BiggerPockets Business Podcast

BiggerPockets Business Podcast 75: Acquiring Businesses Using Other People’s Money With Shawn McCoy, Tom Szold & Charlie Szold

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Are you interested in entrepreneurship through acquisition (basically, buying existing businesses), but aren’t sure where to start?  Want to buy a business but don’t know where the money will come from?  Always wondered whether it was possible to buy a business with no money down?

If so, this episode is for you!

Sean McCoy, Tom Szold & Charlie Szold — co-owners of Precision Safe Sidewalks — walk us step-by-step through the acquisition of their company. From the acquisition channels they use to find potential purchase targets, through underwriting, due diligence, purchase and transition — they detail each piece of the process, both in terms of how it worked for their purchase and how you should be approaching it for yours.

Most interestingly, they walk us through the “capital stack” of the business — how they used a combination of an SBA loan, private money from outside investors and seller financing from the owner of the business to essentially purchase with no money out of their own pockets.  They even detail how they connected with outside investors, and how they structured the investments.

Make sure you listen to our discussion about how it's not only possible to get the seller of the business to provide part of the financing for the purchase, but why it's often in the seller's best interest to do so!

Check them out, and subscribe to the BiggerPockets Business Podcast so you won’t miss our next show!

Click here to listen on Apple Podcast.

Listen to the Podcast Here

Read the Transcript Here

J:
Welcome to the BiggerPockets Business podcast show number 75.

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Tom:
It’s just the people who you never thought you should ask in the first place who then wrote us nice big cheques. “Oh, we never thought we’d get money from him.” And so it worked out. But that’s something that I think is a good lesson for anybody who’s trying to do this. You just never know who’s going to want to make this type of investment at this particular time.

J:
Welcome to a real world MBA from the School of Hard Knocks, where entrepreneurs reveal what it really takes to make it. Whether you’re already in business or you’re on your way there, this show is for you. This is BiggerPockets Business. How’s it going everybody? I am J. Scott. I’m your co host for the BiggerPockets Business Podcast and I am here again this lovely week with my lovely co host, Carol Scott. How’s it going my favorite wifey?

Carol:
Oh, doing fabulously. And today, super fabulously because I have a very, super special congratulations to our great friend and business partner, Ashley Wilson. So Ashley has released a new book called… And by viewers out there can see this. It's called The Only Woman in the Room: Knowledge and Inspiration from 20 Women Real Estate Investors. And it's a compilation written by some of the boldest female real estate investors we know and love, have the honor of working alongside. If you have not already purchased a copy, go to Amazon get this book. It is absolutely phenomenal, incredible, incredible knowledge, great tips. Just great people sharing awesome experiences. Rock on Ashley, it's a fantastic book, The Only Woman in the Room.

J:
Love it. And yes, congratulation, Ashley and all the other co authors of that book. We’re thrilled for you guys. Now, let’s jump into our show this week here on the BiggerPockets Business Podcast. We actually have three for a four you this week, we have the three co owners of a company called Precision Safe Sidewalks. And they are Sean McCoy, Tom Szold and Charlie Szold, two brothers and their friend. And on this episode they tell us all about how they acquired this business. And they talk about entrepreneurship through acquisition. So they take us literally step by step through the process of buying a business working with outside investors. So they’ve actually raised money from passive investors for their business, they’ve also gotten SBA financing for their business and they walk us through the process of getting SBA financing. And they tell us about seller financing and how seller financing can and should be used when you’re acquiring a business.
In fact, I know a lot of us hate the idea of asking sellers to finance part of the deal to put in some of the money for the deal or to hold a note, but these guys tell us specifically why not only should you not be afraid to ask, but why it may be in the sellers best interest to provide seller financing for a deal. They talk about how to structure seller financing, what percentage of the deal you should be using debt for, equity for, seller financing for, so they really go into the details there. They talk about one of the biggest mistakes that companies make when acquiring a business. So make sure you listen for that. And finally, make sure you listen for the one big thing that you really need to be spending your money on to be successful during an acquisition. Fantastic tip there at the end.
If you want to learn about anything we discuss on this show or if you want to hear about the great book that these guys based the name of the company off of, we talk a lot about this awesome book at the end of the show. Make sure you check out our show notes @biggerpockets.com/bizshow75. Again, that’s biggerpockets.com/bizshow75. Now without any further ado, let’s welcome Sean, Tom and Charlie to the show. How are you doing today, guys?

Tom:
Great. Thanks so much for having us on.

Carol:
We are so looking forward to digging into your story. Gentlemen, you have done some amazing things together. And here on our show we have been talking a lot about purchasing businesses, specifically this year in 2020 when there are a lot of businesses that might be struggling or a lot of businesses that could need help or people are just ready to retire and in just saving those businesses. But it sounds like you have taken an entirely different approach to your entrepreneurship journey. And so we just can’t wait to dig in and hear all the details of your amazing story. So let’s just start off. Gentlemen, tell us a little bit about how the three of you teamed up in the first place.

Tom:
Okay, I can start with that. This is a Tom. So as you can tell by our last names, Charlie and I are brothers. So we’ve been working together on all kinds of things for many, many years and both of us had started on similar career paths, brief stops in journalism and then we worked in politics for a while. But the two of us started thinking over the course of time, we wanted to control our own destinies. And we started thinking a lot about the value of ownership and started thinking that we need to make a change. So take a step back five years to when we met Sean, we all worked out in Iowa together on a campaign. And we had very similar job two very similar goals. And so we very quickly learned that we worked very well together, we worked hand in glove, we had our skills complemented each other well and it created a great friendship between all three of us that we maintained over the next five or so years.
So Charlie and I kicking back and forth, “Hey, we got to start a business,” but we just didn’t know what it was. We talked about the pipe dream every time we had a beer together for I don’t know how many years and Sean knew this. Sean had smartly gotten an MBA in the meantime. Long story short, one day he sends me an article. Sean sends me an article called Entrepreneurship Through Acquisition, which I know that your listeners have been learning a lot about that lately, from some recent guests, the idea of basically buying a business that is already functioning, already successful and then taking it over and hopefully making it better and growing it significantly.
So he sent me this article, I immediately knew this is exactly what we need to do and we need to do it together because a three headed team for us is much more powerful than one. And so just like that, we were all in and on the road towards creating a new career for ourselves. And I think it was about two years after that day that we signed on the dotted line on buying our business, Precision Safe Sidewalks and it’s been a lot of fun and we don’t second guess our decision for a minute.

J:
That’s awesome. I love that. And I’ll let you guys decide who, but can one of you tell us specifically what is Precision Safe Sidewalks and how did you find this opportunity? And I guess we’ll dig into some more details, but at a high level, how did you evaluate and decide this is the opportunity versus the millions of other businesses out there that are available for purchase?

