40 - From W-2 to Owner | Your Playbook to Buy Profitable Businesses

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. Absolutely it's an honor to be here. 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 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 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 two and three 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 and we'll talk about this in just a few moments but what's going to happen to them what what 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 is shifted I think the American dream is about freedom it's about owning something that you can control 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 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 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 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 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 yeah so we've got this amazing opportunity and right now what is the ratio of businesses on the market that actually sell 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 going to 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 sure and it'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 two three four percent right 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 yeah lots of buyers out there and a lot of businesses not prepared to sell right and and it's it's kind of an interesting thing because if you go back into my opening statement about all these baby boomers that are about 2X at 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 have 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 close and they walk out and they never receive the value of what they've built aside from what it produced month over month for a 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 that the brokerage side and say I'm thinking about selling my business but have no clue what they're doing is that a large majority of them almost all of them wow and I think that speaks to that 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 that they can actually exit from and you know conceivably change their lifestyle once they exit as opposed to running it like a job 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 would 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 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 sure and if the recipe as example is in the owner's head and and a new owner can't extract it the potential for failure goes up sure if the recipe which is what empire does so well for people is it 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 perspective 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 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 while 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 is a great way to start looking for the business that you want to buy 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 that 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 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 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're 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 path 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 and a business that's losing altitude the trajectories 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 uh that's a scary thing because 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 got to 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 to and I agree with you 100% on this point is that I would rather buy people successes 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 is relatively easy now relative it's relative right like but they're everywhere you know like there's a lot of dentists and doctors and chiropractors and electricians and plumbers and you know age vector like they're it's it's everywhere right these people that are over 70 years of age that still own businesses um so I love those points I love those a lot how do you spot uh 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 the listener the viewer insight into why you choose that method yeah well there's a there's a couple aspects of that one it's what I understand right because I grew up around mainstream businesses and helping broker so many transactions now as I'm much more focused on or participant I'm definitely looking for a business that has a consistent trend and a financial reward that I can evaluate upfront so when I'm evaluating a business that I'm on on 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 sure 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 the guessing game and the hope and the you know 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 or cosmatically distressed so I do not want the print plane that's about to crash and I'm going to figure out how to turn it right right yeah 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 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 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 higher fire personnel you have the personnel side and then sales market you have to be able to generate and leads and closely it's 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 dollar 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 sort of buying all the companies I built some sizeable 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 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 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 will stick with the plane analogy who just got their pilots license and stick him in a fighter jet right 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 yeah 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 another one and and and turn that into something very sizable sure then it is to hop into the fighter jet and and hope you can handle it you know mock one or whatever the speed is sure so so I think that's crucial and then getting over my tips that 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 sure became illegal and and that's where I had the 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 to tap into our resources as a group and figure out how we were going to deal with this thing and I'm blessed to say that all all three of those are still here today that's awesome but it it put me to the test and I had the dig into resources in a way that I I never imagined I would 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 really is a if no one's ever operated a business in a dire time it'll understand the amount of stress and you know just the the down pressure you feel how did you manage all of that well for me I'm fortunate one of my guiding principles as 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 sure and so when we got in the trenches so to speak around the around the COVID timing we just really dug into each others our groups 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 time so often more comfortable sure we really dialed up I mean we're 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 backing enormously and I didn't take that lightly for him and obviously he didn't sure we got through it 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've felt the same way during covid you know I had sold 76 companies 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 was it was more of a hobby you know all of a sudden give 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 is like there were no events going on during covid you know 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 on 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 let's 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 by a business you know you and I understand that we typically are not putting millions of dollars