Build a Business Buyers Want | Matt Tortora

Bill Canady: Hello everyone, welcome to the Thousand Day CEO, where we talk to CEOs, founders, investors, and operators about what it really takes to build a great business, create enterprise value, and ultimately earn the right to win. I'm your host, Bill Canady, and today we're talking about something almost every business owner thinks about, but often far too late. How do you build a company that somebody actually wants to buy? our guest today is Matt Tortora, founder of Drive Equity Advisors. He helps founders on how to build a business that's more valuable and achieve a better exit outcome Matt brings interesting perspective because he has set on both sides of the table. He's been an operator, and today he advises founder-owned businesses on acquisitions and exits. Matt makes a point I completely agree with. A great exit does not begin when you hire an investment banker. It begins years earlier in how you build and operate the business. Today we're going to get inside the buyer's mind. What creates value? What destroys it? What separates an average founder-owned company from an exceptional one? And what should the CEO be doing today, even if they have no intentions of selling soon? Matt, welcome to the Thousand Day CEO.

Matt Tortora: Thanks for having me, Bill. It's great to be here.

Bill Canady: Man, I'm so excited about this conversation. It was funny. We were setting offline here for a couple of minutes and just chatting. I thought we got to get on, we gotta get this recorded. This is this is golden stuff.

Matt Tortora: Yeah. Right. The last twenty minutes would have been a great episode in and of itself.

Bill Canady: In and of itself would have been amazing. So why don't we just start at the beginning before we get into excess and enterprise value? Give us your story.

Matt Tortora: Absolutely. So spent 17 plus years as an operator, two-time CEO and founder, exited my a company, a software company that I founded about 12, 14 years ago. also served as an executive at a venture-backed SaaS company. made the decision about seven years ago to transition over to the other side of the table into investment banking and Worked with founders and supporting them in their efforts to either sell their business or grow through acquisitions. that probably was one of the biggest boons from my career because it gave me, number one, the opportunity to see from a far different perspective on that quote unquote other side of the table. and through that experience, I've had conversations with now approaching 300 founders and CEOs of privately held companies. And you know, from that you really start to develop strong pattern recognition and see the traits that separate companies that succeed and thrive and get great exit outcomes versus those that struggle and don't meet the founder's expectation when it comes time to sell. And fast forward to today, I founded Drive Equity and kind of stepped out of transactional work with the mindset of building a platform and a company that can help founders. Build a more valuable company, and get a far greater and more valuable exit outcome.

Bill Canady: You know, what did becoming an advisor teach you that we you wish you to understood when you were actually operating a

Matt Tortora: That's a question. I mean, I think anytime you're an advisor and you don't have an emotional attachment to what you're building, it's very easy to look at the business objectively, look at the macro perspective of both the business and the broader market landscape that the business is playing in. And from that, I think you make much better. rational decisions about the strategic things that need to be made to adjust the course of the business, obviously for the better. and the other piece of it, and this is huge, and it's a it's something where I think where founders struggle, when you're an advisor, you can look at things strategically. And that's where I always try to spend 80% of my mind share is on big picture strategic stuff. Whereas for a lot of founders, they're in the day to day of the business. They're fighting, you know. Day-to-day fire fires and putting out fires and executing at a tactical level. And they don't have time to think about the business strategically. So the big learning for me was the ability to see how valuable it is to be able to step outside, think strategically, and work on the business as opposed to in the business.

Bill Canady: Taking the emotion out of it's a a big deal. You know,

Matt Tortora: Mm-hmm. Yep.

Bill Canady: what do you think a sophisticated buyer looks for in a founder owned company? What are they actually buying?

Matt Tortora: Yeah, that's well, what they actually buy, I always say buyers buy heat. And when I see say heat, I mean a a company that is growing, a company that's thriving, a company that is in an industry that's growing and thriving. That's what attracts buyers. What they don't buy is a company that's, you know, not growing or struggling to grow, or even worse, heading in the wrong direction. and they also buy businesses that are well run and by well run I mean doesn't rely solely on the founder, has a strong management team in pr place and a structure and an infrastructure of scalable systems and processes.

