Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
Bar's going down.
Bar. Bars going down. Here we go.
[00:00:21] Speaker B: Getting ready for the ride.
[00:00:22] Speaker A: Yes, let's have that on the show. There we go. Here we are everybody.
[00:00:27] Speaker B: We're here to talk what phantom stock? Because last week we talked about executive compensation plans and short term bonuses, but today is going to be more long term focused.
[00:00:41] Speaker A: Yep. And they're all nested within module 8, the executive compensation. And we are cascading everything down from how much should we share out of the whole bonus pool. And so we created that, you know, the total pool. We were talking about net operating income. What's the total amount that we should share? Then we say, okay, great. Then we then have the exact annual executive who are going to have a percentage of that. And then we slice them up between the different executives for like how they could be tied together from their different departments and all on the annual basis.
And Kim, we did talk a little bit about the CEO and there the CEO comp plan about the annual and stuff like that. We're going to talk a little bit more detail in module nine. But the, we are now in the third milestone of that module eight, which is the phantom stock. So it's like, okay, how much should we share? How's everybody aligned annually? And then if you think about the owner scorecard where it's five years out, we want to know how can we actually tether them to today as well as that five year plan. So we're trying to figure out how do we then actually compensate the executives to that five year plan? I think we should, I was actually thinking about this. If we want to start or like just as a generalization for these concepts to like focus on the CEO, because this is going to apply to any key executive. I mean whether, I mean, I don't know, I guess for anybody listening, the concept that we're going to talk about can apply to any of those three top level executives and, or the CEO conceptually.
[00:02:19] Speaker B: Okay, so maybe a good place to start is why do long term comp structures exist anyways? I mean I've got my base, I've got my annual.
Why the long, why the need to tie me into a long term comp plan?
[00:02:33] Speaker A: I'm just picturing that, that interview that you and your dad and I did, it's like, well, what is money, Kim?
It's kind of how I want to start, but I promise I won't.
Well, because wages are not enough.
I mean, why? Well, because they debase the money and the money printer and I don't care.
[00:02:53] Speaker B: Okay.
[00:02:55] Speaker A: Because we want to lock someone in long term to be with us and share in what we're creating.
And wages versus capital and wealth are different. I mean they're taxed differently and we as a country are disproportionately over incentivizing people on the wealth. And so wealth generates a lot. So the goal is that like as an owner we want someone that's running the outcome for their division or their department or the CEO who's running the whole operations, he or she, the alignment of. They're not just optimizing for the K1 that year.
Because the constant balance that you and I are talking about is time, cash and wealth.
Cash flow and wealth are, it's a seesaw teeter totter. We're like, you can have more cash today, but you will have less wealth tomorrow. And if you could have less cash today, you can have more wealth tomorrow. So that teeter totter, we want the people that are working with us to have that balance and that equilibrium that's completely tied to the owner's goals.
[00:04:01] Speaker B: Yeah, and that makes sense. So I think for today's episode we also going to use like a case study. Right. That's been running through this entire thing. So what are some thoughts or examples of.
Have you like a case study of where this wasn't in place and how that ended and where it didn't work well because there was no long term strategy in place.
[00:04:21] Speaker A: I think that's maybe within that question, like what we can, where we can start. Like what goes like what are people doing right now?
And then like what usually goes wrong and then like how this could work if it's done right. Because like I, I mean the structures that we're going to talk about, like, I mean we had a couple of our clients in our community that like did internal buyouts because of how well this can work in alignment with like if it's all tied to the math, the numbers, it's so objective that it's like objective. It didn't mean, it's very clear like if we're there or not.
And what usually happens, and you and I were joking around about it in the first of the series was insurance people are making all the money because the, it's the long term phantom stock. I'm sorry, not the phantom stock. The long term Incentive plans that are wrapped with all this insurance where like that's how people do it is like, hey, like you know there's going to be an insurance premium here, an insurance product, whole life or whatever it is, versus just actually sharing in a percentage of the valuation growth because it's based on math.
So the things that go so wrong is when it's like, okay, Kim, you've been working for me for five years.
It's like, okay, well how much do I owe you?
Well, what's the based on the value or is it based on insurance premium? You start to get like there's no tether to what. So that's why the valuation math and the mechanics and that five year plan have to be because that's the grounding.
What is the income statement, the balance sheet and the cash flow statement look like in year five and then what's the valuation? And then we have to figure out how much are we going to share between now and then, which we can talk about all the different like levers to pull now.
[00:06:08] Speaker B: So quick question for you because I know in the last two episodes we had like interim solutions. So what happens if somebody listening to this hasn't done the initial steps of the valuation and all those things? Are there, is there an interim solution to this like there was to the short term bonus or because this is the long term strategy. There isn't an interim and you have to do the foundational steps first.
[00:06:33] Speaker A: Super good question. I'm literally thinking about this. You're welcome. Good job, Kim. I can be GPT. You're the best.
[00:06:42] Speaker B: Affirmation, Affirmation, Affirmation.
[00:06:46] Speaker A: This is the best phantom stock plan ever.
The, the deal that I was part of where we like the owner had been trying, we were doing all of this work last year laying the groundwork. I mean getting the financial model put together like putting all the stuff, all the controls in place and the CEO running the business.
We had been intending and we're planning on building out that phantom stock plan. We ended up actually selling 75% of the business to this person instead of doing the phantom stock plan. And we can talk about why that was.
And like all the, there's a huge spectrum of options and maybe that's small little data point there, phantom stock where we're sharing in a percentage of the value, but they're not an actual cap table meaning the ownership structure. So just maybe we can level set with some terms and then we can come back to that question of like the interim solution.
Phantom stock, meaning Kim has the rights to 10% of the business.
We are going to talk about how you earn that. I don't give that. But you have rights in actual contract and it's an actual liability on the business's balance sheet.
So. And it's pegged based on the valuation. Okay, how do you get to that valuation? But then there are like, you know, a lot of different mechanisms that you could put into place.
Phantom stock plans, but also then like partial ESOPs. I mean, there's all these different things we can do. We decided to sell actual. Just actually sell the business to this person where we ran into a challenge that was over, that we overcome. Overcame. But it was a challenge was the company was growing in value while we were trying to figure this out.
And like, you can't stop that shit.
So like, it's like trying to catch that training and like the intent. So like we had the legal team, the investment banking team, the CPA team, and we were trying to figure out what's the lowest defensible valuation we can do this deal on starting at the beginning of this year because of how much fricking value was created by the end of the year. So, like, it was a act of God to make sure that we had like the IRS defensibility there and like all the different mechanisms to make sure that that was okay.
