Designing Bulletproof Exit Strategies with Rick Sapio – EP 117

Interview with Rick Sapio

Rick Sapio

Designing Bulletproof Exit Strategies with Rick Sapio

Rick Sapio is an entrepreneur who started his first company when he was 13 and had already led more than $100 million in transactions while still in his twenties.

Rick is the Founder and President of Mutual Capital Alliance Inc. (“MCA”), which has made over 100 investments in the past 25 years. MCA has worked with companies and invested in financial services, technology, healthcare, real estate, and telecom and has more than 40 holdings.

To get to the level he’s at today, Rick had to struggle through the challenges of navigating the business world at a very young age. Although he would go on to found more than 20 companies during his career, his early entrepreneurial difficulties gave him an understanding of the challenges that business owners in all areas face.

Today, he uses his 30+ years of experience to guide companies and entrepreneurs through the often grueling exit process, ensuring that all parties, from the investment banks to the attorneys, are efficient and effective from start to end.

In our conversation, we discuss the crucial role values play in our personal and professional lives, what Rick learned about business from interviewing more than 50 billionaires, and his strategy for helping entrepreneurs land stress-free exits with reduced costs.

Featured on This Episode: Rick Sapio

✅ What he does: Rick Sapio serves as the Chairman of USA Mutuals Advisors, Inc. and was also the Chairman of the USA Mutuals public trust until June 2021. In 1994, Rick founded USA Mutuals, a predecessor financial-services firm, which became USA Mutuals Advisors Inc. ten years later. Rick has been the CEO of the holding company of USAM since 1994. Since 2003, Rick has been a Co-Founder, General Partner, and Advisory Board member of Mutual Capital Partners, a private equity/venture firm. In 2001, Rick founded the USA Mutuals public trust, which subsequently launched ten publicly-traded mutual funds, with US Bank as the administrator. The trust operated from 2001 to 2021. He is the co-author of the best-selling book, Who’s In Your Room: The Secret to Creating Your Best Life. Rick created and launched the term Catalyzing Statement™ in a popular TEDx Talk in Italy in 2013.

💬 Words of wisdom: It really is a skill to have the presence and be present no matter what’s going on around you.” – Rick Sapio

🔎 Where to find Rick Sapio: LinkedIn

Key Takeaways with Rick Sapio

  • Rick’s advice on finding great mentors at any stage of your life.
  • Block time in your calendar for defining your values. It may turn out to be a life-changing move.
  • How getting rid of the things (relationships, habits, etc.) that sap your energy allows you to pinpoint the ones that give you meaning.
  • The life-changing advice he got from Warren Buffet and what he learned from rubbing shoulders with Richard Branson.
  • The importance of finding great leaders and getting out of their way.
  • The mindset that separates billionaires from the rest of the pack.
  • Rick’s unique strategy for helping entrepreneurs land exits with reduced expenses, in less time, and with less stress.
  • Tips for raising entrepreneurial kids with an unshakeable mindset.

Rick Sapio | A Billionaire’s Secret to Simplicity

Rick Sapio Tweetables

“I think we are uniquely oriented around a set of values and a purpose just for us. And if you go through life without knowing that, how the heck do you know the difference between an opportunity and a distraction?” – Rick Sapio Click To Tweet “We're all gotta, gotta, gotta machines. Got to do it, I got to check the box, build this, get a Facebook campaign, got to build a funnel, all this crap. And the reality is no, you have to find the right leader.” – Rick Sapio Click To Tweet


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Read the Full Transcript with Rick Sapio

Justin Donald: What’s up, Rick? So glad to have you on the show.


Rick Sapio: Thank you for having me.


Justin Donald: This is going to be fun. You know, you and I have built a fast friendship. And I got to tell you, every time we have a call set up, I’m just so excited to connect with you, learn all the cool things that you’re up to in the world, hear your ideas, glean some wisdom from you. So, I’m just thrilled to have you on the show.


Rick Sapio: Well, I’m thrilled to be here, Justin. Thank you for the invite.


Justin Donald: Yeah. This is going to be cool. I mean, there are so many directions that I want to go in. You know, you had a really cool, I guess, chronicle of interviews that you did with 40 self-made billionaires that I thought was incredible, and I for sure want to get into that. I want to hear about how you got into the business world as well. And so, there are so many directions we can go. But why don’t we just start off with how you got to where you are today? Like, where did this all began? You’re a very successful entrepreneur, a very successful investor. You have a network that is second to none. You offer incredible value. So, how did you get here? Where did it start?


Rick Sapio: I think like many people listening and probably like you, it started with a lot of family issues as a child, and I don’t want to belabor the point, but it really impacted me. When I was a baby, my brother died and that impacted my whole family. I was the seventh of nine kids and you could imagine as a mother and father when a four-year-old child dies, that’s the light of the house. And he died from cancer. And it affected my parents immensely. My mother had a massive nervous breakdown when that happened and she never fully recovered. And so, I really never had a relationship with my mom. And then tragedy happened again when I was 11. My dad came down with cancer and was given six weeks to live at the first doctor visit. And I watched my dad, who was my hero, die before my eyes. Thankfully, he lived more than six weeks. He lived for two-and-a-half years and he said, “Look, you kids have to take care of yourself. You have to learn how to make money and be business people.” I don’t think he ever used the word entrepreneur, which is a more recent word in the lexicon of human language. But what happened after my dad’s death, so here I am, I’m 13, I have no dad, I have no mom. My oldest brother had moved out of the house when I was six. He’s 11 years older than me. So, then it was my sisters and then me, and then three after me.


