Most founders say they want to exit someday, but very few build a firm that someone actually wants to buy. In this episode, Greg sits down with Brad McAllister, co-founder of WAP Sustainability, to unpack how WAP avoided that trap and positioned itself for a strategic acquisition by SLR. They explore the uncomfortable decisions Brad made years before a deal was on the table — decisions that turned growth into real exit leverage.
What you’ll get from this session:
• The difference between a firm that grows and one that is acquirable
• What Brad built on purpose to reduce founder dependency
• How to recognize when interest from buyers is signal — not noise
Why it matters:
• Most professional services firms are “successful” but not sellable
• Revenue alone rarely creates exit value without structure behind it
• Founders who plan for exit early get more control, better terms, and real options
TRANSCRIPT
Greg Alexander: Hey everybody, this is Greg Alexander. You’re listening to the Pro Serv Podcast, brought to you by Collective 54. If you’re new to this show, this show is for founders of boutique professional services business. So, if you’re in the business of… expertise. This is for you. And on this show, we aim to help you do three things, and that is to help you make more money, make scaling easier, and make an exit achievable. And on this episode, we’re going to talk about a member who recently, successfully sold his business. His name is Brad McAllister, and Brad’s been a long-standing member of Collective 54. We’re very appreciative and happy for him that he has seen the journey to conclusion, and he’s going to share with us what he learned about selling a professional services firm on today’s call, so… Brad, it’s good to see you. Please, introduce yourself.
Brad McAllister: Yeah, thanks, Greg, I appreciate it. Excuse me. I’m excited to be here. My name is Brad McAllister. I’m one of the two co-founders at WAP Sustainability Consulting. I serve as the company’s CEO and President. We’ve been in business for 16 years, and kind of the role of our company, and the role of our company going forward, is to help organizations navigate the emerging sustainability marketplace.
Greg Alexander: Okay, got it. And just for those that might not know, sustainability… I think I know what that is, but let’s just define that real clearly. What is that?
Brad McAllister: Sure, it’s a… it’s a big topic, and you know, it means a lot of things to a lot of different markets, but in short, it’s managing resources of organizations for the long term. So, we help organizations manage their… manage their climate change impact, their waste reduction programs, water, water, use programs, etc, etc, etc. We help them make commitments, and then, make meaningful progress towards those type of commitments.
Greg Alexander: Okay, and a typical client for you guys would be what type of business?
Brad McAllister: A lot of manufacturing. We’ve got our start, in the building product space. You may be familiar with the leadership in energy and environmental design lead criteria for buildings. A lot of the manufacturers to those building projects are required to meet certain criteria. We help those manufacturers through that, so whether it’s flooring or, you know, chairs, drywall. Et cetera, et cetera. We, we expanded into other markets, we do a lot with, technology firms now. We do some stuff in the financial, financial markets, and then certainly consumer products as well. So, really, anybody that makes something or invests in another company that makes something.
Greg Alexander: Okay, got it, very good. Alright, well, let’s start at the very beginning. So, 16 years ago, you and your co-founder get together and decide to start a firm. So what was the original idea?
Brad McAllister: The original idea was, what we wanted to do is take our experience, I was working with the City of Chattanooga, that’s where I reside, and we were developing a climate action plan for the city. My business partner, William Paddock, was working with, Eminem Mars, doing essentially the same thing from a corporate perspective. And we met in grad school. And in grad school, we started to work together on projects and started realizing that we had a perspective that, you know, the environmental issues that were facing, the world facing the globe, couldn’t just be solved with, you know, advocacy. It needed a business component to it. And there were some, you know, tailwinds moving in that direction already. Walmart, at that time, as an example, was starting to… push some things through their… their supply chain. And, we recognized that because some of the experience we had in the past, we could take those, those activities that we were doing, package them into a, you know, comprehensive set of services, and then deliver those services to manufacturing organizations in a way to meet the demands of companies like Walmart and, you know, the lead building criteria. And, you know, what made us different from some of the other ones at the time was the fact that we had kind of holistically packaged these services together in a managed service approach. So, there were… there were other companies out there who were doing, kind of, individualized services, so there was, you know, services related to, you know, the carbon footprint of organizations, you know, there were companies doing that. There were… organizations, you know, focused on the carbon footprint of products. There were organizations focused on the disclosure and the strategy and the marketing of all that information. What we wanted to do was bring that all in one house, and be kind of that one-stop shop for organizations that needed all that. And that really ended up being our moat, if you will, and really helped us, you know, scale the business.
