Acquiring Buzzd - A Look Behind the Scenes

Jordan Buckner: [00:00:00] Building a CPG brand is really exciting, but also comes with a lot of challenges along the journey. At some point in that road, you go on this journey from starting your company to maybe one day selling and exiting. And there's a lot that happens in between. One thing that's really exciting is like what happens at the end, how your company may get acquired and some of the avenues for doing so.

And for this conversation, I am excited to bring on Alexandra Sangster, who is the founder of Sarjesa Tea, a really awesome tea brand based in Canada that also just acquired a brand called Buzzd 'd. Alexandra, welcome. Thanks 

Alexandra Sangster: Thanks for having me. This is great. 

Jordan Buckner: This has been an exciting year for you because I know you just went into your business full time, which I was like, wow, this is like, super excited and following your journey.

We've been buying your teas for some of our corporate clients through Joyfulco and then I feel like it was like a, Month or a couple of months after you're like, and you're acquiring a business. So I was just like a little overwhelmed. I was [00:01:00] like, I have to talk to you to find out a little bit about kind of what happened behind the scenes.

But before we get to that, I would love for you to share about Sarjesa and your tea journey. 

Alexandra Sangster: Yeah, so Sarjesa started as a school project to support women in our supply chain. Specifically, we wanted to focus on supporting missing and murdered Indigenous women and girls. And then as the tea grew, I realized that missing and murdered women is much more prevalent in all sorts of different communities connected to our supply chain.

And so I was like, oh, okay, so we have this issue. What's the best way to tackle it with our business? And that was through supply chain and ethical sourcing, as well as some other initiatives, and that was kind of the seed that started the business. My partner, his parents are. In health foods, his whole family has been in like supplement manufacturing and all of that for like three generations, I think.

So when I opened up my own plant, they were really important in setting up our kind of health and safety processes, as well as our [00:02:00] food safety program here at our facility.

Jordan Buckner: Opening up your own plant. That's a big deal of, you know, a lot of people will start and they'll work with the contract manufacturer, especially with something like tea or the specific equipment that needs to be made.

And so what led you to starting your own facility? 

Alexandra Sangster: Well, first off, I wouldn't recommend it. Don't start your own plan. Work with a co backer. Save it for the experts because it can be really challenging. And I, like, we've had it all. We've had exploding teabags. We've had teabags sealed in the over wrapper.

We've had string issues. Like I wouldn't recommend it. It's not for the faint of heart, for sure. I wanted to work with a Co-packer originally, and we just couldn't get the MOQs, like they were so astronomically high. And I also couldn't get the ingredient quality or sources that I wanted. And then I would have had to share our entire supply chain with them if we were working together and it just wasn't a good fit.

So I started my own thing, quickly realized that I was going to have so much downtime on our lines if it was just my product. And so. Other [00:03:00] brands started to approach me and then I decided. I might as well make a really, really amazing plant and hire women and like do it in a really good way and grow it that way.

So that was kind of why I started a plant. 

Jordan Buckner: Well, I love it. And you know, with when I launched TeaSquares, we went back and forth between self manufacturing, trying contract manufacturers, back to self manufacturing. So. You know, I've seen both sides and agree that it's not for the faint of heart and it's really challenging.

You do get more control, but then it also stops at you if anything goes wrong. And so, you know, always, I would say, like, pick your poison, but go into it knowing your strengths so that you can best execute. Okay. 

Alexandra Sangster: And my favorite brands to work with are ones who have done self manufacturing and understand because like in your first couple of production runs, there's always going to be issues.

There's always going to be hiccups, things you don't expect, but over time, if you have the right manufacturer, you can build a relationship around like how we solve these issues or different things. And I think it, in a perfect relationship, [00:04:00] it really helps both sides blossom. Yeah, so I recommend that.

Jordan Buckner: I love it. Okay. So you've been selling Sarjesa for a number of years. One thing that I think is very cool about your story is that you also continue to work another job, right? Like while you're Sarjesa. 

Alexandra Sangster: Yeah. So, okay. And this is where I think people get it wrong. People are always like, Oh, it was a side hustle or like a side gig.

