When and How to Exit Your Business Gracefully | Capability Amplifier #107

Yeah, things just disintegrated. I think the statute of limitations have run out, so I could probably talk about that. One of your objectives in life needs to be to build a financial fortress around your family that no one can tear down. Probably the biggest mistake I made was to try to wing it.

Wah, wah, wah.

I was devastated. I mean, totally devastated. And back to the start, this concept of the second bite of the apple, it's a life changer and it's completely changed my life.

This is as close to an ATM cash on demand business as you can imagine.

He said, well, it's at least 10 times. Well, maybe I am interested in selling. And I panicked. So I call them up and they said, no, it's going to be like six different transfers today.

Hey, this is Mike Koenigs. Welcome to another episode of Capability Amplifier. This is for you. If you are a founder, a business owner, an entrepreneur who's always dreamed of selling your business and walking away with a big check. And if you're like me, after I've actually sold five businesses. So part of this interview and this conversation with Joey Osborne, my special guest, who just had an exit, is all about our biggest and dumbest mistakes we've ever made as we prepared, but also some of the biggest life lessons and the capabilities we had to add to our skill set in order to get to the special place. And one of the things that we found in talking to many, many business owners and entrepreneurs is we get stuck on how do you start preparing to sell your business? Maybe you don't know what you don't know and you hesitate because you're worried that maybe when you do sell your business, either you won't get paid, the deal will fall apart, or the buyers won't share your business values or your personal values. They're actually people that you need to like. So one of the things I love about Joey Osborne, he and I met about 10 years ago. He's been a client, he's been a friend, but he recently sold his business just a few months ago and he walked away with an eight figure payday and he is acquired by a private equity firm. So part of what you're gonna learn today is how to get position, how to become attractive. And we've got some great tools to give away. So one of the things that we'll have and share are the five most important things that any business owner needs to know to get acquired. And these are the non obvious things. These aren't what's on your spreadsheet. It's Just as much how to think as it is the preparation. And one of the great things about Joey, which I'm really, really excited about, is not only did he continue to work with this private equity firm, but he's now helping other business owners who want to learn and prepare for the exit. And he's got some great strategies. So what I think I love most about him is number one, he's got some unique insights. He has 30 years plus of education and experience. He's a guy who's invested in himself and he's always focused on lifestyle compatibility. He's got really interesting hobbies. He's a falconer, for example. He was just telling me about this amazing Humvee that he restored. And so he's just a well rounded human being. So with that, I'm just going move right into Talking to you, Mr. Joey Eismore.

Thank you. Thanks for having me. It's a little intimidating to have Dan Sullivan looking over your shoulder with this. My favorite mentor on the planet. Yeah, so. But no, thanks for, thanks for having me.

Now this is something I've been looking forward to doing. We've been talking about this for months, maybe even years. And as everyone's going to learn, not only do we have some great giveaways today, I think you'll walk away with a great education. So maybe before we get into the process of selling the business and some of the great content, why don't you share a little bit of your entrepreneurial journey so people have a context because people who do know who you are would recognize you from Strategic Coach. Been a member, you've also been a member of Genius Network and you've also spent a lot of time with a lot of mentors, friends of mine that we share in common too. But let's just get into a little bit of your backstory.

Yeah, great. Well, thanks. No, and you know, a lot of the backstory we've been, as you mentioned, connected now for a decade or so. So you've seen the evolution of mosquito authority. I won't go back much before that, but it's been about a 15 year journey from really the time it really got started until the exit and lots of good times and bad times along the way. But it was one of those businesses that sort of came out of a, out of a necessity in that I was transitioning from one one thing to another. Had been a contractor, building contractor, specializing mostly in lake, lakefront construction, boat dock, marine construction, and then a complete flip into something it was pest control space that I knew Nothing about, but it was all about timing and having been a lifetime entrepreneur, it's easier. I mean, there's so many things that we've all done over the years, it's even hard to remember them all. But I think the statute of limitations have run out on the stuff that I probably shouldn't have been doing. So I could probably talk about that. But I think the big takeaway was the timing. Just starting the right business at the right time and, and sticking with it was another challenge that we can talk about. But then getting to the end, the big, the big payday, the big reward is, was worth the grind.

Yeah. And for you.

And I'm going to get into a little bit more about the business, but because you had the exit with the private equity firm, you didn't sell the entire business. You have something that you've referred to as the second bite of the apple. So why don't you give us the Tarantino mini version and then we'll get back into how the business got started in the first place. That's a good story too.

Yeah, it is. And having never been a mergers furthest thing from a mergers and acquisition guy, you know, I'm a grassroots entrepreneur. So yeah, there's so many cool terms that have evolved out of that, that business. But yeah, this concept of the second bite of the apple is literally, it's, it's a life changer and it's completely changed my life. It's the way that works is the right investor, the right PE company in my case was willing to give me a really nice payday out of the gate, but let me retain some interest, some ownership in the company so that when the second capitalization piece comes, or the recap as they refer to it is, I get to share in, in that increase as well. So it's definitely, you know, it was an unexpected little gym in the sales process. So yeah, second by the apples, big can be bigger than the first bite. And it will be in my case.

Yeah, I think that's a great story. And again, just to be really specific about what that means, so you have the sale, private equity firm comes in, they give you a good chunk of dough. In your case, it's a multiple eight figure exit. Plus you retain actually a pretty substantial percentage of the business. Which means the PE firm invest, they provide support, they help you grow it, you're available as an advisor. And then they of course are either going to have some kind of an exit, either a larger private equity firm or some other buyer comes in, might be A strategic buyer. They've done all the prep and then boom, you get a second exit along the way, which as you say, could very well be, I mean, staggeringly life changing.

No, absolutely, absolutely. And it's an opportunity that you just can't outside that PE world or outside that big investment world. Those you just, you can't really get those sorts of opportunities unless you're 200 million, $250 million investor. You just don't get those chances. So yeah, to play in the same game with, with, with that caliber of folks is really fun.

