BIZ/DEV
David Baxter has over fifteen years of experience in designing, building, and advising startups and businesses, drawing crucial insights from interactions with leaders across the greater Raleigh area. His deep passion, knowledge, and uncompromising honesty have been instrumental in launching numerous companies. In the podcast BIZ/DEV, David, along with Gary Voigt, an award-winning Creative Director, explore current tech trends and their influence on startups, entrepreneurship, software development, and culture, integrating perspectives gained from local business leaders to enrich their discussions.
BIZ/DEV
The Reinvestment and Rebirth Cycle w/ AJ Ramsey | Ep. 92
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David Baxter has been designing, building, and advising startups and businesses for over ten years. His passion, knowledge, and brutal honesty have helped dozens of companies get their start.
In Biz/Dev, David and award-winning Creative Director Gary Voigt talk about current events and how they affect the world of startups, entrepreneurship, software development, and culture.
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Hi, everyone. Welcome to the biz dev Podcast, the podcast about developing your business. I'm David Baxter, your host, and I am joined as always by Gary Voigt, who just happened to win an award. Gary did know this. By the way, Gary has won an award for the largest Tupperware party ever in the history of Tupperware. How did that feel to win that award? And where did you put it all?
Gary:Well, I mean, I've been striving for this kind of award for a year. So I actually had to rebuild your collection. I had to rent out the Senior Center down the street from my house. Yeah. And I mailed all the invites through regular mail. Some of them didn't get there. Some of them did, though. But yeah, fair. He was great at the end, handout, bumper stickers and stuff. So I don't know if my award counts, because I made it for myself. But I just like, did
David:you just graphic and printed it out? Like Dot Matrix style?
Gary:No, I went to an actual trophy shop and had a little Tupperware, nice slit on a little wooden plaque. That's pretty cool. AJ,
David:thank you so much for putting up with me. And and this shenanigans of our site. Are you doing all right today?
AJ:I am doing great. It's my pleasure to be here this morning. Awesome.
David:Awesome. Awesome. So I wanted to chat with you. So give me a 30,000 foot view of what Transworld does. Okay,
AJ:we quite simply we're Business Brokers, we help people buy and sell businesses. Our particular niche is we're more of a kind of a boutique, probably m&a firm. But we do what we call Main Street deals, which would be for companies that have $2 million, revenue and less, and then we move up into the low mid market. So midmarket typically goes from like 2 million up to like 250 million, we deal on the lower end of that probably between 2 million to about 50 million in revenue.
David:So that, that's really interesting. So I was talking to a friend of mine, who has sold several businesses over his life. And he gave me advice. And I want to say this advice, and I want to get your since this is your world, I want to get your thoughts on it. He told me don't sell your business unless it's at least $5 million. And the reason why he says if you sell it at a million, you sell your company at a million dollars, you get that. And let's say you use the 4% rule of living off of that money, right? You don't touch the principal, you just put it away and you live off 4% That would be $40,000 a year. So you went from if you had a million dollar company, he probably made a lot more than$40,000 a year as a salary. And now you have zero salary. And we're assuming after you work for the new company, or whatever that you had to do as part of that contract, but you suddenly you're starting to new, you have income of zero, and you're living off of $40,000, because no one, these banks aren't going to give you a loan because you have no w two, you have no income coming in. And so you are really kind of hurting yourself. If you're a younger guy, if you're a retirement age, you can dip into the principal, but and he was like, So if 2 million selling you're at 80,000, he said that 5 million, you're making two or $2,000 a year, which is a very comfortable lifestyle forever. And if you go north of that, of course, it gets crazy. What are your thoughts on that?
AJ:Which part of it does a whole lot of stuff? That's
David:just that philosophy that hey, if it's not worth 5 million don't sell?
