Ask Us Anything: Dwayne Bergmann on how to purchase another designer's firm

Summary

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

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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.

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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)

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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.

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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)

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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)

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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)

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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)

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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)

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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.

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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)

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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.

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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)

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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

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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)

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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.

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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.

Transcript

[Duane Burtman]

Foreign.

[Caitlin Peterson]

Hi, I'm Caitlin Peterson, the editor in chief of business of Home. Welcome to Ask Us Anything where we're tapping your favorite Trade Tales guests to answer all of your questions about building a better design business. Some weeks we'll be workshopping a crisis. In others, we'll take a step back to talk about the big picture. Things like embracing change, hiring, or how to level up. No question is out of bounds. No question is too large or too small. And we're keeping it confidential so that this is always a safe space to air your frustrations and share your fears. This week we're hearing from a designer whose boss recently presented her with a big offer.

[Designer Question Asker]

I was approached her and then basically our h. The HR guy, then just saying, hey, you've been with the firm for almost four years now. They didn't really know her plan at that time, like whether or not she was just going to completely step away, whether or not that was going to be a partnership. She didn't have an answer at that point, but it was a, hey, I really want you to think about this.

[Podcast Host]

And what was the. This? Was this like buying the firm basically.

[Designer Question Asker]

Is what it came down to. We regrouped probably, I would say, three months later. And that is what it came down to of, hey, I want to offer you the firm.

[Caitlin Peterson]

At first, our question asker thought the opportunity seemed too good to be true. As she took a step back, she realized she had more questions than answers.

[Designer Question Asker]

She was having an appraiser figure out how much the firm was worth. I never got that number just because of what I ended up choosing to do, but she went down the road of doing that. And then it was a, you know, we can talk price once we get that appraisal back. You know, she was thinking of retiring by the end of the year if I had accepted that offer.

[Podcast Host]

What goes through your head in that first conversation?

[Designer Question Asker]

It was really odd timing. My husband and I had been talking about, you know, do I step away and. And do my own thing and start my own business? Because at the time, you know, in the position that I was in, there was no way for me to go up. There was no way for me to expand my job and what I did unless I own something. And so I was like, maybe it's a good time. You know, it's been four years. Why not just try something new, you know? And around here, there's not a lot of residential firms, definitely not any big residential firms, but didn't really want to work for anybody else around here. So it was Kind of do I start my own thing or, you know, what I ended up doing is going the commercial route, but just trying to do something new. You know, how do I. How do I expand my knowledge and my creativity and. And my business way of thinking and. Yeah, so it was just kind of a. How do I not stay in the same place that I've been in for four years?

[Podcast Host]

What were the factors that you were considering and where did you wish you had more guidance or more help sort of understanding the contours of what was on the table?

[Designer Question Asker]

Well, trying to understand how it all worked. It seemed to have a very. Or the Internet seemed to have a very broad approach, and I'm assuming it's because not a lot of people have done it.

[Podcast Host]

I think that's true.

[Designer Question Asker]

Right. So it was like, you know, the farm could be worth anywhere from 50,000 to 300,000, depending on certain factors, but it didn't have what those factors were. So a big part of what happened through my thinking and what I ended up choosing the way I did was just, you know, okay, I'm newly married. We're wanting to start a family. What makes sense for us? Is it smart for me to, you know, take over a business and have that be my burden, owning it, and then also be a new mom and also support my husband who's working? So that's why it logistically didn't end up happening. And, you know, if I step away to be a new mom, like, is my firm in a place where it's generating money on its own, or am I having to have somebody step in? Or unless I had a partner in that purchase, you know, it would be up to me to kind of fill that pipeline myself, to know that there was work being done. Right. And to trust and to hire designers to do it. Because also, at the same time I was a senior designer, and the other designer that we had on staff, the owner needed to hire another designer. When I stepped down, the designer, she had just, you know, wasn't at the skill level to. To even consider taking over, to consider being a senior designer and to take on that kind of trust as a designer on her own. So, yeah, and so all that to come down to, like, there just was no guidance either online or with other designers, because it sounds like with a lot of designers, unless you're like an architect or a contractor, you kind of just retire and step away. Or there wasn't really an.

[Podcast Host]

Or in this case, what would you have been buying?

[Designer Question Asker]

Well, that was another question, too, that she never really had an answer for, you know, is it your clientele? And if it is, do you want the same clientele? You know, we had a small studio space that she had put money into. You know, it's a rentable space, she didn't own the building. And with the appraisal, like, what are you appraising? And because I had to make a decision as quickly as I did, I didn't get to really understand what that appraisal came back with. But yeah, to your question, like, what are you buying? And there was no real answer to that. I think it's just you're buying a lot of non tangible things, like clients, like your reps, you know, like just relationships that you have. Yeah. How do you put a dollar amount on that? I don't know. And I think too something that wasn't really talked about was a partnership. It hadn't really crossed my mind, but you know, who could you bring in too? And my initial conversation with the firm I now work for happened less than a week before she presented me with this offer. And then three months later we had the discussion of, hey, I've now been offered this job and she's now offering me this company. So, you know, the other job needed an answer within a week. And it like, it was really unfortunate timing the way that it worked because there wasn't a whole lot of discussion or thought with it. But what I learned from it and what I took away is, okay, if you're offering somebody a company, like, 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? And I wasn't given that opportunity to even research, to even ask questions because she didn't have it ready.

[Podcast Host]

You know, she came to you initially, she followed up three months later with a little bit more of a plan. But were there also questions around like what her role would be and what that handoff would look like?

