Episode 423: Making M&A a Force for Good

Corey KupferHannah Sandmeyer is the founder and CEO of Up and Over Advisors, the first certified B Corporation in the world dedicated exclusively to values-aligned M&A sourcing, and the founder of Steward Market, a live marketplace for ethical business transactions. She also co-hosts Ethical Exits, a podcast exploring how ownership transitions can protect mission, workers, culture, and community. A former Peace Corps volunteer turned M&A operator. I don't think you've ever heard that phrase before. I certainly haven't. Hannah works at the intersection of ownership, capital, and moral courage, helping business transitions become tools for stewardship rather than for extraction. She's based in Portland, Oregon. She's an avid cyclist, raising a preteen and a chicken named Greta, who believes she's a dog. I love that. I love it. There is so much I want to ask, and I will tell you, folks, that usually I do a quick fifteen minute, maybe twenty minute pre-call with guests, and we purposely, you know, it's just check in, get to know them, make sure they're actually right for the podcast and give them some information. We don't pre-discuss normally what we're gonna talk about, because as people who listen to the show know, it's conversational and I want it to be fresh. And despite all that, I think our pre-call ended up to be close to an hour because I was just fascinated by this amazing person and we had so much to connect on. So I'm super excited to talk to her. And Hannah, I wanna get into all of that, whether it's a chicken who thinks they're a dog or whether it's how somebody in the Peace Corps ended up doing M&A work. But before we do any of that, I wanna take you back to when you were a little kid growing up, maybe eight, ten, twelve years old, what did you want to be? Because I doubt it was M&A. I don't know if it was Peace Corps, but I don't know. You tell me. I'm confused.

Hannah SandmeyerYeah. I don't think I actually knew what M&A stood for until my late thirties or forties. So that was definitely not on the career path. No, Corey, I very cleanly wanted to be a civil rights lawyer for the ACLU. That was my dream. I grew up in Boise, Idaho, was born in Montana, so I like to tell people that I'm the original Hannah Montana. But I grew up in Boise, Idaho. And I was a gay kid. I'm a gay person. And although I was not out, growing up in Idaho, I grew up in Idaho living in an environment with my family in two very different worlds. My mom was highly educated, very progressive. My dad was deeply religious and a laborer, right? He wanted to go to school for art, and his parents didn't believe that was a good path. So he never went to college. But my mother did, she got her graduate's degree, and when my parents got a divorce, my mother remarried an attorney, a Columbia law educated attorney from Boston, who intentionally moved out to Idaho to do migrant farm worker work, working for Idaho Legal Aid. So I grew up around very different ideas, as you can imagine, around identity, class, morality, and what it meant to live a good life. And I'm using air quotes here. A good life, not just meaning a financially viable life, but how you move through life being a good person. And I was fascinated by civil liberties cases that were going on in the mid 80s, late 80s, early 90s as I was growing up and forming my own sense of morality and character. There's that famous case of the gentleman burning the American flag, right? And the ACLU defended their right to, as that was a symbol of free speech. Or what happened in Colorado with the fight for gay rights and whether or not states could enact laws to prosecute gay people. And then of course there was also the examples on the other side where you had the KKK putting up a cross in a town square, in a public square. And the ACLU defended all of those people. And when I was twelve or thirteen, we were having the first person executed at the Idaho State Penitentiary since the 50s. And my mother shares positive and interesting memories of me being obsessed about protesting, standing outside and speaking out against the death penalty as a young kid. So that was really formative in my life. These ideas of, do dignity and fundamental rights only belong to the people that we agree with or approve of? Or is it universal and is it part of a larger social contract? So I didn't become a lawyer for the ACLU, but I did go to the Peace Corps, as you mentioned. And then I found my way here, I think as a lot of us do, just through lots of chutes and ladders.

Corey KupferYeah. Well, it's interesting because I sort of highlighted what most people would think would be, how did she get from here to there, or how do those things go together, or what doesn't fit in this puzzle? But as you know from our prequel, I actually do a hundred percent believe that these things can fit together. So I definitely want to go down that road, because your path into M&A deals is not the usual one. But before I do, let me ask you my other only other scripted question at the beginning of the podcast, which is, what was your first deal of any type? It could have been when you got into M&A, maybe there was a deal before that. I don't know. You tell me, what was your first deal of any type?

Hannah SandmeyerYeah, when I think about deals, I also think about capital raises, right? So the first time I really raised capital, I was in the fifth grade. And I guess I was kind of a nerdy kid, I was also an athlete, but I love the game of chess and I happened to win a state chess tournament when I was in fifth grade. And so I was invited to go out to the national elementary chess championship in Knoxville, Tennessee.

Corey KupferWow.

Hannah SandmeyerAnd of course we had to raise capital to do that. So my grandmother and I, we clipped coupons out of the newspaper. If you remember we had like paper.

Corey KupferYeah. For those younger folks, there was a physical coupon at some point, like in paper, but yeah.

Hannah SandmeyerPhysical coupons, you get books of coupons. And we'd clip those coupons out. And we'd take them to the supermarket and we'd write our chess team's name on them or what have you. And so we'd paste those coupons on the physical products. And then when people checked out, they could either take the value of the coupon or they could donate that 50 cents to our chess club. So that was my first crowdsourcing distributed micro unaccredited investor raise.

Corey KupferI love it. All right. So listen, I wanna quickly get to talking about your journey, because obviously your journey significantly informed what you do now. And then I really, really want to talk about what you have going on now because I'm so excited about it and believe in it. So okay, talk to us a little bit. You think you want to be a civil rights lawyer, you're not gonna do that. You go to the Peace Corps and then all we know is that you're doing ethical M&A now, which is a very different M&A approach than most. There are certain situations where people should be able to fill in the dots. I don't think anybody should be able to fill in these dots without help. So help us.

