Ep. 3 The Thermostat Is Still Set To Operator Featuring: Sean Hutchinson.

speaker-0: This is the Exit Series. I’m Bob Rourke. This is for the founders, brokers, and attorneys, the people who are in the room when the deal closed, talking about what happened next. This is the conversation nobody else is having. My guest today is Sean Hutchinson, he’s partner, ready for next, USA. He was recently on episode one. We covered a lot of territory, but we decided there was more yet to discuss. But before we do, Sean, tell us about your firm, what it does, and who your ideal client is.

speaker-1: Sure. So Ready for Next USA is a business advisory firm specializing in building value for privately held businesses throughout the United States. We’re working with business owners who are probably two to five, six, seven years away from some kind of ownership transition, whether it be internally to an employer or partner or management team or externally to a third party or going out and raising capital. We’re pretty agnostic on those fronts we want the owner to be successful in a way that they feel good about. So we are business advisors right down the middle of the fairway. We don’t do financial planning, wealth management, ⁓ you know, insurance, accounting, law, any of that kind of thing, but we partner with all of those people because it is, in fact, a team sport. Our ideal client, ⁓ you know, privately held business, probably starting about 10 million in enterprise value and up. Largest client to date was about 400 million in enterprise value. Work with a lot of family-owned businesses, really like that. And also work with complex partnerships and owners with more than one business entity. So we’re kind of known for taking on complex cases that go beyond the kind of one business, one owner ⁓ pattern.

speaker-0: Well, Sean, the last time you and I were here, we went deep on the emotional side. But there’s a whole mechanical reality underneath the deal that most founders never see until too late or later. When the founder hears we’ll buy your company for twenty five million, how much of that number really survives all the way to the close?

speaker-1: That’s a marketing phrase. That’s that is marketing. ⁓ I remember one ⁓ what a lawyer that I really, really like to use. His name is Jack Selman, ⁓ on MA deals. ⁓ he’s been doing it a long time. And he even says the letter of it the letter of intent is a marketing document, right? So most of the time when folks come in, you know, they’re gonna approach you, have a conversation with you. Try to come up with a number that seems fair based on what they know, but then they’re gonna have to go quite a bit deeper, even to get to more a a more formal expression of interest in a sense. Eventually, if things are moving through that preliminary due diligence, keyword preliminary, where you’re trading some information with the potential buyer and they’re kind of looking into a few things, you’re not at all close to what due diligence will actually become if the deal goes forward. But where you’re trying to get to. is the letter of intent, the LOI. And the LOI is such a key document in the whole process, but because it typically has the word non-binding in front of it, and there are provisions of it actually that are binding, but most of it is non-binding, I think people tend to underestimate its importance. But that is the document that sets up the whole deal. And that’s when the number really gets Firmed up. It gets real at that point. Now, whether it’s going to hold all the way through due diligence and closing is another story. But as ⁓ Bobby Kingsbury at MCM Capital says, look, he’s a private equity investor. That’s a private equity fund. So he’s on the buyer side. As he says, for the seller, the letter of intent is the last point of leverage that you have in the entire process. So you get that right, you’re probably gonna be okay. You don’t pay enough attention to the letter of intent, all the terms that are around it, including the number, then you’re not gonna be okay. There’s gonna be a lot of movement after that. Look, most deals don’t founder on the number. Most deals founder on the terms. That’s what kills the deal in most cases. And I know when we’re this in this conversation, we’re gonna have some discussion about terms, but you know, it’s generally not the number that kills it.

speaker-0: Okay. Well, let’s stay on the post exit journey. If a founder sells his company or her company for gets sixty percent of close, the other forty percent is tied to a performance target over three years, but they no longer control the company, they’re supposed to trust the buyer to run it well enough to trigger their payout. What happens when that goes sideways?

speaker-1: So so I think all earnouts are gonna go sideways at one point or another. I don’t think I’ve ever seen an earnout really work out the way that the seller wanted it to work out. If you imagine what’s actually happening is that an earnout is just simply a way of shifting risk back to the owner. And the larger the o the percentage of their earnout is of the total purchase price is just a signal that the buyer wants to shift all the stuff, all the risks that they don’t want to take is gonna be back on the seller’s shoulders. Along with a whole lot of reps and warranties that are probably gonna pack even more risk in for the seller. So, you know, there you are. You’ve sold your business, but you really haven’t achieved any sense of freedom because a lot is still in the line. And as you pointed out, you really don’t have control over the company. You’re not in the driver’s seat, you’re not making key decisions. Things could go wrong, and you really, you know, you could point all day long at what the buyer and their team did wrong, but you don’t have any protection in that. Either they’re gonna perform and you’re gonna get your money, or more likely, they’re not gonna perform as well because they’re running a business that they may not understand as well as you did. So they may struggle, or you know, in the worst cases, they just don’t honor the deal in the way that it was designed. So so we always advise our clients don’t take an earnout as a very large percentage of the deal because The rule of thumb, I think, in our in our mind is don’t depend on anything beyond what you get at closing. The rest of it is really kind of, you know, either it’ll come, but more likely it won’t.

speaker-0: You know, looking back at all the transactions you’ve been involved with, without mentioning names, what owner did the best job on managing the earnout that you can remember and what was it that they did that made their earnout successful?

