Whether you’re a business owner who wants to avoid a disappointing sale value or an employee who’s looking to create a dream lifestyle after decades of “working for the man”, this episode’s for you!
As a rare treat, today’s guest Clint Fiore has no interest in retiring any time soon.
On the contrary, his business Texas Business Buyers helps Texans prepare their businesses for maximum sale value as they pivot into retirement. Likewise, he helps long-term employees craft the lifestyle of their dreams by helping them buy stable, high-performing businesses
In this episode, you’ll discover tips and tricks that let you live a fulfilling life in your golden years, no matter whether you’re buying or selling.
Listen now!
Show Highlights Include:
- Why getting a business valuation now sets you up for a wealthy retirement, even if you won’t sell for another 5 years ([10:58])
- Why even “dangerously smart” CPAs overestimate the value of your small business (and how to get an accurate valuation) ([13:14])
- The “backtrack” strategy that lets you maximize the sale value of your business (while minimizing taxes) ([15:06])
- How to buy a business at a bargain price today (even if the seller could make more money by waiting a few more years) ([16:53])
- The easy way to own a business that stands the test of time (even when 90% of businesses fail) ([19:20])
Transcript:
Do you want a wealthy retirement without worrying about money?
Do you want a wealthy retirement without worrying about money? So welcome to the Retire In Texas Podcast, where you will discover how to enjoy your faith, your family, and your freedom in the state of Texas. And now here’s your host, financial advisor, author, and all-around good Texan, Darryl Lyons.
([00:29]): Welcome to retire in Texas. This is Daryl Lyons, and I’m proud to be the co-founder and CEO of PAX Financial Group in San Antonio, Texas. And they’re the sponsor of this program retire in Texas. Before we get started, I need to share our legal disclosure. This material contains general information only, and it is not intended to provide specific investment tax or legal advice. Visit PAX financial group.com for more information, investment advisory services offered through PAX Financial Group. I also wanna remind you that if you text the phone number seven four eight eight six eight, and put in the text, Texas, we will send you a retire in Texas ebook for free that’s 74 8 6 8. And just put in that text, Texas. Okay. So here we go. This is gonna be fun because a lot of times I will interview people who have retired or pivoted into their next chapter in life. As many of you have listened to previous shows, you’ve heard us exchange the word retire for pivot. And this time I’ve got a special guest and a friend Clint Fiori, and he actually helps people with their small business, either looking to buy a business or looking to sell a business. That’s his, that’s his business. And what I love about his business is the name Texas business buyers. So thank you for being on the show today. Clint,
([01:52]): Thank you very much for having me Darrell. Now you could have picked any name. Why did you pick Texas business buyers? It kind of says it all. You know, we help people buy and sell companies all over the state of Texas, but we are a main street and lower middle market business brokerage. And so we do work with sellers, but when I was getting started, I was a buyer, you know, so I, I had started a business with some partners and grew a, a manufacturing company to pretty good size about a 50 employee company. And then I sold it and all of a sudden I decided I wanted to buy a business that I could be the majority shareholder in. And when I started looking around and trying to figure out how do you buy a business? I, I discovered it’s very difficult. It’s very difficult to find good companies for sale and where to get them and how to know what you’re looking at.
([02:44]): And there’s a, a whole cast of characters out there that some are reputable and some are not that you encounter when you’re shopping for a business. And so for me, I created the company I wish existed when I was looking to buy a business. And I just was frustrated with the processes said, you know, there’s gotta be a better way. And I wish there was a way to find just the good stuff and someone that would make my life easy because we’re spoiled in other industries, you know, like, like shopping for a house. Yeah. You can do that in your PJs and get 99% of the way there, you know, before you set foot in the house, a lot of people are making cash offers without even seeing the house, Not even going there, you know, but when it comes to business, man, it’s hard. So take me back real quick. You said manufacturing, can you be more specific about what business you were in? Yeah, my first big entrepreneurial adventure was in 2011. I, I started a company called nature blinds and we made hunting blinds that look like giant trees that you can hide inside. And it’s a really funny story. But yeah, we raised an angel investor and then went on the national market. But if you just imagine a giant tree with a door that opens you, walk through the door and sit down and the animals walk right by you and have no clue that you’re the air. That was my first business I started.