AJ:Yeah, well, it depends, right? I mean, the majority of businesses in the United States probably do not do 5 million in revenue. That's just one thing. So and pricing is another thing, that's one of the things that we do is we help work with business owners to get a true valuation of their business based on what the market says they'll pay for it. So the business can't, can't sell for more than what it's worth based on how it's how it operates and how it runs and the kind of cash it throws off. So the the price is based on the operations not really based on what the owner wants, although sometimes they like to think that but but but that's part of our process of going through and educating them on what is a realistic price if you really want to sell it. So all that being said, I like the math that you did, that would be great. A lot of times I work with business owners that it can achieve that sometimes they don't. But here again to your point is it has it depends upon the seller and what age group they're in. I work a lot with retiring business owners, right they've they've had very good businesses, they've been very successful. And their exit strategies are sometimes different. I've had I've had sellers that have put seven figures on the table aside just because they like a buyer but another one and thinks they'll take care of their their company better. You know, so I've had some that have said I've made my money. I want to go to my employees and they've transferred ownership to the place so there's there's different goals, obviously. So it's all very dependent upon where they're at in life and what their what their aspirations are.
David:That's great. Yeah. that. I think that's all amazing. In my business group, there's a lot of guys who are in their upper 50s, early 60s, and they're talking about, you know, what is next? Because they they've done very, very well. And they're wealthy generally in their own right, cuz these are successful. Most of the people in my area are between five and well, I guess the highest is over 100 million, right. So there's different sizes of companies, but they're all successful. There's no brand new companies or anything like that. And they're talking about those exact conversations you're having is with your older business people, but I am curious, like one of the things that I've always been fascinated in, you're an expert, so I could I get to pepper you with all my questions. So I run a service business, big pixel is a service business. And so selling for me, as it's always been explained, is very, it's not really an option of, it's not what most people can get excited about, right? I, I run a distribution company. And it's making 50 million in revenue, because my revenue is really high, but my margins are really small. But I can sell that for two 3x of my profit, for instance, okay, that's really nice. She's making 2 million he sells it for six, he's living nice for the rest of his life, a service business has been explained to me and tell me if I'm wrong, you will be lucky to get half of your revenue as a selling price. So if you make 2 million in revenue, your company will be sold for somewhere around a million bucks, because you are your business and you're leaving. And so the value of it just tanked. Tell me tell me if that's right or wrong in your mind, I
AJ:again, valuation is probably is probably one of the more complex things that we have to deal with. So there are a lot of variables involved. Right. So you just mentioned a couple of them. Number one is, is it as a sole proprietor? Or is it something that the founder or owner who's selling is critical to the operation of the business, if you don't have a staff, a team and you know, other people to carry it on? Obviously, that's a big issue, if you want to exit the business, the type of business as you mentioned, we use multipliers and different things to do valuations and different industries have different multipliers, the easiest one to think about is something like a software because you write it once, and then it keeps selling, it has a really high multiplier, you know, those companies sell at a really high number. To your point, if it's professional services, it's a little bit probably not as much because the tangibles that somebody's going to be buying are not as much the cash flow stream or the assets underlying the business. So again, that all goes into the valuation process.
Gary:Since you are in the business of brokering, business, buying and selling businesses, have you come across any reason businesses that have actually been hit in a way of technology kind of taking over some of their business? And I'm leaving this with like, everybody's freaking out about AI taking jobs. And the way the economy, I guess, is kind of not in recession, but is claiming to be in a recession and tech companies laying off people, has there been recent businesses that have just like, Okay, we don't think we're going to go any further with this, we should just try to sell now.
AJ:There are some of those businesses, obviously, depending on where you're at, quite honestly, I don't come across that, because that's not necessarily the types of business I look for. Right. I mean, as I mentioned, again, if we're dealing with more, you know, so you have the main street stuff, which, you know, that can be the mom or pop, you know, pizza parlor that could be home cleaning services can be a lot of things that fall into that, that what we call main street businesses, the less than 2 million, those are smaller businesses, a lot of them are, you know, sole proprietors, or small teams or those sorts of things. They're very niche. So they may get displaced, but that's going to be very late in the curve of things like AI or some of that kind of stuff. A lot of them are this basic services that people need. And as you go up into where I deal on the low mid market, kind of same thing. I mean, I deal a lot just because of my background on it with industrial businesses, with construction businesses, with manufacturing businesses, with those types of things. Those are actually in hot, very high demand, because what we have a gap of right now, certainly in North Carolina, as well as nationally, are just skilled technicians, right. I mean, you don't think about this, but just having a electrical license, right, or a masonry person, or, you know, some of those folks, those are plumbers, they make very good livings because there aren't enough of them out there. And we aren't producing enough of them. So all my businesses that I work with a lot of those there, they fall on kind of the industrial side. They are somewhat immune because they're providing services that that are critical. You know, when you start talking about some of the things that you're talking about, they're a little closer, a little bit higher in larger corporation kind of things. Well, actually, I was thinking
Gary:of smaller like startups that decided they're going to start something hit the market as quickly as possible, and then they saw, they can't really bring it any further. So what's the most they can get for now, that was my thing.
