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Beat the Competition to the Best Deals. Here’s How.
At Quiet Light, we recently sent out a survey to our buyers to get insight into what they really want to learn about the buying and selling process. Today the hosts of Quiet Light are sharing the number one thing that first-time buyers want to know about getting the inside track to a deal. How do they break into the industry if they lack the experience in acquiring?
This episode is just Joe and Mark, guest free, talking about breaking into the business for the first, second, or even the tenth time. They are sharing five things to keep in mind when shopping. There are a whole host of things you should do as well as things you should not do. Joe and Mark have built, bought, and sold businesses and have helped countless deals come to light, so you can trust that they learned all of this from hands-on experience!
- Give really good feedback.
- Review as many listing as possible in detail.
- Put time into the process. Make it a job.
- Prepare your financials.
- Get out on the conference circuit.
- Make a checklist of wants.
- Act quickly.
- Be likable to the buyer and the broker.
- Tell us what else are you doing.
- Be willing to overpay for a great business.
Mark: As you know we recently put out a survey for our buyers. And by the time this airs we’re already going to have closed on that survey … that poll and we should have some really good conclusions. Nobody at Quiet Light other than myself knows the results of the polls yet. And I’ve been maniacally hitting refresh seeing what people are saying both the good and the bad and sometimes the ugly of what’s being said. But I’ll share one thing with you, Joe, right now that has come through that we’ve heard from a number of buyers and that is wanting to know how to get the inside track on deals. Basically feeling like there is this completely competitive disadvantage if they’re a first time buyer. And there’s some truth to this right? I mean if I’ve got three buyers looking at one of my deals and I have one that we’ve done four deals with already I’m probably going to prefer that buyer just because I already know them. They’re a known quantity. We’re going to be able to go through due diligence with them. We know what to expect. We know that they’re going to not get cold feet at the 11th hour and so it’s a problem for new buyers. How do you break into this industry? How do you break into your first acquisition? How do you get the best deals when you’re competing against some guys that maybe have done three or four deals with us already? So this episode is containing no guests. We don’t have any guests. It’s just Joe and me talking about how to get the inside track to deals. And Joe I gave you an exercise at what … like 7 o’clock this morning I texted you and I told you to write some things down.
Joe: You did. But first I want to say that to those listening that are first time buyers I’ve been at this for seven years, Mark’s been at it for more than a decade, and I can only think of one buyer that has bought three listings from us. Maybe two actually if I think Shakil and 101. So there’s only a handful of people like that that have bought more than three and then maybe a few more that have bought more than two. So I think the competitive advantage is in preparation and instilling confidence. We’ve had new buyers that beat repeat buyers. So I don’t want anyone listening to feel like they’re second in line, there’s no way to break in. And that’s the purpose of this podcast correct? So yes you gave me a task this morning. Thank you. I did not sleep last night and I know I’m doing the podcast and then you send me a text that says “Come up with a list of five things buyers can do to get the inside track on our listings.” Thank you for that.
Mark: You’re welcome and I came up with a list a little late like 10 minutes ago of five things as well. And I had to think about it because five was just kind of an arbitrary number right? If we want to get really minute we could probably come up with 12. If we want to talk about the big points it’s probably three or four. But I think that what you said is true. I hope people that are listening to this, especially first time buyers that maybe have been looking a while and feel like they don’t have inside access to deals will end this episode knowing that there is more myth to that than reality. And you can be an established buyer by following some basic principles. We’ll go over some of those today. So I think the reason I sent you that text Joe I thought it’d be kind of fun to compare lists to see if you and I would agree on what these five things are. And honestly, I made my list a little bit with the knowledge of what I thought you would be putting on your list. So I purposely tried to avoid things and also get a little bit more creative.
Joe: I did the same. Oh my God, we’re a match made in heaven.
Mark: Well no doubt. Now we’re not going to be hitting any of the key points because we’re going to be avoiding the obvious. So if we missed the key points we’ll include them at the end here. But I don’t know how you want to go about this, do you want me to just go with my first and then you talk about your first?
