← Impact with Eddie Wilson
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- [00:00]
A
Welcome to the Impact Podcast. I'm Eddie Wilson, here to help you visualize what others cannot see, create opportunities where others have failed, and push you to build empires where once there was empty space. Let's embark on this journey together and make a difference in this world. Hey, guys, Eddie Wilson here. Thank you so much for joining us on the Impact Podcast. As always, we've got some amazing content for you today, but it's unique today in that every time for the last year that I've been coming into the podcast studio, it has been intentionally to mentor you and help guide you along your business journey. But today, I brought a guest into the podcast shoot today, and he's my friend, Matt Euler. Matt, thanks so much for joining us today. Appreciate it.
- [00:46]
B
Absolutely. It's an honor to be here.
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A
Yeah. So one of the promises I made you was that as we built this podcast out was that I would take content that you were asking me for and I would teach it, and I would train you on these things. And so this podcast has been much about mentorship and guidance and trying to help you from a place of where you're at to a place of where you want to go. And so, over the next couple of months, you're going to see me start to bring on some guest experts with me to teach, mentor, and train you on these various things. And as you know, I've said this in the past, but I want to reiterate it, that there is an amazing opportunity that's happening right now across America. And I believe that it is ramping up at a level that goes we've never seen in our lifetime and may never see again. In that you've got an entire generation of people who have been building businesses but have now gotten to an age where they're going to exit that business. It said that there will be somewhere between 2 and 3 million baby boomers that leave their place of business that they own. It's something they've built, they put their blood, sweat, and tears into, and they're going to walk away from this place of business. And we'll talk about this in just a few moments. But what's gonna happen to them? Where do these businesses go? And for you, as an American citizen today, that's looking for the American dream. I think oftentimes the American dream has always been sold as a W2 job where you work there for 50 years and you retire and you pay off your house and you go on vacations and you spend time with grandkids. But I think the American dream Has shifted. I think the American dream is about freedom. It's about owning something that you can control, that. That supports the lifestyle you want, that can get you to a place that gives you the freedom to enjoy your world, your life, your family, your friends in a way that you want to. And I believe that that great American opportunity today is buying small businesses. And that's what Matt is an expert at. He's done over 800 transactions buying and selling companies. He's a good friend from Arizona. And Matt, as just by way of introduction, if you don't mind, tell him your story a little bit. Help them get some context for the conversation we're about to have.
- [02:54]
B
Yeah, absolutely. Well, I started out, like so many as a W2 worker and then started a business and was able to end up selling that business after about nine years. And that's what really exposed me to the power of being able to buy and sell businesses as an asset. And so I started working for a business brokerage firm, and then. And ended up buying part of that firm as what we call the territory. And so during my career, which is coming up on 28 years, like you said, I've completed 800 transactions and hundreds of millions of dollars worth of transactions. And that's given me a lot of exposure, which is part of what I love about that industry, to what works in people's businesses and what doesn't. And having evaluated thousands of them, it's given me a lot of insight into what's worked and what has not worked. And so over the past about 20 years, 20 years, I started buying them myself. So I've owned 35 businesses in that time. I still have a current ownership in 20 businesses. And, you know, it's part of what I do every day and love. And I think it's a real opportunity for people to create the lifestyle they want. And as you talk so much about doing that with balance and rhythm, to maintain a lifestyle that you want is important.
- [04:11]
A
Yeah. So we've got this amazing opportunity, and. And right now, what is the ratio of businesses on the market that actually sell?
- [04:22]
B
You know, it's a great question, and we've talked about this in the past. It's a very small percentage, but I think there's a unique opportunity here that. For our discussion, because typically, as a broker, I won't list it unless I think I can sell it. So the vast majority, I'm gonna say 80% of what I actually list, I end up selling. And then I was thinking the other day about your history, which is fascinating. Because to exit 76 companies in one year, they all had to be prepared to be ready to be sold, which is not what I usually see.
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A
Sure.
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B
And that's part of what's so extraordinary about your story. Of course, most of the people that come to me as a broker or for coaching and consulting sometimes, we're looking at two, three years to get them ready to be sold. So I think back to your question. It's probably 2, 3, 4% of what's available for sale that actually sells. But that's mostly driven because I think most of them are not ready. There's lots of buyers, right?
- [05:19]
A
Yeah, lots of buyers out there. And a lot of businesses not prepared to sell, right? Absolutely. And it's kind of an interesting thing because if you go back into my opening statement about all these baby boomers that are about to exit their business, from my experience, and I'd like to hear yours, a large majority of them are not prepared to sell. They haven't even thought they had no succession plan. They're thinking, I'm just going to sit in this dental chair, work on teeth until I'm ready to walk away. And then when I'm ready to walk away, I'm essentially going to tell my staff like, okay, this year is the year that we close everything down, so go find other jobs. They, they literally tell all their patients and customers, you're like, hey, you've got six months and here's my recommended place that you should probably go. And literally they just flip that sign from open to closed and they walk out. And they never receive the value of what they've built, aside from what it produced month over month for year, year after year. And because they never thought about this question, Right. Like, how many people walk into your business or into your place of business, which is the, the brokerage side, and say, thinking about selling my business, but have no clue what they're doing. Is that a large majority of them?
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B
Almost all of them.
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A
Wow.
- [06:31]
B
And I think that speaks to that. The, the, the industry of being able to buy and sell businesses is fairly new, unlike real estate, as an example, where there's way more information out there. So most people that I talk with that own a business think about their business as a job. And they run it like a job as opposed to an asset and an income producing asset.
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A
Yeah.
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B
That they can actually exit from and, you know, conceivably change their lifestyle once they exit, as opposed to running it like a job.
