Amir Hadar – A Lifelong Entrepreneur on Creating Value

Craig Castelli (00:04):

Welcome to The Close M&A podcast with Caber Hill Advisors. Today we have my friend Amir Hadar. Most people, myself included, know Amir for his work in the hearing industry today. He owns a very large group of Beltone Hearing Care centers across both the US and Canada. This is his second venture in large retail, but Amir’s reach really extends to a lot of different businesses. He’s the classic serial entrepreneur and he has a great story to tell. So looking forward to diving in. Amir. Let’s just right from the start, your first big business in the hearing aid space, Belsono was founded in 2014 at the time you called it Hearing Health USA. Tell us a bit little bit about the idea and what made you think it would work.

Amir Hadar (00:49):

Thank you, Craig, for the intro. The idea at the time I was, I was CEO of a fairly large retail organization. It didn’t start out large, but it basically became that way. As I was there, I was the CEO of a retail for manufacturer, large scale manufacturer in the us. I started in 2005 and back then the industry had tremendous potential and that was the reason for me stepping into it in the first place. The industry was changing from analog hearing aids around the year 2000. It was changing from analog to digital. Baby Boomers were at least ostensibly around the corner and we’re going to be knocking down our doors. That’s just, I dunno how many years later this is right now, 20 years later, it’s starting to happen, but back then,

Craig Castelli (01:44):

Still right around the corner, right?

Amir Hadar (01:46):

It’s pretty much still around the corner and they’re asking a lot of questions. But digital hearing aids were there, small audiology practices I noticed had nobody to sell to practices that we’re bringing in $250, $300,000 a year and we’re resigning, or they were pretty much shutting down their practices. So there was a lot of opportunity to buy those and roll them up. Better technology was finally available to serve everybody. Again, I was running the retail division for Audicon. We started out with about 15 clinics, and when I resigned in 2014, for the sake of going off on my own, at that point, we were at about, I think we had about 200 locations.

(02:40):

There was just a tremendous upside to the business. And having been in business my entire life prior to getting into the hearing aid industry, I felt that it was time to go off on my own. There were corporate changes, everything the stars, I would say were kind of aligned for me to go out there on my own. And what I noticed while I was working for the manufacturer, I noticed that the manufacturers or anyone that was buying clinics were after the bigger ones. They were after ones that were doing a million dollars in sales, 15, 20% in EBITDA, but nobody was buying the ones that would bring in 250 up to 750 in sales they had no one to sell to. So I felt as though I can go out there, get those for much lower multiples. And also through my experience running that large operation for the manufacturer, I knew that we can grow those.

(03:42):

So we’d buy a $250,000 practice and grow it to $750,000 or 500 to 700 in some cases, even more than that. So it was just the opportunity was there. I seized it. If funding was readily available, every manufacturer in the industry at that point saw what we did before and were willing to step in at very favorable terms, terms that included, for instance, no personal guarantee on the initial tranche or something that was kind of, I’ve unforeseen or I’ve never seen before in any industry where money was that readily available and everybody was just anxious to give it to me at pretty much whatever terms I dictated. So that was the drive, and hopefully I’ve answered that question for you.

Craig Castelli (04:34):

Yeah, it’s pretty amazing because we do work in so many different sectors and there’s no financing, like hearing aid, manufacturer financing, especially the way it was back then for sure. It was a very, very unique product. You took advantage of it. And look, we were involved in some of your early deals, so I can attest to the fact that you articulated this strategy back then. This is not hindsight bias kicking in and saying, oh yeah, that’s what made this work. You came out of Audicon with this clear vision, you executed it. And I really don’t think I’ve seen anybody able to buy these really small clinics that really are not performing in any way from a pure business sense. Great providers, they’re taking care of their patients, but according to business metrics, they’re really underperforming. You were asking them up. I mean, we’re talking about immediate growth, first year doubling and tripling of revenue. It was very, very impressive to watch.

