Exit Like a Legend

Video Version: https://youtu.be/CTQKs3huEaE

A legendary business exit does not begin when a buyer makes an offer—it begins with how you build the business today.

In this ACHIEVE Summit conversation, Bo Kemp sits down with Nicole Emerick to reveal what makes a company truly sellable and how founders can maximize its business valuation long before a transaction begins.

Together, we unpack the systems, leadership, and financial discipline buyers value, the risks that can quietly reduce your sale price, how to make the business less dependent on its owner, what buyers need to see during due diligence, and why building a transferable company creates freedom—even before you sell.

Whether your exit is two years away or twenty, this episode offers a practical blueprint for exit planning, building a buyer-ready business, and turning your company into a valuable, sellable asset.

For sellers, buyers, and future owners exploring Entrepreneurship Through Acquisition (ETA), this is how you prepare early, negotiate from strength, and sell your business like a legend.

Transcript

SPEAKER_01 0:36

What if the biggest decision in your business is not how you start, but how you finish. In this achieve summit episode, Nicole Emmerich breaks down what it takes to build a company buyers want. Avoid the mistakes that reduce its value and prepare a successful sale long before you are ever ready to exit. Whether you're a founder or an ETA entrepreneur, this is your roadmap to exit like a champion.

SPEAKER_02 1:05

You're probably in this room because you built something, you took a risk, you worked those long hours, you figured it out, you kept going when you didn't know if you could. And statistically speaking, 87% of the people who did exactly what you did are gonna leave their business without getting the return on what they worked their whole life for. And it's not because they weren't talented, it's not because they didn't work hard enough, but it's because they didn't really understand the game of the exit. And I'm going to dig deeper into the rules of that game. But first, my name's Nicole Emmerich, and I'm the co-owner of Exit Factor of Western Chicagoland. I own it with my husband. Working with your husband's always a joy. I'm among different titles and seasons of my career. I'm a former commercial banker, I'm an exited entrepreneur myself, and I'm a third generation business owner. But I didn't end up in exit planning because I thought it sounded interesting. I ended up here because I saw a lot of people in my life go through exits. I saw great exits, I saw good exits, but a lot of the times I saw disappointing, unexpected, sometimes even bad and ugly exits. And I didn't want this to keep happening. That statistic of the 87%, it bothered me the more and more that I saw it. So by the time we're done with this workshop today, you're gonna understand what separates that 13% of people who have an elite exit from everybody else. And I'm gonna give you a real framework to walk through. But before we do that, let's paint the picture of what this is like for the business owner. The owner decides it's time. Maybe there was a terrible health diagnosis, maybe there was a death in the family, maybe there was a disagreement, a divorce, or maybe someone called and gave them an offer. Usually what they do is they call a broker, and that broker goes through their financials, looks at their operations, looks at how the business runs without them in the room, and then says, this isn't quite sell ready. Or maybe they say something like, Well, I think you could sell it for X, but not the Y that you're seeking. And every time the owner is completely blindsided because in their mind they built something great, and they probably did. But great and sellable are not the same thing. Here's another number for you 80% of most business owners' wealth in the United States is tied up in their business. Their retirement depends on it, their family's financial future depends on it, and their legacy depends on it. And they find out too late what that business is worth. There's a name for this. We call it the wealth gap. And it doesn't just hurt the owner financially, but it hurts their community. I know a lot of you guys here care about that. It hurts the employees who depended on the business. It leaves abandoned buildings in your town, it leaves a gap in the local community too. And here is what just gets me it's preventable. It doesn't have to be like this. So this is not me being dramatic. This is me having experienced this from multiple sides of the table. I first experienced it as a kid, growing up with parents and grandparents and aunts and uncles who worked in family businesses. I experienced it when I was a commercial banker. I experienced it when I went to sell my own business. Again as an employee of a company who did tons of mergers and acquisitions. And then when I went on a journey to go buy a business, I just kept seeing it over and over again. So before we dig into the workshop portion of my time with you today, I want to just share a few stories so you understand why this is so important to the way you run your business. I saw my first exit when I was 13 years old, and I've never really shared the details about that on a stage or on camera, but it was a very defining moment of my childhood when my sisters and I saw my parents home from work that day for the first time ever. Well, we're after school, they're usually still at work. And then when the office furniture and the files got taken out of the house and company cars, and my parents were left with no jobs and no cars because the exit plan that they had didn't come to term. And I sometimes look back and I wonder how could that have gone differently? How could that have not affected our family for so many years? And then when I was a banker in my 20s, I happened to