E167: Peterson Acquisitions: A Unique Approach to Buying and Selling Businesses with Devin Craig

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit podcast. Today I'm here with Devin Craig. He is an acquisition entrepreneur broker with Peterson acquisitions. And, we're going to have a blast here today talking about all things buying and selling and growing companies. Thank you for being on the show, Devin.

[00:00:15] Devin Craig: Yeah, thanks for having me, Ron. Good to be here. 

[00:00:18] Ronald Skelton: I used to do these, read these really long bios of people every time we put somebody on the show. And then the first question I have for everybody is kind of like, tell me how you got started. Give me your origin story. I tell that repeating joke. Hey, you were born and now you ended up on a show about mergers and acquisitions.

Can you fill out the gap in between? So let's just start there. Like kind of how did you get into this space? Mostly focused on like the mergers and acquisition buying and selling the companies. And how did you become a broker in that space? 

[00:00:43] Devin Craig: Yeah, yeah. Sounds good. Yeah. So actually my wife was kind of my initial inspiration. She started her own business from scratch. She's a marriage and family therapist. And so she started that, oh man, I guess it's been like a dozen years ago now, and she's done really successfully well. And so I told her I kind of wanted to go do something like what she's done, right?

So she had the opportunity to go first. I was still corporate America, doing my thing or whatever, and various different kind of big fortune 500 companies and just, not loving it. I think like most, acquisition-preneur, they start out within a, in a situation they're not loving and they want to get the heck out of it, that was exactly me.

And like so many of the other buyers that I meet now when I'm facilitating a transaction, but what I did was first I started with an education. I got a master's degree, uh, from Gonzaga and org leadership. That actually sparked me to start a business plan to do consulting. And so I started doing that coaching, consulting and professional speaking.

But I learned that starting something from scratch is really freaking hard. And, I saw my wife go through the same thing. I'm like, man, does it have to be this hard? And so through my like research and learning about this process, I got the idea planted in my brain. Actually from a really, not an acquisition-preneur M and A space expert, necessarily this guy named Mike Johnson on LinkedIn, he more so talks about how to free yourself maybe from something you're not loving by buying your cash flowing asset basically.

And in his case, it was not specifically businesses, but I took it off from there in a rabbit hole and started going on that journey. And I started following all the big gurus, um, that talk about this. You know,Carl Allen and all these like no money down, Dan Pena, all these folks. I started following these guys.

And so I went down that rabbit hole and started shopping and searching for a business to buy once I learned about this kind of process or approach. And so I eventually did, several years back I bought a direct mail marketing company here in the state that I live in here in Washington state where I'm at with my wife and two young boys.

So I bought that and the plan was to keep the day job at the same time, but actually I got let go right like 30 days before closing. It was like divine intervention, God saying like, this is where you're going now. So that's what I did is I jumped full, full bore into entrepreneurship and took this thing that was a 25 year old company that in every facet was operating like that, it had a lot to improve.

And so,just poured myself into that and started working to improve the business. And did very successfully, but I also just love that deal process too. So I went and bought a second business. Both of these were at the SBA kind of programs that were set up, but also at the same time, as I was going to look for the second one, I started going even further into the education and did all the big gurus like mastermind courses and the online courses and spend a stupid amount of time and money on those things, man. 

But it was all good education. So I did my second deal then, and the education helped me to do that. Did a third deal that was a customer of the first business I bought and just kind of kept going with it. Eventually part of what all the gurus recommend is to go get your own deal flow going.

And so that's what I did is I started going to, I use my direct mail marketing company to do that, but it was still a lot of time and energy to like do off market deal sourcing. So I started to build that pipeline, started finding sellers or business owners that were willing to sell, but I wasn't willing to buy them, um, at that time for whatever reason.

And so,they asked me if I'd help facilitate the process for them. And so the thought hadn't crossed my mind because honestly, I didn't have a ton of great experiences with brokers, to be honest. Most of the gurus you talk to and you listen to, they are very anti broker. And so I was kind of in that vein all along.

So when I got asked that at first, I'm like, yeah, there's no way I don't want to be associated with that crowd. I gave it some more thought and I talked to a couple of mentors of mine, one of which who was a business broker, and used it as his like deal sourcing. Basically for businesses he would buy and then also extra income.

