In this episode, we sit down with Bill Snow, a seasoned lower middle market M&A investment banker, to explore the intricate world of mergers and acquisitions. Bill’s extensive experience offers invaluable insights into the intricacies of the deal process. He divides the process into three key phases: Search, Finance, and Negotiate.
During our conversation, Bill underscores the significance of staying informed and connected within the industry. Tools like Capital IQ provide crucial data for making informed decisions in a rapidly evolving market. Additionally, Bill emphasizes the importance of networking and building meaningful relationships with fellow professionals to expand one’s reach and opportunities.
In the negotiation phase, Bill debunks common myths, advocating for a strategic approach akin to poker, where understanding your counterpart is essential. He emphasizes the importance of crafting a compelling narrative for sellers to appeal to potential buyers and highlights the intricacies of working capital in transactions.
Join us as we decode the world of mergers and acquisitions with Bill Snow, uncovering practical strategies and insights for successful dealmaking in today’s competitive landscape.
In this podcast episode, we discuss:
- Three Key Phrases of the Deal Process
- Staying connected to the M&A Industry
- Selling or Buying Businesses
- Assessing Working Capital
You can connect with Bill Snow by email: bill@billsnow.com
Additional Resources:
- Access our archive of video interviews on YouTube
- Checkout our upcoming Conference – https://malaunchpad.com/
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
Transcript
00:00 all right today’s episode we interviewed
00:02 Bill snow an investment banker and man
00:04 what a wealth of knowledge not only is
00:06 the investment banker he’s also the
00:07 author of m&a for dummies and he’s been
00:10 around the block and so we talked a lot
00:11 about what it takes a search how to
00:13 basically negotiate a deal how to
00:15 finance a deal and how to work with
00:17 investment bankers and what that
00:18 interaction looks like so Casey what
00:19 were some of your takeaways well I think
00:21 one of the biggest questions that almost
00:22 anybody has is networking Capital
00:24 conversation which is one that we’ve
00:26 experienced the hard way right oh my God
00:27 and bill went into something that is
00:29 typically very complex and explains it
01:31 very very well yeah and so if you’re
01:33 buying a business it’s important to
01:35 understand what networking capital is
01:36 and why that’s part of the business it
01:38 needs to stay part of the business so
01:39 that was definitely one big one I think
01:40 another one is really understanding how
01:42 to Market yourself right and how to
01:44 build rapport with others whether you’re
01:46 looking to talk directly with a seller
01:48 broker or somebody else and you know
01:50 ultimately it’s about how to be
01:51 memorable yeah then just having that
01:53 empathy about the search because you
01:55 know you’ve talked so many times about
01:57 I’ve searched I can’t find a business or
01:59 I haven’t found a business hey really
01:00 comes home to say I’ve been doing this
01:02 for 40 years search is the sh right and
01:06 it’s all hard but he was just he a lot
01:08 of empathy there yeah but ultimately it
01:09 was kind of interesting to see that the
01:10 part that he enjoys the most is
01:11 negotiating right and we really did dive
01:13 in on what negotiating looks like right
01:15 it’s not about creating a win- lose
01:17 situation it’s Tim about how do you
01:19 create win-win situations where both
01:21 sides are getting what they want how do
01:23 you go about them and ultimately walk
01:25 out on the back end with an actual
01:26 transaction not a place where everybody
01:29 kind of Parts ways because everybody’s
02:30 upset that the thing didn’t really work
02:32 out the way he wanted it to yeah it’s
02:33 poker right but not poker for the bluff
02:36 it’s more poker for the strategy reading
02:37 the room reading the room yeah so
02:39 definitely lots of golden nuggets in
02:41 this one I mean you know super super
02:43 informative I think Casey took a whole
02:44 page of notes so we’ll hop right
02:49 in hey everybody Welcome to the m&a
02:51 Launchpad on today’s show we got Bill
02:53 snow bill snow brings over 30 years of
02:55 extensive experience in the mergers and
02:57 Acquisitions landscape with nearly two
02:59 decades dedicated to invesment banking
02:00 his expertise encompasses orchestrating
02:02 business Sal facilitating Capital raises
02:05 for Middle Market companies and
02:06 providing buy side services for acquires
02:08 targeting Middle Market entities as an
02:10 accomplished author Bill has penned four
02:12 published books notably mergers and
02:14 Acquisitions for dummies Bill’s also a
02:16 sought offer speaker sharing his wealth
02:18 of knowledge and insights with audiences
02:19 seeking to navigate the complex world of
02:21 m&a Bill welcome to show thank you my
02:24 pleasure to be here awesome we’re glad
02:25 to have you on so merges and
02:27 Acquisitions right a topic that we love
02:29 dearly and you would love to kind of
03:30 share with the audience you want to
03:32 maybe hop right in right what’s the
03:33 biggest mistake people do in merges and
03:35 Acquisitions and kind of how they think
03:36 about it well they think about it
03:37 completely wrong it depends on what
03:39 their perspective is a lot of times a
03:40 lot of lay people will look at what I do
03:42 and they think it’s open outr I think
03:44 it’s the stock market people yelling
03:45 screaming and doing the hand signals and
03:47 maybe trades that’s not what we do in
03:49 lower bit of Market private transactions
03:51 for a lot of uh business owners selling
03:54 their business I think they tend to
03:56 think of it as a listing service like
03:57 selling a piece of real estate it’s
03:59 completely different different than that
03:01 for business owners or Executives who
03:03 want to make Acquisitions they don’t
03:05 realize how difficult making
03:07 Acquisitions is it’s tough so really
03:09 depends on the perspective but there’s a
03:11 lot of Mis misconceptions got it so
03:14 ultimately just learning how difficult
03:15 it is right it’s easier it’s easier to
03:17 read a book on it no pun intended than
03:18 it is to actually go out there and do it
03:20 right bill I highly recommend everybody
03:22 watching this go out buy two 3,000
03:24 copies of mergers and Acquisitions for
03:26 the D don’t worry we’ll get a referral
03:28 fee on that piece so yeah absolutely
03:30 abolutely absolutely so Bill where I got
04:32 I kind of got my cut into this space was
04:35 um I got into Finance um and I was a
04:37 broker for many years started out in the
04:39 real estate side and then right around
04:41 2010 I had a couple guys approach me and
04:44 say hey we’re looking to buy a company
04:46 um can you help us find the financing
04:47 and I’m like of course and so I started
04:50 helping them find the finance I helped
04:52 probably about a dozen people make
04:54 Acquisitions right then I got really a
04:56 custo and these were non SBA
04:58 Acquisitions these were using Al Finance
04:00 ing you know factoring and things like
04:02 that then we started learning more about
04:04 the SBA I’ve helped a ton of people on
04:06 the real estate side with the SBA by own
04:08 by real estate the long story short is
04:10 as a finance guy I’m like man these guys
04:13 are able to just you know look at what
04:15 they’ve done so I said I’m gonna do it
04:17 myself right and that’s how I entered
04:19 into the space and so you know some of
04:22 the things you talk about which are you
04:24 know search negotiate and finance right
04:27 and I think you were just telling us
04:28 earlier that Finance you feels the easy
04:30 e part but sure someone like me I sit
