Introduction

Athin: Hey, and welcome to another episode of the Business Growth Show. I’m your host, Athin Cassiotis, and today I have a powerful guest. His name is Gregory Kovsky, and he’s the president and CEO of International Business Associates, IBA, the Pacific Northwest’s oldest and largest business brokerage firm, established in 1975.

With over 30 years of experience as a mergers and acquisitions intermediary, Gregory has personally facilitated over 300 transactions involving privately held companies and family businesses across multiple states. His expertise spans manufacturing, distribution, technology, marine, automotive, and service industries, with transactions typically ranging from $1 million to $30 million in enterprise value.

A seasoned entrepreneur as well as a business sale expert, Gregory purchased IBA in 2000 and has grown it into a regional leader with 10 offices across Washington and Oregon, completing over 4,400 transactions in the company’s 50-year history. He combines deep transactional experience with comprehensive real estate expertise, having held broker licenses for over 30 years. Gregory is also a published author, seminar speaker, and advocate for entrepreneurship, and he follows a unique work-life balance philosophy of working 45 weeks per year while maintaining a family-first approach to business. Welcome, Gregory, and thank you for being on the Business Growth Show.

Greg: It’s a pleasure to be here, Athin.

Greg’s Journey

Athin: Awesome. I’m sure this is going to be a very impactful episode for everyone watching and listening. For those who don’t know you, please introduce yourself and tell us more about your journey.

Greg: Certainly, I’m happy to share it. I’m a Pacific Northwest boy. I grew up in Portland, Oregon. My first love was actually basketball. I went to the University of Texas in Austin and was a student manager there. I studied business and got a degree in accounting and finance. I turned down Wall Street to chase my dream of coaching and did that for four years.

Then I came back to the Pacific Northwest. IBA had sold my father’s veterinary hospital, and he had been impressed with the firm. He and I were talking, and he said, “You’re a salesman by personality, and you have an accounting and finance background. I think you’d be good at mergers and acquisitions.” So he introduced me to the founder of the company, Bill Osavski. It intrigued me, and I joined the firm in 1994. I emerged as one of its top salespeople between 1994 and 2000, and in 2000, as one of the top performers, I was offered the opportunity to buy the company from him. Twenty-six years later, I’m still at the helm.

Athin: What an amazing journey. You learned business, accounting, and finance, did the coaching side, and then looked at those skills, which make a great all-round skill set: the sales side and the numbers side, both very important in business. Then you got into the M&A space, a very interesting space, performed well, and got the opportunity. I think that’s a great succession story for a business, being able to sell to someone within the business who’s doing really well. And well done for continuing it over such a long period, from 2000 to 2026. That’s no mean feat, so congratulations.

Sales Cures All Ills

Athin: Let’s talk about sales first. I think it’s the most important skill in business, because without it, the business isn’t going to grow. What are the key mindsets and skills that put you at the top at that company, and now in your own company, that people can model to be as good as possible at sales?

Greg: Certainly. One of my favorite expressions is that sales cures all ills. If you can be a rainmaker and make sales, you can overcome a lot of management errors, because you have extra cash flow and profit. If sales are tight, it’s much harder to navigate with limited resources.

I run a sales organization, and I’m a strong believer that top-tier salespeople are critical to success. I believe a top salesperson is worth their weight in gold. Where entrepreneurs often go wrong is not supporting their salespeople. If they’re rainmaking and generating revenue, you really shouldn’t worry too much about what you’re paying them, because they’re contributing to the whole. Where businesses often get into trouble is trying to replace top performers.

We were just talking about the World Cup. The hardest thing to get in soccer is goals, and having a top-tier striker is critical to winning the World Cup. Sales are exactly the same to me. If you put three goals on the board, you’re probably going to advance. If you put one goal on the board, it will be nip and tuck. I think that’s very applicable when you look at successful sales.

Athin: I love the football analogy, and the World Cup. It’s awesome that, as we were chatting beforehand, we were at the same game, Australia versus the USA in Seattle, even though we didn’t get to meet. And I agree there’s a quality element here. If you get A players in your organization, that’s what will get you there. If you skimp and get someone who’s just okay, it probably won’t get you where you want to be with your goals.

Building a Business That Can Be Sold

Athin: A lot of people want to grow their business and eventually sell it. As great as a business is for cash flow and lifestyle, at some point people want to exit. What have you seen in the best businesses, the ones that have scaled to the point where they can actually be sold?

