How planning your exit from the beginning could help you to get noticed and exit rich

Welcome to this episode of The Unnoticed Entrepreneur. Today, I am delighted to have Michelle Seiler Tucker joining me from New Orleans. Welcome, Michelle.

Thank you, Jim. Thank you so much for having me. It's Mardi Gras right now in New Orleans.

Oh, I would love to come over for Mardi Gras. It sounds like just the biggest party in the world.

It is a huge party and it's really a big party right now because it's been shut down for the last year due to the pandemic.

So I'm sure everyone's partying, but you know, There are business owners out there, hopefully, who are having a party and help us to understand how you as an M&A expert and author of the book Exit Rich, how you help business owners to, to get noticed. Let's talk about that.

So, well, the way we help business owners get noticed, there's so many steps before getting noticed that we help prepare the business for sale. We package the business for sale. We work with business owners to make sure They're building their business with the proper infrastructure, what we call the 6 Ps. But as far as getting noticed, it's kind of difficult. It's a slippery slope, Jim, because most business owners don't want to be noticed when they're selling. Confidentiality is everyone's number one priority. They don't want their employees or their clients, their vendors, their landlords. They don't want everyone that they do business with knowing that they're for sale, that they're on the market. And before you and I jump on this phone call, Alice, I have a very nervous seller that's like, I don't want my investors. I don't want my clients. I don't want anyone to know. And so it's really not getting that business owner noticed because you can ruin your business if you breach confidentiality. People don't like change. Employees don't want to know that the owner is selling because they're fearful that they're going to lose their job. They're fearful that the new owner is going to take away maybe certain benefits, change pay, be difficult to work for. Clients think the new owner is going to come in and not provide the same level of quality, quality customer service. And so it's usually the best kept secret that a business is selling their business. And so it's really difficult. Well, we never ever showcase that business with proprietary information. We always go to market without any proprietary details, without anything that will give it away. We're extremely cautious because if we breach confidentiality and employees start to find out for sale, customers, et cetera, then they can literally put them out of business. So we get the business noticed. Like I said, it's a very difficult process, but we get them noticed without anyone ever knowing the company name, the company address, knowing anything proprietary about that business. And the way we do that is by blind mailings, telemarketing. Listings, business site listings that we utilize. And we send out blind teasers to gauge the interest, whet someone's appetite, to see if they have an interest, to sign a nondisclosure agreement, go through the qualifying process, financial qualifying process, and move on to get more information to find out who that business is. But in the beginning, we get that list, that engagement known, that company known without reaching Confidentiality, which is not easy.

Yeah. Yeah. And that's a really fabulous start to the podcast because this assumption that everyone wants to get noticed. There are times, and especially if you have a listed company, there are quiet periods as well, aren't there? Where you're not allowed to talk about provisional earnings. Michelle, how are you helping companies to prepare to be seen to look attractive? Because there's 2 elements, aren't there? One is they need to look As a, as a company that's going somewhere. And then you've got the transaction part of communication.

Yeah. So, so let— I do want to make one more statement about getting noticed because a lot of business owners don't really know who to call or who to hire when they go to sell their business. And some of them will hire a real estate agent. Well, you should never hire a real estate agent to sell your business because real estate agents' models Their motto is the more you tell, the more you sell. So they have a big sign in their front yard. They put it on the MLS. Everybody knows about it. They conduct open houses. So you want to make sure that you hire the M&A experts so they maintain confidentiality throughout the process. So as far as the transaction goes, how do we make it look pretty? Well, you know, how do you put lipstick on a pig? Sometimes I've been asked. And what we try to do is not cover anything up. We want to tell the truth. We want to be transparent. We want to tell the good, the bad, and the ugly. We want to talk about the skeletons in the closet upfront. You know, we really want to work with our business owners ahead of putting the business on the market because we want to clean up some of these things. If there's a pending lawsuit, if there's a workers' comp issue, if there's some employment scandal, we want to try to clean all that up before we go to market. So we're telling a story about what did happen, but not what's happening today. So we really want to package that business in the best light, but we're going to do it with full transparency. We're always going to tell the truth.

Wow. That, yeah, there's a lot in there. So a little bit of sort of, sort of, is that a redecoration? I mean, are you going out and looking at things maybe on Glassdoor, for example, that are not favorable or? You know, it's an old employee post.

