Buy a Business

Key Takeaways

  • In selling a business, getting advisers such as lawyers and accountants on board early on during the sale process is crucial to the success of the deal. 
  • Regardless of which side of the deal you are on, you must examine the agreements to check whether they have provisions that prevent the seller from taking those agreements and assigning them to the buyer. Check for provisions like this: ‘On the event of a change of control such as a sale of the business, the agreement cannot be assigned to any third party without the customer’s consent.’ 
  • Unlike in product-based businesses, service-based companies are selling relationships with customers and agreements, not hard assets. This makes it more difficult to put a value on service-based businesses. 
  • A term sheet or a letter of intent is a high-level document that outlines the understanding of the buyer and the seller regarding the purchase price, what assets are being purchased and whether the entire company is being sold. It is subject to due diligence and is not legally binding until agreements are “fully fleshed out.” 
  • Many times, sellers and even buyers are tempted to just use a form, an LOI or to enter it without incurring any outside adviser fees or expense. Dan Cotter considers this “a bad idea.” Sellers, according to Dan, need to understand that the LOI is not the final agreement. 
  • Dan Cotter’s advice to sellers to help them move successfully toward closing a deal: 
    • Learn to separate personal from the business side of selling your business. Selling a  business is like selling a house, in which the owner has created something from scratch and has built it into a successful organization. One thing to keep in mind: “The process can become very personal, and it is very difficult to separate that.”
    • Get some good advisers on board once you’ve contemplated selling your business. Reach out to an expert who can help you with valuation, brokering transactions and market knowledge. “If you are serious, having advisers in place and thinking that through is a very good idea.” 
    • In selling a service-based business, you need to understand the valuation methodologies that are available. This helps you get a good idea of the range of potential value for your organization.

Read Full Interview

Jeff: With real stories from real business owners and associated providers of third-party services, this is Done Deal.

Hi, my name is Jeff Allen, and Done Deal is brought to you by Morgan & Westfield. On this edition, we are going to change things up just a little bit. 

Instead of talking with a business owner about their experience selling their business, Dan Cotter is an attorney and partner at Butler Rubin Saltarelli & Boyd in Chicago. We're catching up with him following a successful sale involving one of his clients’ businesses to get a legal professional's perspective on the sale process and how it all worked out for his client, how it all came down, and what his involvement was. 

Dan, it's good to talk with you again. Welcome back to the program.

Dan: It's good to talk with you as well, Jeff, and thank you for having me on your program again. 

Jeff: Dan, you might remember when we visited the first time on Deal Talk, we had a completely different conversation. It was one involving cybercrime and cybercrime’s threats to valuations. For those people who’d like to go back and listen to that program, all you have to do is visit the Morgan & Westfield website — that's morganandwestfield.com and go to Deal Talk. You can look that show up once again with Dan Cotter on cybercrime’s threats to valuation. 

But this time, Dan, we've got you here on Done Deal talking about the follow-up, the post-interview following the sale of a business that you were involved with and your client. Now for legal purposes, we are not able to talk about too many specifics in this particular case. We can't talk about the owner themselves or their specific business necessarily, but we can speak about a number of generalities here, and that's what I would like to do with you, Dan. 

To start, give us an idea what kind of business this was, the kind of industry that it was involved in.

Dan: Sure. So this deal, this particular transaction was a sale of assets of a service industry provider. A company that had a number of contracts with customers that were retaining the seller for purposes of providing services to their organizations. 

Jeff: Now right off the bat, Dan, when we were talking about contracts, and depending on the type of business that you have, you could be dealing with a lot of contracts insofar as your vendors and suppliers are concerned, and of course your clients, your customers themselves. 

When you get involved in a sale where there are a number of contracts involved, whatever those contracts might be, is this something where you know you are going to have a tremendous amount of involvement in? Are there certain challenges and certain legal repercussions that could occur if someone such as yourself, a legal professional, is not involved in this sale of the business?

Dan: That is a great question, Jeff. Yes, there are a number of legal hurdles and potential obstacles. In many cases, sellers — and buyers for that matter — do not want to get advisers, whether it’s lawyers or accountants or deal brokers, involved early in the process. Especially in a deal and a transaction where it is a service industry that’s being bought or sold, it is really crucial, I think, to have lawyers and other advisers early on in the process.

The reason is this: With contracts and service contracts that a seller has — regardless of what side of the deal you are on — you need to take a look at those agreements and determine first and foremost whether or not those agreements have any provisions that would prevent the seller from taking those agreements and assigning them to the buyer. 

Oftentimes, what we'll find in service agreements and vendor contracts — and I’ve drafted many of them over the years on both sides — is that the customer wants entity XYZ or individual A to perform the services that are contemplated by that service agreement. And so they have provisions that say that, for example, on the event of a change of control such as a sale of the business, the agreement cannot be assigned to any third party without the customer's consent. 
 

My advice to all of my clients, whether it is an M&A or just another contractual matter, is that it's better to be proactive and have a lawyer that they trust to spend half an hour or a small amount of time to review a contract because if the contract is problematic and they sign it without spending that time, it’s much more costly in the back end to fix or address issues that have come up from a poorly drafted contract.


If you have those types of provisions in the agreements for services, that can present a challenge because unlike a retail store or a company that is selling with inventory, that's what the purchasers are buying. In the instance of a service industry seller, what’s being purchased and sold is in fact just those relationships and those agreements. So that is one of the items that I think is important for advisers, including lawyers, to be involved on the front end. 

In addition to that, I think one of the other challenges is that when it comes to having service agreements in place, it is very difficult or can be [difficult] to put a value on the business other than net revenue or net income for a couple of year period and try to figure out a multiple. Again, you are not buying computers, desks, offices, property plant, and equipment. So having the proper advisers in the front will save a lot of headaches for both the buyer and seller on the back end.

Jeff: And you talked about being involved in the early stages, Dan. When you got involved, was this one of those things where you could see, "This is going to take some time here. There's no way that we're going to be able to sell this company within 9 months, within 12 months, within 15 months” whatever the case may be? Were you brought in at such a stage where you knew that there is a lot of prep work in advance, that there was going to be a fairly long period before you knew that the deal could be consummated? 

Dan: In this case, I was brought in when the seller had already, I believe, indicated that they were interested in selling their business. I was brought in during the negotiation with the entity that eventually purchased the assets of the business. The letter of intent and the agreement was close to being final and hadn’t been fully realized. 

This transaction took, I think, 3 or 4 months from start to finish. Not an extensively long period of time, but the main hurdles even once the letter was entered into, the letter of intent, and the parties agreed on terms is based on due diligence and just a review of everything taking place. There were some adjustments to the eventual purchase price.

Jeff: We are going to talk about the letter of intent or the LOI here in just a couple of minutes, Dan. But what is the process once a seller accepts an offer? What happens from that point? And what role do you play at that stage?

Dan: Sure. Once a seller accepts an offer, that offer is typically memorialized in a variety of ways. It could just be by a simple letter. More and more these days, the prevalence of email as our main communication and a business transactional tool. It could be as simple as the buyer or the seller confirming the conversation that was taking place that would buy X assets for Y price and close on such and such a date. 

Then what typically happens is that you would see either a term sheet or a letter of intent. Both of them are just high-level documents that always reference that 1) they are not binding until agreements are fully fleshed out, and 2) they are subject to due diligence and other basic factors. 

Jeff: Did you actually help draft those documents, or are you at least a part of the process where you go through and you vet those documents, making sure that they are sound and that they are all legal?

Dan: In this transaction, I reviewed drafts that were put together by the buyer and provided input and recommendations for edits and for finalization. So I was involved in that process. 

It is really important once the parties have figured out what it is that they offer in acceptances, they’ve got a meeting of the minds, to really document well what those agreed-upon conditions are. In this case, the letter of intent was pretty well defined in terms of all the different moving pieces, price, and continued retention of the seller for a period of time. 

The first step is giving some kind of letter of intent or term sheet to finalize, memorialize, signed by the parties. Once that happens, it is off to due diligence and the process of negotiating the definitive agreements that, unfortunately, are full of legalese and a lot of boilerplate language but are all designed to protect both parties in the transaction as much as possible. 

Jeff: We are looking at the sale of a service-oriented business, not from the business owner's perspective but from an attorney's perspective. 

Dan Cotter is an attorney and partner at Butler Rubin Saltarelli & Boyd in Chicago. We are glad to have him with us in the program today, once again brought to you by Morgan & Westfield. 

Dan, what other parties were involved along with you as part of this deal to make sure that it went through as successful as possible for both parties?

Dan: On the seller side, in addition to myself as legal adviser, we had a broker involved and then we also had the CPA (certified public accountant) for the seller was involved. The reason for that is again there were questions that came up during the deal that come up during any deal in terms of assigning value to assets as part of the sale, tax consequences of the deal, and so on. On the seller side, those were the three groups of advisers that assisted the seller in this transaction. 

On the buyer side, they had their lawyers as well. I don’t know if they used other resources, but typically they would have somebody that has expertise in tax, so that’s typically the CPA that’s been doing the books and records and providing the tax filings for their organization.

Jeff: Now who did you communicate mostly with when you were going through the day-to-day? I know that there are different tasks and different responsibilities each day that you would take care of. Who did you find that most of your interaction was in this particular situation? 

Dan: In this particular situation, it was the principal, founder and owner, the seller. On a daily basis, we would interact, but I also dealt with the broker as well because again a lot of the questions and the kind of guidance and shepherding through the deal involved him interacting with the principal on a regular basis. But principally, my contact on a day-to-day basis is with the seller and owner of the company that was being sold. 
 

This document [LOI] is important for the seller to understand that it’s not the final agreement. It is not spelling out all terms and conditions. And the seller does not want to be locked into having to sell the business, if the buyer came back and said, "we offered you half a million dollars for your business but we've done due diligence and revised purchase price is $50,000," and there are no caveats in the letter of intent that the seller has the option to turn down a negative offer.


Jeff: I want to ask you two pieces of information that are really, really important. Some drafts and documentation that are critical to the sale of many businesses and you could probably say just about all businesses where there are attorneys such as yourself involved.

Let's talk about the letter of intent for a moment or what is also known as the LOI. This is obviously a very important document that is part of the sale process, and this is presented on the part of the buyer of a business. Let's talk a little bit about what kind of language that document has in it, and why that language is important that we need to make sure that we are very specific in it, and what your advice is for a seller who is presented with this document. They might be tempted to accept it very quickly, especially if it is their first business and they are anxious to cut a deal and move on.  

But let's just talk about it, why it’s so important, and what a seller needs to know before they accept a letter of intent. 

Dan: Sure. A number of reasons why the LOI or letter of intent is so important to the transaction. First and foremost, again, it sets forth the kind of high-level understanding of the parties about what the purchase price is, what assets are being purchased, or if the entire company is being sold. Is it a stock purchase agreement or unit sale, if it’s an LLC? Typically it will have some caveat language that says that the letter of intent is subject to due diligence period and that the price and other terms and conditions will be negotiated between the parties based on what comes up in due diligence. 

You know oftentimes as you mentioned, Jeff, sellers are tempted, and sometimes buyers as well, to just use a form, an LOI, or to enter it without incurring any outside adviser fees or expense. 

That is a bad idea, and I can give you an example of a situation from about 2 years ago. I was brought into a transaction where the letter of intent had already been signed. I asked for that as part of my process when I first interviewed, in this case, it was the buyer of a retail establishment and received a letter of intent. It was a very brief letter of intent but it had some very bizarre language in it. For example, it said that the buyer represented, warranted, and gave assurances that the financial statements of the seller were fully accurate. That’s problematic because if you are buying something, how can you be in the position to attest that the financial statements are accurate, right?

Jeff: Exactly.

Dan: That was one problem that was in this case, there was an earnest money deposit where the buyer immediately agreed to give the seller a sum of money for the deal. There was nothing about it being refundable. So there were other problems with it. 

So, again, this document is important for the seller to understand that it’s not the final agreement. It is not spelling out all terms and conditions. And the seller does not want to be locked into having to sell the business, if the buyer came back and said, "we offered you half a million dollars for your business but we've done due diligence and revised purchase price is $50,000," and there are no caveats in the letter of intent that the seller has the option to turn down a negative offer.

In addition, oftentimes what you see in a letter of intent is a period of exclusivity where the buyer has the only ability to interact with the seller for a period of time. It may be 3 months, it may 6 months, it may be 30 days. Again, the seller needs to understand what that means in terms of being able to shop the business, especially if they’ve put their business up for sale, and what that does to interacting.
My advice to all of my clients, whether it is an M&A or just another contractual matter, is that it's better to be proactive and have a lawyer that they trust to spend half an hour or a small amount of time to review a contract because if the contract is problematic and they sign it without spending that time, it’s much more costly in the back end to fix or address issues that have come up from a poorly drafted contract.

Jeff: Is that a relatively common mistake that you see, Dan Cotter, from time to time that you understand these stories whether they are presented to you in person by actual clients that you have taken on because they ended up accepting something that just is not just going to fly? Or there are just not the proper documentation to back up certain terms in the language in the contracts and so they end up coming to you after the fact, saying, "hey, there are some stuff that we need to clean up” or “there is something that just is not right."
 

I cannot tell you how many times I’ve had a friend or former internal executives, when I was in-house, or other folks inquire about what their ability is to move on to something else ... oftentimes when you ask them why they signed something without reviewing it or thinking about it, they will respond that they had no choice. But it is better to be proactive and penny-wise rather than pound-foolish.


Dan: That is often the case and that's understood. A lot of small and mid-sized business, even the large ones, they look at what the legal market is and the costs that are involved in it. Oftentimes, I think the legal profession is seen as being a profession that inserts hurdles and issues where none don't exist. But again, it will oftentimes. 

I've have had situations where business owners, they might be co-owners and partners in a deal, will come when they want an exit or sell or move on to something else, and oftentimes the documents that they have entered into did not really address how they can amicably separate their ways.

It happens in M&A as well, it happens with letters of intent, it happens with almost every type of contract there is. That is just natural. It occurs in many instances. It happens in employment, transactions, offer letters, non-competes, non-disclosure agreements. 

I cannot tell you how many times I’ve had a friend or former internal executives when I was in-house, or other folks inquire about what their ability is to move on to something else. And oftentimes when you ask them why they signed something without reviewing it or thinking about it, they will respond that they had no choice. But it is better to be proactive and penny wise rather than pound foolish. 

Jeff: Dan Cotter with Butler Rubin Saltarelli & Boyd, an attorney in Law in Chicago is with us. We are talking a little bit about, speaking in general terms about his involvement in helping business owners sell their companies and why it is so important to have an attorney involved in the process. Speaking about a business in general terms that he recently just completed the sale with Morgan & Westfield on a service-based business where there are a lot of contracts involved. Some terms that we often hear come up involving the sale of a business, Dan Cotter, reps and warranties. 

Now that sounds like a legalese, but when you get down to it, you get representations. We know what a warranty is, but tell us when you take and combine those two, reps and warranties. What is involved in that language? What does that mean to us as a business owner or to the buyer or seller of the business, and why is it important that we also have these examined by our attorneys before we move forward with any deal?

Dan: Sure and just so that we can use the definition that’s been tried and true, Black’s Dictionary defines a representation as “a presentation of fact either by words or by conduct made to induce someone to act, especially to enter into a contract.” 

Representations and warranties are really assurances by the seller that the purchasing party can rely on as factual. When we look at traditional asset purchase or stock purchase agreements or even other contracts that we may have in our lives, when we look at what representations and warranties are, again, there are assertions of fact that are intended to be true at present — that is the representation part of representations and warranties. 

Warranties kind of go to the future, and say that we are telling you, as the buyer, that with respect to these items, these things are true and will continue to be true. And what we often see in representations and warranties is things such as employment status, that if the company has employees that there’s no current complaints. There's usually reps and warranties about litigation and whether or not there is any material exposure. 

We have talked a lot about contracts today, Jeff, and so again one of the representations and warranties is that the schedule that’s part of that particular representation and warranty that states that all material contracts are attached to the agreement, or that the referenced and the buyer has had access to those contracts to review in their own case. 
 

Every transaction is a bit nuanced. Depending on who is drafting the original drafts of the purchase agreement, if it’s the buyer, then you can expect that the representations and warranties will be slanted more in favor of the buyer. That’s just who drafted determines what the provisions say.


And so it’s important again because a lot of language in various agreements is absolutely boilerplate. Every transaction is a bit nuanced. Depending on who is drafting the original drafts of the purchase agreement, if it’s the buyer, then you can expect that the representations and warranties will be slanted more in favor of the buyer. That’s just who drafted determines what the provisions say. 

So again, it is important that a lawyer review how these are drafted and to ensure that they are constrained and limited as much as possible. For example, oftentimes the draft from the buyer will make very clear statements that are just absolute. For example, seller represents and warrants that all contracts that the seller has entered into are attached as schedule 1.3 or whatever the schedule number may be. 

The problem is that oftentimes, especially in organizations where it is not just a very small group of employees that are knowledge-based. For example in this transaction, it was the principal, and she was the main person that was responsible for having knowledge. 

Oftentimes, what we as lawyers would do is put in qualifiers to make it clear that it is to the knowledge of seller, and the knowledge will be defined to be the particular, actual knowledge of a particular person or a control group of people. And so again what is trying to be done here is that while these are reps and warranties, our assurances and statements to the buyer that certain things are true. I want to make sure that when somebody makes those statements that they actually have knowledge. 

And so you can think of situations where, you know, if GE were being sold, for example, you would want to make sure that there are only certain people that might have that knowledge because literally receptionists in one of their branches in Hong Kong could have received a notice of a lawsuit that is material, and for whatever reason, that is still sitting on that reception desk in Hong Kong. So you want to make it actual knowledge.

Jeff: There is a kind of a colloquial expression that I have heard bantered around now and again, “once and done” and sometimes we use that expression, we take and twist it a little bit, we may call it “one and done.” But “once and done,” what does that mean when you are talking about a business sale or perhaps in your particular case in this particular deal, what does that mean to us and why is that important?

Dan: You know from a business perspective, the “once and done” is that all of the facts, all of the tire kicking, all of the request for information should be done all at once. And once that process is complete, then the contracts will be fully fleshed out, the definitive purchase agreement. 

The reason for that is that if you are doing this piecemeal and repeatedly coming back with a request to the seller for more information, is that 1) the price and terms may change. But to me, the importance of casting a wide net and getting as much information as possible like we do when we enter any personal transaction makes it much easier in terms of the time spent, the resources required by experts and your advisers to review contracts, to review final terms and to opine on things. 

If you have a transaction that is constantly shifting, that’s going to be costly and is also frustrating to both the seller and the buyer. And not an ideal way to approach.

Jeff: I would imagine so, particularly if you are a buyer, and you are interested in a business, and you really wanted to take and move things forward, and move things forward as quickly as you possibly can, and after all I think both sides want that very much. But it would seem that the buyer comes in at a slight disadvantage because the seller holds all the cards from the very beginning. 

You talk about casting a wide net, how does a buyer do that? What would you suggest, Dan? What is maybe a step or a couple of steps that they can take in order to ensure that they are able to, as you say, obtain as much information as they can and make sure that everything is out on the table, so to speak. What is a good tip or rule of thumb for a buyer to remember in order to take this “once and done” approach?

Dan: I think that the best first step is to, again, engage with advisers from the buyer's side and to develop or have advisers provide kind of a template, a due diligence checklist. 

I can give you a story many years ago: I just started at a client, and my first order of business was to put together a due diligence request to a seller and got the business folks’ input, sent it out to the potential seller, and that was my first week with this client. We sat down to dinner on a Friday afternoon with my family — my two young boys and my wife. We got an email and the subject line was "Ouch." So I opened that email, and the email was a long exchange between one of the partners of the seller and my client's CEO. The sellers were not happy with the fact that we had sent them a pretty expansive due diligence request that we’ve used in other deals that listed things by organizational documents, good standing of the company, human resources, IT, contracts, litigation, etc. 

And so I was told that I had to put that down to one page, and we did so. Then we visited the potential seller, and it was immediately apparent why they had balked at that request. 

My advice on both seller and buyer side is to put everything that you might want to know about the seller into the initial due diligence checklist and request. In the worst case, the responses to much of it would be not applicable, none, nothing responsive. 

But as you said, the buyer on the transactional side is always at a disadvantage because the seller knows the business. He knows where the issues are, he knows the blemishes that might exist on the business, and it’s not required as part of the transaction to fully disclose without being requested. At the same time, he should give enough information to make the deal. 

The buyer, if they are doing it right, should send a due diligence list and figure out whether it is going to be an electronic database and due diligence room or if it is going to be in person. Then start that process, in addition to documentation, includes interviews with the main management of the seller, includes perhaps interviews with major clients of the seller. But it is again cast in this broader net and being more thorough rather than the one-page due diligence list that I mentioned in a prior life is going to get as much information as possible.

The other benefit of having that approach is when the final definitive agreement is drafted with all the schedule showing various disclosures and reps and warranties. Again, the buyer may have recoursed on the line if it turns out that the seller, despite the assurances and despite the request from the buyer for a broad information, that the seller did not fully disclose everything that was relevant to the transaction that was requested. 

Jeff: Dan Cotter, this has been a great conversation we’ve had today. It has been very insightful, just as we are kind of winding things down a little on this particular discussion. 

Anything else that might pop into your mind when you are talking to a roomful of business owners or even those folks who may be looking for a business to purchase at one time or another, whether that is in the near term or in the distant future, at some point when they are ready. What kind of advice or just a couple of real key pieces of information could you leave us with today? Some takeaways as far as preparing properly or being ready to engage in a conversation with a business owner about his or her business for sale in order for things to move as swiftly and as successfully as possible toward a deal that is going to benefit both?

Dan: I think that from a seller's perspective, one is that the transaction itself is like selling a house. Oftentimes it is a business that the seller created from scratch and has built into something that is a fantastic organization. 

One thing to keep in mind is that the process can become very personal, and it is very difficult to separate that but I would advise that. 

Secondly, from the seller's perspective, when the seller is ready to contemplate selling and an exit strategy, it’s important to have good advisers in terms of valuation, in terms of the market for whatever line of business your organization is in. People that have a wealth of experience in brokering transactions, they understand where the market is for various lines. So I think it is important for a seller to reach out to somebody that is in that space and get some advice. 
 

On selling a service-based business: You’re not selling inventory, you’re not selling property plant and equipment, all you are selling are relationships and contracts and agreements you have in place with your customers. So you need to have a pretty good idea of the range of potential value that your organization presents.


As the deal starts, as we talked about already, I think for both sides, it is important to have those advisers involved in the discussions and negotiations as much as possible. Put into understanding that the business principles are going to hammer out a lot of details. And it is not cost-effective to have your full body of advisers in every meeting and in every conversation, but if you are serious, I think having advisers in place and thinking that through is a very good idea. 

Finally, if you are in the service industry, I think getting the sense of what valuation methodologies are opted for your business. You’re not selling inventory, you’re not selling property plant and equipment, all you are selling are relationships and contracts and agreements you have in place with your customers. So you need to have a pretty good idea of the range of potential value that your organization presents.

Jeff: Dan Cotter, we’ve run out of time on this edition of the program. I want to thank you again for your participation in the program today.

Dan: Well, thank you.

Jeff: Dan Cotter is an attorney and partner at Butler Rubin Saltarelli & Boyd in Chicago. Done Deal is brought to you by Morgan & Westfield. 