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A
And so let's, let's kind of back up and just Talk about this opportunity. Right. Buying businesses. And, you know, I'm a huge proponent about operating businesses correctly. You know, I oftentimes will call it the Empire way. Right. It's. It's about making sure that when you buy a business, you're not buying a job, you're actually buying something that gives you freedom. What are some of the principles that you teach people? Or that when people are starting to look to buy as a buyer, not a seller, that they should be looking for so that they don't end up just buying a job, that they actually buy a business that gives them freedom?
- [07:38]
B
There's so much there. Right. And I know as we dive through this, we'll work our way through the intricacies. But there's a couple of things. One is, if you're looking to buy a business, is there a recipe? And I look at a recipe as a formula for getting a particular result, and that's what a business is ideally.
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A
Sure.
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B
And if the recipe, as example, is in the owner's head and a new owner can't extract it, the potential for failure goes up.
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A
Sure.
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B
If the recipe, which is what Empire does so well for people, is it helps to identify the recipe and put it in a system that's duplicatable. If that's something that you can see as a prospective buyer going in, then the likelihood of you as the new owner being able to follow the recipe and then adjust it carefully and appropriately is far greater. So. So that's certainly one aspect is, is the recipe. And then the. The other thing that I think is important is the financial trend, because a lot of people don't look at. They look at businesses. Well, I want to buy a distressed business, or I want to pay as little as possible, or. And to me, I'm happy to buy a business that demonstrates a consistent trend of financial reward. And then I'm just going to carry that forward. It's a whole lot riskier to buy something that's got all kinds of distress, unless you're an expert in that area or industry. I think having a consistent financial trend that can be followed is a great way to start looking for the business that you want to buy.
- [09:08]
A
I think those are two really great points. I want to reiterate. You know, you talked about a. Making sure that you understand the recipe, but that goes back to some level of experience with this business or trust with the person who's operating it. And second of all, what you said, which is so important, and I want everybody to understand this, is that the financial trend of a business, right? So a trailing one year, two years, three years, showing some level of trajectory that shows success, not failing failure. I always say this when I'm teaching business. I'll say, you know, what happens is, is a plane when it's starting to lose altitude. Most people, if you just. If you just throw some random person in the airplane and you're like, hey, we're losing altitude, what do you do? Now most people will push the throttle down, thinking that more speed will give them more lift. Well, all it does is it literally just takes you. It takes your, you know, like your, your guide. Your guide path to a shorter point where you hit the ground faster, right? And that's what happens when you put an unexperienced business operator in a business that's losing altitude. The trajectory is down, is they think, oh, I just have to spend more. Oh, I just have to put more time in. And all they're doing is accelerating the loss. And that's a scary thing because when, when, when you get in there and if you've never operated a business and so, like, so many people teach, you know, they're like, go buy the business. That's easy. And, you know, it's the, it's the laundromat theory, right? It's like, let's go buy a laundromat. It's gotta make money. It's like, no, it doesn't. And if it hasn't been making money, it's hard to make it make money. And it's like. And so we have to be very careful. I always say, too, and I agree with you 100% on this point, is that I would rather buy people successes than. Than buy their mistakes. I would much rather buy their successes than their mistakes. Finding a baby boomer right now that's ready to exit the business but has made a lot of success in their life is relatively easy now. It's relative, right? But they're everywhere. There's a lot of dentists and doctors and chiropractors and electricians and plumbers and H vac. It's everywhere, right? These people that are over 70 years of age that still own businesses. So I love those points. I love those a lot. How do you spot? So you're. Let's just talk about the differences between the way I do it and you do it. I typically buy a business that's fairly sizable and try to scale it. I try to go to the moon with these businesses. You take more of an approach of buying the main street business and making it Marginally better. And so you play a little bit more of a quantity game, if you don't mind. Kind of give the listener, the viewer insight into why you choose that method.
- [11:56]
B
Yeah, well, there's a couple aspects of that. One, it's what I understand, right, Because I grew up around Main street businesses and helping broker so many transactions. Now, as I'm much more focused on owner participant, I'm definitely looking for a business that has a consistent trend and a financial reward that I can evaluate up front. So when I'm evaluating a business that I'm going to own, I'm taking three to five years worth of history. I'm looking at, based on our new ownership formula, you know, management, wages, the things that are going to be a new expense for us. What would the return have been to us had we owned it for the past three to five years?
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A
Sure.
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B
And so when I go to my partners and when I'm evaluating myself, it's a whole lot easier to say, listen, if we had owned this over the past three years, our return would have been 40%, 35%, 22%. Whatever it is, it eliminates the guessing game and the hope and the idea that we're going to improve it enormously. So for me, I'm looking at how can I purchase it where it is, maintain it. So we're continuing the recipe and then improve it slightly. And I don't look for distressed businesses unless they're operationally or cosmetically distressed. So I do not want the plane that's about to crash and I'm going to figure out how to turn it.
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A
Right.
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B
Not for me. Yeah, I want to maintain what's there and then improve, you know, turn the dial slowly to try to get a better result.
