In this podcast, Bo Burlingham, author of "Finish Big: How Great Entrepreneurs Exit Their Companies on Top," talks about:

  • The different stages of the journey when building a business;
  • The experiences of Generation X and Y's that have exited their businesses;
  • Keys to success among entrepreneurs that find happiness after selling their business; and
  • Understanding what you want from a business exit or transition.

About the Guest

Bo Burlingham is an editor-at-large of Inc. Magazine and the author of five books, the most recent being "Finish Big: How Great Entrepreneurs Exit Their Companies on Top." His previous book, "Small Giants: Companies That Choose To Be Great Instead of Big" (Portfolio/Penguin, 2006), was one of five finalists for the 2006 Financial Times/Goldman Sachs Business Book of the Year award.

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Noah Rosenfarb: Hello everyone and welcome. It’s your host, Noah Rosenfarb from Freedom Business Advisors with really a talented guest, Bo Burlingham, the author of "Finish Big: How Great Entrepreneurs Exit Their Companies on Top." Bo, that’s certainly just one of the many books you’ve written but I welcome you to the show to talk about Finish Big. Thanks for coming.

Bo Burlingham: Well, great. It’s good to be here, Noah. Thanks for having me.

Noah Rosenfarb: So tell me how you got the idea in your mind to write this book on Finish Big.

Bo Burlingham: Well, it actually started, you know I do a column in Inc. Magazine and have for the last 20 years with a very successful and smart entrepreneur named Norm Brodsky. It’s a column that appeared monthly. Back in, I guess it was 2006, I showed up to talk to him about what was the next column we were going to do and he told me that he had just gotten back from a trade conference and that he’d met some private equity people there who had inquired about buying his business and he’d had a couple of conditions that he thought they wouldn’t meet but he mentioned them. They didn’t blink an eye and so he said he thought he was going to go ahead and negotiate a deal.

This sort of shocked me because we’ve been in business, oh I don’t know, for at least 25 years at that point, maybe more, and he always seemed to just love his business. He just had a great time doing it. I said to him, “Well Norm, that’s pretty interesting. Why don’t we write about it?” He said, “Sure, why not.” Well, I think the buyer probably could have thought of a couple of reasons why not but we went ahead and began. We wrote one column and then we did a follow up column. Pretty soon, this whole thing took on a life of its own because really, I think nothing had ever been done quite like it before with actually giving people a blow by blow, month by month account of what was happening in the negotiations to do this deal.

We developed a huge following. At one point, Norm asked because he was on the fence. He was going back and forth about whether or not he should do the deal. He asked readers for their advice and we got like hundreds and hundreds of emails from people most of them saying, “Go ahead with it, Norm.” Eventually, he decided he was going to sell the company and this is a big deal. It was a cover story in Inc. Norm decides to sell.

About two weeks after that appeared, I called him up and find out because the closing was suppose to happen that week. He said, “Guess what, I’m not selling.I was shocked and I said, “What do you mean you’re not selling?” Well, he’d found out something that really had been kept from him. In other words, there is a key piece of information that he hadn’t been told and that was the information about who was the crucial decision maker among the buyers. It would happen to be the person whom he trusted least.

The buyers had made a whole bunch of commitments as to how his employees were going to be treated after the sale and he realized at that moment that he couldn’t trust them to keep those commitments. So he called off the deal. Now ultimately, he did wind up selling a majority stake in the company to somebody else but I came away from this process thinking, “There’s obviously a tremendous hunger out there and curiosity about what it’s actually like to go through the process of selling a company.”

I did some research online and pretty quickly realized that there’s almost nothing out there about it. There’s tremendous amounts on starting a business. If you Google starting a business, you get about a billion hits. If you Google exiting a business, you get about 2% of that number and almost all of what’s online is really how to make sure you get the most money for your business which isn’t a bad thing. I’m all in favor of getting as much money as you can when you sell your company but from what I had seen and from what I talk to other people about, it’s only one part of the equation that in fact, selling a business is great. There are a lot of emotional challenges in it and so I decided to go out and investigate it. My publisher was excited to have me do this and so that’s how we got started.

Noah Rosenfarb: What was the research that you had done to start the foundation for the book and the thesis?

Bo Burlingham: Well, I realized pretty quickly, you know, I’ve been at Inc. now for almost 33 years and the fact is that we’d hardly ever written about exits. I myself knew very little about it so I realized that the first thing I had to do was to go out and educate myself by talking to people who had actually been through it.

I began doing some interviews and the more interviews I did, the more I wanted to do and in the end, I think I did somewhere between 100-150 different interviews with people who had sold their businesses, mostly almost all with people who had sold or exited in one way or another.

