Exit Planning

Many firms focus on issues that affect them right now, such as marketing, HR, sales, cash flow, and so on. Having or formulating an exit strategy for them is unrealistic since they do not expect to sell their company anytime soon. However, you cannot avoid departing your business, and research found that over 70% of businesses had no exit strategy at all. Having an exit strategy plan as soon as necessary can benefit you and your business since you will have a clearer picture of what your business will be in the future, giving you recommendations on how to develop it today.

In today's podcasts, Kit invited Gerald Radican of Veritas Financial, and Rick Scruggs of Financial Designs and they talked about the importance of having an exit strategy in your business. The episode starts with telling background information about our guests and what are the benefits of formulating exit strategies for your business. They also share the ideal Time Frame to set to have a successful exit strategy and what are the factors to look at during the set time frame. They notably said that in every business, solutions, and processes are different from each other as they said no one solution fits all. They also share some case examples from their experience and lastly they provide some insights and lessons learned from their many years in business.

If you're interested in learning more about organic growth, growth by acquisition, or the increase of capitalization of your company, this will be interesting and useful for you.


Key Takeaways

The Benefits in Collaboration with Firms That Can Advise Exit Plans in Businesses.
The Optimum Time Frame in Selling Business and The Factors To Look at
Doing Due Diligence is Still Important in the Exit Plan Strategy
The Difference between Our Guest from The Others
Challenges and Big Lessons That The Guests Learn in This Business Journey

Quotes

Every situation is going to vary. It's going to depend on the size of company ownership, and tax status as an S-corp or C-Corp. So one size does not fit all. - Gerald

It's lonely at the top, in the sense that you have no one on your team to talk to about succession, selling the business, or planning to sell the business until the moment is right. -Kit

I would say that what differentiates us is We run a personal financial plan parallel to a business plan every time we work with business owners and we come in often to find out that no business owners ever really do a personal financial plan. - Gerald

What sets us apart from other businesses is that we want to listen first, then ask excellent questions before offering answers. - Rick

Featured on this Episode

Christopher Lisle
Growth strategy advisor for the ecosystem of investors, IBanks, and the companies they work with (middle market).
Linkedin: https://www.linkedin.com/in/kit-lisle
Websites: Acclaropartners.com / http://strategicgrowthcouncil.com/
Contact: [e-mail] / 703-867-7269

Gerald J Radican
Partner At Veritas Financial
Profile: vfwealth.com/team/gerald-radican
Linkedin: https://www.linkedin.com/in/gerald-j-radican
Website: https://vfwealth.com

Rick Scruggs, CLU, ChFC, C(k)P
Partner At Veritas Financial | Principal at Financial Designs
Linkedin: https://www.linkedin.com/in/rick-scruggs-clu-chfc-c-k-p%C2%AE-5257a729
Website: https://www.financialdesigns.com/

Book Mentioned in the Episode
The Checklist Manifesto By Atul Gawande
Link: http://atulgawande.com/book/the-checklist-manifesto/

Words from our Sponsors

Thanks to our sponsors Acclaro Growth Partners, a strategic consulting firm serving middle-market mergers and acquisitions. You can visit acclaropartners.com. Our other sponsor, of course, is Strategic Growth Council, not the podcast, but the Peer Advisory Council slash virtual roundtable slash mastermind group for senior execs and business owners. Contemplating what an acquisition, a sale, or just strategic growth? Strategic Growth Council collaborates with participants in the M&A ecosystem, such as private equity groups, lenders, investment banks, and relevant service providers. Visit strategicgrowthcouncil.com to learn more.

Chapters
00:00 Introducti

Episode Transcript

(00:09):
Welcome to Strategic Growth Council, apodcast about strategic growth and mergers and acquisitions
for the middle market. If you'reinterested in learning more about organic growth,
growth by acquisition or the sale ofyour company, this show will be interesting
or useful for you, and ifour guests do a good job, maybe

(00:29):
both. No, I'm just kidding. Thank you to our sponsors a Claro
Growth Partners, a strategy consulting firmsserving middle market M and A. Visit
a Claropartners dot com and Strategic GrowthCounsel, the Peer Advisory Council slash Roundtable
slash Mastermind group for senior execs andbusiness owners who are contemplating acquisition or a

(00:52):
sale or just plain old strategic growth. Strategic Growth Council collaborates with participants in
the M and A ecosystem, suchis private equity groups, lenders, investment
banks, and service providers, allcollaborating to make M and A happen.
Visit Strategic Growth Council dot com tolearn more. All right, Well,
with that long intro out of theway. Every episode I interview an expert

