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