BeansTalk
BeansTalk: Where Expertise Meets Opportunity, Mauldin & Jenkins' podcast, where we are sharing and showcasing our areas of expertise through conversations with practice leaders on their knowledge and experience.
BeansTalk
The Lifecycle of a Business Transaction: Maximizing Value at Every Stage
This episode breaks down key insights on navigating each phase of a transaction, highlighting the best practices for optimizing business value, managing challenges, and making informed decisions. Whether you're a business owner or an advisor, learn tips to find success through the transaction process.
About Our Guests
Tom Houlihan is a Managing Director at Mauldin & Jenkins where he is responsible for leading the Transaction Advisory and Valuation Practice. With over 20 years of transaction experience Tom has provided support for clients on over $3 billion of transactions for a variety of purposes and across a broad range of industries.
Andrew Denham is a Manager at Mauldin & Jenkins who leads our business development practice. He works with many professionals and business owners for business planning and transaction planning.
About Our Host
Brandon Smith, CPA, is a Partner based in the Atlanta office and the Advisory Practice Leader.
Welcome to Beanstalk, M&J's podcast where we are sharing and showcasing our areas of expertise through conversations with practice leaders on their knowledge and experience. Transactions are a common and natural part of the business lifecycle. Whether we're growing our business and moving to new geographies through acquiring other companies or merging in with them, or we're on the other side and looking to exit and sell our businesses, which is the topic of today's episode. I'm very excited to be joined by Tom Houlihan, the managing director of our transaction advisory space, and Andrew Denham, who leads our business development practice. Tom, hey, how are you?
Speaker 02:I'm doing fine. How are you?
Speaker 01:Doing great. Thanks, Tom. Will you do a favor for our listeners and just give some background around your experience and your role at Mauldin & Jenkins?
Speaker 02:Sure. Where to start? Probably at the beginning. I started out in traditional investment banking over 25 years ago mostly in the debt cap and market side. Transitioned into corporate transactions, corporate development with larger international corporations when I moved to Atlanta with my wife in 2000 after grad school. Worked in that arena for probably about six years, then moved to the traditional advisory side. Practiced in the advisory side for about 15, 20 years. and transitioned to, uh, Mauldin & Jenkins to start the practice, uh, transaction advisory evaluation and, uh, um, and due diligence practice, uh, by the year, a little over a year ago, 14 months ago. Um, we've, uh, we've, we built those practice, uh, but do a great job. I mean, it's just, it was a, actually an absolute need here at Mauldin & Jenkins, um, with the firm being size that it is now the client base that it is. I think, uh, that we're delivering an excellent service that, um, Yeah, that's getting a lot of traction and I think a lot of appreciation from our current client base.
Speaker 01:And Tom, your experience is going to be huge for this discussion today. So thank you. I'm also really excited to be joined by Andrew Denham, who leads our business development practice and is spending a lot of time talking to professionals and business owners in the space around business planning and also transaction planning. Hey, Andrew, would you also please tell the listeners a little bit about your background and role at Mauldin & Jenkins?
Speaker 03:Yeah, absolutely. Thanks, Brandon. So I actually started my career at Mauldin & Jenkins years ago and as a CPA. And then I've got into sales and business development and excited to be rejoined with Mauldin & Jenkins in the business development role. So a lot of my efforts are around connecting with and establishing new and deepening existing relationships with professionals in the marketplace. And a lot of that is connecting prospects and clients with our professionals in our office walls. And it's also connecting our prospects and clients with other professionals in the marketplace, which we'll get into a little bit later.
Speaker 01:Yeah, well, thank you so much also, Andrew, for joining us. And to that thought you just said, I'm kind of curious, even right now, what you're hearing out there as you're talking to business owners who are potentially navigating a transaction or some kind of business event.
Speaker 03:Well, sure, I thought you were going to give me a minute break, but I'll go right ahead and get into it. So, lot of business owners that we're connected with and are talking to, the first question, primary quesiton is all about value. What's my business worth today? What could it be worth in a different market, in a different interest rate climate? How could I enhance the value of my business? What are the levers that I can pull to maximize the value of my busienss? So, a lot of our initial conversations are geared toward the value of a business owner's buisness.
