439: The Real ROI: People and Culture Drive Business Value

In times of uncertainty, knowing what your business is worth—and how to protect or grow that value—can feel elusive. You are never sure what business you are really in. What should you do? How can you retain the value you have created and prepare for the next growth phase, or even the exit strategy?

On this recent episode of On the Brink with Andi Simon, I had the pleasure of speaking with Dave Bookbinder. Dave is a business valuation expert whose groundbreaking work focuses on an often-overlooked truth: your people are your most valuable asset.

Dave, the author of The New ROI: Return on Individuals, joined me to unpack how business owners can better understand, manage, and maximize the value of their companies—especially in a rapidly changing business environment. His key message? Valuation isn’t just a number. It’s a reflection of leadership, culture, and strategic clarity.

Let me repeat that:  Your business’s value is a reflection of leadership, culture, and strategic clarity. What can Dave teach you about how to build and protect that value?

The Human Side of Valuation

Dave’s experience spans thousands of valuation engagements across industries. And while balance sheets highlight assets like patents and trademarks, human capital rarely makes the cut. “Every CEO says their people are their most valuable asset,” Dave points out, “but where do they show up on the balance sheet? They don’t.”

That gap sparked his first book, The New ROI, which explores the critical link between culture, engagement, and enterprise value. His second, The New ROI: Going Behind the Numbers, draws from his award-winning podcast, Behind the Numbers, which focuses on how leadership and culture truly impact business performance.

You will totally enjoy watching our video of the podcast here:

Common Valuation Mistakes

Dave shared some of the biggest pitfalls business owners face when it comes to valuing their company:

• Relying on rules of thumb: “Back-of-the-napkin” valuations based on hearsay can be wildly misleading. Dave recounted a client who declined a generous acquisition offer assuming better ones would follow. Years later, the business couldn’t command even half that valuation.
• Tax-driven financials: Many entrepreneurs minimize income to reduce taxes, only to struggle during a sale. Buyers don’t take your word for “adjusted EBITDA”—they want clean, auditable numbers.
• Unrealistic projections: Over-optimistic forecasts, especially those shaped like a hockey stick, often destroy credibility with buyers. “They’re buying the future,” Dave says. “And if your projections seem disconnected from market realities, they’ll discount for risk.”

De-Risking Your Business to Maximize Value

Buyers and investors are risk-averse. That’s why Dave emphasizes the need to “de-risk” your business:

• Clean financial statements: Avoid running personal expenses through the business. Have your books reviewed or audited by a CPA.
• Strong management team: If the business can’t run without you, it’s not scalable—or sellable.
• Documented processes: Institutional knowledge should live in systems, not just in people’s heads.

“If your business can’t survive you getting hit by a bus,” Dave quips, “you don’t have a sellable business.”

Exit Planning is a Process, Not an Event

Whether you’re transferring ownership to a family member or preparing for an acquisition, Dave urges owners to think ahead. “Selling a business is like selling a house,” he explains. “You need to get an appraisal, clean it up, and understand what similar businesses are selling for.”

He also warned that poorly integrated acquisitions often fail—not due to valuation issues, but because of clashing cultures. “Seventy-five to ninety percent of deals miss their synergy targets because they ignore people and culture,” he says.

Why Culture is Core to Company Value

As a corporate anthropologist, I know firsthand how culture shapes performance. Dave agrees. “It’s not that successful companies have a good culture—it’s that good culture drives success,” he said.

When leaders overlook how work gets done—or try to impose a new cultural model without understanding the old one—they risk alienating key people and destroying value. Culture is the operating system of the business.

Your People Are Your Value

Dave’s work offers a refreshing, human-centric view of business valuation. Whether you’re growing, planning an exit, or considering acquisitions, the lesson is clear: your people, your culture, and your credibility are the real ROI.

If you’re curious to learn more, check out Dave’s books on Amazon:

• The New ROI: Return on Individuals
• The New ROI: Going Behind the Numbers
• The Valuation Toolbox for Business Owners and Their Advisors

And tune into his award-winning podcast, Behind the Numbers.

Final Thought

In today’s volatile market, it’s not just about numbers—it’s about narratives. The story you tell buyers, investors, or the next generation about your company must be grounded in reality, powered by culture, and led by people who are truly your greatest asset.

