Jason Watson, CPA, sits down with Bud Rainsberger of RWA Partners in Colorado Springs to continue their discussion about when, why, and how to sell your small business.
In this second segment on Business Financial Planning, Jason Watson, CPA, sits down with Bud Rainsberger of RWA Partners in Colorado Springs to continue their discussion about when, why, and how to sell your small business. Bud explains the importance of understanding your motivation for selling, and, he touches on the emotionality of the decision and how it can impact your personal and professional life going forward. Special thanks go to Axe and the Oak Distillery for graciously hosting our Bourbon and Business podcast series! This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
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WCG Inc. (formerly Watson CPA Group)
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00;00;14;18 [Jason]: All right. Welcome. My name's Jason Watson with WCG
Incorporated, we're a local tax and accounting firm here in Colorado
Springs. I am alongside Bud Rainsberger of RWA Partners, a
Registered Investment Advisor firm here in Colorado Springs. In our
previous segment, on our Bourbon and Business tour, we
discussed
00;00;33;19 kind of financial planning in general and then some of the extra stuff
that needs to be taken care of for business owners. You know,
when to sell the business, when not to sell the business, how
00;00;46;12 much cash are you taken out of the business, how personal
interests can compete with business interests and all those things.
And that's a great video and, and podcast that we would encourage
you to go view and listen, as well. This time around, oh, I want to
make sure that everyone understands that
00;01;02;15 we're being hosted by Axe and the Oak, here in Colorado Springs.
They've been gracious enough to open up their bar so that's why
it's Bourbon and Business, and I'm sipping on some nice Axe and
the Oak bourbon
00;01;13;20 right here as well. And a couple more of those, I think we'll allow
any tax deduction.
00;01;17;15 [Bud]: Well, you know as a guest I can't quite imbibe yet, but I'm
looking forward to the after interview.
00;01;22;12 [Jason]: I'm doing, I'm doing the Coyote Ugly, I'm just holding it to
my lips, not actually taking a sip. So anyway, in this segment we
want to discuss selling your business and, and some of the aspects
there. And we kind of touched on this a little bit again in our last
segment but
00;01;38;01 maybe kind of give, give our viewers and listeners an overview of
some of the things just out of the gate that you discuss when a guy
goes, "Hey", or a gal doesn't matter, she shows up and says, "I
want to sell."
00;01;49;07 [Bud]: Right. So, you know, traditionally we have a built-in
relationship so we know quite a bit about our client.
00;01;57;14 [Jason]: Okay.
00;01;57;20 [Bud]: And we know a lot about the business as well as the
personal and so its a natural for them to come and, and you know,
give us a holler and say, "Hey, I'm thinking about selling.". But in
many cases we're, we're actively planning for it, right? So we're in
the planning stage. It's just when somebody shows up with an open
checkbook, all of a sudden
00;02;16;01 you start thinking about the possibilities.
00;02;18;10 [Jason]: Right.
00;02;18;27 [Bud]: And, you know, in many times you've already spent the
money before .
00;02;23;16 [Jason]: I was going to say yeah, yeah, you've already spent the
money. I'm paying off the house, I'm getting a car I wanted.
00;02;27;03 [Bud]: So we're trying to, you know, go, you know, take a step back
and say, what's your motivation for selling?
00;02;32;08 [Jason]: Right.
00;02;32;18 [Bud]: What, what are we trying to accomplish here? Is it health? Is
it family? Is, is it economics? You know, what really, what are the
driving factors?
00;02;40;29 [Jason]: Sometimes it's just that phone call came in and it surprised
you.
00;02;43;19 [Bud]: Right.
00;02;43;24 [Jason]: And then the dollar signs, you know?
00;02;45;13 [Bud]: I, I find the good businessmen and women, who are
watching their industry get a, a pretty good feel for what their, their
business is worth.
00;02;54;23 [Jason]: Sure.
00;02;55;02 [Bud]: On a, you know, general basis, you know, it's a multiple of
NOI or something like that. And so they kind of have an idea of the
value that they're creating.
00;03;03;00 [Jason]: Right.
