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Mastering Business Exits: Insights from John Marsh
29 Plays11 months ago
John Marsh, Founding Partner at Marsh Creek Advisors, shares valuable insights into strategically exiting businesses and maximizing their sale potential. Learn from John's extensive M&A experience and discover how his firm guides clients towards successful transactions.
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Transcript
Introduction to Growth Catalyst Show
00:00:00
Speaker
Welcome to The Growth Catalyst Show where we believe that growth can come in many forms, professional, personal, company, sales, you name it. I'm your host, Dan Mahoney, founder of Transcendent Sales Solutions and a guide to a world of growth possibilities. I've spent my career empowering companies and their people with strategies that accelerate growth. I'm here to bring you stories of these business leaders and their trusted advisors to gain insights into their journeys and learn how they fueled their own growth. Just maybe their journey could become part of your own growth story. Are you ready? Let's grow.
00:00:34
Speaker
Welcome to the next edition of The Growth Catalyst Show. I'm your host,
Meet John Marsh: Strategic Business Exits
00:00:37
Speaker
Stan Mahoney. My next guest is John Marsh, who is the founding and managing partner at Marsh Creek Advisors, a boutique business brokerage and M and&A advisory firm dedicated to guiding business owners through the exit process on their terms. He brings his extensive experience in finance and operations to help business owners strategically exit their companies using the power exit strategy. Johnny, welcome to the Growth Catalyst show. Thank you for having me, Dan. It is awesome to be here. I'm going to do my best to keep this, ah to not do like we do when we have cigars and laugh all the time. and John, joke listen to me. Johnny, listen to me. We've got the releases signed.
00:01:17
Speaker
I already gave you permission before we hit the record that you could throw shade, so I am all ready for you. Well, I just hope your views are going to go crazy when I talk about my good friend, Dan Mahoney, who is going to play Santa ah this Christmas with the beard. and Santa? i You did. Well, thank Johnny. I'm trying to look like you, man. you know You know, you should try to, you should try putting a little gray in there, you know? Well, that's what john you won't look, you won't look 30 years old anymore. You know what I mean? man That's the first I've heard that. John, you know, I'm glad to be here.
00:01:51
Speaker
Well, and you know what? And and honestly, um you were just giving me a hard time because it's taken me so long to to get you on the show. Because you know what? I remember those breakfasts back a couple of years ago when we were talking about doing podcasts. And you're one of the main reasons why I'm here today. And you you inspired me to to get this done. And I'm very thankful to that. Well, you're doing a great job. I love listening to it. I'm glad to be here. I do regret a little bit that I didn't bite the bullet and figure out how we could do this together, but you're killing it and I'm glad to be here. So thanks. Well, it's never too late, right? So think what would we name it? yeah Everyone needs, everybody that does a podcast needs an Ed McMahon. So, you know, I mean, ah All right. So, so John, you know, I want to, I want to talk a little bit, and this is all about you, which you're going to love that your favorite topic. So, uh, so in Atlanta native, you're in Atlanta native. Yes. The fifth person I've met that's now in Atlanta native.
00:02:51
Speaker
You know, it's funny, we say Atlanta native Metro Atlanta. um So yeah, I grew up in a Woodstock when it was cow country. And now it's a cool place to be. ah But yeah, Metro Atlanta went to the University of Georgia, Kennesaw State for my MBA and now live in Sandy Springs. So I don't get out much. But when you when you land in a good city, why leave? i guess Why leave? Well, and you're my wife have something in common. She grew up in Woodstock as well. So that's right. Good chiefs. go Chiefs. So John, when you went, you know, when you went to school, I know you went, I think you were at finance at KSU and then you got your MBA at UGA. You know, what were you thinking coming out like with the finance and MBA degree? What, what was the plan?
