Author Factor: Notable Nonfiction Books

Optimizing Your Business Valuation—Expert Insights (w/ Nate Lind)

June 01, 2023 Mike Capuzzi Season 5 Episode 179
Optimizing Your Business Valuation—Expert Insights (w/ Nate Lind)
Author Factor: Notable Nonfiction Books
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Author Factor: Notable Nonfiction Books
Optimizing Your Business Valuation—Expert Insights (w/ Nate Lind)
Jun 01, 2023 Season 5 Episode 179
Mike Capuzzi

On episode #179 of The Author Factor Podcast  I am having a conversation with business broker and author, Nate Lind.

Nate sells companies like realtors sell homes. He is a business broker at Website Closers, which is the largest marketplace of $1 million to $150 million Internet, Technology and E-Commerce businesses.

Nate is the author of the short, helpful book, Maximum Exit.

During our conversation, Nate shares several important tips ALL business owners should consider regardless if they are looking to sell their business or not.

Learn more about Nate by visiting NateLind.com.

For more details about our short, helpful book publishing program, visit BiteSizedBooks.com.

Show Notes Transcript

On episode #179 of The Author Factor Podcast  I am having a conversation with business broker and author, Nate Lind.

Nate sells companies like realtors sell homes. He is a business broker at Website Closers, which is the largest marketplace of $1 million to $150 million Internet, Technology and E-Commerce businesses.

Nate is the author of the short, helpful book, Maximum Exit.

During our conversation, Nate shares several important tips ALL business owners should consider regardless if they are looking to sell their business or not.

Learn more about Nate by visiting NateLind.com.

For more details about our short, helpful book publishing program, visit BiteSizedBooks.com.

Mike Capuzzi [00:00:00]:

 Welcome to another profitable episode of The Author Factor Podcast. I'm Mike Capuzzi and I want to thank you for joining us. My guest today is Nate Lind. Nate sells companies like Realtors sell homes. He's a business broker at Website Closers, which is the largest marketplace of $1 million to $150 million internet technology and e-commerce businesses. He's the author of the just published short helpful book, Maximum Exit. Nate, welcome to The Author Factor Podcast. 

 Nate Lind [00:00:34]:

Thanks for having me, 

Mike Capuzzi [00:00:36]:

 This is like a reunion because we work together on Maximum Exit. It's good to see you again. And it's neat to see what you're doing with Maximum Exit. It's a great book over there in your shoulder there. Looks awesome. So, Nate, before we jump in and talk about the book and what you've been doing with it since you've published it, I'd love to hear a bit more about your business, what you do, how you serve your clients, etc.

 Nate Lind [00:00:54]:

 Absolutely. Well, I'm a business broker. So it's just like what a realtor does. They sell homes, but I sell businesses. And it's internet businesses, technology businesses, e commerce businesses. So companies that are selling products direct to consumers, or other business to business service companies that serve the internet technology and digital universe as their clients. So it's kind of that core nucleus, our internet businesses and then the next ring out is anyone else that's supporting those internet businesses. That's what my buyers are interested in. They can buy those and not have to be physically in an office in Houston or New York. They can pretty much operate them anyway, anywhere. And there's now new funding options for those types of acquisitions that buyers are using, kind of like how real estate transition from all cash deals into using lending. It's very similar to that now. Now the SBA has a 7A program that people are using to acquire businesses for as little as 10% down.

 Mike Capuzzi [00:02:00]:

 Very interesting. So I'm going to ask you to share some tips for someone who might be interested in this topic and is thinking about this, but before we do, I'd love to hear a little bit more about why you even decided to publish this book, why you decided to write a book, you know, as a strategy for sharing, you know, the information.

 Nate Lind [00:02:19]:

 Tell me a little bit more about that if you don't mind. Well, it, uh, it comes from a heartfelt desire to share knowledge with my clients or prospective clients, uh, so that they can be fully educated about what the process looks like, who the buyers are that are out there, how much the buyers are paying, what people's multiples are, how much the businesses are worth. There's a lot of questions that I get over and over that people just genuinely don't understand. And over the years, I've taken for granted that I know that inside and out and I just haven't seen anyone else write about that process and so I figured you know let me just get some words out there on a you know on page and I came across your book about how to write a book to share that and to use it as a as a funnel so to speak for people who some people decide to go their own way and other folks decide you know what this is too much of a hassle I want someone that's an expert to guide me through the process. And for those people, I entice them with a call to action at the end, where I'll help them with their own business valuation that's comparably based on other businesses that have sold that are like theirs. So they have accurate and timely information about what their business is worth. And if they decide to list their business with me, I will happily guide them through the process of getting a maximum exit for themselves. 

