Episode 2: Building a Business You Can Sell: How to Prepare for a Successful Exit
Most business owners pour their heart, soul, and every available dollar into building something meaningful, but few are thinking about how they'll eventually step away. In this episode, Bill West, Founder & CEO of ESOPable, shares a clear, grounded roadmap for building a business that is truly transferable.
Listen in as Bill breaks down the real differences between internal and external sales, how ESOPs work, why forecasting increases value, and the operational habits that make buyers lean in instead of walk away. You’ll learn how businesses are valued, what buyers pay attention to long before negotiations begin, and the structures that can maximize both liquidity and legacy.
Don’t miss this practical, candid conversation for business owners who want to ensure their company is strong, stable, and ready for whatever comes next.
What You’ll Learn:
Why every business owner should “begin with the end in mind” from day one.
The two primary exit paths and how to know which fits your situation.
How buyers evaluate businesses and which red flags most commonly turn them away.
Why forecasting (even just 90 days ahead) creates clarity, stability, and long-term value.
The difference between asset sales and stock sales, and why the trend is shifting.
How financing structures (SBA loans, seller notes, ESOPs) influence business value and deal terms.
Ideas Worth Sharing:
“Begin with the end in mind… If you're thinking about your business with the end in mind, you're going to do the right things from the beginning. The things that you do to make your business valuable are the right things to do for business.” - Bill West
“The best thing somebody can do is get the business to operate without them… If you can very comfortably go on a couple of vacations a year, and you know your team's got it, you've really created a lot of value with that.” - Bill West
“Listen to your counselors… Find somebody, get referred to somebody you can trust… If it's a business valuation, listen to it... Make sure you listen to that advice and follow it.” - Bill West
Resources:
Bill West: LinkedIn | Phone: (772) 812–5530
Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow
About Our Guest:
Bill West is the force behind ESOPable — a Marine Corps veteran and seasoned business expert who has spent his career guiding owners through complex transitions with clarity and precision.
Drawing on decades of experience in SBA-backed financing, Bill has built, bought, and sold banks, led high-performing commercial lending teams, and successfully structured exits across capital-intensive, compliance-heavy industries. His approach is calm, analytical, and deeply strategic, helping closely held companies build transitions that protect both value and culture.
Bill personally leads every engagement, ensuring every business he works with has a succession path that is both financially sound and built to last.
Connect with Us:
If you're ready to stop avoiding your finances and start building the future you deserve, schedule a free call with me at pelicanfinancialplanning.com and let’s create your personalized financial plan together.
And if you want ongoing guidance, clarity, and confidence as you grow your wealth, subscribe to our newsletter for financial insights delivered right to your inbox.
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Read the Transcript:
Bill West: If you can very comfortably go on a couple of vacations a year and you know your team's got it, you've really created a lot of value with that. Getting the business in a position to operate without you, having good reporting, good reports—if you're able to forecast, your business is gonna operate differently, and you're gonna show something to buyers that they usually don't see.
Welcome to The Wealth Development Studio. I'm your host, Genevieve George, Senior Financial Advisor and Founder of Pelican Financial Planning & Wealth. Our goal for this episode is to provide clarity about today's financial topic, inspire you to be brave with your questions, and gain confidence in your financial future. So take a deep breath, grab your favorite cup of coffee, and step into the studio. Your dose of financial empowerment begins now.
Genevieve George: I know many of our listeners are already small business owners, or considering starting a business. Being a small business owner myself, I understand the pressure that puts on your overall financial picture. We are investing not only our money, but also time and energy into what we are building and growing.
In some cases, this becomes one of the largest assets on a person's balance sheet, but only if they're able to monetize it, regardless of how far out in the future a sale or transition may be. Our guest today, Bill West, is a strategic transition expert. Over 70% of US business owners say they'll transition their business in the next 10 years, yet fewer than one in five have a formal written exit plan.
In other words, there's a big gap between intention and preparation. As a financial planner, I wanna help bridge that gap. Welcome, Bill. So glad to have you.
Bill West: Thank you. Thank you, Gen. Very nice to be here.
Genevieve George: Let's start at the beginning. If you could reach those individuals that are in the very early creation stages of building their new business, what advice would you give them?
With the idea of a future sale in mind, they may not be thinking about that in that creation stage at all, but what should they be thinking about?
Bill West: They should be thinking about that. That's what I've said for a long time. Now, I'm fortunate enough to—I've been with businesses completely through the cycle of startup, and now we're on the selling side.