AJ:And that's and again, that's a, that's a different type of exit process. There, you're looking at people that are looking more to exit towards venture capital, and private equity groups. And we do do that. But mostly we're selling, I have three primary people I sell to I have owner operators, somebody who wants to buy a business could be for whatever reason, they can be young in their career, they can be late in their career, they can be excellent corporate career, whatever, they want to be an owner operator. So they have very definitive desires about what they want for a business. I have strategic buyers, it can be someone who has a certain type of business, and they want to expand either geographically or whatever. So they have very certain desires, right. And then I do have private equity groups, you know, some of these, there are companies out there that they just buy companies, right, and they want to major companies. But ever, all of those buyers are looking at something that produces cash and has an existing cash flow stream. And then when you start talking about the early stage stuff, that's more venture capital, there, they are out there, those are funds and those people are out there, investing in businesses that are not quite profitable, yet are having don't have the maturity that show long term profitability. And so that's where they play as a business broker, you know, we we really can't sell business unless they have probably three years of positive financials, you know, they have to have kind of a stable business model. Because they because almost all these deals are done with debt, and they can't get debt lenders will not provide them money, unless there's some type of stable operation that they can purchase. Okay.
David:So our audience, generally speaking, are people who are early in the business journey, right, you're on one end of the spectrum, when they're usually trying to get out of the business. Most of our audience is getting into the business, right? But I am curious with your expertise. If your goal is let's say you're, you know, 30 plus years old, and you're, you're starting your business, any kind of business, it could be a plumber, it could be a software, it doesn't matter, you're starting your business, is there anything they can do early in their company lifecycle, to prepare themselves for the eventual day where they've come and look for you? Right? I might not right away, but just things that are smart to do early on, rather than not like I met a guy who had ease, he's building his business up, and he has every intention to sell it. So he's like, when I've sold businesses, businesses before, the due diligence was a nightmare, because we didn't think about it when I ran this other business about selling. And so we didn't keep the paperwork that we needed, right to do the due diligence. And so it was just ugly. And so he's building this business to sell it and X years. So he's been really diligent about his paperwork already. Day one. Is there any? Maybe that's silly? Maybe that's overkill? But are there anything that you would think of if you're on the early side of your business, that you shouldn't overlook for the later side of your business?
AJ:Well, number one, I think anybody who wants to be an entrepreneur has kind of a similar kind of set mindset, right? You have to, you have to be an entrepreneur, you have to be a little bit independent, you know, you have to have some risk tolerance, you have to have all this gets in some general business smarts, right. So that's, that's all part of it. But let me take it this direction, because we always kind of laugh about this. My partner and I, we both have MBAs from from Top Tier Business Schools. And one of the reasons why I went into business school is because I have this kind of entrepreneurial, and I was thinking about doing something on my own. But when I got to business school, and I think there's probably most business schools, what they talk about when he said entrepreneurship, well, that was like, what's the business plan? What's the great next great killer app? You know, what do we have to do? You know, and I, and I poked around, it did some stuff, but I never really had that killer idea. Now, fast forward here, a number of decades later, and I stumbled upon business brokerage. And I'm like, Well, let me think, let me think about this. I can try to come up with some idea. I can invest all this time in my trying to develop it, get it to market it may or may not work. And or I can buy a business with an existing cash flow stream. Right? I mean, no one ever explained that to me. It's like, yeah, you can spend years kind of trying to do a startup and there's there's there's upsides and downsides, that is certainly quite cheap, rather gate. But if you can buy an existing business that's already throwing off cash and has customers, you know, and maybe you can come in with your management background. If it's one of these older people that are selling you can upgrade operations, you can bring more technology into it. You can bring your skill sets that you have and leverage it to push it along. That's a whole lot quicker money because you're buying an existing cash flow stream out the door. Like I said, for most of these to get funding. They're gonna have to be throwing off cash As and what you pay as a multiple and how much cash they're throwing off. So you don't have to go