Ethical M&A for Mission-Driven Companies with Hannah Sandmeyer

Jennifer Norman:
In this episode, we are going to get down to business. Let's face it, the phrase ethical business often sounds like an oxymoron. Most people hear mergers and acquisitions and immediately figure that there's going to be profit hungry buyers, cost cutting takeovers, and founders watching their life's work get restructured beyond recognition. And honestly, that fear is not unfounded. When a business owner hands over the keys to someone who doesn't share their values, the consequences can be brutal. Employees can lose jobs, communities can lose stability, and the mission that once made the company special can get stripped for parts. But today's guest is rewriting the script.

Jennifer Norman:
Hannah Sandmeyer is the founder and CEO of Up and Over Advisors, the world's first and only Certified B Corp buy-side M&A sourcing agency. An organization built on the belief that buyers and sellers deserve values alignment, not just a financial transaction. She has sourced more than $600 million in private acquisitions, helping mission driven and employee owned companies grow without sacrificing their souls. What makes Hannah's work so groundbreaking is simple. She's one of the only people in the M&A world asking not just is this profitable, but is this right for the people, the planet and the long term health of the company? In an industry where ethics often feels like a whispered afterthought, Hannah turns it into the headline. In this conversation you'll learn how aligning on values, not just valuation, creates healthier, more resilient business. How to prepare for the Silver Tsunami, that massive wave of boomer-owned businesses preparing to exit. Why selling to the wrong buyer can destroy years of purpose-driven work, the inside scoop on Steward Market - Hannah's newly launched platform helping mission-driven founders and values aligned buyers actually find each other, and why she believes this is the most powerful moment in history for founders who care about impact. If you've ever wondered whether business can truly be a force for good, Hannah is living proof that it can.

Jennifer Norman:
And she's here to show us how. Let's dive in.

Jennifer Norman:
Welcome to the show, Hannah.

Hannah Sandmeyer:
Geez, that was a wonderful intro, Jennifer. You had me smiling and nodding right along.

Jennifer Norman:
Yes, yes, that is me. I celebrate you even before you said a word. Oh Hannah, I was saying to myself when I first learned about you, I am so grateful that there are people like you on that are able to really turn business on its head. Because I think so many of us, me included, have been working for companies in the past and just said there's gotta be a better way. There's got to be a better way to do business that really doesn't feel like I am crushing myself and that I am compromising myself and that I feel really, really good about. So I want to start with the first question that I think a lot of people are probably wondering about. What the heck does mission-driven M&A actually mean? And how is it different from traditional business, traditional mergers and acquisitions?

Hannah Sandmeyer:
Yeah, it's an excellent question. Thank you for asking it. It's still very nascent. I mean, when you think about all the transactions that happen every year, it's hard to find data on mission-driven M&A. Right. Outside of describing or labeling what that might be. From what I've seen anecdotally, it's less than 5%.

Hannah Sandmeyer:
Right. So per your intro, the vast majority of transactions are built around the financial metrics of that transaction. And oftentimes people will boast post transaction, like I just read the other day, we bought this company, we flipped it in six months for 4x of what we paid for it. Yeah, that's commonplace.

Jennifer Norman:
And that's considered very successful.

Hannah Sandmeyer:
And that's...

Jennifer Norman:
Yeah, that's the metric. It's just about the dollars and cents and how much you can make, how quickly you can make it.

Hannah Sandmeyer:
Exactly. That's the home run. Right. And then you see the other models that are really prevalent, right. Outside of what we're trying to do or what we're trying to advocate for. And it hasn't been easy. Jennifer, I'll tell you this, so we could talk a little bit about that. Like it's been with any business. It's slow to capitalize. We started last March.

Hannah Sandmeyer:
But we're really on a mission, no pun intended. We really are on a mission to find morally ambitious buyers, to recruit morally ambitious, triple bottom line profit for purpose capitalists to the buy side. And that has proven to be a little bit challenging. So in their absence, who is partaking every single day, it's these more predatory actors who are looking at these events as consolidation and extraction events. Right. These events that are contributing to this widespread of those who have everything and those who have nothing.

Hannah Sandmeyer:
And to your point about the dramatic impact that has on all of us, because we are all interconnected, none of us can survive in an urban area or in a rural area across this country, across this globe, where people are losing their jobs by the thousands and you're not able to keep pace with the cost of just normal living expenses. So I don't know if you were on the call, we're both B Corps, right? So hallelujah, you are a B Corp, we were born to be a B. That was like our intention, like if we're going to do this, we're going to be a triple bottom line business. That was like from the get go. It was like, it was not a maybe it was like a must have for us. And we really wanted to differentiate ourselves and market that way. And that's really been a wonderful gift to be able to do that. There was a call between B Lab and some of the employee ownership model representatives which I think that is a perfect marriage. Right.