John's Career Journey: From Accounting to Business Operations
00:03:34
Speaker
So yeah, I went to Georgia for my undergrad and Kennesaw State for my MBA. And I really had this
00:03:43
Speaker
goal of just getting a job, right? And I went to my counselor, and I knew I liked accounting, I liked business. um And I got some good advice, I think, at the time, which was you can do finance with an accounting degree, but you can't do accounting with finance degree. So I went and did the accounting undergrad. I took an internship with Ernst & Young and then went to Kennesaw State for my 150 credit hours to sit for the CPA exam. I did not decide to go the Masters of Accounting route. I think the writing was on the wall pretty early on that accounting, public accounting, was not in my long-term future. So yeah, I got my MBA at Kennesaw State, majored in finance there. and
00:04:24
Speaker
It was it was hard going from Athens to Kennesaw immediately. But yeah yeah yeah, I enjoyed my time at both of those schools for sure. But missing all that hunch punch. I don't remember much about my days in Georgia and in Athens. That doesn't surprise me. I think there might be a reason for that, but no, it was a great experience and tried to, you know, I was all about getting a job and the Terry College of Business had so many good options and I just landed on accounting and I don't regret it. I'm so thankful for it, but I also am glad that I'm not.
00:04:57
Speaker
in public accounting anymore. It was a great way to start the career, but it just wasn't for me. I enjoy the this part of it. I enjoy the relationships. I think I have a little bit more sales in me than I and i thought I did coming out of school. so Well, and you were in the, you did some of those audit, you were doing some audit work and then you went and and I saw that you had a couple jobs with VP and general manager, VP of supply chain, uh, read one medical. Tell me a little bit about those experiences. I want to hear about John Marsh in the early days that I did. Yeah, so the, you know, started at E n&Y, as I mentioned, and then went to Frasier and Dieter. And I was lucky to meet a lot of really good people at Frasier and Dieter, but Roger Lesby was one of the partners there who introduced me to his brother, Tim, who was one of the founders of a company called Amindia.
Founding Marsh Creek During a Pandemic
00:05:45
Speaker
We made spinal implants. In fact, you can see the spine up there that I've got here as a little reminder of that time. And we grew that business from 12 million in revenue.
00:05:54
Speaker
to 80 million. We sold it to Kohlberg in 2016 and we did a number of transactions there. So I fell in love with doing the deal, the art of the deal and making deals happen. So um you know I thought the next stage of my career was to buy a business and I talked to some business brokers and many advisors and just left that process feeling like lower middle market business owners could be better served. so Founded Marsh Creek in 2020, but yeah, I read one medical was a med device company I skipped over that did a couple of years of consulting there when I was trying to figure out what I wanted to do when I grew up um And I'm glad that Marsh Creek came to fruition in 2020 So what is your why what's the why for John Marsh?
00:06:36
Speaker
You know, i I do this because I help. I want to help people. And I know that sounds cheesy. It's not a sales pitch, but every personality test I took growing up said I needed to be a social worker or a police officer. Can you imagine getting pulled over by this guy? now ah right You could easily outrun ah with John Marsh, push you over. But you know i'm I'm too much of a coward to be a cop. And I enjoy wine and cigars too much to be a social worker. So I decided to marry one. ah but
00:07:07
Speaker
you know Seriously, God put me in this position to help people, um and I love it. There's nothing like meeting these business owners who have built something that is really valuable, and they know how to run it, but they don't know how to monetize that or to run a process to help maximize the transaction. And that's what we do here. So you know if you were to come in and say, hey, I need you to run like a steel roll former, I sold a steel roll former a couple of years ago, I couldn't run that business. but I can sell it and um we did a really good job on that one. um I'm rambling a little bit, but the point is this is how I help people who've grown something and they don't know how to um run a process to put it in front of the right buyers and um this is how I serve, so yeah.
00:07:53
Speaker
I love it. And so other than being disenfranchised, looking at the quote unquote franchise model and a lot of cases with business brokers, what really was the decision? Like, you know what? I'm just going to do this a month because I got to tell you, it's a, you know, at that time it's a, it's as a big move for you. Young family, everything, you know, big moves. Yeah, I spent, you know, it was I started marketing the first week in January of 2020. Oh, perfect time. Yeah, and I had two beautiful, I still have two beautiful girls at home and my beautiful wife and I spent a lot of time in the basement in March, April, May, June of 2020 on my knees praying and also trying to figure out what the heck I had done.
