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Published in Small Business

Companies show how to make a deal during a global pandemic

BY MARK SANCHEZ and JAYSON BUSSA Sunday, October 25, 2020 04:28pm

The sale of Paragon Recruiting LLC, a small Holland firm that specializes in recruiting for the information technology industry, was two years in the making. 

Jen Bradshaw would eventually take over the business from Beth DeWilde using earnouts and putting what she would make in commissions to finance the transaction.

The deal proceeded during the COVID-19 pandemic with an expected close by the end of 2020. That’s a year earlier than originally planned and a reflection of how business in the I.T. industry has held up well in the age of COVID. Despite the crisis, Bradshaw and DeWilde never considered delaying the deal.

“We didn’t change anything and we continued to plug right along during the whole thing,” said Bradshaw, senior recruiter at Paragon Recruiting. “We are still doing well and are profitable.”

Bradshaw is not planning any changes to the business, other than moving the office from Holland to Grand Haven, closer to her home in Muskegon.

“We’re just going to continue to run as is,” she said.

The Paragon Recruiting deal moves forward as small business M&A rebounds nationally.

BizBuySell.com, an online marketplace for small businesses, last week reported that transactions were down 5 percent in September. That’s a significant improvement from the slowdown that resulted from the COVID-19 pandemic that drove a 21 percent year-to-year decline in July and a 51 percent dip in April.

Asset sales have become increasingly popular, and buyers are mostly seeking small businesses they consider “pandemic proof,” according to the website.

If a business has performed well or grew during the pandemic, “you’re going to be a very desirable ticket on the market” among buyers who have “come out in droves” looking for deals, said Max Friar, managing partner at Calder Capital LLC and Small Business Deal Advisors in Grand Rapids.

‘Job security’ in software acquisition

Among the recent sellers locally was Grand Apps, a mobile app, web and software developer in Grand Rapids with a digital marketing component. Owners Chris Ake, Jon Butler, Jacob Canfield and Johnny Brann Jr. sold the business to employees Tyler Kutt — who most recently served as head of marketing — and Brandon Ross.

While technology and digital development is not necessarily an industry that was rocked by the COVID-19 pandemic — in some ways it was quite the opposite — the uncertain times still registered with Kutt.

“It definitely set some alarms off with both Brandon and I not knowing how all this would shake out,” Kutt said. “I think (COVID-19) absolutely did affect Grand Apps, just maybe not as long as some other companies.”

Grand Apps is an established brand in the Grand Rapids market, providing both apps and custom software development for a variety of businesses, working with companies such as Haworth Inc. and the Van Andel Arena.

The pandemic’s effect on business showed the new leadership at Grand Apps that companies would likely be investing more in mobile apps and digital marketing. Kutt said he has already had encouraging conversations with potential clients.

“Once we sat down and thought about it and saw how things were trending, it was almost job security, really, as long as we kept working at it and stayed true to the brand and the work that we do,” Kutt said.

As the newly minted owner of Grand Apps, Kutt said he and Ross look to spend the rest of the year stabilizing the business before making any monumental changes.

“We’ve done much better than a lot of companies during COVID, but we have not come out unscathed by any stretch of the imagination,” Kutt said. “Really, as we’re transitioning and doing all this, it’s just about stability right now and making it through the rest of the year. Come the first of next year, we might start putting out some new product offerings and some internal, structural changes as well.”

‘Great time to be a buyer’

The pandemic has not only affected deal flow but also how companies come together after closing.

Grand Rapids public relations and investor relations firm Lambert & Co. closed on the acquisition of Fairly Painless Advertising Inc. in Holland during the first week of March, just as the pandemic was spreading into Michigan.

“This required us to do a swift turnaround in how we do integration,” CEO Jeff Lambert said.

The firm — which has three offices in Michigan, plus New York City, Washington, D.C., and Phoenix — used Zoom and Microsoft Teams to bring office staff together and integrate operations.

Lambert has made a series of acquisitions. He said virtual connections have actually made the integration process more efficient.

As far as making a deal amid an ongoing national crisis and economic uncertainty, Lambert advises others to hold to the basics: Decide whether a deal makes strategic sense for business, hire the right professional advisers, and perform thorough due diligence up front.

“If it’s a strategic benefit, it’s a great time to be a buyer,” Lambert said. “It’s certainly a market for the bold and the prepared.”

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