Selling Your Business? Avoid These Costly Exit Mistakes and Pitfalls with Kasim Aslam

Summary

Podcast Summary: Special Ops – Episode: "Selling Your Business? Avoid These Costly Exit Mistakes and Pitfalls with Kasim Aslam"

Introduction In this episode of Special Ops, hosts Emma Rainville and Travis Gomez delve into the intricacies of exiting a business with their esteemed guest, Kasim Aslam. Recorded in Mexico at the Driven Mastermind event—a mastermind group cherished by Emma and Travis—the conversation centers on the common mistakes entrepreneurs make when selling their businesses and how to navigate these challenges effectively.

Key Discussion Points

1. Asset Purchase Agreements (APAs) and Buyer Representations

   Kasim emphasizes the critical importance of Asset Purchase Agreements (APAs) in the business exit process. He points out that APAs are typically drafted by the buying party and often lack buyer representations, which can leave sellers vulnerable.

   "Asset purchase agreements, first of all, are written by the purchasing party, second of all, will never feature buyer representations ever." [01:13]

   Kasim advises entrepreneurs to ensure that all essential terms and conditions are explicitly stated in the APA. Without these provisions, even the most basic assurances—from employee retention to continued use of intellectual property—may not be honored.

2. Examples of Missing Representations

   To illustrate the pitfalls of inadequate APAs, Kasim provides examples:

   • Employee Retention:

     "We've got 100 employees. You're not gonna take a hatchet to my team, are you?" [01:56]

   • Continued Operations:

     "Will you continue to let me do my podcasts? Can I talk about the sale of my company?" [02:10]

   These scenarios highlight how, without proper documentation, sellers may face unexpected changes post-sale that can disrupt both personal and business operations.

3. The Transient Nature of Buyers in Private Equity

   Kasim sheds light on the unpredictable nature of private equity buyers, emphasizing that entrepreneurs are negotiating with the agreement itself, not with the individual buyers who may change hands:

   "They're all transferable. So you're never negotiating with the person, you're negotiating with the agreement." [03:00]

   This means that once a business is sold, it becomes a commodity subject to further trading, often stripping the original founder of control and continuity.

4. Importance of a Specialized M&A Attorney

   Navigating the complexities of an exit requires expertise. Kasim advises hiring a seasoned M&A attorney who has extensive experience in mergers and acquisitions, preferably someone who has dealt with contentious deals:

   "You need somebody who's litigated at least once on a deal gone bad, because then they know what's poor about this agreement." [05:12]

   He underscores that general business attorneys may lack the nuanced understanding necessary for successful negotiations.

5. The Power of Documentation and Attention to Detail

   Kasim shares his personal approach to ensuring favorable terms, including meticulous scrutiny of every detail in the APA:

   "He gets obsessive over semantics. [About the APA] Someone lost $5 million on the Oxford comma." [06:19]

   This anecdote illustrates how seemingly minor details can have significant financial implications, reinforcing the need for precision in legal documents.

6. Negotiation Strategy: Disclose All Issues Upfront

   One of Kasim's standout strategies is to preemptively disclose all potential issues ("skunks") of the business during negotiations. This approach prevents buyers from leveraging these issues to reduce the offer price later on:

   "When you're negotiating the price of your business, you want to take every skunk that's ever existed in the history of humanity and bring it up on day one." [11:38]

   By overwhelming the negotiation process with full transparency, sellers can maintain control over the valuation and prevent incremental price reductions.

7. Understanding the Private Equity Mindset

   Kasim contrasts the relationship-driven nature of entrepreneurs with the transactional, game-oriented approach of private equity professionals:

   "Bankers, Wall Street, they're computers that are built to make money and they don't care about you at all." [15:45]

   He warns that private equity often prioritizes profitability and visibility over intangible assets like brand reputation and customer relationships, which can devalue businesses that rely on these elements.

8. Personal Experience and Lessons Learned

   Reflecting on his own exit, Kasim discusses the unintended consequences of selling to a private equity firm that undervalued his business's brand reliance:

   "When I sold, we had 200 clients. Eight months later we had 130." [17:45]

   This downturn was partly due to the new owners' inability to sustain the personal touch that had been integral to the company's success.

