Podcasts about centurica

Watch Here: https://youtu.be/yPVBN0SOG14About the Guest(s): Nate Ginsburg is a seasoned entrepreneur with an impressive track record of building and acquiring businesses. He is the owner of Centurica, which provides due diligence and quality of earnings services, and SellerPlex, a full-service Amazon agency. Recently, he co-founded NTMK Logistics, a freight forwarding business. Nate has a diverse global team managing operations and has a strong background in e-commerce, logistics, and financial analysis.Summary: In this How2Exit podcast episode, Ronald Skelton reconnects with Nate Ginsburg from episode 70. Nate shares updates on his three businesses—Centurica, SellerPlex, and NTMK Logistics—discussing the intricacies of managing multiple companies and leveraging synergies. He provides insights into logistics and e-commerce, strategies for business growth through acquisitions, and the complexities of quality of earnings and due diligence. Nate offers valuable lessons from his career, highlighting the decision-making processes in starting new ventures versus acquiring existing ones.Key Takeaways:Entrepreneurial Experience: Nate Ginsburg discusses his journey of starting and acquiring multiple businesses, providing a unique perspective on both approaches.Quality of Earnings and Due Diligence: He emphasizes the importance of thorough financial verification and balance sheet analysis, especially in brick-and-mortar acquisitions.Logistics Industry Insights: Nate explains the vast and interconnected logistics industry, shedding light on freight forwarding and the collaboration between different companies.Strategic Growth vs. Synergies: The conversation explores the complexities of pursuing synergies between businesses and finding the best growth strategies for each individual company.Decision-Making Processes: Nate highlights the critical thought processes involved in deciding whether to invest in acquisitions, new ventures, or existing business growth.--------------------------------------------------Contact Nate onLinkedin: https://www.linkedin.com/in/nateginsburg/Website: http://nateginsburg.com/--------------------------------------------------How2Exit Joins IT ExchangeNet's Channel Partner Network!-Why IT ExchangeNet?Since 1998, IT ExchangeNet has created $5 billion in value by selling more than 225 IT businesses in 20 countries. IT ExchangeNet works exclusively with IT-enabled businesses generating between $5M and $30M who are ready to be sold, and M&A decision-makers who are ready to buy. For over 25 years IT ExchangeNet has developed industry knowledge that helps them determine whether a seller is a good fit for their buyers before making a match."Out of all of the brokers I've met, this team has the most experience and I believe the best ability to get IT service businesses sold at the best price" - Ron SkeltonThe IT ExchangeNet M&A Marketplace we partnered with has a proprietary database of 50,000+ global buyers seeking IT Services firms, MSPs, MSSPs, Software-as-a-Service platforms, and channel partners in the Microsoft, Oracle, ServiceNow, and Salesforce space.If you are interested in learning more about the process and current market valuations, complete the contact form and we'll respond within one business day. Everything is kept confidential.Are you interested in what your business may be worth? Unlock the value of your IT Services firm, visit https://www.itexchangenet.com/marketplace-how2exit and complete the contact form.Our partnership with IT ExchangeNet focuses on deals above $5M in value. If you are looking to buy or sell a tech business below the $5M mark, we recommend Flippa.--------------------------------------------------

Chris Yates is the Co-owner and COO of Centurica, a due diligence services firm that helps ecommerce entrepreneurs avoid scams, fraud, and unreliable information when purchasing an online business, website, or Amazon FBA account. He is also the Co-owner and CEO of Rhodium Weekend and the Co-founder and Managing Member of Vision Group Management, LLC.  Throughout his career, Chris has built hundreds of websites, generated millions of dollars in sales, and successfully created, scaled, and sold multiple businesses. He has also been an advisor on more than $50 million in online business acquisitions and exits. In this episode… Do you want to know exactly what you're getting yourself into when purchasing an online business? Are you looking for advice and tools to help you identify — and avoid — risky deals? It's difficult to evade unnecessary risks when buying a business, especially as a new entrepreneur. You want to acquire a solid, profitable business — but how can you do so without hard-won experience under your belt to instruct you every step of the way? That's why Chris Yates is here today: to share his own accumulated wisdom about online businesses and help you identify common red flags to prevent a disastrous sale.  In this re-released episode of the Quiet Light Podcast, Joe Valley sat down with Chris Yates, the Co-owner and COO of Centurica, to discuss the best-kept secrets for buying an online business. Listen in as Chris talks about his tips and tricks for diversifying risk, what to avoid when buying an Amazon FBA business, and how Centurica's MarketWatch tool is changing the game for buyers and sellers across the globe. Stay tuned!

CEO of Centurica, the premium provider of buy-side due diligence services for online acquisitions. 10 + years online entrepreneur, investor and Yogi.Centurica, works with a large range of individual investors, funds and PE firms to help them:1) Verify that the business is what the seller is reporting2) Uncover and hidden risks that could derail the business3) Identify key opportunities for improving the business and increasing its value4) M/A Advisory to help interested acquirers with deal flowThey provide unique value to clients due to their operational and business growth expertise. Nate has built multiple 7 figure businesses (in e-commerce and service business models). Had two exits. Started SellerPlex as well as am an investor in a portfolio of other online businesses. Now my focus is on leading our team at Centurica. Aside from business, Nate is passionate about yoga, personal development, travel, health/fitness, mindfulness and audiobooks. To get a sense for my values check out some of the posts on my page.--------------------------------------------------Watch it on Youtube: https://youtu.be/11oaAcmK4nY--------------------------------------------------Contact Nate onLinkedin: https://www.linkedin.com/in/nateginsburg/Website: https://Centurica.comTwitter: https://twitter.com/NateGinsburg--------------------------------------------------How2Exit Joins ITX's Channel Partner Network!-Why ITX?Since 1998, ITX has created $5 billion in value by selling more than 225 IT businesses in 20 countries. ITX works exclusively with IT-enabled businesses generating between $5M and $30M who are ready to be sold, and M&A decision-makers who are ready to buy. For over 25 years ITX has developed industry knowledge that helps them determine whether a seller is a good fit for their buyers before making a match."Out of all of the brokers I've met, this team has the most experience and I believe the best ability to get IT service businesses sold at the best price" - Ron SkeltonThe ITX M&A Marketplace we partnered with has a proprietary database of 50,000+ global buyers seeking IT Services firms, MSPs, MSSPs, Software-as-a-Service platforms, and channel partners in the Microsoft, Oracle, ServiceNow, and Salesforce space.If you are interested in learning more about the process and current market valuations, complete the contact form and we'll respond within one business day. Everything is kept confidential.Are you interested in what your business may be worth? Unlock the value of your IT Services firm, visithttps://www.itexchangenet.com/marketplace-how2exit and complete the contact form.Our partnership with ITX focuses on deals above $5M in value. If you are looking to buy or sell a tech business below the $5M mark, we recommend Flippa. Flippa - Real Buyers, Real Sellers - Where the Real Deals Are MadeVisit Flippa - https://www.dpbolvw.net/click-100721038-15233003--------------------------------------------------

Today we have an ex Amazon seller and one of my favorite writers and you'll learn why on this episode, Nate Ginsburg of Centurica not only shares his experiences, hacks and tips and his love for service related business but how his love for fitness impacted and helped him succeed in business. Listen in and be inspired.  In This Episode: [01:26] Welcoming Nate Ginsburg in the show. [04:50] Retreat, Trade Shows, Masterminds and Conferences. [07:50] Retreat in Peru [14:35] 6 needs [17:50] Were you always on this field? [25:00] First business. [27:00] Service business [30:00] Hacks and Tips [35:50] About Centurica   Guest Links and References: Website: https://centurica.com/ Instagram: https://www.instagram.com/nateginsburg/?hl=en   Book Reference: The Artist Way Morning Pages by Julia Cameron The Bhagavad Gita by Jack Hawley Links and References: Wizards of Amazon: https://www.wizardsofecom.com/ Wizards of Amazon Courses: https://wizardsofamazon.mykajabi.com/a/27566/x6Kwkz6p Wizards of Amazon Meetup: https://www.meetup.com/South-Florida-FBA/ Wizards of Amazon on Facebook: https://www.facebook.com/groups/WizardsofAmazon/ Wizards of Amazon on Instagram: https://www.instagram.com/wizardsofecom/

Today's guest on the Niche Pursuits podcast is Nate Ginsburg. Nate has a background in Amazon FBA and Business Acquisition. He joins Jared today to talk about purchasing Centurica, dropping lots of valuable knowledge bombs for anyone looking to acquire a business now or in the future.

When it comes to navigating the twists and turns of acquiring a business, particularly one in the 7-figure range, even the most seasoned entrepreneurs often find themselves in unfamiliar territory.  In this episode, Nate Ginsburg, a 10+ year online entrepreneur and investor gives us a behind-the-scenes look into his 7-figure acquisition of Centurica, a due diligence service that guides buyers through the complexities of assessing and purchasing web-based businesses. Nate walks us through the biggest pressure points of the acquisition, including how he approached the previous owner with an offer to purchase Centurica, how he financed the deal, and the support structure made available to him as a buyer.  He shares the biggest lessons he learned from the purchase and reveals the advice he would give himself if he had to do it all over again. According to Nate,  “My advice to buyers is, during your due diligence, spend some time looking into the nitty gritty parts of the operation to understand the deliverables you'll have to build out when you take over the business. You should also try to engage the seller in as long of a transition and support period as possible.” We also dive into the different categories and components of buyer due diligence, how to overcome key-person risk, and we break down the hidden risks and opportunities that buyers can uncover with the right research.  If you're considering buying an online business you can't afford to miss out on Nate's first-hand knowledge of the ins and outs of the acquisition process. Topics Discussed in This Episode: Nate walks us through his entrepreneurial background (02:14) A brief overview of Centurica and why Nate was inspired to acquire the business (06:30) Nate walks us through how he went about acquiring Centurica (09:22) The SBA loan process and how Nate determined the value of Centurica (12:41) Key-person risk and importance of hiring the right team (15:33) The different categories and components of due diligence (29:54) Hidden risks and opportunities that can be uncovered during buyer due diligence (34:40) Why online businesses are a great investment (36:31) The biggest changes Nate has seen in the online business industry over the past few years (37:33) The advice Nate would give himself if he started his online journey all over again (40:13) Mentions: Empire Flippers Podcast Empire Flippers Marketplace Schedule a call with our expert sales advisors  Centurica SellerPlex Sit back, grab a coffee, and learn the importance of buyer due diligence when acquiring an online business. 

When it comes to navigating the twists and turns of acquiring a business, particularly one in the 7-figure range, even the most seasoned entrepreneurs often find themselves in unfamiliar territory.  In this episode, Nate Ginsburg, a 10 + year online entrepreneur and investor gives us a behind-the-scenes look into his 7-figure acquisition of Centurica, a due diligence service that guides buyers through the complexities of assessing and purchasing web-based businesses. Nate walks us through the biggest pressure points of the acquisition, including how he approached the previous owner with an offer to purchase Centurica, how he financed the deal, and the support structure made available to him as a buyer.  He shares the biggest lessons he learned from the purchase and reveals the advice he would give himself if he had to do it all over again. According to Nate,  “My advice to buyers is, during your due diligence, spend some time looking into the nitty gritty parts of the operation to understand the deliverables you'll have to build out when you take over the business. You should also try to engage the seller in as long of a transition and support period as possible.” We also dive into the different categories and components of buyer due diligence, how to overcome key-person risk, and we break down the hidden risks and opportunities that buyers can uncover with the right research.  If you're considering buying an online business you can't afford to miss out on Nate's first-hand knowledge of the ins and outs of the acquisition process. Topics Discussed in This Episode: Nate walks us through his entrepreneurial background (02:14) A brief overview of Centurica and why Nate was inspired to acquire the business (06:30) Nate walks us through how he went about acquiring Centurica (09:22) The SBA loan process and how Nate determined the value of Centurica (12:41) Key-person risk and importance of hiring the right team (15:33) The different categories and components of due diligence (29:54) Hidden risks and opportunities that can be uncovered during buyer due diligence (34:40) Why online businesses are a great investment (36:31) The biggest changes Nate has seen in the online business industry over the past few years (37:33) The advice Nate would give himself if he started his online journey all over again (40:13) Mentions: Empire Flippers Podcast Empire Flippers Marketplace Schedule a call with our expert sales advisors  Centurica SellerPlex Sit back, grab a coffee, and learn the importance of buyer due diligence when acquiring an online business. 

Ep. #4 [THEME THREE] In this last episode of the series, “Demystifying Business Valuations,” we have Chris Yates, the owner of Rhodium Weekend, a community of online entrepreneurs, on the show to share the story of how he sold his business, Centurica. Chris received two offers from different buyers that were wildly different. In this episode, we hammer home the concept of intrinsic financial value vs. strategic transaction value by unpacking the differences in Chris’s offers. In the first half of this episode, Chris goes in-depth with the first offer he got from a strategic buyer–an Amazon aggregator–that wanted to do an “acquihire” (essentially wanting to purchase the company for the people and processes). Chris describes how the purpose of the deal drove the deal structure and terms and how it eventually blew the deal up. In the second half, Chris walks us through how he doubled down and focused on the intrinsic financial value of the company by getting a bank to pre-approve an SBA loan (ultimately determining the intrinsic financial value of the company based on the risk of the cash flow). Getting clear on the intrinsic financial valuation helped Chris during the second negotiation for a few reasons. First, he knew what his valuation was regardless of the specific buyer. Second, Chris was able to clearly negotiate the terms and deal structure efficiently because he knew what the company’s intrinsic value was worth. In addition, there are limitations to “creative” deal structures when an SBA is used. Being approached by a buyer can cause a rush of emotions for you as the business owner. However, in this series, we have consistently discussed how getting clarity on the intrinsic financial value is crucial so you can weigh all your options against what you know the company is worth. //WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast What You Will Learn How to structure an LOI so a buyer can’t steal your clients, processes, and systems. Why Chris decided to exit even though he was getting fed opportunity from old and existing clients. What was driving the acquihire buyer to want Centurica so badly. How Chris got into the mind of the acquihire buyer to really understand why they wanted his company. Why understanding what he wanted and why helped Chris negotiate with a buyer that initially had an unappealing offer. How Chris realized that ALL of the decision makers need to be sitting at the deal table. The uncertainties Chris had in the first deal and why he wished he had set the terms instead of reacting to each offer (and pulled away at the beginning knowing it wouldn't work). Chris’s thought process after the first deal fell apa

Ep. #4 [THEME THREE] In this last episode of the series, “Demystifying Business Valuations,” we have Chris Yates, the owner of Rhodium Weekend, a community of online entrepreneurs, on the show to share the story of how he sold his business, Centurica. Chris received two offers from different buyers that were wildly different. In this episode, we hammer home the concept of intrinsic financial value vs. strategic transaction value by unpacking the differences in Chris’s offers. In the first half of this episode, Chris goes in-depth with the first offer he got from a strategic buyer–an Amazon aggregator–that wanted to do an “acquihire” (essentially wanting to purchase the company for the people and processes). Chris describes how the purpose of the deal drove the deal structure and terms and how it eventually blew the deal up. In the second half, Chris walks us through how he doubled down and focused on the intrinsic financial value of the company by getting a bank to pre-approve an SBA loan (ultimately determining the intrinsic financial value of the company based on the risk of the cash flow). Getting clear on the intrinsic financial valuation helped Chris during the second negotiation for a few reasons. First, he knew what his valuation was regardless of the specific buyer. Second, Chris was able to clearly negotiate the terms and deal structure efficiently because he knew what the company’s intrinsic value was worth. In addition, there are limitations to “creative” deal structures when an SBA is used. Being approached by a buyer can cause a rush of emotions for you as the business owner. However, in this series, we have consistently discussed how getting clarity on the intrinsic financial value is crucial so you can weigh all your options against what you know the company is worth. //WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast What You Will Learn How to structure an LOI so a buyer can’t steal your clients, processes, and systems. Why Chris decided to exit even though he was getting fed opportunity from old and existing clients. What was driving the acquihire buyer to want Centurica so badly. How Chris got into the mind of the acquihire buyer to really understand why they wanted his company. Why understanding what he wanted and why helped Chris negotiate with a buyer that initially had an unappealing offer. How Chris realized that ALL of the decision makers need to be sitting at the deal table. The uncertainties Chris had in the first deal and why he wished he had set the terms instead of reacting to each offer (and pulled away at the beginning knowing it wouldn't work). Chris’s thought process after the first deal fell apa

Nate Ginsburg is an entrepreneur, investor, and CEO of Centurica, a premium provider of buy-side due diligence services for online acquisitions. For the last 10 years, Nate has been an online entrepreneur for brands such as Onset LLC, Onset Interactive, and SellerPlex. He is a Partner at AMZ Pathfinder and Principal at Abound Ventures.  Nate graduated from the University of Wisconsin-Madison with a degree in economics and philosophy. He is passionate about yoga, personal development, travel, health and fitness, mindfulness, and audiobooks.  In this episode… If you're buying a business on or off Amazon, how can you avoid common mistakes and red flags that can delay your deal? According to Nate Ginsburg, a business needs to have solid financial pillars to avoid any pitfalls.  Through the process of due diligence and valuation, an entrepreneur can have confidence when purchasing a business — and that is what Nate brings to the table. With his purchase of Centurica, he is creating value for others and his brand by having conversations and educating others on the buying and exiting process. So, how can you make sure your finances are in place? In this episode of the Quiet Light Podcast, Joe Valley sits down with Nate Ginsburg, entrepreneur, investor, and CEO of Centurica, to discuss the importance of due diligence when growing and exiting your brand. Nate talks about his approach and journey to purchase Centurica, the deal structure of working with an SBA loan, and red flags a buyer needs to watch out for when purchasing a business. Stay tuned!

This week on the Digital Velocity Podcast Chris Yates of Centurica joins Erik and Tim to discuss growing digital businesses through acquisition. https://www.digitalvelocitypodcast.com/episodes/13-growing-your-business-through-acquistion-chris-yates

The market for eCommerce businesses has never been hotter. Now dozens of brand aggregators have war chests of $100s of millions of dollars with one mission - buy and grow eComm brands. We're now seeing valuations in the 5-6x of EBITA where just a few years ago we were only seeing 3-4x multiples.   Now is a great time to sell an eCommerce brand. And, if done right, it's still not a bad time to buy a brand.   Chris Yates is co-owner of Centurica a company that offers buy-side due diligence for digital businesses. He's also the founder of Rhodium Weekend - a vetted community of digital entrepreneurs and investors.  Here's a look at what we cover.   Mistakes when going through due diligence Most important steps/tips when going through due diligence  Mistakes when evaluating your own business As you hit different vacation tiers - types of buyers and buyers wants and needs change  How aggregators are changing the landscape of DTC M&A What is Rhodium weekend? Mastermind and speakers. Real in the trenches stuff and fun activities

Ben Aston is joined by Chris Yates, Founder of Rhodium Weekend. He's also a partner with Centurica and has advised on hundreds of millions of deals for online businesses, acquisitions, and exits. Listen to learn how to create value and sell your content sites.

Chris Yates is the Co-owner and COO of Centurica, a due diligence services firm that helps e-commerce entrepreneurs avoid scams, fraud, and unreliable information when purchasing an online business, website, or Amazon FBA account. He is also the Co-owner and CEO of Rhodium Weekend and the Co-founder and Managing Member of Vision Group Management, LLC.  Throughout his career, Chris has built hundreds of websites, generated millions of dollars in sales, and successfully created, scaled, and sold multiple businesses. He has also been an advisor on more than $50 million in online business acquisitions and exits.  In this episode… Do you want to know exactly what you're getting yourself into when purchasing an online business? Are you looking for advice and tools to help you identify — and avoid — risky deals? It's difficult to evade unnecessary risks when buying a business, especially as a new entrepreneur. You want to acquire a solid, profitable business — but how can you do so without hard-won experience under your belt to instruct you every step of the way? That's why Chris Yates is here today: to share his own accumulated wisdom about online businesses and help you identify common red flags to prevent a disastrous sale.  In this episode of the Quiet Light Podcast, Joe Valley sits down with Chris Yates, the Co-owner and COO of Centurica, to discuss the best-kept secrets for buying an online business. Listen in as Chris talks about his tips and tricks for diversifying risk, what to avoid when buying an Amazon FBA business, and how Centurica's MarketWatch tool is changing the game for buyers and sellers across the globe. Stay tuned!

What do you do when your business loses 70% of its revenue? It happened to one of Justin Gilchrist's businesses. In the following interview, we will talk about what he did about it. Justin is a serial entrepreneur. He is also the UK based co-founder of Centurica. Centurica provides due diligence and website [...] The post What To Do When Your Business Loses 70 Percent Revenue appeared first on Small Business Advice Help For Startups and Entrepreneurs.

Chris Yates is the Co-Owner of Centurica, an online acquisition and due diligence company that helps buyers, sellers, and owners of digital assets protect their interests and manage their portfolios. Chris is also a Managing Member of Vision Group Management, LLC, and the Co-Founder of Rhodium Weekend. Over the years, Chris has built hundreds of business websites, generated millions of dollars in sales, and advised on more than $50 million in acquisitions and exits. Brian Diener is the Director of Operations at Centurica. In this position, Brian helps potential business owners review acquisitions, verify seller claims, and avoid risky deals. As an e-commerce expert, Brian has bought, sold, and invested in $3 million worth of online businesses. He has also advised hundreds of clients during the acquisition process of more than $100 million in internet businesses. In this episode… Are you a buyer or seller of online businesses? Do you want to know how to make the transfer process as smooth, transparent, and effective as possible? If so, meet your new best friend: due diligence. The due diligence process is vital to a successful—and relatively seamless—exit. However, due diligence can be tedious, stressful, and confusing. That's why Chris Yates and Brian Diener help clients navigate the due diligence process through their company, Centurica: to make the exit planning process as painless and productive as possible. By analyzing every nook and cranny of your business to assess risk, improve documentation, and verify claims, these due diligence experts not only ensure a smooth transition, but also help you create a more valuable business. So, how can you start working with Centurica today? In this episode of Amazing Exits, Kellianne Fedio and Paul Miller sit down with Chris Yates, Co-Owner of Centurica, and Brian Diener, Director of Operations at Centurica. Together, they discuss everything you need to know about due diligence. Listen in as Chris and Brian reveal why SBA funding impacts your business' profitability, how to avoid crucial—but common—mistakes as an Amazon seller, and the secrets to dramatically increasing your business' value before selling. Stay tuned!

Learn about the coaching program: https://www.BusinessBuyerAdventure.com Find Centurica https://www.Centurica.com Get more info and join my list at https://www.DavidCBarnett.com Related Article: Due-diligence for online businesses in Covidland. Brian Diener is with Centurica, they’re due-diligence experts for online businesses. I had Brian come to the Business Buyer Advantage group coaching program as July’s guest expert. I wanted to invite him to the main YouTube channel to talk about what they’re seeing in the online business marketplace now that Covid has disrupted business around the world. We also touched upon some of the issues and dangers in having a brick and mortar business pivot to online. Check out the interview here: https://youtu.be/-nRhkZ_fjcI Learn about the coaching program here: https://www.BusinessBuyerAdventure.com Learn how to buy an already-successful and profitable business even in the covid-recession of 2020: https://www.BusinessBuyerAdvantage.com Book a call with me at https://www.clarity.fm/davidbarnett Stop missing my videos and other news. Join my email list here: https://www.DavidCBarnettList.com

Chris Yates On Pivoting And Profiting During A Pandemic"I surround myself with others who have already started to take that leap or who are already a few steps ahead"- Chris YatesChris Yates Chris Yates is Founder of Rhodium Weekend and Partner in Centurica. Rhodium Weekend is a community of 6 to 8 figure digital business owners and investors. Chris has over a decade of experience acquiring and operating digital businesses. Chris has overseen $150 Million in acquisitions of eCommerce, Content, and SaaS businesses. Centurica specializes in helping entrepreneurs, companies and private equity firms buy online businesses.SHOW NOTESThe power of building a network around youThe importance of transforming a website into a lead machine through contentHow Chris solves problems by having the right community of people around himWhy you need to be in a mastermind groupChris' first principles of business: adapt and always learnWhy it's critical to diversity revenue and traffic to create a busienss of valueChris' approach to generating leads through digital marketingGenerating leads through paid advertising and organic networksThe power of peer groupsThe importance of working with the trend and not against itAsk yourself the question, "what the opportunity in this situation?"The value of customer and business relationshipsChris' challenge with his upcoming in-person Rhodium Weekend in light of the coronavirusDissecting elements of an in-person invent and transferring what you can to virtualFirst principles of both an in-person and virtual eventHow Chris leverages the power of word-of-mouth marketingChris found a way to monetize his passion for connecting peopleThe secrets of being a great operator for eventsWhat to look for in opportunities as an investorWhy business owners must disrupt their businessesThrive in business when you do what's hard for big companies to replicateThe strategies Chris deployed to avoid the pandemic from putting him out of businessHow Chris looks at what's ahead in the new economyThe importance of building trust with your community and customersChris' approach to buying and selling businesses and creating a business he keepsHow Rhodium Weekend channels Chris' passion while helping business owners solve their problemsThe power of scarcity and small groups to create a thriving communityChris' 7-year rule that puts people first every dayThe world needs leaders to get it through the pandemicThe power of stepping into the identity of a leader and not holding backThis podcast is brought to you by Deep Wealth. Are you a business owner who is wondering how to grow your business, sell it, or both? Perhaps you're wondering how to make your business pandemic-proof? Learn how the strategies to grow and extract the deep wealth from your business.Enjoy the interview!SELECTED LINKS FOR THIS EPISODEConnect with Chris YatesRhodium WeekendThe Deep Wealth ExperienceThe free Deep Wealth Exit eBook

Chris Yates is the founder of Rhodium Weekend and Owner of Centurica. Rhodium Weekend is an event for online Entrepreneurs who own 6- to 8-figure businesses, and for buyers, sellers, and investors of those businesses. Using both structured and unstructured time so each person can learn, network, and share in the way that works best for them. All attendees are curated through an application process to ensure the community is filled with smart, driven members who are willing to pay-it-forward with their own expertise. Episode Highlights: What is it about smaller, more intimate events that's working well? Money hacks versus real business Why is scaling challenging when you get involved in running the business? Insights about productized service businesses A good portfolio and filters work for investment Thoughts on deal structures like seller financing Where to seek for legal and accounting advice? How to build up mentorship and support for yourself Tweetable Quote: “I will buy any deal at any price as long as you let me name the terms. When you think what that means is price kind of irrelevant. I could tell you I will pay you a million for your business right now but I'm going to pay you a penny a day for a million days, that doesn't sound very attractive.” – Chris Yates Resources Mentioned: https://rhodiumweekend.com/ - Rhodium Weekend https://centurica.com/ - Centurica https://www.linkedin.com/in/chrismyates/ - Chris Yates's LinkedIn

Chris Yates, partner at Centurica, the biggest due diligence company in the e-commerce acquisition space, walks through the interests and concerns of the buyers of e-businesses. He is also the founder of the Rhodium community, composed of people interested in buying and selling on-line businesses.WHAT YOU'LL LEARNWhat is Due Diligence?Centurica’s Due Diligence ProcessDeterminants of Due DiligenceDeal KillersTips to Prepare for Successful BuyKEY NOTESCenturica primarily works with buyers in conducting due diligence on sellers, making sure that the buyer’s objectives are met and there is an appropriate fit.Trust is the most important thing; it is not just between buyers and sellers, but also all the agencies that the buyers and sellers are working with, including brokers, 3rd party evaluators and the like. Most deals do not push through due to the breaking of this trust.As early as now, co-mingling of funds, either between businesses or personal and business, should be cleared from the books to show true performance of the business. As much as possible, keep separate accounts per business.Due diligence looks beyond financials. Marketing performance and inventory treatment are equally looked into.The process and level of due diligence is dictated more by the buyer and not just the size of the business being bought.Listing an e-business as SBA qualified helps in increasing the buyer’s pool.Click here to Listen, Subscribe, and Review Ecom Exits Podcast on ApplePodcastsThanks so much for joining us this week. Want to subscribe to the Ecom Exits Podcast with Nate Ginsburg? Have some feedback you’d like to share? Connect with us on ApplePodcasts and leave us an honest review!Your feedback will not only help us improve the show, but it will help us connect with more high flyers like you.Subscribe to the eCOM EXITS Podcast now

