American Dream Achieved
IBA, as a fifty-year old business brokerage firm serving the entrepreneurial community of the Pacific Northwest, has been uniquely positioned since before the American Bicentennial celebration of 1976 to witness and hear the stories of thousands of people who have lived the American dream through entrepreneurship creating beloved businesses by employees, customers, and communities while finding personal fulfillment and financial prosperity through execution of their ideas, hard work, perseverance, and ability. In an effort to share these stories heard throughout the years by our team of business brokers, who are commonly regarded as the “best listeners” in the M&A industry, IBA has retained highly regarded writer, Nesha Ruther, to tell their stories. It is our goal to share one story a month. It is our hope that you will find the stories as inspirational and motivational as they are to us and the buyers who bought the businesses in IBA facilitated transactions in Washington, Oregon, and Alaska. The following story comes from internal at IBA and features IBA’s Director of Operations for Spokane & the Inland Empire, Bill Southwell. IBA is blessed to have many successful entrepreneurs among its team of business sale intermediaries and corporate management. Guidance that comes from a place of knowledge is valued. However, professional counsel from a party with relevant academic knowledge and field experience is superior.
The Story of Bill Southwell (IBA’s Director of Operations for Spokane & the Inland Empire)
By Nesha Ruther
Before Bill Southwell was an entrepreneur, he was a lawyer. He graduated from Gonzaga University in 1977, “before they had a good basketball program,” and went immediately into law school. He graduated in 1980 and became a member of the Washington State Bar Association. “I started out with a couple of tax attorneys and basically did everything they didn’t want to do,” Bill says.
Bill was a generalist in his practice, able to meet a variety of legal needs. This proved valuable, not even a year into his practice, he was offered a position as corporate counsel. “I had a business client that was an emerging high-tech company, they hired me as corporate counsel. $500 a month made the difference in making the move from private practice into the corporate world,” Bill says, laughing. He didn’t know it at the time, but that decision would prove fateful, setting him on a path to business and entrepreneurship.
The tech company was called Data Rite and was developing retail pharmacy computer systems. This was in the mid-1980s when the PC was a revolution and the DOS operating system still cutting edge. Before the business went public, Bill took the lead in sourcing private investor funds used to develop and expand the business, this allowed him to develop strong relationships with the investors impacting the direction of the company. “Over time, my role shifted from Corporate Counsel to one of the major decision-makers and strategic planners. Ultimately the Board of Directors felt a need to shift direction and leadership and I was asked to assume the role of President/CEO,” he says.
Eventually, Bill chose to leave the company to be closer to his roots in Western Washington. “I had a fresh window of opportunity to get back around close friends and my family, so I seized the moment. I also left because I really love the challenge of building things, and I had gotten somewhat stagnant [at Data Rite].”
Bill’s desire to build something of his own led him to consider starting a franchise. He always had his law degree to fall back on, making a normally risky move feel more approachable. “I wasn’t sure exactly what this was going to entail, but I thought if I just ran a public company and being a lawyer, I could probably start a franchise from scratch,” he says with a laugh.
He began looking at the service industry, take-and-bake pizza, gelato, and other options. He consulted with a friend who imported Italian kitchen equipment. He pointed him towards a little-known beverage that would change the course of Bill’s career. “He says to me, ‘You’re missing it, it’s espresso.’ Keep in mind, this was cutting edge, it was 1987 and there were very few people in the US retailing espresso,” Bill says.
Surprisingly, one of the few businesses selling espresso at that time was Nordstrom’s. “They had an espresso bar outside the store that was doing $400,000 a year, all off a small 3’X8’ bar.” This was the perfect opportunity for Bill to not only build a business but grow awareness for a little-known product with high potential. “I began looking at the concept and saw it had a serious market advantage, I was looking at a quick return on investment,” he says.
Bill, along with his friend-turned-operations manager took the leap and opened Picolo’s Franchise Development, one of the first retail espresso franchises in the United States. They began importing espresso from Italy, but it was highly expensive, so Bill decided to source locally.
They began setting up meetings with local coffee roasters, looking for locally sourced espresso they could sell at a competitive price. One of those roasters was a small up-and-coming company few had ever heard of. They were called Starbucks. “I met with Howard Schultz who was the new president of the company and was really making a push for retail,” Bill says. “At the time they had this tiny roasting plant in Seattle, he pitches them to us, and I told him ‘I’m going to have to pass.’”
While hindsight is 20/20, Bill’s decision at the time showed quite a bit of wisdom. Unlike many others, he could see Starbucks’ potential and didn’t want to be selling their coffee if they ever expanded their retail operations and became competition for locations.
15 years later, after Starbucks had become a household name, Bill would see Howard again at a Gonzaga event that he was speaking at. “I go up to him and say, ‘Howard, you’re never going to remember me.’ He says, ‘Bill, I remember, you broke our heart.’ At that time Starbucks had nine locations and Picolo’s had four.
For Starbucks, Bill would always be the one that got away.