Hannah SandmeyerYeah, I think it's really interesting because there's so much power in politics and social government and the way that we organize society, the way that we define community, humans living with each other. And there's all different layers of how we organize and how we do that and how we set standards of what is ethical or how to best get along. And I studied political science in university, so that was a big part of my path as well. And I love to think about how communities organize around themselves. And I see M&A as social economic justice work, largely. To just put it that way, Corey, there's so much power in private enterprise. In private enterprise we can create the prototypes of the societies we want to live in. If we care about healthcare for all, surely we can just do that in our private enterprise. If we grow and scale and we're fortunate enough to be able to provide that for our employees, we can make that happen. And I see ownership transitions, not just of course an ownership or a transition of wealth, as it's largely defined or how we talk about it, but it's a redistribution of power. And there's so much there. So I think there's so much power in how these businesses transition, what they preserve, what they protect, what they extend. So as I was starting my own business as an entrepreneur, as you can imagine your audience might be able to understand, once I was able to do that, and I wasn't able to do that till later in life after I kind of got spit out of corporate America's machine and I was in my early forties, I just thought, you know, after COVID and all the other disruptions, can I rely on anybody else? Can I continue working for somebody else? Or should I just take this big jump and leap in and work for myself, and then adapting and bringing forward all these skills that I learned throughout my career? And of course I was like, well, if it's gonna be my company, it's gonna be my brand, then I want to be a B Corp. That was foundational. I wanted my values, my ethics to be core, part and parcel of how the business operated. So for those who might not be familiar with a B Corp, what effectively that means is that in my business and other certified B Corps, we look at the bottom line as more of a triple bottom line. So we care just as much about bottom line profits as we care about our impact on humanity, humans, people, and the environment. So people, planet, profits is another way people think about that, the triple Bs. So I started there.

Corey KupferYep. But I'm sorry to interrupt, I just want to make a distinction again, a lot of people understand, but some don't. It's not a nonprofit, right? Which is key. Like it's very different. And I have a lot of views on a lot of the nonprofit model and why I love the whole B Corp concept, especially in the M&A business. But that's the key point as well. This is a for-profit business. It's just that it's not the only measure.

Hannah SandmeyerTotally a for-profit business. Yep. So a lot of people will think about that, Corey, as profit for purpose. So not profit as the purpose, but rather your margin is for your mission. You're using capitalism, a for-profit business, as a way to solve problems. So to explain a little bit to the audience about how I got into M&A. Starting my own business and starting a B Corp maybe maps. But how did I get to M&A? Certainly I came in through the back door. So after I left the Peace Corps, I thought I was gonna be an attorney. I was still pursuing that path. It didn't work out that way. And I started working for Fortune 500 companies.

Corey KupferYeah, please.

Hannah SandmeyerAnd I'm a gregarious, outgoing person, Corey. I can get along with almost anybody. And I learned those skills throughout my life of how to fit into a room. I think being a gay person, like you, you certainly know how to put on a different coat. I think it's a little bit different for people coming out now, but certainly in the 80s and 90s, we learned how to cosplay a lot, to be liked, to get along with people. And that made me a very good salesperson. So I was on go-to-market revenue teams and did that for about 18 years, worked my way up into positions of power where I was running teams and teaching others how to do that. And a company based out of Boston and New York, they asked me to come out in 2021, I believe it was, to run their corporate development team, to help them buy businesses. I had never even heard what corporate development was.

Corey KupferYep. What is corp dev, right? Yeah.

Hannah SandmeyerI had no idea. But as I started to learn about it, well, it's just a different type of sale. Instead of asking someone to buy your widget, you're saying to them, no, I want to buy your business for life changing cash. It's just a different offer. And all the skills that I had learned over 18 years of how to go to market, how to train sales teams, how to do outbound outreach, how to close a deal, how to move a deal forward, all those skills became highly applicable. And this company acknowledged that. So they hired me to do that. And they wanted me to build out and develop their team. And I had a team of five globally. We got a billion dollars in a single round, our Series D. So they're very well venture backed. And their entire model was growth by acquisition. So I know you talk a lot about it as inorganic growth. That's exactly the model, 100%. They didn't build any service or product of their own. They just acquired companies and they did this at a voracious speed, because we had so much capital to do so. Capital was cheap back then, if you remember. So the idea that we could refill our coffers was really strong back then. So we built a team of five globally, young people, people in their twenties. For many of them it was their first job. And we were one of the top companies in the space, had really good brand positioning and a lot of money to spend. So in the first 90 days that I was there, we closed sixty million dollars in EBITDA. Sixty million in bottom line revenue. I'd never seen anything like that before in my life. And the take rates on cold calls, as you can imagine, were much higher than if I was trying to sell somebody software, or sell them a service.

Corey KupferYeah, and bottom line. Right.

Hannah SandmeyerPeople were interested in that. People often will take that call, and the types of founders that we were selling to were people who had built a brand or were selling products on Amazon exclusively. So we were selling to Amazon vendors. And as you can imagine, people who bought plastic spoons on Alibaba and then figured out how to sell them on Amazon, they were looking for that arbitrage moment. They weren't necessarily tied personally to what they were doing. So we were very successful. We moved a lot of capital. It was a very fun environment to be in because we were so successful. But they thought they were gonna go IPO. That was gonna be the way that they recapitalized. Because of course if we're paying five, six X on these deals, you need time.

Corey KupferAs many fast growth companies pursuing growth through acquisitions do, and what percentage of them actually achieve it, that's a separate competition.

