How a $50M Science Ed Company Used a Perpetual Purpose Trust for Succession

Matthew (00:06)
All right, welcome back everyone to Bicycle for the EoMind podcast. Today I have with me the founder of Vernier Science Education, David Vernier. How are you today, David?

Dave Vernier (00:15)
I'm fine.

Matthew (00:17)
Excellent. Now, can you tell me what is a maybe a favorite quote of yours and why?

Dave Vernier (00:23)
Well, I guess I say often life is what happens when you're busy making other plans. So I hadn't thought about that, but that is something I say occasionally because I think it often happens that way. Yeah, certainly we never planned to start a business and ended up with a company that, know, over 100 people and then around 43 years. So.

Matthew (00:38)
And in fact, you were saying that's how the whole business happened and yes, quite the success and I'm excited to get into it with you. So what prompted you to consider selling your business?

Dave Vernier (00:57)
Okay, so we, like I said, we never really planned to have a business. It grew kind of organically. We never borrowed any money except to buy buildings. And we finally started, we did make a lot of money over the years. 20 or 25 years ago, we decided we needed to do something to have more help in the management of the company and we talked to some lawyers.

We briefly looked at ESOPs at that time, but we found out they were extremely complicated even in those days. It might not have been 25 years ago, but whenever ESOPs were around. But we talked to a lawyer who set us up to do sort of what dentists' office and law firms do, you key people in the company and you sell a percentage of the company to them. You, the original owner, loan them the money with interest in their payment schedule, but if the company is profitable, the moment that the person becomes a new owner, they are getting an income stream. And in a perfect world, that income stream almost matches the payments they need to make to the original owner and everybody's happy. And that person gradually owns a percentage of the company. Now we did that many times with as many as 13 people or so. And we kept doing that over the years and we got to the point where we had sold 60 % of the company. So we owned 40 roughly. And the other people who were all employees, every single one is an employee, there's no outside ownership. Two of them had, no, three of them had retired and they had to sell their shares to those same people who were part owners.

So as of a year or so ago, we had, I think it was eight or 10, probably 10 part owners of the company, including my wife and I. And we needed to do something to answer your question. We're just kind of rolling along and not thinking much about the future. And all of sudden, about two years ago, our CEO said, I'm gonna retire in two years. And that was like, whoa, that's a wake up call. We assumed he would be, he had been with us for 30 years, he'd been CEO five years. We assumed we'd just keep rolling along and not really thinking about the future. And that was an absolute, my God, what are we gonna do now - kind of situation because we didn't wanna take things over again. 
 
We've been trying to hand off more responsibility, although we're working all the time, but not letting other people make some of the key decisions. Anyway, that just shook everybody up and we started into a major, what the heck are we going to do mode? And we, I started looking at things and got out my old ESOP notes. And I think our CEO went to an ESOP conference somewhere and, I got out notes where I had heard a little bit about a perpetual purpose trust, read about that. 

We also actually courted a few people to see if they would buy us Not not exactly competitors but sort of parallel industry people Where they could incorporate our products into their line and we kind of knew the people we kind of liked the company and That almost worked I think in a couple cases and we weren't wild about that because we knew that could mean lots and lots of changes to the company but we wanted to at least consider the option financially, probably would have been a good one for us. And then we read again, this article was in some magazine, I think, I can't remember where, about perpetual purpose trust and especially about organically grown and that process of how they got the Oregon law changed to allow perpetual purpose trust. 

And I contacted Natalie and talked with her and a little bit with, I think she connected us with Peter one time. And finally, well, we started a little exploratory process with them.

Matthew (05:40)
Yeah, so just to recap, you've covered a lot of ground with us, which I really appreciate you letting us into the story. you you've been exploring the key, you know, selling to key people, you expanded from just the two partners, you've, you know, went as high as 13 folks, you got to 60%, you had some retirees, you looked into ESOP, but it seemed complicated, heard about perpetual purpose trusts from the organically grown company example, you didn't consider it a strategic sale, but didn't quite go through. And so you're really like, showing you, you've thought a lot about and you've considered a lot of different options. Maybe with the most successful or rather, I should say, the final choice that you made, what was the first, like what was the role of the first person you called to help you?

