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Banking on KC – Joan Wells

Banking on KC – Joan Wells

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Kelly Scanlon:

Welcome to Banking on KC. I'm your host Kelly Scanlon. Thank you for joining us. With us on this episode is Joan Wells. Joan is the co-founder of Wellington, a strategic meetings and events agency that creates signature experiences. Joan recently sold Wellington to Augeo, but has stayed on as president. And she's here today to talk with us about her experience with mergers and acquisitions, and perhaps provide some takeaways for entrepreneurs who may be listening and are thinking about selling themselves or exiting their businesses. Welcome, Joan.

Joan Wells:

Thank you. I'm glad to be here.

Kelly Scanlon:

First of all, congratulations on the sale. I mean, you did what every entrepreneur that I've ever known anyway, hopes to do, and that is to complete the cycle. So, tell us about what prompted your decision to sell.

Joan Wells:

Yeah. So yes, we're super excited to have been acquired by Augeo. So, they're a global leader in stakeholder loyalty and engagement platforms, and the acquisition went through February 1st. So, it's all still-

Kelly Scanlon:

Very recently.

Joan Wells:

It is really recent. To answer your question about what prompted us to sell, I need to take you back a bit. I co-founded Wellington in 1994 with Jada Hill, and we built the business over 26 years. Really in the 1990s, we were an event logistics company and we evolved to really being a global experience design and community building agency. And over the last 20 years, we added departments in digital marketing, gifting, production, and community building. And we just continued to be one of the region's fastest growing companies and grew the business every year for 25 out of the 26 years.

Kelly Scanlon:

Remarkable.

Joan Wells:

It was. And the reason we kept doing that is we kept asking ourselves, "What's next? How can we pick up that flag, run ahead of the competitive market and put our flag in the ground in a new location further ahead?" And Jada and I knew that we wanted to solidify a long-term future, and asking, "What's next for us, now?" That would be far more vibrant than the one we would accomplish on our own. So, even with our consistent high growth rate, we were ready to take things to the next level. And it was important to us that Wellington headquarters remain in Overland Park and our leadership team all stay in the same place.

Kelly Scanlon:

So, you were looking not to exit the business, you were looking for a partner that would allow you to run to that next place further ahead and plant the flag again.

Joan Wells:

Yes, we really wanted an acquisition by an acquirer that would really value our deep roots in technology, our agency model, the extensive line of experience design services, and really say, "Gosh, this is a great example of where one plus one equals three," so that both organizations would achieve something extraordinary collectively, that would not have been possible otherwise.

Kelly Scanlon:

I love the way you phrased that, "The one plus one equals three," that together you're better than either one of you are individually. I just love that way of thinking. You mentioned technology, drill down on that a little bit and tell us more about what they brought, that's going to allow you to enhance the things that you do.

Joan Wells:

So, what Augeo does is they have technology platforms that engage stakeholders for brands. So, whether it be their employees, or their consumers, or their dealer groups, they have motivation platforms and communication and community building platforms. And that is an area that we had been trying to solve for, for years. We knew that we weren't going to really create and market our own platforms and we really were working with a variety of different partners to try to fill that gap. So, this was really something that was magical for us in terms of what we had been looking for.

Kelly Scanlon:

How did COVID affect you? How did you navigate through that challenge, through the challenge of COVID, the curtailment of in-person events, all at a time when you knew that you were trying to prepare to sell your company or to find an acquirer?

Joan Wells:

So, it was really interesting because of course, the immediate impact of COVID back in March of 2020 was exceedingly challenging and that live experiences, which are always the core of every company's experience strategy and for every association, those disappeared completely. But really what happened is that, as I mentioned at the beginning, all those broad range of services, we developed an experience design.

Joan Wells:

And then, also our agency model, which is focused on client service, regardless of what we're doing for them, and our deep roots in technology, we were able to quickly pivot and provide our clients the right solutions for the time, because their objectives didn't change. They still had to accomplish what they needed to do in business, but our way of solving for that changed. So, in place of producing live experiences, we were able to transition clients to virtual experiences or gifting solutions or digital marketing strategies, to set them up for success.

Kelly Scanlon:

And I would think that given your focus prior to COVID on experiential kinds of events, that you really had an advantage when it came to virtual, because one of the things I have heard from people is, that companies converted over to virtual, but they didn't necessarily do it well. I would have to imagine because you were so used to experiential events, that you already had an advantage there.