[Designer Question Asker]

Yeah, and so that was part of her question. When we initially talked, she was like, I don't know if I want to play a role in it still. I don't know if I'm going to just, you know, once that purchase is made, if I'm just going to fully step away. Which when we regrouped and we talked about it again, it was, hey, once that purchase is made, I'm done. You know, in the meantime, like she'll teach the business side, she'll teach all of the things that I don't do. Just as a designer. But it was a, hey, I've decided that I'm going to retire. And since I turned it down, she decided not to retire because of some different projects and things. So if I would have purchased it, it would have been like a true handoff. But yeah, again, I couldn't weigh that even in that three month interim if she didn't know what she was going to do as an owner. And so in my mind, if I'm buying a company, in my mind I'm like, well, I don't want, no offense to her, she's a great woman, but I don't want to have you involved.

[Podcast Host]

Do you still sort of think down the road that you will launch your own business someday?

[Designer Question Asker]

Yeah, I would absolutely love to own my own company one day. And so again, whether or not it's buying somebody's or starting my own, I, yeah, I'm just curious to hear some other smaller design firm stories of how that worked for somebody. We're not in California or Florida, so we don't have a massive national name, you know, and so like how do you do that in a somewhat rural part of the country? And how does that make sense? Or does it make sense, does it make sense to just start your own? Because to your question earlier, what are you really buying and are you interested in buying that? Because if you're wanting to start over anyway, then what's worth the dollar amount? Or if you don't like the clients you know, you didn't choose to work for but the previous owner did, then are you starting over from how you're marketing and the clientele that you're trying to draw in anyways, then, then yeah, what's the point, I guess, of, of doing that?

[Caitlin Peterson]

At the root of this question is a dilemma that seems to come up more and more these days. Designers are building increasingly sophisticated businesses, but what should they do with them when they're ready to make an exit? If you wanted to buy a design firm, how much should it cost? And for designers working their way up the ranks, should they purchase an existing business or should they make plans to strike out on their own? As we ended our call, I knew just who to connect with to offer some answers. Someone who successfully acquired a fellow designer's firm a few years back and who has a clear eyed perspective on what a firm is really worth. All that and more in just a moment. There's no question that running a design firm will test you often in the corners of your business that have very little to do with the actual design work. The good news is that your relationship with your vendors doesn't have to be one of those challenges when you shop with four hands. With four hands, you can rest assured that you're working with partners who understand that you need a level of service that stands up to the challenges of daily life in a design firm. Whether you're building a mood board, placing orders, or tracking your shipment, fourhands has developed tools to ease the administrative lift of pulling a project across the finish line, and they'll help you get there on time and on budget. Fourhands offers a dedicated support team for every part of your shopping journey, from style recommendations to order assistance. Plus, when hiccups do arise, they'll work with you to make things right for your clients. There's nothing better than knowing that your vendors are in your corner, and that's a guarantee when you're working with Four Hands. Explore the benefits of shopping with Four Hands for your next project at four hands.com tradetales today I'm joined by Duane Burtman. As a guest on Trade Tales. This summer, he shared the experience of acquiring another design firm. With that in mind, I thought he'd be the perfect person to weigh in on today's question.

[Podcast Host]

Thank you so much for joining me today. Tradeales listeners heard from you last month. Usually we are bringing guests back after years have gone by, but when today's question came in, I knew immediately that.

[Caitlin Peterson]

You were the right person to turn to. So thanks for coming back.

[Duane Burtman]

I'm happy to be here. Thank you for having me.

[Podcast Host]

How is the end of summer treating you? Does the changing of the seasons bring like a certain change of pace for you at work?

[Duane Burtman]

Yes, it does. And living in Florida and being a part of the endless rains and humidity, I think less on the change of pace of work and more on the change of pace of work.

[Podcast Host]

Pace of temperature Temperature.

[Duane Burtman]

Is the thing I'm looking forward to most, but actually with the fall coming, our fall high Point, we're really, really looking forward to October. It'll be our second High Point market with Barrett Bergman Home. I can't not wait to to showcase a few new options that we're bringing to market and then just to reinforce our first market at High Point. And then I have to do the exact number, but I think I have 11 or 12 pieces coming out with the Abner Henry collection that we're going to show at market, including a completely new design. I needed a very specific style and type of bar for our new so I should give Laverne at Abner Henry more credit for this than myself because I did this sketch and design and I sent it to him and said, hey, can you build this for me? Because I really want this in my new house. And he looked at it and he said, oh, my goodness, Dwayne, this needs to be your next new collection. So he's like, you can build off of this. And I said, really? Do you think? And he said, no, absolutely. You've got to do this. Like the leg and what you're doing with the back is, is really cool. He's like, you need to make this into a bunch of different pieces. So I have to give him more credit than myself on this one.

[Podcast Host]

You were, you were tunnel vision on, like, I need to solve this problem for my house.

[Duane Burtman]

I did. It was very selfish. This was a very selfish innovation. Not. Not one of, oh, my goodness. There was this inspiration that I saw for this and that I was like, this is the bar that I want and this is how I want it to look.

[Podcast Host]

I like the honesty of that, though. I'm excited to see it.

[Duane Burtman]

I am excited too. It's a little bit. It's an offshoot for me, so I'm very excited. It always has my little undertone of mid century to it, but it's probably the most touch of traditional piece that I've done. So I'm excited to show everybody there's.

[Podcast Host]

A little bit of traditional in the air. I love this.

[Duane Burtman]

There is. I agree.

[Podcast Host]

Are you ready to give some advice?

[Duane Burtman]

Of course.

[Podcast Host]

Well, this week we are fielding a question from a designer who was working at a small design firm when her boss approached her pretty out of the blue and asked if she would be interested in buying the business. The spoiler here is that she did not ultimately feel like she had enough details to make an informed decision, and so she ended up taking a job at a commercial firm in her area instead. But she is an avid trade sales listener, and I think after realizing just how little there was out there to help guide that decision making process, when she was weighing her options, she decided to call in anyway with all of the questions she sort of wished she had had the answers to. And I know you have a lot of experience assessing and buying a design business, and so I couldn't imagine a better person to kind of set us all straight on how to start thinking about this.

