ve-BINAR: How to Prepare For a Successful Exit

Good morning, Good afternoon. Depending on where you are. Welcome to today's Vendux Webinar. I'm Andrew Miller, one of the partners at the Vendux Group, where we focus on helping clients to grow their sales leadership capital. I. I'm thrilled to have Steve Conwell as our guest today. He's the founder and CEO of Final Ascent, a very well established M and a exit planning and value building firm in the lower middle market sector. In. In a second, I'll let Steve introduce himself. A couple of quick housekeeping notes before we jump in. We'll keep everyone muted for the duration of the webinar and there'll be a Q and A session at the end. So you can either use the chat function in zoom to submit your questions or. Or just feel free to open up your mics and engage with Steve directly at the end of the webinar. This webinar is being recorded and it'll be available later today on our site and on YouTube. So with that, let's start. Steve, welcome. Great to have you. Thanks for your time and for being with us. Tell us a little bit about yourself and what you folks do at Final Ascent at a high level.

Yeah, thanks a lot, Andrew. Really appreciate being on your podcast and this webinar here. Yep. I'm Steve Conwell. I'm the CEO of Final Ascent. And this December I'll be married for 30 years. So very excited about that. I've got two kids who are, gosh, I mean, gonna be 26 and 23 here very soon. One went to a. M. So I won't hold it against her. And then my son is at my alma mater at the University of North Texas to go mean green and yeah, Final Ascent. So we're what we like to call an exit journey company. So if you think about the Final Ascent, what does that mean? So if you're a business owner, you can tie it to that last journey up the mountain. So like K2 or Everest, when you've built a company and you're on that last Final Ascent, to determine how do I prepare my business for sale? What's it worth? What does the selling process look like? That's where we come in. Our target market is middle market firms with enterprise values anywhere from 10 million to 100 million. So what does that mean? Typically, revenues of 10 million to 150 million is the markets that we serve. And it's a lot of fun. You know, we're entrepreneurial nerds. We get very excited about what our clients do. And you know, that's really cool. And how can we help? So very excited, really glad to talk about what we're going to talk about because as a former business owner and we'll kind of visit that I don't have any clue about any of the stuff that I know now when we sold our company.

Cool. Great. Well, congratulations on many, many years of marriage. That's a big milestone for sure. And, and all, all of your success. I was actually doing some mountain climbing this summer at 13, 13 and a half thousand feet in the Alps. So I love the name Final Ascent. So Steve, you, you work with business owners in the lower middle market. You, you advise successful entrepreneurs on how to prepare their business for a successful exit broadly. How did you get into this line of work to begin with?

Yeah, it's a great question. So I'm going to say it in two different ways. So one, back in 02, we started our first company and it grew from myself to then my wife who was a recruiter, and then to 90 professionals. And we did finance, accounting and technology recruiting across the US and then it risk consulting to the Fortune 2000 and in 08, 90 professionals, several million dollars revenue. We got approached by the number nine public accounting firm out of the blue and started talking to them, went through the whole selling process, thought we did great, right? And I'll admit I did not have a clue about anything about selling a company, right? So I thought, hey, this was fine. This is the approach you take. So then you fast forward, this is maybe 2015. I'm the interim CFO for residential real estate firm. We did about 300 homes. We buy, rehab, resell in the marketplace. And we had an exit planner working with the owners. And I'm sitting here kind of listening to this and going, this is really interesting. So I started doing a lot of research and I'm like, my gosh, man, we left at a minimum two or three million dollars on the table and didn't even know. Like we thought we did great, right? And it really bothered me and it bothered me from the standpoint that I felt like there was a lot of other business owners in there that had 20, 30, $40 million businesses that have no idea like what it actually takes to go through a selling process. What makes you attractive in the marketplace and sellable? How do you maximize the enterprise value? What does life look at, look like after the sale? So we started final ascent in 2017. The exit planning and merger and acquisition side. We love to take our clients through that exit journey and it's really personal for Us as trusted guides. I mean, we. That American dream, you know, you built your company for 30 years and all that blood, sweat and tears and it literally goes away in a fire sale or the business gets shut down. I mean, it does not sit well with us at all. So we take it to heart. It means a lot to help these folks go through that. They may only do it one time in their life. And so it's really personal for our company. We get emotional about it and we absolutely love what we do. You've got to have a passion for this because it's a tough, tough process for sure. But that's how we got our start. And just very excited to talk about this and see we can do to help. It's all about helping others be successful.