Speaker 01:And I imagine that that kind of drives into the potential need for a transaction. So, Tom. What are you seeing as some of the drivers about a transaction? Like, for example, a sale. What is really driving that move from value and working on your business to then having a transaction as a component of that?
Speaker 02:Sure. A lot of that comes down to where the owner is in their development or where they are in the business themselves. In a lot of cases, it could be just an individual owner that really doesn't have a succession plan, doesn't have anyone that's going to take over the business. And it's at a point in their lives where they're thinking about kind of taking a step back and enjoying the fruits of their labor. In some cases, it's a transition where you might be losing a key partner and the other partners aren't in a position to buy them out or they're considering a transition as well, too. And so they're starting the process of exploring what their options are for either raising the business or maybe taking on another capital partner, someone who's going to invest in the business. There are a lot of different factors that come into play, obviously. Those are probably the primary scenarios that we see. And Andrew talked a little bit about value. Obviously, that's what the first question always is, is where should... You know, where should I be thinking about selling this business? What is it valued at? But that is actually a constant theme throughout the whole process from the beginning, which is probably the first question. And then, you know, it's a constant theme along the lines of, you know, how do we extract more value from this business? How do we actually optimize what we're going to gain from this business? And from the first conversation that we have to them, you know, through to the last decision making part of the process, whether they decide to go through with a sale or not, we kind of guide them through the process of what they need to be considering.
Speaker 01:So business owners are taking a step back, actually trying to think about their business and what does this thing worth. And then from there, helping them kind of navigate whatever the appropriate path is for them. Like you were saying, you can introduce these concepts around like mergers and acquisitions and M&A and the transactions. So what's y'all's view on sort of the role of an M&A advisor in this space? Somebody coming in to kind of help and hold their hand and think this through with them as they're navigating concepts like value and then the M&A space.
Speaker 02:Yeah, and I'll let Andrew answer this because we actually just had a recent conversation about it, and he put a pretty good analogy out there, which is outside of kind of the context of the typical financial speak, but it really frameworks in Layman's terms the way the value should be probably looked at and articulated.
Speaker 03:Yeah, so first, I think it's important to understand, like, who are we working with? And that's the lower middle market. And lower middle market is roughly defined as privately held businesses that have $10 to $100 million in revenue on an annual basis. And the analogy that I use with Tom, because I like to break things down in simple terms and understandable terms, is selling a business, you can kind of relate that to selling your home, preparing to list and sell your personal residence, except there's no Zillow or other online platform to see how big your neighbor's house is, what it's sold for. There's no comps out there that are readily available, and you don't know how to vet the professionals that are gonna assist you through the transaction. When you receive a contract, how to view that contract or a letter of intent on a business, through the diligence process, who's going to inspect that home for you, appraise that home and actually give a third party assessment of value for you. And then when you do go to closing and view that the numbers are the numbers are what they thought you were going to be. Are they different and why? And then beyond closing on your business or in this scenario, your home, what's next? Did you think about that before the closing table?
Speaker 01:There's a lot that goes into it. And so the M&A advisor can kind of help you with each of those steps that you were discussing about. And I love that kind of example in parallel to selling a home that I think most people are experienced with, even folks who've been in the business world for a long time, but might be encountering a transaction related to their business for the first time. They've been through things that have similar steps. And so, Tom, when it comes to somebody who's kind of walking this process and doing the valuation and then working through the due diligence and preparing for a sale, what are some kind of missteps that you occasionally have seen or encountered in working with clients?