Greg: The first thing you want when selling a business is management that works on the business, not in the business. That’s hard for founders, because they’re often the hub of all activity, and they want control. But the evolution into a mature entrepreneur means surrounding yourself with quality people, delegating, and trusting but verifying. If that’s the case, you’re much more sellable in the marketplace, because you won’t be needed to perform the critical functions.

The executive running a hospital isn’t the one performing the surgeries, and it doesn’t matter what the business model is. Elon Musk isn’t engineering the rockets that go to outer space. He’s hiring the best, and that allows him to lead the organization. I believe that’s the first thing. I’ll pause there in case you have a follow-up question.

Athin: That’s awesome. As a buyer, and I also look at buying businesses, if the owner is too involved in the processes, you wonder how the transition will go and whether it will affect the future of the business. And I think it’s hard from a mindset perspective. I also do business coaching and mentoring, and a lot of owners see the business as their baby, so it can be hard for them to let go sometimes. But it’s needed to get the business where they want it to be. Please continue.

Greg: The next point, in line with that, is that diversifying risk makes a business more sellable. That means not having high customer concentration, where 30% or 40% of your revenue comes from one customer, because if you lose them, the business model is at risk. It means having redundancy in employees, so that if one gets hit by a bus or wins the lottery and leaves, the business can go on. You’re not dependent on one employee any more than the business is dependent on you.

It’s competing on quality and customer service. You never want to compete on price. That’s always a losing game.

And it’s understanding your competitive landscape. Is there room for growth? Is there looming competition that will make your business struggle because someone is building a better mousetrap?

All of those things go into valuation, as does clarity of the financial records and the ability for an outside party to assess your systems and financials. Do you have protected intellectual property? Many elements go into protecting your space and making the business more attractive on the market.

How Long a Sale Really Takes

Athin: So many great points there. Let’s talk about the timeline, because I think a lot of people assume they’ll call a business broker like you and the business will be sold within a month or a few months. That’s usually not realistic. What timeline should people expect to get their business sellable and achieve the best valuation?

Greg: My company operates on a paid-on-performance business model. Interestingly, about 21% of M&A and business brokerage firms in the United States operate on our model. Most charge retainers and administrative fees to start the process. I understand why they do it from a cash flow standpoint, but I believe the best salespeople in the world don’t need a retainer or a base salary. They’ll be taken care of through performance.

Whichever business model a firm uses, the process starts with a business valuation. With our model, we have a vested interest in being honest with you, because we only get paid if we complete a transaction. We do the valuation for free, because we want to develop rapport and a relationship. And honestly, we don’t care whether you go to market now or in a couple of years. We’re starting to build a relationship.

With the other business model, some of the less scrupulous firms will give you the answer you want to hear, so you’re a happy customer when you write the first check. So be cautious when getting an assessment of value, and ask what the core motivation of the party giving it is.

To answer your timeline question: once someone decides to go to market, it generally takes us four to 12 months to sell a business. Then there’s usually a transition period after that, where the seller mentors the new owner on how to run the business, which can range from a couple of months to a couple of years.

So one thing we often coach people on is this: if you’re 70 years old, it could be two years until you’ve exited the business. You may want to get that train moving, because Father Time doesn’t stop, and you don’t control your health 100%. And if your spouse has never worked in the business, you have to consider what happens to it if you have a stroke or a heart attack. Without a proper transition, the value can diminish very quickly.

Athin: I love that. I think your pay-on-performance model is great. I’ve heard so many stories of a business broker telling an owner, “I’ll get you this amount,” and then no one wants to pay that, and the price ends up lower. So I think what you’ve done is the fairer option, better for everyone involved, and realistic.

How Valuation Works: Pricing Risk

Athin: Let’s talk about valuations. The standard approach is an EBITDA multiple, which people will know, and depending on the size of the business, the industry, and the other factors you mentioned, that determines the multiple. But there are other ways of valuing a business too. How do you value a business? Do you use other financial models, or is it a fairly simple calculation?

Greg: You’re correct. The basic valuation formula is EBITDA, which, for those unfamiliar, is basically the company’s net profit, times a multiple. And when people talk about the multiple, they’re talking about risk.

For your audience: a four multiple is a 25% return on investment. Divide four into 100 and you get 25%. A five multiple is a 20% return. A knowledgeable M&A intermediary assesses the risk of the transfer of ownership and of the business model.