[Duane Burtman]

Sure. Yes. Before I became a designer and launched my firm when I was going to college, I worked a full time job as well. The company did focus on mergers and acquisitions and divestitures. So they their whole business strategy was to acquire a market, grow it to a very specific size and sell it. And then during that process there might be other acquisitions that come in to get it to a certain size. I had that exposure, you know, as a young adult and then didn't know if I would ever apply it, you know, over my career. But by having that knowledge in 2022 closed the acquisition where Duane Bergman Interiors acquired Freestyle Interiors. And a lot of that experience actually came into play during that process. So I think there are multiple approaches to acquiring a business and then making the decision on should you acquire a business or should you start your own business? And you really have to start off with your own personal pros and cons list of know why would this make sense for me to do option A or option B, which is really how in my opinion any major decision should be making. You need to do this pros and cons list for yourself and then decide, you know, do the, not only do the pros outweigh the cons, but how can you address the things that are going to be a challenge and does that work within your, your skill set and ability to be able to execute, you know, once you made that decision as well. So I always think that that's like the baseline and I know it sounds kind of bookie, booksy, you know, like, okay, this is an intellect approach, but in this scenario, I mean I really do think you have to like identify, okay, there would be this much startup capital required. However I'm getting these contracts in return versus I have to spend this much in either personal marketing time or marketing myself or my efforts to be able to get clients. So you know, I think there's, there's obviously all of those decisions that need to be made.

[Podcast Host]

Totally. I mean I think one of the interesting things in my conversation with this question asker was this idea that she wasn't even really sure what she was buying or how much she should pay for it. So for someone like that, I mean.

[Caitlin Peterson]

How do you think about what you're.

[Podcast Host]

Actually purchasing when you acquire a firm?

[Duane Burtman]

So there are two that really is an asset versus a stock purchase. And that's one of the first things that needs to be identified. And there are legal, like you have to determine legally what kind of contract is it going to be? Is it going to be an asset based purchase or a stock based purchase? And high level the difference, it's easier to say on a stock. So when you're doing a stock purchase, you are purchasing the actual business and all of its history. So you're taking on all of the contracts. They don't have to be assigned, they would inherently just be yours because the membership changes at the business level. So whoever the business owner is right then, so let's just say it's ABC Designs LLC and then you know, John Doe is the managing member and owner. Well, at the end of the day on a stock purchase, you are buying ABC Interiors and John Doe would be replaced with your name because you're the owner of that. Which means everything that ABC Interiors entered into for future work or current work is yours as of that closing date, as well as though all of the liabilities that might be either known or unknown are also your responsibilities. So that's where, especially on a stock type of contract, the level of due diligence that's required or that you should do before entering into a stock based purchase is extremely important. For example, you might buy this business and let's just say it's 2026 when you close on the business and the IRS decides to do a, or your state sales tax audit and they're going to do a three years review of sales tax and see where this is going.

[Podcast Host]

You don't get to say, oh, it.

[Duane Burtman]

Wasn'T me in 2024 that you know, you underest or underpaid sales tax and that's your responsibility. If you own the company in 2026 as ABC Interiors and you know it's no longer owned by John Doe, it's owned by yourself, you can't say, well I didn't do that at that point and I didn't know that, sorry, you, you are the stock owner of that entity and everything in the past and everything in the future is your responsibility.

[Podcast Host]

What are the pros of this? I'm guessing it's that you're getting the future business or the current booked business you acquire. I would imagine all of the accounts as well.

[Duane Burtman]

Absolutely. So some of the benefits that are specific to our industry are all the vendor pricing and vendor agreements that are in place have to move forward because they're assignable. Let's just say that you're in a lease or the space, that space, there's no renegotiation for a new owner and a new lease and you don't have to go through, you know, is the lease assignable or not assignable? Employees. When you do a stock purchase, employees, their employment relationship is with the entity. So there's not the need for renegotiating. All new employment offers. And employment, you know, contracts, client contracts are the same way. So in an asset versus a stock, you would need to go and sign all new contracts because the old contracts would no longer be viable. So those are some of the, like, the big hits. There are a few others. Like there are things on the legal side and some other areas that, you know, depends on the size and magnitude and everything else that happens with this stock based transaction versus an asset. But those four that I just mentioned are probably the most important in our industry.

[Podcast Host]

What about that asset purchase? What, how does that break down and how is it different?

[Duane Burtman]

So on an asset based purchase, you are literally coming up to an agreement on. This is exactly what you're buying. You're buying my client list, you're buying my phone number, my website. You're buying. Maybe there is a building, maybe there are samples, maybe there's a design library, maybe there's five computers and five desk, I mean whatever that list of assets would be. And you literally list everything out and assign values to each of those assets. And when you buy those assets, there's typically an agreement with the seller that then they are dissolving, you know, said business or, or usually over time they would dissolve it or shut it down. So it's not an active business. But, but there's usually a, okay, I can't compete with you. You know, that business can't be active and I'm, I can't compete for however many years post close. But you then are not responsible for anything associated with that business. So if they're in that previous example, if there was a sales tax audit from two years prior prior, maybe you're still running the business as ABC Interiors, but you're now XYZ Interiors doing business as abc. So you started a whole brand new entity that, let's just say you closed January 1st of 2026. So it's effective January 1st, 2026 and you're moving forward. So what that requires though is you're setting everything up like it is a new entity. You're getting new bank accounts, new tax ID numbers, new employment contracts. You need to have all of your clients on new contracts. You need to sign up, sign different leases. So you're kind of doing more of the things that you would do to start up your company. You're just getting the assets and you're probably buying the existing contracts, you know, like at whatever their value is. So you know, there, there are certainly, you know, pros and cons of each. And you kind of have to decide one, do I have the capability of doing the level of Due diligence that would be required to feel comfortable with the stock, you know, stock transaction. And two, you know, do I also have the comfortability that I, I trust and, and believe that I, you know, I can get as much information from, from the, the seller to feel comfortable versus an asset. You literally are, you know, exactly what.

