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Welcome to the Maximizing Outcomes podcast,

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brought to you by Jim McGovern and the

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McGovern Wealth

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Group. Achieving bigger and better results with money,

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family, and business isn't about creating a bigger

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to do list for yourself.

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It's about who can help you create results

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without you having to do all the work.

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Listen as we provide uncommon perspectives,

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powerful resources, and experienced people that can help

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you maximize outcomes in your life.

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Let's get to the show.

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If you're a business owner,

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odds are that nearly 80% of your wealth

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is locked inside your business.

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You know, most owners are unprepared when it's

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time to harvest that wealth and exit the

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business.

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So today, we'll discuss how exit planning isn't

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just about stepping away. It's about unlocking the

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full potential of your business and building something

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that can thrive without you. I'm Patrice Sikora,

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and this is the Maximizing Outcomes podcast with

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Jim McGovern.

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Jim, with 75% of business owners aiming to

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exit within the next 10 years, why is

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having a plan in place so crucial?

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It's a great question, Patrice. And it's it's

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kind of a shocking number when you think

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about it, that 75%

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of owners plan to exit in 10 years.

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It's a lot of businesses. It's a lot

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of money in motion.

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And and the big thing about exit planning

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is that it is really crucial for owners,

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and yet it's often mistaken for something that

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a business owner does much later when they

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feel like they're really ready to sell this

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company or when they're ready to transition it

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to

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family members or key people in the in

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the company. But the reality is

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everybody listening in and owns a business. I

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want you to think about exit planning as

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a value management

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system. So it's something that you focus on

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today

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to grow the value of the business and

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drive income from the business.

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And it it should be integrating

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with the business owner's objectives.

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It should be integrating with their personal and

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financial objectives. So when it it does become

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time to exit the company,

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the owner is gonna have a lot of

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options to harvest that wealth that's locked up

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in the business

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and maximize that

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wealth as it transitions from the business to

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their personal balance sheet, but they're able to

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do it

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on their timeline and on their terms.

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So today, we're gonna be talking about what

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exit planning is, but I also wanna talk

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about exit planning is not.

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I'm gonna talk about the process

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of value acceleration

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in the company

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and why owners have to be not just

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personally prepared

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to exit the company, but they have to

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be emotionally prepared exit the company. And the

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business itself has to be ready for that

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transition. So lots to talk about today. That

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is a lot. That is a lot. So

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let's start with what exit planning is. We'll

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get to is not after this, but what

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is it? Because I think there are some

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real misperceptions with the name here. So in

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your words, what exit planning what what is

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exit planning, and why do so many business

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owners misunderstand it?

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So, yeah, I think that the word exit

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itself, it sounds like it it's a moment

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in time, and I'm not ready to exit

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right now. You know, maybe it's it's 5

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years, maybe it's 10 years, maybe it's 20

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years from now.

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So I think the thought is, like, that's

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something that's on my to do list. I'll

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get to that at the very end. But

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in reality, I want you to think about

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exit planning

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as an ongoing process.

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It's something that is it is really about

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building the company.

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It's about protecting

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the company's value and the cash flow it

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produces and positioning it so that you could

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harvest that business value whenever you are ready,

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which, again, may not be for for quite

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some time.

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So when this is done properly, like I

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said earlier, it's gonna align the owner's personal

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financial and business goals.

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It's going to create

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a way for the business to be,

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transferable.

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Right? Because that value, it only means something

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if they can really be transferred to somebody

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else and that company can continue to thrive

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and succeed without the current owner.

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And it also has to prepare the business

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and the owner for all sorts of unexpected

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life events and business events.

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And this is not a complete list, but

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there's some things we call the 5 d's.

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And this is what happens if there's a

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disability? What happens if there's a death? What

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if there's a divorce?

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What if there's distress either in the company

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or in the business owner's personal life? What

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if there's disagreements?

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So it's not just about

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growing the value. We have to protect the

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value.

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And ultimately,

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it's about increasing

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the business's

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attractiveness

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and the readiness for an ultimate exit, which

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again could be a sale, but it could

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also be transitioning it to employees or to

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family members. So there's a there's a lot

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that goes into exit plan, but it's it's

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an ongoing process that really should be starting

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today.

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Alright. So that's what exit planning is.

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What is it not?

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So it's not about just selling the company

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and stepping away all of a sudden. In

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fact, I think it's it's more challenging when

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somebody comes to us and and they say,

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I'm ready to exit the company, like, right

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this minute.

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What's worse is when somebody says I have

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to exit the company right now. There's been

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a major health event. There's been some circumstance

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in life that I have to get out

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of this thing right away.

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You know, it's like blood in the water.

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The sharks smell it, and they're gonna you're

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you're probably gonna get far less for that

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company than you could have had you prepared

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ahead of time.

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So it's also it's not something that you

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do just when you're ready to retire. There's

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a lot of owners that we meet that

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are saying I'm gonna retire in a year

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or 2, and I need this value for

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my company to go to my personal balance

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sheet so I can retire. Again, your options

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are gonna be a lot more limited if

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you wait till that late in the game.

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And the other thing is this is not

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limited to just a a transaction.

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It's you gotta take a holistic look at

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this because there's a lot of your life

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that's tied up in that business. It's what

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you put your blood, sweat, and tears into

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for many, many years. It's a big part

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of who you are. So you have to

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also start to think about,

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what am I gonna do next? What's the

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next chapter of my life gonna look like?

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And what am I gonna do when I

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don't have this company? Am I ready for

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that? So it's, you know, it's not a

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transaction. It's about getting your personal life, your

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financial life, and your business life all on

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the same page and and positioning you for

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long term success.

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No. I think a lot of people don't

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understand how much importance that is, that has

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the emotional aspect of it. It's your identity.

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It's who you are. That's right. Yeah. Any

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other big misconceptions here that, we need to

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touch on?

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Yeah. The only other thing I wanna add

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to it is it's just I think ownership

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really the thing about exit planning is just

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good solid business strategy.

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So for example, if you if you had

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a way to improve the cash flow of

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your business,

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when would you want that to happen? Would

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you wanna wait 10 years for that, or

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do you wanna do that right now?

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Yeah. I think every owner listening would say,

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yeah. If there's a way to improve the

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cash flow of my business. I'm gonna do

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it right now.

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Same thing if it's the the value of

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the company. If you could get a much

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larger multiple for that business, when do you

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wanna see that become possible, today or in

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20 years? We wanna see that now. So

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that's exit planning. It's it's business strategy. It's

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it's value management. In fact, if someone's taking

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notes out there, I think that's something you

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should write down that exit planning is more

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about value management than anything else.

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Alright. Now you did mention the 5 d's

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as you call them, death, disability, divorce, distress,

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disagreement.

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How

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does exit planning

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mitigate these risks?

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So, yeah, this is this is super, super

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important because

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there's a lot that's at stake with the

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company, and there's a lot of an owner's

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net worth that's typically tied up in the

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business.

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And you have to have good solid risk

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management, which we're gonna spend more time on

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a little bit later, but,

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you know, these are things that can happen

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without any warning,

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but any notice.

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You could wake up one day and have

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a massive health issue that came up out

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of nowhere,

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and that could really put a dent in

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the company. So when we talk about these,

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these 5 d's, again, or death, disability, divorce,

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distress, disagreement. You have to have

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good, solid insurance planning, both in the company

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and in your personal life.

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You have to have good legal documentation,

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whether it's business agreements, whether it's good estate

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planning, wills and trusts.

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You have to have documented processes in the

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company.

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You yourself or one of your key people

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could go down at any moment, and who's

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gonna step into their shoes and continue on

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in a smooth fashion

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to fill that role? What about retention planning?

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Making sure that your very best people can

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stick around through some of these

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5 d's or other issues that pop up

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in the company.

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So it's,

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it's really hard to get into growing the

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company and pouring a lot of additional money

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into the company to to get it to

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scale,

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if it could all be taken down. And

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that value could disappear overnight because these these

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risks weren't addressed ahead of time. Right.

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Alright. Here, your your shift in our mindset

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here, exit planning is smart business strategy.

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It's about value management.

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So walk us through the value acceleration

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process that your team uses.

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So there's there's really 5 stages to the

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value maturity of a company.

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And where every company really should start

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is

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just the very first step, which is identify,

272
00:09:11,625 --> 00:09:14,365
and that is conducting a business valuation

273
00:09:14,745 --> 00:09:15,804
at the starting point.

274
00:09:16,424 --> 00:09:17,865
So, in fact, let me just give you

275
00:09:17,865 --> 00:09:19,784
all 5 stages first, and we'll talk about

276
00:09:19,784 --> 00:09:21,384
each one individually. So step 1 is to

277
00:09:21,384 --> 00:09:24,044
identify. Step 2 is to protect.

278
00:09:24,959 --> 00:09:28,320
Step 3 is to build that company's value.

279
00:09:28,720 --> 00:09:30,320
Step 4 is to harvest the wealth that

280
00:09:30,320 --> 00:09:31,839
you've created in the business, and step 5

281
00:09:31,839 --> 00:09:33,679
is to manage that wealth. So if we

282
00:09:33,679 --> 00:09:34,879
go back to that step 1, like I

283
00:09:34,879 --> 00:09:36,240
was saying, is that, you know, you really

284
00:09:36,240 --> 00:09:38,399
need to measure what is this company worth

285
00:09:38,399 --> 00:09:39,735
right now. That's our starting point.

286
00:09:41,014 --> 00:09:43,174
And I would say with most owners we

287
00:09:43,174 --> 00:09:45,334
work with, they may see somewhere between 80

288
00:09:45,334 --> 00:09:47,975
to 90% of their net worth is locked

289
00:09:47,975 --> 00:09:49,274
up in the value of this company.

290
00:09:50,054 --> 00:09:52,134
So it's not just essential to know what

291
00:09:52,134 --> 00:09:54,154
that wealth is right now,

292
00:09:54,720 --> 00:09:56,959
but you should be doing valuations every year

293
00:09:56,959 --> 00:09:58,959
to measure the progress. So the strategy you

294
00:09:58,959 --> 00:10:00,799
are deploying, is it having an having an

295
00:10:00,799 --> 00:10:01,860
impact or not?

296
00:10:02,559 --> 00:10:04,500
The other part of this is with valuations.

297
00:10:04,559 --> 00:10:05,839
A lot of times, owners look at the

298
00:10:05,839 --> 00:10:07,839
valuation. They just kinda check the box. Okay.

299
00:10:07,839 --> 00:10:09,915
That's the number. Mhmm. There's a lot of

300
00:10:09,915 --> 00:10:11,695
hidden value in the business.