Speaker 02:I'd say the biggest one is not starting the process soon enough. More often than not, we see business owners deciding within six months of retirement that, you know, I want to retire and sell the business. And then they start, you know, asking the questions. Well, how do we go about this process? And, you know, what should we be thinking about? At that point, it's really too late to have a discussion about some of the things that might optimize the value that they're going to extract from business. Again, we're talking about value because, as I said, it goes through the whole life cycle of the transaction. You know, business owners, you know, have all, you know, a whole, I mean, whole realm of uh different ways of managing their business and their accounting and when they're doing it for themselves you know their business owners that just keep you know all their day-to-day in their head and you know they don't put it on a piece of paper they don't have a business plan um you know and some of them are very successful managing their business that way but when you go to sell business information is key and the ability to articulate where your business has been, how it's grown, how it's going to continue to grow, what the financials look like, and having the financials organized in a fashion and the operating profile projected in a fashion that is going to be well-received by a potential investor and is going to actually paint the picture of your business and tell the story of your business in a clean and articulate way. A lot of those things really take preparation. And there are a lot of components of the business that you know, the operating aspects, valuation expectations, things that maybe are a little bit neglected in the course of a business that the owner doesn't think are very important, but the investor is really going to want the information on. And, you know, be able to articulate what those things are and identify areas for improvement. That takes time. And if you have a two to five year time frame, to work with the business and be able to actually paint the picture and to clean up things that maybe, you know, aren't necessarily handled in a way that an investor is going to, you know, is going to see, you know, the trends in or see, you know, the necessary data that they expect from a seller or to be able to pay a top value for it. Those are the things that we can assist them with in the process as we have time. The more time we have, the better able we are to actually work with them on refining their business.
Speaker 01:Yeah, I can definitely see that as being a concern and a misstep because of all that goes into it and needs to be done to assist this transaction. Waiting too late can really hold you back. So when is the best time to start?
Speaker 02:Well, you know, as early as possible. And I say that, you know, when you're thinking about transaction, you know, maybe a three to five year timeframe is appropriate. But when you're thinking about transition planning, you know, it should be part of your long-term planning process. And, you know, every business owner should probably have a, you know, regimented process or even if it's annual, every three years, two years, whatever it might be, to sit down, take a look at their long-term plan and include transition planning in that. You know, there are certainly other aspects to be considered about transitioning beyond selling the business. You know, I mean, there are some tragedies that take owners away from their businesses. They're no longer able to actually lead. And if they don't have a transition plan in place, in particular, if they don't have a financial plan in place for how the business is going to exist beyond them, you know, those are the sale processes that come to us where the owner's no longer you know around or no longer available to operate the business and there have been it's been no planning done um you know where you're not going to be able to extract as much value out of the business that you would have if they had done proper planning so day one as soon as you enter the business whether you're starting it up you know whether you transition to you whether you purchased it day one transitioning. It needs to be something that you're thinking about. And it's not necessarily just your addition of sale. It is that transition process of what happens if I'm not able to operate the business.
Speaker 01:So, yeah, Tom, I like that a lot. This isn't just about transaction planning. This really is a few steps before that where it's business planning. It's having a business plan and transitions are a part of that business plan. So kind of tying that conversation we were just having a little bit ago about M&A advisors. Kind of, Andrew, how do you see those concepts coming together? Having somebody at the seat at the table to help you with being an advisor with respect to your business planning and how that impacts transition planning?
Speaker 03:Yes, a great point. And Tom touched on a lot of considerations that a business owner has to keep in mind. And it's hard to be an expert in one of those, let alone all of them. So our approach to being an advisor is creating a team of advisors for that business owner to create a business plan, exit plan. And hopefully one day that business owner is going to have a really big wealth event where we all can celebrate. Yeah. So a wealth advisor is important to have at that table to help configure what the goal is for that exit, what's the dollar amount that's necessary to carry on their lifestyle, and what's going to happen next after that exit. A business attorney. Not all business attorneys are transaction attorneys. It's important to have a transaction-specific attorney on your side when it comes to advising through a deal. There are several others. A state planning attorney could be involved. An investment banker could be involved. Sales side advisory and our transaction team should be involved as well. So there's a lot of different aspects of it. And I'll give one example of... And I'll preface this by saying that this example is not a client of ours, but we were connected with a business owner not too long ago who just went through a $20 million exit in the construction industry. And you think, congratulations, successful exit at the face value of it. In later conversations, we learned that he gave half of his business away last year to a couple of employees that raised some questions about compliance and was planning done. Estate planning concerns there. And then he was asking us after the fact what the tax liability might be and why the numbers look different on the settlement statement than he was expecting. He was unhappy with the result. And that's a sad place to be in because this business owner has worked really hard for the majority of his life and done really well. And we want them to be happy at the closing table. And he may not get another shot at this. So that's what we're here to educate and avoid happening in the future. The benefit of the advice and education and information that you'll receive early on in the process far outweighs any costs associated with that advice.
