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- [00:00]
Rocco Cosa
Build the company from the start without you. If you can do that, that's a scalable company that now has an enterprise values that a lot greater than what the value would be if you're the one in the day to day running.
- [00:11]
Rudy Moore
A lot of entrepreneurs, they get into the business, then they start making money. A lot of them don't even ever think about selling the business. When, how do you think about it? When's the right time to think about it?
- [00:22]
Rocco Cosa
The right time to think about it is probably five to seven years before you're even considering it because most people think about it like when they want to sell and it's too late. You've got to really, I always say if you, if you're going to set up your business, set it up to sell. You may never exit. But do it from the beginning. If you want to grow an organization and have a valuable workforce that values the business and you as a leader, you have to really understand.
- [00:44]
Rudy Moore
My name's Rudy Moore, host of Living the Red Life podcast and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life. Ditch the blue pill. Take the red pill. Join me in wonderland and change your life life. Hello and welcome back to another episode of Living the Red Life. Joining me today is Rocco. He's a visionary and entrepreneur and innovator like most of us building something amazing. So I'm excited to dive into his lessons and his journey. So welcome to the show.
- [01:11]
Rocco Cosa
Thanks for having me.
- [01:12]
Rudy Moore
So tell everyone if they don't know who you are, let's start with, you know, who are you and what do you do and how did you get here?
- [01:19]
Rocco Cosa
That's a great question. So obviously I've been practicing law now for over two decades, so business lawyer by trade. But what my passion is actually helping companies grow like systematize and then exit. So I go into small to large organizations, help them look at all their problems, fill the gaps, then get them ready for exit. Yeah, sell it Multiples.
- [01:43]
Rudy Moore
Well, and it's interesting because, you know, a lot of, you know, I've worked with a lot of attorneys and lawyers and they, they're very, you know, stay in the paperwork on the legal clauses. Right. And I mean what you're doing so great because not only do you understand business much better to help advise on the legal side, but you know, actually I've done a lot around educating entrepreneurs through my programs over the decade on how to build, to sell. And I was fortunate to learn from some friends that had sold $300 million plus companies or done 100 plus exits. And they taught me. And you just, you know, you don't learn this stuff, but most people learn it when they sell their first business and lose tons of money. So when I learned it, I was like, I need to share this stuff. So, well, let's start there. What are the. What. How did you get into the. Like, helping entrepreneurs and business owners understand how to structure to sell.
- [02:35]
Rocco Cosa
So I've been an entrepreneur basically my whole life, and being a lawyer was kind of a means to an end for me. Like, I knew that I wanted to be able to start my own business, but I didn't. I didn't want to be a lawyer working in a big firm. So I started a law firm. I left corporate America and I had my own businesses that I grew and sold myself. And then I just started working with. I started with a lot of athletes and entertainers where they were kind of.
- [02:55]
Rudy Moore
They need it a lot. Right. All the legal side.
- [02:58]
Rocco Cosa
Well, the interesting part is, yeah, they. They do. And they. They wanted a lot of the advice for free.
- [03:02]
Rudy Moore
Yeah.
- [03:03]
Rocco Cosa
And to me, like, I wasn't starstruck. I'm like, look, you need me more than I need you. So I started working with them, and then I just saw this need in the marketplace, lawyers over complicated things. So I always said, how do I go in and simplify things? And I. You know, our tagline for our law firm is redefining legal services. It's really a consultative basis. So I go in with these companies and look at. Most of the gaps tend to be in leadership in operations. They have the. They have the right people, but in the wrong seats. And they have broken processes. If you fix the people problem, you fix the process problem. Profit takes care of itself.
- [03:34]
Rudy Moore
Yeah.
- [03:35]
Rocco Cosa
So I've just always had a knack for that. And that's what I do. I go into these companies and really help them tear things apart, rebuild it with the pieces they have, and then make the company, you know, three to five times more valuable than it is.
- [03:46]
Rudy Moore
Yeah. It's interesting. And, you know, as I built many companies, you know, I've exited out of a couple. But now when I build a company from the ground up, it's like I build it without me involved. Whereas when I started, the opposite is that you build everything based on you, and then you have to peel away 100 plasters to try and get out of it 100%.
- [04:04]
Rocco Cosa
Right.
- [04:04]
Rudy Moore
And I think that's like a great starting point. I try and teach people, I'm like, even if you don't plan to sell ever, just doing that makes a healthier business because you're not the bottleneck and you're empowering the team and bringing in the right people. You have to have the right systems. If you're not involved. When you're involved, you can kind of like hold a thousand pieces together as an entrepreneur. But it's not a healthy way to run the company.