Because, like, you can't just go back and like retroactively, like, well, the value was this and now Kim owns this because that's a, that's actually deemed a grant.
And then you would be taxed.
So if I, like me trying to get you, if we're trying to say, like, okay, Kim's the chief executive here that I'm trying to get money to, like, if I disproportionately shrink wrap a company and give it to you, that's a gift and then you'll be taxed. Because if that, if that valuation is not defensible, you avoided taxes.
So I'm like, that's a kind of a loop around way of saying, like, we do want to get this figured out as soon as possible based on real math, careful pegging the expectations to something that gets super messed up down the road. And that's why I think us talking about this is going to be helpful. So the. I would approach it something similar to what we talked about last week where if we're not sure, tie it to an objective that we know is important. So one of my clients that I worked with was, we were hiring the CFO.
The CFO. We, we. This this all has happened last 18 months.
We want them to have a phantom stock plan, kind of the five year plan. But they were supposed to build the three statement model.
So we said if we have a three statement model that's believable and accurate and a 12 month budget and a five year forecast by, by the end of the year, you'll get this lump sum next year. Like because the CFOs building the plan for us, we've talked rough ranges of percentages, we had a conversation with them about dollar amounts that are meaningful to them.
So it was like, okay, what, what's meaningful to you, Kim, over the next five years? Okay then what's meaningful to us? And we were trying to get this, you were shimming together two definitions of meaningful. And then how does the company as a whole provide for that and what are the percentages? And so we're trying to get and isolate those variables that we can mess around with.
But it started with like, oh, what's meaningful for you? What's meaningful for you? But like we're going to have this interim step that's going to be a chunk of money but tied to a project.
So that way we can get that valuation three statement model. So it's usually probably more the financial person that needs to get that done first.
And my thought would be, is if someone's trying to do this for someone that's not the financial person and they don't have a three statement model, they might have it asked backwards about how they want to go about doing this.
[00:11:30] Speaker B: So then if I heard you correctly, or we circle back around. So I just want to make sure I pick that out. It is advisable that you do want to have these things figured out before you're putting into place like a long term phantom type program with your team. Because otherwise you're going to have to
[00:11:46] Speaker A: be creating what's it based on?
[00:11:48] Speaker B: Right, exactly. Like it's a necessity. Like the short term we can get creative to get the stuff done that we need done. But the long term, you gotta do the short term first before you start implementing anything long term.
[00:11:59] Speaker A: And that's why the nine modules of IBD and the Roadmap go in order knowing like, hey, like I understand that reality happens. Like you can bounce around as like you have a very specific reason to go out of order for whatever is happening. But like module one is your owner's goals and module two is what is the valuation of your business and how did, how does that work? And then module three is building in your Operating rhythm for the board and the monthly meetings. And then module 4 is the build up the financial model. So now you've got that whole structure and plan and now you go, okay, now I build out the financials, then your module of revenue, then the operation. So we're just stacking all these things on top of each other because the model becomes the objective truth.
And that answer your question? Because I was going to keep going, but.
[00:12:49] Speaker B: And then the truth is no longer up for debate.
[00:12:51] Speaker A: The math is not. Whether you want, whether you want to do A, B or C is totally up to you.
A balance sheet has to balance.
[00:13:01] Speaker B: I was wondering what the reaction was going to be. So that's fun. All right, Maybe we dial it back just a little bit though. So difference between phantom stock and real equity,
[00:13:10] Speaker A: this thing called a K1 in taxes, like, and a lot more than that. So if you and I were business partners on the actual like business of equity shares, we would have to sit down and you and I would have to have conversations around what percentages, the voting, like, everything that has to do within the operational, the operations, agreement of like roles, responsibilities, how the board, how decisions are made, buy sell agreements, like, if we sell it, do we take it out? And like, all of the conflict that I've seen is no goal. But if we have two partners, and I have lived this personally, the percentage ownership is how we have to mathematically split the distributions.
So if you have a million dollars in distributions and it's 60, 40, like if I want 600 grand, you have to get 400.
Like it just has to be that way. So then you go, okay, well all of a sudden, like, how are we dealing with it? Well, people then mess around with their salaries to overcompensate for the fairness of this. And then if you and I are partners, you would then get a K1 for your percentage. And then you have to pay taxes on the pass through of that, which sucks.
And if I wanted to sell the business, I have to talk to you about it. We have to have conversations of like, do I put more money back in? Do I take more money back out? Like, it's truly the three legged race. When we're on that capital table and the operating agreement together, we're in it with taxes, where we have to be completely aligned with distributions, completely aligned with the valuation target. Like, everything has to be completely locked in.
A phantom stock plan is vesting. And we can talk about how people vest, how people get paid out, but at the simplest way, Kim, like, I'm just Picturing the three statement model, right? Like, you can see when I do this, I'm just thinking in columns, it's like, okay, if there's five columns in five years, in year five, that Advanced Solutions case study that we have in the training, they're going from 1.5 million in normalized EBITDA to 3.
They're going from 4.52 multiple to 6.67.
So they're going from a 5 point. I think it was a $5.78 million valuation because there was a million dollars in debt.
So it's actually 6 million 78%. But then take away the debt and then we're going to 21,100,000 because we have an extra million dollars in cash. So there's a huge valuation growth there.
That literally is very reasonable.
The phantom stock plan. If someone's vesting along that way, let's just make some that every year we hit those numbers and those KPIs of the normalized EBITDA and the working capital and the net debt, and we can talk about what KPIs drive the right behavior. But let's say it's a percent each year.
So each year we vest a percent and we got five years.
That's a 5% of the total $21 million valuation.
That's a liability.
So, like as the company, the company owes someone. It's a contract, it's an actual liability. It's not like, oh, guess what, I don't want to do that anymore.
So that whole plan that I just talked about has to be visible in a model because the math is the math. It's 3 million in normalized EBITDA. If we agree on. Then how are we calculating normalized ebitda? How are we calculating the multiple debt is pretty straightforward. Cash is pretty straightforward.
Working capital has to be discussed. So it's the four KPIs that every single valuation does anyways.
We want to know what the company's worth in the market anyways. So we're doing all this work, but it is so simple on the math to just shoehorn in someone like, okay, well, how about an extra percent a year? Kim, you help me hit these goals and then you've earned the 5%.
And then that comes off of my net proceeds at the end.
And so I'm thinking about that from the ownership perspective, like, okay, well, I couldn't get there without Kim's effort.
