Why 75% of Founders Regret Selling, and How to Avoid It with Better Planning

Bruce EckfeldtWelcome, everyone. This is From Angel to Exit. I'm Bruce Eckfeldt, I'm your host. Our guest today is Scott Snider. He is president of the Exit Planning Institute. I'm excited for this conversation, not only to hear Scott's personal story, but to hear what the Exit Planning Institute is focused on, how they serve this industry, and how they help founder-CEOs with the exit process. I'm sure there are going to be lots of fun stories here, both from him and from the people he's worked with.

I'm excited because this is an area I think not many founders spend a lot of time on. I think they should. I get it, they're busy, but there are a lot of things here you need to consider. Scott's a wealth of information, so I'm excited to hear what he has to say. With all that, Scott, welcome to the program.

Scott SniderThanks, Bruce. I appreciate it, man. We'll probably have some stories of my own, and from our CEPAs out in the marketplace too. So it should be a fun time together, no doubt.

Bruce EckfeldtI'm sure. Let's start at the beginning. What was your personal story? How did you get into business? Give us a little backstory before we get into the Institute.

Scott SniderSure. Maybe like many of your founder-owners, I wasn't satisfied at the job I had and decided to go out on my own. But I was young. I was quite literally in high school. I was a janitor at an all-boys high school here in Cleveland, Ohio, the high school I attended. I had a little stint over the summer where I worked on their summer crew, and their director of maintenance, I always remember this guy, Russell, said, "Dude, you're really thorough. Would you actually want to join the staff?" Not just as a summer worker for a couple of weeks cleaning some stairways and hallways.

I said sure. I got one of those jumpsuits with my name badge on it and everything. I quickly found that it was quite a dirty job, particularly when your friends all know you clean the basement bathrooms. So I lasted about a month, thanked Russell for the opportunity, and I quite literally threw a lawnmower in the back of a red 1996 Ford Taurus sedan, bungee-corded the trunk down, and boom, I was in business.

A year after that, we incorporated and became formal, and we went on a run, man. We went on about a 10-year run until we got an unsolicited offer from a kind of competitor, a subcontractor. He did a lot of tree care. We knew him, and we had actually used him, so he got to know us. He said, "Scott, we feel like you've got something unique inside the landscape world here," which is a world where every kid has a lawnmower and there's a landscaper on every corner. "Have you ever thought about selling?"

At the time I was 24 or 25, and I said, "Not really. This is what I'm doing." The mid-story there is that I went to college and dropped out of college to run my company, because it had gotten to a significant size and I had to make a decision. So I thought, no, man, I just dropped out of college. My dad's already pissed off. But my dad does this kind of work. He's a business advisor, an exit planner, and obviously a mentor to me. So I said, "No, I haven't really thought about it, but let me ping it off my dad." That turned into a much deeper conversation, and about nine months later, Doug bought our company, and off I went to the next journey. That's how I started in business ownership.

Bruce EckfeldtWhat was that like? When you talked to your dad, what were the factors at play, and how did you come to a decision?

Scott SniderIt's a little bit of a unique story, because Dad was in the space, and when this deal came up, Dad had just earned his Certified Exit Planning Advisor credential. So now he was even more into it. We teach this, and I'm sure we'll get into it, three-legged stool approach: the business, personal, and financial elements of an owner. Dad was purely on the business side, and he went to EPI to understand the other two sides.

A lot of people who don't understand that piece of the story would say, "Well, your dad's a CEPA, so wasn't it very holistic and very long-term?" And the answer is no, it wasn't. Dad was still trying to figure out what was right.

The questions around the kitchen island were, "Dad, I started this thing, and I'm very passionate about what I do, but we took a pretty big hit during the recession." We did high-image properties. Think of the polo club where the doctors and football players live, the professional athletes. Think high-end assisted living or senior living centers. People who actually invested money in their image because it helped them sell their product.