9. Strategic Timing of an Exit

   Kasim advises entrepreneurs not to wait indefinitely for an optimal exit. He recounts his decision to sell early to avoid the eventual decline in his business’s value:

   "The moment you have the ability to cash a check that really would satiate your financial needs for life... take the money." [21:56]

   He cautions against trying to outsmart the market, emphasizing the uncertainty of waiting for a potentially better deal.

10. Financial Management Post-Exit: Emphasizing Liquidity

    Post-exit financial security is another crucial topic. Kasim advocates for maintaining liquidity and investing smartly to ensure long-term financial stability:

    "Liquidity is like oxygen. It allows you to do anything you want to do, anywhere you want to do, any way you want to do it." [25:20]

    He advises keeping a significant portion of the exit proceeds in liquid assets, such as T-bills or real estate syndications, to preserve capital and enable strategic investments.

Notable Quotes

• "Terms are more important than price on a level where price is almost irrelevant until terms have been discussed." [09:16]

• "You're playing Uno and they're playing chess." [16:03]

• "Money is the abundance of oxygen. It allows you to do anything you want to do, anywhere you want to do, any way you want to do it." [25:20]

Concluding Insights

Kasim Aslam's candid discussion offers invaluable insights for entrepreneurs contemplating the sale of their businesses. From the critical importance of thorough legal documentation and strategic negotiation to the psychological and financial preparedness required for an exit, Kasim provides a comprehensive guide to avoiding common pitfalls. His emphasis on maintaining liquidity and the strategic timing of a sale underscores the need for entrepreneurs to prioritize long-term stability over short-term gains.

Emma and Travis commend Kasim for his transparency and strategic acumen, encapsulating the episode's essence:

"I really love that. That's probably the best advice about exiting I've ever heard." [14:38]

Final Thoughts

This episode of Special Ops serves as a tactical blueprint for entrepreneurs aiming to execute a successful business exit. By highlighting real-world experiences and actionable strategies, Emma Rainville, Travis Gomez, and Kasim Aslam equip listeners with the knowledge to navigate the complex landscape of selling a business, ensuring that their legacy and hard-earned success are preserved.

For more actionable insights and to download the associated playbook, visit Special Ops Podcast and subscribe on Apple, Spotify, or YouTube.

Transcript

[A]

Welcome to Special Ops podcast. Travis and I are in Mexico continuing on with our Driven Diaries. We're at Driven Mastermind, a mastermind we belong to for a long time and we love dearly. Today we are joined by Qasem Aslam, also known as Qasim Aslam.

[B]

That's what I was waiting for.

[A]

Qasem Aslam, who is one of the Driven owners and one of my dearest, dearest friends. Today we are going to be talking about when exiting what not to do.

[B]

So masterclass on that.

[A]

I know. That's why I wanted to talk to you about it. So, Kasim, you had a massive exit. It was a very great thing that happened to you and it was a. It was a remarkable thing that you did. But what I love is that there were some mistakes along the way. And what I also love is how you've just shared those with me along the way so that I know not only for myself, but for clients. And so I would just love to make operation super sexy today with you by talking about during an exit, what not to do and why. And I know that you can talk about this for four hours, but sum it up for me in about 20 minutes.

[B]

I can do that.

[A]

Awesome.

[B]

One of the things that I've heard from other people is all asset purchase agreements, first of all, are written by the purchasing party, Second of all, will never feature buyer representations, ever. Because the buyer wants to represent nothing, because the buyer wants to be held accountable to nothing, because the buyer is saying, hey, I'm giving you a great big bucket of money. Wow, you're welcome. So if there are things that might be important to you after the purchase or sale of your company, context dependent, make sure. So I've heard from other people that you have those things written down clearly in plain English in the buyer representations. If they're not there, if it's not in the apa, it will not happen. Even the most basic things.

[A]

Hey, can you give me some examples?