Tom:
Yeah, I’ll hog the mic on that one too because once we start talking about the analysis and the math part, you won’t hear from me again. Our business is Precision Safe Sidewalks. And I’ll just very briefly describe it. First of all, our clients are municipalities and anybody else that has a whole bunch of sidewalks to maintain. And what we do is we create trip hazard removal programs for those entities. So basically, what that means is we come in with our team of surveyors, we map out, in some cases, in some instances, the entire city, we find where all their trip hazards are, all of their liabilities are and then we map those including the severity of the trip hazards. We then send the client a heat map that shows them, “Hey, here’s where your problem is, you tell us what you want to do about it.” Then they choose, “Here’s what we want to fix, here’s what we don’t.”
And then they send in our team of technicians and then they come in, we have patented technology and a patented process that basically makes these trip hazards disappear faster and more effectively than any of our competition. So, the result of this obviously, is more walkable neighborhoods or whatever it is we were fixing. Walkability is becoming very, very important to people across the country nowadays. And then of course, it also helps reduce the amount of liability that our clients have because when somebody trips and falls on a sidewalk hazard, you can imagine that sometimes that becomes a very costly proposition for the city. So it’s a great service and we’ve been extremely happy with the company.

J:
So how did you find this company? Was it listed on business website somewhere? Did you know somebody who happened to be selling it? What led you down the path of, “We’re going to do this,” versus again, a million other potential opportunities that are out there?

Tom:
Yeah. So actually, I think a lot of your listeners will be surprised to find out that we found our business on BizBuySell. And I say that people would be surprised to hear that because a lot of people who do these search funds and I think Charlie will talk to you a little bit more about what a search fund is. But the style in which we did this, a lot of people kind of pooh-pooh the online websites, especially the non paid one like BizBuySell. BizBuySell for those who don’t know is an online marketplace where people all over the country can list their businesses that are for sale. And once you get to a higher level, but you’re not really going to be using BizBuySell anymore, because at that point you have relationships with brokers or if you’re on an even higher level than that, investment bankers. And you’re going to get off market deals, you’re going to see opportunity before anybody else does.
It’s true that that’s overall the better way, but for anybody who’s thinking about doing this, starting from total scratch, which is what we did, no contacts, no real experience, Sean had small business before this, but it was nothing like this. For those who haven’t done anything like this, I would encourage them to don’t sleep on BizBuySell, there are a lot of great opportunities on there on the smaller edge, but there are multi million dollar businesses that are great to be purchased on there. That’s what we found and we were very happy with it. We also did the broker relationship part of this and that’s very important. We found many great businesses that we could have gone for doing it. We basically Googled people, called them, told them what we wanted, kept close in touch and then they called us with opportunities and we took a good look at a lot of CIMs that came from those that came from those calls. A CIM for those who may not know is a confidential information memorandum. It’s basically once you sign off on a nondisclosure agreement with the potential seller, they send you the CIM.
And it’s basically a big fancy pamphlet that tells you, “Here’s what my business is, here are the basics on the numbers, the basics on what we do. Here are some cool pictures.” Stuff like that. So anyway, we monitored the online business marketplaces that were unpaid, we worked with the brokers and then we did also use a paid service called Intralinks Dealnexus, which is basically a slightly… It’s a paid for service, so they curate what you’re seeing a little bit more carefully and there are ways that it helps you organize the sale if you’re actually going to work on it. It was a good service, we found some good businesses on there too. But like I said, BizBuySell is where we found our business. So I think don’t sleep on it.

Charlie:
Hey, Tom, I want to make one additional point on BizBuySell and just the whole search process.

J:
And for those who are listening and not watching, this is Charlie. So this is Tom’s brother and co founder. So just wanted to throw that out there for people can get used to your voice, Charlie.

Charlie:
Thank you, J. We’ve been told that we look alike, but that we sound exactly alike. So, I’m sorry for your podcast listeners, they’re going to have to figure it out. So one of the things that I think is one of the important lessons to be learned is that the business that we ended up buying, if it wasn’t the first business we looked at literally the first, it was really close to the first. It was one of the first things we found on BizBuySell, it’s one of the first things that we looked at. And I actually give ourselves some credit because a lot of people would have just marched on by and said we can’t possibly buy the first thing that we looked at, but it was the right business. And while we looked at a lot more businesses afterwards and we were continuously, I think we ended up looking at in various levels of depth over 1000 businesses. But this was it.
It’s like when you’re looking for a home, a lot of people will not pick the first home that they see just because they can’t possibly sit on the first one. But for us, it was the right move. So you got to trust yourself and trust the metrics that you put in when you’re looking for a business because it doesn’t matter if it’s the first or it’s the last, you got to just choose based on the actual particulars of that business itself.

Carol:
I love that. I love that. Thanks, Charlie. So there’s so many great things to unpack here. And clearly it sounds like if you looked at one business that you ended up purchasing, even after you looked at nearly 1000, I think you said in some form or the other, then you clearly did a lot of research and a lot of prep work upfront. So let’s unpack this a little bit linearly. So take us back to the bare basics. Charlie, Tom had mentioned that you would talk a little bit about just what is a search fund. So what exactly is that?

Charlie:
Yeah, so I think of it as what I call the third way, when we were trying to figure out how to become entrepreneurs, we felt that there were two options. And the options were one, to just work for a business, work at a corporation, continue the nine to five lifestyle, nothing wrong with that. But we thought that was one option. And then the next option was to have some brilliant idea to invent Facebook or Twitter or come up with some sort of genius tech idea that was going to pick the world by storm and make us billionaires. And when Sean sent us this article for at least the two of us, it was a final piece of the puzzle falling into place, which was that we didn’t need to have the brilliant idea, we just needed to know how to buy someone else’s brilliant idea.
So typically, the way you go about doing that is through a search fund, which is where you go out, you find some people, either friends and family or some people who are interested in investing in businesses in general and they stick you up front, they give you cash to one, continue living comfortably, they give you a salary, legal cost, accounting costs, if you need to get on a plane to go meet the seller, they’ll provide you this upfront capital and in return they will get either first crack at the business and investing on some preferable terms or they’ll just be prepared from the start to invest in whatever business you find. So it’s a deal you find with other investors early on, so that you can then find a business. They’re investing in you.
So that’s the idea of a search fund, we ended up not doing exactly that, we didn’t start a search fund, we self funded our search, which was where instead of finding people on the front end before we had a business, we found a business, we funded a lot of it out of our own pocket, the legal costs and the plane tickets and all that kind of stuff. So that when it came down to it, we could keep a little bit more equity than we would have otherwise in the search fund.

J:
That’s great. I love that. We’ve talked a lot on this show about essentially, there are two ways to buy businesses, there are two ways to invest in anything, there’s debt and there’s equity, you can borrow the money or you can bring in partners who share in the upside, but they also share in the downside. And so ultimately, it sounds like you wanted to self fund the search part, but when buying the business, did you ultimately go the debt route? Did you borrow money to buy the business or did you go the equity route and bring in investors or some combination of that?