Yeah, it's awesome. So I think before we get into again the step by step stuff, a little bit of framing in context. The company that you built and sold is Mosquito Authority. Once you talk a little bit about why you started it, what the origin story was and how it was structured. Because the dead giveaway here is it's a franchise organization which has pros and cons. But I think for someone to understand your systems that you developed along the way that you provide now, understanding the context is going to matter. So why don't you just share a little bit about why you invented the business and what the driver was.

Yeah, thanks. As I mentioned, it was a timing issue. So it, it's really got going, the business got going really well around 2009 and we all know what happened in 2008. 2009, yeah, things just disintegrated and I happened, as I said, I was in the construction business. It was a really great business, a super cash flow business. But as we know, in 2008, 2009, cash stopped flowing and I was a victim of that. Left with contracts that weren't paid, left with some financial commitments that I had probably stuck my neck out a little too much. Bank banking on the industry continuing. So fortunately, as going back to the necessity piece, I had started this little, little company and it was nothing but just like almost an accidental kind of thing. I, I had a two year old at the time and mosquitoes were really bad where we lived. So we couldn't put her out in the backyard to play without smathering her. Indeed. Or doing citronella and all these things that I knew didn't work. So I started looking for, for options, you know, how, how kind of better protect her from these mosquitoes. And I kind of stumbled on to a little niche that literally had just gotten started maybe a year before. And that's the backyard mosquito space, which now is a 15, 16, 18 year old industry that's, that's booming. But again Timing happened to be there at the right place at the right time. Being an entrepreneur and a do it yourselfer started doing the research. You know, how are these people? This one company basically owned the market at the time, so did some background research, figured out what they were doing, went online, ordered the, what I thought would be the stuff to do it with the chemical and the machine, and did my spray in my yard. Zero mosquitoes. My wife was blown away. I was blown away. And again, first thing I thought was, how do I monetize this? This is too good just for me to keep to myself. Put a single yard sign in my front yard. Put my phone number, my cell phone number on this yard sign. And it said something like mosquito freeze zone or something like that.

Miraculously, no one called the number. So I thought, wow, this is not such a great idea after all. Maybe a week or two later, one of my neighbors happened to be walking by. I was out working in the yard and she stopped and we chatted for a minute about the weather. And she said, I've been meaning to ask you, what is this nomus? What does this mosquito free zone mean? I said, oh, it's the coolest thing. You can get your backyard sprayed. You'll have no mosquitoes. It just works wonderfully. And she said, well, should I call the company? Is it a legitimate company? I said, well, it's actually me. So I hadn't even told my neighbor about this. So she said, well, how much does it cost? And I kind of knew what I wanted to charge. But not being a sales guy, I said, I don't know, let's try it and see if it works and we can talk about that later. Which turned out to be the model that we used all the way through. But anyway, getting toward the end of the story, I spray. Her name's Scotty Sue. I go up and do Scotty Sue's yard spraying her yard. I get done, she comes out, she said, would you go across town and do my son Grant's yard? Sure. Go over, drive 5 minutes to spray Grant shard. While I'm spraying Grant yard, he's talking to the next door neighbor. And they motioned me over. So that was on a Saturday. I did like those four or five jobs. I think it turned out to be five. Monday morning, Scotty sue called me and she said, I was at church yesterday telling people what you're doing. I have 12 people who want to try your, your service. So I knew then it was a real thing and it worked. So I did it for four or five years. Just as sort of a standalone kind of business. Built a foundation for it, then realized it was growing super fast. I was growing couple hundred percent per year, 100% per year. A couple of years. I knew it needed to be expanded. So that's when I stumbled onto the franchise model. Launched that and now we're up to 2009. I launched that in 2009 and the first year we sold 100 franchise territories. And pull myself out of a hole that I was in at the time and we were off to the races. And we were now 450 or so locations in 38 states. And it's 50 or 60 million dollars revenue. Business started with one yard sign. And the coolest thing is Scottie Sue's still a customer today. We give her a little bit of a discount, but we actually still, we still charge her a little for the service.

Yeah. And for people, out of all the franchise owners, the average revenue they're generating is between what and what?

Yeah. So as with any model, you have the bottom 20%, the top 20%, the average across the board is probably approaching two and a half to two to two and a half million dollars gross revenue. And that's, that's a six month, it's a six month a year gig too. And it's another cool, cool part about it. You can take the winter off in this, in this model.

Yep. And I think what I was super impressed with is the business model itself is awesome. The whole promise to the. Well, and I'd like to hear the pitch to the franchise owner is what the big benefits that, that ultimately sell them.

Yeah, no, super question. And that's the reason we sold 100 franchise territories our first year is the thing sold itself. I mean there was a wow factor connected to it that you can't, you can't, you can't create that artificially. It was a brand new industry. It had this component to it. It still does. Where people don't believe that it works because most folks have tried everything for mosquitoes and there's this assumption there was more so then than now that you can't, you can't. And we offered a no mosquito guarantee. That was, that's the next part of it that really ended up being the cinch. But to answer your specific question, people got it and we would have. Back in the day, I couldn't afford to run ads, typical franchise sales ads. So I, I happened on the Craigslist and someone introduced me to Craigslist and I found that I could go on Craigslist and post a free ad like in the business section where people are selling used office furniture. And I would get eight or 10 leads, you know, in a 24 hour period. And it's like franchising is a beautiful model. I know that's where we're. You'd like to talk more about that. But it's like selling real estate you don't own. I was literally able to take a map and like draw a circle around it based on you know, some geography and some population and demographics. But people line up to pay you to buy a piece of real estate that with the option to go operate your your business.

Right. And what so the the net net is you'd say hey this is an opportunity to have a business of your own work half the year make at the time, what did you say the potential was?

