When and How to Sell Your Small Business – Seapoint Business Advisors – SBS 61

Small Business show at BusinessShow Co Episode 61 for Wednesday, April 6, 2016.

Greetings.

Folks, and welcome to the small Business show at businessshow Co. The small Easy for me to say. The show for and by folks in small business, the unsung heroes of our economy, as Shannon sometimes likes to say. Here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. And I love that unsung heroes phrase because I really believe it's true.

Yeah.

And how are things out in your neck of the woods, sir?

It's spring, which means we had a snowstorm yesterday.

I saw those pictures. That's insane. It's like 85 here today. Of course.

Yeah, yeah, mostly melted anyway, so we didn't even have to shovel. So that's the beauty of the spring snowstorm in New England is you watch it come down and you don't even have to worry about it. In fact, our plow guy didn't come and we were like, that's kind of weird. He didn't come because I kind of figured he would want money. But it's a limited window of opportunity, man, before the sun takes care of it all.

That's awesome. That's awesome. Well, hey, today we are joined by Bob Grewall from Seapoint Business Advisors. And Bob, we're going to talk about a number of things that Bob does with his business. And Bob, welcome to the show.

Thank you for having me.

Good to be here. Yeah. We really appreciate you giving us the time today and get us started here with a little bit of background about Seapoint, what you guys do, how long you've been involved with the company and just little tidbits for our listeners.

Sure. Collectively, our Firm has about 20 years of experience selling companies. We sell small to medium sized businesses. We think of ourselves as folks that fill in that gap between business brokers that might sell mom and pop shops like restaurants and retail shops, versus an investment banker which may sell 100, 200 million dollars. Business when we define small businesses, we're really defining them as businesses with revenue somewhere between 1 and $30 million. And that's what we do. That's all we do is just sell companies for business owners.

That's awesome. And what do you love most about your job?

You know, the thing that I love most is the first time I meet a business owner and I sit down and I learn the history of the company, how they started it, all the blood, sweat and tears they went through when they built it. And today they have this successful company they're proud of and they've made such a good living for them themselves doing it. I love hearing those success stories. And I meet so many different folks with so many different types of businesses. It makes my work so much more fun. I look forward to Mondays. Most people don't, but I actually look forward to it because I get to meet different business owners every week. And that's so enjoyable for me.

That's so cool.

I've already got like a laundry list of questions.

Shannon.

Oh, yeah, go, man, go.

Okay, so how. And I'm going to go out of order because there is no order. How many businesses, I mean, you say you get to meet new businesses all the time. How many businesses do you work or do you work with every year? And then how many do you wind up selling every year?

That's a good question. Generally, I work with about. I get 10 engagements a year. Any more than that, it's just too much work. And my wife starts to tell me that I'm working too many hours. So I definitely try to keep my clients to about 10. And then some of those businesses don't sell. Sometimes there's something that an event that happens with the business or the business itself isn't well received in the marketplace, and we can certainly talk about that in a bit as well. I sell about seven companies personally. We have four intermediaries at my firm that do the same. When you try to sell larger companies, oftentimes you'll have to reduce the quantity of businesses that you are going to sell because some of those larger businesses do take an enormous amount of resources and time and effort to sell. So it generally varies, but generally it's 10 businesses and we sell seven to eight of those businesses per year.

All right.

You'Re doing some. I mean, probably just naturally in the course of the kind of. The getting to know you process, you're sort of doing a weed out too, of, okay, we're only going to take on these businesses that we believe we can sell to whoever it is we sell to, correct?

That's correct. So we kind of. We do a lot of. We go out, we meet with owners for free. We don't charge anything to meet with them. And so we do. We have to filter out opportunities for the marketplace. So when buyers come to us or they're seeing screened businesses, businesses that are generally profitable, more often than not healthy. I mean, if there's something that's distressed about the business, that's a special circumstance. But we typically get involved with profitable, healthy businesses.

