Denise Logan knows that to business owners, selling a business is more than a transaction. To them, it is an emotionally fraught period of transition, filled with unexpected highs and lows, with no clear vision of what waits at the end for them and...
Denise Logan knows that to business owners, selling a business is more than a transaction. To them, it is an emotionally fraught period of transition, filled with unexpected highs and lows, with no clear vision of what waits at the end for them and their family. Her passion for this work is colored by her own experience of being an unprepared business owner who made an abrupt and choppy exit from her company, after ignoring the signs that it was time for several years.
She is the author of The Seller’s Journey: A Business Fable about Navigating the Emotional Obstacles to Selling Your Business, and has addressed more than five hundred audiences on three continents about the psychology of business owners and how to make it easier when the time comes to let go.
Denise is the secret weapon M&A advisors have turned to for years to help get their deals "unstuck" and she provides advanced training to advisors employed by some of the world’s largest financial institutions, law firms and accounting firms, helping their clients successfully transition their businesses to new owners and, most importantly, without regret.
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Book: The Seller’s Journey: A Business Fable about Navigating the Emotional Obstacles to Selling Your Business
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Ronald Skelton 00:06
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling. Hello, and welcome to how to exit the podcast. Today I'm here with Denise Logan, business advisor and author of the sellers journey, journey. It's okay to speak today. Thank you for being on the show. I really appreciate having you here. And I think we're gonna have a blast. You've got some really interesting and valuable information that you've gathered over the years and wrote about so I'm interested in that.
Denise Logan 00:55
Thanks for having me. Nice to join you.
Ronald Skelton 00:58
I think it's a place we always start. And, you know, it's very common for me to do on the show is kind of your journey. How did you get here? Now you got a very interesting path. So, but I'll let you tell it your way. How, you know, I joke around all the time says you, you were born. Now you're on my show, can you fill in the gap in between. But let's just kind of take a look at, you know who you are, and how you ended up being a business advisor because your journey has been a lot different than most.
Denise Logan 01:24
And I love that you're using the word journey since that's in the title of my book sellers journey. I'm like, Yay, bring it.
Ronald Skelton 01:31
There we go.
Denise Logan 01:32
In my early life, I was a mental health professional. And then I was a lawyer. And some of your listeners might be thinking, for heaven's sake, why didn't she stop herself from becoming a lawyer if she was a mental health professional. And I built a law firm in Washington, DC, when we got a pretty good size, I realized I would rather put a stick in my eye and go to work one more day. And I did a super ugly, choppy exit from my own business, got rid of my house and bought a motor home. And that might be a separate conversation we have over beverage at some point.
Ronald Skelton 02:09
Yeah, I live in a tiny home. So that'd be Yeah, we probably have some eye to eye there.
Denise Logan 02:13
Super fun. So what I thought would be six months where I would travel and kind of reclaim myself turned into several years, where I traveled all over North and Central America in a 38 foot motorhome with two little dogs. And when I came off the road, I joined a friend's business who was preparing it for sale. Over the next 10 years, we took that business to the market three times. And he was unable to let go. And I thought isn't this interesting, you could be me and wait too long and be ready to give my business away. Or you could be him and go too early and not be able to let go. So I left and did a research study to try to figure out why do business owners get stuck? And how can we help them be able to let go more simply. And then I wrote a book about it and have been out on the speaker circuit I speak at 70 or so conferences a year about the psychology of owners and how to make it easier when the time comes to let go.
Ronald Skelton 03:18
Thats interesting. As a all of us business entrepreneurs probably need a mental health professional on our team. And we were talking about this a little bit about this before the show. And you and I've talked about this before sellers and entrepreneurs. In general, we tie a lot of our most I'd say 90% of our identity, to who we are and what we do like our ownership of our business. I've been doing my best over the last couple of years to break that. So he asked me what I do. And I was like, Well, I'm a dad, you know, I own a few businesses, but I'm a dad, I'm a podcaster I do this other stuff. But you know, the thing I enjoy and one of the is you know a dad who spends time with his kids. But that's a hard transition to make and almost a conscious effort every day to not tell people I'm an acquisition on to it. I buy businesses or you know, I'm a pest control company owner, and I own a pest control company. What I know that, that's part of what your book does is help you like figure out what's next. Right? I was reading it and, and it was I love the story. It's a story format as opposed to just a lot of business books are just like bullet points and do this, this and this action steps. You did a really good job of putting in effort what it's called, but the fable or a
Denise Logan 04:31
Yeah, it's a business fable. You know, just to frame that and then I'd like to circle back to the question about why owners get stuck with their identity. So the book, the seller's journey, is written as a business fable. It's the story of an owner one year after he exits his business. And he goes on a trip across Glacier National Park with his banker, his lawyer, his wealth advisor, and the private equity buyer who bought his firm and some of your listeners might be thinking which one dies, and you might have your own idea of who should who should get shoved down the crevasse. But the purpose of the story is as they're crossing the glacier, they relate the physical obstacles they're facing to the emotional obstacles that they each faced in getting that transaction over the finish line. And, you know, coming back to the question that you started with, which is why owners identify so strongly with their business? You know, there's some psychology behind why that is and how we can lessen it. If you think about it, everywhere we go, we are asked this question, what do you do? Whether it makes any sense or not. And I believe that, that is actually a social pegging question. Because depending on how you answer that question, the other person's response will be different. So I think that question is, really should I be kissing up to you right now? Or should you be kissing up to me? And if a listener is saying, Oh, that's not true. That's not why I ask it; try answering with a different answer. So let's say and, you know, from my background, right, as a lawyer, there was a certain amount of cachet, or now as an author, there's a certain amount of cachet if instead, I said, I was a janitor, or I was a housekeeper, do we actually think that the other person's response would be with the same level of interest? As if I give a different profession?