Speaker 02:And we're fortunate to, just to bridge off of that a little bit, you know, to be able to play that role and, you know, work from the perspective of already being a trusted advisor with Mauldin & Jenkins, basically being the accountant for most of the clients that come to us for seeking advice. We already have a relationship with them and they already trust us with the financial aspect of their business. I mean, we have a knowledge of their business that's very intimate already through our accounting relationship with them. So taking on that additional role and playing advisor and being able to build that team around them and to assist them with navigating the process of who they should be seeking advice from and putting trusted advisors in front of them, knowing that they trust us already and we already had that relationship with them. First of all, it's a very gratifying role, but it's also a very, I guess, responsible role that we play because we kind of have to lead that process. And with any transaction or with any advisory assignment, there has to be a lead that is the trusted advisor. And we play that role. We're fortunate to play that role.
Speaker 03:One other quick story I'll share from a client that is one of our clients is a conference call with their team of advisors. No transaction involved, just some planning involved. And after a while, the client was essentially on mute while their team of advisors were coming up with a plan, formulating a plan in real time for the client without their involvement. Then the client came in and said, yep, checks all the boxes. Let's move forwards. So it's really cool to see it in action when, you know, follow up what could have been with a non-client with what is with one of our clients who's heeding our advice.
Speaker 01:And Andrew, what you said earlier, too, about that, the goal is that this leads to a significant wealth event. I think that's something important to kind of reflect on because this isn't something we want to race into and rush into. This deserves the attention that it needs to bring in that team of resources in order to kind of help navigate this process and make sure we're moving through it. And I think, too, something that comes to my mind thinking along that concept of planning appropriately and giving us the attention it deserves is even maximizing value. Because we've talked a lot about value both directly and also just as a concept for this generally. What's y'all's perspective on how a business owner can work to maximize value while they're working through their business planning, while they have their M&A advisors going through for transition plan, considering all these different elements? I think a good theme is going to be maximizing value. What's something we can do to help maximize value?
Speaker 02:I think that when an acquirer, when you do decide to exit and an acquirer is looking at your company and you're going through the diligence process, in order to assist them, we get them thinking early about that process, about what exactly to expect when they're looking at your financials and what they're looking for. And so there are certain things, first of all, they're going to pair you against your industry peers. And if your EBITDA margins or your sales trends are... not really corresponding with the industry or with what the visitor competitors is being, there are going to be questions about those. And you're not going to maximize your value if there's something adverse or something about your financials that draws questions and maybe has a negative impact. You know, revenue stability, employee retention rates. If you have a lot of turnover with your employees and your staffing, it's something that you need to put the thought into. You know, there are a lot of managers out there, a lot of people who are managing businesses that maybe don't put a priority on their staffing. And for whatever reason it might be, you know, they have a lot of turnover. And in order to address that and make them aware that, you know, it might not be a priority right now for your business because your business is operating fine. And you're content with the amount of turnover that you have. But when you decide to sell, if you get to that point, the acquirer is going to look at the trends with your employment and they're going to ask you questions about it. And you need to be ready to answer those questions. Or we need to address turnover at this point. Is there a satisfaction issue? Is there something about the work requirements? It's something about... the pool that you're bringing your staffing in from, whatever it might be. But those are the questions that we would ask and have them prepared to either address or to answer when they got to the transaction process. And these are long-term planning things. Customer retention rates, profit margins. These are all things that we would look at with the client and make them aware of what they should be thinking about as they build their business, as they spend the first three to five years preparing for that exit.