Yeah, that makes Sense. And do you work only on commission or is there a fee that the business pays? And I'm not looking to turn this into a marketing pitch for you. I'm just asking because I'm curious. I was curious.

I prefer the marketing pitch. That's all right.

I didn't figure you were going to balk at that. For the sake of our listeners, hopefully they're having the same questions. Right, sure, sure.

So we do not charge any upfront fee. There's no retainer fee. There's no cost if we don't sell the business. It's just strictly on a success fee. We like to call it a success fee because it sounds better than commission. But essentially we only get paid if the business sells.

Right. Okay.

All right.

Okay. So you really are. I mean, your customers know that when you bring a business to them, this is not just something you're doing so that you can, you know, siphon, you know, money out of some unsuspecting business owner. And it's never going to sell you. You truly believe that you're going to be able to sell this business. And that's a great thing. I've always said, you know, if you're going to engage any sort of partner, you know, in any, in any way, it's always good to have your interests aligned. And it sounds like you follow that philosophy.

That's true. And I would advise all of your listeners to be really, really careful. If you're working with anyone that's charging a very large upfron fee with the promise of some exorbitant price because you may very well not sell that business and they will keep that fee. I'll just be very, very careful about doing that. I don't recommend anyone do that.

Yeah, I'll run into those people. I'm sure you have.

Yeah, yeah. So it didn't take long. I mean, I was probably in business a few years before those kinds of letters started making their way across my desk, where it would be, I guess maybe they would be considered a broker or something like that. But they use all kinds of different names, but they typically are, oh, I have a buyer. We have buyers in your industry. We'd like to talk to you. And, you know, as a new business owner, you look at these kind of things like, wow, you know, maybe somebody's interested in buying my business. But a few phone calls later, you realize there is a lot of companies out there doing just what you're advising against, you know, charging a substantial fee just to get involved in the, in selling Your business?

Yeah. An upfront. An upfront non refundable fee. Yeah. That's awful.

Yeah, it is. And I guess I don't have a question other than more of reiterating your. You know, it's great to know that there are companies like yourself that are out there that will get aligned with a business owner, because I imagine you look at a company and it's in your best interest even to say, hey, you know, we don't have a fit here. We don't think we could sell it, or maybe we couldn't sell it for what some expectation is.

Right.

Because you don't want to waste your time because it's money.

Correct. So what we'll do is we'll sit down with a business owner and give them our opinion after some analysis of their financials and give them an idea of what we think the market value of the business is. And if they're on the same page in terms of their expectation, we will be interested in working with them. And you know, obviously there's. When you, when you estimate the value of anything, you never really know until you go to market what it actually is worth. So we're essentially making a very educated guess based on comparable data that we have in our databases and then also just our own experience being in the marketplace. So if we're on the same page, then yeah, we'll happily go to market. I do want to amend one comment I made. There are certain times or certain instances with very large companies, let's say it's above $100 million in revenue, where certain firms, typically an investment bank, will charge an upfront fee and those are oftentimes necessary because there are a lot of expensive resources an investment bank may want to put into it. And they also want to know that the seller is truly committed to it and not just kind of fishing for offers from an intermediary just to either entertain themselves or satisfy their personal curiosity, but to show, but to show that they're really committed to the process. May charge an upfront fee. But generally if you're a small to medium sized business, I do not think you should pay any upfront fee to sell your company.

Yeah, that's great advice.

Thank you.

Yeah, that's awesome. Yeah.

So who, who are your, who are your customers? And I guess I mean that in both ways. You know, are there certain businesses, types of businesses, markets that, that you find you, you work in better? And then who buys these businesses? Who do you go to to sell these?