[B]

We've got 100 employees. You're not gonna take a hatchet to my team, are you? No, of course not. We would never do that. We're Ivy League educated, Goldman Sachs backed private equity. We love humanity and all people. Cool. Will you put it in the asset purchase agreement? No, we won't. Now you at least know or. Yes, we will. Great. I know my people are safe. If you think employment's gonna carry on, will you continue to let me do my podcasts? Can I talk about the sale of my company? Can I? Will I. Anything that you wanna do you know what? I travel a lot. I'm in a group called Front Row Dads. I like to take my kids places, like things that you don't think are up for discussion or up for debate. And that's the issue with most entrepreneurs is I ran my company on my own for 20 years. I was the boss, I was the general on the battlefield. I was purchased by a SoftBank backed. SoftBank is massive. It's one of the biggest private equity groups in the world. I don't even know if they're technically private equity. They're so big, like they're public equity at that point they will dictate terms. And you know, the acquiring entity was friendly, but there were just new rules that I didn't know were coming. And so if it's not in the apa, it does not matter. And this is the other thing that the APA will say, it does not matter what C level exec told you, it's okay. Who said that they were going to be friendly? How friendly they seem, how friendly. This is the most interesting part, how friendly they really want to be. Because the thing about private equity is they trade businesses like playing cards. So you're purchased by somebody that you love, you went to school with, you grew up with, is your sibling. Doesn't matter. What will happen is you're purchased by them, you know them, you love them, you trust them. They get sold two days later and now you're subject to whoever bought them. So you're never negotiating with the person, you're negotiating with the agreement and you're. It's always transferable. That agreement is transferable. So it doesn't matter that I trust you. Does not matter. Do I trust who you'll sell to? Do I trust who they'll sell to? Do I trust who owns you will sell to? Because it's all trading cards and it's all transferable. That's the thing is as soon as you get sold, you're now on the market. You are a commodity. And if it's not in the agreement and you don't realize how small a cog you are, you have no idea.

[A]

Right? We're all a big deal.

[B]

Well, I was their largest acquisition at the time, so I thought, oh, I'm a big deal. But I was the largest acquisition to an entity that is now on an acquisition tear and is funded by a company that's on a buy sell tear. So who's to say where I land in the grand scheme of things and who I'm a star In a galaxy that's exactly right. I'm dust on a planet in a galaxy rotating around a star that. Yeah. It's like you just realize how infinitesimally small you are. So if something's important to you, it has to be in the buyer's representation in the asset purchase agreement, period. Full stop.

[C]

So these are like speaking engagements or ability to. Anything.

[B]

To be honest with you, it's a hard conversation to have because it really is. Anything that you want or need has to make its way into the apa. You also need to make sure that you have a phenomenal M and A attorney. Not any attorney, not good attorney. Like attorney, your business attorney. The attorney you've worked with for 20 years doesn't m and A. They have to know M and A. And every attorney will tell you they know M and A. So the question is, how many M and A deals have you done?

[A]

Right?

[B]

How many M and A deals have you done like mine? Cause if you sold a dry cleaner, it's a little bit different than selling an agency, truly, Right? So you want somebody who knows M and A, and preferably you want somebody who's litigated at least once on a deal gone bad, because then they know what's poorest about this agreement. And it's the other thing that really blew me away when I was going through this whole process is how important documentation is. The benefit I had. I had a business mentor of 20 years, Greg Smith. He's one of the brightest people I've ever known. He's bought and sold 30 or 40 banks, bought and sold an airline twice. He built the largest auto fleet in the world at the time. Truly brilliant. He's an M and A guru, and he's managing money. So not ever would never be worthy of actually being his real client. But he's like a dad to me. So he manages my M and A deal. And I'm watching him, first of all, manhandle our attorney. Second of all, he gets obsessive over semantics. Obsessive over this word, this comma, this place. You know, we make jokes about that as entrepreneurs, about how stupid contracts are and how they're not. They're not stupid when you're dealing with private equity or when you're. They're not stupid. When you're dealing with.

[A]

They're never stupid. They're never stupid. They're never stupid.