To reach David Bookbinder and read his books:

Listen to these other podcasts or read the blogs about them:

435: Navigating the Management Maze: Tips for New Leaders 

433: Organizations Must Embrace Human-Centric Design

430: How Does Dr. Chris Fuzie Create Great Leaders?

Connect with me:

• Website: www.simonassociates.net
• Email: info@simonassociates.net
• Books:  Learn more about these books here:
  • Rethink: Smashing the Myths of Women in Business
  • Women Mean Business
  • On the Brink: A Fresh Lens to Take Your Business to New Heights

Listen + Subscribe:

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Reach out and contact us if you want to see how a little anthropology can help your business grow.  Let’s Talk!

From Observation to Innovation,

CEO | Corporate Anthropologist | Author
Simonassociates.net
Info@simonassociates.net
@simonandi
LinkedIn

Read the text for our podcast here:

Andi Simon 00:00:02  Welcome to On the Brink with Andi Simon. I’m Andi, and as you know, my job has helped you get off the brink. And I think these are the most interesting times because when things are changing fast, you are very unsettled. The uncertainty makes it difficult to make good decisions. You’re not quite sure if what you used to do in the past is the appropriate thing to do for the future, and the future is never clear. But on the other hand, you have some confidence based upon what you used to do, that the future will be pretty predictable based upon what you know. But right now, things are such in turmoil and disruption. And it’s not just tariffs. I had my tea the other day. It’s tariffs and trade and taxes and talent and technology. And those are all creating a world going through a major transformation. Today I have with me Dave Bookbinder. Now, Dave was kind enough to put me on his Conversational Podcast. It’s all by the numbers and he will tell you more about himself, because I’m going to give you a very short bio, but I want you to listen to him carefully.  He specializes in business valuation, and he has a lot of good books written about him. Don’t underestimate the power of your people for the value of your organization. And I would tell you, don’t underestimate the value of your culture for the value of your organization. So we have a whole lot to talk about today that’s going to be helpful for you. If you’re thinking about it, am I going to keep this business for a long time or short time? Do I want to sell it? Is it a family firm ready for the next generation? What do you think about the value of your business? A little bit about Dave. He’s a business valuation professional. As I mentioned, he served thousands of client companies of all sizes and industries, many types of intellectual property and intangible assets that Dave has valued our human capital assets as we were talking. He holds a bachelor’s degree in economics from Temple University and a master’s in finance from Drexel University. But he’s also an accredited senior appraiser in business valuation with the American Society of Appraisers and holds the designation of CEI Certified in Entity and Intangible Valuations. Now, some of you are going to say, really? And I’m going to say yes, really. There are some very good certifications that make him extremely expert and expert in this. He’s the author of three books now. He’s going to tell you a little bit about all of them. The one that I found most interesting is the new ROI, The Return on Individuals. So think about it. You have people and you have processes, and you have projects, and you have all kinds of wonderful things leading to profits. But how valuable are your people? Probably the most important thing he writes about is business and leadership at CFO University and Entercom Thrive Global. And he’s been a contributor to The Huffington Post. And he also has this wonderful talk show called Behind the Numbers. I’m not going to say much more about Dave. I’m going to ask him to tell you, his story. It’s always more interesting than a bio, but what it does is make him come alive so that whether you’re listening or you’re watching, you’re going to say to yourself, what? Can Dave help me? Does he have tips and tricks for how I can really understand the value of my business? And then we’re going to talk about some important things for today. Like how do I value a company that’s going through change or changing business environment, and how does that affect my value? And what of my people, do I keep them? How do I manage them during these changing times? What are people in a time when things like freelance or gig economy become so common? Dave, thanks for joining me today.

Dave Bookbinder 00:03:48  Andi, it’s a pleasure. Thank you.

Andi Simon 00:03:50  Tell the folks who’s Dave Bookbinder. How did you get here?

