Episode Transcript
Adam O'Leary (00:01.252)
If you're a business owner who is thinking about potentially exiting your company down the road, then our guest, Jason Cisneros is about to give you a simple win you can implement today. Jason, known as the architect, is a business strategist, investor and speaker with 26 exits in support for 165 plus companies. Founder of Build2Exit, he helps entrepreneurs escape burnout by building scalable, sellable businesses.
His mission, empower founders to achieve freedom, purpose, profit and legacy. Jason, so excited to have you here.
Jason Sisneros (00:36.686)
Happy to be with you, brother. I know you're in a great country and a great city. And I am too. I'm in Charleston, South Carolina. But there's half of the year I would love to be where you're at.
Adam O'Leary (00:46.576)
Absolutely. I love South Carolina though. What a great place. And so let's dive into this. Let's talk about strategic exits. What does that look like and what is a strategic exit?
Jason Sisneros (01:00.206)
So strategic exit starts with the conversation with the business owner. So I love that you're talking directly to your business owner. People, this is not a a wide net to talk to every business owners to one, it's to talk to the one that's watching you today to say, come to a conclusion of wiser, longer standing, know, people that have been in this and had their tails handed to them, like I have multiple times and to come up with a statement.
that drops off a lot of things that you carry around as a business owner. And that statement is this, everybody exits how matters, right? And to custom tailor your own exit, you need to know where you are and what that expected exit is gonna look like, what that number is, what kind of money you wanna put in your pocket, what number frees you to go do the thing that you wanna do next. And so that's really where we hyper-focus on each individual case. My mentor,
Adam O'Leary (01:49.437)
Hmm.
Jason Sisneros (01:58.322)
Keith Cunningham was who's the rich dad and the rich dad poor dad books told me a long time ago. He said, Jason, business is not a bathrobe. One size does not fit all. So we have to start with that premise. It's your business, your start, your finish. And then we, we custom tailor that on the inside and figure out who's the best person and the best deal structure for you to be able to exit, to meet your own outcome.
Adam O'Leary (02:24.252)
That's awesome. So I know there's many different people that could potentially purchase your company. So for example, there's private equities, there's venture capitalists, there's partners, like partnerships that you have, and then there's so many others. How do you go about deciding who is the right type of a buyer for you?
Jason Sisneros (02:41.912)
Sure, so in the process of saying, okay, here's what I want my exit to look like. There's a lot of questions that are needed to be answered, which is, do you wanna stay in the business? Do you wanna be a partner of the business? Do you want to finance the business partially? And then when they sell, you're attached to that. Do you want all cash at the closing table? And then when we get to the answer of how you are expecting to exit, then what happens is you go, okay, cool.
We know that at the beginning because there's like a big mountain that you climb on the way to having a business that is ready to be purchased and optimized so that you control three things, price, timing and terms. And so then you decide, okay, cool, private equity would be the best people to buy. And then we say, not just one, this is a big mistake that most people make that I want everybody to not make. When you get ready to take your company to market through our brokerage or anybody else,
You want to make sure that you have four to five buyers at the LOI stage. The worst mistake you can make is having a buyer tell you we're interested and then going down their path because now you're going to be playing the game of their price timing in terms you're not going to control it. So what I would say is you figure out private equity, roll up. There's things called grouping. There's like 40 or 50 different types of structures for you to exit.
esops, succession planning, blah, blah. but once you decide on what that is, then you go, okay, there's one private equity firm that I think would be ideal. And then you go find their biggest five competitors. Right. And when it's time and you're built, now you go call all of those people and you say, look, I have this business. It's ready. It's built to how I know you want to buy the business. It's optimized. have the four segments that are dialed in your relationship to customer, your clarity on
on finances, have a management team in place and I have my exit plan built and ready to go, right? Ready to have that conversation. Whoever comes to me with the biggest LOI is the one that gets to dig deeper and go into the actual due diligence phase. So that's a, you know, that's what I would do is figure out along the way, whoever you're going to sell to, then you find out their four or five biggest competitors and you alert all of them that you're ready when it's time to sell. that's in
Jason Sisneros (05:07.904)
In large part, that's due to, you know, who you use as a broker and there's not very many good ones out there, which is why we started a brokerage.
