Business Valuations and Exit Strategies with Tom Lyons
Interview: Tom Lyons, founder of Faelon Partners Ltd., is a seasoned M&A advisor and author with over four decades of experience helping business owners maximize valuation, develop exit strategies, and align outcomes with their wealth and retirement goals. (podcast hosted by Sharon Calhoun)
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About this Episode
In this conversation, Tom Lyons, founder of a mergers, acquisitions, and advisory firm, and Vector’s Sharon Calhoun, discuss the intricacies of business valuations, exit strategies, and how to maximize the value of a business. They explore the importance of planning and preparation for business owners considering selling their business, the role of management in enhancing enterprise value, and common mistakes to avoid during the exit process. The discussion emphasizes the need for business owners to understand their goals and plan for retirement effectively.
Takeaways
Business valuations are an important part of planning an exit strategy.
Understanding enterprise value may help owners to maximize their business worth.
Planning for an exit (and retirement) should start early, ideally years before selling.
A strong management team can increase a business's attractiveness to buyers.
Not preparing adequately for a sale is a common mistake
Business owners should seek multiple valuations to better understand worth.
Tax implications play a significant role in business sales.
Have a clear vision of life after business ownership.
About Thomas Lyons
Tom Lyons has 40+ years of experience in business brokerage and mergers & acquisitions helping owners maximize the value of their companies. A Vietnam-era Air Force veteran, he’s also the author of Exit Strategy, a host of Minnesota Military Radio, and a passionate advocate working on veterans’ food security and family support through nonprofit initiatives like the Minnesota Veterans Pantry.
Visit www.faelon.com/thomas-lyons to learn more about Tom and connect with his various causes and interests, including the Minnesota Veterans Pantry.
Chapters
00:00 … Introduction to Business Valuation and Exit Strategies
05:08 … Understanding Business Valuations
09:15 … The Importance of Accurate Valuations
13:06 … Enterprise Value and Its Significance
19:04 … The Role of Management in Business Valuation
22:26 … Sharon’s Experience with Business Transitions
24:43 … When to Start Planning Your Exit Strategy
28:50 … Common Mistakes in Exit Planning
30:59 … Final Thoughts on Exit Strategy
34:09 … Regulatory
Transcript (adapted for readability)
Sharon: (00:03)
Welcome! I’m Sharon Calhoun, Managing Director at Vector Wealth Management. Today I’m joined by Tom Lyons of Faelon Partners Ltd., a mergers and acquisitions firm in Golden Valley. Tom, welcome.
Tom: Thanks, Sharon—it’s great to be here at Vector.
🧠 Intro & Background
Sharon: We’ve got an interesting topic today—business valuation, enterprise value, exit strategy, and how to maximize the value of your business. Your background is so rich I hardly know where to begin—mind if I read a few highlights?
Host of Today’s Business Radio
Author of Exit Strategy: Maximizing the Value of Your Business
Active in Beyond the Yellow Ribbon (veteran support)
Host of Minnesota Military Radio and board member of the Minnesota Military Family Foundation
Launched the Minnesota Veterans Food Pantry
I deeply appreciate your service and philanthropy. We’ll have another podcast with Chris Wagner to go deeper on your charitable efforts.
Tom: Thanks, Sharon. As a Vietnam-era Air Force veteran, outreach to fellow veterans feels completely natural. I’ve been around a while.
🤝 Our Partnership & Client Perspective
Sharon: Also—and I have to say this—you’ve been a client of Vector for several years. Professionally and personally, we appreciate the connection. We have referred business owner clients to you asking: “How do I exit my business? When do I start?” Many push it off because they don’t know where to begin.
Tom: That’s right. At Faelon Partners, we start planning early: when should you sell, and is your business worth enough to meet your wealth goals and estate plans. Working with Vector’s Sojourn tool gives clients a visual: do I have enough? Do I need to adjust? It’s been a strong partnership.
