December 26, 2024 • 37 mins
The Private Equity Experience podcast discusses the buy phase of private equity, focusing on the preparation required for business owners to sell their companies. The hosts, Ed Barton, Emily Sander, and Rory Liebhart, emphasize the importance of assessing one's personal and business situation, identifying motivations for selling, and assembling a team of experts, including investment banks and wealth advisors. They also stress the need for corporate hygiene, including getting financial records in order and addressing regulatory gaps. The hosts encourage listeners to ask themselves "why" and "what" questions, know their goals and motivations, and proactively prepare for the sale process.
Timestamps:
00:00 Introduction to the Private Equity Experience Podcast
00:34 Hosts' Personal Anecdotes and Fitness Talk
01:37 Preparing to Sell Your Business
03:27 Understanding Your Motivations and Goals
05:38 The Role of Investment Bankers
10:50 Assembling Your Advisory Team
19:53 Crafting Your Business Narrative
23:31 The Importance of Founder Self-Awareness
27:05 Managing Team Dynamics During Transition
33:40 Preparing for Due Diligence
34:22 Interviewing Investment Banks
36:09 Conclusion and Key Takeaways
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Who Are We?
Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).
Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:07):
Welcome to the Private EquityExperience Podcast.
Your backstage pass to thestrategies, stories, and secrets
that drive value in the PEuniverse.
No filters, no fluff, juststraight talk and expert
insights to help you navigatethe private equity world with
confidence.
And now your hosts, Ed Barton,Rory Liebhart and Emily Sander.
emily-sander_1_12-03-2024 (00:34):
Okay.
First of all, my legs are dyingbecause I did leg day yesterday
for the first time in a longtime.
And now I walk like a cowboy.
And I can't stand or sit.
It's fun.
Right.
squadcaster-12c2_1_12-03-202 (00:49):
as it's not your back killing you,
that's a good thing on leg day.
emily-sander_1_12-03-2024_1 (00:52):
No, I have done that.
I have done the herniated discsfrom squatting and deadlifting
too much.
And that is no bueno.
Holy.
squadcaster-12c2_1_12-03- (00:59):
Yeah.
emily-sander_1_12-03-2024_1 (01:00):
You were up there for a while, man.
Rory, you were like, I rememberthat picture of you on the hack
squat machine and you were doinglike a thousand pounds or
something stupid like that.
squadcaster-12c2_1_12-03- (01:10):
Yeah.
That was when I was probablylike, you know, 40, 50 pounds
heavier.
Um, I'm definitely not as strongas I once was, but, you know, we
do the best we can that, uh, youknow, at this age
emily-sander_1_12-03-202 (01:20):
You're looking good.
You're feeling good.
That's what counts.
Ed, have you ever deadliftedanything in your
edward-barton_1_12-03-202 (01:25):
Yeah, I've got I'm country strong.
emily-sander_1_12-03-20 (01:30):
Country strong.
edward-barton_1_12-03-2024_16 (01:31):
I have functional fitness.
emily-sander_1_12-03 (01:32):
Functional fitness.
Yeah.
There's the chip.
There's the dip.
I've seen you, all righty here.
We are talking about the biphase.
this is when you're gettingready Sell your business.
and we're going to talk aboutjust the main tenants of what
goes on there.
So Rory, this is a large topichere, but kick us off.
What's a good starting point.
squadcaster-12c2_1_12-03-20 (01:52):
You know, it's, it's just, you know,
you're a founder, you know, Um,you've been in, you've, you've
run your business, youbootstrapped it.
Maybe you've taken on some angelinvestment early on, but you've
reached a point to say, youknow, now it's time to consider
selling my business.
What do I need to do to preparefor that?
You know, so who do I need toinvolve in the process?
(02:13):
You know, who can help meassess.
the buyer universe, you know, Iknow my business, but I may not
know MNA, you know, how do we,how do we get the wheels
turning?
And, you know, hopefully thisworks out as well as it can for,
for me, my family, those aroundme, the employees that were
involved in helping me bootstrapthis business.
(02:33):
That's kind of what this, this,this phase is about.
emily-sander_1_12-03-2024 (02:36):
Yeah.
So you mentioned some key thingsthere.
So I think is like part of itlike your situation, like you
personally, your family, andthen your business and who
you've got on staff.
And then it seems like there'sthis whole, I like that phrase
buyer universe, but first ofall, it's taking inventory of
like, what do I have going on?
And what do I want to do withthat?
squadcaster-12c2_1_12-03- (02:56):
Yeah, exactly.
Um, you know, I think it'sdifferent for every, every
situation, different everyfounder.
There are certainly some themesand we talked about those, I
think a little bit on the lastpod, which was around
motivations.
You know, maybe you want to takesome off the table.
Uh, maybe you gotten to a pointwhere you want to retire and you
(03:16):
don't have somebody as asuccessor to move the business
forward.
So maybe it's the time to, sellthe business and kind of go a
different direction or maybe,you know, it could be any myriad
of things basically.
edward-barton_1_12-03-202 (03:27):
Yeah, I was going to say that the one
of the elements is, and ittransitions from the last from
the last discussion wasunderstand your why.
Because that's really going todetermine the how.
So,
squadcaster-12c2_1_12-03-2 (03:40):
Yes.
edward-barton_1_12-03-202 (03:40):
maybe that if your why is, you know, I
need to get liquid and I want tobe able to take a bunch of chips
off the table and I'm willingto, um, I'm willing to see a
significant amount of controland vision, then, you know,
there, there, that's one why.
Versus the why I want to be ableto build a new house and I want
to, you know, continue, I wantto actually spend more time over
(04:02):
at the lake and I want to be,that's a different vision.
And one is going to be, and thatdoesn't mean you can't do both,
but the one is far more alignedto private equity than the
other.
squadcaster-12c2_1_12-03- (04:13):
Yeah.
Yeah, exactly.
emily-sander_1_12-03-2024_16 (04:16):
so like why, but also like what,
like, what do you, what do youwant to do?
Like, what do you want to be?
edward-barton_1_12-03-202 (04:20):
Yeah.
emily-sander_1_12-03-2024_16 (04:21):
at this stage
edward-barton_1_12-03-2024_ (04:22):
And what do you want the business to
do?
Because again, part of thisexercise is making sure, and I
know we'll talk about it here ina bit, is making sure you've got
the right, when you're going tomarket and you're talking to the
investment banker, that theyunderstand what you're trying to
accomplish.
They, they attach that buyeruniverse that we were talking
(04:43):
about with.
They go, okay, in that Bayeruniverse, there's a few, you
know, there's a fewconstellations in there that we
don't want to go to.
And there's a few constellationsin there that we want to focus
on and based upon your why andyour what.
And so that's going to be reallyimportant to understand as
you're going through it.
And it's, it's not good enough,um, for a founder where founders
(05:07):
become imperiled is when theygo, well, you know, my buddies
are doing it.
So I'm going to do it too.
Um, that's a bad, and I've seenthat.
Um, I've had to survive throughone of those, uh, PE
transactions where their buddydid it.
So they did it and then theydidn't realize what they did.
Um, so, you know, I, I thinkit's understanding the what and
why and making sure you canconvey that well to the
(05:29):
investment banker before theyput you to the market, because
that's going to depend on howthey position it, who they
position it to.
emily-sander_1_12-03-2024 (05:38):
Okay.
And then an investment Baker'sbanker's job is they're kind of
like a, your, your, um, agentfor a house, like their person
who's real estate agent lookingfor different houses and
matching your needs and criteriawith different locations and all
that, all that good stuff.
So, um, investment bakers areimportant players
edward-barton_1_12-03 (05:59):
critical?
emily-sander_1_12-03-2024_16 (05:59):
in this whole process.
squadcaster-12c2_1_12-03-2 (06:00):
much so.
You know, investment bankers,investment banks, represent both
buyers and sellers.
Just like, you know, the analogywith real estate agents.
You have buy side advisors, youhave sell side advisers.
you know, in the case of afounder, you'd be engaging a buy
side advisor to, help you, asyou say, match with a potential
(06:21):
suitor to buy your company youknow, their job upon, you know,
engaging with you.
And there's a lot that goes intofinding the right, you know,
investment banker for you,their, their job is ultimately
to extract the highest valuepossible for your business and
really meet your objectivesbecause, and we'll get into some
of the compensation schematics,but for the most part, they're,
(06:44):
they're compensated.
on success, successfully sellingyour business.
And it's usually a proportion ofthe transaction value, you know,
with some other caveats andmaybe some retention, uh,
compensation in there too.
But for the most part, it'sabout just like, again, real
estate agent type of scenario,you know, the compensation is
tied to the value of the, youknow, transaction.
emily-sander_1_12-03-2024_16 (07:07):
So they're in, they're incentivized
to get the best deal for you,but they also deal in
relationships and they want toretain the relationships with
both, with all parties in thatfor the longterm.
So they're not going to burn anybridges to, to try to, you know,
shove one past
edward-barton_1_12-03-2024_ (07:26):
No,
squadcaster-12c2_1_12-03- (07:27):
yeah,
edward-barton_1_12-03-2 (07:27):
they're they are not and as a matter of
fact one of the things to beCognizant of as a founder is
when you're going through theinterview process and you should
be interviewing investmentbankers Um with a much higher
level of scrutiny than Igenerally see them interviewed
Um, so it becomes you know, thisis somebody who is going to make
or break quite literally Um thetransaction for the sale of
(07:52):
probably your largest asset YouAnd so one, you want to make
sure you're well aligned and torecognize to your point, Emily,
recognize that these folks, the,you know, let's say they're,
let's say that you're beingpositioned to be sold.