[Podcast Host]

You'Re getting, picking and choosing a little bit too correct.

[Duane Burtman]

And, and even in a stock, you can decide like, you know, we, we. There was some inventory that I did not want to come over on our books when I did our acquisition. And, you know, it was like, that's not going to be a part of the calculation because the assets, you know, that inventory is going to stay with you. But yeah, in a pure asset transaction, you could certainly say, you know, no, I'm not going to, I'm not going to provide you money for those contracts because I don't want those three contracts. I just want, you know, this book of business and not, you know, maybe you're working on a, maybe it's a hospital project or a commercial project and you're like, no, I, I don't want that. You need to finish that one out. And then I'm just going to buy, you know, the four residential projects that I want.

[Podcast Host]

Can you tell me about that appraisal process and how you assign value to the different parts of a firm? And also, are you doing that yourself or is there someone you can bring in to really help guide this process?

[Duane Burtman]

So unless you're really familiar with what the due diligence process looks like, you. You really should engage a business consultant that specializes in mergers and acquisitions, or specifically acquisitions, if you're buying. And you're definitely going to want your CPA and a business attorney involved. I felt comfortable enough. I had enough experience with going through the due diligence process that I didn't. I personally did not bring in a business consultant, but I did heavily involve my CPA and my attorney.

[Podcast Host]

What does that actually mean, you know, when you're saying, okay, what are, what are these contracts worth? What is my website worth? What is your Instagram handle worth? How do you start assigning value to those things? Like, where do those numbers come from?

[Duane Burtman]

So those are kind of considered goodwill and intellectual property and those. And I'm not devaluing those, but in a true negotiation, those become fluff numbers, and they become justifications more for the seller than the buyer. As the buyer, you really want to focus on hard, cold numbers. So, you know, give a little bit different advice to someone wanting to sell versus Someone wanting to buy. But as a buyer, I mean you, you want to get the majority of your efforts in the evaluation process focused on specifically, okay, this is what your past performance looks like. And you need to look at probably the previous five years of numbers give heavier weight to what's happened over the previous three years. But you definitely need to look at five years. One of the things that is extremely challenging and you have to be really careful about in most businesses of like in our industry and the sizes of the majority of the interior design businesses is that as an entrepreneur and as a small business owner, business owners typically have a significant amount of expenses that could be categorized as personal expenses. In other scenarios, if you were just a 1099 or if you were a W2 employee versus a business owner. And it could be things like cell phone and, and auto insurance to sometimes like your computer networking at your home because you're working at home and maybe breaking out some office expenses at your home. But I've also seen it where there's a whole plethora of expenses that get categorized. And then when you're looking at the financials and reviewing the bottom line, net income, then the seller wants to go back and go, oh, well, you know, here was my salary, but in addition to my salary, you know, I was also pulling out this much money from the business that it paid for for X, Y and Z. And so that needs to get added back in to the true income of the company. And yes, that is absolutely accurate and is the case. But when that starts to happen, you really need to look at those numbers and find out like, okay, are they just trying to push expenses back in to make the bottom line look a little bit better or can you see? Yes. Okay. Over the last three years their auto insurance was constant like always paid out of here and, and you know, whatever, whatever else might have been included. So those are some of the like high level things to look at. But you really need to focus on what does the gross revenue look like? Is it relatively stable? Does it fluctuate a lot? If it fluctuates a lot, honestly I would tell you it's going to be extremely hard to get a solid evaluation. And that's a negotiating point with the sellers. Like, look, you know, I'm going to try to average this out but because it's so up and down, like we're going to have to gear this towards more of the down because I don't know where we're going to land when we're actually hitting in the close is it going to be an uptime or a downtime. So most of the time if somebody is planning on selling versus it sort of being a little bit of a, hey, I think I'm thinking about it, you know, I want to sell. But if they're planning on selling, they will have done a lot of cleanup and they'll, they'll say okay, I'm really going to try to make sure these things are relatively stable or we've been able to have fairly consistent revenue streams for the last three or four years. And then you go down to the bottom line and you look at the EBITDA or the total net income available to you with the business. And the most common way is coming up with a multiplier. And there are some, I would say guidance numbers on what an EBITDA multiplier looks like to acquire a service level business. But that number really depends on how much of the business was being driven by like a principal. And if that principal designer, and it was like a principal and yourself and one other person or two other people, if that principal designer was really the person driving most of the business, the EBITDA multiplier is going to be much.

[Podcast Host]

Lower because you're losing that driver.

[Duane Burtman]

Right, exactly. And you don't know how much that's going to influence the future business level. And you know, if clients are going to continue to work with you or not because you know, maybe they all of the repetitious business and the referrals were coming in because you know, the principal was really that go to person and they just don't have that level of confidence yet. That also then plays into the amount of time you would want require the business owner to stay involved and engaged and what that role would look like. Specifically, you know, is it just business development? Is it actually finishing out projects? Is it acting as the referral agent, you know, to make sure that, you know, any of those calls that they could still be in contact with and let them know that oh yes, everything is great, they're just going to, you know, this individual has acquired my firm. They're going to be doing your design work. But I'm still available for, for questions or you know, challenges for, you know, this period of time which could help mitigate some of that. But kind of back to the evaluation, you know, there's going to be a certainly a different multiplier in what the business is worth. If it's a principal with maybe an assistant or a, you know, a junior senior designer below them and one other person, then a very different valuation. If it's a someone selling their business and they've got three, four, five or more designers that are servicing clients on their own, then it's going to be a higher multiplier.

[Podcast Host]

Can you, I don't want to put you on the spot to like say a number, but I just googled this really quickly and the AI overview at Google says that the EBITDA multiplier for service businesses can range from 1 to 14 times.

[Duane Burtman]

Exactly.

