How To Purchase A Good Business At A Great Price And Capitalize On The Best Buying Opportunity in Decades Using These Simple Steps | Richard Parker

[00:00:00] Well, I'm excited to welcome into the show Mr. Richard Parker. How are we doing, brother? I'm doing great. It's wonderful to be here. Thank you. Well, I think right now is a very perfect and fitting time for the conversation that, you know, we're going to have knowing that you have been an expert in this industry for decades.

[00:00:21] And it seems like this narrative continues to get a little bit louder as time goes on. Maybe it's due to part and where the, you know, economy is that maybe it's the post COVID world of so many business owners either retiring and shutting down their businesses or looking to sell their businesses. I know you've helped tens of thousands of people around the world buy and sell businesses.

[00:00:44] You've worked with some of the smartest financial minds in the world being, you know, connected to the Dalio family. So I know there's some great wisdom and insight that we can dig in from your perspective today. But I want to give people just a quick [00:01:00] little, maybe take a couple steps back in and help them understand who you are, how did you get into this industry in this space and become what now many people, you know, regard as a business M& A expert.

[00:01:15] Okay, great. And again, thank you for having me. I appreciate it. I got into the business or the world of M& A probably, well, by accident. I was, um, I had, I, when I was, I was always entrepreneurial, even as a kid growing up in Montreal, shoveling snow and, and, um, doing whatever I could to make a few bucks while I was a kid.

[00:01:34] So I think that always had that in me. But I was working for a company, this goes back into the, um, Late 80s. And so kind of to give you an idea of how old I am 62. Um, and I was working for a company. I was doing quite well. I was, I was running a division for them. I was 29 years old. I was really in a position that's pretty much above over over my head, but the company was growing by leaps and bounds.

[00:01:55] So. They were using, you know, loyal, dedicated employees to fill spots as the company was [00:02:00] growing. Probably if it was in another environment, it probably would have taken me another 10, 15 years to get to where I was then, but I found myself at a really good spot and I was making a good living. I mean, this is going back again, 30 something years as making 72, 000 a year as a 29 year old kid.

[00:02:14] So that was pretty good. Um, so that was the good news. The bad news is I pissed it all away in the stock market. I, I made it. Made this investment, then found out how you could leverage margin, which all sounds wonderful. You could buy twice the stock, but half the price, but half the amount. And when, when the stock goes up and you sell it, you make all this money and you have all this great leverage, but you sort of, if you don't pay attention to the fact that the stock could go down, you could really be in trouble.

[00:02:37] And, and that's exactly what I did. So I pissed away 60, 000, which I was in no position to do. Um, and I, I realized that, you know, I have to figure out how to make this money back. I had my first child on the way and realized that there was only a couple of opportunities if I can, even though I was making a good living.

[00:02:58] If at that level of income [00:03:00] or slightly more, I mean, I would never get, I, I couldn't get out of the hole, right? Even if I moved up to 100 grand, I mean, you can't, it's not just money straight going into your pocket. I mean, there's cost of living, etc. And so I was thinking about how the hell am I going to get out of this mess?

[00:03:14] And again, and operating with a gun to my head. My first kid was on the way was I could either, um, you know, I, I could either buy lotto tickets, which I don't do. I could go to Las Vegas and plunk it all in 17 black and see what the hell happens. And I don't gamble. Um, and so I've said, you know, my only option really is to get into my own business where I don't have a ceiling.

[00:03:34] And so I put together a structure where the division that I was running for this company was actually up for sale. And so the company that was acquiring it wanted me to run that, continue to run that operation, really wanted me to continue running that operation. But given the point where I was in my life, I actually used it to my advantage and negotiated a deal with them where I agreed to train someone new [00:04:00] for a period of time, whatever they were comfortable with till they felt comfortable with in exchange for getting the exclusive rights to those products in my own business.

[00:04:08] And I would essentially become their distributor stroke manufacturers representative. So the timing of that was really good. Had it not been that I would have acquired something else, even though I didn't have, um, uh, a lot of money. So I, I managed to get that deal into place. And the cost, they still had to get operational.

[00:04:26] I mean, people weren't working remote. I mean, if you work from your house at that point in time, you were a loser right now. Now people think you're blessed, right? People think now you're blessed. Back then you were a loser. So you're getting offices set up, staff, et cetera. So I, I really took whatever I had left and plunked it into that.

[00:04:43] And it worked out pretty well. I was able to, probably within a year or so, was able to get back to the levels that I was at before and then to really grow the business. And then, um, a couple of, about 18 months after that, I recognized an opportunity. It was in consumer products, selling [00:05:00] products typically to retailers, pegged items and the like.

[00:05:02] It was infant products and my main product was PlaySchool Baby, which was infant products that were sold, um, under the brand, the Hasbro brand. Play school, baby, pacifier, squeeze toys, bibs, et cetera. Um, little infant lay yet. They call it little one pieces, you know, um, like Peter Griffin wears on family guy, little onesies.

[00:05:20] Um, and there was some opportunity to acquire some, um, retail servicing companies, um, that would be an ancillary product, uh, ancillary service to this. So I was able to acquire those for. pretty creatively, not for no money down, um, but for a reasonable amount and, and, and sell some of the people that were in that business on the dream of what I had in mind, as far as this putting, putting together this national, um, retail, um, company.

[00:05:47] And, um, that business grew substantially and ended up making some other acquisitions and started getting a bit of a reputation in my hometown of being a guy who was, you know, doing these acquisitions. And I started helping people, friends, families, colleagues, [00:06:00] not for money. I was just happy to help them.

[00:06:01] And it was, I was really enjoying it. And then I acquired just by dumb luck, by no, this has nothing to do with me. I mean, it was strictly in the right place at the right time. I happened to acquire the rights for Sega video for Eastern Canada. And that was at the time when I acquired it. Nintendo had 80 percent of the market, Sega had 20.

