(To be clear: “Associates” as used here is a noun not a verb.)

If you are asking the question, how did this guy ever think he had a chance at creating a successful company, you are probably not alone. I had no previous relevant experience. I had never started a business. I was never in a management position in a business. I had attended seminary and planning school, for heaven’s sake, not business school, and I had never had a class in anything related to starting up or running a business. What was I thinking?

Against all the odds, Howell Associates was formed in 1980 and sold in 1999 when it became an affiliate of ZA Consulting. I stayed on for another five years before retiring in 2004—a good run lasting almost 25 years. How did this happen?

In 1980 when I realized that the Section 8 Program was coming to an end, I had to do something else. But what? It occurred to me that there was stuff I could do that clients were willing to pay for. Most developers needed a feasibility study before they could get a loan. From my Gladstone Associates experience I had learned how to do market studies, and I was pretty good at that and at determining whether a proposed project was financially feasible. This was the first service that Howell Associates provided and remained the primary service that the company provided throughout our twenty year history along with development management for startups or expansions of senior living communities, skills I had learned from my experience working at the National Housing Partnership and from my work developing St Mary’s Court.

And over the years as the business grew, we added a marketing service where Howell Associates provided clients assistance by marketing, selling or leasing units in senior living communities, primarily to large, nonprofit, continuing care retirement communities (“CCRCs”). While our clients were mainly in the Mid Atlantic area, we had clients in more than a dozen states.

I was the only employee of Howell Associates for the first year and a half, then added an assistant, opened a new office in a downtown office building in Washinton, and added people over the years so that during our peak years in the late 1980s, the total staff at Howell Associates numbered in the mid-20s (including on site staff at communities we were marketing), about half working at our downtown DC office.

Some might also observe that an important factor in becoming a viable going concern is luck. When I threw my hat in the ring, the senior living industry was just getting started. That my company was able to ride the wave and twenty years later I was able to sell the consulting practice to ZA Consulting at the peak of the assisted living boom could fall into the category of luck—or even Divine Intervention.

Thanks, Guardian Angel (to be referred to from now on as “GA”).

My task of creating and maintaining a going concern was not easy but it was not rocket science either. My goal was to get visibility in the senior living and affordable housing industries so that if someone needed help in determining whether a project was feasible or needed marketing or sales help, Howell Associates would be on their short list. I did that by attending annual meetings of relevant trade associations, particularly Leading Age (named at the time “American Association of Homes and Services for the Aging”) though there were a host of others—National Association of Home Builders, National Investment Conference, and the National Leased Housing Association—whose conferences I often attended. At the Leading Age annual meeting Howell Associates usually had a booth and I or someone from Howell Associates was often on the program. Whenever given a chance I put in a proposal to make a presentation. I also sent out a newsletter every so often to clients and major companies involved in developing CCRCs, rental senior living communities, assisted living facilities, and affordable housing.

While our clients were mainly nonprofit organizations, often faith-based, I was never one to turn down business. We did some work for Hyatt when they were trying to enter the seniors housing sector, and for almost a decade were the only company that Fannie Mae allowed owners to use to provide the required market analysis to secure financing for their properties. We completed over a dozen market studies for companies trying to get refinancing through Fannie Mae.

I once got a call from a shopping center developer who said he had heard about the boom in seniors housing and wanted to develop a “one of them conjugal care retirement communities.” What he was referring to, of course, was “congregate housing” where meals, housekeeping and other services are offered in rental seniors housing.

“Conjugal care for the elderly. Really? I think you may be on to something!” I replied, passed on the request for a proposal, and gave him the name and telephone number of one of our competitors to call.

The most important requirement for achieving and maintaining a good reputation is to do good work. And the most important thing in doing good work is to hire good people. Because the company did not have the resources to pay high salaries I focused on the research side mainly on hiring young, smart people who had attended a good college or university, ideally already having had one bad job (so that they would be more likely to appreciate working for Howell Associates). I would tell them that I required a three year commitment but would settle for two. Most were terrific hires, who did good work, gave Howell Associates three years, and then went on to get a law or city planning degree or MBA and ended up having successful careers, often in other fields. On the marketing services side of the business, the person responsible for heading up this service line was a superstar and the best in the business. He tended to hire seasoned professionals with a lot of experience in selling units in seniors housing and hit the jackpot most of the time. Most were older women without a college degree.