Mark: All right the first is really simple. It’s super simple. Give really good feedback. Like just give us some feedback on what you like and didn’t like about a listing. It’s really easy … if I’m talking to a buyer and you look at one of my listings and you don’t like it, it doesn’t fit, that’s totally fine. Let me know. But in addition to letting me know maybe give me a call and say “Hey I really appreciate you showing this” now you don’t have to say that but you can say “I took a look at it it’s not a good fit. I was kind of looking for something more along these lines”. The more conversations you have like that with someone like myself or Joe our anybody at Quiet Light Brokerage, the more that sticks out in our minds. Not only does it A. give us really good feedback on our listing which we can use to help get that listing sold but it also helps establish a relationship between us. And when we’re bringing a business to market oftentimes we think about well who’s a good fit? Who are some people that I know? And obviously, we can go into our database and start to do some matching. But if there’s somebody that we know and we know they’re a good fit yeah they’re going to get … we’re going to think of them, they’re going to become like top of mind. We actually had this recently with a discussion we had internally at Quiet Light. Often when somebody is taking on a new client and they want some feedback on maybe the valuation or their approach or any strategy we’ll have an internal discussion about it. We have just a generic email address and we all talk about it. And one of the brokers, Bryan was talking about a client that he was kind of worried about whether or not he’d able to find a good match for it and he wanted some feedback. And what immediately came to mind was one of our buyers Matt and we said maybe you should talk to Matt and see what he thinks about it and you know this will give him a chance to have an advance look at the listing. And sure enough, Bryan came back and said I already talked to him. And you know why two of us thought of him? Because we talk to him on a regular basis and he reaches out to us and we consider him a friend of the company. So that’s my first item, give good feedback. Don’t just say not interested. You can say thank you, you don’t have to say thank you. I had somebody say that recently and said “thanks not for us”. All right that’s nice but that doesn’t really help me that much. Tell me why. Explain to me why so that I can at least have that in my mind.
Joe: And that’s the building of the relationship. Whenever I get feedback … I ask for it every time, all of us do saying if it’s not for you, let us know your thoughts on the listing. And the professional buyers … meaning they’re just professional people, thoughtful people they send us that kind of email. And my response to them is “Understood. Thank you. We will find the right one for you eventually”. If I’ve written that 500 times, I’ve written it a million times. I’m not sure if that math makes sense but I write it all the time. And I mean it because I know that it is an arduous search trying to find the right listing and these people are trying really hard to find it, they’re reviewing the listings and it’s a long, long process. So that goes to my first list of things to do here and these are in no particular sequence. But the first thing I wrote down and I’ve said this at least a thousand times over the last few years, review as many listings as possible in detail. And I wrote in detail in capital letters; IN DETAIL that’s the most important thing. The more listings that you look at … not just the teaser that’s on our website or a competitor’s website; you can’t really learn anything from that other than well that seems interesting but you don’t really know what it is. You dive in, you look at it, and you learn what it is that you like about these listings and what you don’t like about these listings. You learn what excites you about it and what scares you about it. And you begin to develop a sense for the right fit when it comes along. And that’s really important because when that right fit does come along you’re going to want to be able to act quickly and you’ve already looked at 300 listings. So you need to look at them in detail, digest the financials, look at the history of the business, look at all the products and the SKUs that are offered, and everything that we’ve prepared in our packages and really digest it and make your decision. And you’re going to look at a lot of them. It’s not an easy process. It’s not a quick process. It takes a long time. One of the things that I love when I’m talking to … I’ll say a new buyer, someone that I haven’t spoken to before and they tell me they’ve been looking for a year. To me, that’s great because they’ve gone through a lot of this and they’ve worked really hard to find that right listing. When someone says they’ve been looking for a couple of weeks or a month to me I know that they’ve got a longer road ahead of them and this is one of the things that I advise more often than anything else.
Mark: It actually fits in really well with the next point that I had in my list and a point on there will just kind of piggyback on what you said are two just kind of general philosophies when you’re talking about this process. Obviously, what you’re talking about Joe it takes a lot of time and everything else I think to complement the first point I had and your point here would be two things. One, when you’re looking for a business and you want to get that inside track be intentional about what you’re doing. Intentionality right? So it’s taking that time like you said to actually digest what you’re looking at and reviewing it. I can’t tell you how many times I deal with buyers or I talk to buyers who summarily dismiss a listing based on something which is frankly not an accurate assessment. But because they’ve already made that conclusion and despite the best efforts to be able to explain otherwise that conclusion becomes gospel truth to them and this is … they’re missing out on some really good opportunities because of that. Or maybe they’re not missing out, maybe they would say no otherwise but they will say no for more appropriate reasons than what they’re saying no to. So that would be the first thing, intentionality. The second thing is … to piggyback on what I was in before is this is a relationship based business right? At the end of the day finding that really good business for sale is going to require some level of relationship and you need to find that blend. I think as internet entrepreneurs we love our processes. We love automation. We love efficiency. I mean that’s the hallmark of what makes internet businesses so great. But you have to find that blend between slowing down and taking the time being intentional and having a process because there are a lot of listings out there that you can get a lot of deal flow coming your way. I know RJ over at 101 talks about how many deals they have looked and the numbers stay green. I mean it’s well in the hundreds so you do have to have a process. But processes should not take away that intentional spending of time. And that leads into the point-
Joe: Let me jump in I just want to say something in terms of the relationship Mark and being intentional. We’re talking about the five things to do in between each of those five there are a number of things that you should not do. And one of them is in that relationship building don’t send an email that says “I think you’ve overpriced this business it’s only worth a 2x multiple, it’s not for me”. Because the 10 year old in me wants to send an email back to them saying “thanks for your feedback it’s actually currently under LOI at this time at full price”. And I’ve been in that situation a dozen times where I get a semi rude email on a listing that … it’s been out for a week or two and some folks have looked at it we’ve had some conference calls and somebody sends me an email that says essentially “Joe you’re a fool, you’ve overpriced this business. It’s not worth merely what you and your client is saying it’s worth.” and then that very same day where just prior to that email it’s under contract at full price. That little boy in me wants to reply to that person and say “thanks for your feedback it’s actually under offer at full price”. I say “thanks for your feedback we’ll find the right one for you eventually” because I’m not 10 anymore but I want to. And so it is the relationship thing … again in between each of these five things to do, there’s probably a half a dozen things not to do and that’s really one of them.
