EP31 - Assurance in Action: What It Means for Your ESOP Journey

In this episode, Jason and Makenzie have a conversation around the meaning and relevance of assurance in the context of an M&A transaction and more specifically in an ESOP transaction. They discuss who needs assurance and why - whether it be in the form of a financial statement audit, surety bond, fairness opinion, or simply advice from your providers.

Transcript

[0:09] Thank you and welcome back to the journey to an ESOP and Beyond podcast I'm your co-host Today Jason Miller.

[0:16] And I'm here with Jason this is Mackenzie worth. And today we're going to be unpacking a word that means 10 different things depending on who you ask and it's going to be about Assurance I know that it's an exciting topic for everyone, but it could mean an audit it could mean a surety bond it could mean a bank letter of credit or any other number of things but also brings with it a connotation uh of. Really verifying trust and when we think about an ESOP conversation an ESOP transaction and all the details that go into the deal and throughout and all the parties that have to be involved in making a transition from your ownership to employee ownership uh Assurance is is kind of a big deal. And it's the kind that keeps deals moving and partners trusting each other throughout that process.

[1:12] We're obviously doing something a little new today and uh McKenzie and I are just going to be having a conversation around the these topics uh and we're going to see how it goes so thank you for joining us. Uh we appreciate your listening in uh and hopefully throughout this uh we'll all learn a lot not just about uh Assurance but each other and and and this contextso McKenzie. Um every stakeholder in an ESOP transaction, the lender the trustee management e even really the employees kind of needs Assurance before they act and what I'm, I'm kind of positing about this is it's kind of an invisible infrastructurethat makes things. Possible or keeps it together what would you think.

[2:09] I would agree with that I think um specifically if we kind of just start at the beginning of of the process with an owner even exploring the idea of an ESOP the business owners and management need. A lot of assurance in in the process itself andkind of exploring something that they've never.

[2:32] Understood before been exposed to before they need the Assurance from their advisors and everyone throughout the process that. What is being told to them is going to be hold true when things come to fruition um. Specifically when you'regoing through the transaction itself or even before that just with valuation and feasibility setting the expectations. For business owners and their management team they're really relying on you and as an adviser you're providing assurance that what you're telling them is goingto actually come to fruition.

[3:14] That's probably the most important View of all of this as as a a finance nerd the first thing in my mind goes to are things that I mentioned in the beginning like audit and Cherry Bond and letter of credit but I think thanks for jumping to the most important part first uh, everyone kind of needs needs that um and we're going to use the word in probably a million times someone should put a counter on how how many times we say the word Assurance today but I, I I thinkthat that's that's not just true but probably the most important thing is what what assurances do you have as as a Founder as as an owner that this is this is going to work for you who who should you trust and how how do we do that I I think.

[4:01] I think it kind of lends to the idea that everyone is is asking that question whether explicitly or implicitly with the people that they deal with is can can I trust you, and I think it definitely goes it's it's a 2-way street I think it's it's of course important for. The business owners that are kind of going through with this transactionum taking. Maybe not a risk but just knowing that they're going to switch their ownership or transition their ownership do something completely different that's you need a lot of assurance throughout that but at the same time as an adviser you need assurance that what the information management is providing you, isis accurate so that you're you're almost. You need Assurance on both sides because I can tell you that this is going to work but that's only contingent upon the information that your pride providing me. Is is accurate and reliable. Ya know that I I what you said reminded me of a statistic that I read over the weekend um that only about 30% of businesses end up selling or transitioning U

[5:18] So 70% of of all businesses any never transition whether that's again all the things that we've probably talked about before on the podcast are 7 different exits uh 70% take the uh to sell the desk and chairs or or die at that particular desk route uh the only 30% kind of transact and, shity of execution um is what came to mind when you were you were sharing about that and you know what we say as advisors or what any adviser would say to someone contemplating an an ESOP transaction or a different 1 is how uh, how's this are you sure this can happen, um what what are the the chances of this this this happening for me and that's really I think the heart of this conversation on the the the other big topic that you were mentioning is all of your providers have to be able to trust. The information that's given to them to facilitate the transaction to get to uh the the the closing to to get to the Finish Line um.

