Roland Frasier ┃ How Smart Entrepreneurs Build Wealth by Buying Businesses Instead of Starting Them

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I would way rather start with all of that momentum
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and all of those advantages than the disadvantages, And very
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often it's a way better investment because you're going to
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spend about the same amount in learning all the things
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you're doing wrong in a startup that you would have
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just to bought a business that was where you want
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to be three years from now.
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Right, what if you could grow your business faster, reduce
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your risk, and create more wealth without working more hours
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or raising millions of dollars? Today, I sit down with
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leaden Day entrepreneur and acquisitions expert Rollin Frasier to explore
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a strategy that most business owners never seriously consider. Roller
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reveals why buying existing businesses can be one of the
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fastest paths to growth, how creative deal structures allow entrepreneurs
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to make acquisitions with surprisingly little upfront capital, and why
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so many founders unintentionally build themselves into jobs instead of
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valuable assets. We also discussed what separate businesses that sell
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for a premium valuation from those that struggle to find buyers,
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and the mindset shift that allows entrepreneurs to create lasting
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freedom instead of simply becoming busier. If you're ready to
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think beyond traditional entrepreneurship. This conversation is guaranteed to challenge
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the way you've always looked at business. And I'm thrilled
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to be here today with my friend and colleague, Roland Fraser.
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Welcome, Roland, Hey.
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Sleeve, How you doing great to be here? Thanks for
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having me.
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Oh, We're so happy to have you be part of this.
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And I'm going to share your bio and then we'll
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jump right into the conversation.
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Sound good, I'm good, All right.
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Rolland Fraser is a seasoned investor, mentor, and business strategist
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with a remarkable track record of completing over one thousand
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acquisitions and exits for himself and his clients. His diverse
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portfolio includes companies generating six point three billion annually across
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thirty eight verticals ranging from real estate and hospitality to
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SaaS and e learning. Roland has been a principle in
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six Ink five thousand fastest Growing Companies and serves on
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Stanford Universities Advisory Board for Global Projects. His expertise extends
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to strategic roll ups in industries such as business services,
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home services, franchising, where he identified synergies to unlock growth.
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As the host of the award winning Business Launch podcast.
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Roland has interviewed luminaries including Sir Richard Branson, Sarah Blakeley,
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and Martha Stewart, sharing insights into entrepreneurship and innovation. Featured
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in Business Insider, Fast Company, Forbes, and more. Roland as
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a trusted authority in business strategy and growth. His website
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is rolindpraiser dot com. And I could have shortened all
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that up to just say that.
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You are a fricking genius when it comes to business.
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Okay, So Roland, I know it's tough to ask you
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to do this in just a couple of minutes, but
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we got a lot to cover here.
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But I want to get just a little bit of
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your origin story.
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How you evolved from, you know, as a young person
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exploring music and real estate and then massing yard of
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creatic deal macking and ended up being this serial entrepreneur,
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an acquisition preneur expert.
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Give me a little bit of the background.
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So people can relate to a role in the human
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being who got to where he is today.
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Sure.
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Yeah, I was really fortunate to have, as I would say,
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my first mentor was my father, and I got really
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good advice from him. Early on, I liked, like I
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would go to his office. My father was an attorney,
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he still is an attorney to this day. And as
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a kid, you know, i'd visit his office. My mom
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would take me and i'd go by the office when
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I was very young, and I'd see all of these
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cool clients that he had, and he'd introduced me to
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his clients, and you know, one of them owned a
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chain of record stores, and one of them owned a
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thoroughbred horse breeding farm, and one of them owned a
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gold mine. And I was like, these are cool people.
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And I noticed, you know, my dad was always in
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a suit, and all the people in the offices were
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in the suits, but the people that were coming in
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were like they were dressed kind of actual comfortably. And
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I was like, this is this is really interesting. I
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want to be one of those people. And I didn't
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really know what I wanted to be. I was interested
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in music early on, and I started playing out, you know,
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in the late fifteen early sixteen year old phase. I
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started playing out in clubs. But I had been in band,
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you know, playing obo and clarinet and stuff like that
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when I was younger, in chorus so and in drama,
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so like I wasn't afraid to be in front of people.
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I enjoyed performing. I've always enjoyed performing, even though I
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think I'm kind of an introvert. So so that was
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my background, and I realized that I probably wasn't going
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to be able to live the lifestyle I wanted to
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live as a musician. So I decided musician should probably
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be the fun thing that I do and the work
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thing that I do that I want to do. I
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don't know what that is, but I did get good
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advice from my men to her father, which was, hey,
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I got a degree in accounting so that I would
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be able to understand financial statements. And if I understand
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financial statements, I know how business works from the thing
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that makes it go, which is the money. I'll also
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never be in a situation where I'm not understanding what's
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going on with my money in my business, he told me.
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And then he got the law degree because understanding the law,
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and he's a tax attorney, and particularly how taxes work
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can make the difference between having a deal happen or
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not happen, and the actual tax consequences of transactions can
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very often dictate how they're structured and a lot more so.
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He said, even if you don't know what you want
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to do, young Worland, what you should do is be
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familiar with those things. So since I couldn't decide what
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I wanted to do, I was like, Okay, I'm going
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to go through high school. I'm going to get into college.
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I'm going to get a degree in accounting, and then
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I'm going to go to law school because I'll have
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good skills that will serve me well in the process
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of doing that. I also was exposed to lots of
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great books. So from the back of my dad's car,
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I learned about Robert Allen and nothing down and investing
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in real estate. I learned about Dennis Whitey and the
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psychology of winning and how people that set goals and
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write them down or you know, x percent more likely
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to achieve them than everybody else. Was absolutely fascinated by
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that stuff, absorbed it like a sponge, couldn't get enough
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of it. And gosh, it's so much easier to get
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now than it was back then when it was on
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cassette tapes. But those two things in particular, like you
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lit me up about okay, well real estate, Let me
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find out about real estate. I like this idea of
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this nothing down build a real estate portfolio. I don't
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need money to do that. Wow, how could I get
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into that? I'm going to do it by taking the
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real estate exam. I took the real estate exam when
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I was eighteen, started selling real estate. Realized that I
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hated trying to go out and convince people to give
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me listenings. If I could find people who had a
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bunch of houses to sell, that would be better. Ended
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up talking to developers as a result of that, and
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then being curious, found out that the way that they
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structured their deal is they didn't have a lot of
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money to do it. Most of the ones I talked
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to anyway, they went out and did these things called
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syndications where they raised money from other people in limited
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partnerships and then they shared the profits of that. And
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then they told me how they had to have key
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person insurance. So I was like, okay, well I'll get
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my insurance license. I was nineteen. I got my insurance license.
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When I was twenty, I got my securities license so
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I could actually sell the partnership interests, and through that
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I ended up meeting people in New York because my
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license was through a company my father connected me to
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in New York. I ultimately met the people at Prudential
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Securities and had a person there was probably my second mentor,
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that took me kind of under his wing and showed
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me how investment banking FORTI leveraged buyouts work and I
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was like, so basically you can do with companies what
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you can do with real estate. He said, absolutely, only
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a thousand different ways more because there's so many more options.
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And so that had me hooked. I like puzzles, and
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I feel like I feel like acquiring companies and figuring
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out how you're going to fund them from what you've
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got to what it needs takes to make the deal go,
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then closing the deal and making all the pieces fit
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to integrate them, and then growing and scaling the company
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are three puzzles that are endlessly fascinating. And so it
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allowed me to say my curiosity and my creative side,
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which I still have. I still play music, I still
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have a studio, I still write, but in a way
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that would be very productive to help me live the
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lifestyle that I wanted to live, so I could have fun,
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I could have the challenge and fulfillment that I wanted
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and I could have the money and that was a
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for me.
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And knowing very well personally that you do all these things,
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including the music, I'm still amazed that you find the
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time and organize your life to do it because you're
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doing a lot of stuff. I know that, And you're
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still up to speed with the AI revolution.
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And everything curiosity. Right, I could not know AI.
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And we're gonna we're gonna interview you separately about that.
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But you know, before we get into acquiring businesses and
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doing roll ups and that whole way of being an
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entrepreneur by acquiring businesses, I'd like to talk to you know,
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our audience who have businesses or just starting businesses, and
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maybe right now the idea of even exiting that business
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seems very strange or foreign or even kind of disheartening
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or abhorrent. But you know, if you're reading study up,
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almost everybody's going to tell you if you're building a business,
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make it exitable from you know, you want to build
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an exorle business, even if you're not going to exit
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for ten twenty thirty years. You want an export business
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to maximize value. So I wonder if you could talk
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about that pathway of building a business so it is exitable,
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So you're maximizing value, not only enjoying your passion and
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building this business and serving the world and adding value
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to the world, but you're building a business that is
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sound and exitable.
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Yeah, so let's.
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Start with strategy. So in every situation, and one of
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the biggest places that strategy comes from initially is from
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conflict and from war. And generally, the people who have
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the most optionality, the people who have the greatest number
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of options are typically the ones that win any war.
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And if you think about it, it applies to negotiations
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and business as well, and even to your personal life.
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Like if you're advising a child, you're probably going to say,
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why don't you go to college? So that you have
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all of the options to do anything that you want
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to do, and your options are open until you make decisions.
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And one of the reasons we don't like to make decisions,
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including I'm going to exit my company, is because it
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tends to cut off our options, which inherently, I think
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most of us feel is a bad thing. And so
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it's kind of about preserving your options and having the
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greatest number of them possible available to you for the
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longest period of time until you decide to exit. What
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that means is that there are steps that you could
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take to prepare yourself to exit before you make a
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decision to exit, so that when you do, you will
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be able to do it in the best way possible.
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You'll have all sorts of different options. Now here's the
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thing that most people don't think about. Everyone exits eventually,
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one way or the other. If you work every single
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day of your life until the day you die, you
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have exited on the day that you die. And so
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what you're doing at that point is you're leaving your estate,
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your heirs, your kids, your spouses with the business that
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you started to clean up or to operate, or to
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lose the income of completely because the whole thing falls
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apart because you didn't build something that could survive you.
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So whatever you're doing, there is no one that is
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served by you saying I'm just going to ignore the
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fact the certainty that I'm going to exit at some
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point because it's off in the future. Right. That's like,
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you know, should I stop smoking today? You know, yes,
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because the sooner you do that, the healthier will be
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for the longer. Right, the more you do it, the
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worse you're going to be. The more you put off
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planning for an exit, the worse off everyone, your employees,
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your customers, your family, et cetera. Is going to be.
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So that if we can get to that over like
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those hurdles, I like to go after points of disbelief. Right,
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I don't believe I'm ever going to exit. Okay, but
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you are? You know you are? Right? Are you going
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to die at some point hundreds of years in the future. Yes, Okay, great,
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you're gonna exit. Now, what what do we do to
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get ready for that? Well, it's a long ways off.
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But what if you got hit by a bus tomorrow?
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My aunt got sixty two years old walking across the
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street and a crosswalk drunk driver in the morning on
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her morning walk, comes by, takes her out, kills her. Gone, right,
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this can happen to any of us. I've watched it
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happen to lots of lots of people. Okay, So now
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we've got we're going to exit for sure, but it
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might be way sooner than we think. So now, at least,
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even if you never want to sell, let's get ready
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for that. Okay, now if we do get ready for it,
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we just have to put things in place that will
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allow the business to run without us. Now, wouldn't it
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be nice if the business could run without us anyway?
