Do you have an exit plan for your business? Is it written down and talked about on at least an annual basis? Our guest today, Michelle Seiler Tucker is the co-author of the book, “Exit Rich,” in which she shares the ingredients and knowledge on how to build your business so you can choose when you want to exit your business.
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LINKS
- Get a copy of Michelle’s book, EXIT RICH = CLICK HERE
- Learn more about Michelle’s company at = https://seilertucker.com/
- If you are ready to franchise your business or take it to the next level = CLICK HERE.
ABOUT
Michelle Seiler Tucker is the Founder and CEO of Seiler Tucker Incorporated. She holds the M&AMI (Mergers & AcquisitionsMaster Intermediary) title, as well as Certified Mergers and Acquisitions Professional (CM&AP) and Certified Senior BusinessAnalyst (CSBA). Michelle also owns many other businesses in several different industries. As a 20-year veteran in the M&Aindustry, she is regarded as the leading authority on buying, selling, fixing, and growing businesses. She and her firm have sold over a thousand businesses in almost every vertical and have a remarkable track record of success.
SPONSOR
This episode is powered by Big Sky Franchise Team. If you are ready to talk about franchising your business you can schedule your free, no-obligation, franchise consultation online at: https://bigskyfranchiseteam.com/ or by calling Big Sky Franchise Team at: 855-824-4759.
TRANSCRIPTION
Tom DuFore, Big Sky Franchise Team (00:00):
You’ve worked hard to build your business and now it’s time to grow. Welcome to the Multiply Your Success Podcast. I’m your host, Tom DuFore CEO of Big Sky Franchise Team and a serial entrepreneur. And the purpose of our podcast is to give you a weekly dose of inspiration and education to help you multiply your success. And as we open this show today, the question is do you have an exit plan for your business or maybe an exit plan for you out of your business? Is it written down? Is it talked about at least on an annual basis on what your plan is?
Tom DuFore, Big Sky Franchise Team (00:38):
Well, our guest today, Michelle Seiler Tucker is a co-author of the book called Exit Rich in which she shares the ingredients and knowledge on how to build your business so that you can exit and exit well when you are ready. It’s a great interview, you’re going to want to listen all the way through. She has so many great nuggets. So let’s go ahead and jump right into my interview.
Michelle Seiler Tucker, Seiler Tucker Incorporated (01:03):
Michelle Seiler Tucker, my company is Seiler Tucker Incorporated. I’m originally from California, now I live in New Orleans. I’m a mergers and acquisitions master intermediary, senior mergers and acquisitions master professional, senior business analyst, and a bunch of other acronyms. I won’t bore you with all of that. But we’ve sold over 1,000 businesses, I personally have sold 500. My firm has sold over 1,000 in pretty much every single vertical you can imagine. We specialize in buying, selling, fixing, growing businesses. I do partner with business owners investing my money, my resources, my core competencies. I fix their business, I put them on a to build to sell program and get their business where it needs to be. We buy businesses and flip them, we merge businesses, we sell companies.
Michelle Seiler Tucker, Seiler Tucker Incorporated (01:49):
How did I get into M&A? That’s a great question. I’ve always been an entrepreneur owning businesses in many different verticals. I did get recruited by corporate America, this little company called Xerox recruited me. And I was in sales for six months. And then they promoted me to vice president, regional vice president over 100 salespeople. And I hated corporate America. I just really didn’t like management and leadership at corporate America because you can’t get anything done.
Michelle Seiler Tucker, Seiler Tucker Incorporated (02:19):
So I ended up leaving Xerox and starting a franchise development, franchise sales, and franchise consulting company. So I’ve sold hundreds and hundreds of franchises. I’ve had equity partnerships with different franchisors. The reason I transitioned to mergers and acquisitions is because I had so many buyers asking me for existing businesses. And about 20 years ago that’s when I decided to transition in. We still sell franchises. We still do franchise consulting sometimes. We still sometimes work with clients and do franchise development and we absolutely 1,000% sell franchise or businesses because there’s such a huge demand for them.
Tom DuFore, Big Sky Franchise Team (03:00):
Yeah, great. And I think that’s a phenomenal background. It’s not very often we’re going to talk to a mergers and acquisitions expert that also has the background you have in franchising. So it’s extremely relevant for-
Michelle Seiler Tucker, Seiler Tucker Incorporated (03:15):
It’s probably never.
Tom DuFore, Big Sky Franchise Team (03:16):
Yeah. That’s exactly right. Yeah. Well, and you have a book called Exit Rich. And I love the title, it says it all, how to Exit Rich. And every business owner that reads that or sees that knows exactly what you mean. And so oftentimes business owners that I’ve worked with over the years of helping companies franchise and helping business owners through that, they start a business kind of maybe on a whim or they had to, they were forced into it, whatever, and now it’s successful and it’s working and they say, “I want to franchise it.” But what then? And so I’d love for you to share going through this process of building a sustainable, scalable, and sellable business that you talk about.