[Podcast Host]

Which is a really wide range. Like what to you feels realistic to set someone listening to this up to expect for a small to medium sized design firm? Is 1 to 14 really like is that the range?

[Duane Burtman]

It really is the range. I would say it's more closer to one to seven. Let's just go like a three person or smaller firm. If you're getting one times EBITDA, meaning the entire income that resulted from your work over a year, if you're getting that, that's probably about as good as you're going to get because there's just so many unknowns and the people are contracting with you probably because you, it's a named firm, you know, it's probably like not freelance interiors. It's probably, you know again, John Doe interiors. So as John Doe, you're, you're leaving and you've got to communicate this, whatever that transition period is and you know, do your clients have enough confidence for the junior or somebody else buying your business to take over? So I think that's where you know, probably 1x is why it says 1 to 14. As you have more designers and more contracts that you can point to, then that number can go up. In my conversations, I haven't seen any deals that have gone more than probably that 5, 5x for this, this type of industry. And the 5x is pretty related to the fact that okay, there's some very.

[Podcast Host]

Solid contracts that just like the largesse of the firm basically.

[Duane Burtman]

Yeah.

[Podcast Host]

In our question askers case, the principal kind of like took her by surprise when asking her to buy the business and then she was on a pretty, I think tight timeline to sort of understand what that would mean for her. I feel like there's a lot of things wrong with that approach. But how would you kind of stepping back, suggest that someone who maybe wanted to exit their business, lay the foundation to sell their firm to the rising star on their team.

[Duane Burtman]

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. So that same amount of effort and energy into researching who the client is, researching the product, familiarizing yourself with the architect, understanding the design aesthetic of the general area. You know, all of those things that you would do to prepare yourself for going into a, you know, a pitch or an interview that probably times 10, because this is not something you do on a daily basis, is sell your business. So there are companies out there, I know I have, I've had personal conversations with the Pearl Collective and they're able to provide small packages for, for people who are looking to sell to help them prepare their business. And they can, you know, they can go through and say, okay, let's do a financial review, let's do an asset review and let's look at potential divestiture options of whether it's internal or external and then give some advice. But everything about the scenario described with your caller asking this question is probably why the deal never had, you know, any legs and it didn't come to fruition. Because you do need to plan for this. And the part that I would tell anyone thinking about it is this is probably at least a three year process to prepare your business. Unless you have always run everything as if you were a 1099 or a W2 employee and not utilizing any of the tax benefits of being an entrepreneur and a business, a small business owner, you probably need to spend a couple of years just making sure that you know everything from an accounting and bookkeeping perspective is easy to run reports and to show all of the financial implications and outcomes of your business efforts over that period of time. If you have, then it's probably still about a year long process because you need to identify again, do you want to sell as a stock sale or do you want to sell as an asset sale and prepare yourself, you know, in the direction that you, you really want to proceed with so you've got the right information to show a buyer. The other would be like if you were selling your house, would you just throw a sign in the front yard and like an inspection done prior to know that you've got, you know, three leaky faucets and two cracks in your drywall and a door that rubs and a, you know, a dishwasher that, that doesn't get hot enough? I mean, so I think the same approach that we would do for other things, you know, you would do that same level of, of attention to detail and approach for selling your business.

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[Podcast Host]

On the employee side, you know, someone who is, who, someone who gets that pitch, maybe they're not blindsided. Maybe they get the really thoughtful pitch from the principal at their firm. What questions should they be asking right off the bat?

[Duane Burtman]

Yeah, so I think as someone who, if you are working in the firm, one, it would depend on how long you've been there. So if you're three to five years or less working in the firm, the level of questions is probably very different than if you've been in the company for eight to ten plus years. But I feel like if you've got five years of experience or less, you're going to want to know what that transition period looks like. How long are you going to continue to help support this business knowing that I'm the, I'm the owner and I'm the new leader, but I'm going to need access and, or I'm going to need your continued involvement. So we, you know, we don't potentially lose revenue, we don't, you know, lose any clients. And we want to have this very symbiotic and natural transition as you exit the business. I do think someone who's been in the business for longer than five to 10 years or with, with the same firm for that, that period of time, there's probably a better understanding of maybe some of the interworkings of the business and where the referral sources come from. You know, what kind of vendor negotiations have occurred in the past to get you at the levels where you are, what's, you know, what is the technology support that you're, you're, you're currently doing. You know, those are the kinds of things that you probably have just been exposed to more after being with the firm for five plus years versus the first five years. Because the first couple of years you're just trying to, you know, figure things out and to get your job done and do it right. And you may or may not have, you know, had that exposure to what happens behind the scenes. You know, you might not even have been involved in any of the contract negotiations at that point. And you know, how do you, how would you buy a business if you don't, you know, if you don't participate in the contract side, if you don't participate in the vendor negotiation side. So the first thing that I would ask, I'll go back to that again is what are you thinking from a transition perspective? Because I think for me the idea of you close, let's just say you've been presented this on, you know, month one day one and you're wanting to close month three day 30 and you've got a 90 day time frame. Well, in that case the, you need to have another 6 to 9 to 12 month to years of transition period put into place.

[Podcast Host]

That owner doesn't get to ride off into the sunset that fast.

[Duane Burtman]

No. And if they do, for me that would be an immediate red flag. Like if it wasn't a health family, like look, you know, my spouse just had a stroke or brain surgery or cancer or terminal illness or a child or whatever else where it's like, look, other circumstances are forcing this versus hey, I want to retire, I want to sell my business or I'm just done in that scenario where the seller wants to close and be gone and you're on your own and, and that's it. I wouldn't pursue that deal if it was me.

[Podcast Host]

Our question asker had a lot of reservations. She, she wasn't sure she would want her, you know, if she purchased a business, the person who would be her now former boss sort of sticking around and seeing where she made changes. For example, how would you recommend someone thinking about that transition period, weigh their options, you know, what kind of transition should you be looking for? What kind of overlap should you want.

