In this week's episode, Bill welcomes back Dan Ellsworth, founder of TCQ Solutions, for a deep dive into a topic many B2B business owners overlook—how professional, repeatable marketing strategies directly impact the value of your business during a sale or acquisition.
Drawing from decades of experience in manufacturing, animal health, agriculture, and distribution, Dan shares real-world stories and insights from both sides of the M&A table. Whether you're planning an exit, preparing for a private equity conversation, or simply trying to boost your company's long-term valuation, this conversation is packed with insights for manufacturers and B2B businesses alike.
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Dan: After I've done each one of these, a dozen of them, and we get through the whole process, a couple of comments are consistent. We should have always been doing this with our business is one, like they ask questions about inventory valuation or whatever. And the owners are like, well, we knew we should have made that change, but we didn't. And they learn more about their business through the process because owners spend so much time working in the business, they don't spend a lot of time working on the business. And what a merger or an acquisition will do is it forces you to work on the business and to look at the business as an entity versus working through the business, right? Instead of driving the car, you step out of the car and you look at the car. And we look at the car together and we say, hey, you got a couple of dents and we need to get those dents out. Hey, did you ever notice this?
Intro
Bill: Thank you for joining the Missing Half podcast where we're discovering what's missing in manufacturing and B2B marketing. Today, we're covering a topic about marketing: What is marketing's impact on multiples in private equity and mergers and acquisition? And I'm joined today by Dan Ellsworth of TCQ Solutions. Dan is a professional who's specializing in guiding business owners and acquirers through the complexities of mergers and acquisitions in the animal health and agricultural sectors. Dan, thank you for joining us.
Dan: Bill, it's great to be here again.
Bill: Yeah, and thanks for coming back, right? So we had a conversation before probably about six, eight months ago where we talked more on the marketing side, some things we had done together in ancient history on some agricultural marketing, animal health marketing. But Dan, you're seeing kind of like a resurgence, kind of like a second career where you're stacking wins on top of like the early career you had in industry, and now taking that and applying it to helping companies go through this sale, mergers and acquisition, all of these processes. Could you just maybe talk a little bit about that journey and what led you to where you are today?
Dan: Sure, I think it started out with early deals that we did at sharing with, which was Pfizer at the time, now Zoetis, and kind of the business development and how do you create and see assets to buy that can make that step change. know, everybody sells the hockey stick and everybody wants organic growth and I think that if you can apply organic growth with the right acquisition, you can really transform your company faster and give your employees more opportunities. And so, you know, being kind of on the, maybe the sidelines of some of those deals and then later my career leading and seeing how the advantage is to understand the equation on both sides of the buyer and the seller and to look for the synergies. And the synergy is simply something that I can leverage in my hands better than anybody else. So, you know, that might be market access, that might be new products, it might be infrastructure that I have that this other company doesn't have, but I can leverage my infrastructure with that unique product for an above average return. And I think being able to see that in the fabric on both sides has kind of led me to where I'm at today to work with an owner, see the value that they have and then through my network know where that value will be best fit to different companies. And that one company that has the one asset, there's five different companies out there that would use that asset differently. So how do you create that marriage together so that you extend the asset on the seller side and you maximize the return on the buyer side?
Bill: No, I love that. And so, Dan, in your career, you've been on both the acquisition side. You were CEO at a number of companies. You helped them, those companies acquire different businesses. And then you also helped other companies sell to larger companies. Whenever you went through that process and you decided to really launch TCQ Solutions to the next level, what gap did you see in the market? Like that real need in the animal health, agricultural marketing, those spaces that maybe there wasn't someone stepping in to help both sides through the process and also extract the value because it's not just about the check at the end. It's about how you get there for both the buyer, the seller, the current employees, the future of the legacy of that company. What need did you see, what pain point and how did you decide to address that?
