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Selling Your Business the Right Way: Exit Planning Advice with Sarah Craven · MaxValue Podcast

• 0:10
  SPEAKER_01: Hey everyone, thanks for joining Max Value, a podcast aimed at helping business owners and their professional advisors achieve maximum value.
• 0:16
  SPEAKER_01: I'm your host, Ben Town.
• 0:18
  SPEAKER_01: Today we are joined by Sarah Craven, Chief Wealth Manager at Sand Hill Global Advisors in Silicon Valley.
• 0:25
  SPEAKER_01: She's a certified financial planner, but she's also a certified exit planning advisor.
• 0:31
  SPEAKER_01: So we're going to talk about some of the fundamentals of exit planning today.
• 0:35
  SPEAKER_01: Welcome, Sarah.
• 0:37
  SPEAKER_00: Thank you, Ben.
• 0:38
  SPEAKER_00: Great to be here.
• 0:40
  SPEAKER_01: How are you doing today?
• 0:41
  SPEAKER_00: I'm doing well.
• 0:42
  SPEAKER_00: Thank you.
• 0:42
  SPEAKER_00: How are you?
• 0:43
  SPEAKER_01: Wonderful, thanks.
• 0:45
  SPEAKER_01: So we're talking about exit planning.
• 0:48
  SPEAKER_01: I want to know, you already had a successful wealth advisory practice.
• 0:53
  SPEAKER_01: Why branch out into exit planning?
• 0:56
  SPEAKER_00: Oh, thanks for that.
• 0:57
  SPEAKER_00: Uh, you know, as I was learning about the exit planning practice, I was struck by the statistics.
• 1:04
  SPEAKER_00: I was struck by the number of business owners who are either unhappy after they've sold a business or they felt unprepared or they didn't know what their options were.
• 1:15
  SPEAKER_00: And it turns out you can teach an old dog new tricks.
• 1:18
  SPEAKER_00: Uh, this work is so closely aligned with the financial and personal planning work that we do at Sandhill and that I've been doing for almost 30 years.
• 1:27
  SPEAKER_00: I love it.
• 1:29
  SPEAKER_01: Well, old dogs, you must be talking about the clients then, right?
• 1:35
  SPEAKER_01: Uh it it is uh it it is funny that uh one of the things that you were saying is that you you've kind of already been doing it for a long time, uh at least certain aspects of it.
• 1:46
  SPEAKER_01: And similar uh for my experience, business valuation really is just a part of exit planning.
• 1:53
  SPEAKER_01: And so it is kind of natural for uh people in our industries, our professions to kind of merge towards that as a lot of our clients are having this need.
• 2:03
  SPEAKER_01: So let's start at the very beginning.
• 2:05
  SPEAKER_01: As I said, I tend to come at these things from a business value side.
• 2:08
  SPEAKER_01: Uh, but that's not really all of it, when even when you're talking about business exit planning.
• 2:14
  SPEAKER_01: Uh so what what are some of the other uh other pieces that that people need to think about?
• 2:19
  SPEAKER_00: Oh, great questions.
• 2:21
  SPEAKER_00: You know, and I love the analogy of the three-legged stool.
• 2:25
  SPEAKER_00: Uh picture a stool, three legs.
• 2:27
  SPEAKER_00: Each leg is going to be really important to the functioning, the proper functioning of that stool as a stool.
• 2:33
  SPEAKER_00: So the first leg, as you note, business.
• 2:36
  SPEAKER_00: And this, as a business owner, this tends to be where most of the attention is given.
• 2:42
  SPEAKER_00: Um, but you also have the second leg of the stool being the personal planning leg of the stool.
• 2:49
  SPEAKER_00: Who are you, Mr.
• 2:50
  SPEAKER_00: or Mrs.
• 2:51
  SPEAKER_00: Business Owner, going to be after the sale?
• 2:54
  SPEAKER_00: What does that look like?
• 2:55
  SPEAKER_00: And the last leg of the stool, the financial planning side.
• 2:58
  SPEAKER_00: What's your financial situation?
• 3:00
  SPEAKER_00: How do we get you from here to there?
• 3:02
  SPEAKER_00: Um, obviously, if you neglect one aspect of this planning, your stool's not going to function properly.
• 3:08
  SPEAKER_00: Or even if you don't give one aspect enough time, you're going to end up with a wobbly stool.
• 3:13
  SPEAKER_00: So I um think that each of these pillars is equally important and really needs a lot of reflection and assessment.
• 3:20
  SPEAKER_01: Well, the nice part of a three-legged stool is that you know, one leg can be a little short and you can still function and milk the cow or whatever the heck is going on with a three-legged stool these days.
• 3:31
  SPEAKER_01: Um but yeah, they they do need to be solid, all of them.
