Michelle Seiler Tucker is the Founder and CEO of Seiler Tucker Incorporated. She holds the M&AMI (Mergers & Acquisitions Master Intermediary) title, as well as the Certified Mergers and Acquisitions Professional (CM&AP) and Certified Senior Business Analyst (CSBA). Michelle also owns many other businesses in several different industries. As a 20-year veteran in the M&A industry, she is regarded as the leading authority on buying, selling, fixing, and growing businesses. Michelle and her firm have sold over a thousand businesses in almost every vertical and have a remarkable track record of success.
What you’ll learn about in this episode:
- What it’s like being a woman in the M&A industry
- How Michelle got into the M&A industry
- The #1 mistake business owners make when trying to sell
- Why you should never sell your business during a catastrophic event
- The GPS exit model and its steps
- The importance of getting a business valuation
- The five types of buyers who buy businesses
- Facebook: https://www.facebook.com/michele.seilertucker/
- Twitter: https://twitter.com/mseilertucker
Planning Your Exit
Michelle Seiler Tucker is the Founder and CEO of Seiler Tucker Incorporated. For more than 20 years she’s been a leader in the M&A industry at buying, selling, fixing, and growing businesses. Unlike others in her male-dominated industry, Michelle finds that it’s more than a deal — she helps entrepreneurs build their businesses to sell. In this episode of the Intentional Greatness® podcast, Michelle shares how business owners should think about their exit, and what steps should be in place.
Most business owners build their companies with the goal of achieving success and without a plan to exit. They often don’t consider selling their company until there is a catastrophic event, whether personal or professional. Michelle explains why you should never sell your business during or after a catastrophe. She shares how successful entrepreneurs like Mark Cuban time the sale of their businesses when the company is at its best, and why you should too.
Determining Your Value
Michelle explains that the majority of entrepreneurs don’t know what their business is worth. It’s essential to have your business evaluated over the years to constantly be aware of its standing. She also shares the importance of planning an endgame number for your business. Determining what number you need your business to be worth in order to sell helps you to plan for the future. In the episode, Michelle explains why regular business valuations help you build a successful business.
Listen to the podcast here
Building To Sell, With Michelle Seiler Tucker
I interview top business leaders to learn how they have shattered allusions and self-limiting beliefs in order to maximize their success. I describe these leaders as unfuckwithable, which means to be truly at peace and in touch with yourself, where nothing anyone says or does bothers you and no negativity or drama can touch you. If you are interested in having more moments like that, check us out. You know where to find us. Yes.LearnWorlds.com or SayYess.com.
Readers, you are for a treat now. My next intentionally great guest is Michelle Seiler-Tucker, and she is the Founder and CEO of Seiler-Tucker Incorporated, which all makes sense when you hear it. She’s a twenty-year veteran in the M&A industry and is regarded as a leading authority on buying, selling, fixing, and growing businesses. She knows a lot about stuff to do with getting you to that next happy place.
The reason you started your business was to grow it so that it could serve you. Did you forget that? Now she’s going to remind you. She’s sold over 1,000 businesses in almost every vertical and has a remarkable track record of success. She’s done crazy cool things. She’s got all kinds of accolades, and I’d be on here for ten more minutes if I told you all the awards and things she has. Michelle, thank you for being with us.
Thank you, Sue. Thanks for having me, and to clarify, I haven’t personally sold 1,000 businesses. I personally sold 500 for full transparency. My company altogether has sold 1,000.
Significant. Let’s be clear on that and thank you, so it’s still a lot. What got you into the M&A industry? We don’t find a lot of ladies in our lady boss audience going in that direction. Tell us about that.
We don’t. When I entered this industry a little over several years ago, I walked into a convention and it was 3,000 men and no women. I walked in and everyone turned around and looked at me like, “What is she doing here?” She’s at the wrong conference. It has changed a little bit since then. It used to be 100% male-dominated. Now it’s probably about 98% male-dominated.
What got me into this industry, I have always been an entrepreneur. I have worked on many different businesses in different verticals. Even as a little girl, I never played with toys or dolls. I would always walk around with a notebook and a pen and I would walk up to a stranger and ask them, “What’s your name? What do you do? How do you do it? How’d you get into it,” at a very young age. I have always been curious about entrepreneurship. I always knew I would not work for anybody because I don’t like being told what to do. It’s my biggest pet peeve. That’s my hot button.