speaker-1: Well, the ones that I think of that really did a good job of managing the earnout just negotiated so they didn’t have one. They had a good team that essentially said we’re not taking an earnout, so the deal starts there. And that’s really a key to not having an earnout, by the way, is to essentially put on the table that it is not going to be part of the deal. Well, if you were in a seller’s position, you could argue that taking a lower number not having an earnout would be the better solution than taking more money and punching more of it into an earnout, right? There’s just, you know, I’m like, why not walk away from the closing table feeling good about the deal and not having to worry about what’s going to happen in the future? If it costs you, you know, if it’s a hundred million dollar deal and it costs you five million to get that peace of mind that you just you’re done, right? More or less, you’re done and you don’t have to worry about it, then I think it’s probably there’s probably a freedom tax there, but it might be worth you know, worth ⁓ making that kind of deal. I will tell you the the so we’re where an earnout sort of makes sense in a sense or or or it’s an earnout that might work better is we had a client who sold the offer was initially 70 million dollars to sell the business. He wanted 80. ⁓ The buyer came back and agreed to 80, but they wanted that additional 10 in an earnout under very, you know, at first not very clear conditions. There were a couple of things that made the earnout palatable. One, the buyer was open to very clear hurdles that were reasonable, and they were set on six month timetables. So the earnout was not a cliff earnout, like if it goes well for the next two years, then you get your 10 million. It was if it goes well for six months. You get this much of the 10 million and then so on and so forth. And it was based partially on growth, ⁓ and partially on profit. But the thing that really made it work is that in this particular case, the owner planned to stay on board. The company was going to be, it was an asset purchase. So all the assets in the company were going to be taken out of that existing entity bucket and put in another one, which is pretty typical for these deals. So he was going to be working for a new company in a sense, a new entity, but it was going to be named the same thing. It would just be owned and managed by different people. He didn’t leave any equity in he rolled all the equity out. So there was no sort of lead behind on that either. But he was gonna have substantially all of the decision making for the next three years and an employment contract. So he he, because he wanted to keep working, he really was interested in working with the buyer. He thought they could build something special together. He was willing to accept that that 10 million. was it would be okay in his mind, it was okay not to get it because he got the number that he really wanted and needed. He was fine with that. But the other thing that we did that made it more pal palatable is I I don’t recall the actual number, but I think the initial offer at 70 million, of course, there was a holdback and there was a working capital reserve and there was this and that and this and that. And I think the number at closing was going to be about ⁓ fifty seven million or something out of the seventy. And then, you know, whatever these holds back holdbacks were, they’d be released over time. Generally speaking, that’s very structured. Like under these conditions, these things will be released. So the money is not going to be held. This is not going to be in your pocket. But we negotiated and got it back up so that out of the seventy, he got sixty-nine point two million at closing, very, very small capital working capital reserve, very small holdback, very narrow. Got it all the rest of it came within ninety days. And so really all he had at risk was the ten million. And y you know, if you do the math on making up twelve million on the closing and being able to invest that from day one rather than having to wait two years to invest it, it’s probably you can take the risk of not having that additional ten. You make up some of that ground.

speaker-0: Well, circling back to the LOI, the retrade. The deal is agreed, the LOI is signed, diligence is underway, buyer comes back and says the price just dropped by fifteen percent. Walk me through what that does to a founder who’s already told their spouse, their employees and their attorney we got the deal.

speaker-1: Well, ⁓ first of all, ⁓ you know, planning for a transaction, big, small or otherwise, needs to have there’s a lot that needs to happen prior to the letter of intent even showing up, right? So there’s a great deal of negotiation that’s going on before you receive it, and there’s a great deal of negotiation that goes on when you receive it. Most owners think the LOI might be a page or two and it’s going to be relatively straightforward and it’s going to be all the things that they talked about and nothing more. It’s going to be easy to talk about. They sign it and then the real fun begins. But the fact is, really, if you want an LI to be good, you’re probably going to take three to four weeks, honestly, to negotiate it because it’s such an important document. Even though it says non binding, the whole structure of the deal is going to be packed into that thing. It will either survive due diligence or not survive due diligence. And that also means there’s a lot of preparation that needs to happen prior to that time. So if the owner is not DIYing this for some reason, right? Let’s say that they have a really good team that knows what’s their what they are doing. That’s no guarantee. But let’s say that they have a good team and they’re open to this advice. That team should have been working with the owner for at least a year saying, here’s what’s coming. What terms are acceptable to you? Let’s put together a mock term sheet so that we can kind of compare LOIs as they come in versus the mock term sheet and things that you have said are important to you. So we can get kind of look at the gap. It also educates the owner about what’s coming, what they’re gonna have to consider when it does. So all of that adds up to a good strong LOI. If the LOI is good, you really shouldn’t face a retrade. Everybody has put a lot of energy into that document to reach a deal and to get to the right terms that both parties can live with. Once you’ve spent a lot of money and a lot of time, there’s got to be a really good reason for a buyer, I think, to come back and say, ⁓ we want to shape 15% off the price. Because the chances are real good that they’re going to lose that deal. Right. So now they’ve already spent $250,000 in attorney’s fees. They’re in deep with their accountants. I mean, most buyers are bringing major law firms, if it’s a sizable deal, especially private equity deal, major law firms, Pricewaterhouse Coopers as a financial advisor, the whole bit, right? They’re gonna rack up half a million dollars in just professional fees, not counting time of their own, in just professional fees. It’s a big investment and a big distraction. Same thing’s going on on the seller side. They’re spending a lot of money, probably not as much as the buyer, but they’re spending a lot of money on attorneys. Right. And a whole lot of time and they’re distracted from their business. So the interests are aligned, I think, to not blow up the deal. So if they’re coming back and saying fifteen percent haircut, I would imagine that they’ve got a really good reason for doing it. If they don’t have a good reason for doing it, if they can’t lay out a case that says, here’s why we can’t pay you what we said we were going to pay you, but let’s see if we can structure terms that if you overperform and mitigate the risk that we’re concerned about in the future. That 15% can come back, right? If they come and really try to retrade the deal, my advice to a client, if we’re on the sell side, which we almost always are, if we’re on the sell side and I have a client, I would say that’s not the buyer for you. You don’t want to be that that’s that’s that’s just a bad relationship from moment one. By the way, there’s always still almost always. I mean a clean break, all the money at closing, no reason, you know, don’t have to hang around, you know, you close on Monday, don’t have to do any more work. That’s that’s really quite unusual, right? Usually the owner’s got to stay around for a year or two, probably in a consulting capacity, probably not executive, but they’re gonna get paid to do that. And it’s a way to provide some continuity, make sure that transition is well handled. But, you know, at the at the end of the day, if you have a buyer that’s willing to act unethically in that case and not lay out a strong argument for the haircut, then you’re not getting off on the right foot after closing when you guys have to work together for the next six months or a year, right? That’s going to be quite adversarial. So it happens, I suppose, from time to time, but again, strong LOI where all of those deal points have been worked out, you can even put in the LOI, by the way. terminology around if you want to move the price, you can’t move it more than X percent. Right? You can decide not to do the deal, but here are the guardrails, guys. So so you really have to that’s why you spend so much time on that document and labor over it because and if you have good if you have a good legal team, they’re really going to be able to handle this kind of stuff, right? They’ve seen it all. They know what happens. So so I think you just have to have really good negotiators on your side and believe in yourself that you’ve picked a good buyer. Right?

speaker-0: Well, let’s talk about the moment the founder actually does the tax math. They sold for twenty million that they’re planning their life a rent twenty million and the CPA tells them the real number. Conversation.

