Unlocking Business Value: Insights from Baton on Valuation, Scaling, and Selling Your Company
Steve Iskander: Join us as we sit down with Chat Joglekar, the founder and CEO of Baton, whose specialization is helping companies understand the valuation of their company, scale while boosting valuation, and then sell their successful company. Chet shares his insights on why companies should know their valuation and what to do with the information, and when the timing is right to sell. His company’s technology-driven solution, batonmarket.com, allows companies to know, grow, and sell. And will even make introductions to potential buyers so that founders continue to work on their business for selling their business.
In this episode, we’re diving to the world of business valuations and explore the critical role it plays in solidifying a company’s growth and exit plan. Join us as we learn from Chet’s vast experience and expertise in the industry. Hope you enjoy.
Join us today as we sit down with Chat Joglekar, the founder and CEO of Baton, whose specialization is helping small and medium-sized businesses understand their valuation of their company, scale while boosting their valuation, and then ultimately sell their successful company.
Hi, Chat. Thanks for joining us.
Chat Joglekar: Thanks for having me. Glad to be here.
Steve Iskander: Absolutely, right, I am very familiar with what Baton, but can you share a little bit about some of your experience and your background and what led you to launch Baton?
Chat Joglekar: Yeah. I think the most relevant experience was at Zillow for five years. And then I think the additional thing is I’m old enough to remember life before Zillow, where people didn’t really know how much their home was worth, especially if they’d been in it for 20 or 30 years. They would hear from people, but they wouldn’t have the data at their fingertips to really know how’s my home compared to other homes.
What will I get and then really make the next decision? And I was looking at helping a few friends get some small businesses. And as I just kind of, I ran the real estate playbook, right? I was like, all right, what are the comps? Do you know who to go to to help value your business but also help you buy or sell a business? There was a lot that was missing, and it started, you know, kind of just stuff in my head started to marinate, and I was like, if you could do for small business acquisitions, what we were able to do at Zillow, that could be a really super, like super helpful, but also a pretty good business. So that’s, that’s how we started.
Steve Iskander: Yeah. So I can imagine, right? I understand, you know, the Zillow approach behind it, and definitely appreciate and respect that. How would a business know if they even need evaluation or when should they go for evaluation?
Chat Joglekar: Yeah, and I think it’s, you know, the right answer is you should always know your evaluation. I think, you know, as a startup founder, you almost start with the valuation, and then the revenue comes later, right? It’s a little bit reversed, but most businesses don’t really spend time a small business on their valuation because they’re really treating the small business as a cash-generating entity.
And so what we tell a lot of our customers is at the end of the day, as long as you’ve been in business for a year or two, you should know your valuation, right? Maybe before that, it’s hard to really put a number on it because it’s so new. But once you’ve been in business for a couple of years or you’ve made material revenue, you should get a sense of what that business is worth because the kind of two key paths there are you either want to keep, you know, being in the business and growing it. Or you want to get to a place where you’re ready to sell. Maybe you’ve done it for 10 or 15 years. There’s another business that’s kind of caught your fancy that you’re doing a couple and you want to sell one, right? At that point, it’s like, yeah, no, understanding what you want to do. So we generally say everyone should. I think the challenge has been in the past that there was, there’s no real good options for folks to get evaluation.
Steve Iskander: Yeah, no, I can. I completely agree. And when we talk about valuation, two of the things I heard you say were that the time length in business, maybe a year or two, and some material revenue, but what all goes into a business valuation? Like, how do you look at it? What are the attributes that you look forward? How do you determine if they’re a good fit?
Chat Joglekar: No, and so because of time in business what we get is some historical revenue that we can look at it and see what we do is we can either connect to an owners, QuickBooks or other accounting platform or they can upload. But a majority of folks connect their QuickBooks. And then what that gives us is their profit and loss statement, their balance sheet. And it really allows us to see what the revenue is, how consistent it is, what are the key expenses and add-backs that there should be, which most people don’t think of. And what that allows us to do is get to what buyers would think about is a cash flow number. Right? How much cash is flowing out of this business, and how much will continue to flow in future years? And really, to get to that, once we have those core metrics, we run a DCF, the Discounted Cash Flow Analysis. We do sales comp multiples. So we have a huge database of prior sales comps, like in the last few years, what has sold and actually sold in the market. Industry comp multiples, you know. What do doggy daycares go for versus restaurants versus IT consulting firms, etc. And we pull all that together and essentially give evaluation of what the business would trade for.
Steve Iskander: And that’s definitely interesting and exciting on all the different industries that you do business with, as well as especially for Intrepid Finance. We work with a lot of SMBs in the technology side. So they hear that you’re technology enabled with your that be able to connect to the QuickBooks. And then the depth of all the analysis that you guys are doing behind the scenes on discounted cash flows to understand. So, but that really leads me into these early-stage companies. What are some of the challenges that these companies run into when they’re trying to get a valuation or, and then how does Baton really help an early-stage founder? And I say early stage, less than three-year-old company understand what their valuation is. How do you help address those?