Hannah SandmeyerTotally. And so we had a lot of compounding effect there because not only were we spending money very quickly, but then we had a lot of assets that we had spent a lot of money on and we're trying to recapitalize all of that. So that didn't happen. They couldn't go IPO, they couldn't go through another round. The consultants came in and I'll never forget the consultant from whatever consulting firm, in her black turtleneck, coming in saying on a conference call to all of us, this is nothing more than irrational exuberance. That was what she said. And of course we were all let go. Anybody that touched acquisitions at that company no longer had a job. There was no purpose for us to be there. They were just now heads down on making these companies that they bought profitable. So the wheels fell off of that. But going back to me starting my business, I thought, Corey, I was just gonna do fractional sales. Because the fractional thing was all the rage, there's fractional CMOs now, fractional CFOs. I'm like, cool. I can do sales for B Corps. I can come into a smaller B Corp and provide them with director level sales at a fractional service fee. That sounds great. And the first people who kept calling me were not B Corps looking for sales help. They were these guys, most typically white guys, who said, hey, remember what you did for that company? I want you to do that for me. I want you to help me find companies to buy. And I was like, wow, I wasn't expecting that. But as I sat with it, yeah, it's like fractional corp dev. That's interesting. But once you see the power of M&A and the power of inorganic growth, as you know intimately, you can't unsee it. It becomes such an obvious lever.

Corey KupferYes. Fractional corp dev.

Hannah SandmeyerAnd it should absolutely be part of most people's revenue strategies, I think. And it doesn't always have to operate the same way and not always for the same intention. So I thought, well, this is interesting. What if I could teach B Corps how to use M&A as a force for good, as a lever for their mission achievement? And of course, as you can imagine, the first time I had conversations with B Corps about being acquirers, they looked at me like I was an alien or Palpatine.

Corey KupferWell, Hannah, listen, I don't even understand what you're talking about. There's two camps in the world, right? Either they're the people who do good and then there are those big bad acquirers. And I say that somewhat facetiously, but I gotta tell ya, we sort of bonded a little bit on the prequel on this conversation. Not sort of, we did. Because people try to figure me out a lot as well because they're like, wait a second, you hang out in these sometimes what other people might characterize as radical left activist communities. But then you also work with PE firms on company acquisitions and help people do deals, and you advise on everything from deal structuring to M&A negotiation, and you're financial advisors to clients and all this stuff. And it's just this assumption that you gotta be in one camp or the other and that they automatically don't ever come together, and not only that, but they're automatically adverse, is something that I've just never, ever bought into. So it's one of the reasons I super love what you're doing. So okay, you go in, they look at you like you have three heads, what happens from there?

Hannah SandmeyerYeah, they looked at me like I have three heads, and there was almost a chest clenching, they would recoil almost physically when I would try to have this conversation with them. And oftentimes what their response would be, Hannah, I cannot buy a company. I have to sell. Which I also found fascinating because of course, fascinating, but also commonsensical. Of course they would have that response. Who knows how to buy? And then the idea of being a buyer is like you're a rich person with just bags of money rolling around, and that's how it works. Or that you have this intention to harvest companies, and that's the only way that you can be a successful acquirer. That it can't be a lever for actually all the things that you want to achieve. So that was really interesting. And then of course, from that, I was like, Corey, I'm speaking French to these people. They have no idea how this works, what the deal structures can be, how you can capitalize deals, what this can look like, who's involved, what are the models. So from there, I was like, okay, well, and it was my partner at the time, her idea to start a podcast. And we started Ethical Exits, as you mentioned at the top of the call, just to explain what is the world of mission-driven M&A. And I hadn't seen too many examples of it. I believe that it can be there, but I don't know. I could point to a few examples of B Corps selling and that going terribly.

Corey KupferYes.

Hannah SandmeyerBut are there companies out there with a moral compass who are buying companies and doing really cool things? I didn't know either.

Corey KupferYeah, and it's fascinating because I think by this time there certainly had been a more developed conscious capitalism movement generally, as evidenced by the B Corp or other similar structures, whether it's official legal B Corps, or B Corp certifications, or this conscious capitalism movement generally and this conversation of people, planet, profit. So that was becoming, I mean, it still wasn't the majority of companies on mainstream, but it was becoming much more known as a thing. And the concept that you can make money and do good was becoming more acceptable in some communities. But it hadn't really, for the most part, moved over to the deal world or the broader M&A industry.

Hannah SandmeyerNo, totally. So that was part of my exploration. And I'm a curious person. I think you should just lean in and surround yourself with people who are smarter than you and have different experience. That's always a net positive. So we started Ethical Exits and we just started asking the questions like, who's doing this work? Who has been on the other side of M&A? Who's buying? Who's selling? What does that look like? What is the advisory? And very quickly we started going down the rabbit hole on employee ownership structures. We're like, we could have ended the podcast on episode four because we're like, that's an ethical exit. Selling to your employees. But then we started to find companies that were selling to their employees, but also using employee ownership as an acquisition model. And we're like, wow, that's super cool. And we just felt like, but then we also had all these conversations with people who had gone in through an exit process and had a terrible outcome. Whether they knew what they were getting into or not. M&A is designed to be kind of opaque and it's structured around price maximization and deal multiple. And this is all done on purpose, I think for a lot of different incentives, and that's how the infrastructure is built. But we also were talking to people who thought they were getting a good deal. And then a couple years later their company sold again, and then their companies dissolved. And you have these instances of people desperately trying to buy back their companies from private equity. This has been documented several times and they just were not successful. So we just thought, well, there is a desperate need for people to join the buy side.

Corey KupferYeah.

