Ep 80 | The Private Equity Playbook for Exiting Founders with Aaron Alpeter

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Welcome to the Exit Engine Podcast, episode 80. Welcome to the Exit Engine Podcast, where we help founders, owners, and entrepreneurs turn their businesses into assets buyers fight for. If you're looking to grow smarter, reduce risk, and ultimately exit stronger, then then this is the show for you. I'm your host, Jo Stapleton, and with me as always is my partner in value and salability, Mr. Jon Kniff. Good morning, Jon.

Good morning, Jo. How are you today?

I'm doing good, man. It's chilly, it's cold, it's the— it's wintertime, uh, here in the Northeast, and, uh, we are feeling the, the thing. But we, we think we have it bad, but we've got a guest today who's from even, even farther north than us.

So yeah, we were just chatting about, uh, various things in his, in his home province So it's very cold up there, but very cool things that they do in the winter because it's always cold in the winter there.

That's exactly right. And at least we can know and rest in the comfort knowing that there's always somebody colder than us. John, today's founder journey isn't just about building something people want. It's about building something that can scale, attract capital, and ultimately exit, right? And without breaking under the weight of growth, which is what happens to so many people. And if there's one invisible factor that silently erodes valuation before the deal room, it's ops debt, bad sourcing decisions, fulfillment chaos, margin erosion, disorganized backends that scare the heck out of the buyers, Jon, right? These are what buyers run from. But in this episode, we're gonna dive deep into the world of supply chain-led value creation with someone who's helped architect over $2.5 billion, that's a B, in realized exits. And who knows how to turn the messy middle of operations into one of your company's biggest multipliers. So whether you're a founder preparing to scale or an investor looking for under-optimized portfolio companies, this is the behind-the-scenes look at what makes a business truly worth buying. So we're gonna talk about that today with our guest, Aaron Alpatier. We're gonna— John, before we do that, let's talk about the new ExitEngine ecosystem.

Yeah.

We just launched what we think is going to be a very valuable and important platform for those of you who care enough about their business and your own futures that they want to learn and grow towards a successful exit.

It's everything and everyone you'll need to plan and execute a successful exit on your own terms and timeline. ExitEngine helps founders grow smarter and exit stronger by providing diagnostics, roadmaps, coaching, community, and advisory support that reduce risk, increase value, and make their businesses buyer-ready. It's the first exit planning ecosystem in the world, and you can start for free right now. Just go to www.myexitengine.com.

So, John, we all— we know this, right? When you scale a business, you don't just scale revenue, you're scaling everything. Okay, so whatever— wherever you are, as you start to actually approach scale, everything that you've been doing is going to go with it.

Yeah. And you don't want, you know, just to be clear, you don't want expenses to scale with revenue, right? The whole point of it is you're able to build an engine that doesn't require, you know, additional, you know, 1 times as many costs as it does to grow that revenue. Said differently, you want to be able to grow your revenue without scaling the costs along with it.

That's it. And the reality is the good systems get amplified, but but the cracks, the things that aren't working will also get magnified. So if your team culture is strong, it becomes a force multiplier. If it's a dysfunction, then that's the stuff that kind of metastasizes like cancer. It becomes even worse than it really is. And a sloppy process that works when you're small becomes a bottleneck at scale. Every inefficiency, every misaligned hire, every unspoken value, those things compound just like growth does. That's why scaling isn't just about doing more, it's about scaling what works while ruthlessly redesigning what doesn't. Otherwise, you don't grow a business, you just grow a big mess, right?

Yep.

So our guest today is Aaron Alpeter, the founder of ISBA Group, a family of operating companies built to help brands start, scale, exit, and integrate without losing their edge. Aaron's career spans— check these brands out, John— Unilever, Hubbell, Lululemon Studio, The Flex Company. Today he's driving force behind, uh, these brands you may know: Sourcify, uh, which is helping brands lower cost of goods sold and boost supply reliability; Slotted, which transforms fulfillment with data-backed RFPs. He's got ISBA Consulting, which works hands-on with founders to unlock operational value; and Tompkins Ventures, where he serves as Chief Procurement Officer. This guy's a busy guy, but he's taking time out to be here with us. Ladies and gentlemen, please welcome Aaron Alpieter. Aaron, great to have you on the podcast.

Joe, John, thank you so much for having me as well.

You've got— you have been around the brands, you've seen inside these companies and the whole thing. What is one— what's one of the biggest things that you come across people when they are, you know, kind of at this critical scale point?

Yeah, I think there's a couple of things that people are looking at when they're at this inflection point. The first one is, do they have the right size supply chain? I think so many times you'll run into people who either have something that's too big or too small, and that is going to inhibit their growth. I mean, it is possible to have a supply chain that is too big and that inhibits your growth, right, just through the cost structure, the reliability, those sorts of things. But I think a lot of times when you get to this point where you know, you've, you've kind of got the beginning of product-market fit. You have something that's working and you're like, okay, I've been the hero this whole time. Now, you know, is this it? Is this my life? People start to take a step back and say, okay, well, how do I, how do I maintain the quality and scale this beyond my own efforts? And so it's this conscious piece where as a founder, as an operator, you need to grow by stepping back. And that's a really hard thing for people to wrap their heads around.

Yeah, it's a hard thing because again, they— it's been the Aaron show, right? For lack of a better term, it's been the Joe show or the John show for up to— for this period. So, so what is it about these people you've worked with on these exits like that? Is there, is there a common characteristic among the people that are— that, that successfully exit and successfully take this inflection point and go from the Aaron show to building a team and building a successful company that can scale?

I'll separate my answer between people who built something to exit and people who just scale. I think those are different pieces.

Right.

The people who are building something to scale, they recognize that there's not enough time in the day. They recognize that even though they're very smart, very competent, they got to a point where they are today, there are things that other people should do that they're doing today. And there are things that they can't do that they need other people to. And so, you know, the beginning part of beginning to scale is a bit of humility, right? You have to recognize and not be intimidated by bringing in someone who is more senior than you or more expert than you in a particular area, and you have to trust them. I mean, the worst thing that can happen is if you make these hires, you bring in the right people that, you know, you think will help you out, and you don't trust them, you don't empower them. And you make them kind of second-guess and go through all these sorts of things. And so every founder needs to be in that position from a mental perspective, from a maturity perspective, to be willing to let go. And finding those people they trust is really important. For those that build something to scale, I think it's just simple as being able to work with the end in mind, understanding, okay, if I wanna buy this, what is it that is gonna be worth buying here? Is it my revenue? Is it my brand? Do I have patents? And kind of working reverse engineering that way. Right.

There's so many things, right? I mean, the reality is that there is, there is, it's easy to make kind of mistakes, right? When you're scaling, scaling operations in particular, right? What are the things that you, in your, you've seen $2.5 billion worth of exits here, right? You've seen inside a lot of companies, you've been at, Unilever, Unilever. What are the, what are the common things that you're seeing that are issues kind of under the waterline?

Yeah, I would say that the first part of the first category I would say would be kind of leadership heroics is the first thing that prevents people. And this can be, you know, you can get pretty far with a smart person and kind of command and control mentality where just by sheer force of will, they're making something happen. And that business may be a $5 million business, it may be a $50 million business, depending on the category. But you have to get to a point where things are not dependent on the founder. Because let's suppose this founder is brilliant. Let's suppose, let's throw Elon or Tim Cook or somebody out there that is really, really good that you look up to. Well, the reality is, if someone were to buy SpaceX, and Elon weren't to go with that, the chances are that SpaceX would not be as successful.

