Know what you could keep from a business sale

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Only 25% of businesses successfully transition to new ownership. Their job as a buyer is to do two things. It's to buy your company for as little as possible and to put as much risk on the seller. So he sold for $10 million and felt really good about himself until one year and one day later when the private group flipped it for $150 million. According to EPI, 50% of business owners go out not on their terms, you know, tied to what they call the five dismal deeds. you know, death, disability, divorce, disagreements, distress, and we end up closing that deal at $14 million with 85% cash at close versus the five that they would have got. It's life-changing money. Private equity firms and other businesses when they go, "What do we want to buy?" We want to buy founderowned companies cuz they have no idea what to expect. They're going to get beat up. So, welcome to Beyond the Bottom Line. I'm your host, Joey Lon, and this show is about pulling back the curtain on

how the ultra wealthy actually protect and grow their money without the gatekeeping and the complexity. Now, we talk a lot about tax strategies, investment structures, and and wealth protection, uh, if you've been catching up on the previous episodes, but there's one wealth event that we haven't really covered deeply, and it's probably the biggest one you'll ever experience if you're a business owner, and that's selling your business. Um, and we couldn't be more lucky today than have Scott Bushki is the managing partner and founder of Cornerstone Business Services, a boutique investment bank serving the lower middle market in the US. He's completed over 400 transactions and was just inducted into the IBBA Hall of Fame in 2025, the youngest person to ever receive that honor. He's also the author of Finish Strong: Sell Your Business on Your Own Terms. His firm's 2025 national study revealed some uncomfortable truths about why business sales fail. And he's developed a proprietary process called Pomo, the power of multiple offers that changes the game entirely for business owners. So, if

you ever thought about selling your business or receive an unsolicitated offer or just want to understand how to protect your wealth you've built over decades, well, this conversation might change how you think about your exit. With that said, welcome to the show, Scott. Thank you, Joy. Great to be here. Again, Scott, on this show, we talk a lot about how business owners can protect and grow their wealth through tax strategies, investment structures, estate planning, but for most owners, their business is their wealth, right? It's 70 80 sometimes 90% of their entire net worth. And your 2025 national study, I was going through it before the call, uh, found that only 25% of businesses successfully transition to new ownership. That means that 75% of owners either never sell or sell it in a way that doesn't meet their expectation. So after 25 years of doing this 400 plus deals, why is that number so low and what's going wrong right now with this? Yeah, I think it comes down to two main things. One is is

they don't start planning soon enough. Uh you know, some of the studies showed that 32% have no idea who to trust or even where to start. So they just don't do anything. Another 65% said they are deeply tied emotionally to their business. Their their identity is deeply tied. So, it's like, who am I if I if I sell Cornerstone the next day, who am I? And they don't know and and they just can't they can't let that go or or they don't know what they're going to do next. So, even though I'm burnt out or tired, I've been doing this for 20, 30, 40 years, I I don't let go. So, so they don't start soon enough. A lot of their trusted adviserss don't know how to start the conversation because it's just the blind the blind leading the blind a little bit. And uh so if they don't start the conversation, the owner doesn't know where to start and they go, I'll just I'll figure it out someday. Uh and the second reason is

that they don't build a team of specialists around them. Uh most times, uh they try to do it themselves. And you can imagine, you know, if you're going to have to do something the first time you've ever done it and you probably only do it once in your life. And oh, by the way, it's your largest single asset that you own. It's like you said, it's probably 70 90% of your net worth. You're emotionally tied to this thing. Most of my clients talk about giving up one of their children for adoption when they talk about selling their company. It is your identity. Um, all of these things going together and and you wonder why it doesn't work out. And the analogy that I like to use, Joey, is think of uh think if you're the best tennis player in the world. So, from when you started in, you know, grade school, middle school, high school, college, pros, Olympics, you've never lost a tennis match. You are the best tennis player in the world. And you've

got that confidence because you worked hard. You just didn't wasn't just giving you. You worked hard. You train all the time. You you put in the work, but now you've got that that I you that confidence and then you go into I bring you out to the my country club and you start chatting with the club pro and and you're like, "Well, how hard can golf be?" You know, I'm hitting serves at 100 miles an hour back at people and the ball just sits there. It doesn't even move and I get a big club to whack this thing. I'm like, "God, I you know, I'm sure I could be really good great golfer." And the club pro is like, "Well, it's not that easy. How hard can it be?" And the club pro like, "Hey, Joey, why don't we go out and play around?" Yeah, sure. Now, you've got you're an amazing athlete. You're the Everybody's told you you're the best tennis player in the world. You don't lose anything. You worked hard, but you've

never in your life played golf. Not once. Not miniature golf, not anything. And you're going to go out in this course, and this person's a terrible tennis player, but that club pro has played that course hundreds, if not thousands of times. They know where every water hazard is. They know all the greens lie. They know where the bunkers are. Who's going to win that match every single time? The club pro is going to clean your clock. And yet, that's what it is for business owners is they are very good at what they do. They have this this grit and this persistence and this problem solving ability like I'll pivot here. I'll pivot there. I'll figure it I'll figure out my way. You can't do that when it comes to selling your business. You get one chance. And you know just to give you an idea on that analogy. So I just ran a panel of four different private equity groups and we asked the question. I said how many deals do you look at a

year to how many you actually buy? And the average was of the four groups they look at somewhere between 3 to 5,000 deals a year in one year and they buy five to 10. And this business owner gets one chance in their life and it's the largest transaction of their life. And so you can see that doing it themselves, you know, or using their their attorney who uh again is their friend and they've they've helped them set up their LLC. They've done some collections for them. They've helped them with some problems with customers or with with employees, but he or she is not an M&A expert and all of a sudden now you've, you know, we've seen it where we've the client builds up a company for 30 years, they do a great job, we get multiple offers, more than what they thought we were going to get. They picked the deal. now they bring it to their attorney that's their friend and not an M&A attorney and the deal blows up and all of

that work for nothing. So it it's about starting earlier and and and really preparing earlier and it and and then building a team of specialists around you. If you can do those two things, you got a much better chance of uh of not only selling your business, but maximizing that value and be able to choose at the end of the day, which we'll talk more about with that Pommo of who, you know, who's going to take on your company and who's the best fit for you in your business. That's really interesting again because I was talking to you a bit before before recording this that again, I'm a business owner. I think every business owner should aspire at one day exit, but not only exit, but exit on their terms, right? you've worked so hard to build what you've built today. You need to be rewarded for it, right? Create generational wealth with your business. Um, and it's funny what everything you said is very connected and related to the uh we have we had

a lot of financial advisors come on the show and when it comes to like business owners saving taxes, it's it's the same thread. It's like they're not well they don't have a good team. They don't have specialists that can help them in every area. A business owner might rely on their CPA for their everything regarding taxes, but their CPA is just reactively helping them, right? Filing the taxes. They need a financial planner. Exactly. But they put all the trust on that CPA. Same thing when it comes to selling the business. Um like I have so many questions like when when do I start, right? When when is and I want to get super tactical on this uh on this show and ask a bunch of my own question as a business owner of what I would uh what I would uh what I would have. But uh first I want to start with you said like all right 25% do it properly 75% fail. Uh you've ran through a lot of successful transactions. What do

you think is the common thread of that 75% failure rate? Like if you have to pinpoint one is it expectation? Is it preparation? Is it something else? Yeah I I would say if you looked at the number one reason I and I've been a part of other studies that I've done and the number one reason businesses don't sell is typically sellers expectations. You know, they again, this is my baby. Everybody's kids the best looking, the smartest kid, and the best athlete in school, right? And then you price your business accordingly. And buyers don't care what you want or what you need or what you think. It's, you know, what will they what are they willing to pay when they look at the cash flow the company because that's what they're buying is the future typically the future cash flow. If it's recurring revenue, it's the revenue. But for 98% of the businesses out there, it's what is that future cash flow that that buyer is buying. And uh and so that's I I would say

