EP 109: Books and Records for Optimum Sales Price with Matt Remuzzi

Ed Mysogland  0:19  
welcome to another episode of the defenders of business value podcast, I'm your host, Ed Mysogland. This this episode, you know, there's probably nothing more important in deals than accounting and, and the integrity of the financial statements. And, as I've said, on the podcast, many times valuation, you know, its its earnings, its growth, its risk, those three things drive value, and you have to have good earnings, you had peep and confused buyers don't buy. And so today, I've got Matt, remotely from CAP forge on the podcast. And he, he has, you know, Cap Borges out of out of California, they are an accounting firm, and they do tax prep, payroll coaching and advisory services. And the thing that I I really like about Matt is that he was a deal guy before all of this. So he understands the ins and outs and what's going to be required of his, his business owner clients. And that's why I invited him to the show that, you know, he's he's gone down this path a number of times, not only as a as a deal guy, but also now as, as someone serving in the accounting profession. So I am 100% certain that you're gonna get a lot out of this episode. So enjoy my conversation with Matt re mozzie from CAP porch. Well, Matt, welcome to the show.

Matt Remuzzi  1:49  
Thanks for having me. I'm happy to be here.

Ed Mysogland  1:51  
Well, well, I'm glad you are here. And And as we're, as we're recording this in mid November, you know, one of the things that I keep on thinking about is those business owners that are going to begin talking to their accountants about perhaps selling. So, so one of the things I wanted to at least start off with is to talk a little bit more about your practice and how you're serving the small business community, because I do and that's the point of this show. I mean, we're serving the underserved, you know, giving him some information that they probably have never or haven't heard enough, you know, over the course of their, their time in business. So he talked a little bit about CAP Forge and what you guys are doing? Sure,

Matt Remuzzi  2:39  
so we are focused on small businesses, we do bookkeeping and tax, bookkeeping is sort of where we started. That's our bread and butter, we've added tax over the years. And another area that we've added is really helping our clients think about selling and get through the process of selling. My background before I got into this was I was actually working as a business broker. And what would happen was, right, the first step in somebody says, Hey, I'm thinking about selling my business, or I'm interested to Great, let's figure out what the business is worth. Let's do that by taking a look at the financials. And then they go, oh, yeah, the books Yeah, they're, well, they're six months behind, or, you know, my, my Aunt Susie doesn't, you know, and die. She's not really a bookkeeper, but she needs something to do. So we let her we let her mess around in QuickBooks, or, you know, there's a million different stories, but they all added up to the numbers were not necessarily current, not necessarily done correctly, and certainly not optimized for selling the business. So that was sort of how we got involved in aside from doing the bookkeeping and tax, we worked with a lot of our clients and a lot of business brokers, who were working with their clients getting ready to sell. And obviously, that's why, you know, you and I are chatting about this, because that's a big part of what our practice involves is helping small business owners take their books from Okay, or maybe not okay or not, you know, not even in existence, and getting them to the point where they can use them to get, you know, a premium valuation and really have a painless sale process where there's not a million questions coming up and due diligence about, Hey, what is this and what happened here and what's going on? So, quick answer to your question is we're an accounting firm bookkeeping and tax, but we have this side hustle, if you will, in working with business owners who are thinking about selling well, and

Ed Mysogland  4:38  
that's why we start there. So you you refer to optimizing for sale. What does that mean to to a business owner?

Matt Remuzzi  4:47  
Well, there's two parts to it. The Part one is just having clean accurate books, which sounds like I mean, isn't that what everybody should be doing? Isn't that a pretty low bar? But it often, you know, it isn't a lot of business owners, you know, they will books or what I just have to do before I give everything to my tax guy, right? Or my even maybe my tax guy put something together, I just give them a bunch of bank statements. But if you think about it from a buyer standpoint, right, they want to understand and have confidence and what am I really getting with this? How much money is really coming in? What are the expenses, how much is the owner getting to keep, and that oftentimes isn't the number on the tax return, right? When you when you think about doing your taxes, you want to show as little profit as you can or even a loss, right, because that means you pay less in taxes. But on the flip side, as you know, you want to sell it. Now, ideally, you want to show as much profit as possible, because that's going to directly drive what this business is going to be able to sell for. So step one is just having accurate, you know, complete books, that's, that's the baseline, but from there, then optimizing it to us means going through and pulling out all the personal stuff, right, we don't want to take it off the books, but we want to separate it out. Because that shouldn't really count against the value of the business. One time events, things that, you know, may have come up, let's say, you know, somebody sued you and you had a $25,000 legal bill defending yourself, the new owner isn't going to have to pay 25 grand in legal fees. So even though that was a real expense, the business paid, let's move it down into the section of other expenses, that won't again, count against how the business actually did. It's not part of your normal operations, not part of your normal expenses. So our goal is to go through with the owner, and really pull the business apart. So that we can document clearly and transparently for any buyer that's interested or the bank is going to potentially provide financing for this acquisition deal. Exactly how much business the business is doing separate from all that one off stuff, the tax write offs, the one time events that, you know, sort of pollute the activity, but aren't really what a new buyer is going to inherit and what doesn't really impact how the business itself operates?

