Michael Allen Feinman — Selling the American Dream | Future Ventures Podcast Ep. 026

Mike Feinman is the Managing Partner at Texas Business Brokers, a top M&A advisory firm for the lower mid-market and main street. His career began at PepsiCo's Taco Bell division and includes leadership at Yum! Brands across 16 countries. He has facilitated millions in sales across manufacturing, restaurants, services, and tech. He entered brokerage unexpectedly—an ex-Pizza Hut colleague asked him at Starbucks in 2014 what he'd do with the four and a half days a week he wouldn't be running his three restaurants. Mike works where founder vision meets buyer reality, often telling founders the truth before the market does. Many overestimate their business’s value and transferability. His role is to narrow that gap years before a sale. If you're 3-5 years from an exit or building without planning for one, this episode is essential before your accountant. 

Four Key Topics Covered 

1. The Origin Story Behind Texas Business Brokers — How a chance Pizza Hut connection, a mentor lost to mesothelioma, and a passed torch turned into a multi-state M&A advisory practice. 
2. The Current State of the M&A Market — Why we are in a buyer's market, why sellers are holding back, and how tariffs, energy costs, and onshoring are quietly reshaping multiples by industry. 
3. The Strategic Planning Framework Every Founder Should Run — Mike's full process from SWOT through five-year SMART vision, reverse success planning, one-year milestones, and the enabling culture that wraps it all together. 
4. The Three Risks Every Acquirer Underwrites — Key person risk, customer concentration risk, and the absence of scalable, repeatable systems — plus the "develegating" approach Mike used to get one founder out of the weeds before a $20M sale. 

Three Key Insights 

• Founders find time to do things over far more often than they find time to do them right the first time. A failed business is almost always failed planning — eyes wide shut instead of eyes wide open. The discipline to step back, run the SWOT, and build the vision is the discipline that protects valuation years later. 
• Potential, in Mike's words, is just something that ain't been done yet. And the moment a founder starts negotiating on what the business could be instead of what it actually is, the back goes against the wall. Buyers don't pay for the story. They pay for what's already on the page. A premium on outlook only shows up when the engine underneath it is already running — and even then, the buyer is doing the math on what they can do with it, not what you say they can. 
• A deal is a piece of clay that gets shaped, broken, and reshaped multiple times before close. Buyers and sellers sing Kumbaya, fall apart at the LOI, fall apart again at due diligence, and need to be brought back together at every stage. The job of a real M&A advisor is keeping every stakeholder on the same island long enough for the deal to actually happen. 

Links 

• Mike Feinman on LinkedIn: https://www.linkedin.com/in/mikefeinman/ 
• Texas Business Brokers: https://texasbusinessbrokers.com/ 
• Connect with Maxim Atanassov: https://ca.linkedin.com/in/maxim-atanassov 

Guest Bio 

Mike Feinman is the Managing Partner at Texas Business Brokers, advising on lower-mid-market and Main Street deals across multiple states and industries. Previously, he held senior roles at PepsiCo and Yum! Brands, led restaurant operations, and built training and service organizations in 16 countries. He is a father of three, grandfather of four, active musician, and loves helping founders turn their businesses into their dreams. 

Transcript

SPEAKER_00 0:02

Welcome to the Future Ventures Podcast on Scaling with Clary. Today's guest is Mike Feynman, managing partner at Texas Business Brokers, one of the leading business brokerage firms in Texas, focused on lower mid-market and mainstream transactions. Mike has helped to uh facilitate the sale of tens of millions of dollars worth of businesses across industries, ranging from manufacturing and restaurants to service businesses and technology companies. He has spent years helping founders navigate one of the most emotional and financially significant moments of their lives selling the businesses they've built. Mike, welcome to the Future Ventures Podcast. I'm super excited to uh to have you on.

SPEAKER_01 0:47

Thank you, Axe, and I'm happy to be here.

SPEAKER_00 0:50

So uh the way that we do this podcast is kind of like focused on three parts like one focus on Mike and who is Mike and how did you come to do what you're doing now? Two, um Texas business brokers, where was the idea born out of like kind of like the origin story? And three, just kind of your perspective on what are you seeing seeing across the industry and the market?