([04:02]): How did I’m kind of rewinding life here? How did you start that? I mean, that’s fun, you know, I’m a hunter and so that’s fun. How did you start a fun business? Yeah, so I was an aviation insurance, totally unrelated. Wasn’t even much of a hunter, but I had a friend from church and he was a, a Hollywood set designer and so sculptor and could make realistic looking, stuff like that. And he’s a big hunter, you know, and, but he wasn’t much of a business guy. He didn’t know how to put a business plan together or raise capital, but he had the vision and he had the bunch of patents for his designs. And he just started asking me questions because I had more of a business sales and marketing background. And once I started helping him kind of develop his plan, it was one of those things that was keeping me up at night thinking, man, if we get some capital and figure out how to make this thing, I could sell the heck out of that. And I know that hunters love spending money and they like nice stuff. And, and so we, it was just one of those crazy things. We found an investor who believed in the vision and they gave us a, and you know, within 18 months after raising our investment, we had gone from zero to 50 employees. And we’re, we had dealers in, I think, think about 28 states across the country. So it was pretty wild ride. That
([05:13]): Is fun. The Blind’s still out now. I believe so. Yeah. Okay. Yeah. Yeah. So I’m rewinding the clock here a little bit. So are you from Texas originally? Yeah, I grew up in north Texas. Wichita falls is my, is where I grew Up. And then how’d you get kind of in central south, Texas, what took you down here? I went away to college in Arizona and then I went to Colorado after college and met my wife there. And we did public speaking for a group called Rachel’s challenge, which was re related to the Columbine incident. Yeah. And one of the girls that was killed in that shooting was named Rachel and that’s kind of a, a very touching story season of my life. But we helped teach and speak in schools all over the country and kind of shared her story about kindness and compassion and just made it was a nonprofit and it made a huge impact on millions of kids. But when we got married and got pregnant, it was like that life of traveling around and speaking in schools and stuff wasn’t gonna work. And so it was really a nationwide job search that led me to the hill country, ultimately landed in Keville. And that’s where I had a a degree in aviation and a background in that space. And I got a, my first kind of grown up job with a salary and stuff. And, and did that for a few years while we were having babies and getting settled. And once we landed in Keville know, we just fell in love with the Texas whole country and never left. And so now I live in Bernie and office in Keville.
([06:43]): So I want the audience to know that we are going to cover some strategy, some thoughts about buying and selling businesses. So hang with us, but Clint’s a very unique guy that really pursues passion. I’m not could say without fear, cause I know we all have that, but you kind of push through fear where otherwise people would stop. And so that’s what makes you unique and I can’t help but ask you about your aviation accident. No, I didn’t prepare you for that. We’re gonna go there. Yeah. I need to hear just gimme the high level point of view. I just real quick, I I’m you with the question, but can you tell us what happened? Yeah. So if I can just make it a spiritual point here it’s I had a near death experience. I crashed an airplane when I was in college. It was a box canyon accident. So I clear day just got on the wrong side of Ridge line and was an in a descending piece of air that was going down faster than my plane could climb. I was too close to a mountain range and tried to turn away to get back to safety and ended up making a wrong turn and ended up in a dead end box canyon, which anyone that knows aviation accidents. And this was in Northwest Arizona, in the Nevada, Arizona area. You don’t survive those. They’re pretty much, you’re looking at death. When you fly into a canyon that you can’t turn around fluid. As far as I could turned left to the left canyon wall, it was about a 50 degree up slope of just rocks and boulders.
