Episode 1318: The Secret to an Extraordinary Exit From Your Business with Andy Harris

The difference between a good exit and an extraordinary one may hinge on finding the buyer who sees value others overlook. In this episode of Sharkpreneur, Seth Greene interviews Andy Harris, President, North America Strategies, and Managing Director at STS Capital Partners, who explains how entrepreneurs can maximize their businesses' value by looking beyond standard industry multiples and identifying buyers who recognize strategic value in an acquisition. He explains the difference between financial and strategic buyers, why a competitive sale process can yield dramatically different outcomes, and how the right strategic fit can generate a significant premium. Andy also discusses lessons from The Extraordinary Exit and why a successful sale should take into account an owner's financial goals, personal priorities, legacy, and the business's future home. Key Takeaways: → Relying solely on standard industry multiples can cause business owners to leave substantial value on the table. → An experienced sell-side advisor can help identify and demonstrate strategic value that a seller may not recognize independently. → Running a competitive process can create leverage by giving multiple qualified buyers the opportunity to compete for the business. → The highest offer is not always the best when an owner also cares about the company's and its people's future. → A successful exit strategy should account for the owner's personal goals, including whether they want to remain involved or leave the business entirely. Andy Harris is a seasoned M&A leader, CEO, and advisor with over 30 years of experience driving growth and value through strategic transactions. As President, North American Strategies at STS Capital, he advises clients and partners across all phases of the M&A process, with deal experience ranging from $20 million to $1 billion. He has helped business owners achieve premiums of 40% to 100% by identifying the right strategic buyers. Andy previously served as CEO of Accella Performance Materials, where he grew revenue 6x and profit 8x through organic growth and 14 acquisitions before a successful exit. He also led Syrgis and Vantage Specialty Chemicals through significant growth and transformation initiatives. With deep expertise in industrial manufacturing and B2B sectors, Andy is an active member of YPO and a recognized leader in M&A strategy and execution. Connect With Andy Harris: Website: https://stscapital.com/ LinkedIn: https://www.linkedin.com/company/stscapitalpartners/ YouTube: https://www.youtube.com/@stscapital

• 0:00Speaker 00

  Welcome to the Sharkpreneur Podcast with Kevin Harrington and Seth Green. Kevin Harrington is the inventor of the infomercial, one of the original sharks from the hit TV show Shark Tank, and has generated over $5 billion in TV and digital direct response sales. Seth Green is the world's first trusted authority on cutting-edge direct response marketing, a bestselling author, and the only three-time marketer of the year nominee. On the podcast, Kevin and Seth interview sharkpreneurs who share straight talk on what it takes to explode your business.

• 0:38Speaker 01

  Forty-nine faces looked to him in triumph. Over the last 12 months, they had each taken turns and promoted his business for a week at a time, driving over $987,342 in revenue. What if you had a network of 50 centers of influence who promoted your business every week for a year? Grab your copy of the number one Amazon bestselling book, The Ultimate Guide to Growing Your Business with a Podcast at 33% off the Amazon price by going to ultimatenpodcastbook.com. Again, that website for 33% off the Amazon price is ultimatenpodcastbook.com. Welcome to the podcast. This is your host, Seth Green. Today, I've got the good fortune to be with Andy Harris, President of North American Strategies and Managing Director at STS Capital Partners, a global sell-side M&A advisory firm focused

• 1:23Speaker 01

  on helping entrepreneurial businesses, business owners maximize value when selling. He also recently co-authored The Extraordinary Exit: How to Sell Your Business for Maximum Value, Protect Your Legacy, and Walk Away with No Regrets. Andy, thank you so much for joining us.

• 1:39Speaker 02

  Seth, I'm grateful to be here and thanks for this opportunity.

• 1:44Speaker 01

  Our pleasure. So, let's go back in time just a little bit. How did you get started?

• 1:51Speaker 02

  Well, in my current role, I got started about six years ago, working with STS Capital. Prior to that, I was a three-time hired gun professional CEO that I led three different businesses that were backed by three different private equity firms doing buy and build rollups internationally and had several successful exits, as well as I did over 20 acquisitions across those three businesses. So, I became very good at M&A, both on the buy side and then ultimately on the exit and sell side.

• 2:30Speaker 02

  Those typically are three to five to seven-year runs where you buy a platform business, build it and grow it, improve it, do acquisitions, and then exit it. So, I thought maybe I'd have three or four more of those left in my career. I met the founder of STS Capital at the Peter Diamandis Abundance 360 Conference back in 2019, and he challenged me. He said, "Andy, what are you going to do in the second half of your life?" And I said, "Well, I'm just going to continue being a professional CEO and building and growing these businesses." And he said, "I've got something that's more purposeful for you.