• 3:35
  SPEAKER_01: Yeah.
• 3:36
  SPEAKER_01: Now, talking about the the the business leg of the stool, uh lots of folks want to know when is the right time for me to usually sell the business, is is how the question is phrased.
• 3:49
  SPEAKER_01: But let's generalize it to exit the business.
• 3:52
  SPEAKER_01: What what is it that you answer to this uh question?
• 3:56
  SPEAKER_00: That's a loaded question, right?
• 3:59
  SPEAKER_00: Um lot of pieces to this puzzle.
• 4:02
  SPEAKER_00: But when the business owner can confidently say that they have explored, assessed, reflected, discussed, strategized, put into practice the three aspects of exit planning to optimize the outcome in each area.
• 4:17
  SPEAKER_00: And for the business, being your your uh uh part of this um process is you know working with all of the right professionals to get as most as as much out of the business and valuation as possible.
• 4:34
  SPEAKER_01: Well, and and I like for for my part, I like to say there's there is no one right time uh when you say, you know, optimize the outcomes, what there's no one right answer to that either.
• 4:46
  SPEAKER_01: So many times, of course, that's going to include get as much for the business as I can uh in in cash uh for you know to fund the rest of rest of their lives.
• 4:56
  SPEAKER_01: However, it can be a lot of other things as well.
• 4:58
  SPEAKER_01: And so, you know, there it needs to be driven by the individual.
• 5:04
  SPEAKER_01: Uh it's kind of like your house.
• 5:05
  SPEAKER_01: You don't just sell it when the market is hot because then you don't have a house.
• 5:09
  SPEAKER_01: So you have to have a whole plan.
• 5:11
  SPEAKER_01: Well, where are you gonna live afterwards?
• 5:13
  SPEAKER_01: Um, it's great if the market's high when you sell, probably.
• 5:18
  SPEAKER_01: Uh when does it fit in for you?
• 5:20
  SPEAKER_01: So, yeah, there are a lot of factors involved.
• 5:23
  SPEAKER_01: And let's let's kind of tie this all back to the the three uh three legs of the stool, the three pillars.
• 5:29
  SPEAKER_01: Um when we're talking about this personal side, uh there can be all sorts of reasons why this uh the exit planning process be may suddenly become important.
• 5:40
  SPEAKER_01: Disability, illness, change of life circumstances, the five D's, right?
• 5:47
  SPEAKER_01: Uh yeah, the the triggers, yeah, exactly.
• 5:50
  SPEAKER_01: Um by cell triggers, I think is what we were referring to there.
• 5:54
  SPEAKER_01: Uh and you know, again, kind of rounding back on the goals.
• 5:58
  SPEAKER_01: You know, what is it that you want to accomplish in your life?
• 6:02
  SPEAKER_01: Uh how exactly do you want to leave your company?
• 6:05
  SPEAKER_01: Are you going to give it to a relative, you know, a son, daughter, or in-law, or whatever?
• 6:11
  SPEAKER_01: You know, how how important is it uh to take care of the employees?
• 6:15
  SPEAKER_01: All the employees are or a few key employees.
• 6:18
  SPEAKER_01: Uh cashing out as much as possible.
• 6:20
  SPEAKER_01: Is that the top priority or secondary priority?
• 6:24
  SPEAKER_01: Do you care if the business continues as a standalone uh entity or not?
• 6:28
  SPEAKER_01: What what part of your legacy do you really care about the most?
• 6:31
  SPEAKER_01: Because you can't always have everything.
• 6:33
  SPEAKER_01: What is what happens when one of those priorities conflicts with another?
• 6:37
  SPEAKER_01: So thinking through those issues really takes us through this.
• 6:41
  SPEAKER_01: What is your vision?
• 6:42
  SPEAKER_01: What is your vision for the company as you leave it?
• 6:45
  SPEAKER_01: What is your vision for yourself as you as you leave it?
• 6:49
  SPEAKER_01: What are you gonna do?
• 6:50
  SPEAKER_01: And uh, Sarah, you already uh talked about it.
• 6:52
  SPEAKER_01: Is it you know just hey, retiring to a beach somewhere, which is sounds wonderful to me, or is it starting a whole new venture because you your interests are now elsewhere?
• 7:01
  SPEAKER_01: So what what do you think on the personal side?
• 7:03
  SPEAKER_00: For sure, for sure.
• 7:04
  SPEAKER_00: And I I think uh to add on to your comments, Ben, the business owner has to recognize that this can be an emotionally taxing time, right?
• 7:14
  SPEAKER_00: It's almost you're this is very reflective, it's almost like therapy work, right?