Some of the most popular episodes we've aired have been with guests who have experienced the buying or selling process firsthand. Today's guest has acquired several businesses and is genuinely good at the acquisition process. In part one of a two-part series, Chuck is talking to Mike Nunez about his various acquisitions and his 9 super secret to tips to being a great buyer. Mike has been in the online marketing space since 1999. After gaining experience in affiliate marketing, he launched Affiliate Manager with his brother while he continued to work full time for Google. More recently, Mike has purchased several e-commerce businesses from Quiet Light. We'll hear about how Mike is becoming one of our top buyers, how he's realizing his dreams, and that one last goal he may just reach. Episode Highlights: What it means to be a good buyer. What values the seller looks for aside from the monetary value. Ways to put the seller at ease by focusing on what is important to them. The importance of having a plan in your approach to the seller. How to accept and value of the previous owner's advice during the transition. Why you should avoid poor positioned questions when working with the seller. The buyer needs to find what he wants – the fit has to be right for the buyer too. Finding the component that will help make the business yours and not focus solely on the money piece. The relationship of trust in your broker is also a key factor in being a good buyer or seller. Transcription: Mark: Some of the most popular podcasts that we've put out here at Quiet Light Brokerage are the episodes where we get the chance to interview either a seller or a buyer on their background or their journey of going through a buying an online business. And Chuck I know you had a good friend of ours, a good friend of Quiet Light Brokerage's and a previous podcast guest as well, Mike Nuñez on because he's acquired a couple of businesses from us and more specifically from you in the recent months. How did that discussion go? Chuck: Yeah it went great. Mike is what I would consider probably one of our best buyers. The way he's able to get on a phone call and just talk to people, and sometimes I use the word tactics throughout the call. I don't feel like when he's doing it he's being tactical, I feel like he's just a very genuinely friendly guy who is just really good. His experience is that he's been in internet marketing for 20 years I've been in it for 24 so he's almost up there with me. Mark: He worked at Google so he's got that on you. Chuck: Yeah, he worked at Google for four years in the paid search department. So he talks a lot about on this one so I ended up having to split this up into two podcasts because it was just going so long. So the first one we talked about his nine super-secret tips to being a great buyer and there was a lot of really actionable stuff in there that I think everybody is going to be able to get a lot out of. Mark: Guys that's awesome and you talk about the difference between tactics and just being a good guy and look they can blend together, right? I mean Mike isn't the type of conniving guy saying here's what I'm going to do, I'm going to say this phrase and that phrase to make sure somebody absolutely loves me and then I'm going to be able to get an additional 20% off. That's not the way he works. He is just generally a good guy. He helps a lot. He's got that help first mentality. We preach this all the time and Joe is the one that coined a lot of these phrases which is nice buyers tend to do better. And it's just really, really true that sometimes we need tips on how to do it. This is why Dale Carnegie wrote the famous book How to Win Friends and Influence People just to give us some actionable tips to be like how do you actually encounter people in a business environment in a way that will benefit you. And if you read the book you find out that a lot of it is; well it starts with that right disposition and who you are. And Mike is a good person. I love that you broke this out into nine tips. Are you able to give me any preview of any of the nine tips or do you not remember them offhand? Chuck: Yeah. So one of the questions is around positioning the way you ask questions I think it's a really good tip. I won't get into all the details but you'll see it in the video. Mark: Okay, so not just going out there and hammering people with questions in a very kind of combatant way but I'm sure Mike has a very unique approach to that. Chuck: Well, Mark I just said I'm not going to get into the details. Don't try to pressure me. Mark: Alright. You know what I was talking to Joe the other day and he's like do you listen to the podcasts, Mark? And I said no, I don't because I hear enough of you Joe I don't want to hear more of you and he records all the episodes. So he said your intros are getting to be too long so let's cut it out. Let's get to it. Chuck: Hey everybody today on the call we have Mike Nuñez. Welcome, Mike. Mike: Thank you, Chuck, it's great to be here. Chuck: So people may have heard your name before because we mentioned you quite frequently on the podcast. And the reason we mentioned you so frequently is because you're what I would consider my number one buyer. I think probably one of Quiet Light's top buyers and not from a monetary perspective. You do purchase a lot of businesses, you purchase a lot of large businesses from us but more so just from your personality; the way you interact with clients on phone calls like whenever I'm telling somebody how to be a good buyer I'm always in my head thinking what does Mike do and then I'm telling them what Mike does in order to be a good buyer. Because we're friends and I know you outside of Quiet Light but like I really do mean that. Like you are really a great buyer and you're easy to talk to. And if anybody's watching the video today they're going to notice that you look somewhat like a sports commentator with that headset on and you've got a suit and tie and the suit and tie isn't the normal way I see Mike but one of the businesses he purchased was a custom-tailored suit business so I guess he's got to rep that brand now. Mike: That's right. Chuck: But maybe you could tell everybody a little bit about yourself. Mike: Oh great. I'm happy to. And first, let me say thank you. That was super just kind of you to say. I always whenever I have any of these phone calls I just take an approach of what I want to hear and recognizing that these business owners have been working on this; their babies, right? And you just have to be careful as you ask questions because we all want to know where the opportunity is and I'm sure we'll talk much more about that here but we want to know where the opportunity is and the way that you find that is by asking questions. But it's a very fine line between asking questions and becoming insulting and so you just have to walk that fine line. But there's absolutely a way to do it and there's a way to lead these sellers into that and realizing that you're both kind of on the same team. But again; well I think we're getting ahead of ourselves or at least I am so I'll tell you a little bit about me to start this off. I've been in online marketing since 1999, I was in college at the time and I know that dates myself a little bit. The first job was in lead generation, online marketing. I moved in to travel doing affiliate marketing and travel. I eventually launched my own affiliate marketing business along with my brother that's still going today so its AffiliateManager.com. Last year we merged with a company called Rhino Fish to create the performance company which is our page search division. Overall that marketing company is about 22 people. We have 3 former Googlers myself included on that staff. So we're quite good at both affiliate marketing and paid search. I like to say so. We also have two other businesses or I have two other businesses; one is an outdoor equipment seller that I purchased from Quiet Light, another is a custom made to measure suit company that I purchased from Quiet Light as well. So overall I'm about 20 years down it hurts to say experience in online marketing and business and online businesses in general and it's been a really fun journey. I always like to say Chuck my dream used to be I want to be able to work from anywhere and now I'm there. The new dream is that I want to not have to work. So someday I'll realize that second dream. Chuck: I don't like to hear that because I think the term not working would be not buying additional businesses and you're one short away from a special goal that I; I told him if you bought a certain number that I would buy him a specific thing. So he's just shy of that goal. Mike: Yeah it's just without getting into too many details like we're talking about less than what is it 4% on millions of dollars that I'm short. Chuck: But I set this goal early on, right? So it's your fault that you haven't reached it. If you have just paid a little bit more in that last acquisition you would have hit that goal. Mike: We need to round up Chuck. That's what I'm saying. We need to just round up and I should hit that threshold. Chuck: I'll remember that on the next acquisition. We'll just round up. Mike: Right. Yeah. Only when it's in my favor, please. Chuck: So part of the reason I wanted to have you on the call today was one just to talk about maybe some tips or just maybe even not tips but just discussing what it is to be a good buyer. But then also from your perspective what it is you're looking at when you're looking to buy businesses. I know you have a specific criteria that you're looking for and your criteria is different than other people's. And I wanted to also maybe talk about some lessons you've learned along the way. So I guess to kick it off maybe let's just dive in a little bit about being a good buyer. So I would start off just by saying that you know I talked to a lot of people; constantly I'm on the phone and people are always asking me what it is to be a good buyer? And some people I talked to think that in order to be a good buyer it's about being aggressive in trying to negotiate. And maybe they're not thinking that as being a good buyer but they want to try to get the best deal by doing that and they'll say negative things about people's businesses. And you take a very different approach than that. So I think you already addressed it a little bit but maybe you want to dive into maybe the approach you take to negotiating and to speaking with others. Mike: Sure. I think it's important context to say both of the businesses that I've purchased from you Chuck and Quiet Light had multiple offers, were very much generating a lot of interest and so there were multiple potential buyers. And I don't want to say we were the lowest offer. I don't think we were. I know in both cases we weren't the highest offer either. Chuck: Yeah just maybe to add a little context before you dive into further, one of the; I think actually both of them said I wanted to sell to Mike. So they're talking to multiple people and they said get Mike up to this number I want to sell to him. Even though that number was lower than what some of the other potential buyers were offering. Mike: Yeah. Chuck: So I think that speaks a lot to you. Mike: Thank you again, Chuck. But I would say that therein lies the quote-unquote the secret which is money is valuable, right? They want money. If you're nowhere near what they're asking or if you're nowhere near what their magic number is, the rest of this conversation goes away. Let's put that aside. I think Quiet Light does an incredible job overall of valuing companies fairly and appropriately. And you know that walking in. So if you know that walking in okay this is a fairly and appropriately valued business now it's a matter of percentage points maybe either way and in either direction of that. The purpose of the call, at least the initial call is to identify; one of the purposes of the call is to identify what value is this seller seeking beyond the dollars because the dollars are going to fall within a certain range. So a good example for the suit business is the seller really cared about his people. He really cared about his co-workers that he's had for the last however many years; almost 10 years that have put in their blood, their sweat, their tears into this. And he wanted to know that they were going to be okay. And I think actually in the ranking of why I won the business even though I had a lower offer than other people had, that's probably number one is just feeling comfortable about that the new owner is going to come in and take care of the people that were there. And I made no promises. Let me say that. I didn't say I promise I'm not going to let anybody go or I promise; I said no, I promise I'm going to be fair and appropriate with everybody and evaluate everybody based on performance. And he was confident knowing that he had hired stellar people. And it was part of what was so attractive about the business is he had incredible people that were already working there so it made it even more attractive for us. So I think that was number one for him. Second I think there was a sense of patriotism maybe. So this is a European company. It was based in Europe. It's in a European country. And this European country is kind of known for textiles and for creating things and such. And so I think one of the other buyers; and again there's multiple people in here that you're kind of competing against and so you got to think of like a pros and cons checklist and I'm being compared to each one of these other potential buyers in their pros and cons checklist. One of the other potential buyers wanted to move the production out of Europe and into China. There's nothing wrong with that if that's where their connections are if that's where their factories are and such; great. That's where they want to move their production, good for them. However this particular seller wanted to keep production because of his pride for his country, because of his desire to benefit his country, he wanted to keep production in his home country. I didn't have any alternative contacts in China or in any other potential production areas and so I felt like that was important to them and so I made it known. And I think a lot of, and I think it's the second thing is kind of just listening on the calls. Maybe that's super-secret number two is listening and hearing what's important to them and asking that question okay let's move money aside what's important to you in the future of this company? And another good example of that is potential branding or taking care of the customers. I know this may sound a little bit cliché but this is their baby, right? They've grown this baby. They've watched this baby grow. They've poured their love, their sweat, their tears, their hours. The seller of the custom suit company is an example. I remember him saying like I can't remember the last time I took a vacation. He just poured everything he possibly had into this company. And so when you're that invested overall they just kind of feel a comfort level that the new owner is going to come in and do right by what they've built. They just don't want to see it go away and it's they've already got their cash at that point and they still care. And I will say one positive side effect and please know that this is partly or mostly; not even partly, mostly because of the owner and this is one of the criteria; we can talk more about this later, but one of the criteria that I look at is an owner that cares and they're selling for potentially a different reason other than they don't care about the business anymore. I think those are the ones that kind of phone it in afterwards. The two owners of the businesses that I've purchased are still very much invested. One of them still works full time in the company and works as hard today as when he owned it. And I am very appreciative for that. Same thing for the custom suit company, he chimes in all the time. Like hey, this is how we did things, this is how we did it. It's so helpful in the transition of a company to have the context of somebody who built this business from the ground up. And I think the super-secret number three there is when somebody is on your side, let them be. Both of their intentions aren't to harm the business in any way. They want to see it grow. And even though in both instances there's been times where we didn't quite agree on how to take things to the next level, we absolutely welcomed their feedback and sometimes they were right. Sometimes we were right. Kind of checking your pride and moving it to the side for a second when you're good at something and allowing them to tell you, yes I know you're good at this, let me tell you how what you're doing applies specifically to the business that you're purchasing from me. It's a really important lesson in the growth of the business which might be a good segway Chuck if it's okay with you to start talking about the lessons learned for some of the businesses or did you want more on…? Chuck: Before we move on you mentioned that both of the owners of the businesses were kind of still somewhat involved in the company. Is that something you're specifically looking for or was that just a happenstance of you buying a good quality business that had an owner that actually cared about the business? Mike: So in neither instance was it a requirement beforehand that the owner would stay on with the business post-acquisition. The first acquisition, the owner requested it. They said hey I see the plan and I didn't intend to call out these super-secrets but let's call it the super-secret number four is have a plan. Don't just walk in and say hey I'd like to buy your business. In that instance, I just so happened to be in London and as I'm trying to buy this business the owner of the business lived in an island off of the coast of Morocco. I had a free weekend while I was in London and I flew over and met with him and his wonderful wife and they were gracious. They took me to dinner. I insisted but they wouldn't let me treat for dinner. I think they were just thankful that I flew to go visit them and talk about the business; so just again that personal connection there. So while it wasn't a requirement that they stay with the business post-acquisition I'm always open to it if they're open to it. And I started talking about the plan; having the plan and being able to approach them. In both instances they got excited. One of them and I'll try to talk vague because I don't want to say anything about either one of them that they wouldn't want me to share. But one of them said when I said why are you selling it they said well I'm almost running out of ideas. Like I don't know what the next thing to do is. I don't know where to take this next and how to make it grow. And so for me, it's a choice of whether we stay at the level that we are now and continue happily down that path. Or do I allow my baby to grow by giving it to somebody who's going to take it to that next level? And so to be able to show them okay not only can we take it to next level here's how; yes, you recognize we have the experience before this on how to get this to that next level but here let me lay out the plan in front of you. And all throughout the while of reviewing the business and going to the website I have a checklist and I'll go over some of the points with you later today, here's all the opportunities that we think that we can have. And based off of those opportunities that's how we create the plan. And then we plug that into our for lack of a better word, our company acquisition algorithm to say okay is this worthwhile? And based off of the competitive advantages that we have with this business can we offer a little more? Do we need to offer a little less? Like where do we think that we're going to fit into this overall picture? So I feel like I didn't fully answer your question. The answer is no we don't require the owners to stay on post-acquisition. We are completely open to it. We prefer it. In both instances, they're both quite engaged overall. And just to reiterate the point maybe super-secret number five is if somebody wants to be on your side let them be. And in this instance, both the previous owners want to be on our side. They want to give us the feedback. We 100% remain open to receiving that feedback even if it's counter to what we want to achieve we'll at least receive it. I have a philosophy that you're not entitled to have a point if you can't justify it. And so if they come to me and say hey I think you're doing this incorrectly or I don't think you're doing this right. I tell myself okay, here's an expert that's owned this business for a long time, they feel strongly enough to come to me and say I think you're doing this incorrectly. I feel strongly that I'm doing it this way. But feeling trolling isn't good enough. I need to go pull data, go look at numbers, go say why are we doing it this way. And then I go back to them and say okay here's the reason why we're doing this way and they can poke holes in it or say no you know what that looks good. I wish I would have known that when I had the business. So I think that answers your question, Chuck. Chuck: Yeah I think so. And maybe secret; what number are we on, number six? Mike: I think we're on number six now. Chuck: Okay, so I would say super-secret number six, what you kind of just alluded to and what you didn't is you know when in school like high school or whatever and the teacher is like oh there's no such thing as a dumb question. There 100% is such a thing as a dumb question when you're talking to a seller. I would say super-secret number six is be prepared when you get on a call, be dedicated to the call that you're on, don't be in a car with a lot of background noise. Be at a desk, be in one place, do some research, if there's an interview to watch, watch the interview with the seller, read the package, ask intelligent questions about the business. It's okay to ask something that's already been addressed in the package if you want some additional information but show that you've actually researched the business because constantly when I'm talking to my sellers and we get off a phone call they're like that guy is not serious, don't connect me with him again. They want to know that you're serious and a way to show that you're serious is to have done some research ahead of time and ask intelligent questions about the business. And that's something that you definitely do. Mike: Thanks, Chuck. And I think that goes with having a plan. Like I don't have the time, I know you don't have the time, I don't have the time, I'm sure the sellers don't have the time to just sit there and answer questions that for somebody who clearly isn't prepared for the call it's a horrible signal to the seller that you're not serious about this that even if you do have the cash, even if all other things fall into place you're not going to be an organized person handling their business moving forward. So it's just an awful signal to send upfront. And I think one of the other things that you said; I don't want to say that there's bad questions, there's unprepared questions. Chuck: There are bad questions. I've had them on my calls. Mike: Okay. Chuck: And I know you're; Mike again this gets back to Mike being a super nice guy and doesn't want to; there are dumb questions and I've had many of them on my calls. Mike: I'm still going to stay that there's poorly positioned questions. And one of them might be hey Chuck I feel like this is a really dumb question and so forgive me for asking what's going to seem like a dumb question but it's just weighing on me and I need to ask it. That's a well-positioned dumb question. Another really good example of that is starting a call. I have a big belief and maybe this might be in one of the other super- secrets but we'll call it super-secret number seven, are we on seven now? So super-secret number seven, figure out what they want and give it to them. And again part of that is money but that's the beauty of working with a broker especially Quiet Light, that part's already figured out. That's almost done. They've declared that this is the multiple that they want now it's up to you to figure out does that fit within your company acquisition algorithm. Can I afford this based off of all of these criteria? And again I'll go through some of those in a little bit. Move that aside and now figure out what do they want. Do they want to stay on with the business? Do they want to hand it over to somebody who's going to keep the work within their country or somebody who isn't going to start selling poorly made products to their customer base that they've built up over time? Figure out what they want and give it to them. It's the best negotiation technique. If you walk into a call or a negotiation and you're trying to think how can I squeeze every dime out of this person on the other side of this phone call; I mean good luck to you, you may win or you may not. I have the philosophy of; I took a course from the Wharton School of Business one time and we talked about negotiation and one of the things we talked about was the difference between an average hitter in baseball and a Hall of Fame hitter in baseball is one in nine hits. If you can get one more hit in nine at-bats, that's the difference between average and Hall of Fame. The same thing with negotiation, if you can get one more hit in nine at-bats it's potentially a huge difference in the overall success that you're going to have. So same thing here, and so I approach the call as hey let's figure this out together and I'm listening the entire time trying to figure out what's important to the person on the other side of the call. Also, another; super-secret number eight is going to be disarming the call. It doesn't have to be this contentious conversation where I'm battling you for information. That's not the case. I start out almost every call and you can attest to this Chuck, and by the way, I've purchased a couple. I've probably had maybe less than 10 but several phone calls with people. Some of them after the call I decide this is not the right fit for me. I can't give them what they want so I just walk away and I go on to the next business. Other ones I've made offers for and maybe somebody else was giving something that they wanted and I didn't get that. But the two that I've got I'm very happy with thus far. But when I start the call I say hey I need to ask some questions and some of these questions might come across the wrong way. They may seem offensive or it may seem like I'm trying to prod or I'm trying to poke, all I'm looking for is opportunity. What opportunity exists in your business? And I'm trying to use it to go justify pulling this money out of other places and spending it and handing it over to you. So I'm looking for your help in bridging that gap here. And so when you position it that way and say help me get there it's amazing how they almost start to fall over themselves to tell you all of the potential opportunities in the business beyond what they've already written into the marketing package. And I'll even call that out. I've read the marketing package. I see that you see that this is an opportunity, this is an opportunity, this is an opportunity, based off of some research that I've done I think that this might be an opportunity. Is there a reason why you haven't attacked that market? Is there a reason why you haven't advertised on this channel? Is there a reason why this or this or that? And after you've position that I'm looking for opportunity, I want to make this happen, help me get there, usually they're quite open and willing to volunteer that information. So I'll call that super-secret number eight. Chuck: Yup, number eight. I can see the headline of this interview now; eight super-secrets of Mike Nuñez. We've got to get it to like 9 or 10 maybe. So yeah I think that those are some really good tactics. And I hate to use the word tactic because I don't feel like it's a tactic. I guess it is but like that's just your normal personality and maybe some people don't have it. But I think one of the major takeaways there is don't be super aggressive with a seller. Like the businesses we sell at Quiet Light, they're generally speaking super high quality with owners that care. It's not we generally; like sometimes we do but often it's not people that are just starting a business to flip, to flip, to flip. These are people who started a business because it's something they're passionate about and they're ready to move on for one reason or another and they want to pass on the torch to somebody who cares. And when you come in aggressive and if you try to beat down their business or things like that, that doesn't work. Maybe if you're working on a 100 million dollar deal and you got to like get in there and be super aggressive like that doesn't work with what we're doing at all. Mike: I just have to add to that Chuck because I think it's like if it works you should be worried. If it works it's probably not the right business. Like that's not; feel free to take this out Chuck if I shouldn't or can't talk about this but in the last offer I made I did not get the business. I made an offer but in our call, I recognized that what they were looking for was a quick close and a short close. They wanted to make sure that it closed. They wanted to do it quickly. And that was beyond the dollars and it was very fairly priced already, beyond the dollars that's what was important to them. And so for the caller just to give you an example of how much I personally trust after physically spending millions of dollars with Quiet Light already I made an offer, all cash so that they knew that this was going to close. I offered close at your convenience. And third I offered no due diligence. Now I wouldn't recommend that for everybody and all things. Chuck: I don't recommend that either. Do not offer to close. This is a certain special deal with a person that is a known entity that was trusted. You should always do your due diligence. Don't listen to Mike. Don't rely on us to do due diligence. It is your job to do the due diligence. Mike: 100% that was my decision that I was aware of this company, the numbers were small enough where even if this was a complete disaster it wouldn't be a disaster for me. But it was a complete cash offer, it was a complete quick close and I offer that with the hope that that was the value that they were looking for that was not a cash value that would allow them to choose me because they had; I mean I don't even know how many Chuck. Chuck: There were nine offers on the deal and you were; because of that they wanted to sell that component to you but the other offer was just so much; it was more money, the guy was willing to do a quick close as well so it just beats you out. They wanted to sell it to you. The other guy was just; it was a better offer with the other person. Mike: Understood. And so I got close right with the untangible non-monetary aspects of the offer.; it got me super close, right? I almost got that extra hit and that nine tenth bat. So just a good example of listening to what they want, trying to give it to them, and it's going to save you dollars in the long run. And the fact that they were considering me sounds like even though my offer was lower; yet again that seems to be the MO here overall. And by the way, I made a full price offer so it wasn't even like I made an under offer. I made a full price offer but somebody beat the full price offer and I'm still under consideration. Chuck: And just to let maybe another super-secret number nine; this isn't Mike's this is mine so I think that's like two of the nine. Listen to the broker. If I'm telling you something there's a reason I'm telling you it. Like when I say this is going to sell for at or above asking, it's probably going to sell for at or above asking. I'm not just trying to increase the price, right? I do represent the seller and I'm trying to do my best to get as much value for the seller but I'm not going to do that by lying. I'm going, to be honest. There's things I can't say to you. If you say well what's the other asking price is or what's the other offers, I can't tell you that but I will try to lead you in the direction of making an offer that's going to be accepted. Don't think that we're just; if I tell you there's multiple offers, there are multiple offers. I'm not just B-S-ing you. And we get it all the time where I tell people there's multiple offers put your best highest final offer in and then yeah okay asking price and I'm like put your best offer like I'm just telling you and then it goes for above asking and then the person is mad oh why didn't you tell me? I would've put a higher offer. And it's like I did tell you; I told you to put your best offer in. Like I don't want you to stretch, I don't want you to put an offer that makes you uncomfortable but you need to put your best offer in if you want to win this business. Mike: So I just want to say to that people have been kind of beat down and trained to not be trusting especially to brokerages. And at the risk of sounding like a Quiet Light commercial, it's just not the case with Quiet Light. And is it okay with you if I tell the story of how I found Quiet Light and why I just trust you guys implicitly? Chuck: I'm not sure of the story but please do tell it. Mike: I've had the affiliate manager and the performance company; the affiliate managed business overall since 2002. I started it with my brother and we built up the business. And in 2015 my brother passed away. He passed away fairly unexpectedly. And I was working at Google at the time and I had a decision to make; do I leave Google and come back to Affiliate Manager or do I sell the company? And so through some mutual contacts, I was referred over to Mark and Joe. This was before Chuck was there so I totally would've went to Chuck. But I went to Mark and Joe and just talked about the business and they asked me just great questions and they asked me for the P&L and they asked me what does the growth rate look like over the last few years. And we had been growing at like a 50%; no I'm sorry 100% rate year over year. We had doubled every year for the previous three years from '13, '14, and ‘15. And this is in January 2016 that I'm talking to Mark and Joe. And they even though this would have been a multimillion-dollar deal to sell that company; and I'm sure they do many, many multimillion-dollar deals which makes it easier to; I don't want to say turn it away but to give this advice. Chuck: So I will stop you there before I was with Quiet Light which was I've been about three years they weren't doing a lot of multimillion-dollar deals. So at that time a million, two, or three million dollars was a lot. It's just been in the last few years that we've really got up to where we're selling some of these really large businesses. Mike: So that makes it even more impressive, right? And I just remember this phone call with Mark and Joe so clearly where they said Mike when you sell this we'd love to be the brokerage for you. This is the wrong decision to sell right now. If you keep growing at this rate you will get what you want. Because of that conversation; I talked to other brokers who are ready to list my business or promising me the world and because of that especially now knowing that it would have been a very high multimillion-dollar deal for them and that they weren't doing as many at that time, for them to turn away that commission just gave me a level of trust with them that this is the company that I'm going to do business with. I am not comparing myself to Warren Buffett, Chuck. Not in the least. But one thing that he does that I love is he makes things easy and he; I don't want to say he takes shortcuts but he has built-in shortcuts. He can go from looking at a potential deal to executing a deal very quickly. And I don't know how he does it but my interpretation of how he does it is he identifies businesses and companies that he feels confident and he trusts. And so to me the implicit trust that I get from working with Quiet Light is a shortcut. To me, it gets me from here to this point. My comfort level right off the bat knowing that Quiet Light is not going to take a company that's shady or take a company that doesn't have solid P&L numbers or things of that effect, it's just such a comfort level. And if my comfort level was at a 90 pre these two deals because of what Mark and Joe did when they told me go continue to grow your business. It's at 100 now that I've actually purchased two companies and both of them are better than what I had expected. Now granted I'll take some credit for that that I've done the due diligence on it; I hired Centurica actually for both due diligences. We did the due diligence and we got into the company. Both of them feel; were over a year in on the first one, we're almost a year on the second one and both are solid. Both are growing. We just ran the numbers and after a little bit of a rocky start with the suit one because of some of the changes that we were making and that's what happens but we are now; November is our biggest month and we were up 30%. If you shift to include cyber Monday because everybody is obviously one of our biggest days. Chuck: How long have you owned that company? Mike: Since April of this year. So to go from there we beat our biggest day previously in the company not once, not twice, but three times by over 25%. So to beat your previous biggest day which was Black Friday; I'm sorry Cyber Monday last year, we beat it Black Friday this year, we beat it the Sunday after Black Friday this year, and we beat it again on Cyber Monday this year. So we literally doubled Black Friday. So it's been amazing. And again if my comfort level was a 90, it's 100 because of that. Like I'm not walking into a business that's a money pit or that has craters I didn't expect or potholes that I didn't expect. So I think that's just super important overall. Chuck: Awesome. So we're running a little long on this call, we've got a ton to talk about. So would you be interested in having this become a two-part segment where we'll end it here and then we'll keep going but we'll put that as a part two, to be continued? Mike: Yeah. But in case people are watching this on video just know that we cut it into two parts. I didn't wear the same suit on two different days. Chuck: We'll make a quick wardrobe change. Mike: Okay, I'll go change my jacket. Chuck: No. Mike: But that's fine. Yes, I'm happy to do that. Chuck: Alright. So, everybody, Mike Nuñez thank you for the interview today. And for everybody watching stay tuned. Next, we will discuss some of the lessons you've learned and what you're looking for when you purchase a business. So, for now, bye everybody and thank you, Mike, for joining us. Mike: Thanks for having me. Links and Resources: Affiliate Manager

Today's Flash Back Friday comes from Episode 172, originally published in November 2014. Jason gives a warm welcome to Justin Gilchrist, who is an author and an expert in buying online businesses. He and two others co-founded Centurica, which helps people with online business assessment and does the necessarily due diligence and verification to make sure an online company is worth purchasing. Today, Justin provides some great tips for anybody looking to purchase an online business.  Key Takeaways: 6:00 – A good online business should be at least 3 years old before a customer should purchase it.  8:30 – Part of Centurica's due diligence package is to verify how an online business receives their customers.    12:00 – Depending on your technical expertise, Justin would recommend different types of online businesses that would be a good fit for you. 15:40 – Far too often do businesses over report their revenue or doing crazy accounting schemes to make a business appear more valuable than it really is.   20:40 – It's important to gather all the necessary information and make sure the website doesn't look 'too good to be true'.  22:00 – Justin gives out a very technical example as to why one of the seller's websites didn't meet requirements.  23:50 – Remember to always use leverage when buying a website. This can help decrease your costs and make it easier for you to pay off over time. Website: www.YoungWealth.com www.ExitPlan.co/Digitally-wed www.Centurica.com

Today we welcome Chuck (iii) Mullins, we are talking with him about his background, experience, his algorithm knowledge, ask him our rapid-fire questions, and pick his brain about the business. Chuck built his first profitable website back in 1996 when he was an impressionable 18 years old. He studied computer software engineering in college, which taught him the skills to analyze search results and implement strategies. Throughout his career of developing, managing, consulting, and investing in internet-based companies, Chuck has developed a keen ability to spot opportunities and develop strategies that lead to growth and profitability. Episode Highlights: Chuck's background, entrepreneurial experience, and success stories Web-based business ups-and-downs The difference in long-term cash flow from web-based businesses and get-rich-quick cash businesses Chuck's favorite web niches Chuck's favorite audience member (who is also a buyer) Websites that are more/less desirable The importance of knowing your Profit and Loss Biggest mistake buyers can make Best practices for buyers and sellers The importance of understanding the business and doing your research Quiet Light's vision and how we can help you Transcription: Mark: Joe, one of my favorite things about working with team Quiet Light is some of the camaraderie that we have with each other. The fact that we get to tease each other a little bit, egg each other on, but also help each other out; talk about deals, collaborate on our transactions because everybody at Quiet Light has so much entrepreneurial experience that it's like having this built in board of advisors for every single thing that we do. And one thing I think you and I need to do a better job of; I know we've had each of the advisors on Quiet Light at the Quiet Light Podcast. I think we need to bring them on a bit more so that others can enjoy some of the experience that they have. You had Chuck on recently and grilled him a little bit in this episode. Joe: I did. I want people to get to know Chuck for the fun experienced entrepreneur that he is. And so I mixed it up a little bit. I had some fun with him we did some rapid-fire questions. I intentionally; just let me get this upfront and out there for the audience. I intentionally mispronounced somebody's name. I butchered it intentionally. Again I did it seven or eight episodes ago and I got some email saying I think the person you're trying to find is so and so. I did it again. Mark: Same person? Joe: Same person; yeah, if he's listening. Mark: He needs to start listening to the podcast especially my episodes because frankly, I've got a leg up on you. Joe: You have overtaken me for the most popular episode on the Quiet Light Podcast. I will overcome that because I've got some great ones planned coming in here soon. Chuck is a fascinating individual. I've known Chuck for a long time and he's really, really smart when it comes to his entrepreneurial acumen. It's almost annoying to be honest because with a model that we have at Quiet Light Brokerage; we don't have employees, right? No one's an employee of Quiet Light Brokerage. We have a lot of entrepreneurs who work together in sort of a collective group. Well, one of the benefits to that is all the advice and feedback I'm able to get from people. And one of the most annoying things is all the feedback and advice I get from everyone. And sometimes; Chuck especially, Chuck is so thorough. What's the term he gives to himself? Whatever it is he just hyper focuses on the most minute little detail and I fear asking questions sometimes because of the level of detail that he's going to give to me in terms of what I have to fix and correct in a document that I'm creating. Mark: But at the end of the day even though sometimes it can be overwhelming like come on you think I'm doing everything wrong evidently because I keep getting his feedback, it's always on point. And I don't think I've ever received feedback from them where I look at it and say this is not worth considering or looking at; so a smart, smart guy. I'm looking forward to it. What are some of the things that you discussed in this episode? Joe: Well we talked about some of; he's got almost three years brokering now and over 20 years as an entrepreneur now. And he talked about some of his experiences; the pros and cons of A. being an entrepreneur, some of the things that he's found that certain buyers do better than anyone else, and how he wants new buyers to adopt that style, and then the biggest mistakes that someone's selling their business can make as well. And it's fascinating as I just said he's got 20 plus years as an entrepreneur. I'm in the same boat. You're in the same boat. So collectively the team at Quiet Light I'd say what 250 years of entrepreneurial experience that we share with our team with our clients and I think it's fascinating. Chuck is just the tip of the iceberg here in terms of the experience. So it's exciting to share this with him and we had a lot of fun. So that's the key to this one. Mark: Fantastic, well let's get to it. Joe: Hey folks it's Joe Valley from Quiet Light Brokerage on the Quiet Light Podcast. And today we have the most special guest. His name is Chucky. Now that's not what we call him. It's Chuck. I use his personal email address. I'm not going to tell you at what you can all haul in the mail anyway. You know his e-mail address its Chuck@QuietLightBrokerage. Chuck Mullins, welcome back to the Quiet Light Podcast. Chuck: Thank you, sir. Thank you. For any that's specific it's actually Charles Clifford Mullins III. That's my D-I-I-I. Joe: You know I am from New England I can't talk with a British accent; it's something about us. Chuck: Well I can't either. Joe: Alright. Well listen you know the routine. Normally on the podcast we ask people to give their own background; who they are, what they're all about so that we're not sounding like we're reading from a script which we don't. We wing these things. You know that. Our audience knows that. But before we get into that I want to ask you a series of rapid-fire questions; the first one so that people understand and establish your experience here at Quiet Light Brokerage, how long have you been brokering at Quiet Light Brokerage? Chuck: About two and a half; almost three years. Joe: Almost three years. Okay. So let's start with…I've got a total of six questions. Number one; and you've got to give me a quick answer. Number one, who's your favorite broker? Chuck: Joe Valley. Joe: Good, good, good. Alright, if you were stranded on an island with me, Brad Wayland, and Jason Yellowitz and a rash floated by and they would only carry three of us; there's four altogether, who would you leave behind and why? Chuck: Jason Yellowitz, because he would be able to burn his stacks of cash to stay warm. Joe: And he carries it with him, is that what you're saying? Chuck: Inaudible[00:06:25.8] Joe: Jason I know you all listen to the podcast so everybody make fun of Jason. That's your job here. Alright, this is a really important question. Who is the better podcast me or Andy Youderainan; I mean in Andrew Youderian? Chuck: I would have to go with Mark. Joe: You are… Chuck: Hello? Isn't it you that people come up to the Booze and ask for or is it Mark that they come up and ask for? Joe: That's me. It's me. Mark doesn't go to Booze. Alright, sid you know Walker Diabel wrote a book; and a best seller book? Chuck: Have you heard about the second book that he wrote? Joe: No. He wrote a second book? Chuck: Yes. If you go to WalkerDiebel.guru you can check out the second one that hasn't been released yet. Joe: Okay, Alright. So this is a tough question. This is not a trick question. I want to know if you can answer this one. What's the name of Walker's book? Chuck: Buy Then Build. Joe: You got it. Okay. Alright. Chuck: How can you not get it? I've heard it at every conversation. Every conference I go to there's these three books that are just floating around that conference and I'm like wait a second how did that get there? Joe: And it's the bottom of every one of his e-mail signatures. One of these days you're going to dig way back into the archives when he was actually an actor and find a clip and we're going to change his email signature line somehow some way. Alright, so as you know historically Quiet Light Brokerage does not recruit brokers. I have conversations three or four times a week these days with people who want to join the team. But we, for the most part, don't recruit. We have as you know or Mark has as you know recruited a few starting with Amanda back in the day. She was the first. And I think Brad was also recruited. And yourself was also recruited. Of all of the brokers that Mark recruited; last question by the way, what was his best decision? Chuck: Probably Brad. He's been killing it man. Joe: Man and give yourself some credit Chuck. Come on. Anybody but you would probably be the politically correct answer but essentially you just threw Amanda under the bus. But fortunately Amanda doesn't really listen to our own podcast either. Alright, enough of this nonsense; let's talk about you and your experience. I know all about you but for the audience members, Chuck has been on the podcast before Mark had him on when he first joined the team two and a half years ago, three years ago. And the focus of that podcast was a tiny little bit about Chuck but mostly about Chuck's due diligence experience. And I think you had a list of was it 25 due diligence tools? Chuck: Who can remember? Joe: Yeah, a lot. And it's all; if you Google Quiet Light Podcast, Chuck Mullins, due diligence you'll find it. It'd be at the top of the Google search engine and it's great stuff. And I learned a lot when I did it. But I would say I refer most people out for due diligence; buyers that is to our friend Chris Yates at Centurica. They do a great job. Well, let's talk a little bit about who you are and your life experience and a little bit of your brokering experience now that you're three years into Quiet Light. So who the heck are you? Tell us about your entrepreneurial experience. I know that you started way back when you were in college, right? Chuck: Yeah. I graduated high school in ‘96 and I always wanted a computer but we couldn't afford one. So finally for college I needed a computer so I got a computer and started a free website on it's like Angel Fire or Tripod or one of these things way back in '96. And I remember just putting up some content and that is an online library for college students. And I remember somebody offered me like 10 bucks at some point to put a link on my website. I'm like $10 awesome, I'm making money and then somebody offers me like a hundred bucks and I'm like what $100? So then I was; this is before I even had a domain so it was like AngelFire/blahblahblah. I started thinking about okay we'll buy a domain and back then they were like thirty-five bucks. I was talking to my mom and I'm like mom I'd buy a domain and she's like you're crazy you shouldn't buy you know like you're just wasting your money and why are you spending all this time in front of the computer and then it just started growing and then somebody offered me a thousand bucks. And before you know it I was making about sixteen grand a month off of advertising back in the ‘90s. Joe: In college, right? Chuck: In college; yeah, and so I was just… Joe: That's a lot of Jägermeister. Chuck: And the Internet bubble ended up bursting in like the 2000, 2001 and all that money like dried up overnight. So I was like okay now what? So I had to figure out how to pivot and myself and two other guys; we had different businesses. We all pooled together and started a membership site. The first month with our membership site we made like 60 grand. It was just like mind-blowing like oh my God we're in college. I didn't have keggers I had like full bottle; like full bar parties. Joe: Everybody wanted to be your friend, right? Chuck: It was fun and we'd stay at like the Ritz Carlton for Mardi Gras and like just do crazy things. We rented like a ski chalet; it was like a 15 bedroom house on the slopes and I forget where it was bit we then brought all of like; we had affiliates at the time, all our affiliates to come and ski with us and so we had a great time. And at some point, I was making a lot of money and I didn't really know what to do with it all. I was definitely wasting my fair share of it. Actually kind of going back, my mom, the whole thing with her telling me I shouldn't start the business and this and that in 2003 I think it was about my mom and sister cars for Christmas. Joe: I wrote that down when you said it because I knew that. You told me the story about Christmas and your mom went outside and there was a big ribbon on a brand new car. I guess she's happy you bought that domain name, after all, isn't she? Chuck: Yeah. Yeah for sure and I do not usually tell that story so maybe we'll have to edit that out. Joe: No. No editing. Tell the story. Chuck: I made two giant boxes and I had my mom like a box of some keys and she sees them and it had Lincoln in it which I had a navigator at the time and she's like oh it's a scavenger hunt he put his keys in here and she walks outside and sees this giant box and just like; my mom doesn't curse and she goes oh shit and she runs outside gets ready to tear into the box. And I said wait, mom, hold on hold on there's a card on there you've taught me better; open the card. And so she opens it and it says to my sister and my mom is like inaudible[00:12:57.1] my mom's like…well my sister is like to me? And again I wiggle the keys in front of my sister's face and she's like what?! So she runs and dives in and my mom looks at me like what this like WTF and I'm like you're over there. Then she starts walking and then sees it like buried on the other side of the house in a big box and like runs over and dives in. We're in Georgia at that time at a family house and it was cold and she didn't have shoes on. It was a great time. I've got the video. One day I'll have to share with somebody but I don't know that I want to share it. Joe: What a great experience and a great thing to do for your mother and your sister did. Did your mother get the nicer car or was it equal to both? Chuck: I was actually going to buy them the exact same car and then I was talking to my sister trying to like make sure that it was the kind of she would want and I said well what do you think Mom would like? And she said well my favorite car is a Sequoia and I ended up; my mom a Lincoln Aviator and my mom's Sequoia. They're about the same price. I think my sister was a little more but I did get some grief about that. Also the night before or a couple of nights before we went to Walmart and I bought every single piece of cheesy add on part you could get and added it to the car. So I got like a fuzzy steering wheel cover, dice, a little light-up things that go on the rims, and just totally like made the car look as ridiculous as possible and told them in order to get it they'd have to drive it with that stuff on it. Joe: That's hilarious. So for anybody that's listening instead of watching if you look at my chin and Chuck's chin you'll see some gray; there're probably a little more on mine than his of course. His is more his cheek mine's dead on center of my chin that's because of age and life experience. So you had some amazing times Chuck out of college making more money in a month than most people in this country do in a year; all web-based business experience. It's not always wonderful though. Chuck: No, absolutely not. Yeah, entrepreneurship is ups and downs. We've gotten hit by Google so many times I couldn't even tell you. And most of them were just algorithmic. But I have on one of my big businesses, we had about 12 that were all doing the same thing and one of my partners had used the same email address in our Webmaster Tools account and somebody from the spam team I guess noticed and went in and just manually penalized all of our businesses. I think except for two because those were the only two that didn't have those email addresses. And just overnight it's like poof gone and it's just like oh it's heartbreaking. At least when it's the algorithmic type of penalties it's easy to kind of; well maybe not easy but you're going to recover from that. The manual penalties, we hired somebody who used to work in the spam team. They told us what to do. We did it. We just haven't been able to recover from that on those other sites. Joe: Yeah I know it's always hard. Google algorithm updates I think are getting a little better, a little easier to handle and manage I think ultimately. I always used to say this actually if you do the right thing the way Google tells you to do it, ultimately it's not going to hurt you; the algorithm updates. And I guarantee there are people out there shaking their head no right now because a good friend of mine, he built a great business, a great, great content site, and sold it and there was a an update recently. And the buyer, another great entrepreneur bought it and did have some negative impact. What they both know is that sometimes when Google casts a wide net some of the wrong sites get caught up in it and over time that does get corrected but it does sting initially, doesn't it? Chuck: Yeah. And I will say like the reason we got caught up in a lot of the updates wasn't because we were doing the things that Google tells you to do. We were gaining the system and we deservedly got caught for doing those things and we would adjust our technique and then regain. So like one of our sites had like 100,000 pieces of unique content that we were in Google index for like 30 million pages. Joe: Wow. Chuck: So like how does one do that? Joe: How does one do that? Good Lord. Chuck: Trickery. Joe: Well the grey in your chin has matured you to the point that I think you're beyond the trickery because you look at the long term cash flow and benefits of owning an online business now it's not just a quick cash anymore. At least that's the way I look at it; you too? Chuck: Yeah, absolutely. And you're talking about like the algorithm updates and I feel like there's been so many and that most of the really garbage sites have probably gotten taken out by now. I feel like, and maybe I'm wrong but now it's more of like just tweaking the knobs a little bit. So unless you're in one of these like fringe business models I tend to believe and I could be 100% wrong but I tend to believe that most of the major algorithm updates have been already done and then now they're going after I guess like medical websites and things like that. Joe: Yeah. The updates are far further I'm sure in between and in many cases not as severe. Alright so I'm going to throw a question at you. I don't know if I told you this story or not or if you've heard it. Some of the audience members might have heard it so I'm going to just test your algorithm update knowledge. And if you answer within two seconds then I know you heard the story. So I bought a business, I sold my business in November 2010; yada, yada, yada. People have heard this a million times, or at least tens of hundreds of thousands of times if they've listened to every episode and keep downloading everything. No we haven't done 100,000 episodes that's totally inaccurate. I can't do math by the way apparently. Alright so I bought a content site. I sold a great site. The content was amazing. And then I bought a piece of junk. I had 42 amazing days. I bought it March 1st, 2012. I had maybe 3 or 4 keywords on the first page of Google and then boom they fell to the bottom of page 1 and then page 2 and they were gone and I lost over a quarter-million dollars in the course of twelve months. What happened? What algorithm update was that? It was; again I bought it March 1st, 2012; I had forty-two amazing days. Chuck: Panda. Penguin. Joe: Penguin. Alright, you're close. We're going to have to throw that quiz out there. Everybody in the audience wouldn't throw that quiz out there for a price. Chuck's wearing a beautiful Quiet Like Brokerage…is that a polo shirt? Chuck: Yeah. Joe: We need to get some of those packaged up and give away prizes for that kind of stuff. Alright let's jump on to your Quiet Light Brokerage life; your entrepreneurial life, amazing ups and downs, a lot of great ups and you did some good things for family and friends. The downs, we learn from them and we try to take those lessons and make sure that we are really bringing great listings to market so the buyers are making good safe investments and the sellers of those investments can move on with peace of mind to their next adventures whether that's another business or retirement. In your history of transactions here at Quiet Light, is there any particular niche that you gravitate towards and enjoy more than another because as you said a ton of content and affiliate experience, but I think some of your larger deals have been physical product e-commerce sites. But is there anything that stands out for you? Chuck: Yeah I mean so my heart is in like membership sites. I love recurring revenue. I think everybody does and that's why the multiples are higher because of that recurring revenue and the predictability. So I would say that that's kind of where I'd like to be but my biggest sales have been around physical products inaudible[00:20:53.3] an outdoor sporting equipment one that was great. One that I really love that I sold like six months ago was a company that did custom-tailored suits. That thing it's like awesome. Who doesn't want to say they have a business that sells custom-tailored suits? Like it's just; I think it's got the cool factor. Joe: That's the amazing thing about what you do and what we do at Quiet Light is that we come to this role with a lifetime of experience that; I was talking with Walker and Brad about this recently that we didn't know it but all of our entrepreneurial life was preparing us for this role. And now we get to experience so many cool different business models. You come to this role with a ton of membership experience but custom-tailored suits and you're like that's the coolest thing. Who doesn't want to say they own a custom-tailored suit business? I need to buy a custom-tailored suit. I know who bought it and I can reach out to him. I know who he is too. Speaking of that I do want to ask a random question although its timing is not very random and you have to answer this. There's only one answer to this. This buyer listens to the podcast and he comments and he tells us about us sometimes when he's riding his bike. So do you have a favorite audience member that also happens to be a buyer? Yes or no? You have to say yes and you have to say his name now because he's a… Chuck: Sure. Mike Nuñez. Joe: There you go; Mike Nuñez, this is just a shout out to you. Thanks for listening Mike. Chuck: Well I'll tell you it shouldn't just be a shout out to him. If anybody wants to know how to be a good buyer and how to buy businesses they should talk to Mike Nuñez because he is 100% the absolute best buyer I have. And not like just in a sense of like the actual acquisition of the company. When he gets on a phone call and talks to the sellers he makes them feel like they are the only person in the world; the most important person like he's just so smooth and he's not doing it as like a ploy or a gimmick. He's just a nice guy and he really appreciates these people and the businesses they've created. And it's just he's really good on a call. Joe: It's the unknown secret that we tell all the time to buyers. Look, when it's a great business it's a great opportunity. There are going to be multiple buyers. And it's not always the most money or the most cash that gets the letter of intent. In some cases, it's the buyer that the seller likes the most. And being likable on those conference calls is critically important. Mike does it very well. Chuck: And one of my businesses; actually I think two of them that Mike purchased, the sellers actually said like I want to sell to him. Make him buy this. It doesn't matter; I mean within reason, right? The price; but they were willing to take less than somebody else because they liked him so much. Joe: Oh boy. Now if Mike's listening and he paid full price now he's going to be like inaudible[00:23:49.1]. Chuck: That is the problem because of course I did make him pay more than the other people but they were willing to take less. And what's funny is one of my sellers told him as much oh like I would have taken less from you and I'm like don't say that to him. Joe: In his heart, he was willing to take less but his checkbook and his head was willing to take the highest bidder as long as it was Mike Nunez. That's the key. In your experience both as an entrepreneur and as an adviser here at Quiet Light you've seen a lot of businesses that have come up for first they reach out to us for a valuation, they start thinking about an exit sometimes the day before they want to exit, sometimes months or a year or so in advance. What do you see being the biggest thing; most consistent thing that those particular entrepreneurs do wrong time and time again that there's just if there's one thing you could just like shout into the microphone right now to everyone listening even though some of them are doing it right, what are the majority of folks not doing that that you want them to do to bring more value to their business? Chuck: Silence question. Joe: Yeah it was a long one. I kept rambling on in my sentences because I could see you thinking. Chuck: Yeah. Joe: Maybe I should have asked a little more. Chuck: What's weird about at Quiet Light is we actually get so many great businesses to sell. People bring us quality things. So what are some of the bad things people do? Joe: Let me just get some stats behind that though; because it's true what we bring to market, it's great stuff. But the reality is Chuck if you look at my numbers I've closed 105, 106 transactions in seven years. People say well that's not very many but in order to close those transactions; I've ballparked the math and I've talked to 2,500 entrepreneurs. That's 2,500 valuation calls. Your stats are similar. What is that consistent theme that if you could speak to somebody that someday may sell their business what should they be doing? Chuck: Sure. So when we talk about like specific like product-level things like when people are just selling random shots keys that aren't unique in any way; those are really difficult to sell. When you have an actual unique product that's got some sort of a brand to it that's not easily knock off-able that there's a moat around it like that makes it so much more desirable to people and so much more valuable. One of the things I also see probably is just P & L's; having clean P & L's. Oftentimes people's profit and loss statements are just a complete mess. They'll lump, they want to save; I was just thinking about a specific one, but you see people are just lumping things in because they know they had a cost but they don't really know when it was or where it was and they just kind of guesstimate things and put them in the wrong ones. So then you'll see like really lumpy P & L's. And we always try to work with people to flatten those out and figure out where the real costs are. So that often takes a lot of time to just figure out what the true P & L is on a business. And for doing add backs; what's a real add back? We fight with people a lot on what's a real add back versus something they think they should be adding back. Joe: Yeah I want to just step in and shout out that there's no question I think that preparing your business for sale is the number one thing that people don't do. They decide to sell as I say instead of planning to sell. That means they work their tail off. They launch this business. They work like crazy against all odds. They succeed. And it's producing solid revenue and profit for them. And they just burn the candle at both ends and then the candle starts to burn out. And they're emotionally tired, they're frustrated, they're exhausted, and they wake up one morning I'm just not into this. I'm going to sell. I didn't know I could sell but it just occurred to me. I'm done. I'm calling Chuck Mullins. And at that point because they're tired; because they're emotionally worn out they need to sell because trends will go down. They won't do the things that they need to do to keep the business growing and strong and in great shape for somebody else to take over. And so at that point you get those P & L's and you're like yeah Excel is not really accounting software. Ideally Quick Books and Xero or one of the other so that we can run a historical P & L and do year over year trend analysis and look at the metrics. All that is really hard and then there's the commingling. So I'm going to just mention a podcast; not ours, somebody else's. EcomCrewPodcast247. Chuck as you know I sold Mike Jackness' business ColorIt last spring. And Mike is a bright guy. Mike knew exactly what to do as most people in this audience do. They know what to do. And the mindset that Mike had was simply I'll get to it someday. What happens is you end up chasing too many rabbits and that someday comes when you get exhausted and in his case, he had four brands under one LLC and three of them were really not sellable at the time that we decide to list the business. So what does that do? You've got four brands all in one LLC, tax returns commingled, and you're only selling one brand. What does that eliminate? Chuck: SBA financing. Joe: SBA financing; exactly. Is it required to get an SBA loan? No it's not to sell a business; absolutely not. We sold multimillion-dollar businesses without an SBA loan. But what it does do is it casts a broader net; buyers. And even some of those buyers; I've had it. Have you had buyers that have more than enough money to stroke a check for a multi-million dollar business but they use SBA? Chuck: Absolutely why not leverage if you can? Joe: Yeah, so that's I'd say number one. I'm in total agreement on the documentation. We always talk about that the risk, growth, transferability, and documentation; gets your numbers right, get those P & L's in great shape and it's going to help you learn about your business and set goals and then that passion may get reignited and you may do more in the business and grow it and have a bigger exit someday down the road. It's not that I don't love it when somebody calls me and says I'd like a valuation and part of that is okay, what's your timeframe, when are you ready to sell, right now. Not that I don't mind that; I love that if everything's in great shape. It's just tougher to sell it when it's not. They get a lower value, right? Chuck: Yup, absolutely. Having those four pillars and the clean books it makes a big difference. Joe: It really does. I think I'm in total agreement. Buyers or sellers of businesses, get your documents in great shape. The best way to do that, just call, email inquiries@QuietLightBrokerage.com, Chuck@QuietLightBrokerage.com. Reach out. It's a service that we provide. I mean what do we do Chuck? We help, help, help, and then keep helping, right? Chuck: Build value. Joe: Build the value. It's my; I've got a mentor that I talked to long and hard about all my business opportunities and in this particular one as we chatted about the model and what we do here at Quiet Light he's like well it just sounds like you're giving away all your knowledge for free in hopes that maybe they'll work with you. And I' like that's exactly right. We help first and we're entrepreneurs so there are times that we wish we got good advice and we were too young to listen or there was nobody around to talk to about it. And now we share that when it comes to business values and planning an exit. The number one thing you can do is just reach out to somebody. It's free. Talk to Chuck, he's got a ton of experience. Chuck: I'll tell you kind of in my entrepreneurial days if I wasn't going to be an entrepreneur I always wanted to be a consultant and help other people. And I never had like the actual desire to go out and build a portfolio and charge people to help them grow their business. But like you said I've been do this since '96. I've met so many businesses; a lot of focus on optimization and SEO and just so many things. And one of the things I actually like about is giving unsolicited advice. So when I'm on all these valuation calls I'm constantly asking people like oh have you tried this, have you thought about this? So even if they're not ready to sell I'm often giving people advice on how to increase their business. And even when I do have listings like I think of one and particularly like I give him so many ideas and then he did those and the business just kept growing. That actually came to bite me because the business grew so much that we ended up pulling it off the market after getting multiple full-price offers because it just had grown so much and he wanted to just wait a little bit and we're going to actually getting ready to relist that here soon. Joe: It's a good problem, right? I mean I've been in situations that you say it bit you but ultimately this is a long term play for us; it's building relationships and that person respects and appreciates you obviously because he's coming back for some of your entrepreneurial life experience and it's benefited them financially. It's going to grow the business and ultimately they're going to get a bigger value and tell people about what you did. So that was a little bit more about the sellers and the things that they can do and then number one I think we both agree, plan that exit; call somebody, e-mail somebody, get a valuation. It's not going to hurt. What about buyers; biggest mistakes that buyers can make? Chuck: Disrespecting somebody's business. So getting on a call and like; I'm trying to think of a of a PC term that I could use that's not a profanity, just talking smack about somebody's business, trying to negotiate them down in price, and like trash-talking the business. That doesn't work. At least not at this size but maybe it works when you're dealing with a couple hundred million dollar business or something. I don't know. But at these levels, people care about their businesses at least the ones we sell. Inaudible[00:33:38.9] and when you talk smack like… Joe: It's personal even at the 15 to 20 million mark. Mark just closed one just under 15 million. It's owned by an individual. When you're talking about a hundred million, yes somebody is up there at the top like their shareholders and the CEOs and COOs and all that and big-time attorneys are in there negotiating. It's not you're talking to the guy across the table that actually built it and owns it for the most part, right? So he cares about it. Chuck: He worries about it like he's had the baby. I mean you wouldn't believe how many people I've talked to; sellers that cry on the phone about their business like it happens a lot. People are deeply invested emotionally in their business. When somebody comes in and disrespects it for no reason other than they're trying to negotiate, it doesn't go well. You need to be nice. That's what Mike does so well. And I want to keep talking about Mike. Well like… Joe: Should we talk about Walker again? Chuck: He's about people and he's nice. Joe: Let's talk about Walker again then. Actually you're absolutely right. I remember being at the Rhodium Weekend Conference before you were a member of the team here at Quiet Light. Now he's up presenting and talking and I could swear in that environment and I used the word that begins with an A and ends with an E; figure it out, folks. Everybody's got one. And what's the secret to being a great buyer? And I said don't be one; as simple as that. I can see you out there in the audience shaking your head up and down. And that's exactly right. Mike is very nice, very kind. When I sold my business I had people that were well I remember one, in particular, ripping my business to shreds on a conference call; initial call and I'm like why am I even talking to this guy. I'm not selling it to him even if he gives me an offer over asking. And then, strangely enough, the last call, the person that ended up buying my business first thing he said is thanks for creating such a great site. Your products have helped people exactly like me. By the way I took stuff like this and I ran the Boston Marathon actually the Chicago Marathon last month and it's because of products like yours and I said cool. It was actually a really short call; 20-minute call. I didn't ask any great questions I had going on. That was really nice but I don't see he's buying my business and he almost; he bought it almost full price offer. Chuck: I'll tell you what you just mentioned something that is often overlooked. When you get on these calls don't just wing it; do some research, educate yourself before the call, and ask the right questions. It's so important. So many times I get on a call and the seller or the buyer doesn't ask any decent questions and the seller just writes them off and says let's not take any more calls from that person. They weren't serious. So make sure that you understand the business and you're asking good questions that a good buyer would ask, right? Joe: Yeah. They don't have to be the most intelligent questions the seller has ever heard but that you've done your research and you care. I mean yeah Chuck you put there together a great package and all the great questions are in there. They just have to dig into them and digest it a little bit and ask the same question in their voice and see if you get the same or similar answer from the client on it. I think that's great. I think you're absolutely right. Too many times there has been a few buyers that they're not prepared for. You can hear them walking down the street getting in the car and it just feels like a complete and utter waste of everyone's time including the person who's making the call and asking the questions. Okay, is there anything else; before we wrap up is there anything else you'd like to say about Walker Diebel? Chuck: Visit WalkerDiebel.guru to check out his new book that's coming out in a couple of months. Joe: Let's do this; actually everybody do is too. Go to IMDB and look up Walker Diebel the actor and watch some of the movies he's been in. Add a review, let's see if we can boost that one-star rating up to one and a half. Chuck: Inaudible[00:37:37.6] tomatoes maybe. Joe: Alright Chuck, you're a good man. I appreciate you coming on. We'll wrap it up here with time. Any last thoughts for anybody out there thinking about selling their business or buying one; any last pearls of wisdom and I know I didn't prepare you but any last-minute pearls of wisdom? Chuck: Yeah. I would just say that reach out early. We're not here to be high pressure as far as trying to sign you to sell your business. We're here to lead with value. We're going to offer some hopefully some wisdom that's going to help you sell that business in the future. So don't think that like oh I don't want to reach out because I'm not going to sell it for six months or a year. Talk to us now. Let us help you get the business in shape to sell it later. Joe: Great advice. That's Chuck Mullins folks. We will be back in the next podcast. See you soon. Thanks, Chuck. Chuck: Bye-bye. Thanks.   Links and Resources: Chuck Mullins Chuck's LinkedIn Walker Deibel's IMDB

