In this eye-opening episode, Alexis Sikorsky, Owner of Sikorsky Consulting Ltd, shares how to prepare for a strong private equity exit in stage 5. If you worry about leaving money on the table, fear private equity as the enemy, or feel stuck in growth and decision fatigue, you won't want to miss it.

You will discover:

- Why private equity is your friend, not your enemy, when you understand how they actually value and buy companies

- How to reverse due diligence on PE firms to avoid bad partners and fish-and-chip tactics

- What assessment and preparation steps dramatically improve your valuation and exit outcome

This episode is ideal for for Founders, Owners, and CEOs in stage 5 of The Founder's Evolution. Not sure which stage you're in? Find out for free in less than 10 minutes at https://www.scalearchitects.com/founders/quiz

Alexis Sikorsky is a strategic advisor to founders who are serious about scaling fast and exiting strong. With a nine-figure private equity exit under his belt, Alexis isn’t speaking from theory—he’s lived the entrepreneurial highs and lows across decades of company building, boardroom negotiation, and international leadership. His flagship book, Cashing Out, lays out the APEX methodology, a four-part framework (Assess, Plan, Execute, Exit) that demystifies the journey to private equity for founders feeling stuck or overwhelmed by growth and decision fatigue.

Want to learn more about Alexis Sikorsky's work at Sikorsky Consulting Ltd? Check out his website at https://www.asikorsky.com/

Connect with Alexis through his LinkedIn at https://www.linkedin.com/in/alexis-sikorsky-consulting

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Founder's Quiz

Hello, hello and welcome. Welcome once again

to the start, scale and succeed podcast, the only podcast that

grows with you through all seven stages of your journey. As a

founder, I'm your host, Scott Ritzheimer, and if you're

leading a company and you've poured everything you have into

it, either on the back of your mind or, like right there in the

front of it, you're wondering whether you're actually going to

get to cash out. And that can be easier said than done, but it

can be a lot easier if you know the right path to getting there.

And that's why we've got today's guest with us, because he's done

exactly what you're trying to do, and now helps other founders

to do the same with us. Today is Alexis Sikorsky. He's a

strategic advisor to founders who are serious about scaling

fast and exiting strong with a nine figure private equity exit

under his belt, Alexis isn't speaking from theory. He has

lived this to the entrepreneurial highs and lows

across decades of company building, boardroom, negotiation

and international leadership. His flagship book, cashing out,

lays out the apex methodology, a four point framework we'll dive

into here in just a moment. That demystifies the journey to

private equity for founders from feeling stuck or overwhelmed by

growth and decision fatigue. He's here with us today. Alexis,

welcome to the show. Thanks for joining us from the other side

of the pond here. Always exciting. Having someone from

your neck of the woods, I'm wondering if we could just kind

of set the stage. Your book opens with this premise that

Good evening, Scott. Thanks for having me.

founders are often leaving an enormous amount of money on the

There's a lot of things they do wrong, but I'd say the

table, not so much because their businesses aren't good enough,

but because they don't know how private equity actually works.

fundamental mistake is thinking peace the enemy. So that's

What is it that so many founders get wrong when it comes to

partly private equity's fault and partly founders fault,

private equity?

because they don't do the due diligence, they don't do the

research. But there is many factors that will involve that

will be involved in the valuation of a company, right?

You have your like, numerical factors, your EBITDA, your

multiple, multiple will depend on the side, on the market, etc,

etc. But there is tons of things you can do to improve your your

valuation. And just give you one example. Everybody thinks

private equity buy a multiple of EBITDA, right? So you sell 10x

or EBITDA, 8x 12x depending on your mind, that's actually not

true. They don't buy a multiple of the EBITDA. They buy a

multiple of something they call nominal EBITDA, which is

basically what they think the EBITDA will be after you sell

the company. And these are two very, very different numbers,

and it's one of the way they make money, right? You have a

million EBITDA. They think, okay, so I reorganize,

restructure like that. I have a very good like, top of the line,

bottom of the line, special expenses, and then my nominal

EBITDA is not one. Actually, it's 1.5 so that's a very, very

simple example of how you improve your valuation.