But during the recession, budgets shrank, and one of the first things to shrink was, "We don't need 3,000 yards of mulch. Can we sweep by with 100?" I remember my biggest contract, man. It was $80,000 a year just for the landscaping piece, not even the snow removal and all of that. And they came to me and said, "Scott, can you do it for 40 this year?" Half? No, I can't do that. So I just got rocked by some of the big guys who came in and did volume plays or national plays, where they could go into these national property management firms.

So, to answer your question, it really centered on whether it was time to do something different. I loved what I did, but I was definitely an owner-operator, definitely a lifestyle business. I was working 16-hour days. I was missing holidays when we were plowing in snowstorms. I really did love what I did, but man, I'd love to make it to Christmas Day.

And Dad did say, "It's a good deal. You're going to get your debt paid off, you're going to make some money, and Doug's going to take good care of what you've built. Doug's definitely the right buyer." His company at the time was the right buyer. So those three boxes were checked, and we took the deal. And I was quite miserable after I did that, but nonetheless.

Bruce EckfeldtThat was my next question. What did you do next?

Scott SniderHonestly, I tell this story a lot, particularly in the work we do today, because I didn't know it back then, and I certainly know it now, 20 years later. I was a young guy, 24, 25. I certainly had a good business exit. I just explained that. I had a good personal financial exit. I was young, so I didn't have a lot, but I had more change in my back pocket than my friends who went to college did. They were all paying off debt and trying to figure out life. I felt a little ahead of the game.

I went through about a year-long transition period with Doug, and then I was done. That second year was the struggle. I always say it was high highs and low lows. The highest high came when I couldn't figure out what I wanted to do. I'm an avid soccer player. I still play competitively, and I played in Europe for a little bit. So I thought, you know what I'm going to do? I'm going to try out for the professional arena soccer league. And I frigging made it, on a $150 tryout. It's nothing to write home about. It's like arena football. Everybody's got a day job for the most part. But I was getting paid to play and travel around the United States playing professional arena soccer. So that was super cool.

Bruce EckfeldtThat's amazing.

Scott SniderBut the tragedy is that I also got a divorce during that time. And my first exit planning lesson, at 25 or 26 years old, was that I had totally let my business define who I was. Without the shovel, without the mower, without the snowplow, without my name on the truck, without clients, even though I had a good chunk of money and was pretty financially secure at a young age, I literally had no idea who I was, and it was totally miserable.

Bruce EckfeldtAn existential crisis.

Scott SniderIt was. My marriage clearly suffered, and I had to re-figure out who I was. That's when Dad, who was now a CEPA, two years into doing this thing, said, "Dude, Andy and I are trying to figure this thing out, trying to grow this consulting firm. We'd like to expand more in the Midwest, get outside of just Cleveland, and really help lower middle market business owners grow and sell. Just come do business development stuff with us. If it goes well, there might be a little equity play here for you. Just come and hang out a little bit."

And I fell in love, dude. I was finally around owners again, and all different kinds of companies: $100 million revenue companies, $5 million revenue companies. I got to hang out with some pretty cool people and learn a ton about business. I'd think, shoot, I didn't even know that. Or different industries: man, this service business is making 30% EBITDA. I was making 10. What the hell?

Bruce EckfeldtI run into these things. They're making $20 million making a bolt.

Scott SniderExactly. I thought, dude, this is fascinating. And really cool stories. Like this guy who was at Dartmouth when his dad suddenly passed away from a heart attack. At 22 years old, he came back to join the company and has taken it from $15 million in revenue when his dad passed to $250 million. The typical story: "I swept the floor in Dad's shop, and then I went to college." He was a pretty smart dude, went to a pretty prestigious school, and then got really gritty in entrepreneurship, man, and grew this thing. And he was a nut-and-bolt guy. I said, "You sell $250 million of bolts? Where do these things go?" He said, "Look around. There are bolts everywhere." It was that kind of stuff that really solidified my passion for entrepreneurship and business ownership.

Bruce EckfeldtTell us a little more about the Institute. What's the history? How has it evolved for you? Give us some background.