 

Mike Capuzzi [00:03:43]:

Yeah. Speaking of which, I remember when you and I were on 1 of the zoom meetings, we came up with the concept of maximum exit. And it was like it was available even as a URL, which was crazy. And it's a great, I mean, it's a great title. It is a great, compelling, big idea title. So congratulations on that, establishing that brand. So let's talk about this notion of a maximum exit. Can you share 3 tips or strategies or things our listeners should be thinking about when it comes to positioning your business for sale?

 Nate Lind [00:04:13]:

Absolutely. The number 1 most critical thing is you have to hit the timing right. You need to be selling on an upswing. And what I mean by that is it's absolutely critical that your business is accelerating or becoming more profitable, becoming more, having more sales. That is, that puts you in the best negotiation position. You can walk away from any deal, because you don't need to sell you're growing in profit, you're growing in in cash flow. That makes it very desirable by buyers. That's where buyers will many of them will bid on it, you'll have multiple bids on your hands. And you'll be able to pick the best deal. And just from a negotiation perspective. Now, your listener may be asking, well, why would I want to sell if I'm if things are going great, and they're effortless? Well, there, you're probably 1 algorithm change away, You may even be 1 bank fail away from not having access to your money. There could be a manufacturer that gets cited by the United States government as issuing technology to a banned country. It Just happened for 1 of my clients recently. Anything that is outside of your control could happen and then change your trajectory of your business. And if you're like me, you became an entrepreneur for freedom or for money or wealth that would set you apart from your generation that you came from. You want to be doing better than your parents and you want to provide more for your family. And the reason why most of us got into becoming entrepreneurs is to put away some cash into some passive investments and I can promise you the best passive investments are not in running businesses. They're in real estate, they're in bonds, they're in T-bills, other stuff, other passive investments. So I would encourage you to consider selling when you don't need to because that is the best time. The second thing that you need to do is you need to prepare yourself for sale. You need to actually have a set of books that are like everything is categorized in your chart of accounts and QuickBooks or Xero, an accounting system that will withstand due diligence, that will convey a sense of credibility and professionalism to a buyer, where they will see your value, and they will reward you with it with a whopper of a wire at the end of the day. And it needs to be done with professional help, with the CPA or with the bookkeeper. You need to be able to export those reports out of QuickBooks or Xero or whatever your accounting system is. They need to look industry standard and they need to be professional and accurate. They have to be accurate. If your numbers are wrong, you will not sell. I can promise you that. Or it won't sell for the amount that you expected from the get-go. Adjustments are made, and when there's a material change, if the deal doesn't completely fold in on itself, you have to make a change or, or, uh, you'll have to, uh, negotiate again, uh, at, at the end. And that's never a fun situation. And the third important thing you need to be likable, be, be polished, be professional. Actually don't take that back. You don't even need to be polished. Just be courteous and kind. Be able to be on a phone call with other people and not be generally disagreeable, not be generally frustrating to deal with. If you just emote that sort of vibe, I can't find a buyer that's willing to go through it with you because they want to do business with People they like and if they're having a hard time liking you they're not going to buy the business from you

 Mike Capuzzi [00:07:43]:

 Those are the top 3 things great advice Nate. Let me ask you another question if you don't mind. You've obviously worked with a ton of business owners. Do you find, Nate, that most of these business owners started and built their business with the idea that they eventually would sell it? Or do you think there's a good chunk of them just out of curiosity, that never even entertain the idea that I'm building something to sell?