[00:06:20] Within a year, Sega had 80, Nintendo had 20, is when they came up with the Sega Genesis. But please understand, this had nothing to do with me. I mean, I just, it was like, dumb luck. Because Sega happened to put like 300 million dollars into advertising, and they had a better platform. I don't know if you remember those ads.

[00:06:35] SEGA! You remember they had those, those ads that Absolutely. But you obviously saw something in Sega to, to see some value in that acquisition, right? I wish I could tell you that I saw a lot of value in it. My friend of mine was looking to acquire the rights to Sega for Canada. I had this retail merchandising company with 200 people across the country that were doing studies at store level or replacing merchandise on behalf of [00:07:00] manufacturers.

[00:07:01] I was banking on him. Telling me how good this, um, product was, but he had to do this study across the country. He didn't have the people, didn't have the money to do it, and he was a buddy of mine. So he said, Hey, look, I'll, I'll cover the entire cost of the study. I'll go in, I'll go, I'll, I'll do this analysis and all of these stores that you want this, um, study done, I'll do it for free.

[00:07:21] In the event that you get the line and you become the new CEO of the company, I want the rights for Eastern Canada. And so he was telling me, look, this thing is going to take off, it's good or whatever, but I wasn't a gamer. I'm still not a gamer. I didn't know what the hell this was. I didn't know like a game boy from a Genesis, right?

[00:07:35] And so, um, I wish I could tell you that I really like thought that there was value there, but it's really did. I did it initially just to help out my buddy, right? I just wanted to see him get it right and said, okay, like if you get it perfect, you know, make sure I get the, I get the Eastern Canadian rights to it.

[00:07:52] And that's how it worked. And. My business went from like two and a half million dollars to 30 million in a year. [00:08:00] I went nuts, like, like I couldn't, there were times like I had to just send calls to voicemail in our office because when new games were coming out, it was like you needed a speed bump, right?

[00:08:12] People were like just going absolutely apeshit, right? To get these new games. So it was incredible. And then what, what happened, I knew when I signed this contract with Sega. Given my history in the business and representing manufacturers or in distribution or handling products and exclusive basis for certain regions, what typically happens and it still happens.

[00:08:33] I knew if I, you know, when manufacturers are to be, when they want you to get, when they want to leverage you to get into all these retailers, right. They're your best friend. As soon as you start getting into all these retailers, you go down the road, suddenly they forget how good you were at the beginning or how much they needed you.

[00:08:47] Right. So. I knew that was going to happen. It's just, it's unfortunate that, that attitude, um, um, you know, is in place. It's not everywhere, but it's pretty common. So I had a clause in my contract that if they try to [00:09:00] convert any of my accounts into company house accounts or what have you, um, they couldn't do that.

[00:09:05] So what happened probably within about two years, I was making more money than the entire senior level of executives at Sega combined. Okay. So, so they bought me out. And, um, and I, and your first big exit at that time, that was the first big exit. And I knew that, and I knew it was going to, but I should say it knew it was going to happen.

[00:09:25] I saw through it at the beginning of the contract because it's, it's common. It's not right, but it's common and said that could potentially happen. And if it does, well, look, why am I going to go build someone else's business? And then they're just going to say, have a nice day. Right. And so, so they had to, they were forced to take me out.

[00:09:40] Then they ended up at that point, um, at that point I'd rate made a number of acquisitions, um, you know, a part and parcel with the business. And one thing that I had done, um, you know, one. Smart thing that I had done and not trying to sound boastful or whatever, but any acquisitions that I acquired after my first one, I never took [00:10:00] money out of the company.

[00:10:01] I just kept using, I lived off my first business and I just kept using all the money from the second, third, fourth, fifth, eighth, 10th company that I had acquired, um, to just keep Pounding money back into the business to grow the business, hire people that were bigger, better, faster than me at, you know, early on when I was younger and making some of these acquisitions, I think my ego and insecurity probably prevented me from hiring better people than me.

[00:10:24] I was like, you know, I'd sort of intimidated or, I mean, it's foolish when you look back now, and it was totally my ego and insecurity. I mean, I've really evolved since then, but it allowed me to just build better businesses. And so that was the first exit. And I relocated to Florida. And, um, my, my kids were young at that point and thought it was a good time to move and always, you know, as much, uh, as I reminisce and think about the glory days of shoveling snow and making a buck from, from my neighbors, like I just hated winter, even that, and I, and I'm a rabid hockey player still, but I had enough of that shit, pardon my French.

[00:10:58] So I moved [00:11:00] to Florida. And, um, looked at a couple, got involved in a couple of ventures, um, but one of them that I got involved in was an acquisition down here. It wasn't a big acquisition, a little over a million dollars. I had negotiated pretty good terms. It was for the, um, uh, the company that did the distribution for Maytag commercial washers and dryers for South Florida, and they catered mostly to, um, when it was the commercial side, laundromats, Dormitories, um, condominiums were at that, you know, where they put in the washers and dryer people paid for them and they did a revenue split and they had a big parts and service component to it.

[00:11:32] And he did a ton of due diligence, um, and realized when I went in there and I was really evaluating the business, the, the owner of that company also had a lot of machines where he placed them himself. He bought the machines and he was doing some revenue share with the. facilities. And when I went in to do the evaluation, I mean, like the financials were like a plate of spaghetti.

[00:11:52] I mean, I just could not figure this thing out and it was all over the place. And I, I, I, I don't suggest that he was doing anything fraudulent or illegal. [00:12:00] He was just like a, he was a hot mess the way he managed his books and records. And I just could never get. I, I could never get myself comfortable with it.