The basic example I always give is this. On one end of the spectrum, you have a gas station. With fuel stations and convenience stores, it’s generally location, location, location. It doesn’t matter who owns it. So they sometimes sell at higher multiples, maybe six or seven, because there’s limited risk when you buy them.

On the other end, you have a hair salon. My wife is a beautiful lady, and I’m delighted to have been married to her for 25 years. If her hair salon sold, she wouldn’t even give the new owner a chance. She’d ask one of her girlfriends, “Who do you go to? Who do you trust?” She wouldn’t take a risk on an unknown, even if it’s a beautiful salon with porcelain sinks and all the ambiance you could ever want. So businesses like that may sell at a two multiple, a 50% return on investment, because if they aren’t transitioned correctly, the hairstylists may leave, the customers follow, and you’re left with just a location.

Dialing in that multiple takes a lot of knowledge and experience. Now, I’ve sold hair salons where the owners were earning over a million dollars a year running the operation. The reward is substantial if you can navigate the transition.

So it’s all about risk. It’s no different than buying a stock that just went public versus Google or Microsoft, which are fairly stable investments. My academic background is in investment finance and accounting, and with businesses, it’s all about assessing risk.

When you talk about other elements, it may get into intellectual property. Do they have patents or copyrights? Do they have a protected space? Maybe they own an online domain that’s the obvious destination for people looking for a product. If you want to sell roasted coffee direct to consumers online, coffee.com would be a pretty good domain to have. People would stumble onto it very easily. Those are the kinds of assets we look at.

We also look at the industry and what’s happening in it. Five years ago, SaaS companies were really popular, because of their recurring subscription revenue. With AI right now, everyone is terrified to buy SaaS companies, because we don’t know where they’ll be in three years. I call that the speed of entrepreneurship. If you don’t modify and adjust, you lose. I’m sure we could both give examples of businesses that were extremely popular 10 years ago and don’t exist today.

Athin: Definitely. And that’s the timing issue you talked about: knowing the competitive landscape and what’s happening with technology, and recognizing when it’s a good time, because sometimes waiting isn’t a good thing. You can miss a window of opportunity.

Due Diligence: Seller Prep and the Buyer’s View

Athin: Let’s talk about due diligence, which in my eyes is the next phase. Say you do the valuation and tell the owner, “This is realistically where the business is.” First you understand all the nuts and bolts and systems. Then do you work with them to say, “If we do these things, it will increase your valuation”? And then there’s the buyer’s due diligence on the company as well. I’d love your thoughts on both.

Greg: Great question. Let’s start with our due diligence. As I said, we offer a free valuation. A common outcome is that we do the valuation, explain how the models work, and tell the owner, “If you improve A, B, and C, we can get more money for your business.” Because we take a percentage of the sale price, we’re willing to wait. IBA has been in operation for 51 years, and I’ve been doing this for 32. I don’t care whether you sell in 2026, 2027, or 2030. I’m going to be here, so I want to do what’s right by you.

But as you know with entrepreneurs, it’s one thing to say in theory that if you do A, B, and C, you’ll improve. If you’re not going to execute, don’t fool yourself. I’d say move forward with the sale.

On the buyer side, due diligence gets into an interesting part of valuation. On one side, you have what I’d call the annuity, which looks backward at EBITDA and profitability. On the other side, you have the appreciation opportunity.

Say you look at a business with three locations in Sydney, and you think, “I could take this business model to every major city in Australia and scale it to 50 locations over the next five years.” Then what you actually paid for the business almost becomes irrelevant, because your acquisition price was low given where you can take it.

Here’s an Australian example you may know, which I’ve been involved with in the United States. I sold a Pirtek location here. Pirtek was born in Australia, and it repairs and replaces hydraulic hoses on construction equipment, boats, and other things. Today there are many more Pirtek locations in the United States than there were when I sold that location in Seattle for the owner who brought the business model here.

That buyer recognized the value of a franchise, which is another acquisition path. Someone has developed a business model and done the experimentation, and now you can buy a master territory or a developer agreement to take that business model to multiple locations. At IBA, one of our divisions is franchise sales, and I have two brokers who sell franchise business models. They aren’t established businesses, but they offer the opportunity in a territory.

Athin: Very interesting, both sides of the coin: the past, the annuity side, and the appreciation and opportunity side that buyers look at in due diligence and in what the business is valued at.

