Two companies engaged The McFarland Group around the same time. One has just closed a third party sale at roughly twelve times earnings, on terms it named itself. The other is still trying to agree on what it is worth.
Byron and John spend this episode on the work that separates those two outcomes, told through clients they have known for as long as twenty years.
It opens with a phone call. Joe McGill Sr. read the first edition of the TMG newsletter and rang Byron out of the blue. What he wanted to thank him for was keeping him and his son friendly through the handoff. Both strong willed, both aware it could have gone another way.
John tells the one about calling a client's CPA every Friday at nine in the morning for six months during an audit. That habit turned into an introduction, which turned into a valuation, which turned into an eleven year relationship with a business now worth more than fifty million dollars and a private foundation the owner intends to run in perpetuity.
Then the counterweight. A general contractor growing thirty to fifty percent a year for five years, with the right people finally in the right seats, stuck because its owners cannot agree on how to value the business or reward themselves. Everyone below them waits.
Byron also explains the power sweep, a term he coined about fifteen years ago and still uses. What happens to the business, its liabilities and its key people if an owner dies or becomes disabled. The whole point is settling it early, while nothing is close to triggering it.
CHAPTERS
00:00 A call after the first newsletter went out
00:23 Thank you for keeping Joey and I friendly
04:18 What changes between a father and son after a handoff
07:13 Scott Heine, and a twenty year relationship
11:29 Calling the CPA every Friday for six months
13:15 The introduction that became a fifty million dollar client
15:19 Byron at the whiteboard, and John waving him off
17:40 A private foundation meant to run in perpetuity
19:13 A dinner conversation, and a referral
24:45 The daughter, the finance tutor and the color coded book
26:56 Where John starts on transferable value
29:21 The company that cannot agree on what it is worth
33:13 The power sweep
35:05 Twelve times earnings, and naming your terms
THE TRANSFERABLE VALUE INDEX
Twelve questions, about four minutes. It shows you where your business sits today, and what would have to change before it could transfer to someone else.
Take the assessment: https://transferablevalueindex.com/
THE MCFARLAND GROUP
We help closely held business owners think clearly about ownership transitions. Selling to management, selling to an outside buyer, and designing equity plans that keep key leaders in place.
https://themcfarlandgroup.com
Go Boldly.
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