Zero To A Hundred – Episode 33: Building A Business With The Exit In Mind With Steve Conwell

Accelerators! 🚀

Are you building your business with the end in mind? This week, we’re joined by Steve Conwell, CEO of Final Ascent, who has helped over 130 businesses navigate the exit process since 2017. Steve shares how to prepare for a successful business sale, avoid costly mistakes, and maximize your company’s value by3 viewing it through a buyer’s lens.

Whether you’re planning to sell in the near future or years down the road, this episode is packed with insights to set you up for success! 🎯

What’s on the Menu:

🧾 Why clean financials are the foundation of a successful sale.

💼 The importance of building systems that remove owner dependency.

🏆 How to create a business that buyers can’t resist.

Why Tune In?

Steve dives deep into the strategies that make businesses more attractive and valuable, from improving cash flow to documenting key processes. Learn how to future-proof your company and achieve the exit you deserve!

💬 Gem from Steve:

“Your financials are the resume of your business—make sure they’re spotless.”

Get in Touch with Steve:

📧 Email Steve at SConwell@finalascent.com or connect on LinkedIn to learn more about exit strategies.

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred! 💥

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Watch the episode here

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Building A Business With The Exit In Mind With Steve Conwell

Steve Conwell, thank you for joining us on Zero to a Hundred.

Thanks, Jarrod.

We’re going to talk about everything exits. When we start a business, many of us don’t have an exit in mind, but apparently, we should have an exit in mind. We’re going to deal with that in our conversation. What I would love for you to start with, we don’t necessarily always start with origin stories, but let’s start with your origin story for your business because it’s really important to the conversation today.

Building A Business With An Exit In Mind

Our first company, we started in 2002. We called it Enterprise Controls Consulting, way too long, but we went by ECC, and we did IT risk and controls consulting. We ended up building it to seven of the top ten professional service firms. We also did finance, accounting, and technology recruiting. We did executive contract-to-hire recruiting and built that company to 30 employees.

We had 60 contractors, so about 90 folks working with the firm across the U.S. I think we were in 35 states at the time, and we built it out. Honestly, I’ve got a BS/MS in accounting. I worked for Ernst & Young. I’ve done a lot of system audits and application auditing and knew a lot about business processes. We set up a lot of technology and automated a lot of things, but the one thing we didn’t do, because we knew nothing about it, was how to sell a company.

We got contacted on December 7 from the number nine public accounting firm. They were looking for a South office to kick off the region. We started visiting with them. We sold it on May 8. Thought we did great, but flashing forward, as I started learning about exit planning and how to exit your business, I realized we did it all wrong. We had one buyer who just told us what we wanted to hear. We thought we did excellent, but we ended up leaving probably $3 to $4 million on the table. That’s a staggering amount of money. We had national, North American, and global contracts worth a lot of money and just didn’t know.

That’s how we started Final Ascent. I kicked it off in July of 2017 because I felt like business owners need help. They need to understand what they need to do to get their business sellable and attractive in the marketplace, but they also need to understand what buyers look at so that they can work on things that will make them more lucrative. When they go through their exit, they don’t feel like they’ve got regrets later, that they’ve left things on the table.

The Importance Of Cash Flow Management

Talk to me about what happened, where you left that $3 to $4 million on the table.

We left it on. We did large-scale Sarbanes-Oxley and risk and controls projects. We would do $500,000 engagements, $2 million engagements long. They would take 7 to 10 months or a year to get them done. Those contracts were very hard to get, but we brought in talent from all over the U.S. We would run the projects, and we would find the best folks based on our big recruiting engine to run them. We were able to take on the top firms in the world doing this. You can’t beat us on rate, and you can’t beat us on experience. We were able to take these projects to market and be very successful, from A to Z, getting them through the process. The other thing is the contracts we were able to secure. They were really hard to get.

Office Depot, we were one of 600 vendors going after their national agreement. We were one of three that got it. We picked up PepsiCo, and like I said, seven of the top ten firms, Haggar clothing, and a bunch of others. They’re hard to get at that level, at the Fortune 500 level. They were worth a lot of money. You combine that with recurring revenue and large-scale contracts, and we just left it all on the table. We didn’t know. As a matter of fact, to be honest with you, I had no idea about the whole M&A market, how you sell your company, or doing exit planning back then. I just wasn’t aware of it at the time. Obviously, now that’s what we do, but it was a big lesson to be learned.

We talk about, and we have talked about, the value of your SOP, the value of your people, and the value of your IP. Talk to me more about the actual tangible value of your contracts and how you set them up,your contracts, your relationships, how you set them up so that they become valuable at the closing table for that new buyer.