Sure, it depends on the size. So when you're talking about a very small business. Let's say if it had 800,000 revenue or a million in revenue. Sometimes those businesses are a combination of a job and a business. It's really both. When you start to get larger and there's more management in it, it becomes more of a business. And sure, the owner is coming in and working, but as the business gets larger, you typ have so much management that the owner doesn't come in for a few weeks. The business is going to keep on running. And so in those instances, you have more of a business. And those kinds of buyers for the larger businesses tend to be much more sophisticated. And today buyers typically come in two categories. For those businesses that exceed maybe 5 million in revenue, you're going to get a strategic buyer, which may be a buyer that sells products that complement yours or a service that complements yours. And you also will have a financial buyer. A different financial buyer is one where they just want the actual income from the business. So they're willing to either borrow the money or they have the capital in house to purchase your business and they will just essentially generate return that way. But strategic buyers are interesting because oftentimes there's economics in there that make it so attractive. They often will pay a higher price. But what's so interesting about today's market is that interest rates are so low that oftentimes financial buyers are even bidding higher than strategic buyers, which is very rare, Very rare. So it's kind of an unusual market today because money is so cheap to borrow for buyers and it's a very good time to sell for a lot of owners as a result.

That's good to know. Yeah. So for small business owner, what do you think the biggest misconception is when they start thinking about selling their company? Is there something that you kind of hear over and over again or something commonality in the thought process that's not correct.

Boy, about a misconception. I think sometimes when sellers are on the inside running their business, they forget that somebody on the outside looking in or even if it's a different company, they may not. They're not going to have the same comfort level that the seller is that the seller has today. So, you know, maybe they don't realize the importance of having really good books and records and having really good profit and loss and balance sheets and showing them in such a clean way that anyone that's looking at them will clearly see how much profit the business generates. So sometimes they run it in such a casual way they think, oh, this is so easy. Somebody else is just going to be able to come in and just be just as comfortable and be as successful as me when they really won't. Because, for example, there's probably no operations manual. Maybe they're running a lot of personal expenses through the business. All those things make it harder to sell, and it's not that easy to sell a business. There's a lot of scrutinizing of the books and records that happen when you sell a business. So oftentimes, I think sellers realize it is an arduous process. There is this due diligence period where buyers go in and they want to really make sure that they're getting what they're paying for. So during that process, they're going to be going through a lot of records. And it seems very tedious for sellers. So sometimes sellers are not prepared emotionally or even physically ready to sell the business. They don't have a lot of their records in good shape.

Is it.

Go ahead. Go ahead.

Sorry, I said I wasn't going to step on you, Shannon. Now I'm stepping on you.

Go ahead, do it.

Yeah, well, no. Is it common? Because we're still talking about, you know, even at 5 million in revenue, annual revenue, I mean, that's still a business that I would consider small, you know, because it's typically not too many people and you sort of manage it the way you manage it. But is it common because of that? Is it common for business owners to have to restate their financials in a way that reflects what the business would look like to someone else? For example, you might run a vehicle or something through the business. That is one of these things that. Yeah, the IRS allows it. But really, if somebody else is looking at it, well, that's actually kind of profit. Yes, it's allowed profit. It's deductible profit. But you know what? This other person's not going to run it that way. So. So is that sort of a common thing? How do you address that stuff?

So the common measure for businesses, let's say, for example, for 5 million. I know you mentioned it small, but you would use an accounting term called ebitda, which is earnings before interest, taxes, depreciation, amortization, and we also recast the financial statement. So we'll go in and we'll figure out what the owner is paying themselves. And just like you said, we'll go in and add back an owner vehicle. And sometimes there's other things written off on there. They might have a private plane or anything else in there. That's discretionary and those items are. There's a variety of different ways to spend those monies. I mean, I don't think, for example, maybe there's even equipment that really wasn't necessary that they purchased just to reduce their income taxes. So we do recast the financial statements to really show what the actual earnings figure is. Now in addition to that, though, sometimes if there's a strategic buyer and we can see economics that are very favorable for a transaction, we can also create a set of financials that show what a combined operation would look like. So all the folks can kind of look at and see really this makes a lot more economic sense and it could be a very attractive and lucrative outcome for the seller, but also for the buyer. With the combination of the two companies.

That'S really you providing a lot of value, I mean, to the whole equation there, which obviously is the point. That's.