05:32 there being from Finance I’m like well
05:34 man it’s complicated too so it’s like
05:37 wow so why don’t you kind of start off a
05:38 little bit about your structure and
05:40 those things and I yeah well when when
05:43 you look at m&a first of all there’s buy
05:44 side or sside are you selling something
05:46 you’re buying something that’s a
05:47 misconception too A lot of people don’t
05:49 realize or don’t think about it it’s one
05:51 of the obvious things let’s just look at
05:52 the buy side which is the most difficult
05:56 thing one the most difficult things I
05:57 think you can do in business it is brain
05:59 damage work uh we were talking about
05:01 that before uh KY you’re very impressive
05:03 very intelligent but I can tell you
05:04 we’re far more intelligent before you
05:05 started buying companies too because it
05:07 will knock your brain cells
05:08 out uh buying companies I divide that
05:12 into three main buckets of work which is
05:14 search negotiate and finance we’ll take
05:16 this in reverse order real quick and we
05:17 can dive into as much detail and any of
05:19 these as you wish the finance part is
05:21 actually the easiest that’s not to say
05:23 it’s easy it’s not to say that there’s
05:24 money on every street border but if
05:26 you’ve got a company with a balance
05:28 sheet if you’ve got your own money if
05:30 you’re trying to acquire something that
06:31 has value you can usually come up with
06:33 the financing to do that if you’ve got
06:34 the right background and experience of
06:36 course that is quite often the eases
06:38 that’s most straightforward negotiation
06:40 that’s that’s the fun part of this job
06:42 that’s where you can have an absolute
06:43 blast trying to be creative and figure
06:46 it out and it’s not bluffing it’s not
06:47 trying to take advantage of someone uh
06:49 you have to negotiate for yourself the
06:51 other side has to negotiate for
06:52 themselves but that’s that’s the most
06:53 fun trying to figure that out the search
06:56 and I’ll interrupt you actually really
06:57 quickly and I think I think they’re
06:58 heavily related right I think one of the
06:60 things that I love about this space
06:01 versus commercial real estate is that
06:03 you can use negotiation to enable the
06:05 financing right you can get really
06:07 creative really do unique things to make
06:08 a deal work right and so seller like you
06:10 said it’s not about negotiating where
06:12 one person’s losing it’s about getting
06:13 both sides what they want and you have
06:15 to get creative on the negotiating to
06:17 get the financing that you need to make
06:18 the deal work so both sides are happy
06:20 Absolut absolutely absolutely yeah I
06:21 mean there’s there’s a great overlap and
06:23 I’m obviously greatly simplifying all
06:25 the steps and the process he’s involved
06:26 with this the last piece is the search
06:29 piece that’s actually the first and this
07:31 is the most difficult part of the m&a
07:34 process just simply trying to find a
07:36 company to buy it is it it gets the
07:39 short shrift from whether it’s an
07:41 individual looking to buy buy a company
07:43 from even private Equity firms trying to
07:45 Simply find a company to buy we can dig
07:47 into as much detail as you want there
07:50 the big mistake that a lot of people
07:51 make is they call up people like me and
07:53 investment banker show me your menu show
07:55 me what you have like we’re a restaurant
07:56 or grocery store and I have to tell them
07:59 it doesn’t work that way you the buyer
07:02 not pushing a cart down the AIS of the
07:03 grocery store you’re the product up on
07:05 the Shelf the business owner the seller
07:07 of that business is quite often the one
07:09 who’s going to select who the buyer is
07:12 so in that regard the role of buyer and
07:14 seller quite often are reversed in m&a
07:17 why because number of buyers far out
07:20 seeds the number of sellers okay you
07:22 have a 45y old guy runs a business made
07:25 three million bucks last year loves what
07:27 he does his health is good wife is Happy
07:29 the guy got he’s got young kids at home
08:31 you could not offer that guy enough
08:33 money to sell his company right and so
08:37 that’s why this one one of the reasons
08:38 why it’s so hard to Simply find
08:40 companies to buy because what am I going
08:42 to do with my I don’t need any more
08:43 money what am I do with myself I
08:45 absolutely love what I do and if you
08:48 have something that goes to Market I I
08:50 believe that in m&a uh it is a
08:53 microeconomic activity the macroeconomic
08:56 the general economy yeah that could have
08:57 an impact on companies but as long as it
08:60 performs well it will command a good
08:03 price whether the economy is good or bad
08:06 a good company will command a price a
08:09 bad company in a good economy is going
08:10 to struggle to get bids so it’s really
08:13 hard for the buyers out there to buy
08:15 companies because you have a good
08:17 company for sale you’re only going to
08:19 sell it once you’re not going to have
08:21 multiple companies that you can sell you
08:23 can’t replicate it but it’s really
08:24 really hard for people want to buy
08:26 company simply to find the company to
08:29 buy let negotiate deal and find the
09:31 financing for so Bill we I talked to a
09:34 lot of people um in in especially as we
09:36 build our branded Equity launch pad
09:37 saying hey you know we have that sponsor
09:40 back mentality we want to find good
09:41 operators and back them and you know the
09:44 trade between us and them and we’ve had
09:46 a lot of presentations with the guys
09:48 showing them look you know we’re going
09:49 to take a majority of the equity of the
09:50 deal for putting in the putting it up
09:52 together one of the biggest
09:54 conversations I get from the guys were
09:55 like well hold on I do all the search I
09:58 bring you the deal you bring me equity
09:60 and the debt and all that good stuff and
09:01 we give up we get I’m giving up a big
09:03 chunk of the deal and I’m like well
09:05 here’s the difference about us we’re
09:06 going to help you
09:07 search and you don’t understand like all
09:09 of a sudden it changes everything
09:11 because these guys have been searching
09:12 for one two three years and there’s just
09:15 some people that know how to hunt right
09:17 and bring those deals in and at least
09:19 get an opportunity so dig in a little
09:21 deeper in regards to the search because
09:23 I think probably a lot of the people
09:24 that are here today that are listening
09:26 and they’re they’re listening to this
09:27 podcast the searching part you’re right
09:30 it’s the one where most people are just
10:31 when we talk to them it’s like man I’ve
10:32 been doing this for two years I haven’t
10:34 found anything it’s it’s terrible work
10:37 it is it is the worst work you could do
10:39 in the world I feel bad for these these
10:41 young kids who come out of these fancy
10:43 NBAs that spend too much money for these
10:45 these degrees and they get hired by a
10:46 private Equity Firm and their job is
10:48 they have to buy companies they have to
10:49 make phone calls to jerks like me I set
10:52 my watch every Friday at four o’clock
10:55 because that’s when my phone starts
10:56 ringing because it’s private Equity
10:58 firms call because they have to call
10:60 they have to drum up these opportunities
10:02 it is so hard to find these
10:05 opportunities and people make a a
10:07 mistake I think quite often whether it’s
10:09 a private Equity Firm whether it’s an
10:10 individual and that is passive versus
10:13 active and a lot of times they’re very
10:15 passive I I have a term I call it
10:17 passive ask so if you’re trying to buy a
10:19 company don’t do this don’t call up
10:21 somebody and say here’s my list of the
10:23 perfect company why it’s perfect for me