Creating A Company Culture That Scales

From a standard operating procedure perspective, when you talk about the key business processes in your company to execute, whether it’s customer service, onboarding, time and expense administration, the whole HR side, to delivery, and then how you invoice and collect, like the big key processes, we’d automated most of that. It was extremely repeatable. For example, with EY, we were billing out $160,000 every two weeks. It had to be 100% accurate, complete, and timely. It couldn’t have any errors or irregularities. It just had to run like clockwork.

The other big key is that you’ve got to collect cash fast. Where they were telling us, originally, you can invoice every 30 days on net 30, which is really 60 days out roughly before you get paid. We negotiated, no, we’ll invoice every two weeks on net 15. We were never upside down on cash flow as we grew, just building that, which was really important. In our business back then, especially as we were growing, we could be five times our size in a month or two, depending on how many folks they needed on the recruiting side, the staffing side, and project employees and all of that. You’ve got to have that set up. If you don’t, sales are great, but you can’t pay your folks because you’re not getting paid fast enough. We learned really early that cash flow is important.

The other thing is just documenting what you do. Consistently, this is how we do this process, order to cash, procure to pay, hire to retire, the whole record side, month-end close, etc. This is how we do it, consistently, every time. We looked much larger than we were to the market just based on how we operated. The other thing is avoiding what I call the customer-employee-vendor issues. You never want anything to go outside your company that’s a problem. You’ve just got to look at all that and say, “We’re going to mitigate any of the issues that we see.” If there is a problem, you solve it immediately and get it dealt with. Overcommunicate. Make sure it’s squared away.

I’ll give you an example. We had an executive admin, I think it was at Deloitte at the time. There was a $27 receipt that she couldn’t read. She held up the invoice, which was like $123,000, just held up for $27. Like, I’ll send you the cash. We learned at that stage, look, you’ve got to be able to read all the receipts 100%. You can’t have any hang-ups like that. By paying attention to those details and documenting your processes, refining them, what happens is you start to build your company way. This is how we do things. This is how we talk to our customers. Chick-fil-A, my pleasure. There are just certain things that are said. You codify it as to how you communicate and what you say. It starts at the top and permeates throughout the whole company.

It helps with the hiring process, how you onboard employees and how you get them to understand your vision, mission, and values. How you do things. What it’s like to work for the company. All of that. What’s happening is you’re building a brand, internally and externally, but what you’re also doing is creating value about what separates you from your competition. If that makes sense.

It does. I want to circle back to the company culture and communication because those are key for building a company that is beyond you because you are not the company as the entrepreneur, where the company is the company. What I do want to focus on is something I heard you mention a couple of times, which is cash flow management and the importance of that. What are, if I’m a business owner, some of the provisions that I can put in place to make sure that I always have cash readily available to do things like pay my employees or buy supplies? Because a lot of companies are cash flow constrained.

It’s a great question. One of the things, each business and industry is different, is about how much working capital you need to operate the business. Working capital being current assets minus current liabilities. This is the amount of money you need to receive money from your receivables to pay your payables and your other short-term liabilities, just to keep it very simple. You have to understand what that minimum floor is of cash that you need to operate the business on a day-to-day, month-to-month basis.

The other thing is you have to pay attention to the terms that your customers will give you when you go and bill them, due on receipt, net 7, net 10, net 15, making sure that cash comes in fast because it’s a short-term loan. With your vendors, can you get better terms with them? Net 30, net 60, net 45, and stretch that out so that cash comes in faster than it goes out.

I’ll give you a great example. We had a company, they were super niched, and they did these very unique flavors of soy sauce. They had a super cool bottle, like you’d hold it in your hand. It’s like, it’s nice. You liked it. The soy sauce was awesome. They picked up Target, Walmart, I think Kroger. The problem is that even though they got decent terms with the vendors, I think like net 45 for all three of them and then others, the problem was that their cash, they were sending it to their suppliers 50% up front, 50% when it left the shore.

The problem is they were upside down on cash flow. When they came to us, I think they were a half million dollars underwater, which wasn’t much as far as the growth potential on really scaling across the country, but they could never recover from that. They couldn’t get better terms, which honestly were pretty good on the big-box retailers. They couldn’t renegotiate their contracts with their suppliers.

Ultimately, I gave them a 30, 60, 90-day plan, six months out, to try to reverse it, but they had to get that squared away. Eventually, they just went out of business. It was purely a great company. Absolutely sellable downstream. Super niche, could have done adjacent products off of it, but because of cash flow, because by the time they went to banks, it was too late. Banks aren’t going to loan them money at that stage because they’re upside down. The financials don’t look good.

Cash is king. It always needs to be on your mind, cash flow, because sometimes, look at the economy. You can’t predict the economy suddenly taking a bath, or you look at COVID, out of nowhere, some big macro event or a war, and your industry gets affected. The problem is it could get affected at the worst possible time.

What do you do as a business owner if you are having challenges with your ultimate end user that you’re selling to, like if it’s a big-box retailer? How do you manage your cash well when you’re not going to be able to negotiate better than 45, 60, 90-day terms for them to actually pay you? How do you set yourself up for success going into that knowing that?