[6:29] Which of those do you want to talk about firstwell I think what you mentioned about the statistic of how many how many business actually transact umI think a lot of what's attributed to that is, it's obviously a long process fromstart to finish before, maybe before you even decide you want to transact to going through the transaction and when you get to the tail end of things where it's time for due diligence and things may come up where people are. Getting really into the weeds of the financials or or the information about the company if something is discovered at that time that wasn't. Uncovered in the early stages I think that's kind of where a lot of things a lot of times the transaction will fall through. And I thinkkind of to avoid that ismaking sure you are transparent. As much as possible in the early stages and maybe that's not even just transparent to the questions that you're being asked or the information you're being provided but also.

[7:41] Going out of your way to kind of provide information on um like things that aren't being asked maybe it's just something that you know of but a business owner knows but I as an adviser don't know and if I don't ask. Um or maybe I don't know to ask ityou can still as a business owner like. Uncover that information even if you're not sure if it's relevant to the situation kind of just being transparent all around um and error on the side of likeover communicating.

[8:11] That would be a great quality uh to experience in in in a transaction and I think you're right is the more forthcoming. Uh every party is then the easier it is to set reasonable expectations and if reasonable expectations are set then the the assurity of execution is is greaterum. It came to mind as you were talking, uh there it sounds like there's not just a character quality of of individuals that should carry through in uh in the process but that there are specific actions that they can take. Um the owners can take in advance to prepare themselves for whatever their potential transition would be in the future and we can talk about the ones that, uh made directly impact uh an ESOP transaction umbut I I I think fundamentally. The uh the purpose of any of the I hesitate to use the word um.

[9:19] Uh product, uh in in that but as as we we think about it maybe expenses to owners Founders are going to look at that and go ah these are expenses I have to pay it's the cost of doing business and we think about, audits or or accounting assurance and we again we think about assurity company and then we we, talk about you know Bank bank letters of credit as kind of the those big ones uh what are they for what are their purposes and do people confuse them um a as an auditor let's let's start with uh your your thoughts and perspective on what is accounting assurancewhat, uh who who would ask for for that what purpose does it serve uh and then let's let's talk about how that may make sense to have as 1 of the action items for for owners in advance of of a transaction. Yeah.

[10:15] Um so there's there's different levels of assurance when it comes to like financial statement Assurance um the most Assurance being an audit um, at least you know there's a review there's a compilation which is no Assurance um but I thinkthe level of assurance depends on, what isrequired or maybe not even required just wanted by users of the financial statements um that can vary if it's if it's required it's likely required by um a creditor um an investor someone that that is using the financial statements and relying on the financial statements.

[10:57] They're also may just be you know owners or management that want to make sure that, Financial records and accounting is is accurate and so maybe it's not required by a third party and maybe it's just for their own kind of um Comfort or in preparation of in the future if something if they do need an audit or if they need to, um share their financials that they know they're already in a greatpositionumand I think there can be.

[11:30] Maybe like connotations with audits or you know people people aren't always excited to meet with Auditors and speak with Auditors and fulfill Auditors requests but really it's it's. Not to kind of like. Have a gotcha situation it's more to make sure everything is in place and your financial statements are reliable. And when so many people arerelying on them orum.

[12:00] Yeah I guess relying on them they need to make sure that the revenues that are reported in that period are accurate and you're not including revenues that should have been reported in Prior period or in the following period or are you a all of your expenses correctly um at the right amount there are so many if you're familiar with audit there's all all the different assertions involved that um go into place and then. Not even just the numbers themselves but do you have the controls in place to make sure that the numbers what what what gets tothe. Uh financial statementsdo you have the controls in place to make sure that. Everything isis working properly andaccurately to issue reliable financials. I I have my experience in my view and so I my most of my career in in banking was I I was the require of clients to provide for me accounting Assurance for all the reasons that that you just mentioned um so Not only was I the big bad bank but I was the big bad bank that was requiring an additional expense uh and that that view I've heard so many different times and the value of the.

