Anatomy of a Sale

These guys made buying a business look easy

by Virginia Lindauer Simmon

Jon Cunningham is so pleased with his purchase of Minuteman Press that his brother, David, plans to buy the building.

Jon Cunningham wanted a change. For 18 years, the Newport native had been in the screen printing business: first for InPrints in Burlington, where he worked from 1984 to '91; then, from 1991 to '93, at Ad Art America, a small company in East Barre; and finally, as production manager for Select Design on Flynn Avenue in Burlington.

Things were not going well for Cunningham at Select Design. Realizing his days were numbered, he took an inventory of his skills and experience and decided maybe it was time for him to consider buying a business of his own.

Cunningham began contacting business brokers to get a feel for what was out there, and in October 2002, having left Select Design, he got serious. Through John Beal of Vermont Business Brokers, Cunningham learned Minuteman Press in South Burlington was for sale.

"This was one of the very first ones that piqued my interest," says Cunningham. "I looked at maybe four or five other businesses, but this was always the one I thought was a great mix."

In 2002, Paul Jansen had owned Minuteman for five years. Unlike Cunningham, Jansen had spent his entire life involved with business ownership. "I like to buy businesses, grow them and sell them," he says.

A native of Buffalo, N.Y., Jansen grew up working for the tack business owned by his family since the late 1800s. "On weekends, I would load up the van and travel around to horse farms, pick up things for repair, sell stuff, etc., etc.," he says.

One weekend, he found himself visiting the Keppler farm, where he met Martha Keppler, his future wife. "It turned out our grandfathers and our parents knew each other," he says. "We just had a lot in common, kind of hit it off, and the rest was history." He adds that Martha stays connected to her ancestry by taking their three boys back to western New York for five weeks each summer, where she helps her sister run the family's riding camp.

Before they came to Vermont, the Jansens had lived in Lebanon, a city in southern Ohio, for years. With some partners, Jansen owned Culligan water conditioning companies around the Cincinnati- Dayton-Middletown area. Realizing he was getting fed up with the Midwest "because, other than golf, in southern Ohio, there's not much you can do; there are constant smog alerts; and it's just so blazing hot" and ready for new challenges, Jansen turned his eyes north.

"I went to school at Plattsburgh State," he says, "and was just familiar with this part of the world. I wanted to come to someplace where you could enjoy the winters. I like to do things outside. I ski, hunt, kayak, canoe, backpack and run."

Paul Jansen sits in his office at Roy's Housing, the business he bought after selling Minuteman Press to Jon Cunningham.

At first, Jansen contemplated buying a business in Lake Placid. He soon realized, however, that "unless you want to be an innkeeper or run a tourism-related business," Lake Placid was not the place to settle.

Jansen spoke with the owner of Minuteman Press in Lebanon, whom he knew. "He introduced me to headquarters, and they thought it might be a good idea." The Burlington franchise was for sale, and, having sold the Culligan franchise back to corporate, Jansen was ready to move north with Martha and their three children.

When he bought Minuteman, it was located in an industrial park on Avenue D in Williston, "in the middle of nowhere, with no presence or anything," Jansen says. "The guy I bought it from was an absentee owner; it was a foundering ship at sea." He knew Minuteman needed more presence in order to grow.

"I could clearly see to own a business, you have to have it where people could see it," he says, "so I moved it to Williston Road three years ago. That was, frankly, cheap advertising. I couldn't have gotten that exposure out of the Yellow Pages."

In the five years he owned Minuteman, Jansen turned the business around, tripling the sales. By 2002, he had reached what he calls "a kind of plateau. It got to the point where I had to reinvest more money and grow it bigger in my own mind and get to the next step. I just didn't have the desire to do that. In my little world, I had grown it to the point where it was a going concern, and it was time to sell it and move on to something else."

Enter Cunningham, who realized this was the business he wanted to buy and needed to move quickly in order to have an income. "John Beal interviewed me for 15 minutes and determined pretty quickly that I was a pretty good-looking candidate for this business," he says. "I'm sure that if I went in there and had experience with some other business, and if I didn't proclaim how much money I had versus what the business was being sold for, I might have been filtered out."

Knowing his job with Select Design was coming to an end, Cunningham and his wife had downsized, selling their Huntington home for one in Montpelier that included an apartment to help with mortgage payments. "Moving from Huntington Hanksville, the most rural part of Chittenden County and miles to the nearest store to Montpelier, it was like moving to Paris for us!" he exclaims. Montpelier only added 10 miles to his commute, he says, and made the commute 10 minutes faster because of Interstate 89.

"When he found out I was a good match, we filled out some non-disclosure forms, and eventually I had to show I had the right amount of cash to do the deal."

Not having bought a business before, Cunningham expected things to move quickly once an offer was made. He was in for a surprise.

"It did take a long time," he says, adding, "Well, the procedure for making an offer and counter-offer that took a long time for many reasons: Paul went on vacation for a week, then John Beal went on vacation for a week. But the whole banking experience, which I thought would be the hard part, was a breeze, because I had a great banker Phil Brown at the Williston Branch of BankNorth and a good credit rating.