([08:15]): And basically kept full throtle, brought the nose up as high as I could and smashed it into like into the canyon wall. And it’s really by the grace of God that I’m here, came out without a scratch. The plane was annihilated like it’s wings hanging off the windshield’s gone gears, gone tails hanging off. There’s a Boulder in the cockpit where my legs should have been from the impact. And, and I, I remember hitting the wall and the next instant I was on the ground, outside the plane and had no clue how I got outta the plane. I stood up and, and there’s still like a waterfall of fuel coming out of the out the wing that’s hanging off. And, and so no time had passed. I thought the plane was gonna catch on fire or explode cuz it went in full power, full fuel. It didn’t blow up. It didn’t fall down the mountain, it just hit and stuck to the canyon wall. I stood up patted myself down and I, I literally had no scratch on my whole body. And it was, it was a real miracle. That’s that’s
([09:10]): The short version short version. I’ve heard the longer version with more details, but I need to make sure that what I love about you is that you’ve spent part of your life serving kids that were struggling with the Columbine incident that was tragic. Then you spent time in aviation, you had a crash. Then you had a, you started a random business with venture capitalists and then sold it. I mean, you’ve lived a life and you’re not even halfway there yet. So that’s just telling of who you are. Now. You get to spend your every day finding businesses that are doing great things and finding great people who want to own businesses and you connect the two. So what does this business? You call it Texas business buyers, but what industry do we put in? Do we call it business broker? Or what do we call it? Yeah,
([09:53]): We call it business brokerage or M and a mergers and acquisitions. Okay. The, we kind of straddle the line between those worlds. They’re really the same thing. It’s just people that do larger deals, usually call themselves M and a and people that do the, the smaller main street mom and pop deals, usually call business brokerage. We do kind of the top end of the main street mom and pop deals and the lower end of the middle market mergers and acquisitions deal. So how do you quantify that? Like by revenue? Yeah. I, I usually draw the line right around kind of a 5 million business value business value. So that could be a million dollar. It’s usually about a million dollar earnings. Okay. Or EBIDA or discretionary earnings, depending on how you define it. Once you’re making seven figures at the bottom, that’s usually where you get into a new level where you’re more of an M and a middle market deal. And your buyers are usually institutions or companies that are buying you. And when you’re under that point, when you’re that six figure earnings, it’s usually a, an individual that’s getting an SBA loan and coming in and it’s kind of a different ball game and we do blah.
([10:57]): So I wanna go to, let’s start out with somebody who’s listening right now. And they have a business and they’ve been saying, they’re gonna retire in five years for the last 20 years. And they’re listening right now going, I’m gonna retire in five years. And then the five years comes and obviously they say another five years and their, their spouse is saying, you know, you’ve been saying this forever. I don’t think you’ll ever quit. And maybe they shouldn’t don’t know, but maybe they’re saying like at this point, okay, I wanna sell in five years. I’m it’s legit this time. What do they need to do to prepare for that? So do they come see you? And then if they do see you, you’re getting to know ’em, they’re getting to know you find out if it’s a good relationship. And then you tell ’em, here’s the two or three things you need to do to, to set yourself up for success. Right? I mean, this is why we like having a relationship with you. Darrell in the PAX Financial Group is a lot of times you talk to your financial advisor. Well, before you talk to someone like me, who’s more of a deal guy or, you know, that has a firm that gets that value extracted when you’re ready. But the earlier you start the conversation, the better, I usually encourage people about three to five years in advance of a sale to go ahead and get a valuation. Even if it’s not a formal, expensive appraisal, at least talk to a business broker or a business evaluator and get a handle on what this company’s worth because 90% owners have no idea or they have an, but it’s probably way off. And that’s a huge part of your retirement plan. If you’re a business owner, you, you usually have a, a huge amount of your net worth is in the Goodwill of your business that you need to sell to retire the way you wanna retire.
