EP 67: Common Legal Traps That Will Kill Your Exit Deal

Welcome to the Exit Engine Podcast, episode 67. Welcome to the Exit Engine Podcast, the show where founders, owners, and entrepreneurs get the inside track on building a business that's not just profitable, but exit-ready. We bring you real stories, real frameworks, the real results of raising value, improving salability, and planning your next chapter on your own terms. My name is Joe Stapleton. With me, as always, is my partner in crime and my partner in exits, Mr. Jon Kniff. Jon, how are you?

I'm well.

Awesome. Guys, just as a reminder before we get in today, we have just at ExitEngine, we have just launching a very new an exciting thing that we're calling My Exit Engine. It is, we believe, the first, the world's first exit ecosystem where you can get your total exit value score, you can connect with expert advisors, get a community of founders that are all building towards strategic exits, and that is gonna be coming soon. So right now, if you go to myexitengine.com, you can find out more there and figure out, learn about signing up and how we do that and all that stuff. at myexitengine.com. John, this is an exciting time because today we're going to get into something that we haven't— we've touched on a little bit across the life, but we're going to deep dive now into the legal side of M&A. And there is a lot to the legal side.

Well, it's so— because it's so important. Because not that people forget the legal side, but people are so focused on their business that sometimes I'll I'm accused of this, and I have been accused of this, is playing a lawyer on TV. And that can get really, really dangerous. And when you don't have the right counsel, or you have a counsel who is an attorney but isn't focused on deals and doing with M&A, it can just get—

it causes—

it can cause so much pain. And if you're trying to save a buck or two, it can cost you so much more money in the long term than you're paying for quality advice upfront. No question.

The reality is there's so much of this. I mean, there are, there are, there are, I mean, there are 3 or 4 different contracts just as we go through the process alone, right?

Yeah.

Yourself into— there are, there are negotiations. There are— what you want is somebody who's been there and done this and seen this before, right? Who's going to be able to— and by the way, someone who's going to speak the legal language because the other party is going to be full of lawyers, um, right? And we want to make sure that you've got someone who's going to protect you on your side. So Today, I'd like to introduce you to today's guest, is Hallam Stanton. We call him Hal. Hal is a growth-minded strategist, operator, and an M&A attorney who has basically just started his own legal practice. He's been in the M&A field for years, and he is basically helping people just like us learn how to maximize the value of their exit and to make sure that they exit on their own terms. But he's coming at it from the legal standpoint. So, Hal Stanton, thank you and welcome to the ExitEngine Podcast.

Thank you, Joe.

I appreciate being here.

Absolutely.

So, Hal, you know, the first question is, right, is that what are the things that you come across all the time, right, where you're getting called into a situation, right? And what is the first thing that you're doing when a founder calls you and says, I'm thinking about selling my company?

Yeah, the first thing I would do if I were them would be to think about it from the buyer's perspective, right? So most of the deals I work, which are Main Street deals, right? They're businesses between $1 and $10 million in enterprise value. The thing that the buyers can be most keyed up on to start with are the financials. And that's not really my domain, but I always advise people to focus in there because in these small deals, probably what's going to tank your deal is the financials. So, you know, and there's some classic examples out there, right? If you haven't been— if your tax returns don't align with your financial statements, it's a great example, right? That's going to cause problems. Okay. If you're a cash business, if you're the kind of classic coin-operated laundromat and you're enjoying the bountiful excess of all that cash that you're not running past the IRS, that's probably going to be an issue for you. So the first thing I would do is have your accountant look at your books and make sure that they're ready for someone else's accountant to pick through. Because if they're not, it doesn't matter how good you think your business is, it's probably going to be hard to sell it for what you think it's worth. It's really great. Yeah, that's—

sorry, that's really great advice. I'll just stop you there. I know you've got some more there, but I just want to touch on this real quick. What we see too, just like you, right, is that same thing, which is that the books have been, again, People are often managing their business to a different kind of set of standards, okay, than they are— than the exit process requires, right? As you mentioned, often they're managing their entire business to taxes, right? And the reality is, is that that's fine, and that probably works for you in the short term in terms of the money you're taking out of the company and keeping that money and all that stuff. But the problem is, is that that's a pretty big issue where you might be leaving money on the table, right, when you go to be able to change the way that you're reporting so that you can show the most money as opposed to the least money, right?

For sure, right? Because you want it both ways. You want to sell your business for what you think it's worth, but you also don't want to pay the taxman. Those things are naturally in tension. And that's kind of a classic example. I think there's other issues too with the books. And again, this isn't really my domain. It's just what I've witnessed working with a lot of people in the M&A space. We're closing one deal, working to close one deal right now where I'm representing the buyer and the seller side. Their approach to AR is basically being not to worry about it as long as there's sufficient money in the bank account. So you've got hundreds of thousands of dollars in AR, which is actually going to make your business harder to sell because when it comes to trying to sell that business, the buyer isn't going to want to purchase the business with hundreds of thousands of dollars more in AR than is currently in it. There's going to be some kind of net working capital peg that they want to negotiate. But then you have a problem of how does that peg work with the AR that's in the business. So I just think good business practices on the financials are important. And you have to be thinking about these things years in advance, not just the day you decide to sell, which I think what makes it so tricky for many entrepreneurs.

Yeah.

And along with that, with the financial statements, it's the financial statements. It's the AR issue that you raised. Like revenue concentration, I can imagine, right? Like if you're trying to sell a business and it's a couple of million bucks and $800,000 of it is one client, that's something that A, you can't change overnight, and B, it can require years of getting more clients, making that $800,000 a lesser percentage of a larger number.

Yeah, for sure, right? So this is all— so maybe the best advice you can give to anyone looking to sell their business is think about it in advance, right? Yeah, decide, you know, have a 5-year plan, not a 5-month plan, and you're probably going to be doing better. Once you're in that position, go out and consult your advisors and start getting, getting the business into shape.

And, and, Hal, I know this varies, but like, I can imagine— or, or said, let me ask the question differently. When are you typically brought in, right? Like, so, so in other words, do you get calls? I can imagine you get calls where like, hey, I've got an LOI or an offer or a purchase agreement. Like, Just describe the typical one, and then from your perspective, the ideal scenario when you get brought in, because I can imagine those 2 things are quite different.