• 7:19
  SPEAKER_00: And you and and I think you really need to pull in members of the family uh because the the family circumstances are gonna change, you know, business owner, husband, spouse, wife, um, you know, there I have one client who says, I married you for better or worse, but not for lunch.
• 7:38
  SPEAKER_00: So the day-to-day after retirement is changing.
• 7:45
  SPEAKER_00: Uh, what are your health and lifestyle goals?
• 7:49
  SPEAKER_00: Um, legacy, reputation, you know, you've noted some of the transitions, and what does this look like?
• 7:55
  SPEAKER_00: Um, so it's a big deal.
• 7:57
  SPEAKER_00: It needs some at some attention.
• 7:59
  SPEAKER_00: You know, and many of the people that I've worked with around retirement or sale of their business, they may not be worried about the financial aspect of this.
• 8:06
  SPEAKER_00: They're worried about the emotional side.
• 8:09
  SPEAKER_00: What will I find fulfilling?
• 8:11
  SPEAKER_00: Who will I be after I've sold my business?
• 8:15
  SPEAKER_01: Absolutely.
• 8:15
  SPEAKER_01: One of the things I think is is kind of interesting is almost everybody has problems with retirement, just the the concept.
• 8:22
  SPEAKER_01: But even if you've just been an employee in a business rather than the owner of the business, it's it's tough.
• 8:27
  SPEAKER_01: But when when you are a an owner or prime motivator within a business, that it's it's so hard to not make that part of your identity and to have that be something that you have to reinvent is is extremely stressful.
• 8:44
  SPEAKER_01: So I I think if it's even more stressful for a small business owner than it is even for you know just going into retirement, you know, planning um as a as an employee.
• 8:54
  SPEAKER_01: That's maybe I'm biased.
• 8:55
  SPEAKER_00: And I've I've also heard, Ben, that uh people don't like the word retirement anymore.
• 9:00
  SPEAKER_00: So we need to come up with a new word for this phase of life.
• 9:05
  SPEAKER_01: Any any suggestions?
• 9:07
  SPEAKER_00: Not yet.
• 9:08
  SPEAKER_00: I'll come back to you.
• 9:09
  SPEAKER_01: I mean, that's that one's that one's been the the the benchmark.
• 9:12
  SPEAKER_01: So I yeah, yeah, no kidding.
• 9:15
  SPEAKER_01: Uh okay, so that that was the that was the first leg of the stool, the personal side, which we we know there it's it's a it can be a challenge.
• 9:23
  SPEAKER_01: What about financial?
• 9:24
  SPEAKER_01: And this is this is your this is your area.
• 9:26
  SPEAKER_00: Yeah, this is my world.
• 9:28
  SPEAKER_00: Um well hopefully the business owner is already working with a wealth advisor or a financial planner, and really they have to start the conversation.
• 9:39
  SPEAKER_00: If the business owner, you know, even just the act of or or the ownership of a business should in an advisory team really elicit those questions.
• 9:51
  SPEAKER_00: You know, I you've talked about business, uh the exiting of a business is just being good and proper planning.
• 9:59
  SPEAKER_00: Um, so start the conversation.
• 10:02
  SPEAKER_00: And I think if you're working with an advisor, they as I mentioned, they should be asking you some of these questions, but you'll also want to work with an advisor who knows the people to support the process.
• 10:15
  SPEAKER_00: You want to work with an advisor who has a network of professionals to pull from, um, because you know, you and I cover certain aspects of this, but certainly not all.
• 10:26
  SPEAKER_01: You know, there's uh I'm sorry, and certainly not the same ones.
• 10:31
  SPEAKER_00: That's right.
• 10:31
  SPEAKER_00: That's right.
• 10:32
  SPEAKER_00: All of the work is very complementary.
• 10:35
  SPEAKER_00: But relative to financial planning in particular around the sale of the business, is exploring if there is a wealth gap.
• 10:44
  SPEAKER_00: So the wealth gap is the space between what you have today and what you need to fulfill those dreams of your retirement.
• 10:55
  SPEAKER_00: Like, you know, for your example, moving and living on a beach.
• 10:58
  SPEAKER_00: Well, how do we make that happen given the assets that you have today?
• 11:03
  SPEAKER_00: And does the business owner uh need to work with an accelerator, perhaps, to build value within the company?
• 11:11
  SPEAKER_00: Um, if we can't close that wealth gap, that's another conversation.
• 11:15
  SPEAKER_00: Are we either changing the retirement picture, which we would hate to do, um, or are we building assets over a longer period of time to get you there, right?
• 11:26
  SPEAKER_00: And whatever uh form that may that may take.
• 11:30
  SPEAKER_00: So, relative to you know resources and the financial planning, of course, they're the for personal financial goals.