Mark: I admire your restraint. You know an appropriate response there … because look when it comes to valuations I tend to get very philosophical on this sort of stuff mainly because I’ve been around for 11 years and I’ve seen multiples that have went up way higher and I’ve seen a market where people weren’t willing to pay more than 2.5, 2.6x on anything at all. Rather than saying you overpriced this business you can just simply say the price is too rich for me it’s not a good fit at the price that it’s at. That’s fair. Well, you’ve got a price that makes sense for you. We get it. Don’t tell us though that it’s overpriced for the market. We listen to what every individual buyer is saying and if every … if all the individual buyers say not for me then yeah you’re right. So I think that’s a good point to have. All right so my second point, you’re talking about going in detail. We’re talking about making sure that you’re talking to the broker and giving us some information about who you are, what you’re looking for, why you like that, why you didn’t like this. You might be hearing all of this and thinking that sounds like a ton of work. Yes, it is so that’s my second point; make it a job. If your goal … when we did the survey by the way this … I’ll give you another insight when we did the survey I’ll tell everyone listening who took the survey a little secret. We actually had two surveys. One was just open ended questions the other one was very quantifiable information. Those that filled out the ones … the survey with very quantifiable information we asked how many businesses have you bought and the vast majority of our buyers have not bought their first business and are seeking their first acquisition within the first year. Okay, if your goal is to find a business within the next 12 months make that your job. This is what you get up in the morning, this is what you think about when you go to bed at night; how are you going to go about finding that business? Deal flow is difficult. When we put out a listing … I put out a listing recently that was 8 figures and we had almost a hundred inquiries within a couple of days. Okay, that’s a substantial amount of inquiries on a single listing and that’s not even close to what we get on something that’s going to be in a more accessible price range. It’s a competitive field so you have to make this your job. You have to dedicate the time to it. Read up on it. Subscribe to the podcast if this is the first one you’re listening to it subscribe to the podcast because we’re going to tell you how to do these things better and hopefully give you some insights. But read up on these materials, learn just like you do with any other thing and apply yourself to this in a full time way. Set up those processes to be able to filter through all of the noise and to be able to really take a look at the information in depth. So that’s my second point; make it a job.
Joe: And along those lines, my second point is prepare your financial approach. You can’t get to the end point if you don’t know what it is. If you’re a cash buyer it’s a little bit easier to understand what you’re capable of stroking a check for but you also have to figure out okay if I’m buying an ecommerce business I have to buy that inventory too right? Okay is there a seller no possibility maybe on much, much larger listings but I’m over listening certainly not for the most part but that goes back to well … to whatever other points coming up. You need to prepare your financial approach if you’re … if you have a limited amount of cash and you’re going to do an SBA loan I love to hear from folks that are doing that that they have been pre-qualified for an SBA loan up to X dollars. And then they tell me the name of the lender. If it’s somebody I don’t know I’ll reach out to them so we can build a relationship. If it’s somebody I do know it’s great, fantastic. I feel good about that because it’s people in the network that we know and that we trust and that we know work hard to get deals done for buyers and sellers. If you’re going to do get something under LOI now where somebody is going to be rolling over their 401k … I think it’s called the ROBS. Mark’s written an article on it “Quiet Light Brokerage and ROBS” and you’ll find that article in Google. But that’s another way to source funds to buy a business but it also … you need to understand the timelines there and how long it takes to do that. Mark, can you do a ROB without having the asset chosen that you’ll purchase yet? Do you recall; yes or no?
Mark: I don’t recall, no. It’s been a few years since I wrote that article.