Hannah Sandmeyer:
For more B Corps to become employee owned would really be a magical event. But Timothy Garbinski from the National Center of Employee Ownership shared a harrowing stat. And this is about like the mass impact how capitalism is running in our country and how it is impacting us all and how it's coming for all of us whether we think about it on a day to day basis or not. The average holdings in the US based retirement account. Can you guess the average dollars held?

Jennifer Norman:
Oh gosh, I can't even.

Hannah Sandmeyer:
Excuse me, median. The median amount?

Jennifer Norman:
Yeah.

Hannah Sandmeyer:
So the average amount held in US retirement accounts, or median amount is $0.00.

Jennifer Norman:
Wow.

Hannah Sandmeyer:
So people cannot miss a paycheck. And we've seen this with this administration and people going without their government jobs and then being under threat that they might not even be paid back for the time that they worked where the government was shut down. We cannot afford that collectively as a society. So our ask to market and why we're in this space is are we just gonna sit back and let this happen to us? Right. Or are we going to believe in what we're doing? If we're especially in the B Corp community, we're strong founders, strong ethos. We have great employee retention numbers. Right. We benefit from sticky customer bases.

Hannah Sandmeyer:
We know we have a better model. We're doing this because it feels good. Yes. And it's aligned with our ethics. Right. And it feels great to not have to decouple yourself when you step into your workplace and abandon all the things that really, really matter to you to show up to be whoever your corporate boss or your corporate brand wants you to be. Like to really be a whole person. But if we don't show up for each other and we just allow this to happen, I think it's a missing part of the social contract.

Jennifer Norman:
Yeah, it absolutely is. Backing up for a moment because you, you touched on so many important things That I want to make sure that my audience is gleaning from our conversation. The first aspect is that obviously business transactions, you sell a product or a service, you get money for it, and some people leave it at that. And the higher the profits, the higher the success. And it's all about financial metrics. What companies like what Hannah is talking about and what I am part of also, which is the B Corp movement, the B Corp movement is really talking about the fact that beyond dollars and cents, we think that having a purpose, feeling like you are fulfilling something, and having a positive impact on other people and on the planet, what we call instead of shareholder values, we call it stakeholder values, is that everybody in the entire business ecosystem is impacted by what you are doing, the decisions that you're making.

Jennifer Norman:
And we want to hold ourselves accountable for those decisions and for the impact that we are carrying, not just about dollars and cents. And so a B Corp Certification essentially is considered the gold standard. There really isn't anything higher than it, from what I know globally, for businesses to really say, I am going to contract with all of my stakeholders, that I am going to be a responsible steward to all of the people and all the planet. And that is why when Hannah talks about employee ownership, that becomes so valuable and so important, because then employees feel that they are truly a part of that company, in that they are owners of that company, they have an equity stake in that company, and they have a compelling motivation to do good and to see the business through again. Not just about profitability. Profitability, of course, with capitalism, is important. We all know that reinvesting in the company and growth is something that we wish to achieve because we are ones that love to expand. We are human beings that continue to innovate. We want more. We know that this is something that's part and parcel to motivation and moving the world forward.

Jennifer Norman:
But we want to do it in a way that is not destructive, that doesn't hurt other people, that isn't an us versus them, that isn't my gain is your loss. All of those things are important. We want the collective to succeed with us. And that means how can we give back? That means how can we share in the wealth? That means having something in your retirement account for when you are about to retire and not having the stress of that burden because only the fraction of the 1% has all of the wealth and everybody else does not.

Jennifer Norman:
So now we get into the idea and the concept of yes, a business. Say you are a business owner and you've put your passion and your dream into it. But you know that maybe it is time to retire. We'll talk about the silver tsunami in a moment. Or maybe you believe that there is an opportunity for growth and that a buyer or some invested capital can help you do that. A lot of companies, a lot of owners are struck with this decision of giving over their baby and not knowing what the heck is going to happen with it, of just, oh my gosh, they're just going to look at this like meat and potatoes and just strip and flip, strip it and flip it and then what do you have? Your legacy is gone. So that's why Hannah is trying to flip the script on this. So why don't we talk about the concept of ethical business transactions and value matchmaking, because I think that this is something that you have discovered as being a niche that is worth looking into and driving more attention to so that more buyers and sellers can feel good about co creating together. Let's talk about that.