Just as the title says, this episode is all about helping you get a better sense of how the due diligence process works by talking about a bit about how it was done for a brand we sold - ColorIt.com. I'm joined by Chris Yates and Brian Diener, from Centurica, a company that helps online business buyers conduct due diligence on prospective acquisitions. They not only handled the due diligence on ColorIt but also served as a go-between for myself and the new owners to ensure that this part of the buying process went as smoothly as possible. Chris provides a bit more detail about the Centurica through the following: What the company does (4:22) The process of doing due diligence (5:35) Potential costs for the service (7:14) Brian, who did the actual due diligence on ColorIt, talks about how it was done. Verification process (13:17) Accuracy of splitting up fees (15:02) Checking supplier relationships (16:47) How P&Ls are reviewed (19:45) What goes into a client report (21:09) The results and how we reacted (27:47) Learn more about Centrica's services from the website or book a free phone consultation.  Get the full picture of what went down with the ColorIt sale when you listen to these episodes. E246: Why I Sold ColorIt.com E247: Preparing for the ColorIt Sale with Joe Valley – Part 1 E248: Preparing for the ColorIt Sale with Joe Valley – Part 2 E249: How Our Filipino Team Reacted to the ColorIt Sale Get info about the Rhodium Weekend event in October. Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes. If you have any questions or comments, feel free to leave them below. Happy selling!

In part two of the incredible exit of Mike Jackness's Colorit, we are hearing his first-hand perspective on what the process is like from the side of the seller. Mike honestly and openly goes through the process, from the letter of intent through due diligence, all the way to the handoff and transition. He reveals the humbling moments, the surprises, and things he would do differently. This episode is for anyone thinking about being on the seller or the buyer side of the acquisition process. Ending your involvement in a business can happen more easily and smoothly if you are in a good position and absolutely prepared no matter what. The takeaway to all business owners is put your business in that position from inception in case of an eventual sale. Episode Highlights: Mike's background and how he found himself in the coloríng business. How the due diligence process went and how in many ways it was harder work than running the actual business. The things that came up during the process that were surprising and how to approach number discrepancies in due diligence. The value of using a professional firm for due diligence. Why early preparation is critical. The creation and review of the asset purchase agreement and how it went for Mike. The small things he relayed to the buyer in order to make the transition smoother. Why in-person meetings are very important during the hand-off. The importance of doing everything you can to facilitate while still creating limits to your involvement in the process. What's next for Mike. Transcription:   Mark: Mike Nuñez. Yes, Mike if you're listening to this podcast congratulations for sending in the right answer to the movie quote. And which one was it; that was the Boiler Room, right? Joe: I think so. You expect me to remember. I don't know. We need Chris Moore our content director on here. Come on Chris. Mark: Hey Chris, we need your show notes for before we actually record these. But I do know that Mike you sent in a correct answer. Thank you for doing that. I don't know the prizes although the next time I see you I'll buy you a drink for sending that in and getting the right answer. Joe: For people that don't know, why don't we tell who Mike Nuñez is? Mark: Yeah, Mike Nuñez is an old friend of Quiet Light Brokerage. He is also a buyer with Quiet Light Brokerage and what are we getting out Joe what am I missing? Joe: Doesn't he run AffiliateManager.com? Mark: He does run AffiliateManager.com. Joe: He's huge in the affiliate space so if there's anybody out there with products that are looking for a great affiliate company to connect with look up Mike Nuñez on Linked In and connect with him. He's one of the nicest guys in the country and you'll love working with him and his company. Mark: You know what this movie quote is going to become, right? All of the show vendors, all of the other vendors out there that want us to make a pitch on the podcast are going to start sending in the right answers to us here on out. So those of you listening whatever the movie quote was send us an email and let us know what that's from. We'll give you a shout out on the podcast. But now let's talk a little bit about today's podcast episode. I'm excited about this. I love the actual stories of selling some of his business. Joe, you've been working with Mike Jackness is on ColorIt.com getting his business sold and today we're continuing the story. We already have one podcast on this where we talked about getting the offer, preparing the business for sale, going through all that, and now we're looking at the other side of it. And that is preparing for the close and doing that due diligence and some of that stuff that gets pretty difficult towards the end of a sale. Joe: Yeah the 1st podcast was right up until the letter of intent and now we're talking honestly and openly about the process that we had to go through; that Mike really had to go through with his team from the moment you're under a letter of intent all the way through the due diligence, that financial trusted exam if you will, negotiating the asset purchase agreement, meeting the buyers face to face, working with transitioning your virtual assistants over to them, closing, and training and transition after. We go through all of it. Nothing is left out. Mike is honest and humbled and surprised in some cases. I don't mean to plug people but Centurica did the due diligence and Mike—we'll let people listen to it but Mike made a promise to Bryan at Centurica and he said something about this process and his accounting and how it's going to work out and Bryan said yeah okay we'll see and Mike was a little humbled and surprised in the process. Mark: Well, that's great. Mike is a good guy. We plugged him before. He's been on the podcast now a few times. Let's get over to this because I think anyone that is thinking about selling or even if you're a buyer and you're going through this process, it's so useful to get that perspective of what it's like to go through this process as a seller. Because boy it can be frustrating sometimes, it can be stressful and just getting to the psyche of what's going on there I think is invaluable. Joe: And not to go on too long but one of the most important things you're going to hear is what Mark and I say all the time but you're not going to hear it from us, you're going to hear it from Mike. He's built, he's bought, he sold, and he's gone through this process most recently as a seller. And there are some things if he could turn back time that he would absolutely do and he would have made more money. But he was at a certain emotional state and life state where he wanted to sell and we made that happen. And we achieved his financial goals but if he could turn back time that would have changed things a little bit. So we're hoping that the lesson that you'll get out of this is planning; planning your exit eventually. If you may wake up one day and decide okay today's the day I need to reach out to Joe or Mark or anybody at Quiet Light and begin that process what will you plan well in advance for that? That's part of the mistake that we talked about with Mike. So that's it, let's go to the podcast. Joe: Hey folks it's Joe Valley with Quiet Light Brokerage and we have another great episode of the Quiet Light Podcast here with our good friend Michael Jackness. How are you today Mike? Mike: I'm doing good man. Joe: It's good to have you back. I know that we've been chatting a lot lately because we just closed a transaction together. Mike: We did. It's good to be on the other end of it now. Joe: It is and it's been a process. We're recording this folks on April 18th and we started in mid-December. And we ended up closing the transaction on April 5th. So giving you a little bit of a recap; this is Part 2 of the process of selling Mike's business Color It. Mike those that are just tuning in and didn't hear it the 1st time why don't you give a 60 second background on yourself so they know who you are. Mike: Yeah. So I always joke that this background story gets longer and longer as I get older but the short version is that I have a background in IT. I'm an entrepreneur by heart and was doing affiliate marketing. I quit my day job in 2004 and I've been out on my own doing various things since then. I got into e-commerce in 2012 when we bought Travelo.com and sold that—had an exit to that in 2015 in January. Four e-commerce brands one of which we just sold through you. And we've been blogging and podcasting about that journey since 2015 at EcomCrew. Joe: And you're being a little humble there because you really travel all over the world and speak now. Not just with EcomCrew but also on your email marketing campaigns that you do with Klaviyo. So I'm going to boost you up a little bit. Mike: Thank you. Joe: You're famous man, I'm humbled just having you on the podcast and to call you my friend I think. Mike: Inaudible[00:07:06.7] has this show notes that say famous on Amazon I had one that says famous in my own head. Joe: I'm famous in my house but the least famous according to my family. There you go. Alright, so just a quick recap; again we launched Color It for sale in mid-December against my better judgment but you're influential and you pushed me and we did it anyway. But we try normally to have three to five conference calls in the 1st 30 to 45 days and at least one acceptable offer. We had three or four. We can't remember. We talked about this the other day and I didn't bother looking it up. But we had enough so that we got two offers. We ended up under LOI on Feb 5th, intentionally chose not to close for 60 days so you could move three of the brands out of the seller account into other seller accounts and that was a fun process, right? Mike: Oh yeah. Lovely. Joe: And then we ended up closing on April 5th, roughly 60 days later after going under the LOI. So we talked about the process, getting to LOI in the previous recording. Let's talk about what happened afterwards and talk about due diligence. How was your experience in due diligence; how painful was it, how good was it, how easy, all that good stuff? Mike: It was a lot less enjoyable than receiving the wire. Joe: Is this a yes or a no that you really worked harder getting the business sold than you did actually operating the business? Mike: I'd say absolutely. It was a lot of work. It was stressful just because—I kind of strive for perfection and I wanted everything to be exactly what we had communicated in the preliminary process. But Centurica is really good and they found stuff that I didn't even know about my own business which was really frustrating for me. It was a little bit unnerving. I was worried about how that would be perceived if it would—how it would affect the deal. What I realized I guess eventually was that every one of these deals I think that goes through due diligence stuff comes off and we were kind of within that normal boundaries of acceptable tolerances I guess or whatever they would call it and I probably was making [inaudible 00:09:12.1] but for me at the moment that it was happening I was pretty upset. Joe: Yeah so we had two or three things that came up where the P&L wasn't exactly right; the discretionary earnings wasn't exactly right for the trailing 12 months. And it's funny I had a call this morning, I'm working on launching a listing tomorrow and the owner of that business said well what happens in due diligence if that happens? And he was worried that the whole deal would just fall apart and you start from scratch. That's not normally the case. Normally you just use logic and math and say okay if you're off by $1,000 and your multiple is a 3 time you take $3,000 off the contract price of the business. That's really important when you build that trust that you've built over the last two or three months with the buyers of your business Mike. But in your case we didn't make any adjustment at all even though your numbers were not exactly the same as in discretionary earnings, right? Mike: Yeah and I think a few things kind of happened and number one as we were going to do diligence and working towards closing our January numbers came out and our February numbers came out and eventually we kind of knew what March was looking like and we were up significantly year over year. So I mean it was getting to be to a point where in some respects I was kind of hoping the deal will fall apart just like be realistic for money. Joe: Yeah. Mike: Obviously, that wasn't what I wanted to happen because I didn't want it to go through [inaudible 00:10:37.3] but that certainly probably helps. And I think a little of the trust kind of was established like you said that they knew that there was nothing the fairest going on there or at least they hope that that's what they were thinking. I'm sure that's what they were thinking obviously. And I also think that just based on talking to Bryan over at Centurica like after the whole thing was done it was basically like when a report comes out it's always going to be—there's always something that's kind of found and I just—it's kind of like a home inspection. When you go buy a home there's going to be a home inspection and there's always going to be stuff that that guy finds. Some of the stuff you can try and negotiate for to lower the price of the home but a lot of it you just accept. It's just like there are things that you're going to just go okay well I didn't know that when I signed the agreement to buy this house and put it in Escrow but I want to buy the house nonetheless and here I am and I'm going to just go ahead and still do it. So I think all of those things combined and I just I mean legitimately was willing to walk away. I wasn't willing to sell it for less. Because I feel like the number that we picked in my mind was the least I was willing to sell the business for. I was willing—we had talked about willing to—because we had already started separating our companies and making things better that if we waited another year we would have gotten more money for it. But at the same time, I also had set my mind to sell it. So I mean there was a bunch of things going on there but luckily all kind of worked out in the end. Joe: Yeah, you were emotionally ready to sell. There's no question about it. I talked to you three times about waiting; separate them all out, wait another year or so, and you definitely were ready. Mike: It wasn't about the money. I mean it was just a lifestyle adjustment and realizing we had too much going on and leaving some money on the table for this transaction to almost certainly put us in a better situation moving forward. So all and I think we're going to do much better by selling one of these businesses. Joe: Yeah, and you're going to be able to narrow your focus with the sale. So with regards to Centurica; for those that are considering using them or are fearful that you're under LOI and your buyer is hiring Centurica. I've never had a deal go sideways with Centurica. What they do is they find out like Mike said what the issues are with the business and really what it is, it's a little scary but for the buyer of the business it's really things that can be fixed and it's a path towards future growth and making the business stronger. So I like it when somebody else steps in on a buyer's behalf and really digs into those numbers. It helps the process and instills confidence in everybody that it is a good investment and that nothing's going to come back to you Mike in this situation after the sale if you closed and the buyer found something after the fact. It's better that they find it during due diligence like we did here. Mike: I think the only reason you really need to be fearful is if you are hiding something and you know it. And these guys will find it. I promise you—I mean they're incredible. And if I ever go buy a business I will absolutely hire them. They are incredible. I almost want to hire them just to tell them to come do an audit on our existing businesses to make sure we'd get things fixed before we go sell it—another piece of it a year or two from now. They're really good. Joe: It's not a crazy idea preparing in advance for the sale of a business 12 to 18 months out. You know now that that is critical. We've talked about it recently. You got a good value for Color It but I think realistically if the brands had all been separated out and you had clean tax returns, a staff that was delegated just towards Color It, it's possible you would have gotten a higher multiple. And with your January, February growth numbers and December was just killer, there's no doubt that the buyer of your business is really excited and didn't even think about making an adjustment because some of the numbers were off by a little bit. Because the numbers were so high for January and February he knew that he was getting a great business. And he told me personally that he thought that this one is probably the best of the three Amazon FBA businesses that he's bought for me in the last eight months. So we got through due diligence, it was a little painful, a little tough. Centurica helped. We had some trust built early on so we didn't make any adjustments and mostly because of that trust and because of you keeping your foot on the gas in terms of the numbers and the growth of the business. The worst thing you can do folks is once you're under LOI have a bad month or two during due diligence. It scares the buyer. They're making a lifetime investment putting their life savings on the line and they want to see positive numbers, not negative numbers. So we got through it and the next phase sort of when we got most of the way through it was to end up drafting, editing, and signing a 30 to 45 page asset purchase agreement. And that can be kind of scary and overwhelming in itself but the situation was pretty smooth, don't you think Mike? Mike: Yeah. I mean it was incredible. I expected it to go one way. This is actually funny, I expected due diligence to go one way and it kind of went a different way because I was building to Centurica when I had did the kickoff call that this will be the most accurate—I forgot exactly how I said but I really hear myself on that [inaudible 00:15:57.3] accurate company that have ever gone through diligence with you, you're not going to find anything off here by a penny. He was like yeah we'll see about that. That went one way and then the legal actions in my career and the ones where the other party drops the agreements are usually just an awful experience of their lawyer is dropping the agreement on behalf of their clients and all the things that they would want in a perfect world for their client with complete disregard to what the other party would want to see in that agreement knowing exactly what they want. They already know what the 3rd party is going to want but they don't care about that. They hope that of a hundred things that are in there you only asked to change 50 or something and the other 50 stays in the other party's best interest. So what I got was an agreement and—so I'm not a lawyer and I've been through these a million times and I don't really get emotional about this. I just send it immediately off to my attorney I was like let me know and I was expecting pages of stuff that were going to be really difficult to go back and forth on. And I really hate this part of the negotiation process because you've already signed a deal and now you're negotiating over a bunch of other points that you weren't expecting to have to fight over and there was none of that. Like she just like make sure you fill in the blank for this number and they haven't created this LLC that they're talking about in the agreement and make sure that that's done so it's actually a legal entity before you sign. I mean there was little pebbly stuff like that, there was a couple of small things that had some substance but it made me so happy not to have to go through a tough process. It kept our legal fees down only spending 2,500 bucks reviewing and editing the APA which I was expecting 10 or 20k just from previous experience of having to go back and forth. And it was such a great experience. I actually emailed the buyer afterwards and I was like dude I just want to let you know that I really appreciate this because somebody along the way from your team said do not send an agreement off to Jackness and Terran that's just lopsided. Like, make this a middle of the road agreement from day one. Like that was clearly someone communicated that because otherwise, I think it would have been the other way. Joe: Yeah. This is the 4th transaction I've done with Matt and his attorneys; the 1st one years ago and the last three within the last eight months. And every one of those contracts had been fair and balanced and turned around very quickly. And we actually have an attorney referral list now where we just want people to have good attorneys because we've had situations where people have awful attorneys. So we started gathering a list and we put this firm Jones and [inaudible 00:18:35.7]. if anybody is working on an asset purchase agreement and doing it directly with another buyer or seller and you want a referral to an attorney, shoot me an email at joe@quietlightbrokerage and I'll be happy to send it off to you; I'm happy to do that. So that's good, we got through that APA and we actually signed it. It's interesting because we signed it on the 14th of March and normally when we sign it money goes into Escrow and then we're right off to closing. But in this case, we waited almost another three weeks. So it could have been even longer. Mike: It did [inaudible 00:19:16.7] Escrow. You might not recall but there was like a $25,000 deposit. Joe: Yeah because of the request—actually it was necessary because you moving things out of the seller account. It was a nonrefundable $25,000 earnest money that was put in Escrow after signing the asset purchase agreement. I think it was nonrefundable. But that went to the attorney Escrow agreement and then the balance was sent in just prior to closing. It all worked out very well. We ended up closing on March 5th. But prior to that, we had to have some calls and some meetings and doing some planning but there were times when you were a little nervous because there wasn't a whole lot of planning and a whole lot of conversations going on. Mike: Yeah, and it was from my point of view like I wasn't worried about me because like I knew the money was going to be there. But I'm the kind of guy as you know that I'm looking out for the other guy. They just spent a lot of money, I want to make sure it's a good experience for them. And I was just like guys you're buying this business in a couple of days and we haven't talked about changing passwords and billing and things are going to just start breaking if you aren't paying attention to them and the team needs kind of a handoff to know exactly where to look for things etcetera. So it was a little bit weird to me that it didn't seem to be—like they were the kind of guys like everything was like T's crossed I's dotted, really highly motivated and passionate about everything that they're doing but that didn't seem to be as big of a concern. And I think we were talking a little bit—I think it was a combination of they just purchased another business like right before that. Joe: Yeah. Mike: I was also coming to visit them for two days like a couple of days after closing to be with them two, four days in person which I think probably they were just mostly waiting for that to happen. And I think the last part is that they just basically trusted me by that point that I was a good guy and wasn't going to rake them over the coals. But there were definitely some moments where I just like I—if I wanted to like really screw these guys [inaudible 00:21:09.4] kind of I was like thinking that and more just from the perspective of I think they probably should just be more careful because not everyone is a good person and I've seen scribbly stuff happen. Joe: And remember you didn't read every line of the purchase agreement. I'm sure whatever the potential screwing was or could have been was covered there. Mike: There's probably, I did not read the agreement. My lawyer read it but yeah I'm sure there was some legal stuff on there that had I screwed them—I mean again that wasn't even like—I was [inaudible 00:21:39.9] that I was just more—I'm worried for them. Joe: Yeah. Mike: The biggest was that if a wire did come in and we still had that lump in the Amazon accounts and—who knows someone could just like catch a fly out of the country and really see it later and it was a little bit scary for me on their behalf. I just worry about stuff like that. Joe: Yeah. Well, I think that the last minute stuff was due to they had just closed one so they were busy with that and they also knew what was coming. And they are so busy they have so little capacity for anything about what's in front of them that they were like we'll get to that when it's necessary and it's necessary just after closing; after the money is wired. The other thing you mention was that you went to meet with them in person. You happened to be going on a road trip and going to be in their neighborhood just after closing. So that worked out perfectly. Mike: Yeah. Joe: I always recommend to people, to buyers in particular regardless of the size of the transaction that if you can; if there's any possible way, you get in a car, you get on a plane and you go visit your seller during due diligence. Once you're under a letter of intent get in front of them; have lunch with them, have dinner, get a tour. You don't want to let the staff know that the business is forsold, the large part until the APA is signed. But you could go in as a consultant or at the very least meet them so that you can gain that level of trust because it makes a huge difference. The worst situation I've ever had—I actually had a guy from San Diego where you're from. Early on when I 1st started back in 2012, he bought a business from me that was $35,000 and there was about $40,000 worth of inventory. He flew from San Diego in January to Minnesota and he didn't have a winter coat and I was trying to talk to him because I grew up in Min and I'm like you really—you don't know what 10 degrees is and with the wind chill factor of 20 below but it worked out. And he said to me later, he said look if I hadn't met them in person and learned everything I learned in due diligence I would have walked away because due diligence was tough when you've got a business that's $35,000 and there's $40,000 worth of inventory. But he met them in person and that made a difference. He still owns it today. I saw him at the Prosper Show a few years ago. So definitely in person meetings are really, really important. So let's talk now about those two days; in most transactions, there's a transition period, a training period that is part of the purchase price. The standard asset purchase agreement says up to 40 hours over the 1st 90 days after closing. I don't think you're going to use 40 hours or they're going to use 40 hours from you but you put in a couple of very long days right after closing, right? Mike: Yeah. I mean I don't know that it was required and I committed to be there whatever but I'm again that type of guy and I want to see them have success with this business; bottom line. And part of it is just treating others like I like to be treated. And I have been in transactions before when I bought Ice Wraps on the wire hit the guy ghosted me. It was like I literally never heard from him again. Joe: That's why we do hold backs people. Mike: Yeah but I mean it was a $50,000 purchase. It was actually the exact same situation as going—I went to Michigan, it was also in January. I also didn't have a winter coat. And I was also [inaudible 00:25:13.8] I thought you're talking about me for a second. But the employees did help me with the transition. The owner just was gone. And there were a couple of things that I could have used his help on that would have just taken him 30 seconds to answer. So again I just would never want to be that guy. And there is a lot—I mean a lot of things are going on in our business that I probably needed to hand off you realize it is all complicated; they are but it seems so easy to you because you learned them one day at a time. And when you're trying to take five years of something that you learned one day at a time that for me they're like sending orders into Amazon or you have something come from our 3PL or coming from China go to a 3PL and go to Amazon or deal with the customer service issue or do Facebook Ads, I mean all the different pieces of the business it all just seems so 2nd nature to me. It's no different than breathing. But when you try to start explaining to somebody you realize like just how much there is. And so I actually made a list of like 40 items as I just started thinking of them over and above what they were asking for or things that I thought that I needed to explain to them. And I just I wanted to feel like when I left there that I felt good about myself that they had everything from me to make sure that they were going to be successful. Now what they do with things from here on out isn't really—I look at that and that's not my problem. I mean I've done everything I can it's up to them now if they want to end to the ground there's nothing I can really do about that. I'd rather that they'll make a billion dollars with it. I'd be much happier with that result but I want to tell they felt good about me. Like I gave them every tool possible to be successful and I'm still there for them. They still have been in contact with me but they've been really good about it and respectful. And I've been spending 10 to 15 minutes a day maybe since I left there helping them which I think is completely reasonable. And I see the light at the end of the tunnel in that within two to three weeks I'll probably never hear from them again other than to say hi and maybe have a drink some day because they're really awesome guys. I really like them and I'd love to hang out with them just on a personal level next time we're in the same city. But they're obviously not going to take advantage. That's when I would get upset is like if the other parties are taking advantage and like asking you to continue to do stuff and spend eight hours a day helping them and just taking advantage. And they're not doing that and again I just want to make sure that I do the best that I could and I can feel good about myself with the hand off. And that's kind of how things transpired. Joe: Yeah. And that's why as far as the taking advantage that's why it's called transition and training. It's not operating the business. Mike: Yeah. Joe: So we've always got a certain period up to and over, the reality is that even after three months they may send you a note, a Skype message, a text, an email with a quick question that you're going to respond to. It happens. There's just no way that you can pack everything that's in your head inside of a two day training period. Because they're going to come up against something that may not happen for four months and it's new to them and it wasn't covered in training. It's just the nature of all of the pieces and parts. But at the same time, it's not overly complicated. These businesses are fairly easy to transfer and the training is fairly easy. It's just running on its own now and it's the key thing that I always tell people is especially people that are leaving the corporate world and are used to working 60 hours a week and they take over a business like yours that might take 15 hours a week on a high side that just put in 30 but 15 working in 15 observing and training and don't fix anything that's not broken. I see that happen too often. People come from the corporate world and they're just fixers; they want to fix things even if it's not broken so they do break it. So that's the big piece that I try to have them not do which is really important. Okay, so we're doing a video here. Most people listen to audio but you've got the EcomCrew shirt on so I want to talk about that a little bit. I want to know; we've closed, the money is in the bank, you've dropped one of four brands so you've got a little bit more free time. Not a lot, I know you're crazy busy but what's next for Mike Jackness? Mike: Well immediately following as just I have the EcomCrew shirt on is because we're doing an EcomCrew webinar right after this. That's what's immediately next but I think you're talking bigger picture. I'm trying to get—I have some life goals, I do a podcast every year about yearly goals and a couple of big themes are less is more. I think that would be just trying to do too much. We've been successful in spite of ourselves, in spite of running at full scene. I'm concerned about burning out because I've been there before and I can kind of feel that coming to [inaudible 00:30:01.6]. So before running off the rails and feeling like I'm completely burned out, I wanted to make some changes. And one of those things was selling one of those businesses to make sure that the burnout thing doesn't happen. And overall like the thing that I really enjoy doing is the teaching and education part with EcomCrew. It's just been awesome. I talk about how I feel like I have enough in life. I mean it's always nice to make more money. I'm not going to be one of those guys that's like I'm not going to take any money when I have enough to make money but there's different ways to make money. And one of the things that have been really cool is just to help others while doing that. It might be a situation where I might make 10,000 instead of $20,000 but somebody else might make $100,000 so it's like a net win for the role and it's still good for me and it's still in an environment where I get way more enjoyment out of it and it's a lot better than coming to the office every day and just kind of grinding which is not really for me. That was the reason why I left my day job in 2004. So those are kind of some big picture things that we're working on. I also want to get into an e-commerce business I have just a personal interest in. I think that that's really important after just being in e-commerce and business stuff over a long period of time. The things that you are personally interested and passionate about are just way easier. And Color It was an amazing business, amazing brand for a whole bunch of reasons that we don't time to get into here but it's just not something that I'm personally into. And the same thing with Ice Wraps and Tech Miner and Water Baby, those are just things that they make money. I'm an entrepreneur at heart, I think a really good business person at heart like I am very strappy. I will figure out a way to make money doing just about anything but it's not just about that. It's doing something that I actually have an interest in and enjoy which I think will be a lot better. So those are some big picture things for me. Joe: But I think a lot of that estranged and left comes with age and experience; hustled in the past and you did what you had to do and you got ahead and you're giving back. For those that have not listened to EcomCrew, the podcast, I highly advise it. We talk about it often here on the podcast for people that have just purchased businesses or even those that have them and are trying to expand their channels either to Amazon or email marketing or anything like that. You got to tune in and listen to Mike and Dave on EcomCrew. They've got a great series, Under the Hood, we're going to try to do something like that on valuations here at Quiet Light someday but Mike is one of those guys that has been there, done it, and now he's helping. He's not teaching because he had nothing else to do. He's teaching because he's been very, very successful in sharing his experience with others. So I appreciate that. Mike, any last thoughts, any last words in terms of what you'd say to people that are thinking about selling in the future and how to prepare? Mike: Specifically, on thinking about selling and how to prepare, the 1st thing I would say is that everything comes to an end at some point. So even if you're like I'm never going to sell my business that's complete B.S. because everything comes to an end. And what I've learned in life, entrepreneurial life is a lot of times it sneaks up on you. You think you're in a good spotting and you're happy with what you're doing but there's a lot of things that happen in business that are irritating and wear on you. And eventually one day you might just throw your hands up and you'll be like I've had enough of this. And if you're in a better spot to sell and you're prepared to sell all along the way that can happen a lot easier and smoother than if you haven't prepared. And you'll also get way more money for your business if you have prepared. So it's something that you should be thinking about at all times. It will probably make you a better business person and make your existing business better anyway because if you're always thinking about it from the perception of I might need to sell this business any time it will force you to have better procedures in place. It will force you to be looking at your accounting every month and scrutinizing all your expenses. Making sure that your net profit is always as high as possible. There's a lot of [inaudible 00:34:09.9] benefits having that thought process. And even if you “never do sell” it will probably put you in a better position no matter what. So if there are things that I wish I'd—if I could go—if you try and go back and change things and I was thinking a lot about this; our plan was to sell the whole thing as like a big conglomerate originally. But things changed and so I wasn't—I had been marching towards to sell everything as a conglomerate goal, everything was together and I thought one day e when I was done with e-commerce I would just be done with e-commerce. But that's not how it worked out. What ended up happening was we got too big for what I was comfortable with in terms of risk to reward and I want to take some money off the table and I still immensely love e-commerce and I want to be involved in e-commerce. So I could have better prepared ourselves for that by having multiple LLC's for each brand that maybe one LLC owned each one of those and it still would have been that conglomerate thing and structured in a better way. You can't foresee the future all the time but you can definitely plan—put yourself in a better position when the unexpected comes. Joe: I don't know if I could have said it any better than that so we're just going to wrap this up, Mike. Mike: [inaudible 00:35:20.4] Joe: It's about a complete pleasure working with you. I'm glad to have been your broker in helping you achieve these goals and maybe another year or two we'll do it with the next one. Mike: I'm looking forward to it. Joe: Alright, thanks, Mike.   Links and Resources: ColorIt.com MIke's Podcast Email Mike Centurica