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A
I love that approach, too, because so many people, let's just say they, they're sitting in a W2 job today and they're thinking, I want the freedom you guys are talking about. I would love to control my own schedule. Right. And they jump into something that's a little bit over their head because they don't have experience. Just because you've sat in a corporate office and you're great at marketing or great at sales or great at operations or great at finance does not qualify you for all the other pillars that are necessary in a business. Right. I always say there's five pillars in a business. Right. It's, you have to be able to lead, you have to be able to operate the operation side. You have to control your finances, you have to be able to train, hire Fire personnel, you have the personnel side. And then sales and marketing, you have to be able to generate and leads and close leads. Right. Like five pillars that. And most people are really good at one because that's what they've been trained to do. And they're really horrible at one or two of these. Right. Well, if you're really great at sales and marketing, but very terrible at finance. Right. Like that's a recipe for disaster. So what I love about what you just said was that a Main street business kind of comes from a place of success, but also they're, they're typically less complex. Right. Like you get into a big 10, 15, $20 million company, there's a complexity there with the amount of people with their systems, with their, you know, all the things. You get into these Main street businesses where you have two, three, four, five employees, like it's a little bit more manageable if you've never run a business before. And so I love that. And I would actually be a proponent of a first time business buyer doing it your way versus doing it my way. Right. Like when I got involved, I mean, it's, it's. And I want to talk to you about this just for a second, but, you know, when I got involved, started buying all the companies, I built some sizable companies. So I thought, oh, I'm capable. Then I bought a bunch of companies. But then I just bought one of the worst prisons that I had ever experienced in my life because the stress level and the, you know, and what I had to do in order to make it perform, you know, really was rough. Have you ever, you know, gotten yourself, if you kind of go back to a place where you have gotten over your skis or maybe you were pursuing something too hard, that the reward just wasn't worth it?
- [15:44]
B
Yeah, absolutely. And I want to come back, circle back to one of the things you shared as well, and let me start with that if I could. So the analogy that comes to my mind as you're talking is that you don't take a person, we'll stick with the plane analogy, who just got their pilot's license and stick them in a fighter jet.
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A
Right.
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B
That would be crazy. But yet a lot of times people contact me and they want to purchase something that's just all the chips to the center of the table.
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A
Yeah.
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B
And to me, being able to stack wins, I mean, if you, if somebody were to buy a small business where they had the appropriate core competency and their likelihood of success is great, it's a whole lot easier to then Do a strategic acquisition and buy another one and another one and turn that into something very sizable.
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A
Sure.
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B
Than it is to hop into the fighter jet and hope you can handle it at Mach 1 or whatever the speed is. So I think that's crucial. And then getting over my tips, the place that I really felt that the most was around Covid. So there were three businesses that I have an ownership interest in that just took huge hits, and one of them came to a full stop. I mean, the whole industry just was. Became illegal. And. And that's where I had to dig deep. And it's. It's honestly one of the times I value most. At the time, I didn't love it, but I. I really connected with my team in a way that we hadn't had to prior. Yeah. To tap into our resources as a group and figure out how we were going to deal with this thing. And I'm. I'm blessed to say that all. All three of those are still here today.
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A
That's awesome.
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B
But it. It put me to the test, and I had to dig into resources in a way that I. I never imagined I would.
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A
Yeah. Yeah. So how did you manage that moment? You know, so much fear comes in sometimes. Oftentimes it breaks down relationships because you're putting so many hours into it and the stress and all of that. I mean, it. It really is a. If. If. No one's ever operated a business in a dire time. They don't understand the amount of stress and, you know, just the. The down pressure you feel. How did you manage all of that?
- [17:55]
B
Well, for me, I'm fortunate. One of my guiding principles is people. And so if. If. If I'm. I will not partner with somebody that I don't feel good about or that I don't feel like. We share similar values.
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A
Sure.
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B
And so when we got in the trenches, so to speak, around the. Around the COVID timing, we just really dug into each other's. Our group's core competencies. Part of mine was finance and lending relationships and those things. And so I was able to really hone in on that. We also increased our communication. So as a group, instead of putting our heads in the sand, which is so often more comfortable, we really dialed up. I mean, we're talking way more frequently because I think there was a huge opportunity for the brain trust that came together as a group, and we got creative and we thought outside the box, and some of what we tried didn't work, and some of it did, and. And it really was a moment in my. In My career of owning businesses that I can say I'm the most proud of because one of my partners in one of the examples, I mean, he had everything on the line. He was a guarantor on the SBA loan. He had four rental properties that he had pledged. He would have been set back enormously. And I didn't take that lightly for him. And obviously he didn't. We got through it.
- [19:16]
A
So I think it's. Until you have those moments, you really don't know what you're made of. But once you have those moments, you. You get to rely on those the rest of your life from a place of confidence. You know, it's like I, I felt the same way during COVID You know, I had sold 76 companies the year before COVID but I still had some operational companies, but I kept. I kept the ones that I kind of just wanted to have around. And it was very. It's. It, it was, it was more of a hobby. You know, all of a sudden you have these hobby businesses that now you're going through Covid and there's no customers. Right? Like, one of my. One of my businesses was all events related. It's like there were no events going on during COVID You know, I, I like the analogy of the increased conversation. You know, one thing that I always say is that in an operations standpoint, and if you're listening today, most of your problems are around coordination of action, right? Like coordination of action, your business are typically the core issue that you're facing. And so when high stress times go up, communication should go up. And typically what we want to do, you're sitting in that plane, you think you're going down. You just want to get quiet and figure it out, right? The. The best thing you can do is start communicating to everyone around you, because again, then core competition competencies show up. People can carry their own weight. But, yeah, super, super good. You know, let's step back into buying the businesses, because I think that as people are listening and they're thinking, well, maybe this I would be interested. Just walk them through what something like that looks like. How tactically or practically are you buying them? You know, like if. If somebody's sitting here on the call and they're like, well, I don't have millions of dollars to go buy a business. You know, you and I understand that we typically are not putting millions of dollars out of our pocket to go buy businesses either. So as you instruct people on buying them, how are you typically telling them to finance or find the Capital in order to do this?