speaker-1: Yeah. Well, you know, you’re gonna pay tax now or later, I suppose. ⁓ first of all, you know, there can be some help on the tax if you do good estate and tax planning. So there’s some things that you could do that would blunt the tax burden, I suppose, if you want to call it, but certainly the case that you’re not gonna get twenty million. If they if it’s a twenty million closing, you’re gonna get net proceeds of twelve to thirteen million, right? It’s gonna be 35 to 40%. Depends on the on the total deal and how it’s structured. You know, you can do some things with installment payments and stuff like that that might defer a part of the tax to another taxable period. so on and so forth, right? So the accountant is gonna hopefully be able to get in there with your estate and financial advisors, right? And really kind of talk about the way that this package all needs to come together. And and ⁓ so it does come as a surprise, I think, to a lot of people. We’ve all we’ve always said it’s not what someone is paying you, it’s what you keep in your pocket after closing, right? So somebody’s coming for the money. It’s gonna be the IRS and the state. Now, by the way, you know, a lot of people forget that there’s the federal capital gains tax, and then depending on where you live, there can be another significant bite. That’s the state capital gains tax, right? So some states don’t have it. Some states have pretty substantial capital gains. In some cases, states that would surprise you. So the it’s really important for owners, I think, to sit back and say, if I need 20 million, then ⁓ my actual sales number is closer to thirty two. Right? Something like that. If I can’t that and I need twenty million comes out of good financial planning, right? Good estate and tax planning, good financial planning, so that you know your number. And the number that you need to know is that after tax net proceeds number. And then your advisors need to know when it’s coming, right? In how much of it, how it ties into your other assets, because twenty or thirty million dollars could definitely blow you right above the exclusion, right? For estate taxes. So there’s planning around that. And that should happen well in advance. So it’s just, you know, there this is why you do it as a team. And and this is why you need someone kind of sitting at the center of the team going, Okay, ⁓ have we handled the legal issues? Have we handled the estate and tax issues? Do we know what the financial advice is? Do we know the number? Do we have the right number? Because an owner could make a could make a decision to go forward or not go forward based on what they’re going to get out of the deal. It may not be enough. That sounds like a lot of money, but if you’re dealing, and it is a lot of But if you’re dealing, you know, there’s a big difference between twenty and twelve, thirteen if you’re forty five and selling a business. You know, if you’re living a a large life that’s expensive, having twelve to thirteen million in your pocket and fifty million, ⁓ fifty years to live it out, I don’t know, that might be tricky.

speaker-0: Could. Yeah, the spending habits are the rub, ⁓ for sure.

speaker-1: Yeah. People spend more money than they think they do too. When you ask ⁓ to put a budget together for financial advisor, usually they’re surprised by the amount of money they’re spending.

speaker-0: So we’re at the deal closed, the wire hits, and the founder thinks they’re done, but they’re really not done, I don’t think. Talk to me what’s cool about what’s going on on the other side of the closing, the reps and warranties, the indemnification holdbacks, the escrow. What is the f man what is the founder actually exposed to after they think they’ve walked away?

speaker-1: Yeah. Well, reps and warranties are, you know, you gotta laugh. When you see the when you see an asset purchase agreement, right? So in asset purchases and there’s asset purchases and stock purchases, right? So stock purchases, the buyer is stepping into the shoes of the seller. They’re not changing the assets. They’re taking all or most of the liabilities. They’re taking all or most of the ⁓ of the assets, but it’s staying in one company. They’re just literally stepping in buying the stock. continuing to operate it. ⁓ an asset deal, and that’s typically better tax-wise for the seller, by the way, it’s the stock deal. The asset deal is what I mentioned earlier, where they’re taking all the assets and they’re moving them out of one bucket over into a new bucket and their assets are customers and not just fixed assets, but customers and inventory and the name of the company and know-how, IP, all those kinds of things. But they may leave some stuff behind. The representations and warranties are out of a fifty or sixty page asset purchase agreement, probably fifty pages of it at least. And ⁓ and they are complex and they do make a difference in terms of the kinds of risk that the seller is going to hold in some cases permanently. There are certain things, like intentional fraud, that don’t carry an expiration date on them. So the seller, I mean Sorry, the buyer could come back in some cases twenty or thirty years in the future and say, you lied to us and you lied to us intentionally, and here’s the damage that it did. It’s very unlikely that it would take 30 years. But these are permanent liabilities. Permanent liabilities for the owner. There are a few others that you have to worry about. But intentional fraud also bears some disgusting in that LOI. Because a good law a good lawyer will drill down on that and say, We’re gonna define intentional fraud. Here’s what we’re willing to accept and here’s what it’s not. Right. And you get that in writing so that it’s just no surprise. So you’re gonna have a lot of reps and warranties. Now, these days didn’t used to be the case a long time ago, but these days, probably ninety percent of deals have involved something called reps and warranties insurance, RWI. And it’s just very, very common for the buyer to take reps and warranties insurance to protect themselves. And in some cases, there’s protection also for ⁓ the seller. So it kind of blunts the risk for both parties. It’s not that expensive relative to the overall risk that you’re managing. And so in some cases it’s paid for both paid for f by the buyer. In some cases it’s shared, you know, it takes many different forms, but that really, I think as a kind of risk management, is the right thing to do. If there’s insurance I’m always a fan of insurance. If you can shift the risk to somebody else and it’s a reasonable cost, why not? That’s it, you know, it’s the cost of the deal. So You know, other things that are your your th those reps and warranties, I think, and those permanent liabilities are really the things that you kinda have to anguish over. It comes as a surprise to most owners that you can’t get out from underneath underneath everything. Now the other thing is if in an asset purchase, one bucket to a new bucket, there’s gonna be some stuff left behind over here, including potentially product liability. Let’s say that you’re making something that people are using, eating, you know, flathering on their body, whatever it may be. Let’s say that they’re maybe they have an accident with something that you’ve manufactured. the owner, the new owner is not really going to be excited about taking product potential product liability with them. So you’re going to have to leave insurance coverage on the old company. They will leave behind potential employee liability claims, right? Anybody comes out. past employee comes out, sues you for something even at the time after closing, you’re probably going to be liable for that. The new owner isn’t going to pay for it. So there’s some trailing liabilities even in the old company that you have to really watch for and try as much as possible to insure away. The you could close down the company altogether, but that usually winding down the company, you know, you don’t ⁓ product liability, there’s always a trail on insurable liabilities.

speaker-0: Yeah.

speaker-1: The important thing that I always say, right, is guys, we don’t have a problem if you disclose everything material and you don’t lie. Right? If if those two things are there, we get in trouble when one, you try to tell almost all the truth, but not quite the stuff. You don’t want them to know everything because it might work against you. Maybe they’ll walk away from the deal or the price, whatever. So you tell them nine-tenths of the truth. ⁓ or You ⁓ simply lie about it. Right. And those things you avoid those two things, you’re probably gonna be just fine.

speaker-0: Yeah. Words to live by, right?

speaker-1: Yeah, no kidding. Not just in deals.

speaker-0: All right, the founder closed. They went from owning a thirty million dollar operating company to holding twenty million in liquid. Their state plan, their entity structure, their insurance all still built on the old reality. How narrow is the window to update those structures appropriately, and what risks appear when the founders wait too long?