Hannah Sandmeyer:
Yeah. So John Abrams, the founder of South Mountain Company, which at one point was the highest scoring B Corp on the planet, Jennifer has called this, and I think it's a perfect. Maybe it wasn't him, but he talks about it. The perfect term or language to use around this phenomenon. He calls it fat wallet, broken heart syndrome.

Jennifer Norman:
Yes.

Hannah Sandmeyer:
And to your point, more than three quarters of selling founders consider the sale of their business a failure because of what you just described. Because what happens to their business, especially if you're a founder held business as you're talking about, or are there most? I think half the GDP based on some metrics are held by baby boomers, small and medium businesses. Right. So this is a ton of value and a big port portion of our economies, macro and micro, that are held by these baby boomers who have this business for 30 plus years. They may have had the same employees for decades. They care about what happens to their business. And currently in market there are very few conversations they can have about the sale of their business that where they feel comfortable and they don't feel like they're going to be predated in some way. Mm.

Hannah Sandmeyer:
That is they're gonna be able to either tell their story holistically or be able to ask questions around the stewardship goals of the buyer who's knocking on their door. So the result of that, which is Also horrifying is 80% of founders never sell. Right. They simply close. And of course the downstream impact of that interesting is catastrophic. Right. So to your point of the Silver Tsunami, 3 million small medium businesses across the U.S. the next five to 20 years are held by baby boomers.

Hannah Sandmeyer:
And they will need to find an exit that represents, based on the W.K. Kellogg Foundation, $127 trillion in value transfer, 32 million jobs. So what are we advocating for? Or who are the buyers that we're seeking to support and what is the work that we do to set up an ethical exit? Well, we're looking for buyers. I just was talking to one just yesterday actually, a B Corp up in Canada and they said they're looking around, they have a good business, they're under a million dollars in revenue, which is not uncommon for B Corps. B Corps tend to stay a little smaller. They hit this artificial ceiling because they maybe have a challenging relationship with capitalism, you know, and they don't want to be seen as this is a big bad wolf, or they're maybe not highly competitive, or they have still a challenging relationship with profit. This founder, co founder of a B Corp was looking around the room and he sees other founders in similar business verticals to him in his network with gray hair. Right.

Hannah Sandmeyer:
You know, and he knows that they need to exit. So he sees it. And this is exactly how we see it. Are we going to step up for each other? Right. Because these are viable businesses. Do we have the risk profile where we can say, you know what, I think that I can show up for your company, I can show up for your employees, I can take on your business and benefit from that increased margin or maybe cross sell opportunities. Right. Or new client bases or new geographies that I would get access to overnight versus for this founder to think about.

Hannah Sandmeyer:
Well, how would I double EBITDA organically? He's been in business for over 15 years. He's never been able to get over that like $900,000 top line revenue threshold. Acquisitions are inorganic growth that transact relatively quickly versus organic growth. Right. So that is why it's so popular. Overnight you can gain these things. And for a mission driven founder, what they can do with an extra $250 million in EBITDA is probably pretty powerful. And we know too that when a company is held in the community, three times more money capital circulates in that community versus if it's held by a conglomerate.

Hannah Sandmeyer:
Right. Where it's just sucked out. Yeah. So how can we help buyers who are not only are looking for integrantic growth for their own capitalistic reasons and for their own stability of their company, but that are also looking for values, alignment, mission fit, cultural fit. Because after everything is signed, right, Unless You're a trust. You have a trust model. Your mission is not protected. So it is.

Hannah Sandmeyer:
And your values are not protected or your legacy is not protected. There's no... People can say nice things and they will, but when the contract is signed, they can do whatever they want with your company. The seller has now lost control. So how can we recruit buyers to the buy side who care about that a and want to qualify based on that? In our business model, we only work with buyers, Jennifer. We don't work with sellers, and that's for a couple different reasons. But the reason, the predominant reason why we work with buyers only is because I care so much about that seller's legacy. So we will only work with buyers where we are very confident because effectively we're selling them to this founder saying, hey, you built over the last 30 years, trust this person.

Jennifer Norman:
Wow.

Hannah Sandmeyer:
They're going to preserve that. So we really, through our process, we really have to understand what is the goal of your acquisition strategy. Are you just looking for additional market share? Are you looking in traditional PE categories that are cash heavy and resistant to recession? And are you looking to hold them for three to five years and then pursue a liquidity event? You're probably not fit for us. Right. Versus a client or a prospect like the one I was just speaking about. Where he is really looking to, yes, to achieve his own financial goals, his own stability, to reach new levels of profitability where he can create better jobs and offer better benefits and do more things with his company through additional revenue. But he's also looking at, well, I want to step up for these. My friends who I know have to exit.

