How to Build and Sell your Business the Right Way with Lee Heisman

Welcome back to the show. I'm your host, Phil Risher. And on today's episode, we are diving into how to build and sell your business the right way with Lee Heisman and Peter Cookman. Thanks for joining us today, guys.

What's up, Phil, Good to see you.

Yeah, thanks. Thanks, Peter. Thanks for joining us. So Lee is the CEO and founding partner of Exit Stage Left Advisors. And Peter is an advisor at the firm. Lee is a serial entrepreneur and expert negotiator who has personally built and sold multiple businesses and advised over $1 billion dollars in deal deal value. I actually had to confirm that before because it sounded so crazy and sorry.

Phil, I have to pump my fist every time you say that. It's a reminder. I never look back. Well, I, I never look backwards. I'm always looking forward for our clientele. But it's nice to be reminded.

I love it. And his company guides owners of growing companies through to strategic planning, valuation and exit execution. So Lee, Peter, can you tell us, take it, take a second, give us a quick background story. How did you even get into this space? And even working with home service businesses to help them exit, like how did this all come about?

No, thanks, Phil. Well, good to see you again, Peter. Great to see you as well. And as I mentioned earlier, Phil, I have a face for radio. So I heard that this is a video and that's why we have Peter on as well. I'll let Peter take a piece of it as well. But again, Lee Heisman here. Half my life, Phil. 27 years up in the Philly area so I could talk more like this. The last 27 out of Atlanta, I was an entrepreneur for 30 years in the blue collar space. I owned a commercial printing company. I owned multiple firms and I was fortunate to sell them myself. And I went out there. It was kind of like the mechanic, right? If you've never worked on a car. But you're. I'm going to try this. The first time I went out and I didn't know what I didn't know. Phil, you know that adage, right? I was an expert in the sprinting space. Our clientele are experts in their space. But we went out multiple times, sold our own businesses, myself and my partners and realized, wow, we don't know everything about this. It's hard to be upset when you're getting a windfall of money. But when you look back on it, you realize, wow, what a, what a mistake I made on this part and this part in this part. Because it wasn't my original career of course, that in turn, was the impetus for Exit Stage Left Advisors nearly six years ago. And like you said, Phil, we've been very fortunate. Just this year alone, We've closed over $300 million of deals, Enterprise value for our clients. What we've found to be successful. You know, everybody loves that unicorn story. You know, the tech firms, Phil, and all the stuff that the AI, the tech. Of course, we represent multiple clients in that space, but the majority of our clientele. Mission critical, Blue collar industries. We've sold three roofing companies this year. An H vac company, a pest control company, a landscape company. These are the jobs and industries that AI is never going to take over. And we've been very, very fortunate to become one of the top M and A firms in the entire country in this Mission critical. I say blue collar, but there's a mixture we within those organizations, Phil. There's white collar, there's gray collar, there's blue collar. But all those collars are necessary to run our entire country. So we're very fortunate to know all of the buyers in the country in these particular spaces. And then fortunate to work with Peter at our organization because Peter brings 30 years of experience in this space.

Yeah, Very cool.

Yeah.

Peter, what's your experience like in.

Yeah, so working on the corporate side as well as an entrepreneur, started a number of companies. And I love talking to business owners and helping them understand what their objectives are with the company and helping them really match the. You know, there's lots of private equity and family office money out there with different needs and expectations, and aligning those with the owner's objectives is something that's really exciting. And working with these business owners that have built a company to the point where they're having those conversations is awesome.

Yeah, awesome. So it sounds like, Lee, you went through an experience of selling companies and you don't know necessarily what you don't know. You're more of on the running the business side. And you've gone through this experience and a lot of times, right. The home service business starts as a technician. Then they become the leader and they start scaling a business. But they also have never been through selling a company before. And it's like there's so many mistakes that people fall into from there before we get into those mistakes. And like, you coming alongside them. Can you talk about when someone comes to you, I'm sure you evaluate them as a sellable asset. What are some of those things that you look at. At a business when you're like, okay, this is a Viable, sellable asset that we can go to market with.