The purchase process for first-time e-commerce buyers is rarely stress-free. Today's guest is here to take us through his acquisition from inception to completion. He openly talks about the vetting, the financing, the due diligence process, and the seller/buyer relationship. We also discuss the wins and losses, and how they played off on each other in the six to eight months after the purchase. Finding himself near the end of his career, Rocky Cleborne was looking for something else. As an almost-retiree from the automobile industry, he decided to purchase his first business. Rocky reviewed numerous businesses and performed extensive vettings of fourteen of them before finally deciding on an e-commerce jewelry business. As we've mentioned before, surrounding yourself with smart, experienced people and being the right type of person yourself are often the keys to successful acquisitions. The highest offer is not always necessarily the one that wins the bid for the business. Episode Highlights: The vetting process Rocky went through before deciding on Novadab. How many offers he made out of the 14 businesses he considered buying. How using Centurica services helped Rocky through the process. The SBA lending process and how much Rocky had to come up with in his deal. Rocky's business model and where his e-commerce products are being sold (hint, it's not all Amazon). Mistakes he made in the early days of the transition to e-commerce and sourcing. The customer experience Novadab provides for their 12,000 orders each month. Rocky's email marketing strategy. The business's growth percentage since the purchase. How he's formed a partnership with a surprising partner and how that partnership is fueling growth both in Novadab and beyond. The losses and wins Rocky experienced during the transition process. Transcription: Mark: Joe over the past several years I have sat down and had coffee with people who are looking to buy their 1st online business and we talk a lot about what does that process like. How do you go about finding that right opportunity? How do you vet that opportunity? And then even afterwards what does it look like after you do the acquisition and are spending the 1st several months in there what you would be expecting as far as wins and losses. I love it when we have the opportunity to bring somebody on who has gone through this process and they're totally an open book willing to share what they did. You had Rocky on who you sold a business to to talk just about that. Joe: Yeah and actually I wasn't the broker. I had Rocky make offers on several of my listings and he wasn't the winning bid or the chosen one and eventually he bought one from Amanda and he openly talks about that process of buying the business, the successes that he's had, the financing that he did, some of his big wins and some of his big losses, and how they sort of played off on each other in the six to eight months after he bought the business. Mark: Well, it's great. Now we also have a really exciting announcement here. We had somebody guess one of the movie quotes from the intro Mike K. right? It was Mike K. Joe: Come on now. Mark: I can't pronounce his last name. I'm sorry Mike. Chris, our producer is in here with me; what's his name, Chris? Chris: Koregnept. Mark: Koregnept. Alright, so Mike Koregnept Big Short from the very first intro that we ran. Thank you, Mike, for doing that and hey guys if you're listening and you know the quote send us an e-mail. C'mon send it over. Let us know where it's from and if you use Google tell us; be honest because that's the only way I can ever guess any of these movie intros. I'm not going to at game at all. Joe: Let's do one more thing though Mike I want you to call me, leave me a voicemail message with the proper pronunciation of your last name and we'll air in on one of the upcoming episodes. Mark: That's a really good idea. So let's get back over to the actual topic let's talk about Rocky and the process that he used to acquire his business. Joe: I'm recording; you can see that in the corner. Hey folks, it's Joe from Quiet Light Brokerage and this is another episode of the Quiet Light Podcast and yes you heard me say I'm recording right at the beginning because I have Rocky on the line with me. Rocky pronounce your last name for me; go ahead. Rocky: It's Cleborne. Joe: Cleborne; so easy, spelled funny but so easy. Rocky and I have talked twice in the last week because yes I recorded the best podcast ever last Tuesday with Rocky but I didn't actually do what Rocky? Rocky: Hit the record button. Joe: Exactly! So we're back at it. In the podcast world, everybody has a story of at least one time forgetting to hit record and it happened to us last week. So I'm glad you're back; glad you had time but I think it's appropriate that we didn't do it two minutes after I realized when we were wrapping up that I forgot to hit record. Okay, enough babbling. Rocky Cleborne tell us about yourself; who are you what's your background? Rocky: Well, my name is Rocky Cleborne and after I graduated from college I ended up starting some businesses that I turned around and then sold. I got into the automobile business in the late '90s and became a general manager of a number of large automobile dealerships; some of which were selling over 600 cars a month. I've been doing that for over 20 years and then decided that I wanted to retire but knew that I didn't want to just sit around and do nothing because that's not who I am and so I decided that I would buy a business. At first, I looked at brick and mortar businesses and then I said I wanted to be more cutting edge than that and decided that I would look at e-commerce businesses. I did some vetting and some research. I came across Quiet Light Brokerage and the rest is history as they say. Joe: So you are an almost retiree that is in the automobile industry which is about as old school as it gets and you do what? You buy an e-commerce business and it's not only that but it's a jewelry e-commerce business. Rocky: Yes indeed and the company is called Novadab and I wanted to end up getting a business that had higher margins and that the jewelry business definitely has and I wanted to be able to end up operating the business with my daughter and so she has joined me in this venture and we really, really enjoy it very, very much. Joe: Well, good. So I want to take your life experience in terms of being in business and talk a little bit about the search process that you went through, the vetting process because I know you looked at a lot of deals; we looked at a few together, and then your financing; how you decided to pay for this business and talk a little bit about some of the wins and losses you've had along the way. But before I do that folks I want to say that you've heard me say it, you've heard Mark say it in the past that who you are as a buyer and how you behave as a buyer makes a huge difference in terms of getting the deal done not just with the broker. Well we're here to help both sides of the transaction no matter what and sometimes it does matter in terms of the likability of you the buyer because if we're in a multiple offer situation our client; the seller is going to say who do you like, what do you think, who are we going to get through due diligence with and all the way to closing, and they're going to say who do you think would be better to work with after closing in transition and training? And Rocky is that type of guy. You struck me … well, what you bought this last fall, in fall of 2018 and we've talked a few times before that and then lo and behold I hear you're under LOI and under contract with a deal that Amanda had and excited about it. I even got an e-mail from her and from the lender Stephen Speer about what a great guy you were; so good for you and folks this is what it takes some time. So again, alright Rocky tell us about your vetting process. How long did it take you to find Novadab and how many deals did you look at, and how many deals did you make an offer on? And I know you're going to come up with ballpark numbers because you probably looked at more than you can remember. Rocky: Well, that's true I did look at quite a number of them actually. I started the process February of last year and I looked at quite a few businesses. As a matter of fact, I did do some research and found out that I had actually in-depth researched over 14 businesses that I was trying to end up purchasing. I utilized a company called Centurica with Chris Yates. I actually did quite a bit of study for me because I learned early in life that you want to surround yourself with people that are knowledgeable of the businesses that you're looking to try to purchase and also know what you don't know and I certainly … and I was very, very glad to end up having Chris being part of this search process as well as helping me do the analysis because two heads are better than one and he provided me some great insight and as a matter of fact prevented me from … or didn't prevent me but certainly lend some insight as to why I wouldn't want to purchase certain businesses out there. So we did some due diligence together. I ultimately landed on Novadab and then through that same process and through a podcast I was introduced to Stephen Speer and Stephen really again if you want to surround yourself with really, really smart people that are hardworking and I give it back to you all at Quiet Light and also Stephen Speer and Chris Yates in guiding me to a purchase that ultimately I've been very, very happy with and have enjoyed as I say operating with my daughter. Joe: So you started in February 2018, when did you close on Novadab? Rocky: August 23rd. Joe: August 23rd, so just about eight months … no six months. Rocky: Six months. Joe: I always … I actually did this today, I talked to a buyer today and I said look man trying to find that perfect business is like looking for a needle in a haystack inside of a giant big ass haystack and he said absolutely. He's looked over 53 cases; he looked at 53 of our listings in the last I think probably 12 months, so a lot more than you've probably looked at. How many of the businesses that you looked at did you … you said you looked at 14 in depth; how many of those did you make offers on? Rocky: I actually only made offers on five of them and one of them actually was one of your offers where I was reaching for that brass rain if you will but because I hadn't been in the e-commerce business previously we felt that it wasn't something that we could end up doing and securing the financing ultimately with Stephen. So while I reached for it and wanted to try to do it I'm certainly glad that we ended up where we did in purchasing Novadab. Joe: Good. Alright so quickly and I don't mean to plug Centurica, we don't get any referral fees. They're not an advertiser but what I've talked about historically with Centurica is that once you're under a Letter Of Intent they will help you with due diligence. We give a great deal of information on our listings but no matter what you're going to want to dig deep. You're going to want to look at bank statements, vendor invoices, Amazon statements, credit card statements, all of that in due diligence and when you do an SBA deal like you did Rocky with Stephen at First Home Bank and they've got a 3rd party valuation team, they've got an underwriting team, and they're going to dig in and vet the business as well. So you've got lots of people that are helping but one of the things that Centurica did for you just to make sure if I understand it is that they didn't just help you with due diligence once under LOI, they helped you with the search process as well and it made sense in advance of making the offer and going under a Letter Of Intent; correct? Rocky: Yes, indeed they did. In fact, Chris and I took a look at a number of different businesses together and looked at the attributes, the positive things about the different businesses and how they might indeed tie into my skill set or not necessarily tie into my skill set. And by doing that he really helped guide me to purchasing a business that fit my skill set that I could then expand upon and ultimately grow the way that we actually have grown the business over the last six months. So he was involved from day one with the search for a business and really provided me that hand holding that when you're investing the kind of money that you invest in these businesses really gives you somebody to lean on and obtain incurred information. Joe: Cool. I want to get into the growth but let's hold off on that just for a moment because I do want to learn there. Stephen Speer of Bank United another great one that they're working with is Bruce Marks at Radius Bank for those listening. And if anyone listening has an amazing SBA lender please shoot me an e-mail at Joe@QuietLightBrokerage and make an introduction; the more the merrier. Bruce and Stephen though are top notch. I don't think you'd go wrong with them at all. Okay in regards to the SBA lending process we're not going to talk about the purchase price of the business here but generally, depending on the deal size the lenders are looking for something from 10 to 25% equity infusion and that can come from the buyer and the seller or from just the buyer. Rocky in purchasing this business how much percentage of the overall deal did you have to come up with? Rocky: I ended up coming out with approximately 20% of the overall deal including the inventory and there were some reasons behind that that I did not want to end up pledging my home is a security with the SBA which they looked to try to do and so in exchange for that I put up some additional equity in order to not have my home secure. And it was really quite interesting, the sellers also took back a note for 15% of the total deal and it was interesting in that when we did the interview as you mentioned previously on this podcast how important it really is to end up building a relationship with the seller. Everybody thinks that when they're a buyer that they're in the driver's seat and when you have as much demand for e-commerce businesses particularly the good e-commerce businesses that you really want to buy; you're the one that's being interviewed as a buyer to end up buying that business and you really should treat it as an interview because you are being interviewed by the seller. They've taken a lot of their hard work and really it's their baby if you will and they've owned it and brought it to where it is and now they're turning around and trusting you with it so you want to end up making a good impression and certainly during that interview process you want to make sure that you put your best foot forward. What ultimately happened for me is that I … like many others faced a situation where there were multiple offers on the business; mine was not the highest of offers, in fact, mine was about $50,000 less than the next offer. Joe: Wow. Rocky: He took my offer and it's great because the two of us are still talking with each other on a regular basis and in fact, we've formed another business that we could talk about later. Joe: Good for you, you found another business together in your retirement years. Rocky: Yes indeed. Joe: Crazy Rocky that's what I'm going to call you from now on. It's interesting being likable on those calls gets you … obviously, you got the deal $50,000 less than the highest bidder but also a 15% seller note. That's not standard. I think the highest I've seen and I've done a fair amount of SBA deals is 10% so good for you. This total 35% equity infusion is interesting; 20% from you, 15% seller note for the seller and it's news to me that the equity infusion that you brought to the table scratched the requirement by the lender to have your house as collateral on the business so that's fantastic, good news there. Let's talk about— Rocky: That was thanks to Stephen as well. He did the negotiation for me with that as well. Joe: That's terrific. Let's talk about the transition and training period here. You've got a physical product business, the business model itself is not your standard typical e-commerce business where you're selling on let's say a Shopify store and Amazon you're also selling on I don't want to call them daily deal sites, how would you classify Zoot Wulily; hold on let's just talk about my mispronunciation. I said Zoot and Wulily, I meant Woot and Zulily and Groupon, things of that nature. Okay enough, we can make fun of me all day long; it'll be a long podcast. Tell us about the model where your products are being sold so that everybody understands the business model itself. Rocky: Sure our biggest partner happens to be Groupon, and Zulily is our 2nd biggest partner. We only do at this point about 10% of our business on Amazon, the rest are on deal sites as you mentioned. We have a company called MobStub that we do business with, OpenSky and some of Walmart of course and some of the other platforms that really are great opportunities for growth for us but our … what's called a preferred vendor on both Zulily and on Groupon and it works out very, very well for all of us. Joe: We don't have enough conversation about deal sites like Groupon, Zulily, Woot; all of them and I think the key … tell me if I'm wrong and expand on if I'm right but the key to success on deal sites like that is SKU counts and new SKUs and being able to present new products on a regular basis. Is that right; is that what sets you apart and allows you to do business with them on a regular basis? Rocky: Very much so; they are looking for new products to list on their sites and what we do is we try to do three new products a week on each on the Groupon site as an example. And by doing that we can end up growing along with them and they can present fresh products to their customers on a regular basis. So we vet the products out, we put them on their site, and ultimately we get orders from their customers of course and it helps us grow our business on our home site because they'll order their initial product from say Groupon or Zulily but because we send our product out branded with branded boxes or bags they then could come to our website and we really have done quite a bit of growth through our website and our e-mails because of those different vending platforms. Joe: That's fantastic. So in this situation are you using a 3PL or are you fulfilling orders yourself? Rocky: We fulfill our orders ourselves. I've got a wonderful team of people here in New Hampshire. In fact, we moved the business from Texas to New Hampshire over the Labor Day weekend and did not miss any orders that were placed with those portals that were wired to ship within a certain period of time. And the women that fulfill our orders here do an awesome, awesome job and we're very, very glad to end up being able to provide not only jobs for them but also we take real care in presenting our product to our customers. And because we have control of it we really feel as though it gets into the hands of our customers in a timely fashion and also with it having looking its best. Joe: Did the company come with any outsourced VA's that transferred with the business or did you take it over with your daughter? Rocky: Well, my daughter and I took it over and she does the day to day operations but we ended up having a wonderful team in India. As a matter of fact, we're going through some of the mistakes that I made in why that team ended up being so very important to our ultimate success. When I bought the business we had just about 510 SKUs, during the last quarter of the year I increased those number of SKUs from 510 to over 800. Joe: Wow. Rocky: And it was … I thought pretty easy; you just go out, you source the product, you bring it in, you just get some pictures, put it online, put some marketing behind it and you're all good to go. Joe: Simple; I mean its e-commerce, that's all it takes right? Rocky: That's all it takes. Joe: So I'm sensing we're going to have a valuable lesson come out of this. Rocky: Yes very much a valuable lesson but out of a few mistakes comes your biggest opportunities as well and what happened was I would go out and I would source all of this product and be bringing it in and bringing in and it was a little bit overwhelming to our people at the warehouse as far as stocking it in; having the SKUs. You have to create those SKUs, you have to end up picturing them, get them on the website, and so our team in India provided us with all of that necessary grunt work I'll call it to be able to assign SKUs, to be able to get our pictures taken, to be able to help us with the marketing of the product, and ultimately our customer satisfaction as well because with this size of business that we have we ship about 12,000 orders on average a month. Joe: 12,000 orders a month; that's amazing. Rocky: Yeah and in doing that we certainly have customers that we want to make sure that are taken care of and so we have four customer service people in India, we have a graphics designer, we have a website developer, and a number of other people that help us really execute the plan. We couldn't be where we are today and have experienced the growth we've experienced without their help. Joe: Rocky, you're in 12,000 I mean that's 400 orders a day are you capturing e-mail addresses for every single one of those customers? Rocky: Almost all of them. Joe: Are you're doing any e-mail marketing? Rocky: Absolutely we have about 125,000 e-mail addresses at this time and we e-mail market every single day; Monday thru Sunday. Joe: What software are you using? Rocky: We're using Mailchimp. Joe: Mailchimp; you need to go to EcomCrew.com and listen to Mike Jackness talk about his e-mail campaigns that he does on one of his businesses. I actually just sold up listings of business of Mike's and it's that business that he talks about. He goes all around the world speaking about it. He doesn't use Mailchimp, he uses Klaviyo and the getting 400 new email addresses a day 12,000 a month is gold to somebody with the skill set to be able to send additional e-mails. And with the volume of SKUs you have I would think that that's a growth opportunity; a huge one for you. Not that I know anything about it, Mike knows everything about it. So EcomCrew.com for anybody listening that wants to do e-mail marketing and Klaviyo as well I think you should check it out. So I know you love listening to the Quiet Light Podcast but I'm going to point you over to EcomCrew too. Let's talk briefly about your growth, I mean 12,000 orders a month is great; how many orders a month was it doing when you bought the business eight months ago? Rocky: We've actually experienced about 60% growth overall. Joe: 60% growth and you used to run automobile dealerships; you had no … other than e-commerce websites for the auto dealerships, did you have any e-commerce business experience? Rocky: No, actually I do not. Joe: What is fueling that growth other than your wisdom and your brilliance Rocky? What is happening here; how are you doing this? Let's just say it's your daughter man because she's going to listen to this. Rocky: Yes; absolutely. It goes back to realistically I was able to purchase a business where the gentleman who sold me the business is still actively helping me run the business. And so that really helps quite a bit. It goes back to the relationship that he and I built when he was selling the business to me. Joe: Is he being paid for that beyond the sale of the business and the transition and training period? Is it a consulting deal or he's just a really nice guy? Rocky: No, he is a nice guy; I will say that he's not being paid to end up doing the consulting work. What happened was we ended up forming because of my mistakes of adding these 300 SKUs at the end of the year we formed some businesses; two businesses together and so he wants to end up helping me continue to run Novadab and the growth of Novadab and in turn the two of us are helping each other grow these two new businesses. Joe: I think this is a 1st where we sold a business and then the buyer of the business starts another business with the guy who sold it. I think that's fantastic. And it goes to the relationships and being likable and connecting. I guess it's not always going to happen for sure and sometimes people just want an exit. They want an exit; they want to be done. They go through that initial transition and training period which the standard folks is up to 40 hours over the 1st 90 days. And if you don't have a seller note like Rocky did there's something called a hold back; a certain percentage of the funds just reside in Escrow and then are released in 90 days after that transition and training period is over. Alright well, let's … you've grown it 60% is that what you said? Rocky: In the last quarter of the year, we grew at 60%; the 1st quarter of this year, year over year growth was 40%. Joe: Wow, unbelievable. Alright so … but those 300 and something SKUs that you added; the big win big loss, what was the loss and what was the win? Rocky: The loss was definitely that I overwhelmed the team. Again it's just to add that many SKUs in such a short period of time during the peak quarter if you will; a mistake on my part and it definitely was too much too fast. And while they were very, very helpful in trying to get them launched we actually didn't get them up quickly as what we would want to. At the same time three of the SKUs that we didn't end up launching I know it's not a great percentage but three of the SKUs ended up selling over 20,000 pieces during the month of December. So it really provided some real good growth to us and the other SKUs some of them are working some of them are not but you have to try. And ultimately we're going to end up having most of those SKUs work and retire some of the older SKUs. You have to refresh your product up on a regular basis. I just try to do it all too quickly that's all. Joe: Oh that's alright, that's just part of the learning process at least you know it's a product line that doesn't go bad and you can sell through them, discount them, and maybe retire a few but that's pretty awesome. The big win; let's talk about what you're doing with the guy who sold you the business. You have started two new businesses together, what are they? Rocky: We started two new businesses; the 1st one is called Profinac and it stands for Professional Financial Accountants. Joe: Okay, I just have to say that sounds like prophylactic; how did you pick that name? Rocky: You and my wife said the same thing actually. Joe: She's a brilliant woman let me tell you that right now. Rocky: I will have to say that's part of why we're partners. I did not pick that name, Ashish picked that name for me or for us but the reason it stands for as I say Professional Financial Accountants and so we ran with that and see we're having an impression on everybody just as this [inaudible 00:30:44.2]. Joe: It's now unforgettable to the thousands that are listening. So Professional Financial Accountants, you are doing online bookkeeping for e-commerce businesses? Rocky: Yes, we do online bookkeeping for e-commerce businesses. We also do sales tax management. We end up doing payroll services for people as well, income statements. We'll do anything that they need to in order to offload what I feel that many e-commerce and really small businesses don't want to end up doing. They get so bogged down in being a business operator they don't end up being a business owner and so by taking off the real necessary, you have to keep score somehow and if this way somebody else can do it it ends up being or allowing you to end up focusing on the growth of the business. Joe: And there's … in my experience I mean growth is important if and when … you know what it's really when; when you decide to sell the business and it may be 15 years from now, it may be passing it on to a family member but they're still going to want financials when you decide the business you've got to have good clean financials. You can't co-mingle it with other brands and things that you want to keep. You're just going to get less value for the business and the time to start planning that exit even if it's in 10 years is now by getting good clean financials. So I think the prophylactic company, the Profinac is a great business. I'm sorry I won't do that again. What's the other … is it Profinac.com I assume? Rocky: Yes, it is. Joe: Alright. We'll put that in the show notes. Rocky: Okay. I appreciate that. The other thing is that's what you and Stephen taught me as far as the businesses were concerned in the sense of being able to provide a clean settled financial so that when you end up wanting to sell your business you have those financials that can end up getting that SBA approval ultimately. Joe: Let me ask the question because I think it's probably on some folks mind in the event they need these types of services and are doing it a little bit themselves right now are you using Xero or QuickBooks? Rocky: We will use both. Joe: Really? Rocky: Yes. We'll do either one for them. The team is well versed in both. We feel though that Xero will end up providing them with much more in depth information. Joe: I agree; I hear that a lot. The one thing that I wish the developers of Xero would do is allow a Profit & Loss statement to be run with a longer date range than just 12 months. When someone sends us the Xero reports we have to merge all of the years together in order to get to a running P&L which we always want to present with Quick Books; it's easy. And also the Xero folks they're not US based, I don't think because all of the dates are reversed of what we do here in the States which is the reverse of everybody else in the world I'm sure. Rocky: Yeah very, very true. They're an e-commerce based platform and they were founded on the e-commerce platform or in the cloud if you will, that's one reason why we feel that it provides us with a lot of [inaudible 00:34:10.3] that way. Joe: Good, what's the 2nd business that you're starting with your new business partner? Rocky: It's called Supportab and that is S-U-P-P-O-R-T-A-B.com. Joe: Only one T? Rocky: Only one T. We don't know how to spell either. Joe: It's giving you support to your abs; that's what this one does. Okay, what does Supportab do? Rocky: Supportab basically provides again a lot of the necessary support that an e-commerce business needs. This is going back to my big mistake of introducing those 300 SKUs. I needed to end up having a team; a website developer, for example, customer satisfaction people, graphics designer, marketing person. That's what we provide to people that are in the e-commerce world. And what we do that's a little bit different than some of the other businesses out there is that we have it all and we call it omni channel instead of multichannel. And omni channel basically is the integration of all of those different facets under one roof where your customer satisfaction team or your customer service team, your website developing team, your graphics team are all working together and that way they communicate with each other and interact with each other as far as what the overall goal of the company is. Whereas if you do it multi-channel you might go out and hire a bookkeeper, you might go out and hire customer service people but they never talk to each other so they don't get that common feel of the business going forward. We have it all under one roof and we also provide the supervision and management of that team. So we interview the companies and we ask them what their goals are and then we then convey that and manage the team towards those goals, talk with the owner of the company on a regular basis, and then we make sure that we're doing what it is they want to end up doing and more to achieve their goals. Joe: Based upon my experience in doing thousands of valuations I would say it's a very needed service because a lot of people that sell their business sell because they're just pulled in too many different directions, feel like they're going nowhere, and just need to cash out and get some emotional satisfaction because they're not getting any. Because they're working in the business instead of on the business, so Supportab; support one T ab.com sounds great. But Rocky you don't have any e-commerce experience, you're an experienced business person who's been managing a very difficult niche in the automotive world for 20 plus years now you've got Novadab so I guess that brings that life experience to starting these two new companies which are essentially service agencies which are definitely needed. What about your business partner before Novadab, what kind of e-commerce world experience does he have? Rocky: Well, he founded Novadab and certainly brought it to fruition and then before that he works for AT&T for a period of time in website development and was doing a lot of computer work himself. So that's one of my partner's— Joe: So he's mature, he's not in his early 20's that started his 1st business sold and is doing more business with you? He's got some real world experience behind him as well. Rocky: Very much so and the other partner that we have is actually his brother who is located in India and is heads of the operation over in India for us so that we have someone who has experienced … he worked for Pfizer for a period of time and did marketing for them and spends the time building our team in India and sourcing all of our employees that we end up hiring in that area. Joe: Wow. Is he and his brother originally from the States or born in India and relocated to the States? Rocky: They were born in India and Ashish came over here. He came over here to go to college, graduated from college and wanted to stay for a period of time and has now located in Austin is where he is. Joe: Oh, that's great. That's great to have a direct contact there that is an owner of the business, a relative of one of the owners of the business as well so it's fantastic. Well, Rocky, this is a great story; we're running out of time here. I appreciate you coming back on and actually allowing the team to record this one. Thank you very much for your humor in that regard and your time. I'm very impressed that you've taken this and grown it to the level you have in such a short period of time just for your daughter's sake. He's given you all of the credit in case you're listening; Rocky is just showing up every day. I'm kidding of course. The next time we have you on I want another update maybe in another 12 months we can get you back on, maybe have a daughter on as well what do you think? Rocky: That would be awesome. I couldn't do it without her that's for sure. She takes care of the day to day operations and allows me to end up working these other businesses and really without the team that I have I wouldn't be where I am so I really appreciate all of their hard work without a doubt. Joe: And we appreciate the type of person you are, the type of buyer you are, and the fact that everything has gone so smoothly. I'm so glad to hear for your success. Thank you for coming on the podcast and I look forward to doing an update with you sometime in the future. Rocky: Thanks very much for having me, Joe. It's been a real, real lot of fun. Joe: Take care, you too. Links and Resources: Novadab Profinac SupporTab Centurica StephenSpears BruceMarks Austin Meetup

Since 2013 Quiet Light's average transaction size has grown up to ten times. Back in those days, there were no private equity firms poking around the e-commerce space for these listings. Today it is a completely different story and more often than not we're seeing private equity firms come into the buyer spectrum. In fact, once a business reaches a certain size, it is more likely than not that a seller's potential buyer is going to be in the private equity space of the buyer pool. Today we are going to dissect the PE process a bit further. We'll delve into the process, the advantages and disadvantages, and give a general education on the subject for those who are curious about it how it works. Today's guest, Brian Rassel, is Vice President of Private Equity with Huron Capital. He's responsible for sourcing, evaluating, and analyzing investments made by his firm. Brian delves into ways he finds that e-commerce has entered into almost sector of investment that his group is involved in these days. Prior to joining Huron Capital, Brian was an Associate at Prophet, a global growth strategy consulting firm. Prior to Prophet, Brian was a consultant with New England Consulting Group where he led project management in their private equity practice for buy-side clients. Brian is sharing his wealth of private equity experience and how PE is entering more and more into the e-commerce space. Episode Highlights: How Brian defines private equity. How PE funds traditionally start up and get solidified. The difference between small, medium and large equity funds. The holding periods that private equity funds usually need to secure capital. Is PE all about acquiring to grow and sell or is there a category for buy and hold? Do evergreen funds exist? The difference between platform and bolt-on investments. Three things funds do to generate deal flow and types of business spaces they favor. The behind-the-scenes processes of putting a deal together. How many people are involved in the deal on the PE side. The backend investors committee and if that hinders the deal for the seller. Why time commitment is actually a good thing. How many deals Brian's PE firm evaluates per year. The defined process that gets them through the numbers. The growth potential for e-commerce – multiple appreciations and the role of private equity. Brian frames an ideal acquisition structure based on the general private equity model. Why the buyer/seller fit really matters. How private equity can work for sellers who want to get their business to the next stage. Transcription: Joe: Back in 2013 Mark I closed 23 transactions. It was a busy year for me. Do you have any idea what the average transaction size was? Mark: I … what do I guess? Well, it's you so I'm going to say like seven million dollars. Joe: I love putting you on the spot because you do it to me all the time. The average transaction size— Mark: You got to be like 250. Joe: It was 125. Mark: Holy cow. Joe: 125; very small. Mark: Okay. Joe: And at that time there were no Private Equity Firms poking around the e-commerce space for these smaller listings. Today it's a completely different story and my average transaction size was 10 times that last year. And a lot of buyers or a lot of sellers, the question I get asked all the time are who are your buyers? And it's a mix of everyone but more often than not now we're seeing Private Equity Firms come into this space. And I understand you had an expert in that area on the podcast. Mark: Yeah private equity is a topic that's coming up more and more frequently with sellers especially on the higher end of that revenue spectrum that we really work with. And it makes sense because once you get to a certain size of business your buyer is more likely than not going to be at least somewhat in the private equity place … area of the buyer pool. In addition, we've talked before … I had Ryan Tansom on and we talked about selling to a strategic buyer versus a marketplace buyer. And obviously, people always look at this especially at the higher ends and say I kind of want to have a strategic buyer. Well, one thing to keep in mind here is that this is kind of a spectrum right? It's not binary; you're either strategic or marketplace. But when you get into that private equity world, private equity is almost always going to be something of a strategic play. So I thought … look this private equity world is something that people keep asking about let's actually start to dissect it a little bit. So Brian and I talked and we spent probably about half of this interview just kind of going over what is private equity. How does that work? What is the definition of this? What are the sizes of it? And really just trying to ask some of those silly questions that maybe you kind of wonder about but don't want to ask because you don't want to sound like you don't know what you're talking about. And so we went over a bunch of those questions but then we also went over what does the process looked like. What does it look like to sell to a private equity firm? What are the drawbacks to it and what are the benefits of it as well? And really it's kind of a general education podcast but I think also … and maybe more importantly for those of you out there who are thinking about selling down the road and you're looking and trying to peg the different values that you want to get from an exit and maybe you think well I want a 10 million dollar exit or a 15 million dollar exit, if you get to that point what's it going to look like to sell to a private equity and what do you need to do to really make yourself appealing for a Private Equity Firm? And how does the deal change when you're signed to private equity as well. So we really covered a lot of ground in about 30 minutes. Brian is super knowledgeable obviously. He works in this space. And I really appreciated him coming on the podcast because … again I just downloaded a ton of information. Joe: Well let's get right to it. Mark: All right Brian thanks for joining me on the podcast. I really appreciate you coming on. Brian: Yeah I know. It's great to be here. Thanks for hosting. Mark: All right so I don't expect people to listen … my guests to have listened to the podcast in advance and I know … I don't know if Joe's been doing this, he records like 9 out of 10 episodes and I don't know if he's continued on the tradition but we like to have our guests introduce themselves mainly because you know your story better than I know your story and I figure it's a little bit easier. So why don't you give just kind of a quick 30 second to one minute rundown on who you are? Brian: Yeah I'm Brian Rassel. I'm a vice president with Huron Capital Partners which is a middle market private equity firm based at Detroit Michigan. The firm is 20 years old and has invested in … we're typically enthralled buyout investors where we'll buy a majority of a business and have done that through five successive fawns starting back in 1999. And the industries that we play in are business services, consumer, and specialty manufacturing. You know it'd kind of be interesting how I got to know you Mark for those listening is that believe it or not all of those basins are being affected by e-commerce or different kind of SaaS business models that are internet based. And I'm taking it upon myself to maybe be the person of the firm who is trying to understand those influences on all of our companies and make sure that we're in a position to incorporate those changes that are going on out and new coming at large number and being done by a lot of people who probably listen to your podcast and make sure that we're bringing more of the [inaudible 00:05:51.4] in the businesses we own so that they can be successful today and be well into the 21st century. Mark: All right, well I got a lot of questions for you because this world of private equity is encroaching or coming into the internet business acquisition world more and more. And whether it's because at Quiet Light our deal value is moving up or private equity is starting to look at different price ranges and maybe this convergence of these worlds and also private equity looking more in the online space is just becoming an increasing topic that we're seeing more and more of. We're also seeing individuals that have started up on their own raising funds to do large acquisitions or to string acquisitions together. Brian: Yeah. Mark: So what I'd like to do and I already kind of told you this in our conversation before I hit record, I'd like to go over some of the basics here of the private equity world and how it looks in the Internet space as well. And then know a little bit more about your fund and some of the things that you guys are doing over there and all that. So a quick shout out to Chris from Centurica and Rhodium I know that we've talked about him so much that it's almost as if he's a sponsor. He's not. But this is again how we got introduced. You spoke at the Rhodium and then you and I had a chance to speak after that and a good conversation. So thanks Chris for the introduction again. So let's start out really really basic here. How do you define private equity? Brian: Private equity is capital … private capital being put to work in private businesses. And so I like to name [inaudible 00:07:22.6] for folks who really don't know much about it a little quick stat just kind of on the US economy. There are half as many publicly listed companies as there were in 1996 or 1994 something like that. So even if the value of the public markets is larger the amount of places you can park that capital in the public markets is small in the total number of listed names. Private equity is a big part of either big institutionally managed money. Whether that's from insurance companies, [inaudible 00:07:52.4], pension funds, universities, those kinds of things. This is their way to go participate in the forces of economy that are still private companies that they can't get access to otherwise unless folks like me help them get access to it. It also includes folks that can kind of go into different flavors of private equity but depending on the size from the bing capitals of the world down to very very small funds that are more entrepreneurial. There's sort of every flavor under design in certain family offices and other things like that. That would be private equity, pooled private capital going into private businesses. Mark: Well how did these funds start-up traditionally? And I imagine that there's a lot of ways that they can start up. You've listed a number of sources of money and I think sometimes we forget just how much money there is in some of these places. So yeah [crosstalk 00:08:46.6]. Brian: For sure I mean there's just [crosstalk 00:08:49.4] I'm going to get this off, I'll be wrong by a hundred billion dollars. But I think something like 600 billion dollars flowed into private equity firms last year. So these … and the source of a fund or the way a fund works is that a fund manager like the folks I work for here where I'm a part of, they go out and they make their pitch about how talented their professionals are and what their track record is and the fact that they can get access to great deal flow and great opportunities, places to put private capital where it will go earn a reasonable return. And they raise this money from these other institutional or independent investors. It could be high in net worth individuals or anybody like that but … so they get started that way. They'll hold this farm estate back to the 1960s and there are new ones being created all the time. And frankly, as hedge funds have declined I believe in a large way in popularity just because of the efficiency of public markets there's been more and more money directed towards these private pools of capital and the private equity market. And when I say private equity I mean both kind of traditional buy-out funds for more mature businesses that have healthy positive cash flows on the one hand and on the other hand I mean venture capital is the son segment of private equity. And that might be for really really high growth businesses like the next dewberry of the world or whatever it might be. Mark: Right, absolutely. Okay, that makes a lot of sense. And as far as the breakdown as to sizes what would you consider to be a small private equity firm and what are we talking about in terms of their capitalization rates when they start up? What would be the difference between the small, medium, large type of firms? We can get an idea for how much money we're actually dealing with? Brian: So I would say just kind of from my understanding again all this caviada being dead this is sort of Brian Rassell's take on private equity and my interpretation and may not really be the opinions of United Capital, I can only speak for myself as an individual but they have a dedicated fund. And when I say dedicated fund these are groups of people that other folks, other investors have made a promise and a pledge that is legally binding and written their name at the bottom that that dedicated fund, the small one might be 50 million dollars. That'd be very small. Folks who are trying to invest less than that, generally speaking, have something more akin to a pledge fund. They have a number of people that they can pass the hat with to raise money in a deal by deal basis versus having committed capital to go invest in five, six, 10, 12 companies in that particular fawn. So just kind of … back at the envelope type map that you can think of is every firm should have plus or minus roughly 10 investments that have enough diversification in it. So a 50 million dollar fund is looking to put five million dollars to work in the 10 different companies. And that would be the equity capital going to those companies. There's oftentimes a mix of equity and debt coming into those companies and we could talk about that later. And then a midsize fund might be three or four hundred million up and pawn up to the 2KR's of the world or Apollo or the very big managers who are doing 15 billion dollar funds and so all different world. Mark: Very. Brian: They're taking hotels private or something like that. Mark: I was going to say they're buying something completely different than your Amazon business. Brian: Yeah that's right. It's a whole different world. Mark: All right you talked about you have successive funds. In my understanding again is that we go through these rounds of investment that coming up. We had Andy Jones from PrivateEquityInfo.com on and he talked a lot about the holding periods that private equity looks for. Can you just again quickly touch on that? We're kind of doing private equity 101 here. Brian: Yeah. I didn't hear Andy's remarks but just as it relates to a whole period I would think of it just to be linear about it that a private equity firm once our capital is raised [inaudible 00:13:01.9] the time that it takes to raise that money they committed capital or even the past they had capital they're going to take that money and let's just use this fictional 50 million dollar fund. And they'll take something like four years to deploy the first 80% of it. And the goal would be you take 20% of that money and get it into a new platform company. Companies they had no money in before. In the first year or the next year next 20%, next year next 20%, next year next 20% thus 80%. The point at that point you can't do necessarily new investments you're reserving that last 20% for either a company that's struggling that you need to give more money to to keep it going or to do an add on investment to buy something else and add it on to something that's in the portfolio. That might take four or five years to really deploy the majority of it and then another four to five … you know an investment from year one that you only … you're exiting that investment three to seven years later and let's just use five as kind of a round middle of the road number there. So an investment from year one is maybe gone in year six so it's being harvested. It could be sooner, it could be later. And the investment that was your last platform investment from year four might be heading out the door in year eight or nine. So fund life is something like eight to ten years. It can be longer. And a traditional as you kind of draw it up on the whiteboard like I have behind me here is sort of a five year hold. Now there's … I've seen many that are much much shorter and many that are much much longer but those are the fat parts of the [inaudible 00:14:36.2] if you want. Mark: Sure. So is private equity … is the goal of all private equity companies to grow and sell? So acquire, grow, sell, or are there other strategies? Buy it and hold for long periods of time? Brian: There are certainly evergreen funds out there. They're much more … when I say evergreen they have the ability to hold and recycle the capital. They may be designed to have heard of a number that has committed capital from particularly family offices that never want to do the tax consequences of becoming liquid in an investment and actually realizing the gains so they're structured to reinvest the money that they make. Or if they sell something to quickly find someone else new for it to go into. Now that would be a more unique situation. And then certainly family offices there's a number out there that looks for longer hold periods and there are certain funds that are designed for a longer hold period. Mark: All right so this is going to be again another basic question but I want to make sure our terms are all well-defined here. We hear these terms of platform versus bolt on or add on investments. Just real quick the difference between a platform investment versus a bolt on. Brian: Yeah I'll just keep it simple. I'll say anything that is a brand new business, new industry for that firm to go into. They don't currently own something in that space. Whether that's a tiny initial acquisition or a big one that would be the platform investment. So let's just say with a … I don't know Internet broker pencils, I'm just making this up, all right? And they don't have any other investments in the internet broker pencils space and they invest in a company in that space that would be the platform [inaudible 00:16:17.1] that. And maybe there are 10 companies that make … that do internet broker pencils and they buy two other ones of their competitors and they make it bigger or somebody [inaudible 00:16:25.3] and now they're putting it all together those might be add-ons to that original entity that they purchased or recapitalized. That's what we mean. It doesn't necessarily have anything to do with size which can be confusing. Sometimes you start with something small and you get the opportunity and do an add-on that's much bigger than the original investment. So it's more just where is the starting point in you can do a space or an industry. Mark: And if we think about the terms it makes sense right? Brian: Yeah. Mark: You build on top of the platform and you add-on top of the platform. So it makes … that makes complete sense. Brian: Or bolt-on, yup that's where the nomenclature comes from. Mark: Or bolt-on, absolutely. It's amazing when you dig in to definitions it's like the terms actually have a meaning and it makes sense. Brian: They do. Generally, they come from somewhere. Mark: They come from somewhere. There's logic to this stuff. I love it. All right so now I'll get into questions that I'm starting to be genuinely interested in and that is how does a fund develop a thesis or an entire direction to go after a particular platform investment? I mean if you're selling blue widgets and also if somebody comes and says no you don't need widgets what you really need are sprockets, if you don't do anything with sprockets at all how does that enter into a fund's psyche at all? Brian: There's really three things that we're doing here to generate the sort of deal flow and the ideas and spaces we want to go into. So here I'll speak more from Huron Capital. There are other firms who follow a similar philosophy potentially. So the first is businesses we didn't know about but are being represented by a broker or an investment banker like yourself Mark who … those are opportunities that are coming to us. They are being listed. They're being actively shopped around. We may have never thought of the sprocket industry before or we didn't know too much about it or we read materials on it and we say it has a lot of characteristics and things we like; great cash flow, seems very resilient, seems countercyclical, if the economy goes down it'll still do well, it's a leader on its space, any of those kinds of things. Those are opportunities that come to us and that is more of a passive thing. And then we get active once we realize that it fits a lot of criteria and we believe we could be successful with it. And that sets into motion a whole chain of things where we kind of prove out of the pieces that we might like this business and we try to get educated. The second that we spend a lot of time on is networking with executives from a broad, broad variety of industries. Those people know where there are spaces that are changing. And generally speaking, change creates opportunities. Change creates winners on one side and losers on the other side. And less be to the losers but you need that kind of disruption to create any sort of sort interesting investment outcome. The study ID is probably the market's sufficient enough that the study ID is not going to return the greatest returns. So we've spent a lot of time with executives unless I knew them about spaces that could be interesting and trying to listen to areas they know about and start to build some [inaudible 00:19:37.4]. And then even more proactively than that there's a lot of opportunities where we meet the executive who has a view of one particular thing they want to do here at Huron it's got a registered trademark or the like of the firm. We call that an exact factor investment where we will actually flip the process and say we really believe in the sprocket industry. We met Phil who is going to be our perspective CEO in the space and he has this vision that is going to totally turn the industry [inaudible 00:20:11.5]. To do that we need to go find the platform, we call that like getting fuel behind the wheel. We need to find a car to fulfill the drive. We believe he's the best driver in that industry. And we will do all the work, we'll go write a hundred page white paper on it to prove to our investment committee why it's such a fabulous opportunity and Phil is the greatest operator in this space. And then we will commit dollars into going and finding businesses in that space and find Phil the car he can drive and we'll get off to the races that way. So it starts with a commitment from our farms for a certain amount of money behind Phil to go do an acquisition more and more in this space. So it … I guess ranges from that passive we find things and then we get educated too. We educate ourselves as much as possible and align ourselves with an executive who can execute and work the process the other way. Mark: Cool. All right that [inaudible 00:21:04.07]. So let's talk a little bit about the process that goes on behind the scenes when you are evaluating an opportunity. And I think for a lot of potential sellers this sort of conversation is going to be really insightful. So let's say we have somebody that they have an e-com business, 30 million in revenue, eight, nine million in earnings on an annual basis and they've got a couple of private equity firms looking at their business. Where does that start and what is the process going through? And you can talk about maybe Huron's process and then if there are variations that you know as well. The number of people that are going to look and touch that deal as it goes through the steps. Brian: Yeah. Mark: What are some of those behind the scenes looks? Brian: Yeah so once you've got that moment where there's a couple of firms interested there's going to be an incredible amount of information about the business across insurance, benefits, compliance with laws and regulatory statutes, information about the market; anything the business can possibly produce about itself, fairly every file that's off the shelf that they have, every non-disclosure agreement they have with somebody that they on boarded or employment agreement, every contract they have with a customer, or maybe it's an industry where you don't have a lot of contracts with customers but you have a lot of contracts with suppliers. All that information needs to be made available for these perspective buyers to digest. And the more they can be made available, the more that that's organized into different pockets of legal, employee, insurance, benefits, all of that, the better. It's going to save the company a lot of time from serving requests versus being proactive by getting that stuff out there. And you know well everything here all the buyers be under a non-disclosure agreement and that's just a very kind of well-oiled machine around making that information available to give your last few buyers down to the one you would like to choose and have them under a Letter of Intent. And that starts to be an exclusive relationship where the buyer is going to spend a lot of money in due diligence and in exchange for spending that money, they would like the exclusive right to [inaudible 00:23:19.3] business for a period of time. 60 days … 90 days where they engage and here is where it starts to get to be a lot more kind of in your trousers and really analyzing your business but they're going to engage in quality of earnings earned to go and understand did you actually produce the amount of revenue, if you put it in the right time periods, if you really counted for every cost etcetera. They're going to engage legal professionals who are going first to sort of just again a full work up of registration, compliance, [inaudible 00:23:51.9] and then those folks are going to work on the actual transaction documents as well as a host of other advisors. And that would be like again a 60 to 90 day process. It could be 30 days on the short end. There are firms who can do it in that time particularly if you're a smaller business and an add-on to a much larger or a very simple business. Mark: So how many people are we talking about there that are going to be involved in the process? Outside of the consultants like a Q of E … a quality of earnings report that's going to be an outside accounting firm right? Brian: Yeah. Mark: So we're not going to— Brian: Okay so from the acquiring firm? Mark: Mm-hmm. And we can start at the beginning. We can start at your interns that are digesting deals. That's going to be part one. Brian: Sure call it four and they're going to be answering to the remainder of their firm particularly their investment committee. Ideally, it's a tighter team and there's four and if it's an add-on expect more. So you'll have the management team of that kind of platform investment as well. So four to eight and then when you get to the advisor well now you're talking 20 something more. Mark: Right, getting all those outside advisers. Now one of the things I know people get worried about during this process is you start out again with that guy who's that in deals up front and he sees some he passes it on to the team and they end up liking it so now you're dealing with a handful of people that are asking the questions digging deep in that due diligence right? Pages and pages of collecting information possibly even submitting an offer because on the surface things look okay. Brian: Yup. Mark: There seems to be these back end investors committee as well which can also kind of wash the deal far in the process. What would you say to people that get kind of frustrated when they hear that and they think do I really want to work with private equity because there are so many people that could potentially disrupt this deal? Brian: So I would think about the time investment to it. So the private equity firm is in no way interested in wasting any of their time. Huron looks at something like little over a thousand deals a year. That takes a lot of time and we're very thoughtful about moving things to the funnel and connecting our firm's resources to evaluating an opportunity. So if somebody is spending the time I would tell the listeners that they are encouraged. If everything checks out the way I told to them so far or they've written so far about that business then there are absolutely no issues. The firm, an organized and real firm is going to be thoughtful and time is kind of their most valuable resource and they're set up to be able to make a number of staged gates kind of we're interested and we're not interested. We're interested subject to confirm affirmation I want two and three. And you can have a very quick conversation like you and I are having now to say is this the case is this not the case? Here's a big concern we have, should we be worried? And they will both take your answer and that gives them that kind of gumption to proceed. And they'll probably have to go validate that as well later. And that validation just has to support what's been told to them. But they are also making a big commitment with their time in the same way that the seller is and I would take it as genuine on their part that they're not looking for it to fall apart. It's just things do. Certain deals fall apart because new information becomes available. I've seen that happen a number of times where the seller learns things about their business or thinks about their business in a way they hadn't before and can agree that that's a genuine risk and may be something they want to work out within a course of another year and then they might be back to market. Mark: Yeah, that happens often. We see that all the time even in the amount of work that we put a seller through upfront it pales in comparison to what you guys are going to be doing in your actual dig deep due diligence. And the number of times that we have people come back and tell us that was a lot of work but that was really useful. Brian: Yeah. Mark: I have learned a lot about my own business, right? Brian: Yeah a great advisor like somebody like you and using a broker who's been through and understands the questions that are going to be asked is going to save a tremendous amount of time. And we call folks like you Mark a river guide we're using on our side and we love them. Sellers use them too because they're that much more prepared for the process. Mark: Yeah. And I can tell you like the one thing that … I'm going to play both sides here, I would say the one thing that can be difficult with working with private equity is because there are so many people that can come in with a dissenting viewpoint. You're not trying to … convince is a bad word but show the opportunity to one person and have them agree to it; you're having to show a number of people. But the great thing and I love working with private equity on is that it's completely unemotional throughout the process. Brian: Yeah. Mark: I mean it really is does this check the boxes we needed to check and if it doesn't we're going to find out as quick as we can. You said something, I was going to ask this question, you guys evaluate you said about a thousand deals per year? Brian: Yeah the pipeline you think about now it's working its way down at the top of the funnel and so we're a thousand and then that's working its way down to 250 that real solid time is being spent on and then 75 that we're spending real tons of resources and traveling around to visit them … maybe 80. Now I'll get these numbers wrong this is kind of directional and then down to the 30 or so that are getting a Letter Of Intention and we'll close 22 transactions a year. Mark: Yeah so that's an amazing amount of data to be pulling in. And you guys have criteria at every stage I assume that you're looking for up front? Brian: That's right. Mark: Okay. All right that makes sense. Do you publish those criteria? I know we get a lot of just the very broad stuff sent to us. Brian: We don't only because it's just so bespoke for every company. There are so many things that really are as you just said that are check the box and we're highly confident that we will go confirm later. We're highly confident that's not an issue and we are trying to get to it very, very quickly. The three or four things we want to make sure are the reasons we're most excited and confirm that that is factual and that was going to continue. Whatever that might be; on the customer relationship or the recurring purchasing or … whatever it might be. And then at the same time the three or four things that are kind of we're concerned that could be deal killers. We believe we're spending the time because we think that's going to turn out to be true or we need to get to a yes no about is this a real problem very, very quickly. And so you know it's just they're different for every business. Mark: Yeah I know a lot of people listening right now you guys are buyers that are out there looking to acquire. So technically Brian you guys are somewhat of competitors although I think that you operate at a range that a lot of our buyers wouldn't. But I think one thing interesting that they should hear is this idea of having this defined process number one and then number two the amount of deal flow that you have to look at. I've talked to buyers that been out there looking for a year, year and a half but then you find out the number of deals that they're actually looking at doesn't really … this is a numbers game. I mean it's purely a numbers game. Brian: It is and one thing I want to say on that numbers game for us and it may be different for some of your buyers or not is that we're looking for situations that are great for us and we're also looking for situations where the seller in some ways choosing us. Now I don't want to overstate that but I do want to say that there has to be a great fit in every piece and why we're a better owner than someone else for that business. Some angle that we have, some affinity we have for what they do, or some prior experience or something. Otherwise and it could be a little different for particularly small businesses. Maybe it's a little bit less like that and it doesn't need as much of the chemistry but that's a big part of what we're looking for, for sure. Mark: And we talk about that a lot on these pockets. I know you guys are probably tired of hearing Joe and I talk about the need for a buyer being a good fit. And we talked a lot about this general concept of being likable because sellers do eventually choose and for most of these sellers they do have a choice. I mean right now it's a seller's market. They do have a choice of who they're going to work with. I want to talk about the exciting stuff. Let's talk about the actual deals; the money. Brian: Sure. Mark: Why is selling to a private equity something that people should be excited about? Brian: I think I spoke a little bit about this at Rhodium but I just … I see then the difference in multiples that are paid for businesses that are exclusively e-commerce or SaaS based businesses. Those multiples are so much lower than what private equity firms are paying for more traditional businesses out in the economy. And I believe that those worlds will come together. And I believe that businesses that are a hybrid of both or have excellence in both and are flipping both worlds are going to be extremely, extremely valuable. Because on the one hand, they have the relevance for the future, it's coming from kind of the types of businesses that you represent. And also they have that anchor of the traditional business that makes them more under writable and it makes them more predictable because it's a less dynamic place that they're out in. And so that's where I think private equity firms in the coming two, three, four, five years are number one going to become much more comfortable with standalone e-commerce business models that are exclusive that and there are going to be people participating from the much more kind of like formal private equity world participating in your markets. And then I think there's going to be a convergence where a lot of more traditional business models are going to look for the influence and the DNA as well as the revenue and the profits but the influence and the DNA and the growth that comes from the types of businesses you work with Joe. And I think that means that the market that you're playing in, the multiples will rise there. For every dollar of earnings they'll be more valuable in the future and I believe that's for now in a very significant way in 2018. Mark: Yeah and we talked about this this idea of multiple appreciation that we see. And a lot of it reaches over to the fact that this is where private equity starts to play right? So we often talk if your EBIDTA is less than a million dollars per year the … just again for the sake of a multiple, it's going to vary for each business but maybe 3 … maybe 3.5 would be the multiple on that EBIDTA depending on the type of business that you have. But once you start getting up into two, three, four million dollars of EBIDTA now we start seeing the multiples jump up in the different ranges. And the reason for this again is that we're no longer playing as much with an individual investor who really has a much higher risk profile because they don't necessarily have the entire team behind them or a portfolio behind them to be able to take some of that risk but also get the staff in the background and all the resources in private equity. Brian: Yeah. Mark: So let's talk … I am not going to pin you down because it would be a really bad idea for you to say hey we generally paid 25x on earnings which I know you don't. What does a deal structure often look like? Because I know these deals structures do change as well when we're talking about a private equity acquiring a small company. What does an ideal acquisition look like for you in terms of its structure of cash that the owner is going to be getting, maybe equity or debt that you would hope that they stay around and I'd also like to address the idea that a lot of private equity likes to have or prefers to have an owner stay on board with the new company and why that's a good thing also for that owner to think about that. So that's a lot; the general structure, the ideals for a structure. Brian: Okay so let's keep this out of your space and let's just talk about the general PE model. When deals were cheaper a couple of years ago you might get a higher ratio of debt than equity in a deal but for this sake, I'm just going to make it 50-50. I think that more reflects the market today in terms of underwriting. But let's take a deal where a private equity firm is paying at least eight times. That's still a relatively rich multiple. I could have said six but let's use eight times. So we're paying four times the earnings in their own cash that they're talking and they are going and putting the company on the hook or raising four times and they do it. Private equity firm does it but on behalf of the company of debt for the business to take on. So let's say it's a business with 10 million dollars of EBIDTA. So it's an 80 million dollar transaction and a firm like Huron is putting 40 million of equity and raising 40 million of debt in that transaction. And that 40 million of equity can come either from Huron or some portion of it could be rolled over from the seller. If that seller has no debt on the business today, no capital leases or anything else that could be thought of as indebtedness over the normal trade payables. And in your day to day you've got cash coming in and cash going out; that thing that keeps the shop running. And they have no debt on the business theoretically on the day of closing they're getting a check for 80 million dollars. If they choose to roll over some of that … let's just say 10% of the purchase price, eight million of it I would argue that a private equity firm or somebody like me would take that as them stating a high degree of confidence in the future of the business that they want to continue participating and have a relatively [inaudible 00:37:34.7] portion of their net worth tied up in that outcome. Or that they see the opportunity to turn that eight million into 16 or whatever it might be that there is a great opportunity to continue driving growth and equity value in that business. They'll … I start there that the rollover investments are very useful because if you're saying you want to do no roll over whatsoever and you just want to walk away from the business it's not conveying a lot of confidence in the future of the business. There are certainly reasons to do that but it's not conveying a lot of confidence in the future of the business. And where somebody might have been agreeing to pay you eight if you were rolling over and giving that kind of tacit support for the business going over, they might kind of say this is we're not so sure. It makes them a little more nervous and it might be a seven times deal. So you may actually be shooting yourself in the foot in terms of the total proceeds you perceive. Again so it's an 80 million dollar deal, 40 million of debt, the seller is choosing to roll over. They got their 80 million dollar check, it doesn't work like this you're actually [inaudible 00:28:28.9] but they got their 80 million dollar check and maybe we wrote one back for eight and so Huron holds 32 million of the equity and that seller holds eight million of it. So Huron owns 80% of the business and they own 20% and we've got some obligations to pay. That would be kind of the middle of the road structure. There's certainly a lot more that happens as it relates to creating incentives for management teams and that's a very, very big part of what we do to make sure that if we do well they do well and vice versa so that we're all talking in terms of growing the underlying equity value of the business. And that can often be very different for a business that didn't have that before. And it was just solely kind of the founder driving it or minding the growth of equity value. We believe in creating a broad base of ownership so that we're all on the same page. Mark: Yeah. Brian: Our management team is on incentives exclusively through their salary or bonus or both. Mark: Right so one of the things that I've talked a lot in the past especially on like the main street sort of deals is this almost dichotomy and it really shouldn't be set up as a dichotomy of a marketplace based sale where you only have an investor looking to acquire business in a strategic sale where you have a company that it would effectively be like an add-on acquisition in your world right? They already have the sort of strategic advantage to acquiring that company. Within your world, it seems like so much of what you do is going to be the strategy based type of acquisition anyways. Brian: Right. Mark: So it's like you're not going to do an acquisition unless you think that you have a strategic advantage. And when we … you and I talked out in Las Vegas back last October one thing that you talked about quite a bit was we want to pour gasoline on the fire that's already existing. So whatever that might be and so as a seller who's out there thinking about this and saying man I've been growing my business like crazy but I'm investing all this cash back into acquiring more inventory and expanding the product line and I'd like to take money off the table and then keep growing it. This is that perfect sort of handoff to a private equity because you can say you know what you [inaudible 00:40:54.0] your income statement rich in cash flow pour. Brian: Yup. Mark: We got cash. We'll help you out there. You're going to get some cash on the table and then let's grow this from a 30 million dollar business to a hundred million dollar business. Brian: Right. Mark: And so there's an incentive there for that owner to double dip that [inaudible 00:41:11.7]. Brian: Absolutely. Particularly in situations … we see this all the time where additional capital is going to be an accelerant to growth. So capital is what we have and we're trying to find a smart place to put it work and if that means we can buy a business and continue and support that business with more dollars and we believe in the strategy and what's going on in the way it's being operated there's nothing … that's the easiest dollar for us to put out versus the whole re-under writing process of a new investment. And then for that seller to have all their eggs in one basket … I don't care what their life situation is they could be in their 30's and just want to diversify or they could be somebody who's looking at kids who are about to go to college and it just doesn't make sense to have 100% of their net worth or close to it tied up in their business. And if they could diversify a little bit or generate a little bit of cash but their vision hasn't changed at all that's a great situation to bring on a strategic partner like a private equity firm. And that's where that [inaudible 00:42:11.9] fit it really matters and the chemistry between the seller. For the most part, you're not going to sell it to a private equity firm, they don't want to be in the business or definitely not in the business of operating these companies. So round the business and investing in them helping to bring the right resources to it and bring the right capital solutions or capital availability all that. Helping them set strategy and all the other things but the actual day to day operations. So it's not going to be for your sellers or for buyers [inaudible 00:42:45.1] sellers who are looking to exit the business and hand it off somebody else private equity is not going to be the right solution. But for those companies that they either want to go to be a division of something larger and they think they can be a great cross selling opportunity or the way they've built their mousetrap if just they had more to sell in the same way, and I'll say like let's say you're the number one muffler seller online and you also want to do transmissions and drive cams and stuff but you don't have the capital and you don't have the ability to go source and expand that way, going and selling to a larger entity and being that e-commerce division is a very powerful idea. Or just continue and do your own business and double down … accelerate the organic growth, private equity firm could be a great partner. Mark: Yeah, we're just about out of time in fact we've gone a bit long but one thing I wanted to emphasize here, you said that capital obviously is the resource you guys have and are able to invest and I know a lot of people that I talk to say look I don't really need money from this, the business is making money and I feel good about this. But what I find when I actually start to dig in with these guys is I say well what would it take to move to that next level. Oh well, I would have to hire out this other division or create this other division and you know okay but what's the obstacle to that? I don't want to invest in it. It often comes up. Okay, that's the area where a firm like yours can also come in and say well look we have the capital to be able to invest in this. You know what you need; do you want to invest in it to get to that next stage? And even if that means bringing in someone and you can help with that let's do it. Exactly we can do that and we could— Brian: Not to mention that I think we find that often business owners are willing to do one out of their five ideas that are like that and were willing to do all five knowing that three won't work but two should work out beautifully and we're willing to go [inaudible 00:44:39.4] the bodies of the business and the capital and have the appetite to take two steps backward to take four forward and understand that they're not going to all work. And where maybe an independent owner would do those sequentially, try idea one it wasn't really working, didn't feel pleased with making that investment and losing that cash flow, fired that new sales person who was supposed to do something else. We're willing to go do things faster and make sure that that doesn't hover around in the business and the core of what we're interested in the first place. And so we'll work through that with the business owner by giving them that support and the dollars needed to make that happen. Mark: Brian, I really appreciate you taking the time here [inaudible 00:45:19.8] some of the small questions I had but really good to get those things— Brian: No it's my pleasure. It's fine. Mark: So thanks again and maybe we'll have you back again in the future at some point. Brian: That sounds great. Yeah, I enjoyed it. Thanks, Mark.   Links and Resources: https://www.huroncapital.com/member/brian-rassel/ https://www.linkedin.com/in/brianrassel  