Joe: If you can … well read the article everyone if you can, which I think you can and you know you going to buy a business; do it, roll it over. Are you going to incur some cost up front that you’re … if you’re committing to buying an online business and making it a job like Mark says then you’ll be prepared to buy that business because going back to my point number one you got to look as many listings as possible in great detail so that you’re going to know the right listing when it comes along. And then you’re going to want to be able to act fast because other people are too. It’s not like you’re making a quick decision here because you’ve been doing this for six to 12 months and looked at a hundred listings and you’re prepared to act fast and you’ve got your financial ducks in a row. Because I can assure you if it’s a great listing other buyers are looking at it and they’ve done this; they’ve prepared. It doesn’t matter if it’s all cash. It doesn’t matter if you’re rolling something over into a ROB and it doesn’t matter if you’re doing an SBA loan as long as you’re prepared and instilling confidence in the broker and the seller of the business that you’re capable of going from letter of intent all the way through to closing that’s the most important thing be prepared.
Mark: And to answer a question no you do not need to have the asset chosen before you convert to a ROBS. But take a look at the article; consult an expert on it because it’s definitely a trickier thing to do. It’s not something to do on your own I should say. You definitely want to have a consultant. All right, cool. All right I’m going to diverge from some of the traditional advice with my third point that I’m bringing out there. And it’s not too crazy and it’s pretty simple and that’s get out on the conference circuit. More importantly get out on the conference circuit where brokers are going to be and you can meet them in person. And this comes back to this basic principle that this is a relationship based business. If I see you in person, if I have dinner with you you’re going to be far more memorable than somebody who sends me an email once every two weeks saying “Hey do you have anything in this sector with this sort of EBIDTA?” you know what? I get a lot of those emails and I don’t have a face to go with that email. It’s very impersonal. If I see you at a conference and we spend a little bit of time together I get to know what you’re doing. I get to know what your background is. That’s way more memorable and honestly, the conference circuit is a great place to just meet all sorts of different connections that can help you. I know Stephen Spear who we’ve talked about from an SBA lending standpoint he’s gone to a lot of these conferences. And think about this you’re now dealing with people that you’ve met in person. Maybe an attorney, Shawn Hussein who shows up at a lot of the conferences, Stephen Spear who might end up helping you get an SBA loan. And then any of us here at Quiet Light Brokerage, you’ve seen all of us, you’ve met all of us, we’ve all talked, we’ve all joked, we’ve all had drinks together and everything else. It just helps pop of the mind and get to know everybody a little bit more closely. So that’s just a very simple way to get some of that inside track.
Joe: Let me add to that. For those folks that are spending a full time job on top of a full time job and pinching pennies to be able to buy this business, if you cannot do what Mark is suggesting which is a very very wise suggestion because there’s nothing like human contact; emails doesn’t work as well. This podcast is a great example. Mark had written amazing content for 10 years and then we started the podcast and we’ve been at it for just over a year now and people call us and they say “I feel like I know you already, I just listened before to your podcast”. We never got that kind of call when someone said “I feel like I know you already, I just read four of your articles”; very different. So if you cannot go to the conferences and get that face to face contact, Scott Voelker from The Amazing Seller gave me a great great tip about a year ago. We were talking and he said he was trying to break through to an [inaudible 00:20:25.5]. He read the guy’s book, he loved it and wanted to have him … I forgot if he wanted to have him on the podcast or just have a conversation with him and straight up email wasn’t working and he didn’t have a friend to introduce him. So Scott turned the camera on himself clicked record and said “Hey so and so this is Scott from the Amazing Seller I just want to tell you I’ve read your book. I loved it and it’s fantastic. I’d love to chat with you for a few minutes because I’ve got some things that maybe we can help you with and I’ve got a very large audience yada, yada, yada” 30 second video inside of an email, hit send, he had a response within about 30 minutes. If you can’t go to the conferences, that’s a free option. If you’re uncomfortable in front of a camera, that’s okay. It puts a face to it. It’s one of the things that we’ve started doing with our listings. As many of you know that are looking at our listings we now … for the most part on most of the listings we do a 15 to 20 minute recorded interview with video and audio of the client … our client, the person that’s selling the business. We don’t do that to convey a lot of detailed information. We do that so that you can get a feel for who they are. If you feel like they’re a good person. If you feel like they’re likable. If you feel like you could trust them, feel, feel, feel. If you can’t get to the conferences that little video I think … shooting email to one of us or all of us with something like that. But I tell you what don’t do a template email … a template video because that’s the … again the thing not to do, I want to throw it in here between, don’t send a template email to every