Hello again, it's James Marciano, and I have the great pleasure today of having Jon Brandt with us. Jon's a terrific entrepreneur I've known now for a couple of years and we're going to talk about the sale of his company back in 2009, a company called NHA, National Health Career Association. Jon, welcome.
Hi. Thank you, James, happy to be here.
So let's start with a little bit of history about your business what can you tell us about NHA?
I was an outsider in the healthcare space and making a long story fairly short I had firsthand experience in watching my grandmother in the hospital and seeing what she went through. She had a black and blue mark on her arm. I found out it was from someone trying to draw her blood.
And as someone who had no idea about really what nurses did and what Allied Healthcare professionals did, I actually asked why that black and blue mark was on my grandmother's arm. And one of the nurses said to me, the phlebotomist was trying to draw her blood. And I thought wow, okay, a phlebotomist it sounds like a person that's probably been trained and has gone through extensive training so obviously, there was a little mistake made.
Another nurse overheard my conversation with this particular nurse and she called me over to the side and said, "That phlebotomist was working in the cafeteria last week and we had a shortage up on the floor and we needed phlebotomist so we quickly trained her to draw blood using an orange." And my grandmother was actually her first person or victim that got her blood drawn from this person and that's why grandmother has this big black and blue.
And it just blew my mind. And I looked at the industry – this is before the Internet so I did my work at the library – and discovered that there was no licensure for phlebotomists, there was no certification that existed for them. And I worked it out and developed an education program. I brought people in to help me create a career education school and created a training program for a phlebotomist.
And the next step was the school business. I had actually built it and sold it over a few years and then came up with an even more interesting concept: to create a certifying agency, not only the education piece but being able to verify that these individuals could work in the field and knew how to draw blood. And that was the orientation of NHA. And it was a 15-year build of a business and I was happily able to sell it, really shockingly.
I was six months into a five-year growth plan when I was called by a private equity firm that really wanted what we were doing and I wound up selling the company to them 15 years after starting it. It was exciting.
All businesses start with solving a problem, and I loved how you attacked this one.
Talk more about the private equity firm and how you knew it was time to sell the business. And who was on the team to help you make that transaction happen?
Sure. I mean the business just, you know it got to a point where it was just growing by leaps and bounds and we sat down and figured you know what at this point, let's put together a five-year plan and then sell. We built the company with 14 different certifications, so it wasn't just phlebotomy – we had multiple certifications that we did.
In January of 2009 I sat down my wife and I said, "In five years we're going to sell the company for this number," and I was on vacation in December. And literally, three weeks later in January, I get a call from a private equity firm, and I was getting calls, a lot of calls over the year, year and a half. But this one was particularly interesting because they called me and they really wanted this and really understood what I did and very interested in buying my company.
And I really wasn't interested but I wanted to find out okay, what's the value of my company, I don't even know. And we started talking and one thing led to another and I felt like wow, I got an interesting company here that really wants to buy me. I reached out to an M&A group that was very helpful in helping me negotiate and put the deal together.
More importantly, they helped me through the due diligence process. I had to stay focused and keep growing the company so when we did enter into due diligence I wouldn’t be distracted.
We call those UFO's at SEA, “Unsolicited Flying Offers”, and oftentimes they don't work out but it sounds like it did for you and it sounds like the M&A team you hired really helped you through that.
What was the due diligence process like? On a scale of one to 10 how painful was it and how did your M&A team help you through it?
You know, I can't stress this enough, you absolutely need a good M&A firm. There’s no way I could have gotten through this all by myself. But yeah, the stress was relieved because I was able to really, really focus on the business. When we got into that piece, I forecasted where we would be and I needed to keep those numbers going. My M&A guy just really worked hard in making sure that I wasn't disrupted and yet, all the information that they needed was passed on. It worked out really well.
One of the things we say is a truism in M&A is that all deals almost blow up in the last week. Was that the case for you?
Actually it was, but it was two weeks before. So I was ready to go back and stay with the company because I really believed we'd be at a different number than they were pushing. But the M&A firm stayed steady with me and really help me, we actually raised the price a little bit at the end and it actually really worked out well.
Yeah, I would have blown it if I didn't have that person to rely on, I don't think we ever would have gotten a deal done.
That's great to hear. And so after the transaction did you stay with the acquired company long or was it a pretty quick transition out?
I did. I stayed on for about a year. It was kind of interesting, my situation I didn't really have to, they wanted me. They actually wanted me to be part of the team going forward but that wasn't really my goal. My goal really was just to make sure my employees were taken care of and that's the reason I stayed on. I had a deal to stay on for three months and I signed on for a year to see the year out, so it worked out well.
And did you feel like they did take care of your company and the employees? Did you feel like culturally it was a good fit?
It was. I mean, you know they did move the company so I was a little disappointed in that, but the reality was, you know, for that year things were good. And people were offered the opportunity to go work for the company after it did move. But for the most part, it was their business and they needed to do what they needed to do.
An old friend of mine, Jay Chiat, the founder of Chiat Day Advertising once told me that when somebody buys your house don't worry what they do with the furniture. So I know, obviously, for CEO's for their employees that have been so loyal and gotten them there it's always really important but ultimately, you really can't control the future.
Right. You know, you're selling your baby – it's a tough thing to watch someone else taking care of your baby. So you get emotional and you go through that. But I think one of the things my M&A guy really worked on with me was the end result. I mean don't get so emotional in the process.
If you decided to sell your business don't bring the emotions into it because no one's going to treat your baby like you treated it. You have to be able to separate the emotions of it as opposed to your ultimate goal. The ultimate American Dream is to build the business and sell it, right. And I was able to do that. To me that was the bottom line that I always had to look at and it worked out well for me.
So that was back in '09, what have you been up to since?
Well, I stayed on till 2010 and then late 2010 I started a business called Momentus Ventures, which is really an investment firm – I invest in everything from early stage to private equity investments. I'm the CEO of an education company right now so that keeps me busy. I’m also kind of a part-time CEO for a company that I invested in, and also involved in an early stage angel fund. So that keeps me going and involved.
Last year I invested in a company called Higher Next and we sold it to a company called Procter U. I was able to be a part of the board and help that process happen. So it was an exciting to experience an acquisition from a different angle.
That's great. It sounds like you're taking all that experience and growing other things and helping other entrepreneurs so that's really terrific.
Jon, thank you so much for being a part of our E’s with X’s series, I really appreciate it.