SPEAKER_01 1:12

Right, okay. Well, I guess me, uh I'm an old man, I'm 65, I've been in business for a long time in many different industries. I started at at PepsiCo, specifically Taco Bell, and ran a bunch of restaurants and ultimately ran training and management development for the company and then customer service for Young Brands, which owner of uh KFC Pizza at Taco Bell, 16 Countries Internationally. Back then they may have more now, I don't know. And um, yeah, and so and I really enjoy what I do. I'm a father, I have three daughters, I have four grandchildren, and um, and I make music and I help people uh make their dreams come true uh from a business perspective. And that's a big part of what I what I love to do. Um, you know, I guess in terms of how you know I got here, how Taco Bell or Texas Business Brokers uh became, you know, back in 2014, I decided to leave the kind of the private equity uh publicly traded company world, decided to go off and venture on my own. And uh the day that uh three restaurants came on the market, I purchased them, or at least I went after them. And um, so I became a restaurateur. Well, the I've been in restaurants pretty much my entire career, you know, between restaurants and fitness, and which you could talk about later, and then premium retail. But anyway, the broker that was representing the seller for the three restaurants worked at Pizza Hut when I worked at Taco Bell. And so we knew all the same people, we just didn't need know each other, which was a bit odd. So we got to know each other, became good friends. Uh, I was teaching him how to play racquetball, trying to get him back in shape and tennis. And um, you know, one day he called me and said, Let's meet for a cup of coffee to talk about something that has nothing to do with the restaurants. And so we met at at um uh at Starbucks and he said, Hey, look, uh, what are you gonna do the other four and a half days of the week? I said, What are you talking about? He goes, Well, you're gonna own three restaurants and you're used to running, you know, $700 million worth of business. What are you gonna do? And I said, I I hadn't, and I hadn't, I hadn't really thought about that. And so he said, you know, you should be a business broker. Uh now I see myself as more of an MA advisor now than a business broker. But anyway, he started teaching me and helped me actually, you know, I was having him look at all my due diligence that I was doing on the restaurants, and he was a bit conflicted because obviously he wanted to sell the business, but he was helping me through it because we saw things the same way. And anyway, um, I started uh started working for him as a business broker, and one thing led to another, he ended up actually dying of mesothelioma, which is really, really sad. I was actually there the night before he died. Um, he used to decommission ships in the Navy, and it got a bunch of that asbestos into his lungs and it metastasized. But I kept the torch going and I carried it and grew. At the time, I turned it into what I called retail growth associates, which is really what I was focused on then was helping companies grow either through acquisition or through consulting. And then that morphed into Texas business brokers, uh, really uh became more than just Texas. Frankly, we do we do some things all over the country and states that we can work, not commercial realtors. And there's I don't know, 15 or so states that require that. But other than that, you know, we're involved in sell side uh exit planning, we're involved in buy side, either either finding businesses or helping figure out what is the right kind of targets to go after. And then also uh, which really is a this year venture, which has been really real or growth, I should say, uh, which has been very exciting. And then also we've delved into really business consulting, where either it's strategic planning or it's you know problem solving, uh, etc. So there's been a lot of consulting going on this year, which is I I think I enjoy that most. And so here we are. Yeah, here we are. I guess we can talk later about kind of what I'm seeing. We can target that a little bit because it's pretty wide open that question.

SPEAKER_00 5:26

Well, I mean, let's jump right into it and like what's the hottest? Like, what are people looking forward to to to buy? Like uh what are the trends shaping industry? Kind of what are you seeing across? And then we we can talk about some of kind of like the fauna site and what they need to prepare for exit and stuff like that, but like what is hot and what is not?

SPEAKER_01 5:48

Yeah, there's a lot of new and emerging. I I think what people are probably realized and maybe not completely um you know uh isolated is the amount of dynamicism there is now in the marketplace. Um, you know, I remember some years ago everybody was saying, hey, things are gonna happen a lot quicker. When you think about Moore's law, you know, 10 years ago or 15 years ago, it was every 18 months, you know, computer speed doubles and the price uh halves. And now Moore's law is no longer applicable. It's a law called 100,000, 10,000 every year. That's how quickly things are moving, at least from a technological standpoint. Well, I would submit that really the environment is changing that fast too. I mean, we see it everywhere. Uh, you know, so what's hot? I mean, you know, the new emerging industries, there's believe it or not, a lot of space uh support. You know, I talked to a company yesterday that's focused on not building rockets, but providing services for rocket builders or people that are within the space exploration and leveraging industry. You know, I also talked to a company uh this week that is looking at, you know, making films by crowdsourcing. And not I'm not talking about small films, I'm talking 50 to 100 million dollar films and providing those types of services for people for people to be able to pitch almost like shark tank production ideas. Uh, you know, I talked to a company that's talking about, you know, portable, uh, portable power, you know, battery. I I would submit that battery uh uh uh technology is definitely slower than most other technologies, portable power. And so that's a big opportunity to be able to grow it. Maybe it's been stymied because the oil industry doesn't want battery power to to uh to progress. There's a uh you know a big case for that. I don't have any evidence, but I think that there's a big case of why that might be the case. But you know, also um I'm talking to a company that is doing a 360-degree support out at a cellular, so companies can leverage this company to be able to do everything from merchant banking to social media uh to marketing. And um, you know, and also where you know, wearable technology, I think, is pretty hot right now. There's a lot of utilizations for real wearable technology, other than just telling you how many calories you're burning and how many steps you're taking. And then, you know, from a bricks and mortar standpoint, you know, that's all shifting also. If you think about what's happening with, you know, and what's happened with Amazon, and to be able to get things and if you don't like it, immediately return it, no problem, no questions asked. And the Zappos, the original Zappos model. So there's there's a lot that's hot, but it changes every day, every week, every month, every quarter, because the environment is just constantly changing uh right now. Very, very quickly, you see it in the market.