Dan:Well, I think in the animal health world, there are different segments. You have veterinarians, you have the manufacturers that are coming up with products, ectoparasiticides, drugs, solutions. And then you have distributors that deliver the last 50 miles to the farm gate of those products. The gap is that there are very few people that have played on the producer side. So I have my own cows. I started in the manufacturing world and grew up in sales and marketing and in big pharma. And then I made a transition into distribution. And I was asked early on in my career, you know, you're a manufacturing guy. Are you really going to be able to do something in distribution? And now I hear, well, you are a distribution guy, so you don't know anything about manufacturing. But the thing is, is that it's about understanding the world from somebody else's perspective. And because I've had those different hats, I can look at a distribution company and talk to a manufacturer and say, hey, here, you may want to look at this company because it gets you to the to the farm gate. May look at a manufacturing company and go to a distributor and say, look, I know your P&L, I know your margins, I know you're trying to improve your gross margin and your net profit because the margin profiles of those businesses are dramatically different, which means their needs are different, which means what they're looking for is different. And so the gap is to be focused on animal health and know all facets of the business, to be able to identify those synergies and make the fit and be able to go to, you know, in the last couple of deals that I've done, one was a distribution company to a distribution company, one was a manufacturing company to a distribution company. I've sat in both those chairs. And so when I talk to a CEO of an acquiring company, I can say, well, I know what you're up against and the pressures that you have and identify them. And they'd say, well, have you been sitting on our board meetings? I'm like, no, it's just common, common challenges that we all face. And so I think it's just, you know, trying to find the, finding that niche with kind of seeing the fabric and seeing where the nuances to help both the buyer and the seller, even though more times than not I'm a representative on the sales side.
Bill: So Dan, I think that's just a fascinating niche that you're filling, a fascinating problem you're solving. Because if we look at mergers and acquisitions and we look at that whole space, if we go to Wall Street and we think about the Fortune 500 companies and the huge brands, that is a very efficient process. There are a lot of people who know that and have been trading in those spaces for let's be honest, centuries, right? That's very efficient. When you look at the agricultural community, the animal health community and this scale that is starting to occur in that space. I'm sure that the PNL statements look like every other PNL statement according to GAP, but the nuance and the understanding that you can bring into those spaces are not known in Wall Street because they've never walked through a hog barn. They have never understood the producer's challenges. They have never understood the distribution challenges of that whole situation. So I think that's a really unique niche that you're filling. And it's something that's very necessary because as we scale in agriculture and animal health, and that's only going to continue, there are going to have to be changes to family operations, to mid-market, you know, 10, 20, 30, $50 million operations that we're going to start to enter a phase I feel that we're going to see more and more activity and there needs to be professional support like you're offering to guide folks both on the buy and the sell side, right? Cause those are two different animals. But no, I'm excited about what you're doing. And I think it's such a neat niche that you're filling and you're going to really bring value to that arena. And I know you have from some of the clients you've worked with and some of the stories we've heard. I think that's, that's just amazing. Well, Dan, I'd like to pivot a little bit because I know that you're focused in this space and one of the conversations we're trying to have with professionals is what is marketing's impact on multiples in mergers and acquisitions? And I'd kind of like to walk down a number of conversations around this. And from your experience, have you seen marketing directly influence multiples? And marketing is a broad term, but let's think about organized marketing, professional marketing, predictable, scalable, repeatable results in the marketing function as opposed to we have these sales because we've been here for 50 years, right? So those type of things.
Dan: Right. Yeah, and think that what it comes down to is that marketing is that how do you position a product? And you're used to doing that from a marketing standpoint. When you're running your company, you're an owner and you know what you need to do and you know the value and you know that it's unique and you know your differentiators and you know how to position that. It's the same thing with your company and that, you know, we pay, it's the old adage, you're only worth what somebody will pay, right? But they'll only pay in how unique you are. And marketing is being able to communicate that uniqueness in an efficient and compelling way. And so whether if you're selling a product, you're selling your company, your position in your company, it really comes down to what is the most compelling thing about you and what you're trying to accomplish, and what is the shortest way that you can deliver that message? Because a message that's compelling is only compelling is if it creates action. And if we think about, what's a compelling statement that creates action? You know, you have a mission statement. If you have a mission statement that's 15 words, it's not compelling because it's probably not actionable. And what I try to compare to people is that to say a compelling statement that creates action would be, Bill, I want you to know that there is a fire upstairs in your bathroom. Okay? You're thinking about that. You're like, do I even have an upstairs? And how did a fire start in my bathroom? And like, what were the kids doing? As compared to, if I say, Bill, fire, you automatically go to action.