that's probably number one. And the number two would be that that preparation piece that we talked about earlier is that they just I it's really interesting uh probably one of the most unique and scariest questions we asked was in the study and again these are these are 750 companies all over the country uh accurate to the 2020 US census uh and uh so they only got like a three and a half% uh differential or or or uh fudge factor in it. Yeah. And it was businesses about 25% were 5 to 10 million. So they had to be at least five million revenue to get into the program. So 5 to 10, 10 to 25, 25 to 50, 50 to 100, about 25% a piece. So these are not companies that just started yesterday doing 200,000 revenue. These are some doing 80 90 million in revenue and some doing 2030 and everything else. And we asked them, what's your mindset around when you're going to sell your company? The number one answer which blew me away

was I plan to sell my business when I'm physically and or mentally unable to continue. That's crazy. Think about that. That's the mindset because they just don't know how, when, why, or where because no one's asked them that question. It's like death. You know what what do you want for your funeral? But we'll figure that that that'll some other day we'll work on that. You know, right now I just want to work on what's what's here today. And yeah, and uh you know, you ask somebody when are they going to sell their business? I bet you nine times out of 10 they're going to say five years. And you ask them two years later, guess what their answer is? Five years. Because they're close enough that them and their spouse kind of get excited like, oh, we're almost at the end or we can almost start to really enjoy life and do everything we've said on our bucket list, but yet it's just far enough away that I really don't have to change my habits

of what I've done to really prepare this thing for sale. And so they just keep doing it. And when what we found through our surveys, I've just been in the trenches for 27 years, is that most business owners do not sell their business. The trigger is not a business issue like, oh, I Joey's built this business up and he's got a 10-year plan and the 10 year he's going to sell. It's typically, and especially baby boomers, most of our clients are baby boomers, not all. We get a lot of Gen Xers as well, but a lot of them are are boomers looking to retire and and being one and done, is that uh they just wake up one day and they're burnt out. They're tired. They don't have that energy anymore. It's like, you know what? It's just harder than it used to be and I'm still my company's still doing good, but I'm just done. I'm tired. I'm burnt out. Maybe I'm a little sick or my spouse is sick or my best friend

who's in better health than I was just died of a heart attack and it's like, "Holy cow, I got to maybe I should stop and smell the roses a little bit." And uh so I think those are some of the key areas that that we focus in on of why it just doesn't work out as well as it should. There's so many angles I can go with that. I was laughing because I was when you were saying this, I was trying to answer your your question, right? like for me for myself and it was five years I think it just makes sense right it's like it's far enough though so that you can reach that number that you have set for yourself but at the same time it's not like you don't have to take action today because you have five years and um to your thing about uh do you know Alex Hermosi and Laya Heroszi acquisition.com um I remember in one of the video they were talking about when they sold gym launch

their first company I think they sold 66% for $43 million and they were saying that like they at one point that triggered that wanted them to go out. It's because of that that desperation. They were burnt out. But like when you're burnt out and desperate with your business, nobody wants your business. Nobody wants to be burnt out. It means there's something wrong, right? So you actually you're going to sell for half of what? Exactly. Exactly. And then they met someone was like, "Yeah, well look, if you fix this, you fix that, you fix this, then you can sell for 20x, 10x what you think, what you would do right now." So they did that and at the end they didn't want they didn't want to sell their business because now it was a nice business they weren't burnt out they had the whole team. So uh that's very interesting and I'm just asking again for for myself because I was like okay that five years what's the right timeline that right the right gauge like

should it be a number that you're chasing after um or what should it be? Yeah, I mean I think you know a lot of times people think of exit planning or or preparing their company for sale as something that you're going to do a year before you sell or something like that. And really to your point before uh the story you just told is that the the I literally starting today like what can you do to derisk your company? What can you do to drive more revenue to the company? What can you do to you know build out your management team? All those things are are are going to make your company more valuable at the end are going to help give you more options today. You know, if you can build out your management team, guess what? Now I can take time away. Like I we that's what I did in the last three years. Build out my management team. I took off July and August. Yeah. July and December, excuse me. I would

have never been able to do that three, four, five years ago ever, you know, and now my company's worth more because I can take time off. And then it's how are we growing? How are we building things out? So it it's really you it's really it's exit plan is just good business strategy. And people don't see that like I'm going to do this at the end. It's like you know I I sold my the last house that I sold. I I you know had it and I lived in it for 10 years and it was a great house but at the end I did all this cool stuff to it to make it ready for to sell. I put in a bar a pool table and built out a man cave. I'm like man why didn't I do this when I bought the thing? I would have had 10 years, you know, to enjoy the house and I didn't at the end, you know, and so it's just, you know, I could have had a

much more enjoyable experience at my house throughout the whole thing if I would have done it earlier and I knew what to do. I just put it off and put it off and put it off until I had to do it to get it ready for sale. Yeah. No, that's my takeaway from that. And again, I think that the five year is the typical answer, the the knee-jerk answer. Uh but at the end of the day I remember like people ask me as well like okay when do you like we're we're celebrating we celebrated our fifth year this year so we're go on our fifth year right now like all right do we want to go another 50 or another five or another 10 it's hard to say but I think the the right answer is that even if you don't want to sell just build your business in a way to have the option have the best options you sell because if your company is growing got a good management team you don't have

to sell you could step away you can sell it for more money you can put in a manager you know you can sell part of the company with an with a to a private net group or family office. There's so many different options you have. But if you got a company that's all based on you and you're burnt out and it's been stagnant or you know it it's been going down to your point, it's probably not salable at that time. And that's what happens is that um the number one again these are all answers from the study findings from the study but the number one answer why would you not want to sell your company was man things are going so good. I'm having so much fun making so much money. Why would I ever want to sell now? And that's ironically that's the time that you do want to sell. Like things are on an up upward trend. You're excited about the future. You got good eBay of growth. Buyers buy into that. They

see the growth and go, "Hey, with with your company, you you know, with your company and you're more with your uh more capital or or whatever you have that's more because you're bigger. Just think what this thing can do versus what happens most of the time is going, why would I ever want to sell now?" And then you crur. Yeah. And now it's like, well, now I'm kind of bored, tired. It's not fun anymore. I'm burnt out. I don't put the energy. And now I want to sell. Well, it's not this anymore. Now you're on a downward spiral. And then they still want this value. Like we talked about earlier, sellers expectations. Well, when I wasn't burnt out, I was doing this. Why can't I sell for that? Because it's not down. Now you're down here. You're not up here anymore. And they just keep hoping that someone's going to pay them this big number and until it spirals and they end up shutting their doors for pennies on the dollar. That's that's what happens

so many times because they don't know what it's really worth. They've never get what we call an RMA or real market analysis. No one ever talks to them about when they're going to get out, how they're going to get out. There's no planning. They just wake up one day and they decide they want to get out and and find out that it's it's probably too late. They hang Most people hang on well too long versus selling too soon. Like, oh, I sold too soon. I left money on the table. That probably happens one out of a 50 times versus the 99 times out of a hundred that people hang on too long. Yeah, for sure. Because you got to val like it's an offer like anything else. It's like, okay, let's say they you get offered $50 million, but your business makes $20 million EIDA every year or $10 million EIA every year, like a 5x on your EIDA. You got to real like make the the real decision for yourself like do you think