Dave Bookbinder 00:03:53  Thank you for that really kind introduction. I’ll try and keep this brief, because you certainly gave me quite the intro there. So the short story about Dave Bookbinder is I grew up in the corporate finance world, doing mergers and acquisitions, starting in valuation, of course, but working my way up to corporate finance ladder and got involved in buy side and sell side M&A, raised some debt for companies and also did asset backed securitization. And after having all the fun cocktail party conversations one day I realized that valuation was actually the thing that turned me on the most. So I pursued some professional designations, which you described in the intro, and I’ve had the opportunity to be involved in leadership roles at some very fine valuation firms. I currently lead the valuation practice at an accounting firm called Haley Flanagan, where we help privately held companies for the most part in valuing their businesses around all the issues that you just described. you did mention that I have a designation in intangible asset valuation, and I valued a lot of IP assets over the years. The ones that get all the ink, so to speak, are things like technology and patents, customer relationships and trademarks. And then there’s the human capital component. And you already know this. But for your audience who has probably heard every CEO on the planet pound the table and say, our people are our most valuable asset. Where do those people sit on the balance sheet where all the other assets are? Well, spoiler alert they don’t. And one day I decided that I needed to do something. I needed to write something.  I just felt compelled to do it, about how we and our valuation profession value people who didn’t think that it told the whole story. So I had to be really careful because I don’t want to throw stones in my profession because I don’t agree with the way we do things. And I also had to be careful not to piss off the entire accounting world, because people don’t appear on a balance sheet. So there was a fine line that I had to walk while conveying my personal frustrations. And at the time, you mentioned I was still contributing to the business section of the HuffPost. So drop the article there and on LinkedIn. And never thought anything of it except people started to show up in my life and he asked me, what’s next? You can’t stop there. Oh, right. I had never thought about anything beyond one article. So the article turned into a series of articles, and people kept asking me, what’s the master plan? And honestly, Andi, there was no master plan. It was just I was going with the wave and wherever I was inspired, I wrote something. And anyway, one day it occurred to me that after all these requests, I had to aggregate the content in some way. So that kind of felt like it needed to become a book. So that was my journey to prove that people are really your most valuable asset. It’s called The New ROI Return on Individuals. If you’re looking on Amazon, it’s the one with the white cover. There’s another sister book called The New ROI Going Behind the Numbers, which is a compendium of the conversations that I’ve had on my podcast, Behind the Numbers, with various leaders talking about things that they’ve done to implement culture change and how it’s impacted their business value. And then the last thing I’ll say, and I’ll shut up is you did mention the third book, which I recently dropped, which is a valuation toolbox for business owners and their advisors. And I felt compelled to publish that because I’ve had so many conversations with business owners who have a real misconception about what their business is worth. How do you value your business? How do you even think about an exit? And this little toolbox is designed to hopefully help some folks out there. And as they think about these processes.

Andi Simon 00:07:16  Well, you know, Dave, you’re in a trusted advisor group for Vistage. I’m a speaker. I’ve done 500 talks for Vistage and tech everywhere from India, Mexico and Canada. I mean, it’s really interesting to be involved with these CEOs of companies of all sizes, with all kinds of backgrounds and being able to talk to them about something of great importance to them. You know, how do I value my company? Part of the question for us today is how do you value your company? What are the mistakes you make? And we can start there thinking that something is a value that’s not. And I know that’s important to you. And then how do you begin to think about it in a changing business environment? Let’s start with the mistakes people typically make. And then we’ll talk about the environment. They’re trying to do it now.

Dave Bookbinder 00:08:05  Yeah. One of the most common mistakes that I see is people relying on the back of the napkin or back of the envelope valuation method. Those aren’t valuation methods, Andi, as you probably know. so the short story is they rely on either rules of thumb or info that they get wherever they’re out networking. So business owners tend to network among other business owners, and they hear conversations like golf courses. Yeah, I sold my business for 15 x. Well, what does that really mean? But to hear they hear a multiple and they get it in their head that that’s something they can achieve. I just recently completed a valuation engagement for a client who’s transferring his ownership to his daughter. He got an offer a few years ago and declined it. So as a part of my diligence, I need to understand what was the nature of the offer. Why did you pass on it? And what he explained to me was.  Well, if somebody’s going to come out of the blue and offer me this, then surely somebody else is willing to pay more for this. And oh, by the way, I could earn this amount over the next several years and just take it on the come and then sell the business for even more than that. Well, with hindsight now, the reality is, when you sum his profitability over the recent period does not even come close to what that offer was. And going backwards in time, I just had to check the implied EBITDA multiple on that offer he got was about 17.5 x. Yeah, I know right. Thank you. For those of you who are listening, Andi’s face just exhibited some extreme shock.