We try to bring you stories from real business owners and from those third-party organizations and representatives that they’re associated with to try to give you some insight as to how things went down with the sale of those businesses, some of the key challenges that were faced, how they were overcome, and what you should do in the future in order to work toward a successful deal on your part, whether you are the owner of a business now or looking to buy one in the future. 

We hope that you join us again on the future edition of Done Deal. My name is Jeff Allen. Until then. Thank you.

Key Takeaways

Have patience.
Diane Robbins’ Miracle Method franchise might have taken a year to be sold, but in the end, everything came together. Diane’s patience with the first buyer was a major factor that led to the deal’s success.

Be prepared.
Having been informed of what was required of her and what she needed to do during the sale process, Diane was able to prepare in advance. This preparedness hastened the sale process from the seller’s end.

Learn to manage your emotions.
Diane mentioned that she went through an “emotional rollercoaster” during the process of selling her business. This is common among business sellers, so keeping an objective view of the deal helps.

Be ready to train your successor.
A seller’s obligations to the business do not end once the deal is closed. Part of what ensures the long-term success of the business in the hands of the new owner is providing comprehensive training and allowing for an adequate transition period.

Read Full Interview

Jeff: No two business experiences are alike, even for franchisees. If you like hearing stories from real business owners like you who've recently sold their businesses and lived quite well to tell about it, you've come to the right place.

From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk", brought to you by Morgan & Westfield,nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.

Jeff: Hello and welcome back to the web's number one content source for small business owners looking to build a business for eventual sale. Here on "Deal Talk," it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.

Experience is the best teacher, even if it may be someone else's experience that you're learning from. That could be, again, particularly true when you are a business owner who may be interested in selling your business. On this edition of "Deal Talk," we're welcoming the former owner of a franchise business who's gone through the experience of selling their baby and has agreed to share their story right now with us. Her name is Diane Robbins, and she is now the former owner of the Miracle Method franchise in Ludlow, Massachusetts. Diane Robbins, welcome to "Deal Talk." 

Diane: Thank you, Jeff.

Jeff: Miracle Method, for those folks who may not be familiar with your company, provide a service that actually restores and refinishes surfaces, and that includes things like bathtubs, countertops, and things like that, is that correct?

Diane: That's very correct. We also do a lot of high-end colleges and big businesses.

Jeff: Really in the surface of making things that are old and worn-out look new again, and at a price that is maybe a little bit lower than what it might cost to have a contractor come in and just demolish everything and start over again with a brand-new countertop surface or a brand-new tub or something like that, is that right?

Diane: Correct. They save about 75% by going with our process.

Jeff: Which is huge, it's just significant. Miracle Method has been around for some time. We've had a chance to speak to other Miracle Method owners and former owners in the past who've shared their stories. But like I said, no two stories are absolutely 100% alike. And the reason we like to talk to business owners and former business owners like yourself, Diane, is to share your story. Tell us a little bit about why you decided to share a business that you had found quite a bit of success with.

Diane: We weren't going to retire. My husband and I were going to keep on going and maybe hire a manager. But a few years back, I ended up with some medical problems and my husband basically fired me because I was calling out too much. He acquired my part of the business problems, and it just got to be too much. He is not a high-tech person, and we felt that our franchise needed to go into the 21st century with iPads and other products going into the home. And we decided it was just time that we spend time away from a business.

Jeff: Understood. You were in a situation where, obviously, health at first was the main concern there that sparked all of this. But at the same time, you knew that it's in the company's best interest to move forward with respect to your particular location, in your part of the country, your franchise location, when you began to entertain this idea of selling your company and move forward with the idea of doing that, what did you do first?

Diane: We reached out to Miracle Method National in Colorado Springs and spoke to John Tubiolo, the franchise guru down there, and ask him about if they had any brokers that they dealt with versus us just putting something in a newspaper. And he did, and it was Morgan & Westfield.

He hooked us up, and I just felt that I was in the right direction. We answered their questions. They have a large questionnaire, and we answered all of their questions and did our contracts, etc. From there, he put it into the various magazines and small business ventures. And within four days, we had a prospective buyer. 

Jeff: Wow. That is a very, very short space of time, from the time that you got connected with the folks at Morgan & Westfield until the time that you actually had a prospective buyer in your sights interested in your franchise location there.

You and your husband then, did you share equally in the role as far as being involved in the process, or were you still at that time getting better with respect to your health and he was working the process?

Diane: No. I was the one who dealt with the whole process. He was working away. I did everything. The only thing he did was help me answer the technical questions that Morgan & Westfield had provided. That was basically it. He would ask here and there, but it was all me.

Jeff: How long did it take for the entire process to play out from the time that you contacted the folks at Miracle Method Corporate to the time that things closed for you and the sale was completed?
 

When you have a buyer at the beginning, it doesn't mean that within a couple of months you have a closing. That's the message I want to get out to prospective sellers, that it's just a patience and waiting game.


Diane: It took one year for this whole process with the same buyer, that was within four days. We went through an emotional roller coaster.

Jeff: Oh my goodness. We want to get to that a little bit here. I want to talk to you about that. Once the buyer presented themselves to you, it took one year after that or was it a matter of things speeding up after that process or after that point?

Diane: No. The gentleman was very enthusiastic and had the money, etc. And we would hear from him, and then for one month we would hear nothing and we think, "Oh my god. He's gone. We lost our prospective buyer.

Jeff: And that was a concern to you?

Diane: Very much so. And then we hear from him. He's as enthusiastic as he was a month ago. And then he had to go through the process of getting an SBA loan, which was a nightmare for him, a nightmare for us. It took many months. And even after he was approved, it was still a lot of little things that we had to provide information for him, etc. And I think in some parts, his lawyers were not good lawyers helping him along.

Jeff: I see. During the time then, when you were concerned about this and you'd hear from him. He sounded enthusiastic and then he got you up to date on his status. And then you wouldn't hear from him for a month or so. Were you at any point in time talking to additional prospective buyers to see if there might be somebody else out there who is willing to step forward and maybe come through without having you wait any longer?

Diane: During the whole process, we had four other prospective buyers, but we did nothing with them because we had faith in the gentleman who was pursuing this and thought that it would be disrespectful to start another process.

Jeff: Fair enough. Diane Robbins on the other end here of our conversation. My name is Jeff Allen. You're listening to "Deal Talk." Diane Robbins, now the former owner along with her husband, of the Miracle Method franchise in Ludlow, Massachusetts. We're talking a little bit with her today about her recent experience in selling her franchise location there. 

Would you say the most stressful part of the process, Diane, was just the waiting game, waiting for all of this to play out and wondering whether or not this was actually going to go through with this person?

Diane: Exactly. It was a mental nightmare, but it ended up to be a good ending.

Jeff: Very good. Really the ending is the most important part, right? It's how we finish the race that counts. Give me some sense of how much work was involved on your end in terms of getting your business ready to sell. Were you surprised at the amount of work that was required? Were you ready for it?

Diane: I think we were pretty well-prepared. Like I said, we had spoken to Miracle Method National and had been in contact with Morgan & Westfield throughout this process. And they let us through what was expected of us, and it really went fairly well on our end.

Jeff: You talk about a questionnaire that Morgan & Westfield provided you. What other types of things, what kind of role overall did Morgan & Westfield play in the process?

Diane: They basically got us started in the whole process. And once everything was going, they went into the background until he would call periodically to see if we wanted to update our information for other prospective buyers. And throughout that, I kept on saying “no” because we had this one buyer. And we just had the faith in the buyer that he was going to come through. And at the end, it almost didn't come through, and we were like, "Should we have updated everything and contacted other prospective buyers?" But in the end, it worked out.

Jeff: Did you ever have to meet with anyone at Morgan & Westfield face-to-face at a table during this process?

Diane: No.

Jeff: Was the fact that you didn't have to meet with them in person, did that still work out for you? Was it convenient for you being able to stay in touch by email and by phone?

Diane: Totally. I did not feel the need to go face-to-face with him. And I felt that I knew him pretty well just by him being so responsive to everything.

Jeff: Let's go ahead and move forward a little bit. And maybe we're fast forwarding a bit, but we're getting to the closing process. You had mentioned that there were some concerns that maybe things wouldn't go through. Was there a point at the end where you thought, "You know what, we've waited this whole time, and now there's a pretty good chance that this isn't going to happen.” Did that ever cross your mind?

Diane: Yes. There were dealings, negotiations with purchase price that he had agreed upon at first, and then he was skeptical about the price. So we negotiated price, and that was a very, very tough decision on our part. And so now that we were so long involved that we gave in because it was time to sell. We did the right thing.

Jeff: Did Morgan & Westfield play any role at the closing table and that process, helping you with those negotiations or working with that buyer in trying to get the deal done and get it consummated?

Diane: No. They were in the background at that point. And it was just between the buyer and us.

Jeff: I'm getting then one of the more stressful parts of it that you talked about was the waiting game. And you mentioned that that might have the most stressful part of all but then we get down to the negotiation. 

And everyone, Diane, I'm sure like you have bought cars, and many people have purchased homes and so we all know what it's like to go down... You get down to the end of the last few days or moments. You get down to the end of the wire. You've got that negotiation and you know that that's coming up and that's looming. Would you say that the negotiations were the most challenging aspect of selling your business or was there something else that caused you maybe some headaches, or you weren't exactly sure whether or not you would be able to get through it without some help?

Diane: No, I think it was the negotiations. But throughout the whole thing, I think you need patience. And that was our saving grace, that both of us were very patient. And we were not edgy with the prospective buyer and we just went along with what was going on. And to know that when you have a buyer at the beginning, it doesn't mean that within a couple of months you have a closing. That's the message I want to get out to prospective sellers that it's just a patience and waiting game.

Jeff: Boy, that is an outstanding piece of advice. I think another way to put it is never take it for granted that you've got a deal done until the signatures are on the bottom line. And you've got your money in your pocket and the buyer has the business in hand.

Diane, really important advice, I think the key here is never to take anything for granted until you've got those signatures not wet but dry on the bottom line of that contract. I'm speaking with Diane Robbins, now the satisfied former owner of the Miracle Method franchise in Ludlow, Massachusetts, helping to give us the opportunity to understand what it was like for her to sell her company after owning it for so long. 

She wants to share her experience with you so that you can be prepared for the eventuality, selling your own business whenever that may be, whether that's two years from now or 22 years from now. My name is Jeff Allen, and we'll be right back with my guest Diane Robbins here on "Deal Talk" when we come back after this.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on the future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message, include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com. 

Selling your business may be the most important business transaction you'll ever undertake so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield, we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers. 

Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.


Jeff: If you have any questions about any of the topics you've heard us discuss here on "Deal Talk," all you have to do is ask. It's very simple to do. Simply call our Ask "Deal Talk" info line at 888-693-7834 extension 350. Follow the instructions, leave your question, and we'll reach out to one of our guest experts so we can feature your question and their response on a future edition of "Deal Talk." Ask "Deal Talk" at 888-693-7834 extension 350.

My name is Jeff Allen and you're listening to this edition of "Deal Talk" with special guest Diane Robbins, the former owner of Miracle Method franchise in Ludlow, Massachusetts. The Miracle Method franchise location there. Miracle Method, of course, now all over the country. Diane Robbins, I appreciate you joining us today on our program, really enjoying your insight and your first-person's perspective experience in selling your company, your Miracle Method location there in Massachusetts. 

I want to talk to you now a little bit at this time, Diane, about the emotional aspects of selling your business as it relates really to your employees, the team of people that you had working with you. Tell us about that. How large was the team, and how did you break it to them about your plans to sell?

Diane: There are eight employees, and one of them is our son who knew all along what was going on. He's very quiet and patient and non-verbal to anybody. So the whole year nobody knew what was going on. Two days before our sale, my husband told the employees that there was a new owner. Their mouths just dropped. And, of course, they were like, "Do we call you for problems? Can we do this, do that?" And Ray reassured them that the buyer was a very nice gentleman, and he was going to get this company going into the 21st century and just improve everything.

Jeff: How did the team take that when you tried to soothe their concerns a little bit about the transition? And once your husband talked to the team about this gentleman and what his plans were to help drive the accompany, its success into the future, what was the response? Did you feel that they had relaxed a bit and were feeling a little less stressed out about the situation? Just tell us, if you would.

Diane: No. They were all worried that they would not have jobs. And my husband reassured them that he had no plans on firing anybody, and everybody was going to be the team to start and prove themselves along the way and go forward.
 

There's no way that this gentleman would know the ins and outs of this business. It's not like walking into an office of some expertise that you knew about. This is just a different kind of business that you just don't walk in knowing anything about it.


Jeff: As far as you know, everybody's still there from what you understand?

Diane: Oh yes. They're all there. It's been three weeks and the transition's going smoothly. My husband is there along with our new buyer, giving him some instructions. And then he will go to Colorado for the main training.

Jeff: Very good. I think it's important to point out that this program will be heard probably months and then maybe even years if this transaction had all been completed. So I think it's important to point out at this time, Diane, that you and your husband agreed with the new owner of your Miracle Method franchise that you would stand by in order to help them or in fact spend a certain amount of time with them in the beginning to ensure a smooth a transition as possible, is that right?

Diane: That's right. There's no way that this gentleman would know the ins and outs of this business. It's not like walking into an office of some expertise that you knew about. This is just a different kind of business that you just don't walk in knowing anything about it.

Jeff: Did he have any kind of experience before with the Miracle Method process or doing something similar with another company?

Diane: We resurfaced his tub 12 years ago.

Jeff: Is that right?

Diane: Yes. And he loves his tub, and that's where he knew when he was looking for a business that this was the right direction, that it was a nice small business that he could get into that the product was reliable.

Jeff: Wow, no kidding?

Diane: Knew from firsthand that having his tub resurfaced himself from Miracle Method.

Jeff: I wish I would've led with that question, kicked off the program here with that question because I don't know if you remember the old commercials for the Remington shaver back in the ‘70s. Victor Kiam who bought himself a Remington shaver, he liked it so much he bought the company.

Diane: Exactly. That's what this man did.
 

I think buying this business was just as nerve-wracking [as selling it].


Jeff : That's a great story, and it's one that you can turn around, I'm sure, and start a conversation about. I think it's really heartwarming to hear that the employees have obviously continued. And that the new owner is really inter-directed and very convicted about making sure that he can lead the company and continue to lead it into the future. And upgrade the technology a bit, as you said, that you and your husband were a little bit uncomfortable with doing, but that he has made that commitment to help improve the business and to help make it even more profitable than it already is in terms of being able to look at other types of things that you've done in your life.

Selling your company, is there any comparing it to any other type of situation that you have been involved with in terms of whether it be the emotional roller coaster that you've been through or the amount of preparation that you had to do in order to get your company ready for sale?

Diane: I think buying this business was just as nerve-wracking.

Jeff: Really?

Diane: Because we knew nothing. I was a nurse for many, many years, and my husband was a meat manager at a grocery store, and also a special police officer in our town. There was nothing. We knew the old owners, and my company was folding. My husband had had enough of the food industry, and he had 35 years there, and so he basically retired from that business. And we just up and started and it was very nerve-wracking.

Jeff: Amazing. Really, you're talking about people. If you could find professions or occupations that were the opposite of one another, you hit it there. Police officer, nurse, and meat cutters, that's completely different from folks who can go in and resurface a countertop, if you will. It's an unbelievable comparison. It's a contrast is what it is. Now that everything is done, now the signatures have dried, you have your money, the new owner is working with the business. He's trying to get up to speed. And you've got the employees there. Everything's been done. They understand the new owner is in charge now. What's it like? How do you feel about the process being over and just share with us the feelings afterward?

Diane: I think I'm okay because I've been out of the business for two years. I know what's going on, but I'm not there. But my husband is having the "this was my baby and I'm leaving my baby." But he feels that it’s in good hands, and each week is getting better.

Jeff: What are you both going to do now, Diane Robbins? You and your husband, share with us any plans that maybe you're making post-business ownership?

Diane: I have lots of honey-do-lists here.

Jeff: And how active a role will you be playing in that?

Diane: I will be writing the honey-do-list. 

Jeff: True to form, Diane. Spoken like a loving spouse, and I have experience with it from the other side of the list, shall we say. You're going to have some fun, right? You've got some other things that you're going to be doing, right?

Diane: Of course. We're going to travel here and there. I have difficulty walking so I'm not going on the big tours of any sort, but locally and not airplanes. And I have two wonderful grandchildren that I can spend more time with. And I'm looking forward to that.
 

My advice to anybody is you have to have patience. This is not something that goes to market right off the bat and you're signing papers in a couple of months. It's just patience.


Jeff: Very good, let's, if you would, take just a second as we close our program with a couple of final questions with respect to any advice that you're able to give. If you had to do it all over again is there something that you would do differently that you might urge members of our listening audience to consider when it comes time to sell their business?

Diane: I think I would not do anything different. I had faith in the first prospective buyer. And my advice to anybody is you have to have patience. This is not something that goes to market right off the bat and you're signing papers in a couple of months. It's just patience.

Jeff: Patience is a virtue and it will be rewarded. And in terms of preparing your company for sale, to making sure that it is ready to go and that it is marketable to somebody else out there, so that you actually have people coming in and interested in what you're doing, sitting down with you saying seriously “yes”. Is there any anything at all that you might be able to say in terms of making sure that you're ready when it comes time?

Diane: You have to have profitability in the business itself and showing that... obviously, he knew what the company was about because he had his tub done. But we had to basically just put ourselves out there and do our thing because it is a good, small business.

Jeff: It sounds to me that you found, overall, the process while it was stressful and there was that emotional roller coaster, you were satisfied at the end and able to let your hair down at that point. And now that you're looking forward to new chapters I want to thank you so much for joining me on this program, sharing your perspective, all that you went through, and your plans for the future. Diane Robbins, thank you again.

Diane: Thank you very much, Jeff.

Jeff: That's Diane Robbins, the former owner along with her husband of the Miracle Method franchise in Ludlow, Massachusetts. I hope that you got a lot out of our discussion and enjoyed it along the way too.

Let us know how we're doing. I'd love to hear more from you, and we'd appreciate your comments. Just send those comments, compliments, criticisms, whatever to dealtalk@morganandwestfield.com. "Deal Talk" is brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com or by calling 888-693-7834. I'm Jeff Allen, here's to your success.

While we take reasonable care to select recognized experts for our podcasts, please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

 

Key Takeaways

  • Morgan & Westfield’s one and only specialty is selling and valuing businesses. By specializing on this one endeavor, we have become focused, thus substantially increasing the quality of our services. As we’ve been in the business for more than a decade, we’ve become very good at what we do.
  • Our large backend support team is what mainly sets us apart from other business brokers, who work solo and have no support staff at all. Having a team of experts allows us to be more efficient in our processes, as opposed to a typical business broker who plays the role of a jack-of-all-trades.
  • Another main differentiator is that we cut the most time-consuming yet unnecessary roles of a broker in the deal, which is physically meeting with the buyers. We believe that there’s no one better than you, the owner, when it comes to showing your business to a buyer.
  • Our fees are highly competitive because we model them after other professionals like accounting and law firms. Because we’re efficient, we spend less time on each deal. By spending less time, our costs are reduced, and thus we can charge lower fees.
  • Everything we offer is on an a la carte basis. You have the option to select only the services that you need. You can even bring in your professional advisors, such as your accountant or attorney, to the conversation to help you make the most intelligent decision.
  • Whether you’re ready to sell now or later, Morgan & Westfield can help you. If you’re set to sell, we’ll prepare a framework of recommended steps that is customized for your business and walk you through the sale process. If you wish to prepare for the sale in advance, we can provide you an exit plan, value your business, and help you increase the value of your company.

Read Full Interview

Jeff: The Morgan & Westfield Podcast, an ongoing series of conversations with Morgan & Westfield President Jacob Orosz. On this edition, who is Morgan & Westfield? And that’s exactly what we start by asking Jacob.

Jacob: Jeff, thanks for having me. We are business brokers and appraisers. Our one and only specialty—and that is our one and only specialty—is selling and valuing businesses. We have sold businesses in nearly every industry and in every state in the country. Personally, I’ve been in the industry for nearly two decades, and I started Morgan & Westfield almost 10 years ago. 

Jeff: You said something very interesting, your one and only specialty. Now, you've made that sound very important. Why is it so critical to be good at just that one thing?

Jacob: It's just too hard to be all things to all people. When I first got started in this almost 20 years ago, I tried to be all things to all people. I tried to do too many things at once. Selling a business is hard enough, let alone when you try to, let's say for example—and a lot of people do this—but let's say you're trying to sell residential real estate or commercial real estate, or you're doing leasing, or you’re a financial advisor, accountant or attorney, and on top of that you’re trying to sell businesses. It’s just way too difficult. 

We have found that by specializing, that has allowed us to become very focused and actually substantially increase the quality of what we do. When you do one thing over and over again, you tend to get very good at it.
 
We have found that by specializing, that has allowed us to become very focused and actually substantially increase the quality of what we do. When you do one thing over and over again, you tend to get very good at it.

Jeff: Let's learn a little bit more about the person who makes up Jacob Orosz. How did you get into this business, Jacob?

Jacob: Well, I come from a line of entrepreneurs in our family, and I worked in our family manufacturing business for several years. And I got into selling businesses almost 20 years ago when businesses were actually sold in the newspaper. And I toured the whole country, traveling from Florida to California looking for the top business brokerage company to work for. And I ended up working for one of the most successful, top-ranked offices in the country. They had a total of about 200 offices, and I worked for their top office. 

I actually ended up leaving because I saw that their model for selling a business was broken. Their platform was modeled after the process of selling residential real estate, where real estate agents work on a local level. They advertise houses in the newspaper, drive the buyers around in their car, and work on a straight commission. 

Now don't get me wrong, that model works very, very well for the real estate industry, but it's proven that it is just not that successful for the business brokerage industry. 

The International Business Broker's Association, or the IBBA, publishes an annual survey. And in that survey, they ask brokers what percentage of their listings they actually sell. That number has hovered around 30% to 40% for the last 10 years, so the proof is right there. The model that is currently being used is not the most successful model that could be used. And because it was a larger corporation I was working for, there really wasn't much I could do to improve the system. And I really wanted to change the industry, so I decided to start my own company.


Jeff: So with all of that in mind and with the things that you thought were broken at that larger corporation, what did you bring to your concept for Morgan & Westfield to make your business different? How is Morgan & Westfield different, and in fact better than the way that other brokers may be used to working?

Jacob: The biggest difference is that we have a large support staff, like accounting and law firms. Most brokers are solo, with no support staff at all. Or if it is an office with multiple agents, again, zero support staff. So what impact do you think that's going to have on quality and efficiency? Quality and efficiency go hand in hand. If you're not efficient, what impact is that going to have on cost? What's more efficient: a team of experts or a jack-of-all-trades who has to juggle it all and juggle it all for dozens of clients at the same time?


Jeff: I know that certainly with the companies that I have dealt with, with both personal- and business-related matters, I've always found it easier to work with an organization that did have individuals that handle different aspects of what I needed to be done, and so I agree with you completely. It does certainly seem that your particular business model is much more efficient than what we would typically be used to from traditional business brokers. 

Let's talk about any other differences or advantages that you can point to with Morgan & Westfield.

Jacob: Another major difference is that we cut out the number one investment of time in the deal, which is physically meeting with the buyers. We feel very strongly that this is unnecessary.
 
The biggest difference is that we have a large support staff, like accounting and law firms. Most brokers are solo, with no support staff at all... Another major difference is that we cut out the number one investment of time in the deal, which is physically meeting with the buyers. We feel very strongly that this is unnecessary.