Bill: Sure.
Dan: So the key with marketing and the power it has is that it gets, your compelling message has to get people past thinking into doing, into creating action. And the sharper you are with your message about the value that you're bringing to your customers, which is your marketing pitch, the more that that creates action, the easier it is to get more buyers interested in your business because it's compelling. And that's, at the end of the day in business, what we're trying to do is get people to act. Act in buying the service. We're trying to get our employees to act in delivering the service. It's all about action. And the tighter your message is and the shorter your message is, the more likely you're going to inspire action.
Bill: No, I love that. And Dan, whenever you're looking at the buy side, whether you are the buyer and acting on their behalf or you're presenting to buyers, how often are they interested in asking questions about organic growth and the future? I mean, obviously we're going to value the business for what it is today. And we're going look at EBITDA and we're going to do our multiples and all that stuff. But at what point in time in the conversation do you see the question of like, where's the roadmap and the runway for this over the next three, five, seven years, is there opportunity for compounded annual growth? Is there like, how do it, and you know, is it a situation where the, the unit being acquired has an amazing marketing program or have you generally seen the buy side has an amazing marketing program and is looking to buy and they're going to roll that into their situation or maybe a combination of the both, depending on how related it is, if it's a roll up or like an add on?
Dan: Yeah, I think the biggest thing that BuySide looks at is what have you done? My dad used to have a statement, what you have done indicates what you will do. And that's the place that we start in all these acquisitions. And we look at kind of what is your last three-year trend or five-year trend. And it's also a combination, like what's your revenue? Is it going up? What's your gross margin? From a percentage standpoint is that improving? Is your operating expense percent decreasing because that shows efficiency and it all turns into, you know, improved EBITDA. The both maybe the positive and the challenge on the buy side is that we always think we can probably do more and better than what we actually can. Now when I'm leveraging that with people that are selling companies, you know, that we leverage that, right? Like, you're fantastic and you're going to do great things with this. And we sometimes probably overestimate our own ability with something in our hands. Now, we want to, if we're selling, we want to say, yeah, this is what it will do for you. But I think that the buyers, when I advise as a buyer, and if I think about my experience as a buyer, is be be pretty humble and be realistic. Because it's all about expectations on the buyer side, especially if you're a CEO of a company and you're looking at buying, you know, this company and you have, say you're backed by private equity, so you're using their money or you're using, you're publicly traded, you have the street, okay? So how you set those expectations, you know, is you're going to be held accountable to it. And I'm not saying that you should sandbag, but I think you should be realistic. And we all get excited about that you know, the next thing that we buy, I mean, you're in the car lot, you see this car, you love the car, you buy the car, you drive it off the lot, and you're like, wait a minute, there's a scratch there. And there's, know, so the biggest thing is, is to look at what your acquiring has done. Look at what their customer concentration is. Look at how resilient their people are. I think that you want to look at those, those financials as tangibles, but they also, the intangibles are, has the ownership enabled the employees to continue on with this, this company? Or is this going to be a heavy lift from an integration standpoint? And so, you know, you want to look at that future forecast. But when you're doing pre-revenue, if you're doing fundraising for pre-revenue, every deck I've seen shows a hockey stick, right? And it's like, you needed to…
Bill: No, without even like variability, it's all straight up. Yeah.