Scott SniderSure, man. It's a good year for us. We're celebrating 20 years of the Exit Planning Institute. Dad and I have been owners of EPI for 13 of those 20. Again, the story gets a little odder. I joined Aspire Management, which is Dad's consulting firm, and I was obviously fascinated by everything, but we really leveraged the EPI brand to help promote our brand. Dad was on their board. He chaired their first-ever conference. Remember, it was small. There were about 150 CEPAs in the country. Today there are nearly 10,000. Back then, no one really cared about this stuff yet.

Dad and I were sitting around at that same kitchen counter where I had my life lesson when I was selling my first company. Dad and I definitely share a bond around helping business owners harvest the value of something they built. Changing the mentality from an operating business to a financial asset. And we said, look, we're struggling, not in a bad way, but trying to figure out how to scale this consulting firm that was six guys. And Dad and I said, maybe we're doing it wrong. If our goal is to help business owners, maybe the void in the space right now is that no professional advisor is coming to the owner with the same framework and mentality and language. Everybody's saying, "I do estate planning, let's focus on that." "I do financial planning, let's focus there." "I'm an investment banker, don't call me until you're ready to sell your company."

And we said, what if we could unify a profession, all kinds of professionals who surround an owner, and have this army that goes out together and helps business owners grow value and exit? We were obviously close to Pete and Rich, the founders, so we asked them, "Have you ever thought about selling your business?" And they said, "Yeah, thank God. This thing has gotten too big." They owned a pretty successful investment bank in Chicago, and they had started EPI really as a lead-gen tool to supply deal flow to the investment bank. Then they had 150 or 200 CEPAs and realized, shoot, this is a whole other business.

Bruce EckfeldtInteresting. Classic. They created a monster.

Scott SniderRight, it's a monster. They had a guy running it, and they said, "Yes, take it off our hands." We went at it once and couldn't get a deal done. Then they went to a larger organization that had a credential and an established business, to fold this into what they did, and they couldn't get that deal done either. So they came back to us, and we were able to get something done that was right for everybody. In 2013, Dad and I bought EPI.

We evolved the methodology of the credential, the Certified Exit Planning Advisor credential. Instead of just working the methodology with business owners ourselves, we began teaching it to business advisors. Now all kinds of advisors, investment bankers, estate planners, personal planners, consultants, CPAs, have flooded the market with the same mentality. So now you can have three or four advisors sitting around your table as an owner, and you can say, "Okay, these folks are aligned and in unison and have some clarity. Let's go to work."

That's the start of it. Fast forward 12 or 13 years, and we have nearly 10,000 CEPAs in the market. I'd like to think our CEPAs are leading the way in the thought process around how we truly build value and align business, personal, and financial goals.

Bruce EckfeldtThat's great. You mentioned a couple of different types of experts involved in the process. Give me an overview of how you look at the types of experts you're bringing together, the people who could use this framework to do the work they do.

Scott SniderI'm going to go high and then bring it in a little. I'd say the ecosystem that exit planning creates for the owner and the advisor becomes quite large when you change your mentality from income generation or risk reduction to value creation. You can have your core advisors, like your CPAs, your financial advisors, your attorneys. But then you can also have a marketing consultant, a leadership coach, an HR person, because everything we're doing in our business every day eventually affects the value, the exit, and the transferability of our company. So it's not just about the short term. It's about long-term value and how we're aligning business, personal, and financial goals.

What I would say to an owner today is that every owner needs two people for sure. We need a financial advisor running the personal financial path we're on, and we need a business consultant running the business improvement path, so we're always moving toward best in class and taking that value up. Surrounding them are your core advisors, your attorney and your CPA. Between those four people, we've really got the business covered and the financial stuff covered.

And then we add this in. It's certainly not a mainstream thought yet, but maybe my legacy 10 or 20 years from now would be that business owners layer in a personal planner or some type of personal coach. The stats still ring true today: 75% of owners profoundly regret selling their business just a year after selling it. Usually it's because they lack meaning and purpose, just like I did. They think, "Man, this sucks. I should have just continued to mow grass, plow snow, and plant trees." So I would layer in a personal planner.