301
00:10:12,555 --> 00:10:14,735
So one important thing to remember is that

302
00:10:14,875 --> 00:10:16,975
all businesses have a range of value

303
00:10:17,595 --> 00:10:20,315
based on that company's individual characteristics, based on

304
00:10:20,315 --> 00:10:22,715
the industry that they're in. And the shocking

305
00:10:22,715 --> 00:10:23,855
thing is is that

306
00:10:24,230 --> 00:10:26,009
a lot of businesses cannot sell.

307
00:10:26,870 --> 00:10:28,870
And I've heard stats that it's somewhere around

308
00:10:28,870 --> 00:10:31,450
7 of 10 businesses that try to sell

309
00:10:31,830 --> 00:10:33,509
can't sell. So that means it doesn't matter

310
00:10:33,509 --> 00:10:35,590
what the valuation said. There's no real market

311
00:10:35,590 --> 00:10:36,090
value.

312
00:10:36,495 --> 00:10:38,975
There's nobody willing to transact with you to

313
00:10:38,975 --> 00:10:40,495
write you a check for that company, which

314
00:10:40,495 --> 00:10:42,095
is scary, because a lot of times owners

315
00:10:42,095 --> 00:10:44,014
think that, well, that's my retirement plan. I'm

316
00:10:44,014 --> 00:10:45,455
gonna sell this company someday, and that's what

317
00:10:45,455 --> 00:10:46,575
I'm gonna have to ride off into the

318
00:10:46,575 --> 00:10:48,509
sunset. And it doesn't always work out

319
00:10:49,149 --> 00:10:50,669
that way. So the other thing I I

320
00:10:50,669 --> 00:10:52,910
want people to think about with with this

321
00:10:52,910 --> 00:10:55,009
hidden value that's in the company

322
00:10:55,549 --> 00:10:57,790
is that, you know, all companies are gonna

323
00:10:57,790 --> 00:11:00,850
sell for some range of multiple of earnings.

324
00:11:01,595 --> 00:11:03,435
So where there's some hidden value is that

325
00:11:03,514 --> 00:11:05,195
let's just take an example of a of

326
00:11:05,195 --> 00:11:05,774
a company

327
00:11:06,235 --> 00:11:08,254
that has annual sales of $20,000,000,

328
00:11:09,754 --> 00:11:11,215
and maybe they have $2,000,000

329
00:11:11,754 --> 00:11:12,495
of EBITDA.

330
00:11:13,115 --> 00:11:16,169
So that's earning before his earnings before interest,

331
00:11:16,169 --> 00:11:16,669
depreciation,

332
00:11:17,049 --> 00:11:17,789
and amortization.

333
00:11:18,250 --> 00:11:20,089
Mhmm. Not to get into the accounting world.

334
00:11:20,089 --> 00:11:21,289
I'm not an accountant. I'm not gonna get

335
00:11:21,289 --> 00:11:22,110
into all that.

336
00:11:22,570 --> 00:11:23,929
But you have a company with 20,000,000 of

337
00:11:23,929 --> 00:11:25,470
sales, $2,000,000 of EBITDA,

338
00:11:26,009 --> 00:11:28,089
and maybe it could sell for 4 times

339
00:11:28,089 --> 00:11:30,644
EBITDA. So that means that the value of

340
00:11:30,644 --> 00:11:31,625
the business might be $8,000,000.

341
00:11:33,284 --> 00:11:34,664
So what would happen

342
00:11:35,524 --> 00:11:37,845
if the company was able to operate as

343
00:11:37,845 --> 00:11:39,384
best in class in the industry?

344
00:11:39,845 --> 00:11:41,924
Well, maybe they could take their $2,000,000 of

345
00:11:41,924 --> 00:11:43,524
EBITDA, and they could work on getting up

346
00:11:43,524 --> 00:11:45,384
close to $4,000,000 of EBITDA.

347
00:11:45,899 --> 00:11:47,899
And what if the company could be positioned

348
00:11:47,899 --> 00:11:49,919
where it's best in class in the industry,

349
00:11:49,980 --> 00:11:50,639
and it

350
00:11:51,179 --> 00:11:54,059
it it can command a multiple that's maybe

351
00:11:54,059 --> 00:11:55,199
7 times EBITDA?

352
00:11:55,980 --> 00:11:58,620
Just those two changes, taking EBITDA from 2,000,000

353
00:11:58,620 --> 00:11:59,279
to 4

354
00:11:59,745 --> 00:12:02,144
and getting the EBITDA from 4,000,000 I'm sorry,

355
00:12:02,144 --> 00:12:02,965
from 4

356
00:12:03,345 --> 00:12:05,205
times to to 7 times

357
00:12:05,664 --> 00:12:07,585
means that that valuation could go from an

358
00:12:07,585 --> 00:12:08,085
$8,000,000

359
00:12:08,465 --> 00:12:09,445
value to $28,000,000.

360
00:12:09,985 --> 00:12:12,485
So there's a value gap here of potentially

361
00:12:12,544 --> 00:12:13,044
$20,000,000

362
00:12:13,585 --> 00:12:14,404
in this example.

363
00:12:14,970 --> 00:12:16,649
That's what I was really referring to is

364
00:12:16,649 --> 00:12:18,730
this this hidden value in the company is

365
00:12:18,730 --> 00:12:20,029
that you look at some of the efficiencies

366
00:12:20,089 --> 00:12:22,169
that could be gained with proper planning, and

367
00:12:22,169 --> 00:12:23,870
it could be a staggering difference

368
00:12:24,409 --> 00:12:24,909
between

369
00:12:25,370 --> 00:12:26,909
the result you would get without

370
00:12:27,264 --> 00:12:28,784
proper planning and what you could get with

371
00:12:28,784 --> 00:12:30,304
proper planning. So there's a lot that goes

372
00:12:30,304 --> 00:12:32,704
into that that step number 1 of, of

373
00:12:32,704 --> 00:12:34,784
identify. It's not super complicated, but it starts

374
00:12:34,784 --> 00:12:36,544
to get the wheels turning on what the

375
00:12:36,544 --> 00:12:38,084
potential for this company is.

376
00:12:38,384 --> 00:12:39,664
And I should think that gets a lot

377
00:12:39,664 --> 00:12:40,404
of owners'

378
00:12:40,784 --> 00:12:41,284
attention.

379
00:12:42,220 --> 00:12:44,220
Makes people excited. Yeah. Jump out of bed

380
00:12:44,220 --> 00:12:45,019
in the morning. You know, if I can

381
00:12:45,019 --> 00:12:46,539
get this thing from 8 to 28,000,000, I

382
00:12:46,539 --> 00:12:48,460
mean, that's that's real money. At least where

383
00:12:48,460 --> 00:12:49,980
I'm from, from Pittsburgh. It's real money in

384
00:12:49,980 --> 00:12:50,480
Pittsburgh.

385
00:12:51,500 --> 00:12:53,120
Alright. Step 2, protect.

386
00:12:53,899 --> 00:12:56,559
So step 2 is all about mitigating risks.

387
00:12:57,024 --> 00:12:58,865
It's about safeguarding the existing value in the

388
00:12:58,865 --> 00:13:01,284
company. So before you grow and you scale,

389
00:13:01,584 --> 00:13:03,184
you've gotta make sure that the current cash

390
00:13:03,184 --> 00:13:06,225
flow the business is bringing in, continues under

391
00:13:06,225 --> 00:13:08,404
as many circumstances as humanly possible,

392
00:13:08,784 --> 00:13:11,205
which in turn helps protect that business value.

393
00:13:11,970 --> 00:13:13,970
So you have to look at 2 balance

394
00:13:13,970 --> 00:13:15,329
sheets side by side. You have to look

395
00:13:15,329 --> 00:13:16,769
at your personal balance sheet and think about

396
00:13:16,769 --> 00:13:18,529
what risk do you face over there. You

397
00:13:18,529 --> 00:13:20,209
have to look at the business balance sheet,

398
00:13:20,209 --> 00:13:21,970
figure out what risk you face in the

399
00:13:21,970 --> 00:13:23,970
in the company, and protect against it. So,

400
00:13:23,970 --> 00:13:26,289
again, this is where your insurance planning comes

401
00:13:26,289 --> 00:13:28,195
into into the picture. This is where your

402
00:13:28,195 --> 00:13:30,514
legal documents come into the picture. And, and

403
00:13:30,514 --> 00:13:31,894
this is a bit of a team sport.

404
00:13:32,035 --> 00:13:33,875
You know? So it's it's working with your

405
00:13:33,875 --> 00:13:35,795
attorney, both your corporate attorney and your personal

406
00:13:35,795 --> 00:13:37,475
attorney, to make sure everything from your estate

407
00:13:37,475 --> 00:13:39,654
plan to your buy sell agreement to,

408
00:13:40,195 --> 00:13:42,535
how you protect your your intellectual capital,

409
00:13:43,370 --> 00:13:45,049
you know, what kind of agreements you have

410
00:13:45,049 --> 00:13:46,970
with your employees. Like, there's a lot to

411
00:13:46,970 --> 00:13:48,649
to really lock down and make sure that

412
00:13:48,649 --> 00:13:50,909
you've you've looked at this risk management holistically.

413
00:13:52,009 --> 00:13:54,250
Even things like just financial risks. Like, how

414
00:13:54,250 --> 00:13:54,990
much liquidity

415
00:13:55,495 --> 00:13:57,014
do you have currently, and how much do

416
00:13:57,014 --> 00:13:57,595
you need

417
00:13:57,975 --> 00:13:59,654
if, you know, things get a little bit

418
00:13:59,654 --> 00:14:01,415
haywire in your personal life or your business

419
00:14:01,415 --> 00:14:03,975
life? What about risks with loans that you've

420
00:14:03,975 --> 00:14:06,134
taken? What about market risk? So there's a

421
00:14:06,134 --> 00:14:07,675
lot that goes into this step.

422
00:14:08,049 --> 00:14:10,210
And, you know, when I'm going through this,

423
00:14:10,210 --> 00:14:12,370
there could be a feeling that it's getting

424
00:14:12,370 --> 00:14:13,809
overwhelming. It doesn't mean you have to do

425
00:14:13,809 --> 00:14:15,190
all these steps at once.

426
00:14:15,649 --> 00:14:17,330
You know, it might be that you start

427
00:14:17,330 --> 00:14:19,170
off with just the identity step, which is

428
00:14:19,170 --> 00:14:20,389
not a really long exercise,

429
00:14:20,884 --> 00:14:22,485
and then you just work on protecting things.

430
00:14:22,485 --> 00:14:23,445
And you may be taking a little bit

431
00:14:23,445 --> 00:14:24,105
of a break.