[00:12:08] And, you know, due diligence goes way beyond the nu way, beyond the numbers. You have to investigate the, you know, the marketplace, the competition, the employees, the, the salespeople, the, uh, competition of course. But the, the financial, the way the business was put together was like, I could, I could just never, I could never get a, a, a, a grasp on what was going on.

[00:12:26] So I decided, um, I wasn't gonna come, go through that with that, um, acquisition. And when I walked outta their place. If this was in South Florida in Fort Lauderdale, actually, they were located when I walked out of their place after telling the seller I was wasn't going through with the transaction. I remember standing in the parking lot and saying to myself, you know, the average schmuck would have bought that business, right?

[00:12:45] And it's not because I'm not, not that smart. I mean, I'm really not that smart. I just happened to be old. And at that point happened to do it a number of times. And so it was a case of saying just it's only because I knew what I was doing related to that, [00:13:00] um, that I was able to extract myself from. The, um, from the, from the offer and to the average person would have gone through with that transaction and really intrigued me, like, what does the average individual who's, you know, maybe working in corporate America or has an average job, you know, as a manager somewhere, what does he or she do if they want to acquire a business?

[00:13:18] And I became very excited and intrigued by all of this. And the more I looked, the more I realized there's nothing available for people. And I had looked at hundreds of businesses at this point, and I spent a year researching the marketplace, the business for sale marketplace, business brokerage, financing, talking with hundreds and hundreds of people that were looking to acquire businesses.

[00:13:38] And what I was finding was the vast majority never got to the finish line. They just got overwhelmed and it was, it was too impossible for them. Too many things that they came across. They didn't understand what to do and saying, Hey, this is crazy. Like I'm just a, an average bloke, you know, no smarter than the next guy.

[00:13:53] I was able to do this a bunch of times. I made a ton of mistakes. Don't get me wrong. But I said, you know, I have hundreds of files that I've [00:14:00] looked at and I kept. Just absolutely pristine notes on every transaction. If this happened, I did that. If this happened, here's what I did. What was the outcome? What was good?

[00:14:08] What was bad, et cetera. And I decided to put everything into a type of course to help people, um, go through this process of buying a business and keep in mind, like my agenda was never to make money. My only goal was, you know, I wanted to be able to help people, right. And do what I've been able to do. And even, you know, so after spending, I didn't take me that long to write because I'm great.

[00:14:30] Great notes, and I really spent an inordinate amount of time laying out the process into bite sized pieces for people, and I really wanted to explain to them what they need to know, what they need to do, and how to do it. And also make myself available to people, because in speaking to hundreds of business buyers and brokers, whatever, found out that you get people who may be interested, but if they need some unbiased advice, they never know who to go to.

[00:14:52] Yeah. The attorney can help so much in accounting. Certainly a business broker is not dispensing unbiased advice. They work for the seller. Yep. And [00:15:00] so, so I put it all together and I see you're, you're, you're smiling because it's right. I mean, you realize that their, their advice is they just want to, they don't care if you buy the right business.

[00:15:07] They just want you to buy any business. On the commission, man. It's the, and I don't blame, I understand it, it's great. And so I wanted to put together something related to the information and handholding and I put the course together, um, and even the night before we launched this, which we've up, we updated, you know, constantly, but this goes back 20 years when it first started.

[00:15:25] My wife asked me the night before we hit, you know, go on the website, like how many figure you're going to sell? And I said, you know, I, I really don't care. I just want to sell one. If I could help one person by the right business or avoid buying the wrong one. It will be worth all the effort that I put in to write this thing and it's 548 pages and divided into 23 sections.

[00:15:45] And lo and behold, here we are 20 years later with countless number of updates and upgrades and and additions to the program. We've sold over a hundred thousand of these things, um, to 86 different countries and help tens of thousands of people. So it's, it's been like, like nuts, [00:16:00] nuts and exciting. Before we talk about kind of, because I want, I want people that are thinking of buying a business or selling a business to get to tap into a little bit of your, your, your wisdom there.

[00:16:12] That being said, did you ever imagine that when you got into this info product space and putting your experiences and your knowledge and your skills into a course that you would touch a hundred thousand lives? If you told me I would have touched a hundred, I would have been thrilled. Thrilled, right?

[00:16:30] Like a hundred people, that would be unbelievable. So like, no, I absolutely did not anticipate, I had no delusions of grandeur. I mean, it's just like staggering to me. I'm not surprised from a standpoint of, you know, information. Availability or informational products have evolved over time. They become more accessible.

[00:16:51] Of course, the internet was a huge, has been a huge part of that. Um, but, but no, I had no dilute, no delusions of grandeur. I just wanted to build a [00:17:00] great product to help people, but. Again, my, my, my bar, and it's not because I'm, um, not an optimist, I'm a very optimistic person. My bar was really, if I help one person, I'm going to be thrilled.

[00:17:13] Like that's good enough for me, right? So no, I mean, sorry for the long winded answer, but no, I never in my wildest dreams thought this would happen. Well, to me, what it, what it says is it, it validates. The demand and desire for so many people to look at the vehicle of business ownership as a way to unlock freedom, taking control of your time, taking back control of your finances, giving yourself in a, you know, a vehicle in a space to exercise your passions, your creativity.

[00:17:45] And to achieve what most people always desire and dream of achieving, but find a way to kind of get lulled into staying in that comfort zone. Right. And so that is really, really cool that, you know, you were able to be on the [00:18:00] forefront of that, right. You, you see a lot of these business gurus and course creators and this and that kind of come into the space over the last, let's just say five, 10 years.

[00:18:09] You were doing this 20 plus years ago, which is pretty cool So I want to kind of shift more towards people that have already either Thought about you know buying a business or owning a business and looking at business Acquisitions as a great way to grow buying income Instead of having to go out and recreate it or spin it up from the ground up It's a good way to just capture it and roll it into the existing infrastructure that you already have Um, or maybe the, you know, systems and, and the people that you've already got in place.

