Home Care Strategy Lab

#83 Selling your home care agency might not be at the top of your mind, but the decisions you're making today will directly impact what your business is worth and how easily you can eventually walk away. Craig Falk has sold two home care agencies and interviewed 18 other owners who've exited, uncovering some surprising lessons about financial readiness, emotional preparedness, and choosing the right buyer. He breaks down why selling a profitable agency can actually leave you with significantly less income, why buyers often prefer a larger business with lower margins, and how owner dependence can diminish your company's value. We get into the realities of negotiating a sale, navigating due diligence, and discovering that life after ownership isn't always what you imagined. Whether you're actively considering an exit or still in the early years of building your agency, this conversation will challenge how you think about growth, profitability, leadership, and building a business that has lasting value beyond you.

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Creators and Guests

Host
Miriam Allred
Host @ Home Care Strategy Lab
Guest
Craig Falk
Executive Advisor @ Pando Home Care

What is Home Care Strategy Lab?

Is there a single right way to run a home care agency? We sure don’t think so. That’s why we’re interviewing home care leaders across the industry and asking them tough questions about the strategies, operations, and decisions behind their success. Join host Miriam Allred, veteran home care podcaster known for Home Care U and Vision: The Home Care Leaders’ Podcast, as she puts high-growth home care agencies under the microscope to see what works, what doesn’t, and why. Get ready to listen, learn, and build the winning formula for your own success. In the Home Care Strategy Lab, you are the scientist.

Miriam Allred (00:00)
Hey everyone, welcome back to the Home Care Strategy Lab. I'm your host, Miriam Allred. It is so great to be back in the lab with all of you. This week I am joined by Craig Falk, an executive advisor at Pando Home Care in California. Craig, welcome to the lab.

Craig Falk (00:17)
Thanks a lot, Miriam.

Miriam Allred (00:19)
This is a pleasure to have you on the show. We've been recently introduced via some of your colleagues at Pando. And you and I met just a couple of weeks ago but had a lot in common. I was thinking about that before we we got on, ⁓ went to high school with your daughter-in-law, have roots, you know, in Idaho, and ⁓ just discovered that we're both cross-country skiers. So a lot in common. and also home care. Sheesh, the most important thing that we're gonna talk about. We have ⁓ all sorts of mutual contacts and

network and so this is gonna be a lot of fun. Let's start with your background. For those that don't know you, tell everyone a little bit about yourself personally and professionally and then I'll kind of introduce the topic for today.

Craig Falk (01:02)
So I got into home care back in ⁓ 2002 and unlike so many people that you end up meeting, I didn't have any personal experience in home care. I I came from the corporate world, but I just always had this desire to have my own business. And when I started thinking about businesses to get, I asked friends and one of them said, you know, people need help if they're gonna stay in their own home. So I researched it and I just had this sense that it was a good fit for me.

And ⁓ that turned out to be true. ⁓ I owned Craig Cares and operated it from 2002 all the way to 2021 when I sold it to Home Care Assistance And I settled into a very comfortable retirement, I would say. but three years into my retirement, ⁓ one of my very best friends, Greg Hartwell, he and his wife Lisa had

founded Home Care California over in the San Francisco Bay Area. And ⁓ unfortunately he passed away. And Lisa came to me and she said, Craig, would you run the company for me? And I have to say I was very grateful that there was something I could do to help. It was a real tragedy and I wanted to help and I was able to help. And

Fortunately it all came back to me pretty fast and I was surprised by that because I hadn't thought about home care that much. ⁓ but it did come back to me quickly. And Home Care California, the company that Greg and Lisa built, it's just an amazing company. ⁓ it wasn't that hard to run, honestly, because they had set up beautiful processes, they had an incredible team, very, very loyal people. So I mean that was a true pleasure to

help lead that that company. You know, selling a company is a whole nother job and to itself. And so that was a lot of work. And ⁓ fortunately we were able to find a fantastic buyer, Pando, who ⁓ Family Matters was the company that we merged with. And ⁓ that went really well. I was allowed to stay on as an investor and an advisor. And ⁓ the team from Home Care California was able to integrate in

Miriam Allred (02:59)
Hmm.

Craig Falk (03:22)
To Family Matters and I'd say ⁓ they're stronger than ever now.

Miriam Allred (03:26)
Yeah, great, great story. And you're unique in that a lot of people maybe build and sell once in this industry and maybe other industries, but you have done it twice. And of all the things we could talk about, I asked you, you know, all the things that we could talk about, what do you what do you feel most passionate or interested in speaking to? And you you said to me the question that you get asked most is how do you know when you're ready to sell? And so that's what we're gonna talk about. And

Craig Falk (03:36)
Yes, I think.

Mm-hmm.

Miriam Allred (03:54)
I'm always like like a hair apprehensive to cover this topic on the podcast because most of the people listening to this are building, you know, they're heads down, they're building. But all of them, at some point there is an exit, you know, at some point they will.

buy or sell or roll up or, you know, do have some sort of like exit strategy. And so I do like to sprinkle this topic in every, every so often so that people are thinking about it and you have some really great like thoughts and perspective on this. And so I I share that because I partially want you to think through that lens of all these people out there building, but they, you know, will likely all transition in three, five, ten, maybe twenty years. And so these are things that they can be thinking about even at this stage.

Craig Falk (04:25)
Mm-hmm.

Miriam Allred (04:38)
So let's just kind of start there. You've sold two home care businesses. You also interviewed 18 other owners who have also sold. I'm curious what has surprised you most about what actually determines whether the owner themselves is ready to sell or not.

Craig Falk (04:58)
before I jump into that, I'm just gonna say I remember being in those shoes of, you know, a home care owner where you're just scrambling to try to find a caregiver to fill the last minute shift. And you know, I go to these conferences and they talk about selling your company and it did sound like very abstract to me. So I can identify with that and and I want you to know that's perfectly normal, every single owner out there. But in the end, if if you do things right, you will have this opportunity at some point. So

Miriam Allred (05:26)
Mm-hmm.

Craig Falk (05:27)
You know, to me the thing that's ⁓ probably the hardest part for most of the owners, and certainly was for me, ⁓ was of the emotions. ⁓ you probably heard it said sometimes that someone's business is their baby, and I think that's not far from being true. You know, you really pour your heart and soul into your business and ⁓ there's a lot of your identity tied up into it. And so, you know, that's that's that's so

challenging is to work through those emotions. And then a different piece of it is, you know, one of the hard things is people really don't know what their number is. And what I mean by that is just what is the dollar amount that you would need to sell your company for so that you could be retired. So I think those are the two things that you know people really probably struggle with.