Andi Simon 00:09:39  I’m married to a serial entrepreneur, so I get it. and what do you think? But that’s a lot of EBITDAS.

Dave Bookbinder 00:09:46  Yeah, that’s a good multiple.

Andi Simon 00:09:47  You can do that. You go for it.

Dave Bookbinder 00:09:49  He didn’t do any research around it to vet whether or not they made any sense.  And now in this current market where we’re valuing his business, he’s worth about seven times. So that’s a huge mistake. And I see that far too often. So that’s one. I’ll give you one other one that I see a lot. And investors hate this. So a lot of times business owners are managing their businesses to avoid the payment of taxes. So you’ll see zero net income or close to net income because they don’t want to pay any taxes. Then they get to the point where they’re thinking about selling their business. And then they present you with a forecast that looks like what we call the hockey stick, where things have been flat. And then all of a sudden, you know, the shaft of the stick goes way up north.

Andi Simon 00:10:34  I’m sorry. I’m just sorry to laugh, but I’ve been there, so I, but please continue. I’m so sorry.

Dave Bookbinder 00:10:41  Yeah. So the key takeaway there is that buyers and investors are savvy, and you have to be able to demonstrate that you’ve been there and done that. And as soon as they see that hockey stick forecast, your credibility goes out the window. And credibility is a very important component in how buyers and investors think about putting a value in your business.

Andi Simon 00:11:01  Give me a few more. I like those because we’ve all been around people who have been so impressed with what they’ve created that they have no idea what it’s worth and ignore what somebody might offer. But the other part is how you manage your business and anticipating something in the future called a sale matters. So are there a couple of things that you could advise them to do to make sure they have the value that they think they’re going to want to get out of the business? I mean, this tax or this value, it doesn’t sound like you can have both.

Dave Bookbinder 00:11:36  Right? Because if you’re managing your business not to pay income taxes and you’re putting all the personal expenses through the business, then you’re going to be talking about add backs, you know, the adjusted EBITDA.  And that’s where you’re now throwing the personal car, the brother-in-law who never shows up for work, but on the payroll and a whole boatload of other things. You get it. You’ve seen the movie, right? It’s a lot more prudent to have a clean set of financial statements and not have to explain away the EBITDA adjustments when you’re at that moment. But here’s the thing to answer your question directly, the selling of a business is a process. It’s not just an event. And a lot of business owners don’t actually think about the process. Sometimes they get blindsided, ill health, some catastrophe happens, and then they’re forced to sell. If you have the luxury of time, take advantage of it. Get your ducks in order. Talk to a good group of advisors who can help you navigate the waters of a business sale and make yourself ready. Think about if you’re selling your home, before you put the house on the market, number one, you’re going to want to get it appraised, right. So you have a rough idea of what you’re going to get. And then you need to assess what the landscape looks like for other homes in the market. What have other homes sold for? You make some adjustments for the number of bedrooms and so forth. Access to transportation before you then go to the market, you’re going to make sure that the walls have good paint. Carpets are clean. You’ve done the touch up work so that you’re presentable. It’s a similar thing with the sale of a business. So getting your financial statements clean. Stop burning the personal expenses. Get an audit or a financial review done by a certified public accounting firm that will give investors and buyers the comfort that they need to understand that the numbers are good. At the opening, you talked about uncertainty. Uncertainty is key in valuation. Investors and buyers hate uncertainty. And the only way they can price uncertainty is to risk adjusting your business. So the more things that you can do, if your audience takes away nothing else today, the more things you can do to de-risk your business, the better off you’re going to be.

Andi Simon 00:13:51  Now, give me an idea of what the risking of business might look like.

Dave Bookbinder 00:13:56  Well, one would be like the financial statements I just referred to. So you’re going to have numbers that somebody can rely on. if you have a situation where you’ve got a management team where you can start to delegate if you haven’t already done so, the operations. So the idea is that if you get hit by the proverbial bus tomorrow, will the business still survive?  If the answer is no, you probably don’t have a real saleable business. So that’s another way to start de-risking it. Processes and procedures. A lot of times the smaller businesses don’t really have those things in place, but button them up and put those programs in place in a formal way so that there’s a guidepost for people to follow. So those are just a couple of things you can do to de-risk your business. And when you think about a business plan it’s about looking forward with a thoughtful eye, not an overly optimistic eye. Because now you say that you want to sell your business and you’re going to develop that hockey stick because people are going to challenge you. They’re going to ask you; how do you get from here to there? What are the underpinning assumptions about growth in terms of sales and profitability and margin expansion? And oh, by the way, how do you expect to be at EBITDA margins of 40% when the publicly traded peer group, you know, the big boys have EBITDA margins that are half that. Tell me that story. So you’ve got to be credible.

