up to help me get to a comfort level, where I’m seeing like, okay, like, let me take the next step. I mean, I think that like, you know, as an entrepreneur, like, you do have to accept a certain degree of uncertainty, right? Like, if you wait until, like, everything’s all clear, like you actually, like, you probably will never have a deal. But like, you, everyone has your, you have to, like, figure out where your threshold is. And if like, if it ever crosses that threshold, like you just have to, like, you just have to, like, you know, end the process right there. So I definitely have had those conversations. But like, you know, besides the trust level, like the other element that just made it very clear is that it was just like, like the numbers, right? I had a certain budget, that was one constraint. And then I also had a certain expectation for the profitability for the business. And, you know, for the segment that was operating, there were just so many opportunities out there. So I was just very stringent. Like I didn’t in the beginning, I looked at the more businesses just to learn how to read, like, you know, like a lot of prospectus just to kind of get to know the process. But after a while, I was like, I just have to really stay discipline like I can’t talk myself into something that will eventually not be effect.
Joe Valley 23:12
Yeah, discipline is huge, right. Sometimes some people just push, push, push, and they end up buying something they’re really unhappy with, because they set an unrealistic, unrealistic goal. Personally, I did that myself. Back in 2012, I bought a business that I shouldn’t have bought, I pushed and pushed and pushed. And it ended up costing me about $280,000. Because I lost every penny of it. Katie was a bad decision wasn’t necessarily my fault. It was a Gu ag algorithm at that time, I couldn’t blame somebody else. But if I hadn’t pushed, I wouldn’t have bought that business in the first place. So you never know what the reason is that you shouldn’t shouldn’t buy it, but you should follow your gut. And I just didn’t, I wanted it so badly, I made a bad decision. So the nice thing about buying with an SBA loan, in my view, is that it’s not just you, you know that you’re doing your own due diligence on this business, you’re gonna, you know, run your own numbers, but you’ve also got, in this case, multi funding, also doing their analysis of it. Just out of curiosity, as a buyer with your level of experience during due diligence, did you did you run the due diligence process on the numbers on your own? Or did you hire an outside company like Centrica or somebody else to help you?
Katie Ng-Mak 24:30
I hired an outside company. So, again, like, you know, I told myself that like, this is my first transaction, right? Like, just bring in the additional support. Like, don’t don’t nickel and dime, that part of the process. You just have to, like, you know, bring in the experts who have seen this before. And just like, you know, leverage your expertise to give you a little bit of guidance. So I hired a team for financial dude diligence, they also hired a separate team to do, like, kind of like operational due diligence. And you don’t have to hire two teams, it just so happened that I didn’t, I wasn’t able to find someone that was available during that time to handle both together. So it ended up being like two separate parties to handle that. And then I also had a financial
Joe Valley 25:22
lawyer. Yeah, you gotta have that. Who did the financial due diligence? A firm?
Katie Ng-Mak 25:28
Yes. Oh, man. I’m like, I’m cap watch.
Joe Valley 25:33
Cap, did it for you. Okay. Matt removes the over a Cap Forge. Excellent. And the operational due diligence is interesting, how many employees of the firm were there, but not the, from the company that you bought.
Katie Ng-Mak 25:48
So the company only had to the sellers are a husband and wife team was a small business, and they had a lot of manual processes, right. And so it was actually through working with the operational due diligence team, where they kind of just flagged for me that like, hey, you know, JT, like, we just went through the process, like, you know, great news, like, the books are very clean, right, like, a lot of like, everything that was shared with you is proving to be true. But one of the things that you really want to look out for is that a lot of the like, you know, process sees in running the business, it’s very manual. And even like, you know, the sellers during that time had mentioned that to me. And they wanted to just make sure that I didn’t underestimate that how much time it would take to learn the process, and also like, transition into an employee at a later point. So during the due diligence process, that was something that we definitely went back to the seller for, to have a conversation and just make sure we’re on the same page of that.
Joe Valley 26:53
Did you extend the training and transition period after closing? Because of what you learned in operational due diligence?
Katie Ng-Mak 26:59
Yeah, we definitely that definitely extended, like included, specified a very, like clear number of hours, I was told that it’s a lot more than average.
