March 30, 2023

12 Concepts You and I Can Learn About A Great Exit From How2Exit's Interview With Jonathan Brabrand - Author, Entrepreneur, and Expert Advisor.

12 Concepts You and I Can Learn About A Great Exit From How2Exit's Interview With Jonathan Brabrand - Author, Entrepreneur, and Expert Advisor.

12 Concepts You and I Can Learn About A Great Exit From How2Exit's Interview With Jonathan Brabrand - Author, Entrepreneur, and Expert Advisor. E18 Watch Here

Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron

 

Concept 1: Focus On More Than Money.

When it comes to selling a business, it is important to remember that money should not be the only factor that is taken into consideration. It is important to focus on more than just the monetary value of the sale.

This is something that Jonathan Braybrand, an author, entrepreneur, and expert in the field of advising business owners on the sale of their companies, understands well. He has spent over 20 years helping business owners with a wide variety of industries sell their companies to their ideal buyers and achieve the exit outcome they dream of.

When asked what made him want to do mergers and acquisitions, Jonathan said that it was a little bit self-serving. He wanted to have the opportunity to have responsibility and exposure to senior people. But he also mentioned that he loves working with entrepreneurs and business owners, and hearing their stories. He loves getting to know their companies and helping them monetize what they have built.

When it comes to selling a business, it is important to focus on more than just the money. Entrepreneurs should consider the legacy of their brand, and make sure that their employees who have worked for them for years are taken care of. Jonathan suggests running a competitive process, and having multiple options at the end of the day for the entrepreneur or the business owner to choose from. It is important to not over-emphasize price, and to focus on other factors such as the legacy of the brand and the future of the employees.

Money is an important factor when it comes to selling a business, but it should not be the only one. It is important to consider the legacy of the brand, the future of the employees, and other factors when making the decision to sell. By taking these factors into account, entrepreneurs can make sure that they are making the best decision for their business.

Concept 2: M&A Market Is Robust

The M&A market is currently very robust. There are many reasons for this. One is the fact that generational transfers are needed. As the second, third, and fourth generations of business owners are not staying in the family business, entrepreneurs are looking for ways to exit. Another reason is the challenges of the last few years have put some business owners in a position where they want to exit. 

When considering the sale of a business, one of the main factors to consider is the activity in the M&A market. If the market is robust, then it is a good time to consider selling the business. This is because there are more potential buyers which increases the chances of finding a good match. Furthermore, the buyer is likely to value the company the highest when there is a good fit. 

The sale of a business is not just about the money, but also about creating new chapters for the business owner, the company, and the employees. For the business owner, it can provide an opportunity to do something else with their wealth such as travel, start other businesses, or do philanthropy. For the company, it can mean being part of a larger organization and continuing the founder's legacy. For the employees, it can mean new opportunities and bigger projects. 

In conclusion, the M&A market is currently very robust. This is a good time for entrepreneurs to consider selling their business as there are more potential buyers and more opportunities for everyone involved. It is important to consider the legacy of the brand, the future of the employees, and other factors when making the decision to sell. By taking these factors into account, entrepreneurs can make sure that they are making the best decision for their business.

Concept 3: Be Sale-Ready At All Times

However, it is also important to be sale-ready at all times. This means that entrepreneurs should be proactive in building relationships with potential buyers, even if they are not actively trying to sell their business. They should also be doing annual strategic planning and holding themselves accountable to the results of those plans. Additionally, they should be thinking about succession planning, both for the ownership of the business and for their own role in the business. This will ensure that the business is in a sale-ready posture if and when the time comes to sell. 

Finally, entrepreneurs should be researching potential buyers and building relationships with them. This will help them to identify the best buyers and ensure that they get the highest possible price for their business. 

By taking the time to be sale-ready at all times, entrepreneurs can maximize the value of their business and make sure that they are making the best decision for their business and their future.

Concept 4: Find The Right Partner

One of the most important aspects of being sale-ready is finding the right partner to buy or invest in the business. It is important to understand the different types of buyers that may be interested in the business, such as private equity, family offices, strategic acquisitions, competitors, and strategic partners. Each of these buyers may have different criteria for what they are looking for in a business. 

For example, private equity companies are looking for businesses that they can ultimately sell to a strategic buyer. Strategic buyers, on the other hand, are looking for businesses that can help them further their strategic plan. They want to know if the business is a missing puzzle piece that they need to complete their plan. Financial buyers, such as family offices and private equity, are looking for businesses that have a plan and can be accelerated with the capital and expertise they bring to the table. 

