The Exit Engine Podcast Episode 37: Meet Upswell's Eric Goodstat

Welcome to the ExitEngine Podcast, episode 37.

Where are you located, Eric?

So our company is located— our headquarters is in Atlanta, Georgia, um, but we have offices in Richmond, Virginia, and Provo, Utah. And what's really interesting for your benefit, John, is as an organization, we've been in the market acquiring companies for the past, we'll say, 18 months. I've looked at over 300 companies, and as I told Joe, we made bids on 4. We ultimately acquired 2. So we're in the process of integration, if you will. And at the same time, we're actually going to market this year. So I'm on both sides of the coin right now. I'm dealing with individuals like yourself and investment bankers acquiring companies because we're still in the market, we're still acquiring. And at the same time, I'm dealing with investment bankers preparing ourselves to go to market later this year. So it's— I'm seeing both sides of the coin. I am both the owner that you're consulting as well as the— buyer that your owners are seeking. Awesome.

Okay. Now, is just— now we've started recording, which is fine. Is what you just told us something that is— are you comfortable with putting just that out that you just said that?

Yes.

On a podcast?

Okay.

So you're comfortable with us putting something like that in the pod? Okay, good.

I don't have any concern with that.

Yeah, no. So, uh, Eric, the, this, this, um, look, for this, this podcast today, guys, we're very excited about because, so agencies is a, uh, is a market, okay, out there that is obviously, uh, they, they're, they're always kind of ripe for acquisition, right? And mergers and acquisitions in particular. Marketing agencies, advertising agencies, any kind of really real kind of professional services agency. is a very, very common target for acquisition. And also on either side of the coin, right? So also for growth, right? One of the easiest ways and best ways to be able to grow a professional services business is through acquisition. So we talk a lot on this podcast about growing revenue and making sure that, you know, and profitability and stuff like that. But the reality is that in growth mode, when you are planning an exit trajectory, right? One of the things you're going to want to consider is, can I grow this business and can I accelerate the growth of this business via an acquisition of somebody else before I go to market myself as now a larger entity with more value, right? And, and more to offer a larger buyer. And so today I want to introduce a really good friend of mine, uh, Eric Goodstadt. Eric is the President and CEO of an advertising agency called Upswell. And Upswell is an advertising agency that specializes really mostly in kind of small business advertising, right? And you guys work with a lot of particular kinds of small businesses, right?

Yeah, well, first, Joe, John, thanks for having me. It's great to be here with you. And just for the record's sake, so I don't insult my president, I'm CEO of Upswell. I do have a president of the organization as well. But, but to your point, we work predominantly with location-based businesses, organizations, or companies that, if you will, are trying to maximize the trading area of which they are geographically located. We work with over, in any given day, 4,500 businesses literally daily, and we work with everyone from mom-and-pop small businesses, you know, entrepreneurs starting out with single location to national accounts with hundreds of locations.

So the reality is, so again, that's, you get hyper kind of local advertising, right, around professional services and other kinds of service businesses and things like that mostly?

That's correct. That's correct.

So that's a really important thing to know. So obviously, look, there's so many kinds of, you know, marketing agencies, right? There's advertising agencies. Obviously, Eric is a big advertising agency guy. I mean, that's been his kind of bread and butter the entire time he's been— he's had several positions. He's been a chief marketing officer. You know, he's had a lot of experience in the agency world. And so what we wanted to talk about today was, again, if you happen to be a kind of professional services agency, this is going to be the podcast you're going to want to listen to because Eric, as Eric, you know, has mentioned previously, Eric has been recently going through Um, a situation as the CEO where he has been trying to grow, uh, Upswell to a point where it can be acquired for a certain— basically a certain, you know, range of value. In order to get to that value, they have decided that they needed to go out and actually acquire a couple of other components, if you will, right, to be able to make the— right, to make the value better. Explain to me Explain to our guys what you were, what kind of, what was the impetus behind this and what's the process you've been going through to do this?

So to your point, Joe, when you think about an organization, one of the things you always want to have is strong organic growth. Absolutely. That's, you know, that's the core of what you're doing. And to the credit of the tremendous talent at the Upswell team, we have been growing over the past 4 years at about 25% annually. But on top of that, you know, that growth provides opportunity. It provides opportunity, A, to reinvest some of that revenue potential or revenue gains into either new capabilities, so acquire someone who has skill sets that we don't currently possess and bring that into the organization, or the alternative is gain market share. So in The past year, as I was referencing earlier to you and John, we've looked at over 300 companies and we made offers for 4. So I just want to put that in perspective for people, right?

Is that— Right.

You know, a lot of times people think, oh, I have this great company, I'm going to take it to market, and I'm going to have 1,000 people pounding down my door to get it. And in reality, that's, that's not really how it works. Ultimately, buyers like myself are coming in and looking for Very specific things, and you're gonna have to kiss a lot of frogs to find your prince, right? So, and I'm sure, you know, I'm hopeful the owners that I acquired think I'm a prince, but we'll get back to that at a different day. But the point is that only 4 companies really kind of fit the criteria for us to even make a bid on. And then within that, we actually ended up closing only 2. In this case, we closed one that was purely about market share. We're within the— one of the verticals that we focus on is dental. And a particular company that we acquired was Dental Print Marketing based in Utah, and they gave us access. So we had already— we're working with about 200, 225 dental practices. Acquiring Dental Print Marketing brought another 300 to 400 dental offices into Our organization. So we immediately expanded our market share.

Yep.

The flip side of that is we dabbled about a year and a half ago. We stood up what I refer to as a self-service or do-it-for-yourself marketing platform in regards to direct mail as well as paid search, paid social, display ads, that type of thing, but really made for kind of the entrepreneurial individual who maybe wants to take control in their own hands. And we ended up acquiring a company called Teradel in Richmond, Virginia, because while our MVP product that we put out in the market had some traction, Teradel is the foremost leader in a self-service, do-it-yourself platform. Their technology is actually used by some very large brands. I'm not at liberty to say whom, at this point, but their platform is used by very large brands as the solution for the backend to do all the services for their customers, right? So when we had this opportunity to acquire Teradell, what we were doing was adding a capability that we just didn't possess, or even, you know, I would say, yeah, we had an MVP product, but this took us 5 years ahead in our development instantaneously and brought in a tremendous amount of great talent as well, all at the same time. So we've really expanded our market share and we expanded our capabilities in those 2 acquisitions. And Eric, let me ask you a question about the other 2 companies, right?

So there's 2 companies you got from 300 to 4, you acquired 2. Those other 2 companies, without obviously giving their names, what were the things that were attractive about those 2 companies to you?

So, John, what was interesting about that is there was 2 companies, as you stated. I'll start with one, which was an expansion of capabilities again. They offer a particular service that would be attractive to our customer base, meaning our customers are using their services, right? So we don't offer it, they do. We could bring that in-house. The issue that happened there is they had unrealistic expectations on the multiple. And we can talk about like what traps people fall in if you guys would like to go down that path.