Yeah, yeah, yeah, super question. My objective when I launched the thing was just to make enough money to make my mortgage payment every month. And I think at the time it was eight or nine hundred dollars. And I got to that point in two or three months. So I just used that as a selling point all the way through because I was always. And this was a mistake maybe at the start is selling this thing as nothing much more than like paper route money Because I didn't see it any more than that. I thought maybe a couple hundred thousand dollars a year gross revenue would max this, this thing out. And we now have some franchisee doing 6 million 8 million a year. But yeah, so that's, that's been the evolution.

Okay so but it evolved into. And I'm going to just tell you what I'm looking for because I think you know, when I look at the model it's you can own your own business, work part time and run the whole thing from get to that part because you ended up selling the software is a huge component of this whole thing.

Yeah, absolutely. Yeah, we've had that so from so long I forget that. But no, it was a huge selling point was this business can be so service related industry. So you're dealing with consumers, customers on direct, you know, one on one basis. So literally all you need is a cell phone. And this software that we, that we built. We built a proprietary software but it's a CRM, a scheduling and routing. It really runs the entire business under one hood. It has the capability to communicate with clients, it does billing and that. But yeah, it just literally enables the, the franchise owner to run the whole thing with a cell phone in the.

Laptop and and the other thing that's great for you. Which ultimately made you attractive was the fact that you're collecting all the money.

Yeah.

You're charging the franchise owner 10% basically. Plus you had some additional services that you made available because you'd even lead gen for them.

Yep.

So all they really needed was a bunch of people who'd go out and spray and they'd get auto billed, the customer would get auto billed and you've got repeat customers. I mean it is, this is as close to an ATM cash on demand business as you can imagine. And if there's any mistake that we make as business owners often is, we don't see how big our creation really is until someone tells us that. But talk a little bit about the evolution that led to the sale and what they actually bought from you.

Yeah. So you're right in terms of not realizing because it's such a, for me it was a slow process. I'm talking about 15 years total. 10, 10 or 11 in the franchising space. So yeah, you lose sight of, of where you, where you started and what that one piece was that got you, got you going. But what ended up happening with me specifically with the, with the purchase is I really didn't know that I had anything of value because like most entrepreneurs, founder led companies, you, I was like you investing money back into the company. Obviously you want to pay as few taxes as you can so you're looking for ways to reinvest. Paying myself very handsomely, had great salary, great, all that stuff was working fine. But I really didn't think that it was something that was marketable. And some point in time, maybe a year or so before the sale, I started getting occasional calls or emails from, you know, people who were saying, are you interested in selling your business? And my assumption was it was just, you know, somebody trying to sell me something, some product or service. So I ignored a ton of them. But I finally took a call one day and it was from a, a guy who was, turned out to be a headhunter. And his role was he had owned businesses before and had exits and he was trusted by one particular big private equity company and introduced himself. I liked him. So we continued the conversation and he asked me if I was interested in selling. And I shared, yeah, probably not. I don't think I have anything anybody would want. And he said, well, what are you basing that on? And I said, well, I don't know. And he said, well, what's your ebitda? And I said, not only do I not know what my EBITDA is. I don't even know what EBITDA means. So he got, he got a chuck. And I said, well, now you know I'm a sucker. So anyway, long story short there, he coached me along, gave me some really good solid advice on first of all, once we determined what EBITDA was, he said, no, you've got something here that's worth something. I said, what do you mean? And we'd established ebitda. And he said, so what happens is these investors or PE companies will pay you a multiple of that number. And I said, what could I expect? And he said, well, I probably shouldn't tell you this, but it's at least 10 times. So I knew what the first number was and I quickly did quick math. I thought, well, maybe I am interested in selling. I actually have something here. It's a value. So anyway, he was a great mentor, still is involved and a good friend, helped me through the process and got us to a first offer.

All right, so from the first offer, fell apart, did and what was the reason for that? What was the big takeaway lesson? And then we're going to lead into the big deal that actually happened. So let's do a little contrast here because again, this is leading up to the five things that were non obvious but super important that you focus on today when you're working with and advising other business owners.

Yeah, well, I became quickly aware of how much I did not know about the space, about this mergers and acquisition thing. Scott had encouraged me. I realized I had something of value. He made the connection. But from that point, probably the biggest mistake I made was to try to wing it and do it on my own. Trust the PE company. So ended up with a, with an offer. It was a big PE company, fast moving, they had tons of money. They were going to be buying 40 companies inside 12 months. So one of the first questions they asked because Scott had shared with them our, our my ebitda. And so they knew kind of what we, where we were and they had done their research. It turned out a lot of those calls I'd been getting prior to this contact that I recall that I took were people doing background stuff. So this company had already interviewed franchisees. They had really kind of dug deep. So they knew what they were doing. So we, they said, can you close in 30 days? Again, I had no idea. So sure, I can close in 30 days. I didn't understand this process of due diligence. And I know you've been through it and you can probably elaborate on, on that, but so I said, yeah, we can close in 30 days. And so I got an Eloi get the letter of intent to buy was a good number. Exactly where I thought I wanted to be at the time. So long story short, we go through 30 to 45 days of intense due diligence. I had to like bring in some expertise to try to satisfy their needs because they're looking at accounting, they're looking at infrastructure, they're looking at, you know, all these components of the business that, that were functional but not exactly as functional as they should have been. So into the story with this one is it was a really nice exit. It's going to be a seven figure figure exit, which is plenty. I was happy. I wasn't thrilled, but I was happy because I knew that the impact that was going to have on me and my family. So 45 days I get a call, 22nd call, said thank you for your, your, this opportunity to negotiate with you. But we, the PE company have decided to, to move on. We feel like you're three to four team members short of being where we want to be. Thank you. Have a good day. Literally not have been a minute. Yeah, I was devastated. I mean, totally devastated. I'd already. I mean, I knew where I was going to invest the money. I knew what I was. I was going to buy this, I was going to buy that. And back to, back to, back to the start.