Hannah Sandmeyer:
This is an event. It's not a kind of maybe. And we don't live forever. We're going to have to pursue this at one point or another. And if you're not in a position and most companies are not, they're small businesses. The US economy is built is made up of small businesses. Selling to your employees is likely not an opportunity. If it is an opportunity, I encourage you to check that box off first to pursue that.

Hannah Sandmeyer:
There are tons of organizations who can help you do an assessment to see if that's a good opportunity. But if you can't hand over the keys to the people who helped you build that business in the first place, seeking out someone whose values align with you is absolutely critical. Because that values alignment is what is going to protect your legacy. Absolutely. Because none of these exits are neutral, something will happen. Yeah. So to your company, once you leave lining on mission values and stewardship, legacy, goals with that buyer and the founder is really, really important.

Jennifer Norman:
Absolutely. I love that you just spoke about how the predominant share of businesses are so small. Under a million dollars is not unrealistic. And a lot of companies and founders that are the founders of companies or the owners of companies that are small think, oh, M&A, that's just for massive, large, large companies. I don't really think that I have a viable business. Nobody's going to want to buy my laundry service or my little shop on the corner. Do you think that those are some of the biggest misconceptions? What are some of are misconceptions that some people have about M&A and finding somebody to take over the legacy?

Hannah Sandmeyer:
Yeah, I think for the sellers it's fear. Right? It's fear and it's just like something they push off. Right. Or they think it's really expensive. And it's true. I mean, if you're, if you're looking at traditional investment bank services, Jennifer, folks will help you find a buyer, do all the legal and the financial modeling. A lot of those, their nominal fees are $300,000 to start.

Jennifer Norman:
Yeah.

Hannah Sandmeyer:
Upwards of a million. Right. That is inaccessible. Of course there are vendors that will work under that. But yeah, I mean, it's just the large nature. It's so easy just to push that off because it's such a big, bolder decision. And I was speaking with a gentleman in Eugene just a few weeks ago in Eugene, Oregon, who is a pastor and now he also is an M&A attorney. He sees this work as pastoral because it's such a large percentage of your personality is wrapped up in the business.

Hannah Sandmeyer:
So of course you don't want to talk about it, you don't want to think about it. So the number, the percentage of folks that don't have a viable succession plan is outsized. Right. It's the vast majority of folks, especially as they're lower on the market, they have lower revenue. Maybe they never really hired a bookkeeper, they've been doing that themselves. Or they don't have anybody who can really help them put together the books, clean their books up or have any kind of rational expectations. And then hiring an M and A attorney, of course, is expensive, but these are expenses that, hmm. Well, they're hard requirements.

Hannah Sandmeyer:
Right. If you really do want to be able to exit out of your business and find, certainly find a viable partner, but also make sure that you're getting the right value for your business and at the right terms and you're not being taken advantage above for sure. So those are some of the big misconceptions, I think, for buyers too. And that's again, like that's where we really focus because that's the agency. It's, that's where the power is. Because when you're a buyer, then you control the destiny of what happens with that company. Sellers, regardless of how they approach it, they will lose control. Right.

Hannah Sandmeyer:
Unless they keep 51% of the business. And of course there's transactions that are like that. They're more like asset sales or that are non majority ownership. But so for founders that maybe have never considered, and this is true, I think most founders have considered at some point that they're going to exit. Most. But the majority of founders have never considered being a buyer. Right. And when I talk to purpose, problem for purpose companies, mission driven companies, when I suggest such a thing to these founders, Jennifer, their prominent reaction is they recoil physically.

Jennifer Norman:
Really?

Hannah Sandmeyer:
Yes. And they say, Hannah, I can't, I can't buy, I have to sell. Right. So it's more of a defensive posture. And of course they think they get the horn and the tails as soon as I'm gonna require. Right, right. So I think there's also large outsized misconceptions on what it takes to buy a business. We've done transactions for folks that are sub 1 million.

Hannah Sandmeyer:
No worries. We're not afraid of that. Those sides of deals, right. There's plenty of them that are really healthy and of course there's people that are involved, there's micro economies that are involved. So we really care about that. But that it doesn't cost a wheelbarrow like somewhat of like this gentleman yesterday, he's like, do I need a wheelbarrow of cash? He's like, no. Actually the vast majority of transactions today are especially in sub 1 million or a million to 5. 5 million in enterprise value are done through SBA loans, of course, which are still happening that are, that you can qualify, you can access cash that way or through seller financing.