What I found was that about half of them at the end of the process when it was all over, they were reasonably happy and had moved on and were doing something else. About half of them were totally miserable. They regretted selling their businesses. They were feeling lost. They didn’t know who they were anymore or what their purpose was. Some people had good feelings about the exit process, some people had terrible feelings.

One person told me that he remembered it as a nine-month dental extraction. Somebody else told me that he found it the most educational thing he’d been through. So I decided that this actually had to form the backbone of the book, namely let’s look at what are the differences between the ones who had a happy exit and the ones who didn’t.

Noah Rosenfarb: Was there any correlation with how much money they received?

Bo Burlingham: Very little. In fact, exceedingly little, and that was one of the most striking things. There were people who have been compensated extremely well for their companies and were miserable and there were people who hadn’t received anywhere near that amount of money who were perfectly happy, which made me realize as one of the people told me that he found out, he discovered after selling his company that going into it, he thought it was all about the money. Once he got out and was dealing with all the things you deal with after you had sold your company, he realized that about 20 or 30% of an exit is the financial part and the rest is all emotional.

Noah Rosenfarb: Yeah. I have a saying that I tell clients which is, “If you don’t have something that’s more enticing, more rewarding that makes you want to get up on Monday morning and do this new thing more than you want to go into the office, there really should be no compelling reason to sell.” Do you think that that’s true?

Bo Burlingham: What I think is that that’s very good advice for you to give your clients. The fact is that everybody exits their business sooner or later. You may exit feet first but you are going to exit and there are a lot of baby boomers. Huge, huge number of baby boomers because the baby boom generation was an extremely entrepreneurial generation who are now getting to an age where they can’t avoid the fact that they are not going to live forever and they have to figure out what they are going to do with their businesses. The estimates are that somewhere between 1.3 million and 2 million businesses will change hands in the next 5-10 years just as a result of the baby boom generation getting older. That represents somewhere between $6 trillion and $10 trillion in assets trading hands.

Noah Rosenfarb: Yeah, we’ve had Peter Christman on the show. He’s the author of the $10 Trillion Opportunity. He talks specifically all about those statistics and I think as you said, they are going to exit one way or another and the question is what is going to compel them to leave feet first versus standing upright. What have you found are the critical success factors to being happy after a sale?

Bo Burlingham: Well, let me say this. Let me go back to your previous point about having something to go to. I think that the advice you give your clients is extremely good advice. It is, however, difficult for some people. There are people who think that really what they want to do is after the sale, they are going to have all kinds of time to play golf. Well, I talked to one guy who felt that way and he said within two or three months after he sold his company, golf had become a job for him. He no longer got the relaxation from it that he would get when he was doing it.

I would say I came up with eight things and I guess I should back up a little bit here, Noah, because going through this process forced me to change the whole way that I thought about exits and about building a business. We tend to think about building a business as if it’s like building a house, building a factory or something like that. But I realize in doing this that that’s the wrong metaphor.

Building a business is actually a journey and like every journey, it has a beginning, a middle, and an end. The end is not when you build a company. That’s the middle. The end is when you leave that company. It’s also not an event. It’s a stage of the business and there are, you have the startup phase, you have the growth phase, you have the exit phase, and there are really four stages to it and the critical mistake is that people don’t go through all four phases.

The first phase is just the exploratory, educational phase when you really educate yourself about what’s involved, what the challenges are going to be, what are the kinds of things that people have done and the kind of experiences that people have.

The second phase is the strategic phase. That’s when you’re building into a company the kind of qualities that are going to allow you to have the kind of exit you want to have, whether that’s selling to a third party, selling to your employees, selling to your children, whatever.

The third phase is the one which unfortunately most people start at and that’s the execution phase. That’s when you call up a broker, an investment banker, or you talk to your accountant or lawyer and say, “I’m ready to look for buyers.” If you do that without having done phases one and two, the chances of your having a bad exit are greatly increased.

The fourth phase is the one that people forget about but it’s one of the most important, which is the transition. It’s going from one day being the owner and probably the CEO of a business to being what, a question mark. A lot of people told me that the question they hated most after they had left their businesses was they did a party or something and people would say to them, “What do you do?” And they wouldn’t know how to answer the question.

I think it’s important to really start looking at what you’re doing when you’re building a business with a different frame of mind than most entrepreneurs are used to. Most entrepreneurs get so focused on building the company that they don’t give any thought at all to leaving the company until it’s very, very late in the process. I think that’s the source of a lot of the problem.