I'm paying you. We're just using you as an example. I'm paying you every single Every other month or every other week, we've got the variable comp tied to your bucket and a couple other buckets annually.
So that way you're locked into that five year plan annually and then you're keeping an eye on that value growth and all the best practices so you can get your vesting each year. If we wanted to do 1% a year, there's a whole bunch of stuff we can do about vesting. But then I would be thinking to myself, I can't do that without you.
It would suck if you left.
And as long as if I can't do that without you, then sharing 5% of that 21 million, it wouldn't have happened without you.
So that's why when I say giving someone something, it's like it shouldn't be possible without this person.
Otherwise don't do the phantom stock. Go hire someone who just wants a salary.
So you're just kind of balancing all these KPIs to say okay, how do we balance fair and objective and look at the five years and start know getting to the numbers.
And then it's literally just ac that liability.
And then we have to make sure that when if you.
I don't, if we don't want to sell and like you want to go retire, like when and how do you get paid out? How does that happen? We like there's so much animosity and resentment because all of a sudden the owner has a healthy company and it's kicking out cash. I don't want to sell anymore. And now they, they're employ their executives are incentivized to trigger a sale because they can't get paid out otherwise. And there's no cash otherwise. So there's all of these problems that happen where it's all great until all of a sudden it was event based.
I want complete optionality for anybody. It's like why lock us into that event and the clean numbers and the clean forecasting allow us to be able to pull any of these levers and be able to see the impact on cash and the vesting and whether people objectively hit the numbers or not.
[00:19:28] Speaker B: So a couple of questions and I don't know if this takes us off track, so just tell me if it does or not.
[00:19:33] Speaker A: You're assuming I know what on track is.
[00:19:36] Speaker B: It's become a dark and scary day.
[00:19:38] Speaker A: Ryan, you wore the white shirt.
[00:19:42] Speaker B: Yeah. Today was opposite Ryan day.
All right, what are examples of that optionality that you just spoke of? So it's not event based. And then a question that pops in my head. From an ownership perspective, it sounds like I'm gonna start off with a thought and then followed up with my question.
It sounds like it's really important to know if you can hit those goals or not without that person that you're looking to incentivize with this type of a long term strategy. What are steps like how do they know? How do they go about figuring out and answering that question? Can I do this without Kim or can I not do this without Kim? Because I imagine there might be some.
Again just putting in my brain some owners might be arrogant and be like, I don't need so and so to do this. What in fact they really do. So if there was a, like a gauge or a measure or process that they could follow just like gut check themselves. And then other people might be on the other side of the coin where they put too much emphasis and credit into Kim's capabilities and performance and such. So it's like now they have all three executives on these phantom plans and really they all suck at their jobs.
[00:20:50] Speaker A: Yep.
[00:20:50] Speaker B: So just curious like what your thoughts are there. And then also the optionality part. So it's not tied to an event.
[00:20:57] Speaker A: We'll for sure get to the optionality. We're going to go through this detour because it's important.
There's a reason that module seven is the leadership team. It's before the number eight.
So like yeah. Everything to you said. Yeah.
And like what we were talking about last week in the, in the exact. The short term executive comp, like the CRO, someone has to own revenue, someone has to own margins and someone has to own SGA and finance.
If someone's not owning those spots, like what are we doing here?
[00:21:36] Speaker B: Right.
[00:21:36] Speaker A: So like that's how we determine whether someone. Like and then it's the forecast, right, Kim? Because like it's like well, the job is very objective like revenue, margins and finance. And I know that there are other executives like HR I know is very important. Like you could argue a CIO or an AI person like it.
But we're talking about three buckets of the income statement, three people owning. Like I'm, I'm approaching this from the highest leveraged position for the owner who wants complete optionality over their time, cash flow and wealth.
For the arrogant owner that says, well, I can do this.
You're probably listening to the wrong podcast because like why are you wanting to do the work?
Like if I, like if you want to. Like if I want to go tinker around in ops or Customer service or sales, that's total optionality to me. But if someone thinks that they need it or need to do it for it to work, the company's gonna take a hit on the valuation anyway. So go. More power to you. You're building the prison and you're probably gonna be stuck in it. Solve for annual cash flow, then don't solve for long term value because we're trying to build a baton to hand off to anybody or to keep it. Another reason we don't wanna lock someone into a, like an actual sale, because what if we wanna collect $2 million in distributions while a CEO and exec team runs the company?
So leadership team is module seven. You and I have built out seat descriptions for all three of those people. We've built out leadership team assessments for all three of those people. We've built out functional assessments for all three of those functions.
Hopefully by the time we get to comp, all of that stuff has been thought about.
And by the way, all those assessments I just mentioned that you and I have built are how we measure all this stuff.
So that's also how we actually would measure the short term comp for each people's divisions. Like how, like the CRO is responsible for the client acquisition costs, et cetera, as part of their 50%. So the 50% of the CRO is responsible for all of those operational KPIs. And when we build out that budget, Kim, those people built the budget.
So like it's, it's, it's through that osmosis and that first budgeting season with each, you know, it might, you might ladder multiple years as people hire these executives or the people get leveled up. But every budgeting season that goes through where we have the person that finally owns that function and built the budget, now we literally have our, our baked in annual comp plan tied to everything that we built. And then we are making sure that that five year plan is tethered together and like it should just be straightforward. So like if sales and ops and finance are doing the budgeting, if I'm the CEO in that situation, it's like, okay, well it's gonna be very obvious if you fail and like we could miss it for economic reasons that, you know, we're not listening about the stuff you and I talk about about the geopolitics. But did that answer your question about the three leaders? And like how, like, because this is what allows us to find the A players and the rock stars.
I don't know of any.
I should be careful what I just said because I think I just there was a client that they have a couple rock stars that didn't ask for this, which is rare most of the time.
If someone knows their worth, they're going to ask for the three legs of the stool, the base, the variable and the annual variable and the, and the, the phantom.
It's like, all right, I know I can do that. Good luck. Find someone else to do that. I mean like that someone that's that confident will ask for the three legs of the stool. Shout out to Craig Rutledge, who is, I've learned a lot of this stuff from him. And Vision Link, they do a great job with a lot of this, this long term planning. And so the people that know that they can own that outcome are going to want this. And it's also the threshold for these executives who we all want to hire who can own the outcome and go run and take the monkeys off our back.
If the owner CEO does not have answers for the executive, it is a data point in itself for that executive to go, no thank you.
