The Messy Marketplace
Based on the book, "The Messy Marketplace," adventur.es presents an annotated audiobook-podcast as a resource for business owners and their advisors.
Instead of a regular audiobook, Brent and Emily have recorded each chapter with commentary and stories from the deal trenches. In the initial release, there are 41 episodes, covering the majority of the book.
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Introduction: A Note From The Author
Welcome to The Messy Marketplace! We kick off our podcast by laying out why we wrote this book for you, the owner of a business - to inform and equip you as you consider selling the business you've built. There's no sales pitch for our firm in this podcast, just a collection of lessons learned over ten years and thousands of companies that we believe will prepare you as you contemplate next steps for your company. Discussion with Brent Beshore and Emily Holdman starts @ 2:32.
Introduction: Profile Of An Owner Who Should Sell
In this episode, we get specific about our target audience for this book. What does their business look like? How involved is the owner in day-to-day operations? And what circumstances might lead them to consider selling? Discussion with Brent Beshore and Emily Holdman starts @ 2:13.
Preparation: Motivations For Selling Your Company
Why do you want to sell and what do you want to get out of it? In this episode, we discuss the 7 root motivations for transitioning your business and share a “cheat sheet” to help you lay out your personal priorities as you consider selling your business. Discussion with Brent Beshore and Emily Holdman starts @ 6:14.
Preparation: When "Don't Sell" Is The Right Answer
In many cases, the wisest financial decision an owner can make is not to sell. In this episode, we try to talk you out of selling your business. Yes, really. Discussion with Brent Beshore and Emily Holdman starts @ 1:29.
Preparation: Selling A Company Is An Emotional Rollercoaster
All humans are messy and emotional. So it follows that selling your business will be a messy and emotional process. In this episode, we unpack common sources of stress and talk through healthy ways to prepare yourself for the inevitable messiness of doing a deal. Discussion with Brent Beshore and Emily Holdman starts @ 2:24.
Preparation: Country Club Rumors & Other Bad Advice
Bad news always travels faster and further. The rumor mill tends to exaggerate, but typically contains an element of truth as well. In this episode, we step through five of the most common rumors about the selling process, what their nugget of truth is, and how to avoid the horror stories. Discussion with Brent Beshore and Emily Holdman starts @ 4:48.
Preparation: Deal Killers
All businesses have issues and buyers will figure them out eventually. The good news is the vast majority of them can be addressed. In this episode, we lay out the main categories of potential deal killers and how to proactively deal with each one before they derail the sale of your business. Discussion with Brent Beshore and Emily Holdman starts @ 4:09.
Preparation: It's All Confidential
Prospective buyers will ask you some of the most challenging and personal questions you’ve encountered. Can you trust them and answer honestly? In this episode we take a look at the issue of confidentiality and how legally bound mutual trust makes a transaction possible. Discussion with Brent Beshore and Emily Holdman starts @ 1:14.
Preparation: Big News - Everyone Wants To Know [What It Means For Them]
If there’s an unexpected area where we see people stumble, this is it. Making wise decisions about who knows about your transaction and when is critical. In this episode, we step through each group of stakeholders and discuss considerations about the content and timing of your message to each one. Discussion with Brent Beshore and Emily Holdman starts @ 5:42.
Types of Sales: Buyouts vs. Recapitalizations
Private company transactions come in a variety of flavors, but most fit into two major buckets: buyouts and recapitalizations. In this episode, we discuss the differences between the two transactions and provide a helpful and comprehensive list of questions for business owners who are becoming minority owners to help set expectations with their buyer. Discussion with Brent Beshore and Emily Holdman starts @ 3:47.
Types of Buyers: Who Should Buy Your Company?
Private equity firms, fundless sponsors, search funds, family offices, strategics… the buyers of private businesses vary widely in the way they acquire, operate, and finance their purchases. In this episode, we go deep on each type of potential purchaser and look at their incentives for buying, typical financing structures, operational preferences, and the practicalities of working with each type day to day.
Selling Expectations: The "X" In EBITDA, What Are Your Expectations?
Investors and advisors often speak in terms of “multiples.” The key question is: a multiple of what? Potential buyers are interested in the true earning power of your business. This episode explores the ins and outs of EBITDA and other methodologies for measuring earnings. Discussion with Brent Beshore and Emily Holdman starts @ 1:38.
The Role of Advisors: Advisors Can Make Or Break A Deal
Picking a great team of advisors is the most important transaction decision you will make. So what should your team look like? What should you look for in an advisor? In this episode we discuss the members and attributes necessary to build a stellar advisor team. Discussion with Brent Beshore and Emily Holdman starts @ 2:58.
The Role of Advisors: The Larry Bird Strategy
Your advisor team is critical to the success of your transaction. But how can you build your own Dream Team? In this episode we lay out a clever strategy we learned from an original Dream Team member, Larry Bird. Discussion with Brent Beshore and Emily Holdman starts @ 1:23.