00;03;03;11 [Bud]: And, and, and it, and it builds over time. And you, you do say,
you know, when it gets to X I'm going to really, you know, take a
hard look at that.
00;03;10;29 [Bud]: So we got a call last week, for example, and the clients go,
well, we didn't think we'd get, get there this soon but we got a call
and they're dangling some real money in front of us and, and we're
really interested. So we sat down with them and I said, Okay, what
are they offering? They said, well, 12 million.
00;03;25;15 I go, well that's a good number. You know, simple lifestyle. They're
very charitable. They're thinking about, you know, they've done
some things in terms of volunteering around the world for charitable
causes and, and they're young
00;03;38;28 enough where they can really go out and do that.
00;03;41;16 [Jason]: Sure.
00;03;41;21 [Bud]: And so it really has peaked their interest.
00;03;44;18 [Jason]: Yeah.
00;03;45;12 [Bud]: And you know, to the point where we go, we think we're
going to go through the pain of going through this process and
seeing just how legitimate is that offer?
00;03;53;07 [Jason]: Right.
00;03;53;20 [Bud]: Does, do they really have the money.
00;03;55;19 [Jason]: Right.
00;03;55;24 [Bud]: To do the deal?
00;03;56;15 [Jason]: But even to take a step backwards
00;03;58;28 [Bud]: Yeah.
00;04;00;07 [Jason]: Twelve sounds like a big number, 12 million, right? But is it
the right number? Maybe it's worth 15, maybe you're shortchanging
yourself, you know? May, you know, so those
00;04;09;24 [Bud]: Right.
00;04;10;28 [Jason]: Sometimes
00;04;11;12 [Bud]: The matrix, right?
00;04;11;27 [Jason]: Yeah, sometimes the adding gets a little bit crazy because
you think this is sunset money, right? I can take this and ride into
the sunset.
00;04;18;12 [Bud]: Right.
00;04;18;21 [Jason]: Well, you should go get 15 if it's really worth 15.
00;04;21;29 [Bud]: Right.
00;04;22;13 [Jason]: You know.
00;04;23;18 [Bud]: And the deal structure, right? You know, so it's 8 million cash,
and it's 3 million in a note.
00;04;28;12 [Bud]: And so you go, okay, well what's the 3 million now? Does it
pay any interest? Well, no, I go, okay, well that's a negative. So,
how much background do they have managing a business like
yours?
00;04;39;02 [Jason]: Right.
00;04;39;07 [Bud]: Well, not a lot, but they are, you know, coming out of
Stanford and they got all this money and trying to put it to work. And
I go, well, you might think about taking all cash rather than some
note on the back end.
00;04;50;25 [Jason]: Right.
00;04;51;05 [Bud]: And, and some things like that. So we're just kind of
evaluating, you know, like you said, all the, the things that could
come into play
00;04;58;13 [Jason]: Okay.
00;04;58;21 [Bud]: Which is different, you know, for every, every business
opportunity that we've looked at. And I've, I've been through it in my
own firm, right?
00;05;05;02 [Jason]: Sure.
00;05;05;14 [Bud]: So we've had the pitches from firms around the country, and,
and have, and played the dance
00;05;11;23 [Jason]: Yeah.
00;05;13;00 [Bud]: And, and so forth, so we have a really good idea what that
looks like. And of course the cultural fits and, you know, good things
like that.
00;05;18;28 [Jason]: Yeah, no, it's huge.
00;05;19;18 [Bud]: They want you to stick around and you know, where are they
going to pay you to do that?
00;05;22;20 [Jason]: Yeah. It's all about managing risk.
00;05;24;29 [Bud]: Right.
00;05;25;10 [Jason]: And in a theoretical world, if we have unlimited time on
earth, we can assume unlimited risk, right? And probably when
you're 25 years old, unlimited risk is almost the same as, you know,
unlimited time. But when you're 55, when you're 60, no, time is now
very, very, you know,
00;05;41;29 very much limited.
00;05;42;28 [Bud]: Right.
00;05;43;05 [Jason]: So risk has to be managed, you know? So where I was
going with that is yeah, you have a, you know, $12 million cash
offer, you have a $15 million offer with let's say 10 in cash and five
00;05;57;13 as a note. What's the risk that you're taking on?
