Trade Tales Episode Summary

Podcast: Trade Tales
Host: Kaitlin Petersen, Business of Home
Episode: Ask Us Anything: Dwayne Bergmann on how to purchase another designer's firm
Date: September 17, 2025

Episode Overview

This episode of Trade Tales centers on the complex process of buying another designer’s firm, specifically addressing what happens when a principal unexpectedly offers to sell their business to a rising team member. Host Kaitlin Petersen first hears from a designer grappling with such an offer and then brings in Dwayne Bergmann, who successfully acquired a fellow firm, to provide practical insight into evaluating, purchasing, and transitioning design businesses. The episode aims to demystify the process, highlight what a buyer is actually purchasing, and unpack both the financial and emotional considerations involved.

Key Discussion Points & Insights

1. The Designer’s Dilemma: To Buy or Not to Buy?

[00:51–08:58]

• A designer explains being approached to buy her boss's firm after four years as a senior employee.
• She had envisioned starting her own business but was weighing the unexpected offer against personal and career priorities (e.g., starting a family, the lack of clear advancement in her current role, scarcity of other firms in her area).
• The process lacked clarity: the owner initiated an appraisal but never provided concrete details or a vision for transition.
• The designer ultimately passed on the opportunity, citing logistical concerns, ambiguous valuation, lack of guidance on what was being bought, and uncertainty over transition support.
• Key considerations included personal timing, whether she wanted the existing clientele, and the intangible nature of what was for sale.

Notable quote:
"If you're offering somebody a company, you need to have everything laid out like, this is the appraisal, this is the dollar amount, this is what you're buying. Are you in or are you out?"
— Designer (06:08)

2. Enter the Expert: Dwayne Bergmann’s Acquisition Story

[11:13–13:44]

• Dwayne introduces his design journey and experience in mergers and acquisitions, setting the stage for expert advice.
• He recently acquired Freestyle Interiors and drew upon past experience in corporate M&A for the design industry context.

3. Asset vs. Stock Purchases: What Are You Actually Buying?

[14:41–24:21]

• Dwayne explains two primary types of business acquisitions:
  • Stock Purchase: Buyer takes on the existing business (name, contracts, staff, liabilities). All historical matters—including past tax issues—become the new owner’s responsibility.
  • Asset Purchase: Buyer selects specific assets (client lists, leases, equipment, IP) and leaves previous liabilities behind, but must create a new entity and renegotiate all contracts and relationships.

Notable quote:
"When you're doing a stock purchase, you are purchasing the actual business and all of its history… as well as though all of the liabilities that might be either known or unknown are also your responsibilities."
— Dwayne Bergmann (17:05)

4. Valuation & Due Diligence

[24:21–32:59]

• Emphasizes the importance of getting professional help: a business consultant, CPA, and attorney are key if you lack experience.
• Valuation should focus on hard numbers—revenue and profit history over 3–5 years—not merely “goodwill” or reputation.
• In this industry, add-backs for owner perks are common but must be carefully scrutinized.
• The most accepted valuation method involves multiplying EBITDA; the size and stability of the firm, and how much business depends on the principal, affect the multiplier.

Notable quote:
"Those are kind of considered goodwill and intellectual property and those... become justifications more for the seller than the buyer. As the buyer, you really want to focus on hard, cold numbers."
— Dwayne Bergmann (25:25)

On valuation ranges:
"If you're getting one times EBITDA... that's probably about as good as you're going to get because there are just so many unknowns."
— Dwayne Bergmann (31:33)

5. Preparing a Business for Sale (and a Buyer for Ownership)

[33:34–36:30]

• Owners should prepare for a sale with as much dedication as a major project pitch.
• It often takes 1–3 years to “clean up” the business (financials, operations) for a successful transaction, especially in small firms where owner and business are tightly connected.
• External consultants (such as the Pearl Collective) can assist with business prep.

Notable quote:
"You need to prep for that just like you would prepare for a design presentation. That's the most important project you've ever wanted to land."
— Dwayne Bergmann (33:34)

6. Key Questions for Employee-Buyers

[37:43–40:26]

• Employees considering buying should assess the planned transition period and ongoing support from the seller.
• Experience level matters: those with deeper exposure to contracts, vendor relationships, and business functions are better positioned to evaluate purchase opportunities.
• Red flag: If the owner wants to exit immediately post-transaction without transition support, be very cautious.