Jeff: Why is it that you decided that it's not really important to meet with a customer face-to-face?

Jacob: Two reasons. Number one, the buyer feels more comfortable meeting with the seller directly, as opposed to having an experienced broker sit there observing and analyzing their every move. 

And number two, it's just not a technical conversation. The buyer wants to know about the business at this point, and who better to tell them than you, the owner. It's a simple meet-and-greet, ask-questions-about-the-business-type of conversation. The technical conversations happen once the buyer is prepared to make an offer, and that’s when we become involved again. 

There's really no need for us to be there at this point. And I've been to hundreds of these meetings earlier in my career, and we can provide the same level of value by being just a phone call away if we are needed. Not to mention that when my expertise was needed before, I usually wasn’t available because I was sitting at a meeting with another buyer. So, again, we've cut that step entirely out of the process.


Jeff: Why do you believe that other brokers do continue to do that, continue to meet with their clients and meet with the buyers?

Jacob: It's simple, one word: “commission.” They need to protect their commission. If they're not at those meetings—and it's happened a lot in the past—the buyer and the seller meet, the buyer asks, "Hey, what are you paying this broker?" Say it is 10%, 50 grand, 80 grand, whatever the cost is, and the conversation goes from there, and they find a way to cut the broker out. So once that has happened to a broker once, the broker then feels the need to be at all of those meetings and to babysit the transaction simply to protect their commission.
 
We model our fees after other professionals like accounting and law firms. We work on a fee basis with a small success fee on the backend of the transaction.

Jeff: And talking now, Jacob, about fees, do you structure your fees the same way? 

Jacob: We model our fees after other professionals like accounting and law firms. We work on a fee basis with a small success fee on the backend of the transaction.


Jeff: So tell us how the fees compare with those of traditional brokers. Are they competitive?

Jacob: Yes, they are. Let me give you a solid example. Say you sold a $500,000 business, you'd pay the average broker 10% to 12%, or $50,000 to $60,000. For us, it would typically range from 1% to 5% of the selling price, or $5,000 to $25,000. And this equals a savings of $25,000 to $55,000 on a half-million-dollar transaction. 


Jeff: Why are Morgan & Westfield’s fees so low?

Jacob: Two reasons. Number one: We're more efficient. Because we're more efficient, we spend less time on each deal. And because we work only by email and phone, we spend less time on each deal. Obviously, when you spend less time, you can charge a lower fee. 

Reason number two: Commission-based brokers need to pad their fees for the 60% to 70% of transactions that don't close. So if you end up selling your business and paying a broker $100,000, about $60,000 to $70,000 of that represents a fee that the broker's charging you as a pad just for the other transactions that they were working on that did not close. So for those two reasons alone, we've been able to significantly lower the fees that we charge our clients.


Jeff: As a business owner and someone who decides to work with you to sell my business, what am I paying for? How are those fees actually parsed out?

Jacob: Again, we are not primarily commission-based. We do have a small success fee on the backend of most deals to motivate us to close the deal. But, we work similar to other professional advisors, like attorneys and accountants. 

Once we meet with an owner, we prepare a proposal, and in that proposal is a list of the services that we recommend and the fees for each of those services. We have another show that will walk you through our proprietary process of selling a business.

Everything that we offer is optional. So the owner can go through that list and say, "You know what, I don't really think that we need a formal business appraisal." And that’s okay. If they want to meet with their attorney or accountant and discuss that, or bring them into the conversation with us, that would be fine as well. So they can help them oversee the process and the fees, and try to make the most intelligent decision possible.


Jeff: Give us some sense right now, if you could, in summary form, how the process works with Morgan & Westfield. So if I were to pick up the phone right now, give you a call, and tell you, "Jacob, I think I'm ready to sell my company. Let's go ahead and let's get started," what happens next?

Jacob: First, we would have a phone meeting with you, the owner. We discuss your objectives, your business, the industry, and dozens of other questions about your business. After that meeting, we would prepare a framework of our recommended steps. And no two transactions or businesses are the same. So every single one of those is customized. Next, you would review the process or framework, discuss it with your advisors if you want to, and then we can tweak the process if necessary.
 
First, we would have a phone meeting with you, the owner. We discuss your objectives, your business, the industry, and dozens of other questions about your business. After that meeting, we would prepare a framework of our recommended steps. And no two transactions or businesses are the same. So every single one of those is customized. Next you would review the process or framework, discuss it with your advisors if you want to, and then we can tweak the process if necessary.

Jeff: What about in those cases where you have a business owner who's not exactly sure if they're ready to sell right now. Is there anything that you're able to do to help them improve their company's value, help them get their business ready to sell?

Jacob: Absolutely. Number one we can do an exit strategy. And that's primarily a qualitative look at the company. We do look at it quantitatively as well. But it's primarily a qualitative review of hundreds of factors that we take into consideration before selling your business. Then we prepare a game plan, that’s typically 50+ pages, of steps you need to take to prepare your business for the sale. 

Secondly, we can value the business. That's helpful because let's say that you want to get 2 million for your business and we only think it's worth 1 million. Obviously, you shouldn't put it on the market now. And again, that is an impartial view of your business because we're not being paid a commission. That offers us the ability to give you an unbiased opinion on the value of your company. 

And then third, if your company isn't worth what you would sell it for, we can help you increase the value of your company.


Jeff: Jacob Orosz, thank you so much for joining us.

Jacob: Thank you, Jeff.


Jeff: And thank you for listening. I’m Jeff Allen.

 
 

Key Takeaways

  • For business buyers, an accountant and CPA are the two most important people one needs in their team to help with buying and validation processes. A broker may not be necessary for someone who is looking to buy a business. 
  • Employees' reactions to the change in ownership of a business may be mixed. Those who provide the business's services, the ones in the field, tend to be less concerned about changes, especially changes in their roles. Others who hold management positions are more prone to worry, as there might be changes in their usual way of doing things. 
  • For a new business owner, building good working relationships with employees is important because doing so will motivate them to provide the best possible service to customers.
  • In buying a business, being thorough in due diligence is paramount, as this will enable the new business owner to run the business more easily and effectively.  Business sellers, in turn, should prepare in advance the data and documents that buyers usually request to save time during due diligence.

Read Full Interview

From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk", brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.


Jeff: Hello and welcome back to the web's number one content source for small business owners committed to building a business for eventual sale. Here on "Deal Talk," we share real stories and information from business owners and industry experts that you and all small business owners can use to help you improve your company's value, sell your business successfully, and enjoy what life brings next.

On the program, we have talked in the past to a number of experts who are in the business of helping business owners transition, and in transition help them sell their companies. And they have given us a good taste for what buyers are looking for when they are out prospecting and seriously considering your company. But on today's edition of "Deal Talk," we're going to be speaking with one of the buyer's first-person perspective of what this particular buyer was looking for in the company that he ended up buying, what he has been able to do with his company in a short space of time, and just get a feel for what it is like from a buyer's perspective when they are going through the process of buying a business.

And what we hope to accomplish by doing this is so that obviously business owners can get a clearer understanding of what's going through a buyer's head. Number one, sellers understand what's going through a buyer's head, and number two, if you're considering buying a business yourself, maybe this will give you some sense of what it is like to go through the process before you've had a chance to go through it. That way, maybe you'll be able to form some questions on your own based on this conversation, some things that you should consider asking sellers eventually when you're in the market to buy a business. 

And to help us do all of this stuff today, we are talking with a gentleman who is the new and recent buyer of a business. As a matter of fact a Miracle Method franchisee now, and we've had a couple of folks from Miracle Method join us on this program. His name is Mike Rabinovich. Mike, I want to thank you for your time and welcome you to "Deal Talk," sir. It's good to have you.

Mike: Thank you for having me.


Jeff: Mike, you have purchased a business that we have featured on this program in the past. We spoke with a gentleman who is the former owner, in fact now, of the very location that you own and operate. That gentleman, Dan Ness, we spoke with him some time ago on "Deal Talk" and now you own that same location.

Mike: That's right. 

I think due diligence is extremely important, and both a CPA and a lawyer [are] the two primary people who would help with the process.

Jeff: I was wondering if you can share with us, Mike, what factors made you decide to buy this specific location from Dan Ness and this specific business, Miracle Method?

Mike: The location was pretty simple. We moved here to Portland, and I was looking to settle down, and I was looking for a business in Portland area. I was tied to a location. When I started looking for a business to buy, I initially started looking for manufacturing businesses because that's something that I was more comfortable with. 

But as I was looking, it's a fairly long and complex process looking for a business. There are not very many for sale, and the ones that are for sale I was looking for the right business. And as I was digging through a pile of businesses for sale, this one appeared on my screen. There are a few things that I really liked about it. I thought the buyer was selling it for the right reason. The business was well-established and well-known in the community, and I really like the product. So those are the main things that drove me eventually to purchase the business.


Jeff: How long was the process for you? Once you arrived in Portland, did you start looking for opportunities before you arrived in town, or was it after you arrived in Portland that you wanted to get a lay of the land and see what's available out there before you finally started to zero in on your target?

Mike: It was after I arrived. I came here and then within about three or four months, I started looking. I had a corporate job before that. I have plenty of time to look. I knew I wanted to buy a business, but I knew I could take my time looking for one. And once I started looking, I think it took about six to seven months until I stumbled upon Miracle Method.


Jeff: Mike, for those people who are tuning in for the very first time who may not know what Miracle Method is and what it does, tell us a little bit about your company and what you offer your customers?

Mike: What Miracle Method does is refinish surfaces. A lot of our work is tubs, showers, tile countertops, and recently a more advanced commercial project. We do refinish concrete countertops, concrete floors. But essentially, any hard surfaces, instead of doing a demolition and put new ones in, we'll refinish them and make them look and feel new.


Jeff: And the advantage here to a lot of people and I think many customers are interested in this is the cost savings over demoing an existing countertop or an existing tub and replacing with brand new. You provide a cost-effective option, correct?

Mike: Exactly. Not just cost but also convenience and time. A lot of people don't want to leave for a demolition process of their house or their business. They would rather have it refinished, done in two or three days, especially if the business, as we see it, is very attractive. They want to get back to doing business. They don't want to shut down for two weeks for a complete remodel.


Jeff: Mike, let me ask you. You had a choice. You could have purchased an independently owned business. You ended up though buying an existing franchise instead of an independent business. Why did you decide to select an existing franchise?

Mike: To be honest with you, initially I was a little apprehensive about the franchise. I did not know much about them, but my perception was that a franchise would dictate a lot of what I do and how I do it. And once I started investigating, I actually like the franchise model. And now, I like it even more that I have been a part of it. 

The reason I like it is it gives me a lot of the support network that otherwise I would not have. If I have a question about something, there are other franchisees I can go to and ask them. And somebody always has an answer for me. They help with purchasing. They negotiate national contracts, so I don't have to. There is a lot more negotiating power when you do the franchise. 

From the back-office support, anywhere between constructing a website and doing national promotions, all of those things become a lot easier and more cost-effective when you share the cross, 144 franchisees or however many we have right now.


Jeff: And we've heard similar explanations given from others who also elected to go the franchise route and simply because you have that tremendous support mechanism. You've got it not only in support from, the quality of support you get from corporate but also in the quantity of support, the number of individuals who are there to help you out along the way and in that chain.

When you were ready to get started with the buying process, which professionals did you consult during the process who ended up being most helpful to you?

Mike: I think when I started out, a lot of the background work I've done myself. Once I did not go through a broker directly, I kind of looked online. I contacted a couple of brokers initially, and none of them ended up being exceptionally useful. But when I found this franchise, the main thing was an accountant and a lawyer. Those are the two professionals who helped me go through the steps of the process as well as the validation process.


Jeff: Is that something that you would advise other potential business buyers to do in terms of taking the steps that you did in order to ensure a smooth process?

Mike: Absolutely. I think due diligence is extremely important, and both a CPA and a lawyer, the two primary people who would help with the process.


Jeff: Mike, how long did the process take, the entire buying process?

Mike: It took us about seven months, from the time that I found this business, which was in about April, and we ended up closing at the end of the year, which was more of a convenient thing because the calendar year and fiscal year align. So it was easier. We could probably close a little sooner.

I thought we could do it a little quicker. My expectation was probably three to four months to close, but it took longer. Due diligence took a little longer. Financing took a little longer. Basically, everything took a little longer than I thought it would, but it didn't take too much longer. 


Jeff: Did the people that you worked with and the seller of the company too, were there any concerns or was there anything that they thought could actually contribute to the length of time before things were done, maybe some things that were just entirely out of your control that nobody really expected?

Mike: No, I don't think so. I think everything was... And again, not that it was really delayed. Most things took about as long as they should take. From my perspective, I expected to see a lot more data. I'm a very mathematical person, so I kept asking for more data. 

The previous ownership I think they were running business more by the field than data-driven. And when I asked for data that seemed obvious to me, they just did not have it ready. So it took a little time for them to dig up the data when they could find it. And then it would take for me some more time to analyze what they actually provided.


Jeff: And by the way, Mike, one thing I should probably point to those people who have listened to "Deal Talk" for some time, we've mentioned this before, the fact that it is very common to run into the situation that you yourself found out in working with the previous owner that most business owners do kind of operate that way. 

To say it's “by the seat of your pants” is not accurate, but it is certainly one of those things where you said yourself, “more by feel.” Where the data is not always the most important thing, the analytics of it all. Those types of things oftentimes end up following well down the line, and they present themselves in that due diligence. 

And I'd like to camp out on that for just a second, talking about the due diligence, and we've already touched on that just a little bit. As far as the due diligence process itself, were there any significant challenges that you came across that maybe you didn't necessarily expect and that you feel now, as a business owner yourself, you will be better prepared for, so that when you get ready to sell, whenever that might be, that you'll be able to avoid those issues yourself in your next business transaction?

Mike: There was nothing very difficult, there was nothing critical; otherwise, we probably would not be able to close. But I feel like if our seller took a little longer to dig through data that they have and prepare it... For example, because this is a franchise and there are specific territories that I have to buy, one of the questions that I had, “how much business do you do in each one of your territories?” 

And to answer this question probably took about a month and a half because they did not have the data structured in a way that this was easy to calculate or easy to extract. Now that I own this business, because of the way I maintain my data, I can give you that answer probably within five minutes. 

And to them, it wasn't very important because the way their territories were, they've had it forever, and they probably did not care very much. But as a buyer, I care because I needed to figure out which territory I should assume, which territories I should not assume, does it make sense the way the territories I'm going to structure, do I need to negotiate something with the franchise master. That probably took the longest just because the data wasn't there and it wasn't available.


Jeff: We're talking with Mike Rabinovich. He is the new owner of the Miracle Method franchise in Portland, Oregon. And we're talking to him about his experience in purchasing this company. In fact, from a former "Deal Talk" guest who also ran it very successfully, by the way, Mr. Dan Ness. And we've heard that Dan has quite a name in that business and with that company. He'd been with them for such a long time. And now Mike, of course, doing very well there himself. Our conversation with Mike will continue when "Deal Talk" resumes right after this.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on the future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message, include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com. 
Selling your business may be the most important business transaction you'll ever undertake, so don't go it alone. Work with an organization that has made it their business to sell businesses, and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield, we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy, to preparing a comprehensive appraisal and locating the right buyers. 

Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.

If you have any questions about any of the topics you've heard us discuss here on "Deal Talk," or if you would simply like to give us your feedback, we'd love to hear from you, all you have to do is send us an email to dealtalk@morganandwestfield.com. Once again that's dealtalk@morganandwestfield.com. You can also make a phone call and leave us a message at 888-693-7834. Again, that's 888-693-7834 extension 350.

My name is Jeff Allen, pleased to be joined on this edition of "Deal Talk" by Mr. Mike Rabinovich, and he is the owner of the Miracle Method franchise in Portland, Oregon. And we're talking a little bit about his experience buying a business. 

You've heard us talk on this show to a number of experts, people who are in the business of helping individuals buy companies, and they had been able to share with us what goes through a business owner's mind and what they're looking for. Well, now we're getting it from a truly first-person's perspective here, Mike as the business owner, what it was that he went through, what it was that he was thinking, what was important to him. And he's sharing with us the experience.

Right now, Mike, what I'd like to do is I'd really be interested in talking to you about the people, the human element, the folks in the background who do a lot of the work for the company. Those are the folks who get out into the trucks and the cars. They go out in their vehicles, they go out into the field, they do the work. You obviously had a chance to gauge the employees’ reactions when they found out that you were the new owner of the business. Just give us a glimpse into what that was like from your eyes, seeing their reactions, what those reactions were, and how you were able to deal with them.

Mike: I would say the reaction was definitely mixed. I would say from the technicians' perspective, the guys who actually go and do the work, they probably have a little bit less of a reaction because they knew that they were the ones delivering work, and there would probably not be a huge change for them.

Office personnel knew there would be a big change for them, and some of them were excited, and some of them were scared. So that was essentially the mix of people. We had a general manager who was here for, I think, 25 or 27 years with the previous owner, and she was probably the one that was the most nervous about changes because she had just been used to running the business in a specific way. The rest of the people in the office seemed more excited about the changes than were nervous about them.


Jeff: And that obviously makes you feel, I think and correct me if I'm wrong, Mike, a little bit more comfortable because you have to do a little bit less, say, coddling or maybe you don't need to provide as much assurance as some individuals might where they have an environment where all of the employees, all the staff members are really concerned and really feel badly about the changes that are taking place. And let's face it, sometimes you hear some of those stories. There is such a change in culture from one owner to the next. But here you are, you walk into a situation where you were able to take and you were able to bring people into the fold and make them feel comfortable.

Let me ask you then now, Mike, we've had a chance to go through, the business has changed hands, you've been at it now for several months and with this particular location. Let's find out how you're performing and how you're doing based on what you've been able to see so far from the numbers and from the business that you've been able to bring in. How is Miracle Method Portland performing now?

Mike: We've been doing extremely well. It's been just over a year, in fact, it's been 13 months since I bought it. Last year, our revenue increased by 47% compared with the year before. It was significant. Our net has basically doubled. 


Jeff: Wow, unbelievable. And so you've really got to be feeling tremendously confident about your operation, and the corporate office has got to be pleased with how everything's going as well.

Mike: Oh yeah, absolutely. I'm very happy with the way things worked out. It exceeded my expectations. I expected we would grow, and I expected we would find some cost savings. It just ended up being much better than I even projected.

When you own a small business, your employees or your team members really look up to you, and you need to be able to connect to them. You need to make sure that they're comfortable with you. That's the only way that they're going to perform well. That's the only way that they're going to give their best to work on your business.

Jeff: Do you essentially have the same number of people, the same number of personnel on board now that you had when you first started? Or have you been able to grow the team at all to this point, or is that still in the works?

Mike: We grew the team a little bit. We added a few people. When I took over, I have 13 employees and we're up to 17 right now. And we're always hiring. As we are growing, and I know this year I'm projecting another 20% to 25% growth. I need to hire more employees, both office employees as well as technicians.


Jeff: This is outstanding. Congratulations so far on the early returns. It just sounds like everything has been working very, very favorably for you, Mike Rabinovich. Would you consider that by now, it's been about 13 months, you say. Is this still a transition period for the business, or right now the business has its legs underneath it, you're in full control, and you consider this pretty much in its new evolutionary phase, and the transition period is all entirely over with?

Mike: I don't think the transition period is over yet. I think we have picked a lot of low-hanging fruits in the way of business improvement, but it's not fully running the way I like it to run. And there are quite a few changes that are forthcoming that will alter the business pretty significantly. So probably by the end of this year is when I would consider the transition phase complete.


Jeff: What are your goals, what are your objectives, what kinds of improvements are you looking to make?

Mike: Both from a sales perspective, I'm looking at essentially more growth and specifically targeting a few of the sectors that have been underdeveloped, specifically hospitals is one place where we haven't done as much work as we should, and so is universities. 

Then from a quality perspective, we're looking to improve our quality, which has been really good compared to our competition, but there are a few changes that need to be made operationally to make it even better. And as well as software, we are looking to replace our existing software system in the next couple of months. And that will give us quite a few tools for customer relationship management as well as cloud to track in as well as purchasing.


Jeff: Mike Rabinovich is the owner of the Portland area franchise of Miracle Method. Is there anything that you can offer in the form of advice to either business sellers or business buyers that would allow them with their transactions, no matter what kind of business or industries that they're involved in, to help them make the transition process go more smoothly? You've had a chance to participate in it. You've lived it. Is there anything at all that people can do to ensure that the transition moves as smoothly as it possibly can to help both the buyer and seller reach their goals?

Mike: I would say spend as much time as you need for due diligence. Bring in people who you trust to help you review documents, review numbers, review contracts, talk to customers, talk to suppliers. Spend time on that because the more time you spend doing that, the easier it is going to be to run the business once you actually take it over.


Jeff: Mike, I'd also like to ask you too, if you could, because you're such a down-to-earth-sounding guy. We haven't met face to face, but I can tell just by chatting with you that you're a pretty reasonable guy to deal with and easygoing as it can be for a business owner to be that way. 

Are there any characteristics or traits that you can think of, or any particular qualities in general terms, that a business buyer should have when they get ready to engage in the process of buying their own business? Maybe it's for the first time, as a matter of fact. What should business owners have inside them to help them get through the process smoothly and get to where they want to go?

Mike: I think a big part, from a personality perspective, is the ability to connect with your employees. Most business buyers, so this is their first business, they probably have been managers or organizational leaders of some sort before, but they were never the only ones making decisions. When you own a small business, your employees or your team members really look up to you, and you need to be able to connect to them. You need to make sure that they're comfortable with you. That's the only way that they're going to perform well. That's the only way that they're going to give their best to work on your business.


Jeff: This has just been an absolutely fascinating conversation. I've really enjoyed it a lot, Mike, and I appreciate you taking the time. And what I'd like to do now is offer you the opportunity to provide your contact information for those people who obviously would like to do some business with you and would like you to come on out and take a look at what they have, to find out about how Miracle Method can help resurface and bring back to life maybe a counter top, or a tub, or any other surfaces, maybe floor or whatever they have in their business or their residence, number one. 

And number two, if you don't mind also sharing your number for those business owners or those people who are looking to buy a business who might want to just tickle your brain a little bit to get some information from you, some of your input in terms of expertise that you now have as a business buyer to help them in case they might be looking for tips on how to buy a business themselves.

Mike: Absolutely. They can always call us at 503-256-3405. I'm mostly in the office, and if I'm not, the office staff will always relay a message to me. Or they can email at portland@miraclemethod.com.


Jeff: Very good. Again, Mike Rabinovich, I appreciate all of your time, really a great story, and I thank you so much for taking time out of your busy day today to talk with us a little bit about your experience and just share your expertise as a business buyer. And I do wish you much success with your location there in Miracle Method in Portland and continued success.

Mike: Thank you so much, Jeff. Thank you for having me.


Jeff: That's Mike Rabinovich. He is the owner/operator of Miracle Method, the franchise located in Portland, Oregon. Again, I hope that you enjoyed the conversation. It really is nice to talk to the business owners themselves, to learn about what it was that they went through, what they were thinking, and the process and how they saw it, and now how they're getting along and how their companies are doing. 

And speaking of how companies are doing, let us know how we're doing. Again, we'd love to hear from you and hear from you more often. Send us comments, compliments, and criticisms to dealtalk@morganandwestfield.com. 

"Deal Talk" is brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com or by calling 888-693-7834. I'm Jeff Allen, again, thanks so much for listening. Here's to your success.