Ed Mysogland  7:16  
Well, you know, one of the, and it's just happened in the last a year, maybe 18 months, you know, we're starting to see, sellers preempt the quality of earnings reports that the buyers typically do. And, and and some of the sellers, you know, how, I guess from a, I don't know, if you do any QB work, but the, you know, the question is, you know, how do you I think it's a great idea. To me, I think you you're substantially changed the, the negotiating leverage with with the buyer, if you hand them a, you know, whether it's a limited QV, or whatever, it's something that says, you know, what, you can rely on this will rep and warranty, the these numbers, more so than then, you know, just kind of take it at face value. So I guess my question is, you know, give me the wraparound service, how does how does that work? When someone says, you know, I'm going, I'm going to put the business on the market, I need your help. Tell me what your what qv means to you, and how that relates to the buyer? Yeah,

Matt Remuzzi  8:32  
and you're right. And we've been getting more and more requests from some of the brokers we work with, Hey, I've got this business, they have 5 million in revenue, you know, 1,000,000.5 and EBIT up, before we go to market, can you just look everything over? Review? You know, pretend you're the due diligence team, which we do plenty of that as well. What would you find? What would you have questions on? What do we need to backup? And and make sure that we have good answers for or just clean it up to preempt even there being a question? So that's exactly what we do. We essentially put on our due diligence hats, as if we were working on the buyers team. And we go through the whole thing from top to bottom and say, you know, can you explain this? This doesn't make sense. Why is this here? What does this transaction what happened? And anything that can be moved or cleaned up or recast in a way that's going to either prevent the question altogether? Or at least give us an easy way to answer the question, we'll do anything that just, you know, let it happen. There's no way to fix this, but at least we already Okay. Here's the bullet points. Here's the explanation. Here's the backup documentation. So that way, when you're sitting at the table with a buyer, right, and you've either pre done this and given the report or you're at least ready, right, they're gonna say, Hey, I noticed in June of 2022, this thing happened and you go I'm glad you brought that up. Here's exactly what happened. And here's the backup. Here's the bladders, the bank statements or whatever it is. And then the buyer goes, Oh, wow. Okay, great. Well, I appreciate your note. And he's added that. And that makes a lot of sense. Because if What if the other thing happens if they go? Well, hey, what happened in June of 2022? And you go, I don't know what you're talking about. Let's see. Oh, you go, Oh, wow, that's yeah, I don't, I'm not sure why that's like that. You are the seller just lost about 20% off the shelf? in it. Not even a Yeah. Even if you could explain it later. Right. Just the fact that you weren't ready, and you didn't have to, and you have to go, Oh, I gotta ask the accounting team. I'm not sure. You know, that just loses credibility. Because even if you can explain it, the buyers mentality as well, I found that they didn't even tell me about it. I found it. What else haven't I found that I didn't ask about? It's laying somewhere in there undiscovered. And they immediately feel like, well, there's more risk in this deal? Because I don't know what I don't know. And now I'm nervous.

Ed Mysogland  11:00  
Yeah. And, yeah, and it's funny you say that, because one of the things that, and I guess one of the questions that I know everybody asks is what's the difference between quality of earnings and an audit? You know, what, and, and there's, there's a pretty big distinction.