Michelle Seiler Tucker, Seiler Tucker Incorporated (04:04):
Yeah. So Exit Rich is actually my third book so I am a best selling author. Exit Rich, by the way, I keep forgetting to say this, is a Wall Street Journal bestseller and a USA Today bestseller, and number one in several categories on Amazon. I keep forgetting to say that. But the reason I wrote Exit Rich is because I wrote Sell Your Business for More Than It’s Worth in 2013 and I really have learned that the business landscape has changed so dramatically. It used to be that startups would fail. 90% of startups will go out of business. Well, now the landscape has changed dramatically, it’s actually flip-flopped. Startups are not at risk anymore. Only 30% of the startups are going out of business.
Michelle Seiler Tucker, Seiler Tucker Incorporated (04:49):
When I did the research for Exit Rich, I was flabbergasted to learn that it’s existing businesses are at great risk. Out a 27.6 million companies, those businesses have been in business for 10 years or longer, 70% of them will go out of business. 70 70%. It used to be 90% of startups going out of business. Now it’s 70% of existing businesses. So the reason I wrote Exit Rich is to really educate business owners about why that is. You hear about the big public companies all the time, like Toys“R”Us goes out business, in business 75 years. Toys“R”Us, Kmart, Stein Mart, Pier 1 and these business owners, but the media doesn’t talk about the private businesses.
Michelle Seiler Tucker, Seiler Tucker Incorporated (05:29):
These business owners are exiting poor, selling for pennies on the dollar, closing their business or even worse, filing bankruptcy. So Steve Forbes who endorses Exit Rich also says that 80% of businesses won’t sell. 80%, Tom. I mean, that should be a huge wake-up call for business owners because that means you have less than a 20% chance of success. And the number one reason for that is because business owners don’t think about selling their company. They think of their business as, “This is my baby. I love my baby. I’ll never sell my baby.” And you and I just discussed before we got on the show that you have three kids in school, right?
Tom DuFore, Big Sky Franchise Team (06:06):
Yes.
Michelle Seiler Tucker, Seiler Tucker Incorporated (06:07):
In elementary school. Well, and I have a daughter. Our babies are at home, go home, hug them, love them, kiss them. Your business is your most valuable asset. So you need to treat your business as such but most business owners don’t think about selling their business until an internal or external catastrophic event occurs. That could be health issues, partners disputes, divorce, death, and externals of this pandemic. So the first thing that business owners should really do is follow what I call the GPS Exit Model and plan the end from the beginning like Steven Covey says start with the end in mind.
Tom DuFore, Big Sky Franchise Team (06:41):
I see. And thank you for sharing that. And so for a business owner, let’s say, I’m operating my business now I’m five, seven years in operation, things have been going well, it’s providing a nice income. So I’m not at the beginning now. I’m thinking maybe growth. I’m thinking all these different things that I could be doing. How would you advise me if I’m in that situation? What would you say there for me planning and going through that?
Michelle Seiler Tucker, Seiler Tucker Incorporated (07:05):
Well, I would still tell you to create your Exit Model because you still haven’t planned your access strategy and that’s a problem. It doesn’t matter if you’re 10 years, 15 years, 20 years into it, you still haven’t planned your exit. So let’s go through that model real quick. Number one, when you want to drive somewhere in Atlanta, what do you do, Tom? You pull out your phone, you go to Google Maps and what’s the first thing you plug in?
Tom DuFore, Big Sky Franchise Team (07:24):
Yep. The address, the end destination, where I’m going.
Michelle Seiler Tucker, Seiler Tucker Incorporated (07:26):
The end destination. Bingo. And that’s the problem with business owners. Business owners don’t plan to fail, they found a plan. Business owners don’t have a destination. So they’re driving around in circles driving up and down the financial hills. You need a destination. You need your desired sales price, your endgame. So most business owners they’ll wake up one day and they go, “Gosh, I got to sell because I’m getting a divorce. I want 15 million.” Well, how’d you come up with that? “Well, my wife needs seven and a half. I need seven and a half to retire on.”
Michelle Seiler Tucker, Seiler Tucker Incorporated (07:56):
That’s not how businesses are evaluated. The buyer doesn’t care about what you need. The buyer cares about what your business is worth. So you need a desired sales price now. And let’s say you want to sell your business for 20 million. Great, there’s a number. But guess what you have to do? You got to build a 20 million company. So the first thing you want to do is determine what is your desired sales price? I own a company with partners. All our desired sales price is 30 million in five years. So you need a de to determine what is your endgame? What is your destination? Let’s say you want to sell for 20 million. The next thing you need to know on the GPS Exit Model is what?
