Episode 67: Exit-Ready: How to Build a Business Someone Actually Wants to Buy

Selling a business isn’t something you figure out at the finish line, it’s something you build toward from day one. In this episode, Jennifer sits down with Cameron Bishop of Raincatcher to talk about what it really means to be “exit ready.” Cameron shares what he’s learned from 50+ acquisitions and decades of buying and selling companies, including why nearly 80% of businesses that try to sell never do. 

Episode Outline

• What It Means to Be Exit Ready
• Why 80% of Businesses Never Sell - Cameron shares data showing that most businesses that try to sell never do, and walks through the biggest reasons why.
• Financials That Buyers Trust - Why “checkbook accounting” kills deals and what buyers actually want to see
• Owner Dependency and Burnout -If you can’t take a real vacation, your business may not be sellable. Cameron explains why buyers avoid businesses that rely too heavily on the owner.
• The Emotional Side of Selling - Selling a business is not just financial, it’s deeply emotional. Cameron explains why owners struggle with identity, purpose, and letting go, and how that can sabotage deals.
• Start Planning Before It’s Too Late - Cameron shares heartbreaking stories of owners who waited too long—and why exit planning protects not just you, but your family and future legacy.

Related Episodes & Additional Resources

Episode 41: Selling Your Small Business: Real Talk, on Buyers, Profit and Letting Go with Jessica Starks. 

Guest Information
Cameron Bishop is a Managing Director and Partner at Raincatcher, a lower middle market investment bank that helps business owners sell and transition their companies. Over his career, Cameron has led or advised on more than 50 acquisitions, helped grow companies to hundreds of millions in revenue, and worked with owners on exit and succession planning. His passion is helping business owners avoid costly mistakes and maximize the value of what they’ve spent their lives building.

Links:
Website: raincatcher.com
Email: cameron.bishop@raincatcher.com
LinkedIn: https://www.linkedin.com/in/cameron-bishop-19b6804/

Meet Your Host:
Jennifer Kok is a Profit & Growth Advisor and founder of Next Wave. A serial entrepreneur with more than 25 years of experience, she helps service-based women entrepreneurs increase profitability through financial clarity, strategic decision-making, and systems that support sustainable growth.  

www.nextwavebusinesscoaching.com
Focus Growth Collective - is a 1:1 strategic advisory and mastermind designed for female business founders leading established service-based businesses so growth becomes deliberate, profitable and sustainable.

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LinkedIn: linkedin.com/in/jennifer-kok-17441829
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You’ve Built a Business You’re Proud Of -But It’s Time for It to Work for You. You’re still wearing all the hats, working long hours, and not paying yourself what you deserve. You know there’s more possible. More profit, more clarity, and more freedom to enjoy the life you’re building.  The Earn More Stress Less 9-Pillar Blueprint helps women entrepreneurs with families create profitable businesses that finally pay them back. 

My name is Jennifer Kok, and I’m a profit and growth advisor for service-based women entrepreneurs. I help women business owners make smarter, more strategic decisions so they can grow profitably, pay themselves consistently, and avoid burnout.

Because the truth is, business owners make decisions all day long, but the ones that really matter are often the hardest ones. Should I hire? Raise my prices? Invest in marketing? Let go of a draining client? Expand, or simplify?

Those decisions carry weight, and they can impact your time, your profit, your energy, and your long-term growth.

That’s why I created the Focused Growth Collective, a virtual mastermind for women business owners who want support making the kinds of decisions that move a business forward. Yes, we talk strategy, but we also look at the bigger picture like mental load, health, profit, and long-term sustainability.

My goal is to help women build businesses that pay them well, support their lives, and still feel worth leading 10 years from now.

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Transcript

Jennifer Kok (00:01.443)

am joined today by Cameron Bishop, who is a managing director at Rain Catcher. And I'm really excited to talk about this conversation of how to exit a business profitably, because I believe it's one that doesn't get talked enough. So thank you, Cameron. I'm so thankful for you to be on the show today to share your expertise.

Cameron Bishop (00:20.92)

Certainly, Jennifer, I'm very pleased to be here.

Jennifer Kok (00:23.941)

So Cameron, give us a little background of how you became an expert in selling businesses.

