Birko Corporation was started 70 years ago in Kelly Green's grandparents' garage and continued as a family business into the third generation. Then, three years ago, she sold the business — even though, as she told attendees at the Denver Smart Business Dealmakers Conference, she never imagined she would.
Coming into the family business as the third generation, Green says she inherited a lot of interesting issues. However, she says she realized that while there were things to fix in the business, it still needed to behave like a family-owned business and have that culture and feel.
"Otherwise, if we took that culture out of the business, it would implode," she says. "But realize that the business needed to behave like an actual business."
To do that, she says she and now-former CEO Mark Swanson set out to determine who would be a good partner and what that would look like. Once she found the right one — PE firm Class VI Partners — she says she worked with them for some eight years as advisors and board advisors. They would meet monthly to look at the good, the bad, and the ugly. From those meetings, difficult conversations were had around a lot of the "ugly" that needed to be fixed and what it was going to take.
"It took time and a whole lot of grit and believing in each other and the team," she says. "And we lost quite a few people during that time. But then we actually started to realize that the culture that we really needed to take forward was the team that wanted to pull up the bootstraps and actually get the job done to take that third generation forward."
Though she ultimately sold the business, she says from her perspective, the business was never for sale.
"I never wanted to sell the family business. I wanted to take it to the next generation," Green says. "But then realizing where we were — we became a very well-oiled machine. And we were essentially approached. We were not seeking out. We were actually on the buy side, actually looking at an additional company that would complement our service and our business models. So, it came to a very quick decision."
To prepare the business for a transaction, Green says she recognized that she needed to hire an outside CEO — Swanson — something that can be challenging for a family-owned business.
"There were a lot of obstacles to go through that," she says. "And really, that was the DNA of Birko is hanging your ego at the door, and let's find the right people to get the right seats, and capitalize on everybody's strengths."
Together, they determined that working with Class VI presented a great opportunity to help Birko create a blueprint that identified where Birko's weaknesses were and what they're good at. Then she says they built that that model from there.
Looking back on the process, she says something that helped was that she and Swanson were extremely transparent with the team up to the point where they couldn't be with some of the things that were going on — something she says was difficult given the tight-knit culture and a tight routine. And working with an outside agency, she says, really helped bring confidence to the table.
"When our buyer said what kind of business is this, they weren't speaking with us they were speaking with (Class VI), with counsel," she says. "And (Class VI) understood all the legwork, understood all of our Intellectual Property, all of our patents all of our contracts, because we had gone through the house cleaning exercise essentially with (them) and that brought a huge amount of confidence to the table immediately."