Right? Well, it's a great story. And I'm sure that that story in that background allows you to relate to the business owners that you work with and vice versa. So the kind of the top three. What are the top three things that you see that affects a business? Attractiveness and sellability in the marketplace. In today's marketplace in particular.

Yeah, yeah. So there's one that goes without saying and it's your financials. The accuracy and completeness of your accounting records is absolutely vital. And I'll kind of explain it this way. So let's say you were searching on LinkedIn and hunting for a job and you found the absolute perfect job, that you are 100% the absolute best candidate for it. But when you send your resume in, it's got typos and grammatical errors and my wife can attest to this in recruiting, you got about 15 seconds and it's thrown in the trash. Your financials are the exact same way. It's the resume of your business. Our company, I mean, we do a lot fixing that, going from cash to accrual basis accounting, cleaning up financials. We've rebuilt them from scratch because you have to picture that the buyers are sophisticated. Some of these buyers have bought a thousand companies. They've got CFOs, business analysts, financial planning and analysis people. They're very sophisticated. And as soon as they see your financials and see, you know, negative receivables and things don't look like they're reconciled. They're not according to gaap. They just politely walk away. So that's one just right off the bat. I'd recommend if you're at a certain size, get a financial statement, audit or review, hire a fractional CFO to assist you, get a true month end close process And I don't want to get too detailed in, you know, quality of earnings reports. When you go through a selling process to actually validate your, your earnings times a multiple so they can get comfortable with the value. But all that is super important. The other one that's, that's interesting, I'll just call it owner dependency. So if you picture a business, even if it's 20 and 30, sometimes 50 years old, an owner typically starts it because they were an expert in something. Maybe they were in manufacturing, they're an engineer, the consulting side, building products, technology, what have you. As they build the business, they're like the hub and all the business parts are the spoke. So you hear about those business owners, they're proud because they know all their customers, they negotiated all the supplier contracts, they know their attorney, their banker by first name, and they're just entrenched in the business. And anytime there's an issue, you're always going to the owner. This is a huge problem. From the buyer perspective. There's a saying that says owner dependent business can be essentially worthless. If they're not worthless, the buyer is going to say, hey, I'll tell you what, I'll buy your business. I'm going to give you 50 cents on the dollar up front and the other 50% you're going to earn over five years. And oh, by the way, you're 67, you've owned your company for 30 years. And me, buyer, I'm a private equity group where our average age is 35. And you're going to work for me for five years. Now how do you think that's going to pan out? It's not right. And the owner is going to throw up their hands and they're going to lose that 50% or maybe get 10 cents on the dollar. So these are serious issues. You want to have a turnkey business that you can hand over to the person acquiring your company and walk off into the sunset to bigger and better things. The other thing, and I can kind of wrap this one up into like what is unique about your business. So maybe many of you have read like Seth Godin's book the Purple Cow. There's a lot of businesses we say, oh, we're commoditized, we all do it this way. But there are business owners that find a unique way to do something and that stands up from their competition. So if you think about like a defendable moat, Warren Buffett talks about that around your competition. On top of creating raving fans where your customers not only repurchase from you, whether on a recurring basis or a reoccurring basis. But they also will refer you to their friends and colleagues. So you've got this high potential for growth and buyers can feel that. So those three things, I mean, we can go, you know, off the deep end and a whole other things that, you know, make your business attractive and sellable in the marketplace. But those are ones that we see consistently across the board.

Yeah, those. Yeah. Great. It reminds me, you know, we, we have, we have many, many clients who, whose business includes their names. Oh, yeah, Joe and Sons. So, you know, does that actually have a bearing? You know, if, if a prospective buyer is looking at a company and the first thing they see is the name of the owner, is that, is that automatically and initially a yellow flag for the buyer?

