May 30, 2024 • 25 mins
In this latest episode of the Apex Business Advisors podcast, host Andy Cavanaugh and Apex president Doug Hubler engage in a lively Q&A session during the Entrepreneurs Alliance event. Packed with candid experiences and persuasive advice for business owners ready to sell, they delve into why they started their podcast, the momentum behind it, and the benefits they've gained. The episode covers issues from managing multiple entities to ensuring your business retains its value post-sale.
Explore the intricacies of business selling with real-time audience questions, tackling challenges like unprepared sellers, industry-specific complexities, and dealing with fraudulent clients.
Whether you're a seasoned entrepreneur or an aspiring buyer, tune in for practical insights and expert advice from our seasoned hosts.
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Transcript
Episode Transcript
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(00:00):
Music.
(00:08):
Welcome back to the Apex Business Advisors podcast. I'm your host,
Andy Kavanaugh, joined as always by the president of Apex, Doug Hubler.
Doug, we are back for the Q&A from the Entrepreneurs Alliance live episode that
we did a couple weeks ago. Mm-hmm. Yep.
Anything you want to say about these people?
(00:30):
Well, they had some great questions. I think that, you know, it was fun.
I enjoyed that live episode and kind of fed off of their energy.
I think they were enjoying, you know, some of the stories we were telling because
I think people are really surprised by the things that we deal with.
So you, you know, you heard some of the blunders last week.
And so then we, we got quite a few good
(00:52):
questions here after after that and and so
i think uh you know listen in
on these and i think we answered them pretty well yeah i think
the uh the thing that really stood out for me was that normally
it's you me these walls right uh some uh buyer search letters some furniture
(01:13):
get the furniture that uh that hear these and so to actually be in front of
a live audience to see that people are enjoying the stories and the give and take.
So got a lot of good feedback from the people in attendance,
which was very nice to hear. Right.
They like us. They really like us.
(01:33):
And I think the other thing that came out of this, too, is I think we have some
potential guests for the future.
Which is something that we always love to see.
I think that we actually hit the stop button, But the one question that was
really a little disheartening was the one right after we hit the stop button and someone said,
(01:57):
you know, these podcast things look pretty easy.
I was like, please don't say it's easy.
We just make it look easy. Well, without further ado, let's get to the Q&A and
we'll be back to wrap it up. And then we'll be back next week with a more traditional
(02:17):
episode of just you and me.
Enjoy the Q&A from the Entrepreneur's Alliance.
So any questions that you guys have, we would love to take those.
And when I say we would love to take those, we really kind of need them because
we're kind of counting on this as being a two-parter.
So stretch it out a little bit. So fire away. Terry?
Yeah. So the question was when the owner is so involved in the business and
(02:42):
the business is so reliant that when they sell that the business may take a hit.
That goes into some of the planning and preparation,
the stage that's often most forgotten when somebody is selling the business
is planning and preparing for sale and kind of goes back to that comment about
(03:03):
the things that are valued as an owner.
Owner, those are the things that get overlooked because they're involved in the business.
And I fell victim to this myself. I had a shop and I took it as a source of
pride that I knew every client by name.
I knew what their likes were, what their dislikes weren't. And then they'd come
(03:26):
in and be like, well, we like better working with you because the employees,
they don't really take as good of care of us. And it's like,
well, that's a, that makes me feel good.
And you step back and you're like, that should make me feel horrible.
Like that should make me, that should be like the worst thing somebody could say.
So, you know, the advice there is that you've got to, you've got to think three to five years out.
(03:51):
You know, one of the things that I'll say to people that is,
as they're looking at selling their businesses, plan that you're going to sell it in five years.
And then at the end of five years, decide, are you going to buy it back?
Or are you going to put it on the open market?
But either way, if you're always managing your business towards the end in mind
with an exit and with that sale, you're going to run an efficient business and
(04:13):
you're not going to cut some of the corners that we've talked about.
Do you have anything to add? Totally agree.
All right. Good answer. Thank you. It is a common problem and it is one where
we struggle with business owners and trying to get them to understand the value
of their business us is taking a big hit because the risk involved for a buyer
(04:35):
to take that over. So huge problem.
Okay. The question is, if you've got somebody with multiple entities and you've
got an accountant who's working for one or the other, how are they being,
basically, how's the cost being allocated, right?
A salesperson, it could be just any role within a company.
(04:56):
Yeah, you know, I guess in the situations that we've seen, we've got two companies
where we'd have separate employees. An accountant is probably outsourced accounting.
So how they're paying for that, I don't know. We have seen companies that have
administrative fees allocated to both sides.
(05:16):
So where they figure out the time for each function that they're putting on,
whether it's sales or accounting.
And so as long as there's some allocation, reasonable allocation to both businesses,
then that's what we're looking for. I think it also complicates if you're only
(05:37):
wanting to sell one of those entities.
