Ep 553 Why 17.5% of Owners Are Burnt Out and Want to Sell

Speaker A: Hi there and welcome back to another edition of Built to Sell Radio, the podcast designed to help you punch above your weight in negotiation to sell your company. I'm the executive producer, Colin Morgan, and today we're trying something new. Instead of one guest, John is hosting a panel and the conversation gets pointed. He's joined by Lee McCabe, a private equity veteran who now advises PE firms on the businesses they buy, and Jason Swank, who built marketing agencies and sat on the buy side, acquiring them. The the trigger for the discussion is finding from our Prescore data, 17.5% of business owners now say burnout is the number one reason they want out, not retirement burnout. John pushes both guests hard on the question underneath that number. If you're tired and feel like AI is a threat and you don't have the energy to fight, do you sell now or is your business worth more than you think? They don't fully agree, which is what makes it worth your time. If you'd like to see more panel episodes just like this one, leave a comment on the YouTube page and let us know. It helps us decide what to provide for you next. Though further ado. Enjoy the conversation.

Speaker B: Lee McCabe, Jason Swank. Welcome back to Built to Sell Radio.

Speaker C: Thanks for having us.

Speaker D: Yeah, thanks, uh, for having us.

Speaker B: Yeah, it's, it's good to have you both here. And it comes at an interesting time. We've just analyzed the users of our preschool assessment, and this is an assessment we have business owners do as they're thinking about kind of selling their company. And, uh, we've looked at it longitudinally over six years. And so we've just done a big deep dive. There's a couple of things that are popping out today. One in five business owners say their primary reason for wanting to exit is burnout. If we look at that cohort of people who are burnt out and kind of unpack it, 57% say too much stress versus 11% of the overall market. Uh, 41%. Take my take, my business is taking Too much time versus 13% of the overall, uh, 40% want to cash out versus 28% of the overall. And here's what's interesting. Time to retire. It's basically a dead heat. What I'm getting away from this is that business owners, many of them don't necessarily want to go retire, but they are really burned out. And I, and I think part of the burnout is coming from everything they've gone through. Like if you're a 50 something business owner today, you've gone through 9, 11, great financial crisis, Covid. And now you've got this thing called AI And I think a lot of people are kind of throwing up their hands in the air and say, and saying, like, I'm out. Like, I'm not, I'm not. I don't have another transformation in me. Like, I just don't have the stomach for it. And, and that's why I wanted to have you both on this conversation. Lee, you've been in private equity. You started off at Alibaba in North America, then you were in private equity. Now you advise private equity companies. Jason, you built marketing agencies, one of the kinds of companies that are being affected by AI, uh, both good and bad. You've then worked at the acquiring company, looking at acquiring agencies. And then today you help agency owners kind of get ready to exit. So you've got a, ah, really interesting lens on this. So let me throw it open to the group. Lee, maybe you can start like, should business owners just kind of hang it up and if they're feeling burnt out, like, what do they do?

Speaker D: Well, look, when it comes, if they're feeling burned out, that's, I think that's a whole different issue. If the question is how should they think about AI? Yeah, I would say this, uh, one, it depends on the business. But as a whole, I'm an optimist in general, and I think AI can be a great amplifier for your business. This is a, uh, we're in a gold rush right now, and the ones that figure it out first will benefit. But the ones that figure out first I think have to do the basics very well, which most business owners don't. AI is not a magic wand. It's not some ominous threat that's going to decimate your business or your industry overnight. I would say take a look at your business. If your business is built on data and process and systems, then AI should be a big advantage for you. But that's where most business owners are. Uh, not in that place.

Speaker B: Jason, what, what's your stats agree with Lee or have to?

Speaker D: Yeah.

Speaker C: So about a, a year ago when I started watching all the propaganda of all these social media people, uh, going, I just replaced my agency with AI and I started watching some of their videos. They sucked me in. There's, there's those, those creative people. And I was like, yeah, agencies are done or a lot of businesses are going to go out of business. And then I started really getting into AI and I was like, this is the most amazing tool. And kind of like what Lee, was just saying is if your business is not built on systems and you are the biggest bottleneck, AI is going to destroy you and expose you. But if you have systems and you look at, I always tell people, use AI and start where your biggest bottleneck is. How can I replace myself? Too many business owners are still operators where they're doing everything they focus on, then they focus on operations, sales goes down and vice versa. Where. And then they start hiring people and they get in this manager trap where you're doing what you're doing now, you're doing other people's job and you're managing them. But we all need to get to like architect or CEO level, where we're building systems to let people make other decisions. And AI gives us that ability to do that if we build it right. But we have to innovate. We have to create stuff. Like, we've all been through the dot bomb, error, 9, 11, Covid everything. And you just have to be wanting to do new things. Do I get burned out? Heck, yeah. I get burned out, right? But then I kind of reset and I'm going, what is burning me out right now? So I can kind of reset. Give that to someone else, give that to AI or stop doing it altogether.