speaker-1: Well, ⁓ if the process that we’ve been talking about works well, if it’s been embraced, and that’s the what we call the value acceleration methodology, right? So the personal and the business ⁓ are never separated. It starts in advance, you’ve got a good team, you’re working the personal and the business kind of in parallel throughout the process. ⁓ those things should be done in advance. I mean, you didn’t mention anything, honestly, that shouldn’t be addressed before. even the owner enters into a sales process, right? Or does or or harvest value out of the business in any way, right? Through a employee stock ownership program or whatever it may be. So so where where people get in trouble, I think, is one, if they have an incomplete team. Let’s say that they decide to sell their business. They haven’t done any planning personal or business on the exit side, right? ⁓ they hire a lawyer to do the transaction work. That lawyer really doesn’t even think about, hey, have they done their estate planning? I mean, that’s not what they’re paid to do. They’re just not going to think that way. So, in other words, they’re sort of an incomplete team that doesn’t represent all of the disciplines that are going to be involved in this. And they don’t have a quarterback, right? Who’s kind of managing all of it holistically so nothing is missed, then they close successfully and Then they say, well, I guess I got all this money. I better, you know, do some estate and tax planning. If assuming that they don’t die within the next two or three months with all that money and no estate and tax planning, they might be okay, right? But ⁓ they need to get started on it right away, right? So that my my thing is always, Bob, my thing is always don’t assume that you’re gonna live for two or three or ten or twenty years. You might die tomorrow. And if you have twenty million in your pocket after tax and more wealth, right, outside of that, and no tax planning, you are running on a razor’s edge of risk, honestly, that if something happens to you, you just blew through forty or fifty percent of that if you have something over the estate tax exclusion, whatever that might be at the time. So it can cost millions to not. Do it right. In many cases, tens of millions to not do it right. I I just finished an engagement with a client who hadn’t done a whole lot of planning on either side. And, you know, he had seventeen businesses and and, you know, complex partnerships, just a very complex situation. But he had really not thought about his total enterprise value, right? If you stick all these things together, then how much are they worth today and how much are they worth in the future if everything goes as planned? He’s already at sixty million. He holds all of the equity interest as an individual, which means none of it is outside of the estate. So he’s he’s already on the hook for thirty million times forty or fifty percent upon, you know, death of him and his wife. And then, you know, you you’ve got he’s gonna build another forty or fifty million in wealth o over and above that. So we did the planning so that he wouldn’t ⁓ we probably saved him twenty five or thirty percent, honestly. ⁓ I’m sorry, twenty-five or thirty million just in having a conversation about how how to hold the equity in his businesses outside of an individual. We got his equity into the right kinds of trusts, in other words, ⁓ which is not the easiest thing in the world to do. But now we know, one, that he’s creditor proof. Because he’s got stuff inside of a trust rather than an individual. And two, that he’s going to save a lot of money in tax down the line. He’ll pay some, but he’s going to save a lot of money around the tax. Because of those holistic conversations, he’s not going to be the guy who closes and then tries to figure it out on the back. Right. He’s going to be set. He doesn’t once that there’s a whole strategy for what happens once he sells all or part of his enterprise. He’ll probably sell it in pieces, right? He might keep some of it. Maybe, maybe, maybe not. So he’s got options because he’s done the planning. I do think that it’s possible to kind of recover from a lack of planning as long as you don’t die right away.

speaker-0: That’s pretty a pretty good plan a pretty good piece of planning advice.

speaker-1: Yeah, don’t die. Don’t die. Top of the page. But ⁓ you know, people don’t think about that. Honestly, that you know, the their assumption is I’m just gonna keep on living. I got time. ⁓ and you know, people with a lot of wealth, they’re they’ve got a lot of state, a lot riding on that. So do the planning. Do it before you actually before you go into the transaction process, get your planning in place.

speaker-0: Yeah.

speaker-1: And plan based on scenarios, honestly. I think I think you’ve got more than one potential option or result that you’re planning for. And you need to take all of those into account.

speaker-0: Yeah, the the last time we were talking, you were painting the broad picture of identity loss, the void, the regret, and some of the the touchy feely stuff that happens after the exit. This time, let’s talk a bit about the time frame. If you would walk me through what you’ve seen basically one month, three months, six months, what’s actually occurring to that founder in that kind of progression of months out after the exit.

speaker-1: Well, you know, every it’s kind of like this five stages of grief. Everybody grieves differently, right? And and I feel like we’re a little choppy. I don’t know. But the ⁓ it’s hard it’s hard to predict exactly how someone is gonna go through the process. But I do think that post sale there’s kind of a period of relief, rest, maybe a little euphoria about the fact that you’ve worked your whole life and You’ve kind of created this thing of value and somebody else saw it that way and they invested in it or they bought it and that’s validation, right? So there’s a lot of, you know, serotonin and endorphins and all that kind of stuff running through your body at that point. And you and I have talked about it a little bit in the past. I I do think that it’s a good idea for the owner post closing to just simply go rest for a while. Right. Just try to take it all in. And I think there are a couple of reasons for that. One Right. To sort of almost like emotional processing ⁓ that ⁓ can set them up for what they’re going to probably have to deal with in the near future, which is within probably three, four, five months, they’ve really got to come back and figure out who it is that they’re going to be. and again, preparation for that conversation is you know, super important. The more you can do prior to the transaction, the better it’s gonna be. So I would say a month or two of rest in reality is gonna kinda sit in set in. Hey, I don’t have something to go that felt good, but now I’ve got to figure out what I’m gonna do with my time or who I’m gonna be and why I’m gonna be that person. A lot of times there’s a huge family adjustment during that period of time that might continue on for most of the fr ⁓ first year. You can imagine, especially at a certain age, let’s say you’ve been married for a long time, but you’ve been working 60 or 70 hours a week, and now all of a sudden you’re not working anymore and you’re home for lunch and you know you’re hanging around a lot, you’re kind of underfoot, and you know, it’s not it’s it’s it’s a big adjustment for everybody, not just the owner, by the way. Their family has to adjust to all of this. So all of that’s, you know, kind of going on at the same time. There’s a lot that’s happening. I would imagine for most business owners that it doesn’t really settle down until about month. twelve, like the first year is probably kind of a roller coaster ride, right? It’s just sort of like, okay, rest, euphoria. Oops, did I make the right decision? Did I make the wrong decision? And we know that probably 70 or, you know, 70% or so of business owners at that 12 month mark, those that didn’t do the planning, ⁓ that maybe didn’t have a plan for life after business, for instance, they kind of feel lost and they might even feel pretty regret regretful that they That they transitioned ownership in their business. Because they just, you know, it is an identity loss. It’s an identity, it’s not an identity loss. It’s an identity shift. It’s just from one to that. It’s a transition, right? And it takes a while to make that transition. Somewhere in there, if you’re a business owner and have been for a long time, you’re probably going to get the itch to buy or invest in another business. You’re going to kind of have that regression temptation, which is, I know that well, so I think I’ll go back to that thing. I like that, so I think I’ll go back to that thing. And look, ser serial entrepreneurship is fine. I don’t think that’s necessarily a bad thing, but I think you gotta choose to do that for

speaker-0: You know, here’s what people you know, I I think it’s not talked about that often at the dinner table. The founder comes home with fifteen million in the bank and the marriage is now under pressure in ways that perhaps neither spouse expected. What do you think happens at the home after the wire hits? Probably other than the obvious.