- [21:08]
B
Yeah, it's a great question. So in the transactions, I help people with about 70% of them. We arrange the financing. Now a lot of times people get concerned about financing. They want to live debt free. And I think there's a huge difference between consumer debt. Right. As opposed to income producing debt. I personally am not afraid of income producing debt. If I've done my homework and I understand the asset I'm buying can afford the debt. So I'm an advocate of people determining how much they can actually afford comfortably in down payment funds. And the reason I say comfortably is because post closing liquidity and operating capital are part of what allow a business owner to ride out the storms. And so oftentimes I find that people want to, well, I've got 250,000 in the bank as an example, so I can put 220,000 down and I would oftentimes coach them. Why don't we scale that back a little bit? Because you can receive a lot of leverage and financing, make it so that it's comfortable and either A, the money just sits there or B, it's there for a rainy day or C, it's there for the next opportunity. So I think carefully leveraging debt is a great way to evaluate what the next step can be. And so if somebody's looking for buying a business, I think it's the first step is like, what are the resources I have financially, what will that allow me to buy? And then you shop within that realm as opposed to what I see people oftentimes do is they're looking for a specific industry or they've got their mindset that they should do something totally different than what they've done before. And that oftentimes can be a trap and dangerous.
- [22:51]
A
Yeah, yeah, I, I agree. And finding somebody as a professional like you wouldn't, you wouldn't just go buy a piece of real estate without an agent or a realtor giving you comps and giving you information and things like that. And I think because this is a newer industry, they go to websites like Biz by Sell and you know, these kind of listing platforms with very little context and little to no support. And they think, oh, I can just buy this business. And, and then if the SBA gives them the loan right, then they, they're off to the races. But yeah, I, I, I agree with that. I'm a proponent of leverage, you know, and I think that it's why I have 4000 real estate doors because I, I leverage those assets up to where they can, they can actually pay for themselves. Right. I don't want to always have money out of pocket, pay for themselves in cash flow. And I look at businesses the same way. I don't mind having debt on a business as long as that business has the capability of servicing the debt. Now I need to have some funds set aside for rainy days and dips and all that good stuff. But it's like if the status state of that business can cover its debt service, all it's doing is, is it's paying for itself and buying me equity. You know, it's buying me, it's buying me the opportunity to gain more. And I think that many people miss that. They get into this mindset of I got to have everything, everything paid off, I got my house paid off, my business paid off, no credit card debt. And it's like, while I, I agree with you, it's like consumer debt can be dangerous, you know, because it's expensive. Oftentimes you have a consumer debt and no way to repay it. That's dangerous. It's like, but a business using debt to buy a business that produces cash flow is actually in my opinion, wise. And so I, I do like that. So 70% of the businesses that you help your clients buy, you also find the financing for?
- [24:37]
B
That's correct.
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A
Wow, that's great. That's great. Great stat. How do they find someone like you? You know, it's like I, I, I get calls non stop from business brokers, people trying to sell me businesses, people trying to buy my businesses. How do you weed through that to get representation? Because I think representation is really important.
- [24:57]
B
Yeah, well, it's a, it's a great question. You know what I found unfortunately, is that a lot of times business brokers and real estate agents as well, unless they're on top of their game, I think we as consumers need to be cautious in those environments because they may not have our best interest in mind. It may just be to get another sale done and, or they may not have the experience to help. So I think people listening to your podcast and getting their own education, specifically in the business acquisition world, I think obtaining as much information as they need to feel confident to guide their path.
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A
Yeah.
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B
Is crucial.
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A
Yeah.
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B
And then of course, advisors, if there's an area that I know I'm not strong in, I am going to hire a person to help me do that. I do not want to make a mistake because I tried to become a jack of all trades. I like to know what it is that I'm able to do and where my strength is and where it is not. But it doesn't mean just because I don't have that strength, I let it go. I find somebody else to plug that hole.
- [26:00]
A
Yeah. Yeah, that's good. When you're evaluating and looking for businesses, I believe in metrics and measurables. The, you know, the acronym we use is KPI Key Performance Indicator. You know, that's a metric that's in a business. Are there certain metrics or certain KPIs you're looking for when you're evaluating or buying a business? Or there are some that you're just like honing in on. Like, man, this one's really important.
- [26:27]
B
So for me, the financial piece is first. When I'm evaluating a business, I'm looking at the financials as the very first thing to see what they tell me and what I need them to tell me if I'm going to pursue it as a business I'm going to buy is that it can afford to pay for itself and support a return for myself as the buyer. And if it can't do that unless there's something, a switch I think I can, a lever I can pull immediately, I'm just on to the next one. So if it makes financial sense and will provide the return that I think is appropriate, then I'm looking more at the operational pieces. And honestly, lastly is probably the owner. I have a lot of people contact me and say, listen, I don't, you know, it doesn't matter who the previous owner was. And in my opinion, this isn't a car, it's not a house. I mean, I am heavily relying on the previous owner as somebody I can trust and count on to guide me through the transition. And so if I don't feel good about the person that's running the day to day going in, I'm out.
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A
Yeah.
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B
Just not going to pursue it. I don't care what the numbers say. I'm not going to risk my future and my financial.
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A
Sure.
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B
Future on somebody that I don't feel like I can work with closely.
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A
Yeah. You know, the biggest issue I have with looking at someone's financials, especially this small business, is most small business operators have so much junk inside of their finances. So it doesn't always seem to be a, a true North Star for me because it's like they've put their Disney family vacations in there and they've literally written off a bunch of stuff that's not really a part of the business. I mean, it's like it is it's messy. So it's like I now a bigger business. I, if I get into a C corp and they've got all their ducks in a row and it's like, you know, and I, I have solid financials, I trust it. It's like, but man, the small businesses. So how do you get to a place? I mean, I get the gut feeling of the operator and making sure that they're above board, but it's like, how do you get to a place where you can even trust their financials?