Joe Valley 27:11
Yeah, typically, folks, what we do is up to 40 hours over the first 90 days after closing, what did you wind up with getting,
Katie Ng-Mak 27:19
we ended up with three months on we’re in 20 hours, I use every single second of that 120 hours. And then on top of that, we also, you know, agreed that if I needed more time, like how we would arrange for that it will be off like a consulting fee. And I used some time to not not as much as I thought I might need. But I’m glad that we actually defined that. So that one louvered there at the moment where I like need a little bit more time. And that final stretch, like everything was discussed already. And I think that just made it easier for everyone.
Joe Valley 27:53
I think relationships in the way you treat people are incredibly important in a transaction like this, or in almost all aspects of life. But did you think about that? Are you just the kind of person that you needed to have a strong relationship with the owners of the business? Because you’ve got to work with them after closing? And in this case, for three months, 120 hours and beyond? Did you find that on that first buyer or seller? Get to know each other call that you just connected with them? And that you found them to be honest, likable, trustworthy people? Or was it something that that you had to build with them?
Katie Ng-Mak 28:31
Yeah, it’s a good question. I found them to be likeable and trustworthy, exactly, as you described. I think our trust level like went way up during the, during the transition process, like they were just really awesome. Like, I feel really lucky. Like if you’re really lucky that they were as supportive as they were during the transition process. I and I do think that that trust is incredible, right, and is important. And one thing I would say in terms of like, you know, what made me feel such a high degree of trust with the sellers during the process. I felt like the trust wasn’t just reflected in how they presented themselves during the calls. It was, it was reflected in how they responded to requests. It was reflected in like, clean books. Like one of the reasons why I bought the business that I bought is that the books were clean.
Joe Valley 29:23
If I could just shout that from the rooftops people. I preach this way too much. Right? Clean books, clean books, clean books, it’s not perfect books, but it’s clean books. So there’s somebody like you Katie can you know read a profit loss statement and analyze it look at the balance sheet look at the numbers and go okay, well, I can improve upon that aspect of the business. Their cost per acquisition is too high. Why did that? They hire that consultant. It didn’t make sense just clean enough to be able to digest it is the key thing. Because you’re, you know, you’re spending seven figures here it big risk, you’re not, you’re not going to have a second opportunity to spend seven figures. Because you’re going to be gun shy the second time, your family is going to say no, you’re just not going to have that second opportunity. So folks, if you’re out there running a business and you’ve not hired a company, we’ll call out cap forge because Katie mentioned them. If you’re not hiring, you know, an e-commerce bookkeeping company like cap, forge, seller, accountant, acuity, there’s a whole list of them, go to the quiet lights for test partners page. And there’s a whole list of e-commerce bookkeepers that can help you. Please do if you’re not doing it. Because eventually you are going to sell your business and your business is likely your most valuable asset. And if you don’t get the numbers, right, if you don’t get the books clean, somebody like Katie not gonna buy it, you’re gonna walk away, right, Katie?
Katie Ng-Mak 30:49
Yeah, like, I mean, it was probably one of the most attractive parts of this, like, this transaction. Like, the fact that it was like clean bucks. You know, I had spoken with CAP Forge, and they told me they’re like, you know, we really have, you can have like, really good books. And we really have like, like, like, you know, the books, like, you know, tie back to the accounts down to the penny, but these tied back down to the penny. And so and that was important, you know, because what it helped me feel was that, like, the reality is that like, you know, you can poke and you can dig and, and there’s going to be like, a lot that you still don’t fully like, get, right, especially for like a first time buyer. Like, no, like, amaze is going to prepare you for everything that you need to be looking for in like your first purchase. And, and but like, you know, when something when you have clean box, you just trust that like, Okay, if the owners brought this level of attention and detail to their books, they’ve probably brought this level of attention and detail to other elements of their business, and it just kind of reflects on them and how they do business. And, and that’s comforting. Right without them. So that was that was a big, big part of it. And it actually was part of what made me realize that this could be a good fit for me, for my first business.
