Join host Aaron Burnett as he sits down with Tony Richardson, Managing Director at Alexander Hutton and 17-year member of Entrepreneurs’ Organization (EO), to reflect on the pivotal moments that shaped his entrepreneurial journey.
From leaving Microsoft in 2005 to co-founding Extreme Consulting, Tony scaled the business to US$84 million in revenue through rapid growth and strategic acquisitions. He shares candid lessons from a challenging exit, including failed deals, lawsuits, valuation missteps, and why cultural fit and deal structure matter as much as price.
Tony also reflects on the personal side of entrepreneurship—how EO Forum provided a confidential space to navigate conflict, identity shifts, and growth beyond business.
Note, this podcast features real entrepreneurs sharing real challenges and solutions. No pitches, no sales - just honest conversations about the moments that shape successful businesses.
Aaron: Tell me about your entrepreneurial journey. I know you started at Microsoft and you were at Microsoft for a dozen years or so.
Tony: Yeah, yeah, exactly.
Aaron: Yeah. And then started your own company.
Tony: Mm-hmm. So I was at Microsoft kind of in a variety of technology roles, right outta college. Spent a little bit of time in the product group, but.
At the last probably seven, eight years in Microsoft Consulting Services, and I was flying around a lot of these Fortune 500 companies and helped them deploy new products and technologies. And a lot of times I'd go into projects where there would be consulting companies that had these contracts. And a lot of this work was federal, state, and local government.
And they'd have teams of consultants doing these projects and they'd bring me in. To kind of fix it because, you know, a lot of it was public sector that everybody would openly talk about projects and the bill rates and everything, which was a little opening eyeopening to me. But I kinda realized, I'm like, I, I'm living on an airplane flying all around, fixing projects that these.
Consulting business owners couldn't do, and you know, they're living, they're sleeping in their own bed every night.
Aaron: Right.
Tony: Probably doing a lot better financially than I was at the time, too. Yeah. So it just kind of made me think maybe I should be looking at this from a different angle and thinking about running my own thing and.
And at the same time, you know, starting to get a family going and didn't want to be on the road a ton. And so started thinking about, you know, running my own business. My wife and I looked at several different, like some franchise opportunities and other things, and really I sat down with a mentor of mine and he was like, well, why would you go start a franchise?
Why don't you do what you know?
Aaron: Mm-hmm.
Tony: Which is consulting. And I was like, yeah, that is what I should do. And so I left Microsoft in 2005 and started an IT consulting company. As I was thinking about it, I met another guy who was in the same kind of timeframe as me. I didn't really know him very well, but I knew the third person that was also a partner of ours.
And we started extreme consulting and and kind of went from there. Just started with three of us and our first project was to get ourselves billable work.
Aaron: Yeah,
Tony: yeah. And then try to grow and expand it from there. So that's kind of how it all started.
Aaron: Tell me about the journey with Extreme Consulting.
'cause you did very well. It got big.
Tony: Yeah. So we had some pretty fast growth in our first four or five years. We were the fastest growing company in the state of Washington, you know, and I'd worked at Microsoft for 12 years, and so a lot of what we did was initially consulting back to Microsoft. Mm-hmm.
Probably in like five or six years, we grew to about 40, 45 million in revenue. And, and then we started doing acquisitions. We started using kind of our cash flow to do acquisitions to get us, you know, a little bit more diversification of clients work and locations and so we did some, we probably did about 10 acquisitions.
Aaron: Yeah,
Tony: three pretty significant getting us into new markets and just kind of opened up some new doors. One of our partners left early on and we got further along in the process and you know, just kind of started thinking about, okay, we've been doing all these acquisitions, we've had a lot of groups. Kind of reaching back to us, potentially interested in acquiring us and started kind of entertaining conversations.
And that was a real big learning process going through that process. Initially a failed transaction ended up, you know, getting in a lawsuit, you know, really leaned in pretty heavily on my EO forum and EO members to kind of get through that. And that was a trying time and came out the other side and, you know, eventually we, we exited, sold the business. Anytime there's mishaps and misalignment of strategy, the business can suffer. Yeah. And the business suffered. It wasn't the best transaction, but I was ready to move on and do something new. And after that, you know, there were a lot of things that I thought went pretty poorly in the m and a process
Aaron: mm-hmm.
Tony: That I really wasn't happy with. And I got into. Mergers and acquisitions after that because I thought there was a better way to do it. I have a lot of friends that are gonna sell their businesses someday and. You don't wanna learn hard, tough lessons on what's most likely gonna be the biggest transaction of your life.
You know, you go into that and you know your business really well, but you don't know capital markets and how to run m and a processes, so
Aaron: Right.
Tony: I kind of dived in and actually. Because of everything that was going on, I was able to sell the business as kind of a m and a advisor. And then I've been working, doing mergers and acquisitions now for, you know, 10, 10 plus years.