Joan Wells:

Kelly, you're exactly right. We were able to take an experience design lens to the virtual platform. So, instead of just creating a virtual event as a band-aid so that you can do something this year with your stakeholders, and then you pivot back to live, we knew right away that we were onto something special because when the entire world at one time adopts this particular type of technology and particular way of communicating and gathering, all at the same pace, you know it's not going away.

Joan Wells:

So, we tell all of our clients that virtual should be an ongoing part of their marketing mix, get better and better and more sophisticated at what you're doing in that realm and continue to do live experiences, of course, but these virtual experiences will augment live experiences and be a permanent part of how we communicate with brands and with our communities.

Kelly Scanlon:

Tell us about how the impact of COVID and the fact that so many others were going virtual or forced really, to go virtual, how did that impact your discussions with potential buyers?

Joan Wells:

So, that was a really interesting process. It's been an amazing year. Luckily, we aligned with Country Club Capital because I knew many of the folks in leadership there and I knew they were great, highly respected, innovative team, and we engaged them in December of 2019, really with the intention of finalizing a buyer within four months, and they were all over it. And probably in the worst timing in history, the beginning of March 2020, we had started conversations with many highly interested parties. But with COVID, within a matter of a couple of weeks, most wanted to put the conversation on hold until they could see the end to the pandemic. And at that time it was kind of funny, they were thinking the pandemic would be over probably late summer or fall.

Kelly Scanlon:

Yes, we all did.

Joan Wells:

Yes, exactly. And our leadership team though, we met as a whole and we felt that the companies that would be poised for high growth in the future would be those that leaned into new lines of business and opportunities during 2020, instead of waiting. And so, we thought we want to find another company like that. We were a little unsure if we should pause the acquisition process or not, but Country Club Capital was full steam ahead because they could see the situation as well, as an even greater opportunity to find the right buyer who had our same mindset.

Joan Wells:

And so, we first started talking to Augeo, obviously via Zoom, back last April and it was really refreshing to have conversations with a company that was moving at the speed of light, just like Wellington, really navigate their own clients through the pandemic. And we had great conversations ideating on really what was next in our industry, and in the can-do spirit of the three of us, with Country Club Capital, Augeo, and Wellington, we brought Augeo, their leadership team, to Kansas City for a socially distanced site visit last July.

Joan Wells:

And that's how we met each other, masks and socially distanced and spent several days together, getting to know each other and visioning on what our collective future should be. And we all agreed that many companies were hunkering down during 2020 and waiting for the business climate to get better, and we were just doing the opposite of that. We were readying ourselves for what's next.

Kelly Scanlon:

Right.

Joan Wells:

And really, it was interesting, those conversations we had in Kansas City led Augeo to bring Wellington in as a partner on a client engagement project for 80,000 employees last September. So, we actually had this extra bonus that we got to work together prior to closing the deal as well.

Kelly Scanlon:

That had to be a really fascinating experience because so often people forget that when a company merges or is acquired, it's not just the financial goals that are at stake, there's culture, that has to be connected as well. And so, you got to see how your different associates worked with one another, and not all companies have that benefit.

Joan Wells:

That's very true.

Kelly Scanlon:

So, you got to work with Augeo. You got to see what their associates were like to work with. They got to see you in action. It looked like a great fit. You moved forward with the acquisition. I asked you what Augeo brought to the table for you, but what is it that you're now bringing to the table for Augeo and their clients?

Joan Wells:

So, really, as the experience division of Augeo, we're able to provide clients, world-class platform technology that engages key audiences and we now have the resources and expanded client base to scale rapidly. And then, in addition, now Augeo is able to offer to their clients, the talent, technology and expertise within the experience design industry that keeps them at the forefront really of loyalty and engagement industry and positions us as the worldwide leader in live, virtual, and hybrid experiences.

Kelly Scanlon:

You and your co-founder, you mentioned, Jada Hill, you co-founded Wellington, and each of you owned 50%. Some advisors advise against 50/50 relationships because it makes it very difficult for someone to be able to pull the string on a decision. You were the CEO, Jada was the president and so, with that 50/50 split like that, how did you learn to make operational decisions together over a 20 year timeframe?

Joan Wells:

One thing that was really helpful is that we were both in similar life stages. We were both in our 20s, we'd both had babies. We added each two more children, a piece, to our families soon after, and we were navigating all this as a team from similar perspectives, and I think that was really helpful. But then, we also, we're really different people and so, we appreciated each other's differences. And through the years, over 26 years, we gravitated to lead those areas of the business that really, that were most intuitive to each of us.