Greg Alexander: You mentioned a managed service. So when I hear that, I think of the managed service provider in the information technology space, which is, like, a recurring revenue business, which makes those businesses very attractive to an acquirer. Are you using that terminology in the same way? Were you guys in… did you have recurring revenue?
Brad McAllister: We did, and we continue to. We’re expanding the recurring revenue opportunity with the business. So, you know, year over year, as we grew the business, we found that about half of our revenue came from clients who we had done business with the previous year. So, we were able to… through our services, uncover more about the business, in a lot of cases, than the new sustainability manager that was within the business actually knew, and found additional opportunities to scale, you know, year over year. So that was one kind of, you know, reoccurring component of our work. Over the last three years or so, 3 and a half years, we started getting into the software space. The whole industry is scaling up so fast that services can’t meet the demand on its own. And so, we’ve started to tech-enable, you know, some of the work that we’ve been doing. And that came in the form of a few acquisitions of early-stage companies, early-stage software businesses. And, we now sell licenses to those software components, so that’s probably more akin to maybe what you’re thinking about there. So, there’s kind of different components on how we, you know, kind of layered on different reoccurring opportunities within the business.
Greg Alexander: Okay, got it. Okay, and if I remember, Brad, this is your first exit, is that correct?
Brad McAllister: It is. Yep.
Greg Alexander: Okay, and the reason why I’m asking that question is that’s the overwhelming majority of our listeners to this podcast and our members of Collective 54. So I want to ask some questions about that, so… Sure. Now that the deal is… has been closed, and you’re in the next chapter of your professional life. What surprised you most? About what actually mattered in the transaction. That, you know, you weren’t anticipating it to be a big deal, but what… did anything surprise you there?
Brad McAllister: Oh, man. Oh, Greg, we’ve talked about that for ages, probably. Yeah, you know, a couple different things. I mean, the one thing that I ended up spending a lot of time on during the transaction was the quality of earnings. And we knew, you know, we knew we had to do one of those, we knew that was going to be really important to the… the exit. What we… what we didn’t realize is… we… we… we were a little, I guess, different, and we didn’t realize we were different. So, the majority of our work is flat fee. It’s always been flat fee. Little bit of hourly, you know, work there, but really, you know, and this again is another, I think, one of the reasons we were able to scale and grow the business is we were focused on delivering value to the client, and if the client perceived that value, they were happy to pay for it. Right? So, you know, we were always a cash-based business. As we started to get to this stage, we started recognizing that an accruals-based business became, you know, or accruals-based financials, I should say, became more important to buyers. And they really wanted to understand, you know, utilization, and when the money was earned from an accruals basis, and not just when we got the checks in the door. But where that became somewhat of an issue is because we were a, you know, project fee-based company. We never worried about tracking hours within the business. And, you know, as we sought the interest of, you know, strategic buyers who historically have tracked that within the business, we had to, you know, find a way to close that gap in the, you know, financial analysis of the, you know, the work we did with the buyer.
Greg Alexander: Yep. It’s a great learning, because I’ve had this conversation with many members to switch from cast to a crew. Because I say that someday you’re going to sell your business, and when you do sell your business, you’re going to have to be on accrual-based accounting.
Brad McAllister: People drag their feet, oftentimes, though, because…
Greg Alexander: You know, the exit is down the road, it may, it may not happen, it’s like a low priority item. If you were to do it over again, would you have waited until you decided to sell your firm, or would you have switched over, you know, back in the day, so to speak?
Brad McAllister: Yeah, you know, I mean, we… there was a lot of advantage to doing it the way that we were doing it, because… again, we were really, you know, cash flow was never a problem with the business. And so we… we didn’t really… have to worry about it. And, you know, in retrospect, you know, part of me says, yeah, I’d love to have gotten started on that earlier. You know, maybe it’s a year earlier, maybe it’s not 15 years earlier that I would have wanted to start. But, you know, maybe a year earlier, I think, would have helped, because you know, there’s a lot in the process that, you know, I was educating myself on, which, you know, it just… and, you know, to the ultimate buyer’s credit, like, they were very collaborative in that process, which I don’t know if is always the case.