10:25 and when you find that perfect company
10:26 for me call me and then I’ll buy it okay
10:29 that’s a passive ask you are passively
11:31 asking somebody else to do your job so
11:34 instead of calling up people like me
11:36 show me your your companies I’m not
11:38 going to do that I do my homework I want
11:40 to find buyers whether it’s another
11:42 company private equ firm whatever that
11:44 we might think are going to be viable
11:45 buyers I will make the contact or
11:47 somebody on my team will make that
11:49 contact so if you want to buy companies
11:51 two things you need to do one is be
11:54 proactive put a short list together and
11:56 reach out to companies that you might be
11:59 interested in bu so do a lot of homework
11:00 you’ve got the internet these days you
11:02 can do a lot of homework and determine
11:03 that find a way to connect with the the
11:06 owner of those companies that is going
11:07 to be difficult do not call up and say
11:09 hi I’ve got a lot of money and
11:11 experience and I want to buy you because
11:12 business owners get that 20 times a day
11:14 they’re sick of it come up with a thesis
11:16 a reason that somebody wants to talk to
11:18 you you see something in the industry
11:20 you want to get somebody’s expertise get
11:22 the other person talking and if you can
11:24 as much as possible don’t even ask see
11:26 if you can offer something I was we were
11:28 talking about this before the the the uh
12:31 the podcast that we’re recording I I
12:33 played golf a few years ago with
12:34 somebody who was a former private Equity
12:36 guy struck out anded by a company and we
12:39 golf for a few holes and I I I had a
12:41 feeling I knew where this conversation
12:42 was going and I asked him how’s it going
12:44 and his body language changed and he
12:46 said it’s it’s a lot more difficult than
12:47 I thought this guy had a membership in a
12:50 very exclusive golf course in the
12:52 Chicago area very very private exclusive
12:54 very expensive golf course and I asked
12:56 him how many business owners have you
12:57 taken out as a guest he laughed at
12:59 people why would I do that and I said
12:01 you have a Golden Ticket you’re going to
12:02 tell me that if you can find a way to
12:04 connect with business owners and you
12:05 invite people out there to play golf at
12:07 this very expensive exclusive course
12:09 that some of them aren’t going to take
12:10 you up on that offer and then if you’re
12:12 Artful enough you can start asking
12:14 questions and see if you can move it
12:15 along the conversation lot what do you
12:17 want to do with your business so it
12:18 starts with having a thesis finding a
12:21 way to offer something and being
12:23 proactive instead of reactive the second
12:25 thing is if you’ve got a company or
12:26 private Equity Firm is use make sure a
12:29 cap like you for example has all your
13:31 information it shouldn’t cost you
13:32 anything I have to pay money to use cap
13:34 like you but that is how guys like me
13:36 put buyer list together put a website
13:38 together uh make it very easy for people
13:41 like me to contact you uh don’t put a
13:43 fancy title down put corporate
13:44 development I want to see people who
13:47 have corporate development in their
13:48 title when I’m selling something because
13:49 corporate development means I buy
13:51 companies so those are some tips very
13:54 I’ve told this a million times very few
13:56 people follow through I don’t know why I
13:57 just wrote corporate development down I
13:59 like that
13:60 I mean it’s all about adding value right
13:01 like figure out ways to add value where
13:03 you’re going to broach the subject at a
13:05 later point in time right you got to
13:06 catch people whenever they’re just arm
13:07 not whenever they have all their Shields
13:09 up and picking up a phone call I mean I
13:10 get it all the time right I get pretty
13:13 much anytime I get a New York number I
13:14 mean a I don’t answer my phone at all
13:16 but nine times out of 10 if it’s a
13:17 number out of New York it’s someone
13:19 asking if we want to use them for debt
13:21 and you know I have 20,000 of those guys
13:23 right versus the guys that will come out
13:25 do something completely orthogonal then
13:27 they can bro the depth subject that’s
13:28 the way to add value and get that
13:30 conversation but but Bill a question for
14:32 you so you’re talking about how someone
14:33 can go directly to a seller maybe my
14:36 question to you is how would someone
14:37 work with you right as a kind of
14:40 intermediary right what’s the right way
14:41 to build that Rapport you know like I
14:43 said you’re choosing you’re choosing
14:44 this the buyers right and so how do we
14:46 build a PO with you how do we gain your
14:48 trust and confidence he’s done some
14:50 calculations and by some estimates the
14:53 number of buyers strategic buyer or not
14:56 strategic but just private Equity buyer
14:58 Financial buyers somewhere around 7,000
14:00 in the United States running the gamut
14:02 from the big funded PE firms to a guy or
14:06 a couple guys that just buy companies on
14:08 their own time because they they find
14:10 things that are cool you’ve got 7,000
14:12 they call us all the time for us to stay
14:14 in touch with them I I hate to I hate to
14:18 sound like this but it’s it’s impossible
14:20 it’s just absolutely impossible to stay
14:22 top of line the best way to stay in
14:24 touch with people like us is to make
14:26 sure your information is up to date in
14:29 capital like you okay have your your
15:31 contact name phone number email address
15:34 make it easy all the types of companies
15:36 that you’re looking for get very
15:38 granular things like that pitchbook
15:39 maybe as well I don’t have any stake in
15:42 any of those companies those are just
15:43 some of the tools we use and they have a
15:45 website make it easy I I’m G to go on
15:48 and on and on I get I go nuts when I see
15:50 these these companies and what do you
15:52 have in these companies on the websites
15:54 the president CFO the chairman they all
15:56 put their mug shots in they’re very
15:57 impressive bio front and center again
15:59 they don’t want to be contacted so very
15:01 simple thing if you don’t want to be
15:03 contacted okay but you have to put your
15:05 picture up on your website don’t call
15:07 yourself the president the CEO call
15:09 yourself the director of it sales and
15:12 SEO sales nobody will ever call you okay
15:15 if you want to be contacted do not use
15:18 Business Development I don’t want to
15:19 talk to Business Development people I
15:21 want to talk to corporate development
15:23 right that down put down VP of corporate
15:25 development or something like that and
15:27 people will contact you make it easy for
15:30 people to contact you uh you can proove
16:32 your LinkedIn there’s probably people
16:33 are better than than me at at uh at the
16:36 tips on on using LinkedIn but you know I
16:39 accept invitations from from almost
16:41 anybody just never know where you get
16:42 something good I I I’m always puzzled
16:46 why people at private Equity firms and
16:48 corporate development people put up all
16:50 these barriers to connect with
16:52 investment bankers and other Financial
16:54 professionals that just doesn’t make any
16:55 sense you want to cast a wi that so
16:56 hopefully there’s a few ideas there that
16:58 and here I thought going to say the
16:59 easiest way to stay front and center is
16:01 bring you lunch right which nine times
16:03 out of 10 most guys aren’t going to do
16:04 that and that’s the way you stand out
16:06 above the crowd if I never have another
16:08 business lunch again I will die a happy
16:09 man everybody want to drive you every
16:12 drive all over hell and back and come
16:13 see me and I want to have lunch and then
16:14 they all can at the last minute
