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Getting the Best Offer with Steve Conwell

George Grombacher November 21, 2023

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Getting the Best Offer with Steve Conwell

LifeBlood: We talked about getting the best offer for your business, driving value and making your business as attractive as possible to borrowers, the emotional component in the this process, and why failure to take all variables into consideration can lead to value destruction, with Steve Conwell, CEO of Final Ascent, an exit planning firm for middle market business owners.       

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You can learn more about Steve at FinalAscent.com and LinkedIn

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Our Guests

George Grombacher

Steve Conwell

Steve Conwell

Episode Transcript

Steve Conwell 0:19
Thanks, George. That’s a party podcast. Yeah. excited to have you on. Tell us a little bit your personal lives more about your work? Why you do what you do? Yeah, yeah. My brother and I met country dancin many moons ago, back in 92. We told both our parents who were Catholic in Assemblies of God that we met at Un t. But yeah, I’ve been married i Gosh, this summer will be 30 years and got two great kids, one that graduated from a&m, so I won’t hold it against her. But she’s a teacher with Title One schools is just amazing. She does kindergarten calls in her littles. And she’s, she’s incredible at that. And then our son, he’s third generation University in North Texas and the undergraduate in December. And so our empty nesters so we kind of laugh and say, when our friends call and say, Can you do something we can go right now.

george grombacher 0:02
Steve Conwell is the CEO of final ascent they are a firm advising middle market business owners on creating exit ready companies that attract buyers and sell for maximum value so that they’re able to create wealth and and a legacy that lasts for generations. Welcome, Steve.

Steve Conwell 1:16
Which is fun. But I’m the CEO, final set, like you said, and my life’s journey is to help middle market business owners navigate that whole exit process. So what I mean by exit, so how do I get my business attractive in the marketplace and really exit ready so that if I do a transition to a third party, how do I maximize that value? All that blood, sweat and tears that they have the 30 years of building their business? How do they really monetize that so that they can have a lucrative and happy exit, a beautiful retirement multi generational wealth. And so it’s that navigating that exit journey is, it’s a process, it’s fun, we love it. But it’s a roller coaster ride. And so we’re there with our business owners as Traci guides to take them through that process and, and help them get there, especially considering the fact it’s probably the only time in their life, a lot of them will ever do this. And so you got to take it really seriously. And you got to make sure that, you know, we get through that process with them hand in hand, just guiding him up the mountain on their final sentence. So they can have that kind of wonderful journey until the friends after that. Having a cigar that I sold my business and it helped the next generation for sure.

george grombacher 2:36
I love it. So I imagine that your daughter always thought I’m going to be a teacher and she sounds like a perfect teacher, you know, me, I’d be an awful teacher, I probably don’t have an ounce of the patients that she has. When when when you were a kid really like I’m going to help people sell their business or how does that happen?

Steve Conwell 2:54
Now? Oh, my gosh, that’s such a great question. Because I mean, no, right. But I remember as a kid, looking at these millionaires back then right now it’s the billionaires. And so how did they do that? How did they get in, you look at somebody that owns a, you know, not owns but runs a fortune 500 company with 300,000 employees? How do you do that? How did you get there? And so it’s always curious about that. But I did the traditional, you know, bachelor’s and master’s in accounting, did the financial statement audit with the Big Four going down that path. But I was always entrepreneurial, always kind of thinking about new ways of doing things. How do you make it better? Thinking out of the box. And so I think those skill sets helped me. But I was also really fortunate to work on I mean, you know, hundreds of industries, multiple companies, and I’ve seen a lot of ways to do things, a lot of ways to do things well, and a lot of ways that maybe not so well, right. And so that kind of navigated my journey that way. But I will say my accounting degree. I mean, I look at financial statements all the time, it never goes away. And those early skill sets, you know, the soft skills that you learn the attention to detail, quality, time management, budgeting, the emotional intelligence learning that you have to do to kind of move up the food chain, all of that helps navigate that journey. But ultimately, you know, what happened was I was the interim CFO for residential real estate firms. We did about 300 homes, and I was a client, an exit strategist. And so what’s funny about that is that when we sold our first company, we thought we did great, this was back in 2008. Here I am listening to this exit strategy person talking about all the things that buyers want in the business. How do you go through an exit? And I’m looking back going, not only do we not remotely do that the right way. We probably left easily, like $3 million on the table. And we thought we did great. And so that’s what got me really curious about this. And that’s how we started the company. I said, Oh my gosh, man, there’s so many people don’t know, they have their entrepreneurial hats, and they’re great with that. But they don’t know what it takes to get their business really ready for sale? And then what do you need to do to go through that process? And so that’s now my life’s work to help business owners with that.

george grombacher 5:18
I appreciate you sharing. And it’s life is life as a funny thing, and you answered one of my questions. You just never know if people are going through the degree work and then advanced degrees and then working for great big financial accounting firms, if there’s a lot of emotional intelligence going on, and where you picked that up, because you mentioned that such a huge part of the process.