[13:21] Assuranceumis not in. Completing the report to the the bank it is the Gateway or the access to the capitalthat you are borrowing from them in order to achieve a strategic objective, of your company what whatever you're using you're buying in facility you need a larger line of credit um you know you need a whole whole new uh assembly line you need to buy what whatever it might be and the the bank who's deploying that capital, is saying hey you could you can tell me whatever you like about your numbers but I I need someone else, to put their name on ituh after inspecting it to know that it's been done properly and with that stamp of approval um you know that that's that's what creates that that access to to Capital.

[14:15] Umand I I do believe that a lot of times it gets to well it's just someone saying what's already there but the value to the company to be incrementally better at what they do than yesterday in a financial control standpoint comes through the process and identifying some of those areas but I I don't I don't think, umtell me what you think about that and again your experience as an auditor let's talk about that control piece uh hey, these are some things that we've identified throughout the course of the audituh that we we recommend that there's there's Improvement or that this happens or this occurs give us you know a glimpse into how they could utilize the findings in an audit that aren't necessarily Financial to help.

[15:05] Get them to where they want to go uh as far as the the um Integrity of the the underlying company right I think that's something that's definitely. Maybe not overlooked but just not reallyknown or fully understood when companies go through an audit or know that they. If they've never had an audit before they don't realize that there's more than just oh give me your number so I'm going to look at your numbers and make sure you're recording everything correctly there's so much more that goes into it and I think like some sort of findings that that are an example of what. Can come from an audit that can help improveThings Areif you're maybe you have process in place and you have um.

[15:51] 2 people do or 1 person doing 2 different roles that should really be done by 2 different people to avoid um. Any sort of conflict andum.

[16:04] Maybe it's it's a a process where there needs to be a level of review done maybe it's a complex calculation that is um an estimate that. It ends up on the financials and if you have 1 person performing that complex calculation that's an estimate you need another person to, take a look at it and review it and make sure the assumptions are reasonable just having um an extra set of. Eyes even on somethingumI'm trying to think of other examples and there's a million of course but maybe it's. It sounds to me like no nobody um wants to put themselves in the position to just trust what someone else says without someone else. Having their hands or their their eyes on it even internally or or through uh.

[16:56] Through the control on iteven something as simple as are you keeping up with your your bank recs on a monthly basis or are you catching them all all up at the end of the year like that is. These are just simp almost like simple or obvious like processes that should be in place that um. Maybe you don't have the capacity or maybe there's a million things going on and you're not or you or you think someone's doing it and maybe they weren't told that was part of their daily I don't know there could be so many different scenarios of. Ofum areas that all eventually contribute and show up on the financials.

[17:39] And then, the the users of financial statements you used that phrase earlier um list out a couple of of those that's not the big bad bank that that we've already brought yeah um any sort of investorum. There could be I mean with public companies for example you're the all any. Stockholder anyone that has any sort of ownership is using those um maybe analysts that are are. Projecting or um using financials to to make projections about. The the stock price of a company in the futurethey'll use financials ummaybe a. A charity bond agent if you if you need bonding your your charity bond agent will use those financials assess them and and of course the shy as well but um.

[18:40] There's there's could be many different parties and then of course whenever you're you're looking to sell if there's a buyer the buyer needs those financials. And don't undergo these uh, the accounting Assurance piece whether it's a compilation of review or or an audit what what's the the potential alternativeum if an interested buyer wants to have some insight into what what's happening. With the business's financeswell, I mean I think all the times there's a quality of earnings engagement that will come from it and I think I mean that's also maybe another topic we can explore because a a QVum is, it's not an audit it's something you could say it's similar to an audit but it's it's at the same time very different um and even so for example if you have an audit that doesn't mean you get to bypass the QB process you should still have a QB um because the purpose of a QB is not just to. Um kind of validate thatfrom a high level without going into.