I, it really wasn't, I was working full time on both businesses. But what I did, I worked in a job with an amazing CEO called Wayne Chu. He's awesome. And his son, Patrick is also phenomenal. And I got learn from. Other experienced CEOs and founders on how to operate larger businesses than what I had, which meant that I was able to take those systems and implement them.

And implement them in Sarjesa in a way that I could grow into, which was awesome. And it's like such a gift to know that you have people you can trust who are like literally four doors down in the hallway that you can be like, I just have a quick [00:05:00] question. This thing happened at the tea factory and I don't know what to do.

Oh, 

Jordan Buckner: so they're located not near your factory, but where you were like your office. 

Alexandra Sangster: My office, and they were like a 10 minute drive from the factory. So like that relationship still exists, but I made the decision not to join the Tea full time. I could have done it like five years ago. It was more important to me to build the team first, because I don't have all the skills that you need for a manufacturing plant.

Better to hire those people, put them in place and then join them last. Because like, realistically, I'm. Such a bad production person. Like I'm terrible. I should just sweep the floors because it's low quality help when I'm there. And so having those people in place and letting them set the systems and then getting out of their way was my main job.

And then it wasn't until this past August where I had a customer tell me that I needed to go full time. I had a staff that needed to tell me full time. And ultimately my partner was the one who's just like, we need you. Like, what are you doing? And [00:06:00] so it was just the right time. 

Jordan Buckner: I absolutely love it. So the business is growing and tell me about Buzzd d and there's a little bit about their story and how the acquisition kind of came about.

Alexandra Sangster: Yeah. So Buzzd d was owned by Lauren and Alex. They founded it much like Sarjesa out of their condo. It was based off of wellness and like addressing needs that they had as customers and they came to us or we came to them. I can't remember how that relationship started, maybe two years ago, and we started manufacturing all of their products in our facility.

So, they have superfood creamers, as well as a hot chocolate. Essentially you add them to your coffee or your tea, it reconstitutes as like coconut milk powder, and then makes it really creamy. And then they've added superfood ingredients as well as some like natural products that help enhance like focus or revitalize after a workout.

And I thought the products were great. Like everybody in our plant loved the way they tasted and the way they looked. And so Alex and Lauren and [00:07:00] me were talking in April and we were kind of floating like some ideas around about the future of their brand. I got off the phone and I called my partner and I was talking to him about this and we were both like, at the same time, what if we offered to buy it?

And because it works so well with our products, like when we go to grocery stores to do demos or sampling events, people always ask for milk and it's disappointing to have to refer them to like a different brand. And so that was how. We decided we wanted a creamer and we offered to buy Buzzd d . And then it was like eight months of negotiation.

So I thought it was really interesting that you noted at the beginning, how it was so many things all at once. Like I quit my job, I joined the tea, we grew, we added four team members. And then at the same time I was acquiring this business. That was 

Jordan Buckner: not You didn't have enough to do already. 

Alexandra Sangster: Yeah. The day I gave my notice was the day we actually like, we finalized a price for the sale.

And I was like, Oh my goodness, this is a lot. Like, how am I going to get through? And my [00:08:00] mom was actually just like, Oh, well, at least you're going to have more time now. Yeah. 

Jordan Buckner: Oh my goodness. I love that. Well, we won't go into like the specific numbers, but I would love to anything that you can share around, like from Your perspective of an acquirer, things that made it attractive and how you thought about, you know, the value of how much you're willing to pay and why, and like the partnership and any thoughts around that, especially for our listeners who are like, I have a brand, maybe we're doing like under a million dollars through life reasons.

Like, I think it's a really great product. I want to have a home, but you know, I'm thinking about selling you or finding someone else to take over. And they're kind of at a loss of like, where do we even start? What are people thinking of? Who are some of these partners who might be able to acquire it? And I know like you can't speak to everyone, but I love to hear kind of what went through on your mind.

Alexandra Sangster: Yeah. Okay. So valuation is going to be the hardest piece to overcome, especially when you've built something that you love it can be really hard to value it at what is actually Going [00:09:00] to sell on the market. And so what I did was I knew I was going to acquire this business and I wanted to. And so I went back and I looked at all of the numbers at this point, we were in due diligence, so I was like seeing financials and all this sort of stuff.