Bill Canady: You really hit all the big points there. Of all those you mentioned, which is the toughest for the founder to build?

Matt Tortora: I think it's revenue and more importantly, profitable revenue growth. Growth is hard. Growth is hard for anyone. and I don't want to sound trite when I say anyone can go out and build really good processes, because they can. they they absolutely can. But growth is really what separates what I call, you know, the top 10% of founder-owned companies from the rest. And being able to generate growth year in, year out. And level up as the business hits new plateaus and benchmarks in terms of revenue and EBITDA growth is an incredibly difficult thing to do.

Bill Canady: Do you ever see it where a highly profitable company h is still not very valuable, people don't want it? And if so, what what are those circumstances?

Matt Tortora: Yeah, and I would say a highly profitable company is valuable on paper, valuable sometimes in terms of the headline valuation number that they'll get. But oftentimes, like so, for example, if you look at a highly profitable company that's in a declining industry or one that has massive customer concentration issues, yeah, maybe they'll get a bigger valuation. But they're going to be looking at a deal structure that's, you know, loaded with seller notes, big aggressive earnouts, most of which they won't achieve. So the exit outcome definitely will be lesser. And look, make no mistake about it, I'm a huge believer in revenue growth and obviously profitable revenue growth and larger EBITDA numbers is the single biggest lever that increases a company's value. But if it's all built on a house of cards, that's gonna damage the sustainability of the business and the exodus.

Bill Canady: How do deal with the importance of the founder? Sometimes it all seems to be riding on them. How did they handle that?

Matt Tortora: I think buyers get turned off. I look at, you know, I look at things that I call quantitative drivers of an exit outcome in terms of like, you know, EBITDA, revenue, things that actually you can mechanically apply differences and multiples to. And then I think there are qualitative aspects of the business that you can't apply a mathematical formula to, but it will hurt the valuation. And anytime a buyer sees a business that relies wholly on the founder, it's going to scare off a buyer. And if they're willing to write an offer, again, I go back to it's going to be an offer that is designed to really de-risk a transaction because if the founder walks, the business could fall apart. So it's going to be again heavily loaded with earnouts, you know, maybe an equity rollover that needs to be accrued or earned, seller note, etc. And here's the other thing about this, like when you're looking at a business that relies heavily on the founder, you're looking at a business that never achieved its true potential. Because by building a business that runs solely through you, you're leaving a lot of opportunity and growth on the table.

Bill Canady: What does a buyer need to see to believe that the business can thrive without the without

Matt Tortora: You know, again, it's it's two things. It's scalable systems and processes and a management team that really owns their line of business function. You know, everyone talks about the 90-day test, right? Can the founder go off the grid for 90 days? And if they do, not just will the business run and survive, but Will the business thrive? Will it continue to grow? Will it continue to acquire customers? Will continue to keep those customers happy? And the truth is, is most founder owned businesses, especially in the lower middle market, and then you know, the lower down you go, the more dependent they become. Most businesses wouldn't pass like a three, four week test. So it's, you know, the easiest way to explain it is, and I think founders need to ask themselves can I leave this thing for 90 days? And will it run well without?

Bill Canady: Yeah, so one that we always talk about and look out and when we're unsure

Matt Tortora: Mm-hmm.

Bill Canady: we do two things. We put in a non compete, we tie that founder up to to to try to get through it in a big earnout. sometimes I think it's just a a a license to get sued when when they don't they don't hit the number.

