Get a Free Valuation
Sell Now

  Subscribe: Apple Podcasts | Spotify | SoundCloud | Amazon Music

Episode 295

From Operator to Investor: Unlocking Business Value and Mastering the Exit

Insights from Saul Cohen on The Exit Podcast

For many entrepreneurs, the day-to-day grind of operating a business can be so all-consuming that they lose sight of the ultimate goal: creating a valuable asset that can eventually be sold.

In a recent episode of The Exit, Steve McGarry sat down with Saul Cohen, Partner at The Expert Eye and expert acquisitions advisor. Saul shared his journey from PwC auditor to entrepreneurship advocate, offering a masterclass on how small to medium-sized enterprises (SMEs) can bridge the gap between “running a business” and “building an exit-ready asset”.

Why Traditional Accounting Isn’t Enough for an Exit

Most business owners view accounting through a single lens: tax optimization. While keeping tax bills low is great for yearly cash flow, it can actually hurt you when it comes time to sell.

Saul explains that there is a fundamental difference between traditional “compliance” accounting and M&A-style accounting:

  • The Optimization Conflict: Entrepreneurs often optimize for low tax, but buyers optimize for high profit.
  • The Valuation Gap: Traditional accountants may only see a handful of acquisitions a year. They often miss the interplay between numbers, risk, and how those factors drive a buyer’s valuation.
  • Risk Assessment: Understanding the “core fundamentals of audit” allows an owner to identify, measure, and control risks before a buyer ever sees them.

The SCORE Framework: Evaluating the Health of Your “Cow”

Saul uses a vivid analogy for business valuation: The Cow. > “If you think of a business as a cow, we’re looking at how much milk it’s going to generate and what’s the risk that the cow is going to continue to generate that milk into the future”.

To help owners assess this “health,” Saul developed the SCORE Framework:

  • S – Systems: Do you have a repeatable way of delivering work that doesn’t rely on the owner?
  • C – Clients: What is your process for winning and nurturing clients? Is it a system, or is it just “people knowing you”?
  • O – Organisation: Is your team structured to function independently?
  • R – Structures (The “Cheat” R): Do you have recurring revenue, legal frameworks, or intellectual property (IP) that reduce risk?
  • E – Exposure: Where is the business vulnerable? (e.g., supply chain issues, legal claims, or market downturns) .

When is the Right Time to Sell?

Timing an exit is both a mental and a market-driven decision. Saul highlights three key indicators:

  1. The Three-Year Rule: If you want to sell in three years, start prepping now. By the time you are “mentally tapped out,” you won’t have the energy to do the hard work of exit prep.
  2. The 5-10 Year Cycle: Scaling and selling every decade allows you to reset. Interestingly, Saul notes that second-time founders often scale their next business to the same size in a fraction of the time because they already “know the journey up the mountain”.
  3. Market Anomalies: Sometimes, “multiples shoot through the roof” due to private equity consolidation. If your industry is seeing 12x multiples instead of the usual 4x, it’s often better to take the money and start again.

Red Flags and the Importance of Trust

In over 150 deals, Saul has found that the biggest deal-killer isn’t a bad number—it’s a lack of trust.

Financial due diligence (DD) is often less about finding “gotchas” and more about finding “negotiation triggers”. However, if a seller is slow to provide bank statements or appears to be hiding information, the trust breaks down and the deal usually follows.

Advice for the 10-Year-Younger Self

When asked what he would tell his younger self, Saul emphasizes radical responsibility.

  • Own the Mistakes: “If something’s not going right, it’s on you… stop blaming other people”.
  • Build Assets from Day One: Focus on “soft assets” and valuation from the beginning, even if they don’t sit on a standard balance sheet.

Connect with Saul Cohen

Saul is currently working on his upcoming book about the acquisition journey and engaging in private equity “roll-ups”.

Looking to transition from operator to investor? Saul’s SCORE framework is a great place to start audit-proofing your business for a future exit.

YOUR HOST

Steve McGarry

An entrepreneur, content creator, and investor based in sunny Tampa, Florida. In 2015, while living in San Francisco, Steve sold his first fintech startup LendLayer to Max Levchin’s (founder of PayPal) consumer finance company Affirm.

You May Also Like

Episode 294

The Exit

Can a creative producer turn a simple video game interface into a major patent exit? On a recent episode of The Exit, Steve McGarry sat down with Victor Varnado, CEO of Supreme Robot, to discuss the transition from entertainment producer to tech IP dealmaker. From navigating SEC-regulated acquisitions to building “hybrid newsletters,” Victor shares the […]

Episode 293

The Exit

Building a business from scratch is often romanticized, but as Gregory Mohr, founder of Franchise Maven and Wall Street Journal bestselling author, points out, you don’t need to reinvent the wheel to achieve financial independence. In a recent episode of The Exit podcast, Mohr shared his journey from a 16-year-old Taco Bell employee to a […]

Episode 292

The Exit

When preparing for a business exit, most entrepreneurs obsess over their Profit and Loss (P&L) statements, tax returns, and customer contracts. However, there is a hidden value-killer that often goes unnoticed until it’s too late: poor digital asset management. In a recent episode of The Exit, Paige Wiese, founder and CEO of Tree Ring Digital, […]