SPEAKER_00 8:43

Yeah. Are we entering a buyer's market, seller's market, though it's something more con uh complicated? And and is it like highly dependent upon the industry?

SPEAKER_01 8:53

I think we're uh I think overall we're probably in a buyer's market. Um, and sellers are holding in a you know in a large part right now because they're really not sure. I mean, there are a lot of businesses that are getting hurt right now uh with everything that's happening with the economy or are projecting pain. Because if you think about you know five, five fifty diesel and you know, petroleum and how expensive that is right now, let alone gas, uh, those are gonna have kind of tail effects that are gonna take a long time. I mean, if you think about distribution, if you think about manufacturing, you know, they use all those resources. And so I don't know that, you know, and and and then I don't know if tariffs have completely uh we've seen the full impact of that, because it's such a moving target one day to the to the next. Yeah. So uh, you know, and then also, you know, the industrial um, you know, war uh complex. I think that that, you know, that's a big uh uh unknown in terms of if we are now in a war phase as a world. And if that's the case, then that's going to definitely impact a lot of industries. So I think right now people are a little bit wondering and watching, and a lot of sellers are saying, you know what, I think I'll wait, and some of them are being hurt or projected to be hurt, which impacts a sale. And I think buyers are in a position to be able to say, look, cut your losses, I'll take it at this price now. And so, you know, I've not seen hard evidence that multiples have declined, but I think certainly multiples, depending upon the industry, have have hardened.

SPEAKER_00 10:30

Yeah, what we're seeing across it's um we're seeing uh massive demand just over the last uh week or so. We've received half a dozen inquiries from private equity firms uh or uh uninterested buyers for industrial heartland companies like fasteners, foundries, construction technology. Uh it and so we I mean, of course, the the the the flight of capital towards AI is is continuing, but we've seen some of this like moving away towards more asset-intensive companies uh that provide some kind of this defensibility compared to like pure uh software or pure AI companies.

SPEAKER_01 11:10

I think that's right. And I think part of that is onshoring, you know, and I don't think that um I don't think onshoring uh will ever decrease. I think that we've learned a hard lesson that for us to be competitive as a country, for us to grow on a long-term basis as a company, number one, we have to be, you know, innovative in that we have to come up with our own industries. You know, green is kind of subsided right now, but green was our own industry. You know, we should own AI, we should own automation, we should own robotics, you know, all these things that we should really take a leadership role in the world. We have the best minds and we need to leverage those minds. But at the same time, you know, for and it's definitely less expensive to go to Asia to get those things that you speak of or wherever else. Um, but it's really, you know, not in our best interest, I think. I think that we have to build, and I'm not saying we should be isolationist, but I think that we need to build our own capabilities versus creating a situation where we're largely uh uh contingent upon other others. So, you know, if we can build those hard goods here and we can do it in a way that that is uh internationally acceptable from an economic standpoint, then let you know let's do that. I mean, you think about how America was built. I mean, America was built initially through agriculture, right? And then ultimately ended up being manufacturing and then ended up being technology. You know, you wondered what's next. And sometimes the future is the history, and maybe uh maybe a strong base will be our ability to truly manufacture those things that are needed across the world. So I don't think it's a bad thing, and I think that, you know, um, and I think that you know, at the end of the day, the slope is going up towards uh is going up towards you know onshoring. And I think that's a big reason why that's happening.

SPEAKER_00 13:09

That's interesting, and and I'm not surprised. I mean, obviously, you um with uh Trump's election, he's he's been very pro uh pro-America or America first and kind of shaking up the uh US, uh, Canada, Mexico agreements and and other uh trade agreements. So we we're seeing that as well. Um I'm curious, like I Texas is home base for you, even though you said that you operate in in in other states. What does the Texas business ecosystem get right compared to other regions? I mean, like at least from from my vantage point, like like living here in Canada, but operating on a global basis, like the the feedback we have or or the impression we have is that uh the Texas is this kind of like business mechanism very business forward, business friendly environment.