They may deal with the managingdirector at Parthenon on 18
(08:12):
transactions over the next 24months.
And they're going to deal withyou once every 10, every five to
10 years.
So if there is a, they are notgoing to destroy the
relationship with a repeat buyeror investor client, um, if you
are a founder looking to sell.
Now that dynamic changes whenyou've got a private equity
(08:34):
trend, private equity ownershipon, or private equity parties on
each side of that transaction.
So the seller's private equity,buyer's private equity, the, the
investment banker's got a littlebit different tightrope to walk.
But, um, on balance, that's notthe case.
I mean, on balance you're stuckwith They're stuck with a
situation where it's, you know,they're, they're going to be
(08:54):
working for that as much forthat next deal from Parthenon as
they are from you.
emily-sander_1_12-03-2024 (09:00):
Okay.
So let's go through an example.
So let's say, give me a foundersituation, like a common
founder.
They're I want to just somemoney off the table.
I want to go play golf orwhatever I want.
I want to go do other things.
And so I'm going to start thisprocess.
Is that like a good example?
Okay.
And, and then a step one, like,let me, let me go through the
(09:21):
vetting process of finding agood investment banker, because
there's lots of different kindsout there and I got to find the
right one who plays in my, In mypool type of thing.
squadcaster-12c2_1_12-03-20 (09:30):
and I, I, how I've, how I've seen
it, uh, you know, transpire.
I think it's not uncommon is.
You know, the founder isn't justgetting the idea to sell the
business out of the blue.
I mean, there's typically beencalling on the founder, um, and
even, you know, others on themanagement team to kind of say,
(09:51):
Hey, you know, your business isreally attractive to this of
the, you know, or this is aplace where.
You have the opportunity wherevaluations are hot to get the
highest possible valuation wecould see for your business.
And so it's a selling process ontheir end to kind of get you to
consider selling.
(10:12):
Sometimes it's easier than not.
Um, but you know, in the courseof these interviews with
potential investment bankers, itusually goes down is, you know,
you ask them to provide youwith, uh, you know, uh, a
proposal what, what the dealentail, what you, what they
think.
Evaluation range on yourbusiness could be who the
(10:34):
potential suitors could be, youknow, maybe on a, you know, a
semi no names basis, et cetera.
So they're kind of pitching youwith, you know, this is why you
should, you know, align with usfor the next, you know, six, 12,
18 months.
And we'll go do this together.
Now, meanwhile, I think if agood, a good move for anybody
looking to sell a business, Isto take the work that you're
(10:59):
doing with a banker, but also onyour own personal side, maybe
work with a wealth manager tosay, Hey, if this happens, if we
do transact this deal, what doesthis mean for myself and my
family?
What are the implications ofthis for our lifestyle, our
lives?
know, what are the taxconsequences?
What are the, you know, uh,other things to consider wealth
(11:22):
transfer, all of these things.
So you don't go down a path and.
Do it the wrong way and screwyourself up in the long run by
not having type of transactionstructure or things like that
considered because maybe itisn't the right time to do it
given factor A, B, C, or D inyour life, you know,
emily-sander_1_12-03-202 (11:40):
Right.
So are the investment bankersreaching out to you?
Is that what you're saying?
squadcaster-12c2_1_12-03- (11:44):
yeah, yeah,
emily-sander_1_12-03-2024_1 (11:45):
How do you know if they're like
spammy or not?
Cause I mean, like, is it, is itlike we're getting with these
incoming calls and requests allthe time?
Or is it like slow dripping?
Like, you know, when one popsup, probably want to
edward-barton_1_12-03-202 (11:59):
Check our website.
No,
squadcaster-12c2_1_12-03- (12:02):
yeah,
edward-barton_1_12-03-2024_ (12:03):
lot of the spammy, a lot of the
ones, if you haven't heard ofthem before, and if they are
reaching out, um, that'sprobably a little bit more on
the spammy side, just like, youknow, when you've got a nice
house on the hill and you getreal estate people calling you
all the time going, you know,have you ever thought about
selling your house?
Um, probably not the ones youwant to list with.
Um, however, the best way tofind a good investment banker is
(12:27):
to talk to folks who havetransacted their businesses in
that industry.
So investment bankers will tendto be, larger investment banks
will have specialty divisionsthat focus on financial
institutions or manufacturing orwhat have you.
Um, so there's niche investmentbanks, which you may not have
(12:47):
heard of.
But that work, you know, only inautomotive, or only in emerging
technology, or only in, youknow,
squadcaster-12c2_1_12-03-202 (12:56):
or
edward-barton_1_12-03-202 (12:56):
Yeah, so, so you wanna, you, you
should get to take some time todo that research, and if you
don't know, one of the otherpeople to talk to is going to
be, pick up the phone, um, andthis is kind of someone you need
on your deal team anyway, pickup the phone and, and have a
conversation with someone fromone of the more respected law
firms in the area.
(13:16):
that are going to know who'sdone transactions, who's, you
know, they're going to, if theydo buy sell transactions,
mergers and acquisitions in thearea, they're going to know the
reputable investment bankers.
They may have contacts that theycould put you in, in connection
with.
Um, your accountant may know thesame thing, and they're going to
know folks that are reputablethat you, that they could put in
(13:37):
connection, you in connectionwith.
So utilize your professionals.
You're going to need themanyway, going through the
transaction.
So this is a good time to getyourself, your attorney, get
yourself, your accountant, makesure you've got, if you don't
have them already, and thenutilize them for referrals or
kind of checking on the, uh, thereputation of that investment
bank before you engage.
emily-sander_1_12-03-2024 (13:59):
Okay.
So we're like assembling a teamhere.
So we've mentioned a whole bunchof parties.
So investment bankers, um,lawyer, accountant, Rory, you
mentioned financial advisor,financial planner.
Okay.
So talk to me about that one.
So that's kind of to the pointwe were just saying earlier,
like you got to figure out yoursituation and what you want in
terms of family and all, all thehome stuff, is that where you
(14:22):
bring in a financial advisor andsay, okay, here's, here's The
cards on the table.
let's talk about some options orhow we would structure this
thing.
squadcaster-12c2_1_12-03 (14:30):
that's exactly right.
Um, You're, you're looking atkind of taking the same kind of
discussion you're having withbankers and lawyers and all
those, but then using the datathat's coming from those
discussions to gear yourconversation with your personal
or family, you know, financialadvisor, wealth advisor.
(14:52):
say, hey, look, this is whatI'm, you know, gathering from
what could transpire.
do we optimize this on thepersonal side so that we're
seeing the most benefit possibleand actually on the flip side,
minimize any sort ofconsequences that may arise
because I, while I have not beenin this position myself, heard a
(15:12):
lot of horror stories aboutpeople that think they, you
know, just are walking away witha fantastic deal.
Um, but then there's unforeseenconsequences to the, on the
personal side based on thestructure of the deal, but also,
you know, the way in which itwas characterized in the deal
structure, which could haveconsequences when it comes to
(15:33):
just what you're really tryingto extract is the maximum
cashflow coming out of a deal.
So it's super important thatI've just heard.
So many people talk about, man,I wish I would have gotten my
wealth advisor before I becamesuper wealthy as opposed to once
I got wealthy, I needed to goget a financial advisor.
I mean, I've talked, I've heardof, I've people heard people
(15:53):
talk about, you know, ninefigure deals they did, but then,
you know, after a while, it'snot even close to what, what
that was.
emily-sander_1_12-03-2024_16 (16:02):
Oh no.
squadcaster-12c2_1_12-03-2 (16:03):
hits and all of the other elements
of, um, exposure that they hadfrom that, you know, it's going
to be, it's super important
emily-sander_1_12-03-202 (16:10):
That's a bad day when that happens.
Holy.
edward-barton_1_12-03-202 (16:13):
Yeah.
squadcaster-12c2_1_12-03 (16:14):
People that
emily-sander_1_12-03-2024_1 (16:15):
And
squadcaster-12c2_1_12-03-2 (16:15):
they have to actually go back to work
after these things because ofthat.
edward-barton_1_12-03-202 (16:17):
Well,
emily-sander_1_12-03-2024_16 (16:18):
my gosh.
And it sounds like having alawyer who, like, can, who
specializes in that and can readthrough a contract and know what
to look for.
Like, this, you need to switchthis around or ooh, I would flag
this and have a question.
Like having someone who knowswhat to look for and, and is in
your corner.
So it's like, I'm onlyinterested in, in how
edward-barton_1_12-03-202 (16:37):
yeah, this is, this is one of those
times where a lot of foundersare pretty frugal and they're
also pretty smart and they,they're like, I, I can handle a
lot of this myself, or I use mycousin Joe for, you know, doing
my, doing my taxes and, and my,my brother in law, Fred is my
attorney.
squadcaster-12c2_1_12-03- (16:53):
Yeah.
edward-barton_1_12-03-2024_ (16:54):
one of those times where it makes
sense.
And again, being in my own case,kind of a solo practitioner, I'm
about to speak, speak against myown position.
This is one of those, if you'regoing to do a, a 9 or 10, 8, 9,
10 figure deal, you want toengage like Kirkland Ellis.
You want to engage a large, alarge national or regional,
(17:19):
highly reputable regional firmfrom probably the large city
near you that does these thingson a regular basis because what
that firm will have is they'llhave an expert In transactions,
they'll have an expert in taxstructuring.
They'll have an expert inprivacy issues.
They'll have an expert, sothey'll be able to advise you.
Now it's going to cost you asmall arm and a leg, but as Rory
(17:42):
noted, this is one of thosewhere you may spend 200, 000 on
legal fees and you end up makingan extra million bucks because
of the way that the deal isstructured or they identify
concerns for you, um, that youmay not have thought of.