Yes.

But ultimately, They just had unrealistic expectations of the value of their business. So we made a bid, and after much conversation and a little bit of back and forth negotiating, the gap between what they felt it was worth and what we know it's worth, because we come armed with a lot of data, was just too great.

Yep.

So we continued to talk, but ultimately they would have to grow their business substantially for it to be made worth what they think it's worth currently. So that one fell off.

Let me— Eric, let me stop you. Let me just stop you right there because I think that's a really important point. This is something that comes up all the time with us and something that we'd like to stress for our listeners as well, which is exactly what you just said. The crux, okay, of, of being acquired, okay, relies on one particular thing, okay, which is your ability to come to an agreement with the buying party about the value of the company.

Okay.

So, right there, okay, that is a huge piece. And the reason that we stop you there is because this is what exit planning is for.

Okay?

So, understand that before you ever acquired, before Eric made the phone call, who knows where these guys were? Were they getting phone calls before? Were they really trying to do this? Right? But the reality is, this is what happens to most kinds of companies, right?

Mm-hmm.

Is that you suddenly get a phone call or an email one day from somebody saying, hey, Hey, what are what's going on? Would love to know what your interest in being acquired is.

Right.

That's something had started that way.

Right.

So the the the the the the situation right now is holy crap! I never really thought about this before, and now I'm going to be in a mad dash scramble, right, to basically figure out what is my value and saleability, right? What what have I got here? What what's going on? Because now because the instant thought needs to be. These guys are going to come in here and they're going to look at everything, right? And so understand that if you are not prepared for that phone call, right, then that opportunity is going to potentially— 9 times out of 10, that opportunity at that moment is going to pass you by. Now, maybe that's okay because again, there's, there's a reason behind everything, right? But at the end of the day, this is how lots of these acquisitions begin, when you're least expecting.

I would agree.

So again, a company like this, you come along and they are not prepared for this, right? They come and they say, oh, now here's an opportunity. Well, we're worth this because we're so excited and whatever, right? And now you're saying, no, no, no, I've got professionals behind me who are basically, you know, doing the work, know the value, can prove it to you. And now you're— but now you're in a discrepancy because this, you know, whoever, again, no, no, we're worth this. And the reality is, again, as we go through all the time, you are probably not worth what you think you are, but you can be, right? But Eric can't wait around 2 years for you to be able to grow your business to the point at which he says, now it's worth this money, right?

But to your point, there's a lot of very common mistakes that business owners make when they're considering selling their business, whether it is to a strategic, as that's what I would be in most cases, an agency buying an agency, Or they're trying to sell to private equity. One of the biggest mistakes is, to your point, of them not really understanding the value of their business and the value of the business within their marketplace. So talking to experts like yourself is one of the best things you could possibly do. And inevitably what happens is, to your point, you get a call out of the blue. Hey, this company is looking for organizations like yours. Would you be considering You know, open to selling. And as a business owner, you know, initially you weren't thinking about it, but then you decide, well, I'll investigate this a little bit. You have an initial conversation, it all sounds kind of good and interesting. And then what you do is you go and talk to your buddies, right? Most business owners know other business owners and other business owners, right?

Right, right, right.

That's how it works, right? And what happens is they end up talking to someone who, you know, sold their business before 2020. And I'll tell you, prior to 2020, from basically 2013 to 2019, multiples did get crazy and people did spend extreme multiples. So they talked to someone who sold their business before 2020 and they think they're gonna get the same multiple today that they did back then. The answer is no. And that's in any industry.

Right.

Add in the next piece is that they talked to someone who sold their business maybe recently, But they sold a completely different industry and they think that that multiple carries over to their industry.

Maybe an artificial intelligence business.

Exactly. Right.

SaaS company.

Yeah, exactly. And even like, you know what hap— this is actually a true story. A SaaS company that sold in 2022 had a double-digit multiple. A SaaS company that candidly is better today than the one that sold in 2022 is getting a mid-single-digit multiple.

Right.

And it's because the bloom of SaaS companies has disappeared. It doesn't mean that your SaaS company isn't awesome and shouldn't be better. But the fact is, is you're not just promoting or you're not just trying to market— let me rephrase that. Your valuation is not just based off of your company. It's based off of what's happening in the marketplace.

Sure.

So that's one of the other issues, and that's where advisors like ExitEngine can really help you understand not just the value of your business, but the market dynamics that are impacting that value.

And Eric, let me ask you a question about the other— that same company we were just talking about. Did they end up getting— did they sell themselves?

No, they're still in the market. And like I said, we talk somewhat regularly and I would say my opinion is that their valuations are coming down to reality. The problem is, to be honest with you, is I'm not really sure I would want to buy them today.

Interesting.

Back when we made the offer about a little over a year ago, I wanted them and I wanted them bad. But, you know, years passed and my situation has changed, and I could possibly become a greater competitive threat to them organically.

Sure.

Than just spending the money to acquire them. Now, I'm not suggesting I'm doing that. I want to be clear. But at the same time, my situation has changed. So one of the other things about someone expressing interest in acquiring is it's momentary. You know, if anything of recent events tells us, the market changes fast.

Yes.

And you need to be mentally and operationally prepared to take advantage of it when it comes to you. As you know, the old expression, luck is when preparation meets opportunity.

Right.

So true.

And if you haven't done your due diligence and you haven't spoken to experts and you're not really prepared when that opportunity, When that moment comes, that opportunity comes, you won't be ready to seize it and you might miss your lucky moment.

It's so true. It's so funny you say that because, you know, as Jo was just saying earlier, it's, you know, you do exit planning when you— you should do it now, right?

It doesn't—

you should start it now. If you're looking to sell at some point in the future, there are, you know, we have 10 or 12 things that you walk through. And if you can make these changes, you can optimize your financials and plan your exit goals, and we talked about them on our webinar recently, you'll be prepared when those 2 things come together, right? Because that company may never get acquired again, and they missed a huge opportunity because they wanted 8 times EBITDA or whatever they wanted that was outside of your scope, and they could have made a ton of money, and they could have been out of the business or on their way to an earnout with some money in their pocket to do their next thing, and they missed that.

One of the biggest mistakes that I see among entrepreneurs is exactly what you just touched on, John, and that is a lack of succession planning.

Yep.

Both in regards to how do they foresee exiting the company? You know, do they see it as a family handdown? Do they see it as a sell to their employees? Do they see it as a sell to a buyer? They just don't think about it until they're ready to actually exit, and that's just way too late. To the other part of that succession planning is what are you leaving behind? Meaning one of the things that we evaluate companies on is how good is the second in command or the second level management?

Mm-hmm.

You know, so many times you get into an organization and it's a good organization. There's a lot of fundamentals that are solid on it, but if the owner leaves, the whole thing crumbles. That's not a company that's worth buying. Candidly. Oh, right. So it's our— so it's our—

it's our— it's literally our favorite thing to say is that the owner dependence is the— is the number one killer, right?