So one of the challenges that I think folks

have is, you know, founders want to go in and sell high.

so how our common goals?

PE is not trying to buy low. That's one of

the legends. P is trying to buy at the right price, and you're

actually trying to sell at the right price as well. So if you

are knowledgeable, if you know how P work, happy calculate,

actually it should be the exact same number and another like.

That's something that's been puzzled me my whole life, my

whole career. When you start negotiating with a private

equity, when you get to the point that you are in exclusive

deal, while you get a letter of intent, the private equity will

start do a due diligence of your company. It's going to be pretty

thorough. I call it the six months colonoscopy. It's gonna

be a pretty thorough due diligence. On your side, you're

selling your company that you've been working years in. You

basically choosing, not only you choosing the guy who makes the

check for you, but in private equity deal, mostly you choose

your boss, right? And so that's basically, as a founder, the

most important decision in your life. And yet they don't do a

due diligence. They don't do private equity due diligence. It

puzzled me, and to be honest, it puzzled my private equity

friends as well. These guys are why don't they do a due

diligence on us? And they. Are ready for due diligence. They

Yeah, I love the idea of turning that around

understand it should be happening, but they don't, then

that's a super key component.

one of the other. And feel free to tell me if this is a myth,

because I've not seen it quite play out this way in the real

world. But there's this idea for founders that, like nobody will

care about their business as much as they don't, or nobody

will lead it as well as they did. Or if I sell to private

equity, they're going to gut it and it's going to lose its soul.

How do we, how do we, you know, maybe there are some private

equity players who do that, but that should be a function of due

diligence, right? How can we look for the right things in our

future Boss To use some of the language from earlier?

That's absolutely very important, and

it's usually seeds in a misunderstanding of what a

private equity is. A private equity is is think of a private

equity as a real estate investor. Private equity, it's

not a risk play. It's a leverage play, right? They will borrow

money from the bank to buy your company, as long as your company

doesn't get bankrupt or doesn't get lower in terms of EBITDA,

that what they were buying, they're going to make money, and

they're going to make tons of money. I don't want to get into

details, but basically, you a private equity buys a company

that does a million revenue, with million EBITDA, with five

years, the companies still do it a million EBITDA, and they made

5x right? So it's, it's a leverage play. So what they need

is they need to de risk, because the only time they lose, well,

they never lose, but the only, the rarest of time they lose, I

say they never lose. I'm talking small, mid cap here. I'm not

talking the $10 billion deal. The reason they never lose is

they de risk a lot, and the thing they hate the most is

firing the founder. I would be lying if I say doesn't happen.

It does happen, but there has to be a really, really good reason

they are not in the business of running companies. That's not

what they do. And I know because I'm I work as kind of interim

CEO for private equity when they have to fire the founders, and

if that happens, like, that's, mean, the deal was very, very

up. Like, being completely misunderstood, and like, I've

been working on a company in Paris for a few months, because

the seller was actually cheating. They cheated the

private equity. Private Equity failed to see it in due

diligence. They had to fire the guy for stealing. That's the

kind of teacher. But most of the time, firing the firing the

founder is not what they want to do. It still happens, but it's

not what they want to do. Then breaking it for parts like,

unless you are a multi billion dollar company, I know no

company that does like, 50 million or 100 million revenue

that could be breaking for parts like, it's ridiculous. Will they

will they care about your company less than me, yes,

because they will care about different things, private equity

or an Excel spreadsheet. They don't give a flying about your

cousin who's your accountant. And you'll be very sad if you

want them to care about stuff, which I did, you have to make

them. The way you make them is contract. You do key person

contract. You be sure they are treated well, but they're not

going to treat them well because you like because they like them,

that they don't care. And the last thing I want to mention,

and one of the main reason you do due diligence, is actually

none of what you describe is actually real world problem. It

does happen, but if you do a proper due diligence, and after

that, maybe I'll spend 30 Seconds to explain to you how I

make private equity do due diligence, but the thing you

have to guard against, which is very common, is what we call

fish and chip. So that's a very common practice in private

equity, and that really the private equity who do that

should be avoided like the plague. So the play is they fish

you with a very high valuation. So okay, I'll give you 100

million for your company. Do a letter of interest for 100

million. Do an exclusive D going exclusive negotiation for 100

million. Start a due diligence. Do six months of due diligence,

and come and say, oh, did we didn't really like what we see.