Dan: Yeah, yeah. And you're like, well, can you demonstrate that? Well, yeah, here's an Excel sheet. It's great. It's just math. So I think you have to look at that with a jaded eye of what the future could be. But you look really critical on what it can be or what it's been in the past. And then it's really where I might augment that statement is, is this a platform opportunity? Is there something about this business that sets a foundation that has an infrastructure that I can go out and buy other things and plug and play and continue to get a, you know, use the systems of this company that then if I plug in different aspects, we'll get a greater return because that platform is there. So I would look at what's the platform? hat's the potential? And I'd be a little bit critical of what they're saying they're gonna do in the future. And also a little bit humble about what I think my own ability is to turn the thing around. Don't sandbag, but have accurate expectations.
Bill: So Dan, often in this space, what I've seen, and I've done a number of mergers and acquisitions and deals in my early career with my dad, we did over 30 deals. And one of the things I've seen, and I want to get your perspective on this, let's say someone approaches you and says, hey, I'm interested in looking at what the future is for my business. Whether that's an exit or ESOP, or like they just know that there is a change coming and they want to be proactive. How often do you meet with an owner or a group and see that one of the things they need to fix or really improve on is marketing to prepare them for an exit three, five, seven years down the road? Because they may have an amazing business and it may be very profitable. But if you look at the predictability of future, you're like, wow, we're doing well. But if a big competitor came in, we're not going to compete because we don't have a good marketing function. Or we're not diversifying our revenue in new channels by identifying new target markets and activating them. Do you see that as something that may be missing as far as having marketing have an impact on multiples? Or do you sometimes advise those folks that, we're not ready yet and this is one of the missing pieces?
Dan: I think it starts with evaluating how is your marketing doing? And you could say, well, look, we're growing by 10% year on year, so marketing is great. I'm glad that you're growing and that's important. But the question really is, is that what's your revenue concentration and what's your customer concentration? Because you might be riding the tailwinds of a market and you've got three customers that are in the right spot and those tailwinds are driving your revenue. And it's not so much your message it’s just you have a relationship with these guys. You've always had a relationship with these guys. They're growing. And so you're growing. You have to look at your marketing and say, is my marketing growing my business or my customers growing my business? Different. It's nuanced, right? And the way that you evaluate that is to say where, what are the sources of your revenue? Are there multiple sources and what's your customer concentration? So you do an 80-20 rule. Most businesses, 80% of the revenue is coming from 20% of their customers. If you have 80% of your revenue coming from 60% of your customers, your valuation is gonna be higher. The reason your valuation is gonna be higher is it it limits the risk of the buyer. Because when the buyer comes in and buys the company, they may have, those customers may know the buyer, may not like the buyer, and may leave. And so if you have buyer concentration, it increases the risk profile of the company that you're buying, which decreases the valuation. So marketing needs to be used to decrease the level of risk that your business has based off of sources of revenue and concentration of customers.
Bill: I love that. I think that's, like you said, it's nuanced, but it's so true because it's in those details that you really see where's your growth coming from. I have a client that has grown tremendously over the past three years and marketing has had an impact, I'd say on about 30% of that growth. But the other 70% is they just have some longstanding clients that did the hockey stick with no squiggly line. Like they just had a tremendous growth and that growth fueled the orders from this company. And that would not be an adder to the multiple or to the valuation. I don't want to say it's luck because they work hard and they do a nice job for them. But they didn't do anything to really impact that growth and control that growth or control their own destiny. It's just because they're retaining clients and they're doing what they do. So I think that's a great insight.
Dan: And one thing I might add on that too is that also how dependent is the business on the marketing versus how dependent is it on the owner? And this is where your people come in and also the marketing and that is the marketing running the company or is the owner? And is the owner doing everything and is involved in customer acquisition as in, you know, going to all the trade shows is, is doing everything or are the employees in the marketing doing it? Because if the employee, if the, if the owner is doing everything, then the business becomes dependent on the owner which means the owner needs to stay after the acquisition. And it just depends on what the owner wants and who's buying the company. So if it's a strategic and the owner wants out, then there's gonna be a higher risk profile, valuation is gonna drop. Now, if the owner wants private equity buy, private equity comes in, they take over the majority, say, 51 to 60% of the company, and private equity will require the owner to stay and roll some of that that they're, they're taken off of the table. And then the pitch from private equity is, will you get a second bite at the apple in three years? Because we're going to bring capital in, we're going to give you more money to expand into markets. You're, you've done as much as you can with the money that you want to invest. We'll bring more money in, we'll bring in our processes, our expertise, take it to the next level, and then you can leave in three years. So if that's what the owner wants to do, it's a great option. A lot of times the owners I deal with just want out. And if you want out, your marketing better be clear in with customers and your employees better be able to run the business without you because you're gonna get a lower valuation if it's dependent upon you.