out of our pocket to go by 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 yeah it's 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 don't want to 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 write 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 in 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 where 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 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 BizBysel 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 agree with that I'm a proponent of leverage you know and I think that is why I have 4,000 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 low 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 I need to have some fun 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 it's paying for itself and buying the 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 to my house paid off my business paid off no credit card debt and it's like well 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 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 do like that so 70% of the businesses that you help your clients buy you also find the financing for that's correct well that's great great stat how do they find someone like you you know it's like I I get calls non stop from business brokers people trying to sell me businesses people trying to buy my businesses how do we through that to get representation because I think representations really important yeah well I 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 right and or they may not have the experience to help so I think you know people listening to your podcasts and getting your own education specifically in the business acquisition world sure I think obtaining as much information as they need to feel confident to guide their path yeah is crucial yeah 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 whole yeah yeah that's good when you're evaluating looking for businesses I believe in metrics and measurables that 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 kpi's you're looking for when you're evaluating or buying a business or there are some of you just like honing in on like man this one's really important so for me the 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 what I need them to tell me if I'm going to pursue it as a as a business I'm going to buy is that can it can afford to pay for itself and support a return for myself as the buyer yeah and if you can't do that unless there's something switch I think I can 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 and honestly lastly is probably the owner I have a lot of people contact me and so 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 yeah 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 future on somebody that I don't feel like I can work with closely yeah you know the biggest issue I have with looking at someone's financial 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 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 trusted it's like 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 well it's funny I'm working with a client right now it's an aspire community member and then as we were evaluating a business for them there were and you would have probably gotten a kick out of this there were some addbacks that one was three hundred thousand dollars on a five hundred thousand dollar EBITDA so three hundred thousand dollars is a big number out of that and so in my mind it becomes is it bankable or not bankable so some of those addbacks that you know the things that you add back to the bottom line if they're not bankable can be a deal killer right so there's no reason to go through due diligence and spend all this money pursuing a business that's not gonna qualify sure so I really look at them as deal killers or something I need to understand later sure and so as an example in that business there were two line items one was three hundred thousand dollars another was two hundred thousand dollars over two year period and and what I coach the person I was working with is before we go through L.O.I. and all kinds of time we need to understand what these two are because if they're not bankable or their deal killers were out don't spend any more time and if they are viable addbacks that are bankable and not deal killers then maybe we take the next step yeah so I really look at them based on those two criteria yeah are are the books just such a mess that I can't work my way through them well again I'm not willing to risk yeah my money on that I move on and find another one sure if they're within reason or they 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 yeah that makes sense that makes sense okay so you you buy a business right you find this one and maybe it's one out of ten you've evaluated and you take the 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 in you're like okay now I have it what do I do with it yeah so I personally get the accounting dialed in and for me that's an independent third party because I want it done correctly sure I don't want to count on somebody who's just learning quick books to provide us with the dials we're gonna steer the ship by sure 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 sure 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 it's just make sure we keep it the way it was you know and get the return let's get the cash flow and then we'll start tweaking it from there so it's a different game yeah I think we're it's like however you're predisposed it's like you know for me 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 a 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 will I know where their gaps are I run you know 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 by 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 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 sure 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 percent 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 into the business 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 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 and 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 why I love what you teach with AMP success and all you do because it's like I think it's an easier pathway in you know like I can teach somebody how to operate a business but to buy a business operate it and at scale is it's rare air 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 dollars right it's like that's there's a ceiling there you know and typically the ceiling is the operator so really good good stuff once you've bought the business you make this first move right now how do you build a relationship how do you make sure 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 do you maintain that balance yeah and you're referring to the the seller as a operator yeah so again I take a very humble approach from the standpoint I want to buy their recipe again sure 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 sure sure yeah so so I really take and in 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 sure right because of I've got other things I'm doing so it's myself and the person who I partnered with who we're 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're into 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 sure because we're buying what they created right I don't buy it to fix it I buy it to emulate it again for me it's base hits and consistent we're occurring 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 sure and actually I'm going through I'm helping my oldest son and my wife by a business that they're excited about right now the two of them are buying