Yeah.

Yeah.

And I know that from experience where.

For me, my first exit was.

We were privately held, got bought by a publicly traded.

At the time, Minneapolis's largest advertising agency, had a billion a year in billings. And they were owned by the interpublic group, Inter public group ipg, which is a huge conglomerate that owned tons of agencies. And it took us close to a year to close a deal because we weren't prepared, just like you. We have such an absolutely similar backstory. But I can remember getting prepared and I had all the millions figured out in my head and what I was going to do. And by the time I got the check, we paid our debts, I had been through a divorce.

Taxes, attorneys, accountants, which we overpaid for for sure. And all the people, all the promises, a few bonuses here and there for the people who stuck it out. We declined in revenue because we had all of our attention went on getting this deal closed. And while you're closing a deal, you're not running your business and growing your business.

Okay.

Which gives you an opportunity for the buyer to go in and renegotiate at the very end which you don't expect all that stuff. So by the time you get your check, you know, in my case, I didn't have years of Runway. I had some resting time and some other obligations. So I know how devastating that is. So let's get to how long did it take to get to the second offer and the close and why was it worth so much more? What changed? What were those big lessons?

Yeah, so the big thing that changed, first of all, I had this new awareness of, well, this is how the game works. And I realized how. How deficient my organization, my structure was, and I really was. I certainly wasn't ready to close in 30 days. I wasn't ready to close at all. So had I had someone with expertise come in ahead of time that said, no, you need to pull back. You don't need to waste your time and money, because I too, spent a ton of money on this due diligence process with this first company. So I learned my lesson there. And then the first thing I started to do was seek out somebody who could, like, help me. How do I get this structure that I need? Because by this time, it's an interesting thing that happened, and I think it's like a feeding frenzy that happens in any niche is that two of my competitors had just recently been purchased in which all the other PE companies looking at what the others are doing and say, oh, that's a space that we ought to be in. So within probably 30 days after this offer having fallen through, I had five or six other PE companies reach out to me, and now I'm taking the calls, unlike the first time around. Yeah, now I'm. Now I'm responding to emails and taking the calls, but my message to them was, at this point, I'm not ready. I'll let you know when I am. So, yeah, I made a. I made some contacts at a couple referrals, and I had a gentleman referred to me who had experience in. In M and A. He had CEO experience. So I brought him in on an interim basis and. And we started getting our. Our ducks in a row and building out the things that we knew so that we would be. We would be ready.

Right. So how did it end?

So it ended well. So, yeah, it was a pleasurable experience. The process ended up being pleasurable because a lot. Because the stress was much lower now, because I knew what they wanted. I had this mentor, this guru, this professional now guiding things, and he was putting out fires. And. And that's a very. Turned out to be the best decision I made. Was having him on board. But so, yeah, I narrowed it down. We, I basically had three of the five that I was speaking to entered into a somewhat of a bidding process. It was a very, very structured kind of thing, like a war, you know, it was very straightforward. But so, yeah, I ended up with. I didn't actually take the highest offer, but I took the one, the best in my opinion. And that best was what you described earlier, the opportunity for the second bite of the apple. A company that was very, very accommodated. They would, they were willing to buy as little or as much as I wanted to sell and in the end decided to sell. They, I thought it made sense to sell controlling interest to them because part of our growth process.

Plan was to do it through acquisitions. And I knew if we're making acquisitions, I wanted them to be making those decisions. It's mostly their money. So yeah, so the end product wise it was due diligence was probably still four to six months and it was grueling and I spent a lot of money. But I hired the best at, on the advice of my mentor, I hired the best law firm that I could find and, and those are expensive. I ended up spending $400,000 in due diligence. A big part of it went to the law firm and to the accountants that were associated with them. Best money you can spend. So yeah, and I think you would agree with that based on some of the trials and tribulations that you had.

Yep.

But what I ended up with was at closing day, a deal that was ready to go. A deal that actually we actually were able to increase our EBITDA during the six months. And cool thing about it, the P company was fine with that. They said, well, the final price gets determined on closing day and we'll see what 12 months trailing EBITDA is. And it was a little bit bigger number. So it was a bigger deal than I thought. You know, we, we did it all electronically. The clothes was electronically done. But the coolest thing in the whole process and when it all kind of hit home that, wow, this is really something was I. The bank would like text me, I'd get a message when a wire transfer came in. And actually the first one came in and it was, yeah, I knew this was a big eight figure deal. Right. So the first one came in, there was like seven figures and I panicked. I thought, oh no, something's gone wrong. And so I call them up and they said, no, it's going to be like six different transfers today. But it was a wonderful thing to See, you know, your bank, bank account hit seven and eight figures, but then I'm worried about, oh, can they actually take this back? Can I go to the bank and like get the money out real quick?

Clubbacks.

Yeah, yeah. Well, I didn't have those fortunately, so we negotiated a great deal that didn't have that. But I'm just thinking something's got to go wrong. This is too good to be true.

Yeah, yeah. And from my, one of my deals I did, they, soon as the transaction occurred, the buyer started to screw me and I ended up, they basically tricked me into leaving some money in an account that they immediately swept in after the transaction to the tune of it ended up almost being half a million dollars. And.

So I learned that picking the right partner is super important. And I can remember my attorney said there's a chance, a definite chance that the first transaction is all you'll ever get and they'll find a way to wiggle out of even if they agreed to something because, you know, it's possession is.

Half the law or more than half.

Yeah.

They say nine tenths of the law.

Nine tenths of the law, yeah.

And, and there's so many ways that a company can trick you and working with an experienced buyer. And I was going to ask you how it felt, you know, when you look in your bank account, because I can remember the first time it happened to me and it was like when you can.

Multiple seven figures dropped in, in your case, eight figures. How did that feel and what happened inside your head at that moment?

