Intro: [00:00:00] Welcome to the Stacey Salyer Show, the podcast for property management leaders ready to think bigger about growth. I'm Stacey Salyer and the only acquisition strategist in this industry who sat on all sides of the m and a table. I've been the buyer acquiring a 370 door competitor during COVID using seller financing.
I've been the seller building and exiting a seven figure business. And I've been the corporate evaluator as director of acquisitions, assessing over hundreds of companies nationally. That means I know exactly what you're thinking, what you're missing, and what actually works when it comes to buying and integrating in this space.
On this show, we dig into acquisitions as a real business tool. Not luck, not someday. You'll learn positioning, strategy, numbers, and integration from someone who's actually done it all. Let's go.
Stacey Salyer: Welcome back, my friends, [00:01:00] to the Stacey Salyer Show, where we talk about buying and selling property management companies. And today I have a guest with me. , Some of you who have been around in the industry for a long time know him and love him. , Today he's coming on, , to share his story of how he built his property management company and how he sold it, and all the things in between.
And, , we're gonna dive really deep into his story. He's gonna share some of the personal, , trials and tribulations of building and selling and what that looked like. So I'd like to welcome my good friend, Pete Neubig to the show. Welcome, Pete.
Pete Neubig: Stacy, thank you so much for having me. about time you got me on your podcast. I've been asking for months.
Stacey Salyer: Absolutely. I know. Well, I'm glad our schedules finally aligned, , because you are definitely a treasure in the property management space. So I would love to dive in for those of my listeners who are not familiar with your background. , When did you get started in property management? And just [00:02:00] maybe kind of we can kind of start from the beginning, , and then talk about, you know, you, you built your business.
I believe you had a business partner. I know I'd love to hear more about that and what that looked like for you. And then, you know, getting your company ready for sale, or did you do
Pete Neubig: I'll give you, I'll give you tw - I'll give you 20, I'll give you 20 years in like five minutes, right? So,
Stacey Salyer: Okay
Pete Neubig: so like many of your listeners, I came in from the investor side, right? Main- mainly you come into property manager. Very few of us grow up and say, "When I grow up, I wanna be a property manager." Many of us fall into it through the investment side or through the realty side.
I came in from the investment side. , I started buying properties in 2001. At one point, , my business partner, Steve Rosenberg and I owned three apartment complexes and 30 something houses. I was working full-time and I was managing pretty much everything. And that was a crazy. I was single, shocker, right?
I mean, I don't have time to date, , at the time. It was pretty crazy. , [00:03:00] I finally decided over a year it took me, like, for many of us that were work, that work full-time for a big company, , I was the, uh, senior systems engineer for a nationwide, , retailer. And I was, like, the guy. And I just, , you know, I made the really tough decision to leave corporate America. So Steve and I, as we're buying all these properties, we, uh, we realized that we were great at buying properties, but we were terrible at managing them. So we created a little management company just. And the vision, the original vision for Empire Industries, which was our management company, was to manage our properties, and we were gonna have, like, 500 properties.
That was the initial vision. What happened was, Steve ended up selling third-party management to people. This is now, uh, I'm gonna date myself, this is probably around 2011. What happened was, we're managing, like, 60-something units or single family [00:04:00] homes, and I only own 31 of them. And I'm like, "Wait a second.
Why. How are we managing 30 other doors? Oh, well, this guy needed help and this guy needed help." And Stacy, I'm gonna tell you, all right, and this is kinda like, I don't tell too many people this, so this is between me and you and all your, and thousands of listeners. When we first started Empire, we did not collect the rent.
We let the rent go from the renter to the owner, and then we would invoice the owner
our big management fee of about 50 bucks at the time.
Stacey Salyer: All right
Pete Neubig: and, but all maintenance would come through us, and then we would front the maintenance. It was a great way to go, , to go belly up very quickly. , So very quickly, we realized that we need to control the rent.
We need to handle all of that. , But that, that was, like, we had no idea what we were doing. We had not found NARPOM yet. , But when I had these 30 other properties, we were bringing in revenue, and I realized that we kind of had past proof of concept. So I finally made the big decision, and it was probably the toughest decision of my [00:05:00] life to leave corporate America after 20 something years.
I was 41 when I when I started Empire.
Stacey Salyer: Really? Wow, 41. Okay, that's cool. And I, I love that you shared that because I think people have this misconception that,, you know, if you, if you haven't started something or you haven't become successful by 25 or 28, that your life is over. But gosh, you just start that business at 41. That's
Pete Neubig: Start at 41. Now, a couple things. I always ran my personal life, , where I didn't have a lot of debt. So everything was paid for, and I don't have kids. My, my wife and I, we just didn't have, uh, we didn't have the ability to have children. So, even though it was a hard decision in my life, it was still easy to some other folks that have mortgage, two car notes, school to pay, and, and kids.
So I get that. I understand that because it was really difficult for me, and I still. But, but it was easy for me to always other people. And I always tell people, "Don't quit your job and then try to figure out what you're [00:06:00] gonna do. But start something on the weekends at nights. That's where you really de- determine if you're going to make it or not."
