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I’m Thomas Marky. I’m a CPA actually founders family office. Holy cow, how did we get here? Um, few years back, early spring, summer of 2020, anybody remember kind of what was happening, >> right? Our economy got shut down, pandemic, we started hearing the terms essential and non-essentials. Our business got called a non-essential. I didn’t like that. I don’t like losing. I like being labeled non-essential. How do we become essential? Me and our model started brainstorming.
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First thing we did is we come up with our front client profile. Um you can see this over here be uh on this white board. We work with founders. Small business drives 50 to 60% of our GDE. Turn your neighbor and say you are essential. Turn your second choice and say you are essential. Yeah. So me and Armando um we go how can we help these founders out? >> One of the things we notice that they’re normally the first ones in their families to break through. They’re we call it the first generation. They kind
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of make be successful. Second characteristic we often see is that 60 70 80% of the net worth is in their business. Third character system we see is that when they go to exit the business, I got a study here that said that 80% of business owners after the exit are unsure that they got what they should have got after the sale. That’s a problem. So I’m here to ensure Arman’s here to ensure you’re going to hear our panel ensure that doesn’t happen. So Arman does did an incredible job of
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establishing a professional network. You’re going to hear from those guys today and we’re going to talk about our symptoms and our process that we help you exit that business. So with no further ado, let me introduce the other half of Axiom founders family office. Welcome to the scio. I want to go here with you. We are doing some video of this. It’s a video though. Just so you’re aware, it’s only capturing up here. You’re not on video. That’s on purpose. I sold my tax
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accounting practice about 15 years ago. I don’t anyone know I was trying to sell my business. I told my employees, my is super important. I’m sure yours is as well. The video we’re going to capture it because people who wanted to come and couldn’t, we’re going to share this link with them so they can see this and get this information as well. So, if you’d like that information, just let us know. I’ll be happy to share that link with you also, but that’s what the video is
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here for. So, uh, spoiler alert, we we all as people, we all have an expiration date and we just don’t know when that is. So, it’s important that we plan for that eventuality so that that business that you built that is probably a a significant part of your overall growth, that that business continues and transitions to a new owner. And with proper planning that can be done. I think you
can very easily with proper planning. So what today is all about is that transition. For most if not all of
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you in this room, you have never sold a business before. And yet the biggest part of your overall net worth, it’s that company. If it’s not 60%, it might be 100%. But it’s a big part of your overall net worth. If you don’t know how that exit needs to happen, then how do you know where to start? Well, it makes it pretty difficult today. Today is all about that transition from you running that company now to the next owner because we can’t survive even when we don’t because we don’t have that
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expiration date. So again, that’s what today is is all about. Um, a few things. Here’s what you’re going to know today from being here. You’re going to know what some of the pitfalls are from exiting your business. some of those things that you don’t want to have happen to you. You will know what type of team you need to have on board so that when you exit, you get the right advice and counsel and you are able then to make more informed choices. You will know when to start planning. Some people
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think of exit as a project and they don’t plan far enough in advance. So, you will get to you will know when you really need to begin planning. Here’s what you will have. you will have the opportunity to hear from experts in this room who buy and sell companies for a living. That is what they do. And the way this is set up, you’re going to have some people up here talking at you for a little bit, but then afterwards, we have a social hour set up. And the reason that social hour is set up, if you’re
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from a prior prior events, is that during that social hour, if you have a specific question and you want to catch Mike Patterson’s ear, the attorney who drafts sales contracts for a living, you can pull him aside and ask him your question. He’s a very expensive lawyer, but he’s free to please make use of it. So, that’s what you’ll have an opportunity to catch the people’s ears and to ask them questions that you might have. Here’s what you’re going to feel. You’re going to feel a heck of a lot
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more confident that you’ve taken some real steps in planning for the exit of your business. So, you’re going to feel better knowing that you you you’ve learned tonight and you’re going to hear a lot of really good information about the whole business exit process. Um, and if you think about, you know, if your overall net worth is in this company or the bulk of it, the stakes are really high that you get this exit right. For most people, this is a once in a lifetime opportunity. You have to
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get it right. And the way you get it right is you plan in advance and you talk with the right people as you’re going through that process. So uh as uh as uh Tom mentioned, my name is Arant Roman. Uh I’m the founder of Axi Founders Family Office. We’re a wealth management firm and a family office here in Scottsdale. And the the the client that we serve is a founder. So we’re not ordinary. We don’t take care of the corporate executive or the retiree. We take care of the founder.
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And as founders of businesses, people who are running businesses day in day out, you know that that’s a different kind of person that can put in those kind of hours and have that kind of commitment and have that kind of dedication to quality to keep running that business day in day out. Takes a lot of energy, a lot of months, years, a lot of money, a lot of stress and anxiety come along with it. That’s who we serve. And so we’ve tailored everything that we knew to serve you. That’s who we decided to serve. And
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that’s why we have this event that as well. We had a uh we had a client who went through a business sale a few years ago and the client came to us a referral from their CPA and when they came in I remember when I when I sat with this couple I I asked them you know the obvious question he was I think about 63 years old. He had the company 25 almost 30 years. I said, ‘Well, the obvious question is, when are you going to sell your business? He got very offended at me, Armanda. I don’t want to talk about that. I
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understand, but you’re asking us to put in a 401k profit sharing plan for your company. I need to understand what your goals are so we can really tweak this and make it work for you. Armando, I don’t want to talk about my business. It’s not for sale. I dropped it. Within 12 months, he had a letter of intent signed. He was he was game on selling his company for $25 million. So while he was in that process, he and wife he and his wife his wife joined him. I think he’d had 10 years and she
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joined him after she was doing stuff in the office there and then he was the hands-on. Anyhow, as they were going through that process, they were very busy with the due diligence as they were selling their company. And I called their tax and said, “Hey, our client is selling this company now. Um, I know from talking with with her that, you know, they’re very generous, very philanthropic, and they want to give and they want to have an impact.” And I asked him, “Have you spoken with them
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about how charitable giving can help them this year when they’re going to have the biggest tax hit ever?” He said, “No, I’m going to wait till it closes because they’re too busy right now.” I was a licensed CPA 32 years. That’s the wrong answer. You don’t plan after the fact. you planned ahead of time and they could have had a they could have had a different outcome. Maybe not much but somewhat if they had planned ahead of time if their CPA had had kind of pulled
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it by said, “Hey, you got to do this now.” But that didn’t happen. Their sale closed right around December 20th. That meant there were 11 days left in that calendar year. between Christmas and New Year’s. I’ll bet no timing happened at all on this $25 million once in a-lifetime sale for this family. And when that happened, I said to myself, “This is never going to happen again in one of our clients. We’re going to get ahead of this. It’s never going to happen again. We’re not going to
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allow it to happen.” So, we have this event to invite clients and others who are in that process when they get a selling. And if I can just grab this for a second, you’ve got these cards and these flyers on your on your table here for discussion one. That’s why we created this, so that you can come and you can learn and you can take the right steps and ask the right questions along the way so that when it comes time for you to exit your business, you’re better prepared, better informed, and you’ve
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got a better outcome. So very grateful that you are here to give you a lot of information. One quick thing too, I we hear in the media a lot about Amazon, about Tesla, about all these big companies that are in the news every day, but what we don’t hear about is your company. And if you look at who drives the American economy, it’s you. It’s you and all those jobs that you create. In Arizona, it’s even more important. The smaller businesses here are more important to our economy.