00;06;01;08 [Bud]: Right.
00;06;01;27 [Jason]: And if you are taking on somebody who, because now
you're in bed with this new buyer, right, wrong or indifferent.
00;06;09;14 [Bud]: Right.
00;06;09;20 [Jason]: You are tethered at the hip
00;06;11;18 [Bud]: For some
00;06;12;10 [Jason]: Your success depends on their success.
00;06;14;26 [Bud]: Right.
00;06;15;01 [Jason]: You know, especially if you're not collateralizing that 5
million
00;06;19;21 [Bud]: Right.
00;06;19;29 [Jason]: With much other than blue sky and future cash. So you
have to weigh all that in.
00;06;25;18 [Bud]: Absolutely. You know, what's the liquidity on that note and
things like that. And you know, every deal seems to be different.
00;06;31;16 [Jason]: Oh yeah.
00;06;32;03 [Bud]: And like we were talking about from a financial planning
perspective, we want to go back and validate, you know, what kind
of lifestyle do I have to support with whatever's leftover on an after
tax basis. And, you know, risk is, is something that, you don't mind
doing as long as
00;06;49;10 you're working.
00;06;50;06 [Jason]: Sure.
00;06;50;18 [Bud]: So all of a sudden, you know, making, you know, 2 or 3% in
a safer environment isn't very sexy or exciting, but that might be the
right thing. And so what does that really do for me?
00;07;01;13 [Jason]: Right.
00;07;01;24 [Bud]: If I'm spending 600,000 a year and I need a 200,000 a year,
you know, that's what I can get from the assets today? It's a
different story.
00;07;10;00 [Jason]: Right.
00;07;10;17 [Bud]: We're trying to validate, you know, does it make good sense
to do that?
00;07;13;05 [Jason]: Right. Yeah. We talked about that earlier, in another
segment about selling too soon.
00;07;16;13 [Bud]: Right.
00;07;16;23 [Jason]: Right. You know, given someone's burn rate, or their a,
inability to adjust lifestyle.
00;07;22;17 [Bud]: Right.
00;07;22;23 [Jason]: Especially that dramatically. I mean, going from 400,000 a
year to 150,000 a year is a big deal. Going from 400 to 350 yeah,
maybe you just don't take as many trips to Fiji.
00;07;34;03 [Bud]: Right.
00;07;34;09 [Jason]: You know, but
00;07;35;14 [Bud]: I mean most of us, we would say, Hey, I can live on 100,000
a year.
00;07;39;06 [Jason]: Right.
00;07;39;21 [Bud]: You know, why are you complaining about 500,000 a year?
You know, we don't maybe necessarily run in that circle, but it's as
real to them as it is to us.
00;07;46;26 [Jason]: Oh yeah.
00;07;47;08 [Bud]: You know
00;07;47;22 [Jason]: Oh for sure.
00;07;48;12 [Bud]: You know, if you're, I think, you know, for me, I've always
said Plan F is a trailer in Scott City, Kansas because you could live
really, really cheap in Scott City, Kansas and, and nobody really
cares. But really that's not what we're planning to do.
00;08;02;18 [Jason]: Right. No. For sure. All right, so let's say we have
somebody who says, I want to sell my business. I don't have this
person waving a big check in my face. So, I have some years
ahead of me to whip things into shape.
00;08;16;14 What kind of things are you whipping into shape?
00;08;18;27 [Bud]: Well, that's where really bringing in the accountant makes
perfect sense, right? You know, and hopefully there's, you know,
maybe in the business there's a controller or something.
00;08;27;21 [Bud]: I mean, many times the business owner is reluctant to share
a lot of the things going on with the controller that they're really
trying to achieve.
00;08;34;22 [Jason]: Sure.
00;08;35;07 [Bud]: So figuring out how
00;08;37;06 [Jason]: How privacy comes into play.
00;08;37;19 [Bud]: That relationship is, you know, privacy and knowledge. And
then, you know, bringing in the accountant and they go, okay,
here's what we're trying to achieve. What do you see happening?