(01:17):
or a participant in the world ofstrategy growth and M and A and today
I'm joined by Gerald Radikin of VeritasFinancial and Rick Scrugs of Financial Designs.
Welcome, gentlemen, Welcome, goodafternoon, Good afternoon, Thanks for having
us. Absolutely so, these gentlemencollaborate to help businesses with exit strategy planning

(01:44):
and a lot more than that.But we're here to talk about exit strategy
and there's a lot to think aboutin terms of prepping for the sale of
your business personally and from a businesscontinuity standpoint, and that's that's what we're
here to learn about today. Butfirst thirty sixty seconds background. We'll start

(02:05):
with Rick. Okay, so,Financial Designs as a private advisory firm and
that serves the private and family businessmarket, and we work on the issues
of continuity, succession, transition,and exit planning. And hopefully most of
our clients want to exit with tentoes down instead of ten toes up.
However, does require require planning.It's not an overnight event. And time

(02:32):
is something that we all have thesame amount of, but how we allocate
it to plan for our businesses thatwe've started, whether it was five years
ago or twenty five years ago,is critically important. And Rick, I
understand you've been in this industry fortwo or three years now, right,
I'm just kidding. Correct, we'recelebrating forty five years serving the private and

(02:55):
family business market. Wonderful, wonderful, Great, Thanks Rick Gerald. How
about yourself? Yeah, So,I'm founder of Veritas Financial. It's a
financial services firm and we really runin three lanes. Our core lane is
the comprehensive plan in and device drivenmarket and then we're flanked on one side

(03:15):
by the wealth management and the otherside by protection. I personally spend most
of my time working with the smallclosely held business owner owners either privately held
or in the family business marketplace,along with our executives. Also, you
know, several years back, alongwith several others like helped create Legacy Advisor

(03:38):
Network, which we refer to asthe Land and that's a collaboration about eighteen
different practices across the country that servesas smaller the middle market place for the
business owners for succession and exit planing. And Rick and his team down and
Lynchburger part of the network as well. So, Gerald, just elaborate a
little bit for our listeners, privateequity groups, business owners and so forth.

(04:00):
On Land. The relevance there isthat you provide more a broad line
suite of services that you than anyone individual financial planner, advisor, exit
planner would have access to in oneone fell swoop. Is that correct?
But that's correct, and think ofit more as these smaller boutique firms like

(04:23):
Rick and firm in Veritas but acrossthe country. Yeah, specializing is marketplace.
Yet one of the keys is todayis collaboration is the key of success.
Historically, the allied professionals, whetherit was accounting, legal banking,
operated in silos. And as oneof our good friends Gerald and I have

(04:46):
out of Loveick Texas says, siloshave no windows. Yep, yep,
good good. Well, So,if you're a lower middle market business,
a company with no prior exposure experiencewith a sale, no exposure to anybody
in the big world of investment banking, or even somebody like yourself a wealth

(05:11):
manager, exit planner, personal financialplanner with you have a long track record
of history of helping business owners getready to sell. What are the reasons
that they might contemplate working with you? What are the benefits of doing that?
Well? First of all, sellinga business is not a natural process.

(05:35):
For an entrepreneur, building the businesswas their entrepreneurial seizure and something that
came more naturally to them. Theydidn't see it as the risk that most
other people would view it. Thekey, though, is you have to
have time on your side, becauseyou don't get a chance to hit the

(05:55):
reset button if you make a decisionthat becomes irrevocable, and selling your business
is an irrevocable decision. That thereare serial entrepreneurs, but the vast majority
of clients at Gerald's firm and ourfirm works with they've built this they've raised
this company up to its current status, and they impact the quality of life

(06:17):
in their communities in which they're house, the employees that they hire and who
work for them, and all theircustomers and clients. So most business owners
also do not have a clear ideaof what the value of their company's worth,
and they're not aware of the arduousprocess that they might have to go

(06:39):
through to recognize the fair market valuefor their enterprise. And so you mentioned
fair market value. There's obviously alot more to it than that, but
that's a good place to start,is that is that one of the key
areas of confusion concern disconnect with thevalue of the businesses, or or there

(07:02):
are other issues where there's a sortof a disconnect in your experience. Well,
I'll start and then turn this togeneral. There's something called blue sky
value, and that's this wished forvalue that every entrepreneur business owner feels that
their business is worth. Unfortunately,until you dig into the financials, until