[20:02] The level of assurance that you do with an audit making sure that thing that everything is reported. Essentially correctly but also making sure that. The earnings in a given year or on a trailing 12-month basis is reflective of.

[20:21] Earnings in any given year um, if you're valuing a company based on the last 12 months and in those last 12 months they had some big lawsuit and had a settlement well that's a that's a 1-off situation we shouldn't value the company with that in consideration so but in an audit of course that that settlement needs to be in the financial statements because that is what happened and it's accurate so there's kind of different ways.

[20:49] To look at that but I would say even if you don't have an audit review and you go into the QB sure you might get a little more beat up than you would if you had an audit um but at the same time the, the the work that goes into a QB is is less umI guess intensive it's just different than an audit, 8 you mentioned something really important so the the purpose of the quality of earnings the the require or the asker of of that is the the buyer who's saying, hey what I would like to understand what's happening and all of those adjustments, and 1 time events within a period of time in relation to the historical earnings of of the company lend directly to value. Which as a selling shareholder that would be super important to me how how do I substantiate that how do I validate that um how do I prove that, what I know or what I believe about the value of my company is going to be accepted by the person who has the check uh or checks or you know is going to be purchasing uh my my shares from me uh to to give them.

[22:04] Assurance that uh it is what it is. All right so distinctly different between your normal accounting insurance that has additional uses Beyond just, a requirement for big evil institutions um and then how how all this plays together for potential transaction um you mentioned charity bonds um, and not every type of Industry requires assurity bond uh but is assurity bond and auditno, no all right not at all who who is the beneficiary of assurity bond um and then what who requires that like how how does how does that work in uh in in what assurances it providing to whom I guess is the way that I'm asking it, mhm um sothe shity provides. Assurance that well I guess well I guess we can start with industry so this is very common in in the construction industry with with contractors umand what. So a contractor will bid on a project andum.

[23:18] The shity provides assurance that the contractor or that the job will get done if the contractor runs out of money um the shity will come in and and cover any Financial.

[23:31] Like loss or or within that process umso it's.

[23:38] It's not an audit at all but it is a form of assurance because you're you're assuring um to a third party that. Something will be done or completed. So who would go to build a tower without first counting the cost right his what what comes to mind for for me and the uh.

[24:01] The clientwho is buildingthe the building wants to know that it's going to be completed and that they are hiring someone, to that says they willum but they are requiring a a bond on that job, that says if you don't someone else is going to step in and finish building this building for me completing this project for me uh and the. Carrier of that is the the Builder or the contractor, right and they're saying yes I will build this for you um but if I don't, yeah we'll we'll carry we'll carry the bond my my word is my bond but it's not it's the shy company's Bond word that is saying yes we will complete this for you even if they don't. Mhm. A lot of risk or can be a lot of riskit's a great word we haven't I don't think it's come up so far what what are we trying to do. Uh I believe all of this is reducing the risk of of any any type of transaction or contract or or agreement, and in finance in money in anything related to Value there there is always risk, and the lower the riskum.

[25:29] Inherently in like valuation for for an equity or for for a company the lower the risk really the greater the value.

[25:39] Because the investment that needs to be made in that is is more assured of a return right um and the these are ways as Founders as owners that are contemplating a transaction instead of it's an additional expense again or you know I'd something it's that that cost of doing business all all of these. Validate and verify what you say about the risk of your company to another and then it.

[26:10] Kind of translates over into well if I'm missing a mark, by missing a control if I'm off here and I don't have any AP and are separated maybe I should do that and we think about processes and we have processes underneath, supporting people than the kind of the the value that those individuals contribute to the company and therefore to the bottom line and therefore to the value of the stock the underlying stock, is greater when they're supported by processes and then when that's Den demonstrable to Providers like shy agent to achieve bonding to get a bond to back your word then you can do more projects as long as you have the people to do them right so there's fun little daisy chain, of uh really what we're looking to do is is reduce reduce risk. And and then demonstrate that with uh proofright.