Noah Rosenfarb: Have you had the experience of interviewing any Gen X or Gen Y millennial types that have exited their business?

Bo Burlingham: There were actually quite a few younger entrepreneurs and they didn’t fair very much better than the older ones although some of them did. I mean, some of them had great exits. There was one guy I interviewed who had built a chain of tanning salons actually in the Dallas area. He was a very, very good entrepreneur and he’d built a great company. He had a terrific culture. His numbers were far exceeded the rest of the industry but he made promise to himself that he was going to sell his business by the time he turned 40 or by the time, I should say he was 40 and then do a lot of other things that he hadn’t had time to do while he was doing it.

He went through the process. He found a buyer. He did a lot of the right things in terms of making sure that he took take care of his employees so that that wasn’t going to weigh on his conscience afterwards. Then he sold the business and went out and actually went traveling around the world but then he had to come back because his mother was sick. She died and after that, he went out again but it wasn’t fun anymore so he came back. He has really been spending a year since then trying to figure out what to do for an encore. He has gotten involved in some businesses, restaurants, that sort of thing, but I don’t think he has found anything that even remotely compares to the kind of passion he had when he was building his first business, the chain of salons.

I had another guy. His was an example of the importance of knowing who is buying your company and why they want it. He’d come up with a great system for really training sales people. He himself had been a sales person. He had worked for the North Carolina Bank before it became Bank of America. He was like one of their top sales people and the reason was that he developed a system that he used to prepare himself for every sales call, which involved doing lots of research and basically knowing everything that he could find out about the industry of the potential customer he was going to visit.

It was a great system and he realized that he could turn this system into a business. He did and they were doing very well. He had a couple of really great partners. He had great employees. The culture was terrific. He was having the time of his life. Business was going very well and then he showed up at a trade show. At the trade show, there happened to be a person from Hoover’s, which was owned by Dun & Bradstreet who came over to his trade booth and was looking at the company and she said, “We should really acquire you. This would be a perfect thing for us to offer our customers.” He said, “Well, I can’t disagree with you there but I’m not interested in selling.”

But he also had the attitude that every business has a price. In other words that at a certain point, you get offered so much money that you really can’t say no and when you have that attitude, sooner or later, someone is going to call your bluff and in this case, it was Hoover’s, Dun & Bradstreet. They really pursued him very aggressively. He kept turning them down. They kept making offers. He kept turning them down. That went on for a few months.

Finally, he got together with his partners and said, “Look, they are obviously very interested. Do we have a number where we absolutely couldn’t say no?” They came up with a number. Sure enough, Dun & Bradstreet came back and finally they said to him, “Okay, what’s your number?” He gave them their number and Dun & Bradstreet said fine. They proceeded to do the negotiations. He was very concerned about his employees and what was going to happen to his employees, so he built into the contract all kinds of protections for his employees to make sure that they were going to have a secure job and a secure home after the deal was made.

What happened was the deal went through and it didn’t take long before the problems began arising. There were two different work forces. Dun & Bradstreet wanted to train their sales force in how to use this new methodology and how to sell this new product, but that raised questions about compensation for the sales force that had come with the company. There were all kinds of clashes and people began losing their jobs. My friend here became very, very distraught about it. Every time somebody lost a job, he took it personally. He basically felt he was responsible. He got so upset that he had to go check and make sure he wasn’t getting a heart attack. He wound up on going to a psychiatrist.

Really though, when you look back, what was his mistake? His mistake was that he hadn’t really answered a key question that you have to answer namely,why is it that this acquirer wants to own my company?” If he’d ask that question, he would have realized that Dun & Bradstreet wasn’t interested in his people, wasn’t interested in the great culture they had. It was interested in their intellectual property and basically, they wanted to acquire the company, get a hold of the intellectual property, and then do what was best for Dun & Bradstreet and Hoover’s.

Yes, he had all these “protections” in the contract but when he went to his lawyer and said, “Look, they promised to do this and they are not doing this. They promised to let me do this and they are not doing this.” His lawyer basically said, “Look, do you want the rest of your money?” The point there was that as is often happens, there was a significant portion of the sale price which was put in escrow pending certain performance after the sale. Once that happens and the sale is done, he lost all control because he knew that if he tried to invoke the terms of the contract and to force Dun & Bradstreet to do what it had promised in the contract, then very likely, he would never see the rest of that money.

There were a lot of lessons that he learned about how not to do it and he went through a very tough time. He is doing much better now. People do get over this but sometimes it takes a long time to get over.

Noah Rosenfarb: Share with me the keys to success that you found that were common threads.