But when I was very much in the startup side in commercial lending, it was begin with the end in mind. It's the old Covey line. One of the steps that one of the habits was to begin with the end in mind. And I've always said that with your business, if you're thinking about your business with the end in mind, you're gonna do the right things from the beginning.
The things that you do to make your business valuable are the right things to do for business. That's what makes it valuable. Definitely begin with the end in mind. Be thinking about down a determined path. What you're trying to do is set up for options. There's the book, Built to Sell—one of the famous business sale books.
But I would say build with the option to sell. What you're trying to do is build yourself in with options so that as life and as business and things come at you, you can maneuver with your business and just be thinking forward to begin with the end in mind. The other thing I would say in there that leads into that very early stages is to, people always look backwards with their financial statements and if you can get to the point where you can forecast so you can look ahead—even just 90 days—but if you can look ahead 90 days, you'll figure out how to do it for a year in advance.
People say they can't forecast, you can forecast. Trust me, the best thing you can do for your business is going to be to look a little bit ahead, not all the way ahead, but a little bit ahead with it, and it'll give you a lot more clarity as you go further down the road.
Genevieve George: I love that. Yes. Begin with the end in mind and start forecasting as soon as you can. Even if it's a short period of time that you're forecasting it. That's amazing. What does it really even mean when we say that four out of five business owners don't actually have a written exit plan?
What does it mean to even have an exit plan? What does that look like?
Bill West: I'm glad you brought that back up 'cause I heard that fact and I have never seen one in five. This is what they written, formal plan, something they think about towards the end. I do a lot of business valuations, a lot of things.
I talk to business owners as early as, like I said at the very beginning because they're starting to organize and moving along through that path. The more that you can do and understand the better off you'll be.
Genevieve George: And coming back to begin with the end in mind and getting your ducks in a row for what that may look like.
Is there a spot where it's too late for somebody to start planning for this?
Bill West: It's never too late. When you're talking to business owners, right now, what we're doing with the valuation, with any conversation, it's to begin thinking about that, have a formal written plan, especially as you're going process, and it's a decision.
Business owners—business brokers will call them sellers, and there's no such thing as a business seller. There's a business owner who develops something of value. Now they have a problem that they need to do with it. If you have your IT professional that is dependent on you every month. Your secretary, your workers, your manufacturer, laborers.
Everybody is dependent on you and you've got to make a decision. And as you go through life, we don't know necessarily what we're gonna be doing in three years, especially lately. You have to be able to maneuver and you have to be flexible for that. A written plan as you're going through that is probably too much to be thinking about your exit, to be thinking about your exit opportunities.
If you do have a determined path, then absolutely a written plan is the right thing to do. You're approaching retirement, you've got options. You have to figure out, like I said what you're gonna do with your business. What are your options there for that? Do you have a key person in your team?
But you can transition the business to, how do you go about doing that?
Genevieve George: So what are the types of transitions that businesses can be thinking about selling to within the company versus externally? Can you talk through when you're meeting with a business owner, what are you talking to them about as far as exit options?
Bill West: Sure. So there's two big categories of options. One is to an external sale. And then the other one is to sell to your employees somehow. I do a lot of work with both external sales, where you're selling to a third party, which determine what that path's gonna be. You understand the business and put that on the right path for the right buyer there.
My preferred path is to sell it to employees. If there's a key person around, if there are key people leaders, whether it's chief operating officer, somebody's your key sales person, something along that line, then I enjoy selling to them. Helping with the transaction, helping people understand, I start with the value and figuring out what that piece is there.
From that, you can determine a structure, a sales structure for those employees. The other employee sale option that I love, that has a lot of tax benefits and things to it, that's a lot of larger businesses are selling to private equity firms now because of the multiples that they pay, but it's not necessarily the right thing that they want to do for their business.
So the alternative to that is an ESOP. ESOP gives you, it'll give a business seller full value, significant tax advantages for them, and then you can set up the businesses, a tax advantage business at the end, straight culturally great for the businesses. All both of these paths are great culturally and great for the business.
That's why I enjoy working with them. The options, really for business: an internal sale or an external sale, you're selling to a third party, or you're selling it to people that are inside your business that are very familiar with your business. An external sale would include people that are familiar with your business.
Maybe it's a close partner or somebody that you're a vendor for, or is a vendor for you, that you're vertically integrating, but still that's an external sale. Internal sale would be too you've got a key person a chief operating officer, a great sales person, a great whatever it is that you do that they're really good at it and they're capable of operating the business and you would like to transition it to them.