Hannah Sandmeyer:
So seller financing it might look like, Jennifer, I was going to buy your business is a million dollars is the value or the purchase price we agreed on. Maybe it's a simple multiple of your, of your EBITDA. And maybe I put down 10% as a, in cash, as a deposit. And then over the next three to five years, I pay you out a percentage of the revenue that the business generates. Right. Or maybe there's profit sharing. And then of course also what's fairly common is maybe you hang out for a while because I want to learn from you. I don't want you to, I don't want you to hit the door right away.

Hannah Sandmeyer:
And certainly I want the company to be stabilized as I'm coming in as the new owner. So if you leave, maybe not, then some of the employees or staff kind of gets nervous. So having you there is anchor and still certainly you're the, you're the expert in the business. So learning from you, learning what works, because I'm not going to assume that I know everything and I want to learn from you. And then if the business grows through both companies coming together through this acquisition, maybe there's additional cross selling opportunities from business that I'm currently running where now we have more opportunities, we can get bigger contracts. Then if the revenue grows beyond our projections or even goes up from flat from what you've been doing over the past three to five years, then there would be accelerator payments. Right. So maybe a little bit of a bump above what we agreed to as our standard repayment process.

Hannah Sandmeyer:
That is very, very common. And to your up to your earlier question, there are a ton of impact funds that are an impact investors that are actively seeking these types of deals. Even if and I, which I think is even most exciting is if you're buying a business with an employee ownership wrapper. So you're buying the business and then you're converting it to an employee ownership model. What a magical thing. Right. For all the reasons where we just talked about, but also that inherent give back of stability where people say wait, what we got acquired but we're now owners of this larger entity. Well, holy smokes, what a cool opportunity if I can benefit from having equity in a larger entity.

Hannah Sandmeyer:
Now you start to see where this has been done. And there are companies that have roll up strategies that are baked in an employee ownership model. What they find is instead of employees starting to maybe take notes of client client information and maybe they're not as cooperative in meetings where initial meetings where people are trying to understand, well, how does it work here? Like what is the process? How do you, what's your sales process? They're more open to share best practices and they want to stay. Right. Which is a huge gift for everyone.

Jennifer Norman:
Yeah.

Hannah Sandmeyer:
And that's where we really see the antithesis. We really have then flipped the script of what traditionally it means when your boss says we've been acquired and everyone's like sh. Yeah. When is that?

Jennifer Norman:
Like, yeah, everything is unsettled and what's going to happen to my job?

Hannah Sandmeyer:
And yes, am I going to be redundant? I mean We've seen this time and time again. It's not a welcome event. And that's often why actually even in transactions that are done between purpose driven companies, they don't the fat. And this is part one of the harder parts for founders is they can't talk about it with their employees while it's happening. And they don't. So this is all happening behind closed doors. And I was speaking with a founder last year where they said the process of selling their business through a $50 million B Corp, it was the hardest times of their life. And when their husband would pick them up after work every day, they would just cry in the car.

Hannah Sandmeyer:
They shared everything with their employees. Right. They were an ethical business. They were really open, they were really collaborative. And then they were having these conversations behind closed doors which nervous. Even though they were trying their best to find the best buyer for the company, anything that's set at the negotiating table is likely not going to make it into the contract and is not enforceable. So it's a very nerve wracking event and it's very stressful and very. It's very hard on people, but it can be done.

Hannah Sandmeyer:
M&A can be a force for good. And I don't know if you know this, but I found this out as I was building this company. I came across this podcast with the co founder of B Lab is the B Corp certification agency, Bart Houlihan. And he actually came up with the idea the B certification from a failed M&A transaction that he was a part of.

Jennifer Norman:
Interesting.

Hannah Sandmeyer:
Yeah.

Jennifer Norman:
Wow. No, I didn't know that. And it's fascinating because I think that there are a lot of people who may work for a business or be in a business and say, well, I'm not a B Corp, I'm just learning about B Corp, but maybe I'm not ready for that. Am I an impact company? How do I even know and what is this? Because I certainly would love to have my employees feel a sense of purpose and a sense of pride of what they're doing and I want to be able to give back more. What are some of the things that your buyers want to see in selling companies that would make them feel like, oh, this is a really good value driven organization that I might want to be investing in.