Amir Hadar (05:31):

One fun fact is you got me my first practice. It was the first, maybe the second and the third as well, but you were definitely there.

Craig Castelli (05:40):

Yeah, it was a lot of fun. And we will get to this. I was there at the end too. So bring us forward to today with the current Beltone business. What’s similar to what you do with Belsono and what’s different from this time around?

Amir Hadar (05:55):

Well, it’s bigger and it’s going to be bigger. The biggest difference is scale, especially as it pertains to the funding element. We have significantly more backing than we did before. The current lender was also a manufacturer. The tremendous amount of trust in us, which either the people that are funding us today have followed my specific story. And my business partners, Jonathan Wiseman, they’ve followed our specific story since our first days in the industry. And at this point, the aim is to build, to create a certain level of history and to build what I believe will be the largest ever privately held entity in our industry. We’re aiming at 350 to 400 locations at this point, and we’re glad to say that we’re halfway there at this juncture.

(06:55):

And that’s the biggest difference, is the level of funding. What’s similar is that we are known as consolidators at heart, but this time we’re working under the belt on banner, which I thought would be challenging only because Beltone was always known as a pure retailer. So when you approach audiologists in our industry, there is a certain element of questioning, are we going to become a pure retailer or do we keep our audiology practice? And I’m glad to say, now that we’ve done this for two, three years, I don’t have that as a challenge. It was a real challenge at first. You and I have had discussions about that.

Craig Castelli (07:40):

We’ve discussed this at length. Yeah, I absolutely perceived it as a challenge. Clearly you’ve overcome it.

Amir Hadar (07:46):

We are at this juncture where obviously I can’t name any names, but we’re on the verge of buying one of a fixture, an audiology fixture in our industry at this juncture. Someone that you specifically probably would not think that I’d be able to speak to when we spoke about two, three years ago about it. I honestly don’t know how we were making this happen, but it’s over the next 30 days or so, there’s going to be a big announcement and it’s as audiology and as much an audiologist as can be. So that tells me that we’ve really been able to cross that bridge. And there were certain concerns.

(08:26):

Everyone knows that we are a Beltone agent, and one of the reasons that brought me to Beltone was the individual running GN at this point, whom I’ve developed great trust and relationship. Another thing that maybe ties into your question of what’s similar, it’s the relationships that you form. And that’s what basically got us to where we needed to be during the first time. And this is what led us to this particular venture here. It’s a set of individuals that work with what’s now GN Belton that brought me to the table. My initial response was

(09:06):

You’ve reached Elon status in the hearing industry, guys like Thiel and Gracias will say, if Elon brings in an idea, they’re going to back it. It doesn’t matter what it is. And I mean, I’m saying this somewhat sarcastically, but it’s true. You have proven yourself time and again, and they know that you are as safe a bet as they’re going to fight it. They don’t want to own the retail themselves. They should back you and Jonathan because you have proven the model.

(09:31):

It’s definitely, definitely Jonathan and myself. I mean, it takes a village as we know. And another thing that anyone watching this should know, because it’s our third go around, maybe our second as entrepreneur, but the following that we have, the level of trust that we have from our people. I do believe we have the best in the business and not only the best in the business, but also people that we’ve groomed to potentially be our successors at one point and running this business. So that’s another thing that stretches from one business to the next as the level of following that we have by our backers as well as our employees, especially in management.

Craig Castelli (10:22):

Yeah, I think just sticking with the backing for a second longer, something that a lot of entrepreneurs don’t fully appreciate until they’re in it, if not until it’s too late, is how much the capital behind you can make or break the growth story. It doesn’t matter how good of an idea you have, how many problems you solve if you don’t have somebody to back it, if you don’t have the balance sheet yourself to support it, the business can be dead on arrival. And so it’s interesting that, yeah, there’s some other elements of secret sauce here, but you’re not saying the big difference between the last business and this business is some revolutionary delivery mechanism or technology that’s changed the game. It is relationships, it’s capital. And I’m going to guess some of this lessons learned from the first go round.

