The Exit Playbook: How to Avoid Leaving Millions on the Table

24:39It's just a lot of hassle. And so if somebody comes in and offers you something that you think sounds good, and you're like, yeah, I could see myself taking$20 million, $30 million,$100 million for that, That's kind of in my range. And if I don't have to go through all that hassle, I'd just as soon not have to go through all that hassle of that process. It sounds pretty appealing. And the process is disruptive. And you have to be careful how many people, this is a mistake, how many people in your company are going to know that you're doing this, that you're thinking about exiting, that you're even entertaining it.

25:14Because the minute that you do, in several cases, we see top management that has equity and top management that does not have equity both change. The people who have equity are counting their money and spending it based on the highest multiple they can think that you might get, and they might check out and underperform, and then you got to talk to them about that, and that's an awkward conversation, and you might not be selling. That's a significant challenge. Your employees, for sure, they're thinking, what's going to happen to me? I need to find another job. Your customers are going to be like, are things going to change when you're owned by this big PE company?

25:49I think I might try to see who else might be good to use instead of your company because I don't want to deal with, you know, sophisticated financial buyers. So there's all that that's going on emotionally. So not letting people know that you're entertaining the idea until you have a deal, really, as long as you possibly can. Management, not letting them know, even your business partners, if they're minority partners, for some period of time until you actually come close to an LOI, I think is really helpful. And then taking that, like the temptation to take that first deal and just chase it down without going through the process will cost you a lot of money.

26:28I mean, you'll definitely leave a lot of money on the table if you're doing that. Yeah, because the process is effectively an auction. Yeah. You know, I mean, if you got, if two people want you, you're worth more than if only one wants you. I mean, that's just, that's just basic supply and demand. And creating that, you know, because, because you said something, you're like, okay, yeah, so to run a, to run a process, the first step is you get an investment banker. Well, we all know those, right? No. Most of us don't know an investment banker. We've heard of them. So what do you do? You just Google investment bankers in my area?

27:00Yeah, you're bound to found good ones out there. Whoever's got Google reviews or Yelp, especially. Yeah. The other mistake I would say is that when When you're within three years or so of thinking that you might do something like this, and this could be a sale of part or all of the company, majority, minority, or just a recap, including debt financing to just get money to take chips off the table, you really want to go and start meeting people early on. So like we're for sure three years out from three to five from a sale of this business, right? But we want to meet now because just taking the deal to the investment committee, if the PE firms biz dev person already has a relationship with you, including I met them for 30 minutes at a conference that JP Morgan put on.

28:04The investment committee is going to say, how long have you known this company? I met him about three years ago at a JP Morgan conference. That deal is much more likely to get approved than I just met him. It looks like a good deal. And that sounds silly, but just the fact that they've had their, because you're going to stay, like I'll stay in touch with all seven of these for the next three to five years until we do a deal, right? And so meeting and staying in touch with or having somebody that you're working with doing that is a huge deal to get you through the investment committee and increase no like trust.

28:40And the investment committee is basically just the partners get together at the Monday meeting. That make the decision. Yeah. But they're going to make the decision of whether or not to do the deal and enter into negotiations. And then they're going to make the decisions on what is the multiple, what's the amount, what are the holdbacks, et cetera, et cetera. What were the things when you were talking to these private equity groups that you could tell? You know, I'm sure they asked you some questions about the business. What were some areas where they clearly their eyes sort of lit up and they're like, oh, well, that's nice.

29:05And, you know, conversely, was there anything that you kind of got a sense that they were down on? They were all very, very interested. It's a very appealing company. The things that were really important to them were customer concentration. Is there any one customer that makes up more than a certain amount? What is the amount of recurring revenue was a big, big point for them. What is the level of AI integration and tech enablement was a big deal to them? That was interesting, yeah. So, I mean, a lot of what we were talking about this morning, a lot of what Richard is going to talk about tomorrow, I think that's going to be good for a turn in something, maybe half one.

29:51Maybe it doesn't take you from a six to an eight, but six to a seven. Just being able to say, look, we've AI-ified these entire departments is big. The CAGR, the compound annual growth rate, ours is almost double what it is in the industry. So that was super, super appealing to them. like eyebrow raising, oh my gosh, that's really amazing. Our operating margin as well was about double what the industry's is. So that was also very appealing. So like they really perked up. And then like it went from very friendly asking the questions to that's amazing. What you guys have done is amazing. We definitely are interested.

