Author name: Hamel

Hamel
Emotional Readiness, Owner Conversations, Owner(s) Sale Objectives

Owner Conversations: “Life After the Deal: The Unexpected Personal Lessons Owners Learn After Selling Their Company”

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Learning From Conversations Podcast Host: Welcome back to the show. Today’s conversation is a little different. We’re talking about what happens after the transaction, after the congratulations, after the wire hits the account, after everyone tells you that you’ve reached the ultimate definition of success. My guest today is a 64-year-old entrepreneur who sold the company he built after decades of hard work. It has now been 14 months since the sale, and he’s here to talk openly about something many owners don’t spend enough time thinking about: what happens when the company you built is no longer yours. Thanks for joining us. Frank: Thanks for having me. I think this is an important conversation because when you’re building a company, almost everything is focused on the business, growth, employees, customers, solving problems, creating value. The idea of selling becomes this finish line. But what I’ve learned is that selling the company isn’t the finish line. It’s actually the beginning of a completely different chapter, and I don’t think I spent enough time preparing for that chapter. Podcast Host: Let’s go back to the day after the transaction. You had accomplished what many entrepreneurs spend their entire careers working toward. What did you think life would look like? Frank: Honestly, I thought I had it figured out. I thought, “I’m going to play golf six days a week. I love golf. I’ve always loved golf. Finally, I’ll have the time.” But what I realized was that my relationship with golf was different when it wasn’t a choice, when it wasn’t squeezed between business meetings, customer visits, and responsibilities. During my career, I probably only played about one round a week, and many of those rounds were with customers or business relationships. Golf was connected to the business world. After I retired, I had unlimited time, but I didn’t necessarily have unlimited motivation. I found that I wasn’t motivated to playing six days a week. Sometimes I play a couple of times a week. That was a surprise. Podcast Host: Why do you think that happened? Frank: I think I underestimated how much purpose came from the business itself. The company wasn’t just a job. It was my identity. It was relationships. It was challenges. It was waking up every morning knowing there were problems to solve and people counting on me. For 38 years, I had a reason to get up. Now, I can sleep later if I want. Nobody is waiting for me to make a decision. Nobody needs me to solve the problem of the day. And while that sounds great when you’re working 70-hour weeks, when you lose that structure, you realize how much energy came from being needed. Podcast Host: You mentioned before the show your wife wanted to travel more, and you’ve done more traveling together. How has that transition been? Frank: Actually, it’s been good. My wife always wanted more travel, and we’ve definitely done more of it. The challenge is that travel means different things to each of us. My whole career involved a tremendous amount of business travel. Airports, hotels, meetings, being away from home, I did that for years. So when I retired, I was thinking, “I finally get to be home.” My wife was thinking, “Great, now we can go everywhere.” (Laughs) She loves exploring new places. I enjoy it, but I don’t have the same appetite for it because I spent so much of my life traveling. Podcast Host: You’ve also talked about how your wife has adjusted to having you around more. Frank: Yes, and that’s been an interesting part of this transition. For years, I was gone a lot. She had her routines, her friends, her activities. Now I’m home much more. She loves me being around, but I think the reality is that going from having your own separate rhythms for decades to suddenly sharing almost every day takes adjustment. She has weekly groups and activities with friends, and sometimes she feels guilty leaving me home alone. I keep telling her, “Don’t stop doing those things. You need your friendships and your independence.” But I understand why she feels that way. We’re both learning what this new version of life looks like. Podcast Host: You mentioned mornings have been difficult. What does a typical day look like? Frank: The interesting thing is I still do things I’ve always done. I get up early. I take our dogs for a three or four mile walk every morning. That routine has stayed with me. But I’ll admit there are mornings where I wake up and think, “What am I really getting up for today?” That’s something I never experienced when I owned the company. There was always a mission. Now I’m trying to create a new one. Podcast Host: Do you miss the business? Frank: More than I expected. I miss the challenges. I miss the people. I miss the employees who were part of the journey for years. I miss sitting across the table from customers and solving problems. You spend decades building relationships, and then overnight, you’re no longer part of those conversations. That’s been harder than I anticipated. Podcast Host: Looking back, do you think selling was the wrong decision? Frank: I wouldn’t say that. The transaction was successful, and I’m grateful for the opportunity. But I do question the mindset that led me there. There was a lot of outside messaging: “You need to sell now. The market is strong. This may be your last opportunity. You need to maximize your value.” And I listened. What I wonder now is whether I was making the decision because it was truly what I wanted, or because I was trying to meet other people’s definition of success. Was I trying to prove something? Was I trying to show the world that I had made it? Those are questions I’ve thought about. Podcast Host: Do you think you could have continued running the company longer? Frank:

Emotional Readiness, Owner Conversations

Owner Conversations: Uncomfortable Thoughts

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Learning From Conversations Some of the most important subjects we should discuss dip into areas we try to avoid and often find boring until the day an event scares us into taking action.  The hardest part of planning for the future is that the future always feels far away.  You fought through the uncertainty of building your company.  The pain was immense and the sacrifices were many, but along the way you survived and built a profitable company.  More than that, it now supports employees and their families who depend on you for a portion of their financial security.  You finally reached a point where you could enjoy some comfort and satisfaction from accomplishing what many never do. Then along the way, someone starts asking you what you plan to do with your company when you retire.  Retire? You weren’t even considering retiring or leaving.  You were just getting used to the better vacations, more freedom, and perhaps that extra vacation home you promised your spouse years ago.  Your spouse endured all the late nights, missed dinners, weeks of travel, and the countless times personal bills came second to making payroll.  Retirement feels irritating to consider, but also strangely intriguing.  Maybe there is life after the company.  Maybe there are other dreams worth pursuing.  Still, the thought disrupts the rhythm you worked so hard to achieve. Then that little voice inside starts talking, “You’re getting older, maybe you should consider?”  But you shove the voice into your mental desk drawer, slam it shut and tell yourself, “This can wait, my retirement is 5-10 years off.  Why worry about it now?”   Then six years pass.  One afternoon, a vendor stops by your office and offhandedly mentions that one of the founders of a well known competitor drowned in a riptide while vacationing off the coast of Fiji. And suddenly, the future no longer feels distant.  In that moment, you are reminded that time does not continue indefinitely.  You try to push the thought aside, but it continues to play on your mind until, one day, you take action. Maybe that conversation starts on a golf course with your best friend. Conversation “Man, you ever notice nobody wants to talk about the important stuff until something scares the hell out of them?” Tom said, pulling a tee from his pocket. Rick laughed. “You talking business or life?” “Feels like they’re the same thing sometimes.” Rick smirked and lined up his ball. “Fair point.” Tom shook his head. “I had a guy asking me last week what my exit plan is. Retirement, succession, all that. I about rolled my eyes.” “You? Retire? I can’t even picture it.” “Exactly. Took me twenty years just to get to where I can finally breathe a little. Remember those early years? Making payroll before paying myself?” “Oh yeah. You looked ten years older back then.” Tom chuckled. “My wife stuck through all of it. Late nights, travel, stress. Now we finally take decent vacations, got the lake place… and suddenly people want me thinking about walking away from it all.” Rick nodded slowly. “That’s the hard part though. You spend your whole life building the thing, then one day somebody asks what happens when you’re not there.” Tom looked down the fairway. “I always tell myself, ‘I’ve got time.’ Five, ten years out. Deal with it later.” “Yeah, until later is today.” Tom paused. “Exactly. One of my suppliers stopped by last month. Told me the owner of a competitor drowned on vacation in Fiji. Guy was healthy too.” Rick stopped adjusting his glove. “Seriously?” “Yeah. And ever since then… I don’t know. Gets in your head a little. Makes you realize this thing doesn’t go on forever.” Rick took a breath. “So what are you gonna do?” Tom shrugged. “Honestly? Don’t know yet. Part of me wants to work till I drop. Other part’s thinking maybe my wife’s right. Maybe there’s more trips to take. More life outside the office.” Rick grinned. “Well, maybe start with surviving eighteen holes today.” Tom laughed. “Fair enough. Baby steps.” Conversations like this are uncomfortable to have because they remind us that one moment we’re here, and the next, it’s just over. I was once told by someone far wiser than myself that my life would unfold better if I imagined myself at the end of my life looking back, then live every day with that vision in mind. Staying true to that idea means recognizing that each day’s decisions will either move you closer to that vision or take you farther away from it. If you have read this far, I would truly love to hear your thoughts and comments in return. Austec Pre-Diligence Risk Exposure System

