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TN Bun Company founder and CEO Cordia Harrington never thought about selling her business. At one point the company’s sales were about $120 million with EBITDA around $17.5 million, and she wondered what she was going to do, and how her kids were ever going to be ready to run a business that kept growing.
While talking with an estate planner, she mentioned that the company was getting ready to build a $70 million bakery in Arkansas. Given her age, the planner said that she owed it to her family, and herself, to figure out what her business was worth.
“I mean, in my mind, all I could think of is debt, cash flow, blah, blah, blah,” she said at the Nashville Smart Business Dealmakers Conference. “I didn’t even think about what it could possibly be worth.”
She agreed to bring in a banker and have them evaluate the business, and was shocked by what she learned. Soon after, she met someone from a private equity firm that only invests in food businesses, and in 2019 sold them a majority stake in 2019.
“We ended up getting $50 million more than we thought on the sale,” Harrington says. “So, all of a sudden, I’ve got a great big new problem. What do I do with this cash? I didn’t know how to make money with cash, I never had any.”
After the sale, she was asked if she wanted to roll some of the proceeds from the sale into the new deal, something she admits she didn’t even know was possible.
“At that point it was like fluff money because it was so much more money than I thought we’d ever get in my whole lifetime,” she says. “Oh, why not roll it. And you can be the CEO, and I’m like, OK. So, I get this great salary. I get to do everything I want to do — lead strategy, make acquisitions, use their money to do so, reward my team (they’re all still part of the team) — and we’ve gone from 500 employees to 1,750, approximately, employees, nine plants, 15 million buns a day, and all of my team is making more money than I ever dreamed I could afford to pay them. So, I’m very grateful.”
When she got the payout from the majority sale of her business, the way she approached allocating that to her family was to give a large percent to her leadership team and paid off some debt when they sold. As for her adult children, she says she’s never had a direct conversation with them about the money because she wants them to work.
“Nobody can take away from me what I learned making mistakes and growing the business,” she says. “And I want them to have that opportunity that I had. They do have a trust. They don’t know what’s in it. They do know if I get hit by the bus who would be talking with them. But even in the trust, that sort of got an ironclad glove — they can’t just stop working because I think it would take away something that I think is very important to me.”
When it comes to charitable giving after a significant liquidity event, she offers this guidance: “Make sure you’ve got somebody that understand your heart and what you’re really trying to do. My whole goal my whole life has been create opportunities, make a difference and impact lives. So, trying to do that now with cash — I always did tried to do it in my business, but now how do you do that? Scholarships for people or travel for people or whatever. And I’ve got really great estate attorneys and guidance on how to let what’s important to me carry on.”
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