Speaker 01:Because a potential buyer, they're going to be studying our business and they're going to be asking us questions. So let's start studying our business ourselves in the same manner and answer those questions for ourselves to prepare for that event. Now, what are kind of the risks of waiting too long, of not moving fast enough and thinking early enough on these considerations?
Speaker 02:But, I mean, I'll go back to the trends. If you have... You're going to have to answer a lot of hard questions in the due diligence process. And maybe we can talk about the due diligence process a little bit as well. The due diligence process is a process where you're basically... opening your coverage. You're bearing every piece of information about your business that the potential acquirer asks for and wants to know about. And so they're going to be looking at things that maybe you haven't put a lot of attention into or things about your business that you could have done a little bit better, but as an individual operator, maybe you didn't have time for it, it was an area of focus, whatever it might be. Those are the areas that if you just start thinking about them six months in advance versus three years in advance, all you're going to be able to do is prepare answers. And you're not going to be able to extract maximum value out of your business. If, for example, your operating margins are going down when your industry is on a tear and all your competitors are actually increasing their operating margins, when your sales have been static over the years or they've been declining for one reason or another, or if you can't articulate what your customer base looks like, if you're asked for a list of your customers and what the revenue has been for the past three years, that's really information that you haven't been tracking. It's something that you really haven't been paying attention to. Because you just either organically know it or it's not an important place for you to spend your energy because you're stressed between 50 other things. But those are things that are going to be a priority for an acquirer. And they're going to want to look at those things or understand who your customer base is. And if you don't have that information available for them, it's not something that you can just fix, you know, three months, six months ago in the transaction.
Speaker 03:So essentially, the longer you have to prepare, the more options you have. The less time you have to prepare, the more limited your options and more limited the advisory team is going to have to help you.
Speaker 02:You want to address all the uncertainty that you can when you're going through the process and be prepared to address that uncertainty or the questions about ambiguity in your business model. And if you can address and clean up that ambiguity... You'll extract more value because the more ambiguity there is about your business and about the underlying factors that are driving your business, the less an acquirer is going to be inclined to pay for your business because there's more risk associated with acquiring that business and operating it.
Speaker 01:So we've covered quite a bit in terms of when it comes to how this really ties into business planning. And as part of our business planning, having transaction planning and transition planning as a component of that, which is something that we need a team of advisors to assist with. And an important thing we'll need to keep in mind is maximizing our value. And to maximize our value, we need to give ourselves time, time to really study our business, answer the hard questions ourselves, and be prepared for other people to come in and look at it through that lens. I'm curious about trends in this space. What trends are you seeing, especially Andrew, as you're talking to business owners?
Speaker 03:So the biggest trends that I've heard about as I'm talking to professionals that also are working in the lower middle market is around quality of earnings reporting. And I'll go back to residential housing to use that as an example of what quality of earnings or QoEs are like. If you're preparing to list your home for sale, a QoE will be like going ahead and getting an inspection or appraisal on your home before you market your home to the public. So you'll know about any deficiencies or issues that either you're going to go ahead and fix or know how to address or factor in the value of your home when you list your business after that QoE is done. And the trend is about a handful of years ago, it was far less common for sellers to get a QoE done on their business before they market it for sale. Um, about one in five is what I've been told a handful of years ago. Now that's flipped to about four out of every five businesses in the lower middle market are now open to and getting quality of earnings reporting done on their businesses before they market their company so that their advisors know how to address questions from buyers. They can get out in front of any issues. They can factor any issues into their value or have a decision on the timing of when they go to market to sell their business. And I believe that that's that will help keep more deals together. You could imagine if you're trying to sell your home and you didn't know about a big issue with your house, a buyer finds out about it. They're either going to say, what else are you hiding from me? Or they're going to just totally cancel the deal altogether or want to renegotiate the price and all the terms. That's what's happening as a trend of the lower middle market space for business transactions.
