The “Wisdom and Wealth Podcast” featured STS Managing Director Kempten Schwab, who discusses how he has helped guide business owners through the emotional and psychological journey of exiting their closely held business.
The Wisdom and Wealth podcast, which is hosted by Joshua Klooz, is a series of conversations designed to equip listeners with insights necessary to simplify life's critical decision points because of the belief that "true wealth is the thing money cannot buy and death cannot take away." Joshua Klooz provides investment advisory services offered through Carson Wealth, an SEC registered investment advisor.
In this episode, host Joshua sits down with Kempten, who shares his insights on how he helps entrepreneurs monetize the strategic value of their privately owned business.
Here are four key takeaways from the podcast:
1) Owners should prepare to sell a business long before they are ready. Kempten’s advice for businesses that don’t currently fit the criteria for STS Capital is to contemplate who may value your business more than you. Owners must think about what their business is worth to a buyer in the future–not just what it's worth today. A lot of owners can't get out of their own way and can't think from a different perspective. But the more an owner can do that task early on, the more they bring into the experience–which allows STS to do a better job.
2) Buyers and buyer representatives should look for businesses that would enhance what they're doing today. Buyers need to constantly be on the lookout for organizations that have skill sets and success stories in competencies that will become complementary to their larger enterprise. Such buyers will pay more than what the seller could ever dream of in that scenario, which creates a win-win experience for the buyer and seller.
3) Business and family are two interconnected enterprises that should be considered separately. Kempten advises to avoid assuming their children can run a business with the same capacity as the existing owner or the owner that came before. The genetics of business success being directly transferred from parents to children is a very risky strategy. If an owner monetizes the business at its height, they're creating generational wealth. There is an entire occupation to be found after the exit for multiple generations to come, versus giving it away or transitioning it to an offspring.
4) A common mistake is not thinking about the mental and emotional aspects of life post sale. Regardless of industry, many owners don't think about the therapeutic side of the selling experience. It’s important for an owner to think about if they are going to do something that's significant and leave the world in a better place, not just monetarily, but also for satisfaction beyond just what they can pass on in wealth. Kempten recommends engaging with people that have understanding and capacities in the psychology around the exit and experience in the exit. Kempten says one of the things the STS team takes pride in is that they are owners representing owners.
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