Matt Gilbert - LCPA Conference "Navigating the Journey in Selling a Business"

Matt Gilbert provides advice to the advisor working with a client to navigate every stage of the journey in selling a business…from preparation to buyer vetting, due diligence, and closing the deal.


[00:00:00] Business, our clients trust you more than you think they do. They had they put more stock, in your opinion, than you might think they do, especially if you just see them on a regular basis where you're compiling their tax returns, probably with the instruction to minimize the taxes as much as you're possibly able to do. And so after years and years of just having, in some cases, a kind of minimal relationship with your business owner clients, when we come in and we meet those business owners, boy, and we start talking about their key advisors, attorneys and CPAs and people like that, you guys are always at the top of the list of somebody that they trust, somebody that they think understands their business, understands the accounting functions of their business, which translates in their mind to thinking you have a good handle on their valuation. And then obviously, when we get into a transaction, being able to advise them on how much they're actually going to clear and get to keep at the end of the day. And I think that's where you guys would probably be most comfortable if you heard the things that I hear about business owners faith in their CPA. And then I turn around and I call the CPA and they say, man, I barely know the guy. And that happens quite a lot. So so my advice here to you guys is understand that that trust is there and somehow you've built that relationship and then use that as a way to watch for clues.

[00:01:33] When a business owner starts aging or they have declining health or their spouse has declining health or or something like that, you can you can begin to pick up clues that maybe they're headed for a transaction down the road in the future. And the sooner we can all get involved and start nurturing and guiding that business owner toward a successful transaction, the better off we'll all be know there's things like taking accelerated depreciation and then having to reverse that depreciation upon the sale of a business. There's certainly things like making an election. If they're scoring well in advance of a transaction, that can really move the needle on how much business owner and their team, their shareholders get to clear whenever. They sell their business. So today, like I said, this is a couple of hours worth of material, we're going to go really fast. Feel free to jump in and type a question in the chat box. If if you have one, I'll stop and take it at the end of this thing. Slideshow of all my contact information is there, including myself. And you're certainly welcome to reach out to me if you want to talk more about any of this or think I might be able to help you in some way. So for now, we're going to jump off and we're going to talk about kind of the psychology of what's going on, what would motivate a business owner to want to sell their business.

[00:03:06] And you guys know the list, right? Health changes and burnout are probably at the top of the list. Lifestyle changes. I know I often have clients whose spouse is pestering them to travel more or move to where the grandkids live. Something like that. We see shareholder misalignment. One shareholder may get a divorce and begin to change their lifestyle, and that causes partnerships to grow apart. We see young shareholders and older shareholders have competing agenda. The older shareholder normally wants to be very conservative and very sure footed. While the younger shareholders want to be more aggressive. They want to go out and continue to build the business and push the envelope. And so a lot of times that causes the need to take some chips off the table for some of these folks. So there's a lot of reasons why a business owner might want to sell. And one of the reasons I threw this slide up early in the process here is. You guys often get the call when the process is, you know, half or two thirds of the way into it, you might even get the call at the point when when you're when your client says, hey, I just signed Anello, I and I need you to model some some tax consequences for me.

[00:04:26] Right. And then it's too late to really help them. But and so what I'm encouraging you to do is say, hey, look for these clues when you're talking to your business owners around tax time or whenever you get to get to really visit with them. And if these clues are there, start having the conversation about what do they plan to do? Do they plan to transition this to a family member or is there a management team that's going to take over? What is their arrangement? And if it starts looking like they might sell the business in the next few years, then we get to come in and we have a really targeted conversation about, OK, how do we help you do that? Where you can in your one shot at getting this done, you can maximize this sale and really set your family up and have that legacy that you're looking for. You know, it's it's it is definitely something that is a range whenever a business sells and those at the low end we find really didn't prepare. Well, there's a couple of other reasons why, but preparation is huge. And then those that sell at the top end of the range have prepared very well. They've got processes. They've got key people in place. There's a there's a lot of transparency in the business. They've got trajectory, they've got momentum, they've got credit facilities. All of their agreements and engagements are transferable.