Sometimes it's a potential flag. From the standpoint, they may be small. Right. If they're going to do a stock sale where the name is going to transfer with the deal because the company survives, that's going to be tough. If maybe they're entrenched in a local market and that brand name is important and the new buyers are going, God, we can't change the name. But that's an issue. The other problem with having your name entrenched in the business goes back to that owner dependency. So we've had clients. We actually had one that ironically, they had their last name in it, but in the. So they were definitely a brick and mortar company that had, you know, maybe a 30, 50 mile radius that they would work on kind of multiple locations. But in the state that they were in, his dad had run for senator and their name was incredibly well known. And so see, that actually created brand value. And so you're going to want to buy them and actually keep that name rolling forward. Because that state, everybody knew that name and it had a tremendous reputation. We've had some where we've said, okay, if we have enough Runway, let's go ahead and see if we can shift the name. Maybe we do the initials, we rebrand, we do what we have to because that can take value off of the deal for sure. Yeah, that's a good question.

Steve. So selling a business, from an owner's point of view, selling a business and then being mentally prepared for life after the sale of the business, you know, can, can be two very different things. So what are some of the ways that a business owner might get ready for the sale of the business? Actually going into the journey and then post journey, do you get involved in, in helping owners in that Part of the journey.

Yeah.

So we like to say we're like exit psychologists. Right. Because it's a tremendously emotional journey that they go through. I mean, it's rough. And as much as you can mentally prepare them for what they're going to go through, they have no idea. It's like a roller coaster. We have a saying that says it's not a real deal until it's been completely shut down at least three times. Buyers all happy on a Friday. They go home on the weekend, and on Monday, blow a gasket and we're done. And I mean, we're used to this, you know. Okay, we got another couple of weeks. Let's get it back on the rails. Yep, we're good. Let's keep this thing moving forward. You know, some of the things, you know, if I'm a buyer and I hear from a business owner that I hate my company and I'm so sick of running it and I just want to get out, I'm out, too. You know, sometimes you have things that are pulling the owner out of their company. So, for example, big partner dispute or divorce. We actually have a client that's going through a divorce right now and a lot of conversations about how this is going to affect the value of the company. Do they have to sell now versus later and what that's going to look like. You may have issues with the kids and have to move. There could be an illness. Let's say a family member buyer could be incapacitated. These are all pulling you out of the business. And it's not a great situation because you may not be ready to go to market right now. You could be leaving a tremendous amount of value on the table. So if you think in terms of a business, let's say that two years ago was, you know, 40 million in revenue, and then they dropped down to 30, and they're now sitting at 23 million. Well, you just potentially drop that business 40, 50% in enterprise value. And now they have to sell like our recommendation would be. All right, well, let's just turn this ship around because let's just move it. We've got two years. Let's get it back and reverse the trend. And then also show the forecast to book business being much higher than that. And now we're going to be, you know, 120% higher than the 50% are sitting at now. But that's life. And life does happen. Covid killed businesses. The supply chain killed businesses. The working capital challenges. Right? Especially on macroeconomic scale. Sometimes there's micro scales and things like that. So what we counsel business owners on and kind of help them think about is what are the things that's pushing you out of your business. You're going to retire and spend more time with your family and get to travel. Maybe the, you know, you want to take up the hobbies you, you know, put on the shelf, like playing golf or, you know, different sports and things like that. Lifting weights again. Maybe you want to start another company and you're excited about that next journey. Maybe there's a foundation that you want to sit on, you want to sit back with your buddies and, you know, just reminisce. And so what that does is they, they're thinking about life after the sale. Because I, I'm telling you, we had this happen one time many years ago, about two weeks before the sale was going to happen. Big journey took about 6, 7 through the cycle. It finally dawned on that business owner. Wait, I'm selling my company? And he just walked away. Like he literally disappeared. And it took several months to actually we had to fly out there, could not get him on the phone and he just said, I know we were going through the process, but it just never actually hit me. And so you have to have something that's pushing you out of that company and to remind them of that through it. Because the process is tough. It is really tough. I mean, you have to keep growing your business, hitting your goals and objectives. All the while you've got buyers asking a million questions, asking for X, you know, all the research, all the people you're having to deal with. It's tough and it's very, very busy and they get, you know, deal fatigue and they get stressed out and you know, we have to kind of help them through for sure.

Yeah. Great stories. So earlier I asked you about the, the top three things that you would see affecting a business's attractiveness and sellability. So what about on the flip side? Are there three top deal killers that you see consistently when, when a business is going through the selling processes process? Is it just, is it the reverse of the, the other list of three or there different deal killers that you typically see?