Matt Remuzzi  11:20  
Right. And there's also I mean, people talk about quality of earnings and quality of earnings light, right? So it really has to do with the size of the deal, and the amount of money you're going to invest upfront. In doing this analysis, and also the level of liability, you're going to transfer to the people who did the review. Right. So most small business deals kind of come stamped by the broker with a disclaimer that says, look, the seller gave us the stuff, you know, we think it could, it could be good, it's really up to you, as the buyer to do your homework. When you go, you know, you get a quality of earnings, or an audit, then you're getting into you're involving a third party who's not only doing the review, but also signing off on it and saying, you know, to the best of our professional experience, this is accurate, and we will incur some liability to that factor, right. If it turns out, you buy the business or later discover we were way off base, and there was a lot of problems, that accounting firm, is now going to have some liability to the seller, potentially the buyer to make this thing hold because they signed off on it.

Ed Mysogland  12:27  
So I'm certain everybody's gonna ask the same question, what does something like that costs? And I know it markets vary, and so on and so forth. But I mean, I always tell everybody, you know, brace for a five figure, you know, this is a, this is a five figure a conversation you're gonna have. And and so that's part that's part one of the question, but part two of the question is, does it preserve value? Or does it amplify value? If you hand somebody quality of earnings? Do you? Do you get that money? You know, it's kind of like fixing your bathroom or your kitchen or whatever in your house? You're going to recover that, that on the sale? Do you recover? You know, when you do that kind of the preliminary work? Do you recover it on the back end?

Matt Remuzzi  13:12  
Right. So to address the cost first, you know, when we do a review like this, it really depends on the size of the business and the complexity of the business. So we do we work with businesses that go from six figures to eight figures, and the report, you know, in the process can go from two or 3000 bucks for a small business that doesn't need a lot to 10,000 15,000 for a large business that needs a fair amount of digging in and, you know, recasting and so on, I would say the average cost for one of our clients with a seven figure, you know, sort of mid range business 7500 to 10. Grand. Now, very important question that you asked, right? What is this? What do you get for your money? And he essentially, is the is the question. What I see over and over again, is two kinds of clients. One kind of client comes to us, or somebody like us doesn't have to be first right before they go to market. You see, let's do this ahead of time. And if it's done, right, like I said, you you preempt a lot of questions, you fix a lot of things. And a lot of times what we can do is we'll dig through and find more value to add back that the broker didn't find and the seller didn't realize they could write on those one time costs those Well, you know, who's Doris? Oh, Doris is my aunt. We put her on payroll, but she doesn't really you know, well, you're paying her 80 grand and you're telling me she's doing 15 grand worth of admin work. So there's a there's a Delta there that we can capture and put back and then if you sell it for x multiple Doris is now worth 240k You by identifying it. Oh, I didn't even think of that. So we're on the hunt for a value that we can bring back to the table for this seller. So that's one way you recapture it when you do it ahead of time. And the other thing that happens is when we do it ahead of time, the business gets listed at the right price. And typically the first buyer that comes who's qualified, closes the deal. So There's time saved in from the start of listing to the close of the deal, you generally only go through it once because it doesn't fall out and due diligence. The other client that comes to us is we've had two buyers fall out why? Well, both times they have found all these problems in the financials. So we really realized we need to fix that before we can go back to market again. All right, well, you you burn nine months, and legal fees and everything else, falling out, binding, you know, their due diligence team found all these problems, but now you've got to fix them before you can go out again. And now you know what, and the third buyer comes along and goes, what happened with the first two buyers? Now you got to tell that story. So I think you've added value by doing it upfront, if there's more value to capture, which there often is and to you've saved, that time of being burned on two or three deals that fell apart before you finally decided, hey, I guess, you know, we can't just blow this off and say, you know, it is what it is, we really need to fix and address these problems and be able to explain it to a buyer. And then the will be able to actually get to the finish line with this.

Ed Mysogland  16:24  
Yeah. Well, I'll tell you, one of the things you mentioned is is finding things to add to the to the cash flow as opposed to take away. You know, and and I didn't look at it that way. Because I know, normally the folks that we're squabbling with, you know, they have put so much on there. And it's like, man, it's he can't do it, no one's going to buy, no one's going to buy into this. And, and unfortunately, then we're taking it away. But it's interesting that it can go the other way to that, you know, things that that you hadn't thought of? Have you seen any interesting ways that that this, you know, that this has done? Like, for example? I've I've often thought, yeah, as a deal shop, maybe we ought to bulk up the retainer and pay for the QV. ourselves? And and have, you know, that's just part of the deal costs so to speak? Have you seen any interesting ways that that sellers have gotten that accomplished? Or is either one or either some guy, some guy like me pays for it or, or they pay for it?