Miriam Allred (06:17)
Mm.

Yeah. And you you've written articles on this and you've spoken about this ⁓ previously. ⁓ one of the things that I found interesting in what I've consumed of you on this topic is this kind of like counterintuitive financial argument of, you know, owners are often better off keeping their business than selling it. Walk through walk through that mindset because some people are thinking in that headspace of like, what is better?

Craig Falk (06:51)
Yeah, and ⁓ yeah, there's a lot of aspects to it. So this is the financial piece of it, is that let's say you've grown your home care company to five million dollars in revenue and that's probably aspirational for a lot of people, but it's absolutely doable. You c it can be done. ⁓ you can grow it to more than that. But let's say you grow your company to five million dollars in revenue, and ⁓ that means a million dollar profit. Let's say you're getting a twenty percent profit margin.

So it wouldn't be unusual for you to be able to sell your company. ⁓ and it's usually defined by a multiple of your like your annual profit. So you're making a million dollars, and ⁓ a multiple of five wouldn't be unusual. So that means you're gonna be able to sell your company for five million dollars. And that's a big number, it's a wonderful number. But first of all, there's about a 20% haircut because you have to pay taxes, you're gonna have to pay capital gains taxes. So

What started out as five ends up being four, four million dollars. Then if you're like a lot of people who sell their company, you're going to want to try to turn that big lump of money into some stream of income, a stream of income that you can live on. So if you have four million dollars, ⁓ you can probably get five percent pretty reasonably ⁓ return very safely, less two hundred thousand dollars. So

You do the math here, you've traded a million dollars worth of income for two hundred thousand. So it might not sound like that great a deal. And ⁓ go ahead, Miriam

Miriam Allred (08:26)
When when you were at this stage, did you n understand this? Did you have a mentor that helped you think through this? Like I mean, here you are stating it, but I think in this regard people don't know what they don't know. Who helped you or wh how did you get educated on this when you were going through it?

Craig Falk (08:43)
In in my case, I just love numbers and I ran the numbers and it became very evident to me that ⁓ you know your return is higher if you can keep this company running. And but then the whole piece of this is that the risk is higher as well. So it's a trade-off. And you know, the fact of the matter is with

With a home care company, the profits can go up, they can go down. We all lived through a pandemic. We saw that. I dealt with all kinds of labor laws in California and made the profits go up and down. One time we went through this workers comp scourge where, you know, huge chunk of money was going out to workers' comp just all of a sudden and you know ate into my profits. And ⁓ just one thing to think about is when private equity buys a company.

Over 7% of the time it goes to zero. So we're talking about professionals, people that are really good at buying and running companies. So it's real risk. I mean you have this thing that's worth five million dollars and it's giving you a million every year, but that's not guaranteed. That could go to zero. So you know you have to keep that in mind.

Miriam Allred (10:04)
Yeah. And a minute ago you shared kind of like the two big factors are the price, you know, the financial aspect and then also the emotional aspect. The third of kind of like your three re three legged stool is the buyer. And they're another big factor in this. And so you you just kind of like stated, you know, private equity. There's all sorts of buyers out there. You know, here you are working at Pando that, you know, like the the structure of buyers, ⁓ you know, in my opinion, like, you know, private equity more

Craig Falk (10:16)
Mm.

Miriam Allred (10:32)
financial players have kind of, you know, been circling well, circling and penetrated this industry over the last few years. But how important is the buyer? And when you sold, were you thinking strategically and emotionally about like the importance of the buyer?

Craig Falk (10:48)
Absolutely. I was thinking about the importance of the buyer, no doubt about it. And ⁓ the reason I chose the buyer I did is well I wasn't thinking about selling when it happened. It just it was an offer and and for something a lot higher than I ever thought I would get. ⁓

But Jim Kimzey who's been on your program, he had sold two Home Care Assistance and he told me they were a wonderful buyer. That you know what what they agreed to the first day is what they ultimately paid him. And that was true for me as well. Now, I missed something in all this, I would say, which was a role after the sale ended up being really important to me. You know, because I learned that I love business. And so

So ⁓ because I sold to what would be called a strategic, a really big company that had all the money they needed ⁓ and all the management, all the know-how, they didn't need me. They wanted to buy my company and move on. And for a lot of sellers, that's perfect because they truly want to be done. ⁓

I probably in the back of my mind knew that might not be true. ⁓ but I didn't know it the way I ended up learning, which was that my business brain just never turned off and I I loved business and I I wanted to have my finger in it in some way. ⁓ and because of the buyer I chose, that wasn't really possible. But there's lots of buyers out there where it's incredibly natural, it's normal, in fact it's needed and it's wanted. So ⁓

Yeah.

Miriam Allred (12:32)
I think that's a common mistake where owners get fixated on that kind of like headline purchase price. You know, there's kind of like that sticker shock, there's that that excitement, that thrill. But then, ⁓ you argue as well that the structure of the offer can be just as important. And so in your mind, what are some of the things that sellers should understand and are able to negotiate? ⁓

before they accept the offer. You know, there's all like you said, even roles, like negotiating and structuring roles. What are some of the other things that can be negotiated and sellers should think about when they're structuring the deal?

Craig Falk (13:07)
Yeah, a and for my framework it would be do you want to try to just maximize the amount of money you can get and you wanna walk away and you don't wanna have any more involvement.

that kind of leads you to a different type of buyer and a different type of structure than, you know, where I was coming from and where some other people might be coming from, which is, you know, they don't wanna they wanna take some risk off the table. They want to take some of their chips off the table. They don't wanna yeah, like in my case, I didn't want to have to take phone calls on the golf course anymore like I like I did when I was an owner. so there's you know different pieces of the transaction that will be different based on, you know, kind of what you want and

And different buyers will, as I say, will want different things. So you need to match up with the right buyer. So I'll start out with ⁓ one of the things that you'll be able to consider is do you want to roll equity? So in our example that we gave, if you're going to be able to sell your company for five million dollars, it wouldn't be unusual that a seller or a buyer would say to you, will you roll 20% of that equity?

which means that you're actually gonna get four million in cash, but one million of it, twenty percent of it, will stay in the ongoing company. And so you will be an investor in the ongoing company. And ⁓ again, depending upon the the buyer, it probably means that they're gonna want some of your advice along the way, which like for someone like me feels good and it's something you want to do. ⁓

Another possibility to where you would have a little bit more involvement is you could loan money to the buyer.