Speaker 02:I mean, there's a lot to unpack there, but I think the biggest thing from a seller's perspective, and in particular, you know, the individual business owners, private business owners in that middle market space is, you know, these individuals are trying to pay as light a tax load as possible. And a lot of personal expenses might be running through their business or expenses that, you know, would otherwise be personal. For example, a vehicle, fully loaded medical expenses, whatever it might be. But those are items that when they sell the business are actually going to be cash flow that is released back to the business again. And so when you go through a QoE process, you take a look at owner's expenses. Maybe an owner is taking a $400,000 a year salary and a manager is going to replace them. That will make $120,000 a year. That's one of the things that in a QoE process, you would take a look at and go, you know, this is something that actually was going to add a little more value to the business because when you replace this owner with a manager or with someone else who's managing the business at market rates, it's going to be free up a lot more cashflow for you. So there's actually value that needs to be attributed to that in the sale price. And you try to recapture some of those items that, you know, otherwise just might be look like normal business expenses. You have to be prepared to rationalize them and explain what they are. But that's really what you go through in the QoE process. You look at the business, you break it down, and you identify areas where maybe there are some inconsistencies that need to be explained or that maybe lead to charges that need to be added back or expenses that really aren't related to the normal course of the business and need to be added back to increase the value of the transaction. The QoE process is something that every seller needs to be prepared for. And it's a very rigorous process where, again, they're just basically opening their books and having to address the information requests related to their business that if they're doing it on their own, it's going to take them away from their business. They're going to spend a lot of time actually addressing those questions. And there's always the personal attachment, the emotional attachment that sellers have to their business. And if you have someone coming in and asking questions about it and being what seems like critical, probably to an owner that's emotionally attached to the business, it creates another layer of opportunity for maybe some less fluid movement to the transaction that would otherwise be done away with or eliminated by having an advisor that has prepared you for it, that is acting as intermediary, that's actually already addressed the information needs by making those requests themselves and putting it in place to be ready for the process when those questions are asked by the potential acquirer.
Speaker 01:And when we're kind of diving that space of due diligence and having to open up our books or records to people, what are some common challenges you see in that?
Speaker 02:You know, beyond getting the seller, the owner of the business, comfortable with saying, yeah, actually, that expense is related to... my personal car expense. And that's actually my son's car. Uh, and, and identify what the personal expenses are and, and getting them comfortable with the fact that this is actually going to add value to your business because these are normal charges, of course, of business. Um, the next, the next thing is, is actually making them aware that maybe some of the things that they're doing with accounts receivable with the way that they're invoicing, um, some of the write-offs that they're taking, um, or some of the inefficiencies that they have in the way they're operating their business are going to be highlighted and they're going to be inquired about and preparing them to address questions about those things so that they have a clear, articulate response to the acquirer's questions and they can leave no doubt about where the opportunity is either to enhance the business and to address those items when the acquirer takes over the business or that they're not impacting the bottom line.
Speaker 01:So what in y'all's mind would constitute a successful transaction? To where we've been following the right playbook, we have the right advisors, and we're doing what we need to do. We can answer those hard questions and be prepared for this because we've been asking them of ourselves. But what does a successful transaction look like?
Speaker 02:When the business is prepared for that transition, when it's prepared to undergo that scrutiny, when the owner is prepared to transition the business and is prepared to answer the questions about the business and prepared for the process itself. It's a long, arduous process. And, you know, there are ups and downs in a process when, you know, the value that you start out with might not be the value that you actually receive from the business. But understanding that, you know, that the business is prepared to sell, the owner is prepared for the sale process as well, And finally, that you extract as much value as possible from the business because they're prepared. I say those are probably the three categories I would point to as a successful transaction or what leads to a successful transaction. But setting expectations on value and extracting as much of that value as possible is the ultimate goal.
Speaker 01:And potentially that significant wealth event too that you were kind of describing earlier.
Speaker 03:Yeah, absolutely. That's part of it. And I would say it's much harder to measure, but our goal is for the business owner to be happy and satisfied for that business to be successful after the transition, after the exit. So if you talk to the business owner a year after the exit, and they're happy, because there's countless stories of, I wish I would have done this or known this or done that from a business owner that exited. But talking to business owners that are happy with the results a year after, they're happy with what they're doing now and the result of the exit and beyond, I think that will be the measure of success.