Yeah, absolutely. It's kind of like staging a house. You know, when you want to put your house on the market, a real estate agent will come in. If it's a really good real estate agent, you know, there's good and bad, will come in and work with a stager or stage it themselves and really show your house in the best possible light. Get rid of the clutter, get rid of the junk, you know, make it look like you have no kids. And so for a business, depending upon the size of the business, If it's a small retail business, like a coffee shop or restaurant or clothing store or something like that, you know, we really want to dress up the curb appeal. We want to make sure the signage is visible. We want to make sure that the windows are clean of clutter. If it's a larger business, like a manufacturing plant, trucking company, something like that, we want to make sure that the business looks as good as it possibly can for a warehouse or for, like I said, a trucking facility or A manufacturing plant. And then we want to make sure that we're working with that owner to dress up the staff, make sure that they're in proper attire, make sure that they look good, make sure everything's clean, you know, make sure everything looks good on the outside. But on the inside, we're working with the business owner to really clean up those 6 Ps and make sure they have the right people in the right seats and make sure they have management teams in place because Steve Forbes, who endorsed Exit Rich, says 80% of businesses will never sell. M&A Source in America says 90% will never sell. That means you have a 10 to 20% chance of success. If we don't work with you on the inside and out, the probability of you selling your business is slim to none. So we want to dress up those 6 Ps and build that infrastructure to make sure that your business is shown in the most possible light as possible. That's why we have an exit. We have a Road to Exit Rich program that we really work with our clients for 1 to 2 to 3 years before we put their business on the market. Because this stuff takes time. You know, you didn't build the business overnight. We're not going to fix it overnight.

Interesting. Now you've mentioned there are 6 Ps in the Exit Rich book, which you, you authored with Sharon Lechter, I believe, who was the co-author of Rich Dad, Poor Dad. Just share, what are the other, what are the other Ps?

Sure. So people is number one. So, you know, the number one reason that businesses are not sellable is number one, business owners don't plan their exit. They wake up one day and go, I can't do this anymore. I have to sell my company. And it could be health issues, partner disputes, divorce, death. It could be this pandemic we've been living in for the last 2 years, it could be the employee market and not wanting to deal with employees anymore, but you can't wake up one day and expect you're going to maximize value. It never happens that way. So you've got to plan your exit from the beginning. Like Stephen Covey says, start with the end in mind. The number one reason that business owners don't sell is because the business is 1,000% dependent upon that owner. You want to make sure you have the right people in the right seats. And you want to ask the who question. Who opens doors? Who handles customer service? Who handles quality control, marketing, legal, accounting? Who handles manufacturing, distribution, et cetera? The list goes on and on, Jim. Your name, Jim, should never be next to the who in your company. You want the business to run without you. So that's people. Product is next. In America, it used to be that startups were at great risk. You know, 90% of startups would go out of business in the first 1 to 5 years. Guess what? It's not startups at great risk anymore. Only 30% of startups are going out. Now, out of 27.6 million businesses in the United States, 70% of those businesses have been in business 10 years or longer. Will go out of business. They are going out of business. This is your product, your product, your industry, or your service. You have to ask yourself, are you at the top of your game? Are you an Amazon and you're in your prime? No pun intended. Or you're a Blockbuster and you're about to go out of business. The number one reason businesses are going out of business all around the world and they're exiting poor, not exiting rich, is because of lack of AIM. A-I-M. AIM is always innovate and market. Business owners stop innovating. They stop marketing. They want to continue to do things the way they've always done them. You're either growing or dying, Jim. There's no in-between. That's your product. Then you have processes. Most business owners design their processes around the owner's agenda. A doctor's office. We're trying to take our doctor to pediatrician. The hours are 9 to 4, Monday to Friday. When does my daughter go to school? 8:30 to 3:30. You know, so. You got to look and ask yourself, ask yourself, ask your clients, what are the 3 things we want our clients to experience when they do business with our company? McDonald's did this back in the '40s. They said, we want our customers to experience great tasting food that's hot and fast, 30 seconds or less. Those processes were designed in the 1940s. That's why you can eat at McDonald's anywhere in the world and get the same experience. You got to have those SOP checklists. You got to have employee contracts. You got to have those non-competes. Then you have proprietary. Proprietary is the highest driver. It can take you from a 4 multiple to 5, to an 8, to a 10, to a 15. These are your contracts. These are, these are the more well-branded you are, the more I can sell your company for. Apple is the largest brand in the world worth over $389 billion. That's not assets, inventory, anything else. Databases are huge. Facebook paid $19 billion for that. And WhatsApp was hemorrhaging money, but guess what they had? They had a billion users. Patents are huge. If you ever watch Shark Tank or Lion's Den or any of those shows, they always ask about patents, contracts. But the biggest mistake business owners make with contracts is they don't have the transferability clause that says this contract is transferable upon an entity because 98% of all sales in America are asset sales, not stock sales. Then you have celebrity endorsements. You have what I call digital real estate. If you have a bedding company and you have a radio personality that talks about your sheets and how luxurious they are, your pillows, et cetera, they can only endorse one vertical at a time. Somebody else is going to pay huge money to get that real estate because you can't get it as long as they're endorsing your company. So there's so many things that build up value that really can take— because again, when we do a value, when you look at evaluations, it's not just about the numbers, it's about the synergy. It's about those proprietary assets that really drive value. And then you have patrons, which is the 5th P. This is customer concentration versus customer diversification. Many businesses in America follow the 80/20 rule where 80% of the revenue comes from 20% of their clients. If they lose any of those clients, then their business can, can go, you know, can be tanked really quickly. They can lose revenue, they can lose EBITDA, and they can basically be out of business. And then the very last P, the most important P to all of your listeners, Jim, is profits. The reason I put profits last is because profits is never your problem. Lack of profits is never your problem. It's the symptom of not having the right people in place. It's a symptom of being in a dying industry. It's a symptom of not having your processes all buttoned up, not having checks and balances. You know, 3 out of 5 companies in America get embezzled every single year because owners are trusting but not verifying. They don't have the right systems and processes in place to make sure they're protecting their money. So lack of profits is never your problem. It's a symptom of.

Wow. That's an amazingly, you know, comprehensive view there, Michelle, of all the things that one needs to do if you're preparing. Now, what I also love is what you talked about in terms of kind of the ramp, the 1 to 3 years to get the business kind of packaged. It needs to be profitable, as you say, but to be packaged as well. Can you just talk us through the process and, for example, creating investment memos? So you've talked about the, the process of maybe farming out and putting out that this business in this sector, in this location is available. What about stage 2? Once you've got people interested, can you tell us a little bit about what needs to happen from a communications perspective there?

So, so once we have people qualified, because qualified is the big key here. Once we qualify them and they're interested, then we send them what we call a prospectus. It's also called a CIM, Confidential Information Memorandum. And once they, they go through that, then they typically will let us know if they're still interested or not. They'll send us a list of questions and we really prepare the buyer and we prepare the seller. So before they get on that call together, they typically are having a call before they have an insight. meeting, especially on the larger transactions. Smaller transactions are a little bit different, but we want to, we want to prepare the buyer to make sure, you know, that when you're asking questions, let's get those questions ahead of time. Let's make sure the seller has time to prepare. Let's make sure that we're not getting into negotiations because that's our job. Let's make sure you're not insulting the seller by saying, oh my gosh, I hate your location. I hate your building. I hate this. I hate that. Because that happens all the time. You know, we want to set the buyer up for success of building a good relationship from the beginning. And then the sellers, we really want to help them be able to communicate and be transparent because a lot of sellers are like, I don't know if I wanna tell them that. I'm like, yes, you have to tell the truth. You tell the truth in a positive light. This is hap— because no business is perfect. They all have skeletons. Every deal has hair on it. You gotta tell the truth. You gotta be crystal clear. And you just, you gotta do it in a positive spin. And then we also make sure that they know not to communicate without us. We are the experts. We're the advisors. A lot of times deals are made based on emotions, not logic. So a lot of times if buyers and sellers talk to each other without us being present, buyers misinterpret something sellers say, sellers misinterpret something buyers say. Look, it's a common problem in America, in the world. You know, if we all had better communication, we wouldn't have most of the problems we have today in the entire world. Right. So we want to make sure that everybody's heard and understood. And so that's what we have to deposit at all meetings because I've literally had deals fall apart because a buyer called the seller without getting us involved. And the seller didn't like the buyer because they misinterpreted something they said. And we want to make sure that everybody's heard and that it's clear. clear and that no one's misunderstood. Does that make sense?

Yeah, absolutely. Absolutely. So having, if you like, an objective party brokering the deal in every term is really, really important from a basic communications point of view.

Yeah. It's kind of like we're advisors, right? It's kind of like an attorney. If an attorney is representing you, attorney is going to say, don't talk to— if they're representing you in a divorce, if they're representing you in a criminal matter, if they're representing you Maybe a patent issue or trademark infringement. They're going to say, don't talk to the other side without your attorney present. Well, same thing. Don't talk to the other side without your advisor present because we're there to make sure that the T's are crossed and the I's are dotted.

Exactly. Exactly. So, so you're obviously, you know, and looking at your bio, you've got an M&A, Mergers and Acquisitions Master's Intermediary, uh, was the title. So you've got a professional qualification. But how have you in New Orleans been building your brand as an entrepreneur? Because you've also got stakes in multiple companies, Michelle. So share with us how, as an entrepreneur, you've been getting noticed as well, because that's really interesting.