So, I think back to my teenage years as just really trying to figure stuff out. And one of the things I figured out at a young age is I don’t have a dad. I didn’t have any relatives really. I didn’t have any men to look up to. So, I sought mentors. I probably am a professional mentor seeker, even 45 years after my dad’s death, which is what led me ultimately to interviewing 40-plus billionaires in my life. And the list is longer than that. Up to that recording that you mentioned, it was 44, but I constantly seek male role models and male mentors. And if you think you’re too old to seek out mentors, you’re crazy. To this day, I do it. And it’s one of the reasons why I sought you out. I just love having people around me that can contribute. So, anyway, that’s really how I got to be, I guess, motivated, curious, kind of forceful when it comes to getting someone’s attention. People say, “How do you get a billionaire to meet you for lunch?” And the answer is you figure out what they need or what they want. If you come to them from the perspective of, “I want something from you,” it’s going to be hard. But if you come to them with the perspective of, “I’m really here to build a relation and see how I could add value to you,” just like you opened the presentation today. So, that’s really the backdrop.


Justin Donald: Oh, I love it. Well, it’s such a great precedent to set and example to live by where you’re never too old to find a mentor. You’re never too old to network with people that are smarter or more accomplished or have more expertise in whatever area it is. And I really think at the moment that you are at the top, you’re either deceived or you are not well rounded in recognizing all the other areas that there’s just brilliance beyond where you live, right, where you are in that moment. So, that’s really cool. So, you started as an entrepreneur really young, like as a teenager, right? Like 16 or something, maybe it was even 13.


Rick Sapio: It’s funny. I have young kids. I started late in life and I had three boys and a daughter, but they’re ages 8, 10, 12, and 14. And when my dad first got diagnosed, my mom was like, “Look, we need money.” So, I started delivering papers and I lived in North Jersey, just outside New York City. I delivered the New York Daily News. Now, here’s what happened with the New York Daily News. A stack of 200 papers got delivered around 4:45 a.m. That stack had to be wrapped with a rubber band and put in a plastic bag by 5:15 a.m. and had to be delivered by 6 a.m. and my sons are like, “Every day? What happened when it rained, dad?” “Yeah, every day.” And there was no, you know, we live in this culture now where parents put pillows under their kids’ asses in the event that they fall down. And it’s just shocking to watch how parents raise kids today. So, my parents were just like, you know, “Just go make it happen.” And I never missed a day, not once. And there were days in New York winters that were crazy, like, how the hell are you going to get it done? Like, I remember trying to pull screen doors open because I got more tips and they’d be frozen shut at times. So, yeah, I’m not sure where I’m going with that one but the reality is that’s where it was born, the desire.


Justin Donald: I love it. And didn’t you have like a bicycle shop or you started bicycle repair? You did something with bikes, I thought.


Rick Sapio: Yeah. So, after the paper route, I was 13-and-a-half, my friend Chris Mason said, “Let’s create a bicycle shop.” And we did. We had an absolute ton of bicycle parts and a lot of neighborhood kids would come. And I got really good at mechanical things and it elevated to actually taking cars apart, engine rebuilding, and all that. And I made a lot of money through high school and college by buying used cars, fixing them up, and selling them. So, my first real entrepreneurial experience, I would say, was the bicycle shop. But learning how to get up early, rain or shine, knocking on doors, being presentable, asking people for tips, and culturally, today, it’s just gone. I had to buy a car recently, and I just hate the whole process. And I had to talk to three salespeople before I could find one that could look me in the eye and speak. I’m like, to the first two, “How do you do this for a living? Like really?” So, as a tip to everyone here, I think I heard this story once about a mom who made her children in the summer introduce themselves to 200 people in a busy park, or not park, a mall where stores are. And these kids went on to be incredibly successful. She’s like a 65-year-old mom. She’s like, “I made my kids do that.” I think we need more of that. So, I was very much the type to just go talk to people, talk to strangers, just like you and I are talking. I tell my kids every single positive thing that happens to you, me, or anybody in the world starts with a conversation with a stranger. So, it started at 13.


Justin Donald: Yeah. The soft skills that you gain are unparalleled to anything else from just a well-rounded skill set. I mean, these are things that you need to excel at so many areas of life, so many genres of business or, I mean, I don’t even want to limit it to business, to like being a professional and whatever that professional field is. I remember, by the way, I wanted to get a paper route and I had friends that kind of had everything locked down, so I couldn’t get it unless they gave up the route and they did a good job. So, I just became the guy that was first on the list whenever they were sick, if they were on vacation. And so, I did do a paper route periodically wherever the opportunity came up. So, I can appreciate the skills of waking up early and doing all the things and being out there hustling. Although, I don’t feel like I got any tips. I feel like the tips I got in working hard must have gone to my buddy, Kevin Green.


Rick Sapio: Kevin definitely got tips. But let’s talk about you. You’re a bright light, you’re curious, you’re focused, you’re not doing anything else. You’re in this conversation with me and the listeners are benefiting from that. I mean, these skills are just not used enough. We all are overwhelmed. We got too much going on. It’s hard. I even think for people listening to this podcast, we’re going to provide immense value to them but they’re probably doing five things right now. So, one of the most important things you can do, people, is focus and right now focus on this interview.