While we take reasonable care to select recognized experts for our podcasts, please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

Key Takeaways

  • Separate your identity from your business. Some people think that your self-value as a business owner is tied to what you do for a living. However, it’s good to be able to separate yourself from your business — they are not the same.
  • Be prepared with the emotional aspect that comes with selling your company. Selling a business is not only a business transaction but also an emotional experience. Valuing your company and keeping the sale confidential from your employees (and finally breaking the news to them after the closing) can make the process emotional. Be prepared to manage your emotions if you want to succeed.
  • Don’t let anyone discourage you from getting what you want from the sale. As you go through the process of selling your business, you may encounter unexpected things like unreasonable demands or even insulting statements from a buyer. However, to succeed in the sale, you have to “keep your eyes on the goal that you want to accomplish.”
  • Be patient. Patience is key in successfully selling a business. You will not sell your company overnight. Maintain as much patience as possible as you go through the process.

Read Full Interview

Jeff: What now? A fellow entrepreneur talks about selling his business and life after the sale. If you're a business owner looking to grow or sell your company you've come to the right place.

From our studio in Southern California, with guest experts from across the country and around the world this is "Deal Talk", brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.
Jeff: Hello and welcome back to the web's number one content source for small business owners looking to build a business for eventual sale. Here on "Deal Talk" it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.I don't know about you but I always learn a lot from my fellow business owners and I hope the same goes for you. It really kind of depends on the topic that you cover and what you discuss. On this edition of "Deal Talk" though we're going to speak with another business owner who recently sold his company in order to learn more about his unique experience with the hope that we can learn a little bit to help us successfully sell or at least prepare our business for sale with the time comes.

I'm happy to welcome today Ed Ketchoyian, joining us from Sterling, Virginia. Ed is now the former owner of a highly successful PuroClean franchise. PuroClean is a company that provides restoration services specializing in fire and water damage recovery for its residential and commercial customers. Ed Ketchoyian, welcome to "Deal Talk" sir, it's good to have you on.

Ed: Hi Jeff, good to be here.
Jeff: Why did you sell your business Ed? You sound like kind of a young guy and I understand that you had a very successful franchise where you are.

Ed: I'm not sure I'm that young but I appreciate the compliment anyway. Why did we sell? In the beginning, when we were considering buying a franchise we had a plan coming in for how long we wanted to be in the business. We're sort of thinking ahead from the beginning about how and when we might want to exit. The original plan was to exit if we could in five to seven years after establishing the business and growing it.

Unfortunately, the economy didn't quite cooperate for that time frame. So we sort of toughed it out a year or two beyond that and had some good success, and decided it was the right time after about eight and a half years to sell on a high note. And that's pretty much what we did.
Jeff: So you really only kind of missed that deadline I guess, that self-imposed time frame by maybe about a year and a half there at the very, very end. If you don't mind my asking — why did you choose that space of time to sell? Was it purely a business decision, strategic in that regard, or was it more of a personal decision to sell your company within that short five- to seven-year, but actually eight-year window?

Ed: It was primarily a business decision in the beginning. Of course, once you get into a business as an owner your emotions become involved because it's just the nature of small business ownership is you end up putting a lot of yourself into it. But in the end, it was a business decision.

Owning and selling a business is just one more business and life experience that I can take with me to whatever I’m going to be doing in the future.


Jeff: If you could summarize now for us and give us a high-level overview of the process and how it worked and who is involved.

Ed: Okay. The first step for us was after making the decision that it was time was to notify the home office at PuroClean of our intentions. That sort of got the ball rolling. After that we were referred to Morgan & Westfield who worked with us pretty closely. We decided to work with them as the broker. And they helped us a lot in terms of putting together a business summary which is essentially your marketing document or your sales document for perspective buyers.

And then Morgan & Westfield also helped as far as listing the company out on the various sites where businesses are listed. And the home office also helped out as well because they get prospects coming in all the time as part of their franchise development organization.
Jeff: I was just going to say obviously they have a real keen interest in trying to find someone that they'll be able to work with and that they know will do a great job as a new member/owner of the organization and of their own franchise. So they obviously want to find somebody who's going to be able to come in and do just as good a job if possible as you did.

Ed: Yeah, exactly. And whoever the perspective buyer is has to be vetted anyway. So it's not like I could just sell it off to some guy off the street who just expresses an interest on my own. So the home office is a party in the end to the transaction because there's a franchise license involved.
Jeff: What was the role, Ed Ketchoyian, of your wife in this process?

Ed: My wife had a very important role. In fact, she was the most important stake holder since she's also a co-owner of the business. She was very important. She provided the constant counseling and was instrumental in terms of acting as a sounding board in making sure that I'm doing my job. She was important.
Jeff: Then the process, let's get back into maybe just some of the details as we start to talk a little bit more specifically about how the process unfolded. Was this something that required a few weeks, a few months, a year, or two years? How long did it take altogether?

Ed: For us it took about a year just to go through the whole process from the time we started listing the company and having various people come along. We had some tire kickers with various level of interest. But once we had the final buyer or the serious buyer, the person who ended up buying the business have contact with us, that process took about three months. I was just looking at my emails the other day and it was almost exactly three months from first contact to the closing date.
Jeff: And so that was from the time that the buyer was actually located, the person that actually ended up buying your particular franchise, is that correct?
Ed: Yes.
Jeff: Okay, very good. The buyer, was that someone who presented themselves through the franchisor? Where did they come from, actually, Ed?

Ed: He came from another business broker that I had signed some kind of agreement with early on in the process as somebody who could find prospects. That other broker may have been funneling other candidates as well.
Jeff: I see.

Ed: It's sort of like a real estate deal. You have agents for the buyers and agents for the sellers. And this person was provided to us by an agent who specializes in helping out buyers I think.
Jeff: I see. It's not like you were working with that agent before to help you sell your company, but rather you were working with them to essentially find prospect if you would for perspective buyers out there for your company. Were they ever in contact with Morgan & Westfield, the company that actually helped you sell your business?

Ed: I don't know.

To small business owners: “Your identity is not your business. It’s good to keep that perspective and be able to separate.” 


Jeff: Whether agents were in touch with each other or they just came to you directly?

Ed: I think the leads were all funneled through Morgan & Westfield.
Jeff: I see. What was in your view during this process, because you probably had not yet gone through a business sales process before Ed. What was the most stressful part of the entire process from your perspective?

Ed: From my perspective, the most stressful part was after we had gone through the high-level negotiations and we were in the final weeks before close where real money is transacting and being deposited into escrow. A couple of weeks before the close, there's always that feeling or irrational anxiety that the buyer just might change his mind for some reason and just disappear or walk away.
Jeff: It may not necessarily be an irrational fear to some people listening out there because it's obviously very real, it's part of the process. And in fact, someone can get up and walk away. That's well within the right to be able to do that.

Did you feel that you and your wife as co-owners of this business were really prepared as well as you could be for the process of selling your company? Or was there kind of that get ready phase where once you met with Morgan & Westfield you realized there were some things that you had to do?

Ed: Actually, we felt pretty well-prepared for the process — I think from a business point of view. And it felt pretty good for me on the financial and negotiation aspect. That actual exercise of valuing your company is an interesting one. There are different rules of thumb out there that are like if you're in a corporate world where you just look at cash flows and do a net present value. There are different methodologies of doing that. We felt fairly well-prepared. But the other part was that we weren't necessarily prepared for the emotional part. This is more than just a business transaction, so there are certain emotions that came to play at the end that I wasn't quite expecting.
Jeff: Which, by the way, are also the types of things that we have found in our discussions with other business owners which are actually very natural. It's kind of when you feel like you're walking away from a business whether or not you're happy with how the transaction, whether or not you're getting the money that you wanted for your company you're still kind of leaving something behind that was very much a part of your life. Would you not agree that that's kind of the way that it worked for you?

Ed: Yeah, absolutely. Regardless of what your status is in the business or how the business itself is doing or has done, something that put so much of your time in especially after all of our years, about eight and a half years. It's really hard to describe to somebody else who isn't already a small business owner. It’s the expression of having your skin in the game it's just adds a different dimension to things. It's still there when you're on your way out.
Jeff: Ed Ketchoyian, what we're going to do is take a short break and when we come back what I would like to do is really kind of focus on Morgan & Westfield's role in helping you sell your business really from beginning to end where we can talk about the specifics that the company was involved in in terms of helping you get ready all the way through the final process and through the closing of your deal.

I'm Jeff Allen, I'll be back with Ed Ketchoyian. He's the former owner along with his wife of PuroClean franchise in Virginia. And we're going to continue our conversation when "Deal Talk" resumes right after this.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on the future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com.


Selling your business may be the most important business transaction you'll ever undertake so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers.

Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.


Are you a professional adviser, accountant, attorney, or a wealth manager, or do you provide other professional services? Contact us today to see how our reliance program can help you increase your firm's revenues. Call Morgan & Westfield at 888-693-7834. That's 888-693-7834.
Jeff: We're interested to know your thoughts about "Deal Talk," what you like, and your suggestions for how we can make this show even better for you. Send us an email to dealtalk@morganandwestfield.com. That's dealtalk@morganandwestfield.com.

I'm Jeff Allen with Ed Ketchoyian, former owner of a PuroClean franchise in Sterling, Virginia, and we're talking about his experience selling his business and working a little bit with Morgan & Westfield to help him do that. We kind of want to now jump in to once again some of the details following your conversation the first half. We kind of talked a little bit more about things from your perspective. But what we want now to understand a little bit more about is the role that Morgan & Westfield played specifically in helping you sell your company.

Let's talk about it, exactly what did Morgan & Westfield do and you can summarize this a little bit but from the time that you contacted them what were some of the real important things that stood out about what they did for you.

Ed: Well, like I mentioned before the break they put together a business summary document which is the document that contains an overview of the business and financials, and other pictures of the business and equipment and all of that which becomes available to perspective buyers. Obviously that's a really important piece. And that's one of the things that Morgan & Westfield put together.

And so besides providing the actual listing service for the business Morgan & Westfield was available to almost anytime I have a question, providing advice. They provided help and guidance on doing the valuation exercise for helping me determine what price I wanted to list companies for. Ultimately it was my decision but it was very good to have that input.

And then second phase I guess I'll call it or in the final phase that Morgan & Westfield helps a lot in the final phase of putting together the agreement. Morgan & Westfield took the lead in putting together all the closing documents and attachments and things like that that were necessary in order to actually do the asset sale.

And that's pretty much what we had. We did an asset sale of the company or the franchise assets from my entity to the entity of the buyer and Morgan & Westfield put together the contract that enabled that to happen. The way they did that is they had a very detailed questionnaire that I filled out along with the buyer and that was used by Morgan & Westfield to put into some of their templates. And of course some items were customized. And that's pretty much how it worked. It was a very easy process for us.

We felt pretty well-prepared for the process — from the business point of view. But we weren’t necessarily prepared for the emotional part ... certain emotions came into play at the end that I wasn’t quite expecting.


Jeff: Would you call it an efficient process?

Ed: Yes, it was a very efficient process. The people at Morgan & Westfield gave us very quick turnarounds in the timetable that we had and I was pretty satisfied.


Jeff: Let's fast forward just a little bit to the closing process, what role did they play there? Because I know that obviously you are in contact with a lot of these perspective buyers and they were being funneled to you through the other broker and also too of course you had a lot of input from the franchisor. But once you got to that closing table what happened then? What was your mindset like and how did everything go for you?

Ed: A lot of the documents that we had talked through and negotiated points on, we're already completed. And when we were there it was just a matter of signing things off. Again, more like a real estate transaction where you just have a bunch of forms that you need to sign. This was not as detailed if you've ever been through a real estate transaction.
Jeff: What you're saying is it's a little bit more simplified there in this particular instance with you working with Morgan & Westfield to sit down there and get the documents and all the formalities taken care of in order to close the deal?

Ed: Yeah, exactly. On closing day it was more of a crossing the finished line kind of thing and shaking hands, and making sure, confirming checks and wires are being available. But otherwise it was more like a formality once we got to closing day.
Jeff: Let me ask you, in terms of the value that you received from Morgan & Westfield what was it that they did that they provided you with the most value? You came away thinking, "You know what, this was a really good decision."

Ed: I just felt like the overall services were provided at a very reasonable rate or price. It's hard to put my finger on just one thing. It started from the beginning of the relationship with Morgan & Westfield and toward to the end. We paid for different aspects of services that we got. But the value in what was provided was very good.

One thing that Morgan & Westfield pointed out to me which had a lot of value, I guess this could be the most valuable thing was that a lot of these closing documents that they have already been reviewed legally many times and they've already had a lot of legal scrutiny. So that by the time our closing documents were prepared there really wasn't much review needed from a legal standpoint in order to come to agreement. There could've been some negotiation points, again, between me and the buyer. But from a legal point of view the documents were pretty tight to begin with.
Jeff: So you had a lot of confidence going in whenever you receive these documents that all the details were absolutely final and ironclad from a legal perspective. Did you ever meet with anyone from Morgan & Westfield and face-to-face? Was that even necessary?

Ed: No, I never met with anybody from Morgan & Westfield face-to-face and it wasn't necessary. We did all our correspondence by email and phone conversation, and that worked out just fine.
Jeff: It had to work out fine that you didn't have to hope into a car and drive some place. And you were able to do everything, take care of everything right there in the office or wherever it was that you were. Ed Ketchoyian is with us. He is the former owner of a PuroClean franchise business in Sterling, Virginia.

PuroClean, for people who don't know, is a home and business water damage and fire damage restoration services company and they have offices from coast to coast. If you could tell us Ed in just the few minutes that we have left, maybe offer some advice and maybe discuss with us some of the challenges or maybe the most challenging part of this process of selling your business that you will take with you to maybe your next business wherever it is that that might be or whatever it is that you choose to do.

Ed: As far as the process is concerned I think the biggest thing for me is just to have patience with the process. That's probably the advice that I would give to any other person trying to sell their business is that it's not going to happen overnight. And just keep a long view perspective on it.

In the more general sense I like to look at the whole experience of owning a business and selling a business as just one more business and life experience that I can take with me to whatever I'm going to be doing in the future. All of our life experiences end up benefiting us at some point in the future.
Jeff: This is interesting. So the way you're talking about it you're talking about owning a business. In general terms, and certainly with regard to PuroClean here in this particular instance it also just kind of boils down to basically just a step in life's journey for you anyway. That's kind of how you look at it isn't it?

Ed: That is how I look at it. Sometimes it's difficult to do, and I think sometimes for a small business owner as well is to realize your identity is not your business and you're a separate person. And sometimes people feel that their sell value is tied to what it is that they're doing for a living. It's good to keep that perspective and be able to separate.
Jeff: I do want to ask you about your separation from your company and in kind of those final days or weeks in the transition or as the transition was going from the time that you stepped away, to the new owner of your franchise. What was it like working with your employees and the people on your staff?

I'm assuming obviously there was the need to keep things pretty quiet in order to make sure that the sale would go through and that services and work within your organization would go on as usual. How was it for your employees to find out that you were selling the company and that they were then going to have to work for a different owner.

Ed: That was difficult. We were working with the owner for months and we couldn't reveal anything that was going on. We chose not to reveal anything that was going on to the employees. And so we were absolutely certain the deal was going to happen.

For obvious reasons if the buyer were to back out before the deal closed after we told employees there'd be instability and it would just not be a good thing. So we had to wait. And in this case we had to wait until less than a week before the closing date to inform everybody. Everybody was very surprised. Shocked is a strong word but they really had no idea that we were in the process of selling.

There's a lot of uncertainty and people wondering how it affects themselves and their livelihoods. And the message that we gave is the message the buyer wanted us to communicate which is that he really didn't want to change anything that was going on. The people that were there are assets in the sense of they're essential for what the owner wanted to have in place. People weren't going to lose their jobs or anything like that. That was really important to try to get across. Change in general is not a welcome thing.

I never met with anybody from Morgan & Westfield face-to-face and it wasn't necessary. We did all our correspondence by email and phone conversation, and that worked out just fine.


Jeff: No, it's not by anybody at any level. And particularly when you have employees who are used to working for a boss and everything seems to be going along very smoothly. And then all of a sudden you find out there are changes at the top and you've got somebody else new coming in. I can understand that. And I think that we've all been there to a certain degree Ed.

I am interested in knowing what you did or what role you played in the transition from one owner to the next. Were you asked to provide some guidance and consultation to the new owner coming in?

Ed: Yeah, sure. As part of the deal itself I stayed on for 30 days to help with training the new owner. And then it was important to the new owner that stay beyond that or an additional two months to help transfer my institutional knowledge over to them. And also just to maintain business continuity with the business and our relationships with partners and customers out there. I'm actually still there and still working as a contractor toward the next couple of months.
Jeff: That is now but obviously an evergreen program. This'll be heard by people well down the line. Looking back let's pretend maybe it's six months or a year after having sold your business and your two-month stay period, the transition period is over. How do you feel about how the overall process worked selling your business, getting it ready to sell and in selling your company, and moving on into other chapters starting new chapters of your life. Looking back at it, you're happy with the way things went? Are there things that you would've done differently? Just give us your final thoughts there.

Ed: Sure. I'm very happy with the way things went and I'm not sure what I would do differently honestly because I have a clear conscience. I don't have any special wisdom to add here at this time.
Jeff: You are definitely in the top 1% because there are so many other people that we've talked to who've had things to say about different things that they might have a little bit differently in order to maybe make things smoother or what have you. But you definitely do sound like you're very clear on that key point.

I guess the real final thought here as I have some seconds left on the program in order to wrap up. If you could give one piece of advice to a business owner who is planning to sell his company and maybe it's not necessarily tomorrow, or next year, or even two years from now, but they do have it in their mind to sell their company at some point and that they plan on building their business for the purpose of selling it. Having gone through the process of selling your own business what piece of advice would you give?

Ed: I'm going to go back to something I said before. It's the patience thing. It's a business situation, it's a business transaction and try to approach it that way. And, again, try to maintain as much patience as possible as you're going through it. Valuing your company can also be an emotional thing as well, obviously.

And I think the important thing here is that as you go through the process there are certain things that may or may not happen in terms of say, if a buyer shows up and they say or demand some things that may seem totally unreasonable, or might be in some ways even insulting depending on how you want to take it. You just have to keep your eyes on the prize so to speak and keep your eye on the goal that you want to accomplish.

If your goal is to sell your company at a price that you're happy with you have to be able to move beyond little bumps on the road that might distract you from getting there.

Jeff: Really simple words of advice from Ed Ketchoyian, patience in looking at it as just kind of a business deal or scenario not to be taken personally, one to be taken certainly very seriously for sure but all the more reason that we need to have that patience and be able to rest on that. Ed Ketchoyian, such a pleasure to chat with you my friend. All the best of luck to you in the future and congratulations on the successful sale of your business.

Ed: Thanks Jeff. Good talking to you.
Jeff: Good talking to you too, sir. Thank you so much. That's Ed Ketchoyian, now the former owner of a PuroClean franchise, Sterling, Virginia has been our guest to kind of share his thoughts and his perspective having just gone through the business transaction process.

"Deal Talk" is brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com or by calling 888-693-7834. Again, 888-693-7834. For Ed Ketchoyian, I'm Jeff Allen. Thanks again for listening to "Deal Talk." Until next time, here's to your success.

While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

Key Takeaways

  • A business broker will qualify buyers and ensure they have the financial capability to buy the business.
  • When going to sell their business, an owner needs to make sure that all of their agreements are up-to-date, including leases or contracts with suppliers, and get the business running as best they can.
  • It is important to remain in touch with your customers beyond the time of the transaction.
  • Confidentiality is critical; a business broker needs to create a platform where a seller can comfortably speak with the business broker about their business in detail without worrying about where the information is going to go. 

Read Full Interview

Jeff: Business brokers aren't merely in the business of selling your company and making a quick dollar. In fact, if you want to know how valuable a business broker can be to the value of your company, you've come to the right place.
 
From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk," brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.
 

Jeff: Welcome to the web's number one content source for small business owners committed to building a business for eventual sale. Here on "Deal Talk" it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.
 
If you're tuning in to get some guidance, some tips, some information on how you might be able to today improve the value of your company, I am talking with someone today on our program who is in the business of helping his clients do just that. And who knows, maybe somewhere down the line you might be able to get in touch with him. We're going to provide his contact information later about your particular situation, if you're interested in selling your business that is. His name is Nelson Bayford, and Nelson is a business broker and commercial specialist with Business Finders Canada. And what we want to talk to Nelson about today is how he works with people, and really kind of get his general thoughts on how business brokers can best help their clients, and that is you. If you've got a business for sale and you're looking for a way to elevate its value. 
 
We're out to prove today that business brokers are far more than those individuals that you would go to just for the purpose of selling your company. They provide greater value than that. Nelson Bayford, I want to welcome you to "Deal Talk." It's good to have you in. Thanks for joining us today.
 
Nelson: Hey Jeff, thanks for having me.

We talk about a lot of different business owners that own a lot of different types of businesses. But in the end, all businesses are there to generate income and profits for the shareholders.

 
Jeff: We appreciate you, and what I thought might be kind of a nice way to get started here just as an icebreaker is to tell our audience a little about yourself and how much skin you have in the game of not only selling companies and finding buyers for them, but also in business ownership yourself. Your experience goes way back and it's pretty deep. Tell us about it.
 
Nelson: Yeah, that's right, Jeff. In the real estate investment, finance, business brokerage business for a long time now. I guess about 40 years. And obviously I enjoyed it because I stayed in the same industry that long. Now, here in this stage of my career I'm really enjoying a business brokerage which I started with Business Finders Canada about six years ago, and really enjoyed the process of helping business owners first of all find a way to speak with someone confidentially to talk about their business and help them determine the most probable selling price through a very detailed valuation system and take it from there. 
 
Nelson, we appreciate having you on board today, and I'm really looking forward to this conversation with you. We may have already kind of given away the answer, or at least a majority of the answer to my first question, which is really kind of helping to clarify what a business broker does. Because a lot of folks nowadays in business for themselves, entrepreneurs have a lot of choices, they have a lot of directions that they can go when it comes time to sell their companies. 
 
But if you could, could you clarify exactly what a business broker is and does these days, or at least what the really good ones should be doing these days. I know that you've got enough experience in the background. You can kind of share with us on that.
 
Nelson: I think the primary role of a business broker is to create that platform where a seller can comfortably speak with the business broker really detailed about their business without worrying about where the information is going to go. So confidentiality is so critical that a good business broker has to be very versatile in being able to understand all kinds of different businesses. 
 
We talk about a lot of different business owners that own a lot of different types of businesses. But in the end, all businesses are there to generate income and profits for the shareholders. And so we key on just what that number is and place our valuations around that key number, which is referred to as normalized earnings, or seller discretionary earnings, or many different ways that people talk about that.
 
But I think the key job of a good business broker is to really help a business owner get a good opinion of value through a detailed valuation process and then take that business to market and work with qualified buyers.
 

Jeff: What have you found in your experience, Nelson, to be some of the most common yet fixable factors that actually hinder value or could stall a company from being able to improve its value?
 
Nelson: I think probably the old saying, “it's all about details.” In business what I've seen a lot is where companies have agreements and contracts with suppliers where they have some exclusive right to sell or distribute something. Or some proprietary method of doing something. And perhaps what's happening is that they go to sell their business and those contracts aren't up-to-date. Or they have some special way of doing things but they haven't patented it or branded that. 
 