And that's what happened, right? I was doing weekends, I was doing nights, then I was doing lunch hours, then I was stealing time from the company I was paying me, right? I was, I was kind of taking some time here and there to do stuff , for Empire. And that's when I realized, , I'm stealing time.
I need to either go or, or, you know, poop or get off the pot, so to speak. And, and, and so I, I, I did that.
Stacey Salyer: So you did kind of what I call, like, the Gary Vee hack. Gary Vee talks about that all the time, is that you always have enough time to do whatever you want, right? So if you have your W-2, your nine-to-five job, you still have the hours between 5:00 and 9:00 PM to do
Pete Neubig: That's right.
Stacey Salyer: and so that's basically what you did.
You followed Gary Vee's advice before he was probably giving that advice. I think he
Pete Neubig: bef- beforehand, right? So, so I just think that, you know, and there's so many of us in this industry that, that work so many hours already, , , might as well [00:07:00] build something for yourself. So then, um, in 2011, we start Empire. I don't find, . I though we created the single family property management industry because all my people that I knew were investors, they knew multifamily property management.
And I was told it can't be done, the windshield time, the, there, you, you, you can't get enough clients. , And of course, , we started doing it, and we, we kept asking, like, "Man, this is. Is anybody else doing this?" And then we found NARPUM. And, uh, and that really changed my life. It changed my life.
There's two things that really changed my business, which ch - which if you change your business, you change your life. And number one was I got hired a business coach. Even before I quit my job, I hired a business coach because I was an IT guy, and my business partner was a pilot. We didn't run businesses, so we knew what we needed.
We knew what we didn't know. And then the second was NARPUM. NARPUM was our operational kind of safety net. It kept me out of, kept me out of Texas Real Estate [00:08:00] Commissioner's Office. It It kept me out of probably jail at some point. , And so the business coach taught me about business.
NARPUM taught me operational. , So we ran that business from 2011 to 2019. And we went from those 60 doors, we ended up, , a whole other story, but we ended up getting rid of most of our clients and changing our model. Our, to put it this way, our average unit rental unit was about $800 when we used to managing properties.
We were managing, I call it Baltic Avenue, if you're familiar with Monopoly, right? We wanted to get to Marvin Gardens. We wanted to rent Marvin Gardens. And so we finally ch - we changed everything. We changed our image, we changed , our marketing, and we got to Marvin Gardens, and our average rent was like 1500.
This is in Houston back in 2015, so that was pretty good rental.
Stacey Salyer: Yep
Pete Neubig: So the vision went from, , doing this for only ourselves, then the vision was like, "Oh, we could do this third party." , And, like, we though, "Okay, if we get to, , a couple hundred doors, we be happy." [00:09:00] Then we're at a NARPAM conference, and we heard that 300 doors, you become profitable.
I don't know why we heard that or how or whatever, but then that became the new vision. And, , the vision was, , was in alignment with both Steve and I until it wasn't. So then Steve decided that he wanted the vision to be basically, uh, if you remember what Mind and what Pure are trying to do, where they're trying to create a national property management firm with their own software.
And so Steve had this vision, he wanted to do it. We didn't have the skillset to do that. We didn't have the connections. We didn't have the money, the ability to raise the money, the ability to create, uh, the software. But for whatever reason, Steve wanted to do this, and that forced us to go into new markets in Texas.
So we were in Houston, we broke to Dallas and Fort Worth, and we're looking into breaking into Austin, but we were like. Stacy, we were killing. , We were losing so much money in those other markets, so we're taking Houston money , to basically, , service those areas, because we did it all wrong, and that could be a whole other podcast [00:10:00] on how to expand.
, And so, I basically wanted to. So my vision changed. I wanted to actually get rid of those markets and just be the best property management company in Houston. And Steve's vision is, "I want to take this and really blow this thing out."
Stacey Salyer: Okay. So question, a couple questions if you don't
Pete Neubig: Yeah, go for it.
Stacey Salyer: so were both you and Steve equally, , equal time in the business at this point in time, or were you pretty much running it and then, you know, he was still flying airplanes? Or what did, what did that look like?
Pete Neubig: Yeah, great question. So, , we were both fifty fifty partners, so just, you know, that was. We brought in a third partner when we tried to expand for 10%, and Steve and I were both 45 and 45% partners. , Steve was in charge of sales and marketing, and I was in charge of basically operations, HR, IT, accounting, and all that good
stuff.
Stacey Salyer: Okay
Pete Neubig: so I would say I probably put in more time, but, , that really didn't matter, because Steve was, was putting in a lot of time, [00:11:00] and he was also, , being successful. We were pretty successful because we went from those couple hundred doors to in 2019 when we sold, we were at 984 single family units.
No, no HOA, no apartment complexes, , in three markets. So
Stacey Salyer: three markets. Okay.
And I'd love to ask more questions about that, 'cause I know a lot of my listeners have this, like, desire and vision to do kind of that. , People are always excited, like, "Oh, I wanna be in several markets," or, "I wanna be multi-state." But what I'm hearing you say is that you actually, like, lost some money, and it was really
Pete Neubig: Yeah.
Stacey Salyer: Kinda, if you don't
Pete Neubig: we did it,
we.
