E137: Richard Parker Shares His 30 Years Of Experience In Mergers And Acquisitions

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Richard Parker. He's the CEO of richardparker.com and at Roy Street Advisors. You've been in this business, what, 30 plus years? 

[00:00:08] Richard Parker: 30 plus years, yep. 

[00:00:10] Ronald Skelton: Yeah, man, I'm really looking forward to you work with some big name clients and stuff. Really looking forward to getting to know you. Getting to learn from you, learn from your, experiences and from your mistakes, from other people's mistakes that have been done in your presence. And really share that with the audience. So thank you for being here today. 

[00:00:25] Richard Parker: Well, it's my pleasure and I've listened to a number of your podcasts.

[00:00:28] I think you do great work. Most of your guests, most of them, if not all, are very entertaining. Clearly learned something pretty much with every podcast. And I'm glad you're gonna touch on some of the mistakes that I've made 'cause I made a hell of a lot of those. They've been good learning experience, so I'm happy to share anything and everything I can and, hopefully provide some, good knowledge and learning to your audience.

[00:00:46] Ronald Skelton: Awesome. I always say I make good money on my wins and I make a lot of, get a lot of education from my losses, right?

[00:00:52] Richard Parker: Absolutely, a hundred percent. It's all the way how you look at them. 

[00:00:54] Ronald Skelton: And sometimes you end up more educated than you are wealthy. So my, my joke, my running joke is you were born and now you ended up on a show about mergers and acquisitions.

[00:01:02] Could you fill out the gap in between? You've been doing this for 30 years, so can you give us a kind of, how did you get into this space and then give us a rundown of what the last 30 years in the mergers and acquisitions, looks for you. What I'm looking for is a way for the audience to connect with you and know who you are and, build that trust in you before we tell, give your advice. 'Cause a lot of people that are listening know who you are. Cool thing is I was on a, a meeting this morning with, like a virtual summit with a bunch of speakers and stuff. And they asked me who I was interviewing today, and I gave 'em your name and another guy's name. 

[00:01:31] They knew 'em both. They just knew who you were. So that's a good sign. And these guys were over in the UK. 

[00:01:36] Richard Parker: So it's, yeah. We have,a lot of clients in the UK. I'm happy to give you some background. I'm not surprised that you, that there was familiarity with me.

[00:01:44] I try to fly under the radar and have for many years. So I've been in the m and a world pretty much since 1990 and I got into it by accident. I was, 29 years old working, I was living in Canada. I grew up in Canada, in Montreal, so you can see by my Montreal, Canadian jersey. So I grew up in Canada. I was working for a consumer products and toy company. They were a publicly traded company. A lot of, popular products. I was 29 years old. I was running a division for them. I had a terrific job. The company, I was growing by leaps and bounds, so I grew within the company probably much quicker than I should have under normal circumstances.

[00:02:19] But the company was doing really well. I was working like a maniac. And, they were terrific at promoting from within the age. Didn't matter if you were working hard, reasonably intelligent and loyal and, focused on customers. You can advance pretty quickly. And I was making a real good living. I was making $72,000 a year. This was in, 1989. I was 29 years old and I discovered the stock market and I pissed away $60,000 in the stock market when someone told me the wonderful world of, buying stock on margin that actually shit the bed. And so I found myself making 72 grand, lost 60.

[00:02:52] My first kid was on the way. as I thought about it was, there's just no way I'm getting out of this hole. If I keep working for somebody, it's just absolutely not gonna happen. And, as it turned out, the division that I was running got sold back to Hasbro, we were under license for a product categories called Playschool Baby, which were infant products, toys, squeeze toys, bibs, pacifiers, et cetera. And they acquired back the license from us. At that point, they wanted me to run the division. I wanted to go on onto my own and I'd made that decision before. And so I struck a deal with them, which was, terrific for both sides, which was they had to train their,a new, general manager or managing director, CEO, whatever you want to call it, to run the business.

[00:03:35] And I agreed to train that individual and trained their, anybody else in their company, in exchange for getting the rights to that product for Eastern Canada. So that worked out well. So I opened up basically a manufacturer's rep business and that was in 1990. And shortly thereafter, I was doing okay. 'Cause I had a platform to make some money. I was making an okay living, and started to look at some other companies that would dovetail well into what I was doing that I could acquire. And I started making some acquisitions. And along the way, I guess I started getting a bit of a reputation for buying some of these smaller companies. Mostly amongst friends, family and colleagues 'cause we're all pretty young guys. 

[00:04:15] And, started helping some of those individuals acquire some companies. And I continued to acquire some businesses. I acquired a, a retail merchandising company. I was selling into retailers. And what was happening is I kept going into these stores and I had sold 'em all these goods and finding out my goods are in the back room and not being put out onto sales floor. Just because they were too busy or short staffed. So I started a retail merchandising company and then in one local area and started buying up a bunch of similar companies that were already operational in, in that business. 

[00:04:47] One of them, at that point, was a hundred thousand dollars acquisition, which I could not afford. And I managed to work out a deal with the, with the owner of that business where I would acquire it for very little money upfront and, bring them into the business and his operation into the business and give him a piece of the bigger pie. And lo and behold, we turned that shitty little business into a four and a half million dollar business and immensely profitable. And, started making some other acquisitions. And then in 1992, 93, through that retail merchandising company, actually a friend of mine was trying to acquire the line for Save a Video.

[00:05:23] Well, I'm not sure how old you are, but I'm old enough. And they used to have the video. But at that time, Nintendo had 80% of the market. Sega had 20, but Nintendo's, was much infinitely more popular. A friend of mine was trying to get the line for Canada and become the CEO. He was pitching Sega 'cause the current distributor wasn't doing a real good job. But he needed this study done 'cause he, he wanted to make sure he went to them with a proper assessment, what was in the stores across Canada. I had this retail merchandising company. He was a buddy of mine. So I said, Hey, I'll do the whole study for you.

[00:05:52] I have 200 employees, visiting, thousands of stores across Canada. So he said, tell me everything you need to know. I'll get all the answers from every store, every nook and cranny in, in Canada, and you can build that into your presentation to Sega that we were, they were in Redwood City, California. And so I said, I'll do it for you and I'll foot the whole bill. He was a buddy of mine. So I said, I'll foot the whole bill and if by chance you get the line, I want it for Eastern Canada. I didn't really even know what Sega was, but my buddy was a pretty successful guy. More than executive position.

[00:06:22] And so he said, so we had this sort of very casual agreement, but the key thing for me is I just want to help him. So lo and behold, a number of months later, he calls me one day, I was actually vacationing in Florida at the time. He said, Hey, I got the Sega line. And he said like, I didn't even remember, right. He said, we gotta be in Las Vegas next week. And I was on vacation. I said, okay. So drop what I was doing. He went to Vegas. Now, keep in mind my business at that point in time, 'cause it was mostly the, it was some retail merchandising and the, consumer products. I was doing two and a half million dollars a year successful.

