Ep 566 From "Unsellable" to $112M, a Bootstrapped Sale to Intertek

Colin Morgan (0:00)

Hi there and welcome back to another edition of Built to Sell Radio, the podcast designed to help you punch above your weight in a negotiation to sell your company. I'm the executive producer Colin Morgan.

Okay, now buckle up because this is a special episode of Built to Sell Radio. It's got a bit of everything from how Andy Klump took a service business from unsellable to $112 million exit, to a couple of surprising hiring hacks. It's also got a couple of negotiation gems, and it serves as a stark reminder of an idea we talk about a lot on the show. You never want to become an acquirer's proprietary deal.

Make sure you're subscribed to ensure you never miss an episode of Built to Sell Radio. And without further ado, here is Andy and John. Enjoy.

John Warrillow (0:52)

Andy Klump, welcome to Built to Sell Radio.

Andy Klump (0:54)

John, thank you so much for having me. And it's been an honor to have the chance to connect with you, read your books, and listen to your podcast countless times. So I'm very happy to talk to you today.

John Warrillow (1:04)

I'm thrilled. It makes my day when I hear that.

It's a kind of passion project for me. So it's great that it was helpful on some level. And I want to get into the deal itself. Clean Energy Associates. I was trying to kind of find an analogy for what you do, explain it for folks in a way that people would understand. I'm sure you're probably in a much better position to do that. What did you guys do? What did you sell?

Andy Klump (1:31)

So we were a technical advisory firm focused on the solar and storage industry, solving supply chain, procurement, engineering, quality assurance and market intelligence related challenges. But to make it very, very simple, we were kind of the eyes and ears on the ground in China, helping folks who are working with a number of Asian based manufacturers. We weren't just in China.

We eventually scaled and grew the team to 15 countries. We did inspections and had clients or client projects in over 85 countries around the world. So we had to travel to many parts of the world where I even I couldn't go myself. But we are based the eyes and ears on the ground, both in the factory, as well as on the project level, helping to support solar clients, solar and storage clients who are deploying solutions worldwide.

John Warrillow (2:21)

So if I were a US customer, as an example, and I wanted to contract with the Chinese manufacturer of solar panels, and I wanted to make sure that the work was being done correctly, compliantly, at standards, I might hire your firm to kind of evaluate that, that the effect will be the contractor.

Andy Klump (2:47)

The reason I started the business in China is I had been developing a career there, I spoke Mandarin, and the market had shifted from the time I joined the solar industry in 2006, where literally only 5% of products were manufactured there, ended up being closer to 90 today, but at various points in the supply chain, it could be a little more or a little less, but I was there at that early cusp of the high growth area for the market in China, and so yes, we started off just focusing on doing inspections at the factories in China, and I had the knowledge of what it was like to actually live on the factory floor.

I worked out of a warehouse before the Trina Solar IPO in 2006, and the better part of my two years, we were just basically like right alongside the guys at the factory until we formally set up a formal headquarters building and everything else. But yes, I was based in Changzhou, China, which arguably was a fourth year, maybe someone would say fifth year city in China at the time. But it was a first.

John Warrillow (3:53)

So why wouldn't a solar company or company in the United States who wanted to contract with the Chinese company to make solar panels, why wouldn't they have someone internally in house to do that job? It would seem that you'd want to have like an internal person vetting the contract and evaluating the supplier.

Why would they outsource that?

Andy Klump (4:16)

And absolutely, if you look at the history of large companies like Walmart have a massive presence in China. They have a huge QAQC team. But at the time, the solar industry was extremely small. In 2006, the global solar production was roughly 1.6 gigawatts, which doesn't mean anything to you, but it effectively has grown over 600X in the last two decades. So it is a much, much larger market now. And so you have to be able to have that size and scale. And so our first really core group of clients were not Americans. It was more the European companies. And some of those European manufacturers, or some of those European, yeah, they were manufacturers, and they would source part of the product in China, put a label on it, and then ship it. They had teams of a few dozen folks doing inspections.