In the second installment of our Incredible Exits series, we welcome Mike Jackness back to the podcast. Mike, one of our favorite guests, is here discussing the recent sale of his online business, ColorIt. Mike is a lifelong entrepreneur and hosts a podcast with a 30k listener following. On his show, he talks all things about e-commerce, email marketing, and Amazon. Mike's decision to sell this particular business was based not on struggling to grow it, but simply on the the need to offload something from his plate. He was well aware of what he'd done to grow it, and the potential for its future growth, he simply knew it was time to hand over the reins. We wanted to have Mike on to tell us firsthand how that process went, the challenges he faced, and how he eventually reached multiple offers. He shares some of the key things he did to get the business sold at 96% of the list price. We discuss how some acquisitions don't go as smoothly as others, even for someone who seems to have a great grip on how to grow and eventually sell an online business. Ths episode chronicles the sale and buying process: what Mike has done right and what he would change if he could. Episode Highlights: We hear about Mike's journey as an entrepreneur and what led him to start the Ecomcrew podcast. The factors that led him to sell one of his e-commerce businesses. Mike talks us through the 10 risk factors to take into account for e-commerce success. How Amazon can be the judge and jury when it comes to keeping your e-commerce business alive. The one thing he would go back and do differently in the transaction. The importance of planning in advance for an easier buyer transition. Why some entrepreneurs get caught up in the squirrel syndrome and often find that as they take on too much they run into trouble. Mike takes us through the launch process and how we got to the multiple with the right buyer. The importance of instilling confidence in the buyer. The inventory issue specific to this brand and how that affected the sale. Why one can't plan the perfect inventory in e-commerce business. How to find middle ground on the inventory excess in the sale and acquiescing when necessary. Why the seller makes all the difference in the sellability of the business. The way a seller should act under any circumstances.   Transcription: Mark: Joe you got to have one of our favorite podcast guests on; Mike Jackness. And Mike actually retained you or hired you to help sell one of his properties. And we get to do another episode … is this part of our Amazing Acquisitions? I don't know … our Amazing Exits I'm sorry. Joe: Incredible Exits, come on Mark get it right. Mark: My goodness, I made it up. It's a good— Joe: I don't even know what it's called. Somebody's going to tell me there's a certain term for things that flow off the tongue very well … incredible. Mark: It's almost as if I'm not paying attention to what you're doing at all. You got to have him on the podcast about selling his business. Joe: Indeed. Mark: I'd like to know about it. Joe: You know he's just an awesome human being and that made selling his business and the person buying it that more excited about it. Look, Mike is an influencer. He has a podcast where he's got 30,000 people listening to him every month and he talks about e-commerce and email marketing and Amazon. We had challenges because people are like well if Mike Jackness isn't killing it with this I don't know if I can do any better. But the reality was Mike was just simply chasing too many rabbits as he says. He had four brands inside of one seller account. He has the podcast and he has other projects going on. So he wasn't giving his full attention to this. So really the reason I wanted to have him on was to have people hear from him some of his … well-known and an influencer much larger audience in his podcast than we have what he was doing wrong. If he could go back and do it all over again how he would have changed things so that it would have been an easier process for him and we would have had … we had multiple offers but would have had a much easier process in reaching those multiple offers. And some of the key differences that he did to seal the deal. He didn't do it to seal the deal, he was just doing it anyway and it is what sealed the deal and got us under LOI at 96% of the list price. Mark: Yeah you know one of the most popular articles that I wrote on our blog back when I was doing all the blogging on Quiet Light Brokerage was the story of my own process of buying a business and in my own estimation failing at it. And frankly, as the founder of Quiet Light, it's kind of humbling to go out there and say yup I made an acquisition I completely failed but here is why. And I got so much good feedback from that saying this is great thank you for sharing these details because it really helps. So hearing from someone like Mike Jackness and his episode that you did with him is probably my favorite episode that we have that I've listened to. I don't listen to my own episodes which is why they aren't like [inaudible 00:03:51.2]. That episode from Mike Jackness in all seriousness he talks about email marketing and how he does email marketing. That's fantastic so if you haven't listened to it, go back and listen to it. It would be interesting to hear what he had as far as his own self-assessment when it comes to selling his business and some of the struggles that he had as well. And I think it might be encouraging for those of us that are out there like how are these guys doing all of it because we only hear about the successes, right? Joe: Yeah. There are challenges in here and I was … my initial plan was to do a two part series but we managed to get it all in. It's a little long folks. It's about 45 minutes or so and then the plan is to do a follow up episode about due diligence, closing, transition, and training. We may even have the buyer on and have all three of us on the podcast. Mark: It's 45 minutes? Joe: Yes. Mark: Well, I should shut up. We should get to it. Joe: Let's go to it. Joe: Hey, folks Joe Valley here from Quiet Light Brokerage and today I've got somebody that's been on before; Michael Jackness from EcomCrew. Welcome to the Quiet Light Podcast. Mike: Welcome back. Joe: Welcome back is right. You actually inspired this type of episode as I said before we recorded. Folks Mike has … when he was on before he shared his expertise on email marketing and the use of Klaviyo. Today he's actually going to be our first exit entrepreneur or Incredible Exits guest. Mike decided to list his business for sale last December. We talked about it. We got it listed. And now we're under Letter Of Intent. We're recording this on February 12th and we wanted to share Mike's direct experience so that you hear it … hear about the process, and what you should do right, what you've done right and what you do wrong, and hear from somebody other than me. Mike has been through it. He's got an audience of 30,000 that listens on a monthly basis at EcomCrew. If you're not listening to EcomCrew … I know I'm promoting another podcast but it's one of the absolute best out there. Go to EcomCrew.com they're always helping entrepreneurs in the e-commerce space. So Michael Jackness, 30 seconds just tell some folks who you are again for those that didn't listen to the first episode that we did together. Mike: I'm basically a serial entrepreneur. I started my first business when I was a kid. I did have a stint for seven years in corporate life. One of my clients did hire me but for the last 15 years, I've been doing my own thing either in affiliate marketing or e-commerce lest the 5 plus years. And when I got on e-commerce I realized that we were coming at things a little bit differently. We kind of got at it as a tech company rather than a product company. And we realized we had a lot to share. So the entire process pretty much; as you mentioned EcomCrew, even blogging, and podcasting, and telling the world about what we've been doing. But one of the things that make us unique is we also talk about all the negatives not just the positive sunshine blue smoke up your ass crap. In fact we go out of our way to talk about some of the hardships of running a business and specifically e-commerce. So yeah that's a 10,000 foot view. Joe: And in just about 30 seconds; so thanks. Yeah, I get it, I can't emphasize enough. If you are a current e-commerce owner you should listen EcomCrew as well especially the Under the Hood series that I enjoy so much and inspired the Incredible Exit series here at Quiet Light. All right Mike at one point, you came to me. You reached out I think probably around Thanksgiving or so and said you wanted to exit. Did you plan that well in advance or did you just find yourself tired and ready to move on? Mike: Yeah, there were a ton of factors that went into that initial conversation. We had a different plan. I can tell you what. We'll talk a little bit about that but the plan was to do this a little bit longer. But I actually just did a podcast about risk factors in e-commerce and we don't have 30 minutes to go over the entire episode but there were 10 risk factors that I called out. Which basically were like the amount of inventory that you have, tariffs, taxes … just kind of like a risk to reward type of thing, competition, Amazon getting involved in brands, Amazon shutting your account down, getting unbalanced to be more Amazon than not off Amazon things of this nature. And for me what I realized … I started waking up one day realizing that for us this stuff they've kind of gone a little bit out of balance. We're at a point right now as we're doing this podcast because I haven't quite done the exit yet where we have $1.3 million in inventory total company wide as we've been growing. As you know in e-commerce it's hard to get any money out of your business because we are growing it 100% per year and it's a situation where money just keeps on piling back in the business. You have a tax bill every year and without the money to even pay for that because you're plowing everything back in the inventory for growth. And we have been running at that speed for almost four years. And because of some of those other risk factors, the kind of leverage is changing a little bit. I felt like it was time that we needed to take some chips off the table. And combining that with just honestly being a little burned out; running at that speed is definitely exhausting. I found myself either dreaming about Amazon shutting my account down or waking up every morning first thing and checking my inbox and seeing if they had been shut down. Not because we do anything black hat at all but because I see things that happen out there because of EcomCrew and also [inaudible 00:09:05.1]. You hear stories of people that legitimately didn't do anything wrong but it doesn't matter because Amazon can be the judge and jury and executioner all in one. And factoring all these different things in it just … it felt like it was time. And we didn't know it when I had that initial conversation with you. I didn't know exactly what that was going to look like. At one time we had talked about selling everything. I was kind of like just in a bit of bad mood that day and then we kind of start walking through some more realistic and better options to kind of end up [inaudible 00:09:35.9]. Joe: Yeah, let's talk about that the realistic option of selling everything I have things or setup because I really want people to learn from this process and what your goals were and the challenges that we've had and some of the amazing things that you have done throughout the process as well. So the first thing we looked at was selling all four of the brands that you have. You have it under one LLC and two of the brands are doing very, very well. And two of the brands are start up brands where they're really working at a loss because you have a tendency to just focus on organic traffic and brand recognition for a series of months to a year and don't mind operating at a lost. First and foremost Mark had a podcast with somebody from a PE firm that painted this picture. He said the thing about private equity investors is … well, think about it when you were a kid. And he says you get a bag of marbles from and you try to negotiate a deal with your buddy for the bag of marbles. The first thing you want to do is reach into that bag of marbles and take out all the chipped ones. You don't want to buy the chipped marbles. And then you want to focus on the best marbles. And so when looking at your four brands, two of them were really operating at a loss so my advice right away was let's take those out of the picture. Because when you're selling a business let's say at a three time multiple and you have two brands in the bag and they're both operating at let's say negative $10,000 in discretionary earnings; that's $20,000 times three that's $60,000 off the list price of your business if you go with the multiple of discretionary earnings valuation model which is what we do in marketplace valuations. So we had to pull those two out. And then we looked at what at the time was one of the larger brands of the two. We've got ColorIt that we've talked about. We've talked about it openly and you've done presentations all over the world on your email marketing campaigns with Klaviyo and ColorIt. But the other one, different space, and we had a challenge. See one of the things that we talk about all the time are the 4 pillars of sellable businesses; age, documentation, growth, transferability. And the big thing that we had a problem there was the transferability of that particular brand. Two of the SKUs that you had which were not the largest used by any stretch, you were reselling those, right? And you reached out to your vendor to confirm that you could transfer those and what did they say? Mike: They said no. Joe: Simple as that. So that takes away one of the pillars. It makes it more complicated. But again as you said you were in a bad mood that day that we talked. A lot of emotions in selling your business and as you say in the introduction that we did for ColorIt, you've been chasing too many rabbits. When you're doing that you're getting tired, exhausted, and pulled into many different directions and often going nowhere. So we ended up setting that one aside as well and focused only on ColorIt and went with that to launch. Before we get into the initial launch multiple and things that we found that were really amazing about it we found one more challenge or maybe two. You have one LLC with all four brands under one LLC and all four brands in one seller account. What have you done since our initial conversations back in late November early December to rectify that? Mike: Let me kind of set the stage just real quick of why we got there as well because it's interesting in business. There's two phenomena that is existing, first of all, I've been in business for 15 years so I kind of knew some of the hiccups and roadblocks we might get into down the road. But I had run multiple businesses in the past. So whenever you do something and you don't like it you tend to correct for that in another way in a future endeavor whether it's a business or in personal life. And the thought of like having … we actually have more than four things going through this LLC, there are other non e-commerce stuff and some other things as well. And the thought of having six or seven different tax returns and credit cards for each business and trying to figure out how we're going to separate employees or like the lease or back in software like Skubana or you know a UPS count; all these different things like having to have them all segmented out just was not appealing to me in any way shape or form. And I was more concerned about today than tomorrow as far as operating the business. And I also had this thought process of when I'm ready to get out of e-commerce I'm going to get rid of all of it once. I'm a pretty binary kind of guy like I'm either all in or not doing it. And I thought the day that … when it came that we would get out of e-commerce we would just sell that conglomerate. But life happens and business happens and like I said some of these risk factors changed and the reality was that we wanted to pivot and change our philosophy and our business plan pretty quickly. I equate this also to like when you want to pay taxes you want to have your business show the lowest amount of money. You're trying to figure out any expense you can have. That's really good for a tax but when you go to apply for a loan it better be showing lots of income. So it's like … it's a similar kind of phenomenon where like in one part it makes sense to do one thing but in another … on the other side, it makes sense to do another. So we were kind of at that spot where it was obvious that this was going to be a problem because the things that came up in the calls over and over again were really two things. Number one shared resources of employees or other resources which I understand the challenge there. And also the fact that everything's in this one Amazon account. And let me tell you man if there was anything I can go back and do differently it would be having multiple Amazon accounts at a much earlier stage. The challenge is Amazon doesn't make this easy. They won't allow you to just create multiple accounts first of all without getting permission. And in order to get permission, you have to have a separate company. You have to have a separate … either separate ownership structure, separate EIN, separate checking account, separate credit card. All this stuff has to be 100% separated out in order for them to grant you permission to create another Amazon account. So we are going through that now and I mean what a disaster. Like we're having to … we're trying to close within about six weeks of recording this. And to hand over the account at closing we have to have just Brand A which is going to be ColorIt and the Amazon account and Brand C or B, C, D have to be out of the Amazon account and in a new account and it has to happen as seamlessly as possible which is impossible because we're … we only have inventory in Amazon. All of our inventory is on Amazon. So we're having to recall some of it and relabel it, get it into the other account. And we keep a relatively [inaudible 00:16:34.1] amount of stuff in Amazon so it's not … looking on a SKU by SKU basis it isn't that big of a deal but because we're a high seven figure seller total we're recalling truckloads with the goods from Amazon. It's not going to be cheap and when you recall stuff it gets damaged a lot of times. The stuff shows up and looks used by the time that … you're shipping it in and it's getting … someone's handling it and putting it on the shelf and they got to go take it off the shelf put it in another box and crate and when you recall stuff it doesn't come back in the best of shape. So yeah I mean it's kind of a disaster all around but this is what we've had to do to get to where we are. And moving forward they all are all going to be in separate companies. So at any point when the time comes to put Business B up for sale, we'll have it all in one clear concise company; one account and we'll just pull the trigger and be done. Joe: You know I think you had said at one point you knew what to do and you had one plan and it was to sell the entity and all the brands within it at one time. And then we found three stumbling blocks. Two of them were operating at a loss because you are focused on organic traffic and brand building. And one where two of the vendors said: “yeah no, we like you, Mike, we don't know anybody else we're not going to do this deal with anyone else”. So you ran into challenges there. And you also said if you have to make those changes someday you'll do that. And all of a sudden you woke up and someday was here and we had an action that we wanted to take right away whereas the idea of I always say don't decide to sell which is eventually you do decide to sell but plan to sell. So my little slogan there doesn't actually work all that well. But seriously though I think the thing to do is to plan it out in advance as much as possible to make it strangely enough as easy and seamless as possible for the buyer. For that person that is going to put a million dollars of their life savings on the line or two or three or 100,000. The amount doesn't matter. It's a lot of money for the person that stroking the check or sending the wire. So that's the key thing. Mike: Can I just … I want to mention one other thing if you don't mind? [inaudible 00:18:48.4] this thing. Joe: Yeah. Mike: You're asking just kind of like some of the other things that kind went wrong and we could've done better. This is stuff that's often not talked about again in entrepreneurship but the reality is is that it would have been better just to have one brand and focus on it or maybe two rather than trying to do too many things at once which is a trap that a lot of entrepreneurs get caught in. Something I tell myself all the time, I even had it in writing on a blog post like eight years ago like I won't do that again; get into too many things. Entrepreneurs are different … there are different classes of entrepreneurs but the kind of entrepreneur that I am it's the squirrel syndrome. It's always exciting to do something new rather than what you're working on. I get bored really easily. To me, the business aspects are way less about the money than the personal enjoyment and excitement part of it. And oftentimes you end up with this … you chase rabbits both will get away saying that I use all the time. But I give that advice and don't follow it as well as I should. So that's another thing that you could really take away from this if your … the existing business you have is probably the best one that you have, the same type of thing with a car like the cheapest car that you'll ever have is the one that you own right now. You are then going on and buying a new one. Or any of these types of things can be applied to other aspects of your life as well. But if you are focused on one company like you typically have all your T's crossed and I's dotted and that's how I like to run my companies because I am a bit of a perfectionist. But as you spread your resources across multiple businesses things like to fall through the cracks that make things less attractive to a buyer. And the reality is is it's not as easy as it should be to just cookie cutter your business into another one. We had a really great podcast about this a year and a half ago. It was actually something we recorded live at E-commerce Fuel Live last year back in Gohana. So I just want to throw those things out as well as just other things that to be thinking about. As you're planning your exit you should be a lot of times it's … well, I want to get in this other thing or as you're growing it's really exciting and it's infectious and you want to keep on that path because it's fun to tell everybody how fast you're growing. And everyone pats you in the back and society makes things even worse because they're always like yeah man good job and everybody is like oh good job you only grew by 5% last year because that's just how we're all wired. Which the reality is that as Dave my partner always says is that revenues are vanity and profits are sanity. Joe: Yeah. Now I love that again this is … I want people to hear from you more than me. I say his stuff all the time and you're someone that's going through it right now and coaches thousands of people on a regular basis to improve their businesses and Dave as well. The other thing that is separating out the brands and separating out the LLC does for you the seller and the potential buyer is it casts a broader net of potential buyers. And the broader the net the more interest level there is going to be in the business. And the more interest level the more likely you're going to get an offer at or close to list price. And in this case we did not say SBA prequalified, technically you can take a business like yours and go through the process and have your accountant separate all those things out and certify it. It's not a full audit and you could try to go through the process and make it SBA prequalified. But in the time frame that you and I were trying to do this, you wanted to be under Letter Of Intent by January 31st. It didn't happen. We came close but we couldn't have gone through that process because that process would have taken six to eight weeks for your attorney to do it. And given the time of year, it might have taken longer because he's in full on tax preparation now. So that's the other thing that separating out your LLC's by brand will do for you is that when you wake up one day and you want to exit it's clean, it's simple and you can do that with a lot less work. And that work Mike we … it was a lot of work in preparing the listing for sale. In the Profit & Loss statements and then in that client interview everybody's heard about it … I told my wife when I sold my business I felt like I was working harder preparing the business for sale and going through the process of getting it sold than I was actually running it. And when I was running my own I was working about 20 hours a week running the business so that tells you what that workload is like. In terms of what we did, I want to talk a little bit about the launch process and talk about the multiples and some of the things we did but you did it just absolutely right spot on. We did go out a little early the right? We talked in late November early, early December and you had a goal and I wanted to help you achieve that goal. I'm human and I think that what I probably should have done in hindsight is said no, this is probably not the best approach. We went out in I think around the 10th of December, listed the business at a pretty strong multiple. It was at a four time multiple. And went out and said Look December is going to be great. Trust us these numbers will drop to a 3.5 once the December numbers are read. And the ultimate answer we got was cool, I think I'll just wait to see if that's true. So we've got a … I think we had a phone call, maybe we had one buyer seller conference call in the month of December and then you're a man of your word and you like to under promise and over deliver. And when December numbers came in they were up 80% year over year. Mike: Yeah. Joe: I've used this analogy with a lot of folks before and they've heard me say this again you can list something at a four time multiple and if it's growing 25% year over year consistently the buyer earns their money back in 2.7 years. I did not do the math on 80% and I won't but that really got people off the fence a little bit. We updated the P&L's, got the December P&L's and then we're relaunching I think on January 8th, 9th, or 10th, in and around there. And we actually dropped the price by $75,000 too. So the multiple didn't drop to just a 3.5 it dropped to a 3.2 multiple and we relaunched. And I think we had three or four phone calls out of the gate. The goal is to have three to five in the first 30 to 45 days and one acceptable offer. We did have just two offers in this case and one was just not there. We had two or three phone calls with them. One was interesting, right? I was traveling to Dallas so I'm on a conference call with Mike and the buyer and I'm actually going through TSA security on the conference call. And thankfully Mike can talk folks. So he was talking as I put my headset down and went through security. I picked it up on the other end and you were still talking. And you had a terrible cold. Mike: Yeah, that was a pretty embarrassing call. Joe: It was great though and the thing that you do so incredibly well is you instill confidence in the buyers. You're honest. People trust you. And it made them … anybody that had the opportunity to talk with you I think wanted to make an offer if they could pull it together. But we couldn't do an SBA buyer because of that commingling issue so we were focused primarily on cash buyers. Keep in mind though that not all SBA buyers don't have the cash. Many of them do they just prefer to make their money go further with an SBA loan. So I think we were both at ECF, that's E-commerce Fuel, at the event down in New Orleans and I drove you nuts a few times saying I think I may have an offer right? Did I—? Mike: It was so funny, you texted me at the opening party I think I have an offer and then you went to bed. I think like you didn't actually have the offer yet I just think I read the text a little long but … so I was like walking around the entire thing looking like anybody know where Joe Valley is? Like I want to know where Joe Valley is. Joe: Yeah, I think I heard somebody say Joe likes to go to bed early. He doesn't stay up late at these events. He's probably in bed. And that … I felt a little embarrassed there. I'm like okay I'm getting a reputation for going bed by nine. But we ended up not going under LOI— Mike: [inaudible 00:27:07.7] morning than I did. Joe: I think I probably did. I was really hopeful that we could go under LOI while at E-commerce Fuel because that would be a great feather in your cap and mine. We would be able to have a drink there and celebrate. But it didn't quite work. It took an extra … probably four or five days. But we had some challenges with the business. We ended up getting fairly close and I'll do the math as you answer this next question in terms of that asking price; that 3.2 multiple. But we had some challenges and the big challenge was something you talked about earlier. One of these big issues that you've got is you're taking all the profits from the business and putting it back into inventory. And when you have a business that's growing at the rate that yours was that's a lot of inventory. Can you talk about that a little bit in terms of the challenges that we had there? Mike: With inventory specifically in terms with ColorIt? Joe: Yes. Mike: Yeah. And this is something that we have worked really hard on in our business and we're very [inaudible 00:28:06.7] which is that you basically want as little inventory as humanly possible at all times. I mean you don't … there's a lot of reasons for this. If you have too much inventory when something goes wrong like you're stuck with a hot potato. That always sucks but probably more importantly especially when you're in this growth phase is cash flow is the most important thing. There's this saying that's been around forever which is cash is king and there's a reason for this; for every dollar that you have an excess inventory that's a dollar that you don't have in some new product … some new product launch or some other thing that can make you more money. And every inventory business is going to go through this. There is no inventory business I think on earth that … especially when it's newer and growing at this speed that can plan inventory perfectly all the time. Either you're going to err on the side of caution of not having too much inventory and be willing to run out of SKUs because of that. Or you're going to err on the side of caution of having too much inventory and err on the side of caution of never running out of a SKU. And for me, we went with the latter because in the early days of selling on Amazon we realize that when you run out of stuff it can be really detrimental. We had one SKU that we still are trying to recover from. It's a part of this issue here with this business sale we're now we have too much inventory because we could never get it to recover back to the point where it was before. So we try to in our inventory business turn our inventory three to four times a year which means that you should have no more than three to four months of inventory at any one time. And with ColorIt that was definitely not the case. So it was not the case. I mean there's a bunch of different exceptions that put things way further out than that but there was an old legacy book manufacturer that we work with that had very high MOQ's. So if we wanted to even sell the item we had to order a year worth of it at one time. And that was a decision that we made in Q2. We had a newer product that we just started selling and it was selling really well so we've ordered more of it and again at their MOQ so we have more than 4 months of inventory there. And so the bottom line was that of the 300 … actually it was $400,000 in total inventory that we have for ColorIt both from stuff that's in stock and things that we had already placed orders for that haven't shown up yet. There was about 100 … I don't have the numbers in front of me but $100,000-ish I think of inventory that that would take longer than 12 months to sell. And so for me because I've been on both sides of the fence as both a buyer and seller of businesses and I really believe living life like don't ask others or don't do what you want to do yourself, I realize that before we even start talking to the buyer that we probably have to make some sort of concession on the inventory. It just would be unrealistic to just be like no you're going to the inventory and too bad because I wouldn't feel comfortable doing that myself. The other thing that I don't like doing is like having someone pay me with my money. So that one thing I was steadfast about was that we're not going to take financing or delay the purchase price. I want an all cash offer for the for the purchase price but the inventory component I thought the right thing to do was to pretty quickly acquiesce and come into a middle ground with a buyer. So what we had agreed to do was, first of all, there was one SKU that I admit that just doesn't sell well. It was a bad buy on us. We just rid it off 100%. It's about $8,000 dollars. They can either … they were in a trash can if they want to transfer or they can keep it and do whatever they want with. There were a couple of SKUs that I kind of conceded to that were slower movers that I felt like was going to be kind of detrimental to their business to buy at with 24 months with the inventory at face value. So what we agreed to was we'll sell you anything that we think is going take longer than 12 months within that inventory at a 50% haircut. We'll just write off half of it and you can buy it for 50% off. So now you … yes, you carrying more inventory but you're buying it at a price that makes sense to carry it. And then the third group of SKUs were things that were basically like in this 12 to 18 month window, they weren't really that low for stock, and the biggest culprit of that was this new item that we're trending higher on. So I think ultimately and I convinced the buyer ultimately especially once the Christmas season comes they aren't going to have … they aren't going to actually have more than 12 months with the inventory. So we agreed that even though our forecast shows it's going to take more than 12 months to sell it's because we were using like a January sales number for that we weren't including sales growth in that forecast and we also weren't including what I believe that was going to happen in December which is December is about 3X any other month in our business. So ultimately we wrote off $40,000 with the inventory and agree to give them 12 months financing on the inventory at 5% interest which basically I think helps normalize that situation for them. And it's also something that I can tolerate as well. Joe: Yeah, and it happened and then we succeeded with it A. because of you; the likability and trust factor. But you have something that I preach again and that's when you've got an inventory based business you should have inventory aging reports. Sophisticated buyers are going to ask for them and they're going to want to see the inventory by SKU when you bought the inventory and how old it is, how many months you've got. As Mike said you want to turn your inventory every three to four months if you can but in his situation, it was 9, 12, 18 months in some rare instances. And so on that inventory report one of the key things that your buyer Matt said that made a difference for him in sealing the steel and getting it done was the inventory aging report and the notes that you put by each SKU and right there in one of them you said this is all inventory and it's not going to sell so we'll write this off. You just acquiesced on that 8,000. He didn't ask for it. You just put it in there because you knew it was the right thing to do. And then you went line by line on every other SKU and justified the 100% value or where you needed to discount. And let me just say for everybody listening, it is rare to need to take a note on inventory. It's rare to have to discount it. But when you've got that much you've got to do the right thing. What I don't want to happen here is for buyers to go “oh well hey Jackness took a note, I'm always going to ask for a note” because that's really, really the exception rather— Mike: Like I wouldn't do that with IceWraps for instance because there's … if we were to sell that we have four months with inventory. It's really clean and smooth. It's a more established business with fewer SKUs. It doesn't have a lot of the other things that cause us to have extra inventory. And like you said I mean just doing the right thing and being realistic of both sides. I mean this is what happens … like a lot of people when they're sellers they want to be way up here when they're buyers they want to be way now here and they're just like … they have this gap in which I think that just makes them not the best of human beings right? I mean you've got to be like more in the middle and realize the person that's buying and what they're thinking and what their [inaudible 00:35:24.6] is. And conversely when you're in the sell side be thinking about as well. It's not always just about you. There is another side of the coin. And I wish our politicians are covering this a little bit as well but it's just good business it's being a good human being. It's what makes deals get done. It's just doing the right thing and being fair about it; being equitable about it. I could … I just … I would feel like a dirty shyster if I have that guy by that one SKU that I know … like he doesn't know the business as well as I do. I know that one SKU [inaudible 00:36:00.9] it's been around here for two years. No matter how hard we try to sell it, we threw it at a 50% off sale or we even did a 75% off sale around Christmas to try to get rid of some of them. People just don't like that title. It was the one title that we made out of 25, it's a pretty good track record but one title out of 25 that was just this complete failure. I'm like how could you have someone take that? That's just basically like I'm stealing from them or trying to pull the rug over their head. And you know when they discover that later which they probably will in due diligence they're not going to trust you. Joe: Yeah, exactly I was just going to say that. They are going to discover in due diligence. And I'll tell you what for folks listening, we're going to run a little bit long on this episode. I'm going to lock this all up in one episode instead of doing two series here. The due diligence process would reveal anything like that so you need to get ahead of it. You have to be a good human being. This is a transaction that has to end with two satisfied individuals or entities at the closing table; that's the buyer and the seller. It's not winner takes all because the buyer is putting their life savings on the line again and they can walk away at any time. If you fake it, lie, cheat, or steal, it is going to be discovered in due diligence. More and more folks are hiring Centurica, your buyer is. That's Chris Yates' team. Chris owns the company called Centurica. C-E-N-T-U-R-I-C-A, they do due diligence for buyers. And honestly, as a broker, I love it when they join the team because they're working for the buyer. And I have yet to see a deal go sideways on any of the listings that we've put out. What they do more than anything else is they reinstill confidence that the numbers are right, that the seller presented information, and they create a roadmap to growth. They can point out certain things where there are flaws and sometimes it's a little scary but the buyer goes oh okay that's a flaw, I can fix that. I can make this better. And it's a path growth that we aren't able to do on the client interview which is great. One other thing I just want to say that we won't get into in great detail but without a question when you plan to sell instead of decide to sell, one of the things that you should always do, your partner Dave did it, is to take a look at your cost of goods sold. And if there's a possibility that you can renegotiate your cost of goods sold 12 months out in advance and reduce that cost of goods sold, for every $10,000.00 you save you're going to wind up with at least 2 ½ to 3 ½ times that depending upon your business and the trends and whatnot. Mike, you did it but you were able to renegotiate the cost of goods sold on just one of your SKU's and you placed an order for it so was locked in and loaded and the future sales would all be locked in at that lower cost of goods sold. And you sold through all of the other stuff at a higher price. So we were able to increase your seller's discretionary earnings by a total of $43,000 on that overall. And it was just because of that one SKU where you were able to renegotiate the cost of goods sold. In hindsight Mike do you wish you had done it on all of the other SKUs as well? Mike: Yeah I mean I don't think this is necessarily a selling your business thing more than this is just good business at that time. Joe: Yeah. Mike: What I've realized again after four plus years of importing stuff from China is that I wasn't as good of a negotiator as I thought I was. And I've always thought of myself as a really good negotiator in all aspects of anything that I do in business. And we had negotiated down from the original price they gave us but it still wasn't like the Chinese price. And when you get like a really good sourcing agent or you have someone that's more in tune with the local business and customs there they'll probably get a better price. And that's what happened for us. We met somebody … and these contacts are hard to find in business. We were out there doing it all ourselves like going to the Canton Fair, walking the floor finding manufacturers, and we did that because we're never really able to really find a good sourcing agent and didn't really know any other way to go about it. But because … mostly because of EcomCrew which is one of these things where the more you get back in life a lot of times the more you get rewarded. A lot of things we do in EcomCrew we don't get anything direct for our time for what we do. Like most of the stuff is just giving people free information and giving back to the community but what I found that happens in these types of situations is that makes relationships with people and the people you meet they know people that makes relationships with other people and eventually that path led to us finding this amazing sourcing agent that not only is he helping with ColorIt but everything else that we're doing now. And he was in our office here one day and we were actually sourcing something else for our tactical brand. I wasn't even looking to resource price I was looking to source new stuff. We were just chit chatting and we have this display up on our wall of all of our products and he is like what if I try to go source this for you? What do you pay for it if I can do better when you buy it from me? And I was like well man I'm also like not just about money. I'm really about relationships. I really like the factory I work with. We've been working with them for a while. It had to be like one hell of a cost savings for me. Like if it was I'm going to save you know a couple $1,000 here and there it's not worth it for me to blow that up. But he came back and was able to reduce the price of that particular thing from … well, he reduced it by 16% is what it was; which is massive. It's like this ridiculous cost savings. And at the same time the other factory as much as I … it's so funny like I'm really big on relationships and I was really concerned about them they actually copied our product during this process and even used our [inaudible 00:41:30.2] that we had paid for and everything and released our product to someone else. Sold our product to someone else. Which we then have to go spend money on a lawsuit to fight them which we got them to stop but … so between those two things we switched. Now the switch engine is going out and repricing our stuff and that's going to end up benefiting the buyer way more than it is for us on ColorIt which is fine. But I guess the end result is you should always be looking at price. Even when you think you have the best price you probably don't. There was a great … a presentation at ECF about this as well when it came to shipping rates. I don't know if you saw Craig Gentry's presentation on FedEx and UPS when he was just like if you think you have great rates you don't. Like there's … you can still do better because there's still another … they make you feel like you're getting the best deal ever because they're really good at negotiating. And it was similar with our products and we realize that we could be saving quite a bit. I mean 16% percent is a huge difference on COGS … I mean it ends up in your net profit. It's way more than 16% percent increase rate because it's going to be SKUed. It makes you … you could just throw money around the bottom line. So yeah I mean it was massive and the timing was great because we did get some benefit. But yes I wish that we had time to go through and renegotiate all those SKUs for sure. Joe: Yeah and I think you said it best. It's just good business. It makes smart business sense. Not necessarily sorry for the exit planning and the eventual exit and sale of your business. Can you say one more time what Dave always says it's not profit it's—? Mike: Yes. Revenues are vanity and profits are sanity. Joe: Perfect. Mike: I'm sorry I'm going to go off on a tangent; another tangent. [Inaudible 00:43:05.7] I got you and just like people are like counting their chest. Like I'm a seven figure seller and well I'm an eight figure seller and I sold this stuff … no one ever goes around saying well I sold 10 million dollars of stuff last year but I actually lost money. I mean there are plenty of businesses out there that are like that. It's very easy to get in that trap because it's actually pretty easy to sell stuff online. You can just spend way too much money on advertising and you can sell stuff but the profit is what really actually matters. Joe: Absolutely and that's where these marketplace valuations are. It's on the profits so discretionary earnings. All right so look I want to read one more thing and I'm going to wrap it up. I've said that you the seller, in this case, you Mike makes a huge difference in the saleability if that's a word, of your business. How you act prior to selling the business, how you manage your business, and how you represent yourself all throughout makes an enormous difference. And the way that you handled yourself on the client interview, on the recorded interview that we did as part of the package, on the conference calls with buyers, in the inventory challenges that we had, in writing those notes there, and just acquiescing on that $8,000 of inventory that you knew was no good; it all made the difference and it's why we're under Letter Of Intent. I did the math. We're actually under Letter Of Intent at 96% of the list price of the business. Again the inventory we're doing on a note which we don't love but sometimes you have to do that. I want to just read an e-mail that you sent to Matt, your buyer within a couple of hours of when we were under Letter Of Intent to just reemphasize what's important and the way that a buyer should treat their sellers … or seller should treat their buyer. So here we go. I feel like I'm in second grade standing up and reading this— Mike: I was not planning on this being read but it's okay read it. Go on. Joe: It says, Matt … his first name is Matt we're not going to say what his last name is. I just received the signed LOI from you and wanted to take a minute to thank you for putting your faith in me and my love child ColorIt. It's been one heck of a ride but I'm ready to pass off the baton and experience a year or two of not having too much on my plate. Of course, I realize there is still a lot to accomplish to get to the finish line but I wanted to say cheers. With the growth rate of ColorIt along with some of the other fundamentals, I'm convinced this will be your best purchase to date. My goal is to make sure that it becomes a reality for you as we progress through the transition. I look forward to working with you in that regard over the next few months. Mike. Guys, that is the way to transact business. It's just the right thing to do and it feels good. And I can tell you [inaudible 00:45:45.4] 80% year over year growth in December and didn't even mention it 74% year over year growth in January. It made a huge difference and Matt making an offer at 96% of the list price. But this kind of thing, the way Mike handled himself as a professional, as a good human being in this entire process sealed the deal ultimately. So Mike, thank you. I appreciate the way that it's gone so far. I think what we'll do is have a follow up episode to talk about due diligence and the training and transition and how the transaction wound up at the end of the process with this closing that we've got if you wanted to come back on. Mike: Yeah. Can I say one thing about the letter that I wrote? Joe: Of course. Mike: Since you took the time to read it I just … I got to preach because I've been on both sides of these deals. There have been times where I've been the buyer and at that moment that you sign the LOI there's always this anxiety, right? Where you like man I'm about to jump into this thing and you don't necessarily know what you're getting … everything that you're getting yourself into. And I just wanted to let the guy know that first of all I appreciate him again like it was sincere like I appreciate him … this was like now the sales person parts over like I'm not trying to sell him anything. It's always awkward when you're saying stuff in the call part of it. It almost sounds manufactured even though I don't do that but I'm sure to them it comes off as like this guy is probably just saying this to get me to write a check. But it's done. The finish line is there from that perspective I just … and I do want it to be a success story. I want the guy to buy it and look back at these years later and feel like he made the right decision. And yeah that was really all; just kind of being sincere about it. And I think all too often again people are more way about themselves they'd be all high fiving everybody and saying that we got an LOI and celebrating their success more than thinking about what this guy's about to endeavor in. And I think that's important. Joe: I appreciate that and the last thing I'll say is what I said to everyone which is we're under Letter Of Intent. There's no guarantee. Mike: You're right; the money is not in the bank yet for sure. Joe: It's not on the bank yet. So let's have another killer month in February. We'll get through all of this. Due diligence is very detailed but again they've got Centurica doing it for them. We've got to do a lot of work but we know it would be done right. And that emotion will be left out of it as much as possible and it'd be math and logic and we'll get through it. And then we'll have you back on the podcast to maybe high five. And maybe we'll get the buyer Matt on it as well. Mike: Yeah, I think it'll be cool to have him and come join us and talk about both sides. Joe: Alright, I'm looking forward to it Mike. You're a good man I'm glad to do business with you. I look forward to hearing you back on the podcast. Mike: Thanks, Joe.   Links and Resources: ColorIt.com Mike's Podcast Email Mike Call Mike 703-216-3225      