And so I think it's all about making sure that anything that you are selling forward, contracts or customers that you've dealt with for a long time, if you're selling your goodwill you want to make sure that you've got an up-to-date customer records, any contracts, leases. I think that's one of the primary things that an owner has to look at when they're going to sell a business, make sure that all the details are in order.
 

Jeff: Nelson Bayford joins us today on "Deal Talk." Nelson is a business broker and commercial specialist with Business Finders Canada. Nelson, the website for that, is that BusinessFindersCanada.com, is that correct?
 
Nelson: Yes, BusinessFindersCanada.com.
 

Jeff: Very good. And we're going to provide Nelson's contact information so you can reach him directly at the end of this program. Nelson, you typically have a goal for how much you try to get your sell-side client as a percentage of your opinion of value, for example. In other words, should a business broker, and obviously we're kind of looking at you today. Should a business broker in general have a pretty good idea when they sit down with you as the business owner or the client about how much they would look or try to get you in terms of what your valuation is?
 
Nelson: Yes, I think definitely. For example, going back to this whole idea of having a good market valuation or opinion of value. That's why I think it's so important, because that to me becomes the basis of moving forward with the seller. That's why we always insist that we get a market opinion done by ourselves. We want to go in there and do this valuation. We're not looking for anyone else to do it. 
 
Because when we sit down with a seller after we've gone through that process of looking at their three to five years of financial assets their balance sheets, etc. And we've come forward and say, “Based on what we see here is our opinion of value," we want to be able to look square in the eyes and say, "This is what we can sell this business for," and to your other part of the question, how much do we try to realize. One we've got that opinion of value we tried to add a little bit on there for negotiation as well. Because we know that in any, probably in most, I guess, buying and selling situations is going to be some negotiations.
 
I would say that we achieve approximately 80%-85% of our opinion or value on our sales. And our sales, by the way, our sell through rate is approximately 80%. And I think that's because we've spent so much time on the front end, getting on the same page with the seller as to what the value is.
 

Jeff: When you say “sell through rate,” exactly what is that? Define what you mean by sell through rate.
 
Nelson: OK. What I mean by that is once we've established and we’re on the same page with the seller about what the price is and what the selling price should be, once we begin our marketing, we know it takes us seven to nine months to sell a business typically. Sometimes sooner, of course. But our success rate is well over 80% of the listings that we take. It's sold within the listing time frame for 80% of the price, which it has that 80% is allowed for some negotiation. Did that clarify that for you?
 

Jeff: It sure does. You make every attempt to get to 80%-85% of that valuation for the seller. That's kind of your target zone. And of course the rest of that room for negotiation above and beyond that there. And then your sell through rate, which means your rate of success is 80%. And it would seem to me that compared to industry averages that's pretty good isn't it?
 
Nelson: It is. I think we're probably at … But Jeff, I go back to, and I know I sound like a broken record on this. But I go back to the fact that it's all on the front-end how much time you spend with that seller getting whatever information you need to do a proper opinion of value. A lot of sellers might think their business is worth X dollars because that's what they want to retire on, whatever reason they come up with that number.

I think that's one of the primary things that an owner has to look at when they're going to sell a business, make sure that all the details are in order.

Jeff: Usually it's much higher isn't?
 
Nelson: Most of the time. And sometimes lower, but most of the time higher. And the key I think to be a good business broker, I think you've got to be willing to say to a seller, "Based on our analysis, and here's how we've come up with this number, look at our methodologies here. This isn't where we're coming up with the value, this is how.” And if we can't get on the same page, there's no sense of trying to do business because we can't achieve a sale if there is an unreasonable asking price that's not supported by the financials and the assets of the business.
 

Jeff: Nelson, once you've submitted your opinion of value, and you believe that value can be elevated, you may have some ideas for how the business owner can do that prior to actually selling their companies. How do you work with those business owners to discover and implement important value drivers that you may in fact recommend?
 
Nelson: A lot of times when business owners are thinking about selling the business, maybe to some degree that they've taken their foot off the gas pedal over the last two or three years. So maybe it's just as much to say, encouraging them to really get on top of their game, run the business with enthusiasm during the early years. Make sure that sales are trending upward and do everything possible to make that happen. 
 
Some of the things that you can do is just simply, if you've been in business a long time start making sure you're in touch with your customers. Make sure that you're providing the best quality service that you can. Some of the other things you need to that we've already talked about, make sure that all your agreements are up-to-date, whether they're leases, or contracts with suppliers, etc. Just get your business running as best you can.
 

Jeff: Nelson Bayford, business broker and commercial specialist with Business Finders Canada joins us on this edition of "Deal Talk." My name is Jeff Allen. And when we come back from this short break I'd like to talk to you, Nelson, about maybe any stories or real life examples you may have of having worked with a client and you were able to help that company perhaps raise its value and maybe even received more than the business owner had originally thought that he might get at the signing table. Or maybe got more than maybe you might have even thought that you got at the signing table.
 
We're going to do all of this when "Deal Talk" resumes right after this.
 
If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on a future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty  and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com.


Selling your business may be the most important business transaction you'll ever undertake, so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy to preparing a comprehensive appraisal and locating the right buyers. 
 
Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.


Are you a professional adviser, accountant, attorney or a wealth manager, or do you provide other professional services? Contact us today to see how our reliance program can help you increase your firm's revenues. Call Morgan & Westfield at 888-693-7834. That's 888-693-7834.
 
Jeff: You're listening to "Deal Talk," and if you have any questions about any of the topics you hear us discuss here on this program, all you have to do is simply call our Ask Deal Talk info line 24 hours a day, 7 days a week, 365 days a year.  The number to dial is 888-693-7834. The extension is 350. Simply follow the easy instructions to leave your question and we'll reach out to one of our guest experts so we can feature your question and their response on a future edition of "Deal Talk." That's Ask Deal Talk, 888-693-7834 extension 350. 
 
I'm Jeff Allen with Nelson Bayford, business broker and commercial specialist at Business Finders Canada. Nelson, what I'd like to do is find out from you maybe a short story that you may have from your past and working with your clients the situation where maybe you were able to help a company elevate its value and receive more than maybe either of you had originally thought when it comes time to selling that business and they were able to take home more money at the end of the day. Do you have anything that you can share with us?
 
Nelson: Yeah, that's really pleasant with something like that happens when you actually realize more in a sale than what you originally anticipated, and that's happened a few times. One story that comes to mind was a small manufacturing company. They have been doing things pretty much the same way for the last 20 years. 
 
One of the things that they were not doing is they weren't really reaching out to new customers. They didn't really recognize that it was going to be such a... And I'm going to say easy way for them to increase your sales fairly quickly by just adapting some search engine optimization ads out there, and they started doing some email marketing campaign based on what we're talking about. And these might sound like really simple things, but this was an older couple and a family business with some long term employees both in the administrative and marketing part of their business and they just weren't on top of that. 
 
I just made a few suggestions and it happened very quickly that their sales started to increase so we had to go back and review where we had put the value on the company. And it's pretty obvious this company was going to continue to grow their sales with some additional marketing. We sold it for a little bit more than we'd originally listed. So that was all about just getting the company to go after their sales a bit more.
 

Jeff: And I know, Nelson, that you said you have some other examples, and we might ask you to come back and share those with us at another time. After you've rendered your opinion of value, typically speaking, what is the process like for the business seller from that point? What happens after that? You talked about the sales process being seven to nine months, but what does that seven to nine month period entail with all the steps that are involved? 
 
Nelson: That's a good question. Because I think that one of the most frustrating things for sellers. And it's really, really important as I said to get the valuation. There's different people that get valuations, but when it comes to actually selling the business I think it's really being able to follow up with people that are inquiring about the business, and really, really being able to qualify these buyers as to... First of all, do they have the financial capability to buy the business? Do they have the relevant experience? What is their time frame? 
 
Today, our business is all technology driven; 99% of our leads come through the internet. And it's really easy for people to hit a button on the internet, so that it's really, really important to qualify people. The process starts with qualifying that buyer, and then disseminating information out to them on a confidential basis. And eventually getting that conversation going between buyer and seller. And being that buffer between the emotions between buyers and sellers. And then negotiating a contract that makes sense to both parties. And just carrying that all the way through to the end of the deal.

I'd say the most important thing when you start a business is determination to succeed, because I don't think there's a business out there that is going to perform exactly the way you've laid it out there. There's going to be all kinds of things happening. It could be labor issues or employee issues. It could be initial sales aren't meeting your targets, it can be suppliers, or not giving you what you need. There's many, many challenges in running a business. I think number one is determination.

Jeff: How many bids will you receive, or how many interested buyers might you be working with at one time in the early stages to kind of vet them out and determine which ones are most suitable? Are we talking three, five, 10 perhaps? Or maybe you can kind of shed some light. 
 
Nelson: I think if a business has been exposed for a month or two, I would say that within a month you'd probably... our office anyways, I have five colleagues that work with me in Business Finders, in our particular office. And I would say that within a month or two of having a business properly promoted and marketed, you're going to have a half a dozen of interested parties. And so it becomes a person in the middle which is the buyer that is best suited and moving forward with that particular buyer.
 

Jeff: How involved is the seller in kind of the process of getting the company ready to sell and preparing for that occasion when the negotiation actually begins?
 
Nelson: I think by the time we get to writing a contract of purchase and sale for an asset sale, or a shared purchased. I think the seller's probably done most of the work that you need to do at that point because we've gathered that information on the front and we know that business pretty intimately by trying to get to a contract stage.
 
So basically I'd say at that point there’s not much the seller really needs to do other than to maybe provide additional documents for the buyer's due diligence, ultimately the formal contract is done between the buyer and seller's attorney.
 

Jeff: I wanted to save some time here in the program for you, Nelson, to just kind of put it in your own words. I know that you're very passionate and you've shared this with me about helping first time business owners grow their companies. And I was wondering if there's any guidance that you can kind of share, words of wisdom perhaps to help entrepreneurs of early stage businesses work toward a pattern of sustainable growth. And if you can share that that would be wonderful. What are some of those most important keys to success in the early stages of owning a business?
 
Nelson: Well, I'd say the most important thing when you start a business is determination to succeed, because I don't think there's a business out there that is going to perform exactly the way you've laid it out there. There's going to be all kinds of things happening. It could be labor issues or employee issues. It could be initial sales aren't meeting your targets, it can be suppliers, or not giving you what you need. There's many, many challenges in running a business. I think number one is determination. I think is the number one key to succeed in business. Because if you have a goal, have an objective, and you really want the business to succeed, stick to it, make it happen. 
 
One of the things that's golden in any business is the old golden rule, take care of your customers. And that doesn't mean just during the time of the transaction but staying in touch with your customer, and there's so much good software out there today that helps people stay in touch with their customers, whether it's remembering birth dates, or remembering important things for the customer, a little note here a little thank you note there. I just can't say enough about just staying in touch. It doesn't take that much to do that.
 

Jeff: Those are great words of advice and very, very simple it seems. But sometimes I think, Nelson, we forget about the common sense types of things because we get so wrapped up in the day-to-day. And common sense really, it works in our personal lives, it can work in our business lives as well and help our business overall. And also, too, not only that but you're making people feel good about you. You're heightening your credibility and integrity. And that helps not just you, your clients, but also the other members of your team as well, and I want to thank you for that. 
 
There may be some individuals listening to this program right now who'd be very interested, Nelson, in talking to you about ways that you might be able to help them, help them with their businesses, help them sell their companies. How can they connect with you?
 
Nelson: They can connect with me by my email is nelson@businessfinderscanada.com. And one of the things I was interested in when I was invited to come on the show, Jeff, one of the things I just put out there is that I live in a beautiful area called the Okanagan Valley of British Columbia. And we have a really, really good economy right now, and it's a great time for U.S. investors and buyers to look at this market because of the exchange rate on the dollar. Plus, our economy is very strong and there's lots of good opportunities up here in Canada. 
 

Jeff: And I'll bet you that there's some residential real estate available too to new and aspiring business owners in your neighborhood. And I'll tell you something, it is beautiful there. I know people who frequent that area very, very often, in fact have second homes there. Nelson, I really appreciate you for taking time out of your day and out of you schedule to give us a call and talk to us about what a business broker is and how they add value to a company prior to its sale. And again, I want to thank you so much and I hope that we can reconnect again in the future.
 
Nelson: Yes, it's been a pleasure, and I just hope that your audience got some value from this. And again, thanks for having me.
 

Jeff: I know that they did, Nelson, thank you. Tell a friend about "Deal Talk," won't you? We feature guests like Nelson Bayford on each and every program. We try to find the best of the best. Nelson Bayford, of course, business broker and commercial specialist with Business Finders Canada, and you can listen to this show all over again on any one of our four channels. We are featured on iTunes, Stitcher and Libsyn in addition to morganandwestfield.com. Now, if you tune in to morganandwestfield.com for this program we'll feature the entire transcript of today's conversation there for you so you can download it, print it out, and refer to it again and again.
 
"Deal Talk" is brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com. My name is Jeff Allen, thanks again for tuning it, and we'll talk to you again soon.
 
While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

Key Takeaways

  • Sellers need to be cognizant of the fact that acquisitions can be very messy to the employees.
  • When looking to sell your business, it’s important to bring in a third party to have them look at the company as if they had never heard of you before and ask a lot of questions that you might take for granted.
  • Buyers need to be sensitive to the fact that if they take up all of the owner’s time, the business is going to start deteriorating.
  • Approaching your customers early on as part of the preparation for a future sale will allow you to gauge their potential reaction.

Read Full Interview

Jeff: What does a perspective buyer you haven't even met already know about your business? How much should you know about them? If you've ever wanted to be a fly on the wall at an M&A firm to know how buyers and sellers can do a deal or ruin one, you've come to the right place. 

From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk," brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.



Jeff: Welcome to the web's number one content source for small business owners committed to building a business for eventual sale. Here on "Deal Talk" it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.

Whether or not you are kind of making motions toward selling your company or divesting part of it, we do want to go ahead and bring you some of the wisdom and thoughts of a gentleman who has been in the trenches. He has been involved in a number of different M&A activities in the past, and he's going to be able to share some of his viewpoints and perspectives from both sides working with sell side and buy side, kind of from that 30,000-foot level. 

And we'll also kind of try to zoom in on some specifics with Ed Murphy, former Senior Vice President of Strategic Transactions at SAIC, and now enjoying retired life in America's finest city of San Diego. Ed Murphy, nice to have you. Welcome to "Deal Talk," sir.

Ed: Thank you, Jeff. Nice to be here.

It's a sensitive process, but we focus a lot on integration. And it's not easy. It's hard to get it right, because you don't know everything that the seller knows.

Jeff: It's nice to have you, and I really do appreciate your taking time out from some of your hobbies to talk to us, because we have found on the program and in the past that a lot of really interesting observations, perspectives if you will, and thoughts on M&A, and the kinds of thoughts and input that can help business owners right now maybe prepare themselves for selling their company at some point are of particular value because you've been doing this for many years.

So what I'd like to do is kind of start by having you tell us a little bit about yourself, where you've been and just exactly what kind of experience you've had in this area.

Ed: Sure, Jeff. I was with SAIC for about 30 years. I had two jobs before that. But SAIC was an employee-owned company. I was there probably from about 150 million up to when I left there around 10 billion. And it started out as employee-owned. By the time I left it was a public company. And the last 20 years of my time there I did mergers and acquisitions and headed up a department in the last many years.

So I kind of saw a lot. We did small deals, we did deals with smallest, half a million to a million bucks. And we did deals in the hundreds of millions of dollars. And I've done deals, managing the deal directly with the principal. And I've dealt with JP Morgan and Goldman Sachs, so sort of all over the map. I have seen a lot but I have not seen it all, Jeff.



Jeff: That's fair enough, and I appreciate that. From a business owner's standpoint, they think that they have really kind of done everything that they need to do in order to get their company ready for sale. Maybe they need to leave quickly, maybe they've got another 10 years on their horizon to be able to make certain improvements. And we're hoping by some of the information you're able to share with us that it will speak to those folks who down the line know that they're going to be offering their company at some point and try to get the best value for their company that they possibly can. 

From your perspective involved in past M&A deals, when a buyer approaches a seller with an interest in his or her company, it could be on a bus, it could be in a meeting, or it could be through an intermediary, what kind of research typically have those buyers already done on the company that they're interested in acquiring?

Ed: It's a very good question, but I'd probably spin it around and say that your owner should probably find the answers for themselves. But ways of doing that would be if somebody does approach them they should go into what I say is a set of general questions which you want to weave into a conversation, because the last thing you want is if they think they're being interviewed they'll be more guarded in their answers. 

But if you can make it conversational, start out with, "How did you hear about us? What is it about us that attracted your interest? How much do you know about us? Why would we be a good strategic fit for your company?" And try to get those into a conversation before they ask you those questions so you understand and can kind of frame up, "Well, they seem to know a whole lot about us." 

And sometimes the answer would be pablum. It's like that's sort of very motherhood-y stuff. So it may come off as they're giving you an answer that has no substance. In which case they probably know nothing about your company. So I think that's important to kind of go through that early. 

And I think the other filter, the other set of qualifying questions you'd want to ask is, again, conversationally, so they don't feel like they're being interviewed. But what kind of deals have you done, how many, what's your process, who's your deal champion along the way, and who actually makes the approval? Is it a board who will see it at the very last minute and have no context? Or is it the CEO who's been working with you the whole way? 

So I think those are the things that you probably want to find out. And that'll answer the question, how much research have they done. If they're very crisp in their answers and in describing their process, it sounds like, well, they've done this a lot. You should probably get a pretty good confidence. If it's very weak, you need to start out thinking if you're going to waste your time with them.

And I will tell you, when I talk about acquisitions, people think they're sexy, they think they're cool, everyone wants to be involved in one. But I kind of describe an acquisition as, frankly, it's a process of involuntarily employing a large number of people somewhere where they had not chosen to work. And then asking them, ‘Hey, we're going to change all the policies. We're going to change our processes. And we want you to be comfortable with all this.'

Jeff: Ed, how important is it to know as a business who is interested in selling his company or her company to know what it is that you want, to know what it is that you're expecting not just to get out of the deal but why you want to sell your company in the first place? Because I think that a lot of people make these quick knee-jerk decisions. 

"You know, I'm not interested in doing this anymore. I want to sell my company. I'm going to go contact a broker tomorrow." But I think sometimes those knee-jerk decisions end up being kind of irresponsible. So how important is it that someone take the time to really give selling their business that they worked so hard to build a lot of thought?

Ed: In a perfect world, which not many people reside in, but maybe your listeners will by listening to what you just asked. In a perfect world, if you're going to sell, you have already established... Even if you don't want to sell now you at least put the framework in place so that if someone does approach you out of the blue you can immediately put it in context and say, "I'm not interested in selling right now, but hey, come back and talk in three years." Or, “I'm all ears but I'm not committed to selling.” And even if you are desperate to sell of course you would never say that but you of course still say I'm all ears. 

But I think when you've made a decision that at some point selling is probably the exit strategy. I'm not going to give it to my children or other family members or whatever. I don't have partners who will carry on. The best thing to do is do that homework well in advance. And the way I think about it is you probably want to look at your own company. Sometimes it's hard to do, so you may want to bring in a third party or even just a friend maybe. 

But bringing somebody in and have them look at the company as if they had never heard of you before, and they're going to ask a lot of questions that you take for granted. So I can run through a few examples if that would be helpful.



Jeff: That would be helpful. Thank you.

Ed: For example, if you're looking at selling your company down the road you probably want to start doing what I call a ‘restatement process’ right away. Because if I come in and look at your company, the first thing I'm probably going to ask you is give me a couple of years of financial statement. That's sort of a typical starting point. 

And so I'll look at them and I'll say, "This guy doesn't turn his receivables very quickly and he seems to have a lot inventory, he's not running a very efficient business."

And what's really happening is you're just tax managing. You're telling your customers don't pay me quickly year end, or make sure you put the bills out late. And so you're doing tax management. 

That will not be apparent to an unsophisticated buyer and it might not even be apparent if they're only looking at year-end financials to a reasonably sophisticated buyer. Although if they're done a lot of deals they'll probably get there. 

So you sort of want a build what I call the restatement process. One would be a cash in accrual if you have tax issues going on. So we do your financials. I'm not saying literally we do them, but just sort of have a little checklist of things that you would adjust. 

Another big one is of course compensation of employee owners. Do you pay yourself a lot in a C-corp to avoid double taxation? Did you transition from a C-corp to an S-corp? Is there any risk of built-in gains taxes? Do you have family members on the payroll? Do you have a rental company that you own that rents furniture in the office. All stuff that's fine, but for a buyer they will look at that and go, "We've got a lot to unwind here." 

My preparatory step would be do the work for them and develop a series of things that if you're buying your own company you'd say, "We need to address these things or we need to develop summary statements." And that'll help the buyer get to a valuation quickly. Plus, understand that you know your business.



Jeff: Edwin, you were working M&A. Did you ever get in the middle of a situation where maybe the buyer asked the seller to provide some statements, documentations, records, whatever the case may be, and the seller was unwilling or very, very reluctant to do that?

Ed: If there was complete reluctance to the process, that would usually be troubling. I can only think of one deal where we frankly just walked away, and this is a peculiar one. But we actually had a person we thought was... And this is not what we usually run into. We thought there's somebody who is so key to the business, he was a single point of failure that we said we need a key man insurance on you, which is also not something we would typically do.

And so of course to get that you had to get a physical. And this person refused. He said, "I'm not going to do a physical for a key man." It could've been just a principle thing, but frankly we said, "Well, maybe he's got some health issues, or maybe there's something he doesn't want a family member to find out." And that killed the deal for us.

So that was quite unusual. I would say that typically people will withhold information for competitive reasons, but eventually at some point in the process they're going to give it to you. And if they're holding something back that's important to you when I say me, as a buyer, that can be a deal-killer. I am very comfortable with not doing a deal because you don't want to assume the best in transactions. You have to assume the fact in front of your face.



Jeff: Ed Murphy is a former Senior Vice President of Strategic Transactions at SAIC, now enjoying retired life. My name is Jeff Allen. You're listening to "Deal Talk," and we're happy to have you back with us. What about those business owners who really are well meaning but they're so mired in just the day-to-day operations. And they've got a sale pending, or at least there's certainly things in process but they're not able to answer to these requests for information. 

Then typically who did you work with if you weren't able to work well with the owner because of a number of different reasons? Maybe they're just not able to provide you with everything that you needed. Typically where would you go in that company in the sell side to get what you needed?

Ed: The deals we looked at they very often did have investment bankers involved. So they would sort of manage the process. So there was a little bit of a governor there. I think that's a good thing and a bad thing. It certainly makes the process probably more efficient. And the bankers generally have a lot of experience, so they would sort of know, they would anticipate what you need in a lot of cases. 

The downside of course is the process gets sanitized quite a bit. And a lot of times we want to look at the counter party in the eye and say, "How do you feel about something?" Just watch the body language frankly. That becomes important. 

If we couldn't get the CEO or the principal, we'd generally be talking to their senior staff like the CFO, or it could be the key line manager if we're trying to get information on customers, contracts and stuff like that. But in the smaller companies you really do need to get the principal. And that's why I would say if you are not able to give the time, then you're probably not ready to sell. Or if you haven't figured out who's going to be managing the process for you.

I did encourage sellers to try to make the complement of their staff available to us for discussions. But sometimes sellers are not willing to do that. They're like, "You're only talking to me because I don't want anyone to know this is going on." But they became single points of failure. 