Matt Remuzzi  17:33  
It's we definitely have brokers we work with who pay us rather than having the client pay us. It, I think it depends on how the conversation goes, right? And how valuable the seller perceives their deal to be and how valuable the broker perceives the deal to be as to who they can get to pay for it. Right? So sometimes, right? If it's, if it's a marginal deal, and you sit down with somebody who's an intermediary, and says, Look, if you take it to market as is, you're gonna get x. But if you can go work with CAP Forge, and get this cleaned up, and get this right, I can get you to x. And I almost don't even I'm not even willing to take it to market at the 1x. Because it's going to be such a headache, and the buyers are going to shoot this thing to pieces with all their objections and questions. It's almost unmarketable without fixing it. But if you fix it, now, you've got something legit. Right? So those people they come to us, and how much is it? And then they make now if the broker goes, Look, this is, this is a fantastic business, even with these garbage financials, I'll pay for to get it fixed, just so we can sell it and get your premium. Because I know what's going to sell either way, but my job is going to be so much easier if I don't have to fight with the broker over all these, you know, well, what's this and out of that, what what's going on. So it's it goes both ways. But either way, it's facilitates the ability to sell sometimes to sell it all. And sometimes to sell it the price you could get versus the price you're gonna have to take. Interesting.

Ed Mysogland  19:01  
So let's, let's talk about the the financials. And, you know, where are the common areas that you see that? Yeah, it's like, man, if you guys would only just spend the time to fix this. We were in the income statement and balance sheet. Are you? Are you seeing the most value leakage for lack of a better term?

Matt Remuzzi  19:26  
Oh, gosh, I mean, it's kind of all over the place. You know, one of the things we see all the time is commingling. Right, either between business and personal or multiple businesses, right? With multiple business business and personal, you can pull it out for the most part and make the case although some expenses, you know, depends what it is right? If it's let's say it's a it's a landscape architecture business. It was well, those are supplies were from my house. Well, how do you know how do I know right? Really,

Ed Mysogland  19:55  
I get we get

Matt Remuzzi  19:55  
that right that happens. But the other thing is when there's when somebody He owns multiple businesses. And they go, oh, you know, Joe and Bob and Jane, they work for this business. But they also, I mean, they mostly work for the other business. So, again, okay, well, how do we, how do we know? You know, how does that really split out? So if you can work that out ahead of time, do the allocation, come up with a backup? Or take them off all together? Right? We don't, we don't really need them. I just started I pay them from here, but they work over there. It's just always been easier. You know, all that kind of stuff that happens, this sort of, hey, look, Island, all the businesses, so who cares? Well, no one cares until it comes time to sell. And now, people care now, if you have to pay attention to that. So

Ed Mysogland  20:40  
how long does it take to? Like if I, if I unwind that? Alright, so I've got I've got I've commingled payroll. And, you know, how long, you know, before? How long before the buyer can say I, you know, I mean, we I guess we readjust, right. So we basically rebuild the income statement to reflect that, you know, does it? I can't imagine that it's, it's helpful, you know, not helpful from the standpoint of, I think, you know, confused buyers never buy period and the story there, you know, if they can't figure it out, you aren't selling. But what I where I was going with it, is that alright, look, so we rebuild, it? Does, does the buyer, does the buyer look at and say, Alright, I can go with that? Or is there a value penalty that accompanies it? You know, it's like, like you were mentioning earlier that, you know, you got junk financials, you know, and now if I find it, you got a value penalty, you disclose it, you've probably not in or not as much. So I'm just curious to get your thoughts on, you know, we've now we're now rebuilding a set of financial statements, how that was a reliable, but how, you know, how does the buyer perceive rebuilt financials that you do?