And he has a brokerage here in Washington State. His name is Aaron Muller, super great guy. He's written a book that's not so much on acquisition focused, but it is about acquisitions. It's called Lifestyle Business Owner. And, yeah, just a great friend and mentor. He, was open to me working with him as a broker.

I'm going to do it differently. Then any of these folks who've gone before. and so Aaron was one of those folks who was doing it differently. he just had a different process that I liked, but through my research, I found Peterson. And when I found Peterson, I'm like, yeah, this is it. Chad Peterson and team and what they're doing is truly unique in this space of business brokerage. 

Like smaller deal sizes or in a lower middle market or whatever. Doing some really, really cool stuff. So I've been working on them since last year, the partner broker here in Washington state building on our practice out here. But under the Peterson umbrella, basically it's a joint venture kind of setup.

Um, unlike a lot of the other franchise brokerages and stuff like that there's a lot more infrastructure that we get to work with. So yeah, I've been working with them and now I still own those businesses. I'm selling one. And I'm kind of using the methodologies we talk about in Peterson, which I'll get into a little bit later of using that in to put that back into our companies.

So that we can continue to kind of grow basically. But so I got the brokerage and then still have four other businesses that I do. I still do some consulting, and then the direct mail marketing company and the other two that I bought kind of through that process. So I'm kind of going full bore out of Peterson now.

[00:06:06] Ronald Skelton: So you got the direct mail and then one of them, what was the other one's mail related? 

[00:06:11] Devin Craig: Yeah. It's like, it's more of like a retail version. The first one mostly service businesses. The other ones, like a shipping and logistics, but it's, mailbox type store, that kind of thing.

So kind of like a non franchise UPS store, but that does a little bit more like on steroids, so it's more consumer focused. It's an offshoot, but not, I tried, I thought it was going to be more of an intertwined, but it wasn't really, so they are really separate running businesses. 

[00:06:31] Ronald Skelton: I seen that one. The reason I was curious about it is like our local U. S. Postal service here in the small, I told you I live in a small community in the woods out here in the northern California. It's not very good. Like to the point where we went and got a post office box at the facility because they just don't regular deliver to our house correctly, right?

It's raining or something's going on. The lady just won't bring our mail. All right, whenever she feels like it. This is U. S. Postal Service. So I thought, man, there's a play here to rent a space, put boxes in there and let people come get their mail. And I know some other people have done it.

They're decent cashflow, recurring revenue type of small scale. It doesn't take much to run one, right, as far as man hour. One of the things I did many, many years ago is I used to get contracted in the, to set up FedEx stores. So when FedEx would open a new store, I would go and install all their electronics, point of sale systems, their network, network. They would give me blueprints of the store and want like, okay, the router has to go here.

This cash register goes here, the scale goes here, the, and I would go and set everything up for them in two or three hours. I could have the whole place, in and out of there. 

And then the direct mail out here, you're a man of my own heart there. I made most of my money in the real estate business through direct mail.

I'm trained by Dan Kennedy in this, in the space. I spent quite a bit of money in his courses. I still have them stacked around here somewhere. And everything that man ever wrote, I bought.Every book, every program, everyone or whatever, I, probably spent a good 20 to 530 grand with him.

But I'm a big fan of that. And my master's degree is in marketing. I say I won't, I'm not interested in a brick and mortar company, but if somebody had a really good, direct mail company that was local and I didn't have to go to Washington to run it, I'd probably be interested. It's a good business to be in. 

[00:08:11] Devin Craig: Yeah. Yeah. Yeah. It's done really well. And like people think mail is dying, but, definitely not direct mail. That's for sure. This is growing. Sure, letters, people are sending me these letters and stuff. And that business does do that as part of the service for the businesses we serve, but direct mail, man.

I mean, even the big tech companies are using a left and right because they see the value in it. And so I constantly get stuff from all the, um, what online places that ship food and stuff like Google mails me things as a business owner to say, like, use this coupon to do Google ads. I'm like, you guys know who you are, right?

And you're like the biggest online company and you are mailing me stuff. So yeah, even the big guys do mail all the time. 

[00:08:47] Ronald Skelton: Yeah. And, like I was looking at one Oklahoma was like, probably direct competitor for what you do. And, talking to him and his main customer was like, churches and charities. Cause they do subscribe, basically,

[00:09:00] Devin Craig: People up for money. 