And, and where can we make those, you know, reduce expenses or
headcount,
00;08;52;22 things like that that we're trying to, I don't want to say, you know, put
lipstick on a pig, but how do we kind of build up this business ready
to sell?
00;09;01;07 [Jason]: Kinda lean it out.
00;09;02;03 [Bud]: Absolutely.
00;09;02;25 [Jason]: Let's, let's, let's take some of the owner you know,
Perclocets, the perks and lets
00;09;06;14 [Bud]: At least know what they are so I can add them back at time
of sale, right?
00;09;10;16 [Jason]: Correct. And clearly identify them without telling
somebody, Oh, just add 50,000 onto my discretionary
00;09;17;15 [Bud]: Right.
00;09;17;24 [Jason]: Cash flow. That's kind of what I pull out on the side
between meals, cars.
00;09;22;24 [Bud]: I can't say anything because I'm a business owner and I do
that, right?
00;09;25;14 [Jason]: Exactly. So, so yeah, we have to set that up because if
you're buying someone's future cash, you have to show them
there's all kinds of cash available.
00;09;33;18 [Bud]: Right.
00;09;33;26 [Jason]: And you can project that.
00;09;35;10 [Bud]: Mutiple cash flow, right? So if I can find an extra 50,000 or
cash flow and I'm getting a 6 or 8X, that's worth some real money.
00;09;40;25 [Jason]: Totally. Exactly. So I agree. So we have to whip these
business owners into shape.
00;09;46;03 [Jason]: We have to probably pull some of those personal, quasi
business transactions out of the business.
00;09;51;12 [Bud]: Right.
00;09;51;27 [Jason]: You know, and normalize some of your data. Maybe you
own the building and the rent is a little too high, maybe the rent's a
little too low, whatever.
00;10;01;02 [Bud]: Yeah.
00;10;01;04 [Jason]: A lot of normalization of those kind of expenses to arrive,
and we want to do that today so that five years from now it's good
history, you know? It's funny when I see financials or tax returns
and they just take a left
00;10;16;10 turn or a right turn, whatever. And all of a sudden they're making a
way, way more money, you know, than they ever have. And
revenue's the same, right?
00;10;23;05 [Bud]: Right.
00;10;23;26 [Jason]: Yeah, they, they haven't squeezed a bunch of nickels out of
this thing, they just changed their financials a little bit. Not cooked
the books but just identified clearly shareholder distribution.
00;10;35;08 [Bud]: You mean, got a conscience or what?
00;10;36;01 [Jason]: Exactly. But it's like oh, you're looking to sell.
00;10;38;15 [Bud]: Right.
00;10;38;21 [Jason]: You know, your, you're trying to lean this business out and,
and have every dollar be completely accounted for and not have
the murky dollars in there.
00;10;47;14 [Bud]: Right.
00;10;47;22 [Jason]: That buyers don't want to pay you for but you certainly
want to get paid for it because it's cash that you're using to support
your lifestyle that a new owner could do as well.
00;10;57;24 [Bud]: Right. And that's, you know, just trying to figure out what
those are and, and clean that up as you say, and then get, maybe
probably a more realistic valuation number.
00;11;07;08 [Jason]: Yep.
00;11;07;26 [Bud]: And then actually have to take that on the personal side and
say, well, you know I was running a car lease and a, you know, a lot
of lunches and some travel and so forth that I'm going to, if I'm
going to keep doing that, I got to add it to my personal expense
side, right?
00;11;22;25 [Jason]: Totally.
00;11;23;02 [Bud]: And so if that's 20 or 30 Grand and I haven't, and I don't have
it in my budget, and we're trying to validate what is it going to cost
you to live, we need to make sure that that number gets moved
over.
00;11;32;22 [Jason]: That's a great observation and one that I don't see very
often either is where, yeah, if we are taking a bunch of money out
of this business and we are trying to pretend this family budget is
what it is
00;11;45;07 [Bud]: Right.
00;11;45;12 [Jason]: We have to adjust that new family budget.
00;11;48;05 [Bud]: Right.
00;11;48;08 [Jason]: To account for those quasi dollars, if you will, this quasi
deductions that are, are maybe gray
00;11;54;01 [Bud]: Right.
