Sell Your Business, Stay in Control

The head of a property management group talks about why she let go of a majority interest and what the process taught her

by Karen E. Klein

Can entrepreneurs sell their companies but still retain control over their destinies? Yes, says Melinda Masson, CEO of Merit , a property management group based in Southern California. Masson recently sold a majority interest in her $35 million firm to FirstService, a diversified property services company with more than $1 billion in revenues and 12,000 employees worldwide.

The deal allows Masson to retain the balance of the equity and continue to manage day-to-day operations. She spoke about the sale with Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.

How and when did you start your company?

I started it in 1980 with two employees and myself. We had a business plan that was out of the norm for the industry at that point. Most property management companies focused on marketing to existing homeowners and condo associations.

We decided to target new associations in areas that were being developed, and we created relationships with developers on the front end, before the projects were completed. The concept proved to be successful. Over the last 26 years, it's grown into three companies with nine regional offices in California.

What made you think about selling?

We were interested in moving outside California and into other high-growth areas of the country. There were two national companies already operating in our space, so the question was, did we partner with one of the existing national firms or hook up with another regional player to try and become a third national business?

As an entrepreneur, at some point it becomes obvious that if you want to take your company to the next step, you need a partner. I didn't have a family member waiting to step up in terms of a succession plan; my children are still teenagers.

So I created a focused plan in 2000 to take my company to the next level. The challenge I gave myself was, besides being the visionary focused on development, I needed to immerse myself in our operations. I didn't want to just understand it but to get into the belly of the systems and processes we had in place and improve them.

What other kind of preparation did you do to get the company ready for a sale, or a strategic partnership?

I did a lot of personal preparation, soul-searching, and training. I wanted to make sure that I was as close to the top of my game as possible when I went out into the marketplace. It was the hardest journey I've ever been on. I felt an incredible sense of responsibility. I take it personally that I'm responsible for my employees, and what I do impacts their livelihoods and their families.

What kinds of options did you consider?

I thought about buying a smaller firm, growing our firm larger, selling out to one of those two national players, even creating an ESOP [employee stock ownership plan]. I ran through all the options to give myself and my employees the best opportunity.

It took me 18 months to align with a strategic business broker. I found it was important to take the time to make that decision. It's a marriage. Sometimes you're in sync with your broker, and other times you want to pull out your hair and pound sand. You have to have a lot of trust and confidence that they know what they're doing and have your best interests at heart.

How did you find the right broker eventually?

I used personal and business referrals, and then I checked the living daylights out of their references. I wanted a broker that was large enough to be a player but small enough to consider me a valuable client.

How long was the sales process?

It took a year to complete. If you try to do it faster than that, you'll short-circuit and miss things. I thought when we started looking for a prospective buyer list it would turn up 10 or 15 companies.