If you're selling them both together, it's not going to be as complicated to
sell both together versus if, oh, I only want to sell this one.
That's where it becomes, that's where the waters get muddied and questions start
arising about like intercompany transactions.
Actions so has tim been on our on our podcast we should we should probably have him on our podcast.
(06:04):
So uh so i well one of the things i wanted i wanted to say there is we are not
accountants we're not cpas we're not legal advisors uh disclaimer i think you
guys all signed that when you came in here today.
So, yes, Jason.
Stop the geek out, man.
(06:30):
Why did you start a podcast? Why are you continuing? How do you keep it going? Have you seen benefit?
Yeah, so why did we start a podcast? Andy told me we should have a podcast.
Yeah, I was kind of bored one day.
Andy's had a podcast experience.
And obviously has the personality for it. It was another way to get a message out.
(06:54):
And we have a lot of stories that you can't get into a blog.
And so we kind of went into this thinking, well, yeah, we can do something.
And I think we were challenged a little bit. We've had other brokers out there
who had reached 20 or 30 podcasts, and then you never hear from them again.
And we have lots of stories to tell.
(07:17):
I think the reason why we've been able to keep it going is that we're not trying to do our episodes.
We're trying to do 15 minutes. We're trying to make it real bite size. It's not.
You know, there's certainly some weeks where finding content is tough,
and then all of a sudden we've got a seller or a buyer that just,
by the hand of God, just delivered right to us.
(07:39):
Like, that did something that, you know, you're driving in and you're like,
I need some podcast content today.
And it's like, you hear somebody over. And then the phone rings.
Oh, well, thank you for that. So, yeah, so the consistency, you know,
is really is that I don't know that it is a massive time constraint for either of us.
(08:00):
I think if we had to commit to doing an hour content plus editing,
plus, you know, all of that stuff, and it became like a four or five hour thing
each week that, you know, it probably wouldn't have lasted that long.
But I think the fact we're doing it about 15 minutes and from an editing standpoint,
it probably takes about three minutes for every minute of recording.
(08:22):
So to edit it, especially if you're ums.
So there's a lot that goes on the on the back end.
But if you're trying to do, you know, 60, 90, 120 minutes and then you're adding
four or five hours of editing, that's where I think a lot of people would would fall down.
And it's also obviously another way for us to market Apex.
(08:46):
You know, it's another hit, it's another touch.
Somebody can go to our website and see it, download, subscribe, like, right?
And be part of that and get those updates every week. Do you attract additional
activity then to your social sites?
I think it's hard to measure exactly. Exactly. Our traffic has definitely increased
(09:11):
over the last couple of years.
And there are a lot of reasons for that, you know, with all the other marketing
things that we're doing. But I think the podcast helps.
And for us, it is another way to get the message out and answer a lot of questions.
We are interviewing people that are professionals that are part of our world.
(09:31):
So we can, you know, it's a great way to communicate what we do.
Yeah, and it's evergreen. So, you know, people can go back to where,
just because we recorded something today on, you know, the 10 steps to buying
a business, doesn't mean that that's going to be relevant to somebody that day,
(09:52):
six months down the road or a year down the road, they may be scrolling through
and go, that's an episode I should listen to.
Kind of going back to why we started it. For me, actually, it was,
I was in Doug's office a lot, asking a lot of questions when I first started.
And it's like, we should probably just record this.
And then, then I don't feel like I'm just constantly in there bothering him.
(10:14):
Now I have like an appointment to kind of pick his brain.
And, you know, he committed to doing 10 episodes with me. And I think that we've
ran just a little bit past that.
But it was just really kind of an educational thing for me as a as a new broker
to get kind of up to speed and get new, new information or discuss things like,
(10:36):
Hey, I'm seeing this, how should I react to that?
Or Hey, I'm seeing that. And there's not really a manual you can hand to people in our world.
Because again, we don't know when Darla is going to show up and we hope Darla
is going to show up and that she's in a good mood and we'll sign some papers.
I had a broker one time. She's not with us anymore. She's alive.
She's just not with us anymore.
(10:58):
It's like the Hotel California here. You know, she had asked,
why don't we have a process, you know, like a Gantt chart?
Here's what you do. And I'm like, go, go for it. Try it.
Do three deals and see if you have the same chart.
Every deal is different. All the personalities are different.
The advisors are different.
(11:19):
The ups and downs in a deal and all the steps, the title companies,
whether it's real estate or not, there's so many pieces to it that you just
can't put one process together for it.
The IBBA actually has a training class on a deal structure, and it is a 12-page spreadsheet.
(11:42):
Printed out, it's 12 pages of the little lines of all the things that could
be done in a transaction. action.
I like to just hand that over to buyers and sellers without any context around it.
Here's your deal. When you get this completed, let me know. Let me know.