And the same thing, you're goingto want to have that law firm's
tax department.
Working with your certifiedpublic accountant or tax
(18:02):
preparer.
And if you don't have a taxpreparer, this is a good time to
get one.
Because these transactionsgenerally have significant tax
impacts regardless.
Except maybe if it was a Ccorporation that you're holding
stock.
They're all, almost always goingto have significant tax.
Uh flow through impacts to youthat as Rory noted They can it
(18:23):
can blow up this deal for yousix ways from sunday where you
have phantom income So you endup paying tax on cash you didn't
get yet Um, you know, there'sthere's issues like that that
can be resolved if you get youradvisors in At about the same
time you're getting theinvestment banker in and you
just kind of get them familiarwith the issues
squadcaster-12c2_1_12-03- (18:43):
Yeah.
Even structuring something as astock sale versus an asset sale.
I mean, those are things thatreally need to be considered in
the totality.
I think the, the point here onthis kind of element of the
discussion is make sure you havea really strong team around you.
You may be.
You know, you may know yourbusiness better than anybody and
that's most likely the case.
You may be extremely level whenit comes to your business, but
(19:07):
these other ancillary aspectsare, you know, these other
professionals business.
So utilize them, know, don't bepenny wise pound foolish.
Um, but you know, also, youknow, also choose wisely who you
will, you know, kind of lockarms with on these processes.
emily-sander_1_12-03-2024_1 (19:24):
And someone with an outside
perspective might see somethingin your business that you don't,
or how to position it, or how toit, tilt it like this and
position it like this,
squadcaster-12c2_1_12-03 (19:33):
that's
emily-sander_1_12-03-2024_1 (19:33):
and it becomes more lucrative.
Okay.
So we have a founder who wantsto take money off the table, go
spend time doing other thingsbesides working 80 hours a week.
They've assembled their team.
And then, and then what happens?
squadcaster-12c2_1_12-03- (19:49):
Yeah.
I think then you start intowhat's really kind of the
beginning of the sellingprocess.
So you have, all of myexperience has been once you
have an engagement letter signedwith an investment bank, more or
less, that's when the real heavywork starts.
Um, and you know, we couldprobably spend an entire podcast
on this, but You know, so much,especially with a business
(20:13):
that's earlier stage, doesn'thave a really robust financial
planning and analysis team,cetera, et cetera.
There's a lot of work to be doneto get it to a point where, hey,
we, we have.
Information that's organized andshareable with, you know, buyer
universe.
And in what happens at thebeginning is you start to work
(20:34):
with the investment bankcrafting the pitch, crafting the
story story is an important,important to describe it is
you're telling the story of thebusiness in terms of why it's
most valuable commodity outthere for a potential buyer.
And, you know, everything kindof.
know, stems from that and thework you do to, to get yourself
(20:57):
out there in the market.
edward-barton_1_12-03-202 (20:59):
Yeah, you're gonna
emily-sander_1_12-03-202 (21:00):
that's kind of interesting.
So talk about that narrative.
Ed, you can, you've done this amillion times as have you Rory,
but there's like the personalfounder narrative.
There's the company narrativeand that story arc, but it can't
end because you're trying to saythere's a next chapter that you
can
edward-barton_1_12-03-202 (21:17):
yeah.
emily-sander_1_12-03-2024_16 (21:18):
me type of thing.
So it's kind of like a differenttype of story arc.
edward-barton_1_12-03-2024 (21:21):
Yeah the the story arc you're gonna
so kind of going taking onesmall step back As you're
assembling this, this team, um,and you're looking at what the,
who the investment banker is.
So as you're kind of goingthrough that interviewing
process, you're going to want toask the question of them.
Look, here's, you're going towant to tell your story in a
(21:42):
couple of different ways and gettheir feedback as to what the
market is going to want to hear.
And then triangulate thatamongst the four or five, and I
would recommend you don't, Gowith fewer than four investment
banks that you interview.
Triangulate that feedback sothat that way when you do lock
in with one, one, the investmentbanker has heard the story
before and they're alreadythinking about how to position
(22:05):
you and who to position you within the market.
And two, you've had anopportunity to kind of, to pitch
it a few times, refine your ownmessaging, understand what that
story looks like.
Get some feedback from the, frominvestment bankers, different
ones.
Um, and then be able to go intothe market going, look, that the
story we're going to sell andthat's the, what you just said,
Emily, is we've come this farand there's a lot further to go.
(22:29):
And in order to go that lotfurther, we need growth capital.
We need an investment in ourmanagement team.
We need a strategic partner.
We need a, and so there's alsogoing to be a theme behind it.
What a lot of founders do, andthey make this mistake and, and
buyers look at it routinely.
Is they make it a founder ledstory.
emily-sander_1_12-03-2024_ (22:50):
Yes.
edward-barton_1_12-03-2024_ (22:52):
You should, the founders should be,
should be darn proud of whatthey've accomplished.
We're a founding team.
But this needs to be about the,you want to maximize your value?
Here's what, here's why it's allabout you, buyer.
And here's how we're positioningit so that regardless, and it
may be different stories todifferent buyer, uh, potential
buyer types.
Here's why having you on boardis going to help us attract the
(23:14):
strategic partner that we needto be able to grow this
business.
The strategic capital we need togrow this business.
The, the couple strategic hireswe need to grow this business.
So you're going to modify thatstory arc a little bit, but
clear, clear the generalapproach during the interview
process.
Ha!
emily-sander_1_12-03-2024 (23:31):
Well, I mean, we harp on this so much
in our book, but like the famouslast words or the deadliest
words for a founder is youcannot run this business without
me.
That is a surefire way to likepass.
squadcaster-12c2_1_12-03-202 (23:43):
of hubris right there.
Fault
emily-sander_1_12-03-2024 (23:45):
Yeah.
And people might like foundersmight think that, and we've
known plenty who
edward-barton_1_12-03-20 (23:51):
Pretty much everyone I've worked with.
emily-sander_1_12-03-2024_ (23:52):
that and, and all that.
And it's actually, they don'tunderstand you're decreasing the
value.
You are taking money away fromyourself.
By doing that and, and making itdependent on you.
So listener, if you get nothingelse from this episode, please
take that away, cause that willjust kill a
edward-barton_1_12-03-202 (24:10):
Well,
emily-sander_1_12-03-2024_ (24:10):
that will kill the
edward-barton_1_12-03-2024_ (24:11):
and seasoned private equity, um,
folks know this.
They also know that foundersthat go into that, go into the
transaction with that approachare likely to need to be
replaced.
And they will probably, theywill probably tell you what you
want to hear.
Um, to get the deal done,they're going to, if they don't
run away.
Um, so you're going to end upwith a smaller buyer, buyer, um,
(24:34):
universe.
And the folks that are cominginto buyer universe will
probably have already reachedout to some of the folks in
their Rolodex to figure out whotheir successor is going to be,
whether that they're bringing inthe CFO, CEO, or a new CEO, and
they're going to have that onspeed dial, um, because the, the
ego doesn't.
A healthy ego works.
(24:55):
A you can't do this without meego is going to get replaced
pretty darn quick or they'regoing to walk away from it.
squadcaster-12c2_1_12-03- (25:00):
Yeah.
Yeah.
Yeah.
It's just more, it's just morerisk that's introduced risk, you
know, to the buyer that if, youknow, You know, you take that
position, you know, they'regoing to have to intervene in
some way, and that's, that's notideal for private equity.
I mean, they're, they're, know,they're there to buy companies
with strong management teams,not strong, you know, um,
(25:24):
messiahs, if you will.
Now, every business that is,that I've seen that's gotten
bootstrapped to a certain pointdoes have a founder or CEO with
those characteristics, thereally strong ones also have.
Bench strength as well that theycan demonstrate, you know, and
that's where you see, you know,this, I I'm buying a turnkey
(25:46):
solution as opposed to I'mbuying a company, I'm going to
have to do a lot of stuff to itto, you know, make it a scalable
and or functional even.
emily-sander_1_12-03-202 (25:55):
That's another really good point.
I mean, that kind of goes backto assessing like personal
situation of the founder, butalso the staff, like who's on
your team and are they ready togo?
Like, are these just like the ateam or are we, are we going to
need?
To bring some new recruits in orplus up our bench.
Cause
squadcaster-12c2_1_12-03- (26:12):
yeah, it's usually a little of both.
I, you know, my experience isI've never seen it where there's
a wholesale change right out thegate because I think, you know,
you talk about a founder.
This is I'm indispensable.
Well, my experience has actuallybeen it's, you know, the next
level down or even two levelsdown are the people that
actually.
know, are super important
emily-sander_1_12-03-2024_ (26:31):
make this stuff happen.
squadcaster-12c2_1_12-03-20 (26:33):
Um, so, you know, uh, functional
team is important, but I, I'veseen it mostly where there's
usually a couple of pieces thatneed to be brought in just to
handle the rigors of.
it takes to be owned by anothercompany, um, in the reporting
and all of the interactions andthings like that, that's just
wasn't present before.
That's natural.
(26:54):
I've not seen it too much wherethere's like a wholesale change
because that's just a too,almost too much of a, too much
of a burden unless you're justbuying for
emily-sander_1_12-03-2024 (27:02):
Yeah.
squadcaster-12c2_1_12-03-20 (27:03):
and you're going to shut this damn
thing down basically.
Yeah.
emily-sander_1_12-03-2024_1 (27:05):
So, so a coaching engagement I had
was PE firm came in, could notmake it.
So they, they sent him away,brought in one of their own
people to run it.
They knew a guy and had beenthere within days, but this
team, the new president hired meas a coach for his leadership
team, for the five people.