Justin Donald: Yeah, I think so. And you know, what was Warren Buffett’s quote or general insight on like how successful people say no to virtually everything and they say yes to what’s in alignment with our core values? Is that it?


Rick Sapio: Yeah. I love it. It is my number one quote. He says, “The difference between successful people and extremely successful people is that extremely successful people say no to almost everything and they only say yes to things that are completely aligned with their values and their important objectives.” If we all live that way, I mean, hell, the world would be a much different place. But it starts with, number one, you have to know what your values are. How do you know if something that enters your life is a massive opportunity for you or a massive distraction that’s going to take you down if you can’t map it against a pre-established list of your values? I believe that every human being is born with values that are part of their DNA. That’s why when they meet somebody, they love them instantly. It’s because there’s a values alignment that they can feel. So, it’s really inherent in all of us. So, write down your values. And mine are crystal clear, and I think all of us have a primary one. For me, it’s simplicity. That’s my absolute primary value. Everything starts with simplicity and one of my kids said, “Dad, why is family after simplicity?” I said, “Because if I didn’t have simplicity as a value, I couldn’t have dinner with you every night. I couldn’t have the life that I have with you because I’d be a scattered entrepreneur like many of them are.”


So, I would encourage everybody to write your values down and also write your purpose down. I believe we’re all born with a unique purpose. There was an old Vedic saying that says when a child is born, a star lights up in the universe and it’s imprinted with your purpose statement and your values. And whether you believe that’s true or not, I do think that we are uniquely oriented around a set of values and a purpose just for us. And if you go through life without knowing that, how the heck do you know the difference between an opportunity and a distraction?


Justin Donald: That’s powerful. Yeah, I love that. And, by the way, if you want to make it fun, there are decks of cards out there. There are a bunch of different businesses that kind of have put values into a deck of cards where you could literally go through and pick out what it is that are true values. If you’re like, “Hey, I don’t know what they are,” get one of these decks of cards and then go through it. You have to go through like three, four, or five, six different rounds to kind of minimize what it is. But it becomes clearer and clearer over time. And it’s a really powerful exercise to do with your spouse, to do with your kids, to do with business partners. It’s really neat.


Rick Sapio: Yeah. I wrote a book on the topic. It’s called Who’s In Your Room, how the people you surround yourself with will determine your destiny. And the whole book is about this topic if you want to buy it on Amazon.


Justin Donald: I love it. And so, let’s talk about that a little bit. Let’s talk about the people because you and I share this belief that it’s your peer group, it’s your mentors that elevate and create the opportunities in us that we have. Right? Like, we think bigger because of it. We process information differently. We’re exposed to new ideas, new ways of thinking, and ultimately that’s what shapes us and kind of creates the space for us to do what we do professionally and personally.


Rick Sapio: So, let me just take the opposite of that. We know, you know, and I know, and all the people listening know that there’s people in our lives, whether it’s family, friends, business associates, even spouses potentially, that are toxic to us. And if we don’t take care of business when it comes to removing toxic people, habits, projects, etcetera, from our life, who’s to blame for that? So, I think right now, if we’re doing this at the beginning of the year, one thing I want to send you, I just made a note at the beginning of the interview is an exercise I do at the beginning of the year. It takes 20 minutes. It’s called Completing and Creating. It’s about completing last year and creating this year. But one of the things that we could all do right now is write down ten things that we’re going to eliminate from our life this year, and that’s relationships primarily. But it could be habits like alcohol, it could be sugar, it could be a business that just isn’t working. I’ve got a saying that I say all the time that drives people nuts, and I say, “Where things start is where they stay.” Meaning if you’re in a business and it’s just not happening, you’re three years in, well, hell, where they start is where they stay. And if your partner, you know, if you think that you’re going to rehabilitate a partner, you’re insane. So, just know that and put that on the toxic elimination list.


Justin Donald: Yeah, that’s good. I like that. And I think at the beginning of the year, it’s really important to do that. I’m doing this. There’s a big event that I’m going to this weekend called the Wellspring, and we’re getting really ultra-focused on kind of like what 2023 is going to look like. And then my wife and I do this annual planning day. It’s a marriage and family planning day that I think you and I discussed last time. And it’s just such a powerful way to create alignment and work in tandem with each other, together with each other in one mission but to accomplish different sets of goals and dreams and objectives that each person has. So, that’s been a powerful tool for us that we’ve used for, what, over 15 years now and that I’ve personally been using it for over 20 years prior to even meeting my wife. I love that. Now, at some point, you worked on Wall Street and I’d love to hear your thoughts and your experience there. And then you took a big turn and really dove into being an entrepreneur and starting not just one business, but many businesses.