My husband, many years later, still doesn’t get that. Slow learner. I always knew I would own my own businesses and I always knew I would be a writer and I always knew it would be something centered around people because I love people and I love entrepreneurship. I own different businesses, like I have had a wedding event business.
I have had publications, graphics companies, and stuff of that nature. I have been in medical. I’m in medical now. I opened up a franchise sale. Franchise development consulting business, and a lot of buyers and investors kept asking me for existing businesses. I’m like, “No, we only have franchises.” One day I was like, “Why am I saying no? I should be saying yes like the Law of Attraction. I need to start an M&A practice,” and that’s what I did. I dwindled down my franchise business and did M&A full-time.
What’s been the best or most interesting, and this probably fluctuates business you’ve gotten yourself into that you’ve owned? It could be either. How’s that?
Some businesses are quite difficult and quite complicated, and there have been so many times when I have thought, “Why am I in this?” There’s a business I was selling in Houston and the buyer’s due diligence individual representative went to the company and pretended to take inventory but was there to do due diligence and didn’t tell any of us.
I went there to assist with inventory. I thought I was going to be gone for a day. I was gone for over a week and had to go to the mall to buy clothes. I was gone for over a week trying to get this still done, and everything you could think would go wrong went wrong. I even caught the CPA embezzling money. That’s why we were doing due diligence.
I caught my husband going, “Why am I doing this?” It’s a tough business and industry. It’s got about a 98% failure rate. Most people don’t survive this industry, and so there’s been a lot of ups and downs. Even though I have been in several years, there are times when I’m like, “Why am I in this? Why am I doing this?”
I do it because I love entrepreneurship. I love business owners and I don’t want business owners to become a statistic. Steve Forbes says 80% of businesses on the market will never sell. Steve Forbes endorsed my book Exit Rich. That breaks my heart because these business owners have been in business for years, decades, and many of them will be exiting poor. They will be selling for pennies on the dollar or, even worse, closing their business altogether. That breaks my heart because as entrepreneurs, they invest everything. They invest money, time, energy, or effort. We make huge sacrifices along the way. I have an entrepreneur that hasn’t taken a vacation in nine years. I have another one that messed all of his kids’ events growing up.
You are in this to intervene in that entrepreneurship and set people up to win. That’s what I’m hearing.
Exactly. A lot of brokers out there are in it for the deal. I’m not in it for the deal. I learned a long time ago that if I don’t fix businesses, they are never going to sell. We specialize in buying, selling, fixing, and growing companies. I partner with business owners, investing my time, expertise, and capital, and wish to fix their businesses and put them on the build-to-sell plan. I have bought businesses and flipped them. At any given time, I own 5 to 10 companies that I’m building to sell and I sell businesses too. I do care about the outcome.
You said 98% of businesses result in failure.
What I said is this industry has a 98% failure.
Tell me more about that. How have you cracked that code? Clearly, you are doing it, as hard as that is. I’m listening to your story going, “How often do people pretend things like that?”
Crazy stuff. I could write a book on how business owners completely sabotage their businesses.
Why do people do all this pretense?
People say buyers are liars and sellers are too. I don’t know why they do all the pretense. I guess because they are trying to get information. In that situation, it was not alerting the seller’s due diligence team that the buyer’s going to be there in hopes that they could get closer and get information without it being filtered. We filter everything before we release it to the buyer. We are going to filter, which we should do.
Not at the risk of not disclosing, and so, in turn, they come at you in these sneaky ways, and that’s common, you said.
That one was not common, but I have seen situations before where they give hardly any notice to do due diligence. I don’t want to go down that path because there are so many different things. We have done 1,000 deals. No deal has gone down without a lot of fight and effort.
You are a woman in a man’s industry. I have got to believe you’ve figured that out.
Every deal almost falls apart, and my nickname has always been Humpy Dumpty. I always say, “I put Humpy Dumpty back together again when the deal starts to unravel.”
I have had a number of companies I work with doing EOS because we help people prepare to get to people like you. What are some of the mistakes that are most common that you see when a business comes and says, “We are hoping we can sell this.” and it’s the frog hoping to be a prince?
