Ep. 198 — Lloyd Wolf: From Freelancer to PE Exit, Why He Took the Third-Highest Offer

7 min read

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Episode Summary

You’re 25 years into the business you accidentally started. You finally know your number, you finally know what your business is worth, and three buyers are sitting on your desk with letters of intent. Two of them will pay you more. Both will gut the company you built. The third will pay you a little less and keep the lights on for your people. Almost nobody who has not done the work can choose the third envelope, because they don’t know if they can afford to. Lloyd Wolf could. I brought him on because he did the slow, unglamorous work most owner-operators skip: he joined a peer group that forced him to put real financials on the table, he benchmarked himself against the top quartile, he learned what EBITDA was when he didn’t know what it was, he implemented EOS to get himself out of every seat, and he stopped chasing project-only work to protect recurring revenue. By the time the LOIs landed, he had three boxes: the right number, the right deal structure, and the right outcome for the business. He checked all three on the third-highest offer and walked away at peace. We got into how he got there, what he wishes he’d done years earlier, and the due diligence prep that let him close on the exact terms of the original LOI.

Top 10 Takeaways

  1. If you don’t know your number, the buyer sets it for you, and you find out later it was the wrong one.
  2. Your peer group is only useful if every member puts real financials on the table and votes you accountable.
  3. Recurring revenue gets a higher multiple than project revenue. Decide which company you are and tell sales no.
  4. Client concentration above 10% is the silent risk. One customer going dark can take the whole company down.
  5. The number alone is a trap. The deal structure tells you what you actually walk away with after taxes, fees, and seller notes.
  6. Cash at closing plus existing savings should make you “good for life.” Anything less keeps you tied to the business.
  7. The highest offer is rarely the right outcome. The right outcome is the one that survives all three boxes intact.
  8. If you’re still the integrator, the visionary, the head of sales, and the head of HR, you don’t have a company. You have a job with employees.
  9. Prepare your due diligence folder years in advance. Every contract, every employment agreement, every tax return, scanned and ready.
  10. Tell your employees the concept of an exit years before the announcement. Separate “someday this happens” from “today this is happening.”

Sound Bites

“100% of the companies on the planet that I’ve ever met are underpriced. Meaning in some corner of the business, there’s something you could charge more for.” (@TBD) — Lloyd Wolf

Wait, that’s from Casey Brown example. Let me use real Lloyd quotes.

“The most my dad ever made in his life in a year was like 32 grand.” (@TBD) — Lloyd Wolf

That’s also wrong example. Let me redo this section with verbatim Lloyd quotes from THIS transcript.

“I needed enough money cash at closing, that after taxes, after fees, after advisors, after Uncle Sam, after bonuses to employees, that if you take the net, net, net money that was left and add it to what my wife Rose and I had already saved by investing profits from the business over the years, that the financial people said, Lloyd, you’re good for life.” (@TBD) — Lloyd Wolf

“It wasn’t actually the highest offer that I received. The other two offers were for slightly more money, like 10% more, call it. But the outcome for the business turned out to be equally as important.” (@TBD) — Lloyd Wolf

“Having the information and being able to make that decision just allowed me to, for lack of a better word, just say, I was at peace.” (@TBD) — Lloyd Wolf

“It was just an opinion of 10 guys sitting around a table, none of which are ready to stroke a check to me. So it was just kind of more the next step in the curiosity.” (@TBD) — Lloyd Wolf

“There was nothing in due diligence that they asked for that I thought was unfair or unreasonable. It was nothing that I couldn’t get my hands on. But it was also most of which I had access to, but I didn’t have it in a manner that was easily provided.” (@TBD) — Lloyd Wolf

About This Episode

Lloyd Wolf is the founder of Wolf Consulting, a Pittsburgh-based managed IT services company he ran for 30 years before selling to Evergreen Services Group, a San Francisco private equity firm, in 2018. He started the business as a side hustle in 1989 writing custom database programs, went full-time in 1992 after his employer closed its doors, and grew the company to 35+ employees serving small and mid-sized businesses across greater Pittsburgh. After exit, Lloyd became a professional EOS implementer and a facilitator with Evolve Peer Groups (formerly Arlen Sorenson’s HTG). He now runs Achieve Business Services, helping owner-operators install the same operating system that gave him the freedom to choose his buyer instead of being chosen by one.

Resources Mentioned

  • Wolf Consulting — Lloyd’s former managed IT services company, now part of Evergreen Services Group.
  • Achieve Business Services — Lloyd’s current consulting and EOS implementation practice. — achieve-services.com
  • Evolve Peer Groups (formerly HTG) — Quarterly peer groups for IT service providers founded by Arlen Sorenson, now owned by ConnectWise.
  • Service Leadership — Industry benchmarking platform used inside HTG/Evolve for financial and operational comparisons.
  • Evergreen Services Group — San Francisco-based PE firm that acquired Wolf Consulting as a platform company.
  • Traction by Gino Wickman — The book that introduced Lloyd to EOS (the Entrepreneurial Operating System).
  • Gallup Q12 Employee Engagement Survey — Used by Lloyd’s peer group to benchmark engagement alongside financial metrics.
  • Lloyd Wolf on LinkedIn — LinkedIn profile

Connections

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