Yeah.

Huh.

That's right.

Yeah. So you, you'll like. Should the expectation of the, you know, the business owner that's selling be that, that an advisor such as, you know, c point is going to help walk them through that process or that they should already have those things ready to go.

So we, we often will meet sellers two years, maybe three years before they're ready to sell. They're kind of just in this discovery phase where they want to just learn a little bit more about the process to do. So we'll sit down with owners and just go over their financials, go over their systems and their processes and talk about where can we make things a lot more efficient. For example, one of the areas that we will talk about is customer concentration. So let's say you had a business and you have a very loyal customer for 20 years and they represent 35% of your revenue. That's a lot of concentration. And a buyer will look at that and be very concerned about it. So sometimes what we'll talk about is what can we do? How many more customers can we add to help reduce the perception of risk there and what else can we do to reduce the perception of risk? You really want to have your revenue well distributed amongst your customer base. So a buyer comes in and they're not worried about the loss of one customer. So we'll have conversations about things like that. We'll also have conversations about their daily involvement. Owners love to do things on their own, be very hands on, maybe even minimal middle management. However, adding management is a very valuable thing for a buyer because there's personal relationships with customers, there's personal Relationships with vendors and suppliers, all those things need to transfer to the buyer. And if you as the seller are sitting there and you manage all of it and when you sell, you're not really selling yourself as an asset, you're usually wanting to step out at that point. But if you haven't added management, there is a transition process that's going to be a lot more delicate than if you did have those managers in there and ultimately translates into more value for you as a seller when you do have more of a hands off kind of business.

Yeah, that's great. And Amy, it kind of leads me to another question about when the that business owners should start thinking about, you know, selling their Is there a typical time that makes sense for them or should they, you know, you know, when is the kind of right time? I don't know if it's just a personal, hey, I'm thinking about selling. But it sounds like, you know, if they're two or three years out, they should start talking to someone such as yourself that can help guide them through that process. Which sounds, you know, fantastically valuable from a business owner standpoint.

I think it's very important for them to reach out to advisors. They could even start with their CPA and have their CPA sit down with their CPA and talk a little bit more about what kind of tax structure should we think about if I wanted to sell my business and there are some entities, for example, that are taxed very differently. You know, C Corps are taxed very differently than S Corps. And those are all kinds of conversations that a seller or a business owner should have with their CPA early on and talk about how can we structure this. If I do want to sell three years from now, that will minimize my tax impact. And they can talk to their advisors, they can talk to folks like us. I mean, we're often referred to as either mergers and acquisition advisors or business brokers. But sit down with somebody that you like or even sit down with a group, you know, maybe interview several of them and try to find out which one do you see yourself really wanting to work with. And they can oftentimes will give you advice and very valuable advice early on and you'll build a relationship with them. I mean, oftentimes when I am working with clients, that whole courtship process might take two, three years and I'm not generating any income from it. My incentive is to generate goodwill with the seller and then ultimately they will have me represent them when I sell the business. And that sort of, that's where I'LL have what we'll both have essentially is a mutually beneficial economic outcome from it. So there are things they can do is meeting with professionals such as myself or also with a CPA I think will be very, very helpful for them.

Yeah, and it sounds like, you know, they need to be prepared for. This is a process that is going to take a significant amount of time and it's not something that they're going to jump into and make a decision and you know, a few months later it's going to be all wrapped up.