Dave Vernier (06:24)
Well, guess, of course, Natalie is the answer. And we also talked with our attorney. I think the first step was we literally did, I think, short little contract with those guys to say, for a few thousand dollars, will you be on a Zoom call with our 10 partners and explain this situation, talk about the pros and cons? And I think that was a...you know, a two-hour session where I had presented what I thought about the perpetual purpose trust and how it would impact our company. But I wanted the other owners to hear it from the horse's mouth, so to speak. And so then we had to have lots of discussion after that. Do we really want to do this?

And then that led to another round of hiring Natalie and Peter to really dig into it.

And then we had to have every single person, I'm sure every single person went to their personal lawyer and accountant people and talked about how it would work out. My wife and I donated about half of ours to, donated it to the Perpetual Purpose Trust. And so we are getting paid for 20 % of ours over time and the other people need to be paid off.

So that's a big deal and it means the company has some debt to pay off. I wish it was less, but hopefully that'll be fine and we look forward to the day when they don't have the debt and can just do good with the income stream that hopefully is still there.

Matthew (08:19)
And just to take a step out for a moment. So I know you've used the term, you know, perpetual purpose trust. think our listeners will also be familiar with the term employee ownership trust. Could you talk about the two of those and how you think about the terminologies there?

Dave Vernier (08:20)
Well, I don't know too much about the other terminology. We really zeroed in on perpetual purpose trust, which our structure has a legal document assigning the purposes of the company, which are, it's great detail, but to summarize it, it's to be good to our employees, to take care of our customers, to be environmentally sustainable as best we can and to support local nonprofits and ⁓ and definitely take care of our teacher customers. So all those things are built into the legal purposes. We have a trust committee that every year will review what the company's done and if they're not doing what the trust says they can complain. 

There's a person called the trust enforcer who can literally say that's not acceptable and we can even conceivably take legal action that they're not doing what we told them to do the purposes of the Company it's now a corporation. We had to change from an LLC to a corporation And then there's of course we have an executive team we all incidentally we one of the reasons we expedited this process of making the transition to a perpetual purpose trust or at least making the decision to be a perpetual purpose trust was that we wanted to get a new CEO because our CEO had said he's leaving and we wanted to honor his wishes. we knew we did not want to hire a CEO and two weeks later say hey by the way we're going to change to a perpetual purpose trust and your visions of owning all the company and making millions and millions of dollars that's gone.

The first step was to make the decision, are we going to do a perpetual purpose trust? Then start looking for a CEO. We actually completed, amazingly, started this whole thing last spring. We completed the whole process on January 1st of 2024. Then we hired our new CEO in March. We did everything in order that way.

Matthew (10:52)
Yeah, and so we've gone through a couple more steps, right? So we talked about the donation and then there's also some amount of debt. You were able to seek payment for about 20 % of your shares. We talked about the legal document, the trust stewardship committee, the enforcer having to become a corporation and how that fit into your timeline with the new CEO. I'm curious, could you say a bit more perhaps about - were there any tools that were involved? Methods or tools that helped you think about the selling price for the business through any of these transitions?

Dave Vernier (11:24)
You know that it was really challenging because we've been around for 43 years and we've done always been profitable. But you know the pandemic was no picnic for anybody, especially for a company that sells to education. And then you could say, ⁓ my God, that's pretty bad. But in reality, the supply chain problems were actually much worse than the pandemic in terms of the impact on our company.

You know, we buy chips from mostly Taiwan and we build stuff mostly in Beaverton, Oregon, but the chips come from Taiwan and we'd have chips that cost $3 and next week they're $30. And that goes into a product that sells for $90. you stop making that product, maybe you go out of business. Well, the only other option is to redesign the product with a different chip, which is millions of dollars of engineering time, reworking. We essentially reworked every product we own because the chips would disappear or triple or ten times over increase in price. So for three years we didn't have a single new product, which was just painful for us because we like to introduce new products and sell them and get people excited about our new things.

So it was a challenging time and we knew that, know, it's how do you evaluate something that has been rolling along for 40 years and then all of a has this downturn. And then now, but now the biggest problem, the chips problem is getting better. So the answer is we did guesswork on what the value of the company was. And I think that's always the way it is. There's no such thing as an exact answer.