Matt Tortora: I think the way buyers need to look at it, and they the way they need to look at the M&A process and the exit process is all an exit process is and our acquisition is, it's an exercise in risk mitigation. The buyer wants to mitigate as much risk as possible. Like to your point, like tying tying the founder up, non competes, earnouts, all those things mitigate risk for the buyer and things like a business. It's Dependent on the founder, a business that has customer concentration issues, maybe they have legal issues. That presents risk, and buyers have to either mitigate that risk or choose not to acquire that business. On the other side, sellers need to realize that too. A seller with an earnout is a seller that's carrying a lot of post-transaction risk. And a seller that's building a business that will probably face an earnout is also creating a lot of risk for themselves.

Bill Canady: You know, we started off the conversation talking about revenue growth. Owners love to talk about it. Bankers love to

Matt Tortora: Mm-hmm.

Bill Canady: talk about it. Buyers also care about something that I call revenue quality, right? What makes

Matt Tortora: Yep.

Bill Canady: one dollar revenue more valuable down there?

Matt Tortora: I mean, I'd say it's two things. If you boil the ocean, it's sticky revenue, right? And sticky revenue is recurring revenue. you could add every dollar revenue is far more profitable in business A than in business B. That's a more attractive business. And I'm a big believer when it comes to margins and profitability. I'll take a business with a strong gross margin. as opposed to a business with a weak gross margin but a high EBITDA number all day. Because strong

Bill Canady: Absolutely.

Matt Tortora: gross margins are in my eyes the leading indicator of future growth in a business.

Bill Canady: It's also the hardest number to change. You can you can always get the middle of the P&L skinnier, but it is harder lift gross margins.

Matt Tortora: It is hard. I think if you look at gross margins, like outside of the obvious things about like cogs reduction, things like that, it's pricing power, right? What's your positioning, what's your position in the market? How much pricing power do you have? And it's honestly how well can you sell and how well can your salespeople sell?

Bill Canady: Mm.

Matt Tortora: you know, if you're running a business that is differentiated and creates real differentiated value and you have a sales team that knows how to sell that value and price based upon value, pricing can be a huge lever when it comes to gross margin expansion.

Bill Canady: Yeah, yeah, I agree. Yeah, you think about EBITDA the same way. A lot of ways are different ways

Matt Tortora: Mm-hmm.

Bill Canady: to measure the bottom of the P&L, EBITDA operating income and private equity, we generally talk

Matt Tortora: Mm-hmm.

Bill Canady: EBITDA. What makes EBITDA durable and therefore makes it more valuable for a buyer?

Matt Tortora: Repeatability. You know, well, I'd say gross margin, number one, right? Because again, if you have a weak gross margin, EBITDA is fragile. I would say repeatability. Repeatability in terms of like you know what your customer acquisition cost is, you know what your

Bill Canady: Mm-hmm.

Matt Tortora: customer lifetime value is. You know that the same financial inputs will get you the same outputs quarter after quarter after quarter. And you've got a well-running system in place, so your operating expenses become very, very predictable. And without us going down a whole nother path, I think now in 2026, we live in a really exciting time where AI is now starting to present serious opportunities to drastically reduce operating expenses. Create a greater level of predictability and obviously higher EBITDA numbers.

Bill Canady: Yes, interesting. a lot of the entry level stuff, graphics, looking at a financial analysis, you can do it quickly and in some cases even better with AI. but you still need people, you still need people to go do it, but it can drive a lot

Matt Tortora: You still need people.

Bill Canady: of costs.

Matt Tortora: A hundred percent.

Bill Canady: Yeah, let's let's turn it around a little bit. what's the biggest red flags that typically cause sophisticated buyers to either reduce their price or or walk away completely?

Matt Tortora: I think there's two. The biggest is a lack of growth. well, there's they're I'd say they're equally big. Lack of growth. So a company that's either flat or declining. and number two, customer concentration. You know, customer concentration when it comes to the attractiveness of a business, the ability to have either no earnout or small earnout, it's if you have massive customer concentration issues, it's almost insurmountable. It makes it makes the process of selling a company infinitely harder. and the thing is about that, we talk about preparing to build or building a business that will command a premium valuation and and the mindset of you shouldn't be doing it a year or two years before you're ready to exit. Customer concentration is not something that can be fixed overnight. It's not a 12-month fix either. That's a multi-year fix.