[00:09:02] Ronald Skelton: People up for money. I'm trying to think of a polite way to put it, but you're dead, dead on with what it is. There's a name they call it. But basically they, they sent out call for tidings for people who haven't been to church in a while.

Like, so they'll, they'll send it like, I go to church, I believe. But I was like, if you start sending me a bill to my house, cause I haven't been to church in a couple of weeks, I'm a little offended by you. 

[00:09:20] Devin Craig: Yeah. I wonder how that went, but yeah, same thing. I mean, our clientele, cause we're, it's a hyper localized focused business, this one and same thing.

Yeah. It's a lot, all local nonprofits, all the school districts use our business. Like it's all local, but yeah. Churches and nonprofits send a lot of stuff because it works, you know? And so they, the ROI they get on these things is like 10 X. It's crazy that they send out 5, 000 pieces of mail and they're getting tens of thousands of dollars back.

[00:09:47] Ronald Skelton: One of the best ones I've seen, and I haven't seen this in a long time. I still own a bunch of real estate in Oklahoma. I'm at that stage where a lot of it sees that I'm high equity absentee.

So I ended up on their mailing list of getting letters like, Hey, would you like to sell your house? My taxes are in a different state. It's like, it's just, it shows up in their mailing list. One of the best mailers I've seen recently was somebody sent me a Keller Williams. Hey, would you like to sell your house letter.

But it had a flyer in there with a bunch of advertisement of things you would do before you sell your house. Insulation, roofing, paint. But so they did is he sold a flyer card. He sold ads, on that card to pay for his mailing campaign. I think that was absolutely brilliant, right? Because you know now he gets the mail for free and it's a it's a real estate broker or agent and 

[00:10:31] Devin Craig: 100 percent yeah. Like 100 percent return like you paid nothing to get good leads, you know, that's amazing.

[00:10:37] Ronald Skelton: You might even, depending on how much you charge for those little spots and how much, how well you did it. You might even be able to turn it into a minor profit center, right?

[00:10:44] Devin Craig: Exactly, and that's the third acquisition I made was a customer of that direct mail marketing company because the direct mail marketing company didn't produce a lot of its own proprietary content. But there was a customer of that we did all the mailing for that did have kind of this branded thing.

That was this local mailer, basically like one of the penny flyer looking things with coupons in it, Sudoku, stuff like that, because there wasn't really any in that geography. And so we saw the benefit of that and he was kind of winding down or doing something else. So we just took it over from him. And we say, Hey, can we just do this for you kind of thing.

Because there's still, a big demand and need for that kind of stuff. But that's essentially kind of the same thing. It's like this aggregated, for someone who approaches us and they want to do like a, just a direct piece themselves, but too expensive. This is a good alternative.

It's like, okay, it's a lot cheaper for you to be just on a page with a few other folks kind of thing. So it gives us another service offering, but yeah, that's super smart. 

[00:11:38] Ronald Skelton: Before I got into mergers and acquisition, I had a real estate investment firm. We probably spent between 2, 500 and $3, 000 a month in stamps and mailing expenses, paper, ink, stamp.

But we had to do it in house because we had two interns. Well, we brought two interns in to do the list, main, maintenance. We had an outsource for a little while, but it's really hard to find somebody that does small batches. And unfortunately we were sending, even though we're spending that much money, we were sending a bunch of different things, groups of a hundred of this letter, that letter. We had a business that did, help homeowner stop foreclosures.

And if they couldn't stop it, we would buy the house out of foreclosure for them through either through the short sale or negotiating with the bank or whatever. Rarely, bank owned properties, but you know. So we tracked every single case in the state and multiple times throughout the process, we'd update them on what's happening in their case.

It might be a thousand of one letter going out and 100 of another and 50 of another, depending on the stage. So it was just constant management of, small batches. And I just couldn't find, I couldn't find a mailer that was really good at small batches. They all wanted to print the same thing a thousand times or 10, 000 times to send out.

[00:12:48] Devin Craig: That's right. Yeah, exactly. Yeah. And this mailer I have because it's hyper localized, like that's all we're used to doing a small batch stuff. So you're exactly right. You can go to the big guys and get the super cheap or if you want kind of more hands on. That's what that business I own is kind of that super hands on high quality, fast turnaround can do smaller scale stuff.

