Navigating Ownership Transitions: Behind the Scenes of a PR Firm Buyout

Adrian McIntyre: 00:00:04

And we're back. The Copper State of Mind podcast comes out of hibernation. It's been a couple of years since we recorded an episode, and a lot has changed, both in the world and in our specific businesses. Joining me for this conversation, kicking off a new season of Copper State of Mind, is Abbie Fink, President of HMA Public Relations. Abbie, what's on your mind?

Abbie Fink: 00:00:27

Well, even that title is kind of nice to hear. So since we last spoke, when I was the vice president and general manager of HMA Public Relations, we went through a transition at the agency. My business partner, Scott Hanson, decided he was ready to retire. And throughout the second half of 20 23, he and I went through the painstaking efforts, happy times, sad times, challenging times to come to an agreement that we were both very pleased with and I became the sole owner of the agency and since that time have really enjoyed, leading a successful firm, having exciting work to be done, great clients. Our team is fantastic. And he is enjoying retirement, doing all the things that he likes to do. And we talk on a regular basis and stay in touch with each other. But he is enjoying the life of leisure as the agency that he helped build continues on. And we're very excited about that.

Adrian McIntyre: 00:01:44

Now, let's back up a minute because it wasn't that many years ago. Actually, I guess it was. It was more than five years ago that you and Scott and I sat down in a room and... HMA Public Relations to record the first episode of a new show I was launching, Valley Business Radio, and folks can hear a version of that conversation as episode one of this podcast, Copper State of Mind. At the time, we talked about the fact that HMA Public Relations is the longest continuously operating PR firm in the state of Arizona. We talked about how Scott had joined the firm coming out of broadcast media and moving into pr and then we talked about how you and Scott met and how you had joined HMA Public Relations at that point, I think it had been 35 years previous…

Abbie Fink: 00:02:37

Twenty-five at that point. We're at 31 years now. So Scott and I had a working relationship he was still in the broadcast industry while he was running the pr agency and I was working for the Fiesta Bowl at the time and had opportunity to speak with him as a journalist covering the things that I was working on. And our relationship from a professional standpoint evolved to a fantastic friendship. And when it was time for me to find a new opportunity, there was an opening at his agency and I joined with the firm. And after about five years of working together, we really discovered that we are very compatible as colleagues and really felt that we could become business partners in a more formalized fashion. And we worked to do that over a very long period of time. It is...

It is one thing to say, we think we can do this and we're good together and we want to do this together. But when you start talking about the ins and outs of what that means to become business partners with something, when you're combining financial information and resources and you're becoming very dependent on each other for really your livelihood, there's a lot of difficult conversations that take place. And so over the years, we had a lot of good advisors that helped us both, you know, those that were working with him, those that were working with me to come to this understanding of how we wanted to do it. And so for, you know, 15, 18 years or so, you know, we operated that way and we divided and conquered. We knew what our areas of responsibilities were, what we like to do from an administrative perspective. And with this goal in mind that at one point down the road, when he was ready to retire, he's just a couple years older than I am. So when he was ready to retire, we would have this plan in place, and we would activate the plan and go through that transition. So we just got closer and closer to that and decided to move it forward. And in the conversation started in early 22 and became a reality in 23, which seems like it shouldn't have taken quite so long. But talking about it is one thing, actually doing the hard work of it does take a bit longer than you expect.

Adrian McIntyre: 00:04:56

Yes, the best laid plans of mice and men and PR mavens or something like that, I'm not sure. But I'd like to focus in a little bit and talk about this, because the goal of this podcast has always been to share insights, lessons, perspectives that benefit business leaders, nonprofit leaders, government officials, anyone in the communications adjacent fields here in Arizona. And there's, I don't know if there's a science, but there certainly is an art to navigating these kinds of transitions. And I'm sure that like everything else in life. You learn as much through the mistakes you make as through the successes that you have. So this had been on the table. You're taking ownership of the firm, essentially buying out the previous ownership. Owner had been on the table for a long time. When it actually became real is when things kind of started to matter, right? The rubber meets the road. It's one thing to have a plan or concepts of a plan in the parlance of our time, but it's another thing altogether to actually bring that plan to fruition when the money and the emotion and the legacy and all of the other things are at stake. So let's just start there. What are some of the things you had to navigate as you transitioned ownership to becoming the sole owner of the firm?

Abbie Fink: 00:06:18

Right. And one other element of that is that it was he and I who still had a business to continue while we were negotiating what was going to be happening. It wasn't that a larger conglomerate was coming in to buy us out or a private equity firm or any other ways that business owners can possibly sell off their business, it was he and I. So we had to run the firm so that there was something for me to buy, something for him to retire from, and still maintain what we were doing. So we had really these dual roles that we were contemplating over the course of that. It was probably about, give or take, almost maybe about 18 months of real conversation, and then about six months of hardcore with the attorneys and the financial and all of those kind of things. And so... You know, one of the things that was really important to us as we were going through this is we came to work together through a friendship at the very beginning. We became friends and it was very important that that friendship remained when the transaction concluded. And so we had to really separate out, you know, Abbie and Scott, the friends from Abbie and Scott. Now, these people negotiating a partnership.