[00:18:42] So for who you work with and, and where you see the industry and the current climate, where's the opportunity right now? And maybe we can talk about some of the, you know, X's and O's of looking at businesses, underwriting businesses, structuring deals, all of [00:19:00] that. But like, what, what is the business buying landscape and opportunity look like today?

[00:19:05] Okay, so there's, there's a couple of tentacles to it as it stands today. And you raise a very good point early on related to sort of the proliferation of information into this marketplace related to buying acquisitions, which, you know, it's, it's, it's almost like that. That's almost like a balance sheet.

[00:19:22] You have two very distinct sides to it. One is the awareness component has been terrific. Right. I'm getting people aware that they can actually do this. The liability side of the thing is there are like in every information product, you have a whole lot of gurus who are not really gurus at the subject matter.

[00:19:37] They're just gurus at marketing. Right. And so people have to be very, very careful about where they place their bets as far as information is concerned. And so, you know, I don't, uh, I don't crap on what anybody else does. I just. I come from a very different approach related to buying a business. It's not necessarily old school.

[00:19:57] It's just, I believe it's just practical, [00:20:00] real world approach to buying businesses. So you know, which is buying good businesses as opposed to buying distress type businesses because they don't exist that much. And there, and also for individuals that are looking to get into entrepreneurship as their first, or it's their first foray into entrepreneurship, you don't want to get into a distressed business.

[00:20:21] I mean, it has the word stressed in it for a reason, right? I mean, it's, it's very difficult. Like you really need to know what you're doing because you've got to be a turnaround expert. So I'm, I believe in buying, you know, rock solid businesses where if you do this right. You get the keys on Monday, you take a paycheck on Friday.

[00:20:39] That's the goal. The landscape as a whole right now, it's a very interesting time. I mean, I call it beautiful upheaval. There's a lot of things at play, high interest rates, fears of recession, tons of people exiting businesses, the baby boomers exiting whatever. So there's, there's a lot of things going on.

[00:20:55] Which also cause a lot of people that are thinking that they're interested to sit on the [00:21:00] sidelines. Well, I'm just going to wait to see what happens with interest rates. I'm just going to wait to see what happens to the stock market. I'm just going to wait to see what happens with this, you know, with this recession that they're talking about.

[00:21:08] So what that happens is just removes a lot of people from the equation. Now, you know, in this industry, 90 percent of the people who begin to search to buy a business, never complete a transaction. The numbers are, are horrific. I mean, we're, we do slightly better, 82 percent of our clients buy a business in six months.

[00:21:24] So we're really proud of that. Why do you think that is? Well, two parts. The, the, the 90 percent reason is, I mean, that's, that's pretty simple. Um, and that's because people jump into this with apps, absolutely no knowledge, no experience, no expertise, specifically to the point you mentioned earlier about, you know, the, the, the proliferation of information, that proliferation also extends out where people can get online.

[00:21:46] You can look at businesses for. You can spend the next two years looking at businesses for sale and not going anywhere. The problem is you have to get into looking at businesses, figuring out how you're going to negotiate the deal, valuing them properly, [00:22:00] arranging financing, conducting due diligence, going through all of the various stages.

[00:22:04] And if you're just going to spend your time looking at businesses for sale and read generic information, you're just going to run into a brick wall. You're not going to go anywhere in a hurry. So people, they do these endless searching. You know, what happens is, you know, I've, I've, uh, acquired. Businesses, people who've acquired a number of businesses, um, they have this list.

[00:22:22] They have criteria that a business has to meet, right? I have my five golden rules that a business has to meet. So I look at a business, I could say no very fast, right? And to me, that's really important is it's, it's great to find businesses of interest, but when you're looking at there's hundreds of thousands of businesses for sale, you have to learn how to say no quickly.

[00:22:38] Yeah. I mean, say no, say maybe slowly, but say no fast. Right. And so, um, and so they get into the, they're, they're, um, dealing with uncooperative broke, uncooperative brokers, or they get initial, uh, financials from a seller that when, once they dig in, they're not even close. And so they run into these situations.

[00:22:56] Where they know, you know, they don't have to know how to navigate each step, [00:23:00] each of the steps of the buying process. And so they become overwhelmed, they become frustrated, they become aggravated and they just abort. And then there's another, you know, add them to the 90 percent failure rate. I mean, it, it really makes sense because people just approach it in the wrong way.

[00:23:13] Whereas, you know, if you look at this and the way you're supposed to do this before you start, you know, it's like if you line up at the starting gate of a race and the gun goes off like the way most people do it, they run in 12 different directions. And you need to have focus on the finish line. And the first thing you need to understand is what type of business is right for you or have a general idea, then it's easy to find and buy it.

[00:23:32] Yeah. Right. But if you don't, if you spend all your time looking at businesses for health, trying to figure out which, if any is right for you, you just spend all your time searching. Absolutely. So you mentioned five golden rules. Maybe we could touch on those real fast that people might be able to use as a quick little framework for how that can be implemented in this type of process.

[00:23:55] Sure. I so, and again, these are my rules. They don't, they don't make sense for everybody. So in other [00:24:00] words, like, you know, Matt, if you're going to go buy a business, what's important to you may not be important to me. Right. What you might have in a business. You might be, for example, saying, look, you know, you're at a certain age in your life.

[00:24:12] You don't mind working a hundred hours a week for the next 10 years to really get things going. I'm an old fart. So at this point in time, I might be saying like, screw it. I'm not working on the weekends anymore. Right. Like, you know, so, but we're maybe like, you don't. want to deal with, um, uh, lower level employees or higher level employees, or you don't want to be in a business where, you know, it's, it's a manufacturing component.