16:16 everybody wants to have lunch I could
16:17 have 15 lunches a day I actually want I
16:20 want to you’re I don’t want to have
16:22 lunch don’t bother me with lunch call me
16:24 up and and say that you’ve got a very
16:26 expensive golf course you can take me on
16:29 as as guest okay I’ll I’ll do that yeah
17:31 that that’s a good offer that’s great so
17:34 that’s what you mean by when you say you
17:35 like to give you like to give not
17:37 instead of asking for right you’re
17:39 you’re giving so you’re looking for ways
17:41 to get that that buyer or you know
17:44 really the seller uh to uh to come and
17:46 do something or engage with you without
17:49 asking them anything about their
17:50 business it’s it’s more about let’s
17:52 start with that yep yep now there’s a
17:55 time to ask for the business or so forth
17:58 of of course but if you’re starting with
17:00 we’ve got a lot of money we want to
17:02 we’ve got industry experience a lot of
17:03 money we want to buy our company every
17:05 business owner hears that every single
17:07 day it’s just it’s a background noise I
17:10 call it eardrum buzzsaw it’s just that
17:12 white noise that’s buzzing in your ear
17:14 you walked into a buzs saw you want to
17:17 avoid that look at what other you what
17:19 what a great lesson for for people if
17:22 they can do this is to uh try and see
17:25 try and position themselves as a
17:26 business owner and see the inity that
17:28 comes over for the transer from private
18:31 Equity firms from uh people that are
18:33 selling fractional Jets and databases
18:35 and bespoke suits and investment bankers
18:38 and stuff like that and see the
18:40 stupidity that comes over your transel
18:42 okay and then ask yourself am I doing
18:44 the same stupidity because if you’re
18:46 doing the same thing that everyone else
18:48 is doing and you expect a different
18:49 result you’re going to be sorely sorely
18:52 disappointed absolutely doing yeah I
18:56 always have to have something to
18:57 differentiate you go ahead well well I
18:60 was gonna ask you so I mean on the
18:01 investment banking side we’ve talked a
18:02 lot about buyers what about sellers like
18:04 how does a seller work with you right do
18:05 they approach you do you approach them
18:07 and ultimately you know what does that
18:09 process look like for any sellers in the
18:11 audience sure sure that that’s a great
18:13 question we as am Bankers have the same
18:15 challenge that the business buyers said
18:16 we have to find the client and it is
18:19 really difficult to find the client uh
18:21 going direct you know sometimes that
18:23 that could happen look I I met a client
18:26 on the Golf Course once it wasn’t
18:27 looking to meet a client it’s the fourth
18:29 July I was playing golf with a with a
19:30 friend and we make the turn and hey
19:32 there’s two other guys playing with with
19:34 us for the last two hours I started
19:35 talking to one the guys he has a
19:36 business and I tell them what I do and I
19:38 wrote this book he said oh wow I might
19:39 want to sell my business and I was kind
19:41 of sh I just want to play golf and drink
19:43 a beer leave me alone it’s Fourth of
19:44 July and uh seriously and he kept kept
19:47 pestering me and so you know we
19:48 developed a good report then his firm
19:50 hired me we sold the company which led
19:52 to another sale that’s a happy accident
19:55 uh but you you can’t expect that but
19:57 that’s getting out there that that’s
19:58 being quick wited and open-minded and
19:00 and looking to meet people play golf I
19:02 highly recommend you play golf you’ll
19:04 never know who you meet out there um
19:06 typically we get referred in okay and so
19:09 the way that I stay in touch you talked
19:10 I’m giving away all my my super
19:12 marketing Secrets here so I don’t ask I
19:15 offer a lot of things so what do I offer
19:17 I have a big email group a lot of
19:20 professionals that I stay in contact
19:22 with how do I do that I don’t send them
19:24 any business stuff because business
19:25 stuff is boring okay I’ve I’m the
19:27 biggest hocr in the world I I’ve written
19:29 four business books I hate business
20:30 books I don’t read business books I
20:32 absolutely hate that kind of stuff I
20:33 find it very very boring I don’t get
20:35 anything from them I get my my my
20:37 insights and other ideas else a lot of
20:38 history biographies and stuff like that
20:40 but I keep in touch with lawyers
20:42 accounts wealth managers commercial
20:43 bankers and a few others okay these are
20:45 people who have the ear of a business
20:47 owner and what I want to do is find a
20:49 way to stay top of mind so when these
20:51 people and I don’t know where they’re
20:54 going to come from I don’t know who’s
20:56 going to be the next one but where
20:57 somebody has a conversation I’m thinking
20:59 about selling the business or the wife
20:00 is tired of the winter here uh we want
20:02 to move to the the house we have down in
20:04 Florida I don’t know what to do with the
20:05 business you should sell your business
20:07 how do I do that you need an investment
20:08 banker oh I don’t need uh any investment
20:11 help in a banker well investment bankers
20:13 are not investment professionals and
20:15 they do nothing they do nothing with
20:17 Investments and they’re not a bank they
20:18 call themselves investment bankers so I
20:20 want to be on that short list so how do
20:21 I do that I have emails very creative
20:23 emails I can guarantee you nobody writes
20:25 emails like I do uh I host happy hours I
20:28 give away stuff I just made a big
21:31 purchase this year I bought uh baseball
21:33 tickets I’m here in Chicago so I have
21:35 these fabulous ticket giveaways in fact
21:37 I’m giving away tickets now I have an
21:38 algorithm that I wrote to decide who
21:40 gets these uh wins the tickets off about
21:42 40 games that I’ll be giving tickets
21:44 away too so this is something that I can
21:45 do it’s a lot of fun people ask me all
21:47 the time my algorithm has a name it’s
21:49 called gimme they think gim’s alive they
21:52 ask me all the time okay so I’m top of
21:54 mine because I’ve been creative and so
21:56 forth and so I have have have to make
21:59 make sure they know what I do and so I
21:01 hit them with multiple prongs but I want
21:02 to be the one top of mine I want to be
21:05 the memorable one so when they have that
21:07 opportunity they at least think of me to
21:09 get a chance to to bid so there’s my
21:11 there’s my marketing everybody no I mean
21:13 and that’s one thing I do want to hit on
21:15 that I mean my first software company
21:16 really it failed because we did not
21:18 understand the value of sales and
21:19 marketing so I knew we would never make
21:20 that mistake again and it’s so why we do
21:22 this podcast right you figure out ways
21:23 to add value to people or give them
21:26 value that you might not otherwise right
21:27 like right now I got you know minute
21:29 hour conversation with Bill Bill’s going
22:30 to know who Equity Launchpad is and what
22:32 we’re doing after this because we have a
22:34 platform right we’re helping Market Bill
22:35 and vice versa it’s doing those kinds of
22:37 things to stand out is how you grow
22:40 right same thing with our conference
22:42 that we have coming up May 11th it’s a
22:44 platform to put people on that we may
22:45 not have a way to add value to otherwise
22:47 right but they remember you and I I
22:49 coincidentally said this phrase to Casey
22:51 earlier today it’s not about who you
22:52 know or what you know it’s about who
22:53 knows you right and being that person
22:55 the first someone thinks okay I need to
22:56 sell my business oh there’s bill I
22:58 remember Bill he took to this game he
22:59 did this he he put me on this podcast he
22:01 did this interview whatever it is right
22:03 that’s what it’s about and that’s why