Ronald Skelton 06:41
It's a social status question, right? It's like, you know, where do you fit in on the food chain? And, you know,
Denise Logan 06:49
I don't ask that question. When-
Ronald Skelton 06:51
I, don't, I don't ask it anymore, either. Like, you know, I asked people, what makes them happy? What do you know kind of acts, you know, what do you do? Let's say, what do you do? I'll, I'll say, what do you do that makes you really happy? Well, I work that No, no, no, no, where you work? Not? What earns you money? What do you enjoy doing? Right? You know, I've been trying-
Denise Logan 07:09
Sorry, when I'm asked that question, right? And we're often asked that question, in places that it makes absolutely no sense to be asked, right? I was at the hair salon, and the gal six feet away with, you know, the blow dryers going shouts over. So what do you do? I was like, wait, you want to know how I earn my money? Like, what is the relevance of that? And often, when I'm asked that question, in a social setting, or even in a professional setting, someone will say, what do you do? And my answer is always about what? Because that's, that's the frame for our conversation. And typically, that will cause a little jarring in the other person. And they'll say, well, like, what do you do for a living? To which my answer is you want to know how I earn my money? And they will often say, Well, no, I just want to relate to you. Think about it. Aren't there about 200,000 other questions we could ask about that person that would help us relate? And the reason I think this is such an important topic for a business owner, is when the time comes that your answer is unclear. There can feel great shame around that. Our identity when we tie our identity to what we do, here's a little brain twister for you. If what you do, is who you are, when you don't, do not exist, because in many ways we listen to owners as they are approaching their transition. They will often say it feels like falling into a black hole, who will I be, you will still be all that you are. It just doesn't have to be tied to how you earn your money. And I think one of the things that we often see with owners is they sell their business, they receive us sackful of cash, and then all of that turmoil comes up. And if they are not either prepared to go through the turmoil or have someone to guide them through it, they will quickly throw themselves into another business, they will buy another business without being without evaluating whether or not that is the business for them or whether that is even a worthwhile business for them to acquire. And that is moving away from the cognitive dissonance of who am I without my business.
Ronald Skelton 09:37
And I never thought about that as, as human beings we find different ways to escape, and as entrepreneurs a lot of times if there's other things going on our lives and our families or stressful events out there. We just dive into the business put more hours in right, so we escape the outside world a lot of times by focusing on the exact business in front of us at the moment, and when that goes away that ability to escape, you got to deal with all that extra stuff that you've just been putting off and probably is not as good of a state as it would have been if you had dealt with it the day it came up, right, the stuff you've been putting. So-
Denise Logan 10:13
So much. Can I tell you a story that puts
Ronald Skelton 10:16
Denise Logan 10:16
into context? So, and what I'll say is, you know, some of the stories that I might tell, don't get hung up on the dollar amount or the actual type of business, because the emotional arc that an owner goes through in their transition is the same whether we're talking about a $50,000 hair salon, or a $500 million manufacturing company. So this particular story is a story of a man who owned a manufacturing company, $85 million company. Eight weeks before the closing, he suddenly announced that he would not take a penny less than nine times ebita. Never mind that he already had a deal at 6.2 times ebita. So that's a significant growth that he suddenly demands eight weeks before closing. So all of the advisors and the transaction are rushing around like the lawyer is telling him, you're going to get sued, the bankers telling him that's the best you're going to get. And he stopped returning anyone's calls, ghosted, and pulled back. So the banker invited me in and said, I think my seller went crazy. I'm like, yeah, sounds like it. Let's see if we can figure out what scared him and what hidey-hole he's in. And can we coax him out? So what I learned is that his original plan was to sell the business, buy a sailboat, and sail around the globe, you know, you can get a pretty good boat for 85 million, so it's probably not really about the money. And then what I learned is two weeks before he asked for this unicorn of more money, his wife had said, I'm not doing that, I do not want to be stuck in a boat with you far away from my grandkids. That is not happening. And can we agree, Ron, that he is not coming back to tell the deal team that the deal was off, because my wife won't let me do what I want to be doing. Instead, he asked for more money, because he knew that they could not produce it. It was never about the money. Instead, I did one on one work with he and his wife and created a solution where he would buy the sailboat and sail. And every six weeks, she would take one grandchild, fly to where he was, they would do two weeks on land building memories with the child. He, She would fly home, and he would sail on, boom, that deal was back on track closed on time at its original asking price, because it was not about the money, what it, what it was about. And you can relate perhaps and some of your listeners will we call it relational grief. Because this is the moment when couples, maybe they own the business together, or one is leaving their work. And they realize I don't want what you want. And we have language for this in other parts of our life. Right? What do we call it when the last child leaves home?
