Selling a Business - Interview with Andrew McIntosh


Episode 13: Louisville Certified Financial Planner Jeb Jarrell interviews entrepreneur Andrew McIntosh. They’ll discuss Andrew’s journey and the eventual selling of his company, SKYE Technologies. Andrew is a cyber-security expert.



The Journey Begins

While Andrew never planned to become an entrepreneur, his childhood certainly prepared him for the journey. Growing up in the Midwest, he earned money cutting grass, raking leaves and shoveling snow. It cemented his work ethic and a basic understanding of how to price for his services vis-à-vis his local competitors.


His family moved to Kentucky in 2004. Andrew started his own business in 2006. He had an IT background and was able to develop and grow his side-hustle, during the evenings and weekends. Eventually, he and his wife were able to control their expenses and when combined with the revenue generated by his own business, they decided it was time to go after it on a full-time basis.


Andrew recounts how his business was started opportunistically. He had begun developing a reputation for good work and fair pricing. One day, a customer asked him to step in to help her company with an internet service issue. The company’s internal IT guy wasn’t able to resolve the issue. Andrew was able to diagnose a virus that was slowing down the internet connectivity. The owner of the office offered to contract with him for an ongoing, monthly fee. Unintentionally, he landed his first reoccurring, managed service client.


Andrew comments that success often results from being consistent, keeping one’s head down and working hard. He’s living proof of it.


The Evolution of SKYE Tech

Andrew began as a one-man business, living off of referrals. The business continued to grow and eventually became too much to handle as a solopreneur. He eventually realized he needed to bring on someone else. He hired a local friend and then a few more. Over time, he continued to experience the challenges of growing a company and having to wear many hats. Like many entrepreneurs, he was better at managing certain areas of the business than others.


Interestingly, Andrew points out that his decision to hire his friend was mostly based on personality. In his words, he knew he could teach him the technical aspects. It’s personality that you can’t teach. This is true in many situations. However, there’s a delicate balance between adding talent and maintaining profitability. Andrew also shares his perspective on the risk of “hiring another you.”


Scaling the Business – Where to Invest

Eventually, Andrew hired an individual who was able to handle the job without the need for Andrew’s involvement. This opened up the opportunity for Andrew to focus on growth. It was a pivotal moment in the life-cycle of the business.


Andrew poses the question, “If you were to get hit by a bus, would the company be able to continue?” If you’re the center of your business, there’s a cap on your growth potential. A business coach advised Andrew to track his time during the week. The time should be allocated by activities such as sales, marketing, recruiting, accounting, administration, random tasks, etc. You’ll be surprised at how much time is spent on tasks your good at verses the mundane activities someone else could/should perform for you. This was the roadmap Andrew used to offload certain tasks, enabling him to focus more on growing the business and relationships.


The Decision to Sell the Company

As time progressed, Andrew was asked if he’d consider selling the company. It wasn’t a serious consideration for him. Fast forward to the Spring of 2020. The business is booming, despite COVID’s impact on the economy.


A friend called and asked him to consider what would happen if he were to sell at a desired price and invested the proceeds for the next 20 years, with the anticipation of 10% growth per annum. It would triple by the time Andrew would anticipated retiring. That friend had investors who were interested in investing in IT companies. In the Fall of 2020, Andrew received 7 actual office visits from people legitimately interested in buying the business.


One of the concerns Andrew discusses it the downstream risk, when private equity is involved. Because the objective is to look for synergies to reduce costs and deliver higher multiples, they make changes which may have a negative impact on the customers of the acquired companies. Andrew had vendors who were sold to private equity groups. The result was a decline in the quality of service from those vendors. Andrew knew he didn’t want that for his clients.


Andrew was approached by a large accounting firm. On the surface, this makes sense. Both IT cyber-security companies and accounting firms rely on an extremely high-level of trust from their clients. Many accounting firms are beginning to move toward a full-service model, so having an IT capability would blend with other service offerings. Andrew eliminated this option based on a perceived, cultural fit. The same emphasis he put on personality-fit for hiring would make perfect sense in terms of a merger or acquisition.