Who were like, just happened?
(27:26):
Like P E what?
And then our, our person we knewis gone and we're sitting here
going, what the heck is goingon?
So it was like, just walk themthrough this process, give them
someone to talk to who's beenthere, done that who's not in
the business, but just let themknow it's going to be okay.
And when I first met them, itwas like, it was like Bambi and
like deer, you know, a deer in aheadlight.
(27:46):
It's like, what is happening?
Like I had people on the vergeof tears.
Um, so it can be a bigadjustment, but
squadcaster-12c2_1_12-03-20 (27:52):
not just can, it always is.
Yeah.
Yeah.
emily-sander_1_12-03-2024 (27:54):
Yeah.
And I mean, people react tochange in different ways and you
got to let them go through thatprocess.
And some people, I mean, somepeople will sink, but some
people will flourish in that andthey'll rise to the occasion.
And you're like, Oh my gosh,like, I didn't know you had, we
had that in you, like youuntapped potential right there.
So it's a, that's a reallyinteresting process all by
itself.
squadcaster-12c2_1_12-03-20 (28:14):
is.
Yeah.
Yeah.
Um, I, I just, you know, it'sthe end of the day, it's people,
right?
Like that's, you know, people,humans are, are unique and and,
and all of those things.
And so you just never know.
Um, you know, but believe this.
Any buyer of your business isgoing to have contingency plan
(28:35):
A, B, C, and N, And
edward-barton_1_12-03-2024 (28:38):
hmm.
Mm hmm.
squadcaster-12c2_1_12-03- (28:40):
being thought of, whether as Ed said,
you're getting, you know, sweettalked and, you know, given,
told the story about your valuein the future.
You know, those, those plans andcontingency plans are, are
always, always in play.
Yeah.
emily-sander_1_12-03-2024 (28:55):
Well, and here's where I would go back
to Why are you doing this?
And what do you want?
If you want to step back fromthe company and have a lot more
money and a lot more time, thengo, go step back and have a lot
more money, a lot more time.
And don't let your ego get inthe way of that.
Yeah.
squadcaster-12c2_1_12-03-20 (29:11):
CEO and just, you know, kind of semi
retire and, you know, back.
But if you're, if you're reallytrying to, you know, I think in
a lot of ways.
You know, you know, you havethis amazing business that you,
you just haven't figured out howto unleash or haven't been able
to access the capital to unleashit.
And if you can show the concretepath to doing that, know, you,
uh, you know, great founder isalways going to see that
(29:32):
potential and then look athaving another bite at the
apple, right?
So you sell your business, butyou still want to be part of the
journey.
As you said, the next chapter,and I'd say, you know, eight
times out of 10 that I've, I'vebeen in, you know, seeing these
things that always is the case.
Very rarely is the founder.
Basically just sacked right outthe gate and said, goodbye, you
know, there's value that theythey've brought to the business
(29:54):
to get to that point.
And so the PE group or whomeverthe buyer is, isn't going to
like, want to see that walk outthe door if it can possibly work
in flourish, like you said.
edward-barton_1_12-03-2024_ (30:05):
No, and I'm a
emily-sander_1_12-03- (30:05):
important too.
They don't, they don't want tokick the founder out.
They will if they have to, andthey will have someone on deck
ready to go, but that's nottheir plan A.
They would much rather this workwith the founder in place in a
potentially new capacity.
Ed.
edward-barton_1_12-03-202 (30:19):
Yeah, I was going to say, on the flip
side, what you, what you do havean opportunity to do is, when
you're putting the company upfor sale and when you're going
to market, if your intention,and, and Rory had kind of said
this, if your intention is,look, I do want to step back, I
do want to be able to get more,then be very upfront with that.
(30:41):
And then collaborate with theprivate equity guys on coming up
with a With a strategy to bringin the successor chief executive
or to highlight the person onyour team That you think would
be the good successor chiefexecutive and be prepared to let
the baby go I mean that's youknow that let the fledgling out
of the nest and let it startflapping its wings But that's
(31:01):
the you know at the end of theday don't think That you're
going to be able to go in andgo, no, I'm going to stay the
CEO and it's going to geteasier.
And I'm going to be able to geta lifestyle and I've got money
in the bank because that justdoesn't happen.
It's, it's, you could get themoney in the bank and have a
lifestyle, but be upfront withit if that's really what you
want.
And there's nothing wrong withthat.
(31:22):
And where founders have made thebiggest mistakes that I've seen
have been in that situationwhere they think because it's,
they can't do it without me orfor whatever reason, You know,
they're not as hungry anymore.
And so they go, okay, well, Ican do this.
You can't it's, if you're goingto do that, be honest with
yourself upfront and just beprepared and say that going into
(31:43):
the investment banking, um,selection process, cause that
becomes part of that story arcwe talked about.
Um, as to one of the reasons whyyou're transitioning the
business, a buyer will look atthat as an opportunity and pay
more.
So you talked about, they don'tnecessarily want the founder to
go.
That's true.
If you're, if you're staying andyou're adding value, if you go
into it and go, Hey, what?
(32:04):
The reason this business is onthe market is because I'm ready
to transition.
I'm in my fifties or sixties.
I'm, you know, taking money offthe table.
I'm ready to transition to a newleader.
I know that I'm not the personto take it to the next level.
That becomes an attractive buyfor the private equity guys
because they're not, they knowthey're not going to have to
fight that battle.
It takes that risk off thetable.
And now they can collaboratewith you to find the successor
(32:26):
management that you need.
emily-sander_1_12-03-2024_1 (32:28):
And another scenario I've run into a
number of times is founders whoknow their sweet spot and they
know they like taking it from to10 and then they want to hand it
off to someone.
So it's kind of like, uh, andthey do this over and over and
over again.
It's kind of like the relay raceyou see in the Olympics where
like the first person runs thelap and hands it off.
(32:48):
They know they're really good atthat first lap and they suck at
all the other laps.
And so they just do that firstlap over and over and over
again, and then hand it off tosomeone else.
And they make a, uh, verylucrative, very good career out
of doing that over and over andover again.
So if you.
And you know it, then play tothat.
squadcaster-12c2_1_12-03- (33:07):
yeah.
self awareness and knowing your,you know, your superpower, so to
speak, is important.
And I think people that havefigured that out, you know, tend
to tend to flourish and others,you know, they kind of go
against the grain.
Um, yeah, it doesn't work outall the time as much, know,
oftentimes they're still verysuccessful, but maybe not as
(33:28):
successful as they could be, youknow, what have you.
emily-sander_1_12-03-2024_ (33:32):
What else is, what else is good to
know as a primer for this phase?
squadcaster-12c2_1_12-03- (33:36):
Well, I think this, you know, this is
a good place to wrap thissegment.
I think we can pick up in ournext discussion, but I think
this is about where the businessstarts to undergo a little bit
of a cage rattling, so to speak.
This is a point where.
You know, other folks on theteam are going to need to get
involved because a founder can'tmanage an entire diligence
(33:57):
process.
And when, when we talk aboutdiligence, we will talk about
all that goes into, uh, to kindof making your business position
in the best possible way.
And I'll, I'll just say, itstarts with being really
proactive as opposed toreactive.
And, you know, informationalhygiene is super important.
And.
need a team to kind of overseethat because it's, it's a lot.
(34:20):
So,
edward-barton_1_12-03-202 (34:21):
Yeah.
And I, and I,
emily-sander_1_12-03-2024 (34:22):
like, what's the, it's like Avengers
Assemble, what's the, orAvengers Unite or something
where it's like, your team!
edward-barton_1_12-03-202 (34:28):
Yeah, I was gonna, I was gonna add
that, you know, this is thepoint where an investment bank
worth their salt, especially ifthey're going on a contingent
fee sale, like a realtor would,where they're going, okay, I'm
gonna, you know, get apercentage of the sale as
opposed to a retained, uh, kindof a retainer plus.
Um, you're gonna start yourdiligence process before you've
(34:48):
even, you know, talked topotential client one.
And so, as Rory said, kind ofthe, the corporate hygiene piece
is important, getting all thestuff pulled together.
But, in a lot of cases, I'veseen investment banks, even
during the interviewing process,Emily, go, we want to see this,
this, this, this, this, andthis.
And, you know, these are thegood investment banks, the
Goldman's, uh, the, you know,the Cowan's.
(35:10):
And they go, and if you can't,you can't pull that together,
they're not going to engage you.
You're not ready.
And they're going to tell you,you're not ready.
You need to do these threethings, or four things,
including getting your bookstogether, Making sure you have
an audit, making sure you havean IT exam done, you know, from
a securities perspective,security perspective.
You've got regulatory gaps, andthen come back and talk to us.
(35:32):
So utilize that process, youknow, even before you go to
market, utilize that, and Ican't stress enough, the
interview process with theinvestment banks is a time to
get a better understanding ofwhat their go to market strategy
is, what is going to be expectedof you and the management team
during the sale process, Andthen they're going to be asking
you, the ones that are good, aregoing to be asking you to have
(35:54):
almost a mini data room puttogether before they even
engage.
And that's going to be a goodtest as to whether you guys, as
the founding management team,are actually ready to go to
market.
squadcaster-12c2_1_12-03- (36:06):
Yeah.
emily-sander_1_12-03-2024 (36:07):
Yeah.
Okay.
All right.
We'll wrap this one up.
But I think takeaways arethere's ask yourself the why and
what questions and go have likea walk around the block with
that one.
Cause those are important.
You're going to have to knowthose and come back to those
over and over again.
Is it Descartes, the famousphilosopher?
It's like, know yourself.
Um, but you've got to, you'vegot to do that internal work.