Yeah, so I think I work buy side and sell side. And I'm typically brought in around the time either someone knows they're going to receive an offer or around the time they think they're making an offer. And that's totally fine. There's no need necessarily to bring in a Okay. On the sales side, because I know that's your focus here, the issue then is whether your company is— the state it's in when you bring in the lawyer, right? Because what I'm going to be looking at in those first few weeks is, again, going back to the buyer's perspective, is let's do diligence in reverse, right? What are the things that the buyer's going to ask for that we need to provide? And some of this can be quite basic, but but still there, right? Do you have evidence that you can sell the thing you're trying to sell? And that is, the buyer's going to want to look at your governing documents of the business. If you're a corporation, kind of the board and shareholder minutes. If you're an LLC, even the company minutes, just to make sure— the stock ledger or the equity ledger— just to make sure that there's no hint of that silent partner in the background that you've forgotten about because it was 10 years ago when you granted them the interest or something like that, right? So it depends on the state of the company. If those records are maintained on a central Google Drive or something, this is no problem. We can easily go through that and work out what needs to be potentially tidied up and what's there. The problem is if you get someone in and you're trying to rush through a sale and you don't have any of that, it's gonna jam up your work. So again, forward planning is probably the most important part of that process.

Right. And then like the structure, right? So I can imagine that there's all sorts, there are different business structures, especially in the United States and in other countries. Do you advise, like, in the event that you're selling an LLC or helping to sell a C corp, like, do you have any, like, general guidance for those types of situations, or, or what's better from your perspective, or does it really not matter?

Yeah, that's a good question. So, uh, generally speaking, it doesn't matter. And I, I say generally speaking, but there is an exception. Uh, so there is a fashion, there is a trend, right, that all small businesses want to be taxed as S corps. S corporation seems a very tax-efficient structure. The problem with S corps is they are less flexible than other types of entity. So if the buyer is not buying alone, if they're buying with a partner, or if they want to take on investors, it's going to make it hard for them to purchase that S corporation, right? Because it will blow the S election, because only natural people can buy, can hold stock in an S corporation, with some exceptions. So in those situations, there might be some kind of pre-transaction structuring that happens. And it's normally at the buyer's request, they're going to request something called an F reorganization. And this is where you take your S corporation, you wave your hands, and the taxing authorities kind of look away and they look back and, oh, you've got a single-member LLC taxed as a disregarded entity, and that's much easier to sell. Of course, that kind of stuff costs money, right? You have to pay your advisors to hold your hand through the S corporation reorganization, the F reorganization. Apart from that though, and that's that specific example, not really, right?

I got you. You could argue that maybe corporation is less—

if people are looking to buy equity in a company, C corporation maybe is less attractive than an LLC taxed as a partnership with this regard, perhaps. But the other thing I think we should focus on here is most Main Street deals, at least, are asset purchases. They're not stock purchases.

Yeah.

So in that case, it really doesn't matter. You're just reaching into that toy box and you're picking up the things you want and you're putting them into your own legal entity, which is an LLC or a corporation. So it's really not an issue at that point.

Yeah, and that's a good point. I'm sorry, John, we just, just, uh, we should clear up right now the difference between an equity sale and an asset sale, because they are really the two— is that where you're going? That were the two— that's, those are the two kind of big— they're very different, right? And they are, uh, and they, they're approached differently. They have, both of them have, you know, good parts, bad parts, whatever. Um, and, but the reality is, let's talk— can you talk a little bit about the difference between an equity sale and a, and an asset sale?

Yeah, for sure. So yeah, in these small deals, that's typically one of the 2 structures you're going to have, right? Assets v stock. From the buyer's perspective, it's advantageous to buy assets. Okay. And that's for 2 reasons really. And that is when they— so an asset sale, the buyer's going to set up a new legal entity, an LLC, corporation, whatever it is, and they're going to reach into your corporation or your LLC and they're going to pick up the assets they want and put them in their box and they're going to pick up the liabilities they want and put them in their box and they're going to leave everything else with you as the seller. That's advantageous from the buyer's point of view, right? They get to leave behind the liabilities they don't want, including liabilities you may not even know exist, like a lawsuit that's about to be filed, for example. Okay. They also get something called a stepped-up basis in the assets, which means that they have greater depreciation amortization deductions on their tax bills in future years. So that's better for the buyer. It's also very common in this space, right? It's advantageous for the buyer, but it's also If there is a market for the market term for stock, the assets is assets, right?

Mm-hmm.

An equity deal, a stock deal is advantageous for the seller. This is where they buy the whole company off you. There's no new entity set up. The buyer is going to take the stock certificates off your hands, put them in their hands, and they inherit the company. And with that, they inherit everything. They inherit all the liabilities, but they also don't get that stepped-up basis in the assets. And generally speaking, it's more advantageous for the seller on a tax basis to sell stock rather than equity. rather than assets. So you've got those 2 modes. It's pretty much a zero-sum game, and it depends on the circumstances. But generally, if you're a seller, you want to sell your equity. It gets everything off your plate. It ends up with a better tax position. And if you're the buyer, you generally want to buy the assets. And there are some nuances there, but that's how it breaks down.

And with regard to the asset purchase and the liability purchase, so we've dealt with A couple of, many of those, right, throughout our career. With regard to, um, like when they're buying liabilities in addition to the assets, what's an example of, of a liability that a company would want to buy in that asset purchase, uh, scenario?

Yeah, it's a great question because why would you want a liability? It doesn't sound good, right? So the truth is very, very few. You really don't want any at all. But normally the 2 liabilities you're going to assume are accounts payable, right? Potentially, if there's working capital in the deal and you're balancing that AR/AP equation. Or alternatively, in addition to the APs, is any liability associated with an assigned contract. So let's say there are customer contracts in place, right? And maybe there's 6 months left to run on the contract. You need to buy that contract, right? That's revenue you have to purchase and transfer over. And in doing so, you're also inheriting the liabilities of that contract, including your obligation to pay perform that contract, for example. So that's typically the 2 big ones. And then there are occasions when other liabilities are assumed. For example, rare, but sometimes maybe the most common time this comes up is if you're buying something with a lot of inventory that's financed, you might want to assume the financing loan that's underpinning the inventory. That sometimes happens.

Okay. Yeah, that makes sense.

And again, it's interesting because most people, I think, again, especially at the Main Street level, right, are, when they come to you at first, a lot of them are probably like, I want to sell my company, right, or my business, right? And you're like, well, you're not really going to sell your whole business. You're really going to sell your assets, right? Because at that level in particular, that's really what the deal is most of the time, right? We're not in a, you know, when companies are less than $1 million in particular, But again, even less than really $5 million, oftentimes what you've got is, again, a bunch of liabilities and assets more than you have potentially a company that its overall value is greater than the sum of its parts.

Well, when we speak about buying assets and stock, I know it sounds literally like you are buying assets. It's really a legal fiction. It's a statutory technique. So You're buying all or substantially all of the assets of the business. You are, for all intents and purposes, buying the business. It's a bit awkward, clumsy how it's done, but you are— after closing, you should be operating under the same trade name and everything else. It's just a wave of the hands. Look, large transactions, if buyers had a choice in large transactions, they would probably buy assets too, but the reality is it's impractical. Big companies, hundreds of contracts to review, potentially to get consent from the counterparties to assign, it's just not going to happen. So typically, it's only the small deals that are done this way.