Hannah Sandmeyer:
Yeah. I think a lot of what they look for are especially in client relationships. Are they long held? Do they get a good portion of their revenue from referral based business? Right. That's always a good indicator that this company is living their values and that they're, they're loved. Right. That they have not only good product but they have reliant and a good customer base that are advocates for them. Right. That's certainly when they're looking through, especially when they're looking through financials, they can start to pull out pieces that are more meaningful there based on what, what they can glean how revenue is coming through the business.

Hannah Sandmeyer:
But certainly culturally. So ask. We ask a lot of questions when we, when we reach out. So we reach out cold most often to founders that we have identified. They're rent operating a company that might be a good fit for our buyer based on service model revenue that we can kind of gleam size of employees, location, that kind of thing. And then we also will cross reference. So we'll look for certain terms that are really important to our buyer that we can just scraped from their website. So anything that would, that would allude to the values and the cultural setup that would be most applicable or most.

Jennifer Norman:
Transferable or most like sustainability or DEI.

Hannah Sandmeyer:
Yeah. Regenerative. Yeah. Philanthropy. Right. Or if they're, if like one of our clients for instance was we really like to work with companies that work for nonprofits. So we would look for those key terms or if it's a climate based business or certain kind of technology or any kind of even like management structure like eos. Eos, that kind of thing.

Hannah Sandmeyer:
Like we would look for. And then we would ask, we would certainly in those conversations with the founders we'd ask questions about like well, what is your, how would you describe your culture? How are people working together? What kind of upward mobility do they have? What's your ENPS employee score, that kind of thing. What, what is the tenure of the company? Upward mobility? Have they seen that kind of thing? And then also like pay structure. Right. I mean that's also comes pretty, pretty clear. Are there a lot of contractors?. Right. Which is inherently on the surface like a bad thing. But are you providing good jobs? Right. With good benefits.

Hannah Sandmeyer:
Those things are really important. And then of course we look for certifications. So beyond B Corp, 1% For the Planet, People Putting People First, Carbon Neutral. Those kind of like third party certifications are easy checks. Right. But yeah, I mean that's, those are kind of like some high level things that certainly founding buyers that we work for are looking for.

Hannah Sandmeyer:
But also what is interesting too Jennifer, which I think is. Has a lot of energy behind it is when a triple bottom line or purpose driven business is also seeking out maybe a traditional just for profit business. Right?

Jennifer Norman:
Yeah.

Hannah Sandmeyer:
And the immediate upside of bringing in your model, like we talked about, like the immediate upside, morale. If you said we bought the business. But guess what? Every single one of you is an owner. And the effect on culture and morale and productivity in the company that that has. But also new life. Yeah. But if a B Corp bought a non traditional business, right? But I think that to your point and to your question, there are plenty of companies. There's only 10,000 certified B Corps globally, right? That seems like a big number, but it's really not that many, right? And it's a pretty hard standard to meet that's pretty rigorous, as you and I both know. But there are a lot of really good companies out there that for one reason or another just have never gotten the certification.

Hannah Sandmeyer:
But they're still doing all these things, right? They're still, they have a philanthropic model, they have an ethical supply chain. They treat their employees really well. They have a lot of volunteer activity, right? Paid volunteer time for their staff. They're doing all these things, right? But they're not. And they're talking about ethical business models or lifting people up, lifting up communities, doing good work, doing heart forward work. These kind of, these kind of things that are tangibly the same things, but they don't have these certifications. Or maybe they have an easier one to get, which is one for 1% for the Planet. And anybody can sign up for that, right?

Jennifer Norman:
I'm wondering if the 'why' is as clear. Because when we talk about traditional M & A, just as we did at the top of this podcast, where somebody's like, oh, I'm going to just flip and strip. And that is their why. They know that they want to make a multiple and do it quickly. And so that's just the way that they go about doing business. This is different. This is vastly, vastly different.

Jennifer Norman:
And so how do you have these conversations with buyers and then with sellers about their why? Like, why do you want to buy, why do you want to sell? What is it that you're hoping to get out of this? What is their why?

Hannah Sandmeyer:
Yeah, I mean, what we're really looking for is a long term hold, right? When people start talking about short term holds and then they're looking for a liquidity event, that's where things really go off the rails, right? They maybe they position themselves as a comfortable fit for that selling founder, right? And they're, and we've seen this before where company is sold, held for three to five years, everything is good. Right. It seems like a good fit as a strategic buyer. It seems to make sense. And then they sell to like a private equity holding company and that company. Yes. I mean there are so, so many stories like that. So longevity is a big one.

