Wealthyist E41 | Strategies for Business Owners Eyeing an Exit
In this episode of Wealthyist, host Brian Lambourne (Senior Wealth Strategist at Wealth Management) welcomes Nick Kozik, Director and Shareholder at TKO Miller, a Milwaukee-based boutique investment banking firm specializing in sell-side transactions for family-owned businesses (typically $15M–$250M enterprise value). The discussion dives into the current M&A landscape, strategies for business owners eyeing an exit, and pitfalls to avoid when selling.
Key Highlights
- TKO Miller's Focus and Nick's Role
- TKO Miller helps family-founder businesses navigate sales, emphasizing education and "bedside manner" for first-time sellers.
- Nick leads transaction teams (4–5 people per deal) in sectors like industrial/infrastructure services, plastics/packaging, consumer goods, food & beverage, and tech-enabled services.
- The firm marks its 10th anniversary in 2026.
- Current M&A Market Dynamics
- Bifurcated Landscape: High demand for recession-resistant service businesses (e.g., HVAC, healthcare, recurring maintenance), trading at peak valuations (10–12x EBITDA) due to abundant private equity capital chasing limited deals.
- Challenges: Tariff-exposed manufacturing/distribution or consumer-discretionary sectors face lower interest and multiples, though deals still close.
- Advice: Sell now if in a hot sector; wait if trade-impacted. Personal timelines (e.g., health, retirement) often trump market conditions—consult experts for tailored assessments.
- Buyer Types Explained
- Private Equity (PE): Pools of capital for majority buyouts (leveraged, using debt); focused on growth, not just cost-cutting. They prioritize services over risky sectors, paying premiums for "safe" deals.
- Strategic Buyers: Operating companies seeking synergies (e.g., one chemical firm buying another); more cautious in uncertain times.
- Quasi-Strategics: PE-backed portfolio companies doing add-ons for operational alignment.
- ESOPs (Employee Stock Ownership Plans): Ideal for owners prioritizing employee ownership and business continuity; involves seller financing and tax perks, but yields lower upfront proceeds than PE/strategic sales.
- Planning for a Successful Sale
- Timeline: Start 1–5 years out for max value—focus on management succession (e.g., 18–24 month transition team) and data readiness (accurate reporting to handle buyer requests).
- Define Goals: Clarify priorities like max proceeds, growth partnership, or legacy preservation to shape the process.
- Build Your Team:
Role
Why Essential
Timing
Internal Management | Runs the business post-sale; needs ops leader, finance expert, and sales rep. | Ongoing
Transaction Attorney | Handles deal terms to avoid clawbacks. | 6–12 months pre-sale
Accountant/Quality of Earnings | Tax planning, financial audits tailored for transactions. | 1–2 years pre-sale
Wealth Manager | Post-sale lifestyle/investment strategy. | 1–2 years pre-sale
Investment Banker | Runs competitive process for $10M+ deals to maximize value/options. | 1+ year pre-sale
- Valuation Insights
- Private businesses are hard to value without market testing—multiples vary wildly by sector (e.g., HVAC at 10–12x vs. metal fabrication at 5x).
- Free initial assessments from firms like TKO Miller reveal true worth via broad auctions, avoiding guesses that skew net worth planning.
- Common Mistakes to Avoid
- Selling to the first buyer without alternatives (erodes leverage, invites "chipping away" on terms).
- Fire sales due to unpreparedness (no team/data = higher risk, lower price).
- Dropping performance during the 7–9 month process (e.g., growth stalls = deal death).
Closing Thoughts
Lambourne and Kozik emphasize proactive planning over reactive exits, noting that even in a volatile market, the right process unlocks life-changing value. Kozik offers free consultations for owners curious about their business's worth.
Lambourne and Kozik emphasize proactive planning over reactive exits, noting that even in a volatile market, the right process unlocks life-changing value. Kozik offers free consultations for owners curious about their business's worth.