So that's not so uncommon. Again, it might be twenty percent. So you would loan them a million dollars of the purchase price. You probably get somewhere around eight percent as your interest and and that's kind of a nice thing. That's an interest you know stream coming in. And of course, ⁓ it's high risk for a lot of people, but you would still be the able to advise that buyer, help them be successful.

One that I've heard people do, but is oftentimes disappoints them, is what's called an earnout. Is where let's say you want five million, that's your number, that's what you need, but they'll only offer you four. That's what they'll offer you. But they might agree to an additional million if your company grows over the next couple of years. That's called an earnout. You'd probably be involved in that. So

It really comes down to the buyers that would want those types of arrangements are usually going to be an like an owner operator. They're going to buy the company, oftentimes a young person maybe in their early 30s, and they want to run the company. So they're really going to need you.

Miriam Allred (16:09)
Hm. Yeah, that was that was great. ⁓ what about ⁓ speaking of like roles and staying on and you staying on personally but also your team staying on? Talk about kind of like the personnel negotiation that takes place.

Craig Falk (16:20)
Mm-hmm.

Well, I mean that's gonna be very important when I go back to like how emotional that it is. You know, those team members, those caregivers, and you know, the family members that are getting your care, you those are really important to you. So you wanna choose a buyer that you trust that you know is gonna take care of ⁓ fact of the matter is for your office team, there's gonna be change. It doesn't matter who you choose.

There's gonna be some change and you're gonna have some people on your team that just don't want that. And ⁓ they may be able to adjust to it and they might not be able to adjust it to it. So chances are that there'll be at least one or two people on your team that don't stay on long term with the buying company. And that's ⁓ there's really almost nothing that can be done to prevent that. but

Miriam Allred (17:20)
One of the other things is the brand you built up Craig Care. So there's brand equity, for almost twenty years in your market. Then you have, Home Care Assistance come in and and buy it. How how do conversations go there? do you encourage them to keep the brand? Do they say, we have we overrule whatever you think or say? how d how does that brand conversation play out?

Craig Falk (17:21)
That's my thoughts.

Well, it it's not uncommon for that to be a factor for a seller, because that is their legacy and they want it to continue. ⁓ so buyers might go along with that. ⁓ in the end, I mean you have sold your company and it's no longer your choice. So ⁓ they will make a branding decision based on what they think is the best thing going forward. So

I would suggest to most people pay more attention to you know how are they gonna treat your team, how are they gonna treat your clients, your referral sources, and ⁓ try not to cling to that brand quite so strongly. You know, it might make sense and and it might not.

Miriam Allred (18:28)
Yeah. With Pando, speaking of present day, ⁓ some people might be familiar with the structure of Pando or not, and I'm just throwing this at you, but I believe you all are taking a different approach, which is keeping the brands of the companies that you've purchased. And I'm guessing that's an intentional effort. Having done both, where Craig Cares roles into Home Care Assistance versus Pando, you're keeping the brands as they are. What's like your personal take on the better approach or the preferred approach?

Craig Falk (18:57)
I love what Pando's doing and ⁓ Family Matters, what an amazing brand. I mean, Jacob Laffin, the the owner who who sold, ⁓ has stayed on, he's still running the ⁓ that whole division. And ⁓ it's a wonderful brand and we're we're growing it in in the Bay Area in Northern California. And ⁓ but the plan is for sure as as Pando grows to acquire other brands and do the same thing in in those markets.

And I think that's a fantastic strategy. It really is, because ⁓ you have to buy carefully. If you're going to buy that way, you want to you cannot buy something where the brand is sketchy or or doesn't have a fantastic reputation. But when you do find that correct company, there's there's a ton of value in the brand. So we're gonna keep them, yes.

Miriam Allred (19:51)
Yeah, zooming out a little bit, how I ⁓ was speaking with someone recently about this. Is there is there like true brand loyalty in home care? Think about the clients and the families, you know, when they first come to you. They don't know visiting angels from Home Care Assistance, from Craig Cares, from, you know, somebody up there like

There's not as much brand equity in home care and then also on the caregiver side. They might be working for multiple agencies. They may confuse which agency's which, you know, they're just working the hours and they're focused on the client. How much weight do you think there truly is to brand loyalty and brand equity in home care?

Craig Falk (20:28)
So my opinion is it's local and there is loyalty and equity at a local level, but there is not ⁓ a national brand that people would seek out and

But there definitely are local brands that are strong. And I think all those constituents that you mentioned, the caregivers, that you know, it does matter that you know they hear the reputation of how an agency treats their caregivers. And there's a lot of value in that. And certainly referral sources, they know. And then there's just word of mouth, you know, throughout a community. If you've been there long enough, ⁓ a lot of people have used your service and are going to recommend you.

Miriam Allred (21:11)
Can I ask how long I know I'm I'm straying from the script here, how long do you feel like it took you to like hit your stride in your community with Craig Cares to develop that brand recognition and that brand loyalty?

Craig Falk (21:25)
Well, I will tell you, I clearly remember the ten year anniversary. So in many ways that felt like a milestone. And that yes, we we were well known 'cause I remember holding a kind of celebration gathering and ⁓ a lot of people came and a lot of people were talking about, wow, that's incredible, ten years.

I mean that might sound longer than people want to hear, but ⁓ you know, certainly the brand was growing that whole time, but I I felt like I'd really created something by that time.

Miriam Allred (21:58)
Yeah, I I'm not surprised to hear ⁓ it takes that long because I do truly think it takes that long to where you you've develop a name in the community and the word of mouth and the referrals, like there's just like actual brand equity. I do think it takes, you know, ten years. So for a lot of the independents listening to this and and the franchises, like just to establish yourself in a market takes a good amount of time. And to kind of bring us back, you know, you built up Craig Cares for nineteen, almost twenty years.

it became your baby. And so you mentioned kind of earlier, obviously there's like this emotional side of selling. Help explain the difference between burnout and being ready to retire and like genuinely being ready to sell. Because a lot of the established owners that I think are kind of in this in this headspace, there's a mix of all of that. There's kind of like the burnout

Craig Falk (22:53)
Mm-hmm.