SPEAKER_01 14:00

Yeah, I know it is. And I've operated in many states, including California, and there's a lot of controls, a lot of uh stepping on your heels, nipping at your you know, your caps, and and um and trying to stop you from doing things that really government shouldn't touch and shouldn't have any uh any way of controlling. Uh, and should let, you know, I'm a capitalist. I think business should go on as uh, you know, let nature take its course. And Texas does give you a lot more, uh, I'm not gonna say carte blanche, but a lot more freedom in the ability to be able to do stuff without someone saying, no, you can't do that because you know, one percent of the population has an issue with that. Yeah, um, you know, one percent of the population has an issue with that, then I should be able to make the choice as to whether or not I want to make that change for that 1%. But I shouldn't have that what I call the vocal minority driving controlling and and um and limiting and limits. And so in Texas, there's a lot less of that. And and and also obviously there's a lot less taxation. I mean, property taxes are probably a little bit higher, maybe, but not high. Um, but there is an income tax, there's not income tax. There's a franchise tax on businesses, which I still don't know exactly, you know, I probably ought to research it as to what that used is used for, but you know, infrastructure and and and whatever. And it seems like everything's under construction constantly in terms of the highway system and you know, those types of things. But yeah, it's definitely uh an easier state to to do com to to do commerce in.

SPEAKER_00 15:42

Yeah, no, it makes sense. And in some ways, I mean, like everybody's talking about the the need for um a tax reform in in the states, uh, but in some ways Texas is taxing the people that have the capital, right? Like if if you are yes, property tax is higher there, but you only pay property tax if you have a property, whereas if there's no income tax, the like the people from the lower and middle class keep more of the money. So in some ways it's it's it should be more uh representative of how the progressive tax system in the US should work.

SPEAKER_01 16:17

Yeah, I think so. And yeah, I think so. And and actually one of my clients is from the UK, and that's a whole other story in terms of how much tax there is there. It's a huge, yeah, it's a huge amount of it's a huge amount of tax. And and yeah, the healthcare system, I've heard I've heard mixed reviews on the healthcare system in Canada. That's maybe for another edition. I'd love to learn more about that. But nonetheless, you know, listen, I don't think any any country is perfect, or in any, I don't think any state is perfect. But yeah, it it's just you know, like minimum wage is an example of a big a big question in the United States. And you know, I remember when minimum minimum wage was three dollars and thirty-five cents an hour.

SPEAKER_00 16:57

Oh wow, okay.

SPEAKER_01 17:03

Uh, you know, so at the end of the day, minimum wage was never a living wage, minimum wage was a starter wage. And so that's a whole other uh, you know, a whole other question. And thank God that minimum wage in in Texas is still seven and three quarters, but you know, I think in California now it's almost $15. And oh, by the way, minimum wage should be much higher in New York City than it should be in Waco, Texas. So, you know, so making a state minimum wage and also getting off track of what minimum wage was originally for. So I, you know, I believe in principle-based, uh principle-based government. And let's get clear on what the principle is and what the philosophies are, and then everything else should follow within that. And if someone gets out of bounds on those philosophies or those principles, you just I mean, it's just like any any other type of influence strategy. You know, I come back to you and I say, Maxim, didn't you agree to this? And you say, Well, yeah, I did agree to this at a high level. Well, then doesn't this fall into that? You say, Yeah, actually it does. Good point. Yeah, and so the first step is let's get clear on what our what our principles and our philosophy are, and then everything else I think falls into place.

SPEAKER_00 18:07

Yeah, I know I I I hear you. Um, what a what a move into kind of like like you you you said that you've moved into uh um instead of uh focusing on business broking, like into more of MA advisory. So, questions for you there. Um why do so many businesses never actually transact? Kind of like what separates a good business from a sellable business? What's your perspective? What are you seeing on the front lines?