And I costed out all of the work that had been done. And then I looked realistically at all of the work that needed to be done still. And I assigned. Values to it, and then I had my friendly wise skeptics, which are the people who kind of look over my plans and tell me where the holes are double check that I had valued these components properly.

And then I looked at like, okay. So this is what it's going to cost to get the business to the next level, which is where I want to take it. And then this is what it would cost me based off of all the work that it has been done to build it from scratch. And I looked at both those things and then I did some forecasting on like, Where I needed the brand to be from like a sales perspective to be able to like sustain any extra [00:10:00] work, any things like sampling, like promotional products, all of that sort of stuff.

And that was kind of how I came with my first base numbers. And then I started to look at, okay, what are some different sorts of offer structures that we could put together? And so I made this little report, I sent it off to the Buzzd d founders, they reviewed it, they sent back their like, kind of thinking around it and it was just negotiation from there, I know that they had like a number of interested people in purchasing the brand, so it moved slowly, there were some things that had to be addressed and like conversations that needed to be had, it wasn't a fast process by any means, that was kind of how I looked at it, and then when I We knew that they were going to move forward with us as a purchasing partner.

I went to my team and I was like, okay, what is like, you've been working on this product for two years. We know how it moves through our equipment. We know what needs to be improved, pull apart the packaging as if it was our brand. Pull apart all of the pieces and put together a wishlist of like, what you want this to look like.

And then let's go from there. And at that [00:11:00] point I got a really wake up call from my team about like, okay, these are like really expensive things we need to fix. If we're going to run this at scale, because pouches of product are very different than stick packs or sachets. The product moves differently, coconut just gets everywhere.

It's an allergen in the U S all of these pieces. And I was really lucky that they were so granular because it helped us kind of iron out the last details of like, okay, this is actually how much we're willing to pay. And this is the offer that works best for us based off of how much we have to do.

Jordan Buckner: I think that's awesome that you looked at all those numbers and include your team to get so many different perspectives because I'm sure that helps just get everyone else on board as well to see if, like, they're excited. They think it's possible to cover any blind spots that you have, because, right, I think what happens when you get into a negotiation or just start these conversations, are you just like wants to get the deal done.

It's also important to make sure you're continuing to go in, making sure that it's going to work for all parties. 

Alexandra Sangster: Well, and I think women have a real [00:12:00] bias against negotiation at this level. Like, I mean, it's one thing to be on Facebook marketplace and like negotiating there, but it's a whole nother thing.

Like I remember getting the first kind of email back about the offer and I was like, I want to stop. I don't want to do this anymore. Like, let's just take it off the table. And my partner was actually just like, what is wrong with you? Like, this is normal. And so we like, there was a lot of like emotional stuff I had to get through to be able to do it.

Jordan Buckner: That's true. You know, I think there's in general, a lot of people are uncomfortable with negotiation. I've also, there's gender dynamics that come into play with negotiation. I remember going through my MBA program and seeing, you know, different styles from all people that happen and also from different cultures and different backgrounds where negotiation could be kind of frowned upon.

Were there any things that you learned about yourself just in that negotiation process that helped you not just like overcome it, but like, be more confident in your position? 

Alexandra Sangster: Yeah, I mean, I think looking [00:13:00] at. All of the work we've already done with our brands and then what we were building and not coloring it with emotions, having other people double check it and actually seeing that like, no, this makes sense was really helpful for me to see that like, Oh, I'm actually quite good at this planning piece and like understanding the numbers.

Like I don't have a hundred percent knowledge on everything all the time, but I do have a really solid understanding of how Systems in our business work, and I think sometimes When you're in it and you're building something, it's not that you lose sight of how capable you are, but when you're encountering all sorts of issues in manufacturing or there's so much more to learn all the time, you can lose sight of like, you have a little bit of knowledge.

You have a little bit of understanding of how to do these things and you have the people around you to help you get to where you need to be. So that was a big learning. I also was surprised at how fragile I was through this whole process. Like how sensitive it is to like put an offer on and negotiate.

And like, that was shocking to [00:14:00] me. I wasn't expecting that. 