Because it's just a total effing mess politically. All the dynamics, all the drama. Because if it's not clear, I mean my buddy Brandon Henry, who owns a family office of a very large company down in Texas, he's like, you can't even hire an executive, that's awesome. Unless you have a plan. And I have now noticed that Kim, with a couple of our clients where the reason that we were able to hire the people is because the owner was able to say we're going from 30 million to 60 million or we're going from 150 million to 220 million. Here's the normalized EBITDA that we have over the next five years. Here's where we're planning on going, here's how much resources the company's going to have and then people get excited to get on board and without that it's just pure drama and confusion. And does the company have enough money to do the strategies and the compensation? Subjective.
Any good executive that's lived through hell knows what to avoid.
Does that make sense?
[00:27:06] Speaker B: Yeah, it does. And that's a very good point. So I think in summary then to how do you handle. So I think some of the key highlights I pulling out, this is not a gut based decision like Kim is prepared or Kim is needed or Kim this or like this. These can't be because I know a lot of leaders lead by gut based decision decisions like this. This is definitely not one of those Situations where you want to lead by a gut based decision. This has to be a clearly analyzed, assessed situation for them to make decisions on.
[00:27:38] Speaker A: Yeah, and like we'll get to the payouts and stuff like that and some more of the math. But like I was just on a call right before we jumped down with a client and they got multiple entities and they're starting up a new entity with same people.
So there's a, there's a current operating company with percentages and everything that are actually already there. Well, they're now spinning off like IP co. It's like, okay, well this is all future potential.
And it's like, what's the right percentages? And so the same conversation happens on like the inception of a company and the conversation I had with this gentleman, I said like, like you could argue this way or that way for percentages. And I said like all of, I mean it's a blank canvas at this point because it's all future work. I said if we anticipate what we're going to do for our job, who's going to contribute the money, we can talk about the different percentages. But I think the most gut based, if we're going to speak to the people that are truly gut based, the way that I would think about this is what has to be true.
So that way I avoid resentment for the owner, CEO and the executive.
You know, in the workshop that we did this week with the group, I said the road to resentment, most compensation plans lead there, overpaid the person. Now the owner resents them, underpaid them, the executives resent them.
So like the chances of leading to that road of resentment are so high because at the most human level resentment comes from.
It's not, what do you think?
Fair?
[00:29:22] Speaker B: Huh?
[00:29:22] Speaker A: It's not fair, right? Well, yeah, the person is going, it's not fair.
And that's where that resentment comes from. Because I'm doing too much for what I'm getting paid or it's not fair, I'm giving you too much for what I'm getting.
It's really that simple. So all we're trying to do with all of this work is just make it fair based on how people are spending their time and the return that we're all getting and we're trying to align ourselves all, all the way. So back to your like, hey, can you do this on gut? I think kind of like with top down budgeting, we can start there.
Hey, I think Kim should get 10%.
Well, first of all, the 10% of what I Mean people have very little understanding of value.
So then that's probably usually all effed up. Is it the PE market at multiple or is it the internal market? Multiple is the esa. You know what I mean? There's all that shit. So percentages of what? So valuations become a really important part that we can unpack. How do you peg the valuation? But then I think a great way to start from the gut. So maybe you start with percentages because it's like I think the reason Kim, that people start there, even though it's not founded in math, it's because it's the shared contract. I mean like you and I have a revenue split that you and I have walked through.
How many times do we talk about what's fair? How many times did I bring it up to you?
[00:30:52] Speaker B: A lot.
[00:30:53] Speaker A: Because I don't want to us to be down the road and mess something up. So talking about splits and percentages and like that kind of stuff is so helpful to start. Then we have to quantify it in dollar amounts. Based on what? It's kind of like the top down budgeting, right? And then we can start the other direction and say what's a meaningful dollar amount?
And that's where one of my clients started. It was like what's the meaningful dollar amount? Because, and I helped him on two, because one was a cfo, one was a coo. We ended up hiring the cfo, the COO threw out a number. We're like, holy fuck, that is meaningful.
Too meaningful for us. So like, but like the conversation ended there and it was like okay. And they're by the way, they're friends, they're childhood friends. It's like thank God we didn't do all of this. And then like realize that the meaningful dollar amount because like so dollar amount percentages, I think we talk about what's meaningful and then we have to then look then at the company and say, can the company produce this?
Right? Because if the company can't produce that growth and that value, then we have to go to a different company to get the value that we need.
And so that starts with the outer perimeter of the both of the peoples time and cash flow and wealth goals. They kind of take those two owner scorecards and they mash them up together, say okay, what do we need? And then can we use the company as a vehicle to get that together because we're better together. And so then the question might be okay, well let's say and use some easy math on that advanced solutions. We go from 1.5 million. And I feel like I can get there. I think I can get to 2 or 2.5 million and normalize EBITDA.
I feel like I could. And the multiple is a judge of risk. Maybe I think I can go from 4.5 multiple to 5.5.
So I can't do all that math in my head.
So I know that the first 4.5 to 6.67, and then the 1.5 to 3 is 5.7, and there's a million dollars in debt and then a million dollars in cash. So there's a $2 million swing. The, the way to think about it is, let's say I think I can get to $15 million in value in year five without you.
Do we want to share the upside? Do you see how we can start to then slice the percentages and go, okay, well, if I shared, let's say you said I need a million dollars, that's meaningful to me, Ryan. And I go, okay, well, I can get to $15 million by myself without you or with someone else in your role without that. But I can get 21 million because I think both of us together can get there.
Well, if you wanted a million dollars, I have to figure out what percentages of that. Is that right? So we're backing into the percent and then saying, does that feel right? Does that not? Well, if it's not possible without you, we're kind of negotiating around something that doesn't exist yet.
And so we should be negotiating around what we feel is appropriate of that and that now I'm kind of, I'm bouncing around.
Hopefully you're seeing this. Like, we're starting with these levers. Like, what can we pull? Like, okay, well, 15 by myself. How do we value it? Do we want to start at the 15 and that's where, like the base case is. And then we have the upside. I mean, like, you start. See how we can start playing around with all these variables, but we're starting from the outside and we're going in and also kind of doing the ground up and bottom or a top down ground up at the same time to get in, like, what's going to be in the forecast?
[00:34:24] Speaker B: I think something that I'm hearing in all of that too, before I go into that thought, because I know we still have to circle back around in the optionality thing that I had there. And then you had mentioned also getting further into the valuations. So just wanted to put those both back up on our radar.
[00:34:41] Speaker A: But something they're kind of Tied together when we're talking about it.