Charlie:
I’ll kick that over to our MBA, Sean.

Sean:
Yeah. Most of these deals are structured as a combination of the two. And so in our case, we looked at having about 50 to 75% that comes from the SBA loan and some seller financing that typically represents 10 to 20%. And then an equity injection that in our case, we had 30 investors with us. And that represented 20 to 30% of the purchase price. And so we have to go out and pitch a lot of investors. And in doing so, you have to essentially find an equity point where you're incentivizing the investors enough to come in, because their money is tied up with you, there's no liquidity in this, they can't sell their shares. So you have to give them a return that is better than what they could expect in the stock market.
And so they might be presenting 20 to 30% of the purchase price in the deal, but you’re going to have to give them slightly more of the equity in order to properly incentivize bringing in investors. So it’s an important point to keep in mind if you are in need of pursuing investors that you do lose a little more equity. But in our case, we have a great team of investors that really have helped us a lot along the way and provide some great advice. And so it’s been very beneficial.

J:
That’s great. I guess that leads me to my next question. So you’re raising money and you’re pulling money from a group of investors, and you said it’s somewhere on the order of about 30 investors. Are these investors… Are they active investors? Do they have a vote and a say in what happens with the business or are they purely passive investors who are putting their money in, they’re waiting for you to execute on a business plan and they’re hoping to exit either with cash flow or some liquidity event at the end? And if they’re passive investors, did you have to go through the SEC and do registration for a private placement? What’s the process of bringing a group of investors together for a deal like this?

Sean:
Yeah, so a lot of important questions there that go into this process. One, you get to the point of accredited investors versus non accredited, that's extremely important as you're approaching people. Accredited is people that are earning over $200,000 a year or have a net worth over a million, you can look to friends and family that are not accredited investors, but you do need to keep in mind that the legal fees rise significantly if you plan to do that. And so that is an important challenge if you're trying to keep your legal fees limited. Additionally, getting back to the question over whether to raise a search fund and giving up 80, 90% of the equity because your investors are taking that risk up front of not knowing whether you're ever going to acquire a business. If you do decide to do that, you will give up 80 to 90% of the equity.
But if you’re able to self fund the search, you can end up keeping most of the equity for yourselves. And in our case, we have most of the equity. The investors are passive, but we’ll turn to them when there are opportunities to use their skill sets. A lot of them are experts in their field and we have calls with them regularly to get their input.

J:
Okay, that’s awesome. So Tom, tell me. So you talked about basically, you guys self funded your search as opposed to bringing in investors early. You save the investors to later so you can keep some more of your equity. Not all people, not all of us have the ability to self fund our search. What are your recommendations for our listeners out there who don’t have the ability to self fund their search? What can they do?

Tom:
Well, it’s definitely a really important point because when you hear self funding, people must be thinking, “Oh, these guys have a bunch of money bags.” And that’s not the case at all. Let’s step back, what is self funding mean? For example, searches often take up to two years. So people need to eat, you need to be making at least a little bit of income. There are a lot of legal fees that are incurred just in the search part, you’re trying to find questions, paying people to advise you, you need to build a website to show that your partnership is legitimate, you do a little bit of marketing for yourself. It’s not exorbitant amounts of money, but it’s it is money. So that’s why a lot of people get funded. And they do pay themselves a salary out of that funding. That’s actually perfectly normal. Then there are people who can just afford to self fund, that’s great, simple, you keep all your equity, you do it yourself, if you can do that awesome. For us, we created a third way. You notice here that there are three partners.
And I like talking a lot about this because it was the one thing that we were doing that literally almost everybody that we talked to who knew anything about this, they cast a lot of doubt on it, they thought that’s too many people, too many cooks in the kitchen you’re going to end up splitting the equity three ways and you’re going to feel like it’s not worth it, decision making will be tough. And we always push back on that because we thought that the three of us together, it was just more… First of all, you have to get along really well. And we already knew how to do that because of working together. But it also allowed us more firepower, our networks combined when it came to raising money that became very important and just support during a very tough process. It’s a heck of a roller coaster, we’ll probably talk a lot about that a little bit later. Just having people to talk to and bounce ideas off of is vital. But in a more specific point, when it comes to the search, we were able to keep income coming in.
So, two of us kept our full time jobs during this. One kept enough consulting work to pay the bills and so we needed to have three people if we were going to be able to push the ball forward on this, because it’s a ton of work. And if you’re one or even if you’re to, your funders are going to tell you, “You have to quit your job. You have no choice or we’re not giving you the money.” Because it’s that much work. So having the three allowed us to be able to do that. If I was extremely busy with my actual paying job on one day, Charlie or Sean would pick up the ball and vice versa. So, this was a really great way for us to have our cake and eat it too. We kept our jobs, we’ve more or less kept our incomes, it’s not quite what it was. And we ended up keeping far more equity than it would have been like they said earlier, Charlie and Sean, 10 to 20%. That’s not all that much, especially when you’re going to split it amongst… You got to say it’s usually two partners.
So I think that that’s something we’ve never heard of being done before and that we would strongly recommend assuming you have the right partners and are very, very sure about that. Because if you don’t, it’s all going to blow up and none of it’s going to matter anyway.

Carol:
Excellent. So, I want to talk more about the experience in buying this business and the experience that’s needed. So three was clearly the right number of partners for the three of you. And combined, you clearly have a lot of combined skills. So what are the specific skills that our listeners need to ensure that they have before they are going to be embarking upon this type of journey?

Sean:
I think it's important to know that we didn't have any direct experience in private equity or company valuations or how to find a lender. And we didn't really have much business experience at all, because we'd come from the political world doing campaigns, we did know how to manage people and we knew how to tackle complex tasks. So we felt confident that when we actually acquired the company that we would be able to fit in running the operations. But as far as knowing how to do a search and do all of the necessary valuation and raising capital that goes into it, that's stuff that you can't learn in a book and you can't learn in a classroom. And for anybody that's thinking about doing this, they just need to jump in and do it. It's stuff that you have to learn by doing it and then just take the plunge to begin with.

J:
Okay, so let’s say that our listeners do jump in and they do take the plunge and they start looking at businesses and they find a business that they think they might want to buy. First of all, let me ask the question, should our listeners be looking at businesses that are struggling, that they can turn around and add value and rebuild or should we be looking at businesses that are pretty much on autopilot and self sufficient and running well? Do you guys have a thought process there about the types of businesses our listeners should be looking at from that perspective?