And we had to make it work because like say the perpetual purpose trust does owe money to these employees. In a perfect world, we would have owned more of the company and could have given more away. I mean, it'd be nice to be Patagonia and you'll give the whole company to Mother Earth or something, but that's not going to happen too many times.

Matthew (13:50)
Yeah, and could you talk a little bit about sort of that financing structure? So I think, you we mentioned, you know, so there was both some donating as well as some financing. Was that all seller financing, to be clear, so there was no third party financing? Yeah.

Dave Vernier (14:02)
There's nobody else involved.

In other words, the trust has a contract with, well, I guess about eight people, maybe 10, I can't remember, and it owes them money on a regular payment schedule. Some of them are 12 years and some are 15. I'm a pretty shrewd businessman, so I plan mine so I get my final payment when I'm 93.

Pretty smart, huh? I didn't want that income stream to dry up. I'm kidding, of course. That was a stupid decision, but we did it because it makes it little easier for the company early on. For the record, we've also agreed that if the company is still viable when we die, my wife and I own the building, separate from the company, we own the building we're in, 45,000 square foot, very nice building.

Matthew (14:31)
Yeah.

Well, you had two hats on at the same time, right?

Dave Vernier (14:59)
We will donate the building to the company because we know that would have left them in a... if we do die right away that leaves the company in a pickle because they you know they were in a building that they don't have control of.

Matthew (15:15)
And I may take this moment just to point out it is quite the building just from what I was able to read online. So there's a photochromic glass, a bike room, 17,000 watts of solar panels, a worm composting bin, a beehive, bat houses, and two bio swales with blueberry bushes and fruit trees.

Dave Vernier (15:26)
And a slide, we have a slide. And we have an exercise room with six showers and two beehives, yeah.

Matthew (15:34)
Amazing in a slide.

Incredible. And how thoughtful of you all to set up that structure that way that you would donate the building and clearly you've thought quite a lot about this transition and making sure that you're looking out for all the different stakeholders involved. Just kudos.

Dave Vernier (15:55)
Because we do have, I think there is a real good People here have gotten along well and we do have a real a real sort of a somewhat of a family feel everybody knows everybody and even though we have a real mix of people everybody from PhD scientists to overpaid software developers to People with GEDs that put stuff in boxes and test stuff all day long. So a real mix of people. We also have lots of athletic events.

Every day we have some kind of sports event like a basketball game or a volleyball game or a soccer game. And we also have yoga classes and we had an adapt class today that's like crunches and lunges and jumping jacks and stuff like that. anyway, we didn't want to destroy that culture. And that's of course, one of the good things about a perpetual purpose trust because we think that we can hopefully keep that. It's for the purpose.

Matthew (16:51)
Yeah, absolutely.

And you've defined it across all these different stakeholders with your trust document. If I could linger for a little bit longer on the sale price and the relationship of the valuation there. So you mentioned having a trust stewardship committee who presumably represents somewhat of the interests of the employees, sometimes an employee.

Dave Vernier (17:11)
Yeah, we have two employees on it, plus these other partners who are employees too. I mean, they're members of the team, they work here and they're not outsiders.

Matthew (17:20)
Right. And so what I was going to ask is, know, some employee ownership transitions are sort of a back and forth, a negotiation process with the valuation. Was the Trust Stewardship Committee kind of negotiating with you about the value?

Dave Vernier (17:32)
No, the trust committee was kind of separate. It was more like a subcommittee of the former owners who were coming up with the value. We sort of split the former owners into two teams. One team worked on the HR related stuff and more of that trust stuff. And the other team worked on the valuation and how do we get this thing paid off? And we would meet weekly and we would meet with Peter.

Koehler and and The other team would meet with Natalie

Matthew (18:08)
Got it. just, yeah, sort of different sides of the transaction, but also different expertise. And I know you also engaged the B Corp examination as well. Did that kind of come up in the process of defining your purpose?

Dave Vernier (18:20)
Yeah, I hope we're doing the right thing there and I hope it's... We needed... Well, first of all, we considered becoming a B Corp and maybe someday the company will. I love the concept and it's just that the darn thing is not only a big pain in the rear to do, but it's also expensive. I think it was gonna be like $10,000 every year to be officially B Corp certified.