you can stay more than five years in this in this business and make that money and then keep growing it or not? So, um my question was in terms of preparation, what's the best preparation? Is it uh is it business strategy? Is that all all what it is? It's like just making sure you can build your business in a way where you get that optionality in the future or meets with someone in specific sectors to help you in certain areas. Yeah, I I I think you know it depends on what your skill set is and everything else. But the the two biggest things that are are drivers or deal killers typically in in in deals again you got to put your if you put your buyer hat on going where is the risk? Where are the single points of failure that if I'm a buyer and I'm buying your company, Joey, if A or B happened, the company, you know, would fall apart. What are those things? You know, for most times it's the owner

is the business. So, did you build out a management team? If you've got a management team there, that opens up the world to so many more buyers because now you've got a proven management team. You can take yourself out. Management team stays in. They get some incentives to go forward and get some equity or whatever it might be. And life is good. The other is is how well diverse is your is your customer base. You know, if you if you're you know, you got two customers or two businesses, one doing you know, both doing 10 million in sales, one's doing a million8 IBIDA, the other one's doing 2 million EBITDA, you know, which one would you buy? Well, I'd buy the one that 2 million EBIDA because it's making more. But then if the 1.8 their top customer is 5%. And on the other one where it's 2 million the bottom line, but their top customer is 55%. Now, which one would you buy? why I buy a all day long because if I lose

5% I'm still in the game. If I lose 55% I'm out of business. So, so those are, you know, and again, and it's d-risking the company, it's processing systems. It's all the things. A lot of it is strategy, but I would say those are the biggest ones because you could build up a a $4 million eBay company, but if it's all based on Joey and Joey's knowledge and Joey's contacts and Joey's got the relationships, you can't sell it. You're going to have to stay on a big earnout. Then you go, why the heck would I sell and stick around and be an employee for three years? I'll just keep running the business the way I you know what I'm doing now. So it's it makes it much much tougher and going back on your you know hey if I get $50 million today should I stay you know or keep the 10 million and that's where we really go back to why did Mr. or Mrs. business owner why did you do it in the

beginning? Why did you start this company in the first place? Why you and most yes they saw an opportunity and need but most are it comes down to financial independence. They want to be able to live the lifestyle at some point that they can. And that's why with our process, with our our insurance 360 process that we've developed it it some of the earliest steps are, you know, have their conversation, have a discovery call with with an investment bank like Cornerstone just to understand what's the lay of land, what's going on in the marketplace, how long does it take, whatever it might be. Get that RMA done, what is that real market analysis, what's that real value, what's my net number, what's my lifestyle number. You should never think about selling your business till you know those three numbers. So the three numbers are what's your valuation? What's that? We call it the RMA, the real market analysis, because you've got to be careful because again, M&A, investment banking, there's it's high stakes, right? People

have never done this before. People get taken all the time. So, there's groups out there, national groups, small groups, big groups that will just tell you whatever you want to hear from a valuation standpoint to get a $50,000 retainer, you know, and and they sell 5 to 10% of the companies that they take on talking to their employees. It's ridiculous, but that's that is a model that's out there. Um, and so too many brokers or too many investments will tell you whatever you want to hear. So, you need someone that's in the trenches that are going to give you a real number. And that's what we like to say is that we're going to tell you not what you want to hear necessarily, Joey, but what you need to hear in order to make a well informed decision. That's just one of our princ. That's one of our core principles. And then so once you know that number, then you say, "Okay, it's 10 million bucks. Easy number. Who cares? What am I going to

net out of this thing? If I got nine million in debt, I got a million of fees. I get a big goose egg. Probably not the right time to sell my business." Even though 10 million could sound like a lot. So yeah. So what am I So what So now I got my real number. Now my net is my net number. What am I going to net out? So what what's my worst case scenario? And then sitting down with these there's so many brilliant people out there again to your point that are specialists in taxing and go yeah you know your worst case scenario is six but I can get you 7.2 if we if we have the time you know once they sign a letter of intent once the deal is done so many of these tax treatments come off the table. You've got to do it well before you you're you're selling your business or even in the process of selling your company. And then once you know what that net number is,

what's your lifestyle number? What is, you know, when you sit down with your financial advisor going, "Hey, what do I need to live my ideal lifestyle?" And if that number is six and your net number is 7.2, hey, who cares? You know what? You now you you can sell and you can live your ideal lifestyle because at the end of the day, that's what it's really worth because you have these people go, "Oh man, I could work for five more years and make that much money." You could it also could drop dead tomorrow. Your business could you could lose your biggest customer tomorrow. the industry could completely change. AI could take you out of business tomorrow. So there's again that's where entrepreneurs always think it's always double double double double double when we all know very few companies go like this year after year after year after year, you know. So it it's it's that's why we try to help them go, yeah, before you even sign up with us, let's just make sure the

numbers make sense. If they don't, that's okay. We'll show you what you could do to enhance the value and then you can work on that with a coach. I recommend working with coaches. Uh going back to your earlier question, I I've got working with a coach. So for companies that are usually doing 1 to 10, one to 15 in revenue, uh we we've seen a lot of great work by Cultivate. Uh it's a nationwide group, Cultivate Advisors. And then above 10 million in sales, uh scaling up. There's about 300 coaches worldwide with scaling up and they do an outstanding job. And there's others out there that are are good as well. Those are the two that we've had some really good experiences with. But what they do is they really not only do they probably point out some things that they that you didn't see because they can really dive in, but they're also going to hold you accountable because what I found with business owners is is uh we'll show them, okay, you know,

the numbers don't make sense. Great. Here's the two things you can do to enhance the value and only two. We don't give them 40 different things, you know, it's and they go, okay, I got it. I don't need anybody. And they'll do it for about a month or two, you know, and then they'll go back into the what they've done for 30 years, 10, 20, 30, 50 years. And they'll come to us a year later and be the same or less even sometimes because they're burnt out a little bit and going, "Oh my gosh, I just wasted a year of my life. I didn't increase the value at all and I'm a year older and I just wasted a year of my life." So, by bringing in a coach, you can usually help you get there faster and better and and they're usually a good investment that more than pay for themselves over over the long haul. Yeah. Scaling up. That's the uh the master the Rockefeller's habit. That's right. Yeah. This book This book's

a Bible. This book is a Bible. I think we have to reook at it every year because your business changed so much. And that's a great first step. It's cost 20 bucks. Even if you don't have the money for the coaches, just get the book that's going to help you out. So, three numbers, real market value, your net number, and lifestyle number, right? That's correct. The only one you kind of have to figure out yourself is the lifestyle number. The RMV and the net number, like you don't really control it like someone's going to sell it. You you control how you the RV, we're going to tell you what it's worth. Yeah. At the end of the day, you got to figure out that's why the financial advisor is so great because as you guys as you know, the the good ones, you know, they can run all these what if scenarios and you can plug in, yeah, I want to buy a house. I want to do this. I want to live off of

400,000 a year. Whatever it is, and then they can back up, okay, you need this much and how much do you have? And and then you can see what that wealth gap is, what EPI talks about. And and uh yeah, it's it just clear it's just such a clear path because otherwise somebody wakes up one day and go, I want to sell. I have no idea what it's worth. I don't I have no idea what my net number is going to be. I have no idea what I need to live. Please God, let it work out. And and it's a gut-wrenching and they have no idea. And I've seen people live with millions of dollars very very frugal feeling guilty every time they spent any money because they just never sat down and going how much can I really spend each year and still be okay and why live like that? Why not understand what kind of lifestyle you could live like? And that's where again it takes a team to help with a business

a business owner get through the sale of their business. It's not I can't do it myself, the financial adviser, the CPA, the tax folks. It's everybody coming together for the benefit of of the client to really help put together the best strategy possible and the best sale possible. Yeah. And and you've written about unsolicitated offers, right? And you have a white paper specifically on this. Um and for owners like who've received that flattering call, right? Walk us through what's actually happening on the other side like what does the buyer know that the business owner doesn't? Yeah. Yeah. No. So this is if you get anything of a business owner if you get anything out of this is do not accept an unsolicited offer before you talk to an investment banker. Uh because again their job as a buyer is to do two things. It's to buy your company for as little as possible and to put as much risk on the seller. So if it doesn't work out as good as they think they will.