(36:30):
Um, which sounds, which soundskind of silly sometimes, but if
you don't have that, you'regoing to be blown in the wind,
like a leaf with a leaf blowerover your face.
Um, and then there's thetactical and practical pieces of
assembling your team.
And that's important too.
And we, if you're sitting theregoing, Oh, like, I don't know
what investment banks, I don'tknow what wealth advisors I
(36:50):
should go to.
Um, we actually have some freedownloads with lists of those
resources for like, okay, here'sa starting point.
Go check these out.
And we'll have a link to that inthe show notes,
If you enjoyed today's episode,please like, share, and
subscribe wherever you get yourpodcasts.
Welcome to the Private EquityExperience Podcast.
Your backstage pass to thestrategies, stories, and secrets
that drive value in the PEuniverse.
No filters, no fluff, juststraight talk and expert
insights to help you navigatethe private equity world with
confidence.
And now your hosts, Ed Barton,Rory Liebhart and Emily Sander.
emily-sander_1_12-03-2024 (00:34):
Okay.
First of all, my legs are dyingbecause I did leg day yesterday
for the first time in a longtime.
And now I walk like a cowboy.
And I can't stand or sit.
It's fun.
Right.
squadcaster-12c2_1_12-03-202 (00:49):
as it's not your back killing you,
that's a good thing on leg day.
emily-sander_1_12-03-2024_1 (00:52):
No, I have done that.
I have done the herniated discsfrom squatting and deadlifting
too much.
And that is no bueno.
Holy.
squadcaster-12c2_1_12-03- (00:59):
Yeah.
emily-sander_1_12-03-2024_1 (01:00):
You were up there for a while, man.
Rory, you were like, I rememberthat picture of you on the hack
squat machine and you were doinglike a thousand pounds or
something stupid like that.
squadcaster-12c2_1_12-03- (01:10):
Yeah.
That was when I was probablylike, you know, 40, 50 pounds
heavier.
Um, I'm definitely not as strongas I once was, but, you know, we
do the best we can that, uh, youknow, at this age
emily-sander_1_12-03-202 (01:20):
You're looking good.
You're feeling good.
That's what counts.
Ed, have you ever deadliftedanything in your
edward-barton_1_12-03-202 (01:25):
Yeah, I've got I'm country strong.
emily-sander_1_12-03-20 (01:30):
Country strong.
edward-barton_1_12-03-2024_16 (01:31):
I have functional fitness.
emily-sander_1_12-03 (01:32):
Functional fitness.
Yeah.
There's the chip.
There's the dip.
I've seen you, all righty here.
We are talking about the biphase.
this is when you're gettingready Sell your business.
and we're going to talk aboutjust the main tenants of what
goes on there.
So Rory, this is a large topichere, but kick us off.
What's a good starting point.
squadcaster-12c2_1_12-03-20 (01:52):
You know, it's, it's just, you know,
you're a founder, you know, Um,you've been in, you've, you've
run your business, youbootstrapped it.
Maybe you've taken on some angelinvestment early on, but you've
reached a point to say, youknow, now it's time to consider
selling my business.
What do I need to do to preparefor that?
You know, so who do I need toinvolve in the process?
(02:13):
You know, who can help meassess.
the buyer universe, you know, Iknow my business, but I may not
know MNA, you know, how do we,how do we get the wheels
turning?
And, you know, hopefully thisworks out as well as it can for,
for me, my family, those aroundme, the employees that were
involved in helping me bootstrapthis business.
(02:33):
That's kind of what this, this,this phase is about.
emily-sander_1_12-03-2024 (02:36):
Yeah.
So you mentioned some key thingsthere.
So I think is like part of itlike your situation, like you
personally, your family, andthen your business and who
you've got on staff.
And then it seems like there'sthis whole, I like that phrase
buyer universe, but first ofall, it's taking inventory of
like, what do I have going on?
And what do I want to do withthat?
squadcaster-12c2_1_12-03- (02:56):
Yeah, exactly.
Um, you know, I think it'sdifferent for every, every
situation, different everyfounder.
There are certainly some themesand we talked about those, I
think a little bit on the lastpod, which was around
motivations.
You know, maybe you want to takesome off the table.
Uh, maybe you gotten to a pointwhere you want to retire and you
(03:16):
don't have somebody as asuccessor to move the business
forward.
So maybe it's the time to, sellthe business and kind of go a
different direction or maybe,you know, it could be any myriad
of things basically.
edward-barton_1_12-03-202 (03:27):
Yeah, I was going to say that the one
of the elements is, and ittransitions from the last from
the last discussion wasunderstand your why.
Because that's really going todetermine the how.
So,
squadcaster-12c2_1_12-03-2 (03:40):
Yes.
edward-barton_1_12-03-202 (03:40):
maybe that if your why is, you know, I
need to get liquid and I want tobe able to take a bunch of chips
off the table and I'm willingto, um, I'm willing to see a
significant amount of controland vision, then, you know,
there, there, that's one why.
Versus the why I want to be ableto build a new house and I want
to, you know, continue, I wantto actually spend more time over
(04:02):
at the lake and I want to be,that's a different vision.
And one is going to be, and thatdoesn't mean you can't do both,
but the one is far more alignedto private equity than the
other.
squadcaster-12c2_1_12-03- (04:13):
Yeah.
Yeah, exactly.
emily-sander_1_12-03-2024_16 (04:16):
so like why, but also like what,
like, what do you, what do youwant to do?
Like, what do you want to be?
edward-barton_1_12-03-202 (04:20):
Yeah.
emily-sander_1_12-03-2024_16 (04:21):
at this stage
edward-barton_1_12-03-2024_ (04:22):
And what do you want the business to
do?
Because again, part of thisexercise is making sure, and I
know we'll talk about it here ina bit, is making sure you've got
the right, when you're going tomarket and you're talking to the
investment banker, that theyunderstand what you're trying to
accomplish.
They, they attach that buyeruniverse that we were talking
(04:43):
about with.
They go, okay, in that Bayeruniverse, there's a few, you
know, there's a fewconstellations in there that we
don't want to go to.
And there's a few constellationsin there that we want to focus
on and based upon your why andyour what.
And so that's going to be reallyimportant to understand as
you're going through it.
And it's, it's not good enough,um, for a founder where founders
(05:07):
become imperiled is when theygo, well, you know, my buddies
are doing it.
So I'm going to do it too.
Um, that's a bad, and I've seenthat.
Um, I've had to survive throughone of those, uh, PE
transactions where their buddydid it.
So they did it and then theydidn't realize what they did.
Um, so, you know, I, I thinkit's understanding the what and
why and making sure you canconvey that well to the
(05:29):
investment banker before theyput you to the market, because
that's going to depend on howthey position it, who they
position it to.
emily-sander_1_12-03-2024 (05:38):
Okay.
And then an investment Baker'sbanker's job is they're kind of
like a, your, your, um, agentfor a house, like their person
who's real estate agent lookingfor different houses and
matching your needs and criteriawith different locations and all
that, all that good stuff.
So, um, investment bakers areimportant players
edward-barton_1_12-03 (05:59):
critical?
emily-sander_1_12-03-2024_16 (05:59):
in this whole process.
squadcaster-12c2_1_12-03-2 (06:00):
much so.
You know, investment bankers,investment banks, represent both
buyers and sellers.
Just like, you know, the analogywith real estate agents.
You have buy side advisors, youhave sell side advisers.
you know, in the case of afounder, you'd be engaging a buy
side advisor to, help you, asyou say, match with a potential
(06:21):
suitor to buy your company youknow, their job upon, you know,
engaging with you.
And there's a lot that goes intofinding the right, you know,
investment banker for you,their, their job is ultimately
to extract the highest valuepossible for your business and
really meet your objectivesbecause, and we'll get into some
of the compensation schematics,but for the most part, they're,
(06:44):
they're compensated.
on success, successfully sellingyour business.
And it's usually a proportion ofthe transaction value, you know,
with some other caveats andmaybe some retention, uh,
compensation in there too.
But for the most part, it'sabout just like, again, real
estate agent type of scenario,you know, the compensation is
tied to the value of the, youknow, transaction.
emily-sander_1_12-03-2024_16 (07:07):
So they're in, they're incentivized
to get the best deal for you,but they also deal in
relationships and they want toretain the relationships with
both, with all parties in thatfor the longterm.
So they're not going to burn anybridges to, to try to, you know,
shove one past
edward-barton_1_12-03-2024_ (07:26):
No,
squadcaster-12c2_1_12-03- (07:27):
yeah,
edward-barton_1_12-03-2 (07:27):
they're they are not and as a matter of
fact one of the things to beCognizant of as a founder is
when you're going through theinterview process and you should
be interviewing investmentbankers Um with a much higher
level of scrutiny than Igenerally see them interviewed
Um, so it becomes you know, thisis somebody who is going to make
or break quite literally Um thetransaction for the sale of
(07:52):
probably your largest asset YouAnd so one, you want to make
sure you're well aligned and torecognize to your point, Emily,
recognize that these folks, the,you know, let's say they're,
let's say that you're beingpositioned to be sold.
They may deal with the managingdirector at Parthenon on 18
(08:12):
transactions over the next 24months.
And they're going to deal withyou once every 10, every five to
10 years.
So if there is a, they are notgoing to destroy the
relationship with a repeat buyeror investor client, um, if you
are a founder looking to sell.
Now that dynamic changes whenyou've got a private equity
(08:34):
trend, private equity ownershipon, or private equity parties on
each side of that transaction.
So the seller's private equity,buyer's private equity, the, the
investment banker's got a littlebit different tightrope to walk.
But, um, on balance, that's notthe case.