As you can see, there's nothing checked in there for brokers' responsibility.
It's all buyer and seller.
(12:03):
So just give me a holler when it's time to go pick up the check.
So I think we had a question over here. Yeah, correct.
Yeah. So the question was, what percentage of owners are just not receptive
to the advice, the input, the feedback, is that fair? Yeah.
We make up statistics all the time. Just make up a stat.
(12:24):
They won't know. They can't check it. I would say the sellers that we actually
engage with, most of them are listening to us.
The ones that we disqualify, I think we try to learn early on whether they're
going to be listening to advice or not.
We do have a client now the second time through
with this client who still isn't listening to advice
(12:47):
and then at some point you have to
decide whether you're going to fire a client and so we get
we get real close we try to we really try to help people
and and give them guidance and tell them
how things are supposed to work how they're really going to work and
if they just can't get that or
constantly resistant to it then we're
(13:10):
just wasting time yeah i think the ones that are
the toughest ones that don't listen to the
advice are ones that have some sort of background or
experience in real estate whether it's through the
sale of houses or rental property or something because they think that this
transaction is going to go just like a real estate transaction is going to go
and so they put that lens on a business transaction and there's similarities
(13:36):
but the similarities aren't as as much as, as you would actually think.
There's probably about 50 to 60% of that is similar, a similar process.
And then there's subtle nuances that make it drastically different.
And so those are the people that it's kind of the people that want to walk into
the auto mechanic shop and tell them, all right, it's this belt and I need it
(13:59):
this fixed, and this is how you do it and, and it's generally not that belt
and it's generally something else.
And those are the ones that, that really present the challenges.
18 percent, 27 percent to direct an answer. 27 percent.
Yes. Well, two parts, I guess. So if someone starts to think it.
(14:21):
Well, the question is, how long does it take? The process, how long does it take?
Doug likes for people to show up on Friday and expect for the business to be
sold on Monday. That's his favorite thing. Right, right. If you've got one of those.
We have had those before, too, come in on Friday.
So if we are working with somebody and we're planning three to five years ahead,
(14:42):
then those deals usually sell pretty quickly.
Our typical client is coming in on Friday and saying, I'd like to sell now.
They've avoided us for three years.
Now they want to sell. So we haven't done any planning. We haven't done any strategy.
So now we're going to be telling them Your business is worth this,
not what you were thinking.
(15:04):
And it's going to take nine months to a year to sell.
We have had several deals. I've got one under contract right now.
It's taken two years to sell.
But we have plenty where we've got them under contract within a month.
We do say industry-wide, it's nine months to a year to sell a business.
So planning is really critical because you get better value and a quicker deal.
(15:28):
And it goes back to a lot of the operational pieces that we talked about.
There's a lot of things that can quickly be cleaned up that will make the deal
more attractive to a buyer.
And so if you're coming in and I'm ready, I'm done, I'm burnt out,
I'm ready to go. Those are the ones where it takes a little bit longer because
there hasn't been any planning.
(15:50):
And those are the ones that can drag out versus the ones that we've worked with
for anywhere from six months to two years, helping with the prep and plan.
And, you know, and sometimes even within that six months to two years,
a buyer will reveal it, reveal themselves.
And, you know, and they're on the path and it's like, Hey, you know,
(16:10):
you might not get all the way to here, but we've got somebody that seriously
is looking at your business.
And so we can, we can introduce that person.
I mean,
a sliding scale. I'm sorry. The question is, do we, you know, it's funny.
(16:31):
We get people who will complain because we sold it quickly and complain if it takes too long.
So, there's no real win there and so our scale, if you're talking about how
we charge fees, is based on the size of the deal.
So anywhere from 50% to 25% of the day. Yeah.
(16:57):
Well, and if you're going to be a pain, then we definitely put a,
we definitely put a. We have, there is a premium.
There is a premium. If somebody, if we know going in, somebody is going to be
difficult. They've got a great business, but they're going to be difficult.
Then that sliding scale is going to change. Yeah.
Jason. You had talked about fraudulent and you talked about firing clients.
(17:19):
When a client does something fraudulent, you have to fire them.
What's your favorite fraud that clients... Jason's question is,
what's your favorite fraud that clients commit?
And we still keep them on. And you'll still keep them on and cover for them.
Do we have to fire a client if we know that they are creating,
that they've committed fraud?
(17:40):
What we want... So everybody knows the financial issue. That's apparent, right?
It's the other things that may be material to a
business if we know about it then we
want it disclosed and so if the seller doesn't
disclose it we'll disclose it and I think our view is I'll have an easier time
(18:01):
in front of a judge saying even though this is my client I needed to tell the
buyer because the seller wouldn't and so I'm going to disclose it if they don't
do it if it's material to of the business.
We don't have too many people. We have a client right now who is under indictment
on a couple of charges, but unrelated to the business.