00:08:37
Speaker
um But at all it's it's been great, we closed two deals in 2020, but it was a trying time ah for sure. But to get back to your question on how we how I got here, like I said, ah you know i i went to I thought I wanted to buy a business, I did not wanna work for anyone else again. I wanna do my own thing, ah spend time with my family when I when i want to, but also you know do good work for good people. um So yeah, founded the company and I affiliated with the Bristol Group in 2020 because I believe in the power of a team, but it's not a franchise model, it is an affiliate model. Yeah, 25 of us in the network and helps helps our clients get good results.
Challenges in Business Sales and Solutions
00:09:21
Speaker
so So you you I've read a couple places where Marsh Creek is a boutique firm. What does that mean, boutique, as it relates to the M and a&A side of your business? You'd have to ask the marketing people who I hired who came up with that. But yeah, boutique, you know we're a small shop. yeah Last year, I'm proud to say we I was the top global producer for the International Business Brokers Association. We won the Platinum Award. Yeah, and it's it good. It's not about me. It's about the results that my clients had. um But boutique means that you know we're not gonna have 50 advisors. We're not gonna put you with an advisor who's right out of school, who's looking to just pound the pavement. We're in this for
00:10:08
Speaker
working with sellable businesses and the right owner mentality. The person who really sees the value in running a process, in taking control of the process, we call it the power exit. um So, you know, we did nine deals last year. That's a good number. I don't know that we'll do a whole lot more. um but So boutique in my mind just means that we're not going to be the folks who have 40 employees and we're doing hundreds and hundreds and hundreds of millions of transactions a year. We're selective in who we work with because there's a capacity issue. You're going to get our best attention. So I guess the marketers thought that boutique was the right way to explain that model.
00:10:47
Speaker
So I do want to get into the power exit strategy in a minute, but you know, I read something that somebody wrote last week and it was 20% of the businesses listed for sale will actually be sold. If selling your business as part of your long-term plan, be, let's be sure you're set up for success. John Marsh wrote that. So, and you know, and again, so I did read your post, which is good. and It was good. And you know, it makes you, and it, and it was a, it was a wild moment for me going, wow, one out of five that are listed actually gets sold. yeah Why? ah absolutely well ah number That's a big question. It's a loaded question. Yeah. You know, a lot of those businesses, those numbers are a little skewed. Our our numbers are around 80%. But that's also because, you know, a lot of those folks are just posting their business out there on these buy side sites, biz, buy sell, axial, biz quest and just hoping
00:11:43
Speaker
uh that something will happen and it's like going fishing without the right type of bait you know if you're just throwing a line in the water you're not going to get any bites and um you know i'm passionate about this i'll i'll try to get off my soap box here i know we only have because much time as we need, John. I have i have an editor, so keep going. All right, good. i Thank God you have an editor. ah You haven't cursed yet, which is good. so No, and I'm going to try not to for sure. Just don't. yeah
00:12:14
Speaker
and No, it's important that you take control of this and that's the problem. Business owners run great businesses and they grow their businesses and they create something that's valuable, but they don't understand that selling a business is not an easy process. It's not like putting a house on the market and putting a sign for sale sign up in front of it and expecting people to come in and give you an offer. um It's an intentional process. And if you want to do it the right way, you take control of it. And what does that mean, right? It just means what means a lot of things, but it means putting your business in front of the right buyers. There are people who will buy your business for a reason that may be foreign to you as a business owner.
00:12:56
Speaker
and identifying those right buyers, private equity, strategic, sometimes individual buyers, and then running ah a campaign, a phone call, email, all kinds of different things to get the opportunity in front of those buyers. And it's not easy. It's not something that just happens. And unfortunately, a lot of business owners let the process be controlled by something that that is out of their hands, know whether that's yeah Truth or myth? Did you just give me the sign that you told me you were going to give me if I was talking too much? No, not at all. No, not at all. It was a good it was a transition, John. so But truth or myth, you know business owners who all of a sudden get an unsolicited offer is typically not a good thing.
00:13:44
Speaker
but Let's take a moment for a quick word from our sponsor. This episode of The Growth Catalyst Show was brought to you by Transcendent Sales Solutions. Whether your company is facing uncertainty, declining sales or resource limitations, Transcendent Sales has the solution. Their team has decades of experience helping businesses find alignment to meet their growth goals and transforming underperforming sales organizations into revenue producing market leaders. They take a hands-on, results-oriented approach to solving sales challenges. Visit TranscendenceSales.com to learn more and subscribe to the biweekly Growth Catalyst newsletter for insightful growth strategies. Transcendence Sales Solutions, empowering businesses to reach new heights. And now back to the show. I think you should be complimented as a business owner or think, well, at least I'm on somebody's radar.
