The Chris Voss Show - The Chris Voss Show Podcast – Your Multimillion-Dollar Exit: The Entrepreneur’s Business Success(ion) Planner: A Blueprint for Wealth Guide by Wayne M Zell

Episode Date: August 6, 2023

Your Multimillion-Dollar Exit: The Entrepreneur's Business Success(ion) Planner: A Blueprint for Wealth Guide by Wayne M Zell https://amzn.to/45dHr0j ARCHITECT YOUR EXIT STRATEGY... ON DAY ONE This easy-to-follow planner is designed to help entrepreneurs build a strong foundation for exiting their businesses on their terms. With this fast-paced guide, you'll learn how to: Uncover the legal and business secrets lawyers and investment bankers use to gain the upper hand in negotiations and drafting transaction documents Anticipate and minimize risk of unexpected exits (such as death, disability, or sudden losses) Identify and navigate rough patches to successfully exit your business Assemble a superior team to maximize your exit strategy Understand what buyers and investors want and what they fear most. Save thousands (if not millions) of dollars through advantageous tax planning techniques Using real-world examples, checklists, and actionable advice, this book is about selling smart and achieving maximum value for the time and effort you've put into your company.

You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times, because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, this is Voss here from thechrisvossshow.com, thechrisvossshow.com.

Welcome to the big show, my family and friends. What would we ever do without you? The smartest gosh darn audience known to man. Like this is actually a recorded fact. We went into the depths of my BS and we found that I just made that fact up. And the lawyer said as long as I say that I made that fact up i can run for a politician in this country so there you go uh so welcome to the big show my family friends ladies and gentlemen welcome to the big circus tennis guy we have the most brilliant minds on the show none of them of

course mine that's why we have guests on the show that's the trick chris 14 years 1500 episodes two to three new episodes a day uh 10 to 15 new episodes a week what more do you people want from me damn it how many smart people do you bring you this is all the more reasons that we do the lead in for the shaming the deep the depths of shaming for the plugs please for the love of god give us five stars on youtube or uh five stars on itunes yeah that too do both what the hell it's it's good for you it uh has nutritional value i hear the lawyers are going to say i can't say that but fuck them uh go to goodreads.com for success utah.com for success christmas linkedin.com for success christmas follow the big linkedin newsletter as well

we have an amazing mind on the show and of course there's only one of them uh and it's not me uh he is joining us for his latest book that came out may 2nd 2023 uh your multi-million dollar exit the entrepreneur's business succession planner a blueprint for wealth guide wayne m zell joins joins joins he joins us on the show today with his zelny his zelliness, and he's going to be imparting his zell intelligence. I hope he doesn't hate me for messing with his name here, but it did sound cool. I don't know. Wayne M. Zell is a JD CPA, and he's been advising clients for over 35 years on business succession planning. He's the architect behind hundreds of transactions that have saved his clients millions of dollars. Working with thousands of founders, Wayne has created a

unique process for taking his clients from entrepreneur to multi-million dollar exit, and even the most daunting circumstances underneath there. As an active speaker and writer, he's recognized one of the best lawyers in America. You screw with him, he might see you. I'm just kidding. His clients include a wide range of entrepreneurs, institutions, high net worth individuals, technology companies, real estate developers, government contractors, non-profit, and now he's reached the pinnacle of his success. He's sitting on the Chris Voss Show. Welcome to the show, Wayne. How are you? Thanks for having me on the show, Chris. My brain is bleeding.

There you go. Well, we're going to do a whole, we've got a whole hour, so just keep a tissue up to the ear so that the blood looks bad on camera. So welcome to the show, sir. Give us your dot com so people can find you on the interwebs. We've got three.

One is waynzell.com. That's the author's site. One is zelllaw.com. And the third website is our new one, AspireToExit.com, which is our business exit planning site. There you go. So what motivated you to write this book, from your words? Wow. You know, I've been doing this a long time. I'm not a young man, let me put it that way, even though I feel young. I feel young every day I get up. We both look young, damn it.

I'm losing my hair. You know, what inspired me to do this, I started outlining the book back in 2013. And then I re-outlined it in 2016 and 17. I was just too busy. I never got around to it. What really got me to write the book was a friend of mine dared me to write the book. And she said, look, whoever, exactly. There's a, there's a dinner at the end of this. Whoever writes the book first, the other one has to buy dinner. So all I needed was an offer of a free dinner. And on May the 15th, last year, I started writing the book after

my daughter got married and it took me almost three months to finish it but i dictated it and i edited it every single day i put my head down and i had a lot of material because i've been doing this 37 years now and 43 as a cpa and uh had a lot of stories and so it was the hard part was trying to put it all together in one cohesive place and i did it and uh we finished writing it on august the 15th but the publisher screwed around with it and didn't get finished uh doing their editing which i had to re-edit about four times uh until about february and then we finally you know finished all the work uh got it published and and out to everybody on may the 2nd i did an audible version there's a narrated version as well so there you go i mean that's the you May the 2nd. I did an audible version. There's a narrated version as well.