Rick Sapio: Yeah. So, let’s go back to the mentor. When I was actually 11-and-a-half, right after my dad was diagnosed, my mom literally sent me to live with a friend of the family. I was in New Jersey. I had never been out of the state but one time and I moved to Cleveland, Ohio, and I live with a friend of the family. It was a guy who was a successful entrepreneur. I didn’t know what that was and he was an engineer. And he said to me, as an 11-year-old, “I know you don’t know what you want to do with your life, but if you become an engineer, it’ll train your brain to think differently.” You know, it’s so much harder to get an engineering degree and I didn’t know just how difficult it was. But any time anybody asked me after that, you know, “What do you want to be when you grow up?” I would say, “I don’t know, but I’m going to get an engineering degree because it’s really hard to get it. And my mentor told me that with an engineering degree, I could be a doctor, a lawyer, I could work on Wall Street, I could be a businessperson, I could be a real estate person.” And so, as luck would have it, I got a scholarship to go to Rutgers. They had a great engineering program back in the day, and I’m sure they still do now. And at the time, Wall Street was hiring engineers. So, right after college, I graduated in 1987, I started working for a firm that bought bankrupt public company debt.


And so, I was part of a small team of people that would buy the bonds or the debt of public companies that were in bankruptcy. And I remember working on the Zale Corporation deal, Southland Corporation that owned 7-Eleven, Macy’s, Bank of New England, etcetera. But the cool thing about that is you’re poring through documents, you’re sitting on creditor committees, you’re doing transitions, turnarounds. It was grueling work but I loved it. And because of my training as an industrial engineer, where it’s all about process and all about procedure and all about repetitive tasks and flow and all that, I really, really excelled. And I think my mentor, every day I think about this, like had I not had that meeting where he convinced me to go down the path of engineering, I never would have had that opportunity. And to do a turnaround of a large company, you’ve got to be able to talk to people and lead. I remember I was 28 and they put me in charge of this deal. It was a massive deal. It was a $140 million bond portfolio that we owned and they made me in charge of it. But we actually controlled this company that was worth $2 billion at the time. That was a lot of money in the late 80s. And I remember talking to people that were like 50, 60, 65 lawyers, trustees, and it was just an immense learning experience. So, then actually one of our clients, as luck would have it, I don’t have time to tell the whole story here, but was Berkshire Hathaway and I had many meetings with Warren Buffett. But in one of those meetings, he said, “You got to keep things really, really simple.”


So, when it came to complex transactions, I was known as the simplicity guy. But the other thing he said to me which changed my life, he said, “If you ever start a company, you should start a holding company.” And I didn’t know what that was at the age of 28, 29 but when I started my company at 30, I started a holding company. And that holding company just makes my personal life really easy because all of my private holdings are in one entity and that’s what Mutual Capital Alliance became, which is a long-term holding company. We’re now in our 29th year of business. That’s where all my income comes from. So, he influenced me in many ways. But a holding company allows you to just have one private holding. And, you know, I just watched so many of my friends are involved in multiple deals that are chasing K-1s and they’re trying to figure out their tax. And for me, it’s all about simplicity. And that’s why I did that. Another thing he taught me was he said, you know, I’ve been in this office at the time for over 40 years, he said, “Don’t make office space and real estate a decision that you have to make every year or every five years. Just find a home, a place that you’re going to have an office that you’re going to die in.” And so, I searched the United States, really, and I found a building in Dallas that is the best building. It’s got a hotel attached, four gyms, 15 restaurants, a doctor’s office, a hairdresser, dry cleaner, a dentist, etcetera. And when my lease runs out, I’ll be here for 44 years, which is really quite crazy. But it speaks to one of my values, which is stability.


Justin Donald: Yeah. That’s really a cool story and it’s neat when you talk about holding companies, and by the way, I did the opposite of you. And so, I can be here as a testimony or a testament to how like scattered and un-simplified life can be when you don’t have a holding company and have since instituted and implemented a holding company that owns the assets under a trust. And that again is for simplicity’s sake to gather everything up to have a tax return. So, what you’re saying is so true and for anyone that has brands or businesses that can be sold, there is value to having them all under one roof. There’s a little bit of a multiplier effect that can happen when you have a holding company and you have multiple brands in there that have a similar alignment. Isn’t that correct?


Rick Sapio: Yeah. Let’s just use a real-world example. We started as if my relationship with the Gathering of Titans, we started the very first entrepreneurial week on Necker Island. This was 2007 is when we created it. I work with two other entrepreneurs and it was great. But I spent a ton of time with Branson and when you think about it, he could have 400 holdings. I don’t know what his numbers are now, but let’s just say he’s 400.


Justin Donald: It’s over 450 now. I think, is it like 454 or something like that?


Rick Sapio: So, there’s a lot of investors with hundreds of holdings but Richard Branson gets the value of not only one plus one plus one plus one equals five or in his case, 400, but he also gets the multiplier effect to using your quote of the Virgin brand, which triples the value of his holdings. But on top of that, you also get the efficiency of using the same structure. You might use the same payroll provider, the same lawyer, the same computer. So, the Pritzker family made billions off of these shared services platforms inside of a holding company. So, if you have multiple investments or you plan to and you don’t have a holding company, I think you’re crazy.


Justin Donald: I think that’s great advice and I think it’s good for everyone to consider. I mean, one of the things that I think is important is you take a look under the hood of your estate plan every year. That should be an annual thing that you do just to see if there’s anything else that maybe isn’t in that should be included. Did you pick up new assets? Do you need to structure them differently? Does your holding company actually own all the assets that you’ve acquired over time once you put that into place? What other efficiencies can you have by bringing things under the same roof as you had said, even outsourced? So, yeah, a lot of reason to do that. I would love to take this a little bit further. And by the way, I have spent time on Necker Island with Richard Branson, have had just incredible moments with him, incredible wisdom drawn from him. And I mean, still today, I would say like some of the greatest pieces of wisdom I’ve ever gotten have been just conversations that I had over six days with him.