[00:34:44] Speaker B: Perfect. So one of the things that I'm hearing, I think I'm hearing a lot of. So I just want to pull it out to see if it's true and then highlight it if it is. That this is not a CEO or an owner in a bot in a room by themselves. Running all these analyses and then coming to me, Kim, and saying, all right, Kim, here's what I'm willing to produce for you for this long term.
Phantom incentivization. Right. Like, this is a lot of back and forth conversation where there's that, like you said, Kim, what's meaningful to you and what do I think that the business can do? And like, let's have these conversations together. So that way we're both equally bought into this future state of our business together versus the dictator that does it in a closet and then comes out and says, here's what I'm willing to offer you.
[00:35:33] Speaker A: You and I both probably had experiences of how that works and it's not. Well, the fastest pass go way to resentment.
Like suits and ladders. Boom, right there. All right.
[00:35:46] Speaker B: It's funny, I referenced shoots and ladders earlier today on a client call too.
[00:35:50] Speaker A: Like Candyland, all those different ones. Yeah. Like all this is shoots and ladders. Like, we have to like navigate this thinking about it. And I go to a couple places in my brain where like, is this person, Am I recruiting this person or are they already on board?
Both of those are still true with what you said. It's a conversation like the way that it works. The best that I have been a part of is we have the owner's goals unbelievably clear.
We have a rough outline of that financial. Like when I say rough outline, we've got a five year forecast of the three statements. So we can see the distributions, we can see the working capital, we can see the operations and the income statement. And we've got a rough target because the only way we can play with the levers is if we have a fricking model.
So all of these things need to be true to have that back and forth. And I was on that our boardroom blueprint call this month or this Monday, and there was a meaningful conversation about. Because they were going through module two about valuations and the three lenses of value.
And this will get into our buyouts and how we actually are pegging this to evaluation. But like, we're talking about it, it's like the most powerful part about that valuation knowledge is I understand how Much effort it takes to create what type of value.
How am I supposed to know what I'm trading if I don't understand value back to me and me and your dad and you, like, what's money? Well, what's value? Well, it's time. I mean, like, so how are we supposed to be able to negotiate if we have no effing clue how valuations work?
It's. It's the most dysfunctional part about the market that you and I are in is no one really knows. So everyone's arguing about shit they don't know.
So it's the buyers and sellers of the company. It's the buyers and sellers and the CPA and the attorney and the broker. And no one, like the brokers and the investment bankers generally know more about it. The attorney knows how to paper the valuation. The CPA knows the tax return of the valuation. But, like, the only person that really sees inside of that operational value of the cash flow is the owner operator.
Private equities do understand that as well, because the cpa, the attorney and the like, you either have cash for payroll or not.
You either have cash to buy your inventory or not.
So the person that's responsible for that cash position is the person that owns the company.
They're the only ones that can say, I need this much money in my checking account over the next five years so that way I can have taxes, distributions. And we have to go. So we have to have that floor to say, this is the constraint of this company and if we have to dip into that floor, it'll dip into the line of credit. But we have to have this. Then we can start having a conversation around how do we trade value?
So then we have to have that conversation around valuation. So I know what am I giving up or not?
How am I supposed to know? If you don't know valuations and I don't know valuations, we're going to argue about my Princess Diana Beanie Baby. And you think it's worth a million? I think it's worth 10 bucks. It's still on my balance sheet as a million bucks. I just haven't sold it yet.
So I say all that because it's a back and forth whether someone's getting hired for the first time or they're coming up.
That becomes. So the education that the owner CEO gives themselves about how valuations work is so important because they're going to have to communicate that to the person that they're trying to negotiate with because that person does not understand value either they don't like the chances that the executive knows the difference between job and equity is slim to none.
And they're going to go, well, we did 20 million in revenue, so, Kim, you're rich and I want 50% of it. So there's a lot here.
The more we understand how evaluations work, the more we can fluidly have a quick conversation. My client that went out, flew out to Vegas, had a conversation with his COO and he was like back in the nappy method. Like, nope. Like, literally within the first 10 minutes, they, they realized there was nothing there. And then they just had fun hanging out in Vegas for the night because they weren't talking. They're like, okay, well we're way off on this. Let's just go have fun.
[00:40:35] Speaker B: That's interesting.
Okay, so what about the optionality? How does that lead us down that path? We gotta figure out, gotta educate the owner on valuations. They gotta figure out what it is that they like, what is it they want to build in value. And all of that convers. And then do you have steps that you'd want to share on the call of like how to unmutty some of that other than it's confusing.
[00:40:58] Speaker A: Yeah, I know, that's a good point. I don't want to. You're welcome.
[00:41:04] Speaker B: Affirmation.
[00:41:05] Speaker A: Yes. You're the best. Kim, what a wonderful question.
[00:41:08] Speaker B: The.
[00:41:10] Speaker A: Without leaving people confused. And I, because I. This is not an insurmountable task.
That's what I want to make sure it takes baby steps. All this is possible and when it's done, it's so beautiful how simple it really is. My client, that we were walking through all this stuff, he's like, yeah, that seems pretty straightforward. Let's do it. And it was a two page document. I'm like, dude, 12 months ago you had no idea what any of those words meant.
I'm like, I could have drafted this for you 12 months ago and you didn't know what literally any of it meant.
And like, we landed here because you thought about it all and it aligned with your goals. So the, the math becomes.
Start with the percentages that you feel is good. Start with the gut. What percentages do you feel good that you want to share in? What per, you know, is there a dollar amount? And like, the way I like to think about is like, what's that five year target? And then we'll get into the valuation and the payout. So like we go, okay, that five year target, I can get to $15 million. I think with, you know, Playing around with the normaliz but doing the multiple. I feel like I can get there without sharing.
So I need. Let's go. Let use some easy numbers can to go from 15 million to, to, to 20. I'm willing to share a disproportionate amount of that 5 million bucks because I can't get it, I don't think without you. I mean like if we wanted to go like way overboard here. So like let's say this, let's start it with the whole company pool. So I'll take us all the way through payouts and a couple ideas on the way out. But let's say we're vesting a million dollars in percentages each year or we're having a ramp up to get to that endpoint of. Because my target for my owner scorecard is I want $15 million in net worth so that way I can have 600 grand a year and passive income if I were to sell the business. Like that's my, like anything above that I'm willing to share but I don't want to sacrifice my financial freedom because I don't want to give anybody equity. So now we got $5 million in upside that we're willing to maybe split out between the top level executives.
We've got to work on the vesting plan of how people vest into that whether the valuations going up every single year. But like let's just take this rough straight line like I'm talking about.