Yeah, I mean, there's definitely a lot. I mean, we did talk about inaccurate financials. That's going to kill a deal very quickly and may not ever make it happen. And so I cannot reiterate that enough. You've got to have accurate financials, but the skeletons in the closet are big ones. When we talk to our business owners, look, you got to open the Kimono up and tell us everything because we don't want the buyer to discover that because they're going to say, all right, well, you guys should have known about this and should have told me about this. What are you not telling me? So we had a situation five or six years ago where for 17 years the husband had done the. Had done the tax returns and they switched CPA firms. And so it had been easy. And so he just said, hey, I'm just going to have my wife do it. She's like, yep, that's fine. They got three years of tax returns just like before. We got three buyers really interested in the company. Great offer. I think it was about a million million five over. But the high end range of what we were looking for. And then when they did their due diligence, they said, well, you never submitted the tax returns. I mean, we never. They never even been filed. What are you talking about? And what happened was that that cpa, the second one, gave them the hard copy financials and expected them to submit it. So she looks, hey, not financials, but tax returns. So she's looking, hey, I got all the tax returns. Everything's great. So what happened? Those buyers went away. Took about 45 days to get them submitted and get the actual evidence that they had been submitted and was fine. And then, you know, six months later, we were able to sell. The company had to go through the whole process again and they sold. And it was a good business, but life comes at you fast, man, and you know, something could happen. And they never sell the business. So the skeletons in their closet are a big one. We had, we had another situation where my VP of M and a business partner had asked this a large buyer or large seller. We had, all right, we got to do background check. And we talked about this. There's nothing that's going to show up. Absolutely nothing. You're sure? Absolutely sure. So sure enough, they do the background check. And when he was 18, so he's like 35 now, he had stolen a dirt bike and just wrote it all through town and then just kind of left it on the side of the road and got arrested. And they said, well, it'll be expunged from your record, but nothing's expunged from your record. So luckily, you know, the buyer. This was a really complex sale. We were able to get past that and he was able to talk about it. And I'm sorry, I was stupid kid and I shouldn't done it. But that gets buyers nervous. What are you not telling me? So you have to think about an iceberg. Anytime you're taking a company to market and you've got all this documentation you gather, you're putting your best foot forward. Remember the resume I talked about? Buyers are concerned about risk and they're largely unemotional about going through a process like this. And they're one I want to get to know as fast as I can because they're going to have to do buyer due diligence, a quality of earnings report, legal due diligence. They may be a hundred grand, two hundred grand into their side of the equation and they don't want the deal to shut down by then. So that skeletons in the closet is a huge one. The other thing is deal fatigue. So there's a saying that time and people kill deals. Usually you have the sellers and the buyers, they're happy. You have about 90 days goodwill after letter of intent, and after that the sellers are going, you can't do the deal. You can't get it through the process. I know you can't do the deal. And I'm getting sick and tired of you constantly asking for stuff that I've already given to you. Right? And then the buyers are going, something's wrong. I'm not comfortable. A matter of fact, I'm also not really kind of thrilled about how this whole process has been. I'm really probably not thinking this might be the right company that I want to buy. And, and so that time and then people. People's the other one. So oftentimes we spend a lot of time evaluating all of the advisors that are on the deal. Do they have transaction experience? What's the relationship like? Because the last thing we're going to need is somebody making a comment because they've been with that owner for 20 years. It's a completely inaccurate comment. But the seller doesn't know. And so we have to then unpack all that so that, that statement about deal fatigue, seller and buyer fatigue and time and people killing deals, it happens through every process we go through. And we're very, very careful to monitor all of that, make sure we're moving and advancing the cause without this coming, coming to light.

People, people, people I do want to question and then I just put it out there to, to the group here. If you've got any questions, you want to put them in the chat bar or. Because I'm, I'm going to open up the floor in a second for, for any of your questions or comments. But on the, on the people side of the equation, Steve, we Our business, we make an impact with business owners and CEOs and, and entrepreneurs on the sales and commercial side of their businesses.

Yeah, yeah.

