Acquiring Minds Podcast Summary

Episode: How a Couple Left Tech to Buy a Business Together
Release Date: January 27, 2025
Host: Will Smith
Guests: Ray and Dana Cherry, Owners of Monsam Portable Sinks
Podcast Link: Acquiring Minds on YouTube
Episode Summary Subscription: acquiringminds.co

Introduction

In this compelling episode of Acquiring Minds, host Will Smith delves into the inspiring journey of Ray and Dana Cherry, a power couple who transitioned from successful tech careers to entrepreneurship by acquiring Monsam Portable Sinks. This detailed conversation uncovers their motivations, challenges, strategic decisions, and the profound impact of owning and operating a business together.

Background of the Guests

Ray and Dana Cherry come from diverse backgrounds, both rooted in immigrant families, which instilled in them values of humility, hard work, and education.

• Dana Cherry:
  Raised in a Haitian family near Boston, Dana's upbringing was steeped in entrepreneurship, with family members owning various businesses. She pursued economics at Tufts University, met Ray there, and built a robust career in financial services and investment banking. Her expertise lies in advising companies on mergers, acquisitions, and capital raises.

• Ray Cherry:
  Although Ray's detailed background isn't explicitly outlined in the transcript, it’s clear that he complements Dana with strong skills in finance and a background that facilitated their business acquisition process.

"This is a full circle moment for me... your platform and your guests have been really helpful..."
— Dana Cherry at [05:12]

Decision to Transition from Tech to Entrepreneurship

Both Ray and Dana recognized that their fulfilling careers in tech were approaching a natural pause, driven by a desire for more autonomy and the pursuit of their entrepreneurial dreams. Their mutual understanding and complementary skill sets made the idea of buying a business together not just appealing but the natural next step.

"We were at a career crossroads... that's how it came about."
— Dana Cherry at [10:48]

Search Criteria and Process

The couple embarked on their search with clear criteria to ensure a smooth transition and sustainable growth:

1. Business Stability: They sought businesses where owners were retiring, avoiding distress sales or fire sales.
2. Profitability: Consistent profitability was essential, with a minimum SDE (Seller’s Discretionary Earnings) floor of $250,000, aiming upwards to $1 million.
3. Location: Proximity was key—within a 30-minute radius of their residence in the Bay Area—for ease of management and daily operations.
4. Industry Focus: They remained industry-agnostic initially but favored B2B businesses to align with their expertise. They avoided businesses requiring stringent licensing or credentials to minimize operational complexities.
5. Growth Potential: The chosen business needed substantial room for growth under their ownership.

Dana managed the day-to-day aspects of the search, engaging with over 300 businesses, demonstrating the high deal flow in the Bay Area market.

"I think it was pretty strict... provided a bunch of options."
— Dana Cherry at [26:27]

Acquisition of Monsam Portable Sinks

The Cherrys discovered Monsam Portable Sinks, a $2 million manufacturing company, through proactive networking and direct outreach. Their meeting with the seller was serendipitous, fueled by shared immigrant backgrounds and similar entrepreneurial spirit.

About Monsam Portable Sinks:

• Products: Customizable, commercial-grade portable sinks used in various settings such as schools, restaurants, hotels, spas, and salons.
• History: Founded in the late 1990s by an Egyptian immigrant couple. The original innovation—a portable sink enabling safe food handling at outdoor events—catalyzed the company's growth.
• Revenue: Last twelve months (LTM) revenue was around $2 million, with a notable spike during the COVID-19 pandemic due to increased hygiene demands.

"Monsam designs and manufactures customizable portable sinks... These can be moved anywhere."
— Matthias Smith at [32:39]

Founding Story and Business Origin

The inception of Monsam Portable Sinks is a testament to innovation born out of necessity. Faced with the challenge of maintaining hygiene while selling goods at fairs, the founders—an Egyptian immigrant couple—developed the first portable sink. This solution not only met their immediate needs but also addressed a broader market gap, leading to the establishment and growth of Monsam over 26 years.

"The wife moved on from her government job to bake and sell cakes. The husband built the first portable sink..."
— Matthias Smith at [36:21]

Transition and Integration into the Business

Transitioning from tech to manufacturing presented several challenges, both operational and cultural. However, Ray and Dana leveraged their strengths in finance and strategic planning to navigate these hurdles effectively.

Key Aspects of the Transition:

• Employee Relations: The existing staff, loyal and experienced, warmly welcomed the new owners. Ray and Dana spent six months working side by side with the team, fostering mutual respect and collaboration.