30:36We want to stay in touch. How soon are you thinking about doing a deal like this? That's a pretty good question. Yeah, and you're getting a sense here, so you should know. What is your CAGR? What is your compound? Yeah, I went in. It's a really good point. I went in, and I had ops, marketing, and finance all prepare information so that I had a one sheet, like I would actually send out, that I was referring to in the meeting, so that I could basically answer all of those questions. Yeah. I knew what's the amount of recurring revenue, what's the CAGR, What's the percentage of recurring revenue? What's the AOV, LCV?

31:15What's the growth rate and percentage of each business segment? There are four business segments in that company. What percentage of total sales do they represent? What percentage of total profit do they represent? Those are all questions that you need to have ready to go. And when you do, you distinguish yourself from the people that haven't prepared. Because what, yeah, most of it's like, oh, so, you know, what's, yeah, what percentage of your revenue is represented by, you know, subscription recurring? I think it's like a lot. Yeah. It's good. A lot of people, a lot of people like our stuff.

31:52Yeah, yeah. I mean, but you could see the difference. That's, okay, so you're a six. See what I'm saying? Like, that's a six. Like, this is why, like, knowing the questions that are going to be asked before you go in so that you got those answers ready is really, really important. And they know then that you know what you're doing. Yeah, so they're not going to throw. There was one other thing, because you talked about, and I thought this was really fascinating when we were talking about this, because they want to buy a platform, which means they want to buy a business that they can tuck more businesses into.

32:25And so one of the things that you said they were particularly impressed by is that this company had already done some acquisitions Yeah, you will get multiple turns higher multiple if you've proven that you can do acquisitions and integrate them successfully So I had the numbers on the acquisitions that we've done how they've performed since we did it and And that made a huge difference what we don't have that they would like for us to have is we don't have a dedicated M &A team that is tasked with doing acquisitions regularly, and we don't have an integration team that's a dedicated team to integrating those acquisitions in.

33:03So what we will do before we take money is we will have both of those teams in place, and we will probably do another five or six acquisitions. The reason being that they like organic growth. Organic growth is really important to them, but also inorganic growth, growth as a result of acquisitions, is a proof that what they're going to do once they come in is going to give you money to go buy more companies. And that's going to accelerate the trajectory of your growth. And if you can prove that you already know how to do that and they don't have to help you figure it out, and not only that, but you've got dedicated teams, and not only that, but you've integrated and you have an integration team, then you're definitely going to get what I would call a super premium.

33:52I think we're already at a premium because of where we are with respect to the industry, but a super premium is going to be, and we also have your wish list of things that you wish that we had. Because think about how much less risk they've got if you've already proven that your company can handle, like identify and absorb successfully other companies. It's pretty indicative you'll be able to do that in the future. Yeah, it's the perfect, I mean, if you want to basically be treated like a platform company, act like a platform company before you sell. That's the key. And that's, you know, tomorrow morning you're doing a session on, you know, kind of the newest stuff on business buying and selling.

34:30So even if you think you've heard about Roland, talk about this. There's lots of changes, lots of stuff that happened, SBA stuff. Sometimes it's worth going out there and doing some of these deals just to show that you can do it, to signal that you can do it. It is. And I would ask too, like I asked them, how important are acquisitions to you? Because some of them, like one of them had a company they were in for 10 years and they only did, I think, four acquisitions during that period. And they were like, we're very into organic growth. And unless the acquisition provides one, two, three, four benefits, we just assume as long as the company's got its CAGR up where we need it to be, we're good.

35:09one of the companies was we grow by acquisition we want to go in and typically over a period of three years while there's no you know no like requirement we're probably going on average to do 16 to 20 acquisitions that's a lot of acquisitions over a short period of time right so you want to know what their expectation is too because if it doesn't match with what you want to do Then you probably don't want to work was the former a family office So that's why they were okay with family office was the one that had the longest horizon Which was in excess of ten years. They're like basically if we buy it and we like it We don't ever want to sell it.

35:47Can you break down the industry private equity family office and pros and cons? Sure private equity is generally a group of people who have Decided they're going to pull money that other investors have like public pension funds and things like that to to have that money ready to buy companies and then they're going to target a certain return typically six times capital to over the period of the of the private equity fund which might be anywhere from you know five to ten years but they're definitely transactional financial based looking for exit they're definitely looking to turn that money and get out they are not in they're in for a while and they might be in for a while and then let you buy them out and even finance that but several of them we talked about that but but they're definitely in and out investors family office is looking for a good investment to hold forever they're typically formed when a family has a very big event that whether it's inheritance or or an exit that gives them a bunch of money then they hire a dedicated investment team that only does investments for that family and their investment horizon is significantly longer because they don't they don't want to be in it.