Your point is spot on. We had to be sensitive to the fact that if we took up all their time, their business is going to start deteriorating. So they're paying too much attention to us and not the customers. So we try to be sensitive to that. And I'd say at the end of the day, if we took up too much of their time and the business deteriorated and we did the deal, we're the ones who suffered, not the seller, so we have to really keep an eye on that.



Jeff: One of the things we've talked about on our program. In fact we've talked about it on a couple of other programs, shows that we've done prior to this one, is we've talked about the actual process that one goes through in the sale of a business and the transaction process could probably, actually, if we talked about it in its entirety, take us a couple of two or three hours here on the program too to really go into detail about it. So we won't necessarily do that here.

But I do want to go into a little bit, I want to talk to you about those types of things that you've seen that have derailed deals that have actually caused them to not go through when maybe you thought that everything was working smoothly. And I'm sure that you've got a story or two on that. 

But I also too wanted to talk to you a little bit about that transition process, kind of that period that things come to a close and you've got one ownership group taking over, the other one is exiting. What happens at that point? And we'll go into that a little bit with you. 

I'll be back with Ed Murphy, former Senior Vice President of Strategic Transactions at SAIC, when "Deal Talk" resumes in just a moment.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on a future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com. 
Selling your business may be the most important business transaction you'll ever undertake, so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers. 

Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.
Are you a professional adviser, accountant, attorney or a wealth manager, or do you provide other professional services? Contact us today to see how our reliance program can help you increase your firm's revenues. Call Morgan & Westfield at 888-693-7834. That's 888-693-7834.



Jeff: If you have any questions about any of the topics you've heard us discuss on "Deal Talk," all you have to do is ask. And I'm talking about anything that we've discussed on this show prior to this particular edition of "Deal Talk" or even about this particular subject we're discussing with Ed Murphy today. 

Simply call our Ask Deal Talk info line 24 hours a day, 7 days a week, 888-693-7834 extension is 350. Follow the instructions to leave your question, and we'll reach out to one of our guest experts so we can feature your question and their response on a future edition of "Deal Talk." Ask Deal Talk at 888-693-7834 extension 350. 

This is Jeff Allen. My guest is Ed Murphy from San Diego, retired Ed Murphy that is, and he is the former Senior Vice President of Strategic Transactions for SAIC. And, Ed, we appreciate of course your being available once again to join us here on "Deal Talk," and I'm glad you are able to make time in your schedule to join us today for this discussion.

We're having, I think, an interesting talk that really is one that a lot of business owners can learn from. And particularly right now what I'd like to do is talk about those types of issues that come up, preventable types of situations that sometimes present themselves during the transaction process. When everything seems to go smoothly. All of a sudden something turns up and the seller or I should say the buyer, that is, sees something that raises a red flag and can really throw the deal completely off-track, and perhaps nicks the thing altogether.

What did you experience with SAIC and some of the deals that you were participant in that did come up that you thought, "If one thing had changed, or been different, or they've been more tentative to this we wouldn't have lost this deal." 

Ed: I think it can be a myriad of things. But something that comes to mind, I remember one in particular, the seller had actually done what I thought was a pretty good job of preparing themselves for the process, but it was sort of in the vacuum of who is the buyer. 

And so he had I think prepared his employees for this, which is always a very touchy topic for some buyers and some sellers. But the thing that hung him up is that he had a particular subcontract that was... He was just subcontracted to a very large company. And so he has a very stable revenue source. And he's providing a service that his customer appreciated what he's doing.

So it looked like it was a key part of his business, and as I said it was not an immaterial piece of revenue. Well, when he came to us and we had discussions and negotiations, got the valuation, we're in due diligence, we said we need to talk to some of your customers. And he goes, "I'd like to handle that first round and let them know who's buying us."
 
It turned out that that major customer of his felt that we were a competitor. And so suddenly the customer said, "I'm not going to assign that contract." And this person had not done the homework on, number one, can I assign contracts without customer consent, and will it go by operation of law or do I need specific assignment permission. 

And secondly he had advantages. There are certain buyers who would be unattractive to you as a customer of mine. And so that actually blew up the deal because the revenue was too material. And frankly once he realized he knew the deal was going to go blow. So he had to go down a different path. 

And your listeners will say, "That wouldn't happen to me." No, it'll be something else. So I think it's again a key thing that you kind of look at your own business and say what could go wrong, not how well is this going to go. And I had other ones where frankly the then employee revolts against the owner once they found out they're going to sell. Not literally revolt but the employees felt like they were being ignored in the process and then suddenly they heard there was a deal going on and they were pretty upset. And you as a buyer want to step in and start trying to integrate a large, unhappy employee base into yours. And so we had a deal that actually blew up over… Frankly, he couldn't sell the company. Employees basically controlled the process in a peculiar way because he had not been, what I would say is open with his employees. And again, that's sensitive. Some owners will not do that early on, and I understand that, but you do run that risk. In both cases those deals kind of blow up.

And I will tell you, when I talk about acquisitions, people think they're sexy, they think they're cool, everyone wants to be involved in one. But I kind of describe an acquisition as frankly it's a process of involuntarily employing a large number of people somewhere where they had not chosen to work. And then asking them, "Hey, we're going to change all the policies. We're going to change our processes. And we want you to be comfortable with all this." 

So acquisitions can be very messy to the largest number of people that are affected by it. Sellers should be cognizant of that. But it's still tough to decide when they're going to open the kimono on that.



Jeff: I was going to say the key really is knowing when to I guess lift that veil of confidentiality with your team. They're going to be certain folks that you're going to want to bring on and let them know about what is going on, obviously, key seconds and thirds, key leadership on your management team. They're going to have to be brought in on all of this.

But going back to that thing you talked about with regard to contracts and working with contractors and clients that rely on you to perform certain types of services and so forth. And then they decide, "No, I'm not going to continue with you because I don't approve of your buyer." 

What do you do? How can you effectively reach out to these people to key customers that you do work with to let them know about this potential transaction so that they don't bail. Is that just kind of one of those judgment calls that you have to make, or is it just one of those types of facts of life? Yeah, you lose some business here and it could have an impact on whether or not the deal goes down or not.

Ed: Sure. And there's always some risk. As a buyer you always have to price in something going wrong. I don't think you can always assume everything will go perfect. That would be naive. But I think when you're looking at the customer set and you're preparing for sale, you have to decide at what point are you even thinking of saying, "I'm thinking of selling my company." 

Because if you come in too late, I think you may be in a process where you've always done through pricing, due diligence, you've shown a lot to this other party and then your customer blows it up. Unless you know your customer well, that's kind of a risk that I wouldn't suggest you take. 

But if you early on just sort of do a soft sale, and it's just something I'm thinking of down the road, sort of part of the preparation for sale that we talked about earlier. If you think it might be coming down the road, you might just say one of these days this might come up. And I want to make sure that you customers are comfortable with this. So I just wanted to let you know early. And see if they have any kind of reactions.

Generally, a lot of the customers are not going to really care. They'll say, "Is so and so still going to be working with me? Is your key guy going to still be working with me?" Those are the things that they're worried about. So you can address it, but I think if you put it off too long it is a risk of being a trigger for a blow up.

And for a buyer, at least for us, that was the key thing. Let's face it, what is a business but its customer? So for us we said we need to understand that these customers are going to be sticking around and we need to get highly comfortable with that if we're going to proceed.



Jeff: And I know that as a retired guy, you didn't necessarily retire from a business that you owned, a privately held company that you personally controlled the whole show on it. But you've been through so many deals. We talked about this a number of times already during our conversation. 

And now that we're kind of winding down our discussion here on this edition of "Deal Talk," it's actually kind of a good time I think to talk about one last thing that I wanted to kind of bring up with you and that is integration, or the transition from one ownership group to another, or from one owner to another. 

And in this particular case, talking about what happens at that point when you've got owner A who's had this company for 25-30 years, walking away, the deal is essentially done or about to be done, and owner B is taking over. And you've got kind of that window, I guess, where you've got that mixture of one guy leaving, one guy coming in, and business that kind of needs to be done between the two so that you can have a seamless a transition as possible. 

What has been your experience with regard to that integration period when the two sides come together, the deal's just about done or has completed, and that company needs to go on to continue to succeed and continue to perform?

Ed: I'll try to gear it more towards smaller deals. But on larger deals where there's an anti-trust review period you have at least 30 days generally between the time you sign a deal and you close it. So you can work a lot of the issues then. The risk to the buyer of course is you pretty much own it unless something huge happens you can't walk away from the deal. You don't control it but you're committed to buying. 

But in most deals where it's a sign and close deal where you sign the documents and that day you own it, it's important to do preparatory work leading up to that closing. And again, there is not a common interest here in most cases. The buyer wants to know as much as they can about the employees, about their mindset. They need to compare benefits, they need to figure out how the transition's going to work. That they engaged in generally happy workforce, which, again, in most acquisitions is not the case. You have people freaking out.

When you think about acquisitions, If I'm the principal on our side and I'm buying you, and you're the principal on your side, you and I may have a common interest of getting something done. But the employees often are feeling like, "Hey, what do I tell my family when I go home? Do I still have a job? Am I going to get fired? Is my pay going to get cut?" All their issues and I'll choose what's the strategic fit here? How much is the owner going to get? They don't care about that. They want to know what's going to happen to them. 

So there's huge integration risk to a buyer. Again, this is more in a services business where people are not interchangeable, they're very critical to the business. But there's a big integration risk there, and so we used to overlap integration and due diligence so that as we learned about the business we would start teeing up issues about how we're going to compare benefits and match them. Are we going to require anyone to relocate, which generally was not the case. And with customers, are we going to make sure that the key people stay in place? Are we not going to lose anyone to make sure that the customer sees this as fairly seamless.

And the seller is generally saying, "I don't want you to know anything because if you find out a bad fact you're going to try to unwind the deal and renegotiate it." There is a tension there and I think the best way to resolve it is to just say to be a fair buyer and try to give comfort, but at the same time say, "This is what I need to know to make sure that I can take care of your employees who will become mine, and your customers who will become mine.”

It's a sensitive process, but we focus a lot on integration. And it's not easy. It's hard to get it right, because you don't know everything that the seller knows.



Jeff: And I do appreciate very much your taking the time out of your schedule and of your retired life to talk to us a little bit about your observations to give us some key insight into what it is like there during the process, buyer and seller coming together, some things we need to be mindful of. And again, I want to thank you so much for joining us on "Deal Talk" today.

Ed: OK, sure thing. Thanks, Jeff.

And that's why I would say if you are not able to give the time, then you're probably not ready to sell.
Jeff: Ed Murphy has been my guest. He's the former Senior Vice President of Strategic Transactions at SAIC. And again, we thank him very much for joining us. We hope that you enjoyed the discussion. You can find us and all "Deal Talk" podcasts on a host of channels for your convenience, including morganandwestfield.com, iTunes, Stitcher and Libsyn.


"Deal Talk" is brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com. My name is Jeff Allen, thanks again for tuning in, and we'll talk to you again soon.

While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

Resources (All references mentioned in the show)

Key Takeaways

  • It’s important for the target and the acquirer to get together in the very early stages of a merger to determine if there are going to be any major issues before the deal is closed in order to maximize the opportunity for culture change and adoption.
  • When a business owner is struggling to merge their organization with another, the trouble usually stems from a culture clash somewhere and trying to make two entities into one.
  • When an organization has acquired another entity, it is important to ensure business continuity because customers should not feel any type of hiccup.
  • The biggest challenge to the cultural component in a merger is a lack of communication.
  • Issues about top talent should be addressed upfront.  Acquirers who assume that the HR department will just handle top-talent issues post-acquisition are setting themselves up for a disaster, which could not only kill the deal, but also devalue the asset. 

Read Full Interview

Jeff: If you are negotiating to sell your company outright, or are merging to form a new, larger organization and you're committed to its success as quickly as possible, you've come to the right place.

From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk," brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.



Jeff: Hello and welcome to the web's number one content source for small business owners committed to building a business for eventual sale. Here on "Deal Talk" it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.

Corporate culture may be a bit of a grey subject for some business owners. But knowing what culture is and understanding how it influences your decisions and drives your business can be critical, particularly if you're in the acquisition process, or if you're selling your company outright, or merging with another company to form a new, larger organization, or if you're the buyer looking to succeed as quickly as possible post-acquisition, this program is for you.

We could not have a better, more qualified guest to talk about this important subject than a gentleman who was recently honored internationally as the Post-Merger Integration Adviser of the Year (U.S.A.) for 2016 by Corporate LiveWire. Dr. Curtis Odom, Principal and Managing Partner at ‎Prescient Strategists, LLC. He is a certified M&A adviser and an expert in the area of organizational change. 

He joins us this morning via Skype from the Austin area. And Dr. Odom, it's a pleasure and honor to have you on the program. Welcome to "Deal Talk." 

Dr. Odom: Thank you very much, Jeff, for that kind of introduction. It's a pleasure to be here with you today.

 
Jeff: What have you discovered, Dr. Odom, in all of your work that you've done that most often hinders or prevents the success of an organization following a merger or acquisition?

Dr. Odom: That's a really great question. I was just in a meeting this morning where we're talking with business owners. They're struggling through trying to make the deal work. The thing that keeps coming up more and more is when they look at merging their organization with another or making an acquisition, the trouble usually stems from a culture class somewhere and trying to make two entities into one.

They [companies] think about it [merger] simply from a strategic standpoint. We're going to add company A to company B and we're going to move forward. Everything's going to be great. We're going to achieve increases in revenue. We're going to achieve increases in value. But we don't pay attention to the people component of it.


Jeff: We're really committed on this program. And we mention it all the time that we want to help business owners grow their companies. Whether that's the company they own right now or the company that their business could be later on as its acquired by somebody else, or they do the acquiring. They find targets that they want to pursue in order to grow their organization and expand it to new markets.

This discussion today that we're having is really important because you've said, and you've kind of committed throughout your career, that culture really does have a relation to value. Can you tell us how and why that is?

Dr. Odom: Absolutely. When a merger and acquisition unexpectedly starts to go south, the cost could be painfully clear. You have a drop in morale. Synergies fail to materialize. That top talent that you hope to keep, they start running for the exits. And it's tough to figure out what's really going on and try to understand where the synergies are failing or what's really causing a hole in the bottom of the boat. 

And from my research, what I have really learned from executives that I have a chance to work with, and those that I have seen both be successful and fail, is that a deal's failure to achieve the promised value most oftentimes was due to a lack of or meager attention being paid to the cultural integration component.


Jeff: And how exactly can that lack of attention to culture manifest itself as far as the importance of its impact on the business is concerned?

Dr. Odom: Great question. Usually what I see and when I'm brought in a culture clash, companies' fundamental ways of working are so different in two organizations that they're easily misinterpreted. People feel frustrated and anxious. And it lends itself to demoralization. Your productivity starts to flag.

What it really lends itself to is when you look at corporate culture, it's the shared values, the beliefs and the behaviors that determine how people are actually going to do things in the organization. How are they going to survive, how are they going to win? 

So there's three areas that I see that lend itself to culture. Number one, whatever those behavioral norms are that are expected to be exhibited by everyone, from the senior leaders all the way down to the front line employees, those need to be laid bare on the table. We need to talk about those. We need to admit that those are in the room and that they're really the soul of the deal. 

The second thing I would share is that we need to look at the critical capabilities and decisions about where is this new organization going to go? How is it going to compete? And what is our organizational strategy? 

So many times, Jeff, people that I have had the opportunity to work with and talk with, they think about it simply from a strategic standpoint. We're going to add company A to company B and we're going to move forward. Everything's going to be great. We're going to achieve increases in revenue. We're going to achieve increases in value. But we don't pay attention to the people component of it. 

And the people component is really what lends itself to the third area, which is how are we going to look at this operation model for the new company? What's going to be the structure and the accountabilities? What governance is going to be in place? And what are the ways of working that we're going to need to embrace now that we have this blueprint of two organizations that are coming together? How are we going to get the work done?


Jeff: Dr. Curtis Odom joins us today from Boston, and he is an expert in the area of organizational change. He's Principal and Managing Partner at ‎Prescient Strategists, LLC. My name is Jeff Allen. You're listening to "Deal Talk," and it's good to have you.

Talking about then, Dr. Odom, this idea about establishing maybe what those differences are in trying to find a way to eliminate those differences and create a seamless culture. Maybe you've got two companies with a culture clash, so to speak, and yet there is a deal in the works. There are negotiations underway to bring these two companies together.

It would seem to me that it would be really important for both companies, both the target and the acquirer, to get together in the very early stages to kind of identify or determine if in fact there are going to be some major issues and hurdles to get over before you can even try to consummate a deal before you can get it done. Is that right? You want to try to have these problems off the pass early, correct?

Dr. Odom: Absolutely. Where we have had the most successful of our clients is really being at the table, part of the conversation, Jeff, during the due diligence phase. We want to get both not only the seller but also the buyer, of course which we usually spend most of our time assisting the buyer. But we want the buyer to understand upfront during due diligence. 

What is this asset that they're acquiring not only from an IT standpoint or operations, sales, marketing, legal, all those components? But from a culture, from a people component, what is it that you're actually bringing in? Where we like to work, and we've had the best success is upfront during due diligence. But we see it and, to be completely honest, we see a lot of the challenges that this idea of culture, of integration, of the change management most oftentimes happens post-close. 

So the deal is done, the signatures are dry on the documents, everyone's gone off for the steak dinner. But the question we like to ask of business owners and those who are acquiring companies is what happens after that dinner? After that steak dinner you're left with this asset you've acquired. How do you maximize its value? How do you optimize the purpose of the deal in the first place? How do you do that?

That idea of waiting to post-close is really where a lot of these challenges happen because the ink is dry and now you've got a culture that's really looking around to figure out, "Now, what? What does this mean for me? What does it mean for my ability to provide a lifestyle for my family, my loved ones? Well, I have an opportunity to be in a role in this new, emerging organization. And quite frankly, do I want to be?” 

So all of those things when you think about the top talent, the people that are really instrumental to driving the operational excellence and optimization of the business. If these questions aren't answered for them upfront, Jeff, without a thought or they just assumed that after the deal is done that the HR department will just handle all of these things as they go, you're setting yourself up for a disaster, which could really not only kill the deal, but it could really devalue the asset from the onset.


Jeff: Are you suggesting then that waiting until after the deal is done. And here we are, we're post-closed, we’re in that transition phase and maybe it's a year down the line and things have gotten off to a shaky start. Are you suggesting then that it may actually be too late to make changes after the close of a deal, Dr. Odom? 

Or is there really still kind of a window of opportunity there that as long as you don't wait too long, that you can take and get your arms around any of these culture-related issues in order to set yourself for a pattern of growth and a more positive, sustainable type of growth even after you've had some issues initially?

Dr. Odom: Absolutely. There's what we'd like to call basically the runway to a deal when you think about the cultural integration. Certainly where we have the opportunity to partner with clients. If we could do that during due diligence, basically the runway of the cultural integration really maximizing the opportunity for culture change and adoption.

If we start in due diligence, that window is roughly around six to 12 months of working with the senior executives, those are the part of the different heads of operations to really get the integration component going. So due diligence, you're looking maybe six to 12 months of time from a consulting standpoint and an advisory standpoint to mitigate some of the risk that could kill the deal. 

But when we wait to post-close, that runway really does lengthen. You're looking anywhere 18-24 months on our experience to come in, to assess what miscues have already happened. How do we wrap our arms around the challenges that are already being experienced? And then really start to do a little bit of what we like to call damage control, of trying to undo some of the things that could've quite frankly been avoided if we started the conversation upfront, if we did a look at what are going to be the right people for this deal, what are the right roles they need to be in, what are the right skills, are they there at the right time? 

And then finally, what's going to be the right cost at being able to execute this deal across the board and down through the silos of business unit where it comes to the people component.

Because you have had two cultures that have merged together, we need to define and identify what the new culture of the new organization needs to be and put things in place to allow us to see the future state clearly.

Jeff: Very good. I guess we've been talking in generalities. We've been talking about issues, and we've been talking about things as they relate to these cultural differences. Can you kind of share with us maybe some examples of what these cultural issues might involve? What some of these things are that sometimes divide these companies and prevent them from being able to grow together, or from the new company being able to succeed post-merger?

Dr. Odom: Sure. I can give you one example of one client who we're working with right now, and the signs are very positive for the senior team. They seem to be really committed to building a culture that's going to both excite employees about the future and give them a new way to go forward. They're really focused on the culture, which is a great thing, and it's really going to set up so that the objectives or the deal are shaped and that the sequence actually works for a pace of integration that everybody can wrap their arms around.

So what we've been doing with them now over the past seven months or so is we've been going on a function by function basis. We've been talking to the managers of each function and really working with them to figure out now as we're moving toward the deal being done, where are we going to accelerate the opportunity to integrate? Where are we going to stage it, maybe have a more of a purposeful walk. 

And then which integration activities are we really going to delay? Because just like every good consultant, there are many gaps that you're going to uncover when you're working with your clients to help them look at their organization in a way that maybe their operational pace doesn't allow them to. 

So a lot of what we do is we help the business owners of an organization take a step back and look at their organization as we do objectively, without being in the day-to-day operational basis of running their firm or running their company.

But every gap that comes up from an integration standpoint may not necessarily need to be closed straight away. So what we've been doing with this client, again, is really prioritizing. What are the must-have functional areas that we need to integrate so that we can both ensure compliance, which is big. 

And then secondly, how do we ensure business continuity? Because the customer of this client, they do not and should not feel any type of inertia, or slowdown, or hiccup, if you will, because the organization has acquired another entity. The customer wants to feel like they're still as important pre-deal as they are now going to be through the deal and post-deal. So we really focus on that and try to make sure we keep our pulse on any instances where we are seeing a different productivity that would then translate into damage to customer brand, customer loyalty, what have you.


Jeff: Dr. Curtis Odom is my guest, Principal and Managing Partner at ‎Prescient Strategists, LLC. And for everyone, you can find a complete transcript of this program at morganandwestfield.com. You'll see a summary below the media player, but you can click on that PDF link to download the whole thing and you can come back and read it again and again on your PC, or your phone, or tablet, or whatever it is that you use to take with you.

This is a great conversation, and we've got more of it to come as I continue my chat with Dr. Curtis Odom when "Deal Talk" returns after this.


If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on the future edition of Deal Talk.

Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com. 

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At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process.

That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. Morgan & Westfield will help you every step of the way. From helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers.

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Jeff: We'd like to hear from you, very interested indeed in finding out your opinions, getting your feedback, learning what it is that we can do to make "Deal Talk" even better for you. So all we'd ask you to do is simply send us a quick and dirty email. Hopefully it's not too dirty, hopefully you can send us a quick and clean email, and hopefully it'll be nice too, morganandwestfield.com. 

Once again, send your comments, thoughts, suggestions and even praise if you happen to have some. We’d be glad to get that too, dealtalk@morganandwestfield.com.

So glad to be joined today by the Post-Merger Integration Adviser of the Year for the United States and just so named now internationally acclaimed he is for 2016 by Corporate LiveWire. His name is Dr. Curtis Odom, Principal and Managing Partner at ‎Prescient Strategists, LLC in the Boston area. Dr. Odom, once again, good to have you. Thanks for staying with us during the break.

Dr. Odom: Absolutely. Happy to do this. This is a great conversation today.


Jeff: I appreciate it. I'm enjoying it as well. By the way, my name is Jeff Allen. You're listening to "Deal Talk," and we're talking about the importance of cultural integration during that transition phase, how important it is to try to discover the issues that divide two companies early in the acquisition phase, the merger and acquisitions deal, so that the new company can succeed, so that you're building a new company for a long-term track of success right from the get-go, that's really important, that's what we're discussing. 