Right. So let's talk about deal structure for a minute, because again, I think that's the next place to kind of think— well, actually, before we do that, let's talk about there are several different contracts that will pop up during this process, right? There's the LOIs, the one we talk about a lot, which is the letter of intent. There's the purchase, the sale contract, and all that stuff. Talk to us a little bit about the basic kind of contracts that that there are during this phase and how we kind of go about— how do we go about kind of making sure on the sell side in particular that those things are buttoned up?

Yeah, you're absolutely right. So traditionally, the way you're going to receive an offer is through a letter of intent. And you're probably working with a broker, so maybe your broker receives it and then you review it afterwards. But the letter of intent is essentially a buyer's offer, but it's non-binding, largely non-binding. There are some exceptions, we can discuss those, but it's largely a non-binding offer. It's largely a way for a buyer to say, hey, if I was to present a purchase agreement with these material terms, would you accept it? Right? And it's a way for the parties to kind of get those big-ticket items like purchase price, purchase price structure out of the way and done before either side invests too much time and money into a deal. That's the purpose of the LOI. It's kind of a safe space they want to create. So you're going to receive one of those. There are some binding terms to an LOI, in particular exclusivity, right? Exclusivity is this period you're going to enter with the buyer where for that amount of time, be it 60 or 90 days—

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You're not going to look for another suitor. You're only going to work with that buyer on the deal. And this is so that the buyer has time to kick the tires, due diligence, and to look at the transaction documents too. So when we say that LOIs are non-binding, as a seller, you have to be aware that if you're signing an LOI, some of it is binding. And in particular, the important provision is the exclusivity provision, because if things go south with the buyer, you're locked in for that time, right? You can't sell your business to someone else very easily.

And that can be a challenge, right? That the exclusivity period, depending on how fast the market moves and depending on changes in the economy, like a 90-day exclusivity period can And that's a long period of time sometimes.

Yeah, it can be, right? It can be, right? If things fell apart, the first thing the buyer's going to do when they get on their LOI is they're going to start their accountant looking through your financial records. Let's say that takes the accountant 2 weeks and the buyer's accountant just doesn't like the look of something, right? And they want to retrade price. But you don't want to retrade price as a seller. I know this is how much my business is worth. And at that point, you've got a bit of a stalemate. And unfortunately, if you as the seller, if you're locked into an exclusivity period, you kind of have to ride that stalemate out, right? You can't go looking for another buyer because the buyer's contractually got that right to at least discuss it with you for the next, you know, however many days it is.

And are there any— so for that period, are there any like, um, tips or anything that you advise your clients on with the exclusivity period? And not, not 60 or 90 days, anything like another provision in there where they can get out of that exclusionary period Or exclusive period if the buyer finds something materially wrong or decreases their offer by X% or something like that?

Yeah, you could.

Rarely.

Sometimes the seller, we could push to include some kind of term like if the buyer attempts to retrade the purchase price, then exclusivity ends. The reality is, and I think this is sellers and buyers should take this to heart, the reality is this 99% of the time, this is a very collaborative process. If the buyer's not interested in proceeding on the business, they're actually going to let you know and you're going to mutually walk away from that LOI, right? No one's real interest is to hang around like a bad smell trying to get a deal done that's not going to go. So I would say if you're going to sign an LOI as a seller, if you're happy with the terms and you've had time to evaluate the buyer and you think the buyer's a serious buyer, I wouldn't sweat it too much about exclusivity. I would enter into the spirit of the LOI and say, look, we're going to work hard to get this deal done and to rely on both being very reasonable. If it looks like a deal's not going to go, then you're going to mutually agree to walk away from the LOI.

And I would also add, right, that if you are buttoned up to begin with, then you've got no fear. Okay? So, the reality is, is that again, sign an LOI because you've already done the work. You're not fearing due diligence. That 90-day period or 60-day period or whatever, right, is going to be a breeze for you because you've listened to the Exit Nation Podcast and you've You've talked to someone like Hal and you've got, right?

Okay.

Because, because that's because you're being so smart founder about this stuff, right? The ability is that, as you said before, you're starting at a 5-year out, not 5 months. And your ability to be able to have done the things that are likely to trip you up during that due diligence period is going to make that— make it a 60-day period, make it a 90-day period. I don't care.

Right.

Because the reality is that I'm so buttoned up, I'm not— I don't, I don't fear any of this.

It's a great point because, you know, when I was buying companies at another company, it was so funny when we were looking at financials for a couple of different opportunities and one was buttoned up, had everything, like we got everything within like 3 days, I think, of sending it, and that included the weekend. And then the next one, it took, I think it took like a week and a half for them to produce a partial list. And it's like, can you just, can you read your email? Because I was very clear with I need the last 3 years of financial statements, including balance sheet, income statement, and cash flow statement. And they like— it was, it was drip, drip, drip, drip, drip, drip. It's like, come on, man, like, just can you send me everything that I asked for? As opposed to getting something, getting partial stuff in a week and a half, and then, oh yeah, I gotta send you 20, you know, whatever it was, 2018 or whatever it was when we were buying them.

So yeah. Well, that often happens in smaller deals because the seller is These businesses are run informally. The seller is doing all the work, they're doing all the management. They don't have some— if you have someone in place who's your— even on a fractional basis, your CFO, those materials are going to appear very quickly. But if you are the person just bootstrapping this whole operation together, you may have a great client book, your business may be worth something, but it's actually not worth as much because you are the key. You are the person at the center of the spider web just tugging on all the different strands.

And that's something we caution people against, right? So, like, you know, in some of the smaller deals, it's sort of impossible. But one of the things that we mention to our clients is like, look, like, to the extent that you're doing 40% of the sales or all of the operations or all the customer service, like, that's not a viable business, right? Or a viable and a viable business, right? Because what are they buying if I'm going to go away or I'm going to be available for 10 hours a week or whatever you're going to be available after the purchase? Like, The buyer's going to think twice about paying a premium for that business if it's the Joe Show, the Hal Show, or the John Show.

Yeah, for sure.

So again, so now you're in the LOI stage, right? You've got that document and that document is essentially saying, hey, I'm the buyer. As the buyer, I propose that this is the asking price. This is what I'm going to pay, assuming that this stuff happens, right? Because it's going to be in there too. We're going to go through due diligence. It's going to take this week, about this long, and we're going to set a close date, right, to be able to have due diligence done and all that stuff. And so those are the kinds of things that are in the— and then there's an exclusivity, often exclusivity clause that says, hey, while we're doing this, please don't go shop the business to someone else and try to beat my offer because we're in the middle of this now. I am committing time and resources as the buyer, right? We're being— and so that's why that, that's That's ostensibly why that exists, right?