37:02They don't want more money back. You give them a giant pot of money and they just got to figure out how to put it back out there. They're just trying to deploy the money and get a good return on it. Yeah. And I think that's, we'll go to questions next, but I do think that that's something for everybody to remember because we can sometimes feel like, oh no, it's scary out there. The world, you know, it's uncertain. There's a lot of uncertainty. But one thing that is certain is if you're sitting on a giant pot of cash that someone gave you, you have to put it somewhere. You have to deploy it. And family offices are more about wealth preservation generally than they are about wealth appreciation.

37:35Right. Yeah, I got that. Moore, can you speak to just how much money is sitting out there and how desperately they still want to deploy it? Does it seem like there's been big changes in multiples over the last couple of years? Yeah. I mean, everything I read says they're down, but my experience is they're up for everywhere we're dealing. So I can't reconcile that. I don't know why, maybe there's more unsophistic, that's probably it, is that if you think about what private equity has really done is target very fractured businesses like HVAC and auto repair and things like that, and so they're dealing with much greater numbers of less sophisticated investors, and I think that tends to drive the multiples down, but in that middle market where we play, I have only seen them, you know, I've watched the numbers and I see them go up, and even the latest data from like deal stats is that the multiple has increased significantly just over the last couple of quarters, over last year.

38:36Yeah, so if you think that now... For private equity slash... Yeah, and I'm not suggesting that anybody like rush to a sale, but if you think like, oh, right now would be a bad time to sell, not true, not necessarily the case. And if you're hearing like, oh, I guess multiples have come down, the multiples that have likely come down are the crazy, insane, you know, Tiger Global out there throwing... SAS multiples, for sure. SAS multiples. SAS has gone from you're going to get a 25X on a non-profitable company as long as you've got more than a million in ARR to it's got to be a profitable company with maybe an 8 to 10X.

39:14Yeah. It just finally started recognizing math. Yeah. Yeah, I never understood that. But for folks selling profitable businesses at a multiple of EBITDA, don't let like the media or people tell you like, oh, it's terrible out there. And there's so much money that's been sitting on the sidelines that they need to deploy now. Yeah, I mean, like I said, nobody there was shy about offering anywhere from$200 to$2 billion in investment capital. And they were all on fund, you know, like I think the youngest fund was fund number three. and several were on funds seven, eight, nine, and all of them were minimum a billion up to about four billion.

39:57Because these are middle market, so they're not doing$20 billion deals. But their sweet spot really, most of them were, we really like to invest somewhere between 100 and 500 million. And the other interesting thing, which is good for negotiating is, there are seller take back notes that basically if your private equity fund allows you to participate in the funding of your acquisition by you effectively lending them some of the money to buy the equity, you can keep the equity that you've got. Plus, this is hard to explain. Yeah, I was going to say, you got a break. You can keep the, I mean, I'll try to do it tomorrow because I need a chart.

40:41But effectively, you can lend the private equity firm money to buy the interest that they're buying and effectively get paid plus get interest on what you are getting, what they are buying. And it allows you to keep a greater amount of equity in the company and get paid more overall for the deal. And I'd have to do like a side-by-side to show you how it works, but it's actually really cool. Most of them won't let you do that, so it's a question I ask. That is cool. I know I got one more question then. Does anybody else have any questions on these lines? Okay. So can we get the catch box out? We'll start flinging these around.

41:21And I know we have two of these, right? So can we get two of them going just for the sake of efficiency? Cool. We'll kind of get one on this side, one on that side. A lot of people, when they think about selling the business, they approach it as an all or nothing type thing. Even if it's like an 80-20 deal, that's not the approach that you'd be taking with this business. Can you kind of speak to the difference between private equity, growth equity, and just taking some chips off the table, cleaning up cap tables, getting some dry powder, and how that could be a better option? because if you're thinking to yourself, hey, this sounds great, but I don't know that I want to sell.