I assist business owners with and the employees with structuring that sale, valuing it putting the right value on it, and then making a financial transfer that's beneficial to everybody, beneficial to the business. It gets to continue on with known players and everything.
And the employees get to—it's a real boost for them. The other way to sell to your employees that I absolutely love is an ESOP. SBA recently changed their rules a little bit to allow smaller ESOPs. So typically you think of an ESOP, you think of a pretty large multimillion dollar business.
The SBA rule changes. It's allowed regular 5, 20 million local, industrial park size businesses with business owners and employees and local employees that live here the opportunity to purchase the businesses. So you form a trust to purchase the business from the employees.
You go through structuring with it but the benefits for the seller are you're gonna get a PE equivalent exit value. You're doing something for your employees and for everybody else. And the tax advantages are there. There's significant tax advantages. The business on the other side can be—it has advantages just culturally is a huge advantage.
And then there's other opportunities for tax advantages for the business on the other side. So it really, if you have the ability, if you're considering a sale to a PE firm, you should be considering an ESOP.
Genevieve George: Okay. And when you're saying PE, you mean private equity, correct?
Bill West: Private equity, I do. Yeah.
Genevieve George: When you're working for all three of those types, an internal sale to maybe a key employee or an ESOP or a third party external sale, do you see that the business owner is often still involved in the business post sale?
And does that look different based on the type of structure?
Bill West: Yeah, very different based on the type of structure, frequently involved in the post-sale to some degree with employees. And with the ESOP, you can really have a great deal of involvement Still in the business. It can be a long-term transition plan for you.
Typically, when it's an external sale, there may be with some businesses, there's licensing requirements and qualifying type requirements. Sometimes the business owner will have a consulting agreement or something along that line to be the qualifier for a period of time while the other's getting qualified.
Generally a very short period that the owner—the former owner—is still in the business after the fact.
Genevieve George: Okay. I think that's important for people to be thinking about When I think about financial planning with clients, that changes the timeline, right? If they're considering their exit sale, but they may still be involved post-sale for a short period of time or a longer period of time, depending upon the structure.
Important for them to be thinking about that early as they're making their plans so that they're not retiring three years later than they had planned. Are there certain things that make a business more attractive to a buyer or some sort of transition?
Bill West: Key thing: the best thing somebody can do is get the business to operate without them.
So take a vacation. Figure out how to be able to take a vacation. If you're a business owner that can't take a vacation, you don't have as much value in the business. You can go on vacation if you can very comfortably go on a couple of vacations a year and you know your team's got it. You've really created a lot of value with that.
Getting the business in a position to operate without you, having good reporting, good reports, you're able to forecast, your business is gonna operate differently, and you're gonna show something to buyers that they usually don't see.
Genevieve George: That’s great. And I love that there's a vacation element of this. We're gonna test it out with a trip.
Bill West: Take a vacation. Once you get to take one vacation, start taking two.
Genevieve George: Yeah. Are there red—like on the other side of that—red flags that turn potential buyers away even if a business may be profitable? I know you mentioned one, but maybe there are others that you wanna share.
Bill West: Value is a big one. A business owner's value. Look at a lot of other valuations, getting to that value. Using that value, listening to it is one thing. Business owners, it's a two-way street. It's a dance. You're learning the dance, you're learning the date. It's not a home sale where the buyers and sellers aren't ever around.
There's a lot of communication that has to go on here very early in the process. You have to be friendly, you have to be open, you have to be communicative, all of those things. Anything that in any relationship would give you cause to pause is gonna give a buyer pause to pause. Keep it moving forward.
Keep it light. Make sure you're answering the questions that they ask in a friendly and a quick, prompt manner. The tempo that you go with these transactions, you can measure a buyer and a seller, and they need to match. That's where I go back to the dance thing again. So when somebody's asking for something, if they're delivering something to you really quickly, you should be just as responsive to them.
If they're slow and thoughtful, then you got a little more—you can do that as well. But truly try and answer the questions immediately, quickly, correctly. Having that information available you, you can't fake it if you're doing it quickly. The longer it takes, the more curious somebody gets. But if you can pull a report, somebody asks you for an inventory and you can pull a report and give them the inventory report or show it up, pull it up on a computer screen right there, it goes a long way.
Genevieve George: That's excellent. That's great advice. When you are working with businesses, maybe even in advance of them thinking about an actual sale. How are the businesses valued? What is your process of helping an owner understand the value that their business has and can that number be influenced?