Bill Canady: If it's fixable at all.

Matt Tortora: Potentially, yeah. A hundred percent. Yep, a hundred percent. but yeah, it's customer concentration and it's a lack of consistent growth. I mean, those are two of the biggest red flags that I've seen scare off buyers.

Bill Canady: Is there anything that typically surprises the sellers of, you know, these these founders the most when they're going through diligence?

Matt Tortora: I think it's I think it's inside of their own company. And and that's through diligence, right? I think it's it's once they really, once a buyer really starts pulling back the covers, founders start realizing, you know, maybe my financials were really, really messy. You know, there are a bunch of issues here, either, you know, financially or with a lack of reporting, that we didn't even realize we had, because again, founders are in, you know. Tactical firefighting mode, and understandably so. So the business can get messy. So I think there are surprises that they'll see with their own business and things and inconsistencies and their financials and stuff like that that that can derail an M&A process. But by far, if you look at the process from a 5,000 foot view, the biggest surprise is how much the founder's business is worth. I can't tell you how many times I've had conversations with CEOs and founders that are starting to think about looking at an exit. They've got a number in their head in terms of not only what they want, but what they think their business is worth. and it almost always never matches. There's a huge disconnect across the entire market between founder expectations and reality.

Bill Canady: I find the same thing. It's a

Matt Tortora: Yeah.

Bill Canady: total disconnect and typically they gotta go through a couple of deals that blows it up before they're willing to think of it differently.

Matt Tortora: Yep. Yep. Well that's and that's the thing we talk about like being educated early on. You know, I always ask myself, if if a founder knew 10 years before they were going to exit what they needed to get their revenue to, what they needed to get their EBITDA to, to have a greater than 50% chance of hitting their target number when it came time to exit, how would they have approached building the business differently? And I think the answer is a lot of them would have taken a very different approach to building their business if those expectations were set at the beginning and they were educated at the beginning.

Bill Canady: I agree. When you're the founder and you're setting there and you may or may not have misaligned expectations, what are the things they should be looking at in their company right now to help kind of understand are they going to be looking at a premium multiple or one that's not in the in their industry? What are the top three things they should be looking for to set expectations?

Matt Tortora: Well, and I the first thing I would say, and this may sound like I'm selling my own dog food, but a founder shouldn't be looking at those things themselves. I think the best thing a founder can do to get a real, unfiltered, brutally honest perspective on what their business is worth today, what they need to be doing to make their business, you know, quote unquote more exit ready and be on the right path, is to bring in an external resource who's connected with the market, who knows what levers to look for. that's gonna be the most important thing. But if you know, if we were to say, okay, well, hand hand some advice to a founder now and in our conversation, you know, I would say look at a your customer concentration, going back to what I said before. Make sure that no one customer accounts for ideally like to 20% of your overall revenue, or that your your top three or four customers don't account for at least half of your revenue. So make sure that's addressed. You know, look at look at your forecast for the next several years. And look at your previous growth and ask yourself an honest question. Am I on the right growth trajectory? Are we growing consistently enough to be an attractive asset to buyers? And I there's a startling statistic. 50% of businesses growing or in the lower middle market are growing less than 10% a year. and it's something like only 20% are growing over. 25% a year. and those are the companies we talk about that huge transition over the next 10 years, and 80% of the businesses won't sell. It's those companies that are growing below that, you know, 10 or 5% mark. Those are the ones that are going to struggle. The ones with the big customer concentration issues, those are the ones that will struggle. And the third, and this is a real easy piece of real easy piece of low-hanging food to grab, it's clean financials. And if you don't have the internal resources or capability to do that, go find a resource external to the organization that can help you build a set of clean financials, clean KPIs, four or five KPIs that you can focus on month in, month out, quarter in, quarter out, so you can build a better business.