Ronald Skelton 13:16
Emptiness syndrome? Or emptiness-
Denise Logan 13:18
Right. And we know what that is. And often we go through that with other people. And so there's a common language for our business owners, the business is often the last child is leaving home. And it can feel really shaming when for a business owner, they realize how am I going to get like, Who will I hang out with? I have that happened with an owner $16 million. And you know, this happens with young owners, and mature owner. So this is not like oh, you wait until you're 60 and exit your business. This particular fellow was in his late 30s. And he was selling a software company, he was set to net about $16 million on the other side of the sale. And suddenly he realized who am I going to hang out with all my buddies have jobs, and now could be a really normal response from friends or family or even advisors. Who if we create the kind of emotional safety for an owner to say what is really struggling that what they're struggling with, we can solve it. But if instead we shut that down and shame them, they will frame every problem that they have in terms of more money. I need more money when it's not about them.
Ronald Skelton 14:42
The question I'm going to have on this is like how do you detect that that's coming up? How do we see that that's going to be an issue early on in the process?
Denise Logan 14:53
Yeah. So one of the things is we have more conversations with owners sometimes I watch advisors or brokers or even buyers, who will ask, or what I call a dopey question. So what are you going to do when you retire? Oh, okay, you're going to cough, golf and travel, check. That's not an answer. And the more compelling the future is that that person is stepping forward to, the more likely they are to be able to complete. So here's a question that I ask, what does work provide for you, other than money and financial security? So let me phrase it again. What does work provides for you, other than money and financial security? And we should be able to get 12 to 15? Distinct answers to that question. So what have you and I just brainstorm? What does work provide for you? Other than money and financial security Ron,
Ronald Skelton 15:54
most of the friends I've had have either worked for me or work, you know, work beside me.
Denise Logan 15:59
Ronald Skelton 16:00
you know, At some point, like even the, the guy was telling me about his prior military, we work side by side. So a lot of our social circles come from what we do.
Denise Logan 16:09
Ronald Skelton 16:10
Denise Logan 16:11
Right. Some of the ones that I often hear are structure, right, there is structure to our day, and to our week, and to our year, a place to go.
Ronald Skelton 16:22
Denise Logan 16:23
During the pandemic weren't, we all just like I gotta get out of this house. And so is your spouse thinking that you got to get out of this house?
Ronald Skelton 16:31
Exactly. I was to say my spouse just like you need to go out and buy space,
Denise Logan 16:35
right. But it's also friendship, intellectual stimulation, the thrill of the chase or the hunt. But also things that we don't like to admit, very much, which is power. At work, you say you want something done, and it generally gets done at home, maybe not so much. And the practical reality is those later ones that show up on this list are the ones that are more likely to derail a deal. And that's because they're going to come up, you know, I wrote a column a couple of months ago, probably around Halloween now called scary things that go bump in the night. And they're about the things that wake owners up at three o'clock in the morning. And unless they have somewhere safe to have these conversations, they will frame it in terms of money. So if the advisors or the buyer, are framing everything only in the context of money, that is how an owner will communicate their distress. So advisors who have busted deals, you can do better, we can learn about what an owner is going through.
Ronald Skelton 17:50
So interesting is I've been doing it for a while. To the extent that when do we moved here, when we went home for the weekend, we lived in a private Valley, we bought a little place out in the middle of nowhere, there was a drive down our driveway out there, and cell signal goes away. So if you wanted the bad news is if you did need to make a call, you had to get in the car and go up 300 yards, 400 yards to the top of the driveway halfway up the hill to get one or two bars and make a call. That said we had ways for through satellite thing that you know somebody could reach us an emergency, but it's difficult for people to disconnect. And, you know, inside of a business, I get it if you're in there, and you're running your operations on a day to day basis. And there's this sense of oh, I'm not going to call it overwhelmed. But there's a sense of urgency about everything that can every decision that needs to be made. And there it goes back to the whole seller being the main operator that causes that problem for us buyers, is that if you're telling me that you're on call 24/7. I don't necessarily want to buy your company because I do not want to be on call 24/7.