Charlie:
Yeah. So, there’s two different ways to think about it, I would say the rule of thumb should be, although that really depends on who you are. If you have a lot of cash and you’re not afraid to lose it, then there’s nothing wrong with going after a turnaround type business. The upside could be higher, it could be a lot of fun, could do really interesting, great things. However, there’s a substantially larger risk if you go that route. For us, we were already doing enough risky stuff, just on leaving our profession and starting a whole new career. Our appetite for risk pretty much ended there. So we were looking for what you would call an enduringly profitable business, which means that year after year, it’s turning a profit and preferably it’s growing year after year. So that when you’re taking on all this new debt, when you’re bringing these new investors, you can look at everyone with a straight face and say, “Hey, this business, even if we’re not here, even if we put some replacement level person in charge, this business pretty much runs itself.
Now, when you get into the business, there’s nothing saying that you can improve it dramatically and increase growth rate and all this kind of stuff. But no, if you’re like us and you’re leaving your career and you’re bringing your friends and family into an investment and you’re taking on a substantial amount of debt, I would suggest looking for an enduringly profitable business. And we can talk more about what that actually means. But I think that’s the smarter way to go about it frankly.

Carol:
Well, so tell us… I would love to follow up on that, Charlie. So do please tell us more about what that means. An enduringly profitable business?

Charlie:
Yeah. So one of the key components is recession resistance, which is something most of us here came of age around 2008, 2009, during the first big financial crisis. And that scared us pretty good in the sense that the sand could shift under your feet pretty dramatically and leave [inaudible 00:24:38]pencils out in the ocean like they say. So we were very focused on this idea of recession resistance, meaning that even if the economy did take a downturn, that we would have a business that has preferably proven to be able to withstand a recession in the past. So for us, it was important to find a company that actually had financials going back to that time period, where we could look at and say, "Hey, this company was still growing or this company managed to stay at the same revenue that year."
So, recession resistance is a huge component, necessary product is another really important component. And these are often ways of saying the same exact thing. Unnecessary product means that even if people don’t have a lot of disposable income, they still need your product. Toilet paper would be a great example. There’s nothing you can do about it. You need to buy toilet paper.

Tom:
Apparently now we need it more than ever.

Charlie:
That’s a good point. A very good point Tom. Products like that. So, obviously finding a toilet paper manufacturer is not exactly what you’re looking to do, but finding a product that’s similar in the sense that even when the financial winds change, it’s still going to be necessary for your customer. So, that’s a big component. Tom, Sean, anything I’m missing here?

Tom:
Yeah. I would say like you said, endurance was our main criteria. And for viewers, knowing your criteria is one of the most important things. Walker Diebolt talk a little bit about this the other day. You need to know what you want. Are you looking for safe and the ability to grow it or are you looking to buy a company for cheaper and fix it up and then you have a higher risk, higher upside, it’s really just a question of your risk tolerance. For us, the three real pillars of enduring resistance enduringly profitable was recession resistance and then we didn’t want to do anything in tech, we don’t want to be competing against the next young geniuses that are going to be inventing the next Facebook, we wanted something that was a little less sexy. We wanted a non-sexy business and I think we can all agree on this call that we definitely found one. Sidewalk maintenance is about this non-sexy as you can get other than maybe toilet paper manufacturer.

Charlie:
Unofficial model was boring is better.

Tom:
Boring is better.

Carol:
Awesome. Boring is better. Make a note of that J, that’s good. [crosstalk 00:26:48]. Boring is better in this business.

Charlie:
Someday when we get around to writing a book, we claim that title.

Carol:
It’s all you, copyright it now.

Tom:
Yeah. And then our last criteria not to prolong this is barriers to entry. And that’s something pretty much anybody’s going to be looking at. You can’t really hope for a business that has no competition, but you can find things that have not all that much and have strong barriers to entry and we were going to look for our business until we found something that met that criteria. And like Charlie said, miraculously, it happened to be the first business we really looked at seriously. But that’s the basic. And knowing your criteria is one of the first things you need to do before you really embark upon in acquiring a business.

J:
That’s great. Okay. So, let’s go linearly. So now we found the business that we’re interested in getting more information about, can one of you guys walk us through what the process looks like from the day that you either find that business on BizBuySell or broker brings it to you or however you find the business that you’re interested in getting more information? What’s the next few steps to figure out if that might be the right business for you?

Sean:
Yeah. So, I think once you’ve received the CIM and really taken a good look at the financials like Tom and Charlie were explaining with recession resistance ultimately, you need to make essentially a leveraged buyout where you’re piling on debt. So that’s where it becomes so important that you are able to service that debt and see the company cash flow when you’re looking at the P&L and the balance sheet knowing that the financials are secure. So once you feel comfortable that you understand the company financials and the operations by reviewing the CIM, you can set up a call with the owner of the company or sometimes start with doing call with the broker, discuss how the company runs, learn more about their customers, customer concentration, how the company operates on a day to day basis. And if you feel comfortable at that point, you can then start negotiating a potential purchase and then get into the LOI phase, which Charlie can talk a little bit more about.

Carol:
Awesome. So, Charlie, talk to us more about the LOI, about your letter of intent and what happens when you found that business and you were ready to make an offer?

Charlie:
Yeah. So, at this point you’re starting to feel pretty good about yourself, you’ve managed to fake it long enough to get to this point and you start negotiating directly with the seller. And for us at least, our negotiation process was pretty difficult. Our seller was very aware of the worth of his business, we were aware of the worth of his business too and there were minor disagreements about this and that, but those minor disagreements took a substantial amount of time for us to iron out. And he had been through this process a few times in the sense that he had tried to sell the business and had a few similar sales not quite get to all the way to close. So he wanted to make sure that on the front end before he signed an LOI, that we were in broad agreement about what things were going to look like. The LOI, it’s a letter of intent, that’s all it is. It’s intent.
It’s non binding for the most part, there are some loose rules governing how you can or cannot pull out of there, but there’s still a long way to go once you get to that letter of intent. So we made the offer, we made counteroffer, we went back and forth for quite some time, I would say probably took about a month just to get the LOI negotiated. We thought once we got there that it was all going to get real easy from there since we’d done all this difficult negotiations and we couldn’t have been more wrong. The LOI is maybe five to 10% of the negotiation process. Once you sign that, not only do you have to raise the money, but you also need to put together a purchase agreement, which is where really all the nitty gritty details are ironed out. And there are more nitty gritty details than you could ever imagine. So it was a difficult process to get the LOI and getting from LOI to close was even more difficult.

J:
So you talked about… The details are where the rubber hits the road. And I know we’ve bought a couple businesses and certainly we’ve had our struggles there between employees and inventory and things like that little things that shouldn’t be a big issue. But I know the big struggle that we’ve had and I’d love to hear this from your perspective in your business, one of the big struggles we’ve had is with employees. And so basically that transition of employees from the old business to the new business, do you tell them, do you let them know that the business is being sold? How do you ensure they stay with the business during that period that the whole transaction is going on? What was your experience with the employee side of things? I know that’s daunting to a lot of people and what should our listeners be cognizant of if they’re buying a business that comes with employees?

