Gino (00:00):
Hello and welcome back. This episode I call Selling Your Company. Well, there's something calling me to share this message at this time. And as I dug into why, there are three reasons that come to me for why I'm doing an episode on selling your business. Number one is, assuming you are a driven entrepreneur and you have a business, you are going to transition your company someday, and it's going to happen one of four ways. The first way is your business is going to transition out of business, and so God forbid that happens and hopefully it doesn't, but that's how many businesses transition. The second way it's going to transition is that you will transition it to your next generation, to your family. Number three is you're going to transition it to some buyer. A private equity, institution, but someone, some outsider, for lack of a better term, is going to buy your company. And the fourth way is that your employees are going to buy your business. You're going to sell it to your employees.
(01:25):
But one way or the other, at some point your business is going to transition. And in this first reason, I want to help create mindset and awareness so that your gears are turning around this reality that's going to happen. The second reason I'm doing this is because with the 10 Disciplines implemented in your life and the three discoveries, you are going to gain clarity. Some things are going to become very clear as to what the best option is for you and when. And when you get into ten-year thinking, you're going to start to see a realistic timeframe for you. It's going to happen. The third reason is that I just delivered my keynote at our EOS conference. And so every year I keynote the EOS conference. Been doing that for nine years. And this year's keynote was very different than anything I'd ever done before because what I did is I finally told my story on how I started and built and sold EOS worldwide.
(02:41):
And I've never publicly talked about how I sold because I sold in a very unique way. And frankly, the reason that I have not shared it is because I didn't want to jinx myself. And so as I finally shared the story, it was so well received that it has pinged me that I need to share this more often, and so you are the second audience that's going to hear this message. So I waited over seven years to tell the story. Well, the reality is I don't know what timeframe you have to wait before the new buyer of the company runs it into the ground where you have to deem it a failure and an unsuccessful sale. But again, all businesses transition at some point in time. And so what's typical when you sell your business with private equity, it gets purchased and then resold every three to five years.
(03:42):
So with those being the three reasons, let me start with why I waited seven years to tell the story. As I mentioned, I was afraid I would jinx myself, and there's truth to that because I don't know the right amount of time you wait to tell the story and it be deemed a success. And so the way my funny mind works is it's like if they own the business for 99 years and it went out of business, was that a failure? Did I fail in selling the business? I don't know the right amount of time, but seven years just seems to feel like the right amount of time. And in that seven years, they've done some amazing things. They've six X'd the company. Another thing that gave me peace of mind is that I'll get into more detail on this, but there were more than 30 people in the company that were able to invest in the business and three years after the sale, everyone was offered an opportunity to get three times their money back.
(04:43):
So that gave me peace of mind that at least everyone would've had one heck of a return on their investment. So that was my first peace of mind. But again, I just feel comfortable today sharing it. And if, God forbid, they run into the ground after this, I think it's proven that it was a successful sale. As we now dive in, I just believe it's vital to share this. I'm feeling called to share it. I think it's really important and the big word that comes to me as I share this, is the word mindset. I'm just trying to help you with mindset around this inevitable reality that's going to happen. And then secondarily, I'm trying to level the playing field because historically sellers have been at a disadvantage. Driven entrepreneurs that sell their business have been at a disadvantage because buyers are so sophisticated and there's a wonderful opportunity now to really level that playing field so that it's a win-win-win for all people involved.
(05:47):
What I would also urge, after you listen to this episode, is to go back and listen to my episode called The Company That Shines because I give a little more color around this as well, and I think it's just a great companion episode to what we're about to talk about here. So bottom line is I just want to help and I'm feeling compelled. And so here's what I did, and all I can do is just share my experience, my story. I am not giving you a how-to manual on how to sell your business. Again, it's mindset, awareness and just helping you glean in terms of what I did. Some things that may be helpful for you for the inevitability that will happen someday. And so here goes.