Greg Alexander: Depends on who you sell to. I mean, so you sold to what we would consider a strategic. And, therefore, you know, they understand the business very well, and they’re not just kind of spreadsheet jockeys. And they probably had gone through that process themselves at some point back in the day, so they’re empathetic and they understand it. Financial buyers, private equity people only, you know, that have no, you know, platform or operating experience or anything like that. Don’t understand that, it can be a little less tricky. So that’s a good lesson. So that question was, you know, did something surprise you? Let’s go the flip side of that, which is, is there something that you thought was going to matter? As you were selling your firm, that actually turned out to not matter at all.
Brad McAllister: Oh, God. Something that did not matter. I’m struggling with that one, Greg. I mean, I think…
Greg Alexander: It’s okay if the.
Brad McAllister: Yeah, I mean, I think I feel like most of what we… what we did… I mean, help me out on that one. What’s some other answers you’ve gotten to that question before?
Greg Alexander: You know, I mean, sometimes… Like, because we’re experts. Sometimes people in professional services think you know, that their intellectual capital is some unicorn thing, and it’s gonna matter a lot more than maybe it really did. You know, sometimes people get all wrapped up around… you know, key people on the team.
Brad McAllister: And then when you sell to a strategic, the strategic has a lot of key people themselves. I mean…
Greg Alexander: You know, these are… these are some examples, not… and they’re not uniformly applied, but I asked the question because we’ve got a lot of people who’ve never been through an exit before, and as they get themselves ready for an exit, they’re wondering about these things, but it sounds like you and William were extremely well prepared, so therefore you weren’t surprised. Is that accurate?
Brad McAllister: I think that’s… I appreciate you putting it that way, but yeah, I feel like maybe we were prepared. I mean, and keep in mind, too, I mean, this thing is still fresh. I mean, we’re not even at the month anniversary of the close of the deal, so, you know, some of the options that you just, you know, some of the topics that you just mentioned. I mean, we may find out down the road that maybe they didn’t matter as much as we thought they were, but… You know, I mentioned this, I mean, you said something about, you know, strategics have key people within the organization. You know. I think we’re… we’ve set the team up, our team up, for some… a really good, you know, long-term outcome in terms of their professional development. And, you know, part of the reason that we got acquired is because of the talent that we’ve been able to accumulate in the business. I think that’s, you know, that’s kind of one of the things that I… I don’t think we’ll be surprised that it wasn’t important, the team that we built, the culture that we built, and maybe that’s one of those things that we’ll find out was probably more important than we originally realized. Let’s talk about the team. Yeah.
Greg Alexander: Founders like yourself often ask me as they’re going through the process when should I tell the team, you know, I’m nervous about telling the team, you know, there’s a lot of anxiety built up around that, and rightfully so. So how did you handle that?
Brad McAllister: This is… this is actually a really, really good story. I’m glad you… I’m glad you brought this up, because it, again, goes to show the… the alignment that we had with… with the buyer on this. So we ended up telling them on… it was December… December 18th. Right before our holiday break. So we were… we were breaking on the 19th for basically 2 weeks of, you know, office clothes. That’s something that we just have always historically done. And the deal we knew was not going to be closed until 2026, mid-January 2026. So we essentially told them, you know, make three… I guess, ultimately, that was probably three, three and a half weeks prior to the close on the deal. And we were all confident the deal was still gonna go through, but what we wanted to do is we wanted to give them enough time to sit in it for a little while, so that, you know, when they came back at the beginning of the year, when we had these earnouts that were, you know, trending towards hitting, or we’re aiming towards hitting this year. We don’t want them to be distracted in the first couple weeks of the year based off this, so we just wanted to go ahead and tell them. You know, let them sit in it a little bit, and then come back in the new year, to be… being really excited, you know, to working with this, you know, this global powerhouse that we’ve become involved with. And the reason I say that’s a good story, because again, I think it goes back to the collaboration that we had with the buyer. You know, they trusted us, they trusted our team not to leak the information. Before it was ready to go, and, you know, to the… the… the credit to the team, it didn’t get leaked. And so, it, you know, worked out… it worked out really well.