[00:13:05] Ronald Skelton: That's cool. Let's talk about the process like you, a lot of people think that it takes, they can buy a business in the first 30 days. They go take a course that they're going to buy a business in the next month. The search process, what did it, how long would it take you to find your first acquisition?

[00:13:19] Devin Craig: I think like over two years, two and a half years, something like that. And that was even with education or that was me investing in the education. And like, so it took me a long time.

[00:13:27] Ronald Skelton: So I've taken the, we don't throw shade on the show. I didn't tell you that beforehand, so we never talk bad about any of the gurus, but I've taken, you can talk good if you want.

I've taken both Roland Frasier's and Jeremy Harbour's course. I've interviewed most of the guys. Most of the guys I would take their course. Unfortunately, after I've taken Roland Frasier's and Jeremy Harbour's, I don't feel that I need any more because they both have so much information. Roland's course had like a 217 videos.

I haven't still haven't made it through all his videos and his good job, you know, right? But do you mind saying which one you went through? 

[00:13:58] Devin Craig: Oh yeah, no, I don't mind. It was, so I took Carl Allen's, I did kind of an offshoot of Roland Frasier. Like he had so many students that he had some students start to go off and do their own things, basically.

And so I kind of started plugging into one of those guys. So it was like a Roland Frasier esque, but it wasn't the exact stuff, but yeah. I did Carl Allen's. I think Moran Prebares. I did a couple of lesser known guys. Kyle Malian and Michael Byers. Yeah. They had Acquisition Preneur. Did theirs. 

[00:14:25] Ronald Skelton: And that fell apart in, last year, at the end of last year.

[00:14:29] Devin Craig: Yeah, yeah, they stopped doing it. But yeah, at least those and then obviously Peterson stuff too. I've gone through all Peterson stuff. So at least four or five. Yeah. 

[00:14:38] Ronald Skelton: Yeah. I've done a few and I've interviewed them all. Like, one of the things I did is even after taking the two courses, I started this podcast, like I still have questions. And I was like, I already had the podcast equipment because it's before COVID hit, I was about to start a different podcast on a just really cool, interesting people I knew.

I had the equipment and I had the thirst for knowledge. And then I started interviewing brokers, advisors, and people that have done deals to get the rest of the questions answered. You know, you go through a couple of courses and you still have little gaps, right? Then I realized I really love meeting people like you and doing these programs.

It kind of just stuck with it. So I don't know that I'll ever, I don't know that I'll ever quit. it's fun to do this. what's unique about Peterson that had you, you said a couple of times they do something different than the rest of the brokers and stuff. What is unique about there? What's their setup? What drew you to them? 

[00:15:21] Devin Craig: Yeah. Two things. One is results. So really, really effective in each one of the things that Peterson does. So the typical traditional thing is sell side brokerage. Okay. And, Peterson's really effective in that it's got a 90 percent effective rate compared to the 20 percent industry average effective rate.

And so that really drew me in, because of how just much they can get done. And once I started to learn how and why, like it made sense to me basically. But basically it comes down to kind of the values of the company and of Chad himself who founded it. He's been doing this for 25 years, 20 years.

And, he's been named one of the top brokers in the country and, um, done a ton of deals. And so basically this whole thing is kind of being built around what he's learned and done and built, like taking this all out of his brain and how he's been so effective. And so the brand and the process and all the training.

So like, that's what they're going through the process right now since last year doing is trying to download all this and put it into something that's like repeatable. Essentially. So all of us are getting to learn his methodologies and how he was so effective on the sell side. So yeah, really, really super effective on the sell side.

And it's basically because, he left no parts a chance. And that's partly what I experienced that I was frustrated with, sell side brokers when I was engaging with them through BizBuySell or saw they had a listing. I mean, it started with the basics, like return my phone call. Return my email like I had to chase freaking brokers down if it wasn't for me being so laser focused on wanting to do this. Like I those deals wouldn't have gotten done that I purchased because I had to hound those freaking brokers to get just on the phone with me. So it just starts with the basic stuff like that and some were better than others. But I mean there was a decent amount that I found that were just hard to get a hold of which was so surprising to me. So Starting from there all the way through the point of like properly pricing the business and helping the seller to understand and like managing their expectations.