Hannah SandmeyerThat not only have we already figured out, and I think B Corp has proven this, B Lab just turned 20 years old, that we can build businesses that maintain a triple bottom line and they can be successful, durable, have excellent returns, good employee retention, do all these things. We've also shown that with employee ownership, that you can have broad-based employee ownership and your company is actually more stable because of it, not less. It's more attractive, it grows at a good rate. But we hadn't necessarily proven that we could exit well. And certainly I don't think that we've proven on a large scale that we can also buy well. And as I'm sure largely your audience is well aware, if they're curious about these things, we're also heading into the largest ownership transition in a generation. So if there was ever a time to turn this on, or figure this out, I think it's now. And not only do I think it's the time now to really figure these models out, but I'm confident in what we're seeing now with our latest product line, Steward Market, which is the net new M&A marketplace that is designed to be the marketplace for ethical exits. Where all this stuff we were exploring on the podcast can actually take place is that there are excellent buyers out there that are looking to not just harvest a business, but want to hold for the long term, want to preserve legacy, want to protect employees, want to continue doing good, to use M&A as a force for good. There are ecosystem partners out there who are also doing tremendous work, all the advisory and legal expertise out there, capital, impact capital, the whole world of impact capital. I went to SOCAP last year. I knew nothing about how capital markets worked. My God, that was, there's so much.

Corey KupferYep. Impact capital, that's huge.

Hannah SandmeyerIt's a huge market and there is tons of money out there that's seeking stewardship, steward ownership models. And I know even if you're not, we think about our beachhead and our ideal client, of course, is social enterprise, B Corps, B Corp Light, all those different varieties of business owners. But we also know, and you've had several of these people on the podcast, they're traditional capitalists, traditional founders, don't think of themselves as proper for purpose, but they give a shit about what happens next.

Corey KupferThat's right. Whether it's about their communities, whether it's about their employees. I just shared very anonymously, because it's on an episode we recorded on our deals round table about strategic deals, about an entrepreneur that runs a very large four hundred and fifty million dollar revenue company who was getting pushed to go public and decided not to because there's a certain culture, certain opportunities he's provided for people to come up in the company and grow, including many people who are not from educated backgrounds, things like that. Just to keep that culture and keep the kind of impact they have on the community. And this was a generational, not life changing, generational changing money opportunity, the kind of deal value most people never walk away from. And it was like, nope. Not aligned.

Hannah SandmeyerTotally. Yeah, and we've seen this in extreme examples on both sides. And I love your point earlier too about people thinking there's so much tribalism going on. We think we're supposed to believe this based on certain factions that we're in, or we're supposed to behave or be incented by different things. But the most obvious example of an ethical exit, in the way that most people would define an ethical exit, something that cares for more than just an individual or one family or just wealth for a small set of people, and wealth being the god, wealth servicing, or servicing as god, is Patagonia. Patagonia saying, okay, no, I don't need nor do I have any want for these extreme riches, I'm going to put my purpose into a trust and that's going to be preserved and protected over the next thousand years. Okay, sure. Yvon Chouinard is going to choose that based on who Patagonia is. And that seems obvious in hindsight. Although it's a really radical model of ownership transition. But the most recent example that we just saw in the New York Times was Eddie Smith, Grady White, the fishing boats company out of North Carolina. And Eddie's talked about, he got offers north of four hundred million dollars for his business. He didn't have anyone in his family. Unfortunately, his son passed away, so he thought his son was gonna take over the business. His son was not, well, that's not what happened. And Mr. Smith talked about, he's like, I have friends that also have similar size companies, and I watched every single one of them sell and then be unhappy with the result, not because of what they gained financially, but because they hate what happens to their company. And Eddie very succinctly said, Grady White has a soul. This company is something beyond what it makes, what it sells. There is more going on there. And I think a lot of founders can align with that. Because I think a lot of founders are entrepreneurs by accident. They fall into something because they love it, or they really care about it. And at the end of the day, when you go to transfer it, of course you want it to survive you. You just might not be able to really verbalize it as cleanly as Eddie did. So then he chose the same model. Not because he and Yvon have beers together. Eddie Smith's been donating to the Republican Party his whole life. They've probably been on opposite political spectrum. But from a human perspective, there is so much overlap there. And there's no more consequential decision that we make, and I know that you know this intimately, than selling our business. If we get lucky, we get to do that once.

Corey KupferRight. Yes.

Hannah SandmeyerIf we get really lucky, we might be able to do it a couple times. So people tend to think about it, or maybe some of the M&A infrastructure forces us into the smaller box, that it's an individual singular event. It is not. A company like Grady White or even smaller, these are community events. If you have employees, you have suppliers, you've been living and working in community, there's a constellation of impact that comes from a business transfer.

Corey KupferYes. And I love when people even, like I had Andrew Dunlop on a recent episode, and Andrew lives in Virginia and what he noticed was that companies getting acquired were all getting acquired by outside investors, or invested in by outside investors, and then they were moving headquarters out of Virginia and he was like, I live in this beautiful part of Virginia and it's drawing people out of the state because that's where the companies are moving, the jobs are moving. And so they're a private equity firm, but their focus, their whole M&A strategy, is investing in companies that are gonna stay in Virginia, that are gonna build in Virginia, create jobs in Virginia. And in a lot of ways, he's, I mean, they're more patient capital than some others, but you would look at him as a private equity guy. He's in that camp over there, but if you listen to his episode, his commitment to Virginia, to the community, to the people, to keeping talent in that state, is really what drives their whole approach to managing acquisitions and their investment thesis. It's what drives this culture. So that's another example. I think that's another thing that happens, whether it's in politics, whether it's in business, it's like, okay, it's also gotta be all or nothing. You're either gonna be an employee owned B Corp, or you're gonna be an evil capitalist. Like, no.