Greg Alexander: Yeah, that did work out really well. I, unfortunately, many times hear the opposite of that, and… a mistake that I’d like our listeners to avoid is if you tell the team too early. Deals are very fragile. You know, I think the statistic is about half the deals post-LOI, pre-close, actually don’t close. So if you tell the team too early, everybody gets excited about, you know, joining the new global powerhouse, and then it doesn’t close, and now you’re dealing with disappointment. So you waited till the 11th hour, basically, I mean, 3 weeks before the deal closed, and I think that’s a good idea. Not because you’re trying to hide anything from anybody, but things can go sideways. That’s just the way it is.
Brad McAllister: Yeah. I’ll add to that… I’ll add to that, too. So we actually brought the leadership team into the deal, the diligence process of the deal. So the leadership team, or managing directors, knew that this was happening, you know, months prior to the close, months prior to us telling the team. So I think that’s an important part of it, too.
Greg Alexander: So, yeah, that is important. I’m glad you just brought that up. So… the leadership team was brought in during diligence, but the rest of the employees were just told at the 3 weeks before close, is that correct? That’s right.
Brad McAllister: That’s right, yep.
Greg Alexander: Okay, and so that was risky, you know, by some measures. Why did you decide to bring the leadership team into the diligence process?
Brad McAllister: Well, we wanted the buyer to see how good that the leadership team of the organization was. I mean, that was a big part of it. You know, some on the leadership team were actually involved directly with the due diligence process, you know, providing information, or… you know, sitting in meetings, discussing the vertical that they manage. So that was a big part of it, too. And then the other part of it was just so that we could be transparent and open about it in the leadership team meetings, the monthly meetings that we had with the group. I mean, there was, you know, there was a lot we wanted to share with them about the deal. So that they wouldn’t be surprised by it. And if we could get them on board with that this was the right buyer for the, you know, entire organization. That if we got them on board, we knew the rest of the team would be on board with it as well.
Greg Alexander: Alright, let me switch my conversations to some personal questions, because members of our community are entrepreneurs. And the journey, you know, the line between personal life and professional life in the world of an entrepreneur is very blurry. So, you and your… classmate. One guy, yourselves working for the city. Another guy, William, is working for a huge company, Eminem Mars. You guys decide to leave, you know, the security of those two environments and start a firm. And… my hunch is, but correct me if I’m wrong, 16 years ago, you never thought you’d be where you are right now. I mean, you started your firm. Did you start it from day one, thinking you were gonna sell it, or did you start it just hoping to build a good firm and provide for your families, etc?
Brad McAllister: I mean… you know, candidly, I started… started just because I didn’t really have anything else to do at the time, really, you know? You know, it was an adventurous opportunity, that we, you know, we could take advantage of at the time. I, you know, I don’t think it was… it was probably 5 years into it. I mean. I should give this context, too. Like, I mentioned we’re, you know, 16, 16-year-old firm. We really didn’t start scaling the business until 2020, so it’s really only been the 5-6 years that we took off, so… you know, the first, you know, 5 years of it, that was just, you know, William and I having, you know, some clients, and I’m in Chattanooga, so we’re close to Dalton, Georgia, which is the carpet capital of the world. So, you know, that was just us having some clients down there, having clients in Northern Alabama, a few local, and that, you know, he’d come down for those, and, you know, we just needed to, you know, be able to spend money on our, you know, mortgages that we just bought, car payments, and, you know, the beer that we were buying in the bar, you know, that type of thing. And so it really, it really wasn’t until, you know, I don’t know, 8 years into it that we, you know, we had our employee number 1 come in, and then, you know, a few years after that. You know, 4 employees, and then really, 2020 is when we started scaling. So, long story short, like, I don’t think exit was on my mind. I didn’t know what an exit was until, you know, 6, 7, 8 years into the process.
Greg Alexander: That is the pattern. So, what you just lived is exactly the way it unfolds. In fact, sometimes people call that pattern the accidental entrepreneur.