Bill West: Yeah, sure. Yes, it can absolutely be influenced. Financing is the biggest way that it can be influenced.
But I guess we'll circle back to that. So how do you value a business? If you're gonna sell your business, there's only one way to value your business. When you go to appraisal school, appraisal institutes, and they'll tell you about all these different ways and they tell you about weighting them and whatever.
The weighting is a hundred percent. If you're selling your business, the right value for it is the value you're gonna get on the market. 100%, period. There's no discounted future cash flow. You can't discount a future cash flow on a business. But I see smart people trying to value businesses like this all the time and wrong.
It doesn't give you a factual answer. It's understanding what the business is, understanding the industry of the business, and then comparing it to similar businesses, like you would do a house sale. You're getting comparable.
Genevieve George: Yeah. And that's my house for $10 million. But nobody's gonna buy it, is what you're saying, right?
Bill West: Exactly. Yes. Getting the data for that, understanding the business, having that I access, I use the SBAs, sold their database that they have. I've got current information, very factual tax return, been verified. I can have a high degree of confidence in it. I can peek into that information. I peek into it by NISDS codes and by business size.
And then I find those comparables, and that's what I use for the comparable base. The other piece of it, really the hard work—that's database work. It's getting to, it's the right thing, important to get to the right information. The harder work is understanding how to normalize the cash flows, how to understand what an owner is taking out of that business to get to the right number that you're using.
Once you've got the right multiple from the other side, you've got the right numerator, denominator, you come up with the right answer. Getting to that, doing those pieces are the, that's the proper way to put your business on the market to value it is to look at other businesses that’s similar.
If you're in the manufacturing industry, yes, there's a ton of different kinds of manufacturers, but the business itself, I've looked at it, there's going back to my banking routes a long time ago, and that's where this system comes out of, is building a loan loss reserve system for a bank. So that's how to calculate it.
But going back to those RMA classes and everything, there's something called a common size analysis where you can look at businesses and after you've been looking at a lot of businesses for a lot of decades, there's business models and there really are great similarities. The NAICS code is a great tool to narrow it down, and then you get to within sizes. There's a little bit of variations of things that you can do, but tearing it down, getting the right facts, and then going with the market approach, very rare that you can do it, use a discounted cash flow approach.
But I see it all the time in valuations, and I see it given a pretty heavy weighting. It's gonna lead to the wrong answer.
Genevieve George: So would you say—just recapping that a little bit—would you say that it's really important for the business owner themselves to really have very well organized financials where they can easily pull out those pieces that are very owner-specific, like owner payroll.
Maybe they're running a few of their personal expenses through the business 'cause of shared expenses, but those could be easily pulled out so that you can see what is the true value of the business and then compare it to similar businesses in the marketplace. Is that a fair recap?
Bill West: Buy difficult for an owner to do. Hire somebody to help you to show you this.
Genevieve George: Yes. You need an expert for that.
Bill West: Yes, they can get through the weeds for you. So you're gonna give them the financial statements. They're gonna do the hard work for you. And they're gonna say these are the important facts here. This is what you're doing right.
This is some place you can improve some. Yeah. Most businesses, when you look at 'em, again, comparing different businesses is a lot of consistencies. Most businesses, when you compare their, so most people, let's talk about forecast. Most people never look at the trends. A three year comparison, that's what I'm using is getting that three year comparison.
It's telling me trends and many businesses across those accounts in there, like your wages, right? There’s gonna be a trend to it. Small. It's light growth trend. If it's up and down and all over the place, or wages are all over the place, there's some other expense or something.
Sometimes they're one-off events and you can add those back. It's good to understand the business. Sometimes you're not doing the proper tracking of your financial information, putting it in the right places and preparing and planning your business. Most businesses are very consistent as they go across.
Genevieve George: That inconsistency when you look at that three year is make a red flag?
Bill West: It tells stories anytime. That's why I look at them across the trend. I'm looking at the actual numbers and then I started mentioning RMA. It's a common size analysis where you're pulling 'em down into where you can compare 'em and there's different information in there.
I did a valuation for, it was a gentleman I had helped him start these two great restaurants. He had passed away. His family had the business. His wife was running one restaurant and their son was operating the other restaurant. When I looked at their cost of goods sold, mom was getting, she was providing groceries for many families in addition to the restaurant business.
It was very obvious. We were able to find that and they were able to cap that, and then there was more value there that they could find in the business.