The question is how do we value that company?
Like who values that business?
Because if it's objective, I'm sorry, if it's subjective like you and I have talked about and like everybody's confused about valuations. Are we using the industry associations, all the hype that's going on, it's very problematic very fast. And this can go very wrong depending on if it's too. If it's underpriced or overpriced back to road to the resentment. It's not fair.
Maybe I'll just jump straight to the recommendation and then you can like back me up and we can unpack some of the topics if you want. Because like I'm trying to have. I'm having a hard time going, okay, like I know exactly how I would say it, but I'm trying to like educate as I'm giving my recommendation. So the, the recommendation that I have for anybody going through this is on that buyer. Like let's say we get to year five and it's just, you can, we're like, okay, Kim's, got $1 million of phantom stock. Now it's a liability on the balance sheet. Let's say you're my CRO and you've, you've fully vested and it's yours contract iou. And I don't want you working here longer than you want to be.
You don't want me to be forced to sell this where you're like, you're quietly quitting for a year.
All roads lead to resentment if it's not treated fairly about thinking through all of these scenarios. So in my experience, when I've done with a few other clients, it's all right, Kim, if you leave on good terms, well, figure it out. And with an esop you can get, there's a whole way of working on the buyout for five years.
So we have to look at the cash flow of the company and do the cash flow forecast and three statement model that should be always rolling. It's like, I can't afford to give you the million bucks, Cam. And for tax purposes, you might not want that either. Right. So we have to work through how am I going to pay you and over what time period? If there's a cordial separating.
[00:45:18] Speaker B: Yep.
[00:45:19] Speaker A: What? I, I hadn't heard anybody say this, so I feel like I, the idea was out there at some point, but I, I either stole it, but this is what my current level of thinking is on some of these executives where if we're not selling, I will pay you out. If you, if you exit on good terms, you're hiring your replacement subject to board approval. I'm not coming back into that seat, Kim.
So, like, it's just like, if we were to sell, the selling is, you're exiting, but like, I'm not coming back in there. Like, you have to train and integrate your, your, your replacement. And it has to be a board approval in whatever timeline. And then you'll like, get your money and like, obviously you're not, you know, things might not work out with that person, but after some time period, you're off the hook. Right. Like, we all tried it and like, obviously things happen, but like, I've worked on that with CEO and CFO and like, like, why wouldn't we do that?
Right?
[00:46:13] Speaker B: Like, and that makes a lot of sense to do it that way, I guess. Question for you. So that's an example of an option where if the business doesn't sell, is that something that's documented in the contract? I would assume at the beginning when you're putting into place, like, if we sell this is the outcome if we don't sell this is the outcome. Like all of that needs to be
[00:46:31] Speaker A: all of those optionalities and like I'll do a couple plugs here for like let me, let's talk about like actually consummating this after. So like hold that thought for me and let's talk about the valuations first so that way we can get that done and then we'll talk about how does this managed and how is this done over time. The, the valuation methodology that I recommend is a cash flow valuation.
So that does not mean the premium that the private equity firm's paying in your industry because we don't even know what the deal structure is of those people could be overpaying. I mean it's a mess and like if you left and we were using that valuation methodology and I didn't sell the business, it's a total effing disaster.
So like we need to use a cash flow valuation which is a combination of the discounted cash flow and the market multiple. You blend it all together. At the end of the day all we're doing is we're saying what's like if this company was going to be loaded up with some debt and we hit the five year target, what's the, what's the cash flow valuation of this company?
So we want to use that valuation methodology.
The biggest component of discounted cash flow or, or the market multiple is company specific risk.
That's the underpinning of entire module number two is how sustainable, predictable and transferable is this cash flow based on the operational, which is our IBD roadmap, which the whole roadmap is about addressing company risk and growing the value.
That becomes really complicated because, and really interesting Kim, because with the clients that I've been working with for a couple years, like their level of understanding of all this in like their plan and their model. Like we're all sitting there going like.
So we all know that valuations are like all math until the last 10%. That's complete subjectivity and art. Like who determines the 5 or the company specific risk.
And that is that like a buyer, when they buy a company in due diligence, that's what they're determining, right? So like an ESOP or a third party private equity or a strategic buyer will determine what they're willing to pay for that using the general framework of the buildup methodology and the discounted cash from the multiple to get to company specific risk essentially.
So the buyer determines it ultimately.
So the way that I have helped Multiple of our clients go through this process because they've sold a good chunk of their company, but they still have percentages. So they're literally going through this, going like, hey, we need to have an ongoing way to manage value that's objective so we don't get in a big fight. If I own 25%, like and I want to be bought out in the middle of next year or something like that, you and I need to be able to have like a market between the two of us.
And the question is, how do we value this company if we're not trying to sell it to a third party?
So my recommendation so far has been finding like Prairie Capital Advisors out of Chicago or any investment banker. And this is just purely my opinion and my approach. There's probably a lot of different ways to do this.
What I like about Prairie Capital Advisors and I think PCE out of Florida does it and I think Butcher Joseph does as well. Those are the only three I know who do ESOP transactions, management buyout transactions and third party sale PE transactions.
So they, a firm like that has the actual resources to know the difference between if we sold this on the third party market, right now, it's a 9 multiple. But the ESOP or a management buyout, because the ESOP and management buyout is all about debt financing with commercial banks, they're going to pay a seven.
So they're going to do that objectively and they're going to come in and through the lens of an esop, look at that company specific risk. They would look at the financial model, they would look at the forecast, they're going to look at the due diligence of the executive team and the strategic plan and they're going to ask for material to judge that company specific risk.
So like with our clients, I mean, shit, I think it's like 10 or 15 grand is an ongoing valuation.
It's not that expensive to have an objective valuation done.
And so what we like to do is like we have that knowable, understandable, defensible value based on someone outside determining that company's specific risk. So that way you and I don't get in a fight. Because what's. When I say it's interesting because watching my clients, both the buy like the, the, the internal buyer that bought these companies and the seller, they both understand this. So think about it like if you and I both understand all of this and it's like, well, if we're going to be arguing, I'm going to argue company specific risk. And you didn't do as good of a job on the sales side as you should have, you know, like, so like we're just going to take. So you and I are completely aware of how this all works, but we're still going to then have a third party go through and you and I are going to agree upon how they go about doing it. So if we do sell the company, then we all win.
You know what I mean? So that premium, the premium's not realized. So the premium's realized if it's a 9 multiple instead of a 7. You get what I'm saying here?