So I had this mentor that I rank up there with, Dan Sullivan, a guy named Jim Rohn. You may have even known Jim Rohn in the day. But of course, amazing, amazing business mentor. But Jim Rohn said once that one of your objectives in life needs to be to build a financial fortress around your family that no one can tear down. And I thought, whoa, this is it. Because I knew about managing how, you know, this needs to be managed. It needs to be structured so that my kids and their kids and multi set. It's so. It's a big. Yeah, it's a big, It's a big deal. It's such a, It's a big enough deal that you think maybe I just shouldn't do anything else because I can only mess up from here. Yeah. So. But yeah, no, it's, it's a, it's a, it's a big, It's a big deal and there's an, a lot of emotion around it and there's a lot of you and I've talked about some of the psychological things that are not necessarily all positive because now you have this void that you. That's just your bank account's gotten huge but your maybe your self worth is not what it was. Yeah. And our friend Dan Sullivan actually talks about that and he's coached me on what happens sometimes when sellers, when people sell, especially founders sell business that they've been their life. Yeah. Big change.

Yeah. Well let's, let's get raw for a second and talk about what you noticed and where your greatest fear showed up and where you got psychologically hit the most. Like what were some of the key things and obviously we've talked about it but yeah after it what have been some of the things that you've struggled with post sale that have wrecked and I've shared a lot of mine with you. But yeah, let's get raw for a sec.

Yeah, yeah. No. So it's been now a little over a year. So it's fairly, fairly fresh.

Initially I went into this acquisition mode myself and I'm still there. I still want to acquire businesses and I am in the process and I know you are too. But I was really, really aggressive out of the gate to make a big acquisition because I was in a position to do so. I'd learned a lot and I had this team in place now that could assist me. I had the lawyers and the accountants and everybody's there, they still are the.

Army ready to strike, they're ready to.

Go and now we've got the of funding to do it. And I'd learned even more techniques and I've learned lots of good techniques about how you fund such a thing. So step one was I was looking for a business to buy. I found, I found one that I liked, checked the criteria that I was looking for basically looking to buy cash flow. I wanted to buy a million dollars cash flow. And it's doable. It's very doable.

Like the company entered into due diligence with them and spent six months in that and a couple hundred thousand dollars in the, in the sellers backed out. And part of the reason they backed out was and this was what really killed me as they reasoned or excuse I think it was an excuse. But they said we're not sure you're the guy to own our business. And, and that was like that. You know, this was my business was 10 times, 20 times what theirs was. Now they're telling me that I'm not. So I've already lost my somewhat of my self worth you know, that now that I'm out of this thing that I babied along. So that was one of the psychological things. I pulled back on that a bit.

But I think the main thing, the bigger one, is. And now thinking about how I would do things differently is pretty quickly get into something else. You know, I only took two weeks off, you know, maybe two weeks. I already had all the toys that I wanted, so it wasn't like I could go out and buy stuff. I had already done all that. So. Yeah. So looking for just something to fill that void. And, you know, that's a lot of why I'm here with you. I think I have something now that I can do that you and I are talking about. Yeah. Yeah.

No, it's exciting. And I know just to something that we were talking about today at breakfast. The mistake I made right away is.

I had a huge bank account, and I started a show and I started investing, and I surrounded myself with people who are very happy to spend my money and have big parties on my. On my bill. And I was dabbling to the tune, and I. I literally burned about 800 grand in. In a few months. And one day, all the money was out of my account. I'm like, what the hell happened? I called my wife, and she's like, I'm not gonna let this happen to you.

You.

It cost you cancer, 10 years of your life to build and sell this thing.

Yeah.

And.

And I just want you to take pause. I'm gonna support you no matter what you want to do. And, you know, it was a lot of cash. And I was like, it really woke me up because, you know, you just get into this mode where if you're, you know, grew up poor, kids like us, and you don't have resources, and suddenly it seems like there's an endless bank account. You start playing around and reliving some of these, maybe these childhood fantasies that showed up. And getting the right guidance along the way is really, really important. So with that, I thought, let's dive into the five big things, because we've spent a couple days together really thinking about and talking about our biggest lessons, your biggest lessons, and turning this next chapter of your life into a fun business. So I'm going to tell people where to go first of all, to get some of this stuff. And let's go through the big five. Okay? So what we've put together, Joey and me, is there's a site. It's ready to sell me. So it's easy to remember, easy to say, you're going to get a copy of the five big things we're about to share now, the 12 core metrics that are most important. It's literally a checklist to see if your business is ready to. To sell, but also help you determine what it might be worth. And a brand impact scorecard is something really important that's part of the big five here. And then of course, a transcript for this whole conversation which has been edited. So with that, let's go through the big five and talk about that. So we've got through your lens. What was the most important lesson that maybe you took for granted going into this or has been the big learning experience. I think that's the setup for this one.

Okay, good. So, yeah. So started with what did I take.

Recall that is, is the juice worth the squeeze?

Worth the squeeze.

And that's the mindset part.

Yeah, yeah. So no, mindset is, is super critical. And unfortunately I'd spent. You'd mentioned spend doing work prior to this and getting coaching and you've helped me along the way for 10 years now. Dan Sullivan for six or eight years. John Asaraf, Echo. You know, all these, these guys who are just, you know, it's all have this realization, understanding of what that if. With, if the mindset part is not right, it's really hard to get all the other pieces in place. So yeah, with, with mindset, I think number one, you have to get your mind right as a seller. You have to have as many people around you support that spouse, particularly on the same page. In my case, it was. Had a very supportive spouse. She was ready for me to be out of the business and ready. But I think what's the deal? Typically with retirement, you get the spouse or the wife gets half the or twice the husband and half the income. In our case, it's a little different.

Yeah, yeah.

But so that's an important thing. But I'll tell you another good piece that I've learned a lot about. Very important is to the mindset of the buyer in this case needs to be aligned and sometimes that needs to be tuned throughout the process because everybody's got to stay on the same page and have the, the same goal. So that's more or less where I was headed with mindset.