432
00:14:24,725 --> 00:14:26,964
Right? Then we may get into step 3

433
00:14:26,964 --> 00:14:28,404
a little bit later, which is the build

434
00:14:28,404 --> 00:14:30,004
step. But Mhmm. You know, these are just

435
00:14:30,004 --> 00:14:33,125
building blocks in in this this overall exit

436
00:14:33,125 --> 00:14:34,024
planning process.

437
00:14:35,190 --> 00:14:36,730
Well, how long does this take?

438
00:14:38,149 --> 00:14:39,690
So this is a question we get often.

439
00:14:39,830 --> 00:14:41,029
It's not like it's a

440
00:14:41,669 --> 00:14:43,509
an initial project that we just do one

441
00:14:43,509 --> 00:14:45,509
time when we're done. It's really an ongoing

442
00:14:45,509 --> 00:14:47,475
thing that never really ends. You may not

443
00:14:47,475 --> 00:14:48,914
have to go back and revisit all these

444
00:14:48,914 --> 00:14:50,835
steps all the time. Like, the protection step,

445
00:14:50,835 --> 00:14:51,894
if you did it correctly,

446
00:14:52,434 --> 00:14:54,375
that may be a quick annual checkup

447
00:14:54,835 --> 00:14:56,914
unless there's some some new things that have

448
00:14:56,914 --> 00:14:58,914
popped up that warrants some additional time. But

449
00:14:58,914 --> 00:15:00,835
if you'd if you'd done the protection side

450
00:15:00,835 --> 00:15:02,540
correctly, it tends to stand the test of

451
00:15:02,540 --> 00:15:04,000
time unless there's massive changes.

452
00:15:05,100 --> 00:15:07,340
And that allows you to put more time

453
00:15:07,340 --> 00:15:09,179
and effort into the 3rd step, which is

454
00:15:09,179 --> 00:15:11,519
all about building the company value. Mhmm.

455
00:15:12,540 --> 00:15:14,620
But, again, this is where you can't put

456
00:15:14,620 --> 00:15:15,899
the cart before the horse. I mean, if

457
00:15:15,899 --> 00:15:16,960
you're gonna build

458
00:15:17,304 --> 00:15:18,745
the value of the company, you may have

459
00:15:18,745 --> 00:15:19,884
to spend a lot of money.

460
00:15:20,345 --> 00:15:21,625
You may be borrowing a lot of money

461
00:15:21,625 --> 00:15:23,065
because you're trying to grow. You're trying to

462
00:15:23,065 --> 00:15:24,045
hire new people.

463
00:15:24,585 --> 00:15:26,585
You may be investing in new technology, new

464
00:15:26,585 --> 00:15:28,745
equipment. You may be expanding territories. There's a

465
00:15:28,745 --> 00:15:30,205
lot that you might be risking

466
00:15:30,929 --> 00:15:32,370
in that build step. And if you haven't

467
00:15:32,370 --> 00:15:34,850
protected first, I mean, you're you're taking super

468
00:15:34,850 --> 00:15:35,590
high risk,

469
00:15:36,049 --> 00:15:37,750
and you could be wiped out pretty quickly.

470
00:15:38,610 --> 00:15:39,970
So when you look at the value of

471
00:15:39,970 --> 00:15:42,370
a business, it's about 80% of the values

472
00:15:42,370 --> 00:15:45,115
tied up in 4 intangible capitals. It's we

473
00:15:45,115 --> 00:15:46,795
call the 4 c's. This is your human

474
00:15:46,795 --> 00:15:47,295
capital.

475
00:15:47,675 --> 00:15:50,795
It's your structural capital. It's your customer capital

476
00:15:50,795 --> 00:15:52,475
and the social capital. I'm gonna define what

477
00:15:52,475 --> 00:15:53,675
all those mean here in just a couple

478
00:15:53,675 --> 00:15:54,575
minutes, but,

479
00:15:55,434 --> 00:15:56,955
you know, that's that's where all the the

480
00:15:56,955 --> 00:15:58,634
money's tied up in most companies. It's it's

481
00:15:58,634 --> 00:15:59,455
really the people

482
00:16:00,089 --> 00:16:01,690
and and what you do about your customer

483
00:16:01,690 --> 00:16:03,049
base and what you do about your your

484
00:16:03,049 --> 00:16:05,370
best employees. I mean, that that's really what's

485
00:16:05,370 --> 00:16:07,370
gonna help drive all this. And, again, you

486
00:16:07,370 --> 00:16:09,529
may be taking some risks to really scale

487
00:16:09,529 --> 00:16:12,009
and grow. And if you haven't protected, it

488
00:16:12,009 --> 00:16:13,209
it could be a could be a pretty

489
00:16:13,209 --> 00:16:14,029
rocky road.

490
00:16:14,845 --> 00:16:15,345
Alright.

491
00:16:15,644 --> 00:16:16,465
So identify,

492
00:16:16,845 --> 00:16:17,345
protect,

493
00:16:17,804 --> 00:16:18,304
build,

494
00:16:18,845 --> 00:16:21,164
and then the fun starts, harvest. And the

495
00:16:21,164 --> 00:16:23,325
fun starts, harvest. Right? So it could be

496
00:16:23,325 --> 00:16:25,804
that you're not even thinking of exiting the

497
00:16:25,804 --> 00:16:27,404
company right now. You're just trying to build

498
00:16:27,404 --> 00:16:28,225
a better business.

499
00:16:29,209 --> 00:16:30,509
But you should have checkpoints,

500
00:16:31,129 --> 00:16:33,309
whether this is, you know, once a year,

501
00:16:33,529 --> 00:16:35,529
maybe it's once every 6 months. You just

502
00:16:35,529 --> 00:16:37,209
start to take a step back and say,

503
00:16:37,209 --> 00:16:38,350
am I ready to exit?

504
00:16:39,209 --> 00:16:41,230
Am I personally ready? Is the business ready?

505
00:16:41,370 --> 00:16:43,049
It's probably gonna be the answer is gonna

506
00:16:43,049 --> 00:16:44,350
be no for quite a while.

507
00:16:44,785 --> 00:16:46,865
But as you start to say, yeah, the

508
00:16:46,865 --> 00:16:48,384
company is we're starting to get to a

509
00:16:48,384 --> 00:16:49,924
point where it it can run itself.

510
00:16:50,465 --> 00:16:52,325
It doesn't depend on me as the owner

511
00:16:52,384 --> 00:16:53,985
as much anymore. Maybe it doesn't depend on

512
00:16:53,985 --> 00:16:54,884
you at all.

513
00:16:55,264 --> 00:16:57,840
Then you start to shift your thinking on

514
00:16:57,840 --> 00:16:59,840
how do you wanna harvest this wealth. Is

515
00:16:59,840 --> 00:17:01,759
this something where you're gonna keep this business

516
00:17:01,759 --> 00:17:02,259
forever?

517
00:17:03,279 --> 00:17:05,599
And maybe you're just gonna hire professional management.

518
00:17:05,599 --> 00:17:07,619
You're gonna hire a CEO and a CFO

519
00:17:07,680 --> 00:17:09,519
and a COO, and they're really gonna run

520
00:17:09,519 --> 00:17:11,434
the company. You still own it,

521
00:17:11,815 --> 00:17:13,335
but you're not in there day to day

522
00:17:13,335 --> 00:17:13,835
anymore.

523
00:17:14,855 --> 00:17:16,375
And that may be a company that can

524
00:17:16,375 --> 00:17:16,875
transition,

525
00:17:17,255 --> 00:17:18,554
you know, for many generations.

526
00:17:19,494 --> 00:17:21,654
Or it could be, no. You want to

527
00:17:21,654 --> 00:17:23,414
really get out of the company. You wanted

528
00:17:23,414 --> 00:17:24,934
to sell it. Maybe you wanna sell it

529
00:17:24,934 --> 00:17:26,519
to a third party. Well, is that gonna

530
00:17:26,519 --> 00:17:28,200
look like you're selling to a private equity

531
00:17:28,200 --> 00:17:30,920
firm? Is that gonna be you're selling to

532
00:17:30,920 --> 00:17:31,980
a strategic buyer?

533
00:17:32,600 --> 00:17:35,400
That's a very different exit than somebody who

534
00:17:35,400 --> 00:17:37,559
wants to sell the company or transition the

535
00:17:37,559 --> 00:17:39,500
company to those inside the business.

536
00:17:40,125 --> 00:17:41,565
So it could be, you know, maybe I

537
00:17:41,565 --> 00:17:43,825
wanna gift this company to my children someday.

538
00:17:44,125 --> 00:17:45,484
Maybe I wanna sell it to my children.

539
00:17:45,484 --> 00:17:47,085
Maybe I have I have key management in

540
00:17:47,085 --> 00:17:48,384
the business that really

541
00:17:49,005 --> 00:17:51,805
are prepared and positioned to buy me out

542
00:17:51,805 --> 00:17:53,664
someday. Well, what does that deal look like?

543
00:17:54,240 --> 00:17:56,480
Should we sell to all employees via an

544
00:17:56,480 --> 00:17:58,319
employee stock ownership plan, which is a very

545
00:17:58,319 --> 00:17:59,759
powerful plan? In fact, we did an episode

546
00:18:00,480 --> 00:18:02,160
I think it was around episode 17 or

547
00:18:02,160 --> 00:18:03,440
18 we did on on,

548
00:18:04,079 --> 00:18:05,940
ESOPs is what they're called for short.

549
00:18:06,494 --> 00:18:09,394
Very, very powerful exit strategy, very tax advantaged,

550
00:18:09,855 --> 00:18:12,095
but, again, very, very different than selling to

551
00:18:12,095 --> 00:18:12,994
a third party.

552
00:18:13,454 --> 00:18:13,954
So

553
00:18:14,335 --> 00:18:16,015
this harvest stage is where you start to

554
00:18:16,015 --> 00:18:18,450
look at what's what's in the best interest

555
00:18:18,529 --> 00:18:20,450
of me as the owner, what's best for

556
00:18:20,450 --> 00:18:22,369
the culture of this company moving forward, the

557
00:18:22,369 --> 00:18:23,889
the employees that have been loyal to me

558
00:18:23,889 --> 00:18:24,710
all these years

559
00:18:25,089 --> 00:18:27,329
in my family, and and starting to to

560
00:18:27,329 --> 00:18:29,089
kinda whittle down to what are the maybe

561
00:18:29,089 --> 00:18:30,710
the 2 or 3 best options

562
00:18:31,569 --> 00:18:33,250
that are gonna fit what you're what you're

563
00:18:33,250 --> 00:18:34,149
trying to do.