This is going to sound like a pat answer, but it’s taking the emotion out of it, being all excited because you’re having these conversations, and logically looking at it like you have a business to protect. As much as it sounds great that Amazon wants to go buy, instead of 5,000 units of your lipstick, they want 80,000, what happens is these big-box retailers can literally overrun you. What they can also do is they can bleed your margins down to where they’re so lean. That’s that dull concept of “We’ll make it up in volume.” You don’t, because in a smaller business or a lower-middle-market company, these gigantic accounts can crush you.

You keep thinking, “We can do this. It’s a big account. We can get another one.” Sometimes you can, but what you can’t do, as the owner of a business, you’re the gatekeeper. Cooler heads will prevail. You can’t just listen only to the sales guys going, “This is the greatest thing ever.” You have to analyze it logically. Look at the financials. Look at the forecast of what that’s going to look like. What’s that going to do to your business? And then determine, is this the right time to take this account on?

That’s sage advice. One of my good friend’s fathers used to always say, “Just because it’s an opportunity, it doesn’t mean that it is yours.” Taking the emotion out of it is very important, especially when you are a product business where you might be selling your widget in volume to a big-box retailer, making sure that that contract is in your favor and you’re not stepping into something that could ultimately crush your business because it’s glittery and seems like it’s going to be an awesome opportunity, but they’re not paying you at a pace where you could actually pay your employees, pay your vendors, and then you don’t ultimately have a company.

I’d like to expand on this, too. One of the things you said, a lot of times you’ll make the right decision on bringing the account on, but your sales commission plan is not set up for success. You’ve got your sales folks paid on revenue versus margin. If it’s based on revenue and you need to maintain 50% margins, but they get paid for every dollar they bring in, they don’t care about selling the product at a loss. It doesn’t matter, they’re going to get their commission anyway.

The other thing that I see where folks will mess up is they’ll do a sale, and then they pay them their commission, like, on their next paycheck, but they don’t pay them when the company gets paid. Which then forces the account managers or the business development executives to maintain those relationships and make sure that those invoices are collected in a timely manner, which then affects their pocketbook and their alignment with the company.

Two things you’re saying are pay your commission salespeople on the margin and pay them when you get paid. That’s very good advice. I want to shift to something that I think is important that you and I have discussed before. It’s emphasizing viewing your business from a buyer’s perspective. Explain what that means to the audience.

Viewing Your Business From A Buyer’s Perspective

Think about you as a business owner. You wear a lot of entrepreneurial hats as you grow your company. Oftentimes, what most buyers have not done, especially ones that haven’t gone through a transition or a sale, is put on a seller’s hat and think about their business the way buyers do. They’re looking at their company through the buyer’s lens. It’s super important.

When we built our first company, we didn’t because we didn’t even know there was a buyer’s lens. But buyers, especially ones that are going to buy lower-middle-market companies, are very sophisticated. If you look at a financial buyer, like a private equity group that you hear about, they’re going to want to buy a company that they can grow and scale. They’re going to buy, in a perfect world, a company that’s considered a platform. They’re the ones that have the systems, technologies, processes, and people that they think can go buy ten other companies, ride it on that company as the platform, and then do a second sale, which is called a second bite of the apple.

Do they want a company that, two years ago, had revenue of this, one year this, and then now that? They don’t. In that situation, the company may be worth double back then what it is now. Sadly, it’s probably not even sellable now at that stage because buyers are going to look at it and go, “How do I get to no as fast as I can?” Because they may be looking at 200 other companies at the same time.

Financial performance is a huge thing. In the last three years, have your revenues grown 30% top line? Have your bottom-line net profits grown 20%? You’ve got this upward trend going into the sale that shows this company has the ability to grow and scale. Do you have positive cash flow? Is there something about your business that is unique, that separates you from your competition? It’s like you’ve created this defendable moat around your business that does two things, it creates repeat customers and raving fans, and it also creates customers who will refer you to their friends and colleagues, which is important.

The other thing is that you have owners who typically will start a business because they were the expert in it. They build their company, and they’ve got their hands in everything. They’re like the hub. All the spokes rely on them all the time for everything. Big question, challenge with a customer, how do we do this? This one customer wants a new service offering or product. The expert, the owner, is the one everybody depends on. It becomes an owner-dependent business.

The way buyers look at that is they’ll say, “If you’re not in the business, there is no business.” I’m going to politely walk away, or I’m going to say, “I’ll tell you what. We’ll give you 50¢ on the dollar for your business, but for the other 50%, you’re going to earn that out.” You call it an earn-out over the next 3 to 5 years. That owner is going to have to roll with the business, which the owner may not want to do.

The problem is that you’re proofing the business. They have to, over time, get that owner out of the company and transition all the customer relationships, the key stakeholders, document all of the processes that the business owner executes by delegating approval and authority to them, and get that business to that stage.