So I am from California, just to throw that out there. Welcome to California. But yes, I'm a mergers and acquisitions master's degree, senior business analyst, and which are the titles behind my name. What matters is results. I always say titles don't matter. Results matter. We are results-driven. We make sure our clients get results or they don't pay us. We're probably the only M&A advisor out there that doesn't charge retainer fees. But how, how did I get— are you asking me how did I get— Yeah.

I mean, I love the exit, Rich. I love the look of that. It's fantastic. But yeah, tell us, because as a, as an entrepreneur, you've obviously carved out a really fabulous niche.

Jim, I call myself the Best kept secret. Oh, it's always a best kept secret because remember, selling a business is confidential. It's not selling a house. So we will go out and sell businesses, but there's seller financing, there's earnouts, there's all kinds of different creative financing that's involved. So the buyer doesn't want us to tell anyone about the sale because they don't want the clients and everybody to find out. Sellers want to keep it confidential because they want to make sure they get paid. So I can't talk about it. So I've been able to. Sell businesses for millions and millions and millions and help business owners retire rich, but I can't talk about it until after so many years. And if it's a public deal, you can talk about it. If it's private, you can never talk about it until you get everybody's permission to do so in writing. So back in 2013, I met, I went to a conference and met someone there that says, you should write a book. And I'm like, you know what? I was a writer when I was a kid and I love writing poetry and short stories and things. You're right. I should write a book. So I wrote my very first book in 2013 called Sell Your Business Before It's Worth It. And I self-published, but that was a huge game changer for me. That just really opened up the world because nobody knew who I was. And the bigger issue of not knowing who I was was business owners didn't know that there are business brokers and there are mergers and acquisitions advisors that exist. You don't have to go to a real estate agent or an attorney or a CPA to try to sell your business because they're not experts in selling companies. So I really wrote the book to educate the marketplace of who we are and what we do. And there's a better way to sell your company. And I wrote the book for branding purposes, you know, to get recognized, to get noticed for lead generation. And it really, really helped. And then Exit Rich is my third book now, and I've got a couple more coming out, but Exit Rich is also a game changer because now I have a publisher. I have Cheryl Richter as my co-author. And Steve Forbes endorsed it. Kevin Harrington over at George Schwab on Schwab Take wrote the foreword. So it's a huge game changer. We're in the Hudson Bookstores and airports all around in 90 different Hudson Bookstores in America. So if you go by Hudson, pick up Exit Rich. And we've been on over 300 podcasts because of it. So you write a book, you launch a book, you get on podcasts, you want to get your name out there, you get your brand out there. And, but for me, it's not just about becoming, being recognized. For me, it's about making a difference in the world and really changing the landscape of business.

Well, you know, in just 20 minutes, Michelle, you've changed my awareness and understanding of my landscape. If people want to find out more about you, how can they do that?

Sure. So there's several things. Number one, I encourage everyone to go out there and get, pick up Exit Rich. Exit Rich is not a business of selling the business. That's where people, that's where everybody tends to get confused. Exit Rich is all about building a sellable asset. It's about building a business that is sustainable to continue to grow without you, that you can continue to scale. And when you're ready, you will actually have an asset to sell. So you can pick up Exit Rich. If you're outside of America, go to Amazon because of the shipping costs. Go to Amazon. Inside the America, you could go to Hudson Bookstore, you can go Books-A-Million, any of your favorite bookstores. Also, you can go to Amazon and you can go to exitrichbook.com because, Jim, I have to tell you this really quickly. We are giving away a free— so anybody that buys Exit Rich shows me your receipt, you buy anywhere else other than exitrichbook.com, you get a lifetime membership into the Exit Rich Book Club where you get video content, me doing deep dives in these different strategies and techniques, but more. There's documents, documents to operate your business, like sample SOPs, policy and procedure manuals, non-competes, sample letter of intent, prospectuses, due diligence, purchase agreements. closing documents, all these documents, especially over $50,000. All that is available for you for your review and download free by Exit Rich. And that's at exitrichbook.com. You can also take the 6P quiz at sarahtuckeracademy.com. And my main website is sarahtucker.com. And then don't forget to listen to Exit Rich podcast, where we'll talk about million-dollar exits.

Well, Michelle Sarlatucker from New Orleans. I nearly said New Zealand there. New Orleans. My landscape shifts so much. I'm in different continents. Michelle, thank you so much for sharing, uh, amazing amount and how you've gone and built yourself into becoming such a recognized entrepreneur and helping so many of us around the world. Thank you so much for joining me today on the show.

Thank you, Jim. Thanks for having me. I had a lot of fun.

Yeah, me too. Thank you so much. And so I will put all those details in the show notes around Exit Rich and Michelle Silo-Tucker. Thank you so much for listening to this episode of The Unnoticed Entrepreneur with me, Jim James.