SPEAKER_01 18:33

Yeah, and I think if there was any thread in what we're talking about today, this would probably be be it. You know, it's important when you're dealing with uh either running a business or uh fixing a problem to take this philosophy of let's step back for a moment. What are we solving for? And business owners don't ask that question enough. Let's step back, you know, we get into fixing things. And what I always try to do is I go, time out. Let's step back for a moment. What are we solving for? And what that means is let's do a SWOT analysis, which is a key thing that I do with any business that I'm that I'm working with, and certainly for a new business, a SWOT analysis, we look at strengths and weaknesses that are internal that we can control. And we look at opportunities and threats that are external that we can take advantage of or protect ourselves from. And then let's come up with a five-year vision. And this, the the owner may say, Yeah, but I want to sell in a year. Doesn't matter. What are you selling? You're selling the vision. You're selling today and you're selling tomorrow. So you better be clear on it. So let's do a little reflecting on where do we want to be five years from now? We want to be doing $80 million in sales, so we want to have a 25% margin and throwing $25 million to the to the EBITDA line. You know, so uh, and then if that's the we want to be doing it this way, right? So we come up with a uh specific, measurable, actionable, realistic, and time-bound vision statement. Then we do reverse plan uh success planning. So let's look back and say, what do we do each year for the last five years to get here? And so we have five one-year milestones, and then we operationalize around the current year's milestone, which means we come up with strategies and tactics and tactical plans. So we're clear what we're gonna do and who's gonna do it. All of this is a living document, so it may change. We're gonna continuously look at it and make sure that we're always stepping back and being clear of what we're solving for, but we'll have that full uh set of strategies and tactics for the current year to set the foundation to be able to hit that five year. And then finally, um, around all of this in like a squiggly circle is our enabling culture. And so we'll very be very clear about not only how we are going to behave, how we are gonna work together to accomplish all of this, but also we're gonna be very clear about what our target is for who we're gonna find as we hire people, as we uh try try to try to even you know, even try to get people to even look at maybe working for us, and also, frankly, even clients of who we want to work with. We want to work with clients that that we feel are in our sweet spot that work within our culture. So at the end of the day, I just call that strategic planning from vision all the way to enabling culture. And like I said, if there's any thread or any continuity in the conversation today, that's the biggest thing that uh we start off with. And that's what good companies to answer your question do. There's plenty of companies. I'm working with one company right now, and they said, Well, we're failing this as a failed business. And I said, It's not. I said it was failed planning. You went into this eyes wide shut and not eyes wide open. And eyes wide open meaning you go through that exercise that that I talked about, and you're honest about it and direct about it. It and so now what we're having to do is step back and do it again or do it for the first time. And I always say, if you know, I don't understand, I never have been able to understand why no one has enough time to do it right, but we always find enough time to do it over again later, and so and so that's a lot of the kind of hard, and that's a lot of the hard talk that that I have with uh we have with each other, with with the you know the people that I get to work with as what we call clients.

SPEAKER_00 22:32

Yeah, I I hear you. I mean, like we rendered some of the same advice, like you know, slow down to speed up, like do it right, like you're gonna gain the speed and efficiencies later on, but kind of like uh continue down that uh train of thought. How early should a fauna think about a negative and kind of like what should we process as well as like um what traps do founders fall into when thinking about valuations?

SPEAKER_01 23:04

There's a a book that is uh an old book, and this will give away my age. It's called Built to Last. Okay, built to last, and it talks about HP and it talks about IBM and all these great companies back in the day that you know they didn't build a five-year plan, they built a 50-year plan.

SPEAKER_00 23:26

Yep.

SPEAKER_01 23:26

And you know, and I think that that anybody who's starting a business should build out and should be thinking about when he's gonna harvest or she's gonna harvest it. Absolutely critical. And you know, some people say, Look, I'm 30 years old, I'm gonna be doing this for the next, you know, I love this, I'm excited, I'm gonna be doing this for the next 30 years. And I just say, all right, so in your mind, and you got to pause when you ask these questions to yourself or to somebody else. In your mind, you just said 30 years. What's gonna happen in 30 years? Well, not really thinking about yet, but I'm asking you to think about it right now. Yeah, so in 30 years, are you gonna sell and be done? And your kids and your grandkids and their grandkids, you know, you know, like um, who was it that said that Garth Brooks made more money than his grandkids' kids could ever spend? Is that what your goal is? And think about it now because the law of attraction will get you there. And now let's work our way backwards. And I'm not saying we need to have 31-year milestones, but now it kind of adds a little bit more meat to the bone on your five-year vision. So answer your question, I think uh a founder should be thinking about it as soon as possible because it guides what they do. If someone says, I want to be free, then my question is then why are you right now involved in everything? Why are you involved in everything? Well, because that way I know it's done right. Well, how are you gonna develop your people to do it right? So, and how are you gonna isolate those higher order things that you should be checking to make sure that all those other things happen? If I'm checking this, then I know all these other things are gonna happen. If I'm checking all these other things, then I'm gonna miss a half of the other things because there's too many of them. But I have to be smart, I have to, you know, really have the peripheral vision and the aptitude and the wisdom to be able to know as a leader, these are the things I should be focused on, not these things. And so I think from the very beginning, these are the kind of conversations that I have with founders. And if I'm working with a founder that I need to get them there, I mean, I just sold a $20 million manufacturing company that did electri, they did, they did um circuit boards. And when I first started working with them two and a half years prior to sale, the wife was constantly on the floor soldering, and the husband was involved in every single thing. And I said, Someone's gonna come in here and say, I'm gonna spend $20 million, but I can't get rid of you because if you leave, the thing falls apart, or I'm gonna have an earnout that's gonna be 50%. And so I got to get you to start delegating, and I call it develegating. Yeah, so if I delegate, I'm just giving you something, but developing, I'm developing you, so you get something out of it too, right? And I we talk about that. That hey, I'm gonna have you do this, but here's why, and here's what I want you to learn from it, and how it's gonna be better for you whether you stay with us or not. It's gonna build your you know, your your capability. And it took two years because the first probably six months was getting their head to the point where they felt like they really could let go, and then after that, it became a lot easier, which is putting systems and processes in place so that they knew what those higher order things were as CEOs.