[00:05:54] Then there's just a whole plethora of things that can either increase their confidence or decrease buyer confidence and introduce risk. So we want to make sure that every chance we get, we're able to step in as early as possible and guide these business owners toward a super successful sale. You know, my my business partner, Brett, is pretty famous for saying proper preparation prevents pitifully poor for performance. And and I would add to that that the preparation and management of a good plan really helps keep control in our camp. And as long as we have control of the process, control of confidentiality, control of when information is released, then we can manage the process for the best outcome for our client. Once we begin to lose control, it slips to the other party. It's very hard to get back. And so deal fatigue sets in, retraining of sets in. Certainly there's an emotional component that happens. And so I'm just encourage you, the sooner we can get involved, the sooner we can help script the winning plan for our business owners. And and, you know, we read about and we hear about M&A activity in the news all the time. But most of our clients are family owned businesses and and businesses around the community. They employ 50, 60, 100 people. And and those M&A transactions are actually pretty rare. I'll give you some statistics here and a little bit that shows you just how rare it is to be successful and sell your company to a third party and then to really outshine the pack and sell at the upper end of that value range is something that we as advisors have a lot of effect on.

[00:07:47] And so I just want to talk to you about working together and managing that process today. One of the things that we have found over and over and over again is a lot of our business owners have an alpha personality and that has made them successful. It has helped them get where they are. And but when it comes to this process, they only know kind of what they've heard in conferences and what they read on the Internet, what what their brother in law might have told them. And so we found that it really helps a business owner to have a guide in this process. And that's where transaction advisors, investment bankers, business brokers, intermediaries, people like that. That's where our role is. We really come in and we help understand the landscape, listen to the business owner to understand what they're trying to achieve in their financial life and in their personal life and with their employees and with their legacy of the business. And then we script and plan a process that can take them from where they are to where they want to be. And in that process, we'll certainly call in accounting professionals.

[00:08:58] We'll call them legal professionals. We probably call environmental people we may call safety people or even to our control folks, stuff like that. And so this scripting of the process is a way of being prepared and a way of making sure that we control the outcome as best we can. And and so there's a lot of things that go into that market. Timing is huge. It's something that's out of our control. But the way that a lender views the market segment that your client is in, the way a lender views the deal, the return on investment, that the buyer's pitching when they're asking for money, all of those things can affect this thing kind of outside the control of us and our teams to the things that we can control. We really, really want to get our arms around. Right. And those things could be the trajectory of revenue. Right. For the business owner thinks he wants to be deeply involved in this process or even tell the company themselves, maybe with the help of their attorney. Well, they're going to be taken out of action for seven to nine months of running the business. And when they're out of action, kind of splitting their time, neither function is going to get a great set of attention. You're going to see business revenue and performance begin to trail off, sometimes decline, and that's going to affect the sale. And so having a good transaction advisor, kind of quarterback, this thing really does statistically help a business owner exit at the top or upper quartile of the value range, a strong backlog, confidentiality, keeping leverage, having and meeting interim goals.

[00:10:42] All those things help us stay on track and run a process. This process I just mentioned take seven to nine months to do well to get out at the top. And so rushing the process is an issue when when we study processes that we're hurried or went quickly, we find that they didn't extract all the value that they could have in most cases. So we really want to talk to the other advisors about trusting the process and then talk to our clients about trusting a process. They're going to buy into a team that includes you and us and an attorney and some other folks. And then they've got to put that team has got to put together a plan and then everybody's got to trust the process. That's huge in this deal. So what would be the roadmap to success for that business owner? I find that most of the time the accounting profession or the CPA, the bookkeeping person who's a third party, you guys have the ear of a business owner and the trust of a business owner more than most folks. And most of the time when I get a referral, it comes from a CPA or somebody who is that trusted the accounting person.