Bill: If you have that situation where the owner, you know, owner founder is leading sales and marketing and it's really, they are the revenue driver, right? All roads lead to them. And private equity comes in or someone comes in and buys it, is one of their first is, would you recommend that one of the first things they do is invest in marketing to really drive away from that owner founder revenue engine and develop their own organic professional marketing program that can provide predictable, scalable results that isn't centered on the owner?
Dan: Absolutely, and I think we all get operational blindness. And I see this when I was running ANIMART, had veterinarians on staff. And a farm would have a veterinarian and the veterinarian would be working with the farm and then one of our veterinarians would walk in and they would say, hey, why do you have your mastitis tubes on top of the heater? Why didn't the other vet see it? Well, it's because you become blind to what you become most familiar with, you don't see. And so I would say from an owner standpoint is that there might be some operational blindness that you have, or if you bring in a professional marketing group and you develop, you know, what is your real pitch and competitive advantage in the market, that second set of eyes, those other eyes will be able to identify opportunities that might be blind to you just because you've been doing it so long.
Bill: No, I think that's right on Dan and the, we need different perspectives. And I think this is a nice segue because one of the things I want to talk about next is really about what you're doing at TCQ Solutions to help your market. And I think one of the things that happens whenever you start talking mergers and acquisitions and you start talking about sales and processes, I think a lot of folks in what I would call the middle market, right? Companies that are doing five, 10, 20, 30, $50 million, have a healthy business they've built for 20, 30 years, which is probably going to be a profile that is consistent in the animal health and agricultural communities. We don't have, now there's some that we know of personally as well that are more like app-based or pre-revenue kind of on that AI frontier. But a lot of the older business, existing businesses have been around or kind of in that space where mergers and acquisitions might feel like they're watching the movie Wall Street from the eighties or nineties or Wolf of Wall Street. Like it's very cutthroat and all of those things. And one of the things I've appreciated about understanding what you do at TCQ Solutions is you're looking at the human element in guiding specifically if it's founder-led or it's like one family that owns it as opposed to a huge corporation. If you're trying to sell that, you're as focused in the early stages on helping them determine the next step in their life as you are just in the check. Could you maybe talk about the philosophy that you have and how you're bringing that to fruition in these processes for these owners?
Dan: Yeah, and I think it starts with what the owner is looking for. And obviously, the first thing they’re looking for is a good valuation. They do want the check. They want paid for all the nights that they stayed up worrying about the business and all the evenings they spent working in the business and solving problems when nobody else was around. So valuation is important. Once you get past that, it's really about the legacy because, you know, they see these businesses as their children and they are because they've put, you know, if you think about, only have so many hours in the day and so many days in a life, they've, they've put their majority of their, you know, their blood, sweat and tears into this business. And it's, it's personal to them. It's a representation of who they are. And while they want to check, they also want to see the business continue. The other thing is that most owners have a tremendous amount of gratitude to their people because they recognize, especially those that are the most successful, recognize that they couldn't have got there without Jim and Jane and Tom always being there and the sacrifices that their people have made. So while it's about the check, they don't want to just take the check and see the business disappear tomorrow. And they also still want to see, you know, their people be successful because they've, they've invested themselves as owners in their business and in their people. And so the way that we approach it is that one, we recognize that. And some may or may not. And I know simply, and not every private equity group, but a lot of times private equity group, the first thing they'll do is they'll come in and say, look, you got too many people. And that's the biggest expense. You actually talk about, if we run back to the marketing comment, I always ask my marketing professionals, what's the number one marketing expense you have in the company? And they're like, well, our ads. No, it's your people. It's your salespeople. Your salespeople are part of your marketing. So you should be thoughtful about those guys. And I know they're prima donnas, especially the really good ones. But you need to have a service attitude. You need to be a servant attitude to your salespeople, salespeople, same thing. So we try to, we look at the hard numbers to get to the valuation. We look at the intangibles. We think about who in the market do we know and how do we position these intangibles to extend your legacy and give opportunities to your people? And then when we're talking to buyers, we say, look, here's the legacy that this company has, and this is how it augments your legacy and how it's, you know, synergistic and how one plus one will be two because you're bringing in their reputation. And they didn't get this far without really good people. And so how do we fit those two things together? Now, the other thing is when the from the people standpoint, if anybody comes in and buys the company says nothing's going to change, they're lying to you. It's going to change. But as an employee, you'll have the opportunity to change with it. And it's still up to that employee to make that decision to demonstrate. And again, it's really about humility across the board saying, look, it's a new owner. I have to prove myself again, even if I've been here for 20 years or 30 years. You've got 20, 30 years of experience. Demonstrate it, showcase it, and you're going to succeed.