(06:36):
The first thing I did is I read a book called Finish Big by Beau Burlingham. And when I use the word mindset, it was incredibly helpful for me to get my mind right and check all the boxes to understand the pros and the cons and what to do, what not to do. It's just a really great book. There are many books out there on how to sell your business, but that one really helped me with my mindset. The next thing that was important is I knew exactly what I was going to do after the sale. And so being an EOS implementer and working with so many companies, taking them through the EOS process, I've had many clients sell, and that's given me a luxury to observe watching entrepreneurs sell their business. Also, when we sold the family business, I got to watch my dad as an entrepreneur who sold his business.
(07:30):
And what happens for most entrepreneurs is they actually go into a depression after the sale of their business because they are purposeless. And so the idea here is I, having seen that so many times, knew exactly what I was going to do next. I knew exactly the projects, the businesses, the things that I was going to do, so the day after sale, I could then go pursue that new passion. And so again, many entrepreneurs are left rudderless, and so I urge you to know what you want to do next. The money really has to be secondary, and we'll talk a little bit about money as we get deeper into this. Next, is decide if you want to stay involved in the business. And so for me, when we sold the family business, I stayed on for a year and a half with an employment agreement and it was absolute misery for me. I'm not employable. I'm not good having a boss. And so it was really hard for me.
(08:32):
And so the urging here is to really decide do you want to stay involved in the business? Because in most cases, when an entrepreneur sells their business, they have to stay on. For me, I knew that I didn't want to, and so I worked really hard to build a strong leadership team that could run that business in my absence. And so if you want to be able to walk away the day after closing, you've got to start building a company. As Dan Sullivan would say, a self-managed company, where your team can run the company in your absence. And so that's what I was able to do, which leads to the next point. Is I really believe you should give yourself a five-year runway. So when I decided to sell, I actually was working on a five-year plan leading up to that sale where I didn't realize I was selling. And so five years before the sale, I worked on a transition plan with my partner, Don, for he and I to replace ourselves as visionary and integrator of the company.
(09:37):
Amongst other things, we gave ourselves a five-year runway to get all the pieces in place so that we could seamlessly step away from the business when that time came. And so five-year runway is what I urge. Most give themselves a one or two-year runway. All I'm trying to do is get you to kind of ten-year thinking. Think long-term about this. So again, your mindset is right and you're preparing well. Next thing that I did is very unusual, so I'm not recommending this. I'm just telling you what I did, and that is I told everyone in the organization. And so we had over 200 people at this particular time. Eight months before we closed the deal, when I decided it's time to sell, I told everyone in the organization, all 200 plus people. Now that is crazy in the private equity business selling world. Most experts will advise you to not do that.
(10:41):
What's important to understand is my partner, Don and I had built such an open and honest healthy culture that we could do that. Now, with that, there's still fear, but my attitude was I would rather deal with all the fear, the questions, the anxiety over the next eight months than surprise them after the sale, break the news to them. And it just, in my soul, I did not feel good about that. Again, I'm not recommending it, I'm just telling you what it is that I did. And so when I delivered that message, the other thing I did was, I call it preparing for the speech of my life, I stood in front of the entire organization and I gave my eight reasons for selling. Now, I'm not going to go into great detail on the eight reasons for selling. The point is the discipline here, the idea is for you, when this time comes, is to get really clear on why you are selling.
(11:40):
And so for me, it was things like I felt I had taken it as far as I wanted to. I didn't have a passion for now running a company with hundreds and hundreds of people. I'm great at startups, I like less people. I like it when I can touch and feel and see everyone. So it just got bigger than what I was interested in. Another example was, again, it was a self-managed company, as Dan Sullivan would call it, where I had a strong team in place. I was more or less sitting on the board for lack of a better term. I was up in the owner's box and others were running the business, so I was free. Another example is I had other passions I wanted to pursue, and the business was always on my mind. The other thing is I just didn't want to work that hard on this business. I didn't want to put my energy, allocate my energy to this business. I was seeking more peace of mind.
(12:32):
I had put 17 years of my life into it in a very intense way. And so things like that, reasons like that, I'm just trying to stimulate your thoughts. Those are some examples for me. But it's really important that you get clear on why you are doing this so that you get your head right. If you have partners, get their heads right, and then ultimately the day you communicate it, I feel like you owe it to your people to understand why. And for me, it was a lot more to do with just taking a check. The next thing I did is I defined what I called the ideal buyer criteria. I got really clear on what the ideal buyer looked like to me. Now, I summarized it in three simple bullet points, I called three criteria, which were number one, right buyer. I'll come back to that point in a second. Number two, the right opportunity for Peyton and Kelly. That was the new visionary and integrator. So an opportunity that they were excited about.