Matt Remuzzi  22:11  
You know, usually what I'll say is the truth comes out, right? So if you say, Well, look, I took this person off payroll, because they're paid from this company, but really, they mostly work with the other company. So we made a small allowance, and that's the truth. If they'll accept it generally at face value, but then if they go and talk to some of the other employees, and they go, yeah, she was here all the time. You know, she worked late came early. She worked on weekends ago. Oh, wait a point. Oh, hold on. We've had cases though. Like with the last couple years, right? Shipping has been crazy. We have some clients that do e commerce, right. So shipping has been a big thing. We've done recast financials, using today's shipping costs. Like if I was paying today's rate for the last 24 months, instead of these crazy up and down all over the place. COVID rates, this is what I would have made. Now these are these are our final financials. This is an XL recast to show you what would have been. But look, here's the invoice today for shipping. Here's the last three, here's the price I'm paying. And if I had been paying this price all along, this would have been the margin now. Yes, I didn't make as much as that because of this. But that's the only reason and here's today's prices. Again, most of the time the bile go. Yeah, I mean, that makes sense. Right? You know, the shipping craziness is not You're not making it up, I can go find it in the news. I can see the invoices from today, I can see the math don't make sense. So buyers are, you know, buyers are open to that as long as the story. You know, keep it simple and keep it true.

Ed Mysogland  23:47  
So that's, that's a great, keep it simple and keep it true. What from a lending standpoint, though, you know, I, I know that, you know, commingled financial statements or commingle financial statements that tie into the tax return, I don't say is the kiss of death, but boy, it makes life a hell of a lot harder than than it needs to be so. So I guess you got you got any tips and tricks to survive the scrutiny of the of the lender? underwriter?

Matt Remuzzi  24:20  
Yeah, I mean, a lot of that comes down to who the lender is and who the underwriter is as to how much slack they will cut you. But I will agree. I mean, their standards are significantly tighter for that kind of understanding than a buyer. So if you know you're going, you're in a market space market size, where the buyers are going to be predominantly dependent on SBA loans or financing like that, you know, that's the standard you have to meet. So, if your stuff is again, a total disaster of commingled garbage, you're going to have to clean it up and then be run things for 12 months through at least one tax return cycle before you're going to be legitimately able to sell Oh, somebody that needs to go get a loan. If the other war you take a very low price from somebody who's can come up with some deposit, and you're gonna carry a seller's note that, you know, you kind of have to, and this is why don't try and don't decide tonight you want to sell your business and then listed tomorrow, right unless you want the lowest possible price. If you're thinking you know, an exit isn't my future, then start asking the questions now, who would the buyers be? What kind of financing? What kind of requirements are they going to have? And then you know, you've got a nice runway 12 months, 18 months to get that really set up. And now when it comes time to list all your ducks in a row. In fact, you could even go on pre qualify the business for an SBA loan, which is a great jam to have in your listing, right? SBA pre qualified that tells them we've already we already know the hoops, they're going to ask us to jump through and we can jump through those hoops. That's a good point.

Ed Mysogland  25:53  
What sale prep sale prep services that you guys do. I mean, you I know, You've touched upon and you know, qv and cleaning up books. When you're when you're consulting with these people that are that are starting down this path, what what are those conversations? Like?

Matt Remuzzi  26:12  
It's really, you know, look, the, the predominant way that you get the best price for the business is by having the most profitable business that you can. So and that's good to do whether you sell it tomorrow, or you sell it two years from now, right? Why wouldn't you want to optimize the business? So let's look at all the places that overtime as a business owner, you kind of take your eye off the ball, and stuff accumulates excess inventory accumulates excess assets, right? I would not too long ago, we did a project for a guy at a street sweeping kind of company, or the kind of things that go around the city at night parking lots of whatever, he had nine street sweepers, only four of them ever went out of the yard? Well, what do you do and and, you know, access employees, you know, access, sometimes people sign up for all kinds of software subscriptions, they haven't used that and yours will quit paying for it. Or, you know, just all that kind of optimization stuff. Again, you know, some of our ecommerce sellers, they'll have 50 different skews that they're selling and 10 of them they lose money on we'll dump that in, get stop selling that stuff. Now, well, you know, net net, we make money well, net net, you'd make more money if you stop selling money losing products. So it's really, you know, the process you go through to sell the business is also the process, you should just go through in general, as a business owner to run an optimal business. Now we all get lazy and tired or you know, work life balance, or whatever, you don't always, you don't always have to keep everything screwed down to the tightest, you know, right. But if you're planning to sell, those are the kind of house cleaning things that you want to do. It's not dissimilar to when you go to sell your house, right? You go through you paint the chipped walls, and you fix the squeaky door and you do all that, you know, the windows granite was missing, you put all that stuff, you can live with it, because who cares at your house, right? But then when a buyer is going to come and look at a cause paint chips, squeaky door and missing screen, you fix all that stuff. And now you get a better price because he doesn't look like a fixer upper anymore. Same thing with the business.