Hannah Sandmeyer:
Are they also what kind of another thing that we look for is. This is a technical term, so I apologize in advance. But it's called the IRR. So it's internal rate of return, which effectively means how quick are they looking to make back their investment? To be positive on their ROI from the purchase price and traditional PE firms will target 35 to 40%. Right. So they're looking to get that investment back very quickly. Right. And then head to the next liquidity event.

Jennifer Norman:
Yes.

Hannah Sandmeyer:
So that's another good indicator is how fast are you looking to get back your money or how are you structuring this deal? So if they're really heavy on, for instance, we talked about earnouts. If it's really heavy on earnouts and earnouts could be missed. Right. That also might not be a very ethical transaction. Right. Where we can see they're not really trying to invest in this company, hold this company for it to be one plus one equals three event, which is there are so many opportunities for companies to have to transact to find inorganic growth where you don't have to get the company to see a financial return. You actually can benefit from what's there. Right.

Hannah Sandmeyer:
And only add and improve from more people coming together, working together, having more minds around the roundtable. There's so many opportunities for that. Maybe it's not these big bang liquidation events that that other predatory actors are seeking, but there's plenty there. There's plenty of good reasons, ethical reasons that don't harm people and planet or, or take away prosperity from the people who built a business or their job or even their job, frankly, to see them as redundancy or just a line item. But those are the kind of things that are like, those are red flags for us where we're like. Or where they're really focusing on traditional PE categories, where we can see that they're trying to build a stack that would be attractive to predatory capital. Right.

Jennifer Norman:
So you can kind of whiff that.

Hannah Sandmeyer:
Yeah, yeah. So we really look for like one of our clients there. I'll just mention them. I think Peter would be okay with that. Is Karma Dharma up in their Canadian company. And Peter's a $5 million digital branding and marketing agency. And he has this dream to build a hundred million dollar Deloitte for Do Gooders Collective. Right.

Hannah Sandmeyer:
And he wants to do that over the next decade or so. There's absolutely no way that Peter could grow from 5 million topline revenue to 100 million organically without M & A. Right. But the way he wants to do it, he's looking for like minded companies from an horizontal service level and also from a vertical, vertical tuck in perspective where similar companies that are doing similar things but just in different geos. But Peter is looking for one plus one equals three. Where we have more of a CEO roundtable. We have cross sharing opportunities. We just create more stability, more opportunity, better jobs, better benefits, more, more prosperity for Do Gooders.

Hannah Sandmeyer:
Right. And those are, those are kind of things. It's like, okay, Peter, like I can get down with that. That makes sense. And what's important for us is being buy side working exclusively for buyers. And we're talking to selling founders, which is such a vulnerable position for them. Often we really have to understand the story because that becomes so critical in our process because we're knocking on doors for folks who are actively raising their hand. Right.

Hannah Sandmeyer:
They're not listed on any marketplace. And we're saying, hey, we're working for a buyer. We think it would be a good fit for you. I really have to believe why that's a good story. I would be. Not that we're going to be perfect, but that will haunt me if I feel like I'm representing buyers that then turn around and create generational harm. Right. To the people working there.

Hannah Sandmeyer:
Right. Or again cause that fat wallet broken heart syndrome for the selling founder. For that to be filled with regret. That would be a hard position for me.

Jennifer Norman:
Truly. Truly. Let's talk about Steward Market, which is your newest initiative. What inspired this creation? And for somebody who's never heard of it before, how would you describe it in one or two sentences?

Hannah Sandmeyer:
Yeah. So we're all about ethical exits, creating ethical stewardship, creating ethical transaction moments. And we only currently represent buyers as I've been describing. But sellers still need resources and there's CPAs and attorneys, there's professional services that partake in these transactions that are, there are ethical actors and there's also this whole world of impact investing. We wanted to provide a way where all of all of those seats at the table that are required and necessary to have an ethical transaction, everyone rolling in the same direction, everyone values aligned, to be able to find each other and to transact in a place that feels safe, feels like no one's going to get the stick. Right. To say it that way to feel like they like sellers can tell their story. They can talk more about just their even trailing 12 months their margin they can actually talk about why they built the company, who they're looking for, what their stewardship goals are for this exit and they can also sort and filter by who they are.