[B]

You're right. This is Ops talking. He got so clinical with language and the interpretation of language that he actually shared an article with me once. Somebody lost $5 million on the Oxford comma. This is case law. You know, instead of, like a list of things like, so I want berries and cheese and milk. Some people would write that berries, comma, cheese and milk. Some people write that berries, comma, cheese, comma, and milk. And not having that second comma, lost them $5 million. So when you. When you are being flippant or not paying attention to your agreement, you're putting yourself. That thing will be pulled out. It's been pulled out 50 times since I've been purchased. And it's whatever that says goes. You'll also notice with the asset, whatever.

[A]

The interpretation of what that says goes.

[B]

Well, that's exactly. And the person.

[A]

Wordsmithing is a thing.

[B]

Guess who gets to interpret it. It's who's willing to throw the most money at the most attorneys. So you're always, always going to be at a disadvantage because you can never play the legal game the way they play. That's why you need. And this is really, really, really important. It's okay to ask for plain language in your apa. It's okay to say, hey, that feels like gobbledygoop. I don't know. Can. Can we simplify that for. And, you know, the thing that I did really well, and this is sort of my Persona, and I don't know if it's always going to last, especially the more money I make, but I play Forrest Gump real well, so. And this really served me the thing that is going to put you at a disadvantage. If you go in and try to play with these people on their field, in their uniform, with their utensils, like, these Ivy League douchebags, you can't out Ivy League them. So I come in exact opposite. I'm off. Shucks. I'm like, hey, look, I'm a dropout. I lucked into this with everything inside of me. I have no idea. I'm the dumbest person you work with all day. I'm going to need you to explain this to me like I'm three. And it tears their playbook apart because the people that come in and try to posture and try to pretend like they know you will get destroyed.

[A]

Right?

[B]

Leave your ego at the door. And it's just like. And here's the thing about explaining it to me like I'm three. If you're gonna fuck me over, you're gonna have to draw that out in crayon. And I get to ask questions about like, well, what if this happens? And what if that happens? So, no, I think that Humility and the Forrest Gump approach saved me. I'll tell you, actually, one very specific. Let me see if I can share this. I think I can. We'll see.

[C]

We'll cut it if we can.

[B]

Yeah. I'll tell you a story I heard once.

[C]

Perfect.

[A]

Well, I'm gonna determine whether you can share this or not.

[B]

Thank you, Emma. If it stays, if it makes the final.

[A]

Because I'm not going to deal with a lawsuit.

[B]

No, a story I heard once was, company goes to buy an agency, says, we love what you're doing. We love your business. We're going to give you your asking price. Oh, here's. This is the sound bite for you. Terms are more important than price. I'll prove it right now. I'll give you a billion dollars for your company. Yes or no? Billion dollars over what time frame? A dollar a day for a billion days. Right. Terms are more important than price. I love that company.

[A]

Now you know why I give them half?

[B]

Yeah.

[A]

Because I would have been like, yeah.

[B]

Yeah, so would I. Billion dollars, billion dollars, billion dollar exit.

[A]

Where do I sign?

[B]

Yeah. So terms.

[C]

About that.

[B]

Terms are more important than price on a level where price is almost irrelevant until terms have been discussed. So a story I heard once, a company goes to an agency, says, I want to buy you. We'll give you, what price do you want? Oh, that's a fair price. Great, I'll pay that. No problem. Puts you. And here's the other thing that's really smart, is then they put this fictitious agency through due diligence, and due diligence is a six to nine month proctology exam. So you're in due diligence. And it's so hard. And they need everything that's ever been produced in your company from a contract, legal, documentation, perspective. And you. It's almost not worth the money to go through due diligence. It's the hard. Anybody who's ever been through an exit will tell you it's the hardest thing you've ever been through. And you're looking. You're buried in due diligence, and you're overwhelmed and you're still trying to run your business. And it's hard, hard, hard. And then they come and they say, hey, you know, we don't actually have to do all this. Instead of a purchase, we could actually paper this up as a referral agreement. We'll still pay you exactly what we talked about, but due diligence will go from nine months to nine weeks. Yes or no? Obviously. Yes. Obviously. Yes. I'LL do that. Referral to what's, you know, what's the difference? Nothing. The money doesn't change. We still take the assets of your company. We just. It's just the paperwork. Here's what's really interesting. Long term capital gains is taxed at 20%. If it's a referral, it's regular income tax to 40.

