Selling a business is complex, and many owners need experts to guide them through the process. Exitwise founder and CEO, Todd Sullivan discusses how his team advises and guides entrepreneurs through the exit process.
Benzinga: How is Exitwise different from a more conventional investment bank?
Sullivan: We are a marketplace for founders to meet and hire the best, industry specialized, M&A experts in the world. We have investment bankers, M&A attorneys and other transaction specialists who focus on a single industry and who know their industry’s buyers intimately. For example, we have one investment banker who focuses on HVAC services (heating, ventilation and air conditioning) and another who only focuses on HVAC distribution. We know that industry specialists create better outcomes for our founders.
Benzinga: Where are you based and how big of a network is it?
Sullivan: We have hundreds of investment bankers, M&A attorneys, tax accountants, private wealth managers and M&A insurance brokers globally. Most of them are in the United States, but we also have M&A experts in Canada and Europe.
(Note: Exitwise investment bankers include people with experience working at some of the most prestigious investment banks such as Perella Weinberg Partners (NASDAQ: PWP) JPMorgan Chase & Co. JPM and Goldman Sachs Group Inc. GS.
Benzinga: How has your background shaped the formation of this company?
Sullivan: In the last 25-years, I’ve built and sold four companies. They may not have been the most well known companies, but I figured out how to sell each business, either by myself, or by hiring M&A experts.
I was then asked to sell a business by a venture capital firm. I was the right person to sell the business because I knew everything about that business, the founder, the industry, the competitors and I had an intimate knowledge of the potential buyers so we were very successful. But that wasn’t the case when I was asked to sell the next business in an unfamiliar industry. That’s why Exitwise was born to match the best M&A expert with each founder to make sure we maximize every exit.
Benzinga: How do you target businesses looking for an exit?
Sullivan: First, we focus on our personal networks as former business owners and fellow founders and we tap our global network of M&A experts who refer their off-target deal flow to us. So today, we are growing entirely on word of mouth but we don’t just want to hear from business owners themselves; we want to talk to their friends and trusted advisors because we can pay referral fees for intros to business owners looking to sell.
Benzinga: What kind of businesses are you looking at to sell?
Sullivan: We are looking generally at businesses with $2 million to $25 million EBITDA (earnings before interest, taxes, depreciation and amortization). Most of the companies we end up selling have a value between $25 and $100 million.
Benzinga: How are the M&A markets faring in these uncertain economic times?
Sullivan: So far, the public markets don’t seem to be affecting M&A in the lower middle market which is what we service. The consensus is that last year there were a ton of PE (private equity) firms raising capital, and they don’t get paid until they deploy that capital. I think we are going to see a ton of activity over the next two years; there is more than $1 trillion that needs to get deployed, and there are a lot of hot sectors.
Benzinga: Why can’t businesses just sell themselves? Why should they come to you?
Sullivan: CEOs often want to try to sell their businesses themselves, and I tell them if you're trying to get less than $5M, go for it but you will leave money on the table. I also warn them that if they try to sell themselves they will likely take their eyes off the business and it will slip. This is the worst thing you can do when trying to sell your business. For us, we’ve been through the M&A battle personally many times and we understand most of the challenges you will face. If we get the opportunity to work with you as a client, we’ll consider it a true honor to be part of your entrepreneurial journey. We build personal relationships with all our clients because we are a “founders first” firm, one client at a time.
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