00;11;54;17 [Jason]: Between, between you know, a tax deduction and
distributions.
00;11;58;13 [Bud]: And you know, so you're going to have to make some
decisions. I really don't want to help pay for all my Flying Horse
expenses.
00;12;05;16 [Jason]: Yeah.
00;12;06;04 [Bud]: To the extent I bribed my accountant to do that. No. Is this
being recorded somewhere? I mean, you know.
00;12;11;12 [Jason]: For our listeners and viewers, Flying Horse is a, is a, is a
golf community up in Northern Colorado Springs.
00;12;19;00 [Bud]: Right. Right.
00;12;19;08 [Jason]: Which we're actually building a new office in so there's
some irony there.
00;12;21;16 [Bud]: It's going to look great and I can't wait to see it.
00;12;23;26 [Jason]: One of the things you also mentioned too is not just, you
know, cleaning up the books and the tax returns, but just you know,
cleaning up some of your longterm obligations.
00;12;30;18 [Bud]: Right.
00;12;30;27 [Jason]: And liabilities. Do we have some, because that's a part of
due diligence when I help somebody buy a business is I go, Hey is
there any off, off balance sheet contractual obligations that we need
to be aware of.
00;12;43;06 [Bud]: Right.
00;12;43;12 [Jason]: If, if, do you owe some, some manager a bonus?
00;12;47;25 [Bud]: Right.
00;12;48;01 [Jason]: That's going to come bite me in the butt because now I'm
the one paying the bonus, you know.
00;12;52;14 [Bud]: Right.
00;12;52;20 [Jason]: All those things. You want to probably get some of that stuff
cleaned up.
00;12;56;07 [Bud]: Yeah, I think in a way I mentioned, you know one of our
clients sold their business in, in Chicago area and you know, it, it
was probably as, had all of the complications you can think of,
right? He owned real estate, he owned equipment personally. He
had a partner that, you know, was no longer there that owned 10%,
that
00;13;14;20 he had to figure out what his distribution would look like and when
do you pay it, pre or post, you know, and do I want to own the real
estate or do I want to sell the real estate? You got to have that as a
separate transaction.
00;13;25;18 [Jason]: Right.
00;13;26;01 [Bud]: Things like that. And so we went through a lot of variables to
get to a point where we kind of added up the different pieces and
thought, okay, that was a deal that, that he could live with.
00;13;36;14 [Jason]: That's awesome. It, that is tough when you start to chop it
up, where you have like the silent investor. What do you want to do
with that individual?
00;13;46;25 [Bud]: Right.
00;13;47;00 [Jason]: You know, is there a wholesale clause in their Buy Sell
Agreement and what's the valuation? Did they get 10% or is it, hey,
do we discount that for lack of control.
00;13;58;00 [Bud]: Right.
00;13;58;03 [Jason]: And lack of marketablility?
00;13;59;00 [Bud]: And a lot of time it's planning for 3 years from now, you know.
Maybe I should buy out my silent partner now at a known price with
the expectation that if I grow at 20% a year for the next 3 years, I
really
00;14;10;10 don't want to share that future growth with a silent partner. Not
trying to be mean or cruel or anything, but you know, maybe it
makes it sense to buy that person out, replace that with some debt.
00;14;23;13 [Jason]: Yep.
00;14;23;18 [Bud]: You know, that doesn't have an equity participation. And you
know, those are all part of that, that process. And I think that's the
thing that we try to help our clients, is if they're not thinking about it,
if the account hasn't brought it up, let's talk about those kinds of
issues.
00;14;35;26 [Jason]: Yeah, those are huge and whenever I see people in
partnerships, multi-member LLC or whatever, and they're not
married to each other, so they have competing personal interests,
at least on some levels,
00;14;50;10 just naturally. I'm always like, what's the agreement? What's the
operating agreement?
00;14;55;22 [Bud]: Right.
00;14;56;03 [Jason]: And you know, more often than I'd like to think, they don't
have one at all or they've bought some boiler plate one
00;15;04;26 [Bud]: Right.