Then you get to what we'd call in the EPI world functional advisors, who come in and out of the equation. You might have an estate planning attorney come in for a bit, some insurance professionals, an M&A advisor, a family enterprise advisor. Depending on what you need along the way, you're having advisors come in and out.

Knowing that trajectory, CEPAs can take many forms. They could be the financial advisor, the personal planner, the fractional CFO. When an advisor has CEPA after their name, regardless of their role and expertise, it's an indication to the owner that they understand how to drive value and align business, personal, and financial goals. They understand how each of those ticks. They're also expert collaborators and connectors of people. They understand team play. They usually have a big Rolodex of folks who believe in the same stuff they do, whom they can bring into the equation along the way. And so the CEPA community builds and builds and builds.

Bruce EckfeldtI'm curious, as you've grown the business and this whole industry has evolved, what have been the big shifts in terms of the people who are interested in the CEPA designation? Who have you found has joined the organization and benefited from it?

Scott SniderI think there are a lot of shifts going on. It's a wild time right now, and I'm super excited about the next five or 10 years. I'd say the biggest shift is that owners today want relationships, not transactions. So if you're a transaction-type personality, like a CPA, an attorney, maybe a relationship manager at your bank, you're getting left by the wayside.

When we bought EPI in 2013, we did a State of Owner Readiness survey, the first survey to study nationally what business owners thought about exit planning and how ready and prepared they were. When we asked them who their number one most trusted advisor was, the biggest chunk, 38%, said their CPA. We did that survey again in 2023, a decade later, and CPAs dropped to sixth place, at about 11% of the total. The number one advisor now, at about 32%, is the financial advisor.

I think it's the financial advisor because it lends itself a little closer to home. As owners start to personally plan, they need to understand their wealth gap and their financial scenario. But I also think financial advisors are relationship oriented, and they need to be, because they're in it for the long haul. They're in it for the owner's liquidity event. That's how they get paid for their advice and services, but that might not come for three to five years. So they're naturally investing in the relationship with the owner. When the owner has questions, they start to turn to their financial advisor now, not their CPA.

And it mirrors the CEPA community too. About 50% of the Certified Exit Planning Advisor community today is financial advisors. About 10% to 15% are growth consultants, like my dad was. Another 10% or so are M&A advisors, investment bankers, business brokers. And then the next group is attorneys and CPAs. That has definitely changed over the last decade. But I keep a laser focus on the idea that business owners want relationships, not just a transactional experience. Yes, they've hired people to give them great advice, but in order to get that advice, they want somebody who can listen and ask good questions, not somebody who says, "Here's the transaction, here's the life insurance policy, thanks, see you later." I don't think they're looking for that anymore.

Bruce EckfeldtI would agree. I have my own slice of this market, and I've certainly noticed some trends. I'm curious what you've seen on a broader level. I've found that a lot of this has gone from a transaction to much more of a strategy. I think 10 or 15 years ago, it was basically, "I'm going to run this business until I'm ready to retire, then sell it and go sit on the beach." Now it's much more, "I've been running this business a couple of years, I'm ready to shift to something else, I'm going to liquidate this, and I want to use these assets and the value and relationships to pivot to something else." It's much more of a stepping stone: what do I do next?

So the relationship stuff becomes interesting, because it's not just how do I maximize transaction value, but how do I figure out what my next thing is going to be? How do I time this more personally and less around the market? How do I leverage the things I've done here into something else? I've certainly found many cases where we're not taking the best valuation, or the one that gets us the most cash. It's about what sets us up for the next thing I want to do, whether it's resources or assets I can leverage from the company. I'm curious what you've seen on a broader level in terms of shifts: the nature of the sales, why people are selling, when they're selling.

Scott SniderI'm passionate about this, so just cut me off when you're ready. It's always top of mind for me. We just came out with the generational State of Owner Readiness survey. To your point about rewinding 10 or 15 years, it was a lot different. I think it was different because most small business owners, meaning the micro market, small market, or lower middle market, were baby boomers. Even 10 years ago, the youngest boomer was just 50, so they weren't thinking about exit. But when you layer the readiness statistics onto who they are as a generation, their generational characteristics, I think it makes a heck of a lot more sense.

To your point, fast forward to where we are today. The youngest baby boomer is turning 61, the oldest is 77 or 78, and the average is 67. So they're definitely into this retirement phase: "Man, I've been working for 50 years." They're passionate. They're the inventors of the 60-hour workweek. One of the core values that really bubbles to the top for them is success. They want to feel successful in what they've done. They also realize, "Well, I'm a grandpa or grandma now, and I'm a little tired, and frankly I have some health stuff, and I'm just not what I was at 40 or 50. I've got to figure out how to get out of this thing, because I certainly need the income from my business to power my lifestyle. I probably don't have a 401(k), because that's my business. I didn't really invest in anything like that." So that has been changing. It's very real for them now, given the age demographic.

What I think is most interesting, though, is the impact of Generation X, 43 to 60 years old, give or take. They are really interesting. They value their time much more than the baby boomers do. They're certainly not working 60 hours a week. They're a generation that wants to work smarter, not harder. They have this natural inclination to say, "Look, I'm a dad, I'm a soccer player, I'm a husband, I'm a business owner, but my business consumes my life. How do I get out of it?" So they're naturally looking for the work-life balance we always talk about.

When you compare the two generations, 57% of boomers want to exit in the next five years, but 38% of Generation X wants to exit in the same time frame. When we asked them what the number one thing is that they want to do when they exit their business, the boomer business owners said invest in or buy another business. They're passionate, career-driven people. The number one answer for someone pretty young, 43 to 60? Just retire. "I want to make enough money in my business so I don't have to do business anymore, and I can go be a teacher, or an adjunct professor at a university, or shoot, man, I just want to coach my kids' soccer team." So they're very inclined to pursue other passions in life.

And then the millennial business owner could be the most entrepreneurial yet. They don't want to exit as quickly as Generation X or the baby boomers, but they're indicating boomerang exits. They're going to buy, build, sell, buy, build, sell. Like me: I'm 40, and my dad's 66. By the time I'm Dad's age, I might be on my fourth exit.

When you carry that into the younger generations, for people in the exit or M&A space, what does that do to the buyer pool? I think you might see a lot of entrepreneurship through acquisition. That's a hot topic right now. You might see more financial buyers in the marketplace. When I sell EPI, I'm probably just going to get a couple of guys together and go buy another business. I'm not private equity per se, but I'm a financial buyer, like I was when I bought EPI. And I'm going to do that three or four more times over my journey.

So, talking about what we're seeing across the market: most immediately, we're still helping the baby boomer business owners. They've got to do it right. We have a huge opportunity to showcase to the next generations of owners what value acceleration can do for them. The Gen Xers have a shorter time frame: "Dude, I'm approaching 45, or I'm approaching 60. I can't wait to stop working." And then you have millennials saying, "Look, man, I'm super ambitious, but I'm not very structured, so I need a framework that helps me out." They love advisors. They're definitely the number one generation seeking advice. "And I want to do this four times by the time I'm 60."

What a cool marketplace, both for business ownership in our country and for business advisors. Talk about becoming the most trusted and valued advisor. In the days when we first bought EPI, CPAs were saying, "Why would I do exit planning? I'm going to sell off all my clients." Total transaction mentality. And I'd say, not me. If you're my CPA, let's do exit planning together and turn that into a successful exit. Then I'm going to bring my advisory team with me to the next thing, and the next thing, and the next thing. And frankly, if you can showcase to the buyer that you did a hell of a job with exit planning in my business, maybe the buyer keeps you on, because you know so much about it already. That's the relationship mentality, not the transaction.