it together they are can you tell us a little about that sure I can and it's a it's a business it's it's got a very unique retail aspect with a wholesale component and also an online opportunity and I I'm gonna say it's distressed from an appearance standpoint there are some very simple things that we can 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 sure and more than half of the price is inventory and so again I don't feel like we can go we can go wrong with this and I think we can turn it into something that's beneficial but I guess 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 you know when we first come in we want to learn and we learn way more by listening than talking so in that scenario we asked 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 that's awesome yeah it's great and it's great to be able to guide them 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 first 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 now it's an adversarial role versus 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 position of strength so like I'm going to point out some financial wrongdoing so I'm going to 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'm 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 you're 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 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 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 is my grandkids drive by it you know it's like and I think that you just gave him a masterclass negotiation without saying it but it's like I just wanted to make sure we call 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 given their out given their opportunity given their given their moment of glory and then the the negotiation goes so much better well and there's a couple points in there I want to touch on yeah if and I wouldn't do a deal where I didn't care about the other person sure and I want this gentleman is wife who are running this business to feel good about it yeah 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're in tend 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 yeah because they are doing exactly what you just alluded to I think I think a perspective buyer can lose an enormous amount of money by hammering the seller to a place they don't feel good about it yeah 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 yeah well what could that cost sure I mean literally it could work I mean it could devastate the business frankly absolutely absolutely I want relationships when I'm buying a business where I can call the previous owner seven months later and solicitor we're we're considering a serious change here what would you do I mean you ran this thing for 20 years yeah what would you do if you were in our situation sure 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 there are wealth of knowledge they develop the recipe in most cases so yeah it's not all about getting every last penny in the negotiation it's about keeping the resources intact 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 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 sure and 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 we when I calculated this business that they were looking at which was far larger than what they needed to fulfill their 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 given up a 250,000 dollar you're a wage to buy a business and you would have been in the red just 18 months ago it that's scary why do that so I think the the principle for a beginning buyer is core competency make sure you have this skill set to be able to hop into that seat with with some comfort and number two understand financially the the key things that need to happen in order for your success to be as guaranteed as possible yeah very cool I've got three last questions we're both going to answer it okay sounds great 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 we're still you've ever walked away from and why oh we're still I ever walked away from and buy 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 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 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 sure 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 yeah my story is exact same is that I was on the you know the the one yard line ready to close the deal and I was I was walking into this person's office his size of business about seven to ten million dollar 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 be rating her 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 ask 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 going to be my business partner I was coming in as I'm I was going to buy 48% of this 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 and over six months were the due diligence about how he took advantage of this guy and basically like and almost prided himself on being superior 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 thousand dollars worth of you know M&A work and all this stuff you know like 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 you have to align with the people okay next question if you could only look at three things on a business before buying it that's the only three things you could see what would it be 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 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 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 that I would want to talk to the customer and I would it's 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 in 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 yeah that's a great question and I'm glad you qualified it within my life right because we all have different objectives 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 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 that I really appreciate and feels like an empire in my world 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 income 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 really what it was motivating scale and I got to the end of that kind of journey after those exits and really found myself into spare because I tied my identity so much to those businesses and realized like that that wasn't what 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 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 mazloss hierarchy of needs it's like once you take care of one need another need shows up it's like you know 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 I love that and it's it's really beautiful I appreciate the way you share that because when we're in survival we don't have much to give others right and and business buying businesses in my opinion allows us to financially ideally reach a place where we can then figure out how to give back to to all those indeed and and also kind of pay it forward I mean I had lots of people who who helped me to get to where I am and I'm grateful for every one of them and it feels like a duty to me to now figure out how to be able to help others do the same thing sure 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 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 was really excited 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 absolutely thank you again it's been an honor 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 yeah amped success.com is certainly one way to find us and in all the social media of course we have a podcast as well and Matt Euler.com will direct you to me as well okay very good thanks so much appreciate it thank you thanks so much for being a part of the podcast for listening today I'd 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