[00:06:53] I got the Sega Line, my business went to $30 million in a year. Just, at the time when Sega spent like $300 million in advertising and that market share of 80, 20 that Nintendo had, flipped. Genesis and, game gear and some other, virtual reality product and so the whole market shift. So my business went through the roof. Nothing to do with me. I just happened to be in the right place at the right time. In short order, I was making more money than all the senior executives of Sega. I knew that would happen. It typically happens in those situations if some, if a product gets on fire. So I knew they'd buy me out. I solved for that in the contract that they could never convert any of my accounts.

[00:07:29] And they bought me out. And it was, it was very profitable and I was deciding at that point whether or not I was gonna move to Toronto, move to Florida. And I ended up relocating to Florida. 

[00:07:38] Ronald Skelton: What year was that? 

[00:07:39] Richard Parker: That was in 1996. 

[00:07:40] Ronald Skelton: So we probably drove past each other on a regular basis.

[00:07:43] I got outta the military in 97. Hawaii was my last duty station. Yeah, three and a half years in Oahu. Horrible duty station. But, night diving in the ocean, during the day going to college, and then working a military intelligence job. When I lived in that area and actually lived and worked in Redwood City, but that would've been 2000, around 2000. So anyway, let's go back into, so now we're in the, nineties, and, you were involved in Sega, Genesis. Let's continue the story. 'Cause it's very fascinating. 

[00:08:16] Richard Parker: Okay, cool. So after, Sega bought me out, I was deciding whether or not I wanted to move outta Montreal. The political situation that's going on there since 1976 at Young Kids. And, it was a significant change in my business.

[00:08:28] And so I was deciding whether or not I was gonna move to Toronto, which is where all the head offices typically were located. If I wanted to continue the same line of business. I was considering moving to Burlington, Vermont, which is an hour and a half from Montreal. It's a nice college town. I could do a lot of, river fishing. And my kids were young in a political situation and I said, you know what, what the heck? Once I'm moving, I'm gonna move somewhere warm. So I moved down to Florida and was thinking about what I was gonna do. I got involved, as a CEO in a, in a golf business with Greg Norman. It was a, public company and ran that for a few years.

[00:08:59] It was one of those companies where we had a phenomenal product, but we couldn't turn it into a terrific business. And then I left there and said, I'm getting back into the acquisition mode. And,between that period I was just really chilling out a little bit. So, got back into acquisition mode. I was looking to make acquisitions and I got involved with one in South Florida. It was a, a distribution business of commercial washers and dryers. Catering mostly to laundromats and all, dormitories and where you have the coin operated units in, in certain facilities. And I was very close to making the acquisition.

[00:09:30] It wasn't a big acquisition. It was a little over a million dollars. The deal terms were pretty good, and negotiated that. As I was going into the due diligence and really investigating it thoroughly, I soon discovered that the whole business was a house of cards. I mean, there was a, a lot of co-mingling. It was the proverbial any individual worried about buyers, sellers cooking the books. I mean, this was it. And not so much fraudulent really, but from a standpoint of co-mingling, the owner had one company that he owned a lot of these machines and he was moving revenue from one to the other.

[00:10:01] The bookkeeping really wasn't accurate. And it was just a real mess. And so I decided to, rescind my offer. And it was really an important day in my life because I walked outta that building. It was in Broward County or just off Broward Boulevard in Broward County, Florida, which is really Fort Lauderdale area. And I was standing, I walked out into the parking lot of this building. I had just informed the seller that I was not going through with the, transaction. And I remember standing in the parking lot and thinking to myself said, the average schmuck would've bought that business. The only reason thing that saved me was not because I'm not smart, it's but I've done it a bunch of times.

[00:10:37] I knew what to look for and what to dig in and what were the red flags and what, what should set off the alarm bells. But the average person wouldn't have, would've bought that business unquestionably. And so it really triggered me,a high level of curiosity about what's out there for small business buyers to assist them with the process of acquiring their business. And the internet was just really starting to take hold. It was 2000, late 2000, and gone through the bubble. And at the beginning, everything on the internet was free. And I always thought the internet was pretty cool, but there was no way I was ever gonna get involved in the internet sell, getting involved in anything that's for free.

[00:11:11] I mean, that didn't make any business sense. And so I spent an inordinate amount of time, researching what, an individual business buyer is faced with or does, or what resources or good help is available to them. And at every turn, I found the answer was nothing valuable.

[00:11:29] And there was just all this stuff and information. Accountants really weren't the right people to, they were good for due diligence, but not for valuation. Lawyers, they're not deal makers. They write up the documents. At every turn there was nothing available. And they said, I looked at hundreds and hundreds of businesses in my life to potentially acquire. And I kept immaculate files and I always kept tremendous records related to, on any scenario that came up and something that went wrong. What I did or what happened. Whether it was a good thing or a mistake.

[00:11:58] And clearly, you learn a lot more from your mistakes. But I had these files like this, like of tons of great stuff, right? And so I said, you know what? I'm going to, I'm gonna memorialize all this. I'm gonna put my, life's work at that point into, material that's going to walk someone right through the whole process of buying a business. Not only what they need to know, what they need to do and how to do it. Because while I was doing all of my research, I was finding out, speaking to a lot of business buyers. They go about it the complete wrong way. They just jump into it and start looking at businesses for sale.

[00:12:28] Rarely would any preparation and the statistics I was finding according to industryresources was, over 90% of the people begin to search to buy a business, never get to the finish line or close a transaction. And so I put everything together and I wanted, and I had, again, these great files. So it was very organized. I just wanted to get everything out there and the night before, and I had a website developed and, the night before we hit the push button on the website my wife said to me, how many think you're gonna sell? And I said, I really don't care. But if I'm happy, if I sell one of these, and it either helps someone buy the right business or helps 'em avoid buying the wrong one, it'll have been worth all the effort possible. So I had no delusions whatsoever that this was turning, gonna turn into a business. I just wanted to help people. 'Cause I'd gone through this and I didn't wanna see people make mistakes. And I'll fill in the gaps of what I've done beside, but fast forward, I sold like, six figures worth of these things into 80 country. Our success rate is off the charts of people who bought the materials.

[00:13:23] I always priced it really inexpensively, so it would never be anything for anybody. And the biggest thing that I always said to anyone who bought the materials, you email me anytime or we can have a call anytime. I'm happy to help you. And so, anybody run into any situation, they got hundreds and hundreds of emails, and answer by your questions. 'Cause people run into trouble. I mean the material is terrific, walks 'em through everything. But scenarios change. I've been doing deals for 30 years. I still learned something in every deal. And I fully automated the business. I put a lot of money into automation and answering emails and loved that.

[00:13:52] And then got much busier in the buy side representation and sell side representation. And was doing that for a number of years. Still looked at some other acquisitions. I bought a legal document preparation company. And in total, up until that point, I'd made 13 acquisitions and, started doing much more m and a and,on sell side and buy side. 'Cause word was getting out and I was getting a lot of calls from buyers and sellers and I started doing more representation and higher end businesses. More in, investment banker type size. Like the ones that are too big for business brokers, too small for investment bankers. Like the ones I say are too big to be small, too small too, be big. (Right.)