through that startup phase, you don't have to go through the fact that you're having to build customers, and you're building a brand, and you're having to figure out how to sell that concept that's already been done for you. That's, you know, so, you know, I think it's, you know, like I said, I work a lot on the sell side with older people, just because that's where we're at in our demographics as a country, you know, 20% of the business owners right now are over 65, if another 35%, or 30% are between 55 and 65. Right? So there's just a bulk of business out there. But guess who the buyers are those buyers? Are these people that want to be entrepreneurs or that want to, you know, have a business? You know, and there's plenty of opportunity of them. I mean, over the next 1015 years, the number of businesses successful businesses, you know, a lot of that that misperception to that people say, Oh, someone selling a business, it must be a bad business. Now, the businesses I sell are all really good businesses, right? You know, and they've been around for decades, a lot of times, right. So for somebody to come in and acquire that, you know, it's a, it's a blessing that the whole business brokerage thing. It was, I was huddled in corporate for a long time, did a lot of stuff, and he never really realized what was going on. And all these small businesses, you know, there's just a lot going out there. I mean, the majority, I think, is like, Small Business Administration's there's something like 33 million small businesses in United States, you know, like 45% of our economic US economic activity comes through small businesses, there's a million of them in North Carolina, right, there's all this stuff going on. And they are, for the most part, a lot of times, they don't trade, they don't for whatever reasons, they die out, you know, again, that goes back to the startup, you know, the, there's a really a lot of attrition, in the first year, first five years of a business, if you buy a business is past that they they're upside by the abilities goes light up. But there's a lot of stuff out there going on. But there are websites, there's one called biz buy, sell, you know, you can go out there, it just lists businesses, you can just go out and look around and see what type of businesses are there, it's another probably thing that surprised me is the number of types of businesses that are out there, you know, people have found a way to make money doing a whole lot of different stuff I never thought about, it's a whole world. So you can kind of go out and you can look around, what types of businesses are out there? How much are they selling for? How much you know, how much cash are they kick off? And what are they asking for it, and you can kind of see the different pricing on, you know, as we said, well, I go software company costs up here, that may be, you know, when I'm done here is a lot different, you know, bigger companies, you know, there's a, there's a company size for everybody, however much money you have, you can find probably an existing business to buy with that, you know, and then there, you get into other things, too. As you know, a lot of times, the sellers will help out with financing their government programs to help out with financing. You know, just as in startups, you can bootstrap stuff, you can get family money. The good thing about buying existing business versus up your startup, like I said, is that people will lend you money, because there is a existing business that has shown that it is a viable business.
Gary:So then the stress is not for you to build up a business, it's to not ruin one that's already successful. It's a little less stressful. But if you if you match up to a business with your skill set, like you were saying, I think that yeah, that's probably a really good fit for people.
David:I would say I mean, so big pixel has just crossed 10 years. And I don't think it's any less stressful now than it was originally like it's just different. In maybe it's because I haven't crossed, we haven't crossed the threshold where people are coming to us, right? If you're a well known roofing company, people are calling you because the original owner has built up this great reputation or whatever, and people are calling them out of nowhere. That's gravity. That's what we call gravity. And maybe I've never crossed that threshold. Because to me, I still feel like I'm in survival mode, even though we're not. I mean, we're we have contracts that will fill up the rest of the year. And but I in my, my heart, we are always this close to bankruptcy.
AJ:And you are a small business owner, you probably I mean, that's, that's the mindset, you'd have to be in, right? You wear many hats, you'd have to do it all. I mean, that's part of being a small business owner, you know, that's part of be the entrepreneur part gets you out the door, you know, to want to take that risk and do that being a small business owners, right, it's hard, right? There's a lot of work. You know, it's a different stress. If you're in a large corporation, and you gotta you know, you're in the kind of rat race and in politics and all that kind of stuff. Being a small business owner is a special breed of people as well. And that's who we deal with right on both sides. There's people that want to be business owners or those who are in and out and for whatever reason, it's time to transition out.