Nate Lind [00:08:08]:

It's the latter. The majority of my clients never even thought they would have something sellable. They never thought that they should sell something. They didn't really give it any consideration. And the 3 reasons why most people sell their business in this what we call lower middle market small business and lower middle market, which is that 1 million to $150 million range, that's the boutique segment that our marketplace serves. Most of the time, they're bored, they're burnt out, or they have a burning passion for something totally different than what they're doing. And they don't wanna keep doing what they're doing right now. So they start thinking about what's my business worth and who are the buyers? And that's usually where the conversations start. For every person that's interested in selling their business, I talk with them about how much it's worth and I assess the value of the business and then prepare a valuation and a sales plan for them so they can assess whether it's the juice is worth the squeeze because it is work to do this it doesn't happen overnight.

Mike Capuzzi [00:09:08]:

1 last question before we go to your book. If you were talking to a new entrepreneur whatever the age a young kid you know a seasoned professional who's just starting his or her business. Would you encourage them? It's probably a loaded question, but would you encourage them? Because I know it's a big mistake I've made. You know, if I could go back 20 years, boy, you would sure as heck, I would sure as heck be trying to build a business that I knew I at least wanted a position to sell. Would you encourage these new entrepreneurs to do that or is it too far down the road? I absolutely would. It's not that hard. All you need to, the only thing you need, there's 2 things really that you need to be able to sell a business, you need to be profitable.

 Nate Lind [00:09:48]:

 And you need to be able to show that profit with your financials. For our marketplace buyers to start showing interest, the business needs to be profiting about a quarter million dollars a year profit, not gross, but that's a profit. And it needs to be able to demonstrate that it's done that for at least 2 years. So if a business has 2 years worth of track record, and it has quarter million dollars worth of profit, and even better, if it's got that growth, like I was talking about earlier, if it was making $250, 000 last year in profit, and now it's making $300, 000 in profit, and you project it's going to make 350, we've got a sellable company. You can be an owner operated company and outsource everything. You could be a 1 man show. We sell those all the time. You don't have to have a big like group of staff. You don't have to have a big building. You don't need to have, you know, a whole bunch of junk in the garage. In fact, don't be like if you're selling stuff, make sure it's at a third party logistics company, don't put it in your garage. If you're doing services, Mike, like what you do, we sell those companies all the time. I just sold a reputation management company is a 1 man show. He had some contractors out of India, and the Philippines helping them with some aspects of the business. He was making $700, 000 a year in net income, and we sold him for 2.7 million bucks. We get almost a Forex exit for 4 times the trailing 12 months cashflow as a one-time lump sum payment for his business. And the new buyer had to take over the operations he stuck around for a year he in fact he kept some equity too so he's still involved because he loved the business he just didn't like all the aspects of it and he wanted to take some money off the table So I absolutely recommend everybody go through the process. All you need is an individual bank account. You need to keep track of all your books and bookkeeping in a professional bookkeeping system and then just grind away, get that profit up and get some track record under your belt. And before long, voila, you're talking to me and you got dollar signs in your eyes because you're hearing, you know, 3, 4 or 5 times your cash flow as a business valuation. You're thinking, wow, if I can build this thing in 2 years and sell it for 3 years worth of cash flow, then I'm going to get 5 years worth of cash flow in 2 years. I could do this every 2 years. What's that kind of money going to make me and my, my future generations.

Mike Capuzzi [00:12:12]:

 Yeah, that's awesome, Nate. And I remember, you know, the gentleman who wrote the Ford of your book. I mean, I've shared that story. You're the gentleman who wrote your forward. I don't know how many times I've shared that story because it was just like, whoa, this guy started a business. I think it was like in 2015, sold it for $20 million a couple of years later.

 Nate Lind [00:12:25]:

 Started in 2019 And in 2021, we sold it for 25 million bucks. So he'd only been around for 2 years. 

Mike Capuzzi [00:12:39]:

Yeah. Cool stuff. Well, listen, obviously your book, Maximum Exit, helps folks, business owners, think about these kinds of things. Let's talk about Maximum Exit for this next part of this interview. So you published it, I don't know, that was probably about 6 months ago, 4 or 5, 6 months ago. What are you doing with that book, Nate, to get it out there in front of your target audience?