00;15;05;26 [Jason]: Off the internet, you know, five years ago and everything's
great. And you know, marriage is all about love, and divorce is all
about money. And when, when you go through a business divorce
00;15;18;24 [Bud]: Right.
00;15;19;07 [Jason]: Whether you're amicable and you're like, Hey, we're in
partnership together and now we're going to sell, how does that
look?
00;15;26;23 [Jason]: And if you don't have the agreement back when it was
easy and about love, and now it's tough and about the money
00;15;34;17 [Bud]: Right.
00;15;34;23 [Jason]: It's really hard to, to get
00;15;36;13 [Bud]: It, it is.
00;15;36;22 [Jason]: People to negotiate.
00;15;37;29 [Bud]: Right.
00;15;38;03 [Jason]: In good faith.
00;15;38;28 [Bud]: Making sure documents are up to speed and they're actually
signed and dated and things like that, little things like that.
00;15;43;23 [Jason]: Oh, yeah.
00;15;43;29 [Bud]: Really make a difference. I, I have a, a partnership I, I bought
a with a, a group of 20 clients 27 years ago, 4 Quick Stop stores in
Lincoln, Nebraska.
00;15;55;10 [Jason]: Okay.
00;15;55;18 [Bud]: And we are just selling them this month.
00;15;57;25 [Jason]: Wow.
00;15;58;15 [Bud]: Twenty-seven years collecting triple net lease income,
everybody extremely happy. But like you said, you know, I had to go
back into the file and figure out, okay, where's that operating
agreement?
00;16;08;15 [Jason]: Yeah.
00;16;08;20 [Bud]: That tells me the process that we can use to, you know,
validate the sale amongst the partners and what's the split look
like? And
00;16;15;12 [Jason]: Right.
00;16;15;17 [Bud]: You know, all that kind of stuff. And, and, and had been so
long since we had actually looked at those, I, I had no idea what it
really was.
00;16;22;02 [Jason]: Right.
00;16;22;16 [Bud]: The good news is, is I get a nice cut of the profit.
00;16;24;25 [Jason]: [Laughter]
00;16;25;15 [Bud]: So I'm happy.
00;16;26;11 [Jason]: So you found the agreement that you liked.
00;16;29;07 [Bud]: Well, it was the original file.
00;16;29;21 [Jason]: There was like 4 or 5 of them.
00;16;30;23 [Bud]: I was pretty smart back then.
00;16;33;19 [Jason]: So, so we're selling the business, you know, that can take
on all kinds of different shapes too, right? I mean, we could, we
could get that sunset check where, hey, here's a check, see you
later hit the bricks. Or oftentimes it's got some structure to it and it
might more look like a
00;16;53;11 merger.
00;16;53;25 [Jason]: For example, you might say, Hey, I'll buy another financial
advisory firm. I'm going to give you X in cash, I'm going to give you
Y as a note. Or you're going to take back a note for Y, and then I'm
going to work for you for another 10 years at, at Z, you know, and
that's going to be my
00;17;12;06 downline compensation
00;17;13;22 [Bud]: Right.
00;17;13;25 [Jason]: You know. So it's not, you know, business sale doesn't
always mean getting out of the business.
00;17;19;28 [Bud]: Right.
00;17;20;10 [Jason]: It just might mean, Hey, I'm changing my role, I still want to
be paid a certain amount or whatever, and that can factor into that
too, right?
00;17;28;11 [Bud]: Yeah, absolutely. You know, and then you've got typically
something about, you know, client retention and revenue growth
that's tied to some of those
00;17;36;24 [Jason]: Some guard rails. Yeah. Like, hey, if revenue drops off
more than this, then it's reduction in note. Usually it's, that's how
you see that, as it's a note reduction. And if revenues go up, you
know, and you can isolate that revenue to that
00;17;52;06 new revenue that you bought, then there's an incentive for that to
go up as well.
00;17;55;26 [Bud]: Yeah.
00;17;56;06 [Jason]: So, what else did you want to add for our viewers and
listeners about selling their business?
00;18;02;22 [Bud]: Well, you know, it's an emotional event, right?
00;18;05;01 [Jason]: It's huge, it's their babies, it's what they grew up on, you
know.