Stacey Salyer: back a little bit on that.
Pete Neubig: Yeah, well, so we did it, wrong, is, is really what it comes down to. Um, you know, but Jen Stoops actually showed me the right way to do this. So if you wanna learn the wrong way, I'm gonna teach you the wrong way. Get Stoops on, she'll tell you the right way, okay? So , we didn't know we didn't know. So what we decided to do is we decided to hire a [00:12:00] marketing person and a property manager in Dallas with zero doors.
Now, Stacy, think about that. Do you really need a property manager full-time when you have zero doors? Do you need a, do you need marketing, , boots on the ground there? What you should do is send out your marketing first, right, because you have this thing called the internet, it's everywhere, you don't need a person there, and then
you
Stacey Salyer: social media now. Social media
Pete Neubig: And social media. , So we spent a lot of money. We, we believed in boots on the ground marketing, like, going to all the different, like. It's, it's not just marketing, online, but it's also marketing in person, going to broker's offices. , We didn't hire the right people. , , I'm much better at that now with VPM taught me a lot about that.
We hired the wrong people. , , We hired them too soon. And so that is, that was the number one reason why we were losing money.
Stacey Salyer: Okay,
Pete Neubig: but the vision
Stacey Salyer: sharing. I think that it's,
Pete Neubig: You're welcome.
Stacey Salyer: for people to, to hear that too, because while it's cool to share what does work, I think it's [00:13:00] even cooler to share what doesn't work, because that's how
Pete Neubig: Yeah, I think, you know, when you go to, when you go to an event and all these people are speaking, they're only speaking from, like, you know, when everything's perfect. , I like these podcasts because you do get a little bit more quote unquote real, and you talk about failures. I've had lots of failures, but I was still a success, , on, on the, uh, on the exit.
and so I think every business has trials and tribula. I don't know anybody, you know, I, I mean, it's funny because sometimes I've seen people on stage and then I, and I know they're. I've seen behind the scenes in their business, and I'm like, "They are a rat's nest, and they're out there talking about how to do X, Y, and Z."
So we all have our challenges,
Stacey Salyer: , I know. If only we could have zero bullshit on the stage. You know what? Let's have a zero bullshit conference. Let's do that.
Pete Neubig: I like, I like that. I'm in. I'm in. I'll speak on that. I got, I got more war stories. So here's the crazy thing. So everybody asked me, or a lot of [00:14:00] people did ask me, "Why did you sell?" Because I truly believe property management is a great lifestyle business. , I believe it's great when times are great, it's great when times are bad.
I think now, , even with, , legislation, I think it's gonna be better for us in some ways, obviously more difficult to run the business, but I think you're gonna get more business. So I just believe in property management, and that's why I serve it today with my company.
, But Steve and I's vision changed. And if you're listening to this and you have business partners, it is important, like, once that vision changes, the foundation cracks. And when Steve realized that , we couldn't build a national company because we just didn't have the know-how, he then talked to Catalano, Mike, Michael Catalano with Pure, and also, , I don't know if you remember, , Alex Osenenko, who used to be with, , four and a half.
Alex was working from Mind, Alex and Steve became buddies, and Alex basically recruited [00:15:00] Steve to basically sell to Mind. In the meantime, Steve was also talking to Catalano as buddies, and Catalano had this idea, Pure was just an idea at this time. And so, we took a meeting , with Pure first, and we were in the Silicon Valley Bank.
We're in one of their conference rooms, Mike, Joe, a couple other folks, me and Steve, and they're talking about this, this idea, right? , They didn't have one property manager firm yet. Mike's like, "I'm gonna, you know, bring my property management firms," because he had, I think, four or five different companies at the time.
and we were, like, we were, like, ground zero. And so, he was reaching out to us and a coup - and one other, person I, I won't name. And so, at, in that meeting, I'm seeing what we call in the IT world vaporware. Like, it doesn't exist yet, but Mike had this great picture and, you know, God bless him, this is [00:16:00] 2018, 2019, what, what a job Pure has done.
And, and, uh, you know, sometimes I kick myself. We decided not to go with Pure because on the flight home, Steve looks at me, he goes, "What do you think?" And I go, "Steve," I go, "What I think is everybody in that room was a visionary, and I'm an integrator. I think it is going to be years of hard work, and I am getting tired.
I was putting in, Stacy, 80 to 90 hours a week as it was just to get Empire off the ground. I had just gotten to the point where I was putting about 20 hours a week in, , literally, , only, like, 30 days. finally got to the finish line. I got the team in place. I'm wearing the hat that I wanna wear.
, We're making money now. , It was years of not making any money as we're growing. I'm like, we made it. , We can now spin off. We have the hub, we can spin off Spoke. So I wanted to spin off a brokerage, a maintenance company, a title company. , That was my vision. And Steve's vision is, no, I wanna go national.[00:17:00]
So I just told him no. And, , a month later, we're back in Northern California, and we're at the mind office, and we meet with Doug Bryan and his team. And at least at this time, they had a staff, they had office space, they had a software that they can show us. , And so I still did not wanna sell, but , here's the truth of it.