Like what are some of those, Phil? All right, you've done this before, Phil, because that is an integral question now. That really is. You know, I'm always across the country, Phil, very fortunate, like I said, for our reputation. A lot of people just leave it open ended and then I just freestyle and can talk about this. I can talk about this for 10 hours at a time. Right. But your question was so precise and so accurate. So I say this all the time. I was in a room recently of a thousand people in San Diego talking about this exact question. You said, and I looked at the room and said, if you are profits, you, you have two things, of course, you have revenue and a lot of people, Phil. And most businesses, I'll say, you know, how large is your organization? And you're right, Phil. I'll have clients sign or people sign NDAs so I can look at their businesses in advance. Phil. We probably turn away 85% of the businesses out there because they're not sellable today. It doesn't mean that we won't work with them for a year or two to help guide them to become sellable. But I would say most aren't ready. If your revenues and your profits and you're going to hear a term, Phil Ebida, are you familiar with that?

Yeah, I am. I. Before we talk about ebitda, I want to talk about what are some of those things? Like, are there like two or three things that you're like every single time I see this, it's like you're not sellable at this point. Like, you don't.

Well, so your ebitda, your profits, you're filled it. That's where I was going with. Yeah, you're, you're, it's nice to have revenue. And if you said to me, I have a $10 million revenue company, but you had zero profits, you had zero ebitda. A lot of people talk about that top line, really, that word ebitda as you kind of. If you look at our social media, Phil, we own the domains. You know, you had me at ebitda. What's your ebitda, Phil? I'm embarrassed. In Georgia, my license plate is the license plate that says ebitda. So I literally have the state license plate in Georgia that says ebitda. Because that is. If you were to point a gun to my head, Phil, and you said, Lee, what is the one thing that matters most for selling a business? I would say it's the profits, which is Your ebitda. Now, I won't bore your listeners today with how you get that number, but generally speaking, it is the bottom line, net profits of the company. So I have people always tell me, I'm a $5 million business. I'm a 10. I'm a 20. I'm like, oh, my gosh. 20 million of profit. 10 million of profit. They're like, well, no, that's the top line. I'm like, well, that's nice. But, Phil, I've been doing this so long, I don't even know the majority of our clients that we've sold. I don't even know their revenues, meaning their top line. You might say, billy, you've sold all these businesses. Those. Those numbers don't matter. What matters is, is your profits. Those are the most important thing. And secondly, fill in line with that. It is the. The trend of it. So if your business is flat or going downward, Phil, do not sell. So anybody out there right now, if you say, man, I'm burnt out. I've been doing this for 10, 20 years, and I'm telling you, I just. I want to sell right now. Now's the time to sell. I want you to think about this. If you're burnt out, you're overwhelmed, your business is flat and decreasing, and you say, now's the time to sell. What's that? Who's that appealing to?

Exactly.

That's not appealing. So you have to find this Goldilocks moment where you're growing. There's a tremendous future ahead of you in Runway. You've had a tremendous success. And you say, why would I sell now? I'm making money. That's the time, Phil, when you look and say, I'm going to sell, hopefully. And then, Phil, we could get into more things later. Because if you sell, you can sell pieces of it. You don't have to sell the whole business. You can get to the second bite of the apple, which is usually larger, Phil, than the initial acquisition. Peter, I didn't know if you had an echo on that.

No, I think that's perfect. I think, you know, business owners who are looking to exit, and if they're thinking about what their role wants to be in the future, you know, there's many different scenarios in which they can play a role. And like Lee said, a lot of times, the first bite of the apple is great, but it's a secondary bite. Being part of a larger firm and a larger acquisition eventually down the road, that can even play a larger role in their financial.

Phil, I have to Give this analogy for your listeners. This is the easiest way to look at it. You can sell 100% of your business. Those are less than 10%. I want you to consider, do you want 100% of a grape or do you want 20% of a watermelon? So start thinking about that. Do I want 100% of the grape that I have, no matter how big your business is, or do you want to 20% of a watermelon where you're a part of something larger to even go further in that exit?

Yes. Okay, so for people that are listening, if you're like 1 to 10 million in revenue, this is the exact situation that I was in. If, if you know my story from listening to this. I was at a three million dollar business. They had 10% EBITDA, so they were doing $300,000 in profit. Then I helped them go to $5 million in revenue, but the EBITDA went to $1.2 million and that was over two years. So what Lee is saying is that the trend of moving very quickly with EBITDA and catching, you know, some good wind, but then also having growth in the business from an EBITDA perspective, going from 300,000, which you might get three or four times maybe, to like 1.2 million of EBITDA, which you could get five to six times maybe or more. That's what you're talking about here is catching that tailwind of growth, but then also optimizing for your EBITDA or your profit number so that way you can do it. I do want to ask you this though. If someone is thinking about selling and like they have a 10 profit margin and it's, and it's whatever that means, should people look at guzzing up their profit in order to sell or should it be like a natural thing like that people evaluate and by guzzy up, I mean like, you know, spend a bunch of money and invest now and then two to three years, you can cut your expenses. So that way you have a bunch of profit.