Yeah.

Right. That's kind of thought there. And so if I'm a founder and I am responsible for every decision and every direction and everything kind of goes through the organization's organized to push information toward me and then execute my will, I might be able to build a big business, but I can't sell that business unless I now want a boss. Right. Because it's impossible for that founder to exit because exiting as a founder, if that's the way that you built the company, means that the company is going to die. And so your valuation, your longevity of whatever you built is really tied to you being in that business.

Right. And that's not a fun place for a buyer either.

Right.

Because the point is that the buyer doesn't— is going to— you must have something spectacular. Right. If you are willing to go with it and that the buyer is willing to take you too. And in fact, sees the fact that that's a whole other kind of like, you know, deal structure, right? I mean, the reality is that most people are in a situation where they are— they're— where they're— sometimes people obviously stay with the companies, right? They take on positions in larger companies. They can do that. That happens a lot. But what you're talking about is a whole other level. It's like, I don't have anything that can run without me, and therefore what I'm really buying is the guy who designed this entire thing. And I'm just, you know, it's like, it's almost as if, you know, he's a— it makes it for a very difficult kind of business operation, right? I mean, it's not something that is— it is not common. And that's why it's not common, right? Why we— that's why we teach people the other way, right? Which is to say, hey, look, why don't you scale? Why don't you build a business towards being able to remove yourself from the business? Because A, as a founder-operator, that's gonna give you the freedom that you thought you were gonna get right when you started the business, which turns out to be a lie. But basically that now you have the ability to potentially to exit and to be able to have that freedom or at least create options for yourself. But it has to, you have to move yourself outta the way, right? I mean, the point is, is that it's a matter of if you really wanna sell the company one day, And if you really want to capitalize on this giant asset you potentially are creating, then you need to actually work yourself out of the business.

Yeah, it's funny. I had a guest on Build a Business Worth Buying a couple of months ago, and I was talking to someone who buys companies, and he said that he is actually willing to pay more if it looks like the founder is not really involved in the business. So somebody who is golfing a lot or You know, it's just kind of like, yeah, whatever, you know, I'm kind of coming, I check on things. He's like, I want those visits, I will pay more for those visits.

Well, it's like a signal, right? Yeah, it's like a signal, right? Yeah.

Yeah.

I mean, who would have thought that playing golf would mean that you'd, uh, you make more money?

Sorry, I interrupted.

Yeah.

Yeah, but it's a great thing. I mean, exactly. I mean, what Aaron said— say it again, Aaron. I mean, just so everybody can hear you. You're saying is that it's like the people who are out playing golf, right, are potentially better targets than the people that aren't because their business is running without them. Already.

Exactly. That's exactly the insight. And so that's, that's helpful whether you're, you know, you're running a landscaping business or you are running a 9-figure D2C brand. I mean, again, the answer here isn't for the founder to just not work or not do anything. But if you've got a team that you've built and empowered and the business is working, it's got this momentum without you, that is a great place to be in. You know, we've got a couple of our clients, one just exited for $1 billion.

Wow.

And the founder stepped away about 2 years ago to have a president and get things taken care of. And so, you know, they were doing very well and they did exactly what they should have done because they had built all these systems. They still, you know, were very involved in the places they need to be. But I think that's the key part is there are some areas where the founder needs to be paying attention to and needs to have an opinion. And there are other places where it doesn't matter. Right. And so you can fire— you find other people who are more intelligent or more specialized in that area. Who can have the opinion. You just trust them and their opinion.

Yeah, I was gonna say, yeah, and it's interesting. I just was reading a book about a restaurant group, right? And to your point, Aaron, about earlier, is it can be $5 million business, it can be a $50 million business, it can be a $250,000 restaurant that like the person who buys the restaurant shouldn't be the one making the decisions about how things are cooked, right? Just as an example. And in those situations, in other situations in tech companies, like maybe they're the product officer so they can listen to the voice of the customer, but they shouldn't be involved in financial engineering. So it's really, it's an individual company thing where the founder should be involved and where he or she can add value to the business.

Yeah, I think like let's break that down to, okay, that sounds good, but what do we actually do about it? One of my people I look up to is a founder that we've worked with that he says his whole job is to make the business simple. And so this means, you know, working with as few people as possible, as few processes as possible. And not that there's no SOPs, but he wants to make sure that they are fast in decision-making. And so he spends most of his time thinking about where is there complexity in our business that I can get rid of? Are there activities that I'm having the team do? Are there campaigns that we're running that really, you know, we could do without. And so I'm going to make the decision to kill these things. Right. Because it's a lot easier as a leader to say, oh, let's just do these 10 things and, and we'll try them and see what sticks. But there's a lot of effort that goes into that, not just bandwidth, but also mental capacity. And so that's one piece is, is your founder, your CEO should be focusing on making the business more simple. The second thing—

Oh, yes. No, no, no. You keep going.

Yep.

Okay. The second thing around simplicity is that they need to make sure that there is the right ideal state mapped out. And so whether this is the form of an SOP, a flowchart, whatever it needs to be, you need to have a way that everybody who comes into the organization is held to the same standard. When we bring someone onto— into the consulting company, we have the ISBA way. We have our core values. We have, you know, a very specific way. This is how we're going to interact with the client. This is how we're not going to interact with the client. This is, you know, how our decks need to look. This is, you know, we're not willing to do these sorts of things. We're willing to do these sorts of things. So there needs to be some effort that's spent to codify what does your brand, what does your experience look like so that as you bring on more people, you can do that. Because when you're a young company, the first thing you do is, OK, I'm the founder. I'm going to work with you. I'm going to go over all of your work. That becomes untenable once you start adding 5, 10, 100 people. Right. So you have to systematize that. And then the third part here is just making sure that you've got the right level of foresight in terms of what you've built. I think the number one mistake that we see people build, the number one mistake that we see people make when they're building a business is they start building for a billion-dollar outcome before they're a million-dollar business. And so when I look at these things, especially in supply chain, it's all about seasons. It's all about understanding what act of the 5 or Or 6 active players are you in? And what— how do you build something that's fit for purpose right then? And so I think that, you know, you need to understand, okay, what we've got right now is going to be good for 18 months, but in 18 months, if we hit our goals, this is a problem. So I need to start working on something a year from now. And that's kind of how you scale and get those things going.

That's an interesting point because that's part of the way that we've always done that work too, right, is to be able to kind of like— you've got to break this stuff down into component pieces, right? You're going to— it's going to feel overwhelming. And it's not the kind of thing that you're going to be able to do anything overnight.

Right.

You've got to be able to actually be taking the time. It's why Aaron has, you know, what Aaron does for a living, right, is to be able to come into your company and show you, right, the things that you— that the things that have to change in order for you to be able to grow in the right direction and to be able to figure out what are the things. And one of the biggest pieces that we find, too, is deciding what to do.

Right?

Because the things that— there are so many things, and we can help you uncover the issues, right? Here are the, here's the places that we need to focus. OK? And then when you start to dive deeper into those focus areas, you're going to find individual things that need to be done, you know, individual projects, right? But you're going to have to set time for those things to happen. And you're going to have to decide who is the right people to oversee those things too, right? And This is the time at which you may discover, oh crap, I don't have anybody who can do this right now. And it's about, as you said before, as the founder, examining yourself honestly to say, hey, look, what am I good at and what am I not? Because I think the first thing you got to do is try to fill out the things that you're not good at and make those decisions and get those things going first, right? Because those are the things that potentially are going to really hurt you. What about the, you know, you talked about again, so the leader and the leader's examination and the humility of the leader at this point, right, is really like the first big bucket. I've got to look at this first if I hope to scale and all that stuff. So that's the first thing. What's next? What are some of the other things that you're seeing? Let's talk about supply chain in particular, because I think that's obviously an area of specialty for you.