The seller takes a hit even more on value versus versus the seller. That's it. That is I mean think about it. When you go buy a house you're not going to go you know Joe you seem like a really nice guy. I'm going to pay an extra $50,000 or $150,000. It's like how much can I negotiate for to get it for as little as possible. And just to give an example and then I'll get into some specifics, but to give you an example that most people will understand. Again, going back to the housing scenario is think if uh you know you're you know your family, you and your family are looking for a house and your realtor calls you up and says, "Hey, it's a Wednesday. I think I got the perfect house for you. It's a it's in the school district you want. It's the square footage. you want the backyard that you wanted everything that you were looking for and you go, "Well, you know, I'm a little busy today. You know, I'm

busy this week. Can I go Saturday or Sunday?" Like, let me call. And they call back. You know what? You can go Saturday, go Sunday, go next week, Saturday, Sunday. It's been on the market for 110 days. There's nobody looking at it. There's been no offers for whatever reason. Yeah, you can go Saturday, Sunday. Let's just say it's listed at a million dollars for easy numbers. So, it's a million- dollar house. What are you going to, you know, what what value? What offer are you going to put on the house if you're the only buyer in the table? and no one else has been there and they've been on the market for 110 days. So now, same house, scenario number two, same house, same square footage, same as anything else. Get a call. Hey, you know, I think we found the perfect house for you guys. It's everything you've been looking for. School district, blah, blah, blah. And they go, oh, great. You know, I'm busy today. Can I go Saturday? Saturday. There's already five

showings on Thursday. You got I got you the 6th and all the offers are due on Friday at noon. You go there, you look at it. It's everything you're looking for. and and you've been looking for three months now what value you gonna put on that house you know probably asking or even more than asking you know you went from 800,000 maybe offer to a million one you know or whatever be and then the third scenario is as you're walking out of that house the seventh couple's walking in and it's just that family that you can't stand like he or she you know they think they know it all or they their kid beat up your kid at school or you know whatever it might be and they're like hey Joey get out of this house that's my house you can't afford this house I'll I'll bid you now you're like over my dead body I'm buying this house now that's now now that's the synergy of the buyers going well I can't let my

competitor buy it now I've got to buy it and so you might put three different values on the exact same house and that's what we do as investment bankers at Cornerstone is that that's what we're creating is we're telling we're telling the right story the best story possible to the right group of buyers we're putting no asking price in the company we're running a process where we're controlling the flow of information we're keeping a confidential. We're controlling timing. We're asking for all the offers at one time and then and then we get to negotiate from there. So like last year we averaged eight offers per client because so now who has the who has the leverage? You know if if it's one buyer and one seller, the buyer has all the tricks. They're going to tell you and what we hear a lot and in fact I just heard this the other day is the buyer will tell you even sometimes they'll even tell you a high number. They'll tell you a crazy multiple and

go holy cow. Well, geez, if I can get that, that's more than I ever thought. Well, then they're like, well, just sign this LOI here and now they got exclusivity. Once they sign the exclus sign, you sign the LOI as a a seller and you get exclusivity, the deals, you know, the deal's kind of done. Your your fade just been sealed because now they have control. You can't bring any other buyers to the table. You know, there's the deal's already cut. So, you really don't need to bring an investment bank in or anybody else. The best thing you're going to do is get that value and but what's going to happen is is now they're going to drag you out and they're going to drag, oh, I'll close quick in 45 60 days, Joey. Nine months later, you're still talking about it and you're getting tired and you're wearing down and guess what? You're not spending time on your business. So now, yeah, you know, Joe, I told you I'd buy a five multiple, but

it used to be 2 million. Well, now it's a million5 in your TTM, your trailing 12 months. So, we can close next week, but you got to take that $2 half million dollar haircut. Joey, you want to do that? Oh my gosh, it's been nine months. I'm dragged through the mud. You're burnt out. You're tired. And you take a, you know, you take a big haircut at the end of the day. Um, or they walk away and you plead them for them to come back and then they lower the price. And it's sad, but that's what happens a lot of times is is, you know, and again, not everybody, but that is a playbook that gets played is that they'll tell you what you want to hear and they just or they just keep chiseling away at the value with QVS and other due diligence items and everything else until they get to the number that they knew they were going to pay to begin with, which is much less than what they offered and

probably much less than what the true fair market value is. Because just to give you an idea, um we just did a deal about a month ago and the it was a smaller deal. It was about uh the but a great great business out west someplace and the business owner the financial adviser actually called us. I think they saw me speak somewhere and said, "Hey Scott, we'd like you to talk with our clients. They're talking to a buyer, which most of our most business owners are talking to buyers right now. It's it's amazing how much money is out there chasing deals because again, they get a better deal." And this is a proven this will prove the point. So they said, you know, they got an interested buyer. They don't know what, you know, they don't know what it's worth. They've never had a valuation done or an RMA and they just want to make sure they're not leaving any money on the table. I said, well, where you at? Well, they started at 5

million and then they go up to 10 million, but it's all earnout from 5 to 10 million. You know, if if we'd have to be really really good and grow crazy for us to get the full 10 million. So we they said, "We want you to do an RMA." So, we did the RMA and and as they presented, you know, they're talking the 10 million. They said, the buyer said, "Hey, look, just so you know, this is as high as we've got we can go. We we shouldn't have even gone this high. We really like you. Um, but this is our last and final offer. If you don't like the 10 million with the five and five million at close and 5 million earnout, we're not the right fit, you know, and good luck." So, she signed an agreement with us and she sent them an email going, "Hey guys, I like you guys. I want to keep you in the process, but just so you know, I'm I think I'm gonna work with Cornerstone

to make sure I do this right. I only get one chance to do this. Within five minutes, her phone rings. Hey, what's it going to take for you not to sign with Cornerstone? Or how much more money do you want not to sign with Cornerstone? Because they knew if we ran a process and we brought multiple of buyers together, the price was going to go up. And they stayed in the process. they were not the buyer that the seller chose at the end of the day and we end up closing that deal at $14 million with 85% cash at close. So they got like $12 million cash close versus the five that they would have got and she would have saved a fee, but she would have never known, you know, how much money she left on the table. And it's it's life-changing money. You know, it's not a well, you know, cornerstone fees is a half million, I'm going to get a half million. It's like no, we're typically getting on average with our

process uh we're getting like 20% more than what the market market is what you know what those valuations come in at. And uh because again it's all comes down to the competition. People pay more when there's competition. There's urgency and scarcity and that's what we get to uh you know that's what you know we get to do. That's very interesting. And that's the Pomo process, right? The power of multiple offers. That's crazy. That's a 7 million uh more upfront and then that's a 40% increase as well. What do you think that's due to? Yeah, it just comes down to purely again going back to the house story. I mean, think of the the emotional pressure, the competition that you have, the scarcity of this is the perfect house. We've been looking for three months. If we don't get this one, who knows when we're ever going to find a house and school starts next month and we got to be in the school district. It's that kind of pressure that gets on and it's simply