David:I love the fact that that exists. I had a question you based on what you said earlier. I am the Greenbrae I find out somehow out biz buy sell that you mentioned earlier. I'm assuming you don't i don't know you exist yet? Did you put, say the roofing company up on biz buy sell? And so when they reach out, they're talking to you? Is that how you
AJ:guys get involved? My job? My job is, number one, our key thing is confidentiality, right? No one, if you want to sell a business, right, you don't want your customers or your employees know what's going on, is usually not a good business thing. Right. So one of our key things is confidentiality. The other thing is is it is complicated process. It is unique and complicated. Every business you sell is different. I mean, this is I won't go down. I mean, it's complicated, right? So there's a lot of stuff that we do. And what we do is we do that, while the owner, the business owner keeps running his business. In a we shield him, my job is probably to shield him from 90% of what's going on. You know, I sit down, I work with him, I look at his business, I do evaluation, we talk about what we think the market is, and we have come up with a marketing, I come with a marketing plan, I go out, I take it to market, you know, I weed through all the people that are responding off of online, you get everybody from really serious buyers to, you know, flyers that are just, you know, don't even know what you're talking about, right? I handle all that. And I sort through, and I get a couple that I think maybe fit what he told me he wants and from talking to him, I think they can do a deal. I introduce it and we see if it goes forward, eventually, you probably get a letter of intent, and then you start engaging in a due diligence process to get to close table. Now another thing a lot of people don't realize is that process I just talk probably takes depending on the size of the business from six to 12 months, you know, our average sales cycle is probably eight to 10 months, people don't realize that a lot of times I talked to people's like, Yeah, I'm thinking about selling, but I don't think I want to do it for a couple years. Well, guess what now's when you should start because you said, as you mentioned earlier, there's prep work that you need to do to make sure your business is ready to sell, right, you need to have the right financials, you need to have your processes documented and all sorts of things. You need to have a management team in place, all those things that are inherent what the value of the business is. So there's that upfront work. But even after that, by the time we get involved, you know, we can help coach through that, but but we get it and package it and take it off the market, all those sorts of things. And then oh, yeah, if it's a fairly sizable and complex company, like the one I've just mentioned, the roofing company, they want the owners to stay around, you know, so there's a smooth transition, right. So when all that said and done, guess what that is a couple years are if there's a lot of prep work, it could be three years to get, you know, get the you know, a couple of years to get the businesses going. So the the process inherently is long and evolve. My job is to kind of quarterback all that. So that so the owner can own his business, because also, not only am I involved, eventually, as we go through the process, there's going to be lawyers involved, there's going to be CPAs involved, there's going to be potentially potentially financial planners involved. And maybe there's all kinds of other people, the brokers job is to kind of be the quarterback, keep things confidential, and keep the owner running his business.
Gary:Yeah, my question was actually going to be related to marketing. And I think you already answered that. Stolen, answering David's question, but I see that you do have a background in marketing?
AJ:Yep. Well, a couple things. I mean, we we obviously there's a lot of ways to go to market. And we do these multiple there are a handful of websites, as I mentioned, where you can go out and find businesses, we have our own website, we do. We do. A lot of times we we go out, we look at people, like I said, there are investment groups out there that are looking for this type of business or that type of business, right? We have strategic buyers that say, Hey, you know, you may want to be in this part of the, you know, lead. So there, we do target marketing, we do broad based marketing. You know, you always get the the owner that says, Well, hey, I have somebody who approached me about wanting to buy my business, you know, what about him? And I'm like, that's fine, we'll include him. But the chances are nine and a half times out of 10 that really doesn't ever pay us not the person who ends up buying the business because by the time you actually have a conversation with them, you walk them through what the business is really worth all these things, a lot of times they fall out, but certainly if they have buyers, I bring them but again, finding the buyer is just a small part of the overall sales process. So we're involved in all that, you know, my fiduciary responsibility is to my seller, usually, occasionally we do represent buyers, you know, if someone wants to buy a specific business, and they are really fine tuned to what they want, we can help go out to the marketplace and find them. Find them a particular business as well. But most of what we do is on the sell side, we're working with the seller and the owners who are selling the businesses.