Andi Simon 00:15:19  Well, I mean, you’re pointing to many things, though, that are also essential to running a good business. And I’m listening to, because I’ve had clients who have been at $10 million wanted to go to $100 million, and they were all running by family members, and they had no scalability, no understanding even of how to get scalable and so we started to work with him about a mindset change. You’re talking about a mindset here as well, because he couldn’t possibly sell a business that was so fragile, even if it was making a lot of money, because it was so unclear, there was any value in the management team.  It was a product. And how would we ever get some growth out of that? So in some ways, running a business with good value to sell the business or to take it public or anything requires good management skills about how to run a business in a good way. Does that make sense?

Dave Bookbinder 00:16:13  It does. I just want to share one other thing, because we spent all this conversation talking about the sell side of a business, but there are other reasons why you need to have your operations buttoned down tightly, too. Because especially nowadays, I’m seeing a lot of business owners who are doing that, that generational planning. And it isn’t necessarily a sale. It’s like I alluded to before, the story of the owner who is transferring ownership to his daughter. There’s a lot that’s happening. And there’s a valuation exercise that’s associated with that as business owners are gifting shares or if they’re creating any kind of stock compensation program, you’ve got to know what the value of the equity of the business is.  And one of the other mistakes that sometimes business owners overlook is that there are valuation discounts that get applied in that situation. things like the lack of marketability of a privately held company and then also a discount for minority interest in a privately held business because minority interest positions don’t have the economics of the prerogatives of control that a controlling interest would.

Andi Simon 00:17:13  So much to think about. within the business in normal times. Now we have something that’s quite traumatic, which is uncertainty at a level that we probably have apart from the pandemic or maybe the 2008 recession. I guess we’ve all lived through tumultuous times. These aren’t any different from that. But I love the listener or the viewer to begin to think through how to become strategic in a time of uncertainty. Humans want certainty. They want to protect their status. They want to know that what they’ve done will work tomorrow. And therefore, I’m good to grow. But these are not necessarily the same. Your clients are changing. The business environment is changing. Financing is changing.  I’m mentoring some women business owners who all of a sudden found the deep freeze coming. You know, clients would come to them to do things. Just put a deep freeze on. We’re not going to spend money now or we’re in the federal contract business. Great company running beautifully all of a sudden to find no federal contracts. You know, I’ll stop. And so how do I begin to build the business in uncertain times other than I’m working with them to reinvent them? What are your thoughts?  How do we help them think about this?

Dave Bookbinder 00:18:34  Well, there’s so much to unpack there. A couple of things came to mind as you were framing the question. One is when you talk about uncertainty and how do you navigate it? I thought about the difference between Blockbuster and Netflix. And when you mentioned doing what you’ve been doing, if you keep on doing what you’ve been doing, you’re going to get what you’ve been getting. And sometimes that doesn’t work to your advantage.

 And you need to be mindful of what’s going on in your industry. So again, think about what Blockbuster and how Netflix kind of surpassed them and became a successful business in that space. But I’ve been around long enough to remember valuing businesses in the dotcom era. Oh yeah and talk about uncertainty. Then I remember having a conversation with the CFO that I’ll never forget. He handed me a projection for the next 20 years where they were never making money. And I asked him, “What is the path to profitability here? And he literally scolded me, like, I have no clue about finance because I’m such a dummy. Because for every dollar that he’s losing, that just increases his multiple even more. We’re selling eyeballs. Not profitability. Well, they were gone in six months. And at the end of the day, we’re laughing.

Andi Simon 00:19:47  I’m sorry, I’m sorry, but please continue.

Dave Bookbinder 00:19:50  I still chuckle about that, too. yeah. See the sock puppet, right? At the end of the day, businesses are valued based on profitability.