(18:23):
So we're selling the business. He may go to jail on this other thing,
but he was taking money from the government, but that's unrelated to the business.
So that is disclosed. Google the guy's name. It's out there,
but it's not related into the business.
We do have an obligation to, if we know something material and the seller doesn't
(18:45):
tell the buyer, we have an obligation to tell the buyer.
If it's material, then we have to tell them.
Yes, sir. Sure. Yep. Insurance claims are my expertise.
And so my question is, if a buyer or seller are lining up to do a deal and then
(19:05):
there's a fire or there's a storm or a car runs into a building or something happens,
how does that turn off the whole deal?
Or do sometimes people get more excited because maybe there's some insurance proceeds coming?
So just kind of elaborate on that. What's a catastrophic event due to a deal?
(19:25):
Well, it'll kill the deal. So that's pretty straightforward.
And until that gets cleared up, you know, that deal's on hold.
That'd be a typical buyer response. They're not going to see an opportunity there.
And so if it's a slip fall, for example, and that's happened where that needs
to be settled before closing.
So that business owner needs to handle it with their insurance company,
(19:49):
then we can close the deal.
So one last question, anybody?
Anything? You ready to wrap it up? I think I know the answer from a previous episode,
but for the sake of the episode title and helping sellers prepare to sell,
(20:10):
is it ever a good time to let employees know.
That the company is up for sale.
Is it ever a good time to let the employees know the company is for sale?
Yes. Yes. There is a good time. And usually it's at closing or after closing.
(20:32):
And so now there are cases where you've got an elderly owner and people know that they are selling.
You've got a client right now, but employees know.
We had to market it as this is the business. And the employees know.
They talked to them. They said, listen, we're retiring.
We've got to retire sometime. time and so we're looking for a buyer to take
(20:55):
it's going to take over and take care of you all,
yeah the employees are our biggest asset so you guys are important and we have
not had any issues with that but that's that's rare usually a business owner
is not going to tell their employees,
until after closing and then there's going to be for a joint meeting with the
buyer and the seller and there's going to be a big rah-rah and here's what you
(21:18):
know buyer's going to bring in all this energy and excitement and give you 50 cent raise.
I think there is a time where to bring in a few key employees.
And we see deals with that where a select few people know about it.
It's got to be people that you know and trust.
Or I'm working on a deal right now where, to Doug's point, the seller's at a
(21:43):
retirement age and the administrative staff is pulling every report that we
ask for in due diligence.
So now the rank and file, the folks that are out in the field have no idea,
or maybe they, maybe they do, but the office people all know,
and they are, they are all very comfortable with it.
And, you know, it's not that big of a deal for them, but it's,
(22:05):
it's a calculated risk on who
you tell, because we've ran into situations where he's like a son to me.
He's like a son. Yeah. And.
Son just robbed you blind when you told him.
So it's calculated risk. That was last year, I think. That happened. Okay.
(22:27):
Any types of instances. We haven't done strip joints in a while.
So we did one. We did have a gentleman's club once, and a female broker was
the one that brought it in.
And we had a little meeting with everybody and said, okay, is this something
that we want to do? It's a little weird, but they had tax returns.
(22:49):
They reported their income, probably not all of it. And we had so many buyers
from New Jersey wanting to find out who that, what that strip club was.
So we ended up canceling that engagement after a little while because it just
was kind of unsavory and we just didn't want to be involved.
Right, right, right. I'd run out of tip money.
So we don't, we typically don't do medical practices because that's just not, that's a specialty.
(23:16):
And there are plenty of brokers out there that focus on that.
But most businesses, if we'd say if it's legal and it's profitable, we can handle it.
Thank you. Thanks. Great question. Appreciate it. It's through the applause. Yay. Yeah.
Once again, thank you to the Entrepreneurs Alliance for asking Doug and I to
(23:36):
do a live podcast, live Q&A.
I think that was something that we really enjoyed. And quite frankly,
I think we should be taking our show on the road.
Never been done before, but I think we could do it. You know,
we got back from the IBBA conference a couple weeks ago.
I mean, IPBA should have been having us do a live podcast up there.
(23:59):
You know what? We should have offered it up. They might have accepted it.
I didn't think about that. Yeah.
The Hall of Fame induction was a little dry. They needed us.
We could have been presenting while they were doing that. We could have been
emceeing it, basically, for the podcast.
Can we offer that up next year? Use your stroke to get us, you know,
(24:22):
as an IBBA main contributor that you are.
Contributor, yeah. Huge contributor to the organization.
You really should use your influence to get us a prominent space up on the stage.
All right. Well, until Doug and I get to go sit on the stage and do the Hall
of Fame induction and probably the opening ceremony of the IBBA conference next
(24:45):
year, Until then, you're just going to have to settle for all the content that
we're putting out on the Apex website,
kcapex.com.
