The Why Behind Exit Your Way
The Why Behind Exit Your Way
This Business Round Table by Exit Your Way® topic was “The why behind Exit Your Way”. The video features Damon Pistulka and Andrew Cross talking about began working together and eventually how they came up with the idea for the company. Damon and Andrew open up the round table by talking about how they met in 2008 at companies where they worked. When they finished that work in 2009 Andrew and Damon stayed in touch but did not formally start working together again until late 2015 in Andrew’s company, Cross NW selling businesses. They explain how they soon started to include consulting services for their clients to grow their business values and fix business problems prior to the sale of the businesses. They explained that they started marketing their consulting services under the name Exit Your Way in 2019 and officially formed the company in 2020.
They talked about how Damon’s career was mainly spent managing and helping build companies for investment owners. They then covered how Andrew’s experience in sales and finance helps Exit Your Way clients run more efficiently and profitably. It is clear that Andrew and Damon do not view Exit Your Way as a business brokerage. They view Exit Your Way as a business that helps a client create the business exit they want. In their words, its not a “business brokerage”. They explained how the transaction is just the culmination to the real value they provide in getting the company to the value the owner needs and preparing the business for sale. Damon and Andrew menttioned the fulfillment when they are able to help clients create the exit out of their company that they want.
Exit Your Way successfully has increased our client’s enterprise values by over $40 Million. No fluff, no frills, just results. Exit Your Way is leading the way toward creating higher value companies in a much shorter period of time
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Thanks to Damon and Andrew for sharing their time and talking about their company.
Damon Pistulka 00:00
We’re live now with Damon Pistulka and Andrew Cross once again on the Exit Your Way Business Round table. So, today it’s just the two of us. Because Andrew and I were thinking about what the heck can we talk about
Andrew Cross 00:23
not a problem. That’s not wrong.
Damon Pistulka 00:27
But one thing that we haven’t really shared with a lot of people is is the why behind exit your way and I thought more seriously, it is it is a an opportunity for us to talk a little bit about that and kind of, you know, how you and I met Andrew many years ago and just kind of stayed in touch and how that works. So
Andrew Cross 00:50
Damon Pistulka 00:52
So interesting thing. So, you know, for those of you don’t know Andrew and I work together, around it’s a Long time ago now over
Andrew Cross 01:02
15 years probably no,
Damon Pistulka 01:03
yeah, it’s close to that. Oh, God it is Isn’t it just gets worse, doesn’t it?
Andrew Cross 01:09
Damon Pistulka 01:11
But the thing is, is interesting is, you know, we, we got to work together a long time ago we stayed in touch and and quite after that after that you you started a business brokerage. You were selling businesses and I was off doing other things and, and in 2015, we, we came back together, we stayed in touch, looked at deals, did a bunch of stuff, you know, here and there. And then in 2015, you were going to be moving to Park City and and we decided to get together and I was going to be in Seattle and you were going to be in Park City and go from there.
Andrew Cross 01:53
Yeah. Yeah. Well, Damon and I were working for manufacturing companies. Yeah, those are focus. And we were in the trenches with small businesses. And our last gig that we worked on together was pretty. It was during the last great recession and pulled in. And it was a it was a pretty tough, tough situation. I forget
Damon Pistulka 02:18
I forget about that, honestly, that we were it was it was in 2008. Nine. Right. And in the worst part of it.
Andrew Cross 02:24
Yeah. Yeah. It was just starting to happen. Yeah. It was really hitting.
Damon Pistulka 02:30
Yeah, it was.
Andrew Cross 02:31
It was I am getting a little feedback. Do you? Do you hear that too? No, I do
Damon Pistulka 02:37
not. I do not.
Andrew Cross 02:38
But yeah, yeah, no, but you know, tough times for tough people. You know, it’s kind of like that’s really where you get to know somebody and we got through both of that. And, you know, we both moved on. Damon’s a turnaround guy and works in particularly in those situations. You know, that was his business and It was impressive when we worked together for about a year and a half. I think we were happy to fail on that one. And, and, and after that, but, you know, I got out of it first and he got a second. And, you know, it was just messy, but we you know, it was we both You know, it took about six months, I think to just to decompress, figure out what to do next, at least in my case. And I started a business brokerage business a one man solo operation, I didn’t dabble in the model of business brokerage, which is somewhat similar to a real estate operation with associates and principal brokers and such. So, that was a little more unique based on my background and experience of working with clients. You know, more, more boutique I would guess you Yeah, you could call it Yeah. And one of the things about you know, I got into it It learned how to be a business broker back then there were no deals going on. The banks were all locked up. It was a lot of people in in m&a or in brokerage that were getting out of the business. And I think for me, fortunately, I didn’t know what it was like before. And we could make a lot of deals and I’ve started with small deals and working major ones because that’s the only place you could get something done. Yeah, well, those are, you know, that you don’t necessarily need begs the seller financing. There was a lot of activity and I learned a lot doing that. Yeah. You know, and then exit your way really evolved. You know, later on after that after doing years and years of deals and some of the lessons learned during that. We decided to change it up a lot.
