#13: Top Secrets For Selling Your Business For Big Bucks
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Learn More Earn More Business Growth Podcast

Host: Brian Webb

Guest: Lisa Moscarelli

Episode 13: Top Secrets For Selling Your Business For Big Bucks

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TRANSCRIPT: 

Brian Webb:

Hey there, everyone. Welcome to the Learn More, Earn More Business Growth Podcast. I'm your host, Brian Webb. This podcast is your premier place to learn the frameworks, secrets, and growth hacks to grow and scale your business and revenue faster. Whether you're an aspiring entrepreneur or a thriving business owner, this podcast is designed and produced just for you, so you can learn from the best industry experts in the world. I'll bring you exclusive interviews with authors, thought leaders, and successful business titans who share their stories and business journeys so we can draw insights and learn from their successes and struggles together. As you're working on growing your business and pursuing your dreams, I'll be here to help you make better decisions and avoid costly pitfalls and expensive mistakes along the way and we'll have some fun in the process. Let's go ahead and jump into today's episode.

Brian Webb:

Before I jump into today's interview with Lisa Moscarelli, my guest, I want to tell you a little bit about her. Lisa actually co-founded one of the top five largest ad agencies in Houston, according to the 2011 Houston Business Journal and she sold it to a top 500 company, Thomson Reuters, I have no doubt you're familiar, for a high seven-figure exit, so Lisa knows a thing or two about selling a business and about how to do it right. On top of that, she's got an amazing heart. She's just a great human being. Let's go ahead and jump into the interview. I think you're going to enjoy it.

Brian Webb:

I'm so happy to have you here today, Lisa, here on the podcast. It's awesome to have you. I know we're going to talk about how to sell your business for big bucks. A lot of business owners in my experience don't even have an exit plan. They don't even think about selling their business one day, they just kind of operate it until it just goes away because someone dies or retires. But obviously, if you're wanting to really be strategic, an exit plan is a great thing, and selling your business is usually the last step. Tell us today, how do you even know if you have a sellable business?

Lisa Moscarelli:

Brian, thanks for having me. We go back quite a way. Well, I want to back up for a minute. If you own your own business, having a long-term exit strategy, if you're in your 30s or 40s or even 20s can seem like, "I'll think about that later." But actually, if you run your business with the knowledge of what you need to have in your business to sell it, you're going to have several things happen that are going to be great. You're going to have a healthier business. You're going to know what your profits are down to every last red dime. You're going to have a great stirring up of your vision and the ability to build a legacy, if you wish, for other generations in your family. I mean, how do you know if you have a sellable business?

Lisa Moscarelli:

Well Brian, a lot of people like you and I with service businesses that are in the business arts and business advertising space, think, "How do I sell my business? I mean, it's my relationships. If I'm not here making all of the posts and doing all of the Google analytics reports and seeing how well my clients are doing with what I'm doing for them, if I'm not here, that doesn't really go on in the way I would like it to." Essentially, you have a sellable business if you own... Do you own a niche? Do you own a vertical group of clients that really sets you apart? In our case, we did advertising for attorneys. Both my partner and I had varied backgrounds in advertising and in marketing and we built a vertical market for attorneys. It wasn't something we set out to do, but it was something that happened and it was very, very lucrative.

Lisa Moscarelli:

One client tells another client and you become what they used to call category busters. That's really, really a strong way to approach it. Now, if you're like me, you tend to lean more to the creative cells in your brain and it seems sort of antithetical to job fulfillment to have to be doing the same type of project every day, but I think once you get it down and if you have systems, processes and the right people in the right place at the right time with you, shoulder to shoulder, as you trudge on through exponential growth, it can be very satisfying. I'm going to give you a cursory view, Brian, because I am not a business consultant. Okay. But we paid a lot of money to attorneys and business brokers to advise us on what our business was worth. We had been doing it for about 12 years, you really kind of need... Is your business mature?

Lisa Moscarelli:

Is your business mature? And if you have let's just say gross revenues over a million dollars, there's something to look at. If you decide it's valuable enough for you to walk away, you need to look at things like how much longer do you want to be working? Are you going to be still working in that arena? And usually, if you want to continue to work in that arena that you sold your business, they're going to either hire you for a period of time or indefinitely depending on how you negotiate it, but you will have partners or you'll be an employee or you're going to go and do it on your own, but you'll have a non-compete, which may tie you up anywhere from one to five years. Those are just things to be cognizant of.

Lisa Moscarelli:

As you're building your business, always just look 10 steps down the road, I always like to look where am I going to be in five years, six months, one year, 10 years? Do I want to be doing this when I'm 60? That kind of thing. I just think it's really important to have the top of the bleachers view. It's so easy, Brian, and you and I know this, to be the little hamster in the wheel running the operation, dealing with employee issues, dealing with lawyers and rent and lease negotiations, and all these other things that you have to do to have a business and you're not really thinking strategically. I think that's really one of our discussion today is to... Hopefully, some people out there that are listening will start to think strategically about what am I going to do with this business?