• 11:36
  SPEAKER_00: We want to look and organize around debts and liabilities.
• 11:40
  SPEAKER_00: What does the investment strategy look like, or what does it need to be to get us from here to there?
• 11:47
  SPEAKER_00: And how are we replacing income, right?
• 11:50
  SPEAKER_00: As a business owner, or maybe they're not take pulling much of uh uh earned income on a regular basis, or but in fact taking distribution.
• 11:59
  SPEAKER_01: Sorry, frankly, that's such a common thing.
• 12:02
  SPEAKER_01: I you wouldn't think so.
• 12:04
  SPEAKER_00: That's right.
• 12:05
  SPEAKER_00: Um, I often find the business owners put most of their um you know earnings back into the company and don't do the financial planning on the personal side.
• 12:16
  SPEAKER_00: Um risk management.
• 12:17
  SPEAKER_00: What is what does life look like addressing any potential financial risks before and after the sale?
• 12:23
  SPEAKER_00: But relative to strategy, and this gets back to where we pull in these additional resources, let's create an effective and efficient exit from a tax standpoint and a wealth transfer standpoint.
• 12:37
  SPEAKER_00: So you're pulling in tax advisors, you're pulling in estate planning attorneys.
• 12:41
  SPEAKER_00: Um, you know, there are a lot of really interesting and potentially hugely impactful strategies that can be put into place uh for uh you know an optimized outcome.
• 12:53
  SPEAKER_01: Absolutely.
• 12:55
  SPEAKER_01: And I think one of the important takeaways there is that again, knowing where somebody wants to slash needs to go really can identify how the exit plan is built.
• 13:09
  SPEAKER_01: As as you said, the you know, the value of a business can be accelerated.
• 13:13
  SPEAKER_01: Uh our our exit planning uh program is called exit builder because you have to build towards it, it's not something that just happens itself.
• 13:22
  SPEAKER_01: And there's no again, no one right answer.
• 13:26
  SPEAKER_01: Uh the answer looks different.
• 13:27
  SPEAKER_01: Every business is different, sure.
• 13:29
  SPEAKER_01: Every exit from a business is different.
• 13:31
  SPEAKER_01: So let's speak of, let's talk about the business uh leg of the stool.
• 13:37
  SPEAKER_01: So the readiness gap.
• 13:39
  SPEAKER_01: Maybe you've heard of it.
• 13:41
  SPEAKER_01: This is where you're assessing whether a business is really ready and able to be sold.
• 13:47
  SPEAKER_01: A lot of times, what I find is that there are landmines in uh embedded in a business uh from a risk standpoint uh in particular.
• 13:56
  SPEAKER_01: Would somebody's interest in buying your business be just exploded if something happened to you?
• 14:04
  SPEAKER_01: Uh what if you decided to take a vacation for four weeks or had to take off for four weeks?
• 14:10
  SPEAKER_01: What would that do to that to the business?
• 14:12
  SPEAKER_01: Is your business more risky than average?
• 14:14
  SPEAKER_01: Some of the times these are kind of endemic to the uh type of business we run.
• 14:21
  SPEAKER_01: My business valuation practice would have a little bit of a hard time running without me.
• 14:25
  SPEAKER_01: On the other hand, there's lots of things that you can do to overcome these.
• 14:30
  SPEAKER_01: For example, in in your industry, that similar risk happens.
• 14:34
  SPEAKER_01: The personal uh uh contribution of the professional is huge.
• 14:38
  SPEAKER_01: However, one of the things you do to mitigate that is you you have a firm that you've you've built around you uh such that any one person isn't going to destroy the business or uh lack of any one person that is.
• 14:51
  SPEAKER_01: Um but let's say you're ready now, we've gotten past those issues.
• 14:57
  SPEAKER_01: There could be, according to Sarah, a value gap.
• 15:01
  SPEAKER_01: So I come along or some business appraiser comes along and says, hey, your business is worth we think about three million dollars.
• 15:09
  SPEAKER_01: But Sarah says that your uh exit plan, your retirement plan is gonna need five million dollars to fund the legacy that you want.
• 15:20
  SPEAKER_01: So in that case, that's probably a closable gap in many cases.
• 15:25
  SPEAKER_01: A couple million dollars, we probably could we probably could close that.
• 15:28
  SPEAKER_01: Um, and that's where the business exit planning really comes in.
• 15:32
  SPEAKER_01: Uh, starting with that readiness gap, making sure everything there is short up, then moving on to kind of all say the low-hanging fruit, uh, some of the really easy risk factors to mitigate and improve.
• 15:44
  SPEAKER_01: Um, because I'll just taking an aside here, all valuation really comes down to growth, risk, and profitability.