Basically taking the approach, this is like Chad's phraseology, is he looks at it like once you client signs on with us, it's now our deal. It's not our business. So in other words, the seller is not calling the shots because they're looking to someone like a broker and advisor to be just that, to be that guide through that process.

And so we really take full ownership over that business and that deal from the sense of like getting that process done. So starting with evaluation, starting with seller expectations, they don't call the shots. We do. We help them understand how we value businesses properly for bankability. And so we have an internal expert who is a 30 year veteran who started the US bank, SBA lending program named Lee Levinson.

He teaches all of us about the SBA guidelines and most brokers understand that SBA is going to be probably the primary tool that most people use but they still don't understand the SBA that well. So we really use like their tools, their processes, their guidelines to put deals together. All the way up through like that buyer vetting, we're really thorough and the buyer vetting side of things.

So many brokerages, just sign an NDA and then hand over that information. We actually have conversations. We asked for them, like, how are you going to finance this thing? We asked him for the personal financial statements. I've signed probably in my lifetime now over the last five years, 500 NDAs and 99 percent of them just handed me the info with no conversation.

Only one brokerage that I met, actually expecting me to tell them specifically how much money do you have set aside to go do this and where's that money coming from? So Peterson does that as well. We do expect when earnest money goes up, it's hard money. When we, um, get to the financing portion, we insist on using the banks that we know do deals and not just their local credit union, who they said, her does SBA lending.

Like, no, we don't play those games. We use our 3rd party attorney. Who's not going to over lawyer the deal and make it more expensive. Like we just have a thoroughly vetted process beginning to end and no, no, we leave no parts of chance basically. And so when I heard and saw that it made total sense to me. But the other parts that make Peterson really unique is the effectiveness with the sell side, which again is the most common thing that all brokers do, but also everything else that we do is really unique.

So for example, we also do buy side advisory too. So if people want to come hire us, we can actually help them go find off market deals and go walk hand, this is what's different than these other gurus. Is like, they just tell you how to do it and then you are completely on your own. Good luck, right? For the same amount of money or potentially a little bit more, you could hire someone who's going to give you both the education, consultation, go find the deal, walk you through all the way to the point of negotiation and closing the freaking deal.

Finding the money, walking you through how to do it hand in hand, shoulder to shoulder, all the way from beginning to end. Had I done that with my first deal, it would have went from two to two and a half years to like six to 12 months. It would have cut the time in half so much opportunity costs, not lost anymore.

Had I just like worked with someone who was going to work shoulder to shoulder with me to actually get it done. So yeah, the buy side advisory is like second to none. And there's investment banks that do it and other big, big groups that do it on bigger deals, but not really in this lower space, lower middle market space. 

And then on top of that, we have our education company at chadpeterson. com. And this is honestly of all the ones I've done, it's the cheapest and it is hands down the most effective in my opinion. And, both of us know from experience, all these other different ones, and to your point, like the education was there, it's awesome.

But what I love about what we have is it's both buy and sell side, because part of it is, part of the reason why sometimes deals get delayed or don't get done or whatever is sellers being the problem, right? And so our education also specifically addresses sellers and helps them to understand like, when is the right time to sell and how to be more proactive because most sellers wait until it's way too freaking late, to sell, right. 

And then they have these unrealistic expectations about price and process and terms and everything and they slow down and make the deal harder oftentimes, because they just, whatever. And then eventually they get desperate when they sell for less than it's worth or whatever, or it doesn't sound to close it.

And so we actually have education that addresses that category too, because our goal is to make the entire space of smaller and lower middle market more sophisticated. And just make both parties, everyone involved, just more educated and power to the process. So we address both sides. And then we also have lots of different tool kits and different books that we have.

And also like a unique methodology that Pete, Chad's kind of coined and that we're kind of trying to advocate for out there called QSI. And it's just a way of looking at small business ownership as an investment vehicle, basically. And, that's another really unique thing that makes us, kind of differentiate it as part of our education processes is helping buyers and sellers to understand this process and how you can actually leverage it.

For not just getting into entrepreneurship or changing, adventures or whatever, but do it proactively in a specific way, using the SBA to actually like get outstanding returns on your money and even grow that money over time by using liquidity events to buy even bigger businesses. And so now that's what I'm doing.