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B
Well, it's funny, I'm working with a client right now. It's an Aspire community member. And as we were evaluating a business for them, there were. And you would have probably gotten a kick out of this. There were some add backs. That one was $300,000 on a $500,000 EBITDA. So, so $300,000 is a big number out of that. And so in my mind it becomes is it bankable or not bankable? So some of those add backs, you know, the things that you add back to the bottom line, if they're not bankable, can be a deal killer.
- [28:59]
A
Right.
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B
So there's no reason to go through due diligence and spend all this money pursuing a business that's not going to qualify.
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A
Sure.
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B
So I really look at them as deal killers or something I need to understand later.
- [29:13]
A
Sure.
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B
And so as an example, in that business there were two line items. One was $300,000, another was $200,000 over two year period. And what I coached the person I was working with is before we go through loi and all kinds of time, we need to understand what these two are. Because if they're not bankable or they're deal killers, we're out. Don't spend any more time. And if they are viable add backs that are bankable and not deal killers, then maybe we take the next step.
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A
Yeah.
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B
So I really look at them based on those two criteria.
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A
Yeah.
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B
Are the books just such a mess that I can't work my way through them? Well, again, I'm not willing to risk my money on that. I move on and find another one.
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A
Sure.
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B
If they're within reason or they don't move the needle so far that it creates a huge problem, then I take the next step and I continue to peel back the layers of that onion as I move forward.
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A
Yeah, that makes sense.
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B
Sense.
- [30:09]
A
That makes sense. Okay, so you, you buy a business, right. You find this one and maybe it's 1 out of 10 you've evaluated and You've take the leap, you get some SBA financing, you put your down payment in, you believe in the operator, you've got kind of this agreement on purchase, but then them operating it. What are the first things you do when you buy the business? Do you have a system or a process that you jump into? You're like, okay, now I have it, what do I do with it?
- [30:38]
B
Yeah. So I personally get the accounting dialed in, and for me, that's an independent third party because I want it done correctly. I don't want to count on somebody who's just learning QuickBooks to provide us with the dials we're going to steer the ship by.
- [30:55]
A
Sure.
- [30:55]
B
Right. So, number one, I want to make sure the accounting is something we can count on as an accurate indicator moving forward. And then number two, and this is part of what I find out so fascinating about what you do for me, I lean back into the recipe, like, okay, what did they do? We need to get really good at that and be careful of changing any of those aspects.
- [31:15]
A
Sure.
- [31:15]
B
And I think why it's fascinating for me what you do is, you know, with your background and experience and the team you have, you can, I believe you focus right on scale. You know, for me, it's just like, okay, let's just make sure we keep it the way it was, you know, and get the return. Let's get the cash flow.
- [31:33]
A
Yeah.
- [31:33]
B
And then we'll, we'll start tweaking it from there. So it's a different game.
- [31:37]
A
Yeah, I think we're, it's like, however you're predisposed. It's like, you know, for me, if, if you step back a little bit, as I'm, as I'm doing some due diligence on this business, I'm looking at its stress points. You know, it's like I'm looking at their financials. 100%. I mean, financials typically tell you majority of the story. 100% agree. But then I'm predictive indexing all their people. Right. Like, I run a predictive index on all their people. I know where their gaps are. I run, you know, a five pillar assessment on them. So I know, like, where their deficiencies are. But what I'm looking for is a foundation to scale. You know, it's like, I'm looking at it. It's like, okay, if I buy this business, can I go buy 10 more of them, or can I take them to 10 times their size? And so my evaluation is typically like, yes, do they have success? But can they scale And I think that there is a little bit of a different there, but difference. And that's why I wanted to ask you, like, what do you do when you jump in? Because what I do is similar in that I just want to shore up the things that are working, and I want to make sure that what I bought is real. You know, it's like. And oftentimes, you know, you're 95% sure, but it's like, until you actually watch them with a customer or watch them do the thing that they're selling, you know, it's like you still have that 5% of, like, did I see everything? You know, and so I think that for me, it's like, when I get in the business, it's more of, like, now is it real? And then it's really about, you know, like, I process map a lot. So I'll look at, like, how they do everything, and I'll say, like, there's seven or eight core processes that every business has, so I'll process map that, because then it gives me that foundation to know, like, can I replicate it? Right. Can I actually duplicate what they did and can I grow it? And. But I think that we're still in the same vein. I just think that oftentimes for you, you know, I. Here's. Here's the benefit of what you do. Right? Right. Is that you can get them short up, get them 10, 15, 20% better, and then you can play a little bit more of a distant game with them. You can let the operator operate. You can, you know, have your quarterly meetings or your monthly meetings with them, and you kind of just can guide and, you know, push. For me, it typically is I've got to roll my sleeves up and I've got to get involved, or I have to bring my team in and my team has to. To do this. And so, you know, I think that the way that you do it is way more practical for the average person buying a business. And it's. It's why I love what you teach with amp Success and all that you do, because it's like, I think it's an easier pathway in, you know, like, I could teach somebody how to operate a business, but to buy a business, operate it and at scale is. It's rare error, you know, and that's not. That's not a prideful statement. It's just there's a reason why the SBA says that, you know, less than 1% of businesses are actually going to get to $5 million. Right. It's like There's a ceiling there, you know, and typically the ceiling is the operator. So really good, good stuff. Once you bought the business, you make this first move right. Now, how do you build a relationship? How do you make sure that that relationship with the operator stays intact? Because one of the biggest issues we face is you buy the business and oftentimes you have to course correct some of the things that the operator was doing so that you get your extra 10, 20, 30% out of it. How do you course correct the operator? Make sure you're getting the changes you need without, you know, them feeling like you're coming in and changing everything or you're stating that I've been doing it wrong for 20 years or whatever is how, how do you maintain that balance?