22:05 Nike pays to get their you know their
22:07 logo put so many times it’s not because
22:09 you’re gonna buy it off of the one but
22:10 it’s about that repetitive process and
22:12 being top of Mind a absolutely
22:15 absolutely before I get into the next
22:16 thing do you guys know the difference
22:18 between sales and marketing it’s a
22:21 question and anybody I have my
22:23 interpretation of what that difference
22:24 is interpration I probably don’t know
22:26 your answer to it here here is and this
22:29 is my my one great great strength at
23:32 least what what I think it is being able
23:33 to think a complicated subject explain
23:35 it very simple so sales and marketing
23:38 sales is what you do I’m sorry marketing
23:40 is what you do to get a chance to make a
23:42 sale marketing is what you do to get a
23:44 chance to make a sale you ask most
23:45 people the marketing degree they can’t
23:46 give you a cic answer like that um but
23:49 you’re absolutely right you know when
23:51 when I look at this networking or
23:52 whatever you want to call it I have five
23:55 five things I call the five BS it’s kind
23:57 of hokey I know five BS which is B
23:59 professional be knowledge knowledgeable
23:01 be honest okay most people have that in
23:03 business right you know you’re talking
23:04 about your professional you have good
23:06 ethics you’re honest that’s great you
23:07 want to be active this is the one where
23:10 a lot of people fall out myself included
23:12 you get busy with a lot of other things
23:13 when you’re not active you don’t see top
23:14 of line and as much as possible be
23:17 memorable okay I a long time ago I I
23:20 devised what my strengths and weaknesses
23:22 were one of my weaknesses I’m terrible
23:23 with names and faces I’ve had so many
23:25 conversations down chicag with people
23:27 who know me and I have no idea I’m
23:28 talking to so I own it I don’t know I
24:30 I’m terrible at place this kind of stuff
24:32 so I decided a long time ago I’ll be the
24:34 one who’s memorable I’m kind of a normal
24:35 looking guy but I thought I’ll just be
24:37 outspoken and actually uh the more
24:39 outspoken I am and uh the less I care
24:42 about what people think it seems to be
24:44 working for me so I want to be the
24:46 memorable one I want people to remember
24:48 me I don’t want to blend in I don’t want
24:49 to be the best at fitting in it sounds
24:51 like a Dr Seuss book okay but a lot of
24:54 people very good it’s
24:57 funny well no I mean grow growing up
24:00 right name is Ferris and you know people
24:02 used to make fun of you Ferris buer
24:03 right for those that know who Ferris
24:04 berer is and I learned as I got older
24:07 it’s about being memorable so now I
24:08 introduced myself Ferris like Ferris
24:09 speler and for usually the older guys
24:11 get it the younger people those you know
24:12 we have some young people here in the
24:13 office they don’t even know who Ferris
24:14 bueler is so then I go to Ferris wheel
24:16 but in both cases it’s very memorable
24:18 right people aren’t going to forget that
24:19 bill you’re gonna think about it in a
24:20 month from now see Ferris beer you’re
24:21 gonna be like oh there’s that guy Ferris
24:22 on the podcast right being memorable is
24:24 important whatever it is for you he said
24:26 keep your shirt on all right exactly
24:29 I’m thinking non-fair as metal is what
25:31 I’m thinking when I when I see your that
25:33 works too you know I’ll take I’ll be
25:35 metal all day so Bill we’ve talked about
25:37 the hard stuff right we talked about
25:39 search obviously people can go they can
25:41 get your book I’m we go you go a lot
25:43 deeper into these conversations and they
25:45 should read as much as possible if
25:47 you’re sitting there wondering what your
25:49 next steps are so what about the fun
25:52 stuff right fun for you is the
25:54 negotiations that’s because you
25:56 understand the financing and you
25:58 understand understand the deal structure
25:60 so that makes it fun most people have no
25:03 clue what an earnout is and how all of
25:05 these different structures are and
25:07 really that there’s really no
25:09 limitations on your deal structure I
25:11 mean I I literally the deal that we
25:13 struck back in May with our with our
25:15 acquisition I mean he literally said hey
25:17 here’s my objection and I would just
25:18 throw out well what if we did this and
25:20 he was like I like that so we papered it
25:22 I mean it really became like he told me
25:25 what he liked we said well we could do
25:27 this you could do this and we we did
25:29 that over like 20 different breakfast
26:31 lunches dinners just really hammering
26:33 through the deal so let’s get into
26:35 negotiations I mean you know this stuff
26:37 very well what you got yeah no
26:39 absolutely
26:41 negotiation that quite often scares a
26:43 lot of people why because they think of
26:45 it as bluffing right that’s that’s it is
26:47 you you have to rip somebody off you
26:49 have to Bluff and what I always tell
26:51 people is you know what bluffing doesn’t
26:53 work okay if you Bluff be prepared to
26:56 have the bluff called and for me there
26:59 is an
26:60 analogy with negotiating it goes back to
26:03 to Poker playing poker and if you want
26:06 to do this kind of work for some reason
26:07 I have to ask you know what is wrong you
26:09 defa on a flight of stairs but you need
26:11 a certain certain skill set accounting
26:14 you need to be an expert accounting uh
26:15 you need to be an expert in math so if
26:17 you didn’t like high school algebra you
26:18 don’t want to do this kind of work you
26:20 need to be an expert in writing if
26:21 writing that 10-page paper when you’re
26:23 in high school or college was a a pain
26:24 you don’t want to get this work just a
26:25 lot of writing and then beyond that it’s
26:28 having poker skills and it’s not
27:30 bluffing it’s it’s not the big uh you
27:33 know like you might see in some sort of
27:34 movie you know very uh theatrical type
27:37 motion for
27:39 me the lesson is reading your hand in
27:43 comparison to the other players at the
27:45 table do you have a strong hand do you
27:47 have a weak hand if you have a weak hand
27:49 you have to figure out how do I get out
27:50 of this as cheaply as possible and if
27:53 you have a strong hand and I think this
27:54 is something where a lot of people fall
27:56 down where they make mistakes they over
27:58 play a strong hand if you play cards and
27:01 you have a strong hand and you bet the
27:03 maximum or you bet really strong right
27:06 off the bat what do you do you chase all
27:08 the other players out of the game and
27:10 now you’ve won the anti you know you get
27:13 your anti back and a couple couple bucks
27:16 more big deal you’ve misplayed a strong
27:18 hand and the same thing applies in
27:20 negotiating so if you have a strong hand
27:22 that’s great but you can’t be so over
27:25 the toop with your asks and so forth and
27:27 demands that you push everybody away
27:30 that to me has been the most beneficial
28:32 thing so if you want to get in this
28:33 business you didn’t spend some time in
28:35 college uh drinking beer or playing
28:37 poker with your buddies you don’t want
28:38 to do this kind of work and golf you
28:39 need to to know how to golf because you
28:41 find clients out there so if you don’t
28:42 know how to do math accounting WR play
28:44 poker of golf this is the wrong business
28:46 for you so Bill kind of going into that
28:48 you know also there one of the things
28:50 like when making an offer right so now
28:53 I’ve negotiated but even before we get
28:55 into that that that positioning my
28:57 indication of structure all these pieces
28:01 do you find that there is an art in
28:05 regards to that first offer meaning you
28:08 know we’ve made offers that we felt like
28:11 the people on the other side came back