Cameron Bishop (00:30.414)

Well, my career path has been an interesting one and not necessarily planned. I started my career as an advertising copywriter in a small technical publishing company that was owned by a huge international conglomerate. And at that time, it was a $7 million.

business and about five years after I joined that company, they sold us off to the Macmillan Book Publishing Company and they said, hey, we kind of like this magazine business and they just said go out and buy magazines. So that's what we did. No instructions. Just go do it. So a lot of times learned by doing is the best way to go. And for me anyway, your failures you learn more from than you do your successes many times.

The first deal I did was a total failure, but we learned so much from that. And our biggest mistake was not in dotting the I's and crossing the T's and doing the financial audits. It was in how to read and understand and hear what the people are saying. So that became sort of our mantra going forward. And over a 23 year career there, we did 40 plus acquisitions, built a company from

million to 400 billion and I then decided to go out on my own, wrote a business plan, partnered with JP Morgan Chase Banks private equity division and we built another company from zero to about 120 million. So I've done around 50 buy site acquisitions, spent about a half a billion dollars of

private equity money and it's kind of my passion today because I saw so many business owners make so many mistakes when they were trying when they were actually selling to us. They had no idea that I could have been paying them a lot more money for their company if they had just taken some proper steps but of course I was the buyer and it wasn't my job to tell them what they were doing wrong so that I would have to pay them more.

Cameron Bishop (02:39.758)

spent five years as a partner in a consulting firm working with business owners during an exit and transition planning and did a turnaround on a very troubled $60 million charitable company and that contract ended during COVID, got very bored. What do I like to do? Well, I like buying and selling companies. So I found Rain Catcher. We were very well aligned on mission, vision, values and the desire to help.

business owners at the time they wanted to transition out of their business. So I've been a Partner and Managing Director there for five years.

Jennifer Kok (03:16.751)

Wow, what a wonderful career. And one thing that stood out to me is you've been a builder. You really understand the building process because you've built so many different careers and companies. And I have to believe that is a very strong asset when you're starting to have the conversation with business owners about the opposite of building and that would be the succession planning, the exit. So take us through a little bit. What does it really mean to be exit ready?

Cameron Bishop (03:45.935)

Certainly. So in our business Raincatcher, are what's called a lower mill market investment bank. So that means our clients kind of have around 2 million to 10 million in EBITDA profits. And that's a very underserved market because those businesses are too small for big investment banks and too big for the majority of Main Street business brokers. And this is their primary source of generational wealth.

Today most of these business owners are in their baby boomer generation years

And they don't have children that want to come into the business. So they're left with no choice but to sell. So our business is growing rapidly from these owners who need a proper solution and professional representation. So they contact us. We're very digitally marketing savvy. So they find us and of course we get a lot of referrals. But when we have the conversation with them.

It's often times, Jennifer, very sad because I have to tell them that their company simply is not sellable or won't be for another year, two years or three years or even more based on some of the tactics or strategies that they are either improperly using in their business or that they're not doing it.

Jennifer Kok (05:13.403)

So there's a couple of thoughts there. do feel like there's a big misconception with business owners who do have family members that they just assume their generations, their children, their grandchildren are going to want in on the business. And like you said, that's not always the case, or maybe they don't even have somebody who they could pass the business on to. And so you mentioned that a lot of times you see all these mistakes.

Cameron Bishop (05:13.762)

Thank

Jennifer Kok (05:40.945)

It's part of the problem that business owners think about the exit too late when they're already hitting their golden years, retirement years.

Cameron Bishop (05:46.254)

Cameron Bishop (05:49.729)

Actually, it's worse than that. They don't think about the exit at all. you know, it's... Yeah. Our theory is that it's a very human nature thing. Business owners focus on top line revenue, avoiding or minimizing their taxes and taking home...

Jennifer Kok (05:52.881)

Well, they're so busy building, right? They're so busy wearing all the hats.

Cameron Bishop (06:14.904)

profits and usually because they're usually S corps or LLC's distributions that you're in. So they spend at least 95 % of their time working in their company and maybe at best 5 % of their time working on their company and they don't even realize that and they don't understand the difference between the two and they'd have no

whatsoever of how long it truly takes to position and prepare a company to A, be sellable at all or B, sell at a peak value.