Joan Wells:

So, Jada gravitated to finance and operations, and I gravitated to marketing, sales, and people. It's interesting, it's like we use the Culture Index as a hiring and management tool and that additionally, taking that, and we use it for all of our hiring and stuff, but it confirmed how different we are, but yet that we're a great balance to one another. So, even the way we process information or make decisions or handle research, all of that, we do very, very differently.

Joan Wells:

So, the two of us together then, really complete each other in terms of, from a leadership role. Thing that we both agreed upon is that we wanted from day one, to work on the business versus being immersed in the weeds of the business. And so, we were always very quick to hire as we were growing and to empower those folks, to be able to make decisions and become leaders themselves within the company.

Kelly Scanlon:

You and Jada made one of the most important decisions that business owners can make, and that is to sell, to have someone acquire Wellington. And that's not always an easy decision to make because both owners aren't always in the same place when it comes to that. Talk to us about how you were able to come to a decision simultaneously, that this was the right time for this kind of move.

Joan Wells:

I think a lot of it was about five years ago, we started having the conversation about setting Wellington up for success, at that next level. As we realized that we were experiencing consistent high growth, but to get to a point of truly explosive life-changing growth, it's not something that we could continue to accomplish on our own. We were a debt-free company. We had always been debt-free and other than a capital infusion, it really takes a synergistic type of partnership or a significant change, in order to achieve that level of growth. And we felt that starting around five years out, talking about it and looking at it, it was a really good timeframe to give us the grace and space to learn the process of selling a business. We knew we were only going to do it once in our lifetime, and to ensure we had all the right people on the bus, in the right seats, for the long-term.

Kelly Scanlon:

You're staying on. You are the President of the Experience Division. And sometimes when a company is acquired and the founder of the company that was acquired stays on, it's still a different company, decision-making is different. And what is it about Augeo that made you so sure that this was the right match for this particular kind of situation? What did you look for, knowing that you wanted to stay on?

Joan Wells:

Well, what we looked for was an understanding and an appreciation of our leadership team, collectively, what we brought to the table and therefore, a willingness to keep all of these key folks, which their tenure ranges anywhere from five to 17 years. These are amazing leaders. That they recognized that and said, "We want to keep these people in place, intact." I love what I do. I just love this work, and for me to be able to continue doing that is just a joy. So, that was obviously something that we were looking for.

Joan Wells:

And then in addition, it's that cultural fit you were talking about, and you really don't know if you have it until you start talking to people and really getting to know them and understanding at the core, who they really are. And one of their core values, Augeo's core values, is earnest. And I thought that was really interesting because that's really one of my favorite words. It has so much that goes into that word about humility and intention, and always wanting to just do the right thing and thinking of others. There's just a lot that goes into that word. And so, I would say that, that's what we saw in them, is they really represented that type of culture that we see and value in each other when we were Wellington.

Kelly Scanlon:

So, as a potential acquirer, you saw their culture as being a mirror of your own, essentially?

Joan Wells:

Exactly. We really, really did. And I just think that is so important and I think that one of the biggest pieces of advice I have for people that are going through this process is to develop personas of particular buyers. What do they need to psychographically think like, and be like? That need to feel like to work with them. What is it like to communicate with them? And design that. And then, you should look for people that fit that instead of just starting wide open and looking at everybody, because you do see a lot of people who are willing to do a great deal with you, but you just can't picture yourself working with them or your top people working with them. And you'll know that right away, if you take the time to think it through on the front end, before you start meeting people.

Kelly Scanlon:

You mentioned something very important earlier, you said that you started about five years out, thinking about this day, when you would look for someone to acquire you, sell the company, because it's not something that happens overnight. From the time you decided to do it until it happens, it might be a fairly short time period, but there's really this period where you have to prepare the business for sale, and that covers a lot of different things. So, talk to us about what that means, what it meant for you?

Joan Wells:

For us, a lot of it was just continuing to do what we were already doing, which is honing in on our competitive differentiator in the marketplace, that is what really increases our value. Continuing to round out our leadership team and bring up some emerging leaders in the company to that team and make sure that they're highly charged to see the future potential of the company, and to lead through challenging times and times of high growth, was really important.

Joan Wells:

It's also important to document all of our operational processes and systems, as those are the core of any business. And also, one of the things we did a couple of years ago, was we brought in an EOS consultant and we went through the EOS process over several years, which is a key part of that in addition to operational efficiency and operational excellence, is tracking and visioning for the future.