What's the— what's—

is there anything else that the LOI— important thing the LOI does as far as a contract is concerned?

No, then you hit the nail on the head, right? Material business terms that you want to get agreed up front, some binding provisions, importantly exclusivity, just to keep the party moving forward.

Right. And so now we're in— now we're in— the clock is starting on due diligence, right? And they're getting— they're asking for documentation, they're going through everything with a fine-tooth comb, they've got their lawyers and accountants.

This is—

I mean, I say they, I mean, the buyer, the buyer's side has their accountants and lawyers and all those things going through things. There might be several meetings that start to happen, right? There might be things that start to happen about, okay, one of the things that comes up for me all the time, because this was my experience, was during this time, we're starting to talk about things like integration. We're starting to talk about things like earnout. We're starting to talk about things that come up and happen in the whole thing as a way of completing the deal, but this isn't just about a close date and the deal is over, is it?

No. So after diligence, the next step in the process is going to be the purchase agreement. This is kind of the centerpiece of any deal. And it's the buyer's prerogatives. It's just the first draft. It's just customary. I don't know why that is. It's just the way it is. The buyer's going to present you as the seller with a draft of the purchase agreement. And you hope the purchase agreement is one representing everything that was agreed in the LOI and the bits that weren't negotiated in the LOI because there are lots left unsaid at that point. You're hoping it's going to be kind of middle of the road. It's not going to be too aggressive because if it's very aggressive, there's going to be lots of red lines that are going to go back and forth. No one's going to win apart from the lawyers. So you've got this big purchase agreement to negotiate. Most small deals are done on what's called a sign-then-close structure. Right, where you're going to negotiate and sign this purchase agreement, and then you're going to have a transitory period, a closing period. Let's say it's 30 days, just for the sake of argument, during which you've signed, you're in a binding contract, you're just going through the conditions to closing. If you've got an SBA lender, the buyer's got an SBA lender, they're going to go through the closing process. That's a great time to discuss some of the things you're talking about in terms of transition planning, if I'm understanding your point correctly, Jo. That's the time to sit down with the buyer and say, okay, here's how we're going to make sure you, the buyer, succeed at the closing. And you might be thinking to yourself, I'm selling, why would I care? And the reality is, it's because the buyer's going to incentivise you to care by making sure some of the purchase price is contingent on him succeeding or her succeeding.

Right.

On a small deal, if the buyer's using an SBA loan, this is unlikely to be an earnout. In fact, it can't be an earnout because the SBA doesn't allow earnouts. But there will undoubtedly be a seller note, a part of the purchase price that you, the seller, are financing. Maybe it's 10%, maybe it's 15%. And if you want to see that 10% or 15% paid back to you over the long term, you have to make sure the buyer doesn't fold on day 1 post-closing. And there may also be some other contingencies, right? There's part of that seller note might be forgivable, let's say, because the buyer wants certain revenue targets, historic revenue targets to be kept up, or whatever the contingency is that the buyer's negotiated. So the period after you sign and you have your incentives aligned with buyers, But before you close, it's a great time to sit down and say, look, how can we make sure, especially if you're the kind of seller who's, I kind of run the show just out of here, out of my head, right? That's a great time to start planning how you're going to get that knowledge into the buyer's hands so that the buyers can take what you've done over the past 10, 15 years of running your business and run with it, succeed, pay you back the money, pay you back the interest on the seller note and everything else.

And when you're thinking from the seller's perspective, right, your point about SPAs and earnouts, Like, there are certain questions that the seller has to ask the buyer before they sign the contract, obviously, right? There's things spelled out that's contractually obligated in the purchase and sale agreement. But there's also things like, you know, how you're financing this deal. Are there other questions that the seller needs to ask the buyer in order for— that's outside sort of the payment, that's outside the contract that they need to know before they enter into a contractual agreement with them that you can think of?

Yeah. Well, this is about qualifying your buyer, right? So this should be happening a long time before you negotiate the purchase agreement. This should be happening at the LOI stage. Okay? And if you've got a broker representing you, as many sellers do, your broker particularly is going to be very, very keen about qualifying the buyer. And the reason is because the broker— brokers charge quite a bit of money for their services, but they take on a lot of risk. They don't get paid unless the deal closes. So what you really don't want is unqualified buyer wasting their time for 30 or 60 days, okay? Or however long your exclusivity period is. So qualifying the buyer is important. What does that mean? Is the buyer likely to close the deal? I mean, I think the 2 biggest things that sellers are concerned with early on in the process is how much money will I get at closing? Not necessarily what the purchase price is, but how much will I actually get in cash at the closing, right? Because that might be, or it's almost certainly going to be a percentage of the overall purchase And then 2, how likely is it that the buyer can actually close this deal? Do they have— let's say they want to rely on an SBA. How are they going to fund it? They're going to have to say, well, I'm going to rely on 85% on an SBA loan and 10% on a seller note and 5% of my own money. Do they have that 5% in the bank account? It sounds like quite a small number, 5%, but it's not necessarily. 5% on a $5 million deal is $250,000. That's a lot of money to have kicking around. Liquid assets for many people anyway, right? So do they have the means to close this transaction? Do they have a track record of something germane to running this business or closing transactions? Have they closed deals before? If not, have they worked in this industry? Is it likely that they're going to get in over their head very quickly? And those are the kind of buyers that maybe you just want to be a bit more careful with before you accept an LOI that sounds good on paper, but it's 2 months down the line and you're nowhere close to getting close to closing.

Yeah, especially when you're going to wait 90 days or whatever, or have to go through an exclusivity period for 90 days where nothing will happen, right? Or on your side, or nothing can happen on your side, right? You can't get out of it. You have to wait there for 3 months waiting, you know, and then just to have it fall apart, which is obviously also, you know, in your experience, you know, what we see numbers-wise is about 60% of the transactions fall through. Is that a number that you think is probably about right?

I would say, from my experience, it's more like 40% of the deals I work on die, 40%. But the reality is, for a lawyer working on these deals myself, I think I do a fairly decent amount of deals in a year. But the reality is, let's say, I think last year there was probably like 4,000, 5,000 SBA deals that went last year. I'm only seeing a small segment of this. The market, right? I really don't know what the actual numbers are in terms of people who are trying to close these deals and failing, but it probably depends a bit on selectivity, right? The position you're in as the seller, how selective can you be? How much interest have you got from buyers, right? If you've got lots of interest, you can be very selective and you're obviously going to go with the person you think can close versus your business may be on the smaller side, it's not very well run, it's quite formally run, there's a lot of problems with the accounting, maybe you're just running the business from your your checking account, you've got less of a choice. The buyers who are going to be interested in buying that business are maybe less sophisticated. There could be a higher failure rate. All these factors probably swirl around and play into it.