Tom DuFore, Big Sky Franchise Team (08:36):
Go ahead.
Michelle Seiler Tucker, Seiler Tucker Incorporated (08:36):
Where you’re starting from.
Tom DuFore, Big Sky Franchise Team (08:38):
Yeah. You’re right.
Michelle Seiler Tucker, Seiler Tucker Incorporated (08:39):
Where you’re starting from. What is your current location? In other words, what is your current business evaluation? What is your business worth today? And I’m here to tell you, Tom, that most business owners never ever get their business evaluated until they wake up one day and say, “Oh, it’s time to sell.” And then that’s when shock sets in because they think their business is worth 30 million and their business is worth maybe five million. So you need to get a business evaluation checkup, annual evaluation checkup every year because there are events to increase valuation. There are events to decrease valuation. You need to know what your business is worth every year. Don’t go to the CPA to get at that back. Align yourself with an M&A expert who knows how to evaluate your synergies.
Tom DuFore, Big Sky Franchise Team (09:19):
Well, and just a quick plug is that a service you offer?
Michelle Seiler Tucker, Seiler Tucker Incorporated (09:23):
Yes, we do offer that. Yes we do. We’re not the only ones, but yes, we offer that. We offer annual valuation checkups. So let’s say you want to sell for 20 million. You’re currently worth five million. The next step is timeframe. Let’s say you want to do this in 10 years. Then the very next thing you need to determine is who are your buyers going to be. And I notice I say buyers not buyer because so many clients come to me and say, “Michelle, I already had the buyer. You need to just represent me.” I’m like, “No.” I go, “I won’t represent you without also putting it on the market.” Because I’m going to have to come into your business. I guarantee you’re not operating on all 6 P’s. I’m going to have to fix your business.
Michelle Seiler Tucker, Seiler Tucker Incorporated (10:00):
I guarantee your financials are a disaster. I’m going to have to clean your financials. Then I’m going to have to get everything into a data room. And the likelihood that that one buyer’s going to close on a sale of your business is slim to none. Plus you can never maximize value if you can’t create competition with a party of one. So there’s five types of buyers, Tom. It’s important for your listeners to know this.
Michelle Seiler Tucker, Seiler Tucker Incorporated (10:21):
90% of buyers are first-time buyers. They buy small businesses under $2 million. Coffee shops, restaurants, ice cream stores, things of that nature. Turnaround specialists are number two. They buy distressed assets. Private equity groups are number three. They buy based on platforms and add-ons. Let’s say that a private equity group wants to get into franchising, they want [inaudible 00:10:42] and franchisor.
Tom DuFore, Big Sky Franchise Team (10:44):
Which is happening a lot by the way right now. I see it happening a lot.
Michelle Seiler Tucker, Seiler Tucker Incorporated (10:48):
A lot. And let me tell you something. Franchise orders are one of the best type of businesses to sell for a multitude of reasons. And I can give you a all those reasons later if you’d like. But first and foremost, private equity groups if they want to get into franchising, they won’t even consider your franchise, Tom, unless you have at least three million in EBITDA. EBITDA is earnings before interest, taxes, depreciation and amortization. And if they’re already in franchising, then they’ll look at add-ons for under a million dollars in EBIDTA.
Michelle Seiler Tucker, Seiler Tucker Incorporated (11:17):
And then your fourth type of buyer are strategics and competitors. And strategics and competitors typically pay the highest multiple because they’re paying for those synergies that are going to catapult their current business to the next level, such as patents, trademarks, contracts, management teams, celebrity endorsements. Okay? So they pay the highest multiple. Then you got your fifth type of buyer, which I call them storm chasers, Tom because they chase EBITDA, they’re industry agnostic and these are serial entrepreneurs.
Michelle Seiler Tucker, Seiler Tucker Incorporated (11:45):
So those are your five types of buyers. Now that you have your plan, reverse engineered the numbers and say, “Okay, if I want to sell 20 million and I’m worth five, where’s my gross revenues need to be my COGS, my operating expenses? Most importantly, where’s my EBITDA? [inaudible 00:11:58].