50 Marketing break
Bill: Well and I think, Dan, let's talk about not only your guidance on that process and making sure it goes smoothly. So we have the check. We have the legacy. have what we want the experience to be for the owners and the employees. But let's also talk about how someone like you can really provide guidance in that. Because let's be honest. If you haven't done mergers and acquisitions before, if you haven't sold a business, it is a completely different process from operating your distribution, your manufacturing, whatever you do, whatever your genius is, and wherever you've carved out that value in the market, it is a completely different process. And I would also argue based on my experience, there are many paths to getting that check, preserving the legacy and taking care of your employees. It's not just put it up for sale and have the biggest kid on the street buy it. There's ESOPs. There's, I mean, there's all types of ways. So maybe talk about how you would explain to a potential seller, someone who wants to sell and work with you, why it's important for them to have a broad exposure to a lot of market transactions through you to really envision what the best path could be as opposed to putting a shingle out at the end of the lane, business for sale, and hope somebody drives by and hands them a whopping check.
Dan: Well, I think it starts out by asking the question of what do want out of this process? And listening to the ownership and saying, you know, well, we want X, Y and Z. And then saying, okay, well, here are, you know, the five options that can get you there. And there's going to be trade-offs like anything. There's pros and cons. You're not going to, you know, you're not going to have somebody come in. And if you're a $10 million business and you got a $2 million EBITDA, nobody's going to come in and pay you $100 million and then give you a salary and continue to pay you a salary. And most owners are realistic. I think that the thing that, what this process does for owners, and I don't know if I'm really answering your question, but it spurs a thought. And the thought is that after I've done each one of these, a dozen of them, and we get through the whole process, a couple of comments are consistent. We should have always been doing this with our business is one, like they ask questions about inventory valuation or whatever. And the owners are like, well, we knew we should have made that change, but we didn't. And they learn more about their business through the process because owners spend so much time working in the business, they don't spend a lot of time working on the business. And what a merger or an acquisition will do is it forces you to work on the business and to look at the business as an entity versus working through the business, right? Instead of driving the car, you step out of the car and you look at the car. And we look at the car together and we say, hey, you got a couple of dents and we need to get those dents out. Hey, did you ever notice this? Well, yeah, it's kind of something that we've noticed. I'm like, but in their hands, there's a tremendous amount of value. Well, we just haven't had the time or the capital to invest in that platform. And so, you know, and again, it comes back to what you want. If you want to just continue your legacy and you want to protect your employees, do an ESOP. But you're not going to get as much capital on the front end. And have you developed, do you have the talent for an ESOP? What have you done to develop your people? I mean, you've done a lot to develop the business. And if it's just about you as the owner and you don't spend a lot of time developing people, one, you limit the growth of the business. And two, you really set your folks up for failure in that next, next, next world. So I don't know if that answers your question, Bill, but did we get around it at least?