It is. It is. I'll go in at a 5x multiple and then realize that, you know, if I remove the owner, everything else crumbles. It drops to a 2x, right? And, you know, in most cases, they're not selling at that point. So all I did was waste their time and our time. And got their spouse excited, and ultimately it's never gonna get forward because they have nothing underneath the hood. And that's one of the biggest mistakes I see pretty regularly.

Yeah, yeah, that's excellent. I was gonna say, you've— out of seeing 300 companies, so out of the owner dependence issue, which is always the thing, what are some of the other common mistakes that you've seen people make?

Common mistakes I see, obviously one is, and we touched on this briefly, you know, not having an advisor.

Yeah.

Not having an advisor is a huge mistake because, A, you know, you don't have, you don't have the data, you don't have the experience, you don't have the insight to really know what your company's worth. An advisor does. Second thing is, is that you have no one protecting your interest. So it's great for me as the acquirer that you don't have an advisor because I can manipulate the numbers in 1,000 different ways. And with indemnity clauses and escrows and all kinds of stuff, I can call back all kinds of money from you. So having an advisor to protect your interests is essential. And then kind of the last piece of that is not having an advisor also creates a huge burden on the acquirer. And we may turn around and we will put this into our equation from a multiple perspective.

Right.

We just assume that this is gonna be problematic, right? So we're gonna give you a lower multiple. The other thing that we see as common mistakes is we touched on unrealistic expectations. One other piece is cutting operational costs. A lot of times we see people actually preparing their business for sale, and what they do is they try to strip down to the bare minimum to get by, right? Because they want to boost up that EBITDA.

Sure.

Well, sophisticated acquirers like my organization, we see right through that. We can tell that you were advertising at, you know, $500,000 to $1 million a year, and all of a sudden it was zero. Come on now, right?

Right.

So all we're going to do is put all that back in. So you're not fooling anyone. And actually what you're doing is you're hurting your business, right? You're starving your business. So you think you're doing a smart thing, but actually you're— all you're doing is starving your business from what it needs to be successful, as well as we're going to see right through it. And therefore we just add it back in and take it off of the multiple, right? And then the worst part is we make— we become suspicious. When you go into a deal, you want to feel like you're trusted. But when you— when we see gamesmanship like that, we assume that you're hiding stuff. So again, we're just going to put it into the number calculations and we're going to take advantage of that.

You may even— I mean, you may even walk away. I mean, just because of that. Oh yeah. The reality, you're being kind by saying you're going to lower— lower. No, that means that you like a lot more about the the company than you don't like, right? Because you're still willing to go through it. But the reality is most people are walking away at that point. We try to counsel our clients exactly the same way about the idea of being prepared and open and transparent, right, is actually one of the biggest benefits you can have. Because when an acquirer is here, they're not— you're not the only— most of the time, you're not the only company they're looking at.

That's right.

So your competitive advantage In terms of being actually being acquired or being targeted comes down to how you appear next to all the other people that you don't know, right? And you don't know who they are, who are also being targeted. And so your ability to be able to be the cleanest and the most transparent and the friendliest and the openness and all that stuff matters a great deal. To your point earlier, you're like, we have so many options, we are looking at so many things, and I am only on this for 5 seconds.

That's right.

Like, I have— you have 5 seconds to show me that this is a company that's worth spending thousands of dollars, by the way, right? You're spending money in, in terms of looking at these companies and, and, and with your advisors and all that stuff on there, and, you know, paying them to be able to do all the due diligence and all that stuff. So this is not a free situation at all, right? So I mean, the ability to be able to—

To your point, every situation is different and, and different size companies. You know, Upswell is a— is greater than $100 million in revenue. revenue. And our Vision 2030 plan is $300 million. So we're playing at a particular level that not everyone that's listening to this podcast may be playing at. But to your point, because we're private equity backed, we don't go into any acquisition lightly. We're spending tens of hundreds of thousands of dollars on advisors to comb through everything. And to your point, if we come across a business that we're really interested in, then we discover that they've tried to do some, you know, hide some expenses and kind of cut what the business actually is doing so that it looks better, it's gonna give us hesitation because we don't wanna spend a whole lot of money on a company that actually we're gonna discover isn't what we thought it was, right?

Right.

To that point, one of the other mistakes is kind of taking your eye off the ball in regards to running your actual business. And, you know, I mentioned that we had 2 fall off. The other one that fell off was because of exactly that issue. We got into the process, we settled on a purchase price, we were going through all of our due diligence. And let's be honest, the due diligence process, getting to the price is great, but then you have to go through a due diligence process. And the due diligence process is like going to a proctology exam every day for like 3 months. It's just, it is a process, right?

Yep.

And as we went through it, the business that we were going to acquire, their sales just kept declining all the way to the point where from a trailing 12 months perspective on EBITDA, their multiple grew substantially because their revenue just kept dropping.

Right.

So I had to call the owner and say, you know, hey, listen, the good news is that we finished all the due diligence. And we're still willing to buy the company, but we have to do it at a much lower price now because your business has declined. And that was obviously a no, a non-starter for that particular business owner. And I don't fully blame him, but at the same time, it's like you stopped working on your business for 6 months and then you thought we were gonna buy it.

Was that because the CEO or the leaders of the company, like, Was it because they couldn't do 2 things at once or the CEO is responsible for sales? Or did you ever get to the underlying reason why that happened?

I would say that it was, you know, there are a myriad of factors and sometimes a little bit of that is just bad luck, right? They just have a large client leave or something along those lines. But the fact is, is that I can't, I don't think I want to say why I believe that particular company suffered. But what I would say is that I think owners, when they, when they make the mental decision that they're going to leave a business, they don't realize they actually have to sustain that business extremely well through the whole process. The whole process. The whole process. Until— yeah, exactly. And in many cases, you're not leaving on the day that the transaction closes.

Right.

So you have to keep at it. And, and I think that's what some people miss. I referenced earlier, we're actually on the market again ourselves. We're going and trying to find a private equity that has a bigger fund to help us take ourselves to the next level. And, you know, this year I'm putting my plan together, even though I'm going to market, I'm spending like I'm not going to market, right? I have the same amount of capital expense investment planned. I have new hires planned. My advertising budget went up by 5 to 7%. We're investing in more capabilities and more talent. The idea that we're thinking, the way we're looking at it is we're not playing for the exit. We're playing for the next 3 years because if we play for the next 3 years, we'll exit at the highest point possible.

Right.

And I think a lot of owners need to understand that. You got to play like you're not exiting in 6 months. You got to play like you're exiting in 2 years so that when you do exit in 6 months, you're at the peak of the arc.

Exactly. You're on your way up. So you want to set a trajectory. We talk about exit trajectory, right, Jonny? Yeah. This notion that basically is that you were trying to do is set a target of value and saleability, right, over a period of time. And that what you're doing is running the company, right, to the growth goals that you would want to have, right? regardless of whether this is happening or not, because whatever happens, you know, the exit happening is actually the lowest percentage, right, of chance. So within any time frame, just because of the odds of it, right?