- [35:07]
B
Yeah. And you're referring to the, the seller as the operator. Yeah. So again, I take a very humble approach from the standpoint. I want to buy their recipe. Again, it's my term and I need to learn their recipe. So if I were to step into a kitchen with a master chef, I'm not going to go in and start telling them how they should cook. Right. So I really take, and most of my, I should clarify this. So most of the businesses that I have an ownership in, I've partnered with somebody to be the day to day boots on the ground. Right. Because I've got other things I'm doing. So it's myself and the person who I partnered with, who we are there to learn the recipe. And it's, I've seen it, fortunately not in, in a partnership of mine, but I've seen it where people come in and they think they're the master chef. That doesn't work out so well when you, when you enter somebody's house or kitchen. In my example analogy here, it's important to, I believe, be humble and learn what we don't know.
- [36:07]
A
Sure.
- [36:08]
B
Because we're buying what they created, right?
- [36:10]
A
Yeah.
- [36:11]
B
I don't buy it to fix it. I buy it to emulate it. Again, for me, it's base hits and consistent reoccurring revenue that I'm after. So that's really how I do it. I'm very inquisitive and honoring and want to understand what they've done that worked. And actually I'm going through, I'm helping my oldest son and my wife buy a business that they're excited about right now.
- [36:33]
A
The two of them are buying it together.
- [36:35]
B
They are.
- [36:35]
A
Can you tell us a little about that?
- [36:37]
B
Sure, I can. And it's a business, it's Got a very unique retail aspect with a wholesale component and also an online opportunity. And I'm going to say it's distressed from an appearance standpoint. There are some very simple things that we can improve upon day one, which will bring us great benefit. But it's at using a multiple term, it's at a two times multiple.
- [37:04]
A
Sure.
- [37:05]
B
And more than half of the price is inventory. And so again, I don't feel like we can go wrong with this and I think we can turn it into something that's beneficial. But I guess back to the point, as I was coaching my son, which is an honor for me to help him do and work with my wife, I said when we first come in, we want to learn and we learn way more by listening than talking. So in that scenario, we prepared and we asked some very specific questions that allowed the seller to share with us what he thinks. And from that we learned way more than we even intended we would about how to acquire this in a way that's beneficial. And what came from that is that the seller is very excited about it. He's excited to mentor my son. He's excited for what we might be able to do that he acknowledges he doesn't have the energy to do. But we're part of his dreams. And back to the relationship aspect. We, we have a very strong relationship with this business owner who's ready to move into the sunset, and my 23 year old son and wife who are excited to dig in. And so anyway, it's really.
- [38:20]
A
That is awesome.
- [38:21]
B
Yeah, it's, it's great. And it's great for me to be able to guide them.
- [38:24]
A
Yeah. Yeah. One piece of advice I'd like to give any of the listeners that are listening right now is he just gave you a master class in negotiation that you probably did not even hear in that the way that I believe you should negotiate the purchase of a business is, is opposite of what everyone will teach you. What typically, especially if you watch private equity firms and these people that do it for a living, what they do is they try to find this place where they get, they kind of get the seller into a corner, right. And they hammer them on their finances or their bad choices or the last, the lack of opportunity or the bad operational decisions they've made. And they kind of like put them in the corner almost like they're going to put them in checkmate, right? Like it's like, look, you have no other choice but to sell me this business. And so I'm going to negotiate, I'm going To get it for as cheap as possible, right? And what happens is, is when you put a seller, you put whoever you're negotiating with. And this is just General Negotiation Skills 101. Whenever you put somebody in a corner, you know what they typically do? They typically fight back, right? Like now it's an adversarial role versus a, a complimentary role. And it's like, and by you going in and asking a bunch of questions, what you did was like, I always say, like it's not wrong to negotiate from a position of strength. So like I'm gonna point out some financial wrongdoings. I'm gonna point out the things that are real. You know, like here's some operational things that maybe weren't the best choice. And you know, this corner over here, you cut. I, probably not a great corner to cut. Like I'm going to be honest about it, but I'm also never going to put them into a corner where it's like, look, your only choice for success is to sell me this at a, at a fraction of the price. Because they're just going to fight and it's not going to be a good thing. What I always say is like, show them and go from a position of strength, but always let them have their way out, right? Like let them have their success and you got to figure out what their success is. What you just said right there is such a clear indicator of what most people want in their success. They want this brand they've built to live on in legacy. They want this idea that they had to not die right. They want somebody that has more energy than them to come take it to a place. What they really want is validation. What I, what I find so much in the business seller is they want validation that they, that they weren't necessarily doing something wrong. They just didn't have maybe a couple of the pieces or they didn't have the energy or they didn't have the, the time or whatever it is. So it's like, you know, to, to bring your 23 year old son in and him to feel like, man, I get to mentor somebody. And it's like think about the win for this business owner to the point where they're almost willing to always sell at a much discounted rate if you give them the true success they want, which is oftentimes not money, oftentimes it's, I want my idea to live on. I want this legacy. I want my, my sign that I, you know, built over the last 20 years to still be here as my Grandkids drive by it. You know, it's like. And I think that you just gave them a masterclass negotiation without saying it, but it's like, I just wanted to make sure we called attention to that because I think sometimes we feel like in negotiation, it's got to be a win lose, you know, and it doesn't have to be. Give them their out, given their opportunity, give them their. Given their moment of glory, and then the negotiation goes so much better.