Often with fractional heads of sales, sometimes with full time W2. And so we, we certainly see the impact on that side of the business. From your in your work. To what extent are you working with business owners around you, key parts of their team on the sales side, the op side, the finance side, etc. And what do you do in those situations?

Yeah, that's a great question. You can imagine sellers, business owners aren't going to hang this sign in their chest saying I'm selling my company. Right. Very confidential. So those are who we work with exclusively. We may go down to the management level within a business but if we're helping to prepare their company and to grow their enterprise value, we're looking at all aspects of the company. So if you think about okay, how can we improve top line growth? How can we improve their gross margins and their gross profit dollars? How can we get them lean and mean so that their net profits on the bottom line are growing? So if we have to bring in let's say a fractional CFO to help shore things up, get the financials to accrual basis, have a month end close, we will do that right now in a couple of our clients. We have fractional VPs of sales in there helping to shore all of that up. We've worked in recruiting firms to hire account managers and sales managers for these companies. We brought in like a VP of sales enablement for the whole front end engine on the cold calling side. And how do you get through to a close on a structure that way for another sales channel for this business? Oh my gosh. We brought in, you know, digital marketing and PR firms. We've built like B2B and B2C websites and full SEO and pay per click channels. So if you think about us, we're the quarterback but we partner with strategic firms that we vetted that we're comfortable with and bring them in and so let's all kind of march. Here's what we're doing, here's the projections that we've built where we're taking this company to maximize that value, to get them attractive and exit ready and then let's go and let's get it there. So like for what you guys do? Absolutely. I mean it's something that would be really important depending on the goals and objectives of the business owners is very important. We kind of help to co develop that kind of counsel and Talk that through and what those objectives will look like, where they'd like to take the business and then we bring in the talent for sure. Yeah, excellent question.

Great. Henning, any questions in the chat bar?

There's one in the chat from Tim. What do you think about owners that are opposed to seller financing? What if they want to transition to being an employee after the sale?

Yeah, it's a good question. So as you're taking a company to market and there's multiple different ways to sell the company, different buyer strategies for how this is going to work and how, how they're going to give a term sheet and a letter of intent. So sometimes you'll have a rollover strategy from an equity perspective. So they'll say, okay, the owner would like to go with the sale, so we're going to roll over, oh, let's say like 30% of their equity. And then it's called getting a second bite of the apple. So if it's being sold to a private equity group, they may bolt on other companies onto that and grow in 10x the business and then resell it. And oftentimes that 30% is going to be worth well more than the 70% that they sold their company that first bite of the apple, if you will. I'm on a seller note perspective. So if the seller wants to do, let's say, a consulting agreement, I'm going to do a year of consulting and then I'm going to do part time for maybe years two and three, so I'll be full time in that first year. Oftentimes you're going to want a seller note, Maybe even just 10% to make sure they have true skin in the game. Because as much as we'd like to say that seller is going to be heavily involved that whole year, sometimes they like being retired, right? I want to go and, you know, ride my, you know, do my Baja racing and I'm going to buy a boat and go have fun with that. And so that's how you make sure that they stay engaged and don't disappear while they get that back. Sometimes they may roll over. So I'm going to be the chairman of the business and I'm going to roll over that way. So I'm going to get all the money for it and roll over as the chairman because they've got the experience to take it to the next level. Gosh, we can go on. Sometimes there's management buyouts, sometimes they sell to their kids. There's a lot of tax minimization strategies and how do you do that? You can't just sell it to your kids who've been making 100k a year and it's a $35 million business and hit them with a big tax bill. So there's strategies to slowly roll over the equity so that even the business can help and fund that over time. Yeah, it's a great question.

Specifically, would you be concerned, Steve, if the seller has said, no, I don't want to do any seller financing. I'll stick around as an employee and you can pay me a salary, but I'm not going to do any seller financing?

Is that.

Is that a red flag?

I mean, it's not necessarily a red flag. I mean, that's going to be all right. The buyer, the seller's adamant about that. So from a buyer perspective and the negotiation strategies of it, we're not going to have them do a seller note on this deal. But if I'm a buyer, it's going to have to be a good company. I mean, I'm going to have to really want it. There's going to have to be a lot of competition for buyers saying, I want to buy this company. This is a great one. Maybe it's a platform or what have you. I'm happy you had that consulting agreement, but, yep, we're going to go ahead and down this path. We're comfortable.