Aaron: What did you experience in your own process that you wanted to remedy when you went into m and a?
Tony: You know, as business owners, you really hyper-focused on your business. You really know it and understand it pretty well. You just don't have the time to learn about capital markets and how these things work and how.
You know, there's a lot of little things you can do to increase your business valuation, but you can't just do it in six months or 12 months, right? You need a, you need a little bit of time, so understanding what the key value drivers are in the industry, what the business, you know, what the business metrics that groups are looking at, so that you can focus on those items because.
I mean, we had really fast growth and we had good EBITDA margins. Our, our, at our peak, we were about 84 million in revenue. But, you know, we had some client concentration. We had, you know, a, a funny mix of consulting and staffing, and there were some things and tweaks that we could have made that wouldn't have been super difficult, would've taken, you know.
18 to 24 months, but could have made the business significantly more valuable.
Aaron: Hmm.
Tony: Because, you know, just understanding what, you know, what the market is interested in, what they're gonna put a premium valuation on. There's certain niche offerings, there's certain margin profiles and other characteristics of a healthy business.
And what we do now is, you know, we create a chart of six to eight KPIs that are tracked in each industry and business sector. So that. Business owners can know where they fit relative to other deals that have happened. And if you're in the green on all of these, you're gonna be an attractive asset and probably be able to demand a premium valuation.
But if you're off on one or two of these, it can really affect your valuation. And those can be things that a lot of business owners just aren't aware of.
Aaron: Sure.
Tony: Or haven't really put the time and thought into. So
Aaron: yeah, it's a certainly a challenging process. Right. For almost everyone. It's the first and maybe only time that they're going to go through it.
Tony: For sure.
Aaron: So it, it's. Exhilarating that you're learning to new things. It would be good to know those things before you did it.
Tony: We had done, like I mentioned earlier, at least 10 acquisitions. And so we felt like we had a pretty good idea of what the process looks like, you know? 'cause we'd gone through it many times, but it's completely different when you're on the other side of the table and now you're selling and you're talking to businesses that are private equity, that are professional buyers.
Aaron: Mm-hmm.
Tony: And sure you're gonna partner with them, but if you don't have. All the reps in warranty, all the legal verbiage and the purchase agreement and all these little terms. If you don't know what market terms are, there can be a lot of things that can work against you down the road that you just aren't aware of.
And so it's a completely different process. You gotta have the right professional services partners surrounding you to make sure. You know, your interests are taken care of and, and any future things, you know, everybody gets fixated on the top line value.
Aaron: Mm-hmm.
Tony: Really, it's, you know, what are the net proceeds you're gonna take home?
And, and, you know, is it how much cash it closed versus earnouts don't take the deal if you wouldn't be comfortable if you got zero in the earnout, because there's no guarantee you're gonna get any of that. Right. And once you sign the deal. You are not necessarily on, you know, the other group, especially if they're a big entity, they've got shareholders that they owe a fiduciary to and they're gonna try to do what they can so that you don't get your earnout within the rules of, of your agreement.
Right. They're not gonna probably sabotage you, but that could happen.
Aaron: Sure.
Tony: So
Aaron: their interests are certainly different
Tony: than yours. Yeah. Your interests are no longer aligned. Yeah. And so you have to be, you have to be super careful to make sure you know, your agreement has. Protections for you.
Aaron: You've described a bit of the approach that you take now at Alexander Hutton,
Tony: right?
Mm-hmm.
Aaron: What else differentiates you? Dis differentiates Alexander Hutton from other similar players in market.
Tony: You know, we're a boutique, lower middle market investment bank, and so probably our biggest differentiator is all of the partners are former business owners. So I have two others, two other managing directors.
We've all. Acquired, ran, sold e eventually exited businesses. Mm-hmm. My business partner James, took his business public on the UK stock exchange. Our other partner, Steve, sold his sold, sold two businesses to private equity, and so we've sat in the shoes. Of, and the same seat as business owners. So we bring a different approach.
You know, we're not trying to just close a transaction, we're trying to make sure we're finding the best overall fit, and that's kind of the three legs of the stool. One being purchase price, two being cultural fit.
Aaron: Mm-hmm.
Tony: And, and three being the structure of the deal. Cultural fit is generally the most important.
If it's, if you don't see your team. Having more opportunity and really engaging with this new business and them being able to take you, take your business to new heights, you really have to think. Quite a bit around why you would be partnering with this company, right? Because that should be the number one goal.
And the way we run a process is we will share where we think the valuation is going to come from these groups, you need to be comfortable with that or recommend not running a process. Mm-hmm. And then we're gonna try to. Make sure your business is in a position where there's gonna be multiple offers. So you'll have a lot of options to pick to find the right partner to move forward.