  "Our employees have been there for four or more years and they've taught us a ton..."
  — Matthias Smith at [63:47]

• Cultural Shift: Moving from a corporate to a manufacturing environment required adapting to a blue-collar setting. Embracing the hands-on aspects of production and valuing the workforce's efforts became integral to their management style.

  "We're not getting free lunches every day... It's a more blue-collar existence."
  — Dana Cherry at [70:07]

• Operational Enhancements: Implementing digital transformations, such as updating the website, integrating CRM systems, and automating workflows, significantly improved efficiency and scalability.

  "We're looking to reach eight figures within the next five years."
  — Matthias Smith at [57:24]

Growth and Future Plans

Ray and Dana envision substantial growth for Monsam Portable Sinks, targeting an eight-figure revenue within five years. Their strategic plans include:

1. Market Expansion: Focusing on diverse sectors like education, food service, beauty and wellness, and expanding geographically into Canada.
2. Product Development: Enhancing product customization and exploring adjacencies such as dog washing stations and luxury hotel amenities.
3. Sales and Marketing: Leveraging their backgrounds to refine marketing strategies, optimize branding, and expand their dealer network.

"We're looking to reach eight figures in the next five years... the segmentation opportunities here are tremendous."
— Matthias Smith at [57:24]

Insights and Advice for Aspiring Entrepreneurs

Ray and Dana shared invaluable lessons from their acquisition journey, emphasizing the importance of:

• Strong Communication: Maintaining clear and effective communication with all stakeholders, both in business and personal relationships.

  "Communication was just the importance of strong communication."
  — Matthias Smith at [17:41]

• Leveraging Professional Backgrounds: Utilizing their finance and investment banking expertise to manage financial modeling, due diligence, and deal structuring effectively.

  "Financial modeling is just one part of it... understanding how to communicate with different counterparties."
  — Dana Cherry at [48:35]

• Building Relationships: Establishing genuine connections with sellers by sharing similar backgrounds and values, fostering trust throughout the acquisition process.

  "We were able to really lean into that with them and build genuine trust."
  — Matthias Smith at [53:38]

• Adaptability and Learning: Embracing new environments and continuously learning to overcome operational challenges in different industries.

  "It's been a roller coaster of finding new things... it's been a tremendous learning experience."
  — Matthias Smith at [63:47]

"Take the time to really think about what you're looking for, what your strengths are, and go for it."
— Dana Cherry at [73:31]

Personal Reflections and Impact

Ray and Dana highlighted the profound personal fulfillment derived from entrepreneurship, particularly the ability to set an example for their children about ownership and generational wealth.

"Our kids have been to our workplaces... stepping into entrepreneurship was a great way for them to see what it means to truly own something."
— Matthias Smith at [72:27]

Conclusion

Ray and Dana Cherry's journey from tech professionals to business owners encapsulates the essence of acquisition entrepreneurship. Their strategic approach, rooted in strong communication, financial acumen, and a commitment to fostering a positive company culture, offers a blueprint for aspiring entrepreneurs. Their story underscores the potential of buying an established business as a viable path to achieving entrepreneurial dreams, maintaining financial stability, and creating a lasting legacy.

Notable Quotes with Timestamps

• "This is a full circle moment for me... your platform and your guests have been really helpful..."
  — Dana Cherry [05:12]

• "We were at a career crossroads... that's how it came about."
  — Dana Cherry [10:48]

• "I think it was pretty strict... provided a bunch of options."
  — Dana Cherry [26:27]

• "Monsam designs and manufactures customizable portable sinks... These can be moved anywhere."
  — Matthias Smith [32:39]

• "Take the time to really think about what you're looking for, what your strengths are, and go for it."
  — Dana Cherry [73:31]

• "Our employees have been there for four or more years and they've taught us a ton..."
  — Matthias Smith [63:47]

• "We're looking to reach eight figures within the next five years... the segmentation opportunities here are tremendous."
  — Matthias Smith [57:24]

Connect with Ray and Dana

• Monsam Portable Sinks:

  • Website: portablesync.com
  • Alternate URL: monsam.com

• Contact:

  • LinkedIn: Preferred method for reaching Ray and Dana.

This episode of Acquiring Minds serves as an inspiring guide for those contemplating the transition from traditional careers to entrepreneurship through business acquisition. Ray and Dana’s experience highlights the strategic considerations, emotional resilience, and operational diligence required to successfully navigate this transformative journey.