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So, when Tom said essential, he is absolutely right. You are essential. And without you, how many people wouldn’t have jobs? How many families couldn’t put their kids through college? But because of your effort, they can. And for that, I’m very grateful. in our American economy is also very grateful to you as well. So, let me go through here and um one quick thing um we are a growth venture firm focused on founders and why that matters to you is that we’re looking at how do we help you
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preserve what you’ve already built. Um you have a network mostly tied in that business. Most advisory firms, financial advice firms don’t want to talk to you till you have cash in the bank and cash that you can invest. That’s not us. We realize that you’ve got a sizable net worth in your business and it needs to be protected, needs to be maintained, and needs to be preserved. So, our goal as a wealth management family office firm here in Scottsdale is to help you do exactly that. help you mitigate your taxes,
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preserve your overall net worth, help you help keep you from from being unjustly sued by helping to magnify your charitable gifts and helping you to transfer what you have to your heirs during that time frame. So, what I’d like to do now is invite the founder who successfully exited his business a couple of years ago and uh Richard. Richard, where are you? There you are. So, Richard, come on up, please. Richard built a really phenomenal company. Let’s have a seat here. So, let me introduce to you Richard
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Dickens, Dickens Quality Demolition. Richard, I’ll ask you a few questions. Most of the people who are here, they came because they haven’t sold the company before. they have not been through what you’ve been through and if you can share things with them that will be helpful that would be great. So I’m going to ask you first of all if you could tell them about the company that you helped spend a couple of minutes and tell them about the company. >> So we are a large scale commercial
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demolitions contractor. Uh no we don’t blow buildings up. That’s like the number one misconception in in our industry. Um me and my wife, my wife Lucy right there, uh started the company a little over 26 years ago. Started a real small in our house. Um three employees and uh built that business over the last 26 years. Uh we’re the largest demolition contractor in the state. Uh employ about 200 uh 200 people, mainly work in Arizona, Metro Phoenix, uh Paradise Valley Mall, we demo that. We’re demoing Fiesta Mall
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right now. every major hospital. I always say normal people don’t realize how much demolition actually takes place. We’ve done tons of buildings around Scottdale Air Park. So, um that’s kind of what the business is and what we do. >> Fantastic. So, let’s talk a bit about about when did you know it was time for you to sell? How as the owner founder, how did you know it was time for you to start thinking about that? Well, when we kind of hit 20 years in business, um, we started pretty early.
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Uh, we started our family very early. So, at at the 20-year point, we’ve been real successful and had gone through some some really really good years and some tough years as well. Uh but our our kids were out of college and financially we were in a really good place and it really the kind the company really had its own momentum at that point and and really uh it felt like I was holding it back and and just cuz I had kind of reached this level of success. I was I was happy we had a second home and could
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pretty much go and do mostly whatever we wanted. And uh and so we really just had to start thinking about you know what is this success going to look like and do I really want to work you know the rest of my life or what do you kind of that second half kind of conversation started. >> Okay. So what about when you did come to that decision that it was time then what you you you uh then what? Well, for me, I had to wrestle with the fact of actually selling my business. You know, it bared my name. Uh, it’s something that me and
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my wife literally started out of a single bedroom of our house when our daughters were four and seven. And I just really never imagined selling the business. Um, but I also had to be realistic and and numbers were just at a size where um, unless I wanted to spend the next 15 to 20 years in some massive transition, key person buyout or or ESOP or what have you, it just in what I saw as my timeline just really didn’t work. So I I finally kind of came to the conclusion that that um civilian was the
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was the best option not only for me and my wife but also the company itself and the employees in their future. So >> So when when you came to that decision then how how did you know you you went through and you used a broker and or M&A advisor or intermediary. How did you know that that was what you needed to help you transition out of the business? >> Well, for me, I was very fortunate that I’ve had um I’ve had some real good mentors, but I had a business coach and I, you know, was talking to him and and
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he just really uh he sold a couple of businesses and and so it was once I made that decision that this is what we need to do, it just seemed like this was the automatic. So uh so we went through the process of interviewing and narrowing the search and and getting comfortable with the further so >> Okay. And so for people who haven’t done that, you’ve gone through it, you ended up picking somebody. What was the deciding factor for you that that was the right firm and the right team to
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help you sell this one business that you had that was substantial in your picture? >> Yeah, for me it was just it was getting comfortable with the people I was going to work with. Um I felt like they listened to me. uh they understood what was important to me. Um you know I say people that say money doesn’t matter um you know that’s that’s not necessarily true but if money is the only thing that matters then you know that is not my kind of person to say. Um so I just got really comfortable. I I uh we
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interviewed a few different firms and went through uh I think three rounds and so I got comfortable first and um you know I believe everything happens for a reason and uh so we had gone through kind of this initial meeting and and realistically it was I felt comfortable I met with with uh with Jim and and Jim in the back over there and uh we walk out of her office and I see a painting my wife’s an artist and I see a painting on on Jim’s uh office wall of the injury. And and I looked I go, “Wow, I
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know this man.” And and I looked up my my wife paid. And so I asked him, I said, “Hey, uh where’d you get this paint?” And he says, “Oh, I I I donated some money and I I I bid on it in an auction. A friend of mine was this this big Mel Mountain Music Festival. Um and uh and was in that auction. I bid on it. I won it.” and he seemed really excited about it. I said, “Well, do you know the artist?” And he and he said, “No.” And he looks, he goes, “Well, it’s Lucy