That's another. I feel sharp again. I'm not being nice to you, Phil. Remember I told you My first 27 years are Philly. So I don't ever. I'm just always direct, great direction. So number one, you hit the nail on the head. The EBITDA on your previous example, obviously that's the right trend. That's why I don't even care what revenue is. I care what the profits are. So I'll share this with you, Phil. Yes, you can absolutely strategically say I'm going to have this growth path. I'm going to put jet fuel on my EBITDA by chopping expenses down and firing people. I mean you, I know I would know exactly how to self destruct and strategically get the EBITDA as high as possible just at the perfect time. So it's a great question. Can you guess up, gussy up your numbers? Can you make it look really pretty? So I will share this with you and the listeners, and I do this every day. The private equity firms that I deal with across the country, Phil, I mentioned over 1300 private equity and family offices that I know intimately. I know who has the money, who has what's called committed capital, who is bank dependent. So I know all of them. And I will tell you this, although I think I know what I'm doing. They're 10 times smarter than all of us because that's their entire job. So if you gussy up numbers or attempt to do anything, this is a long process. Phil, if I could make a transaction for you, just say, phil, we'll use you as an example in your business and you gussied it up and the numbers look perfect. We're looking at a six month to a one year transaction time. From the moment we take someone on, it takes as little as six months up to 12 months. There is no way to gussy anything up without as you go through due diligence, I want you to consider a colonoscopy. If we're an older man like us, or myself at least they're going to find everything, Phil. It's like running into the er. When you go into the er, I have these issues. They need to do CAT scan, blood work, MRIs, X rays, and they're going to find everything. So what we do for our clients is we do provide everything before they ask for it. So you're right, Phil, you can do that. To have a little moment in time, to have the highest ebitda, I simply say, run your business appropriately. When clients sign on with us, I turn to them and say, okay, you've begun the process, do not take your foot off the gas. And it's hard because clients go, I'm ready to sell. I'm just going to relax now. And as I go down the world of the next six months to bring these buyers in and if the business starts tanking because they think just because in their mind they're going to sell. No, no, we, you have to put the foot on the gas and grow it while we're doing this. So Great question. There is no magic wand to gussy up a number to make it look perfect at that moment. You just have to run your business effectively. And remember, it's an important piece, Phil, personal expenses that you have that are business expenses, slash personal expenses, those things are added back in. So, Phil, if you, if I looked at your books and you made $1 million a year, you had a million of profit, and you spent $100,000 every year on a Range Rover just making it up. Right? Bill, you had that, but it's a personal expense you're running. Your ebitda wouldn't be 1 million, it would be 1.1 million. Because when you sell, what are the things that are personal expenses that will no longer be at the business after the sale that benefits you? Actually, it's very helpful.

Yeah, it makes sense. Do you want to say, and one.

Thing that I just add is with us working with so many companies, we also see where there's opportunities. So there was one roofing company where we were able to help and identify that their cost structure was a little bit higher than some of their competitors. And so renegotiating some of the things as they get larger, those are opportunities that we can look at and make recommendations in terms of where they can maybe find extra EBITDA.