creating urgency and scarcity. And you know, another uh example of that is uh you know, look at look at the draft, the NFL draft. Yeah. You know, it was just in Green Bay, you know, and uh it was insane. You know, for 50 years, it was this sleepy thing that had to happen as NFL teams, people got hurt, people retired, they had to get new kids in and play. So, they just did a draft and it was in 50 in New York, the largest city United States for for 50 years. And at at its biggest it had, you know, I think it was at the radio city hall, uh, five 6,000 people, you know, so 6,000 people there, couple camera crews, and then someone decided, hey, what if we take this thing on the road? Instead of having it the same place, same time every time, what if we took it on the road and we created Pomo where all these teams and all these cities bid on having it there? And if they bid

on it, they were going to bring all this money to this amazing event and this event that's small asleep is going to become awesome. Yeah. Well, just to give you an idea, it's been going on now for about 10 years. Green Bay's population is 107,000 people. New York is about 8.5 million. New York had 6,000 people. Green Bay had 600,000 people. That's crazy. Yeah. It's now the second largest event that the NFL puts on besides the Super Bowl. It makes the most second most money to the Super Bowl. And it was just somebody going, "Let's create, let's let teams and cities bid on this, having it here, and we're taking it all around the country." And not only do they get all the sponsors and all the excitement and all the investment in the infrastructure, but now me as a as a fan, I'm in Wisconsin in Green Bay going, "It's never coming back to Green Bay in my lifetime. If I don't go now, I'm never going to see this thing." Versus, well, it'll

it'll be here next year. By the way, it's kind of crappy weather. I'm going to go next year. No, it's it's here once in my lifetime. So, it created the urgency for the fans and that's what brought 600,000 people through the gates in three days. So that's that's really what we create is this this this urgency, this scarcity, this competition within all the buyers out there. When you don't put an asking price on on that and you got the best story possible what the future is and how great this company could be and you're talking with all the right buyers that have all the synergies where one plus one equals three or four, not just two. That is the only way a business owner is ever going to know what their true value of the company is. And on top of that, they get to choose who the best fit is because it might not it's a lot of times it's not always the highest value. might be the second highest value, but they're going

to protect my employees or they have a better culture fit to mine than this other buyer or I get to leave in three months versus I have to stay for three years or vice versa. You know, there's so many variables that go into a deal and that's where the owners get to truly, you know, they get to finish strong like the book I wrote. They get to finish strong and choose who is that best fit for uh for the gener for the next generation of the business, the legacy, the employees and in in the community. Yeah. So basically, right, be careful about if it if you just have one offer, you're doing it wrong, right? Make sure that you have more uh more eyes to look into it and see. It's it's it's a shark shark industry. Yeah. If you're going to do one offer, it's flattering. It's exciting. Like if Joe, if I called you yesterday, go, "Hey, I really like your company. Man, you build up a great company. I would love to

buy your company." It's flattering. It's somebody's validated the five years of work that you offer. It's your identity, right? Because a business owner, it's your identity, their business. So it is. And you hear all the right things and that's what it is. They know all the right things to say to pump up your ego. And it's not, we all have egos. It's good. You have to have an ego. It's not negative. It's like, no, I built this thing and someone's validating my baby and telling me it's a good-look baby. And boy, your kid's a good athlete. And you feel proud for sure. But then you just don't know what the true value is. And they again, why would they why would they pay more than they have to if they're the only buyer at the table? Of course. No, it makes total sense. And that's and that's what and that's what we bring to the table. That's really with all the money out there, record amount of money, record amount of buyers, that is the

number one mistake business owners are making now. In fact, I was just at an EO uh national EO conference speaking to entrepreneur organization and these are well educated business owners more than most. And I one of the sellers raised a hand saying if you got an unsolicited offer today, how many of you would sell? And everybody kind of looked around and all a sudden hands started going up like yeah what I bet you it's like 50 to 60% of the room raised their hand. That's crazy. And that's right on with our study which that showed that 55% said if they got an unsolicited offer that they assumed was reasonable, again 60 plus% have never had a valuation done, but if they assumed it was reasonable, they wouldn't check with anyone. They would just do the deal. 55% in our national study. So that's why these business that's why private groups keep doing it because it works. Yeah. You know, because your business Yeah. you're never going to get the price that you want. And if

if you're really to sell right now, it's like you're looking for a way out. So you you're assu you're admitting that your business is not as valuable as it could be. So that's crazy. You don't know. You have no idea. And that and that's the game. And that's just private equity, family office, it's corporate. I mean, if we work for a buy side client, we do the exact same thing. We're trying to get sellers to raise their hand that aren't on the marketplace because we know we'll get a better deal uh than than if we were competing against five or 10 other buyers on the table, you know, around around the table. Well, that makes sense. And like now the next like logical question that I have is like okay well when when is the right time like when's the right time to to get started? Is it like okay now my funds the famous five year is it right now? Should I start right now like to start working with people like you or

when's I guess the better question is what is the average stage in business that most of your client come to you at? Yeah, it's it it varies quite a bit, but what what I would say is a good starting point today and whether you're in business for five years or 35 years is to get an RMA done is to get that real market analysis because that starts everything because you might find out that you're worth much more than you think or you might find out that you're worth a lot less but now you still have the energy and time to work on it. You know, if you're one year away, there's only so much you could do in a year before you sell your business. if you're 5, 10, 20 years away. Oh, now you know instead of trying to go over here, it's like, okay, here's here's the path and it's a straight line to get from A to Z. We can help you get there faster. Whether that's 5 years or 30 years,

we don't care. But that RMA is is really taking the time to understand, you know, what is that value? What am I going to net? And then again, sit down with your financial advisor going, hey, I might be 15 years away from selling, but you know, I think I'd like to live this kind of lifestyle. What what is that number? What is the number? because it might be six, it might be 26. You have no idea. But once you start understanding those numbers, now you can start to get in your mind of all right, I'm here today. Where do I got to go? And you know, because if you could get there three years sooner, why wouldn't you? Why would you get three years of your life back? And and one story I like to I like to tell when I'm speaking around the country is around the why wait is about my dad. And uh my dad, you know, was the youngest of five, born, I think, in 1946. And uh um he worked

all his life. His dad was not a very nice person. And so from like 10 years old through high school through college, he worked himself all the way through. And then and uh we ended up in a small town called Horon, Wisconsin. And the only thing there is John Deere. Uh and so he worked in the corporate office of John Deere for 28 28 years. And he came home from work one day on a Friday and my mom was home and it was just those two. And I was like, "Hey, how was work?" It was great. Really? Yeah. I retired today. And he was only 60. And he's like, "What? You're thinking about retiring? We haven't even talked about this." Yeah. No, I retired today. They gave me There was an opportunity to take advantage of an early retirement. They gave me 30 years versus 20 on my on my pension. They gave me a year's worth of severance and they're paying out my vacation. So, I basically got my two years. I got all

my money up front. I'm taking off now at 60. I'm done. I've been working since 10. Because he saw this opportunity he didn't know was there. Saw it. Took advantage of it. And thank God he did because he went golfing with his buddies. He traveled, came to see us and the grandkids and and did all the things that were on his bucket list for two great years. Just had a lot of fun and relaxed. Tra, like I said, I went to Florida, all over the place, Arizona. And thank God he did because at 62 when he should have retired according to the the plan. Um 10 days before my wedding, he had a massive stroke and he got, you know, playing golf, playing the best round of golf. got massive stroke, driven to a hospital, flight for life down to Madison, Wisconsin, and was told that, you know, he could die. He lived through that, you know, took another six months or a year to learn how to walk again. His mind and body was