Steve Conwell 5:41
Yeah, you know, I had a pivotal moment when I was 25. Because, you know, those those situations, you know, you’re right. I mean, this is the path that you need to go down. But there’s personality types that you can’t convince, then you can’t figure out why, like, why is it that that personality type, for whatever reason, can’t get from A to B? And my pivotal moment in my career was, I thought, what if I’m the problems? What if I’m actually the issue. And so I started reading all these soft skill books and the groundbreaking book by Daniel Goleman, like on emotional intelligence, and working with emotional intelligence, and I remember reading things. And it’s like, I never knew that I never knew this, right. And so I started, kind of tabulate in my mind, okay, how do then I changed my style, my communication approach, so that the person listening to me, that’s how they like to be communicated to. And so I just adjusted myself. And adjusted, you know, how I talked to folks how I listen. And it was, it was a groundbreaking thing for me. And so I’m kind of a lifelong learner, and things like that. I have to with my job, I mean, listen to business owners, and like the underlying meaning of what’s really being said, what the real issue is, and then how do I get them from where we are now to, you know, two or three accessing their enterprise value, getting them from really no market, that’s going to purchase them to attracting a market where multiple buyers are there. And so you have to, you have to be willing to kind of humble yourself, they know more in their pinky about their business than you do with your whole body and mind and soul. And so you have to respect that and appreciate it. And then you have to then help them with the experiences that we have taking companies to market and selling them for that maximum value that we talked about. But they have to execute, they have to be the ones that get that entrepreneurial spirit energized. Get excited again, let’s go run and let’s go grow this thing and see the possibilities. Because the funny thing about it is that no buyer wants to listen to a seller go. I hate my business and like really sick and tired of it. And so I’m going to sell it to you. They’re like, banks, but I’m gonna go somewhere else. Right? So yeah, that it’s, it was a big thing. And so I’m a firm believer, and you know, you’re not always right. You may not always have the answers. And so listening and kind of helping guide people versus just telling them what they need to do is, for me, it’s just a great way to do things.

george grombacher 8:28
What a moment of clarity, what if I’m the problem, to ask yourself that question, and then to actually do the work and to dig into it, and then to recognize, look at all this stuff that I didn’t even know I didn’t even know. And what a difference that that’s made.

Steve Conwell 8:44
Yeah, yeah, my wife and I, we used to do premarital counseling, but with our church, and we were the youngest couple of doing that. And they would do this speaking of love assessments found that you know, love communication, you know, seven Love Languages of people. And what we realized was that, okay, there’s going to be, let’s say, his third marriage and her sockets, is that if you gave them mirrors, and said, Look, if you don’t fix yourselves, what you’re doing is you’re marrying somebody that’s exactly like your previous spouses, but they look different, right? But if you change yourself and you change, you know, how you give love how you communicate, how you interact with your team, your customers, your key stakeholders, the other hats that you wear, whether you’re like, your son, you’re a father, you’re a husband, you’re a friend, you’re a business owner, all of those roles, affect you know, how you are going to, you know, improve things, how you’re going to make things better, how you’re going to grow your business, how you’re going to have your kids being wonderful, contributing independent members of society, how you’re going to have a loving marriage, how you’re going to be a good neighbor. So all of that’s intertwined. It’s the reason why when we’re visiting with business owners, we’re really kind of getting a full labor for more than just them as a business owner, because if we don’t understand the personal things and what’s going on in their life, the big things that are affecting them, that can affect that whole journey. So it’s really a kind of a microcosm of a lot of who are you talking to, while you’re sitting here talking about the business, because it could be that you’re talking to the husband at that point. Or you could be talking to the son because the dad’s got cancer, and hasn’t told you. And it’s stage four, and they just spent the whole weekend at hospice now. And him getting irritated and upset with you has nothing to do with the conversation, but that What’s weighing on their mind, right. So all of that can factor into a journey that, if you’re selling your business could take nine months, there’s a lot that can happen during that time, and life comes at you fast, so you have to appreciate it, you have to be willing to be open to changes. And we like to like to say we’re like exit psychologists without the degree right? Navigating that roller coaster going up and down and the changes and the things that happen. So yeah, it’s, it’s, it’s a fun job, it’s a wonderful thing to do to help business owners kind of navigate that, that life long journey that they’ve had building their companies, and all of a sudden, they get to a stage where they say, Hey, I’m thinking about selling. And we have to help them get over that finish line, especially considering the fact that we know nothing about this process at all. And you know, that great client that they have that has, you know, 60% of their revenue can be holding them back from selling, because that’s a concentration problem. So they love that client, that’s been a wonderful thing for their family. But on the scalability standpoint, buyers are looking at that and going What if I buy the company, and that customer just bails? I can’t be the big, bad new owner like firing half their employees, because we can’t service that anymore. We don’t have the revenue. Yeah, so there’s, I don’t know, in my heart, this is something we take very seriously. We love the business owners we work with. And we truly if you think about that final ascent, it’s a minor mountain climbing term. And it’s the last ascent to the summit. So if you think about Everest, or Ketu set, most dangerous part of the ascent is all things can go wrong. So we have to be there and guide them through that process to get over that finish line. It’s fine.