Tom DuFore, Big Sky Franchise Team (11:58):
You make a great point. I like this annual business valuation about doing this annual. No different than just like a checkup. An annual physical for your health and annual checkup for your business health and what’s going on. Because I’ve seen it happen the exact scenario you described so many times where a life event happens. Now the business owner is forced in a situation where they need to sell or they’re just ready to sell. And they’re shocked at what the valuation is because it’s generally much less than what they think it’s actually worth is what I tended to see-
Michelle Seiler Tucker, Seiler Tucker Incorporated (12:36):
It’s usually always worth less than what they think because the difference here, the valuation gap, Tom, is because sellers base their business on what they need. What they need to exit their business, what they need to retire on. What they need to put five girls through college and weddings. What they need to buy another business. It’s never based upon what the value is of their business. It’s also based upon what they think their sweat equity is worth.
Michelle Seiler Tucker, Seiler Tucker Incorporated (13:04):
Buyers value businesses on what the value brings to them. We base our valuation on six different methods. So if you want to sell business for 20 million, your EBITDA’s going to have to be around four million dependent upon your synergies. Three to four million dependent upon your synergies. All right? And then the last step in that motto is to say, okay … There’s two last steps, but they say, “Okay, what are the synergies? What are the characteristics that these buyers, these three types of buyers are looking for?” What are they willing to pay more money for and outbid everybody else on? Because that’s truly how you maximize value as having multiple buyers at the table.
Michelle Seiler Tucker, Seiler Tucker Incorporated (13:47):
And then the very last step is what is your why? Why do you want to sell a $20 million company? If it was easy, everybody would be doing it. So that’s kind of the GPS Exit Model. So the next step is to really build that infrastructure, those characteristics, that buyers are willing outbid everybody else on and those are called the 6 P’s.
Tom DuFore, Big Sky Franchise Team (14:06):
Well, I don’t know if you have time to talk through the 6 P’s and some of these things, but I’d love for you to share what that is.
Michelle Seiler Tucker, Seiler Tucker Incorporated (14:14):
I have time if you have time.
Tom DuFore, Big Sky Franchise Team (14:15):
Let’s do it.
Michelle Seiler Tucker, Seiler Tucker Incorporated (14:17):
So the first thing and franchisors are really good about this. There’s so many great things about franchisor. I love franchisors. I love franchisors. I’ve helped so many franchisors become successful. And what I love about them is a lot of them already have the 6 P’s. Most of them will operate on four or five, very few operate on all six. But the first P is people and most franchisors have people. They have people. So you always say you don’t build a business, you build people and people build a business. And so that’s a big mistake that a lot of business owners make is they’ve created a glorified job and wants you go to work at every day versus a business that actually works for them.
Michelle Seiler Tucker, Seiler Tucker Incorporated (14:58):
Franchisors have done the opposite. They’ve leveraged the assets and they’ve leveraged people. So you want to make sure that as an entrepreneur, you’re focusing on your strengths, hiring your weaknesses, surrounding yourself with people smarter than you. That’s number one. You got to put the right people in the right seats. And you got to ask the who question. Who opens the door? Who handles customer service? Who handles legal, marketing, accounting, banking? Who handles franchisee qualifications? Who handles quality control, training, area of development? I mean, the questions go on and on and on. The clue here, Tom, is you never want to put you next to the who because we’re trying to build the business to run without you. So people is huge and franchisors have really figured that out.
Michelle Seiler Tucker, Seiler Tucker Incorporated (15:41):
Now there’s some franchisors, they don’t really have a good training system or they don’t really have people in place to do quality control, but most of them do. So then the second piece, product. Product in your franchisor is the industry that you’re servicing. Are you a restaurant franchisor? Are you a staffing franchisor? Are you a mode of remediation, environmental franchisor? That’s really the service. So the product is your service, your industry, your product. You want to ask yourself, “Is it on the way up or on the way out?”
Michelle Seiler Tucker, Seiler Tucker Incorporated (16:18):
And a lot of businesses got in trouble during the pandemic. Not so much because of the industry they’re in, Tom, but because of the industry that their clients that they serve are in. Like we have a landscape company that services all hospitality. Well, their business practice closed up because hospitality closed up. So you want to ask yourself, “Is your product on the way up or on the way out?” If it’s on the way up and you’re in your prime, that’s when you sell. You sell when you’re in your prime. If it’s at the bottom and you’re like a Blockbuster and you’re about to go out of business, you don’t sell then. Sell when you’re in your prime. Then it’s processes and franchisors are pretty good about processes.
Michelle Seiler Tucker, Seiler Tucker Incorporated (16:56):
I mean, most of them have a cookie cutter formula. Most of them are a well-oiled machine. And that’s what franchisors are known for is their processes. But when I talk about processes, I always go back to what’s really important. What’s really important is when you design processes, don’t design them around your own agenda, the owner’s agenda. Design them around the customer experience. Ask yourself, “What do you want your clients to experience?” McDonald’s franchise did this back in the ’50s. Did you ever watch a movie The Founder based upon the McDonald’s story?