That's your one-stop shop for everything you need to know about buying or selling
a business, including for those sellers out there that are looking at the question
that they're all asking, what's my business worth?
We've got valuation tools out there that you can look to see how the market
(25:09):
would view your business if you wanted to sell today, or even better,
how the market would view your business, and you can plan for your sale three,
five years down the road.
So until then, if you are looking at buying or selling a business, we got you, fam.
Music.
Music.
(00:08):
Welcome back to the Apex Business Advisors podcast. I'm your host,
Andy Kavanaugh, joined as always by the president of Apex, Doug Hubler.
Doug, we are back for the Q&A from the Entrepreneurs Alliance live episode that
we did a couple weeks ago. Mm-hmm. Yep.
Anything you want to say about these people?
(00:30):
Well, they had some great questions. I think that, you know, it was fun.
I enjoyed that live episode and kind of fed off of their energy.
I think they were enjoying, you know, some of the stories we were telling because
I think people are really surprised by the things that we deal with.
So you, you know, you heard some of the blunders last week.
And so then we, we got quite a few good
(00:52):
questions here after after that and and so
i think uh you know listen in
on these and i think we answered them pretty well yeah i think
the uh the thing that really stood out for me was that normally
it's you me these walls right uh some uh buyer search letters some furniture
(01:13):
get the furniture that uh that hear these and so to actually be in front of
a live audience to see that people are enjoying the stories and the give and take.
So got a lot of good feedback from the people in attendance,
which was very nice to hear. Right.
They like us. They really like us.
(01:33):
And I think the other thing that came out of this, too, is I think we have some
potential guests for the future.
Which is something that we always love to see.
I think that we actually hit the stop button, But the one question that was
really a little disheartening was the one right after we hit the stop button and someone said,
(01:57):
you know, these podcast things look pretty easy.
I was like, please don't say it's easy.
We just make it look easy. Well, without further ado, let's get to the Q&A and
we'll be back to wrap it up. And then we'll be back next week with a more traditional
(02:17):
episode of just you and me.
Enjoy the Q&A from the Entrepreneur's Alliance.
So any questions that you guys have, we would love to take those.
And when I say we would love to take those, we really kind of need them because
we're kind of counting on this as being a two-parter.
So stretch it out a little bit. So fire away. Terry?
Yeah. So the question was when the owner is so involved in the business and
(02:42):
the business is so reliant that when they sell that the business may take a hit.
That goes into some of the planning and preparation,
the stage that's often most forgotten when somebody is selling the business
is planning and preparing for sale and kind of goes back to that comment about
(03:03):
the things that are valued as an owner.
Owner, those are the things that get overlooked because they're involved in the business.
And I fell victim to this myself. I had a shop and I took it as a source of
pride that I knew every client by name.
I knew what their likes were, what their dislikes weren't. And then they'd come
(03:26):
in and be like, well, we like better working with you because the employees,
they don't really take as good of care of us. And it's like,
well, that's a, that makes me feel good.
And you step back and you're like, that should make me feel horrible.
Like that should make me, that should be like the worst thing somebody could say.
So, you know, the advice there is that you've got to, you've got to think three to five years out.
(03:51):
You know, one of the things that I'll say to people that is,
as they're looking at selling their businesses, plan that you're going to sell it in five years.
And then at the end of five years, decide, are you going to buy it back?
Or are you going to put it on the open market?
But either way, if you're always managing your business towards the end in mind
with an exit and with that sale, you're going to run an efficient business and
(04:13):
you're not going to cut some of the corners that we've talked about.
Do you have anything to add? Totally agree.
All right. Good answer. Thank you. It is a common problem and it is one where
we struggle with business owners and trying to get them to understand the value
of their business us is taking a big hit because the risk involved for a buyer
(04:35):
to take that over. So huge problem.
Okay. The question is, if you've got somebody with multiple entities and you've
got an accountant who's working for one or the other, how are they being,
basically, how's the cost being allocated, right?
A salesperson, it could be just any role within a company.
(04:56):
Yeah, you know, I guess in the situations that we've seen, we've got two companies
where we'd have separate employees. An accountant is probably outsourced accounting.
So how they're paying for that, I don't know. We have seen companies that have
administrative fees allocated to both sides.
(05:16):
So where they figure out the time for each function that they're putting on,
whether it's sales or accounting.
And so as long as there's some allocation, reasonable allocation to both businesses,
then that's what we're looking for. I think it also complicates if you're only
(05:37):
wanting to sell one of those entities.
If you're selling them both together, it's not going to be as complicated to
sell both together versus if, oh, I only want to sell this one.
That's where it becomes, that's where the waters get muddied and questions start
arising about like intercompany transactions.
Actions so has tim been on our on our podcast we should we should probably have him on our podcast.