Okay, and how about one of the talk a little bit about preparing your team and maintaining confidentiality. That was a huge part of something that, that you and I talked about.

Yeah, yeah, yeah. No, it is because you have to, you know, most. It's human nature to think what is what's in this for me? And as excited as the team might be about the fact that, you know, you, the owner, the founder is getting ready to take a big payday. They're wondering what happens, what happens to me. So that's an important piece. But I, I did this and I think most, most conscientious sellers do this. They and the PE company that I dealt with was very understanding of that and willing to, to make sure that the entire team came over. Everybody that wanted to come over came over. But the due diligence process involves sometimes bringing some of those team members in and you have to, it's hard to get what you need from them productivity wise without them knowing what's going on. So in my case, we had a meeting as soon as I could. Once I knew the deal was likely to happen, I brought in the key team members and shared with them. Here's what's happening. It's. The timing is right, it's good for the company, it's going to be good for you. And sold them, sold them on the whole, the whole idea. And I didn't share with them at the time but I certainly knew that I was going to compensate them well with some very nice bonuses which, which I did. And it was critical too for the P company because they wanted commitment from me or assurance for me that these key people were going to still be there.

Yeah, of course.

They didn't want everybody walking out the same day. Right.

Yeah. And that's.

Talk a little bit about the due diligence process but also the knowledge of when you're working with a sophisticated buyer. In your case, this wasn't like an acquisition by a competitor or a collaborator in the industry. The fact that they're so much more sophisticated than you could ever hope to be. So just talk about that perspective.

Yeah. So the second time around versus the first time was night and day for me. So I was a bit prepared. But yeah. So a company that's running multi billion dollar fund has more lawyers than I have friends. And what happens with that situation is they can crank out 100 questions overnight. And I think these people don't sleep. I mean we would literally answer a flurry of questions and data requests. 6pm one day and 6am the next day. They have absorbed all that and they wanted that much more. So there's a huge difference there in scale. And again, the big, the big thing I would recommend to people that are thinking about doing this is spin. Don't, don't cut corners on paying the right people to help you with your due diligence. Yeah, it's saved that you share with me your stories and they're pretty traumatic. And you know, I have to say that probably had you gone a little deeper in the, in the p. In the. With, you know, recruiting and hiring professionals to really dig deep into these deals, you might not have had those, those issues. So I'm very thankful for that. Again, spent a lot of money to get it, but, but yeah, I mean, you got to. My, my coach said, be prepared. They're going to crawl our drawers. Was waves. Oh, yeah, yeah. And they did. They did. And they leave nothing unturned. And, and honestly, it got to the very end. And you know, these lawyers and accountants are being paid hourly basis, so they've got incentive, all in the same world to keep digging and digging. And, and we had already gone through tons of things, but one of the last days they came back and they said, we found this $3,000 check you wrote 6 years ago and we can't find documentation for it. And I said, I'm not going to do it. I mean, we have been paying $2,000 an hour for this stuff. And they're asking about a $3,000 check from six years ago. I said, no, that's it. Due diligence is over. And they accepted that and they were ready to move on to the buyer. Yeah, yeah.

And I think that that is knowing when to call it. But the other one that a great mentor told me that I've shared with you before, but I love your commentary because.

It'S time kills deals. And this friend of mine told me that if you do quarterly audits, you can close a deal in a month versus if you have eight months. There's a lot of stuff that can go wrong. And the, you know, you literally have that situation that you had where the potential buyer just says one day, you know what? We just decided we're not going to do this. Something can spook them. And there's so many variables at work. So any other commentary about how time kills deals?

Yeah, no, I would say absolutely. So the key to avoiding that time does kill deals. It could happen on both sides. But the big thing you want to avoid as a seller is for a big surprise to pop up for the buyer. Yeah. And, and, and they're going to be those. And now we all have them. You know, every business, founder led business that's more than two or three years old, there's some, there's some skeletons in the closet or some bodies buried. And the key is to surface those and to bring it up and to have an explanation behind it so that the buyer knows going in. And because once they find something and it's not been disclosed to them, then their tendency is to go deeper. And you don't want deeper. You want them to say, all right, this. Because they want to buy the deal. They're looking for reasons to buy the deal. They're not looking. Typically looking for reasons to back out. So have the due diligence all structured and organized.

Ahead of. Ahead of time. And in my case, thank you. Thankfully, I had this mentor who knew what the process was going to be.

That's very good. All right, well, let's move into number two, which is Sizzler Steak. And again, for you as a listener or a viewer, right now, all These are at ReadyToSell me. It's a whole toolkit for preparing your business to be purchased. You also learn about working with Joey. So sizzle or steak? Talk a little bit about the sizzle and the steak.

Yeah, so I think it's all about branding and snazzing up something that may not be all that snazzy, because, again, these whole. The buyers are people, and they have emotions and they respond to the same things that you. The seller responds to. So, yeah, it's just about, you know, you can have $100 million company on a $200 website, and you're. It's a whole different strategy. And you can flip the thing around, too. You can. You can spend the money. But anyway, I think it's very critical to. To snazz up, polish up. I have a friend that talks about knocking the hair off of the dog kind of thing. And so that's it for me. Around, around that, you know, make it as snazzy as possible. And.

Yeah, a big part of that, I think, is through the. Just the polishing the brand, I guess, is the best way I like to think about that.

Yeah, you talked about Peacock, you know, and, you know, what we've done, for example, and what we're offering is part of this little package at Ready to Sell Me is the Brand Impact Scorecard. So it's not just the aesthetic appeal, but it's the packaging, the positioning, the messaging. And we've come up with about 75 different checkpoints that we look for in a brand. And it's like, do you have a good story to tell? Are you referable? Do you have social proof? All that's included in this checklist that we put in the package. So it's really a Nice tool. And I think you also, when we were brainstorming about this, it's the icing on the cake. And any buyer is going to look at it and say, how easy is it going to be to sell this product or this service or to attract talent? Because they're going to scale and grow this thing that's going to. That's definitely going to fall apart. All right, so let's go on to number three. You called it the warts and all. So that had to do with the credibility and the believability. But talk a little bit about that.