564
00:18:34,654 --> 00:18:36,654
And you have to be prepared because sometimes

565
00:18:36,654 --> 00:18:38,335
the door you think you're about to walk

566
00:18:38,335 --> 00:18:39,154
through closes,

567
00:18:39,694 --> 00:18:41,454
and you better be prepared to walk through

568
00:18:41,454 --> 00:18:43,134
a different door. Like, I've I've had many

569
00:18:43,134 --> 00:18:44,575
owners over the years that thought that they

570
00:18:44,575 --> 00:18:46,335
were just gonna transition the company to their

571
00:18:46,335 --> 00:18:46,835
kids.

572
00:18:47,375 --> 00:18:48,659
And then when they actually talk to the

573
00:18:48,659 --> 00:18:50,500
kids about it, they learn that the kids

574
00:18:50,500 --> 00:18:51,480
don't want the business.

575
00:18:53,619 --> 00:18:54,119
Yeah.

576
00:18:55,059 --> 00:18:56,259
And they don't want them to buy the

577
00:18:56,259 --> 00:18:58,099
company or, you know, take it over out

578
00:18:58,099 --> 00:18:58,759
of loyalty.

579
00:18:59,380 --> 00:19:01,779
And, but meanwhile, they're miserable as adults. They

580
00:19:01,779 --> 00:19:03,159
don't wanna be in this company.

581
00:19:03,835 --> 00:19:05,275
The other thing I've seen happen with that

582
00:19:05,275 --> 00:19:08,555
is that I've seen parents that didn't really

583
00:19:08,555 --> 00:19:10,815
plan financially outside of the business.

584
00:19:11,914 --> 00:19:13,914
And they now have the kids running the

585
00:19:13,914 --> 00:19:16,335
company, and they're paying the kids very little

586
00:19:16,634 --> 00:19:18,795
in terms of salaries because the parents are

587
00:19:18,795 --> 00:19:21,250
still, you know, extracting all the revenue out

588
00:19:21,250 --> 00:19:22,990
of that company to support their lifestyle.

589
00:19:23,690 --> 00:19:25,529
And the kids are watching their adult lives

590
00:19:25,529 --> 00:19:26,430
pass them by.

591
00:19:27,210 --> 00:19:29,529
They, at one point, may have been making

592
00:19:29,529 --> 00:19:30,509
a decent living,

593
00:19:30,809 --> 00:19:32,730
but it hasn't grown in many, many years.

594
00:19:32,730 --> 00:19:34,490
Now they have their own cash flow pressures

595
00:19:34,490 --> 00:19:36,455
at home, and it's all because the parents

596
00:19:36,455 --> 00:19:37,735
are still trying to hang on the company

597
00:19:37,735 --> 00:19:39,255
because they're they're afraid they're gonna run out

598
00:19:39,255 --> 00:19:39,755
someday.

599
00:19:40,535 --> 00:19:42,615
So it it can be rough. Right? So

600
00:19:42,615 --> 00:19:44,775
you you've gotta plan ahead, and you have

601
00:19:44,775 --> 00:19:47,335
to start to think through multiple exit options.

602
00:19:47,335 --> 00:19:48,775
And and like I said earlier, this is

603
00:19:48,775 --> 00:19:51,539
a team sport. So we oftentimes will serve

604
00:19:51,539 --> 00:19:52,900
as the quarterback for a lot of these

605
00:19:52,900 --> 00:19:54,039
conversations, but

606
00:19:54,500 --> 00:19:56,339
it does take other people, like getting your

607
00:19:56,339 --> 00:19:58,679
accountant involved, getting your attorney involved,

608
00:19:59,059 --> 00:20:00,980
you know, being able to bring in somebody

609
00:20:00,980 --> 00:20:02,579
who's an expert in getting into the weeds

610
00:20:02,579 --> 00:20:03,319
of the company

611
00:20:04,005 --> 00:20:05,605
in terms of, you know, how do you

612
00:20:05,605 --> 00:20:07,204
really drive the value and how do we

613
00:20:07,204 --> 00:20:09,684
get the people to to perform and working

614
00:20:09,684 --> 00:20:10,964
on some of the culture of the business.

615
00:20:10,964 --> 00:20:12,404
So there's some there's people that are that

616
00:20:12,404 --> 00:20:14,884
are trained experts in that area, and there's

617
00:20:14,884 --> 00:20:16,750
also some transaction advisers. You know, if you're

618
00:20:16,750 --> 00:20:19,230
gonna evaluate an ESOP as an option, well,

619
00:20:19,230 --> 00:20:20,910
we may need to do a feasibility study

620
00:20:20,910 --> 00:20:22,429
to see if that's even gonna be possible.

621
00:20:22,429 --> 00:20:22,929
Mhmm.

622
00:20:23,230 --> 00:20:24,829
If you're gonna sell to private equity, well,

623
00:20:24,829 --> 00:20:26,750
let's start to look at some transaction advisors

624
00:20:26,750 --> 00:20:28,849
and some investment bankers that can come in

625
00:20:29,069 --> 00:20:30,929
and be part of this process proactively.

626
00:20:32,404 --> 00:20:34,244
So that that harvest stuff, it is fun,

627
00:20:34,244 --> 00:20:35,605
but that's also where a lot of the

628
00:20:35,605 --> 00:20:37,365
lot of the the work gets done in

629
00:20:37,365 --> 00:20:38,964
the number crunching and figuring out, like, how

630
00:20:38,964 --> 00:20:40,884
we're really gonna do this. Sounds like some

631
00:20:40,884 --> 00:20:42,505
hard decisions get made then.

632
00:20:42,884 --> 00:20:45,125
It it's hard decisions, but it it's easier

633
00:20:45,125 --> 00:20:47,529
when the company has been positioned correctly. You

634
00:20:47,529 --> 00:20:48,890
know, if you look at the company and

635
00:20:48,890 --> 00:20:50,750
you say, wow. Our our four c's,

636
00:20:51,289 --> 00:20:53,529
our intangible capitals, are all are all great.

637
00:20:53,529 --> 00:20:54,890
We're gonna spend a few more minutes on

638
00:20:54,890 --> 00:20:56,509
that, in just a second.

639
00:20:56,970 --> 00:20:58,329
And it might be okay. Well, now it's

640
00:20:58,329 --> 00:21:00,490
realistic. Now we we are operating best in

641
00:21:00,490 --> 00:21:02,684
class. Our revenues are way up. Our customer

642
00:21:02,684 --> 00:21:04,845
base is more diverse. Our our key people

643
00:21:04,845 --> 00:21:06,784
are incentivized to keep growing this.

644
00:21:07,085 --> 00:21:08,605
And now you start to look at, okay,

645
00:21:08,605 --> 00:21:11,164
well, is a third party sale really the

646
00:21:11,164 --> 00:21:12,684
way we wanna go? Well, if that's the

647
00:21:12,684 --> 00:21:14,444
case, the company is in pretty good position.

648
00:21:14,444 --> 00:21:16,044
Let's bring in an expert that can that

649
00:21:16,044 --> 00:21:17,980
can take this company to market. Mhmm.

650
00:21:18,599 --> 00:21:20,759
Alright. Does this all come into the final

651
00:21:20,759 --> 00:21:22,920
stage here of the final of the process

652
00:21:22,920 --> 00:21:23,900
here, manage

653
00:21:24,279 --> 00:21:25,259
the 5 stages?

654
00:21:25,640 --> 00:21:27,799
So this is managing all the wealth that

655
00:21:27,799 --> 00:21:29,580
you've extracted post exit,

656
00:21:30,295 --> 00:21:31,355
making sure that

657
00:21:31,734 --> 00:21:33,894
whatever the next chapter of life looks like,

658
00:21:33,894 --> 00:21:34,855
the last thing you have to worry about

659
00:21:34,855 --> 00:21:36,775
is the money side of it. So maybe

660
00:21:36,775 --> 00:21:38,535
it's you're gonna sell the company, and you're

661
00:21:38,535 --> 00:21:40,615
gonna retire right after in the sunset. That's

662
00:21:40,615 --> 00:21:41,115
great.

663
00:21:41,414 --> 00:21:43,095
How much money is it gonna take in

664
00:21:43,095 --> 00:21:44,695
order to give you that level of financial

665
00:21:44,695 --> 00:21:45,195
freedom?

666
00:21:45,649 --> 00:21:47,089
What are the risks that you face? How

667
00:21:47,089 --> 00:21:48,289
do you manage that wealth? How do you

668
00:21:48,289 --> 00:21:50,609
manage taxes, cash flows? And just making sure

669
00:21:50,609 --> 00:21:53,429
that you have long term financial security.

670
00:21:54,130 --> 00:21:56,230
The other side is that some business owners,

671
00:21:56,369 --> 00:21:57,889
that's the last thing they wanna do. That

672
00:21:57,889 --> 00:22:00,049
that sounds like cruel, unusual punishment to them

673
00:22:00,049 --> 00:22:02,294
to retire. They're they're so active, and they've

674
00:22:02,294 --> 00:22:03,355
all they're always thinking.

675
00:22:03,815 --> 00:22:06,134
To them, it's just I'm exiting this company

676
00:22:06,134 --> 00:22:07,654
because I'm gonna go into something different. I'm

677
00:22:07,654 --> 00:22:09,434
gonna maybe start another company,

678
00:22:09,734 --> 00:22:11,654
or maybe I'm gonna get more involved in

679
00:22:11,654 --> 00:22:13,575
charity or whatever it is. That's fine.

680
00:22:14,140 --> 00:22:15,819
I think just you have to have a

681
00:22:15,819 --> 00:22:17,419
clear path as to what you're gonna do

682
00:22:17,419 --> 00:22:18,779
because one of the worst things that we've

683
00:22:18,779 --> 00:22:19,839
seen happen is

684
00:22:20,539 --> 00:22:23,440
owners are so focused on getting this company

685
00:22:23,579 --> 00:22:24,480
to this point.

686
00:22:24,859 --> 00:22:26,619
They've never thought about their life after the

687
00:22:26,619 --> 00:22:28,954
exit, and then we hear that they are

688
00:22:29,095 --> 00:22:30,394
bored out of their minds.