george grombacher 12:35
What a great way to think about it. And you described it beautifully. And it seems to me that you ignore the stuff at at at at your peril. And if you are not taking into consideration, the family stuff, the emotional stuff, and you’re just looking at the books that you’ll probably end up freezing to death, close to the summit on Ketu. Or Everest as it would be.

Steve Conwell 13:02
Yeah, there’s nothing worse than saying okay, like going to the summit. If we stick with that analogy. It seems like the straight line is the best way to go. logic would dictate this is how we get there. But it’s experience over time of doing it, you know, hundreds of times it says nope, we have to circumvent that straight path. And what appears to be like the road less traveled by Robert Frost is the right way to go to get through this exit journey for them. Because going up those mountains, there are people that they keep up there that have passed away 5060 years ago, because they didn’t they didn’t look at those those risk factors, they didn’t think about the fact that oxygen was low. So time people kill deals, financials that are a mess, kill even the opportunity to have somebody give you an offer for your business. Businesses where the owners are largely dependent on them. So they’re very proud about the fact that other customers know their name all the key stakeholders. They’re the person that everybody goes to for all the problems and challenges. And while that’s great for the business owner from a buyer’s perspective, they’re looking at it and going well this entire business is dependent on you. So we’re gonna walk away because it just doesn’t have any value ie you just died on the mountainside and you didn’t even know that was an issue.

george grombacher 14:35
Yeah, what feeds you destroys you kind of a thing. What brought you to the dance and major companies successful? It’s you and your personality and everything else. But yeah, I’m the new potential owner and I am not you. So.

Steve Conwell 14:51
Yeah, it’s like what you want to do is you want to take your business and make it turnkey. So you sell it, you hand the keys over to that new job. hire, so that you can go off into the sunset and walk away. Now, the reality is that a business that is turnkey, you may spend the next year working on a consulting basis, full time, maybe the next two years part time, you may have some level of earnouts, where you’re earning, let’s say, a portion of the sales proceeds, after the fact to get to that next level. But if the business is truly dependent on you, you really hit the nail on the head, you are the reason is businesses here, not all your employees and not what you’re selling, but that just larger than life personality that you have the expertise that you have. And while that got you here, it’s not going to get you successfully over the finish line, you’re not going to be able to maximize that value at exit. So even if you do get an offer, you’re gonna get something well below what the expectations of that business owner may be. But that’s reality, that will be market value, because what owners tend to forget is these buyers are bigger, they’re more sophisticated, they may have bought, you know, 100 companies or more. They’re not, that’s not the only business are looking at, they may be looking at 200 More at the same time. And so they’re gonna take your financials, and emotionally and with logic, they’re gonna throw you into their financial planning and analysis systems with their CFOs and analyst. And they’re gonna say, well, compared to your industry, you’re just middle of the road, we want the big shining star, right, we want that Purple Cow out there, that we can grow and scale and take to the next level. Or they may be one of you look at businesses in multiple industries. But with these earnings, these this EBIT, this revenue range, and you don’t compare with the rest of them. So all of that stuff matters. And so if you compound all of that, with the fact that the business is the is the owner, people just walk away, even if you have good numbers, they’ll walk away,

george grombacher 17:03
which makes perfect sense hearing that do. And you’ve talked earlier how, you know, the business owner, it’s their baby, they found that it, they’ve grown it and they know more about their business in their pinky than your I could ever know about it ever. But they’re so close to it. And that by very nature of that knowledge, and that attachment is a negative thing and a process like this. So it’s it strikes me that you almost need somebody to help you through this process. Somebody outside of you or your family.