Jordan Buckner: I mean, I appreciate your vulnerability and sharing that because and your strength in sharing that, because I think that's. Something you don't really experience until you're actually going through it, because I mean, like, whenever you're negotiating something, like, you're putting yourself out there, right?

And so it can feel like the reflection on, like, yourself, like, oh, they don't value what, like, all this work that I did, and they don't see that, they don't value that. Or, you know, on the other part, you may or may not be thinking the same thing. And so it's difficult to, I don't think you should even remove it, but like, how do you incorporate that as part of the process?

Thanks. 

Alexandra Sangster: Right, and like, holding those anxieties and complexities is it's like, even though you make an offer that you feel is fair, there's always those questions of like, if I put this out there, are they going to think I'm cheap? Like, how are they going to react to this? Like, and the care that has to go into like, those conversations and the understanding especially when it's like people like Lauren and Alex, who I really like, and I really like, we have a good working relationship and not wanting to hurt feelings or like, So, those are really important conversations and [00:15:00] areas that I think when I buy the next business I will think more about before I do it.

Jordan Buckner: Yeah, I love that. I think one thing to call out, and this is separate from your own situation, but I found that as founders, it's very easy and normal to over value your own business because your blood, sweat, and tears have gone into it. And then your mind you're projecting future value of the company.

But oftentimes from an acquirer standpoint, They're looking at the current value, right? Like, what are your sales? What are your cost structures now? Because yes, the brand might be worth 50 million in the future, but that's the value of the acquirer is purchasing. They're purchasing now to the future.

They're not purchasing 10 years from now and the work that, you know, they have to do themselves to get it there. 

Alexandra Sangster: Exactly. And that's why it's so important, I think, to cost the workout. Because then you actually understand is it's like, Oh, as an acquirer I have to do all of these things before [00:16:00] I think this can be like profitable.

And I mean, you and I are the same. We both care about profitable businesses. I care less about being acquired because my goal is not to magically be out of the game and. Retired. I want to play the game for as long as I can and build as much value as I can, because I think in this vehicle, we can use business to change the world.

And that's the impact that I want to have. It's less about like, it's not about not being paid fairly, not doing, but it's work I love doing. And the future I see is one that I want to bet on in business. 

Jordan Buckner: I absolutely love that and I think that's a mentality that I subscribe to as well and I always tell people that With my current businesses from Foodbevy and Joyful Co., like if I did these things the rest of my life, like I would be happy.

Alexandra Sangster: Yeah. 

Jordan Buckner: And I like plan to, unless something happens, but like that's been my goal because when I started my first company, I was like, Oh, I'm going to sell it in five years and made all these decisions that went to trying to grow and trying to scale and like all these vanity metrics. I wasn't happy and the business wasn't doing well [00:17:00] either.

Alexandra Sangster: Yeah, and you see mentors on social media who are like all about the acquisition and all about these things and they're putting out advice on LinkedIn and I sometimes I wonder about it because it's like, okay, you built a company in this very specific time frame, but you haven't built post COVID and you haven't done these things like Under these environments that a lot of founders are facing.

So I always I'm curious because like people are chasing that big acquisition, that big dream, and yes. It happens, but I think we're in a moment where a lot of mergers and acquisitions need to happen between small businesses because the market just can't support the breadth of companies that are out there in the same category.

Jordan Buckner: That's totally true. And when you look at the likelihood of acquisition, and I think this is what's hard. I think a lot of the founders I talk to go into the business and want to be acquired. And I think maybe comes from two positions. One is that. Right? Like you're kind of sold the dream, the tech mark in the social in the like on social media of like the tech startups sold this [00:18:00] vision of companies selling for hundreds of millions of dollars.

Every few years in the CPG industry, you see companies like RX bar, CFA foods getting acquired for large sums of money, but they're definitely the exception and they also are doing millions of dollars of revenue on their own. But I think the other thing that happens. I said, starting a CPG business is really hard and really expensive.

And I don't think a lot of people, you can't truly understand the emotional and financial toll that it takes because like any business, you're often starting losing money from the gate, right? You either have to like take out debt or give up a job or something where you're like losing money every single day.