Hannah SandmeyerTotally. And that's what I really appreciate. And just to extrapolate on that further, employee ownership is one model, but there are several different models within employee ownership and they're not gonna be a fit for every business. And we understand that. So when we built Steward Market, it's not about pushing one, and the whole point is not pushing one outcome, or focusing just exclusively on the financial engineering or the financial aspect of the deal. Rather where we like to start and where we built infrastructure around is, what do you care about? What do you want to continue when you're no longer the one making the decisions? And to your point, there have been countless examples of people who are able to capture fair market value and also be happy with what happens and who takes over ownership, how ownership is transferred in their company. Those things are not mutually exclusive. And we've seen also these models can be ongoing business models that actually accelerate the growth of a company. I think Grady White, we'll see what happens. Patagonia's been fine. They've really kind of turned down the notch on growth on purpose because they don't want to grow at any scale. They really want to protect their purpose and make sure they have responsible growth. But Grady White, I think based on the choices that they made, I think people will start buying Grady White boats for different reasons. And his employees, of course, it's stickier. They're gonna get better service, better client retention, better employee retention from this business model. So it can be a tremendous growth lever, where we've seen on countless occasions where you get a high multiple, and then in a couple of years your company's not even around.

Corey KupferRight. So I wanna dig into some of the specifics on how the marketplace works and how you sift. But before we go there, I wanna go back to a piece that you talked about because as anybody on this podcast knows, and maybe some people get tired of it, I talk about mindset all the time and I talk about inner work all the time. If you don't like that, listeners, you probably stopped listening to me already. And part of what we've been half joking and commenting about, like these dichotomies, I really believe that everything starts with a mindset shift. So whether it's you going into these companies that are looking at you like you have three heads, what are you talking about, ethical M&A, there's a mindset shift that has to happen in this M&A space. So I want to talk a bit about that piece of the journey on getting people to understand. And part of it in my mind, I don't want to oversimplify it, but part of it is if you have a belief that something's not possible or it doesn't exist, ultimately that's a scarcity mentality, and I'm not saying that in a criticizing way, there is a heck of a lot of evidence out there, there's very good reason to have those beliefs because in a lot of the marketplace that is true. But I believe that amazing, creative, entrepreneurial, committed, passionate, purpose driven people can create new models, have created new models throughout history, have shifted mindset, and ultimately you shift enough individual mindset, that's how movements get going. It's person by person from the ground and then it shifts culture. So talk to me about the mindset journey, the journey you've had in not only educating people that this is possible, but also whether it's those limiting beliefs or those camps or anything that sort of stands in the way of understanding that, no, no, no, you can have an ethical M&A deal happen, for example. Talk to me about that journey.

Hannah SandmeyerYeah, I think it's really interesting to think about and I appreciate the question a lot, Corey, because certainly convincing people that they should buy companies is super hard. But at the same time, convincing people that they should plan for their succession is also terribly challenging.

Corey KupferIn any business. Forget purpose, not even in any business. Yeah.

Hannah SandmeyerIn any business, I mean, and I think that you also understand this intimately based on the conversations I know you've had with other founders. Our ego, a lot of us struggle with ego death. To turn away or accept that there's one day where I'm no longer gonna be CEO, when that's been such a big part of their life, maybe one of the biggest things they've done with every single day of their life for the last twenty or thirty years. To start planning for that exit is really challenging. And I think there's a lot of interesting parallels with retiring athletes as well. It's very similar. It's a big part of who they are, of their identity. So they want to talk about anything else than planning for their exit, even if they know that that is an eventuality, or that they're getting tired and maybe they aren't the best leader for that company. So I think about that a lot as well. I think the challenges are a little different from convincing people that they should be buyers in a room. And the way that we've tried to do that, or one of the ways that we've been successful, is again pulling in examples from lots of different other industries. And what we've been seeing in the employee ownership space, not to focus there, but there have been some really interesting examples. And I'll just give you one quick example that I think has been really illustrative in helping move that needle. Because people think about all the negative energy around buying a company and what they see in the world, but they haven't really seen enough of the opposite of what that can do. So there's a company, I'll just name them because this is not secret or proprietary information. They've shared this openly at different conferences. There's a company called 3LS, Three Legged Stool. And their company principally is in social service work. So their employees are social workers who provide critical services to children.

Corey KupferYeah.

Hannah SandmeyerAnd as we all know, you don't go into social work to become a millionaire. It's really hard work. It's really punishing, but it's really valuable work. And this company, they converted to an ESOP. And because of their structure, they needed to make sure to maintain their books that they had plenty of reserves to pay for when people retired or left the company due to the way that the ESOP was structured. So they started to acquire companies, and they first started to acquire companies in that same stack. So they would just buy other companies who were doing social work. And they were so successful at that that then they started cutting checks to their retiring social workers north of a million dollars. And their president talks about that as being like the proudest day, when they can do that. It's so fulfilling and so rewarding. And they did that not through organic growth, but by taking the risk to grow inorganically. And they just recognized, we're doing good work. We're providing good net outcomes for everybody that we touch, every life that we touch. Why not do more of that? And the quickest way that we can do more of that, create more employee owners, cut bigger checks, is through acquisition. And then they took it a step further. You'll love this, Corey. So then they looked at all their opex. Because they weren't afraid of acquisition anymore. They weren't afraid of buying other companies. They had figured out how to do this. They were very successful at it. So then they looked at, okay, like you said, there's a deal for that. They were spending a lot of money on their marketing company. So they bought the marketing firm. They were spending a lot of money on M&A advisory and deal origination services. So they bought their M&A firm. And now their president, you and him would probably get along really well, Corey. He says it's a yes until it's a no. That's how he considers every acquisition. So just telling that story in a room full of B Corps where I can say, okay, how long would it take you to capture an extra million dollars in EBITDA, doing exactly what you're doing today? Well. Years. For most companies, it is years.

Corey KupferYeah, if not decades.