- [04:27]
Rocco Cosa
No, it's not. And that's where entrepreneurs get burnout.
- [04:29]
Rudy Moore
Yes.
- [04:29]
Rocco Cosa
Like that's truly. I faced that myself, my law firm. I had to let go of a lot of things and trust my people to run parts of the organization. And you know, your point is, is absolutely correct. Where build the company from the start without you. If you can do that, that's a scalable company that now has an enterprise value a lot greater than what the value would be if you're the one in the day to day running it. And it's, it's hard for entrepreneurs to do because it's our baby. Yeah.
- [04:55]
Rudy Moore
And I learned this because I actually went to sell my first business and I had to like reverse engineer out of it for a year before the exit, basically. And then what was funny is I never ended up exiting in the end because it took so long, but it was a valuable thing because. And I kept running the business and I actually kept it for three years and I wasn't involved. And it just ran itself and you know, it made like four or five hundred grand a year profit without me.
- [05:19]
Rocco Cosa
Yeah.
- [05:19]
Rudy Moore
For three years. It was pretty good still. Absolutely. But it was such a valuable. Like when I first I saw I was going to sell it to a big firm, so they sent me this 200 checklists, like checklist, basically. Right. Due diligence checklist. And it was like super, like crazy. But it was actually great. But I was like mid-20s. I was pretty young. Yeah, 27 maybe. But it was so good because it was like, wow, this is what they look for. Like a real firm that's buying you is looking for to sell. It was a really cool experience.
- [05:48]
Rocco Cosa
Yeah, I have one of those sitting in my inbox. Right.
- [05:50]
Rudy Moore
So. So just for people, obviously we can't go through all 200, but there's five or ten really big ones. Right. So what are some of the big common denominators that people are looking for when buying a company or something that helps you get a better multiple?
- [06:04]
Rocco Cosa
1. Are your numbers accurate? Right. A lot of.
- [06:07]
Rudy Moore
Do you even have numbers? Well, that's probably on your phone that's listening.
- [06:11]
Rocco Cosa
Yes. Do you have numbers? Are those numbers accurate? Are you profitable? And you got to think about profit from perspective of your bottom line. Ebitda. But then also adding back in what your owners pay. Owners pay owners. The, the owner's draws are taking especially
- [06:26]
Rudy Moore
for entrepreneurs too because they don't like they see it as the same thing.
- [06:29]
Rocco Cosa
Yes. There's two different pieces of that. And then do you have the systems in place? Because if someone's buying a business, they want it to be plug and play. Yeah.
- [06:37]
Rudy Moore
Yeah.
- [06:37]
Rocco Cosa
They don't want to have to come in and rebuilding. They either want to take it as it is, run it, make it better or plug it in. Like a lot of PE firms are buying these small companies, plugging them in and rolling them up. So do you have really good systems like sop? So many businesses just don't have a standard operating procedure. Like I always say, like how do you know if someone got hit by a bus tomorrow who would do their job and how will they know what to do? Do you have a written documentation? 9 out of 10 companies don't have that. That if I could give one piece of advice it's making sure you have documentation and checklists for every position you have in the company.
- [07:10]
Rudy Moore
And I'd like to piggyback on that because so what we do is we every key staff member, pretty much most staff members have a like a roles and responsibility. Right. And everyone makes that in the part of the legal contract when they sign on and then it's forgotten about. But as is the opposite. So we actually have it as a one page table. It's super clean and we review it every month on their check ins but then linked to like say their 20 things they do. Right. And it's more specific than like broad stuff like manage blog. It's like more detail. But then we actually link the SOP next to it and it's such a easy way like if that staff member quits it's like oh well new person, here you go. Here's the 20 things they did with 20 loom videos and sops next to us. And then we just copy that document and put a fourth column of a check mark once you are trained and ready to take over that thing. And it makes you know, it's never nice when a staff member does leave but it makes it pretty easy to bring someone in after.
- [08:06]
Rocco Cosa
Yeah. I always say anticipate that people will leave and then how can you replace them? Because the, the cost to replace an employee, when you don't have those in place is exponentially higher than it is to retain somebody. So you have to make sure you have those documents in place. That's the biggest mistake people make. Truly. If. If you're trying to sell your company, get the. What you have is great because it's. It's a repeatable, it's replicable. You can take a person, swap them in and out, and it's very.
- [08:30]
Rudy Moore
Well, it's not even about to emphasize that the person's irrelevant. It's all about the roles. Every role, it says the person's name at the top.