You know, I've had a, you know, last year we sold a pet products company and it was a gentleman that wanted to sell and from the time I met with him to the time we actually sold and had a had an outcome that the seller was over the moon, happy about. It took about eight months. And, and so that one I was really excited about because pet products is a very, very hot industry right now and manufacturing, wholesale distribution are areas that we are experts in and areas we just love working in. Those are great, very scalable businesses and there's a lot of demand for those right now. So that particular business sold very quickly. But we also have other customers that are like me for example, or other clients that are in the technology space. So anything with a recurring revenue component to it. So let's say you had an online business and you charged a monthly subscription fee or you even had an old school kind of business, not technology oriented, but it was like a maintenance business and you had filters and you constantly replaced those filters. So some type of consumable or even a food products company, those are. There's a very healthy appetite in the marketplace for those kinds of businesses because again, the buyer will want to, they basically will pay a premium for businesses that they perceive as less risky. So if you have this stable revenue stream that's well distributed amongst many different customers, you have a business that's going to be very liquid and it's going to sell a lot quicker than it otherwise would if you didn't have those attributes to it. So it varies on the types of timeframes. We generally like to meet somebody about a year before, a minimum of a year before they're interested in selling. That gives us time to at least do some work together. And if it's three years, that's fine too. We'll sit down and meet with them. But it's often difficult for many folks to determine when is the right time to sell because it's a personal decision. It's, you know, when am I sometimes for some folks, they don't really need the money when they sell. I mean, we all love to be in that position. But many, many sellers are so passionate about their business, they just love doing it. And so I will ask them, you know, why is it that you want to sell? What's really motivating you to sell? Are you wanting to spend more time with your, with your grandchildren? Are you wanting to travel more? Are you just burnt out and you're just tired of all the headaches of having employees? And I really like to understand the story of why owner wants to sell because sometimes they might think, well, I'm just thinking now might be a good time to sell and I can get a lot of money for it. That may not be a good reason to sell because if you don't have anything to do, like for some folks, I mean, it's not good for me, but it's good for the seller. I'll just tell them, I don't think you should sell. I think you enjoy what you're doing and you love what you're doing and maybe you don't want to retire, maybe you don't enjoy traveling. I think, I don't think that you should, you should, you know, you have a sense of purpose from owning and running your business and I think you could keep it. But for some folks, I really like try to understand it. And so from a financial standpoint, you want to know like the last three years, there's a, typically a three year look back. Some folks actually go back five years, but generally you want three years of stable and solid profitable history on your business. So, and then the other thing, other question I would ask the seller is if you're trying to time the sale of your business, what if we hit a recession later this year or sometime next year? Nobody really knows when the next recession's coming. And your business is sensitive to recessions, are you willing to wait three to four years after that recession to sell? So, meaning if we hit a recession next year, are you willing to wait four years before you sell? And if the answer is no, you should probably start preparing to sell the business now because you may not be in a position either from a personal health standpoint or even just your mental well being, you may not want to wait that long. So it's difficult to time it perfectly. But I think that's one question somebody should really ask themselves. And if they're not really ready, now is probably a good time to look at that. It's been many years since we've had a recession even since the 08 recession. We're at one of the longest periods of expansion. It may not feel like that for a lot of business owners, but this is a, we're getting close to being overdue for recession soon. So that's one of the things that people should be mindful of.

Bob, this is such good material. I mean, it's so useful to get your feedback with somebody who has that expertise. And I would add that everything that you've been talking about is just going, you know, those steps that you take, even if you don't sell your business, they're going to make your business so much better and stronger and healthier. And you know, I read somewhere sometime in the past that, you know, you should run your business like, you know, you're always trying to sell it because it will, it'll increase the, the quality of everything you do. So it's, it's great stuff. I'm really happy to have you share that on the show.

Well, thank you. Thank you. Absolutely. I agree with you completely. I think if you were to run your business like you were going to sell it next year, people would have a very well organized business. And not only that, something could happen. I mean, you know, God forbid, should something happen to you as an owner, you want somebody to be able to step in and have organized records and be able to run the business properly until you can get back into it for whatever reason. So I think that's a great point.

That totally makes sense. So when most businesses sell, is there kind of a requirement more often than not, that the owner is staying around for a certain period of time, either just a transition or maybe part of their compensation on the sale is tied to them being there for a while. What do you think?