(13:36):
And then number three, certainly the right price. So under the right buyer criteria, there were about 15 bullet points. I won't go into detail on that, but I just simply painted a picture that I then shared with every potential buyer when we got down to the final 10 and I checked my gut, looked into their eyes to make sure that they met that criteria. Things like wanting to maintain the vision that was in place, the culture that was in place. And again, I'm not going to get into all those bullet points. The point here is to get really clear on the ideal buyer, because what's important is I did not sell to the highest bidder. So when we got down to, I think it was the final six buyers all made offers, there were two offers higher than the offer that we took. And it's because, again, price was important, but it was secondary to them being the right buyer. And this particular buyer that we went with met all of the criteria and the two higher bidders, there were some concerns we had about them fully meeting that criteria and so I think it helped us make a much better decision long-term.
(14:49):
Next is that we ran on EOS. And so if your business runs on EOS, on an operating system, it's going to be worth more money and more self-sufficient. The next thing I would say, and I want to come back to something I shared about my reasons for selling, is if you don't have it in you any longer to run that company, to own your company, be really honest with yourself. And this is where we come back to with the 10 Disciplines in your life and the three discoveries in your life and the awareness around those things, you might start to be pinged that it might be time. That's why I'm feeling called to do this because some of you out there, it's time. It's time to start to get to work on this.
(15:36):
And you might realize you just either don't have the passion for this particular business any longer, there's another passion you want to pursue or you just don't have the stamina that you used to have, and it's time to let other people take the reins for you and take the business to the next level, which is very similar to where I was. Something else I did that was quite unique is I gave veto power to my partner, Don, to the visionary, Peyton, and to the integrator, Kelly. And so the four of us had veto power, which meant if at any point in this eight month process of selling the business, anyone felt like we shouldn't do it or it was the wrong buyer, I gave them veto power, which is borderline crazy. Again, I'm not recommending this, but what it did is it kept me honest so that I didn't get caught up in the helium and the excitement and the craziness of the deal. And so that kept us all true to why we were doing this.
(16:36):
The next thing I did is I started holding weekly meetings. The buyers were agreeable to it, but every Saturday morning we got on a call. As we got close to the end of the deal, probably the last two months and every single week we were on a call working through every single issue, everything that needed to be discussed, which helped absolutely speed up the process, helped save me a lot of legal fees and a lot of miscommunication or communications sidebars, things like that that go on during the week. And so it just kept us all in sync. It kept the circles connected through the whole process, which really expedited things and helped us solve problems really fast. And then the last thing I would suggest to you, and this almost needs to be done at the beginning, but I wanted to save it till the end, and that is talk to experts.
(17:30):
And so I just strongly urge that you have great experts. Don't try and figure this out on your own. This is why the sellers are typically at a disadvantage because that driven entrepreneur is trying to figure it all out themselves. And so have a great attorney, have a great tax attorney, have a great investment banker, somebody that will take you through a process of selling your business so you get maximum value so you find the right buyer, and so that you are not trying to be an expert at something that you're just not an expert at. And these people are worth every penny when you find the right ones. And so with that, there's how I sold. There's why I wanted to share this message with you, and I hope it's hitting some of you right where you are right now, and you needed this message. And if you know anybody who's thinking about this topic, please forward this episode to them and hopefully give them tremendous peace of mind. Hope that helps.
Gino (18:28):
Thank you for listening in today. We truly appreciate you taking the time to spend with us, and please tune in for the next episode. Until then, if you'd like to see where you are on your true self journey, go to shedandshinepodcast.com to take the true assessment and receive personalized guidance. If you're all ready to begin your inner world journey with Rob and myself, please join us for the next round of the 10 Disciplines group coaching program. We wish you all the best in freeing your true self, stay focused and much love.