broker in the industry because we’ll know it’s a template. And generally, those are unpersonal … impersonal and we don’t pay much attention to them. Okay, why don’t I go ahead and I want to jump to a different … it’s my third one I guess right not my fourth one? Third one, create a checklist of your wants. Now, this isn’t necessarily a thing that you could do to get the inside track to our listings because it’s all of the other things that we’re talking about. But for you, it will be conveyed to us that you are preparing, that you are really diligent about your approach. I was at eCommerce Fuel a few years ago and someone that we sold a business to got up on stage and talked about his processes and his experience. And he put a checklist up on the screen and it had a checklist of all of the things that he wanted to buy in a business; all of the features the business must have. Whether it’s re-locatable, whether it’s got virtual assistants, whether it stores its own inventory, whether it’s a software as a service business, etcetera. And then on the right hand side, he had a checklist of the business that he bought from Quiet Light and all of the boxes down beside it. And not all of them were checked off and he still bought the business. So if you’ve got this list and Kevin Petersen was on the podcast Mark a while back and he’s got a portfolio of SaaS businesses and this is what he does. It is a checklist of things that they know what they want and then they always, always, always, always use that checklist on a listing that they were viewing and see how many of the boxes and checking. They’ve developed a process to score it. They’ve made this a job like you talked about. But doing that gets you away from the emotional approach and more to sticking with the logical approach. Because this as a buyer you’re going to put your life savings on the line it can get emotional. You can get frustrated, you can know that there is a deadline … a horizon to your job, to the bonus that you’ve taken and it’s going to run out and you’re going to feel pressure to buy a business. You want to avoid the emotional decision of buying a business and buy it with logic and reason and a checklist I think is a great way to go.
Mark: Did you know Joe that I tried to start a podcast before we actually started this one?
Joe: No, I didn’t know that.
Mark: Yeah I actually did like two episodes and I had four recorded and as anyone who’s trying to start a podcast knows getting started is often the most difficult thing. Because you get the first few done and you’re kind of excited about it and then you realize it’s difficult to keep the momentum up. It’s not easier when you have somebody else on the podcast, a co-host who records 70% of the episodes like you do Joe. I did and I think the second episode … I don’t know but you can still find this this somewhere back in the industrial archives of QuietLightBrokerage.com. There was a blog post and a podcast on do you have an acquisition checklist. It was the exact same thing, right? How do you process these deals quickly and how do you keep it objective. And it was … I have a checklist that you’re looking for and modify that checklist and understand that it needs to be this balance between being too broad and too narrow. And that you’re not necessarily going to check off all the items in the box on the checklist but are you hitting the major points enough to warrant that deep dive, that deep investigation that somebody makes. So that’s one of the good tips as well. I see a thing developing in these as well right? An overarching thing that you want to have this blend of having processes in place but also somewhat of an analog approach … a non-digital approach to this as well. So Joe is talking about … you’re talking about recording a video of yourself, just a personalized introduction so that we can see your face; that’s very personal in human relationship and somewhat analog in that sense or going to a conference and meeting there some person or calling and having a conversation but also making sure that you have a process and you know what you’re looking for as well. And I’m going to pirate I think my last point … I’m going to flip them around and that is when you see something that you like act quickly. And I’m going to put a couple of sub points on this. One, speed … when you’re in this space and you’re trying to buy a business and you’re talking to us and maybe you set up a call and all of a sudden that business is snapped up, it goes under LOI with somebody else, you might think that person must have had an advance notice or they have some sort of an inside track. Speed is really the product of solid preparation. It’s executed by people who know what they want and are putting in the time to have the processes in place to be able to evaluate these deals quickly and get back to us in a timely manner. I’ve dealt with buyers who are looking at an opportunity or they inquire on an opportunity, I do my follow ups with everyone that inquires and then I hear back two weeks later “Oh I haven’t had a chance to look at the listing yet”. Okay, well you know what … very good chance that you’re not going to get this. It’s just the nature of it is that there’s a lot of people looking at it and those that look at it within the first 24 hours and get back to us are typically going to be ahead of “the inside track”. So the basic lesson here is pretty simple, learn to act quickly. That doesn’t mean that you have to make rash decisions. It just means that when you receive the information if you like what you see send out an email and get on the calendar right away for that conference call. The buyers who are first in line often do get some level of preference when it comes to that offer time and there’s nothing [inaudible 00:27:28.1] to doing that. So act quickly is my fifth point now I’ll do my fourth point last.