Speaker B: What are you seeing among the acquirers that you're, you're in touch with Lee? You're, you're obviously steeped in the world of private equity. You, you meet with them all the time. Like, how are they thinking about AI and the portfolio of companies that they are potentially looking to invest in?

Speaker D: I think, look, I think everyone's getting ahead of the game here. I think AI is on trend right now. So a lot of PE firms are hiring head of AI and it's tough. A lot of it is to placate LPs to say, we're great in AI. We've got this. But when you look on the ground, most of these portfolio companies are not ready for AI. And I have conversations with portfolio companies all the time, and they say, what should we do in AI? And my usual answer is absolutely nothing. And they say, well, why? I'll tell you why. You've got no data in your business. You've got a CRM M that you built yourself that doesn't work. You have a CRM that you haven't used for three years. There's no foundation in this business. Build a strong foundation in the business first, and then you can capture all the goodness that AI is going to bring.

Speaker B: Lee, I just want to make sure I decode a Couple of things for my listeners. So when you say lp, you're referring not to the private equity company, but you're referring to the people that invest in private equity companies, is that correct? So private equity company will go out, you know, get some capital from usually LP investor, like limited partner investors, could be an endowment, could be a, uh, high net worth, family, whatever, and that amount of capital they're deploying to try to get a return. Am I getting that generally right?

Speaker D: Exactly.

Speaker B: Got it. And you're seeing, if I understood what you just said correctly, that some of the private equity groups, uh, are kind of pretending that they have an AI strategy just so that they can look good for their LPs and get their LPs off their back and saying, yeah,

Speaker D: you have to do that because the LP is the customer for GPS and private equity. So if you look at every kind of trend that's come along, there was a hiring of digital managers when digital blew up, uh, there was a hiring of, there was ESG managers when ESG was the thing. So now there's a big hiring of AI. But when you look at the portfolios, the average private equity business is an old boring business that spits out cash. It's a manufacturer in Ohio, you know, it's a, it's a distributor in Iowa. So when you say, how do I apply AI to this? It's the same answer. Um, I'd always give. Start with a very good business. If you have a very good business and you've got all the data, AI is going to be great for you. But like Jason said, if you haven't, if you're a bottleneck, you've got no process, then, yeah, you're going to be challenged because somebody will come along when your competitors will come along. They'll get this faster than you and they'll create a better business.

Speaker B: Jason, what are you seeing among the agency holding companies? Because again, you know, agencies, you know, if I want five headlines on my new ad, Claude will do that pretty quickly for me. ChatGPT will do that pretty quickly. They are certainly susceptible to AI. What are you seeing among, uh, acquirers of marketing agencies today?

Speaker C: Well, they're looking for profit and efficiencies. And really a lot of times when I'm talking to agencies or businesses, they'll say, oh yeah, we're using AI for everything. And they're just using it for tasks. They're going into chat and they're just asking it something rather than we all have the same tools. If you think about it, we all can use Claude or Codex or Gemini or whatever tool is hot right now, right? Which it changes every single day. But what is unique to us is really, like Lee was saying, our data. So, like, for example, a couple months ago, I started building our own operating system. So I got tired of going to a model and training it and trying to come up with the best prompt, right? We've all kind of seen all those advertisements. Here's the best. The only prompt you need to replace your business, your agency, or whatever it is. Here's. And I got tired of all that. And so I started thinking, how do I download my brain to allow my team under me and then show them how to do the same thing with the team under them to download to give the ability for people to make decisions without coming to the manager or the leader. So I had to figure out, like, can I build a context folder with all the context? Can I build the framework folder? Can I build, can I connect it to my CRM where all my data is there? Can I bring in all my case studies and success stories and really all our frameworks? And I think that's what these holding companies are looking for when they go to buy an agency or buy a business is because this will make them way more efficient and it will make it less founder dependent, right? If the founder is so dependent on the business, they're not worth that much because honestly, when someone bought me, man, I was the worst employee ever, right? Like, I've been fired from every single job I've ever had. I only had one option. Build businesses. That's it.