Denise Logan 19:05
Right. And you know, the question that you asked was, how can you spot this earlier? So some of the ways to spot it is to go through that exercise that we just did. What are all of the things that work is providing for this person other than just money and financial security. Some of needing to be on call is purposefulness but it is also a form of avoidance. So the reality is all of those needs will continue beyond selling the business. The real question is where will those needs get met? So let's just use friendship. If friendship is something that you get in your business which for many of us, our customers or employees or vendors are our friends. How will you get that need met after you sell your business? Because otherwise it is going to come up close to the time of the exit and scare the pants off this owner? Also, where will you get your power need?Met, I had an interesting conversation with a father and son who owned a business and what I realized in my conversation with them, son was pushing for the transition to happen, the father was delaying. I generally do conversations with all of the advisors and some of the family members because I can gather a lot of information. And I realized in talking with the stepmother, ah, this dad is a bully. He bullies at work? Where will he get that bully need? met outside of work? Because if he's not gonna get that, and he would not call it bullying, but Right, we're grownups here, we can talk about what is true. If he can't get the bully need met? How likely are we to have his wife derail the deal? Because he's going to continue to bully. And she knows that. And she doesn't want that at home. So often, I think advisors or, or buyers focus as if they're only going to get information from the seller. And they can ask shallow little questions and expect, okay, I don't really want to know the answers to any other questions. And I often will say that to an advisor when they have a deal that blows up, we talk about what could you have known that you refused to know? Or looked away from? And why?
Ronald Skelton 21:38
I've sat on some calls with some new guys in this industry, because they know I've talked to lots of business owners. And I tell them, it's like, do you want me to be on the call, let me lead to call. And, you know, most of them can't resist. The reason I say that is the first couple of calls with the business owner. I don't bring up money unless they do. Meaning I don't ask, you know, how much you make? And what does it business look like? I want to know, the background, the origin story, what how did you create it? You know, just like, what would you if you weren't gonna sell it? How would you grow it? I want to know, inside of their head, what their plans were, what challenges they've had, what are they overcome, and get the real story behind it. And I want it you know, a lot of times I'd like to talk to other employees their way before we start talking about numbers I kind of there's a, there's a scope of things, I kind of know you're in my target market, but because the way I reached out to you is like I know you're you know making enough to be interesting or I wouldn't be talking to you start with after, after I know that. I'm not ready for the details. Number one, it sets the wrong, wrong tone for the conversation is that I'm more interested in what your company makes and what your, your revenue wise than what your company makes. For the people working there for the customers. You know what value it truly adds. And this is a people business. A lot of people will fight that. Say it's a numbers business I buy based off valuations and numbers. Yeah, you do. But you'll never get to the other end and get that acquisition done. If you don't deal with the people in front of you. And I think that's where you specialize. I think that you can see this. This is way more people business than a numbers business.
Denise Logan 23:23
Yeah, I work both with owners and with advisors and buyers. So because there is emotional work going on for everyone in that transaction. I'll give you another example. I was speaking at a conference and I had a fellow from the audience say, I don't understand why this deal fell apart for me. And it was a family run business multiple generations in the family. And he was dealing with the son in business. And when he first started, he was like, oh, yeah, don't worry, my dad's on board with this. And then come to find out close to the unknown. The dad was not on board with this. And so what I said is, how is it possible that you didn't have a conversation with the dad in this situation? And it was like, well, the son said, you know, he was on board. If the son said Our books are good, would you not have done a financial audit? No, no possible way. And what I think is that this is a place for buyers and advisors to notice where their own skill set isn't as strong and either get some training on that or bring in another resource who can help ferret those things out? Because we all have blind spots. Look, I went I have a social work degree because I did not want to do math. So I am not going to be the transactional person in the process. I'm The person who's gonna deal with what's happening emotionally, why when the seller reacts like this, does the buyer react like this, because everyone's emotional interchange is causing friction in the deal,
Ronald Skelton 25:15
you know, and it's the dynamics go up with the number of people involved to write. So, in general rule of thumb, I'm not interested in any business where there's three or more owners, because I've just, it's on me more than it is on them. When you have more than three or more high equity stake, meaning decision makers, I have to have all three people in alignment, I'm really good to get one person to align with me see my vision, agree with me sometimes, too. But that third fourth, there's always just going to be one out there that just, it's just not going to work that well. And historically, I've been avoiding, like, anything with three or more majority shareholders. But on call number two, if I find out on call number one, there's two other majority shareholders, I need to talk to him right away. Right. And you'll find more often than not that if you talk to them individually, they say different things.
Denise Logan 26:14
But isn't that in any relationship?
Ronald Skelton 26:16
Denise Logan 26:17
Right. That's the truth in any relationship. And I think what happens is, a lot of times, buyers and advisors and sellers lose sight of the fact that we behave in business, there are all kinds of drivers that cause this. And sometimes, you know, I hear this, I'll call it a, a myth in the industry, that time kills all deals. Time is not what kills deals. What kills deals, is unprocessed conversations and emotions. So here's something that often happens. I was just listening to this recently with someone else. We'll have someone say, I can't let my employees know, we're selling. Like we have to keep it a secret, you're going to come and look at the business and dark of night with a flashlight at 11 o'clock at night. So let's just get real, can we this is like pretending your children don't know what's going on in your household. Employees and children know a lot more than we give them credit for, and what buyer would want to buy a business. If the seller is saying I can't let my employees know because they might leave. Your employees are not chattel. They're not product that we're selling. And I'm not suggesting that you have to blabber mouth, everything to everyone in the company. But I think what happens is owners often they scare themselves and advisors scare owners with this, you have to keep it quiet, you can't tell anyone more than anything, what we want is to be able to keep as calm and settled an environment that we can when we are going through a transaction or a transition. Transition brings up uncertainty, which of course is going to trip our poor little friend the amygdala a lot, which is why going slow, allows us to go fast. So when I hear someone say time kills all deals, what I know is their amygdala is activated, they are afraid, oh my gosh, the deal might fall apart all their fears up. So when I'm involved in a transaction, I'm often working with the advisors to to help soothe them to keep them steady. It's the reason why in the story I told a few minutes ago where the person didn't want to talk to the to the Father. Because if they had learned that the father was not on board, they would not have taken that transaction on. And part of their own fear was I'm just going to take this deal. And somehow I will figure it out. That never works. That never works.