Yes, oftentimes we see consulting periods that are generally about a year. So there'll be a time where the seller will stick around for a year, sometimes six months, and then the new owner will kind of use that as a training period and eventually take over the business completely. So we also have a phase out period where maybe in the first few months the seller is working full time or close to full time, and then gradually cuts their hours by a third and then cuts their hours even more. And by the end of a year they're hardly ever working there. You really want the buyer to come in and to really run it. And so it also depends on who the buyer is. So if you have a strategic buyer, then they may want you to stay on a little bit longer to help Kind of with the transition process. And then if you have a financial buyer, they may want to take over the business and kind of want to be there for all the decision making, but also kind of establish themselves as the new owner and build relationships with the employees. But generally it's six months to a year.

That makes sense. And, you know, you mentioned earlier, and I didn't get a chance to comment on it, but one of the things I think is the journey that you go through to selling the company and having done this before, but, you know, it's also really personal and you have to be emotionally ready and physically ready to go through this because it, I don't want to say it's an adversarial relationship, but you've got all these folks that are going to be digging through everything that you've built from nothing.

Right.

And you've taken a lot of pride and you have all this passion. And oftentimes those people that are coming to look to buy your company are kind of poking holes, kicking the tires, if you will, telling you why maybe it's not worth as much as you think it is. And it can be kind of tough to swallow sometimes.

It can be. I think, yes, you're right. That's a good point. I think it's tough. I mean, there's, you know, you put your heart and soul and oftentimes with folks with children, and I hate to say it, but they may not even say it out loud, their favorite child is their business.

Yeah, that's right. That's right. Yeah. It's true, it's true.

We're not going to talk about that here, though, because we're recording this. See, that's right.

And I know my kids to listen to this. You got it. Yeah, yeah, yeah, yeah. That's a, I think, a big challenge. You have to be ready. And, you know, to your point, again, of having, you know, putting these layers of management in place, I think can really help that. To give you some distance a bit from. From that process.

That's right. That's exactly right. And. And it, and it positions the business. Well. I think the, the number one thing that I hear from a lot of business owners, it's hard. Manager or managers. But that's what makes a business valuable, is you've done something difficult that a buyer doesn't have to do and they'll pay you for that.

That's a really good. That's one of those magic phrases. You've done something difficult that gives your business value.

That's right.

Yeah. And that's an important thing. It's like, oh, it's too hard to do. Well, yeah, that's why somebody's going to buy that from you.

That's what they'll pay for it. That's another thing. Valuable.

Yeah, yeah. You want to cash out, you got to put something in, you know. Yeah, that's right.

That's for sure. So, you know, our listeners, we tell a lot of stories on the show and share lots of, you know, anecdotal stuff that, you know, is there. You know, can you share your favorite, you know, success story of selling a company? You know, I know you got to keep, you know, things confidential, but is there a story that you like to talk about, you know, over dinner and a glass of wine when you're, you know, talking about your business experience?

Boy, I probably have to. Yeah, I have to pour myself a glass of wine right now.

You should encourage people to do that before they come on the show, Shannon.

I know. We should do that. That's a good idea.

Well, I think I'm trying to think which one I should share, and I have to be careful with the confidentiality of it.

Sure.

I think. Oh, boy. I'm trying to filter myself right now in terms of. I don't want to bring that story. Yeah, I guess I could talk about the. Okay, I could talk. We'll see. If I bring up the company, I think people might.

Yeah, you don't need to mention anything. I mean, just even a tidbit of it. It doesn't have to be the whole process, but just something that you enjoyed.

Do your best at filtering yourself. But if there's something we need to cut out of the show, we have the ability to do that. Nobody's listening, actually listening live. So, you know, speak, speak, speak. And we'll deal with it if we have to.