Ed Mysogland  28:17  
Right? The it's funny you say on the on the subscriptions. One. And this is this was a tip that somebody else had given was at the end of every year this guy changes his his cancels his credit card and just gets a new card with a new number. And it forces his team to see you know, ever all their recurring charges and, and he good on him. Yeah,

Matt Remuzzi  28:46  
that's a good way to do it. Because he's saying, Oh, well, this canceled I didn't even know we had it. Well, then obviously not gonna renew it. Right, who cares?

Ed Mysogland  28:55  
I mean, it's it's kind of low hanging fruit, but But it got it gets the job done. One of the things I wanted to talk to you about had to do with winding the company down two things. One, what's it look like transitioning accounting to the new buyer? Yeah, well, how does that occur? And how painful is it? For everybody, I guess. And that so that I was yeah, let's start there.

Matt Remuzzi  29:26  
So it could go either way, right. Most of the businesses that we deal with do asset sales. So an asset sale the buyer has their own entity, and the sellers entity stays on, but they're transferring their customers and their IP and their assets and everything else. So the new owner is basically starting books from scratch, but they can use essentially the same chart of accounts and set up invoicing the same way and copy over vendors and customers and everything. And you know we do that kind of project all the time. It's really not that painful and in some ways, you know, it gives you a chance as the new owner to optimize, right? This guy had all this stuff in here that we don't even need anymore. So again, it's like, let's start fresh and just really set it up for success, this time don't carry over any legacy baggage that we don't particularly need. If it's a stock sale, then the entity doesn't change at all it continues on, it's just the ownership of that entity changes. In that case, nothing really changes with the books, they go on exactly as they were, it's the same everything, just, you know, new ownership. So that's even easier. But in either case, you know, that's a project we do all the time. And it doesn't have to be a disaster, as long as you take care of it right now, some people get the new entity set up, but they don't get around to getting a bank account. So they're still using another guy's, you know, bank or merchant account at all. You credit me this and then you can make it is.

Ed Mysogland  30:55  
Yeah, it doesn't have to be. Okay. So, so one of the things, one of the last questions I had had to do with projections, and you you help you help your clients make projections, right? Yes. I mean, how, you know, from a, from a advisory standpoint, I can tell you what to project I mean, as a, as a valuation guy, I know, you know, business value is earnings growth and risk, that's all it is, from a deal guy, I'm looking at, you know, what are companies like you're selling for? So when you start putting projections together, you know, yeah, I've never, you know, I try to, you know, conservative, out, you know, conservative projections, you know, the pro formas and such. On the sell side, I'm curious to know, how you build your projections. And, you know, because I think we serve roughly the same avatar. And I'm just curious to know how, how you're, you're able to do that, because I'm, because I'm certain you are, I just don't know, how do they come to fruition? Do you ever do you ever, like circle back? And just? Because I know, I do. Whenever I, whenever I've done projects? I'm like, I wonder, you know, three years down the road? How close was I? And normally, you don't want to know that answer.

Matt Remuzzi  32:26  
Well, it you know, if the projections are because they're required, like for the SBA, right, you gotta have business plan, you gotta do projections. You know, we just this last standard 10% 15% a year, whatever, it seems conservative, they new guys gotta come with some new energy and try to grow things. But you know, those are worth exactly the digital bytes that they're printed. Completely. Crap. Yeah. So. And this is one of the things when I counsel people who are looking at buying a business, you know, I always tell them, Look, if you don't come to this deal, with a solid plan to grow it, don't do it. Right. Do do not expect to draw a cash flow machine, you can just sort of stand back and expect to maintain status quo, right? Everything, it's either growing or die. And if you're not sure it's growing. And guess what? It's die. So, you know, if you're getting into something that you're brand new to, you better start doing your homework immediately. Or even if you think you've got some experience, right, make sure I hear from people all the time. Well, you know what the current seller told me, they don't do any advertising. So I'm going to start doing advertising and that's going to grow the business. Well, how do you know, right? Did the other guy try advertising and it didn't work? That's why they don't do it? Or is the cost of ABS, you know, 3x the lifetime value of the customer, well, then that's not gonna work either. So figure out what your growth plan is, you know, the best buyers are somebody who's already well aligned with industry, right? It's a strategic acquisition, or somebody who is maybe a C level executive, they're buying into their own, but they know all the customers they've been to all the trade shows, they know exactly what the pain points are. And they go, here's my, this is my plan for my five year plan for growth pot that that that that it's all laid out. I've already had the conversations. As soon as I buy this, we've got invoices, we're ready to sand. That guy, you know, they might be 50% year over year growth. That could be, you know, so frog wouldn't put that in your projections, but that's what they can achieve. And on the other hand, somebody else who feels like, I'm just going to buy it, I'm going to manage it from a distance. I'm just going to bank the money. Okay, well, I'm gonna project it.