Gary:I'm assuming it works similar to real estate, where it's like a commission based business from the sale and a different commission for buyers. Are they?
AJ:Okay? Especially on the sell side is typically is commission based based on the sale of the business. On the buy side, a lot of times, that will be an upfront retainer, just because again, you want to make sure that the people are serious and that you don't say tire kickers fair by people, yeah, that are, are early in the process or don't have. And you can, you can spend a lot of cycles with them, kind of, if you have to educate them on the market, and the process and all that kind of stuff, we'll do that somewhat. But typically, we want to make sure we have a retainer up front. So we kind of really gotta pay for a time basically, as well as make sure that they're serious about what they're doing.
Gary:You don't want the person that's looking to buy a Ferrari from Craigslist.
AJ:That could be a good example.
David:So if I said, so again, sorry. If you want to sell your business, and someone approaches you, like an EN,
Gary:unrepresented, right
David:just came out of nowhere, he just comes out of nowhere, generally speaking, in your experience, that's a bad deal. There are they they're probably going to come under than what you probably could find them is that generally been your the case.
AJ:That sounds a little Mississauga little sinister. And I don't think that's the case, though. I mean, getting a true valuation of your company, I think is important. And then you can go to be I mean, we provide, there are formal business appraisals, as a broker, a lot of times, I will just do an opinion, and I'll be brought in to do an opinion of value, you know, so it's always good to double check. Number one, you want to make sure you are in the right place in the market. And you understand that, you know, sometimes if it's a strategic buyer, they may want to offer you more, you know, sometimes it may be someone who just doesn't know your operation, and they offer you less. So having a true understanding of what the value of your businesses is a range, it's always arrange, right? We'll help you number one. The thing is, is you got to make sure, you know, like I said, you have a good transactional lawyer, somebody who's who is experienced in doing business deals, not your not your your sister's wife's cousin who you know, sells is a real estate attorney or a different type of training, you want a business attorney, because again, these are these are there's, there's a lot of legalities involved and you want, you want both parties that have to know what they're doing to make the deal close. So you need a good valuation, you need a good attorney, a lawyer, you need a good closing attorney, are probably going to be the key things. And a good broker to kind of tie everything together. For Mike is, I think, the most efficient way to do that, you know, if you're a little bit bigger, it might be more of a, an investment banker, a more pure m&a firm, you know, as I get higher up into the businesses I work with, it's more in that realm, you get more sophisticated buyers and sellers and those sorts of things. But just just a normal business owner, seek some professional advice. It's a long process. It's complicated process, and they can help guide you along the way.
David:How did you you've been doing this for a while? How did you get here? What What was your mentioned your background in marketing and some other things I see, we have a fun fact that you have a degree in science. So we've been all over the map here. How did you end up here? And what was it that drove you to brokering businesses?
AJ:Well, I always tell everybody, I have a lot of great here, and I've earned every one of them. So I've been around for a while. And quite honestly, I think that does help me. But you know, I started off, you know, I've have a 35 year history, you know, spinning everything from low tech to high tech and consulting. And I started off professionally as an engineer, actually, before getting a business degree about halfway through my career, I've worked for large corporations, as well as small businesses, global entities, as well as local entities. So, you know, all along the way. Through that, you know, I had an opportunity to do everything from operations to finance, I kind of settled in and up more on the sales and marketing side, just because I like people and that kind of interaction. But truly all those things are that I use almost every day, right? I have to come in, I have to evaluate the business, right, I have to understand the operations and, and the finances and all that kind of stuff, I have to be able to relate to the buyer and the seller. I mean, there's a whole lot just in making sure that the seller is ready to sell. There's a whole psychological component of that, you know, on making sure that a business owner is really ready to exit the business and has he thought through that and implications to his life. So he can do all sorts of things. You have different types of buyers, as I mentioned before there, whether it's an owner operator or equity group, they all have different different types of approaches and strategies on what they want out of the business. So you have to deal with those things. So, you know, when I was in sales and marketing that was basically marketing is basically trying to understand what the market place wants and provide a product that fits it. It's kind of the same thing here right is like understanding what a buyer what the seller wants out of his exit for the business and what the buyer wants to buy it for. So that's kind of the bridging thing. I mean, and, and, you know, you know, we have people can get into this industry, one of the main street level, those are, those are good solid businesses, a lot of times are not as large as not sophisticated just because there's smaller operations. You know, as you get kind of up into the larger businesses do more mature, the owners are more mature, they've been around more experienced, they built bigger businesses. And it takes a little bit broader skill set to be able to relate to them work with them understand their operations. So really the business approach industry, there's really a place for everybody to enter in even if you're early in career, or myself, I came to this after having retired from corporate careers and having done a whole lot but but I'm able to use those talents every day and try and relate to people and trying to help support both the onto the entrepreneurs, which are either on the the entrepreneurs that are selling or the operators that are buying.