(06:04):
So uh so i well one of the things i wanted i wanted to say there is we are not
accountants we're not cpas we're not legal advisors uh disclaimer i think you
guys all signed that when you came in here today.
So, yes, Jason.
Stop the geek out, man.
(06:30):
Why did you start a podcast? Why are you continuing? How do you keep it going? Have you seen benefit?
Yeah, so why did we start a podcast? Andy told me we should have a podcast.
Yeah, I was kind of bored one day.
Andy's had a podcast experience.
And obviously has the personality for it. It was another way to get a message out.
(06:54):
And we have a lot of stories that you can't get into a blog.
And so we kind of went into this thinking, well, yeah, we can do something.
And I think we were challenged a little bit. We've had other brokers out there
who had reached 20 or 30 podcasts, and then you never hear from them again.
And we have lots of stories to tell.
(07:17):
I think the reason why we've been able to keep it going is that we're not trying to do our episodes.
We're trying to do 15 minutes. We're trying to make it real bite size. It's not.
You know, there's certainly some weeks where finding content is tough,
and then all of a sudden we've got a seller or a buyer that just,
by the hand of God, just delivered right to us.
(07:39):
Like, that did something that, you know, you're driving in and you're like,
I need some podcast content today.
And it's like, you hear somebody over. And then the phone rings.
Oh, well, thank you for that. So, yeah, so the consistency, you know,
is really is that I don't know that it is a massive time constraint for either of us.
(08:00):
I think if we had to commit to doing an hour content plus editing,
plus, you know, all of that stuff, and it became like a four or five hour thing
each week that, you know, it probably wouldn't have lasted that long.
But I think the fact we're doing it about 15 minutes and from an editing standpoint,
it probably takes about three minutes for every minute of recording.
(08:22):
So to edit it, especially if you're ums.
So there's a lot that goes on the on the back end.
But if you're trying to do, you know, 60, 90, 120 minutes and then you're adding
four or five hours of editing, that's where I think a lot of people would would fall down.
And it's also obviously another way for us to market Apex.
(08:46):
You know, it's another hit, it's another touch.
Somebody can go to our website and see it, download, subscribe, like, right?
And be part of that and get those updates every week. Do you attract additional
activity then to your social sites?
I think it's hard to measure exactly. Exactly. Our traffic has definitely increased
(09:11):
over the last couple of years.
And there are a lot of reasons for that, you know, with all the other marketing
things that we're doing. But I think the podcast helps.
And for us, it is another way to get the message out and answer a lot of questions.
We are interviewing people that are professionals that are part of our world.
(09:31):
So we can, you know, it's a great way to communicate what we do.
Yeah, and it's evergreen. So, you know, people can go back to where,
just because we recorded something today on, you know, the 10 steps to buying
a business, doesn't mean that that's going to be relevant to somebody that day,
(09:52):
six months down the road or a year down the road, they may be scrolling through
and go, that's an episode I should listen to.
Kind of going back to why we started it. For me, actually, it was,
I was in Doug's office a lot, asking a lot of questions when I first started.
And it's like, we should probably just record this.
And then, then I don't feel like I'm just constantly in there bothering him.
(10:14):
Now I have like an appointment to kind of pick his brain.
And, you know, he committed to doing 10 episodes with me. And I think that we've
ran just a little bit past that.
But it was just really kind of an educational thing for me as a as a new broker
to get kind of up to speed and get new, new information or discuss things like,
(10:36):
Hey, I'm seeing this, how should I react to that?
Or Hey, I'm seeing that. And there's not really a manual you can hand to people in our world.
Because again, we don't know when Darla is going to show up and we hope Darla
is going to show up and that she's in a good mood and we'll sign some papers.
I had a broker one time. She's not with us anymore. She's alive.
She's just not with us anymore.
(10:58):
It's like the Hotel California here. You know, she had asked,
why don't we have a process, you know, like a Gantt chart?
Here's what you do. And I'm like, go, go for it. Try it.
Do three deals and see if you have the same chart.
Every deal is different. All the personalities are different.
The advisors are different.
(11:19):
The ups and downs in a deal and all the steps, the title companies,
whether it's real estate or not, there's so many pieces to it that you just
can't put one process together for it.
The IBBA actually has a training class on a deal structure, and it is a 12-page spreadsheet.
(11:42):
Printed out, it's 12 pages of the little lines of all the things that could
be done in a transaction. action.
I like to just hand that over to buyers and sellers without any context around it.
Here's your deal. When you get this completed, let me know. Let me know.
As you can see, there's nothing checked in there for brokers' responsibility.
It's all buyer and seller.
(12:03):
So just give me a holler when it's time to go pick up the check.
So I think we had a question over here. Yeah, correct.
Yeah. So the question was, what percentage of owners are just not receptive
to the advice, the input, the feedback, is that fair? Yeah.
We make up statistics all the time. Just make up a stat.