Jennifer Kok (06:54.107)

So how soon do you recommend business owners start thinking about the exit?

Cameron Bishop (07:00.942)

Well, the big picture is I taught a course for the Small Business Administration at a local university. And in the first class we would have, I would say, there's a lot of young company owners, new companies. And I said, you need to build your business from the start with your exit in mind. Because every business owner, one way or another, is going to leave their company.

And so an exit is going to occur. Now if they're up and running and established in a perfect world, beginning to think about the exit five years in advance gives them the optimum runway to really fine tune the company.

and have historical performance in place to demonstrate the track record for buyers of the business. Oftentimes we face the challenge of dealing with business owners that literally wake up one day, they're extremely frustrated by something and they say, that's it, I'm done, it's time to sell. That's the worst case scenario where again, they're either not going to be sellable or probably not going to be able to get them a maximum value

them to sell their company. So a year is nice we often see that as a luxury two or three years is even better.

Jennifer Kok (08:31.473)

OK, so that's good to think about. So tell us, in your opinion, we talk about they're not going to be sellable. Is there some concrete things that you're seeing? Are there some statistics out there that are telling us how many businesses aren't selling? And take us through a few of those key factors of why they're not sellable.

Cameron Bishop (08:53.614)

Well, the big picture, the percentage on the metrics of companies that are sellable is pretty surprising. I believe the source of this data was Pepperdine University's business school. I'm not certain of that, but the general metric used is that 80 % of companies that try to sell never sell.

Jennifer Kok (09:17.51)

Wow.

Cameron Bishop (09:18.242)

many reasons but there are some pretty consistent fundamental reasons that are huge barriers for business owners to sell and for buyers to buy.

So we'll kind of touch on the five ones that we hear the most from with interested buyers. So when we're representing a company to sell, we market that business nationally to any kind of strategic buyer for that business, private equity firms, high net worth individuals, family offices.

called independent sponsors. So we may target marketing to be 200 could be 500 could be 1000 potential buyers and when they contact us and say yes I'd like to know more. We have them sign an NDA and then we have a video conversation with them. And here are the kinds of questions that we get asked first they want to know.

the owner want to sell and sometimes owners don't really have a compelling answer to that question so that's the first thing they need to consider. The second question is well if they're selling what do they want to do? Do they want to stay on board and continue to run the company or do they want to leave and if so in what time frame? And then we get into the real detailed parts and they want to know

firms accounting and that's the number one problem we see in companies that are unsellable. or many business owners pay very little to no attention.

Cameron Bishop (10:58.388)

in their accounting. They don't use it as a decision making or strategic planning management tool. They don't even really know often how to read an income statement. And Jennifer, it's amazing how many people can't tell me.

the cuff when I asked the question well what size of a company are you they don't know how much the revenue is and even more have no idea how much profit they make so they often are running on they may be on QuickBooks but they're functionally running what we refer to as a checkbook accounting business so they look at their checkbook if they got enough money in there they pay their bills and unfortunately for most of them they have the luxury to have enough money where

they can pay their bills and they're making a distribution. If they have any kind of reasonable accounting, they're on what's called a cash basis, which is fine in one sense, but...

The buyers of companies want to see the financials reported on an accrual basis and hopefully a GAAP accrual basis because they're going to go out and borrow money to buy this company. They're not going to pay all cash for it. And the banks that they go to require GAAP accrual based accounting reporting.

Jennifer Kok (12:24.241)

What does GAAP stand for?

Cameron Bishop (12:27.598)

generally accepted accounting principles. So it's sort of the standardized way that financials are treated for reporting purposes under all the accounting rules and regulations and audit firms.

Jennifer Kok (12:44.561)

You know, it's interesting because I have this conversation a lot in my consulting business because I'm working with creative service-based entrepreneurs who want to serve their client and that's their focus. And they are creative and a lot of times they don't want to look at the numbers and we talk about all the time, revenue, profit, cash flow. I I learned the hard way, like you said earlier, failure is usually our number one teacher. I learned the hard way in my first business because I was the checkbook.

Accounting person I would look at the checkbook and basically I was borrowing from tomorrow's revenue to pay today's bills and I you know you that those pitfalls stick with you and so that's a big thing that I try to teach my clients and Obviously, like you said, it's one of the key reasons that businesses do not sell

Cameron Bishop (13:34.639)

Correct. So the next key kind of test that we get questions on is what's the owner's role and responsibility in the company? And that is called the degree of owner dependency. So if that business owner is the key provider or owner of critical knowledge in the company or

type of business if they are the primary creative mind in the company that's a red flag for buyers because buyers ironically are open to risk and that they're willing to buy

at the same time, very risk averse. So they do everything they can to mitigate the risk when they buy a business. So if the owner is the key source of knowledge or talent, and even worse, if they are the key customer contact or the key business development person, that creates significant owner dependency. And one of the questions we ask the owners when we're considering representing them is,

When was the last time you took a vacation? And if an owner kind of laughs and says I haven't taken a vacation in years That's a major red flag if the owner tells me they're calling me from a vacation home in Florida or

client right now he spent two and a half weeks off the grid in Africa hunting. That's a good sign that the business is not solely dependent on that business owner. And with that in mind and based on kind of your audience profile and who you consult with this is a true story of the first client I had at Raincatcher.

Cameron Bishop (15:30.735)

This gentleman owned a small marketing creative services and premiums and incentive business based in Michigan and he was incredibly creative super cool guy I liked him a lot and he had won many awards and he had

clients a large multi-location hospital chain in the region and that client represented 50 % of his total business so that's what we call customer dependency and business buyers by and large won't consider buying a business that has more than 20

percent customer concentration. We brought this gentleman, and again, he was the key creative. He was the key point of customer contact. And as I mentioned, he'd won all kinds of creative awards. And when we had to sell his company, we brought him six offers for his business. All were competitively priced, but none of them...

offered any cash on closing the sale, which is extremely unusual. And the reason, and they wanted him to stay on board in an employee capacity for two to three years, which was completely counter to his objective in selling the company and retiring. And he got very angry and he turned down all six offers. And I stayed in touch with him and six months later,

And his argument was that he didn't have just one customer in this hospital chain. He had like 30 plus customers because he made calls on each of the individual locations. But the senior management of the hospital chain was changed out. And what happens when new management comes in, they bring in their own people. And like that, he lost 50 % of his business and he was completely unsellable at that point. So you've got owner dependence.

Jennifer Kok (17:28.134)

night.

Cameron Bishop (17:38.288)

and you've got customer concentration which are critical benchmarks that buyers look at in any business.

Jennifer Kok (17:48.176)

Wow, and you know, I've heard of very large businesses going under for the same reason. You they had all their eggs in one basket, so to speak. So that's really interesting. You brought up something that I think is key to talk about, and that is owner identity. You know, as business owners, our identity is often locked into what we do, our business, that's how people in the community know us. And what do you see, do you see that as a,

a block for people selling? Do they have a hard time letting go emotionally of that owner identity?

Cameron Bishop (18:26.542)

You know, some of them do, you're right, it is their baby. They eat, sleep, and breathe their business. And people who don't own companies don't really realize that owning a business or being the CEO of a company, it's lonely at the top. And it is a, it's just a 24 seven, 365 job. And, you know, it's like, you know, when you have bring in buyers, and this is one of the key reasons why.

was tremendous return on investment for these owners when they want to sell to bring in professional expertise to represent them because an investment bank like ourselves, we take the emotions out of it. We're strictly running a business transaction, but at the same time, we play a critical role in what I kind of jokingly call the Dr. Phil role.

Jennifer Kok (19:22.193)

Hehehe.

Cameron Bishop (19:22.698)

selling a company for those reasons is an emotional roller coaster ride for these business owners. It's fraught with various emotions and thoughts and what am I going to do after I retire or you know if there are some wrinkles in the business they take it personally it's like somebody calling their baby ugly.

where our role comes in to diffuse that and help reset that and give them the context that they're going to need because selling a business if you want to sell your company and want me to represent you and you said Jennifer you said cam let's get started so we have a sign an engagement it's going to be nine to ten months before that deal closes and that's a national average for the duration of time it takes to sell a company doesn't matter

size the business or what industry. So that's the norm and buyers wake up and they want you know an immediate solution and it's just not there. So they they get fatigue. Selling a business is a job on a full-time job on top of a full-time job. So a big part of our role is to navigate and help them through that process because sometimes they could become their own worst enemy and I've had to talk

business owners down off the ledge because they just reached a point where they said, forget it, I'm done, I'm not gonna do this. So yeah, they need to understand that and they need to begin having.

plan for their life post-closing because many business owners get excited, I'm gonna get a big check in my bank and life's gonna be good. But because it's their primary purpose in life, it's their ego validation, it's their primary source of relationships through interaction with other people, whether they're employees or customers.

Cameron Bishop (21:23.454)

up one day and they suddenly have no purpose. But interestingly, they are very prone to taking risks to build their company, but once they sell it, they become extremely risk averse and they are unwilling to go out and reinvest any of that money they just made. So many of them take a long period of time to transition into not having that kind of a role where they matter, where they're calling the shots, and where they have a daily purpose.

Jennifer Kok (21:53.562)

Yeah, I can see why. And I'm actually surprised that it only takes nine to 10 months to sell a business, to be honest with you.

Cameron Bishop (22:01.26)

Well, certainly there are exceptions. Few sell faster. Many take a longer period of time.

business during the course of our marketing process kind of softened based on you know macro market dynamics so we pulled back and took the company off the market as the economy improves this is in the residential housing industry and we'll go back to market again that will probably take two years or more

for them to get an optimum valuation for their company once we can demonstrate that the business has fully recovered. yeah, things happen during the process. It's key to keep the business on a consistent financial performance track during the marketing and sales process, and that can definitely slow things down.

Jennifer Kok (23:00.273)

So you brought up something, you we talked a lot about the owner identity. So let's talk about seeing the owner stay in the business post-sale. You know, when I sold my business of 20 years, I stayed on as a consultant for a year. That was part of our agreement. And that can be a tricky road as well, because you're, you know, personally, I'm trying to let go.

and let the new owner take over, but then at the same time you're trying to help them succeed and see the pitfalls they might be heading because they've got new ideas. It's emotional, it's hard. How many of the deals that you structure are you seeing the owner stay around and what do you recommend for the owner once they sell?

Cameron Bishop (23:42.669)

Yeah. So as I mentioned earlier, Jennifer, when I was on the buy side, doing 50 deals, we would integrate those into our larger parent company. And most often, the owner would stay on for some period of time.

And of course, most owners sell because they want to ultimately exit. Some owners just want to take what we call take some chips off the table. So they reduce their or diversify their financial profile or portfolio and they'll stay on for sometimes three to five years. What we see today is in this deal size range where the companies we represent sell kind of in a window of five

million to roughly 30 million.

and what we refer to as enterprise value, that's the total purchase price. Many of those companies are acquired by financial buyers, particularly private equity. And private equity buyers like to see the owner stay on and oftentimes will improve the valuation for that factor. And they ask those owners to roll over part of the purchase price.

into equity in the buying company, is referred to as a platform company, which for many of those business owners can be a fantastic financial investment. Typically, the private equity firms ask them to roll over 20 % of the purchase price into equity into their platform company.

Cameron Bishop (25:23.086)

And I've seen many cases where when the private equity firm sells the full platform portfolio, those owners make more on the 20 % of the business that they didn't sell than on the 80 % of the business that they did sell. I had a former consulting partner that sold his company 20 plus years ago and he sold 100 % of it and turned down the offer to roll over equity.

And to this day, he still kicks himself because that platform play had an exponential return on it. And he would have made millions more if he had simply taken the role over, but he was burned out. wanted to retire. He did a brief transition period and he was out, but he still kicks himself forward and lunch with him a week ago. And he brings it up almost every time.

Jennifer Kok (26:10.864)

Yeah.

Jennifer Kok (26:14.891)

I'm sure. Well, hindsight's 20-20. And like you said earlier, that age or that group tends to be a little more risk averse. So apparently, you know, he just wanted to move on. One last question about structuring deals. What are your thoughts on seller financing?

Cameron Bishop (26:30.638)

So it's a very common way to get a deal done today. When interest rates really ballooned up, we saw more and more of that. So a typical deal structure today, know, most business owners have never sold a company before. Again, why it's good to have professional representation. I've always been a believer in know what you know how to do well and do it. Know what you don't know how to do well and hire an expert to do it for you.

So deal structures can be far more complicated today, especially with higher interest rates. So again, in this deal size category, it is not uncommon for the buyer to ask the owner to roll over a portion of the sales price as equity in the new platform and do what we call carry back a seller note, which is essentially loaning the buyer part of the purchase price. And those are typically structured on a

three to five year payback could be market interest rates. Lately could be six or 7 % interest on that money could be no interest payments or principal payments for the first year. They get structured differently, but there's a second advantage to that that most sellers don't realize that part of the purchase price is structured as a seller node, then they're not going to pay capital gains taxes on that.

sale of the business so it can help from a personal tax liability planning standpoint as well. So we navigate through all of that complexity with our clients.

Jennifer Kok (28:12.187)

So Cameron, this has been really, really good information. And like you had mentioned a few times, you don't just go into selling your business very quickly and without a lot of thought. And we talked a lot about what can go wrong and how sellers can end up leaving money on the table. So what do you want any business owner? Like, let's take the business owner that's

five years in, they've made it five years, they're building a business, they have no idea when they want to exit. You know, right now they still love what they do. They're making money, it's going well. What do you want them to really know and take away from this conversation?

Cameron Bishop (28:51.192)

Yeah, well, they definitely need to begin planning. When we're talking with potential clients, we consider it actually absolutely frankly unethical to try to convince a business owner to sell. What we try to do is provide them with the information they need to make arguably the biggest decision in their lives.

It's where their source of generational wealth is going to be. So they need to know the pros and cons of that process. But as I said early on, they're going to exit. They're either going to leave of their own volition or they may leave horizontal someday.

And I've seen many sad situations where the owner put off structuring an exit and maybe they got hit by the proverbial bus.

someone come down sadly with cancer with a very short lifespan. And then not only are their family members and their loved ones left with the devastation of losing, you know, a patriarch or matriarch or whoever this individual might be and everything we all have to navigate through when a loved one dies. And suddenly on top of that, they have to deal with what do I do with this company?

Usually we don't see many cases where both spouses are in the business and they

Cameron Bishop (30:29.358)

spouse may have no clue what goes on in that business or how to manage it. And I saw a case with an HVAC business for example in the northeast where that did occur and because there was this instant vacuum and the employees had no leadership, didn't know where to go and they had some of their route repair people had good customer relationships and they just simply left.

and started their own new company. And tragically, this company just collapsed on itself. So the family not only lost their husband and father, they lost the entire business and their source of future generational wealth. It's just a key consideration because we never know.

Jennifer Kok (31:19.633)

This to me was a very powerful conversation because I talked to a lot of business owners who don't have a 401k. Their retirement plan is selling the business. And I hope that everybody listening today realizes that this is a journey that you should not do alone. We need to bring in experts like yourself and bring in experts like myself who can help you get your business running properly.

Cameron Bishop (31:30.67)

Exactly.

Jennifer Kok (31:44.977)

and start, it's never too soon to start the plan to exit because that just is freedom. know, like I say, we, a lot of people start a business because they want freedom and flexibility. They want the autonomy of owning their own business. Well, when you're not planning the exit, you're losing the freedom on the choice that you get to make and on the timing that you get. So thank you so much for sharing your expertise. What is the best place to get ahold of you if someone is interested in learning more about your services?

Cameron Bishop (32:11.628)

Yeah, absolutely. They could reach me at cameron.bishop at raincatcher.com. And of course our website is raincatcher.com.

can easily be messaged on LinkedIn as well. And as you heard me mentioned, we don't try to sell anybody anything. We do try to educate. I'm happy to talk to any of your listeners if they just want to bounce some ideas off or get some further guidance. And if they're ready to sell, of course, I'd really love to talk to them because that's our specialty is selling companies.

Jennifer Kok (32:47.419)

Thank you so much for your education and your ability to be available. And I will definitely put the show notes to get a hold of Cameron. I'll put the links in the show notes. So thank you so much for your time today.

Cameron Bishop (32:57.272)

You bet, pleasure to be here.