The ‘Sweet Spot’: GCA riding wave of mergers, acquisitions
Confidentiality marks the latter, says Curtis Kuttnauer, co-owner of Golden Circle Advisors (GCA), a Traverse City business brokerage that has helped several owners across Michigan sell their small- to-mid-sized businesses since GCA was founded three years ago.
“With a home sale, you want people to know that the house is available, but with a business it’s very different,” Kuttnauer said. “Confidentiality is of the utmost importance. Most times, a business owner doesn’t want their clients, their staff or their competitors to know the business is for sale. When that happens there can be fear, uncertainty and doubt.”
Businesses with $1 million to $10 million in sales is GCA’s “sweet spot.” And, for a variety of reasons, they turn away more clients than they accept, Kuttnauer says.
“They have to be in our sweet spot and we have to be able to work with the owners,” he said. “We have to have the right personal relationship. They have to trust us and let us work for them.”
Clients pay GCA a retainer to cover the cost of research, plus a commission when the sale is completed.
To many business owners, selling their operation puts them in unfamiliar territory. It can bring to the surface conflicting emotions, ranging from financial questions to concerns about leaving relationships with customers and a team of employees who became a work family. Golden Circle Advisors guides its clients through the transition.
“Our primary function is to be both a guide and financial counselor, as well as the seller’s business advisor in managing the steps through the process,” Kuttnauer said. “GCA will assist all parties involved to keep focused on the goal … the transfer of owners of the business, while maximizing the value for the seller and maintaining a high level of confidentiality to protect the interests of the buyer and the seller.”
Some of the northern Michigan businesses that have used GCA include Overhead Door Company of Grand Traverse (acquired by GD Systems Inc.); Access Window Door and Hardware (acquired by Access WDH of Grand Rapids); and Williams and Bay Pumping Services (acquired by True North Environmental Services).
Sometimes owners will try to sell their business on their own, something Kuttnauer calls “risky.”
“They often do a bad job of marketing the business,” he said. “We focus on the growth story. People looking to buy a business expect growth. We tell our clients, ‘Our job is to market the business. Your job is to continue to run the business.’”
GCA brokered the sale of a Wyandotte Jimmy John’s franchise.
“We sold it at auction,” said Kuttnauer. “We contacted other franchisees about the opportunity and it sold for $60,000 more than expected. There was only one bidder and at one point, he bid against himself.”
Some business owners underestimate the value of their operations, such as one trucking company client involved in the sale of JK Transport in Plymouth, Mich.
“We met with the owners as asked what they thought their company was worth,” Kuttnauer said. “They said if they could get over $1 million, they’d be really happy.”
Kuttnauer visited the operation’s truck terminal, which he said was “pretty dirty, it was kind of a dump.”
But a look at JK Transport’s books told a different story.
“[The finances] were solid; we sold the business for $2.7 million. The owners were thrilled,” he said. “A year later, on the anniversary of the sale, we got an email from the sellers that said ‘We continue to thank you every day. You changed our lives.’”
The trucking company sold in four months, according to Kuttnauer, which is highly unusual. Most similar transactions take an average of 12 to 18 months, he said.
From his Traverse City office, Kuttnauer serves northern Michigan clients, while his partner Fred Manuel, based in Plymouth, handles southern Michigan customers. Both team up on most sales.
Kuttnauer, a University of Michigan graduate, spent 16 years with IBM in sales and management. While at IBM, he also partnered in the operation of three Hungry Howie franchises. After leaving IBM in 2000, Kuttnauer launched an executive search firm specializing in high tech and private K-12 education industries.
When he’s not busy with GCA, Kuttnauer is an active member of Northern Michigan Angels, a group focused on providing funding to early stage Michigan-based businesses so they can grow and increase employment opportunities for Michigan residents.
Since launching GCA, Kuttnauer and Manuel occasionally field calls from downstate buyers who want to purchase a business in northern Michigan.
But for now, the focus is on serving sellers, not buyers. They are currently developing a program that would serve sellers of smaller businesses and hope to launch that in the next six months.
“We both love what we do,” said Kuttnauer. “I had never even talked to a business broker until I became one.”