Dave Bookbinder 00:19:59  It’s about their cash flow. It’s a forward-looking exercise into the future. It’s sure the investors and buyers want to know, what have you done last year? What have you done the year before that? What are the trends historically? But you can’t just rely on a multiple or discussion of trends historically. It’s really, they’re buying the future. So an extreme example. If you’ve got two companies with identical sales and identical profitability, but you know that one just lost a key contract and next year the sales are going down and profitability is going down, does that company get the same multiple that the other one has if their trajectory continues forward upward? No, of course not. So it’s a forward-looking exercise. And the way the math works is it’s a present value calculation of the future economic benefits of the business. And that present value factor is also called a discount rate or a risk rate. That’s the numerical depiction of risk. That’s how the buyers and investors quantify the risk in your business. So when I talk about de-risking your business, if you can do those things, it will incrementally lower your discount rate in that cash flow scenario. And the lower the discount rate, the higher the value. That’s just math.

Andi Simon 00:21:10  It is just math. Having said that, when we are looking at an acquisition that we want to acquire apart from our own business, that we want to be acquired, how should we be, you know, really significantly critical of what they’re showing us. What would you do? What should we look at? And I’ll give you the question. Why? I wrote an article once for Businessweek. Small businesses and companies were buying out competitors, and they were buying out competitors, only to find out that they were buying a red ocean where they now had more supply and not enough demand. The reason they were taking out their competitors was that they weren’t doing so well, and I had to scratch my head and ask, what are you actually trying to do other than envy, jealousy, and hate? I want to get rid of them. They’re my competitors for very silly emotional reasons. So. But if you want to roll up something, you want to acquire something.  You want to get into a market, you know, how do I look at their valuation from our perspective and from what they’re telling us and thoughts to share?

Dave Bookbinder 00:22:16  Yeah. Again, you ask such insightful questions and there’s so much to unpack in all of them. A lot of buyers are asking for something that’s called a quality of earnings analysis. So if you’re selling a business, and I mentioned earlier, get an audit. Get a review to help give you more stability and credibility. Oftentimes with buyers, that’s not quite enough. They’ll come in and kick their tires themselves. Bring in another group of professionals to do a quality of earnings to test that. The numbers that you provided really are rock solid and start to pick holes in where maybe there were some issues historically. So that’s one aspect of it. In terms of rolling up businesses, here’s an interesting, fun fact for you, depending on where you get your data, I think it’s between 75% and 90% of businesses fail to live up to their projected synergies. When you combine the businesses, the idea is one plus one equals three, and most of them don’t live up to that. And the number one reason for that failure isn’t valuation, it isn’t systems, it’s failure to integrate people and culture. So that’s a critical component nowadays that you’re analyzing. Who are you buying? What’s the business? Of course. But who are the people? And can you keep them? Because there’s a lot of institutional knowledge that, unfortunately, walks out the door as soon as people hear that their company is being sold.

Andi Simon 00:23:40  Yep. And they go find some other place to play.

Dave Bookbinder 00:23:43  Yeah. And that’s so much harder to replace than you think. There’s a lot of folks who naively believe that, sure, people are fungible. Don’t let the door hit you on the button on the way out, and we can replace you in a heartbeat. But then when that individual or group of individuals is gone, they start to realize there’s a lot of nuances. Things that weren’t in their position description. Have to do with the position description is how we got things done.

Andi Simon: And that’s exactly the question of culture. How many may fail because you created an aardvark and a giraffe, and you wanted it to live together. And, you know, we do a lot of culture assessment and culture change work. But that’s a typical problem that the value of the company is as much in the way they get things done and the things that they value and believe to be important as it is in the fact that they make a profit at it. It’s not just the outcome, it’s how we got there. You know what your experiences are? Because I’d love to talk about culture just a little bit.

Dave Bookbinder 00:24:41  Yeah. No, I completely agree. You know, I talk about that and write about that a lot in the new ROI series. So, you’re preaching to the choir on that one, my friend. but I think there’s a causal relationship there. So when you talk about the companies that are successful and are outperforming their peers, I would argue that it’s because of their culture.

 It’s not the other way around. It’s the ones that are doing the right things around the culture. Create the engagement, which drives the innovation, which drives the above and beyond. You know that that whole spirit of commitment and that lands on the bottom line, and it impacts the value of business.