speaker-1: What’s obvious? A celebration champagne.

speaker-0: I think the obvious a better or worse but

speaker-1: Yeah. They’re negotiating a new kind of relationship that I hope they’ve talked about in advance. ⁓ you know, after but I but I ⁓ also agree you said that it’s probably not talked about. I I do think it needs to be really integrated into the prep the preparation and the discussions. It’s kinda like not it’s not just about the owner, right? And their experience. There’s gonna be a whole other set of people, their family, maybe even friendships. That are going to be in one way or another influenced or affected by this. So, so a couple of things. One, I think it’s important to families for families to understand that once this is done, they’re going to have a different configuration in a sense. So they go through the same shift, the same transition in some ways, just from a slightly different point of view. has if the if the family has not had conversations about what money means to them, then I’d I think it’s I think it’s very difficult for anyone, regardless of age or financial maturity, all of a sudden have a whole bunch of money in their pocket, much more than they’ve ever, you know, had before. And as you and I have talked about, you know, bigger bank account for the owner, smaller world, but same family. And so, you know, there can be a lot of, you know, it’s sort of it’s almost like, you know, kind of a tornado. It’s, you know, ⁓ very chaotic on ⁓ you know, at points, but it’s also really surgical. There’s a p there’s a there’s a point within a hurricane, for instance, in the eye of the hurricane, that’s actually pretty small. And that’s what you’re trying to find if you’re a you know, if you’re a family, you have to know where the eye of the hurricane is for you. And that’s going to be organized around a set of values. But I also think It’s organized around some literacy about what’s going on, right? Whether it’s business literacy, certainly would recommend financial literacy, especially for kids who may not really understand what it is to be in a truly wealthy family, a very ultra high net worth family, ⁓ how it’s gonna affect their lives. You know, I think transparency for the parents and the children, if that’s if that’s what they’re dealing with is is really important. So there are a whole set of discussions that need to be had where probably there’s trouble on the horizon is just in those situations where they figured they would have the conversation after the deal was done. That’s just a violation in a sense, right? That’s that’s that’s a that’s a kind of ⁓ violation of the process, a good process with a good team of advisors who really think holistically and with a quarterback. Managing all of this, right? They’re going to be, they’ll that that quarterback is going to say, all right, it’s time to have a conversation at the family level about where we are, where this is likely to end up, and what the implications are for you. I if I’m having that conversation, I’m not trying to get them to be a different family. I’m just trying to get them to see themselves as a family with a whole lot more money than they used to have. And there are real implications to that, right? Sounds fun, but it’s not always. doesn’t always get that good result. We know what happens to, you know, people who win the lottery and are else all of a sudden worth nine hundred million dollars and two years later they’re living, you know, not living the life that they thought they were going to. and you know, part of that is is probably spending some of that money on other people in a way, right? Making sure that you’re in service to the community or philanthropic or Doing things that you really consider to be important for people other than yourself. ⁓ that’s balanced and it’s mature and and hopefully people take advantage of that.

speaker-0: You know, for for both of us, we’ve seen this pattern many times where the founder sells, we’ll pick a number, twenty million, nets thirteen. Within the first year and a half, they’ve deployed significant portions of the proceeds into various ventures, real estate, angel investing, you know, not because they’re necessarily good, but they need to feel like they’re still operating. Yeah. They’re trying to recreate that feeling. Talk to me about that impulse.

speaker-1: ⁓ well you’re right. I think that ⁓ there there’s kind of ⁓ you know, their their thermostat is set to operator, right? It just hasn’t it hasn’t really been adjusted yet. And it’s a hard thing to adjust, right? It’s been stuck on, you know, that thermostat’s been stuck on operator for a long time. So it it’s they’re used to moving money around. They’re used to making decisions about how to deploy capital. They think in terms, you know, when you’re an owner, you’re thinking in terms of, well, if I spend a dollar there and make five. Spend a dollar there. Am I to wait three years to make five or make it right away? You make those kinds of decisions just every day. Get used to it. So having idle capital, or quite frankly, capital that’s potentially managed by someone else, right? Which is, in my view, potentially a good thing, because I don’t know that people are really just because you’ve run a business doesn’t mean you’re a good investor. Right. So, you know, the the markets are more complex. And in fact, there’s more kinds of opportunities out there. But we do kind of default. We regress to what we know, what we’re most comfortable with. And I think in, you know, when you see ⁓ you know, that that the someone starting to reinvest in illiquid assets, right? Other businesses, real estate, which is certainly less illiquid than a private business, doing things with their money, especially in big chunks, right? Like I’ve got twelve to thirteen million, I’m gonna put four million into a building and you know, downtown Colorado Springs and rehab it for another, you know, six million and I’m just gonna be the most successful real estate guy. Have I owned any real estate in my life? No, I’ve never owned a piece of real estate, but someone told me it was good investment, so on and so forth. And all of a sudden all that liquidity that you’ve worked hard to harvest out of your business is back in illiquid assets with a high risk profile. So but I would say that that is not that’s really not about the investment, even though it may be a bad choice. That’s an I that’s that deployment of capital, that’s identity for the owners. It’s what they do. Deploy capital, get capital back. Hopefully more of it in the second than the first. So ⁓ I would say that there needs to be kind of a 90 day rule, maybe 180 or one year rule, which is no major financial decisions for at least, you know, 90 days after you get this money, like put it on hold. Put it on ice. ⁓ let’s let this thing settle and then if you haven’t already, let’s make a determination about how best to use that money so that, you know, you don’t end up with ⁓ you know, two or three generations down the line not having any at all.

speaker-0: You know, it’s in talking to some of the guys, you know, they’ll talk about and the gals, you know, the phone quit ringing the people that they thought were their friends and their golf buddies and industry contacts and the people always return their calls. Well, they’re gone. What happens to the founder’s social world after the exit?

