From Founder to Freedom: How to Plan Your Business Exit the Right Way with Todd Krough

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. We'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne, and the podcast is brought to you by Modern Revenue Strategies and their 10x ROI B2B Growth Guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome to another episode of the B2B Growth Blueprint Podcast. I'm your host, Mark Osborne, and today I'm very excited to welcome my guest, Todd Crowe. Now, I'm going to read Todd's bio to make sure I get this right. He's a seasoned wealth advisor deeply rooted in the world of exit planning and business transitions. Todd currently serves on the wealth advisory team at UMB Bank, bringing over 30 years of advisory experience to the table, expertise that he applies through a uniquely team-based holistic approach to helping business owners plan their exits with confidence and clarity. He's a graduate of Gustavus Adolphus College with a BA in Business Administration, and Todd's commitment to his alma mater continues through his service on the Alumni Association's board. He's also an active and respected presence in his community, an active member and incoming president of the Exit Planning Institute's Twin Cities Metro Area chapter, and holds a Certified Exit Planning Advisor, or CEPA, designation. Contributing his leadership also through roles with the Minneapolis Rotary. On a personal note, Todd lives in Plymouth, Minnesota, with his wife, Liz. Together, they enjoy family time, travel— I think he just got back from Europe— hockey, and golf. And he's equally proud of his 3 adult children and grandchild. So, Todd, welcome to the show.

Thank you. Happy to be on.

Yeah, I've been looking forward to our conversation. But before we sort of dive into some of the topics that you and I have been chatting about, Why don't you give our audience a little bit of background, sort of tell your story of, you know, what brought you to where you are today?

Sure. Yeah, you know, my grandfather on my mother's side was a big saver, and he got us started early and often into the markets. And this was, you know, kind of pre-computer, back in the mid-'80s and that type of thing. So I knew that I wanted to go into this line of work. Eventually, I landed with Fidelity Investments. So for over 20 years I was with Fidelity Investments. A lot of people have heard, large organization. And then I got involved with the local community here and what we would call the advisor committee with business owners. And I got my CEPA designation. And about 3 years ago, I came to what is now UMB Bank. And excited about it because I'm working with a lot of the commercial bankers that, of course, work with business owners. So it's that combination of my wealth advisory experience and then working with the business bankers and then working with the business owners themselves.

Ah, that's really interesting. And you and I have talked a little bit about how some of these business owners sort of want to put it off. And in insurance, they talk about no one wants to think about life insurance because they don't want to think about dying. And in exit planning, a lot of times people don't want to think about exit planning because they don't want to think about the business ending, partly because they love what they do and they're passionate about it. It's what gets them out of bed in the morning. Talk to us a little bit about how you work with some of these business owners to sort of create some prioritization, maybe some urgency around it, and some of those conversations that you have.

Yeah, I mean, I think like you and I talked before, I think that, you know, it's a very difficult conversation. There's a lot of business owners, you know, it is their life, right? It's almost like a second or third child.

Right.

And it's very, very difficult at some point to part. And we've talked about the terminology grow or go. So we're not just there only for the exit. I mean, they're going to exit their business someday, but we might be in a situation where we sit down with them and they still may need to grow to get to— we call it a value gap because at some point when they sell it, that business, how much are they going to sell and monetize? Because for most owners, they want to still, you know, have the same type of paycheck that they had when they owned the business. So, I think one of the big things that we'll do is we'll sit down with them in the initial assessment and kind of go through that. We typically will go through some type of a financial plan. We use eMoney. So, really what it does is it gets on paper what the value of the business is. To be honest with you, a lot of owners haven't even valued their business properly. Right. So let's get a proper business valuation and then take a look at, you know, what are some of the— hey, if they own some debt and that type of thing. But ultimately, if they were to sell it and monetize it, there's some taxes. Are they on track or are they going to have to grow the business? And so I think that's the first step because that also helps us. Well, where are the gaps? Okay. And a lot of owners, you know, you and I talked about that. And it's very common that most of their wealth is tied up in the business itself.

Yeah.