Mm-hmm.

Obviously, the odds are much greater, right, when you have a plan and you're a sustainable, you know, business that can show growth, that's got a good management team, you know, all the things that we talk about. But at the end of the day, your ability to be able to just have a growth plan that sets a trajectory, because when you're— to Eric's point, when you're in the middle of that trajectory up, right, and your ceiling is up here, right, potentially the suitor comes along and says, this is great, you're right in the sweet spot where we want to purchase somebody because they're in the middle of a growth phase.

That's right.

That's the most exciting time. That's the most valuable time for the buyer. Because they're potentially gonna get in on that growth, which is why they're doing this in the first place, right? So, I think it's an excellent point. When you get— when you are in a situation where you are at the, you know, the transitions, I wanna talk about transitions just for a moment because—

Sure.

One of the big factors that we see, and of course, this was true, you know, in one of my exits too, was You know, that the deal was great, the money was good, everything was there, but then the actual execution of the integration was so bad that it essentially made, it just made everybody leave, right? And so what is it about the transition phase? You know, how do you see the transition phase and what is that like? And what is your expectation when you've acquired somebody in terms of the integration and what that looks like and how do you kind of work through that?

I mean, I think to your point, one of the most difficult parts of any acquisition is the actual integration because, you know, part of that process is you're melding cultures, you're melding staff, often you're melding reporting lines, and it's disruptive. And I would say that The acquired ownership, meaning the individual who sold their business, sometimes underappreciates the importance of the role that they play in that process. As you stated, you know, it is rare that someone is going to say, I'm buying your business, and on, you know, on January 1st, I'm going to buy your business, and on January 2nd, I want you gone.

Right.

That's usually how it works, right? There are even, even, you know, you know, PEs and strategics buy businesses differently, and I could dive into that. But the fact is, is no matter who you're working with, you're usually not gone the next day. There is some form of transition, and the, the way that the individuals at the top behave will dictate how the individuals at the bottom behave. So I've been very fortunate, you know, again, part of the equation as we were making our decisions was, What's the culture like that we're buying? Not just the company, not just talent, not just all the other you know data points. What's the culture like? Because we wanted to try and find cultures that were very similar. To the other side of that coin is how much can I trust the leadership to to to carry the flag? And we've been very fortunate in all cases. The leaders that have joined the company, as well as the leaders that have left the company, have all carried the flag of the integration.

That's great.

And that is why we've been so successful, what we have been able to see, because this is what happens, right, is you acquire a company and you can expect that if you bought the company at 100, that when the integration is done, it's now at 90, right? It's just, if you're going to have some drop-off, It's inevitable. You kind of prepare for it. But if you can pick the right acquisition and you have the ownership, the previous ownership carry the flag the correct way, maybe you cut that dip from 90% to 95%, right? So you only have that 5% fallback.

Yeah.

And then what you're really hoping for is it becomes a leap, right? And 6 months later, that 100% that went down to 95%, now pops up to 120. And again, in our case, we've been very fortunate, uh, with Dental Print Marketing. That's exactly what happened. Terradel, we're still in the thick of it. We'll be fully integrated by June, but there's early signs already that, that we won't have any issues there. The team is amazing. The previous owner and founder, Jim Fitzgerald, is just one of the most amazing people I've ever met. And he did a 3-month transition with us, and now he's a consultant for 12 months. And he is, you know, the true— exactly what you want, the true professional and the true advocate. And then on top of that, one of the reasons why we bought TerraDell, besides their technology and extending our capabilities, is he had a great second-level management team.

Yep.

And they have been integral to this whole process. They're part of our leadership team now. And these individuals are really taking the company to a whole nother level. So when you talk about successful transactions or integrations, we couldn't have done it any better than these 2. And, you know, candidly, Joe and I've been around for a long time. We've been part of a lot of bad ones. And I'd like to say I've learned a few things from that process.

Yeah.

But I would say that the key has been That second-level management being top talent, that they could be integrated into our organization. And then the senior owner who was leaving the business being the advocate for the purchase made a big difference.

It's so funny. These are the exact, these are the exact things we talk about, Erik, on, you know, throughout our programs and our podcast is that you, it can't be the John show. It can't be the Erik show. It can't be the Jo show. You need to have that second level of management because As you just said, the, the, the, the Mr. Fitzgerald was, he'd be there for 3 months. Now he's an advisor. And the next step away from that is he's going to be gone and you're going to have to rely on those people that, that, that were hired and that are part of your leadership team now to run that business and give them more responsibility, right, to integrate them further into your business so they can get exposure to different types of capabilities and products.

You know, John, to your point, I think for most people, their greatest strength is also their greatest weakness. And when it comes to entrepreneurs, one of their greatest strengths is, lack of better words, and this is, this is not really the right term, but I can't think of a better one right now, but is that narcissist mindset of that they can accomplish anything, right? That has actually been the fuel to their success. Most people have the talent to build an empire. They just don't have the confidence. And most successful entrepreneurs have that built-in natural confidence engine that propels them to the highest levels, right? But the problem is, is that same strength that got them there, when they go into negotiations with an individual like myself and the whole meeting is, well, you know, I landed that client and, you know, I built that, and I came up with this idea, and I'm sitting there with their whole team, and there's 6 people in the room, and everything is I, I, I, I, I. I smile, I tell them how great of a company it is, I shake their hand, and then as soon as they get down to the bottom of the building and walking out with my PE advisor, we go, well, that's a pass.

Right.

That inability to sit back and recognize that all these people helped build this company with you. is one of the biggest weaknesses of most entrepreneurs. So to your point, I'm not buying the founder because the founder's most likely leaving. I'm most likely buying his team. And therefore I need to hear what his team did, how they contributed, who's the individual with the essential client relationships. You know, if you are the owner of a, let's just say a $30 million total billings, that is. So that includes pass-through and all that type of stuff, right? $30 million ad agency. And you've got, I don't know, I'm gonna say 15 key accounts. And I learned that you are the key client manager of all those accounts. Your company is worth zero, right? Because as soon as you leave, the relationships with those accounts leave. But if I learned that actually you haven't been involved in account management for 5 years and all these relationships are with Sally and Bob and, you know, Matt. Now that's a valuable company because Sally, Bob, and Matt are staying with me. Yeah.

So, John, say it. Go ahead. Say it.

I was just going to say, we always say, and this is sometimes the most difficult part of a discussion with entrepreneurs, is what got you here will not get you there, right? What got them here. So they get to the point, you just, your example, They're responsible for the top, for some large percentage of the top 15 accounts. That will not get you to sell the company because, as you just said, Eric, you believe and you're buying companies that it's worthless. And when we have this conversation with entrepreneurs, we often get the look on the entrepreneur's face like, I'm awesome, right? Like, look what I've built. You know, Joe always says he can land a plane. Like, if anyone, if If there's a plane that needs landing and the pilots have passed away, Joe thinks he can fly a plane. Now, I happen to think I can fly a plane, but I actually probably can. I don't know about Joe, Ken, but these entrepreneurs think they can do everything, right? They think they can do everything. And when someone like us comes in and tells them that, look, real people, not us, will tell you the exact same thing we're telling you, that you need to diversify, you need to step away, you need to Hover above the business, as Jo says, and be, you know, moving the deck chairs and moving, moving things around and not selling accounts and not managing businesses, not managing your clients. You have to think about the business as your product when you're gonna sell your company.