Andrew admits that going through these various discussions and evaluations was a terrific learning experience. He developed a much deeper perspective on why various companies were looking to acquire other businesses and their strategies to do so.


The Last Two Standing

Eventually, the list of interested suitors came down to 2 final companies. In the end, it came down to cultural fit and good landing spots for Andrew’s employees. His focus wasn’t strictly on the money.


In the end, the company which eventually bought SKYE Technologies, was in Andrews words, “A much bigger and much older version of SKYE.” The other option was a similar business, but it wasn’t actually what SKYE did. He’s confident with the company he ultimately chose.


The Environment Evolved

Andrew discusses the evolution of IT support and how cyber security is much different today. At times, the potential risks to his clients literally kept him up at night. A cyber incident could cause the client to go out of business, not to mention the potential legal exposure for Andrew. It’s not what he thought he’d be doing in 2006.


In today’s environment, there are competitors on every street corner. Some are much larger and then there’s the smaller price-oriented players. Given each of these variables, and the fact that people were actively interested in acquiring SKYE Technologies, selling the company was definitely worth considering.


How Would Andrew Have Done It Differently?

We are specifically addressing the process of selling the company. A VC connection helped Andrew to better understand the enterprise value of his company, by analyzing the numbers differently. Looking back, he may have started with a higher enterprise value.


The entire process really only lasted from the Spring of 2020 to the Fall of 2020. It was a relatively brief process. Jeb, mentions the average time is 9-12 months. Having a couple of years to better position, prior to entering the actual sales process can be very beneficial in terms of maximizing the value of the enterprise. Andrew agrees. There were steps he could have taken, had he really assumed that mindset, much earlier in the process.


What Type of Experts Did He Use During the Sale?

Andrew explains that the company which eventually acquired his company was extremely experienced in valuations and acquisitions. He had the opportunity to get to know the CEO of the company. Andrew never really felt as if he was at a disadvantage, given the sense of integrity and experience he recognized in the company’s leadership.


Andrew did decide to work with a consultant/advisor, who was a specialist in this industry. He was able to perform some financial benchmarking and add value to the overall process. This step provided a better sales price, as well as peace of mind for Andrew. He highly recommends utilizing the services of someone similar to this. While the price for the service may seem high, that professional should easily pay for him/herself several times over.


Andrew used his existing CPA, given the tax planning considerations involved in a deal of this size.


From a legal and contractual standpoint, Andrew hired an outside attorney who was very experienced in mergers and acquisitions, in Andrew’s specific industry. His existing business attorney didn’t have that particular knowledge base, and was kind enough to have that conversation with Andrew.


Looking Back

It was a wild ride. Andrew says he’d do it over again. It wasn’t perfect, but it worked. He admits that a couple of clients left even before the process began, once they were informed of Andrew’s intentions.

There were also some growing pains. Andrew discusses that a few transition issues did surface. The overall support channel has changed with the new company. There’s not all that much Andrew can do to change the process, even though he is still working. He’s no longer the boss; rather, he’s an employee. It’s, at times, a challenging change of roles.


The announcement was July 1st and Andrew was eagerly anticipating the date. There are many tasks he would no longer have to worry about, such as payroll or HR. His headaches are fewer, but he’s still fielding issues from his clients, but again, he’s not in charge of the resolution for each issue. It was harder to let go than he anticipated.


Communicating to His Employees

Andrew explains he only had one employee who was fully informed of the plan to sell the company. He really wanted his right-hand man to be both aware and supportive of the decision to sell. The end result is that the larger company is brining on many new opportunities for growth and income for the team. “The ladder was much taller.”


He eventually called a company-wide meeting. As the founder and leader, he made an emotional announcement and introduced the new company’s leadership team. This was ultimately an asset-sale. The field is brighter for those who remain and continue to excel in their respective roles.



I’d like to thank Andrew McIntosh for taking the time to share his journey and perspectives.


At the end of the day, you should sit down with a qualified, investment advisor who can help you to think through your strategies. A good advisor will bring a solid perspective, but also know how to develop and implement your strategy. You can schedule a meeting with Louisville Certified Financial Planner Jeb Jarrell, by clicking this link.


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