[Duane Burtman]

To answer the question at a granular level would need to know kind of what kind of contracts and what type of projects and clients are involved. But you know, 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. And that kind of goes back to, you know, why would you buy, why would you buy it? And I think the notion if somebody's buying something because they're like, oh, I could fix it and I could make it so much better, there's always that little, like, I can, you know, with some changes and things, I can do it better. And we all have to have that mindset and that confidence, right? Or we're not going to be an entrepreneur. You know, as an entrepreneur, yes, you're always going to think you could do something better, and I applaud that. However, it's not going to happen day one. And there are going to be things and reasons why the business owner, you know, had made decisions and was supporting clients in whatever way they're doing, whatever way they had vendor relationships that you really need to be able to understand and go through some of those real time situations with them versus just, okay, I bought it, you're out, I'm in. And you know, we're all, we're all moving forward now. Again, I don't think this needs to be drawn out forever, but there certainly needs to be a transition timeframe for everyone, for you, for them, for your clients, your vendors and you know, if there are other employees around as well. So it's just not, you know, this hard kind of stop, you know, start date. But, but yeah, your original question, and from this, you know, from this particular situation, if I had those feelings, I don't want the person I'm buying this business from to be involved at all after I close. I don't think I would buy or pursue buying.

[Podcast Host]

How much of this is that you really have to truly believe in the business that you're buying?

[Duane Burtman]

Well, I think that's incredibly important. And part of that is culture related. And so with a small firm of one, two or three people, sometimes it's hard to capture, okay, what is the actual culture of the company. And true, if there are some situations where the principal has, you know, characteristics or things that make it challenging for, you know, for individuals to grow or to develop, or they're so style centric where, you know, they're only going to get this style of project and you know, you have other capabilities you can do. You know, let's just say they're everything for us in Florida. It's, let's just say it's coastal like they do. Coastal, Coastal, coastal. And it's, you know, white beige. And you have clients that love that. But you also know that if you're buying this firm, the reputation and the clients that are looking for this firm are coming to it because it's a very coastal style. And that's what they've always done. So you might, you know, say, oh well, I also can do all these modern, I can do traditional, I can do whatever else. So I have that opportunity to expand. But you just have to know, hey, this is going to take a little bit more time to develop. So in that, in that scenario, like while that, that's a part of the culture because it's a part of the design aesthetic, there's also other elements of the culture that you look at. Are they, you know, are they a developmental type of leader, are they a collaborative type of leader or are they more of a directive, you know, type of leader? And so that's where again the culture that exists and if you have other employees that are staying, you know, are they going to be able to transition to your leadership style versus the leadership style they've been accustomed to? In some cases it may be better, in some cases it may be worse. And you know, that's where I think that this whole idea if, if you've also been someplace for less than five years, you may or may not have gone through as many of the scenarios that can impact the culture of a company versus if you've been there for much longer, then you know, okay, this is how everybody works. These are the personalities. We've been through all sorts of different scenarios together and it's a real clear cut culture. And you then know, okay, well I can continue this and then make tweaks to it versus this is a solid, hey, he or she is out, I'm in. And starting tomorrow it's going to look and feel like a completely different place.

[Podcast Host]

Does geography or market size have anything to do, do you think with the success of some of these deals? I think her question asker was, I think she said specifically, I'm not in California, I'm not in Florida. You know, she's in a pretty, I don't say small town, but it's much smaller, very regional market. Does that change the outcome in your mind?

[Duane Burtman]

Yeah, I definitely think it does. I think that's when you may need to ask during your due diligence process. And you, you'd have to have very specific in your non disclosure agreement, your NDA, if you could talk to the referral sources that typically, you know, provide the income stream. So if there are builder or a set of builders or architects that typically drive the business, then I would want to be able to have a conversation with them and have that blessed by the seller that I can talk to them and say, okay, look again. John Doe Is, is considering selling me the business, I'm considering buying the business. And they would, they would all have to sign NDAs as well. But you know, if I purchase this company, are you going to continue to refer business to me? Because you're, you know, you're, you're it in this market. You've, you know, if, if you're not going to continue, if, if your relationship is solely with them, then, you know, I need to know that because it's going to impact, you know, my ability to, to, to move forward with this firm considerably. So I think if the market's small, you definitely need to, you really need to understand what is the reputation and what are the future referral sources going to look like. A little bit bigger market, you have a little bit more, I think, maneuverability, but you still have a reputation. And so I think it's really important to find out and to be able to figure out kind of, you know, if you're not in the middle of, if you're not in the company, if you're outside of the company, you need to really make sure you understand what the, what other people think about that business. And certainly if you're inside of it and it's a small market, then yes, I would, I would try to find from those referral sources and your industry partners, you know, what do people really think about this business? And if, you know, John Doe, but if John Doe exits is the only reason they're doing business with them is because of John Doe. And they really don't think that the support staff or the other members of the team are all that worthy of continuing their referrals. And it's a tough question to ask, but I would, I would figure out a way to get that information before moving forward.

[Podcast Host]

There is a ton of hand wringing I feel like in the industry about what happens to a design firm when a founder is ready to move on. And I feel like we've seen a lot of handoffs that haven't gone well. Certainly some that have gone very well. And I feel like you're actually a pretty great example of a success story here. What has made your acquisition of Freestyle Interiors so successful to date? How do you think you set yourself up for success?