00:14:33
Speaker
ah Will that person end up buying the business? No, probably not. Will they end up giving you a fair and reasonable offer that's competitive? Probably not. These are professional buyers who are out there dripping and calling and getting in front of business owners, and they are good at what they do. um so do you know How do you know as a business owner that you are when you're done with the process that you have gotten the most that you could get, and you really took control of the process. You don't if you take one of those unsolicited offers. And, yeah. No, go ahead. No, sorry, God. No, that deep sigh is throwing me off. I don't know if you're... you're you're No.
00:15:13
Speaker
We can edit this part out. Continue, please. We're not editing anything, John. I lied to you. So um what are the biggest gaps you typically see when you go into a business that says, I'm sure it's very rare when you go, man, you are ready to go. I mean, sure there's always a little something, but what are the biggest gaps you typically see going in? Well, there's a number of them, right financials. um Usually internal financials are woefully inadequate. um and and And that's something that is easy to fix by building the right team while in advance. um Owner dependency, documenting your process. you know A lot of folks take pride in the fact that they are the end all be all at their business, but that's not a good thing when you go to sell it because it's not transferable.
00:16:00
Speaker
um So there's a ton of things, revenue concentration, vendor concentration, key employee risk. um It's really hard to pick one. ah But if i if if you were to pin me down and say pick one, it would be the financials and and and really understanding. And the financials tell a story. If you as the business owner can't articulate that story, that's a problem. um So that's numero uno. So talk a little bit about, and I'm sure this plays into it, what is the power
Power Exit Strategy: Preparing for Business Sale
00:16:31
Speaker
exit strategy? What is what what is that strategy that's trademarked? It is trademarked. And the the power exit is really taking control of the process. And how do you do that? We're here for the transaction.
00:16:45
Speaker
the Taking control of the process is years in advance. I'm sure we've all heard of traction in EOS and all these different managerial operating systems. But the exit planning institute talks about every 90 days you need to ask yourself a question, are you growing or are you exiting? and I think that's important to the power exit starts when you start your business are you building a business that can be transferable that's not dependent upon the owner that that has systems and processes that can be scaled.
00:17:16
Speaker
um But specifically, as it relates to an M and&A advisor like me, it means actively going out and finding the right buyer, getting the right deal, and not just taking a deal that comes to you, but using time on your side to get the deal done and to put the business in front of the right the right buyers. The other thing that I'll say is Power switches when you sign a letter of intent. You control the process until you sign that letter of intent. Then you've given exclusivity, you've set terms, you've set a purchase price, and that's when power shifts to the buyer. So how, as an owner or as a seller, I mean, do you control that? It's the ability to walk away. If that buyer gets squirrely and decides to start retraining or doing things that change significantly the terms of the deal,
00:18:08
Speaker
then you need to have the ability to walk away. And how do you do that? You have a plan B, you have a plan C, you have all of this market, this competitive energy that you've built ah so that you have other options. um Obviously walking away from a deal is a big decision and you don't want to do it without giving it significant thought. But the ability to do that and not be starting back at square one is really an important aspect of this if you're gonna control your destiny.
00:18:39
Speaker
And if you've already started a process in this and you're at LOI and you have to walk away, I'm guessing it's easier to restart. Yeah, if you've done things the right way, if you've built that competitive marketplace, if you've got compelling marketing materials, if you have a process for sharing that news with the market, whether that's a new customer, a new line, whatever it may be. Yeah, if you're in deal mode, don't get out of deal mode until that deal is done and the wires have cleared your bank account.