689
00:22:31,575 --> 00:22:33,335
Yeah. Yeah. There's only so much golf you

690
00:22:33,335 --> 00:22:35,095
can play. You know, there's only so much

691
00:22:35,095 --> 00:22:37,174
you can do that's it sounds fun. It's

692
00:22:37,174 --> 00:22:38,134
like, what do you mean there's only so

693
00:22:38,134 --> 00:22:39,869
much golf I could play? But when every

694
00:22:39,869 --> 00:22:41,950
day looks exactly the same and you kinda

695
00:22:41,950 --> 00:22:43,549
lose that compass and you lose that that

696
00:22:43,549 --> 00:22:44,049
passion

697
00:22:44,589 --> 00:22:45,490
and that direction,

698
00:22:46,190 --> 00:22:47,549
that's where owners are like. That it's the

699
00:22:47,549 --> 00:22:49,390
biggest regret that I've I've had. I should've

700
00:22:49,390 --> 00:22:50,829
never I should've never sold this company. I

701
00:22:50,829 --> 00:22:52,755
should've kept it. That kept me going and

702
00:22:52,755 --> 00:22:54,434
kept me active and kept me motivated. Now

703
00:22:54,434 --> 00:22:55,494
I'm just kinda floundering.

704
00:22:55,875 --> 00:22:57,234
So you really gotta start to think through

705
00:22:57,234 --> 00:22:58,434
not just the how do you manage the

706
00:22:58,434 --> 00:22:59,894
wealth, but how do you manage your life?

707
00:23:00,674 --> 00:23:02,434
And it's, it's a big part you should

708
00:23:02,434 --> 00:23:05,549
discover before you before you exit that company.

709
00:23:05,930 --> 00:23:08,009
Alright. And it all goes into being a

710
00:23:08,009 --> 00:23:09,950
human being, which brings us to the next,

711
00:23:10,490 --> 00:23:13,289
question here. You're you're talking about the capitals,

712
00:23:13,289 --> 00:23:15,769
the intangible capitals. Got that. People. People is

713
00:23:15,769 --> 00:23:16,875
the big thing here.

714
00:23:17,275 --> 00:23:19,115
They they are the most important part of

715
00:23:19,115 --> 00:23:19,694
a business,

716
00:23:20,154 --> 00:23:22,954
but you can't you can't price a person.

717
00:23:22,954 --> 00:23:24,234
I mean, it's they're not a piece of

718
00:23:24,234 --> 00:23:25,615
equipment. They're not a building.

719
00:23:26,234 --> 00:23:28,474
So how do you talk about the people

720
00:23:28,474 --> 00:23:28,974
side?

721
00:23:29,994 --> 00:23:31,914
What impact how does that impact the company

722
00:23:31,914 --> 00:23:32,414
value?

723
00:23:33,250 --> 00:23:34,849
So this is like I said earlier, this

724
00:23:34,849 --> 00:23:36,630
is 80 to sometimes 90%

725
00:23:37,089 --> 00:23:38,769
of the value of the company is tied

726
00:23:38,769 --> 00:23:41,250
up in people. Right. So just let's talk

727
00:23:41,250 --> 00:23:42,529
about the people in the business for a

728
00:23:42,529 --> 00:23:44,529
minute. This is your your human capital. This

729
00:23:44,529 --> 00:23:45,970
is the value of your team. This is

730
00:23:45,970 --> 00:23:47,109
the value of your leadership.

731
00:23:48,065 --> 00:23:49,825
And one of the biggest challenges that we

732
00:23:49,825 --> 00:23:50,325
see

733
00:23:50,625 --> 00:23:53,664
owners facing is it's really tough to find

734
00:23:53,664 --> 00:23:54,404
top talent.

735
00:23:55,664 --> 00:23:58,065
You know, it's it's hard to find really

736
00:23:58,065 --> 00:24:00,704
good people that can perform really, really well.

737
00:24:00,704 --> 00:24:03,269
So it's it's about recruiting those key people.

738
00:24:03,269 --> 00:24:05,049
It's about motivating them.

739
00:24:05,350 --> 00:24:07,430
It's about making sure that they stay with

740
00:24:07,430 --> 00:24:09,210
you through especially a transition,

741
00:24:09,910 --> 00:24:11,529
and they can help evolve

742
00:24:11,990 --> 00:24:13,670
as as you evolve, as the company evolves.

743
00:24:13,670 --> 00:24:14,170
So,

744
00:24:14,805 --> 00:24:16,325
you know, there's there's some art and some

745
00:24:16,325 --> 00:24:17,225
science to this.

746
00:24:18,005 --> 00:24:19,924
You know, one thing that that owners can

747
00:24:19,924 --> 00:24:21,305
do is start to look

748
00:24:21,684 --> 00:24:24,404
at what's the measurable impact that my key

749
00:24:24,404 --> 00:24:25,945
people have on my bottom line,

750
00:24:27,045 --> 00:24:29,119
and what can I do to help them

751
00:24:29,119 --> 00:24:31,380
drive that bottom line? That's not just good

752
00:24:31,919 --> 00:24:33,759
for the company. It's good for the company

753
00:24:33,759 --> 00:24:35,519
cash flow. That also helps drive the value

754
00:24:35,519 --> 00:24:36,799
of the business. But if they can be

755
00:24:36,799 --> 00:24:39,140
incentivized to stick around for the long haul,

756
00:24:39,694 --> 00:24:41,615
it also makes the company a lot more

757
00:24:41,615 --> 00:24:43,694
attractive to an outsider that may be coming

758
00:24:43,694 --> 00:24:45,454
in to buy the business someday. If I'm

759
00:24:45,454 --> 00:24:47,694
afraid that I buy your company and your

760
00:24:47,694 --> 00:24:49,855
very best talent, which are responsible for most

761
00:24:49,855 --> 00:24:51,375
of your revenue, are all gone the next

762
00:24:51,375 --> 00:24:54,434
day, what am I buying? Yeah. You know?

763
00:24:54,859 --> 00:24:56,880
So, in fact, we did an episode

764
00:24:57,740 --> 00:25:01,420
about retention bonus planning and deferred compensation planning.

765
00:25:01,420 --> 00:25:03,259
It's a really important part of the step.

766
00:25:03,259 --> 00:25:04,700
It is that, you know, I've I've gotta

767
00:25:04,700 --> 00:25:06,000
keep my best people

768
00:25:06,460 --> 00:25:08,619
engaged because they're gonna help me grow the

769
00:25:08,619 --> 00:25:09,599
value of this thing.

770
00:25:10,214 --> 00:25:12,694
And and there's some unique plans out there

771
00:25:12,694 --> 00:25:16,154
that are tailored towards executives or towards

772
00:25:16,694 --> 00:25:19,255
just key performing people that, will will do

773
00:25:19,255 --> 00:25:19,914
the job.

774
00:25:20,375 --> 00:25:22,315
A lot of times, these deals finance themselves

775
00:25:23,000 --> 00:25:24,140
because if the employee

776
00:25:24,840 --> 00:25:25,340
performs,

777
00:25:26,119 --> 00:25:27,340
perhaps there's significant

778
00:25:27,799 --> 00:25:29,799
financial incentive for them to do that. But

779
00:25:29,799 --> 00:25:31,160
if they don't perform, then they may not

780
00:25:31,160 --> 00:25:33,160
get anything at all. Or if they quit

781
00:25:33,160 --> 00:25:33,900
too soon,

782
00:25:34,360 --> 00:25:35,480
then they may not get anything at all.

783
00:25:35,480 --> 00:25:37,804
So we have some companies that have significant

784
00:25:37,944 --> 00:25:39,704
packages they put in place for their very

785
00:25:39,704 --> 00:25:40,444
top talent

786
00:25:40,984 --> 00:25:42,984
that maybe they don't get anything out of

787
00:25:42,984 --> 00:25:44,825
that until they've been with a company for

788
00:25:44,825 --> 00:25:46,524
at least 10 years or 15 years.

789
00:25:47,065 --> 00:25:49,224
But when that plan vests and they get

790
00:25:49,224 --> 00:25:50,744
a big payout, they might be getting a

791
00:25:50,744 --> 00:25:51,244
significant

792
00:25:51,869 --> 00:25:53,569
chunk of money coming out to them

793
00:25:54,029 --> 00:25:55,230
that is like a we call it a

794
00:25:55,230 --> 00:25:56,750
golden handcuff. It's a kind of a carrot

795
00:25:56,750 --> 00:25:58,190
that's dangling out in front of them. They

796
00:25:58,190 --> 00:25:59,630
say, okay. If I do x, this is

797
00:25:59,630 --> 00:26:01,309
what I'm gonna get later on. And it's

798
00:26:01,309 --> 00:26:02,690
a very substantial benefit

799
00:26:03,150 --> 00:26:04,829
for the right person that can be very

800
00:26:04,829 --> 00:26:05,329
motivational.

801
00:26:05,924 --> 00:26:07,605
But it also protects an owner because if

802
00:26:07,605 --> 00:26:08,965
they don't perform, if they quit, they go

803
00:26:08,965 --> 00:26:09,625
to a competitor,

804
00:26:10,164 --> 00:26:11,684
then you may owe that employee nothing at

805
00:26:11,684 --> 00:26:12,184
all.

806
00:26:12,725 --> 00:26:14,424
So it it starts to align

807
00:26:15,045 --> 00:26:18,005
the objectives of the business with the performance

808
00:26:18,005 --> 00:26:18,825
of the employee,

809
00:26:19,359 --> 00:26:21,519
and it goes well beyond the basic benefits

810
00:26:21,519 --> 00:26:23,700
package that almost every employee gets every company.

811
00:26:24,240 --> 00:26:25,919
So, that's I'll I'll put in the show

812
00:26:25,919 --> 00:26:27,599
notes a link to that other episode. It's

813
00:26:27,599 --> 00:26:29,619
a really, really critical part of this. But

814
00:26:30,079 --> 00:26:32,159
that's just one type of of human of

815
00:26:32,159 --> 00:26:34,414
of the the people capital you're talking about.

816
00:26:34,414 --> 00:26:36,355
This is human capital inside of the company.

817
00:26:36,414 --> 00:26:37,855
The other type of of people we have

818
00:26:37,855 --> 00:26:39,394
to worry about is the customer capital.

819
00:26:39,934 --> 00:26:40,994
What's the strength

820
00:26:41,615 --> 00:26:43,554
and the loyalty of your customer base?

821
00:26:44,575 --> 00:26:47,554
We see companies that have very loyal customers,

822
00:26:47,934 --> 00:26:51,640
but it's a very concentrated customer base. Yeah.

823
00:26:51,640 --> 00:26:54,039
Maybe 70% of their revenue is coming from

824
00:26:54,039 --> 00:26:55,099
their top 3,

825
00:26:56,039 --> 00:26:58,380
their their top three customers. That's a really

826
00:26:58,919 --> 00:27:01,000
that's a really big red flag for a

827
00:27:01,000 --> 00:27:02,835
potential buyer in most cases. They say, well,

828
00:27:02,835 --> 00:27:04,275
what happens if we lose one of those

829
00:27:04,275 --> 00:27:04,775
relationships?

830
00:27:05,794 --> 00:27:08,355
And that that company's cash flow could tank

831
00:27:08,355 --> 00:27:09,174
in an instant.