Speaker B: Uh, interesting, Interesting. So you're, you're, you're seeing one of the common themes I'm hearing from both of you is like, run a good business that's not dependent on you and you'll be fine. I guess I get a, I'm going to subtly push back because I think there are lots of examples of people who run good businesses that have been dramatically disrupted by AI and, you know, software as an example. Anything in the professional services, accounting, legal. I mean, there are people who run amazing law practices are down 40, 60%. I, I went for, I was out on a ride the other weekend with a guy who runs one of the most successful law firms in Toronto and he said, yeah, like I, my work is holding up because I charge a hundred, fifteen hundred dollars an hour or whatever I charge, but it's the underlings, it's the, it's the, it's the associates in my model and it's blowing up my business. Model if I want to be a one person, like a law firm, sure. But if I want to build a FIR firm, I'm getting destroyed. And so, uh, I don't know. I'm just, I'm of the opinion, I guess, that it is disrupting a lot of businesses. And I did an interview with a guy two weeks ago, Jared Cruz, I think is the guy's name. He's Australian guy who said, look, you know, I love it when I see a business that has not adopted AI, uh, because I know that's my upside, that's my value creation. Right. So I'll buy it for X multiple and I'll go in and improve it. I'll put in a lot of the work that you do, Lee, and in terms of digitizing it and building out the systems, uh, and all of the sort of transformational work. And that's my lift. So it's not an unattractive business if they haven't adopted AI. So that gave me a little bit of solace and hope that all of our listeners aren't completely screwed.

Speaker D: No, I don't think so. And it depends on the industry. Whenever you look at a business, you look at the industry first. And the industries you just reeled off are probably the ones that are going to be most challenged. Agencies, professional services services, lawyers, accountants, consultants. Anything that you bill by the hour and you've got a bottom level of associates that probably can be replaced by AI. You've got to rethink what business you're in and rethink quick because the whole industry is under threat. So, yes, you're going to have some industries that will be challenged more than others. But then you look at home services. AI is not going to replace your roof. AI is not going to fix your plumbing. Those industries, there should be a massive upside because there's lots of inefficiency in those industries. If you have the data, you can create great businesses. So I would say it completely depends on the industry.

Speaker B: Yeah.

Speaker C: And I look at it as, I try to relate to it. When I, you know, I started my agency in 99, and when I started, the Internet was getting really popular. Hardly anybody had any websites. So I started designing $500 websites just by accident. And I started and I did a speech a couple weeks ago and I was talking about AI and the operating system. And I, and I basically went to them, I said, look, all of you are thinking, are we screwed? Are we done? And the reason being is I put myself back in 99. I was excited about it because this is new thing and why was I excited about it was I didn't have anything to protect. But now I built the business, I'm trying to protect it from all the change that's happening. And when I look back, like we didn't have web designers, we didn't have webmasters. I love my webmaster.

Speaker D: Right.

Speaker C: If you guys remember webmaster or web developers, like they were just graphic artists, there were print artists that had to adapt to digital. So it's an uh, innovation. We all have to evolve. The people that don't evolve the, like in the professional services, like for example, like when I'm like with the lawyer example that you told about John. Right. If they're doing business law and they're just writing contracts. Yeah, you need to think about like I'm going to Claude almost every single time to write my business contracts, to review the business contracts, all that. And so they need to think about not what's changing, but what's not going to change and what kind of business can I create from that to adapt? If you're constantly doing things the same way you've always done, yeah, you're in trouble. But you have to evolve.

Speaker D: Yeah, but you have the time to adapt. AI is not going to change things overnight. And I think everyone's always bullish on new technology and thinks AI is going to be here tomorrow, everyone's going to be over AI. Everyone's going to get it in a few years. They're not. Most companies and businesses are very slow adopters to this. The analogy I'll use that Jason will get is SEO. Now, I think if you went back 10, 15 years when SEO was emerging, maybe longer, you would say that Search engine optimization, you would say that in a few years every business is going to get this. Every business is going to understand how to optimize on Google and show their business. Most businesses still don't get it 15 years later. I think it's going to be the same for AI. You're going to have some very fast movers here. Uh, but I think the larger pack is going to be still slow to adopt it over time.

Speaker C: Well, if, if you go back, the Internet took seven years to get to 100 million users. Seven years. LGBT did it in two, two months. So I, I think it's going to be quicker than people think. But like you said, Lee, there are going to be people that are always going to be the laggards that don't want to use it. But the thing I like about it is you have to have A director for AI for sure.

