“So, what do I need to learn next?” she asked sincerely.
“What do you mean learn next?” I replied.
“Isn’t there more to it than that?” she asked frowning.
“Actually, there’s not much more to learn until we take what we’ve just talked about and apply it to your business,” I said.
She sat with that for a minute.
Then, shook her head and took a deep breath to say . . .
“That can’t be right. What about ESOP’s? How do I learn about private equity deals? Have the multiples in the market changed? And I heard there’s a change in a SBA program a buyer might use to finance the purchase. I also read that M&A activity is way down this year . . . “she trailed off.
“There’s a lot more to learn isn’t there?” she concluded.
“Well, there’s a lot more information out there around this topic,” I said, “but it’s a dangerous waste of your time to try to learn it right now.”
She immediately responded, “How can it be a waste of time? The experts in this space talk about these things all the time?”
“All that stuff is important to the experts because that’s how they make their money,” I replied. “Attorneys, brokers, accountants, bankers, M&A advisors . . . they are all compensated by their mastery of the complexity associated with ‘doing a deal’,” I said making air quotes.
“And so, some small business owners start to believe that being able to ‘do a deal’ is somehow tied to how well they can master all the complexities in this space,” I said.
“And it’s not?” she asked.
“It is not,” I replied. “99% of your ability to ‘do a deal’ is about the business you’ve built.”
“Some owners spend all their time trying to master some piece of complicated minutia. They’ll go to a three-hour attorneys’ luncheon trying to learn about some element of purchase agreements . . . meanwhile the business they want to sell doesn’t show any profit.”
I could tell that hit home.
Her business wasn’t very profitable right now.
“So, selling isn’t about the complications?” she asked.
“Not for owners it’s not,” I responded. “For owners, being sale-ready is about three basic questions.”
“Are your results desirable?”
“Can a buyer duplicate your results?”
“Can you document your results?”
“Exit isn’t found inside the complexity,” I said. “It’s found in creating a business that allows you to answer ‘YES’ to those three simple questions.”
“So how do we handle the complex stuff then?” she asked.
“When your business is ready to sell, we’ll watch together as the complexity experts fight for the opportunity to take care of that stuff for you,” I replied.
“For now, ignore that stuff,” I concluded. “Focus on your business results.”
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