It seems that with certain Quiet Light Brokerage listings, there is just a mad rush of activity as soon as they come out. Most of the listings that we put out will receive at least 100 inquiries right away, but what does it look like when we put out a “hot listing” that garners two times that much interest? Today we are discussing the type of business that gets 9 offers. We go over how many inquiries those types of listings get, how much discussion and conference calls happen around these potential transactions in a short time frame, and just what it takes to get these listings under contract. We hope you enjoy this little case study of how to set up for a successful sale from the seller side and tips for how to act from the buyer side. Being thoroughly prepared and running a real, viable business are keys to success. Episode Highlights: The main characteristics that made this business so attractive. How the pricing decision played into the transaction. The process of selecting the 15 buyers we entertained. The conference call screening process between the seller and potential buyers, facilitated by the broker. How to choose a buyer and deal with disappointing those who lost out. The 4 pillars of success and how this business checked them all. The one intangible thing that took the business to the next level and attracted the buyers. How the packages that Quiet Light puts together tell a story about the listing and the journey of the brand and its seller. Transcription: Mark: It seems that with some Quiet Light Brokerage listings as soon as when they hit the marketplace there is just an absolute mad rush of buying activity towards those listings. Now to be clear most of the listings that we put out at Quiet Light Brokerage, the vast majority, in fact, it could be an exception to the rule is going to receive at least 100 inquiries from buyers and calls right away. So what does it look like when it we come across a “hot listing”? Well, it looks like a lot of conference calls scheduled very, very shortly and just a mad rush of inquiries probably upwards of 200 and 250 within the first 24 hours in some cases. What's the difference between a listing that is not as hot like that that gets on a 100, 150, which is still a lot and something that doubles that? Joe, I know you launched a listing 3 or 4 weeks ago from the time that we're recording this episode that we would definitely throw in that hot category. What were the top line statistics on that? Joe: It was a let's call it a 95 to 98% Amazon business. It was 30 months old. It was in the category of America's fastest growing recreational sports. It was run by a single owner operator that was a stay at home dad that was a CPA by training yet outsourced the bookkeeping to an e-commerce bookkeeper. $440,000 in discretionary earnings and we went out on a 3.3 which is lower than my recommendation. But in this case, the conservative CPA said no I don't want it to be listed for too long. I really like to get it sold let's … can we go out at a three. I suggested a 3.5. Rarely does somebody come back and say can you sell it for less and he did in this case and we ended up [inaudible 00:02:50.9]. Mark: The guy sounds like one of these unbelievably likable guys. How many inquiries did you get within that first 24 hours? Joe: You know I didn't count the first 24 but I know that you and I were … we were in Dallas and on the way to Houston for a meeting and I think we pulled it up and within the first 4 hours, we had something like 185. So within the first 24, I think it probably doubled to close to 400 would be my guess. Mark: That is insane. Now I do remember obviously these are all loaded questions so anyone listening like I know the answers to most of these questions— Joe: No, he doesn't. He forgot them all. He can— Mark: I actually— Joe: Yeah. Mark: I was introduced by the way this is completely outside; a complete diversion here. So sidebar I was introduced at a group of CEO's yesterday. And in front of the entire group of CEO's the guy that introduced me said “And Mark, by the way, took his son, they have seven kids or is it they're expecting their seventh kid. He's got so many kids he forgets their birthdays because he took his son to urgent care the other day and he got his birthday wrong.” I'm like thank you for that. I'm so glad to be known as the guy who forgets his kids' birthdays. Joe: You've got a lot of kids man. Mark: I got the month right. I didn't get the year or day right. I know the answer to this. We were in the car together and your phone was blowing up. We were at a conference. You were trying to schedule out all of these people wanting conference calls and you did this right over the conference itself which maybe we can talk about in just a little bit here. Within that first 24 hours if you would just guess how many conference call requests did you get? Joe: Well, let's keep in mind that that our process requires that the buyer either speak to me first before requesting a conference call or we've spoken in the past. So in this case in the first 24 hours, I had at least 10 requests for conference calls with buyers that I've already spoken to in the past that have looked at prior listings of ours and they wanted to make sure they were on a call with this one. We wound up with a total of 15 on this. As I said the owner of the business, Paul, is a stay at home dad. It's funny and I don't know if they loved this or just love making fun of Paul for this but he's a stay at home dad right? His son is a couple of years old but he takes his son to daycare at eight and picks him up at five. So I'm not sure how stay at home that is. Anyway so … but the beautiful thing is that he maybe … Paul if you're listening I'm sorry, maybe it's nine to four and you expanded it. Either way, you're a great guy and people love you and your business. I am not getting a Christmas card from Paul this year. Mark: I'm sure you are. Joe: Anyway, he was able to clear his calendar which was great. I was getting so inundated and I was at eCommerceFuel and I'm like I can't do these conference calls. And I had said to Paul on the way through eCommerceFuel look I want to bump this launch a week because it's going to get crazy and I'm not to be able to be on this conference calls. He says oh god really? Come on I really want to get it launched and it totally got my heartstrings so we launched it anyway. So I took the two days … it launched on a Wednesday I think and I took Thursday and Friday and all I did was talk to folks and schedule the calls for the following week. Paul cleared his calendar. We set up a link so that people could just grab a link and schedule them. We did a max of three a day separated by at least an hour a piece and we wound up I think by Monday closed the business. We had all 15 slots scheduled. We capped it at 15 which is really five too many. You just don't have to have that many conference calls. Normally we have three to five conference calls and we have at least one acceptable offer. Here we had 15 scheduled and we wound up with nine. Mark: These are 45 minute slots or are they an hour long slots? Joe: They were hour long slots. I go with an hour yeah. Mark: So just to put this in perspective for people that have not been on the sell side, I know I had this with a listing last year that I represented where it was just a really favorable price on the business and so we had that 15 conference call sort of scenario that we were doing in one week. For anyone on the receiving end of that our clients, the sellers, that's exhausting to go from one conference call to the next to the next; an hour where you're being asked the same questions and you're doing the majority of the talking during that time. This might be a little bit beside the fact but how did he hold up throughout all those calls? Joe: He did pretty well. They were spread out which was nice. He usually had … he had a minimum of an hour but usually, it was two or three hours in between. And we had one drop out so it ended up being 14. But he did pretty well. He had to keep moving around the house. That particular week his son was home because he got a fever a couple of days before and he was quite sick so he couldn't take him to daycare. And his mother flew up from Arizona to be with his son while he moved around the house to be in an appropriate place to do the conference calls. Most of the time he was actually in the nursery doing the conference calls from his laptop. Mark: Right. So I want to get into a couple of big topics here. I want to talk about what were the characteristics that made this business and you already talked a little bit about this but what were the characteristics that made this business so attractive? Because I also know that we suggested to Paul going out at a 3.5. He's the one that wanted 3.3 for the asking price on this. That's the multiple that we're asking on the earnings. So I want to go into what was it that made this such a hot listing where people just needed to look at the teaser that we gave and that alone generated 200 plus inquiries within the first 24 hours? So what's going on there and then second I want to go through a little bit more of the process that you went through in selecting the buyers that were going to get those conference calls. Because out of 250 finding 15 you know I know a lot of buyers out there would be like well how would I become one of those 15 if I'm going to be competing against this? And then last I mean this is kind of the darker side now or the bad side I guess of what we have to do when you have a hot listing like this is we have to disappoint a number of people that actually really want this business but lose out in a bid for it. So I want to go over those three categories with you and then obviously Joe you're better at this podcasting thing than I am so if there's something I'm missing let me know. Joe: Can you repeat that last part again, please? Mark: You are better at this podcasting thing than I am but I still have the number one episode thank you. Joe: And two and three, yes you've got them all, but you do the title so I think there's a little trickery going on it. Mark: And I used to do the promotion too so … your podcasts easy for me what with number one. Joe: I mean you talked about the four pillars; risk, growth, transfer ability, and documentation. And when you go through these things Paul's business just checks all of these off and all the subcategories within those checks them all off. He owned his own brand. He developed it himself. It's in a niche that is out there and there are other brands but he picked a … he specifically chose a niche within a larger niche to serve a certain segment of these people to start with. So there's a growth opportunity to go. He picked the sort of beginners in this sport. He didn't go with the top end of the product. He went with a middle of the road product that beginners … a price point that beginners would enjoy. So right away you could say okay well I'm learning this business and now I'm going to take this to the new level and go with the more professional people that play this sport. It's not quite professional but retired professionals can play. So he did a really nice job there in picking the category. It was just by happenstance. He happened to be on vacation visiting his folks in Arizona and saw this game that they are playing and said what the heck is that? Looked it up, studied it, researched it and it started growing like crazy and chose to go in that category. A registered trademark, beautiful brand, beautiful packaging, and again let the business age. We've been talking for probably nine months and it was getting close to the 24 month mark but we got through that Christmas holiday season. This particular business is not fourth quarter heavy seasonal. It's actually better in the spring and summer months. So we got prior to the spring and summer months so that a new one would have a great advantage with an upswing in the summer months. It was clean books, SBA eligible which helps cast a broader net to probably half the offers. I can't say half because they were nine. So four out of the nine offers, five out of the nine were SBA offers. The growth trends were fantastic; 80, 90, 100% year over year, month over month growth. It looked really good comparing month to month and from year to year. Transfer ability; super easy, he owned the brand. He wasn't reselling anything. He had a good relationship with his manufacturers. And the documentation, of course, good SOP's in place. He did it all himself so there weren't VA's that were combing [inaudible 00:11:42.3] anybody else or people that works on his house or anything like that needed to transfer. This sort of intangible thing that I think took this to the next level is the person behind the business. He's not transferring with the business but he is so, so likeable and so trustworthy; just the full story behind him. And I'm not suggesting that everybody goes and becomes a CPA, quits their job, and works from home and be a stay at home dad. But people want to invest in a business and buy something from somebody that they like and they trust. As Mike Jackness said on a call recently you have to be a good human being in order to get the deal done. It needs to work for both parties. And just describing who Paul is and then how he is in the video and how he came across, he's just a good person and people wanted to buy the business from him. Mark: Yeah, I'm looking at the teaser right now. It's cool if I read some of the teaser, right? Joe: Yeah of course. Mark: All right so again I'm just looking at this. I'm … this is selfish on my part, the next listing I put out I want to get 250 inquiries because that's awesome. I mean that's great for our clients. All right so I'm looking through this and look in through the prism of those four pillars of risk, growth, transfer ability, documentation. Risk; Amazon businesses, this is primarily Amazon. The biggest thing that I find and maybe you'd disagree is that it needs to be defensible against competition. In here I see towards the bottom there's a trademark and the brand is brand registered, there we go. There are over 2,000 reviews you are … these are getting harder and harder to fake. So you're speaking towards this … the main risk that people associate with Amazon. Right away people are thinking oh awesome that's great. Growth; this is rapidly growing. You leaved this but this is rapidly growing as one of America's fastest growing sports. So A. this business is growing, B. this niche is growing; two really good things, so growth is checked off pretty easily. You have some other stuff in here. Transfer ability; the owner, single owner, dedicates approximately 15 hours per week running the business. I could do that right? Who can't do 15 hours a week on something? And then lastly documentation; the owner is a former CPA. Do you need to say anything else? I think you checked each of those boxes with a giant red check mark to say everyone looking at this; this thing is going to check all of these boxes and become really valuable. It turned out surprisingly enough to be true. These four pillars work. Joe: Yeah, they do. They do. And one of the pillars is growth but within that is growth opportunities and growth trends. And the opportunities I'll dig into the package itself. I can't quite remember but he had launched new SKUs in 2018 and so we look at the revenue when did he launch those and the revenue by SKU during that time period. And it was clear that some of these SKUs had gained some traction in 2018 but they hadn't been available for the full 12 months. So that's a built in path to growth. So it's one other thing that buyers liked. And then when you … I mean that teaser it obviously checks all of those four pillars but then when you get into the package and we recorded a video, a video interview with him via Xoom like we're doing now. Obviously, people are listening to mostly audio but we do the video as well. And he's in his home you can see the kitchen in the background and he's got the packaging and he holds up the packaging and it's just beautiful. It's a really nice product and this is again hard for people to duplicate but this particular product it's just cool. It's just a cool niche and a cool place to be and he did a really nice job with the packaging. He did everything right as far as I'm concerned and obviously as far as buyers are concerned as well. Mark: Yeah, one thing I want to touch on here because we talked about this a lot for buyers that you want to be likable and come across well to the potential sellers. But it works both ways too right? I mean obviously, somebody who's selling who's a complete jerk probably isn't going to get too far with us because the process is just too difficult. So most of the … most of our clients are great people anyway but there are some people who have just magnetic personalities. And for this deal, you for I think one of the first times we experimented or you experimented by doing more video conferencing between buyers and sellers on that. How did that impact the deal and what should buyers take away from boy these guys want to do a video conference should I turn on my camera or should I, oh no, no I don't really have good lighting for this and a good set up for it. Joe: Do it. One of the best calls we had was with a guy named Noah. And he hadn't planned on doing video because he was on his dad's party boat. I know he's 35 years old but he's helping his father move this big boat from one port to another because it's being sold. And Paul and I are on video and we said the video is optional and said it's recommended but optional. And he said well both of you guys are there and he goes I'm kind of embarrassed. I'm on my dad's boat. I'm on a boat. I'm like we have to see it, turn it on. Mark: It's great. Joe: Yeah. His dad was in the background moving stuff around and he's shooing him out of the frame. It was fantastic. So Noah was like able and memorable and that stuck with Paul. Paul wanted to sell the business to Noah at the end of the call. So that makes a huge difference. Not everybody did it. There were two or three that were in the top three. Yeah, obviously three when the top three but two or three that stuck out. Two of them did a video one of them didn't do video. The very first person that we had a call with he chose not to do video. He made a great offer and he … we came close on having him but we ended up … Paul ended up choosing someone else. But I think you do the video. I'm doing it more and more and if you've got an opportunity as a buyer to do a video if your broker allows that then, by all means, do it. Mark: I think on the sell side this is something just to note. To people listening, we're going to be doing this more and more because it really makes a difference on the sell side as well. Sellers most likely will be doing video. And I love that he was able to just hold up some of the product on the video to be able to show it there directly. I mean how cool is that? Joe: People are … I mean they're buying a business potentially just based on the black and white information that we put in a package. It's worked for years but we moved to doing videos in the interviews and making it part of the full business summary. 24 months ago I remember doing the very first one. It was horrible. I just did audio actually. I recorded it on my phone and it was horrible but beneficial. And now we've moved beyond that to video. You get to look relatively in the likes of someone's eyes and gauge whether you trust them or not and if you're going to put your life savings on the line and buy their business. And I think it just makes a tremendous amount of information. Mark: Yeah, absolutely. That's really cool. And again this is coming from somebody like myself that does not like video … doing video personally. I tend to be one of those shut the camera off types of guys but I'm more and more warming up to it and definitely getting more accustomed to it as well. So that's pretty cool. And also the odd story, by the way, I know our content director Chris Moore and Chris I know you're listening to this you're going to hate this that I'm saying this but some of the most memorable conversations I've had with people have been in the oddest places. The podcast with Chad Annis where he was in his RV and I could see the pine trees out in the background or Andrew from ECF Live, eCommerceFuel, awesome forum, he was in his van holding up a microphone. I'm like this is great. It's this weird background that only entrepreneurs understand. Joe: Exactly it's classic entrepreneur stuff. You know people when I'm having calls with them and valuations and you hear the dog barking in the background oh I'm sorry, I'm sorry, I'm like you're an entrepreneur you're going to hear mine any minute. This is the life that we live. It's great. So back to the points, the last point I want to make in terms of what makes a difference … what made a difference for this particular business I think is the images. Paul provided me with great images for the package. And he had them because he had professional photography. And it helped. Obviously, everyone knows that runs an Amazon business what a difference good images make. But he had great images of packaging, of the product being used by human beings having fun and all that stuff. And I was able to litter them throughout the package and it just brought the whole thing to life. And I think it made a bit of a difference too. Mark: Yeah, you know something I've said over the years I've told you Joe and the others here at Quiet Light is that some of the packages that we put together are supposed to tell the story of the business. And I look for that with every business I represent. Like what is the thread that I want to tell you? What is the common thread throughout this? The data and everything else supports a story. And hey people love stories right? That's … we're all drawn to them. Joe: Right. And you said data, I just want to say one more thing I keep looking at the package and I'm like there's another thing. One more thing they gave me was data; data from the outside world that proved that this is one of America's fastest growing recreational sports. So I was able to link to outside magazine articles and newspaper articles and outside sources that backed up what he was saying and what I was saying in the package which is really, really helpful. Mark: Okay, I might regret this question because I don't want to go long on the episode here but you said more than once that he was just a really likable guy. Do you know what made him likeable? It's such a hard question to ask, right? How can somebody be more likable than another person? We've identified when Walker did an acquisition through Quiet Light Brokerage thanking the seller; taking the time to thank our client and saying thank you for agreeing to sell me your business and how much of a difference that made at that point. Was there anything that kind of stood out outside of the video that really made him stand apart? Joe: He was who we described him to be which was a CPA, a stay at home dad, and honest, and uncomfortable in front of the camera, and vulnerable, and real. He never watched the video that I did with him. I told him. He's like I might watch it because I hope that was okay. I was really conscious here and there. I'm like well let's not watch it because you were great. You were human. You were real. And I'm not editing anything out of it and I'm not redoing it because you were great. People are going to love you because you're just normal. And he never watched it. I don't know if he's … I ought to ask him if he's gone back and watched it since we've got it under contract. But he was just real. Just real and honest and he wasn't selling. He was just stating the facts and that's one of the things that we do … I get excited so maybe it feels like selling but stating the facts is what he did. He didn't try to pitch or sell. He was just being himself; likable. Mark: That's … I think I heard that somewhere recently about authenticity among like millennials and I would broaden that out and say among those within internet realm because we've seen so much stuff that it's so easy to colossal or make yourself look bigger or better or more polished than you are. I think people within the internet world we tend to value authenticity a bit more than people might think. And so that vulnerability I think is a key. I'm not saying that you put on a show like oh look at me I'm all vulnerable. Hey, look if you are really confident in what you're doing be confident. Be true to who you are. That comes through. You can tell that in people, right? You can tell when they're being real or when they're trying to make themselves sound better than they actually think they are. Joe: Absolutely, no doubt about it. You want to go on to process and what we do there? Mark: Yeah. I want to know. So 15 conference calls tell me … again mistake that you probably made in this and you told me this, I'm not accusing you of this; launching a listing during two conferences. You were sick that week. You were flying to two different cities, driving to one city with me as well. So how did you manage getting that many inquiries, that many requests for conference calls with everything else going on? Joe: Well, it actually worked out pretty well because I was not feeling well and I was at the conference and I said I am not doing this over the next two days we're going to push it all the next week. And it enabled me to communicate in writing with all the people that inquired, all the people that … look there were a couple of hundred in the first few hours of course but those that I've spoken to before that know the process they reached right out to me. They called me, they texted me, they e-mailed me and said, Joe, I want to talk to this guy. I want to get on a conference call. Because they know that's the process. And so those that have followed our process, looked at as many listings as possible so you know the right fit when it comes along and you can act quickly did just that and reached out to me. And so I just walked it all off and we scheduled the calls. For the process when we had the calls if anyone hasn't been on them, us the broker we talk as little as possible. We make introductions, hand the call over to the buyer to give a little bit of background on themselves and then go right into their calls. We put ourselves on mute and in this case, I took myself off camera as well and we listen and we jump in if we can help out but for the most part we stay quiet until the very end of the call and then we just wrap things up. At the end of each day, I had a quick wrap up call with Paul and I said okay you've had three today, its Monday, you've had three, who do you like the most? And then on Tuesday, I said all right you've had six who are your top two? And the same people kept rising to the surface. Although people near the end of the week very quickly got to the … Noah I think was probably on Wednesday or Thursday. So we ran through the process and I think one mistake I made Mark in hindsight when I look at it, I knew it was going to be a frenzy and as much as people think oh multiple offer situation you going over asking price etcetera. We did. Yes, we had them and yes we did go over asking price because we priced it right. We didn't price it too high or too low; we priced it right. And that gets more increase than anything else buyers know. We chose to go best and final. And I think in hindsight I probably would have had two rounds so that … you know what we did was we told everyone we're going to have a call with every buyer. You may submit offers prior to the following Monday at noon if you wish too but we will not be making a decision until close the business the following Tuesday. You've got to have it in my Monday at noon and we'll make a final decision close the business Tuesday. It gave us a little time to review. Everyone gave it to us in the same exact format that I provided so it was easy. We didn't have to interpret different offers. And most kept it simple which is what I knew Paul was looking for and what I suggested that they do. One made it a little complex but I know them and I know what their goals are. They're raising funds so they've got investors to satisfy. And then tell me what you did? We get a clear deadline of Monday at 12 pm Eastern Standard Time. I got one that came in maybe at 4 o'clock that day and one that came in at 9 o'clock that day, pm, with apologies and a text saying I thought it was midnight. Would you have allowed those offers to be presented or would you've been cold and said no? Mark: I don't … it depends on the situation. That's a tough one especially because of the [inaudible 00:27:08.9] when you said 12, and 12 is I mean you can interpret that both ways. Joe: 12 no we had a total of nine offers. We ended up with 14 conference calls because one fell out. We had nine offers. Mark: No I mean you put your deadline at 12. Joe: Why? I said 12 pm Eastern Daylight Time. Mark: Yeah but I mean you have to think like 12 pm, you think night and you know. Maybe I'm the only one that can read time but— Joe: I don't … I only speak Eastern as I tell everyone else in every other time zone. There's too many time zones and I just say Eastern. I try not to coordinate with their times anyway now we were accommodating. In hindsight I think we probably should've narrowed it down to the top two or three and gone back out to them. But the reality is that when you have a seller that has multiple offers it's hard on the seller. First is that they're on … in this case 14 conference calls that are lasting about an hour each. That's 14 hours. And then he's talking to me for 15 to 20 minutes at the end of each day as well. That's a lot of time in one week. More time than he spends running the business right? 15 hours a week of running it. More time selling it than running it. And then you've got to make a decision based upon we had one offer that was … let's see; it was $150,000 over asking price. Mark: Wow. Joe: A pretty big jump. Mark: Yeah. Joe: That one was an SBA offer. So the benefit there is that not only is it $150,000 over asking price but it's going to take upwards of 60 days longer to close than a cash buyer. So he's going to put another $50,000 in his pocket by waiting an extra two months. I mean just a cash windfall right? Mark: I want to disagree with you on something real quick before we get too far away from this point because it said that— Joe: Is it back to me being the better podcaster or something else? Mark: I'm going to say that to the end after this because I think I'm doing such a stellar job at this interview. Joe: You're doing great. Mark: It's easy when you know the person you're interviewing and you know the story as well. But I'm going to disagree with you on is should you have gone a second round with the offers. Okay, that would be the standard process when you're not expecting multiple offers and when maybe … like if I have a listing that's been sitting around for a month and we narrowed down and we happen to have three buyers that kind of called us around the same time then it makes sense. Because the buyers don't know that they're in a competitive situation but … and I might sound a little harsh here but hey if you're a buyer and you're in a situation where you know it is competitive, and the buyers, in this case, knew it was competitive, that there was a lot of stuff going on. Joe: Yeah. Mark: My guidance has been the same like put in your best and final. There's two sides of that coin; the first … one side is don't try and necessarily get a discount because the market is going to speak. It is going to push that price up necessarily. And two don't over bid what you're comfortable bidding. Find out if I get it at this price I'm going to be happy or satisfied at least? If I go above I'm always going to wonder if I paid too much. Find that, make the offer, and get it done. So I actually think that you did the right thing by doing one round instead of two rounds. I would recommend the two round again if it was kind of a surprise multiple offer situation. Joe: Well, I think … you know I had one person tell me they wish there was a second round. But it was crystal clear in writing in black and white that it was best and final. And so I took his suggestion and constructive criticism in a way that I thought maybe was worthwhile and we could do a second round next time possibly. But when you're in a multiple offer situation it's emotional for the seller. Mark: Yeah. Joe: Believe it or not people it's hard. It's hard for the broker as well. So I just want to reemphasize one thing that you said and that is you don't want people to get … the buyers to get emotional in their offer. We want them to make an offer that they're going to be happy with after they're under letter of intent because we want two happy individuals at closing; the buyer and the seller. It has to be a good transaction for both of them so we don't want them to overbid and so we work really hard to make sure that they're making an offer that they're comfortable with that assuming everything's good in due diligence that we'll get all the way through the closing with. Mark: Yeah and I think if you're a seller out there you're thinking why wouldn't you want to get something above what they're comfortable with? The reason is simple; the offer is the beginning of a longer journey, right? You've got to go through that due diligence, you've got to go through transition, planning, there's a lot of time in there for those cold feet to really, really freeze up a little bit. And for the buyer to say I made a mistake I got caught up in the heat of passion and now yeah. And I want to emphasize one other thing that you said here and that is we think multiple offers is a really good situation and it is but for anyone that hasn't been in that situation before where you have multiple buyers all of whom are very qualified to buy your business and given you good offers. It's really tough to choose because you can't choose five offers. You've got to choose one. Joe: Yeah. Mark: And in your head, you're going to be thinking I've got to get this right because I don't want to go through this again or I don't want to go through this due diligence process and then have to go back and what are people going to think I have to go back. So it's actually really stressful and one of those good problems to have but still a problem. Joe: And that's where I think the video … the folks that did video you know a better connection with Paul little bit although one of the top three didn't do the video but just a super nice guy. I mean I just wanted … we both, Paul wanted him to be able to buy the business. He travels all over the country all the time and has two teenagers that he just doesn't see enough and he wants to work from home. Mark: So there was that personal connection. Joe: Well, it's that personal connection tugging at Paul's emotional heartstrings, at mine. I think he's a great guy. I would love to help him find an amazing business so he spends more time with his family and becomes an entrepreneur which he's not now. He's in the corporate world. Mark: All right we're getting close to the end so let's wrap. I want to get to the end here and talk about— Joe: Sad news. I'm sorry. Sad news having to tell eight people they didn't get it. Mark: Then also I want to know the metrics. Because I know you had recommended to him go out, we should go out at a 3.5 multiple. We covered that the beginning and he said I don't know if we need that you know as … being and Paul sounded like a great guy 3.3 is what it went out at. I'd like to know where the highest and lowest came in and then also the sad news portion having to tell so many people that wanted this business sorry we're going to keep you in mind, we'll keep looking for you. Joe: Yeah, again I wanted it to go at a 3.5. I thought it was worth a push and I let him know it's a bit of a risk. We haven't sold one at 3.5 that's 100% Amazon business with discretionary earnings this “low”. It's still 440,000. We wound up with the highest one being at 3.6, 150,000 over asking and the one that he chose was 50,000 over asking at 3.4, 3.41. And it was an all cash buyer and had the funds on hand. Had had the funds and had the experience and has bought Amazon business before so he looked at the full package. Cash buyer, close in 30 days, hiring Centurica for due diligence but understands Amazon really well and that training and transition was going to be a breeze. It's the full package and that's why he chose that particular buyer. Mark: Yeah, again we've talked before about people winning with lower bids. Not necessarily being the top bidder but still being able to win. And we've also talked about the idea that financial motivation isn't always the sole motivation right? People sell for a variety of reasons and so being able to understand, as a buyer understand some of those secondary goals can really help you out quite a bit. Joe: Let me just jump in, it's not always a cash buyer that wins as well. If everybody remembers the story I've had Syed Balkhi on the podcast and he chose a buyer that was an SBA buyer at full price on his business versus a cash buyer because he just really bonded with that SBA buyer. And he carried a 10% seller note on that particular listing too. So he chose an SBA buyer and a seller note over an all cash buyer. So SBA wasn't necessarily the problem it was just a combination of a number of things and Paul really wanted to get the business sold. And he is kind of a nervous guy a little bit so he didn't want to have to wait upwards of 90 days; 30 was comfortable. Mark: All right what final thing should people know about this particular deal? Because this is a fascinating little case study of just a listing that's going crazy, how to act on the buy side, and also how to set your business up from the sell side. So what final things should we probably round this episode with? Joe: Well I hate to finish it with … you know just because this one sold a 3.4 doesn't mean yours is worth 3.4. This one has all of these little points and metrics to it. I launched one this week Monday at 3.3 and some of those same buyers, those eight buyers a few of them have looked at it and said no. Others are comfortable with the niche and like it and see the upside to it so I think we'll get at or close to asking. But just being prepared running a real business, think about it from a buyer's point of view. They're going to be investing their life savings and if you were them what type of business and what type of person would they want to buy that business from? We want them to succeed. You want them to succeed. And that's really what you need to focus on. Mark: That's fantastic. Hey, thanks for sharing all of this. I know that you always have the best case studies mainly been because you do the most deals at Quiet Light. So thanks for sharing this one. The next one I'm going to write a better teaser than yours and I'm going to try and get like 251 inquiries in the first 24 hours. Joe: You taught me how to do it so I know you can do it. Mark: Well, then I'll make sure that I'll let you know in every podcast. All right cool, hey thanks, Joe. I appreciate all of it. Joe: You bet.     Links and Resources: https://www.quietlightbrokerage.com/ Listen and subscribe on Itunes  

Do you want to know how to grow and scale your business to sell it, but don’t know where to start? It’s true that creating a business from scratch and growing it can be a tedious and long process. However, for my guest, Chris Yates, buying a business instead is a great way to go. As a digital entrepreneur and founder of Rhodium Weekend and owner of Centurica, Chris has proven that when you have the right tools, you can build a business that gives you freedom and growth. Chris shares insights and strategies, how to avoid the big mistakes people can make when looking to buy or sell and working in partnerships and more. He also talks about the core values you need in the business that will afford room for your passions, as well as unusual strategies that will guide you to become a professional buyer of a business while minimizing the risks involved.