[00:14:27] And then in 2017, one of my former clients who had become a good friend, he was running his, his family's family office as Co-CEO and it was the Dalio family office. And, he had left there and decided he wanted to get into, look to acquire businesses. The Dalio family had hired me in 2007 as a mentor to him to look to acquire businesses. He was based in Florida and his, son Devon Dalio, him and I became good friends and ultimately decided not to acquire something. The family office was just starting. They only got a handful of people and, that would be a much greater experience for them to get involved with the family office. Which he did, and ultimately became Co-CEO and from three people, I think there're probably about 125 people now today.

[00:15:09] And it's just been, the most gratifying work that I've ever done. And I'm in a good spot, financially and otherwise. And so that, I apologize, take a whole lot of time, but that's my journey. 

[00:15:19] Ronald Skelton: Yeah, we learned a lot during the process too though. I mean, there's, some lessons learned in there.

[00:15:23] The experience you had and how you ended up in there. It's a little unique to you. It's not like, you came straight outta Harvard, went to work for one of the, Deloitte. I got a lot of guys on there. Not to pick on 'em, but they came from Harvard to Deloitte, to doing it on their own. Very logical approach. Yours is more organic. You had a very organic approach to ending up here. As opposed to like the, Scholastic version, which you just kind of forced. I'm gonna go learn this and I'm gonna figure this out and I'm gonna get it done. Let's talk about, let's kind of jump right into your advice.

[00:15:53] You've acquired so many companies. You've exited on, as many. Let's talk about the buying side. Most of our, listeners are on the acquisition entrepreneur side. They're making their first few purchases, maybe the first. What are some things that the other people are missing? Like the, you've been doing this longer. You've had material out there for a while.

[00:16:10] Let's start right in there with that practical advice. You said you, people would usually jump in and, into the buying businesses all wrong and never get to buy one. You have a different direction for 'em. What is the first step in your world to looking at a, acquiring something? 

[00:16:26] Richard Parker: So the first thing as you touched upon the, this concept of people and the internet has been the greatest blessing and the biggest curse related to business buyers because you all of a sudden you have hundreds of thousands of businesses for sale and this proliferation of information and a lot of generic information and not useful and what have you.

[00:16:41] But it makes it very easy. Someone thinks about their, they're interested in buying a business, so they jump online and start searching endless business for sales listings. And what typically happens, they spend the hours and days and weeks and months look looking at listings and they try to figure out which. If any is right for them, very rarely making any progress. Don't get answers from sellers. Don't get answers from brokers. Often, the financial information that they get back, they either don't know how to even read it. Or it's not, it's not necessarily misrepresented, but when they start digging into things, that's not the actual fact.

[00:17:11] So the first thing, that's not the actual, the numbers. And that's why so many deals fall apart or don't get done. So the first thing is, like any other major project. The first thing you gotta do, is if you don't have the experience, you've gotta acquire the knowledge. That is step one, real easy, right? And acquirement from a, either a good source or a mentor or someone you know, and someone clearly who has done it before, but acquiring the knowledge to understand what are the steps in the process and what do I need to learn about? Whether it be negotiating, valuing a business, due diligence, dealing with brokers, how to search. Something is as, as simple as, if I find one of these businesses, how do I contact the seller? 

[00:17:48] Yes, it says, press this button to contact the seller, but what am I supposed to say to them? I remember, early on when I had some engagements listening on there, I remember once getting an email from someone who says, please send me the last three years of tax returns. Like, I don't even know you. Shouldn't we first have a conversation? So certain things like knowing what you're supposed to do with that step and be able to send, for example, in that particular case, when you send an inquiry, you're supposed to be telling a broker or seller, I'm interested in your business.

[00:18:15] I would like to learn more. I'm happy to, execute a non-disclosure agreement so you can,forward some additional information. Please tell me what your steps are in the process so we can get going. And that is done by probably 1% of the people, and those are the people that start off right. Versus everybody else who's saying, how are sales this year? Or send me the tax returns. Or start asking 'em questions related to the number, getting into the weeds. And brokers are inundated, sellers are inundated. They're just gonna totally dismiss that. So number one without question is the knowledge. Wherever or however you get it, you gotta have the knowledge.

[00:18:47] The second part is, which is the big piece and the biggest fear that buyers has, have is buying the right business. So if, spending countless hours and days and weeks and months searching business for sales, listings, trying to figure out which if any are right for you, is the complete inverse of how you'd be doing. First you have to figure out what type of business is right for you, and then it's easy to find and buy it. Right? Okay. And there's methodologies to be able to figure out what business is right for you. We did a survey a number of years ago with, it was 1,004 respondents of people who had, purchased materials from us and we asked 'em a series of questions.

[00:19:22] What's your biggest concern related to the buying a business, which is sellers misrepresenting the books, not getting financing, a fear of uncovering problems after it's too late. Not knowing how to operate the business. Or number five was, finding a business that's right for me. And we asked 'em to only articulate, one is their number. Clear number one choice, not pick three of them or whatever. 74% of the respondent, 74, which is like almost unheard of said, finding the right business for me. So you have this, everybody's concerned about it. No one's doing it about in the right way.

[00:19:52] So the first thing, you have to figure out what's right. And oftentimes it takes looking at 10 different business type. I tell people, leverage the business for sale, websites as a tool. In other words, find four categories that are remotely of interest to you. Contact four or five sellers in each. Then you can look and have conversations with 20 sellers, and you'll get a much better insight into the business. You may not buy any of them or be interested in any of them, but you'll learn more about that type of business and whether you're not that business makes sense for you. 'Cause the most important thing is, when you're getting a job, it's okay to bullshit your skills a little bit as people do to get the job.

[00:20:29] But when you're buying a business, it's your money on the line and your future. Okay? You can't fool yourself. So you don't wanna buy, you have to be very aware of your weaknesses. And the key thing is, whatever it is that you do best, it's not the experience. Not that you worked in a plumbing business. It's whatever you did, whatever it is skilled you have, whatever it is that you do best. Sales, marketing, management, operations, whatever has to be the single most important driving factor of the revenue and profits of any business you consider purchasing. So you have to get through that and marry it up with a business.

[00:21:01] If you marry it up with the right business, you're gonna be successful. And the third thing is this concept of people looking for the perfect business. If you wanna buy a perfect business, buy a toll booth. Right? I have a late friend of mine, Jerry Efros, he was a tail gunner in World War II and that's what he used to say. When people say, what's the best business to buy? He used to tell 'em, buy a toll booth. There's no perfect business. It doesn't exist. And if it does exist, you can't afford it. So every business has warts and you have to get past the fact that there's not perfection and keep, clicking through to find the perfect business or never being able to be satisfied.