I mean, on balance you're stuckwith They're stuck with a
situation where it's, you know,they're, they're going to be
(08:54):
working for that as much forthat next deal from Parthenon as
they are from you.
emily-sander_1_12-03-2024 (09:00):
Okay.
So let's go through an example.
So let's say, give me a foundersituation, like a common
founder.
They're I want to just somemoney off the table.
I want to go play golf orwhatever I want.
I want to go do other things.
And so I'm going to start thisprocess.
Is that like a good example?
Okay.
And, and then a step one, like,let me, let me go through the
(09:21):
vetting process of finding agood investment banker, because
there's lots of different kindsout there and I got to find the
right one who plays in my, In mypool type of thing.
squadcaster-12c2_1_12-03-20 (09:30):
and I, I, how I've, how I've seen
it, uh, you know, transpire.
I think it's not uncommon is.
You know, the founder isn't justgetting the idea to sell the
business out of the blue.
I mean, there's typically beencalling on the founder, um, and
even, you know, others on themanagement team to kind of say,
(09:51):
Hey, you know, your business isreally attractive to this of
the, you know, or this is aplace where.
You have the opportunity wherevaluations are hot to get the
highest possible valuation wecould see for your business.
And so it's a selling process ontheir end to kind of get you to
consider selling.
(10:12):
Sometimes it's easier than not.
Um, but you know, in the courseof these interviews with
potential investment bankers, itusually goes down is, you know,
you ask them to provide youwith, uh, you know, uh, a
proposal what, what the dealentail, what you, what they
think.
Evaluation range on yourbusiness could be who the
(10:34):
potential suitors could be, youknow, maybe on a, you know, a
semi no names basis, et cetera.
So they're kind of pitching youwith, you know, this is why you
should, you know, align with usfor the next, you know, six, 12,
18 months.
And we'll go do this together.
Now, meanwhile, I think if agood, a good move for anybody
looking to sell a business, Isto take the work that you're
(10:59):
doing with a banker, but also onyour own personal side, maybe
work with a wealth manager tosay, Hey, if this happens, if we
do transact this deal, what doesthis mean for myself and my
family?
What are the implications ofthis for our lifestyle, our
lives?
know, what are the taxconsequences?
What are the, you know, uh,other things to consider wealth
(11:22):
transfer, all of these things.
So you don't go down a path and.
Do it the wrong way and screwyourself up in the long run by
not having type of transactionstructure or things like that
considered because maybe itisn't the right time to do it
given factor A, B, C, or D inyour life, you know,
emily-sander_1_12-03-202 (11:40):
Right.
So are the investment bankersreaching out to you?
Is that what you're saying?
squadcaster-12c2_1_12-03- (11:44):
yeah, yeah,
emily-sander_1_12-03-2024_1 (11:45):
How do you know if they're like
spammy or not?
Cause I mean, like, is it, is itlike we're getting with these
incoming calls and requests allthe time?
Or is it like slow dripping?
Like, you know, when one popsup, probably want to
edward-barton_1_12-03-202 (11:59):
Check our website.
No,
squadcaster-12c2_1_12-03- (12:02):
yeah,
edward-barton_1_12-03-2024_ (12:03):
lot of the spammy, a lot of the
ones, if you haven't heard ofthem before, and if they are
reaching out, um, that'sprobably a little bit more on
the spammy side, just like, youknow, when you've got a nice
house on the hill and you getreal estate people calling you
all the time going, you know,have you ever thought about
selling your house?
Um, probably not the ones youwant to list with.
Um, however, the best way tofind a good investment banker is
(12:27):
to talk to folks who havetransacted their businesses in
that industry.
So investment bankers will tendto be, larger investment banks
will have specialty divisionsthat focus on financial
institutions or manufacturing orwhat have you.
Um, so there's niche investmentbanks, which you may not have
(12:47):
heard of.
But that work, you know, only inautomotive, or only in emerging
technology, or only in, youknow,
squadcaster-12c2_1_12-03-202 (12:56):
or
edward-barton_1_12-03-202 (12:56):
Yeah, so, so you wanna, you, you
should get to take some time todo that research, and if you
don't know, one of the otherpeople to talk to is going to
be, pick up the phone, um, andthis is kind of someone you need
on your deal team anyway, pickup the phone and, and have a
conversation with someone fromone of the more respected law
firms in the area.
(13:16):
that are going to know who'sdone transactions, who's, you
know, they're going to, if theydo buy sell transactions,
mergers and acquisitions in thearea, they're going to know the
reputable investment bankers.
They may have contacts that theycould put you in, in connection
with.
Um, your accountant may know thesame thing, and they're going to
know folks that are reputablethat you, that they could put in
(13:37):
connection, you in connectionwith.
So utilize your professionals.
You're going to need themanyway, going through the
transaction.
So this is a good time to getyourself, your attorney, get
yourself, your accountant, makesure you've got, if you don't
have them already, and thenutilize them for referrals or
kind of checking on the, uh, thereputation of that investment
bank before you engage.
emily-sander_1_12-03-2024 (13:59):
Okay.
So we're like assembling a teamhere.
So we've mentioned a whole bunchof parties.
So investment bankers, um,lawyer, accountant, Rory, you
mentioned financial advisor,financial planner.
Okay.
So talk to me about that one.
So that's kind of to the pointwe were just saying earlier,
like you got to figure out yoursituation and what you want in
terms of family and all, all thehome stuff, is that where you
(14:22):
bring in a financial advisor andsay, okay, here's, here's The
cards on the table.
let's talk about some options orhow we would structure this
thing.
squadcaster-12c2_1_12-03 (14:30):
that's exactly right.
Um, You're, you're looking atkind of taking the same kind of
discussion you're having withbankers and lawyers and all
those, but then using the datathat's coming from those
discussions to gear yourconversation with your personal
or family, you know, financialadvisor, wealth advisor.
(14:52):
say, hey, look, this is whatI'm, you know, gathering from
what could transpire.
do we optimize this on thepersonal side so that we're
seeing the most benefit possibleand actually on the flip side,
minimize any sort ofconsequences that may arise
because I, while I have not beenin this position myself, heard a
(15:12):
lot of horror stories aboutpeople that think they, you
know, just are walking away witha fantastic deal.
Um, but then there's unforeseenconsequences to the, on the
personal side based on thestructure of the deal, but also,
you know, the way in which itwas characterized in the deal
structure, which could haveconsequences when it comes to
(15:33):
just what you're really tryingto extract is the maximum
cashflow coming out of a deal.
So it's super important thatI've just heard.
So many people talk about, man,I wish I would have gotten my
wealth advisor before I becamesuper wealthy as opposed to once
I got wealthy, I needed to goget a financial advisor.
I mean, I've talked, I've heardof, I've people heard people
(15:53):
talk about, you know, ninefigure deals they did, but then,
you know, after a while, it'snot even close to what, what
that was.
emily-sander_1_12-03-2024_16 (16:02):
Oh no.
squadcaster-12c2_1_12-03-2 (16:03):
hits and all of the other elements
of, um, exposure that they hadfrom that, you know, it's going
to be, it's super important
emily-sander_1_12-03-202 (16:10):
That's a bad day when that happens.
Holy.
edward-barton_1_12-03-202 (16:13):
Yeah.
squadcaster-12c2_1_12-03 (16:14):
People that
emily-sander_1_12-03-2024_1 (16:15):
And
squadcaster-12c2_1_12-03-2 (16:15):
they have to actually go back to work
after these things because ofthat.
edward-barton_1_12-03-202 (16:17):
Well,
emily-sander_1_12-03-2024_16 (16:18):
my gosh.
And it sounds like having alawyer who, like, can, who
specializes in that and can readthrough a contract and know what
to look for.
Like, this, you need to switchthis around or ooh, I would flag
this and have a question.
Like having someone who knowswhat to look for and, and is in
your corner.
So it's like, I'm onlyinterested in, in how
edward-barton_1_12-03-202 (16:37):
yeah, this is, this is one of those
times where a lot of foundersare pretty frugal and they're
also pretty smart and they,they're like, I, I can handle a
lot of this myself, or I use mycousin Joe for, you know, doing
my, doing my taxes and, and my,my brother in law, Fred is my
attorney.
squadcaster-12c2_1_12-03- (16:53):
Yeah.
edward-barton_1_12-03-2024_ (16:54):
one of those times where it makes
sense.
And again, being in my own case,kind of a solo practitioner, I'm
about to speak, speak against myown position.
This is one of those, if you'regoing to do a, a 9 or 10, 8, 9,
10 figure deal, you want toengage like Kirkland Ellis.
You want to engage a large, alarge national or regional,
(17:19):
highly reputable regional firmfrom probably the large city
near you that does these thingson a regular basis because what
that firm will have is they'llhave an expert In transactions,
they'll have an expert in taxstructuring.
They'll have an expert inprivacy issues.
They'll have an expert, sothey'll be able to advise you.
Now it's going to cost you asmall arm and a leg, but as Rory
(17:42):
noted, this is one of thosewhere you may spend 200, 000 on
legal fees and you end up makingan extra million bucks because
of the way that the deal isstructured or they identify
concerns for you, um, that youmay not have thought of.
And the same thing, you're goingto want to have that law firm's
tax department.
Working with your certifiedpublic accountant or tax
(18:02):
preparer.
And if you don't have a taxpreparer, this is a good time to
get one.
Because these transactionsgenerally have significant tax
impacts regardless.
Except maybe if it was a Ccorporation that you're holding
stock.
They're all, almost always goingto have significant tax.