[A]

Right?

[B]

Didn't know that. Thank God. I have my 20 year MA surrogate father to go. No, the tax implications. Double your tax liability. Fictitious story, we call them on it in theory. And here's the best part about these Goldman Sachs douchebags is they're so brazen, they almost smile at you when you catch them. They're like, oh, they're almost impressed. It's almost like, all right, good for you. Yeah, yeah, good job. That's exactly what it is. Good job. The other thing that they'll do, so I've heard, is they, and this is textbook, this will happen 101 times out of 100. They put you through due diligence. And here's what you do as a business owner, no matter what, even if, you know, even when I say this, you're gonna do it anyway. Take your eye off the ball. You're running your business. It's your baby. You're obsessive. As soon as you've decided to sell, in your mind, you, first of all, you've already spent the money.

[C]

Yeah.

[B]

It's already spoken for. You already know what you're going to do after you're already an owner that's made an exit. And on the 11th hour, on a Friday of the last week, of the last month, of the last year, adjusted for whatever fiscal quarter you're selling for, they call you up and they go, oh, gosh, so sorry. You know, one of our analysts found out that you don't spec in the bushy babble. And it's really important to spreck in the bushy babble because businesses that don't spec in the bushy babble, they're not worth as much. So Instead of an 8X, the market trades them at 6. What are you gonna do? Tell them you already committed? You've gone through this months and months, and it happens every single time. They do a fourth quarter. Now here's what you need to know. These guys have to deploy liquid. They have other people's money that they've promised they're going to invest and promise they're gonna get a yield and the amount of money because you're spending all this Time, effort, and energy and due diligence, too. So are they attorneys, analysts, mathematicians. Who knows? People who've gone to college that I don't understand. You can if you walk. They're in a world of hurt, generally speaking. So you can hold the line. And with the understanding and expectation that if they're playing this bait and switch game with you, all they're doing is some guy's trying to see if he can get a bonus and squeeze you down by another, who knows what. And what I'd say is, if it's in the very end, you hold the line. Unless what they're saying is, now here's the thing that really sucks. And sometimes there's a legitimate problem with your business. So what you want to do as a seller, everybody thinks you want to hide the issues and you want to be the bell of the ball. Nothing wrong with me. No tattoos, no piercings. Never been. You know what I mean? Like, pure is the driven snow. Yeah. Here's what will happen is they don't bring that up in the negotiations on the front end, they bring. And if they have something legitimate on you, you have to take that down. Regulation. So what you want to do is when you're negotiating the price of your business, you want to take every skunk that's ever existed in the history of humanity and bring it up on day one, day one, and you dump it on them. Here's what's really cool about negotiations, and this is just negotiation logic. When I take all my skunks and I dump them on day one, you can't. Because if you're going to negotiate with me and you get to bring each skunk up one at a time, week over week, you get to whittle my price down. If I put it all on you at once, it's actually overwhelming the negotiation process to where you have to take them en masse. And it allows for an instant discussion. And now either we agree or disagree. You know, normally agencies trade at 6, 7, 8x, but because of all these skunks, you know, instead of. And that's what's really cool, too, is it keeps you within the window. But if they say, normally agencies trade at 6 to 8x and I've agreed to a 7, and then a new skunk comes up, and now I grew to a six and a new skunk comes up, you can get me down to 5, 4, 3. Whereas normally agencies trade a 6 to 8x, and I say, here are all my skunks. And they're like, okay, well, that's six. Great. But I'm locked at six. I will not part with this business for less than 6x of EBITDA. And if you try to do anything other than 6x, I'm walking and I'm wasting all of our due diligence time. We understand. And now we're on the same page, so don't hide.

[A]

I really love that. That's probably the best advice about exiting I've ever heard.

[B]

Yeah, exactly.

[A]

Yeah, you're welcome.

[B]

The thing about those people is they really are smarter than you. They really are like these people.

[A]

Of course they are.