The Role of Advisors: Hiring An Intermediary
What is an intermediary? What do they do? How do I know if I need to hire one? In this episode, we present a list of helpful questions to answer as you consider hiring one of the most important advisors on your transaction team.
Financial Structures: Financial Structures & Valuation
When people hear about a transaction the first question they ask is: "What is the valuation?" While the answer seems simple on the surface - a single number - the way valuation is decided can take many different paths. In this example-packed episode, we show the diversity of approaches taken towards valuation and talk about why methodology matters. Discussion with Brent Beshore and Emily Holdman starts @ 8:18.
Financial Structures: Terms & Deal Components
In many ways, the deal components are more important than the purchase price. When it comes to purchase price, there is often a tug-of-war between buyer and seller. This episode explores this back and forth by looking the motivations, mechanics, and messiness of agreeing on a price. Discussion with Brent Beshore and Emily Holdman starts @ 1:55.
Financial Structures: Cash, Cash, Cash... And Other Considerations
The first component of financial deal terms is the amount of cash at closing. But even something as simple as "cash" can take on many different forms. In this episode, we examine the various types of cash at closing, why they are used, how they are structured, and the potential impact on your company after close. Discussion with Brent Beshore and Emily Holdman starts @ 3:09.
Financial Structures: Earnouts
In situations where the buyer and seller disagree on future earnings, earnouts help bridge the gap by taking a "wait and see" approach to a portion of the valuation. But they can also cause trepidation in sellers as they introduce uncertainty. In this episode, we lay out some questions you should consider before agreeing to an earnout in your transaction. Discussion with Brent Beshore and Emily Holdman starts @ 1:53.
Financial Structures: Net Working Capital
The math behind Net Working Capital seems straightforward, but agreeing on this number is often the most contentious part of doing a transaction. Why is there so much nuance and why is getting this number right so critically important? This episode dives in to this crucial negotiation point and we share how we almost lost our first deal because of it! Discussion with Brent Beshore and Emily Holdman starts @ 1:35.
Financial Structures: Fees Buyers Charge
While it's common for Private Equity firms to charge fees as part of the transaction, these fees can take on many forms. Some firms are transparent and only charge enough to cover their expenses, others not so much. In this episode, we cover fee types and structures, as well as things you should watch out for when examining the fees your potential buyer plans to assess. Discussion with Brent Beshore and Emily Holdman starts @ 1:43.
Financial Structures: Employee Option Pools
Done well, Employee Option Pools present compelling incentives for the employees running the company post-close. As with most components of a deal, the structure and the math matter. In this episode, we talk about potential pitfalls and the hallmarks of a well-constructed employee compensation plan. Discussion with Brent Beshore and Emily Holdman starts @ 1:09.
Financial Structures: Reps & Warranties
Reps and warranties. Indemnification. Caps and baskets. Are you still awake? In this episode, we break down the legalese into digestible concepts and walk through how this section of a contract can be used to protect yourself and communicate critical information to a potential buyer. Discussion with Brent Beshore and Emily Holdman starts @ 2:34.
Financial Structures: Real Estate & Cap Rates
Many company owners own real estate associated with their business in order to expand their returns. As part of a potential transaction, buyers will be interested in the relationship between the real estate and the company and it is likely that real estate will be part of the deal terms in some form. In this episode, we step through the terminology and calculations used around real estate in transactions and the conversations you should be prepared to have with potential buyers as you negotiate a deal. Discussion with Brent Beshore and Emily Holdman starts @ 2:36.
Financial Structures: Owner Post-Close Employment & Consulting
What will your role look like post-close? Do you plan to exit immediately or stay on indefinitely? And how do you want to be compensated in this next phase of your business? In this episode, we examine the different employment structures available and their potential impact on you, your personal finances, and your company. Discussion with Brent Beshore and Emily Holdman starts @ 1:50.
Negotiating: The First Move
Buyers commonly make the first move in a transaction. As a seller, this often catches us off guard (in a good or bad way). In this episode, we discuss how to digest an initial offer and the importance of communicating our expectations clearly and transparently. Discussion with Brent Beshore and Emily Holdman starts @ 1:34.
Negotiating: "You Set The Price, I'll Set The Terms"
As a seller, it can be easy to fixate on the valuation and cash at close numbers, especially when they are some of the largest you've seen in your lifetime. But the structure and terms of the deal are equally important. In this episode, we explore how to work with your potential buyer to make sure the structure of your deal is a reflection of your needs and expectations. Discussion with Brent Beshore and Emily Holdman starts @ 3:02.
Negotiating: Formulaic vs. Numerical Deal Value
Prospective buyers will express their valuation of your company in different ways. While some will give you a set valuation number, others may use a multiple of earnings or an even more complex formula to be calculated at a predetermined time before close. In this episode, we examine the pros and cons of each method and important considerations as a seller as you contemplate an offer. Discussion with Brent Beshore and Emily Holdman starts @ 2:10.