speaker-1: Well, I think ⁓ yeah, well, it certainly is less hectic, let’s say that. But but I do think one one maybe positive thing that comes out of that, by the way, even though it’ll come as a shock, is that ⁓ it real quickly re weeds out the real relationships from the transactional ones. Right. So You’re probably gonna have a lesser number of people that or that you would put in your circle of friends or the people that you really respect and rely on. It could be that people move on because quite frankly, the transactional ones are like, you know, kind of, well, he’s no or she’s no longer of use to me. I they you know, that was a useful relationship, ⁓ because of their, you know, position as a business owner. But I don’t know that we have all ⁓ all that much in common with one another outside of that. I I don’t really I think that’s kind of a healthy ⁓ rationalization, if you will, in a good way. A kind of you know, that that kind of weeding out is is something that from time to time we need to do as as adults, right? Every I I had a friend that every year sat down at the beginning of the year and just said, Huh, which friendships are actually important to me, which ones are working? Where do I wanna put time? Where do I wanna put my time? It’s precious, I don’t have whole lot of of it. of it, who am I going to invest it in? And for those friendships that just seemed transactional or they weren’t really communicating, she pretty much called the people up and said, I don’t know that there’s a whole lot here. Right. So let’s release one another and feel okay about it. It was great while it lasted. So all of that could be healthy. It’s still going to come as a shock. Because most business owners are used to the phone ringing off the hook all the time and they’ll complain a lot about it. Like, I can’t get my phone to shut up. But that’s that’s the sort of environment that they have thrived in, or at least it’s the environment that they thought they’ve thrived in, right? So they tie the thriving to the activity when maybe they’re not all that connected. But then it’s quiet or much quieter. I would I would say that’s part of that That’s part of that stabilization phase that you’re gonna engage in over that first three to six months. When you have to learn to sit with the quiet, you have to learn to sit with the money, right? You have to learn to sit with the family. You gotta learn a new way of living. That’s not necessarily a bad way of living. It’s just different. And you will lose people. No question. You will lose people who maybe you thought were your friends. You’ll lose people. Because you’re just not running in the same circles anymore. You just don’t see each other as often as you did. you know, we know as adults that we probably have eight or ten really close friends at any given time, and that’s probably about all we need and about all we need to manage before and then you realize when you kind of get into that position, hey, the rest of it was activity, but it really didn’t nourish me in a way that I need to be taken care of by. a true friend. So it will be a massive adjustment, no question. And as you were saying earlier, it’s during that period when you really need to be kind of zen, like just sit with it, accept it, learn it, get really good at it, right? That it’s during that period that that sort of panic and regression sets in. Like this feels weird. I don’t know how to do this. I’m not sure if it means I’m moving in the wrong direction, the right direction. So I think I’ll just start to regress towards what I was, which is when People invest in new businesses or they start buying assets or whatever it may be. ⁓ and they might ⁓ not end up in the right place. Again, I can’t emphasize it enough. Good team, good process, good quarterback. You end up talking about this stuff, or it actually happens. Ultimately, you just don’t want any surprises. All you’re trying to do throughout this entire process for your client is eliminate as many surprises as you possibly can and maximize the results, optimize the outcome. And a good team will be able to do that.

speaker-0: You know, it’s there there’s a lot of we we’ve talked about the teams and you know, there’s the pre exit team and at the exit team, you know, where there seems to be a a gap in the team structure is the support structure for the founder, you know, from you know, right before the exit till, you know, the twelve, eighteen, twenty four, thirty six months post exit. You know, if you were to build that team and the components of that team, you know, what would that look like. I mean, I don’t even know if there’s one out there.

speaker-1: team that can handle all of that or a tea or or

speaker-0: You’ve assemble the team to help that business owner, you know, tw eighteen, twenty four months post sale.

speaker-1: Yeah. That’s a great question. Look, I think I think and it’s it’s very intriguing. I never really thought about that before. So the the the closing is ⁓ a life event and it’s a big one. But it’s ⁓ I don’t wanna ⁓ it’s very, very important for people to to for people to know that it’s really hard to get there and be successful in closing a deal. It it is It’s really complex. It’s really hard to get right. Those who do it deserve a lot of credit for getting to the point where somebody else says, I want to spend a whole lot of money buying that thing that you’ve created. And I believe in it so much that I’m going to pay and then try to get my money back later. Right. So, so, and I might be paying a lot of money. I’m putting a lot on the line, but I believe in what you’ve built and I believe that it’s going to make significant returns for me in the future, right? That’s what I’m investing in. So you should feel good about that. But it’s really hard, it’s really hard to get there. But it’s really just it’s a big life event, right? Think about other life events that you’ve had. If you’re a business owner, you chose maybe you chose to get married. Maybe you chose to have children. You know, there are gonna be these life events along the way and this is one of them. And it’s a big one. But it deserves the same attention That you would give any other big decision. And you also need to contemplate what you need in the future in order to be successful as that thing you are no longer, right? You are going to be something different after this event, just as maybe you were different, you weren’t a spouse, then you were a spouse, right? You weren’t a parent, then you were a parent. You were a business owner, you’re not a business owner. With some skill and hopefully some introspection, we can do this. We can do this as humans. We’ve done it before. I don’t know that business owners necessarily are a particularly, you know, unique breed of people who who simply haven’t taken the time to learn how to manage their life. I think they’re actually decent at it. They’ve just been super busy. So therefore, maybe there are some things that they haven’t really thought about. So what a team might look like for them going along is. I personally think, and I hope people don’t find this weird, that if you’re if you don’t have a really good therapist on your side, you probably as a business owner might want to think about getting one. Getting one before it happens and staying with them for a period of time after it happens. I think that it would be a very good idea just for however long it’s helpful. Even if you have a great marriage or a great partnership with somebody. To go to couples counseling and talk about these things after, like before, I would say, and then certainly afterwards process this stuff. Take advantage of, let’s say that you find yourself in an ultra high net worth category. You probably are gonna have your money with somebody, right? Talk to them quite frequently about your strategy. Get together with them, talk about what money means. And what it’ll mean to have even more of it as you go, and you know what you want to do ⁓ with it as a family. So you’ve shifted your perspective significantly. But I also think that you don’t be afraid to seek help. There will be a period of time when you feel like you don’t have any. It doesn’t have to be that way. You’re just looking for a different kind of help. It’s not technical help, it’s life. Emotion relationship based health with good technical advisors who can plug into that at the same time. Right.

speaker-0: You know, there’s you know, I think about the the folks that do, you know, that have roles in movies and, you know, other endeavors, and as their roles change they get a new coach. And the new coach has specific skills, you know, and and if they change the word from therapist to coach, I think it’d probably be better served.