That’s a great analogy and obviously a great question because, like I said, 80% of businesses don’t sell. Number one, the biggest mistake that business owners make is they don’t think about their exit. They don’t plan their exit. They don’t get their business evaluated. They never think about it until a catastrophic event occurs, and that’s internal or external.The biggest mistake that business owners make is they don't think about their exit. Click To Tweet
Internal could be health issues, partner disputes, divorce, and death. Death of a partner, owner, or spouse, and/or this pandemic that we are in. That’s the worst time to sell your businesses, during a catastrophe, because you are not going to exit rich. You are going to end up exiting poor. You’ll probably end up selling for pennies on the dollar, closing your business or worse, filing for bankruptcy. You can’t sell during a catastrophic event. You need the sell when the business is doing well and the business is in its prime, which is when it’s fun, and that’s when business owners want to hold onto, but that’s a mistake because nothing lasts forever.
Mark Cuban, when he was in the tech industry and he sold right before the internet crashed, the dot-com crash, whatever you want to call it. He had a sense that this is the time to sell. You want to sell when the business is up, when a business is in its prime. Businesses have life cycles like humans do. You want to sell when the business is in the young adult stage when the business is in its prime. You don’t want to wait until it gets to the senior citizen and in death.
We don’t want that. Not everyone is Mark Cuban and times it exactly right, to your point. What are some of the science or ways that business owners can relax or release when it is getting to be that fun? “This is everything I worked for. It’s finally working. Now I want to soar into the sunset because it’s always going to be this fun and easy.”
No. That’s not always going to be this fun and easy. Here’s the bottom line. Instead of guessing, instead of saying, “Should I or should I not?” let’s plan it out properly. That’s what you do. You help your clients plan things. Business owners don’t plan to fail. They fail to plan. I take my owners through what I call the GPS exit model, whereas for step one, when you want to drive somewhere, what do you do? You pull out your phone, you go to Google Maps, and what do you plug in? Your destination.
That’s a problem with business owners. They don’t have a destination. They don’t have an endgame. They are driving around aimlessly in circles, driving up and down the financial hills to end up nowhere and broke. I always work with my clients to say, “Let’s figure this out.” As Stephen Covey says, “Start with the end in mind.”
From the beginning, buying or starting your business, or even if you’ve been in business for 10 to 15 years, you need to start this now. Figure out what is your end game? What do you want to sell your business for? Pick a number. Everybody gets hung up on numbers. You can decrease or increase it later. Let’s say you want to sell for $10 million. There’s a number. A GPS exit model needs to know where you are starting from. What is your current location? In other words, what is your current evaluation?
You probably know this more than most business people do, but most business people never get evaluation. They have been in business 40, 50, or 60 years, and never had their business evaluated. They don’t get a business evaluation until they think about selling it, and then they are like, “It’s only worth $1 million, and I need $10 million.”
How many are afraid of what they are going to find out?
You might be afraid, but you need the facts so you can start planning and fear’s not going to accomplish anything. Think about this. We go to the doctor once a year to get an annual checkup. We take our car to the shop once a year to get a tune-up, but we take our most valuable asset, which is our business, and we don’t get an annual evaluation, a business valuation. That’s financial suicide. You need to know what your business is worth every year because there are events that increase or decrease valuation.
Let’s start pandemic on that note. What has that done because this is a huge M&A year?
This is a huge M&A year because the pandemic has been great for a lot of industries and a lot of businesses, but it’s also been a death of others. That’s why you have to know. There are also other things other than pandemic. There are hurricanes, tornadoes, earthquakes, droughts, or fires in California. There are all kinds of things that can affect valuations, so you always want to know what your business is worth. If you want to sell for $10 million and let say, your business is worth $2 million. The next thing you want to know is what’s the timeframe. Plan it out. Let say you want to do that in ten years, then you need to know, “Who’s my buyer’s going to be?” There are five different types of buyers.
Let’s talk about those a little bit.
The one thing that I want to stress here is buyers have to stop thinking one buyer is going to buy their business. I have clients that come to me all the time and say, “I have the buyer. You need to represent me with this one buyer.” I’m like, “No.” They are like, “What do you mean no?” I don’t know. I got to come in and evaluate the business on all six Ps and we’ll talk about six Ps in a minute. That’s meaning does your business have the proper infrastructure? Are you running on all 6 cylinders, all 6 Ps? Most businesses are not. I have to look at the financials. I have to do the evaluation. I have to do all this stuff in a data room and go through your due diligence and clean stuff up to find that one buyer’s going to fall apart.