There you go. I mean, most of our people that come from the big publishers, they take sometimes a year and a half from a final edit to publish it. It's crazy sometimes. But congratulations on the new book. These are always fun. You know, let's get into it because a few years ago, someone came on the show and they talked about, uh, forming exits and planning exits. And I had lived in a, my own private Idaho, which we all know I do constantly, uh, for

most of my business life. I started my first company 18. I built companies as M for empire. I built them to stay with me for life. And then of course, a little recessions like 2008 housing crisis and shit decided, uh, you don't need that 20 year old mortgage company.

You don't need that, uh, couriers or you don't need any of this stuff anymore. And, uh, so there was that. And I found out that sometimes building empires isn't quite as lasting as you would think it would be,

especially with the cyclical nature of business and new technology. And someone turned me on to this thing and exploded my mind that you should plan for exit and build for an exit from the very day one start to sell your business and do whatever. Yep. We're still trying to get someone to buy the Chris Voss show, but without me, it doesn't really work. It's kind of like...

Yeah, you don't have any transferable value, as they say. Well, that's what they've been telling me in job application rejects ever since. So what's the 30,000 overview of your book? What's that? I'm sorry, I missed that. 30,000 overview of your book, if you would, please. You know, the book is about, it's about exit planning, but it's about planning for the unexpected exits, death, disability, as well as the expected exits. So we break it into two pieces. And then we talk about how to plan for the unexpected, how to have contingency plans. But really, when you're doing your exit planning, there's a process that you've got to go through. It's a seven-step process that the Business Enterprise Institute

likes to use. I'm a member of that, and I'm a certified exit planner. And we basically impose our will on our clients. And we say, look, you've got to figure out when you're going to get out of this business. When are you going to retire? When are you going to be done? And then do you have enough to live on at the end of the game? And if you don't, you've got to plan for that. And so it's a combination of personal planning and business planning. And fortunately I do a little bit of both. I do estate planning. I do business planning.

I do mergers and acquisitions, but then there's stuff that's not legal that's involved. And so we bring in experts like you, you know, to help, you know, design the, uh,

the things that need to be done to fill the value gaps in the business. And there are often a lot of gaps that people just don't realize. Most definitely. And so you get in, you call it a fast pace guide where people can go in and do it, but it is 400 pages. So there's a lot of detail there. We were talking in the green room about how it's pretty detailed. Yeah, there's a lot of detail.

There's a lot of examples, though. So we broke it out so that it's kind of like an exit planning for dummies. And I'm sure there's a book out there called Exit Planning for Dummies. But the examples are highlighted. There's a hypothetical that I created at the beginning of the book, George and Hannah. George is the father. Hannah is the daughter. And we basically take it through every aspect of the book, how to Hannah. George is the father, Hannah is the daughter. And we basically take it

through every aspect of the book, how to value the business, how to pick the right exit strategy for your business. So each chapter, each segment of each chapter has the hypothetical. And then we have examples that illustrate different topics all the way through the book. We've got a glossary in the book so people don't get freaked out by all the technical terms that we're using. And then there are deep dives. Deep dive. If you want to read some more

about an obscure or technical topic like self-canceling installment notes, you can read about it or you can skip over it. Wow. That sounds pretty intensive. I don't even know what those are. And I've been running companies for 30...

I've been... A long damn time. Book an appointment and we'll talk to you about that better we can read the book too so do both pretty good it's pretty good there you go all right we got to get a plug in for the book there so yeah the book the book is uh the book is a guide is it fast-paced i don't know that may be a misnomer maybe i'll get sued for that one i don't know i don't know. That may be a misnomer. Maybe I'll get sued for that one. I don't know. I don't know, man. It's pretty deep. It's a deep dive. It depends on, you know, if you, you know, I love reading books on Audible. So that's how I consume most of my stuff. And I try and do a hundred, a hundred plus books a year.

So, you know, you, you can turn it up to two, two and a half if you want. That's kind of fast paced. So it'll be fine. I think that will get you out of any legal jams. And you know, if you do it on Audible, there's a whole resource section on the website, on the author's site, where you can just download all the charts

and all the calculations and the diagrams that you can't otherwise see, which that's part of the value of the book is the visual aspect of it. But I do the same. I listen to a lot of Audible books, nonfiction, fiction, but I do the same. I listen to a lot of audible books, nonfiction fiction, and I consume that. It's how I walk around the lake or work out or whatever. It's really a good

audible book. I narrated it, so it's not terribly boring because I know the topic. But yeah, there's a lot of technical stuff in there. And so you probably want to refer to the resources page if you want to get some more detail on the stuff that I'm talking about. There you go. And I'm suspicious, although I do live in my own private Idaho, or Utah for that matter right now. Are you a B-52 fan? No.