Damon Pistulka 04:51
Yeah. Well, and then and then in my in my experience running the companies for for the investors and private equity groups. We typically did bigger deals when we were doing them. So, you know, I think even, like, the smallest deal we did was $20 million or something like that. And I worked on the funding side of some deals and raising money for things that you know, in the 50 and 100 million dollar range. So it’s, you know, it’s, you get a pretty wide range of experience when you combine the two of us together and what we’ve done as far as, you know, you’ve done a tremendous amount of sales work, and I’ve done a lot of operational work and just general management of companies so and when it came together, and we were we were at in 2015. We were selling businesses, I mean, that’s that’s all selling businesses at that point. Yeah. And I still remember when it was it wasn’t too long down the road and and, as you said, and I’ll let you say, what, what, what is the normal process if you’re, if you’re an investment banker or business broker and you talk to a Business Owner about their value.
Andrew Cross 06:02
Yeah, yeah, you know, I mean, this is business brokerage one on one, you know, you can get the playbook out do it in, they’re really focused on just getting a transaction done. And that was what was a little different about our approach was that because of our background and operations and running companies, you know, we could add a little more to it than that, you know, but, you know, most business brokers, you know, they just want, you know, really, it’s more of a financial exercise and how the, how the numbers look and yeah, and, and some that, you know, there’s, there’s not a lot of input into adding value to the company, or they really can’t, you know, anyways, we were in that situation, but you know, it’s funny, Damon, and I cross paths and started, you know, it was like, we’ve done deals, but we’ve been on the other side, working for big companies and operating and being operators in those companies. And so he was, you know, we knew it, he knew enough about it, but he was like, I want to get more involved in the deal side, you know, as well as the operation side. So we did, and I said, Well, this is How you be a business broker. And we went out and we started talking to clients and you know, this is a, this is a very important thing in the broker world is, you know, it’s a very product, you know that business is is very price sensitive. And if you come into a client, it’s very important for a business broker to know what the buyer thinks he can get for the business what he wants for the business. Because we are trained as brokers to kind of we can understand and get a valuation going and understand where the business probably will sell for. Yeah, and if that is too far apart, you know, if it if it’s worth 5 million by our analysis, and the seller wants 10 million, we work on commission business brokers working on commission, we’re not and it takes a year to sell a company. It’s a lot of work, you’re not going to put in all that work. If there’s no chance it’s going to get sold because meet the expectations. And I call it the value gap. In the broker world, that’s that’s, that is, you know, move on, they’re not ready to sell yet wait until either they come around and understand it, wait till they have a bad day, you know, times more on the broker side and eventually you may not get that account which is is fine. But you know, they they come around a reality, I guess you would say that’s kind of harsh, but I think what the brokers do is and while we were out there getting new clients and some we found and others I told Damon Forget it. You know, he, you know, we’re never gonna be able to sell that company, you know, his expectations. It’s impossible to beat it. Let’s just move on and we’ll find we’ll find someone who’s ready to sell. And David was like, Why? Why do we have to keep doing that? Why can’t we help them? Yeah, that’s really where it started. It’s like, if they want 10 million, let’s help them build a company. And so yeah, that’s exit your way because I mean, His perspective was, you know, I go and fix companies. You know what I’ve been paid for my whole career, I’ve done this. And I built companies up and sold them. And you know, now we can give an opportunity to somebody to help them. And while that the light bulb just went off, that’s exit your way. It’s not business brokerage? is it’s different than an investment banker, yes, where we’re focused around the transaction, but we’re really focused around getting the client what he wants or needs from that transaction. Yeah,
Damon Pistulka 09:31
yeah. And that’s, and that’s what makes me happy when we can do that with it with a business owner and you want to know why, why, why, why I do it. Why I think you do it is is because we really help them create the exit they want, and get new point they want rather than having them selling a business for what they can get. And that’s, you know, for me, that’s why it is and as you said, that’s what we knew how to do is grow businesses. And make them run well. And it’s really the foundation behind what we what we started that,
Andrew Cross 10:06
yeah, it’s really a matter of putting the pieces together too, because it was just my experience that having gone through being successful or not successful, and seeing how it works on the other side, then you get to know what an impact you can have, by just getting in and putting some elbow grease on the company, either if it’s you know, and a lot of these companies are good companies. Oh, yeah, they’re just, you know, but this is this isn’t about selling a good company, this is about getting a premium and want to get a premium, you know, then there’s ways to do that. If you’ve been through it, and you see what the buyers See, then you know what to work on. And, you know, then it was really just about and when I already knew, with Damon, I already knew the people who could make that kind of stuff happen in the company. Mm hmm. In relatively short period of time, you know, so there’s a lot about exit your way to is Hey, if you’re thinking This is gonna happen in the next five years. That’s why you can you can just kind of keep doing what you’re doing and say it’s time to sell and it’ll take a year and you’ll get what you get. Are you ever thinking about it? Okay? I first step we’re gonna figure out where I’m at. This is what I’m worth. And now I want to figure out where I want to be. Yeah. And then we’ll hit it you know and get some help doing it. That’s we got some you know, an exit your ways grown now from Damon and I are Yeah,
Damon Pistulka 11:29
yeah. I mean, if you professionals that we have at our at our that are helping us now are, you know how they’re way better than I ever would be at a lot of things and that’s for sure. And, and that’s why it really makes the makes a strong is that it’s not just you and I it’s a team approach. We have people that are specialists in sales, we have specialist therapy. In social media, we have specialists in you know, ecommerce, we have specialists in manufacturing in e commerce and finance in any Financial Planning because, you know, as soon as we started, we realized that most business owners don’t understand how much money they really need. Because they can pull, they can have a great business that’s given them half a million dollars a year. And, and they don’t really understand how much it takes after they’re done with their business to sustain that lifestyle.