But if there's owner dependency like you spoke about, if there's owner dependency, that's. That's a concern. Yes.

I mean, it's. It's a concern from the standpoint that it is a drag on the value of the business. For sure. Buyers immediately are going to look at it and go, if you walk away, those big customers that loved you, they walk away, too. And I can't be the big bad owner firing 50% of the staff because that one customer had 60% of the revenue.

Yeah.

So, yeah, for sure. It could be that, you know, you get into other dependency issues to kind of advance that question. So they're dependent on one key supplier. But what if that supplier goes away? And it's very difficult to negotiate these contracts. You have to go overseas to get adequate inventory. That becomes a supply chain risk that's going to affect the deal, especially the terms of it. For sure, you can expand that to key employee risk. Right. So you have a VP of sales who's responsible for 75% of the sales of the company. We actually have a client right now that we have been working exclusively on fixing that problem because we know it's A risk if that VP of sales gets wind of a pending sale and says, all right, well, I'm responsible for a lot. I want 20% or I walk. Well, a buyer absolutely wants that person to roll, so you've got to mitigate that risk. So I know we talked about, you know, three things to get your company prepared for sale, but there's a lot more that's involved to make sure that, you know, you're showcasing a company that is absolutely attractive to the marketplace. Yeah, Tim, those are great questions, for sure.

You don't use the expression powder the pig, do you?

No, it's not so much that. I mean, like honesty, integrity and character. Character matter.

I'm kidding. That was a joke.

Yeah, but no, no, it's. You want to showcase. Here's what we do. Well, but if there's opportunities for improvements, I mean, these buyers are sophisticated. I mean, they're going to know that. They also know that, you know, if they're, they've got a portfolio of their billion dollar company and they're buying a, you know, $80 million firm, they're bringing like their horsepower to the table, their big engine. And then they may decide that $80 million company on the sector they're looking at there. There's my platform and we're going to grow them to 800 million and then sell them. So. Yeah, yeah, absolutely. But are we going to say, well, they're actually horrible and this guy's got, you know, bad breath and you really don't want them, but we'll sell them at 10 cents on the dollar. Now you've got to got to put your best foot forward for sure.

Cool. And any other questions for the moment?

Thank you.

Yeah, Andrew, I do. Hey, Steve, thank you for your time and your insights today. You mentioned prepare is sort of the theme we've been talking about. How long does it typically take, specifically if you see an issue with the sales engine, with a company, whatever the case might be, how earlier in the process are you getting involved? Is this like a year long to.

Prepare a company or. Yeah, it's a great question. So based on all of our different, like lead funnels, referral systems and all of that, each company comes in differently. Some think I'm selling my company right now and we look at it and they're not remotely sellable for what they want. It's the classic, hey, my buddy sold his company that's in my sector for three times revenue. It's not the same company. So we've got to kind of level set expectations but if that's the number they want to hit, I mean, it may take, depending on the sector, you know, three to five years to get to that. Right. Because growth is usually slower and they're heavy asset intensive and you're not going to be able to expand that fast. There's other businesses. We've got like a year Runway and so we're doing heavy cleanup and projections. We're working, you know, hard to drive revenue growth and profitable growth significantly and then looking at getting really lean and mean. Oftentimes we've got financials in there where they got tons of personal expenses. Let's start cleaning this up and get this company professionalized in the organization. And we're trying to increase that bottom line as much as we can through top line growth and profitable growth and cost containment to hopefully get that multiple higher as well. Because if we can get another, you know, one, one and a half, 2x off of that, it's significant material. If it's one of those situations where I've got a client right now that came on the bus and it's kind of odd, but they have this May 18th that they want to sell and there's like a personal reason why. So it's the big run to get there. There's not going to be much that we're going to be able to do to like grow them. However, in evaluating the company, we have to make sure they're maintaining their trajectories and it doesn't go flat or depth. And that's part of the tough thing with the sales process because the buyers are going to go, well, I know the reason why this is happening is because you're going through a selling process and it's normal, but they won't act that way. So, you know, it's our job to keep driving that ship forward, keep moving them into the direction that we need them to so that we can head off in negotiation to things that come up to say, hey, we got to drop the price, half a million dollars. Well, that's great. But they're continuing to grow. So we're going to move up the parameters up to here and you owe us another 850. So it's your call. We'll give you the 5, but now worth 850k more and they'll go, nah, we'll go ahead and keep it and we'll head it off at the pass that way. Does that answer your question? It does.