Hannah SandmeyerRight. What if you could get an extra million in EBITDA in the next six months, in the next nine months? Okay, well that would be very interesting. What would you do with it? And in a room full of B Corps, they're gonna give you some really interesting answers. Well, I might pay my people more, I might increase benefits. I might be able to contribute more to one percent of the planet, because that's a big part of our philanthropic commitment. Or whatever it might be. And then I say to them, well, what's your main mission? What's your main goal? And if you're a company focused on climate change, well, how much time, energy, or service would it take for you to capture this much carbon out of the atmosphere? Okay, well, what if you could just go buy somebody that is putting off that much carbon in the atmosphere and reinvent their supply chain? Or restructure how they're doing business?

Corey KupferYes.

Hannah SandmeyerThat can be an unlock. And then of course the barrier is, well, but Hannah, I don't have bunches of money. Well, okay, let's talk about that. You don't have to have bunches of money. There's lots of different ways that you can monetize a deal, capitalize a deal. And the thing that we're experiencing, and maybe you've seen this as well, when you have true values alignment, when you're able to build trust between a buyer and seller, and they believe that they're working towards the same goals, they might take a different deal structure. They might be open to more seller financing. It can totally change the dynamics of what's possible and how a deal can move when trust is secured, versus, well, I don't know what's gonna happen. This is a big risk. I want all the cash up front, or I wanna go with the highest multiple.

Corey KupferYeah. And that's part of the mindset shift, that there are a lot of ways to bring value in a deal. In traditional financial engineering it was cash or equity. But in this conversation, there's value you're bringing by having those aligned commitments and values. And when you're bringing value over here, you get to give less value over here. So if this is cash, less cash, because, and that is like fundamental market deal principles, but it's often not applied that way. It's often thought, all right, I understand if I take more cash, I'll get less equity, or less equity, more cash, the classic trade-off people know from equity M&A. But you can also apply it in this scenario. And the other thing that came to me when you're talking about it is, one of the challenges, and this is one of the many challenges in the nonprofit world, and there are plenty of nonprofits we support, but it's that efficiencies, economies of scale, sharing of best practices. Social work is not anywhere near efficient, cutting edge, any of that kind of stuff. And the problem has been, in other businesses, whether that's in the trades or other things, there's been all these roll-ups, because the whole thing is, okay, you got some person who really knows what they're doing, they're taking their orders on paper. Okay, we can put some technology behind this or we can put marketing behind this. And again, because of this sort of way of thinking, those principles have been associated with other business practices that people assume wouldn't be consistent with social work. But it doesn't necessarily have to be the case. So if you create economies of scale, you create efficiencies, you create technology, you create marketing, you create sharing of best practices, forget everything, how about how many more people you could serve in social work, because you're running much more efficiently. It's just that I don't think there's been a trust factor in the people or the systems that have created those efficiencies, whether that's private equity funding, whether that's roll-up acquisition models, because people have perceived and seen them, and it's been largely true, that they've been done mainly only for a profit, or multiple arbitrage, effectively money over purpose. But those structures, systems and reasoning all work. So why don't we learn from that and apply it to a more purpose driven situation?

Hannah SandmeyerYeah, absolutely.

Corey KupferOkay. I was afraid of this, that we could, I say this to a lot of my guests that I could talk for hours with you because it's true, because I love talking about deals. In all my years of M&A experience, working alongside founders and their M&A team, I think with you I could talk for days. So we are gonna go longer here than we normally do, because there's just too much I have to cover. So I do wanna delve in more specifically so people understand the marketplace and the other offerings. Because this is way more than saying, okay, this is just the marketplace for purpose driven or socially conscious companies, and list it. You actually have functionality and specific intention around it. It's not just, this is where you should come and then it works like every other marketplace. So I want you to spend a little time delving into how you've designed this to handle real M&A transactions, which I think is amazing. And how it is set up to really have people get the information they need, do the due diligence, and find those right matches.

Hannah SandmeyerYeah, I appreciate that, Corey. So we think largely that the M&A marketplaces that are out there today are just ripe for disruption. I think they're delivering similar outcomes. They're pushing narrow optionality on folks and they're most typically a one-sided marketplace and sellers show up as inventory. We think that just lacks human dignity, just to begin with. And the way that they're monetized as well, we also think is very extractive. So we wanted to really create something totally different. And again, the way that we came to Steward Market was through organic, authentic curiosity, just talking to folks who are in the space who have gone through this. And just recognizing there's so many gaps. There are really great service providers out there. They can provide a lot of really good optionality, a different way to capitalize growth or acquisitions or exits. There's really great buyers out there that have totally different buyer profiles, that are gonna own differently. They intend to own differently. And then there are sellers out there absolutely that care about more than just the bottom line. We knew all of that was happening, but how do they find each other? And we think about the traditional infrastructure today almost like chutes and ladders. Depending on where you show up on that board game, go back to that analogy, is like depending on where you show up on the board, that's what you can see. So it's the advisor, based on what they tell you to prioritize. And then as you go along the way, you might get lucky and see visibility into something else, but then you have to start all over. So we wanted to design Steward Market, as you kind of talked about it, not as another listing site, but as a market map. So it is a three-sided marketplace. So we have a full partner directory, we have a buyer directory, and then we have seller listings as well. And everybody shows up the same way and we use values as infrastructure. So what do I mean by that? I can search on Steward Market for a B Corp certified buyer. I can search based on their missions, what they care about, for that alignment. I can search for a buyer that has a long-term permanent hold period. I can do all of that, in addition to searching for a buyer that wants to buy a company like mine with a valuation like mine. So we wanted to open all of that up. But we also have full buyer profiles, full seller profiles, where you can talk about not just what you're selling or what you're looking to buy, but what the seller is looking for in a steward. And we mean that word intentionally. And how the buyer intends to steward the future of your business. So that you actually have a much more complete ecosystem where people can show up and they can describe more completely what their hope is for the future, in addition to the financial value that they're looking to secure and that they rightfully should get. We don't discount the sacrifice financially, emotionally, time-wise that founders put into their business.