Tom DuFore, Big Sky Franchise Team (17:29):
Yes. Oh yes. Great, great book and a great movie.
Michelle Seiler Tucker, Seiler Tucker Incorporated (17:33):
Great movie. So back in the 1950, the McDonald brothers said, “We want to build a fast food restaurant because there wasn’t any. And we want to build a fast food system processes designed around the customer experience.” Do you remember that?
Tom DuFore, Big Sky Franchise Team (17:43):
Yes.
Michelle Seiler Tucker, Seiler Tucker Incorporated (17:44):
And they said, “We want our customers to experience these three things. We want them to experience great tasting food that’s hot and fast, 30 seconds or less.” And guess what? We’re in 2020. What year am I in? 2022. And even though the processes have been tweaked along the way, it’s the reason. It’s the number one reason you can eat at a McDonald’s anywhere in the world and get great-tasting food, especially the French fries that’s hot and fast still. They never said they’re going to have great customer service. They never said it’s going to be good for you.
Michelle Seiler Tucker, Seiler Tucker Incorporated (18:21):
So you really got to sit back and ask yourself, “What do you want your customers to experience?” Because if you don’t create raw experiences for your clients, then your competitors will be happy to do it for you. And obviously those processes have to be well-documented. You need policy and procedure manuals. You need those SOP checklists per department. I mean it’s the same reason that McDonald’s can fire somebody from the drive-thru and have somebody up and running in 30 minutes brand new because of the processes, because of the SOPs.
Michelle Seiler Tucker, Seiler Tucker Incorporated (18:48):
Proprietary is the next piece. Any question before I go on?
Tom DuFore, Big Sky Franchise Team (18:51):
No, that’s great.
Michelle Seiler Tucker, Seiler Tucker Incorporated (18:53):
Proprietary is the highest value driver. So proprietary, let me give you a quick crash course in evaluations. And this is not necessarily just for franchisors because franchisors depending upon your industry could get a higher multiple. So typically on average, businesses that have less to million dollars in EBITDA, not SaaS companies. SaaS companies are the only industry that really trade for multiple of revenues. Everybody else trades for multiple EBITDA, adjusted EBITDA. So less than a million in EBITDA. You can be anywhere from one and a half, one, one and a half up to three, three and a half depending upon your synergies.
Michelle Seiler Tucker, Seiler Tucker Incorporated (19:31):
Over a million in EBIDTA is when you start at five and up. So the goal is to get your businesses over a million on EBITDA and that’s also where all the buyers are. That’s where we can create the bidding wars and bring you multiple buyers from one business. That’s how we maximize value. So what determines if you get from a five to eight to 10 to 12, are these synergies or these proprietary assets. So there’s six pillars. I’ll go through all of them. Number one is branding. The more well-branded you are, the more I can sell you a company for as long as the brand is relevant in the mind of the consumers. Is anybody paying any money for Blockbuster?
Tom DuFore, Big Sky Franchise Team (20:11):
No.
Michelle Seiler Tucker, Seiler Tucker Incorporated (20:11):
What’s the most valuable brand in the world?
Tom DuFore, Big Sky Franchise Team (20:17):
Coca-Cola or a brand like that, McDonald’s, something like that. I don’t know.
Michelle Seiler Tucker, Seiler Tucker Incorporated (20:21):
Coca-Cola and McDonald’s are in the top 10. Apple, 359 billion just for the brand. $359 billion. That doesn’t include real estate, assets, cash flow, anything else. Just the brand so build your brand. Franchisors do a great job at building the brand because they’re using other people’s money to open up franchisees and getting that company name out, getting that company brand out. Trademarks are huge. Trademark your company name, your logo, your slogan, your products even, but make sure you get a federal trademark. Now most franchise awards know to get that federal trademark. And if you’re going to sell internationally, get that global trademark. Okay?
Michelle Seiler Tucker, Seiler Tucker Incorporated (21:03):
Also, patents are big. Some franchisors have patents. Patents are huge. If you’ve ever watched short tank, what do they always ask? Do you have a patent or not? Do you have a patent pending? So patents are big too. Make sure you hold your IP in a separate corporation. Contracts, manufacturing, distribution, vendor contracts. Franchisor contracts that has franchisees and client contracts are the most valuable. Here’s the mistake that business owners make. And I’m going to give you a great franchise story to illustrate this point.
Michelle Seiler Tucker, Seiler Tucker Incorporated (21:36):
Most business owners don’t have, now a lot of franchise owners have this, but some don’t. The transferability clause to say this contract is transferable upon a new entity. There was the brokerage firm about 20 years ago that sold to a private equity group. They had 1500 franchisees. The private equity group had a due diligence team. The due diligence team never really reviewed the contracts. After the closing, they started receiving letters from the franchisees saying, “Oh, I heard you’re the new franchisor. I won’t be transferring over.”