You used that reference over and over again. I did watch a Rock Lobster video that showed up on my TikTok the other day. So I was like, holy how much how much drugs are they on uh but you know i'm a metallica fan we all know about drugs uh there you go i'm going to see the altar bridge tonight so yeah yeah i just love the reference because i'm close to idaho and i met those people i'm just kidding i know people are nice uh i'm actually referring to some politics and things uh but so let's get into this um let's start like it was uh before i segued uh five times um i talked about how uh

are a lot of entrepreneurs like me they were living in their own private idaho about building a business designed to give yourself an exit and a sell? I've been working with entrepreneurs, thousands of entrepreneurs over my career, and no one starts thinking about the exit until they're close to the exit. And then sometimes it's a little too late. I'll give you an example. I had a guy who sold a roofing company last year and he got a good price for it. So I'm not belittling it, but had he done a little bit more work up front ahead of time, planning for the transaction, planning for the exit, he would probably have saved himself a lot of time, a lot of headache, a lot of hassle, and maybe even generated a higher price on the sale.

So it's a common story. And I've got another guy, he just signed up. Fortunately, we've got a couple of years to plan for it, maybe a few years to plan for it, but he wants to grow this business fast and he's trying to figure out what his value gaps are in the business. So we're trying to help him identify those gaps and we'll bring in other experts to help fill those gaps so he can get to his $150 million purchase price that he seeks. There you go. Everybody's different. To answer your question very simply, most entrepreneurs don't want to think about it.

They just want to focus on building the business, not on exiting. You know, and sometimes you're like, you're kind of like, I don't know if this is going to work. I don't know if this can work out. I know that some important things, there's foundational stuff that's really important. And this is why entrepreneurs should really tune in this. Like the formation of what company style you choose, whether it's a sole proprietorship, LLC, C-Corp, S-Corp, blah, blah, blah, blah. I think there's 50 million variations these days.

And that's important in handing over or selling that property, right? Very important. Which one you choose. If you want to save money in the end, you've got to figure out the right structure for yourself. And, you know, everybody likes talking about, Hey, my accountant told me if I use an S corporation, I can avoid self-employment tax. You know, it's a story that you hear over and over again, but it depends. It always depends. It always depends. So as a tax guy, which is how I started my career as a CPA,

and then as a lawyer, I'm a tax attorney, you really become sensitive to the tax issues on the exit. So it's not just income tax issues either. And there's not just federal income tax or there's state income tax, but there's also an estate tax, death tax. If you're going to sell your business for enough money, what have you done in advance to shelter the family from having to pay that inheritance tax or death tax after you're gone? And so there's lots of cool things you can do to build the business, set aside a piece of it for your family without having to incur any kind of estate tax on your

death and save millions, I mean, millions of dollars. And we've done this for many entrepreneurs for many, many years. And I thought, gosh, you know, I should write about this. I should get it down in writing, see, you know, see what happens. And now the result is, the feedback is enormous. We're getting a lot of work in. And it's not just legal work. It's, you know, figuring out what the steps are. And there's usually seven basic steps to get to the exit. And so we help them along the exit.

That's what Aspire to Exit is all about. That's my business exit planning entity. It's a separate entity and it's not about doing legal work. It's about helping them get ready to build the business, to grow it, to make it solid and save taxes, but also protect from creditors, do asset protection, other things that people just don't think about. And it's combining a little bit of estate planning concepts with the business planning that everybody's familiar with. Definitely. So you've got some great tidbits in here. Uncover the legal and business secrets lawyers and investment bankers use to gain the apprehended

negotiations and drafting their transaction documents. That sounds like a great thing to know about. Yeah. Investment bankers have one thing that they want to achieve, and that is sell the business. Now, if they're representing you as the seller, they're going to try to negotiate on your behalf the best way possible, but they're not always familiar with your personal circumstances. And you've got to consider your personal situation, your financial situation, and the resources that you've got outside the business in negotiating and building a transaction for you and in auctioning off your business or in helping you sell your business. So the investment bankers know a lot about a lot

of different things and they're usually very important in larger transactions, but you may not have an investment banker in a five or $10 million deal, right? So then the lawyers come in and the lawyers usually are representing, again, the company. They may not be representing you personally and they may not have your individual situation mapped out as well as you need to map it out. So you've got to map out your personal situation and integrate it with the company's situation. Then the other piece is, if you've sold enough companies like I have, you know what the buyer's looking for. You know what the buyer's, you know, so what are the secrets? Well, buyer's going to always ask to, for example, treat the transaction as an asset purchase,

