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Build Value And Master Your Exit - Joseph LoPresti #6251 · Financial Survival Network

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  Speaker 1: There are a lot of options out there today for
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  Speaker 1: the private business owner. Some are transitioning internally to management
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  Speaker 1: team if they have some key employees that are well
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  Speaker 1: equipped to take over ownership or family transitions.
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  Speaker 2: But when you're getting you know, when you're working with
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  Speaker 2: you know.
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  Speaker 1: Say a businesses that are valued at I don't know's
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  Speaker 1: say five million, unless generally it's going to change hands
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  Speaker 1: to another private owner. Another a private buyer is going
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  Speaker 1: to buy it from a private seller.
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  Speaker 3: You are listening to Carrie let'sa's Financial Survival Network where
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  Speaker 3: you get valuable information you just can't find anywhere else
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  Speaker 3: to thrive in.
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  Speaker 4: Today's trying times.
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  Speaker 3: newsletter and gift. Financial Survival Network now more than ever.
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  Speaker 5: And welcome you are listening to and watching the Financial
• 1:00
  Speaker 5: Survival Network. I'm your host, Carrie lutz A where second
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  Speaker 5: to last day of February here, it's hard to believe
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  Speaker 5: this year is sailing by so quickly, a sea of change,
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  Speaker 5: that's for sure. A one thing though, if you are
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  Speaker 5: a small business owner like I have been, My entire
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  Speaker 5: life is a book that you're going to want to
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  Speaker 5: get and it's called exit by design, And what does
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  Speaker 5: that mean. That means that you, as a successful business owner,
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  Speaker 5: you pick when you sell, when you leave, when you
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  Speaker 5: go onto retirement, or when you go on to something else.
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  Speaker 4: And it's probably appropriate that.
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  Speaker 5: A book like that would be written by a financial planner,
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  Speaker 5: financial advisor, and it is. His name is Joseph Lapresty
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  Speaker 5: and Joseph and Marissa La Presty. I guess that's a relative, Joe.
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  Speaker 5: And you wrote your daughter, okay, great going into the
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  Speaker 5: family business.
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  Speaker 4: That's always a great thing.
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  Speaker 5: So your exit plan has already set up, your daughter
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  Speaker 5: is doing it for you.
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  Speaker 4: Of Hey, what made you write the book?
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  Speaker 1: Oh, well, we wrote the book because, you know, being
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  Speaker 1: a wealth manager now for forty years and a business
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  Speaker 1: owner myself starting my own company twenty five years ago,
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  Speaker 1: we felt there was a gap in the types of
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  Speaker 1: planning that business owners are getting where they may have
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  Speaker 1: you know, different advisors, accountants, attorneys, financial advisors, business coaches
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  Speaker 1: or some advisors on their business level, but they're dealing
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  Speaker 1: with them in a silo and nobody's coordinating that advice,
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  Speaker 1: and oftentimes it conflicts with each other. So getting that
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  Speaker 1: synergistic and having a unified approach to help the business owner,
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  Speaker 1: you know, be the advocate or the owner and what
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  Speaker 1: they want to achieve in life. We feel that there's
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  Speaker 1: a gap in the types of and the type of
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  Speaker 1: advice that is available for the privately owned business.
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  Speaker 5: So the need is out there identify this. I mean,
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  Speaker 5: I know myself. I've been in.
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  Speaker 4: Business my whole life.
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  Speaker 5: I've sold two businesses and I think I got a
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  Speaker 5: good price for it, but I always felt like there
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  Speaker 5: was a better way to do this.
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  Speaker 2: Yeah, so that's interesting.
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  Speaker 1: Can you share a little bit of your reflection on
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  Speaker 1: after the fact. Were you satisfied with the exit? Did
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  Speaker 1: you regret anything about it?
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  Speaker 5: No, because I was ready to move on both times,
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  Speaker 5: but I felt that look, the first time, as partners,
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  Speaker 5: the family member in a thriving legal printing concern industry
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  Speaker 5: that doesn't exist anymore, and I.
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  Speaker 4: Knew it was time to move on.
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  Speaker 5: I contacted our largest competitor, which had just been acquired
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  Speaker 5: by somebody else.
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  Speaker 4: They needed a few months to.
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  Speaker 5: Get their feet under the desk and you know, get
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  Speaker 5: control of the company before discussing it. But eventually nine
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  Speaker 5: months later we closed the transaction, I couldn't have been
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  Speaker 5: happier with it, got what then was probably top dollar.
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  Speaker 5: Second time, I was a partner in the law firm
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  Speaker 5: and just didn't really enjoy the practice anymore.
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  Speaker 4: I wanted to move on.
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  Speaker 5: So both times, you know, I probably would have taken
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  Speaker 5: less just to get out.