Ed Mysogland  34:40  
It's funny, you say that. I mean, there's so many courses and so much so much noise out there on how easy it is to buy a business these days. And I don't think I don't think there's enough people that are sitting there pumping the brakes, saying, You know what, there's a lot more to run in their business than just being able to create a real set Actually spreadsheet. And I don't, you know, I, you know, now granted, I have you know, if you if you look at the default rates on the SBA, they're not very high. I mean, that they're making good deals. So somehow some way that, you know, these projections and these people that are buying it, you know, it's good now, you know, maybe we'll see it different, you know, two to five years from now, but, but I guess where I was heading with it is, is that it's just, you can't run a business from a spreadsheet. I think you I think, you know, you see that all the time. All right. My My last question I asked, every guest I've ever had, is, if you had one piece of advice that you could give to the to a business owner, that would have the biggest impact on its value, and or scalability, what would it be?

Matt Remuzzi  35:57  
It would be start early, start the process earlier. And if you're thinking about selling, the longer the runway you can give yourself, the better off you will be. And honestly, the way I run my business, and the way I'd advise anyone else to think about running their business, is always run it like you might sell it, right? Because if you're doing that, you're not allowing excess inventory to build up, you're not overstaffing, you're not paying for subscriptions you're not using you're always keeping an eye on what is the enterprise value, the thing that I'm running, if I sold it tomorrow, how much could I get for it, and is that the best I can do if you're always ready, your financials are clean, your metrics are good, your growth is there, your profit is optimized, and I don't mean down to the last. But you know, generally speaking, you're running it as if at any point, you could sell it, then you're probably running it really well, for the most part. And you really are ready, if somebody come along and say, Look, this, what you've got strategically fits into what I'm building, and I just got a stupid amount of money from some investor, and I'm willing to pay you a stupid price. You could do that deal on short notice, which is, you know, probably not going to happen. But it's just being ready, I think, overall helps you be a better business owner. So that's, that's my advice, run it like it's gonna sell it no matter when you actually sell it. That's cool.

Ed Mysogland  37:28  
All right, well, how do we find we get in touch with

Matt Remuzzi  37:29  
you? So the best place to find us is the website, Cap forge.com. It's got lots of information about me and us and our services, and of course, an email contact form and a phone number. I'm always happy to have a conversation with anybody, whether you're thinking about selling or not, you're not sure if you want to change accounting firms or not, you know, or just general business advice. I'm happy to chat with anybody. If we can be of service. Great. I'm a big believer. And you know, it comes back to you eventually, right? Whether it's the guy I talked to, or the guy he refers me to later or something else, you know, who knows? I'll put it out there.

Ed Mysogland  38:04  
Yeah. And you can do work across the country? Yes. Oh,

Matt Remuzzi  38:08  
yeah. We've got clients in all 50 states, and actually a fair amount of clients who are foreign who own us entities as well. So we're pretty broad reaching. Nice.

Ed Mysogland  38:17  
Man, I I'm really happy that we had the opportunity to talk it was a, it was a good one. And like I said, You're the you're the first guy that does your kind of work that's been on the podcast, and 120 episodes. So I'm on it. You delivered my man. All right,

Matt Remuzzi  38:34  
excellent. Well, hopefully, if we can be of service to anybody who's listening, you know, we're happy to do it. And I think honestly, there should be more of us out there. I think this is a key piece that a lot of times doesn't get looked at until too far down in the process to where it could have been a lot more help if that had been done sooner. No. Great,

Ed Mysogland  38:51  
great point. Well, thanks, my friend and have a great holiday. All right, you too. Thanks

Matt Remuzzi  38:56  
for having me.