Amir Hadar (11:14):

Absolutely. I mean, one thing that has changed as far as technology or at least laws associated around technology is the fact that the hearing aids as they stand as medical devices, I’m more than keeping up with the PSAPs or the so-called hearing aids that are available right now over the counter or over the internet or et cetera. The manufacturers have been able to keep a great distance between what it is they bring to the table versus what’s available out there, which are still sound amplifiers, just glorified as hearing aids. So technology has certainly helped in terms of being able to bring people, patients through the door. The fact that that’s kept up has helped, but you’re right, there’s nothing revolutionary. It does come down to funding to trust funding and execution, which has kind of remained the same.

Craig Castelli (12:14):

Absolutely. Well, let’s take it back to Belsono. This is an M&A podcast after all. When did you start thinking about that exit and what did you and Jonathan do to prepare?

Amir Hadar (12:25):

So as you mentioned before, you were there at the inception of it, and I did pretty much spell out what the plan was, and I’m glad, in retrospect, I’m glad that you’re able to say on this podcast that we did execute. But the idea was I was there as the CEO of the manufacturing company and I watched people just start these businesses and sell them within two years, three years, four years for at least at that time were amounts of money that were just unbelievable to me. And I did see some roll-ups when I was there, and given that my background was in business, I felt that I can go out there and I can go out there and do it. And the plan was from the beginning, the plan was a five to seven year plan. We wanted to reach a certain level of sales and we were in associated EBITDA and sell it.

(13:23):

So it was a business that was designed to build and sell within a five to seven year period. And I’m glad to say that we actually sold five years to the day. We reached our number within about three and a half years, started thinking about selling. Then back then it also helped that back then there was the war and Grassley bill, the Affordable Hearing Aid Act of 2016, which didn’t come around until when, 2021, 2022. But back then, it led us to feel that there was a certain threat, albeit I didn’t think it would be a great one, but definitely led us to believe, okay, we are now sales wise where we wanted to be. Let’s start focusing on having the company be as profitable as can be. But the driver was the fact that it was originally created to be a five to seven year deal. We were where we needed to be, and we started looking for the purchaser.

Craig Castelli (14:26):

Well, it’s well documented that in 2019 you realize that vision, you sold the business to Alpaca, which at the time was a portfolio company of Thompson Street Capital Partners a couple of years later exited themselves to Sonova, the big Swiss strategic in the space. How did you end up selecting Alpaca as your partner?

Amir Hadar (14:52):

Alpaca approached us. We also owned, at the time, we owned a small buying group that we started because we thought that it would be a great business that could feed our hearing aid business, so why not have a buying group? And Alpaca originally approached us about that, and that was the entire conversation never really went anywhere. We knew the buyers were there. We knew that pretty much every large scale manufacturer would be interested. We had existing relationships with pretty much all of them. But it really ended up coming down to timing. One thing that I did like about Alpaca is that unlike a manufacturer that already had retail facilities and would probably do away with my entire management staff or middle management or administrative staff, alpaca were going to keep us as we were. They needed everything that we brought to the table, the management team, the facilities and the foundation we had for running a large scale national hearing aid company.

(16:01):

But at the end of the day, they were there. They were available. I believe that the principles at the time had what it took to get the deal done, whereas there were some consolidations going on at the time. If you may recall, Videx and Insignia were merging. They were putting all their deals on hold. I think it just again comes down to the fact that the stars aligned on that one, that one as well. And again, the principles there were there money in hand. They acted on whatever promises, verbal promises were made. They acted on a fairly speedy fashion and we ended up making it happen.