speaker-1: I call it co pilot. I call it get yourself a co pilot, right? And I don’t like the word coach because it’s so overused and but I I understand where you’re coming from. I mean, it absolutely you have to have somebody to talk to. If it’s not a I I I think friends are really important in this whole thing, right? So good, solid friendship, spend time with people, spend time with your family. But you also have to have a place that you can go just yourself and talk to somebody who is neither one of those two things, right? Not friend, not family. Somebody who can copilot, you know, your experience, ⁓ help you kind of see your way through it. You’re gonna learn a whole new language, a whole new daily way to live, right? You’re gonna have to accept that and become fluent in it. It’s gonna be very different than the one, than the life you were leading prior to the transaction. No question. There’s no way around it. There’s it’s it’s just the way that it’s gonna be. So the question for a business owner is ⁓ an exiting business owner should be how do I want to use this time that I have left? How do I want to use this time to serve my serve serve my community, my family, myself? I now have assets that I never dreamed I would have when I started this business. Never thought it would be better. I have honestly very rarely met a business owner owner of a certain age. A lot of the folks in Silicon Valley start a business to exit it within a year. They raise a whole lot of money. They anticipated that they were going to transition ownership in this thing very, very quickly. Owners that started and developed a kind of traditional business, let’s call it, over a longer period of time, when they get to that point where they might actually have somebody that wants to buy their business. I have more than more than not heard them say, I never dreamed it was going to get to this. I had no idea when I started this. It was me sitting at a desk. I don’t know it was going to have 500 employees or whatever it is. I didn’t know that somebody was going to pay me tens of millions of dollars. Had no idea, right? Good for you. That was that life that you live. Now, what’s the next one? What’s the next stack? It can be just as meaningful, but be attentive to it. You’re not going to be able to do it alone, and there are definitely pitfalls that you need to take advanta that you need to be aware of. But you got so much to work with that you didn’t used to have. I mean, if somebody told you, hey, by the time you’re sixty, you’re gonna have fifty million in pocket, you know. I think most people would say, That’s phenomenal. I don’t really even know how to respond to that, but lucky me. Now let’s see what I can do with it.

speaker-0: Yeah. You know, for you, you’re well known in the community. You know, you you teach at various locations and you work brokers and attorneys and CPAs and wealth managers and you know, we’ve talked deal structures and tax traps and legal exposure and timelines. You know, systemically in the business. Do you think there’s ⁓ a move afoot to try to adjust the post exit approach or or how the industry serves those business owners going through that exit?

speaker-1: I I I think this has traditionally been an undervalued and even in some cases ignored part of the process. Right. So the job to be done, in a sense, no matter what role you play in it, has been let’s get the owner to the point where they can exit their business. Job done. Mm-hmm. Okay. We we are we technicians are we’ve done our job and we feel good about it. And the owner has left the closing table feeling feeling quite pleased and we’re all gratified and and you know on we go. The technicians are on to their whatever it is that they’re gonna do next. And the owner is now, you know, has escaped gr Earth’s gravity and is just, you know, kind of in a good way racing through space to the next version of their life. So so but I do not think even now I do not think that we as a community are paying enough at enough attention, nor have we necessarily developed good, strong, well-accepted methodologies and frameworks for helping owners during this period. There are some models out there that ⁓ are available that have been developed in some cases for other things. Right. There are people in the community who are developing their own models, their own structures and processes. So there’s some knowledge base work and intellectual work that’s going into this. And it’s earnest. It’s definitely earnest. People are people are now going, ⁓ that’s really important, not just to talk about and assume that by talking to an owner about, hey, what’s your next stack? Yeah, I have a next stack. Okay. Well, what is it? Let’s go through it. Does it all kind of along? Okay, great. We have a plan. Well, Then the owner really needs support while they implement that plan. It’s no different than the plan that they we were helping them implement, right? Design and implement prior to the transition of ownership. Now they need support and actually implementing, not just designing, implementing the plan for life after the transition. So, but we tend to just end at design, right? It’s like, okay, well, we’ve Check the box. There is a designed life after transition plan. So we all feel good about that. I don’t have any statistics whatsoever, but I wonder if you if you went and surveyed a hundred owners who had developed a well designed life after business plan, how many of them actually implemented it successfully? Right? A year or two later, the statistics would suggest that not very many. actually end up doing what it was that the plan was designed to help them do. And that could very well be because they just don’t have a support network as they go through it.

speaker-0: Well the accountability side. It’s you know, ’cause you’re reframing how you operate to some extent. Yeah. You know, or it’s not couched in the terms that you understand. Yeah. I think. That’s right. You know, I th I think about you know, the if there was one if you could wave a wand. It’s either a number, a data point, dollar amount, what you know, a specific point that every founder should know, you know, at the start of the exit process. where that number would change how they approached the entire exit process if they knew it early enough. What do you think that is?

speaker-1: There are several that I think of, but I would point to one that I think kind of encapsulates a lot of the stuff. Business, personal, family. It’s kind of a more holistic way to look at it, and that’s the wealth destruction number. It came out of a it came out of a book called Preparing Heirs. it was ⁓ Williams and Pricer, P R E I S E R. And ⁓ the it was seventy percent. So here’s the seventy percent of wealth transfers from the first generation to the next generation, right? First to second or whatever that is. Right? Seventy percent ⁓ fails to transfer to that second generation. Ninety percent of the wealth is gone that was generated from that transition. Ninety percent of that wealth is gone by the third generation. So 70% lost in the first transfer, another 20% lost in the second transfer. By the third generation, you got about 10% of what was generated out of the transition itself, out of that transaction. So the wealth destruction curve is very, very steep. So if I’m a business owner, I’m thinking, okay, I I worked really hard to climb this hill. I got to the pinnacle. I sold this thing, and you’re telling me that on the other side of the hill, what waits for me is just a downward slide to Probably about where we were before, right? Maybe even less. Why am I doing this? I mean, if I knew that that was the case, I would do everything I possibly could to avoid that. Right? Why climb the mountain if that’s what’s gonna happen? So I just view it I view it as a totally holistic end to end kind of thing, right? We’re we’re watching so many different dimensions and aspects of it, trying to do so in an agile way. Because things change really fast in today’s world and in lives. So it’s just a kind of constant kind of plan do, plan, do, plan do, but on short cycles, just the team always checking in on it, making sure that things are still the same. The worst case situations is where I see people do really good estate planning, ⁓ you know, or financial planning, and then nobody actually stops to go, Hey, has anything changed over the last five or ten years since we put that plan together? Like has anybody looked at it? ⁓ and I and I think fur I think that’s kind of a failure of the team, but it also is just a failure of n it’s it’s like that kind of stuff happens when you don’t have a quarterback.

speaker-0: You know, it’s there was a book by a guy named John John Boyd, Uda Lou. It’s some it’s not the name of the book, but that was his process. Observe, orient, decide, act, and it’s just continuous. And he was talking about it, you know, in in the fighter pilot world and performance aircraft and many other things. ⁓ military is good for that type of process iteration. You know, what did you learn? What do you what are your goals and move forward? And I think that this is no different than that. I agree. You know, we here we are, as you say, you know, and and if you can do the OODA loop approach and adopt it and every now and again instead of looking forward, look back and you go, What do we do well? What do we miss?