Bill Canady: Mm-hmm. Let's make this practical for for our listeners. Suppose your founder owns a business today worth roughly $50 million. They want to be able to sell it for $100 million five years from now. How would you reverse

Matt Tortora: Yep.

Bill Canady: engineer for that that for them? What would you suggest they start with?

Matt Tortora: Really good question. So here's what I would do. if I were the founder, I would look at companies in my size range, right? Call it, you know, 40 to 60, 70 million dollars and upwards. And get a sense of where the market is trading. What are the valuation numbers? And not just look at what are the best outcomes people getting top of market valuations, but what's middle of the bell curve in that size range? So let's just say companies of that size, call it $50 million in top line revenue, are averaging a 10% EBITDA margin, right? So we're looking at five million dollars EBITDA and they're averaging at 5 million in EBITDA eight to nine times. And say, okay, eight to nine times. And let's say, you know, they grow by 50%, that shifts to 10. So I'd look at okay, 10 times, a 10 times multiple, you know, in the $100 million range means we need to get the business to $10 million in EBITDA. How do we do that in a very prudent, careful manner? And what I mean by that is we don't artificially manufacture EBITDA by cutting costs that will be detrimental to the company, and we don't go chasing growth for growth's sake. So I would reverse engineer it by looking at middle of the bell curve multiples at the level we want to trade at eventually, getting an EBITDA target in mind and building towards that. And I would constantly monitor that number and that market range year in and year out.

Bill Canady: Makes a lot of sense working backwards, understanding what the peer set's

Matt Tortora: Mm-hmm.

Bill Canady: already doing, and then starting to say, all right, what do I got to do? It I think it's exactly what it's hard to look in that mirror though. I find a lot of owners struggle with it. And I think you said it earlier, they need to work with someone like yourself who has that passion, that understanding, but can take a clear-eyed view.

Matt Tortora: Yep. Well I always it's like a it's akin to going to a doctor. If you if you're going to a doctor when you're really, really ill, it's too late. If you're going to a doctor ten, fifteen years before and doing the things you need to do, requesting the tests you need to see, the blood work you need to see, asking what inputs you need to have to make sure that you're healthy so you avoid catastrophic health life events years in advance, you're gonna be way better off. And you could say then that the founders who are talking to the quote unquote experts when they're a year from selling are like the people that don't monitor their health years out.

Bill Canady: Yeah. You know, you've seen a lot of transactions, talk to a lot of owners. What's the most expensive mistake you repeatedly see success for founders make when it comes to building enterprises?

Matt Tortora: Lack of knowledge, 100%. Most founders don't build with the end in mind. They build blind. They start out, you know, they they have a business they want to build and they think about the next day, the next month, the next quarter. And yes, they want to grow. Yes, they want to be profitable. Yes, they want to do a great job. of servicing their customers and all that's admirable and all that's the right mindset to a degree, but they don't understand the big picture just because they don't have the knowledge. so it's a lack of knowledge. That's a huge mistake.

Bill Canady: Mm-hmm. Mm-hmm. You know, one of the things we talked about earlier before we came on live is the the rocket fuel, the thing that can help you get to your from 50 to 100 using our example is acquisitions, buying other companies

Matt Tortora: Mm. Yes.

Bill Canady: as a founder. I see it so few times. Let's talk about that.