never the same. Lived for five more years and then died of cancer. and he would have worked from 10 to 62 to have a stroke and die of cancer and and and lived, you know, a miserable last three to four years versus at least he had those two years to truly enjoy life and and anything he wanted to do, he could do. And and I just look at people going, why would you want to know today what your value is? Why would you want to get get an idea whether it's higher or lower than you think, at least you know the number and you can start planning accordingly. And again, we're going to give you the top one, two, three things you could do to enhance the value the most. So then you could do it yourself or like I said, get a coach and and now you're getting there quicker. If you can get five years of your life back where you can sell and live your ideal lifestyle for five years, again, why

wouldn't you? People get too stuck in the in the rut of I got to just keep doing this, keep doing this to my retirement age, or I have no idea when I'm going to get out and uh I want to make more money, more money, more money. And they forget about why they're doing it in the first place. and all of a sudden now they drop dead at their at their chair going, "Man, got a lot of money, had a nice business. What was it? What what how much impact did he or she have? How many memories did they make with their family and friends?" And all, you know, what else did they want to do in life that they never checked off the box? Uh, but they they sure ran a nice business, you know, and so it's just trying to get them to really look at their life at a holistic picture. I and we have a book and in the workbook like you talked about where one of the exercises in the

workbook is writing down what is my bucket list because people don't know what they're going to most times they just would know they don't want to be where they're at today they're running away from something so where are you going to and then also do almost write like we have an inner exercise of what do you want to be remembered for or almost like writing your eulogy like at the end of the day when you're gone what do you want people to say about you and then are you doing those things that you want people to say about you sometimes you are like oh man no I haven't seen my grandkids in a year, six months, you know, last time was Christmas. Yeah, maybe I should go if I want to be the best grandpa and and really impact their lives and my kids' lives, maybe I should spend more time there, you know, or whatever else it might be, your church or your community. So I think that's again just so going back to

what do you what should you do when is understand what your business is truly worth today and and then understand what you can do to enhance the value and understand what your net and your lifestyle number is and then you can make decisions for the next 30 years but at least you're starting to and I would say update that RMA every two to three years because of you know your company changes the market changes your company can be exactly the same you know think about uh you know 911 your company was one value on September 10th it was worth something completely different on September 12th because all this uncertainty I had two deals that were great deals that just fell apart like that. So it's you know all the things you can't control is uncertainty geopolitical wars interest rates co I mean all yeah so so you you always think oh it's always going to be good I'm always going to be healthy the company's always going to be great and unfortunately bad things happen

to good people and and according to EPI 50% of business owners go out not on their terms you know tied to what they call the five dismal D's you know death disability divorce disagreements distress things that you don't want to you know that's not how you want to leave the company or or your legacy. But yet 50% go out that way because they just wait until something happens to them. And I've seen that well way too many times of people that wanted to sell and didn't sell until they literally had a heart attack or had cancer or and like okay now I'm on my deathbed. It's time. But it took them to their deathbed to decide that there it was time to sell their business. That's really powerful. That's going to that that's that shook me and that shook that should shook a lot of people here as well. What what's the first step to um get the RMA? Like where do you where do you do that? Yeah, you can just give us a

call if you could put our information there. You know, our corporate number is 9204369890 or our website is cornerstone-business.com and uh you can you can reach out to us there. And again, everything we do is confidential. We'll have a discovery call with you. There's no obligation. There's no cost just to learn, you know, just to help every all these business owners learn because as you started out pointed out early in our conversation, it's so much of it is a lack of education. Yeah. And they only do it once, so they don't need to know it their whole lives. Yeah. And but they do need to learn enough or get the right people around them. And that's what we're here to do is help be a resource to business owners. And we work with a lot of financial adviserss in helping their clients sell their businesses as well. That's a a very large piece of our our business as well. If we can help out any financial advisors. Yeah. Cuz my my biggest fear looking at

um the selling process is the tax part, right? Because you never want like you work all your life for this, you finally get that $50 million offer, that nine figure offer, you got to get 30% away, 20% away, 40% away. Like how do you how do you mitigate that? And who do you work with to do that? Yeah. So within the deal, there's things between, you know, an asset deal and a stock deal. Like if you're a CC corp and you're doing an asset deal, you could pay as much as almost 50% in taxes. you get the double taxation versus if it's a stock deal, you're just paying capital gains. So, it's half the, you know, half the tax, you know, and uh and there's there's asset allocation that you can look at. There's u personal goodwill. There's a lot of different things we can do within the company. But really, the unique things come about working with the tax folks with a tax attorney, CPA, financial adviser well in advance of the sale. Yeah,

you know, gifted estates, you know, getting some gifted estates tax, passing some of the things on to your your next, you know, your kids if you want to do that. A lot of it can be done there. I mean, and there's so much that can be done to shield taxes or defer taxes and everything else. But to my point earlier, you can't wait until, oh, I've got a signed letter of intent or even worse, I've I've sold my business, now what can I do? Yeah. Now, you can pay the taxes and you're gonna pay full boat. you know, it's it's all the prep work before you go to market. That is where the real magic happens. And again, we can help negotiate in the transaction, but the real tax experts are going to help you much more upfront, you know, really set that up, whether it's a putting the business in a trust or whatever else it might be. There's a lot of different things you can do, but at the end of the day,

like the higher offer you can get, obviously, this helps the net part of it, correct? Right. So, it's it's powerful to get multiple offers on it. But yeah, but if you can structure it where you know you're paying, you know, 25% versus 45% or you're or deferring all the tax, you know, you can again, it's all about what the net number is. So you can accept a lesser offer, which means you could probably get out earlier. Yeah. If you got the right tax specialists around you, and that's powerful because you can shave off a million or two million bucks in taxes or or 10 million depending on the size of the company. Yeah. Uh and you can get out earlier and enjoy your life and make more memories and and have a bigger impact. Why won't you? But yet most people just go, I'll call my CPA after I sell my business to my competitor and I I took I got half of the value of my company. I paid full bone on taxes and

I net out this much and now my lifestyle isn't what it used to be or what it what it could have been and and they wonder why or so that they just keep going or whatever else might be. So that's where you know you I I love this podcast because you you really can help educate business owners on a topic that most people don't talk about. Yeah. Or it's a generalist talking about it. And uh look, if you talk to my wife, she will tell you that I'm pretty much an idiot about everything else but this little niche in the world. I've got 70,000 hours uh tied into helping business owners sell their businesses, understand value, and understand how to negotiate the deal and get multiple offers. But if you ask me how to fix the fridge, uh I'm cool. I'll just go buy a new fridge. That's not on anything else. I just write checks. But I do know a lot about this little niche in life. That's good. You seem to know a

lot about football as well. So that might be your second meeting. You have to know a little bit about football. That's good. The riches in the niches, right? That's what we That's right. That's right. That's good. Your your I want to go on the assurance 360 process. Um for a business owner who's never sold before, right? Which most business owners watching this should be there. What does a professional M&A M&A process actually look like? Right. M&A merger and acquisition. What happened that what what happens that doesn't happen when someone just takes a call from an an from an interested buyer from one offer? Yeah. No, that's a good question. So, t typically I'll just say that the process the national average is around 11 or 12 months to sell your company. Our average right now of course is about six to eight months. So, know that it's it's an it's a process. It's not an event. It's not like selling your house in a hot market that you're going to put on the market and

get two off, you know, seven offers the next day and it's done. So, it's going to take time. So, the first thing is getting that that RMA done. That's about 3 weeks to do the RMA and then whatever time it takes, you know, for the tax and the and the financial advisor, you can kind of all do that somewhat at a at a parallel path. But let's assume that the numbers make sense. So that way, so the first step is telling the right story. So again, most if you're accepting an unsolicited bidder, you know, if somebody's talking to you, you're going to piece mail some things together and answer their questions and everything else. What we're doing is we're taking your your legacy, your history, the current status of the company, your great management team, the products and services broken down by you know margin and divisions and you know why do you win business and what are the growth opportunities and putting the company in the best possible package that we can. So it's