The likelihood that one buyer’s going to close on to solve your business, you have about the same chance of winning a lottery. Slim to none. You don’t want to do all that work for one buyer. You always want to have backup buyers. Plus, how do you maximize value with a party of one? You can’t create competition.
There are five types of buyers. Most people don’t know that 90% of buyers are first-time buyers. They buy ice cream stores, coffee shops, smoothie stores, and restaurants because they are trying to leave Corporate America. They can’t afford a multimillion-dollar company. The second type of buyer is terminal specialists. They buy distressed assets. The third type of company is PEQ, Private Equity, and you said M&A has a lot of activity right now. You are absolutely right. Huge activity right now.
M&A is based on platform and addon. Platform is, let’s say, they want to get into food manufacturing. They won’t even look at your business for less than $3 million in EBITDA. That is earnings before interest, taxes, depreciation, and amortization, but less said already in food manufacturing, and they will look at smaller companies under $1 million in EBITDA.
The fourth type of buyer is your strategic competitors. They pay the highest multiple because they are buying your patents, trademarks, talent, and database. They are buying synergies that will help catapult their current business to the next level, plus they take advantage of economies of scale so they can decrease overhead. They also look at the infrastructure of what they are buying to see what they can cut immediately and which should decrease overhead and increase EBITDA.
The last type of buyer is sophisticated entrepreneurs. They are industry agnostic. They chase cashflow. Out of those five types of buyers, three will be right for the $10 million company. Now you have to say, “Reverse engineer your plan. Where do my numbers have to land? I want to sell for $10 million. Where does my gross revenues have to be, my EBITDA?” Your EBITDA needs to probably be around $2 million or $2.5 million, depending upon your synergies.
The next equation is like, “What are the synergies? What are the specific criteria that those buyers look at?” They have negotiables and non-negotiables and I talk about all of that in my book. What are they looking at? You want to build your business to meet their specific criteria. It’s like when business owners go in and they go, “Here’s my widget. Here’s my target audience and buyers.” The same thing with your business. Your business is your product, it’s your widget, and you want to build it to meet those three buyers’ specific criteria.
When you are working with companies, do you work with all five types of buyers, number one? Number two, you were talking about strategic competitors are the best opportunity for the entrepreneur. Do you seek those more favorably or is it more, “I want to have the smorgasbord,” based on your exit strategy?
We have thousands upon thousands of buyers. I personally don’t work with first-time buyers anymore because I sell larger businesses, $50 million, $60 million, $70 million companies. I do have a team that sells the smaller type of businesses, so they might work with first-time buyers. We have a database with all types of buyers. We look at private equity groups and strategics for the businesses that we are working with, because one of those are going to be a good fit. Does that answer your question?
Absolutely. It was great. For most entrepreneurs, so we know they wait too long. We know they don’t plan. What else don’t they do when they start their businesses because so many of them are in love with what they do?
Many of them think their businesses are their baby. “My business is my baby.” I’m like, “Your business is not your baby. Your babies are at home. Go home, love, kiss, and hug them. Your business is your most valuable asset.” You are not kissing your business, I hope. There are lots of mistakes and the biggest ones is not building the proper infrastructure and not running a business on all six cylinders.
I will kill two birds with one stone here. I will talk to you about the biggest mistakes and the six Ps. One of the biggest mistakes, other than not planning your exit, is a lot of business owners have created a glorified job unless they go to work every day versus a business that works for them. They work in their business and on their business.
People is the first P in what I call the infrastructure of the Seiler-Tucker six Ps. Entrepreneurs. You don’t build a business. You build people and people build a business. Entrepreneurs have to stop working in it. Entrepreneurs will never grow unless they let of the control. Entrepreneurs have this mindset, “If I want to jump, I got to do it myself.”You don't build a business. You build people, and people build the business. Click To Tweet
That can’t be further from the truth because they do so many things wrong because you are doing so many things at one time and we can’t be great at everything. Entrepreneurs have to focus on their strengths, hires their weaknesses, put the right people in the right seats, which is critical. A lot of times they hire people, but they put them in the wrong seats. You need to do some testing, analyze your skills and then you have to ask the who questions. Who handles customer service, marketing, legal, or quality control? Who handles human resources, manufacturing, logistics, or environmental? The list goes on and on, but the clue is Sue should never be next to the who.
This is what I help them undo. These are the parts that EOS does. It’s get the structure in place.
Are you with EOS? You are an integrator?