Genevieve George: Okay. That was an interesting side-by-side comparison. Yeah. I love that. It tell stories. That's a nice way to put that. This could potentially be a whole different topic for another day, but I touch on it.
In my experience when I'm working with clients and they have a business and they're getting ready to sell, there is a difference between an asset sale and a stock sale. Can you break that down a little bit? So people understand, what the difference is and why it's important to know that as they're walking into this exit plan.
Bill West: Lot of differences between them.
You're starting to see a lot more stock sale. Almost every sale used to be an asset sale, and there were liability reasons for that. There were some very good business reasons to do an asset sale. You're buying the assets of the business rather than the entire business itself.
The goodwill. You're buying the telephone, you're buying everything that would make up a whole business, but rather than transferring the stock, you're buying those assets, whatever those liabilities would stay with the business. Typically, you're getting the assets, you're buying them free and clear, and you're using whatever debt or capital structure you have to acquire those assets. You're given, the business owner, the value of the assets, the value of, like I said, the goodwill is an asset, right? And it can be a very substantial asset. That’s where we use SBA. Lending is terrific with goodwill. Seller financing is terrific with goodwill. We're gonna circle back to that value question that you asked earlier 'cause it's hidden in there.
Genevieve George: Okay. When you're talking about an asset sale, the reason that was more favorable was because of the tax treatment of that, right? That they're not—they're only buying the assets, they're not taking on the liabilities of the existing company. And then the taxable gain treatment of that, is that accurate?
Bill West: Partially. It's more it's mainly, it's the liability. Okay. So there's asset sales or stock sales. A stock sale is the easier transaction to do.
Genevieve George: Because you’re buying the whole thing.
Bill West: You're actually buying the stock. Either way, you're buying the whole thing with a stock sale, stock purchase, you're actually purchasing the stock. So all of the, if it owns real estate, if it has all of your licensing and things that are set up. You bought the stock. So most of that, unless there's other contingency items, there's things you have to sort out within that, but it really transfers over.
There's guarantees and obligations that the seller's gotta get released and the new buyer needs to take on. But it's a much simpler, turnkey solution—
Genevieve George: Because you are taking over their liabilities as well.
Bill West: With that comes all the liabilities, so that's where you can structure. Now legally, and I'm not the attorney, but attorneys tell me confidently and CPAs tell me confidently that you can still, even in those transactions, you can put the proper verbiage in your documents to leave those liabilities behind. Some people stood an individual choice, a business choice. It's a strategic choice. Each sale is different to have seen definitely a trend of, especially in the bigger businesses, stock sales over asset sales.
Genevieve George: Okay. And. When you are thinking about this sale itself, working with attorneys, working with CPAs, so what is your guidance towards that business owner as they're working towards this exit?
What are you telling them to talk to those other professionals about from a planning perspective?
Bill West: Sure. Definitely, your CPA is taxes, as you're mentioning, right? What can you do? There are some CPAs. There are services, there's things available to you that if your CPA says there isn't a lot to do, there usually is more that you can do, getting some good tax advice on what you can do to defer your taxes perhaps into perpetuity or perhaps actually have them go away one day.
There's definitely items along that path. With attorneys, it more gets into it's the operating agreement, the transfer. It's especially in some of these employee sales and things. It's what do you have in place already? That operating agreement is very important. I like to see it. Sometimes there's clauses and things that you might use in there. A well prepared one.
Most are not well prepared and most don't have anything meaningful at all in them, but you gotta at least look there because it's already there looking there. Attorneys also, it's very much in the closing of the transaction, in the transfer.
Does the stock sale liability, right? Stock sale, asset sale, how do you do it? Historically, they were almost all done asset sales. I'm seeing more and more buyers that are willing to do and open to, or even prefer, a stock sale on a business.
Genevieve George: Okay.
Bill West: That's the legal
Genevieve George: And on my side of things, when I am working with clients and they're going through a business sale, a liquidation event, some of the other things that we're talking about, we are making a plan for that tax bill because there you have a basis and then you have a sales price and there is some tax gonna be due.
And what are the ways that we can work with the CPA to reduce that tax liability as much as possible, or defer. We're encouraging a little bit of tax planning in there, as well as planning for that new wealth that they maybe didn't have in the same way.
That matters, working with the estate planning attorney, because now their financial picture has changed and we need to make sure that they're protected and that, if something happened to business owners day after sale, what happens to all those assets,mMaking sure that there's a plan around that.