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Because if it can't, then we are bound to it
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as a servant to it. And should we be serving
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the business or should the business be serving us? So
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if you want the business to serve you, then you're
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going to have to put in place the things that
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allow you to not have to be there. And that
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goes to a concept and I'll shut up in a second.
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That goes to the concept of don't work in the business,
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don't work on the business, work above the business, in
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the business on the business. Was Gerber's talk in the
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e Myth revisited right. He's like, you know, don't sweep
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the floors and serve the customers, hire the managers and delegate.
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But going from doing to delegating is only the first
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step in the evolution of an entrepreneur. The next steps
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are really I've got to go from delegating to leading,
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to being a true CEO and having people that work
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for me. And then I've got to go from leading
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to governing, so that I've got a CEO, And at
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that point I'm much more of an investor in the company,
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which is what I call being above the business, where
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the product or the service that you're concerned about is
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the value of the business. The business becomes the product,
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not the product that the business sells. So I hope
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that answers your question. If not, you can ask me
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more details.
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Absolutely, and I love that distinction you made that question.
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Should we be serving the business or building a business
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that serves us and service what we want to create
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with our life.
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That's such a I.
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Mean that one thing can get us pointed in the
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right direction. So, you know, some of the folks in
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our audience, we may have some people just wanting to
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start a business. We have solopreneurs that would like to
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grow their business. We may have people with six figures
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that want to go to seven and seven that.
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Want to go to eight.
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But thinking of a lot of the you know, the
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solopreneurs that have some kind of practice. They could be
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a lawyer, like like yourself, like in your previous career.
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They could be an accountant, they could be they could
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be a therapist, and you know, essentially they're the product
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as a solopreneur, But what are some of the steps.
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They can think?
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I mean, they may love doing what they do, so
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they can remain the product.
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But is there some way.
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That they can move out because usually we're wearing all
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the hats, right, so at least not maybe they can
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move away from being maybe they're still delivering the product,
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but could.
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They move away from being the operator? Could they move
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away from being the marketer?
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And eventually could they have a way design a way
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that if something happens to them, somebody else can come
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in and serve those clients. Or you can even have
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already somebody. I mean, people do sell their practices. Solopreneurs
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sell their practice, but they usually have a colleague they've
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already been working with or something.
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Right, Yeah, why don't you could talk about that?
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Yeah, I mean I think the first step there is
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that if you can have someone who handles the administrative side.
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So let's say that you are a service provider and
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you love what you're doing great, you know, and or
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you're you know, you have a retail store and you
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love it's a hardware store, and you love hardware and
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that's why you got into the business, and and so
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you know, everything about every nut and bolt and you
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know saw and everything else that's in there, and you
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love talking to the people about it. Great, then that's cool.
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How do I then?
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Basically I call it a UU chart, So I basically
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will do an organizational chart, and you find that you
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are in all the boxes. You you, you, you, your marketing,
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your service, your customer, you know, your everything. Okay, great,
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what are the things I don't actually that don't bring
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me joy, that aren't in my areas of joy and genius?
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Those are the first things that you should get somebody
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else to do. So if you're my hardware store owner, example,
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and you love talking to the customers, somebody's got to
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be doing the book. Somebody's got to be doing the marketing.
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Somebody's got to be doing all of the other stuff
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in the business, ordering the supplies and managing the inventory
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and counting it and all that. Get other people so
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that the UU chart becomes fewer and fewer boxes with
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you in it. That's to me the first step, and
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that can be a single person. Like it starts with
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a single hire. Right, Maybe you're doing well enough that
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you can hire a manager, and the manager then fills
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all those boxes like they it's it's you and then manager, manager, manager, manager, manager, right,
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but eventually the manager will hire some people to fill
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that in. You get to continue doing what you're doing. Now,
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the next step would be, I need a shadow, I
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need a second that is going to be my apprentice
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or my foil or you know, my partner's a good
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good chance to partner or my employee that is able
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to do the other things that I do. They'll probably
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not be as good at you as you to start with,
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because they don't have the experience that you have, and
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they aren't you, and so you're a snowflake in your business, right,
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you are individual, and so they're not going to come
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in and be you, but they will bring something. And
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if you can get them to be doing eighty percent
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as well as you do, you will have replaced eighty
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percent of you if you need to. And so now
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you've got your manager, you've got your second apprentice, lieutenant,
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whatever you want to call it, and you're doing the
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things that you want to do. Now we get to Okay,
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I'm not going to be able to scale my business
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if everything is custom for everybody. So if every hardware
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advice is custom or every accountant, financial statement, or every
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legal case is the same. I am always going to
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be short people. So the next thing would be how
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do I productize that service. If you've got a product,
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you obviously don't have to do this. But if I'm
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looking at me as an accountant, attorney, you know, baker, whatever,
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I need to figure out, how do I deliver? Or
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even a marketing agency owner, how do I take the
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thing that I deliver and turn it into a product.
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Because when I turn into a product, then my second
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knows exactly how to sell it and the people that
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they hired you and I'm no longer required even though
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I might want to do it and you can, I'm
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not required to, which gives you optionality, which gives you
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a business that becomes exitable.
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You know, you spoke to one of the I think
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major blockages for entrepreneurs I know earlier in my career was,
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and I can still struggle with it from time to time,
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is feeling well, nobody will do that the way I
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do it.
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Nobody will do it as well as I do it.
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They won't, they won't, and they won't, and that's what
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you have to come to grips with. Then you know,
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earlier in running a nonprofit for many years, I suffered
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from this model, and I ran to a lot of
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other people suffered from the same model, being an expert
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with many helpers, and I never brought in that person
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who was a smart person who could actually take things
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to the next level and really take a lot.
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Off my shoulders. Right.
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And the cool thing is, because there's a lot of
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fear in all this that we have to get over.
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But the cool thing is, then you get to do
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more of what really brings you joy. You get the
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more you replace yourself, the more you get to do
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what really brings.
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You to your joy areas of your joy and genius.
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Right.
408
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And you know, the funny thing I think is about
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this fleet is that that two things. One is that
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that person that you bring in that can't do it
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as well as you ultimately might be able to do
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it better than you. And if you coach them well enough,
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they probably will because they'll have all of the things
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that you have, plus the things that caused you to
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bring them into your world as well working for them.
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And that's magical but scary, as you mentioned, because the
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second thing is is that you fear that you're replaceable,
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Like there's a bias against being replaceable because then am
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I relevant? And that's a tough question for us to
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wrestle with, and it's something you can help people with.
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So that's like, that's a whole different discussion. But I
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do think that those are two big areas that stop
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people from creating the environment that gives them the options
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to have an exitable company.
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And there's another fear I think creeps in here, and
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that's a fear of losing control.
427
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Yeah, and if.
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We let that feer around our lives, we're going to
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be stuck until.
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We're buried literally. So an I want you to talk
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about that.
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How we get over that hurdle of the fear of
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losing control as we turn over response, stability to other
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people for making our business run.
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I think you have to go to identify how much
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of that is real and how much of it is emotional?
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How much of it can you deal with empirically, empirically
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losing control? I guess it comes to what do I
439
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want to be in control of? Because you can go
440
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out and raise a bunch of money and have investors
441
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and managers and everything and still be in control in
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that you can make the decisions for everything in the
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company if you want to so. To me, that's what
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control means. So my definition of control is if I'm
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not the only person that can say what happens, or
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if I could be fired, then I'm not in control.
447
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I don't feel that I'm not in control when I delegate.
448
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I don't feel that I'm not in control when I
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have somebody else who can do other tasks in the
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company that I can do. So if that's the air,
451
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like where's the blockage, if the blockage starts with I'm
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not in control if mary Anne is doing that work.
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But if you control mary Anne because mary Anne reports
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to you, then you do control how mary Anne does
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that work ultimately, And if mary Anne doesn't do the
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work the way that you want, then you can have
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some say in that by letting, you know, liberating her
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to the workforce. Now you can get more in the
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weeds as to how she does it. By creating standard
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operating procedures that Marianne is going to follow, or any
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other Marianne as a placeholder is going to follow to
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serve that customer and create feedback mechanism so that the
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customer is giving you assessments as to how happy they
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are throughout the process, which allows you to see are
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the procedures being followed as my customer happy? If they are,
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and you can still fire Marianne if you don't like her,
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or you can change the SOPs, then why should you care?
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Unless if your fear is emotional, you know your control
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thing is emotional. When you get all the way up
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to the level of I'm raising money and I've got
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investors in multimillions of dollars operation, you can still stay
472
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in control by having voting shares versus non voting shares,
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the right to elect a certain number of people to
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the board. There's a lot of ways that you can
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continue to be in control so you don't get ousted
476
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like Steve Jobs, did you know you basically? Or Chip
477
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Wilson at Lulu Lemon you know, or the guy at
478
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Men's Warehouse. There's a lot of people that suffered that
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because they didn't have I won't say they didn't have
480
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the good advice, because at some point there was not
481
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either the information, advice or ability to make a decision
482
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that caused them to think carefully about how do they
483
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want the company to look? From a control standpoint as
484
00:24:52.119 --> 00:24:58.440
they grow. Warren Buffett, Mark Zuckerberg, those guys, Phil Knight,
485
00:24:58.839 --> 00:25:02.759
those guys all have different control mechanisms that even though
486
00:25:03.079 --> 00:25:05.920
they own a minority interest in their company, they still
487
00:25:05.960 --> 00:25:07.880
get to make all the decisions. They can still get
488
00:25:07.920 --> 00:25:10.279
rid of the entire board, or at least enough of
489
00:25:10.319 --> 00:25:13.319
them so that whatever they want goes. And if they
490
00:25:13.359 --> 00:25:15.440
wanted to climb all the fil wanted to climb all
491
00:25:15.440 --> 00:25:19.599
the way down to the sneaker, sole shoemaker person who's
492
00:25:19.599 --> 00:25:21.960
doing that and change the way that person did that job,
493
00:25:22.240 --> 00:25:25.599
he could. I don't know why I would, but he could.
494
00:25:25.880 --> 00:25:29.119
So he can always feel comfortable he's still in control,
495
00:25:29.160 --> 00:25:29.960
and you can too.
496
00:25:31.160 --> 00:25:32.799
So you're really talking about scaling here.
497
00:25:32.839 --> 00:25:35.079
And just like you said, we can productize a service
498
00:25:35.119 --> 00:25:39.039
so it becomes scalable. We can also build ourselves into
499
00:25:39.079 --> 00:25:42.440
the structure of the company through SOPs or playbooks and
500
00:25:42.519 --> 00:25:44.319
systems and all these kind of structures.
501
00:25:44.400 --> 00:25:45.279
Yeah. Absolutely.
502
00:25:45.920 --> 00:25:50.400
So Let's say someone's you know, maybe envisioning an exit
503
00:25:50.440 --> 00:25:52.839
at some point, and you know, if they if they've
504
00:25:52.880 --> 00:25:55.799
followed your program from the beginning, they probably won't have
505
00:25:55.839 --> 00:25:57.799
this fear, but they still might have fear around the
506
00:25:57.920 --> 00:26:01.720
due diligence process, and if they haven't, you know, built
507
00:26:01.759 --> 00:26:03.960
it to exit from the get go, there may be
508
00:26:04.039 --> 00:26:06.880
some skeletons and some various things. But even once they
509
00:26:06.880 --> 00:26:10.240
get into that exit process, the due diligence process.