Miriam Allred (22:55)
There's the okay, you know, what's my number? There's the like I'm ready to sell, but I'm also love this and so I wanna stay on. That is like a a tangled web for I think a lot of providers. So talk through that.

Craig Falk (23:04)
indeed. Yeah. And I think you know, owning a business is a roller coaster. So there are gonna be moments when if you got a good offer, you would definitely sell because you know the workers' comp just hit you, you know, a a lawsuit showed up and you're like, I want to be done. but

Miriam Allred (23:19)
Yeah.

Craig Falk (23:25)
you know, things pass and then you get through them and you know, things are going wonderfully. ⁓ but the fact of the matter is they don't they don't stay wonderful forever. There's always gonna be challenges in a business. It's really hard. So what

I recommend, and I'll start out by saying I did not do this. I wish I had, but I think it'd be amazing, you know, anybody that would, they I think they would get a very clear picture, is step away from your business. And I think like a minimum of three weeks, ⁓ three months would be ideal. If you can step away from your business, you know, tell your team, I don't want you to call me, I'm not gonna be checking my emails, and really get away.

Miriam Allred (23:44)
Okay.

Craig Falk (24:09)
It takes a while to decompress from just the twenty-four by seven nature of being a business owner. but most owners, if you've gotten to this point, this point that I talked about, where maybe you could sell your company for five million dollars, my guess is you actually do have a team where you could be gone for certainly three weeks and and maybe even three months. So

Recommend you do that, get away, and then when you come back, pay attention to how you feel. it's quite possible that you're gonna feel very energetic. You're gonna have a whole bunch of ideas that you came up with you wanna try. I think you've got your answer. It's like, yeah, I just needed a break. I needed to get rejuvenated. I also think it's possible that you'd just be dreading heading back into the office.

And if that's the case, I think that's your answer. You know, you need to start be preparing to sell in that case. Now, like I said, I didn't do that, so I guess there's a couple of other clues that I think can can help you. One would be, like, are you still willing to take risks in your business? Or are you more conservative now and you're kind of trying to put it on cruise control? Are you still interested in growing your business?

It's really important to always be trying to grow your business. But I understand it. Sometimes you get tired and you just think, I I don't have the the energy and the passion to make this grow. Well, I think that's something you should really listen to.

And and if you have your number, if you've achieved your number, you might want to think about this would be the time to to take the chips off the table and start a new phase of your life.

Miriam Allred (26:05)
Okay, a couple of follow up questions. ⁓ granted, I know you didn't take the three weeks or the three months. Had you done that or thinking in that, like in that ⁓ vein of thought, would you spend that time away thinking about the business or trying not to think about the business? Granted, obviously it would be hard not to think about the business, but do you know what I mean? Like when you truly step back, like

Trying to almost let it all go and like reset and not think about it, obviously you'd have thoughts bubbling up and ideas, you know, maybe bubbling up or dread bubbling up, but like would your advice be to truly try and kind of stop thinking about it or or how would you approach that those like that time away? What how what questions would you be asking or not asking, or how would you be thinking, or how would you approach that?

Craig Falk (26:56)
I recommend you try not to think about your business. I believe what you're you're trying to do is you're trying to simulate retirement. You know, try it on, see what it feels like. ⁓ so that would be my advice.

Miriam Allred (27:14)
And what about the timing of this? Think back to your last maybe five years of Craig Cares. At what point do you think it makes the most sense to do this? Like at the very end or a couple years in as you're just starting to think about winding down? Like what what would the timing of this be that in your mind might be optimal?

Craig Falk (27:34)
Well, for sure I I'd say it would be that that point where you've got your number. I I don't if you are if you know that you still need to grow your company, you still need the income in order to achieve your retirement goals, then I mean it's always good to get a break, don't get me wrong. It's it's good to step away for a while, but it's not because you're looking for a an ⁓ an answer ⁓ to whether you want to sell or not. ⁓

So I would say do it when you feel like you've achieved that financial number where your company is worth enough money to where if you did decide to sell it, you could be done financially. So that's that's when I'd recommend you do it.

Miriam Allred (28:18)
Okay. Another thing that you mentioned that I thought was interesting was your like aptness to take risks versus not. ⁓ when did you hit that point of, you know, you want the business on autopilot or, you know, I'm I'm kind of done taking risks? Like when when did you hit that and and why, I guess? Was it just a timing and tenure thing or when do you hit that?

Craig Falk (28:44)
So I w even though I started my own company, I was never a huge risk taker. So there were a lot of different opportunities that came along that I didn't pursue because it would have been financially risky. So I was not a particularly big risk taker. I would make incremental changes and I was all about execution, make the business better and the and you know, the profit will come. And and it did.

So, on the other hand, what I'd say is that ⁓ like I think I mentioned, I wasn't looking to sell, but when the offer came, I really had to think about do I want to? And here's one of the thoughts that I had was that, you know, I've been running this company for 19 years. ⁓ for the first eight years at least, I did all of the marketing, all of it. I did all the assessments. You know, I was out in the community.

doing all that. So I had developed a personal network from my own personal networking. Lots of geriatric care managers, ⁓ attorneys, case managers, referral sources that were placement referral agencies. And they knew me personally and they referred to Craig Cares because they knew me and they trusted me. And ⁓ those people were very, very loyal.

But after nineteen years, some of them start to retire and you know they're not gonna refer to you anymore in the same capacity. And I could see that happening and it absolutely occurred to me because I was never that great at like hiring and managing a salesperson. So ⁓

I thought to myself, if I want to keep this going, and certainly if I want to grow it, I'm gonna have to go back out and meet some new people and ⁓ do more networking myself. And you know, as when you're 60 years old, you just kind of start to question, do I have that passion, do I have that energy? So that that played a big part for me.

Miriam Allred (30:51)
Okay. Yeah, very interesting. And then yeah, the second part of the of your thought was yeah, like growth when you feel there's you're there's the fire and the passion to grow, and then there's, you know, that moment kind of when that fades. when you were building your business, did you have a clear understanding of what you wanted to grow it to? You know, and I maybe that sounds naive, but in home care and in business in general, I just find it so fascinating that everyone's mindset is so different of what they

What they think a successful business is, what they want to grow their business to, what kind of like, you know, lifestyle versus side hustle versus, you know, all in, you know, boots on the ground doing the sales for eight years. Like it's to me, it's just so fascinating. When you started, how did your thinking evolve as to like where you wanted to take this business?