Andrew Cross 12:26
And yeah, you know, lifestyle, too. And it’s, it’s even further than that. I mean, with some of the business coaches that we’re working with are phenomenal business coaches, they are working this they’re working with entrepreneurs and business owners here in their heads. Yeah, really understand it because it is there it you need to do that you need to go to that level to really understand what is it you want to do? You know, the money’s one aspect of it, you know, and will there be enough but it’s, you know, at the end of the day, it’s not the money, it’s what you do with the money, the money gives you the freedom to do what you want. Yeah. So you have to you have to really Getting in with the business owner. And the reason we like to do that is because it does take a significant investment in in our team and our time to get this deal done. And we darn well want to know that they know what they want to do and don’t get cold feet. Yeah.
Damon Pistulka 13:17
Yeah. Yeah. Or even or even just with the questions that they have, you know, just with the questions they have is is is another thing is
Andrew Cross 13:24
Yeah, yeah, it’s very, it’s a very, it’s just such a hard transit transition. And I, I really sympathize with the business owner, but I think we’re doing really good work because a lot of businesses, you know, they don’t make it. They don’t make it through these conditions. They either may even get sold and still don’t make it you know, the either new ownership of the transition and that’s all lack of preparation, lack of preparing, and, and I think it matters a lot, a lot to the business owner, you know, that their legacies then destroy, the thing they’ve worked on for 20 years is faded away. There are employees sometimes it’s their family. You know, are, you know, are out of work, you know. So all these things are on the line. Now we go, Oh, it’s really cool to be able to, you know, to really make a successful transfer transaction and transition. You know what that means or exit? Because that means it’s a company that’s going on, and it’s going to do it again, for the next 10 to 1520 years. Yeah.
Damon Pistulka 14:26
It really is. It really is, as you said, what we’re doing is we’re helping to ensure their legacy and, and part of their legacy is leaving like they want. And for people that don’t understand about, only about 20% of the businesses ever get sold. Most of them actually get they just stop LIC, liquidation, whatever you want to call it just cease to exist over time. And really what we do is create businesses that are first of all, valuable enough. attractive enough to be sold. And that’s that’s I think, what what, for us, the light bulb goes on with our clients is once they realize that, wow, I have a great business here. But today it’s not worth anything when you look at it from the outside or somebody wouldn’t buy it because the risk is too high from the outside, whatever you want to call it.
Andrew Cross 15:23
Well, I think business owners, I mean, a lot of them who have real I think good companies that are valuable, don’t honestly believe they’re, you know, they don’t understand what the valuation is. They just know Oh, it makes me X amount of money per month. And you know, that pays for my cut my kids tuition, got them through school and I base my vacation home, I throw a little bit into my 401k and they figure when I’m 65 that’s the time to stop. And you know, and I’ll stop in and they’ll think about selling the company or have a target for it or say what I’m going to do with that money after I retired. Your Life doesn’t end. And you know, the other thing about it too is I think we’re we’re trying really, really, really hard to educate in owners and business owners really understand. That’s not you know, that’s not the way you don’t have to do it that way. And you’re lucky if it works that way. Yeah, get the pick the best time to sell your company. And I think we can specifically talk to folks who should have sold the end of last year and are going, Oh, my, I should have sold my company in a year and then everybody knows what happened in the first quarter of 2020. With COVID you know, things just change and what you should be doing is like any other great investment that you have, be disciplined in your investing approach, build it up to your sell point, sell it and know what you want to do with the money after that.