• 3:15Speaker 02

  What if you were to help three to five entrepreneurs or business owners or families each year

• 3:23Speaker 02

  achieve a greater, an extraordinary exit? An exit that is above and beyond what they would otherwise have achieved, either on their own or working with another advisor? Because you're so good at what you do, and STS is selling to strategics. We help these businesses find buyers that are going to look at the business strategically and therefore give a strategic premium versus just a financial premium. Why don't you join our team and help that? And you could sell three to five businesses a year for these entrepreneurs and make a really big difference in their lives and their families' lives." And that just hit, the light went off for me there, and I thought, "Wow, that is very purposeful," and that gets me up in the morning, every morning.

• 4:07Speaker 02

  I love being a CEO and leading a business, but to be that impactful and in a way kind of give back to several families a year or more to help them achieve an extraordinary exit. So, that's how I got involved.

• 4:22Speaker 01

  That is absolutely incredible. You mentioned strategic as opposed to financial. So, why can two similar companies sell for dramatically different multiples?

• 4:33Speaker 02

  It's, well, a financial buyer really just looks at the business from a financial perspective and puts a typical industry or market multiple on it. And then a strategic will look at that, look at it that way. But then if there's also other value that's created by combining the businesses, that's can help to get a greater strategic premium. And so, as an example, when I was doing the, our buy and build rollups when I was in my prior roles, the industry I was in, for the size of businesses in the middle market

• 5:14Speaker 02

  that we were acquiring, in the industry that we were in, the industry financial multiples would be buy for five to seven times EBITDA.

• 5:25Speaker 02

  That was the typical multiple. We knew that as we rolled up and got bigger and greater scale, that we would likely sell on a financial multiple nine to 10 times. So, there was arbitrage in that way, and that was kind of a strategic rollup. And then if we did other things and we sold to a strategic, it would be up into the double digits, 11 or 12 times, which is what we actually ended up doing. So, we were able to get a strategic premium.

• 5:54Speaker 02

  But we were buying financially, and then we were going to sell strategically.

• 6:01Speaker 02

  Had we, in all the businesses we bought, we bought individually on a proprietary deal with the business owner, the business owners, except for one of them, did not have an advisor representing them or running a process. We just got to know them. We negotiated a good deal for them. That was a market deal.

• 6:25Speaker 02

  And that worked well for them. It worked well for us. But had they had an advisor like myself, working on their behalf, and understanding, "Wow, there's strategic value here." The businesses we were acquiring were definitely worth more than five to seven times to us. And had we been pushed, we would have paid a strategic premium, maybe up to eight or nine times, right? So, that's a 30% increase in value just because of what it was strategically worth to us. But the buyers didn't know any better, or the sellers didn't know any better, and they thought, "The industry multiples, five to seven times. I'm getting five to seven times, so I'm good."

• 7:09Speaker 02

  Yet, there was strategic value that they could have achieved had they had an advisor like us working on their behalf.

• 7:18Speaker 01

  That makes a lot of sense. What inspired you to write the book?

• 7:24Speaker 02

  So, I had a business that we represented a little over two years ago, and that the owner of that and our co-author Jonathan Sherrill reached out to me about a year after we sold his business and we truly achieved an extraordinary exit for him. He reached out to me and he said, "Andy, I want to tell my story. I'm going to write a book, and I'd love you to co-author it with me." So, it was Jonathan's idea, and he asked me to join him and write it. And it's this story of, from his perspective, of what it was like to get the business ready for an exit and then get through the exit process and achieve really an extraordinary exit.

• 8:08Speaker 02

  And then it's also told from my perspective as the advisor on that. So, you're getting two perspectives, and then I weave in a lot of other stories about other deals that I've been involved in. And there's a lot of, there's a lot of shared wisdom, both what to do, what not to do, lessons learned that are told in a story format throughout the book. So, it's, I think there's a lot of golden nuggets in there. I've had several business owners that have sold their business, who've now read the book, said, "Boy, Andy, I wish I'd read that book before I sold my business, because there's so many things I would have done differently." But in Jonathan's case, the reason it was an extraordinary exit is two things.