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Dickens.” And so I just knew that, you know, I believe that everything happens for a reason. Um, and I didn’t know Jim or Jim, but um, but they made me comfortable pretty quickly. They understood what my desires were. They they quickly um kind of caught my passion for my business and my people and what was important to me. So, I felt comfortable. >> Okay. Fantastic. And so once you made that decision, they they they took your company through a through a process and you had multiple people looking at
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your business and then you chose who the buyer of your company is going to be, right? >> Well, yeah. So, we were we were very very uh fortunate with our timing. We went to market uh it was I think January went to market January 2020. So and and uh and Jim K says, “Oh man, we got, you know, a bunch of people interested signing NDAs and and about a month later, you know, everything was shut down.” And so we spent the next time I don’t know 6 to 8 months and and we were super busy with work. So we’re
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was going crazy while everybody else that was non-essentials at home or uh we were working like crazy. So for me it really was continuing to focus on the business, make good decisions, do the things that would make the business attractive for an owner that was running it and they were so good it could be potentially buying it. So um >> Okay. And and given what you learned in the exit process, what thoughts would you like to share with them or what advice would you give them since they haven’t been through that yet
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and you have? what would you share with them? >> Well, the first for me was I I I surrounded myself with some people that I trusted. Um, I picked uh people from different parts of my life. Uh, my attorney, you know, my attorney, an accountant, uh, a business coach, uh, uh, somebody from my faith, uh, to kind of just help guide and steer me through this this process. Um, but I had to get comfortable with that that I was going to sell the the company and that I was going to trade in essence my control
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over the business um for being able to pull a bunch of my net worth out of the business. And um, and that took a while. I mean, it took a while for me to get comfortable with that. Um, and I’m not retired yet. I still uh I’m still in the middle of it of of it right now. And uh and I love it. I love my partners. I love my partners. Business is going well. And uh so for me, the the initial thing
was really trying to get some people around me that that I felt comfortable that I could that I could lean on for for
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advice and help guide me. And then and then Richard when when you sold it almost 24 months ago and then you said you wanted to be on about 3 years to grow company 3 years uh and so that’s what you set up. Was that a good choice for you? What would you do differently? >> Uh yeah well it’s it’s been great. Uh we’re uh December December will be two years down and we have a year left. uh we have a lot to do uh in a year and uh you know so there’s still a lot to do and I and like I said I still work in
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the company so I’m still the president um so so the reality is is I will go through this one more time at least because you know I still work every day you know me and my wife went on a fantastic trip when we closed and you know got a big payday made some some you know nice donations and stuff uh but then I went back to work and So, uh, everyone still comes to me with questions and, um, but but the timing, uh, it’s amazing. It’s 2 years has already gone by for sure. So, uh, but at the same time, I don’t know that I’d
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want to, you know, do the 5-year thing. So, >> okay. So, a question for you. You mentioned you had a team of professional adviserss around you. How important were they as you were going through the exit process? Uh there’s no way I could go through it. It’s just too much. It’s too much for I think it’s too much for any one person deal and there’s just too many things to hand especially gone through numerous times. So, uh, for me, you know, my my attorney and my accountant, naturally, I
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had on speed dial and, uh, but but there it’s just too much, you know, not if you’re active in the business. I guess if it’s a business that you’re not active in, then then maybe, you know, somebody could handle a little on their own, but, you know, I’m a firm believer in understand what you’re good at and then surround yourself with people that are good at the things that you’re not. So, uh, it was pretty easy for me and I’ve been super fortunate throughout my business career to to just be surrounded
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uh, by some really amazing people. So, >> fantastic. And then, Richard, your your uh, your wife Lucy is here with you. you mentioned that I think you mentioned that when you first started that she was helping you get the company launched and that pretty quickly you you had enough um you had enough business in that to where that wasn’t really necessary anymore. So I guess when you were going through your exit with with you and your wife having those conversations, how were there any surprises along the way
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in that or any dialogue that that was I I know I thought I should ask her that question. Uh, no. And I would just tell you that that uh and my wife was the corporate. I mean, so so she worked in the business for 8 years and and our daughters were four and seven when we started um when we started the company. So, you know, when they had gotten into high school, the business got big enough that it was just really at a point where we just felt like it was better for her to to step out of the business. And and it had
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grown to a point where we were running like four companies and it was it was just crazy. So, um, you know, I think that the that Lucy really she knew and and and trusted the people that we were working through the process with. And, um, you know, I don’t know that there was any major surprises. Uh, I think that, um, you know, we talk about everything, I think. So, you know, she didn’t have to go through all the contract stuff numerous times. you become a professional contractor for sure if
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you’re not already. But uh you know I think that uh you know for me having Jim and Jim uh Jim K we talked I I couldn’t even tell you I mean numerous times uh a week and and so you know like I said they they really became kind of my advisor staff as well and there was a few you know a few opportunities that came up uh that that we kind of uh turned down or didn’t pursue. Um, and so pretty quickly I got to where I felt like they were like we were all, you know, we’re all part of the team. So,
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um, so it I think it went pretty smooth. Uh, it’s a lot of work, you know, for sure. Um, but anything worth doing it. So, >> okay. So, we just have a couple more minutes left. And I would ask you then as as you think about what you’ve been through, you’ve got another year left on your your three year um three years with the company. So, one more year left and then you’ll be moving on to something different. So, you’re like, like you said, you’re still in the transition. But for them who