even if it's a stock purchase. That way they can write off the goodwill that you're selling in the business. Well, how do you structure this so that you don't get hammered with ordinary income tax on the sale? There are secrets that come into play. What about negotiating the deal? There are all kinds of issues that come into play. What about negotiating the deal? There are all kinds of issues that come up. Well, chapter five of the book talks about, walks you through all the issues

that come up that the buyer and their lawyers are going to raise. And then how can you respond to it or how can you prepare for that in advance so you don't get screwed in the end? And that's really what my objective is the book is really written from the seller's perspective from the owner's perspective and you help uh you help us understand what buyers and investors want what they fear um and and probably how to better sell the business i mean i imagine any sort of business deal you know they're going to try and beat you down on the price a little bit. They're trying to, oh, I don't know, that forklift over there looks older or something.

I don't know what they do, but stuff like that. Forklifts don't mean a whole hell of a lot in most businesses, but you could have probably written them off for tax purposes. And the last thing in the world you want to do is write it up to fair market value and then have to pay depreciation, recapture ordinary income at 37%. So, you know, how do you avoid that? Don't worry about the forklift.

Worry about the value of the business that you can transfer as the seller. So one of the key issues that always comes up is what happens if you leave the business today? What's this business worth? Is there something to transfer to the buyer? And if the answer is, well, they really need me to help bring in business. They really need me to help with the financial side. They need me to help sell or handle the operations for the manufacturing, whatever it is. If you can't extricate yourself from the business, that's going to depreciate the value for the manufacturing, whatever it is, if you can't extricate yourself from the business, that's going to depreciate the value of the business. It's going to cause the business to go down. So the key is let's build up transferable value. What does that mean?

You got to have a good management team. You got to have a management team that can manage the business if you're not around and run it and generate the same cash flow that you're generating today. And if you can't do that, how do you keep them? What do you need to do to incentivize these people to stay? So all of this stuff is really part of the exit planning process. And it's real important. You've got to figure out what the buyer is looking for, depending on the industry. And I've handled transactions in many different industries. You've got to understand what the buyer is looking for and what they're going to be scared about if they buy your business. And yeah, you said, are they going to try to negotiate you down on the purchase price?

Well, if you don't have that transferable value or if there's some risk that you're going to lose a major customer, if you only have one customer or one major vendor, you're going to be in a boatload of trouble and it's going to depreciate the value of your business too. So we'll get into that percentage of your business thing here in a second, but you jumped to where I wanted to ask you the question. And so we've got that down the road where assembling a superior team, you know, we talk about as entrepreneurs all the time, you know, try and get people that can replace you, try and build people that are smarter than you,

better than you maybe. But you have to start building your leadership team, your replacement leaders, your leaders who can take your place. And how important is that? When buyers come around and they look at your business, how take your place. Uh, and, and how important is that when, when, when buyers come around and they look at your business, how well do they look at, okay, how good are these people that this man has or woman has and, and how, uh, or, you know,

dog, pony, whatever. I don't want to discriminate. Um, the, uh, how, how good are these people that they can take over if, you know, we give Joe some money and Joe hits the road? And how well they can run the business? Do they look at the quality of their resumes, maybe their experience level, or just maybe length of time at the company? You know, it's a combination of factors. Some of these people may not have been with the company very long because you may have assembled your management team fairly close in time to the time when you're going to sell. But the key is, do you have all the disciplines that are needed to run the various pieces of the business? Do you have a good operations person who knows how to get projects

done on time and make a profit? Do you have a good financial person who can basically handle all the accounts receivable, accounts payable, the controllership, the treasury function. And if the buyer already has that, then they don't necessarily need that person as part of the management team to continue running the business. But usually the most important people that I find, at least in service businesses, as well as manufacturing businesses, are the salespeople, the BD people, the business development people. And they are hard to find and they are hard to keep and to keep motivated and incentivized.

And sometimes these are the highest paid people in the company, more than the CEO. And justifiably so, because they're the ones who are bringing in the business. So the key is, do you have good rainmakers that can make rain other than you? So all of these different facets of the business are part of the management team. And when I talk about assembling a rock star team, it's not just the internal team. It's assembling an external team to help you get to the exit. So you need a good CPA. Okay, that's right.