- [41:33]
B
Well, and there's a couple points in there I want to touch on, and I wouldn't do a deal where I didn't care about the other person.
- [41:40]
A
Sure.
- [41:41]
B
And I want this gentleman, his wife, who are running this business, to feel good about it and to continue on their legacy. And so part of what we're coming to this with, my son and wife and I, we're not pointing out all the things we think they need to change and that we intend to change. We are in their kitchen to learn what they've done and learn from them. And the other piece that I think is so important is sometimes I work with people and they're so focused on negotiating to beat it to death. And I'm dealing with a private equity group right now where my recommendation to my client is, it's time for us to pack up and walk away, because they are doing exactly what you just alluded to. I think a prospective buyer can lose an enormous amount of money by hammering the seller to a place they don't feel good about it, as opposed to having it be a win win, and then them training the new owner. Let's just give you an example. I mean, let's say somebody beats somebody over the head, and they get. They save $20,000 or 50, whatever the number is, $200,000. But then that previous owner is a little less enthusiastic about pointing out the curves in the road and some of that stuff during the transition. Well, what could that cost?
- [42:54]
A
Sure.
- [42:54]
B
I mean, literally, it could cost. I mean, it could devastate the business, frankly.
- [42:58]
A
Absolutely. Absolutely.
- [42:59]
B
I want relationships when I'm buying a business where I can call the previous owner seven months later and say, listen, we're considering a serious change here. What would you do? I mean, you ran this thing for 20 years.
- [43:11]
A
Yeah.
- [43:11]
B
What would you do if you were in our situation?
- [43:13]
A
Sure.
- [43:13]
B
And we did that during COVID If you were faced with this today, what would you do? Here's what I would do. I would be looking at my overhead, and I would be looking at my occupancy expense, and I Would. They're a wealth of knowledge. They develop the recipe in most cases. So, yeah, yeah. It's not all about getting every last penny in the negotiation. It's about keeping the resources intact.
- [43:34]
A
For sure. Yeah. 100. As people are sitting here thinking about, should I buy a business? What are just some. I would say some cautions that you might give them. You've done 800. That is a lot of transactions. You know, it's like they say, I'm the king of exits. Maybe you're the king of acquisitions. I don't know. But it's like the. What are just some of those core cautions that you give your clients as you're helping them navigate?
- [43:59]
B
Yeah, well, there's several. One is staying within the core competency. So what I find is that a lot of people work in a W2 job before they buy a business. They get tired of what they're doing, and so they try to go out and buy a business doing something totally different.
- [44:14]
A
Sure.
- [44:15]
B
And the reality is the safest way is to find the aspects of what they know that they enjoy and then convert that into the business they're going to buy. And so. So that would be, number one, and then number two, I think, having a great understanding whether they can obtain it on their own or whether they seek assistance to make sure that financially it's going to work. And to drive that point home, this couple that I was working with a few days ago, when I calculated this business that they were looking at which was far larger than what they needed to fulfill their desires, I took their debt service, what the payment would be, and I went back two years and said, if you owned this business two years ago, you would have lost $190,000 without a wage. So you're giving up a $250,000 a year wage to buy a business, and you would have been in the red just 18 months ago. It.
- [45:15]
A
That's scary.
- [45:15]
B
Why do that? So I think the principle for a beginning buyer is core competency. Make sure you have the skill set to be able to hop into that seat with some comfort. And number two, understand financially the key things that need to happen in order for your success to be as guaranteed as possible.
- [45:37]
A
Yeah, Very cool. I've got three last questions. We're both going to answer it. Okay.
- [45:42]
B
Sounds great.
- [45:43]
A
Because I think there's a different framework of how we operate. I think we both have kind of the same ethos, but I think it's comes from a different point. So I'm going to give you the question you Answer. Then I'll answer. Okay. So, worst deal you've ever walked away from and why?
- [45:56]
B
Oh, worst deal I ever walked away from and by why. It was actually a good deal, but it was the person and I got to the place with the previous owner that I did not trust them. I wasn't getting that same feeling that we just talked about with my wife and son. And it was hard to. I had some partners in that deal, and some of them had already liquidated investments for us to move forward. And I figured out how to make that right for them. But at the end of the day, I just said, listen, I think we have a whole lot more to lose than what we've already committed to this deal by continuing with this person, because I just don't trust them.
- [46:33]
A
Sure.
- [46:34]
B
So that is by far one of the deals that I walked away from that I'm grateful to this day that I did. It was the right thing to do.
- [46:42]
A
Yeah. My story is the exact same, is that I was on the, you know, the. The one yard line, ready to close the deal, and I was walking into this person's office as sizable business, about seven to $10 million business. Seemed like a very sharp business operator. Everything checked out and. And I walked in around his conference table. We were about to start having conversation. His wife walks in, and he just starts, like, berating her, like, say, saying some things that I. It took me, like. It was just like, jarring. Like, I. I had not heard a human speak to someone that way. And it was just like, it opened up this, like, whoa, what's going on here? And it was just enough of a pause that I was like, wait a minute, something's off. Like, I had not seen this at all, this behavior. And so I asked if we could kind of. I was like, you know, we're still trying to get some. I just basically, like, pushed it off. And then I talked to one of his executives, and I said, hey, just quick question. I said, I noticed something in him. And I. And he was going to be the operator of this business. He was gonna be my business partner. I was coming in as a. I was gonna buy 48 business, meaning he still had operational control. He was basically taking my capital and he was going to use my money. And his executive basically opened up to me and said, yeah, that's a huge issue. It's why we lose people every two to three years. They're afraid of him. And he said. And then he told me a story about a previous partner he had that never came out in over Six months worth of due diligence about how he took advantage of this guy and basically like, and almost prided himself on being superior. And, and it was just like this moment of like. But if I hadn't seen him interact with his wife, I never would have saw it because I didn't see it anywhere else. And we just politely declined. And you know, you, and you know as well as I do, you're walking away from real money here. I mean, I probably had 40, $50,000 worth of, you know, m and a work and all this stuff, you know, Like, I, I literally was walking away from a down payment, you know, and it was, it was a lot. But he did get a partner and a year or two later, they had a massive issue and ended up suing each other. And I was like, oh, thank God. Like, I, you know, it's like, I think what you just said is so important. It's the people. Like, you have to align with the people. Okay, next question. If you could only look at three things on a business before buying it, and that's the only three things you could see, what would it be?