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haven’t gone through that, um, other thoughts you might want to share with them that maybe we haven’t touched already? Well, for me, I think the biggest thing is is know what you’re retiring to? I I mentioned that to a couple I was talking to over here. You I think that it’s important to have a plan and and know what you’re retiring to. Uh, for me, I I’m a super busy guy. So, I’m used to being super busy, uh, busy at work, uh, busy at home. And so, just the idea of, well, I’m not going to work
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now, so I’ll work on my golf game or mountain bike more or whatever, I think that’s just probably not realistic uh, for me. And, uh, I would like to get better at golf and I would like to mountain bike more, but, you know, I’m not going to do that full time. And so, for me, it’s important to to have something to retire to. Uh so so I have something that me and my wife are really involved in in marriage coaching and some marriage ministries for our church and stuff. So that’s something that that
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we spend a lot of time on and something that we want to invest more time. Um the reality is is my my wife is has got a business as a full-time artist and and uh she just reminded me that she worked for free for a year and then worked for literally peanuts for the next seven years. So So I got some back some back pay. her and um but so I think it’s important to have something that that that uh to prior to and going into it I I would echo what you said about the thinking about church giving in advance
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for us we’ve been very fortunate and had the opportunity to to be exposed to a lot of um opportunities to be generous and and and uh support great causes. So by and I don’t want to take away what somebody else has got to say which we actually have stuff too. So um but but I think it’s important to be able there’s so many there’s vehicles out there that allow you to be charitable at the time of a sale but you don’t necessarily have to make a decision right then and there on who you’re directing funds to. So for
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us we had already been exposed to a lot of that. So for us, it was just an automatic, hey, we’re going to do this, you know, from a percentage standpoint with with gifts out of this. Uh, and it was good that me and my wife were on the same shoot music with that. So I think it’s important to work about those kind of things. >> Yeah. Yeah. I’m glad you brought that up. We will talk about more about what he’s touching on donor advice funds. I’m sure we’ll get it and how it can be
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impactful for you when that sale comes about for you. Uh, and so you you uh you have worked with the Arizona Community Foundation and Kristen over here and then is part of that part of that 70 member team who that that’s what they do here in Arizona. And then one last thing for you chose uh Fox and Finn. You chose them as to represent you in that sale and you said you felt comfortable with them and that it it was a good outcome for you. Uh, anything that that just one thing about anything about Fox and Finn
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that that stood out? You you chose them obviously because you felt good with them, but anything else that stood out about them that they might want to know about? >> Well, I I’ll just tell you initially they may not like that I say this, but the kind of the valuation that they had given me uh initially was less than what another firm had given us. Um, but but I felt like they were using real information and I felt good about the number and and uh and you know, you know, I’ll just say, super smart guys
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and and uh and and then I think that um uh Jimovich as far as running the practice itself, I I just feel like I feel like he’s somebody that does what he says he’s going to do and and uh I know we can’t work on handshakes, but but Jim is a guy that I work on handshake with. Um I really would for sure, >> Richard. Thank you. Really appreciate it. Thank you. I’m going to introduce our panelists. And so the panelists up here, I’ll talk about them. I have you have bios somewhere in your materials and let me
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just tell you who they are and why you’re going to appreciate the conversation with them. First on my left is Jimovich. We’re in his hanger. This is his company. Airplanes outside I guess. Jim, he said three airplane rides for everybody. Is that what you said? >> Yeah. So Jim’s company IG Fox and Finn their their their purpose they are business brokers sometimes called M&A intermediaries sometimes called M&A advisors merchant and acquis acquisition advisors and what what he and his team
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do is just what you heard Richard talk about. They help you go through a process to sell your company and he’ll talk about his auction process and what that really means. But in essence, what he’s doing with his team, he’s taking your company, getting it into a in a format that people will understand and recognize, and then taking that to the market, saying, “Hey guys, I have this company looks like this.” And Jim told me before, when buyers are looking to buy, they’re looking to buy a cash
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machine where they buy your company and that company now just produces cash for them. you know, really very simple simple terms, but in essence, that’s what Jim and his team will do is help go take your company to the market and have people uh bid against it and bid that price higher and then help you make the right decision for you when it’s time for you to exit your business. Next is Kristen Mahalik. Kristen is with the Arizona Community Foundation and Kristen’s part of a 70 person team in central Phoenix. And I
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would say the Arizona Community Foundation is probably one of the best kept secrets in Arizona. >> And we don’t mean to be. >> Yeah. Yeah. They don’t want to be a secret, but they are. But what Richard talked about is what he said or didn’t say is that when you’re going to have that big tax, you don’t you don’t to um you don’t have to make all the decisions on where you’re going to give money away for charity. You can instead use a a organization like the Arizona Community
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Foundation where you can get that tax deduction now in this calendar year when you’re selling your company and then you can in essence keep it there in their 501c3 nonprofit organization and over the coming years decide how to build those dollars out in the way that you want to have the impact. So when I think about the Arizona Community Foundation and Chris and the work that they do, that’s what I would ask you to think about with them. When you’re thinking about your charitable giving and having
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an impact in Arizona with your charitable giving, then that’s the team you want to talk with. Um Mike Patterson over here on the on the other my other left, Mike Patterson is a partner with the law firm Spencer Fain. Spencer Fain is a regional firm. They have lawyers in different cities across the country and he’s an attorney. He’s a merger and acquisition attorney. His job is to help you go through and navigate that business sale. So, he’s an attorney who’s going to give you advice on what
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to put in that contract, what not to put in that contract. He will look at that letter of intent for you that you might receive from that prospective buyer, and he’s going to go through and modify that to protect you. And you will hear him talk about that letter of intent, how it’s just incredibly important and that you talk with your attorney before you sign any documents with prospective buyer. Mike is also it’s called a corporate attorney, but there are lots of corporate attorneys. There are much
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many um there are fewer attorneys who are merger and acquisition attorneys. When you’re selling a company, you want your attorney to understand mergers and acquisitions. That means they know how to buy and sell and they’ve already been through those ropes before and they will use that experience to help you go through the sale of your company. So your regular business lawyer, if he or she doesn’t have merger and acquisition experience, I’d say they’re the wrong lawyer. And I think anybody who’s gone through a
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sale would tell me the same thing. Um, same thing with your tax. If they haven’t gone through some of the sales, they might have some of the same issues. Sound about right, Mike? >> That sounds right. >> Okay, good. So, what we’re going to do, you have I’d like you to take a look at at at this document here. You have these on your table, and we you’ll hear a lot about planning in this time that we’re together. This document is one of the main, if not the main planning tool that
00:36:07
we use for our founder clients. I’m going to go through I’m going to walk you through this just really quickly and I’ll use this as an example so that I can ask questions of of the panelists here. So this is what we call our total client profile. And the total client profile, I’ll just start, you know, clockwise from the top. You can see up there values. This is what are your values? That’s what this is all about. Going clockwise. Then you’ll see goals. What are your goals? Richard talked
00:36:38
about goals and and what was important to him in that sale. The next box there is relationships. Who matters in your life. Which relationships do you want to take care of as you as you go forward in your life? The next box there is advisors. You know who who is part of your team today. It’s very likely that you don’t have all the team members on board right now today as you think about that sale because a sale is a once in a-lifetime event, right? Why would you have them on board today if you’re not
00:37:09
thinking about selling? Often when we meet people, they don’t have the right team members that they’re lacking a couple or few. The next on there again clockwise is assets. What are the assets that you have including that business and what is the overall net worth? The next is processes. what processes do you want to follow? And then the last thing about 10 11:00 on the face of that clock is interest. And we have this because this we’ll tell we’ll tell founders this needs to drive all the planning that
00:37:39
you’re doing. This is you. This is you and your family. The planning is driven by you, your situation, and what you want, not what somebody else wants for you, but it’s driven by you. And so this document becomes very very important because of that. You heard Richer talk about the process. You heard him talk about your team. He felt comfortable with you. For someone who has never hired a broker, investment advis or a M&A publisher like you, what do you do? Well, our our pro Richard, thank you for
00:38:14
the kind words and thank you for being a client of ours. Uh, you know, you talked about picking your team and having the right people, and I think that’s very important. It’s the same with us. We can only work on a limited number of transactions. So, we actually turn down about three out of four people that come to us to become a customer. They’re either not ready, but they’re not realistic. But that fit is very important. uh now and I I’ve told people if you don’t like me I’ll give you names and
00:38:50
phone numbers of my competitors get somebody that you feel comfortable with. This process on average takes about a year. You’re going to spend a lot of time with that person and you better feel comfortable with them. You know, if you don’t like each other on the first date, you’re going to hate each other when you’re married. So, make sure you got the right fit to begin with. That’s that’s the first thing. Uh process really it it is a process. People think you just oh well, I find a buyer and I
00:39:24
sell the business. Well, in these size businesses, you want to have multiple buyers. Uh we’re saying one buyer is no buyer. You want to go to market. You want to be prepared to go to market ahead of time. Often times you’re working two or three years in advance. You don’t just wake up one day and decide you’re going to sell that day. So you have to work on it. I would contend that you should run your business like you’re never going to sell it and run your business like you’re going to sell
00:40:01
it tomorrow. And I’ve had situations in in both cases where somebody was killed in a car accident and the family suddenly had to sell the business and it wasn’t prepared to do that. So process is starting out ahead of time looking at your business the way a buyer is going to look at it. look at it as the market is going to look at the business and it isn’t always the same way you look at your business. So having advisors let you know how the market is going to view your company uh is
00:40:43
helpful. planning in advance as I mentioned but once you’ve planned in advance once you’ve got the right team of advisors around you when we finally go to market we do a lot of research we look at values we look at buyers we do a national search for buyers typically we go to market without a price and that may sound crazy but if you put a price on a business all you’re doing is putting a cap app on it. You don’t know what some buyers are going to pay for a particular business. You know,
00:41:22
businesses are going to be based on some valuation principle, some multiple of earnings, but people will buy for other reasons. They’ll they’ll buy to block a competitor. They’ll buy to find market share. And you don’t always know what those reasons are. uh when we go to market without a price, we’re trying to get multiple buyers uh so that we can play one against the other. Not only to maximize price, but maximize takeoff. You know, it isn’t how much money you get, it’s how much you
00:42:00
have after tax. Having a good attorney, a good accountant help you with that, maximize that return. Also, we want to have multiple buyers if we can. We We don’t always, but if we can, we want to have a choice. People don’t always sell to the top bidder. Um, I I’ve been doing this for over 35 years, and I remember one of the first businesses worked on was a veterary practice. And I was particularly interested in that because my father was a veterinarian. and they they got a buyer for the
00:42:41
business. They had half a dozen buyers that went to the seller and said, “Doc, I got good news. Uh we got a full price allcash offer.” And he said, “Well, which buyer wants?” We said, “Well, it’s buyer number B.” He said, “I want to sell now. I’m going to sell buyer A.” Well, said buyer A is giving you 50% down in 5year terms and not full price. He said, “I don’t care. I want to sell to him.” And and he went on to say, “My clients have made this business what it
00:43:17
is. I’ve got employees that have been here for 30 years. I’m the guy that offered the most money.” and he named the body part of all individuals have one to describe this particular person and said I don’t want to stick my customers and my employees with that guy. I want this one. He’s better for my employees. So if you’re going through a broad process and have multiple people, you’re going to maximize value, but you’re going to have choices. And so that’s simply stated the process.
00:43:56
Value the business, find buyers, package it, make sure the business is ready, and then be prepared to spend a lot of time doing it. Thank you, John. So Kristen Malawik is the leaders of the community foundation and she spends her time working with donors, talking with donors, helping to achieve the goals they’re trying to achieve with their charitable giving. Along the way, they give you some pretty significant tax breaks with with what people get when they work with you. Can you talk about
00:44:30
what you and your 70 uh person team do at ACF? So, our favorite thing is to get a call from somebody who says, “I’m interested in selling my business.” And the first question that we want to ask is not surprising. Where are they in the process? Because I’m sure Jim will tell you that sometimes these things move along quicker than you expect. And nobody’s even thought about bringing charity in and how it can benefit the the buyer, excuse me, the seller of the business. And so we get pretty excited
00:45:06
when these come along because it’s an opportunity to kind of um uh flex our muscles so to speak and um learn more about a donor, a potential donor, their business, and how we can help them. Are they younger? Are they going to continue to work? Are um is is there a family succession plan with the business? So there are a lot of things that we ask so that we make sure that we get it right for them if they’re going to utilize us. >> Thank you, Kristen. And so so Mike, uh, you’ve talked about
00:45:41
the anatomy of a sale and what you do as you’re helping the sellers go through that process. Can you talk about what that anatomy of a sale looks like so they understand what that is? >> Absolutely. I love to hear the planning and uh and I really do strongly recommend uh both of these professionals and and Armando as well. I love this style of getting ready to sell your business, thinking about what you’re going to do before, after, during with Armando. Uh just a great whole holistic
00:46:18
approach so you’re happier when you’re done. And I love the process of using an investment uh banking professional uh uh uh like this firm toxic pin. We’ve worked with them on numerous deals and the idea of getting multiple buyers so that you have choice that actually helps me as a lawyer in the process too uh is not just the amount the dollar amount of the sale but it’s having
leverage to ask for other things in the documents as well. And then um we did one of these before, a panel like this and I had one
00:46:54
of my clients out there that we had sold his business about 10 years ago and uh Arizona Community Foundation was up on the panel and said, “You could have done it this and you could have done that and got a tax deduction and made a charitable gift.” And my client came up to me afterwards and said, “Well, I guess we missed that one on your deal, right, when you helped me on the on the first one.” I said, “Yeah, I I I guess we did. I I didn’t I wasn’t adept on that. Today I have with me uh Raj
00:47:22
Gangabine in the back. Raise your hand Raj and Bill Clark up here. Uh they both are on the team in our office as well. What’s the anatomy of this? Well, first if you do nothing and don’t plan and don’t use a gym, uh then you might on the golf course or someone else might just reach out to you out of the blue and say, “I want to offer you X for your business.” And as they will probably tell you, that’s probably the lowest offer you’ll ever receive. You you’re not getting probably top dollar from
00:47:54
that. You’re many people are of the impression that I know my industry. I know who that strategic is that should be buying me or or my competitor. I that’s really a wrong impression. There are a lot of people out there, a lot of family offices, a lot of people out there in the industry who have cash and want to buy uh an operating business uh and and may want to buy for other reasons. You may not even be aware that there’s someone out there that wants those two strategic contracts that you
00:48:26
have or they want those 30 employees that you have. uh those other reasons that uh Jim was mentioning, anatomy of the sale. Once you get a an interested buyer, they’re going to want to do that letter of intent, it really is important that we look at that and uh even though it’ll say non-binding most likely in many cases, uh the apple doesn’t often fall from the a far from the tree. And there’s some key provisions back in there about how long the exclusivity works with them. If they don’t close
00:49:02
that deal, uh, you know, can you move on to the next one, etc. That gives you leverage. And I’ve actually seen deals fall apart because they kept extending, kept extending cuz we didn’t get that clause in. I wasn’t part of negotiating that. It came to be signed and and now we’re it’s extending. gets extended. They’re doing more and more due diligence and oh yeah, we found a piece of bubble gum under one of your trays or something and we need to lower your price uh or we’re not going to do the
00:49:33
deal. That kind of thing. That letter of intent incredibly important for making a decision up front depending on what kind of business you are and what kind of a sale is whether in most cases it will be an asset purchase. They’re buying your assets, not buying any of your liabilities. However, there are a number of cases where we have done sales that are actually the purchase of your equity of the company. Why do people do that? Maybe you have a key regulatory approval that no one else in the industry has and
00:50:08
they want that. Okay? And the only way they can get that or maybe you’re uh in in uh like a healthcare approval as well. Maybe there’s some key key things associated with your business uh and and even some key contracts that may not assign without having to go and renegotiate them uh with that third party and uh the the the buyer may choose to go this route but you know want some uh indemnities and things like that. So there’s some reasons why people go this way or that way. We can help you
00:50:43
through it. and also your uh you know we do this in partnership with your uh investment banker professional like Fox and Ben and then next thing is we go straight to the documents themselves the purchase document if it’s equity or if it’s assets and it is not just about the money and what you’re going to get whe it’s all cash up front or you’re going to get paid a chunk and then get paid something we call an earn out over a period of years. um if you have uh if you hit these targets and the milestones
00:51:17
etc. And we will want to if if part of the purchase price is going to be paid out, we want you to have some influence and control and stay in the business at least have enough influence so that I can hit those targets so that I can make that money. Does that make sense? and then indee and you’re and have reps and warranties that can make this all sounds like a lot of weeds. But we want you when you’re done with this to be able to go if you want to and sit in Portugal or move on to your next thing without you
00:51:50
having all this uh trailing behind you of risk. And that’s that’s my job and what to work with the uh um investment banker professor the intermediary to pick out of the offers that come in and then negotiate and try to get where we where we would encourage you to be based on your goals in your future. Well, I set it up though for that one question. >> Yeah, that that’s all that’s all fantastic. Thank you for that that um I want to say random it is a lot of information but in a short time you
00:52:26
really can’t touch on everything obviously but he can give you a lot of information so that as you’re getting further along the process you just are included in it to then give your attorney a call or Jim a call or or uh Mike or whoever whoever needs that phone call. like to add one thing though Mike said uh first I’m going to preface it by saying there’s three stars need to be aligned
when you sell your business it’s got to be the right time for the business the right time for you and the
00:53:00