41:58Maybe I just want to get some additional dough to infinity and beyond. I guess, can you speak to that, those infrastructure that are out there? Yeah, depending on what you want to have to go and do acquisitions. And you don't need a lot of money to do acquisitions as we'll talk about tomorrow. But if you do want to do more traditional acquisitions and you just need some capital, the best thing you can do is just go borrow it. just basically go to the bank and say, can you fund this? Now, the bank might not be willing to, at least I know our experience with, say, Digital Marketer, is that the bank's like, tell you what, we'll loan you$2 million, and then you keep the$2 million in the bank and pay us a really high interest rate, and if you fall below the$2 million, we need more guarantees, and we want you to personally guarantee everything.

42:45I don't understand why anybody ever does that, but I guess they do. I know our CFO said, do it, and we were like, you're an idiot, in the friendliest of ways if you're watching this. But what you really want to do is ideally, if that's your plan, use debt to do it unless you need a lot of capital. And if you want to take chips off the table, then that can be done through a recap, so a recapitalization of the company. And that's generally a different kind of firm than a private equity. They're just looking basically at best to get some warrants in your company, some option maybe if you do sell to get a little kicker to what they're going to get.

43:27The growth people are typically going to take a minority interest and they're giving you capital to grow. They're usually more early stage, so if you have a company that's been around a little bit longer, they may not be interested, but you will get interest from private equity in helping you grow the company. And then you get to how much do you want to sell? And then you're talking about are you a minority investor? are you a majority investor or do you do something in between so i don't know if that answers well yeah i was gonna say for this particular deal there you don't have to sell 70 80 a majority percent of your company i guess is what i'm saying like for this particular deal targeting yeah we we would right now um probably be around a half a billion valuation on that company and um we would it depends on the owner you know me i'm i want to hold it for longer right um but but sometimes that's not good because a pandemic comes.

44:20But usually it seems like it's good with the companies that we've got. So we would probably sell somewhere between 30 and 40 % of the company ideally. But there are some strategic partnerships that some of the private equity companies have. And so one of the questions to ask is how well do you integrate your portfolio companies? because we're a professional services company. They have other professional service companies that are not competitive to ours in their portfolio. And so if they've got a fair amount of them, some of them have formalized masterminds like this for all their portcos, all their portfolio companies, where you all come together and get to know each other and talk and strike strategic relationship deals, which is important to us because we're very flexible in the industries that we can partner with that not compete but add more money to their and our our businesses and so that's one of the things that's important to us is we're looking and something you should you should ask and so I was I would ask and some of them are yeah we generally it's Chinese wall between everybody and others are yeah if you if there's anybody you want we'll introduce you others are we can make introductions and by the way let me introduce you to two companies, I like those people because they're giving before.

45:44And then others are we actually have a formalized structure with quarterly meetings and monthly calls and that's kind of a good thing to check out when you're looking at it too. Because to grow organically from just those introductions with no acquisition that's facilitated by somebody that has the reputation that your backer has is kind of cool. Nice. Yeah, so three years ahead we should start having meetings and building relationships and what have you. What should we be revealing in those? And how careful should we be about giving numbers, you know, revenue and profit and growth, et cetera, et cetera?

46:22And I guess by the same token, you know, every so often some company calls us, I think usually with a platform that might want to buy us, same kind of thing. They want to get on an introductory call. In those meetings also, you know, how careful should we be? How much should we? Should you take them at all? Yeah, I believe that taking every serious offer is smart. I think that if you get lots of people fishing, I'm not as interested in talking to those people because they're just low-level people making calls. But if I get a serious connection to a fund, even if I don't think we're ready to sell and I don't think that they would maybe be the ideal, I definitely like for, we like for our founders to have those conversations because that's a great experience building thing for you.

47:10And it shows you that your company's valuable and it gives you an indication of kind of how the process works and the type of people you're going to deal with. And, you know, honestly, from our side too, it lets you see that we're really good at what we do by the questions we ask and how we are able to deal with those people. But also just to get those relationships. Like, we'll know if we're working together, we'll know. If you don't have somebody that's advising you that knows that this company that reached out to you has no interest in this industry. They're just dialing for deals, right? But if it's a company that's a significant player that we've identified as a potential acquirer, funder, strategic partner, et cetera, they're in the sector, they're actively investing, and we like the way they do things, then I want you to take that meeting and have that conversation.