You can tell from my passion that the next five years scare me a little bit, because we have to deliver. When I talk to the CEPA army, I say, "Guys, this is what we've prepared for. It's frigging here, and I've been out there preaching the word, and we have to make it happen."

Bruce EckfeldtWhat's the John Wick line? Prepare for war.

Scott SniderThe rally cry is here. The owners are ready, and more willing than ever before to have exit conversations. Are we ready as a community to go make it happen? So it's a super cool time.

Bruce EckfeldtIt's funny. I sold my business about 12 years ago now, and I've been coaching and advising for quite some time. What I find is that I get clients to exits, and then as we start doing the exits, we start figuring out, "Well, this is really what you want to do with this company." So now it's the first thing I ask: what do you want to do with this? Because depending on what you want, whether it's a financial exit, a strategic exit, handing it over to your management team, the next generation, an ESOP, there are very different strategies we want to deploy in terms of how we scale the business and what kind of business we create.

So for me, it becomes, let's have this conversation now, or at least understand which paths we're going to focus on or maybe take off the map. Then we can start figuring out what we should build. Because otherwise we have the conversation, "We're going to build this company for five years," but then what? Depending on where they're going to go, we can make really different decisions about how and what we're going to build.

Scott Snider100%. Exactly right. Totally agree with you. I think the cool part about bringing exit strategy into the present and having these conversations now is that it creates options for business owners. And the other thing you might see is that it creates hybrid options.

Take me. I'm in a partnership with my dad. I own 49%, and Dad owns 51%. At 66, he's saying, "Dude, I just want to get risk off the table, man. I'm good. If we sold the business today, my wealth gap is closed. It might not be closed for you, but it would be closed for me." So I'm challenged with how to take some chips off the table for Dad. Do I bring in a private equity partner? Do I sell some to my management team? Do I turn this whole thing into an ESOP? What are my options? And do I do a little bit of all of that over the next five or 10 years until I'm completely out?

That's the gamification of business for me. It's fun, knowing that it might be unlike a traditional exit for our baby boomer friends, where it's, "I started that business in the shed 40 years ago, and 40 years later it's a 100,000-square-foot facility, and I'm going to exit one time to a private equity group." Versus now, I can say, "Okay, I'm 40. By the time I'm 50, I want to be completely out. I'm going to take my 49% all the way down to 5% in that final liquidity event, but I'm going to be building value every time I take some chunks out." So I'm hoping my business is worth more later than it is now. Even if I have a smaller chunk, I'm still getting a pretty big payday. To your point, planning now actually gives you options and more choice. Pretty interesting.

Bruce EckfeldtExactly. I have this phrase I call the sell-keep mindset. I want to be able to sell the company at any point, but also be happy keeping the company at any point, because that keeps my options open. The other thing I find is that when we start really thinking about what kind of exit we want, and therefore what kind of business we need to have, what's going to drive valuation, what's going to drive what I call buyability, that's just good business practice. When we start doing those things now, we actually have a better business now. Those are all just good things to do anyway. Even if you're not going to sell, you create a more valuable, more profitable business.

Scott SniderNo doubt. You're doing stuff in your business every day that eventually affects your exit, so you might as well do some of it intentionally. Then you can actually have more profits, get better people, keep more people, have better relationships with your customers, and have a higher multiple at the end of the road. So you have a better company now and a more valuable one tomorrow.

And a lot of us tend to think about a third-party external sale. Being in a family business myself, with my dad, I think about the next generation a lot. Dad and I have a unique situation. I always call myself generation one and a half. My buddy has a business with his dad that was started by his grandfather, a traditional family business. He's the successor of the company. He's basically going to get gifted the business, just like his dad was. Right now he's not an owner. He's the plant manager. But in 10 years, he'll be president of the company, and ownership will eventually transition.

In that scenario, there's a lot of forced intergenerational transition. "Dad, I don't want to inherit all of your problems." Or, "Dad, I don't actually want to do this. I love working here, but let's sell this company, take the generational wealth that's been created, and go buy another company. I might be in manufacturing today, but I'd actually rather be in a publishing company. I want to go buy a publishing company and move away from traditional manufacturing."