Negotiations, Owner Conversations

Owner Conversations: Negotiating Red Sky’s

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Learning From Conversations Maria (Owner): Thanks for coming in. I know you’ve both reviewed the numbers, so I’m happy to address the points you flagged. The company’s stable, profitable, and we’ve built this over 22 years. We’re over 200 employees now, and the operation has strong systems in place. James (Buyer 1): The business is impressive. The margins are strong, and the retention on both customers and staff stood out. But we need to talk about concentration risk. Your top two customers represent about 45% of annual revenue. That’s a meaningful dependency from an acquisition standpoint. Maria: It’s true. Two customers make up 45%, but they’ve each been with us over a decade. One for 16 years, the other 11. Contracts renew consistently, and our service levels are one reason they stay. That kind of loyalty isn’t easy to replicate. Daniel (Buyer 2): Longevity helps, but concentration still affects valuation. We have to underwrite the downside. If one customer shifts vendors or consolidates supply chains, the revenue impact is immediate. That kind of exposure pushes risk higher than a more diversified book. Maria: I understand that. But you’re also looking at a business with extremely predictable orders. Food manufacturing isn’t a speculative market for us. These are recurring accounts, and the customer relationships are institutional, not personality-driven. James: Understood. The second issue is capacity. You’re running at roughly 95%, correct? Maria: Yes, depending on the quarter. We’ve optimized the floor as much as we can. We can squeeze some scheduling efficiency and minor throughput gains, but not a major increase. Daniel: That means the next phase of growth requires capital expenditure. Probably a facility expansion or a second site. Maria: A second site would likely be the long-term answer. Expanding here is difficult. The building already occupies nearly the full footprint of the parcel. There’s some flexibility for minor additions, but not enough for meaningful production scale. James: That’s the concern. We’re not just buying cash flow; we’re buying future return. If the company is nearly maxed out physically, then growth requires us to deploy more capital immediately. That changes our model. Maria: But you’re also acquiring a very strong platform. The workforce is exceptional. Most of our supervisors have been here 10+ years. Turnover is low. Training is strong. In this industry, operational consistency and labor reliability are major assets. Daniel: We agree. Your team is one of the strongest parts of the business. It lowers transition risk considerably. We also like that customer retention is so deep. That has real value. James: Still, our investment criteria targets a 30% annual return. To achieve that, we have to factor in the concentration risk and the limited organic expansion. The purchase price has to reflect those constraints. Maria: What kind of adjustment are you talking about? James: Based on our model, we’d discount compared to a similar company with diversified customers and room to expand on-site. The business quality is high, but the risk profile narrows our acceptable entry point. Maria: You’re discounting for future risks, but the existing earnings are proven. This company generates strong cash flow now. You’re not buying a turnaround. Daniel: Absolutely. But from our side, if we’re paying full market multiple and then also funding a relocation or second plant within a few years, our ROI falls below threshold. We have to build in that expected capital cost up front. Maria: So in your view, you’re valuing the current operation but subtracting for the expansion investment you anticipate making. James: Exactly. If the business had 20% idle capacity and land to double the footprint, that’s a different valuation. Here, expansion is possible, but it requires a larger strategic decision and more capital. Maria: I can appreciate that. But I would also argue you’re buying something hard to build: a loyal workforce, long-standing customers, and a proven operating culture. That reduces execution risk significantly. Daniel: It does, and that’s why we’re still very interested. We’re not questioning the strength of what you’ve built. We’re just saying the structure of the revenue and physical limits mean our offer will need to reflect a more conservative entry multiple. Maria: I’m open to discussing structure if price is your issue. Earn-outs tied to customer retention or expansion milestones might bridge some of that gap. James: That could help. If customer concentration remains stable and revenue expands after capex, there may be a way to align valuation expectations. Daniel: That’s worth exploring. We see a strong company here. We just need a deal that meets our return requirements while accounting for the risks we’d be taking on. Maria: Fair enough. Then let’s work through a structure that recognizes both: the risks you’re pricing and the strength that already exists. Fade Out Sellers and Buyers Often View Deals Differently A common dynamic in selling a business is how differently sellers and buyers talk about value depending on which side of the table they’re sitting on. Sellers often present their company through the lens of blue-sky potential, emphasizing untapped growth, expansion opportunities, and all the upside that a new owner could unlock. At the same time, many sellers will say, quite reasonably, that a buyer should not expect to pay today for profits that may or may not happen tomorrow. Yet buyers often reverse that logic. They may not want to pay full value for what the company is earning today because they see red-sky concerns about tomorrow, customer concentration, facility limitations, industry changes, or future capital needs. It’s a convenient shift in perspective, and many sellers accept that reasoning without fully examining it. The reality is simpler: the seller has to determine what price reflects the years of blood, sweat, and sacrifice it took to build the company. The buyer has to decide what price makes more sense than acquiring a comparable company elsewhere or building one from scratch. Somewhere between those positions lies a deal, if both sides can reach it. Negotiation is ultimately a dance. Each side studies

Business Continuity, Owner Conversations, People Considerations

Owner Conversations: How Hard Can It Be To Replace The President?!

