The Exit Engine Podcast Episode 14: The view from the buyer's side!

Welcome to Exit Engine Podcast, episode 14. Hey, John.

Joe, how are you today?

Doing great, man. How are you today?

I'm excellent.

Very cool. So today, uh, today's kind of special because we're gonna talk about everything we're gonna talk about today is gonna come from the buyer's point of view.

Excellent. Very important point of view. Uh, the prob—

perhaps the most. In fact, everything that we do at ExitEngine actually starts and ends from the buyer's perspective, even though we don't really work with buyers. The reason is, is that we, we need to understand what it is that buyers want so that we can make sure that they get it right. And we understand that we're in a situation where The buyers think, not always true, but they think they have a lot of options. They are in many cases investing their own money. They're investing potentially other people's money.

Yep.

They are trying to make a very, very, very, very good decision when it comes to what company to purchase.

Yeah.

So what we have to make sure we do is that they're going to be very, very, very careful. Uh, and they're gonna look under every— right? They're gonna look under the rugs, they're gonna look behind the curtains, they're gonna look in the closets, they're gonna look under the bed, right? They're gonna look at every single thing they can possibly look at to, uh, in order to basically, you know, to be able to make sure that they're making a good decision. And so it's, it's, it's, it's up to the seller if they wanna sell a company to not only have a good valuation, And not, I have a good propensity to sell, but it's important for the seller to be able to meet the buyer's expectations.

Yes. And also, you're right, 100% correct in all of those things. And also realize the seller has to realize that even though their company's very different from the other companies that the buyer's looking at, invariably that buyer is going to compare your financials and your market position with all of the other companies looking at, because trust me, they are looking at multiple companies. And, and the way these, these, these buyers work is they have lower-level associates look at all— look at a lot of these deals, and they bubble things up to their manager, and then that manager bubbles things up to their manager, and investment— it eventually gets to the investment committee, and they choose the best of the best in which to proceed in, in many cases. And again, A lot of firms operate differently, but, but many firms operate in this way in the sense of you are being compared to other firms either in your industry or out of them based on a timing thing that the, that the buyer is looking at, you know, in when we are right now in October of 2024, as an example.

That's exactly right. And, and of course, because they are looking at all these companies, they consider themselves an expert. In your company. Now, they may not be an expert in your company yet, but they're an expert in the industry. They are looking, in the case of private equity firms in particular, they are looking for companies that are in a particular category, right? They think that they can take on this company and manage it moving forward and grow it. So they believe, right, that they've got the expertise, they've got the ability, all they need in their minds is a good starting point, right? They need a solid foundation. They need a company that's doing well, that's got momentum, that is able to be— that does not have an owner that's getting in the way of stuff, right? They— is a healthy, financially healthy, has good processes and things like that. And there's going to be some things that it doesn't have that the buyer wishes, maybe wishes it did. Right. But we're also gonna be able to turn those things around and to show the buyer why they need to have the things, why the opportunities exist. That, you know, that, so that there may not be things that are not complete yet, but maybe opportunities for the buyer as well. So, we're gonna wanna point those things out. So, let's start by talking about the motivation of the buyer.

Yep. Okay.

So, obviously, any buyer, and again, this is what we'll try to do here is we'll, we'll talk about the different kinds of buyers that there are. Okay. And let's talk about those real quick because I think it's important. All these buyers will be slightly different in terms of how they approach your company, how they approach their process. And then even within individual private equity companies as an example, and there's literally thousands of them. I think the last count was 9,000 in the United States alone. Okay. So a lot of companies with a lot of money, a lot of personnel, a lot of staff. They're all staffed differently. They've got, some of 'em are very large, some are very small, some are very nimble, some are very robust and take a long time. It's important for the average person to know too, though, that the private equity thing, and this is just a little bit of an aside, but understand that much of your, or much of people's 401s and retirement funds are actually tied up in private equity funds. They may not even know that. So some of these companies are, are you, most of these companies are using other people's money. They're using money from institution, institutional investors. And so they're gonna be very, very, very, very careful, right? With that money. They're gonna make sure that they're making a good bet and that they're doing everything they can to buy a healthy company that they're gonna be able to grow.

Right?

So let's talk a little bit about the kinds, different kinds of buyers there are. Okay, so, John, let's talk about private equity groups first.

Yeah, I mean, private equity groups, they are, again, they make up, they run the gamut from one person and an office, one person and a desk, to, you know, hundreds and thousands of people that are the largest firms, largest investment firms in the world. But primarily what they're looking to do, and Jo is very good at pointing these out, pointing this specific thing out, is they're looking to buy companies where they can make a return and make a large return by twisting a couple of knobs and changing a couple of things of the company. And by changing a couple of things, it could mean, um, changing the financial— the capital structure of the business, taking out existing debt as an example and replacing it with lower-cost debt, or, um, you know, making it, uh, making its product, the company's product, available to it's other portfolio companies and, and having like an ecosystem, if you will, of they're buying— they're all buying their own products. Again, perfectly legal and a very— and a good strategy. Um, but they range from people who have very long-term operating horizons, um, indefinite, right? People that just like to buy companies. Like if you think of Berkshire Hathaway, although they're not a private equity firm, they operate very much like one in the sense of They bought See's Candy in 1965, I think, and it's returned an incredible amount of money. Why would they ever sell that company? So big private equity firms and long holders of private equity that want to hold for the long term can buy a company, roll it into its portfolio, and just can just print money. And, and they are the— they essentially are the bank for that company. Um, other companies look to have a time horizon of— time horizon, excuse me, of of 5 years or, or 3 years. And often those horizons are dictated by the investors of that private equity firm.

Right.

The, the, the fund, if you will, that has been raised has a time horizon, be it 2, 3, 5, 10 years. And the investors in that fund are, are, are required to take a distribution from that fund when that fund ends. And that fund definitely ends. So they have As an example, they could have 36 months or 18 months to put money into companies and then a time horizon of, let's call it 5 years to realize those gains. So they have to either have a financial harvest in those 5 years. So they're encouraging companies to accelerate growth plans. And all of those companies in that private equities portfolio have a 1, 2, 3, 5-year time plan to get them going. Some of them will be successful, some of them won't be. But the private equity firm is betting that a majority of them will be successful. And then they get a couple of really big returns, kind of like venture returns. It could be 10x, 20x returns in those private equity firms. And then they're going in again, twisting a couple of dials, going in, bringing in maybe a management team member, some financial strategies, and some operational strategies that they've honed over the course of them, over the course of their investment career to make the really big, the big levers can twist to make the biggest financial return. 'Cause that's what they're really looking for is they're looking for a financial return.