Craig Falk (31:40)
So, first of all, I'll just say that you know, I didn't grow up with business. You know, my parents were teachers, so I I did not really have business. I had an uncle that owned an AW in Stockton, but that was it. so I didn't really understand business very well and what the potentials were of owning a business. ⁓ financially, you know, the way I was raised, we were we it was a very humble you know background in that respect. and

While I'd been in the corporate world, you know, I was making a good salary, one that made me v very happy.

My goal when I started Craig Cares was to duplicate that. That was my whole goal. And one thing I can remember is it was maybe six months into starting Craig Cares and I could see that it was working ⁓ and I was starting to y you know meet the expenses of the business. And I thought, okay, if I can keep growing and I can have a little profit here. And I changed my goal. This will just show you the way I think, is I thought I don't necessarily have

to make as much as I used to because I love doing this. You know, I don't want to go back to working for somebody. So, you know, I was one of those people who had, I guess, modest goals, you might say. And, you know, fortunately I was able to duplicate that income and then quite a few more times above that.

Miriam Allred (33:06)
Yeah. So that was kind of like your early thought of, you know, six, six months, twelve months in. wow, I love this. Like this is exhilarating and the fun and the fire is maybe worth more to me than just like the monetary aspect. But then how does that change? You know, five years in, ten years in, when you when you taste a little bit of success, sometimes that breeds more fire. And and so how d how did that evolve later on of, okay, wow.

Craig Falk (33:10)
Mm-hmm. Yes. Mm-hmm.

Correct.

Miriam Allred (33:35)
you know, we're really capable of doing this. Like how far can we take this? Like what did your mindset turn into later on?

Craig Falk (33:42)
So

You know, my mindset always stayed with the quality. I I just wanted to provide quality care and I always wanted to do the right thing. And I had this confidence that that would lead to business success. And I think every time I looked out and I saw some number that was, you know, exp much, much bigger as a goal, I always waited against, you know, do I is this gonna impact quality? And and honestly, I you know, we had two boys.

We were raising our two sons. I wanted to be involved in their lives, and I thought, you know, how much is that gonna pull me away from them? And I I always made choices around you know making sure the quality was there with the business, but also in our family life. And so I wasn't driven by big giant goals. Now

When you're in business, you meet other people and you start to hear what other people have achieved. So you understand, you know, it's out there. and it did motivate me for sure, but never in a way that I hear other people talk. Like, you know, they had some big giant number in their head and they were gonna just tr strive for it. That that's not the way I was motivated.

Miriam Allred (35:01)
Mm-hmm. This is kind of a philosophical question, but do you feel like when you focus on quality, when you focus on the right things, things really do work out? Like, do you feel like that was kind of like your mindset of like if I focus on quality and I focus on the service and I focus on the people, monetarily, futuristically, like all of this will work out? Do you think that think like that?

Craig Falk (35:25)
Absolutely. I believe that, you know, in my heart and very much so. I mean I a business ultimately is there to solve a problem for somebody and to provide value. So if you are able to do that, if you're able to provide value, you will be valuable as a company.

Miriam Allred (35:45)
Yeah, I think that's one of the lessons. I mean, I personally am learning like the head versus the heart in business, because I think you and I are similar in nature of like a little bit more conservative, focused on quality, focused on helping people. But then also I also, you know, talk to a lot of people that are big numbers people, big growth people, you know, very ambitious, very hungry, like, you know, shoot for the stars. And I, you know, you have to strike that balance of you know what matters most to me. ⁓

how much impact can I have and how much of my my time and my family and my soul do I give away to this business and to growth. And so it sounds like, you know, you y you learn that at every stage of the business.

Craig Falk (36:19)
Yes.

I think so and I don't want to mislead people from the standpoint that

I I was very business oriented while I was doing this and that I had a keen sense of profit and you know what you needed to do to make there be some profit at the end of your year. And ⁓ you know, to this day I just love looking at profit and loss statements and you know I was reconciling my bank account, you know, 15 years into owning my business because I I do love the numbers. I I I truly do. So I don't want to misrepresent and say think have

People think that you can just lead with your heart all the time. You do also have to be practical from a business standpoint and make sure what you're doing does produce a profit.

Miriam Allred (37:13)
And arguably in home care you need that balance more than ever because you're taking care of people. There's real lives on the line. But then also to, you know, be a profitable business in home care, the margins are tight. Like that that balance and that dynamic is essential in home care. And it sounds like you are one of the good ones, you know, that had that and maybe had that early on.

Craig Falk (37:17)
I agree.

And there's lots of people like that. I mean, all the owners that I, you know, respect and and look up to, they have that balance. I mean they have a caring heart and they they truly do the right thing. ⁓ but they also have a business brain and so y you need both.

Miriam Allred (37:51)
Yeah. Let's let's get ⁓ back to ⁓ some of the kind of the technical things that you've prepared on this topic. I wanna jump ahead a little bit to what actually happens from deciding to sell to closing the transaction. And I've told you, you know, to come and be prescriptive and formulaic. And so you've put together, you know, kind of like a 10-step of exactly what happens. And I want you to share this with owners so that they understand clearly, you know, what happens here. So what actually happens from

you know, deciding to sell. We've kind of talked about all of the the emotions and the numbers and all of that. And then it's like, okay, tactically what actually happened. So will you kind of state what those steps are and then we can talk through them.

Craig Falk (38:33)
The first thing for most people is they they choose a broker. It's like when you're selling a house, you you you get a real estate agent and then that broker will provide a sim. ⁓

Which is a description of your business. There'll be a letter of intent, real high-level terms, that will go into due diligence. It's kind of like when your house gets inspected when you're in the sales process. Then there'll be a purchase agreement, and that's the nitty-gritty of what you've all agreeing to. You announce the sale to your team and your clients. ⁓

You then do an integration, which is a lot of work. ⁓ And then there's the close that the and that's when the money shows up in your bank account. But then finally there's a ton of work post-close that I didn't really think about and most people don't. So those are the steps.

Miriam Allred (39:28)
Okay. Which of those yeah, just a variety of questions here, which of those do you feel like is the hardest and maybe the most emotional of of all of those those steps up to the actual close?