Steve and I have been together ride or die for 20 years, right? It was 2019. We met in 20- 2005, so call it 15, 16 years, okay? We were not just business partners. We were good friends, if not best friends. And so at this point, I had a choice to make. Either one, I basically tell Steve, "Go pound sand.
We're not selling." And now I've destroyed that relationship, okay? Number two is, I tell him, "Okay, sell your portion and I go find an investor, the devil you know." I didn't want, , number one is I, I, remember I told you I had [00:18:00] no debt when I left my job. I don't like debt. The business didn't have any debt on it, and I didn't wanna put a bunch of debt.
Plus, now I have an investor that wants his money back as soon as possible, puts, puts a lot of stress. , And then the number three is I sell. And so once mine, mine made us an offer, Pure really wanted to make us an offer, and we would've been much higher. Like, I would've been the number two at Pure today , if this, this transaction would've transpired.
But Stacy, I don't know if I had an enemy because that, that's seven years ago. I would still be there. I would still be working 80, 90 hours a week , and, you know, it, it just, I just don't
know.
Stacey Salyer: no, I
Pete Neubig: do I know. Yeah,
Stacey Salyer: I, I sold... I did sell to Pure. I was the very last day of 2021, and I did stay on, and it was a ton of work. It was
Pete Neubig: It is. It's not a, it's not an easy lift on what they're doing. , And so I would've been, you know, I would've been Catalanos, like, number two and that would've, , just, it would've been great, , but [00:19:00] I don't think I actually. Honestly, I don't know if I had an Emmy and I don't know if I had the skillset.
So that is why I sold, because, , I do believe that relationship is more important than business, especially really good ones. you know, worst case scenario is I put a bunch of money in my pocket.
So there was two negotiations when we sold. One was the sale of the property management firm, and the other was becoming a, uh, member of the management team. So, so employment. So the employment was separate , from the sale. I'll talk about the, the whole process of the sale here, but I wanna talk about the end real quick.
So when we sold, I had more money in my pocket than I ever had before in my life. I was making more money than I was paying myself at Empire, and I was more depressed than I've ever been. And the main reason for that, Stacey is because I did not want to sell, right? And because I did not want to sell, I did not have, you know, what I wanted to do next.
I didn't have my out. So I just took the job because I still needed [00:20:00] to do something. I didn't have. I didn't sell for enough where I could retire forever. I probably could have took a year off, but then it's , then what do you do? Now you start from zero. Like, it's kind of like you're marketing for your company.
You can't just shut marketing off and then start it back a year later and think everything's gonna be right back. So I was still. I was very nervous. I'm very conservative. , I was very nervous about bringing money , into the household. , My wife wanted to retire and, , she was close to it, so I'm like, "I gotta keep bringing money into the household."
, So that's. So I just took the easy path, which is just take the job. I lasted 18 months.
Stacey Salyer: do you feel like your identity, like was it kind of an identity type issue where maybe you didn't feel like it was, , I guess I'm kinda hearing where maybe you just didn't feel like it, it's really what you wanted and so you just took that path and then you just kinda had to be there, but you didn't really wanna be there.
Is that kind of fair or
Pete Neubig: Yeah. I would say that, , my identity was wrapped up in Empire. It was definitely part of who I was, okay? That [00:21:00] was part of it. , And then, of course, when you sell, and you know this as you sold your business, you're not the guy anymore or the gal. And all of a sudden, they just start ripping your baby apart.
And, you know, in my case, I had very, very high opinions on what they were doing was not right for my team, my clients, , for the business. , You gotta remember, pure mind, these guys are playing a. They, they're on a different board game. Like, when you ran your business and I ran my business, profitability, you had to be profitable.
That's how we fed ourselves. These companies back then, , they didn't wanna be. They didn't need to be profitable. Matter of fact, they just wanted to grab market share. I didn't understand that. , And so I'm like, "Hey, we got to treat the client right. We gotta treat the people right." I just didn't feel, that was the case, , and I just didn't understand the game.
And so, , me being a little bit of, you know, butt hurt that I had to sell, , and then seeing, , that they changed [00:22:00] everything on me, I also was told that I'd be able to quote unquote move the needle, like I was gonna be, I was gonna be on the management team. Well, Stacy, the management team at the time was, like, 25 people. You're one of 25. You know what I mean? Like, you're not moving the needle. And, , my job ended up being Eastern Region Vice President, which is a nice way of saying, , senior property manager. All the escalations went to me. All the stuff that I hated at Empire that I was able to firewall with my general manager and my team now came back to me.
And so, it just was not the right position. I, , I didn't take the right position at mind. I took it just to keep the income coming. And, , honestly, they did not get the best version of me, and they got a pretty bad team member, to be honest with you. Like, I was just. I questioned everything. I was, I was very difficult, , to work with at times.
And now looking back, I realize it was part of the identity thing, part I was just [00:23:00] depressed. I really was unhappy. The lesson learned, if you're thinking about exiting your business, make sure you understand what it is that you're going to do next.
Whether that's retire, great, retire, but what are you gonna do? Because, , you know, we're. lose peace of yourself , when you sell. yes, I did recognize my depression. , Actually, there was, there was one day my wife was, because remember COVID happened, and my wife comes down the stairs.