Corey KupferYes.

Hannah SandmeyerThey should be able to get what they think is a market value for their business. But we also think that they should have visibility to the full deal board of all options that are available. So certainly you can show up as a seller on Steward Market. You can purchase a listing for $25 one time, zero commissions. Buyers can show up, they can pay a subscription to have a full buyer profile on Steward Market. And partners can also show up and they can have a full profile describing what they do and how, when they enter the process and what outcomes they optimize for in addition to what they do. And we like to have sellers explore the partnership directory first. And what they can search for and the criteria they can use is very simple. They don't have to have a degree in M&A or understand everything that's available to them. They can just search by where I am in the process, so they can say like, I'm early on.

Corey KupferYeah.

Hannah SandmeyerAnd then they can also isolate what stewardship outcome they're most hopeful for. And that could be something as simple as mission continuity. Or legacy preservation. You can search for that on Steward Market. And from that, just for those two filters, then they can see all the advisory that helps them at that stage and will optimize towards those stewardship outcomes. That is M&A meant for the rest of us. M&A meant for humans. None of us have a degree in M&A. That doesn't exist. And I don't think that you should have one in order to be able to really not only just find your buyer, but as we like to say, find your steward. And you might at the end of the day find that your steward, your best buyer, is your employees. That could be one potential outcome.

Corey KupferRight. One of the options. And by the way, we don't have time and we won't get into them, but you alluded to this. A lot of people, especially who are just more in the deal world, think that the only employee ownership option is an ESOP. It's not. There's a bunch of other options. Again, we won't get into those, but I just want to say, and take this as practical M&A advice, don't assume that, listening audience, if you don't know. There are some really, really interesting employee ownership models out there. And again, the whole universe of employee ownership is not the only option. But even within that, there are things beyond ESOP, other models out there. All righty. So God, there's so much more we can talk about. I usually sort of ask an open ended question at the end. I'm gonna ask it, but I feel like there's a thousand directions we can go in. As we are coming up past time, is there anything, whether it's about this movement, whether it's about your journey, whether it's about the company or your offering, that we haven't talked about that you really think would be helpful for the audience or that you want to really highlight?

Hannah SandmeyerYeah, I guess the thing that I would really like to relay is that I started working with buyers. That's where we started. But where I ended up is just with so much love, compassion, and care for sellers. You've built something of value, you built something that really matters. And I want this process of you selling your business to be infused with dignity and for you to have an emotional sensation that what we want to deliver on Steward Market is, when you arrive there, that you get a combination of joy and relief. That there is somebody out there for you. There is the steward for your business. Even if you're a small business, you don't have to be a big business. Like, you know, classically Wall Street successful. Please don't just close your doors. Please don't assume that no one's gonna come for you. And don't assume anything, like you said, like don't assume there's just one employee ownership model out there. There are plenty. There are lots of different shapes to this. And what we wanted to show is what is available to you on Steward Market and for you to be able to search on things that you already know about. And that is, you know what your values are. You know what you care about. Those are searchable filters on Steward Market.

Corey KupferI love this so much. People that know me have heard me talk about some of these things, but we deal with so many founders and business owners. I've had the gift of providing strategic advisory across a huge deal volume, working with thousands and thousands of businesses over the years. And what I find with entrepreneurs, particularly, is that no matter what their political beliefs are, no matter what their religious affiliations or level of commitment, I find most of them, they do have a vision and a purpose for their business that's beyond profit. It may not be what some folks in some of our communities would consider, it's not B Corp, whatever, but it's still, even if it's to create jobs or even if it's to, you know, just, and I find a lot of them, people who might have very different political views than me, for example, you find how much they care about their employees, how much they care about their families, how much they wanna help their communities. They may be doing it in ways that look different, that some in certain spectrums might have judgments on, but that fundamental, I think it's a fundamental human thing to wanna make impact in some way and to have something live that's bigger than yourself. I honestly do believe that there are very few people who are really in it for themselves. They may not be doing things at a level that someone else has a judgment on, or in an area or at a scope, but they care about somebody and something that's beyond themselves. And I think that's a fundamental human trait. And one of the things that I've had the gift of is feeling like I'm somebody that has the opportunity and the calling to bridge worlds. And I love what you've talked about because, and I think it's one of the reasons why we connected, you can run in a Fortune five thousand company, or some activist meeting, and you're also bridging worlds as well, obviously with what you're doing. And especially in this time where there's so much division, I think the bridging concept is just so important. And that bridging is not only with external communities and worlds and across spectrums and politics and economic status, but there's also an internal conversation around that. Yes, listeners, I'm going there again. Because even in my own self, and I've talked about this a little bit in the past, I never, like you talked about having to, growing up gay and then being in the corporate world, and how you were able to sort of shape shift. I did that in a different way and I felt blessed in a way that I didn't feel like I was showing up fake in other places. What I was doing though was only showing certain aspects of who I was. There's a difference between, I'm gonna put on something that's really not me, which some people have to do in certain things, I don't make judgment, but I have always tried not to do that. But also there's this thing where we have many facets of who we are, what we care about, and in this environment, we're only gonna show this piece of it. It's a true part of who I am.

Hannah SandmeyerA hundred percent.

Corey KupferAnd I have worked for a long time to be able to show up as my whole self everywhere. A lot of my own M&A firm's work is in RIA M&A, also called RIA mergers and acquisitions, and wealth management M&A, so I'm sitting down talking to an investment advisor client of mine who, let's say, is a born-again Christian, Trump supporter or whatever it is, and I'm still gonna talk about, if it comes up, I just got back from Chicago and we did a site visit at Rebuild because we're really supporting the Theaster Gates community redevelopment and art work there. Whereas earlier I might not bring that up because I have a judgment, so I'm gonna only show this part of myself. And I think there's a parallel because again, I do think everything comes from within. And I think there's this opportunity to look at it, and the more whole that we can be and the more we can bridge things within ourselves, I think it can manifest outside. So that's just what came to my mind.