Well, I think I kind of touched on it just in this last thing where it's okay to. To bring out those things, you know, those negatives that are going to come up anyway, because there's almost. There's a reverse psychology piece to that, too, with the buyer, because these. These investors, the buyer, whether it's PE or, you know, any other. Any other investor, they're looking for these little warts and whatever other things that they can, like, take care of and deal with, and they see that as being a multiplier, and that's what they're looking to do. How many ways can we multiply this thing with our skill set? So I think it's good to bring those out, you know, and to. And to talk about those.

And what were some of yours? What were some of the biggest warts that you had that you knew and then some that were. You discovered, especially during the big sale, that in your case could have turned into potential opportunities.

Yeah. So for me, the biggest one was me, I think. And this goes back, this predates the first offer because I had definitely maxed out in my potential and what I could do running a 50, 60 million dollars company entrepreneur with no year and a half of college. I learned the dean has two lists. One of them gets to go home and the other gets to get the big job. And I was on the one to go home. So I have no, you know, no. No background really, in that I'd kind of like, you know, seated my pants and bootstrapped every business I'd ever done. So I was way out of my league. So my initial thought was, well, nobody's going to buy me because I can't speak. I can't talk the talk. I don't know the language. I don't know these things. And. But what I realized is that was actually something that they were looking for. They were actually looking for the founder who had. Was ready for. To transition to a real CEO, a Real management team.

Yeah. So that was a big, big piece of it. Maybe that was number one for me. Was. Was literally. Was literally me. But I then also had the. The internal. A lot of the internal things that needed to be fixed. Processes weren't documented. Was probably the biggest one. And I think I got a $3 million ding for that. We left $3 million on the table because processes weren't documented. And I knew that my partner, my mentor and I knew that. But we had to make the decision. We have 16, 18 months to get this whole deal done because we want to take advantage. I didn't know what's going to happen in the marketplace. Is money going to go away? I still don't know that. So we made the. Made the decision to focus on other things and just say, nope, we don't have documented processes in the business. And so it worked, but it was a. It's a hit.

Yep. So then you got to listen to the.

Songs. All right.

Yeah.

All right. Number four. Good guts. Talk about that.

Well, that's the. Goes back to the processes and. And. And the all, you know, document documenting. Hopefully having documented as much of the processes in your business as you can. You got to have. You have to have good books. There's just no way around having good, good books, because that's p. Walk from that pretty quickly. Any investor will. Doesn't mean that you have to have them back 20 years. It doesn't mean that they can't be fixed, whatever you have, but you got to get that fixed. So that's one of the guts. I would say a key part of that is key team members having the right people in place ahead of time and settled into their roles. That's one of those things you get dinged on if you don't have that. So those are the biggies. Okay.

And then you also talked about the ability to hire and bringing in Chris and Tim. So why don't you talk about Chris as being one of those important people? Who was he and why was he important to the sale?

Very good. So Tim was a mentor I refer to along the way. So we knew that I wasn't CEO material. And Tim was not interested at this stage of his life. He's done all that. He wasn't interested in being CEO for this new company, so we needed to hire someone. So we were very strategic about that. But at this point, the. The PE company was involved. They. We were. We both felt good about the deal was going to happen. They knew we needed a CEO and they knew part of Our plan was to hire a CEO. So we jointly with their input, recruited through a recruiter, talked to a lot of candidates and hired Chris that you're referring to as our CEO. So not only was he now positioned with the PE company because they liked him, he guided us through the most of that due diligence because he also had a lot of experience in that, in that space.

Yeah, for sure. And then number five, we've already talked a bit about the buyer, but just talk about the, the buyer side of things and what you like. If you were advising and working with a business owner right now, what would be the biggest takeaways that you would say? These are absolute musts when you start talking to a buyer and these are again are the invisible things that as a seller you might not know about. The second bite of the apple is the structure of the deal, what they value, what they don't. But just talk about the personality of the buyer and what would be an absolute must. And if you were going to do another sale now, what you would look for and say, these are the, on the scorecard of mindsets and values, these are absolute non negotiables.

They have to be friendly. You have to like them just like any other relationship. And this is a serious relationship. This is right up there with marriage, especially if you stay on as I'm doing or especially if there's like you referred to clawback, where there's an option maybe for the buyer to take back some of the money. You really have to trust them and feel good about them and, and the good PE companies. And again, I've spoken to a lot of them and I know a lot of them have gotten to know a lot of them is at a core they're good. They really are. I mean there's some bad ones, bad apples out there and you got to look out for that. But a PE company that has mutual, your, your best interest aligns with theirs mutual best interest.

That you know, that you're just comfortable overall with because you know you're going to run into the ones. The first one I dealt with, I didn't like them to start with. They were just not, I mean they were, It's a very sophisticated company, a very legitimate company. But their mode of operation was different than, than mine. They were, they wanted to close in 30 days and they're buying 40 companies. And so I went with, as I mentioned before, I didn't take the highest offer, but I, I went with the company that was most compatible. So that's number. That's number one also deep pockets. You don't. You want to make sure that the company has because a big part, especially if you're staying on, you want to make sure they're the backstop that you need. You know, if cash flow changes, something goes south. You want to make sure that they're capitalized and, and they're heavily enough invested already that they're going to backstop anything that bad that goes wrong. So I think those would be the two biggies. You got to lock them and they got to be heavy. You got to have money.

Well, I think something else that popped up is a great buyer.

Sees the value and they also see the possibility and potential. And one thing that I learned in listening to you is the having a partner that isn't greedy.

Yeah.