[B]

Yeah, of course they are. Yeah, but. And they lack all integrity. They have no scruples. That's generally speaking. Bankers, Wall street, like, they're just, they're computers. They're computers that are built to make money and they don't care about you, about you at all. And we're not used to that. Entrepreneurs, we're relationship people. It's how business is done, it's not how banking is done. And I mean, I've never seen people get so dirty and then also get so surprised when you get mad about it. They're like, this is the game we're playing. What do you. It's like playing paintball and getting mad when you get shot. Like for them, they don't even mean it. They can screw each other and then go have drinks together. We don't, we don't work that way.

[A]

When I, most of us, most of.

[B]

Us don't work that way.

[C]

I love the point that you're making because we, we heard about this at a mastermind a long time ago. We had a deep conversation early on, like way, way at the beginning of our relationship even. And you know, the idea was bringing up the like, how do you, how does everybody get paid? Understanding how everybody gets paid. Because in that example that you're giving, you know, these guys are playing a completely different game.

[B]

Yeah, right.

[C]

And so if you don't know the game that they're playing, if you don't know the rules, if you, you're never going to win it.

[B]

Right.

[C]

You know, it's like playing checkers and then somebody's like, checkmate.

[B]

Yeah.

[C]

Like, what happened?

[B]

Well, and I mean, to exaggerate the point, you're playing Uno and they're playing chess. I mean, you're playing Parcheesi and they're. Yeah, they're paying like three dimensional. It's it. The thing that's interesting about private equity is their monetization models aren't built on the profitability of your business. Which blows my mind still to this day. They don't want the most profitable businesses. Profitable businesses are actually not very profitable to private equity. They're not the most tradable, they're not the most fungible, they're not the most liquid. Private equity likes building blocks. Things that, oh, I can take this off and I can take this off and I can do this. Because what they want more than profitability is visibility. They want analysts to be able to see what's gonna happen if I pull this lever and I push this button, these things take place. They love those businesses. Profitable businesses. The most profitable businesses are built on things that can't be quantified. You can't quantify relationship. You can't quantify the value of a brand. You can't quantify, generally speaking, you actually can't quantify CRO, for instance. And yet private equity is. They're gonna. They would rather pay. They would pay more for a business that I know if I put a dollar in, I get three out. But they know why. Then I get a dollar in and I get 10 out. But they can't figure out. Exactly right. They need because.

[A]

Which makes sense. Right? Because they're not going to be able to maintain those relationships.

[B]

Exactly right.

[A]

They're not going to be able to.

[B]

Maintain that if a computer can't do it, they don't align value to it. And they will actually down regulate your value based on some of those things.

[A]

It makes total sense. If you think about it, if you build a brand that surrounds you, your brand is worth less.

[B]

You know what's crazy? They didn't give a shit. Solutions 8 was so wholly and solely dependent on me and John Moran, on our face, on our voice, on our reputation. And they were so.

[A]

They felt like they understood the math.

[B]

They were so arrogant. I was scared about that. I was like, gosh, my face is everywhere. My YouTube channel is 100% of our lead generation. Outside of referrals, like, is this going to be a problem? Ten years ago it really would have been. But because I think social media made the founder led business the norm, not the exception. They didn't care, which was weird. I think they just thought they'd be able to like replace us or supplement with something else. And I think it was catastrophically damaging. When I sold, we had 200 clients. Eight months later we had 130. They grew our business from 200 to 130.

[C]

Wow.

[B]

Yeah.

[A]

Yeah. Makes sense.

[B]

Yeah. It wasn't just that the market turned. I mean, I can Tell you, I didn't. It's not because I'm smart. I sold at the exact right time. Like God in heaven. I saw. I knew. I thought I had two years left. I knew what was coming. I saw the meteor. I just didn't realize how close it was. We sold, sell. AI rolls out, attribution dies. Everybody takes their paid media spend in house. Everybody. I got love letters on the way out, but my clients were like, you guys are amazing. The best thing ever happened to us. We're so grateful we found you. You're fired. And I just cashed a great big check, so. Luckiest guy in the world. I've got a star. I was born under the star of the like.

[A]

I'm protected by a deed. You say that. It's. But I've watched you for a long time now. Be very intentful with everything you do, everything you say, every action you take. You said it earlier, and I'm just going to say it again. You are the best Forrest Gump impersonator.

[B]

And shrimping got real easy after that.