Michelle Seiler Tucker, Seiler Tucker Incorporated (22:13):
Then the private equity group decides to look at a contract after the fact that says these contracts are not transferable. The due diligence team missed it. They threw this huge big party to invite all their franchisees in the family and hopes to get everybody to sign up. The franchisees didn’t like the franchisor because they thought they were arrogant and lacked experience. So only one out of 1500 actually transferred over. Within 90 days, they filed bankruptcy. They sued their entire legal team that was responsible for the due diligence and won. So it’s really important to get, to make sure that you have that transferability clause in your franchise agreements, in any of your agreements.
Tom DuFore, Big Sky Franchise Team (22:59):
Yeah. Yeah, no, that’s great advice. And I know that the clients we work with, that’s a standard language for most franchisees today, but that’s a great example of-
Michelle Seiler Tucker, Seiler Tucker Incorporated (23:11):
But there are some franchises that miss it. I have a couple now that I’m working with that miss it. So you got to have that transferability clause. Okay? Databases are huge. Databases can really get you a higher price. You could be losing money and still sell your company for millions or billions. I mean, Facebook paid 19 billion for WhatsApp and WhatsApp was hemorrhaging, hemorrhaging money. So really build those proprietary assets.
Michelle Seiler Tucker, Seiler Tucker Incorporated (23:39):
And then celebrity endorsements. Some franchisors have celebrity endorsements. Synergistic buyers, competitors will pay a lot more money for that because they want to get their products in front of some of these like we have a client that has products in front of Oprah. Everybody wants to be in front of the queen of everything so you want to make sure celebrity endorsements, radio personalities, all of this is what we call proprietary assets that really bump up the multiple. Make sense?
Tom DuFore, Big Sky Franchise Team (24:07):
Mm-hmm (affirmative).
Michelle Seiler Tucker, Seiler Tucker Incorporated (24:08):
Okay. And then patrons is the fifth P. Patrons is your customer base. Most businesses follow the 80/20 rule where 80% of the revenue comes from 20% of their clients. If you’re a franchisor and 80% of your revenue comes from 20% of your franchisees, two or three, four franchisees and you lose one of them, because anything can happen. Then you could be in big trouble. I mean, we sold a media business, a media business that have five clients. And the only reason they have five clients who are selling for 15 million is because they cater to the casino industry so they have five of the largest casinos. But during the process, they lost two of the five. Their revenues dropped in half. Their EBITDA dropped in half.
Michelle Seiler Tucker, Seiler Tucker Incorporated (24:49):
The last P is profits, Tom. We’re all in business to make money. And so the reason I put profits last is because lack of profits is never the issue. Lack of profits is a symptom of not having the right people in place, not having the right processes. It’s a symptom of the not running on the 5 P’s. If you are running on all five cylinders, you’re going to be profitable. So those are your 6 P’s. That’s the infrastructure.
Michelle Seiler Tucker, Seiler Tucker Incorporated (25:15):
The only thing I would share is that there are more buyers for great businesses over a million dollars in EBITDA than there are great businesses to buy. So if any franchisors are considering selling, this the time to sell your company because there’s so much money available. You got to remember. Private equity groups have been sitting on their wallets, sitting on their cash all of 2020. And 2021 has just exploded from an M&A standpoint where there’s so many deals in a pipeline right now because there’s so many private equity groups, but money burning holes in their pocket.
Michelle Seiler Tucker, Seiler Tucker Incorporated (25:52):
So if you are considering selling, this is the time and what’s nice about the franchise business, is it pretty much checks off all the boxes. Most of them run on all six cylinders. It checks all those boxes and we have more buyers for franchisor businesses than any other type of business.
Tom DuFore, Big Sky Franchise Team (26:11):
That’s really interesting. Well, that’s a trend that I’ve seen. I’ve been in the franchising business now for almost 18 years. And what I’ve seen over that time period was the investment groups or venture capitalists that were getting into franchising. Initially, when I first started, they wanted 50 or 100 units in the system. And then that number has slowly started drifting down to they’d look at you if you had maybe 25 franchises.
Tom DuFore, Big Sky Franchise Team (26:39):
And now I’m seeing groups that say, “Hey, if you’ve got three to five or 10 franchises” because they’re trying to buy them up early and get involved. Now obviously not every single one like what you’re you’re discussing, but I’ve just never seen that as long as I’ve been in the business. Just a really interesting shift in investors and investment groups recognizing the power of franchising.