Tom:
I can say we’ve gotten to know a lot of people who have done this over the course of doing it, we had reached out to people just to learn from them. We’ve actually we’re proud to say we’ve inspired a few of these since we’ve done it and then seeing those people work their processes through. And I think what I see is that that particular part of the process is really handled very differently depending on who you’re talking to. I’ve heard of sellers that have told their employees the first day they put their business on the market, employees who help get the sale done by helping sell the potential buyer on, “Hey, this is a great business come work with us.” And then I think the majority of people though, they really don’t tell the employees until the deal is done. And in our case that was what happened, the seller, aside from a few key people chose to keep it on the low down, which is actually very smart for many reasons in my opinion, until the deal was done.
And then we basically drove down to North Carolina and had a very… We worked very hard on a presentation that was meant to put the employee’s mind at ease. And our outlook on the business, we were the opposite of cowboys who were trying to come into a new business and change everything. We bought an enduringly profitable business because we thought it’s a great business. So why would we come in and want to shake things up? We wanted to learn the process over time and then start tweaking things to make them better, adding things to make it better. And so we basically… Long story short, we came in, had a long talk with the staff at the time, it was 27 employees and we explained who we are, what our style of management was going to be and making sure that they understand that we wanted to learn from them and that we’re going to plan to make this company better and your life even better than they already are workwise. And so basically, don’t worry about it, don’t freak out. And naturally, there are going to be a few people who do.
The kinds of people who just, “Aghh, change I hate it.” And we had to work a little bit extra with those people to help them understand, “Look, we’re seriously not these villains coming in to tear this thing apart and rebuild it.” And I think we did that very effectively and soon after I think people’s fears were allayed and everybody was ready to keep doing business together. And we also have the help of the seller on that, who helped talk to his employees and explain to them, “Here’s what’s going to happen, here’s what I made these guys promised to do. They’re going to take care of you because we talked about it already.” And then we did that. So, we think that’s the best way to operate in the type of company we bought.

Carol:
Cool. Go ahead.

Charlie:
Hey, Carol, I’d like to add one thing here in the sort of, I think the way to sum up everything that we’re saying when it comes to the transition. A very important part of it is just humility in your own skills. You might be feeling pretty good about yourself because you just bought a business, you did something you didn’t necessarily think that you were able to do, you’re feeling really proud and you should feel proud. However, you need to remember that the people that you’re going to work with have been doing their jobs in many cases for five to 10 plus years. They’re experts in what they do. You’re not yet an expert. You might understand the financials of the business better than they do, but they know how to actually do it in a way that you don’t yet.
So if you come in and you think that you’re some genius because of whatever, your past work skills, your degrees, the fact that you’re able to buy a business and you act that way, you’re going rub people the wrong way. So having some serious humility believing it, is a key component here I think to a successful transition.

Carol:
That is just a tremendously valuable point right there, is staying humble throughout the process, acknowledging the fact that you’re not the expert in this field that you’re doing although it’s something that you never knew was something within your realm of what you could achieve that you have achieved it, but like you said, staying very humble about that and collaborating with everybody on the other side to ensure a really successful transition. Thank you for sharing that tip. I think that’s just fantastic.

Tom:
And just one quick last note, just showing them that you mean it is important too. Saying things is great, showing them is important. Charlie is the COO of the business, he runs the operations and Charlie spent a fair amount of time cutting sidewalks. He bought knee pads and work boots and learned how to take the sidewalk. And that is really, really tough work. And I think that it meant a lot to the technicians to see that Charlie was doing this because they know that unless Charlie’s done this, he’s not going to know how to manage them on doing it. And he’s just not going to have the credibility. So you got to get down and dirty and show them that you mean it and you’re going to learn this business from them.

Carol:
That is such a great point. And that is just true leadership right there. Just showing everybody on your team that no matter what is required of the job, that you do understand what it’s like to be in their shoes, because you are physically doing that job to learn the ins and outs and all the intricacies of it. So, awesome. Awesome. So once you’ve collaborated with everybody on the other side, everybody in the business, then it’s time to fund it. So let’s talk about the money. I’m so curious, I want to talk about the SBA financing about investors. And let’s start with the debt. So what’s the process of getting the SBA loan so we can get this thing to the closing table?

Charlie:
So, SBA for those of you who might not be very familiar with it, it doesn't… A lot of people think that you just go to the SBA, the Small Business Administration and just apply for a loan through them. That's not how it works, it's very similar more to buying a home with Fannie Mae or Freddie Mac, where they're out there to just guarantee a portion of that loan to take some of the risk off the bank to make the bank itself more likely to take on a loan that they might not otherwise if there wasn't some sort of government backing on it. So in this particular case, the broker that we were working with on the business had already and to his credit, because it's such a great broker, his name is George Arapage for those who are looking for a great business broker. He had already lined up an SBA loan broker who's going to help us find a loan for this business.
So he put us in touch with another really great guy named David Madison, who knows the landscape for banks in which banks might or might not be willing to take on a loan of the type that we were doing. So we worked with David Madison to put together a pitch package to then take to a few banks to figure out which of the banks had an appetite for this type of loan. So working with him and then working with the banker, we were able to secure an SBA loan. When you get an SBA loan, it includes taking on a lot more paperwork, there’re some strictures about how you structure deals, anytime the government’s involved, it’s going to add some bureaucratic element to the process. But if you find a good SBA loan broker and if you find a good banker, well, it might be frustrating and slow at points, it’s still a great way to get some debt that you wouldn’t otherwise necessarily have access to.

J:
And I know one of the benefits of an SBA loan and maybe you can talk to us a little bit, is that typically SBA loans are non recourse. I know not always but in some cases you're taking a lot less risk than you might be if you're a real estate investor and buying a house with the loan where you're signing a personal guarantee. Is that the case or am I mistaken there?

Charlie:
We did have to sign personal guarantees.

J:
Okay. So I guess like everything it’s going to be dependent on the specifics of the deal on the loan. Okay, that’s good. So let’s talk about the other side now, let’s talk about the investors and maybe this is a good question for Tom. Now, you’ve found the business you want to buy, you’ve negotiated an offer or you’ve negotiated a purchase and sale agreement and you’ve gotten the process started on your SBA loan, but you still want to bring in 20 to 30% equity investors. So investors to cover the down payment and the rest, what is your process for approaching investors? How do you find investors? What are you giving them to make them comfortable with the deal? What’s that whole process look like with your outside investors?