Craig Castelli (16:44):

Yes, you did. We were a part of that deal as well. Coincidentally, we’re there at the start. We’re there at the end, kind of fun to see things come full circle. Your comments and timing are interesting because I feel like that’s been the story of m and a in the hearing aid industry for 20 plus years. Now. One group is hot and they’re rolling everything up and then they either make a transformative acquisition or they make a mistake and they pause and the next group comes and steps in and starts filling the shoes. And that was really that story of the alpaca runup from 2017 to 2022, 2023, that whole journey. And interestingly, Belsono brought a lot to that organization. There really was an opportunity for your team to step in and fill a lot of important roles. It was more than just buying offices and hearing aid sales and EBITDA. They bought a team too. And I think there was absolutely value attributed to what you and Jonathan had built beyond just the footprint and the addresses on the website. So I mean, I think there’s a lot positive there. What went wrong or what would you do differently the next time around?

Amir Hadar (18:08):

I think that the litmus test is actually, if I look at anything over my lifetime as it pertains to business or anything else, I look at three, five years down the line and I ask myself, would I do this again? Knowing everything I know right now, knowing everything that I know beforehand and then everything I’ve gone through over the past three, five years, would I have done anything differently? And the answer is no. I think that yes, there were certain bumps in the road, but it worked. They did exactly what they said they were going to do up until the point of the closing. So that’s where everything went, right. The typical negotiations back and forth, a little speed bumps on the way to closing, but nothing that would deem as incredibly terrible. Everything just kind of worked out that way the way would’ve wanted it to.

(19:06):

And then the only thing anyone should know, and I am not the first one to say it, and I’m probably not going to be the last, is that when you’re selling your business, be prepared that you’re no longer, although not withstanding anything you’re told you’re not going to run the business after you sell it and get paid, you sell it, you get paid a tremendous amount of money. We were told that we were going to run the business. There’s nothing that you do that we would do any differently. You guys are the best at what you do. There’s no reason for us to change anything. We’re all looking at that proverbial second bite at the apple. And lo and behold, everything changed within a week or two. I had a new boss and not just one, but the new boss in the office sitting there and kind of telling me what to do every day.

(20:00):

I think that our heart was in the right place. I can still say that Jonathan and I truly wanted this thing to succeed. We wanted to grow in accordance with what it is that was projected, what that was promised to us. We wanted to reach that second bite at the apple, and then everything did change again. Would I do it again? Absolutely. Whatever it is that happened, I can live with because I did get my goals were met for this, and my team were all able to keep their position to keep their jobs. Some liked the transition, some didn’t. But that’s kind of typical. So I would say that just know and understand what the contract says. What are you going to be expected to do when the sale does happen? And just know that you’re able to live with the fact that there is going to be change. It’s generally not personal, it’s business. Although it does get personal from time to time, we know that. But you have to be able to withstand it if you’re going to sell your business and get paid that kind of cash just to be ready for the fact that you no longer call the shots afterwards, at least not to the extent you did it before. But nothing surprised me there. I can’t say it was easy every day, but it was not surprising.

Craig Castelli (21:21):

Well, if it were easy, everyone would do it right? And it is quite the litmus test that you can look back 5, 6 years now at this point later and say, you do it again. Not that anybody was feeling sorry for you because it was an incredible financially rewarding transaction if nothing more. And it’s afforded you a lot in life. You’ve opened other businesses, you’ve gotten to spend a lot of time with your family taking some

Amir Hadar (21:51):

Great

Craig Castelli (21:51):

Trips and doing some other amazing experiences, but at the end of the day, it is business and you no longer own the business. And this is one thing that we always try to counsel our clients with on the front end when we’re on the sell side, advising entrepreneurs who’ve never sold a business before. You’re meeting multiple buyers. Yes, you’re selling them your company, but don’t forget that they’re coming in and they’re putting on a sales pitch too. They want to convince you that they are going to be the best steward of your business going forward. Let’s just assume that we’re going to have a couple that are close financially and you’re deciding on other criteria, where is any rollover equity going to appreciate the most? Who is going to treat your employees the best? Who’s going to leave you alone? I think for the most part, they’re all sincere in those as objectives. But then you actually have to move on and keep running the business after you close it. And that’s when things can go in a variety of different directions. And the more you have your eyes wide open going through all of that, I think the more you can be at peace with it, no matter which direction it goes.