Speaker D: But we'll split it so the adoption will be quick. And I think ChatGPT eclipse those usage metrics so everyone will be using AI. I was talking more about the business adoption. I think how businesses will figure out how to use it will be way longer than we think. They're not going to figure out overnight or in a few years. You're going to have a lot of laggards in this who won't figure it out and will need help to figure it out. I don't see that journey moving fast.

Speaker B: So what if you were a business owner listening to this? Because here's what I hear. You know, I hear you both being very optimistic, uh, and bullish about AI and its ability to turbocharge business processes for successful companies. I hear that bullishness coming through, which is great, which is optimism, and I love that. And at the same time, I think we have listeners that are listening to that saying, I'm just too tired. Uh, like I don't have it in me. Like, I don't. I hear you, Jason. Like, I get it, Lee. Like, I get it. But my best days are behind me. I don't have another 10 year journey to transform my company. So I want to get out. I want to get out. And I have not yet adopted AI. So what advice would you have for that founder who is saying, I'm done. I'll start with you, Jason. If he wants to sell to an agency, Holdco, and he has not adopted AI, what advice would you give?

Speaker C: I would ask if he was going to buy his own company or he or she was going to buy his own company. What would you change that would change your thought on this? Because whenever anybody wants to sell, there's some kind of pain that they haven't been able to figure out. There might be something that they're doing that they just don't enjoy anymore. Like, I remember when I got to a point where I, uh, you know, many times I wanted to call it quits. And then I went back to a simple exercise, well, that I created by accident because I got to a point where I wanted to quit and I went to go interview, uh, with nascar and they go, what do you want to do every day? What don't you never want to do ever again? And so my exercise was this. Draw a circle on a sheet of paper, spend about 30 minutes, write down all the stuff outside the circle that I hated, right? And then about 15 minutes of all the stuff that I really loved. And, uh, if there's Nothing inside the circle. Yeah. Then sell it. And I always tell people, don't sell unless you know exactly what you want to do next. Because when I sold the first agency, I was completely bored. After, uh, two weeks, I was like, I don't. Right. And then I found this. I was like, oh, okay, this is fun. Let's, let's, let's try this out. But you know, if there, if you're at burnout, there's a reason. Try to figure out that reason. Or if you want to go be an airline pilot and you were an agency owner and you've always wanted to do that, like, then go do it. That's what I would tell you.

Speaker B: So, sheet of paper, two kind of columns or two circles, Basically everything you love doing, everything you hate doing. And if there's nothing in the everything you love doing, well, then clearly it's time to go on. But if there's, if there's a few things there, you're saying use AI or digitization or hire people to do the

Speaker C: stuff you don't want to do or don't do that stuff that you don't want to do, or delegate. Like there's other options. It's just people think business is not going good. It's been on a downward trend. It's going to go to zero. Right. They maybe not have put money away or whatever it is. Like there's, there's some issue. What, what if you fixed your biggest issue? Would you still want to sell? I remember when I first started thinking about selling my agency. I was like, I need to fix my biggest issue. So it looks more attract then I did. I was like, I don't want to sell.

Speaker D: But I think it's also hard to walk back from that decision. I think once you decide, I'm out, I'm done, I've got a good run at this, I'm out. I think it's hard to come back off the ledge once you're there. So the advice I would give is figure out the exit. Like, Jason, where do you go next? Or how do you set up the best exit possible for this business? And you don't have to go into AI, but make it AI ready. And that's back to the point earlier. If you have a great business, you have a great business. If you have a great business built on data, uh, you have an even better business. And that's attractive to a buyer because they want to look at it from an AI lens and we'll say, oh, we're buying a great business. With data man, we can drop a eye on top of this and make a big difference, uh, and make some real money out of it. So I would say if you're out, you're out. Figure out how you exit and take the best path possible.

Speaker B: Lee, when you talk about data, what sorts of data are you referring to?