Damon Pistulka 16:55
That is one of the things that you know, around around why we do what we do. is really, you know, work, we’re creating that goal, whatever that goal is, you know, 1 million 10 million, 100 million really doesn’t matter. But you got that goal in your, your trigger point is not so much I’m turning 65 but it’s, I’ve hit my goal, and in helping people understand, okay, what that means is that the business will be sold. And then they’ve got more to do because this is just propelling them for whatever they want to do after that. And that’s, that’s even more fun sometimes is to go to see them understand what they are going to be able to do then and and this is just a stepping stone to do that rather than, you know, fading off in the sunset.
Andrew Cross 17:42
Yeah, yeah. Yeah, it’s, it’s good work. And I want to bring back and focus on now what exit your ways evolved to, is it that’s the why it happened. And it started with Damon and I then Jeff Graham came in as a partner and we grew out. Then you know, the is a fun part of the business too is we, we have it in search of and have worked with some of the best people in the business. We believe you know, and they all do different things, but they all do one thing in common. They all improve companies. And we know who they are. And we apply them and they are, they are resources in various disciplines that are now that’s a bench we have our bench we can call on to go work on a company and bring exponential value to the client on an exit. And they don’t have to go around and with trial and error and find good people or bad people. These people are proven.
Damon Pistulka 18:45
Yeah, yeah. And it’s it’s it’s funny you say that because it’s
Andrew Cross 18:52
Damon Pistulka 18:53
think, probably think we’re kind of crazy the way that we network and the way that we do the things we do. But it’s to find these professionals and to understand who really is the cream of the crop to do this specific thing for for a company because we need the best in the in the, you know, that we can find to do those things and and to help our clients.
Andrew Cross 19:18
Yeah, yep. You know people who improve companies, but this is, you know, also this is a program and exit way is a process that puts instant momentum into a company. Yeah. And he’s and we do that, and we don’t have to do it for years and years and years. Once momentum is momentum if it’s going. Buyers love that. Yeah, that’s, you know, that’s all I know, it’s, you know, so much easier for me to sell a business. If it’s got momentum, momentum, which is like a
Damon Pistulka 19:52
you look at you look at a hot team in sports, and hunting sports is hard to beat a hot team in sports when they’re, you know,
Andrew Cross 20:00
So the playoffs but when the playoffs start, everybody’s at 500, you know?
Damon Pistulka 20:04
Exactly. Exactly. Yeah. But as you as you talked, it is a process. I mean, we if you if you look back at some of the things that we do the fundamentals that we use, I mean, you can you can read it read about things like traction and EOS and those are some of the principles that we use and, and honestly a lot of them came from from the private equity investment company world of years ago when we you know, those companies you’re used to having board meetings and weekly KPIs and and projections that you had to do every year. Quality and accountability, yeah. To meet the projections, and those kind of things that that that a lot of private companies don’t have, but as they make that transition into being sold need to have because buyers want to have a little bit of predictability. And what they’re buying?
Andrew Cross 21:01
Well, not every buyer, but typically the buyers never really accountable to anybody. It’s a it’s a very foreign concept to them. Yeah. And it’s not about being accountable to your investors, although that’ll happen that they’re on their way out. But your organization has to be if you want to do it right, you have to be accountable to the deal. And if you being accountable to the deal, that’s really being accountable to the buyer, and the buyer is the customer.
Damon Pistulka 21:27
Yeah, that that that’s another thing that we we start out with right away. Is there your ultimate customer? Yeah, customers that you sell to every day, but your ultimate customer is the buyer of your business.
Andrew Cross 21:37
Exactly. Right. And, and, and they’ve been in business maybe 15, 20, or 25 years. And they all their customers in their heads that they’re constantly are selling their their product or services to their customer, and never thought about the buyer as a customer. So you got a it’s a different way to look at it. So when you do that though, you start to understand to what they’re looking for and what is what’s the value driver and where the risks are. And that’s build a company that mitigates risk, because they’re going to do it after they buy the company. I’ll put all those same pieces in place so that at least they’re going to try. Yeah. And again, that’s another place where deals are unsuccessful. They die in that transition, that are the deals done to the new ownership and their management team. And a lot of companies cannot survive that. Yeah, you hear a lot of bad, bad stories about private equity groups and transitions going bad and everything else. And really, in that place, it’s private equity is the bad guy, not the good guy. But, you know, a lot of it is just, it’s, you know, it’s lack of preparation and not really understanding the softer risk factors involved, especially with people in
Damon Pistulka 22:51