• 15:53
  SPEAKER_01: So if we can affect one or all three of those in a positive way, we can increase uh business value.
• 16:00
  SPEAKER_00: And I imagine, Ben, that the buyer would be looking for those three things to continue successfully after the sale, right?
• 16:10
  SPEAKER_00: Exactly.
• 16:10
  SPEAKER_00: So any of those low-hanging fruit items would be things that put potentially a buyer wouldn't certain would certainly not be interested in.
• 16:21
  SPEAKER_01: Exactly, exactly.
• 16:23
  SPEAKER_01: So it there's so much about risk that's invisible because risk is a bad thing that hasn't happened yet.
• 16:33
  SPEAKER_01: So if there is that overhang of something that could happen or you know is is reasonably possible to happen, i.e.
• 16:39
  SPEAKER_01: a risk, why would a buyer want to take that on, or why would a buyer want to pay you to take that on, essentially?
• 16:46
  SPEAKER_01: So either they're gonna pay you much, much less, or they're just not gonna be interested, depending on the magnitude of this of this particular risk.
• 16:53
  SPEAKER_01: So, you know, things you know, like a very big concentration of a uh of a customer or client or vendor, what happens if something uh negative happens in that relationship?
• 17:04
  SPEAKER_01: Um, simple other simple examples might be you know getting your financial information slowly because you don't have good enough accounting.
• 17:12
  SPEAKER_01: It's a very simple, silly one, but that means you can't make decisions quickly and you can't make decisions well because you don't have the information.
• 17:21
  SPEAKER_01: Uh and it, you know, this can go on all the way to you know looking at your revenue streams, looking at your your product lines, etc.
• 17:27
  SPEAKER_01: etc.
• 17:29
  SPEAKER_01: And kind of going back to when is the right time to sell your business, you know, what about timing the market?
• 17:38
  SPEAKER_01: All things being equal, sure, great.
• 17:40
  SPEAKER_01: If you're at a low point in the cycle, in the business cycle, don't sell the business.
• 17:45
  SPEAKER_01: If you're at a high uh part in the cycle, great, it might be a great time to sell your business, but it's so much more driven by your particular needs and the readiness of the company.
• 17:55
  SPEAKER_01: So even if the market is high, but you have a big readiness gap in your business because you have still have all these landmines, you're it doesn't matter how good the market is, nobody's gonna be interested in your business.
• 18:08
  SPEAKER_00: Your valuation will reflect that.
• 18:09
  SPEAKER_01: And your valuation will reflect that exactly.
• 18:12
  SPEAKER_01: Yeah, so and of course, you can't just sell your business on eBay, it takes a minute.
• 18:17
  SPEAKER_01: So I I'm trying to think of my own experience here, and uh probably the fastest process sale process I was ever involved in was maybe three months, and that was with the buyer lined up and just everything going at lightning speed.
• 18:34
  SPEAKER_01: When in reality, most of the time, you you need to market the business, hopefully get a couple of bids, you need to figure out the rough outlines of your deal, you need to allow the buyer time to go through due diligence, which is basically their method of checking on all the things that you've told them, making sure that they're all accurate.
• 18:56
  SPEAKER_01: And then maybe you get to the execution of the transaction, hopefully without any modification of the sales price.
• 19:02
  SPEAKER_01: So that's really more like nine to 12 months.
• 19:04
  SPEAKER_01: And that's if you say, hey, I'm I want to do this today, I'm ready to do this today, let's do it.
• 19:10
  SPEAKER_01: Um oh yeah.
• 19:12
  SPEAKER_01: Also, nine to twelve months, not the end of the story, because I don't think there's a successful exit until you get all of your money.
• 19:19
  SPEAKER_01: So sometimes that'll mean an employment contract post-the uh the the date of the uh sale.
• 19:26
  SPEAKER_01: Sometimes that's going to be, sometimes that's gonna be an earnout.
• 19:30
  SPEAKER_01: And depending on how the deal is negotiated, where people think the risks are, that might be a very significant portion of the deal price.
• 19:41
  SPEAKER_01: And a lot of people don't give it enough uh credence that that is uh not cash in your pocket yet.
• 19:48
  SPEAKER_00: Well, and actually, and getting back to the personal planning and the financial planning, um uh that tail at the end could also be a part of the business owner's vision.
• 20:01
  SPEAKER_00: Maybe I want to stay on as a consultant or stay on with some kind of role of counsel, whatever, you know, what have you.
• 20:11
  SPEAKER_00: Um so that may align.
• 20:14
  SPEAKER_00: Uh, you know, again, getting back to the the three pillars, that may align with the goals of the the owner.
• 20:22
  SPEAKER_01: Oh, and fair enough.