You need a good CPA, somebody who that's right. You need a good CPA, good somebody who can help you not only with the basic blocking and tackling and accounting, you know, gap accounting, generally accepted accounting principles, but you need a good CPA who's done M&A work, who's been through a quality of earnings analysis with his clients or her clients. You need a good business lawyer. You need a good corporate transactional lawyer, but you may need specialists depending on your business. If you're in real estate or you're dealing with hazardous wastes, like gasoline or oil, you're going to need a good environmental lawyer as well. If you've got employee benefits,

you're going to need an ERISA lawyer, a benefits lawyer. And then aside from the lawyers and CPAs, you should have somebody who's helping you with your insurance. And it's not just selling you products. It's making sure that you've evaluated all the risks associated with your business so that you've got the proper coverage for what you do today. A lot of people hear about cyber insurance, right? Cyber security insurance and privacy insurance, data insurance. This is a new phenomenon, but it's extremely important in the M&A world today. So it's assembling all the people on the outside who are going to get you to the goal line and over the goal line successfully. For those who are laymen or just listen to the show and they're not familiar with the term, what does M&A mean?

M is mergers and A is acquisitions. There you go. And so that's one way to exit your business. It's to sell it. You might merge it with another company. You might get cash in exchange for it. You might get publicly traded stock. If somebody offers you non-publicly traded stock

because they're not publicly traded, you're taking a huge risk. I talk about that in the book. There's a whole section on that. But the M&A strategy may involve selling it to a strategic buyer, somebody who needs your business to help fill out gaps in their business model, geographically or otherwise. It might be a service that you provide or a product that you've developed that will enhance what they do.

They may be buying stuff from you and they may say, you know what, instead of buying stuff from you, I'm going to own you so that I can integrate you with my whole product line. So it's M&A to a strategic buyer, to a private equity buyer, somebody that has put together investors, institutional investors, high net worth investors that have put money into a fund, and they're out there buying businesses in a particular industry and rolling them up under an umbrella that might be specifically designated for a specific industry. Like there's a big roll-up going on of roofing companies around the country. And there are several companies that are engaging in this. And then all of that is backed by private equity money, believe it or not. So There's registered investment advisors, financial advisors. Private equity is out there looking for people that provide financial advice

to you and me, and they make a lot of money doing that. And they're buying these companies at extremely high multiples, multiples of their earnings. So the values are incredible. And so, yeah, there's a lot of ways you can exit a business. You can sell a business to an ESOP. You can sell a business to your managers. You can sell it to your family or gift it to your family. There are challenges in all of these techniques. And of course, you could always take your company public, but that's a very small minority of businesses that do that. That's true. So, you know, how long, you know, someone, I can hear someone probably in the audience going, you know, since a lot of entrepreneurs don't think about this sort of thing. What's the average time from starting a company to having the possibility of possibly exiting it?

I mean, you've probably seen all sorts of variations. Is there an average maybe that you've seen? I don't think there's an average. I think it depends on your industry. It depends on what you do. It depends on the framework of your business. You're a rocket ship taking off. Salim Ismail wrote a great book called Exponential Organizations,

and it's a good book to listen to as well as to read. But it was all about what are the companies that have taken off like rocket ships and can sell quickly or go public even, like Google was a classic example of one. Or are you a legacy company, company that's sort of just ambling along making good profits for the owners but not really growing rapidly maybe you've matured and you're at a point where you're just generating profit on an ongoing basis with nothing wrong with that there still is an exit because at some point you're gonna die everybody's gonna die what you're gonna become disabled yes chris what you are going to die as will i This is news to me.

Probably me before you. That explains why I've been feeling like shit. I don't know. I drank heavily for 20 years. I might be into it. I had some fun. And then there's the free fall or the end game. What if you're all the way at the end of your business?

You're 75. I had two guys come in a couple of weeks ago. They were 75 and 76. They've been partners for 50 years in a business. You're 75. I had two guys come in a couple of weeks ago. They were 75 and 76. They've been partners for 50 years in a business. And the business just generates a steady amount of profit every year. And I turned to them. I said, so what's your exit plan? When do you guys want to get out? What's the date? And the 76-year-old said, hey, I think I'm going to just keep doing this until I die. I said, so what's going to be left for your kids? He said, that's their problem.

Okay, that's their exit plan. Or his partner, too. I mean, his partner looked at him and was like, well, that's not a good answer. I don't want to hear that. So, yeah, I mean, they come in all shapes and sizes. I'd say I have a lot of entrepreneurs that have grown their businesses in five to 10 years, and they've been able to get out and do so extremely well, very successfully making a lot of money. I've got one business that we're representing right now. He's been around for 20 years and they just can't find a good buyer at the price he wants to sell it. And I think part of

the issue is he doesn't have a good management team internally. Because if he wants to sell it. And I think part of the issue is he doesn't have a good management team internally. Because if he tries to sell it, they're going to say, well, are you going to continue working for us for $200,000 a year for the rest of your life? Otherwise, we're not going to pay you anything for this business. And I think that's part of the analysis that goes into it is, you may be operating your business from day one. I had one guy, he was operating probably the largest privately owned hair salon business in the United States. They had 950 stores on the East Coast and the Midwest. And they just, you know, we were trying to sell them and we actually got a good offer

back in 2016 and they should have sold it then but you know the i think the owner felt that the business was worth more than he was offered so he stuck with it and they re-engineered the business and then covid hit and then the bank came after him oh and the business went bankrupt wow now the guy had already you know amassed significant wealth over 50 years of growing a business of that size, but he could have had a couple hundred million more had he been a little bit more realistic about the valuation and what the business might have been worth. So everybody's different. They're different fact patterns.