Adam O'Leary (05:15.951)
I love that. And when you just talked about building the business basically for the acquisition, right? So building this company for the other company. What does that actually look like though? Like what do these companies when they're looking and saying, okay, you know what, I would be interested in buying this. What does that look like? What are they actually, what are the pieces of the puzzle?
Jason Sisneros (05:35.586)
Yeah, the pieces of puzzle. I'll go back to the four that I just sped through is relationship to customer there. When you're selling a business and it's always best to understand once you optimize what you do, lot of business owners are great at what they do. Roofing. I'm a great roofer. You have to change hats and become a great and A expert because you're going to sit across the table from somebody who knows way more than you.
Right? Whether it's the person who's buying it or their attorney or their, their investment banker, whoever it is, you got to get yourself prepared. So you put on that other hat and you say, I'm to become as much of an M and A expert as I possibly can, which, which is, again, why we have the M and A side of our business. And, and so, you know, that the buyer is not looking for your stories. They're not looking for all of the things that you had to do. your son, you know, slept in a cot next to your bed while you were building. They don't care about any of that.
they are coming with other people's money. if a single buyer, it's their money, whatever it is, they wanna make sure that that investment is going to be solid, that that investment is going to be protected and that there is a reasonable assurance that what has happened for you over the last three years is gonna happen for them over the next three, right? And so in that conversation, you wanna be prepared with your relationship to customer. I'll give you a couple of things that are important out of that conversation.
lifetime value, monthly recurring revenue, profit margins, the breadth and depth of your customer base. Make sure you don't have concentration risk around one or two clients. That relationship is essentially establishing for the new buyer predictability of ongoing revenue streams, okay? That's that box. The second box that I mentioned, which is your clarity of finances,
is they're gonna dig in and they're gonna wanna know all kinds of different ratios. They're gonna want to know, they're gonna wanna see if you made bad mistakes. They're gonna wanna see your bank account. You're gonna wanna see your P &Ls. They're gonna wanna see if you have a 13 week rolling cashflow. Again, because business speaks the language of, or sorry, business speaks the language of finance. The finance has to tell the story that you're telling them.
Jason Sisneros (08:00.638)
on the exit dossier that you put together for them. It has to match up. And if that language is in any way different than what you've been saying, now it breaks the deal down because they think you're being untruthful, but most people are not being untruthful. They're just unprepared and unsophisticated in that side of the equation. Third piece is they generally speaking do not want to buy you and you don't want a job, which is why you had the business in the first place.
So you have to demonstrate the fact that you have built a management team that they can step into your role and that management team can continue that process of making sure that those revenues stay coming in. They don't have to train a new team. They don't have to worry about the team walking off the job. And then the fourth piece, is this is more sophisticated, but it's called having an exit plan. That exit plan tells the buyer,
that you're prepared for this. And there's three levels. One is EBITDA and what you're reporting to the government EBITDA. And then there's owner adjusted EBITDA. And then the third one, which is what we prepare all of our clients with is called a pro forma adjusted EBITDA. All that means is if I was to keep this business for the next five years, here's my acquisition targets. Here's the additional lines of revenue, the additional
products or services that I would have, a strategic acquisition of talent. These are the things that I would do over the next five years. And if you hand that to the buyer, they go, my God, you already did 90 % of my job for me. And I'm ready to go to the closing table right now.
Adam O'Leary (09:49.613)
That's fantastic. That's really, really good insight. And I like how you broke it down systematically one by one. And I guess one of the struggles that a lot of founders have, and I mean, I think what's probably going through their mind is like, this sounds good, you know, but in exit is so much work, but I have all this stuff going on at the same time. I have all these fires that I'm putting out. How can the, does the founder need to do themselves to be able to look good for a potential buyer?
Jason Sisneros (10:19.618)
Yeah, there's two questions in the question that you just asked me and it's so, you speak right to the heart of the biggest problem with the exit is that the business owner thinks that it's hard work when owning a business is as hard of a work as you're ever gonna have. Number one, exiting the business is not gonna be any harder. It's just that you need to know the specific ins and outs. You can't go to a course over the course of a weekend and learn how to be an &A expert.