You guys are absolutely right. And again, that isn't to imply that you can't have a role and that you have to, like, you know, off, off, outsource everything that you do. But the fact is, is that If you are really looking to get a high multiple on your business, you have to be selling the business. You know, one of the reasons why I would buy a business like what we just described, where the owner is the sole connection to its biggest clients, is because I believe that, A, I have more to offer than that agency does currently. So I think I can hold on to the clients. that way. And then B, that I'm gonna give it a low multiple and I'm gonna buy the client, right? I'm not buying the company, I'm buying the client then.

Right.

And A, if you are an owner that's willing to take a lower multiple to exit, that might be sufficient for you. But just know that because if you think you're gonna get a high multiple, 'cause I'm buying a client, then you're mistaken. And that goes back to the beginning of the whole conversation of have realistic expectations of what your company's truly worth. And there's a whole bunch of other stuff we could dive into. So what other questions do you guys get often?

Yeah. I mean, well, I'm just kind of interested in exploring that breakage a little bit, right? The breakage that you're figuring into your business, is that just a historical— because when I was buying companies, I would do a much larger breakage amount For not the 10% or not the, you know, from 100 to 90. So can you just talk about that? And that might be a function of advertising agencies in your market, but just talk about that a little bit more.

Yeah, to be fair, Jon, that was kind of just illustrative, right? To your point, every industry is different and you do, but I think one of the mistakes that people make, especially those that are maybe new to acquiring companies, because the other side of the coin of people listening to your podcast are probably You know, small businesses, let's say they're $10 to $15 million annual sales, and they're thinking, how do I grow to the next level? Well, I gotta acquire a company that maybe is, you know, $5 million in annual sales and try to bring those into the fold, right? And the mistake they make is they assume that, well, if I acquire this company, it's all gonna stay with me.

Right.

It just doesn't really work that way. There's always breakage, to your point, and you need to understand what breakage is. One of the things first things I did when I became CEO of Upswell is I wanted to understand how every single thing works. And one of those elements was, what's breakage? When I have a salesperson leave me, what happens to that book of business?

Yeah.

When I acquire a company like me, what happens to their book of business? And what we have discovered, at least again in our business, and again, our business is unique. It's kind of a B2B, even though our actual product is B2C. And we're working with everything from small mom-and-pops up to national, you know, Fortune 1000 enterprise entities. So what we wanted to understand was what's the impact there? And what we discovered is it's about a 15% breakage. Okay. Yeah. If a salesperson leaves me, I can typically retain 85% of his book of business or her book of business. Now, that doesn't mean I will. I have to do all the right things. I've got to make sure that that business is reallocated fast. I need to make sure that the new salesperson is competent and capable. I need to make sure that they are integrated to the customers quickly. But if we do all the things that we're supposed to do correctly, we can retain at least 85%. And if we are fortunate, we can do a little bit better than that, you know, and if we're not so fortunate, we'll do a little less. But you need to know what that breakage is because that again goes into the into what you're willing to pay for it.

Yeah.

You know, one thing that a lot of business owners mistake when they're thinking about their exit and the multiple is they think it's a hard number. It's not a hard number. It's a range. And you're typically either at the top of that range or at the bottom of that range. And then sometimes you get lucky and you're in the middle, right? And based off of the due diligence process, that 3-month proctology exam, that number's going to move up and down based off of everything that they discover or we discover. So to your point, there's breakage in every merger. You just need to understand what that breakage is because you want to price accordingly based off of that. If I'm looking at a company, let's just use an illustration, for example, I want to buy a kind of a more traditional traditional ad agency who has $1 million of EBITDA, and I'm gonna come in, I'm gonna market that at say 6x on, on $1 million, right? So I'm buying it for $6 million. Well, if I believe based off of what I've learned about the company, that breakage is gonna be closer to 50%, well, that valuation's gonna take me how many years to earn back, right? So that's probably not a good deal, and I'm either gonna bail or I'm gonna drop the purchase price. Exponentially. Whereas if I think I'm gonna retain 95% of that revenue, well then I might even increase the purchase price a little bit because I can earn back the cost of that transaction relatively quickly.

Sure.

Right.

Makes sense.

So in the agency world too, we talked about breakage because of losing clients and stuff like that, but How one of the big things that we talk about too is customer concentration to begin with. And my story is famous because, as you know, when we sold Kinesis, we had like, we had like maybe a roster of like 15 clients. But the reality was, is that, you know, we had 2 huge clients that were 95% of our revenue, right? And, and that was, in that case, that was, that was, that is not something that should have happened.

Right?

The reason it happened was because we were, we were, we had a, we had a capability that, that was easier to buy than it was to build, and that was called social media, right? Back in, you know, whatever, in 2007, that was a big deal. And the fact that we had that was overcoming a lot of other things that were wrong, potentially were not necessarily perfect in terms of, you know, an acquisition profile, right?

Yep.

So talk about customer concentration in the agency world and how important, how important do you think that is in terms of, you know, in terms of the valuation of the company?

Oh, it's huge. You know, candidly, you know, if again, everything is circumstantial, as we touched on earlier, I would never buy Kinesis, right? Because to your point of that, that customer concentration, that wouldn't have touched it, even come close to touching it. And we see that a lot. I referenced, I looked at 300 companies. Listen, there was a lot of good companies in that 300, but there were a lot that they were easy to dismiss, right? Like, you want to give people a reason, or you want to make it hard for people to dismiss your business.

Yes.

It was easy for me to dismiss these businesses because I'd come in and I'd look at the customer breakdown and One client was 65% of their business. Well, that one client leaves and the business is now cut in half. That's a bad investment, right?

Especially when you talk about breakage, because the other question that follows on that is how close is the relationship and what will happen? Is that relationship the— lots of times in agency world, you are catching the owner built the built the agency on the back of one client.

Yep.

And you still retain that client today, and that client is still 65% of your revenue.

But when that client retires or sneezes, CMO changes, you know, that, that, that stuff happens, right? To the— I'll, I'll put, actually, I'll give you a, a real life example that will put things in perspective. Yeah. As I referenced earlier, we're planning to go to market. Later this year. It's always been on our roadmap, so like this isn't new, like we've been working towards it. And a year ago, more than a year ago, I looked at our situation and while we are very diversified from a customer perspective, we have a high industry concentration. We are significantly concentrated within automotive repair. So I looked at that and I was like, this is a weakness. We have to fix this weakness. So part of our strategy was building out our other verticals, which includes the fact that I acquired a company that did dental.

Dental, right?