Joseph, Stepke is here on Facebook here with a couple of good comments. He says I think all owners need to think about their legacy. See where their business? And are they going to give it to their children or sell it? And I think that’s really a? I mean, none of us want to think about it, right? Let’s just throw it right out there. Hell, I’m not young enough that I mean, we think about this, we’re the age we have to be thinking about this stuff, right? What are you going to do after you a want to quit work or can’t work anymore, and you really need to think about what your legacy is going to be as a business owner, not just, Hey, I made it through another month, or I’ll do that in a few years, because what happens as we all know, time speeds up, it speeds up
Andrew Cross 23:37
it does and the light bulb that goes off to I mean, this is I’ve had this happen and I’ve worked with a company and helped reposition them and you know, on a, you know, and consulted with them in depth for a significant amount of time to get them salable even just to get the deal done, you know, are in a better position to get you know, more money for it. And, you know, so after working with six, seven months, we changed some things and we bought You know, different managers who will do whatever it takes, you know, to, to, you know, address some of the, you know, it’s we’re staging, you know, getting ready for the sale. And at the end, you know, I’ve had the buyer say over and over again. Gosh, I wish we just had done this work with you guys. You don’t want you know, 10 years ago, you shouldn’t worry at all All right, but that’s that small business, no accountability, and you’re, you’re doing fine. It’s nothing wrong with it, you know, you get what you want out of the business. Yeah. You know, and you know it but there’s complacency. You know, it’s the things are okay. But at the end, it’s, you don’t realize till it’s too late. I didn’t really get what I want. Yeah,
Damon Pistulka 24:43
yeah. Well, and that’s especially you talk about two things. One is complacency and it’s as natural as as you get more comfortable in your business and as as say you start a business in your 30s or 40s. And and you know, you’re growing that business and you So you think about your business and your life, you’re trying to grow that business to the point that it’s a, it’s going to first of all, replace a paycheck. B, then you’re going to my kids are getting older. Now, if you’ve got kids or you’ve got other interests like that, I need to buy a boat, I got to buy my house, I got to put my kids through college, I need a lot of money, right? And then you get into that, that stage where now what happens? The kids are out of college, they go get their own jobs. I don’t need as much money anymore. So what a lot of business owners do is they coast. They coast because they don’t have to, and the businesses around it might be generating a tremendous amount of money.
Andrew Cross 25:39
Yeah, well, the other thing is they don’t need to grow. It’s it’s gotten rough, at least as far as they’re concerned and in growth is risky. You know that hard charging growth it that’s that’s risk unto itself and you also when you’re growing like that you lose control. Yeah, you know that and that’s a scary thing. You lose control. You got some risk? Yeah, you could make a bad misstep. I guess I like the analogy. It’s like the race horse. You know, you just at a certain point, you know, you’ve won enough races, you just start pulling on the reins. Yeah. Yeah. And,
Damon Pistulka 26:14
and that’s a good, that’s a great point because what, what happens is at that point, it would be a lot of business owners, if they grew to maybe a little bit bigger than where they’re at at that point, and then sold their business they would be in a much better position than running it for another 10 to 15 years, limping along and what we often see is that it goes down a little bit goes down a little bit more, you know, declining revenues, because it’s not really the drives not there to reinvest or, or be aggressive on sales.
Andrew Cross 26:50
Well, business owners get tired, you know, near the end, and they’ve already probably waited too long. And they take their foot off the gas at the end. That is just it’s As from, from the deal perspective, it’s just very hard to get a deal done. I mean, you can smell that on, on somebody when you walk in the door, that is not going in the right direction very hard to sell a company like that. Unfortunately, that’s another thing where I would, you know, in the old day, you know, just being a broker, I would walk in and go, I’m not going to take on this assignment because, you know, this thing’s going down. And, you know, yeah, you know, so you have to, because you only go can only take on so many clients as, yeah, as a consultant exit your way. It’s like, we walk into a situation like that. It’s like, okay, let’s sit down and see how we can fix that, bro. And get out of this and, you know, finish strong.
Damon Pistulka 27:45
Finish strong, you want to go out, you want to go out on top, you want to go on, there’s no reason it has to be like that. I mean, if you could grow your business once and you’re in an industry that’s still got demand, there’s no reason that you have to do it that way.
Andrew Cross 27:58
Well, it’s also your Not Alone. That’s the other owners do tend to get into the mentality where and they’ve operated alone for the most part, it’s pretty lonely. Yeah, being I get it, you know, they’re, they’re a paranoid fearful creature, that everybody’s taking stuff from them employees, Lawyers, Tax, you know, you name it, you know, it seems like it’s coming from all sides. It’s tough to be successful on this and I get it. But you don’t have to do that. Like, that’s why the exit is all about. Yeah, right. And, and we talked about that if we can find the business owner who will go okay. I, you know, I’ll I’ll let go and let let you know and see if we can get my people to run. You know, you’d be amazed at the results. Yeah.