([12:26]): And so I encourage you to start that conversation early, and then that’s gonna tell you kind of what you got. And once you know, what you got, you can kind of develop the game plan of where you need it to be in the next three to five years to get the exit that you want. Because once too often people come to me and they’re just stick a fork of me. I’m done. Yeah, I can’t do this business one more year, sell it. But at that point, if you really thought it was worth 3 million, but it’s really, when we look at it, it’s worth a million and a half. If you’re done, you’re done, you know, and that’s what you get. And, and I would rather, if you need 3 million, you want 3 million, let’s talk five years earlier when it’s a million and a half and let’s point you in the right direction to, here’s what it’s gotta look like. An example of maybe a common mistake people make when overvaluing their business.
([13:19]): A lot of times people will talk to their CPA, you know, which is usually a great person for certain financial questions, but they’re not main street or, or lower middle market evaluators. But the dangerous thing is there’s some mark, you know? Yeah. And sometimes it’s, it works against you because they can do some research and the most popular, easily available data that they can find. If they start Googling multiples, for example, on what a plumbing company’s worth is usually from the larger private markets that are not you, you know, so like if you’re a, a plumber, that’s doing 2 million in revenue, that’s pretty hard to find data on what multiples are trading at your size. And so when you just start Googling around on it, sometimes you get data from the larger deals that are, you know, from a hundred million dollar, 200 million plumbing company that got bought by a public company. And because it’s public, we can find that multiple that was paid and sometimes you’ll get a vastly overestimated value because the bigger, the deal is the bigger the multiples are And I want, and so you need somebody that, that actually does deals in main street. If you’re a main street company to kind of give you a realistic look at what type of multiples of earnings there are for your company.
([14:39]): Now it’s a great point. And just to make sure that the audience understands when we say multiples, that’s a number multiplied by your earnings. And it varies in different industries. Sometimes it’s five, you take the number five and times your earnings, and that may be the number that you get. And that number can vary depending on how attractive. And if there’s a lots of buyers and sellers, it drives that price up. Am I right? Clint? Yeah. Yeah, you’re right. And the dangerous thing is people just go with rules of thumb or yeah. Or old wives tales, you know, but it’s not simple, like valuing a business is pretty complex. And when you just say earnings, you don’t always know what you’re talking about. Like, like what your earnings say on your tax return is not the earnings I’m talking about. Very true. Like there’s net income, which a lot of times, once you, if you’re doing your tax mitigation strategy with your CPA, right. Is actually a pretty small number. Right. Because they wanna go drive it down and pay less taxes. Exactly.
([15:41]): Yeah. And so most business owners are very familiar with that game of you’re trying to prove to the IRS every year that you don’t make much money, you know, so you don’t have to pay as much taxes, but there’s another, the flip side of that is when you want to sell your business, you have to prove to a buyer that you do make money. And you’re trying to kind of build up your earning stream and make adjustments to it, to show the earnings power of your business. And because of that, there’s like an art form to that of what’s acceptable. And what’s not acceptable in making adjustments to your historical financials. That it’s not something you can just over a beer say, oh yeah, just three times, you know, this or that or five times this or that, or there is a little bit more complexity. And if this is a major asset, that’s a big part of your retirement, then it’s worth taking a little bit of time to make sure you got your, your head around you’re
([16:33]): So right. Because a lot of times we don’t wanna take that time for those that are just tuning in. You’re listening to retire in Texas. And we’re here with Clint Fiori, he’s the founder and CEO of Texas business buyer. So hopefully I got those titles, right. This is really a two hour show Clint and I’m trying to put a lot of stuff in a short amount of time. I, I wanna make sure that there’s also another group of people. First of all, I asked you about the business owners that are listening to the show that may wanna transition out and, and you gave them some good advice on what to do, how to get in front of that and maximize value. Now there’s another group of people that have always wanted to own a business and worked for a company for a long time and are now ready to either start a business or maybe even buy a business. Can they see you for that?