[00:21:35] 'Cause every business is gonna have problems. You have to just figure out and know how to mitigate those problems. And certain problems you just have to live with. And that's the beauty of owning a business because it's not perfect, you could get up every day and figure out how to make it bigger, better, and faster. So, those three things of, knowledge, acquiring the knowledge and preparation, identifying the types of business that are right for you, for your skillset, and eliminating this idea that you're gonna find the perfect business. Those to me, those are the top three.

[00:22:05] Ronald Skelton: It's interesting is I went down that route, is trying to figure out what I want to do. So I picked three or four industries, started diving into 'em. One of the things I knew I wanted to do is eventually buy more of them. So I've looked at, I even built a qualification spreadsheet to like, to do weighted scale.

[00:22:24] And I was looking for industries that had some things that were important to me. So I had about 20 qualifying factors. Things that I, I like in businesses. They either have recurring revenue, or you can put it in, there's just a list of things that I, they're fragmented. They lend themselves a rollup, so acquiring them and eventually selling them to bigger player was an option. So, came down to like, we did one of 'em, marketing agencies. I already knew I didn't wanna do that again. It's a very interesting space, but if you start one or buy one small, you're gonna run into the same problems they have.

[00:22:54] You have to sell it to grow it. There's a artificial selling inside of marketing agencies. We don't need to get into here. So I knew that one was out. Kind of dove into coffee and it took me about six months aside it. Coffee roasting companies. Importing and roasting beans and selling it. And I don't even like the taste of coffee, but I love the smell of it. I thought it's great business. You already have set clients if you build a subscription model around it. I'd met a couple people that had done it, were doing really well. And, what turned me off eventually on that was the corruptness in the industry.

[00:23:21] You're constantly on toes, on your tip, your toes, making sure you're not dealing with bad players. There's a lot of bad players in the coffee industry. A lot of people don't get it, but US banks are, most of the US banks in the mortgage industry are corrupt, is snot. So having dealt with them in the short sell world where I, ran an investment firm that bought houses from banks and watched all the dirty tricks they played. And we were turning banks in left and right, the Consumer Financial Protection Bureau for rules they were breaking. 

[00:23:44] I didn't wanna play in another realm where everybody, everybody but you, you're the only one trying to play it honestly. It's a dirty game and it's, part of the nature. So, you dive into these and you learn a lot and you think it's the right one, but the stuff you learn to go don't think of it as wasted time. The reason I wanted to ring this up is I didn't think of that as a waste of time. 'Cause everything I learned from that, I took to the other industries I evaluated. Like, now I know why I didn't want that.

[00:24:05] That wasn't even on my checklist. It's just a, a fairly corrupt, industry where there's international regulations and other stuff. It's like I wouldn't get in the diamond business. You've got one big player and the rest of it's, you basically gotta play in blood diamonds if you wanna, like, compete against the what it, the bear or the bar or whatever they call themselves.

[00:24:20] Richard Parker: The one thing what you point out through the example that you just gave is, you learned, right? And you really dove into it and you just, you didn't say to yourself well, I think I wanna buy a coffee business and this just go running in every which direction.

[00:24:34] To buy a coffee business you really dug into the weeds to learn the business, what's involved. For whatever reason it didn't match with your interests, your skillset, is immaterial to the equation. You did your diligence, you dug in, you did your research, you gained the knowledge that you needed to gain as to how to go about the process. And you took knowledge from those particular,conversations and meetings, to the next set ofbusinesses that you potentially look at, which is exactly the original point of gaining the knowledge. And so what happens, you compare and contrast that to a typical buyer, typical buyers.

[00:25:09] And the only example, the analogy that I could use is you, you prepared. It was like if you were having a race, right? And all of your, if anybody was doing it the same way as you, everybody prepares for the race. They train, they eat properly, they train properly comes a game day or race day, the gun goes off. Everybody's focused and everybody's looking at the finish line. Versus the typical buyer what happens is you get to the same starting line and the gun goes off and everybody runs in a different direction.

[00:25:35] Ronald Skelton: Yeah. I did something a little different. I've never seen a, one of my good friends is a, a performance coach and I adopted this from him.

[00:25:41] You never seen a phone number he didn't like. He sees the number, he'll just dial it. I'm not afraid of cold calling, so I literally just start picking up the phone and dialing people in the industry. People that have roasting companies. And it wasn't to see if they wanted to sell their company to me. Basically, it was to say, Hey, I'm interested in investing in this industry. Thought about you might be a competitor in the future, but it's a big enough space for both of us. If you were to start over, would you get back into the space? Why or why not? And then, you'd be surprised.

[00:26:05] Some of 'em hung up the phone. They didn't have time for me. But, good six or eight, really decent sized coffee roasting companies talk to me. And I did happen to know two people in this space. I knew somebody that sold theirs and, he was one of the religious leaders I know in my life, and he sold his. And, they did distribution, so they brought it in, roasted it, and they basically had trucks that would haul it down and put it in, their roast in all the, businesses in town. 

[00:26:27] But, yeah, you'd be surprised at who will take your call. Like, Hey, I'm interested in your industry and, discourage me or encourage me, either way, I'm okay with either one. I just wanna know the honest opinion. And I always go for the, when they say, I would never do this again, x, Y, Z. I go, cool, but what do you like about it? And I get both sides of the story.

[00:26:43] Richard Parker: Yeah. Well, one of the things you said I would be, you suggested that I would be surprised that how many people. I'm not surprised at all because I've been doing that all my life.

[00:26:52] And recommend people. You call trade association, you call industry experts, you call competitors. If you're looking for the, I don't know, an HVAC company in, in Redwood City, California, well call an HVAC company in Minneapolis. There'll be some differences. But there's never fear of competition. What surprises me though, is how, people do not think that strategy is even possible. Like, it just shocked me that, I don't mean to call it ignorance, it's maybe being naive. Maybe it's being,afraid that someone's gonna hang up the phone on them or tell 'em to take a hike or whatever the case may be.

[00:27:27] I'm not surprised that people answer, 'cause people are generally happy to help. And especially, you have the odd people that are not nice. I mean, that's rare. I mean, that's the exception. It's not the rule, but people, you call a business owner and they hear that someone else is an aspiring business owner in their industry. Often they're not gonna think it's a competitor. I mean, but I think instantly people put themselves back in time to when they were starting out and wish they had a resource. And people are generally helpful. People are generally nice. People are generally trustworthy. People are happy to, generally happy to see others succeed.

[00:27:58] But again, what surprises me is that people don't have, it seems to be the common sense of looking at a business and say, Hey, how do I go about this in a good way? That's really problematic. And that's the reason why the failure rate is so high, is because this practical, real world approach, is not being taken by the majority of people.

[00:28:18] Ronald Skelton: I'll share one more golden nugget. One of the things I would do is I looked on LinkedIn for these guys, or, and other places too. But I'd find their profiles if they had any online. And, most of the coffee roasting guys had something on LinkedIn. I Google 'em, they have something on their name and I start looking at what trade associations are they involved in and what volunteer associations.