right time in the market and today we have a very active market uh there’s a lot of money out there chasing deals our typical transaction will get six to eight buyers for again not everyone but that’s fairly typical. Um I’m talking about not setting a price on it. Um Steve here had a a deal not too long ago. We looked at said it’s probably worth 145 million. We got eight offers range from 12 million to $18 million. A huge range. And every buyer thought they had the right price. And the last
00:53:44
thing you mentioned, someone approaches you on the golf course. What we’re seeing a lot these days are private investment groups, professional buyers approaching businesses directly, saying, “Hey, let’s just do a deal together. I can save you all those broker fees.” And you’re not saving money doing that. That’s not going to be your best buyer. Usually when you’re approached directly, if you’ve got a good business, you are going to have interest in it in today’s
00:54:16
market. And the best example I can give you that gentleman who called me on a Wednesday and said, “I just got a letter of intent to sell my business. My lawyer said I should talk to you before I sign it.” And I said, “Okay, come in and see me.” He did. He said, “Yeah, we were approached by this company. They’re in our industries. They’re a synergistic buyer. We really like these people. We’d like to sell to them. We spent 8 months negotiating this deal, and I’ve got up
00:54:50
to $6 million.” And I said, “Okay, well, what I want you to do is go back, tell them you’re hiring investment banker, give them my name, and I’ll give him a call in a couple weeks when I get my arms around the deal.” And he said, “Oh, God. No, we can’t do that. We said the letter of intent expires on Monday. But I said, trust runs a long time. We spent 8 months. He’s got to wait. So we called the buyer, delivered the message, and he said, “Oh, don’t get some broker in the
00:55:22
middle of this. They just stretch things out. They screw deals up. They’re going to mess it up. Don’t hire them.” And he said, “This is the biggest transaction of my life. I want to be personally represented.” We hung up. The next morning, the buyer called me back and said, “Listen, I really want to get this deal done. I don’t mind it relate to some damn broker. So, if you promise to leave the broker out of it, you can make it 8 million instead of six.” So, he called
00:55:51
and told me that story. And he said, “It took me 8 months to get into $6 million in 24 hours. You got me $2 million more and I haven’t even hired you yet.” back then. I said, “You’re hiring me, aren’t you?” And he said, “Oh, yeah.” And he did and we sold the company for $10 million. He thought six was a good offer. But that’s being approached directly. We see that more and more. You’ve got a good company. You’re going to have somebody call and smooge you and
00:56:23
tell you why you’re going to save so much money just selling to them without getting anybody else involved. So be cautious of that. Thank you. So I want to just draw on this on this uh white here for you to work. So I want to draw for you. Um Mike talked about a team member. He talked about working with Jim and working with the other people on your team so that it all works out for your benefit. We had Mike and Jim in our office last week for the meeting exactly that purpose to talk about a client
00:57:11
situation and how do we help this client? The dialogue that we get in that kind of a of a meeting is really phenomenal because you get a lot of expertise in the room, a lot of perspectives and the outcome is really best for the client. We start that meeting by talking about our wealth management formula and how all the pieces need to come into it so that it can make sense. I’m going to try that formula here for you and hopefully you’ll be able to see that. So to us, wealth management is
00:57:40
investment consulting with the IC plus advanced planning plus relationship management. We’ll talk more about each of these. Advanced planning is wealth enhancement which is mostly tax but it’s tax debt management and cash flow. All these things matter when you’re looking at the overall nature. The next piece is wealth transfer. At what point does it make sense for you to transfer what you have to whomever you’re going to choose? The next piece of this is wealth protection. If you have an
00:58:20
overall net worth and most of it or a big chunk of it is in that business you own today. So how do you protect the overall net worth that you have by the right types of trusts using the right types of business entities and using the right types of insurance on everything. That’s what you can do to help protect that overall network that you build. The last piece of this part of the formula is charitable giving. And this is really Christmas based charitable giving. How do you maximize the impact
00:58:51
that you want to have through the charitable giving that you would like to that you would like to do? And this is really you and your 70 person team over there at ACF. The last piece of this formula is about relationship management and it’s the client relationship management which gets back to this. You need this for you. often we put these together for for people they’ve never seen this before and we’ll tell them this driving document for us because this is what starts all that planning for you. So it’s the client
00:59:28
relationship management but then the other part of this is what is what uh is what Mike mentioned is the professional network relationship management. It’s getting the professionals who are working in their behalf in a room and talking together about you. We’ve had a number of clients come in who might have the best part and smell loaner for their lawyer on X and he’s fantastic and the best CK who does this is great, but these guys never talk. And the one who pays the price is the client. It’s you.
01:00:03
if they would just have a dialogue that like he talked about then it just it’s just so much better for you. So I do want to ask you Kristen, we haven’t talked about we talked about what ACFs and what you do and uh we did have K. He had a health issue and wasn’t able to make it tonight. But one thing that he would say is that when you’re having the biggest tax hit ever, you want to look at all the strategies out there. And within the charitable giving space, there are a lot of strategies
01:00:37
that Kristen and her team can make sure that you’re aware of so that you can have the impact you want to have and reduce those taxes at the same time. But part of what I think people don’t often know with the way ACF does Kristen is that you’ve got people there that can help say Richard if he wanted to engage his adult children in philanthropy. You can have family meetings with them. You can help them as a family come together and talk about what that plan is for the next 30 years. Can you talk about that
01:01:06
please? >> Yeah. as a successive generations being able to look at the the opportunity to be able to learn from each other. Often times like in the Dickens case, um they’ve set up a fund with us and bringing their their children in to be able to continue and advise on that. Maybe even the future grandchildren being able to advise on it. But one of the things that the Arizona Community Foundation offers is uh family retreats to be able to really sit down and look at, you know, hey, you mentioned your
01:01:45
church and church is one of the most common places that people give, but you know, your children may have different ideas about where they want to give. You mentioned the the U McDonald Mountain Music Festival. Um they’re a 501c3 organization that people could give to. That’s a beautiful story. I love that. And maybe you you share that with your family about, you know, how a relationship, a business relationship came to be just because of a painting and a music festival. What if the kids came in and they said
01:02:20
something like, “Hey, we love horses. We’d like to talk about how horses and equin therapy.” they’re probably not going to use that actual term, but we like to hear more about how courses are helping younger people who are maybe um disadvantaged, handicapped, that type of thing. And everybody’s learning from each other. So, family philanthropy has really come a long way in bringing families together and we can facilitate these conversations, these retreats. We do them frequently. And what we see is