And when you think of those 40% that, roughly, and we're not going to obviously hold you to the number, but when you think of those failures of those deals, what are the contributing factors to those deals that are failing typically?

Number one thing that kills deals is financial diligence. If there's a disagreement in, if you are presenting EBITDA as a number or SDE as a number and the valuation is based off that number, then the buyer's going to go in there and have their accountant scrutinize it pretty carefully. And if there's a big gap, there's a big delta between your views of what that number should be with add-backs and everything, then at that point, deals can fall apart quite readily. After that, I would say the number one thing that kills deals after that you've got over that hurdle, is time. There's a great saying, time kills deals. I'm not a big fan of that saying because I think it encourages people to rush through deals and you definitely don't want to rush.

Right.

But there are situations where time really can kill a deal. And I'm thinking in particular, I had worked on a deal a couple of years ago where it was an asset purchase. The broker had done a very bad job actually on this deal. It was an asset purchase. It became very clear to us, I was representing the buyer, that it would have to be a stock deal because of assignment issues with key contracts. But there were too many key contracts to get our hands around, and the business was quickly entering into new business, right? So we had to transition to a stock deal. And it took some time to get through that process of negotiation, because then we wanted an adjustment on the purchase price. And then what happened was— and this is very classic— because of that time, the seller took his foot off the gas.

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That's The pipeline looks smaller. Suddenly the current year financials didn't look as good as the previous year financials. That is a big problem for most buyers because that's when buyers get cold feet and they want to walk away. So time kills deals in the sense that time goes on, you get preoccupied with the deal, you decide to take your foot off the sales gas. That's really a problem.

It's interesting because you are, you are sitting in this kind of period where, right, where you think— and again, this is like having— when you, you may do— you're lucky if you get to do this one time in your life, right?

Yeah.

And so how can you possibly have all the knowledge you need to have in order to do this well on your own, right? And so this is again why we exist, right, is to help people learn this stuff now Well before that it's time for them to exit, we hope, right? But but what you're bringing up is is a really interesting thing because it's a matter of that there is a is a it it can be a roller coaster, man, right? It can be an up and down situation depending on especially depending on where you are when you start because you know we've had situations obviously where we've had people that have been able to sell that probably shouldn't have been able to sell, right? And whatever and you you're gonna you gotta have a tenuous deal at best and it's probably an asset sale and you're in a situation where hey look. There's some value here, but we got to get through this. And the negotiations itself can be overwhelming for a seller.

Yeah, for sure. Right? Especially again, if you're just trying to do everything yourself. Look, no one likes spending money on advisors. I'm an advisor. I know people don't like spending money on lawyers. Let's face it. Right? But the truth is, if you're going to do something which is probably the biggest transaction of your life, Probably bigger than the house you bought, right? Then it might just behoove you a little bit to just get some people around you who have done it before, who can just help guide you through it. You'll probably end up making more money in the process. It's just a consideration.

Yeah.

Well, we had a situation, not recently, but we had a situation where we were unfortunately removed from the negotiating process. And we had things like things where Oh, when I get a text message, it's a little bit like Dr. Jekyll and Mr. Hyde or whatever it is. Dr. Jekyll and Mr. Hyde. It's like text messages crazy, but then emails are fine. And it was like dealing with 2 different people. And we were advising them like, hey, look, cut this out. Let's have a conversation. Let's have a conversation. Because that sort of seemed to be where we wanted to go is like, oh, let's get them on the— let's get people on the phone so we can have a dialogue and conversation, not sort of asynchronous communication with an email or a text message. So, I mean, do you have thoughts on those types of negotiations? What are best practices that you guide your clients to do?

Yeah, it's interesting. I would say I very much leave that up to my clients, actually, to be honest with you. And that's just because, you know, I guess ideally what we would do is we'd sit down at the beginning of the deal, we'd agree on a timeframe, team. We'd agree on a project plan basically, not only with my client, but with the other side too. And then we would have regular touchpoints where the advisors and the clients at that point met and just kept things moving forward. When it comes to the legal stuff, I normally prefer to deal with the buyer's lawyer.

Sure. One-on-one.

I find it can just move a lot quicker that way. But I've met my fair share of brokers who really, really are adamant that everything has to go through Right. It's just picking your battles. Yeah.

And the timing stuff is such a great point and such a deal killer because again, there can be— there's going to be things that come up, new clients, new operations, problems, lawsuits that come up during the deal structure or during the deal timeframe that you just got to deal with. Right. That it's inevitable that those things come up, obviously.

And to say in the timeline too, is that what we have seen happen is that the seller, to your point, earlier starts to actually get cold feet because the negotiation is so hard, right? They're afraid that they're not going to get what they want and they start to fall apart, right? And it's this notion of, especially when you've got a savvy person on the other side who is, let's face it, they try to, the buyer is trying to get a deal, right? The buyer is trying to find things and ways in which they can reduce their costs, reduce it, right? They want low risk. They want all this stuff, and they will— and they are ostensibly often in the— have the position of leverage, right? Because they are bringing the money, and this is something that somebody really, really, really wants.

Yeah.

The buyer often has other options, right? The seller is often sitting there, right, with the fewest options. And again, this is what we're counseling people to do, right, is to— you can create more options of buyers if you are a healthy more sustainable, sellable company. And that's why we're trying to— that's what we're trying to do, to counsel people then. But let's face it, the negotiation of this thing can be an up and down situation for people, even when it's their lawyer that's doing the actual negotiating.

It can be. And I think also the thing sometimes gets the sellers, or sellers in general, I should say, is I think when you get that NOI, there's a number on it. Let's say it's $3 million. You're like, $3 million, that's a lot of money. I could retire and cruise Aruba or something. I could do something with that money. And then you get through all the way in the process, and suddenly you get to the end, and there's a closing statement handed to you. And the closing statement has a top line number, and that number is your number. And then there's seller note, and that's deducted from it. Maybe there's an indemnity escrow, there's more money deducted from it. And then there's You've got to pay your advisors, you've got to pay your broker, you've got to pay your accountant, you've got to pay your lawyer. Suddenly, you've got this number down the bottom and you're like, I'm not sure I can retire on that. I've seen sellers literally walk away from deals at the last minute because they suddenly realized they're not receiving nearly as much money as they thought they were. A bit of it is, again, surround yourself with advisors who can keep your eyes open, keep your head up so you can really see what's going on and see actually where you're losing money and where you're gaining money.