Uh flow through impacts to youthat as Rory noted They can it
(18:23):
can blow up this deal for yousix ways from sunday where you
have phantom income So you endup paying tax on cash you didn't
get yet Um, you know, there'sthere's issues like that that
can be resolved if you get youradvisors in At about the same
time you're getting theinvestment banker in and you
just kind of get them familiarwith the issues
squadcaster-12c2_1_12-03- (18:43):
Yeah.
Even structuring something as astock sale versus an asset sale.
I mean, those are things thatreally need to be considered in
the totality.
I think the, the point here onthis kind of element of the
discussion is make sure you havea really strong team around you.
You may be.
You know, you may know yourbusiness better than anybody and
that's most likely the case.
You may be extremely level whenit comes to your business, but
(19:07):
these other ancillary aspectsare, you know, these other
professionals business.
So utilize them, know, don't bepenny wise pound foolish.
Um, but you know, also, youknow, also choose wisely who you
will, you know, kind of lockarms with on these processes.
emily-sander_1_12-03-2024_1 (19:24):
And someone with an outside
perspective might see somethingin your business that you don't,
or how to position it, or how toit, tilt it like this and
position it like this,
squadcaster-12c2_1_12-03 (19:33):
that's
emily-sander_1_12-03-2024_1 (19:33):
and it becomes more lucrative.
Okay.
So we have a founder who wantsto take money off the table, go
spend time doing other thingsbesides working 80 hours a week.
They've assembled their team.
And then, and then what happens?
squadcaster-12c2_1_12-03- (19:49):
Yeah.
I think then you start intowhat's really kind of the
beginning of the sellingprocess.
So you have, all of myexperience has been once you
have an engagement letter signedwith an investment bank, more or
less, that's when the real heavywork starts.
Um, and you know, we couldprobably spend an entire podcast
on this, but You know, so much,especially with a business
(20:13):
that's earlier stage, doesn'thave a really robust financial
planning and analysis team,cetera, et cetera.
There's a lot of work to be doneto get it to a point where, hey,
we, we have.
Information that's organized andshareable with, you know, buyer
universe.
And in what happens at thebeginning is you start to work
(20:34):
with the investment bankcrafting the pitch, crafting the
story story is an important,important to describe it is
you're telling the story of thebusiness in terms of why it's
most valuable commodity outthere for a potential buyer.
And, you know, everything kindof.
know, stems from that and thework you do to, to get yourself
(20:57):
out there in the market.
edward-barton_1_12-03-202 (20:59):
Yeah, you're gonna
emily-sander_1_12-03-202 (21:00):
that's kind of interesting.
So talk about that narrative.
Ed, you can, you've done this amillion times as have you Rory,
but there's like the personalfounder narrative.
There's the company narrativeand that story arc, but it can't
end because you're trying to saythere's a next chapter that you
can
edward-barton_1_12-03-202 (21:17):
yeah.
emily-sander_1_12-03-2024_16 (21:18):
me type of thing.
So it's kind of like a differenttype of story arc.
edward-barton_1_12-03-2024 (21:21):
Yeah the the story arc you're gonna
so kind of going taking onesmall step back As you're
assembling this, this team, um,and you're looking at what the,
who the investment banker is.
So as you're kind of goingthrough that interviewing
process, you're going to want toask the question of them.
Look, here's, you're going towant to tell your story in a
(21:42):
couple of different ways and gettheir feedback as to what the
market is going to want to hear.
And then triangulate thatamongst the four or five, and I
would recommend you don't, Gowith fewer than four investment
banks that you interview.
Triangulate that feedback sothat that way when you do lock
in with one, one, the investmentbanker has heard the story
before and they're alreadythinking about how to position
(22:05):
you and who to position you within the market.
And two, you've had anopportunity to kind of, to pitch
it a few times, refine your ownmessaging, understand what that
story looks like.
Get some feedback from the, frominvestment bankers, different
ones.
Um, and then be able to go intothe market going, look, that the
story we're going to sell andthat's the, what you just said,
Emily, is we've come this farand there's a lot further to go.
(22:29):
And in order to go that lotfurther, we need growth capital.
We need an investment in ourmanagement team.
We need a strategic partner.
We need a, and so there's alsogoing to be a theme behind it.
What a lot of founders do, andthey make this mistake and, and
buyers look at it routinely.
Is they make it a founder ledstory.
emily-sander_1_12-03-2024_ (22:50):
Yes.
edward-barton_1_12-03-2024_ (22:52):
You should, the founders should be,
should be darn proud of whatthey've accomplished.
We're a founding team.
But this needs to be about the,you want to maximize your value?
Here's what, here's why it's allabout you, buyer.
And here's how we're positioningit so that regardless, and it
may be different stories todifferent buyer, uh, potential
buyer types.
Here's why having you on boardis going to help us attract the
(23:14):
strategic partner that we needto be able to grow this
business.
The strategic capital we need togrow this business.
The, the couple strategic hireswe need to grow this business.
So you're going to modify thatstory arc a little bit, but
clear, clear the generalapproach during the interview
process.
Ha!
emily-sander_1_12-03-2024 (23:31):
Well, I mean, we harp on this so much
in our book, but like the famouslast words or the deadliest
words for a founder is youcannot run this business without
me.
That is a surefire way to likepass.
squadcaster-12c2_1_12-03-202 (23:43):
of hubris right there.
Fault
emily-sander_1_12-03-2024 (23:45):
Yeah.
And people might like foundersmight think that, and we've
known plenty who
edward-barton_1_12-03-20 (23:51):
Pretty much everyone I've worked with.
emily-sander_1_12-03-2024_ (23:52):
that and, and all that.
And it's actually, they don'tunderstand you're decreasing the
value.
You are taking money away fromyourself.
By doing that and, and making itdependent on you.
So listener, if you get nothingelse from this episode, please
take that away, cause that willjust kill a
edward-barton_1_12-03-202 (24:10):
Well,
emily-sander_1_12-03-2024_ (24:10):
that will kill the
edward-barton_1_12-03-2024_ (24:11):
and seasoned private equity, um,
folks know this.
They also know that foundersthat go into that, go into the
transaction with that approachare likely to need to be
replaced.
And they will probably, theywill probably tell you what you
want to hear.
Um, to get the deal done,they're going to, if they don't
run away.
Um, so you're going to end upwith a smaller buyer, buyer, um,
(24:34):
universe.
And the folks that are cominginto buyer universe will
probably have already reachedout to some of the folks in
their Rolodex to figure out whotheir successor is going to be,
whether that they're bringing inthe CFO, CEO, or a new CEO, and
they're going to have that onspeed dial, um, because the, the
ego doesn't.
A healthy ego works.
(24:55):
A you can't do this without meego is going to get replaced
pretty darn quick or they'regoing to walk away from it.
squadcaster-12c2_1_12-03- (25:00):
Yeah.
Yeah.
Yeah.
It's just more, it's just morerisk that's introduced risk, you
know, to the buyer that if, youknow, You know, you take that
position, you know, they'regoing to have to intervene in
some way, and that's, that's notideal for private equity.
I mean, they're, they're, know,they're there to buy companies
with strong management teams,not strong, you know, um,
(25:24):
messiahs, if you will.
Now, every business that is,that I've seen that's gotten
bootstrapped to a certain pointdoes have a founder or CEO with
those characteristics, thereally strong ones also have.
Bench strength as well that theycan demonstrate, you know, and
that's where you see, you know,this, I I'm buying a turnkey
(25:46):
solution as opposed to I'mbuying a company, I'm going to
have to do a lot of stuff to itto, you know, make it a scalable
and or functional even.
emily-sander_1_12-03-202 (25:55):
That's another really good point.
I mean, that kind of goes backto assessing like personal
situation of the founder, butalso the staff, like who's on
your team and are they ready togo?
Like, are these just like the ateam or are we, are we going to
need?
To bring some new recruits in orplus up our bench.
Cause
squadcaster-12c2_1_12-03- (26:12):
yeah, it's usually a little of both.
I, you know, my experience isI've never seen it where there's
a wholesale change right out thegate because I think, you know,
you talk about a founder.
This is I'm indispensable.
Well, my experience has actuallybeen it's, you know, the next
level down or even two levelsdown are the people that
actually.
know, are super important
emily-sander_1_12-03-2024_ (26:31):
make this stuff happen.
squadcaster-12c2_1_12-03-20 (26:33):
Um, so, you know, uh, functional
team is important, but I, I'veseen it mostly where there's
usually a couple of pieces thatneed to be brought in just to
handle the rigors of.
it takes to be owned by anothercompany, um, in the reporting
and all of the interactions andthings like that, that's just
wasn't present before.
That's natural.
(26:54):
I've not seen it too much wherethere's like a wholesale change
because that's just a too,almost too much of a, too much
of a burden unless you're justbuying for
emily-sander_1_12-03-2024 (27:02):
Yeah.
squadcaster-12c2_1_12-03-20 (27:03):
and you're going to shut this damn
thing down basically.
Yeah.
emily-sander_1_12-03-2024_1 (27:05):
So, so a coaching engagement I had
was PE firm came in, could notmake it.
So they, they sent him away,brought in one of their own
people to run it.
They knew a guy and had beenthere within days, but this
team, the new president hired meas a coach for his leadership
team, for the five people.
Who were like, just happened?
(27:26):
Like P E what?
And then our, our person we knewis gone and we're sitting here
going, what the heck is goingon?
So it was like, just walk themthrough this process, give them
someone to talk to who's beenthere, done that who's not in
the business, but just let themknow it's going to be okay.
And when I first met them, itwas like, it was like Bambi and
like deer, you know, a deer in aheadlight.
(27:46):
It's like, what is happening?
Like I had people on the vergeof tears.
Um, so it can be a bigadjustment, but
squadcaster-12c2_1_12-03-20 (27:52):
not just can, it always is.