[Duane Burtman]

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. So the owner of Freestyle, we started talking over a year prior and the first six to nine months they were just conversations. We hadn't even signed an NDA we weren't looking at, it was simply a, you know, get to know each other talk, high levels about situational conversations about well, you know, hey, this, this situation occurred, how would you handle it vice versa? Like I ran into this, you know, what would your approach be? And the whole process was it's, it's about alignment and understanding. Okay, this is the way that that firm had been directed and grown and developed and this is a leadership perspective and would that align with my personal leadership style and leadership perspective and a go to business strategy? And, and through that you, you really, through those conversations you really understood that we had a lot of similarities in our approach to client service, approach to contracts of approach to referral sources and approach to how we managed and maintained our employees. So I think that spending a significant amount of time, especially this, for me, this was, for me this was a large acquisition. This is a fairly good sized business. There were 20 plus employees in the business and a significant amount of clients. So I didn't want to just rush into this. And likewise she didn't want to rush into selling her company to someone who wasn't going to maintain it and grow it. And I think had a lot of the similar, similar ideals in mind for you know, for the business to continue. Then we got into all the financials. I mean there was certainly a lot of conversation and I think that's where everybody just has to be really level headed and you have to be, you have to be clear in all of those communications about okay, this is what, this is your perspective, this is my perspective and these are the, these are the numbers. And we agreed early on to an evaluation. I'm not going to say a number but we an evaluation method. So it's like, okay, this is the methodology that we're going to use and then we're just going to vet the numbers and agree then okay, these are the pluses and minuses that are going to be allowed to be used in the calculation. But instead of, instead of getting into this specific, this dollar, that dollar for us to agree to the, I'd say the process, you know, which is again calculation that we're going to use, that made it very easy to say, okay, now we agree, this is what you need, this is what I need. And now let's just make sure that, okay, these are the numbers that are being presented, that the data backs up those numbers. So it became a very non emotional discussion when it came to that. And then like every deal at the end when the attorneys and the accountants are putting all of the documents together, that's the most difficult part because we at one point just had to pull them aside and say, you're missing a key element of how these businesses work. So we're both comfortable with this, so please stop fighting. And it was literally one paragraph, right? One paragraph out of hundreds of pages that the accountants and the attorneys couldn't get on the same page. And so you can have a deal blow up over, over stuff like that. So, you know, all the way down to the last few weeks of getting documents. I mean, I think you need to be very involved and stay very level headed. And ultimately, you know, you have to make a decision of, okay, I trust my professionals and I hear the feedback that they're giving. I also know at this level, I know, you know, I know what the impact of this decision is if I'm moving forward with or without the language that, you know, they're recommending. And both she and I, we basically got together and solved the whole problem ourselves and went back to them and said, this is what you're doing.

[Podcast Host]

What did your transition plan look like?

[Duane Burtman]

So we agreed to a much, a very long transition plan of five years. So that, and that was the only reason I did the deal because everything that I had going on during the time frame of the closing, it was just impossible for me to have stepped in and to take on a full time leadership role within, within that organization. So, so I had very specific timelines for what I wanted to do and I literally put together when we, when we were negotiating, prior to the close, during this, you know, what a five year, what the five years would look like. And we've really executed the first three years almost exactly to what we agreed to in, you know, in our plan. And then 26 and 27, the end of 27, we'll, we'll finalize the, the five year transition period. And for us, that length of time was the right amount of time. It was the right amount of time for her and it was the right amount of time for me. For other people, that would be way too long. And I honestly, this is just my take. You'd have to call Faith herself. But I believe if Faith didn't want to retire that she would continue to work in some capacity with me, you know, and continue. And, and that's, I think, speaks to the, the type of relationship that we created and just have, you know, a continuously strong relationship between the two of us. We talk regularly on, you know, the direction of the firm and any challenges that arise or opportunities that Arise. And like I said, I mean, if, if her grandchildren weren't becoming that time in their life where they need and want more and more and more of her time, I think we just laugh. We said if this was 20 years ago, oh my goodness, the kind of businesses we could have created together. So we just came different seasons of life for each of us. But that for me is the best kind of opportunity when you can find the type of relationship where, you know, again, culturally it's a fit, strategically it's a fit. And then timing wise, it works for everyone as well.

[Podcast Host]

You know, you mentioned earlier this idea of having similar ideals and that really stuck out to me that your vision for the future of this firm is very much in alignment. How have you navigated making changes to that business or have you held off on making changes for now?

[Duane Burtman]

So our agreement, we talked about changes and how changes were going to occur. And so our agreement was year one, completely business as usual, unless it was a logistics behind the scenes that wouldn't impact clients or employees. And we tried that. And then unfortunately the, we had an administrative team that selected out. So we had an accountant and one or two other who, who just opted out. So the, the accountant found, I think relocated and that wasn't a decision. The other, the other individual had gotten another opportunity and decided they didn't. I think there was, they were thinking there was going to be more changes.

[Podcast Host]

And got it and just like didn't want the risk.

[Duane Burtman]

Yeah. So we were sort of left with, okay, we need to rebuild an admin team relatively quickly. So we did at that time make some additional changes that were administrative in year one than what we had planned. But otherwise it's like, no, we're not, we're not making any of those changes. And we started working on the back end because our year one, year two was about vendor optimization and creating efficiencies by bringing the, the two companies together. So that was really our focus, which again, didn't have, it didn't have any type of negative, and I say negative or feels like change for, you know, for employees or clients. And so year three, this is the year we've probably incorporated the most amount of changes where we've, we wanted a few different policy changes. We've upped bit benefit programs. So there's a 401k program that didn't exist previously. We have an auto allowance program that didn't exist previously. There's some other things that we've added in some different, I think some different approaches of looking at performance and Then going into next year, we're changing some of the metrics for bonuses and things of that nature. And so it's slowly. We didn't really want to come in and go, okay, we, well, these ideas are bad and our ideas are right, or vice versa. Yours are good and ours are bad. It was really a. Let's fully understand what works, what doesn't work, and make those tweaks. And this year, I would say we've had the most amount of, okay, we've had three different ways of doing things. We're going to agree this is the way we're going to go forward.

[Podcast Host]

That's a challenging process sometimes.