Bo Burlingham: Okay. Well, I basically came up with about seven and a half. The first one is actually one that over all the time that I have been studying, reading about, and writing about entrepreneurs, I think it’s one of the most important attributes of an entrepreneur can have and that is knowing who you are, what you want, and why. It’s not something that you sit down one weekend and figure out. It’s something that most of us spend our whole lives trying to figure out.

There’s no question that the clearer understanding you have of who you are, what you what and why, the better decisions you’re going to make while you own a company and in particular, the better decisions you’re going to make when you’re going to leave that company. The truth is if you haven’t thought about that, by the time you leave your company, you’re going to run smack into that question as soon as you leave because all of the questions, there are a whole bunch of things you get from your company that you aren’t really aware of until you don’t have them anymore. That is number one.

Number two, it’s obviously important to have a salable company and by that I mean a company that you can sell when you want to whom you want for a price that you think is fair. Most companies are not in fact salable. The Chamber of Commerce has done a study of all the companies that are put for sale in any given year, only 20% or the most 30% actually wind up being sold. Four out of five owners are going to walk away disappointed.

But it’s not just the idea of having a company that you can find a buyer for because one of the worst things that can happen to you is that you are put in a situation that is called a forced sale. That’s where something happens that you don’t expect. It could be illness, it could be a change in the economy.It could be something totally out of the blue and suddenly, you have no choice but to sell and in those situations, the chances are very good that you are going to wind up with a not very good deal. I’ve got a number of really, really sad stories that didn’t finish big about people who made that mistake.

The third characteristic is the importance of giving yourself enough time. It’s not a matter of months. It’s a matter of years. In fact, if you really go through the whole process including the first and second stages of educational and strategic, you know, this is something you should be doing the entire time that you have your business. In fact you should probably start thinking about even before you have your business.

The mistake people make is that they wait until something happens. They get bored with the business or something like that, and then they try to do a deal quickly and it leads to all kinds of problems. It’s especially important to give yourself enough time if your plan for leaving involves having a successor because almost always, the first person you choose for your successor is going to turn out to be the wrong person and you won’t find out until later and you have to give yourself enough time to be wrong at least once and get the education that you need in terms of choosing the right successor.

The fourth one is getting the kind of help that you need and to some extent, that’s professional help from people like you, Noah, who are experts in the field but I also think it’s very important to get help from people who have actually been through this. They are entrepreneurs who built companies and sold them and been through the process themselves. They have a somewhat different perspective on it than the exit professionals in that for the exit professionals, the deal is over. Once the deal is done, it’s over. They go on to the next client. For the entrepreneur, it’s not over until they have moved on to something else.

The fifth quality has to do with making sure that you are at peace with whatever is going to happen to the people who have been on the journey with you up to that point, mainly your employees. One of the big regrets that people wind up having is that things happen to their employees that they didn’t foresee after the sale. It’s something that really just sort of sticks with them for a long time. It becomes a major source of regret.

The sixth one is the one I refer to before and that is making sure that you understand why it is that your acquirer wants to own your company. People forget when they are trying to sell their businesses that they aren’t the only ones doing the selling. The acquirers are also trying to sell them on what a good acquirer they would be and how great they think you are, what a great cause you have, and what brilliant things you’ve done with your business, and so forth, and how they want to do the same things in their company. That may or may not be true. Usually, it’s not true. What they really want is to own your company and the important thing is to figure out why. What is really driving them to do the deal?

The final one is the one that we’ve talked about before which is you get a lot of things out of your business that most of us, most people aren’t aware of until they don’t have them anymore - their sense of identity, their sense of purpose, their tribe, the people they see every day, their structure in terms of knowing what to do next. Your business usually tells you that. A sense of accomplishment, one of the great things about business is that it actually measures how you’re doing. When you suddenly find yourself without any of those things, it’s an extremely disorienting process.

The people who have good exits, they figure out how to get them back. First, they figure out what’s wrong in going through that and then they figure out how to get them back. The ones who have great exits are the people who figure out how to get them back on a higher level because they now have the financial resources. They give them a kind of flexibility that they didn’t have when they were doing it the first time.

Noah Rosenfarb: Did you see any distinction between those that sold their business to an outside third party and those that transferred it to either their management team or their children in terms of satisfaction?

Bo Burlingham: Well, it could be the management team or it could be the employees. The answer is that this is where it becomes so important to know who you are, what you want, and why. Any of those options can work out well depending on who you are. If your goal is to make sure that you build a company that’s going to be a family business that your children will eventually take over, that’s one thing. If your goal is to build a company that is going to last after you and remain independent and private after you, that’s a very important decision for people to make.