Matt Tortora: Sophie. So it's something like only 17% of founder-owned companies use acquisitions as a lever for growth. And it's like it's a huge failing, and it's a massive opportunity for founders, and it's a massive growth lever that most of the market's leaving on the table. I think a lot of founders think. I can't make acquisitions because either A, I don't have the capital, or B, I don't have the know-how, or acquisitions is that's for private equity. That's not for us, or that's for a large strategic. But the reality is they can. they can get access to the capital, they can get access to the knowledge. Even a five million dollar company can go out and make an acquisition. Now, by no means am I saying this is easy. It's it's a big undertaking, but it's incredibly achievable. And What these founders don't realize is when you add a second growth lever, so you have organic growth, if you add acquisitions as a growth lever, you can put your business on a significantly different trajectory than it was before. so it's just a matter of realizing A, you can do it, and B, the resources and the capital are out there. for you to do it. And I go one step further. And if we look at these 80, this 80% of six million dollar businesses over the next 10 years that won't have a home, so many founders are in a position, an advantageous position, where they can go make small tuck-in acquisitions that will have a meaningful impact on their business with competitors in their industry. And they're absorbing a company that they know how to run because it's in their industry and they have strong subject matter expertise around. Whereas private equity or a large strategic acquirer may pass on that saying, no, the EBIT is too small, the business is too small. This is a tremendous white space and opportunity for founders that they're missing out on. It's a huge growth lever.

Bill Canady: So there's three big pieces to it. One, you gotta find them, then you have to finance it or and then the last step is you gotta integrate Let's start with the first one. How would a owner, or founder of a small, lower middle market business got to start finding deals?

Matt Tortora: Well, I mean, I'd say the first thing before you even ever go out and start looking for a deal is understand what do we want to buy and why, right? Why would this acquisition of this type of company make sense for our company? Is it a competitor with a like you know a like offering that's in our space that we could absorb and it would it would make sense and it would be a one plus one equals two? Or is it someone in our industry that's serving, you know, the same customer base, but With a complementary offering, and maybe it's a one plus one equals three. So there has to be a very clear thesis in place and a reasoning around here's the here's why we want to make an acquisition, here's the exact type of company we want to buy in terms of what product or service they offer, the size range of the company you want to be targeting, both in terms of revenue and profitability, and then the geographic location. So once you have all that in place. You have a set of acquisition criteria in place. You can go out and start proactively knocking on doors. And it's, I mean, honestly, the acquisition process, it's a sales process, it's a hunting process. And it's a process that takes a lot longer than I think most founders would anticipate and expect, up to twelve to twenty-four months in in many instances. but that clear thesis has to be put in place around what to buy before you go out. and actually proactively start knocking on doors.

Bill Canady: Do you think using bankers or doing it themselves or how would you suggest that they actually start finding the the deal for

Matt Tortora: I think either path is viable. Either path is good, as long as the expectations are properly managed in terms of the investment, in terms of time and capital. I think if you have the knowledge or can get the knowledge or can get someone with the knowledge and insert them in the organiz into your organization, I'm always a big believer in in running it internally because it can become more scalable and it could put you s in a position where you can be a repeat acquirer. but obviously bankers. Are there a lot of bankers who are very, very good at at running a buy-side initiative and have made many acquisitions for strategic acqu strategic acquirers? So both are viable paths. But either way, it's going to be necessary for a founder-owned company to get some level of outside expertise before under undertaking.

Bill Canady: Agree. You mentioned earlier the financing piece of it. How should they start? How do they think about it if they haven't done this before? How do they go find that?

Matt Tortora: Well, I mean, I think they need to look at financing in three ways. There's you know, three primary levers, right? Their own equity capital that they have on hand, debt, and then seller financing. And I think most, you know, any 10, 15, 20, 30 million dollar founder owned company should absolutely include seller financing as part of the overall deal structure. They should absolutely include debt and equity too. They should have all three. I think they need to look at debt. I think a lot of founders, especially when it comes to acquisitions, I don't want to say are afraid of debt, but are leery of taking on debt to make an acquisition. So they gotta, you know, this goes back to target size, right? You know, profitability, profitability of their company, but obviously, more importantly, in this case, profitability of the company and the range of companies they'd be acquiring. And look at the debt and not just say, okay, how much debt can we get? Let's max this out. No, that's not prudent. How can we do this in a responsible manner where we're taking on a relatively conservative amount of debt to fund inorganic growth? And use a responsible amount of cash on our balance sheet to fund this as well. But they should be thinking about those three levers. And look, there are founders that say we're gonna be hyper-aggressive with this. We're gonna use a small amount of our own cash off our own balance sheet, and we're gonna aggressively look for say turnaround situations and put in place aggressive seller notes and earnouts. And that's one way to go about it. there's no right or wrong answer. but founders should be thinking about all three of those levers when it comes to financing a deal.