Bill continued to grow and develop Picolo’s in Western Washington, opening six coffee bars and two coffee bean stores during the first two years of business. Business was booming and people couldn’t get enough of espresso. He began setting up area development agreements across the country to expand the business outside of Seattle. “I hired a Vice President who had been with a company called Hickory Farms,” he says. “It is a kind of dated retail concept now, but at the time it was very relevant. [My Vice President] had a lot of contacts across the country, and so we started branching out and selling.”
Before long, they were approached by an investment firm out of Vancouver, British Columbia. They represented a bakery business called Epicure Food Products that they wanted to marry into the coffee industry. This was a huge opportunity for Picolo’s. Epicure provided Bill with the infrastructure and resources to not only continue to set up coffee espresso across the country but further expand their business concepts.
The espresso bars were a perfect recipe for success, but ever the developer, he was not content to rinse and repeat. He came up with a radical idea that only the major fast-food franchises had begun to develop, coffee drive-thrus.
“I wanted to do drive-thru espresso. This was at a time in the industry when even fast-food chains like McDonald’s and Burger King were just getting into the drive-thru. Nobody in espresso was doing it.”
Bill approached his board in Vancouver and pitched them the idea, but they didn’t see his vision nor the need for further concept diversity. “Of course, Starbucks does drive-thrus today,” Bill says. “But at the time [their board] was of the belief that it was contrary to the culture of the coffee industry. [Espresso culture] was meant to be communication, sitting down and talking, coffee house atmosphere. They felt that a drive-thru was contrary to the concept of coffee.”
Bill, however, knew he had something here. “I remember leaving that meeting and coming home and telling my wife, ‘We’re going to do the unthinkable, we’re going to use our own money and open some drive-thrus,” he recalls.
He took matters into his own hands and in the mid-1990s opened his first espresso drive-thru, called Mondo’s. The drive-thru was a tiny, 350 square-foot building with a bathroom, but the success was resounding. “It was a reversible drive-thru with a walk-up window in the front. We sold espresso like you would fast food. It was a major success, and I mean major, major,” Bill says.
Bill quickly received multiple investment opportunities for Mondo’s but turned them down. “I really liked running my own show,” he says. “I liked controlling it. My stores put three of my four kids through college, very profitable.”
Bill ran Mondo’s for over ten years. Whether through espresso bars or drive-thrus, he had always been ahead of the industry. The industry, however, had begun to catch up. “Starbucks and other bigger players began getting into [drive-thrus],” he says. “I had a bunch of opportunities to do something bigger scale but I’m now at an age that I’m trying to figure out whether I’m going to continue in retail, or slow down.”
Bill chose the latter and began the process of selling Mondo’s. “At the time, I was of the opinion that because I was an attorney, and fairly sophisticated, I would surely be qualified to set the sale prices for my business, right? Wrong! At the end of the day, I got the prices I wanted, but when I look back, I realize I had no basis for anything of the pricing that I had proposed. Did I get a good price or a bad price? Did I just pluck that number out of the air?”
Bill fully intended to slow down but slowing down is a far cry from retiring. Before long, he was looking for his next chapter. “I knew I wanted out of retail, and I was looking for a fresh horizon,” he says.
The experience of selling Mondo’s on his own had piqued his interest, and he began to look into becoming a business broker. “I liked the flexibility that it would give me,” Bill says. “I don’t have any quotas, I don’t have to take on any listings I don’t want, and diversity of projects truly stimulates me, I see different things every day.”
When choosing which brokerage firm to work for, there were a number of strong contenders. One, however, stood out above the rest. “IBA was the oldest firm in the Northwest, they have been open since 1975 and sold more than 4,300 businesses.
Another factor that set IBA apart was the high standard for businesses they are willing to sell. “We pass on about 75%-80% of [the businesses] we see,” Bill says. “Most are too small and sometimes we’ll dig into the financials and not like what we see. We’re not shy about that.”
But the biggest part of that decision for me was that Greg Kovsky, the President of IBA had agreed to personally mentor me,” Bill says. “Business brokerage involves very sophisticated transactions, with an extensive and on-going learning curve. [Gregory] is an outstanding teacher who pays attention to detail and always preaches best practices. That was the difference maker for me.” In 2017, Bill joined IBA and hasn’t looked back.
Not only did Bill have a strong mentor in Gregory, but his past experiences directly contributed to his success as a broker, particularly when it came to franchise resales. “I am able to empathize with many of my clients because I ran a franchise, I understand the mentality of the franchisor,” he says. “I’ve walked the walk, I know the language, and I have a different level of insight than many other brokers probably have.”
Bill’s love for creating and growing businesses also gave him valuable insights for determining a business’s worth and establishing a smooth transition. “My clients, ironically, are as interested in my background as I am in theirs. They want to know what qualifies me.” With Bill’s knowledge as a lawyer, experience running companies, and intimate knowledge of being a franchisor, his clients can be assured they are in good hands.