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Business Owner (Mark): I’ve been thinking a lot about the future of the company. Right now, everything runs through me—customers, vendors, decisions. That’s not sustainable, especially if I want to position the business for a sale. Executive Recruiter (Dana): That’s a common inflection point. You’re looking to bring in a president who can step into those relationships and shift the company away from being owner-centric. Mark: Exactly. I need someone who can take over day-to-day leadership and become the face of the business. But they also have to fit our culture—we’ve built this company on trust and long-term relationships. Dana: Culture fit is usually the hardest part. Finding someone with the right experience is one thing, but aligning with your values and leadership style—that takes time. Realistically, you’re looking at 6 to 12 months just to find the right candidate. Mark: That long, huh? Dana: For the right person, yes. And even then, hiring is just the first step. Once they’re in the role, it typically takes another 12 to 24 months to truly know if they’re the right fit—whether they can build those relationships and lead effectively. Mark: So, this is more like a two- to three-year transition, not a quick fix. Dana: That’s the right way to think about it. It’s a process—search, onboarding, relationship transfer, and then proving performance. But if done well, it significantly increases the company’s value and makes a future sale much smoother. Mark: I’d rather take the time and get it right than rush it and regret it. Dana: That mindset will serve you well here. Fade out The Overlooked Thought to Leadership One of the largest reasons I attribute to why 75% of business owners regret selling their company is the prior lack of understanding of all the selling process complexities and the time needed to make adjustments to their business, personal, emotional, and financial aspects prior to selling.  One of these obstacles is that the value of the business increases as the owner-centric dynamic decreases.  For a new owner, one of their toughest challenges is quickly transitioning relationships that were likely built on years of trust between the original owner and key employees. This transition has to happen in a matter of months to ease concerns and prevent negative discussions that could drive customers or employees away.  Of course, if those relationships are already secured with a new president or key manager, the risk of losing customers and employees is greatly reduced.  These are key assets on which the company’s value is based.  I often hear from owners the phrase, “I’ll just leave that up to the new owner.”  However, comments like that often quickly scare off the majority of buyers, if not at all.  If a buyer has to go through the trouble of securing a key manager or president with a new contract, it’ll often cost more than if the seller had handled it themselves.  And where do you imagine the new buyer will place the extra cost?  They simply reduce the purchase price in the negotiations.  Another important point, unless the buyer wants to be the president, the risk of buying a company and finding a president to run the company that they do not fully understand can be a huge risk.  If, say, a private equity firm does go through with the purchase because the company is large and worth the risk, they will likely offer a significant discount to account for that uncertainty. Not many private equity firms have CEOs with the industry-specific experience needed to step in immediately. Think of it like selling a home.  If you have to replace the old water heater, it may cost you anywhere from $600 to $2,500, depending if you or someone else installs it.  But imagine the buyer learning the house needs a new water heater, well, they just reduce their offer by 5-7k.  Why?  Because the inconvenience of replacing it after the closing comes with a price tag.  Now consider the conversation above.  It’s not so easy to find a leader replacement who has experience but also fits the company culture.  Also, the owner may need to go through two or three candidates before finding the right fit. This process is similar to a Navy SEALs Hell Week; all new potentials have qualifications, but only real world experience in your company will reveal the right fit. This is not an issue to be left up to business brokers or investment bankers, unless you wish to ask the broker or banker to just negotiate a large discount in the price of your company.  Their role is not to fix your company, but rather assess its value, clean up what they can, and present the business in the best possible light to find a buyer who will stomach both the price and existing flaws.  The regret often shows up once you realize that you could have earned significantly more  (in some cases millions) had you taken the time to understand the complexities of the selling process, assess your business and personal (emotional, financial, taxes, etc.) situation prior.   Instead, you realize that maybe you rushed through the sale because of business burnout, pressure from attorneys, bankers, and buyers to close, or the desire to achieve a certain sale price to prove your success.  That’s not to say those are all the reasons, because they’re not, which is exactly why I write these newsletters.  Thank you for reading. If you have a moment, I’d appreciate it if you could, like, subscribe, and leave a comment. Austec Pre-Diligence Risk Exposure System

Negotiations, Owner Conversations

Owner Conversations: You Won’t Pay for Customers?!