[27:07] Right and I'd say it'seven though it can be like perceived as just like this extra cost that maybe you you feel as a business owner that you don't need or you don't want for in a scenario where an audit or review isn't required but would. You know benefit the company just to have 1 I think it it. It should be looked at a little differently like it's of course it's it's an expense but it's an expense that. It's worth it very much worth it and and avoids um. Maybe evena larger expense in the future from whether it's kind of a a misstatement that's identified and that kind of. Adjust prior periods or or you have to.

[27:54] You you had if you had an audit and you had an expense or a continuous annual audit these things would becaught or um.

[28:05] Maybe you would have the processes in place for them to not even happen.

[28:11] I can get really myopic in my view umwhat am I what am I missing, in this concept of the the trust but but verify um element of, assurance and the idea of of being transparent and how that transparency plays out is there anything that kind of comes to mind that I might be missing.

[28:38] Um

[28:40] I guess if we want to kind of circle it back to just maybe esops in general I thinka big part of this is relevant. And valuationum I thinkduring the valuation piece what.

[28:57] The assurance that maybe is most important is on. The the company sideum as an adviser I need assurance that the numbers you're providing me are accurate and that the questions I'm asking and the answers you're providing. Accurate and I'm not missing anythingin in the. The picture of the company and then maybe when you get tofeasibility the Assurance kind of switches to. Uman adviser as an adviser I need to assure youthe business owner management the company that.

[29:36] This transaction isfeasible and.

[29:42] It's feasible for the company totransact.

[29:48] Um sustainor I guess is sustainable for the company going forward um and then not only that. The that the the transaction process itself isum.

[30:03] Maybe like seamless forthe business owner.

[30:10] Let's let's keep on that that that's a great point and once. You're through the feasibility stage and know as an individual or as as a selling group of selling shareholders this is what we want to do we're going to move forward with the ESOP transaction now we introduced the other side right so that then what we have to do is is take, that that information um or at least the raw datauh and provide that to the the trustee, and we as as as a as an adviser and with the selling shareholders the selling shareholders are asserting you you you can also rely on this data, but they're obligated to act in a fiduciary capacity. For the employees of the company uh and on behalf of of them and representing the the trust uh and let's talk about due diligence.

[31:09] In that right they're going to do the same level of scrutiny if not more and being forthcoming being transparent being open lends to a. More seamless I think it was a word that you used earlier smooth processbut that. That level of documentation uh that that's going to be required throughout isn't just Financial um 1 of the things that comes up in in paperwork is uh in the legal documentation is is reps and warranties.

[31:42] And that this is another the area where we could probably unpack on a whole new episode but the the seller is making the representations that the facts are the facts as they they've been, described in a list and there's a long list of those uh items where it's everything that you've said is true, and then you are putting your name to and and a testing that it is true and then it's not just representations it's it's reps and warranties, so then the the warranty part is if it turns out not to be right, then just like if your your iPad broke and you sent it back for warranty work like they're going to fix it because of the defect there was a defect in what your representation was and then you warranty that you're going to remedy it or you're going to fix it, right and you're providing your assurance that that that's what you're going to do. And maybe Jason if you can elaborate on obviously we've we've hit on like represent the rep uhmanagement. Giving their reps on on the numbers themselves but maybe kind of elaborate on what otherareas so like 1 thing that comes to mind for me is are there any like open. Lawsuits or or any pending litigations that are outstanding what what other representations does management make.

[33:09] Asking me questions that's great umI had to flip it over to you I didthere was a long list I did not provide what that that list was but uh the the facts that are being stated are, yeah yes are there any open lawsuits um are there any um. Anthony work workplace complaints or OSHA violations are you in trouble with any regulatory body, is there any environmental concern with the way that you are occupying your your space um all the things that you would want to ask if you were buying a business from someone is what what you're representing basically in in that that list of all all the information's been disclosed and it it's true and accurate. Uh to the best of our knowledge because not every no 1's omniscient um but with everything that we know you know and we're saying that that's the way that it still is um. But the that yeah environmental legal, um the the quality of the assets right so if we're we're making things and we have an assembly line those assets are coming along with with the purchase that everything's an operating kind of condition and and able to, produced the revenues, that we've attested to financially all the things are in place uh for for that to continue with the new ownership, does that make sense yeahdefinitely.