Today we welcome Bryan O'Neil, one of our very own, to discuss owning and running a brokerage firm and being a top advisor to buyers and sellers. Based in the United Kingdom, Bryan is joining us today from Costa Rica, where he is living the true traveling entrepreneur lifestyle. His career has had him in the mix for over 10 years and he has seen a lot from the many angles of the acquisition process. Before joining Quiet Light, Bryan was one of the original co-founders and a director of Flipping Enterprises, as well as a co-founder and the concept creator of Centurica – the world's first website due diligence agency. He was also a consultant at Flippa.com and was responsible for the launch of their brokerage service, Deal Flow. Today we tap into his wealth of experience as an entrepreneur and pioneer in the internet brokerage industry. Episode Highlights: What Bryan finds exciting when starting with a client and the signals that he looks for right away in a potential transaction. The importance of paying attention to the soft side of a deal and the personalities brokers are working with. We discuss the burnout rate for the online business broker. How brokers develop a sixth sense for what is going to be a smooth deal and how hard or easy it will be to work with a seller or buyer. How the relationship between the owner and the prospective buyer is one of the most important aspects of a transaction. The broker's valuation is merely the prediction based on the marketplace. Which niches that Bryan gravitates towards in his work. What red flags brokers look for in transactions. One thing that buyers don't look at enough in the valuation process. Why buyers also need to look beyond the transaction. Something buyers focus on that is sometimes an impediment to the transaction progress. Transcription: Joe: So Mark, I understand you had a conversation with one of our very own who probably has more experience than most of us combined in terms of owning brokerage firms and being a top advisor as well. Mark: Yeah within Quiet Light Brokerage I am obviously the most experienced broker since I've started the company. I've been doing this for ten and a half years now but Bryan and I started off our conversation just kind of reminiscing on his career arc. When you take a look at our little industry that we have here within this kind of online business brokerage [inaudible 00:01:27.0] when you take a look at the companies that have sprung up and really kind of made their mark on the industry you typically see that Bryan has been somewhere right in the mix of all of those companies in that startup phase. So he's been at this just as long as I have. He's been doing this for about ten years now and his resume is impressive. Joe: It really is and he's been the easiest to work with because he really doesn't need any help which is pretty great given the level of skill and experience he has. But it's funny with Bryan it seems like every time we talk to him he's in a different country. You know he lives over in the UK but I think the last call we had he was actually in Cuba and working really literally from anywhere in the world like the true lifestyle entrepreneur. Did he get into specifics about the companies that he's started that are well known in this industry? Mark: He did. Yeah absolutely and people that listen to this you guys are [inaudible 00:02:22.7] of companies we talked about the companies. I'll save it for that. And by the way he was in Costa Rica now when we actually did this interview. So he was doing it from his hotel room and asked me in advance “Do I need to shave, is this going to be video?” I said “Yeah Bryan you should shave it and you know comb that hair and all that.” So he did and the audio … because it's a hotel room the audio is a little bit echoey. I'll apologize for that but … and then if you're like me I can't listen to accents very well. We make fun of Bryan for his British accent all the time. But what he has and his observations in the industry and he's seen a lot from a lot of different angles. And so in this one of the things that I want to tease for you guys to listen to, we talked about the things that he finds exciting when he's dealing with a client. You know that up front call and Joe you and I know about this, when we have somebody calling to us that they are starting to explore that possibility of selling you develop a really quick sense for what's going to be a good opportunity and what's not. So I wanted to see if I could kind of haul that out of him, what are some of the signals that he looks for right away that makes him go yes this is going to be a really nice client to work with. Joe: So the signals are being not just the client but the business itself that buyers are going to be excited about is what you're talking about. Mark: Well we talked about both and I will reveal this one thing, we talked about this so often the theme just came up again which is we also have to look at those soft sides, the personality; are you reasonable to work with. Those sort of things just naturally come up. Whenever you talk to anybody who's experienced this industry that part comes up. Joe: Let's get right to it we don't to give too much away. Mark: Awesome let's go. Mark: Bryan how are you? Bryan: Hi Mark, doing good thanks. How are you? Mark: Good, thanks for agreeing. I know you're in Costa Rica right now right? Bryan: Oh I am indeed. So I'm going to be here for a couple weeks and I'm actually traveling a little bit right now so yeah I'm seeing a few new places. Mark: We have a game here at Quiet Light Brokerage which is try and guess where Bryan is in the world at any given moment and if you can get it down to the quadrant of the globe that's usually pretty good. So [inaudible 00:04:25.1] world traveler. You are our European representation for the company because you live over in England correct? Bryan: Yeah I'm mostly based in England and [inaudible 00:04:35.5] but yeah because I'm kind of traveling quite a lot but yeah I'm keeping a base there. Mark: I got to ask you a question completely unrelated to any of this but it seems as if British people travel a lot more than pretty much any other culture I know. It seems like just popping out to the States for a quick visit is no big deal for most British people. Is this true or am I just completely stereotyping? Bryan: Oh I should [inaudible 00:05:04.2] of your place to Europeans in general. I mean it's probably true but the fact that we've kind of grown up that way. Because you know living in Europe … it's never really a big deal to travel to a different country because from pretty much any place in Europe … any other place in Europe you can get in a matter of hours. So like from Helsinki to Milan you would have a two and a half hour flight. So I've kind of started the traveling from quite young. Same with everybody who's grown up in Europe and then I suppose that kind of sets the mindset for later. Mark: Right. I find that fascinating. I mean if we plan a trip to Europe, its multi month ordeal to try and plan. For you, I just find out like oh I decided to come over to the States next week or I'll be over in the States the most. I was amazed so … good to have you on this side of the globe though. Of course, even though you're down in Costa Rica I know you'll be up here in the States real soon as well so … cool. So out of the Quiet Light Brokerage team … for those listening, Bryan you've been with Quiet Light now for over a year now. A little bit more than … I think about two years now, I think- Bryan: Yeah yeah. Mark: A couple of years, so for those of you that are keeping track which I don't anticipate as too many but we have a number of people here with Quiet Light and the assumption is typically that Joe is the most senior, most veteran broker on the team. The reality is out of experience outside of myself, you have by far the most experience. And in some ways, you have more experience than I do at the Quiet Light team. What I'd love to do is just kind of go over your background real quick as to how you get started in this industry. Bryan: Yeah sure. So I think we have to go like back to 2007, 2008 something like that so I think 2007 actually. So I suppose my sort of segue into this was when I first started building some fairly simple Google ads and sites and stuff like that. I think that was about … yeah even earlier actually so that must be like 12, 13 years ago. And you know I was also doing that so I had a few sites and then at one point I wanted to sell one of those sites. And it was back then there weren't really too many options because there weren't pretty much any growth [inaudible 00:07:26.7] facing an online businesses that Quiet Light started that just after that time. Most of the others started at quite a lot after this. There was, however, Flippa or what later became Flippa that kind of started emerging so it was- Mark: It was the same platforms at the time right? Bryan: Yeah it was like an Australian developed web forum and they started a little section that was there for people to buy and sell websites and that's what later turned into Flippa. So I found that I sold them my site and then it said hey you know there's quite a lot happening over that. And then that's got my interest and I started buying some sites. And then what I started doing this essentially back then the content of flipping sites was quite bare and profitable. So pretty much before I knew it what I started doing was I started picking up sites that could do with some quick improvements and I would do that, so I would improve those sites and I would sell them off anywhere from a couple of months later to a couple of years later. And that basically got me to a place where other people at one point started reaching out to me asking hey you know you're doing a really good [inaudible 00:08:45.5] you've got a lot of fair above listings and then you're getting good prices can you help me sell my site? Can you draft the listing copy sort of guide me through the process and so forth? I thought hey you know why not. So yeah I charged a small percentage and helped these people and that … this was myself and my business partner back then and we kind of started doing that to the extent that these at one point became the main thing. So we kind of for a long time we never really formally became website brokers, but then at one point think it must've been a year or so we did, we said hey that's a business so we better turn it into business and that's when we started a company that was then called Flipping Enterprises. Now they're called FE International. And so that was kind of the start. Mark: Right and just to be clear so Flipping Enterprises was the original version, they've reincorporated and changed significantly since then but that was back in 2009 I would say. Bryan: That's 2009 yeah. Mark: Yup, okay so yeah and Quiet Light started in October 2007 if I remember right. So that was a few years later; fascinating. Okay, then you moved on from Flipping Enterprises to … which one was it? You were … I don't know you're a co-founder of Centurica and then you're also part of Flippa, which one came first? Bryan: Centurica first. So yeah a couple years in I think that must have been 2011 or 2012 I kind of cited that I've had enough of that part of the industry for a while anyway. And at the same time I saw a need at … for sort of buyer education and due diligence services in the industry. So obviously back then the industry wasn't arguably still ease. The journey has been very very young and there aren't really many resources available and the one issue that I run into quite a lot in speaking to buyers is that they didn't have any professional to turn to when evaluating a web business to purchase. So yeah that's when myself and my two other business partners Justin Gilchrist and Kaspars Peksens started Centurica. And yeah that took of quite quickly and was really really well. I think with regard in the industry and so we built that up over the course of couple of years and at that point, I exited from Centurica first and then about I think six months later the whole company have sold to the guys who [inaudible 00:11:26.5]. Mark: Right that would be a [inaudible 00:11:28.3] over with Rhodium as well. I remember when you started Centurica, I was at Affiliate Summit East with Jason Yellowitz who was speaking at that conference. I ran into Chris Kite who was a friend of ours and he had mentioned what you guys were doing and I had heard about you before as well with Centurica. And I remember telling Chris I said these guys are absolutely insane. I would never want to do by side do due diligence for anybody due to liability issues. But I … one of the many times I've been proven wrong over the years and the companies well over the years have been a very good resource. I know that those that listen to a lot of our podcast so that we refer or recommend them a decent amount. I think [inaudible 00:12:15.5] does a really good job and is a good person. But I remember hearing about you guys at first and thinking you guys are crazy, who would actually want to be in that position of liability, but it's a good resource. And Justin Gilchrist, that's a name I remember. When he first reached out to me and I was thinking oh man just another person trying to get into the space and it turned out to be a giant in the industry. Justin if you're listening we miss you in this space, feel free to come back anytime you want. So you left there and you went on to another company within the space. Bryan: Yeah. So from there, it came my sort of a company idea with Flippa. So I guess I got into a discussion with the guys of Flippa who back then wanted to sort of break through into the brokerage industry but with very little success thus far. So what we ended up doing was … I essentially ending up quote unquote consulting them for what was supposed to be a year, it turned out to be two and a half years. And I went there to build out their brokerage platform called Leadflow. So yeah close and short this put it that [inaudible 00:13:29.9] nicely and by now that part of the company is actually separated from Flippa. And my good friend Jamie whom I basically hired as the main guy there and the main senior broker has now taken over running Leadflow and managing it. So they've kind of spun off from Flippa but yeah that was another interesting two year career. Mark: Yeah I get asked sometimes how large is the industry that we operate in. And I try to explain to people it's pretty small but there's good money in it. When I look at your career arc your fingerprints have been over pretty much every major ebb and flow of the industry that we're in. You've definitely been around and seen a lot of different changes and influenced a lot of the changes. I know when Flippa was starting their deal flow a lot of the brokers just out there were paying close attention because Flippa had such a large audience or has such a large audience still. And so there was a real … and so a little bit concern but also just kind of curiosity. How are they going to change from a marketplace into a brokerage? And it's fascinating to watch the changes occur over the years. And then you joined … you left the brokerage industry, I tell people when they want to come on as brokers I tell them that burnout in this space is real, it's not easy. I probably … I think the average years or the average about time before somebody is just completely frazzled was probably around five years if you're really really good. So you took a break for a while. Bryan: Yeah I kind of. So well … not so, not really for very long but I think that at the time that I had between Leadflow and when I joined you guys was probably about half a year maybe, maybe first a two year. So there I kind of needed to … knew the break from [inaudible 00:15:24.8] to concentrate on the other stuff that I was doing … I'm then doing. This is stuff like I think that entrepreneur syndrome anting up here that I can never sit still and do one thing. So yeah that's the kind of break but yeah I thought that we would give up and get off in this industry. And it is very much a real thing and very few people can last for a long time and at the same time remain sane so yeah. Mark: I took time off so I mean I wouldn't say I was brokering solid without any break for about eight years and then I took over a year off before I took on another client. But there's something weird about this space where it kind of becomes an addiction even after you leave- Bryan: Yeah if you say those I can- Mark: Yeah it is there's something just super fun about it when you actually do start doing deals and are able to help people. But then once you get into it a lot you do get burned out and Joe and I comment sometimes that you know that you're reaching that burnout stage when somebody comes to you with a fantastic business and you feel like it's a burden. Like oh please you know that makes more money and you're ah I felt that I don't want to deal with this right now. Bryan: I think we've all been there. The highs are really high and the lows are super low once they've set. It's kind of like … but it's nice because it's a … I think it sort of evens out because I can be really burned out at some times but at the same time when I then do a deal where everything goes nice and smoothly and I worked with people who are good to work with and you know I can see that we're helping the seller, we're helping the buyer, everybody's happy with everything then that's the kind of feeling that sort of very nicely balances out the few negative experiences. Mark: Absolutely. So I want to talk about … I want to get into that here and hopefully, this will be the real value part for people listening. You know with your or my experience combined that's 20 years of doing this and it'd be interesting for us some time to see if we could estimate what our total closed amount is between the two of us. I bet it'd be a pretty big figure there. But what I want to talk to you about you know when you're in this space of brokering and you're advising people every day it doesn't take very long before you develop a sixth sense for what's going to be a good deal and what's going to be a really difficult deal. So I want to see if we can kind of break out some of those things and I'm going to ask you this and see if you and I kind of agree on some of these points here. But I want to start with the positives, so somebody calls you out of the blue or you got a valuation requests coming through the website and you are in charge of it, you got on the phone with them, what are some things that you look for or if you hear immediately you know those signals start going off this is a great deal, this thing is going to … people are going to love this thing; what are some of those key figures or key indicators? Bryan: Well I think sort of objective stuff aside such as you know what that business is and what their numbers are and so forth. I would say that I get really excited when I talk to a seller who's clearly easy to work with and on the same page with us. And I think I can't really quantify this to a large extent but it's just sort of the gut feeling if you will that you and I … I'm sure that you as well kind of just get even after a couple minutes into meeting somebody. And I can kind of tell that having probably spoken to over I think two, three hundred sellers in the last 10 years I've sort of developed like I said a sixth sense of being able to tell whether somebody is going to be easy to work with or difficult to work with later on in the process. And when I say that I don't really mean so much the future relationship between the owner of the business and me the broker but also that often translates into the relationship between the owner of the business and the eventual buyer of the business. And that's a super important thing because as you know Mark relationship quality if you will between the buyer and the seller is the one thing that can very easily make or break a deal and that's probably the most important thing when it comes to [inaudible 00:19:45.4] any transaction. Mark: Yeah you know I think that that sort of intangible comes down to … at least for me, it comes down to the reasonableness that I see from somebody. And it's when we have a discussion and I want to explain where I see value in the business and maybe where I see some problems in the business you know are they absorbing that information or are they fighting me with that … with that information right? So if you say oh you know the trends on the business are kind of negative and we want to make sure that the trends are going in the right direction. If they come back immediately and say well you're not looking at the right aspects of my business in order to value it. At that point, I'm almost hearing that they're not listening to what we're saying there and just trying to fight us and trying to convince us into a higher valuation. And you know the reality is the marketplace is brutally honest. You know I could say whatever you want me to say it's not going to change that the reality of the marketplace at the end of the day. So that's sort of are they there to listen, are they there to absorb, and of course, I'm there to listen and absorb and learn the business as well. But I think it's that touch of unreasonableness that's one of the soft signals right? Bryan: Yeah and I think this is actually the one thing that's, unfortunately, a lot of people speak to us and get wrong but we're not the people that they need to convince regarding the legend of their business because we're not paying them the money. It's our job to take the business to the market and I just set them up basically, to be honest. And contrary to the belief that some people have what we say or in what words we describe a particular business is not going to influence the valuation of the business because the vast majority acquires at far more sophisticated than that and they look beyond the [inaudible 00:21:31.9] if you will. So there is really very little we can do to influence the value of the business all we can do is reflect what the market at least came to be. Mark: The one thing I try to explain to people is that our valuation and the valuation approach is a predictive value. And that said I had a conversation with a buyer this is probably a few months ago where they took a look at a business I was representing and looked at the valuation approach and he came back to me and said well you know I was looking at this valuation book and I think we should really be using this approach to place a valuation on the business. And of course, you know being a buyer he wanted the price lower, understandably so. And so his valuation approach significantly discounted the business and I had reply that was said that I don't care what sort of formula you use or approach you use, you can use whatever formula or approach you want, end of day we're just trying to predict the marketplace and what one buyer in that marketplace is going to be able to do or be willing to do for that business. The same thing with that on the sell side is just that. What sort of niches do you tend to like when repping a business? Bryan: That's a really interesting question I think that's changed over the years quite significantly. And interestingly enough I think if we would to go back about five years then ironically I hated e-commerce. I really and truly hated e-commerce because it was difficult. There were always issues with stuff like transferring over tangible inventory etcetera etcetera. But that has actually changed 180 degrees and nowadays I would say that I actually have grown to like e-commerce. And if we took all of my closed deals then I think e-commerce has actually easily been the majority. And that kind of adds up with what Quiet Light is doing as well because if you look at the industry in general then you can kind of see certain soft specializations and for Quiet Light that specialization is quite easily e-commerce even though we obviously represent businesses across pretty much all business models and niches. But yeah I think e-commerce nowadays is where our collective expertise and most of my expertise lies in over the last four, five years. Mark: That's fascinating. I know our numbers break down and just under 50% of what we do is e-commerce so that'll be a plurality, SAS comes in second; probably behind that. And then we get into the different types of sites that can really break out from there; completely unintentional. You know I didn't set out and say I'll then become have this soft specialty in e-commerce but by any means. That's fascinating. Well, let's talk a little bit about some of the things that when you're doing an initial valuation call are a kind of those warning signals or kind of those oh man this thing is going to have difficulties selling. I know for me I'm super focused on trends. Trends are probably the number one thing I would look for but I'd be interested to hear what you look at and what some of the big red flags you look out for would be. Bryan: No absolutely I can feel them, trends are a big thing. And I think that the most common sort of warning signs that something might be off would probably be either a significant drop in revenue as of late. So if we see the business being just stable growing for a year or two years and then over the last three months you have a sudden drop in revenue then that certainly indicates that something is very likely off there. Or in the same bane if I see continuous decline over a longer period of time even if it's a slight decline then that also indicates that something might be wrong and there may be some sustainability issues with buying that particular business or the industry that the business operates in or something along those lines. And I think apart from this another thing that is a little controversial because it often results in false positivities if business books are really messy then that can be a warning sign. But also that's when we come in because it's a … that first stage is for us to determine whether that's a true warning sign or if it's just somebody who has never really paid attention to keeping clean books and running that part of the business properly. Which happens quite often because in our industry we often see businesses that have grown essentially out of hand for the owner of the business, they just started a really really small business not worrying about stuff like proper accounting and things like that. And before they knew it the business grown tenfold or a hundredfold and that part of the business has been neglected. But you know in those situations we always try to figure out what's actually going on behind the scenes and whether those things can be fixed and if it's just a case of some negligence or if it's a case that the seller is in fact trying to hide something and got to the books which we do come across I mean on the end as well. Mark: Yeah the books obviously would … are something that we focus on first and foremost. And I think for me it's … messy books don't scare me as much. It's the overly simplified books that scare me. When I get a P&L that's only in Excel and it's a total of 15 grand lines in there I'm thinking something is not right with this. Bryan: Yeah this happens often as well. I kind of put the two in the same bucket, maybe I shouldn't but yeah they sort of go in the same bucket because if someone has taken an hour to put down some numbers in an Excel spreadsheet and it doesn't really have anything firm up there and that can definitely issue. I actually saw a P&L just a few months ago where I noticed that for some reason all the revenue numbers were round numbers. I'm like that's not right, that it cannot be, I mean I'm listing up one client and there are you know two clients and you charge them $7,000 a month each then that just can't be the case. And then it came out that yeah I was just taking some approximates because I don't really track the actual figures so based on what I know how the month was I kind of put that down. No that doesn't really work like that. So if you want to sell your business then you have to have the exact figures and know exactly what the business has been doing. Because even if a broker exists who is happy to list the business having something like this then you came be a 100% in that you're going to run into issues the moment you have a buyer or actually before that. Mark: Yeah round numbers and P&Ls are always a warning sign. I've never had round numbers or very very rarely. All right, I'm going to put you on the spot; I didn't prepare you for this question. But what is one thing that you think buyers need to pay more attention to that they currently don't pay attention to? Or maybe let's put it this way, out of the reports that a business could offer what do you think is one report or one thing that the buyers really don't look at that might provide more insight into the businesses that they're evaluating? Bryan: That's a really good question I think in terms of reports I'm not sure if there is anything major about that. But I would say that I've noticed quite alarmingly that a lot of buyers don't really look beyond the actual business that they are evaluating. And when I say that what I mean is that they don't look at the industry as a whole. They don't kind of pay enough attention to the competition, to where the industry is actually going; whether the industry itself is likely going to be growing for the next five or ten years or the kind and sort of the external stuff like this. And I, myself included actually when I started buying businesses years ago then I later on noticed that I was guilty of the same thing. I was just concentrating on that particular business and the trends and the books of that business that I completely started ignoring everything else, everything that was around it. And I got burned a few times so I learned. I wish I learned before getting burned. Mark: Yeah I think that's fantastic advice, looking beyond seeing if there's room for growth within the industry itself. I had a conversation with Jeff Hunt and asked him a similar question and he said knowing where your customers are coming from which I thought was fantastic advice. You know understanding that the process of you're looking at a business, to acquire a business and you see that it has customers, understanding fully how are these customers being acquired. So I think those two bits of information might be quite useful. Okay, so we'll bookend this and I'll have this as the last question here for our conversation. What would you say is the one bit of information you see buyers frequently look at and you think is probably not as important as they think it is? Bryan: That's a good and very difficult question. I'd say that it doesn't happen very often but I think the reason why I say this is because over the last few days I've actually had two separate conversations in the thing where I've been asked for things like the company's liabilities financial and balance sheets and things like this. I think that's due with a little bit of misinformation. So you know exactly what I mean but just so all the listeners know, the vast majority of the deals that we do in this industry are asset purposes. Which means that what you're buying is the website, any trademarks, any Amazon accounts you name it but you're not buying the [inaudible 00:31:27.9] which means that you're not buying any liabilities, you're not buying any entities themselves, any contracts, etcetera unless they're transferred over. Which if I close because it makes things simpler and … a lot simpler to both buyers and the sellers and this often means that in terms of the information required in such due diligence as a buyer you don't have to spend your time and money making sure that corporate entity itself is in good order because that's never going to be your concern or your liability. So that's something that I've come across a few times just recently. Apart from that, I don't really think there are a lot of things that happened too often. Maybe at times getting a little bit too granular with old stuff is something that I would rather not spend that much time on. Obviously looking at … you know spot checking certain months or certain periods is something that can easily be very beneficial because if there's anything funny then the stakes will come up this way. But I wouldn't necessarily go back to 2015 or 2016 and start asking questions about why it was there a small bit in revenue in March 2016 because [inaudible 00:32:49.8] seller doesn't even remember it or if they do and if they can find out then that information is really quite irrelevant right now. Mark: Absolutely getting to that granular detail years ago could be an absolute pit fall for buyers. And I think there's obviously buyers who wanted to protect them against risk as much as possible as do we. We want to make sure buyers are protected from risk but you can spend all your time looking for what's going to get you and then end up losing out on the big picture sometimes as well. So that part is a balanced net. Cool. Hey, this has been fun. With our team being spread out all over the country literally all over the world we don't get a whole lot of opportunities for a face to face. So this podcast and the video portion of this is an opportunity for you and I to have a face to face conversation which is always fun. And whoever is listening can either I guess benefit or suffer through that conversation. So all right any last parting words of wisdom for the listeners? Bryan: Well not really but I think if there's anything then I'd actually like to go back with … go back to where we started off which is if I had one piece of advice over to the buyer and sellers is be a nice person, be good to work with and that's something that is always going to pay off. If you're making yourself difficult then any eventual deal is likely going to be difficult as well. But if you keep an open mind and remain realistic then likely you're going to enjoy the whole process working with us, working with the other part of the transaction and everything is going to go nice and smoothly. Mark: Absolutely I think our listeners have heard this from us before. You know these are financial transactions but they're also human transactions. Bryan: Exactly. Mark: And you've got to get all parts right, cool. Bryan thank you so much for joining and yeah we'll be talking and I'm sure. Everyone that wants to reach out to Bryan you know how to contact him you can find his contact information on the site. He's got a ton of experience. So I'll offer what I offer for myself personally and that is if anybody has questions or want to run something by Bryan just reach out and it works as well. We're here to help and more than happy to talk to anybody who wants to ask us a few questions. Thanks, Bryan. Bryan: Absolutely, my pleasure Mark. Links and Resources: Bryan's Website QuietLightProfile

On this episode, I talk with Justin Gilchrist from Optimum Feedback. Show notes >> https://richardpatey.com/optimumfeedback Justin started Centurica back in 2012/13 with Bryan O’Neil (who is now over at the online website brokerage quietlightbrokerage.com) as they saw a need to protect people from fraud from unethical sellers who were misrepresenting their sites. Bryan was the original founder of FE International with Thomas who left to start Centurica. Justin & Joe set up Empire Flippers (then Adsense Flippers) around that time too. Bryan contacted Justin to help start Centurica to systemize due diligence. Justin started in online business as a graphic designer in 2003/4 when a lot of offline companies were working out that ecommerce would be big for them. He built sites for them but found that they expected traffic to just turn up so he reached out to a company who he built the site for and bought it back off him and added new content to top performing pages. We discuss how SaaS companies consider their asset price in terms of multiple of revenue rather than profit and ask for insane valuations. After Justin sold Centurica he also sold all of his portfolio sites apart from a supplement e-commerce site for cashflow, in order to focus on his SaaS Optimum Feedback. Also mentioned on this episode:   Jordan Gal at Carthook   Invest Like A Boss podcast on on Airbnb income   passthekeys.co.uk   Check out Justin's ebook and consulting products here >> exitplan.co/digitally-wed