And the key is not to be the greedy pig that gets slaughtered in the end so there you go uh matthew fulton comes in uh with a great question how long does the m&a process usually take i suppose on average yeah you know i've done it as fast as a month really yeah but it usually takes particularly for a larger business you know 30 40 30, 40, 50 million dollars and up, it's going to take anywhere from six to nine months and sometimes longer, depending on what the issues are. What the buyer comes in and does what's called due diligence on your business.

And they ask for everything, including, you know, your marriage certificate. And they want to see everything from day one. They're not getting mine because I'm single. But the question is, how well prepared are you for those questions? And so part of what we do and we help clients with is get ready for the questions that they're going to ask because we've seen hundreds of due diligence checklists. We know what they're going to ask.

So let's get it all organized and get ready. And you know what? The faster, the more you have organized, the faster you're going to get the closing and you're going to increase your price. There you go. It's going to sustain your price. Yeah, because if you don't look like a jumbled mess of like,

you know, they show up at the business, it looks like, you know, one of those shows on hoarders or something. Whatever. It's going to be an issue. But yeah, it astounded me. And I learned that you have to plan for this stuff from the very day one, the minute you decide what formation of your business you're going to do, the planning throughout it um and stuff like that you know one thing i never really thought of you mentioned this uh about how you know well we're just gonna let the kids inherit and let them deal with it but i never had to deal with this because i've been seeing

all my life i don't have kids um i never got tired of being happy so i never got married um and uh the nervous uh husband left there um the uh i'm just kidding i don't know if you're married or not wait 33 years i'm sorry it gets better um anyway uh i'm just teasing you man i love you uh i tease all my married folks uh i give them a bad time i call them from spirit rhino and go hey man wish you were here uh enough with the merry good jokes chris um so uh but but you know you guys uh people that are married that have children you know one thing i never thought about in my businesses uh and my successful ones i had a business partner but we had a we had a succession plan um and but there really wasn't anybody give my money to my dogs you know give them 50 bucks

they'll be happy and some dog treats. But people have families like yours that are married. You guys got to think about stuff like life insurance. If you're the proponent, especially in the early days of building your business, you really got to plan as you build that business. Maybe you're not going to be a merger and acquisition out, but maybe you get hit by a bus one day and you've got a plan so that maybe somebody could step in, take over that business. You can minimize your death taxes and all that crap that

goes on. Well, let me, let me give you an example of somebody like you that I represented who did not have any kids, wasn't married. And he said, why do I need any kind of business succession plan again? You know, if the business goes down, who gives a crap because I don't want to leave it to anybody. There's more of us? Yeah. There's lots of you out there. And some of you are divorced. That's why we're all so damn happy. About half of you are divorced actually. But what do you do? I mean, if you care about your employees, which a lot of my clients really do, then you will have to think about getting life insurance, key employee insurance, for example. Oh, yeah, that too.

How do we hire somebody to come in and run the business if my employees can't do it themselves? They're good at what they do, but they can't run the day-to-day stuff that I do, right? So what are we going to do about that? How are we going to keep it going for the employees? And then there is an exit at the end because we're just not going to give it to the employees, or maybe we will, because I've seen people do that, where they turn the keys over to their

employees if they don't have anybody that they really care about. Well, they care about their employees and they want them to have gainful employment going forward. So the question is, what is your plan? Everybody's different. And even if you don't have any kids, and even if you don't have a spouse, you could give your money to charity. But if there's nothing to give, if you're charitably inclined, you give it to charity. If there's nothing to give at the end because you basically have to close down the business and there's really nothing left, that's too bad for the charity, I guess. But there's a lot of people that are in need out there. billions of dollars to one of these big TV conglomerates or one of the, you know, direct TV or whoever it is,

dish or, you know, any of the, any of the new channels, Roku, maybe Roku will buy your program and put it on or local cable. I don't know. You're going down on me and you're not going up the food chain.