Rick Sapio: And what’s funny about that is the first time he ever did it. I remember talking to him. He goes, “Why do you want to do this? What are people going to talk about? What is masterminds?” He had no knowledge of it. And I’ll never forget, it was May of 2008. And Necker Island, you may not be aware of this, was empty most of the time before that. So, this first group in May of 2008 catalyzed the island being full most of the time with high-paying entrepreneurs. He made tens of millions, probably hundreds of millions off of that. But I remember him saying to me like, “What do you guys talk about? I get all my information from my employees.” And he had a radical shift and I did it for the first four years and ended up going to South Africa with him and spend a week, ten days actually in Africa on this massive project that he created to create a CDC, linking all CDCs in Africa because there’s all these witchdoctors running different city-states that he’s like, “This is crazy.” People are spreading AIDS because they were told by their witch doctor that having sex with a virgin will cure AIDS, believe it or not. And so, I ended up spending some really cool quality time with him there as well. But the point of it is, prior to that time, he wasn’t really a mastermind guy. And now I haven’t talked to him in probably nine years but now I understand that he’s all about it, which is great.


Justin Donald: Yeah. I think he’s definitely adopted it. And I know a handful of people that have gotten together with him and some regularly that get together with him to do mastermind stuff. And by the way, his island is set up perfectly for it. I mean, it is just such a cool space. So many unique spots all along the island, and he’s done a great job of creating cool rooms, open-air rooms, villas, areas where the masterminding, the lounging, and connecting is just so fun, unique, inspiring, beautiful. It’s a cool thing. So, thanks for any and all influence you had on that because it probably influenced my ability to do that a handful of months ago. And as we’re talking about Richard Branson and earlier, Warren Buffett, I would love for you to share some of the takeaways that you had interviewing over 44 billionaires. How many is it now? Are you over 50?


Rick Sapio: I don’t know. I never did it as a project. I did it because I’m just a curious son of a b*tch. And I’m sure it’s way over 50. When we think about our funds, we’ve got a lot of different funds that we’re affiliated with that we started and many of our investors are billionaires too, so it’s a lot. But in terms of a formal sit down or spending a week with them, it’s about 60 to 65, I would say. But let me just tell one really cool story that you alluded to in the pre-call, which I just love. There’s a guy in Dallas. He’s now 83. His name’s Phil Romano. And this guy has started more than 50 restaurant chains, super successful guy, but he made most of his money in medical devices. And I remember it was somewhere around 2008 or 2009. We were having our monthly lunch and he was so excited about this medical company he was buying. And he said, “You know a lot of people in the medical space because you got a medical private equity fund. Do you know someone that could run this company? I want you to scan your network.” And he actually had this assistant sitting next to him and he didn’t want to talk about anything else. He’s like, “This person would be about this age. This is the background. Just think.” And I gave him a few names and the whole lunch was about this new company he was buying and he wouldn’t change the topic. He’s pretty much a one-topic guy.


So, a month later we go to our regular restaurant. I’m in the same seat, he’s in the same seat. We order the same lunch, same waiter, and it’s just him and I now. And I said, “Phil, did you ever hire that person to run the company?” And he’s like, “What are you talking about?” I said, “What are you talking about? I sat here. You sat there. You said that you needed somebody to run this medical company.” And he’s looking at me completely dumbfounded. And this is a smart guy. And like I thought I was on, you know, Fantasy Island or in the Twilight Zone. I’m like, “Do I smack him? I don’t know what to do.” So, he goes, “Oh, oh, okay.” And he’s thinking and he says, “Let me tell you the difference between a billionaire,” he points to himself, “and a millionaire,” and he points to me. He says, “A millionaire runs around like a chicken with the head cut off when they have a new opportunity. They’ve got to get a website. They’ve got to hire people. They gotta, gotta, gotta, gotta. They have all these gottas that they have to do. A billionaire, if I don’t find the right person to run it, I’m not doing it. I forgot all about that deal because I couldn’t find the right person.” That was so massively impactful to me, and I hope it would be to all the listeners because we’re all gotta, gotta, gotta machines, got to do it, got to do it, got to check the box, got to build this, got to get a Facebook campaign, got to build a funnel, all this crap. And the reality is no, you have to find the right leader.


Justin Donald: Yeah. That’s so powerful. That had a large impact on me. And by the way, going back to Richard Branson, my biggest takeaway from him, there were several and I have pages of notes from my time with him. But the biggest thing he said to me, it’s the same thing. He said, “When you buy a business or you start a business when you get involved, get out of the building as fast as humanly possible. Find whoever is going to run it, find good, qualified people to do it, put them in place, and let them run it. Get out of their way. Don’t be a distraction. If you’re in the building, you can be a distraction. So, get out of there and let them run it.” And that really is the only way to truly scale. Like, how does Richard Branson have over 450 businesses? How is that possible? The only way is through having people that can run it. And that is one of the themes you see in ultra-successful people.