Today we are talking to Chuck Mullins all about due diligence. An internet business veteran who is now a part of the Quiet Light team, Chuck purchased his first internet business while still in college and was more successful at 18 than some of the most seasoned entrepreneurs. For both the buyer and the seller, the due diligence process is one of the most difficult parts of buying and selling an online business. Fortunately, there are a lot of tools that can be used to simplify the process. In this episode, Mark and Chuck look at over 20 different due diligence tools and explain how you can use them in our due diligence processes. Episode Highlights: Chuck guides us through a group of tools that can be fundamental to any well thought out due diligence plan. Any buyer knows that this is the most important thing you can do to make sure that no stone is left unturned when preparing to make that purchase and hit the ground running. Try using a due diligence consultant service. We don't advise leaving it all up to them but they can take some of the work out of your hands. Never just research the business but remember to also research who is selling the business. Google trends is very powerful. Google Trends lets you read the trends that any given business may have experienced. Be sure to be aware if your acquisition is “trendy” or “evergreen.” SEM tools can provide insight into the business potential and the size of any risks. Website crawling tools are used to determine customer and market trends. Social media tools are an additional way to gain insight into connections for that business and also the business owner's niche interactions in their niche. Lessons from Due Diligence: For first time buyers the best advice Chuck offers is that you don't know what you don't know. Due diligence gives you the answers. Know what a tool is good at, put it in your due diligence toolbox, and use it correctly. Surround yourself with the types of people who can help you. Be careful to use your lawyer for law and your accountant for money. Always remember that you as the buyer ultimately make the business decision. Don't be afraid to ask questions! Keep good records of what you have looked at. Work off a checklist and be meticulous about it. A seller is as interested in you in the success of their business. Transcription Mark: Hey Joe, how are you? Joe: Doing good Mark, how about yourself? Mark: I'm doing well, I'd talk to somebody that we both know well and that's one of our own Chuck Mullins. Joe: Mr. Chuck Mullins, good man he is. Mark: He is, yeah. He joins us on the interview on the video part push on the interview wearing his Quit Light shirt which he had embroidered. The only person at Quiet Light that has one. Although, He didn't tell me that he made one for you. And I haven't seen you in it yet. Joe: He did I almost put it on today. It's just, it's a little big so I [inaudible 0:01:16] it. I need to put on some layer, run it through a two cycles of the dryer. Mark: It would have been so appropriate because, you know, he's wearing his shirt in this interview and you've been wearing your shirt in, and he's getting, make one for me though of course. Joe: He should. You're the founder of Quiet Light Brokerage. Mark: Absolutely. Joe: You should have like a logo on the back of your office chair that says Quiet Light Brokerage, what's wrong with you? Mark: I thought about it but. Most of my office is really a mess. If you seeing this on video and we'll talk about this one a bit. My office is usually a mess. It's all about angles, right? My angles a little bit of center today because I don't want to show you the rest of my office. So, yeah. But this actual episode is going to be great for a video. If you're listening in your car, if you're listening on the podcast, you'll still get a lot of value out of it. But I'd recommend at some point checking out the Youtube channel. We are separating our channels, so we will have a new channel, just for the podcast episodes. And this episode will, going to kick that off. So make sure you'll go there and you subscribe. And the reason that is a good one to watch on the Youtube channel is because we're reviewing due diligence tools in this episode. We actually go over 27 different due diligence tools. We bring them up on the screen and you can see, we kind of browse around and fumbling around on somebody's sites. As we talk about how you can use this in your due diligence process. Any buyer out there who is looking to acquire a business in the next few years or so, you know due diligence is probably the most important part of that process for you making sure that you're checking under every rock and every hidden area to see is there anything wrong with this business that I need to be aware of. Well Chuck and I go over 27 tools that he has used personally in his past of buying businesses. So we bring real interest in episode from that stand point. He brings a lot of experience in buying and selling businesses for.. Do you know how long he has been doing it? I can't remember off hand. Joe: In 1997 I think. He was self-employed in college, making more in one month the most people make in a year when he was in college. Mark: Right right and then, He and I have been presenting at Pubcon for 7 years. We go over this video a little bit but we've been presenting for 7 years at Pubcon together and people always come to see Chuck and then hopefully I can pick up a couple of the scraps to come off the table when presents. So it's a great presentation on a how to go about buying online businesses. Joe: And just a point out of the obvious remaining, not so obvious. Technically we represent the sellers in what we do. Well we can't help them and help them while unless we also help as many buyers as possible. So it's, many people would think that what you're about to present with Chuck is in contrast to what we do. But we're always about full disclosure, always making sure that buyers are making good investments and so that both they and the sellers are happy to closing table and it's successful transaction down the road as well. Mark: Yeah, absolutely! Again, we going to do represent the sellers, but if our seller's getting sued, 3 or 4 months later that is a pretty bad job on our part. So it's important that both buyer and seller walk away from a deal, happy and when you know that deal. So that's the goal. We get a transaction wins. And part of that process is due diligence. I say, I hate like throw a due diligence. When I first started Quiet Light and I got like, you know, a monster due diligence, I would kind of [inaudible 0:04:31] and be like, Oh man, this is going to be a pain. Now when I see a well thought out due diligence, it's makes me happy because I know that, that buyer is going to be really happy and that deal is gone go through. Because where they're going to really inspect that business thoroughly. Joe: Yeah, well thought, that was important. Not just a massive list but a well thought, that was specific to the business that's being purchased. I've seen blank at due diligence less come through where somebody clearly copied and paste it. But I'm excited about this episode Chucks a really, really smart guy and successful entrepreneur and I think a lot of people would learn some good stuff here. Mark: That's good, very good. Let's get to it. Mark: Hey Chuck, how are you? Chuck: Doing great. How are you Mark? Mark: I'm good. Thanks for joining me on the call. I see you have your nice Quiet Light shirt on. You're the only one at Quiet Light that has that shirt. Chuck: That's because I took the initiative to have it made. Mark: Right. We'll get them for everybody else eventually. Chuck: Actually, I think I bought Joe one. But he didn't want it. Mark: Oh really, I got to start getting on him so he wears it from the Podcast. Chuck: Yeah Mark: Yeah, anyway for this Podcast, if you guys are listening to this in your car, this would be one of the once that I would recommend over going to Youtube and we've set up a new channel on Youtube just for the interviews. We're going to put all our interviews on that channel. I'd recommend looking at that because we're going to review a bunch of due diligence tools. A little bit of background between Chuck and myself. Chuck and I have been presenting at Pubcon. What? 7 years I think? Chuck: Yeah, I think so. Mark: Yeah, a very long time. Chuck invited me to speak within that Pubcon a while ago. We've been doing it ever since we've had all the people join us occasionally, to talk about buying and selling websites. But he and I have been talking about that night. Typically we talk on the sell side and Chuck was talking on the buy side. And the result was that more people are interested in what Chuck had to say than I was ever had to say. So I figured, it would be good to have you on here. Both, so I think we can get to know you a bit better. I'd also review some of the due diligence that you've use in the past in buying online businesses. So let's just do a quick introduction for you as far as your background. What's your background in buying and selling online businesses? Chuck: So, I started my first website back in 1996. Through the few years, made a bunch of money in college just a kind of doing really well. And made more money than you know, than I was living on. So I start looking at doing various investments. So, start looking at real estate, franchises, I was looking at car washes, and a storage facilities, and a Laundromats. And nothing ever, just kind of, really worked for me or really peaked my interest enough. You know like, I dabbled in real estate. But everything just kept kind drawing me back to the internet business. So then, you know, I made a few websites that were successful. But I started thinking about you know, what if I could acquire somebody's company and then just build upon that and stand on somebody else's shoulders, instead of trying to prove out a model myself. You know, use a model that has been proven by somebody else. And then just take all the knowledge I had, and expertise, and grow that. So I start doing really well, and at a certain point I just fell alive, you know presenting at a conference, and kind of just, giving back, and then that's when I reached out to you and I think my initial presentation I gave was with Jason, Quiet Light, we did it at affiliate summit. I don't even know, 8 or 9 years ago.   Mark: Yeah, I remember that. I was in the audience for that presentation and then, that was January. I remember specifically because it was really cold at that conference in Las Vegas. The fountains were frozen when we got out of the hotel. I was kind of surprised about that. So it's cool! So yeah, you've been doing this presentation for a long time and I know whenever we do the presentation, when we get to the slide on due diligence, whereas all the phones in the rooms go up to take pictures, because people are really interested to know what's our tools they can use to do due diligence. So we're going to review some of these tools here, as well as talk about some of the principles, buyers might want to apply when you're doing your due diligence. As always, we'll just throw out the blanket; cover your tails sort of a disclaimer here. Due diligence is ultimately a buyer's responsibility. Make sure that you're doing it, make sure that you are bringing in professionals. What we're going to do is were going to give some advices to things that we've seen work, but by all means, this is not complete when you're talking about due diligence. Wherein you need to apply a complete process to the business that you are looking at. So I'm going to share my screen here and open this up, and I'm just going to share the full screen, and hopefully on my [inaudible 0:08:56] of so that people don't get those. But can you see that chart does that come up for you? Chuck: Yeah. Mark: Alright. Good, good. So here we go, where going to just get started right away with this list of tools and I'll be browsing to the website as you talk about the individual ones. The first one that we're going to talk about is Centurica and they're full service due diligence firm. They are the only one of that sort that we have on this list. So why don't you talk a little bit about Centurica, what they do and why they made this list. Chuck: Sure, So Chris Yates is the owner of Centurica, they've been around for quite a while and Chris runs a buying and selling website conference called and Rhodium. Rhodium Weekend I think is kind of, the official name. I ran into Chris way back when I started to look at buying and selling businesses. he was the first person.. I'm always looking for knowledge where I look into learn more. So doing some searches and came across his conference and went to it. Kind of on a whim, because there was no information about the conference because that was the first one that they've had. So it was like, trying to figure out and I thought well, for the money, maybe I'll pick up something and if not, it's not a total lost because you know, I'm just come and go to Vegas to hang out. You know Chris is really a smart guy and I ended up I think I was probably the first one we, to get into his master mind group. So I'm going to master mind group with Chris and a bunch of other entrepreneurs and he does this great due diligence product were he just kind of takes it over from you. Will do like a full blown due diligence review on a business that you're going to acquire and I would never say that you should handle fully the [inaudible 0:10:33] somebody else do the due diligence. But you should allow, if you're going to hire somebody, do it in parallel with them. So that way you're just getting, you know, a second, third set of eyes on a due diligence and on the business that you're looking to acquire. So they offer various levels and, so it looks like they've got something from 59 dollars right there and all the way up to, I think a 5,000 dollar package. That's kind of like a suit to nuts version. Mark: Yeah and just look at the website; they have a whole team of people here that are associated with them. A lot of these people, you and I know, we know them through Rhodium Weekend and through that master mind group as well. These are some really smart guys, good guys, to be able to just get on the phone with and get their feedback. In fact, I'm seeing n a few guys here, Mike Nunez, he has been on a Podcast with us before and a super smart guy. Well, these guys are [inaudible 0:11:24] really good contact as well. These are people that you can arrange calls with and bounce my ideas of. The amount of money, 5,000 dollars, some people might [inaudible 0:11:35] sort of price tag, but what do you think? Do you think that's worth spending that much money on due diligence support? Chuck: Yeah I mean, with Quiet Light, we're generally not dealing with the lower end deals, right? We're generally dealing with mid to high six figures, mid to low seven figure deals, so you know, five grand and that's their highest package, right? They got stuff that's cheaper, but how could you go wrong, you know, spending.. If you're on a million dollar deal, what's five grand, is what? Half a percent? I think it's probably money well spent. Mark: Yeah, absolutely I agree. The only assets that you put an end, this is, that whenever you are hiring somebody on the outside to potentially look for problems, understand that, what they're going to do is they're going to find problems because that's what you're hiring them to do, and they should do that. So this is not a criticism or some trick or by any means or attorney that's looking up for liability issues. But as the buyer, understand that you need to take that information, process it, through a business decision that you're making. Any sort of due diligence tool? I knew the ones that we offer here, that's the way that you should be going about using that information, that fits into the larger scheme. Alright, let's move on, Centurica is a good service. If anyone wants an introduction pres, it's either Chuck or I can provide an introduction pres as well. The next two are related obviously, Google.com and Google Trends, everybody knows what Google is, I'm sure most know what Google Trends are. How would you use each of these sites in a due diligence process? Chuck: Sure! So with Google, right? I mean, it's just a matter of Googling things either about the business, about the person, if you're buying the business, Google the terms around the business, and look for red flags, right? Look for if they've got one star review, average one star review, maybe that tells you something about the business. You know, look for complaints, things that are negative about the business, right? It's kind of one of those, you'll catch all due diligence place where you just, kind of sorting through all of the information that you can find on a given business and/or a person. Never just research the business, always research the person who is selling the business as well because, you could find out a lot of stuff and make sure that you're avoiding, potentially avoid some of the pitfalls, if somebody has done some sketchy stuff in the past, and find that out. Mark: Yeah, absolutely. You can learn a lot about their background as well, and all you have to do is search for all of the places that I have written for, come up, but years ago, I was involved in a lawsuit in those couple of pages. And so, anyone that was doing research on me, I would often get those sort of questions, “What happened then?” everything was fine. I didn't mind the questions, but people that were being smart and doing due diligence would ask about that. Chuck: And don't just look at the first page of Google. Look at the 2nd, 3rd, 4th, 5th, right? Because anybody can hire a reputation management company that will push some of those negative reviews, you know, to the 2nd or 3rd page. But they'll be there generally, still, just maybe a little lower. Mark: Right, Now if anyone wonders and are looking at the screen, I did not play hockey. Even though I'm from Minnesota I'm not a hockey player. There's a couple of them, that's out there that have gotten their name out there. Google trends, what search term I put in there? Chuck: Yeah so type in Paleo Recipe, or Paleo Diet I mean, because Paleo is a little different. So, if you look at the screen. Mark: You changed the date range? Chuck: Yes I changed the date range. That's, in January, you see that giant spike. Because that's when everybody is getting into a diet mode. Check that out even further. Mark: So we're looking right now. Let's set 2004 to present. So we'll do the entire history in Google Trends. There we go. Chuck: Sure, so you know, if you're looking to buying a business, and you're seeing.. Well use Google Trends to figure out what the trends are. Here you'll see is like a giant up peak that just kind of went up, and then all of a sudden it just kind of, trail off, and you're going to find things like this. Then you'll also notice that there is like ups and downs, like inter year, so that would be like the seasonally of the business, right? So just because you see, like this one giant peak, which correlates with January, and then you know, throughout the rest of the year it drops until December where December is at it's low, around Christmas time then it spikes immediately back up. So you're going to look for not only seasonality but you can look for long term trends. And when you're looking at businesses, think about whether the business is a trendy business first, it's an evergreen business. So, diet in general is a trendy business. If you look almost any diet, you'll see that there's a, it goes up, up , up, up and all of a sudden it tails off, right? There's something made it go up, usually it got unpopular, and then it'll trend off. I personally, one of the businesses that I bought was a Paleo website, and I managed to buy it exactly at the peak market, and then.. Mark: Right about there right? Right around January of 2013, early 2013. Chuck: Yup, definitely it's like, it was going up, up, and up, I'm like, great! Then it went down, down, down, and it was less great. So, luckily, we were able to so a little bit of magic and kind of keep the revenue going by trying to grow the business but it's another story. Mark: Something else that you can do with this, so as many people know, I own CatholicSingles, and the turn chart out for CatholicSingles doesn't look that great, when you look at it. Something I've learned from this chart from a few other places is, if you think that you're buying a website that gets lots of natural search traffic, be careful to make sure that it's not branded search traffic. So what's happening here is, the previous owner was losing out to a competitor who was beating him in a brand search, and so, the site still gets lots of natural search traffic to a keyword that still has a lot of relevance. But he lost a lot of brand relevance as well. So you can, if it's a large enough property you can often pick up on brands trends and what are not, you're going to have to compete on that [inaudible 0:17:34] as well. You can type in competing services and see what their trend is overtime as well. And you can actually compare the two together. So you can see how competition is playing along with. Maybe what you're looking at acquiring. Chuck: And then if you scroll down, you can do it by region as well. So what are the countries that has something popular. So maybe it was a US based company, and you see “Hey look! It's doing well in Canada and South America” or I guess none of that case was in South America, but Australia, and I think it was Mexico maybe. So maybe you expand into some of those other countries. Mark: Right, right. Exactly. Yeah Google Trends has some good date out there, I recommend again putting in your, whatever, competitors you know of, and comparing the traffic and the trends for the competitors and get the sense for, how those are working together. Chuck: And one additional point would be, Google trends is the search volume of a specific keyword, so it's not some magic formula, it's how many people are searching for something. So sometimes, people search, the way they search for things changes overtime, so you just want to, kind of remember that. That just because, you know. People might have been searching for, I don't know, Blue Widgets but now they're calling it, instead of Blue Widgets, they're calling it Blue Fuzzies, right? So it doesn't always mean that the actual market is declining at it. Sometimes it can just be a change in the way people are searching. Mark: Yeah, I think an example, that would be internet marketing has pushed toward in digital marketing. And so you see, the phrase you use to refer to something, is slightly different overtime. So, that's a good point. Now let's move off this chart because it's sort of depressing. State business websites, this is one that I haven't really seeing people a whole lot of, but it's a really good idea to use state business websites. Chuck: Yeah, I mean it's just the basic of going to whatever state the company is in, doing a search for the business, finding out who the owners are, and if there's any kind of red flags that maybe appear on that, just some basic due diligence there. Mark: Yeah, that one's not coming up here, but when you do the search, what will happen is, you'll see the records with the state, whether or not if filed in good standing, any other possible red flags that would come up. It's really just checking their box, making sure that everything is on the up and up with that business search. Maybe we can get back to this, if that comes up again. BuiltWith is a really cool tool and it shows all the technologies that a website was built with, right? Chuck: Yeap! Absolutey! So if you want to look at, like the technologies that go.. Is your internet out? Mark: No, I just typed it in wrong. Chuck: I guess your internet wouldn't be out, considering we're.. Mark: Right, right. So we could take a look to see what Quiet Light Brokerage is built on. And you can see that we have Googled conversion tracking, you can you see the whole technology stack and all the services that are used. When this might be useful as if you're looking at the P&L and you don't see a subscriptions but you would see here Drip. And you know that Drip is a subscription based service maybe that's not their P&L. That would be something to catch and maybe ask them about to find out what's going on there. Maybe they just start using [inaudible 0:20:47]the website. Chuck: Absolutely! And you know, one of the things you want to do as part of getting ready to acquire a site is make sure that you have the people and place to take over any kind of service that you need in advance. Right, so, if you have no idea how to use Drip and you're taking it in purchase in your company, maybe you need to has somebody in place who does know how to use it or request a standard operating procedure so that you can learn how to use it. So I would definitely have a list of like all of the kind of aspects of the business that you're not proficient at. And make sure that you have people in place that can help you with that [inaudible 0:21:26] running when you do take over the business. Mark: You know something that, speaking of Drips, I talked to Rob who sold Drip to Leadpages a few years ago, and he talked to me about how Leadpages was completely ready and able to switch over to a new website surely after they closed. They were making plans and building out technology as they were going through due diligence so that they can hit the ground, running right away. Something that might you want to do as you're going through a website's technology stack is take a look at what services are you using. If you are going to the Quiet Light website you'll notice that we have Hotjar, for example. Now I haven't tracked anything with Hotjar on the website in a while. We use it for surveys once in a while, but this would be a service for, maybe those report that you want to ask for during due diligence. Maybe some heat mapping that would just be useful information for you to be able to see and as you're making plans. Or OptinMonster, asked, have you run these campaigns before? What was the conversion rate like on these campaigns? And you can start getting really prepared as you're doing your due diligence to make that transition. Of course some sellers may not be eager to share some of that information with you, so go about that with some level of sensitivity understanding that they might be ready to open up all the books to you, but knowing what's there can help you request different reports. And Chuck you said something before in one of your presentations, probably multiple presentations and that was ask questions. Ask lots and lots of questions. Chuck: Yup, absolutely. I always say ask, ask, ask, and even ask questions you know the answers to. I feel like that's like some kind of weird tactic that people do. But they ask questions regardless of whether you know the answer because you almost want to get a seller to lie to you, because then you know how trust worthy they are right? If somebody's going to lie to you about something, it's a red flag. So, I've seen a lot of people that will ask the same questions in multiple ways. You don't want to be annoying right? Like, don't ask stupid questions but definitely ask. I shouldn't say, you don't want to ask stupid question because almost no question's stupid right? But we all understand there are all stupid questions that you shouldn't ask, that's just, are irrelevant. But don't feel like, if it's relevant to you then it's not a stupid question. So, ask everything. Because the time to ask is before you buy it. Right? You don't want to have a bunch of questions after you've inked the check. So, ask early and then ask often. Mark: Then the other thing too is you can get more callers on a particular answer. I know when I talk to some sellers and ask them why are you selling? They'll give me an answer one day and had talked to them another day and they give me s slightly different answer. And it's not that they're lying. The reasons are complex. There's more than one reason going on there and you gain caller, you gain more information about what's really going on behind the sale. By asking the same question, and looking at, in different formats, I know when you started to do video interviews or recording interviews of some of our clients and part of the reason for that is because people talk about questions differently then they might write them out. So this could ask a lot of those questions. Chuck: Yeah, absolutely! Archive.org. Mark: This is a great one. So if you're doing some due dilligence there's a whole industry people who just buy expired domains, stir a new content on it and then run with the site. Some of the amazing firm like [inaudible 0:24:38]some of them are buying like big sites, or what used to be a big site and for whatever reason, site's no longer so, this will give you an idea like in 2008. What was the site look like? Was it a brokerage site or not back then, you know. It's not always a bad thing but if it was something spamy back then, It might still have some problems moving forward. So it's also good just to see if you had some ideas of you wanted to try this or try that. And getting an idea for some of the things they've tried in their past or looking at previous screenshots of what the site was like one, two, three, four years ago? Mark: Yeah, I think one of the big challenges that you always have as a buyer and.. Sellers as well have this issue, right. Sellers know their business intimately because they've lived with it for so many years. As a buyer, you're coming in and trying to compress knowledge that they've gain over the course of sometimes 20 years now. And to a decision that you have to make within or week or two. Going back in the scene, what the history of the site was, just kind of, again it adds color, it adds more information into what does this person done in the past for the business. Like you said maybe we can see some things that they tried and you can ask them about that, if you're looking at the Quiet Light site, yeah, you might see that we sold some domains in the past. And if there's someone looking to buy us they could ask a question on that, you know, why don't you sell domains anymore? And we could go into that whole discussion. Chuck: Something else to look for is to look for gaps in the years so you know, you can put something on your website, right? And your like, your a [inaudible 0:26:14]telling a way back machine not to cross your site anymore. So if there's like a three year gap, why is that gap? Most legitimate sites aren't blocking the way back machine. From calling their site, so you know, that might raise a red flag and might be something you want to dive in on a little deeper. Mark: Awesome, alright let's move on at Trademarkia.com. Chuck: Yeah, you know it's a, if you're, if they told you to have a trade mark, search for it, figure it out. If they have told you they don't have a trade mark, search for it. See if somebody else has a trade mark right? Make sure that they're not infringing on somebody else's.. What's the word I'm looking for.. Somebody else's IP. You don't want to buy a business if they're infringing on other people's stuff. Mark: Yeah, and this can also be a very useful in search results if you're advertising on Google and you have competitors that are stepping all over that brand search. If you get that trade mark and you have the ability to get a trade mark you can keep all of those guys off, and brand is usually a very cheap way. But if you have competitors branding against it, that's [inaudible 0:27:16] your IP, so, searching for that trade mark is a useful thing to do. Alright, moving to the next set of tools and these tools here seem to be more of, search competitive intelligence and taking look at a site's search profile and I should just say probably maybe SEM. All [inaudible 0:27:33] right? Because this still include adwords as well? Chuck: Yeap, yeap! So organic and paid, my likes spy for a lot. It's a.. You can look at people's history of what kind of ad campaigns they did. As so, if somebody says “Oh we've only ever run one ads set and haven't done much testing” and then you look back at, and shows you. Well actually they ran a hundred different variations of this ad. Cross, you know 5 years and blah blah. So you will able to see a.. Verify some of the information they said. You can also check and it will show you, like literally shows you, what paid ads they ran. And like detects in them. So if you think, “Oh I wonder if they try this”, so you're going to look back and see what sorts of ads they've run. It's kind of interesting, you can also use this right here, like you see their competitor. So that'll show you overlap, so if you know some of, some competitors, you'll be able to see like what keywords they have overlapping using this venn diagrams. It's some really cool stuff and then you can look for opportunity, for words that they're going after, that your knots. They also have they a tool in here somewhere that will allow you to look at specific keywords over time and then it puts it over a timeline and has the Google updates. So you can see like, ok they had this key word was, you know, rank number 1111, and then drops off to like number 7, and [inaudible 0:28:57] Google get an update right when this happen so you can potentially know why they dropped off, it's because, well, Google did this update. So seeing what people are using like a private blog now, where to get a bunch of links and it's like doing really, really well then everything drops off a cliff. Because of Google did an update and it affect it, or, the reverse is true where they went from having nothing to all off a sudden number 1 rankings, just like overnight. And you can see, okay, well nobody just all send this from zero to number 1 ranking for 20 different keyword terms so then you know, Well, they must have done something to have that spike and then you can dive into what they're using like, blog that works for paid links or whatever. Mark: Yeah, any sort of quick changes in these results are going to be something to watch out for. So that's over all a good tool. And a lot of these tools out here, Moz, Open Site Explorer, Semrush, Magestic, AAtraps, I personaly like AAtraps. These are all really good tools, using in combination. It's going to give you a sense for how the data all adds up. Understand that when you're looking at data, in any of these tools, they have to use third parties to estimate what this is, for example, they're estimating for Quiet Light Brokerage, where estimated adwords budget is 3,000 bucks. Actually not too far off from that, but it's not accurate. Just understand that these are useful for trends, these are useful for getting another point of data, nothing's going to replace first hand tracking, it should be Google and Linux, or whatever tool people are using to analyze something. But you can use all these external tools in combination as well to try complete picture of what a website's doing and how it's ranking. Chuck: It's a bit [inaudible 0:30:45] That was I think only Google adwords, so if not taking your account, pay traffic, whether it's Facebook or other things. Right? Mark: Yep, yep! Absolutely that's right! Let's move on to a.. You like Spy for the best from all of these? Chuck: They are all kind of different. So there's like different reasons to use different ones, right? Some are for keyword research, some have like keyword difficulty tools, so part of due diligence isn't just looking at what the site has done, but where you can go with it. So I like to use a couple of them to do keyword research. See where their gaps are, you know, opportunity for me to grow the business. They're all kind of hit, different things to different things well. So I don't have one favorite. I do like SpyFu, I like Moz in the past, [inaudible 0:31:31], Majestic. And then on that list, we kind of didn't point it which I'm guessing maybe you thought I put in a wrong spot, but the alexa.com won. I haven't actually used this yet, but it's apparently a new tool that they rolled out. It's a competitor to all these other ones, Moz and Majestic. So they're doing a paid tool just like all these other guys. So, I haven't really dove into it yet, but it'll be interesting to maybe see how their data looks. Mark: Yeah, I actually just saw this the other day. And was intrigued by it. I haven't dug into this at all. But you would imagine that Alexa's by Amazon. You would imagine that they have some pretty good access to tools to be able estimate this information, with some level of accuracy. Chuck: And you know they've been around, since when, like early 2000 or earlier. So they've been crawling off these sites. So who knows what kind of information they've stored. I see [inaudible 0:32:34] has really good info going pretty far back. Mark: yeah, I know you're right on that. I think actually Alexa may have been the first competitive intelligence tool. That try to rank websites. Maybe there was somebody else before that. But they were the first one's who really gain attraction. Or that for a long time, everybody I knew had their Alexa bar. Up in their browser and you can see what, aside Alexa ranking was along with its paid rank. Right every marketer back in early 2010 and those two things, up in their tool bars. Chuck: It's fine, so I went to the site yet the other day, just checking it out and looking for their little site ranking. I could find it anywhere, so I'm not sure if they still have it or not. Mark: Yeah, I don't know. I try to look that up recently as well and I wasn't able to find it. I was behind actually this pay wall which is how I came across [inaudible 0:33:24] they are now offering this. Chuck: Yeah, yeah. It didn't, for a long time, like, right Google paid rank and the Alexa ranking have been dead like nobody uses those as a real stat anymore . But I just wanted to check it out. Mark: Yeah, yeah I know it's always interesting stuff. Alright let's move on to page 2 here. We're going to get into 3 tools here. [inaudible 0:33:46], deepcrawl.com and Copyscape. What do these tools do? Chuck: Yeah, The first two are pretty similar to each other. And what they do is you can plug in a domain name that it will crawl the entire site and it will look for all kinds of things. Like errors or not errors. Right, so it can show you just by crawling to the site. It will crawl every single link on the site from every single page. So it shows you like if there's dead links so if there are stuff that's going for like 404 pages, no errors, 500 errors, it will show you the redirects. So what I've used it for in the past is the one finding those dead pages or the 404 errors and then also finding the redirects and sometimes you'll see like stuff gets layered, where it will be redirected to this page, which layer's was then redirected to this page, which layer's then redirected to this page. And ultimately, what should you be doing is just going back and linking from the first page to the last page. And not using all of these bounces because with each bounce you have the a, potentially you're losing some of that authority has being passed through. Mark: Yeah, and there are the futuristic will do an on-site SEO analysis for even, one that I've used in the past that all definitely throw a, [inaudible 0:35:01] to be Orange Fox, Jacob Hagberg, has done some reports from Quiet Light Brokerage. and a lot of these tools do is, what these services work, will do, they just to analyze in a condensed manner. Because they look for opportunities and they also look for potential issue. Like you're saying, if there's tons of redirects in there, that's a problem, you are losing out an authority on those pages. 10 pages , 404, broken images. Images without all tags, accessibility issues. These are all things that you want to be looking for. Not necessarily as like major red flags but you know, a buyer beware, but also as opportunities that if you start to fix and clean these things up, there's going to be a natural lift in rankings on its long tale keywords that maybe you're on page 10 to 20 right now for, maybe that will bump you up to the first 10 results . So wait for you to just grow some opportunity. When you're looking at these 3 tools Chuck.. Chuck: The first two are very similar, right? Screaming Frog, is one that you have on your own computer, and then it use your internet connection to then crawl the site. DeepCrawl, they are running it from their servers, the Screaming Frog is relatively cheap. I forget the amount but it's hundred to 200 bucks a year. The DeepCrawl one is fairly pricey so, I would always recommend this Screaming Frog but the other one is a good service as well. Just cost a bit more. It's a 150 pounds a year. Mark: Right. They do have a free version? I've used the free version to be honest it's worth just upgrading to a paid version. Free version will give you just a flavor of what they can do. But if you really want to dig deep and really figure things out. Yeah, again, here's a 500 URL limit, most websites are going to blow through that 500 URLs because you have all their images, you have everything else connected with an individual page, so you'll go through that 500 pretty quickly. Copyscape is a bit different from these two though. Chuck: Yeah, it's different. I threw it, kind of witness just because it's one of those things, where again, you're looking for problems, so you type in your domain and It'll give you list of you know, places that content made and stolen from. So kind of, similar, but different. Mark: Right. This can be useful to see if you have people that are maybe trying' just scrape your pages entirely or if the page you're looking at for some reason is built on a shakey ground. This was something that was used a lot more probably, I don't know, 5, just 7 years ago. I know Copyscape has a really big issue on a really big useful tool for duplicate content issues. A lot of that is going away now. But I would imagine you would find copies of content that somebody's publishing their blog contents, say, on Medium or LinkedIn. I imagine this would probably pick up on that. Chuck: Yeah. I believe so. And you know when we talk about the duplicate content issue, where talking about like, right for organic search but there's also the duplicate content issue where, “Hey everything on this website was stolen from somewhere else and you're going to get sued because you stole our base content.”, Right so, I would be checking to make sure that people aren't stealing other people's content. You know, so I think that's a good part of due diligence. Mark: Yeah, absolutely! Alright Public WWW. This is a tool I have not heard of. Chuck: Yeah, that's a great tool. It kind of isn't a vain, of like, a Google right? But what's cool about it is instead of like.. If I want to search for something on Google. Google looks at what is this plate on the page meaning. If I search for Chuck it's looking for.. If somebody would look at a web page and see the word Chuck on it, then it might come up, right? But with this website, it's actually looking at the source code. So if somebody had a comment that was Chuck, it would potentially come up there. So, anywhere from the word Chuck, right? It's more for if you want to look a analytics code, or if you want to find somebody's affiliate ID. So if somebody's says, “Hey, I'm just running AdSense on this site, and I don't have it anywhere else.”, So we could took.. Put in the AdSense number, and it will show you all the sites that are using that same AdSense ID on their website, right? So you can look for, maybe they're doing some competing stuff, maybe they just, you know, they're driving more income through the AdSense, but having a multiple sites vs the one. And it's not complete, right? There's, it's only as much as they crawl so they're only going to have as much data of the websites they crawl. But you can definitely find some stuff. You can also use a little tip here, would be.. Let's say you have an affiliate product your promoting, right? And you're making some money off of that, and say, you found a new product you want to promote and it makes 10 times the amount of money for each one you sell and you know that like, “Oh! This product, if I switch it to this one, I'm going to make 10X.” Or you could look for everybody who is promoting this old product, and then you're going to try to acquire those sites, and switch them to the new affiliate product and 10X the revenue. A lot of different things you can do with that. Mark: I've heard some of people ask about that, specifically with affiliate sites. You know, “How do I know that this is all coming from the site that I'm buying.”, and so that would be one tool that you could use. The other thing I could see this being useful for is if you have a tool for it. This would be a pretty rare case, but if you're buying a business as a tool, that's using on outside websites. WordPress plugins site, WordPress themes site, or any other tool like that, you could start to get some ideas as for the installation volume. Using the tool like this. Alright, SpyOnWeb.com. Chuck: So similar right it's a looking for people's AdSense IDs and things like that. It's not as complete, with the other one you could search for a lot more different types of things. But still a useful tool. Mark: Right, it gives you some machine information as for our tools also sharing this IP address, DNS server. So again, not [inaudible 0:40:53] information here, but just acquiring [inaudible 0:40:56] this. We have our [inaudible 0:40:58]. So If you want to find out what the [inaudible 0:41:02] rank is, just go to SpyOnWeb and you could also see the page rank which is saying Quiet Light Brokerage just a like a question mark for page ranks. So that would be an information. That would have scared me about a 6 or 7 years ago. Alright, DomainIQ. Chuck: Yup, so DomainIQ and the other two that were listed. This are for finding out information about a domain name. So when was it registered, how many times has the DNS changed, has the ownership changed recently, what other domains are on the same server, or same IP block or same IP address, so if you know, if you're buying something from somebody, and they say it's the only site they have and then you look start looking up and down the IP range or looking on the server or the same IP and you see there's other domain names that are the same thing and are not disclosing it you, you know, that's potentially going to be an issue. You can look up who is the owner, so if it's like similar registration name or similar email address used to register the domain, it will show you all of the domains they own. That are using that registration information. These are all for the most part paid services. So if you want to get, like the good data, you got to pay for it. But they do give you a basic level of information for free. Mark: Right. I don't think anybody has to use all these tools. You pick 1 or 2 out of each of these categories that you want to use. The only one that I would recommend maybe use in multiples one would be in this search intelligence the SpyFu, Moz, and SEMrush. I think it might be worthwhile having upwards of three maybe four depending on how lights would turns out those services. Because like you said they all do slightly different things. Chuck: It's a matter of like what they've indexed right? So they each have their own crawlers, and none of them are going to crawl exactly the same subset of the internet. So, it's just, you're going to find different things while using different ones. Mark: Right, and they all have different levels of accuracy you could see here DomainIQ is [inaudible 0:43:04] to be higher than the last one. And also, few other bits of information that I would say are incorrect but again you use these points of data… Chuck: That was 5,000 dollars? The appraisal value? Mark: That was [inaudible 0:43:17] it's less than 500 dollars. And we have more than 24 backlinks, but again, all these tools are to be used in combination with each other to put together a large picture. Obviously a tool like Google Analytics or [inaudible 0:43:31] you'll going to want to use that first. And then, these tools are been used to fill in the gaps. Chuck: And also like know what a tool is good at, so like last one, you're not going to use that tool for the appraised value right? Like, that's nonsense. But if you scroll up, scroll up a little bit. If you click on, click on the ownership record in the blue, the blue button is there. Let's see if we'll.. Mark: We got gears turning here.. There we go Chuck: Okay so just search who the owner is, when is the last time you updated, when it expires, the age of it, right. So you've owned it for just about almost 11 years, you're using Cloudflare, here's the “who is” info…. Mark: It's kind of a bad corporation name, I got to update that. Chuck: Well there you go. And go back one more time on it, I'll click on one more thing… Mark: All these tools take too long to load up. Let's move on, because this one's getting a little bit longer. Let's get it on to a Bannedcheck.com. Chuck: Yeah, so this one is a, and it's not 100% right. But you can type in AdSense account and I'll tell you if the AdSense account has been banned. Again, not 100%, but if it's says it's banned, that's probably a good indication. I'm sorry not the AdSense account number but the actual domain name. Right so, if somebody says, “Oh! I switched monetization methods, because I didn't like AdSense and I was making a bunch more money with this.” Well, maybe that's not the case, maybe it's that they got banned. So, this is a good one. They can tell you whether they've been, not a 100% right. But if it's says that they've been band, then they've probably have been, right? Mark: Good news with this, I'm making money with Quiet Light Brokerage because it came back and it says that it's not banned for Google AdSense. Chuck: I wonder how that helps with our value of the 500 dollars. Mark: Hopefully, this is a little bit, so all you buyers that are looking to buy a business, we're going to require that you click on an Adsense ad. Because I think that's completely [inaudible 0:45:16] with our terms of service. Mark: socialmention.com. Chuck: Yeah, so just you know, you type in various things here and it will just tell you where it's being mention as far as social goes. So just a good tool for doing some basic due diligence. Mark: Yeah, let's repeat, useful to do, using combination with a Google trends to be able to see. Google Trends is measuring the data on Google itself. Looking at how the different social media networks are also processing the data. It's going to have a different look than just what Google has. On that note, I would say BuzzSumo, which is not on your list. It's another tool that I would recommend adding and it's a page where they do the free option but you can take a look to see what content has done really well on a particular domain name. As well as what content in that specific niche also does well. So you can really got a sense for how popular [inaudible 0:46:15] and what's getting shared and what's not. Well for then Google but also within the social media. It seems fantastic. Chuck: This one definitely should've been on my list then I'm not sure why it wasn't but I actually like this one a lot better. Mark: Will add this to the list. For people who want to download it. Last one it would be just going direct to the source of Facebook LinkedIn, Twitter, etc., etc. Almost every websites these days has presence on all the social media networks, visit their pages I assume that's kind of a lesson there. Chuck: Yeah and again, with like a LinkedIn, right? Looking at the person's profile looking how many connections they have. Are they in a niche where they should have 500 LinkedIn connections and they've only got 3, Maybe that tells you something, right? Why are they connected with all of these hackers or whatever, right? It's just a matter of again, researching the people and not just the business. So I think it's a good tool for researching people. Mark: Awesome, right. So that's a lot of tools that we just went over. Let's talk just a some couple of lessons, and we're running pretty long on this Podcast. So, we'll talk just a couple lessons about due diligence. I'm going to turn off the screen sharing here and talk about couple lessons about due diligence. What would you say for somebody who's going about due diligence the first time? What couple of lessons would you, or principles, should they really use in their due diligence efforts. Chuck: So I think one of the biggest things, is first in for most you don't know what you don't know. right, so having people to help advice you on what to search for and what to look for can be critical. So don't just think you know everything! Because none of us know everything especially when it comes to different tricks and tactics people can employ to inflate the numbers in what they're doing. What else, do you have any idea you would suggest? Mark: I would, and so on that note, obviously bringing people like an attorney, bringing an accountant, as I said before that be careful when you do so because they are being brought in with their specific purpose in mind, that are being brought in to look for liabilities, for being brought in to look for problems, and you are the business owner trying to make a business decision. Your accountant that's trying to make an account decision. Your lawyers try to make in legal decision. And so, you have to take their advice and put it into a broader framework business . It's a good business choice for you. You use their bits of data as [inaudible 0:48:41]data. And create a whole picture with that. The other thing that you said, where you cover this one's ask, ask, ask. Don't be afraid to ask for questions and then the third thing that I would recommend is keep good records of what you have looked at. And I'm working through the due diligence for the client, if a buyer comes back and ask for the same documents that they may have already received earlier on. Extremely annoying for a seller who doesn't understand why they even needed it in the first place. And a lot of sellers get skeptical buyers. They think this person isn't really serious about it. they're just looking fishing for information and if you end up passing the same documents 3 or 4 times, even twice. It start to grow those seeds of doubt and to bigger than just seeds and it cause a lot of problems really later on. So be organized in your due diligence just as you want your seller to be organized. Even your documentation. So that you'd know what you have and work off a check list, where be the last thing that I would ask. But don't be afraid to add to that check list as you go through. Chuck: Sure and something else I would add, kind of similar, not a little different, is with the seller. They're interested in knowing that you're going to do well with their business and whether they realize it or not, the questions you ask them are important to them. Almost always. So if you're not asking good questions, they're going to think that you're not serious or that you're not going to do well with the business and we often see that buyers, or sellers won't always sell to the person who offers the most money often times they're selling to the person they think who's going to do best with their business or somebody that they like. I see it time and time again. Recently I had a nice 7 figure deal, I was working with and every time I get off a call, you know, I do a wrap up call with the seller, “Okay, what do you think? and he went like, “Well that person didn't ask any good questions like, I don't want to sell my business to them.”, So make sure that you're doing some due diligence upfront, you're looking into these things and you have good questions that you're asking that are relevant to the business. Mark: Yeah, absolutely! Do not research ahead of time, not wasting your seller's time on the conference call is important. A lot of good sellers, when they go to sell a business, within that first week, they're going to do half of dozen to a dozen conference calls and it's exhausting to do. So if they get into a call and somebody asks, ask them question that was covered right up front. There's a good place to ask questions that have never been answered, and there's obviously you haven't done your homework, sort of questions. So do have basic homework ahead of time so that people know about, that you've put in that upfront research. One thing I'll add at that fellows, is if there's something that you're not familiar with, ask them about it and don't be afraid about that. And at the end of the day, as a buyer you want to protect your money, but make sure you're not making a bad investment so, don't be afraid to ask those questions. If you ever have questions about, “Can I discuss this or what do you think?” Use the broker. We're here to advice with the buyer and the seller through that process, we want to see a good deal done for our client. Chuck: Absolutely! Mark: Alright, this has been really long, but I think, good information so, Chuck thanks so much for coming on and maybe down the road, we'll do another one of these. Chuck: Sounds good. I appreciate it! Mark: Cool, thanks! Chuck: Alright, thanks everybody! Links and Resources: Centurica offers a full blown due diligence services. Google Google Trends Builtwith Archive Trademarkia.com SEM tools: Spyfu moz majestic alexa semrush Website crawling tools: screamingfrog deepcrawl orangefox copyscape Publicwww is a source code search engine Spyonweb for looking for peoples adsense tools. DomainIQ provide information for domain pages Bannedcheck.com Social media: Linkedin Buzzsumo fantastic sm network tool.

Many larger deals are SBA-oriented. This is a better method for buyers because they get a 10 year repayment period, and it is better for sellers because they can get more money. In 2018, SBA lending limits are changing and they will be bringing 90% of the funds to the deals. It is really good for buyers and sellers. Today, we are talking with Stephen Speer who is the VP and Business Development Officer at BankUnited Small Business Finance. Stephen is a lender, not a banker. Bankers have a tendency to over-promise and underdeliver. We had a bank deal that took over 90 days to close. Both the buyer and the seller were beside themselves with frustration. With a transaction we recently did with Stephen, we got a commitment letter in 34 days which put us two weeks away from closing. This is an SBA transaction that will close in 30 to 45 days which puts us on the same playing field as cash buyers. Today, we are going to cover benefits of the new SBA guidelines and how they benefit both the buyers and the sellers. [Download Our SBA Starter Kit PDF] Episode Highlights: How the SBA aspect of buying and selling online businesses is becoming more prevalent. Stephan has been lending for 25 years and is now located in Tampa, Florida. He works in the ecommerce business acquisition space. He has been with BankUnited for the last two years. The SBA allows lenders to take a greater risk by guaranteeing 75% of that loan. The purpose is to encourage small business lending. Stephen has formed an ecommerce lending team around him. BankUnited is a preferred lender and everything is underwritten and funded in house, but the loan has the SBA default guarantee. Buyer qualifications include income, assets, assets after closing, credit, and collateral. Does the actual business cash flow based on the structure of the deal. Asking the right questions to make sure the buyer is the right fit for the ecommerce space and business that they are purchasing. Getting financials up front and looking at a solid year of tax returns and a ramp up year. How most sellers in ecommerce sell within three years because the trajectory is going up in large multiples. Profit and loss statement plus addbacks equal total earnings. Interest and one time expenses area add backs. Most people want to minimize their tax exposure. Do not commingle two businesses together when you are trying to sell one. Getting off of schedule cs and doing business tax returns. Having an independent third party do a business valuation. Have someone do ecommerce due diligence to poke holes in the financials. 25% injection or down payment with 10 or 15 from the buyer and 10 or 15 from the seller in a seller note. In 2018, the buyer will only have to come up with a 10% injection, and the seller won't have to come up with anything. This will have more sellers open to financing. BankUnited feels comfortable up to a $5 million loan. There are different variables, but with the right buyer they can go high. They will work with buyers on the SBA process. What does an SBA loan cost? There is a deposit for third party fees like business valuation, appraisal, titles, and attorneys. It's usually about $12,000 that is financed into the loan. Plus a 3.5% SBA fee. It the deal falls apart the money can be used on the next deal. Resources: BankUnited Small Business Finance 629 South Fort Harrison Avenue Clearwater, FL 33755 813.382.7543 SSpeer@BankUnited.com BankUnited.com/SBF How To Buy An Online Business With A SBA Loan – Updated for 2017 Centurica

Today's guest is Chris Yates. Chris is an entrepreneur who acquires and manages portfolios of websites. He is the founder of Rhodium Weekend an event for investing in online businesses, and he runs several online businesses including Centurica, Buying and Selling Websites, and Vision Group Management.   Chris started his online entrepreneurial journey in 2009, while running a digital marketing agency. He felt client work wasn't scalable, and he had an urge to build his own assets. He also got a call from a former partner/mentor who wanted to partner with Chris buying online businesses. They bought 10 or 12 websites that year, and Chris thought it was so much fun that he sold his marketing agency and started acquiring web businesses full time.   We talk about Chris's online journey and the benefits of being able to build an income online. We also talk about how isolating it can be and how Chris and his partner decided to start Rhodium Weekend and how passionate Chris is about getting like-minded people together to talk about what matters most for their businesses. We talk about all of this and more on today's show. Episode Highlights: Chris shares how Rhodium Weekend is his passion. A couple years ago, Chris bought Centurica and has been building out the company. It's been fun helping people find the right businesses to buy. How there can be ups and downs with online business. Especially, the penguin algorithm update. How when you buy a business, you buy what the person did to the business previous. How money making hacks are not sustainable. Changing a model from organic traffic to paid search. How Centurica can do SEO analysis for a website and risk analysis. How opportunities can be flipped around. Heavily relying on Google organic traffic. This could be a potential risk. They try to be an objective third party, so that the buyer can know what they are buying. People who work with Centurica are people wanting a risk and valuation. They analyze data from broker listings for a starting point. Risk assessment and analysis. They also verify that seller claims are accurate. The importance of trust but verify. Start with the profit and loss statement when looking at a potential business to buy. Understand the trends and seasonality and what the capital requirements are. Google analytics is great because revenue is usually driven by traffic. Ahrefs backlink tool is one of the simplest tools to find backlinks. Look for quality links and bad links that look artificially generated or look like spam. SEMrush can help find rankings and traffic numbers. FBA businesses and third party sellers. Every business model has specific due diligence. Diversity of skews is better than relying on one product. It's important to look at seller metrics. Are they selling directly or third party fulfillment. Look at refund rate to judge product quality. Look at both the positive and negative product reviews in relationship to other competitors. Take a deep dive into the notifications look for complaints or policy violations. Resources: Chris Yates Rhodium Weekend Centurica Centurica Website Buyers Report Buying and Selling Websites Vision Group Management Chris Yates LinkedIn @ChrisYates30 on Twitter The Four Hour Work Week Ahrefs SEMrush

So many people are having such great success selling private label products on the Amazon platform through FBA that it’s not too far of a stretch to think that some of them may be interested in selling their business. You may not be thinking about that possibility now but the opportunity may come your way someday. That’s why Scott wanted to have someone on the show who is experienced at buying and selling online businesses who could shed some light on what can be done ahead of time to ensure that should the time come that you want to sell your business, you’ll be able to do it with the least amount of trouble and the greatest amount of profit. You can hear more about this exciting possibility on this episode of The Amazing Seller. If you do the right thing by your customer, you won’t have any problems. Too often businesses are built on the strategy of doing everything possible to take advantage of the loopholes in a sales platform’s terms of service. The practice may result in huge profits in a short amount of time but as soon as the platform learns that sellers are abusing the system you can be sure that changes will be made and those businesses will be dramatically hurt, and possibly kicked off of the platform. Today’s guest has tons of experience buying and selling e-commerce businesses and his advice is simple: Do the right thing by your customers and you’ll be OK when it comes to surviving whatever changes do come. You can hear more sage advice like this on this episode. Set up good clean financials to sell your business more easily and get more offers. Many entrepreneurs start out doing whatever it takes to make a buck. They may set up one umbrella LLC or Corporation and run all the finances for many smaller business ventures through that one entity. That’s OK at first. It’s entirely legal and most people have to do that to get started. But if you ever want to sell one of those businesses you’re going to discover that there will be fewer buyers interested because you won’t be able to clearly demonstrate the profits of that business on its own. So today’s guest has some tips on how to set up good clean financials for your business so that you can be ready to sell it easily and for more when the time comes. A business that is successful both on and off of Amazon sells faster and for more. If you’re considering the sale of your Amazon private label business it’s entirely possible. But will you get top dollar? You won’t if your business is only selling on Amazon. A potential buyer will be more averse to buying your business if you are selling your products on only one platform because if something on that platform changes in a way that adversely impacts your business, their revenue stream could dry up if they were to buy your business. But if the risk is spread out over many sales channels, they’ll be more open to considering your business. On this episode of the podcast, you’re going to learn how important it is to start building those sales funnels and establishing an off-Amazon presence for the sake of selling your business in the future, on this episode. Buying an existing business can be a very good investment. There’s so much emphasis these days on building a great online business, and it’s a great strategy for many people. But what if you’re a person who doesn’t really want to go through the hassle and hard work of building a business from the ground up but would be open to buying an existing business and growing it? That’s a great strategy, one that today’s guest sees implemented all the time. If you’ve got money to invest in a business and are curious how it works you can learn a lot from Scott’s guest today, so be sure you listen. OUTLINE OF THIS EPISODE OF THE AMAZING SELLER   [0:03] Scott’s introduction to the podcast! [4:23] How Joe developed his expertise selling online businesses. [5:36] How updates on web platforms can impact ecommerce businesses. [10:22] How often do people sell FBA businesses? Is it possible? [12:50] How to set up a business so it’s easier to sell in the future. [17:00] Why a business that is both on and off of Amazon sells faster and for more. [21:48] How do sales funnels and traffic generation figure into the sale of a business. [26:43] How Joe’s company specializes in buying and selling businesses. [29:40] The price ranges of investors Joe’s company deals with. [32:35] What is the #1 thing people starting a business do wrong when selling. [36:40] Why it’s vital to keep track of inventory to get the best value from your business. RESOURCES MENTIONED IN THIS EPISODE Joe’s business: www.QuietLightBrokerage.com - Get Joe’s free ebook. Centurica www.TaxJar.com

No question about it, having an online business is the best kind of business you can have. Think about it...there's no real estate to maintain. No equipment to buy. No rush hour traffic jams to deal with. And best of all you can keep it open 24/7 and allow it to make money for you while you sleep. My guest today, Justin Gilchrist, has purchased and sold so many online businesses that he's widely considered to be the foremost authority on online business acquisition.  Purchasing an online business can be a great way to invest and generate cash flow. However, the downside is that purchasing the wrong online business can also be a great way to lose a ton of cash if you're not skilled in performing thorough due diligence. As with any business you want to get the best possible return while also taking the least amount of risk. Justin is the founder and former owner of the online due diligence authority, Centurica, which assists clients from all over the world with the due dilligence process when buying an online business. He is also the author of the ebook Digitally Wed and the founder of 2 additional online companies, FlipFilter and Work Ware.  Justin dropped a ton of good insights in this conversation not just about online business acquisition but also about business and success in general.  Some topics that we discussed: How he transitioned from brick and mortar business to online business What 2 skills you must have to be successful in the online world The importance of using systems to mitigate risks Understanding the difference between a website and an online business Why even as a beginner it's almost always better to invest in a larger business versus starting out small Knowing when to hire a team and outsource versus doing it yourself His blueprint for exiting the rat race and avoiding the trap of chasing money Hope you enjoy, don't forget to leave a review on iTunes.   Live Big, Dream Big  

Justin is the Co-founder of Centurica. He helps entrepreneurs buy established Internet companies and web-based businesses, giving them a more predictable shortcut to where they want to be. He is also the Author of Digitally Wed.

Justin Gilchrist is the UK based cofounder of Centurica, a company that provides due diligence and website assessments to people who buy web based businesses. He has a background of buying, operating and selling internet businesses, and specializes in SaaS and Ecommerce. In true serial entrepreneur fashion, Justin is starting a brand new business called Handset […] The post The Crisis of Meaning. What To Do When You’ve Lost Passion For Your Business With Justin Gilchrist (Podcast 012) appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

Show Notes In this week’s show we interview tech savvy Justin Gilchrist who is the co-founder of Centurica, an agency that provides due diligence and consulting services to online business investors. Prior to Centurica he bought, built and sold a variety of online and offline businesses with a focus on web applications and ecommerce. He is also the author of Digitally Wed – The entrepreneur’s guide to buying profitable established web-based businesses. He helps entrepreneurs take a shortcut to where they need to be, through acquiring an already established and profitable business and making it better.   Also in the show Justin explains the sneaky loopholes to avoid when buying an online business so you don’t crash and burn. Justin gives you case studies of why doing online due diligence can help you spot big flaws as well as opportunities to exploit for profit. Learn the real reason most entrepreneurs’ don’t hit the floor running like the Cubans, Zuckerberg’s and Branson’s of this world. Discover the best formula for dealing with what seems like insurmountable problems and negative circumstances in your business.  It’s as simple as turning on a light switch inside your brain. Hear how you can make a loss of money on the front end customer acquisition and still make good profit if you include a certain type of revenue stream in to business operation. Success Quote Sell every day. Recommend Books Do More Faster: TechStars Lessons to Accelerate Your Startup by Brad Feld and David Cohen The Intelligent Entrepreneur: How Three Harvard Business School Graduates Learned the 10 Rules of Successful Business by Bill Murphy Connect Web – www.centurica.com Twitter – @flipfilter LinkedIn – linkedin.com/pub/justin-gilchrist/23/444/b95

Visit EOFire.com for complete show notes of every Podcast episode. Justin is the Co-founder of Centurica. He helps entrepreneurs buy established Internet companies and web-based businesses, giving them a more predictable shortcut to where they want to be. He is also the Author of Digitally Wed.

On today's Infusion Cast episode, Jason Hartman welcomes Justin Gilchrist. Justin is an expert at purchasing online businesses as well as an author. He co-founded the company Centurica, which he talks a little bit about on the show. When customers are interested in purchasing a website, Centurica does the necessary due diligence and background checks to make sure the online business is profitable and worth purchasing. On the show today, Justin shares some vital tips for anybody looking to purchase a website.    Key Takeaways: 1:20 – We learn about Justin's background.  3:20 – How do you do the due diligence on an online business?  7:30 – Paid traffic is just as important as organic traffic. 11:00 – Justin breaks down the types of online businesses you can purchase based on your technical experiences.  16:00 – What are some of the common due diligence failures Justin's company encounters?  19:20 – If a website looks too good to be true – it probably is.  21:30 – Justin gives another example as to why one website didn't meet their standards.   24:55 – There are smarter ways to purchase a business. Do not forget to use leverage.    Mentioned In This Episode: www.youngwealth.com https://exitplan.co/digitally-wed https://centurica.com/  

Justin Gilchrist is the co-founder of Centurica, an agency that provides due diligence and consulting services to online business investors.  Prior to Centurica, he bought, built, and sold a variety of online and offline businesses, with a focus on web applications and ecommerce.

Justin Gilchrist is a founding partner at Centurica, an agency dedicated to help entrepreneurs and companies purchase internet businesses.

Jason gives a warm welcome to Justin Gilchrist, who is an author and an expert in buying online businesses. He and two others co-founded Centurica, which helps people with online business assessment and does the necessarily due diligence and verification to make sure an online company is worth purchasing. Today, Justin provides some great tips for anybody looking to purchase an online business.    Key Takeaways: 6:00 – A good online business should be at least 3 years old before a customer should purchase it.  8:30 – Part of Centurica's due diligence package is to verify how an online business receives their customers.    12:00 – Depending on your technical expertise, Justin would recommend different types of online businesses that would be a good fit for you.   15:40 – Far too often do businesses over report their revenue or doing crazy accounting schemes to make a business appear more valuable than it really is.   20:40 – It's important to gather all the necessary information and make sure the website doesn't look 'too good to be true'.  22:00 – Justin gives out a very technical example as to why one of the seller's websites didn't meet requirements.  23:50 – Remember to always use leverage when buying a website. This can help decrease your costs and make it easier for you to pay off over time.      Mentioned In This Episode: www.youngwealth.com https://exitplan.co/digitally-wed   https://centurica.com/

Justin Gilchrist guest appears on the Young Wealth show today. He is an expert in buying online businesses and is also the co-founder of Centurica - a company that helps customers with website assessment and due diligence. He shares some important insider tips to Jason and his listeners about what you need to look for when purchasing an online business for the very first time.    Key Takeaways: 5:22 – For the most part, Justin wouldn't classify it as a business unless it's at least 1 year old.  8:00 – Justin looks carefully into how an online business generates traffic and where those searches come from directly. Good traffic should be spread out through organic, paid ads, and social media searches.  12:44 – Justin suggests different types of website businesses to his clients depending on the person and their technical background.  16:30 – Businesses sometimes do sketchy things with their revenue reporting and it's Justin's job to make sure you don't fall into a bad business purchase because of it.  20:00 – What Justin advises is to get all the necessary information together before you speak to his company. Does this website look too good to be true? Is it logical? Is the website consistent?  23:00 – Justin sometimes has to look for very, very technical problems that his clients might not know about. You have to check everything and to have the experience to know when something doesn't look right.  24:20 – Use leverage when it comes to buying a website. Most times you can change the terms of a deal to pay for a website slowly and overtime. This will prevent you from going out of pocket right away.    Mentioned In This Episode: www.youngwealth.com https://exitplan.co/digitally-wed   https://centurica.com/