Yeah.

But I think supply chain is huge because it's got, there's so many elements to it.

Right.

We think that we get our supply chain set and a lot of people are like, oh, thank God that's being done or that's done, right? But it's never really done, is it?

Well, I would say supply chain is done if the world around you doesn't change, your customer base doesn't change, and yeah, your consumers don't change. So if you can get those 3 things to not change, then yes, your supply chain can be considered complete. No, in all seriousness, I think it's a really important question because when you think about where most of the money is spent between marketing and supply chain, that's like almost all the money that a company will spend.

Yeah.

You know, you've got headcount stuff in there too, but this is such a huge piece of it, typically 50% of the total cost that goes through. And so there are some high-level things that you have to look at that are important. When an acquirer is going through and doing due diligence, I mean, you guys know this, Typically, the price on the LOI is the maximum that they're going to pay. And as they go through and they do due diligence, they're going to find excuses to pay less. And so, you know, our goal and what we tell our clients is we want to make sure that they don't lower their offer because of what they find in supply chain. And so there's some key things that people should look at. The first one is their contracts. Do they have clear survivability clauses in their contracts, meaning that If someone buys them, you know, the factory can't renegotiate the contract or can't fire them or things like that.

Right.

Do you have all the IP and things taken care of on that end? Another huge element is quality. And so we've got one client we're working with, they're about a $160, $170 million brand, fantastic product, very good quality. And we went through and said, hey, show me your quality system. They said, oh, we don't do that. Our co-packer's really good, we just use theirs. It's like, well, if I'm the acquirer and I recognize that you're just relying on your co-packer, well, who is watching the watchers, right?

Right.

And the right paradigm is gonna be, here's our quality standard, we're going to make sure that our co-packer is adhering to that standard. And so, you know, you have to change that paradigm there as well. Obviously, anything around cash, whether it be inventory, so how often are you rationalizing SKUs in your portfolio? Do you have a lot of dead stock that's not just moving? A lot of acquirers will buy a brand and then they'll recognize that, oh, all the components are about to expire, or we have raw ingredient liability, or you're really only selling 10% of your portfolio and you've got 90% that we're gonna have to throw away. And so those are things that kind of come off the deal. And so it's much better to be aggressive with those sorts of things, prune your portfolio, get rid of that waste as you're building through and you're getting those 8 quarters of solid financials that you need to earn your valuation.

It's interesting. It's like there, there are so many things that are in that. And by the way, when you're growing, you're— this isn't always about exit either, right? I mean, this is obviously— it's a— the exit is an excuse and a reason for people to examine this stuff, right?

Well, yeah.

And the reality is, is that most people are right—

are—

what I'm trying to get at is that the exit is the reason that I started to even examine these things.

Right?

Meaning that I'm going—I think I'm going to be acquired. Now I'm in here, and Aaron's in here looking at your stuff, right? Trying to see, hey, look, let's see what we got to fix and whatever, right? But the reality is, is that it would never even have come up. And I think that's part of the issue, right? With this particular time in your in your business journey, when you are thinking about scale and how to scale, because right because it's a matter of. of examining the things that you don't even know you should be examining in some level, right? Do you help people go through— I mean, we obviously have checklists and all kinds of things that we do. What is your process for trying to get in here and trying to uncover what's going on?

Yeah, it's a great question. We do a couple of things. The first one is that we will almost take the perspective of an acquirer for due diligence point of view. So we'll do kind of mock due diligence. We've helped strategics and other companies kind of look at these companies and assess, you know, what's good, what's not. Typically, you're gonna evaluate the team, right? You're gonna have some honest conversations about, you know, which of these team members you think that you can promote into the acquiring company because they're just that good, which ones are gonna be fine with a lesser title, and which ones you have to exit. And so understanding what that team looks like.

Yeah.

And you can't, You can't look at the people who have a lot of equity because typically they're going to have a big payday and they're going to leave. So you've got to look at your bench, right? And that's what you've got to really understand. That's the first thing you look at is your team. The second piece is your quality. Are they using a reputable factory and fulfillment center, you know, or are things being shipped out of someone's garage? When was the last time they were doing audits or checks or things like that? And so part of this is just going through and trying to understand, okay, If I open up this door, does it look like it's a cobweb mess or does it look like it's neat and organized? Do I have to go deeper into that? Because again, they're trying to look for the skeletons, but if it's, you know, if it doesn't look like there's a body back there, I'm not going to go look for it, right?

Right.

And so there's those elements there. And then the last part is really just going to be around, you know, the inventory efficacy that they have. So what, you know, how often are they out of stock? Are they— and sometimes out of stock could be a good thing.

Right.

Which we'll get into later, but, you know, are they working capital efficient? Do they have a robust pipeline of innovations that could come online over the next 3 or 4 years that I'm just buying something that's already working, or is this a product that's just there and I'm gonna have to put a lot of manpower or resources into developing new versions of the products or new expansions of the product line? In order to make sure this is something that can continue versus just, you know, milk it for cash.

Right. And Aaron, do you find yourself like, you know, obviously the start, stop, continue model is sort of one that I've used in the past and like, and I've always found that the stopping part is sort of tough to convince founders that they should, that they should stop doing certain things, right? Starting things is always fun because it can be viewed as innovation. Continuing things that are successful, sort of obvious, but like I found stopping things that are sort of unproductive or just not working. Do you find that the similar type of thing when you're doing your consulting?

Oh yeah, it can be very difficult. And like we have this challenge in our business as well, 'cause my team will tell you there's no shortage of ideas of things that we could or should do and, you know, who's gonna do 'em sort of thing. You know, what we try to do with our founders is we say, okay, let's reverse engineer this. What do you want from your business personally? You know, do you want to walk away with a $20 million check? Do you want to pass this off to your grandkids? Like, what is it that, that you're looking for?

Right.

And so, okay, now that we know what you want and when you want it, let's reverse engineer that. And that becomes much more clear because if I know that I'm looking for a $20 million check myself and, you know, I own some portion of the business, I now know exactly what revenue number I need to get and what profit number I need to get. Because the multiples are roughly the same, right? And so I know that if I'm on track right now for a $5 million exit and I want $20 million, well, cool, we've got to 4x your profit. Let's figure that out. And once you understand that and they understand why they're doing these sorts of things, all of the political stuff, the sacred cows, all those things that kind of melt away because they say, oh, I understand that we've been doing all of this effort to do this product, this channel, this country, and we're not seeing anything from it. So why don't we just stop doing those and focus on this thing that's working? Because we think that in 8 quarters, we can get to a point where we 4x our profit and it's actually very meaningful. And I think once you've framed it like that, it's less about, well, this is my pet project, or, you know, I really like this vendor, I've been with them for a long time. Those sorts of ideas just kind of melt away. And the reality is, is that if you don't do it thinking you're protecting these people, the acquirer is doing this as well. And they say, cool, I'm gonna get rid of all these guys and change these things. And so this is now a better deal for me. So it's hard to have the hard conversations, but they're important. And part of, you know, our responsibility and then your responsibility is to make sure that those conversations are at least had, even if they're not acted on at that moment.