[00:24:33] My point being is that the golden rules, my golden rules are, are, are for me, but everybody needs to establish them for themselves. And I'll tell you my five rules, like I would never buy a business that has. Four, it's got to have five. So the first thing is I like a business that's sales and marketing driven because that's what I believe my strength lies.

[00:24:50] Number two, the second golden rule, I like a business with high margins because even if the sales are not great, I'm comfortable that I can figure out how to generate more sales [00:25:00] and, and market the business. Cause that's my rule number one where I think I'm good. So as long as they're strong or high margins, the profit is going to follow by default.

[00:25:07] Right. Um, the third thing is I like an element of exclusivity where either the product or the territory, there's something that's a little bit protected. So I'm not stepping on competitor's toes all day long. Right. The fourth thing is I like a business where there's a demand in place. I don't want to create demand.

[00:25:23] I like where the market is aware of the product or the service that's available because it's way too expensive to have to create demand if it even works, right? Um, and number five, I like a business that doesn't compete on price solely. In other words, if it's, if you're strictly relying to have to grow your business based on pricing, it's not a sustainable model.

[00:25:44] I mean, it's a business where you go into business every day. Back into business every day. So those are my five. I mean, I also like a business where, you know, has a sixth and seventh rule, but they don't have to be in place where there's recurring revenue, maybe fewer employees. Those are a bonus. But the first five, [00:26:00] you know, sales and marketing driven, high margins, element of exclusivity, demand in place and not competing on price.

[00:26:06] I mean, I never waver. So when I look at a business initially, even if it's an online ad, I mean, sometimes it takes a quick conversation with a seller or a broker. I rip through that immediately. If it doesn't meet all five, it's in the garbage bin. I never look at it again. I love that. So you've got kind of your clear by criteria, right?

[00:26:23] Uh, these boxes are checked. So obviously everybody should have some Discernment about what that looks like for them. And I'm sure that's something that I know you guys work through in the process when you're consulting and working with people looking to acquire business. Correct? Yes. Correct. And then what is kind of the next step of that process look like for a real prepared and engaged buyer that's looking actively at businesses?

[00:26:49] So that process of establishing your first five, um, evolves might've taken decades, right? And I kept narrowing it down. It depends on what season of life you're in, what the goals. What the timeline [00:27:00] is for cheating. Exactly. And you're also new at this. So what you think may you, you may want, you may not want.

[00:27:05] So sometimes at the beginning, it's a bit of an evolution and that's okay. The beauty of the internet to where I think the internet provides tremendous value. I also think it's the worst thing that can happen to that's happened to this industry. But on the plus side is you can make your, you have your own built in laboratory.

[00:27:20] So let's assume at the beginning you say, well, these are at least, I know these three things I don't want. Where these are, and these are just seven types of businesses that I don't want. Sometimes it's easier to rule out things you don't want, right? Because you're not sure you get what you do want. So what I encourage people to do is at the beginning, you know, everybody has, um, a specific skill set.

[00:27:40] No matter what you're doing, there's something that you've done great or you do great. And what I try to tell people is don't confuse experience with expertise just because you've worked in healthcare. If you worked in a landscaping company, doesn't mean that's not where your expertise lies. That's where your experience lies.

[00:27:57] Your expertise lies in what. Did you do [00:28:00] in that particular job that you do better or believe that that's your number one skill set. So if you take these golden rules and marry it to the following, which is you got to first figure out what type or types of businesses are right for you. And the mantra that I like to use is whatever it is that you do best has to be the single most important driving factor of the revenue and profits of any business you consider purchasing.

[00:28:24] Now, at the beginning, you have no clue. Right. So, but everybody's good at something, but you know, if, if, whether it be sales, whether it be marketing, whether it be logistics, whether it be manufacturing, whether it be planning, whether it be working with a team, you, you have this laboratory of businesses for sale.

[00:28:38] So you pick out five different categories of businesses for sale, which you could do easily. Pick out four different specific businesses that are listed for sale within each one. And then you have a laboratory sample of 20 businesses that you could digest. You could dissect, you could visit with sellers, you could look at the numbers and you could really deter, Hey, do what, you know, can I see myself running this type of business?

[00:28:58] Yay or nay. And [00:29:00] it, it's what happens is you go through this process. It's ultimately become similar to when you look for a house. You know, I know when my wife and I look for a house, we looked at 30 different houses. Right. And we liked the kitchen at this one. We didn't like the bathrooms at that one. We liked the upstairs bedrooms at this one.

[00:29:15] We didn't like the basement, not having a basement. The other one, certainly in Florida, we don't have basements or be pretty wet if you try to think of basement, but you know, you look at a bunch of these houses and then somehow you walk into one house and two seconds later, you know, wow, this is it. Right.

[00:29:27] It's the same thing. Very similar. It's almost the same thing with a business. You put together these pieces of a jigsaw puzzle. So in going back, you know, to, to what you originally asked is you have to get started. The first step is to get your head around what type or types of businesses are right for you.

[00:29:44] And that's something you start off with this big hopper. And the idea is you want to squeeze something small out of the end, or in other words, you start out like a shotgun and you want to get to a laser beam. Right. And so looking at these businesses, that's fundamental to everything. Cause you know, the reality is [00:30:00] you've got 20 steps in this process.

[00:30:02] If you screw them all up to a certain extent. But you buy the right business for you, you got a better than 50 percent shot that you're going to be successful. That, and I'm saying that like being uber conservative, you screw everything else up, but you've bought the business that fits with your talent.

[00:30:18] You'll figure it out because it's your best for your skillset. So the underpinnings, the entire foundation to all of this is figuring out what type or types of business are right for you and may take a little bit of time, but that's what you have to work towards at the beginning. Yep. Absolutely. Now, let's assume that somebody narrows that down.