[00:28:35] I'm a former, I don't participate now 'cause I'm just so busy with kids and everything. I was a Rotarian for a while. If I seen Kiwanis Rotarian or anything like that, I know these guys have a game in heart anyway. Or, if I see, there's just certain indicators like, man, if I call this guy, he's gonna help me out if he's got time. You can almost tell just by looking at somebody's profile, what they're engaged in life, where they're at in their stages and stuff in life. And I'll be honest, most of the time if somebody's over the age of say 60, they've been doing it for 25 years, they're looking for somebody to impart knowledge on because they just don't get that very often.

[00:29:06] You wanna have an interesting conversation, ask somebody to talk about themselves. People love to do it. So tell me about your business. Why did you start it? That's what we always started. Like, tell me why did you start this? If you had to do it again, would you start over again? If they gave me the time, there's been times where I'm on the phone for 10 minutes. I've been on the phone with some of these guys for two hours. 

[00:29:21] Richard Parker: Yeah, of course. And the trade associations, when we provide people with, here's the resources that you need to dig in. And trade associations are terrific because they typically have a couple of things.

[00:29:31] Either, they have consultants that advertise, write on their websites for gigs. And oftentimes you may or may not wanna hire the consultant, but consultants are used to, to telling you about their work and themselves and what they can bring to the table in a free venue in a first conversation. So that's just part of their equation. If you get a consultant on the phone, who's in the industry will be happy to talk to you. So that's one. The second thing is there's, you get full list of, of companies in that business and very, and it's broken down. So it may be the coffee association, but there could be growers and roasters and retailers and all kinds of, and distributors and manufacturer, and packaging companies all related to coffee.

[00:30:11] So you could pick and choose where it makes sense. And you may wanna speak to various ones. And the other one that part of trade association, which is great, very often, the boss of the trade association. He or she has been in the business for decades and very often, they founded the association and continued to run it. And it's a quasi organization and they're doing it to, to help their industry and they're thrilled to help you. All these things are very doable. People are, again, we talked about this, are happy to help. It's just having the initiative. And sometimes people have the initiative, but they're not sure exactly how to do it.

[00:30:45] And so, that's why the handholding piece related to the buying process is what separates those who get to the finish line or not. Whether it be, knowledge that they have accessible at their fingertips. That they've either acquired or they have someone that holds their hand and imparts some experienced advice to them. An unbiased advice that helps 'em get to the finish line.

[00:31:06] Ronald Skelton: The other thing I did is because, some of those reports out there that do in-depth analysis, they're actually expensive, right? They're 25, 30, $50,000. But, there's websites out there, one I'm thinking about is search funder. They have the, is it I B I S world Industry reports? On a mod of these industries for free, and they just happen to have stuff on coffee.

[00:31:25] And that's a detailed report. Something you would've to pay thousands of dollars to get your hands on. And, that gave me the ammunition to actually have decent conversations with these guys. Because I wasn't coming in and gonna tell me everything. I had already like, Hey, I read this on, in a report. This is what I see in the industry. This is what I think I like.

[00:31:40] Richard Parker: Right and they respect that. You learned enough to be dangerous, right? Another site that actually is, helpful for a lot of people is Biz Miner, B I Z M I N E R. 'Cause they'll do a lot of reports. Very granular reports of industry, city location, and a lot of good metrics related to, average revenue. What average margin should be. 

[00:31:58] Expense percentages for payroll, rent, et cetera. A whole, lots and lots of metrics and very valuable. And again, everything we keep talking about keeps some back to the same thing, which is educate yourself. And if you're not gonna get educated, the chances are you're not gonna get to the finish line. It's just that simple. This is, infinitely more complicated than buying a house. I forget who it was. It might have been a broker we were talking to or whatever. We were laughing one time. See if people typically spend more time researching,buying airline tickets and planning vacations than they do preparing to buy a business.

[00:32:27] And it's true. I mean it's, they figure out, okay, how hard could it be? And don't confuse how hard the prosecutor, like most people, they may be capable of running the business, but buying the business is a whole different set of skillset. And oftentimes an individual's only comparison is when they may or may not have bought real property. And so they get the, the agents in that industry may or may not be better, but the things that have to be done related to a property. My wife runs a title agency. Title business. And when she does a closing on a transaction, let's say her checklist is a hundred things.

[00:32:59] And that could vary, plus or minus a few percentage points from one transaction to the other. When you're acquiring a business, you may say have that same a hundred point checklist, but it differs every single time. And so, the only comparison very often people have is when they bought property. So they went to see someone, the owner showed them around, they went and got an inspector who told 'em everything that's good or bad about the property. They went to the bank, and the bank said, oh yeah, you got all these bricks. We'll lend you money. They got a mortgage and they get to a closing.

[00:33:27] And none of that applies. Banks don't financing. No one's doing the inspection, except you. Sellers aren't helping you. If you don't ask them the question, they're not telling you. Neither is anybody on the other side. And the checklist is completely different. So the point of comparison that people have to what this business buying process looks like is just an inaccurate, it's inaccurate context. And I get it. I understand it. So hopefully people make the,come to that conclusion pretty quickly before getting frustrated 'cause they're, buying a business is not difficult. I mean, I went to two years of community college.

[00:34:00] I didn't go to college. I mean, it's just all learning on the streets and, learning and doing. So buying a business is not difficult, but it's complicated. So again, it's not difficult, it's complicated. Anybody could do it. You just have to prepare properly and learn, right? And know how to do things. If you buy the wrong real estate time heals every real estate error. So if you buy the wrong real estate, as long as you can service the debt and hold out, you're gonna be okay. You buy the wrong business, you're bankrupt in a year. 

[00:34:23] Ronald Skelton: I get that. And I always joke around and tell people I have more education than the average fool should have. I've got multiple degrees and at one point in my life I thought I wanted to retire to be a college professor. Then I did some adjunct professoring and realized I don't like snotty nose kids and mommy and daddy's paying their way through college.

[00:34:38] But, let's go, so we covered the first three things that you were talking about there. Making sure that you educate yourself. You know what business you're looking for. Now they've done their prep right. So what is the next step? Do you like broker deals and on market deals? Real quick before we go to that realm, one of the things I also learned doing this podcast actually was you were talking about don't expect the perfect business.

[00:34:58] I was turning businesses away, left and right. Probably passed some really good deals up. 'Cause we were looking at quite a few at the beginning. 'Cause I was trying to figure out where I wanted to be. At first it was like anything profitable. That said, one of the things that somebody said to me is like, why are you expect the financials? Like why are you expecting these small business owners under $5 million purchase price to have perfect financials if they don't have a broker that cleaned them up?

[00:35:19] I was like, 'cause I only know how to read perfect financials. I'm not a forensic CPA. Get better at reading financials or bring somebody on to do it for you, but don't expect them to have it. They're not going to. You're gonna walk past good deal after good deal after good deal because you expect a perfect balance sheet, profits and loss statement and cash flow analysis, which none of them have, right?