01:02:54
that that the bonds between the family grow and the opportunity to be able to have this this windfall of money that you probably haven’t had this type of freedom and flexibility before. And now the family has some options and opportunities to be able to do some good with it. >> Okay. Thank you, Kristen. And full disclosure, I I forgot to mention I am on the board of the Arizona Community Foundation. They invited me on their board about three years ago. And when they invited me, they said what they
01:03:28
wanted is we work with founders and business owners. And they didn’t have anybody like us on their board. And they also realized, and this came this this hit home during Rush for NC about a year ago, they got their biggest check ever about a year ago from a founder who could pay her and he gave them a check for $100 million. the biggest check ever from somebody like you who stuck his neck out, built a successful business, amassed incredible wealth, and was able then to give a big fat check to charity and ACF received
01:04:06
that check. >> So it was 135 million >> 135 still working. We’re still getting um using that story. >> We’re going to get all the work. It’s a fantastic success story. And because of how you can tie in philanthropy to a tax break to helping get some relief on that big tax uh biggest tax hit ever that you’ll experience, we’ve made it our goal, our company goal at Sam to help raise another $100 million by helping founders who navigate that exit, working with the right people in with us. So
01:04:44
then we can then funnel another $100 million maybe 135 million >> 136 >> 136 price has gone up but we can then get some of those funds together for the benefit of Arizona and it’s not for any one cause it’s for whatever cause tugs at your heart because that’s what ACF does is if you give to the heart association it’s all about the heart if it’s cancer it’s all about cancer with ACF you give the money to them and then you indirect that some goes to the heart, some goes to cancer, some goes to
01:05:17
kids, some goes to whatever you choose. And that’s what is so beautifully flexible about the Arizona Community Foundation. So again, this check is here because our company goal is to help raise $100 million by helping founders successfully navigate that once in a lifetime accident. And we hope that that that that may be uh that may be your future accident. I’m going to recap a little bit. Okay, we’ll be short on time. And so I’m going to recap. What are we going to hear with today? We
01:05:44
heard a lot about planning ahead. I think that Richard told me he planned about 5 years ahead. He started thinking about exit and began to plan 5 years ahead. That is not common. And what Richard did is not common at all, but it certainly worked for him. And it’s better when you plan ahead. Talk with your attorney, talk with your tax, plan ahead. We also heard that having that auction process can get multiple vendors to bid up your price and not put a price on your company let the market decide what is your company
01:06:20
worth. We heard Mike talk about the legal parts that need to be in your contract and he said be cautious about signing that letter of intent or letter whatever you whatever LOI is but just being very cautious because even though that may say is nonbinding it falls very close to the tree the apple falls very close to the tree and it if if it has all the elements of a contract might even be able to argue that it actually is a contract. Uh, you also heard Kristen talk about ACF and the impact on your family. And yes, there’s a
01:06:52
tremendous tax benefit there as well, but the impact you can have with your charitable giving can go much further, much beyond your own family and your own reach. And we often hear from founders that what they want to do, they they tell us they are stewards of these monies. they’ve been blessed and they feel obligated to share that with their family, with their extended family as the safety net and with their community at large. And if that is you, then you want to make sure that you talk about
01:07:21
philanthropy and charity when you’re having this big tax. We have a poster up in the middle here in the wall that you you may not have seen yet. The reason that poster is up on the wall is we had them in our conference room. We we filmed it. We found that when we could just have this up in the wall and people could see themselves when they walk into our room, they know they’re probably at the right place to have a conversation with us. And so we put that there. It also helps weed people out. We
01:07:49
don’t fit with with people who you want to work with. But there are people like you, first generation wealth typically, but first let’s just knock it out of the park and feeling like you have been blessed and you want to share these blessings with the community at large. So we heard a lot from our panelists here and I’d like to give them a round of applause, please. Thank you. And you’re going to see you got these hearts on your desk. There’s a QR code on this. The reason this card is
01:08:26
on your desk, if you scan that QR code, you can get a couple of couple of freebies from us. Tommy had the book there. So, it’s a book that like this is partner Tom has. He’s holding that book up. If you want a copy of that book, you can get a digital copy by scanning that QR code and just downloading that PDF. The whole book is on that PDF. There’s also a stress test that is available through there if you want to have a conversation with us. Those conversations are about 20 minutes and
01:08:53
sometimes that conversation means you just need an auditor for your business or you need a new CPA. That’s fine. But like I said, we’re going to follow up with you, see if we make it. If not, that’s okay. But we get your feedback so that we can make these events better. We’ve been doing this for two years now and we have this again. We got the next one scheduled actually with the Arizona Community Foundation. So excited and so we’re going to break now into social hour. I’ll do this instead.
01:09:28
So there is a bar here. We’ll bring social hour. The idea again is that you can ask people questions. I do want to ask thank you. So Jim, could you have all the people who you have your company could you raise their hands please? Everybody can probably clean up. >> So the people who raise their hands, look look at them and just spot them so that if you have questions and you want to talk to Jim or somebody like him who has his expertise, catch them. That’s what this social hour is for. You’ve got legal questions about
01:10:05
your own situation. You don’t really want to ask in more of a public setting. We’re going to have a much more casual private setting here with the social hour and that’s you can catch my boat here. I said he’s pretty expensive. He’s for free tonight only. So, please do ask them. Obviously, Kristen as well. Any questions you might have or heard, please ask. Like I mentioned, had a tax CPA. He was going to come. He wasn’t able to make it. I had a tax and accounting practice years
01:10:35
ago. I sold that about 15 years ago. I’m a little rusty. taxes, but I still know the core of a big sale like this, what needs to happen, how can you help deframe that tax bill. I’m not the tax expert, but if you got any questions or thoughts, and then Tom and I, as a wealth management firm, our focus is looking at you and your family and helping you navigate the sales so that for the rest of your life, it works the way you want it to work. Whatever you want that to look like, it’s up to you.
01:11:03
But our task is to understand that and to help you do it better. So, hope you’ve enjoyed this and we’re going to break social. Lots of food over here. Uh, catering for Rodriguez and Pam will take care of your first need back here at the bar. Eat, drink, and be happy. Thank you.
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