Thank you, Steve.

You're welcome.

Related to Matt's question, Steve, when do you start Shopping a deal, how many months in advance of, you know, from your Runway metaphor, if you're thinking this is going to, about this is going to take a year or so to prepare this company for a proper sale. When do you start shopping that?

Yeah, if we're, if we're preparing a company, you know, getting an exit ready like we talked about, and growing their enterprise value, we'll know by the quarter based on projections like where this thing is going to go and based on the key things that we're working on to get them ready. It takes about, oh, four to six weeks of effort. When you really start to transition towards, we're now ready to start taking you to market. You're putting together, you know, perspectives called a confidential information memorandum, a teaser doc. You're getting the sell side due diligence done and like the virtual data room all set up evaluating the buyers in the market. We've got over 130,000. We work with it will subset to like the, you know, 4 to 600 likely based on all their investment criteria. Then we're ready to run at that point. So it doesn't take an inordinate amount of time to say, yep, clock starts to tick and we take them to market. But it really goes back to, you know, what does this seller want to accomplish through this process? We are not a company. We don't take everybody on. We're not a company that's going to sit and the clock's ticking on that first meeting. I want you to sign an agreement with us so I can lock you down for 12 months of exclusivity. That's not how we operate. We're going to work with that business owner who's most of the time never done this and help them through this process to make the right decision for their, you know, their family and themselves and their employees and their business. Because oftentimes to them this is like a legacy. It's their business, baby. And you have to take that very seriously. I mean it is, it feels like a child when they're selling it and you know, they go off into the sun. But it's really exciting and neat for them to see that their business is going to grow and it's going to continue and their employees are super happy and they've given them a gift for all their years of service. So now it's a, it's a good question, but it's, it's a very important one.

So 130,000 buyers on your, your own roster. You've just a broad breakdown of that, that pie, what's the largest piece is these, these are, these are corporates, are these, are these private equity? What's the, what are the top one or two or three slices of that pie?

Yeah, it's an army. It's a mix of, you know, investment banks, private equity groups, strategic buyers, which there's a ton that are looking out in the marketplace there. Lifestyle, probably not as much for what we do unless somebody, you know, grew a company to several hundred millions, got huge capital and wants to do it that way and just buy a bunch of companies and then live off the, you know, live off the returns on that. Mostly guys like that are going to want to grow and build and make many multiples off of that. But there's a statement that we like to say, and it's called you don't want to be barking up the wrong tree. And we take that very seriously because getting the wrong buyers through the cycle, remember time and people kill deals, that's a huge problem. And so we spent a lot of time making sure the subset of buyers that we look at, it's a significant subset, are the ones that could do the deal that could be interested. And then from there, by having the right buyers on the bus and getting them to compete, we know the chances of taking this thing through to a successful close is much greater. We, this is a huge problem. We get a lot of clients where they'll work with somebody, spend several, several months going through process, may have a buyer that comes through. We've got one right now that I think they'll come our way here in a month. I think they're enterprise valued. We believe they could go to market for 30% more than the one buyer that they have through the cycle. We know that. And so they're going to come in our direction. I mean it's just not the right buyer. Now here's the tough thing. That seller may think, oh my gosh, I finally have somebody and I guess this is what my business worth. And they don't even know that they're leaving. I mean 30%, I mean that could be the difference between a nice retirement and multi generational wealth. You could cost, recover success fees, cost, recover taxes, it's a lot. So we're not talking about 50 grand. It could be you just left, you know, $8 million on the table and didn't even know.

Yeah, that's great.

Hey Steve, do you represent the buyer side? I, I thought it was exclusively seller side, but I'm a little confused. So you're both Sides.

No, we don't. I mean we have buyers that want us to, you know, hey, can you go find 10 of these same companies? But we haven't turned that switch on. I don't think that we will, we will, will probably exclusively stay sell side. If we turn on the buy side then we'll bring on other folks to do that for sure. But. Good question.