832
00:27:10,115 --> 00:27:12,355
So And are they there are they loyal

833
00:27:12,355 --> 00:27:13,875
to the company, or are they loyal to

834
00:27:13,875 --> 00:27:14,615
the owner?

835
00:27:15,279 --> 00:27:17,599
That's a great question. Because sometimes it's it's

836
00:27:17,599 --> 00:27:19,920
very personality driven. They're loyal to the company,

837
00:27:19,920 --> 00:27:21,680
but it's really that owner that's their golfing

838
00:27:21,680 --> 00:27:22,180
buddy.

839
00:27:22,799 --> 00:27:24,880
That's maybe a family member. There's there's many

840
00:27:24,880 --> 00:27:26,960
relationships where it's like, well, if that person

841
00:27:26,960 --> 00:27:28,664
goes, well, we're gonna take our business and

842
00:27:28,664 --> 00:27:30,825
walk. That that's where we see companies in

843
00:27:30,825 --> 00:27:32,204
many cases that can't sell.

844
00:27:33,384 --> 00:27:35,565
But if there's relationships that are contractual

845
00:27:36,345 --> 00:27:37,484
Mhmm. They're transferrable.

846
00:27:38,105 --> 00:27:39,964
The customer base is very diversified.

847
00:27:40,759 --> 00:27:42,200
And, yeah, you no one wants to lose

848
00:27:42,200 --> 00:27:43,880
a customer, but there's some businesses where if

849
00:27:43,880 --> 00:27:45,480
they lose a few, it's not gonna put

850
00:27:45,480 --> 00:27:46,860
a dent into the bottom line.

851
00:27:47,799 --> 00:27:49,400
Yeah. That might be more comfortable from a

852
00:27:49,400 --> 00:27:51,320
buyer standpoint. So you have to think about

853
00:27:51,320 --> 00:27:54,519
how how entangled are the customers with your

854
00:27:54,519 --> 00:27:56,575
business. You know, the the tougher it is

855
00:27:56,575 --> 00:27:57,794
to replace that business

856
00:27:58,654 --> 00:28:01,134
or the more valuable those services and products

857
00:28:01,134 --> 00:28:03,375
are that they maybe can't get anywhere else,

858
00:28:03,375 --> 00:28:04,974
the more value the company is gonna be

859
00:28:04,974 --> 00:28:06,335
in the eyes of a of a new

860
00:28:06,335 --> 00:28:06,835
owner.

861
00:28:07,509 --> 00:28:08,789
Now the next thing on the list here,

862
00:28:08,789 --> 00:28:10,549
you have social capital. What do you mean

863
00:28:10,549 --> 00:28:11,210
by that?

864
00:28:11,750 --> 00:28:13,450
So this is the company's culture.

865
00:28:13,910 --> 00:28:15,990
You know, this is the relationships with the

866
00:28:15,990 --> 00:28:18,069
stakeholders, and this is what draws people to

867
00:28:18,069 --> 00:28:19,450
the company. This is what,

868
00:28:20,244 --> 00:28:23,144
not just draws employees, but also draws customers.

869
00:28:23,444 --> 00:28:24,964
And this can take a long time to

870
00:28:24,964 --> 00:28:26,265
build. So think about

871
00:28:26,884 --> 00:28:28,025
think about a company

872
00:28:28,404 --> 00:28:31,365
like Google, for example, that's pretty well known

873
00:28:31,365 --> 00:28:34,140
for their their culture. Mhmm. You know, and

874
00:28:34,140 --> 00:28:36,460
it's something where they've got I think Google

875
00:28:36,460 --> 00:28:38,940
still has, like, all this amazing free food

876
00:28:38,940 --> 00:28:40,779
when you go. They've got these little sleeping

877
00:28:40,779 --> 00:28:43,340
pods. They've got ping pong tables and pool

878
00:28:43,340 --> 00:28:45,340
tables. That's just part of their culture. It's

879
00:28:45,340 --> 00:28:47,515
a it's a work hard, play hard kind

880
00:28:47,515 --> 00:28:49,035
of a thing, but it's they kinda create

881
00:28:49,035 --> 00:28:51,275
this family atmosphere, at least, like, what I've

882
00:28:51,275 --> 00:28:53,035
heard from clients of ours that work at

883
00:28:53,035 --> 00:28:53,535
Google.

884
00:28:54,234 --> 00:28:56,315
That's a very different type of a culture

885
00:28:56,315 --> 00:28:58,315
than perhaps a firm that's,

886
00:28:59,115 --> 00:29:00,095
suit and tie.

887
00:29:00,599 --> 00:29:03,079
It's, you're in the office early. You're staying

888
00:29:03,079 --> 00:29:04,839
late. You're just grinding it out. That's just

889
00:29:04,839 --> 00:29:05,980
a totally different culture.

890
00:29:06,839 --> 00:29:08,759
And one's not right and one's not wrong.

891
00:29:08,759 --> 00:29:10,519
They're just very different. But if I'm in

892
00:29:10,519 --> 00:29:11,420
the tech space

893
00:29:12,039 --> 00:29:14,904
and I'm looking at a company that, like

894
00:29:14,904 --> 00:29:16,825
Google, has all these cool perks and all

895
00:29:16,825 --> 00:29:18,904
this fun social stuff that goes on outside

896
00:29:18,904 --> 00:29:19,944
of the office hours,

897
00:29:20,265 --> 00:29:22,204
versus other company that does none of that,

898
00:29:22,345 --> 00:29:23,384
I might be like, yeah. I'll just take

899
00:29:23,384 --> 00:29:24,365
the job at Google.

900
00:29:24,664 --> 00:29:25,244
You know?

901
00:29:25,545 --> 00:29:27,625
So this is something that you just have

902
00:29:27,625 --> 00:29:29,460
to look at. What makes the company unique,

903
00:29:29,539 --> 00:29:31,480
not just for the people that work there,

904
00:29:31,619 --> 00:29:34,440
but other stakeholders, customers. And and,

905
00:29:34,740 --> 00:29:36,339
you know, how do you kinda bottle that

906
00:29:36,339 --> 00:29:36,839
up?

907
00:29:37,299 --> 00:29:38,579
How do you feel that? How do you

908
00:29:38,579 --> 00:29:40,259
grow it? Is it where it needs to

909
00:29:40,259 --> 00:29:41,700
be, or or should it be going in

910
00:29:41,700 --> 00:29:42,585
a different direction?

911
00:29:43,224 --> 00:29:44,744
But social capital, I think, is a little

912
00:29:44,744 --> 00:29:46,984
bit underestimated in many cases, and it's a

913
00:29:46,984 --> 00:29:49,065
really important part of this overall exit planning

914
00:29:49,065 --> 00:29:49,565
process.

915
00:29:50,265 --> 00:29:52,365
And and then you have structural capital.

916
00:29:53,625 --> 00:29:57,244
So structural capital, this is the, unique processes

917
00:29:57,919 --> 00:29:58,240
of the company,

918
00:29:59,039 --> 00:30:01,059
the systems that they use, perhaps technology.

919
00:30:02,000 --> 00:30:04,480
This is what's gonna ensure the operational efficient

920
00:30:04,640 --> 00:30:05,859
efficiency of the business.

921
00:30:06,480 --> 00:30:08,720
So you have to document this stuff. A

922
00:30:08,720 --> 00:30:10,799
lot of times, what goes on day to

923
00:30:10,799 --> 00:30:12,819
day is tied up in people's heads,

924
00:30:13,444 --> 00:30:15,125
And it makes perfect sense to those who've

925
00:30:15,125 --> 00:30:16,484
been with the company for quite a while.

926
00:30:16,484 --> 00:30:17,924
When you bring somebody new in from the

927
00:30:17,924 --> 00:30:20,184
outside, it doesn't make any sense to them.

928
00:30:21,045 --> 00:30:22,505
So we don't want the

929
00:30:23,045 --> 00:30:24,345
knowledge and the processes

930
00:30:24,724 --> 00:30:26,724
that drive this company to be stuck in

931
00:30:26,724 --> 00:30:28,904
people's heads so that when the talent leaves,

932
00:30:28,920 --> 00:30:30,380
well, there goes your business system.

933
00:30:30,759 --> 00:30:32,920
So it's it's getting owners to start to

934
00:30:32,920 --> 00:30:35,480
document everything they possibly can. So this stuff

935
00:30:35,480 --> 00:30:37,080
starts to become more plug and play over

936
00:30:37,080 --> 00:30:37,580
time.

937
00:30:38,279 --> 00:30:40,600
And, again, this is something where there are

938
00:30:40,600 --> 00:30:43,420
consultants out there that specialize in that area.

939
00:30:43,565 --> 00:30:45,184
They can help you put all this

940
00:30:45,724 --> 00:30:47,724
from an idea. You you can create pen

941
00:30:47,724 --> 00:30:48,865
to paper at this point.

942
00:30:49,325 --> 00:30:50,684
But this is getting all that know how

943
00:30:50,684 --> 00:30:53,005
that makes that company unique, documented, so that's

944
00:30:53,244 --> 00:30:54,865
you can start to scale the business.

945
00:30:55,579 --> 00:30:57,740
Alright. You kinda touched on this before, Jim,

946
00:30:57,740 --> 00:30:58,240
but

947
00:30:58,700 --> 00:31:00,299
what do you say to an owner who

948
00:31:00,299 --> 00:31:01,759
thinks it's too early

949
00:31:02,140 --> 00:31:03,599
to plan for an exit?

950
00:31:04,859 --> 00:31:07,500
So there's it's never too early. It can

951
00:31:07,500 --> 00:31:09,835
definitely be too late, but it's never too

952
00:31:09,835 --> 00:31:12,095
early. So I I think that owners that

953
00:31:12,474 --> 00:31:13,914
that are starting to think about when should

954
00:31:13,914 --> 00:31:15,355
I do this, I would say start now.

955
00:31:15,355 --> 00:31:17,214
And it it's good business strategy,

956
00:31:17,914 --> 00:31:19,434
and it's something you do every year. It's

957
00:31:19,434 --> 00:31:21,134
ongoing. It's never gonna stop,

958
00:31:22,230 --> 00:31:24,070
just like, you know, any other business plan

959
00:31:24,070 --> 00:31:25,289
that you're doing right now.

960
00:31:25,990 --> 00:31:28,869
Again, transition your thinking from exit planning to

961
00:31:28,869 --> 00:31:31,130
value management and value enhancement planning.

962
00:31:31,750 --> 00:31:32,869
And that I think that's,

963
00:31:33,509 --> 00:31:35,609
that's a good way to approach this.