And again, starting early, right, for that reason, because the, again, where you think the number is and where the buyer thinks the number is, right, and, or this particular buyer, you know, are almost never going to be the same. Or at least they don't, they're very rarely are they the same from the beginning and they stay that way, right? The reality is, is that if you are, again, the more buttoned up you are before a buyer even walks in, Right, the easier it's going to be for you to stand your ground and say, no, I can tell you I've had evaluation done, I have my sellability number, I've gone to ExitEngine, right, John, and done, and, and done the, the total exit value assessment, and I know exactly what my sellability score is and all this stuff, and it's a 90, and I know that I'm a sellable business, and I know that the second I get my— get out there, I'm gonna have a bunch of different buyers that are gonna be interested in me. And when you have that, that's you having the leverage, right? But most people are in positions where they don't even know, like you said, by the time it's all done, $1 million is not that much money.

Yeah.

For a seller, it's true. By the time you've actually carved it all up into its various components. I think it's definitely a seller's market right now. I think that's That's the thing sellers have to look at, right? So you should be able to get top dollar for your business if you just do some work in preparation. And I think that's— I don't know if it's going to stay that way, but there's definitely a lot of people now interested in acquiring companies and pursuing a life of entrepreneurship. I mean, it's written up in the New York Times, it's written up in Forbes. This is a thing.

Yeah.

And so if you're thinking about selling now, whatever your circumstances, are, if you can give yourself just enough time to prepare properly, I think you should be beating them off with a stick, right? If your company is anywhere decent, you should be beating them off with a stick. Now, there's a whole market popping up of micro sales going on now, particularly in the online space, which is a completely different thing, right? Where I question people entering that space as buyers, just because if you're running a tiny, tiny online business, it's just not necessarily a lot to that business. But if you're running like a great Main Street business, like, you know, like you do lawn care, you do fencing, whatever it is, you should be beating them off with a stick if you're anywhere in decent shape to sell.

And sort of switching gears a little bit with regard to like the— so we talked about the financial components, right? The financial components, you know, you mentioned everyone you're going to pay when you get that. So that top line number, that you were offered is very different from the net amount that you're going to get. What about the non-financial things? And I'm thinking reps and warranties that sellers have to— obviously, they need to concern themselves, but what is your guidance for the reps and warranties section of an agreement and how the optimal way to handle that from the seller's perspective?

Yeah, it's a great question, actually. It's often the most— I mean, one of the most heavily negotiated aspects of a purchase agreement. So reps and warranties are statements of fact which, if that you make as a seller, if they're set as reps, which if untrue could leave you open to indemnification obligations, right? If the buyer were to suffer losses because a statement you made was untrue and you indemnify them for that statement, then you might have to pay them money, right? However that works in practice. So the reality is people think, well, I can't represent anything that I don't know 100% is true. And that's not actually the case. It's really just a game of risk allocation. It's a game of what should you as the seller bear, reasonably bear as a risk of making a statement that you can't know for 100% is true or not, compared to what the buyer should state. So a classic example is the buyer's going to ask you to represent that your business is registered in all the jurisdictions that it needs to be registered. in. And you might look at that and say, well, I'm not— how could I say that for sure? Because maybe Rhode Island has changed its laws recently and I actually need to register as a foreign business in Rhode Island and I didn't know. And I'm doing business nearby in New York or whatever. I didn't know I had to register. And now the buyer takes over and the buyer gets fined and they're going to come and ask you for money. But the buyer's perspective on that would be, I think that's a reasonable risk for you to bear as a seller. Neither one of us necessarily knows, but it's reasonable for me to say, because you've been running the business, that that's a risk that you should be bearing. And that's the perspective you should look at reps' warranties in, is what is it reasonable? If one of the reps says that the financial statements I've provided reasonably represent the financial condition of the company at the time of closing, you, the seller, might say, well, I don't know for certain that's the case because maybe my bookkeeper's made a mistake. I don't know. But the reality is that's still a reasonable risk for you to bear as a seller. Now, there's work we can do as lawyers at the edges where we look to soften those representations if we think it's a risk that the buyer can easily bear. And this is sometimes like when we're looking to caveat certain statements with knowledge. For instance, I would never let my clients say there are no lawsuits threatened against the company, because that's unreasonable to ask the seller to know that. Perhaps someone tripped and fell over a sign you put up or something, I don't know, right? You just don't know. They're waiting in the wings, ready to sue. You just don't know yet. So we're always going to say on a statement like that, that's to your knowledge, to the seller's knowledge. And maybe it's constructive, maybe it's actual knowledge. We could argue around that too. To the seller's knowledge, there's no lawsuits threatened. But what the seller can represent is there's no lawsuits pending. Yeah, that's the key thing. Yeah, so there's working around, but you should always approach those negotiations because they are very— they can get very hot and heated— is what's reasonable to me, someone who's run the business for many years, what's reasonable for me to bear in terms of risk allocation, not what can you say with 100% certainty.

Yeah, it's a great point. And to your point about the LOI sets up the purchase agreement, right? And you get the LOI, OK, great, the terms Some of the terms are in there, great. And then when you get the purchase agreement, and this has happened with me, when you have those types of— like when you have those reps and warranties and they're worded in such a way that's so one-sided, it's like it was a signal to me like, I don't know if these guys are, you know, I don't know if these guys are serious, right? They're putting all these things in there that are so, you know, biased towards the buyer that like it can leave a bad taste in the seller's mouth to be like, well, Again, to your point about the threatening is a good example. How would I ever know? How could I ever represent that a lawsuit's not threatened against me? I can't warranty that. So it can be like a signal to some people in the agreement that, like, do they really want to do this deal, or why do they create this thing that's so one-sided to them?

Yeah, I mean, it can seem one-sided. I think the seller has to recognize that they are one, right? They are, of all the people in the room, they know the company better than anyone else, right? Yeah. So there's a lot of stuff that they should be able to represent. Another classic example, that you followed all employment laws. Now, maybe you can't say that off the top of your head as 100% accuracy because you don't know what all the employment laws are about. So a lot of small businesses definitely don't have inside general counsel doing that stuff for them, right? But again, you're the one running the business, and you're also the one asking for the millions of dollars to come into your bank account.

Sure.

So I think there are things that— if there's something that you think the buyer can easily learn through diligence or through investigation of the publicly available knowledge, it's okay to say, I think you should bear that risk.

Do your diligence.

Go away. Come back when you've done your diligence. And if you find something, great. If you don't, you don't. But if there's something that the buyer can't easily, or maybe can't know it all, right, then maybe it's okay for you to burden. Then it's going to look one-sided because you're selling the business. Most of the reps are going to be about the condition of the business.

Fair point.

You shouldn't take it as an affront. You should have your lawyer closely look at it. You should soften those representations that need to be softened. You should caveat them where you can, and you should push back if you're worried about something, but you shouldn't see it as an assault upon the contract.