SPEAKER_00 26:49

I mean, this is consistent that the top three reasons the top three factors that we see, um, in in in in in terms of um or the top three risk for an acquirer, key man risk or key woman the key key person risk, I guess. Um customer concentration risk and lack of uh scalable, repeatable processes and systems, right? Like it's got percent. They want to buy businesses that uh that are self-sufficient, running, like they may want to put an operator in place, but they want business that's self-sufficient, right? They that's the that's what they're underwriting in essence. Um but like today I had two conversations with two of our advisory clients, and the word trust came up repeatedly. And and and so one of them, one of them is a marketplace, the other one is is something that they're building in in um um in in health. But from your perspective, how much of a business sale is actually tied to financial motor and numbers versus trust and narrative?

SPEAKER_01 27:53

Well, the it's really uh equal. Um I would think about it sequentially. The first step is financial, you know. The first the I should say that the first initial step is your gut in terms of trust, right? That I feel good about this seller, that I feel like they're you know good people, and I feel like they they've got a an honest, uh, you know, real business here. Uh, but you know, I'm still gonna trust and verify this is what the buyers are saying. And then, but before I do that, I got to figure out the what. So now I'm gonna go deep into the numbers and I'm gonna understand what the add backs and and what you know evida truly is and the trends and all that kind of stuff. Yeah, and then um I'm gonna figure out what it's gonna take for me to take this business over. And you know, there's there's there's really three things there's transition, uh, there's in some cases uh training, um, and in some cases there are there's operating. And so um, you know, depending upon if I need level one, which is I just need you to tell me how to turn on the lights, I need you to introduce me to the suppliers and the the customers, and I need you to introduce me to the to the the people, the valuable people that are that are your second, should be your second family, uh, that are your employees. And then, you know, and then level two, um, you know, I am gonna need you to teach me, you know, how you do quotes, maybe, or how that how the quoting department does quotes or stuff like that. I don't need you to teach me how to solder a board and how to test a board using the the circuit board, you know, comp a company as an example, or maybe I do. So now that's a whole different thing in terms of how much trust I need. And then there's the third level, which is I need you, and within the third level, there's levels, which is operating. One level of that operating is I need you to stick around for six months as CEO as we source someone to replace you, yeah. And so I need to have a lot of trust for you um uh in you to be able to do that and to not be stuck in the mud because we're going in here to grow this thing. And the reason why we wanted it to be uh us freed up so we could operate it as board and and and and CEO or chairman and not as chief operating officer and having to run the day-to-day uh is because of what you've done what you've done here. And I need to be freed up to do that. So maybe it's not all the way there, so you're gonna need to stick around for a while, a lot more trust. Or in some cases, either I'm gonna partner with you, which I had one company, uh, it's a re a large remodeling company where the seller ended up staying. It happened at the last minute. The buyer and the seller ended up really feeling comfortable with each other. And the seller said, uh the buyer, the buyer said, I'd love for you to stay. And actually, I talked to him because I may sell it for him again, for them this time. Um, and they're they're they're doing in fact, I'm supposed to get all their their books today, um, which I haven't received yet. So after this call, I will be following up. But nonetheless, uh they they're they're doing really well together, and so that's that's that's good. And so if they're gonna stick around and either partner or the seller is gonna stick around and work for the company or operate the company, then that level of trust is gonna be much higher on the right side of the chart. So, you know, I always try to answer these kind of questions with facts versus with uh you know either wet finger in the air or or opinion, because I think whoever you are, whatever side you're on on that needs to know well, why do you say that?

SPEAKER_00 31:21

Yeah, exactly. Um I mean, in in this case, you it you you provided an example where there was a lot of chemistry between a buyer and a seller and decided to just kind of partner up and work together. Have you seen cases where um like what makes a founder difficult to buy from, or have you seen cases where founders are uh are emotionally unable to let go even when economics make sense? Kind of like like when a founder can get out of their own ways.