And Dr. Odom, I was wondering if you can talk about some of the specific steps that a business owner can take to mitigate any drop in productivity or revenue when we're talking about merging these two brands together. Whatever brands they may be, whatever companies, whatever lines of business you may be in, steps that a business owner can take to ward off any issues that might cramp productivity and revenue, and stall things in the early going.

Dr. Odom: Absolutely. I think one of the things that we work with our clients first and foremost, we really need to scope out our integration efforts. There are a lot of areas we could focus, but we want to really key on the areas where we should focus. Scope and approach will depend on the nature of the acquisition, certainly. 

But for those that are acquiring, we want to have a clear business case that we use to support the acquisition. We need to know that, we need to think about the organizational strategy, and we need to figure out, are we doing the complete integration in terms of one company buying another and becoming an operating company as a result of that?

Or are we talking about an acquisition where it's going to be more of a holding company structure where the two entities will operate as separate businesses? But regardless of how that's set up, the areas of focus that business owners and those that are acquiring businesses really want to think about it, what are the value drivers that are going to have the biggest influence on the areas that are going to have the most need for resources, and hopefully will give the greatest synergies and integrations.

Some specific areas we think about is where are we going to consolidate any operations? How do we eliminate excess capacity, also thinking about how do we leverage combined purchasing volume, what are we thinking about from a back office and a front office integration, which operations need to be executed? Included in that are the information technology, or IT, aspect. And then really what are the back office capabilities they're going to need to support this new business or new company.

In all of those scenarios, we need to think about them upfront, hopefully during due diligence. And then we can work with our clients to figure out from a priority standpoint where are we going to focus first and fast.


Jeff: So many of us have a fear of change. And when I hear you talk about integrating culture, you could have two brands that could be in the same business. They're both producing an outstanding product. And all each of these brands wants to do is create a company, join forces, and just dominate the market. But you could have a completely opposite view on each side of what the culture should be. 

And so you're going to have one side that may be particularly resistant for whatever reason, or you may have individuals resistant on the team. How do you deal with resistance to change in order to get buy in from both sides so that you can move forward?

Dr. Odom: Sure. I'll answer that and I'll give you an example of how we're working with a client to successfully mitigate that.

The biggest thing that we see as an absence or challenge to this real cultural piece from a changed management standpoint is a lack of communication. And I know that sounds trite, but the idea of communication is something that you don't just do one time. And I think in a space that's a swirl of activity, it is an acquisition, it is a merger. Communication becomes that much more paramount. 

And where we have seen that is usually communication on these spaces comes down from on high. And that communication is usually coming down and only answering the questions of what's going on and why it's happening at best. But for those that are listening, the leaders of the organization, those charged with the execution and the day-to-day work of the organizations, they're listening for the who and the when. 

And if those communications don't speak to them, you may from a top-down perspective be communicating or think that you are. And certainly you might be sending out emails in town halls and everything else like that, but people aren't coming to these town halls intently listening for the who and the when. 

In my experience, what I have found is that many folks would talk about the fact, oh people don't like change. And, Jeff, I disagree. I think that people don't like being changed. And part of the work that we have seen and gone in with senior leaders and many different sizes of organizations across many different industries is to get them to wrap their mind around one specific sentence, is that your merger or your deal ultimately is change and that change will work when the people for the organization feel that the change that's going on is being made with and for them rather than done to them.


Jeff: They want to feel like they're part of the success. They want to feel that they are part of the team, and that they contribute, and that they're valued.

Dr. Odom: Absolutely. Many times the train is moving so fast at the leadership level, because there's a clear vision from where we're going from, either a strategic standpoint, relationship standpoint, looking at the ROI, if you will, or looking at the value of the deal. And we're doing that from such a high level of moving so quickly at the top of organizations that the people, the culture is almost in a whipsaw type of environment where they're being thrashed about as the speeding train goes around the curb. They are the last car on the train. They're watching the organization turn and take the curve, but they haven't felt the inertia yet, they haven't felt the movement.

And then most oftentimes they feel that movement, they don't understand where the train is going. They don't understand if they are even going to be able to get off, that they want to be on the train and which destination is it pointed to. All of those things, I used that metaphor to really specifically say that we need to think about the last car on the train. Even though where we're headed might be the best place for the combined organization and we're trying to get there with the speed to mark that's going to allow us to really engage and grab some type of ROI or some type of value.

A deal's failure to achieve the promised value most oftentimes is due to a lack of or meager attention being paid to the cultural integration component.

Jeff: I can imagine there are some heads right now listening to this discussion, they're nodding, and everything that you said makes perfect sense, everything we've talked about that you've kind of explained makes perfect sense regarding cultural integration and its importance to the growth of the new company. 

So now they're probably wondering many folks in our audience, what is the next step, how can I take those next steps to get started along my way because I want to expand my company, I'm looking at selling my business, I'm looking at merging with a company that out there has the same ideas that I have. How do we get started? Next steps.

Dr. Odom: Great question. What usually happens, and we're very thankful for this for our firm is that people need or realize that they need a thinking partner. They need someone to be able to sit there with them and help them think up and out of the operational paradigm that they're in. 

They're running the business; they've been very successful with doing that. But they're trying to figure out, "If I want to expand my business I want to go to this next level. If I want to maximize value and optimization there needs to be a plan."

And where we have the most success is working with clients, we create a 100-day plan. And the plan can be quite honestly a little bit frustrating when it's first put together because it's asking for details and it's got a length to it that many operationally-minded business owners think that are questions that quite frankly may not return an investment and they're being asked or them answering. 

But the immigration is a very unique situation, and we have to not just focus solely on material items but we have to think about what does it look like for negative consequences. In other words, what could come back to bite us if we don't think about it right now?

So our 100-day plan really has to put the details of all the tasks across all functions that we must take and keep moving with if the integration is going to be successful. For instance, we need to look at what short-term changes we need to implement, whether they have an immediate financial impact or they're just important to continue the operations. We did an inventory of that. So we got to think about common policies and procedures, how are we going to migrate those, and how do those hit both the front and back office of the organization.

Then we need to spend some time testing and refining the major assumptions about this integration approach. What are the real value drivers that are coming out of the due diligence, and how do we put together an implementation approach. So what's step 1, step 2. And how do we see working together that would achieve the desired future state operating model over time.

And I say over time because we also need to be very realistic that the things that we're putting in place today, there's going to need to be a runway, there's going to be a lag, if you will, in terms of the things that we did do today in terms of returning value. We want to do that simply and honestly within the scope of when we think we're going to, or have communicated we're going to achieve ROI or the optimized value for the integration or the acquisition. 

And then lastly, where do the organizational changes need to be made? Such changes that we need to make immediately. Maybe that's why we have redundancy and function, maybe there are certain aspects that now as a result of this merger acquisition could quite frankly be moved to an economy of scale, more of a centralized model, which things could be outsourced. We really want to look at those things, but also over a phase of time. We don't want to do too much too soon.

Just because we have a plan does not mean that needs to be executed today. It really is a 100-day plan, Jeff, which is looking at from due diligence really out to a place, a 100-days into the new organization, what should we be doing, how do we do it connected to the organization strategy. But also certainly as we've been talking about connected to the culture of now, the new organization. Because you have had two cultures that have merged together. We need to define and identify what the new culture of the new organization needs to be and put things in place to allow us to see the future state clearly.


Jeff: There you have it. By the way, I would probably imagine, Dr. Odom, that if a privately-held business owner may not necessarily have the idea in mind to seek a partner, or to seek an investor, or to grow their company into markets by being acquired or putting their company out there, seeking a buyer. That they may be able to use some of the information we've talked about today to kind of begin the process of some self-examination, looking at their own company to kind of see where some weaknesses might be. 

And we also know that sometimes it’s difficult to get that 35,000-foot-level view of a company because we're so busy working in it as well as on it. In that particular instance, if someone is interested in contacting you today to talk about maybe a pending merger that they've got and they want to move toward working toward seaming together two cultures and creating this new cultural integration that we've talked about today. It's so critical toward their success of their new organization, how can they contact you?

Dr. Odom: Sure. I think there are two ways. I would invite the listeners of this program to take a look at our website at prescientstrategists.com, all one word. You'll find a lot about not only who we are, but what we do, where we work. You have a great idea of the clients that we work with. 

I will share with the listeners, do not be frightened by the fact that a lot of our clients have been Fortune 100 companies. The work that we do is agnostic to industry, agnostic to size. And quite frankly, we have a lot more of an immediate impact working with middle market, and I would even say micro market companies as they think about it.

And I must say you'll find our phone number for the office, but I'll give you that here. Just give us a ring. If you're looking for a thinking partner, give us a call. It's 857-453-6736, and that goes right into my office, and my assistant or one of our members of the team would be happy to connect with you. Or if you'd like me to give you a call back, just say so in your message. I'd be happy to reach back out to you. I'm always in the market for new thinking partners, how I can help their business grow and be successful, and get the value that they're really seeking.


Jeff: And speaking of value, this has been a valuable conversation. Dr. Curtis Odom, thank you so much for joining us, just a great discussion today, and hopefully we can have you back on again in the near future.

Dr. Odom: I would welcome that. It's been an honor to be here today. It's been great to kind of mix it up with you back and forth, Jeff, and talk about how we could add value for business owners who are in that space of merger, acquisition, and really trying to get the value and optimization.

The customer wants to feel like they're still as important pre-deal as they are now going to be through the deal and post-deal.

Jeff: Dr. Curtis Odom, Principal and Managing Partner at ‎Prescient Strategists, LLC., in Boston. In addition to morganandwestfield.com, you can find us on iTunes, Stitcher and Libsyn.

"Deal Talk" has been brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com. My name is Jeff Allen, thanks so much for listening.

While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.


Download the full show.
Read Dr. Odom’s book, Mind the Gap:  Getting Business Results in Multigenerational Organizations


Key Takeaways

  • Buyers are definitely more prepared than some sellers are, particularly first-time sellers.  There is, however, a growing popularity around sell-side due diligence.
  • Doing a sell-side due diligence allows you, as a business seller, to be prepared for any surprises. If any financial or operational issue comes up, you could start strategizing to address the issue before going to the market.
  • Investment banks don’t want to be in a situation in which they have to go down the transaction process and modify the purchase price just because the buyer who had done appropriate due diligence had uncovered something about the business. You can stay ahead of that, as a seller, by performing or engaging a service provider to perform sell- side due diligence.
  • The asking price shall be based on both the historical performance and the forecasted performance of the business. A buyer who considers entertaining a transaction with a seller would, at the minimum, ask for the financial statements and would want to know the person managing the business.
  • If your goal is to entertain as many potential buyers as possible, then it will probably be in your best interest not to have a binding letter of intent, which has exclusivity clause. On the other hand, the binding letter of intent will help you narrow down the potential party that you ultimately want to entertain.  You will typically won't do that until you are either comfortable that that potential buyer is a good fit for your company, and/ or they're willing to pay the asking price if not more.

Read Full Interview

Jeff: Understanding the early stages of a deal from the perspective of the consultant to the acquiring company. If you want to gain a little wisdom into some of the M&A process from the buyer's point of view you've come to the right place.
 
From our studio in Southern California, with guest experts from across the country and around the world this is Deal Talk, brought to you by Morgan & Westfield, nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.

 
Jeff: Hello, and welcome back to the web's number one content source for small business owners committed to building a business for eventual sale. Here on Deal Talk it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.
 
Here to help us understand some of what takes place in the early stages of the M&A process from the buy side is Ms. Nonye Ukawuba, M&A adviser at Riveron Consulting in Chicago. Nonye, welcome to “Deal Talk.” It's nice to have you.
 
Nonye: Thanks for having me, Jeff.

The last thing you want is to uncover an issue after you've already gone to market.

Jeff: You have a lot of skin in the M&A game and I'd like it very much if we could start the conversation by talking a little bit, kind of about what kind of experience you do have because your resume is pretty impressive. You were formally at PricewaterhouseCoopers, is that correct?
 
Nonye: That is correct. I was there for nearly a decade and their M&A practice, what we call transaction services. And I also spent two years in the London office.
 
 
Jeff: Okay. And so travelling overseas, you had a chance to really gain a very interesting perspective having been there and seeing more of this cross-border process as far as M&A goes, which really gives you an advantage in many respects I might think in your business, and that has served you probably pretty well coming back of course the United States and working in Chicago.
 
Nonye: That is correct. There are multiple clients that I serve that have considered cross-border transactions and look for professionals that do have that international experience.
 
 
Jeff: And I should say that at least according to what your LinkedIn profile tells us, and we understand that things could've changed since the information was last published there were changed, she has performed transaction related services on over 130 merger and acquisition transactions ranging in value from five million dollars to over ten billion dollars.
 
Nonye, it's really great to have you here and I appreciate once again for taking the time out of your schedule at Riveron Consulting for joining us.
 
I would like to know how an M&A firm differs from working with an investment bank, Nonye, if you could explain the differences.
 
Nonye: Yeah, not a problem. Riveron, in particular, we serve in a variety of roles. And as you highlighted before my focus really is on transactions, whether it's on the buy side or the sell side. In addition to performing buy-side or sell-side due diligence, our firm also assists clients with the integration process. And also help clients professionalize their finance and accounting function, or improve the reporting process particularly if there are different stakeholders, say when the acquisition takes place that was privately held and now it's primarily owned by a private equity firm, or they've acquired that they didn't have before. We serve in a variety of roles, but my primary role here at Riveron is primarily focused on the sell-side and buy-side due diligence.
 
What makes our firm different from an investment bank? I'd like to use that analogy of buying a house. When someone is either buying or selling a house, there's a real estate agent involved. And that real estate agent's role is to basically put the house on the market and find buyers. The investment bank in this particular example will be the equivalent of the real estate agent. And once they find the buyer, the buyer will likely hire a home inspector to basically check out the house, see if there are any issues with the house. And by the time they're done with the inspection, they deliver reports that summarize all their findings.
 
Now, there may be things in the reports that would cost the buyer money and the buyer would use that as a negotiation tool, but may not necessarily be a deal breaker. My role is equivalent to the home inspector in terms of the buy side. One the sell side, what we'll do is perform the due diligence, help the seller prepare for any potential issues that may cause a fire to basically negotiate the purchase price. So that is our role and that's how we differ from an investment bank.
 
 
Jeff: Would you categorize yourself as perhaps an M&A intermediary?
 
Nonye: Not necessarily because we don't typically connect buyers with sellers, but to the extent that we are where we deal. And we have a lot of clients that are looking for proprietary deals and don't necessarily want to go through the bidding process or go through intermediaries. So we come across opportunities where the seller is comfortable with us spreading the word. Our clients are very much open to it.

I'd like to use that analogy of buying a house. When someone is either buying or selling a house, there's a real estate agent involved. And that real estate agent's role is to basically put the house on the market and find buyers.

Jeff: You touched on an answer or a portion of an answer to part of my next question. By the time a buyer reaches out to you then, usually speaking, they've already identified their target company, is that correct or will you, on occasion, actually kind of help them find somebody who can find the company of interest that they're looking for?
 
Nonye: That's correct. They typically have already identified the company that they would like to target. We will come into play in terms of connecting buyers with sellers if we were working a particular sell side transaction, and we knew of clients where that particular company fits their investment strategy. Then we, again, confidentially is huge to the extent that our client who was selling is open to the introduction. That's when will make that connection.
 
 
Jeff: Okay, very good. Now, if you contact me, I'm the selling company there, okay, and you contact me with a potential buyer, or maybe this is somebody else in your firm Nonye, and I'm interested in talking more about this and kind of pushing the ball along. What typically happens next after I get that call?
 
Nonye: After the seller contacts me?
 
 
Jeff: Let's kind of, just a hypothetical, you get a call from a buyer and you know that my business is for sale. I already know that you guys typically don't taking connected to, not typically but oftentimes if that may come up special circumstances and I'm interested. What typically happens next? What continues on from that point?
 
Nonye: From that point if a buyer contacts me and I'm aware of the company that's on the market that will fit this particular buyer's investment strategy?
 
 
Jeff: Yes.
 
Nonye: I would contact the sellers and basically make them aware of a potential buyer who is looking to invest or acquire a company such as the seller. And basically take it for their guidance take it from there. So ask for their permission to make the introduction if they're comfortable with me making the introduction. So all of that will be driven by authorization of the seller.

My role is equivalent to the home inspector in terms of the buy side. One the sell side, what we'll do is perform the due diligence, help the seller prepare for any potential issues that may cause a fire to basically negotiate the purchase price. That is our role and that's how we differ from an investment bank.

Jeff: Okay, all of it driven by the authorization of the seller. Let me ask you Nonye, your experience having worked of course overseas. You worked in London for a couple of years and of course PricewaterhouseCoopers, now with Riveron Consulting and you've been there for several years now.
 
What have you noticed with respect to the buyers today in the marketplace, are they becoming a lot more savvy before they even talk to you folks, and have they become more savvy in recent years? Do you get the sense that they seem to be armed with a little bit more information, or has it always kind of been that way with respect to what the buyer knows that maybe the sellers don't even really know.
 
Nonye: I don't see much of a change in terms of underlying knowledge that the buyers have when they're walking into a transaction. What I am seeing is more sellers trying to prepare for either that level of sophistication or the fact that buyers are definitely more prepared in the process than some sellers are, particularly first-time sellers.
 
I am seeing a growing popularity around sell-side due diligence. I will say it wasn't as popular particularly in the U.S., not necessarily so much in Europe. In Europe, they do more sell-side due diligence or what you would call vendor due diligence. But it has more so to do with some of the regulatory restrictions that we face here in the US.
 
What I am finding is that although we're not doing vendor due diligence which is the form of sell-side due diligence we are doing more and more sell-side due diligence, which effectively is the reverse of buy side. But in this particular case, the seller is aware of any surprises that a buyer would typically uncover during their due diligence. The whole buyers are going to engage a buy-side due diligence provider.
 
 
Jeff: Okay. Do you feel that then sell-side due diligence gives one company, the company that chooses to perform that due diligence on its own, an advantage over a seller who does not engage in that due diligence or who has to take a lot of time and talking with a bunch of people, attorneys, accountants, and so forth about whether or not it's necessary.  In other words, does one company have a leg up over the other if everything else was being equal?
 
Nonye: Certainly, they do because you don't know what you don't know until you actually go through the process. And not only that but you're finding that more investment banks are almost... I wouldn't say they're making it a requirement but they're highly recommending it, simply because it makes their jobs easier too.
 
The last thing they want to do is go down the transaction process and have to modify the purchase price because something that was uncovered by the buyer as a result of the buyer doing their due diligence. You can stay ahead of that as a seller by performing or engaging a service provider to perform sell-side due diligence. That way you're prepared for any surprises and if something does come up whether there's a financial issue or simply operational issues you're ahead of it and you can start strategizing in terms of how you're going to address it before you go to the market. The last thing you want is to uncover an issue after you've already gone to market.

What we can do in terms of helping confirm that price or make sure that the price isn't altered is before you go to market we can understand the asking price that you have in mind but come in and do the work that the buy-side due diligence providers would do just to say, or at least inform the seller, ‘These are some of the issues that we've uncovered that could potentially impact your asking price.

Jeff: We're talking about the types of issues or the types of concerns that maybe a buyer may have, or at least trying to get in their head and kind of gained their perspective, knowledge of their perspective of an M&A transaction in the early stages and we're doing that with today's guest, Nonye Ukawuba. She is M&A adviser with Riveron Consulting in beautiful Chicago, Illinois. And we're going to continue our conversation with her, my name is Jeff Allen, when “Deal Talk” returns after this.
 
If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on the future edition of Deal Talk. Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com.
Selling your business may be the most important business transaction you'll ever undertake so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way. From helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers. Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.
If you have any questions about any of the topics you've heard us discuss on “Deal Talk,” all you have to do is ask us. It's just that simple, because this show is committed to you and we're committed to bringing you answers and finding solutions. Simply call our Ask Deal Talk info line at 888-693-7834 extension 350. It's open 24/7. Follow the instructions to leave your question and we'll reach out to one of our guest experts so we can feature your question and their response on a future edition of “Deal Talk.”
 
Ask Deal Talk at 888-693-7834 extension 350. And yeah, what we do is really depending on the question that you ask, we'll go through and we'll talk to one of our experts we've had on the program in the past who've actually dealt with those specific questions in the past. We've got a huge database here that we can kind of pull from and we'll find the right person to address your particular concern, or question, or interest.

 
Jeff: We're talking about a buyer's perspective and some of the things they're thinking about, some of the concerns, and just kind of really getting their point of view in the early stages of the M&A transactional process. My name is Jeff Allen.
 
Our guest today, Nonye Ukawuba of Riveron Consulting in Chicago has joined us and really, really pleased to have her on board for this show. This is her first appearance on the program. Nonye, I've got a price in mind for my business. What kind of company like yours, like Riveron Consulting or another company perhaps, provides the same kind of services. What can it do to confirm or alter the price that I'm talking about for my company that I'd like to get?
 
Nonye: The asking price would inherently consider the historical performance and the forecasted performance of the business. So a potential buyer, they're comfortable with the initial asking price before doing their own due diligence then they would agree to at least entertain the potential transaction, but there would be caveats, and those caveats would include them performing their due diligence.
 
What we can do in terms of helping confirm that price or make sure that the price isn't altered is before you go to market we can understand the asking price that you have in mind but come in and do the work that the buy-side due diligence providers would do just to say, or at least inform the seller, "These are some of the issues that we've uncovered that could potentially impact your asking price. That's one scenario.
 
Another scenario would be we actually uncover some items that would actually benefit the valuation. But because you didn't uncover those items, more likely than not the buyer is not going to volunteer that information so you could potentially be leaving money on the table.
 
 
Jeff: That begs the question... you give really great example or illustration how you're kind of the property inspector in a residential real estate transaction for example. Are you prevented from representing both sides of a transaction?
 
Nonye: Me personally, I am prevented from representing both sides of the transaction. I likely would not go in and do the buy-side due diligence as well as the sell-side due diligence because there would be perception of conflict of interest.

The asking price would inherently consider the historical performance and the forecasted performance of the business.

Jeff: Got it. Understood.
 
Nonye: However, Riveron, as a firm, could represent both sides, but you would effectively have these Chinese walls, or what they would consider Chinese walls where the buy side team cannot speak to the sell-side team.
 
 
Jeff: Otherwise, again, you would have that perception of conflict. And so the company obviously takes the necessary steps to prevent that sort of thing from happening. Let's talk about now the negotiation phase. We're kind of jumping ahead a little bit I suppose here while all deals, they're all a little different. Is there a typical scenario during this particular phase, Nonye? What might the buyer request from me as the seller at this time.
 
Nonye: Right. So as I mentioned when we were discussing, the seller has a price in mind and the buyer may initially agree to entertain the transaction. As part of that consideration, the buyer will likely ask for historical financial statements potentially on a monthly basis, going anywhere from two to five years back.
 
If the company is audited, they'll also ask for audited financial statements, to the extent that the company has a forecast. They would ask for the forecast. So at the minimum that would be some of the information that the buyer would ask for. And they also want to understand the key people who are involved and managing the business as well as sell the margin by products or various service lines.
 
 
Jeff: Letters of intent, when we get that far we know that things are going to start moving ahead likely, or at least we're certainly hoping that they do and that we don't run into any kind of challenges by this time or any time thereabout, and you worked with these quite a bit. Should I, as the seller of a company, should I even consider a non-binding letter of intent from someone who is interested in purchasing my business?
 