Craig Falk (39:43)
So due diligence is extremely hard. So that's that's very hard. ⁓ w I'll tell you that when I sold Craig Care's ⁓

They send you a list of items that they want you to produce, the ⁓ buyer does. It was 500 different items. And ⁓ I just remember feeling numb. How am I possibly gonna get all this done? ⁓ and it was a lot of work. I mean, I was in on weekends, you know, after work in the evenings, putting all that together, but I finally did. And then, interestingly enough, when I helped sell Home Care California I was given a list, and I was

thinking, I'm an old pro here. But when that opened that list, I had that same feeling. ⁓ no, I can't believe it. I'll never get all these done. So I would say due diligence is like one of the absolute hardest. But there's a couple of other hard steps as well.

Miriam Allred (40:41)
Okay, let's let's talk about each of them, but due diligence specifically, that is all on you as the owner because this is before you tell anyone, correct? Due diligence is before anybody knows. So it quite literally falls to you as the owner. And you said nights and weekends, how long did that take you? How long is, I guess, a typical due diligence?

Craig Falk (40:49)
Correct.

Normally it goes anywhere between like thirty and sixty days and

Just to give people a little bit of a sense, I say selling your company, it's like you have two jobs. Because you have the job of owning and running your company, but then selling your company really honestly, it's another job on top of that. So, and then this piece you alluded to, which is for most of this process, you can't tell anybody on your team. So it's it's kind of a lonely process as well.

Miriam Allred (41:34)
And thirty sticking with the thirty and sixty days, do they tell you that and do they set that time restraint on you? Because then the pressure's really on, or is that like negotiable? Or is there a reason why it needs to move so fast?

Craig Falk (41:48)
It's tied to the letter of intent.

And when the buyer gives you a letter of intent and you sign it and it's this high level like this is a this is what we think we're gonna do financially for you, that what we're gonna buy your company for. It's not binding, but as the seller you agree that you're not gonna market your company to anybody else during that time period. So your company is essentially off the market for that time period, maybe you know, somewhere between thirty and sixty days. So

I mean, it behooves you to move through that process so that if it doesn't turn out, let's say these buyers change their mind and say, no, we don't want to buy your company, you want to be able to go get back to the other people that are interested. So they are looking at it from the standpoint that they're investing a lot of time and money into this process of buying the company, so they don't want it to drag out forever. So it is in the best interest of

Miriam Allred (42:55)
And you said a list of five hundred items. That's wild. I don't actually think I've heard that number thrown out. and you have cited several times. You like the numbers, and I'm gonna guess your your books were pretty buttoned up. What are there's probably all the kind of the obvious things that would be included in that list. What are maybe some of the less obvious things included in that list that might surprise an owner?

Craig Falk (42:57)
Yeah.

I do.

Mm-hmm.

I don't know it would surprise you, but this, you know, I hadn't really thought about it. You have to find your lease. Like you whatever you're leasing, you have to go find that and and show it. that's really you know, I didn't just have that at my fingertips. I you know, you kinda sign a lease and you forget about it. ⁓ so that was one thing. ⁓ they wanted to know,

real specifics on like what you're spending on marketing and sales and where these leads are coming from, your conversion rates. You know, most of us are probably measuring those, but not quite to the detail that's gonna be asked for. it's it's pretty astonishing ⁓ the list. Probe some more. I I can't think of anything more at the at the moment.

Miriam Allred (44:09)
Well, and so what what is your advice? Again, having like you you had a software in place, you had your books buttoned up, things like leases and stuff, like hopefully those are like in a folder t tangible or digital somewhere. What what would you have done differently? You know, like is there anything you can do better or or it's honestly that the mountain is just like I have to like accumulate all of these things and that purely takes the time, or is there anything you would have done differently or done better?

Craig Falk (44:14)
Mm-hmm.

They are.

I think rather than saying, you know, how to prepare for it so that it's gonna be easy, I would give you a few hints on how to get through it, is that I I don't think anybody's gonna be really perfectly prepared for it. but one thing I'd highly recommend is that when you get the first item, move it to the shared drive. ⁓

Miriam Allred (44:48)
Okay.

Craig Falk (45:01)
Because it'll give you this feeling of accomplishment. Okay, I've got something done. And you can look and see, okay, you know, the pile it's moving. It's moving from the to-do over to the done pile. And so every time you get something, I would say move it to the shared drive. And this is something that the buyer can see.

it'll make you feel better that you're making progress. It'll make the buyer feel better. They can see the progress and they can get started on their side of it. The other piece that I highly recommend, and I didn't do, is that because I was just so I was gonna be perfect. I was gonna be the perfect seller and have every single item ⁓ up there, is that some items are harder than others. They're pretty obscure, they're really back there, you didn't really track them. I recommend you reach out to the buyer and say,

Say, hey, this item A over here, I'm having trouble with it. Chances are that buyer will say, Well, the reason we asked for it is we're worried about this. And they'll get on a phone call with you and ask you some questions around that particular risk they were worried about, and that'll satisfy their need, and you can move on. So, what I'm saying is don't bang your head against the wall forever. Go to the buyer and say, This thing is really giving me trouble, this particular item.

Miriam Allred (46:17)
Because it's a generic list, I'd imagine. You know, it's not tailored to your business. And so there might be things on there that just like aren't red flags that are just unnecessary for you to pull. So that's that's a good point, reaching out to them. ⁓ you mentioned also this at this time, it feels like you have two jobs. Is there anything mentally or emotionally you could have done to prepare for that? I mean, just hearing that now, owners listening to this, it's like, wow, that's what I have to look forward to. But anything

Craig Falk (46:19)
Mm-hmm.

Miriam Allred (46:46)
That could have prepared you for the amount of work that goes into this?

Craig Falk (46:51)
Have a mentor, you know, someone who's done this before, ⁓ that you can call and talk to, because that's super helpful. It it was helpful to me that my wife is a business person. She owned her own business, she sold a business, she was an incredible sounding board for me. ⁓ but that was the most helpful thing to me, is to have a a handful of people that I could be really transparent with and talk to.

And that made a huge difference to me.

Miriam Allred (47:22)
Yeah, to maintain your sanity. You mentioned Jim Kimsey, you know, who had been through it and it's like you just have to have someone that can relate that you can call up and say, Wow, you know, help me think through this or talk through this almost a mentor almost like, yeah. Go ahead.

Craig Falk (47:25)
Yes.