Tom:
Yeah. A key part of this by the way, is that you have to raise that much equity. As part of the deal, you have no choice. So that’s the bar that is set and you guys either get there or don’t. And getting there frankly for us was very difficult. It was a pretty big number. Again, back to the three partners, the three of us working in politics for all these years, we had come to know fairly well a high number of high individual net worth people. So we knew all these people with money, we had worked closely with them. We knew that they liked us, they knew how we worked and we thought, “Okay, this is going to be great.” We know exactly how we’re going to raise the money, we even gamed out a list to get to the number. “This guy’s going to give us about this much conservatively, this woman will give us this much conservatively,” and so on.
And then we basically called through those people, we created a pitch deck and practiced our pitch and then we basically just worked the phones and kept calling and calling until we hit our number, which by the way… And this is important for people to remember. It took us months longer than we had to, which was a significant challenge for us. And really our big lesson learned here was that you never know who’s going to give you money. We thought, “Okay, these people, they’ve got the money, they like us, we know our business is good, we know our pitch is tight, this is how we’re going to get there.” And by the time it was all said and done and we looked at the list of, “Here’s how we got to our number,” we were almost completely wrong. The people that we thought would give, mostly didn’t give and because that happened, we expanded the net of people, we called exponentially.
Basically, we started calling everybody we knew because we were getting desperate. And then it’s just the people who you never thought you should ask in the first place, who then wrote us nice big cheques. “Oh, we never thought we’d get money from him.” And so it worked out. But that’s something that I think is a good lesson for anybody who’s trying to do this, you just never know who’s going to want to make this type of investment at this particular time. Don’t assume anything and plan to start early and work hard early and make sure you have your pitch really tight because unless you… Maybe people that are working at a higher level than us and have been doing this for years, that’s easy at this point. But if you’re starting from scratch, it’s just very difficult. So know how much you need to raise and have a plan to raise it.

J:
And so for these investors, are you giving them… Are they making cash flow off the deal? Are they making money every year as the business makes money or is the expectation that in three or five or 10 years, you’re going to sell the business for a whole bunch more and they’ll get a big pot of cash at the end? Or what does that payback or investment look like in terms of what the investors are getting out of the deal and over how long?

Tom:
Sean, I’ll kick that one to you.

Sean:
Yeah. The way this often works for structuring the investment for investors is they will take preferred shares in the company and receive some type of hurdle rate or interest rate that is being paid back to them as well. So their capital needs to be returned to them ultimately before everyone is able to participate in the distribution. So Tom, Charlie and I don’t get our full distributions until our investors have been paid back in full along with an interest rate on that as well. So it’s important to get the money back to the investors ultimately, but then the investors even once they have their capital back, they will then still be part of the waterfall of distributions, so that they’re getting some continued cash flow as things go forward.

J:
Got it.

Carol:
Awesome.

J:
So one more question on investors before we move on. You mentioned that in some cases the investors are going to have a say in some big decisions or parts of the deal. What does that look like? What types of decisions do you bring your investors in on if any? Maybe there are none. And then is that a majority vote or how do you factor in their opinions on the things that you’re asking of them?

Sean:
For us, we have a significant majority of the equity, we don’t have to go to investors for anything and they don’t have any active role, we don’t have a board. For most deals that are along these lines, oftentimes the investors will end up with a majority or even close to 80%. And so in those cases, you’ll often have boards that will oversee a lot of the company’s operations and major investment decisions. In our case that falls to us we make those decisions, we’ll consult with some of our investors occasionally and learn from them because they are experts in business and in a lot of other fields. And so we’ll go to them when we have questions that they might be able to help with.

Carol:
Excellent. I have one last follow up on investors before we move to the other part of funding that I think is so extraordinarily valuable that I think it’s worth a reinvention. Tom, you had mentioned that because you did not necessarily get the funding from the original list of people, that it forced you to cast your net a lot wider and that a lot of people did come forward and invest in your idea. And I think that’s just such a massively valuable nugget for anybody listening out there, is cast your net wide, ask people because you never know who’s really just going to believe in you. If you’ve proven your worth over and over, if you’ve been extraordinarily successful in other things that you’ve done, there may be somebody who has money sitting back there and they’re looking for the right opportunity. And if they are believing in you, in your heart, in your soul, in your spirit, your passion, in your hard work, they just might be willing to invest in your idea as well. So keep that in mind, it may be people you never thought of.
So, thanks for letting me have that little soapbox there. But I thought it was pretty valuable. So now I want to talk about the last part. Maybe the last part of financing this deal. The seller financing. I think you mentioned, there’s something like 10 to 20% seller financing worked into this deal. So how is seller financing usually structured and how was it structured for this deal?

Sean:
Yeah, oftentimes sellers will take notes of 10 to 20% of the purchase price. And there’s a benefit there for the sellers oftentimes. They get a tax benefit by deferring some of the money that is being paid to them. So they often like it, you can also work in earnouts, where the seller participates in some upside if the company continues to grow. So there’s a lot of opportunity there to add that debt component into the deal. But one thing to keep in mind with the SBA financing, combined with the seller financing, the SBA puts a lot of restrictions on how seller financing is structured. For example, a seller note in an SBA deal will need to be on full standby for two years and some sellers don’t want to wait two years to get some of their money.

J:
So, stepping back, that's great. A lot of people ask, what is the incentive for the seller to actually hold a note and people are scared to ask sellers to hold a note, I see this both in the business world, in the real estate world because we always think, "Well, why would they want to do that?" But you just provided two really good examples. One, they may get tax benefits out of it and two, it gives them the opportunity to in some way stay in the deal and you can negotiate an earnout so that if the business continues to do well, they have additional upside over and above just whatever the purchase price was. So just that's a great point, something our listeners should keep in mind. Don't be scared to ask for that seller financing. It's not just a benefit to you as the buyer, it can also be a benefit to the seller as well.

Tom:
And J, just one quick thing on that. My perception of this is that it’s actually relatively expected to be… They expect to be asked for about 10 to 20%. So Charlie and Sean disagree with me if that’s not your understanding of it, but I think it’s very standard and for us, when we talked to the business owners, they usually seemed open to that. There were definitely some who said, “No, I’m out of here, I’m out of here, I’m washing my hands.” But a lot of people seemed open to 10 to 20%. And there were a few who were perfectly happy to take bigger than that. So to build on your point, people should not hesitate to ask.

J:
I love that. I love that. Okay, so I probably should have asked this earlier. But I’m really curious. So there are three of you, I presume the three of you have a different set of skills that together you make up a great team, how do you divvy up the responsibilities for this particular business or for the company in general, what do each of you do and where does your expertise’s lie?

Tom:
Well, if we want to go with titles, I’m the CEO of the company, Sean is the CFO of the company, Charlie is the COO of the company. So we work in those basic buckets, but a lot of what we’re doing because the company works very well, already was working well and we have great middle management that we’ve built underneath us. And I should mention that the general manager of the company was the son of the seller and he has much leadership as any of us and he runs the sales operation. He’s the sales guru and he’s a huge help to us. But because of that, a lot of what we do is creative. We spend a lot of time brainstorming and talking about how can we take this to the next level? How can we innovate? How can we stay a step ahead? And so we take turns having ideas really, and then when I’ve got what I think is a good idea, they shoot me down and when they’ve got their good idea, maybe I’ll try to shoot them down.
And I guess my point is that when you have a good well functioning partnership, you naturally know what to do and when to do it. And you know what everybody else’s workload is. So when Sean is buried in some horrible paperwork, maybe I’ll try to take that off of him, if he knows I’m doing a lot, he takes it off of me. And it’s like a good basketball team on offense, where you just know where everybody is and when to shoot them the pass.