So they're going to have to monetize and sell that business. A lot of times business owners own their property, so they may or may not want to keep that building. You know, our other goal is once we sit down with them and they see everything that they have on paper, but also try to help them to start getting involved in, let's call it, the capital markets, whether they set up some type of a brokerage account or savings account, Hopefully, they have a 401 or some type of qualified plan that they can get started on. But it, you know, again, a lot of times when it's 90% of the value, we've got to get them to see that on paper. Once they see that, it's a much easier conversation. Yeah.

Well, and I love this concept of grow or go because it doesn't have to be sort of an all-at-once sort of decision of, well, when I decide that I'm going to sell my business, maybe 12 months out, I'll start to think about that. But in fact, if you look at that the things that make a business attractive to an outside buyer are also the things that make it more enjoyable to run on a day-to-day basis. And those are things like not being dependent on the owner. That owner dependency is very scary to an outside buyer. And it also means you can't go on vacations, you can't take time off, you have no work-life balance. And so, solving that is good on both ends of that spectrum. And likewise, a lot of businesses will sort of reach an area where they're happy because they have enough sort of discretionary income and then just sort of ride along and let things kind of fall by the wayside. But they're missing the opportunity to make some minor improvements in their business that might bring in automation or some tools that make it easier to run their business on a day-to-day basis. Not only does that keep them with the times, but again, it makes their life easier. It makes the business run more efficient. Makes that EBITDA higher, so they actually have you know more discretionary income coming out of that cash flow on a regular basis.

Yeah, and and I think you know one of the things that you know we we don't want just the small business to be sold, and then that business doesn't continue on. Like you said, a lot of times the business is the owner itself, so that owner is going to have to find maybe it's a general manager or somebody internally, or if they're to sell to another business and they take it over, that's strategic-wise. But I think that you know we as a community. Of advisors, and I think we even just as society we want to see that business continue on. Right? You've got a $50 million business with 50 employees. If that owner walks away and they were the only one that was really involved in doing a lot of the work, that business is going to fail. And we we want to still have that commerce. Right? We want those people to be employed, pay taxes, you know, do commerce. So you know, I'm very involved with, and we'll probably talk about this something called the Exit Planning Institute.

Yeah.

We have a local chapter here. Well, the National Exit Planning Institute, Scott Snyder is the president. He actually testified in front of Congress. Congress actually asked him and 3 or 4 other people that were involved in the business community, and they were concerned about how is that business going to continue on. They want to make sure, obviously we, the United States, want that business to continue on. You know, 70% of the people that are employed are involved with a small or mid-sized business. So, it's very, very important that not only do we get the owner their value when they sell, but we want that business to continue on after.

Yeah, and such a, you know, it really is the lifeblood of sort of the American economy is these small businesses. And startling statistic that I know you're familiar with, but not everyone on our audience might know, is that something like 70% or maybe even 80% of businesses that try to sell don't successfully sell because of a lot of reasons. But, you know, one of them is oftentimes it's owner dependence, or maybe they have too much customer concentration, things that scare off potential buyers.

Right.

Or as you talked about early on, just an inaccurate understanding of how much the business is worth. And so, having a really clear picture of the reality is so much more important. As people think about that so they can have a successful exit that not only, you know, provides them the lifestyle that they want afterwards, but also ensures that the business continues to thrive.

Right. Yeah. And I think that, you know, one of the important things is, I think once— so usually what we'll have is someone is going to come in, an advisor is going to work with the owner. Let's call them the quarterback. Could be the wealth advisor, to be honest with you, the wealth advisor. Now, we did a survey recently. So any of you, any of the folks watching this, the Exit Planning Institute, or whether it's the national survey, or there are several local chapters. So we're in what's called the Twin Cities Exit Planning Chapter, and we've done some surveys. And as you mentioned, we did one about 6 years ago in 2017, and the satisfaction of an owner selling was very, very low. It was about 20%. And a lot of it was whether it was the valuation or that the business continued on, but something really wasn't that great. And when we redid the survey in 2023, that jumped by about 20%.

Wow.

So, I'd like to think that, you know, because our community of, okay, you've got a wealth advisor that's working with them, but you've also got to have the CPA that's properly, you know, getting it from a tax perspective or the attorney that's drafting up some type of legal contracts. And a lot of times what we'll also have is somebody that's like a business advisor or business coach. that'll sit down with that owner and find out what they need to do. And again, it's, it's not typical that we just come in and they just sell.