Speaker D: Everything. When I look at a business, AI hasn't changed anything. I always look at business data first. And one, I said, do you understand your business? Do you understand what business you're in? And here's what I mean by that. I look a lot of home service businesses and if they say we're in the roofing business, which most people do, I go, okay. But if the CEO says, I'm in the lead generation business because the quality of the roofs, I've got competitors and to be honest, my competitors fit the same kind of roofs we do. But I'm in the lead generation business. I understand distribution, I understand how to get customers, I understand digital. That's what makes the thing different. So those guys, if you understand a few things, if you understand what business am I in and you say if I get good at lead generation, I'm going to have a great business. If I understand my customer journey and I've got the data that helps me understand that, I understand what channel the customer's coming from. I understand what I pay for that customer when I send them the call center. Uh, I understand how fast I'm calling that customer. I understand how fast I'm getting an appointment. I understand the window that appointment's getting set. I understand the cancellation rate, uh, when I send a salesperson out, I understand the close rate of that sale. I know that if I install the next seven days, my cancellation rate is going to be a lot lower. I understand that window. That's what it means by having all the data. And right now it's never been easier. If you build the right tech stack, you can tag and track everything in your business and it makes everything easier. There should be no more gut feel in your business. Every decision is data led. So that's what I mean by having a business built on data.

Speaker B: Jason, you were nodding. Anything to add to, uh, that.

Speaker C: Yeah, I mean it goes back to like the creating that operating system for your business with AI and giving it to your team. You know, the. About a three month or about three weeks ago, we were trying to optimize one of our workflows for our podcast and I jumped on with my team and I would. We basically built an AI agent that does Everything for them makes them more efficient. And then by the end, I go, does everyone understand this? They were real excited about it. And you know what I did? I deleted it. And I go, I just showed you how to build this. And I look, I reference it. Like, I can, I can fish, I can catch the fish and I can give fish to my team, but I rather teach them how to fish. And I feel like a lot of companies right now, the owners or the founders are using AI to make themself better, but they're not exposing their team to it and teaching their team how to fish and really utilize that. Where they become like, AI is like the Iron man suit, if you think about it, right? And you need Tony Stark and the Iron man suit. And so you already have kind of the Tony Starks in your company. How do you give them the Iron man suits to make them so much more powerful, which now you make them more powerful, which takes away a lot of the responsibility that the founder has where they can hopefully achieve being an owner of that business rather than the business owning them. I just look at it that way, where, you know, then they can evolve a lot quicker, right? Like, I've used AI to help me figure out our positioning better in this new way. Like, but I had to give it all this data that Lee was talking about, like, connected to our CRM, all our tools. Like, it's amazing. Like, it's smarter than me. I've connected it to over 900 of our podcasts that we've done. Like, John, you should do that, like, put all of your books in there and podcasts everything, and it will remember everything. Because, you know, what do we use, like 10% of our brains? I probably use 5% of mine or whatever.

Speaker D: And I think, look, and the insight it gives you makes the team better. Uh, and educates the team. I'll give you one example of a, uh, H vac business we're working on. They've now built a business built on data, and it allows you to ask questions, to educate the sales team. And these are things that you would go, duh, uh, well, that's obvious, but now you've got the data to prove to them. So, one, we looked at the correlation between punctuality and close rate on a job. AI can do that in five minutes if you've got the data. So we could see. It sounds obvious, but we've got the data to show the team and say, this is fact. This happens to say, you schedule an appointment with a customer at 11am all you guys turning up at uh, 5 to 11 or 11, you've got a close rate of 60%. All you guys not turning up on time, the longer you leave it, the later you are. There's a direct correlation to close rate. All you guys turning up at 11:30, your close rate is half the guys that are turning up on time. That's a very easy fix to make, but we never had that date before and it wasn't easy to drop AI to show that insight. And you show that to the sales team and they go, all right, I get it, I want to make more money, I want to close more jobs, shit, I better turn up on time. So that's just one example of the insight it can give you.

Speaker B: Uh, it's an incredible innovation for sure. It does remind me a little bit of the late 90s. Jason, you referenced, that's the time you started your agency where it is incredibly fast moving moment in history that it is. The spoils are going to go to the most innovative, the most forward leaning for sure. Uh, in that vein there is an entire new generation of graduates leaving university and in some cases high school as digital and AI natives. Right. Like people graduating in 2026, 2027 will have kind of gone through M, you know, university, high school with AI. And I think for a lot of them they are looking at entrepreneurship as a career and they realized that they can leverage AI to compete with some of these legacy businesses. And again, if I run an H Vac company. Lee, you referenced the idea like I'm in the lead gen business. Yeah, well okay, that's great. And if you are a 60 year old H Vac owner who thinks he's in the lead gen business, I can show you a 22 year old owner who is straight out of university who can match you toe for toe on generating leads and your competitive advantages of an H Vac company just went away overnight. So you got, you know, I gotta push you harder. I like. Well, I think I just don't agree fundamentally with your perspective. I think you're both innovative and optimistic, but I just don't agree. I just think businesses are going to be blown out of the water. No matter how much data they have, no matter how innovative they are, I think they're going to get blown out of the water. And I think it's relationship companies. Yeah, I think it's true for H Vac companies, I think it's true for agencies and I think it's true for virtually every business under the sun. You're going to have 22 year olds that are going after those businesses all day long.