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Tom (Seller): Alright, Steve. I think we’re close, but I want to make sure we’re on the same page with a few points before we move forward. First off, we’re talking about an inventory transfer of about $1.2 million. However, there are some items that we’ve been phasing out and may be outdated. I’m sure we can agree that the remaining inventory has some solid value—around $900K—but we’ll need to figure out a fair way to address the less valuable stock. Steve (Buyer): Right. And, look, Tom, I’m aware of the inventory, but I think we both know that a good portion of that stock is essentially dead weight. Outdated product, expired materials—things I’m not going to resell. I’m not going to pay full value for that. I’m happy to accept a reasonable write-down on the total. Maybe, we cut the valuation of the inventory down to half—call it $500K? I’m sure you can understand that I need to protect myself here. Tom (Seller): I can see your point, Steve, but we’ve been working hard to move through those outdated items. I’d say a fair reduction would be closer to 30%, and that’ll reflect the items we’ve been clearing out over the last few months. But if you want to go lower, we can work something out on the back end, maybe in future performance terms or an earnout structure. Steve (Buyer): Hmm. I’m not opposed to some flexibility, but let’s not get too far from reality here. Now, about the customers—I’ve looked over your client list. We already have over 90% of those accounts. We’re effectively competing for the same customers, and there’s no way I’ll pay anything for those accounts. No goodwill. No transfer of value. Your customers are already my customers. Tom (Seller): But, Steve, my company has a well-established brand, and I’ve spent years building those relationships. Surely that has some value? Even if you already serve many of them, the transition is going to require some level of goodwill. I’d expect something for that. Steve (Buyer): Tom, I understand where you’re coming from. But honestly, my team has been handling those customers for years as well. There’s little incremental value in those relationships for me to justify a purchase price. And frankly, many of your clients might just stick with me because we have more competitive terms. There’s no tangible transfer of goodwill here. So, I’m not paying for customers. I’ll only pay for the assets, the inventory that I can actually use, and the employees that add value. Tom (Seller): Alright, I can live with that on the customer side, but let’s talk about the employees. I’m hoping that the key personnel will stay on board. I’d expect that there’s some value in them—especially the senior team. You’ll get stability for the transition. What do you think? Steve (Buyer): Employees are definitely important, but let’s be honest: not all of them are valuable. We’ll keep the core team, for sure—your sales manager, your operations guy, the lead technician. But I’ve heard there’s some tension, especially with your key manager, Kyle. You know as well as I do that he’s not exactly a fan of mine, or of my company. I’ve dealt with him before in direct competition and it’s been rocky. That’s a concern for me. Tom (Seller): Ah, Kyle. Yeah, I can see how that might be a sticking point. He’s been a top performer for years, but he’s definitely got a chip on his shoulder when it comes to you. I’ll have to have a serious conversation with him about the future, and if we’re going to close this deal, we may need to work out some kind of incentive to keep him on board. I’ll talk to him, but I can’t guarantee he’ll play ball with you right off the bat. Steve (Buyer): Look, I’m not trying to make this personal. But we’ve been competing for these customers, and now you want me to pay for an environment where the key manager doesn’t even like me? That’s a red flag. If Kyle doesn’t want to work for me, that’s a real problem. His team follows him, and if he’s not on board, then his department could fall apart quickly. Tom (Seller): Fair point. I’ll make sure to have a conversation with him. If I can’t convince him to stay, maybe we’ll have to adjust his compensation package or negotiate his exit, but I can’t have him being a thorn in your side, either. I’ll take care of that. But the rest of the team is solid. If we’re going to move forward, I think the employees—most of them—will be happy to join your company. Stability is a big part of what they want. Steve (Buyer): Alright, Tom, I appreciate your effort on the manager situation. Let’s circle back to the inventory then. If we agree on a reduction, say down to about $500K, and we’re on the same page with the customers—essentially, no goodwill there—I think we can move on to finalizing the structure of the deal. But I’m still not seeing the full value on the table. I’d need the inventory terms adjusted, some level of flexibility on performance post-sale, and a clean handover of the employees that matter. Tom (Seller): I think we can work with that. I’m not going to leave any stone unturned here. I’ll have those conversations with Kyle and the team. And I’ll also get with my accountants to adjust the inventory numbers and work out that reduction. But we’re close, Steve. Steve (Buyer): I agree, Tom. Let’s get this done right, and we’ll both be happy in the end. Tom (Seller): Sounds fair. There are countless variations of conversations around buying and selling businesses—and many of them end with the deal quietly slipping into the trash bin. But every so often, a conversation stands out for a different reason. Based on my experience, the more optimistic outcomes tend to come from a deeper