00;18;07;17 [Bud]: Sometimes it's just recognizing that we've gone from the
youngest person in the room to the oldest person in the room and,
and it's just like 2 finger clicks, right?
00;18;16;09 [Jason]: Yeah.
00;18;16;11 [Bud]: It's like, how the hell did that happen, you know? And, and so
it's understanding that, you know, it's time, you know, do it when
you're healthy, when you're, you know, what we've experienced in
our careers is people who've waited too long.
00;18;28;29 [Jason]: Sure.
00;18;29;17 [Bud]: And weren't able to
00;18;31;17 [Jason]: Or the buyer pool's shrinking up.
00;18;32;23 [Bud]: Enjoy life, right? You know, there is fewer and fewer people,
but you know, so if we want to encourage our clients to look at
these things, right? Don't be afraid of it, but see, hey, am I, am I
ready for this? Emotionally, financially, and if it's the right time, you
know, go enjoy
00;18;48;25 life.
00;18;49;19 [Jason]: Some, some of the emotional side of it is, is a challenge.
I'm 47 years old, right now my fuel is working for WCG Inc and, and
doing all that stuff and I don't know what I would do with myself
from day to
00;19;06;09 day. Now, of course I'll find things to do but will, will it be my fuel?
Right?
00;19;11;08 [Bud]: Right.
00;19;11;13 [Jason]: And will I drive Tina crazy, you know?
00;19;14;01 [Bud]: Probably Yes to that.
00;19;15;20 [Jason]: Yeah.
00;19;16;01 [Bud]: Probably already happening.
00;19;16;13 [Jason]: Sure. Yeah. I was going say, I'm sure it's already
happening. But, but we can't as, and I think, again, given your
experience that adds a lot of value to your counsel because I think,
again, a lot of people just
00;19;30;20 look at the black and white.
00;19;31;22 [Bud]: Right.
00;19;31;29 [Jason]: And don't see the downstream emotional conflict now. Like
what's gonna happen to the marriage now that there's all this free
time? And what's going to happen to the marriage when now
there's more of a financial throttle?
00;19;45;24 [Bud]: Right.
00;19;45;29 [Jason]: Or a bridle on the spending and all those things? And
people get through it, sure, but you have to address it.
00;19;52;07 [Bud]: Right. You know, I have a client, you know, he's a couple of
years younger than me. He, he was done, right? And.
00;19;58;07 [Jason]: Just check out of his business, mentally?
00;20;00;04 [Bud]: You know we, we really spent 20 years preparing him for that
moment.
00;20;04;12 [Jason]: Okay.
00;20;04;26 [Bud]: And, and it worked. It, the plan actually, you know, with twists
and turns, worked. So he's now teaching a science class at
Cheyenne Mountain High School, right? Loves it. You know, just as
happy as can be.
00;20;18;10 [Jason]: Yeah.
00;20;18;15 [Bud]: You know, and, and that's just probably, you know, one stage
in the journey.
00;20;22;07 [Jason]: Yeah. No, I'm, I'm like that too. I always say, Hey, what's
my next chapter?
00;20;26;15 [Bud]: Right.
00;20;26;22 [Jason]: You know, do I help other CPAs grow their business? Do I
go teach small business accounting at the local college? Because
that's a sorely lacking subject, you know? A lot, there's a lot of
things you can do
00;20;40;20 [Bud]: I think so.
00;20;40;25 [Jason]: To give back, you know provided that you can do it on your
own terms too.
00;20;44;03 [Bud]: Right.
00;20;44;22 [Jason]: Because you know, you just came from a job, you don't
want another job.
00;20;48;08 [Bud]: Well, you know
00;20;49;02 [Jason]: And this job was tough, you know.
00;20;51;04 [Bud]: Well, they say, "Working ain't all it's cracked up to be."
00;20;53;04 [Jason]: Exactly. Well I always laugh too, because people say I
want to own my own business. I'm like, Oh no, no, no. You, I'm
sorry. No one told you this. But business ownership doesn't mean
you own the business, It means you, it owns you.
00;21;04;12 [Jason]: That's where the word ownership comes in.