Joan Wells:

So, we have ongoing one, three, five, and 10 year goals that we are pursuing. And the really fun thing about it is with our expanded leadership team, post-acquisition ... And we have a few folks from the Augeo side that serve on that team as well and one of them is my boss, Joe Keller, from Augeo, and we were able to get together and re-imagine what does the future look like collectively? So, it's been really great, a lot of that future planning and thinking, we're just continuing that, continuing the work that we've been doing in operations and that, but just at a more intensified level, post-acquisition.

Kelly Scanlon:

You mentioned value and obviously to get the most value or the value that you think after all the years of blood, sweat, and tears that you put into a business, this isn't something that you really undertake on your own. You need obviously, to surround yourself with a team of professionals who know the ins and outs of mergers and acquisitions. So, who do small business owners need on their team to ensure a smooth sale?

Joan Wells:

There is a number of people that I think are just indispensable. And the first is, that getting an amazing investment banker is step one, and really aligning yourself with a very bold, highly connected, innovative, really detail-oriented investment banker, and make sure that they are willing to play a variety of roles. So, there should be someone who is quarterbacking the project. There needs to be someone that is doing outreach to potential buyers and has a huge Rolodex in that area, I guess, if Rolodex is still a word. And that has a plan to really pinpoint and engage the right potential buyers.

Joan Wells:

And I would say perhaps, the most pivotal role in the whole process are the analysts that an investment banker has on staff, because they lead all the financial analyses. They are the center point for all the due diligence process. They can lean in on tax issues. They're the ones that are on the phone with you at midnight on a Saturday night and finalizing all of this work. And I would say, it's probably something that I didn't even think about before starting the process.

Joan Wells:

And then also, you need an accountant who can advise you on the business sale ramifications and personal tax ramifications of a sale. Informal advisors that you can trust are super important. I had a small inner circle of financial advisors and just friends who have gone through the process, that was really super helpful. And a great attorney, who can envision the wide possibility of future scenarios that could occur and then, structures the deal to be a win-win for all the stakeholders involved.

Kelly Scanlon:

A really well-rounded team there. And I think one of the things that bubbles up and surprises some business owners is the emotional component of selling. Even though, for example, you're staying on, it's different. And I think especially for business owners who sell and exit immediately, there's a huge emotional stake in that business, that you have birthed and grown and are now sending off to live without you. And so, somewhere on that team, whether it's your family or whether it's a close group of friends there, it strikes me that there needs to be someone who is providing that kind of support as well.

Joan Wells:

Yes. And that's where those informal advisors ... I would go to lunch with people regularly, and just people who can ask you questions that help you self-reflect and understand questions you need to be asking in the process. People who maybe help you as well, be able to articulate the why behind the decisions you're making, because you need to be able to do that. And so, I'd say, informal advisers who not just being cheerleaders, but they can challenge you as well. It's really beneficial.

Kelly Scanlon:

For other business owners who are contemplating selling or exiting their business, what final advice would you leave them with?

Joan Wells:

I think the biggest thing is when I first started learning about the process of selling your business, people kept talking about a transaction and I absolutely hate the word transaction. I hate as it relates to anything that we would ever do for a client, I would never want that to be transactional. And so, I chose to think of it as transformational. So, to really think of how do you create a solution for your business that is not transactional? Don't focus on the transaction, focus on the transformation, and then when you do that, everything else really aligns into place.

Kelly Scanlon:

That is great advice, to be able to think about the future like that, just a great Kansas City success story over the last couple of decades. Congratulations. And thank you for your time today to share that story with us.

Joan Wells:

Thank you. I'm grateful to be here.

Stephanie Siders:

This is Stephanie Siders, Vice President of Investment Banking at CC Capital Advisors. Thank you to Joan Wells for being our guest on this episode of Banking on KC. COVID-19 caused massive disruption to the live events industry in 2020, and in what many people would regard as a terrible case of bad timing, just before COVID hit, Joan and her co-founder had started to search for a company to acquire Wellington. Undeterred by the pandemic, Joan and her team embraced the challenge head-on and came out stronger on the other side with a new partner that will lead Wellington to even greater heights.

Stephanie Siders:

That kind of strategic pivot and execution-only happens with committed leadership, an unwavering vision, and a robust entrepreneurial spirit. At CC Capital Advisors, we are committed to helping entrepreneurs like Joan, execute middle-market transactions, when they are ready for the next phase in their company's life. Come talk to us if you are a business owner who is interested in an M&A transaction. We can discuss how to develop a strategy and execute it, while allowing you to do what you do best, run your company. Thanks for tuning in this week.

 

Country Club Financial Services, Inc. dba CC Capital Advisors, Member FINRA, SIPC

Country Club Financial Services, Inc. is a subsidiary of Country Club Bank