Andi Simon 00:25:18  And I’ll give you an interesting client situation. We were hired by someone to figure out what was going wrong. He had a very old business that had declining sales. Exactly what it is isn’t important, but if you go from $1 billion to $500 million in sales, that’s the wrong direction. And so he had a lot of cash, and he took it and bought several other businesses that were not related to his. They were family firms. And he removed the family leader who had built each of those businesses. And he wanted them to be more process oriented to get the results the way his business was. Only to find out that their cultures were far more collaborative and innovative, so they got results without the rules that he thought were essential for achieving results and a rule, hierarchical, rules driven company and a family firm that’s full of collaboration and teamwork and don’t necessarily play well together. And he said, I don’t understand how they don’t understand what I’m telling them and why it’s important to do it. So they speak a different dialect of English and their culture, which is the behaviors and the things they did to get things done, are just different than yours. You didn’t just buy a company; you bought a whole culture of how they were successful. And you’re trying to impose on it a foreign a foreign object. And you would be better off going in and enabling them to be successful the way they were or find a whole new crew of people who are going to do it for you. It was not happy. You’ve seen similar kinds of things?

Dave Bookbinder 00:26:51  I’ve seen that from an advisory standpoint. I’ve also lived it personally, where my employer acquired someone or we were acquired and, I’ve even just drilled into somebody coming into a new role, somebody took over a leadership position, took over a department, and didn’t even bother to ask, how do you guys do things? Literally just came in and said, here’s how we’re going to do it now. And I believe over the course of the next 18 months, lost every one of his key people.

Andi Simon 00:27:22  It isn’t simply a good way to do it and a better way to do it. This is the way. This is our daily habits and the body. The human doesn’t like to learn new things without knowing how it’s going to help them either keep their job or do their job or have a happy day at the end. And it’s much more complicated than simply your point of saying, this is the way we’re going to do things, and everyone looks left and right and says, I’m out of here. I’ll find a place where I can be me.

Dave Bookbinder 00:27:48  Change management is tough. It takes time. You can’t just come in and set everything on fire. Your best bet is to just observe, take things in, see how things go. Talk to people. Get a real good understanding and lay the land. Because you may actually learn something and find ways to implement what the acquired company had been doing into your business.

Andi Simon 00:28:07  And in some ways, you ignite that kind of engagement in the folks. The talent that you’ve acquired is waiting to be opened up and blossomed with new leadership. But you can’t simply tell them they’re bad. And if we’re so bad, why did you acquire us? I’ll give you one more example, and then we’ll sort of wrap us up, because I love sharing these. They make me laugh on one hand, but they also help me understand what’s going on with people running businesses. We had a large health care system and asked us to come in and understand how we could help the acquisition of new hospitals, take on their culture, and exactly which hospital it was is irrelevant. But they were sure that they had the right culture, and each of the hospitals that they were acquiring needed to become them, only to discover that they didn’t really have a culture, they just had the illusion of one. And those other hospitals were doing just fine, thank you, and it doesn’t matter whether it’s health care or manufacturing or service industries. The people are complicated, dudes. And if you’re going to build and value them. So taking us back to your beginning, the ROI of people is really the core of what we are looking at today. And all of these folks who are looking to sell their business really should pause for a moment and take a good look at what the value of their company is intelligently, and not create those hockey sticks in hope. Hope is not a good strategy. Dave, tell us about your books. All of them, so people can go and find them, because I think we’re about ready to wrap us up.

Dave Bookbinder 00:29:37  Sure. So thank you for that. so the first one is The New ROI Return on Individuals. That’s the white cover. That’s my journey to prove that people really are your most valuable asset. The black cover is The New ROI Going Behind the Numbers. And as I mentioned, it’s a collection of the conversations that I’ve had on my podcast, Behind the Numbers. And the latest book is The Valuation Toolbox for Business Owners and their Advisors has a lot of good tips and tricks in there, including common mistakes that business owners make, things to think about when you’re exiting, why you need a good forecast, and also discussion of the impact that people can contribute to your enterprise value. So that’s the discussion on the books. I appreciate that, Andi. Thank you. They’re all on Amazon, in all formats. In fact, they’re now also available as audiobooks.

Andi Simon 00:30:19  Good. Did you record them yourself?

Dave Bookbinder 00:30:22  I did not. Amazon enrolled me in one of their new tech programs. And I guess it’s an AI generated thing. But they graciously included my books in that program. So now, by virtue of their tech magic, you can listen to my books.