I tried very hard to look for companies that had lasted through two transfers of ownership and leadership and remained and private and independent. The only examples I could find were either family-owned businesses or employee-owned businesses. I don’t mean to say, most family owned businesses don’t’ make it through two transfers and a lot of employee-owned businesses get into all kinds of trouble afterwards as well. But when I was looking for examples of companies that had really sort of built great cultures and done great things and had continued to do them generation after generation, it was either family and they stayed private. It was either a family owned or employee owned.

Now that’s inside you if you want that to happen. Some people don’t care. Some people, they want to have a good run and create opportunity. My friend, Norm Brodsky, who is one of the people actually in the book and I do tell a story, he knew all along that he was going to sell his business. In fact he was preparing for it for years and years and years before he actually did. As a result of his preparation, he made some key decisions that turned out to be incredibly important.

He had a record storage company. Basically it’s warehouses filled with boxes. Essentially, you’re renting space to boxes. He realized that the potential acquirers for his business included large companies in the field like Iron Mountain. He went to recall. He went to them years before he had any plans to sell just to educate himself about what was it that they would look for in a business. One of the things he found out was that they had no interest in the real estate. If he sold the real estate along with the business, they would just get rid of the real estate and keep the boxes.

He went back and immediately separated the ownership of the real estate from the ownership of the record storage company. As it happened, his real estate, which he’d bought very cheap. It was in Brooklyn on the east river overlooking Manhattan. When he’d bought it, it had been a very sort of down and out crime infested area and the land was cheap. Today, it is among the most expensive lands in the City of New York. That decision to separate the ownership of the land from the ownership of the business is going to mean several hundred million dollars to Norm. He only was able to make that decision because he realized the importance of starting early and doing the kind of investigating that everybody should do with their business.

Noah Rosenfarb: Bo, before we wrap up, what else do you think would be great to share with our listeners?

Bo Burlingham: Well, ultimately, this actually goes back to my previous book, Small Giants, as well and frankly to The Great Game of Business which is a book I wrote with Jack Stack about open-book management. One thing that I‘ve learned is that really, the goal of all of this is to have a great life. When I think about what it is, I try to understand, why was it that you have some people who had such a hard time spending years and years trying to figure out what their purpose was and yet the ones who had done really well, they knew what their purpose was. They knew what their identity was. I began to say, “Well, what’s the difference?”

I realized that what do we mean when we say that we have a purpose? What we’re really talking about is who are we serving? When you’re in business, you’re serving at the very least, your customers or you wouldn’t have a successful business. Very likely, you’re serving your family as well. For many people, they are serving their employees and they are serving, in many cases, their community as well. Really, business is all about service and when people sell their businesses and no longer owners of their businesses, big confusion comes from not knowing who they are serving anymore. The ones who have great exits, they realize that and they figure it out.

It’s interesting that the people who really have had great exits and who, today, are doing so well, I ask them how they are doing and they sort of laugh at me and said, “You really have to ask me that question. If I’m having any more fun, it would be illegal.” When I look at what they have in common, most of them are involved in serving other entrepreneurs. That, after all, is what they know about, building businesses and the whole process. Norm spends 30% of his time doing pro bono advice to young entrepreneurs. The noted person in the book, Basil Peters, who basically is spending a huge portion of his time just going out trying to educate people about the whole exit process.

My friend, Martin Babinec, who built a great company that went public, he is now engaged in trying to create a Silicon Valley in Upstate New York among about six other things that he’s doing. All of these people are involved in service. When people ask me, “What’s the best way to prepare for what I’m going to do afterwards? I’d say, “Figure out who you’re going to serve.”

Noah Rosenfarb: Great advice from Bo Burlingham, editor at large at Inc. Magazine and author of Finish Big. I want to thank you for coming on the show. If our listeners wanted to learn more about you, get the book, where should they go?

Bo Burlingham: Well, I have a website, You can order the book through the website or you can go to Amazon or your local bookstore, wherever. I’m actually working on a course, an online course that I’m going to be coming out with sometime later this year for people who really want to go into it in more depth. So that will be fun.

The main thing I would say is there’s also an organization called Evolve. The website is They are sort of like an EO forum or a vestige something like that, but for people who have either sold their businesses or planning to sell their businesses. People might want to check that out as a potential resource and an opportunity to be in touch, regular touch, with people who are going through the same struggles that they are.

Noah Rosenfarb: Terrific. Well, thanks again for coming on the show, Bo. To all our listeners, stay tuned. Don’t forget to give us your feedback on iTunes and we look forward to having you as our guest again here on another episode. Take care for now.