She was working their office upstairs, and she goes, she comes down, she goes, "Hey, you cannot talk to your people the way you're talking to them." I go, that wasn't my team." She goes, "Well, who was that?" I go, "That was my boss." And she goes, "You cannot talk to your boss that way." And so that was the first time I realized that I was, , not being a, a very good team member.
And then that's when I started looking at it, that's when I realized, , I'm not happy and, I'm depressed. , It wasn't like a major depression, like, it wasn't like I can't get out of bed. It's just, like, [00:24:00] I felt no purpose in life. , I felt like there was no purpose. I didn't believe in the, in the brand.
Like, I was never a, a believer in mind because, again, I didn't wanna sell. , And so I think, I think there's some things there. So just if you're looking to exit, , and I don't know, did you run into this? When, When you exited, did you know what you wanted to do next? Because you took a job at Pure with.
Did you have any kind of, , challenges with mindset?
Stacey Salyer: You know, I-- that's a really good question. So I think a little bit different. I did not have a business partner. I've always been solo. , So for me, it was my decision 100% to, to sell to Pure. So I think that, , what I'm hearing from you is that you really didn't wanna go down that path, and you kinda just were like, "Well, fine, I'll take this job.
I'm sure I'll be fine." , And, , ended up, you're like, "No, this is actually what I hate." , So for me, once I made the decision, I actually was really happy with it. , It-- the funny thing is, is originally I got tagged for operations. So in the very beginning, you know, I sell. It's like, "Hey," you know, kind of very [00:25:00] similar to you.
We did a, purchase and sale agreement, and then I did an employment agreement. I actually didn't really have a role specifically going into it, which was very trusting. I just was like, ", it'll all work out," in true Stacey fashion. Um, but... And it did. It did work out for me. But I remember Jennifer Newton, , well, so f- to kinda back up, in the beginning, , I kinda joined Jennifer Stups' team 'cause she was leading acquisitions at the time.
She was the front woman for it. She's the one that, you know, convinced me to sell, right? And then, , early on, Jennifer Newton said, "Hey, I'd love for you to join the operations team." And I was like, "Ugh, man, I'm kind of burnt out." , I was coming off of COVID in Washington State.
Pete Neubig: Oh, God, yeah.
Stacey Salyer: was, you know, which was just a nightmare to deal with.
And, , I really, kind of like you, I didn't want to get tagged with the whole like, "Oh, we need a backup property manager," or, "We need someone to take these after-hour calls." I'm like, "No, no, no." Because then meanwhile, I had joined the acquisition team, and I'm [00:26:00] like, "Well, this is a lot of fun. I get to go talk to business owners all over the US and tell them my story and share, , the vision of Pure," because I really do...
, did and I still do believe in their vision, , of what they're building, and it was a lot of fun. To answer your question in a - long roundabout way, I think for me it actually worked out pretty well. , I didn't feel a lot of, , sadness or depression. In fact, I was actually pretty happy.
The other thing was when I sold, I was the very end of '21, so all of '22 we were all still operating as the companies we sold as. So my name, Leading Edge, didn't change, my team didn't change, our processes didn't change. In fact, if anything, they dove in and, , used a lot of what I was doing, , , to build out stuff.
, So I didn't feel like anything was really ripped apart. That wasn't, you know, that probably didn't really happen until like the middle of '23, and by then , I was so done as far as like my former life. You know, I didn't, I didn't see myself as Leading Edge anymore. I didn't see it as [00:27:00] my baby anymore.
It was truly just an asset that I had used to get ahead, , because I also invested in the company and, , still believe in that as well. So that's a little bit different journey, I would say.
Pete Neubig: Yeah, , when I got purchased, the first 90 days, they ran us just like normal. And that was the funnest I had. And then day 91, they came in like Locus changed our, changed everything. Who's reporting to who , and all sorts of things and the software and everything. And , that was extremely difficult.
So,
all right,
Stacey Salyer: Yeah. and yeah, and that's probably because it was a little bit more established. So in the beginning, I was part of the band together, build together team, is what I call it, , where it was truly like a lot of my entrepreneur friends across the US were banding together to build it. And then as we moved into '23, and as, as we kept acquiring, , our buy box changed as well.
So like every quarter that would change and our-- what we were purchasing was very different. And so it did [00:28:00] change, I would say probably the sellers in '23 and then beyond probably, if they didn't want to sell for whatever reason or if it was a partnership, they probably felt maybe a little bit more like that p- possibly.
Pete Neubig: Got it. When we decide, when we decided to sell, mine had made us an offer and that's when I knew I couldn't buy my business partner out because I'm like the offer they made was, companies like mine, they have, they have a formula. It's very formulaic, like here's what, you know, based on your revenue, based on the last whatever, two years, this is what we're gonna offer.
And they give you , basically like a percentage, right? A one, a 1X, 2X of revenue. So , they did not do the whole EBITDA thing with us. I don't know if they did with you, but they just did, "Hey, here's your revenue and we're gonna give you one time, 1.75 times." Which back in 2019 was, was pretty good.