All right. Well, I guess my. One of my favorite stories is I had a client that had a business that was essentially in different states. You had one part of the business in one state and another part in a different state. And there was a lot of. There was a lot of legal challenges with the business. They had a lot of lawsuits in the past. And what made it difficult was it was easy to see that they had all these lawsuits, and it made it to the point where it was very difficult for me because I was wondering, boy, what are these lawsuits about? That's going to scare buyers away, and I'm going to put in a lot of time and effort here. I want to know that this is going to be a legitimate operation. And so when I did my homework and I got referred into them, when I got by the client's attorney that I had a relationship with and when I started working on the project, I just realized there were a lot of difficult challenges with this business and the earnings were going down. They had a lot of concentration. They had one client that was 80% of one another division, 80% of revenue of one division. And I just thought, oh boy, I don't think I'm going to be able to do this. I'm not going to be able to meet their expectations. But as soon as we went to market, we do a multi pronged approach. When we sell businesses, there's marketplaces, private marketplaces online where there's these private equity firms that go in and look at different opportunities for sale. And then there's also just the old school direct marketing approach where we'll go and we'll find buyers on our own. And the buyer we found was quite possibly a buyer we would never have imagined to be interested. And we were shocked. We all flew out to go meet with the buyer and they flew in on a private jet and we were just kind of wowed by them. And one of them, the buyer, was on this television show in the media that's currently still very popular and they really wanted it. They put an offer in. And this is the thing, when you're doing a deal, it's important to have either real or perceived competition for your business. And we had a few small lowball offers, but they came in with an offer we were able to counter that. And they came in so much higher than all the other offers. And it was the exact buyer we wanted. And the negotiation process was tough. They had really, really tough attorneys negotiating the purchase agreement. But we had one that was tough as well. And the seller was so happy with the outcome. And I never would have thought we would have had this outcome. And neither the day and I look like a hero, which I love. And today she's one of my best, my best reference. Nice. Yeah. So it's, that's, that's a, that's a. That process took about nine months, nine to 10 months. And, and it's also, it gave me a door into an industry that I didn't have before. So it was just, it was a win, win for everyone. And I was just, I'm so delighted to have worked on the opportunity. And I've become friends with a lot of my clients and she's, she's become a friend of mine.

Yeah, it Sounds like it.

That sounds like a blast, man.

Yeah, it does. It does.

It's exciting. It's. There's a lot of adrenaline in my business because it's all or nothing for me, you know?

Yeah, but that's. I mean, that's why it sounds like a blast. Yeah, exactly. And you get yourself into these scenarios that, like you said, you never would have painted for, but there you are, and now it's okay, let's make this happen.

Yeah. Yeah. And it's a great. And the employees have a great future there, too, which is great, because I think a lot of times folks are worried. And discretion is key, too. We didn't talk about that. But during this whole process, you have to do it to where you can't. The employees can't find out. Otherwise they're going to be so worried, constantly peppering you with questions about their future. And oftentimes, buyers want to keep all the employees. Employees aren't a liability. They are. They are an asset of the company.

Of course.

So people have these scenarios where they're going to fire all the employees and move the business somewhere. And I can tell you, in my industry, 90% of the time, that never happens. It never happens. The employees are important assets and many times are given employment contracts and bonuses to stay. So the day that the business is sold, that's when the announcement's made to the employees. And. And some employees are given retention bonuses because they're so important.

Yeah, well, that's what you're selling. Like we said before, you know, it's. You made a tough. You did the hard thing by finding the right people for these roles. Why would the buyer want to repeat that effort?

Exactly, exactly.

But it's hard for people who are not business owners, who are employees, and we talk about the difference between the two and that it's okay that there's a difference, you know, and there's some people that like to be employees, and that's, frankly, a really good thing. And I don't say that in a callous or Machiavellian way. I say it just. It's part of how the world goes around.

That's right.

But, you know. Yeah. You have to understand. You're right, though. Discretion is key because you can't expect them to think the way you do. And so you've got to walk them through that process. Yeah. In a very deliberate way.

Yeah. Yeah. And I think I was just having this conversation with another business owner that had sold a company, and, you know, we were kind of going back and Forth. And you know, and I made a comment because almost like a, you know, they feel guilty that, oh, I'm going to sell the company. And, but maybe that helped, you know, is kind of what part of what defines them as a good, you know, employer, good boss, if you will, that you're, you're concerned about what's going to happen with the employees. Because most people aren't just, you know, going to dump it and run and do whatever you want with it. You want to make sure everybody finds a good home and that stuff. And I think that's, that's a really good point to, to keep in mind is, you know, making sure those people stick around.