And there were some tough times, certainly, because it is difficult to take the emotion out of that. You know, we'd worked together for a long time. We, you know, know and respect each other. We've participated in family activities, you know, the happy times, the sad times, and it's hard to take that out. But one of the things that really put us on a good path was this understanding that at the end of all of this, we both wanted the same thing, which we wanted the agency to continue. We wanted it to be successful. We wanted our team, most importantly, to have the safety and security knowing that their place of employment was in a good spot. And then our clients to understand that for them, the ownership may change, but the level of service, if anything, was going to improve, right? We were going to have a, you know, we had some new energy around, you know, what we were doing and doing some different things. And so we could have all the, you know, the debating and the arguing and the crying and too much wine that was happening over here.

But we always knew at the end of the day that what we wanted was this, you know, this legacy agency that we had that was coming up on its, you know, at that point, 40, 40, 41 years in the marketplace that it continued. And that was really important to us. And so from my perspective, I am very involved with an organization called Public Relations Society of America and their sub-professional development group called Counselors Academy, which is owners and managers of public relations agencies. And for 20 plus years or so, I've been attending their professional development conferences. And early on, long before I had this idea that I might want to be a business owner, started listening to the presentations on succession planning, transition planning, and how to be the second in command at an agency and ultimately become the owner of the firm. And so I went back to those individuals that I had met, all those years ago that were leading those conferences and said, I need your help now. I don't know what I need. I don't know what I don't know. So I need these professional advisors that can help me. I knew what I ultimately wanted the end game to be, but really didn't understand specifically about what I needed to do to get there.

Adrian McIntyre: 00:10:09

So what were the areas of expertise that you turned to? What did you need to bring on?

Abbie Fink: 00:10:14

Sure. So first and foremost was an attorney and a mergers and acquisitions attorney, someone that understood the nuances of buying and selling businesses of any kind. I happened to use a firm called Davis and Gilbert that has a specialty practice in creative services firms. So it wasn't just that they knew how to do small business negotiations. They knew how to do it in this business in particular. And over a series of many conversations, looking at contracts with clients, employment arrangements, the finances of the company. So the other individual that I needed to have was an accountant and a tax accountant, as well as a bookkeeper that looked at the financials. I had always seen the financials of the company. I knew what our cash position was. I understood where we were. I knew what our billings were. But somebody that was looking at it from the outside in to ask questions about certain things, verify what they're seeing on paper. What did this mean? Why was it this way in 20 and different in 21 or whatever it would be? And so those individuals were looking at, the attorneys were looking from a contractual perspective. The finance accounting folks were looking at it from the money.

I also, of course, needed financing. So, you know, I am very fortunate to have some good connections here in town and called up a friend of mine who's a vice president with a business bank. And I'm like, I'm going to be buying a company soon. You know, how do I do that? How do I get money like that?

And fortunately, they, you know, they have a division that does, the Small Business Administration loans, which was what I would be in line to do. So I put together these individuals from a professional standpoint who really had my back. They were looking out for my best interests. They understood my business. So it wasn't just transactional from them. They really knew how to do this within this industry and helped me formulate the plan and the proposal that ultimately we wanted to present to Scott and his team of advisors, who would then spend some time in the back and forth that has to happen. But it's also, there's a whole other set of people that I affectionately refer to as my friend visors. And these are the folks that are 100% on your side. They have absolutely no idea of what you're going through, but they are there for you. And they are there when you need to call them up in the middle of the night because something has kept you awake and you're frustrated or you're excited because something great just happened. but this is the team of people. This is your friends. These are these people that no matter what you do are going to be there. And yes, we need those professional advisors, but do not discount the value of those other individuals that are there to help you out.

And I'm grateful to this day. Here we are coming up on the one-year anniversary of announcing the transition. And about 10, 12, 11 months into the actual running of the firm. And those folks are still, all of those, all the professional advisors and all of the friend advisors are all part of my inner circle.

Adrian McIntyre: 00:13:52

So you bring up a really good point there about how you communicate, especially when you are a PR and comms firm. But I want to come back to that in just a minute, because before we move on, I have to ask about probably the most contentious part of the process, which is the valuation. And I'm not after the specific numbers here, but I am interested in what happens when you seek to place a value on the firm. In order to have a transaction, there has to be an agreement that's on the valuation and the terms. So two separate components of the thing. And it seems to me that there's probably a lot of ego, emotion, what my young son calls pre-gret, which is regret in advance, pre-gret. And how does that work? So obviously there's EBITDA, there's multiples of revenue. There's a lot of different ways you can talk about the numbers, but it's so much more than that.