[00:30:36] They submit an LOI in a business, the seller's willing to sell it to them, you're getting into contract. Now we're talking a little bit more about how you're structuring the financing and or how you're moving through and navigating the due diligence to ensure that. Everything is as it should be. You got both hands on the steering wheel before you take this car over.

[00:30:56] What does that look like? How do you see the people who [00:31:00] do it the best and most successfully engage in those two avenues? So there's, um, when you get to the due diligence part, let's talk about financing and due diligence, because those are important parts and and they sort of like the Venn diagram of those is somewhat of negotiation.

[00:31:15] But let's assume that in generally you've, you've come to terms in a contract that you're, you're pretty comfortable with. So in the financing, You really have a few options, right? Um, where I disagree with some of these alleged gurus that are on the market. I mean, thinking that you're going to buy a really good business.

[00:31:29] There's going to throw off hundreds of thousands of dollars of profit. You're going to close the deal in a cup in, you know, in 30 days and buy it for no money down. I mean, if you can do that consistence consistently, I'll come to your house and I'll eat your house by brick. Okay. Okay. No problem. Okay.

[00:31:44] Cause I know I'm doing this for 30 years. That just doesn't happen. It's just not consistent that you could do that. So from a financing perspective, there's a couple of options. I'm a huge believer in seller financing. 90 percent of our clients, um, get a component of seller financing. There is a [00:32:00] money that you have to put down.

[00:32:01] Um, it's very rare that you're going to buy a business for zero down, but you could certainly mitigate the downside. And you do want to have money regardless, because you're going to need some money for working capital. So, you know, those are the people. I like to that I work with. Right. And so, um, so you have the option option of seller financing, um, which again is a big piece of the pie and, and, and to get deals to the finish line, sellers have to, I'm not talking about anything revolutionary, small businesses to get them to the finish line.

[00:32:26] Sellers have to finance them. I mean, that's really, that's fact. I mean, it's not, we can't dispute that because if not a lot of them simply don't meet the criteria in order to be financed. Yeah. However, you also have a piece related to SBA financing where you have leverage of nine to one and the criteria at SBA financing has gotten infinitely more buyer favorable in the last set of criteria that require.

[00:32:49] So certainly you want to explore that. And by the way, if any of your listeners, um, get eager about that, I mean, they could always contact me. I have some terrific resources for them to explore that avenue. I mean, it's not something [00:33:00] that I do, but I could certainly put them onto some, some terrific people that can help them.

[00:33:04] So that's the financing piece. So once you get that in place, you have to think about that early on. Like you don't want to wait until you have a, an agreement in place and then try to run out and get the money. You have to be thinking about this thing from the beginning. Similarly, as soon as a business becomes a venture.

[00:33:17] Interest to you. You have to start putting your mindset, um, about the due diligence and the due diligence goes way beyond the financials. You have all these pieces to it. So let's talk about the financial piece because that's the actually the easiest piece of due diligence. Numbers don't lie. Numbers, people like numbers don't lie.

[00:33:32] So numbers are right, or they're not right. End of story. I mean you can get any accountant and the reality when you look at a company's number at the beginning, look at them yourself because if they don't make sense to you, they're sure as hell ain't going to make a sense to your accountant. So that's the easiest piece.

[00:33:44] But you want to look at all aspects of the business from the competitors, to the suppliers, to the systems, to the legal and corporate, to the marketplace, the industry, the employees, etc. And you want to go through that with a fine tooth comb. One of the things that's critically important is you got to allow yourself enough [00:34:00] time.

[00:34:00] In smaller business deals, broker sellers push to give you two weeks of due diligence. That's complete nonsense. You need at least one month, 20 working days, and you have to be Uber organized. And you should do this in a way philosophically like this. If you do your work in advance properly, due diligence should be, it should be confirmatory versus exploratory, which means you should have done enough work leading up to that point that you're confirming certain things because you want to start doing your research immediately.

[00:34:28] But the other part of the philosophical approach is there's 200, like we have a due diligence checklist in the guide. There's 200 items to check out, but people need to understand similarly. There's no such thing as a perfect business. Like, if you're waiting for the perfect business, that's one of the three biggest reasons people don't buy businesses.

[00:34:44] Right? The first is they, they don't want business is right for them. Right? And they, um, and they have no experience or criteria. And the third one is they're looking for a perfect business. Every business has wars, every business has blemishes. And so you have to go into the due diligence understanding that there's certain things that are [00:35:00] not going to be perfect.

[00:35:00] Maybe you're going to be able to make them perfect as long as they're, they're not going to put you out of business. For example, you know, customer concentration where the customer does 80 percent of his business with one customer, that's a big risk. Other things are not as risky. So you, you know, I'd like to tell people, don't turn any incidents into catastrophes.

[00:35:17] If you're waiting for a perfect business, you know what my advice to you go get a job. Yeah. Because entrepreneurship is not for you. And so the due diligence piece, and we could probably spend four hours or more talking about due diligence. The idea is as soon as a business is of interest to you, start investigating all of those various pillars that I talked about.

[00:35:37] Right. And don't, you know, you don't wait because you have a limited amount of time. Don't get nuts about the numbers. The numbers are the easiest part. Yeah. The seller can't prove their numbers and not there. That's pretty easy. Anybody could look at those, but look at the business as a whole and come to this concept of, okay, this is a good business.

[00:35:52] I'm going to, I'm going to pay for the past. That's my valuation. I'm going to think about the present. Right. That's, that's interesting as to what's happening in the business, [00:36:00] but you buy it for the future. Okay. And so when you look at that, it's understand what's life going to look like for me as the buyer.

[00:36:08] And also, what do I believe based on the research that I'm doing, the people I'm speaking to, the investigations that I'm conducting, what is life going to look like for this business, this industry after I take it over? And you put those few pieces together and you just come to a good conclusion. Now People, you know, if you, if you have a good combination, if you're very excited and you're very scared as a business buyer, there's a two perfect emotions, right?