It's actually going to be 92 that's very, very common. You

should guard against that a lot, because it's extremely

efficient. It's very, very difficult to say no to 92

million when you thought you're going to get 100 million.

Because, first of all, you exhausted. The due diligence is

exhausting. Also, your company is struggling a little bit,

because for the past six months, you haven't worked on your

company at all, but just on your due diligence. And you're a

human being, you start. Spending the money in your brain, or if

you're like me, in real life. So, and the way you got that is

the due diligence on private equity is the simplest you can

think of. It's it's purely a reputation play. So what? What I

do, and I do that for every single one of my clients when we

are in discussion with a private equity. I usually do that before

the letter of intent. I say, Okay, now I'm going to do my due

diligence on you. And the way I'm going to do you did due

diligence is talk to people you actually bought, because PE who

behave badly tends to repeat that behavior, right? So what

I'm going to do, I'm going to say, Okay, give me five names of

people you bought and that I can call. So obviously, I take the

five names and don't call any of these guys, because it's of no

interest. So I go on their website find out the company

they acquired. They're usually very public about the company.

They acquire private equity, if not. Well, you have to dig a

little bit to find them. Contact these, these people on LinkedIn

and say, Hey, I make you a deal. I buy you a beer in exchange of

you telling me how the deal with PX went. I'm yet to meet the

founders who didn't want to share and say, No, I'm not

talking to you about it. So it's super simple. It requires no

technical knowledge. Is just like banking on the fact that

people like to tell them their stories.

I love that. I love that. And and so you've got

this really easy due diligence that just about everyone's

skipping but has no reason to. And I like that. Now you also

have this Apex methodology, and because we've got a relatively

short format here, I don't want to dive into each of the

different parts, but help me understand where that fits in

this process, and what you think are some of the biggest

differences that using the methodology creates.

When you say methodology, people will will

think, KPMG, right. It's it's not like step by step

methodology. It's more like meant to know, to not forget

stuff. And what most people forget is the A part of the

methodology, the assessment. Know who you are, know who your

company is. Do you have the proper numbers? Do you know your

numbers? Do you know your clients? Do you know your unique

selling proposal? Do you know your market like, just the basic

knowledge of your own company? Keep in mind, I don't deal with

large cap, right? That's not, I'm not talking to the billion

dollar revenue company. That's not where my skill set lies. And

anyway, they're not going to call me. It's not, I don't have

the these guys work with with investment banks, right? I'm

talking your my sweet spot is the 100 million deal, right? So

I'm talking 100 million, I'm talking to five to 10 million

EBITDA companies, give or take, and they all pretty much at some

point reach the same issue that I had them to fix. And the

assessment part is part of that, right? And you reach a point i i

call it, for simplicity, and it's probably going to be the

subject of my next book. Is the 10 million ditch. So you, you

started your company, you bootstrapped, you worked super

hard, took you somewhere between three years to 10 years to get

to a 10 million revenue. And now you're stuck. And the reason

you're stuck, there are many reasons you're stuck, but

there's three main reasons you're stuck that I help with.

The first one is, I call it founders fatigue, but it's not

fatigue in the New Age sense. Oh, I'm tired and then I want a

better work lifestyle balance, because I'm previous generation.

We don't care about that. It's more like I'm now so much

ingrained in my company, so I spend most of my time in the

company, and no time on the company. Put it otherwise, which

is like what I literally put on the desk of my most my clients,

is do not confuse what's urgent with what's important. Yeah, and

that's a big, big, big issue. Most founders have. They are so

preoccupied with what's urgent, they tend to forget what's

important. And the good thing is, that's a super easy fix,

actually, just thinking about it, it's half of the problem

solved. Second problem is you go from a company that blood and

tears and sweat, right and family and friends and late

night and Foosball games and whatever, and now you need a

company that's processes, procedures, people, and so

that's and the first, usually the first area it shows is the

numbers. To that point, you usually don't have a proper CFO.