([17:19]): Yeah. And I think that’s a great conversation to have on the retirement Texas podcast. Cause a lot of people they’re not thinking about retirement, the way, the stereotypical way of sitting on the beach, sipping a, my tie. You know, they’re thinking about retirement of really just turn earning a new chapter and pivoting, like you said. Yeah. And really what we do in mergers and acquisitions is we just help people turn new chapters. You know? So the people have reasons they’re selling their business and it’s usually not a financial reason. And that’s, what’s the, a common misconception is the sellers. Usually, they can make more money just by continuing to grow the business and never selling until they absolutely have to. But when they wanna sell, there’s usually some underlying reason. Like they have something else they want to do with their life and they want to turn a new chapter.
([18:07]): And so we have to get behind that motivation and the buyers are the same thing, you know, like we have to figure out what are your goals? Like what kind of lifestyle do you want? And a small business is one of the greatest engines for creating the lifestyle of your dreams. Oh yeah. That you can kind of engineer, like how many hours you wanna work, what type of stuff do you wanna be doing? And you can really find a business us if you’re kind of in that later stage of career and you still have a 5, 10, 15-year runway where you don’t wanna be bored and you want something to do, that’s maybe different that you can still make money at, but it’s something that you’re gonna enjoy. Or just to turn a new page. Then you might really look at buying a business and definitely happy to talk about that and kind of the strategies, but the general stereotypical buyer is someone that they’ve, they’ve got a 401k, they’ve got some savings, they’ve got some business management or some executive experience, but they’re kind of tired of working for the man or they’re tired of making someone else all the money.
([19:05]): And they’d like to just kind of either have the freedom of lifestyle or they’d like to, to take a bigger, so wing at something. Now that they’ve got the skills and some, and some cash to work with and make a business purchase that they can be, you know, have the steering wheel of and, and run. And it’s definitely something preferable for people in their forties, fifties, sixties, to buy than start as a startup. Just because startups are fun when you’re in your, you know like I knowest to that. Yeah. Like you can, I don’t know if I do it again though. exactly. When you, I, I did my first startup in my twenties, you know, and like you can fail and go down in flames and you’ve still got decades of the runway. Everyone else’s broke around you. Exactly.
([19:45]): But when you’re more established in life like a startup can be, the statistics are not wrong. That a startup is 90% likely to be outta business in five years. Yeah. When you buy a business, that’s already been in business for five years and you can look back at historical earnings and get it financed and get a established cash flow business. It flips that risk profile to where you’ve got more than a 9% chance of being in business in five years, if you buy a business versus a startup. And so that is a very appealing thing. And then also there’s concrete, proven ways to finance those deals through the SBA and SBA lenders that lets you get kind of a favorable financing profile to get in where you get profits month one, you can lever your money the risk profile that’s that works for you. And just kind of stack the odds of success in your favor. That’s a really cool opportunity.
([20:41]): Yeah. I can see that. And like I said, this is a show that, I mean, I have a list of questions and I don’t know. Maybe I covered two of them list of 20 questions here that I wanted to ask you, but we’ll have to have you back on it’s Clint Fiori with Texas business buyers. We’ll put his contact information in the show notes. Clint, thank you for being here before we tie a bow on this show. I do have one last question. Okay. What’s your favorite kind of salsa? I like my wife’s homemade salsa. It’s got lots of cilantro. Oh yeah. I love that. But the fresher the better. Right. But HEB makes a pretty mean fresh salsa. If you get the ones they, they make in-house. Yeah. The one in the refrigerator session. Yeah. It’s so good. Those are great. Yeah.
([21:20]): But I’m glad you gave your wife some credits, probably a safe bed. Thank you for having us on thank you for coming on the show today and those that are listening, be sure to get retire in Texas ebook. The other thing I’ve been asking, a lot of you guys is if you have questions or if you have some thoughts on who, what type of guest you want to hear in the future, you can email me directly at darryl@PAXFinancialGroup.com. That’s darryl@PAXFinancialGroup.com. And again, tune in every week. We’ll have a show for you to retire in Texas. In the meantime, don’t forget you think different when you think long term, thank you.
([21:58]): This is the podcast factory.com.
Listen on:
