Unlocking the Secrets to Successful Business Sales: Insights from BestBonobos

Intro: Broadcasting live from the Business RadioX studio in Atlanta, Georgia. It’s time for Atlanta Business Radio, brought to you by Kennesaw State University’s Executive MBA program. The accelerated degree program for working professionals looking to advance their career and enhance their leadership skills. And now here’s your host.

Lee Kantor: Lee Kantor for another episode of Atlanta Business Radio. And this is going to be a good one. But before we get started, it’s important to recognize our sponsor, Ksuz executive MBA program. Without them, we wouldn’t be sharing these important stories today on the show. We have Elias Crum and he is with BestBonobos. Welcome.

Elias Crum: Thanks for having me, Lee.

Lee Kantor: Well, I’m excited to learn what you’re up to. Tell us about your company, how you’re serving folks.

Elias Crum: Absolutely, absolutely. So what we’re doing is we’re helping small business owners with a company that is doing up to 10 million to sell their company themselves without the help of a broker.

Lee Kantor: Wow, that’s a big lift. Can you tell us a little bit about what was the genesis of the idea? How did you decide to get involved in this kind of work?

Elias Crum: Absolutely. So yeah, I, I sold a couple of companies before, and the last one I sold was a marketing technology company back in 2024. And when I decided to sell that, I approached a couple of brokers. So in that experience, I recognized a lot of stuff and I found out that it’s actually pretty expensive to sell your company through a broker, which is fine if you’re selling, but only 20% of companies that are on sale actually are sold. So a typical broker charges between 5 and 15% of the proceedings. So business owners that have built for years, that have built a company for years, put all their blood, sweat and tears into that, finally decide to sell or have to sell because of illness or whatsoever. There is always a point someone wants to sell his company. The broker takes up to 15% of the whole company proceedings, so there could be. When you’re selling for a million, that could be over 100, 100,000, right? So after selling that company, which I did on myself, so I didn’t use a broker, I found out that it’s actually not that hard to sell your company yourself. The thing is, you need to know how you how you do this because it’s not something you do on a daily basis. It’s something you do a couple of times or maybe once in a lifetime. So I figured when I, when I built the platform, I just took my own experience and I built the platform together with a business partner, Sebastian. And he, he and I sold a couple of companies.

Elias Crum: So we took all that practice in mind. And then we built BestBonobos, which basically guides a complete well, it guides the owner through throughout the entire sale from valuation to due diligence. And that’s where typically a deal gets stuck because in the beginning, every company owner overestimates what a company is worth. And during a couple of steps later, you enter the due diligence phase where you have to upload everything into a data room. They start to dig into the books and they find all kinds of reasons to talk to you. Well, basically to talk to your initial offer down. Um, I figured when with the help of AI, we could completely automate the process. So by uploading just your QuickBooks or quick sheets, uh, yearly report into the software, answering a couple of other questions. You’ll get a valuation. After that valuation, the fun starts because you need to prepare your company to be sold. So you need to have a sales brochure or an information memorandum as brokers tend to call it. Um, well, the software, the platform helps you to build that information memorandum. It’s entirely based on AI. So you’ll get a very nice word document combined with a one pager, um, that you can use to put your business at sale like an abyss by yourself, for example, or another marketplace. After that, you’ll, uh, you’ll, you’ll want to find buyers. So the AI actually helps you find buyers. So we’ll do a, uh, quick, let’s say gamification, uh, a little game with you, a couple of questions asked, like, uh, the same stuff a broker typically asks you when you’re selling your company.

Elias Crum: So it could be, um, have you been approached, uh, the last six months by someone that wants to buy your company? So we have a couple of questions like that. You come up with a, a long list and will take that list, and the AI will actually look for lookalikes and companies that will actually fit your profile better and will score it based on, uh, on the chances of a fit. Um, the final step is a data room, so you’ll have an entire data room ready to to be inspected by a potential buyer that altogether comes with a, uh, a score like an exit readiness score, as we call it, which you can see in the platform all the time. And it basically indicates how ready you are for a sale, combined with all kinds of tips to improve your company value, to improve your chances of being with that 20% that that actually sells, instead of being with the 80% that never gets sold. And uh, to Ali, it’s, it’s a true, it’s an entire new platform. So it’s really disrupting a market. There’s no platform like this. It’s the first in its in its kind. So it’s, uh, it’s kind of, uh, finding our way, kind of testing the waters, but it’s, it’s going fine so far. We just launched a couple of weeks ago and first results are pretty good.

Lee Kantor: So now the people who, um. So let’s break down somebody who’s trying to exit their business. If you have 100 people exiting, you know, what’s the percentage of people that number one, use a broker. Number two, go at it alone like you did, or number three, just quit because it’s not, it’s either not working or they didn’t get a number they wanted or was too much trouble.

Elias Crum: Yeah, I would say probably 30 to 40% will approach a broker. Um, and the other 60% will try to sell themselves. And trying to sell themselves also means that they put their business at sale at a marketplace like a Best buy sell, for example. But, um, have you ever looked at Best Buy sell?

Lee Kantor: Yeah, I mean, I’ve, I mean, I’ve, um, I’ve interviewed a lot of people that have sold businesses, I’ve interviewed a lot of people, business brokers that sell businesses for people. So I’m superficially aware of that, um, experience. But the broker always seems to come to the table with, I’m like your agent, like a movie star’s agent, like, I’m gonna make this happen for you and you’re going to get a higher price if you work with me as opposed to kind of going at it your own because I do this every day.

Elias Crum: Absolutely. So that’s what they told me. Um, I approached three and they all told me that, um, they’re going to be my, my agent and that they’re going to take care of negotiations. And, um, so it’s actually what I asked a, well, it’s basically all the three brokers that I had visited me, I asked them, why would I hire you? And the majority were basically all three of them told me that it’s mainly about negotiations because it’s hard to negotiate for yourself. Well, I didn’t agree because as a business owner, you’re negotiating every day. Um, the, the, the assumption I had beforehand was that they had a list of potential buyers for me and they didn’t seem to have that. So that was, um, well, a disillusion that I had. I thought by approaching brokers, um, myself in my industry, they would have a list of potential buyers. But in the end they didn’t seem to have that. So their perceived advantage was mainly in negotiations, not so much in the actual deal making or the finding of a buyer.

Lee Kantor: So that so that’s kind of a myth. Or they want you to infer that they have this at their disposal, but actually they’re using probably the same kind of portals that you mentioned earlier.

Elias Crum: They do, they do. And that’s which is fine.

Lee Kantor: But do people buy businesses through that, or is that just something that people say that they do? There’s a lot of portals out there that promise all kinds of things. But is that a is that kind of a valid place to go to sell your business? Like is is that where you sold yours through the portal?

Elias Crum: No, I, I.

Elias Crum: Didn’t sell it through a portal. I, I sold it through my network. Uh, so, but I was very well prepared. Um, so I knew, uh, what kind of buyer to look for. I knew what the right price for my business was, and I knew what my exit terms would be because that’s, uh, things you need to be aware of before you start looking for a potential buyer. So yes, people sell through those platforms. Um, I don’t think as, as much as you would imagine or as many companies do sell through the, through the platforms as you would imagine. Um, and that’s mainly because there is so many, uh, businesses on there that are just listed without a, without a good preparation. Um, I, when I drive through Atlanta, um, which, which I recently did and I just asked some of the, uh, the businesses where I frequently buy stuff like, like, uh, like a coffee shop or something. I just asked the owner, uh, what they would think their business is worth. Um, and small business owners just are not aware on how to actually evaluate their business because they, the answers I got was like, well, I have a couple of coffee machines. I have some inventory. Um, that together added up is 20 K. So I would probably think my business is worth 20 K. Well, that’s not how you do a proper valuation. Um, and I was kind of surprised, but on the other hand, they, they sell coffee, right? They don’t, they’re not used to selling a business. So, um, that’s where BestBonobos actually comes in. Um, and really helps you to do a proper valuation to do to be well prepared. It gives you tips on how to improve the valuation evaluation and the the chances of selling your company. So we’re basically guiding people throughout that sale.

Lee Kantor: So, um, a lot of times you hear a company when they sell, they, there’s a multiple, um, it was X times a certain metric. Um, do you help in that area? Like, because that seems pretty subjective.

Elias Crum: It is pretty subjective. So it’s one of the valuation estimates that we do. So we’ll give you a range after you upload, uh, your, your data. Um, the multiple is pretty subjective and it’s a very, uh, much depending on what, how you run your business. So, uh, a couple of things we will probably ask you is how dependent is the business on the owner? Because if the business is about you as the owner, it’s not going to be worth a lot. So you have to make sure that the business can run without you. Um, the other thing that’s pretty important for the multiple is your, um, monthly recurring revenue. So do you have one off projects or do you have customers that, that, that pay you on a monthly basis, which results in MRI? Um, if you have, uh, customers that are paying you monthly. Your, your multiple will be higher. So together with the multiple, we’re, um, we’re using accountancy, uh, methods as well. Um, so, so it’s based on your cash flow. So it’s actually, uh, built on those two, uh, models. So it’s not the multiple, it’s the, it’s the multiple combined with your cash flow. Prognosis.

Lee Kantor: So is this, uh, suited for more mature businesses or would it work for kind of a startup trying to get funding? Like, um, Where where would this kind of be? The who’s the ideal fit for this? Is it primarily for that kind of business that’s been around for a while in kind of traditional industries, or would it work for like an AI company or something that’s e-commerce or something that’s more, you know, a hotter, trendier, um, business.

Elias Crum: Absolutely. Good question. Well, the answer is both. So it, it works for because we, we have an AI solution. It will use your industry, uh, your industry as a basis for valuation. Um, so if you’re in e-commerce, it will look at other e-commerce companies, but if you’re an established company, um, the, uh, the, the AI will look at your, at that specific industry. So it’s not so much about which industry you’re in. It’s more about the size of your business. So it typically works for businesses that are valued up to 10 million. So it could be which is 90% of businesses, by the way. So, so if you’re a, a huge business and you’re, you’re having all kinds of holding structures and complex like, like business frameworks, etc., um, BestBonobos is probably not the right fit, but for 90% of the market, small businesses, which are between 50,000 in revenue and 10 million, um, this works perfectly fine. And that can be any e-commerce or web shop, but it could also be an established, uh, nail salon that has been around for 15 years.

Lee Kantor: But like, would your company be valued fairly in this?

Elias Crum: Absolutely.

Lee Kantor: So if you put in your financials and this because you said it’s kind of a disrupter, so there’s probably not a lot of comparables. Um, how would you, how would, uh, BestBonobos do?

Elias Crum: How would best bone about itself. Do you mean.

Lee Kantor: Right? Like, would you be happy with the valuation it gave you?

Elias Crum: Which we did? Yeah, absolutely. So of course. So we’re a startup. So it’s valued completely different than the nail salon. That’s 15 years old of course. So it will typically look at your growth rate. For example, with the startup it will it will look at the growth rate. It will not look as much um, as into the revenues or EBITDA for example, because, um, these startups typically have a negative EBITDA the first few years, which is typical for an AI startup for, for example. So yes, it’s, it’s, uh, it’s usable. Um, but it’s, uh, and it’s mainly, uh, focused on, uh, businesses that are making a profit.

Lee Kantor: And so let’s, let’s get back to kind of that typical business. A lot of times people think their business is worth a lot more than it is. Is this one of those things where a person goes through the exercise of using your website, gets on, puts in all their numbers, and then they’re unpleasantly surprised at the number that pops out.

Elias Crum: We actually asked them that. So it’s a little pop up in the software which asks you, are you are you happy with this valuation? Um, so, uh, absolutely true. Uh, the majority of business owners will value their company higher than it actually is. Um, because they, uh, have, have, well, they know the business best, etc. they have, they know all the upsides, uh, and they tend to play down a little on the, on the, on the downside. Um, but, uh, the software will give you the platform best will give you the valuation. It’s actually the valuation, um, is within the free trial of seven days. So I would really like to invite people just to, to go to the website, try it out. There’s no credit card or whatsoever involved. You can just try out your valuation for free and you can, you can just play around with it and let us know if you’re happy. Because from what we have done, we have beta tested it. We have uploaded all kinds of businesses, uh, like from the startups to like more established, uh, businesses. And they, the, uh, we’ve never had a negative feedback. Of course, people hope for more, but it’s also a reality check, um, which I think is good if you’re selling your company because, uh, well, it’s the same with selling your house. You, you know what? It’s what you would like to have for it, but you don’t know if that’s the market price. So it’s a reality check. Go ahead, check it out. It’s, it’s, uh, in the free trial, so you can try it out for seven days without a credit card. Just, uh, right log log into the, uh, the software and try it out yourself.

Lee Kantor: And can you do it? Can you do it anonymously? Or is this data that you’re going to be able to like? That’s the trade off that you’re getting data from certain businesses? No.

Elias Crum: The thing is, um, the reason we’re asking for a login. Uh, so for people to sign up is that it’s very sensitive data, so we don’t want it to be stored anywhere. So we would like you to return to be able to return to the software and, uh, adjust data that you want. Like if you, if the valuation, maybe you have, you have not all your numbers at hand, for example, you need to be able to come back. So it’s, it’s, uh, it’s just a login, uh, platform. We’re not using the data. It’s, it’s the privacy. The privacy is guaranteed. We’re not using your data. We’re not selling your data. Data is yours. Um, but you need a secure platform to be able to do a valuation and to be able to come back and adjust your evaluation, for example.

Lee Kantor: Now, is this something like you mentioned. It’s out in the wild now. Have many companies gone through the whole process of getting evaluation and then actually selling?

Elias Crum: Absolutely. So we, we have just launched bonobos, uh, this month. So we’re live for two weeks. We have beta tested it and the beta testers are all very happy. Um, so, uh, the answer would be yes to that, uh, to that question. Um, for the data that we have now, right. So.

Lee Kantor: So, so far people have gotten a valuation and then sold their business for somewhere in the range of an area near the valuation like it wasn’t.

Elias Crum: Absolutely. Yes, absolutely.

Lee Kantor: So it was everything was performing like you would have hoped it would.

Elias Crum: Yeah, absolutely. Absolutely. And that’s the nice thing you, you, you really don’t need that broker in the majority of cases. It’s not complicated to sell your business, but you need to know the procedure. You need to know your way and the software. The platform is helping you. It’s guiding you throughout the whole process. That’s the that’s the majority. That’s the main thing. Um, that can go wrong. So the software really helps business owners to prepare for that sale.

Lee Kantor: So is the buyer when they see data from, uh, or reports maybe from your software. Are they taking that as kind of validation of obviously they’re going to do their due diligence and they’re going to come back and there’ll be a negotiation. But is this kind of acceptable for a business owner to say, okay, here’s the report I just got, and this is what it’s valued at and why? And or is it kind of holding up?

Elias Crum: Well, it’s actually nicer than that. So, um, we’re giving you that valuation. After that valuation, you’re preparing a sales brochure. So that’s actually a ten page document, which really explains everything about your business to a potential buyer. And we’re also providing you with an NDA. Um, once the the buyer gets serious and wants to get into negotiations with you, we’re helping you. The platform is helping you negotiating. It’s giving you tips on how to negotiate. And then it’s preparing the entire data room. So it’s guiding you through nine steps in preparing the data room. So you can actually upload all the documents that the buyer will probably ask for. And it’s a lot, right? So they’re asking for employee contracts. Leasing contracts. They’re asking customer contracts. So they’re asking they could be asking for up to like probably 50 documents. And we are preparing you there. So we’re actually handing you a data room in which you can upload everything and, and you can give the potential buyer access to all those documents if you want. That’s why we need the platform because it’s, it’s a very sensitive thing. So the platform is is privacy guaranteed. So it’s also GDPR because we’re also heading to Europe. Um, it’s, it’s very much focused on security because there’s a lot of sensitive data in there. And you need to be sure that that data is going to be for you and the potential buyer only.

Lee Kantor: So now, I would imagine since you started this, you’re pretty immersed in what it takes to, to sell and buy a business. What is kind of a mistake that a business owner makes? Like, is there kind of a common, are you seeing any themes or recurring, uh, mistakes that a business owner is making? Maybe it’s they haven’t documented all their processes and systems enough, or is there anything you’re seeing, uh, like what are some of the top mistakes you see a business owner making that you would recommend? Hey, this is the stuff you got to do if you’re serious about selling.

Elias Crum: Absolutely. So one, uh, one thing of course, is what you just mentioned. But the, the, the most common thing we see is that business owners wait too long. Um, and are not prepared well enough. So, um, if you talk to business owners, uh, in your network and you ask them, would you ever want to sell your company, some of them will tell you, yes, I would like to sell short term, but it actually takes 1 to 3 years preparation to be selling your company for the price and at your terms that you want. So, um, that’s the most common mistake that I, that I see is, uh, not being prepared well enough. Um, they expect it to be very easy. So the other, uh, which also leads into the second mistake that we see a lot happening is a business, um, that is depending on the owner. Small businesses tend to be built around their owner, so they don’t have processes in place or haven’t documented them. But they also are the number one sales guy in the company. They hire people. They do all kinds of financial stuff within the company. Um, and a company to be able that, that, well, a company needs to be able to run without the owner because otherwise you’re never going to be able to sell it to someone else. And that’s the, that’s the number one mistake, I would say. So the, the company that is built around the owner, especially small small business owners. And the second one would be that they’re, well, waiting too long with preparation, uh, to sell the, uh, the company.

Lee Kantor: Now, is there a story you can share about maybe somebody who’s gone through this beta that went through the process and was pleasantly surprised by the outcome. Is there any kind of success story you have so far? Obviously don’t name the name of the company, but maybe the industry or what they thought was going to happen and what actually happened.

Elias Crum: Yeah. What? So this is actually a, um, um, a person, a guy that had a couple of flower stores. So the, uh, he had 3 or 4 flower stores. Um, so a florist and they were preparing to sell and he was in his 60s. So, um, he thought it would be easier to sell. So the flower stores basically were his pension, like a lot of older business owners. So he didn’t know where to start, asked for, uh, for brokers and then found out better, tried out the valuation, which is very simple because he had the documents from his account in at hand, uploaded them, had a very pleasant surprise by devaluation because he didn’t know. He basically didn’t have a clue what the stores were worth because he had he hadn’t thought about leases and the existing customers. He had a lot of business users buying those flowers on a contract with him. So he had a lot of recurring business was actually pretty, pretty surprised. Um, by the, by the outcome, the, uh, prospectus or the information memorandum or sales brochure helped him really to prepare to put his business at sale. And he actually was prepared to sell it to one of his suppliers. So he, uh, based on this shortlist that we had, we had him think about potential buyers, uh, maybe family friends, management team, suppliers, customers or whatsoever. Um, which made him, realize that one of his suppliers would be able to buy him and, uh, those people or that company actually acquired him.

Lee Kantor: And is that kind of like you mentioned, selling to your network? Is that kind of the first place to start looking for buyers or are within your network and suppliers and vendors and people that you’re already kind of working with or doing business with in some form or fashion because they’re already familiar with you, they don’t, you don’t have to educate them really.