510
00:26:09.839 --> 00:26:11.200
Can be pretty brutal.
511
00:26:12.759 --> 00:26:15.480
I have a client that just went through it with
512
00:26:15.880 --> 00:26:19.400
a buyer that was actually controlled by a private equity firm,
513
00:26:19.920 --> 00:26:25.279
and it was brutal and he found it bruising, you know,
514
00:26:25.400 --> 00:26:27.599
to deal with folks who were focused on what he'd
515
00:26:27.599 --> 00:26:30.480
been doing for fifty years and they weren't thinking about
516
00:26:30.519 --> 00:26:33.000
anything but the quarters and dimes and nickels and numbers,
517
00:26:33.000 --> 00:26:34.759
and they were pretty brutal about it.
518
00:26:35.160 --> 00:26:37.319
And so how do.
519
00:26:37.279 --> 00:26:39.400
You prepare for that and how do you successfully go
520
00:26:39.480 --> 00:26:41.279
through the due diligence in an exit?
521
00:26:42.640 --> 00:26:46.240
I think that the due diligence can be very, very
522
00:26:46.319 --> 00:26:53.359
very easy if you are preparing the company in a
523
00:26:53.440 --> 00:26:57.240
way that a buyer of the company would want the
524
00:26:57.319 --> 00:27:03.599
company prepared. And so due diligence is tough if you're
525
00:27:03.680 --> 00:27:06.599
going into it cold turkey because you've decided to sell
526
00:27:06.599 --> 00:27:10.480
and you've never thought about that stuff before. There's going
527
00:27:10.559 --> 00:27:13.839
to be a ton of work, there's going to be
528
00:27:14.119 --> 00:27:17.839
a lot of disruption to how your managers and yourself
529
00:27:17.880 --> 00:27:21.799
and your company is going to do through that process,
530
00:27:22.279 --> 00:27:25.000
and you're probably going to get your feelings hurt because
531
00:27:25.000 --> 00:27:26.799
you're going to be told about the things that you
532
00:27:26.839 --> 00:27:32.880
didn't do quote unquote right. The perspective that you have
533
00:27:33.119 --> 00:27:36.960
to have, that it's helpful to have as you think
534
00:27:37.000 --> 00:27:42.400
about that, is that your buyer is really only going
535
00:27:42.440 --> 00:27:45.400
to care about the risk of making the investment in
536
00:27:45.440 --> 00:27:49.759
your company. And so all of those due diligence, there's
537
00:27:49.799 --> 00:27:53.599
three of them, generally, CDD, LDD, and FDD. CDD is
538
00:27:53.599 --> 00:27:57.119
commercial due diligence, LDD is legal due diligence. FDD is
539
00:27:57.160 --> 00:27:59.720
financial due diligence. So the job of the due diligence
540
00:28:00.839 --> 00:28:03.480
that are going to come in and examine everything under
541
00:28:03.519 --> 00:28:07.960
the microscope is to reduce as much as possible or
542
00:28:08.079 --> 00:28:12.839
at least assess and report on the risk to the buyer.
543
00:28:13.240 --> 00:28:15.559
So if you can get your head around that, you
544
00:28:15.559 --> 00:28:18.799
can say it's not personal to you. It's not an
545
00:28:18.880 --> 00:28:22.920
indictment of how you ran the company. Actually, it's a
546
00:28:25.240 --> 00:28:27.359
it's a pat on the back as to how you
547
00:28:27.440 --> 00:28:30.680
ran the company because you did it so well that
548
00:28:30.759 --> 00:28:33.799
somebody else wants to buy it, so be happy and
549
00:28:33.880 --> 00:28:39.079
celebrate that. Now that person is nervous. They're like, I
550
00:28:39.079 --> 00:28:41.960
don't know anything about this people, these people, this company,
551
00:28:41.920 --> 00:28:43.759
et cetera, except it seems like they did pretty good.
552
00:28:44.759 --> 00:28:47.000
I need to know everything so that I don't come
553
00:28:47.039 --> 00:28:50.160
in and buy it and have a surprise. And so
554
00:28:50.480 --> 00:28:54.240
the due diligence teams that come into your company are
555
00:28:54.240 --> 00:28:57.279
the anti surprise squad, right. They're designed to ferret out
556
00:28:57.799 --> 00:29:01.960
what did you maybe not think of or what risk
557
00:29:02.079 --> 00:29:06.160
did you decide was acceptable to you that may or
558
00:29:06.200 --> 00:29:08.400
may not be acceptable to the buyer, And then the
559
00:29:08.440 --> 00:29:12.079
buyer gets to decide is that going to work for me?
560
00:29:12.880 --> 00:29:15.400
Or do I need to go back to the table
561
00:29:15.480 --> 00:29:20.000
and say because of the extra risk? Because you had
562
00:29:20.039 --> 00:29:23.559
your software designed by people in the Ukraine and never
563
00:29:23.640 --> 00:29:26.160
had any contracts with them, so we don't really know
564
00:29:26.279 --> 00:29:31.799
who owns the code. Because you didn't have written employment
565
00:29:31.799 --> 00:29:34.680
agreements with your employees, and your customer list was out
566
00:29:34.680 --> 00:29:37.880
there for everybody because you didn't have any confidentiality procedures.
567
00:29:39.000 --> 00:29:42.480
Are we at risk that that the key employees are
568
00:29:42.480 --> 00:29:44.720
going to leave, take the customers and I'm going to
569
00:29:44.799 --> 00:29:46.440
own the shell of the business I thought I was
570
00:29:46.480 --> 00:29:48.759
going to buy. Am I afraid that, you know, the
571
00:29:48.839 --> 00:29:51.160
single customer that I have, that sixty two percent of
572
00:29:51.160 --> 00:29:54.599
the business is going to leave because there's no contract,
573
00:29:54.839 --> 00:29:57.519
And then the business is worth you know, only thirty
574
00:29:57.559 --> 00:29:59.160
eight percent of what it was when I bought it,
575
00:29:59.200 --> 00:30:01.720
you know, et cetera, et cetera. All of those risks,
576
00:30:02.000 --> 00:30:04.960
that's reasonable. So I think that, like the first thing
577
00:30:05.039 --> 00:30:09.079
is contextually understand that you're really just trying to de
578
00:30:09.240 --> 00:30:12.359
risk the whole thing for the buyer as much as possible. Now,
579
00:30:13.000 --> 00:30:15.440
if you want to do that, you're going to have
580
00:30:15.480 --> 00:30:18.480
to do stuff that you probably don't want to do
581
00:30:18.519 --> 00:30:21.720
as an entrepreneur, the things that we hate doing, Like
582
00:30:23.240 --> 00:30:26.079
what is my entity type? And did I do all
583
00:30:26.079 --> 00:30:28.799
the stuff right with that? Did I file all my
584
00:30:29.319 --> 00:30:31.759
minutes if I needed to do that? Am I up
585
00:30:31.799 --> 00:30:35.279
to date with the Secretary of State for the corporate
586
00:30:35.720 --> 00:30:40.039
renewal fees? Did I pay my taxes? Did I classify
587
00:30:40.119 --> 00:30:44.240
independent contractors as employees you know who you know or
588
00:30:44.319 --> 00:30:47.079
vice versa, which happens much more, you know, did I
589
00:30:47.160 --> 00:30:50.039
classify people who should have been employees as independent contractors?
590
00:30:50.200 --> 00:30:53.880
Et cetera? So like if you do that stuff in advance,
591
00:30:54.599 --> 00:30:57.079
you'll have a better company because the risks to the
592
00:30:57.119 --> 00:31:01.519
buyer are the risks to you today. You are the
593
00:31:01.559 --> 00:31:04.839
investor in the business today. So all of these things
594
00:31:04.880 --> 00:31:08.200
that are a pain in the butt that you have procrastinated,
595
00:31:08.319 --> 00:31:11.839
didn't know about, didn't want to do, made a risk decision, whatever,
596
00:31:12.599 --> 00:31:15.759
are going to adversely impact the value of the company
597
00:31:15.799 --> 00:31:19.680
to you. And if you fix them in advance, you'll
598
00:31:19.680 --> 00:31:22.839
have a better performing company because it will have less risk.
599
00:31:23.359 --> 00:31:25.400
But you'll also have a company that gives you more
600
00:31:25.400 --> 00:31:28.480
optionality because you'll have the potential to sell it to
601
00:31:28.519 --> 00:31:33.640
somebody else where at the ninth hour. You won't have
602
00:31:33.880 --> 00:31:36.519
somebody coming in and saying, I know, we were going
603
00:31:36.599 --> 00:31:39.119
to pay thirty four million. This is a real example,
604
00:31:39.240 --> 00:31:41.839
thirty four million for the company, but because of these
605
00:31:41.960 --> 00:31:45.119
risks that we've surfaced, we're going to pay fourteen. Now
606
00:31:46.119 --> 00:31:48.559
that could be the difference between you selling the company
607
00:31:48.559 --> 00:31:51.000
and not selling the company. So that's to me, that's
608
00:31:51.039 --> 00:31:53.160
the way that I would look at it. I don't
609
00:31:53.160 --> 00:31:55.519
know if that helps answer that question the way.
610
00:31:55.359 --> 00:31:57.599
You want to Absolutely, and you shared there was another
611
00:31:57.640 --> 00:32:01.519
priceless distinction, and there the risk to the potential or
612
00:32:01.559 --> 00:32:04.119
eventual buyer or the risk to you today.
613
00:32:04.680 --> 00:32:07.480
Right you're the investor, right now, you're.
614
00:32:07.319 --> 00:32:09.839
The investor right now. That's priceless.
615
00:32:10.359 --> 00:32:14.359
So I want to start talking about acquisition and being
616
00:32:14.359 --> 00:32:15.640
an acquisition.
617
00:32:15.200 --> 00:32:16.240
Preneur in a moment.
618
00:32:16.559 --> 00:32:19.079
But one last question on exiting. Is there any way
619
00:32:19.119 --> 00:32:21.839
to protect your legacy of your company? You know, people
620
00:32:21.880 --> 00:32:24.839
build the company as their passion is very personal, you know,
621
00:32:24.920 --> 00:32:26.960
is there any way to protect that legacy or basically
622
00:32:27.000 --> 00:32:28.480
you just hope for the best and you got to
623
00:32:28.519 --> 00:32:29.039
kind of let go.
624
00:32:29.839 --> 00:32:32.079
There are lots of ways to protect it. The thing
625
00:32:32.200 --> 00:32:35.359
is is that the things that you will do to
626
00:32:35.440 --> 00:32:40.119
protect the legacy could and probably will impact the purchase
627
00:32:40.119 --> 00:32:43.200
price negatively for you. So that from a valuation standpoint.
628
00:32:43.279 --> 00:32:47.359
Because we have a thing in the law called the
629
00:32:47.400 --> 00:32:51.279
Rule against Perpetuities. The Rule against Perpetuities is designed to
630
00:32:51.440 --> 00:32:56.839
keep quote unquote, the hand from the grave ruling the living.