Brad McAllister: And they don’.
Greg Alexander: But at one point in that journey, your level of ambition changed. You decided to scale it, and then, of course, that worked, and you decided to sell it. So, you’re 8 years in, and you and William say, okay, we’re gonna scale it. Like, what changed at that moment that made you want to scale it?
Brad McAllister: There were some market drivers that got codified, you know, that, you know, we saw there was more opportunity. There, you know, I think that was a big component of it. You know. Personally, I think there’s a… you know, a lot of your members probably feel the same way. We’re pretty competitive people, you know, we’re achievement-oriented type personalities, and I think that started kicking in a little bit. I also think that we recognize that there was a, you know, there was a big gap in the market. There was an opportunity to create, you know, a legacy here as well, because, again, you know, what… I’ve always been the, you know, environmentally-minded person, you know, studied ecology, etc, etc, and you know, that always… that always felt like a feel-good way to spend… spend my life. And then all of a sudden, there’s a… feel good, plus, you know, economic opportunity here. When those things come together, you’re like, God, I want to build this thing as big as I can, you know? I want to go. And you just… the light bulb… that light bulb just came on.
Greg Alexander: Yep. The light bulb just came on. Yeah. Okay, and then if we continue on, so then something triggered you to want to sell the firm. So now you’re scaling it, you’re creating a legacy, you know, the light bulb comes on, and then one day you guys wake up and you say, hey, maybe we should sell the firm. So what triggered you to sell the firm?
Brad McAllister: Man, a couple… I guess a couple of things. We had been talking… we had been thinking and talking about this for, you know, years now. I mean, we’ve been on the Inc. 5000 list four years in a row. And I say that because once you get on that list, all of a sudden, you know, people are calling you. Right? And… and so, you know, once we start getting those calls, it’s like, oh man, maybe there is something here. You know, maybe there’s an opportunity. And, you know, candidly, I was a little… I was later to the party, the sell the business party, than maybe my business partner was, because I was more interested in building something lasting and really cool. I still am, and that’s part of the reason that we’re, you know, we selected the buyer that we did in this. But at some point, you just… you start recognizing that there’s, you know, there’s more risk to continue doing it on your own than it is with a partner. And, you know, you have… you know, I’ve got 3 daughters, you know, family, and you know, you start recognizing that, you know, there’s an opportunity for you to… you create financial, a financial legacy for your family, as well, once you hit a certain… a certain point.
Brad McAllister: And I’ve heard you advocate for this, too, is, like, know your number, you know, run your Monte Carlo assessments, figure out what you… the lifestyle you want, what you want to leave, and then once you have a number, then, you know, try to go get that number. And that’s ultimately, you know, ultimately what we did.
Greg Alexander: Let’s unpack that a little bit, because this is the last question I wanted to ask you, because this was very unique on what you did, and it worked out brilliantly, so let’s talk about this. So very often, first-time founders think about selling their business. And you ask what they want to sell it for. And they pull a number out of the clear blue sky. Some fantastical number that’s not grounded in reality at all. And the reason for that is because they made it onto the Inc. 5000 list, and a bunch of people are calling them. And they’re trying to get them interested in selling their firm, so they start throwing around some numbers, and they’re not based in reality. Then what happens, which is what you did not do, which is what I want to highlight, is then they hire a broker, an M&A advisor, or an investment bank, and they run a process. And then numbers start coming in. You know, the market says, this is what your firm is worth. And ultimately, it’s the market determines what the firm is worth. Then you get these numbers, and because you don’t have your own number grounded in reality, you don’t even know how to process the numbers. Like, should I take the deal, should I not take the deal, should I wait 2 years, should I sell now, etc. What you guys did correctly, is you took a step back, and you said, alright, I’m gonna… I’m gonna think about this in conjunction with a professional called the Wealth Manager. We’re gonna run a personal financial plan using a tool called the Monte Carlo Simulator. That said, hey, the only reason why I would want to do this is to secure the financial security of my daughters going forward. So what is that number? And that number can be calculated, and you calculated it. So then when you started receiving numbers, you actually had a reference point. Like, is this… is this a good deal? Not a good deal in terms of, like, you know, is my firm worth this versus the guy down the street? That’s irrelevant. What’s relevant is, how would this change my life? And so you made the decision correctly through that lens, and I really wanted to applaud you for that, because that’s the right way to make the decision. Everything else is noise. It’s like intermediaries filling your head with rumors. You gotta figure out a way to ground this in reality, so… And then what ended up happening, and respectfully, I advocated a different approach for you. I told you to hire an investment banker. And you disagree with me, and you were right, and I was wrong, right? I mean, you got your number. Which is great, and I’m happy for you. Believe me, I’m thrilled that I was wrong, because… you didn’t have to, you know, pay a huge investment banking fee, and you got to the finish line the way you needed to, with your number. So, when you were going through that process, trying to figure out your number, whether to hire a banker, whether or not to hire a banker, well, you started getting interest from these big strategics, like. How did you… because you’ve never done this before. How did you make the decision?