That's right. They're financial buyers, right? At the end of the day, their interest is purely financial. They are grouping companies together sometimes. So it might be that there are portfolio companies which are the kind of the, you know, the main, uh, the main thrust, I would say, you know, in that particular, you know, industry. And then they may also purchase add-ons, which are things that they may actually purchase after they've bought a portfolio company to add on as a service or product, you know, kind of add on to the existing portfolio company and kind of integrate them, you know, those two, those two companies that way. So, um, yeah, either— right, good.

Yeah, like, like a roll-up strategy, right? A lot of people have heard of roll-up strategies that, you know, There's a bunch of companies doing that with HVAC and plumbing companies and roofing companies, and they roll up roofing companies across the country, have a central management team, and roll that up. The other roll-up strategy that I was a part of early in my career is they're rolling up different providers of financial information, as an example, and slightly different providers, but the goal was to compete with a company like Bloomberg and rolling up all these specialty information providers. to roll up to one company, one management team, different products. And that was the sort of synergies in that they could have all of the shared services of these, of the IT and finance would be shared among these products, one management team, and they would gain and gather efficiencies in that way, shape, or form. Right.

But the idea is that these people basically have a purely financial interest, right? They're not looking for Prestige. They're not looking to have a boring business they can make money on in the short, in over a long-term play. They're looking 3 to 7 years. They're looking to resell it, maybe offer it as an initial public offering and take it public.

Yep.

But whatever they want, they want strong cash flow and they want profitability, right? And they want the ability to see immediately how they can grow it in the immediate future. Yeah.

And they're doing that during their due diligence, right? They're looking at the financials of your company and they're looking at, okay, what are those 2, 3, 4 high-impact things I can do with this company to make a giant financial return?

That's exactly right. And so their motivations are, again, purely financial. It is all about the growth. It is all about that. But that's just one type of buyer. Okay. The, another kind of buyer is what we call a strategic buyer. Right now, these are companies that are basically are looking to complement existing operations. So I'm gonna buy a company like that same roll-up strategy that we just talked about with a private equity firm. The difference is that I am an owner-operator of a company, or I'm a group that owns and operates a company, and I am now looking to grow the value of this company by adding on a service or kind of other strategic offering so that I can find synergies, expand market share, diversify product offering, you know, any of that stuff. Right. And that's gonna give me access potentially to, to do new markets, to new customers, new geographies that I didn't have before. And we're gonna basically potentially eliminate competition, right?

Yep. I, I think, I think of this, when I think of this, I think of adjacent, adjacent markets, right? Markets that are, you know, adjacent to your product. So along the lines of HVAC and plumbing, right? Just as a thought, if you have HVAC people, oftentimes they need a plumber. Oftentimes those companies need plumbers and services. You might be a plumbing company who gets into and starts purchases in a complementary business, a business like HVAC or something along those lines that are, that are You can sell a similar product to your existing customer.

Right. So you're basically, you're finding efficiencies, right? You're finding, you know, again, same thing, one management team, right? But you might be expanding a product offering or expanding into a geography you didn't have before, right? You're reducing your competition, you know, whatever. So overall, again, a completely different kind of buyer with a completely different mission. This buyer obviously still gonna be concerned about the financial aspect of things. They want to make sure that they're getting something, but what they're really interested in is gonna be how well is this company gonna integrate with what I already have?

Right.

That's a much different question, right? That's, there's gonna be a lot of focus for them on how we can actually, how we can actually merge successfully to meet the end that we're trying to meet. Which is to grow the value of the company. Right. And so a very, very, but a very different mindset.

Yeah. And also like the way that the private equity or way that, sorry, the way that those buyers approach different companies and the time horizon for those companies, like, right, are different. Oftentimes a financial buyer often comes in and buys the company and is like, all right, yes, you have some type of transition period, but it's relatively quick because they want them to go in and make those changes. a strategic buyer, not all the time. This, this is— every, every situation is different, but oftentimes they might not know the market as well as the existing owner.

Right.

So they'll want to retain the owner for some period of time after the acquisition is, is finished as a, as an advisor, as a, as an equity owner, roll equity into the new company or something along those lines so that they can keep your, the owner's expertise Within the fold, so to speak, to help them roll the strategy out.

Exactly right. And so this is, that's something that's gonna happen obviously with a more strategic buyer. And there you could probably break the strategic buyers down into a couple of different things too, right? So the first, the most common kind of strategic buyer is gonna be like, it's like a competitor, right? Somebody who potentially is interested in you because they compete with you. And, and in order to basically kind of get you outta the way or, or buy more market share, you know, they could potentially, you know, buy your company because it would be an easy thing to roll up. You're in the same industry, maybe you're doing things similarly, but that's something that's a very common thing to have happen, right? Probably actually one of the more common ways, uh, would, would you say, John, in terms of finding a buyer?

Yeah. I mean, this is what I used to do in, in, uh, one of my companies is we would look for companies in our industry that were, that were either slightly out of our geographic area or within our geographic area that we didn't have a good footprint in. Like, right, we had, we had one company where they, they had a hammer hold— or not hammer hold, a hammer lock on this one city for, for real estate. And we purchased them because it was really the only way that we could get into that city. Um, right. So we had a market share there. It was very small. We were always very small. I think under like we were 4th in the market. We immediately went to number 1 in the market. Also, it's geographic expansion, right? We also looked at companies further away from us where we had a very small market share, but hey, we wanted to be in that market. This company dominated the market and we got turned down a lot when we made offers. We had to buy, you know, we had to buy the Avis of the locale because they were available and the number 1 company didn't want to sell. I think of that in In the state of Connecticut, one particular area, we could never buy this one company. They were number 1, but we bought— we tried to buy number 2. So those are types of expansion strategies where oftentimes you can't buy the number 1 company because they don't want to sell. You buy the number 2, you combine the 4th and the 3rd or the 4th and the 5th and become all of a sudden your number 2, as an example. Right.

And this is something that would probably be a good time to point something out here too. If anybody out there is getting calls from competitors or other strategic people within their industry, Looking to, and it starts talking to you about an acquisition, potential acquisition, answer the phone, take the phone call, say, thank you very much. This is very interesting. And immediately hang up and call an M&A advisor of some kind. Okay?

Yes.

Whether that's, that's, that's us at Exio, at ExitEngine, or somebody else out there. There's plenty of people out there. We can give you recommendations if you don't wanna work with us for some reason or whatever, but please Your very next call should be to an advisor. And the reason is, is that you don't want to go out this alone. Okay? You really don't. Keep in mind that even strategic buyers, okay, may have done this before. They may have a lot more experience than you do in terms of what they're looking for. I can guarantee that you're at almost 100% of the time, you are not ready to sell, even if you want to sell and you get a phone call. Okay? There are things you can do. There are things you must do first before you accept an offer or start entertaining any kind of offer from anybody. Trust us on this, right? It is not, it is not something you wanna handle completely alone. Okay? So whatever, you get an offer, they make you an offer. And remember guys too, that the offer they tell you on the phone, okay, is, is just not real. Okay? Until they get in and they really under— uncover and they really look at your books and the whole thing, that offer's gonna change. And it's not gonna change up.

Okay. So it never does.

Right. So just know that that's the, that is the time. If you are getting phone calls from people who are interested in buying you, whether they're private equity companies or competitors or other strategic or financial buyers of any kind, stop and call a professional in and get some advice before you move forward. Okay. I'll, I'll, I'll leave it there, but that's really important.

And, and, and I'll echo that. And, and, and every time we would buy or try to buy a company, we would always get a phone call back from that company's advisor, right? Jo's exactly right in the sense of, they're the people like us, we do this all day long. We talk to companies, we talk to buyers, we know the lingo, we know what they're going to ask for, and more importantly, we know what these buyers want. And it doesn't necessarily mean it's industry agnostic, right? They all want the same thing. They all want what we're gonna talk about today, right? We're gonna get into some of these things, financial records. They want to know the growth potential, all those things. But it's best left to have it, or it's best to bring someone in with expertise that can ask the right questions of the buyer and provide the answers in context. And oh, not, you know, not, you don't want to make a mistake that lowers the valuation of your company on that first phone call.

That's exactly right. And we know not only the questions to ask of the buyer, but, you know, to be honest, we know the questions to ask of you. Because at the end of the day, as the seller, there are some things that you're gonna have to— there are some hard questions you're gonna have to ask and answer before you're ever gonna be able to sell your company. All right? And so, oh, okay. We've talked about those in the podcast. I mean, we, we, you know, a couple of weeks ago we talked about the 10, you know, 10, 10, uh, sorry. Uh, you know, 10 things you can do right now, right? To raise the value of your company and things like that. Those are similar, similar questions you're asking yourself. To be able to find out the answers, to then be able to make a plan on what to do, right? So understand that anytime you're getting a phone call from somebody or whatever, you, you just don't want to— don't even— you can take it, say thank you very much, I will get back to you, and leave it there, and then immediately turn around and call us, okay? Just, just, just trust us. You don't want to make this mistake. Um, so back, back to the discussion though, we're talking about different kinds of strategic buyers. Yeah. So you've got, um, some, some, some buyers that people don't consider, okay, uh, besides the competitors, are going to be things like, um, family members, all right, potentially selling it or, or, or at least succeeding, having a family member succeed you. Maybe it's not necessarily through sale, like the exchange of money, but potentially through a will situation or, or as part of your exit strategies to hand over the management of the company to A family member, your son, your daughter, your nephew, whatever. Also, now, what they want to do, okay, or what they're going to do with it is going to be, again, yet again different, okay? What they're interested in that case, okay, is again less— to be clear, everybody's obviously concerned about the financial state of things, okay? That's just a given. But these motivations are above and beyond that, okay?

Okay.

They may want to be— they may be interested in in family legacy, keeping control of the organization in the family. They might be concerned with preserving longer-term relationships with employees and customers and partners. They may not want a sale to throw that off. And they're more likely to have an emotional attachment to the business too, right? So those motivations are, as you can see, are— those are much, much, much, much different. Employees are another potential buyer, right? We call it a management buyout or a leveraged buyout. You've heard these expressions before.

Yep.

This is essentially when your management team gets together and buys the company from you to be able to run it themselves and move it on. Again, of course, they're concerned with the financial health of the company, but who knows what the company is more than that? Right. Correct. So they're considered, they're, they're looking at the continuity. They're looking at continuing the operations, continuing the culture. They're looking at maintaining the business, right? And being able to do, potentially do more potentially with you out of the way. Okay? They don't need your training. They don't need you to stick around for 6 months or do any of that stuff, probably. All right? So that, that whole, that whole deal looks different than it, it would if it was coming from a private equity group. Right.

Yep. Agreed.

The other, again, there's some other specific buyers that we could get into. There's ESOPs and all kinds of things like that. We don't need to touch on that today. We will talk about employee stock ownership plans. That's an ESOP, and that's actually something that we can actually, that's actually a very good strategy for some people that are looking to be able to get equity But don't want to— but basically don't, you know, it's basically making a trust and you're selling the company to a trust. We can talk about that in and of itself.

Yeah.

There are obviously, there are foreign buyers too. All right. So some cases, again, doesn't happen that much this way. Usually it's happening the opposite way where there are American companies buying, you know, companies from other countries. has just to do with, I think, the size of our market and things like that. But that's another potential situation, right? Is that you'd be picked up by a foreign buyer. That foreign buyer, again, could be individual, could be strategic, could be some kind of private equity or investor fund. So again, it's not really much different. But again, there's gonna be a whole level of things that are different there, right? There's This new market, there's going to be— there are rules about cross-border rules and things like that. There's all kinds of things that are going to factor into that.

And that's another— going back to Joe's point earlier, if you get a call from anybody, but especially if you get some call from someone out of the country, you want to leverage an M&A advisor because a lot of these sort of— everyone sees the scams, everyone sees the spam you get. And all those things, like, you just got to be careful about what you're— what information you're providing to anybody. You want to make sure they're legit. You can do Google searches.

Yeah.

But the— but, but M&A advisors like us, we have, we have, uh, access to databases that, that aren't retail databases that, uh, that quickly lead us to believe that, uh, these people— some of these people are not real. And we can, you know, lead you down the right path when you get in contact by a random person in some country.

I can remember there's, there is nothing there. There, there are very few things in life that are, are as exciting as someone calling you and saying, I want to buy the business that you've been working on for years and years and years. Um, it happened to us. It's a great feeling, um, when you're like, oh, and sometimes it's, sometimes depending on when it happens, it can be out of the blue. It can feel like it's, you know, you weren't expecting it. You know, you were head down running the business. And now suddenly you get a phone call, it's like, someone's interested in this. You're like, wow, really? It's so exciting, right? Because it opens up a whole bunch of possibilities for you. Maybe things you never even considered before.

But yeah. That's exactly the same thing happened to me as I remember we got a call right after I had been in on a Saturday night at like 11 o'clock fixing something, which was a nightmare. But like literally 3 weeks later, we got a call from somebody and they said that exactly from a private equity firm. We're like, wow. We've been— what, like, they said something to the effect of, we've been watching you. And maybe that was sort of the line to get us, but then they came back to us with actual things that we had been doing. And like, wow, you heard about stuff that wasn't announced to the public, that they heard about. Oh, you heard their meetings. We're, yeah, doing this and doing that. So it's interesting.