The sad reality is that those earn-outs, based on key targets, etc., very rarely get earned. Think about it, a business owner is 65, and some private equity group of 35-year-olds buys the company, and now they have a boss, in their mind, a bunch of kids. The owner is never going to get through the earn-out. They’re just going to quit and be done.

The Benefits Of Long-Term Planning

I think it’s set up that way because they understand the psychology, and they know that that’s going to happen at the end of the day. We know that a lot of business owners aren’t preparing their businesses for an exit. Talk to me about when a business owner should start planning for an exit, why, and how to do it properly.

I like this concept of start to sell, meaning that if you want to start a business, start it with the exit in mind. When would you like to exit? Is it five years out? Is it ten years out? What’s that going to look like? You start thinking about the type of transition. Would you ultimately like to sell it to your employees or maybe your management team that you build? Do you want to sell it to a third party? Do you want to transition it to your children? What is the process for doing this? Over time, sharing equity so the kids don’t get killed on taxes. All of that is really important.

The other thing is time. Time is your friend when it comes to tax-advantage strategies. I’ll give you an example. Most business owners, either by luck, take advantage of it because they set up a C-Corp. They very rarely will take advantage of the tax code. It’s called Section 1202. What it states is, the original founders in a C-Corp, if you had an S-Corp, an LLC, and you converted it to a C-Corp longer than five years before a sale, then each founder gets $10 million of exemption from taxes when they sell the company. The long-term capital gains taxes.

Most people don’t. It’s like their will. They’ll punt it down the road. They know they need to do it, but they wait. It’s the same thing with exit planning. Most of them just miss that opportunity. That’s extraordinary. If long-term capital gains tax is 20%, and the first $10 million of proceeds from a sale are exempt from tax, you just made $2 million.

Are you saying that if you’re an LLC and you’re a company or an organization transferring to a C-Corp, when should you do that? What is the timeline? When does it start ticking?

It has to be held for five years, and a day later, if it’s sold, you would get that exemption.

You hold your company as a C-Corp for five years or longer. Your first $10 million in profit is exempt from taxes. That’s really good. What are some of the other strategies that business owners could be looking at from a tax perspective when they’re preparing for an exit?

The Importance Of Understanding Business Valuation

Obviously, I’m not like a CPA, so I have to qualify all of that. One of the things my CPA said to me, I’ve been with them for 27 years, so a long time, one of the things they said to me was, “If you want to build a valuable business, you have to pay Uncle Sam.” A lot of people will get this business owner bragging about the fact they paid like $8,000 in taxes, like nothing. The problem is that their net profits are so lean that they haven’t created a valuable business. One of the things I would recommend is that business owners understand how valuations work. How do valuation methods value a company, and consistent ones, the same ones that buyers are going to use? Then, understand what levers affect their business value and learn to drive your company that way.

What is going to create quantitative value? Just the strict science behind how you do valuations. And then qualitative value, some of the other things we’ve been talking about, like financial performance, the ability to grow and scale, cash flow. What sets you apart? Recurring revenue, freeing up owner dependency. Those qualitative aspects, in combination, can create a very valuable business. Most business owners typically don’t know how their business is valued. Some businesses are valued off a percentage of revenue. Others are a multiple of adjusted EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization. I don’t want to get in the weeds on valuation, but by understanding that, along with thinking like a buyer, you can create a very valuable business that’s very sellable and very marketable. You just have to understand and think about this stuff early.

You’ve started the company in 2017, correct?

Yep.

How many businesses have you helped exit?

We’ve got experience in about 130 deals.

That’s a lot of deals. Talk to me about what you’ve been working on right now in today’s market and what you are seeing for the companies that you’re helping prepare or have just exited.

Preparing Your Business For Sale

Interestingly, it’s a great question because the economy, the recession, and all that, we always peer into the future because of the timing of when businesses want to sell. We need to understand strategically, does it make sense now based on their sector? Do we need to wait, etc.? That’s really important. If you look at the blue-collar trades in cities that are rapidly growing, there’s been a huge market for those from a roll-up perspective, just because they’re buying the business and they’re buying talent. One of the big secrets of blue-collar trade businesses is that the ones that become really successful realize, “I need to bring these people, who are largely contractors, on as full-time employees.”

The ones we’ve seen that are very valuable, we had a flooring business that had 260 employees. They were $60 million. They did flooring contracts in all 50 states, and they’re super niched in doing that. When they improved quality and time on budget and completion, like percentage of completion and getting that all squared away and on time, was when they brought people on full-time. Because if there were two hours left on the job, and they’re contractors, they don’t want to work two hours because they may burn the day. You can’t find them. You’ve got to go hunt, pay these folks at a premium, which affects the job profitability. That big deal in that sector creates really valuable businesses.