It is important for entrepreneurs to evaluate both types of buyers to determine which path makes sense for their company. Entrepreneurs should contact samples or a broad swath of both sides to evaluate and meet with groups from both sides. This will help them make the best decision for their business. Additionally, entrepreneurs should make sure to put a face and a story behind their business so that when the time does come to make a sale, the conversation will be quick and painless. 

By taking the time to find the right partner, entrepreneurs can ensure that they are making the best decision for their business and their future.

Concept 5: Minimize Perceived Risk

Perceived risk is a major factor that can influence the success of a business venture. It can be difficult to accurately gauge the level of risk associated with a given venture, as it is often based on subjective factors. However, there are certain steps that entrepreneurs can take to minimize perceived risk in order to increase their chances of success.

The first step is to thoroughly research the industry in which the business will be operating. It is important to understand the competitive landscape, the regulatory environment, and the economic factors that may impact the industry. By researching the industry, entrepreneurs can identify potential risks and prepare strategies to mitigate them.

Another important factor is to carefully choose the right partners. This includes investors, vendors, and other business partners. It is important to choose partners who are reliable, experienced, and have a good reputation. This will help to reduce the risk of the venture and provide the support needed for success.

Finally, entrepreneurs should also consider the legal and financial aspects of the venture. It is important to make sure that all contracts are legally binding and that the venture is properly structured to minimize potential risks. This includes making sure that the business is properly insured and that all taxes and fees are paid on time.

By taking the time to find the right partner, entrepreneurs can ensure that they are making the best decision for their business and their future. By minimizing perceived risk, entrepreneurs can increase their chances of success and ensure a profitable venture.

Concept 6: Plan Ahead To Maximize Sale

One of the biggest mistakes that entrepreneurs make when preparing to sell their business is waiting too long to do so. When planning ahead, entrepreneurs should consider the ‘baseball analogy’, where the seventh inning is the ideal time to sell. This ensures that the business has had a good trajectory and also has potential for further growth. Business buyers are looking for potential and future success, not just the past. Therefore, waiting too long can be detrimental to the sale of the business.

Another mistake that entrepreneurs make when preparing to sell is pre-judging buyers. It is important to allow a broad universe of buyers to be considered, as you may be surprised by the potential buyers that could be interested in the business. It is also important to remember that the process is two-way; it is a bit like speed dating. By allowing a broad range of buyers to be considered, entrepreneurs can ensure that they are making the best decision for their business and their future.

When it comes to selling a business, buyers look at the past, but they pay for the past. Therefore, entrepreneurs should ensure that they have a good track record of success in the past few years. Additionally, if there have been any issues due to COVID-19, buyers may be willing to give entrepreneurs the benefit of the doubt.

 

Concept 7: Find The Most Aggressive Buyer

When it comes to selling a business, finding the most aggressive buyer is key. As an M&A Advisory, I have seen firsthand how important it is to have an understanding of the market and the buyers in it. By running a process that allows the market to speak, entrepreneurs can ensure they are finding the most aggressive bidder. This can be done by providing a range of valuations, from low to high, and letting buyers make their bids. 

It is also important for entrepreneurs to be able to provide evidence of their business’s future trajectory. By providing a plan and a team that can execute it, entrepreneurs can show that their business has the potential to grow and succeed. This can help to increase the value of the business and attract more aggressive buyers. 

Finally, entrepreneurs should be aware that there are many factors that influence the value of a business. From competition to financial pressures, there are a variety of factors that can affect the ultimate sale price. By understanding these factors and taking them into account, entrepreneurs can increase the chances of getting the best deal possible. 

In the end, finding the most aggressive buyer is essential for entrepreneurs looking to sell their business. By taking the time to plan ahead and understand the market, entrepreneurs can ensure they are making the best decision for their future.

Concept 8: Invest In Senior Management

One of the most important steps in the process is to invest in senior management. As a business broker, it is important to recognize the quality of the management team makes a big difference in the multiple and the depth of buyers that are interested in the company. When a business is for sale, buyers are looking for a team that is capable and exceptional, and that has a plan. 

This is true for both financial and strategic buyers. While strategic buyers may not need the same level of management, they still need people on the ground in the facility running it. They need the key people to keep the business moving forward. Investing in the senior management team can make a big difference over time and is often overlooked.