Rick Sapio: And I would say with him since we’re talking about it, I’ve got actually two stories, one about Andrew Carnegie. I read the book many years ago about him, but Branson doesn’t worry about a lot of things. I remember him. He was drinking a glass of champagne and I said, “Are you dealing with any lawsuits?” And he’s like, “You mean like big ones, Like with governments and like stuff like that?” I go, “Yeah.” He goes, “Yeah, probably about 75.” And you’ve got entrepreneurs that are dealing with one minor law lawsuit and they’re on the ground crying. Meanwhile, this guy sipping champagne on an island, dealing with all kinds of, you know, you could imagine in his vast empire what he must be dealing with. So, the higher you go up the food chain, the more you have to deal with dealing with negativity and people. I don’t know how anyone feels. It doesn’t matter about Donald Trump, but imagine if you’re president, you’re Donald Trump, and a billion people want you dead and you’ve got to be happy. And so, it really is a skill to have the presence and being present no matter what’s going on around you. But here’s Andrew Carnegie really struck me because here’s a guy in the 1890s, a lot of people don’t know this, he lived in Scotland most of the time. He never once in his entire career had an office and he dealt with his managers by Morse code, you know, the telegraph machine.


And just think about that. Like, I have to be in my office. I just love my office. But this guy worked from his house in Scotland in the 1890s and became the wealthiest man in the world. So, none of us have an excuse when it comes to living like Richard Branson in an island somewhere or, you know, it’s funny, just while I’m thinking about it, that was the week we were there. It was the first time he had a cell phone. So, prior to 2008, he was just doing it on an island. He goes, “Hey, if somebody wants to meet me, they can call me or they can come to the island,” which is not easy to get to, as you know. So, I think this whole concept of entrepreneurs having to be present, having to make decisions, having to hire, and all that is just nonsense. I do want to get to a topic that is really near and dear to my heart because at my age I found what I’m really, really passionate about, which aligns with all my values and aligns with my purpose and my purpose statement. By the way, if you don’t have your purpose statement written down, I’m saying it for the second time, take a week and write your damn purpose down because it will help you align the stars on your life. And my purpose very clearly is to inspire entrepreneurship. I mean, that’s just the line. I want people to be entrepreneurial. What does that mean to me? It means taking responsibility for outcomes. You could have a massive outcome that you want or objective.


And an entrepreneur is anyone who takes their existing resources, takes responsibility, and creates an outcome. And that’s what I’m really passionate about. But as it relates to that, one of the outcomes I like to create for entrepreneurs is an exit. And I’m super passionate about the Exit Concierge. So, when we have time, I’d love to talk about it.


Justin Donald: Yeah. Let’s definitely get into that. You know, one other thought that I thought was interesting before we move away from Richard Branson and then I totally want to talk about this because this new project that you’re doing is just incredible. So, Richard Branson, so we were out kitesurfing, well, I should say he was out kitesurfing and I was doing a very poor job of attempting to kitesurf and getting dragged in the water, and he made it look easy and graceful. And we got back and he has a set time while he’s on the beach in this little cabana. And his assistant comes over and he’s like, “All right. Who needs something? Who emailed?” And so, I learned he doesn’t read his emails and a lot of people don’t know that he is dyslexic. Actually, probably a lot of people do know, but plenty don’t. I learned this through the process and part of the reason that we connected so well is because my daughter has dyslexia. And so, it was really fascinating watching him use his assistant to say, “Okay. What did they say? Okay. Email them back this.” And so, he just listens and then he just dictates everything. And so, it was like a 30-minute meeting. They got through all the stuff and then that was it and then he went back out to kitesurf. So, it was like his little break. And I was sitting there just waiting. I was like, “Hey, do you mind if I just hang here?” “Sure, sure. No problem.” It was so eye-opening just how he works through people, how he just eliminated things like email that I think can bog people down, and he just has a system that works. So, pretty cool stuff.


Rick Sapio: It’s a massive point. And you think about all the stuff that fills our time. I say to people often, if I followed you around with a video camera from the time you got up in the morning to the time you went to bed for 18 hours or whatever it is every single day, I argue that 90% and this is an actual fact. Charles Duhigg wrote a book called The Power of Habit. He says 96%, but over 90% of what every human being does on any given day is completely unaligned with their values, their purpose, and their important objectives. So, I would say, you know, think about all this time you spend on Netflix, online, on email. I just made it easy. I just cut all that crap out. I’m not on social media. I’ve never had a connected TV in my house. I don’t use a cell phone that often. Never had a Netflix account. So, I think that those are like easy things but just think about what you just mentioned in the story of Richard, holy cow, to not have email because that is something that I probably spend far too much time on.


Justin Donald: Yeah. Me as well. And I feel like that story has helped me get even better with feeling like I can fully delegate it all. It’s pretty powerful. I am really excited, though, to talk about Exit Concierge because your track record is incredible here, Rick. You have had over 200 private transactions, private sales, some going public, but a lot of acquisitions with other privately held companies. And so, you have been doing this for a long time. You’ve got a track record, you’ve got expertise. But moreover, because you have all this data and you have all these relationships, you’ve been able to streamline this process. And I think it’s fun to talk about because right now we’re in a season. 2022 is a huge season for people having exits. A lot of people speculate 2023 will be even bigger, even with the woes of the economy, maybe even because of the woes of the economy. But there was a four, well, it was less than a four. It was like a two, two-and-a-half week period where we had nine members of my lifestyle investor community, nine members of our mastermind that literally had an exit within two-and-a-half weeks. Pretty powerful stuff. And so, I just think this is one of the most important things that an entrepreneur can learn about, can think about, because it’s not just about exiting. It’s about how do you scale along the way? How do you set it up for the best exit possible? How do you broker the relationships that are going to yield you the best return and even the smoothest transaction through and through? So, I’d love to have you talk about Exit Concierge.