631
00:32:57.680 --> 00:33:01.119
And so it said basically that you generally can't have
632
00:33:01.559 --> 00:33:05.359
any contract, Any contract that attempts to be enforceable more
633
00:33:05.400 --> 00:33:09.599
than twenty one years of the after the death of
634
00:33:09.640 --> 00:33:11.519
any life and being at the time that it gets
635
00:33:11.519 --> 00:33:15.720
created is voidable. Okay, that's doesn't apply to what we're
636
00:33:15.720 --> 00:33:19.640
talking about at all. But from a concept standpoint, this
637
00:33:19.680 --> 00:33:22.440
this does apply directly. So now here's what you're trying
638
00:33:22.480 --> 00:33:26.400
to do. You're trying to sell your company and be
639
00:33:26.480 --> 00:33:30.279
done with it, but kind of reach back in and say,
640
00:33:30.440 --> 00:33:32.160
but I still want to run things this way, or
641
00:33:32.160 --> 00:33:34.759
I still want things to be run this way. You
642
00:33:34.799 --> 00:33:39.200
can provide for that contractually, so you can say, these
643
00:33:39.279 --> 00:33:42.559
employees must stay here until they retire, You must pay
644
00:33:42.559 --> 00:33:47.200
them always this percentage increase, You must have these service
645
00:33:47.279 --> 00:33:50.720
level agreements with your customers, et cetera. Et cetera. Could
646
00:33:50.720 --> 00:33:52.279
be any of you know, any of those and a
647
00:33:52.359 --> 00:33:56.240
thousand more. But everything that you do there constrains the
648
00:33:56.279 --> 00:33:58.799
ability of the living the people that are in the
649
00:33:58.839 --> 00:34:02.759
company living after you have left it, right from being
650
00:34:02.799 --> 00:34:07.440
able to manage the company freely. And you probably will
651
00:34:07.480 --> 00:34:13.440
not foresee things that are going to happen like bitcoin, crypto,
652
00:34:14.039 --> 00:34:19.239
like AI right, like robotic process automation, Like what might
653
00:34:19.280 --> 00:34:21.400
happen to those customers that you have in the business
654
00:34:21.400 --> 00:34:23.559
now and how they might evolve, What might happen to
655
00:34:23.559 --> 00:34:25.920
the employees and how they might evolve, What might happen
656
00:34:25.920 --> 00:34:28.719
to labor in general. Right, what if there's a pandemic
657
00:34:28.760 --> 00:34:32.000
and you say, the offices have to always maintain this, this,
658
00:34:32.000 --> 00:34:33.760
this and this, and now we don't have one anymore
659
00:34:33.840 --> 00:34:36.320
because we can't even go to it. The more things
660
00:34:36.360 --> 00:34:38.639
that you do to try to rule from the grave,
661
00:34:39.440 --> 00:34:44.719
the worse you're going to create a situation of inability
662
00:34:44.760 --> 00:34:48.559
to adapt for the company, which increases the risk, which
663
00:34:48.559 --> 00:34:52.960
reduces the value. Now you might say, I want to
664
00:34:53.000 --> 00:34:56.760
take care of these four people that helped me come along,
665
00:34:57.400 --> 00:34:59.719
and you could build in that they must have employment
666
00:34:59.719 --> 00:35:03.280
agree if you want to. I would argue instead you
667
00:35:03.280 --> 00:35:05.760
should give them some of the money and let them
668
00:35:05.800 --> 00:35:09.679
make their decision. You should basically say, look, you guys,
669
00:35:09.679 --> 00:35:12.880
help me build this thing. We sold it for one
670
00:35:12.960 --> 00:35:15.239
hundred million dollars, ten million dollars whatever sold it for
671
00:35:15.280 --> 00:35:19.679
ten million dollars. I'm gonna give twenty percent of that
672
00:35:19.719 --> 00:35:22.719
to you guys. Uh. And then you know, if you
673
00:35:22.760 --> 00:35:25.679
want to stay with the company, I'll negotiate for you
674
00:35:26.199 --> 00:35:28.920
to help you do that, and we'll have conversations because
675
00:35:28.960 --> 00:35:31.239
they're gonna the buyer is gonna have conversations with management.
676
00:35:31.559 --> 00:35:33.880
But if you build into the contract that they have
677
00:35:33.920 --> 00:35:36.159
to stay there for five years each or something like that.
678
00:35:36.599 --> 00:35:39.760
It will absolutely impact the purchase price.
679
00:35:40.159 --> 00:35:41.119
That makes a lot of sense.
680
00:35:41.199 --> 00:35:43.800
Yeah, So better to just appreciate that we did a
681
00:35:43.800 --> 00:35:45.559
great job and now it's time to move on. Let
682
00:35:45.599 --> 00:35:48.199
somebody else have their chance. Yeah, it is, So.
683
00:35:50.039 --> 00:35:50.440
Let's talk.
684
00:35:50.519 --> 00:35:55.119
I've heard you and our other summit sponsor here, right,
685
00:35:55.519 --> 00:35:59.800
your partner and friend Ryan Dice, talk about you know,
686
00:36:00.519 --> 00:36:04.400
probably the first five years of a startup company is
687
00:36:04.440 --> 00:36:09.159
the toughest ride. And you know, once it's established and
688
00:36:09.239 --> 00:36:12.159
there's a whole nother journey, but it's that, you know,
689
00:36:12.440 --> 00:36:14.800
the failure rates are all in those first few years, right,
690
00:36:14.800 --> 00:36:17.119
that's where the failure rates are astronomical.
691
00:36:17.480 --> 00:36:19.679
So instead of starting businesses and going.
692
00:36:19.440 --> 00:36:22.639
Through all that again, why not acquire proven businesses with
693
00:36:22.719 --> 00:36:24.079
a proven concept and some.
694
00:36:24.079 --> 00:36:25.760
Momentum and go from there.
695
00:36:25.840 --> 00:36:30.079
So talk about growing and building your your business or
696
00:36:30.119 --> 00:36:34.039
your empire if you will, as an acquisition preneur.
697
00:36:34.880 --> 00:36:37.400
Yeah, I mean you kind of said it like it's
698
00:36:37.440 --> 00:36:40.280
it's the latest thing I've seen from the Small Business
699
00:36:40.280 --> 00:36:42.880
Administration in the United States is that twenty percent of
700
00:36:42.920 --> 00:36:46.519
businesses fail in their first year and sixty five percent
701
00:36:46.599 --> 00:36:49.360
of all businesses fail within the first five years, so
702
00:36:50.679 --> 00:36:54.920
that like, if I'm starting out with an eighty percent
703
00:36:55.000 --> 00:36:58.920
chance of success and ending with a thirty five percent
704
00:36:59.000 --> 00:37:03.360
chance of success, I probably would take the eighty percent bet,
705
00:37:03.880 --> 00:37:05.800
but I don't think I would take the thirty five
706
00:37:05.840 --> 00:37:10.719
percent bet. So if you are lucky enough to survive
707
00:37:11.480 --> 00:37:15.199
five years, you are among the thirty five percent. You
708
00:37:15.280 --> 00:37:18.119
had that thirty five percent chance. And I hope that
709
00:37:18.159 --> 00:37:20.079
nobody starts a business thinking I'm just going to be
710
00:37:20.119 --> 00:37:21.480
in it for a year, because then I have an
711
00:37:21.519 --> 00:37:23.639
eighty percent chance of success, and if I stay in
712
00:37:23.679 --> 00:37:26.679
it longer, I have a higher chance of failure. Hopefully
713
00:37:26.679 --> 00:37:29.519
nobody's saying that, right, So I don't want to play
714
00:37:29.519 --> 00:37:31.400
that game. You come to me and say, let's play
715
00:37:31.400 --> 00:37:34.480
a game with your money, and thirty five percent of
716
00:37:34.519 --> 00:37:36.920
the time you'll win, but sixty five percent of the
717
00:37:36.920 --> 00:37:39.360
time I'll win. It's why I don't gamble in Vegas.
718
00:37:39.760 --> 00:37:39.960
You know.
719
00:37:40.119 --> 00:37:42.679
It's like, look at the hotels, the billion dollar hotels
720
00:37:42.679 --> 00:37:47.159
that are built there off of the odds. So just
721
00:37:47.360 --> 00:37:51.119
being a smart human to play the odds, I would say,
722
00:37:51.119 --> 00:37:56.280
wouldn't you rather have a business that will do everything
723
00:37:56.360 --> 00:37:58.800
that causes you to want to start the business in
724
00:37:58.840 --> 00:38:02.440
the first place without the risk, because risk, to me
725
00:38:02.559 --> 00:38:05.559
is everything. So then I say, okay, yeah, but I
726
00:38:05.559 --> 00:38:08.079
always wanted to start a pie shot because I love
727
00:38:08.159 --> 00:38:11.719
baking pies. Great, you can start one. And if you
728
00:38:11.719 --> 00:38:14.280
start one, you'll have to find the location, You'll have
729
00:38:14.360 --> 00:38:16.119
to market, you'll have to build a brand, you'll have
730
00:38:16.119 --> 00:38:18.159
to get a logo done, you'll have to hire people,
731
00:38:18.519 --> 00:38:20.880
you'll have to buy the machines to do the stuff.
732
00:38:20.920 --> 00:38:24.519
You'll have to figure out what's the processes for all
733
00:38:24.519 --> 00:38:27.960
of that, and probably work like a dog for a
734
00:38:28.039 --> 00:38:30.880
long time before you even have any kind of brand recognition.
735
00:38:31.440 --> 00:38:35.000
What if instead you let somebody else do all of that,
736
00:38:35.039 --> 00:38:37.519
and let's say over that time you're going to spend
737
00:38:37.519 --> 00:38:39.599
maybe one hundred grand that you're going to invest in
738
00:38:39.679 --> 00:38:43.599
doing that. What if instead you took that one hundred
739
00:38:43.599 --> 00:38:47.239
grand and you bought a business that was let's say
740
00:38:47.280 --> 00:38:51.440
it's small, that was already making fifty thousand dollars in
741
00:38:51.639 --> 00:38:54.480
profit a year, and you bought that business for two
742
00:38:54.559 --> 00:38:56.679
times its profit. You took the same hundred grand that
743
00:38:56.719 --> 00:38:58.079
you were going to roll the dice on with a
744
00:38:58.119 --> 00:39:01.519
sixty five percent chance of failure, and instead you went
745
00:39:01.559 --> 00:39:04.639
with the business that has a sixty five percent chance
746
00:39:04.679 --> 00:39:07.639
of success because it's already been around for five years.
747
00:39:07.880 --> 00:39:12.639
It's already got the brand, the employees, the location, the recipes, everything.
748
00:39:12.719 --> 00:39:15.320
And now you're like, but yeah, but I really want
749
00:39:15.320 --> 00:39:18.119
to do my recipes and have you know this cool
750
00:39:18.480 --> 00:39:22.239
brand that I've got the idea for fantastic rebrand that
751
00:39:22.320 --> 00:39:26.360
company put your recipes in. But start with the company
752
00:39:26.400 --> 00:39:30.000
that's already got the momentum rather than starting from stop
753
00:39:31.000 --> 00:39:35.519
that inertia, that that actual momentum that's already there, carrying
754
00:39:35.519 --> 00:39:39.079
that forward, carrying that business forward, that has suppliers that work,
755
00:39:39.119 --> 00:39:41.800
that has customers that like it, that has a location
756
00:39:42.039 --> 00:39:45.800
that works, that has employees that are already hired and proven,
757
00:39:45.880 --> 00:39:47.639
because you go through a lot of employees to find
758
00:39:47.639 --> 00:39:51.440
good ones, right that already maybe has SOPs, already has
759
00:39:51.519 --> 00:39:54.800
leased the equipment, and it's already suffered the depreciation on that. Like,
760
00:39:55.320 --> 00:39:59.760
all of that is just such a huge advantage that
761
00:39:59.800 --> 00:40:03.159
I can can't conceive of why anybody would want to
762
00:40:03.199 --> 00:40:05.480
just start it from scratch. And I've started lots of
763
00:40:05.519 --> 00:40:08.199
businesses from scratch, and you have too, Like I'm not
764
00:40:08.719 --> 00:40:11.559
here saying you know, I'm here saying actually, I've done
765
00:40:11.599 --> 00:40:13.639
both of those things. I'm not a guy that's only
766
00:40:13.679 --> 00:40:16.400
bought businesses. I've started a lot of It's freaking hard.
767
00:40:17.079 --> 00:40:19.320
I would way rather start with all of that momentum
768
00:40:19.360 --> 00:40:22.239
and all of those advantages than the disadvantages. And very
769
00:40:22.280 --> 00:40:26.360
often it's a way better investment because you're gonna spend
770
00:40:26.400 --> 00:40:29.000
about the same amount in learning all the things you're
771
00:40:29.039 --> 00:40:31.199
doing wrong in a startup that you would have just
772
00:40:31.239 --> 00:40:33.719
to bought a business that was where you want to
773
00:40:33.719 --> 00:40:34.840
be three years from now.
774
00:40:35.159 --> 00:40:41.320
Right, What if transformation isn't just about thinking differently, but
775
00:40:41.559 --> 00:40:45.159
feeling differently. Science shows us that true change happens when
776
00:40:45.159 --> 00:40:48.159
we align not just our minds, but also the neural
777
00:40:48.239 --> 00:40:52.079
networks in our hearts and guts. This heart mind connection
778
00:40:52.400 --> 00:40:55.800
is the key to deeper healing, resilience, and expanded awareness.
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That's why I created the Heart Mind all access, membership
780
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and community, a space designed to help you rewire your
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nervous system, cultivate heart intelligence, and live with greater clarity
782
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and purpose. With over one thousand hours of transformational teachings
783
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784
00:41:15.760 --> 00:41:21.400
renowned meditation teachers, neuroscientists, and experts in neuroplasticity, all sharing
785
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powerful tools to help you shift your mindset and heartset,
786
00:41:25.880 --> 00:41:30.360
regulate your emotions, and unlock your full potential. You'll also
787
00:41:30.400 --> 00:41:34.159
gain unlimited access to every summit and course we've ever produced,
788
00:41:34.400 --> 00:41:38.000
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789
00:41:38.320 --> 00:41:42.159
plus live gatherings, and an inspiring global community to support
790
00:41:42.199 --> 00:41:42.880
your journey.
791
00:41:43.159 --> 00:41:43.920
If you're ready to.
792
00:41:43.880 --> 00:41:47.000
Step into a more heart centered, connected and conscious life,
793
00:41:47.119 --> 00:41:49.440
I invite you to join us. Click the link to
794
00:41:49.519 --> 00:41:55.320
learn more and start your journey today. Well that makes
795
00:41:55.360 --> 00:41:58.440
a lot of sense, and especially if you can, you know,
796
00:41:58.480 --> 00:42:00.719
if you can find the right business.
797
00:42:00.239 --> 00:42:01.079
And buy it right.
798
00:42:02.519 --> 00:42:03.960
But you know, we were talking about the whole due
799
00:42:03.960 --> 00:42:07.440
diligence process before, maybe from the seller's perspective, now from
800
00:42:07.440 --> 00:42:09.960
the buyer's perspective, I mean it's a pretty scary thing
801
00:42:10.000 --> 00:42:11.679
by it, I mean it seemed by I've never bought
802
00:42:11.679 --> 00:42:13.719
a business. I don't know anything about buying a business.
803
00:42:13.760 --> 00:42:14.159
I don't know.
804
00:42:14.679 --> 00:42:16.800
I might buy a business and it might turn out
805
00:42:16.800 --> 00:42:18.800
to be a total loser. Or maybe you know, the
806
00:42:18.880 --> 00:42:21.159
seller pulled one over on me, or you know it
807
00:42:21.199 --> 00:42:22.239
seems kind of daunting.
808
00:42:22.360 --> 00:42:23.480
Just get into that.
809
00:42:24.719 --> 00:42:28.119
Yeah, it's why you have professionals that do due diligence
810
00:42:28.159 --> 00:42:31.280
for you. So where are the risks? The risks are,
811
00:42:31.960 --> 00:42:35.519
number one, they have legal stuff they didn't do right,
812
00:42:35.760 --> 00:42:38.840
so you have an attorney do legal due diligence. Another
813
00:42:38.920 --> 00:42:44.280
risk is that they have been unprofitable, but they doctored
814
00:42:44.280 --> 00:42:47.119
the books to show that they're profitable. That's probably one
815
00:42:47.159 --> 00:42:49.280
of the biggest concerns. Or they're like, I get a
816
00:42:49.320 --> 00:42:52.119
lot of business in cash and I don't deposit that,
817
00:42:52.480 --> 00:42:55.119
and so you know, I need to get paid on that.
818
00:42:55.320 --> 00:42:57.880
You don't pay on that? You just say no because
819
00:42:58.280 --> 00:43:01.960
that's illegal anyway, right, not reporting it. The person that
820
00:43:02.000 --> 00:43:04.559
ferrets all that stuff out is your accounting person that
821
00:43:04.599 --> 00:43:08.000
does financial due diligence, and then the commercial due diligence
822
00:43:08.039 --> 00:43:10.679
people are the people that come in and say, let
823
00:43:10.719 --> 00:43:12.360
me look at the employees, let me look at the
824
00:43:12.360 --> 00:43:15.639
way the business runs. Is all that up to stuff?
825
00:43:16.000 --> 00:43:19.039
So if you do that and in a smaller deal,
826
00:43:19.119 --> 00:43:21.880
that's probably just an attorney and accountant, and a bigger
827
00:43:21.880 --> 00:43:24.039
deal it's going to be an attorney, accountant and a
828
00:43:24.079 --> 00:43:27.960
commercial due diligence firm. But there are firms that specialize
829
00:43:27.960 --> 00:43:31.239
in doing that in these types of transactions, and they're
830
00:43:31.239 --> 00:43:34.519
the professionals you're counting on to de risk the deal
831
00:43:34.599 --> 00:43:37.360
for you to tear end right. It's the other side
832
00:43:37.400 --> 00:43:40.920
of what we were talking about before, and they are
833
00:43:41.440 --> 00:43:44.239
professionals who, if they are wrong, are liable to you
834
00:43:44.400 --> 00:43:47.480
for the damages that you had in getting the woolfuled
835
00:43:47.480 --> 00:43:50.440
over your eyes. So you're really hedging your bet very
836
00:43:50.519 --> 00:43:53.920
well when you're making an investment in a company that
837
00:43:54.480 --> 00:43:58.360
has had due diligence properly performed by the people who
838
00:43:58.440 --> 00:44:03.239
do that. Now, how you can further reduce your risk
839
00:44:03.360 --> 00:44:06.760
as a buyer is typically there is an escrow and
840
00:44:06.840 --> 00:44:09.880
a thing called a basket or a hold back, and
841
00:44:10.480 --> 00:44:13.320
usually that's going to be somewhere between ten and forty
842
00:44:13.360 --> 00:44:16.000
percent of the purchase price is going to be held
843
00:44:16.039 --> 00:44:21.199
back in case things come up that were unexpected, and
844
00:44:21.239 --> 00:44:24.119
it's typically going to be for a couple of years.
845
00:44:24.280 --> 00:44:28.440
Usually it'll be three years. Right, So let's say that
846
00:44:28.519 --> 00:44:32.960
you pay two hundred thousand dollars to buy a business. Now,
847
00:44:33.000 --> 00:44:36.159
we might hold eighty thousand of the purchase price back
848
00:44:36.280 --> 00:44:38.559
in escrow, assuming you were pan cash, which we'll talk
849
00:44:38.559 --> 00:44:41.960
about in a minute, and that eighty thousand. If you
850
00:44:42.039 --> 00:44:45.079
found out, oh there's this ten thousand dollars thing that
851
00:44:45.159 --> 00:44:47.320
we didn't know about, you just take it from the
852
00:44:47.360 --> 00:44:50.960
eighty it's there, like literally, the cash is there to
853
00:44:51.000 --> 00:44:53.480
take you get to take it back. Effectively, the purchase
854
00:44:53.480 --> 00:44:56.159
price is reduced by the amount of things that you
855
00:44:56.239 --> 00:45:00.079
find out in the future. If they're going to to
856
00:45:00.239 --> 00:45:03.119
exceed that, then you have the ability to sue, but
857
00:45:03.519 --> 00:45:05.199
nobody wants to do that. But if you had good
858
00:45:05.280 --> 00:45:09.159
due diligence, I've never seen I've never seen in all
859
00:45:09.239 --> 00:45:12.400
of my deals something where it wouldn't be covered by that.
860
00:45:12.480 --> 00:45:14.920
Now here's the other thing that you do, though, is
861
00:45:15.480 --> 00:45:19.519
that the two best ways to shift the risk to
862
00:45:19.679 --> 00:45:23.679
the seller from the buyer would be seller financing, where
863
00:45:23.719 --> 00:45:26.679
the seller agrees to take some portion of the purchase
864
00:45:26.719 --> 00:45:29.719
price over a period of time, maybe with interest, maybe without.
865
00:45:30.039 --> 00:45:32.920
That period of time might be ninety days, it might
866
00:45:32.960 --> 00:45:35.199
be ten years. I like to start at ten years,
867
00:45:35.519 --> 00:45:38.079
so the entire time during that time that you own
868
00:45:38.360 --> 00:45:41.639
that you owe the seller on the seller financed portion.
869
00:45:42.239 --> 00:45:45.119
If bad things happen, you generally build a write of
870
00:45:45.119 --> 00:45:48.239
offset into your agreement and say, hey, if you lied, cheated,
871
00:45:48.280 --> 00:45:51.400
or stole on me, or if these events happen, then
872
00:45:52.400 --> 00:45:54.079
I get to offset. I don't have to pay you
873
00:45:54.159 --> 00:45:57.559
that amount. The other thing would be what's called an earnout.