So when we talk about options and being ready today and having impact on the business today, even if you're sitting here saying, "It doesn't matter to me, because I'm just giving this to my son or daughter," it does. It gets harder as the business gets bigger and the kids start to take it over. I think a lot of family businesses tend to be really good at teaching the craft of their company and not very good at teaching the business of the business. So to your earlier point, planning now versus "whenever I'm ready" is a no-brainer for me, because it just makes a better life and a better business.

Bruce Eckfeldt100%. We were talking a bit about the transaction itself and valuation. Beyond just the number, what am I getting from my business, what goes into your model in terms of things you need to think about in exit planning? Give us some insight into what else you encourage folks to consider when planning.

Scott SniderLet's cover the two quick ones, and then we'll go back to a deeper dive on the business. Number one, you've got to consider the personal plan. We've already talked about that, so we won't spend more time on it, but you have to understand what you want to do. The second thing is you have to understand your wealth gap. How much money is enough? And that's powered by what you want to do. For me at 40, I've got three young kids. I'm probably going to have college tuition and some weddings. Even if I were to exit now, I've got to plan for that stuff, and for all the other stuff I want to do in my life. That gets me to a wealth goal. You also have a net worth outside of your business today. We have to know what that wealth gap is, and it's typically filled by the sale of your company. So we need to get really solid on what that looks like, because it also allows us to personally plan.

Going back to the business, you've also got to think about net proceeds, which your advisors will typically help you figure out, because that goes into the wealth gap plan. And I think you've got to think about deal terms. That's what's on my mind, at least. Private equity might buy us, and I'm going to have to roll some equity over. How much equity is enough? How much do I have? How much am I willing to ride? Am I going to make it five years working for somebody? All very real things. The fact of the matter is, man, I had a job when I was 15, and from 16 to 40 years old I haven't worked for anybody. I think that might be a pretty big change for me.

What's also on my mind is my key employees. Are there stay bonuses for them? Can we roll some equity for them into the deal? And the last thing for me is the future of the company. Again, if you're planning, and planning often, you'll have options, exit options, but you should also have buyer options. If you're going to exit to a third party, really getting to know them in that dating phase is absolutely critical. Are they aligned with the core values of the company? Are they keeping the team around? Do they believe in the same growth strategy? Getting alignment on that is honestly, in my opinion, the toughest part, only because you get such a short dating period, and then you've got to get married. But those are the things on my mind when I think about an exit.

Bruce EckfeldtIt's interesting. I usually tell my clients, particularly founder-CEOs, "You are unemployable. You're not going to go work for somebody, and you just need to embrace that." I had a three-year commitment, and I lasted nine months. I just couldn't do it. Once you don't own it, once you can't call the shots, once it's under someone else's control, it's a combination: you become very disillusioned with the company, but you also get into other things. That happened to me. I got opportunities to do other stuff, and I said, screw it. It wasn't worth the additional payout compared to what I could do otherwise, and it wasn't worth the headache. It was not a fun situation. So I highly encourage people to think hard about what it's going to be like to work under someone else's management.

The deal terms, I think, are really interesting, particularly if you're going to start another business, or sometimes buy another business. You've really got to look at the covenants, restrictions, non-competes, things like that. I had one case where a founder was actually prohibited from mentoring other companies, because it would conflict with their non-compete. You don't realize how restrictive these things are, or how they might hinder you in different ways.

Unless you really know what you're going to do next, you've got to leave yourself enough options. You know a lot about this industry. You've got relationships, a network, maybe an understanding of technologies. You may end up in this industry again, maybe not seemingly competitive, but it could be seen as competitive under your non-competes and agreements. Best case, it just means you can't do things. Worst case, you do things and then you get heat for it. So really understanding these restrictions and the deal terms can be really impactful.