Yeah.
Yeah.
emily-sander_1_12-03-2024 (27:54):
Yeah.
And I mean, people react tochange in different ways and you
got to let them go through thatprocess.
And some people, I mean, somepeople will sink, but some
people will flourish in that andthey'll rise to the occasion.
And you're like, Oh my gosh,like, I didn't know you had, we
had that in you, like youuntapped potential right there.
So it's a, that's a reallyinteresting process all by
itself.
squadcaster-12c2_1_12-03-20 (28:14):
is.
Yeah.
Yeah.
Um, I, I just, you know, it'sthe end of the day, it's people,
right?
Like that's, you know, people,humans are, are unique and and,
and all of those things.
And so you just never know.
Um, you know, but believe this.
Any buyer of your business isgoing to have contingency plan
(28:35):
A, B, C, and N, And
edward-barton_1_12-03-2024 (28:38):
hmm.
Mm hmm.
squadcaster-12c2_1_12-03- (28:40):
being thought of, whether as Ed said,
you're getting, you know, sweettalked and, you know, given,
told the story about your valuein the future.
You know, those, those plans andcontingency plans are, are
always, always in play.
Yeah.
emily-sander_1_12-03-2024 (28:55):
Well, and here's where I would go back
to Why are you doing this?
And what do you want?
If you want to step back fromthe company and have a lot more
money and a lot more time, thengo, go step back and have a lot
more money, a lot more time.
And don't let your ego get inthe way of that.
Yeah.
squadcaster-12c2_1_12-03-20 (29:11):
CEO and just, you know, kind of semi
retire and, you know, back.
But if you're, if you're reallytrying to, you know, I think in
a lot of ways.
You know, you know, you havethis amazing business that you,
you just haven't figured out howto unleash or haven't been able
to access the capital to unleashit.
And if you can show the concretepath to doing that, know, you,
uh, you know, great founder isalways going to see that
(29:32):
potential and then look athaving another bite at the
apple, right?
So you sell your business, butyou still want to be part of the
journey.
As you said, the next chapter,and I'd say, you know, eight
times out of 10 that I've, I'vebeen in, you know, seeing these
things that always is the case.
Very rarely is the founder.
Basically just sacked right outthe gate and said, goodbye, you
know, there's value that theythey've brought to the business
(29:54):
to get to that point.
And so the PE group or whomeverthe buyer is, isn't going to
like, want to see that walk outthe door if it can possibly work
in flourish, like you said.
edward-barton_1_12-03-2024_ (30:05):
No, and I'm a
emily-sander_1_12-03- (30:05):
important too.
They don't, they don't want tokick the founder out.
They will if they have to, andthey will have someone on deck
ready to go, but that's nottheir plan A.
They would much rather this workwith the founder in place in a
potentially new capacity.
Ed.
edward-barton_1_12-03-202 (30:19):
Yeah, I was going to say, on the flip
side, what you, what you do havean opportunity to do is, when
you're putting the company upfor sale and when you're going
to market, if your intention,and, and Rory had kind of said
this, if your intention is,look, I do want to step back, I
do want to be able to get more,then be very upfront with that.
(30:41):
And then collaborate with theprivate equity guys on coming up
with a With a strategy to bringin the successor chief executive
or to highlight the person onyour team That you think would
be the good successor chiefexecutive and be prepared to let
the baby go I mean that's youknow that let the fledgling out
of the nest and let it startflapping its wings But that's
(31:01):
the you know at the end of theday don't think That you're
going to be able to go in andgo, no, I'm going to stay the
CEO and it's going to geteasier.
And I'm going to be able to geta lifestyle and I've got money
in the bank because that justdoesn't happen.
It's, it's, you could get themoney in the bank and have a
lifestyle, but be upfront withit if that's really what you
want.
And there's nothing wrong withthat.
(31:22):
And where founders have made thebiggest mistakes that I've seen
have been in that situationwhere they think because it's,
they can't do it without me orfor whatever reason, You know,
they're not as hungry anymore.
And so they go, okay, well, Ican do this.
You can't it's, if you're goingto do that, be honest with
yourself upfront and just beprepared and say that going into
(31:43):
the investment banking, um,selection process, cause that
becomes part of that story arcwe talked about.
Um, as to one of the reasons whyyou're transitioning the
business, a buyer will look atthat as an opportunity and pay
more.
So you talked about, they don'tnecessarily want the founder to
go.
That's true.
If you're, if you're staying andyou're adding value, if you go
into it and go, Hey, what?
(32:04):
The reason this business is onthe market is because I'm ready
to transition.
I'm in my fifties or sixties.
I'm, you know, taking money offthe table.
I'm ready to transition to a newleader.
I know that I'm not the personto take it to the next level.
That becomes an attractive buyfor the private equity guys
because they're not, they knowthey're not going to have to
fight that battle.
It takes that risk off thetable.
And now they can collaboratewith you to find the successor
(32:26):
management that you need.
emily-sander_1_12-03-2024_1 (32:28):
And another scenario I've run into a
number of times is founders whoknow their sweet spot and they
know they like taking it from to10 and then they want to hand it
off to someone.
So it's kind of like, uh, andthey do this over and over and
over again.
It's kind of like the relay raceyou see in the Olympics where
like the first person runs thelap and hands it off.
(32:48):
They know they're really good atthat first lap and they suck at
all the other laps.
And so they just do that firstlap over and over and over
again, and then hand it off tosomeone else.
And they make a, uh, verylucrative, very good career out
of doing that over and over andover again.
So if you.
And you know it, then play tothat.
squadcaster-12c2_1_12-03- (33:07):
yeah.
self awareness and knowing your,you know, your superpower, so to
speak, is important.
And I think people that havefigured that out, you know, tend
to tend to flourish and others,you know, they kind of go
against the grain.
Um, yeah, it doesn't work outall the time as much, know,
oftentimes they're still verysuccessful, but maybe not as
(33:28):
successful as they could be, youknow, what have you.
emily-sander_1_12-03-2024_ (33:32):
What else is, what else is good to
know as a primer for this phase?
squadcaster-12c2_1_12-03- (33:36):
Well, I think this, you know, this is
a good place to wrap thissegment.
I think we can pick up in ournext discussion, but I think
this is about where the businessstarts to undergo a little bit
of a cage rattling, so to speak.
This is a point where.
You know, other folks on theteam are going to need to get
involved because a founder can'tmanage an entire diligence
(33:57):
process.
And when, when we talk aboutdiligence, we will talk about
all that goes into, uh, to kindof making your business position
in the best possible way.
And I'll, I'll just say, itstarts with being really
proactive as opposed toreactive.
And, you know, informationalhygiene is super important.
And.
need a team to kind of overseethat because it's, it's a lot.
(34:20):
So,
edward-barton_1_12-03-202 (34:21):
Yeah.
And I, and I,
emily-sander_1_12-03-2024 (34:22):
like, what's the, it's like Avengers
Assemble, what's the, orAvengers Unite or something
where it's like, your team!
edward-barton_1_12-03-202 (34:28):
Yeah, I was gonna, I was gonna add
that, you know, this is thepoint where an investment bank
worth their salt, especially ifthey're going on a contingent
fee sale, like a realtor would,where they're going, okay, I'm
gonna, you know, get apercentage of the sale as
opposed to a retained, uh, kindof a retainer plus.
Um, you're gonna start yourdiligence process before you've
(34:48):
even, you know, talked topotential client one.
And so, as Rory said, kind ofthe, the corporate hygiene piece
is important, getting all thestuff pulled together.
But, in a lot of cases, I'veseen investment banks, even
during the interviewing process,Emily, go, we want to see this,
this, this, this, this, andthis.
And, you know, these are thegood investment banks, the
Goldman's, uh, the, you know,the Cowan's.
(35:10):
And they go, and if you can't,you can't pull that together,
they're not going to engage you.
You're not ready.
And they're going to tell you,you're not ready.
You need to do these threethings, or four things,
including getting your bookstogether, Making sure you have
an audit, making sure you havean IT exam done, you know, from
a securities perspective,security perspective.
You've got regulatory gaps, andthen come back and talk to us.
(35:32):
So utilize that process, youknow, even before you go to
market, utilize that, and Ican't stress enough, the
interview process with theinvestment banks is a time to
get a better understanding ofwhat their go to market strategy
is, what is going to be expectedof you and the management team
during the sale process, Andthen they're going to be asking
you, the ones that are good, aregoing to be asking you to have
(35:54):
almost a mini data room puttogether before they even
engage.
And that's going to be a goodtest as to whether you guys, as
the founding management team,are actually ready to go to
market.
squadcaster-12c2_1_12-03- (36:06):
Yeah.
emily-sander_1_12-03-2024 (36:07):
Yeah.
Okay.
All right.
We'll wrap this one up.
But I think takeaways arethere's ask yourself the why and
what questions and go have likea walk around the block with
that one.
Cause those are important.
You're going to have to knowthose and come back to those
over and over again.
Is it Descartes, the famousphilosopher?
It's like, know yourself.
Um, but you've got to, you'vegot to do that internal work.
(36:30):
Um, which sounds, which soundskind of silly sometimes, but if
you don't have that, you'regoing to be blown in the wind,
like a leaf with a leaf blowerover your face.
Um, and then there's thetactical and practical pieces of
assembling your team.
And that's important too.
And we, if you're sitting theregoing, Oh, like, I don't know
what investment banks, I don'tknow what wealth advisors I
(36:50):
should go to.
Um, we actually have some freedownloads with lists of those
resources for like, okay, here'sa starting point.
Go check these out.
And we'll have a link to that inthe show notes,
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