Gary:So you already retired from the previous career. And then
AJ:I did i Well, it was it was, you know, my, you know, I talked to my buddy, this was a business school classmate, right, he was talking about, he was thinking about doing this and some different things. And it just became an opportune time for me to gracefully exit out of my corporate corporate gig and kind of move into this, it's been several years, I truly enjoy it, I really am passionate about what I do, you know, you know, this, for most business owners have anywhere from 50 to 90% of their net worth tied up into their businesses, right. So the sell their businesses could possibly be their largest liquidity event ever, you know, I want them to have a good exit, right? Because these are, these are people that have have hired people, they have employees, they're supporting families, they've been paying taxes, a lot of times, these are the people that support your little league teams, or whatever corporate involvement, I, they deserve a good exit, right? I want them to have a good event, I want to be a good process, I want them to have a good buyer who takes care of their business moving on, you know, specifically for us, we focus kind of the eastern half of North Carolina, we do I do work different places up and down the East Coast. Right now I'm talking as a tech firm up in Canada, some different things, but we want, we want the talent and money investment coming into eastern North Carolina needs it right. So we don't want these businesses just to go away or close. We want them to continue on, we're going to continue them continue on employing the employees, you know, paying their taxes and all those things they do. So I look at this as a privilege to be able to work with these people. You know, I look at you know, we want these businesses to live on, I want these owners who have our small business owners, as we talked about earlier, David, it's a lot of work, they spend a lot of time they invest a lot of stuff, I want them to have a good transition over into the next phase of the life.
David:So I want to flip the script a second, what about those that you can't sell? Happens? I'm sure not everything comes to you that you can sell what roughly percentage wise? How many people want to sell their business? Is it Are you able to sell nine out of 10, six out of 10 Generally speaking.
AJ:I Gillette always sell all of the businesses I have listed, but I do a lot of pre screening upfront, you know, I always say, if it's a if it's a reasonable seller, and clean books, you know, we can sell it right. But they you know, the and they're motivated, they have to truly be motivated, they're motivated, reasonable and clean books, we can sell the business, you know, there's a price on something, even if it's not making a lot of money it will sell for some price may not be a lot, you know, even if sometimes if it sells, it was not making money. If there's a strategic buyer, at some point up so
David:you you hinted at this, and you might have already answered it, but those who few, or maybe it's a better way of saying that there was you screen out? What is it that generally those have in common bad books, they just haven't kept
AJ:good if they don't have you know, it's got to be defensible financials. Right? If so, number one, it's got to be prepared by CPA. Number two. I mean, there are different levels that types of financial reporting, right, it doesn't have to be all the way at the most arduous, expensive, you know, an audited financial report or quality of earnings. I mean, but as long as a as a as a CPA has prepared their taxes, you know, they're filed, we looked at as a legal document, right? We look at the financial statements, we can work with them. So if they don't have financial, clean financial statements, or it's all over the place, or they're not capable of bringing together a clear financial book, we don't deal with them. We just can't write you can't help the business. Right? If they seem I hate to say this a little unethical or little little, you know, sometimes people you know, there's like, oh, I don't, don't look in the back room. I have a lot of stuff going on here that I get paid on the table. You know, it's like, Okay, I can't I can't deal with that right. You know, not legalities, but just from a from a standpoint, you can't do that. I mean, there are things that pop up. But so like I said, and they have to be reasonable, you know, if someone says, you know, I have a, I have a company and I make $100,000 a year, but I want to sell it for$5 million. That's not going to work. They're not reasonable, right? You know, everybody thinks their baby's pretty, right. But sometimes, there's only one, there's only a market price. So like I said, if they're reasonable, and they're really motivated to sell, because it is, like I said, we it's a long process, and it can be arduous. And when you get the due diligence, it is a pain to everybody, right? It's painful. But if they sincerely want to sell, they it's it's priced right. And they have clean books, we can sell it. But the people I weed out are the people that don't meet that are either from some things, gives you some type of red flag up front, the businesses, just something's not right. You know, there are certain types of industries where there's a lot of money that gets traded on the table. That's just the way the business works out. Right. And he just I kind of know those, and I stay away from those. There's a plenty of other good businesses I want to work with.