Obviously, there’s more to it. I’m doing percentage-of-completion accounting methods, which are really important, and doing their financial statements according to Generally Accepted Accounting Principles and accrual accounting, which we haven’t really talked about yet. Those sectors are really hot right now. Any tech company, like software-as-a-service-type companies, there are tons of businesses wanting to hunt for those. The challenge that we see is a lot of these folks want to get these businesses off the ground and immediately sell. What we’ve found is you’ve got to get a certain level of customers past AB testing, beta testing, alpha testing, and all that, and prove there’s a market for the business out there.

Those multiples can be pretty crazy, especially for ones that are very successful. Those unicorns that are selling at 10, 15 times revenue, which are pretty crazy multiples for sure. I’m going to explain it this way, Good businesses that are attractive to the market and exit-ready will sell in any economy. Those shining stars. The one thing that I would also recommend that business owners do is industry benchmarking with their sector, with companies their size, and see how they compare. “Here’s what we do extremely well that is valuable compared to our peers, and here are opportunities for improvement that allow me to get my business more in line with the best in class.”

Besides the obvious, why is that important? Because there are going to be certain buyers who are looking at you and wanting a business in your sector. They’re going to compare you to an army of prospects that they’re looking at. You want to be top of the food chain. That’s going to command more bids from people wanting your business. It’s going to create that competitive buyer tension, and it’s going to get a more lucrative offer for you. The other thing is you’re also going to have buyers that, based on their investment criteria, are looking for a company with EBITDA between $3 to $7 million, with these revenues, with X percent being recurring, in these regions. Any company, that’s what they’re hunting for with that criteria.

The way that you compare your financials apples to apples is, you don’t want cash-basis financials. You need accrual-based financials that allow your financial statements to be comparable. I cannot emphasize enough about cleaning up your books, getting them run correctly, getting a month-end close, and really making that repeatable. I’ll explain it simply and easily this way, let’s pretend that you’re on LinkedIn and you’re hunting for a job, and there’s this perfect job out there. You literally are the perfect candidate. You submit your resume with typos and grammatical errors, and it goes to a recruiter who looks at it for about fifteen seconds and throws it away.

Your financials are the resume of your business. I’d say, for most businesses we look at, we can look at the financials and very quickly tell, there are just challenges right off the bat. We’ve got to get a cleanup going. We’ve got to get month-end running effectively. We’ve got to get budgets and forecasts squared away and start to change the culture and be able to even do effective budgets and forecasts. You have to have financials that you can make decisions off of. The buyers will just walk away off issues on financials.

In terms of financials, I want to talk about something that is very specific. Not every business can do it, or maybe I’m wrong. Every business can do it, but it’s creating that sustainable, predictable revenue and what that does for the value of your business. When you’re working with a business owner, how are you helping them create or at least crystallize what they’re doing that is sustainable and predictable so it makes them more valuable for a potential exit?

The first thing after we do accounting cleanup, because we’ll do an accounting and business risk assessment and then cleanup, we won’t get the financials perfect. It doesn’t mean they’re 100% accurate, but we’ll do a modified accrual format while we’re getting everything in place that needs to happen. But the financials are now in a state to be able to build projections off of and build a strategic plan off of.

There’s a tremendous amount of education going on through that process because we’ll have their financials up while we’re going through it. By account, as we’re starting to build out the projections, the top-line growth, the cost of goods and the margins, all the operating expenses, they’re learning. They’re looking at an account and going, “I don’t know what this stuff is in here.”

Half the account, let’s say it’s marketing, has things in it that shouldn’t even be there. We’re creating all these action items. We need to move that. Here’s a time horizon that we’ll move it. We may have to move it, let’s say, from one of this year going forward, recognizing that the previous two years it wasn’t accurately done.

For the first time, they’re seeing, from an accounting perspective and transaction perspective, what’s going on in their business, but they’re also seeing the projections build and the value build. You’re talking back and forth, and you’re saying, “We’re going to do twelve months, first year, a monthly projection, two years of annual,” and they’re seeing the build.

What’s happening? Top-line, margin improvement over time, building the personnel tables, who we need to hire, when we need to hire them, and what that’s going to look like. The concept of getting lean and mean and how it affects value. You’re teaching them. What you’re also doing, especially with exit planning, where we have time, you’re getting that entrepreneurial spirit, that big energy that they had, refiring.

The Business Exit Timeline

Talk to me about what time should be allotted as an entrepreneur or a business owner to prepare for that exit, because this sounds like a lot, Steve. We’ve got people like you who are experts who can help our audience get through this successfully. Is it years out? Is it months out? How should the audience be looking at this in terms of allocating the appropriate amount of time to get everything in order?