• 20:23
  SPEAKER_01: And you know, in a lot of cases, uh, especially when private equity is involved in this in the uh acquisition, there can be a rollover component where, yeah, basically you're leaving some of the chips on the table.
• 20:33
  SPEAKER_01: Um, I have a client friend of mine, hopefully who can uh join us on the podcast one day, uh, who uh basically sold to uh private equity.
• 20:43
  SPEAKER_01: He left some of the chips on the table.
• 20:45
  SPEAKER_01: He was going to be involved for a little while and then figure out something else to do.
• 20:48
  SPEAKER_01: Uh, but he was a little bit of a younger guy, so he didn't have this you know need to go sit those Mai Tis on the beach.
• 20:54
  SPEAKER_01: Uh and eventually they kind of recruited him back into it.
• 20:57
  SPEAKER_01: So now he's back in charge of a bigger business that includes his old business.
• 21:02
  SPEAKER_01: Uh, so I first personally think that's pretty funny.
• 21:06
  SPEAKER_01: Um, but uh but he's happy with it.
• 21:09
  SPEAKER_01: Okay.
• 21:10
  SPEAKER_01: So and you alluded to it earlier, Sarah.
• 21:13
  SPEAKER_01: Uh good exit planning is just good business planning.
• 21:17
  SPEAKER_01: So like think about that house again.
• 21:20
  SPEAKER_01: Think about your house.
• 21:22
  SPEAKER_01: It's the same in that it's like thinking about whether you want to fix up that house before you sell it.
• 21:29
  SPEAKER_01: So you could put in a bunch of bunch of work, remodel, and you don't really get to enjoy it because you're now gonna sell it.
• 21:38
  SPEAKER_01: And but you maximize your value out of the house.
• 21:41
  SPEAKER_01: That that's great.
• 21:41
  SPEAKER_01: There's nothing wrong with that, absolutely at all.
• 21:44
  SPEAKER_01: On the other hand, you might do it early, enjoy all those upgrades, and then sell it.
• 21:52
  SPEAKER_01: Because the other option is okay, don't do anything.
• 21:55
  SPEAKER_01: And you may get hammered on the price, but there's also no effort involved.
• 21:58
  SPEAKER_01: So there's no you Exactly, one wrong way uh to do this, but that is the consideration.
• 22:05
  SPEAKER_01: And one of the things to think about too is the value of a business may not be as durable as the value of say a home.
• 22:14
  SPEAKER_01: Uh it can deteriorate even faster than uh than that.
• 22:20
  SPEAKER_01: You know, again, if there's a significant risk and you know you have uh exposure to tariffs and that suddenly hits, uh, then your business value might might suffer fairly quickly.
• 22:34
  SPEAKER_01: That's right.
• 22:35
  SPEAKER_01: All right.
• 22:36
  SPEAKER_01: So I said a lot.
• 22:36
  SPEAKER_01: Sorry about that.
• 22:37
  SPEAKER_00: I was well, you know, I what I love about the house analogy is I learned that lesson the hard way, Ben, as a first-time home homeowner with our first home about 20 years ago.
• 22:47
  SPEAKER_00: Sure enough, you know, we redid the kitchen, we redid the landscaping, and I loved the outcome, and then we sold the house.
• 22:55
  SPEAKER_00: Um, what to your point, there would have been a lot of uh enjoyment in having had this fabulous kitchen and an updated landscape plan um while we were living there.
• 23:09
  SPEAKER_00: Get the most out of the experience, right?
• 23:12
  SPEAKER_01: Absolutely.
• 23:13
  SPEAKER_01: I've said a whole heck of a lot about the business owner side.
• 23:17
  SPEAKER_01: Um let's say a business owner is starting to think about, hey, I want to, I want to do something else with my life for a little while, uh exit the business eventually.
• 23:30
  SPEAKER_01: How should they start?
• 23:32
  SPEAKER_00: Yeah.
• 23:32
  SPEAKER_00: Oh, I think you've hit the nail on the head.
• 23:34
  SPEAKER_00: They really um starting with the recognition recognition that uh it may take some time, right?
• 23:44
  SPEAKER_00: Three months is exceptional, but it could take you know three, five years, uh, and it's a process.
• 23:50
  SPEAKER_00: But I think also it may feel overwhelming, but again, to surround yourself with advisors to guide you through a process.
• 23:59
  SPEAKER_00: And of course, there may be advisors that can actually come into the business setting to help um uh or consultants or um uh so but I think really to acknowledge surround yourself with a great team, pull all of the pieces together and get down to work.
• 24:18
  SPEAKER_00: And again, some of it is reflection, some of it is personal reflection, and some of it is you know just conversation with family.
• 24:24
  SPEAKER_00: We like to facilitate family meetings, these are family discussions, uh, right?