Once I've learned this process, I'm doing that process right now, selling one of those businesses to use for a down payment on the next larger business, basically. So, and then the last piece that we have that makes us unique is we have a capital company. And so we will actually be buying companies as we go, on a specific criteria.

And what makes this capital company really unique is like, it's one of the most unique of its kind in that we're bringing together some, lots of different people as part of this process. So we play kind of facilitator guide coach along the process of putting the deal together. We can bring together investors who don't have to be super wealthy or accredited or whatever.

They can literally be maybe a seller we just helped to get liquidity and they can put a portion of this back into small business investing passively. And so they can do that with us. And that will be used as the down payment on the business through the SBA program. Cause we're specifically going to target businesses that are going to kind of push that limit of SBA, that 5 million cap.

And then we'll also bring together operating partners. So people like who I was five years ago, who wanted to go do this, I bought something smaller because that's how much capital I had versus how to put that capital in something like with this Peterson Capco model. I would have been that much larger of an owner, partner with other people who know what they're doing and could have bought a much larger business because they're bringing investor capital too.

And also, I mean, our operating partners don't even have to bring in capital if they don't have it, but maybe they just know they want to get into entrepreneurship or whatever. So we'll have an operating partner, we'll have the Peterson kind of infrastructure supporting it through the education and also the broker's deals feeding us those deals that we're going to look at.

And then the investors can come in and help us buy those companies basically. I mean, ultimately what Peterson is trying to be is, not just a one stop brokerage, but a, not just helping people one time, but through a lifetime of business ownership and buying and selling at different intervals intentionally and learning from us how to do that, and be very planful about those processes over time.

But also want to bring together more people who maybe traditionally wouldn't do it. Like those folks who are stuck in corporate America, don't have the cash to do it, but they have that entrepreneurial spirit and have a skill set that could apply to running a small business, bring them in.

And then same thing with passively investing in small businesses, there's no other vehicles to do that. So we're really trying to like revamp and bring some sophistication to this space and bring more people into it and have them be engaged with us over, like I said, a lifetime. 

[00:24:36] Ronald Skelton: I love that you guys have a process to train and educate the seller. One of the things I get asked to do a lot of times because they see, I spoke in other, when I, like when I had my marketing firm and other stuff, I was on stage and teaching stuff from the stage. They'll ask me to come speak on this, like I'm pretty new in this space.

The only thing I'd be willing to, to speak on and I've done it a couple times is marketing related stuff. Sourcing off market deals maybe a little bit in the negotiation space because i've done a lot of negotiations of real estate and other stuff that kind of is parallel. But one of the things I you know, I really emphasize during the presentation on sourcing off market deals is if you're going off market, you're taking that role of that broker on to some extent because the seller's unsophisticated. They don't know a lot of these terms and phrases that you want to spit out.

They don't know what an LOI is. And a lot of times they're going to look at you with a slight hint of suspicion because you're using language they don't understand. So you got to put on the hat of educator and buyer. And when the trust and rapport deeper than you would have if you went straight to a broker or something, because now they have to trust that you're telling them this is the process and they believe it and they trust that you're the right buyer.

So there's a deeper low. If you're going, if you're an independent buyer, like myself, and like you were when you first started and you're doing off market deals and you're going, you're sourcing off market deals that, rapport building is so much more critical than it would be under any other circumstance, right?

[00:26:02] Devin Craig: Yeah, exactly right. Yeah. So if you're, and I mean, exactly right. I think you'd have to be a skilled like trainer essentially, while also like selfishly serving yourself by trying to get a good deal. And so, yeah, it's like, it's a big mountain to climb yourself. It's doable a hundred percent, but you're exactly right.

It's like, it's not just simply going on to BizBuySell and scanning and inquiring on those businesses. Cause those sellers are already primes. That's the one major benefit of any broker, you know, regardless of how ineffective they are is like at the minimum, they took the time to interview the business and have some information about it and probably did some level of education or expectation setting with the seller of some kind. 

Maybe not very thoroughly, maybe not super well, but at least there's a little bit less of a hump you have to go over versus approaching someone and saying, Hey, you're willing to sell and hadn't thought about it yet. And so now you've got exactly right. This is like big ramp up to get them to that point. 