Because suddenly my concentration, my industry concentration in automotive went from like 65% down to 55% because I acquired that market share. That, that is, that's, that's a real-life example. And it's pointing out that when you think about exiting, rarely is it done in about a 30-day window, right? It is really about planning for it, right? I hate to pick on your, on your, on your name, but right, it is about planning for it. And we had to look and say, okay, if we know we want to exit there, where are our warts? Where are people going to pick at us? Right. And one of those areas was industry concentration. So while we have a lot of security from the diversification of our customer base, we didn't have it from an industry. So we fixed that, and we fixed it pretty well in a variety of different ways. One was acquisition, other one's organic growth and some capabilities. But the point is, is that you do have to find your weaknesses and work on addressing them. Because what we do see a lot, and I talked about make it easy for me to dismiss you, An owner will be working on a business for 10 years. It'll have good steady growth, and then they will get one large client that spikes them, right? They go from $10 million to $20 million and their EBITDA goes from $1 million to $3 million, and they're going, sell now, sell while I'm hot, right? Again, business owners like myself look at that and go, Well, I'm just gonna dismiss that large client right off the top. So now your your starting point is actually down back to where you were because that's the that's the what I'm really buying is that growth.

Right.

That that lucky pop. Yeah, that lucky pop. It's great, and if you can hold on to it and add to it, all the better. But if you think you're going to get paid out because of that one lucky pop, it it doesn't work that way. And you're just you're just misguiding yourself. You're ultimately going to waste. your time, other people's time, and potentially some money trying to pursue it that way.

Yeah. And Eric, let me ask you, what have you learned that we haven't talked about yet or we haven't asked you about specifically? What have you learned about acquiring companies that either surprised you or that, again, we haven't discussed that really is like a light bulb went off in the back of your head that said, oh my gosh, I didn't realize that?

I think that As business owners, and you know I am a business leader, we get so wrapped up into what it is that we do and we believe that we think that we're infallible, right? It's just natural. Like you, you, you know what there's things you want to fix and things you want to change, right? But you, you look at your business, and to be a good leader, you have to believe that your business is the best. And as a result, you start to believe your own press. Right? So one of the most important things to do as if you're preparing for exit is, is to the best of your ability, step outside yourself and basically say, where are all the warts? Right? And that was one of the things that candidly, um, I never really did before I went through this process and looking at over 300 companies and meeting dozens and dozens and dozens of entrepreneurs and, and leadership teams, and, and there wasn't ever anyone who came in and said, you know, we're an okay company. Everyone comes in and says, we're a great company. You would be lucky to have us. And they're right. But they're also not looking from an objective lens. So, as I said, a year ago, when we started preparing, we really went through that process and we found like every blemish we had on our face because With enough time, you can fix those things. You can address them. You can make them smaller. But if you don't go through that process, if you don't talk to an advisor and get that guidance, then you're going in somewhat blind and you're surprised when someone turns around and does an analysis and shows that, you know, your gross profit margin has actually been declining for the past 3 years, even though your EBITDA has been going up. You've becoming less efficient as a company. Right. Right? Which means that there's other systemic problems in the organization. Well, if you didn't go through that process, you would probably have no idea. So I think the biggest thing that I learned and that I encourage people that are listening to your podcast, and if they're doing, if they're listening to your podcast, they probably get this already, is speak to an advisor, have plenty of time, to work through your blemishes so that when you do go to market, you're the best version of yourself you possibly can be.

Well, it's great advice. I mean, that's kind of what we preach all the time. It's this ability that no matter who, no matter what advice you get, right, the reality is that you need a third. If you had a, if you were, let's just say that you are a human being and you're going through a period of anxiety. All right? And the reality is, is that you feel that you've got this issue and whatever. And so you go and you seek help, right? And you go to a therapist and the therapist sits down and talks and you don't really know what it is, but you need to, you know, what you do is you start there and you start to uncover things, right?

Yep.

Now, that process is not a comfortable and always a fun process, right? And so what we find is that the people who are going through this process are naturally resistant to it because They don't want to know what's wrong. It's hard to listen. However, what we can say is that the process of doing this is going to save you so much heartache. Wouldn't you much rather come clean with us because we're on your team? And so, when you've got advisors and you've got people to talk to, let them do the thing that they do. Let them uncover the things because the good news is, You'll be able to— a lot of them, you'll be able to fix them. I mean, what we do with Exio is we're not only showing you what's wrong, we're showing you exactly what to do to fix it and exactly what timeframe to exactly change your valuation from here to here, right? So there is a little bit— there's an art to it, but— and there's a little bit of a science to it as well. But the idea of being able to, to understand, to allow the uncomfortability to happen Because I'd much rather have you be uncomfortable now than when you're sitting at the table, right, with a suit, right, with millions of dollars on the table and your wife going, you better make this deal happen, right? I want to go to Italy or whatever it is.

Well, in many cases, you're talking about what someone built, um, and that they're hoping to use for their retirement, right? Or to pass down wealth to their family or, you know, whatever it may be, right, to fulfill a dream. And to your point, we put so much as owners, right? We put so much heart and soul into our business that any criticism feels personal. Feels like I made a mistake.

Right.

And to your point, when someone's talking to ExitEngine or any other advisor, they need to realize that you're not pointing out mistakes. You're pointing out opportunities that can be fixed before you go to market, right? And again, it's hard going through the process myself. Sat across from my investment bankers just the other day, and they were telling me about blemishes, you know, that we need to address. And it's this natural instinct. I was sitting back and going, you know what, do you guys realize how much we've done on this company? And you guys pick at that scab? Like, you know, come on.

Yeah.

But it's not— they're not doing that. What they're doing is saying, Here is one more area that if between now and, you know, market, can we fix it? Can we find a solution? Can we make it a little less of a concern?

Yeah.

Every little, you know, thing that you, you address makes you more valuable. And it's not personal. It's not an attack. You didn't fail. It's just, let's make you the best version of yourself.

Yeah, exactly. And failing, failing is actually not becoming the best version of yourself.

That's right. That's right. That's, that's ending up leaving $1 million on the, on the negotiating table because you didn't fix that small issue.

Right.

And we talk about, you know, and we talk about marketable inefficiencies, right? There's certain things that companies cannot fix, right? To your point, Eric, about there's maybe, maybe there's 5 things that the investment bankers point out and there's 3 that you can fix. There's 2 that you may not be able to fix, but you can put a plan behind it. You can, you can Acknowledge that you are working on it or that you have a plan for it, but maybe you don't have enough money to do it or you don't have the resources internally, but you can put a plan together so that when a buyer comes to you and says, hey, if I could wave a magic wand, I fix these 3 things, but these 2 things, these are opportunities for you in the future to take my company and integrate it with your business and do all sorts of things to it.

You're absolutely right, John, and I'll illustrate it in a great example. When we think about buying market share, we do over 200 million pieces of direct mail a year. So when we think about buying market share and buying a direct mail organization, they can't possibly get the same price efficiency that I can get, right?

Exactly.