(07:25):
you go through whether it's an auctionprocess or you just have a strategic buyer
who wants to buy that firm,even if there's some things that are not
so attractive to the company, there'salways there's always a gap between what the
buyer wants to pay and what theseller wants to receive. And so you

(07:46):
have to have good financials, youhave to have a great management team.
But at the same time, youwant to maintain a high level of confidentiality
because if it gets out on thestreet, a customer, a client's customers
can get nervous, employees get nervous. So again, it's not a natural
process for a business owner to gothrough. So time is critical. Having

(08:09):
a team of advisors is critical tothe process. Gerald, I think you've
got some comments there. Well,yeah, I'll talk more about the team
in a second. But you noto your question about valuation. It's interesting
a soul survey from EPI, whichis an Exit Plane in Institute out of
Cleveland we do a lot of workwith. They're talking about a survey they

(08:31):
did where they said fifty six percentof the business owners felt they had a
great hand on what their valuation is. What that number was, but less
than eighteen percent had ever actually doneevaluation within the last five years. Wow,
So it's very interesting. It doesn'tmatter what the seller thinks, it's
what the buyers will in the payright. There's a huge galua. It's

(08:54):
a huge gap. And to Rick'spoints, when we really drill down into
it, they're very owners want toovervalue all day long, and so it
comes it needs us and the teamto come in to help level sat down,
increase some realistic values that Yeah,I want to talk about timing,
but first of all, just toacknowledge, Yeah, at the end of

(09:16):
the day, it is all aboutmoney. It's all about value. It's
all about what you can get.I mean, after all, you know,
why would you sell your business ifyou weren't trying to maximize shareholder value.
That's the whole purpose of a businessis the maximized shareholder value. But
I think you know, we'd beremiss if we didn't just point out that
there are a lot of elements thattie into the value of a business that

(09:37):
even business owners aren't necessarily thinking aboutor preparing for it. And some of
that has to do a succession andmanagement and articulating processes, strategies and so
forth. So in my experience asa consultant, that comes into play a
lot. But the next the nexttopic has to do with timing. And

(09:58):
you mentioned you mentioned that five yearswas the average timeframe I think you said
from when they'd actually thought about orgotten a evaluation. What is a good
time frame for a business owner tostart beginning the planning process to sell their
business? So, you know,in terms of eggsit planning, you know,

(10:22):
one of the most common important questionsany business owner can ask. It's
just that kid, it's when shouldI start actually you know my business or
start the planning. Much has beenwritten about the time to do that is
the very first day you start yourbusiness. You should start talking to exiting
now recognizing that really ever happens,M tell clients look the longer the runway

(10:43):
you can give us the better fiveto seven years ideal less than five years
and not ideal obviously, the shortertime period, the lesser options and strategies
that we can implement and watch themcome to forestion and work. The biggest
problem we see with business owners andbiggest mistakes that we see them make,

(11:03):
is they don't allow enough time forthis runway to occur. Someone comes to
say, don't want to get outin eighteen months or twenty four months,
there's very little we can do forthem, as opposed to someone says,
I got a five to seven yearwindow, right. Okay, you'll find
this interesting. So when we askthe question to these business owners, like
when they want to exit, themost common answer is going to be,
oh about five to ten years.And I say them, I go,

(11:26):
let's let's look at five years.Let's just do some quick nap. Right.
Five years is the same as onethousand, eight hundred and twenty five
days. It's the same length oftime, right. But if you have
a major future roll right, that'sfive years away. Doesn't matter if you
say that it's one eight hundred andtwenty five days away versus five years.

(11:48):
Well, apparently it doesn't. Well, apparently it does, because they're psychologists
have shown there's different surveys and whitepapers on this, that when people are
told about their goal in a certainamount of days versus years, they are
far more likely to take action immediately. Right in that same survey I'm referring

(12:09):
to, they talked about parents ofnewborns, I need to start saving for
college. And when they represented theinformation that college started in six thousand,
five hundred and seventy days versus eighteenyears, four times likely more where people

(12:31):
starting their planning when they put itinto Yeah, that's interesting, Gerald,
and that makes sense. I mean, five years is sort of ethereal and
nebulous, and it's sort of outthere on the horizon. But when you
put it in specific number of days, we all know what a day is,
and it gets it gets a lotmore real, a lot quicker,
right, And it looked in thesame way. You know, somebody says,
I got I've got a month todo something, right, it's chance

(12:54):
are is gonna get done a month? I said, I got days to
do it. I get it done. So I think I think to put
a bowl on that. The sooneryou get started with your exit planning,
you know, the greater the likelihoodsuccess of this happening. And I'm going
to bounce around a little bit hereand Rick, Rick, maybe you,
maybe you want to take this one. I don't know either of you is
fine. When you're talking about fiveyears or one thousand and eight hundred and

(13:18):
thirty four days, whatever that was, it just feels intuitively like, you
know, a long long time tobe doing something, you planning for something,
articulating something, creating something. Fiveyears give us an example of something
that a business owner needs to beworried about, thinking about planning for.