Nonye: It all depends on your goal. If your goal is to entertain as many potential buyers as possible, then it will probably in your best interest not to have a binding letter of intent because a binding letter of intent typically has exclusivity clause. What that means is that you can only entertain one potential buyer at a time. In that particular case, a non-binding letter of intent, when you're trying to entertain as many potential buyers as possible has a likelihood of driving up the purchase price.
 
At some point during that negotiation phase, at some point, the potential buyers are going to want exclusivity. The binding letter of intent will help you narrow down the potential party that you ultimately want to entertain, and typically won't do that until you are either comfortable that that potential buyer is a good fit for your company, and or they're willing to pay the asking price if not more.
 
 
Jeff: Okay, so we're at that point and I kind of tipped my hand just a moment ago. I talked about risks or potential challenges to a deal, and you've seen so many of these Nonye over your career. What are some of the most common risks or challenges that could really derail a deal from getting done. And it really doesn't matter what they are, what side, or what industry we're talking about here. But if you could just kind of share a little bit of information, that would be really helpful to us.
 
Nonye: Yeah, I would say the one that's pretty pervasive is the buyer's inability to get comfortable with the valuation, whether it's just because the finance and accounting records aren't in the state where they can actually generate information so that the buyer or the advisors can dig in to the detail and really understand what's driving the performance of the company. Or if the seller can't really say, that they can't really speak to what's driving the performance of the company.
 
Buyers want to understand the data behind growth, and without having that data behind it they can't say whether or not it's because that particular seller's gotten lucky, or there's some fundamental operational strategies or business strategies that the company has pursued that would drive the performance of the business as well as the valuation.
 
 
Jeff: And so obviously they don't want to be tempted by any stats or data that appears flukish, making this company look like a flash in the pan, because then obviously you're talking about a potential liability forever. You buy a company that had one great performing year for whatever reason, maybe it was one great product and then after that everything kind of went in the garbage.
 
Obviously, they're going to continue to do their due diligence and they're going to, I would think try to get as much information in advance by having their team look into the sell side company as much as they possibly can through the due diligence process. And hopefully that uncovers all the information that they're going to need in order to move forward. But you did talk about the fact that it's very pervasive and so being something that's very common indeed, which makes it interesting topic for discussion as we move along.
 
Nonye, this has been a great chat and a great first visit with you, and I really do appreciate your time. We have come to the end of this particular program but I would like to have our listeners understand that you are available to them. If they have any particular questions for you, and in particular if they are really looking to perhaps sell their companies down the line, if you're not able to work with them directly you can certainly answer their questions and pass them along to someone at Riveron who could probably help them could you? How can they reach you?
 
Nonye: They can reach me at nonye.ukawuba@riveronconsulting.com. That is nonye.ukawuba@riveronconsulting.com.

A non-binding letter of intent, when you're trying to entertain as many potential buyers as possible, has a likelihood of driving up the purchase price.

Jeff: Nonye, it's been a great visit. I appreciate your time. Thank you so much for joining us today on “Deal Talk.”
 
Nonye: Thanks again for having me, Jeff.
 
 
Jeff: That's Nonye Ukawuba, CPA and M&A adviser and at Riveron Consulting in Chicago. Tell a friend about “Deal Talk,” won't you? In addition to morganandwestfield.com where you can find transcripts of this and other shows, you can find us also on iTunes, Stitcher, and Libsyn.
 
Deal Talk has been brought to you Morgan & Westfield, nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com. My name is Jeff Allen. Thanks again for listening.
 
While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.

Key Takeaways

  • When purchasing a property for the purpose of generating income by leasing it out, it is important to put a team of professionals together to help protect your investment, including a real estate agent, an attorney, a CPA and a mortgage broker.
  • When utilizing the 1031 exchange, it is important to have a qualified exchange intermediary help you execute the transfers and a tax professional to help assist with the transaction, as well as an attorney. 
  • If you are going to reinvest money earned from selling a commercial property and stay in the real estate market and continue a trade or business, there are some great tax vehicles out there to help defer taxes and put your capital to work.
  • Some of the tax rules on capitalization versus repair are more complicated than ever, and a good tax professional is very important to have on your side.

Read Full Interview

 

Jeff: Do you own the commercial property your business occupies or other commercial property and you're thinking about selling it? If you're interested in saving potentially a lot of money after you sell it, you've come to the right place.

From our studio in Southern California, with guest experts from across the country and around the world, this is “Deal Talk,” brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.

Jeff: Hello and welcome to the web's number one content source for small business owners committed to building a business for eventual sale. Here on “Deal Talk” it's our mission to provide information and guidance from our growing list of trusted experts that you and all small business owners can use to help you build your bottom line and improve your company's value.

If you own commercial property of any kind, whether it's where you do business or its property that you lease to others, this program is definitely for you. Our guest is Mr. Steven Oppenheim, a CPA, and partner at Gettry Marcus in New York. As a member of the firm's real estate group, he advises both commercial and residential owners and developers on matters that may impact their businesses. Steven Oppenheim, welcome to “Deal Talk.”

Steven: Thank you. Nice to speak to you, Jeff.

The good thing is, there is an exception to this general rule under internal revenue code section 1031, which if properly structured allows the taxpayer to sell real estate property, reinvest the proceeds in a replacement property and defer paying taxes on the gain.

Jeff: Steven, tell us a little bit about what you do over at Gettry Marcus.

Steven: Sure. I am a partner at Gettry Marcus where I am the partner in charge of the real estate group. I am a certified public accountant with 22 years of public accounting experience. Gettry Marcus is approximately an 80-person CPA firm in the New York metropolitan area. We are a top 200 firm nationally with offices in New York City and Woodbury, New York. Our firm provides accounting, tax and consulting services in various industries, which include real estate, healthcare, manufacturing, business valuation and forensic accounting. I specialize in the areas of real estate and high net worth individuals. Our real estate group provides a variety of accounting, tax and consulting services to owners, operators, developers and real estate managers. We also specialize in structuring transactions including 1031 tax deferred exchanges, and complex partnership entities.

 

Jeff: Very good, Steve. I appreciate that. What we want to do today is for those folks listening who are property owners or interested in owning property in generating income by leasing property out. This is kind of the show for you. And I'd like you to consider this a different kind of a “Deal Talk” experience here, more of a workshop. This is an opportunity for you to really learn from someone who specializes in this area, so let's get right down into it. Steve, just kind of setting up a scenario here, if I was looking to go into the real estate business as a landlord, it seems to me like this is probably … and it's just me talking here ... it seems that this is really an ideal time to be a commercial property owner. And I had designs on leasing this property out to other business owners. If I find a rental property that I'm interested in purchasing for the purpose of renting out, should I negotiate the deal for that property for myself, or would I be better off working with someone to help?

Steven: OK. I think it would be very important to put a team of professionals together to help protect your investment. Remember, you're investing a lot of money; you always want to protect that investment. This team should include a real estate agent. An agent is vital in educating you about a specific geographical market, and it could be a very good resource in helping you find a property that fits your situation. Obviously, there are all kinds of properties out there; you’ve got to find one that’s tailored to your situation and what you're trying to accomplish. They will also act as the liaison between you as a buyer and the seller, and will help you negotiate in getting the deal done. Obviously, it is important to work with a broker you trust and who is well experienced in that particular marketplace. Another team member I would add would a good attorney. It's very imperative to work with a knowledgeable attorney to help protect your investment. The attorney will assist you in drawing up all the contracts and work with the title companies that verify there are no issues with ownership and there are no restrictions that will affect your proposed use of the property. Another very important task would be for the attorney to review existing tenant leases, so you as the landlord know exactly what your obligations are for the remainder of the tenant leases. Another good person to add to that team would a CPA. And I think hiring a competent accountant can be extremely useful in helping you figure out how much you can afford to pay to acquire the real estate. They could assist you in the preparation of budgets, cash flow projections, expected return on investment and also perform tax projections taking into account the appreciation deductions. The accountant can also assist in structuring the transaction, including choosing the type of entity to use to acquire the property. And that will be tax efficient and minimize liability. 

I think one other recommendation I would have is to go speak to a mortgage broker or a bank directly to start the process of negotiating with the banks in advance of purchasing a property so you could weigh all your financing options. For example, what your borrowing restrictions are and how much cash you will need to come up with to acquire the prospective property. And maybe just some other professionals that you would want to hire as well would include an engineer and consultant to prepare environmental studies so you know exactly what you're getting into, because, again, it's going to be probably a large investment. It's a business you're going into and you just want to make sure that your investment is protected to the best extent possible.

 

Jeff: What a team indeed. We already talked about, essentially, there about five people: real estate agent working with an attorney, a CPA, banker perhaps, and an engineer possibly. And an engineer would really be handy particularly for those older properties I would think, or where you have special needs perhaps if you've got a manufacturing company. And you have an interest in leasing, too, perhaps, or maybe even your own manufacturing company for that matter, so there are a lot of things to think about. Steve, any thoughts that you might have about which one of those individuals you should probably be in touch with first? I'm probably thinking attorney for me, but I'm wondering if you have thoughts on that and if maybe it might be different for different folks.

Steven: It might be the real estate agent to start with, and just kind of seeing what's out there in terms of whether the business plan is feasible and there are properties out there that fit what your needs are. So I would say the real estate agent might be first. And then shortly thereafter would be contacting an attorney, because the attorney should be involved in the entire process.

Remember, you're investing a lot of money; you always want to protect that investment.

Jeff: Many times we see as we're driving by an industrial center for example, and there are a lot of those where I sit here in Southern California, a lot of distribution, warehouse facilities out here. Is it always necessary, do you think, Steve, to contact the people there on those signs in front of those buildings? Or if I've got a reliable source of information perhaps from a professional in my own network of professionals that know somebody in the commercial real estate business. Can somebody who may not necessarily be named on that sign help me out in negotiating the terms for that property, someone that I can hand-select, if you will?

Steven: That's a great question. And I'll tell you why. If you contact a person on that sign, their goal from the very start is to act as a representative on behalf of the seller and just get a deal done so they could get their commission. So I think it's very important. What you would be looking for is on the buyer side. There are real estate brokers you could hire independently to act as your representative as the buyer and not have a conflict of interest, so I think that's a great question and that's very important. Because, as I've stated, it's very important to find a broker that you trust and who's well-experienced in the marketplace and to avoid having that conflict of interest.

 

Jeff: You're talking about saving potentially not just thousands of dollars but perhaps tens or even hundreds of thousands of dollars perhaps in some of the larger cases. If I was looking to sell my property, maybe I’d like to reinvest the proceeds in new property someplace else across the country or any place else, are there any significant tax planning tools that I can use to help defer paying taxes so that I'd have more capital that I can invest in the acquisition of new rental property, for example?

Steven: The general rule is whenever you sell real estate property at a gain you generally need to pay taxes on the gain at the time of sale. If the landlord is looking to upgrade in properties or is looking to move to a different geographical location, then having to pay a big tax on a gain would reduce substantially the amount of capital you have available to reinvest in the new property. The good thing is there is an exception to this general rule under internal revenue code section 1031, which if properly structured, allows the taxpayer to sell real estate property, reinvest the proceeds in a replacement property, and defer paying taxes on the gain. The code states no gain or law shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like-kind property. I'll just brief you on the 1031 rules. The general rules to qualify for a 1031 exchange are as follows. The form of transaction is a sale or an exchange. Both the property transferred and the property received are held either for productive use in a trade or business or for investment. And the property transferred and received is like-kind property. In this case, like-kind was intended to be interpreted broadly. For example, you can exchange commercial property for residential rental property. You could exchange residential rental property for industrial property. The rules there are very broad.

If you contact a person on that sign, their goal from the very start is to act as a representative on behalf of the seller and just get a deal done so they could get their commission.

Jeff: Who is the best person in that team that we talked about earlier to help me determine what truly is like-kind? If I know that that's what I have to look for and I'm out there on the prowl, I'm looking for my next investment to make in talking about like-kind property investment, who's going to be able to help me determine what like-kind actually is and what would qualify?

Steven: There is a team out there that you would need to put together because an exchange would have to be done through something called a “qualified exchange intermediary.” They must be used to execute the transfers of the buy and the sell of the property and ensure that all regulations are followed. It's also imperative that you use a well-experienced tax professional to assist you in the transaction. And between those two parties and the attorney as well, they would kind of lead you in the right way of what would be considered like-kind property. But as I said, the rules are very, very broad, and it's in the tax payer's favor in terms of going from one type of property to another and still being able to get a 1031 deal done.

Jeff: Talking with Steven Oppenheim. Steve is with Gettry Marcus. He's in the firm's real estate trust and estates group and a partner at the firm, and we're going to continue our conversation when “Deal Talk” resumes after this.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on a future edition of “Deal Talk.” Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, an area of specialty and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com.


Selling your business may be the most important business transaction you'll ever undertake, so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way. From helping you plan your exit strategy, to preparing a comprehensive appraisal, and locating the right buyers. Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.


Jeff: Welcome back to “Deal Talk,” where we're becoming the Internet's go-to resource to help business owners understand what it takes to sell their company successfully. You can find a wealth of resources along with all “Deal Talk” episodes and their transcripts simply by visiting morganandwestfield.com. You can also listen to this show on iTunes. Just look for “Morgan & Westfield Deal Talk” in the search function. 

My name is Jeff Allen. I'm with Steven Oppenheim today. He's a CPA and a partner at Gettry Marcus in New York. Steve, we were talking a little bit about tax planning tools to help defer paying taxes so that it’d have more capital to invest in the acquisition of new rental property later on. And you were just starting to get into the actual ways or means by which we can, in fact, defer those taxes, what is needed. So let's go ahead and continue our conversation from that point.

Steven: OK, great. We've just spoke kind of about the general rules to qualify for a 1031 exchange, and now let's talk about … in order to obtain a deferral of the entire capital gain tax, the taxpayer must do the following: Purchase property of equal or greater value. Obtain equal or greater financing on the replacement property that was paid off on the relinquished property. All the net proceeds from the relinquished property need to be reinvested in the replacement property, and a taxpayer could receive nothing in exchange but like-kind property. So if the exempted taxpayer receives any cash from this transaction, that portion would be taxable. Also, there are two primary requirements in getting a 1031 exchange done. There's a 45-day rule and an 180-day rule. The 45-day rule is where the taxpayer must identify the replacement property within 45 days of when the relinquished property is transferred. And the 180-day rule is where the taxpayer must acquire the replacement property within 180 days of when the relinquished property is transferred. Or this must be done by the due date of the tax return, including extensions if that is sooner. So as you can see, although it's a great vehicle to use, there are complications and there are very stringent rules that need to be followed here. So it is very important to have a qualified exchange intermediary help you execute the transfers, and a tax professional to help assist with the transaction, as well as your attorney. 

 

Jeff: Boy, that's for sure.

Steven: Maybe just to bring all this home, I think I would like to use an example to kind of help the audience get a better understanding if that's OK?

You would defer paying a million dollars in tax and have the ability to use these funds as capital to fund the purchase of the replacement property.

Jeff: No, that's perfect. It'll really help to kind of highlight the key points and really, like you said, kind of drive the point home.

Steven: OK. Let's say the facts are as follows. You own a rental property with 10 tenants and you are looking to upgrade to a property with 30 tenants. The selling price of the building you currently own is $5 million, which has a mortgage of $2 million. Let's say there's a gain on the sale of the property of $3 million, and let's say the tax on that gain if you did not do a 1031 exchange would be $1 million dollars. And let's say the purchase price of the replacement property is $10 million and you will use net proceeds of $3 million from the sale of the existing property as a down payment and take out a mortgage of $7 million. This would be, in my opinion, a perfect fact pattern into entering to a 1031 exchange and defer paying any taxes until the replacement property is sold. Since in our fact pattern and you would be invested in the entire net proceeds from the sale of the property and like-kind property, and you are replacing debt on replacement property and excess of debt on relinquished property, you would defer paying a million dollars in tax and have the ability to use these funds as capital to fund the purchase of the replacement property. As you can see, this would be a great vehicle to use for someone looking to reinvest their proceeds in real estate. As stated earlier, I strongly recommend, though, you use a well-experienced, qualified exchange intermediary, a good attorney and a tax professional to assist in structuring this transaction.

 

Jeff: Steve, let me ask you really quick, and I don't want to sound like all of a sudden I stopped paying attention because I want to make that perfectly clear. There are a lot of details here in this discussion, and we talked about the importance of forming a team and using that intermediary you're talking about is going to be able to help fill in the blanks. But I want to make it clear, we started the top of the show, we were talking about if it is your business, if you are in the business of owning commercial property and leasing that property, that's where we started. Is this the kind of thing that a business owner of another type of business, maybe he is not a professional property per se. He's not a landlord but he owns his own property, or she owns her own property for their business. It could be for any kind of industry. Is this something that they would also be able to take advantage of, too, that they don't necessarily have to lease space out in their building to other tenants, but in fact they just use their building for their business only. Can they also take advantage of the 1031 exchange program?

Steven: Absolutely. And I think it's a very, very key tax planning tool because, let's just say, for example, you're a manufacturer and you own your own building. Normally the way it would be structured is the real estate would be held by one entity and the manufacturing operations would be set up under a different entity, but you're dealing with the same situation. Now you're in a situation where maybe you have to move to a bigger space, you outgrew your old space, and let's just say you bought the real estate a long time ago and you have very little basis in the real estate and you would wind up having to pay tax on a very large gain just because the market has increased dramatically over the years. This would be a perfect tool to use to reinvest those proceeds in a new and bigger space, and being able to defer paying taxes on the transaction.

 

Jeff: We're all about, Steve, helping business owners, regardless of what area of business they're in, save money, and improve the value of their companies in the process. And I think that that was a very important point we had to discuss on that. And something else that I think is really important, and this will kind of, I think, round out our discussion on this edition of “Deal Talk” today. 

Determining whether or not the improvement that one requires for their property, should they be capitalized or expensed? How do we determine which one of those we need to do and have there been any important updates in this area to help us determine where we're going to get the greatest savings for this? Let's talk about that.

Steven: Sure. This is an area of the tax law that has always been very subjective. But just recently after nearly 10 years in the works, the IRS finalized its tangible property regulations. And these regulations are effective for all years beginning on January 1, 2014. The new regulations for many taxpayers may result in increased deductions than the prior rules allowed. The regulations cover a lot of material and are very complex, so I'll just kind of touch on them here.

If you have a CPA, particularly one who has extensive knowledge of real estate property and all the tax regulations concerning improvements of those types of things, you're going to be ahead of the game and you're going to be serving yourself well.

Jeff: OK.

Steven: The facts and circumstances still play a very large role in determining whether expenditures are deductible or must be capitalized, but these rules were set up to help clarify what items should be capitalized versus what should be expensed. That was the purpose of the IRS coming out with these new regulations. The new concept described in the regulations is a concept of a unit of property, which is one of the most important revisions contained in the regulations. The unit of property as it relates to real estate is broken down into nine categories as follows. It's the building and structural components, the HVAC system, the plumbing system, the electrical system, escalators, elevators, fire protection and alarm systems, security system, and a gas distribution system. And it's important that I mention those because that's really what the IRS is looking to do, is really break down these expenditures into what the unit of property is. Under the new regulations, capitalization is required if the amount paid results in a betterment, adaptation or restoration of the unit or property. If the amounts paid do not meet these conditions, then it is deemed to be a repair and currently deductible. 

As these rules are very complicated, the best way to get an understanding of these new regulations is to discuss specific examples provided in the regulations. So let's take a roof, for example. I'm going to give you two different roof scenarios. And what the regulations are pushing taxpayers how to treat it. So you have the replacement of one membrane with a new membrane is not considered a betterment and is, therefore, a deductible. Basically, the roof is made up of different components. You've got the decking, you've got the membrane on top of the decking, and then you might have some finishes on top of that. Here they're talking about replacing the membrane would not be considered a betterment and is, therefore, a deductible. The reason being is that the replacement of the membrane is not a material edition to the unit of property, which is the building structure itself. As opposed to the replacement of an entire roof, which would include the decking, insulation, and asphalt. That would be considered a restoration because a new roof is a major component of the building structure that performs a discrete and critical function. And it is a substantial structural part of the unit or property.

One other example is the replacement of one elevator in an office building that has four total elevators. That was considered not a restoration since one of four elevators does not comprise a significant portion of the elevator system, which is a unit or property in this case. Just to kind of drill it home a little, because I know the rules are complicated, in the past if there were four elevators in a building and you did work on one and totally improve the entire cab of the elevator and really improved it. In the past, you would always have to capitalize, and now you have to look at its one of four and a unit of property is the elevator system as a whole. And therefore, since this is not a significant portion of an entire system, you now have the ability to expense it.

 

Jeff: Repairs essentially are deductible but improvements or restorations require capitalization or need to be capitalized, correct?

Steven: That's correct.

 

Jeff: OK, very good. And you really need to have a tax expert who is up to speed on these changes and help you to determine which one of those you're able to take advantage of or which one of those you need to be able to do whether you take the deduction on the repair or you have to capitalize an improvement or restoration, whatever the IRS might consider an improvement or restoration. And if you have a CPA, particularly one who has extensive knowledge of real estate property and all the tax regulations concerning improvements of those types of things, you're going to be ahead of the game and you're going to be serving yourself well. 

Steven Oppenheim, this has been a tremendous conversation and really something I consider more of a workshop when you get right down to it, with all of the important information that you've provided in  a very comprehensive way as well. Final takeaways here from our discussion if you could. If you were taking an elevator, maybe, in your city to the 50th floor and you are taking a meeting with someone but you had only maybe about 30 or 45 seconds to share some final thoughts before you jump off that elevator, and they were perhaps a landlord or looking at purchasing property, what would you tell them?

Steven: I think again, the keys are putting a team in place that will help you protect your investment. Although it might be more costly upfront, in the long run, it will help protect your investment. In addition to that, there're some great tax vehicles out there. If you are going to reinvest and stay in the real estate market, and continue a trade or business, as a property who's renting either commercial space or residential to tenants, there are vehicles out there to help defer taxes and put your capital to work. And the third item would be some of these rules in terms of capitalization versus repair are more complicated than ever and a good tax professional is very important to have on your side.

I think, again, the keys are putting a team in place that will help you protect your investment. Although it might be more costly upfront, in the long run it will help protect your investment.

Jeff: No doubt before you jump off that elevator they've already got their iPhone or their android out and they're getting ready to take your contact information. How can our listeners, Steve, reach out to you for questions with regard to their own particular situation should they like to perhaps sit down with you to take a meeting?

Steven: I would say the best way is you can go to our website to learn more about myself and the firm, and that's at www.gettrymarcus.com. And the best way to reach me is by email at soppenheim@gettrymarcus.com.

 

Jeff: Steve, I want to thank you so much for taking the time out of your schedule today to share your expertise.

Steven: Thank you.

 

Jeff: Steven Oppenheim, CPA, and partner at Gettry Marcus, has been my guest. We hope you enjoyed the discussion. I know that I did. To listen to more “Deal Talk,” visit morganandwestfield.com and click on the podcast link at the top of this site.

“Deal Talk” is presented by Morgan & Westfield, a nationwide leader in business sales and appraisals. Find out how Morgan & Westfield can help you at morganandwestfield.com. For everyone at “Deal Talk,” I'm Jeff Allen. Thank you so much for listening. We'll talk to you again soon.

While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.