874
00:45:57.800 --> 00:46:01.119
An earnout is usually not used the way that we
875
00:46:01.239 --> 00:46:04.800
just talked about. It's more that there are certain conditions
876
00:46:05.280 --> 00:46:08.599
that I, as a buyer, want to continue to be
877
00:46:08.679 --> 00:46:10.679
the case, and if they are not the case, I'm
878
00:46:10.679 --> 00:46:12.760
not willing to give you the purchase price. And so
879
00:46:12.840 --> 00:46:15.199
the earnout is the way to bridge the gap between
880
00:46:15.480 --> 00:46:17.800
what the seller feels the business is worth and what
881
00:46:17.880 --> 00:46:20.599
the buyer feels. The buyer he or she is willing
882
00:46:20.639 --> 00:46:24.119
to pay for the business because of the risk. Right,
883
00:46:24.519 --> 00:46:29.800
So maybe the seller says, look, my projections are hockey
884
00:46:29.800 --> 00:46:32.880
stick shocking. I've never seen ones that aren't right. You know,
885
00:46:33.000 --> 00:46:34.679
this year we did this, but next year we're going
886
00:46:34.719 --> 00:46:36.519
to do this, and then the year that, oh my gosh,
887
00:46:36.599 --> 00:46:38.440
I can't even believe I'm selling this to you. Right,
888
00:46:38.840 --> 00:46:41.800
And you, as the buyer, are like, I mean, you've
889
00:46:41.800 --> 00:46:43.840
had the business for five years and it didn't do that,
890
00:46:44.559 --> 00:46:46.159
So what makes you think it's going to do that,
891
00:46:46.239 --> 00:46:51.880
oh Ai, and the work from home. Okay, tell you what,
892
00:46:53.320 --> 00:46:57.920
if the business does hit those two milestones that you
893
00:46:57.960 --> 00:46:59.920
said it's going to hit over the next couple of years,
894
00:47:00.400 --> 00:47:03.199
then I will pay you for that. But right now,
895
00:47:03.239 --> 00:47:04.800
I'm just willing to pay you for what it is
896
00:47:04.840 --> 00:47:09.599
actually doing and done. So let's take that growth and
897
00:47:09.840 --> 00:47:13.159
say that's going to go in an earnout and in
898
00:47:13.199 --> 00:47:16.800
the event that it hits that, I will at that time,
899
00:47:16.920 --> 00:47:19.400
when it has hit that, agree to pay you that
900
00:47:19.480 --> 00:47:21.719
additional money. I'm going to agree now that if it
901
00:47:21.760 --> 00:47:24.480
hits that in the future, and that's typically one to
902
00:47:24.559 --> 00:47:26.800
four years, and again ten to forty percent of the
903
00:47:26.880 --> 00:47:29.039
value of the company that can be shifted to earnout.
904
00:47:29.039 --> 00:47:32.719
So think about this. If you have forty percent earnout
905
00:47:32.760 --> 00:47:35.719
and forty percent sellar financing, and you put twenty percent
906
00:47:35.800 --> 00:47:39.880
down and you've got twenty percent hold back, you actually
907
00:47:39.960 --> 00:47:42.239
have zero out of pocket. That's an extreme example of
908
00:47:42.239 --> 00:47:45.840
what the hyperbole is to show you that the risk
909
00:47:46.039 --> 00:47:49.079
can be adjusted based on your appetite for it.
910
00:47:50.280 --> 00:47:51.320
Let's step back a minute.
911
00:47:51.360 --> 00:47:55.760
So clearly you're going to be able to negotiate the
912
00:47:55.800 --> 00:48:00.079
best price and these kind of possible structures to a
913
00:48:00.159 --> 00:48:03.519
meliate your risks, things like earn out and that hold
914
00:48:03.559 --> 00:48:04.679
back and these kind of things.
915
00:48:05.199 --> 00:48:07.519
The more motivated the seller is, yep.
916
00:48:08.320 --> 00:48:10.320
And if you have somebody that thinks they have the
917
00:48:10.519 --> 00:48:12.440
tiger by the tail and it's and they're ready to
918
00:48:12.480 --> 00:48:14.639
go public with it and they want to maximize their profit,
919
00:48:14.679 --> 00:48:16.880
they're probably not going to be all that amenable to
920
00:48:16.880 --> 00:48:17.559
all the things you.
921
00:48:17.519 --> 00:48:17.920
Want to do.
922
00:48:18.000 --> 00:48:21.639
Right, So what are the steps in if somebody wants
923
00:48:21.679 --> 00:48:23.880
to you know, they want to do this, they want
924
00:48:23.920 --> 00:48:26.079
maybe they have a particular niece they're interested in, or
925
00:48:26.119 --> 00:48:27.800
they just want to get in business.
926
00:48:27.760 --> 00:48:29.199
Of really identifying the.
927
00:48:30.719 --> 00:48:34.840
Criteria the candidates, how to find these businesses and how
928
00:48:34.880 --> 00:48:38.360
to find the deals that where there's at least enough
929
00:48:38.400 --> 00:48:41.880
motivation so that you can work out a reasonable deal
930
00:48:41.960 --> 00:48:42.199
or a.
931
00:48:42.119 --> 00:48:43.760
Good deal for the seller and for you.
932
00:48:44.960 --> 00:48:47.920
So it's a there's a lot to unpack there as
933
00:48:47.920 --> 00:48:50.360
far as within the time that we've got, so let
934
00:48:50.400 --> 00:48:55.440
me try. I'd say that the first thing is is
935
00:48:55.480 --> 00:49:02.000
there a seller? And how I guess how much work
936
00:49:02.159 --> 00:49:05.119
do you want to do to find the deal? Is
937
00:49:05.880 --> 00:49:08.239
the question you have to ask if you don't really
938
00:49:08.280 --> 00:49:11.639
want to do any work. Then there are lots and
939
00:49:11.639 --> 00:49:14.480
lots and lots of businesses for sale through business brokers
940
00:49:14.559 --> 00:49:17.480
and through online sites like biz buy, sell dot com.
941
00:49:18.079 --> 00:49:21.119
And what you have as an advantage for you there
942
00:49:21.559 --> 00:49:23.920
is that you know that you have someone who wants
943
00:49:23.920 --> 00:49:27.719
to sell their business, so they are motivated in a
944
00:49:27.760 --> 00:49:30.840
way that someone who hasn't even thought about it is not.
945
00:49:31.519 --> 00:49:33.960
So I would argue that the people that have listed
946
00:49:34.000 --> 00:49:37.079
their business for sale are generally more motivated than the
947
00:49:37.079 --> 00:49:40.199
people who have not. Generally, the people who have not
948
00:49:40.320 --> 00:49:45.440
listed their business for sale who are motivated probably don't
949
00:49:45.480 --> 00:49:49.320
know how to do it, or it's just overwhelming for them.
950
00:49:49.480 --> 00:49:52.000
They're kind of caught in the leads in the whirlwind
951
00:49:52.000 --> 00:49:55.280
of the business. So I would say, if you're looking
952
00:49:55.280 --> 00:49:58.960
to buy a business fast, then look at business brokers
953
00:49:59.039 --> 00:50:03.320
and online site. Now, the cool thing about that is that,
954
00:50:03.440 --> 00:50:06.599
much like people who are trying to sell real estate,
955
00:50:07.239 --> 00:50:10.599
there's an expectation curve that has a pretty steep fall off.
956
00:50:11.440 --> 00:50:13.320
The day that you list your house for sale, your
957
00:50:13.360 --> 00:50:15.679
car for sale, anything you've ever tried to sell your
958
00:50:15.960 --> 00:50:19.639
uh or your business, that's the day that you expect
959
00:50:19.800 --> 00:50:21.639
that you're going to get everything that you want for
960
00:50:21.679 --> 00:50:23.519
it because it's your baby and it's worth this much,
961
00:50:23.599 --> 00:50:25.360
and by gosh, if I'm going to sell it, they're
962
00:50:25.400 --> 00:50:29.639
going to pay every penny for it. And then the
963
00:50:29.719 --> 00:50:33.519
offers come, or the offers don't come. If the offers
964
00:50:33.559 --> 00:50:36.400
don't come at all, you start to get a little
965
00:50:36.440 --> 00:50:39.599
bit disheartened, and your expectation of what you're going to
966
00:50:39.639 --> 00:50:43.679
be able to get for this becomes more realistic, certainly
967
00:50:43.719 --> 00:50:46.880
becomes less than it was than you started. If the
968
00:50:46.920 --> 00:50:52.199
offers come and they come low, then you also you're like, well, wow,
969
00:50:52.199 --> 00:50:54.280
I can't believe they say it's insulting that offer. But
970
00:50:54.320 --> 00:50:55.920
then the other one comes, and another one comes, and
971
00:50:55.920 --> 00:50:58.840
another one comes, and then no more come. You're like, oh,
972
00:50:59.639 --> 00:51:01.719
I guess yes, I mean I think it's worth that,
973
00:51:02.679 --> 00:51:05.719
but do other people? And then you have to have,
974
00:51:05.800 --> 00:51:07.960
you know, the seller has to have a conversation with
975
00:51:07.960 --> 00:51:10.840
themselves and figure that out. The longer that the business
976
00:51:10.840 --> 00:51:13.320
has been listed without selling and getting offers that are
977
00:51:13.320 --> 00:51:17.079
below the expectation, the lower the expectation becomes, and that
978
00:51:17.159 --> 00:51:21.119
person can become actually reasonable and flexible, and the business
979
00:51:21.159 --> 00:51:24.719
broker can be on your side at that point because
980
00:51:24.800 --> 00:51:27.440
they realize that they're not going to get anything for
981
00:51:27.480 --> 00:51:30.280
all the work they've done unless the thing actually sells.
982
00:51:30.519 --> 00:51:33.199
So they may become an ally and an advocate for
983
00:51:33.280 --> 00:51:38.360
your creative financing strategy now if you want to get
984
00:51:38.760 --> 00:51:41.360
But the challenge with that is is that the job
985
00:51:41.400 --> 00:51:44.440
of the business broker is to create an environment where
986
00:51:44.440 --> 00:51:46.800
there are multiple sellers bidding against each other to pay
987
00:51:46.800 --> 00:51:49.960
the highest price. And so you're at a disadvantage if
988
00:51:49.960 --> 00:51:54.320
that's actually happening when you go that route. So another
989
00:51:54.400 --> 00:51:57.280
route would be talk to friends, talk to family, talk
990
00:51:57.320 --> 00:52:02.000
to people in the industry. Talk to for sure, advisors, needs, accountants, appraisers,
991
00:52:02.280 --> 00:52:05.599
you know, business consultants. All of those people in the
992
00:52:05.719 --> 00:52:11.320
industry that you're interested in buying in are fantastic resources
993
00:52:11.360 --> 00:52:15.679
to refer their clients who are interested in selling their
994
00:52:15.719 --> 00:52:18.639
business to you. And they're motivated to have the client
995
00:52:18.760 --> 00:52:21.719
sell because they'll get the work, they'll get the legal work,
996
00:52:21.719 --> 00:52:25.599
the accounting work, the consulting fee, whatever. So that's you know,
997
00:52:25.639 --> 00:52:29.239
that's the place to start out. But I will say too,
998
00:52:29.840 --> 00:52:31.840
is if you get somebody that's at the high point
999
00:52:31.840 --> 00:52:35.599
of their expectation, they've just listed the business for sale,
1000
00:52:35.760 --> 00:52:37.760
and you've got to have it. It's perfect for you.