Notable quote:
"If they do [leave right away], for me that would be an immediate red flag."
— Dwayne Bergmann (40:28)

7. Transition Planning & Cultural Alignment

[41:22–45:46]

• A gradual, well-structured transition is vital: new owners benefit from the seller’s guidance to preserve client, vendor, and team relationships.
• Buyers must also “believe in” the business’s culture and client base—rapid changes can jeopardize what was successful, and mismatched visions can torpedo a transition.

Notable quote:
"At a really high level, I wouldn't buy a company from someone that I didn't want them to stay involved with for a period of time."
— Dwayne Bergmann (41:22)

8. Regional & Market Considerations

[45:46–48:20]

• Small markets require extra research: buyers should consult key referrers (builders, architects) to verify if the client pipeline is owner-dependent.
• The firm’s reputation and client relationships may be highly personalized; losing the principal may mean losing business.

9. Real World Example: Dwayne’s Acquisition of Freestyle Interiors

[48:20–60:55]

• The acquisition took over a year and focused on trust, compatibility, patience, and clear negotiation processes.
• They agreed on a five-year transition, slow implementation of changes, and intensive due diligence.
• Both parties prioritized cultural and strategic alignment—maintaining business continuity and gradually optimizing operations.

Notable quote:
"Patience, which is not necessarily a virtue of most of us as interior designers. No, I think patience and it was always a long term plan when we got into this."
— Dwayne Bergmann (48:50)

10. Advice for Future Buyers

[61:10–63:28]

• Prospective buyers should honestly evaluate their strengths and weaknesses, particularly in business acumen.
• Acquiring a firm requires different skills than being a designer—don’t skip self-education or outside help in financial, legal, or management areas.

11. Embracing Failure & Growth

[63:28–66:04]

• Dwayne’s guiding philosophy: be willing to fail, learn from mistakes, and keep innovating.
• Limiting beliefs around failure will hold back both creative and business growth.

Notable quote:
"If you're going to fail, fail quickly, identify all the lessons, buy them, get back on the horse and start over again."
— Dwayne Bergmann (65:00)

Timestamps for Key Segments

• Designer’s experience/question: 00:51–08:58
• Introduction of Dwayne Bergmann: 11:13–13:44
• Asset vs. Stock purchases explained: 17:05–24:21
• Valuing a design firm: 24:21–32:59
• How owners should prep for sale: 33:34–36:30
• Essential questions buyers should ask: 37:43–40:26
• Transition strategies: 41:22–45:46
• Dealing with small markets: 45:46–48:20
• Dwayne’s acquisition story and transition: 48:20–60:55
• Preparing yourself as a buyer: 61:10–63:28
• On failure and growth: 63:28–66:04

Memorable Quotes & Moments

• "What are you buying? ... You're buying a lot of non tangible things, like clients, like your reps, ... how do you put a dollar amount on that? I don't know."
  — Designer (05:00)
• "There are two that really is an asset versus a stock purchase. ... So you're taking on all of the contracts. ... all of the liabilities that might be either known or unknown are also your responsibilities."
  — Dwayne Bergmann (17:05)
• "If the seller wants to close and be gone and you're on your own... I wouldn't pursue that deal if it was me."
  — Dwayne Bergmann (40:28)
• "Patience and it was always a long term plan when we got into this."
  — Dwayne Bergmann (48:50)
• "If you're going to fail, fail quickly, identify all the lessons, buy them, get back on the horse and start over again."
  — Dwayne Bergmann (65:00)

Tone & Language

• The conversation is frank, transparent, and practical, blending professional wisdom with the warmth of trade camaraderie.
• Both the host and guest openly acknowledge nerves, uncertainties, and the emotional aspects of major career decisions.
• The technical breakdowns are approachable, not stuffy—Dwayne’s advice is direct yet encouraging.

Conclusion

The episode provides a rare, detailed examination of what it means to purchase a design firm—emphasizing preparation, caution, honest self-evaluation, and the indispensable role of patience. For designers dreaming of ownership, it offers not only practical frameworks and warnings but also inspiration to think strategically, embrace imperfection, and lay foundations for long-term success.