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The Founders of Wild Apple Graphics Talk About the Sale of The Company

Wild Apple founders John and Laurie Chester

John and Laurie Chester are the founders of Wild Apple Graphics. Wild Apple licenses original art, design and pattern collections to manufacturers, retailers and designers of decorative wall décor and home furnishing products. They met with other M&A advisors, but chose Venture 7 Advisors to bring their company to market early in 2019. Venture 7 reached out to thousands of potential buyers, and along with the Chesters, presented the company to a large number of prospects in their industry and related fields. The offers that came in didn’t meet their expectations, and we collectively decided to pause the process.

In 2021, we brought the company to market again, and in mid-2022 ownership of the company was passed to Shawn Harned, Wild Apple’s Chief Operating Officer, in a management buyout.

After the closing, we talked with the Chesters about the process. Read that conversation below:

Why did you decide to sell your company?

After 33 years of carrying the responsibility for the company, day and night, we had delayed our personal interests and passions, including traveling and visiting with family and friends who we want to catch up with. It took several years to get used to the idea of exiting, but we felt that the time was right to pass it on to someone who would care for the company and team. The way everything worked out, we’re walking away with total confidence in the new owner and the team, which makes it comforting to leave the company.

Why did you decide to pause your sale process back in 2019?

Working with you guys [at Venture 7] helped us to see our company in a different light – it was kind of a reality check where we could see our strengths and weaknesses more clearly. When the Indications of Interest from buyers didn’t meet our expectations, we decided to take a timeout to concentrate on improving the company’s performance to build value. It was just that simple. The decision set our timeline back, but it was actually not a hard decision to make.

That was just before the pandemic. How did the pandemic impact the company and your plans for a sale?

When the pandemic first hit, our business dropped off so dramatically that we thought we were in danger of going out of business. We furloughed some staff, cut back hours, and went remote. We found a lot of ways to streamline and cut costs. We embraced the concept of outsourcing non-core specialty functions like accounting and HR administration. We brought in a part-time CFO on a contract basis, who is still with the company, and switched from in-house Great Plains accounting software to Quickbooks Online. We implemented Slack as a communication and collaboration tool, and adopted heavy use of Zoom for meetings with customers, artists and employees. We moved the image library archive at the heart of our business from an onsite server to the cloud, eliminating in-house computer expenses and providing secure backup.

We had been so focused on the day-to-day running of the business, and the pandemic slowdown gave us the chance to step back and take the time to implement management changes that had been postponed for years, to streamline operations and to cut costs.

And it was a revelation to see how well remote worked for everybody. Creatives tend to be introverted and the remote model turned out to be introvert heaven. They love being able to do their work without the interruptions that naturally happen in an office. And with so many of our people working remotely, we just didn’t need as much space. So, we sold the building and rented smaller office space, which contributed nicely to the bottom line.

On the revenue side, while our traditional channels into bricks & mortar stores declined, our online customers boomed. We were able to gradually bring back some furloughed employees and restore full-time hours, and fortunately government support during the pandemic kept people whole for the most part, including retirements and voluntary resignations total headcount is down from 30 to 22.

The pandemic forced us to act and get more efficient. There were plenty of bumps on the way there, but the results are paying off. In the end, we had a sense of “Why didn’t we do these things before?”

How was the second approach to the market different from the first, and what did you think of the potential buyers who came to the table the second time around?

For openers, the company’s financial picture was much better the second time around, so we were more confident going back to market.

In the first round, Venture 7 introduced us to buyers from our industry or related industries. But the second time, we were surprised at how many of the buyers came from different variations of the private equity world. We had the sense that a lot of those folks viewed Wild Apple as a financial play, but that some of them didn’t have much of a feel for the things that drive our business – the art, the creative process, and the nurturing of the artists.

Through those conversations our COO, Shawn Harned, grew more comfortable with the independent sponsor model and he decided that he would like to own the company. Selling to Shawn was an ideal situation for us and the company so we all worked together to make it happen.

Why did you ultimately select your COO as the buyer?

Shawn has essentially been running the company since early 2021 when he became the Chief Operating Officer. We all realized that if he could arrange the financing, a management buyout would be the best possible outcome. We have to give credit to Shawn, because during that pandemic period, before we took the company back to market, he was the one who pushed hard for streamlining operations, which contributed so much to the strength of the company, and ultimately to its value. With his background as a true sales professional, he brought a sense of discipline to our sales efforts, which has been very advantageous to the business.

As it turned out, the decision to work out a management buyout worked out incredibly well — we couldn’t have scripted this outcome if we tried. Some of the conversations we had with other buyers just … didn’t feel good. We could see that the emphasis would be on financial performance, which of course is important, but in this business the creative, human element is key. We had higher offers from other buyers, but the arrangement with Shawn was clearly the best for the company and the team. We didn’t want Wild Apple to be just a portfolio add-on for an investor.

Right from day one, we’ve always treated our artists very reliably and respectfully — Wild Apple has always been very much like a family. We understand artists who depend on their art for their livelihood, and we always paid fairly and paid on time, which is not always the case in this industry. So we felt that leaving the company in the hands of someone who understands our culture and our commitment would be the best way to preserve that legacy. That continuity is important.

What’s next for you?

Our bucket list is ten miles long, and ranges from the exotic to the mundane. I don’t want to brag, but I cleaned the entire garage! It’s clean, it’s neat, it’s organized. Wild Apple was so consuming for so long, and now we have the flexibility to visit with our children and grandkids. We have lots of travel in store (including Italy and Greece and Africa), lots of mountain biking, skiing, hiking, painting, reading, gardening, kayaking and catching up with friends. It’s going to be really fun. We intend to embrace our insignificance, as they say.

How was it working with Venture 7 Advisors?

When an owner decides to sell their company it’s very confusing entering that arena. There’s the classic scenario where the owners have certain buyers in mind — companies that they think will surely be interested in buying the business. But they can be quite wrong about that.

Venture 7 came to us with a proven process in place for taking a company to market. First, it was really helpful to have a realistic valuation. Then there was your process of discovery, to understand our business in detail, and to put together a book with all of the data that had to be there in order to present the company to buyers. As we said, this process made us look at our company from objective perspectives. Our business is pretty complex, and you guys took the time to dig in and really understand it, and then structure the presentation in ways we would have never come up with.

We were impressed by the way you used multiple avenues to build a list of potential acquirers, put the word out in a structured and organized way, and managed that sales funnel. The outreach process got really complicated — on our own we would have never been able to manage the flow of communications with so many leads, and do it in such a professional way.

You know how to pick up the phone and connect with people to represent the company. You understand the process and you understand small business, which is not always the case with some of the larger M&A advisory firms. There were certain points where I think we needed some “tough love”, and you appropriately pushed us in uncomfortable directions at certain times.

And you never gave up! In the first round, when there were offers that didn’t feel right, you didn’t say, “Look guys, you’re never going to find what you’re looking for, take the offer and have a nice life.” You guys were unflappable. Then throw a pandemic in there, and you’re still unflappable. It was really great. Your attitude was always, “adjust, adjust, adjust. Here’s another challenge – we have to work through this.”


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