Joe Valley 32:15
Yep. I want to emphasize again, folks, that if you’re Katie has an MBA from Harvard. She worked for BlackRock and Bear Stearns and HubSpot. Yet she still hired a due diligence firm, a financial due diligence firm and an operational due diligence firm. So as buyers out there, spend that extra bit of money. There’s so much that you learn. You learn what’s wrong with the business and how you can improve it and how you can make it more efficient. Wouldn’t you say, Katie?
Katie Ng-Mak 32:49
Yeah, absolutely. Absolutely. Like I think I’m, there’s, it’s it, you know, that due diligence process is funny, because you kind of want, in a way you kind of want them to come back and say like, everything’s perfect. And reality is that, like, if they dig deep enough, like there are imperfections to any business, and those oftentimes are like your opportunities, or some of the things that you should pay attention to sooner rather than later. And, and it’s nice that someone kind of did some of the legwork to help you identify them. And then you know, once you go into owning the business, you just have to validate that process.
Joe Valley 33:24
Yeah, their growth opportunities more than anything else. It’s like, this is this is what’s wrong with it. And now you know, how to fix what’s wrong with it and have the business grow. But Katie, you had five offers with a business, the business had five offers on it, you will just wanted them. Why did they choose you?
Katie Ng-Mak 33:39
Oh, that’s a good question. I, you know, I actually, what I knew, I wasn’t sure how this whole process work, right. Like I put in the offer. And then I didn’t hear back from for a few days, I thought that there might be some follow up questions. I didn’t hear anything. And I was thinking, I was like, you know, they probably chose someone else. And so I’ll just take this as a learning. But I was kind of surprised that they chose my offer. And if I were to guess I would say a few things. One is my background. So I think the sellers, like saw my background with HubSpot, and the business is an online, you know, an online store. And I think they felt like, as they look out into the business, and like, and kind of like identify, like, what they think are the growth opportunities, they felt like, I would have like, one of the best shots of taking the business there. And, you know, I happen to buy a business from sellers who had owned the business for almost three decades. So this is like their baby, right? Like they it’s not just like, you know, they sell the business and they’re gonna ride off into the sunset, they will, but they also really wanted to hand it off to see someone like take care of it, like nurture it and take it to the next level. So I think they felt like I was a good candidate for that, given my I given my background, I think the second thing that I did is that I kept like the LOI simple. So because I was part of the acquisitions lab, I leverage some of the resources to put together an LOI, and a letter of intent. And there, there were a couple of versions of it. And I basically chose like, the most simple one, because that’s just my style. Like, I don’t want to, like I just wanted to, like keep the terms simple. I didn’t want to have too many like, you know, if this happens, then that if this happens, then that I don’t want to overcomplicate it at the level of at the LOI stage, right, and, and, you know, you’re a better judge of whether that’s the right call or not, but
Joe Valley 35:48
is the right call, it is 100%, the right call, you know, there’s my process, and our team does it a little differently, depending upon the advisor. But when I had a business that was listed with multiple offers, I would not even want an LOI. In fact, I’d prefer that we use the quiet light template loi, which I’m sure you have a copy of it through the acquisitions lab. Because within each loi, there’s maybe five or six important bullet points of the purchase price, the time to close, you know, what’s going to happen in due diligence, the non compete things of that nature, training and transition period, what you’re asking for, in terms of hours and things of that nature, there’s only five or six of them. And I think it’s best when there’s a multiple offer situation that all of those things are listed out and can be viewed equally against all of the other offers versus somebody finding a template letter of intent online and filling it out. And it’s complicated, or even hiring an attorney for it because the letter of intent is non binding, fully contingent on due diligence, and the further detailed asset purchase a grip, there’s a lot to really get through before you have a legally binding agreement. Now, of course, with the loi, it does become exclusive for a certain period of time, and it changes based upon SBA vs cash and things of that nature. But it doesn’t look to me as I’m, as I’m looking at the closed sales report, there were five offers, but it didn’t go over asking price. It looks like it’s sold at asking price. My guess Katie is that it’s all of the things that you said, and that they liked you. Right? If I, if I done my homework, I could have called Paul up and said, you know, what, were some of the offers higher than asking price? And he probably would have said yes. There was a strong multiple, it was let’s just say in the broad range of three to four, it was listed at a strong multiple, because it’s a strong business has been around for a long time. That’s just solid. I’m curious, Katie, it looks to me as I look at it, it’s it’s in the air filter water filter humidity control space, that there’s it. To me, it looks like there’s a recurring revenue aspect of the business. Is that something that was attractive to you? And is it first? Is that accurate? And is that something that jumped out? That was really attractive to you?