So that way if we get to that point and we actually decide that we all want to sell together because the outside market is paying a ton, that's a conversation everybody has to have. But like if you were this executive in this example, it's not your company, like I'm sorry that it's worth a 9 multiple on the outside market. But like I'm not selling, it's just part of the deal.
[00:52:21] Speaker B: Which is why we have the optionality baked in. So that way not to sell. There's still other ways for me to then still get the money that I was had my eye on. The prize the last five years and
[00:52:31] Speaker A: that prize should have been something that was aligned with the cash flow valuation expectations. Right? So I never once in that five year plan, in this example, gave you the nine multiple.
Right? Just like, like, just like my, the Zillow prices on my personal balance sheet for my house, not the random person that's going to overpay for it.
Right? That's what we're trying to do here. And so like therefore having an objective approach towards value and how to value it. So like, and like then question would be, how are you doing that each year? Because if there's a vesting schedule, there's. Craig Rutledge put it in such a great way because I was like, oh my God, Craig, there's so many options. It's like Ryan, it's a blank canvas, but it's a canvas.
I was like, oh, that's good. Like you can't go way over here.
And like, you know, there's a whole slew of things we could talk about if we wanted to on the transaction. I like, just while it's top of mind, if we do go sell, I was working on a couple compounds recently where like, I like it where if you get that million bucks and whatever percentage that was, if we go sell the business and 60% is cash at closing, another 40% is like rolled equity or earn out, you're getting the exact same percentage of all that stuff is me.
I'm going to start with that. Maybe I'm generous and I'm like, hey, I'll give you this at the beginning, but we want to just tie everybody together.
Everyone's getting the exact same treatment based on the value that they're creating.
And a lot of times sellers and buyers want that person to be part of the integration to get half of their payout. I mean, I think the takeaways, there's a lot of levers to pull, but it's based in math, based in that financial model. And that financial model should be nested inside of the owner's goals of distributions and valuation. And then we say, okay, here's what I'm able to do on my own while paying someone fair market wage with an annual comp plan. And if I want to get higher value and make it more sustainable and transferable, sharing that upside, why not? Honestly? Because if it's not coming out of my pocket, that's why we're not giving the equity. It's being earned by the person who's owning the outcome of the function, whether it's the CRO, cfo, coo, whatever, bucket of the income statement, or the CEO who's responsible for the entire operations.
I mean, this is why private equity and ESAPs do this and have been doing this for decades. Like, it's very straightforward because they, you think about why it's so common is because they all have numbers.
Like it's very straightforward for them. Like they're sharing anywhere between 15, you know, 0 to 15 or 20%. ESAPs have it in the form of warrants or SARs. Private equity firms do the same thing. They usually end up screwing a bunch of people over because people don't know this stuff. But it's all, it's easy to negotiate and that the reason that people get screwed over is because the executives who are negotiating this stuff don't realize all of the different intricacies behind this.
[00:55:45] Speaker B: Yeah, they don't have the full education. All right, so is now an appropriate time to double back on the pin that you asked me to remember on packaging it all up and like managing.
[00:55:57] Speaker A: Oh yeah, the, the consummating in the past. Like how so a lot of people have a pile of insurance because if you like the way that that happens, well, you're going to accrue all this liability. Let's have an insurance plan. It's like wrapped up with a key man insurance and it's all this because people don't have any numbers or valuations to pin it on.
So those were, that's where all those plans come from. It's like, well, cause like, honestly, like I could literally pull up Claude in the spreadsheet with our case study and build out the phantom stock plan for all the numbers. And like with Claude, I don't know a minute and it's going to tell me I did a great job too.
So like with the numbers there, it is straightforward of like how the vesting works, how the numbers work because it's just all, all there.
So the insurance overloading and all that crap happens to over compensate for the fact that there's no clear numbers. So let, if we have that clear like, so if we actually have the idea, let's say we've got that spreadsheet up and we're looking at that idea going, okay, here's how they're going to the spirit of the math behind all this, based on the activities it needs to be legally drafted.
So an attorney is going to have to draft up that entire contract. HR is going to have to get involved as well. You know, for the, you want to make sure you have non competes and non solicitations and all that kind of stuff inside of that because you're giving something you want to get or get something in return.
So the attorney, the HR team on that, I, if the company's like that can be done relatively low cost.
Like, I mean you're talking, you're not going to the $900 attorney an hour going like I have an idea.
And so like through your own work, through your own work with maybe us or Claude or whatever, you get to the spirit of the agreement.
Spirit of the agreement that has to be based in the math and the objectivity and then drafting the contract is not that crazy. In that contract then we're going to want to reference how it's valued, how the vesting happens, how those payouts and all those different scenario plans work.
So you could have an attorney do all of that.
I'll give a shout out to Jim Carlisle from Densmore because he's done a really good job. But the preference that I have had, and I'll be honest, I have not had as many clients take up Vision Link as I would have hoped.
They have some really cool going on. They have a software platform where you can actually manage all of the valuations, all of like shares and, and like, like the whole thing. And they, their system will draft documents and stuff. Like that too. You still need the attorney to do some final approvals and stuff. But like they have everything like all the way down the, the whole rank and file from the executives all the way down for like have shared how vesting works, how to track the vesting, how to track the valuation. All this spitting out contracts they do, they do plan design as well as communication with the team members and stuff like that.
I think part of the byproduct of what we do is it becomes so straightforward that like most of my clients are like, yeah, I could get like 20, 20% more creative and complicated or I could spend three grand with an attorney and just lock this up and
[00:59:33] Speaker B: just track the financials are worth the squeeze.
Right.
[00:59:37] Speaker A: And like, you know, it's really interesting because it's like a, it's like the chicken or the egg where like Craig is like, oh my God, look at all the shit you guys have in that model. Like, it would be so easy to do our job if we did that. So like, I think they end up doing a lot of that cleanup and a lot of that build to get to the outcome. Yeah, I still love what they do and I have clients that have worked with them and actually had a great experience. But like, at the end of the day, we have to have a financial model. We have to have a way to track the valuation every year.
Because I figure like all the decision trees become, okay, how are we going to update the value every year? Does Kim get 1% each year based on the original value or are we. It's a new strike price. Do you get the percent based on the new valuation every year? I mean, you see how these decision forks. Oh my God, there's a lot.
And then how do we then communicate that to the team? I mean like all that kind of stuff. But at the end of the day, it ends up being a contract with an attorney and HR and making sure that whoever signs it then like all of this stuff that we've talked about in this conversation is what makes that contract that the attorney drafts meaningful. Same thing with the operating agreements with like business partners. Like all of the work talking about goals and jobs and distributions, evaluations, is the hard work getting to the end to draft it all up becomes pretty straightforward.