Bill Canady: Is there something that they should be looking at inside of their own organization to know that they're ready to go do this?

Matt Tortora: Mm-hmm. Yeah. And that's the one I know that people listening to this were probably are probably banging the table before they heard me talk about this. Because look, it's not a matter of just saying, deciding we're gonna go out and buy a company and it's, you know, all you know, puppies and rainbows. It's it's it's a big undertaking, and you have to have the right infrastructure in place. If you don't have a well-running organization with a strong culture. And you're not headed in the right trajectory, you're not in a position where you should be buying any business because you're absorbing a business into a company that's struggling, which will then put that company in a position where it's struggling. So the time to do it is not when you're struggling, not when you're starving for growth. The time to do it is when the engine is humming and the infrastructure is strong. That's when you can absorb a company. That's when you can execute successfully on merging and integrating a company.

Bill Canady: I think it's one of the most overlooked pieces. I have this joke I tell, I said, you know, a bad marriage is not made better

Matt Tortora: Yeah.

Bill Canady: by adding a baby to it. So yeah,

Matt Tortora: Right.

Bill Canady: a bad run company is not run better by adding more chaos when when it comes in. Even the best of deals

Matt Tortora: Yep. Exactly.

Bill Canady: really, really struggle with it. But let's say they got through the first two, right? They decided they're ready. they they were able to go out and find the financing, find the deal. How do they integrate? What should they be expecting and

Matt Tortora: I integration comes down. I mean, look, there's a lot of moving parts and a lot of mechanical pieces in place when it comes to integrating systems, processes, financials, product, how you market the product, all that very mechanical stuff. But at the end of the day, fundamentally this comes down to culture. If the two companies have a disparate culture, disparate mindsets and approaches and philosophies on how they do business, how they look at things like accountability, most integrations are going to struggle. And look, it's it's very, very difficult to glean a company's culture just through call it 90 days of due diligence. You'll never you'll never be perfect. And back to your analogy of marriage and dating. You know, when you first start dating someone, you're you're never gonna know them inside and out. It's gonna take years to really know a partner. I think the best way to understand the culture of an organization is to understand the mindset of the founder of that organization. So I think when when people go out looking at making an acquisition, the biggest thing they should be focused on when it comes to is this going to be successful is is there a philosophical alignment in how we approach business? And how we build a culture.

Bill Canady: You know, I I couldn't agree more on that. It's a lot of times we'll look at the numbers and the numbers make sense. It aligns with our thesis.

Matt Tortora: Yep.

Bill Canady: But when you have a misaligned culture, and the other thing that is rarely talked about is systems. If they are on the same systems or near systems, boy, can that make that a lot easier. You know, cl closing

Matt Tortora: Sure.

Bill Canady: well yeah, you know, so any any of the the nuts and bolts can can can decide how how how easy it is. But Fundamentally, you have a thesis and generally that thesis has some synergies built in. I don't need two accounting processes. I don't need two offices. I don't need all those. And getting an early start on that make a make a make a very big deal. And if your cultures are misaligned out of it, you're gonna lose a lot of people.

Matt Tortora: Right. Yeah, I think I think a misalignment in terms of culture makes integrating all those pieces that you just mentioned incredibly difficult.

Bill Canady: Yeah, nearly impossible. And we've seen it all the time. with it. And when you get it right, it's almost magical, right? It it is one plus one equals equals three. So you spent you spent your life building this company. Sometimes people do it their whole life. and and and now you've hundred. Suddenly the wire hits your bank and you're no longer CEO. what do founders underestimate after The deal.