Katie Ng-Mak 38:10
Yeah, the recurring revenue aspect was definitely very attractive to me. They had a, like, average order value that was high. Because they were they sell like units, air purification units. They sound to b2b. So that was just a good fit for my background. And I find a whole area about around air purification, water purification, like, I felt like there was topic area where, like, I can engage with the topic, like I care about, like air purification. In fact, I have air air purification unit in my home, I care about water purification. In fact, I also have a water purification, like, you know, countertop solution in my home. So like, I felt like I can I care about the products, I would be willing to invest my time and energy to build expertise in it. I also felt like the products were learnable. So if you started to enter into, like a super highly technical product, where you just need like a PhD in order to, like be a qualified expert at it. And then you know, I don’t know about that fit. But you know, just given the fact that I care about it. I felt like it could be engaged with the product. But you know, like that resonated with me quite a bit.
Joe Valley 39:27
How did that? Yeah, I think I think it’s personally I think it’s very important. Some people just say, you know, it’s a widget is a widget is a widget and my belief is that when times get tough, and generally they always do as an entrepreneur, there will will be a period when times are tough. I think the more passionate and interested you are in the product or service that you sell, the easier it’s going to be to get through those tough times of the of the 20 listings that you looked at before you were able to buy this one. The other 19 Were there some that the business was generally pretty good, but you weren’t as excited about the product, and therefore you chose not to make an offer on
Katie Ng-Mak 40:05
Ah, yeah, like I looked at a range of businesses. I looked at manufacturing companies that print, you know, customized labels for products for other small businesses. I looked at a school bus company that drives kids with special needs. I looked at a, like, power washing company, but like, you know, the business that does like power washing for like, major trucks, right. So it’s like a b2b sale. super interesting. Like, I think like, if I were to think about all of those different, like services, like, the power washing company, was most interesting in terms of like, business model to me. And look background, they had enough complexity, the financials were interesting, like the, the numbers kind of match what I was looking for, like, pretty cool market development opportunities that like, match my skills. But it was like power washing. Yeah. Right. And like power washing and trucks, and there are people out there who will like, you know, look at that. And they’ll be like, awesome. And then I looked at that as like, Oh, okay. You know. And so, so, you know, I gave myself some time to see it, my reaction would change. And then I was like, oh, powerwashing, you know? So I wasn’t the reason that wasn’t like, the only reason I said no to the business, but it definitely was one of them. You know, I was like, Hey, this is a commitment of a number of years. And so I have to, like be engaged in what’s being offered to end customer.
Joe Valley 41:49
Yeah, 100%. And part of running a business are the people that you operate it with the team that you’re going to build. And with powerwashing, I would imagine there’s, there’s more people and human resources that are needed, then, you know, the the business that you bought, Katie, tell me about after closing, any regrets? After you closed on the business? And you’re working through that training and transition period of 120 hours with the three decade lawn? You know, owners of the business? Did you ever go, Oh, my goodness, what am I done?