I'm sure that you're having some conversations with these people as they're—there's a lot of changes that come with a business sale and a liquidation event for those individuals.
Bill West: That's what I said. That's why I enjoy my job. It's where I get to sit. It's right in between those two. So typically, in the last year of clients that I've been working with, more than half of 'em have had a baby while we've been going through the purchase.
They're purchasing the purchasers. More than half of 'em have been having kids. I'm on that great life beginning journey with them, and hey, we're doing this new great thing and we've got this great business and we're gonna roll in there. We're the former owner had loved on it for years, did it the hard way, and now we've got our MBAs and we're gonna apply some modern marketing and things to it and help it grow.
On the other side, they're super excited. On the other side is exactly what you're saying. It's that liquidity event. It's going off into the side. These business owners have been—many of them have been reinvesting every single nickel since they started the businesses. A lot of 'em are living in their first homes.
They're driving old cars, driving old trucks, and it's a windfall for them. It is a complete life changing event. They've never had money to manage and don't power what? Deferring taxes and whatever. It's a fact of life. Oh, I'm gonna have to be fact. Plan a little bit. Talk your financial planners a great deal.
Genevieve George: Don't go out and spend those dollars that you gotta pay for your taxes.
Bill West: Exactly, yes.
Genevieve George: Let's put those aside and make a budget for what you can spend.
Bill West: Yes, you will need the income. So more planning on that front would definitely be wise.
Genevieve George: It's always an interesting period to work with clients on my end as well.
As you said, if it's that business owner that has put everything into their business and maybe it didn't have a lot of extra income or cash on hand for them to have it and see, okay, what do we need to do to make this last? And if they're not gonna start a new business or have another income-producing job or anything, they need to have a plan to make that work so that they don't take this incredible thing that they built, that created all this liquidity and then squander it before they are done needing it, right?
Bill West: Yes. People living longer, you need it longer, yes.
Genevieve George: Yeah. A couple more questions on the exit planning. So when you're working through these, what does a typical deal structure look like? I know there's a couple different ways to do that. Is it a full liquidity event, or is there like a period of time, or what is that?
Maybe I'll stop talking, let you talk.
Bill West: No, that's perfect. That goes back to we had the value question, how to add value in financing and stuff so that this fits in there to get the most value for your business, it has to be financeable. The best way to finance it would be with an SBA, for most businesses, right?
Most Main Street businesses, a $600,000 business. It's a $3 million business, right? That's very much in that SBA sweet spot where they're $5 million. You can do a $10 million transaction. With the SBA ESOPs, you can easily do a $10, $15, $20 million size transaction for them.
But the structuring, so being able to have that structure, you have to SBA that allows that. The other way to allow that is to be the bank, right? Yeah. Not everybody needs a full liquidity event or want a full liquidity event. And there's even sometimes when you're doing an SBA loan or when you're trying to get full value, people really want to stretch the value.
If you're gonna get more value, you need to have some skin in the game. So it's gonna be some kind of earnout, some kind of seller financing, something along that front that's gonna say, “Hey, I believe in this business more than and you should believe in it with me. I'm in there with you.”
That is definitely a structuring possibility that they have. Sometimes the SBA, if the sellers maybe cash constrained or there's something that the SBA might want to see a small seller note. So it's a subordinated seller note that they would have and hold for a little bit, but usually that's pretty minor.
So typically they are full liquidity events. It's a full-out purchase. You're selling a hundred percent of your stock. And that's the way you structure with the employees. You can structure things a little bit differently. With the ESOP, it can be structured very differently, and you can do a lot of things for tax purposes.
Usually, there's a seller note in there for tax purposes and for other purposes. The SBA, you're getting a lot of liquidity. You can get a $5, $7 and a half million dollars worth of liquidity right up front and then have these recurring income streams. You can still be employed, you can still be the chairman of the board, right?
You can still work within the business. Best thing I can say is your business needs to conform to those SBA standards. That's where you're getting the full value for your business. When it falls out of those standards. I was working on a valuation and they just had a—it was the way their earnings actually came in.
It wasn't a bad year, but the way their earnings came in, knocked them down last year like they were having a great growth trend, and then you get this one blip that's back further down than into the three years. You can't get SBA financing. So that takes that out of the mix. So now you're looking for a cash buyer.
So your value dropped there. Making sure that your business is lease ownership, the occupancy of the unit that you're in is important. So having somebody that can talk to your banker, understand what that is with your business. If you're SBA financable it's likely to be financeable in a sale.