[00:36:30] Because excited keeps you going scared. He'll make sure you do the right thing. Right. And you do your homework. And so you just have to do it in a good methodical way, because if you do it right and you follow, like, for example, how we lay it out for people, the decision to buy is actually the easiest part of the process.

[00:36:47] Cause then it just, everything adds up and it makes sense. If you get to through due diligence and you review and you're still uncertain, well, you either haven't done a good job or your answer is in the fact that you're uncertain and I shouldn't do this. Right. [00:37:00] But if you do it in a good way, then the answer or the decision is never a leap of faith.

[00:37:07] It's a logical conclusion based on you adding up all these various pieces. Are there any non negotiables that if you find these things in DD, you suggest for your buyers or other individuals buying businesses, it should be a no go? Yeah, there are. That's a great question. I think the ones that they have to be super careful about are customer concentration, which is very common.

[00:37:34] In small businesses, businesses, B2C businesses, business selling to B2B rather selling to businesses where a disproportionate amount of business resides in the hands of too few. I think you have to be very careful about that. If you can solve for that with an earn out or performance type deal that only the seller gets paid if the customer continues to buy.

[00:37:54] I think you have to be very careful about that. I think if you come across any situations where [00:38:00] you found that the seller has lied to you. I would personally, I wouldn't walk from the deal. I would run at the speed of light because under any circumstances, no matter how much I like the business, no matter how much if the seller has lied to me, if I don't have an element to trust with the seller, I don't have to love them.

[00:38:17] I don't have to love them. Okay. But if I, if, if, if, if there's something that they've misrepresented knowingly, then I don't know what else is going to be there, right? And so I would never, uh, I would never acquire the business under those circumstances. Um, cause it just, they've lost all credibility. So I mean, that's, that's a certain, um, one of them.

[00:38:38] And I, to me, I know I would never get myself into this position, but it's very easy for people to get themselves into this position, which is a, you know, running a business that you're not capable of running. I think that's really important. You know, when you look to buy a business, this is when you look, you, you have to give yourself the ultimate job interview, right?

[00:38:57] If you go to a job interview and you embellish your history a [00:39:00] little bit, not lying, but embellish a little bit about what you did in previous company, cause you want to get the job. That's okay. Cause you're learning on someone's nickel. When you buy the business, it's all in your shoulders, right? And so don't fool yourself.

[00:39:12] If you start thinking about this and start getting to point of like, do I like this business? I'm not sure that it do. Can I see myself running it? And if you're not convinced. Okay, then forget about it, like, don't try to convince yourself you're something that you're not. Okay. And so, you know, red lines, you know, certainly are those, you know, trying to convince yourself you're something you're not.

[00:39:33] Seller being dishonest, customer concentration. I think, you know, some element of fraud or misreporting, um, finances. Um, you know, or, or taxes, I don't like businesses with cash sales. I don't have to make, it holds no lure to me whatsoever. Um, I never pay for cash that the seller can't prove it. You know, the seller can't steal it twice.

[00:39:51] It holds no allure for me. I I've never taken a penny of cash out of my businesses. I always report everything. I grew up in Canada. I was happy to pay. I paid 53 percent income [00:40:00] tax. So to me, I think every time I pay my tax, I think I'm winning the lotto here, regardless of how much I pay, but. It, you harm the business.

[00:40:05] So, but I think fundamentally, the two biggest ones are really customer concentration. And if you find the seller lying to you, that to me are no brainers. I like you can't put that toothpaste back into the tube for me. Yeah, 100%. I, I just recently canceled not too long ago on a, uh, hotel acquisition, um, that I was buying and, uh, seller, we caught her in a couple of lies and long story short.

[00:40:30] I went down a deeper due diligence rabbit hole on the seller specifically, found out that she had two previous BKs on two other hotels, then it led to all kinds of other things that we found out she wasn't being honest about and like you said, To me, that was already a crack of, you know, the integrity and the ethics and the trust.

[00:40:51] And then as I, you know, furthered that investigation, found out that all those, um, you know, intuitive feelings were [00:41:00] validated and it completely unraveled the deal. You don't want to buy a business when you can't trust that what you're actually buying is what you're really buying. What you really buy. I mean, you obviously did a lot of good work and you did your homework and something in your gut told you that this needs to explore further and it would be very easy for someone on the flip side to say, Hey, well, you know, you're buying the business, the seller's going to be gone.

[00:41:19] What do you care if they're not trustworthy, et cetera, but you don't know where that mistrust extends to. Right. What have they told customers? Right. What have they told landlords? What have they told suppliers? I mean, that's just some, what have they told employees? I was going to say the culture itself of the brand is, is, um, It is, it's tainted, right?

[00:41:38] It's polluted. Absolutely. 100 percent agree with you. Yeah, absolutely. So what are some of your personal favorite businesses? And why for maybe people that are exploring based on certain skill sets or passions that they have What business or industries are you bullish on right now? Where are you seeing great opportunity and maybe where do you [00:42:00] see the next 12 months of buying and selling?

[00:42:02] Maybe if it's not just for buyers that we're talking to here, but sellers Um, where do you see things in the next 12 24 months? Well, I know that on the acquisition side, on both sides of the table, deals are taking longer. Um, that's just part of the, you know, part of the, uh, the marketplace deals are getting done, but they are, but they are taking, they are taking longer.

[00:42:22] I think there's some very positive things related to, you know, on the bigger deals where I do some M and a work representing sellers on larger deals, we're seeing buyers and particularly institutional buyers, private equity firms not getting the same leverage from the bank. Um, and so they have to put more equity in the deal, which I.