Brian Webb:

100%. Let me ask you this, Lisa, where does good solid company branding and marketing and audience development fall into this equation?

Lisa Moscarelli:

Well, when you go, Brian, to sell your business, you can sell your business for whatever someone will pay. If you would've told me 10, 11 years ago that Thomson Reuters was going to come in and buy our boutique agency for what they paid for it, I would have said, "You are smoking crack," but we had something they wanted. They had a legal division of their business where they would help prep attorneys for their bar exams, et cetera, et cetera, so this seemed like a natural progression that they would have a marketing arm as well. That being said, in today's digital age, you are evaluated by how well you've built your universe or, it doesn't have to be a large universe but is the universe that you built online, your social media universe, your prospecting email list, your snail mail list, all of your PR, it's very, very important. People don't understand...

Lisa Moscarelli:

There's a lot of businesses out there, Brian. Have you ever had the company that is wildly successful, but they've never done any branding or advertising?

Brian Webb:

Yes. Oh, absolutely.

Lisa Moscarelli:

You just think, "I really wish that I could impart this to them." When you sell a business, you have to do what's called an executive summary.

Brian Webb:

Right.

Lisa Moscarelli:

That's basically the pitch deck for prospective buyers to say, "Hey, this company has Brian and Brian is an absolute all-star, Hall of Fame guy. This is what he brings to the table because... And this is why this company is great." Unfortunately, in the process of selling a business, those pitch elements that would be done through a professional branding exercise, that would be done through properly, regularly managed social media channels and PR efforts and community efforts, those pitch decks are done by attorneys and business brokers who don't have nearly the marketing savvy that someone traveling in our language, so branding is an investment in putting up the face of what your company is worth. We always say, Brian, "Let's make you look way bigger than you are. Way bigger than you are." That carries weight when you're at the table of selling your business.

Brian Webb:

Yeah. Even Michael Hyatt, who is the former CEO of Thomas Nelson Publishing, the one thing that he has shared numerous times... By the way, the biggest Christian Publishing Company in the world, to put some perspective on that. He'll have authors give him scripts for their books. Even just as authors, one of the things that publishing companies will look at before they'll take on a new book is they want to know how many people are following you on Instagram, how many people were following you on Facebook, Twitter, LinkedIn, where have you, YouTube, because they want to know, are you bringing the audience with you? That's always going to be the biggest asset. That's one thing I even teach our clients is people think that Facebook is a social media platform. No, it's an audience-building advertising platform. People think that television is for television shows. No, the TV shows just get the audience so they can sell advertising to that audience. Right. I guess if you've built that audience up, that's going to be an asset that's going to be valued in the process.

Lisa Moscarelli:

Absolutely. Because not only is a prospective buyer of your business... And this is especially true. Again, we were a service business, which can be tricky because there's a lot of intangibles. Are these key players going to stay on? Because how do you sell a business that's dependent on two or three people and the goodwill and relationships and the hustle and the talent that they have?

Brian Webb:

Yeah, your assets drive home each night, right?

Lisa Moscarelli:

Yeah, exactly. And the culture that's created in that business, those can all be bolstered by how do you look? How does your branding face look? How is your universe? And whether you're going to use it as direct response and get an ROI, there could be a huge ROI on investing in these kinds of things if you have an eye to sell your business.

Brian Webb:

Yeah. Yeah. I know you don't want to go in the weeds on this, but especially for our younger or smaller business owners who aren't as savvy as some of the more mature business owners or advanced business owners who understand this, but tell us a little bit... tell the audience a little bit how you determine worth or the value of your business.

Brian Webb:

We'll get back to the show in just a moment. But first, a quick word from our sponsor, Whatbox Digital. Do you want to grow and scale your business better and faster, make fewer mistakes and stop wasting money on marketing that does not work? I already know that you do. Like so many others, you're tired of relying on a failed hope marketing system. Hope marketing is when we spend valuable time and money on marketing and we hope that it works. You've worked so hard to get where you are. Like most business owners and leaders, you're frustrated with wasting money on marketing that doesn't work. You've thrown tons of money towards marketing mistakes and failures and you wish you could get all of that money back, but you can't.

Brian Webb:

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Brian Webb:

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Brian Webb:

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Brian Webb:

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Brian Webb:

I know you don't want to go in the weeds on this, but especially for our younger or smaller business owners who aren't as savvy as some of the more mature business owners or advanced business owners who understand this, but tell us a little bit... tell the audience a little bit how you determine the worth or the value of your business.