Joe: And there you go now on Mark’s point he said review it and get in line to be on a conference call with a buyer. I don’t allow conference calls and we’ll do most of the brokers at Quiet Light allow conference calls between a buyer and seller unless or until I have spoken to the buyer. So this goes back to reaching out and connecting with us and getting that out of the way. If we’ve had a conversation we’re not going to have to take an extra 15 minutes to schedule that before scheduling a call with the seller of the business. Okay, I actually have a few more points I’m going to blend two into one. One is be likeable and the other is be likable and squeaky, all right? We’re repeating things a little bit here but that’s very important. It’s because we are trying to hone in on these because they’re critical and they make a huge difference. So the be likable first one is actually be likable to the seller of the business. When you get to the point of being on a conference call with the seller of the business your objective is to ask the same questions we asked. See if they answered in the same way. Get to know them a little bit. Get a feel for them. Be on the video. Be on the client interview. Determine whether or not you can trust them and move on with an offer of the business. That’s the upper level objective of the call. The hidden thing, the most important thing I think is to make sure that when the call is over that seller doesn’t want that call to end or that they hang up that call and think god man I really like Mark I hope he’s the buyer of my business. Because if it’s a great business as Mark said you’ve got to act fast. There are going to be lots of people that are really prepared to buy a great business and it’s going to move … what feels like fast? Fast maybe three or four days all right, you get 24 hours to review the package, you ask for a conference call, you have a conference call and 24 hours later you make an offer or shortly thereafter you make an offer. We don’t let things go under contract one hour after they’ve been listed simply because there’s no way for you the buyer to fully review the package. There’s no way for you to get on a conference call with the seller all within one hour. It just doesn’t happen. When someone presents an offer this is one of those don’ts in between the lines don’t make an offer without having gone through the process of a call with the seller within an hour. Because we know you’re just trying to tie the listing up under a lot of intent and then make a decision. We want you to make a decision about a business go under letter of intent and go all the way through the closing. Okay, so be likable. Make sure as a buyer that your seller likes you on that conference call. And then the be likable and squeaky is be likable to the brokers. We’re human right? I didn’t sleep very well last night. I had a bad day. When you call me and you’re hard on me I’m going to remember that the next time you want to buy a business. I have a particular buyer that comes to mind right now where he did just that what I said a few minutes ago. He said “I love it I want to go ahead and put in an offer.” and I said great well let’s have a … he and I have already spoken before. He’d given his LinkedIn profile. He was preparing. I said “Great. Well, let’s schedule a call with the seller first. When are you available?” total silence 24 or 36 hours … total silence and then the listening goes under contract three or four days later because there were multiple buyers because it was a great listing. And he sends me an email on the next listing that launches and says “I really like this one Joe can we get on a call with the seller of the business?” I said “Yes we can. What happened last time? You’re ready to make an offer and then you disappeared on me.” and he emailed me back and said “Well my wife had decided that it wasn’t really the business for us. There were some things that she didn’t like.” to me that that’s fine, that’s okay. You got to do your homework first before you say I want to go under contract but it also tells me his intention was to tie it up under a lot of intent and then make a decision to buy it. And that’s a big no-no because this is a very emotional process for both the buyer and the seller. So be likable to broker and respect their trusts … our time, respect our time and build that positive relationship. Okay, so that’s my fourth I think. Be likable and be likable and squeaky.
Mark: So yeah … and I’ll just say as far as being likable to the broker, we’re not asking you to sit there and give us all sorts of praise and compliments. Unless you’re talking to Jason in which case that’ll probably get you somewhere but when it comes to the … it’s just the basic manners, right?
Joe: [inaudible 00:32:02.5] by the way Jason doesn’t listen to the podcast. We need to stop making fun of Jason because he doesn’t even listen to it.
Mark: Well, who can we make fun of at Quiet Light?
Joe: Oh, let’s make fun of you.
Mark: Well, I’m always game but I’d say we pick on the new guy and the best-selling author Walker.
Joe: You know what … yes, Walker. Right and we’re not making fun of him right now I want to pay him a compliment. Before Walker came on as a broker I had a listing and we had three conference calls with three separate buyers and one of them stood out. He didn’t end up buying the business but he stood out to me and I’m going man oh man that guy is awesome. I hope I can find him a business. It turned out to be Walker. And so when you like two months later had a great listing and your seller said “Look I really don’t want a million calls is there anybody that comes to mind that would be a great broker, a great fit for this business, a great buyer, a great fit for this business?” Walker came to mind and I introduced you and guess who bought the business? Walker did folks. And now he’s, of course, an advisor broker at Quiet Light because he’s fantastic. But it’s that be likable [inaudible 00:33:06.7].