Speaker C: When I started my agency I was 22.

Speaker B: Uh, sure, but you're just, but you're giving a 22 year old like a howitzer. You're giving a 22 year old a Ferrari to drive and you're going up against a 50, 60, 70 year old who's, who's trying to keep up with this stuff, right?

Speaker C: It's like they always what they don't have. So yeah, you give a 22 year old a Ferrari and me a Ferrari, I'm going to kick the shit out of uh, that 22 year old because I have experience and I know how to drive.

Speaker B: Right.

Speaker C: But I also have the relationships.

Speaker B: But Jason, think about it like to use the analogy to extend it further, like they're getting tired and their eyesight's going and their reflexes are not what they were, right? Like think about, you're a 60 year old owner. Yes, you've got context, yes, you've got experience. But no, you're not going to figure out how to train and AI agent on how to do your legion for you. Like that's just not going to be where your strengths are.

Speaker C: But you can, you can. I like that you can find someone that can do that, right?

Speaker B: I'm tired, Jason. I'm tired. Yes. I could hire people all day long, but I'm tired.

Speaker D: Well, thanks.

Speaker C: Die already if you're tired. Stop whinging.

Speaker D: Stop whinging and move out.

Speaker B: Stop whinging.

Speaker C: I, I think, I think the push,

Speaker D: the pushback I'd have on saying a 22 year old can come in and let, let's stay with home services and Disrupt. Yes, it's going to take them a long time because the founder's probably been in business for 30 years. That brand equity you can't buy overnight. The brand equity, the trust, the relationships, the consumer base they've already got in that market. You can't replicate that overnight. That takes a long, long time to do. So a 22 year old is not going to come in and disrupt that. A 22 year old could be dangerous if you put them on that business and said we've already got this great business, great brand, We've been on TV for 20 years. Everybody in this market knows our brand but a 22. All on that to say right now, making a data business, help me understand how I become even better, even more efficient, help me build on that brand, help me build on the infrastructure. You know, I've got 100 guys, installers, a uh, 22 year old is not going to hire them overnight and that's a whole other quagmire, uh, that a 22 year old does not want to deal with installers and salespeople. So I, it's not that easy to say a 22 year old can come in and disrupt this. I really don't think they can.

Speaker C: Going back to what you're saying John though, if they're just done and they are just ready to hang it up, then they should hang it up.

Speaker D: Yeah.

Speaker C: Like I don't want to, like I will never try to convince anybody of anything if. Right. Like I will point them and I will steer them and kind of be a lighthouse. But if they want to run into the rocks and just kind of call it a day, then call it a day.

Speaker B: But nobody wants to run into the rocks I don't think. But I do think they want to sell. Well, the people who listen to this show do and, and they want to sell and they want to have a decent exit. Right. And they're seeing every day that goes by their value going down as new competitors. As 22 year olds say, I could do the lead gen, I could do the whatever. The value in their eyes is going down. And so I think they're saying yeah, sure, could I get on my front foot and learn this stuff? Absolutely right. I've built this business for 30 years. I've built the brand equity, I've done all this stuff. Like I can do it right. Do I want to? No, I'm done. So there are people I think who would like to have an exit, would like to sell to a private equity group and they would like to position it. Lee. And they would like to say, look, you know, I'm a 60 year old person who's built a great H Vac company. Right. We've got all the data in the world but I'm not the guy to digitize it.

Speaker D: Right.

Speaker B: Uh, you're a private equity group. You put the money and the skill set behind it. But, but I want a fair price for my business. I don't want pennies on the dollar. What advice would you have for someone like that?

Speaker D: I think it's perception and um, there's a lot of bullshit in AI right now. I'm getting you guys probably 10 emails a day from new AI companies that

Speaker B: want to change 22 year olds.

Speaker D: Yeah. And my business. So I think it's mostly perception that these business owners think, wow, the value of my business is decreasing day by day. I think the truth Is it probably isn't. If you built a good business with good bonds and a good market in a good industry, you're probably fine. You're probably fine. And you should see the upside because a buyer would look at that and go man, you've ticked all the boxes. I can't build this overnight. You've been building this for 30 years and you've got a great brand and a great infrastructure. Yes, I can see the upside in this because if I buy it from you and put in AI, I'm going to have an even better business. So I think it's perception. I think most business owners, if you've got a good business, you've got a good business. It's is not pushing that value down right now.