Abbie Fink: 00:14:49

Well, and value is as much objective as it is subjective for all those reasons that you said. There's emotion, there's history, we've been building something for this long, and even if the papers don't, you know, the files don't show it, this is what it's worth. And so the, you know, he and I early on in this, in early on, meaning several years ago, we started talking about the, what, what it could look like. We had a number in mind and you know, it was based on, you know, what we were doing from a billings perspective, you know, what we knew, you know, how our revenue was coming in, what our profits were every year. You know, we had a, we had an idea of what that would look like. And if we projected that out and all things being equal, at some point in the future, it would be worth this much money.

And so even when we were kind of finalizing the details of what we, the first thing you do is do a letter of intent, right? Is we both agree we want to pursue this and we'll not talk to anybody until we get to this point and such. So we had this number in mind. And then you use those outsiders to look at the numbers for you, to tell you if that number is real. And there are a lot of different ways that they can figure that out. It's percentage of this, and it's three times that, and there's a lot. At the end of the day, it came back to basically the number that we had agreed upon.

And it was a number that what we agreed was what the company was worth and what I was, what I was willing to pay, what he was willing to accept and what the company was worth. And this combination of things is where we ended up with that. And then from, you know, from that, then it's, then we go back to the bank and we figure out the financing and how, you know, how to make that happen. Um.

I believe that if you are entering, if you are the buyer in a scenario like that, and you've been, whether you're doing it in the way I was, which were already part of the organization, you're coming in to buy out partners, is really looking at the numbers is one aspect of it. But there is other things that have to go into play when you're deciding about it. You know, it's the likelihood that the clients are going to stay, the likelihood that the employees are going to stay. What is the future look like you know what's on the docket in the next handful of months you know what are the expenses that are you know being incurred now what will be the expenses after this transition takes place and as the buyer if you can settle in your mind that all of those things make sense that number all of a sudden makes perfect sense if any one of those things red flags for you, it doesn't matter what the end game is. I mean, half the price would still not be a good deal if all your employees decide they don't want to stay. So you have to look at more than just the dollars and cents at the end of the time.

Adrian McIntyre: 00:18:02

For sure. And let's talk about the employees and then also the clients and community aspect. How and when do you communicate this impending change or even that it's being considered.

Abbie Fink: 00:18:13

The idea of it. Yeah. And that's a really difficult question and probably is different for everybody that's going through it. So we have a very tight knit team. They regularly understand what's happening. We share information about what new business development is happening or what the billings are or collect, all those things. So they are aware of the business of the business. But he and I really needed to get to a place where we were...

About 98% sure that the transaction was going to go through. The specific details of it may still have had to be worked out, but we didn't want to share too early in case it didn't go through. And we didn't want to share too late in the fact that it was done and now they're finding out about it when everyone else is. That didn't seem right either. So we had some built-in internal deadlines that he and I had kind of said, if we're at this point by this time, this is what we're going to do. And if we're at this point by this time, we'll do this. Well, we had a middle of October kind of deadline where he and I were going to be attending our meeting of the Public Relations Global Network. And it would, assuming that the transaction was gonna go through, this would have been, then would be his last meeting as the owner of the agency. And so we use that as kind of our deadline. We need to be in a good place by that meeting because you're going to want to tell them, I want you to be the one to tell them, but then we have to tell our team before we tell them. And so we felt at that point that we could do that. So we gathered the team and shared with them that, as you know, This has been in the works for a while, and this is how it's going to transpire, and we expect to conclude the deal by the end of the calendar year.

We did a similar announcement at our network meetings where he was able to stand up and thank them and announce his retirement. And then once we did that, so it was kind of a twofold announcement. Announcing his retirement and naming me the president was part one. And then part two was the actual transaction of buying him out. So we were able to publicly announce then on November 1st of 20 23 that he was retiring, I was becoming the president, and did sort of a simultaneous distribution. So picture Alison Balin, our director of client service, and I sitting next to each other with our computers. We've got the news release ready to go and the media database all ready to go. And I've got the email ready to go to the clients as soon as the news release is posted. And my website developer is back at his office ready to update the website. And I had my graphic designer. I mean, all these people were kind of waiting for the go button. And miraculously, it all happened just as we planned.

Adrian McIntyre: 00:21:28

Sounds like a day in the life of a PR campaign. But the stakes are different when you're the subject of the story that's going to get written off the back of the press releases and all the rest.