It's a great point. It's a great point. And I think to be able to say, look, we have to have these hard conversations with yourself. Right, as the founder or as the leader of this thing. Because again, so much of this up to this point has been you, and, and, and, and, and you should be first of all congratulated, right? I mean, to say, hey, look, you've gotten it this far, you've made something that people want, you've done a— you've, you've built a thing, you know, right? You've— here it is, and it exists, and it creates money, right? And it's like a money machine, it's really cool. And all we have to do is do this level of effort stuff going in, and this money comes out the other side, and You know, good for you. But now you're at a point where you're going to say, hey, look, what do I go— where do I go from here? Okay, and do I want to keep doing it like this and keep— right, and, and, and, or do I want to actually try to get it to a, to a different level that could potentially be, uh, you know, a very lucrative, you know, situation, you know, for me to be able to sell the car as an asset later on? And again, even if you don't sell Ultimately, when you go through this exercise that Aaron's talking about, uh, you're— all you're doing is actually figuring out how to, how to have a healthy, sustainable business. So if you are, and, and, you know, and maybe you have access, better access to capital and all kinds of other things that, that come down the line. So this isn't just about exiting, meaning I'm going to sell the company a year from now. This is about planning and building a company in a healthy way. And by the way, lots of times when you're building towards exit, that's what, that's what happens, right?

You're absolutely right. And it's the hardest thing for the founder too, because there are lots of things that you like doing. I mean, I'll use myself as an example. When we first started the business, it was just me and I did all the consulting work. And then I brought people on and maybe they would do some stuff, but it was still just me. And then eventually got to a point where they were leading and I was supporting. And it was only, you know, until 2025 when we decided that I wasn't going to consult anymore. And that was really— I love consulting, right? And so I take some projects now and then. But, you know, we recognize that while I was good at consulting, I was better at doing other things. And so it's about, you know, like, all right, let's focus on things that I'm the best at and I'm better at. And, you know, it's hard to argue with the results that we've seen in our own business for what we're able to achieve. And I think that that took some time for me to get, you know, to come around and say, okay, you know, I have to trust my team that they're gonna do this at the quality that we've taught them. I have to trust them that, you know, these clients are gonna be okay without me on every phone call or things like that.

Right.

And so it's a big piece of maturation as a founder that you have to get to, to get to that next level because, you know, we could have stayed at the level that we were and been fine and that was happy. But, you know, we chose that we wanted to do something different, wanted to do something bigger, and that's what we did.

That's right. Yeah, and the mock due diligence that we talked about earlier was really, is what we try to do the same thing in the sense of we'd rather ask the tough questions upfront and get the messy answers and get the, oh, well, we don't really have a standard operating procedure. Like, well, you better have one, right? Or, and ask those questions upfront so that when, again, to your point about the LOI, LOIs rarely go up, right? They very rarely go up unless there's like a bidding war or something weird. And all the mock due diligence, all the effort you put in at the front end will pay dividends when you're going through due diligence and it's like, it snaps. It's like, oh yeah, sure, we actually had a lawsuit, but we settled it. And things that the buyer is looking for to sort of ding that valuation just are not there, right? Because you've taken care of them. You've checked them off the checklist, so to speak.

And you're absolutely right. Yeah. Good. Good. Yeah. You go ahead. Yeah.

Yeah. Have you— do you have stories or anything around the lines of like the due diligence stuff, like where, where you really uncovered a problem that would have come out in real due diligence, but you solved the problem sort of upfront? and really increase the valuation or increase the ability for the company to get bought?

Yeah, absolutely. I mean, I mentioned the quality story earlier where, you know, the well-regarded brand didn't have their own quality protocol or quality system. And so we went through and said, okay, well, we're gonna build it for you. And so we taught them about here's how you track things, here's what needs to be done, here's the standard, here's how you need your co-packer to sign off on it. Here's how you're going to audit that they were doing that. Now let's go out and hire a director of quality for you whose whole job is going to be going through complaints and improving things. So that's like one very concrete example. We've got others where we said, okay, you've got an interesting inventory model with your factory. Turns out you have a whole bunch of liability for raw ingredients that they've purchased on your behalf that you haven't used, and that bill just hasn't come due yet. And so it says, well, the right thing here is either for you to build this product and consume it, or we need to get rid of that now because what that would do is it'll come out no matter what. So it's not as if you're not going to pay this money. But if the acquirer finds out in due diligence, okay, what else is wrong here? And they're going to start digging.

Right.

And so, yeah, it sucks to write off a couple hundred thousand dollars in raw materials. You probably shouldn't have ordered that much, but okay, it happened 2 or 3 years ago. You know, maybe you work on how you can amortize that over time, or maybe it's, you know, you work out the financials. You've got that ability to do that, but it could become much cleaner that way. Another one, a company that I worked with very closely, Lululemon Studio, they sold the exercise mirror. We were able to work with them and cut their BOM down by about 100%. So it went from— making up numbers here— $1,000 to $400. And we were able to kind of help re-engineer that, figure those things out, and that profitability ultimately led it to be something that was in a position where Lululemon, you know, decided to buy it. And so I think that those are lots of pieces there where, you know, it all comes down to your margin, your inventory, your quality, your team, your processes, those sorts of things. We've got one client right now that we're working with that phenomenal founder, he's built a $20 million business himself.

Wow.

With kind of, you know, some support staff. But he's recognizing that, like, you know, I can't be the bottleneck. I can't be the expert in supply chain and customer service and marketing and, you know, finance, all these other things. And so we're helping him build out a C-suite, a roster to say, okay, well, here's how we do it. And his thought was, okay, well, do I just go post roles and, you know, hire $1 million a year worth of headcount?

Yeah.

So you could do that. But the right thing is, let's take a look at what's the most important part. And so, well, I think marketing is going to be our key thing. So let's focus on getting that hire right. And let's hire fractional CFOs, fractional COOs, fractional heads of customer service. Let's get these, these other entities in there to, one, take the burden and the mental headspace off of you so that you can start to work on these things. And then let's get this marketing hire set because that's what you said is the most important cog. Let's work on finding them, onboarding them, working with them. And then what's the number 2? Okay, CFO. Great. Then from there, we'll either decide to keep the fractional CFO team or we'll go out and we'll help screen them. But there's a plan to doing this, right?

Yeah.

And they want to exit in 3 to 4 years. It's like, great, we can build an executive team for you over the next 12 to 18 months, and that's going to be perfectly lined up. You can get the incentive program in place for them so that when someone comes calling, They see that this team is running itself, that they're incentivized, that they're, they're going to be there for a long time. And he's going to have a fantastic exit. I can just tell already.

Right. Yeah. But that's— and that's what's amazing about this. And I want everybody to kind of just step back for a second and listen to what Aaron was saying, because I think that this is like— this is so critical, is that there is a— there's going to come a time, okay, where, where your ability to be able to, as the founder, to say, I am out of my depth. Okay, and just, it's okay. And I think one of the biggest things that we come across are people that have a hard, really hard time saying that about themselves and their ability to be able to step back and go, I need help to come in. I can't do all this myself, right? So many people continue to try to do it themselves. They're averse to spending any money.

Right.

That's like one thing I had to— right. I was gonna say.

Yeah. And also like the falling into the issue or the problem of, well, I have to hire for— I need a CMO, a CFO, you know, C-whomever-o, and I want to hire them all like in the next 12 months. Well, yeah, like Aaron said, you could do that or you could focus on the most important one. And do fractionals and get the person, get each hire right, because those, those positions, when you have to replace those positions, trust me, it's a nightmare when you have to replace a CFO or a CEO. It happened. It happened in companies where I was, where the CFO gets replaced because they just, they weren't the right person for the role. And you really want to take your time. If you have 3 years, you have enough time to do that. And a company like Aaron's can help you You know, figure out the right way to do that.