47:57The only things that you would typically reveal would be high-level things. You can decide that you want to or not tell them what your cagger is and tell them what your top line is and what your EBITDA is I I am a fan of disclosing that information because I Want more people interested and I want them to know that we are in their buy box And so I I'm a fan of disclosing that I'm not a fan I mean even right now we're in the middle of due diligence in a company on exit and we're in we're in pre-due diligence, I guess I would say, that they have made a preliminary indication of interest and we've got two people that have done the indication of interest that we like, that we're talking to now.

48:45One of them wants to do customer level due diligence, which we absolutely will not do. They want to do it because it's a little bit of a specialized nature of the way that you value and validate customers, but like the most that we'll ever do even after, like I won't do, I won't release any customer indication information until we have an actual binding offer, not an LOI, but like a binding. Yeah, customer diligence when they start blowing up your customers being like, so you actually like these people, huh? That's weird. I mean, and it could be incredibly disruptive. And by the way, that is when your employees will find out.

49:21Yeah, and we'll do the best we'll do there is like nth customer like we'll give you you can have if we've got 10 ,000 customers we'll give you access to 75 and you can do your due diligence and have a statistically significant sample of the number of customers that we've got so that you can verify the things you need to verify but everything else is anonymized throughout the deal with respect to that same thing with with employees there's no access to employees there's only access to senior management once we've got an loi and we get to management interviews so high level information no problem specifics even CAC and those things you know I'm less concerned about that getting out to our competition and honestly I kind of want them to know so in in most cases I'm okay sharing that because we share with you guys stuff that we know is going to get out way way more than we would tell anybody right yeah and so in our way that we do business, we're generally telling more about the companies we work with than a lot of people might, but we don't reveal anything that we feel would be challenging or damaging.

50:30So it's kind of like that's what we do, and I'm comfortable with that level of disclosure. I wouldn't go into any more specific KPIs or, you know, individual people or customers or anything like that beyond that. Wouldn't show them offers, wouldn't show them trade secrets, you know, that kind of stuff is later. I also would be very careful about what Roland said, because probably most of you in this room just get random emails from just associates at some private equity group, right? Like we all kind of get those, right? I want to buy your company, or from some search fund. I mean, that is one of two things.

51:08That is a very, very low level junior associate, might even be a freaking intern, at one of these private equity who, like Roland said, they were just told to dial for dollars, and they don't know who they're talking to. And it's just, it's going to be a waste of everybody's time. So if it's that, unless, like you said, unless you recognize them as an intro, I don't feel like you need to take any of that or even dignify it with a response, right? I don't. Now, if you think you might want to sell, then maybe you start having those conversations because it's a good test. And it's sort of like if you're a comedian, you want to go play some small shows before you do your Netflix special, right?

51:42So it's worth it for that. I don't think you can have a realistic conversation with them without revealing sales profitability those kinds of things you really don't need to move beyond that I would just be very very very careful about having too many of these conversations if you don't have somebody kind of in your corner like a Roland because you can get drunk real quick on the invisible money and they're really good at selling you on what your company could be worth and we get really good as entrepreneurs at mentally spending it while simultaneously imagining all the freedom we're about to have when we sell this thing.

52:20And that's when we get distracted. That's when the business starts to go down. And I tell you, they're more than happy for that to happen a little bit. And Sharky-wise, like we had one six months or so ago and they basically reached out to the founder. The founder met them, flew to meet them and then was about to have another meeting when I found out about it. And I was like, why did you not? Like, we have an interest in the company. Why did you not get us involved? And it's like, well, I just wanted to see, but it sounds good, and I think I'm going to do it. Like, wait, wait, wait a minute. And what was that, multiple?

53:03And so it was the offer came in at a shocking range. It was between 6 and 8.5, which is what I told him. I said, they're going to offer 6 to 8.5, but they told him 25. So it was like, typically, I think in this situation, we can do 25. And I was like, that sounds really high, but yeah, let's talk to him. So I flew in. We met with him. And it was basically a couple of meetings. And then the offer came in at between 6 and 8.5. the actual offer was six. The range that we were told after the 25 went away was six to 8.5, the offer was at six, with a 30 % roll in, meaning we were gonna have to put 30 % of the money that we got back into the company.

53:53And what I loved was they didn't tell us what their valuation multiple was, but I was able to get enough information to calculate that they had recently had a valuation at 11.2, I think it was. So they basically wanted to buy us at six, then have us, so basically give us cash at a six multiple, then have us buy 30 % of what they had just sold to us, what we had just sold at six, back from them at 11.2. Not disclosed that way, but that was, I mean, this was to me kind of a snarky deal. Are you making a formal declaration of shenanigans? Yeah, you know, turn the camera off and maybe I might. But that was really uncool.