[01:01:01] Speaker B: Oh, it makes a lot of sense. What am I missing? What are some of the other key. So our focus today was long term incentive plans and using phantom stock as a means of doing that. We've talked through kind of like the setup, the thought process, the characteristics, the prep work that needs to happen before you can even get to this point.
[01:01:22] Speaker A: Talked about real equity versus phantom investing.
Maybe just a couple cool ideas that I've seen implemented over the years is if someone wants to march towards an esop, I've watched people do because you can do tranches of ESOPs.
So instead of potentially setting, I mean it becomes create your own adventure, choose your own adventure. But like, like if you wanted to, I had someone that was a tech services company did a tranche of an esop and then the problem with it with a percentage of an esop, Kim, is if you and I had a company and then we had a 30% ESOP owner, we would have to take our distributions. Let's say you and I wanted 100 grand, so you and I owned 35% each and then the ESAP owned 30%. If you and I each wanted 350 grand, we would have to take a distribution and put it into the ESAB because it owns 30% of the company, so we would have 300 grand into that ESAB.
There are ways and I might be speaking over my skis right now because it's been a couple years since I was really dive into this topic. But you're like pre funding an esop so you could like if you wanted to like buy the, the, the next 30 or 60% out, you're essentially stocking up that reserve in that EOP so you don't have to take commercial banking to do the buyout.
So like you could do this way where you actually have a partial ESOP instead of building out this phantom stock plan. Because you're like, well if I'm planning on doing an ESOP anyways, maybe I can solve this phantom stock plan with the part like doing 30% of an ESOP today, getting people invested, getting people thinking like owners.
And then we have, you know, we're building up some reserves because people won't do this because they don't want to split the distributions with the ESOP, which is why 90% of ESOPs go 100% at the, at the start.
There are other.
What I find to be more common is to tie the phantom stock, which is also called sars. So anybody like SAR stock appreciating, right, stock appreciation rights. It's all the same stuff conceptually tie the executives to that valuation that you want to do that triggering event at without locking yourself in. So if you want to do the esop, like get the people rolling the boat real fast so you can do the 100% is more common or the private equity or the third party sale or the management buyout. I mean, so there's some really creative ways that you can do like layered approaches, tax planning and like how you're going to fund these different mechanisms. If that plan is clear, the amount of creativity that you can have is off the charts.
[01:04:07] Speaker B: No, and I can see that for sure. I know my dad's a huge fan of ESOPs. I know that they were.
I feel like, I don't know, was it like, not. I feel like it was a few years ago, but my sense of time is really off because time just goes
[01:04:21] Speaker A: by so fast and it's like everything's covered. Like that's been six years ago, like,
[01:04:25] Speaker B: like three years ago. I'm like, oh no, that wasn't the case. There was like this shift where they became more popular. I feel like we were talking about that with like the Silver Tsunami and baby boomers retiring and selling and this and that where ESOPs became more popular than they once had been. I just, I don't know if you've been seeing that as well.
[01:04:47] Speaker A: I can't quantify that. I mean I, I'm probably part of that data point because like I didn't know anything about him until I met pat hobby in 2018 or something like that. And like I now have like 40 podcasts on ESOPs. If the people go to the YouTube, I have one that is like probably the most in depth four part series, top to bottom, nine hours of everything from valuations to transactions to deal structures. I had Dave Deal. I mean every part of the esab, like the kind of the heavy hitters from the ESAP community, from like Corey Rosen from the NCO and Dave Deal. And then like it was like multiple of the top trustees and like, like walking through the whole deal structure and like it is unbelievable on the amount of like creativity and flexibility you can have on the tax planning and like all this stuff. It's all the reason that most people don't do it, Kim, because the company is not worth what they think it is. So the only option is to sell to a third party who's willing to give them more money and they haven't met their financial needs.
I'm not saying that's always the case. I'm saying that like a general like out of roughly 4,000 people that I've looked at in the face as they've been going through my training materials over the last seven, eight years, people go, that is so awesome.
And then I go, well, you need to be this size. And then you get only half your money up front. Then there's all this tax advantages. Like it's unbelievable. Like if someone can stay with the company and with air quotes of like some form or fashion, as in sitting on the board or at least getting the half of their seller's financing note over the like call it five years, I would put an ESOP net proceeds neck to neck with a third party buyer that pays 20% premium.
[01:06:46] Speaker B: That's interesting.
[01:06:47] Speaker A: Yeah. Like, I mean it's everything from the 1042s to the warrants to the phantom stock plan to the owner. If there's still a CEO can vest back in, they can control it. They can control their like, I mean it is unfreaking believable what you're capable of doing. The problem is the ESAB community has had inflation hit them where like what people love used to drool over a one to one and a half million dollar normalized ebitda and now they're like, I won't touch it for three million bucks.
[01:07:12] Speaker B: Yeah.
[01:07:12] Speaker A: So there's like this whole like K shaped economy with the advisor community and actually them leaving the backbone of America high and dry. Which is really sad to see.
[01:07:22] Speaker B: Yeah, no, it is. Maybe it'd be helpful for us to put links to those other ESA podcasts in the show notes for this one.
[01:07:29] Speaker A: Is that for you telling me that or you telling your Claude as you help me with the show notes?
[01:07:34] Speaker B: B, that is.
[01:07:37] Speaker A: There we go. Our revenue sharer is working.
[01:07:41] Speaker B: That was me making a mental note while it's being recorded.
[01:07:44] Speaker A: Claude, please take a note and if you could go to Ryan Tanzan's YouTube channel and go to the ESAB playlist.
[01:07:51] Speaker B: Yes. Put them in the show notes and
[01:07:54] Speaker A: then we'll link to Craig Rutledge's couple podcasts for everybody. Yeah, and we've got that workshop coming up for Everybody too.
[01:08:01] Speaker B: Yep. June 25, two hours in the morning we'll be going through everything with activities and worksheets so that we guys actually come out with an actionable plan to take back to the office. Not just listening to us talk for an hour,
[01:08:18] Speaker A: God bless it, because I don't want to do that anymore. Yeah, right.
Thanks Cam. This is so fun. Love doing this with you.
[01:08:25] Speaker B: Yeah, agreed. Lots of fun. I think we got through a lot of good stuff here.
[01:08:38] Speaker A: This episode is brought to you by Kastos Productions.