964
00:31:36,575 --> 00:31:38,015
It's to think of it as value enhancement

965
00:31:38,015 --> 00:31:40,335
and value management. Yeah. And then you also

966
00:31:40,335 --> 00:31:42,734
mentioned the emotional and the personal readiness. This

967
00:31:42,734 --> 00:31:44,734
is critical. I don't think people understand just

968
00:31:44,734 --> 00:31:46,575
how how big a role this plays for

969
00:31:46,575 --> 00:31:49,019
anyone who's retiring, but especially if you're selling

970
00:31:49,019 --> 00:31:51,019
your business and that business has been your

971
00:31:51,019 --> 00:31:52,400
life, your little baby.

972
00:31:53,259 --> 00:31:55,019
Yeah. So I I give a quick example.

973
00:31:55,019 --> 00:31:56,779
So I just talked to somebody today who

974
00:31:56,779 --> 00:31:58,240
retired last summer,

975
00:31:59,180 --> 00:32:01,845
and they said that, it's been hard. Yeah.

976
00:32:01,845 --> 00:32:03,845
It's been really hard. And they say it's

977
00:32:03,845 --> 00:32:06,164
it's it's odd the way it's hard because

978
00:32:06,164 --> 00:32:07,944
you dream about this your entire life.

979
00:32:08,244 --> 00:32:10,644
Then you'll retire someday, and you picture yourself,

980
00:32:10,644 --> 00:32:12,724
you know, maybe playing golf, and you're on

981
00:32:12,724 --> 00:32:14,484
the beach, and you're, you know, in a

982
00:32:14,484 --> 00:32:15,944
boat, whatever it is.

983
00:32:16,325 --> 00:32:17,700
But then you get there. It doesn't work

984
00:32:17,700 --> 00:32:18,519
out that way.

985
00:32:19,299 --> 00:32:20,980
You know? And they're like, you just don't

986
00:32:20,980 --> 00:32:23,140
realize how much time you spent working, and

987
00:32:23,140 --> 00:32:24,740
now that time is all gone. You're like,

988
00:32:24,740 --> 00:32:25,640
what do you do?

989
00:32:26,180 --> 00:32:27,480
So, fortunately, this individual

990
00:32:28,259 --> 00:32:29,940
sprung into action quickly. He's like, I started

991
00:32:29,940 --> 00:32:31,994
getting very involved in the community. You know,

992
00:32:31,994 --> 00:32:34,315
I'm in different clubs and organizations and involved

993
00:32:34,315 --> 00:32:36,075
with charities, so I'm I'm keeping busy that

994
00:32:36,075 --> 00:32:37,274
way. But it was a struggle there for

995
00:32:37,274 --> 00:32:38,875
a while that I just wasn't really prepared

996
00:32:38,875 --> 00:32:40,154
for. I just thought it'd be the dream

997
00:32:40,154 --> 00:32:42,575
come true that every day looks like Saturday,

998
00:32:43,355 --> 00:32:45,434
except I got pretty bored pretty quick. Not

999
00:32:45,434 --> 00:32:46,795
likely he was able to able able to

1000
00:32:46,795 --> 00:32:47,694
fill his time.

1001
00:32:48,049 --> 00:32:49,809
But, Yeah. I think you have to really

1002
00:32:49,809 --> 00:32:51,730
start to look at emotionally, like, what is

1003
00:32:51,730 --> 00:32:52,929
gonna be next? What are you gonna do

1004
00:32:52,929 --> 00:32:54,529
with your time? Are you personally ready for

1005
00:32:54,529 --> 00:32:55,029
that?

1006
00:32:55,569 --> 00:32:56,950
We don't want you to be bored.

1007
00:32:57,490 --> 00:32:59,190
You also have to look at the emotions

1008
00:32:59,250 --> 00:33:01,809
of are there any financial gaps that you

1009
00:33:01,809 --> 00:33:02,309
face?

1010
00:33:03,174 --> 00:33:05,255
And what's it really gonna take to exit

1011
00:33:05,255 --> 00:33:07,255
and not worry about money anymore? Because there's

1012
00:33:07,255 --> 00:33:09,575
nothing worse than stressing about your business, exiting,

1013
00:33:09,575 --> 00:33:11,275
and then stressing about money afterwards.

1014
00:33:11,894 --> 00:33:14,295
Thinking, well, if you're in your business still

1015
00:33:14,295 --> 00:33:16,134
and cash flow is hurting, well, you have

1016
00:33:16,134 --> 00:33:17,674
ways to deal with that.

1017
00:33:18,240 --> 00:33:20,960
Take on new customers, adjust prices, cut costs,

1018
00:33:20,960 --> 00:33:22,880
whatever. You have some levers you can pull

1019
00:33:22,880 --> 00:33:24,660
to start to adjust cash flows.

1020
00:33:25,599 --> 00:33:27,680
When you're retired, there's only so many levers

1021
00:33:27,680 --> 00:33:28,500
left to pull.

1022
00:33:28,799 --> 00:33:30,720
And it can't be that if you exit

1023
00:33:30,720 --> 00:33:32,160
the company with a fraction of what you

1024
00:33:32,160 --> 00:33:34,525
should have, there's not many strategies we can

1025
00:33:34,585 --> 00:33:36,424
deploy that can make it feel like you

1026
00:33:36,424 --> 00:33:38,184
sold the company for 4 or 5 times

1027
00:33:38,184 --> 00:33:39,944
the amount that you got. So, yeah, I

1028
00:33:39,944 --> 00:33:41,325
think you have to really be

1029
00:33:41,785 --> 00:33:43,724
diligent with your financial preparation

1030
00:33:44,265 --> 00:33:46,184
and have a good, solid financial plan leading

1031
00:33:46,184 --> 00:33:47,085
up to that exit.

1032
00:33:47,429 --> 00:33:49,429
And, again, it's gotta align the personal goals

1033
00:33:49,429 --> 00:33:51,349
with your financial goals and the ultimate business

1034
00:33:51,349 --> 00:33:51,849
goals.

1035
00:33:52,789 --> 00:33:54,629
What were some of the most common regrets

1036
00:33:54,629 --> 00:33:56,549
that you've heard? I mean, yes. People saying,

1037
00:33:56,549 --> 00:33:58,230
you know, I don't know what to do

1038
00:33:58,230 --> 00:33:59,529
with myself. But

1039
00:34:00,075 --> 00:34:01,375
what else are they saying?

1040
00:34:02,474 --> 00:34:04,234
I I think it's just not thinking through

1041
00:34:04,234 --> 00:34:06,315
what they would do post exit is the

1042
00:34:06,315 --> 00:34:07,534
number one thing that we hear.

1043
00:34:08,155 --> 00:34:10,074
And the other thing is by not planning

1044
00:34:10,074 --> 00:34:10,574
ahead,

1045
00:34:10,875 --> 00:34:12,734
the exit paths are very limited.

1046
00:34:13,710 --> 00:34:15,630
And sometimes it's after the fact. It's like,

1047
00:34:15,630 --> 00:34:17,710
had I only known this ahead of time,

1048
00:34:17,710 --> 00:34:19,170
this is what I would have done differently.

1049
00:34:20,269 --> 00:34:22,429
Like, I've I've had owners that have sold

1050
00:34:22,429 --> 00:34:22,929
companies

1051
00:34:23,550 --> 00:34:25,550
to third parties that said, I I had

1052
00:34:25,550 --> 00:34:27,824
no idea what an employee stock ownership plan

1053
00:34:27,824 --> 00:34:29,344
was, and I've learned about it since I

1054
00:34:29,344 --> 00:34:30,864
sold my company, and I wish I could

1055
00:34:30,864 --> 00:34:31,824
go back in time and do it over

1056
00:34:31,824 --> 00:34:32,324
again.

1057
00:34:33,585 --> 00:34:35,585
I've I've heard people that thought that, you

1058
00:34:35,585 --> 00:34:36,945
know, I I thought I had to sell

1059
00:34:36,945 --> 00:34:38,464
to a third party because I just didn't

1060
00:34:38,464 --> 00:34:40,304
think my key people could afford to buy

1061
00:34:40,304 --> 00:34:41,045
me out.

1062
00:34:41,349 --> 00:34:43,030
I didn't know the financing that was available.

1063
00:34:43,030 --> 00:34:44,630
I didn't know different ways to structure the

1064
00:34:44,630 --> 00:34:45,130
deal.

1065
00:34:46,150 --> 00:34:47,750
You know, and they're like, wow. I sold

1066
00:34:47,750 --> 00:34:49,829
to a company that came in, totally changed

1067
00:34:49,829 --> 00:34:51,109
the culture, got rid of a lot of

1068
00:34:51,109 --> 00:34:51,769
my people.

1069
00:34:52,230 --> 00:34:52,730
And

1070
00:34:53,109 --> 00:34:55,369
while I'm out and I'm okay, that company

1071
00:34:55,429 --> 00:34:57,164
in the community is just not the same

1072
00:34:57,324 --> 00:34:59,164
anymore. Had I only known how to prepare

1073
00:34:59,164 --> 00:35:00,364
for this, I would have I would have

1074
00:35:00,364 --> 00:35:02,125
exited differently. So that that's kinda like that

1075
00:35:02,125 --> 00:35:03,804
Monday morning quarterback kind of a feel. But

1076
00:35:03,804 --> 00:35:05,244
if you've planned ahead of time, you were

1077
00:35:05,244 --> 00:35:06,844
well aware of all your options ahead of

1078
00:35:06,844 --> 00:35:08,765
time, and you you chose the one that

1079
00:35:08,765 --> 00:35:10,065
was the best fit for everybody.

1080
00:35:10,569 --> 00:35:13,849
Alright. Taking it all together here. For someone

1081
00:35:13,849 --> 00:35:16,429
who's just starting to think about exit planning,

1082
00:35:16,889 --> 00:35:18,969
what are the first steps they should take

1083
00:35:18,969 --> 00:35:19,469
today?

1084
00:35:20,569 --> 00:35:22,250
So I I think it's just like anything

1085
00:35:22,250 --> 00:35:24,010
else. Just take a baby step. You have

1086
00:35:24,010 --> 00:35:25,150
to get started somewhere.

1087
00:35:25,734 --> 00:35:28,214
And I think sitting down and looking at

1088
00:35:28,214 --> 00:35:29,894
the value of the company, wait. What does

1089
00:35:29,894 --> 00:35:31,574
the value of the company look like now?

1090
00:35:31,574 --> 00:35:33,414
What's the cash flow business today? What does

1091
00:35:33,414 --> 00:35:35,594
your personal financial balance sheet look like?