Ronald Skelton 29:04
So interesting that you know, the fear comes into play in all aspects of our lives, right? A lot of people say I'm not afraid of anything. Yeah, you are displaying it not displaying to act upon it not acting on it. We all have inherent fears, right? Like I joke around all the time, you know, I'm 5'10 and a very big guy. And so if you ever see me running, you probably ought to catch up. I'm not afraid of much on this planet. It's about to blow up or bit us. So keep up with me. That that's just a joke inside of the thing. But I've, I've asked a couple of brokers who said, Yeah, fear kills. I mean, time kills all deals. I've asked him why? And the answer is right in line with what you're talking about. They see if you give the seller long enough to stew they'll find a reason why they want to keep it or they'll become afraid to sell it. So you got to move through these deals fairly quick. So they don't have time to stew on what are they going to do next? I was like, why don't we just solve what? Like, why don't we just have a conversation about that? Oh, don't bring it up because like whatever You say won't be what they want to do. And I was like, there's a reason why I don't work for many brokers at this point because I think they're, I jokingly say brokers have their name for a reason. Right your broker,
Denise Logan 30:11
but a, but a good broker or a good advisor, whether this is an attorney, or a CPA or a wealth manager or broker or an attorney, I mean, an investment banker, really, their job is to become the trusted adviser, not the trusted adviser, so I can force you through something, but to be able to solve for what the problem is. And some of the problem if we only talk to owners about money. Every problem will be framed as money. If instead, we're able, and I do this, this thing with the hand, I call it an all hands meeting, I do it at the beginning of a transaction, where everyone in the transaction including the adviser's gets clear about this, and fear shows up, I'll just give you one more piece of this. You know, fear shows up for us in one of five ways. Fight, flight, freeze, fawn, f a w n, and submit. So it's fight, flight, freeze, fawn, and submit. And you probably know some of these we know fight. Right? Get your dukes up. We're gonna argue be can be combative. Now fight flight, flight, that person stops returning your calls. They pull away. Freeze. Freeze can look like slowing things down. overthinking it. Fawn in a professional setting fawn looks like people pleasing. Okay, okay, I'll totally get you those documents. Yep, I will. And then they don't. And submit. If you have ever had a teenager in your house, you know what submit looks like? Fine. All right. You Know, this plays out. And all of us will use all five of those at different times. But we typically have a pattern that we use. So for me, mine is freeze fawn flight, I will get to submit or fight but only if I haven't been able to get away. So knowing that about myself, I watch for it. If I start people pleasing or over promising, I know all I'm unsettled. I need to slow this down. So I can get my prefrontal cortex back online. What is your pattern? Do you think Ron,
Ronald Skelton 32:40
I definitely embark a minute and not afraid of a good fight taught martial arts for years and years. So not afraid of confrontation? So I think that, you know, standing up for myself for this one. And then the I think the second one probably would almost be the the I wouldn't flight as much as I would. Yeah, yeah, I'll get that to you. And then I tried to think of a different
Denise Logan 32:57
Ronald Skelton 33:03
Denise Logan 33:03
Ronald Skelton 33:03
You know, fawn. Right? And then I tried to come up with a different way to have the conversation and a non argument. You know, I say I fight. But I do it in a crafty way. I don't want a heated argument. But I wanna (inaudible) to have our conversation. And both of us be heard. And I make sure that you're heard. But I'm also going to make sure you hear what I have to say, right? And
Denise Logan 33:24
if listeners are having a hard time saying Wait, what is my pattern? Here's the news. Spot your spouse's pattern, right, I'm not going to have you out your spouse, on your podcast. And on a live stream. We're not going to do that. But you can think if you think about this in relation to your spouse, you'll figure it out right away. If you don't know what your pattern is, ask your spouse. And this is outlined in the book, the characters go through this
Ronald Skelton 33:53
Denise Logan 33:53
The reason it's important is think about the fact that fight is actually a fear response.