I’m an implementer.
We call them integrator.
Integrators work with the visionary. That’s a term that gets confused at times, but I’m an expert implementer. I have been doing it for several years. We do. We prep the business for you by saying, “Here’s the system. “ They are free. They don’t have to have an earnout. “Here’s the business model. Take it and run.”
Earnouts are also way for buyers to try to hang on, get something, and not pay because you’ll never collect on an earnout. People is number one. It’s also very important if you are going to sell a multimillion-dollar company, you have a layer of management. You have to have that CEO and CFO. People I put that first because nothing gets accomplished without people. If entrepreneurs can’t afford to hire W-2s, start with 1099s, go to your local college. Talk to your local college and get on the bulletin board. College students have to have an internship at a lot of colleges to even graduate. If you don’t have an assistant, you are the assistant
What’s your second P?
My second P is Product. Before I get into product, let me go back a little bit and educate the readers because most people don’t know this. When I wrote my very first book Sell Your Business For More Than It’s Worth, in 2013, I researched and learned that 95% of all startups will go out of business in the first 1 to 5 years.
We all know that, but here’s what most people don’t know. When I did the research for Exit Rich in 2019, I did the exact same research to learn that the business landscape has flip-flopped. It has changed dramatically. Now only 30% of startups are going out of business. Out of 27.6 million companies, those businesses have been in business for ten years or longer, 70% of those companies are going out of business.
It used to be you could be in business for ten years or longer. You could be in business forever. You hear about public companies all the time. Toys“R” Us has been in business 75 years, goes out of business. Kmart, Pier 1, GNC’s closing on 900 locations. Disney stores are closing. Godiva’s closing down 1,500 locations, but you don’t hear about the private business on every street corner in every state across our great nation. They are exiting poor, selling for pennies on the dollar.
The number one reason for this, why it’s changed, is because business owners stopped doing what I call AIM, Always Innovate and Market. Business owners stop innovating. Blockbuster did nothing new when they saw Netflix. They had an opportunity to buy Netflix. Toys“R”Us didn’t innovate anything within 70 to 75 years. Innovation is key to success. You’re either growing or dying. There’s no in between.
Product is the second P. Product is your product, your service or your industry. You have to ask yourself. “Is it on the way up or is it on the way out?” Thriving or dying. If you have an Amazon, this is when you sell. This is when people should because you always said like, “When do we recognize when should we sell?”
You should recognize when to sell when you get close to your blueprint on your GPS exit model. If you are envisioning selling for $20 million and you are there, then you should sell. You got to ask yourself do you have an Amazon or if you have a Blockbuster? Unfortunately, there are a lot of Blockbusters right now because of this pandemic.
That doesn’t mean that you quit. You have to ask yourself three transformational questions. Amazon did this back in the ’90s. Ask yourself what business are you in? Amazon asked themselves that and I said, “We are in a book fulfillment business.” You have to ask yourself, “What’s my core competency? What do I do better than everybody else? What’s my company do better than everybody else? What’s our USP?” Amazon said, “We do fulfillment better than everyone else.”
The third obvious question is, “What business should we be in?” Amazon said, “We need to be in a fulfillment business fulfilling products for everybody, not books.” Those three transformation questions transform them into a small book fulfillment center into a multi-billion-dollar worldwide conglomerate that they are now. Those questions are powerful. I always tell my clients, “If you don’t like the answers, change the question.”
You are designed to get exactly what you’ve got. If you want something different, you must start back at what are you asking, doing, or designing? You’ve got people and product. What’s the next one?
Probably something you love the most, Processes.
I don’t, but I love process because I’m an EOS gal, but thank God for Gino Wickman. Yes, you have to. If you don’t do this, you are never leaving because it’s dependent on you.
That’s one of the number one reasons that businesses are not sellable because the data is in their head and it’s not on paper. People get this wrong too because they don’t think about processes until something bad happens in our company, like extra strategy. They are like, “We need a process for that.” We need a process before that happens.
The other thing is that business owners don’t design your processes around the customer experience. A lot of times, they design it around their own agenda. Chiropractors. I will give you a perfect example. They will open Monday and Wednesday, Friday from 9:00 to 1:00 or 9:00 to 12:00, then they will close to 3:00 and then open 3:00 to 5:00 Tuesday and Thursday mornings. Are they designing those processes around the patient or around them when they want to play golf?