So right away, by buying their company, I'm gonna lower their cost of operations. Now, the nuance on that is they could be more efficient elsewhere. And if they try to make the company more efficient elsewhere, where they don't need the buying power that I have, that the company becomes that much more attractive because it's already running efficiently elsewhere. All I'm going to do is add production efficiency, and now we've got an even more valuable organization. So you're absolutely right. There's things that you can't control, and then there are things you can control. Focus on the ones you can control.

And then, and then be able to tell the story about the things you weren't able to control and why it's a benefit potentially to the new owner, right?

That's right.

You immediately can take this and, and raise the value 30% because— and here, and by the way, here's the plan. Oh, by the way, you're also buying the staff that's going to implement that plan, and they're all ready to go, and all they need to do is— all they need is the money behind them to be able to do it or whatever, right?

You're spot on. You know, I'll add in one more thing though. Again, this is where people Especially in today's world, make some mistakes. You know, COVID threw people into a situation where, hey, I can hire people anywhere. Hey, I can, you know, not have an office. I can do all this stuff and that lowers my overhead. Well, again, think about who you're selling to and what it is that they want. Maybe that those characteristics are attractive to the potential acquirer. But if you come and sit down with me and I have 3 offices and my staff are required to be in 2 to 3 days a week, you telling me that every one of your employees are spread across the 50 states and we have no office? That's not going to be attractive to me, right? So part of it is, to your point, not just knowing about your company, but understanding who you're trying to sell to.

Yeah.

And how do you take your weaknesses and spin them into strengths? From their perspective, right? And, you know, it would be hard for someone to spin that situation or that scenario into a strength from my perspective. But the flip side of that is there's an, you know, another entity that's got 50% of its staff concentrated in one area.

Well, all right.

Here's my 50%, and they happen to be my core team. They're my sellers. They're my, you know, my executive team. And they're all in the same area. Yeah, we don't have an office, but they would, they would be open to coming back in a couple days a week if you— yeah, if you said— now you're taking that weakness that I see and you're turning it into a potential opportunity.

Yeah, yeah. Well, interestingly, you have offices in Provo, you bought a company in Provo, you have offices in Richmond, you bought a company in Richmond, and your headquarters is in Atlanta. So it's, you know, that's interesting.

So that's right. And, and I will tell you, we, we will not buy a fully virtual company unless we feel like we can convert them into a semi-virtual, right?

Mm-hmm.

Um, like for example, my, my Richmond location, about, uh, 1/5 of the company is virtual. We're okay with that because 4/5 weren't, right? Um, the company, one of the companies that I was looking at is based down in Texas. All of their employees are completely virtual, but there's a high concentration in the city of Austin. Okay, well, if I feel like over time I can build up the Austin office, then I'll make that investment. But a lot of times, again, owners come in and they sell what they think makes their company so great. They're not thinking about what about that company would be great to me.

Yes.

To me, What you think is wonderful, I see as a problem. I've got to overcome a problem, right? I've got to spend money for, for creating an office. I possibly have to replace half the staff because they're all over the place. Again, that might be right for one buyer, but not right for a different buyer. So you just need to understand what are your true strengths and what are your weaknesses, not from your perspective, but from the buyer's perspective.

And problems, as you know, the way to deal with problems in acquisitions is either A, walk away, Or B, discount the price at which you're willing to pay for it.

That's right. That's right.

And look, the reality is, there's going to be situations that you can't possibly, as the seller, you can't possibly know about the buyer, right? You've got to allow the buyer to be able to come in and say those things. And part of it is also your ability to say, well, I guess that's probably not going to be a great fit. So, one thing that Eric taught me, okay, and I'll never forget this, and I say this all the time to this day, and I love it because Eric, had this printed out above his office. It was like above your office door or somewhere, right? And he said, in order to make the sale, you have to be willing to forego the sale.

It's in my— it's still in my office, my new office now.

It's one of my favorite quotes of all time because it's so true, right? The ability to be able to be the seller who walks away is the seller who's in control of his own destiny. And the reality is, is that your ability to walk away, or your ability at the beginning to not feel and not show how desperate you are to sell this company, right? And to be able to— again, it's not really posturing, you want to be authentic. But the idea here is to be able to understand that it may— the, the first person you meet may not be the right buyer for you, the seller, right?

Absolutely.

And so But you do get the chance to be able to talk and you do get the chance to be able to come to terms and to be able to have discussions about things. I think that people also don't realize is that you are, for some period of time, at the very least, a couple of months minimum to a couple of years, you are going to be partners with these people, right? You're going to need to work with them. You're going to have to have a working relationship. Starting now to be able to open the lines of communication to say, hey, look, we've got this situation. And Eric says, yes, I see that you have the situation with Austin. You know, it's not great, right, for us because we would love it to be here, right? Well, how can we overcome that? How can we work together to figure out that issue that is a, you know, that wouldn't make it a, that wouldn't make it a thing? Maybe it still is a thing, but the idea of being able to have the 2 parties be able to talk. is a critical piece of this. And I think that it goes along with your ability to be able to remain open. And the fact is that you have to be able to say, you know, the seller also gets to say, this isn't right for me either.

The worst expression in the world is, it's just business. It's not personal. Business is personal. The difference, though, is that when it comes to business, you have to— it is essential to be in business to be successful. You have to be objective. And not subjective, right? You have to turn around and kind of keep things in perspective. I say this to my managers all the time because, you know, they'll want to give a large raise to somebody who they just really like. Well, I appreciate you just like the person. Well, I like everybody in the company, and if I gave everyone a large raise, the company would be out of business. So you have to be objective, not subjective, right? And that goes down to your negotiations and your dealings with these individuals. To your point about them wanting to acquire your company, their job is to scrutinize the acquisition. They're, you know, my responsibility when I'm acquiring a company is to find out all its flaws and why it won't be successful. Because once I buy that company, if it evaporates, that's on me.

Right.

Right. So it's not, it's my job to pick at every problem that company could have. Possibly to knock down the purchase price, possibly to work out other options, possibly walk away because it's my responsibility to ensure that when I do acquire it, you broke it, you own it, right? So it becomes that thing. Now, that said, I think that a lot of people that are exiting often don't realize, to your point, Joe, the importance of keeping that communication respectful and objective because again, it is so, it naturally gets emotional because you're gonna stay with these people for a while. You know, if you sell to a PE, you're not walking away. You might get some money in your pocket, but the PE's expecting a rollover. So you're gonna put, you know, whatever your purchase price is, whatever they're gonna pay you, assume that 20 to 50% of that's getting put back in the organization. You're not taking it away. So you're staying on and that end game is probably anywhere from 3 to 5 to 7 years away that you are gonna continue to deal with these people. Or if you're selling to a strategic, while you will likely exit, there's going to be some form of either earnout or long-term payout, right? It's not like these people are gonna just give you a a big bag of cash and say goodbye. So once you get beyond the deal, you need to continue working with these people. And if you create a storm of emotion during the transaction to the point where everyone kind of doesn't want to be in the same room together, it's just destined to fail on all fronts.