Ronald Skelton 34:00
Denise Logan 34:00
So instead of kicking off and getting back into a fight with the other person, if we're able to slow down enough to say, Oh, wait, Ron must be afraid of something right now. What just happened? So we do what I call pausing the content to deal with the context. So the content is the deal. The argument, whatever the term is that we're talking about, the context is what's going on under the surface. So think about this, you know, the argument that you have with your spouse about why you put the mustard back on the wrong shelf in the, in the refrigerator. Can we all agree that is not about the mustard that that is about something else? And you can continue to argue about the mustard or whatever your listeners version of that is, or you can press pause and realize, Wait, what is my spouse really upset about what's really going on here? And so I always say when I speak at a conference, you're going to hear about what goes on in your deals. And you're also going to solve the problem, the argument that you have at home, that goes on and on. This is playing out all the time. And it's playing out, not only between buyer and seller, but with the advisors. So when I hear someone say, Time kills all deals, or you can't let anyone know, you have to hide that information. I know right away, that that person's fear is running, they're part of the deal. And we need to get that tamed and under control, because and here's the one other reason why you don't want to have secrets in a deal. So remember, our friend, the amygdala, if you are holding a secret, you are tripping your own amygdala over and over. Even if we use something as innocuous as you're planning a surprise birthday party. Right? You're planning the surprise, you don't know if the other person knows it. And every interaction you have with them, you're like, what does that look mean? Wait, do they know? Do they know? Do they know you're tripping your own dang amygdala and flipping yourself out for no good reason. So again, and again, our bodies can sense when something is off. I call it dog ears. If you've ever had a dog, you know, the dog hears something and kind of goes What was that our bodies are doing the same thing. The more emotional safety we can create in the transaction, the more likelihood we have that it will successfully conclude, and that our seller will go on to a successful post close life, which makes them your number one referral source. As an advisor
Ronald Skelton 36:51
thats interesting, I got really good at doing that in real estate transactions I could pick up especially bigger deals, I can pick up when the sellers like demeanor changed, or I can you know I can tell you stories of like being in the middle of negotiations having both parties say yes. And all sudden, the male of the husband and wife you know leans back crosses his arms and just totally changes his posture on me. And I'm like, Okay, what happened there? And by addressing, it's like, hey, it looks like something's changed looks like you're a little frustrated. And even if I mislabeled it on purpose, to get them to say, no, no, it's not that get having that conversation, I've always been able to move the deal forward. If you ignore that, or just miss that cue, those deals fall apart. And you know, for the one I was just thinking of, it, it came down to a status thing he had, just realizing the deal, that the way we structured it, he was going to make a little bit less than what he had paid for it, because he put a down payment on, on the property, we were going to take it over take over his financing, we were going to pay the mortgage on this commercial piece of property so he wouldn't have to anymore, which was their biggest problem. But he there was a I don't want to stereotype anybody but it was an Asian couple and there was an ego or a face value of he put down 25,000. And if he asked to tell any of his friends that he sold it and we took over the mortgage, they're gonna go but you lost 25,000. And that's what. That's what came up to it. So just by asking, noticing the difference of they're like, he's just he was his is very obvious. He's actually very stared at the numbers on the page for about 30 seconds flat without blinking and looking up, started crossing his arms, he kind of did this little, you know, rock back and forth. And he leaned back and he's like it, he said something along the lines. Why don't you guys just read it from us instead? And I was like, okay, something just happened there. How do I see some of your articles and I've picked up the phrase, some notes that you sent to me and stuff. Seller whisperer. You Is this a skill that we can acquire? Or is this like, tell me about what that is? And like, how do you acquire the ability to be a seller whisperer?
Denise Logan 39:04
Yeah. So I call myself the seller whisperer. And I do trainings with advisors and buyers and sellers, and then occasionally a consult on a transaction directly. But most of what I have really been focused on for the last decade, has been helping for the professionals who are in the transaction to understand what's happening so that you don't need me. How can I open my head like a Pez dispenser, and pour it out so that you can see it and spot it? I'll give you an example. I was talking with a business broker. And he was talking about a client who seemed to just not ever be able to pull the trigger. You know, he just like they've been pursuing this transaction for such a long time. And then we started talking just a little bit about the family dynamics that were going on. And this so the sellers wife's Brother, okay, so we've got brother in law involved. The brother in law had a horrific exit, where he felt like he just got screwed over in his transaction. And he was always yakking this like always, always. So, right, we had a seller who everything he was hearing was about how people were going to screw him over how it could go wrong. So we talked a little bit further. And here's what I learned. The wife was super protective of this brother and his what was perceived as a failure in the exit of his business. And she felt like if her husband had a big win, how could she face her brother? Like there are dynamics going on? In such interesting part? So how could you as a buyer, or as an advisor, learn what I just learned? You actually spend the time to get to know the seller, and what's going on around them. Instead of good, you've got a business here's the numbers look good, I'm ready, let's go. No one likes to be treated that way. Instead, what we're able to do is really start thinking about what is the conversation that needs to happen, perhaps between the seller and his spouse, perhaps between the spouse and the brother in law, because this seller was not going to sell, if it meant that he would feel uncomfortable around his brother in law, or if his wife would pressure him to economically support the brother in law. If they had a windfall, there are lots of dynamics that are going on, it is not just about you have a good business, I want to buy it, or someone wants to buy it, and you're gonna get a big sack of cash. You know, there was an accountant who I worked with a while ago, in exiting his business. And over and over, he was stalling delaying, he had what I call Oh, my syndrome. One more year. Oh, my one more year. And when we dug into this, his wife was a spendthrift. I mean, she just went through money. And there were a number of reasons for that. But he said, I would rather wait and have her get the money after I die, than have to deal with the conflict that we're going to have, by selling the business and having that money and needing to regulate her spending. Now, there's work that we can do around that. And he and I did do some work. And he did ultimately exit his practice. But unless we understand what the drivers are, and that comes from having real conversation, instead of skirting away from it,
Ronald Skelton 42:48
I get it. Again, it's just we're these are not just businesses, these businesses are run by built with built by, and managed by human beings with all the baggage that comes along with them. Right. And one of the things it's a kind of opened my eyes during the show today was, you're not just buying the business from the seller, you're buying it from the sellers, wife and his direct, connected social circle, right. And all those people play an influence on how this transaction is going to either succeed or fail.