So yeah, it's an exciting thing, and it's easy to get carried away with it, right? And of course, if it's one of these, you know, there are people out there that are untoward or who are trying to scam you and things like that. And of course, that's the kind of thing you just want to obviously look out for. So good advice in general is just to call your lawyer, call an M&A advisor, call us, whatever you want to do. Call us for free. We won't even charge you. I mean, you want to talk about someone you're getting, we'll let you know right away. We're not interested in people getting taken here. So if you do get a call like this, let us know. We can potentially help you out with that.

Yep.

Let's talk real quickly though about individual buyers because This is something that I think is also an under— we spend a lot of time talking about big buyers with private equity groups and investors and things like that. And the strategic buyers are kind of a close second, but individual buyers are real and they're really out there. And depending on the kind of company that you have, it's very possible that you could attract an individual buyer. What is an individual buyer? It's an individual, obviously it's a person, it's an entrepreneur normally looking to be able to buy a stable business. And again, it could be part of a portfolio that they have. It could be a single business that they want to run and operate for a long period of time. It's not a bad plan. Okay? If you are pretty good at business and you understand the numbers and you understand basic things about business, it's not a terrible investment strategy for you to buy a— I had a buyer once, his whole mission in life was, he was in his late 30s. He had been a financial guy at a big consulting firm for a long time. He made a little bit of money. What he wanted to do was he wanted to, as he said, he wanted to buy a boring business that he could run for the next 20 years. With really good cash flow that would, that he could then in 20 years sell for a major profit for retirement.

Right.

So think about that. Not a, not a bad idea. Okay. If you can, if you can stomach the boring business part, um, and I think a lot of people could stomach it depending on how much money they were making every year. Um, he was looking to basically make $200,000, $300,000 a year out of the business. And then hold onto it for about 20 years when he was ready to retire and then be able to turn around at that point and sell it to be able to fund the rest of his retirement. Right. Really good plan when you think about it. Right.

And I had a situation similar to that, different age of person, but they had worked— I'm not going to say the industry, but they had worked in an industry for a long time. They wanted to get out of that industry and move across the country. And they wanted to buy a lifestyle business, not necessarily for them. They wanted to buy it for their kids. So, um, the motivations and the financial, um, return had a different time frame than, than, than private equity firms, right? Had a different, uh, they wanted it as a lifestyle business so that they could make not even that $200 grand. They just wanted to cover their expenses, um, and, and, and sell it in a couple of years or Even pass along to their kids.

So there are huge advantages, huge advantages to this, right? I don't have to go through the startup phase, right? I don't have to go through the hard years, right? I'm buying. I can, if I can buy and I can afford to do it. And again, there's many ways financing-wise, we, you know, and again, we'll, we're gonna do a whole episode on financing, but, and there's so many different permutations to that. But if I can, if I can swing it, if I can go and I can afford to buy You know, a decent, decently run business that has a good history, that is profitable, that is established. I don't have to start from scratch, right? I can just, I get this, I get in there, I have instant income, right? Um, and I'm able, and if I know something about something, uh, I can potentially affect some change in a certain direction. Maybe I'm a marketing guy like me. Maybe I'm just like, okay, I can do this. And I— what I would do is I would go and I would go after these markets, and that's how I would grow the thing over the next years while all the people who have been working there for 10 years or 20 years or whatever it is are actively running the business and keeping doing what they've been doing. And all I'm doing is coming in as the new owner saying, keep doing what you're doing, um, and then we're going to try to do some new things by going into some of these new places. So it's a really good opportunity, right?

Yeah.

And it gives you, again, it might be a lifestyle thing. It might be, again, a plan for later for retirement or something. It might be adding it on again to a portfolio that I manage remotely because I just put people in charge of these things and I just own these things. Maybe I don't operate them at all. So there's a lot of different— that's a real category of buyer. And I know it seems like it's like, well, they are Probably the smallest group, but it's becoming more popular. So one of the things that you should know is that there are people like us who are out there actually working with individuals to become buyers of companies. Okay? So they are, again, it's an investment strategy. It is a way that if you've got a little bit of knowledge in a certain aspect of things and you can buy a business that is well established, And is running. It's instant income. You don't have to build anything. You're just allowing it. And maybe you're again, adding to it as best you can. Now, there are risks to that.

Yeah.

All right. So those are the kinds of buyers that, you know, there's, again, there's probably a few more out there that are less common, but I think that's the big group.

Okay.

So again, they have got different motivations, but I think what we can do is we can kind of boil them down to basically like 3 you know, 3 or 4 different total motivations, right? They're obviously, they're either motivated by the finance and the goals of the, of the financial aspect of things, like private equity firms or investors and things like that. The, like a strategic buyer, they're concerned about strategic fit. How well can I integrate it? Um, how well can I integrate my, what's my culture versus that culture? They're gonna look at things like that. Culture's gonna matter a lot more to people like that than it is to, you know, potentially to private equity groups. And then of course there's things like, am I going to get— if I'm a— is there a lifestyle involved in this? Am I trying to buy something because I want to run it for a long time? So these, those understanding the buyer motivations are going to be really key, right?

Yep, absolutely.

So let's talk a little bit about specifically what these buyers are actually looking for specifically. All right, so the first thing obviously is financial health, right, Jon?

Yeah, I mean, when you're looking at a, um, a company and they have financial statements— and it's happened to me where I ask, I send a note over and I say I want X, I want Y, and I want Z— and overwhelmingly those X, Y's, and Z's are I want your income statement, I'd like your balance sheet, and I'd like your cash flow statement. over the course of, let's call it, the last year, as well as the last couple of years, and oftentimes 2019. And we've talked about this on other podcasts, but— Before the pandemic. Yeah, exactly. I want to know what the business is doing before the pandemic. The easiest way to do that is to look at financials for 2019. I know your financials for 2020 are going to be a mess in most cases, um, but do you have them on hand? Is it easy to, to send them? Do you have a cash flow statement? Because when you have— don't— you know, the cash flow is really what— where the cash goes and what you've been doing with it. You've been taking it out of the business and putting in your pocket, fine with me. I'm not making any judgments. You've been plowing it back into the business and expanding, wonderful. You haven't been doing that, that's fine. I just want an accurate picture of where the cash is going and what you're doing with it. If you're buying machines, if you're buying things to make the business more productive, great. If you're spending it on a house in France, fine. Then the business is able to support that type, that level of spending. But what you need to have is you need to have accurate financial statements that you can send over to people without a lot of explanation so that they can make a determination about your business independent of a long conference call or, or email from you, they need to be able to— and they will do this anyway— they will put together the story of your business from your financial statements without you. Because even if you do tell them the story, they will put it together and say, oh, like, what happened in the second half of 2022? Or what happened in the first half of 2019? Or where was your PPP loan? Like, there's a set of questions that That every buyer is going to say is like, wait, why didn't you do this based on this? Or what was the thinking here? Because every strategic decision that you made in your business over the last 3 or 4 years, you presumably thought about and had different options. Should we invest in A? Should we buy a— should we open an office in, um, you know, city— in City B? Should we do these things? And, and there are reasons why you did that. They're going to ask you those questions and they'll come up in Discussions.