Calls, Uncategorized

Buyer Attorney Calls – Hold Please… I’m Losing a Customer

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[Phone rings — click] Owner: Hey, this is Mark. Attorney: Hi Mark, this is Susan, counsel for the buyer. I’m following up on the HR benefit documentation—we still need the last three years. Owner: (exhales) Yeah… I’ve been pulling that together. I sent over 2025 already, and part of 2024— Employee (muffled, in background): Mark—sorry—there’s a customer out front asking for you, they’re upset about the order delay. Owner: (covers phone) Give me two minutes, I’ll be right there.(back to call) Sorry. It’s been like this all day. Attorney: I understand you’re busy, but we do need complete files—plans, amendments, enrollment summaries, everything—for 2023 through 2025. Owner: Right, and I’m trying, but every time I send something, I get another list of questions about why we changed providers or adjusted contributions. That’s hours I’m not on the floor. Employee (louder): Mark, he says he’s leaving if he doesn’t talk to you now. Owner: (frustrated) I said two minutes!(back to call, voice tight) Look, this process has been going on for two months. I’m running a business while digging through archives every night. Attorney: I hear you. But the buyer needs clarity—especially given some inconsistencies we’ve noted. Owner: (dry laugh) And now I’m hearing “price adjustment” because of it? Attorney: It’s just part of due diligence. Nothing final. Owner: It doesn’t feel like “nothing” from my side. I’ve already got customers noticing I’m distracted. I might lose one today because I’m on this call. Attorney: Understood. If you can prioritize the remaining documents, we can minimize further back-and-forth. Owner: I’ll send what I have tonight. But I need this to stop being a moving target. Employee (urgent): Mark—he’s walking out. Owner: (firm, exhausted) I have to go. I’ll follow up later tonight. Attorney: Okay. I’ll look for your email. [Call ends — silence for a beat] Owner (Mark, to himself):(quietly) When does this actually end… (pauses, looking toward the floor where the customer just walked out) Two months of this. Every document turns into five more questions. Every answer turns into a new problem. (shakes head) At some point, it’s not even about running the business anymore—it’s just feeding the deal. (sighs, tired) And now they’re talking about lowering the price… after all this. (under his breath) What if this thing doesn’t even close? Fade Out Austec Pre-Diligence Risk Exposure System

Stories, Uncategorized

When the Deal Is Not the Deal: Distribution Story

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A business owner in Chicago decided it was time to sell his manufacturing company. After 30 years of hard work, he wanted a “fair deal” and a smooth exit. One day, a polished buyer approached him—well-spoken, respectful, and clearly experienced. The buyer praised the company, called it “a legacy operation,” and said he wanted to “protect what you’ve built.” The owner was impressed. The buyer offered $8 million. Not the highest number the owner had heard, but close—and with something even more appealing: simplicity. “No messy earn-outs,” the buyer said.“No risk to you. Clean deal. Quick close.” The owner felt reassured. Other offers had higher numbers—$9M, even $10M—but they were full of contingencies, performance clauses, and long transition periods. They negotiated a little, settled just under $8 million, and signed. At closing, everyone congratulated the owner. His lawyer called it “a solid deal.” His accountant said the taxes were manageable. The buyer thanked him for his trust and promised to “take care of the company.” A few months later, the owner heard things had changed. Production had slowed. Then stopped. Most of the employees—people he had worked with for decades—were let go. Confused, he reached out to someone still connected to the business. “They didn’t really want the operation,” he was told. “They kept a skeleton crew for a bit, but that wasn’t the point.” “The point?” the owner asked. “The distribution.” It turned out the buyer already owned a competing product line—one that struggled to get shelf space and reliable market access. What they saw in his company wasn’t the machinery, or the team, or even the brand. It was the network. Decades of relationships. Contracts. Shelf placements. Logistics pipelines. Trusted channels that took years to build. Within months, the buyer had replaced his products with their own—moving through the very same distribution system he had spent a lifetime creating. The company, as he knew it, was gone. But the channels? More valuable than ever. That’s when it clicked. The buyer hadn’t been buying a business. He’d been buying access. And the $8 million? That was the price of a shortcut—one that would have taken years, and far more money, to build from scratch.