Carol:
Love it. I love it. So with all these combined skill sets and everyone playing off of each other and brainstorming together and ideating and figuring out how to go to the next level, just tell us about the results. So how long has it been since the purchase of your company? And would you say that overall, this investment has been a success?

Sean:
Yeah, so we’ve owned the company now for two and a half years. And in the two year period after the acquisition, we were able to double revenue and we grew from 27 employees to 47 employees now. So really great results. And we certainly didn’t expect to grow as much as we did. I think for most people buying a company, they shouldn’t plan on seeing such huge growth. We initially told our investors that we were planning on about five to 15% annual growth, which is… 15% would still be pretty aggressive, but we have a great team at the company and the employees that we inherited were all wonderful to work with and they’ve contributed a lot to growing this. We’ve also expanded beyond the initial territory that we purchased. We operated only in North Carolina, Virginia, DC and West Virginia, we’re now own the rights to operate in New York and Western Pennsylvania. And so we’re expanding geographically a lot. And I think we’ll continue to see a lot of growth going forward.

J:
That’s fantastic. Congratulations. So I assume that you’ve learned some lessons along the way. I think, Tom, actually, you had implied that there was a weird situation that you had with a PowerPoint designer, could any of you want to talk about any weird lessons or any lessons learned along the way that would be valuable for our listeners?

Tom:
Yeah. This is really more of a funny story that can be spun as a lesson if I really try hard. But in the process of pitching investors, we were building a slide deck. And one of the points we were trying to make about the type of company we wanted was what I mentioned earlier about, we don’t want a tech company, we don’t want to be competing against the young geniuses and the next Mark Zuckerberg, so our plan was to be speaking to that to investors over a slide of Mark Zuckerberg looking all trendy in his hoodie and in his trendy office and we told this designer who we… This was an outsource project because we were self funding and really trying to pinch pennies.
And so we lined up a designer in India and he was really good and he spoke good English. But we told him, “All right, we want a picture of Zuckerberg looking trendy with a sweatshirt, Zuckerberg looking fly.” And so a couple weeks later, we get the deck back and he did a great job, but there was one slide that was really, really extremely confusing to us. And I’ll show it to you and I’ll explain because I know a lot of listeners aren’t going to see this, but this is what [inaudible 00:51:45].

Carol:
That is amazing. Oh, my goodness.

Tom:
So what we’re all looking at is a picture of Mark Zuckerberg smiling face with a terrifying body of a fly attached to it. And so we were just… It had been weeks and we had never really thought about the direction I guess that carefully the wording of it and we had no idea what had happened. We were so confused, racking our brains laughing a lot. And then we finally figured out, “Oh, we said looking fly and he’s from India and does not know this colloquialism.” So I guess that’s the lesson learned if we really want to push it, if you’re working with designers from other countries, just be careful about the direction. Don’t tell them things like make Mark Zuckerberg look fly, it doesn’t work.

J:
I’ll tell you, we didn’t need a lesson from that. That story was worth it. Just-

Tom:
Here is the picture again, I hope any listeners can go… If you can go back and watch the tape, it’s worth it. It’s pretty comical.

Charlie:
If anybody wants to put that on a t-shirt, we have the rights to it. So we won’t warrant it.

Tom:
Yeah. So, we that book title and we’ve got this, don’t touch it.

Carol:
That is just phenomenal all the way around. I love it. I love it. So, we’re so far into this interview. And I could go on for hours. But I want to go to next step. Charlie, I want to hear from you. First of all, I think it’s really important to note for our listeners, company is called Blue Zone Partners. And I personally love the naming convention behind that. So I would love if you could take a quick minute and let our listeners know why and how you chose that name for your company. And then also would love to hear what Blue Zone Partners has next on the horizon and what’s coming up.

Charlie:
Yeah. It’s a great story, we… Tom, actually had read a book called The Blue Zones. And for those who aren’t familiar, it’s all about these particular places in the world where people live to great ages. And not only do they live to great ages like 100 Plus, but they live really good lives. They’re not in bed being kept alive by machines for the last 10 years of life. No, no, they are very active, mentally and physically up until they pass away at whatever age. And this author had done some research trying to figure out why it is that people live that way. And he hit on a few things, diet, exercise, leading a stress free life. And after our time in politics, this really appealed to all three of us because that’s not the life you lead in politics. You eat pizza every night and you stress out until midnight and then you wake up and you do it all over again.

Tom:
It’s work hard live short.

Charlie:
Yeah, work hard live short. Exactly. So we all read the book, we were all inspired by it and we realized that what we were trying to do was find a company that took this application to perfect mix of attributes and we were looking for that in company form. Enduringly profitable is just another way of saying Blue Zone business. So we thought it was just a perfect mixture of something we were personally interested in and what we were professionally trying to do at the time. So we hit on Blue Zone Partners and we take it pretty seriously. We like to work for a business that we consider a Blue Zone business and we also like to ensure that our employees are living in Blue Zone lifestyle and that extends to ourselves as well. And this means extending people extra vacation, it means paying people a good wage, means just ensuring that none of our employees are so stressed out that they can’t live a good meaningful life and that they always have time to do things like be with their family.
So, we take it very seriously from both the acquisition standpoint and then also the management standpoint of our business, the Blue Zone Partners. So that’s that the answer there? And to answer your next question about what’s next, right now we have so much work left to do with Precision Safe Sidewalks that we’re very focused on that, we grew as Sean mentioned 100% in the first two years and we are excited to continue growing as we go on here. So this is what’s great about having the three of us, there are so many things we can do still to improve this company and grow it. We’re not at a loss of activities here.

Tom:
Yeah. And just one quick point to add to the Blue Zone part, a big part of what they found with these people who lived so long into their hundreds in many cases, they were part of their community and they did meaningful work. And one of the things that we always loved about Precision Safe Sidewalks, our company, is that it’s meaningful work. We make these big trip hazards disappear. That helps parents with strollers, it helps handicapped people, joggers, families that are no longer falling and busting their knees. And one thing that we definitely learned since we bought this business is that a heck of a lot of that goes on. So I think we feel and the people in our company feel that we’re doing something meaningful and in that sense we’re becoming a part of the community. Healthy part of the community. And that is very Blue Zone. So, yeah. Like Charlie said, it’s just we wanted to create a Blue Zone atmosphere for ourselves and for the company. And we like to think that’s what we’ve achieved.

J:
That’s awesome. So I’m not going to pretend like I’m smart and I actually knew this. I actually just did a Google search, but was the book that you’re referring to, is the Blue Zones: Lessons for Living Longer from the People Who’ve Lived the Longest by National Geographic Books?