Katie Ng-Mak 42:24
Some of you have regrets. But there are a couple of things that like, you know, if I were to do this again, right, like buying another business, I would do it differently. So like, luckily, right, just silly things. So you know, for me, one of the first silly things that I think I did is that, you know, the sellers render email on Microsoft. And I’m like a Gmail person. I’ve used Gmail through like my, you know, my entire time at HubSpot. And I was like, oh, you know, I should just migrate email from Microsoft onto Gmail, and started spending time on how to do that started, like, looking into like, who could potentially help me with that. I didn’t around like, three, four days in, I was like, Katie, you idiot. Why are you spending time on like, the, you know, a productivity platform like that, when you’re like, when you should just be transitioning? Like, it’s Microsoft, like, you know, you can send emails, call it a day, right? So like, just wasting time on things that, like, shouldn’t have been prioritized that way. Like, that’s like one regret. Another more tangible one, like, I wish I like just knew bookkeeping, better. Like I, I just if you’ve never done it managed, like if you’ve never been an entrepreneur, right? Unless, like, you were like, your dad, or your mom ran a business and you help them like manage your books, you’ve probably never done bookkeeping. And for the business that I bought, like, you know, you are like, like, you just can’t move. Unless like, you have hair in this case, like QuickBooks sorted out. And that was just like, like, there was just like little things that I didn’t know, I didn’t know, like, I needed like, I thought you transfer a QuickBooks account over to me the way we transfer everything else. But that’s not how it works, like. And I didn’t realize that until a several days in. And then by time I sorted it out, I felt like, like it took two weeks. And that’s like a lot of lost time in a transition period. And it made everything way more stressful than it needs to be. So we’re the
Joe Valley 44:26
owners using QuickBooks Online, or they do on a desktop version of it.
Katie Ng-Mak 44:30
They had a desktop version of it. And the thing is that their file was so old, that it like it didn’t really like transition as easily as I was expecting as the people who were helping me were expecting and I think that like, you know if I would ever do this again, like buy another business, I would definitely prepare for that stuff a lot harder. I mean, it’s no one’s fault. Like I think it’s just that I didn’t have the background you were unaware that I needed to do some preparation. Yeah,
Joe Valley 44:59
yeah. Did you end up hiring a due diligence firm? Another due diligence from a bookkeeping firm to do your books way? Did you mean will financial due diligence was done by CAP Forge? Did you hire them to do your books afterwards? Are you taking that task on yourself?
Katie Ng-Mak 45:13
I’m in the process of sorting out like, like I am hiring someone, she helped me with that. And I’m in the process of finalizing that
Joe Valley 45:22
good, because you want to have clean books yourself. Right? Yeah, someday you’re gonna sell this business?
Katie Ng-Mak 45:26
Yes, that is absolutely. I mean, that’s something I learned right about like, like, going through the process of buying a business, like I’m wondering, I’m starting to think about is, like, hey, like, you know, me, I put together a business plan, like for myself, when I was like, you know, during the, you know, in support of the purchase process, but I think I’m guessing every entrepreneur does this, like, now you’re really putting together the business plan. Because you’ve come in, like you’ve dug into the business, you validated certain assumptions. Maybe you’ve invalidated certain assumptions. And now like, you really want to think about like, how do you want to grow this business over the next couple of years? And where are you going to place your bets? So I like I’m definitely thinking about that with the end in mind. And one thing I know for certain, like, I have to have clean books, like without clean books, like I just feel like you just also move so much slower.
Joe Valley 46:24
When you just use the word growth. Let’s talk about that for a minute. You’re only four months in, in the last four months compared to the same period last year. Is your business growing? Is it stagnant? Is it shrinking? And if yes, to any of those questions, why?
Katie Ng-Mak 46:41
Yeah, it’s flat. It’s like, honestly, I’m relieved. Like, the reason why I’m relieved is for a couple of, like, I’m really relieved for a couple of reasons. One is that, you know, I feel like I can kind of bind to business and I have a recession, right? Oh, yeah. And all of us are a little bit like, how’s this going to impact my business, and you kind of don’t really find out until like, you see the numbers. So I’m gonna round flat right now. And I am relieved about that. I’m also prepared for, like, trending downward a little bit in the coming year, I just feel like you just have to, like, like, you know, be prepared for a number of scenarios and know how you will respond to that. But at the same time, like, you know, I bought this business with the intent to grow it. So I plan to invest in it. Right. So, so I think that, yeah, like I’m, it’s, it’s flat, it’s more or less what I expected, just because, you know, when I was looking at some of the marketing investments coming into the year, but like, but like, Yeah, I’m planning to grow it, I
Joe Valley 47:53
feel like flood is, is kind of a win, given the economic headwinds that we have right now. And, you know, you could also say that, Oh, it’s grown by 30% over the previous year. And that comes with its own challenges as well, because then you’ve got to update your, you know, inventory projections, and, you know, working capital to buy that inventory. And there’s just different challenges that come along with crazy rapid growth. So I think, taking over business, its steady as she goes, is a good thing. Because you’re really learning the ropes as you prepare for the growth that you’re going to implement and not in necessarily, you know, the next six to 12 months. But as you look at it, as somebody that has been around and I think really has a business plan, you’re not looking at, oh, I have to grow this by x percentage in the next six to 12 months. It’s more, I would guess you’re probably got five year numbers and things of that nature. Is that Is that correct? Assessment?