Damon Pistulka 28:47
Yeah, it is pretty, it’s pretty, pretty exciting. When when they do you see these little wins that build upon each other. We’d start with little wins and keep building upon them. And the next thing you know, you’ve made big steps. Like in anything and you just keep going and, and it really is, you know, when when they create that legacy, and they’re able to get out of the business like they want that is that is really the ultimate ultimate satisfaction. Yeah, there’s
Andrew Cross 29:15
a there’s a big there’s more puff of their chest. Yeah, I can, you know, that’s the check is great the money you know, they can do what they want. But then while I built that and yeah, yeah, I mean
Damon Pistulka 29:31
you can imagine them right, I like to imagine the business owners after they sell and they’re setting they’re there with their their friends they’re off on vacation somewhere or they’re sitting having dinner with somebody and say, Oh, yes, I sold my business and they can just chuckle because they know they got the money. You know, they got the money, they want it and they’re there and they’re good because we put them in touch with the right financial people they know their their financial plan going forward. They you know, they they know their business. is in good hands as it can be and and that they went out the best way they could in the end for not just for them for their employees to. Yeah. And that’s a real concern because they they probably these people have been with them a long time. And a lot of it it’s family to them that’s, you know, spent a lot of time with those people that care. Yeah, really mad when it didn’t, you know, I mean, you can poison that, but for the most part, you know, every business owner I talk to you it’s one of the number one reasons they’re, they want to make sure it gets sold right is where people are taken care of. Yeah, yeah, but it sure is sure is a lot of fun and and, and when when we get to do it it’s it’s it’s a real honor and and just just it just so satisfying when we can see them be successful. Mm hmm. Oh, yeah.
Andrew Cross 30:51
Yeah, it’s definitely been a lot.
Damon Pistulka 30:53
A couple things though, while we’re here, there’s somebody watching and they’re going Oh, I’m I’m thinking about selling my business, you know, we’re a couple things that they should be thinking about when they’re talking to somebody that could be potentially selling a business. You know, I mean, if they’re out there talking to different people, I mean, what I mean? Do you just get go through the phone book? Is there places that we should be? They should be looking? What are some of the questions they asked, and I don’t want to get into a deep subject. But if there’s a couple nuggets that you can leave somebody with, and we didn’t, we didn’t talk about this beforehand. I’m just springing it on Andrew. You know, this is live.
Andrew Cross 31:35
No, you know, I think that it’s a very difficult thing, because there is, and we talked about this a little bit in our Round table, and with some of our folks recently, it’s come up quite a bit. But, you know, this is why I like small businesses. It’s it’s the engine of our economy. Yeah. 49% of our GDP is produced by privately held lower middle market. Not all the rest of it is then the Ford Motor Company’s Boeing’s and the publicly traded stock market companies, that that’s only the other half. They don’t create jobs. They don’t get innovation, all that comes from all the entrepreneurs who start out on their own and build companies and build value. So it’s really cool and but they’re privately held, you know, and when you go to sell a company confidentiality is, you know, one of the number one things they don’t want anybody to know. It’s not like buying a house. You can’t go and make comps because they don’t have to legally report you know, what the business sold for. It’s not their tax returns amount available. There’s really it’s just kind of like, you know, the broker world has kind of a tap in to at least some data on how businesses sold. A lot of people have to learn how to do it. I love to teach it. teach you how to buy a business, we teach you how to sell a business as well. as possible, because it’s a, it’s a tough process to go through, because it’s not highly regulated, you’re kind of on your own to do it, you know, you want to keep it confidential, and you don’t have anything else to compare it to. So you got to find experienced people. But I think really at the beginning, especially if you’re early in your business cycle, get a valuation from, you know, a good person, at least figure out what your business is worth today, it’s a good starting point, know where you are, you know, and then make a plan I’ve been I’ve got into companies that are doing have 50 employees and over 100 million in sales and have been going around for the last 20 years. And they’ll have projections, they don’t know I mean, in the owners head Oh, yeah, well, we’ll probably do this much this month, but it’s really for them. It’s just month to month, and we’re gonna sell everything you know, we can by the end of the month, and we count the beans and see how we did, but no, cuz if I ask them how you, you know, you know what, what are you going to be doing in six months? What are you going to do a year end What are you going to do? You know, for the next five years, you know, what’s your growth rate? Yeah, after they can’t see three months ahead of them, you know, and figure that out, not only figure it out, track it, but practice it, you know, learn where your value is now, go forward, and reassess it on a regular basis every six months, at least annually, you know, and look how you did and see how you’re going to do for the next year. You know, that’s, I mean, that’s how you would do it with an investment. That’s my number one thing is know where you are.
Damon Pistulka 34:35
Yeah, yeah. And you in and again, it’s, it’s they, the that same person that has 100 million dollar business, they can be sitting there knowing that tomorrow is gonna be just fine and everything like that and and not have projections. The business can be totally dependent on them. But when they go to sell a company, it’s worthless in the market because it’s all in their head. And it can’t be transferred and the risk of someone buying it no matter the profitability is just too high. Yeah. Yeah, we they just really, I can’t underestimate or under emphasize or overemphasize whatever, emphasize enough, the fact that a business owner needs to look at it from an outside perspective, because the people that are going to be buying your business do not understand your business as well as you do. And you’ve taken years to get that understanding. Yeah, they have to they’ve got 90 days maybe to a make the decision they want to buy it tell you how much they’re going to buy it for. Do all of their diligence, and then they’re going to put themselves on the hook themselves on the hook for millions of dollars. Oh, yeah. And
Andrew Cross 35:51
yeah, I will knowledge. tribal knowledge is what that is and it’s in the owners head and it walks out the door has been the minute the deals closed. Yeah, buyers look at that if they see tribal knowledge, they don’t see established processes, they don’t see something they can plug and play. They run like a scalded cat. And it still could be a great company fundamentally, you know? Oh, yeah. And you just got to fix that if you attempt to sell at all, or you can just liquidate. Yeah,
Damon Pistulka 36:22
well, that’s, you know, if there one other thing is people should understand that. liquidating their company is not necessarily the worst thing. If, if that’s, if they if that’s what they want to do, if that’s the right path form, for whatever reason, you know, depends on the situation of course. Oh, yeah.