[00:35:38] Richard Parker: No, they're not gonna have that. But it doesn't mean it's a bad business. And it doesn't mean that the financials are not in good order. What they just need to be is beefed up a little bit. Often they're using QuickBooks. They're managing their business from the financial standpoint that makes sense for their business.

[00:35:52] And some of them don't have even do monthly statements and maybe there's a lack of sophistication and that's okay. And interestingly enough, in the smaller end of deals, 50% of the deals fall apart in due diligence 'cause the numbers that were represented simply don't match up. Where you went wrong with those and what you seem to readily admit is you were too neurotic about these perfect financials versus saying, I'm gonna get in there. And I'm gonna either make sense of the financials or they're not. And that's why tell people before you start hiring accountants to do your due diligence, get ahold of all the financials because if they don't make sense to you, they're not gonna make sense to your accountant.

[00:36:25] And sort of look in and see what's needed. And oftentimes you could reconstruct it and there's a, as long as there's a paper trail and its infinitely easier today than it was 10 or 20 or 30 years ago because so many people are paying by credit card and debit card or online. And so, there's always a trail. The one thing is where people run into danger is this so-called, fatuation withcash businesses, which is a crock of shit. Excuse my language. Because, first of all it's illegal, number one. Number two, if the seller can't prove it, you can't pay for it.

[00:36:53] Number three, it's shortsightedness to run a business and take cash out. Because for example, if you're buying a business, the seller gives you like the wink. By the way, we take out a hundred thousand dollars in cash outta the business. That doesn't mean they're taking out a hundred thousand dollars of cash and putting in their pocket. As I said before, if they can't prove it, you can't pay for it. But they're probably paying a couple of employees by cash or they're buying certainraw materials or inventory or desks or computers for cash to offset it. And so it's not a hundred thousand dollars. And again, if you can't prove it, you can't pay for it.

[00:37:20] But if you get back to the site idea related to the financials, you get a QuickBooks package. You're gonna be able to look at it and be able to look at it with your accountant and you make sense with it. And you'll have a lot of questions, and questions typically beget more questions. But again, where you ran into trouble is stuck in a dropdown to point number three of the perfect business where, you're expecting a perfect scenario and it just doesn't happen. They're small businesses and, often they're run well to the extent of what the business is. But because they don't have good books and records, doesn't make them bad businesses. On my intermediary side, I often spend a six months to a year with a business owner getting their business ready for sale.

[00:37:59] And that oftentimes includes getting the books in records in real good order. To be able to present them properly. I think your earlier question was related to, brokers or sellers. Was it related to disclosing information or, being an impediment or?

[00:38:13] Ronald Skelton: No. I'm just curious of, like, if you're new brokers present a better picture, but often it's not a fully true and honest picture.

[00:38:20] So you still gotta have a thick skin enough and a BS meter enough to go, wait a second, something's not right here, but you are gonna get cleaned up. Especially if they're working within an advising brokers. I mean, it has some skills to do some, cleanup beforehand to where if you go totally off market, a lot of the off market deals I've looked at their finances are, I hand my receipts over every quarter to my accountant. She does my taxes. And other than that, I've got it in a spreadsheet. I've been given Excel spreadsheets with accounts payable and accounts receivable. Didn't even have QuickBooks. Especially small pest control, small home service businesses, they don't have QuickBooks.

[00:38:53] They don't have, they just never need in 25 years of running it, they didn't need it. It didn't exist when they started and there was no reason to change the way they'd been running it.

[00:39:00] Richard Parker: And I understand that and respect it. But on the other side of the equation of looking at a buyers, they do have to put that into place to make it sellable.

[00:39:06] So I know the earlier question is, as you were talking, triggered that, which was looking at businesses that are handled by buyers, brokers or off market or whatever. And my perspective on that is I like 'em all. So I think, starting off early on the resource of the business for sale websites is very good for you to make some mistakes. And you can post some questions and gives you a flavor for looking at business. Get some idea of valuation and gets your feet going a little bit, in the process. Once you start, yeah, contact all the brokers. There's some good ones. There's some awful ones. And so what, right? Like in every industry and some are helpful and some are not. But the broker, there're gonna be some much better brokers who will do some of the things that you said they do.

[00:39:46] Brokers used for three things, from a buyer's perspective. They can help you gain access to businesses for sale 'cause they have listings. They can act as a buffer between you and the seller in case they have to deliver any bad news because the seller's probably gonna be training you. So you wanna maintain a good relationship. And the third thing is they've done it before and they know the documentation and paperwork that's necessary to get it to the finish line. They're not gonna dispense unbiased advice. They're not gonna do anything to jeopardize the deal. They're gonna put together the numbers in the best way possible.

[00:40:12] Some of them are, will do a better job. Some of 'em do a worse job. Other ones are gonna be completely transparent. Other ones are putting lipstick on a pig. And you know what? It all doesn't matter because you have to do your research yourself. And so when you investigate it, and if something doesn't seem right or you're asking questions, it really doesn't matter what they say or what they tell you or how they present it, because it's up to you.

[00:40:32] The onus is on you to diligence it, right? I mean, if you do it the right way, you'll uncover every problem. No matter what they've done. For example, the big thing is owner benefit seller's discretionary earnings or seller's cash flow with all these add-backs. When you go into these websites and everyone has a different terminology, so you first have to make sure they're talking about the same thing. But the, first question is, is well, just tell me what's in that number. Let's start with that.

[00:40:55] You're representing, the seller's discretionary earnings or owner benefits, or whatever the heck they call it, terminology varies. It's $250,000. Well, tell me what's in it. And if as long as what you're doing most is, for example, you find out there's $150,000 add back for depreciation. Okay. And people, you don't know what you're doing. It sounds right to you. Well, what happens if you gotta buy equipment in three years? You gotta need a capital expenditure, allowance to reduce the depreciation, right? Or certain things like, they'll add back, cell phones and trips and vacation.

[00:41:26] Well, if it's personal that's fine, but if you need the cell phone to run the business, you can't add back your cell phone. Or their truck, well, your truck's making deliveries. Well, you can't add back the truck. So all these type of things is through just asking the right questions. And it's like, you listen to everything the broker and the seller tells you. You take great notes. It's wonderful if you could like and trust them. But you have to validate everything. And it's a very good perspective from a buyer is, you wanna form a nice relationship with the seller because you wanna get their guard down.

[00:41:58] You never wanna let yours down, but you wanna get their guard down. And everything they tell you, they're trying to sell you, their goal is to sell you. You're going in to buy a car dealership. They may be the nicest guy or lady on the planet, a salesperson there, but they wanna sell you the car. Make no mistake. So that's their agenda. You have to verify it.

[00:42:14] Ronald Skelton: I walked into a, a friend calls me and says, Hey, my grandparents is about time they sell their company. Would you come take a look at it with me? And I was like, all right. So I go over there with him and, not to present myself as a broker or buyer.

