In this episode of The Art of Succession podcast, host Barrett Young interviews Tom Gledhill, a former business owner, broker, and author who has successfully built and scaled four businesses. Listeners gain valuable insights into business scaling, valuation, and exit planning from his decades of experience spanning from early technology adoption to sophisticated exit strategies.
From Engineer to Software Entrepreneur
Tom shares his journey from electrical engineer to software entrepreneur in the healthcare industry during the 1970s, when computers were still large and uncommon. His company developed administrative software for outpatient clinics, facing initial challenges selling technology to medical practices unfamiliar with computers. Tom describes overcoming the "selling a rifle to a caveman" challenge through persistent cold calling and building referrals. The introduction of the IBM PC in 1980 was transformative, allowing smaller practices to afford their networked systems. By focusing on recurring revenue through maintenance contracts and continuously improving their product based on customer feedback, they eventually grew to 3,000 clients across the Northeast.
The Business Broker Perspective
After selling his software company (which was later acquired by a private equity group and eventually General Electric), Tom transitioned to business brokerage. During his first year, he spoke with nearly a thousand business owners, quickly learning that approximately 80% of businesses that go to market don't sell. Tom explains the common disconnect between what owners believe their businesses are worth versus market reality. Many owners base their valuation on what they need for retirement rather than what buyers are willing to pay—an "inside-out" perspective that leads to disappointment.
Creating Transferable Business Value
Tom distinguishes between different buyer types: corporations seek innovative systems and synergistic products; private equity groups want good management and recurring revenue; while lifestyle buyers look for businesses they can operate themselves. Creating a sellable business requires developing systems that can operate without the owner's constant involvement. Tom emphasizes that businesses heavily dependent on the owner's relationships or technical expertise are significantly less valuable. He recommends cleaning up financial statements, developing management teams, and creating documented processes that allow the business to run independently—ideally starting this preparation years before selling.
Listeners can learn more about Tom Gledhill and his XitPro system which guides entrepreneurs through the entire business lifecycle from startup to successful exit.