Matt Tortora: That's a really good question. You know, I think I know from personal experiences and talking to others, not just in my own deals that I've lived, but other people who have supported deals and transactions. I think oftentimes, not all the time, but oftentimes everyone thinks it's okay, you've sold this company, this is a crowning achievement. There's two things people don't realize. It's number one, Usually the job is not done because you're being absorbed by an organization where you're responsible over the next several years to execute. And you're now going from being a founder or CEO to being an employee, an employee in someone else's business. And your day-to-day is going to change drastically. And I think for all for a lot of other people too, one of the things they don't realize is. You know, you'd think that an achievement like that and an exit outcome like that would make you feel elated. I think a lot of people end up being relatively disappointed because the purpose they had, what they were working on day in and day out, what they were focused on building every day, all of a sudden is gone. And so now you're sitting there asking yourself, now what what's next? Which I don't think I know personally too. That's not something you think about when you think about eventually exiting. Both of those things aren't something you think about.

Bill Canady: It's vastly different. Running your own show, your hands on controls. Now you're reporting to someone. We all have someone we're reporting to, whether it's our board or our spouse or whoever, but but it is different when you become part of a yeah, that's right, of a bigger machine.

Matt Tortora: Yep. Yep. Exactly. Or our customers. Yep. Yep. Or our other half. Yep. Right.

Bill Canady: a lot of founders struggle with that. and they'll have contracts that will either limit them or require certain fulfillment pieces on their side that they're gonna have to deal with. And it can be it can be traumatic with it. The right mindset and the right attitude can go a long ways in getting through those rough patches that are naturally going to know, Matt, you you've got such an amazing background. You've done a lot of these. If people are interested in learning more, want to work with you, how would they find?

Matt Tortora: They can find me on LinkedIn or at my website, driveequity.co. everything that I am building with Drive Equity, as I said earlier in our conversation, is all focused around providing access and services to founders so they can build better, more valuable companies. and I am rolling out industry specific peer groups. So peer groups of eight to twelve people max. So very tightly knit peer groups that are all industry specific. launching peer groups in AI, IT consulting, and other business services sectors. all virtual meetings, meeting monthly and bringing outside industry experts in from private equity, from investment banking. Again, all with the goal of helping founders collaborate, you know, understand big picture what's working, what's not working for others in their industry, as well as what things they need to be doing to get the exit outcome they want to. achieve, understand what their business is most likely worth and obviously help put themselves on a better trajectory.

Bill Canady: This has been a great conversation. The big takeaway for me is very simple. You shouldn't start trying to build your valuable company when you're ready to sell it. You should start building it from day one and build it every single day. Work backwards from what you want, understand what it is, and make

Matt Tortora: Exactly.

Bill Canady: those trade-offs early because the penalty if you wait is is is pretty high. Because the same things that make our

Matt Tortora: Yeah, a hundred percent.

Bill Canady: business attract to a buyer: strong leadership, predictable revenue, durable margins, less complexity, less dependency on the owner. Also make it a better business to own and run. It makes it more enjoyable for you

Matt Tortora: That's right.

Bill Canady: and and your your team.

Matt Tortora: if you're building a business that's going to command a premium exit outcome, you're building a business that along the way is more stable, more sustainable, and a healthier, more profitable business, which are all good things. And they kill two birds with one stone.

Bill Canady: That's right. Get it done now. Time's gonna pass either way. Build the business,

Matt Tortora: Yeah, that's right.

Bill Canady: build the team, create the value, give yourself options. So, Matt, thank you so much for joining me and to everyone listening today's conversation.

Matt Tortora: Thanks for having me.

Bill Canady: You'll be able to follow it on a thousand days CEO. We'll have Matt and his links all down below so you can find him on LinkedIn and everything else like that. We hope you reach out to him and join his industry groups. I think you'll find a lot of value there. So until next time, remember the mission matters, result matters, and you have to earn the right to win. So I'm Bill Canady and this has been the thousand day CEO. Thank you all for joining.

Matt Tortora: Thanks, Bill.