[00:42:25] I mean, not even the buyer of that, but they knew what I did when I was in. And the interesting thing was I said, Hey, he's like, well, can you tell me a rough estimate of what my business is worth? I was like, can I see your financials? He's like, sure. He walks me into a room, I'm not kidding, walks me into a room and it's just filled with file cabinets. Like big tall file cabinets. And he pulls out these notebooks that are green, like these green notebooks. And I'm thinking, oh my God, and I started looking around. There was not a computer in this manufacturing plant. And they had a computerized wing, like green screen wing computer that did their timecard. But nothing else, they had computers. And his accounting was on those old, accounting notebooks that they used to keep. And I was like, okay. I was like, do you have a balance statement? And he pulls out the right one and showed me it was the cleanest damn thing I've ever seen in my life.

[00:43:12] Richard Parker: Some of those businesses represent phenomenal opportunities. Just because they do it a certain way, doesn't mean it's the wrong way. Okay. And it works for that business.

[00:43:21] Ronald Skelton: And I told him, I said, this is the cleanest financials I've seen in a long time. He goes, it should be my wife's a CPA. They were in their late sixties, early seventies, this is the way they'd always done it. They had a kind of a distaste from computers, never needed them. And this was working for 'em. 

[00:43:33] Richard Parker: So where people run into trouble, for example, in that exact scenario, a buyer goes in, they've seen three or four other businesses. Now this individual, has the financials, which are pristine. They're just not, technologically advanced or in QuickBooks.

[00:43:49] And they tell their, they see three other places, they immediately draw the conclusion that the business is in disarray or they tell their,start talking to their accountant, the accountant says, tell 'em to email me the QuickBook files. Well, there's no QuickBook files. What do you mean? Well, they're on, they're handwritten. Those are, you can't buy a business like that. Well, of course you can. But you're getting all the wrong advice and you're drawing all the wrong conclusions. And sometimes those businesses, those businesses represent these tremendous opportunities because you could imagine, if they haven't, automated that part of the business, there's probably other areas that they haven't automated.

[00:44:23] Or those businesses what you see frequently is the parts of the business that are really not the core business, they haven't paid any attention to. It's not in disarray, but they haven't paid any attention to. But oftentimes you meet someone, like in that case, that individual could be one of the most foremost authorities on manufacturing of that particular product, because that's what they know, that's what they focus on. And you know what, that's what keeps the cash registered changing. So that's what's important. And they're usually, not always, but they're usually terrific opportunities. 

[00:44:55] Ronald Skelton: They weren't ready, quite ready to sell. They just wanted like, what is it gonna look like to sell? Two things I told, if we can only focus on two things, what would it be? Here's what I told 'em. I'm hoping I was right. I was like, bring your books back in. Get QuickBooks, get some type of accounting program.

[00:45:07] Bring 'em in 'cause the buyers are gonna wanna see it and you'll get more buyers to look at it 'cause they're gonna look online. What you want 'em to do right at this stage is let your wife do it exactly what she's doing. Their job is to put all that data for at least the last three to five years into the computer system and just keep up the speed with her. Don't change anything 'cause it's done well. I'm sure that a forensic accounting, I'm not an accountant by any means, but I don't, do it as well as you're doing now, but just have somebody keep up with your wife. And the second thing I said is the same thing you just said.

[00:45:34] Like, everything you do here is in your head. This guy would go out and maintain his own machine work out there. And I said, you gotta get standard operating procedures in place for things. So start getting knowledge outta your head. Have somebody, walk around and take notes of what you're doing when you're doing your maintenance, when you're doing your stuff. That stuff's all gonna be documented. 'Cause the next guy is the next operator is not gonna be a senior as you. 

[00:45:54] Richard Parker: And people don't understand in the sales process, so if they get the right intermediary they'll help them through that and get it prepared. And, a large part, the numbers, if you take a look at the business brokerage world, on the Business for Sale website are typical Main Street USA businesses, it's reported that 75% of the businesses that go to market don't sell. 

[00:46:11] And it's for all of those reasons and preparation and what have you, and it's pretty, pretty easy to do as far as the preparation's concerned. The buyers that are,budding entrepreneurs that are listening, it's a very good lesson, and I hope a lot of 'em take these experiences of visiting businesses and all these examples that we've given because there's a real good lesson in, in all of this, which is, run your business, like you have to sell it.

[00:46:32] And so from the time they start, all the pain points that they had going through the process, and they finally got through to the finish line and acquired a business. So you can't just stop thinking about, what a mess the business for sale market is, because you should use that to your advantage and say, Hey, the time is gonna come. Everybody sells their business, right? 

[00:46:52] Ronald Skelton: Everybody exits one way or the other. 

[00:46:54] Richard Parker: Yeah. So whatever, there's an exit going to take place. And so if you make the business easy to sell, and by that I don't mean pricing it inexpensively. You make it easy for someone to buy. 

[00:47:04] You've got process and procedure. And one of the ways, one of the questions that I love to tell buyers that they should be asking sellers, because there's about 36 key questions that you gotta ask at every seller. But a couple of them are, for example is, what happens if you get hit by a Pepsi truck tomorrow? Number one. Number two, what keeps you up at night about the business? And if they tell you nothing, keeps up a business, they're full of crap. Because everybody, if you own a business, something keeps you up at night about the business. And the third thing is what's a very disarming question, and people, sellers don't realize what is actually being asked is, how much vacation do you take a year?

[00:47:35] And the reason why that's really important is because, you're gonna get a tremendous insight to the landscape of the business. If you get someone who takes a lot of vacation during the year and is a successful business, means the business runs very well without them. They've got a good team in place and they got policies and procedures. If they tell you, I don't take any vacation, it's either one of two things, either the business is all them or they haven't put any process or procedures into place and they micromanage the business and there's an opportunity for you to allow people to grow as employees if you take over the business.

[00:48:06] So you have those three questions, which I find very helpful to, again, for buyers. Another thing that buyers need to pay attention to in those type of things with policies and procedures or what's really happening 'cause the seller will tell you, Joan, she takes care of everything. You got nothing to worry about. But a good way to measure that when, that's why I like to have the meetings at the business's location during business hours. Because if the seller can't have a meeting for an hour or two hours without being interrupted several times by the employees with questions, you know that everything goes through him or her.

[00:48:33] And that's not the way you wanna build a business. No matter what the size is, you have to empower your employees to do their job, do it well, and put the procedures in place to make that happen. So again, they might be things that, one buyer looks at and says, shoot, guy doesn't take any vacation, or, if something happens to them, the business evaporates tomorrow or says nothing, keeps him up at night and we know that's nonsense. Or it could be the buyer number two looks at that and says, Hey, this is a tremendous opportunity, right? 

[00:48:59] They got a good product, whatever. If they would just put some of these systems into place, or the seller's probably the one preventing the growth. It's really in the eyes, the way you look at it. And proper knowledge, education and training is how you, are able to put on those lenses to be able to see beyond, what's just at face value and make these, and take advantage of some of these opportunities. 