54:48And it was, like, if you don't know how to do that stuff, you can very easily find yourself in a deal like that. and then they were promising all this other stuff. But when you see what's going on with them and I look at their growth and I found out that our company was actually growing significantly faster than theirs at a significantly higher profit margin and a lot of the things that they were telling us about their international division that was creating this giant multiple that they were promising didn't look right and they were in the middle of a refi to recap out the money that they had invested in other companies.

55:20So we would come into a company at a significantly higher multiple, almost twice what we were being paid for 30 % of the total amount, plus a significant hold period, plus all kinds of debt from the recap that had to then be dealt with. So that was, I mean, if they could have done it, it would be great. And they were counting on, basically, they chased the founder and did their best to cut me out, but the founder wouldn't let them. And we had equity in that deal. So it was interesting to watch, but fortunately the founder was smart enough to say, holy crap, once I see all this out, I'm really disappointed that that's what they were trying to do, but they were trying to kind of romance and sell the value of what it could be when they went public in some unspecified date in the future, and so I'm always with those deals like, okay, so you're selling us based on the public value, are you willing to guarantee it?

56:19Oh, no, wait, you know, too many things, It's like, okay, then we're not talking about that anymore. We're talking about what you're going to pay, right? Fleet? Yeah, I'm still trying to understand this roll-in thing that you referenced a couple times. So you explained it, Ryan, maybe they'll only buy 70 % or 80 % of your company. You still own 20 % and 30%. And let's say you're a privately owned company. How much of that is you taking chips off the table? and how much of that capital are you supposed to invest in growing the company? And how does that work out? The roll-in is different from what you actually keep.

56:56So I'll let you explain that. No, go ahead. So if you're selling to private equity, they're typically not buying 100%. They're typically going to buy some, and they're going to expect you to hold back some of it for the purposes of you continue to stick around and add some value. There are exceptions. I was surprised that you're like to hear that there are some firms in the ecosystem that are like, no, no, no. We're going to buy 100 % of you. Get out. I actually respect that. I do, too. I respect the hell out of that. I mean, I don't probably I probably wouldn't necessarily want to do it. Actually, I might.

57:32Depends. I might. Yeah. You might. You might. I kind of like it. But the typical thing we said was was more of like an 80-20 deal. Now it's more like a 70-30. The roll-in is after they bought it, they're saying, yeah, we want you to also essentially buy back into this company. So the money that we just gave you, as a part of the deal, you've got to give some of that back to us. No, I get that part, and I get the reason why that was pretty unethical, what they were trying to do. but if somebody's buying you, they're buying you with the intention of that growing. So are they just buying you because they think you can grow it on your own or are they gonna bring more capital to the table to help you grow it?

58:18It depends as everything does but almost all of them do growth by acquisition and so they're going to be doing acquisitions. They're buying you now and if you're a platform company as opposed to a tuck-in or an acquisition, they're doing for a platform, then they're expecting most of them that you're going to do acquisitions and they will assist you in obtaining the capital to do that primarily through debt, which you'll be in for 30 % of if you've rolled in 30 % of your investment. Does that make sense? Yeah, it does. And I had one other question. So you talked about beginning to have relationships with potential suitors for six years, but But you also talked about the expense of having an investment firm on board or consultants on board over that same period of time that could be expensive.

59:07And then the other part of this strategic buyers are often competitors. So that seems like a different ball game of how do you keep that confidential so you're not signaling to your niche that you're in, however broad, that you're up for sale. So the first thing that you typically do is you're soliciting indications of interest and you send out an anonymous one sheet to every potential buyer, strategic, financial, or otherwise that you've identified. And so we would send out, like for Digital Marketer, we would send out, is Texas considered Southwest? Yeah. We would say, company located in the Southwest doing approximately X million dollars of sales and why million dollars of EBITDA, 10 to 20 year old company, five to a hundred employees and that's about it for the data that we would give and then the companies that we send that to are like I'd be interested we don't say what the company is so nobody knows that it's digital marketer right then we will get the indications of interest that say I would be willing to pay in the range of this and that for the company like that and we look at all the IOIs and we might get back 80 or 90 of them right so now we've got 80 or 90 companies that say they're interested in buying and we're looking at the ranges that they say and we look at the quality of the company their acquisition history how strong they are do we like them what's their reputation what's the number that they're talking about and we'll narrow that down to a very few and we'll send out the SIM the confidential information memorandum we'll tell them we'll say hey five companies we like your IOI we're interested we need you to sign an NDA at this point so that you can find out what the company is and you can actually get to the point of making an actual offer when they sign the non-disclosure agreement we'll send them the SIM the confidential information memorandum that has the more extensive details and identifies the company specifically.