They are doing their golf game.
Exactly. When I want to play golf. You got to go back to the bases and ask yourself, “What do you want your customer to experience?” McDonald’s back in the 1950s, did you ever watch a movie with The Founder based upon McDonald’s?
I did not and I have had a million people tell me to watch it.
You got to go watch it. Put that on your list.
I’m writing it down right now one more time.
It’s a brilliant movie. Back in 1950s, the McDonald brothers wanted to design a fast-food restaurant with a fast-food system, and they said, “We want to design it around the customer experience. We want the customers to experience three things. Great tasting food that’s hot every 30 seconds or less.” That was done way back in the ’50s, and even though it’s been tweaked along the way, you can eat it at McDonald’s anywhere in the world and pretty much get the same experience.
Whoever makes it easiest for the consumer to purchase products and services is the company that’s winning. Amazon is winning because it makes it so easy to practically buy anything and deliver it within two days. We have to go back and ask our customers or clients, “What do you need? What do you want? How can I make it easier for you to do business with us?” You got to go back to designing.
Those are great questions. It’s fabulous.
Nobody’s asking it. A lot or not, there are so many small business owners are in the day-to-day and when they got to get out of the day-to-day, they got to get more of you, and so that they can get out of the day-to-day. It must be designed around the customer experience. If you don’t create wild experiences for your customer, somebody else will. It’s got to be productive and efficient. You got to have those checklists, policy and procedure manuals because when you go to sell your business, buyers are going to ask for that.
Otherwise, you have to go with it, which is not what you are selling it for. What’s the fourth P?
The highest value driver. The fourth P is Proprietary. It can take you from a five multiple to an 8 to 10. Let me give you a crash course on valuations. Businesses under $1 million in EBITDA other than SaaS companies will typically trade from 1 to 3 or 3.5 depending upon synergies. Businesses over $1 million in EBITDA will typically start at five and up, depending upon the synergies.
Proprietary assets are the highest value driver. These are your synergies that strategics and competitors will pay more money for. This P be the longest. The last two Ps are very short. Branding is number one. The more well-branded you are, the more I can sell your company for as long as the brand is relevant in the mind of the consumer. Is anybody paying any money for Blockbuster? No. Guess what? What brand do you think is the most valuable in the world?The more well-branded you are, the more your company can sell for as long as the brand is relevant in the consumer's mind. Click To Tweet
Amazon. They are in the top ten.
You name all the top ten.
Microsoft, Google. It’s going to be all tech companies. Apple.
Apple is worth $359 billion just for the brand. That’s not asset, inventory, cashflow, real estate or anything else. Build your brand. Trademarks are also big. Trademark your company name, slogans, logos. You are a podcast. Trademark your products. You can trademark products. Here is the mistake business owners make. They will think of a name, they will go to GoDaddy and they get the dot-com. They are like, “Yes, we got the dot-com.” They will then go to their state and get a state trademark, but they never check the federal database, and they can be in business 5, 10, or 15 years. I see this happen all the time. They will receive a cease-and-desist letter and they have to stop using that company name because they don’t own the federal trademark.
Let me tell you. Minus trademarked, as is my show, as is the word unfuckwithable, which we own. It’s our state of being truly at peace and in touch with yourself where nothing anyone says or does bothers you and no negativity or drama can touch you, and we trademarked it and it happened.
It has a fashion trademark.
Yes, because they wouldn’t let you trademark profanity until July 2021.
You need to write a book called Unfuckwithable.
It’s in my future. Not quite yet.
Here’s the bottom line. You don’t want to not look. I’m working with a pretty big educational company right now, and they don’t have a federal trademark on their name. I said, “Hold on. Stop the process.” During evaluation, I’m like, “We are not putting you on the market yet until you get this federal trademark. Make sure we get the federal trademark first.” That’s very important.
Products too. We have a company that has twelve different products and each one is exclusive. One’s exclusive to Walmart, Target, Michael’s, and TJ Maxx. The bottom line is you got to make sure it protects your IP. You have to get federal. State does not protect you, and then patents are huge. If you’ve ever watched Shark Tank, what do all sharks ask? “Do you have a patent on that? Do you have a patent pending?”
Their offers are always contention upon that patent. We sold to a company for $18 million. It wasn’t making that much money, but they had eighteen patents. Contracts are huge. Vendor contracts, manufacturing contracts, distributor contracts, franchisor that has franchisees. Anytime that they have exclusivity, client contracts that are most valuable to buyers because they want to make sure there’s money coming in, especially the subscription models with the right revenue.