Katie Ng-Mak 48:55
Yeah, it’s like, you know, I’m definitely like, I came in with a three year plan. And I’m definitely, like, extending a lot of grace to myself next year. I told myself that so emotionally, hopefully, I get myself there. And yeah, I think it’s, it’s a hard, it’s a hard decision to make as an entrepreneur, because you, you feel like you just like took on this massive responsibility, you probably got a dream in from your family, family members to do this. And this is kind of like a bit of your own thing. Right? So I think, and then first, and then it’s so different, probably for many of us than what we used to do. So I think you’ve put a lot of pressure on yourself to like, get it right. So I definitely feel like I put a lot of pressure on myself to get this right. And get it right, sooner versus later. And, you know, one of the things I’m learning is that like, you know, there’s a some of these decisions, I have to slow down on a little bit. And really just take the time to You set up the foundation for a couple of things. And also, like, take the time to just make sure I truly understand, like some of this stuff, right? Like, I mean, it’s great that we’re from spot, but knowing what needs to get done is very different than like, doing it. And some of the stuff I’ve never done myself, like, I’ve never like done actual work and, and like, even if I plan to hire like, you know, a service agency, like a service company to help me with some of these functions, like, there’s a degree of expertise I need to bring to the table to just choose the right partner and so forth. So, like I’m, you know, definitely telling myself that like in next, like, definitely six, maybe even at least 12 months, like I need to just extend a lot of grace to myself in and the numbers will be what it needs to be. But like, I need to think, much more long term and build for the future.
Joe Valley 50:52
You know, earlier on, we were talking about your education, you said, you you really focused on what you wanted to learn, which I think is just an incredible statement for students, right. I’ve got two kids in college. And I think it’s, you know, what I’d like them to do focus on what they want to learn not what they think they have to learn that now you’re in a situation where as the business owner, you kind of have to focus on what you have to learn as you need to bring certain level of expertise to the table. So I congratulate you on that. I wish you best of luck with that. I have the feeling you got to do amazing things. Katie, I look forward to staying connected and learning how things are in 12 to 24 months. And when you sell this business for, you know 10 times what you bought it for in three to five years, I want you back on the podcast to talk about your incredible exit printer journey. So we can do the full circle aspect of it. Congratulations on everything and just incredible success story. Just in terms of your your life, Katie and your path and the things that you’ve chosen the challenges that you’ve taken, taken on. And now this new entrepreneurial journey, you’ve done it right, because of the work that you’ve done with with, you know, your first of all, your education background, your work background, joining the lab, looking at as many businesses that you looked at hiring due diligence firms, not just for financial, but for operational doing it right. Having that transition period. I have no doubt that regardless of the economy, what’s gonna happen in the next 12 months, you’re going to do very well. Thank you. Thank you so much for coming on the podcast. Katie. I appreciate it.
Katie Ng-Mak 52:37
Thank you. I really enjoyed the conversation. Joe, thanks for your time today.
Joe Valley 52:41
Thank you. Folks, thanks for listening to the Quiet Light Podcast, I have a big favor to ask of you. And that is just go and give us a review on iTunes. Tell us what you think. We don’t ask for that much. And it helps our rankings and help helps us reach more people. So please do that when you have a moment. Also, again, I mentioned it in the middle of the podcast, please go ahead and check out a quietlight.com/partners. It’s our new resource partners page where you can find highly qualified e-commerce, bookkeepers, tax advisors, attorneys, growth, capital acquisition, lending, everything that you need to help grow your business and get you through due diligence if you’re buying one as well.
Today’s podcast was produced by Rise25 And the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at [email protected] Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.