Speaker C: But I, I think, well I, on uh, the marketing agencies, I, I think it's a little bit different because let's say, let's say I was still had my web agency, I'm doing websites. I used to charge, right. Like I used to charge 40. Our uh, most expensive website we ever did was close to a million bucks. Uh, my Jason Swank website, my, all my websites I've created, I've created in an hour with AI, uh, things that I would have sold for 40 to 80,000 that I could do in an hour. Now did I use my experience and my ability. I didn't need all my graphic designers, I didn't need my web developers, I didn't need all these things. So like you could say, you could look at a web agency right now and be like you have good bones, that kind of stuff. And if that owner doesn't want to innovate, that business is done.

Speaker D: I agree. And back to the industries. I think agencies are way more challenged. The example John was using of a 60 or 70 year old owner, I assume they don't have a digital agency. I was assuming those guys were more traditional agencies. Yeah, bones, agencies. I agree.

Speaker C: Owned. Um, uh, but you know I think there's a third option though honestly. What if they, if they go rather than like sell or kind of grow it like built, they've built the business has built them over the years. If you think about it like that 60 year old, that's why they're burned out. What if they actually started building the business that they wanted that they owned?

Speaker D: Right.

Speaker C: Like you think about Tony Robbins owns what, a thousand companies. He's not the CEO of that uh, those thousands companies. He's the owner, he's the advisor that maybe his leadership team comes to. How could they position like how can they build the leadership team that runs the whole business that they require barely any work? They're just accessible to their team. That's an option. But if they, if they're the ones that are the main driver for sales, marketing, technology, whatever it is, and they're burned out, well, you know, the option is hire it for that, an AI or sell and you know, but you're going to sell it at a discount because I'm going to, as a buyer, I'm going to look at it and be like, dude, the business is dependent on you, man. Like, and you're selling it on a downturn, so you're going to get pennies on a dollar.

Speaker D: I think that, uh, has to start by saying having self awareness and saying, I don't know what I don't know. You know, I mean a lot of business owners who can't give up control, who have led this business for 20 years, uh, and their fingerprints are all over it and they micromanage and they won't give up control and they're not built for what's coming because they just don't know. They're not tech guys, right? They're not digital guys. And I think that's the fear they have. So I think the first step is saying, I don't get this, be vulnerable and saying, I really, I don't get this. But I built a great business and if I want to continue, I have to hire a Sheryl Sandberg, a strong number two, who absolutely gets this. And I have to give that person control. I have to kind of step aside or take a half step aside and say, this is the person that's going to take my business forward the next 10 years. It's not me.

Speaker B: A lot of founders, I think, let's assume the listeners of this show have, have been following along and they're, you know, they're, they built a good business that's not dependent on them. So Jason, I hear you. If it's super dependent on them or the bottleneck, they're not gonna, they're gonna get a haircut for sure. But let's assume that that's not the case. That they've, they've done made efforts to kind of build two cells, so to speak. I guess the, the idea that you both put on the table of like, you know, being an owner as opposed to a CEO or bringing in a 2IC, those are similar flavors of the same strategy, which is basically, you know, kicking yourself up to the boardroom and getting out of the day to day Kind of weeds of running the company. I guess for, for some, if I, if I wanted to push back a little bit on that, some people would hear that and say, yeah, but I'm not, I'm not diversifying. Like, I'm not de risking. I see AI as a, uh, you know, existential threat to this business, this industry. And I don't know if I want to own it. I don't know if I want to be the owner of an H vac company 10 years from now when the process of acquiring leads is completely being turned on its head. There's those types of people out there that are saying, I don't want to. I just don't want 80% of my wealth tied to this business that, A, I don't control anymore, B, feel out of control when I'm running it.

Speaker D: Then you should get out and set yourself up for a good exit. That's it. It's hard to check people's minds. Very hard. I've learned it for a long time trying to persuade people's minds that digital marketing is a thing, even in the past five years, and they didn't get it and they may never get it. So I think if your head is there, uh, and you've built a great business, figure out how to exit as well possible. Yeah.

