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“Think bigger. Make everything you can out of your business and out of your life.... If they would have called me a year in advance or two years in advance, those numbers would be massively higher because we can work with a business owner to help them position the business so that it's going to sell the fastest and easiest and for the highest amount of money. ”- Marty Fahncke
As a seasoned marketer with over 30 years of experience, Marty Fahncke has helped businesses scale to over $1 billion in revenue and executed over $450 million in mergers and acquisitions transactions. I had the pleasure of guesting him on my podcast, where he shared his insights on when to sell a business, the importance of staging a business for sale, and the art of growing a business through acquisitions.
The Journey into Mergers and Acquisitions
Marty's journey into the realm of mergers and acquisitions began when he started a business with friends and eventually sold it for a significant amount of money. This experience taught him that most small and medium businesses are sold due to substantial events, such as leases expiring or retirement. He advises business owners to start thinking about selling their business well in advance to maximize its value.
Staging a Business for Sale
Staging a business for sale, Marty explains, is akin to staging a home. It involves cleaning up financials, documenting processes and procedures, and securing long-term contracts to increase its value and attract more buyers. He shares his own experience of having short leases when selling to Taco Bell and realizing the missed opportunity to negotiate longer leases in advance.
The Buyer's Perspective
Marty emphasizes the importance of looking at the business from the perspective of a prospective buyer. Entrepreneurs often get caught up in day-to-day operations and fail to see the potential value-adding actions they could take to make their business more attractive to buyers. This is where a great business advisor can help by providing a fresh perspective and guiding the owner in making decisions that will increase the value of the business.
Positioning the Business for Sale
Even if an owner has no intention of selling, Marty explains that there is still value in positioning the business as if it were for sale. By doing the things that a buyer would look for, such as cleaning up financials and improving documentation, the owner can run a more efficient and profitable business.
Valuing a Business
Valuing a business is more complex than valuing real estate. It depends on various factors such as revenue, profit, industry multiples, and assets like inventory and equipment. Marty emphasizes that there is no one-size-fits-all formula for valuing a business and advises using multiple formulas to get a rough idea of its worth.
Growing a Business through Acquisitions
Marty shares his personal experience and explains how acquiring similar businesses can be an easier and faster way to grow compared to traditional marketing methods. He gives an example of an electrician who could potentially acquire the local electrical parts distributor he buys from, thereby improving his profit margins and owning the entire supply chain.
Acquiring businesses doesn't necessarily mean owning them entirely. Joint ventures and partnerships can be formed, where the acquirer brings their expertise to help grow the business while earning equity in return. Marty gives an example of a marketing agency, like his own, that offers to help businesses grow and become more profitable in exchange for equity instead of upfront cash payments.
Building an Empire
Marty concludes by highlighting the potential for owning multiple businesses through equity partnerships, without having to personally run each one. He mentions the example of Elon Musk, who successfully operates as the CEO of multiple businesses.
Westbound Road: Mergers and Acquisitions Advisory Services
Marty's company, Westbound Road, specializes in mergers and acquisitions advisory services. They help businesses prepare for sale, whether it's in the near future or several years down the line. Their fees are mostly equity-based, as they are invested in the success of their clients' businesses.
Don't miss the full episode for a deep dive into these topics. Marty's wealth of experience and unique insights are sure to provide valuable food for thought, whether you're considering selling your business or looking for ways to scale.
Connect with Marty for more content related to these topics. And as always, feel free to comment, like, share, and subscribe to our podcast. Your support means the world to us!