28:13 and were like man you low balled me I’m
28:14 pissed right do you feel like there’s an
28:17 art form there or how do you typically
28:19 what is your math formula when you’re
28:20 making your offers and and knowing that
28:22 there’s going to be some type of trade
28:24 back and forth but that first offer
28:26 where’s that magic well depends on what
28:29 what your metric is or what what your
29:32 financial metric is or in my case if I’m
29:34 representing the company what is their
29:36 metric you know do they have a cost of
29:38 capital that they’re looking to hit are
29:40 we going to run those sort of numbers or
29:42 a lot of times big companies that want
29:44 to make Acquisitions and never sell them
29:46 they just look at Payback period we’re
29:48 going to invest the money how long
29:49 before we get the money back then
29:50 everything after that is cre so you want
29:52 to understand that ask the other side so
29:54 if you’re trying to buy a company ask
29:57 ask the seller what are you looking for
29:59 no it’s funny so we did another we did a
29:02 podcast interview with JB Sasa and you
29:04 know and it he actually had a good point
29:06 which is you know it’s about being
29:07 selfish and not about selfish like where
29:09 you taking advantage of the person but
29:10 it’s about hey here’s the things that I
29:12 really need that I care about in this
29:13 deal and the seller the buyer you the
29:15 other side will do the same thing it’s
29:17 about finding something where both sides
29:19 are selfishly getting what they want and
29:20 walk away happy and I thought that was a
29:22 really unique interpretation I hadn’t
29:23 really thought of that one no that’s
29:26 that that’s true look you have to
29:27 whether you’re buying or selling you
29:28 have to negotiate for yourself you can’t
29:30 negotiate for the other side nor can you
30:32 expect nor should you expect the other
30:34 side to put together a fair deal for you
30:37 you have to expect them to put a deal
30:38 together that makes sense for them your
30:40 job is to negotiate agitate for a deal
30:43 that makes the most sense for you where
30:45 it gets creative and a lot of fun is
30:47 trying to bridge those differences and
30:49 come up with a way uh of some sort of
30:51 solution uh when I when I do these
30:53 things you you you look look you can
30:55 look at the numbers I mean it’s always
30:56 going to boil down to this this horrible
30:58 metric called evid do vented by
30:00 a cable TV entrepreneur name named John
30:03 Malone evid do earnings for interest tax
30:06 appreciation netization which is good
30:08 and bad you know it’s what we use right
30:11 and it’s usually multiple you pick a
30:12 number uh you want to ask if you’re
30:15 buying ask the seller what they’re doing
30:16 now when I’m selling I I wouldn’t give a
30:18 number um I provide the information your
30:21 financials and so forth and let the the
30:23 buyer come back with an offer that they
30:24 can support close uh but ultimately if
30:27 someone makes a bid on your company I
30:30 think it’s incumbent on the seller to
31:31 come back and say yeah this is good I
31:33 can go move forward or it’s not good let
31:35 me come up with a counter I mean instead
31:37 of just saying this isn’t good come up
31:39 with a counter offer and you want to be
31:41 reasonable as well um you we we were
31:43 trying to buy a company a number of
31:44 years ago we put together very fair off
31:46 we’re going to buy the company over time
31:48 and make some Investments and buy shares
31:50 over a period of time and the uh seller
31:53 came back I I still laugh at this it’s a
31:55 million dollars in earnings and we put
31:58 together something that would have made
31:59 everybody involved very very wealthy uh
31:02 the guy negotiating wanted $87 million
31:05 at close for a million doll even without
31:07 business that was for half the company
31:10 and then we could buy the remaining half
31:11 over the next few years and of course it
31:12 was a non-starter and and he never
31:15 understood that I mean that is just and
31:17 something like leich a a bridge too far
31:18 that’s just not going to work uh he
31:21 looked at my client is having a lot of
31:23 money and just thought well they’ll just
31:25 spend bad money well they’ve got a lot
31:26 of money because they don’t spend bad
31:28 money they’re very careful about how
31:30 they run their business you have to
32:31 understand that if you are selling what
32:34 are you asking for look I mean you
32:35 should absolutely agitate for your best
32:39 interest to get the best deal for you
32:40 but you have to ask if somebody if the
32:43 roles were reversed and somebody was
32:44 offering to you or asking you to pay the
32:47 same price you’re asking somebody else
32:48 would you take that deal and if you
32:50 would not take that deal then you know
32:52 what probably someone else is not take
32:54 that deal it’s not a charity where are
32:56 you Bill one of the other Sation we have
32:59 with a lot of people that’s like hey so
32:00 everybody’s got their kind of rule book
32:02 for multiples right so hey if it’s this
32:05 sub two and a half million ebaada you
32:08 know three you know these things trade
32:10 below four if it gets above two and a
32:12 half you know this next lower Middle
32:14 Market you know I don’t want to go above
32:16 four four and a half whatever those
32:18 numbers are where are you and how are
32:20 you and you’re you know people like you
32:21 in Investment Banking how are you guys
32:23 finding and building your your M yeah I
32:27 will give you the the formula for
32:28 valuation you guys have a pad please
33:30 write this down this is an Insider look
33:33 at valuation okay it’s a very
33:35 complicated mathematical formula I’m
33:37 going to give you the the shorthand for
33:38 it okay very complicated mathematical
33:40 formula that largely depends upon what
33:42 side I’m
33:44 representing it’s a joke
33:46 guys it’s okay maybe yeah you know what
33:49 well generally speaking the more the
33:52 greater the earnings the more the bigger
33:54 the multiple okay and it’s going to
33:55 depend on on U on the industry
33:58 what we used to say is we want at least
33:01 a million dollars in Eva do those are
33:04 getting difficult to place these days
33:05 because the buyers just don’t want to
33:07 put the brain damage in trying to buy
33:09 something that’s relatively small so
33:10 it’s at least two million that they want
33:12 to see and then you’re going to look at
33:14 other factors too is the company growing
33:15 what is the uh gross margin what is the
33:17 iida margin is the management team
33:20 staying uh do they have any
33:21 concentrations with customers they
33:23 concentration with vendors all these
33:26 sort of factors uh or aspects rather get
33:29 factored into valuation so in fact I
34:33 have a a presentation I’m working on and
34:35 I’m calling it not all even Doge created
34:37 equal because a lot of business owners
34:39 struggle with that or they have a
34:41 short-term blip and their numbers look
34:43 really good and they want to get the
34:44 maximum valuation extrapolate off of
34:46 that and and that’s not going to happen
34:48 we need to look at the trends what’s
34:51 going on with the business uh you know
34:53 how much how much cap X do you have if
34:55 it if requires a lot of capital
34:57 expenditures that reduces the cash flow
34:59 for a buyer is that going to have an
34:01 impact on business so all those sort of
34:03 things get factored in um and then
34:07 valuation typically starts with science
34:10 right you’re crunching the numbers
34:12 you’ve got a spreadsheet and all this
34:13 kind of stuff and it always ends in art
34:15 you know it’s it’s what you can get and
34:18 and that’s fine so it start it starts
34:20 with science and it ends up with art but
34:21 if you want to get if you’re selling you