Bill: I love it and I think you did because I think one of the things we overestimate, like you talked about humility earlier. One of the things we overestimate about ourselves on a daily basis, at least I do, I won't cast aspersions on other people. I'll just internalize this. I think I can do anything. I have optimism. Yeah, I could sell this agency. I could figure it out. But…
Dan: Bill, I believe you can do anything too. Just, I just want to go on the record saying I believe you can do it.
Bill: I want the team to cut this clip and that this needs to go viral. Like I, someone on the planet believes in Bill. I love that. Thank you, Dan. That made my day. But I think when we look at, this is an area of extreme expertise and especially as we start to look in the animal health and agricultural sectors, when it was the old days where you were selling your farm or your local small regional business, there were not a lot of options. There were not a lot of funds available. There was not consolidations. There was not private equity. It was relatively small and let's just say old school. That has changed dramatically in animal health in the agricultural sector. And as we see additional consolidation, which is the only outcome that is going to occur, the idea that we as a business owner of a $20 million company or a $30 million company that's doing well, understand mergers and acquisitions and what's truly available in the space is not recommended. Like we need to seek someone who can give us good advice because we didn't even talk about, and I don't want to, tax implications. We didn't talk about legal implications, asset versus stock deals, all of those things. And like I studied some of that in college enough to know that that's not what I wanted to do. And like I was always like, yeah, accounting and tax, I'll hire somebody for that because I'm not, I did not enjoy the class federal income tax. That was not my bag. And thankfully there are very good professionals. And in my life, my sister handles all of that. She's that professional. But well Dan, if you wanted to give a couple pieces of advice, like some takeaway advice, a couple points, if an owner is thinking about pursuing a sale or looking at that next life transition, right? Because the other thing is it's not like it's over. It's just the next step. What would be some like parting thoughts or guidance you would give just as kind of like a top two or three things if they're thinking about it in preparation to talk to yourself or another person in your position in their space who could help them explore these possibilities? Because they're not going to call you and you're going to say, I got it sold next Tuesday. This takes time, energy. Could you provide like a little bit of a roadmap there, please?
Dan: Well, I think the first step is that when you engage with the idea of wanting to do an exit, it is a long road. Typically, I guess my track record's been getting deals done under 12 months, but I also know times where it's upwards to 30 months. It just depends on the macroeconomics, your business, buyers out there. And so it can be time consuming. I think that the first thing is to start thinking about what's your exit plan. And what are you doing to make yourself irrelevant in the business? And because if you, a lot of times I talk to owners and they're like, I just don't know how to get out of it. I've got no exit plan. I've got no succession planning. I've got, you know, kids, but you know, one's a doctor, one's an attorney, one they're they're doing their own lives and they're not they're not interested. And I think that's one thing too, maybe that I would advise new business owners like, not, if you're not, if you're just starting your business out, spend as much time with your family as you do with your business. Because what I've seen is that the reason your kids aren’t interested in the business is because you've devoted more of your life to the business, to the kids, and your kids are sometimes resentful for not having that time with you.
Bill: Good life advice.
Dan: Now that's off-subject and it's just one of those, well, it's one of those things that if you want your kids to take over, you got to incorporate them and yeah. And that's tough. You only have so much time and attention, and we have passion for the business. just, if you have all your passion towards the business and not to your kids, your kids aren't going to be interested in taking the business over. So that would be maybe the first thing is that what's your exit plan? And, and are you thinking about your exit plan? And do you want to exit or you want to just, you know, die in the saddle? Some people just want to die in the saddle, which I can't blame them, Bill, right? Because I know, guys, that, yeah, you spend like a corporate career and you've got 30 years and then you retire and all you've had is your career. You sit on the couch and we know stories, right? Tragic stories where people sit on the couch and then they pass away in six months. Not much of a retirement. So I think it's like having a vision of what is it post-life? What other passions do you have that you want to pursue? And then what do you want to get out of the exit? You know, I want to try to help people balance what they get paid, what the legacy is and setting the foundation for the employees. And the reason why is because I've been in each one of those steps. I've thought about my legacy, you know, I've thought about, you know, the deal I get, the legacy, and then also the people and being, you know, I've been a part where when Allfax bought Destron Fearing, they closed on Thursday, and then we had a meeting on Friday, brought myself and the entire sales team in and they gave everybody walking papers. No severance, right? It was like, just get, get out, you know? And so I've, I've had that moment as an employee where the ground has just completely disappeared and you're free falling. It's not a fun place to be. Great learning experience.