Hannah Sandmeyer:
So I'm a woman, I'm a lesbian owned business. I'm a B Corp. If I sold my business I would absolutely want to sell to another B Corp or 1% For the Planet, or I'd love to sell to an employee ownership model. If you go to traditional business buy-sell websites today, Jennifer, I won't name any of them, but if any of you have had the experience to go on any of them, they're very flat, they're very transactional, they're very volume driven, they're very about the brokers, they're very much about the financials. Steward Market is actually where you can come and it's almost like you build a dating profile when you talk about the things that really matter to you the values alignment, what you're hoping to see and buyers can do the same thing. So then they can surface deals that match match really what they're looking for from a long term perspective. And V2 we hope to have the opportunity where buyers can come on they can describe the deal that they're looking for and in real time we can cross surface like well do you have this deal fully funded? Because here are three patient impact capital funds that will provide you mission-aligned capital, non extractive capital, that are looking to invest in exactly transactions like this one. Like for instance, we're a women owned company, we're looking for a climate business maybe we're doing renewable energy, and we have an employee ownership model, right, like you're going to be able to say you're going to be able to establish yourself as that kind of a buyer.

Hannah Sandmeyer:
You can say well shoot. And it's a $5 million transaction. Here's three investors who want want to give capital to these kind of deals. They want to move money this way. And on the flip side, sellers can tell their story and they can find somebody in more of a values alignment way. It's called Steward Market. We just have the initial landing page up right now, stewardmarket.com, people can sign up. So if you're a CPA and you want to help people get their books together, put together proper valuations or think through deal structures that aren't predatory they will protect really what you're looking for.

Hannah Sandmeyer:
They can also sign up. Lawyers, attorneys, so to put that whole ecosystem together so sellers don't feel so vulnerable, they don't feel so unprotected. They, they're so eager. I'm so confident this site is going to be very successful and when we're successful, only good things will come of it. Because I think, think sellers will be so relieved that the emotion that I hope that they feel when they come in on the website is relief and joy.

Jennifer Norman:
Yes, right.

Hannah Sandmeyer:
That they have a true opportunity to find their, their steward. And they're relieved. They're relieved to have the opportunity to do that in a way that doesn't feel predatory. And then I'll say this. Lastly, the business model for these buy sell websites are fairly predatory, as you might imagine. The site will take 5 to 8% commission on the transaction value for the closed transactions that go through the website. We're not going to do that, but we are going to provide an opportunity for both sellers and buyers to opt in to donate 1% of the transaction value into the Steward Impact Fund which will go back to fund early stage entrepreneurs. Or maybe even we're thinking about pitch competitions where instead of don't pitch me what your, what business you built, pitch me your acquisition, your M & A for good acquisition strategy.

Hannah Sandmeyer:
Have you identified maybe a polluter down the street that maybe you have a better business model and you want to go and acquire them and then reinvent them from the inside out, those kind of opportunities? I think that we can create this regenerative M & A cycle which really is what it should be. It's when people are transacting and value is transferred at that level. How do we get that back to people who need the start? Right.

Jennifer Norman:
Yes. Oh, Hannah, Extraordinary. I want to thank you so much for your smarts and your sensitivity in coming to market with such an opportunity as your platform Steward Market and all of the consulting that you do, all the teaching and training and educating that you do to help people understand this area. Because it can be intimidating. It can be something where a lot of people feel like, oh gosh, as soon as they start hearing about these things, they start to get like, you know, nervousness from top to bottom. And you're making it so easy and so accessible. And so I want to thank you so much for everything that you've shared and there's so much more. I feel like we've just scratched the surface, but beautiful humans, if you're listening today, please look up upandoveradvisors.com, stewardmarket.com as well as Hannah's own podcast, ethicalexits.com and you'll learn so much more about the possibility of keeping your legacy, values driven buyers, values driven sellers, and those that are looking to clean up and create more regenerative positive for the people and for the planet, businesses for the long run. Hannah, thank you so much for being my guest today on the podcast. It was a joy.

Jennifer Norman:
If you're listening today, please look up upandover advisors.com, stewardmarket.com as well as Hannah's own podcast, ethicalexits.com and you'll learn so much more about the possibility of keeping your leg values driven buyers, values driven sellers and those that are looking to clean up and create more regenerative positive for the people and for the planet businesses for the long run. Hannah, thank you so much for being my guest today on the podcast. It was a joy.

Hannah Sandmeyer:
My pleasure. Thank you, Jennifer.

Jennifer Norman:
Thank you for listening to The Human Beauty Movement Podcast. Be sure to follow, rate and review us wherever you stream podcasts. The Human Beauty Movement is a community based platform that cultivates the beauty of humankind. Check out our workshops, find us on social media and share our inspiration with all the beautiful humans in your life. Learn more at thehumanbeautymovement.com. Thank you so much for being a beautiful human.