Speaker C: And just, just know that the grass is not greener on the other side. It's only greener on the side you water. You know, when I sold my agency, I was like, I was always jealous of the people in the software business. And so I started to find my next company. I, uh, attempted to build was an iPhone comp. IPhone app company that took pictures of everything you ate, give you a visualization. Before it was cool. Honestly guys, I hated it. I was like, this going after one to a million or like this sucks. Like, I just like selling like 50 really big clients. And so I was like, I gotta get back in this space. Get me out of this. Right? Like, but I thought like, because like, one of my friends built Pardot and sold it for like a hundred million dollars. They weren't even profitable. And I was like, I'm gonna get in that space. And then, uh, I'm glad I'm not in that software business space now.

Speaker B: This SaaS apocalypse is real for sure. Yeah. And, and Lee, if, if they want to sell and they want to sell to private equity, you know, let's assume they've got all the, like, the business has good bones. It's been around for a while. They just have digitized what Is the, what is the pitch to the private equity group? Like how would you advise them to maximize their value in, in the, in the eyes of a private equity group?

Speaker D: I think how, how businesses always have done it. I mean sure you have a great business, so sure you have a great customer base, sure you have a great product, sure you have a great workforce. More probably more importantly, show you're in a good industry and a resilient industry. And I keep going back to home services because that's a. Private equity loves home services because it's a resilient industry. You know, no matter what the economy, if your roof has a hole, you need to get it fixed. No matter what the economy, if your H Vac breaks down, you need to get it fixed. So I think if you lay this out and say, look, we work in a good industry, a resilient industry, I've spent 30 years building a great brand, we own these markets. If you don't have a business built on data, uh, at least have some metrics that will show that there's no customer concentration, the scalability in this business. We've continued to show growth over 20 years. Uh, this is the levers we've pulled. So at least understand what we've done to do that. Then you should have interested buyers.

Speaker B: Same question for you Jason, and we'll end here. If somebody owns a professional services company and I'm going to broaden your lens, I know you specialize in marketing agencies, but I dare say it's similar for law firms and accounting firms and so forth where there is definitely risk associated with AI Uh, in the professional services world, if you had a 60 year old agency owner who says, I hear you Jason, but I still want to get out, like what, what should they like how can they approach an agency, Holdco to maximize their value?

Speaker C: Just show that just like Lee was saying, you know, just say. And I'm gonna assume that it's not owner dependent or founder dependent. Just tell the story, say hey, and just be honest with them. Like I'm kind of done. Like because when, when I would buy agencies, I would always ask the founder, I'd be like, be honest with me, do you want to stay or do you want to go? Because if you say you want to stay and then you're like me, you're going to be a grumpy old man or grumpy old woman, right? And it's not going to work out, you're not going to get the earn out all this kind of stuff and just say, hey, here's what we've built. Here's where I want to go. I'm just done. I don't have it in me to learn all these new things, but I want the legacy to continue. And this is our process. These are our systems. I want to take care of my people. Just be honest with them. And they'll be like, okay, like, and there's tons of buyers. There's tons of buyers. There's so much money out there, it's crazy. And don't lie about, yeah, we use AI and you don't use AI. Like, just say, here, here's the story. Because they're going to look at your business and go, you know, hey, man, if I put AI on this, or, hey, uh, we already have the financial system, we can kind of leverage with this. And it would make the EBITDA and the valuation go up even more. Right? Two plus two equals 100. You know, that's kind of how I always looked at it.

Speaker B: I think it's a fascinating topic. We'll have to do this as a second round at some point. Jason, where can folks, uh, reach out to you if they wanted to say hi or your website or social? What's the best place for folks to.

Speaker C: Yeah, the best is the website. Go to Jason Swank with an E. So S W E N K. And, uh, everything's there. You can check out.

Speaker B: Awesome. And Lee, best place to connect with you, maybe LinkedIn.

Speaker D: I'm guessing you can find me on LinkedIn.

Speaker B: Lee, VK Jason Swank. Thanks for doing this.

Speaker D: Thanks, Jason.

Speaker A: And there you have it. For today's episode with Lee, Jason and John. If you enjoyed today's podcast, as mentioned, leave a rating and review. Ratings and reviews truly help our show grow and get in front of more business owners just like you. For show notes, including links to everything referenced in today's podcast, including Lee's past episode and Jason's past episode. You can visit their episode page over@builttossell.com Special thanks to our group of advisors who help us bring our message to you. Our advisors are experts in helping you build the value of your company. To get in touch with an advisor or learn how to become one yourself, head over to valuebuilder.com I'm Colin Morgan. I look forward to talking again next week.