I’m going to do it this way. I’m going to explain an exit timeline. This will help. Let’s pretend we are going to sell and want the check to clear on December 31, 2027, three years out. You then have to back up, and you have to say 10, 11 months before that, we’re going to want to go to market and actually put the company up for sale and go through the whole selling process. A couple of months before that, so we’re going to say on 1-1-2027, now this will be done over time, we’re going to be gathering all the documents and putting them into a virtual data room and doing our sell-side due diligence in preparation for all the buyer questions and their due diligence.

What we’ve done is we’ve cut off a year of time to get ready. Realistically, even though you’re going to sell three years out, you need to have that engine running and build that enterprise value over a two-year stretch and then continue growing and achieving your goals and objectives through the exit process. Because what happens when you sell, and if an owner hasn’t gone through it, it’s just an emotional rollercoaster, you’re selling your baby that you may have started 20, 30 years ago. At some point, it’s going to get stressful and overwhelming because you’re running the business along with dealing with all of the questions and the stuff you have to do through a sale.

What’ll happen is the business will flatline or it starts losing its momentum. The thing is, the buyers know this. It’s just normal. But what do they do? “The business isn’t performing as well. We’re going to discount it 15%,” and all this kind of stuff. Part of going through that is helping those owners continue to drive that ship in the direction that was set. It’s defendable, and you can maintain your enterprise value throughout.

Let’s say we’re selling a home. We know where to put the home. We’re going to put it on the MLS through a real estate agent. How do you go about selling your business? Where is it listed? I’m sure it’s different for each market, but what is that actual process of saying, “I now have something tangible. I’m going to go out and sell it.” Where do you do it?

That’s a good question. If you look at really small, micro businesses, so like a typical main street business, there are sites out there. I would 100% recommend at that level working with a business broker who is familiar with your sector, familiar with the selling process, and can help you do that. They’ll create a teaser document. They’ll create a customer information memorandum or a prospectus presentation that may be 30, 40 pages long describing the whole business, and then they will push it out to the market.

Some of the ways they’ll do that is they’ll use SaaS products out there like BizBuySell or Axial that have a buyer-seller market, like Zillow or some of the other ones when you’re selling your house. For smaller businesses, that’ll work really well, people hunting based on certain criteria will find your business that way. They’ll sign an NDA, which will allow them to review the prospectus or the customer information memorandum and then go through the whole selling process.

When you get to larger businesses, like, we have 130,000, 135,000 buyers in our database and network, we’re subsetting specifically to the 400 to 500 businesses, buyers out there that are likely based on all the investment criteria, and then going direct to that. Going on a BizBuySell, you’re just hitting the entire market. It’s like when you’re a recruiter, and you put out a job posting, and a thousand people apply, of which 98% are not the right people. By doing a very targeted buying process and a competitive bid process, we’re now subsetting to the right folks and going through that process.

It’s usually because these buyers are larger, they’re looking at $10 million-and-up businesses. They’re more sophisticated from that perspective. Whereas for micro businesses, sometimes the buyer is going to be an executive that retired and wants to go buy a company and run it, or a lifestyle buyer that’s never been through the process.

In that type of situation, representing a company and selling them that way, you’re guiding that buyer through the process as well. Because they’re going to go through their own buyer emotional rollercoaster of stress, fear, “How do I do this? That’s a lot of debt,” and all that kind of stuff, simultaneously with the seller.

The Role Of Advisors In A Successful Exit

Let’s talk about some of the ones that might be bigger transactions. Maybe it’s not just the bigger transactions, but if you are a business owner, all of our audience are business owners and entrepreneurs, how do you select an advisor to work with who can really help you get there? What questions should you be asking? What should you expect out of that advisor? How do you get help through this process?

That’s a great question. It’s a lot of noise to cut through. I feel sorry for business owners when they’re running searches and just trying to get information and get to the right folks on the bus. It’s like, “I sell companies,” but you were a plumbing company last week, or you sold houses. I like to explain it this way, if selling a company was the same thing as selling your house, it would be selling your house with a thousand complicated steps. It’s a lot more sophisticated to go through and have a financial background. A lot of these guys have BS/MS degrees in accounting and MBAs, have worked with investment banks, been business analysts, or were on the audit side of the house for many years. They’ve run companies, built them, and sold them.

They’ve got a lot of experience doing that, which is really important because they’ve seen a lot of things and a lot of situations to take them through the cycle. We’ll get this question a lot from business owners, “How many of my XYZ widget companies have you sold out of the 6,500 different industry types?” Because the mindset is that you have to be an expert in my industry. What they don’t understand is that the actual buyer that’s going to come out of the woodwork, it’s highly likely they’ve never heard of them. They’re halfway around the country. They’ve built, sold, and bought companies in their sector or adjacent sectors and have experience doing it.

The more important question is, “How much experience do you have successfully taking companies through the process to a lucrative exit? How well do you do that? How does that process work, and how do you really guide and help them?” You’re like the final ascent. You’re like a Sherpa taking them up to that last stage and climbing the summit, which is fraught with all kinds of problems. It’s the riskiest part of a mountain climb, like a K2 or Everest.