So, but I think what I was pointing out too is when you mess up a hire, you restart your clock.

Yes.

Right? Because in anything, if you look back at this and an acquirer is like, hey, you've gone through 3 CMOs in the last 2 years, like, what's wrong with the company? Right? So it's really important to get it right. And if you change, you know, marketing agencies 3 times in 2 years, People are like, okay, yeah, that's fine. So it's one of these things where you have to recognize that mixing up these hires is more than the cost. It's gonna delay your exit or delay the amount of money that you make from it.

That's it. And you gotta be able to see this kind of like short-term thing and this long-term thing. We talk about 2 horizons, right? Like there's a horizon that you're kind of set, that's kind of following, that you're just kind of behind, you know, as you go down. And then there's this kind of longer-term sunset down at the end, right? And your ability to be able to— first, you guys are talking about the hires. I'm talking about the mindset of allowing yourself to say, oh my God, you're right, I gotta go hire. You know what I mean? Because this is what we see all the time. It's that there is— that they are stuck in this belief that I am the only person that can do this. I've got this thing this far, right? And your ability to be able to just— it's a release, to release that control for a second. And that's why hiring someone like Aaron is so important, because Aaron gives you that perspective, right? Aaron can come in and say, as a third party, and say, hey, look, dude, love what you built. You're— what you're doing here is amazing in the whole thing, but you are— but you're not gonna— again, you're not, you know, what got you here is not gonna be necessarily get you there. So, you know, how do you get people to listen to that is the question, right? Like, right?

Yeah, well, there's a joke that I sometimes tell, and, you know, I talked to a founder and they say, oh, I'm never gonna exit. And I'm like, well, the reality is, is that every founder will exit. You're either gonna sell your company, you're gonna retire, or you're gonna die, right? Like, no matter what, like, the exit is gonna happen. And so obviously, you know, you can control some of those, but it's about being prepared. It's about having something that's durable, that's gonna last beyond you.

Mm-hmm.

And, you know, You know, it's, it's an important kind of framing to look at that.

Hey, I'm Joe Stapleton from the Exit Engine Podcast. Building a business is hard enough, right? Planning your exit shouldn't feel like another lonely, confusing project you have to figure out on your own. That's why we created Exit Engine. Exit Engine isn't just a software tool, it's an entire ecosystem designed to help founders engineer a successful exit. You'll get access to self-assessments, growth roadmaps, and a peer community where you can learn from other founders who've been in your shoes. You'll also find the guidance and expert resources you need to build a business that's actually worth buying and to do it without burning out. Imagine having the clarity to know what your business is worth, exactly where to focus to improve it, and the confidence to exit on your own terms, whether that's next year or a decade from now. You don't have to do this alone. You don't have to build a business alone. Join us and let's build your exit strategy together. Visit myexitengine.com to get started. That's myexitengine.com.

I love working with founders that are building something that if Procter Gamble were to call tomorrow, they could sell. That they're like, you know what, I'm really happy doing this. I want to do it for the next 25 years. It's like, great. You have that optionality. You've built it to a point where, you know, if something happens, there's a health scare, you need to go take care of your parents, like you have the ability to step back and still keep all of the livelihoods that you're supporting with your team going and operating because of the system that you've built.

Imagine taking a vacation.

Yeah, right.

Let me ask you a question about the stuff you talk about with start scale, exit, and integrate. I want to focus on the last one for a second and ask you a question about like, why is integrate after exit? And sort of just talk a little bit about what you mean by the integrate part of that verb in that sort of context.

Yeah, so we work with brands who get purchased by strategics, and then we work with strategics who purchase brands. And there is a, you know, you look back on the history of acquisitions and there's a lot that a company will buy it and it just lost its mojo. It wasn't quite there. It didn't quite work out. And what happens a lot is that these integrations are not really well thought out. All of this work goes into the due diligence process. All this work goes into figuring out, do we want to buy it? How's it work? And certainly not the same amount of work, but sometimes very little work goes into what happens after we sign the deal. And having been on the inside and on the outside of good and bad acquisitions, You know, it's, it's very easy for an us versus them mentality to creep in, right? And so, you know, if you are not intentional about the integration, things will happen organically, and organically is really bad in this case. It might be great for a salad. It's really bad for integration because, you know, people will first off not understand, okay, well, are we on the same team? Do I change my email? You're on Microsoft, we're on Google. Like, you know, what do we do here?

Right.

But then there's also a part here of like, well, do I talk with my counterpart at the acquirer or am I separate? Or even if we're going to decide we're going to keep things standalone, well, you've got better parcel rates than I have, so maybe I'm just going to use those. And let's start using your trucking carriers. And now that we're on your trucking carrier, let's start using your TMS. And oh, you know what? Let's swap people out. So these things start to happen and there's a whole bunch of energy that happens on both the acquirer side and the acquired side where they are several levels down trying to figure this out, trying to make sense of it. And you get things where maybe the HR system comes in or it's more restrictive T&E policy comes in. And so that's what the acquired company is feeling is the acquisition. And so once that starts to happen, once people start to feel that, hey, I don't really like corporate, I don't really like what's going on here, they all leave. And you can probably weather a couple of people leaving and you plan on your executive team leaving, but when most of your rank and file starts to leave as well, then you go from being on offense and maybe have this great upward trajectory for 2 to 3 years, and now you're just on defense. You're trying to figure out how things are going. You're bringing people on who don't know what they're doing to learn the business and learn what's going on. And you start taking in these big practices from these big companies and putting them on the small companies and squashing what made them special in the first place. And then suddenly the acquirers, you know, or 4 years later, like, man, this was a dumb idea. Like, what, why would we ever do this? And the reality is, is if you had been much more intentional about the integration, you could have seen this thing really thrive and grow.

On one of our very first podcasts, John, if you remember this, go back to like episode 2 or 3, okay? We talked about the big merger of Daimler and Chrysler, okay? And that's a historic kind of known thing about it being a terrible integration. And the reason that that deal did not be— would come to a kind of unceremonious end at some point was because that the integration wasn't thought through. And that's a very large example, but I lived—

But it's your experience, Joe, right?

Yeah. I lived that story. Yeah. I lived this exact thing. I sold a digital marketing company and it was all great and the money was decent and whatever, but the earnout part of it was, you know, keep these numbers where they are while you're being crushed by a different— a large, very large global company with a whole bunch of different ideas who claims they want to be you, right? So the whole notion of we're buying you because we love your culture and we want to be this and we want to, you know, in the world, whatever— and you're a gray flannel, traditional, global, financial-based consulting company. And you're gonna hire a digital marketing company who's doing social media stuff and all kinds of weird Second Life and all kinds of, you know, at the time, all these weird, you know, kind of like digital landscape things that are out there. And you're buying us because you are, you want this capability. Okay. And you want some market share that we have, some big clients, right? Okay. But the reality is, is that there was no plan for actual integration. It was, I'm suddenly a, a managing director, right? And I've got a bunch of different— a couple of my partners and all that stuff. And I'm being asked to get on a plane and fly around the world every week, right? And be responsible for new business and do all these things and take their stuff. And by the way, make my numbers, right?

Yeah.