And sometimes for two, three, five years. And it leads to causing decisions like. Why didn't take on VC investment, not because you really think you have like a billion dollar company, but because if you don't, you're going to go out of business because the business is in the profitable and people won't loan you money.

And I see a lot of companies like get into these situations where they're like stringing along their business because they love what they're doing. They like the idea, but it's not. Financially able to sustain itself and then get to a point [00:19:00] where they're like, okay, I need to sell the company because I'm in a position where I might go out of, you know, business from it because of the financial hardships.

And so I see a lot of companies who are in that position, unfortunately, right now, and they're like, okay, what do I do with this idea? I spent 2, 3, 5 years building it. Is it worth nothing? Is it worth something? Like, where do I go? 

Alexandra Sangster: Yeah, and I think that that's so important what you're saying, because like, I think the problem starts at the beginning, where, okay, instead of looking at it as like, I need to invest in all of these big systems to like drive growth and become like this business that gets acquired, why not look at it like the way the Trico Foundation looks at it as you have your Like top of the mountain your summit where you want to be and then they break it down into base camps and thresholds and for each threshold, you're going to need different types of staff.

You're going to need different levels of like packaging all of those things. But what I love about that approach is it you if you break it down far enough, you could start with 500. And be profitable and not like, you know, go out of [00:20:00] business or like risk more than what you can afford. And I think by taking that approach, yes, maybe it takes a little longer, but the peace of mind and the, like, ability to sleep.

With the decisions you've made is like, so amazing. 

Jordan Buckner: I totally agree. I'm sure you can appreciate this too, but like, when you get to the point where the business is financially stable, reduces your stress level so much. And actually is like a really big turning point into like making the business more sustainable, more, more enjoyable, I think personally, when you don't have that constant threat of like.

Your personal sort of high ball because the business could fail at any moment and comes with some really great things. I love that. Framework that you mentioned, like setting these milestones and setting steps along the way. And one thing I always tell founders to is like, try to plan your journey as fast as possible to get to a point where you are profitable and paying yourself the minimum that you need to live because it provides you with a level of optionality where then you can make decisions based on [00:21:00] opportunities instead of on scarcity, anything that sets you up in a much better position.

Alexandra Sangster: Absolutely, optionality, I think is like the most important piece because like, even though I wasn't working in the business full time, having the option of hiring quality people at like actual pay that they would take that's important and like being able to like, okay, I have this money coming in. I have options.

I can quit my job. I can join the team. I can hire so and so I can invest in packaging. I can move things directly from farm and then being strategic about like, okay, this is it. How I'm going to evaluate these options and what I would expect in return of making each of these choices. Because I think sometimes people are like, I'm just going to make this choice and there are no benchmarks for like, how do we know this is successful?

And what will we do if it is not as not successful as we think it will be? How will we pivot or change direction? 

Jordan Buckner: I absolutely love what that allows you to do. So I'm looking forward to the future. What does the [00:22:00] Buzzd acquisition look like in terms of how you integrate it into Sarjesa? Are they going to become one brand?

Are you still kind of figuring out if they're going to live as two brands? What are you thinking? 

Alexandra Sangster: Buzzd d is going to be its own brand. So Sarjesa actually has multiple brands within the group that sell to different markets. And so Buzzd d will continue to be its own brand, its own entity. And that I think is really important because we like to be able to look at the probability of each product line on its own to determine if it's being successful and like achieving what we need it to do from an objective perspective.

But the goal is to like use this more in food service and grocery versus like you know, private label it out to other brands or things like that. 

Jordan Buckner: That's really exciting and I'm excited to hear that. Well, perfect. I was into it. Thanks so much for being on today. I am so excited for you and for the team and for the Buzzd founders for coming to this, because I think it's powerful to see brands and companies partnering together in order [00:23:00] to make this happen.

One thing I'll call as well, a lot of founders end up in situations where like their manufacturers acquirers because there's some of the ones who like to know the products the best. Especially if they have their own brand. So if you are brand looking to potentially be acquired, you can start with that option as well.

But there's also other avenues and creative deal structuring that you can do for your brand and selling that as well. Alexandra, thanks so much for being on today.