You know, 1.5 was standard from what I understand. 1.75 was a little bit higher. , I do know in [00:29:00] 2020 and 2021, 2022, I've heard stuff got, get to 2x, but we got 1.75X. They also, like all of our sales, we didn't do a lot of sales, they kept that in there. They were very kind in how they came up with the formula. But, there was no negotiating the price. The price was the price. So , if you're ever gonna exit and sell your company, like you might not be able to, , negotiate price, but you can always negotiate terms. And so we were able to negotiate some terms. Originally, they wanted like a four-year payout.
I got it down to a two-year payout. , They all, they wanted us to take 30% in stock. I only wanted to do 10. Steve wanted to do 20%, so we did 20%. , you can negotiate a little, a little bit of terms. So that's what we did. So we got, , 60% the day we sold, , including the stock options. And then a year later, we got 20% with, , with a [00:30:00] clawback. And then a year after that, we got the, the last 20% with no clawback. And so I was trying to stick around for two years because I was a worrywart thinking that if I'm not working for the company, that they're not gonna pay me the last 20% or they're gonna try to get out of it of some sort. And a funny story is they, uh, they tried to, you know, they, the, it was just a miscommunication, but I got an email basically saying, "Oh, you're only gonna pay you this amount because of the clawback."
And I'm like, "There ain't no clawback." And I'm like, "Here's the information that I got directly from your attorney." So I kept stuff, , just in case. 'Cause you hear, you just hear, , you just hear stories, right? , You don't want a long payout because you just don't know if they're going to not pay you and just say, "Hey, you know what?
Good luck. Sue us." And I, I wanted to make sure we had a good relationship so that we didn't. , the clawback was, it was not cut and dry, but I think we ended up getting clawed back about 8%. [00:31:00] So it wasn't that, that much. , And that was another thing that made me stressed out, was that clawback year, and then the year they end up, , they had to pay me.
, I've heard some people take like a seven-year payout. I, I just would never do that. I just don't trust people. I'm from New York City originally, you know?
Stacey Salyer: Right.
Pete Neubig: Uh, but
Stacey Salyer: What... And so a year, so you guys agreed to a 12-month clawback?
Pete Neubig: We did.
Stacey Salyer: Okay. Okay. But you got 60% up front.
Pete Neubig: the deal was in those 12 months, if we grew the company, we could make more money as well. And anything we grew co- countered anything that was, that was lost. And the first 90 days, it was perfect because like you, we were operating just as business as usual. So we're bringing in more clients.
This is great. We're not losing anybody. And then when they took over, I'm like, I had to do everything I can to save people because that turnover is, it's really hard for your, for the clients, we do things a lot differently now. The portal's changed. [00:32:00] some people just don't like change and they wanna quit.
Some people are already kind of unhappy with our services, Empire, that they take the time to leave. And then some people loved Empire, and then they saw , the level of service they would get and they couldn't talk to their property, their original property manager anymore, or they didn't have the person in maintenance.
And that was, that I had to do everything I can for about, , seven months, eight months to try to keep as many people , so I wouldn't get clawed back that much.
Stacey Salyer: Right, which is really stressful and probably helped lead to some of that depression, to be quite honest. And I think that's something when I'm talking to people, whether it's buying or selling, that clawback is really important on, on both sides. And so that transition period pre-agreeing to what that looks like, because for me, you know, and again, maybe you guys agreed to that 12 months because you got 60% up front, , but 12 months is a pretty long clawback, especially if they're only keeping you status quo for 90 days, really, 'cause , that's what, [00:33:00] nine more months of major change.
, And I think that's where I lucked out. We didn't, I didn't have any clawback. In fact, we actually grew, , by about 45, 50 doors, and I had a six-month clawback. And so I had, I lost zero doors. I actually grew by 45, 50 doors in that timeframe. Yeah, but again, nothing changed.
I mean, our name didn't change. I, I was still there, and now I wasn't, really wasn't technically in the day-to-day when I sold, but I was still probably a little bit more in the day-to-day.
But then as I transitioned, I definitely was not in the day-to-day. I jumped into acquiring and, and working that on national
Pete Neubig: I think you brought, I think you bring up a good point. , And I like this. Like if you are going to exit and they're gonna let you run the business for a period of time, then maybe that, you know, make that the clawback period, right? If I knew they were gonna let me run the business only for 90 days, I would try to negotiate a shorter clawback, right?
If somebody says, "Hey, we're gonna take you over and rip like..." I know, Evernest, they rip the [00:34:00] bandaid I think within the first 30 days. , They just transfer you out. I don't know if they still do, but , that's what they used to do. , , for those folks, you're gonna, you're just gonna.
People don't like change. You just gonna have a, a higher, a higher, rate of losing doors, , a churn rate. So yeah, make sure that it's something that you really look at, that churn , could make, could be very, it could be costly.
Stacey Salyer: Absolutely. Yeah, it can definitely cost you on the back end as far as your, what you're getting for ,
Pete Neubig: And you're right though, Stacy, it caused a lot of stress with that claw, with that clawback. And you can, you know, also with the clawback, , make sure, , that they, , have a ceiling on it as well.