Amir Hadar (23:06):

I would say to use in all adage, right, you expect the unexpected.

Craig Castelli (23:09):

Yeah.

Amir Hadar (23:11):

Be ready to be ready to part with what it is that you’ve built. Again, you’re getting paid well for it and be just emotionally ready for what comes next and understand your choices one way or another. There’s always a choice. And there was a choice here and it was exercise.

Craig Castelli (23:30):

Yeah, absolutely. Absolutely. It did work

Amir Hadar (23:32):

Out. I can’t, can’t complain. And if I did complain, nobody would care. So

Craig Castelli (23:39):

There you go. At least you recognize that. So last question, and you may have already given a little of this away, but give us some advice for a business owner. This audience is mostly business owners and folks who advise business owners. What’s a piece of advice that they’re not going to hear every day on LinkedIn or in the next business book they read?

Amir Hadar (23:59):

In terms of selling their business or in terms of just general business advice?

Craig Castelli (24:03):

A or B or both?

Amir Hadar (24:06):

So in terms of, I’ll just summarize what I said before in terms of selling your business, and I still buy businesses every day. So I deal with people selling the business, and I always tell ’em, I’ve been where you are. I understand the anxiety, I understand the sleepless nights, and I understand the thought process. Should I hold onto it for a few years? Should I grow? It is now the time to sell. What’s going to change? What will affect my business? I mean, all that’s normal and you’re going to go through it. Just know what you’re signing from the perspective of selling your business. Know what you’re signing. Use a great advisor such as, and I’ll give you a bit of a plug here such as Caber Hill, that know and understand your business and not only know and understand it, have the experience to pretty much tell you based on what everything they’ve seen to forecast for you, whether you’re getting a great deal or not, and what your future may look like, a foreseeable future for the next two years. No. And understand your contract. No, I will impact you from a business and from a business professional basis. Also from a personal basis, are you able to take orders from somebody else? Are you able to treat your business? What’s been yours in a way that’s no longer totally dependent on you? Can you deal with that? And I would say for the right money, I would say probably most would be right. That doesn’t mean you sell yourself to the devil, but just know and understand your contracts. What are the expectations?

(25:43):

Know that your expectations as far as your price are probably not going to be met always. Right? And then again, make

Craig Castelli (25:51):

Spoken like a true buyer right there.

Amir Hadar (25:55):

Know that I guess that was also a plug of the sorts. But understand what your life’s going to look like day one and just be ready to deal with it. And it’s never going to be perfect. But for the most part, if let’s say 90% of what it is you came to the table with is met, then just go through with it. As far as business advice, I know I get asked that a lot and there are a couple of elements there as far as the business that you’re in, if you’re about to start a business, just know and understand, at least to me, again, it doesn’t have to apply to anybody else, but these are rules that I follow. When I look at any business, understand the potential of the business, its scalability.

(26:46):

There are a lot of dead end businesses out there. I’ve been in a few, I’ve been involved in a few. Before I entered the hearing aid business, I was involved in quite a few. Some were very successful, some were not. But no one understand the ability of the whole concept of scale. Make sure you enter into a business that’s sellable, that’s sellable, whether it’s something that you can grow without you there one day that somebody can buy from you and still run it. And if business does well, then by all means continue to pour money into it if you need to grow it. But also know the difference between good money after bad throwing money into a business that’s just not doing what it needs to. I’m somewhat guilty of that as well. Holding on for too long. So knowing the balance between having a good business that has a great potential that you can scale and grow and one day retire with not have financial worries or keep dumping money into a business that’s basically quite the opposite. Something that strips you of your funds as opposed to ads to your wealth as important. Surround yourself with people that you trust. That’s easier said than done.