Fair enough. Fair enough. Good point.

Let's talk a little bit about you personally. I want to know what drives you and what is it, Hal, that got— what got you into this business?

Yeah, that's a really good question. It was basically luck, a bit of circumstance. I was working for a large law firm and working on— well, so I'm located in Michigan, so my clients clients of the Big 3. Who else would I be working for? And this was around the time of COVID My son, my first and only son, was born. And that lifestyle, law firm lifestyle, bidding 2,000+ hours a year, potentially having weekends and holidays blown up at the last minute by matters coming in, it was no longer tenable for me. So I went and through a friend of a friend met somebody who had just started a law firm that was focused quite generally on small businesses. And we fell into a market of people looking to buy and sell and grow small businesses. We didn't really know it existed. We assumed small business work was the kind of traditional small-town lawyer, right, who would just have clients in the community. And what we didn't realize was there's a whole network, there's a whole community of people looking to buy and sell these small businesses, and they're all online. And if you're just willing to do the work of building rapport and trust in the community, you can make a national practice out of this type of work. And it's something that's happened to us. That was 3 years ago. It's just gone from strength to strength. The clients are great. The work can be very interesting. The small deals, you'd be surprised how often like an interesting question comes up, an interesting legal question comes up, or you learn something new that you haven't learned before. So the work's great. And it's just been something that I've just generally enjoyed. So looking to stay in this space for as long as I can until AI eats all our jobs and we have to go home and find something else to do.

Well, it's so funny because we deal with similar types of businesses where you don't know any— I'd say I went to an envelope factory a while ago throughout my career, my consulting career, and it was the most fascinating business trip I've ever been on. Like, oh my gosh, And I sort of dreaded it at the beginning, and then I went and I was like, wow, this is so cool. I knew zero about like envelopes and how they're created and the whole process behind it, and it was cool. It was eye-opening.

And one day we can go to a museum and see them too.

But it is a great point because again, it is part— it is what to me, same thing we talked about all the time. I mean, the ability to see inside these businesses, and every single business is as unique as the founder, right, who creates it, right?

Mm-hmm.

And, and so much of the businesses are then also attached to the founder's personality and all that stuff. And, and your ability to be able to see all these things that, and the way that people figure out businesses. And I love the, the buy side, right, is interesting too, especially because you deal, Hal, with a lot of single buyers who are people who are like, You know, going in and buying a business that they haven't been in, right? Necessarily, you're not. You're dealing with people who are coming in and taking and buying in the asset of a buyer, and they're going to start a new LC, and they're going to now have this company they didn't have before, right? As opposed to where we deal a lot more with is, you know, you know, larger companies that are acquiring, you know, this entire company because it's a they're buying market share or capability or something. something like that, right? Private equity firms that are coming in and bringing up an entire company that way, right? Which is much different than what happens at the Main Street level, right? Where you could have, you know, we— I had a client back in our old days, John, right? With where he's like, he comes to me, he's like, here's what I want to do. I want to buy a boring business. That's what he said, right? Sure. I want to buy a boring business because that's going to make a lot of money, the whole thing. I'm not interested in it being flashy and whatever. And what I really would love to be in is something in the warehouse space, something in, uh, in, uh, you know, in, in, uh, the, the transfer of train— I forget what it's called, but there's a whole thing, there's a whole business, okay, that, that's— there are very few of them, but they are, but they, um, that they're incredibly lucrative where they transfer the train stuff to the truck, right? Like that entire thing. And the guy was interested in this thing and he came to me asking for companies like this, right? So I went on a big search and the whole thing trying to find these kind of like these transfer stations that he could buy. But the point is, is that there are as many different buyers as there are sellers, right? In terms of, right, matches and being a good fit and all that stuff. Um, now you've just started your own firm. It's called 7th Street Legal. 7th Street Eagle. What will be your focus with that? And again, more M&A, more Main Street type people looking— you work a lot obviously on the buy side. So your eyes of being able to see from the seller's perspective, you're a very good person to ask about what is the buyer looking for.

Yeah. So I do work with some sellers, just to be clear. I think the reality is, it's easier for me to market to buyers, right? Sellers often are in a slightly— they're a bit more diffuse. They're not congregating in one place online or otherwise. They're kind of just people out in the community. So really more I work on sellers when I'm referred to someone by someone I know. But as for 7th Street Legal, we are laser-focused on helping entrepreneurs buy, grow, and sell Main Street businesses. That's all we want to do. We don't want to do anything else. We're not looking to be flashy. We're not looking to go upmarket and work with private equity or independent sponsors. We are very much playing in that Main Street space, and it's what we enjoy, what I've enjoyed for the past 3 years, and what I want to base the whole business and practice around.

Well, that's awesome because, again, our core audience, a lot of people are learning how to do this for the first time, and they are down in that space. And we are right now, Hal, we are in the middle of building what we call the ExitEngine ecosystem. Which is a community platform that's going to basically bring together founders with other founders who are also looking to exit to learn how to do this stuff, to take a look at how to examine their own businesses early on before they have a buyer in the room, and then to be able to talk to, be able to get in touch with people like you, our advisory partners, who they can be able to bring into their fold around this as well. And so, and that is squarely aimed at the lower end of that, of the middle market, right? So we're talking about companies that are in, that are less than $5 million in revenue, because these companies, some of them are Main Street businesses, meaning that they are the mom-and-pop shops and things like that of people that stay there, the smaller accounting and law firms and things like that. But then they, but then they, but then there are these, this whole other, uh, area of, or a segment of that will, of businesses that can and will cross over Right? So you're $3 million today, right? But you can be $7 million, or you can be $10 million, right, in the next couple of years, right? Which is not— not everybody can do that. Not every restaurant in, you know, in Main Street can sit there and go, I'm doing $700 grand right now, but I'm— but I know I'm gonna be able to grow this thing to, you know, with a restaurant, that's probably not gonna happen.

You got a floor space issue there.

You come up to get some real physical Physical limitations, right? But you have to open the other restaurant, right? But the idea is that there's— so there's a way to do that. But the idea is that, again, it's a matter of there are so many of these people out there that need help in understanding this because they, they will not— they will only do this but one time in their lives, right? And, and to be able to have access to someone like you, Hal, who can help them through that stuff, whether again on either side of the equation, but just to know that there are people out there, guys, that have— that do this stuff All the time, right? You don't have to go through this alone. If you're in a situation right now where you're considering, for whatever reason, selling your business, right, the first thing you want to do is you want to put a call out to us or to someone like Hal, or, you know, to be able to start getting a sense of what is it I should do. You can go back and listen to the podcast episodes where we talk about this process and go take you all the way through it. There are resources out there for you, but don't, you know, I think that it's We always give this one piece of advice, which is to not go it alone. Would you agree with that, Hal?