Michelle Seiler Tucker, Seiler Tucker Incorporated (27:02):
Well, franchising, like I said, it checks all the boxes and there’s just so many hungry buyers out there right now. It truly is a seller’s market and sellers can really cash in and get premium price right now.
Tom DuFore, Big Sky Franchise Team (27:14):
Interesting. Well, while we have you, Michelle, we want to ask the same questions we ask every guest before they go. And the first question we like to ask is, have you had a miss or two in your career and if you could share something you learned from it?
Michelle Seiler Tucker, Seiler Tucker Incorporated (27:29):
Every day. I would say, gosh, that’s tough because like I said, every day. One of the biggest misses that I had I think is early on. I’ve sold a lot of businesses and franchises, but nobody knew who I was because it’s private. Business sales and franchise sales if they’re private companies, it’s a private matter and we can’t discuss it unless we literally have written permission from everybody to do so. And most buyers and sellers don’t want to give that permission.
Michelle Seiler Tucker, Seiler Tucker Incorporated (28:04):
And so that was a huge miss for me because I just felt like I did so much great work for my clients, but nobody knew about it. Nobody knew who I was and what I do. I mean, we have a 98% closing ratio. We get our clients 20 to 40% more than what the business appraises for on average. So that was a huge miss. And I really wanted more exposure to be able to educate business owners not to go to real estate agents to sell their business, and not to try to sell your business on your own. So what I did about it is I wrote a book, my very first book called Sell Your Business for More Than It’s Worth in 2013. And that was a huge, huge, huge turning point for us.
Tom DuFore, Big Sky Franchise Team (28:42):
Well, and then what about a make or two that you could share?
Michelle Seiler Tucker, Seiler Tucker Incorporated (28:47):
Well, that’s a make, isn’t it?
Tom DuFore, Big Sky Franchise Team (28:49):
Absolutely. Yeah. Yeah, very, very often the miss turns into the make so I love it.
Michelle Seiler Tucker, Seiler Tucker Incorporated (28:54):
I mean, that was a big make right there. And then for the very first time in 2011 and 2012, I was everybody else’s mentor. For the very first time I got a mentor. That helped me grow my business exponentially.
Tom DuFore, Big Sky Franchise Team (29:09):
Okay, great. And for a multiplier, we get a really broad cross section for this question in terms of what you’ve used for a multiplier and helping you and your business or your career. Is there anything that stands out to you that you’d want to share?
Michelle Seiler Tucker, Seiler Tucker Incorporated (29:23):
Well, again, writing a book was a huge multiplier because that got us in Inc. That got us in Forbes. That got us some huge exposure. And so that was a huge, huge multiplier. That also got us on a lot of stages. And getting on stages was a big multiplier for us because I spoke with some of the biggest people that you can imagine on stage, like Eric Trump. Love him or hate him. It doesn’t matter. I spoke with Eric Trump. Arnold Schwarzenegger, some of the really big entrepreneurs and Arnold Schwarzenegger knows I’m an entrepreneur, but you know like Donna Karan. And that was a huge make because I really got to network. I got a lot more business from that. And so I would just say writing books, networking, speaking, really all of that grew my business exponentially.
Tom DuFore, Big Sky Franchise Team (30:08):
Yeah. Thank you for sharing that. [crosstalk 00:30:10]. Yeah, yeah. And the final question we like to ask is what does success mean to you?
Michelle Seiler Tucker, Seiler Tucker Incorporated (30:16):
Well, success, to me means several things. Success is not just about the money you make, but what you do with the money that you make and how many people you’re able to help with the money that you make. So success to me means giving back. It also means really, really being able to impact what I’m so passionate about. And my passion, my mission is entrepreneurship, is business.
Michelle Seiler Tucker, Seiler Tucker Incorporated (30:43):
I’m like a kid in a candy store. I can’t wait to find out how you grew your business from your kitchen table to a multimillion dollar company. We’re selling a $70 million company right now and the owner has an eighth grade education and started selling out of his pickup truck. And now his gross revenues are 70 million in his EBITDA is 17 million. So I’m passionate about helping business owners sell their legacy so that they can finally enjoy the fruit of their labor. I’m passionate about saving businesses from going out of business. That’s what success is to me is truly giving back and being able to help others. And then really connecting with my beautiful family and raising my daughter who’s 10-years-old. That’s kind of what success means to me.
Tom DuFore, Big Sky Franchise Team (31:32):
How wonderful. Well, thank you for sharing that. I appreciate it. And thank you so much for being a guest. I really appreciate your time and thank you for being here.
Michelle Seiler Tucker, Seiler Tucker Incorporated (31:40):
Thank you for having me. Can we tell everyone where to get Exit Rich?