The market is also changing, and there are some hot spots to look out for. For instance, software as a service (SaaS) companies and Amazon stores (FBA) are both seeing high demand. Even smaller SaaS companies are seeing high multiples.

In conclusion, investing in senior management is essential for entrepreneurs looking to sell their business. Not only is it important for buyers to have confidence in the team, but it can also make a big difference in the multiple and the depth of interest in the business. By taking the time to invest in senior management, entrepreneurs can ensure they are making the best decision for their future.

Concept 9: Hot Markets Come and Go

When it comes to investing in hot markets, it's important to remember that they come and go. While there are certain sectors that have been hot for a while, such as veterinary clinics and dentist practices, the market can quickly shift and those businesses may not be as attractive to buyers. Similarly, businesses that have seen a spike in revenue due to the pandemic may not be able to sustain those numbers in the future.

It's important for entrepreneurs to be aware of the risks associated with investing in hot markets. While it can be tempting to jump on the bandwagon and invest in a sector that is doing well, it is important to consider the long-term implications. Businesses that rely on a single channel, such as Amazon, may be at risk if the algorithm or law changes. Additionally, businesses that have seen a spike in revenue due to the pandemic may not be able to sustain those numbers in the future.

When it comes to investing in hot markets, it's important to do your research and understand the risks associated with the sector. Additionally, it is important to be aware of the potential for the market to change and to be prepared to adjust your investments accordingly. By understanding the risks associated with investing in hot markets, entrepreneurs can make informed decisions and ensure they are making the best decision for their future.

Concept 10: Prepare For Business Sale

When it comes to selling a business, it is also important to be prepared. Many entrepreneurs make the mistake of either believing the process is too hard and overwhelming, or that selling their business will be easy and require no effort. The truth is, selling a business is neither overly difficult nor overly easy. It requires preparation and the right advisor to help guide the process.

The first step in preparing to sell a business is to understand the landscape in which the business operates. It is important to define the business more broadly than what it actually does today. Doing so will help to attract more buyers and show them that there are bigger growth opportunities ahead. Additionally, it can help to create a competitive advantage and make it difficult to be outsourced or sent overseas.

Another important step in preparing to sell a business is to ensure that there is a defensible competitive advantage. This can be achieved in a variety of ways, such as having recurring revenue, strong relationships, and a lack of customer concentration. Additionally, it is important to ensure that the business is properly positioned, as this will help to attract more buyers that may not have been looking for the particular business, but rather a multi-service home services business.

Finally, it is important to understand that selling a business takes time, typically six to nine months. This means that entrepreneurs should begin the preparation process early and find the right advisor to help guide them through the process. By understanding the risks associated with investing in hot markets and preparing to sell a business, entrepreneurs can make informed decisions and ensure they are making the best decision for their future.

Concept 11: Plan For Your Exit Early

It is important to plan for the exit of a business early on. This means understanding the risks associated with investing in hot markets and preparing to sell a business. By working with an advisor before needing one, entrepreneurs can ensure they are making the best decisions for their future. This includes understanding the timeline of the sale process, researching potential buyers, and creating a comprehensive package to present to potential buyers. Additionally, entrepreneurs should take the time to understand the market and the potential buyers, so they can make the most informed decision possible.

When it comes to selling a business, it is important to plan for the exit early. This means having a comprehensive package to present to potential buyers, understanding the timeline of the sale process, and researching potential buyers. Additionally, entrepreneurs should take the time to understand the market and the potential buyers, so they can make the most informed decision possible. Taking the time to plan for the exit early can help entrepreneurs make the best decision for their future and ensure they are getting the most out of the sale of their business.

Concept 12: Form a Team Quickly

One way to ensure a successful sale is to form a team quickly. Having a team of professionals to analyze the deal and provide advice can help entrepreneurs make the best decision. Working with an investment banker can be beneficial in this regard, as they can provide comprehensive information about the deal and help entrepreneurs understand the process. Additionally, having an advisor can make a world of difference in getting people who are interested in buying the business. Having a team of professionals to analyze the deal and provide advice can help entrepreneurs make the best decision.

Forming a team quickly can be beneficial in many ways. It can help entrepreneurs understand the market, research potential buyers, and get an accurate assessment of the value of their business. Additionally, having a team of professionals to analyze the deal and provide advice can help entrepreneurs make the most informed decision possible.

 

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