The Importance of Personal Relationships When Making Bold Business Decisions
The year was 2007, and at that point, my company, Universal Protection had annual revenues north of $150 million. Remarkably, all of this incredible growth had been 100% organic. There were no acquisitions involved, just good old-fashioned, nose-to-the-grindstone hard work by the best sales team in the business. And while those achievements were something to be proud of, I was keenly aware that grinding out the sales cycle was not going to be enough to get the company where I knew it could be. There were only so many potential customers in the regions that we could practically serve. That meant if we were going to have a chance of keeping up our tremendous growth rate, we were going to have to try something different. Something bold.
This is a story about how my business partner and I completed our first acquisition. Ligouri and Associates was a relatively small, but highly respected company based in San Francisco. This company was probably earning annual revenues of somewhere around $12 million. Lou Ligouri and I were brought together as two of the little guys in labor negotiations with the union that was dominated by two or three of the billion-dollar companies in the industry. So, Lou and I ended up becoming the spokespeople for the little guys in these labor negotiations. We had similar interests and fought hard to protect them, whereas the big companies would have otherwise just rolled right over all of us. In the course of that struggle, Lou and I became friends. One afternoon, during lunch, he informed me that he was growing tired of the daily struggle and was seriously thinking of selling his business. I was intrigued and told him so. There is only one problem: money. Since my partner and I had just borrowed a bunch of money to pay off the original owners, I wasn’t certain just how we would get our hands on more.
I did my due diligence, went to the bank and said, “Here’s the business we want to buy. Here’s what we’re going to get out of it in terms of operational synergies and additional revenue. I’d like to borrow against some of that.”
Cue the cricket noises. Nothing. The best I could do was to find a lender who would offer us about half of the total sum that I needed to buy the company. I realized that personal relationships are everything in business, and in life. I was lucky to have developed a close relationship with Lou and his wife Chris. I was able to convince them to accept the amount I knew I could secure from the banks as a down payment, with the remaining 50% to be paid out over the following five years.
Looking back on it now, it’s odd that I never worried about those arrangements. And I never worried that I was asking my friends to trust me—that I would pay them half its value over time without any certainty of where the payment would be coming from. When I shook Lou and Chris’s hands-on that deal, I just knew that I was going to make it all work out.
And it did. Perfectly.
The acquisition helped us double our presence in San Francisco, offered us more resources, and gave us an office in Napa Valley. Of course, I made absolutely certain that we paid off every dime that we owed the Ligouris. The acquisition turned out to be a fantastic deal for all of us. What I treasured most about the transaction, however, isn’t necessarily the business advantages that we gained, but rather the wonderful friendship I forged with the Ligouri family.
If you’re curious for me winning business insights, check out my book, No Off Season: The Constant Pursuit of More.