Negotiating: Walking In The Buyer's Shoes
All buyers have one thing in common: they expect a return on their investment. So what is the best way to market your company to buyers knowing they won't invest if they don't see growth potential? This episode hits on some important do's and don'ts as you present your business to prospective buyers. Discussion with Brent Beshore and Emily Holdman starts @ 2:05.
Negotiating: Identifying a BATNA
What the heck is a BATNA? It's an industry acronym for Best Alternative To a Negotiated Agreement. In other words, what's your backup plan if negotiations with a prospective buyer fall through? In this episode, we talk about the importance of developing a solid BATNA and the role it plays in your conversations with buyers. Discussion with Brent Beshore and Emily Holdman starts @ 1:15.
We all have our own negotiating style and most of them can be effective... if you stick to it. Whatever method you choose, you're best served knowing as much as you can about the buyer's motivations. In this episode, we give you a list of questions that will help you prepare to represent your needs and your company in the most effective way. Discussion with Brent Beshore and Emily Holdman starts @ 2:21.
Paperwork: Deal Paperwork & Lease Agreements
Drafting the deal documents is expensive and time-consuming, but also can be a good indicator of progress in negotiations and the buyer's interest in continuing the process. In this episode, we step through the various documents necessary to close a deal and the players and factors that impact this crucial part of the dealmaking process. Discussion with Brent Beshore and Emily Holdman starts @ 1:57.
Paperwork: Outlining The Purchase Agreement, Seller Note, And Employment Agreement
Continuing from our prior episode, we dissect another set of deal documents and how they impact you as an owner. Discussion with Brent Beshore and Emily Holdman starts @ 5:16.
Fees and Costs: Deal Fees & Costs
If you're used to spending a minimal amount on legal and accounting issues, transaction fees can be a real shocker. But resist the temptation to drive fees as low as possible - the best intermediaries and advisors will often command a higher fee but save you money in the final accounting. In this episode we set expectations on ranges of fees and the levels of service you should expect based on what you pay. Discussion with Brent Beshore and Emily Holdman starts @ 6:03.
The Process: Preparing To Talk To Buyers
There are many ways to market a product or service and the same is true for your business. But what does marketing a business look like and what can you do to be prepared for the process? In this episode, we give you a comprehensive checklist of the descriptions, documents, and numbers you'll need to pull together to present your company in the best light possible. Discussion with Brent Beshore and Emily Holdman starts @ 8:29.
The Process: Creating A Market of Buyers
Now that you've pulled together your marketing materials, it's time to find a buyer. While there are multiple ways to build a market for your company, they each come with tradeoffs. In this episode, we take a look at broad market auctions to hyper-targeting as well as solutions in between and discuss the key considerations for each method. Discussion with Brent Beshore and Emily Holdman starts @ 3:37.
The Process: Initial Buyer Outreach... And Rejection
You've decided on a buyer or group of buyers to whom you'd like to pitch your company. How do you kick-off the process? And once you do, how should you think about rejection if they decide to pass? In this episode, we give you very practical steps on how to reach your potential buyers of choice and how you should think about a buyer passing on your business. Discussion with Brent Beshore and Emily Holdman starts @ 3:47.
The Process: Fielding Offers: Ballpark Valuation, Site Visits, Indications of Interest, Buyer Qualification & Letters Of Intent
You've generated some interest in your business from prospective buyers. What will their next steps be? In this episode, we walk through the typical process a buyer will follow between the initial expression of interest and the draft of an official Letter of Intent. Discussion with Brent Beshore and Emily Holdman starts @ 5:08.
The Process: Getting Serious: Letter Of Intent & Due Diligence
There's a joke in private equity that each deal is won and lost at least three times during due diligence. In fact, in the part of the market we cover, the ratio of companies that close after Letter of Intent is reported to be less than 25%! Why is this part of the process so fraught and difficult? In this episode we unpack the practical and emotional components of the due diligence process, including a helpful list of questions to ask your prospective buyer to gauge their ability to diligence well. Discussion with Brent Beshore and Emily Holdman starts @ 6:29
Post Close: The New Normal
Congratulations, you've sold your business! The day after you close, you'll be waking up in a brand new world. This episode covers what you can expect - how to communicate your transaction, what it feels like to have "a boss," and even how to deal with seller's remorse. Discussion with Brent Beshore and Emily Holdman starts @ 6:32.
Post Close: The End Of The Book, But Not The Adventure
We wrote The Messy Marketplace to make sure you, the seller, are prepared and equipped for the opportunities and challenges of selling your business. In this discussion, Brent Beshore and Emily Holdman briefly summarize the resources contained in the book and invite you to connect with adventur.es to continue the conversation!