00;21;06;17 [Bud]: Well, you know, that's exactly right. You've got, you know, so
many people, maybe, depending on you to make good decisions.
00;21;14;02 [Jason]: Yeah.
00;21;14;12 [Bud]: Right? Not only your livelihood, but theirs too.
00;21;18;18 [Jason]: Yup.
00;21;19;15 [Bud]: They're counting on you to make the, HR decisions, right?
You, they know when somebody needs to be out the door cause
they're causing too much strife.
00;21;29;12 [Jason]: Right.
00;21;29;16 [Bud]: If you can't figure it out, they do.
00;21;31;17 [Jason]: Right.
00;21;32;14 [Bud]: And so, you know, all of a sudden that comes into play. You
don't learn that right off the bat, it takes time to figure that out.
00;21;37;15 [Jason]: Totally. No, I agree.
00;21;38;06 [Bud]: But you know, like we, we talked earlier, you know, my son
Chris is in Steamboat.
00;21;42;09 [Jason]: Yes.
00;21;42;21 [Bud]: And so he's, he loves construction and he's a builder and so
we've worked, you know, build, created a company. And so I'm
really just enjoying, you know, that aspect of it. So I talked to him
almost every day,.
00;21;54;09 [Jason]: Yeah.
00;21;55;12 [Bud]: Which is part of that whole transition over time.
00;21;57;08 [Jason]: Yeah. No, I agree. I think it's awesome to be able to see it
in the beginning because far too often we only get the call at the
end, you know? Or at least middle to end, you know?
00;22;06;25 [Bud]: Well, you're trying to plan it on your terms, right?
00;22;08;19 [Jason]: Right, right. No, totally. You're right. You're right. So, to
recap here, just, you know, talking about selling your business, is
timing right? We don't know. We have to look at the plan. We have
to look at does he have, do you have enough assets to support
your lifestyle?
00;22;22;11 [Bud]: Right.
00;22;22;17 [Jason]: Is there going to be a lifestyle shift that you're willing to
accept? You know, all those, those you know, things. How's the
structure? What's the risk with this new structure? Are you taking
some, some back as a loan? Okay, what's the risk in that loan?
00;22;36;02 Can you maybe sell that loan to another bank? Who knows. All
those little things go into it. So timing isn't right for me now. Am I
getting what I should? All those things. Business valuations, huge
in, in, determining that. We also need to, of course, you know, clean
up the books, clean up the tax returns. Just, you know, again books
are designed to maximize value, in some
00;22;56;24 respects. Tax returns are meant to minimize tax and sometimes
they don't always agree. And we have to make sure that we're, you
know, showing good value in both
00;23;07;23 the tax
00;23;08;06 [Bud]: Right.
00;23;08;25 [Jason]: Return and the financials. And then we talked about those
contracts as well, cleaning up the employee contracts, any kind of
longterm trigger obligations.
00;23;17;02 [Bud]: Absolutely, you know? Know what they're getting and know
what we're giving them.
00;23;19;23 [Jason]: Yup, exactly. And then, you know, then, then what do you
do after the sale? The emotional response because for me it's, it's
my feel. I get up in the morning, I think about business. And, and
there'll be a day when I wake up in the morning and I think about
00;23;35;21 fishing. But, you know, and, and hopefully that'll be my fuel. But
right now I can't see it happening.
00;23;42;11 [Bud]: Now you've located right across from the golf course.
00;23;44;16 [Bud]: I can't imagine you wouldn't at least try to at least swing the
club once in awhile.
00;23;47;21 [Jason]: But I'm more of a dirt biking guy.
00;23;50;16 [Bud]: Well, that's okay, too. I like that.
00;23;51;01 [Jason]: With a bourbon drinking problem, that's easy. So anyway,
Jason Watson, thanks so much for joining us um, Bud.
00;23;58;04 [Bud]: You bet. Again, Jason Watson with WCG Incorporated, local
tax and accounting firm. Bud Rainberger with RWA Partners, here
Thank you for having me. Also in Colorado Springs. We're hosted
by Axe and the Oak, here also in Colorado Springs. Part of our
Bourbon and Business tour, and we'll talk to you will soon.
00;24;14;06 Thank you.