Denise Logan 43:26
And you know, when I heard you say earlier, you don't like to work with businesses that have more than one or two sellers. That's, that's a perfectly reasonable expectation that you have. But also, if you wanted to do that deeper learning to understand how to navigate those dynamics, when there's more than one seller involved, that's a piece I'd be happy to chat with you about and how to come into, because those dynamics are always happening. Right? There was a private equity firm that was interested in buying a family run business, and the husband was ready to sell the wife was not. And they invited me in to have a conversation sort out what might be happening. And so the wife said, Well, this business is gonna go to our son. You can tell a little bit of the facial expression from the Father. He was not too interested in that. And I was like, Oh, how long has he been in the business? Oh, he's a sophomore in college was like, Oh, is he interested in acquiring the business? Well, no one had had that conversation. So I had a conversation with the son. And he said, I do not want to go in that business. I hate that business. That's like the favored child in this family. I will get three PhDs if I have to, to stay in school until they sell that business. Yeah. Well, you know, wouldn't it be nicer to have that conversation? So I facilitated a family conversation, where it became safe for him to communicate them. Then I did. grief work with the mom. Because for her, this was a huge letting go of a dream that she had. They felt that they had sacrificed a lot to create this business for their son. And the fact he didn't want that felt like a rejection of them. Once we process that and got that cleaned up, that business sold to the private equity firm, they took their capital, they were able to go on and have a successful life. So over and over, there are more things that are happening. But there are things that when we dial in and pay attention to just what we know, as humans, a lot of it comes forward.
Ronald Skelton 45:39
You know, I see that a lot. I actually I probably did it myself. My father turned out when I was 16, my father turned over a painting business to me and I and I helped him run it until I was 20. When I joined the military, I joined the military to get away from it was like, I just didn't want to work on the hot sun anymore. I just didn't want to, I haven't painted the houses and I own a bunch of real estate, I buy and sell real estate. But as far as lifting a paintbrush, it's not happening. So I paint, I painted hundreds of houses in between that time I was 16 until the time I was 20. And there's some psychological thing there's that I just don't want to do it no more. And you, you can imagine why. What do we bring home as entrepreneurs on a day in and day out? basis? Right? I tried to leave it at home. But a lot of times what comes home with you is the problem is like you're explaining them to the spouse why we can't do this or why we can't do that, or we had a slow month. And you know, little Johnny didn't get a new Xbox because he had a slow month or whatever, I think they're almost trained not to want it.
Denise Logan 46:38
It can happen, you know, I just was we just concluded a transition in a third generation family business, which was super fascinating. And at some point, I will you know, be in a place to tell you more about it. But it finally transitioned to generation three. And there were children in that business who did not need to be owners in the business. And there were some children who did need to become owners and thinking through the logistical pieces of that. You know, I always say an advisor needs to be transactionally proficient, that is the bare minimum. But for an owner one, what i The question I would ask if I were selling my business is what is your plan to leave your business? That's the question, I would ask an advisor, because an advisor who has thought well through how they themselves will exit their business will be able to navigate this, and they have a plan. They've already begun dealing with the emotional part. You know, sometimes what I hear is they'll say, Oh, I'm, I'm going to work forever. I'm na. So the truth is we will all leave our businesses, voluntarily or involuntarily. It is when not if any of our businesses and I wrote a column I think late last year that is, is dying at your desk Noble or tragic.