Here’s a big mistake around contracts. I have been doing this for several years. I have never seen a business owner get this right. You need the transferability clause in your contract. The states’ contract is transferable upon a new entity because 98% of deals are assets sales, not stock sales. If the contracts are not transferable and your buyer refuses to do a stock sell, then you have to go to your clients and get a consent to transfer.
They might not sign it. Plus, you don’t want to alert them to the fact that you are selling and what happens if you have 1,000, 2,000, or 3,000 contracts? You need to be proactive and get that language. Then the other big thing is databases. If your database has been nurtured and cared for and you know you have so many touch points with it and they can be repurposed and retargeted, those databases are worth a lot of money.
Facebook paid $19 billion for WhatsApp and WhatsApp was hemorrhaging, but WhatsApp had a synergy. They had over one billion users and Facebook knew they could monetize an ROI. That’s what we are talking about right now are synergies. Celebrity endorsements are big. If you’ve got an investor like Mark Cuban or Mr. Wonderful, Barbara Corcoran, any of those guys, that’s celebrity endorsements.
We have a client whose products are on Oprah’s Favorite Things. Celebrity endorsements work a long way because celebrities can usually only endorse one vertical. You only see Jennifer Aniston’s face on Aveeno. You don’t see it on anything else because she would lose credibility. Same thing with Cindy Crawford. You only see her on rooms-to-go furniture. Celebrity endorsements and radio personalities are big, especially radio personalities because that’s a time slot that nobody else can come and take. That’s what we call digital real estate that nobody else can get. Radio personalities can only endorse one education company, one diet company.
We got to get to your other two before we run out of time, Michelle.
I wanted to tell you content is king and then also digital placement. Any of the top three positions on Wayfair, Etsy, Amazon. The fifth P is Patrons. This is your customer base. Most businesses follow the 80/20 rule where 80% of the revenues come from 20% of the clients. You need customer diversification.
This is a huge problem. We are selling business right now for $70 million and one client that takes up 65% of their revenue. I have had a lot of buyers show me now. That’s okay. I’m finding the right buyers. You need customer diversification. If a business has been in business 20, 30, 40 years, so customers are probably aging out, you have to change your marketing in which to get those new clients. They don’t buy the same way that Baby Boomers do.
Profits are the last, and the reason I put profits last is because lack of profits is never the problem. It’s always a symptom of. Clients come to me all the time saying, “I have a profit problem.” I’m like, “No, you have a people problem. You have a process problem.” If you are operating in all five of these Ps, I can promise you you’ll be profitable. If you are not, you won’t.
Thank you for that. I hope our readers were taking notes. Can I turn the tables on you a little so we can hear about you as a leader because you are a lady in a male-dominated industry and that’s not easy? How did you stick with it? What helped you on the hard days? When you are one in a room like you described at the beginning of the show, that’s intimidating. It can inspire you in certain ways, but it’s also intimidating as hell, and you were changing your business model. There’s a learning curve.
There’s a huge learning curve, but it was a little intimidating especially when I will stare at you. Luckily, I had another lady walk in and her and I became very good friends and she’s still in the industry but not doing much of it. It is intimidating. I have always been very strong and I have always been extremely determined and I have tremendous perseverance. I have grit. You have to have grit. Grit is everything. You can have tremendous skills and talent, but if you don’t have grit, you might have a hard time surviving.
What helped you on the days when you may not have been feeling it to find it?
A couple of things. Number one, I always call it and yell at my husband. I’m like, “Why am I in this industry? Why am I doing this?” He is like, “This too shall pass.” That’s always been my model. This too shall pass. I have taken it one step further and I always say, “This too shall pass. I will try not to kick your ass.” I own a graphics company in Texas and my partner called me. He’s had it with employees. He’s ready to fire them all, and I’m like, “Put it sign and says this, ‘You shall pass. I will try not to kick your ass.’ Put it up in your office.” He gets it, prints it and puts it big all over the place.
It’s hard to think about that when you are in the moment at a crisis, and you are feeling down. I always try to remind myself this too shall pass. I will try not to kick your ass, and then I take it one step further and say, “If this isn’t going to affect my life in five years, I need to not overreact,” which is hard when you are in the middle of it. Also, go back to my why. Why do I do this in the first place? Why am I in this? It’s from my love of entrepreneurship. It’s from my love of business owners.