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  Speaker 1: You know, Well, good for you that I find that
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  Speaker 1: to be pretty rare where there isn't some regret, you know,
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  Speaker 1: after the fact, which is why being proactive and designing
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  Speaker 1: the exit right. The title of the book is exit
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  Speaker 1: by design, because people that aren't proactive end up exiting
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  Speaker 1: by default, and it's that's what, you know, some thing
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  Speaker 1: in that transaction they usually end up regretting, whether it's
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  Speaker 1: you know, a different type of transaction, or maybe not
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  Speaker 1: finding the right buyer, maybe how their employees were treated
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  Speaker 1: after the fact they could have designed that better, or
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  Speaker 1: it's about their own personal they didn't plan their personal
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  Speaker 1: wealth management of how are they going to live the
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  Speaker 1: life that they want? And tax the tax drag on
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  Speaker 1: those transaction is often a big one too, where they
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  Speaker 1: maybe they talked to another business owner who sold and
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  Speaker 1: they told them about a strategy that their advisors put
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  Speaker 1: in place that saved them a lot in taxes and
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  Speaker 1: they say, gee, I wish I would have known about that.
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  Speaker 5: Yeah, so it's a combined kind of approach from taxes,
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  Speaker 5: from getting top dollar. You know, normally, unless you're getting
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  Speaker 5: bought out by a larger company, you're probably going to
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  Speaker 5: take back paper. So how do you make sure that
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  Speaker 5: you actually get paid? How do you know that the
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  Speaker 5: person you're to is in the scammer that's gonna just
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  Speaker 5: take your money? Right, All those things come into play.
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  Speaker 1: Yeah, seller financing is a big part of you know,
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  Speaker 1: many many deals. Uh So that that's always but you
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  Speaker 1: know buyers are generally going to pay that note because
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  Speaker 1: you know the recourses you get the company back if
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  Speaker 1: they don't pay the note. Uh So it's there's a
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  Speaker 1: there's a big risk there for the buyer.
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  Speaker 4: What's left a bit? Well, that is sure, sure what's
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  Speaker 4: left of it?
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  Speaker 1: You don't want to We try to educate clients where
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  Speaker 1: seller financing is good to the extent that it opens
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  Speaker 1: up the door to more buyers. You'll get more interest, Okay,
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  Speaker 1: and that was good for value because the more the
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  Speaker 1: more buyer.
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  Speaker 2: Right, it's supplying man.
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  Speaker 1: But you don't want to go too deep into seller
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  Speaker 1: financing and you want to get the right terms to
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  Speaker 1: reduce that risk.
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  Speaker 4: Yeah. Well, so there is usually the one perfect buyer
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  Speaker 4: for your company, right.
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  Speaker 2: Yeah, I mean it depends on the type of business.
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  Speaker 1: Uh. You know that in this in this day and age,
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  Speaker 1: there's a lot of industry consolidators, there's strategic buyers, there's
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  Speaker 1: private equity depending on the size of the business.
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  Speaker 2: Uh so there are there are a.
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  Speaker 1: Lot of options out there today for the private business owner.
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  Speaker 1: Some are transitioning internally to management team if they have
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  Speaker 1: some key employees that are well equipped to take over
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  Speaker 1: ownership or family transitions.
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  Speaker 2: But when you're getting you know, when you're working with
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  Speaker 2: you know, say a.
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  Speaker 1: Businesses that are valued at I don't know, say five million,
• 7:37
  Speaker 1: unless generally it's going to change hands to another private owner.
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  Speaker 1: Another a private buyer is going to buy it from
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  Speaker 1: a private seller.
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  Speaker 5: Right so, uh Like, what do you think the three
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  Speaker 5: biggest mistakes business owners make when when they're thinking about selling.
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  Speaker 1: Yeah, I think the I think one mistake is is
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  Speaker 1: determining their personal plans ahead of time, knowing what your
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  Speaker 1: next act in life is going to be.
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  Speaker 2: Having that thought.
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  Speaker 1: Out ahead of time. We we help business owners create
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  Speaker 1: what we call a personal action plan that just maps
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  Speaker 1: out what their next chapter in life is, and you know,
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  Speaker 1: think about that if you can. If you can, you
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  Speaker 1: know a few years before you're exiting and give it
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  Speaker 1: a lot of thought. You know, you're not just gonna,
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  Speaker 1: you know, say I'm gonna move to Arizona or Florida
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  Speaker 1: or even know, if you're in a cold climate, you're
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  Speaker 1: going to go somewhere warm and Okay, well that's not
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  Speaker 1: really your life.
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  Speaker 2: That's changing where you're living.