Despite only representing the seller, Bill is fully committed to doing everything in his power to help the buyer succeed. “What allows me to sleep at night is how we make sure our sellers are committed to transition,” he says. “When we sell a business and somebody else is going to take it over, I spend time from the outset really communicating to my seller how important it is that they give the buyer every chance possible to succeed when transitioning the business. How we do that will change depending on the skills and experience of the buyer, but at the end of the day, I want my clients committed to a win-win for all involved.”
“We tell every buyer throughout the process that we represent the seller, but I have to get the job done. That means that sometimes if [the buyer] doesn’t know what to do throughout the process, I’ll step in where necessary and in the best interests of my client. If they don’t know where to go for SBA funding, I’ll help. Over the course of a transaction, it’s not unusual for me to have a great deal of interaction with the buyers. I want to make sure that both parties remain engaged and that all timelines are met,” Bill says.
For those looking to buy a business, Bill’s biggest piece of advice is to acquire a business in an industry where you have relevant experience “What do you know about the business you’re buying? What is your experience level?” he says. “A lot of buyers come in thinking it’s all about money and structure, but there is more involved. Sellers are worried about the sale price, and they’re worried about the structure of the deal, but they are also worried about the legacy of the business. So oftentimes, I’m looking for that side of the deal, I’m looking for those people.”
For entrepreneurs looking to sell their businesses, Bill recommends preparedness above all else. “IBA is what we call a hired gun. When you come to see us, be ready, be prepared, and have your books in order. There are many firms that will charge you a fee to help you get things in order, but that’s not IBA. If you’re interested and ready to sell, IBA is ready to engage,” he says.
“The other thing we encourage is for [business owners] to interview multiple brokers. We happen to believe that the cream rises, and if people have a chance to evaluate more than one [firm], we think it works to our advantage. But I do think shopping is a good idea, period.”
While many brokers have their own specific specialties and interests, Bill takes pride in his lack thereof. “Generalist is the term I hear over and over, and I like it because it’s what interests me. I like to see the next thing and it keeps my mind fresh.”
His generalist nature has allowed Bill to be exposed to the inner workings of companies that span industries. He still encounters new and surprising businesses every day, even in the unlikeliest of locations. “I had one company that was called Royal Restrooms, it’s a franchise out of Georgia,” Bill says. “They’re high-end restrooms, portable restrooms, and trailers. You would use them at a wedding or outdoor event. But they’re really nice, these things had granite countertops and the functions were high-end. It was highly profitable.”
Royal Restrooms had a fleet of 40 trailers and was bought by a local group of investors. “We sold it and the buyers have prospered which is always exciting to see. It was just a highly unique, profitable business,” Bill says.
One particularly powerful company Bill sold was an in-home healthcare business called Caring Hearts which catered to a highly specific market. “They work in Eastern Washington in an area called Tri-Cities. You’ve got the Hanford nuclear reactors in that area, which are the largest reactors in the United States,” Bill explains. “But what happened is there was radiation poison and a lot of people got sick. [Caring Hearts] did in-home health care for the people who had worked in and around the reactors. All of their business had to do with people that were exposed to radiation.”
The woman who started the business was a nurse and was particularly passionate about caring for those who needed it most. “I just thought [the business] was very worthwhile, but most people on the street would never even know that this Federal Program existed,” Bill says.
While the industry may vary, there is one attribute Bill sees in all his clients, a willingness to take advantage of opportunities and forge their own path. “I really believe that you make your own breaks,” he says. “The truth of the matter is, you can’t wait for somebody to knock on your door, you have to push that door open.”
For Bill, the ability to control his own destiny and rise up in the world is a core facet of the American dream, something he sees every day in both his clients, and his own life experiences. “I don’t think anyone that knew me during my early adolescence would have ever expected the son of an auto mechanic and custodian with only high school degrees, to be the first one in the family to graduate from college and ultimately earn a Juris Doctorate degree,” he says. Go Zags!
Having embodied the American Dream himself, now Bill helps others to achieve it every day through the successful sale of their businesses.
“I have been told on numerous occasions how lucky I have been,” he says. “But I identify with the famous quote ‘The harder I practice, the luckier I seem to get.’”
Nesha Ruther
Nesha Ruther is a writer and editor from Takoma Park, Maryland. She received her BA in English Creative Writing from the University of Wisconsin Madison, where she received a full tuition scholarship through the First Wave program based on academic and creative merits. She was a 2016 Young Arts winner in spoken word, a 2016 winner of the DC Commission of the Arts Larry Neal Writing Award, a 2017 winner of the Mochila Review Writing Award, which was judged by Nikki Giovanni, a 2020 winner of the University of Wisconsin’s Eudora Welty Fiction Thesis Award, and a 2022 Tin House Winter Workshop Participant. She has been commissioned to write and perform for the National Education Association, and has had work published in NarrativeNortheast, Angles Literary Magazine, Beltway Quarterly and more. She currently lives in Cincinnati Ohio, is a Lead Writer at Bond & Grace, and a co-host for the podcast Lit Talk (https://www.bondandgrace.com/the-lit-talk-podcast).