speaker-1: Yeah, sure. And understand too that that emotions, the kind of adjustment that you sort of have to make, nothing in this process is linear. There’s nothing from the very beginning. It’s all it’s all sort of looping and cycling all the way through. And that doesn’t stop just because the transaction is done. It’s still looping and cycling as as as you move on. You’re just a kind of in a different environment. It’s a different kind of looping. It’s a kind of team. So so but you have to understand, even if you’re going through these stages, if you will, adjusting after the transaction and you’re trying to figure out it trying to figure all this stuff out. Maybe you’re doing it well, maybe you’re not. But, you know, you’ll find yourself sort of oscillating between, hey, I I’m making progress. ⁓ now I’m not making so much progress, right? Or maybe something happens and it kind of sends you back in time, triggers something in the past. It’s a constant vigilant management, but that’s life. Let’s face it. We do that Every day, all day long, trying to make sense of the world around us. And it’s not easy. I don’t think anybody on this planet would say that life is easy. So, you know, it’s it’s just we actually have I strongly believe that that business owners may be uniquely capable of managing these challenges after the transition because they’ve been managing. a lot for a long time. So they’re used to operating in complex systems with a lot of change going on rapidly. So to a certain extent, I see as an opportunity to kind of, you know, like turn down the volume a little bit and actually have the opportunity to sit in silence and process this stuff with more money in my pocket. So that’s reduced one stress. Right. So I’ve taken a little bit of that noise out. Now I can really sit back and say, all right, I’ve accomplished this thing. It’s fine. Now who am I gonna be from this point on? That’s that’s positive. And I’ve got some skills maybe that other people do not have.

speaker-0: You know, for for you and I w we talk all the time and you know, the the first episode was more of the you know, the human side identity and readiness and all that stuff, and today was more of deal structure and legal exposure and timelines and all that stuff. You know, if you could take and distill it all just down into one message and that, you know, for the founder that’s two years out, what’s that one message that you would tell them that they need to do or would say?

speaker-1: So distill my career down into one sentence, that’s what you’re telling me.

speaker-0: Nothing to it. Nothing to it.

speaker-1: Twenty five years of work in one sentence.

speaker-0: No pr no pressure.

speaker-1: think I I think I would tell them that That all the things that we’ve talked about in these two episodes, the emotional, the personal, the business before transition, after transition, it’s really all part of a continuum and the none of this can be separated from the other. So deal mechanics and the way that a deal is put together can’t be separated from the personal preparation or the personal planning that’s taken place, the financial t planning that’s taken place. You’re gonna cut a good deal, you’re gonna cut the deal that’s right for you in part because you’ve done that preparation. You’re emotionally and personally prepared. You’re financially and est from an estate and tax per ⁓ perspective, well prepared. You know your number, you know what you have to get out of the deal. You know how to build the business in a way that it’s gonna fetch that price and that structure. Right. So, and then you’re gonna do what you’ve been doing all along after that, which is learn a new way of living, make sense of the world around you, but you’re gonna use skills that you built up. Over the years, in order to do that well. And you’re gonna have to manage change all along the way. You’ve always been doing that. So what I would say to them is get good at change, right? There are a lot of us that don’t really like it, but we are, you know, ⁓ probably of many of the creatures on earth, humans have to deal with change in ways that other creatures on earth really don’t have to. Right. Our our systems are more complex. So I would say see it as a continuum, not as sort of discrete little pieces that are just sort of chunking along. See it as one thing, one big holistic ⁓ process, and you’re at the center of it. It is I I guess one thing that I would say, really if I bold it down, is you could talk about mechanics all day long. You know, we could talk about technique, we can talk about deal structure, all that kind of stuff is important. It’s ⁓ it’s important to know how it works. It’s important to have a good technical team around you. But this is so human. The what I have found over the last 25 years is that any of this work that’s not grounded in a human perspective just misses the point altogether. So it is uniquely human what the what the owner is going through, what your family will go through. Our work is human centric, no question, no matter what kind of work we’re doing, it’s human centric. So somehow if we could just position it that way, transformational versus transactional, human centered, then I think it just maybe changes the conversation enough to make sure that we’re watching over everything that we need to watch over.

speaker-0: Geez, that was a really long one for

speaker-1: I know. Yeah. So I boiled it down to human transformational. Human transformational. That’s what I want to say about it. Thank you. I had to think through it. I had to think through it.

speaker-0: You know.

speaker-1: ⁓ takes a while.

speaker-0: Yeah, you know, I I I default back to system discipline process. Is what I get back to. You know, if you ha if you continually do the same system discipline and process, you know, the outcomes can be different, but how you get there is the same. And so if there’s an an outcome that’s not to your liking, did you do the same system discipline process or did some part of that break? And if you can

speaker-1: Yeah. And I think discipline’s an important word. I also think intentionality is an important word, right? None of this is really gonna happen accidentally, not happen well accidentally. You know, if you’re a business owner, start thinking about it early. ⁓ be intentional about it, understand how things work, but also don’t lose touch with yourself as a person. Don’t lose touch with your family. I’ve ⁓ so many times, you know, owners work so hard that sometimes they kinda lose touch with their family. They don’t, you know, I’ve had I can’t tell you how many owners have said, I woke up one day and realized I’ve devoted my life to this business and my kids just went to college. How did that happen? I didn’t even get to see them, you know, compete at baseball while they were in high school and now all of a sudden they’re leaving. You know? You don’t get that back to catch up. You don’t get it back. That’s why I say it’s human.

speaker-0: And you don’t get the You bet. Well Sean, we’ve we talk all the time, you know, and and I value your insights. I hope the folks listening do as well. So if folks want to find you, where do they reach out and find you?

speaker-1: You on your phone. Yeah, so websites ready for next USA dot com. That’s all words. There’s no numeral there. So readyfornextusa.com and my email is Sean S E A N at readyfornextusa.com. We’ve got some nice tools on the website. One thing that I would mention, we have some free assessments that you can take if you’re a business owner. Things like, you know, assessing your level of owner dependency, which is a big deal, right? A lot of a lot of businesses are too dependent on their owners for success. We’ve got some succession planning assessments and other things like that. So you can access those through our website or you can reach out to me at any time and and we’ll have a chat.

speaker-0: Perfect. Well Sean, as always, I appreciate your time. My pleasure. This is the Exit Series of Roark. And ⁓ if you know of a founder who’s sold or a broker who’s seen it or an attorney who’s been across from the table, send them the episode and subscribe wherever you listen. We’ll see you next time. Take care, Sean. You too.