I have to— in order to get my money, I have to stay there. I have to— I'm getting paid by them too, which is nice, but in order to get all the stuff I have to do, and I have to make what we've agreed will happen from a number standpoint, but we got to do it under a new system with rank-and-file people who are actually the ones making it happen, right? Not the senior people. And it was an absolute horror, just an absolute nightmare, absolute nightmare. And it made me leave.

Wow.

And then it sent me into a 10-year stupor that we can talk about later. But the idea is that that's Right. That's a real thing that really happens, and it happens a lot. 93% of people who have exited report that they find themselves unfulfilled by the exit. They are unhappy even when they've made money.

Yeah. So, look, let's talk about how to fix that, because I think that, you know, there are 3 acts that we talk about, uh, and it is about when it comes to You know, integrating a company, the first act is you have to get on the same team.

Right.

And so what I mean by that is you've got to get on the same— like, is it Slack or Teams? Pick one, right? Is it Google or Microsoft? Pick one. And like, this is the kind of rip the Band-Aid off stuff that people will say, oh, you know, our stuff. They're like, no, no, you got to do this as quickly as possible. And it's about having shared town— shared rituals. So is there a regular town hall that the team should start to join? You know, start clarifying, okay, here's, here's how decisions can be made. You know, one of the best examples I have is when Mir was acquired by Lululemon, our first annual plan, we went through and, and basically Mir had this, this, this, this habit, this cultural element where we set really lofty goals. And that was like, if we hit every green light, we're going to hit maybe 95% of the goal, but we're going to like go for it. Lululemon is like, no, no, your goals are your baseline. You've got to get it. And so that was a mismatch, right?

Yeah.

And so just this, this thing of like, well, what do you mean you're not hitting your goals? Like, well, our goals are enormous. Like, you know, so, so that's the first thing is you have to get on the same page when it comes to that. The second piece is you have to start speaking the same language. And so this is where you start to harmonize acronyms, financial, operational language. You start to think about the processes that both sides have and being willing as the acquirer to learn what the acquired company has done well and say, okay, where can we adapt that? Where can we change it? How do we get through there? You know, common dashboards, things like that. But then the third act is you have to score a win together. And I think this is the most important piece, is there was a rationale for why the acquired company wanted to purchase the startup in the first place. And you have to make sure that happens. And so maybe it is expanding into a new geography, or it is a new product line or some interesting partnership, that has to be a win that happens together because it's less about us versus— you versus me, and it's more about us. And I think that's like the key thing that if you're not focused on that big goal that, you know, people can rally around for the first 12 to 18 months, then they're just kind of there and they're reassessing and say, look, this is a natural time in my career to reassess if I'm happy Can I make more money elsewhere? All those sorts of things. And then, you know, lo and behold, you wake up 2 or 3 years later and your company's turned over and it's not nearly as shiny as it was when you bought it.

Yeah, that's a— I mean, that's it. I mean, there's buyer's remorse all over the place. I mean, the reality is, and again, it's their own fault a lot of times, is the acquirers too, right? This isn't like we're not blaming the start, you know, we're not blaming the selling company. It is so— but it is if you want your exit to be successful in terms of your personal outcome, And that outcome might be staying with— again, you never know what options are going to be made available to you when you go into these deals, right? You may go, oh my God, they're going to make me the VP of everything that's really cool or whatever, you know, and that's going to be great for me and they're going to pay me $500,000 a year or whatever. Those things happen. But I think that what you'll find is that you just mentioned before that the big issue is the employees because, you know, we were Lucky enough that we had enough good, solid employees who we were able to protect from this. And I think that's one of the things that we actually found ourselves doing was protecting our existing employees from the crazy thing that's happening at the top, right? Or the crazy asks or stuff like that, or the people who would come out of the woodwork and, right, and go, oh, you're a social media guy. I want you to come into Colorado with me and get on this thing and whatever. And you're like, wait. What's the process around this? I'm not just sending somebody, you know, that kind of stuff, right? The idea of just— it was a free-for-all. And, and not ha— and what you saw was we started to see people leave. And when those people leave, and those are the people that are actually doing the work, right? You're like, oh shit, now what? And, and if your whole reason for buying us was that it was faster to buy than it was to build this, now you're finding yourself in a position where after the fact where you're still kind of building, or rebuilding because you have screwed up the acquisition so bad that people have left. And now the thing that you bought is— wait, what happened?

Yeah. I mean, the interesting thing you said, Aaron, that I really like and it makes complete sense and I've gone through it is the us, right? To think of the acquisition like after you buy the company, it's us. It's not them. It's not, you know, it's not before us. It's we're going— We're part of the same company. Yes, we purchased you, but we can learn from each other and we're better together, right? That's the thinking, is that the thinking behind the acquisition is we bought you for some reason, and that reason may be technology. Part of it could be culture, right? I remember literally flying to California and meeting with people and just being like, wow, these people are completely on the wrong page, on a different page, not the wrong page, on a different page than us. And it was like, well, we have to take the responsibility as the acquirer to like to maybe change a little bit more. And that's really— I found that really difficult as a— or my CEO found that really difficult as a big company. Like, wait, we're going to adopt this small company's culture? Like, that's just not realistic, right? It just doesn't happen.

Well, it can if it's intentional. But I think you bring up a really interesting principle that I wish more people understood is that there are 2 parts of every transaction. And when you are working toward an exit as a brand, your responsibility for the first 2 years is to build something that somebody else wants to buy. It's making sure that everything is clean, everything is good to go. The acquirer, their responsibility is the 2 years after the acquisition and making sure that everything comes together.

Right.

And the due diligence process should be a 2-way conversation where the acquirer is vetting out the startup and saying, okay, like We can see what you did here. We agree this all makes sense. Like, we feel really good about this. But most startups, most people who sell their businesses do not do a good enough job of vetting out the acquirer's plan and saying— So true. Talk to me about how this is going to work. What are the ideas here? You know, what's happened to these sorts of things? And we get so focused on, you know, from an acquirer point of view, you know, writing the check, the money clears, and that's as if that's the finish line. In reality, that's the starting line, right?

Right.

And that's like something that most people miss. And you look at these companies that have been purchased and died, and they have the same thing over and over again where somebody somewhere didn't do their homework or their work. Usually it's on the acquirer side. And it wasn't that they didn't vet out the company had value and it's worth buying, because usually they were. It's that they didn't do their homework to figure out how are we going to integrate this? How are we going to take care of these people? How do we get to us versus just, okay, we did this deal, on to the next one?

It's such an important point. And I think that what we talk about is exiting on your own terms. That's the language we use. What we're trying to tell people is that you have this ability if you can control the things that are controllable, if you can understand through the buyer's eyes what's important and whatever, and you can make sure that the company presents that way. Right? However long it takes to get it there, which sometimes it takes 2, 3, 4 years to do that. The worst thing you can do is go through all that and then not talk about or not demand, okay, which you should be able to do at that point, demand an integration plan as part of the contract. This is not just about numbers that we have to hit or things that we have to, or clients we have to keep, or, you know, whatever the acquirer wants. But you have the right and should ask for from the acquirer and agree upon an actual written-down integration plan. This is what we're going to do over this time frame. Here's how we're going to do each of these things. And, and you should know also going into the situation what the redundancy situation is going to be, right, going in. And even if it's over time, if a thinning out over time or whatever, because so many of these things you hear too is that people are getting acquired and then suddenly half their staff is laid off, right? And the staff is going, hey, what happened, right? This was all going to be— you talked about how great this was going to be in the big corporate meeting we had a week ago before all this came down, and now half of us are being laid off, right? And sometimes that's a surprise to the founder, right, or to the brand itself. So being able to get your— the point is, get your— getting— building your company to a point where it's high value and high salability Okay, should be— you should then therefore then demand an integration plan as part of the deal, and that's followed through and has a point person and who's in charge of the integration. That's another thing that doesn't happen, right, at the acquiring places. There isn't a project manager. There isn't someone whose job it is to make sure the integration is successful.