00:19:12
Speaker
So that interesting question every 90 days, am I growing or am I exiting? So if you start thinking like, you know what, I think I'm exiting and and I'm starting to think about it, what are some things these business owners should be doing? And of course, you know, they need to get ahold of you right away, but just preparing them because you you and I both know they don't always do that. You know, they sometimes wait. So what are some things they can be doing to kind of get ready for that? I think the first thing that every business owner should be doing today is building the team. It doesn't mean you hire an M and&A advisor, but a team includes folks like you, right? A growth catalyst, somebody who's there helping ah institutionalize or grow their sales function, um having a financial advisor, a good attorney, a preliminary data room. Knowing your number, do you know what your business is worth? Obviously,
00:20:05
Speaker
you know, you can't get that to the penny, right? Because it's what a true competitive process does is it gets you clarity on what the ah business is worth. But build that team and do it soon, right? Because having a good CFO or fractional CFO or even a controller, even if it's, you know, fractional, like I said, you've got to have those people on your team. And then a board of advisors, you know, reviewing your financials every quarter at a minimum, ideally monthly, ah but understanding what your revenue trends are, what your balance sheet looks like.
00:20:43
Speaker
educating yourself on what a deal means, cash-free debt-free stock versus asset. There's all kinds of things that you can do now to educate yourself well in advance, but educate and prepare. And and and the preparation is often lacking from folks who I speak with. They call me and they think, oh, I'm ready to sell my business in the next three months. They don't realize that it takes nine to 12 months to sell a business. And then there's going to be a transition period in addition to that. So if you were to sell your business for $15 million dollars and say, Hey, I'll give you three weeks of training. I'd imagine buyers aren't going to be thrilled about that.
00:21:21
Speaker
So it's really backing into your retirement date. So when you say when you say sell the business within nine to 12 months, that means like they could probably list it in three knots, but the transaction is going to take a while to happen, correct? Yeah. you know if If you're going to run a competitive compelling market marketing process and utilize the power exit strategy, you have to have time on your side. um So due diligence is 90 to 120 days, and that's after you've built the marketing materials, run the process, negotiated an LOI, done all these things ah to get to that due diligence um ah or phase.
Successful Exits and Infrastructure Building
00:21:58
Speaker
So yeah, it it takes nine months. Sometimes it can go faster, but a quick deal is is not much shorter than nine months.
00:22:08
Speaker
So businesses that are of scale, right? I mean, if you're selling a small business, a main street business that may be faster, but not in these lower middle market, lower, lower end of the middle market or premium main street businesses. Talk a little bit about some of your good wins. I know you've racked them up in the last couple of years and you guys have been highly successful. So I'd love to hear about some of your wins. Well, it's really about our clients wins. I know that. Yeah, right. Of course, they've built these businesses. And so I'll give you a good example. I'll give you a couple. Uh, we sold AKA tree services last year and these guys have become friends of mine. They're twin brothers and, uh, they were ready to, to, to take chips off the table. They rolled equity and they wanted to find the right partner.
00:22:56
Speaker
um They did not take my advice about having a good internal accounting function, so that led to a lot of challenges. But they had built such a positive business that um we were able to still get a deal done at LOI terms without a retrade, even though the Q of E was a painful process for them. um Independence Fire in Philadelphia, those guys rolled equity as well, found the right private equity partner, and they're on a great trajectory. i think I'll get the number wrong, but I think that private equity firm has done seven or eight transactions total, maybe even more. So they've got they've built a national fire protection company in less than three years.
00:23:39
Speaker
um So we've've we've got several of those, like I said, nine deals last year. um Each one of them is different. Each one of them is exciting. um And sometimes, well, every one of them is challenging. I'm very proud, though, that at the end of the day, most of my clients, all of my clients, knock on wood, have been thrilled with the results. So it's not gonna happen all the time. um But good deals for good people and I'm thrilled about that. We also have opened an office in Dallas, Texas. A good friend of mine Seth McCormick runs that office. We've had a gentleman here in Atlanta as another advisor. So we've got three- Carl, good guy. yeah Yeah, Carl is a great guy. yeah he is He's a ah professor at UGA as well. So go dogs. um So yeah, we've got we've got some great traction and we're really
00:24:34
Speaker
positioned well to help business owners exit on their terms without regrets, which is what we try to preach. I love that. um any he and what's What's some interesting stuff you're working on now? You know, a lot of fun things. A lot of it is about building the the infrastructure within the company. So we're redoing our website. We're going out with a new marketing plan. um So it's really about building Marsh Creek so that we're around for 20 plus years. Oh gosh, I don't know. Do I want to be working that long? but the What else are you going to do, Tom? What else are you going to do? I heard you're not that good at golf.