(12:24):
They won't know. They can't check it. I would say the sellers that we actually
engage with, most of them are listening to us.
The ones that we disqualify, I think we try to learn early on whether they're
going to be listening to advice or not.
We do have a client now the second time through
with this client who still isn't listening to advice
(12:47):
and then at some point you have to
decide whether you're going to fire a client and so we get
we get real close we try to we really try to help people
and and give them guidance and tell them
how things are supposed to work how they're really going to work and
if they just can't get that or
constantly resistant to it then we're
(13:10):
just wasting time yeah i think the ones that are
the toughest ones that don't listen to the
advice are ones that have some sort of background or
experience in real estate whether it's through the
sale of houses or rental property or something because they think that this
transaction is going to go just like a real estate transaction is going to go
and so they put that lens on a business transaction and there's similarities
(13:36):
but the similarities aren't as as much as, as you would actually think.
There's probably about 50 to 60% of that is similar, a similar process.
And then there's subtle nuances that make it drastically different.
And so those are the people that it's kind of the people that want to walk into
the auto mechanic shop and tell them, all right, it's this belt and I need it
(13:59):
this fixed, and this is how you do it and, and it's generally not that belt
and it's generally something else.
And those are the ones that, that really present the challenges.
18 percent, 27 percent to direct an answer. 27 percent.
Yes. Well, two parts, I guess. So if someone starts to think it.
(14:21):
Well, the question is, how long does it take? The process, how long does it take?
Doug likes for people to show up on Friday and expect for the business to be
sold on Monday. That's his favorite thing. Right, right. If you've got one of those.
We have had those before, too, come in on Friday.
So if we are working with somebody and we're planning three to five years ahead,
(14:42):
then those deals usually sell pretty quickly.
Our typical client is coming in on Friday and saying, I'd like to sell now.
They've avoided us for three years.
Now they want to sell. So we haven't done any planning. We haven't done any strategy.
So now we're going to be telling them Your business is worth this,
not what you were thinking.
(15:04):
And it's going to take nine months to a year to sell.
We have had several deals. I've got one under contract right now.
It's taken two years to sell.
But we have plenty where we've got them under contract within a month.
We do say industry-wide, it's nine months to a year to sell a business.
So planning is really critical because you get better value and a quicker deal.
(15:28):
And it goes back to a lot of the operational pieces that we talked about.
There's a lot of things that can quickly be cleaned up that will make the deal
more attractive to a buyer.
And so if you're coming in and I'm ready, I'm done, I'm burnt out,
I'm ready to go. Those are the ones where it takes a little bit longer because
there hasn't been any planning.
(15:50):
And those are the ones that can drag out versus the ones that we've worked with
for anywhere from six months to two years, helping with the prep and plan.
And, you know, and sometimes even within that six months to two years,
a buyer will reveal it, reveal themselves.
And, you know, and they're on the path and it's like, Hey, you know,
(16:10):
you might not get all the way to here, but we've got somebody that seriously
is looking at your business.
And so we can, we can introduce that person.
I mean,
a sliding scale. I'm sorry. The question is, do we, you know, it's funny.
(16:31):
We get people who will complain because we sold it quickly and complain if it takes too long.
So, there's no real win there and so our scale, if you're talking about how
we charge fees, is based on the size of the deal.
So anywhere from 50% to 25% of the day. Yeah.
(16:57):
Well, and if you're going to be a pain, then we definitely put a,
we definitely put a. We have, there is a premium.
There is a premium. If somebody, if we know going in, somebody is going to be
difficult. They've got a great business, but they're going to be difficult.
Then that sliding scale is going to change. Yeah.
Jason. You had talked about fraudulent and you talked about firing clients.
(17:19):
When a client does something fraudulent, you have to fire them.
What's your favorite fraud that clients... Jason's question is,
what's your favorite fraud that clients commit?
And we still keep them on. And you'll still keep them on and cover for them.
Do we have to fire a client if we know that they are creating,
that they've committed fraud?
(17:40):
What we want... So everybody knows the financial issue. That's apparent, right?
It's the other things that may be material to a
business if we know about it then we
want it disclosed and so if the seller doesn't
disclose it we'll disclose it and I think our view is I'll have an easier time
(18:01):
in front of a judge saying even though this is my client I needed to tell the
buyer because the seller wouldn't and so I'm going to disclose it if they don't
do it if it's material to of the business.
We don't have too many people. We have a client right now who is under indictment
on a couple of charges, but unrelated to the business.
(18:23):
So we're selling the business. He may go to jail on this other thing,
but he was taking money from the government, but that's unrelated to the business.
So that is disclosed. Google the guy's name. It's out there,
but it's not related into the business.
We do have an obligation to, if we know something material and the seller doesn't
(18:45):
tell the buyer, we have an obligation to tell the buyer.
If it's material, then we have to tell them.