Yeah. I I I was on the phone with Jim multiple times and ⁓ also I'll bring up Greg Hartwell and his wife Lisa Hartwell. I was on the phone with them multiple times. They hadn't sold their business yet, obviously, but they were such good friends of mine and ⁓ they provided counsel as well along the way and it helped a lot.

Miriam Allred (47:53)
Yeah. So after the due diligence comes the the purchase agreement, and earlier we talked about some of the negotiations that can and can't be made. That is where that negotiation gets happens but then also gets f formalized, correct?

Craig Falk (48:07)
I would say it's it's where it gets documented because the the negotiation hopefully is taking place when you are creating the letter of intent and agreeing to the letter of intent. There should be back and forth there. And hopefully there aren't a lot of changes between letter of intent and purchase agreement. so most of the negotiation would have happened ⁓ prior to the purchase agreement.

But once it's written, you know, you're gonna have your attorney review it, and there's inevitably there'll be things in there that just weren't covered in the letter of intent. There's no way, but I mean it's just the nature of it. The purchase agreement is more comprehensive, so yes, there will be items that have to be negotiated that come up in the purchase agreement. Yes.

Miriam Allred (48:57)
Okay. When if ever did you get cold feet throughout this process? Like during the due diligence during the due dil like at what stage do you get cold feet and maybe the most cold feet?

Craig Falk (49:11)
Well, for sure ⁓ during the due diligence, ⁓ for me.

And the reason I say that is that, you know, once you sign the purchase agreement, you ac you're actually committed at that point. You are you're legally agreeing to sell your company under the terms that you've agreed to. And that buyer is legally saying, I will buy your company under these terms, so long as you meet these terms. So if you're gonna have cold feet, don't do it. Don't do it after the purchase agreement. Get that out of the way beforehand.

Miriam Allred (49:45)
Well, earlier we we talked about, you know, you're better off keeping the business than selling it. I think you were pretty close to your numbers and so there probably weren't too many big surprises during the due diligence. But did during the due diligence did you ever think, Wow, like maybe I'm just not ready to sell? Like there's still more more to build or more to grow or more to do. Did you did did that ever cross your mind?

Craig Falk (50:05)
Yes, absolutely. And I mentioned this in my article, but you know, every morning I read my Bible and pray and then I I write my journal and ⁓ I look back at that journal here a while ago and I noticed that fifty different times I I prayed, you know, God, should I sell Craig Cares or should I keep it? So yes, there was there were a lot of feelings of ⁓ uncertainty, yes.

Miriam Allred (50:31)
Yeah, it's normal to go back and forth. Even when you have your number, you have your intention, you still feel this, you know, this back and forth, this push and pull throughout the process until the purchase agreement is signed.

Craig Falk (50:43)
Yeah.

And and that's something that I also just became so evident to me is that I had this incredible offer. What a privilege, you know, to be offered this amount of money to buy your company and you're gonna be done financially. And yet if you know I have a lot of close friends that aren't business owners, if I told them, hey, I've got this offer and I can't decide what to do, they'd just go, What's what's wrong with you?

You know, they of course you sell, of course you retire. But it's not that simple when you're a business owner and really nobody else can understand it besides other business owners.

Miriam Allred (51:24)
And then after the the purchase agreement, you have to announce the sell, which means you have to tell your team and the clients and the families that sounds really stressful to someone like me and probably someone like you to tell people that you care about and that you've worked so closely with. Talk about how you prepared for that and how that went.

Craig Falk (51:46)
I was very apprehensive, but I decided that, you know, here I am, I'm 60 years old. I'm gonna tell the team, you know, I'm retiring, and this is how that's gonna work. So I led with that, that I was retiring. And most of them felt like, well, yeah, you've put in your time and that's probably appropriate. And ⁓ so that I think most were were supportive, but

as I've mentioned, I mean things are gonna change. So there was apprehension among my team when they heard that, you know, Craig Cares was being sold. And th there's nothing you can do about that. It's gonna be there. ⁓ so yeah, it was ⁓ it was nerve wracking. I felt the same thing when we announced the sale of home care California. and ⁓

You know, that's where I think you wanna really know that you've chosen a good buyer. ⁓ because if you choose a buyer that doesn't have your values, ⁓ things aren't gonna go as well for your team.

Miriam Allred (52:54)
Mm. Is there looking back, is there anything you would have done differently on making those announcements and telling your team?

Craig Falk (53:00)
I think I would have tried to figure out a way to do it sooner, to to do it before the decision was made. You know, I know we we all talk about ⁓ you know, you can't tell them until it's a done deal, ⁓ the purchase agreement has been signed. I would prefer to like have ⁓ the ability to say, you know, this is a possibility, I'm weighing this. ⁓ and I and I know that's risky because people can then start looking for another job. ⁓

But and I don't have this thought out that well. But if if I could change something, that would be the thing I would try to change. And

Miriam Allred (53:37)
Okay. Yeah, that's fair. I 'cause I agree, it's like you don't want to blindside anybody, but you bring up a great point that I hadn't even thought of, but the risk of losing them and them not carrying out, you know, the time. Because, you know, y likely two years before, three years before, five years before retirement, this is on your mind and it's no secret to you or the team.

Craig Falk (53:42)
Mm-hmm.

Mm-hmm.

Miriam Allred (54:00)
But yeah, how much do you divulge and when do you divulge and do you take that risk? Because I agree, you don't you don't want to blind nobody wants to be blindsided. Nobody wants to come to work one day and then it's just like, you know, the owner just rips the band aid off. I nobody likes that or wants that and responds well to that. But how do you stri you know, how can you strike that balance going into it?

Craig Falk (54:07)
Yeah.

And and I think ideally if you could create some kind of phantom stock maybe for the office staff that you have and say, you know, that you're gonna have this. When I do sell the company, because I will at some point, you're gonna have some share in it because you have this this phantom stock. So that's something that I think I wish I had done.

Miriam Allred (54:40)
Is that ⁓ backtracking a little bit, but negotiable? Say you have a a s ⁓ not a co founder, but other executives, C suite, d you know, v VPs, like upper director levels, is that part of the negotiation to potentially roll equity for them or bring them into conversations or consider their involvement?

Craig Falk (55:02)
Definitely their involvement. 'Cause more than likely the you know, the buying company is gonna be very interested in your management team, for sure. ⁓

As far as them being able to roll that, like Phantom Stock Equity, probably not an opportunity, but they are going to then get a financial bonus by making the company successful. So you can kind of build it into that whole concept of, you know, we're a team, we're trying to grow our business, and you know, ultimately it's gonna be sold, and if we grow it, this piece that I'm sharing with you is gonna be worth more.