You're just some guy on his couch in his basement at this point. No, I would imagine, too, that it just occurred to me. I love my mom. I want to give the financial benefits of my company to my mom, but God bless her, she wouldn't have any idea to run it. So you need a management succession plan business succession somehow with the financial benefits you know going to keep the business going for her benefit yeah if you don't have any siblings keep the business going for her benefit at least for some period of time so that

there's something preserved to take care of her so that when she lives to 120 and you're gone by the age of 70 or whatever you know know, she can be taken care of. And that, again, it's what are your priorities in life? And it really does mesh your personal financial planning with your business. And that's what most people forget. The business owner thinks, this is my business. This is my personal life. Never the two shall meet.

And that's the exact opposite of business exit planning. It's bringing the two together to make sure that whatever your goals are, you can meet them and enhance the business value to achieve whatever your goals are. There you go. And I imagine there's a variation on that. Me and my business partner back in the day i think 1993 when two when we formed our first company i think the first one was two um and he had a wacky girlfriend like wacky dacky you know one of these people and i'm not talking about women in general just there are some people men or women that everything that they think of is the worst idea ever sorry i shouldn't have put that to you when you were drinking i was drinking

i didn't mean to do that you know that that's that's i know some people like that too yeah wacky dacky i'm gonna make that a term uh and and so you know they would come to you with good ideas and whatever they would tell you they'd be like hey i got a really good idea and you're like yeah what is it and then they would tell you and you I'm going to do the opposite of whatever that idea is. And like literally she was like opposite land girl. And she was nuttier than a nut farm. God bless her. She was a good person and had a great personality.

But that was about it. So I was really concerned that he was going to marry her. And then I went in, I think Pepsi had this problem. Maybe it was in a movie I watched or something. The brain's faded in the old age. It's the Alzheimer's kicking in, but you know,

I think Pepsi or some, there's probably some large conglomerates that have had some guy die and his wife comes in who has no idea how to run a business. And she just comes in and starts mucking everything up. And Los Angeles Lakers, Los Angeles angeles lakers okay there you go and uh so i was i wanted that prevented no we didn't consult with lawyers we just put it in the bylaws or the corporation crap and all that stuff that basically if either of us got married we had to have a prenup uh to that the other partner had to sign off on

that made sure that that the assets of the company would transfer to each other instead of their wife and control and there's i i don't know if what we worked out for finances but that was a big deal for me and and it was it should have been for him because i'm like dude if i get married to some crazy girl do you want to be stuck in a 51-49 partnership with her? Probably not. Well, prenups aren't enforceable in all 50 states in the district. That's true. So, you know, that's one issue. But you can handle this issue using a buy-sell agreement or an operating agreement that's well drafted.

And so this comes up all the time. Most people who are partners in a business, let's say just thinking of you and your partner, he loved his girlfriend. Maybe they would get married. Maybe they wouldn't. It doesn't really matter. Maybe he leaves the business to her. What you do is you'll always have the right.

You should always build in the right to purchase the business from her so that she gets something out of this, some value, some assets that she gets something out of this, some value, some assets that she can liquidate and live on and you get the business. Yeah. And that's, you know, in a 50,

50 partnership or in a 60, you know, 40 or whatever. Or if you have three or four partners, I had a call with a company that does, they do litigation support for big law firms and they have four owners and each of them owns 25%. And we went through this whole thing. And so the main question that came up was, well, what if I get divorced? And all four of them are married. And I said,

let's build in a provision in the agreement that says the spouse has to consent to this agreement, first of all. They got to sign off on it, number one. Number two, if you get divorced, they get no ownership of your interest, but they can get purchased. They can get the interest purchased. And this is where sometimes life insurance does come in. So there's money that can be paid to your partner to purchase your interest so that he's not having to pay out big sums of money. You don't have the money to buy him out. Yeah. So insurance does have benefits.

I don't sell it, but it has benefits that are really important in these contexts. There you go. Does life insurance cover if you want to choke your partner sometimes? No, there's something called the Slayer Statute that applies. Slayer Statute? Note to self, don't kill partner. One final throw in I'll tip in here uh and and i'm familiar with is uh you know designing contracts with your customers and of course the variation the customer base you alluded to that earlier when you said you know if you have one major customer and 90 of your business

comes from that you know you're gonna have value goes like this to the third really wow wow and of course long-term contracts, or at least some sort of contract where they just can't cancel you next month, and some guy buys it, and then everybody cancels, and then you're like... Hey, in the government contract sector, which we have a lot of out on the East Coast here in Virginia and D.C. and Maryland, all contracts are cancelable for convenience. The government can cancel at any time but how the

the values of these businesses have skyrocketed because they build pipelines of task orders under these massive contracts that are being given to them or their subcontractors and you know as long as there's a track record with the customer, it's okay. It's just if you have one customer, even if it's a long-term contract, there's a possibility that in the contract itself, there may be an escape hatch for the customer to leave and go somewhere else. The other thing you have to think about is if you've got key employees working for you and they're working on that customer,

you'd better have a non-compete or some kind of non-solicitation of the customer with your employees to protect your intellectual property, to protect your trade secrets, to protect your customers that belong to the company and not to the employees who's walking out the door. So that's a valuable secret, if you will, but everybody knows it who's working with us and with their lawyers. They should know that ahead of time that you've got to have employment contracts with your employees that prevents them from stealing your customers or stealing your employees or stealing your secrets. Or worse, in my case, I never thought we had noncompeting agreements on our employees and our salespeople especially. Because, you know, sometimes we would leave. Sometimes they would sell deals they couldn't get approved to other lenders and wouldn't tell us about it and get paid.