be there during the subprime mortgage era, if anyone remembers that. Pretty wild times in lending. And then 2009 happened. And the clients of the bank, who had been with us for 30 years, had very healthy businesses and financials, came into a situation where they could not get the credit that they depended on to run their business. And this is when I was reminded of the power of the bank. And I know this is basic for us business people, but math is math, guys. If the deal won't bank, the deal won't bank, and you've got to understand the rules and how they're gonna change for you. This came up a lot again later, too. In my late 20s, I sold a small media business. It was um it was a business empowering young professional women. And I ran it for five years before I sold it. It was one of the more exciting and proud moments of my career when I got an offer and then another to buy this business. Um, I got really excited, but I think I turned my logic off. My fingerprints were all over this business. My identity, my purpose, the way I spent my free time, it was all wrapped up in that business. And then I learned the feelings part. We often talk about the finances of exit, but there's a whole lot of feelings wrapped up in this too. And sometimes I look back with regret that I didn't invest more or wait longer or make a different choice. I had a lot of empathy for the owner's feelings in this too. I went on to work at a company that did tons of mergers and acquisitions, selling their companies, buying new companies, and I my eyes were open to how this affects the employees of the business. When you have new leadership, you have roles that are duplicated, you have messy communications, you might breed a sense of fear in the air without meaning to. Acquisitions affect your team, and if you don't have a great team, what happens to the legacy of the business if they all quit? Not very good outcome. And I would say the nail in the coffin for why exit planning is so important to me is when my husband and I went on a two and a half year journey to acquire a small business. We saw dozens of businesses. We started in the e-commerce category, and what we were looking for evolved as we saw more businesses. But after that two and a half years looking at so many financials, sims, sitting with many business owners and brokers, we kept seeing the same thing over and over again. Many of these businesses were not sellable. And if anything, they definitely weren't sellable for the amount that this owner needed to retire. And it was really hard to watch someone in their 60s, people that we really came to like, one became a friend and a client later, realized like they had to keep working and they had to keep going if they wanted to sell this and retire. So I want to take you through some pillars of exiting well. And if anyone has questions during this, feel free to stop me. I'll leave time at the end. We're going into a little more detail in this part of the presentation here. So here's the basic foundation of exiting well. You've got to have a vision and value clarity. Clean financials, you need to record the repeatable, and you need to reduce owner dependency. So let's start with this value and vision clarity. What do I mean by that? What got all those business owners and the stories I told you was that they didn't know what their business was worth until maybe it was too late. If you don't know what your business is worth, you might be in for a really bad surprise when those life events happen. So, how do we value a business? For some, this is super basic, but I always like to go over it just in case anyone is new to thinking about this. At a basic level, if you were to call your accountant and just get a quick number, which is great, but there's a lot more that kills deals outside of the numbers, you would look at your EBITDA, earnings before interest, taxes, depreciation, and you would times that by a multiple. So for generality, let's say the average multiple of a small business in America might sell for two to three times EBITDA. And that could be your quick look at value. But the thing is, there's a lot of factors that will move that multiple up and down. And also the way you're doing your accountant could change the way your EBITDA is coming through. So let's talk about some factors that drive value. Quantity and quality. So first, profit over revenue. I can't tell you how many times I meet a business owner and they tell me their revenue, or they tell me how much revenue they've made over five years. I love that for your ego, but that does not tell me how much your business is worth. So we always say profit is sanity, revenue is vanity, okay? So we are looking at the bottom line. If you are maximizing your profit, you are maximizing your valuation. Then there's plateaus of profit. So if a business has less than a million dollars of EBITDA, they're going to have a different multiple than someone who has a million dollars of EBITDA, five or ten million. Why is that? Because there's more room for error. If something goes wrong, if that key employee quits, if you lose an account, if you want to make a big investment, you got a lot more room to play the more EBITDA that you have. And so that is a higher value company. Now let's talk about quality. This is basic, and this is a big theme throughout, but you gotta keep your house clean. And I'm talking about your finances. Everything is organized, everything is documented, everything is legit. We all love perks. Cleaning your house, acting like you're gonna sell the business while you're running it is key. We also need the owner to act like an owner, not like an operator. Because if we can't remove you from the business, how's the next person gonna come in and buy it? And lastly, you've got to be better than the rest. There's something unique about your accounts, your brand, your