Speaker 02:To go back to an earlier point, I think that having the whole team in place, the right team in place, so that every nuance is beyond just getting the transaction done and getting the client ready for the transaction, but having the tax, all the tax issues addressed and being able to optimize, you know, the amount that's actually, you know, that's actually received for the business and tax avoidance, tax planning, estate planning. Where does the money go once you've, you know, received this, you know, this payout? And having advisors in place prior to, you know, having this check deposited in your bank account and understand what the tax consequences are and what you're going to do to optimize your tax situation. Having all those advisors in place before the transaction actually, you know, either processes or before it's completed is, I think, you know, another, another factor of success beyond actually just getting the transaction done and extracting as much value as possible.
Speaker 01:Exactly. Cause that would, to be in a position to where a year off the transaction, you can look back on it and feel like you did what needed to be done. You had the support you needed to have and that no stone was left unturned to maximize the value of what you had ownership.
Speaker 02:And to go back to Andrew's example about the individual that sold his business and then had all these questions post-transaction and still to this day can't figure out why he didn't realize anywhere near the amount of yield on the sale that he expected to, and that was articulated in the value, even in the closing documents, that he couldn't understand why he didn't receive that value and was still upset with the outcome of the transaction years later. That means you did something wrong. That means you didn't address all the client's needs in the process of working through the transaction and the post-transaction process.
Speaker 01:So before we wrap up with this session, I'm really curious of y'all's kind of overarching advice. We've talked about a lot of really good themes here, but what's a big takeaway from each of your perspectives that we can leave our listeners with? Tom?
Speaker 02:Having the advantage of advising not only business owners and clients of ours on the process of thinking through the sale of their business, but also advising business on the investor side, advising private equity and private investors that are buying these businesses. I think the one thing that I see, particularly from individuals looking to sell their businesses, they're inclined to try to go at their own at first. In a lot of cases, they feel like maybe getting advice is going to be too expensive or the hiring of advisor to walking through the process or to assist you with the sale process is going to take a big chunk out of your proceeds. At the end of the day, I've seen more value lost because business sellers haven't sought out advice and have tried to go about the process themselves and either had to find advice late in the process because they get lost in the process or try to complete the process on their own and lose a lot of value because they simply weren't prepared to be selling their business and hadn't prepared the business for sale. And again, that emotional attachment is another factor that comes into play. And all those things combined, for an individual that has been running a business and decides that they're going to exit it, seeking out advice is the single best thing that they could do to extract as much value as possible. And that advice, is going to cost significantly less than the value you're going to create by seeking out advice.
Speaker 01:Yeah, it doesn't feel very intuitive, but it's so true. You know, it's like the most expensive advice can be not getting advice at all, not engaging advice at all. That's right. Andrew, same challenge to you. What's one last takeaway we can leave our listeners with?
Speaker 03:Yeah, so hopefully... One big takeaway from this conversation is that the knowledge that there are professionals in multiple facets of transactions that are out there that do this on a daily basis and do a really good job at giving advice and preparing business owners for that transition. And the number one question that it starts with for us is, What's my business worth? What's the value? And that's the easy part for us. Knowing the value, knowing the multiples in the market, the trends, the analysis and the diligence and having the professionals to put a team in place to really make it a successful transition is the easy part for us. The most difficult question and what I would offer as a piece of advice to business owners is understand what's next for you after the exit. So we're helping business owners, not just in their, you know, 70s or 80s that are exiting their business and, you know, going into retirement. We're helping business owners in their 60s and 50s and 40s exit their business. So it's really important for them to have a plan of what's next for them after this business. And this chapter is closed. All are part of the way. Know what you're going to do next and be successful at next. Enjoy next for that next chapter in life.
Speaker 01:Wonderful. You both delivered. Tom, Andrew, I want to thank you so much for taking the time to join me for this episode. And I also want to thank all of our listeners who tuned in. If any of you have follow-up questions on these business items we discussed today or any other business challenges you're navigating, please don't hesitate to contact us. You can reach us at www.mjcpa.com and click that 'Contact Us' button. Thank you.