usually a a deck of maybe 30 pages, you know, could be 20, could be 40, but it's really highlighting everything and the and the client signs off on every every single page so that you know exactly what we're saying. Everything's accurate, true. We're not saying that's not true. You we're putting the, you know, we go ugly early. We always say like, you know, if there's an issue with the company, you go ugly early. You want to tell the good and the bad up front. Uh so that's being done. At the same time, uh we're also doing uh our analysts and associates are doing research, excuse me, of who are the best buyers. And depending on what your company is, what industry it is, what size it is, and what's it what do you want in a deal? you know, do you just care about the absolute highest value or do you want to protect your employees or, you know, what's what's important to you? Do you want to stick around for three months or three

years? Um, we'll look at, you know, private equity firms, private equity firms that have companies in your in your space already, the ones that don't and are looking to get into your space, family offices that, you know, act like private equity firms but hold on to the businesses longer, you know, got more patient capital. Um, or we'll look at corporations, you know, private companies, more family-owned, public companies, large, small, domestic, international, and we'll do all the research about who should buy your company, who can buy your company, who should buy it, why should they buy it, and what are the synergies, why why does one plus one equal three? We'll put together that whole list. Sometimes it's 50, sometimes it's 350 people, you know, groups on that list. And again, you'll go through it all or go or some people go, I don't care who you sell tell it to, but just don't go to ABC Corp because I don't care if they pay double. They took my top salesperson. They're unethical. I would never

want to sell to them. Great. We blacklist them. So now we know we got the right story. We got the right buyer list. And then we run a very productive process. So if it's if if it's more a main street deal like sub5 $5 million revenue, well then it's going to be more of a reactive kind of shop approach is they're going to put it up on a bisby sell listing exchange site kind of like an MLS for business for homes but for businesses and they're going to wait for individuals to call. In our process it's a rightful approach. We're going to we're not going after individuals. We're only going after the private equity firms, family offices, companies, and and we're reaching out to them and emailing them and touching them multiple times to say, "Hey, we've got this generic opportunity." And again, there's a one-page what we call a teaser. So, we keep everything confidential. That's the biggest thing is that there you're employees, your competitors, your uh uh your employ your employees, competitors,

and customers should never know that you're thinking about selling your company. So, we do everything on a confidential basis. So, they get a teaser, they go, "Yeah, that sounds interesting. I want to learn more." or they'll sign an NDA or confidentiality agreement. We'll get that back. Then we'll give them the SIM or the book that we uh that we talked about before. They get that, we answer some of their questions and from when we go to market. So that first putting together the book and the research that usually takes around 3 to six weeks typically. And then once we go to market where some groups are out market three, six, nine months because of our team of six that are going to work on the deal, we're usually market for 30 to 60 days. So we're we're hitting the market hard. We're getting interested parties. We're answering their questions and we're getting them excited about this opportunity that it's not going to be around for long. And if you want to be get in it,

you got to put your best foot forward. So, we're getting all the offers typically within a three to four day period. Ideally, one day, but usually it's bleeds into two or three days. And now we sit down and it could be three, could be five, could be 20 different offers. We've had anywhere from two or three to 28, I think, is the highest we've had, but our average is right around somewhere between 5 to 10 most years going back the last five years. And we'll sit down and say, "Okay, what are all the values? What are all the structures?" I lay them out kind of apples to apples as best we can. And then the owner gets he or she gets to decide. They typically want to bring three to five through to the next round. So, we're not bringing everybody through. So, which ones do you like the best? Let's get rid of the low ball offers. Let's get rid of the ones you don't like their culture or the structure doesn't make sense.

Get down to these three to five. Then, we're going to bring those people in for a half day meeting. Kind of think of a long first date. They're going to vet us a little bit. We're going to vet them. We're going to show the synergies between our two firms or entities. And then we're going to go out and uh see the facility if there's anything to see. Uh and then uh again all confidential and then go out for dinner or lunch and just get to know each a little bit. And then it's rinse repeat. You want to do that all about within a week's time frame. So that's kind of a a heavy a heavy load. And then two weeks after the uh those meetings that we call management presentations. Then we get the LOIs. Now we're getting so the IOIs those offers initially would have been maybe just value or even a range of value structure closing time frame. keeping out all the legal ease or all the other stuff. Well, now we're going

from well, I'm thinking somewhere between 16 to 182 17.25 and the structure is this and it's all exact and then you're now it's when the M&A attorneys comes in and the tax folks come in alongside us and now we're negotiating because at that point in time the seller has the most leverage because there's multiple buyers. They all know it and they're competing, you know, to try to win this bid. So, we want to get as much into that LOI as possible with legal ease and everything else. And then once that framework's signed, now it's usually a you like to say 60 90 days, but it's probably more 90 than it is 60 to close. But now you're going through, you know, financial due diligence. You're going through uh negotiations. The buyer's getting their financing lined up. You know, it's it's it's not a fun time for anybody, but it's like it's just the thing you got to get to the you get to the other side. So you know so again about a month to

prepare you know two months in market a month or so to a month or two to negotiate the you know get the meetings and have the LOIs and then two to three months to close that's the typical time frame and what you're going to get from that is when you get those multiple offers you're going be able to see and you have the leverage you get to kick people out of the process that want to buy your company you get to figure out who are the best fits and it's just all that negotiation and that leverage that you have in negotiations when you get down to yep you get to choose who is the best fit for you when you look at the value, the structure of the deal, when you get to leave, the culture, the employee mix, or you know, take care of the employees, whatever is important to you. And that's wi without that, you get one offer, you're going to accept whatever it is. You're never going to know what the

other offers are. You're never going to know how much money left on the table because you did. Um, and you're never going to know what you could have got for your employees or anybody else because they just again they're going to pay as little as possible and and uh and then if you don't if they don't like it, you they'll move on to the next sucker and try to get the next, you know, next business owner to uh to agree to their low ball offer. Yeah. So, it's basically transferring the whole thing about Pomo. My takeaway is you're transferring leverage from the buyer now to you, right? If you work with someone like like you guys that has experience, you got the leverage now and you get to choose. It's like making a key hire for your company. Would you rather take the first guy that come in or have the choice of 50 people like that person and you have the choice except for compared to just taking the first person that comes in.

It's exactly right. Yeah. Because again, if the buyer has all the advantage when it's one-on-one, if you bring an investigator and at least it's even now there's knowledge on knowledge, but when you can get all the offers, you know, when you get multiple offers, now the seller has the advantage and that's the only way the seller gets that advantage. Yeah. There was a story that hit me as well a couple I think it was last year, you know, Patrick B. David, right? Mhm. So, he he sold his company um I believe for 300 million to private equity and I remember there was a video where he talked about just a year before um he was he was on market to sell it and the people the private equity firm looking to buy his company went into his office and he was asking everyone uh at his office who who works the hardest, right? Who who works the hardest at the company? They all said Pat, Pat. Like every single person said Pat, Pat, pat. They

went for dinner that night and the private equity was saying like, "Yeah, well, you know, we talked to everybody on your team and they all said that like you you worked the hardest, right? So, we cannot buy the company uh without you. So, we're we're going to give you again I'm going to butcher it, but like 20 million, $30 million, right?" Yeah. Uh and that's it. He was like, "Oh my god, like I cannot do this." So I think he spent like the next year or two um with like went to Harvard and and did like all the the sea level executive uh management courses and met with other CEOs and built his entire sea level team. Um, and then the next year or two years later, they came into the office, did the same thing. Ask everybody around and they all like, no one said Pat at all, right? I don't know if he trained his team to do that. But, uh, but he got that $300 million offer, right? So, that was uh

that was a pretty cool story about again that keyman risk and like you got to plan for it and know what what's the weakness of your business and and plan ahead. That's my biggest takeaway from that and the whole thing, the whole conversation. Yeah. No, I think that makes a lot of sense. And one story that I heard now I I I was not firsthand to this but I heard it through a financial adviser uh friend that I know so I believe it to be 100% true is a company similar to yours and you know digital marketing and everything else uh got an offer for 10 million bucks from a private equity firm and went to the financial adviser and said well you know do you think this is a good offer? He goes I don't know I'm not a valuation person. It's 10 million bucks. You want to sell for 10 million bucks? He's like well I don't have any assets and you know this and that and everything else. So he sold for