Andrew Cross 36:42
Yeah. I you know, certain circumstances is usually though when you’re in trouble, or something’s, you know, something’s not right. Yeah. That’s okay. It’s appropriate on some occasions and it is is one way out but you know the only good way to sell a business is to sell it all the other ways you know just you know going liquidation you know declining sales divorce disillusion all those are bad reasons to sell your company burnout. You know, you want to you know, that’s that’s the finishing strong it’s in your head and and you just got to you know if you want to be successful and have a legacy, you’ve got to get a company up there and and put it you got it takes effort. It’s hard work, but it can be done.
Damon Pistulka 37:37
Yeah. Yeah. Joseph asked us a question here. He said, does he see your way help when businesses are being bought by bigger companies? Sure we do. That’s that’s usually what we are doing. In fact, it’s a sad American dream. Yeah. for teaching, acquisition and
Andrew Cross 37:55
KPMG is ready you can buy exit your way. We’re
Damon Pistulka 38:01
That’s what we’re positioning for. And we do have our timeframe. And our number figured out if anyone really wants to know we’ve talked about that plenty of times. I do. That’s why we work like we’re, there’s no tomorrow. But if you really I mean, in any business, that’s something that you talk with us anytime we’ll spend hours on that to, to educate you why that should be. But yes, that is that’s called a strategic acquisition, Joseph. And we certainly do help our help people do that. Because there there’s two things in a strategic acquisition. Some people it could be a bigger competitor, it could be somebody that’s, that’s not a competitor. But once again, in your market, you really need to understand that because the the fallacy that a lot of business owners get in is that I’ve got this great competitor down the street and I’m going to sell my business to them. And they think that that’s just going to be one day that that I’m going to be able to call Andrew up my competitor and say Andrew, you want to buy My business and tell me about how that usually ends, Andrew. Usually it nothing happens.
Andrew Cross 39:08
Yeah, yeah, it happens a lot. And I have buyers who say, Well, you know, so and so down the road has been talking to you about buying he want he’s been saying he wants to buy it for years. And I’m like, okay, but you have to do the process, you know, there’s no, they’re not compelled to do it most of the time, they just really want to see what you’re up to their competitors, for the most part and are curious. And yes, and the only way to get them to sell to buy in the strikeout is if you know, very rarely are the there are very, very smart buyers that will run out of the pack and go and do a deal. But you’re rare. You know, the rest of them have to be in the pack. We have to be on the market and we have to have four or five other people also looking at the company, because once they realize oh my god, I don’t want someone so buying this company. And now I’ve got a new competitor who’s younger and more welcoming. capitalized and then you know, then maybe that guy will buy the company, but he’s not compelled to do it, just by doing on its own. And, you know, that’s, that’s, you know, you’ve got to go through the process they have to be treated just like any other buyer. The same thing with family
Damon Pistulka 40:18
that’s you have to there has to be an incentive for them to move forward or a consequence that they don’t really more than anything is going to be a consequence of they don’t.
Andrew Cross 40:28
What’s the real art to selling to strategics though is is, is what’s the benefit is you can get you can get a stupid prize from a strategic because they need to have you there’s something in there there’s a synergy or you know, something that they need that will save them a lot of money by buying you rather than having to build it themselves. And the problem is they don’t volunteer that information. You got plenty for sale, but you have to you have to have you know, in the deal side, you have to be smart. enough to have enough business experience to look into that company and identify the synergy so that you can actually negotiate some of that synergy and some of that money in the price for your client. Yeah, it’s really important and you can’t do that if, unless you have experience, you know, that’s why you’re always very strong on that, because we’re all operators, we know what they’re doing. We know what it is company, you know, even if it’s a massive and we just had that, you know, happen for a very small electrical contracting business. It got bought up by a good size, full GC and regional for that same aid needed. You know, what, these guys had specific skills in a certain type of electrical and a territory. They didn’t need revenue, they needed those they needed that you know, that they needed the employees and the licenses and why they were walking then. We knew it and we got more money than we could have gotten anywhere else. Yeah,
Damon Pistulka 41:58
yeah, definitely. So that’s a great question. Joseph is a little longer answer maybe then you’re prepared for but it is it is something we get a lot and honestly, honestly, we we talk with a lot of business owners and they we end up saying Yes Go, go try to go sell to your competitor because they think they can do it themselves and you need to let people understand and find out on their own and, and we encourage them to do that.