[34:36] Um 1 other piece of assurance kind of following with with the due due diligence phase um. That I think we can touch on is the assurance that the independent valuationfirm provides to the trusteeum.

[34:55] I think that'sthat's 1 thing thatis maybe um.

[35:03] It's a common question when when we're speaking to business owners about the process and it's like okay wait we're doing evaluation with you but then the trustee also has evaluation and of course that's a big part of having an arms length transaction um but with an independent evaluation form they're issuing a fairness opinion so maybe ah let's speak a little bit on. Kind of what a fairness opinion even is andhow that ties into assurance, it's a little different than the sayings that go with everyone has an opinion when we talk about assurance and and opinions and I don't I don't think we mentioned it earlier in in an audit what what gets expressed that gives people comfort. Uh is is the opinion right and it's not.

[35:54] Your opinion it's the auditor's opinion based on the the underlying financials right right. Uh and this is the part that always got me early on in my career is you you want an unqualified opinionyes, right uh and it sounds counterintuitive uh and like I I want no I want it to be qual know you don't want it qualified right, that basically means that it's okay except for and then there are some things that could be material to those those requires or users of the financial statements so it's not unqualified because the auditor is unqualified it's unqualified because it it passes muster and everything is okay right um, and that's that's really part of the the cost of the of that Assurance is it's someone else putting their name on the document and on the opinion that, after the thorough inspection uh it it is what they say it is, right and the where the the liability or the risk goes to is on the professional who is expressing that opinion based on their work. Uh and what they've what they've inspected.

[37:08] So if me as a bank came back and said hey I I didn't get repaid um you know you said that everything was fine but we found out afterward that it wasn't uh then we trusted you, the the auditor we we yes we trusted the client to the extent that they provided the information but really we were relying on your opinion so in in that the the opinion the the fairness opinion and and an ESOP transaction is what gets provided from the trustees valuation firmthat says in light of all of the the information uh that was provided to them uh in in light of this this transaction.

[37:53] Uh that they are saying that it followed the right standards and that they are expressing that the the value that was agreed to is is fair. Uh analysts of other things it's a a really important document. We often review that with our clients afterward because it contains a lot of language and information related to the deal um and what we don't receive and what the client doesn't receive is the actual valuation because the, the valuation was provided the user of that was the trustee, right and it's a an interesting thing in in esops right so the trustee was provided with that but all parties are provided with the fairness opinion that say based on these facts and then the deal that was agreed to, uh this is what we're we're putting our our stamp on to say that everything was good right. And that Assurance is you're assuring that everything is good but you're assuring it too um, the governing parties such as the IRS and the Department of Labor and assuring that the the ESOP transaction was transacted at arms length at fair market value and as you're saying everything was fair. Everything was fairit's a big word today Everyone likes the use of fairum.

[39:15] So it it it sounds to me likeyou know if I I think about.

[39:25] 1 of your earliest comments or statements around being forthcoming and being transparent the second time I've I've harped on it it. If we are moving toward a goaland it's a, it's a financial goal it's it's an ESOP transactions we're an ESOP podcast uh not just being transparent and forthcoming makes sense but building the Assurance early. Pays off laterandit's.

[40:01] Is it you think it would be fair to say that it it's less expensive or it's cheaper to establish credibility along the way than try to build it under pressure right for sure. For sure I think the more you can be preparedand get ahead ofeverything the less it will hurt you.

[40:24] Including financially in the long runum.

[40:31] So how do we translate that into something practical for our listeners to take away.

[40:38] I have a couple of ideas what what do you think.