(13:41):
What are we talking about here,Well, there's there's a great start stop
continue, start stop continue. Lifeis going to get in the way of
every body, every business owner today. We've got, you know, supply
chain issues, we've got increasing costs, we have inflation, and we have
employers trying to retain people attract people. So the meeting that was set two

(14:05):
weeks ago for tomorrow gets postponed tomorrowmorning because there's a business fire that must
be put out. So invariably,all of a sudden, you look at
it was forty five days ago thatthere was the last meeting. I mean
it's not like you're meeting every dayevery week for hours upon hours. You're
trying to stretch it out because yourneed to feed the owner with information that

(14:30):
they can absorb, and it typicallytakes five to six, seven, eight
nine times for somebody to read thatinformation ask good questions because ironically, the
valuation looks at historical financials, butthe buyer is looking at what's the future
and how predictable will those earnings be? And so when you look at through

(14:56):
a rear view mirror of your car, you can't see a whole lot.
What you want to be looking throughis the windshield, so you've got a
much clearer vision of what's the opportunity, where the potholes, etc. And
you got to get everybody on page. The spouse today has become one of
the most trusted advisors for the entrepreneur. Doesn't replace the CPA who's has a

(15:22):
good handle or the best handle onthe financials, but it is gets back
to this whole concept of collaboration.You wouldn't want to have your heart surgeon
do heart surgery without the anesthesiologist,scrub nurse, the second in command.
That would probably not be a goodoutcome, right and Rick just following up
on that. I mean the topicsthat we're thinking about. The topics that

(15:45):
we're working on are tax related,their management or HR related, process,
operational improvement related, making sure youhave a clear marketing strategy. What am
I missing or what is the mostimportant of this? Well, it's due
diligence. I mean, that's whatan investment banker, if they're representing a

(16:08):
seller, they go through a checklistto make sure that everything's been covered.
Like you mentioned marketing and operations andhuman capital. One of the keys is
are the key employees linked and tiedto the company. Because if you're the
buyer, you certainly don't want toclose on Friday and on Monday morning half

(16:29):
the management team is exited. That'sprobably not a good strategy. And people
talk about taxes, Eye, taxesaren't a big deal. Well, we've
come across a number of clients recentlywho have been given significant offers for their
business, but they can't take itbecause of some poor tax planning that was
instituted years ago that will take aminimum of five years to unwind. Interesting,

(16:55):
five years, that's like a galaxyfar far removed from this morning,
right, right, that's a goodpoint. Um, So Gerald, what
does it vary by size? Imean, if if we're dealing with a
small company, you know, maybea million dollars of annual profit, would
your recommendations be different for that companythan for a company that's you know,

(17:21):
generating twenty times that that amount ofprofit or is it all pretty much the
same process? No, it's notat all, um. You know,
and while the you know, thebroad top of might be the same name,
whether it's exit planning, key employeeretention compensations, dated issue, every
situation is going to you know,it's going to vary. It's going to
depend much like Rick said earlier ondepend on size of Commy ownership tax status

(17:44):
is an S corp or C corps. So one size does not fit all,
um. You know, the ourinternal processes probably do. But the
suggestions are going to vary across youknow, industries specific across I'll give you
an example also, is you know, if we're dealing with a company that's
a lifestyle business, we're certainly goingto approach that differently for shutting it down

(18:08):
or selling it in a different manneras opposed to if someone is looking to
grow and monetize it at the endfor you know, a multiple Rick and
I were talking about this other daythat you know, times have changed.
Business owners no longer need to staywith the company and die with the boots
on. Right. Some owners mightsee they want to get out of the

(18:32):
business, but they don't want tosell because it's too valuable. So in
that scenario, kit they'll go froman owner owner to owner investor. So
they may just take a seat ona board and collect a check. We're
seeing, we're seeing a lot ofa lot of owners that think they understand
all their options out there, butthey don't. And so when we talk
about you don't have to sell internallyexternally, you can take a seat on

(18:56):
the board, the light bulb goesoff, the thought bubbles go off,
and the conversations start and they startto get real and so and that's where
it gets fun. Family businesses,family owned businesses, they're they're a different
animal all together. Not that notthat they're any easier, they just got
a you know, different set ofyou got another layer of dynamics going on.