Stacey Salyer: Yes. Yes. So yeah, so with that, do you have any like, , tips and tricks that you would love to throw out there, , beyond that , for anybody that's looking to sell or, buyers can also listen to
Pete Neubig: Yeah, so, a couple of things is if you're looking to exit, , most of these companies are not buying based on your profit margin. They don't really care if you're [00:35:00] super profitable. And you can, you know this more than I do say, so you can correct me if I'm wrong, but they really are looking for growth, right?
And so one of the things that we did that was very smart that I didn't think was smart at the time is we just kept growing our business. And so by growing our business, adding more doors, we added revenue, and they bought based on that revenue, because they know, like, they can get rid of our software, they can get rid of X amount of people.
So they're not looking at your expenses, they're looking at how much business you bring it in and pay you on that. So if you have always been running your business kind of smaller because you don't wanna grow because you don't want the stress and you want to, , you have this amount of profit, , if you take a year or 18 months to really grow, because they, they go back about a year to two years, right?
But if you can grow, you can, you can increase the value , of your business a lot more. So that, that's one tip I would give folks. Easier
said than
done.
Stacey Salyer: Yeah, but so my advice to people that are looking to exit, because if you're planning it and if you are a planner, let's say you're like, "Okay, [00:36:00] in two years I wanna exit," now is the time for those people to acquire, 100%, because it's the fastest way to grow, and you're just looking to add contracts.
You're looking to add that revenue. You can find what I consider a distressed business or boomer business that has, , maybe a little less revenue. You know you can add it on, so just play the game on the flip side and then grow it, and then now you have this beautiful package in 24 months that you're gonna get a lot more money for.
That's my... That would be
Pete Neubig: I like that. And, , and on the back end, I said it already, I'll just reiterate it, , when you do so, know what you wanna do next in life.
Stacey Salyer: Yes
Pete Neubig: have, have your exit plan, that'll save you a lot of mental anguish.
Stacey Salyer: Yeah. No, and I'm happy that you brought that up because , I don't think enough people talk about that. You know, I don't think we talk enough about our identity 'cause no matter what, we tend to wrap our identity up into whatever it is we're doing because we [00:37:00] spend the most hours of our day doing what we do.
Pete Neubig: Mm-hmm.
Stacey Salyer: that's just the reality of it. And, you know, y- it sounded like yours kind of just, like, happened, , to you a little bit. So how did you, , move through that, and then how did you land on opening BPM? Because now you're an entrepreneur and
Pete Neubig: that's exactly how I got. Yeah, thank you. That's how, exactly how I got through it, though. I'll be honest with you. , I think once you're a business owner, Stacy, it's very hard to go back to being an employee. And, I've seen a lot of folks after about two years , that exit, sell, they take a job with whether it's Pure or Mind, Evernest, and then next thing you know, two years later, they're gone.
I think that's kind of the life cycle of somebody who was a founder. , I came up , with the idea of a virtual assistant company. I brought in a guy who, his name is Ross, he's my, he's one of our business partners. He used to work with me at Empire, and I brought him and I told him about the idea.
And the idea originally was very traditional. I'm gonna [00:38:00] create a company in Mexico. I'm gonna hire people to b - to work for that corporation. I'm gonna rent them out to the property management companies. , Very similar to the Annequin model. And, , it's a great model, but, , Ross goes, "I have a different idea."
And I go, "What's that?" He goes, "Why don't we create a marketplace where people can post jobs and people can post , their resumes and let the marketplace kinda dictate the salaries and all that, and we just take a small percentage of it." And I'm like, "That's a great idea." And this is very similar to, like, Upwork, if you're familiar with, with that model. And I'm like, "That's a great idea." And then I'm like, "Well, how much do you think that would cost?" And I'm, we were doing the math. I'm like, "I don't know, maybe 100, 150,000. Let's just put it this way, Stacy. It was not 100 or $150,000. It was a way lot more." And it was getting to a point where I'm like, "Holy crap, I think this, my initial investment in this company, , might actually exceed how much I got , from Empire."
So it was a little, little touch and go there for a couple years, but happy to say that we're very strong now and, and, , have a lot. I think [00:39:00] we have, , almost 1,500 jobs across the platform now, so I'm pretty excited about it. But that, that idea and building that company got me out of my doldrums , of where I was.
And the interesting fun fact, my last week at, , at Mind was the first week that we went live with our product online, uh, with VPM, was June of, uh, of 21.
Stacey Salyer: Okay. June of '21. All right. So yeah. No, I love that. I, I believe you and I spoke back in the day, I think, about your, you know, what you were building and everything. I feel like we talked a little bit about that 'cause you,
Pete Neubig: I, I reached out to a lot of people that, that I. Yeah, I reached out to a lot of people that I knew and that I respect in the industry just getting some, you know, giving, getting ideas and just asking them to check out , the platform. So, yes, I think I might have, , tapped you to, to kind of look at that for me.
Stacey Salyer: Yeah. No, I love it. In fact, I refer clients to [00:40:00] your platform. I refer other people to your platform. I think it's a , great way to source, , global talent. You know, I'm a huge fan of global talent. In fact, um, that's how I started Leading Edge was with remote team members, and I... That was my first employee, , was somebody out of Mexico.