Abbie Fink: 00:21:40

Well, and that was kind of the email subject line was I'm usually sharing the news about you and today I'm sharing news about us. And it was very emotional to do that. All this work that he and I had done over the years to build up the firm and have this group of individuals that were aware of what was happening and now we can make it public, And we are PR people after all, so it was public. And then realizing, okay, we did it. Now we really got to do it. Like it's now it's been said and done and now it has to happen. And so we still had two more months of the back end negotiating to finish and paperwork and contracts and all these other things to do. Late night conversations.

Adrian McIntyre: 00:22:30

And there was no earn out for Scott here. When you concluded the transaction, he was retired?

Abbie Fink: 00:22:34

He was retired. Yeah. Now, that's actually an interesting point because at the earlier stages of our conversations, I think we both made an assumption that it would be an earn out, that there would be a two or three year transitional period. And when we got to talk about it more seriously, that was not something that he necessarily wanted to do. And as we looked at it, there was no reason to make that happen if we could pull it together.

And that's different for any business right I think those are questions you have to ask your buyer and seller is you know if you are the seller do you still want to stick around do they need you to stick around you know what's the what are the benefits to having you there, what are the challenges to having you there because it's different it's a different way of being in the business but he and I decided that you know he was ready to be retired. And by retired, I mean just not working at the agency anymore. And we were good with that. We had a plan to make that happen. So we concluded the year and with all the negotiations. And probably the most anticlimactic part of the entire thing was I'm at the bank on the day that we're signing the papers. And he's at his home. And we're waiting for the DocuSign to come through from our attorneys and we just you know hit the signature button poof and I owned a company and I’m like all right now what do I do you know you know okay well let's.

Adrian McIntyre: 00:24:05

Let's end on this because as you as you look back now it's a year from the official announcement uh, What do you do? What's different? How has your thinking evolved and changed? Because again, it's one thing to be planning this for 20 some years, but when it actually happens and you own a company and you now, although you had as vice president and general manager, a strong lead in the direction of the firm, but this is different. What's changed? What are your thoughts about the future?

Abbie Fink: 00:24:33

Yeah. So probably the biggest change is the mindset that you're making decisions now and you are it. When we made decisions, we made them together. There were certainly things that he wanted and he did, and there were things that I wanted and I did. But for the most part, we agreed and we moved forward. Well, I don't have anyone to turn to now and say, hey, what do you think? Should we buy new computers? If I want to buy new computers, it's me that makes the decision. So I think that keeping those advisors around has been very beneficial because I do have then other experts to help me kind of make some of these decisions that aren't daily in the business but understand what's going on. But I think for me, the biggest and most, maybe not surprising, but I think the most pleasant of the changes is really the energy around the work again. And both for me and, you know, for our team is this, you know, it's the same but new.

And there is a, you know, we can look at things in a different way if we want. You know, we refreshed our look and our website and our logo. But we are the same, you know, solid communications professionals that we were before. We have many long-standing clients that continue to be part of our roster. We have clients that have come back as a result of pushing ourselves back out there again. And, The, the excitement for me about, you know, what we do and how we do it is really the reason I wanted to do this work in the first place was the type of things that we get to do with our clients. And I forgot about that for a while. And now that's been re-energized. And I'm exceptionally proud of the type of work that our agency is known for doing in this marketplace and that we continue to be seen in that way and that we are pushing forward new and innovative ways to do what we're doing. And it's being received favorably, internally by the team, externally by our clients.

And it's fun to look forward and see where we can go and what we can do. And I look back and am really amazed at what he and I built and then how we managed through that. It was challenging while we were going through it, but when you look back and the lessons that you can learn and knowing that the blood, sweat, and tears that you put into it mattered, and I feel so proud of what he and I have accomplished together and making through that in a way that, again, we are friends to this day and the relationship is strong, the agency is strong. I think he can look back and say, I helped build that and look how great it's doing now and hope that, you know, as we progress and we continue on for the next however long that is, that stays that excitement and enthusiasm and energy around the work, because that's ultimately why we're doing all of this in the first place.

Adrian McIntyre: 00:28:08

Thanks for listening to this episode of Copper State of Mind. If you enjoyed the conversation, please share it with a colleague who might also find this podcast valuable. It’s easy to do! Just click the Share button in the app you’re listening to now to pass it along. You can also follow Copper State of Mind in Apple Podcasts, Spotify, or any other podcast app. We publish new episodes every other Friday.

Copper State of Mind is brought to you by HMA Public Relations, the oldest continuously operating PR firm in Arizona. The show is recorded and produced by the team at Speed of Story, a B2B communications firm in Phoenix, and distributed by PHX.fm, the leading independent B2B podcast network in Arizona.

For all of us here at Speed of Story and PHX.fm, I’m Adrian McIntyre. Thanks for listening – and for sharing the show with others, if you choose to do so. We hope you’ll join us again for another episode of Copper State of Mind.