Nate Lind [00:13:03]:

 I am on a hell of a lot of podcasts. And being interviewed, I'm attending local, I'm doing my own local events for entrepreneurs. And I'm also attending masterminds and bringing my books and sharing in person. It's a business to business service. And it takes work. You know, this isn't something where I'm just selling a widget where someone can read my book and buy a widget and it's, you know, low intent threshold, they need to trust and believe in me. And, and from that, then, you know, inspires them to kind of go deeper down the rabbit hole. And they also have to, there's a lot of factors that come into play, They need to be at the right timing for their business. They need to be, and I'm really careful about who I'll take calls from because I can't help startups. We don't do any VC funding. We don't do any investing. None of my buyers want to have anything to do with that, so I can't help any of those. And that's the large market of entrepreneurs who want to sell. They don't, they're not making any money and they want to sell for big bucks. I would too, but the reality is those unicorn stories don't happen very often and they never happen on our platform. So, you know, that might be a Silicon Valley, you know, Netflix documentary in the making, but the reality is these businesses need to be profitable and they need to be around for a couple of years before they will attract any interest. So I wanna get in front of affluent and mature entrepreneurs. So I'm targeting people that are, they have the intent to look for tax strategy, help, investment, support, or investment ideas, where they have some affluence and some wealth already. And they're, they may be thinking, what's the value of my business worth. So those are kind of the tactics I'm taking some kind of going upstream a ways that anyone that might be in that affluent group of entrepreneurship, they may aspire at some point in time to sell their business. And I'm trying to create awareness because a lot of people that I've found, They're not even they didn't even know that they were sellable or they may have this This myth that I have to bust that no 1 will buy them because there's a lot of owner-operator Companies out there businesses that it's just 1 man or 2 man show and they don't even think they're sellable But boy, I got news for them. They are and for big bucks

Mike Capuzzi [00:15:19]:

 Well, it seems and I don't know, you know I'm sure this is part of your thought process when it came to Investing the time energy and money into publishing your first book That those kind of people that you're describing I would tend to think a book is a great lead magnet, lead generation device. It's something they can jump on a plane, read in an hour or so, and at least get the gist and really open their eyes and minds to what is really possible. Was that part of the thought process, why you decided to even do a book? 

 Nate Lind [00:15:49]:

Definitely is, you know, and I have found, um, alternatively, I've been giving it to my clients who I have engaged with, and it's helping them see what's the path from Nate, you know, I'm just now working with Nate, to I'm gonna get a big wire. Because I also list out a lot of the things that you know they have to understand about making themselves attractive to buyers. So I use it in 2 ways and I have gotten at this point some cold leads from you know from the Amazon listing and this gentleman that you referred me to is helping me with some Amazon PPC and it's doing a little bit of advertising and so from people that just found it on Amazon I've followed your exact flow of read the book at the end, schedule a call, someone's scheduled the call, and you know, I've had some conversations there and for them, you know, timing is a little bit, you know, interesting, they're not ready yet, or they're not ready for the number they want. They want a $50 million deal and only worth about 12 now, 1 that just recently happened. So I've given them some suggestions and some coaching on how they can get to that, that next level. But in the meantime, yeah, kind of 2 ways I'm using it is 1 to attract cold leads, and 2, to educate my clients,  what I need from them in order to make this work. So it's kind of helping me in both those ways.

Mike Capuzzi [00:17:01]:

 Yeah, and you're still relatively in the new phase of just having it published. And it's a cumulative thing. It's a long-term play, as you probably well know now. Regarding the process of going through either the writing, publishing, or marketing, the fact that we work together, I got to be careful with this question, because I'm sure there was no pitfalls. But was there anything, Nate, if you think back, that you'd want to warn someone else who has yet to write that first book about, you know, think about this, don't make this mistake I made or just something to think about.

Nate Lind [00:17:38]:

 Yeah, so since I've written the book, I've spent some time doing some competitive research on other brokerages and other, you know, other brokers who do service like I do. And I've kind of gone down the rabbit hole with keyword research on like, what are people how are people finding them and me and my I own a franchise of website closers, but the main corporate umbrella of website closures gets a lot of traffic as well. So I decided to spend a little bit of time just researching, what the heck are people looking for? Like, why did how and why are they finding these other companies and what problems are is my main head the headquarters of the company that I have a franchise of, Website Closers, and our competitors, what problems are they solving with the content they have on their websites? And so I've gone down the rabbit hole with some keyword research and some of those. And what I would say to somebody who's getting ready to write a book is I would actually go down that that process as well and think about, you know, what are some of the questions that people have? Where are people looking for answers? And is it, are there, is there implicit or explicit information to looking for? Are they, and then think about, you know, where can you connect with people that may be even further upstream, you know, kind of boiling down and making things more simple. Just because we're experts in our field doesn't mean we should talk like a college professor. We should be speaking at more of an elementary level so that we can communicate to a broader audience. And so this has given me some thought to, what's some additional content that I need to be focusing on, because I found a vein of information for me to mine from that's more around valuations than I had previously anticipated that I'm beginning to explore now. So maybe next time I'm exit part 2, a deeper dive into valuations is on the horizon. 