I remember one time I had a guy walk up to me at a show and he's like, oh, yeah, mortgage company. I got a mortgage company. He goes, oh, yeah, we had some guy come to us and sell like four-year loans to us did he get you paid back on that i was like what and uh yeah long story in that one but it was funny how it turned out uh but my business partner of 13 years uh best friend of 22 when he finally turned on me with his yoko ono crazy girlfriend uh he uh i got yoko ono basically um when he left the company he went and tried to do his own thing and found out that i was the rock star and he was just been following me all these years and so he started stealing from our company and he started trying to steal clients from our company and i had never thought in a million years to put a non-compete agreement in to the partners

of the business yep like holy shit i should have done that i'm sorry sorry to hear that well we kept the clients because most of them really loved and attached to me i talked about in my book but um but still i mean that shit can happen it's crazy that's a good point you know if you are the guy and the customers love you and they don't love him, then non-compete is not going to mean that much anyway because they're not going to leave to go to him. But he could go to somebody else and work for somebody else who has somebody like you that would attract that customer

and then they'll try to undercut you on price or something like that so that they'll go to the other entity. And so, again, a good, a well-drafted agreement that, and again, I don't like to use the word non-competes because in some jurisdictions like California, they're not enforceable or DC. You can't, there's certain non-competes that just aren't enforceable. And in Virginia, they're frowned upon. But stealing clients and stealing employees or contractors that work for you

or stealing your processes or your secrets or your customer list, that should be prohibited, and it usually is enforced in a court. And sometimes you've got to sue to do that. I don't do the litigation. I do all the transactional work. I bring in outside guys, the sharks know come in and uh the meg who comes in and basically eviscerates the people who uh steal from the companies yeah that leads and stuff yeah we sue people over all that shit yeah um it's interesting what sales people do bad yeah well you know welcome to life right i mean

you've probably seen all too with all the all the the crap but you learn from it and uh i should have a law degree by now uh well this has been really insightful wayne people need to read your book the the amount of time you said what 35 years you've been doing this uh 37 as a lawyer 43 as a cpa this year in 2023 there you go you've seen it all then cpa and lawyer holy i have seen a hell of a lot, yeah. Do you ever get tired of it all? You just go, holy shit. It's my passion. I love the exit planning. I'm not a wealthy guy. I'm wealthy in terms of spirit, and I have a great family. I have four kids and a grandkid on the way. Everything's great. But in terms of economic wealth, I'm good. I'm set. But am I in this to make the money? I love doing what I do.

And I love helping entrepreneurs make the money and do their exits. And they do really, really well. And occasionally, I'll get a trip to Hawaii or something like that from one of the clients I help sell. So you never know. You never know. But yeah, it's a long time I've been doing it. Well, I'll call you when we're ready to sell the Chris a long time i've been doing it well i'll call you

when we're ready to sell the chris voss show we were going to sell it and call it at the x show but that fucker elon musk beat us to it so there's that i don't see a good joke at the time but it's wonderful to have you on wayne give us your dot com so people can find you on the interwebs please sir sure the author's site wayne zell.com. The law firm's site, zelllaw.com. And the new business exit planning site, aspire, A-S-P-I-R-E, to exit, aspiretoexit.com. There you go. A whole new paradigm shift for people like me who lived in their own private Idaho, you know, building companies. I was like, yeah, I'll build the companies. I'll be like Warren Buffett. They'll last forever. Of course, he's just an investor. So thank you very much,

Wayne. We appreciate it for you coming on the show. Thank you for having me, Chris. It's been a lot of fun and it's been a pleasure getting to know you today. Pleasure as well. Your multi million dollar exit, the entrepreneur is business successionanner, a blueprint for wealth guide, and you can get it wherever fine books are sold. Thanks so much for tuning in. Go to goodreads.com, Fortress Chris Voss, LinkedIn.com, Fortress Chris Voss. You'll see this on the big LinkedIn newsletter,

I think, next week. And all other places on the internet, you can find us. Thanks for tuning in. Be good to each other, stay safe, and we'll see you guys next time.