And so we just said, we can't justify that right now. But then we found out that you're allowed to take the B Corp assessment and just use that for free as a kind of way of grading yourself. And it has like 200 questions. So I had done that back in 2014 or 19 at least. And, you know, just as a way to get some idea, how are we doing on all this stuff that we'd like to brag about?

And then we just did it again last year before we did this trust transition. we, I think someone suggested it, but maybe Natalie, that we could use that as a tool for the trust committee to kind of grade the company on how it's doing. But it covers everything from how much recycling you're getting out there compared to your garbage, how much electricity are you using compared to other buildings the same size, all that stuff. Plus the HR stuff, chemical use and everything. So we have, I think, put that actually in the trust documents that every year we will complete that form and that'll be one measure of if the company's doing what the purpose trust says it should do.

Matthew (20:07)
Yeah, and so if I'm understanding, sounds like using the B Corp certification was a way for the Trust Stewardship Committee to ensure that the purpose is being upheld.

Dave Vernier (20:16)
Right. It's not the only way to that. They set up some other criteria like getting awards for best company to work for in Oregon. have 100 best companies list and we have top philanthropy lists and healthiest company lists. And the assumption is it will continue to be on those lists, which we have always been on. And if we we aren't, they'll consider that not so good.

And there's other measures, old profitability, that we need to have some profitability. that's all laid out in the trust documents.

Matthew (20:57)
And I was curious to ask you a little bit more about those. How did you come to kind of understand what the legal process might look like in forming the trust?

Dave Vernier (21:06)
Everything we learned, pretty much we learned from Natalie and Peter. And then they would send us documents to read. They really handled us and they did a great job, I'll have to say. They're young people and they do their stuff and they've gone through it with, Natalie had gone through it with organically grown and they held our hand and walked us through things very nicely.

Matthew (21:33)
It's amazing. We've only heard that actually about their work, which is great to lift up in this podcast. Did you compare firms at all when you were considering who might help you?

Dave Vernier (21:44)
No, we did not. I'm not sure there were any, maybe there are. It was pretty new. We had another little interesting twist by coincidence. There weren't many perpetual purpose trusts in Oregon. I believe there's not more than a handful. One of the other ones was besides organically grown was a local ocean, which is a restaurant in Newport, Oregon. We happened to know that restaurant and it's a great restaurant.

But we also by coincidence happened to know the owner who was on the Nature Conservancy Board with my wife. So we were able to talk with her and get some endorsement. So that was the nearest thing to other checking out.

Matthew (22:35)
Sure, yeah, we've heard from other owners. It's so helpful to have a peer who's already gone through it. You can lean on them a little bit, ask questions. Was that kind of how it was working with Laura?

Dave Vernier (22:36)
Yeah and I would say that as far as us doing this thing, we think it's a good thing that we're doing. But maybe the best thing about it is maybe we can be a role model to other technology companies that are far bigger and far wealthier than us to maybe consider this as an option. So let's say that's our aspiration.

Matthew (23:07)
Absolutely. Yeah. And we certainly hope that this podcast will help out with that as well. Get the word out and inspire more companies to try it.

So I was curious just to go back for a moment also about what you were saying about supply chain and how, you know, the pandemic effects and the supply chain were making things so much more expensive for you all, you know, hampered your ability to develop new products, which you were very proud of and also probably would have hit it, been hitting the valuation of the company if you'd been like actively evaluating your value throughout that whole process. Did you feel as though like you kind of had to maybe come out of that a little bit before you could transition? Did that kind of slow things down for you?

Dave Vernier (23:46)
Yeah, well we were in a hurry because I can say that we this deadline, but we did see the light at the end of the tunnel because prices were getting better. frankly, we sold the company much cheaper than we would have two or three years earlier because we lost some sales.

Matthew (23:49)
Yeah.

Dave Vernier (24:13)
We used to sell up to $50 million a year and we dropped to about 45 or 40 in the 40s somewhere. So we knew the value had dropped some, that was the reality of being wounded by the parts shortages and the pandemic. we, and we, you know, that we had, the value was reduced because of that. Now you could say there's a silver lining there. makes it a little easier for the company to pay back.

Matthew (24:43)
Right. Yeah, perhaps a little bit less debt would be necessary from seller financing and was it, I mean, I know it seems like maybe it came from a place of wanting to ease the transaction that you and your wife both decided to donate shares. Were there other considerations that went into that decision?

Dave Vernier (25:02)
No, we wanted to make the thing work. But we also felt we deserve something out of it.

But we want this company to survive and be a good place to work and support our customers who are almost all science teachers. So, not all about money, to us that's for sure.

Matthew (25:28)
Absolutely. And I'm just curious, did you all kind of float the idea of the Purpose Trust or by your customers? Had you gotten any feedback in that kind of regard?

Dave Vernier (25:37)
You know, we haven't haven't flaunted it. I think it's on our website and we made announcements. You know, I don't think we're rubbing it in people's noses or anything, but we're proud of it. And certainly. I would mention it occasionally.

Especially our audience is science teachers who tend to, I think they're impressed by the idea.

Matthew (26:12)
Certainly, mean, yeah, the ability to have a great mission and then preserve it through this kind of a structure really is pretty remarkable as you were thinking about the roadmap itself, so did you feel like you had a roadmap for the kind of the sort of A to B to C throughout this process?

Dave Vernier (26:29)
Natalie and Peter kind of laid that out for us and we were actually, we were amazed that we were able to pull it off in a little over six months, I think. And right now the course is pretty well set. know we've got to get, the company has to be profitable. We've got to meet these payment schedules and we've got to do good for employees and the teachers and Christine and I, we're still working, mostly doing odd projects, but we're trying desperately to make it all work. We're, quite a few people are retiring. That was another thing that drove this. By coincidence, we had, of these 10 partners I'm mentioning, many of them are a little bit older. So was like we needed, we were facing some transitions no matter what happened because people were going to retire. I'm 77, so is my wife, but there's people 10 and 15 years younger who are now retiring.

So even if we hadn't done the trust or any other transition, there would have been a lot of changes in this company just based on age.

Matthew (27:47)
Yeah, it feels all the more serendipitous, right, it was a magazine, you said, that turned you onto this idea.

Dave Vernier (27:54)
Yeah, can't remember where that was actually.

Matthew (27:58)
just yeah, happy accident for sure. And could you also say, so I know we've talked a little bit, we've mentioned that, it was, so you were the original CEO, correct?

Dave Vernier (28:09)
Yeah, we hardly even thought of it that way. But yes, technically I was CEO for like 35 years or 38.

Matthew (28:13)
But yeah, until John in 2015, right? And then now, so I saw that you've got Jill coming in. So yeah, could you talk about that relationship between sort of this transition and how did you explain it to Jill as you were kind of courting her?

Dave Vernier (28:18)
Yeah.

Well, remember that we made the decision, we are going to be a, well, we were a perpetual purpose trust, so that was great because we could advertise when we posted the position. This is what you're getting into. And that appealed to some people, of course, you you've got a great mission. And so we got three great finalists for the job, ironically. I think we got four even, and three of them were from Portland, Oregon, by coincidence.

including Jill and Jill impressed us with we knew we had to have we knew we were going through lots of changes we knew we had to have someone who would lead us through this and not be too heavy-handed and you know make a bunch of people angry so we think she was a great choice and she's doing a good job she she has connections in the educational technology area. Another change that our company is going through is we were a very strange company. We didn't have salespeople for all these 44 years. We only sold our stuff by word of mouth and by little ads in Physics Teacher Magazine or Science Teacher Magazine and going to trade shows and showing our products. But we literally never had a salesperson to knock on a door and try to get a big contract with the district, which is now a big deal.

And that's how many companies function. So Jill has some experience with that. So she's leading us into a new world of having a sales force that goes around and meets with the big districts and tries to get a contract for, you know, 20 schools and use our products and that. So it's a totally different style of marketing. And let's hope it works well. And we'll keep doing the old stuff too.

Matthew (30:25)
Right, thanks for pointing that out. mean, it seems like that's sort of in and of itself a kind of also like a radical shift to many things potentially all changing simultaneously, including having a sales function and to whom you're selling because I read that, you historically you're much more so focused on like the individual budgets of individual science teachers, but now it is districts as you were just saying.

Dave Vernier (30:43)
Right. No, in the old days, one teacher would buy our stuff and he or she maybe really likes our stuff. And he or she goes to the, you know, the Massachusetts Science Teachers Convention and talks about it and does a demonstration and maybe more. That's the way we grew. Totally like that.

Matthew (31:03)
Yeah. So now the market is changing and you all with it.

Dave Vernier (31:08)
Right.

Matthew (31:10)
did it kind of influence the way that you kind of went about your hiring process that you wanted to explain the purpose trust during the hiring process in a certain way?

Dave Vernier (31:17)
Absolutely. Yeah, she was well informed. About that, think she even had the trust documents and all that stuff. Yeah. And she was able to interview the 10 partners and talk to other people around the company too. So she spent some time here.

Matthew (31:37)
Got it.

So yeah, I'd like to move to the next phase. So now at this point, you've become a perpetual purpose trust and now you're starting to be able to reflect on the journey. So looking back, how do you feel about choosing the PPT as your exit path?

Dave Vernier (31:51)
Well, I when you first mentioned this, idea of this interview, I said, hey, it's a little bit early because we aren't very far down the path that we haven't even had our first complete year. But, know, the early verdict is I think it's going well. I think the employees are proud of what we've done and appreciate that they haven't had to go through huge changes and we haven't moved the headquarters to Omaha, Nebraska or something like that. 

So, I mean, if they have a brain in their head, they appreciate that they've been able to get through this thing with very little change. No one was laid off. No one was, you any of that stuff. They hopefully appreciate that they have a little more say in things. Some of them are on the trust board and more will be. We're being more open about sales numbers and profitability numbers and

So I think there's good things about that from their point of view. But of course, what matters is their point of view, not what I think. I personally think it's going well. I think Jill's done a great job. And some people are stepping up. We have a new executive team, which has people driving the day-to-day decisions. I'm not on it. My wife's not on it. Our former CEO is not on it.

They make the day-to-day decisions. so that's been a chance for some people to really step up and become leaders of a company. So I think it's going well, but in two years from now it'll be a much better answer I can give you.

Matthew (33:37)
Sure, absolutely.

You know, so some folks when they kind of unveil, what I mean is that sometimes there is an unveiling moment for becoming employee owned, you know, a selling owner will say, look to your left, look to your right. Well, you know, say hello to the new owners. Were there any sort of like, was there a reveal moment? Was it more gradual? How did that happen?

Dave Vernier (33:39)
In late in December, we always have one big company meeting and lunch and stuff. And at that meeting, we hired Natalie to come down and actually talk to our employees and explain the structure. Because we knew it would be, you know, we can talk about it, but it would have more impact if it was an outside expert explaining it. You know, I think it's soaked in a little bit and then when we announced to the public with the press release in January and there were a couple of little articles in like the Portland Business Journal and stuff like that. But I'd say we haven't made a huge splash about it.

Matthew (34:50)
But still, yeah, enough.

Dave Vernier (34:50)
We didn't do that cute thing about the left and right. Because I guess I wouldn't even say that we don't think of it as the employees owning it, it's the trust owns it. So it's subtle difference.

Matthew (35:05)
Sure. Yeah. And you've also thus created some amount of accountability to your mission as well, which is also certainly laudable and impressive. To that end, folks, you mentioned Patagonia, for example. They've tried to figure out ways to maybe have someone on the board of directors who represents the interests of nature. Did you all kind of build something like that into your governance structure?

Dave Vernier (35:13)
Yeah.

Well, I think it's the number two or three mission to be environmentally sound, on the best green places to work in Oregon, stuff like that. We're science, a lot of people here are science teachers, former science teachers. We're in Oregon. We certainly appreciate that. Hey, climate change is real. We got problems here. We've got to do our part.

So it's spelled out. We have a green team, of course, and we really do try to do a good job. I think the leadership agrees with that and the trust committee will be watching them.

Matthew (36:13)
Right. And yeah, looking at the things that you all are investing in both physically as well as as a culture, yeah, for years to come for sure. What would you say, how would you describe maybe the biggest pain point during the process of becoming a perpetual purpose trust?

Dave Vernier (36:29)
Well, I would say the toughest thing for us was the financial part because like I say, we have to make it so that trust can afford to pay back this loan, the loans to all those owners. I hate to see the company, in a perfect world, the company would have easy, smooth sailing and donating millions of dollars next year to charities and that ain't gonna happen, right? We're gonna go through a few lean years here, but hopefully we'll get to a better place as we pay off the loans and stuff. clearly the biggest pain point was the financial part of it.

Matthew (37:14)
Yeah, and you know, so we're also obviously, we are also obviously curious about how technology fits into all this. Do you think that there are ways that maybe technology could have helped you specifically on the maybe scenario planning in terms of, you know, the financial structuring of your transaction?

Dave Vernier (37:29)
Absolutely. I'm not a financial guy. Anything technology wise that could have helped us learn about valuations, just about the process, listing all the options. I think you mentioned that there might be software to just at the very beginning of this, my God, what are we going to do? You enter some information and it shows you the pros and cons of different options that would have been immensely useful. Like for example, with the ESOPs, frankly, the biggest single reason we didn't do ESOPs is because of our experience with breweries around here. Apparently, you've lots of breweries around Portland became ESOPs, which is to their credit. But the downside is, and I think this is true, if you're an ESOP, you legally have to do what's best for the employees in the ESOP. 

So if a big Budweiser type company comes along and says, I want to buy you, you can't say no. And we didn't want to be in that situation. So that was a big negative for us on ESOPs. any software program could point that pros and cons like that out. And especially assess us based on number of employees, what are our top interests, what are things that are important to us, and stuff like that.

Matthew (38:58)
Yeah, so the ability to preserve your mission as well as have the flexibility with how you designed your exit. It seems like we're high priorities for you.

And so I'm also curious, I know, so you hinted at this a little bit, trying to start to get yourself a little bit further away as well as your wife. So could you say maybe what are you doing personally now and how are you succeeding at that getting away?

Dave Vernier (39:17)
Well, we're still working close to 40 hours a week. went in Oregon, senior citizens can take a state university class for free. so I went to sign up for a class at Portland State University and I was in the process of signing up and I decided, you know, I'd really rather be a teaching assistant in the lab. So I'm helping in a physics lab there at Portland State, three hours a week.

which has been fun to see how technologies used differently and stuff like that. We used to work all the time. We don't have any kids and we both work together. I'm not exaggerating, 60 or 70, 80 hours a week probably in the peak times. It was sort of like you either did something like an outside event or you worked. That's way it was. Now we're more like almost like normal people and we work Saturdays but we don't work Thursdays. We retire on Thursday. And we're going to cut back more but we want to make sure this transition goes well.

Matthew (40:22)
Yeah, well, if I may, sounds like you're getting back to Portland State and the lab is also kind of reconnecting you with some of the spark of the company itself for you.

Dave Vernier (40:30)
Well, yeah, interesting to see how the world's changed. I did that stuff 50 years ago. So it's the same thing.

Matthew (40:38)
Yeah, it's a coming full circle, it seems like.

Well, I appreciate your time so much. I'd like to move to our final phase here in some of your closing thoughts. What would you say is the first step you'd advise an owner to take when they start thinking about an exit?

Dave Vernier (40:48)
Well, think look for anybody you can talk to who's going through the process. Seek out books and websites and maybe software that can give you advice. Talk to your lawyer for sure. Talk to your accountants. And do a lot of reading. That's what I would say.

Matthew (41:18)
Yeah, be thoughtful about it, do your homework. Is there anything that you wished I had asked but didn't? And what else would you like our listeners to know?

Dave Vernier (41:26)
You I think I've pretty much spilled my guts here and I can't think of a single thing. You did a good job interviewing me. You pumped me for all my information.

Matthew (41:39)
Thank you, Dave. Well, how can our listeners reach for you and is there anything you'd like to hear from them if our listeners do reach out?

Dave Vernier (41:47)
No, if anyone has questions, I'd be happy to talk with them.

Matthew (41:52)
All right, well, thank you so much for your time today,

Dave Vernier (41:54)
All right. Bye.

Matthew (41:57)
Bye now.

Matthew (42:00)
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