• 8:51Speaker 02

  First of all, he, his father had owned a kind of a similar business that they sold, so they knew what that sold for. They knew what the industry market multiples were, and so he had a value in his mind that he thought the business would sell for. We did our analysis and our comps and came in, and we were aligned. We said, "This is probably the market multiple for the business. This is where a financial buyer or a market buyer would value the business." When we ended up selling the business, we got 100% over that. We doubled that. So, he got twice the value he was expecting or that he thought would be the minimum value.

• 9:31Speaker 02

  And then on top of that, he had a required outcome that he had to achieve, that he had to exit the business. He was not going to stay with the business, and he wanted to exit the business as quickly as possible. He had a daughter with special needs, and she was coming up to a point in her life and her age where he really wanted to spend a lot of time with her and his wife and just guide her for several years as she went through her teens and into her young adult life. So, he had to exit, and we had to find a buyer that would allow him to exit, that didn't need him in the business. And so, we found a buyer that that was a great fit.

• 10:16Speaker 02

  It was a really great home for the business. They allowed him to exit and also paid, you know, a strategic premium, what the business was worth to them. We ran a competitive process, and they weren't the only one. We had others competing for the business. There was another one that was actually a little bit higher in value, but Jonathan chose not to go with them because he felt this buyer was a better home for the business.

• 10:39Speaker 01

  You've helped so many entrepreneurs. What's your biggest challenge now?

• 10:47Speaker 02

  I think, you know, it's what we're really good at and it's not necessarily a challenge, but it's finding the right buyers for the business and reaching out internationally and really understanding what the strategic fit is between the two businesses and then getting that, identifying and developing that strategic value. And we're good, we're very good at doing that, but it takes, I think it takes, it's not, it's not just transactional. If it was just transactional, we could go out and say, oh, your business is worth seven times and we got a list of buyers that will pay seven times for order, 10 times and just get the deal done.

• 11:32Speaker 02

  But it's finding the buyers that, and identifying, oh, this business is worth 30% more than that, or 50%, or 100% more than that to them because of what the combined businesses could do. And when one business transforms the other, and likewise, when both businesses are transformed because of the combination, either due to customer channel, technology, geographical expansion, whatever magic is created when you combine the businesses and when both of them get improved as a result of the combination, that's when you can get the strategic value. So really, taking the time to dig in and understand that and who those buyers could

• 12:15Speaker 02

  be, and sometimes, many times, those buyers are not the usual suspects, not the people that, the buyers that are in the space or your number one competitor. Many times, it's someone that's in an adjacency and that's not in the space, but would love to get in the space, or maybe desperately needs to be in the space and needs the customers or the technology that the business has, or vice versa. So I think that's, that's probably the, it's a challenge, but it's a, it's a fun challenge, right? So it's, it's, it's our secret sauce.

• 12:50Speaker 01

  Your passion is obvious. What do you like best about what you're doing?

• 12:53Speaker 02

  Well, the impact that we make on entrepreneurs' lives and families' lives. If somebody thinks their business is worth 100 million and we run a competitive process and find, bring in great buyers that are really good homes for the business, that's, most entrepreneurs want their business to land in good home, too. Many want to stay on, stay with the business, some don't, they want to leave the business. But meeting what they're out, their desired personal outcomes are, and then getting a strategic premium for that, where we're creating, you know, tens of millions, or, you know,

• 13:33Speaker 02

  maybe in larger deals, maybe 100 million of additional generational wealth that they otherwise weren't thinking about, or otherwise wouldn't have had, had they just run a typical transactional process. So that's, that's what's, I think, most meaningful and exciting to me, yeah.

• 13:51Speaker 01

  That's awesome. We know your time is incredibly valuable. We greatly appreciate you spending some of it with us. For our folks who are watching or listening and want to learn more, where do they go to get the book, The Extraordinary Exit, and where do they go to learn more about Andy and all things STS?

• 14:04Speaker 02

  Great. Well, the book is available on Amazon. It's also available on many audiobook sites, so that's the easiest way to get it. And to contact me, reach out to me on my LinkedIn profile, and you can also email me at [email protected].

• 14:29Speaker 01

  All right. This has been Seth Green for Sharkpreneur with Andy Harris from STS Capital. The book is The Extraordinary Exit: How to Sell Your Business for Maximum Value, Protect Your Legacy, and Walk Away with No Regrets. Andy, thanks again for joining us.

• 14:41Speaker 02

  It's my pleasure. Thank you very much, Seth.

• 14:45Speaker 01

  Thanks for being here. Thank you, everybody, for watching or listening. We'll talk to you or see you next time.