Aaron: Mm-hmm.
Tony: And if your business is in a situation that we can sell it, but there might only be two or three buyers because. It's either you've suffered some aspect of your business is not ideal and needs to be fixed. That's a tough decision. Tough conversation with a lot of groups and oftentimes we'll, we'll recommend they don't run a process until they get these things addressed because they're probably not gonna have the outcome that they want.
Aaron: Yeah.
Tony: That's good advice.
Aaron: Before we continue, I want to tell you about the community that made this podcast possible. A Seattle chapter of eo, that's Entrepreneurs Organization. It's not networking, it's not selling to each other. It's real entrepreneurs sharing real challenges and solutions. If you have a business that does at least a million a year in revenue, and you're curious about joining a community that gets what you're going through.
Check out EOCF.
Tony: So you're a very long time member of eo. Yes. 17 years, 2008. Yeah. I quit trying to count the number. Yeah, just remember the year. Yeah.
Aaron: So what brought you to eo? What was happening in your life that
Tony: brought you Yeah, so I started my business in 2005 and had just recently met Mark spots. I'd known him for maybe six months and didn't really have a lot of.
Peers to talk to.
Aaron: Yeah.
Tony: And so I'd been asking him some questions. I can't remember the specific questions. I might've been around, who do you use for insurance or health benefits or something of that nature. And he was like, you know, Tony, you should really consider joining this group. I'm a member of EO Seattle.
And I was like, great, make an intro. I'd love to learn more. And so at that point in my life, I mean three years into the business, I was hungry for. Peers and being surrounded by people who were running businesses, growing businesses, and passionate about community and and giving back.
Aaron: What did you get from EO initially that delivered value, and how has that changed over the years?
Tony: You know, I've been in three different forums and I think each of those forums is probably a little bit of a different stage of my entrepreneurial journey. So kind of the first forum group that I, that I joined, I was in learning mode and learning how to be a business operator, learning as much as I could around the things a good business owner should know how, how to grow your business, how to manage the whole three principles of our forum, updates around business, personal, and family.
I mean, those were all three equally important. And equally covered. Since I was so new to business, I was so focused on business, and so that was great. And as my business kind of grew and scaled, I got to the point where I was still getting a ton from the family and personal, but on the business side. The things that I was looking for guidance on, you know, opening international offices, doing private healthcare.
Aaron: Hmm.
Tony: None of my forum mates had done that. And so I ended up joining a quantum forum of folks that had larger businesses. And so, you know, I went from being the largest business in my group to probably being somewhere in the middle to maybe bottom third, and it was just a great reset. Because it was joining a group, kinda like joining the first time in my first forum where I was surrounded by members that had all been in EO longer than me.
They were more tenured, more experienced, and there were certainly experiences that I had that some of them didn't have that I could share, but I felt like I was then learning a lot. All over again, which was great because these were things that I needed to be around. You know, that was a regional group, so it was a lot of travel.
As I shifted back into kind of my new role as a managing director at an m and a shop sell, after selling my business, I wanted to get back to the local EO Seattle chapter. And I was contemplating whether to join two groups.
Aaron: Mm-hmm.
Tony: But then we ended up starting a local quantum group, and so I joined that.
And so now a lot of the individuals in my group have more mature businesses, and so we really lean in more. Around family, personal, and then a big emphasis on personal learning and personal growth. And so while business is still important, it's like the smallest percentage topic of any of my other forums, and it fits in really well.
That's just kind of where I am in my life. So it's, it's been, it's been great.
Aaron: You briefly touched on leaning on your form when you were going through a tough time. Yep. Failed transaction. Can you share either a bit more about that or another time when EO really delivered for you and what did you get from EO that you wouldn't get from, or couldn't get from just.
Hanging out with other business owners.
Tony: You know, I had a, a conflict and a lawsuit with my business partner. You know, I learned a lot about, from other individuals in my forum that had gone through similar, similar instances. And in some cases it was, you know, divorces.
Aaron: Hmm.
Tony: And I learned a ton about, you know, having to deal with a narcissist as a business partner and just kind of the challenges of that and having a support system.
They could walk me through that. I mean, you would want to talk to others about that, but you can't talk to anybody else in your business, right? A lot of these topics, you can't talk to your spouse. My wife has to have a relationship with my business partner, and if I share dirty laundry, she's the type of person that she, she would not be able to like take that information and.
Feel the same way about that person.
Aaron: Right.
Tony: You know, I kind of had to basically mask that for many years for the benefit of the business. Eventually, it was at the point where this is so broken, I've just gotta get away from this and do something new and start over and, and separate myself from. Unhealthy situation.
And I think, you know, my forum was super helpful in that because they were really the only people I could have these types of conversations with. The forum members kind of had that history and knowledge of being with me for a long time. So you build up relationship with them, you can have these deep conversations that can help you work through issues.