You shouldn't have a proper CFO in that 10 million revenue

company. But that's. Mean you don't have the right numbers on

your company. You even have, like, I see the two extreme, you

have the guy who gets his numbers once every quarter,

which is, it's deadly, it's too late. Like I'm flying my plane

and I over without a GPS, overshot my airport by 500

miles, too late. And the other extreme is the guy who gets 50

pages of detailed financial analysis from his accountant

every month that he doesn't look at because it's not it's not

credible enough. So all that stuff, all procedural and stuff.

So that's the second the second issue, and the third issue,

which is the trickiest to solve, is now you reach a point when

you need C level people, right? You need like, good people in

your company, yes, and you cannot afford C level people

like CFO. It's the first example you have. You have 5 million

revenue company, 1 million a bit die. You hire a CFO. It's a

third of you a bit dark. You can afford a CFO. It's same with

SEO. A CTO. Like sales and marketing are usually badly

managed in these companies. And so, yeah, I don't know if I even

answered your question. I apologize.

No, it's spot on. And folks who are listening

will recognize a lot of this from from, you know, guests and

things in the stage four process. And so yeah, there's a

lot in there that we can explore. And I love that you

take that also through the lens of, how do we get ready for PE

on the backside of it, not just how do you get past that

frustration or the fatigue, but how do you actually cash out on

this for there's one question that I want to get to here. It's

question that I ask all my guests, and I'm very interested

to hear what you'd have to say. But the question is this, what

is the biggest secret you wish wasn't a secret at all. What's

that one thing you wish everybody watching or listening

today knew?

PE is your friend, not your enemy. Private

equity is the reason founders get respected. Like move your

brain. 20 years ago. You're a founder of brick and mortar

company. I know tons of example, but I don't know you manufacture

precision instruments, or you are one of my clients is a sport

timing company. You getting close to retirement. What do you

do? You go see a larger company and try to sell yourself to a

larger company, there is five potential buyers. How good do

you feel in this negotiation? Not Not really, you're going to

not sell well, but you're going to be treated like you're going

to be treated like a second class citizen. Then Then comes

private equity, and suddenly there is one of you and 50 of

them. Suddenly, not only you have the upper hand in the

negotiation, but they treat you well. And I think it's something

super, super important that nobody ever talks about like

you've been sweating. You've been like most of founders will

know that, like at some point they'll have to mortgage their

house. At some point they're gonna have to to have trouble in

their family, to lose friends, to miss on birthday and stuff

like that. The least you could expect is when you're ready to

exit, at least you'll be treated. You'll be treated well.

For me, it's something very important.

It's so good, and I love reshaping that space

and having someone like yourself come alongside to connect you

with the right people who can do that and help you do the due

diligence on them along the way. Which brings me to my last

question here before I let you go, and that is, there's

definitely some folks listening today who'd want to know more.

Maybe get a copy of your book. Maybe work with you directly.

How can they find out more about you and the work that you do?

The easiest is on LinkedIn. Find me on

LinkedIn. I'm lucky enough that I have a name that's a little

bit uncommon, so I'm easy to find. Just please, please for

you listeners, please do me a favor when you message me on

LinkedIn, please say you come from Scott's podcast, and

because I get so many, so many messages, I try to answer to

everyone. So if I know you come from a podcast, I'll try to be

careful and answer answer as fast as I can.

That's excellent. Alexis, thanks so

much for being on, for sharing with us, for helping dispel a

couple of big myths in the world of founders that I think will go

a really long way. I appreciate you being on really was a

privilege and honor. Having you here today, this evening, and

for those of you watching and listening, you know your time

and attention mean the world to us, I hope you got as much out

of this conversation as I know I did, and I cannot wait to see

you next time. Take care.