[00:27:00] Ronald Skelton: And that broker acts as an independent third party. Not unbiased on either side, but an independent in the such that if you bring up a term or phrase, they can go to the person that they hired and go, he keeps talking about an LOI.

What the heck is that? And if you were to explain it, you, like you said, you have to be that trainer and you have to have that air of not only knowledge and confidence in what you know, but the ability to teach it and make sure the other person got it right. Then that's a different. Being able to tell somebody something is one thing and be able to explain it to them in a way that they got it and they believe in it and can move forward with it it's two different things, right? 

[00:27:34] Devin Craig: Yeah. Many entrepreneurs are not great at that because they're impatient. That's like the, that's the prototypical entrepreneur trade of like that shiny light syndrome and you just want to get the result and be done and you're going to grind it out and you're going to get it done.

Most employees don't think that way. And so it's not like we're naturally built to be effective trainers and coaches and guides. And, we get impatient. I know I do get impatient, actually having to go weed through the weeds to explain everything that needs to be done. You just want it to kind of be done alread, I think.

And so, yeah, like most entrepreneurs are seeking out these businesses. Even if it's their first one to buy and then probably they need some education on their hand too, right? These individual buyers if it's the first business they bought like that's still going to be scary. That's still going to be a lot of work.

It's still going to be, you know a heavy lift and so if you're learning at the same time, you're barely five percent ahead of the seller. They understand their business. They've been in business. They understand entrepreneurship. They know a lot more than that buyer does in that sense, but maybe the buyer's a little more educated on, the acquisition process potentially, because hopefully they did what I did and got a little bit of YouTube education or something before they started going down this road.

But chances are, it's like the blind leading the blind, typically, probably.

[00:28:42] Ronald Skelton: Yeah, there's plenty of like, I tell people all the time, like which course should I take? And I was like, there's a bunch of good courses out there. As a matter of fact,I got a guy that, uh, in the next few weeks, one of our sponsors, well, he has his own program.

That said, there's a bunch of guys out there that do this stuff.

There's so many people teaching this. I don't see a gap where like, okay, I need to fill this gap for people. There is one small gap that I'm considering and that's a rapport building, relationship building. Basically doing a two or three day thing on not just negotiations, but how to really connect with people and, um, move the conversation forward. And I know some people who have asked me to do it. I've had, I know some people are really good at it better than i'm at it even. And might put together something in that space because I think it's a skill that's lacking and even a lot of these courses they just don't teach that right?

[00:29:29] Devin Craig: Yeah, (they uh, I see two people) talked about it a decent amount. He talked about the psychology, Chad talks a ton about the psychology both of buyers and sellers. And but on the rapport side like it's you're right. It's like only touched on. But I've noticed that to be a strength of mine too.

Like I've never, like every seller I've met, I've talked to dozens and dozens and dozens of them and brokers. And like almost every single one of them have said like that they turned away a potential buyer because they just didn't like them. Almost every single one. And I have never had like a broker calling me and telling me like, eh, I don't think it's a good fit, you know, or whatever.

No, not once because that is such a critical component. 

[00:30:08] Ronald Skelton: And I still to this day have people who call me that I looked at their business last year or the year before. And maybe they didn't decided that I, maybe I decided it wasn't right to buy it or maybe they decided that they just really didn't want to sell.

Cause I do a lot of cold outreach and, but they still reach out to me and go, Hey, how's it going? And like, you know, we made a connection and they'll reach out and, Hey, if I decide to sell this, are you still interested? I moved out of Tulsa. So probably not. I know, there's only one kind of a business in Tulsa I probably acquire at this moment. 

And I own a pest control company in there. If you got a bigger one, I want it, to bolt onto mine and make it bigger. I run an eight for me, I'm 1800 miles away. I'm running it remotely. That said, just knowing how to make those connections.

And, at the end of the day, a lot of people, a lot of this is one thing, a real estate, but, uh, real estate and, business investors don't understand is, at the end of the day, the guy that created that business, unless he's retirement age, be selling your business. Cause he's got another cool idea, or especially in the software space and stuff like that.

There's a good chance five years from now, he's got another one to sell you. I met a guy who, uh, I look people up. I do research on them as I'm talking to him before I talk to him on their deal. Guy was trying to sell a furniture distribution company for, office space stuff. And, we're talking, I'm getting to know him where we're connecting, I'm answering questions.