[00:11:57] And you need to be ready to be asked that question. Hey, I'm thinking about selling my business in a couple of years. What should I do to get ready? Well, you've got to have an answer. You can't win. Right? And in our experience, we've gone up to investment banking and the big boy world and we brought some best practices down to this market that most of us work in. And we've said, hey, the first thing that needs to happen before a business owner gets really serious and starts turning their focus toward an exit strategy is we've got to understand what this business is really worth, what is the fair market value? And in getting the fair market value, there's a number of ways to do it. And we find even even my own CPA has recommended some of his clients get a valuation done. Those people went out. They got fifty sixty seventy thousand dollars. Evaluations done that are more suited for wealth management, IRS defense, divorce, things of that nature, they're not really very well suited for an impending M&A event. And so there is a criteria that makes a lot of sense in the fair market valuation for an M&A event. The good news to our client is it's generally quite a bit cheaper, probably half the price or less to get a good, if fair market valuation for an M&A event. But we've got to make sure it has some key components, right.

[00:13:28] We've got to make sure that it takes in industry and sector trends. We've got to make sure it takes in that credit climate for that sector that we just talked about. We certainly have to evaluate a company from an operations, a safety inventory, strength of management, team processes and procedures. All of those things have to be evaluated. What's the backlog? What are the risks? Do you have a chain of warranties out there behind you that you have to stand behind in the future? There's real estate appraisals, there's environmental compliance. There's so many things that go into understanding what the true fair market value is. And then you got to look at it at the marketplace. So you've got to say, OK, what are the comp sales? What has happened in this market? Are these businesses trading at three X or are they trading at seven X? Because that makes a huge deal. And then you look at the backlog, you look at the business forecast for the next couple of years, you pull all that information together and that'll give you a good opinion of fair market value. And that's the same opinion that a buyer is going to have. And so we're trying to do in a fair market valuation is we're trying to set a range of value that we think a business owner would receive offers in that range if they went and marketed the company for sale at this time in this particular market, as the company sits today in a static environment, once we get that opinion, then we have a really serious fact based discussion with our business owner.

[00:15:03] And this is important because up until this point, everybody has an opinion of the value of the business, but nobody can ground that opinion in the facts of the marketplace and and the business itself. This will be the first time in most business owners cases where they get to gauge their own opinion of value against the opinion that their brother in law has and what they heard in a conference versus what the market would pay for their company. And it's an eye opening experience for most business owners. We find that business owners are either way too high in their opinion of value. That got a lot of blood, sweat and tears and emotion in this thing. They think it's more valuable than it actually is or their opinions really low. And they've got a management team. Things are tracking their long operating in the businesses is pretty easy at times, and they don't realize the true value of the business. So we rarely see a business owner who keeps it and gets that opinion of value. Right. A lot of that has to do with that backs a lot of that has to do with emotions. A lot of that has to do with the fact that the attorney and the CPA, the business owner themselves, none of them really have their ear to the ground on a consistent basis out there in the market, knowing what things are trading for, knowing what sectors are coming up and which ones are moving down.

[00:16:26] No one where credits out for buyers to make these transactions happen and then competition. Right. If there's a lot of competition for a certain type of business that tends to drive valuations up and those bubbles don't last forever. And so those are some of the things that we want to get in and have a very fact based conversation with the shareholder group, the business owner. And then we always want them to invite you guys to the accounting professional, their attorney, other shareholders, anybody who's going to influence their opinion of whether or not they should move forward and sell the business at this time. We'd like to have those folks present in this roundtable event. And what we're doing here is we're just weighing the odds and putting the facts on the table. We're taking all the objectivity out of it. We're saying, hey, what are the odds of us achieving your goals? Right. So how are we going to know if we're going to achieve your goals if we don't first know what your goals are? So it's the listening moment for advisors to understand what this business owner is trying to do in their financial life and their personal life, what their legacy, what the business, what other people in the company want to do, how vendors are seeing them.