Tom:
You got it.

J:
Okay, awesome. So for any of our listeners, we’ll make sure that’s in the show notes because I want to check out that book now.

Carol:
I can’t stand it. 2020 has made me so soft in general and I’m sitting here with tears in my eyes listening to the story, listening to your success, listening to these people who are living more than 100 years, I just can’t take it anymore. The amazingness. Too much awesomeness in one show.

Sean:
We did it guys. We didn’t know that was our goal, but we did.

J:
There you go. It’s really… It’s not as hard as you think.

Carol:
[inaudible 00:57:25]. You’re so mean, stop it. Okay. Guess what? It is time-

J:
Well, it’s normally time for four more.

Carol:
It’s typically four more more time, but there’s three of you. So we’re going to modify four more a little bit today. Does that sound cool?

Charlie:
Yes.

Sean:
Yeah.

Charlie:
Okay.

J:
We’re just going to put you on the spot. So instead of asking you the four more questions, we would love to just get from each of you the single best or maybe the two or five, whatever you want. But at least the single best tip that you have for aspiring entrepreneurs who are interested in entrepreneurship through acquisition, what they should be doing or not doing or thinking about, just what’s your best tip?

Tom:
Well, I could start and Sean already touched on this. It’s just do it. Not to accidentally steal Nike’s motto, but just do it. We had no expertise in this. A lot of people, a lot of people in our industry thought we were totally crazy. “What are you guys talking about? You’ve been building up this career for 10 years, how could you leave now?” And the reason was because we wanted to do it, we wanted to control our own destiny, we wanted to own and we knew that we were willing to put in the work. So you have to be willing to put in the work. You got to read the business books, go read them figure out… Financial Intelligence was a great book that I think we all read. That’s how we know how to read balance sheets and profit and loss. And that’s how Charlie and Sean learned how to create great models to figure out whether we’re going to be profitable or not. Just be ready to do the elbow grease and then jump in. Don’t worry so much.
I just feel that a lot of people are hesitant. Like, “It’s just so much risk, it’s just so much risk.” And it is. But if you work smart and work careful, you can make it happen. Baby boomers, as you guys know from recent conversations, they’re selling their businesses like crazy. We bought our business from a baby boomer, there’re great businesses out there, there’re great opportunities. And if you really feel like this is a great idea for you just go ahead and do it.

J:
Love it. Love it. Who’s next?

Sean:
I’ll jump in now. And I think, one of the things that we focused so much on the acquisition process and we talked a little bit about going out in North Carolina and meeting the employees for the first time, but the importance of planning the transition during the time that you’re actually doing the acquisition, I think for us we neglected that to some degree for a few months while we were trying to raise the money and deal with the bank and negotiate the purchase agreements and the seller at one point came to us and said, “You guys are not thinking through the transition enough.” And that was a wake up call to us, we then really doubled down on thinking through how the transition would look and what we would need to do when we first took over the company. And so that’s just one point for anybody that’s jumping in and doing this is that once you found the company, don’t over focus on the acquisition itself, really think through how you would go about managing things.

J:
Love that.

Charlie:
Okay, I have three pieces of advice. The first is to spend money on your lawyer. Our options were to spend a good chunk of money on our lawyer and get a deal done or spend less money and not get a deal done. Our lawyer was absolutely essential to the deal, especially when you’re self funding, it might be your nature to try to find not even a budget option, just an option that you think is going to save you a few bucks. For us that would not have been the right choice. We absolutely had to spend every single penny with our legal team to get this deal done. And it was essential. So don’t be afraid to do it, to go forward and spend that cash because you’ll actually get a deal done if you do. On that same note, there’s a great piece of advice from Dale Carnegie that was passed down to me from my dad. And it’s about dealing with situations that are stressful or can go wrong. And the advice is to accept the absolute worst that can happen.
Sit there, think about the worst thing that could possibly happen if the deal doesn’t get done, if the legal team doesn’t do the right work, if you can’t wide up investors. And once you really accept that and internalize that, you can move on and solve the problem as opposed to just moping about it. And I will say that as we were getting this deal done, we dealt with existential crises once a day it seemed like. And it really required a pretty steady hand on our end to keep pushing, otherwise we might have lost our nerve. So for me that Dale Carnegie’s advice was really helpful. And the final piece and this all goes to the same advice here. Is, yes, it’s important to have humility as I mentioned earlier, but it’s also very important to have self confidence. We had some situations, particularly when we were trying to get this deal done, where we had to look at a lawyer or an accountant or someone else who had much greater expertise in their particular field and tell them that they were wrong.
And if we hadn’t had the guts to do that, from time to time, again, who knows if the deal would have happened. So if you know something’s wrong, if you’re pretty sure it’s fishy, don’t be afraid to speak up and get an explanation from them. Because even though they’re paid the big bucks to do it, you’re still just as smart as they are, you’re just not just as interested in law or accounting or whatever it is. So have the self confidence to go ahead and get the deal done.

J:
Wow!

Carol:
Fantastic.

J:
Gentlemen, that was fantastic. This episode has been just one tip after another and it’s basically a blueprint for any of our listeners who are interested in trying to tackle the acquisition of their first business. We wish you the absolute best of luck with your journey, with Precision Safe Sidewalks, we can’t wait to hear how it goes. And we look forward to having you back when you guys are ready to move on to your next big acquisition, to hear all about that one as well. So thank you so much for being here today.

Tom:
Thank you.

Charlie:
Thank you guys.

Carol:
Thank you-

Sean:
Thank you very much.

Carol:
… so great to hear your stories. Thank you.

Tom:
We preemptively accept your invitation to come back at a later date. I’m 100% serious about it. So, thank you. Thank you.

Carol:
Seriously, J, how absolutely awesome and inspiring were these guys? They have such a great dynamic together, they dropped so many great pieces of knowledge. It’s truly no surprise that they’ve been as successful as they have. They brought their concurrent backgrounds together, just worked really hard and they just… You can tell they’ve got this great dynamic working together and they’re able to provide us with so many great tips and loved absolutely everything about it.

J:
Yeah. And I love the fact that they didn’t come into this as business experts or knowing everything there is to know about buying a business. Basically, they were learning as they went along and it’s just a good reinforcement that anybody out there that might be interested in acquiring a business can do it. If you put in the work and you learn and you-

Carol:
And you just do it.

J:
You just do it.

Carol:
Like they said, you just do it.

J:
Yeah. Just do it. Absolutely. Okay. Anything else we need to cover on this episode?

Carol:
I think it’s about time to wrap it up.

J:
Okay. Everybody, thank you for tuning in, we really appreciate you, have an amazing week. She’s Carol, I’m J.

Carol:
Now stay humble while having your self confidence today. Have an awesome week everybody.

J:
Thanks, everybody.

Carol:
See you soon.

J:
Bye.

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