But the business had its challenges. In a small company like Howell Associates we couldn’t afford to keep people who were not doing a good job. I hated firing people, but I did not have a choice if they were not contributing, and over the years I had about a half dozen or so people for whom Howell Associates was not a good fit. Almost all were very nice people, but the job at Howell Associates was not right for them and certainly not right for Howell Associates. It was a painful process but had to happen if we were to stay in business.

I also made mistakes along the way. The worst was trying to get into the facility management business. Surprisingly without any experience in facility management, we were able to land a couple of facility management contracts. We learned the hard way that it is a very different business from consulting! Also, I had hired the wrong person to head that up, the CEO of a major CCRC but without any experience growing a business. We did not do a good job, our reputation was affected, and we lost both the contracts. I let the employee go and called it quits but not before we had lost a good bit of money. A second near death experience happened during one of the downturns in the economy, especially the real estate sector, when we lost several of our private developer clients who had retreated from seniors housing. The thing I remember most was our consulting accountant informing me after the fact that it was a miracle that we had survived. During these difficult times I had to let some people go, who were very good, just to keep the boat from capsizing.

These two near misses with bankruptcy and continued stress of trying to run a small company took its toll on my health. There also were always ongoing smaller crises to deal with and that is where I ended up spending a lot of my time. So, after about twenty years, although I loved the work, the people I worked with, and even the challenge of keeping the business going, I realized I no longer had the energy or drive that was needed. It was at this low point that out of the blue, I was approached by a buyer, another consulting company, called ZA Consulting from Jenkintown Pennsylvania.

GA (“Guardian Angel”) to the rescue once again!

ZA Consulting had grown from an accounting firm to become one of the leading companies helping nursing homes deal with regulatory and Medicaid issues and had expanded into the senior living industry. Howell Associates would be their first acquisition as part of a rollup strategy.

The ZA offer seemed about right to me, even generous given our shaky recent history, but to be sure, I hired a specialized accounting firm to analyze the financial performance of Howell Associates and tell me what they thought the company was worth. After a couple of weeks, the accountant came to my office with his assistant to deliver his report. The conversation went something like this after the introductions and small talk:

Me: Well, what is the bottom line? How much do you think Howell Associates is worth?

Accountant: Nothing.

Me: No, I think you misunderstood my question. I asked you to tell me how much I should try to sell the company for.

Accountant: I told you, nothing.

Me: Paron me. I don’t think we are communicating.

Accountant: We are communicating just fine. I understood you and gave you my answer. Your company is not worth a goddamn cent.

(period of silence)

Me: How can you say that? I have an offer on the table.

Accountant: Hell, Mr. Howell, your company has never made a nickel.

Me: Oh, is that how it works?

(another period of silence)

Me: Okay, I get that, but in our case that is not true that we never made a nickel. Because we are a C Corp, that means we must pay taxes on profits. So that I do not have to pay taxes twice—on corporate profits at the end of the year plus personal income taxes, I take for myself what money is available and then loan the company money for working capital until income from new contracts come in. I have been doing this for years.

Accountant: It still is worth nothing. I have seen what you pay yourself and frankly it is not all that much. If you have an offer, take it, whatever it is, and I assume it is not much.

At that point, I told him that the meeting was over and that he and his young associate should leave, which they did. They never sent me a bill.

And that is how the deal got done and I would add, Exhibit A, proving that GA was not asleep at the wheel.

But so many deals like this do not turn out well for the seller. There is usually a non-compete clause, as was the case with me, and an obligation to stay at the firm that buys the company for a minimum of several years, five in my case. I had heard horror stories from others who had sold their companies about how bad they had been treated by the new owner and how they regretted selling.

How the transition went will be the subject of the next post.

Visit me on Substack!
Subscribe to my Substack!