Structuring the Deal: Cash, Seller Financing, Earnouts, and Equity

Athin: Then I guess it comes down to negotiating. A lot of the time it’s about price and terms. Could you talk about that, Gregory? Does the owner want a certain price? There are different types of terms. What are you seeing in how transactions are being structured?

Greg: Certainly. There are four primary components in financial negotiations, and it’s not one-size-fits-all. You have to look at the situation.

Everyone knows cash. There’s no risk for a seller in cash. It’s clean, but it’s also the hardest commodity to have at scale. You can supplement it with a loan or investment, but it’s a difficult commodity to accumulate, and it’s attractive in transactions.

The next is seller financing. Instead of going to a bank, you can sometimes have the seller finance a portion of the transaction, which can allow for a faster deal than going through a bank. The seller knows the business, so they’re taking a risk, but maybe the buyer puts up collateral, like real estate, to secure the note. So that can be a piece.

Then you get into the fun pieces, like an earnout or another variable component. I’ve seen situations where that’s necessary. On the conservative side, say 30% of revenue comes from one customer. You may want a variable piece contingent on retaining that customer, where you look back in one, two, or three years to see whether the customer is still there, and if so, the seller gets a bonus.

On the other side, maybe the business is on a growth curve, and a variable component builds in upside for the seller. The seller says, “Yes, in 2026 it did this amount of revenue, but it should grow 40% in 2027, when you’ll own it. I’d like a piece of that, because you’ll have done basically nothing to get where we are in 2027. I laid all the groundwork for that achievement. You probably won’t really adjust the helm of the ship until 2028 or 2029, given all the momentum and contracts I’ve put in place.” That’s a variable piece.

The final one, which I’ve seen benefit founders, is retaining equity. Sometimes you sell off, say, 70% of your business. Let’s say you sold the business for $10 million and retained $3 million in equity. If you bet on the right racehorse and they grow the business, and it’s worth $30 million in five years when you get paid out, you may get almost as much as, or more than, you received in cash at closing, just for keeping chips on the table.

So you really have to assess your buyer. It’s a little like betting on a racehorse. Do you want to be conservative and take the sell-now cash price, or do you want to bet on someone with upside potential and roll some of your chips into the company?

Athin: I love that. You simplified it: cash, seller financing, earnouts and variable components, both up and down, and retained equity. I’m curious about the equity part. Say people roll in a small portion, 10% or whatever, hoping for another exit down the line or just good dividends. Do you normally find the owners stay involved to some extent, maybe on a board, or are they more passive and just let it ride?

Greg: It’s case by case. A smart buyer will keep them engaged, and I’ve seen sellers stay actively involved for as long as six years if they can keep doing what they enjoy.

The one I’m thinking of was a company called LX Industries, which manufactured products for the nuclear industry. The owner I represented loved the sales side of the business but didn’t want all the management responsibilities. So the new owner created a position for him where he could do exactly what he wanted. In fact, we negotiated, I believe, seven weeks of vacation time. As long as he had that freedom, when he was home, he still loved his company and what he was doing. He was able to give up everything he didn’t like doing and take significant chips off the table.

Working 45 Weeks a Year

Athin: That’s awesome. What a great way to transition, a win-win for everyone. You talked about seven weeks off a year, and I know you enjoy working 45 weeks a year and taking a family-first approach. Tell us more about that sustainable work-life balance as a business owner, and how you’ve set up your life to enjoy it.

Greg: Certainly. Getting back to where we started, I believe the best salespeople need to get out of the game and recharge. That’s why, long ago, I created a system for myself where, at the start, I’d take about a week off every 100 days to recharge my battery, get out of the game, and clear my mind. I found it made me more productive.

I think too many entrepreneurs redline for too long. You need downtime. You need strategic planning time to take the company to the next level.

I’ve grown it to seven weeks a year. As we talked about before we came on, with Sydney behind you: we spent three weeks one Christmas holiday season down under exploring Australia and had the time of our lives. And I believe that when I get my kids, I have a son and a daughter, and my wife out of their routines, I get quality time with them. They don’t have their friends, their sports, or their daily lives, so they actually open up, and you get to know them better as people.

Athin: I love that last part, getting your family out of their environment so you can really connect and create amazing experiences, whether in Australia or wherever you travel. I think that’s a powerful thing for people to think about: how can you create that environment to really connect? And do it throughout the year, not just every now and then. Those moments could be three weeks long, or a weekend, or a long weekend. They don’t have to be big ones. Would that be right?