- [08:38]
Rocco Cosa
Yeah. And the other thing, too, is just people got to understand the people you have in your organization, what motivates them. That's where I think a lot of people go wrong. As entrepreneurs, we think everybody's motivated the same way.
- [08:48]
Rudy Moore
They are doing that to you. And I built an office to 60 people in Tampa, and I started to realize that they. Half of the, like the small group. Yes. You know, executives. And my initial people, they did care about the company.
- [08:59]
Rocco Cosa
Yeah.
- [09:00]
Rudy Moore
But then when you, like, start growing to like 50, 60, it's like 90% of them just want to come in, work, leave, forget about it for the week, and come back.
- [09:08]
Rocco Cosa
That's exactly right. Yeah. Don't get caught up. I always say don't get caught up in. It's okay if people don't care as much as. Yeah, you're not supposed to. Your name's on the wall for a reason. It's truly. It's the biggest mistake people make.
- [09:18]
Rudy Moore
Yeah. And I do love that, you know, like, true leadership is. It's kind of teach it like the five love languages. Right. So much like that that, like, you know, you're motivated by, you know, as the entrepreneur, obviously. Mostly most of the time. Money is a factor. Freedoms are factor. Changing the world with your products and service, helping people. Right. Generally, they're all in common for most of us, but for a lot of staff members, it's like when you actually. We actually on our quarterly retreats, we do one exercise or session which is like all about them. What are your personal life goals? What do you want to do? And is. And we have them present and it's so fascinating. It's like this guy gets up that's worked for me for three years, and it's like one day I want to retire and sailor on a boat, and I didn't even know he liked boats for three years. You know, there's these things you never know. And then it's like, and then you, you know, for his next present, we bought in a glass bottle, a boat in a glass bottle and stuff, you know, so. But there's so many things that motivate them that to you as an entrepreneur, you're like, that's, yeah.
- [10:18]
Rocco Cosa
You know, it's, it's hard because you really have, you really have to get into the shoes of your people.
- [10:22]
Rudy Moore
Yeah.
- [10:22]
Rocco Cosa
And look at it. Because if you want to grow an organization and have a valuable workforce that values the business and you as a leader, you have to really understand who those people are. And it's, and it's hard to do because we're involved in the day to day, we're involved in everything. And sometimes you got to take this. I love what you do by asking people their personal goals. Like not many people do that. And that's, that says a lot to the companies you run, obviously. Yeah.
- [10:42]
Rudy Moore
Great. So a couple of questions just to follow up from this. A lot of entrepreneurs, they get into the business, then they start making money. A lot of them don't even ever think about selling the business. When, how do you think about it? When's the right time to think about it?
- [10:57]
Rocco Cosa
The right time to think about is probably five to seven years before you're even considering it. Because most people think about it like when they want to sell it and it's too late. Yeah, you've got it. You've got to really. I always say if you, if you're going to set up your business, set it up to sell. You may never exit, but do it from the beginning. Set it up right those first two to three years, do the right things, put the processes and procedures in place, make sure you have all those sops because life comes at you and you never know what's going to happen. You may have to sell someday, you may not anticipate it, but if you're set up from the beginning the right way, you'll get a way higher of a multiple. Most people wait till, okay, I'm at the end of the rope, I want to sell. A lot of entrepreneurs I work with are older and they assume their kids are going to take over the business. And that is the worst assumption you can make. So, I mean, that's why they have this thing called the silver tsunami. Like all these people are transitioning out of businesses. And if you're a smart entrepreneur now, you can buy these businesses dirt cheap because no one's thinking about the exit or they're thinking their family's going to take it over and not happen. So do it from the beginning, truly.
- [11:54]
Rudy Moore
Yeah. I mean, that's a whole nother conversation for another day. But we, we bought in four or five into four or five businesses with virtually no money. We just, we bought part ownership and we, we kind of plugged in our systems to them. But that's a whole nother thing is like growing through mergers and acquisitions.
- [12:12]
Rocco Cosa
Yes.
- [12:12]
Rudy Moore
And that's, you know, it's a lot about selling the business. But let's just talk about that for 30, 60 seconds. Because I used to also think, until, you know, years ago, I learned from people much smarter than me and more experienced. It's like, I want to own a $200 million company, I got to grow 200 million in revenue. Where it's actually like, no, you can grow 100 million revenue and acquire two businesses, for example.
- [12:35]
Rocco Cosa
Yeah, you can pick up a lot of businesses through an acquisition or merger. Either you pay them the price, you pay them their price, or you do it on your terms or vice versa. So a lot of times these companies, like I said, the ones that are transitioning out that think their kids are going to take over, you can get those for no money down. Just pay them an earn out.
