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Episode Summary
You could sell today for your number, or you could wait two more years and sell for twice. Mark Raderstorf made that exact call in 2010, and his wife still says they traded time for money on purpose. Mark built BMI (Behavioral Medical Interventions) from a solo psychology practice into a 25-employee firm with national insurance carrier contracts, then spent two to three years getting it ready to sell. He brought four key clinicians in for sweat equity. He hired a CFO consultant. He spent a full year walking down the aisle with a private equity firm that turned out to never have the capital. The deal that closed came from a strategic complement, a Grand Rapids firm doing workplace trauma response that needed a return-to-work service. Forty percent upfront, sixty over five years. Mark stayed on six months as president with no authority, then flew to Ecuador with his wife for seven months to figure out what was next. We got into the real cost of staying too long, the moment his CFO told him to wait another year and he said no anyway, and why planning the encore matters more than the deal terms.
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## Top 10 Takeaways- Set your number before the process starts. When you hit it, get out. Don’t wait for twice.
- The value of your company is inversely proportional to how indispensable you are in the chair.
- Bring key operators into equity early. Sweat equity creates loyalty money can’t replicate.
- A private equity nibble without proof of funds will eat a year of your life.
- Verify the buyer’s capital before you open the books. Show me the money first.
- Selling a service business is selling a group of people. Plan retention before you negotiate price.
- Staying on as president with no authority is the hardest six months of the deal.
- The quicker you exit after closing, the less the deal corrodes you.
- Plan the encore before you sign. Identity collapse is the real post-sale tax.
- Trading time for money is a legitimate choice. Make it on purpose, not by default.
Sound Bites
“The value of your company is inversely proportional to how important it is that you run the company.” (@TBD) — Mark Raderstorf
“Figuring out what your number is. What is your number that you want to achieve in your business? And then once you get that number, get out.” (@TBD) — Mark Raderstorf
“We traded time for money. We could have easily held on to this business and probably sold it for today for twice of what I got four or five years ago. But we decided that we wanted to spend this time doing other things.” (@TBD) — Mark Raderstorf
“When you’re selling a service business, you’re essentially selling a group of people that work together, that provide a good service. The suitor is buying a group of people. They’re the key asset.” (@TBD) — Mark Raderstorf
“Having the title president and not having any authority. I think that once you sell, the quicker you can get out, the less stressful it is.” (@TBD) — Mark Raderstorf
About This Episode
Mark Raderstorf is a psychologist by training who founded Behavioral Medical Interventions (BMI), a 25-employee firm specializing in psychiatric and physical disability management for large insurance carriers nationwide. Mark grew the practice from a solo shop into a recognized rehab psychology business, then spent two to three years preparing it for sale. After a year-long failed private equity courtship, he sold BMI in late 2010 to Crisis Care Network (now R3 Continuum), a complementary workplace-trauma firm out of Grand Rapids. He stayed six months post-close, then took a seven-month sabbatical in Ecuador with his wife. He now works three days a week in private practice and volunteers two days a week with kids in the schools, and counsels other baby boomer owners on what they want their encore career to be.
Resources Mentioned
- Behavioral Medical Interventions (BMI) — Mark’s company, sold to Crisis Care Network in 2010.
- Crisis Care Network / R3 Continuum — The strategic acquirer, now operating as R3 Continuum.
- Raderstorf & Associates — Mark’s current private practice. — mark@raderstorfassociates.com, 612-823-5187
- The Value Advantage — Episode sponsor.
Connections
Phase + Module:
- Module 1 — Ownership Goals — Mark’s “what’s my number, what’s the encore” decision is the Module 1 conversation
- Module 9 — Operator Transition — The deal, the six-month stay, and the post-close handoff
Milestones:
- Milestone 3 — Net Worth & Valuation Targets — Setting the number that triggers the exit
- Milestone 25 — Operator Transition Plan — Bringing in shareholders, hiring the CFO consultant, planning the handoff
- Milestone 27 — Integrate & Pass the Baton — The earnout period and what good handoffs require
Concepts referenced:
- The Owner-Operator Trap™ — Value inversely proportional to the owner’s indispensability
- Enterprise Value vs. Equity Value — The 40/60 structure and what the seller actually walks away with