Yeah, absolutely.

And that might be, you know, my next question was going to ask you, you know, what, what's the, the most important bit of advice you could, you know, offer a small business owner that's thinking of selling their company. And I don't know if that's it, you know, or if there's another tip that you might, you know, leave us with here as we, you know, start to wrap things up.

Sure. I've got one thing that I never really hear anyone in the media ever talk about. And in family owned businesses and small privately held businesses, if you are an owner that's looking at maybe selling in three to five years and you're seeing your retirement, you do want to retire and you're thinking of bringing a family member into the business to help run it, you have to be careful. Because if, let's say, for example, an owner has a daughter or son that they want to bring in to run the business and they don't really have the wherewithal to really run it right and to really grow the business. In fact, they might have a lot of passion for the business, be really excited about it, and then you pay them a salary, you bring them on and three or four years go by and you're realizing they're not doing well with it, but they think they next year is going to be the year that everything gets better. And the problem is it really affects the family relationship and the family dynamic. You can't separate the family from the business once you've done that. So I would say be very careful. I think the percentage of success on the second generation running a business is close to 30%. It's very low. I would encourage children to develop interest outside of just the family business. To avoid a scenario like that, if that's possible, is to go out in the real world and get real business experience out there and Then come into the family business. Once they have that experience, don't bring them in right out of college or when they're at a young age and they don't have a lot of business experience. And then they become attached to it and then it becomes very personal if you don't give them the business completely, even if they don't have the ability to run it well. So that's probably one advice I would say is be very careful with bringing family members into it for that reason. Now, if they're already in the business, I would talk to them about potentially having a scenario where if you do need to sell it is to think about buying them a different business or something to where it's something that they could maybe a little bit smaller, something they can learn from, versus if they're in this business that's maybe too big for them and they're not prepared for, it could be problematic.

That's good advice.

That's really good advice. Yeah, yeah. It's. It's one thing to build the business and learn about it as you go. It's another to just walk into this, this mature business. Yeah, yeah. Because it's two totally different skill sets. And actually it's not just family members that you need to be careful of there. It's yourself too. Right.

You can.

Peter. Principle yourself out in your own business too. I mean, that's a. I realize that's a whole different conversation, but. But you can find yourself in a role that you're not qualified for and you know, and to your point, that's where you hire a good manager and, you know, maybe make those decisions, but.

Yeah, that's right.

Yeah. You know, there's a phrase that, you know, we, you, you keep advancing your employees until they get to a job where they're just no good at.

Right?

That's right. That's right. And I, as a business owner, you wind up doing the. You could do the same thing. So, so, yeah, that's great. Well, Bob, it's been fascinating and some great information here. What's the best way for our listeners to reach you? How can they find out where you're at?

They can email me. My email address is bobpointadvisors.com that's sea like the ocean. S E A Point Advisors plural dot com. And I'll be happy to answer any questions.

That's great. Really excellent to have you on and some just really valuable information. I've really enjoyed it and thanks so much for giving us your time today.

Thank you for having me. Enjoyed it.

It's been a blast, man. Yeah, yeah, it's, you know Shannon and I have been stepping all over each other to ask you questions.

So yeah, we're a little excited.

Yeah, we tend to represent who our listeners are. So I hope that, I hope we've done a good thing for everybody here and I hope you enjoyed your time with us today, Bob.

It's been great. Well thank you.

Yeah, folks, feedback at Business is where you can reach us and of course on, on Facebook as well you can find us. It would be great to hear from you if you've got questions for Bob. Well, he just told you where to find him but, but you can also send him to us and we'll make sure that, that we get to him. Anything else, Shannon?

I think we wrapped it up good. Good show today. Take care everybody. We'll talk to.

Sam.