And, I love your model because they're, , as if I understand, and, I don't wanna, , overstep explaining it, but you... It's more a direct hire for the people, right? Like, you're not the go-between. You're not paying
Pete Neubig: Correct. So unlike the agency model where they might be in just one country, we, wherever our payment process can pay to. So we're paying to, I think, 27 different countries. , We have profiles in 120 different countries. So it's a direct hire model. You find them on the platform and you can hire them and you pay them through our platform.
So we're all in one solution. So you, you can find them, you can train them. We have about 60 training courses on the platform. They're all free. , You can then hire them and you can pay them. [00:41:00] And of course, we have all the reporting that goes with it. , Some of the cool features that I really like is everybody does a disk profile, so you can look to see what kind of disk they have.
They do a video resume, so everybody has a video so you can see if they speak the English level that you're looking for. , So it's exciting. And Q4 of this year, we're coming out with our HR system, which I'm really excited. Matter of fact, Stacy, this is the first time actually talking about it.
Like, I have not told anybody about our HR system, so this is kind of like breaking news. So we're gonna have
an HR system, , and basically you'll be able to do performance reviews. You'll be able to do what we call, , we call them like, tiny pulses, but basically what it is is, , you'll be able to create like a, uh, you get like a three to five question survey and you can survey your remote team members, not you would actually do it as the company, and it gives them a health check.
So they have, we have the periodic health checks, performance reviews, and then, , and onboarding so you can create tasks and you can basically, you know, have task [00:42:00] management and it'll tell, and it'll have a calendar of birth dates and anniversary dates. So it's
Stacey Salyer: I love
Pete Neubig: it's all gonna be triggered. So that's, yeah, that's our next, that's our next product that we're rolling out here, , this year.
Stacey Salyer: No, that's awesome. That sounds so great, and I,
Pete Neubig: And it's all, that's all free. It's like everything we do is free on the platform. The only way, the way we make money is , we take, you know, 10% of, from, from the remote team member, or if the company wants to take on the platform fee, but we just charge a 10% platform fee and that's it.
Stacey Salyer: Wow. That's amazing. Yeah. No, it's a, it's a really great program, and I know some of my clients have picked up some really great global talent. , I'm a huge fan of it, and I love that you do the DISC, , 'cause I am a huge proponent of hiring for the traits. Anybody can interview well if they, you know, practice, but you cannot fake your traits.
I We're all who we are. And, and, and honestly, every team member should work within w- who they are, and you'll be- have an amazing [00:43:00] team
Pete Neubig: Agreed. We also built one called, , Hiring for Attitude. It's based off a book by Mark Murphy. And so they can actually, you can actually see what their attitude is. So it's like, it's like, , what are their core values? Do those core values match up with your core values?
And then of course you have your personality traits. Does that match up with the job role that you're asking them to do? So we, now we get the right person on the bus and we get them in the right seat.
Stacey Salyer: I love that. That's so cool. That's so cool. Well, I'm so glad that you, built that amazing company and that you're continuing to thrive and make new additions to it and grow it and have it be even cooler. So where can people find you in September, October, November?
Pete Neubig: Let's see. September will be at PMI Summit. October will be at NARPM National. December will be at IMN in Scottsdale. And, , if you wanna reach out to me, just [email protected]. , And, or if you wanna hear my beautiful voice, , you can also download the NARPAM podcast. So listen [00:44:00] to Stacy's podcast, and then you can listen to the NARPAM podcast.
And I'm the host of that podcast. Just go to narcam.org and I think it's the radio button.
Stacey Salyer: Yes. Yes. Yeah, no, it's a great podcast as well, so it's really cool that you do that for NARPM, and, , you've had some great guests on there, so absolutely go listen to it. I'll make sure that the show notes have all of your contact information, your website, , how to get ahold of you, and yeah, Pete's a great guy to
Pete Neubig: I appreciate that. I'll
Stacey Salyer: yeah,
Pete Neubig: need to, I'll need to send you the, I'll need to send you the link of your show at NARPAM so that they can listen and then they can go to your NARPAM show and actually see Stacy be the guest of, , of the pod.
Stacey Salyer: Yeah, no, send me the link and I'll, , send it out to , my followers as well. You know I love to , send all those,
Pete Neubig: Awesome. Thanks for having me on, Stacy. I really appreciate the time.
Stacey Salyer: Oh, yeah. Thank you. Thank you for taking the time, especially sharing your journey of what it was like to build and, , then exit and all the things in between.
I think that, , hopefully my listeners learned quite [00:45:00] a few things today and different tips and tricks. And for your next global talent, go hit up Pete at, , VPM Solutions.
Pete Neubig: Thanks, Stacy. Thanks, everybody.
Stacey Salyer: All right, everyone. Thanks for listening. Have a great day
Outro: Thanks for listening to the Stacey Salyer show. Here's the deal. You can read about acquisitions anywhere, but you can't learn acquisitions from someone who's done it the way I have as a buyer, a seller, and from the corporate side evaluating hundreds of companies. That's why I need you to subscribe and share this with someone in your network who needs to hear it.
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