• 24:29
  SPEAKER_00: We can talk for hours about that.
• 24:31
  SPEAKER_00: Um, but certainly the the first step would be connecting with folks like you, Ben, um, in and finding getting a business valuation, because that is that can be a triggering event.
• 24:43
  SPEAKER_00: Do I have holy smokes?
• 24:45
  SPEAKER_00: It's either not valued what I expected it to be, or dream scenario, goodness, it's valued much higher than I that I anticipated.
• 24:54
  SPEAKER_00: So that can really lead to you know what the the next right step is from that point.
• 25:01
  SPEAKER_00: Well, you know what I mean.
• 25:01
  SPEAKER_01: But before we get to that next step, you know, I uh reflecting on what what you said, oftentimes actually, in fact, one very recent example I'm thinking of, uh we come in, do a business valuation, and whatever the number ends up coming up uh to be, it's enough because they've done good financial planning and they you know they have a good business that's running pretty well, and maybe they could or couldn't do anything to improve it.
• 25:31
  SPEAKER_01: But at the end of the day, right?
• 25:33
  SPEAKER_01: What's that?
• 25:34
  SPEAKER_01: What a relief.
• 25:36
  SPEAKER_01: That's exactly it.
• 25:37
  SPEAKER_01: Oh, you stole my thunder.
• 25:38
  SPEAKER_01: Uh no, but at the end of the day, right?
• 25:40
  SPEAKER_01: That that's exactly the point.
• 25:42
  SPEAKER_01: Either you will know, okay, this is exactly how stressed I need to be, which might be none.
• 25:48
  SPEAKER_01: You might not have to stress about this at all, which is which is wonderful.
• 25:50
  SPEAKER_01: Sorry.
• 25:51
  SPEAKER_01: I I did interrupt uh your uh walking through kind of some of the some of the initial steps that needs uh somebody needs to take.
• 25:57
  SPEAKER_00: So oh good.
• 25:58
  SPEAKER_00: And uh, you know, it is a lot on the business owner because they probably may work or they may worry about maintaining stability within the business while they're going through this process.
• 26:09
  SPEAKER_00: And as you and I touched on, I mean, there are aspects of this uh work that are not part of our immediate wheelhouse.
• 26:16
  SPEAKER_00: But for example, what is the ideal potential buyer?
• 26:22
  SPEAKER_00: Is it a strategic?
• 26:23
  SPEAKER_00: Is it a financial?
• 26:24
  SPEAKER_00: Is it an internal?
• 26:25
  SPEAKER_00: Is it a family member?
• 26:27
  SPEAKER_00: Um, how do you structure the sale, right?
• 26:30
  SPEAKER_00: Negotiation and due diligence.
• 26:31
  SPEAKER_00: I mean, these are all part of this process that are important, but again, to recognize you've got advisors to work to help you through each aspect of this.
• 26:42
  SPEAKER_01: Absolutely.
• 26:43
  SPEAKER_01: And, you know, I I do not like working on fear or FOMO or or anything, but it it is the truth that some of these decisions are one-time decisions, and you get you know one at bat to sell your business, usually.
• 26:59
  SPEAKER_01: So just make sure that you're doing everything you can to make the right decision at the right time.
• 27:06
  SPEAKER_00: Okay.
• 27:07
  SPEAKER_01: So as you said, Sarah, it's it's really clear that there's a lot to think about, a lot to consider when exiting a business.
• 27:13
  SPEAKER_01: And it does take this team of professionals to really get it right to have that successful exit.
• 27:19
  SPEAKER_01: Just make sure you're not stepping on any landmines during the process.
• 27:23
  SPEAKER_01: Um, and of course, you you and I, we both do exit planning, but we do different parts of it.
• 27:28
  SPEAKER_01: And so this is not just a hey, let's talk to you know your tax CPA and they're gonna talk you through it.
• 27:34
  SPEAKER_01: They are crucial to the process, but just like you are crucial, and just like I'm crucial to making sure that the outcome is successful and is matching what the uh client business owner wants.
• 27:47
  SPEAKER_01: Okay, so two last questions.
• 27:50
  SPEAKER_01: And these are just about you.
• 27:53
  SPEAKER_01: So, Sarah, what is it that you find most fulfilling about what you do?
• 27:59
  SPEAKER_00: Oh my gosh.
• 28:00
  SPEAKER_00: You know, these are relationships.
• 28:02
  SPEAKER_00: Um, the sale of a business isn't just an event, it's not just a transaction.
• 28:08
  SPEAKER_00: This is, you know, these are dreams and goals and family and legacy.
• 28:14
  SPEAKER_00: And I get to be a part of that.
• 28:16
  SPEAKER_00: You know, I get to make an impact on the outcome.