Scott SniderThat's true. And I think it goes back to personal planning too, figuring out at least a 10-year vision statement. What do we want to do? To your point, I could see somebody who has built a really successful manufacturing company that a lot of people in the same industry look up to. I remember in the landscaping business, I always wanted to be like Mosca Reno Landscaping. That was my guy. If I were to sell my company and then go consult for other landscaping companies, the buyer would probably say, "Well, you're making all our competitors better. I don't know if I want you to do that." So that's absolutely critical. And again, the catalyst is really truly knowing what you want next, because that will influence your deal terms for sure.

Bruce EckfeldtI've seen a couple of nice cases where someone was in services and saw a product opportunity, and it got worked into the deal terms. They said, "Look, this is what I'm doing next." They sold the company and started this other company, and their previous company became a customer of the new one, and they had some ownership stake in it. Everyone came out win-win. But it takes having that clear idea: first of all, this is what I want to do, what gives me joy and purpose and drive. Therefore, this is the business I want to do next. Then, how do I make it work with the deal terms? Even if I have to give up a little valuation, great, because I'm going to create more value in the other company.

Scott SniderYou're exactly right. I smile because you're spot on. If you're actively planning, you understand that your business will sell within a range of value, and you understand where you're sitting right now. If you work on this thing for two or three years, you might get all the way to the top of the range. But is that right for you financially? Is it just time to get out? You've got a big liquidity event here. What's the difference between $20 million and $35 million at the end of the day? Is that what's right for you?

And to your point, deal terms and opportunities and knowing what you want to do next all have a major influence on how much your business is worth to you. Knowing, "Okay, look, I'll take a little less value for better terms and maybe a little more freedom." But you can't answer that question if you don't know your wealth gap. You have to be able to say, "Okay, fine, I'll take the $25 million valuation and not the $30 million. I don't need the extra $5 million, because I only need $20 million. So I'll take less for my business, and I'd rather take the quicker earnout, or no non-compete, or whatever it might be."

Bruce EckfeldtExactly. Tell me more about the plans for the Exit Planning Institute going forward. What's on the horizon? What are you excited about?

Scott SniderThe objective at EPI is to become the second-largest professional credential in the market. To hit that number, we need about 15,000 Certified Exit Planning Advisors. We're getting close. And I'd say this is as much an intangible impact goal as it is an organizational, tactical goal. It's what we've been talking about over the last 40 minutes or so. I think business owners need us, and they need us more than ever. They're going to start to navigate these exits. And as you move down into the younger generations, exit strategy is just going to be part of who they are. So there's a place for an exit planning advisor, no doubt.

I think we need to get to that critical mass where we're recognized alongside a credential like the CPWA or the Certified Financial Planner, the CFP, where people, owners, begin to notice it and perhaps even ask for it. In the shortest form, Bruce, that's the goal. In three years, we want to be the second-largest professional credential, which means we have to be north of 15,000 members. I think the actual goal, if you look at the plan, is 18,130 by 2028. It always sticks out for me.

It's kind of a cool time. We're at 45 employees now, and by the time we hit that number, we'll be at about 93 employees. So significant growth over the three-year period. But it's focused on maintaining a great CEPA community, helping CEPAs advance themselves, helping them become more relationship oriented, helping them understand more about the business owner mentality and how they fit in, and really moving towards that most valued and trusted advisor role. I don't know if that's something you ever arrive at. I think it's one of those goals that just continuously evolves. But that's where we're at, man. That's the focus here at EPI.

Bruce EckfeldtAwesome. Great work. Scott, it's been a pleasure. If people want to find out more about you and the Institute, what's the best way to get that information?

Scott SniderJust go to earncepa.com. CEPA is C-E-P-A, for Certified Exit Planning Advisor. So earncepa.com, and you can see everything about EPI.

Bruce EckfeldtPerfect. I'll make sure all that info is in the show notes. Scott, thanks for taking the time today. It's been a pleasure.

Scott SniderCool. Thanks, man. Appreciate it. Have a good one.