And one of the best things, the thing that we recommend doing is being pro— is being proactive. So we're not going to send a big email that says, hey, this is the thing, and by the way, this is why the cash flow was like this in 2019 or 2020 or whatever it is, or make excuses or whatever. What we're going to ask you to do is, and you can do this for yourself as well as anybody else, is to basically paint— is to actually paint the picture. Here's this business. Right? We, we put it all in a document. It's called a CIM. It's called, right? It's a, it's a, it's a, um, a confidential interest memorandum, information memorandum, CIM, C-I-M. And basically what that is, is your, it's your, it's your business in a nutshell. It's your, it's your marketing document. It's the thing that you say, this is the business, this is what it does, this is the highlights, this is what it, this is the price, this is, uh, how it's set up. This is what the, the things I'm looking to have. As part of the deal. This is where I believe the business can succeed moving forward, etc., etc.

So yeah, and it'll have, you know, it'll be anonymous, right? It'll have a— it'll have an industry. So if you're, uh, you know, again, if you're a candy maker, it'll have confectionery company or food company and something like that. Or it'll be generic, but it'll be specific with regard to some of the details of the business so that we don't want them Googling the company or trying to find out the company, but they'll wanna know the specific individual data, and that will come after an NDA and all those types of things. But, right. Yeah.

So the idea is though, but the, so when we say that, again, you, they are gonna make their own conclusions, but it's important obviously to realize that they have motivations. And what we're talking about today, okay, is, is what those motivations are so that you can appeal to those motivations. Just like selling anything else, right? What you want to know is, what is it? What problem do you have that I'm going to solve?

Right?

Because that's at the end of the day how a deal gets done, right?

Yes.

So the financial health obviously is one thing. So this SIM, this information memorandum, is basically a marketing deck. It's, this is what the company is. This is, you know, it's going to include the financials. It's going to include All the things that we've done in the last few years to get here. It's gonna include potentially ideas about where the business could go moving forward. It's gonna be everything together in one document that's gonna get sent. Now, that document is not gonna be sent to what, as John just mentioned, until an NDA is signed, right? Well, this document is not gonna, you know, is gonna have some information that's not gonna be allowed to be seen by the public. We don't want everybody, you may not want everybody to know that you're actively selling the business. Why? You may not want your competitors to know that you have this thing because maybe you don't want to sell it to them. You don't want to give them— you don't want to give— you don't— you may not want to worry your customers.

I was just gonna say, yeah, you don't want to let your customers know before you've had a chance to discuss with them the fact that you may be selling your business.

And there's nothing to discuss with them until you're actually selling it, right? And so there are things like that. So again, this is a very— this is why this is a confidential situation. It is only given to people who have signed, you know, an agreed-upon, uh, you know, and, you know, non-disclosure agreement. Um, and, and they can only see these details because they've signed that. And that is a legally binding document that if word was to get out or whatever, that you could actually track it down and potentially sue somebody for, for breaking that agreement. So, um, it's a real thing. But, but, but I cannot stress enough that it's— understand, when you are met with a buyer Understanding who that buyer is, where they come from, where their money's coming from, what their motivations are. Okay? Most important thing to learn before you ever give anybody anything is to find out the answers to those 4 questions. Why are you interested in this? Where do you come from? How much? Where's your money coming from?

Right?

And what is your motivation for buying, for looking at this company? That's the most important thing.

Yeah. And that third one is, you know, a lot of these questions, you have to be, you have to be blunt and you have to be upfront and you have to be honest and you have to get this information because the worst thing to have happen, and this happened to us, is you get going down a path and what you've been talking to is like what they call, you know, various names for it, but companies that don't have any money that will use your company to raise money. Right? They don't have a pool of capital. They are a search fund and they are searching for opportunities and then they will raise money. That just complicates things. I'm not saying I don't wanna disparage those types of companies, but it's good to know and get that answer upfront because if they're not being honest with you about the source of their money or the fact that they have money, that's gonna complicate things. And it's going to, it's gonna add time, which may be very important to you. If you wanna sell the company quickly. And it can also lead to situations down the road where they start to lowball you before they have any money, which, which again has happened to people that we know and people we've worked with.

No question about it. So, and again, this is why you wanna pass this on to an M&A advisor if you can. Okay? We know the questions to ask. We know how to get to their motivations. We may even know the people potentially who are coming after you. So just know that that's something that, that can be incredibly helpful. So understanding their motivations, okay? And the reason that you want to— again, the reason you want to understand their motivation is because you want to be able to couch your product, i.e., your company, right, in the right light. You want to be able to say, okay, if your motivation is this— you may say, hey, if your motivation is purely financial, then I don't want to sell to you, right? You may— that's— you may have— you may feel that way. You may say, no, look, the only way I'm going to sell this company to somebody I mean, they're going to sell it to an employee, and I know which employee it might be. And maybe that's 3 or 4 or 5 years down the road, but I know that I would be inter— I would be enter— I would entertain a strategic buyer, someone who came in and said, we really like the way that we do stuff, or that you do stuff. They like the, you know, they like your, your operation, they like your culture, they see themselves being a part of it and putting it together. You may be— you can make that decision. This is what Exiting on your own terms means, right?

Exactly correct.

You decide what it is that you want to go. More deals fall apart at the table because the buyer— sorry, because the seller gets cold feet. The seller, you know, 50— about, about, about 30% of the time, probably. Okay. That, that there is something about the buyer that the seller does not like. It's very hard to be a buyer. I mean, it really is. You have to do a lot of due diligence. You have to think you're very right about the purchase you're about to make. All right? And so, they really do talk about due diligence. They really do due diligence. Okay? I've had buyer clients that I have put 30, 40, 50, 60 companies in front of, and they have not pulled the trigger on any of them. Okay, it is, it is. They, they want to be very, very sure. If you really want to sell your company, then you— what you want to do is understand exactly what they're looking for and then decide how you can position your company to make that fit, right? Not going to be 100% of the time, but at least you want to know what, what you're up against and what, what they're, what they're really into. What you don't want to do is talk about, you know, talk to a lifestyle buyer You know, uh, uh, uh, about the way that he can make money in the next 3 years by selling the company. That's not what he's in it for, right?