Ronald Skelton 48:13
I've seen some real tragedies around a lot of people don't understand that what that does to the business. It's almost unrecoverable. Good, good. We're at the top of the hour, we're gonna run out of time but a really good electronic Electric Company, commercial and residential electrical repair Tulsa that 25, 30 trucks owner dies. And they couldn't stand up half an auction off equipment and stuff like that, because by time he got through probate hear the story I heard through a couple of brokers who had tried to get their hands on it because I was trying to get to talk to him was the owner passed away and nobody else had a check, check or writing authority at the banks. Nobody, you know, pretty much he did he did everything get 27, 30 something like electricians working for him. And you know, they couldn't even cut payroll because all those Council stuff were how to single signature authority. Right? So by the time they could it was just an auction off of assets, trucks and stuff like that everybody else was gone because they didn't you know, hadn't had a paycheck in a while. And that happens. So
Denise Logan 49:21
It makes me mad. It makes me mad that the advisors who are around this owner did not step up into the courageous role that they need to be in. You know, when I hear the low closed rates that happen in this process, that is a tragedy. Anytime an owner takes their business to the market and is unsuccessful, that has an impact not only on them and their family that their community. This is noble work that we're invited to do when it comes to helping to transition a business, whether you are the buyer, or you are an advisor, we have a responsibility to come with care to this process, because I often see some snarky things that go on with advisors who will say, Oh, this owner thinks things are worth too much. You know, we're dealing with other human beings. And we all know this is a response of grief, when you realize, I put all my time into this business, and I thought it was worth something. And it's not. And while you may choose to not take that sale, or process that transaction, we can have empathy and compassion for the other person who is on the other side of this. And not leave them battered and broken and dragged through a transaction or dropped because we can't make a buck off them. There is so much more for us. And I believe that we are put here to guide owners through the most vexing chapter in the life of their business, which is their exit.
Ronald Skelton 51:06
Know, it bothered me so much to watch that happen that I reached out got an attorney and who understood estates and probate and some other stuff to see if we can put together what I was referring to as a fast, fast action team, a team of people that could be called Say, say an owner passes away, we could jump in using our own funds or whatever, run it until it could be, you know, transitioned and potentially be in line with being the buyer if we wanted to. And all the advisors, the attorneys, the CPAs, and stuff said, You know what, it would take so long to get control where you could actually do it. And you would be risking all your capital without the ability, because if they've done that they've left nobody with the authority to approve you to do it. So you would be risking everything. So if you went in, say you like that electrical company, had I went and paid the salary for the first few weeks help run it until probate got through and attentionally been the buyer it only take one of the people in the probate case to say, No, we're not selling to you. And I would have no way no recourse to all the money I put in. Because nobody at the business had the authority to sign for something saying I could do that. Right?
Denise Logan 52:13
So what is the lesson that we can offer our listeners about that? Because I don't want to leave people with just that. What is the lesson we can offer them? I have my idea, but I know I
Ronald Skelton 52:24
honestly think the lesson is, you know, every err, no single points of failure. Everything has a backup everything has, you know, instructions of what to happen if something happens to you. And, you know, I'm a big believer all the way down into insurance policies, but just thinking about where are all your single points of failure, if something happened to you, and you could not show up to work for the next 30 days or six months, or God forbid, you're dead? What happens? And by thinking through that, you really set people up to succeed or have a better shot at doing something if something does happen to you. Right?
Denise Logan 53:01
Yeah, I think owners believe that there will come a day when they realize now I'm ready to sell my business and as if we will know the marker, we will be able to execute on that sale, and it will happen smoothly. You know, selling a business is not like selling a house, you're not going to decide today, I'm going to sell the business, put a little sign in the front yard and people pull up with truckloads of cash and buy your business. It is a longer process. Typically, we expect six, nine, sometimes 18 months for the process of the sale to happen. And all of the statistics demonstrate that when someone says, Oh, I love this, when will you sell your business? Three to five years, there's some psychology behind why people say three to five years three is close enough that I'm not actually stalling. And five is far enough off that I don't actually have to do anything. There's this little psychological plan. But the statistics show that retirees, whether that's from your business or somewhere else, typically retire five years earlier than they expected to retire. And all of the reasons death, illness, illness of a spouse, a change in the economy, all of the things that are beyond our control. So preparing your business so that it is ready for sale, and preparing yourself so that you are ready for the exit in advance actually makes your business so much more saleable.
Ronald Skelton 54:35
I get it well we're above and beyond the hour mark here. We're gonna have to call it in. So before we do, though, real quick, what was the best way for people to get a hold of you?
Denise Logan 54:44
My website is deniselogan.com. You're welcome to email me, it's email@example.com. Nice and easy. The book is available on my website. And we've put a discount code of, if you put in the code, Exit10, Oh, yay, the sellers journey. If you put in the discount code, exit 10, you will receive free shipping and a discount on the book. And if you want to learn more about how to prepare for your exit, or you'd like someone to come and talk to your organization, please contact me. I'd love that. I enjoyed our chat today, so much fun.
Ronald Skelton 55:24
Wonderful. I look forward to you know, I'm going to find a deal out there where we really need you and just bring you in and see your work because that's the best way to learn right? Is if I find the right deal, and we make it all the way through, it's almost like getting free mentor and I get to see your work, see what questions you ask. And, you know, learn from me too. So and then I get a great business on the other end. So I appreciate you. I appreciate your time today, and we need to call it an end.
Denise Logan 55:48
Thanks so much. Stay well.
Ronald Skelton 55:51
Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150. That's 918-641-4150. Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you. Again that number is 918-641-4150. Call our hotline leave us some information. Thank you. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduce first in Napoleon Hills famous book Thinking Grow Rich. With accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible, I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind.
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