technology, your relationships, your recurring revenue, your niche, the future of where the industry is going. We always have to have something that sets you apart if you want to get that higher multiple for your business. So, what makes these businesses more valuable? In summary, you're efficient, you're above the industry standards, you produce cash, not just revenue, but profit, and freedom. A lot of people come to us because they're burnt out. That's not a fun business to run, and it's probably not going to be a fun business for the next person to run. So part of my job is to help you get out of the business a little bit. And then, of course, any buyer loves predictable and recurring revenue. The people that run their business as if it's for sale today are the people who have the best exit options tomorrow. And the last panel I noticed that Bo asked some of the women if they had thought about exiting and what their exit plan was. And everyone had a mixed review, but I'm telling you, regardless of what your vision is, we always need to have a plan B, a plan C as life happens. And then we also need to have a track record. Doing exit planning, which is not a moment in time, just like getting fit is not a moment in time, and planning for retirement is not a moment in time, it takes a lot of time, commitment, actions, and a way of thinking. That foundation is huge, but when that bank goes to look at your finances, when that buyer goes to look at your finances, they're averaging typically the last three to five years. So if you want to exit in five years, which is a common thing people come to us with, we need to start working on that now. Because to put some of these things into place and get that profitability up, clean up the house and operations, finances, innovations, we need to have that three years of track record if you want to move that EBITDA up and that multiple up. So let's talk about your exit options. There's a few different buyer groups that are typically looking for small to medium-sized businesses. And a lot of times I talk to people, and the first thing they say to me is, I do not want to sell to private equity, private equity, private equity. Well, the reality is only about 10% of the folks buying small to medium-sized businesses are private equity. The rest is strategic buyers, which could be just a competitor of yours, and then individual buyers. So the individual buyer, often it's somebody that was in corporate, maybe an executive, typically someone with a very specific function, who is going from working on a team with bigger resources to now doing all the things. We need to up our odds of appealing to the person who is a solo buyer as much as we can appeal to that PE firm who has a whole fancy, expensive team. And we need to be prepared for either of those types of buyers to come in. But there's gonna be a whole lot more people that are solo searchers than there are gonna be these big strategic buyers and PE firms. Now, once you have a buyer, there's there's different paths you can go as far as exiting. And I think it's really, really important if you're a business owner that you take a moment, work with a coach to think through what you want this to look like. A lot of people think the only option is selling your assets and closing the doors, and in some cases, that is the vision and that is your choice. There's ways to do that in a in a way that can be financially beneficial to you. Of course, you can sell to a third-party buyer, we just talked about. You can transition it to a family member. This is a lot of owners' dreams. Love the dream. I dream of it myself at times. But here's the thing: have you asked that person if they want to buy the business? Maybe it's even a key employee, someone you've worked with for 20 years. A lot of times, this exit plan lives in the owner's head, not in reality. They haven't even had the conversation yet. So you need to ask these folks if they are interested in buying your business or even being a business owner in the first place. And if they're not, there you are at plan B or C again. Okay, let's talk about part two here. Clean financials. Sounds more obvious than it is. We need your books to be organized, tagged, easy to read through. When we were looking to buy businesses, one of the sellers just brought us boxes of statements. Those are they were clean, they were good, they were organized. But boy, was that tricky to go through in the due diligence process and made it more painful for everyone involved? And I would suspect there's some buyers that would not take the time to go through that process. We need to benchmark against the industry. So we do have access to a whole database of transactions that have occurred, business sales in your industry with the size and similarities of your business. You should probably know where your multiple might fall and how your EBITDA compares to other folks that are running businesses just like you. These are the kind of things you do not want to be a surprise. And there's data that will help you figure that out. And then figure out is there a way that you can be more profitable, more lean, transform the business in some kind of way to be more competitive in the industry if your goal is being the best. Last, personal expenses. I heard a story the other day about somebody who wrote off multiple luxury cars, including Ferraris and Lamborghinis on the company. We love that for him and his car collection. That is not gonna help his valuation. His EBITDA is looking very messy. Even though it might be legit, and even though that could be, in his mind, a tax saving strategy. There are other ways that we should pay for that Ferrari and Lamborghini if you're thinking about selling your company at any time in the future, or even just transferring it to the next generation. Okay, now we're gonna go through recording the repeatable. The