(19:18):
Yeah, it reminds me always thegood story is having a bunch a
couple of years back with a goodfriend who was a very successful second generation
family business owner, said I needto get out back to the office by
one thirty. Got a really bigmeeting today, and I said, what's
it about. He says, youneed to fire my president, which is
never fun, never a good day. And you could just tell the angst

(19:42):
was building them building as it gotclose to that time. Next day called
him up and said, hey,how did it go was I'm thinking about?
You said, not good at all? Really was horrible, And I
said what happened? He said,they'll call the president in let him know.
We had to let him go.Told me need to go clean out
his stuff by at the end ofthe day, went off and did that.
A few minutes later, I wentdown just to go check check home,

(20:04):
see how it's going. He's onthe opposite side of his desk,
slumped over, head down, shouldersup. You own and went over to
him, put his hand on hisshoulder and said, son, don't worry.
Mom and dad are here for you. We'll get through this together.
Right. So you know, it'sa different dynamic fire not only the president
but his son. So right,right, So when you say the process

(20:29):
or suggestions vary, absolutely they dono situation the same. Yeah, absolutely,
that's really that's really a compelling story. And I could see going in
the other direction too, where thesun is having to fire the dad.
That happens a lot. I thinkthat would be a lot more complicated too.
It does. But if you thinkof a traditional one is where you
might have a husband and wife thathad this company, second generation, third

(20:52):
generation, whatever have you, andthen they have kids, some are involved,
some aren't. Then it starts absolutelyon. For the conversation of a
state equalization and how to pass outit's on, and they want to treat
all the kids equally. But thatmeans some are going to get some of
the business, some are so allthe dynamics, I mean we play financial

(21:12):
shrink, yes, and that's athinking in this marketplace that that's a really
good point, Gerald, And Ijust want to, you know, again,
call out those business owners that mightbe listening that are in a family
ownership dynamic, or for that matter, just any business owner where you're looking
at the business, it's lonely atthe top, right, I mean,

(21:33):
there's nobody necessarily to turn to onyour management team that you can talk to
about succession, that you can talkto about selling the business, preparing to
sell the business until you know thetime is right, and there's certain ducks
that have to be put in placebefore you feel comfortable sort of opening up
the kimono and talking freely with eitherfamily or management about that. And so

(21:56):
who do you turn to? Youknow? One reason source selfishly, I'll
put in a plug for Strategic GrowthCouncil because it's a it's a peer advisory
network. It's a it's a council, it's a roundtable, a group of
peers that are sharing UM lessons,learning insights. But people like Gerald and
Rick as well, they've been there, done that, advised countless companies on

(22:17):
the process. And uh, youknow they're they're they're independent and don't necessarily
have a vested interest in helping you, whereas your wife or your husband will
your accountant probably does have a vestedinterest. So it's nice to have a
third party. Um, I'm wonderingabout and we've sort of touched on a
few of these lessons learned, bestpractices, you know, case studies.

(22:42):
I always like to kind of thinkof it in the opposite context. So
what do you not do you doyou have any good stories about something that
went awry or or something that thatwent particularly well. Could I think of
there's a one ul book called theChecklist Manifesto by Ottawa Gwande, and it's

(23:03):
the idea that you need a checklistand you got to make sure you check
it twice and you want you wantthe business owner and partners to talk to
other owners who've gone through the process. Just let them hear some of the
battle scars. When you're dealing withprivate equity and groups who buy these companies,

(23:26):
there's some of the smartest people inthe universe. They don't make too
many mistakes. They're the ones whoput the provisions in these documents to protect
themselves and they call them clawbacks andother features. So you can't afford to
have your business owner client pay thetuition for somebody who hasn't doesn't have the

(23:48):
experience. He's a good way toput it. You need to have a
deal attorney who's done literally fifty onehundred five hundred of these transactions because the
buyer is really smart. So Ithink of a private business that it's been
ten years because he was waiting tofind out whether one of his adult children

(24:14):
wanted to get involved in the business. His brother wanted to see whether one
of his adult children wanted to getinvolved in the business. Two of their
siblings who were involved in the businessdied during that time period. They had
offers that were made, and thenwhen they were both going to the altar
to put on the ring, thebuyer changed the price. So it's it's

(24:40):
an ironclad process. It's eyes dotted, te's crossed, an experience truly truly
matters, absolutely, all right,good, well, I'm wondering if if
there are any case examples that youcould share, or if not. You
know, what should a business ownerbe thinking carefully about with regards to retaining

(25:03):
a service provider such as yourself?In other words, you know, you
don't just type in exit planner orwhatever and grab the name that's that's closest
or most familiar. What's what doyou think about when you start to hire
somebody like yourself. I'll think ofa client that we worked with, a
very successful company started in the Oeight recession. In the middle of it.