I love these crazy people who have started businesses to solve problems, help people and save the world.
I do and what I love is these business owners. They have a 7th or 8th-grade education and they start a business out of their pickup truck, off their kitchen table, and now it’s worth millions and millions of dollars. Learning his stories because education is important, but it’s not everything. Grit is everything.Education is important, but it's not everything. Grit is everything. Click To Tweet
Where can our readers find you? Where can they get Exit Rich? It’s coming out. We want to know. We want to hear about it, and if you learn about this before June 22nd, 2021, it’s a killer opportunity.
It is a killer opportunity. SeilerTucker.com is my main website. I will tell you a little bit about Exit Rich quickly. Steve Forbes endorsed Exit Rich and it’s a gold mine for entrepreneurs is I leave way too much money on the table. Kevin Harrington the rich shark on Shark Tank wrote our foreword. Sharon Lechter, who you might know, is my coauthor who wrote Rich Dad Poor Dad with Robert Kiyosaki. I don’t think anybody has told me, “No, I don’t know Sharon Lechter.”
She is a CPA, financial literacy expert and the advisor to domain of different presidents. She writes some mentor’s corners after every chapter and her husband’s an IP attorney, so he has information under the proprietary section. We have got great testimonials from Jack Canfield, Brian Tracy, Tom Hopkins, Les Brown, Brad Sugars from Action, which is not Traction. It’s ActionCOACH. We need some testimonials from Traction.
There you go. You didn’t ask.
I know. I don’t know somebody at the top to ask. I’m you. Here you. I’m in. You can get Exit Rich at Amazon or ExitRichBook.com. You can take advantage of all the goodies at ExitRichBook.com. Number one, we’ll email you to digital download immediately, so you don’t have to wait. We’ll ship the hardcover. $24.79. It’s less than Amazon. We’ll ship the hardcover to your doorstep for no additional fees to anybody that lives inside the United States.
Plus, we will give you a lifetime membership into the Exit Rich Book Club where there’s lots of content me doing training on different strategies and techniques I have taught over the last several years, plus documents. Lots of documents to operate your business and sell your business, such as employee handbooks, not compete, policy and procedure manuals, org charts, sample letter tens, and purchase agreements.
All these checklists and closing docs. This would cost you $50,000 if you went to your attorney. I have probably paid more than that for all these templates, but all these templates are there for your review and your download. Such a huge value. Plus, we give you a 30-day free membership into Club CEOs, which it’s an entrepreneur mastermind where we do hot seats Q&As to help business owners pivot and build that sustainable scale of one sellable business all for $24.79 the Exit Rich Book Club for June 22nd.
If you read this, even if you don’t get all that good stuff, check it out. You will save yourself in the long-term and you’ll build your exit strategy. What is one thing you’d recommend everyone do to be intentionally great in their business as a leader or in life?
Number one, read Exit Rich. As we say earlier, you need to get a mentor or you need to get an expert. I always say relationship capital is huge. Your network equals your net worth. If you want to be a successful entrepreneur, hang out with other successful entrepreneurs. Get a mentor but not any mentor. Do due diligence. Make sure you select someone that’s been down a path that you want to travel because they can shorten learning curve dramatically and shorten your path to success dramatically.
What’s one practice that you have that helps you feel unfuckwithable?
Other than telling people, “Don’t mess with me. I will try not to kick your ass.”
It’s going to pass anyway.
Knowing my stuff and being confident that I have been on this road many times and my crap. I go to bat for my clients and they are not going to mess with my clients and they are not going to mess with me.
You get crap done. What illusion have you shattered that helps you minimize self-doubt for my last question? Something you used to believe that you don’t anymore, that whenever you might doubt yourself if that should creep in, it makes it go away.
Probably people’s opinions that may not matter.
Michelle, you are fabulous. We wish you absolutely the best on the book. We will be getting a copy and I look forward to sending clients your way so they can exit rich like the book.
Thank you. That’s my mission and passion to help as many business owners exit rich and beats the statistic about 80% of business is not selling.
Let’s make that happen. I like it. Thanks, Michelle.
Thank you for having me on.
- Seiler Tucker Incorporated
- Exit Rich
- Sell Your Business For More Than It’s Worth
- Rich Dad Poor Dad
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