1:01:17So we've constrained the number of people that know who we are to a very, very small number of potential suitors that have already told us that they're willing to pay in the neighborhood of what we want for the company, and we like them already. And so we've really limited the exposure that way. and it might be and very often is one or two strategics that are in there who might be competitors to us but again we're only providing very very high level information to them and even if we get to the NDA and are releasing full full top level financials so we won't give them all of the detail on the financials we'll just give them the top categories if any of you are in QuickBooks you can like double click and get you know things that drop down we just give them the high categories and they might talk to management but we're really at that point where you know we're going to have to give them access to the data room and you know some of our business plans no trade secrets no specific customer information no specific employee information just the things that we think they need to be able to make an offer so that's but but you are risking at that point even though they've signed the NDA that they'll do things that that maybe they shouldn't.

1:02:32I haven't really had anybody that I feel violated that, you know, in all the deals I've done, but I know it does happen from time to time. You're also, the purpose of creating this data room, this digital storage box for your sensitive documents, is that you also can tell who came in, what documents they read, how long they spent on each one, what parts they spent the most time on, so that if there is any kind of leak, you know specifically who didn't access, who did, who spent the most time on the information that was leaked so that you have the ability to state a case against them. But you're in a losing battle though if you're at that point.

1:03:12But it is nice to be able to have that data. Any other questions on this front? Cool, so I wanted to have this conversation for a couple reasons. One, it was timely. Roland just is right on the back of this. Wanted to give you some information for those of you who are out there, this is all stuff that I wish I had known. I mean, I had sold a number of companies before Roland and I were partnered up. And just looking back, I mean, left many, many, many millions of dollars on the table because I just didn't know. Somebody came along and said, hey, I want to buy you. I was like, that sounds great.

1:03:42Somebody likes me, you know? You respect what I built. Well, I like you for that. You clearly have fantastic judgment and taste. You know, so, you know, wanted to have this conversation so that you knew a heck of a lot more than what I did. Also wanted to encourage you that you know, because again, if we spend too much time watching the media, we can get very, very down on where things are right now. You know, there is so much money sloshing around out there. And it's not until you go and you talk to the people that have it that you realize, like, holy crap, there's a lot of money sloshing around.

1:04:15And we also just wanted you to know that when you get to the point that you're ready to do this, please talk to us. Like, we're good at this stuff. him in particular. You definitely want to do it years before you're ready. Yeah, there's so much that you need to do to get ready for it. And also getting ready for it makes it so much less disruptive when you do it. I mean, I have watched deals fall apart because of the disruption of the acquisition process or the exit process, having taking so much time away of the senior your executive management team that the business started to have issues and underperform which then caused due diligence to fail.

1:04:55I mean, it's like this just domino effect of not good things. So really getting your company ready for exit is a really smart thing to do anyway because it will be a better company. You will exit, we all do eventually, one way or the other. And having the option to be able to do it when you're ready in the least disruptive way really, really makes a difference. And if you decide you want to exit and you're going to do it six months from now, man, you're definitely going to not do as well as if you had planned it sooner. Yeah. So let's know. Along these lines, one of the things that a realization that we had is that in this world, we've got a lot of business people who are maybe looking at selling, maybe looking at doing different deals.

1:05:39But then we have another business unit, another division, Epic Network, where these are people who are buying and selling business. How many of y 'all are familiar with that side of the company? Okay, cool. Some of you, but not all of you. And so we kind of had this realization that we have these different ecosystems within our world and even within our different portfolio companies where there's this knowledge that's out there. And yet, like with so many businesses, we've got our own silos. So the stuff that's happening in here and the discussions and the business deals that are happening over here, many of you would benefit from knowing some of the investors and some of the acquirers that are on the Epic side.

1:06:20Certainly the Epic side, acquirers over there might want to know some of you. And definitely within our broader portfolio, there are people who you should connect with that might be a good strategic buyer at some point, to your point, Fleet. but we actually trust them and would say, if you, like, we're going to give you the detail, we can keep it all private. If you reveal this, we'll kill you because we know where you live, right? Like, just, we've got this really cool ecosystem of businesses, and what we haven't done a really good job of doing is connecting the people, especially in this group, our highest level clients with one another.