Yes, sir. Sure. Yep. Insurance claims are my expertise.
And so my question is, if a buyer or seller are lining up to do a deal and then
(19:05):
there's a fire or there's a storm or a car runs into a building or something happens,
how does that turn off the whole deal?
Or do sometimes people get more excited because maybe there's some insurance proceeds coming?
So just kind of elaborate on that. What's a catastrophic event due to a deal?
(19:25):
Well, it'll kill the deal. So that's pretty straightforward.
And until that gets cleared up, you know, that deal's on hold.
That'd be a typical buyer response. They're not going to see an opportunity there.
And so if it's a slip fall, for example, and that's happened where that needs
to be settled before closing.
So that business owner needs to handle it with their insurance company,
(19:49):
then we can close the deal.
So one last question, anybody?
Anything? You ready to wrap it up? I think I know the answer from a previous episode,
but for the sake of the episode title and helping sellers prepare to sell,
(20:10):
is it ever a good time to let employees know.
That the company is up for sale.
Is it ever a good time to let the employees know the company is for sale?
Yes. Yes. There is a good time. And usually it's at closing or after closing.
(20:32):
And so now there are cases where you've got an elderly owner and people know that they are selling.
You've got a client right now, but employees know.
We had to market it as this is the business. And the employees know.
They talked to them. They said, listen, we're retiring.
We've got to retire sometime. time and so we're looking for a buyer to take
(20:55):
it's going to take over and take care of you all,
yeah the employees are our biggest asset so you guys are important and we have
not had any issues with that but that's that's rare usually a business owner
is not going to tell their employees,
until after closing and then there's going to be for a joint meeting with the
buyer and the seller and there's going to be a big rah-rah and here's what you
(21:18):
know buyer's going to bring in all this energy and excitement and give you 50 cent raise.
I think there is a time where to bring in a few key employees.
And we see deals with that where a select few people know about it.
It's got to be people that you know and trust.
Or I'm working on a deal right now where, to Doug's point, the seller's at a
(21:43):
retirement age and the administrative staff is pulling every report that we
ask for in due diligence.
So now the rank and file, the folks that are out in the field have no idea,
or maybe they, maybe they do, but the office people all know,
and they are, they are all very comfortable with it.
And, you know, it's not that big of a deal for them, but it's,
(22:05):
it's a calculated risk on who
you tell, because we've ran into situations where he's like a son to me.
He's like a son. Yeah. And.
Son just robbed you blind when you told him.
So it's calculated risk. That was last year, I think. That happened. Okay.
(22:27):
Any types of instances. We haven't done strip joints in a while.
So we did one. We did have a gentleman's club once, and a female broker was
the one that brought it in.
And we had a little meeting with everybody and said, okay, is this something
that we want to do? It's a little weird, but they had tax returns.
(22:49):
They reported their income, probably not all of it. And we had so many buyers
from New Jersey wanting to find out who that, what that strip club was.
So we ended up canceling that engagement after a little while because it just
was kind of unsavory and we just didn't want to be involved.
Right, right, right. I'd run out of tip money.
So we don't, we typically don't do medical practices because that's just not, that's a specialty.
(23:16):
And there are plenty of brokers out there that focus on that.
But most businesses, if we'd say if it's legal and it's profitable, we can handle it.
Thank you. Thanks. Great question. Appreciate it. It's through the applause. Yay. Yeah.
Once again, thank you to the Entrepreneurs Alliance for asking Doug and I to
(23:36):
do a live podcast, live Q&A.
I think that was something that we really enjoyed. And quite frankly,
I think we should be taking our show on the road.
Never been done before, but I think we could do it. You know,
we got back from the IBBA conference a couple weeks ago.
I mean, IPBA should have been having us do a live podcast up there.
(23:59):
You know what? We should have offered it up. They might have accepted it.
I didn't think about that. Yeah.
The Hall of Fame induction was a little dry. They needed us.
We could have been presenting while they were doing that. We could have been
emceeing it, basically, for the podcast.
Can we offer that up next year? Use your stroke to get us, you know,
(24:22):
as an IBBA main contributor that you are.
Contributor, yeah. Huge contributor to the organization.
You really should use your influence to get us a prominent space up on the stage.
All right. Well, until Doug and I get to go sit on the stage and do the Hall
of Fame induction and probably the opening ceremony of the IBBA conference next
(24:45):
year, Until then, you're just going to have to settle for all the content that
we're putting out on the Apex website,
kcapex.com.
That's your one-stop shop for everything you need to know about buying or selling
a business, including for those sellers out there that are looking at the question
that they're all asking, what's my business worth?
We've got valuation tools out there that you can look to see how the market
(25:09):
would view your business if you wanted to sell today, or even better,
how the market would view your business, and you can plan for your sale three,
five years down the road.
So until then, if you are looking at buying or selling a business, we got you, fam.
Music.
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