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  Speaker 1: But what are you going to do there? You know
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  Speaker 1: what you're going to be on the golf course five
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  Speaker 1: or seven days a week. Are you gonna you know, what,
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  Speaker 1: what's your life really going to look like? Where you
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  Speaker 1: could still have meaning and purpose? Because you know, many
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  Speaker 1: of the owners we work with where the founding owners
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  Speaker 1: of the company. Then you know their their baby boomers,
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  Speaker 1: let's say, and they own the company for twenty thirty,
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  Speaker 1: forty years sometimes, so it's like their baby, it's like
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  Speaker 1: their identity. And stepping away from that is really emotional psychological.
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  Speaker 1: So that's a big thing. I think determining your what
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  Speaker 1: we call your freedom point is another big one, and
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  Speaker 1: we define that as having enough money to be able
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  Speaker 1: to live the life that you want without being constrained
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  Speaker 1: by you know, financially of course, within reason, but you know,
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  Speaker 1: having that ideal life and knowing what you need from
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  Speaker 1: the business along with other assets to be accumulated through
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  Speaker 1: your life.
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  Speaker 4: What is that point?
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  Speaker 2: Where does it need to be?
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  Speaker 1: So it will help a business owner develop what we
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  Speaker 1: call a lifetime cash flow plan and will show them
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  Speaker 1: what they need from the business sale to be able
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  Speaker 1: to have that secure their freedom. Right that's say a second, big,
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  Speaker 1: big one because many of them don't know, you know,
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  Speaker 1: they just kind of do planning on a legal pad
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  Speaker 1: or something. And uh, but there's a lot to consider there.
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  Speaker 5: All right, So yeah, absolute one piece of advice you
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  Speaker 5: give to anybody thinking is selling their business at this
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  Speaker 5: particular point in time.
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  Speaker 1: I would say, no, no, your Uh, there's a couple
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  Speaker 1: of ways to put this. Know the readiness and attractiveness
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  Speaker 1: of your business to try to sell to transition, Know
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  Speaker 1: what that looks like. Know what a buyer is going
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  Speaker 1: to look for because oftentimes that those those metrics are
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  Speaker 1: much different than the way the owner measures their business.
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  Speaker 1: So some things like how dependent is the business on
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  Speaker 1: the owner. You know, if you're going to step away
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  Speaker 1: from the business and a new buyer is going to
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  Speaker 1: new owner is going to step in, if it's very
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  Speaker 1: dependent on you, it's not very valuable to them unless
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  Speaker 1: you plan on working for them. What's your competitive advantage?
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  Speaker 1: You know, the higher the better your competitive advantages, the
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  Speaker 1: more valuable it would be to a buyer. You know,
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  Speaker 1: a strategic buyer, for example, could take what you've built
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  Speaker 1: and be able to offer it to maybe a broader
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  Speaker 1: list of club customers, or have an add on feature
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  Speaker 1: they don't have that you have that they could add another,
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  Speaker 1: you know, service or product onto.
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  Speaker 4: Their current offer, right.
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  Speaker 1: Brings things like that. Do you have recurring revenue streams
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  Speaker 1: that's very valuable, you know, as opposed to have a
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  Speaker 1: starting at zero every year. So that's what a buyer
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  Speaker 1: is going to look at, and your business is going
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  Speaker 1: to be value based off of that. And if those
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  Speaker 1: measures are poor, then you're going to get a low value, right,
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  Speaker 1: a low multiple of whatever the earnings are in your company.
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  Speaker 1: But if they're high, you could get a much higher multiple.
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  Speaker 4: All right, Joe, it's been great speaking with you. Just
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  Speaker 4: tell us where do we find you, How do we
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  Speaker 4: get your book.
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  Speaker 2: Yes, so the book.
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  Speaker 1: Any of your listeners can download a version complimentary at
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  Speaker 1: Exit bydesignbook dot com. There's some information there, and you
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  Speaker 1: could find me at my company website Arlington Dashwealth dot com.
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  Speaker 5: All right, links are in the show notes this interview
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  Speaker 5: on Financial Survival Network dot com.
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  Speaker 4: Just click through. All we ask is when you go there,
• 12:20
  Speaker 4: sign up for your free.
• 12:21
  Speaker 5: Newsletter, and if you've got a question for Joe myself
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  Speaker 5: kl atcarrielets dot com is the place to send it to.
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  Speaker 5: Joe always appreciate you coming on. Thanks so much yet
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  Speaker 5: my pleasure.
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  Speaker 3: Thanks for listening to Carrie Let's's Financial Survival Network, your
• 12:36
  Speaker 3: solution to today's trying times. For the latest, go to
• 12:40
  Speaker 3: Financial Survival Network dot com. Financial Survival Network now more
• 12:46
  Speaker 3: than ever