[A]

In reality, I've watched you very systematically. I don't know if you always know that. I know, but I very systematically say things at just the right moment or do things just the right turn. So, yeah, that's cute that you want to play stupid, but you're the smartest dropout I've ever met.

[B]

Yeah, I appreciate that. Well, you know, the bar is high because the dropouts are the smartest.

[A]

100. 100. They were too smart for school. That's what happened.

[B]

That's right. Yeah.

[A]

What's happened.

[B]

But I'll tell you the exit. Here's the thing that I'll tell all young entrepreneurs. When I sold, I had a. I was too many in ebitda, which I didn't know what those words meant. It was too many dollars in net profit. Agencies sell at 6 to 8x. You can do the math. I met a guy named Ruben Handel, who's the. He was the top M and A advisor in the agency space, period. And I talked to him. I wanted him to be my M and A guy. When I thought my business partner or my business mentor wasn't going to be able to do it. And Ruben goes, you're way too small for me. He's like, look, if you can get to 5 million EBIT, I can get you 13x, because your agency is your size. Trade to 6 to 8. Because 6 to 8 in M&A is low. You know, SAS trades it 30. So he goes, if you get to 5 million EBIT, the buyer pool opens up massively and I can get you 13x. So now I'm looking at $65 million in about two years time. Wow, 65 million. Now I've got money, but I've got never have to work again money. If I live in relative modesty and I'm careful, $65 million is, is a whole different stratosphere.

[A]

I'm not lazy, I could spend it.

[B]

And I drive a 40 year old Honda. Here's what's funny about it though, is my advice to everybody, I'll go for the 65 million the second time. This, the moment, the instant you have the ability to cash a check that really would satiate your financial needs for life. Which by the way, I think for Everybody is about 3 to 5 million dollars after taxes, depending on where you live geographically, because you can expect a 5% return after inflation and 3 to 5 million dollars is going to yield you enough. Again, it's not private jet money, but it's forever money. The thing about being an entrepreneur, I'm such an effective entrepreneur now because I'm not worried, I'm not scared of anything. I have my fortress of solitude. So if you have this shot at forever money. And again, I had what I had a low 8 figure exit potential on the table, bird in the hand or 65 million in two years. And had I waited the two years, the agency would have crumbled. So on your first shot, cash the check. Please, dear God, take, don't, don't try to time the market, don't try to be smart. And oh, but if I do this, did you take the money? And then second, third, fourth, fifth, sixth time now you can gamble, but don't gamble when you can't afford to gamble.

[A]

Actually some really freaking great advice.

[C]

Do you think that makes you possibly more dangerous in like entrepreneurship or potentially more foolish in some of the things that you pursue?

[A]

This guy is an assassin. A lot of people don't know this man is an assassin in a few ways. I've gotten calls and I know it goes, but this man is an assassin. So yes, I'm going to answer that on your behalf. Yes, he is dangerous.

[C]

I think the point that I'm making is like you can get, you can.

[B]

Get foolish overconfidence sometimes without question, without question. I'll tell you the thing that I wish I had done is not deploy. You know, when you have money, first of all, you become a prey animal and really close friends. By the way, people I've known for 20 years, they just can't help themselves because it's the big lick. So they come to you like, oh, this opportunity, this investment, this idea, this whatever. I wish I just kept the money because I went, I bought a bunch of real estate, did a bunch of syndications, bought a bunch of assets, annuities, whatever, whatever. I just, as an entrepreneur I want liquid. And I realize, I know the arguments, I'm a prepper, I understand fiat currency, I understand inflation. But there's something about money that lets us do things. So now I have the assets and they're sound assets. And yet my advice, if you exit, just stay liquid at least half. If you want to go invest half.

[A]

It depends on how much you get. Like let's be sure. Yeah, so let's talk about that. So let's quantify that in time. So if I sell, if I exit, how much money do I want for time? Like do I want to be able to pay for my entire lifestyle for 5 years, 10 years, 15 years? No, quantify that in a time period. So you're all the way to retirement.