Correct.

So making sure that you understand this, what, um, what, what buyers are looking for. Let's talk a little bit about specifically what, what they, what they really want, right? They want what? They want, uh, financial health in general.

No, financial health. They want operations. So like, they wanna know that what they're buying is repeatable, is— and scalability is part of that, but it's not required. It's a nice thing to have, but if the operations are documented, the processes are documented, and the potential for scale is possible, right? You're a whatever, you're a restaurant, you're some type of offering to retail and, you know, some unique offering for retail people or for consumer, directly facing consumers, and you can— it can be repeated, across geographies. I think restaurants in this case, or something along those lines, that's what they want. They want to be able to come in and without the owner, you know, they assume that the owner is going to be gone, that you're going to, you're going to leave the company and you're going to be doing your next thing, or you're going to be on a beach in Cabo or wherever you want to be. They want to know that that business can run itself. Sure, they're going to be involved, but if they're financial buyers, they want the business to run themselves. So they want Manuals, processes, intelligent people that can run the business that are going to be there after the sale so they can manage the business that they've just purchased from this owner who, yeah, maybe there's an earnout associated with it, but clearly he or she is not focused on the business in the way that they were focused on it when they owned 100% of it.

That's right.

So those types of things are appealing to buyers.

And of course, they also want to know, you know, most of the time, you know, whether it's strategic or financial or otherwise, you know, they want a company with a good reputation, right? They want to buy— they're not looking to buy— there are people out there that buy distressed assets and things like that. That's the thing that exists. There are companies that will just buy your equipment. There's all kinds of things that when you're in trouble that you can do to get cash. But when you're talking about selling the whole company, the reputation of your brand in general is probably one of the biggest issues that there is, right?

How—

what do your customers think of you, right? Where— how much market share do you have, right? Where— what are— what are your— what do your employees and your suppliers think about dealing with you? Those are things that really, really matter, right? And again, they're not necessarily the things that you're going to think about when you're thinking about the price tag you're going to get for your business, right? But all of these things matter. So having all these things you know, your ducks in a row in this situation are going to make a big difference.

Yeah, and just to build on that is the last thing is about customers. You know, again, they want to see a broad customer base. They want to see not too much concentration. They want to see that they're buying different products from you if you have multiple products. Those types of things are very positive when a buyer is looking like, oh, they buy 4 different products from you. Okay, that's great. That's helpful.

And, and, and again, some work at looking at yourself before you, before you put your company on the market is to be one of the, the key things is to be able to look at that customer concentration, look at your products, look at the things that maybe aren't selling and maybe actually get rid of them, right?

Yes.

So the idea is that understand that when you're going, this is why, again, guys, we, we talk about this, this exit planning situation, okay? Is not just about, I'm ready to sell right now. Let me start. Okay, it needs to be done early and often, like voting in Chicago. You got to be able to— it's not funny anymore, it used to be funny. Um, but the idea is that being able to, uh, you understand your business to, to, to a level at which, you know, that, that you want to be able to understand every single ins and outs and every nook and cranny before you're in a situation where someone else from the outside is looking in on this. Right.

Yeah, no, exactly. To the extent that you can, that you can fix any issues that you think the buyer would find before they find them. And I'm not talking— we're not talking about hiding anything. We're talking about if you have a known problem at your business, reliance on a key customer, reliance on a key employee, whatever it may be. Again, think of, think of what you would want as a buyer. If you would want that as a buyer, it's reasonably assumed, and you can reasonably assume that the buyer wants that too. Say, wait, we're too responsible, or, you know, we're too reliant on Sarah, who's an expert in this stuff. It's too risky for us if Sarah leaves, or we're too reliant on ABC Industries because they're 55% of revenue. Try to solve those problems and try to diversify your client base, diversify your employee base to spread things out. Make Sarah an expert, but don't be so reliant on her that without her, a buyer wouldn't want to buy the company.

Yeah, exactly right. So we know we've talked a lot about some of the things that are like red flags, right? So the things that a buyer sees and is basically going to be like, whoa, stop the presses, like right now.

And we just talked about a couple of them, right? We talked about financial records, right? If you have financial records that can't be pieced together, I mean, I've had this a couple of times where you look at the financial records and you can't make sense of them. In other words, we had one situation one time, it was, um, the revenue for the 4 quarters wasn't close to the revenue for the whole year. And I was like, what is going on? And I asked them, I kept asking the question different ways. I said, how can the quarters— and there it was. I looked, I looked at myself and said, am I looking at the right information? Did you send me the right information? Because it was not close, right? So And it turned out that the label was wrong on information was sent over, which is a mistake. It happens. But inconsistent financial records where you can't get a cash flow statement for the second half of 2022, that's a problem. Your balance sheet doesn't reflect, you know, a PPP loan that was forgiven or some type of debt. You know, you don't have all the shareholders in your company. Oh, you know, Uncle Norman owns 20% of the business. I didn't know about Uncle Norman. And that actually happened. It wasn't Uncle Norman, but it did happen where there were, there were people that were owners of the company that sort of came out of nowhere when, when we were buying the company.

Wait, there's another owner? Oh my God. Remember that? Oh my God.

That's a nightmare. That's a nightmare. So those are things that are— those are table stakes. You need to have your financial records. And anytime that That you don't have that, it's a major red flag.

It calls into— because it calls into question other parts of the business. How do I know you're telling me the truth?

How do I— right. How do I know that you're not a liar? Right? That's the thing that, that if you sense— if you make a mistake, everyone makes mistakes. But if you consistently, or you've on a couple of occasions sent over misleading or incorrect information and you didn't immediately try to correct it and explain what happened, That is a red flag too. And that's just, that's a symptom of a larger problem.

And, and by the way, you should know that, that again, everybody in this community is, is largely connected. Okay? It's a very small community. The reality is, and we can talk about 9,000, you know, private equity firms, but the reality is that's a small number considering how many people there are in the, in the country, right? So understand that the word will get out. And if you are trying to deceive buyers or you're not being truthful, or you're not, or even just, even if you are and it's not your fault and you're just being perceived that way, it could have a serious negative impact on you being able to sell a company. All right?

Yeah.