• 28:20
  SPEAKER_00: And that's something that I'm really passionate about and grateful to be able to do the work that I do.
• 28:24
  SPEAKER_00: So I'd say that's what I find most fulfilling.
• 28:27
  SPEAKER_00: Um, being being in a seat at the table to help these families or individuals through a very important part of their of their life and milestone events.
• 28:39
  unknown: Absolutely.
• 28:40
  SPEAKER_00: How about you, Ben?
• 28:41
  SPEAKER_00: Tell me.
• 28:42
  SPEAKER_01: Oh, okay.
• 28:43
  SPEAKER_01: Uh I I mirror that uh a lot.
• 28:45
  SPEAKER_01: And I really focus on small business owners primarily because uh my family's full of them.
• 28:51
  SPEAKER_01: Uh, and so you know, when I saw uh uh my dad building his business and using that as the engine to propel our family forward, and then me following in his footsteps doing the same thing uh with my own business, uh, I just realized that you know, helping people through the the process of having a good business that will sustain them, uh, that you know, as people say, small businesses are the backbone of America.
• 29:22
  SPEAKER_01: Uh but at the same time, then moving on to the next step of whatever the heck it is that they want to do, uh, that's that is that's really important.
• 29:30
  SPEAKER_01: And hey, this is the thing you've worked for for a long time.
• 29:34
  SPEAKER_01: Let's make sure that you you you get the outcome that you need.
• 29:38
  SPEAKER_01: You don't want to work all that time and not you know have your blood, sweat, and tears pay off in the way you want.
• 29:43
  SPEAKER_01: And payoff doesn't always mean money, but a lot of times it does as well.
• 29:47
  SPEAKER_00: So you know what you have just articulated, Ben, is is a big part of what we've been talking about, and that's legacy.
• 29:55
  SPEAKER_00: Yes.
• 29:56
  SPEAKER_00: You are building upon the legacy of your family in business ownership and strategic planning, and I think that's brilliant.
• 30:05
  SPEAKER_00: I you know, and I think thank you.
• 30:08
  SPEAKER_01: I I wow, that's uh that's a great compliment.
• 30:10
  SPEAKER_01: Um you know, I absolutely use the term legacy all the time.
• 30:14
  SPEAKER_01: I try not to make it too grandiose, but but really it's about what what do you want to leave to your family?
• 30:20
  SPEAKER_01: Uh this is really more into your your side of uh side of things than than anything else.
• 30:26
  SPEAKER_01: But what do you want to leave to the world?
• 30:28
  SPEAKER_01: What do you want to leave to your family?
• 30:30
  SPEAKER_01: How do you want people to remember you?
• 30:32
  SPEAKER_01: And remember you before you're gone.
• 30:34
  SPEAKER_01: Come on, let's let's not let's not talk uh about the estate planning yet.
• 30:38
  SPEAKER_01: That's a whole different whole different episode.
• 30:41
  SPEAKER_01: But at the same time, yeah, uh when people put their names on a firm, for example, you know, a law firm or CPA firm, it's because people want you the the owner wanted people to remember them.
• 30:57
  SPEAKER_01: Okay, so the other question didn't distract me from it.
• 31:01
  SPEAKER_01: The other question is you you and I and and professionals like us are always on this quest to improve ourselves.
• 31:10
  SPEAKER_01: So what are you reading these days?
• 31:13
  SPEAKER_00: Oh boy.
• 31:14
  SPEAKER_00: Well, uh as it turns out, I have it here on my desk.
• 31:19
  SPEAKER_00: Uh, I just attended the Exit Planning Summit put on by the Exit Planning Institute, and I picked up um a copy of John Warlow's book, The Art of Selling Your Business.
• 31:33
  SPEAKER_00: Um, John Warlow wrote uh Built to Sell, another great one.
• 31:38
  SPEAKER_00: But what I what I find so catching about this title is it is an art, it's not a science, it's math, but it's not all math.
• 31:47
  SPEAKER_00: Um, you really are curating an outcome.
• 31:52
  SPEAKER_00: Um, and again, I'm only one chapter in.
• 31:55
  SPEAKER_00: See my see my my note here.
• 31:57
  SPEAKER_00: So don't ask me any questions about it, but uh it certainly caught my attention.
• 32:01
  SPEAKER_00: And um yeah, optimize it where you can.
• 32:06
  SPEAKER_01: Awesome.
• 32:07
  SPEAKER_01: Well, Sarah Craven, thank you so much for coming on the show and sharing all your knowledge with us.
• 32:13
  SPEAKER_01: Hope to see you back.
• 32:14
  SPEAKER_00: Thank you, Ben.
• 32:15
  SPEAKER_01: See you later.