Chat Joglekar: Yeah, I think a lot of it is, you know, the two options you have on getting evaluation is you’re either going to one of these online sites that does a very, very cursory, you know, calculator. You’re putting in your own numbers, but they’re not really taking into account the quality of earnings, if you will, right? Like, how repeatable is that revenue? And so those are, they’re great because they’re free, but they don’t really go much past the surface level. And the other option is you end up paying thousands of dollars for something, which is using your tax returns. So for an early-stage person, that’s not really a great picture of the business because so much can change, right? If we’re sitting here this month, it’s seven months into the year, and you’re reporting on what happened last year, you could have grown your revenue by even double, right? And that same amount of time. And then. You know, the other piece is that it takes four to six weeks. So there’s just not that immediacy. And I think for early stage founders, the ability to come in, connect your financials, we’re getting it back to you, you know, five to 10 days. Uh, you still remember why you wanted to get valuation, right? And then we’re providing not only the valuation, but a lot of other data points around, like your margin profile and how you compare to, uh, your competitive set and your peers. Where do you stack up in top line revenue in profit, you know, just in your multiple of what we’re valuing your business, which gives one of our core values is information is power. And that enables that early stage company or, you know, a small business owner that’s been in business for 30 years to really get empowered with that data so they can decide what’s next. Do they want to keep growing? Do they want to sell because they didn’t realize that their business was actually worth three times as much as they thought.
Steve Iskander: Yeah. I like the real-time data feed and benchmarking that you have as well. So they always have that kind of finger on the pulse of the valuation of the company. So now a company comes in. They go through an extremely easy process to get a valuation, very timely, less than ten days. A 409A, you can’t even get through the contract in 10 days. So exciting on this side of it. But now they’ve went through the process. Could you share maybe a success story of a company that has went through the valuation that might not have been for sale? Because I think typically, when companies think about valuations, it’s always, well, I don’t need it until I sell. And we obviously covered that part of it, but maybe a success story of a company that came in, got a valuation, and then that ultimately ended up selling the company?
Chat Joglekar: Yeah, we’ve had a couple different ones where I think, you know, again, people that are interested in selling in three to five years, or they have that, but they don’t really have a good number. So they’ve said like, I want to sell for a million dollars or $10 million or whatever it is. We had someone that came in, was looking to sell. She was looking to sell in three to five years. We were able to give her her valuation and also, with some of these other metrics, show where there was some clear ROI, right? It’s like an A times B equals C cash flow times your multiple, essentially equals your valuation. And by increasing scale, you can increase your multiple, but also, by improving margins, you increase your cash flow, right? So she could start to see that if she could improve her margins, the value of her business would go up. And she went away, kind of focused on that for eight, nine months. And then basically came back and had gotten to the place where she’s like, I’m ready to…to kind of list if you can find me a buyer. We’ve also had folks, I think because of our data-driven focus, there was actually a company that we were working with, he was looking to essentially retire, but he had tried with a couple business brokers to get them to list his business, to mainline, main street business, it’s amazing business. They all said no, because they just looked at the category, and they’re like, we’re not interested. We actually connected his QuickBooks, his other business. He’s a financial services person. So his books were great. We looked at it. Uh, and you know, it’s a $4 million business that these other business brokers were uninterested because they didn’t really take that data-driven approach. So I think like a lot of times by, you know, letting us get access to the data it, we’re really serving those owners and empowering them with, here’s what you’re worth today. Here’s what you could be worth tomorrow. You kind of choose, right? Like if I could sell for even a third price, someone came and gave me X amount of money, I’d be willing to sell. We can help them do that, or they can like kind of put their nose to the grindstone and improve the business over time, but we’re giving them a roadmap, which is great.
Steve Iskander: Yeah, no, I definitely love that. So you’re giving the roadmap of today, what your valuation is, and why it’s important pre-sell or even not even understanding when or thinking about when the exit really is. And in that success story of allowing her to go back and work on her business for the next eight or ten months, to increase her valuation and understand what that increase in valuation is going to mean in the end for her or increase her multiple, what that is, in the end, is going to uh, increase for her valuation. So that’s, that’s definitely exciting and especially fun in this space, right? A less than five-year-old company, is it a startup, is it a not, but very good track record, and how do you move them up and increase their valuation? So definitely appreciate the success stories. I’m sure you have numerous more, but for early stage and small and medium-sized businesses, do you have some last minute maybe advice that you would share with some of these that are thinking about getting evaluation? Don’t know if evaluation’s right for them, Chat?
Chat Joglekar: Yeah, I mean, I think it doesn’t hurt, right? Like at the end of the day, it’s a no-cost free valuation that empowers you with data, and you can choose to just get it and move on your way. There is no catch at the end, right? Like we just want to empower small business owners or startups to understand it. And I really think what it helps to do is at the end of the day, you know, every company wants to be bought, not sold. And so putting yourself in the best light, like we see a lot of times people are, are optimizing for like minimizing their tax bill. So they’ll buy a bunch of inventories. They’re not making profit, but then that actually, in some ways, hurts your valuation because you’re like, where is the profit in this business? And so really starting to understand that and set your business up for the sale well in advance of when you’re, you know, ready to, I think, is an important thing. And understanding what goes into what a buyer is going to look at is super helpful well before you decide to sell, because then at the end of the day, you’re like doing the right steps, the kind of like right actions upfront to get ready and prep your business, you know, your business for the right sale, whatever.
Steve Iskander: Oh, definitely exciting times. I love the space. I love the valuation side of the business, the technology-enabled side of it, and what you’re doing in the small community. So thank you again today, Chat, for being on. You’ve really made me realize why it’s so important for companies to get a business valuation, especially long before that they’re actually for sale. So, yeah, appreciate all your insights, all your advice, and everything you do for the community. Chat, if someone wants to get ahold of Baton, how do they reach out to you?
Chat Joglekar: Yeah, you can go to the website, which is batonmarket.com. You can always find me. I’m generally at jog la car on all the social platforms like LinkedIn, Twitter, maybe Threads now with the new launch, and yeah, you can come to us. We are, you know, can sign up as a buyer or as a as an owner to get your valuation, and we’ll take it from there.
Steve Iskander: It sounds great. Thanks again for having you on Chat.
Chat Joglekar: Yeah, it was great. Thanks for having me.