Rick Sapio: Yeah. I am unbelievably motivated by this topic. It’s something I’ve been working on for 36 years. Thirty-six years ago, I did my first transaction. As a private equity investor, as a founder of private equity funds that invest in companies, what we’ve realized is when it comes to the exit, the exit is the most inefficient process, in my view, in all of business. It is shocking how long the process takes, how much it debilitates companies and owners, how inefficient it is, how expensive it is, and all the mistakes along the way. And what we realized is when we call a company that we invest in and we said, “Okay. It’s time to exit,” the management team goes from full running the business, KPIs, growing revenue, whatever their objectives are and shifting the entire focus of the business to exit. So, that means they got to find an M&A attorney, they’ve got to find the investment bank, they’ve got to find the quality of earnings, accountant, etcetera, etcetera, etcetera. And we just said, “This is horrific. We’ve got to stop this.” So, we’re the only firm that will actually, and you have to think about this mentally, we will sit on your management team and handle the objective of the exit. What does that mean? If you want to build a building, you probably wouldn’t build it yourself. You probably would hire a general contractor and that general contractor would hire subcontractors that they’ve worked with before.


So, the building is built very much in a team effort. It’s no different on an exit, and it’s shocking what we see. So, whenever we exit a company, we hire an M&A attorney on a fixed fee because attorneys can be unbelievably expensive who has worked with an investment bank that we’ve worked with before at a reduced rate, and we hire a quality of earnings provider to make the exit more seamless on the buyer community. So, those three really key vendors, along with some others, have worked together before, work as a team, work at a reduced rate and become far more efficient. And as a result of this process that we have intellectual property around, we’re able to sell any private company faster at a much higher multiple of value and a lot less stress on the owner. And we call it a white glove exit system. And it’s probably the first time in my career that I’ve really been on trend. There’s a great book that I read called The $10 Trillion Opportunity, and the book is about that baby boomers no longer are giving their companies to their kids because the kids don’t want it, so they’re selling them. So, they believe there’ll be 10 trillion in exits between now and 2032. So, it’s just great to be on trend with a really valuable service.


Justin Donald: Yeah. And so, I love what you’re doing there. And what I would like to do is kind of clarify a few points here to really kind of elaborate on the value, because one of the things that I’ve seen with a lot of friends and, by the way, I’ve been involved in exits. I’ve started companies, I’ve sold companies, I’ve invested in companies solely as an investor, but I’ve also been in roles as an entrepreneur. And so, a lot of them are, you know, many of them could sell but I’ve had kind of a season and life experience kind of along the way in various different facets. And I’ve got a lot of friends that are entrepreneurs. And one of the things that I see is that a lot of entrepreneurs, when they go to market, who they’re going with isn’t providing a guarantee or enough eyeballs of potential buyers to drum up the competition to get the best value or the best acquisition price. And so, I think that’s one thing that I’d love for you to touch on. And then secondly, I think in the industry, it’s pretty standard for mergers and acquisitions, often you’ll hear abbreviated M&A, that one of the firms would take a fee off of the gross sale price and maybe it’s 1% or 2%. I think 2% is industry standard or somewhere around there. I think there’s some variance. But to be able to do it for more of a flat fee, which often is going to turn out to be much less in a shorter period of time. So, please elaborate on those because I think these two things are big selling points of your service.


Rick Sapio: Yeah. So, this is very controversial, what I’m about to say. So, when you hire a PR firm and you pay them $5,000 a month, they’re going to go to their riders that they know and they’re going to exhaust their network pretty fast. And PR firms generally are in the business of getting new clients. So, their big focus is new clients so they can get more 5,000-per-month retainers. And you find very quickly that, holy cow, I’m continuing to pay but I’m not getting the result. Investment banks are the same way. They’ve got a lot of preferred buyers and they typically focus on those preferred buyers. So, they say, “Justin, I’m going to sell your company,” and you’re like, “No, no, no, I don’t want to go to your preferred buyers. I know that’s easier for you.” So, we make the investment bank talk to 200 buyers. We have 200 buyers in the system. This is part of the process. There’s a lot of unique things about our process. And by going to a much broader community, actually talking to them, which many, many banks won’t do. So, we work with a handful of banks that we’ve been working with for decades that follow our process to a tee. So, number one is getting the funnel as big as possible potential buyers because what happens in most deals is that bank focuses on one buyer. It could be Bain & Company as an example. And Bain will jack the company around for four or five or six months. And then if they can’t come to terms, they start the damn process over, which is just an absolute inefficient waste of time.