Lisa Moscarelli:

Well, businesses are sold on multiples of a profit figure. It's kind of like if you go and buy a house in a specific neighborhood and you look at what is the cost per square foot of this house in this neighborhood and how much can I really pay? So basically, that multiple of the profit figure... For example, in the ad world, 10 years ago when we sold our business, I want to say that multiple was around three and a half to four. It would be, let's just say, four times... This profit number is called the EBITDA. It's basically your profits before taxes, interest, depreciation, and amortization. It's basically your earnings. That number, if your profit after it's been scrubbed clean of those other things, let's just say you come up with a million dollars and the multiple that the industry that you're in is two, three, four, five, six, seven, eight, nine, 10, whatever it is, let's just say, if it's five, then you could potentially sell your business for $5 million if you had a profit of a million dollars a year.

Lisa Moscarelli:

Like I said, I don't want to get the weeds because I am not a business consultant or a lawyer for that kind of thing specifically. But again, you can increase that number or decrease that number just by doing smart things, like getting all of your contracts in order and making sure that you're getting as much billing as possible through your company to get that number up.

Brian Webb:

Yeah. One of my mentors shared with me, I think it was about a month and a half ago, about a company that they were selling. What he had learned was... This company was a services-based company. Based on where they were in revenue, by the way, a very large company, they were going to get a two to three X on EBITDA. They were told that if that business had been more of a recurring revenue business, it would have increased their multiple up to about seven or eight.

Lisa Moscarelli:

Wow.

Brian Webb:

Which in that particular case is literally millions and millions and millions of dollars of difference. The more you can get recurring services, repeat revenue that also can really affect that multiple as well.

Lisa Moscarelli:

I think it's good to mention, Brian, on that note, if you have the vision to sell your business, you have to know when it's mature enough to be sold.

Brian Webb:

Yeah.

Lisa Moscarelli:

Because selling your business for a million dollars nowadays, by the time you pay attorneys and taxes, that's not really enough to retire on or anything like that, so you really have to have... you have to make sure that if you're going to do it, if you're going to give your baby away, you have to be sure that it's the right time.

Brian Webb:

Yeah. Let me ask you this. I know we were talking... You were talking about this a little bit earlier, but whenever your assets are driving home every night, when you are that services-based business, I thought people in services businesses, or at least as of my understanding, like marketing, advertising, you could even say law, that are built on relationships, meaning if you interview the top 10 customers of that particular business and they ask, "Why do you work with them?" and they say, "Because we love Lisa Moscarelli," well, that's a big red flag to a potential buyer. So when you are a services business, which a lot of times it is those relationships, what do you do to be more attractive to a larger corporate buyer?

Lisa Moscarelli:

Well, that's a loaded question. A lot of successful businesses in today's world are successful because they have systems, processes and they're able to be replicated and automated on some level. I think if you can have some level of automation and infrastructure that you show, if you can have some way of showing that you... A process would be defined by transferring the culture of your business. Let's say you have a culture of really building relationships with your clients and that culture is built on certain things that you do differently than other agencies. That is really, really important. And truthfully, a lot of times when these guys come in to buy you, they're attorneys and people in the corporate world who a lot of times have very low emotional intelligence.

Lisa Moscarelli:

I'm just saying that because they're coloring in the lines and they're looking to buy something and they feel that they can come in and put their corporate suit on your business and take it further than you took it. Well, that's not always true in a lot of cases, they tank it. But if it's a big enough buyer, they don't care because they have to offset all of their bigger profits and bigger fish. Every deal is different is what I'm saying. Every deal is different. Every deal is different.

Brian Webb:

Absolutely.

Lisa Moscarelli:

You have to show that the things that you're doing are transferrable through systems, processes, the right team, replication, automation.

Brian Webb:

Yeah. Not too long ago, just a few episodes back, I had the privilege of interviewing Luke Cheatham, who's a great friend, also happens to be a great client. He runs Diamond Client Group, which is a very... It's an advanced financial strategy firm and just launched a fund called Good Bull Investments. One of the things that he shared that was really interesting, even though in your path, you sold to a big Fortune 500 company,.but one of the things that he shared is that a lot of the times when companies are going to... when the owner wants to exit and sell, a lot of times, the best people to sell it to, and there has to be a plan in place to do this, is to people inside the organization. Sometimes the right fit is what you did selling outside externally to a large company and then sometimes the model can also be selling to your internal stakeholders, your employees, your leaders.

Brian Webb:

And again, if you're going to do that, go back and check out that episode with Luke Cheatham. He talks about that really well. But let me ask you this, Lisa, what are some words of advice, generally speaking, that you would give to a company that's growing with an owner that knows that they want to exit or they think about it. They dream about that exit and selling their company someday. What are some things you would share with the audience?