Tom DuFore, Big Sky Franchise Team (31:43):
Please. Yes.
Michelle Seiler Tucker, Seiler Tucker Incorporated (31:44):
So everyone can reach me at seilertucker.com if you want more information on Seiler Tucker and our services that we provide, especially through franchisors. And Exit Rich. Exit Rich was endorsed by Steve Forbes. Steve Forbes says, “Exit Rich is a goldmine for entrepreneurs as they leave way too much money on the sale of their business.” Sharon Lechter. Have you heard of Sharon Lechter?
Tom DuFore, Big Sky Franchise Team (32:04):
Mm-hmm (affirmative).
Michelle Seiler Tucker, Seiler Tucker Incorporated (32:06):
She’s my co-author. She wrote Rich Dad Poor Dad with Robert Kiyosaki. She’s a CPA, financial literacy expert and the advisor to different presidents. And she writes a mentor’s corner after each one of my chapters. Plus Kevin Harrington, original founder of Shark Tank. Not the original founder, original Shark on Shark Tank wrote the foreword as well. So it is the USA Today bestseller, Wall Street Journal bestseller and available in any of your favorite bookstores in Amazon. But you can also go to exitrichbook.com for $24.79 plus shipping. We will email you the digital download. We’ll send you the hard cover to your doorstep. We’ll give you a lifetime membership into the Exit Rich Book Club.
Michelle Seiler Tucker, Seiler Tucker Incorporated (32:49):
There we have content, video content and me doing deep dives in these different trainings and strategies and techniques that I used, have used over the last 20 years plus documents, Tom. Documents to operate your business, sample employee handbook, sample org charts. Most importantly, documents to sell your business. Sample letter of intent, purchase agreements, due diligence checklists, closing documents. All these documents to operate and sell your business, which will cost you about $50,000 to recreate, especially closing the documents are all there for you to review and download for no additional fees. And then we’ll also, we’ll give you a 30-day free membership and Club CEOs, which is an entrepreneurship mastermind where we help business owners build that sustainable, scalable and sellable business at exitrichbook.com.
Tom DuFore, Big Sky Franchise Team (33:35):
Wow, what a deal. Exitrichbook.com and we’ll make sure we list it direct. All the links in the show notes and broadcast that out so people know they can get in touch with you directly, purchase the book and get access to all those phenomenal resources. Michelle, thanks again so much for being a guest on the episode. And let’s go ahead and jump into our three key takeaways.
Tom DuFore, Big Sky Franchise Team (33:59):
Take away number one on is when Michelle shared that there are five types of buyers that will be looking to purchase your business when you’re ready to exit. And those five are first-time buyers, turnaround specialists, private equity groups, strategic or competitors and storm chasers. So I thought that was a great summary how to describe those five.
Tom DuFore, Big Sky Franchise Team (34:21):
Take away number two. She shared how franchisors are in high demand. So if you’re currently franchising your business or you’re a franchisor or you’re thinking about franchising your business, she reiterates and emphasizes how franchisors are a great acquisition target. And one of the reasons why is that they checked the boxes in all of the 6 P’s that she talked about. And those 6 P’s are people, product, process, proprietary, patrons and profits. So I thought that was a great summary.
Tom DuFore, Big Sky Franchise Team (34:58):
And then number three is she said sell on on the way up. Pretty straightforward, pretty simple, but sell on the way up. She said, you’re going to get the most out of the opportunity for your exit at that time. And now it’s time for today’s win-win.
Tom DuFore, Big Sky Franchise Team (35:19):
So today’s win-win comes when from when Michelle shared how businesses and business is like a GPS. It’s like a GPS device that helps you get from where you are to the destination you’re looking to go. And I like how she said that a GPS is only going to work if you put in a destination. And you also have to know where are you starting from? And she shares how most business owners never plug in a destination. And some may not ever really know where they’re looking to go. And finally, you’re going to need to know what your timeframe is, how long do you want to take to get there or when do you want to get there? And then lastly, in case of selling your business, you need to know who are your buyers going to be?
Tom DuFore, Big Sky Franchise Team (36:10):
And so I just thought that was a great takeaway because when you know the destination of where are taking your business, that is a win for you, for your staff, for your business, for those that are connected to and involved with your business, your stakeholders. It’s really a win for all parties involved.
Tom DuFore, Big Sky Franchise Team (36:32):
And so that’s the episode today, folks. Please make sure you like and subscribe to the podcast and give us a review. And remember, if you or anyone might be ready to franchise your business or take your franchise company to the next level, please connect with us at bigskyfranchiseteam.com. Thanks for tuning in and we look forward to having you back next week.