(25:27):
Are a bunch of money, butthese two guys were bright, sharp
salespeople and operation people, and wewere working on all the succession planning we'd
brought great legal counsel to the table. They already had a great CPA firm
that was doing their numbers. Feltvery confident, and we were going one

(25:48):
direction that seemed to appeal to bothowners. And a company called the largest
private equity firm in the country flewin on a Friday afternoon said we'll buy
you. We'll buy your stock,will pay cash, we'll close in sixty
days. Well, somebody threw awrench into the gearbox. Whatever that initial
offer is, rarely is that what'sgoing to come to fruition. It took

(26:14):
five months for the transaction to actuallyclose. You mean it took longer than
sixty days, and the price changeda little bit. They didn't buy the
stock, they bought the assets.Now. Then the owners were also required
to keep some of their proceeds inthe transaction, and then they had contracts

(26:40):
to stay on board for about twoyears. And inevitably, what we've experienced
as owners can stand at about twelvemonths because it's no longer their company,
it's not being run the same way. It's either been aggregated with other like
companies. Aggregation is a big deal. Today. You have investors who have

(27:02):
very specific numbers that they want tosee return on a timely basis. And
historically a lot of private and familybusinesses were not run. They were run
to be profitable, but not atthe same level of specificity that the new
buyer has. Yeah, makes sense. And so you know, if I'm

(27:22):
thinking about selling my company and Iwant to hire somebody like yourself, experience
matters and having been there and donethat and have different levels of experience in
different industries, different sizes of business. As Gerald was pointing out, all
of that helps and um and havingbeen kind of a coach and a council
through that process before you, Iknow, you guys are well well played,

(27:47):
well suited to do that. Howdo you differentiate? There's obviously you
got a lot of competition, andGerald, to your point earlier with the
land concept, there's an awful lotof indod and then the service providers with
very specific niche, skills and capabilities. You guys are pulling together a collection,

(28:07):
a collaboration of different services, whichmakes a lot of sense. But
how do you differentiate? Yeah,I think you just said it. It's
collaboration. I mean, when youlook at the definition of what an exit
plan states, it's you know,it's a comprehensive roadmap that's successful exit probably
held business. But when you lookat the guts of it that you're asking
and answering all the business, thepersonal, the financial, the legal,

(28:30):
the tax questions involving selling a business, you better come to the table with
a strong team and a strong diversityof subject matter. And that's what we
do. I would say the onething I find kit that really differentiates us
is we run a personal financial planparallel to a business plan every time we

(28:53):
work with the business owners, andwe've come in often and to find out
business owners have really done a personalfinancial plan. They don't know what it
cost to be them, they don'tknow how much is enough. So we
take the long term approach, becauseonce you exit, there's life, there's
a new chap, there's just lifeafter that. What does it mean?

(29:15):
And that's where the personal plan takesa long term approach to it and gives
them the permission slip that maybe backinto what number did you need to take?
That's a good point. That's agood point because at the end of
the day, the value of thebusiness is really the maximum of what one,
two or more bidders are willing topay and nothing, nothing else,

(29:36):
and you don't know what that numberis, but knowing what you need to
get to live comfortably, that's that'sthat's where the rubber hits the road.
And you know, I'll just sharea funny story. A friend of mine
recently retired and he said, youknow, Kit, do you spend more
money on Monday, Tuesday, Wednesday, Thursday or Friday? Or do you

(29:56):
spend more money on a Saturday ora Sunday? And I said, well,
I guess I spend more money onthe weekend. He said, well,
when you retire, every day's aweekend, you know, and you
end up spending more money than youever thought about because every day is like
a weekend. And that was kindof eye opening for me. So,
kid, I think that's that's goodadvice. And I also believe that you're

(30:18):
you're holding a crucial conversation. Gerald'sfirm our firm. Our members of land
are really there to ask the toughquestions because the stakes are high. There's
usually some emotional components and if you'vegot more than one owner, or even
you've got spousal involvement or family involvement, you're gonna have different opinions, but

(30:41):
if you can't ask those crucial questionsand sit back and listen. So I
think we're great listeners. Our ideasnot to say here's the solution, Now,
what's your question? Right? Soif we can ask the questions that
are that help people think, andsometimes they can put people off a little
bit, but we've found that that'swhat we do really well. And that's