Mark: Here where I was about to pick on him and just kind of tease him but I’m going to pile on with the compliments because if you guys are listening to the podcast you’ve heard me say in the past the story where I had a buyer after his offer was accepted told my client at the end of the … you know hey we just got under offer let’s plan due diligence, took the time just to say “thank you for agreeing to sell me your business”. Well, that was Walker and the impact that I had on that deal was so significant. I mean it was again such a simple little thing that you can do and just … it wasn’t disingenuous it was a genuine hey look I get it it’s your asset. It’s what you built and you’re agreeing to sell it to me. I really appreciate that. Take the time. Be intentional. We’ve said that before … be intentional and think about all sides of the transaction here. Everybody hopefully benefits from this transaction so we shouldn’t be sitting there and thinking man I’m giving you a lot of money you should be grateful. You should also be thinking I’m also getting a great opportunity by buying this business and being respectful of that … of the person selling their business. For the person selling their businesses especially if it’s their first time, this is probably the biggest revenue event they’re going to have in their lives at least to date and so it’s a very personal thing for a lot of people selling their business. Take that time be respectful. I think that helps when you’re in a competitive situation and you have multiple buyers. Like you said Joe we have people get off the phone and say “I really hope I get to sell my business to this person” right? Now everything else needs to line up, the offer has to be there but you can definitely help your case with that. All right last point I have is … I’ll just go over it quickly because I think we’ve covered it pretty well but tell us what you’re doing. What other businesses are you part of? What are you really good at? Are you really good at CRO? Are you really good at SEO? Are you really good at SaaS businesses? Are you really interested in getting into something different? Are you really interested in certain niches? Don’t just send us a blank email on can we get these all the time and if you’re listening to this and thinking these guys just want us to cater everything that we’re doing to their way. That’s not the case. Look work whatever way you want to work but understand we get a lot of noise that comes in through our inboxes. The whole point of this podcast episode is how do you stand out from the noise? How do you distinguish yourself from other buyers? Well here’s what other buyers are doing they send us a template email telling us what they want. That’s what everybody else is doing. We do look at those. We do categorize those. We have a spreadsheet that we share internally with that data but it’s a spreadsheet with a hundred other names on it and growing every single day. If you want to stand out do some things in different. And one of those things is when you do talk to us or have an opportunity to have a conversation with us tell us what you’re doing and don’t just talk to us about what you’re doing in the monologue. Let’s talk about your business a little bit. Let’s get into it a little bit. Share some details with us. Not because we necessarily want to know but look we’re entrepreneurs we like to talk about this stuff anyways. It’s always fun. I was talking to a guy the other day who is not a client, probably won’t be a client of ours but a fellow entrepreneur and we just spent probably 45 minutes talking about his business. It was a fascinating conversation. I gained some things from it hopefully he gained some insight from it. And you know what that’s now in my mind and if he ever does come to the point of buying or if he ever does come to the point of selling one of his businesses that’s something that’s always going to stick out in my mind. So how do you cut yourself out? How do you stand above the rest of the noise? Again and have a conversation and let’s get into some of the things that you’re doing because it’s a lot easier for you to be top of mind if I know that you’re like a Shakil buying just a gazillion businesses or if you’re looking for that first time acquisition. I can think of a buyer right now, I’ve met them for coffee in person here in the Twin Cities. A husband and wife team I know that they’ve been looking for a long long time and I have a general sense for what they want. And I’ll tell you what because I had coffee with them, because they shared a couple of opportunities that they’re looking at with me I know what they’re looking for pretty well and hey I’d love to find something for them. So if you’re listening to this know I’m still looking for something for you and it’s still on my mind. So that’s my fifth point, let us know what you’re doing. Tell us a little bit. Let’s get into the details not just the high level details.
Joe: Yeah, back to the human part. When you have coffee with them you talk to them as entrepreneur … as a broker in this industry, you get excited. I want to find them that business. I want to see them succeed. I want them to be another Quiet Light success story and five years from now come back to us and sell the business worth five times the value. Or hear that they’re traveling the world while running the business and just changing their lives completely because there’s something that occurred over a cup of coffee. So I think that’s fantastic. All right my last and final point may sound a bit crazy but if you listen to our podcasts and you’ve heard Ben Carpel on the podcast … Carpel we always pronounce your name wrong Ben I’m sorry. You’re awesome though we love you. If you have listened to Ben and if you have listened to one that aired in early December of ’18 RJ you would have heard two pretty, sophisticated, intelligent, likable, passionate buyers say the same thing and that is be willing to overpay for a great business period. There are lots of great businesses that come out and when they do they get sold quickly [inaudible 00:38:37.3].
Mark: Hold on Joe are you just saying this because you’re a broker and you get paid on commission for the deals that you’re doing?