[40:42] I would say just if if you're not like say you don't have an audit done already or have you done already just. Make sure you're kind of in in touch and in tune with the state of your financials um I think as a business owner or in in any company that's um. Whether whether you're smaller or you're in a growth stage there's a lot going on and there can be things that like you can't have your your hands in in every pot but I think. 1 place that it it should be is in the financials I think um.

[41:20] Kind of making sure you're in tune and aware of the state of your financials and if if you're not sure what that means or where to start with that. Start with the the CPA firm um look for someone that can just even do a quick assessment of the state of your financials.

[41:39] I think that's really good adviceI think beyond that so that in starting that. Building external credibility through the use of providers and assurance and staying consistent with financial statements uh in internally focused. The second thing that I would say to to owners and management teams is to start building documentation habits. Forecasts budgets internal controls internal approvals and processes, yeah and you might be thinking like Jason it's that's the most boring thing it's an extra lift its what whatever it might be I I'll tell you when you put yourself in the shoes of a buyer. Rather than as a seller as a seller you know everything about your business and you know how good it is and you're you're going to Champion your your business in in any, any contests and the beauty contest of your your business is when you bring it to sale really umbut.

[42:47] As a buyer you don't know the same thing about what what you're going to be buying and the phrases is TurnKey you would. Prefer to buy a turnkey business than a a fixer upper. And when we focus on those documentation habits again for forecasts budgets Capital planning and any process um used to support people as as we mentioned earlier uh that, creates repeatableprocesses but insight.

[43:23] And then it's translatable to another party to another set of leadership whether it's outside leadership or we're just thinking about secession how am I going to get the Next Generation to step into this role if they don't if they can't objectively look at things um so that would be my second thing is is is building those habits and processesand the the third is. The greater that culture of transparency.

[43:49] Permeates the business permeates your leadership team and then down then, the better off you are but what that highlights is, those discrepancies and they might be large at first when you first start looking at things or inspecting things you're going be like ah like I should have known that um or we we we need to go and fix that and over time the incremental lift is is lighter because you fix the big things and then you can fix the small. Right but if everyone is welcome to say hey this this is something that I've noticed that that irks me or frustrates me or I had an idea about how we we could. We could do this with this in in the shop whether it's scrapped or positioning or however we do that it those are signals to fix things and not hide them or or bury them right. And. That also is a great lead in to what ownership culture and ownership mindset is going to be on the back end of an ESOP transactionabsolutely.

[44:58] I think those are those are huge those are huge points um specifically I really like the second 1 because I think. If you you need to make sure thatif you're the 1 selling and maybe your goal is to get out of the business, you need to make sure that that business is not so Reliant upon you that when you leave it's downhill from there and 1 way to avoid that is to have all of those. Documentationpieces in placeum to allow things toseamlessly transition.

[45:35] Very goodsoI.

[45:42] We got to spend a lot of time on what we think about this and so listeners I I'd be curious about what you think um about this so, well I want to invite you to interact with us on the journey to an ESOP uh.com and where you can find uh the links to our podcast. Uh as well as ways to to provide us with some feedback um and so really encourage you to go there and not just tell us what you thought about Assurance uh but of the format and what what else you would like to hear from us because this podcast is for you um and we want to continue to produce content that is Meaningful and useful and it helps maintain our our kind of, uh Crusade of making all things related to an ESOP uh both accessible and and understandable.

[46:37] So the these habits around Assurance kind of turn into lower financing costs and smoother diligence and higher credibility with with all parties involved really but it's not just about Audits and reports it's really persuasion by evidenceand, everyone else outside of what you have built and what you know and love is you bring it to a market for a transaction is going to need a little bit of persuasion to see things your way and so as you build these habits and you will have everything to show them uh and then they will see it hopefully your your way at your priceum. So with with that uh again thank you for for joining us if you like this episode please share it with a friend and we look forward to seeing you next time on the journey to an ESOP and Beyond podcast.

[47:37] Awesomethank you.