 Mike Capuzzi [00:19:35]:

 So Nate, I'd love to hear your thoughts. You were a great guy to work with, very smart, obviously. You were timely. So as far as a client, it was a pleasure to work with you. I'd love to hear about the impact of being a published author. What your life has looked like, your business life, even your personal, professional. How do you articulate what it means to be a published nonfiction book author? Now I've got tingles up the back of my neck and my back.

 Nate Lind [00:20:05]:

 Being a published author gives me such a strong resilience of confidence that I've written the book on the subject. And for the, I don't know how many thousands of business brokers are out there. There's not that many books about, you know, what we do. And there certainly aren't any that have been done in the way that I've done it. And I'm I've gotten a lot of genuine support from people that have read my book and have verified the value of it. It's not just a puff piece to get somebody to give me a call. I'm giving people real information that they need to be able to get or architect a maximum exit, whether they do so with or without me. That information is available to them. And I'd say probably the biggest piece is that, that grit and resiliency that I spent the hundreds of hours because it didn't happen overnight. I wrote it by hand in a manuscript exactly like you said in your book. I got it done quickly though. It only took me 91 days from the, you know, first pen to paper to being published on Amazon. So I moved with speed, but I put a lot of time and effort into it. So yeah, there's a number of things, I think, that come from it with confidence and validation with the book as well. As you mentioned, I'm new in the promotion of it. So it hasn't translated into a sale yet because the sale cycle for a B2B M&A is 4 to 6 months anyways. But I'm confident that will come and having something over my shoulder for podcasts and in other places is definitely helpful. And it's given me prestige amongst my peer group. Many of the other brokers at website closers have read it, have referred to it, used it in their material. Some of them asking me to teach and coach them, you know, about, you know, helping them with their businesses. And yeah, so it's a lot of interesting things that have come from it. And I'm looking forward to seeing that evolve over the years as I, you know, continue to spend, and invest more time into publishing and or into promoting the published aspects of it. Yeah, I think you've got a wealth of opportunity in front of you and I think there's a you know great things are gonna happen whether it's from podcasting or you know but I think the book is gonna be an important nucleus of that especially for I totally agree it's the best business card I could have ever asked for it shows people it demonstrates my knowledge it's digestible takes it's 136 pages takes an hour and a half to read if you're slow like me. I'm dyslexic so you know writing a book that's another like major accomplishment like I get my B's and D's all screwed up all the time and L's and I's and stuff like that I still get backwards and my spell check is a red pen nightmare anytime I'm done with something. I didn't know that. Yeah so uh it you know it's not easy for me because like and I use I have found these erasable pens that I use I don't have 1 sitting in front of me. I'd show you, but these, Oh, here's 1. It's a friction pen. So I actually have an eraser on the end of my pen because I, I misspell stuff so dang much. So my manuscript, I'm able to cross stuff instead of crossing stuff out. I can still use my pen and erase. Yeah, there's just so many valuable things I think I got from this that couldn't have been obtained by any way other than publishing something.

Mike Capuzzi [00:23:23]:

Again, I appreciate it. I think you've published a heck of a book. I think anyone who's listening, whether you're thinking about selling or you know that this is something you should at least think about, because as entrepreneurs, again, a lot of times we just get stuck doing what we do. Highly recommend grabbing Nate's book. Nate, where's the best place our listeners can find maximum exit?

Nate Lind [00:23:48]:

You can go to natelynn.com forward slash gift and I'll give you a free digital copy of it so that would be the best place to go.

 Mike Capuzzi [00:23:55]:

 Very good. Well Nate listen again good catching up with you Thank you very much for your time today. Thanks, Mike.