[B]

You're not allowed to spend money, you're not allowed to spend non renewable money. Non renewable money. It's satanic and it's evil. If you want to buy a latte with non renewable money, you're expending life force. What you want is you want to go buy a house in Fargo, North Dakota, which is the number one recession proof city in the continental United States because of fracking and always probably will be or whatever, Whatever. It's easy. You go put it in T bills, right? Go find renewable money. So you go with the T bill was what it got up to like 6% guaranteed by the federal fricking government. Are you kidding me? Go put your money in a T bill and then the 6% that you get, that's what you buy your lattes with, right? If you spend non renewable money on anything, you are an imbecile and you deserve what's going to happen because it's just going to atrophy. The thing to do is to go get your 5% after inflation and you can do that in the market. Just an S and P index fund. You can do that in real estate syndications, which is what I did. You can buy single family home. There's a, there's a billion, there's a trillion ways to just. I did a bunch of hard money loans, right? There's a trillion ways to have renewable money. You spend the money, your money makes you. And if you have $5 million. Honestly, if you have three and you're frugal, you'll never work again. And the money. And you'll never touch the three. You'll always have $3 million, adjusted for inflation. So the three will actually grow at a slow clip. And whatever it kicks off, that's what you spend. It's these, man. I can't tell you how many friends I have. They've got a beach house, they've got a Ferrari. They fly first class. They don't have shit. I have money.

[A]

Yeah. I have to fight with him. Very real. I have to fight with him. Cost him. I bought your first class ticket. Oh, no, don't do that. It's crazy.

[B]

I don't want to get used to it. I'd rather have the money. I've got real money. And when an opportunity shows up. We had an opportunity. It fell through, but we had an opportunity to buy a $10 million business for a million dollars. You know what I'm talking about?

[A]

I do.

[B]

It was a $10 million business for sale for a million dollars. But we needed the million dollars that day. Guess who has a million dollars to go and buy this $10 million? Oh, I'm liquid.

[A]

You're the only one.

[B]

Yeah, so. As a matter of fact. Yeah, so, yeah, man. I just. Liquidity. Somebody put this to me, and I loved it so much. They said that money, liquidity is like oxygen. Oxygen's not the most important thing in life. As a matter of fact, oxygen might be the least important. When was the last time you thought about oxygen? You breathe and you go. And then everything else, the oxygen kind of funds. Let's say it's just when you don't have oxygen that all of a sudden you're like, oh, gosh, like, what am I gonna do? So the money is the abundance of oxygen. It allows you to do anything you want to do, anywhere you want to do, any way you want to do it. And if you don't mind me, soapbox a little bit. The impact you can make as an entrepreneur. Who's. Who's. Actually, I can hire people other people can afford to hire. I can wait longer for you to become productive. I can fire clients other people can't afford to fire. So if you're mean to my staff, big stress me out. If I don't just like your face, your voice, and be like, hey, we're not a fit. Here's your money back. So being able to make those decisions because those folks that keep themselves just so leveraged, that's what everybody does they make a little more. They spend a little more. Make a little more. Spend a little more. Make a little more. Spend a little more, man. Just. Just stay. Stay your lane, you know, like, there's. There's nothing wrong with. Because none of that stuff ever feeds the need anyway. I'm so boxing and I'm sorry.

[A]

No, I fire.

[C]

It's good.

[A]

About time. Yeah, it's about time. Telling you a long time custom. This has been absolutely phenomenal. I think I can speak for both of us when I say, like, we feel blessed to be part of your circle and part of your world and part of your mastermind and friends with you and, like, watching you and your kindness and your love for other people. From the waitress that brings you a glass of wine, who you take the time to ask her how our day is. To the person who gives you $30,000 to be friends with you. We've just. We're. We're blessed to be in your inner circle. So thank you so much, and thank you for dream of ours to have you on. So thank you.

[B]

Thanks, Emma. I don't think we would have driven if it weren't for you. Super grateful.

[A]

That's definitely not true. But it's.

[B]

Oh, no, I'm pretty sure it would be bubble gum and duct tape.

[A]

That might be true.

[B]

That might be bubble gum and duct tape.

[A]

You'd still get people to pay you to hang out. Thank you so much.

[B]

K. Appreciate y'all having me.

[C]

Yeah.