So it's, it's the most important thing. Transparency and honesty are always key. And again, talk with your advisor about this stuff first. They will tell you, you need to tell me— what we say is that you need to tell me everything. Okay? I am going to do an audit of your business. I am going to find this stuff out. I am going to ask questions. You want me to ask these questions of you, right? Because if I don't, then I'm not prepared and I can't talk to a buyer about the things that we want to talk to them about, and I can't give the buyer, you know, enough of, uh, you know, enough information to make them happy with what they're purchasing. So the reality is, is that does nobody good, anybody any good, to hide things or to be dishonest about stuff or whatever. And in fact, we're seeing a, a, a, a higher level of after-the-fact lawsuits happening as a result of bad, uh, of deals gone bad at, at, after integration. Okay?

Yeah.

So understand that there are people who are desperate to sell their company. Don't be one of those people. Okay. Because it will make you do things that are going to, going to do nothing but hurt you. Even if you are, are get through the, somehow get through the sale, once these people uncover something and they see that there was something that you hid, Man, it is over. It is over. They're coming after you for the rest of your life.

And another one that happens, and that's, that's a red flag, is high employee turnover. And when a buyer finds out, like when a buyer gets an org chart, as an example, and they see— this happened to me— when a buyer, we sent them an org chart and someone had left, like in between the time that we sent them the information And then they looked at it, right? It was probably like a week and a half, and one of the key people left the company. And that was— that wasn't a red— I mean, I guess it was a red flag because the question— we didn't have a good answer for why they left because we actually didn't know why they left. Again, that happens, but it's a— it can be a— cause the buyer to pause and say, okay, what's going on here? That can deter potential buyers. If there's that inconsistency or there's a high employee turnover over time.

So you want to be able to make sure that if that's something that's happening or whatever, let's get a handle on why and what's going on. So at the very least, you have an answer. You can say, hey, look, these were disgruntled people who I shouldn't have hired in the first place. And I did a whole round of, you know, and look, one of the things that might happen as you go through preparation for a sale is that you might actually, you know, fire some people. You might have some people quit as a result of this.

Well, right, exactly. Like we talked about earlier, like you're going through, you're going through an audit of your business, right? You're going through and you're looking at the products, as Joe mentioned earlier, where you might discontinue a product. This person, as an example, could be supporting or leading a product that was unprofitable for you. Well, if you, if you let that person go and there's high turnover based on that, well, that's something you want to tell the buyer to say, hey, In going through preparation for selling our business, we know we did some analysis and we realized that these products were, you know, not profitable for us. So we discontinued it. And as a result, we had to let some people go in the 2nd quarter of 2023. Perfectly legitimate explanation. Much better than you control that story and you tell the truth as opposed to them inferring something from an org chart that has changed since they got it.

Exactly right. Another red flag, maybe one of the biggest, is a lack of growth potential, right? What am I seeing? What has been the trend over the last couple of years? Am I seeing flat sales? Are they stagnant? Am I seeing market share decline? Am I seeing— what is the picture of the overall health of the business in terms of where it can go? In some cases, again, not all bad.

Okay.

Your answer might be, hey, look, I'm tired, right? There's all these things we can do. In fact, look, I had these people from Exit Engine come in and they told me all the things that I could do to fix this business. I have them right written down right here. Here they are as part of my SIM. Here, take this because this is where the business could prosper, right? It's okay that you didn't get it to where you wanted to get it to. It's okay. Right. All you wanna be able to do is to say, look, there's a reason this has been going on, and this is why I'm doing this right now. Again, it's not gonna look as nice as the next guy who has been doing well. Okay. But there are buyers out there that you can position this in that way. Why is the— why the first thing a broker's gonna ask you is, why are you selling the company?

Yeah. Right, exactly.

Yeah, good.

And, and not only just the business, right? Your own business obviously is vitally important, but it could be an industry thing. You know, you're a— and your industry is declining. Your industry has been in the news being, uh, you know, not growing, or, or there's a perception that's not growing, yet you have growth potential, right? Or your growth potential slowed. Well, maybe your growth potential has slowed by 5%, but the But the industry's declined by 30%. Well, that's not necessarily a terrible thing, right? You could dominate a smaller industry. So again, these things require context, but if it's truly a lack of growth potential, you need to think about that before you sell and try to fix some of those problems before you try to sell if truly your market is declining.

Yeah, because you want to, again, because those things are going to obviously matter to not only your sellability, but the valuation of the company too. And so being able to identify what those things are and fix the things you can fix, and then show the things that you know about that you can't necessarily get to or can't fix, but somebody else might be able to. And that, again, that becomes a selling point, turning kind of lemons into lemonade. So obviously, the big takeaway here guys, okay, is that it is— you need to understand the seller's— the buyer's motivations, right? Different buyers come with different motivations. Different things matter to them. They're all concerned about the financial and the overall health. But again, but a weight might be heavier on, is this a good culture? Might be more important to one buyer, whereas another buyer might, you know, might think that its growth potential is the most important thing. So, Again, being able to understand who the buyer is, and one of the things that we help you do, but you should be doing no matter what, is that you should be— have different versions of your sim, right, based on the buyers that come to the table, right? Being able to, to have a compelling value proposition based on who the buyer is, not just one single value proposition for the business, because just like anything else, there's more than one way to skin a cat. Right.

So yeah, and, and the most— and just to build on that, the most important thing for certain buyers will be different based on what their motivations are, right? Just said differently is a financial buyer and a strategic buyer could look at the same business and look at different things to make it compelling based on their strategy.

That's right. What you have the ability to do though is create documentation that highlights the strengths Downplays the weaknesses, explains concerns, right? Provides, you know, data to support the beliefs of things or whatever. And you can do those in different versions based on who the buyer is. So identifying the— that's another reason why identifying the potential buyer, or at least the person who's coming in to talk to you about this stuff, you know, understanding what their motivations are helps you select the right story to Right.

Agreed.

The other thing, the other thing that's gonna be really important is, again, is in, this is again where an advisor can help you, is, is in building relationships with buyers. Okay? Again, not your primary job, right? As the owner of the company. Okay? You're gonna, you're, you might talk to 1 or 2 or 3 buyers maybe your entire career. Okay? But what we recommend always is actually talking to as many buyers as possible, even if you're not selling right now, right? For this very reason, because you're going to get insight into what they're looking for, the trends that are going on, right? They're— the more people you talk to potentially about selling, about, about what your company might be worth, or the things that you might have to do to, you know, to increase its value, or how do I sell it, and things like that— all those conversations that you have with potential buyers are going to be great insight, right?

Yeah. And, and, and one, just one sort of silly— not silly example of this, but But the importance of an M&A advisor is you never want to send financial documents over in a PDF. And maybe that's the most obvious statement in the world, but that's going to build trust and transparency when you send the information to someone like us, someone like Exio Advisors, who can go through the documents and say, Joe, I appreciate that you sent this over, but this isn't clear. We're a set of eyes that knows what buyers want and knows what they'll find acceptable, frankly. And I had someone send over PDF documents of a spreadsheet. It's like, no, no, just send me the Excel document. Like, I can sort of piece this together, but you're going to want to send the documents over to the buyer in a way that you'd want to get them.