$10 million and felt really good about himself until one year and one year one year and one day later when the private equity flipped it for $150 million. So they just wanted to get capital gains treat but they would have sold the next day if they you know they just wanted to wait one year and one day to get capital gains treat but sold for $150 million. Now that's an ex extreme but that's that's real. I mean again we my example of the other deal was 20 $22 million that were left on the table. Yeah. And in 45 days, in 10 days, we had a signed LOI at 51.3 when they were going to accept a deal either at 25 or 31 from two unsolicited offers, you know. So, it's that's crazy. It is. It's the wild wild west. It still is, you know. And I always think of that because I started 27 years ago and there was no there was no websites, you know, when I started in in M&A and and now,

you know, AI and everything else. But it was it was all these mistakes that business owners were making and they're still making the same mistakes today even with all the knowledge out there. And again because again you're only going to do it once in your life and you don't want to tell anybody. Like I think roughly what was it in the study showed like 50ome percent said they're scared to death if if their employees find out they're all going to leave the next day. So they don't want to talk to anybody. You know it's like yeah you don't want your employees knowing but you need to talk with someone about this before it's too late and then the situation takes care of itself because you're no longer around and then it's peacemeailed out or shut down and and and everything else. So, it's it is it's it's uh that's that's that's the goal. That's why I appreciate you, Joey, of putting on a podcast like this and and trying to get, you know, really good

information of of a variety out to business owners because it's only with that that they can make well informed decisions. Otherwise, they just they don't know what they don't know. And and uh and I think that's the the the interesting part and I'll wrap up maybe with this is that when one of other thing in our study that I I thought was really eye opening why are the numbers so bad as we both talked about earlier. Yeah. We asked them how they got into business and again these are not they had to be around they have to be at least 5 million revenue and been around for you know 30 40 50 years. Successful. Yeah. Yeah. all successful mature companies and I so I sell companies I'm thinking oh you know sell what what percentage of those companies or the 750 companies you think that the owners bought the company by a third party like through someone like us what percentage would you think that was out of 750 I would say is it like

5 10% yeah it was 3% 3% less so only so 76% started the company bred them from nothing so they have no idea what to expect when they go to sell their company because they've never gone through it. 16% inherited from their family. So again, no due diligence there. They just got it turned over them. They 5% bought it from their boss, from their employer. So there's probably not much diligence there at all other than getting financing and things like that if it wasn't financed by the owner. 3% 3% had gone through the diligence, have gone through the QEVs, you know, gone through financial dig legal diligence and all the negotiation that actually know what to expect. Yeah. So when you think about boy there, you know, 76% or actually 92% um have never gone through this process. And if you look out there for private equity firms and other businesses when they go, what do we want to buy? We want to buy founderowned companies. Yeah. They're like, well, that's just interesting. Why do

we want to buy founder own companies? Because they have no idea what to expect. They have no idea what to expect and they're going to get beat up because they've never probably sold a company before. And uh so that's what you again that's what we're all trying to protect is just educate people and help them live you know the legacy we like to say is that we work with world class you know best-in-class companies giving them best-in-class results you know that they could truly uh live that we you know because again anybody can sell a company you can sell a company you can sell your company tomorrow with all the buyers out there but that's just a transaction we want to make it a legacy level deal you know we like to call it a leg where you know you can live your ideal lifestyle you know what you're going to do next zero regrets you get to choose who your buyers, you get to finish strong. So that's that's again why why work with

an investment bank versus doing it yourself. Yeah. Transaction of yep. I sold my company myself versus a legacy level deal of all of those things and having that peace of mind and everything else. That's great. And I think the first step is education, right? So I think first first thing I'll do after this, I'll grab a copy of your book and I'll I'll drop the link in the the description for those of you that want to get it. What can I expect from reading the book? It it's it's a lot of what we talked about. It's it is not a book on how to maximize the absolute most value in your company and work with cornerstone. It's really a holistic approach of whether you're 10 days or 10 years away from selling your business. It's a lot of stories. You know, some of the ones I told today probably and some others, but it's, you know, why do I when do I want to sell my business? Understanding what's important to me in a sale.

Understanding all the pros and cons of exiting. You might find out that you don't want to sell it to a third party. You want to sell it to your management team. Great. But at least you know the pros and cons of the nine or 10 different options. Um what do you want to do next? What are some of the value drivers? Uh what are the difference between different buyers? And uh and then really at the end of the day is what do you want to be remembered for? So it it's there's the book and then there's the if you go on Amazon it's also the Fit Strong workbook. And really the two together is where the magic happens. The book is good but you really want to get into the workbook and there's thoughtprovoking questions in there that you can reflect on. There's assessments that you can take and it's, you know, if you're looking to pass it on to a son or daughter, it's the whole chapter because people think, "Oh, that's the easiest.

I'll just give it to my kid." That's probably the toughest because now you're mixing family and what's fair with multiple kids and what if they don't aren't passionate like you or they don't have the same skill set. So, there's there's a whole chapter on there's two quizzes that everything in the workbook is mine except for two quizzes. A woman uh let me use her quizzes and she's brilliant. She's written a book. She's studied the entrepreneur traits all her life and and she's hired by some of the biggest and brightest private equity firms to help really understand do they have the right CEOs in place and everything else. So, it's it's just a good workbook. Like I said, it's a holistic you it'll give you a good holistic picture of of where you're at, where the gaps are, and what you can do to enhance the value. That's amazing. Looking forward to dig deeper into that. Uh Scott, I want to leave you with this. Your firm's mission, right, is to create a positive, life-changing events

and give owners the gift of both time and money, right? Absolutely. After 25 years, 400 plus transaction, if this outlives you, right, outlives us, what's the one lesson about selling your business that you would want every entrepreneur to remember? Yeah, I I think it's plan early, build a team especially around you and make sure you get multiple offers so you you you have that peace of mind. You know, at the end of the day, why did you start the company? What do you want to do with life? It's about making memories. It's about making an impact. And by starting the prepare earlier, by building a team of specialists around you, by getting multiple offers, by running a process, that's that's much more likely to happen. And uh and then you can do so much good with with the additional funds that you that you get in the sale. That's amazing, Scott. Well, thank you for your time. Was a blast. We'll drop all your links below in the description. Uh if you want to learn

more about what Scott do, Cornerstone, his book, everything's going to be below. Um again, thank you for your time, Scotty. It was a blast. I think we've uh educated a lot of people here, including me. So, I want to thank you for that. That was a that was amazing. Thank you, Joey. Thank you very much. Have a great day. Awesome. Thank you. And again, the only thing we're asking in return on our on our end is to subscribe, like it, give give some comments, give some questions for Scott uh that we can help you answer. Um, and yeah, we'll keep uh keep bringing on uh amazing guests like Scott and we'll see you guys on the next one. Have a good day. Ciao.