biggest risk to these small and medium businesses is the businesses in which everything lives in the owner's head. They might have a brand, they might have a special sauce, they have really great processes. But if it's not on paper and documented, the next owner cannot really do anything with that. All of that knowledge, frankly, it kind of dies. So this can be tedious and this can take time. But if you are a business, have you spent the time to document these core things that make your business what it is and make it special? And last, this goes perfectly into reducing owner dependency. Who's the team you have around you? And even if you're a very small business, like mine was, doing everything yourself at some point is a hindrance, and it's not growing the business. It's actually one of the biggest risks, and in my opinion, with our search, two and a half years, it's the biggest reason that we didn't end up closing. Because these businesses relied too much on the owners. So here's some things to think about. Most buyers are afraid of losing the clients or losing the employees. So if you are someone that needs to take a step back on being so in the business, the first thing we should start to get you out of, and if not, it's lots of feelings involved here, but is these revenue generating roles. It always scared me when I would look at a business. And they'd say, yeah, that's my frat brother, that's my cousin, these are my big accounts, they're all people I grew up with. Well, what's happening when you leave and I come in, they don't know me. Are they gonna keep working with me? Or are 80% of the accounts gonna disappear? So the first thing you should do is if you're in sales, and I bet you're really good at it, I bet you love it, and I know this is hard, but we should try to figure that out first because that is the thing the buyer is probably most afraid of losing. And the next piece is the customer facing roles. If you're still with the customers on the front lines, managing those accounts, they're calling your cell phone on Friday night when something's messed up. We've got to get that out too, because what happens when you move to Florida or go to Italy or whatever your retirement vision is, you're not gonna be there. And if that's gonna disappoint them enough to leave, that's a big problem for the new owners. Production roles, this is really for somebody who has a business, often with a unique output, even a media business in which you're creating a lot of the content, you're maybe on-camera talent, it could be an artisan, uh, could be more of a services, home services, right? You're actually doing the work a lot. This is the time to start subbing yourself out. And then, of course, might be time to hire some frontline staff and find that balance, right? Gotta still keep that profitability, but we also need to balance. These are the pillars of exiting well. I wanna leave. I want to share a little bit about Exit Factor, and then I want to actually spend time if anyone has questions about their business, their situation. I've seen a lot of things. But start with that vision and the value. What is your business worth? And what do you want the end of the story to look like in a best case scenario where you live till 98 and you're healthy and peaceful, and in some of those not-so pretty situations, too. I didn't really stop to share a lot about Exit Factor. Exit Factor helps small businesses become more profitable and efficient and transferable. I feel like I'm on a personal mission to help reduce that 87% of businesses that don't transfer. And I'm especially passionate about helping women and mothers acquire, run, and sell awesome, profitable businesses. That's part of their legacy. It's part of everyone's legacy to leave something behind when you've done all this work. That's why you don't have a job, you have a business. Exit Factor was started by a woman named Jessica Fiakovic. She is a business broker who owns brokerages in several states across the United States, a Trans World broker, if any of you have worked with Trans World. And she also kept seeing the same pattern play out over and over and over. These businesses were not ready to sell. This model here on the slide is what we call our Vortex model. And what we do with business owners is we go through it, understand your current value, understand what your business could be worth, understand the factors that could kill your deal from actually closing someday, and the huge opportunities you could choose to take advantage of to really increase that valuation. Jessica wrote a great book. I have some copies in my purse, so if anybody wants a free copy of that book, I'm happy to give it to you guys. And then I also wanted to share if anyone's thinking about this, thinking about not just exiting in a couple years, but wanting to run a business today that can give you options, freedom, money, legacy tomorrow. I am offering a mastermind. And I will have a cohort that's just female if there's enough interest. It's starting this fall in September. This is a small cohort, less than eight people, eight people max, per group. We meet every month in person for two hours, together in the group. It's very structured, it's very confidential. We work through that exit planning process one step at a time, and you get to see people that are not in your industry work through their own issues and transform their own businesses, and you get to learn from each other in that safe container. So if anyone's interested in learning more about that, it's very affordable pricing. I am gonna offer it at a discounted rate, even on top of that, because it is a new program for us, to people that attended Achieve Summit. You can email me here if you want to learn more about that.

SPEAKER_00 26:57

Quick question.

SPEAKER_01 26:58

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