34:23 want to get the best price what you want
34:25 to do is have a gr business no
34:27 concentrations have a manage team that’s
34:29 there that’s not going to that’s not
35:30 going to leave uh you don’t want to have
35:32 any concentrations with your customers
35:33 with your vendors want to have strong
35:35 margins you don’t want to have any
35:38 headwinds in the business whether that’s
35:40 uh regulatory or economic all those sort
35:43 of things you want to put together the
35:44 best company possible and that is how
35:46 you’re going to get the the best price
35:48 possible you have to put a story
35:50 together to tell right that’s ultimately
35:51 what it boils down to here’s the story
35:52 here’s the why someone should buy it and
35:55 you know here’s what they need to think
35:56 about and honestly I think a lot I
35:57 thought you were going to actually give
35:58 an answer where a lot of it is actually
35:60 they need to come to you two years in
35:01 advance so you can start to prepare
35:03 right because whenever you go to sell
35:04 anything whether it’s real estate or a
35:06 business there is homework that you
35:08 should be doing beforehand to set
35:09 yourself up to have that story so that
35:11 way whenever you go make the exit right
35:13 you shown that next buyer hey here’s the
35:15 potential here’s what can happen and
35:17 here’s why the business is worth this
35:18 extra multiple that you’re looking for
35:20 right yeah you know the problem there
35:23 see you’re you’re very uh logical and
35:26 objective
35:28 unemotional and reasonable with that
36:30 comment and that’s not been my
36:32 experience in the in the business world
36:34 you know people makeing this know some
36:36 to you know I I have some friends uh
36:38 Partners at accounting firms and they
36:39 will work with business owners clients
36:41 for a number of years to address a lot
36:43 of these these issues these enhancers
36:45 and detractors evaluation and that’s the
36:47 way to do it the tax planning as well
36:50 that is something that business owners
36:52 just seem to refuse to want to do uh
36:55 talk to your tax people ahead of time so
36:57 you understand and structure uh and the
36:59 reason why you have to do a structure is
36:01 it really best to do a stock deal maybe
36:03 an asset deal is better if it’s an asset
36:05 deal you’re going to face double
36:06 taxation what is your account’s
36:09 receivable going to be taxed at is
36:10 account’s receivable going to be
36:11 considered cash is that going to be
36:13 considered income as opposed to longterm
36:15 capital G there’s a lot of little
36:18 permutations that that business owners
36:20 just refuse to do the homework ahead of
36:22 time I really wish they would uh we were
36:25 talking recently with the the business
36:27 and you know nice business very
36:29 profitable but the concern is who’s
37:31 going to run the business after the
37:32 business owner retires and moves on and
37:35 it’s a nice business uh as someone said
37:37 on the on the call today you know it’s a
37:39 nice business to own it’s not
37:41 necessarily a nice business to sell and
37:43 that’s something as well you want to
37:44 think about that you might be nice for
37:46 you to own and you’re make a lot of
37:47 money and that’s great but if somebody
37:49 buys the company what are they buying
37:51 and if you the business owner handle all
37:54 the sales and the product design and the
37:56 finance and the accounting and
37:57 everything else runs through you when
37:59 you’re gone what does a buyer have at
37:01 that point Who’s going to run the
37:03 business really tough one last kind of
37:07 negotiation question that I think is a
37:09 common is networking Capital right we I
37:14 mean this has been one of those things
37:16 where we talk I mean it doesn’t matter
37:18 who we talk to like how do you deal with
37:20 networking Capital you know so kind of
37:22 give us your side from the buy side and
37:24 the sell side how how either side you
37:27 know how it all comes together sure sure
37:29 so networking capitals typically as you
38:32 guys know accounts receivable plus
38:35 inventory minus accounts payable you
38:37 might have some prepaid expenses you
38:38 might have some acrs there but it’s
38:39 basically accounts receivable plus
38:42 inventory minus accounts payable but the
38:44 reason that we have this working capital
38:47 number in a sale is that we don’t want a
38:49 seller to have some sort of perverse
38:51 incentive to do what sell off all the
38:53 inventory Pennies on the dollar collect
38:55 the AR Pennies on the dollar run up the
38:57 accounts payable in other words trying
38:59 to convert as much to cash right so if
38:02 you do a deal and you’re supposed to
38:04 bring $5 million worth worth of working
38:06 capital to the deal that’s to make sure
38:09 that the business is sold and it’s still
38:12 working rather that the company is still
38:14 in good working order okay uh what we do
38:17 when we sell is I want to look at 36
38:19 maybe 48 months of their balance sheets
38:22 this is why you need to have this thing
38:24 called young people who work for you
38:26 because it sounds like real work who
38:27 wants do work so you want to go through
38:29 the yeah you got young people that’s
39:31 that’s what they’re there for right they
39:33 they work for you for one week and they
39:34 want to be the president no you’re going
39:35 to do the crappy work for a few years
39:37 for a few decades probably so what you
39:39 want to do is have these young people
39:40 put the spreadsheet together put the
39:42 balance sheet together month after month
39:44 as many as possible three years maybe
39:46 four years and I want to see the trends
39:49 what’s going on with working capital and
39:52 be able to communicate that to the buyer
39:54 and then they’re going to come the
39:55 buyers can come back with Target and
39:57 then you have to negotiate it is that
39:58 fair is that reasonable the working
39:00 capital Target if it’s if we bring the
39:03 company uh at the closing and we show
39:05 the balance sheet if that’s under the
39:07 target that’s going to cost my client
39:09 the seller some money if it’s over then
39:11 the buyer has to pay a little bit more
39:13 okay and you want to be fair okay it
39:16 shouldn’t be a big pickup for either
39:18 side you want to be reasonable uh a big
39:20 mistake that a lot of sellers make is
39:22 they don’t set that Target correctly
39:24 they set it too high and that might cost
39:27 them lot of money at close so you want
39:30 to be very careful let me just stop you
40:32 here because I think you you kind of ran
40:34 through something that we learned on
40:35 this last deal that I thought was really
40:36 important so you’re saying I when I’m
40:39 issuing my letter of intent right we
40:41 have a networking Capital line item
40:43 right but we’re also saying hey it may
40:45 take us 90 days to close so there’s a
40:47 plus or minus give or take that’s going
40:49 to be in that which is what we call a
40:52 true up right so it’s so it’s the true
40:54 up at closing to then make sure that we
40:57 have the working capital
40:59 necessary okay yeah you’re going to have
40:02 a balance sheet an estimated balance
40:03 sheet at closing okay and so you’re
40:05 going you’re going to negotiate on time
40:07 what the target’s going to be what that
40:09 you’re going to Define working capital
40:11 and what that Target amount is going to
40:12 be and then at closing the seller brings
40:14 a balance sheet here’s the working
40:16 capital then you make some sort of
40:17 adjustment okay well I’m the buyer I
40:19 need to put a little bit more or we need
40:21 to uh subtract a little bit because well
40:24 they they just got a big check for a
40:26 million dollarss from accounts
40:28 receivable so their AR went down by a
40:30 million bucks but they’ve got a million
