Ep. 96 — Arlin Sorensen: Run It Like You're Selling Tomorrow

5 min read

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Episode Summary

You’ve worked 80 hours a week for 27 years. You missed the birthdays, the basketball games, the anniversaries. You finally take the call from a broker and four offers come back at numbers that won’t let you retire. That’s a real story Arlin Sorensen told me, and it’s the one that should keep you up at night. Arlin built Heartland Technology Solutions from a single farm-accounting machine in 1985 into a 100-person managed IT firm, ran 10 acquisitions in 10 years, and sold the company at the end of 2012. He now runs HTG Peer Groups. We got into why one plus one equals 1.6 in year one of an acquisition (not three), why his CFO Jane made them run the business every day like they were going to sell it tomorrow, and why your Milestone 3 — Net Worth & Valuation Targets is 25 to 40 times what you spend in a year. The piece that lands hardest: buyers don’t buy hard work. They buy what the company generates after you leave.

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## Top 10 Takeaways
  1. Your platform is the back office that lets you absorb a company you bought without breaking what works.
  2. One plus one equals 1.6 in year one of an acquisition, not three. Cash flows the wrong way first.
  3. Run the business every day like you’re selling it tomorrow. That’s how the books stay honest.
  4. Three dollars of revenue per dollar of payroll. That’s the floor for a service team that’s actually profitable.
  5. Every decision is a profit decision. Ask if this choice moves you toward the margin you need.
  6. Your Milestone 3 — Net Worth & Valuation Targets is 25 to 40 times what you spend in a year. Do the math before you sell.
  7. Buyers don’t buy hard work. They buy what the company generates after you leave.
  8. The number on the offer matters less than the structure of the deal that pays it out.
  9. You can’t fix a decade of sloppy financials in the 90 days before a sale.
  10. Write four plans (legacy, life, leadership, business). The plan gives you the right to say no.

Sound Bites

“My experience is that the first year, one plus one is more like 1.6 to 1.8. It’s not even two. You take a dip before you’re able to make the changes that are necessary to capitalize on your acquisition.” (@00:28:51) — Arlin Sorensen

“We had to run the business every day like we were going to sell it. The numbers need to be the way the numbers are, and we need to run it like we would sell it tomorrow.” (@00:35:30) — Arlin Sorensen

“People try to equate hard work as value, and I can tell you buyers don’t buy hard work. They don’t care if you worked 80 hours a week for 25 years in your company. They’re going to buy it based on what that company is able to generate into the future. And it’s not hard work.” (@00:40:30) — Arlin Sorensen

“I’m a big believer that the main value of planning is it gives you a reason to say no to things.” (@00:50:11) — Arlin Sorensen

About This Episode

Arlin Sorensen is the founder of HTG Peer Groups, a community of IT business owners he started in 2000 out of his own struggles with Y2K. He came to technology from farming. He bought his first computer (an Apple II Plus, $4,000) in 1982 to run farm accounting and never looked back. He grew Heartland Technology Solutions from a single office attached to his farmhouse into a 100-person managed IT firm across five states through 10 acquisitions in 10 years, then sold the company at the end of 2012. He now coaches owners on the same lessons that took him 25 years to learn the hard way.

Resources Mentioned

  • HTG Peer Groups — Arlin’s peer group community for IT business owners, founded 2000.
  • ConnectWise — The PSA platform Heartland standardized service delivery on.
  • Great Plains — The accounting system Arlin’s CFO Jane installed to bring financial discipline.
  • Service Leadership — Where Arlin learned the W2 multiple KPI for service team profitability.
  • Arlin Sorensen on LinkedIn — Connect with Arlin directly.

Connections

Phase + Module:

Milestones inside those modules:

Concepts referenced:

  • Normalized EBITDA — Why running clean (no add-backs to argue) made the sale go smoothly
  • The Multiple & WACC — Headline offer vs. deal structure (cash, terms, employment, tax)
  • Value Gap — The math between personal need and what the business will actually deliver
  • The Owner-Operator Trap™ — The South Carolina owner who traded 27 years for 10% of his number
  • Capital Allocator — The seat that asks whether this decision earns the margin the plan requires

Graph View