If you look at it that way, that's where the best businesses get the best value. And if you don't fit into that box, it's gonna be a haircut for you.
Genevieve George: That's great. How can business owners protect themselves during negotiations without scaring off good potential buyers?
Bill West: Having honest information? You want to, like I say it's being diligent, having it being communicative.
Your buyers are gonna be motivated to buy your business or not. The intent and the ability, right? So does a business owner have the intent to sell right now? Do they have the ability to have all these things that we're talking about and on the same side with a buyer? It's that intent and that ability, or what I'm looking for, are they driven to buy your business?
So if somebody's driven to buy your business, you gotta chase 'em off. You have to do something wrong. You're not being right on value or there's something that you're not communicating clearly that's, maybe you any kind of questions that you create as you would with any relationship or what's gonna cause room for pause.
And the more of those that you add, the more somebody's gonna pause and then eventually they may walk away.
Genevieve George: What I thought was gonna come out of that, and this is where my mind is going as we're having this conversation, is that this is not uncomplicated. You should not try to navigate this on your own.
It sounds like you're gonna get the best results if you actually work with a true professional that helps work through these business transactions. Because you may know your business backwards and forwards, but you don't necessarily know the marketplace for how to structure the best sale of your business.
And it's this merging of this. There's an emotional piece to what you have built and what you're trying to accomplish, but you're gonna have the best results by letting the experts do what they do. Is that accurate?
Bill West: Yes, ahundred percent. I had definitely known business owners that are capable of doing it themselves.
They begin with that end in mind, and they're going to trade shows and they know exactly who their buyer's gonna be, and they've been friends with them, and they're going to dinner at the convention every year for the last five years. Those guys are out there. Most people aren't those guys.
They've never been—this is foreign to them. You've never sold a business before. You've never seen it. You've never witnessed it. I've witnessed it thousands and thousands of times along with everything else that goes on in business. Yeah, definitely having that counsel that you can lean on is…
Genevieve George: And how early in the stage can a business owner actually engage in an exit planner? If they're truly not thinking that this isn't happening next year, can they still be working with someone like yourself to get their ducks in a row?
Bill West: I talk to anybody. I do a lot of volunteer venture, SPDC score. Training for people. So in my mind, you share and you grow, and it's never too early.
It's probably the first 2, 3, 5 years maybe. You're not gonna wanna do a valuation on your business. You're getting it grounded and it's not gonna give you a lot of great information. Understanding the format is gonna be useful to you, but the valuation itself gonna be too early for you.
Genevieve George: Okay. And one of the things on the podcast that we like to do is I really wanna talk about real life mistakes that have been made in an effort to help others that are listening maybe avoid those mistakes. So is there a financial mistake that you've experienced or that you've seen a client or someone go through, they had known earlier, they might have been able to avoid it? Let’s help our listeners avoid that.
Bill West: Yes. Listen to your counselors. That's where I was trying not to go here with your earlier question, but it's absolutely, listen to your counselor. Find somebody, get referred to somebody you can trust. So that first step is get a referral, find somebody, have somebody who knows somebody, so that you're getting quality advice from wherever it is you're going to, and then listen to it.
If it's a business valuation, listen to it. If it's instructions on, it's how you do your business, it is financial planning. Make sure you listen to that advice and follow it integrated. Every business is different. These are counselors and they're not in your business. They don't know what you know about your business, and that's part of why you need us, because you know a lot about your business.
You've been used to doing it on your own. Hey, I can do this on my own. I know I've been capable. I've done every single thing this whole way on my own. Yes, you have. You still need help. People have guided you along the way, get their advice and listened to it.
Genevieve George: Sounds like you've had a few experiences where advice was given and not listened to.
Bill West: It happens. Everybody does. I've given bad advice that shouldn't have been listened to.
Genevieve George: Yeah, that's great. Thank you for sharing that. How about any last nuggets of advice that you wanna share with our audience that maybe business owners are considering becoming business owners?
Bill West: Considering becoming business owners? Like I said, talking about the confidence that somebody has on the other end, that selling your business and going, or everything that you've done along the line that's meaningful. You're providing for people, you're providing for your community, you're providing for your employees, you're providing for your family, you're providing for extended families.
Absolutely. A valuable way to go about living your life.
Genevieve George: Yeah. It's nice to enter into that and be your own boss for a little while.
Bill West: Yes. It's hard, but it's worth it. It's absolutely every bit of the pain. It's worth it. The rewards are there.