41:31 dollars more cash doesn’t cost you
41:33 anything seller so you want to be able
41:34 to communicate that and then 30 days 60
41:37 days 90 days whatever some period of
41:39 time after the close when the dust
41:41 settles so to speak you’ll have the
41:43 actual balance sheet not the estimated
41:45 balance sheet at the closing date but
41:47 the the actual uh balance sheet not
41:50 estimated but the actual balance sheet
41:51 and then you make some adjustments there
41:53 if you need to make adjustments and
41:55 maybe some of the money that’s been put
41:57 into ES
41:59 is the uh the buyer can say wait a
41:01 minute you know it’s it’s $100,000 we
41:03 need to take and so uh maybe the eso is
41:06 is reduced by $100,000 or if the buyer
41:08 has to put in more money the buyer will
41:10 put in more money at that TR perod yeah
41:12 for those buyers out there that don’t
41:13 negotiate working capital essentially
41:14 money you’re gonna have to inject into
41:15 business day one just to keep it
41:18 functional right that’s why it’s part of
41:20 usually you need to negotiate that to be
41:21 part of the business and so if a seller
41:23 thinks that I’m gonna sell my business
41:24 for $20 million but they have $6 million
41:26 of working capital well really that
41:28 seller is gonna take home 14 million
41:30 right assuming you bought it cash so
42:32 well that that’s that’s another mistake
42:33 too that they think well sell for 20
42:34 million and what are you gonna give me
42:35 for the working capital now the working
42:37 capital is an asset that I’m buying it’s
42:39 AR plus a inventory minus AP and
42:42 whatever six that’s part of the 20
42:44 million that I’m giving for the whole
42:45 business that’s that’s a struggle too
42:47 for a lot of business owners so those
42:49 looking to buy a company you’re going to
42:51 want to get your hands around that
42:53 because you’ll see that a lot of times
42:54 business owners have a tough tough time
42:57 understand
42:58 the business and the work we had that
42:01 learning exact experience was it was
42:03 amazing um luckily we had a good good
42:05 seller and we all got along and we could
42:08 really go down and and do the math so
42:11 Bill I we’re coming coming up into time
42:13 here but I I I we could literally talk
42:15 to you for hours I mean you just gave me
42:17 networking capital for those listening
42:19 pick him out to lunch and talk for hours
42:21 right well he’s got baseball tickets we
42:23 like the Cubs or you white I got I got
42:26 uh you know the Tennessee white socks is
42:28 that what you
43:30 uh they’re threatening boot to Nashville
43:33 but are they really yeah well well don’t
43:36 worry we lost a team to Tennessee also
43:37 so way back when Houston Oilers
43:40 Tennessee Titans yeah that that’s right
43:42 yeah well the white socks do that every
43:44 H 30 or 40 years they they say they’re
43:46 gonna move so they can get a new stadium
43:47 so I think they’re doing that right now
43:49 ah I got it so in in that we’ve got a
43:51 little bit of a rocket round just to get
43:53 to know you but I wanted to say again
43:55 man fantastic this is just great
43:56 information and uh you know definitely
43:59 when someone reads your book They’re
43:01 going to get that type of knowledge
43:03 simplifying very complex things so
43:05 definitely you know that’s the thing to
43:07 go for we’ll have a link to the book in
43:09 the show Notes too for those listening
43:11 all right so far our rocket round here
43:13 what do you like to do in your free time
43:15 as little as possible I I do a lot of
43:17 writing in the summertime I I Golf and
43:21 try to do a lot more travel than all
43:23 right Fair answer all right next
43:25 question what’s been your most memorable
43:27 moment
43:28 in business right was it a specific deal
43:29 that closed specific seller that left an
44:31 imprint buyer I mean what’s it been I
44:34 don’t
44:34 know most memorable moment but for me
44:38 it’s been the connection that when you
44:41 have something to offer talking about
44:44 this earlier as opposed to asking that
44:47 was the big reveal for me when I thought
44:49 about my career the good stuff the bad
44:52 stuff everything that happened okay I
44:54 was upset about a business meeting that
44:57 went bad 20 years ago so I wrote a
44:58 little book that called vure CAP 101 I
44:01 didn’t know what to do with it I just
44:02 released it as a PDF went all over the
44:04 world and years later Wy publishing got
44:07 a hold of that they contacted me to
44:09 write a book was a little bit of a
44:10 gestation period there but that turned
44:11 into mergers and Acquisitions for
44:13 dummies what happens there I get
44:15 speaking opportunities now I go overseas
44:18 and deliver presentations why i’ never
44:21 asked for any of these things right I
44:23 did something I showed expertise and
44:25 experience I have a little bit of flare
44:26 when I write it pretty good writer and
44:29 all these other things opened up so stop
45:32 asking especially you young people stop
45:34 pestering old people like me uh for
45:36 advice and free stuff figure out what
45:38 you can offer there’s somebody else on
45:41 the other side of the trade and if you
45:43 keep asking for advice give me givme gim
45:45 me you have to figure out what are you
45:47 giving that person and if you want doors
45:49 to open once you can figure out the
45:51 world works on Exchange not take and if
45:54 you start asking as opposed to you start
45:57 offering instead of asking that’s where
45:59 doors start opening up for you and
45:00 that’s where you have a lot of fun in
45:01 your life and your brick huge all right
45:04 and last one easy what what’s your
45:05 favorite tool or resource like what do
45:08 you like to go to for business personal
45:10 what is that tool you like to use in in
45:13 the mmaa world without a doubt it’s it’s
45:16 Capital IQ which is an expensive
45:18 database they do a really good job of uh
45:21 keeping caps on all companies you get
45:23 the public information but also private
45:25 companies if they’re of a enough size
45:28 and what’s great is they tend to do a
46:30 really good job of unwinding the
46:32 corporate tree so I can figure out who
46:34 owns what I can also do a lot of
46:36 searching so when we’re selling we we
46:38 will use that to build a buyer list
46:40 because we can get really granular in
46:42 terms of what different companies
46:43 private Equity firms and strategics what
46:45 they’re looking for in terms of
46:47 geography in terms of the uh sic codes
46:50 and things like they get really granular
46:53 and that helps us put together a buyer
46:55 list I would not be able to do this job
46:57 without a database look cap ly which a
46:01 lot of dollars in my pocket because it’s
46:02 enabled me to do my work got it well you
46:05 don’t need a buyer list anymore you just
46:06 let us know what deals you got Bill take
46:08 a look we’re all the we’re the only list
46:09 you’re gonna need yeah oh hold on let me
46:12 write that
46:13 down okay got it awesome well hey Bill
46:17 pleasure thank you very much for being
46:18 on the show really enjoy it uh for the
46:20 listener someone want get a hold of you
46:21 what’s the best way to get hold of you
46:23 you can always get a hold of me at my
46:25 website bill snow. not Bill
46:28 snow.com Bill
47:31 snow.com that way you can find me on
47:33 LinkedIn you can find me on Twitter
47:35 perfect well definitely a pleasure bill
47:37 it’s your guest it’s your host Ferris
47:39 wheel signing off and so we’ll call it a
47:41 wrap thank you Bill Bill perfect thank
47:43 you for listening to the m&a Launchpad
47:45 podcast if you’ve enjoyed today’s
47:47 podcast and would like to support us
47:48 please leave us a rating and a review
47:50 after you listen I’m Casey menu and I
47:52 look forward to talking with you next
47:53 week