It takes time. I tell people from the time you decide that you want to sell your business, figure 18 to 36 months before you're ready to sit down with your very first LOI coming from a buyer. So plan way ahead, plan way ahead. And if you're planning on having your business for 20 years, it's always great to be ready to sell because there's divorce, death, disputes with your partners.
changes in the economy. There's things that you will never see coming that you want to be ready to be able to exit your business at top dollar and not have that be a forced sale because you never win in that place. So start building to exit right now. That's what we suggest to everybody. And then just in preparation for that is educating yourself on the &A process, getting to know your potential buyers. There's a lot of public information that you can find.
especially about private equity firms, how they do their deals, what their deal team looks like, a lot of insight and be educated. I've said it four or five times, I'll say it again, as an &A expert, as much as you possibly can be.
Adam O'Leary (11:59.631)
I like that. what you're actually in, just correct me if I'm wrong here, but what you're saying is, so when you pick your five, like core, I core, and a people that you want to go after, you're actually saying, follow these guys, research them, listen to their podcasts, look at their blogs, really try to identify exactly what it is that they are doing. So when you make your offer, you were literally giving them like almost peanut butter and jelly, just handing it to them on a silver platter, correct?
Jason Sisneros (12:26.926)
100%. That's why we have, we have about 27 private equity firms that we deal with on a constant basis. We deal with a lot of rollup groups. We deal with a lot of people in, in, you know, the mergers and acquisition field that know when a company is coming through the built to exit pipeline, that that's going to be the easiest, most well-prepared, less, least amount of drama that they're ever going to have simply because they did what you just said. We, we can't, we are
We know who we're selling to. We know who they are. We know they're, they're Piccadillo's. We know what to do. We know what not to do when dealing with these people. And we build and construct that we call it custom tailored. There's three types of exits. One is, a involuntary exit. I had three of those. So there's no shame in it. Involuntary just means you run out of cash. You're forced out of business. And that happened to me three times, three bankruptcies.
And then the second type, which you want to avoid is what's called a dictated exit. I also had one of those. Very painful. I sold the business, but I probably got half of what I should have. And it took me a long time to get the money. It was a nightmare. So then I was like, I had the same epiphany that I'm telling everybody. I'm like, people buy these businesses all the time. I want to know what they know. So that next time I get into business, because I'm good at business,
And I know what I'm doing now after having failed three times sold a successful one and been a student of the game Now what I need to know is how they buy businesses and that's exactly what I studied and that's where you know I and I was doing this for myself. Yes. We have a consulting firm Yes, we have built to exit but my wife and I still buy and sell businesses were in cannabis were in medical We're an AI we're still doing this stuff on a day-to-day basis. And when I started the game, I was doing it for myself
And it was so systemized that we've now been able to roll that out for my family, small and other small and mid-sized business owners to have a 15 to $30 million exit for themselves is life-changing money for them and their bloodline.
Adam O'Leary (14:34.308)
That's amazing. And when should people go ahead and reach out to you? Is it once they're ready for an exit or is it beforehand? Like, what does that timeline look like?
Jason Sisneros (14:43.394)
I tell people all the time, it's not a joke. It's a little funny, but the best time was yesterday. The next best time is today. And the next best time is when you realize that everybody exits how matters.
Adam O'Leary (14:54.662)
I love that. Where can people go to learn more about you?
Jason Sisneros (14:57.058)
Built2Exit.biz, it's B-U-I-L-T-T-O-E-X-I-T.biz. And if they wanna know more about me, obviously, jasoncisneros.com. Both of those websites will get you any information that you need.
Adam O'Leary (15:14.118)
Well thank you so much Jason, this was such a fantastic episode!
Jason Sisneros (15:17.986)
Thanks, Adam. I appreciate you. I appreciate your show and the fact that you're trying to help small and mid-sized business owners makes us family.
Adam O'Leary (15:25.123)
Absolutely. Well thank you all for listening and I will see you on the next episode of Simple Wins.