Yeah. Peter's 100% right, Phil, for clientele. And again, I hate to promote myself and organization. We're here, Phil, as a service for you. We're here to provide this for your listeners. But not every firm is made the same. And we've been complemented by the private equity firms across the country and our clientele. But Peter's 100% right. We will go in and work with our clients, too. That's why sometimes we'll sign clients up with us a year or two before their sale because we're able to look at the numbers and show the trends and say, these are the areas you want to fix. Phil, another piece is, you know, in the home services industry, there's a lot of multiple questions, meaning, like, what are my multiples? What's, what's. How much am I going to get for the business? There have been clientele that I've worked with for two years. When I started, they had what's called reoccurring revenue. So, Phil, consider I've been working with that client for the past five years, seven years. They always come back to me. Oh, do you have a contract? No, I don't have a contract. Do you have a service agreement? No, I don't have A service agreement. But here's my historical history with this organization. So I'll get a good multiple for what's called reoccurring. However, I've gone to clientele and said, can you start a service contract department? Can you start getting them under a monthly or quarterly or yearly service agreement? I will tell you, Phil, the multiples go up exponentially. I can go from a 5x to a 7 to 8x just by having what PE firms care about the most. It's one word. Predictability, Phil. They care about predictability. I was in that room. This is a good one, because I was in that room with a thousand people. And I said, by a show of hands, when is the last time anyone in this room changed your pest control company? And remember, I'm on stage so I could see everybody's face, start to think, oh, gosh, when is that? I said, hey, better show of hands. Does anybody even know what credit card the charges of $29 a month or a quarter even goes on? So one guy raised his hand. In a room of a thousand. He. I sent a microphone over. He explained why he changed his pest control. But I said, everybody, just look around the room. That's 1/10 of 1% that has changed your pest control company. If I pulled together all of our money and said, let's invest in something that we know is predictable and is going to stay the same, you think it's going to be a pest control company. So if you start thinking of your business in this way, it will not only increase your business, your profits, by the way, forget about a sale. You as a business owner. Look at that. You can sleep at night knowing you're under service level agreements, but it's unbelievably exponential for buyers.

Yeah, I agree. The predictability piece. So you mentioned EBITDA is one thing that is like, hey, you got to get to this level or something. You got to have a trend of positive ebitda. The one that I didn't hear, which I'm curious, is the leadership team of like, what?

Phil, I didn't give you a layout today. And that was my next point. Oh, my gosh, Phil, you're aligned, man. I'm not being Phil. Look, I'm Philly. I would tell you, hey, you're terrible, Phil. No, you're amazing. Because that was my next point. A big mistake. And we do these presentations all the time, is you don't think of your G2. I'm not sure if you've heard of G2, but it's a common term, generation two, what is your second generation of leadership? So, Phil, if listeners out there say, hey, I want to sell, I want to take some chips off the table and I'm going to stay for the next five to seven years and run it and grow it to get that bigger bite of the watermelon, your G2 isn't that important, right? Because you're going to be there. You're actually rolling equity. You're taking the trip with the buyer. They love the fact you're rolling equity. They know that you're going to be there. They do want to see leadership, just in case, of course. But, Phil, if you think you want to get out of there in a year or two and you don't have a great generation two across the board to replace you, that's a big thing that people tend to forget. I have to emphasize something because I know as we wrap up our 30 minutes, if you're considering selling your business, I'm speaking directly to your audience, and they do this every day. Do not tell anybody you, you work with a firm like ours or whoever you trust, and you sign NDAs, which are nice, they're in spirit, of course, they're legal documentation. But do not tell anybody. If you start speaking to your staff, even as you get closer to. I've had this happen, Phil, where owners are so excited, by the way. The buyers are amazing. It's great partnerships. And my. I'm yelling respectfully at my clients to say, don't share. And they look and go, but. But they've been with me forever. I want to share this with Bob. I want to share this with Susan. I really got to give them this information. I said, let me share with you what's going to happen. You're going to go tell them, Bob and Susan are going to hug you and say congratulations. And when they're finished, before they put the period on the end of congratulations, they're going to say, how does this affect me? Exactly right. Has affect me, my family. They won't even know that you're working on what's called equity incentive plans for them. They don't know that you're working on bonus structures, employment contracts. So, number one, don't say anything to your staff until. Until, if you have to. We need to have the solution and we need to have the employment agreement, the equity incentive plan. We want to present it to your staff when the time is right, usually post acquisition. But if you need to bring them in early, you can't go in ambiguously. Your staff will Freak out. They don't know what you're doing. So, Phil, that is, other than EBITDA numbers, stay quiet. And I'm saying that I would use more language. And other than saying stay quiet, I would simply say, I do this every day. Don't say a word until it's the right time. And that's why you use professionals like us.

Yeah. Okay, so you're at the point you have good Eida, good trend, a decent leadership team. You're staying quiet. And you, you say, okay, I'm going to go list my business on biz. Buy, sell or something. Okay.

No, it's fair. I didn't laugh. You laughed. I didn't laugh. I want to be professional.