Yeah. Whether they're one outta 10 or 10 outta 10,
Aaron: how do you think you are? Different today because of eo.
Tony: Yeah, I'm definitely more well-rounded as an individual. There are so many, so many aspects and so many individuals in EO that you meet that are. Just tremendous. I mean, probably in my early years of eo I just wanted to learn and work, try to do new business and, and now I'm like, look, there's a smart ways to do business work, isn't everything.
Mm-hmm. Gotta have that right balance, you know? You know, maybe when you're in your twenties and thirties. You can work crazy hours and give yourself a badge for that, you're burning yourself out, right? You're not spending enough time with your family, you're not spending enough time with those other family members that are close to you, friends, et cetera.
And, and you gotta just have a good balance to your life. Otherwise things kind of catch up on you. And, and also, you know, I had so much focus and, you know, probably my own identity tied up into, to my business. Yeah. That, you know, when part of that. Was threatened to be taken away from me or fractured. I didn't have a lot of other things that, you know, I could completely kind of lean into outside of that.
And so just not having good balance was never, never gonna be a good long-term.
Aaron: Yeah.
Tony: Solution.
Aaron: You built a big company, you experienced a significant exit. Most entrepreneurs start a company thinking, oh, it'll be great to sell. And that's the holy grail, that's the brass ring that they're going for. In what way was.
And exit what you expected and what you'd hoped for. And in what way was it a disappointment, if at all? How does that help you when you're working with company owners? Who think they want to exit are entering into this process.
Tony: The timing wasn't ideal, but it was kind of there. Were forcing functions on the timing.
Sure. And so when your business is not at the ideal time to sell, then it's hard to market it to groups and get kind of the, the premium valuations that you might want or might expect. And I, and also think as a business owner, I mean, you hear about other transactions and you get numbers in your head and
Aaron: Right.
Tony: You gotta just. Separate yourself from that conversation and kind of do a reset and look at the financials and the performance and all the things and just kind of put that all together.
Aaron: Yeah.
Tony: Ideally it would've been better to run it. For a, a longer period of time during the m and a process, I stepped out of the day-to-day of the business and I wasn't planning on being a part of the acquisition.
And when I stepped out, you know, that coincided with some significant tail off and, and performance and revenue and, and also, you know, when there's external things happening, people start to understand there might be an m and a process, then things can naturally. Just kind of fall off.
Aaron: Right.
Tony: You know, you take your eye off the ball running the business performance starts to slip.
The groups that are looking, you know, kind of there, there's potentially the opportunity to retrade. And, you know, in the m and a markets, one of the sayings we have is that time kills all deals. Mm-hmm. And, and it did, it killed our, the first deal that we had. And that would've been. A nice transaction and you know, the deal got killed like literally two days before.
And it was one of those situations where, you know, our deal took too long. Took too long, took too long, a couple distractions along the way that really were not necessary, and two days before our deal was supposed to sign. The company acquiring us got acquired by another private equity. They wanted to still do the deal, but their bank said no.
Right? So it didn't happen. And then at that point, when you've got nine months into a process and you gotta go back to other groups, it's really hard to get the same valuation because groups understand, oh, well why did this deal not happen? Oh, okay. You know, we can sharpen our pencil, but this is probably a discounted asset now.
And so that was certainly not ideal and the best case would've been reset two more years focused on growth, get the business back on track, and then run a process again. But I mean, I was already, I was out of the day-to-day expecting a transaction to happen, so that made it. Much trickier.
Aaron: Yeah. What have we not talked about that you'd like to talk about?
Tony: I mean, I really enjoy the events and getting to know new people and I think I, I remember when I first joined, there were a lot of individuals that had been in for like 20 years.
Aaron: Right.
Tony: You know, my age and older. And I remember thinking to myself, wow, I wonder why these. These individuals are still in, right?
What are they getting that they've been in for 20 years? You know, even if I wasn't running a business, I would still want to be a part of this if I qualified just because of the fact of the individuals that. You know, I'm meeting with and communicating with and the new business owners. I mean, every year I meet a handful of new business owners that are super impressive.
Aaron: Yeah.
Tony: And just watching their journey and watch what they do. And my forum is all pretty tenured folks and I get so much value and enjoy hanging out with them. Forum, outside forum, you know, we do our, our own annual retreat, which most forums do. It's a huge event and I think we've got 10 individuals in our forum and it hasn't changed.
We haven't lost a member in probably four years, and so it's just a strong, that's really
Aaron: unusual.
Tony: Yeah. It's a strong member of, really committed folks.
Aaron: Yeah,
Tony: so it's been great.
Aaron: Yeah.
Tony: Yeah.
Aaron: That's great. Thank you for talking with me.
Tony: Yeah, of course.
Aaron: Really enjoyed it.