Joe: No. They said it not me. I’m quoting them. And it’s true I mean … look it’s true we had a listing that I put up in August right? We had 10 offers on it. It was squeaky clean. It had the four pillars. It had age, growth, transferability, documentation. Everything was perfect in it. It was just fantastic. I knew it when I looked at it. We priced it right to achieve the buyers and the sellers goals. We didn’t over price it because it was perfectly priced at right still and we had 10 offers. And one … actually, several buyers were willing to overpay for it. One buyer got it because of all of the things we’ve talked about. He was really likable. He was going to be easy to work with in due diligence. He was going to be easy in transition and training and he paid a little bit of extra. And he was okay with that because this is a great asset. We’ve got an email from him since then about the crazy growth that they’ve had in the fourth quarter. And my thought is oh I should share this with seller and then my thought is no that might put him in a little bit of a bad mood. But he achieved his goals. He wanted to get out at a certain time in a certain price and we actually overachieved that. So if two people like RJ and Ben are saying it I think there’s some validity to it. Because if it’s a great asset, if it’s a great business and others only were willing to pay a certain amount it’s great for you. It’s not going to be great for everyone; that’s the thing. Be willing to overpay for a great asset that’s great for you. If you’re into hunting and fishing and it’s a hunting and fishing ecommerce business that’s doing amazing things it’s something you’re going to be a little bit more passionate about. And in my experience when you’ve got some passion for something it’s going to help you overcome those hurdles and those tough times that will come to you as an entrepreneur. So if it’s a little bit … if you pay a little bit more for it I think you’re going to get that return investment quicker than if you buy a complete fixer upper that’s going to take some time.
Mark: Yeah so I’m going to … based on that go back to what you said earlier about people who email you and say “you’re way overpriced like there’s just no way that this is priced right. It’s overpriced by a ton”. Valuations are relative. That is just the reality of it. In that survey that we put out we had people give us feedback that said I love you guys but I think that your listings recently are getting overpriced. And then I had other feedback come back that said we love you guys but the perception is that you kind of underprice your properties. So we have these two conflicting things where we have some people saying hey you’re overpriced and other people saying no you’re underpriced. Look when it comes down to it the price of these assets varies based on the economy at the time but also probably, more importantly, they’re based on the individual ROI that you can get. And what you can get from a particular business is going to be different from what somebody else can get from a business based on your specific skill sets. And so if you find something that’s a good match it comes down to return on investment. What can you do with this business? If you can make that thing work be willing to pay more than what the average person in the marketplace is willing to pay. You’re still going to get a good deal. But with the competitive nature of thinking am I going to overpay for this you know crush your ability to get a deal done because somebody else will pay a little bit more. When we price a business one of the big mistakes I think happens in our industry is that people price a business for the marketplace average. That’s a mistake as a broker. And for those that are on the buying side here, I’m sorry about this next point but it’s just the case, we work for the seller. I’m not looking for the marketplace of buyers. I’m looking for a buyer within the marketplace which means I want to aim towards the top end of that average range or the marketplace range so that I can find that buyer. Be that buyer at the top of the range for the business that matches for you. Otherwise, you’re going to be competing against the full marketplace of buyers. I don’t know if that makes any sense or not but again the idea of finding that opportunity for you and standing out and making sure that when you find it move on it.
Joe: Absolutely I’ll just wrap up my side of it with the fact that we’re all entrepreneurs as Mark said. And we love what we do. It’s crazy but a lot of what we’re doing is simply helping people. We’re giving up our time and we’re getting something in return for it. We are making a living but we love it and it’s exciting to work with great buyers, great sellers who are achieving their financial and personal goals. It’s a lot of fun and we want to help each and every one that comes through our email or over the phone or text or whatever it might be. Help you achieve your goals whether you’re a buyer or a seller. And all of these things that we’ve talked about we’ve talked about it through direct experience. We built and bought and sold our own online businesses and now we get to see what thousands of people do both on the buy and sell side. And so it does come from experience. It comes from the school of hard knocks more than anything else. We’ve learned a lot of things that people shouldn’t do and a lot more things that people do right that stand out in these five things that we’ve each talked about or all these things.
Mark: Right. So, Joe, you know what I’m going to do right now?
Joe: I have no idea.
Mark: I’m going to end this podcast episode because I have an appointment with somebody who wants to buy a business and wants to spend some time talking on the phone with me. Good for this guy. He’s doing the right thing. Guys if you’re listening to this and you have ideas for an episode like this where you have a question … again that survey [inaudible 00:44:06.9] some great feedback from everybody. If you took it thank you, thank you, thank you. And I’m serious- [crosstalk 00:44:12.5].
Mark: Answer a question that we’re trying to tackle in your quest for your first acquisition or your tenth acquisition. Yeah, send us an email … send me an email at [email protected] or [email protected]. We’ll either find an expert to bring on the show to talk about it or Joe and I will jump on it on a show like this. And we’ll cover the topic as best as we can.
Joe: Perfect. Go and hunt that buyer.
Mark: All right, sounds good.
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