[00:17:44] Are they becoming obsolete or are they growing faster than the competition? And this is a moment where we're going to ask the business owner or the shareholder group to make. Go no go decision, right? We're going to put all this on the table, we're going to look around at each other. We're all going to say our piece, but it's up to that business owner. If we have decided that the business is sellable, there's no lawsuits, there's no liens, there's no reasons why it probably won't transact. And we think the business is sellable. Well, then this is the moment where that business owner has to decide, yeah, I'm going to move forward. I'm going to dedicate resources and funds and time into pursuing the sale of my business or now I'm not ready. The sale won't achieve my goals or personally, I'm not ready. And so what can I go work on? And that's an important moment because this opinion, a fair market value, will smokeout the things that introduce risk to a buyer or devalue the company a little bit. And those things can be brought to light, kind of prioritized. And the business owner and their team can go back and really work to improve the value of their company and then come to market another day when they're better prepared.

[00:19:01] And that's a huge component of being a good, good adviser is is to sometimes in fact, in our practice, it's most of the time we have to say, hey, we think you'd be better off working on these things before you go to market and we can help you do that. We can give you guidance. But certainly, you know, to achieve your goals in this business climate, we'd like to see you work on these things. Fix them could be customer concentration, could be a number of issues. So that's kind of the first step, right? Don't don't allow conversations to get very far. And still, we've leveled the playing field and everybody agrees on what the valuation of the business is. You know, I had this was a couple of years ago. I had the business owner of an employ farm implement company come to me and he said, hey, I want to sell my business. He was in I think it was fifty three at the time. So he's in his fifties and and we got to talking and I felt like he was mentally well prepared. His, his business was in a good place. And so we discussed moving forward in the process and he said, well wait a minute, I've got to, I've got to get my dad in here. And you've got to convince my dad that that we can sell this thing, OK? And it turns out that that there are four generations working in this company that have been around almost 80 years.

[00:20:28] Right. And so the dad says, well, wait a minute, you've got to get my dad. And so when we finally met at Olive Garden, we had we had great grandfather, grandfather, father, who was the exiting operator, and then his children were working in business at this time. So four generations working in this company. And, you know, that is it was just a gut wrenching decision for the family to let go of this thing that had been their legacy for almost 80 years. And we find that after probably a wedding and the birth of your kids, which happened decades ago for most business owners who are thinking about selling. Selling their business is the next biggest event in their life, right? They've got to get it right. They have one chance. And so it pays to build a really good team, have a team that's going to work together well, that understands each other, that buys into the plan. They don't step on each other's toes. Right. That has a leader transaction adviser is normally your quarterback, your key players or your CPA, your attorney, and then all the specialists that are required to to get a plan put together, tell the story and then execute a sale. So, you know, it's a big deal to most business owners.

[00:21:51] This has been a huge part of their life. And we find that this decision isn't something that can be made lightly. So if you're brought in halfway through the process and I see this I saw this just the other day, we have a business here about one hundred miles from my house, and we're in due diligence in that business right now. A couple of weeks ago, the business owner said, hey, I want to call my CPA. I wanted to model some of these tax scenarios before we choose who we're going to sell to. And I said, OK, fine. And and so he gets the CPA on the phone and a CPA just starts diving in on all these questions. Right. And throwing out opinions. And I'm on the line thinking to myself, this guy hasn't even asked why we're selling the business, what his client is trying to achieve. You know where he's going. The client is young. He's in his mid 50s. What's his plan to do next? And so it struck me that that that CPA was was getting in there and he was blocking and tackling. And he was he was ready to go, but he didn't know where we were going. He didn't know the overarching plan. And so, you know, one of the things that I would advise is just a slow down, back up a moment, take a deep breath, and let's find out what this business owner is trying to achieve, because we're all in here to serve that plan and achieve that goal.

[00:23:19] And I think, you know, you see on the screen here, all these folks and many more that can get involved in a transaction. And so we've all got to work together to achieve that goal of the of the selling shareholder group. And if you come in just for a small piece, then certainly you might you might struggle to to understand that. Go. I've got a question here. I'm going to read it. What's the best way to approach my client and let us let them know that it's time to bring a business owner in to meet a business adviser like us. And that's a great question. You know, it has to do with trust and it has to do with caring about them. And it has to be really with probing questions. We find that probably ninety five or higher percent of our business comes from referrals from attorneys and bankers and insurance agents and CPAs and people like that. And it's because they've built trust with their with their clients. There's a relationship there. And you can you can talk about age, you can talk about health. You can talk about are your kids capable of taking this thing and continuing your legacy. You can talk about the fact that the market's changing a little bit. And what is your plan to keep up with the market? How's credit gone? What's be done to your business? Things like that.