Brad McAllister: Well, first, let me say, you know, I don’t know if you were necessarily wrong on the banker. Right? It worked out for us not to have a banker, and, you know, that’s probably a longer conversation. I won’t get into it, but I’m sure, you know, there’s outcomes in which a banker is necessary and needed, most certainly. And again, happy to share, you know, why we didn’t end up there. You know, but I think at the, you know, maybe the root of your question is, you know, how… when a number got in front of us that we were finally good on, there was some negotiation back and forth, how do I feel comfortable that that is a number that we could live with, and that we weren’t leaving, you know, something on the table in the deal? Is that kind of the root of the question? Yeah, again, it comes back to personal financial planning, long-term personal financial planning. I mean, there’s, you know, several tools out there. If you don’t have a financial advisor, there’s several tools out there in the market that you can go to, connect all your bank accounts, run a whole bunch of simulations, you know, put ad scenarios in there, et cetera, et cetera, and get a probability of success. And that, for me, is… what got me to the point of saying, like, if I’m leaving money on the table, who… who cares? Because… you know, my… I’m hitting my outcome. Like, I know my probability of success is 99% in, you know, a thousand different simulations. And so, once you know that, and you start recognizing that that money that you may be chasing that’s on the table is probably riskier than it needs to be. You know, that delta is not going to materially change the outcome of your life. And at that point, it’s just a risk-reward calculation, and as long as you have the data in front of you, you’ll make the right decision.
Greg Alexander: That is, yes, that is well stated, yes. Yeah. It’s just a fantastic way to end this podcast. You know, somebody said this, but social comparison is the thief of joy. There’s always more money to go get. And then you can wait, and you can wait, and you can wait, and something could change in the marketplace outside of your control, and all of a sudden, now your firm’s worth half of what it once was. So, greed is a bad thing. So, when you get to the number, however you calculate that number, I recommend doing it the way that Brad did. Take the deal. Rest your head softly on the pillow every night, and don’t worry about a few extra nickels that you may have gotten down the road. Like, that’s the lesson, so…
Brad McAllister: Yeah. That’s right. You’ll drive yourself crazy chasing those extra nickels.
Greg Alexander: I know, and to your point, like, it really doesn’t matter. It’s not going to change things. All right. Well, Brad, again, on behalf of the community, it’s been great having you in our tribe. You’ve always contributed today. We’re so happy for you, your family, for your business partner, for all your employees, and I know that you guys are gonna join the new firm and do great things, so best of luck to you going forward.
Brad McAllister: Thank you, Greg, it’s been great. I appreciate it, Greg, I appreciate the conversation today, and I appreciate all the mentorship over the years. You know, you guys have added so much value to our business. I know you’re adding value to all the other businesses, and… you know, I can’t thank you enough for creating this group of people.
Greg Alexander: Well, you’re welcome. It’s been my pleasure. Okay, well, let’s conclude here. A couple calls to action. So, if you’re a member, and you want to attend the private member Q&A session with Brad, we’re gonna double-click on a few more things in greater depth in the confines of a protected private conversation. Look for that invitation, and please join. If you’re not a member, and after listening to this, you think you might want to, go to Collective54.com and fill out an application, we’ll get in contact with you, but until next time, I appreciate all the listeners working me into your busy schedule, and I wish you the best of luck as you try to grow, scale, and someday exit your firm.