Right.

So if it's a financial statement, you need to have it in Excel or Google Sheets. Hands down, make it easy for them. If it's, if it's some like a PowerPoint document or PDFs, make sure that's formatted correctly. It sounds crazy and silly, but when a buyer is getting all this information and you have these associates that are inundated with stuff, they're going to appreciate that you thought of how they're going to get the documents, um, and how they're going to receive the documents and analyze them in a way that's simple for them.

Absolutely right. It's a, it's a, it's a, it's like seems like such a small thing But I can't tell you how important it is. Many of these buyers, especially private equity firms, are looking at, you know, in, in a day will look at dozens of companies in a day. Okay? They'll be looking at this financial information from a bunch of, and many of them will be competitors to you. Okay? Because again, they will operate in a certain industry, and so they will be looking at your place and 12 others just like it. Okay? And so your stuff stands out because your stuff is put together. Because you've given it to them in a format in which they can see it. We're gonna have a whole episode on how AI and organization using AI and the whole thing can actually help with this entire process. It can help analyze things so that you can keep everything in a place, you know, where that you can give people access to so that you don't have to send individual financial documents and things like that, right? So there's software that can help you organize this stuff and things like that.

Yeah.

There's all kinds of technology out there, and it's changing all the time. But again, the idea is to— first is that you have to understand, just like, just like you do in your own business today, when you started this business, you saw a problem, right? You saw a customer potentially with a problem that you could solve. You developed a business that solves that problem. You get to customers, and when you talk to your customers, you ask them what their problem is, and you say that you have a solution for it.

This—

there's no— there's nothing different about this, right? All you're doing is putting it together and In a way in which it makes the most sense for as many buyers to be able to, to come and get access to the information that is your company, right? Um, the, the, the, one of the things that, again, that you get to do in this is like selling your house, right? You're gonna have a nice write-up about what your company did and where it came from and who you are and, and all that stuff. That stuff matters. Okay? It really does. It gives people a real flavor for, for what they're getting into and what they, and what they're liable to encounter in an integration situation. Okay, so great example of this is a company that we work with that basically, who's they, the, the company was just like, everybody loved this woman. The, the owner of this company was so, everybody thought she was the greatest thing since sliced bread. She was kind, she was considerate, she was generous. It was a beautiful thing. All she did was basically was, was, was as a result was trying to sell this company was turn buyer buyers off because they felt there was no way that they were going to come in and maintain this culture, right? So the the business was good. Everything was there, right? Okay. But the problem is is that the culture is too good. Okay. That's that that again. There's not a whole lot you can do.

Culture's too good, but but and and irreplaceable, right? The person who was fostering that culture and leading that company was irreplaceable in the sense of, what do— who do we put in this company? It's not going to be, you know, the person from the private equity firm. This person is going to be bought out. They're going to leave. They're going to go do something else. It was impossible to replace it. So again, with all those, if they're looking at 11 other companies and they have 11 other companies, maybe this company is financially sound, but it's too much risk in replacing this wonderful owner in the future. And it would invariably— customer retention would invariably go down when this person leaves. So you have to think of that type of thing when you're talking to customers. Yes, you want to talk to customers. You don't want to be irreplaceable to those customers.

Right, exactly right. There's got to be a way for you to be able to disengage. And we know that. But again, building the culture is a good thing. It seems like a good thing. Everybody loves it here. I don't have any employees I have everybody stayed here. Everybody comes and works here and stays here forever. It's the most wonderful thing in the world. And it ended up being the downfall. We were able to actually find, eventually find a strategic buyer for her. But the idea was that, you know, she had a bunch of private equity companies come at it and they were turned off by the fact that her culture was too good. Like, how can you win in a situation like that?

And they don't, they don't say that, but they say that they use code words and they use other language for that. But yes, that feels exactly right.

But the idea— but again, we can still address that, okay? We can have people tone down. We can— we— there's lots of ways in which we can, we, we can make that feel right, right? But again, you got to know the questions to ask. It's not about having this— what we say here all the time, it's not about knowing the answers necessarily, okay? It's about knowing what questions, because that's what's going to guide you through this process.

Sure.

So understanding who you are, where you came from, what you've built, What, how it exists right now, what the future of it could be, and then being able to put that together in a format that makes sense to whatever potential buyer is coming at you. Sounds like the simplest thing in the world, right? But we all know that basically it's not. It is not necessarily everybody's, you know, core strength. So the takeaways today are, again, know your buyers, learn who your buyers potentially could be, understand the information they want, What motivates them, what to downplay, what to, what to, you know, what to highlight, um, you know, in your own business. Make sure that you're providing the information to them the best way they possibly can. Um, and, and, and at the same time, you know, uh, hire an M&A advisor. Okay. I mean, it's just—

Yeah. And also, you know, something that Joe mentioned that's really important, that there's no, you know, there's, there's, um, you can tailor your company's SIM or your company's pitch and story To the different types of buyers that are out there. There's nothing wrong with that. Again, they're going to be— they're going to— some things in your business are going to appeal to certain types of buyers. You want to highlight those types of things to those buyers. There's nothing wrong with that.

No, exactly right. In fact, it's the way it should go, which is the good— good— just Marketing 101, right? At the end of the day, Sales 101. So anyway, I hope that's helpful, um, guys. Um, again, if you ever have a question about anything, okay, you can go to our website at myexitengine.com, and you can actually look at the top menu under Connect, and you can actually ask an ExitEngine advisor anything. Okay, um, what's coming actually in the next couple of weeks on this website, and John may not even know this, but John, what we're having coming up is we've got actually an AI assistant that's going to be coming out on the ExitEngine website, both on the, on the, you know, on the front end site as well as on our learning site, where you're going to be able to actually ask our AI basically anything and actually get an actually really good answer. I'm actually excited to actually try this stuff out. So, look forward to that. But in any case, right now, you can go and ask us anything you want by simply by sending us an email. You can send it to info@myexitengine.com. You can subscribe to this podcast. You can follow us online. We're constantly— we're posting stuff 5, 6 times a week, information that you could really use on LinkedIn. You know, find us everywhere. We're ExitEngine. My name is Joe Stapleton. This is Jon Kniff. Thanks again, guys, for listening. Please don't forget to like and share this podcast with someone, a business owner that you love. They will thank you for it later, I guarantee it. Jon, thanks again, man. Have a great day, and we'll talk to you soon. Thanks, Joe.

We'll see ya.