SPEAKER_01 31:53

Yeah, I think um you know, through the sales process, so we're talking about that phase, right? Because on this side of the phase, there's a lot of consulting and exit planning or improving the company, and then you go through the sales process, and then there's all the post-sale stuff during the fails phase sales phase. I always say that uh the buyers and sellers, you know, my objective is to have them sing Kumbaya. Remember that song Kumbaya? You know, so everybody's singing that song. I don't even know where it came from, but I use it in in uh in my when I train new new brokers. But you know, buyers and sellers come together and they come apart. And our objective is to keep keep them all on the same page, and there's a lot of different techniques to do that. You know, I have a lot of contracting and just a lot of different ways to make that happen, even what you how you bring them together, when you bring them together. Sometimes things happen and you let it let it rest uh for a little while, even though they want to talk, or one of them has to talk to the other one to tell them. And I'm like, let's we'll do that in 48 hours. Okay, sleep on it. You know, so there's a lot of ways to get to get past that. There's natural ways where that happens. At the very beginning, um, they're all singing kumbaya, buyers all excited, you know, or the buyer group's very excited, and you know, they're just meeting each other for the first time. It's a first date. They're both trying to impress each other, sellers trying to impress the buyer how great it is, and and buyers trying to invest the seller how capable they are to take the torch, you know, and then you get the the memo of understanding or the letter of intent. Um, hoping the industry completely goes away from members of understanding because I think they're a waste of time. Letters of intent are much better and much more needy, and so you get the letter of intent, and then they come apart. What they want that? What they said that? How could they believe that? Or how do they feel that, or whatever? Yeah, and so now you're really working every which way you can from a facilitation standpoint to get everybody back on the island, and then they we finally, you know, and I can tell you that yesterday I had a $10 million deal that died at 10 a.m. and was back alive, seriously, died, it was over and was back on track, and we're finalizing the LOI today uh at 11 30 a.m.

SPEAKER_02 34:04

Wow.

SPEAKER_01 34:05

I'm talking, I'm talking about dead, like the titles didn't work. Okay, so that's you know, you got to be alive, you got to be on it. Um, but you know, then then you start working through due diligence, and then you have the seller saying, they're asking for what, you know, and so a big part of making sure that the sellers have the emotional as well as the um uh acumen from a financial standpoint to do a sale is preparing them prior to what's gonna come. And then you can say, Maxim, you remember I told you that they were gonna ask for something like this. Oh yeah. So let's just do it, let's just do it. So then you get through due diligence and you have a couple of buyer-seller calls or meetings, and and everybody slowly comes back together again. Now everybody's singing kumbaya, and then you get the purchase agreement, and then you get lawyers involved, and you know, and and accountants and advisors sometimes, and you know, so now I've got a lot more stakeholders that I'm having to sing kumbaya with, and I'm having to have you know these conversations and explain and and get through indemnities and get through, and that wasn't on the LOI. Why are they bringing up now? Well, it's a lower order thing, you wouldn't find that, you know, going through that, and then you finally get them and it's ready to be signed again. Uh, you got this the purchase agreement is is there, and you know, now we're singing Kumbaya again. So, I mean that's the reality of what happens. And I think if you're a if you're looking for, you know, those of you out in in the audience that are looking for an MA advisor, you really want an MA advisor that it can explain to you what I just explained and give you specific examples and methods that they utilize to to be a deal maker. I mean, there's a difference between being an MA advisor and being a deal maker, and a deal maker also has to come up with things that the lawyers go, I've never heard of that before, but that could work. That could work, and and that's the kind of crazy stuff. I mean, you know, every single deal to a certain extent is a piece of clay that we have to form so that it ends up being everybody's one. The seller wins, the buyer wins, and and we win.

SPEAKER_00 36:24

For sure. Yeah, I mean, for sure. I I I couldn't agree more with you and like it's it's it's kind of reflecting in terms of what we're doing. Like, yeah, I'm a CPA, but a lot of the work that they do is change the management work, right? Like, to your point, like the more stakeholders you have, the more people you have to make sure they're aligned, and singing kumbaya, because without getting them aligned in terms of what you're trying to execute, still doesn't happen. And to your point, like time kills all deals, and so surprises skill, uh surprise is killed deals. So you you want to be as prepared as possible to be executing with as little friction as possible, and so the early the founder starts, the better, the more likely is that the deal can close. But uh, what do you shift gears a little bit and kind of get your perspective? Uh, why do some businesses from your perspective trade at maybe two two to three times earnings versus others at eight, ten, fifteen? I mean, you have the uh Elon Musk companies trading in 120x, right? Uh like what is your sense in terms of like why certain companies attract such a high premium on their earnings or on their or on their business value?