1:06:55That was kind of our big realization, sort of the big breakthrough that we had, and the reason is it's because all of our client services people exist at the division level, at the department level. So we just recently made a pretty big organizational shift where we're not going to have one person who is sitting at the main parent portfolio company level, the same level as Roland, Richard, myself. And this person's job is simply to make sure that they know what's going on in your world so that when appropriate, they can connect you to people and companies in other parts of our world in our portfolio, in and outside of the Founders Board and Scalable community.

1:07:41For many of you, this is a person that you know. It's a name that you know. For many of you, it is not. So I just wanted to take a minute before we break today to introduce you to this person. This person's name is Deanna Rogers. Please give Deanna a big round of applause. Come on up, De. Come on up. So Deanna is now the managing director for the Scalable Company, which again is our parent company that represents our interest in everything that we're doing. And truly her goal, what we've asked her to do is to get to know all of you in addition to all the other people that she already knows, which is amazing because Deanna is so much better at humans than Roland and I both are.

1:08:24She really genuinely likes every one of you. I like hugs. She loves hugs a lot. And those of you who know Deanna, who've worked with Deanna, you know this very, very well. So here's what we want you to hear is Deanna's going to be actively, like, reaching out, looking to connect with you because just that. We want to get to know you so that we can make connections. Anything, Roland, that you would? No, that's it. Deanna has been the CEO of the Epic Group for several years, five years. Is our business partner. Is our business partner in that as well. and I've known her for 15 years and worked with her.

1:09:00She's just an amazing entrepreneur. She's done multiple acquisitions. She's just somebody that connects with people better than almost anybody that I know. That's her superpower. And I think she's in the perfect place to be elevated up here and across all the companies. And she can really help make a difference in your business. Yeah, anything you want to say? Well, there's a lot of new faces. So if you were in the days of War Room, I knew a lot of you. Epic, I know every one of you. But there's a lot of new faces here that I don't know. So the goal is I want to get to know you because I probably know how to connect you in some way.

1:09:38So the goal is if you need something, if you're looking for someone or something, please tell me. I'll probably be reaching out to a lot of you in the next couple weeks to set up one-on-one calls just so I can get to know you better. because it's hard for me to meet all of you in one setting, but I do want to get some one-on-one with you guys and find out how I can best support you guys. And that's the reason we're doing it. It really is to support you. And this is in addition to the great work that Chris and his team is doing. This is for us to know so that we can work across all of our different companies.

1:10:10Also, lesson learned that Ryan said from Digital Marketer, which was like one of the big questions when they said, what can we do to help you better? And everybody wrote back, how do we work with you? and it's like, but that's what we do. We want to work with you. We want to work with you. Our evil plan in doing all of this stuff is not just to help. We do want to do that, and that's first, but the secondary thing is we want to work with you. So we love the idea of helping you build your company, grow faster, do acquisitions, get ready for exit, and this is the path to how we do that.

1:10:53Ever wonder how some people build real wealth through acquisitions while others just sit on the sidelines? Well, I'm here to tell you it's not about luck. It's about having the right system, the right deals, and the right guidance. And that's exactly what we give you in the Epic Deal Fast Track. If you've been thinking about buying a business, but you keep getting stuck, whether it's finding the right deal, structuring the financing, or negotiating with sellers, You are not alone. Too many people waste months, even years, just thinking about acquiring a business while the real opportunities pass them by.

1:11:27The Epic Deal Fast Track is not another course. It's actually an implementation program and it's designed to get you from the idea to the acquisition in just 16 weeks or less. We work with you one-on-one to help you find, fund, and close your first or next deal. And once you do, we're going to plug you into our elite Epic Board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the deal flow engine. So you always have high quality off market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket.

1:12:10And number three, our closing and integration system so that you don't just buy a business, you actually successfully run and scale it once you have acquired it. Plus, you'll have direct one-on-one support from an Epic Deal Advisor every step of the way. And that's people that have actually come up through the system and done these deals themselves. That's the only way to become an Epic Deal Advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines. Just text I'm in to 334-458-9034 and we'll get you in. So text I'm in to 334-458-9034. We'll get you in.

1:12:47No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now. I'll see you there.