Strategy/Business Model

When the Deal Is Not the Deal

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A business man walked into a bank in New York City and asked for the loan officer. He told the loan officer that he was going to London on business for two weeks and needed to borrow $5,000 and that he was not a depositor of the bank. The bank officer told him that the bank would need some form of security for the loan, so the business man handed over the keys to a new Ferrari. The car was parked on the street in front of the bank. The man produced the title and everything checked out. The loan officer agreed to hold the car as collateral for the loan and apologized for having to charge 12% interest. Later, the bank’s president and its officers all enjoyed a good laugh at the business man for using a $250,000 Ferrari as collateral for a $5,000 loan. An employee of the bank then drove the Ferrari into the bank’s underground garage and parked it. Two weeks later, the business man returned, repaid the $5,000 and the interest of $23.07. The loan officer said, ‘Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multimillionaire. What puzzles us is, why would you bother to borrow $5,000?’ The business man replied, ‘Where else in New York City can I park my car for two weeks for only $23.07 and expect it to be there when I return?’ Don’t ever underestimate a business deal! Take our time with our Austec Pre-Diligence Risk Exposure System

Owner Conversations, Wealth, Estate Planning and Taxes

Owner Conversations: “When Your Exit Becomes Their Burden”

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Characters: Martin (Business Owner) Elaine (Estate Attorney) Scene: Late afternoon in a quiet, glass-walled conference room overlooking the company’s headquarters. The last of the staff have gone home.  Martin sits at the head of the table, a thick deal folder open in front of him. Elaine stands nearby, reviewing documents, the weight of the decision settling into the silence between them. ______________________________________________________________________ Martin: I’ve been thinking seriously about selling the company. The offer on the table is solid—but part of the deal includes a seller note. That’s what’s giving me pause. Elaine: It should. Seller notes can be useful, but they introduce risk—especially from an estate perspective. What concerns you most? Martin: If I carry the note and something happens to me—or to both my wife and me—after closing, what does that mean for my kids? They’d be relying on payments from the buyer instead of a clean lump sum. Elaine: Exactly. At that point, your estate essentially becomes a lender. Your beneficiaries inherit the note, not cash. That exposes them to default risk, delayed payments, and even potential disputes with the buyer. Martin: So instead of a clean transfer of wealth, I’m leaving them a stream of uncertainty. Elaine: That’s one way to put it. And depending on how the note is structured, they may not have the expertise—or the leverage—to manage or enforce it effectively. Martin: What if the buyer runs into trouble? My kids aren’t exactly equipped to renegotiate terms or pursue legal remedies. Elaine: That’s another key risk. You’d want to consider safeguards—like personal guarantees, collateral, or even insurance to cover the note balance in the event of your death. Martin: Insurance tied to the note? Elaine: Yes. A life insurance policy could provide liquidity to your estate, essentially replacing the value of the outstanding note if something happens to you. It’s not a perfect solution, but it mitigates the timing and credit risk. Martin: I assume structuring the trust properly matters too. Elaine: Very much. You may want the note held in a trust with a professional trustee—someone capable of managing the asset and making decisions in the beneficiaries’ best interest. Martin: So the real issue isn’t just whether I take the seller note—it’s how exposed my family is if I do. Elaine: Precisely. The note shifts risk from the buyer back to you—and potentially to your heirs. The question is how much of that risk you’re willing to carry, and how well we can insulate your family from it. Martin: Then before I sign anything, I want a plan that protects them—even if the worst-case scenario plays out. Elaine: That’s exactly the right approach. Let’s build the structure first, then evaluate the deal within that framework. The Overlooked Role of Estate Planning Estate planning is one of the most commonly overlooked elements in a business transition—and one of the most consequential. Consider this real scenario: a father transferred ownership of his company to his son (the acting president) and his daughter (who was not involved in the business). To manage potential disputes, he left a tie-breaking ownership stake to his wife. After his passing, a disagreement arose. The mother sided with the daughter on a critical decision. The conflict escalated, and ultimately, the business unraveled. No one involved intended that outcome. But without a carefully structured plan that accounted for both governance and family dynamics, the risk was embedded from the start. What This Means for Owners These examples aren’t outliers—they’re reminders. A business transition is not just a transaction. It’s a multi-layered shift that touches finances, identity, relationships, and legacy. And while no plan can eliminate every risk, starting earlier gives you the time and clarity to make better decisions. If there’s a consistent lesson across these conversations, it’s this: The quality of your outcome is shaped long before the deal is signed. Estate planning, tax strategy, deal structure, and post-transition life aren’t side considerations—they are central to whether you walk away with confidence or with questions. The goal isn’t perfection. It’s preparation. Thanks for reading Prepare|Exit|Transition! Subscribe for free to receive new posts and support my work. Austec Pre-Diligence Risk Exposure System