Elias Crum: Really. And, and look alikes of those people. So it could be a member of your management team, for example. So the, uh, recent company that I sold, the marketing technology company, I actually sold to an investor together with two people of the management team that did that, did a management buy in. So, um, preparing them for a buy in actually gave the, uh, the, the reason and the confidence to the investor that it was a great company to acquire, because if a management team believes in the company and wants to take a stake in the company, the the other investor is very well can be very assured that it’s going to be kind of going to be ran very well because the management team is taken over. So yes, it’s your it could be your management team. It could be friends or family, it could be suppliers. Uh, it could be customers, it could be competitors. And we are guiding you. Our platform is guiding you throughout that process. So it’s helping you to select those people, those companies, and it’s going to look for look alikes of those companies because, um, based on AI, if we have a long list of companies that you came up with, we can actually look for people that you haven’t thought about but are actually in the same ballpark or are like in the same industry.

Lee Kantor: So what do you need?

Elias Crum: That’s what a broker does, right? Broker does exactly the same, right?

Lee Kantor: Right. But you’re just leaning on technology.

Elias Crum: Absolutely.

Lee Kantor: Rather than BNI meetings.

Elias Crum: Right. That’s actually that’s actually pretty right. And, um, I, because this is a true disruption. Um, the price is as well because we are a software platform, so we don’t charge a percentage of your actual sale price. We just charge a monthly fee for the software, which is 300 bucks for just as long as you need us. So the typical sale takes anywhere between 6 and 18 months. So let’s say it’s 18 months. You’re paying 18 times that 300 bucks instead of maybe 10 or 15% of the entire sale price of your company.

Lee Kantor: So what do you need more of? Uh, how can we help you? Are you just looking for people looking to exit, or do you have partnerships with business brokers? Like who is kind of your like they’re your referral partners and who are your end user partners?

Elias Crum: So we, um, we are looking for both. So we’re looking for people that are at the point of exiting or thinking about an exit within the next, well, maybe 18 months, um, together with our partners and we actually are searching for partners, um, which could be business brokers, but they could also be accountancy firms or bookkeeping firms because bookkeeping firms that have a list of companies of, of, uh, actual clients always have a percentage that they want to exit, uh, with. So they, the, the maybe 10 or 20% of those companies. So every company gets sold on average within ten years. So if an accountancy firm or a bookkeeping firm is serving like 100 people or 100 companies, there will always be around ten that that are somewhere thinking about an exit. So, um, we’re looking for referral partners. Those referral partners get, uh, a kickback from us. So they get a revenue share, but we’re also giving them a reduction of price reduction to their end users. So it’s a win win for those kinds of, uh, of referral partners.

Lee Kantor: Oh, so they can kind of white label the offering to their existing customers who are thinking about exiting.

Elias Crum: Yeah, they can offer it. And what we’re not white labeling yet. So we’re thinking about doing that somewhere this year, offering like a master license. But for now, they’re a referral partner and they get a special discount for their clients. And on top of that, we’re giving them a revenue share.

Lee Kantor: Wow. Um, good stuff. So if somebody wants to learn more. Have a more substantive conversation with you or somebody on the team, whether they’re exiting or they’re a CPA or accounting firm or bookkeeper, what is the website? What’s the best way to connect?

Elias Crum: The best way to connect is bestbonobos.com. Um, and we have a contact form there. Or just shoot me an email on Elias at host.com. Um, or send me a LinkedIn invite. There’s not too much Elias Crumb. So I think there’s only only two and only one of those is the co-founder of best Bonobo.

Lee Kantor: And that’s b e s t b o n o b o s.com. Elias, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Elias Crum: Thank you very much, Lea. It was a pleasure being here.

Lee Kantor: All right. This is Lee Kantor. We’ll see you all next time on Atlanta Business Radio.