00:25:16
Speaker
And I played well last Friday, but thanks for saying that. I'm not gonna embarrass you and have you tell everybody what you think well is. We'll just let it fly. I shot a 76. On the front nine? 76, no. I was even on the front nine, yeah, 40 on the back. Yeah, and um I think the difference was- Hot play's doing good. The difference was I didn't drink that many truly's or high noon's. That was the difference. I think that doesn't help my game. But yeah, you're right. I don't know what I would do. I love helping people and I love doing deals. um So yeah, we've got some exciting stuff in the pipeline. you know There's always noise about the election and what the ah the environment looks like and interest rates. And we're seeing capital start opening up a little bit. but
00:26:02
Speaker
You can't let those things as a business center, you can't let those things dictate your timeline or your decision making process. Yes, they're all factors, but really it's about what you've built and is your business ready
Controlling Business Sale Timelines and Risks
00:26:14
Speaker
to exit. so Well, one of my good friends, I saw him on TikTok today who does mortgages and he said, you know, all you people who are waiting to buy a house and you're just waiting for the interest rates. Well, let me tell you, Frannie, Frannie Mae said the interest rates are not going to go down. They're probably going to stay about the same and go up. So if you're ready to buy a house, buy a house now. but And it's probably the same thing of selling your business. If you're ready to sell your business, you should, you know, waiting for economic factors. We have zero control over. It's probably not a good strategy. Well, time is on your side when you're selling your business until it's not. And that's a dramatic change. you know One of the things that we talk about are the you know death, disability, disillusionment, the D's that that that can really change your timeline. And if if something happens to you, God forbid, as a business owner, whether it's your health or a partner walking away or something that you can't control, timelines don't matter at that point.
00:27:12
Speaker
then you're just trying to get water out of a sinking ship. So it's really about being ready when you're ready, not win those external factors. And I'm not good at blackjack. I don't win money when I go to the casino. So why would you gamble with your business? ah yeah Well, I know one thing I just learned is we're no longer just gonna sit around and smoke cigars and drink bourbon. We're gonna start, I'm gonna bring a deck of cards. I appreciate you letting me in that. I am smart enough to know that as long as we limit the buy-ins and the amount at risk, I will play all day. All right, well, you got it. That is fun going to a casino. you know We were in Tampa a couple months ago and we went to the casino down there.
00:27:55
Speaker
Those ATMs keep giving you money and that is not a good thing. Wow. And the thing that's not, and I've been to Tampa within the last year and the problem down there is you can't find a blackjack table. That's under $25. There is no such thing as a tech. I know, I know they're in 25 of your lucky on a Wednesday afternoon, but yeah, it's gotten crazy. That's wild. The five and ten dollar days of playing Blackjack are over. I haven't been to Vegas in a long time, but downtown Las Vegas where you've got the cheap tables is where I like to hang out. Because then you don't feel bad if you're, you know, I'm down a hundred bucks instead of, you know, It can get better. Maybe we'll take a road trip, John. We share that. I like old Las Vegas as well. I would love to go to Vegas with you. Maybe that we'll do a podcast from there. That would be fun. I get to interview you and hear about you. And I think we could write it off too, that I'm in.
Conclusion and Contact Information
00:28:51
Speaker
So John, listen, this has been fun. You're a good friend of mine and I really, I enjoy our time together. My last question for you is if someone's interested in learning more about John Marsh and about
00:29:02
Speaker
Marsh Creek Advisors, what's the best way to contact you guys? Yeah, no, I appreciate that. My my email is jmarsh, J-M-A-R-S-H, at mcreek.com. You can also go to mcreek.com for our website, and we're here to help, so feel free to reach out. Johnny, I appreciate you coming on and taking time on The Growth Catalyst Show. This has been a lot of fun for me. You're the man. Thank you for having me, good friend. And that's a wrap for today's episode of The Growth Catalyst Show. Remember, you can take these stories of growth and make them part of your own journey. Learn from them, draw inspiration, and let them guide your path of growth. I'm your host, Dan Mahoney, and I look forward to our next journey together. If you've enjoyed the show, please subscribe and leave a review. Until next time, keep growing.