1092
00:35:36,054 --> 00:35:37,815
And just start to to get a game

1093
00:35:37,815 --> 00:35:39,815
plan together of, you know, what's it really

1094
00:35:39,815 --> 00:35:40,635
gonna take

1095
00:35:40,969 --> 00:35:42,569
in order for you to live the life

1096
00:35:42,569 --> 00:35:44,010
that you want on your terms? What kind

1097
00:35:44,010 --> 00:35:45,289
of money is it gonna take? And start

1098
00:35:45,289 --> 00:35:47,049
to build a lot of times, I'll start

1099
00:35:47,049 --> 00:35:49,289
with a personal financial planning with a business

1100
00:35:49,289 --> 00:35:51,210
owner first to get a sense of forget

1101
00:35:51,210 --> 00:35:52,889
the business value for a minute. Based on

1102
00:35:52,889 --> 00:35:54,029
what you're doing personally,

1103
00:35:54,489 --> 00:35:56,349
what's the trajectory that you're on

1104
00:35:56,844 --> 00:35:59,265
outside of the outside of the business?

1105
00:36:00,045 --> 00:36:01,644
And then you start to see the gap

1106
00:36:01,644 --> 00:36:03,565
it's gonna take of what do you have

1107
00:36:03,565 --> 00:36:06,045
to extract from the company someday in order

1108
00:36:06,045 --> 00:36:07,485
to close this gap, because there's always a

1109
00:36:07,485 --> 00:36:07,985
gap.

1110
00:36:08,364 --> 00:36:09,965
And I think that's a really easy place

1111
00:36:09,965 --> 00:36:10,625
to start

1112
00:36:11,190 --> 00:36:13,190
as you start to put together the risk

1113
00:36:13,190 --> 00:36:14,329
management plan next,

1114
00:36:14,710 --> 00:36:15,909
and then we start to work on the

1115
00:36:15,909 --> 00:36:17,589
on the build factor after that. So it's

1116
00:36:17,589 --> 00:36:18,949
it's just a couple of baby steps. It's

1117
00:36:18,949 --> 00:36:20,469
not overwhelming. I think some owners think this

1118
00:36:20,469 --> 00:36:21,609
is gonna be this long

1119
00:36:22,070 --> 00:36:24,070
drawn out process. A lot of times these

1120
00:36:24,070 --> 00:36:25,449
conversations can happen,

1121
00:36:25,885 --> 00:36:27,505
like, an hour or 2 at a time,

1122
00:36:28,445 --> 00:36:30,125
and that's about it. And then just having

1123
00:36:30,125 --> 00:36:31,644
kind of a rhythm that you're able to

1124
00:36:31,644 --> 00:36:33,405
to stay with this framework, and it might

1125
00:36:33,405 --> 00:36:34,945
be every 90 days is a checkpoint.

1126
00:36:35,405 --> 00:36:36,925
And there's gonna be some homework, things you

1127
00:36:36,925 --> 00:36:37,965
have to do with your teams, things you

1128
00:36:37,965 --> 00:36:40,204
have to do, personally with your finances, things

1129
00:36:40,204 --> 00:36:41,679
you have to do with your your legal

1130
00:36:41,679 --> 00:36:43,039
team or your accountant. I mean, it's it's

1131
00:36:43,039 --> 00:36:45,199
just little checkpoints along the way. And before

1132
00:36:45,199 --> 00:36:46,400
you know it, you turn around and say,

1133
00:36:46,400 --> 00:36:48,019
wow. We've made a ton of progress,

1134
00:36:48,480 --> 00:36:49,860
and we've had fun doing it.

1135
00:36:50,160 --> 00:36:52,719
So it's not a process that's boring or

1136
00:36:52,719 --> 00:36:52,880
it's

1137
00:36:53,594 --> 00:36:55,434
you don't see the results right away. A

1138
00:36:55,434 --> 00:36:56,715
lot of the stuff, you start to check

1139
00:36:56,715 --> 00:36:58,394
the boxes off pretty quickly going, wow. We're

1140
00:36:58,394 --> 00:37:00,155
accomplishing a lot very, very quickly. There's a

1141
00:37:00,155 --> 00:37:01,755
lot of momentum going, and and owners are

1142
00:37:01,755 --> 00:37:04,494
excited. They're they're charged up by it. Excellent.

1143
00:37:04,954 --> 00:37:07,199
Well, Jim, how can business owners reach you

1144
00:37:07,199 --> 00:37:09,519
if they haven't already started planning? And even

1145
00:37:09,519 --> 00:37:11,119
if they have started planning, just to touch

1146
00:37:11,119 --> 00:37:12,260
base with you and say,

1147
00:37:12,559 --> 00:37:14,000
am I doing this right? Am I covering

1148
00:37:14,000 --> 00:37:14,659
my basis?

1149
00:37:15,039 --> 00:37:16,639
Yeah. So a couple of suggestions I would

1150
00:37:16,639 --> 00:37:18,239
make. You know, one would be you can

1151
00:37:18,239 --> 00:37:19,920
reach out to us directly on our website,

1152
00:37:19,920 --> 00:37:20,820
which is mcgovernwealth.com.

1153
00:37:22,194 --> 00:37:23,734
There's a contact us button.

1154
00:37:24,275 --> 00:37:26,375
You can also email us info at mcgovernwealth.com.

1155
00:37:26,914 --> 00:37:28,994
But it could be something as simple as

1156
00:37:28,994 --> 00:37:31,255
if you haven't done a business valuation before,

1157
00:37:31,875 --> 00:37:33,974
we can do a business valuation for you

1158
00:37:34,050 --> 00:37:36,369
and just see what is the company worth

1159
00:37:36,369 --> 00:37:37,969
roughly today, and then we can do a

1160
00:37:37,969 --> 00:37:39,510
risk assessment for you as well.

1161
00:37:39,809 --> 00:37:41,489
And start to get a sense of, okay,

1162
00:37:41,489 --> 00:37:43,250
where are the holes? Where are the gaps?

1163
00:37:43,250 --> 00:37:44,610
And and what are some of the areas

1164
00:37:44,610 --> 00:37:46,469
you should be putting your attention to first?

1165
00:37:47,224 --> 00:37:49,144
And at that point, you start to get

1166
00:37:49,144 --> 00:37:51,644
a sense of is a more comprehensive exit

1167
00:37:51,785 --> 00:37:54,425
planning process appropriate, or should it really be

1168
00:37:54,425 --> 00:37:56,105
just let's look at a couple components of

1169
00:37:56,105 --> 00:37:57,164
this overall plan

1170
00:37:57,465 --> 00:37:59,159
and focus on that. It's kind of a

1171
00:37:59,159 --> 00:38:00,679
little silo first before we get into the

1172
00:38:00,679 --> 00:38:02,440
bigger picture planning. But it all starts with

1173
00:38:02,440 --> 00:38:03,339
an initial conversation.

1174
00:38:03,800 --> 00:38:05,319
Blocking off an hour or so to have

1175
00:38:05,319 --> 00:38:05,980
a conversation

1176
00:38:06,679 --> 00:38:09,239
is, is usually well worth your time. Alright.

1177
00:38:09,239 --> 00:38:11,900
All you business owners, you heard this. Plan

1178
00:38:12,119 --> 00:38:14,300
so you can exit on your terms.

1179
00:38:15,014 --> 00:38:17,574
Follow this podcast, maximizing outcomes to know when

1180
00:38:17,574 --> 00:38:19,355
a new episode is ready for you.

1181
00:38:19,655 --> 00:38:21,514
And, of course, please share with others.

1182
00:38:21,894 --> 00:38:23,275
Thanks for being with us.

1183
00:38:23,894 --> 00:38:26,954
Thanks for listening to the maximizing outcomes podcast

1184
00:38:27,335 --> 00:38:29,150
brought to you by Jim McGovern and the

1185
00:38:29,150 --> 00:38:30,289
McGovern Wealth Group.

1186
00:38:30,670 --> 00:38:32,190
Be sure to follow the show to be

1187
00:38:32,190 --> 00:38:34,289
notified when new episodes become available.

1188
00:38:34,750 --> 00:38:36,590
To suggest a topic or guest for a

1189
00:38:36,590 --> 00:38:38,910
future episode or learn more about how we

1190
00:38:38,910 --> 00:38:41,470
can help to maximize outcomes in your life,

1191
00:38:41,470 --> 00:38:43,625
visit our website at www.mcgovernwealth.com.

1192
00:38:49,284 --> 00:38:52,085
This podcast is intended for general public use

1193
00:38:52,085 --> 00:38:55,125
and is for informational purposes only. Guest speakers

1194
00:38:55,125 --> 00:38:57,525
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1195
00:38:57,525 --> 00:38:59,570
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1196
00:39:00,030 --> 00:39:03,150
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1197
00:39:03,150 --> 00:39:05,869
are their own. By providing this content, Park

1198
00:39:05,869 --> 00:39:07,329
Avenue Securities LLC

1199
00:39:07,630 --> 00:39:10,269
is not undertaking to provide investment advice or

1200
00:39:10,269 --> 00:39:10,769
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1201
00:39:11,070 --> 00:39:13,795
for any specific individual or situation or to

1202
00:39:13,795 --> 00:39:16,755
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1203
00:39:16,755 --> 00:39:19,474
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1204
00:39:19,474 --> 00:39:21,574
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1205
00:39:22,034 --> 00:39:23,414
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1207
00:39:25,155 --> 00:39:27,894
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1208
00:39:28,469 --> 00:39:31,510
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1209
00:39:31,510 --> 00:39:32,809
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1210
00:39:33,349 --> 00:39:35,369
Jim McGovern is a registered representative

1211
00:39:35,670 --> 00:39:38,809
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1212
00:39:39,030 --> 00:39:39,530
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1213
00:39:40,309 --> 00:39:43,609
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1214
00:39:43,864 --> 00:39:45,405
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1215
00:39:45,944 --> 00:39:48,824
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1216
00:39:48,824 --> 00:39:49,484
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1217
00:39:49,784 --> 00:39:50,284
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1218
00:39:50,585 --> 00:39:51,804
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1219
00:39:52,105 --> 00:39:54,924
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1220
00:39:55,304 --> 00:39:57,545
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1221
00:39:57,545 --> 00:39:59,644
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00:40:00,559 --> 00:40:02,179
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1223
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1224
00:40:05,199 --> 00:40:07,059
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1225
00:40:07,440 --> 00:40:07,940
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1226
00:40:10,159 --> 00:40:12,980
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1227
00:40:15,264 --> 00:40:16,804
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1228
00:40:17,344 --> 00:40:18,085
number, 7119103.

1229
00:40:19,984 --> 00:40:21,204
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1230
00:40:25,105 --> 00:40:26,644
Expires November of 2026.