[00:42:38] I mean, I, you don't have to be a genius to figure that out. That was, it was going to happen by default. And I think that's terrific because it's forcing them to be more diligent as well. So, um, I think that the deal dynamics are changing a little bit in the, in the much higher end, in the lower end, I'm seeing multiples coming down a little bit cause they got nuts for, for, for awhile.

[00:42:57] And, and. Smaller businesses, Main Street, [00:43:00] USA businesses, those multiples really by and large should never change because people need to have a very specific return on their investment. Um, and so, you know, those, those seem to be coming down a little bit. And again, as I mentioned, the, um, deals are taking a little longer.

[00:43:14] I think it's the best time in 25, 30 years that I've been doing this to buy a business personally. I'm a very, I'm a, I'm, I'm, I'm an optimistic person by nature, but I'm not nuts. Right. And well, I mean, there might be some people that disagree with that, but I'm not delusional. Maybe that's a better descriptive.

[00:43:30] I'm, I'm realistic. I operate in the real world. Um, and so, cause I think that this, this upheaval is, is pretty good. Um, but where I see, I see, um, uh, uh, attractive businesses. The same thing that I've seen for, for decades, which is solid, stable businesses, businesses that are simple. I like simple businesses.

[00:43:50] I'm not the smartest guy in the room. If I'm the smartest guy in the room, I'm in the wrong room. So I like stable businesses. I like businesses that people can understand, especially I'm, you [00:44:00] know, I'm talking to newbie entrepreneurs, right? This is maybe their first, uh, Uh, entree into, into entrepreneurship.

[00:44:06] So, I, you know, I like to see them buy businesses that they can understand, that are right for them, they can get their head around them. It may not be a business that they can take and, and multiply it by 10, 20, 30 times, but it's, you know, stability is pretty sexy. Stability is stability. There's value in stability, right?

[00:44:26] And the idea is you want to learn. So you get into a business that you could understand, that you could learn, you could understand how you handle the books, how you deal with landlords, how you deal with customers, how you deal with, um, you know, the, uh, uh, again, all the financial parts of the business, how you deal with employees, how you deal with the sales, the marketing, et cetera, learn it because that's not the end of it.

[00:44:43] Right. You know, and if it turns out that you don't love it, you could always sell it because good, good businesses sell fast, regardless of the economy that that has never changed in 30 years. Good businesses with good books and records, or does a good, uh, a substantial buyer pool that could be sold to those businesses are boom, boom, [00:45:00] boom.

[00:45:00] They sell very quickly. Um, and so to me, get into something that's simpler. That you can understand that you can get ahead around and the enjoyment factor. I mean, I mean, it's going to rise exponentially sure as hell better than working for someone. I mean, that's not even close. I mean, if you have to trade dollar for dollar working for yourself, same compensation and all the stress of business ownership versus working for someone else.

[00:45:20] It's not even close. You'd rather do it. You do it for yourself because you're evolving and you're learning and you're getting onto a better path and you're in charge of your upside. So I think there, the market is in phenomenal shape for acquisitions. I believe in simplicity. I believe in stability. So, you know, to me, stability is a lot of value.

[00:45:40] Right. I mean, growth is wonderful, but stability is, is, is valuable. So I like, so those are the type of businesses that I like, and there's a wide range of them, right. And so, um, and, and, you know, I, I, I don't like to get hung up into a particular industry because the media industry is secondary. And it may even be in third or fourth place.

[00:45:59] It's [00:46:00] getting a business that's right for the individual, then the industry doesn't really matter. I love it. So for those that are going to want to know more about you, your process, obviously the education and resources you have available. You know the consulting all of the stuff that is in your world That's of value that people can connect with of course We'll link everything up at millionairemindcast.

[00:46:22] com on richard's episode. You guys can go and check all that stuff out Where is the best place for them to engage after this episode with you on any of the stuff we covered today? The easiest place is go to richardparker. com. Um, I've hundreds of articles, free articles. There's some of the resources that we offer, um, are available there or linked to a secondary site.

[00:46:43] But the one thing that I certainly want to convey to your listeners is, you know, I went into this business. I never thought it was going to turn into a business. Right. I'm still astonished. I know it was one of your earlier questions. My answer still remains a resounding no, I never thought it would turn into what it has turned into.

[00:46:57] So, which is nice because, you know, I, [00:47:00] I truly believe my heart was always in the right place of just helping people. That's never changed. And so if anybody, I don't care, they don't have to buy our courses. If I never sell another one, my life has not changed. But if they go to richardparker. com, they can use it.

[00:47:11] Even if they have any questions, there's. You know, they want to contact me or jump onto a call. I'm happy to do it. Go use the contact desk page. Just tell them to send me the, the, uh, the email or whatever. And, and they'll find tons of information, but I'm happy to help anybody. And, you know, they want to spend a few minutes on a call.

[00:47:26] I'm, I'm happy to do that anytime. That's awesome. Well, Richard, we get a lot of people that inquire to be on the show all the time and when I did a little digging with the team on you and what you have, you know, the value you've added to this space for so long was what caught my attention. And then obviously in our conversations interacting with you, you are one genuine and what you say actually feels and shows up in the way that Um, I think you intended it for, so I give you big props on that.

[00:47:55] Your audio matches your video and just your experience and the skills and, and [00:48:00] expertise that you bring to anybody that wants to get into this space is why we bring people on the show at Millionaire Mindcast is to get. The individuals that are looking to take their life, their business, their wealth, uh, to that next level, real tangible, accessible experts with experience, and you're one of those individuals.

[00:48:18] So just want to say thank you for coming on the show today, guys. Be sure to check out million of my cats. com on Richard's episode. We'll have all the links, all the things that you guys can, um, you know, connect with him on. And again, thanks for coming on the show today. Thank you. I appreciate it. Yes.

[00:48:33] Great questions. And it was really an honor to spend some time with you. Thanks again, Matthew.