- [12:52]
Rudy Moore
Yeah, yeah.
- [12:52]
Rocco Cosa
Just say, hey, I'm going to buy it. Come and take your business over. I'm going to make you profitable. If your numbers are legit, we're going to pay you X over so many years. And if you stay on to help us increase business, you'll get more multiple of it. Well, you don't have to pay any money out of pocket. There's a ton of weed structured deals like that.
- [13:07]
Rudy Moore
Oh, there's so many. Yeah. And I would say too, as a lesson, like, a lot of people want to sell, you would never know unless you ask. So, like even an example of this is there's a restaurant on the beach here that I like that I want to buy. And I told my assistant, I said, ring, see if they want to sell. She's like, why they don't? They've not listed it for sale. It looks busy. Why would they want to sell? Like, trust me, most people want to sell. They get an opportunity.
- [13:28]
Rocco Cosa
You know, got to ask the question. Most people are afraid to ask the
- [13:31]
Rudy Moore
question, so sometimes it can also, the point of telling that story a bit is you can be strategic. Like you have this agency but. And you know this podcast agency that's like perfect for you. It has all your perfect clients and you know the guy just ring him up or text him because he might be wanting you again. It's like the. The boat story with my staff member. You. They might be having a kid or want to move to a different city or country, and you just never know unless you ask. So that's another big thing with buying is always make the asks.
- [13:59]
Rocco Cosa
Yeah, absolutely. So it's 100%. I mean, that's. And that's. That's where most deals get done. Very few deals get listed for sale. Yeah, yeah, yeah. It's all the backdoor stuff that's happening. It's just knowing the right people. Like, people come to me all the time because I have a deal flow that's coming to me constantly. You know, a thousand clients in these spaces, so everyone's for sale for the right price. Think about, like, I would sell my business for the rights, right? If someone offers me $100 million for my law firm, sure, I'd probably take it, but so just. You're right. Ask the question. Just don't be afraid to commute.
- [14:26]
Rudy Moore
Well, the funny thing about business, I always say, too, if a business is listed for sale, there's normally a problem, right? Like, yeah, sometimes the owner's just bored. Sure. But most of the time, if it's printing crazy money and easy, they ain't selling. Right. Or so if they know something about the economy or a license or a new law that's about to come in, or a competitor. So you got to be careful with
- [14:49]
Rocco Cosa
the businesses you want to. That. That is the most accurate statement. That is true. If it's listed for sale, there's probably a reason why and ask. And you got to be willing to ask those hard questions, the uncomfortable questions. Definitely. Yeah.
- [15:01]
Rudy Moore
Good. Well, we could talk for hours about this. I do love this stuff. I used to do a lot more on it, but just, you know, if people want to learn more, this is obviously a very complex and important subject, and it's so great that you understand this so well as from a legal standpoint, but also the entrepreneur, because it's hard to find that balance. Right. And I'm sure that's why you do well, because most attorneys don't have their entrepreneurial side. So where do people find you if they want to learn more, hire you, maybe consult with.
- [15:29]
Rocco Cosa
Yeah, you just go to my law. Or my law Firm's website is cozalaw.com c o z a l a w.com or I'm very active on Instagram, which is the Rocco Cosa. All one word. I post a lot of stuff about business acquisition, buying, selling, motivational entrepreneurship, but I'm always wanting just to talk to someone. Just pick my brain. I'm always willing to help. That's. That's kind of how I'm built. You know, just give where I can. So.
- [15:51]
Rudy Moore
And also, I would say if you're ever thinking of selling, don't be afraid to hire someone like yourself, because what people like, oh, they're going to take a percent or whatever. I'm like, if they add a multiple, you're going to sell for 5 mil, right. Or whatever, or 5x and you get 6x. Yeah. That could add millions of dollars. So don't be afraid to give someone a couple of hundred grand to help you do that, you know? Absolutely. So I think that that's so important too. People get scared about that. But normally you can add a multiple. It's like millions off of it and. Right. So well worth the money. So, guys, that's a wrap. Go check him out and take this stuff seriously. I think this is so valuable. And sadly, no entrepreneurs get taught this until it's too late. Most of the time it's kind of like taxes. Till the IRS sends a letter. Then they start to learn taxes. But this is such great stuff and it's fun stuff when you learn how you can grow quicker through all of this as well. But that's a wrap. Keep living the red life. Hope you enjoyed today's episode and I'll see you guys soon. Take care.