Lisa Moscarelli:

I think, first of all, you have to look at the emotional aspect of it. You have to look at what are you really called to do. A lot of times when people, entrepreneurs have been trudging along in a particular business for 10 or 15 years, you get burnt out. It's just the way it is, especially with service businesses where you don't work really nine to five, you work sometimes anytime clients have a need and that can be exhausting over time, so you just need to determine your timeline. Determine your timeline, thoughtfully, prayerfully. Talk it over with your wife. Talk it over with people who've done it. Find mentors who've done it before. I always like to find people who have done what I'm trying to do and have been successful at it. I think that's probably one of the smartest things you could do.

Lisa Moscarelli:

The other part of that is you need to be sure you clean up your financials Be sure you fully understand P&L sheets. I know that sounds elementary, but you would be surprised how many people just leave it to a business manager and that business manager gets cancer, this was a true story, and got cancer and the guy was basically in the dark because they didn't have a succession strategy. They didn't have layers of backups of understanding and insight into how everything worked and it cost her business some money. You really need to be sure your financials are in order and that you are well-versed on how profitable your business is and what would that EBITDA look like if it was sold today? Obviously, the obvious is boost your sales, but I think that sometimes again, hamster in the wheel says, "Let's just go out and hustle up as much business as we can," which is [inaudible 00:25:38].

Brian Webb:

Yes, absolutely.

Lisa Moscarelli:

But depending now, if you're the person that has to do the work, that's not scalable, so you're just going to have to figure out how can I boost my sales? How can I best boost my sales? But the caveat is with increasing my cost the less.

Brian Webb:

Yes. Yes.

Lisa Moscarelli:

[inaudible 00:25:59] Digital businesses have been sold for so many millions of dollars because of the quick scalability. Then I think also if you want to... Just be sure you have your contracts in order. Be sure if you have leases, if you have investments, if you have contracts with your clients. Contracts with your clients, if you get clients signed on multi-year, multi-angle contracts, that is a very shiny, beautiful, attractive thing to buyers, especially in service businesses, because then they feel like it's not so much to do with market forces, so they're sort of betting on what can happen, which maybe they may to consider paying less. But if you kind of show them, "This is what will happen because I have these," minimum and then you add to that what can happen with what your business prognosticators say, then it's a really attractive package. So if you can get people signed into long-term contracts, that is sublime.

Brian Webb:

Absolutely. Let's do this Lisa. One, thank you for being here. Tell us about what you're doing now at Moscarelli Media and the services that you're providing to your clients now in this newer initiative, obviously, post the exit of your first business?

Lisa Moscarelli:

Well, I took a couple of years off caring for a family member who is in heaven now. I decided that I wanted to make a difference. I wanted to be sure that the places that I invested my time, talent and treasure professionally would be businesses that were needing to have a son or daughter takeover or businesses that did great things in the world. I worked a lot in the global relief nonprofit space and created content. I'm a content creator, producer. I'm a digital strategist. I help people kind of bridge the gap between both worlds. We have a generational divide somewhat in really understanding how it all works together. Everything heretofore been so siloed that integration specialist, there's a market for us, people that can put reports together and analysis together to help people kind of get to the next level. I help people with their ecosystems. I can confer and really just get to the heart of what your visions and dreams are and hopefully get you there.

Brian Webb:

Okay. Where's the best place for someone who wants to reach out to you or possibly discuss your services, where's the best place for people to reach out to you online?

Lisa Moscarelli:

I think you best send me an email, just do info@moscarellimedia.com.

Brian Webb:

Info@moscarellimedia.com. I'm sure they can find you on LinkedIn. Obviously, your website address is www.moscarellimedia.com.

Lisa Moscarelli:

That's correct.

Brian Webb:

Well, thanks for being on the show today. I think this is tremendously valuable. As I already said at the beginning of this episode, I think you're just an amazing soul, a great human being, so it's great to have you on the show today.

Lisa Moscarelli:

Likewise, my friend. Blessings to you and go forth and prosper today.

Brian Webb:

Thanks for joining me today and listening to this episode of the Learn More, Earn More Business Growth Podcast. We can be found on all the major platforms like Apple Podcasts, Google Play, Spotify, Pandora, Stitcher and even Amazon Music. I genuinely hope you enjoyed today's episode. If you did, I'd be honored if you'd subscribe to the show and leave us a rating and an honest review. I'd love to connect with you on Instagram. You can find me at, @BrianWebb and the show sponsor Whatbox Digital can be found at, as you might guess, @Whatbox Digital. You can also find me in Whatbox Digital on Facebook and LinkedIn with the links in the show notes. This will allow you to stay up to date and never miss out on exciting new announcements, events, special offers and opportunities and you'll be in the know when we drop a new episode of the Learn More, Earn More Business Growth Podcast.

Brian Webb:

If you'd like to send me a DM on Instagram to say hello or share your thoughts on how we can make this podcast even better for you, I'd love to hear from you. Again, thanks for listening. Let's go and grow together. I'll see you on the next episode.

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