But, but you get inbound inquiries occasionally from buyers and say Steve, I'm, I'm looking for this kind of a company as a, as a bolt on or some kind of a strategic investment. You got anybody that you can bring to us?

Yeah, all the, all the time, right? Literally all the time. So we'll, we'll set them up in our system. You know, we'll respond and get a good understanding, ask some questions. But yeah, I'd say we get, oh my gosh, probably 10, 20 inquiries a week or more just reaching out and everybody. There's a lot of what we call dry powder out there. There's you know, million a trillion, 2 trillion and investor capital sitting on the sidelines. Obviously the debt markets, it's pretty tough right now as everybody's trying to figure out how do we get deals through the cycle based on the economy and rising interest rates. And so they're hunting, they're trying to find what's a deal that's like off market that you're aware of that I can try to get in the game early. The difference is that I mean we're going to get their best offer when they go through our process. We're never going to get it when it's just them. So we'll, we'll make sure that competitive bid.

So yeah, I'm not a journalist but then I'm inclined to have a chiron at the bottom of the screen. Hey, breaking news from Steve Conwell. So the question is for those of us lucky to be on this Vendex Vibinar, can you share with us one or two industries or themes when you're getting all those weekly inbounds? How do you, how would you break down what people are looking for today?

Yeah, so that from a buyer perspective. So they'll have investment criteria. Some are more detailed than others, some are more succinct. So sometimes it's an investment, it's like an industry or geographic play specifically. Other times it may be a demographic. Right. So we want a woman owned business. Right. Or we want a minority owned business specifically in this sector, in this, in Texas as an example. Other times it's more generic they'll say, I want companies with ebitdas anywhere from 2 to 10 million in any sector that has 50% of their business has recurring revenue. So we enter all of this in and so we're able to subset to those likely buyers and oftentimes the seller.

I understand generic stuff, this specific stuff today. What, what are the industries, the themes? Is it manufacturing, is it AI and tech? Is it women owned, minority owned businesses? What, what are the themes that, that most buyers are looking for today?

Well, I mean there's obviously tons. Right. But you, let's put it this way, there's certain businesses that are harder to sell.

Yeah.

By their nature. So if you look at sometimes like construction companies that are purely project based. So it's eat what you kill and keep doing that kind of tough. Right. If that business has been around for 40 years, have consistent earnings, consistent revenue growth over time. Now I'm going to get more comfortable if you look at manufacturing things that you can feel and touch. So manufacturing, building products, wholesale and distribution, industrial, you know, companies like blue collar trades. So I've got an electrical service company that does, you know, industrial, residential and new construction, multi location that's getting buyers interested in the marketplace. I mean tech is huge. So companies that are like SaaS based companies or have new technologies, AI, the biggest buzzword. So there's a lot of consulting firms coming up that way. Health care is huge. So we're always looking out into the marketplace for roll up opportunities. So if you remember all those urgent cares that were showing up or the big boys start getting in the game and going, we could roll up all of these under our brand. So we're always peering into the market and looking into the future and saying what's, what are the next big things. But there's 6,500 industries. Usually the big question, what gets on the other side? So the seller would go, what experience do you have selling my very unique widget that nobody's heard of that is in this finite slice of the market and you're gonna go none. However, as you roll up into this sector, we have a lot of experience. Right. At the end of the day, we've grown lots of companies that way and we can definitely take them to market and kind of get them comfortable that way.

Right.

I don't know if I answered your question or not.

Well, you touched on it. But it will, we'll take it up offline because we, you know, have, in the, the years that we've been in this business, our, our clients and industries span every imaginable sector that you can imagine. And so separate conversation but very, very interesting if anybody else wants to raise their hand for a final question, otherwise we will move to wrap up. Steve, great to have you. Really insightful. How do people get in touch with you for for any follow up conversations directly?

Yeah. So I mean obviously on our website, so Final Ascent.com I'm really active on LinkedIn so Steve Conwell, final profile. I'll pull up that way and connect with you and love to have any conversations with some of you folks if you want to sit down and visit. We work with a lot of strategic partners in the marketplace to help our clients so would love to talk more.

Excellent Steve. Thanks again everybody. Thank you for, for being here for your participation. Have a great rest of the week and month and there's about 95 days left till Christmas so make it a good one.