Right.

It's going to take some time and figure out what they need to do. And if it's the grow part, hey, let's help them acquire another business or grow until they get to the valuation that they need. But there may be a time where, hey, they are really ready to go. And I think that business advisor will call the quarterback will eventually get the other team involved and hopefully they're like-minded. So as you mentioned before, I carry the accreditation of a CEPA or Certified Exit Planning Advisor. So I think the benefit there is that we're all, when we do it in a team approach, we're not working in silos. I think that's the problem before. You might have one advisor, but then they're not talking to the other advisor.

Right.

And you really have to have a team-based approach. And we feel that that has really helped out I think increased the satisfaction of the sales that have been going on.

Yeah, well, and like you, I also carry that CEPA designation. And the thing that I love about it is it creates a shared language. And, you know, I know, you know, an embarrassingly small amount about, you know, wealth advisory. I use experts like yourself. And similar to sort of the tax implications of selling a business. I know enough to be dangerous, and then I use experts that, you know, know how to mitigate those risks. But I can come in specifically through the lens of improving marketing and sales systems that de-risk the business for a buyer, that improve the, you know, sort of the structural capital to make sure that it'll continue to run and be successful, maybe achieve some growth if they, you know, haven't quite built the value that they want in their business. But and can dovetail really easily with those tax advisors, with those wealth advisors, so that we're all operating from the same perspective with EBITDA in mind. Whereas most marketers and sales folks just think about top-line revenue. They can't spell EBITDA. And so, I can come in and really dovetail in a nice way, which I think creates, as you say, so much more satisfaction for the seller. Or the business owner to be able to bring in folks that can speak the same language and advise them on different areas because there's just so much to do.

Right.

And it's a lot better to hire an expert than it is to try to figure it out on your own.

Yeah. And I think that whether it's me or the business coach or whoever that advisor is, I think that because, like you said, we're talking that same language. For instance, just on our local Exit Planning Twin Cities website, we've got the names of different members. And I tell a lot of people, hey, if you're looking for an attorney or a CPA or a business advisor, they're going to be able to go onto our website and know that they're like-minded.

Yeah.

And, you know, I do believe that, you know, one interesting statistic, and I just have to pitch that from a wealth advisory standpoint, is that one of the most recent surveys, they said the most trusted advisor is the wealth advisor. And I think Part of that was initially it was probably the CPA or even a spouse. But I think the wealth advisor is there, you know, before they sell, during the sale and after. And a lot of the other advisors, of course, might have their little piece before or after. But that wealth advisor, for the most part, is going to be with them through everything. So it's, you know, it's through the stages of growing, it's through the stage of selling, and then, of course, it's going to be after.

Yeah.

And you may even be dealing with additional family members and that type of thing. So yeah, it's interesting. I mean, it's— I really think that we have a lot to do because as you know, the baby boom generation is getting to that level where you're 65+, 65 to 75. But it's a tough group. You know, a lot of those, a lot of the men and women aren't ready to sell yet still. So we've got to get them hopefully to grow and figure out what their valuation is.

Yeah, so we talked about, you know, how it's something everyone's going to have to deal with and that it doesn't have to be put off to the end because actually tackling some of these things now makes your life better today. We talked about that there's a lot to be done, but there's a big, you know, sort of support team of advisors that have a shared vocabulary that can help you get those things done. But how do we break this down into not seeming like such a daunting task? What are some of the ways that you help business owners start to think about, you know, taking a bite out of that elephant and starting to move towards, you know, putting a plan in place that isn't so overwhelming?