It’s the same thing, you started your company, and fast forward many years, this is the second, if not realistically the most significant, decision you have to make. Finding that right representation of somebody that not only 100% cares about you and your business but is going to make sure they do this in a way that achieves that. I would say honesty, integrity, and character matter almost, I’d argue, more than anything. We believe that we are going to tell you at the outset, “Here’s what we think.” We’re not going to tell you what you want to hear.

They may not be sellable. “I know you’d like to sell, but based on what we’re seeing here, if you go through a transaction, you’re going to get $0.60 on the dollar, and here’s why. Or, if you could wait and you had time, this is what could happen. This would make it this much more lucrative by doing these things.” Or the counter side of that is, “I want to sell this thing in three years.” We evaluate it. They’re worth this much, like $6 or $7 million more than we thought based on all the criteria that you look at. Maybe you’re going to want to sell now because you never know what could happen, right?

Right. Steve, one more question for you before we get into the rapid-fire section. I think this is the really important one because it’s going to be a great takeaway for the audience. What is one piece of advice that you would like to tell the audience if they are considering exiting their business?

I’ve heard this from business owners that have exited, work with strong advisors as early as possible. It is tremendous advice. I wish, looking back, that I had done that because we didn’t know. We had a good business, but we still didn’t know that. I think that by having those conversations early and getting educated on the exit process, on what it takes to be sellable, to sell for maximum value, since so few businesses actually do, it can be worth its weight in gold.

We’re not talking about $50,000. It can be millions of dollars that can separate you. I would highly recommend that. I’m not saying, “Call Final Ascent.” What I’m saying is talk to people who are educated and experienced in this, who can help guide you along the way. You do not want to go through this alone.

Rapid Fire Section With Steve Conwell

Sage advice. We’re going to do the fun stuff and jump into the rapid-fire section. Are you ready?

I guess I’m ready.

Who wins the race? Rabbit or turtle?

Turtle.

Me too. Slow and steady. If you have to leave your home and protect your family, and it’s a zombie apocalypse, what is your one weapon of choice that you’re going to take with you?

A cure.

Awesome. Is there a book that you would recommend for our audience of entrepreneurs and business owners to read that can help them on their journey?

That’s a great question. I like Daniel Goleman’s book Working with Emotional Intelligence. It’s an amazing book that talks about all different professions, like the top maids, the top flight attendants, what separates them is that they have tremendous emotional intelligence. It goes through all of these different key facets of emotional intelligence. It’s just a fascinating book.

Excellent. That’s on my list because I am an avid reader and love to learn new things. Are you using AI in your business and how?

Yeah, absolutely. We definitely use it on the marketing side, 2 or 3 different tools that will do email marketing, blog posts, etc. Ironically, right before we got on this call, I was saving off a doc. I’d gone through exit planning and M&A, a big detailed ChatGPT question of just all the different facets of our sector and what AI and software tools are out there for it.

Just last week, with one of our clients, an IT-managed service firm, he was working with a digital marketing company. “Let’s just jump on there. Let’s see if we can go create seven. We want to do email marketing. Let’s go create it.” We ended up going back and forth and building it out. We created 28, four sets of seven emails that he could use for his marketing, all within an hour call, and had it all done.

We leverage it quite a bit. I think in every sector, you have to stay on top of it. I would just get comfortable with your own business. Just as the owner, explain your business, “I’m the CEO of my company. Here’s my website. Here’s all that I’m thinking about. I’m concerned about this.” I’m going to give you some crazy advice, but at the end of it, when you get all done writing it up, before you hit enter, say, “Please help me because my life depends on it,” and then hit enter. Ironically, the software goes, “This is life or death,” and it will work harder for you.

Good note. We’ve got two more questions. You are a business owner who’s doing $10 million in revenue. I walk through your front door, and I hand you a $300,000 check. What would you advise that business owner to do with that $300,000 to grow their revenue over the next year?

$300,000? I’d be concerned about why they’re just writing me a check right off the bat. Just my audit spider sense would go off the grid. It depends on the company. How much cash do they already have? What would make the most sense in using that cash to grow the company? Could it be that we need to hire some rock-solid, talented business development executives to assist us, as an example? Could it be improving our working capital, not spending it on anything, but keeping it in the bank? As we continue to grow our company, we have the cash in place to continue to expand and grow.

It could be certain products that you would like to acquire to sell, just based on what your customers want that you haven’t been able to acquire before. From an inventory and management perspective, you can now acquire more things to resell. I would say that that question is going to apply differently for every different industry and then from the maturity of the business and where they are. $300,000 to a startup is like an ungodly amount of money. $300,000 to a $10 million business isn’t as much. It’s still a good chunk of change, but not as much, maybe not enough to significantly move the needle, as an example.