[00:24:41] But it's it's more. About caring about a person that gets you into that conversation than it is what you do for a living, right. And so I think you can leverage that trust to have this conversation to say, hey, there's nothing wrong with talking to an investment banker, kind of understanding what their process looks like. There's nothing wrong with taking we have a couple of surveys that help business owners really kind of discover whether or not they're ready and if they're not ready, why? You know, there's nothing wrong with just taking a couple of those surveys. So help us help them decide when the time is right. And so that's a great question. I appreciate it. That was something that definitely isn't top of mind for folks. You know, when we. Meet with this business owner and they decide, yep, timing's right. I like the valuation range. I would accept a deal in there, depending on how it's structured, depending on who the buyer is. Let's move forward in the process. Let's sell this company. That's the moment where we have to back up for a second and say, OK. Back to preparation, we've really got to one chance to to go out to the buying community and tell them who you are and what we want to do. And so this becomes critical when we put our pitch book or SEM or deck.

[00:26:13] You guys have heard those terms together that tells the story of the business. Right. And then the story of the business includes a tremendous amount of financials. We use charts and graphs and we do get conversions. If it's a construction company, there's going to be cost of completion and discussions about working capital and where retainment fits into that. We always put together a trailing 12 month. We want to show the last three years Aveda in the next two projected years of things like that. That's a huge accounting function that has to go into being ready to present this business to prospective buyers. We certainly, if they own their real estate, we want to have an appraisal. We to have an environmental assessment done. We really want to. And this is our job as transaction advisors. We want to anticipate every question that we think a buyer is going to ask and we want to touch on that in these marketing materials. And marketing materials are a little bit of a fishing thing. We want to get a buyer on the hook and in real time in and get them interested. But more than anything, if we end up closing with one of these buyers, we want to get them a true and accurate look at not only what business exists today, but what the potential of that business could be in the hands of the right buyer.

[00:27:37] And then that potential is what's going to drive everybody towards a really good transaction, really good closing. So marketing materials for us takes probably ninety to one hundred and twenty days to put together. I know there are brokers out there that do it in two weeks. I know that there are transaction advisors out there who write a one page synopsis attached, three tax returns and that's their marketing materials. And so the team that you surround yourself with, I believe, is going to greatly affect the outcome of the process. And if I can for a minute, I'll tell you about our team just so you can compare and contrast that with something that you may have experienced out in the marketplace. You know, I was a business owner to start with. I bought companies. It sold companies. We started this firm because I didn't really feel like there was a transaction oriented business advisory group out there whose goals aligned with my goals as a selling business owner. And their fee structure certainly didn't align with how I thought the fee structure should be. And so they got paid whether I achieved my goal or not. And, you know, there's there's some aspect of covering costs. But, you know, if you're on my team, you need to be striving to achieve my goal. And so being a little frustrated with that, I got with my business partner, Brett, and we sat down and we put together this company and, you know, in this company, we said, OK, the existing climate is to to operate a relationship this way, to handle a transaction process, this way to charge for those services this way.

[00:29:24] What do we like about those things? What do we not like about those things? We made a big to not do list that this firm will never get involved with. And we have very short we will be list. And it included things like very transparent and very high integrity. We think it takes a village to achieve a great outcome and it can't really be done by an individual. We have pillars of excellence. We put processes that are different than everybody else does. And so when you get behind those things and you look you look at the team behind those things, that is going to execute the plan on behalf of that business owner client and our firm, we have X CEOs and presidents who have walked the path that our client is walking today. Right. And I'm one of those. We have a CPA and former CFOs on staff to crunch the numbers, convert to get really work hand in hand with you, the third party accounting professional, to make sure that we've got this thing buttoned up for our client. We have MBA data analysts. We have MBA researchers. These will come into play in just a minute when I talk to you.