(28:10):

But also people with compliment that compliment your own weaknesses. Give people the right people. Give people minority shares in your business. If you find the right person, if you go around across someone that can run your business when you are out of town, when you’re out of town, you’re on vacation or something happens in your family, may need to step away. If you find a person that you know can trust with your business, I always say 80% of something is better than a hundred percent or nothing. So find the right people and reward them well. Know that you don’t have to be the smartest person in the room. You have to as a business owner, you have to be able to make the tough decisions. And if you can’t do that, then you shouldn’t be in business. But surround yourself with people that can help you make those decisions.

(29:03):

Listen to what they have to say. If you trust ’em and you’ll reward them well and you’ll be well rewarded. And finally, and this is not my, I heard it, I think it was, I forget who it was that said it recently, but work-life balance doesn’t have to come on a weekly basis on a daily basis. I mean, if you push hard for a certain stretch of time and you make certain sacrifices, you’ll have the financial freedom later to make up for missed family dinners, long weekends and the long weekends you spend at the office. Don’t just assume that you’re going to have an infinite amount of time. Don’t live for the weekend, don’t live between now and your next vacation. Work hard now. I think that’s probably the key to success.

(29:59):

Even though I am doing this and I’m blessed to say that I’m doing this now because I want to, not because I have to. I probably work harder now than I did in or even before. I work as hard as ever. I’ve come to the conclusion that work is my hobby. That’s really what I enjoy doing. I enjoy building businesses and I enjoy watching progress happen, and I enjoy the fact that there’s history to be made. And at this point also at my age, it’s also about legacy. So don’t worry about missing out on a weekend and don’t worry about missing out on a weekend away or dinner with friends. Work as hard as you can tomorrow. It is not a promise.

Craig Castelli (30:41):

And you absolutely can be outworked and that is the clearest way a competitor can make up ground, whether it’s sports, whether it’s business, any walk of life. I think your comments about balance are interesting because we have this classic sense, this media portrayed sense of work-life balance and it’s you work this many days and then you have these days off or you take this vacation and I cannot tell you the last time I went, even half of a day without thinking about my business, I might be on vacation with my family on another continent, another time zone. It’s still front and center all the time. And it doesn’t stop me from enjoying myself if I’m hopping on a call or responding to emails while everybody’s slowly waking up or whatever else is happening that is not a core part of the trip, but I’m looking out over the Alps or I’m in beautiful northern Michigan that’s to me the most relaxing place on earth. I’m happy. I’m doing multiple things that I enjoy at the same time. Building my business, the work part of it with the balance and the relaxation and the family time all wrapped into one. We all have our own version of what that looks like and what makes sense, whether it’s sprint and then rest, whether it’s wrap the two around each other or it is that more traditional sense. It doesn’t have to take it any one form.

Amir Hadar (32:14):

I always say that I think my kids at this point, and some of them are college age at this juncture. I may have missed a recital or a play from time to, I try not to. I always try not to. Family should come first up to a certain extent. But I think that my children, adult children appreciate the fact now that they can go to the best university, they can get into probably more. I mean, they’ll always remember that. They may not remember that I wasn’t at that play, right? And mom had to take a video and that’s all I had when I came back from my business trip. This balance and everything, if you are a successful entrepreneur, you’ll know what that balance is. But that’s the one piece of advice that I can give you. Work. Making money is not a dirty concept. I mean it doesn’t resolve all your issues and it doesn’t buy you happiness, but it buys you a peace of mind and it buys you the ability to provide for your family and give it the best possible life at the end of the day. What else do we have?

Craig Castelli (33:18):

Truer words may never be spoken. Amir, this has been a lot of fun. Thank you so much for joining us here on the close.

Amir Hadar (33:24):

Much appreciated. Good luck with everything.