1001
00:52:37.800 --> 00:52:39.840
It's in the place you want, You love the employees,
1002
00:52:40.000 --> 00:52:42.760
you love the business. It's what you always wanted. It's
1003
00:52:42.800 --> 00:52:46.559
still financiable because generally up to ninety percent of it
1004
00:52:46.599 --> 00:52:48.920
can be financed through in the United States the Small
1005
00:52:48.960 --> 00:52:51.719
Business Administration, and you have to come up with ten
1006
00:52:51.719 --> 00:52:54.679
percent of the equity, which probably if you are buying
1007
00:52:54.679 --> 00:52:57.119
a business, you've got money in a in your house
1008
00:52:57.400 --> 00:53:00.199
or you know, your investments, or your crypto or or
1009
00:53:00.199 --> 00:53:03.000
something other asset that you've got that you can tap
1010
00:53:03.119 --> 00:53:05.320
either on a loan basis through a helock homemic what
1011
00:53:05.440 --> 00:53:07.480
you line of credit, or you could borrow from your
1012
00:53:07.519 --> 00:53:10.920
four oh one K or something like that, or if not,
1013
00:53:11.119 --> 00:53:12.960
you can go and get a partner or a friend
1014
00:53:13.159 --> 00:53:16.719
or even a bank loan to cover that ten percent,
1015
00:53:17.840 --> 00:53:19.920
and then you've got the business. Takes a little bit longer,
1016
00:53:19.960 --> 00:53:22.400
but you bought it and you're still going to do
1017
00:53:22.480 --> 00:53:26.039
great because you wouldn't buy the business that wasn't cash flowing.
1018
00:53:26.079 --> 00:53:27.880
You're going to hire your attorney and accountant to do
1019
00:53:27.880 --> 00:53:30.280
the due diligence, and now you've got a great business.
1020
00:53:30.320 --> 00:53:33.920
So like I think, I think that's the thing. Fleet
1021
00:53:34.000 --> 00:53:36.119
is that like, you can do it any way you want.
1022
00:53:36.159 --> 00:53:40.079
And typically I want to say you can buy one
1023
00:53:40.119 --> 00:53:44.039
hundred percent of the businesses by paying cash, okay, And
1024
00:53:44.679 --> 00:53:47.719
most people will be able to pay one hundred percent
1025
00:53:47.719 --> 00:53:50.440
in cash if they want to, through an SBA loan
1026
00:53:50.960 --> 00:53:54.400
and a helock or some other asset they've got or
1027
00:53:54.480 --> 00:53:59.880
tapping into friends, okay. Sixty percent of the transactions about
1028
00:54:00.079 --> 00:54:02.559
in the United States, and I have the numbers for Europe,
1029
00:54:02.559 --> 00:54:03.679
I just don't have them off the top of my head.
1030
00:54:03.679 --> 00:54:06.480
It's lower, but it's it's not that much lower. Sixty
1031
00:54:06.559 --> 00:54:09.360
percent of the transactions in the United States are done
1032
00:54:09.639 --> 00:54:13.719
using some form of seller financing or earnout. So that
1033
00:54:13.760 --> 00:54:15.800
means that if you're willing to talk a little bit
1034
00:54:15.800 --> 00:54:18.599
at and the seller is a little bit motivated, you
1035
00:54:18.639 --> 00:54:22.159
can transfer some of that risk to the seller, and
1036
00:54:22.239 --> 00:54:25.039
the ROI on your money is going to be higher
1037
00:54:25.039 --> 00:54:29.599
because seller financing rates are much lower interest rate wise
1038
00:54:29.639 --> 00:54:34.400
typically than say SBA, and earnouts generally have no interest
1039
00:54:34.480 --> 00:54:37.000
rate at all, right, and you might not even ever
1040
00:54:37.039 --> 00:54:40.320
have to pay that. And then about forty percent of
1041
00:54:40.360 --> 00:54:43.480
the transactions, probably between thirty and forty can be done
1042
00:54:43.760 --> 00:54:46.039
creatively to where you wouldn't have to come out of
1043
00:54:46.079 --> 00:54:50.079
pocket at all. So like, you can absolutely buy a
1044
00:54:50.119 --> 00:54:54.280
business at any structure the seller wants. One hundred percent
1045
00:54:54.280 --> 00:54:57.039
of them are available for cash, and there's probably a
1046
00:54:57.039 --> 00:54:59.480
way to get that done. Sixty percent of the time.
1047
00:54:59.519 --> 00:55:04.159
You can probably get seller financing and earnouts that make
1048
00:55:04.199 --> 00:55:08.239
you very comfortable, maybe for most of the purchase price, right.
1049
00:55:08.639 --> 00:55:12.559
And I don't generally want to pay cash all cash
1050
00:55:12.599 --> 00:55:15.000
for a deal, so I generally follow in that sixty
1051
00:55:15.039 --> 00:55:18.280
percent zone. And then there's the I don't want to
1052
00:55:18.320 --> 00:55:20.840
have a penny out of my pocket at all, and
1053
00:55:21.199 --> 00:55:22.800
I want to do the business, and I need to
1054
00:55:22.840 --> 00:55:24.719
have a super motivated seller, but it also has to
1055
00:55:24.760 --> 00:55:27.320
be a good business, and that's probably thirty to forty
1056
00:55:27.360 --> 00:55:29.760
percent of the time. But I'll tell you what, if
1057
00:55:29.800 --> 00:55:31.679
three out of ten people I talk to will sell
1058
00:55:31.679 --> 00:55:33.239
me the business without me having to come out of
1059
00:55:33.239 --> 00:55:35.880
pocket at all, I'm pretty excited about that.
1060
00:55:37.559 --> 00:55:40.639
And just give a sense of what's possible here, and
1061
00:55:40.719 --> 00:55:43.000
just say, you have a lot of frameworks and we're
1062
00:55:43.039 --> 00:55:45.079
going to talk about a free gift, wonderful free gift
1063
00:55:45.079 --> 00:55:47.320
you're offering in a moment. You have a lot of
1064
00:55:47.320 --> 00:55:50.320
frameworks for creating these the creative strategies for creating these deals,
1065
00:55:50.360 --> 00:55:53.559
and a typical no money down deal might include six, seven,
1066
00:55:53.599 --> 00:55:55.039
eight different strategies.
1067
00:55:55.280 --> 00:55:57.159
But you offer I think in your book and your
1068
00:55:57.159 --> 00:55:57.960
training porms, you.
1069
00:55:57.920 --> 00:56:00.000
Talk about over one hundred or maybe over two hundre
1070
00:56:00.119 --> 00:56:03.519
or different mechanisms and strategies for structuring these deals.
1071
00:56:03.760 --> 00:56:06.559
But I remember, in doing some of your trainings, if.
1072
00:56:06.400 --> 00:56:09.320
I have the numbers right, something like forty thousand businesses
1073
00:56:09.360 --> 00:56:11.159
are for sale at any given time in the US
1074
00:56:11.199 --> 00:56:12.400
and another ten in Canada.
1075
00:56:12.480 --> 00:56:13.639
Is that right, something like that?
1076
00:56:13.960 --> 00:56:16.480
No, it's it's a I want to say, it's in
1077
00:56:16.519 --> 00:56:18.320
the neighborhood of three and a half million in the
1078
00:56:18.400 --> 00:56:21.280
United States, Canada and English speaking world that you're looking
1079
00:56:21.320 --> 00:56:24.519
at that are for sale, that are that are available
1080
00:56:24.639 --> 00:56:28.440
for sale. Yeah, not maybe that are listed on you know,
1081
00:56:28.480 --> 00:56:31.599
but but at any given time about that, So it's
1082
00:56:31.679 --> 00:56:32.440
much bigger number.
1083
00:56:32.480 --> 00:56:35.360
And there's also too that wetly eighty percent of them
1084
00:56:35.440 --> 00:56:37.840
actually end up closing their doors without.
1085
00:56:37.639 --> 00:56:41.000
Eighty percent of that no, no, almost eighty percent of
1086
00:56:41.039 --> 00:56:45.000
them that lists for sale do not sell. So that's
1087
00:56:45.039 --> 00:56:47.840
why I think that like I kind of changed my
1088
00:56:48.679 --> 00:56:51.400
approach on that mostly because people wouldn't listen to me,
1089
00:56:51.440 --> 00:56:53.639
and they're always going to the business brokers because it's easy,
1090
00:56:54.159 --> 00:56:56.639
Because I would say generally, I used to say, look,
1091
00:56:56.960 --> 00:57:00.199
the best deals aren't the best deals are off market
1092
00:57:00.199 --> 00:57:03.960
with business brokers, right. But it's kind of like the
1093
00:57:03.960 --> 00:57:06.960
best jobs, right, the best jobs go before they get listed.
1094
00:57:07.440 --> 00:57:12.960
So if you're out there looking using some of the
1095
00:57:12.960 --> 00:57:16.039
things we talked about here today, then you'll probably find
1096
00:57:16.360 --> 00:57:20.320
better deals. But of the people who actually list the
1097
00:57:20.360 --> 00:57:23.360
business for sale, eighty percent of them do not sell
1098
00:57:23.400 --> 00:57:27.480
because they're expectations too high. So if you can hit
1099
00:57:28.000 --> 00:57:30.920
business brokers or online sites where the business has been
1100
00:57:30.960 --> 00:57:33.280
for sale for some period of time, especially if it'll
1101
00:57:33.280 --> 00:57:36.039
show the list date and you see that it's six
1102
00:57:36.079 --> 00:57:39.440
months or a year or longer ago, then that's probably
1103
00:57:39.440 --> 00:57:42.599
a motivated seller right now. It could indicate either it
1104
00:57:42.599 --> 00:57:44.599
could indicate that they're like, I'm sticking to my price
1105
00:57:44.639 --> 00:57:46.400
no matter what. I don't need to sell. I'm never
1106
00:57:46.440 --> 00:57:48.639
going to sell unless I get my price. Okay, But
1107
00:57:48.679 --> 00:57:50.519
I'd say more often than that, you're going to get
1108
00:57:50.519 --> 00:57:53.239
somebody that's been beaten down a bit and they're going
1109
00:57:53.320 --> 00:57:55.599
to be a little more flexible and when they get flexible,
1110
00:57:55.880 --> 00:57:59.639
we move over into the more creative, de risked deals
1111
00:58:00.119 --> 00:58:02.320
that I like. And so I think there's a lot
1112
00:58:02.320 --> 00:58:03.280
of opportunity there.
1113
00:58:03.800 --> 00:58:06.440
And you mentioned before so in terms of finding the
1114
00:58:06.440 --> 00:58:10.639
off market deals, you're you know, being connected with accountants
1115
00:58:10.679 --> 00:58:14.400
and lawyers, your strategic partnerships, your network because if somebody
1116
00:58:14.440 --> 00:58:16.239
is thinking about exiting, who are they going to talk to?
1117
00:58:16.239 --> 00:58:18.039
They're going to talk to their tax attorney, They're going
1118
00:58:18.119 --> 00:58:18.760
to talk to their.
1119
00:58:18.639 --> 00:58:21.039
Accountant, right, financial planners as well.
1120
00:58:21.119 --> 00:58:24.719
Yeah, developing those kinds of networks and strategic partnerships could
1121
00:58:24.719 --> 00:58:27.079
be a great place to find those deals before they
1122
00:58:27.119 --> 00:58:28.239
do end up with a broker.
1123
00:58:28.519 --> 00:58:28.960
Correct.
1124
00:58:29.000 --> 00:58:30.920
And if you don't like doing that because I don't,
1125
00:58:32.360 --> 00:58:35.000
then partner with people who do. I partner with people
1126
00:58:35.039 --> 00:58:36.760
who love to do all the things that I don't
1127
00:58:36.840 --> 00:58:39.239
like to do, so I can only do the things
1128
00:58:39.360 --> 00:58:41.599
that I do like to do. Well.