[00:30:38] And then finally, we have legal counsel. We have an M&A attorney on staff in-house. And so if you look around the landscape really coast to coast, you're not going to see a firm that looks like ours because we're unique. We started this company to be different. We've gotten great, except. From the legal and the accounting and the business community, which proves that our methods work and there's a reason that industry averages for success are so low and ours are so high. I'll tell you about that in a minute, too. So let me jump forward to buyer identification, because the team is a big deal. Right. And so there's really five types of buyers for the companies that we all get involved with. Succession is one that's almost always family. That's not something that you need a firm like ours for. Very often you can forego that part and those expenses normally jump down to, say, a foreign buyer. There's a lot of those in our marketplace right now. There's Chinese companies, there's Russian companies, there's German companies. There's certainly over here buying oilfield assets, energy assets, real estate, health care. So we have to deal with those every now and then. There's an insider team that could be your buyer. Maybe you've got key managers who you've groomed to take over and there's ways of putting together a buyout that leverages that management team as your successor.

[00:32:09] But in most cases, far and away the majority of the transactions that happen in our spaces. These are going to be strategic buyers, which is somebody who's in the same business as your client, could be a competitor, could be a vendor, could be somebody with a complementary service or product that wants to bolt on your client service or product. But certainly those we call strategic and then a financial buyer could be a family office, could be a private equity firm, could be the pension fund. Anybody who's not in the business and is doing this as an investment, those are going to be financial buyers. So for the rest of this discussion, I'm going to focus on those two foreign and financial buyers. And just we're pushing up on time, too. So I'm going to I'm going to speed up understanding buyer drivers. This is huge. Business owners always think the world revolves around them and it's about them. It's about the performance of their company. And they can impact those things for sure. But a buyer has to make a return on equity. A buyer has to convince the lender to get on board in most cases or a financial partner to back this thing. And so buyers focus on the risk and investment, buyers focus on transitions, buyers buying come in and say, hey, I want to acquire a set of personnel who have key skills, or maybe they want to buy a client list or maybe they want to enter a geography.

[00:33:44] And so buyers have drivers that are motivating them. And so one of the things that we're trying to do is we're trying to find the best buyer out there in the universe of buyers to match up with our one seller and have an alignment of interest. And that's that's a difficult thing. We think the market doesn't do that very well. That's why the success statistics are where they are. And so we think there's a different way. The offer process is a big deal. Right. So finding a buyer, most brokers will go out and list their company for sale. They'll put it on MLS. They'll blast out emails to everybody they know. Usually there's there's thousands or even tens of thousands of people that see a teaser trying to reel in buyer interest. They certainly can go to online portals and see this. And then most of those brokers that operate that kind of business model, they don't vet their buyers very well. So a buyer expressed interest. They call the business owner, start trading information, start having conversation, waste in the business owners time. And I get told every month by by somebody that calls me and says, hey, I went through this process a couple of years ago and the broker just wasted my time with 15 different buyers. And we traded information, we shared financials, we did all this stuff.

[00:35:10] And then I found out that my buyer can't even qualify for the lending or they haven't put a financing package together. And so they never got to close. And we just we just think that's one of the problems at this level of the industry. And so talking to you about best practices and what we as advisors can do to help our clients be successful, you know, the way to be successful in this business is to market the business for sale, not listed. And what does that mean? Well, at our firm, we put some researchers and some analysts together on a team and we say, hey, go find a group of buyers who have a stated operational or growth reason why buying our client would. Fill a void in their organization. Those are the buyers that are motivated to close the deal here. They're going to value this thing higher. I'll give you an example. We have a transaction in play right now. We had fifty three interested parties that signed an NDA to find out who our client was and then went through the vetting process to make sure that they were capable of closing a deal and looked at the deal. Out of those, we had eight submit indications of interest, kind of telling us the parameters of how they would like to purchase the company and what they valued it at. Those are very good numbers. By the way.