Yeah, I mean, I think the number one thing is when we sit down is we'll go through an actual financial plan. I think that's the number one thing. And so, we use eMoney. And what we'll do is we'll start collecting data. You know, hopefully, they have a lot of the information. Maybe they already have it set up with another financial plan. We probably want to do evaluation of the business. So find out who can help that because that's going to tell us, hey, is that going to be enough when we sell? And then you're starting to collect other pieces of data that I think are very important. So for instance, I met with an owner who was still thinking about selling his business, didn't really have a legacy in place. But the number one thing is, you know, he was divorced. He hadn't redone his will in like 30 years. So 2 kids, um, you know, I don't even know if he had funded his buy-sell agreement. But, you know, by sitting down and talking with him and looking at the financial plan, you know, we can morph off into the tax side of things. We can go over into the legal side of things. Of course, I'm looking at the financial planning side of things. So as we see gaps there, that's where then I can pull— there's times where I'll just say, you know what, before we even meet again, you've got to go help You've got to go get some help on this legal part of things, or maybe something from, from the tax perspective. So I think the number one thing is, is getting a financial plan, sitting down with the client, the owner, and figuring out where we are there, because then they can see things a little better than just the verbal side of things.

That's right.

So they're going to say, hey, there really is a gap. I've got to grow this thing, or I'm ready to go, or I'm way behind on understanding the tax. ramifications, right? We talked about, hey, maybe, maybe on the sale of a business, if they're philanthropic, there's a way that they can avoid some taxes by being philanthropic from their gifting. And then of course there's the legal side of things too. So I think that the financial plan's the number one thing that I would say that we'd start out with and then kind of go from there where we see gaps.

Yeah, well, that makes sense. Well, and I think that's the work that you do specifically. So tell us a little bit about who you work with and, you know, sort of who should reach Reach out. What are the types of business owners that you work with or individuals?

Yeah, I mean, so a lot of my referrals I'm getting for the business owners is coming from the commercial bankers here with UMB. We also do, you know, we are a full, you know, we do the investment side of things, we do the financial planning. We are a bank where we can be a trustee, a co-trustee, a successor trustee. So we have a lot of trust business that's done here too. But I think the ideal, you know, client that we like to work with as a business owner that really hasn't done a lot of planning and can utilize our services from the financial planning side of things. And then I'm also a connector. So I wanna make sure that, hey, if it's something that I can't deal with, I could connect them with somebody else. Or if there's other types of advisors that they need that I know there's a gap, I've got a lot of different people that, of course, that I work with that I, and I can know, you know, once I get to know the prospect or the client itself, You know, I know there's going to be certain people that are going to work better with this type of advisor than somebody else. So I can be somebody that can be a resource for really anybody. Hey, you know, I need to connect with some type of an advisor. Let me know. They can connect with me. So I'm with UMB Bank. So it's just todd.crowe@umb.com. You can find my LinkedIn page. I am the president of the Twin Cities Exit Planning Chapter. So, you can look if you're in the Twin Cities or Minnesota, you can always look it up, look at us. Can I pitch something though that's coming up in the fall?

Is that okay? Absolutely. Yeah.

So, we, the exit planning group, we meet once a month. But in the fall in Minnesota, we always do what's called an owner's forum. And it's primarily what we want to do is get business owners to come to our event. And on October 9th, we'll have a large event that's a business owner event, which we primarily want to be for business owners. And our national chapter of the Exit Planning Institute is going to come in and run the whole thing with the presence of the local chapter. So go to the Twin Cities Exit Planning website and you can sign up for that. Hopefully, if you're a business owner, we'd like to see you attend, or an advisor also.

Fantastic. Well, Todd, you're obviously an expert in a lot of really interesting topics that we could spend all day on, but I got to be mindful of your time. But before I let you go, just, you know, so you shared something on the horizon that you're excited about with work with that Owners Forum. I know you and your family just got back from a vacation in Europe. Is there anything personally on the horizon that you're excited about or looking forward to?

Love to do more travel, you know, like you and I talked about. Just got back from Scandinavia after 17 days. So just figuring out what the next trip is. Yeah, we'll have to see what it is. Probably someplace warm. In Minnesota winters, we need it to be warm.

I bet. I bet. Well, we'll talk about some beach vacations next time we chat up a little bit. But Todd, thank you so much for taking the time to join us today.

Thank you very much.

All right. Talk to you soon. Thank you for joining this episode of the B2B Growth Blueprint podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate, comment, like on your favorite platform, and share to others who will find it useful. Do you know a CEO, founder, or leader at an early stage B2B services, tech, or SaaS company who would like to be a guest and share their story, send us a note. Let's schedule a conversation. Thank you.