"I was preparing myself for a lot of hard work, a lot of paperwork, and it was quite remarkably quick and easy. I submitted my loan right before Christmas and had financial approval two days after New Year's, on Jan. 3. I got everything I asked for. I got a VEDA loan through BankNorth. They're fantastic!"

The only roadblock now was that Jansen still didn't have anyplace to go.

Because he couldn't afford representation in the process, Cunningham admits that he found himself relying on Beal a bit more than good business practice would dictate. "That was probably a little bit of a mistake," says Cunningham, "because he represents the seller. So maybe it was a little bit of a mistake not pursuing the relationship with Paul right away, but once it kicked in, it was great."

"I wasn't brave enough to sell without having something else to go to," says Jansen. "I was frantic to find another business, but he was frantic and unemployed. I said, 'Why don't I hire you, and you can learn while I'm paying you?' I needed a body, and he's a level-headed, competent guy, and in turn, I got some activity out of him, and he shadowed me for a matter of weeks."

Jansen admits it was a risky move, because Cunningham could have joined the business and decided it wasn't for him. "I've been through enough bad deals, because I've bought and sold enough businesses over the years, so I know how I'd want to be treated," he says. "I went into this treating him like I would want to be treated. And because of his character he's got integrity, and I like to think I'm the same it worked out well. I'd never heard of that being done before."

Gratefully, Cunningham leapt at the offer and went to work for Jansen in March. "He was honest about it he couldn't jump off the bridge without the parachute so it was always obvious it was going to happen," Cunningham says. "I think the big thing about this deal was that he hired me and I was able to learn and train."

Cunningham went to a 21/2-week training session at Minuteman's headquarters on Long Island. "Working here for the seven weeks was hugely helpful," he says. "Things would be a lot different now if I hadn't done that."

He admits to a bit of discomfort during the seven-week period, because he was not allowed to say anything to anyone not even his fellow employees about his plan to buy the business, but "everybody understood when the cat was out of the bag, and it's worked out just fabulously for me."

The seven weeks also worked out well for Jansen. He was able to do the work necessary to buy Roy's Housing in Highgate Center, a business he sees a great future for. "It is what started out as a multi-section mobile home dealership, selling singles and double-wides," says Jansen. "What's happening across the country is modular construction, stick-built in a factory, and I bought this for the potential of growing the modular business and looking at affordable housing or the lack thereof in the state of Vermont." He points to a colonial home at the back of the property as an example of the graceful kind of building that's possible with a manufactured home.

"Transactions like these aren't easy," says Jansen, "but I've got to give credit to John Beal at Vermont Business Brokers, too, because he's also of the mindset of a win/win. It can't favor either the buyer or the seller in any transaction. Here we are five months after I sold it to Jon, and he still likes me; and that's how it's supposed to work. There are no surprises. I held nothing back didn't blue-sky it and he saw for himself what it was. I'm still a part of this community and had to make sure I did things where I could still hold my head high and still have a reputation around Burlington."

Cunningham echoes this. "There was mutual trust that still exists," he says. "Paul's a friend who pops in here at the office every once in a while." Of his newly bought business they closed in May Cunningham couldn't be more delighted. "I've inherited a great staff," he says.

John Beal, the owner of Vermont Business Brokers, guided Jansen and Cunningham through the labrynth that ended in their successful closing.

Since he bought the business, says Cunningham, "we have completely upgraded the prepress with all new Macs. We have more computers than we have personnel: there are nine terminals, six employees, including me. It's pretty full-service," he says, mentioning graphic design services, a Heidelberg two-color offset press, a two-color envelope press and a digital Xerox Doc-12 high-end color output machine. "It's great for short-run color, up to 500 pieces." It's obvious that both parties to this deal are happy.

"A lot of times, we're trying to sell the sizzle," says Beal. "The important thing for business acquisition the most important thing for a buyer to ask is whether it is something I will enjoy doing. If it's not something you can enjoy, the financials are not even worth taking the time to look at.

Hiring a potential buyer of one's business is one of the methods by which transfers can occur, says Beal. "However, there can be pitfalls, because then the employee learns all the idiosyncrasies of the business before he has to commit to ownership; but it is not uncommon for a business owner with a high level of confidence to bring somebody in as an employee and say, 'Here, learn all about my business first.' The advantage is that you perform the transition assistance prior to the sale, so that once the sale is concluded, the old owner can move on immediately to doing other things."

Cunningham has slid easily into the membership opening at Burlington Rotary Club left by Jansen when he transferred his membership to St. Albans. "Maybe he'll become as involved as Paul," says Beal, adding that both men appear to be committed community members and family men.

When Jansen bought Roy's Housing, he did the more common thing, having the seller, Fred Solomon, stay on after the sale for a period. The two like working together so well, Jansen says, "we're trying to work out a way for him to stay here permanently."

Originally published in September 2003 Business People-Vermont