Gets everyone aligned.

Miriam Allred (55:44)
Yeah, absolutely. Which seems integral to success, especially if you're going to stay on in any capacity or be tied to the business. ⁓ I believe you said integration before close. Is that correct? There's some level of integration before the close?

Craig Falk (55:52)
Mm-hmm.

Well I I think I used the wrong word there. Migration would be a better word for it because you're migrating your caregivers and your clients over to the buyer. They all the caregivers, all your office staff, they have to sign employment agreements with the buying company. So that's what that's about. And ⁓ it's a migration. An integration takes place after the close. So you are correct. Yeah.

Miriam Allred (56:01)
Okay. Okay.

Got it. Okay, and that happens after okay, okay, okay. And and that so that migration happens and then the close and then this is a whole nother can of worms, but all of the post close. ⁓ but with your first sale to Home Care Assistance, you did not stay on in any capacity, correct? So the close was kind of the the finish line, correct? You weren't involved heavily in the post sale.

Craig Falk (56:50)
Well, what I'll say is that it was the end, you know, financially, 'cause you know, ninety percent of the purchase price showed up that day in my bank account. I did not have any business responsibility for the company ongoing. So I I didn't stay on as a leader or manager in any capacity. What does happen though is that there's a lot of responsibility that you keep from the just

The fact that you've sold the company, you y you still have accounts receivables, for example, that you have to collect. You still have to, you know, do your final payroll. You're gonna have to close the the year end and send out W2s and 1099s. There's there's a bunch of steps like that that have to happen. And trust me, those steps are easy compared to owning and running a company. But it's different from

resigning from a a corporation or a government job where you walk out the door and you're done. It's not quite that simple.

Miriam Allred (57:53)
And and just kind of closing the loop here, ⁓ in your article, you have this line about you had more money than ever, but sometimes felt poor. Talk about the that feeling of, you know, the deal is closed, the money is put into your bank account, you still have kind of to tie up these loose ends. But then this is the I mean, granted, this was your first sale, and you you talked about, you know, a few years later you get back into it and sell the other business. But

Talk about just that the emotions, those first few weeks, those first few months. How do you cope and how does what does that look like for you?

Craig Falk (58:29)
Well, I guess I'll address that thing of Mike's statement that, you know, even though I had this pile of money I still I felt kinda poor.

And you know, my wife identified with that. We've we shared that that feeling, is that you know, I'd been working for 40 years, and you know, half of that time was running and owning Craig Care's, but you know, before that, you know, I had an income stream, I was making money, and I was always spending less than I was making, and you know, I'd always put money away for retirement. So that was just this habit. And then when you've sold that income stream.

stream it stops. You're not getting those profits anymore. But you have this pile of money. So the normal way to deal with retirement is you know you take your four percent a year and you chip away at that pile. And that just didn't feel very good to me or my wife. ⁓ So

Fortunately, we were able to take the proceeds of Craig Cares and buy investments that produced income. And produced enough income to fund our lifestyle. So that felt great. And I think I referred to it as mailbox money. It's just money that shows up every month because you've made this investment. And it's, you know, you can count on it. It's not risky. and once that happened,

you know, that feeling of being poor went away 'cause we knew we had a certain amount of assets. You know, we still had some, you know, sitting there in our investment accounts and whatnot. and we weren't shipping away at it because we had it this investment income that we could live off of.

Miriam Allred (1:00:14)
Yeah, Craig, this has been great. You have thrown in a lot of nuggets here and a lot of things that people have maybe thought about, maybe haven't thought about, but should be thinking about. I just wanna one question here in closing. Think about all the people listening to this that again are still probably in build mode, but this this headspace is not that far off for them. What maybe kind of last piece of advice would you give to people building right now to start to prepare for thinking about these things in the future? What should every operator be thinking about?

Right now.

Craig Falk (1:00:44)
Yeah. So Miriam the the

Number one thing is figure out how you can pull yourself out of the day-to-day. Because I already mentioned the fact that I was out there doing assessments, I was doing all the sales, you know, I was running payroll, all that stuff. Over time, I had to delegate those things ⁓ and pull myself out. And ultimately I got to a point where ⁓ the people that were doing those jobs didn't report to me. You know, I had a director of operations that that ran the company day to day.

That's what you want to do. Figure out how to get yourself there. And ⁓ I mean there's ways to do it. There's a book called Traction that I highly recommend. We used it at Craig Care's, we've used it at Family Matters. It will help you figure out how do you grow your business in a way that you can pull yourself out of the day-to-day. But absolutely, that is the thing to do. It'll make your business more valuable, no doubt about it. You'll be able to sell it for more.

But also it'll make your business more sustainable. I mean, where you have this option of, I kinda like continuing to own my business. And you can continue to do that because it's sustainable. You're not getting burned out. You're still doing things that you enjoy. The business involvement you have is is fulfilling. But then when you reach your number and you decide you might decide now it's time to sell, and you'll have both of the options.

Miriam Allred (1:02:14)
Fantastic, Craig. I asked earlier about, you know, who your mentors were. I think what you've shared today is gonna resonate with a lot of people and you would make for a great mentor. And I know you have your role at Pando, but I guess I just wanna ask publicly, if people reach out to you, are you open to having conversations with owners, operators about these types of things?

Craig Falk (1:02:23)
Mm-hmm.

very much so. In fact, you know, I had so many people help me through my career. I feel like it's paying it forward. But ⁓ also don't hesitate to contact me because I think it's fun. I love talking with business owners and operators. So yeah, you'll make my day if you reach out to me. Yes.

Miriam Allred (1:02:51)
Wonderful. Hopefully I'm not opening the floodgates, but I do hope people reach out to you because again, there's only so many people that have been through this. You've been through it twice. You've thought a lot about this. You've shared a lot of tips and tricks and hints and ideas today. And there's a lot more that you have to offer, you know, getting into the weeds of things. But Craig, thank you. Fantastic conversation. I hope people reach out to you. I wish you all the best with Pando and the growth and the success there. I think you have a lot more to give, but just appreciate all you've done for the industry and the example that you set.

Craig Falk (1:03:21)
Well, thank you for the opportunity, Miriam.

Miriam Allred (1:03:23)
It's been my pleasure. Thanks, Craig.