Greg: It’s true. I’m also a big believer in experiences. Ideas can come from all corners for entrepreneurs. Putting yourself in new environments, reading new things, and listening to new podcasts can spark an idea that grows into a wonderful modification to a business model, or an entirely new one.

I’ll tell you about one business model I loved, though I haven’t acted on it. I took my family to Cambodia a few years ago. We visited Angkor Wat and stayed in Siem Reap, and we went to a restaurant there where 100% of the staff were children and young adults. They were taught the hospitality business, from chefs to waiters to hosts. It was a combination school and restaurant with exceptional food, training these young people to maybe open their own restaurants someday or work in other restaurants. You went in knowing they were young people experimenting and learning, but to me it was such a wholesome, wonderful environment, because they were trying so hard in a hands-on educational setting.

Athin: I love that. I think that’s the gap where a lot of universities can be all theory. Actually doing projects and getting out there is different. I remember in my MBA, businesses paid the university for us to go in and improve an actual business, with coaches and mentors. Learning about something is one thing. Actually getting in there and getting your hands dirty is another. It’s an amazing concept. How can we immerse people more in that and give them the chance to try, fail, face challenges, and keep moving forward? I’ll have to check it out at some point. It sounds really cool.

Push Away From Shore

Athin: Gregory, you’ve shared so much with us today about sales and what we should be thinking about, and also about ourselves: replenishing our energy, getting ideas, spending time with family, and enjoying life along the journey. As we start to wrap up, what one key piece of advice would you give all the entrepreneurs watching and listening today?

Greg: I would say be willing to accept risk. One of my favorite expressions is that to discover new lands, you have to push away from shore. People get caught up in their routines and comfort zones, but if you’re unwilling to take risks, you’ll never know what’s possible. It doesn’t matter which entrepreneur you research. All of them have had failures in their lives, but it’s what you learn from adversity that creates the next big thing. I think people need to be comfortable with failure.

I know we both have athletic backgrounds, and I believe athletics teach so many things. I’ve used them with my kids and in my own life. They teach you teamwork, competition, hard work, and that life isn’t fair. Those things happen in athletics. And I believe entrepreneurship is the ultimate competitive sport, because it’s unforgiving. You’re going to fail. You’re going to do everything right, and something will happen that causes you a nightmare. It’s how you respond to that, and how you learn from it.

Athin: I completely agree. I love the comparison between sports and entrepreneurship as the ultimate competitive sport, and the idea of just bouncing back. I use the analogy of the Rocky movies. Rocky keeps getting hit, but he keeps getting back up in the ring, and he wins in the end. It’s about being able to take the hits, keep getting back up, and move toward what you want to achieve.

Where to Find Gregory

Athin: We connected through our networks, and I learned about your awesome journey: over 30 years of experience in mergers and acquisitions sales and more than 300 transactions personally facilitated, which is massive. You’re so knowledgeable, and you laid it out quite simply here, including getting the right people on your team, because you don’t know what you don’t know. Increasing valuations and multiples can make a massive difference, as can how you structure the deal for your transition and for what you want to move on to after everything you’ve worked for. I’m very grateful we connected and look forward to partnering as well. Gregory, how can people find you and get in touch?

Greg: The easiest way to connect with me is through our website, ibainc.com. I’d point people to our blog. We have a very robust blog that’s published several times a week and has had about 200 guest authors in its history, where you can learn an immense amount about entrepreneurship and buying and selling businesses. We also have a video page where podcasts like this one are shared.

I believe the best decisions are made from a foundation of knowledge, and honestly, podcasts like yours, Athin, are where knowledge is being shared today, rather than legacy media. People aren’t watching television, but on a long car ride, bike ride, or walk, they’ll absorb a podcast, get themselves thinking, and take a deeper dive into subjects. I think that will be very valuable going forward, because you can basically crowdsource the world to share ideas. An idea from Seattle could be heard by someone on Hamilton Island who decides to do something based on listening to your podcast.

Athin: I love it. It’s awesome to have you here, and I think podcasts are a great medium for everybody, whether you want to host one like me or be interviewed like Gregory. We all have things to share, and we can always learn from other people, because you never know what idea from today’s conversation could spark you to say, “I want to do this,” or “Let’s dig into this further.” So definitely check out the website, the blog, and all the resources, videos, and podcasts there, because I’m sure there’s a lot of gold to go even deeper on. Gregory, it’s been a pleasure interviewing you. Thanks for being on the Business Growth Show.

Greg: Thank you.