Gary:So I think we have to switch up our last question here. Typically, we ask, what are our top three pieces of advice for a new business, a new entrepreneur, or a startup, but maybe we shifted to what are three pieces of advice for someone interested in selling their business?
AJ:Well, you know, we've touched on a lot of those are the left of the blessed by this, right if if you number one, you need to have a business that's sellable. So a couple things, it needs to be making money probably or, or had made money or good path to make money, right? Making money is gonna mean that you have a product that people want to pay for, and you have the processes to develop it and deliver it, right. So if you have those things, that's that's key, right? So that's the first things you need to have a good business, right? You need to go into the mindset if you want to sell a business, that there are a lot of different types of buyers out there. A lot of times I have buyers that have preconceived ideas about who they're going to sell to, right, I'm going to sell to somebody who does just what I do. Well, sometimes that's not the case, like I said, like the being the using the military officer again, no, that was somebody that they would never thought about, but I think it's gonna be a good match for them, right. So be open to who you're going to show your but now, my job as a broker is I'm going to shield you from a lot of people that I don't think either culturally, you know, from their background in your background, the type of business you're doing, or what they've done just doesn't, they just don't have a skill set that matches over, you know, be open about who you want to talk to, and be realistic. And it does help. I mean, to have a broker or somebody who's gone through the process can help you most, most businesses don't sell actually only a small number transact, and get sold. Some of them just can't be sold some people just just because you're not right, the the, for whatever reason, the owner wants to leave and the business is not capable being sold. So if you work with a professional to help you with that process, because like I said, there's a lot of moving parts here, a lot of people involved, and a lot of different things to it. So find somebody that can help you out, you know, and you can do a lot of research online. But ultimately, this is a people business, you're gonna have to work with somebody probably to help you coach you through the process.
Gary:So AJ, if anybody wanted to learn more about Transworld, your business or about you, how can they get in touch?
AJ:Sure, shoot me an email. It's AJ Ramsay AT T world.com. He was in Transworld, my numbers 919-325-6611. And happy to talk to anybody who is interested in in selling a business or potentially buying a business.
Gary:And we will put that in the show notes along with the link to your LinkedIn page and the Transworld website. So if anybody needs to find you online, the links will be available in the show notes below this episode. And if anybody has any comments or questions for us, feel free to email us at Hello at the big pixel dotnet. Or you can leave comments below this video or reach out to us on any one of our social media channels.
David:With all that said, thank you so much, AJ, for joining us. This has been a lot of fun.
AJ:Yeah, I appreciate it. Like I said, it's funny. I've been an optimal world for a long time. And I never really thought about the end until more recently, you know, I have I have a great client. I love the guy. He's, he's 80 years old, had a business for 40 years, you know, and he told me one time he goes, you know, he goes everyday I came to work, worried about my business, trying to keep my employees happy and employed and keep everything going. Not once in 40 years. Did I ever think about what was going to happen? At the end? You know, I'm at 80 Now my my kids don't want the business I've you know, they want me to get out. I had no idea what to do. I had never thought about that. So I'm happy to be able to work with them and provide them that out because most entrepreneurs are all worried about the upfront right I mean, some of them start with with a with a plan to exit you know, that sort of thing. But most of them are about the business and building the business and growing the business. They never think about what happens at the end. So like I said, I'm really happy to be able to work with those people to help to help them in that.
David:Well thank you again for joining us, and we will talk to you all next week. See ya