- [49:13]
B
Oh, man, that's a, that's a tough one. I would look at the financials, number one. Number two, I would look at the Google reviews. As much as I have a bias about Google reviews, that might give me some insight into the culture. And number three, I would look at the integrity of the, of the person I'm buying it from. Yeah, yeah, those would be the three.
- [49:32]
A
It's good. I would go finances. I would want to talk to a customer that has had an experience. Right. More Google review type. But I would want to talk to the customer and I would, I would want to talk to the longest. I would like, I would want to interview the longest standing employee. Right. It doesn't matter if they're the janitor or at the top. I want to, I want to talk to the person who's been through it all. You know, those would be my three. All right, last question. What is your definition of a business empire? How would you define a business empire? Like, or how would you define it in your own life, as you're building your empire? How would you define it?
- [50:08]
B
Yeah, that's a great question. And I'm glad you qualified it within my life. Right. Because we all have different objectives, right? So in my life, it became important for me to create a more passive income than the one I could create with my time at my office. Right. And so, so at this point, my empire of the businesses I have an interest in exceeds what I earn from my day to day activity as a broker. To me that feels like an empire because it gives me the opportunity that I could change my course with my day to day operation. I could have a family need that took me away from my day to day operation and I could still survive and thrive financially. So I've got a level of diversification now that I really appreciate and feels like an empire in my world.
- [51:00]
A
Yeah, that's great. That's great. And I think that so many people need to get there right to live. When we talk about businesses giving you freedom if you don't have passive Inc. True passive income that if you don't show up, you still earn, you know, do you truly have freedom or have you just bought yourself a job? Right. So super good. My answer to business empire has changed over the years. It used to be I want to be the biggest, the best, the. I want to conquer the world. And whatever business I was in, it's. It's really what it was, motivating scale. And I got to the end of that kind of journey after those exits and really found myself in despair because I tied my identity so much to those businesses and realized like that that wasn't what I was striving for and then moved more into the impact other side which is all my business have some sort of give back component. And so my business, the way that I define my empire today is not a set of businesses. It's not even necessarily the people. Even though the people are the most important thing that we touch in our, in our business and in our world. It's the, it's the impact that it's making by its sheer existence on people that couldn't impact themselves. Like that's how I define it today. But that's been the evolution, right? Like that. That wasn't that way five years ago. It's just, it's what it is today. But anyways, I think, I think there's a natural progression, right? It's like, I think that just like Maslow's hierarchy of needs, it's like once you take care of one need, another need shows up. It's like you know, you, it's. It's once I can care for my food, water, shelter, then you get all the way up to like love and acceptance and then self actualization. It's like you get all those things. I think that, I think business is the same way. I think it's a journey. It's like, I think, you know, oftentimes it's like, you want to take care of your own, just family and your basic needs. And it's like, then you get to a place where it's like, well, now I want freedom to do what I love. And it's like. And then once you get to freedom to do what you love, it's like, well, then now what gives you satisfaction, joy and fulfillment, you know? So I love that.
- [53:01]
B
It's really beautiful. I appreciate the way you shared that. Because when we're in survival, we don't have much to give others. Right. And buying businesses, in my opinion, allows us to financially ideally reach a place where we can then figure out how to give back to all those in need and also kind of pay it forward. I mean, I had lots of people who helped me to get to where I am, and I'm grateful for every one of them. And it's. It feels like a duty to me to now figure out how to be able to help others do the same thing.
- [53:32]
A
Sure. And I know that you do that on a daily basis. If you haven't followed Matt, make sure you follow him. He has a couple of businesses, but the one that I want to point out to you is one called Amped Success. And Matt has really transitioned into not just being a business broker, but helping others find success in this area. If you're trying to find a business to buy, you're thinking about this kind of, how do I get into Main street operations and businesses? How do I take a piece of this American dream? That's what Matt's been giving his life to. And so that's why I wanted to have him on the podcast today. It was really because I knew that he comes from a place of education, teaching, and paying it back for all that he's received. And so appreciate you coming on the show today.
- [54:13]
B
Absolutely. Thank you again. It's been an honor.
- [54:15]
A
Yeah, Very cool. How can they. We'll put it in the show notes, but how can they reach you and how can they kind of follow the journey?
- [54:20]
B
Yeah. Amped success.com is certainly one way to find us and all the social media. Of course. We have a podcast as well, and mattyler.com will direct you to me as well.
- [54:33]
A
Okay, very good. Thanks so much. Appreciate it.
- [54:35]
B
Thank you.
- [54:36]
A
Thanks so much for being a part of the podcast and for listening today. Love to connect with you further. And you can connect with me on social media at Eddie Wilson official on any of the social media channels.