[00:36:38] We sat down with our business owner and we said, hey, these are the best opportunities to sell your company. We called away five of them was short listed. Three, we called those three. We said, hey, you guys are on the short list. You're in the running. We need to talk about a few things. We need to get you confident enough to to submit a letter of intent, which is the eye. That's where it really gets serious. And so for us, we don't allow anybody to beat our business owners until they're on that short list. So we only had three parties meet our business owner buyers. We met and toured the facility. We got three fantastic offers. Our our client picked one, and now we're into diligence, headed to closing. So the offer process is huge. And how it's orchestrated is a big deal. A mistake. Sorry if your attorneys are out there, but a mistake is to have an attorney run this process. You're not their only client. I don't do this for a living. They've got a different objectives. And the offer process we see kind of is a little less efficient when you don't have a transaction professional doing it. So what makes a good deal for our client alignment? Really, what makes a good deal for our client is when all the advisors are working in harmony together. What makes a good deal for our client is when we achieve their goal.

[00:38:05] Obviously, what makes a great deal for our client when there's a cultural fit, when the employees are well cared for, when the clients and the customers are well cared for, when the business owner who's selling in the business that's buying have a great fit, they have a bond and and they strike up a great relationship. We see that more times than not in our practice. And it's pretty rare. I'll show you how rare it is. I'll talk to you about deal statistics, mainstream businesses. We consider those to be donut shops and franchises and car washes. Anything with about five million or less in revenue, less than a million Neveda, for sure, that we call a Main Street business. The national statistics are somewhere between nine and 10 percent of those businesses that get listed for sale actually transact. So if you flip that statistic over, you're going to say, hey, ninety to ninety two percent of those businesses fail to transact. I've wasted a lot of time that we've wasted a lot of money that wasted your time as an advisor and they failed. Why is that? You ought to know before you go in and get involved. Lower middle market is where our firm operates. We say five to about seventy five million in revenue. Abida Between one and 10 million roughly. That's our space. That's probably your face. The odds of of success are a little better.

[00:39:28] They're not great national statistics. Twenty three percent chance that if you go to market, try to sell your business in this space, you'll be successful. Flip that statistic over. That's about a seventy five percent chance of failure. Why is that? You really ought to analyze that. Understand it. I think it's who you choose as your team, what process you run, your expectation and able to defend your opinion of value. At our firm, we're running just slightly ahead of 90 percent success, less than 10 percent failure. Why is that we stage gate our clients and, you know, we don't let them move forward if they don't pass a stage test. There's one for the individual as the owner, there's one for the business. If there's a lawsuit or liens on the property or warranty claims that are abnormally high, that business probably isn't sellable. Don't let that owner go through the process. And I'm pushing up against time here. So I'm going to stop there. I'm going to see if you guys have any questions while I'm waiting to see if any pop up. I will point to a couple of things on this slide and then I'll put my contact information up. If you want to reach out to me. It's interesting. We we did a study on one of our transactions. It was actually a failed transaction that covid killed it back in March. But we were just a couple of weeks away from closing.

[00:40:57] And at our firm, we had forty six hundred hours into that event advising that client, running the process. That doesn't count the legal team. That doesn't count the third party accounting team. A couple of the other specialty advisors just in our firm, we had about forty six hundred hours. So this is a serious, time consuming year of your life in most cases, and you don't want to go through that and fail. So you want to get with a great team, skilled negotiators. We want to have a plan we want to maintain control on, make sure that the process fits the bills, pay attention to details. That's how you are really successful in a transaction. So a little bit about our firm. If I could brag for thirty seconds, we just got a great recognition. We're top twenty in North America. There were seven hundred and eight firms that went through this evaluation. We scored number sixteen were the only one in this part of the world. Very proud of that. I give my team all of the credit there, the strength behind this thing. It's core companies, core competencies, it's pillars of excellence, it's best practices. And we have success out there. If I can help you guys, we do continuing education, love to make new friends and just really help people be successful with our passion is for for business owners who are able to do this one time to do it really well. So thanks for your time. I hope you have a great rest of the conference. And Happy Halloween.

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