Andi Simon 00:30:36  They are so smart. They created a whole new product for you.

Dave Bookbinder 00:30:38  And maybe they did, because I was reluctant to do it because I really couldn’t find the right voiceover person for it. And anyway, they made it really easy.

Andi Simon 00:30:46  Well, it’s interesting because I recorded my first one.  It’s a lot of work and I had somebody for my second one. It’s a lot of work. So this is so interesting. Okay. So I’ll make sure that on our podcast blog we have those up there so that the readers or the listeners can easily click through if they want to reach you. So you could do a valuation or help them do a better one. I’ll put that up also. But where could they reach you?

Dave Bookbinder 00:31:09  They can find me all over the web. They can find me on LinkedIn at Dave Bookbinder. If they’re curious about the new ROI series, they can check out new ROI, and if they’d like to learn more about the podcast Behind the Numbers, you can find that wherever you get your podcasts. And I just do a real quick humblebrag, because Behind the Numbers actually just was the recipient of two awards recognizing us as the top valuation podcast.  I’m honored to have been honored.

Andi Simon 00:31:33  Wow. Thank you so much. What a cool thing that is.

Dave Bookbinder 00:31:38  It is a cool thing.  And here’s the really cool thing, it’s not really a valuation podcast, this is just between us and a couple of million people. But, yes, it’s about valuation from the standpoint that my endgame is to talk about how leadership and culture impact the value of a business, but we’re not having the quantitative analysis conversations that would make your eyes bleed or your ears bleed. If you’re going to listen to it, I assure you that it’s a little more engaging than what you typically might expect from an evaluation podcast.

Andi Simon 00:32:06  I don’t think we discussed any numbers. We discussed the bigger picture, you know, how the value of the business I’m building. How do we make it worth more? And I’m particularly impressed with Dave’s focus on people and the culture because it’s such a business. Someone once said to me, you’re an anthropologist. I thought you study small scale societies. I said, what makes you think of businesses in a small-scale society? And they went, oh, I said, my gosh, just take a look at the rituals and take a look at what brings people in that belong there and who leaves because they don’t belong there. And it’s very much a human phenomenon. And we organize because we like to be together. And when people don’t feel they belong, they find some other place to go to work. It’s not just a job. So this is pretty cool. So I’m going to thank you. Dave, for joining me today. It’s been a pleasure. Let me make sure I tell the folks who have been listening two or three things that you should remember, one of which is that your business has value, but you’re going to have to make sure you really manage it so that the value is obvious, whether it’s for today, for a simply a valuation or a sale for the future. Don’t play with the business so that you don’t pay taxes. Make sure that you’re setting it up for whether you’re going to pass it on to somebody in your family, or you’re going to try and exit. So many of the folks who I’m working with are thinking it’s time to exit my business. Maybe. Maybe not. But valuation isn’t inconsequential.  And the second thing is that your real value is in the people who get the job done. It’s not just your products or your services, it’s the culture in which they’re working and the way in which they’ve developed the kind of expertise and experience that you’re selling, and your clients engage with them. They’re part of the whole complexion of your company. And these are very interesting times. You’re going to have to rethink who you are and how do I do this, and the branding question is always why me? So for all of our listeners and our viewers, thanks for coming. Thanks for sending us all of your ideas about who we should have on here. I know you’ve enjoyed Dave today and you can share his podcast to everyone you love to share podcasts with. All of my books are on Amazon: Women Mean Business,  my most recent book is just sitting there waiting for you to enjoy it. Rethink: Smashing the Myths of Women in Business is an award-winning book, and On the Brink: A Fresh Lens to Take Your Business to New Heightsis also an award winning book, and both of those have brought me great clients, either to help them build better cultures for women and diverse people to live in and work in.  And On the Brink is about how little anthropology can help your business grow, and I enjoy both sharing them and sharing your stories. On our show today, I’m going to say goodbye to Dave Bookbinder. Please pass along his wisdom and make sure you understand why your business is so special and make sure it truly is so special. Goodbye for now. And remember, take observations, turn them into innovations, and be an anthropologist. You will enjoy the journey. Goodbye, Dave. Thanks a lot.

Dave Bookbinder 00:35:08  AndI, thanks so much.

Andi Simon 00:35:10  Thanks for coming.