(31:03):
part of that differentiation that you askedearlier. Why why or our respective firms
able to serve the client. It'sbecause we want to listen first, ask
great questions, and the solutions comeat the end. Yeah, I was
just gonna say you you talked aboutlistening well, and I wanted to make
sure the listeners here understand that Iknow you guys, I know you are

(31:29):
fantastic listeners. I can speak forpersonal experience, but in order to be
a great listener, you have toknow what the right questions are to ask.
And that's the secret sauce here isknowing what to ask. And as
you said, some of those questionscan can make people uncomfortable, but that's
part of the process and that's whyit takes As you said, it may
take five years. Um. Soyou know a couple of things I'm going

(31:52):
to toss out at you and youcan take these in any order. But
challenges that you're facing in your industrywith your businesses, opportunities that you see,
you know, goals that you havefor your businesses. That's sort of
you kind of lump all that together, or we can go in a different
direction, and that is any biglessons learned for our listeners that we haven't

(32:16):
had a chance, anything else thatyou wanted to share that we haven't had
a chance to get out there today. Well, I'll start and then turn
this to Gerald. One of thethings that's catching people off guard when you're
working and got your nose to thegrindstone, you forget Wait a minute,
when I exit, I might havethirty plus years of life expectancy. People

(32:39):
are going to spend as many yearsretired and every day is that Saturday you
just mentioned kit as they spent buildingthe firm. Because most entrepreneurs don't start
their companies at age twenty two.They've gone out and done something else.
They might have built it over thirtythirty five. So life expectancy is another
issue. There's health concerns today thatimpact people's decision making, and you know,

(33:05):
our challenges are finding people who havethose skills, not just the math
skills or the tax skills, buthave the people's skills to listen and be
willing to share stories and take thoseemotional risks to expose the achilles heel that

(33:28):
nobody wants to talk about, theelephant in the room. Yeah, that's
great, and Rick, if Icould just make sure I captured correctly what
I think I heard you say isit's relatively easy to find somebody with the
technical skills to do what you do, the knowledge of advising companies and exit
planning, for example, but it'shard, especially today with the great resignation.

(33:52):
A challenge for your business is havingsomebody with the people skills to be
able to not only ask the rightquestions, but then listen and deal with
that awkward silence that might happen andthen sort of play coach and counsel and
advisor and mentor all at the sametime. Did I capture that you did?
And we would define that as havingan abundance mentality, you know,

(34:14):
because when you when you fall intothe gap, you're gonna miss You're gonna
forget about all your progress. You'regoing to forget about all the accomplishments of
running your business. And our roleis to keep the client's eye on the
prize, you know, keep itfocused on true north, which is where
do you want to go? Whydo you want to go there? Who

(34:36):
do you want to take along onthe journey? Do you want to still
be involved in, you know,the causes that were part of your business,
because you're not the same. Whenyou leave, you don't you don't
get to come back as the generalor the dictator. You want to exit
your client, your business and bethe ambassador. Always welcome back on corporate

(34:58):
property. Excellent, Gerald, Anythingto add there or did we miss anything?
Well, I'll take the opportunity piecethat you you asked earlier about what
I believe the question is what arethe opportunites we've seen in this marketplace?
And I'm going to go back tothat EPI Readiness survey because I want to
I'm gonna reach you some of thestats that came from that. So this

(35:22):
again was the State of Owner ReadinessSurvey, which was gauging the level of
exit preparedness for the for these twelvehundred business owners that they survey here,
two thirds of the owners are notfamiliar with all their exit options, right,
and they're they're acknowledging that, soit might it might even be higher.

(35:42):
They also found seventy eight percent hadno formal transition team, eighty three
percent had no written transition plan,forty nine percent had no had not done
any plan in at all. Ninetythree percent have no formal life after business
plan. What do you do inthe next job? Yeah, right,

(36:02):
there's interesting using that. Another surveyI saw that fifty two percent of the
baby boomers has sold their business regrettedwithin the first twelve months. They didn't
have an after plan because that wastheir world and the baby generate exactly that
sixteen seventeen hours a day to getit going up. Other stats in here,
forty percent had no plans in placeto cover illness, death, or

(36:27):
forced exit. And then the lastone you heard me say earlier early was
fifty percent. Fifty six percent feltthat they had a good idea what their
business is worth, but less thaneighteen percent had ever done evaluation. So
yeah, within the last two years. So why these and what was the
date of that survey? Any ideaeighteen ten. Okay, thanks. So