Yeah, look, I'm not intending to go it alone, just to be clear. I'm heeding this advice, right? There's so much to do when you're running a business, OK? And the idea that you could just do it all yourself is just unscalable, right? You'll never get there. You need to have people around you who can do some of this stuff for you. And more importantly, you have advisors around you who have been there and done it before and can maybe help you avoid some of the mistakes. So I'm a parent. You guys might be parents too. I've only got one child. It's been a challenge. I'm told the second child is easier. And the reason is because you've done it once before and you know roughly what you're doing. It's not going to be exactly the same, but you roughly know what you're doing. And that's kind of the same in business, right? If you have someone there who's like, oh, I've tried that before. It didn't work for me. Here's why. That's always going to be useful. So again, it's Don't be proud, right? This is about everyone trying to do their best and to maximize what they can from what they have. And the best way of doing that is to get things right first time if you can. That's it.

And especially if you've had this business for a long time, right? This is so much a part of who you are as a person. It's so much a part of potentially maybe of the community, right? You've got employees and their families and all that stuff, right? This isn't just about you necessarily, right? This is— there's a lot of other people involved potentially in this as well. And so getting this right and being able to maximize this, and again, starting early, right, Piotr, so that you can say, hey, look, this is— I have some time to work on this before I'm ready to go, but it's going to take some time. As you said, it's not 5 months, it's more like 5 years.

Yeah. For sure. Well, I mean, at least 3 years, because they're going to want to see at least 3 years' worth of tax returns. So at least 3 years.

Yeah.

There will be changes that, as John pointed out earlier, there are things that you just will not be able to change overnight, no matter how much you want to.

Right. Yeah.

That's something that, again, stuff in due diligence, you won't be able to rectify that. And that will be a legitimate thing that the buyer says, hey, This is something you can't solve. We understand that it's a huge client and, you know, we have to work around this or deal with this, but it's going to be— they're going to discount that revenue, just as an example.

So, Hal, if you were to leave everybody today with— we are just about out of time, but to leave everybody today with like one big thing from a legal standpoint when it comes to M&A, what would that be?

Wow, you put me on the spot there, guys. One big thing. Yeah, as a seller, it's tempting for you to ignore diligence, right? You're going to ignore it because until someone asks you for that paperwork, you're not really going to care whether it exists or not. And my advice to you would be, don't ignore that, right? Get out ahead of that. Have someone essentially do reverse diligence with you, a lawyer, who's just going to go through what the buyer's going to look for, it's going to make that process, one, less stressful.

Right.

Because you're not going to be suddenly scrambling around in your drawers for documents. And 2, it's going to make sure that you have a greater chance of closing, that the buyer's actually going to see through the deal. And so I would say, I know it seems like an unnecessary expense to do upfront, but I would partner with a lawyer if you're thinking of selling your business and just have that process done so that you're ready to sell.

It's such good advice. It's such good advice because, again, due diligence is a painful process to the end, and surprises and the things that you'll be asked for surprised me, let's put it that way. But if you can prepare all the stuff that you know you're going to be asked for, then that just lessens the amount of surprises that will come out of the woodwork and say, like, wow, I never would have prepared that, because those will come up and you'll have to come up with those questions. But minimize those numbers. It makes due diligence so much easier.

And you'll catch the stuff that might be right early that might be issues later, right? That you can then say, oh wait, good thing there's not a buyer in the room right now. I have a chance to fix this. I can go out and change this customer concentration, or I can, you know, or add this system or change this process, or at this— in the simplest way, make sure I have a document that says this is how we do Or in my case, settle the lawsuit that you've been avoiding that's been on your—

that's been on the left side of your desk for 3 months. Like, just do it, settle it. Sorry, that's a very specific example that I had going on that I was just avoiding. And it was like, yeah, but it's true.

That's the stuff that's sitting there and you're not— until this thing, this process happens, you are— there's so many things that you're not focused on, you know what I mean?

Yeah, for sure.

Right? You got to bring those things up. And so So, getting with someone like Hal, getting into something like ExitEngine, finding another M&A advisor, finding someone out there who can actually take you through this process and will help you really do due diligence before you go do due diligence. Yep.

Thank you so much, Hal, for joining us today. What's the best place for people to reach out to you? Like, how do people find you?

I'm very active on LinkedIn. So I try and post daily on LinkedIn, all educational content. It's not the hard sell, quite the opposite. I just try and make people aware of the business buying process. I also write a newsletter. People are welcome to subscribe from it. They can find a link on my website, 7streetlegal.com, if they want to sign up for my newsletter. I try and make it once a month, depending on workload, but I try and get there at least once a month. Again, it's just centered on the business buying process. A lot of it's buy side, I won't lie to you, but if you're looking to sell, sell, it's not a bad idea to actually understand what the buyer's about to go through, right? It's going to help you in that process at all. And then finally, yeah, please visit my website, 7thstreetlegal.com, to learn a bit more about the services we offer, but also to reach out if you want to. If you're thinking about selling, you're selling curious, and you want to speak with a lawyer, I'm happy to have a call with you. It won't cost you anything, contrary to popular belief. If you believe you need a lawyer, it does not necessarily cost you money. So happy to have a call with you and just discuss the cellular sales process and see whether I can help. And if we're a good fit to work with you, it'd be great.

That's awesome, Hal. That's really, really great. And that's again why we have people like Hal hanging out here at ExitEngine, right? Because he is like-minded. He wants you to be better. He's willing to do it no matter how it takes. And again, just like our mission of trying to help 1,000 founders successfully transition out of their businesses on their own terms by 2030. Hal's got a similar mission of trying to help these people, help you however he can. Okay, so we are so grateful, Hal Stanton, for you being here today. We really, really appreciate it. 7thstreetlegal.com, go check him out there. Look at it at LinkedIn. You're gonna see more from Hal, we hope, here at ExitEngine as we move forward in the whole thing. He may not even know it yet, but hopefully you're gonna see that, as you do with all of our advisory partners. And you can see, and so as a reminder, guys, we want you to go right now to myexitengine.com and follow the instructions on that site to get yourself into a situation where you can start thinking about this stuff, okay? It's never too early. It's kind of like voting in Chicago, all right? Early and often. We want to make sure that we, that we get you here to start learning this stuff well in advance, okay? It's, it's, it's never too late to start thinking about this stuff. Right? It's actually— and it's never too early either, right? So again, guys, uh, John, again, thanks for being my partner. Really appreciate all the time. Hal, thank you so much for being here today. Really appreciate it. Um, please go to myexitengine.com. Check out Hal at 7th Street, uh, 7thstreetlegal.com as well. Really appreciate you guys. Have an awesome day. Thank you so much.