No, I appreciate that. I'm saying I laugh because I hear this all the time from people. Right. So, like, what. What does it look like from a DIY perspective versus working with someone, a professional? And what's the difference? That.

Yeah, yeah. So I'm going to give you the best example, because we do not list our businesses. As I mentioned, we have well over 1300 private equity firms and family offices. We know where the money is. We know where the money's buried and what it's allocated for. What you want to watch out for is people that will hand you, Lois, letters of intent. They will hand you, hey, I think your business is worth this. Here's a letter of intent. They're going to wrap you up in what's called. It's not binding, but it's exclusive to them. And then they're going to go out and beg for the money, and they're going to waste 60 days, 90 days, 120 days of your life, and then you're going to get the T shirt that says, I got the hosing at the closing. Now, we don't ever. We don't have those T shirts at our firm. But the point is, if you got offered $5 million for your business from somebody who didn't have the money, they then start going out to banks behind the scenes. And those banks will look at your information and say, hey, we're only going to give you three and a half. And then your buyer comes to you and says, hey, here's the reasons I'm only going to give you three and a half year. Three to four months into it, you're like, I'm so tired, I don't even care anymore. And this is how I've seen this happen consistently. I know Biz by sell. If you're going to be going that route, you're mostly looking for seller financing. And you're hoping that they keep the business. I will share with you what we do. And I don't mind sharing our secret sauce because if you ever go to a nice restaurant, fill a five star or a three Michelin star, you know, that's the same ingredients anybody else can get. So it's just the chef. And we're the chef.

Give the recipe and sell the cooking.

That's my 100%. Yes. It's the engineer. Right. Not the engine. And I will share with you that we do a proprietary auction process. So, Phil, we don't ask, we don't have, we don't list for price. The market speaks. And there's. Why would I take money off the table? I have a great organization. They were an automatic door company, you know, Dollar General, Walmart. And their business, on paper from their accountants, was valued at $14 million. I can't mention the name, although my client says you can always talk about it. But he lets me share the numbers. They were valued at 14 million. We came in, we found 66. Zero buyers. We ended up with our final four, and they were all bidding in an auction process. And we ended up $22 million, all cash, because they were all fighting against each other for this very valuable business. So I'll end on this. Phil, you own a beautiful home, and we live in Georgia, which is great, right? In terms of these. Well, Florida would be no state tax, but just say we live in Georgia. Cost of living is a lot less than California. I have a beautiful home. I want you to think, your listeners to think about this. You have a beautiful home worth about $1 million. Call it in the market. Your neighbor comes running over to you and says, I need to buy your house. I'm going to hand you $1 million right now. Even 1.1 million. I'd like to just take it right now. If I then took your home in the state of. Let's just use the state of Florida, because there's no state tax at that point. So say I'm in Florida because there's benefits there. The Neighbor offers you 1.1 million. If I took your home and said, hold on, let me repaint it, let me stage it, let me fix it up and put beautiful furniture in it. I'm now going to videotape this and send this all over the country to the 330 million people in this country, let alone other countries. Someone in California who has ridiculous state tax looks suddenly at Florida with no state tax and that home in Florida versus the home in California. Beauty is in the eye of the beholder. Do you think if I staged it, put it on the market and threw it across the country to qualified buyers, I would get more than 1.1 million? I'm not going to answer that question. I'm going to let your audience just say, if I have a neighbor running to me to hand me money or if I put it out into the marketplace, when am I going to get the most money? And, Peter, it looks like you wanted to jump in.

Yeah. And keep in mind, if you're working with a private equity firm or they've already reached out to you, they're trying to sell you the grape, not the watermelon. And so it's also the terms in which you can structure this that going in it yourself, you're not always. You'll probably be taken advantage of in terms of the people who are out there trying to buy. Your companies are trying to sell you the grape where they want to make money on the watermelon.

Yeah. That's the part I want to dig into, is how to structure a good deal. Because some people are jaded with earnouts, other people are jaded, you know, with the second bite of the apple dream that might never come. So I want to hear what. Well, can you explain what the second bite of the apple is? And also earn outs or how you would recommend structuring.