No.

And if your earnout is based off of hitting certain performance numbers, which often it is. Joe, I think you experienced that.

I did.

You know, your likelihood to hit those performance numbers gets significantly diminished. And what happens with most business owners when they're selling the business, whatever rosy picture the buyer gave them, they believe, right?

Sure.

Hey, I'm gonna buy your business for $12 million, but you're only gonna get 2 of it today. And if you hit these, these performance metrics over the next 6 years, you'll get $12 million. I go home, I tell my wife, I didn't sell my company for $2 million, I sold my company for $12 million. She believes we have $12 million, right? And I, meanwhile, at the same time, destroyed the relationships, entered into this, this confrontational environment. And, you know, 3 years later, 4 years later, we only got to $6 million. I only made 50% of what I thought I was gonna sell the company for.

So, yep.

You know, you really have to put things in perspective and there's no way to take emotion out of it, but you gotta remain objective.

Yeah, no, it's great advice, Eric. This has been phenomenal. I gotta tell you honestly, I think that any agency that's out there listening to this right now has to know that this is the way That there is a path forward on this stuff. But the reality is that it's something that you've got to start early and often, right? You've got to start thinking about this stuff now. And by the way, it's agree, disagree. It would not be too early to start no matter when you— where you are in your journey, right? Because the reality is that thinking about how this ends, right, should have been part of your business plan to begin with, right?

Absolutely.

But if it's not, It's the kind of thing that right now there's potentially a lot of work to do to maximize your value and salability, right? And as you heard Eric talk about today, man, it can be— it can be the color of the logo is off, right? I mean, it can be so— the reasons not to buy are what actually— the due diligence is figuring out why I shouldn't buy this company, right? Not why I should.

That's correct.

And so your ability as the owner, as the founder, as the CEO, to be able to understand that and look at yourself in the mirror, take a good hard look, get some help, look at your heart, look at yourself in a real objective way, be able to understand all the blemishes, where are all the warts, what are all the issues, and get them out on the table. Because now when you do that, now you can set it, you can make a plan. I can control this. I can control this. Hey, team, can we get this and move this needle and make this better? Yes, we can.

Great.

And then there are things that I can't do. That's also okay. But the reality is, is that you are— you need to start doing this thing and thinking about the trajectory of your exit right now.

All very true. As I say to my leadership team, as we're going through the other side of the process, we need to be realistic. We need to be objective, and we need to be humble.

There you go. Great.

Those three things are essential.

Love those.

I love that. Great advice. That's great advice. Eric Goodstaff from Upswell, CEO of Upswell Agency. Thank you so much for taking the time out today, man. You're a great friend. You're a mensch. You've been you've gained some great advice, and I think and I hope that I'm sure that our listeners today got a lot out of it. Thank you so much for for being on.

Thanks for being here, guys. Thank you so much.

Thank you, buddy. So, Jon, amazing, right? Like, this is the stuff. This is real life, really out there happening, really doing it and understanding both sides of the equation.

Well, and his advice is so practical and it's so real. And I love that last part about when you're preparing your company for sale, you know, be objective. Certainly. But the humble part, right? Realize that the people are going to look at your business and they're going to look at, you know, what they think is important. Look at it objectively. Step outside yourself, I think is what he said at one point in the call or during the podcast and said, you know, look at your business the way somebody outside your business would look at it. And then try to acknowledge your blemishes, fix as many as you can. and report on or provide the other couple or maybe the few that you cannot fix. The buying power as an example. So it was such great advice and from someone that not only is buying companies but is, as he said, preparing his company for sale.

Exactly right. So if you are an advertising agency, a marketing agency, a digital marketing agency, any kind of professional services firm out there, this is the advice you want to take. You want to be able to start early and start thinking about this now. Take it, get some advice first, get some help. Exeo Advisors can help you. Obviously, ExitEngine can help you. There are hundreds, if not thousands, of people out there who potentially can give you, you know, some insight into what your company actually is worth. And then also be able to tell you, one of the ways in which we can help you do that is if you want to right now, Right now, John, people could go to assessment.myexitengine.com, and in about 2 and a half minutes, they would have a pretty good idea of where their issues would be, right?

Yeah. And these, you know, the assessment is the first step in working with us, and it's the first step in assessing your company for sale, right? Like, this will help you, as Eric just mentioned on the podcast, step outside yourself and look at your business from an objective standpoint. And realize that every business can be improved. And again, these first steps allow you to make those initial steps, if you will, to improve your business and to make it more saleable.

And there's gonna be in that assessment and the whole thing, there's gonna be things like your customer concentration, right? Things that Eric specifically brought up. What's your customer concentration, your client concentration like?

Right?

Where, where's your— where— what's your management team like? Right? All these things that, John, we've been talking about for 38 episodes, right? So now, right, Eric just basically summed up in like one episode. Like, this is the stuff. These are the people out there. Eric is your strategic acquirer. Okay? So just know that, again, it may not be specifically Eric, but, but someone like Eric is probably gonna be the person that buys you.

Yes.

Okay. Or approaches you. Let's just say that now it's up to you to be able to say, okay, timeout. I gotta do this work. Okay. So if someone has a— if someone has approached you or whatever, send an email info@myexitengine.com. We're happy to take a look at what's happening right there. If someone has— if you've gotten a bunch of these letters and you don't know what to do, or you've gone through the process a couple of times and Or at least started the process and haven't really gotten anywhere, another good reason to reach out, right? There are— there are— and by the way, we're saying to us, it doesn't have to be to us. Reach out to somebody who can help you, because the reality is that this is a— as you can see, this is a— this is not what you're used to doing. And your ability to be, as the owner, to be able to step back, be humble, as Eric said, and be able to take an honest look at yourself will help you become will help the business become the best version of itself, which is the way in which it's sold for a high multiple and that makes your exit more valuable, right? And so, it was great advice. It was a great, great conversation today. Eric's a great guy. Anyway, John, thank you so much for being on today again. Guys, the Exit Engine Podcast, you can find us on LinkedIn at Exit Engine. You can find us at myexitengine.com. Um, and obviously go right now, do that assessment. If you do it right now, we'll actually get back to you. We'll give you a whole report, okay, on where you are right now. All right, and, and by the way, there's no— we're not asking for any personal information. There's nothing in there where we're asking you about what your revenue is or anything like that, okay? We're not, we're not interested in that right now. What we're interested in is showing you the areas in which you need to, to concentrate your efforts In making your— and increasing your value and salability.

Exactly.

Assessment.myexitengine.com. Guys, thanks a lot for joining us today. Really appreciate you. I'm Joe Stapleton. This is Jon Kniff. Our guest today was Eric Goodstadt from Upswell Agency. Check them out at upswellagency.com. And appreciate Eric again, wherever you are. Thank you so much for joining us today. Jon, thanks a lot, man. We'll see you next time.

Thanks, Joe.

We'll see ya.

Bye.