Or if there is someone, they You know, they don't have any practical experience in the business. And realistically, I like to see it as a duo where it's the acquired company and the acquirer who have people who are co-leading this integration.

Yeah.

There's a lot of intentional things that can be done around cross-pollination. So if leadership is staying on, be very intentional about taking people from the acquired company and putting them into the acquirer and vice versa. And you have to be intentional about that. But I don't know about you guys, but I find that, you know, so many people are worried about the number. the valuation, things like that. In my experience, it's formulaic at this point. I mean, yeah, the multiple may change a little bit, but it's always going to be a multiple of profit or it's going to be a multiple of revenue. And you're very rarely going to see somebody say, oh, it's 2x this versus 30x this. They're all in the same range. And then where people fight in due diligence is they make excuses about the things that they didn't fix and why they shouldn't or shouldn't discount it from that valuation piece. But Really, the key thing that a brand should be doing if they have done everything to make sure they have a clean due diligence process is they should be interviewing this acquirer and being like, you know what, this money sounds great, but as you know, I have a fantastic business over here. I have something here that's growing well. I have a team that's working on autopilot, and there will be other ways that I can sell this business. You need to convince me why I should join with you. So what does that plan look like? And I think that if that were to change that mentality, suddenly I would imagine that acquirers would be like, oh, we got a good one here. Like, maybe we should up our offer a little bit. Maybe we should keep more of these people. Maybe we should do these sorts of things. Great. Because it's all about selling that company versus just what's on the spreadsheet.

Well said, man. Yeah. Good job.

And it's a really good point because, again, as you said, Aaron, everyone focuses on that number, right? Oh, We're gonna get X now and 20% later, or whatever the earnout is. Whereas if you're focused on— if you come back to the acquirer with an integration plan request and then, what are you gonna do about this? Or here's the 3 things that we haven't solved yet and we have working, and we call those marketable inefficiencies. It's like, look, like our cost of capital is just high because we can't borrow money because X, Y, and Z, or whatever it happens to be. We're too small. And we haven't been able to solve it. That's why our debt is— that's why our interest rate, our interest issue is so high. Like, when we find that those discussions, when an acquirer can have those honest discussions with the acquiring company, it sets up the integration and the post-exit activities so much better. Because again, it's not all about that top line number. It's the acquiring company thinking, or the acquiree thinking, How I'm going to make sure that this integration goes as well as it possibly can.

Yeah, well, you mentioned— you're right.

Yeah, it's your right as the selling company. I love the way that Aaron said it because it's just like, it's like this notion is what we've been saying. We're trying to scream this from the mountaintop. The whole reason, right, to do any of this is so that you have more control of your own destiny, right? The ability to be able— you have the right. I know everybody's going, oh, Oh my God, we used to call— this happened all the time. We would call, cold call these IT companies for PE firms. And, you know, we get into it a little bit with them, we start to take a little peek under the thing, and we would pretty much quickly be able to assess whether this was gonna, you know, be able to move forward or not and that kind of thing. And what we would see so many times was, you're just not quite there. And if you could move this and do these things or whatever, and you'd say it to them and whatever, they go, yeah, okay, great. But the reality is that, you know, you would be looking for the one that was already there, right? But the reality is that if you do this work to make yourself a— we talk about, and that's why we talk about salability more than about valuation, right? Because what we're trying to do is to say, what are the odds you're going to sell? And if you can actually increase the odds that you sell, that you're sellable, that somebody wants you, going to increase more people that want you, and therefore your multiple potentially is affected positively by that, right? When you are desirable, healthy, desirable company that people want, buyers fight for. Our intro to our podcast is all about that, right? But the, but the most important thing to know is that it's not just about the number you get. Oh, and by the way, we haven't even talked about the fact that that number is also all the stuff that's going to come off the top of that number. Right before you actually put the money in your account.

Yeah, that arrow was going to mention about the earnout.

So, right, no, exactly. So I mean, the idea is that, so in this, in this, this is a point of discussion and a point of negotiation for you to say, hey, I want to know, how is this going to unfold? Tell me what your plan is. How do we make sure this is successful? It's going to be beneficial for us, but at the same time, I'm concerned about things like my employees. I want you to tell me what's gonna happen to them, right? Or how this is gonna be looked at. And again, a strategic buyer's gonna treat this differently than a PE firm is, right? So all, all those things, that, that's the point is what you're saying is that this gives you, finally gives you, you need to know that if you do this work, what you will earn by doing it is the right to want stuff and to get it right out of the deal, right? Yeah.

Yeah, I'm sure you've had conversations with founders who sold a company, had an earnout, and some hit, some don't. And I think that everybody wants to hit the earnout, both the acquirer and the acquired want it to happen. But I would almost be— I think there's a founder out there who one day is going to be like, you know what, unless there's an integration plan that I feel comfortable with and I feel confident in our ability together to hit these metrics, I don't want an earnout. Just give me the cash. And that might be less than what the earnout is there, but it's just like, look, if you don't have a plan for how we're going to do this, and if the assumption is that, oh, just keep doing what we're doing and nothing's going to change, that is a fool's errand. And I'm already saying I'm not going to get the earnout, so I'm just going to take the cash today and I'll take my ball. You go home and you figure this out.

But if you're in a position where you are this valuable and sellable, Okay, and that person is sitting at the table and that you don't like the response back from that potential suitor, then that's the point. You get to say thank you, but no thank you, right? Nobody's making you have to go with the guy, the first people to come along. And if they're not good at what— if they're not giving you what you want, you just have to know what you want and know what you can ask for. And a lot of that is what we're trying to do, is doing this work and getting the company to be valuable and sellable. Sellable is actually the key because now you can ask for what you want.

Yeah, you bring up a really interesting point here too, Joe, where I think a lot of times there are different timelines for when someone may want to exit or is looking to exit. It could just be like, I'm tired, you know, I, I want to retire, I just want money, you know, those sorts of things. Um, but I think the best companies kind of look at where they are in the natural growth trajectory and say, okay, have we done all the easy stuff yet? And are these next growth pillars going to be really difficult? I mean, the example that comes to me is Rhode, the skincare company.

Right.

They have built a fantastic business in the US. It's mainly US-centric. And the next logical step for them is to expand internationally. And that is very difficult to do because the regulations are different. They're going to reformulate. All these distribution models are different. Could they have done it? Yes. Would they have had to raise a lot more money? Yes. Was it better to partner with a strategic that already had those capabilities in place? Yes. And so part of this is like, if you look at this and say, if I stay independent for a long time, you know, what are these natural things I'm going to bump up into? And, you know, do I want to go through another fundraise? Do I want to go through all these difficult things? Or is it a natural spot where both an acquirer and acquired say, this is a natural handoff where, you know, I need another partner who has done this before, who can help me do these things faster? Yeah. We've got this part taken care of and then we're not trying to fix this other part because together we're working on that joint win of expanding into Europe, as an example.