And Phil, again, you're hitting all the grand slam. Serious. Like, literally, Phil, I do this all the time. Your structure of asking your three main questions is exactly what listeners need to hear. Like, it's really some of the best questions because of the most important. So there's two pieces to a deal. It's very simple. It's very simple, everybody. There's the total enterprise value. Hey, this is what I'm buying the business for. And there's the structure. And as an owner, you the owner of the business, you have to decide what's more important. Meaning is it 50.1 for the structure, 49.9 for the total enterprise value. Meaning, you know, I could, I could offer you. If you had a business, Phil, if I could get buyers every which way from Sunday. If you had a business worth $10 million, I'm sure I could get you three or four, Lois, for 15 to 16 million. But you're only going to get paid a couple million at close and there's going to be a ton of earn out and you don't get the bait and switch pulled on you. So, Phil, to answer your question, when we meet with our clientele, we're finding out what's important to them. I have some people that say I just need to leave in the next 60 days. That's a harder business to sell unless you have a great G2. All the other pieces have to work with that. If you have someone saying, like you said, second bite of the apple. So structure makes everything total enterprise almost as secondary to the structure. Because I could get you a $15 million offer and you end up with $1 million at close. And 14 million is on the hook with risk. Right? I've never done a deal like that. I've never done a deal less than 80% cash at close because the, my sellers wanted to roll equity. But what a second bite of the apple. This is a. I'm going to do my best to describe the highest level of how private equity works. This is how they work. Size matters. I won't make jokes on your show. Size matters exponentially. And I will tell you that the larger the business, the more multiple it commands. So Phil, if I were to look into the H Vac space, let's just use that. And I was a private equity firm, I'm going to go buy 10 businesses all at a million dollars of profit. And when I, when I'm buying a million dollar EBITDA million dollar profitable company, I'm paying a 3 to 4x. I'm just giving you the real numbers. By the way, viewers out there, if you're listening to this and someone tells you double digits and there's three to four industries in this country, I sell them the veterinary clinic space, financial advisors like the pest control space, there's limited double digits and those double digits are a lot of recurring revenue. So you can piece it together. But if I'm going to buy 10H vac companies that have a million dollars of profit, I'm going to pay $3 million per, per company. Okay, so say that I spent 30 million. But now what do I own when I put them all together? I own one 10 million dollar EBITDA company. When I sell that, I'm selling that for 12 to 14x. Okay? So I want you to consider the return on my investment. I'm going to grow this much faster than the S P. I don't care how good the market is doing today. So your question, Phil, is if you are an operator that's selling, look, you can grow your business to a million of EBITDA, maybe 2 or 3, you're not going to get the 10, that's just that's a lifelong journey to get there. So these guys do it very quickly by acquisition. And right there, you got to consider if I sell for 3 million and I won't run the numbers and board people, but if I want to roll equity when they go to sell in five years, usually those runways are three to five years. They're selling for a 14, a 15X. Right. Well, then your 20% is getting a 14 or 15X on its money. Just a high level to think about it.

So perfect explanation.

Size matter. It's a complex scenario, and I hope I simplified it.

Yeah, no, it's a perfect explanation. I think from what you're saying, you can roll up companies together and then you get 80% of the cash up front, and the other 20% gives you this big outcome at the end, and hopefully it works out.

Listen, trust me on this, Phil, and for viewers out there, I don't care where you invest your money in the stock market, the private equity firms will get the largest return. Phil, Enough that every deal that we do at esl, we turn to the buyers and say, hey, our success fee by Phil, by the way, we're success fee based. Only I didn't mention that it wasn't relevant. But we are. We jump in the boat with you guys. That's why we turn away 80 to 90%. So you're paying $0 with us until we close a transaction. But still, every buyer that we close a transaction, we ask if we could take our success fee and roll it into the large watermelon.

Yeah, I love it.

Doesn't happen every time. They have regulations, but we know that's better spent for us than in the stock market.

Okay, So I want to ask you about this. Earnouts have a little bit of a bad stigma, and some people have a bad experience. How do you make sure that you don't have a bad experience and pick the right partner to work with? So that way you want to stick around for that?

Yeah, it's easy. Well, so, Phil, remember the best part about me and our firm is that I did this for 30 years before I'm doing what I'm doing.

Yeah.