(36:50):
while those numbers are alarming to meand Rick as an advisor, it also
creates a huge opportunity for us.It's just a very, very underserved marketplace.
Right, So when you look atwhen you look at the exit planning
market, it is really a winwin proposition. And what I mean by
that is if you have a welldesigned and implemented exit plan, it's a

(37:14):
very powerful and valuable tool for thebusiness owner. Right. It allows them
to achieve their business and personal goals. It helps them facilitate the retirement and
control the win and how behind it. So it's a huge value to them.
So the vises like Rick and myselfwas also a ton of value because

(37:36):
Rick will tell you by the timewe get someone from A to Z and
our planning process and in the exitor succession or whatever process we take them
through, it's a long runway.And by the time we're done, we
have deepen and strengthen those relationships likeno other relationships that we have. So
they really become their trusted advisor.And it's it's really difficult. I mean

(38:02):
from personal experience, it's very difficultto educate the audience or to tell your
client this is this is how muchbetter you're going to feel. You can't
you can't quantify that. But atthe end of the process, that that
weight off of shoulders and the acknowledgementand recognition that wow, we're prepared,

(38:22):
we're ready, no matter what happens, We've got this. It's a great
feeling. I can't One of thethings that Gerald said earlier was having a
roadmap, you know, preparing thatroadmap for the clients so they can find
the mild markers along the way.Gerald and I have talked about this frequently.
It's also I think we make theprocess fun, not necessarily ha ha

(38:45):
stand up, but so that theclient recognizes this is not a torture.
This is not going to be arduous. Because the single best investment that most
owners ever made was starting that enterprise. And so the part that was always
missing was maybe the transparency component becausemost owners hold it pretty tights tight to

(39:07):
the best their CPA knows the numbers, and maybe their CFO or controller.
And what Gerald said is we useour reference list. Is we tell a
new potential client, please call thepresident the CFO and ask call at least

(39:28):
ten of them to ask you,was the process, what they thought,
did it meet their expectations? Andwas it fun? Gerald kid, I'll
actually I don't say this with anymoxie, but being a trusted advisor,
I mean in taking people's success,you through that that journey we create raving

(39:49):
fans, and those raving fans wantto introduce us on a very feral basis
to their other friend or other businessowners. Yeah, it's all about the
experience. And I know, Iknow how passionate you've been with your clients
about creating an experience that's positive.Yeah. Yeah, that's good. So

(40:13):
we're gonna need to wrap up becausewe're just about out of time, Rick,
but I'm going to give you thelast chance to weigh in here.
Rick, Uh. I want toknow how how listeners can support you.
I mean you you've provided valuable insightshere. How can they contact you?
And? Um, the websites certainlygo to our website, they can go

(40:36):
to the Legacy Advisor Network website,contact Veritas. And one of the things
that Gerald and I recognizes, thevast majority of these businesses are owned by
baby boomers and there's going to bethis sixty trillion dollar wealth transfer that's taken
place over the next twenty twenty fiveyears, it will go unsuccessfully for a

(40:57):
lot of people if they don't takethe time to think. Have somebody ask
them tough questions and let that advisorsit back and listen, and let the
advisor bring together a team of allstars to do the best planning to have
the best outcome, because that outcomehas to last thirty years or more,

(41:19):
or it can be multi generational fora hundred Yeah, Gerald, how how
do you recommend that our listeners getin touch with you? We can provide
our information to you our websites again, Veritas website, the Legacy Advisor website
as well. But when the oldschool always works too. If the phone

(41:42):
call is free, any questions,Yeah, any thought bubbles, go off,
pick up the phone and give aricer of myself a call. All
right, Rick Scrugs and Gerald Radikin, thank you both. I appreciate your
time and your wisdom and insights heretoday very much. And I'll add a
comment that just read something that Ithink Warren Buffett was talking about. Giving

(42:06):
the current state of the economy andinflation. That you know, business owners
spend a lot of time thinking andplanning and worrying about their their investments outside
of the business. But frankly,their single largest investment is in themselves.
And there's no better time than aninflationary period to really focus on yourself.

(42:29):
Invest in yourself, invest the timeand energy work on the business and not
just in the business. And Geraldand Rick are extremely well suited to help
you do that. And as theysaid, it takes a while. It
takes a while to do it welland to do it right. Remember absolutely,
thank you both. Remember visit StrategicGrowth Counsel dot com for all of

(42:52):
our episodes, past podcasts, andfollow us on YouTube or wherever you listen
to podcasts and put us in yourlistening queue, review the show and give
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