SPEAKER_01 37:37

Yeah, I think uh you know, obviously the easy answer is oh, it's the industry. Um, that's an easy answer. But I would use the word outlook at the end of the day, you know, outlook. So and also margins. But if I'm looking as an example at a let's just call it a wearable technology company, right? So let's say I'm looking at a wearable technology company and they've created a uh a technology that is expandable that can do many other things besides calculate your steps and calculate your um your calories burned and maybe your temperature of your body, things like that. Um, and so they've uh you know, again, I'm just used that as an example, that they've created something that can give you a lot more information. You know, maybe I throw it on my kid and then I know where my kid is at all times, or I throw it on my my uh my elderly uh my father who had dementia, who's no longer with us, who's here now everywhere, but um fortunately, but uh but I miss him. But when he had dementia, having something like that on him that would alarm me if he stepped outside of a radius, or you know, you know, so now what you're doing, and and maybe you know, potential, the definition of the word potential is just it ain't been done yet. Now you see the the southern come out of me, it ain't been done yet, but that's potential, it ain't been done yet, and so I never got any y'all. Yeah, well, I I try to not go too far, you know, over the line. But but if it but if it's it's potential, but it truly has the ability and it's protected. So now we're talking about outlook, and so if I you know, and and beauties of the buy eye of the beholder as well, okay. Now uh, you know, it'd be rare that I'd spend 120x on something, and probably those companies that are trading at 120x have a PE ratio of zero of negative. So, you know, at the end of the day, but if I was in the industry and I understood and had a 30-year plan for what I could do with that, and then I was really looking at the multiple, not over the current multiple, but I'm looking at my expected multiple, which I maybe I've started in, yeah. There's probably you know, forecasted multiple, and maybe at that price, based on how I plan to use it and and the diversification that I can add to it, and the strategicness of my me as a buyer, beauty in the uh is I in the eye of the beholder, to me, the effective multiple is point two. And now I take it to the board and I go to my board and I say, Hey, by the way, this company to point two multiple. It's crazy. They're paying us to buy it. And they're gonna say, No, it's not, it's it's 120. And I'm gonna say, okay, everybody sit down. Let's go. Let me walk you through this. So I think that's stuff's all happening behind the scenes for someone to buy something that's, I mean, you know, there there's a lot of there's a lot of people out there that aren't smart, but there's a lot of very, very smart people. And someone that's trading, you know, hundreds of millions of dollars to buy something at 120x, you know, I guarantee you there's a lot of meat behind the bone. And I guarantee you, if you and I, now there's some shysters out there, we know that, that go up there and do the presentation and somehow they have this attraction power, we'll believe anything you say. I've met people in my life, luminaries, that you understand why they are as successful as they are. They just got the mojo. You get up in front of them and you're gonna do anything they tell you to do, and you don't know why. And you I won't, but but you know, the broader part of the population, you know, pitch pitch people. So uh hopefully that answers your question. But I always go to bricks and mortar. I want to know, you know, give me give me the facts, nothing but the facts.

SPEAKER_00 41:35

No, that makes sense. I know we're coming on time, Mike. Um what's the one thing every founder should understand about selling a business before they ever think about going to market?

SPEAKER_01 41:47

That the buyer wants to pay less than the seller thinks it's worth, and an MA advisor is um is responsible for uh for well, not only reaching, but reaching, like I said earlier, with the 120 multiple, reaching in a fact-based way that actually makes it obvious that you're getting an incredible deal at the price, yeah. And in a way that's believable. So but I think at the end of the day, that's the that's nature. Uh founder always feels like his company's worth much, much more, but you can't sell the company on on potential because it hasn't been done yet. And if they buy it on potential, then their back's against the wall. Oh, not many people will do that, and the banks won't do that.

SPEAKER_00 42:30

Okay, okay. If you're buying a business today, what would you go after?

SPEAKER_01 42:36

Um, I don't want to buy a business right now. Um seriously, excuse me. Um you know, but personally, I'd go after actually some of the companies that I've heard about this week, I'd go after green space. Um, because I think that in you know, green space by definition is looking to the future. Where people that are already operating right now, they're under a huge amount of risk because it's in the wood in terms of the way that they're engineered, and there's only so much nimbleness. You know, that some companies, the scale of nimble nimbleness is larger than others, but at the end of the day, all of them have a have a smaller appetite for nimbleness or ability for nimbleness as uh versus something that's brand new. So I'd go green, I'd I go, you know, whiteboard, green space.

SPEAKER_00 43:25

Yeah, yeah, yeah. Makes sense. Uh green field creation of new industry, creation of new platforms, new formats. Uh yeah, because it provides uh novelty, but also um it the competition is not as strong. Makes sense. Yeah, Mike, this has been fantastic. I really enjoyed having you on the pod and getting you insights on kind of how you think about business.

SPEAKER_01 43:47

Thank you. Great to be here. It was a lot of fun.

SPEAKER_00 43:50

Thanks, Mike.