So I'm not just a broker or an exit consultant that's never done this. I ran businesses and sold and I had earnouts. I actually had earnouts. So, Phil, in addition to what I do for my clients, I was an entrepreneur for 30 years. That's why I connect so well with my clients, because I know what you're going through. I know exactly what you've done. I Did the same thing for 30 years. So two things. Number one, having a good exit consultant and having good attorney to create a good purchase and sale agreement. So the hooks are appropriate. Let's start there. So that is the most important piece is as we go to the purchase and sale agreement where your rear end is covered. You notice even being a Philly guy said rear end. I didn't use language. But secondly, Phil, the most important piece is if you're going to leave. It's really two things, Phil. How do you confirm your earn out if you're leaving or how do you confirm if you're staying? So if you leave, you're going to have limited control. You still get your earn out but you have minimal to no control at that point on affecting the outcome. So if you have a one to two year earn out, which again I'm very familiar with, I'd stay in the business to ensure that I have control of that situation. And then also I would put hooks in the purchase and sale agreement, which I do, which not allows them to increase expenses and mess up with the ebitda. Again, these are advanced moves, they're kind of pro moves, but I know exactly what to look for for. So as you do the earn out agreement, you're protected, but the biggest protection is staying there for that earnout period. You have control.

Yeah, I think it's, it's hard because you're basically like giving, you know, your asset to someone else. I mean, yeah, you're in control, but it also, there's, there's layers to it.

So there's a roofing company we're working with and there was 70 interests amongst the 1300 that Lee had mentioned. And so part of our job is also screening them and identifying where, where alignment happens in terms of vision of the corporation and where they want to take it and how that fits into their corporate plan if they have one. Some people just want to buy it and run it. Some, you know, so there's all different types of ways in which these people approach acquisitions. And so part of it is you get to sit down in front of buyers and understand how you fit into their, their vision. And so, you know, that's another thing that we can provide when instead of just going out on your own and maybe working with a single, you know, private equity firm or whatever the case may be, because we provide choice and optionality amongst buyers.

Yeah, what it sounds like is don't go at this alone. And that's why you literally need someone in your corner to fight for you to make sure that you're getting a deal and you know what you're getting into. Opposed to just a PE roll up company throwing money at you and you have no idea what you're getting into.

100 and Phil, I'm not here to. I'm here to provide information. Yeah, we never force people to work with us in any way, shape or form or even. It's up to them. But Peter's 1000% correct. I would say that before we go to market, we're spending at least three to four months doing a full financial package for our clients, building what we call a SIM confidential information memorandum, which is their bible, I would call it. And we're spending three different months getting to know our client before we go to the market. Because it isn't all about dollars and cents. We have to know who fits.

Yeah, okay, that makes sense. So if someone's out there and they're like, what's my thing worth? Or do I know if I'm ready to go? Is the first step kind of setting up a meeting with you guys or how does that look?

100%. I mean the biggest thing. And our emails I'm sure you put out there and mine is obviously leadvisors.com. i provide my cell phone all the time. 404-431-7800 Phil, we provide so much information for people. We let them make the right choice. But most importantly, we sign an NDA immediately with whoever reaches out and referrals. That way they feel comfortable and we honor that NDA. We have to. It's our reputation. And then, Phil, before we even begin a conversation or after the first one, send me all your financials. We send a data room link, Phil, because it's nice to hang out and talk with people. I love the hour meetings I have. And then send me your data, send me your financials because that's the first step to opening the door and getting through there.

Yeah, makes sense. Okay, so if you're listening to this and you're like, hey, I'm thinking about selling my business, you can reach out to Lee directly. You can call him up and talk to him and he'll get you whatever you need.

Anytime. Anytime.

Okay, great. Well, I think I really appreciate you guys coming on here and sharing. Is there any other last minute advice you have for someone who's maybe thinking about selling in the next three to five years?

Oh, I have the best advice for people right now. I do this all the time. Again, we're considered one of the leaders in the country. I have never been asked three of the best questions by any interviewer ever. So whatever you're doing, Phil, I'd be listening to all of your episodes and you've gained a new follower because you're questions were the most integral for someone looking to leave a business again. I can talk about this for 10 hours. I just am in the weeds all the time. So I sometimes feel don't think of those high level questions you just asked. They're quite possibly the best. Really the easiest way is, I have to admit, just reach out to us, reach out to the firm. I'll give you all the input, all the time in the world to see if it's the right move for you. There's so many layers to it. There is no easy recipe. It's just finding a good consultant to lock hands with and go along the way. The road trip with.

Yeah. Awesome. Well, Lee, Peter, thanks so much for joining us today and look forward to continuing the conversation.

Absolutely. Wonderful. Thanks, Phil.

Yep.