Due Diligence, Owner Conversations

Owner Conversations: “What Stays Behind”

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Characters: Frank – Seller, late 60s, seasoned owner of a large plumbing company Evan – Buyer, early 40s, sharp, observant, cautious Scene: Late afternoon in a large yard behind the company shop. Rows of service vans and trucks are parked. Frank and Evan walk side by side. ______________________________________________________________________ Frank (gesturing proudly): This is the backbone right here. Twenty-three vehicles total—fully outfitted. Most of them rotated in the last five years. Evan (nodding, taking notes on his phone): They look well maintained. Service logs all included? Frank: Every oil change, every repair. We stayed on top of it. (They continue walking. Evan slows as they approach a newer, clean truck parked slightly apart.) Evan: That one’s in great shape. (checks his list) I don’t see it on the inventory sheet. Frank (glances at it briefly): Yeah—that one’s not part of the sale. I’m keeping that for myself. Evan (looks up): Keeping it? Frank: Just for personal use. You know… errands, getting around. Evan (studies the truck more closely): Was it used in the business? Frank (casual tone): Oh sure, but nothing major. Just my run-around truck. I’d take it to job sites, bring supplies if something was missing, check in on crews… that kind of thing. Evan: So… more of an oversight vehicle? Frank: Exactly. (Evan walks around the truck, peering into the bed. It’s stocked with tools, fittings, and equipment.) Evan: There’s quite a bit in here. Frank (shrugs): Yeah, I kept it stocked. Made things easier instead of pulling from the vans. Evan: Are those tools included in the sale? Frank (shakes head): No, I’m keeping those too. Goes with the truck. (A pause. Evan straightens up slowly.) Evan: So the vehicle you used to move between job sites… (gestures to the truck) …handle gaps, bring supplies, check crews— that’s not transferring with the company? Frank (slightly firmer): No. You’ve got everything you need with the rest of the fleet. Evan (measured tone): Maybe. (beat) But that sounds like more than just a “personal” truck. Frank (a hint of defensiveness): Look, every owner has their own way of operating. You’ll have yours. Evan: Sure. (pauses, then carefully) But it sounds like this truck played a pretty central role in how you ran things day to day. (Frank doesn’t respond immediately.) Evan (continuing): Filling gaps. Solving problems on the fly. Being present on-site. Frank (shortly): That’s just experience. You can’t put that in a purchase agreement. Evan (nods slowly, but his expression shifts): No… but sometimes you can see where it lives. (He glances again at the truck.) Evan: Help me understand something— if you’re stepping away… why keep the one piece that kept you so connected to everything? (Frank crosses his arms, looking at the truck instead of Evan.) Frank: I’m not planning to just sit in a chair all day. Evan: So you’ll still be… around? Frank (quickly): Not in the business. Just… around. (Silence hangs between them.) Evan (quietly, more to himself than to Frank): That’s the part I need to be clear on. (Frank finally looks at him.) Frank: You’re buying the company. Not me. Evan (meets his gaze): Right. (beat) I just need to be sure the company can stand without you driving that truck into every problem. (Another long pause. The confidence from earlier has thinned.) Evan (exhales slightly): Because if that truck represents how things actually get done… (shakes his head faintly) then I need to rethink what exactly I’m buying. (Frank says nothing. The hum of distant traffic fills the silence.) Fade out.

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