Bill: In retrospect.
Dan: In retrospect, I mean, yeah, it's a, you know, next time I have a parachute, that time I didn't. But I think that the conversation I have with them is that what do you want to accomplish? What do you want your legacy, just your life legacy to be, family-wise and so forth? What do want that next stage to be? And then let's look at the business and say, is your business ready to sell today? And I've had conversations with a construction company and we met and I said here's basically you know the way that we would approach it. He goes yeah I think I need to wait a couple of years because I don't have enough assets. I'm like, okay, you know, are your people ready for you to leave? And so we look at the business and say, you know, you have a, you have a, you've been really investing in the business, you got 250,000 in EBITDA, you know, we might get you a million and a half. We might be able to get you two million. I don't know. I've had cases where I had a group come to me and I looked at their numbers and I said, yeah, it's probably maybe three and a half. He's like, oh, he's like, well, we'd like to get about 15. Well, Bill, I'm like you, I think I can do anything. And I said, well, I don't.
Bill: And you can.
Dan: Yeah, well, thank you. I go, we'll give it a try and we'll get, you know, equivalents out there probably was worth 15. But again, it's only worth what somebody will pay and we overshot. And so, you know, I think the first thing is to what do want your exit to be after the fact? Is your business ready? And do you have the right expectations evaluation? And let's see if we can exceed that. But there may be some things that you need to do in your business on the front end before we can maximize the value and set up your legacy.
Bill: No, I love that. And Dan, I think what, the solution you're providing in the market is so right and ready for where we are today. We have so many baby boomers who are pretty much exited or exiting. There's like, there's so many businesses that are going to change hands. There's so much consolidation in the animal health and agricultural business community. And the values of the people who are participating in that segment of the economy are more Main Street than they are Wall Street. They care about their people. They care about their legacy. They care about their life after. It's not just about people pushing numbers on a spreadsheet in Manhattan in a skyscraper. Right, so I think your mixture of process and people and financial performance, because we all want that check at the end, is the right recipe for mergers and acquisitions, sales, divestitures, whatever in that market. So I'm excited to see where this goes. Dan, we've been talking a lot about mergers and acquisitions, marketing's impact on multiples, but I always love to allow our guests to give a shameless plug of their business, which all of these items will be listed in the footers, show notes, YouTube, social media posts, but let's go through that verbally, Dan, about your business, where they can find you and how to connect.
Dan: Sure, no, appreciate that, Bill. And our website is tcqsolutions.net. The TCQ comes actually it’s our cattle brand. It's T-Cross Quarter Circle. It's kind of an homage to where we came from as being kind of cow-calf producers and that rural ethic. And so if you're looking to sell your business or you want an evaluation or if you need a review to say, is it ready for a sale? And what are the steps that we need to go through to get ready for a sale? Whether that's a month process, a six month process or a year process, you know, give us give us a call. My phone number, I think is on the website. It's 913-558-4378. That's my cell number. You can call anytime. And, and if you're just curious about it, and you want to learn about the process, or you just have questions. I'm just here to help and hopefully the experience that I have, I can be a good service provider to people that are trying to answer that question. What's the next stage in my life?
Bill: Excellent. Well, no, Dan, thank you so much. Thank you for your input on this topic. It's one we're wrestling with. We're trying to provide value to companies who want to make sure the marketing function is impacting their multiples. And I think your insights specifically in agriculture and animal health, that vertical is just tremendous and has been very helpful to us. Dan, once again, it's been a pleasure and thank you for joining the Missing Half today.
Dan: Bill, it's great to see you again.