Steve Conwell 17:40
Yeah, I’ll tell you the and I’m not just saying this, because we own a Exit Planning and m&a firm, but having strong advisors by your side early, like very early in the process is absolutely critical. And I’m living proof, right. I mean, I got BSMS in accounting, I’ve worked for the top consulting firms in the world, we had no idea about what the selling process was our consulting and recruiting shop that we owned, we had about 90 professionals, we got contacted by the number nine firm in the world, wanting to open up their South presence in Texas and kind of the surrounding states. We thought that was great. Now that’s one buyer reaching out on a whim and just happened to catch me. Hey, I’m so and so we’re looking to buy a company are you interested in selling had never even thought about it. And it’s highly like automated we were in systematized. We had everything documented, like we’ve done a lot of things, right, except for one minor problem. We didn’t have anybody representing us who would have said, Now hold on a minute, we’re going to take you through a process, we’re going to build the perspectives like the customer information memorandum, a teaser deck, we’re going to take you to market and that number nine firm can be part of that process. And we’re going to go through that journey because then you’re going to get their best offer. You’ll never get their best offer when somebody reaches out to you out of the blue. They’re going to be super nice, you’re going to think wow, this process is great. But what they’re doing is they’re in a fact lowering the asking price taking you through that journey. They’re gonna make sure that you know other people aren’t in the mix. And here we are, sell it in May of oh eight thinking everything was fine and did it all wrong. And so that statement of like we never knew that you never knew we were those people. And so for me, you know, we take the selling process very seriously because it is their baby. It’s almost like their businesses like their child, right. And so after the sale, I mean they can feel empty inside almost depressed, because that part of their life is gone now. That big hat they were the owner of so and so this business, all their friends know about that. And so all of that is just really critical. along with the fact when you get calls from guys to $50 million businesses, and they’re writing furiously and taking notes on that first call, and you’re chatting, kind of going back and forth, and they pause, and they say, Oh, my gosh, I’ve talked to a bunch of people, you guys are telling me stuff. And I had no idea that this is what a sales process look like, this is what we had to do. I kept being told that, you know, financial statements are fine, that this process was going to be easy that we were worth three times revenue, which is obviously never the case, for the most part. So yeah, I mean, it. There’s a reason why we do this. There’s a reason why you need people early. I’ll give you a great example, too. If you have a business and you convert it, let’s say you have an LLC, and before five years before, you’re going to sell, you convert it to a C Corp, then the original owners when they have that C Corp, and they sell the business downstream, it’s considered qualified Small Business stock, and you have a $10 million tax exemption, per owner by doing that. But most people, it’s like your will, you know, hey, we need some advisors to come in here and talk to us about this. And like your will, we’ll just punt it and do it later. Most people that we talk to you completely mess, that tax strategy, because they’re not thinking about it. And so the earlier you can start to visit with people that are in the know, and we’re not talking just about companies like ours, but tax strategists with m&a experienced the wealth managers that have business owner clients who have sold their companies and understand all this, the CPAs that have been involved in transactions and understand it, the better off you’re going to be to talk to people think through the issues and then say, okay, now I have time to get my business ready to exit and attractive in the marketplace. But now I can do the things to maximize that value.

george grombacher 22:07
I love it. Well, Steve, thank you so much for coming on. Where can people learn more about you? How can they engage with you?

Steve Conwell 22:13
Yeah, absolutely. I mean, our website is final ascent.com. So go to the blog, you can learn a lot about a variety of topics in this industry. I’m on LinkedIn at a time. So if you look up Steve Conwell, and final ascent, I’d love for you guys to connect with me. And start those conversations and that journey and I really appreciate the opportunity to come on to your podcast. It’s been a lot of fun.

george grombacher 22:39
I enjoyed it. You enjoyed it as much as I did. So Steve, your appreciation and share today share with a friend who also appreciate good ideas, and any folks that are business owners, obviously go to final ascent.com and check out the great resources read through the blog that Steve was talking about and then find Steve Conwell on LinkedIn as well and I will link all those in the notes of the show. Thanks again, Steve.

Steve Conwell 23:05
Thanks, George. Appreciate it.

george grombacher 23:06
Till next time, remember, do your part by doing your best

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