And the fact that they are going to build this up for a second sale. So talk just a little bit about that because I thought that was a key distinction, a very subtle but nuanced and important distinction of having a non greedy partner in here. Do you have any commentary about that?

No. Absolutely. And that came out early on that they didn't have that, that element. And another thing that, that was encouraging and I highly recommend everyone look for is, is the patience model. Some of the, a lot of firms have a built in time frame. They, they have investors, multiple investors who expect a return on their investment at X date and at X date the fund gets liquidated, the companies get sold and doesn't necessarily mean they have to be profitable. So I was attracted to the particular company that I used because they had none of that. Two, two billionaire investors. No timeframe. So that's where the greed goes away because now they're playing. If it has to be a long game, it's a long game.

So but yeah that's, that's huge because they're controlling interest and, and you have no, really no say you have a board seat on the board. But at the end of the day they're looking after their best interest, which they have to do.

Yeah. Yeah, I love that. Okay, so from here I'm we're going to talk a little bit about the workshops. I'm going to set this up for our listener and our reader and then I want you to talk about it. So first of all we've got the tools that we're giving away. Again, it's at readytossell me. You get the transcript. The five big things in even more detail than we've discussed here, the 12 core metrics. These are the fundamentals that any buyer is going to look at that you need to have prepared the Brand Impact scorecard, which is the checklist of over 70 different things that any smart buyer is going to look at and look for. I'd say they're even deeper. So it's pretty sophisticated, but you really want to understand these. And then finally an opportunity. What I convinced Joey to do is collaborate and because he's so fresh out of this and he is such a knowledgeable guy, said, Joey, if you were going to put together something that you wish you would have had when you sold Mosquito Authority, what would it be? And it's like I'd like to know everything that it would take to prep and sell my business in the shortest period of time. So think of it as an MBA to be ready to sell. And so what we put together is a workshop. It's a one on one workshop to work with Joey and I for two to three days and to get your business ready to sell and also get some of the tools you need and be prepared so you can communicate with a level of sophistication with a buyer, understand some different options, but also have the preparation in place. So Joey, why don't you talk a little bit about what we'd be doing, what we'd be putting together and what the big value is.

Yeah, no, I'm super excited about this. Yeah. Because we've, we've actually pulled together expertise, probably going back, gosh, I don't know, 10, 30, maybe 30 years worth of expertise in our experiences in going. You've been in the M and A space for a long time, so you have more experience than I do. But the beauty of pulling all this together and providing tools that in a three day workshop, can I think condense what I know what I went through for 18 months and spent half a million, probably more than that. So pulling all that into especially the tools and those are the most useful things. The spreadsheets, the impact filters, all the things that I used and had available on the second time, not the first time. Pulling all that into two to three day event is. Yeah, it's exciting because I know what the outcome of that's going to be. People are going to leave with everything they need to make that decision. What's the next step? Right. Super exciting.

And I also think the roi, which is this can be the difference between getting a seven figure deal or an eight figure deal. And because we're diving deep first in getting you educated in what the possibilities are, the next is what your marketing needs to do. So it's how to improve and increase your sales, your brand value. And these are things that won't necessarily cost you a lot of money or take a lot of time, but that give you the multiplier. It gives you more income and less cost, less risk and less time. And getting back to time kills deals. If you could shorten the sales cycle by even half and the acquisition and the due diligence and be prepared and not get caught with your pants down. And I know for me.

I had, fortunately after going through this five times myself, I brought in some specialists and I know for a fact that my what was going to be a probably about $300,000 legal bill was about 125,000.

Yeah.

Because I was prepared.

Yep.

The amount of money, how I got paid. But even a tiny little example where in the instance that something went sideways, I. My non compete got canceled and I also kept all my ip so no matter what happened, I could always restart if things blew up. And I know a very, very famous person who sold his trademark, which was also his name, with a big business and it ruined him for two decades. And so those are the kinds of things that you want to prevent. So the whole idea here is two to three days with you and me going deep in a fun, enjoyable process that's gonna shorten your cycle, increase the amount of income you get and get some tools that you're gonna need anyway that frankly just aren't available anywhere else. And because it's coming from fresh experience, fresh mind.

And a big deal. And also just finding out, part of our goal in giving you the tools upfront is we'll tell you right away if we think you're saleable or not. We won't say we're the final word but you know, you've seen plenty of deals, plus the fact that you've got a Rolodex now of buyers, you got a PE firm that you could put a deal in front of and they're good people. I've met them too.

Absolutely.

So I'm going to pass this on to you. Anything else that we want to talk about in terms of the experience, the takeaways from the workshop or working together?

Well, no, I think this personally have realized what a life changing and that's understating what a life changing experience it is when you have that, that, that exit and I want it for everyone else and I don't need to do this, you don't need to be doing this. But knowing the impact we can have and change, major, major changes to people's lives makes it all worthwhile. So I'm excited about it. Thank you for having me join you in this venture.

Yeah, well, I've. I've told you for years, when the timing was right, I knew there was always something bigger for us. And when this came along, it was like when we spent some time at the Mastermind in Mexico. I just said, you know, we had that deep conversation, what are you going to do next? And I said, I got an idea for you and it's perfect. And it's your opportunity to work with, you know, four to six businesses, bring them from where they are to close, mentor the founders, and do it in a way that's kind and caring and fun. And, you know, part of the thing that we also said together is there's nothing better than working with people you actually care about, you can spend time, play with, and make a huge impact at the same time. And that's what drives us both at the end of the day. It's the values, the shared, common values. So that's what I got.

Absolutely. Thank you. Yeah.

No, it's been a. I've been looking forward to this for years. So we finally got to do it.

We did.

And. Well, here's what. Here's what we're going to do next. Let's look up, say goodbye to everyone up there at the camera. So head on over to readytossell me. Get all the goodies. You'll learn more about working with Joey, Also learn more about doing the workshop with the two of us and this capability amplifier. Thank you so much for listening and watching.

Bye. Bye.