1129
00:58:41.639 --> 00:58:44.599
I know that you're going to offer free gift for
1130
00:58:44.639 --> 00:58:46.679
audience here, and it has to do with your approach
1131
00:58:47.000 --> 00:58:49.480
to being able to purchase companies really with no money
1132
00:58:49.480 --> 00:58:51.199
out of no personal money out of pocket.
1133
00:58:51.199 --> 00:58:52.119
It's called zero down.
1134
00:58:52.679 --> 00:58:54.159
Could you talk about that a little bit and then
1135
00:58:54.159 --> 00:58:56.400
we're going to have there's a link right below people
1136
00:58:56.440 --> 00:58:58.159
will be able to access that free gift.
1137
00:58:58.599 --> 00:59:01.360
Yeah, and I'm going to try too. We are just
1138
00:59:01.840 --> 00:59:06.039
I just rewrote everything in there because what I found
1139
00:59:06.280 --> 00:59:10.760
was that people don't understand that it's zero down is
1140
00:59:10.800 --> 00:59:15.039
not what I teach. The book got titled by the
1141
00:59:15.039 --> 00:59:18.519
people that title books, not by me. First. What I
1142
00:59:18.559 --> 00:59:20.440
really wanted it to be was zero out of pocket
1143
00:59:20.440 --> 00:59:24.159
because zero down is hard. But there are lots of places. There's,
1144
00:59:24.280 --> 00:59:28.320
you know, close to three hundred now, I think I've
1145
00:59:28.320 --> 00:59:32.760
documented two hundred and sixteen of them, different strategies to
1146
00:59:32.920 --> 00:59:36.400
not have to come out of pocket, cash exchanges, hands
1147
00:59:36.840 --> 00:59:39.119
sellers get cash because they need it and want it,
1148
00:59:39.480 --> 00:59:42.559
but it doesn't come from you. It comes from all
1149
00:59:42.559 --> 00:59:44.840
these other places to fill the gap between what you
1150
00:59:44.840 --> 00:59:47.039
would like to be out of pocket and not. So
1151
00:59:47.119 --> 00:59:49.920
what I did was the new book, which is completely
1152
00:59:49.920 --> 00:59:52.199
rewritten and has a lot of new stuff in it,
1153
00:59:52.480 --> 00:59:54.800
and that's the one that we're going to make available
1154
00:59:55.239 --> 01:00:02.400
is the Art of Profitable Acquisition, and that still gives
1155
01:00:02.480 --> 01:00:06.920
plenty of those strategies, but it doesn't it doesn't subject
1156
01:00:06.960 --> 01:00:09.199
to people who are watching or listening to this to
1157
01:00:10.039 --> 01:00:12.119
I don't believe you can buy something with no money down.
1158
01:00:12.159 --> 01:00:13.719
It gets past that. You know, a lot of guy's
1159
01:00:13.760 --> 01:00:16.119
full of crap because I'm not because I've done it,
1160
01:00:16.159 --> 01:00:17.840
but I understand that it can be hard to believe,
1161
01:00:18.679 --> 01:00:21.920
and it actually allows them to say, what if I
1162
01:00:22.159 --> 01:00:23.760
just want to buy a business that I'm willing to
1163
01:00:23.760 --> 01:00:26.679
pay for it. So it kind of covers everything, you know.
1164
01:00:27.760 --> 01:00:30.119
I wonder if that covers We're literally just about out
1165
01:00:30.159 --> 01:00:31.800
of time here, but I wonder if that also covers
1166
01:00:31.840 --> 01:00:34.440
I've watched some of your presentations. Now, somebody who's buying
1167
01:00:34.440 --> 01:00:36.599
a business, they may buy that pie shop because.
1168
01:00:36.360 --> 01:00:37.719
They just want to run a pie shop for the
1169
01:00:37.760 --> 01:00:38.519
next thirty years.
1170
01:00:38.639 --> 01:00:38.840
Yeah.
1171
01:00:38.840 --> 01:00:43.440
But somebody, you know, may maybe getting into growing through
1172
01:00:43.480 --> 01:00:46.960
acquisition to build businesses and more businesses and so forth.
1173
01:00:47.079 --> 01:00:48.119
So they may be flipping.
1174
01:00:48.159 --> 01:00:50.480
They may be buying a business, improving it and making
1175
01:00:50.519 --> 01:00:52.559
it more marketable, selling it, making a profit.
1176
01:00:52.880 --> 01:00:55.679
They may be doing what you call roll ups. And
1177
01:00:56.320 --> 01:00:57.159
there's a thing of the.
1178
01:00:57.480 --> 01:01:00.119
Multiples of businesses sell for right, So if you if
1179
01:01:00.159 --> 01:01:02.920
you're still running the businesses upounder the operator.
1180
01:01:02.559 --> 01:01:03.880
It's going to have a limited multiple.
1181
01:01:04.400 --> 01:01:06.679
If you've gotten yourself out of higher multiple and it
1182
01:01:06.719 --> 01:01:09.679
goes up to scale. And I've watched your presentations where
1183
01:01:09.679 --> 01:01:12.920
those multiples get really interesting. When you buy a bunch
1184
01:01:13.000 --> 01:01:16.920
of small businesses, improve them, roll them up into something else,
1185
01:01:17.039 --> 01:01:20.000
make that more marketable at higher price point, maybe private equity.
1186
01:01:20.000 --> 01:01:23.280
Even further on to IPOs, those multiples get pretty interesting.
1187
01:01:23.559 --> 01:01:27.159
Yeah. They start typically for an owner operated business where
1188
01:01:27.199 --> 01:01:29.639
you actually have a person that has to be there.
1189
01:01:29.679 --> 01:01:32.079
You have to be there for your business. You're generally
1190
01:01:32.119 --> 01:01:34.239
going to be between two and three x. The average
1191
01:01:34.239 --> 01:01:36.880
I think is about two point four right now. If
1192
01:01:36.880 --> 01:01:39.320
you get professional managers so that you don't have to
1193
01:01:39.360 --> 01:01:41.519
be there, you've de risked it and also made it
1194
01:01:41.840 --> 01:01:44.800
appealing to investors as opposed to somebody that wants to
1195
01:01:44.800 --> 01:01:46.880
buy a job. Because if you're selling an owner operated business,
1196
01:01:46.880 --> 01:01:49.280
you're selling to somebody wants to buy a job. They're
1197
01:01:49.280 --> 01:01:51.039
not as many of those people, and they don't have
1198
01:01:51.079 --> 01:01:53.960
as much money and can't pay as much as investors.
1199
01:01:54.239 --> 01:01:56.719
So since there are fewer companies that are professionalized and
1200
01:01:56.800 --> 01:02:00.159
have professional operators, those are typically selling right now the
1201
01:02:00.199 --> 01:02:02.880
four point eight range. So like that's a pretty big
1202
01:02:03.000 --> 01:02:06.880
jump in the multiple of profit. And then private equities
1203
01:02:06.920 --> 01:02:11.119
in the neighborhood of fourteen x right now, so they're
1204
01:02:11.159 --> 01:02:14.440
paying fourteen times now. It's you know, that's across all
1205
01:02:14.440 --> 01:02:16.960
industries and big deals and small deals. So if you're
1206
01:02:16.960 --> 01:02:18.960
a smaller company, they're probably going to come at you
1207
01:02:19.000 --> 01:02:21.039
with six to eight, But six to eight's a whole
1208
01:02:21.039 --> 01:02:23.519
lot better than two to three, and six to eight
1209
01:02:23.599 --> 01:02:27.440
can very often, in my experience negotiating, become eleven to seventeen.
1210
01:02:27.960 --> 01:02:30.960
And then if they're going public, you know they're in
1211
01:02:31.000 --> 01:02:33.480
the forties. You know, the multiples are in the forties,
1212
01:02:33.480 --> 01:02:37.440
so you know two buy it two, sell it, you
1213
01:02:37.480 --> 01:02:40.519
know forty. I like that, buy it two, sell it five.
1214
01:02:40.960 --> 01:02:44.079
I still like right, buy it two, sell it eight
1215
01:02:44.840 --> 01:02:46.880
four x on my money, I'm pretty happy with that.
1216
01:02:48.320 --> 01:02:51.000
Yeah, an extra one hundred thousand, actual million, never heards, right.
1217
01:02:50.920 --> 01:02:52.920
Every million helps. I've said it since, you know, for
1218
01:02:52.960 --> 01:02:53.679
the longest time.
1219
01:02:53.719 --> 01:02:58.760
Now, thank you so much. Well, And apart from this
1220
01:02:58.880 --> 01:03:01.239
wonderfully book that people have access to right now you
1221
01:03:01.239 --> 01:03:03.480
can click on it and get it downloaded, where else
1222
01:03:03.519 --> 01:03:05.559
can people go to find out more about your work?
1223
01:03:05.840 --> 01:03:10.360
The best places would be epicnetwork, dot com, epic network
1224
01:03:10.440 --> 01:03:12.039
is I'm on all the socials by the way Forward,
1225
01:03:12.079 --> 01:03:14.679
slash rolland Frasier. Uh, and I do you know, I
1226
01:03:14.719 --> 01:03:18.400
do read my stuff, but uh, epic network is where
1227
01:03:18.719 --> 01:03:20.920
dot com is where kind of all of the acquisition
1228
01:03:21.239 --> 01:03:26.119
stuff lives, scalable dot co. Dot com is where how
1229
01:03:26.159 --> 01:03:29.559
we run businesses, our business operating systems and exits live.
1230
01:03:30.000 --> 01:03:32.920
Those are probably the two best places to find me.
1231
01:03:33.079 --> 01:03:34.880
And you know, other than my socials, and I have
1232
01:03:34.920 --> 01:03:37.320
a YouTube channel and the Business Launch podcast and all
1233
01:03:37.320 --> 01:03:39.079
that where we talk about all this kind of stuff
1234
01:03:39.079 --> 01:03:41.239
and interview smart people like you. Gotta get you on there.
1235
01:03:42.199 --> 01:03:44.800
That's uh, you know, so those are good places.
1236
01:03:44.519 --> 01:03:45.960
Too, wonderful.
1237
01:03:46.199 --> 01:03:48.440
Well, well, and thank you so much along with your
1238
01:03:48.440 --> 01:03:50.880
partner Ryan Dice for being the co sponsors of this
1239
01:03:50.960 --> 01:03:53.760
summit along with myself at Hartmine Institute. And thank you
1240
01:03:53.840 --> 01:03:57.119
so much for your presentation today. Fascinating conversation as always.
1241
01:03:57.199 --> 01:03:58.440
Yeah, thanks for the great questions.
1242
01:03:59.199 --> 01:04:04.199
Pretty well, thank you for joining me on the Radical
1243
01:04:04.199 --> 01:04:08.199
Responsibility Podcast. Remember, real change happens when we commit to
1244
01:04:08.239 --> 01:04:11.880
our growth, face our challenges with compassion, and stay open
1245
01:04:11.920 --> 01:04:15.159
to transformation. If you found this episode, help lie encourage
1246
01:04:15.199 --> 01:04:17.320
you to subscribe and help us spread the message of
1247
01:04:17.360 --> 01:04:21.480
healing and personal empowerment. Until next time, stay grounded, stay present,
1248
01:04:21.880 --> 01:04:23.760
and stay true to yourself. Take care,