That's a great example. And we should also just follow it down a little bit more, understand that not all strategic buyers are taking your company and having you walk away from it forever. Oftentimes it's, hey, look, we're going to own you and you are going to keep doing what you're doing. Okay, I mean, that's not an uncommon situation to have where their integration isn't that much, because let's face it, there are strategic acquirers who are buying add-on stuff, right? There's platform stuff. There's all kinds of different kind of permutations of this that are possible. But the idea is that— what you're saying is it's the right fit for you for where you are right now, right? Part of the exit planning process is to figure out who are my likely suitors and buyers and what, what, what, and marrying that together with what you said before, like reverse engineering what you want and moving backwards. It's like, right, it's like being able to say, what is the kind of where you are right now, this kind of company with this kind of, of acquirer is probably going to be your best bet. And what is a deal with them going to look like potentially? And what is the way in which these things, might unfold, and are they going to keep you intact, or are they going to absorb you, or are they going to— do they want your— just want your market share, right? There's all kinds of different things that can happen there. And so the idea is that part of this exercise over the next 3 or 4 years, or whatever you're doing in order to do this, is to decide for yourself, hey, I— do I have the wherewithal to do this, right? Am I the right person to do it, right? Do— where are we, and what do I really need, right? In order for this company to keep going the way that it's going or to be able to grow. Like you said, where are my growth needs? Do I need to go international? Those are the kinds of things. And to be able to have those discussions with suitors is, again, it's getting to a level that you can do that, right? And feel confident doing that. Because I think that's a lot of the problem too. People assume that I'm the lesser. Mm-hmm. And so therefore, Right. I— they get the— whoever's acquiring me is like somehow better than me. Right. And that therefore I have to like listen to everything they do. That's just not true, is it?

No. I mean, the whole reason you're having that conversation is they, they want something that you're doing. Right. They couldn't— they couldn't do it. They couldn't develop it. You're doing it better. You're causing them pain. So there is— there's a lot of— there's a lot more that you have in your favor when you're talking to these acquirers.

That's it. And you got to be able to start by knowing that and then, and then understand what your options are and the whole thing. And if you are buttoned up and you have the due diligence stuff, you know, set, and you know what you're going to say, and you know how you're going to explain that weird lawsuit or whatever the thing happened 2 years ago, and you're, you're just going to make your— you're just giving yourself more leverage, period.

Aaron, it's been a great conversation. Thank you so much for taking the time. to speak with us today. What's the best place or best places for people to get in touch with you when they want to, if they want to engage you for your services?

Yeah, so I'm on LinkedIn, so feel free to find me there. My email is aaron@izba.co. And if you like conversations like this, I can't wait to have you guys on the Build a Business Worth Buying podcast as well.

Sweet. Can't wait to do that. That'd be awesome. Aaron, really great to have you on here today. Really appreciate the insight and the whole thing, especially again around that. I think the conversation, you know, we covered a lot today. We talked a little bit about the supply chain angle of stuff like that. We talked obviously a lot about this integration thing, which is incredible because we have not spent a lot of time on that yet. And I think that, you know, that's a piece that's obviously very important to me. It's one of the reasons why I'm in this business is because You know, I know how these things can go. And I also know that what, you know, what I've left on the table and what people are often leaving on the table when they are faced, you know, when they're in these situations. Really appreciate you, you know, coming on today. And thank you so much. And reach out and talk with Aaron. You can find him through here. There's going to be more with Aaron, I hope. We'll talk about that moving forward. But for right now, I want to thank you again for being on the podcast. Really appreciate it.

Absolute pleasure, guys. This was a blast. Thank you.

Hey, Jon, when we talk about this stuff, right, I think the big lesson that we take away from today is that what you really are doing here when you do this exit planning stuff, okay, this isn't about, oh, who's going to— it isn't just about succession, okay? This isn't about, hmm, I wonder how, you know, about protecting Protecting yourself from the 5 Ds, which we talk about all the time, which is also part of this. But the most important part here is to understand that you are creating options for yourself, right? When you do this work and you examine your business and you're unafraid and you examine yourself, okay, and you're able to take a real honest look and you get some help being able to see where you are and be able to know, what are my options? What can I do? Right?

Yeah. And it's, you know, when you just said exit planning, I think that one of the things I take from this conversation, because there's a lot, but it's more about the planning than the exit, right? To your point about options, right? You know, Aaron can help you, and what he helps— what he's helped companies is really planning that integration, right? Planning the after-the-fact, after you get your money or some of your money, if you get a lot of in-and-out, is planning that exit so it goes smoothly. And the acquiring company has to do work after the fact, right? And And before to make sure that there's an integration plan. But the company that's selling itself has to really make sure that they're building something and planning for something that can be acquired into a larger company. So that's, you know, there's so much in this conversation, but that's the one thing that, one of the things that sort of resonated with me.

And I love the fact that, again, that it's about what resonates is you do this work, you build yourself options, and the selling is just one option.

Right.

But understanding who you're gonna— right, but you're building the business in the right way, right? You're understanding it. It's another level, right? And it's hard. And, and I think that, that what, what, what people need to feel confident about is that there's help out there, okay? There are ways. Aaron is one, just one, right? But Aaron's one of the best ones. But Aaron's out there doing this every day and can— and is seen inside these companies and knows the kind of strategics that are going to be right for you, are going to be able to help you plan it all the way through. It's not just about getting— as he said, and here's the best part that I think he said all day, the closing of the deal is the beginning, not the end.

Yeah.

Okay? And getting that cash that first day when the bank hit the thing and, oh my God, look at what we did, and whatever, is that now it's really just starting. Okay? Because the next 2, 3 years that you go through earning out Making sure this stuff integrates, keeping this thing going. And again, maybe you, you're earning out, maybe you're not leaving the company, okay? Maybe you are staying on to run it, maybe you're staying in a capacity or whatever. All those things are possible. But watching— one of the hardest things that was hard for me to do was to watch my baby die, okay? And, and literally be crushed to death under the weight of another company that thought it— what it thought What it was was what it wanted.

Yep.

Makes sense, you know. So I think again, this is why this stuff, you know, becomes so important. Um, Aaron, thank you again for being here. Really appreciate it. Guys, you can, you can reach out, you can ask us questions. You can— you want to talk to Aaron, you want to talk to any of our advisory partners, you can reach out to us. You can hit me directly at jo@myexitengine.com or john@myexitengine.com. We want you to go right now to myexitengine.com and start this journey. All right, you're going to come to the website, you're going to see a video of me, you're going to watch this video, you're going to set up an appointment. When you set up this appointment, we're going to talk to you about specifically about your particular needs, what you're thinking, where you are, and we're going to figure out a solution that's right for you, right? We can send you to Exit Engine, we can send you to Exdeo. There's lots of places to go. We have partners like Aaron. We've got lots of places, a lot of help here. It takes a village, okay, to grow a business to exit. All right, and we have everybody, all the advisory partners you need, everything you can find here. But start by going to myexitengine.com right now, okay? Uh, find us. I want you to follow, share, like, give this to a business person that you love. Tell them to listen to this. This is the kind of information they need to have. Um, it's hard to get other places. This is the one place that you can absolutely get the best, the honest, the straight dope about exiting, exit planning in general. You're going to meet the advisory partners. So come here and subscribe to this. You can find us on YouTube, you can find us on podcast, on— you're gonna find us on Spotify and Apple and everywhere you go. So here's where we are. That's— you'll find us also on LinkedIn. John and I are LinkedIn all the time as well, and we're interacting with Aaron. You'll see Aaron's content, you'll see our content, you'll see all the stuff, and you'll get a really good education. All right, thank you for being here, John. As usual, thank you for being my partner. Really appreciate it.

Sure.

Have a great day, everybody.