I have one more question, and you’re going to make this one super quick and super easy. What is the one thing you’ve had to overcome in your life to build the success that you’ve built today?

I’d say the biggest thing was when I was 25, there was a certain personality type that I would just butt heads with. It didn’t even matter if I was right, I could not convince this personality type. This was the biggest epiphany for me in my life. I was brushing my teeth, looking in the mirror, and this light bulb just went off. I was like, “What if I’m the problem? What if it’s me that’s the issue?” That book Working with Emotional Intelligence, I read Emotional Intelligence: Why It Can Matter More Than IQ, Working with Emotional Intelligence, Putting Your Best Feet Forward: A Guide to Feet Care, all of these soft skill books. I learned so much that I just wasn’t aware of.

Ironically, that personality type,when I look in my past, was really them talking to me. A certain person. I’m not going to say who they are, but that was a massive epiphany for me. Maybe I’m the issue. Maybe I need to improve myself in how I communicate with those folks, to communicate with them in the way they would like to be communicated with, the way that works best for them, and adjust my style. That was a huge pivotal moment for me.

Awesome. Steve, please tell the audience where they can connect with you if they’re looking to sell their business.

I appreciate that. Steve Conwell, you can get me on my email, SConwell@finalascent.com. I’m on LinkedIn, Steve Conwell. You’ll find me that way easily. You can call my number, 214-253-8422, that’s my direct line.

Steve Conwell, thank you for joining us on Zero to a Hundred.

Thanks a ton, Jarrod. It was a lot of fun.

Important Links

• Steve Conwell on LinkedIn
• Ernst & Young
• Final Ascent
• Office Depot
• PepsiCo
• Haggar
• BizBuySell
• Axial
• Zillow
• Working with Emotional Intelligence
• Emotional Intelligence: Why It Can Matter More Than IQ
• Putting Your Best Feet Forward: A Guide to Feet Care

About Steve Conwell

TEVE CONWELL, CEO | MS, CVB

Steve is an accomplished entrepreneur with over 25 years of business advisory and financial consulting experience. Steve is passionate about helping business owners creatively tackle their biggest challenges and successfully grow their businesses. Throughout his career, he leveraged public accounting, internal audit and controls experience with Fortune 500 and middle market companies, always returning to his entrepreneurial roots.

Steve is the CEO and co-owner of Final Ascent LLC, bringing his passion and energy as an accomplished business owner to entrepreneurs who want to sell their businesses. He helps owners prepare their businesses for sale, transforming their businesses into built to sell companies and maximizing their value at exit. Final Ascent as a whole is a national leading mergers & acquisitions, exit strategy and legacy planning firm serving middle-market business owners navigate the exit journey.

Steve graduated in 1993 with his combined Bachelors and Masters of Science in Accounting/Auditing and is a member of several professional associations. He is a Certified Value Builder and expert in getting companies “built to sell.” Steve is a shareholder and member of the Board of Directors of The AEC Equities, a private equity group that acquires premier engineering, light industrial, construction and light manufacturing middle-market firms. He is the President and Founder of the Dallas Exit Planning Exchange Chapter, which launched in May 2022.

Steve is a Board Member on the College of Merchandising, Hospitality and Tourism’s Dean Advisory Board, beginning his term in 2023. Steve is also a Board member on the Dean Advisory Board of the Ryan College of Business, serving on the marketing, corporate partnerships and social impact working groups. He serves as the current President of the Denton County Alumni Association Chapter, successfully building out the Steering Committee and branding to our Mean Green alumni family and the community at large.

Steve was the past president of the Fort Worth Institute of Internal Auditors. He previously served as a National Board Member and Dallas Advisory Council Chairman with the American Lung Association. He is an accomplished speaker, presenting several topics on business and entrepreneurship to business leaders and college students.

Steve is a native Texas and attended nine different schools growing up. It’s why he embraces change and loves thinking out-of-the-box. He lives in Dallas with his college sweetheart and two children, and he’s proud to say he’s a fledgling empty nester.

From 1993 to 2002, Steve worked at Ernst & Young in public accounting, business advisory services and technology auditing. At Whitman-Hart, Steve served as the COO of the Dallas office and Global Director of Business Operations across the 72-office, $2b management consulting firm.

In 2002, he began his entrepreneurial adventures co-founding and building ECC, a national consulting and recruiting firm. The company led global risk and controls engagements for Fortune 500 and middle market clients, partnering with Tier-1 accounting firms. He successfully sold the business in 2008. Steve realized at this time he had a passion and love for business owners and their entrepreneurial spirit.

From 2009 to early 2017, Steve was the Market President of a consulting firm that provided professional accountants to small businesses to complement their internal accounting staff. Most recently, he was the interim CFO for Rylex Capital in residential real estate. He led the cash to accrual conversion and the year-one financial statement audit, earning an unqualified audit opinion from the #8 public accounting firm.