Andrew Cross 42:24
If they can get a deal done by themselves, like right out the gate like that without brokers. Great. They absolutely should with the only risk they take is they might be leaving money on the table because you haven’t tested the market. But if they’re happy with the price, do it all day long.
Damon Pistulka 42:42
Yeah, if you can get a deal done, do it. You’re happy with the price.
Andrew Cross 42:47
You’re happy with what you’re getting. Do it.
Damon Pistulka 42:51
Don’t wait. Don’t get a broker. Don’t nothing if you
Andrew Cross 42:55
write it up, do it.
Damon Pistulka 42:58
Don’t talk to us though. Nothing against that’s how hard it is to sell a business because if you can get the money you want and you need and you know you’re gonna get it go do it. Don’t be don’t wait. Don’t pause, do not pass go. Yeah, well,
Andrew Cross 43:15
that’s so true too because those offers come along but they don’t stick around. And you know, it might be there now but two years from now, if you decided to hold on a little longer there lot, you know, chances are there’ll be long gone. And you’re back to square one. So yeah, yeah. Strike wohlers hot. Get it done. Yeah.
Damon Pistulka 43:32
Yeah, that’s for sure. Oh, justice that we did a good job of explaining it. So that’s nice. Good, good. Um, but anyway, that’s it’s been you know, this is this is, I mean, we could sit and talk about this stuff forever, honestly, because we do really, really realistically that’s what we do. We talk about this about different businesses and our clients all day long. Yeah.
Andrew Cross 43:55
Like a good No, I think to that those The thing is exit your way. We merged You know, we were an evolution on a brokerage into something different. Yeah. And I, you know, the only thing I could say is, you know, any business owner out there, I don’t care what what, what, we’re happy to talk with you about what’s ahead, no matter what stage even if you opened your doors yesterday, you know, certain, you know, will help educate because that that just helps everybody get you know, that helps to get deals done. everybody’s having knowledge is power, and we’re happy to share it doesn’t cost anything. You can you can meet with us anytime we love to learn about entrepreneurs and what they’re up to. Yeah, that’s just you know, that that’s just an aside and we’re happy to share what we know. You know, how you prove how you build a company is sell it?
Damon Pistulka 44:43
Yeah. And that’s and that’s what the other thing that I realized we have instead said it all during is is we do Allah carte services to I mean, we don’t just sell a company sometimes we’re only selling a company. Sometimes we’re doing sales only. Sometimes we’re doing some sort of accounting work that we we’ve got to overcome See and do or set up a board or, or room interim roles that will have somebody do with our guidance. And, you know, there’s all different kinds of things that we’re doing for clients and they everybody’s going to exit sometime. That’s why we that’s why we can we help? Yeah,
Andrew Cross 45:16
it’s building great. It’s building companies that were you know, or Card Services do that we’re particularly focused in sales and outsourced sales and sales consulting. Work that that’s, you know, that’s really the starting point. And the lifeblood of all businesses, so we like working in that space. But
Damon Pistulka 45:34
and that’s, and we focus on sales because that’s what drives value the fastest.
Andrew Cross 45:39
I’m sales. Yes, you have to do both, you know, yep. But sale sale solves problems.
Damon Pistulka 45:45
Yeah. Yeah. Jeff Graham sale solves problems. So that many times and done it many times
Andrew Cross 45:51
Damon Pistulka 45:55
For sure. Well, thanks a lot. And you know, it’s been fun and we’re We’re just just happy to be able to talk a little bit about you know why we do what we do. And thanks a lot, Joseph for the questions and stuff. And if anyone has questions, you know, you you can get ahold of us on LinkedIn or on exit your way.us. You can find us there and you’ll get all of us were around. Yeah, we are around, around Well,
Andrew Cross 46:25
we’re in Salt Lake City. We’re in Seattle. We’re in Los Angeles, or
Damon Pistulka 46:29
Andrew Cross 46:30
or Denver and Chicago yet. We’re almost there.
Damon Pistulka 46:34
We’re almost in Chicago, but we’re in Cleveland. And we work with clients
Andrew Cross 46:38
all over the country. Yeah,
Damon Pistulka 46:39
yeah. Yeah, we actually have Yeah, we actually have clients all over and even one client in Puerto Rico now. So yeah. Last business that we sold, the client was actually in South Africa. So it’s a Yeah, it’s a virtual thing is is not new to us. So great. Well, until next time, people, thanks a lot. Have a great rest of your week. This is Thursday, you still got another day to make it happen. So go out and do it.
Andrew Cross 47:10
Right on. All right. Bye, guys. Bye
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