Hannah SandmeyerYeah, no, I love that so much because I think that often is what's happening and I think for sellers as they go through this process it feels really lonely because the advisory often will focus myopically on their books and on the multiple and on the speed of transaction, or the ability for a transaction to go through based on who you're talking to. So private equity is like a sure thing, rather than exploring maybe a mission-aligned buyer. And I think that can be really isolating and super confusing during the sale, but then after the sale, people go through wicked depressions. You know, the highest mortality rate for people is the day they retire. And I think that's only compounded when they see something that they care about being turned into something that they don't recognize. So I think that's so valuable. And I really want to double tap on that, Corey, because that would be, again, an extension of what I want people to be left with. Like you can care about more than just money. That's okay. And that is a rational, viable thing. And you can get both. You can absolutely get both.

Corey KupferAnd I believe, whether it's deep down for some people or less so, that everybody ultimately cares more than about money. And if you're willing to be honest and vulnerable and out front about that, you give permission for other people to do that. And again, their care may look different than yours, but they have something. And there's so much in our society and culture and business where we're supposed to keep these parts separated. And I think that's hopefully an old and eventually dying model, because bringing our whole selves and being authentic and being honest about what we care about and having business be not separated, but a part of that, is something that I'm very committed to.

Hannah SandmeyerMe too. It's amazing, Corey.

Corey KupferI am so excited to have had you on. Final two questions. People want to find out more about you, about Steward Market, about everything you have going on. Where do they go?

Hannah SandmeyerYeah, stewardmarket.com is probably the best spot. There's tons of resources on there and more information about me. It's really easy to find me. I'm just Hannah at Steward Market. H A N N A H, palindrome. Don't forget the double H, the double A, the double N.

Corey KupferLove it. And Hannah, all right. So my final question of the podcast is always the same. And with you, I feel like again, we could talk hours probably, just on the final question, but we won't. My final question on the podcast is always about my highest value in life, which is freedom. And for me that means freedom for everybody around the world, from oppression, to why I've been an entrepreneur and haven't had a boss. So it's that entire range. What does freedom mean to you and how does it impact your life and business?

Hannah SandmeyerYeah. I really appreciate this question. I know that you ask it. And we're friends and I think you might expect this from me. But honestly, the word freedom makes me bristle a little because I think, and you kind of touched on it, I think we often describe freedom as an unrestrained life, having enough money and power to do whatever you want, answer to no one, remove every inconvenience from your path. And I think that's bullshit. And it makes me think of people waving a flag and telling other people how they should live or who they should love or what they should believe in or what version of the Bible they should be reading. And it's often used as a term to describe our own entitlement while ignoring the freedom and power of other people. So for me, and this gets back to what we talked about at the top of the call, just this idea about social justice, liberty, equity, that real freedom is reciprocal. That it means having the agency to live honestly and make meaningful choices while recognizing that everyone else is entitled to the same dignity and agency too. It goes both ways. And I think about that existing in this concept of the social contract. That my freedom depends on other people restraining how they use their power and I owe them the same. So I appreciate that so much about you. And we talked about this a little bit. I'm like, you're the type of guy who can fit in at all the golf courses. I might have a harder time if I'm my authentic self. So knowing when to restrain your power is really important. And I think that's especially important in business. The wealth and ownership give people enormous freedom to make consequential decisions, but that does not release us from obligation. It only increases it.

Corey KupferYes. I love that distinction. And there's a very intentional reason why I describe my view on freedom the way I do, which is freedom around the world for people from oppression, to why I've been running my own company without a boss. Because for me, there is that freedom to say, hey, great, I have the freedom and privilege of running my own company and not having a boss and being able to do whatever. But if it were only that, for me, that would not be enough. And it's interesting, I can't help but spending more time every time we have a conversation, because there's also something, and I a hundred percent get everything you're saying, which is not only why the freedom from oppression part is important to me, but also there's people who try to own freedom. There are a lot of narratives that people try to own. And I'm not willing to cede freedom to those narratives. So I think, listen, sometimes it's smart to just choose another word or another way to express something because you don't want to be associated with it. And sometimes it's like, no, no, no, I'm not gonna let you own that narrative. We're gonna take it back.

Hannah SandmeyerTake it back. Yes. Let's do that. I want to be part of that train. Okay, Corey. I'll try not to bristle. I'll try to express myself more.

Corey KupferI love it. And again, I totally honor and get where you're coming from, but I'm just telling you, I'm not letting you folks own freedom. My god. This has been so amazing. Folks, listen, obviously we support all the guests we have on the podcast. I always tell you to check out their stuff. And it's honest for me, we have people on that I think are doing good things. This one's just so super aligned and important to me. I love what Hannah's doing. I love that it's in the deal world that we're talking about this stuff. I talked about bringing my whole self and having all these parts of me come together. And another big conversation I'm often in is about integration and not balance. And I think everything you're doing hits all of those things. So I really, really want to support your work and I really want the audience to support it and check it out and let people know about it, because this conversation of ethical exits, this conversation of honoring people in sell side M&A, this conversation of the fact that people can be purpose driven and not only have for profit companies, but actually do deals, whether as a buyer or as a sell side M&A advisor, in a way that's gonna help the mission, help the purpose, help have the impact, I'm so aligned with. So I really, really, audience, check it out. Definitely check it out. And if you're a dealmaker doing work like this and you'd want to share your story on the show, head to beaguestondealquest.com to apply to be a guest. All right. And I thank you so much.

Hannah SandmeyerThanks, Corey.