[Duane Burtman]

Yeah. But we've kind of got to the point where, okay, we're just not as efficient as we could be. And it's just a matter of, let's go through. Okay, let's just say there's 100 items and 85 of them. We're all good with five of them. We don't understand why you're doing them this way. In 10, we have three different ways of doing it. We just need to agree on one. Let's go through the five. That is a clarification. Is it training? Is it just. Let's have the discussion. Is it necessary? Or if it's not, and have a go forward for those five. And then the other 10, let's look at the three options and let's all agree this is the way we're doing it going forward. Put it in writing. If it's not in writing, it doesn't exist. And, you know, get everyone trained and sorry, if this was the way you were doing it. This is where we're doing it now. Here's why. And some people get to do it exactly the way they were. Some people have to make an adjustment. Unfortunately, we just want everybody on the same page. It just makes things easier, et cetera, et cetera. But that's. That's the phase we're in right now.

[Podcast Host]

Hang in there. No, I was a junior employee for that process at a magazine that merged together early in my career. And I think sitting in those meetings of being like, how are you doing something right now? Okay, well, now you're going to do it. Like, this person is a really interesting transition to navigate, I will say.

[Duane Burtman]

I think from a patient's perspective, there's an expectation that they want everybody to solidify this is it. So instead of bouncing around between different ways of doing things, it's like, no, this is it. And you can always refer to this, you know, process the standard operating procedure, the SOP manual, that this is, you know, this is the way we want things done. And again, I think that's part of the patience applied to this whole plan and taking things slowly versus swooping in and saying, okay, within the first six months, this is changing, that's changing, this is changing. And again, you might, you might. People might be in a situation if they're acquiring company where they have to do that. I was fortunate enough with this transition timeline that we could take a very patient approach to the entire process. And I'm very glad we did because initially there were a couple of things that I was hesitant about that I actually, we've said no, this is a much better way of, of approaching, you know, the situation.

[Podcast Host]

Something you would have changed if you hadn't seen it in action.

[Duane Burtman]

Yep. And in turn, I think that a couple of those, those things that are specific to employees, they really work and I'm glad they're in place and I understand why they are and I don't have any intentions of making any changes to them at all.

[Podcast Host]

You know, our question asker took a job at a different firm. You know, she walked away from this opportunity, but she is sort of mauling this idea that maybe she would buy a firm or found her own firm down the road. For the person who might want to buy a firm, what should they be doing now to prepare so that they can be a better buyer down the road?

[Duane Burtman]

So my feedback, if they haven't already done this, is to. To truly understand their strengths and weaknesses. If you don't truly know who you are, what you do well, what you don't do well. And this is not a fluff conversation. This is a look yourself in the mirror and get really direct and get it on paper. Because you're going to want to gloss over the things that you're not strong at and focus on those things that you are. And you could miss some major, major intel or steps in your due diligence by not truly understanding, you know, what, what you could be missing out because you're not, you're not good at that. And if any of those things that you say, look, I don't really get into my financials that deep on a daily, you know, on my own. Like, I've never really read a P. L. I don't really understand what an income statement, I don't understand how balance sheets work, and I don't understand, you know, tax ramifications of making decision A and B. Then go get yourself some education when it comes to the business side of running, you know, running a business, you know, there are so many things that you're going to, you know, that are going to be thrown at you that you're not going to know all the answers and don't expect yourself to because you just, you know, then you'd be going to school forever. Forever. So at some point you do have to jump in. But at the basic level and if you don't have time or if you really don't know that, then you need to either hire someone or engage with someone or, you know, hire a consultant that can really explain things to you and look at, you know, look at patterns and look at things that, you know that, that might be red flags if you knew to look for them and especially if they're financial related. Then, you know, get someone involved with you or start educating yourself right off the bat.

[Podcast Host]

As we wind down, I wanted to know what is the best piece of advice you've ever received?

[Duane Burtman]

So I've been given amazing advice, you know, throughout my career. I also have incredible parents who are amazingly supportive and always, I think, built in this level of confidence that, you know, you can do anything that you want, you set your mind to it, but you have to decide you're going to do it and nobody else is going to be sitting there, you know, egging you on and cheerleading you. It's got to be you pushing yourself. And that, that's always stuck with me on that side. But that's all very positive feedback. What I'm going to tell you is the most interesting advice I've given might be perceived as more of a, you know, has clap empty or negative, but it really isn't. So I'm going to, I'm going to set the parameter of this, that as we grow up and as we go through school, we're taught that, you know, in most, in most environments that you need to be right 90% of the time. But for someone to, in my opinion, to be able to achieve success, especially in a creative environment, you have to embrace failure because you can't come up with something new and expect it to be great your first try. But I think if you look at, you know, people who have made major impacts in society or in our world or in our history, there's a lot of failure that happens. And if you're going to fail, fail quickly, identify all the lessons, buy them, get back on the horse and start over again. So, you know, I would push that out to anyone on the business side, you know, in any and even on the creative side, get out of your comfort zone. And so what if you fail? Yeah, you might lose some money. You'll earn it back. You might lose a client. You'll get a new one. And this whole idea of not being willing to fail or not being willing to try something because you might fail is a limiting belief. And it will completely hold you back for your entire career. And it doesn't always have to be taking on something big like push yourself. And if it works, great. If it doesn't work, identify the lessons learned. Apply them when you try something else new. But the important thing is to keep trying something new. So don't be afraid of failure. Just, you know, get over it. Move on.

[Caitlin Peterson]

That's our show for today. Thank you so much for being here and for everyone listening with a question of your own. I'd love for you to ask us anything. Don't worry, we'll keep it anonymous. Please start the conversation by sending me an [e-mail] if you're enjoying Trade Tales, please leave a review on Apple Podcasts to help others discover the show. And if you're looking for even more great business advice, head on over to businessofhome.com Trade Tales is produced by me, Kaitlyn Peterson and Caroline Burke. This episode was edited by Carol Carolyn Burke and Michael Castaneda. Our theme music is by Kyle Scott Wilson. Thanks again for listening and I'll see you here next week.