[00:49:20] Ronald Skelton: A lot of people don't realize, like we were in that, that particular one. One of the things I did notice that I couldn't carry on a five minute conversation without somebody needing something from him.

[00:49:27] Like every five, 10 minutes somebody was in his office. And, that's how I knew you had to have standard operating procedures and he needed to like distance himself some from it. 'Cause like that there's something to be said that. And then I got to talk to, one of the employees there because like, I'm friends with their grandchild. And he said, he's the worst micromanager I've ever met in my life. And I said, the company can't sell that way. Because, even if there were standard operating procedures and everything else, when somebody hires somebody and they, the only people that'll work at a place that's been micromanaged for the last 30 years, are people who need to be micromanaged.

[00:49:59] Richard Parker: You need to be micromanaged. You got the wrong people. 

[00:50:02] Ronald Skelton: Yeah. Well, that's the problem. And I've done this in business, I surrounded myself with the wrong people in business once or twice before in my life. And to fulfill my own needs, like when it clicked, you're like, wait a second.

[00:50:11] I love to solve problems. So, one of the things I consider myself as a really good problem solver. So I had a business for a little while where that, I didn't think some of my employees could tie their shoes unless I showed 'em how to do it. One time, the first time, and then they wouldn't bring that back to me, but, oh, there's a knot on my shoelace now, how do I undo the knot? 

[00:50:26] And you had to teach 'em everything at least once. And it clicked in my head as, I positioned myself in a company where everybody that's working with me, they needs me. And I don't need to feel needed anymore. I need these guys to do the dang of job without me.

[00:50:38] Richard Parker: But, you know, you come older and your ego goes away. I mean, the biggest evolution in my business career. And at the beginning it was probably insecurity, or what have you. And I recognize that is when I, started hiring people that are, they're bigger, better, faster, and a hell of a lot smarter than I am.

[00:50:52] And a lot of it, again, probably has to do with the ego and security. The way I look at it right now is, and the way sellers should look at it is, again, this is just my personal feelings. If I'm the smartest guy in the room, I'm in the wrong room. I don't wanna be the smartest guy. And so again, business owners, they have a tendency, some of them, they're micromanager. You see all that but, it really all comes back to a lot of this where we're talking about these scenarios. Where people come across, and you and I both have probably, oodles of war stories of these examples is, you come across all these type of sellers, owners, different ones.

[00:51:26] You walk down the street from that particular owner and the next person has great procedures in place. Second tier of management. They don't have to be there. They take 6, 8, 10 weeks vacation year. I have one client takes a hundred days off vacation a year. They exist, so you can't get discouraged the time possible and having surrounding yourself with the right people if you have to go to them for questions, because all of these scenarios, that's the beauty of what you and I do, 'cause every situation is so different. 

[00:51:55] And so it, as long as you know how to handle it, sometimes the greatest opportunities, that business that I told you about early on, that I was a hundred grand and I couldn't afford and end up working out a deal with the owner. We turned it into a four and a half, four and a half million dollar company with ridiculous profits. And I could list out 50 reasons why I should never buy that business. And I could list out one reason, that I knew why I should buy it. And that was, I mean, their books and records were disarrayed. Their technology was old. Some of the people weren't even showing up to work. But they had a tech, one part of their technology, which was really impressive and could be exploded.

[00:52:34] So you had all these things one side of the ledger. 50 things at least that would tell you why I shouldn't buy the business. But the one side of the other business was, I knew that particular business would dovetail perfectly into my company. And there was a tremendous rollup opportunity because the service was going to be, required more and more frequently by retailers as they lowered their store personnel count.

[00:53:01] I knew without question and complete conviction, even though I could have been wrong. At that point in time I really felt, that I knew that this was gonna be a tremendous path for the next several years, and it's something that I could build upon.

[00:53:14] Ronald Skelton: I like that. What one or two things with all absolute certainty that you can improve upon in the business? That's something we should always identify is like, I look at, like content sites and newsletters and stuff. And a lot of times I just look at like there's some things I like. Just at the first glance, you go, I know absolutely positively, a hundred percent, I can do X, Y, and Z to this and improve it.

[00:53:33] Richard Parker: Yes. And oftentimes when you talk about, small business buyers, they don't have the experience of having owned any businesses or any, upper level management position, potentially. They know they have a few bucks. They wanna buy a business. They wanna get something. But what happens is when you go through this process properly and you're looking at a bunch of different businesses, you take something away from every conversation and discussion.

[00:53:53] And when you go meet with a seller in a business that's completely foreign to you today, and you do start doing research and every question you have begets more questions and one place leads to another, you start doing more research. It's amazing what you're able to extract from your knowledge that you've acquired in a very short period of time. You were looking at a plumbing supply business, now you're looking at a pest control business and the next thing you're looking at is a property management company. And it's amazing. Like a Venn diagram has an overlap. It's amazing how much overlap there is and what you can pull from one thing, what you learned in one can be applied to the other and you just get smarter as you go.

[00:54:26] Ronald Skelton: Yeah. Well, we're over on time here. I think we're having a great conversation and stuff. So, how would you like to wrap this up? If somebody could remember two or three things from today's show, what would you want 'em to remember? 

[00:54:36] Richard Parker: It's a great question. So from a buy side clearly is, take the time and I'm not giving anyone a sales pitch for the materials or information to provide it.

[00:54:44] You've got to get knowledgeable whatever it takes, however it is, you've got to get knowledgeable before you jump into it. 'Cause the statistics are against you, right? 90 plus percent fail in our business. We're a little better, 82% of our clients have bought a business in six months. We're slightly better than that. Or a hell of a lot better, right? But prepare. There's lots of good information. Align yourself with the right people. Get good information before you jump in to start looking at businesses. Really educate yourself. The other thing is understand that this takes time.

[00:55:11] This is the ultimate marathon and not a sprint. The average business from the time a business is listed until it sells is nine months in the smaller category. It's going to take you in a perfect scenario. It's gonna take you six months to buy a business. It's going to be, four months of looking, a month to negotiate and investigate, and a month of due diligence. So it's gonna take you six months. It doesn't happen overnight. Don't spend this ridiculous amount of time just searching endless business for sale listings. Top of the list. You want to educate yourself, and that's perpetual is, meet with a bunch of different businesses until you can figure out exactly whatever skillset that you have, marries perfect to that type of business.

[00:55:48] And then you really begin your search in earnest and you can go off market and there's good ways to do it. And don't get discouraged. A lot of deals fall apart. You're gonna meet all kinds of people, but you meet mostly nice people and the onus is on you. And everything, this is very doable.

[00:56:01] Ronald Skelton: So, Richard Parker, richardparker.com Thank you for being on the show. Great information today. Hang out for a second afterwards and we'll call that a show.

[00:56:09] Richard Parker: Thanks again. Pleasure being here.