Genevieve George: And Bill, you work with both. We've talked a lot about the seller side, the business owner that's looking to sell.
But you work with both sides, right? You're working with buyers that are looking for those good businesses to purchase, and you work with the sellers that are looking to sell. Is that correct?
Bill West: Yeah. I naturally wind up with a strong following of buyers from the work that I do for sellers. I get buyers that come in, and the business isn't exactly a fit, and it's not something anybody did wrong.
So that wasn't exactly what I was looking for. So I've got these great quality buyers that are out there. And I will continue to work with them. They'll reach out to me on LinkedIn even if they're—if I can fit them into that SBA mold and qualify them, make sure I've got somebody that I'm working with that's communicating and doing all the things that we talked about in a relationship with me upfront that I can confidently bring to a seller. Yeah, I absolutely have so many buyers that's why I talk sellers all the time.
Genevieve George: Yeah, you're looking for them.
Bill West: There are wonderful buyers that are out there and there's people even within your own business, there's buyers for you, but outside, coming into our community.
People say the Canadians aren't coming. The Canadians are coming. They're still coming, they're still buying businesses. I'm selling businesses to Canadians. A lot of New Yorkers, a lot of, like I said, they all tend to be 30 to 40. There's some that are a little bit older than that, but they're young family members.
They've had professional lives. They have liquidity. They're showing me the liquidity upfront. They've got significant liquidity. They have significant work experience. And they're good people that are fun to be around. These are people that I enjoy and that's why we work together. And I'll go around for—I'll spend a year looking for a business, looking for the right business for somebody, and showing them what's available out there.
I sell a lot of my own listings by doing this, but by doing this, I also wind up selling a lot of other brokers’ listings naturally.
Genevieve George: So can you give us a little bit of background? I, of course know you, but I want other people to understand what makes you an expert in this? And I know you have many years of experience, so maybe give us a little background on how you got to where you are now.
Bill West: Sure. So I started off, I joined the Marines outta high school, got outta the Marines, and there's a whole story there of how I wound up in banking. But yeah I ended up pretty quickly in banking as a collector in Mobile, Alabama, very quickly got promoted a little bit, wound up becoming a credit manager.
We had to acquire a portfolio from another bank. We acquired a commercial loan portfolio. I went through all of that due diligence on it very early in my career, and then continued to do that through my career. Began after a long step working for banks, began creating banks and working with teams. We would create the banks and we would eventually wind up selling them.
So I've been through several mergers of banks, several bank, full bank sales. Along that line. My responsibilities were commercial end. I worked actively with all of our business customers and all of their transactions, growing and selling, and whatever else in between with their businesses. Through the session, I was in special assets, working with businesses that were in distress and trying to help them to, what can we do to help you survive?
How can we work through this? What do you need to do? What can we do? That experience was incredibly beneficial. So my backpack, I ran commercial lending teams. Teams very heavily lean into that experience. That's where my valuation system comes from. Going through a merger, I had responsibility for a loan portfolio that had 984 commercial loans, and I had to figure out the loan loss reserves for this thousand loans.
That's the origin of my valuation system, that problem that I had, how do I fix it? And now I use it for individual businesses rather than whole portfolios.
Genevieve George: That's amazing. We're gonna put it in the show notes as well, but how can our listeners get in touch with you, and can you work with business owners throughout the United States?
Bill West: Yeah, primarily Florida. ESOPs are throughout the US. Some of the key, main transactions all do throughout the US. I'm very much Florida focused, south Florida, southeast coast of Florida. It's centric here. I'd say Space Coast down to Palm Beach and Broward are really where I'm at a lot over into Orlando.
Best way, phone number is (772) 812-5530. Super easy way to get to me—two websites that you can look at. For everything, you can look at intelexit.com, or esopable.com is for our ESOPs and has a lot of information there.
Esopable is exactly the way it sounds: esopable.com.
Genevieve George: Excellent. And you're on LinkedIn as well, so I know you're pretty active there, sharing different stories and whatnot of transactions you're working through. So it's really helpful to have that. And Bill, I just thank you so much for being on and sharing your expertise, and I'm just excited for all of our business owners out there and for them to get their ducks in a row for a successful exit.
Bill West: Wonderful. Thank you Genevieve.
Genevieve George: All right. Thank you, Bill.
Bill West: Great answer. Bye.
That's it for today's episode of The Wealth Development Studio. Remember, financial clarity is powerful. Do you need help with your financial plan? Go to pelicanfinancialplanning.com to schedule a call with me. Until next time.