📊 Valuation Basics: When & How
Sharon: Let’s break it down—what is a business valuation, when should owners get one, and how often?
Tom: It varies. ESOP companies get valuations annually; most others don’t need that frequency. A simple starting point: ask your CPA, “What’s my business worth?” Also, consider: what does it need to be worth to meet your goals? Many owners overestimate value or haven’t aligned wealth planning. That’s where a range-of-value and tools like Vector’s Sojourn help you test if your current number really supports retirement goals.
Sharon: You mentioned your proprietary report—your “range of value”—can you elaborate?
Tom: Absolutely—it breaks the valuation into parts:
Working capital/net assets: cash, inventory, receivables, payables—that owner keeps (often already taxed).
Business value: frequently a multiple of earnings—subject to capital gains.
Real estate value: if the owner also owns property independently.
We analyze each piece, calculate post-tax outcomes, and produce a range of value so clients can say: “If I get the low end, can I hit my goals? If I get the high end, what could that do for me?”
🏗️ How to Build Enterprise Value
Sharon: Got it. Now—how can owners increase enterprise value? Are there specific actions or metrics?
Tom: Depends on the industry—manufacturing, services, distribution—but core things line up:
Income, expenses, net profit
Asset-based valuations or earnings multiples
Market comparables
But beyond the numbers: What distinguishes your business? Do you have leadership in place? Processes? Customer relationships outside the owner? That’s what gives a buyer confidence.
Sharon: Give me an example of how that actually makes a difference.
Tom: Sure—I worked with an owner who did everything: accounting, sales, operations. He bragged about going 100 days without leaving the shop. We told him straight: “Your business has zero value if you walk away.” He agreed to build a leadership team, empowered them, waited a couple years—and suddenly the business was salable.
Sharon: Letting go really jumps out as the challenge in these scenarios.
Tom: Exactly. Owners struggle with it—that identity shift. When closing nears, it hits them: “What now? Who am I?” Successful owners engage their spouse, ask, “What do we want next?” That transition planning is just as crucial.
⏳ When to Start Planning
Sharon: So when should someone start this planning?
Tom: Early, and always act as if you’ll own the business for 20 more years. That mindset aligns your day-to-day management with future readiness. Forget arbitrary ages—like “retire at 65.” Instead ask: “When is enough, for me?” That might be 55. When you have enough, you choose to continue—or step away.
Sharon: Some of my clients continue working after they’re “set”—and I always say: work because you want to, not because you have to.
Tom: Couldn’t agree more. I still stay involved in strategic and volunteer activity—I choose it. You can define your post-sale role however it works with your life.
⚠️ What to Avoid
Sharon: What are some mistakes you’ve seen owners make when preparing to exit?
Tom: The biggest one—getting that unsolicited “big check offer” and rushing into a sale without consulting advisors or planning tax, wealth, estate. Many sell too early, underprepared, and regret not holding out—either longer or structured differently.
✅ Final Thoughts
Sharon: Today we covered a lot: valuations, enterprise value, readiness, and exit strategy. Any final advice for business owners?
Tom: Three things:
Plan early and deliberately—build value intentionally.
Choose candid advisors—those who’ll push you, not just confirm.
Know what “enough” means and align your life around that.
Sharon: Thank you, Tom. If listeners want to connect with you, how can they?
Tom: Just reach out to Sharon—she’ll get you my contact. Or visit faelon.com, where you can request a copy of my book Exit Strategy.
Sharon: And be on the lookout for our next podcast with Chris Wagner, where Tom discusses his veteran philanthropy. Thanks for listening—please share this episode—and we’ll see you next time!
These discussions aim to spark dialogue about enhancing retirement readiness and making more informed financial decisions. At Vector, we delve into the nuances of scenario planning, offer insights and guidance tailored to each client's unique circumstances. If you or someone you know is pondering their financial future or seeking clarity on their retirement plan, we're here to help.
This discussion is hosted by Vector’s Sharon Calhoun.
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