Separately, I’m flipping topics to the M&A lawyer. As you mentioned, when you’re doing an M&A transaction and I’m dealing with a guy right now who called me in a panic. He isn’t even at the yellow-eye stage. His company is worth 120 million. The law firm has already charged him over $1 million. So, that’s 1%. Law firms oftentimes try to get 2% on a transaction. What we do is we work with tried and true national M&A law firms at a fixed fee of one-third of 1% with no contingencies, meaning it can’t go higher than that. And the reason they work with us is, the same thing on investment banks, by the way, the reason they work with us is they don’t have to market. You know, investment banks and lawyers have to kiss a lot of frogs to find the deal. So, because of our volume, we’re giving them deals that they don’t have to do any due diligence on. And so, they like the volume and they like to just do their work, which is, in the case of an investment bank, selling a business, in the case of an M&A firm, working through all the documents to get a successful close. So, there’s a lot of elements of creating efficiencies. And by the way, the way we charge is so rare in the industry. We are fee. We do have a retainer. However, we refund the retainer at close. We get paid on the amount that we can discount the lawyer and the investment bank, and we share those savings with you.


So, by using Exit Concierge, one of the things that makes it so novel is the seller, not only do they have to change their whole life and learn how to sell a business, which in most case is going to take two or three years, but they get it done in eight months. They get to delegate it to someone and they generally get a higher exit price with less vendor fees. So, I have never been involved with something this on trend and I’ve been selling companies for a long time. But as the Exit Concierge, we’ve been doing it for 18 months.


Justin Donald: Yeah, I love it. I love the model, I love the streamlining effort here, having the teams, having a large top of funnel, having the reduced fees, having a savings-based play here. And I mean, there’s a lot to like about it. You know, when I think about my friends who are entrepreneurs, all the things that they’ve gone through, many of which that have sold, put their whole focus into the M&A process, sales slip. Right? And so, with this strategy, I think it’s important to kind of get that GC who can run point so that the business continues to grow, Everyone stays focused on their objectives, business conducts as normal, and so that when the time comes and there is an exit, the revenue, the sales, everything is pretty consistent. There’s not the drop-off that then these firms love to negotiate out in the 11th hour and say, “Well, hey, now it’s only this, so we want a discounted rate.” I mean, ask anyone who has sold a company and I bet you 90% of the time, maybe even more, 90% of the time, there is a reduction that is thrown out in the 11th hour right before the closing.


Rick Sapio: There’s a stat from EPI, Exit Planning Institute. They say that 80% to 81% of all exits are failures. Either they don’t happen or it’s far lower than the price. But one thing we didn’t touch on is I interview the heck out of the decision makers If we take on an exit client and if I don’t feel that they can delegate the exit, we’re out. Just like a GC, if they’re building a luxury home for you and they realize, “There is no way I’m getting this husband and wife to allow me to do my job,” they’re going to terminate you. And so, in consistency with all my values, we value people that we help exit, that also value our values, which are simplicity, delegation. Probability is one of our values. I love probability as a value. People go, “What is that?” Probability is doing things that increase the probability of hitting the stated objective. And on the personal side, in our family, simplicity is one of the values and probability is one of the values. And my wife and I have said since our child we have four kids, as I mentioned, 8, 10, 12, and 14, or maybe I didn’t mention it but we’ve told them since birth that we want to raise independent, entrepreneurial, God-fearing, hard-working 18-year-olds. And that’s why we’re not buying you a car and that’s why we’re not driving you to your damn sporting event. You got to figure it out. And that’s why you got to work when you’re 15. And that’s why we go to this school and live in this neighborhood and do things this way.


But we want to increase the probability in our parenting decisions that we actually live up to creating an independent, entrepreneurial, God-fearing, hard-working 18-year-old. And my son just turned 15 and I literally, I think I mentioned this to you, I started crying. He said, “Dad, I really…” Can you hear me? Did the mic go off?


Justin Donald: No, I can hear you.


Rick Sapio: Yeah. He said to me when he was in eighth grade, “Dad, I really want to go to this private boarding school that’s in Kansas,” and we live in Dallas. And my wife is like, “No way.” And he said, “But you’ve been telling me my whole life you want me to be independent and this school creates entrepreneurs that are hardworking and all the things you tell me.” And I couldn’t say no. And so, he’s been at the school now. He’s a freshman so he’s been there, what, since August. And it’s funny, the headmaster of the school, when we dropped him off in August, he said to all the parents, “Listen, we don’t have any screens here. We don’t have any phones. You’re not going to hear from your kid until Thanksgiving. And guess what, parents? Your kids are going to have a lot of problems here. Guess who’s not going to solve them?” And my wife looks at me as like, “Okay.” And he said this, he said, “If you’re a helicopter parent, take your kid right now.” And he came back for Thanksgiving break a few weeks ago as a different kid because he didn’t have the neon glow of pop culture and screens. He’s in the outdoors. He’s on a farm, he’s milking cows, he’s growing food, he’s cooking his dinner. And I say all that to say that we made that decision because one of our values is probability.


Justin Donald: I love it. And I know we didn’t have time to get into your third family and business value, which is leverage, but I think everyone can gather, I mean, it’s a brilliant value and I think people can gather the strength of that. What I’d love to do is have you share how people can reach you. Let’s say someone wants to learn more about Exit Concierge. Where do they go? How do they get in touch with you?


Rick Sapio: is where they go. My email is if they want to send me an email. I mean, it’s really that simple. That’s my holding company. That’s where people go. So, make it easy.


Justin Donald: I love it. Well, I love wrapping up each episode that I do by asking our listeners one simple question, and that’s this: What’s one step you can take today to move towards financial freedom and move towards the life that you truly desire that’s on your terms, a life not by default, but a life by design? Thanks for joining us and we’ll catch you next week.

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