And then realize he kind of messed his company up pretty bad. He's going through divorce. So I was like, so I was still asking questions. Like I, are we done? Like, you're not going to buy it? I was like, yeah, I'm pretty much done. And he goes, well, you're so nice about it. And I was like, yeah, so you're going to create another business.

You're going to sell this to somebody. It's just not me. I can't do it with the status you put it in. You're gonna have to sell it as a strategic buy to somebody in the space already. You just want your customer list and stuff. A year from now, you're going to, pull yourself out of this muck.

You're going to create another business five years from then. You're going to be ready to sell it and do something else because you haven't, this is the third one you've built and sold. I still want you to call me at the end in five years from now, I'm probably still going to be buying companies at 55 and you build good companies.

But a lot of these business owners are like that. You want to build rapport with them because they're probably going to have something else for you later or even better.

You do buy the daggum thing and you need their help six months later. 

[00:32:13] Devin Craig: Exactly. Exactly. Yeah. Another thing that we say at Peterson is like, the person who buys your business is going to be your best friend. Cause how many of the other best friends have cut new checks for seven digits? Not many.

So, um, yeah. And all the more reason why it should be amicable. It really should be, I mean, a marriage, a positive relationship and partnership that's longer term than just that transaction. And I still do to this day, I've had, both the owners, um, live closer to the businesses I bought. And so they, they actually go into the business more frequently than I do.

And they'll call me dead and Hey, what the heck's going on with this? They got to get that shored up. I'm like, okay, you got it. And so they're still just as invested because of the relationship mostly. And because it's their business. And their baby they built, and so they, and so they, but they feel like they're welcome to do that, which I want them to feel like they can't, because I want it to feel like a partnership essentially.

And they're, increasingly not coming in as much because now they're in retirement status or whatever. But the fact that they feel like they can, that was a big sign of like, okay, obviously they felt like they have a good relationship with me. 

[00:33:11] Ronald Skelton: And business, people don't understand business, there's actually microcultures, right?

If you think about it, like, you made me think of something, my father worked at the same place before he passed for 44 years. I grew up in that facility. Everybody, I know everybody there. Now they're all retiring out. Years after he passed, I would go stuff, I was in town or whatever, I'd stop by.

And if I needed their product, it was a manufacturer that made paint. Like they actually mixed it and made their own brand of paint. I would stop, if I needed to paint something, I'd stop by and buy mine from them. And, but I knew the guys behind the counter, they knew my dad, I worked there during the summers growing up, I worked there for a year or two before I went into the military and the owners have switched hands.

It's now, it went from son to grandson by the time, in my lifespan from father to son, to grandson, they're running it now. Like nExt time I'm in town, years from now, I might go in there and see if anybody I know is still there.

But, uh, there's their microculture. That business owner that sold that business had those, some of those employees, especially the business has been around for a generation or two. Those people have been around and grew up in his presence, right?

They're almost as much family as they are employees. So you kind of expect them to come back and get, stay involved and ask questions and give you some insight. And that rapport and the ability for them to do it is important. I think, I've interviewed a couple people like, No, I don't want the old owner coming back, he's locked out.

And I've seen a few companies where like, uh, you see this as a broker I'm sure. You go into a company and they do a lot of cash business. You're like, yeah, here's, here's our books and here's what we tell the IRS, but business is way bigger than that. Yeah. Like, yeah, no, it's not. 

[00:34:44] Devin Craig: Yeah. It's only what you can prove, buddy. Yep. Sorry. What do you expect the buyer to buy exactly? Your word? Good luck. 

[00:34:52] Ronald Skelton: I've had people, It's not even always like kind of a dishonest type of thing. It's just, it's laziness to some extent or sort of, I'm going to use a word that most people find offensive. It's ignorance. And all that ignorance is a lack of information or lack, a lack of training and knowledge.

So it does, it's not as vulgar as a word as most people put it. But an owner can be ignorant in the ways that things should be done and have no fault whatsoever. In this case, the owner was, at the end of every day. He had, uh, functional workers, basically. Got real busy. He had two or three people come in and help and do stuff.

And he was paying them cash at his register at the end of the day. And I was like, okay, how do you track that? Well, you know, they come in and they, they write down a piece of paper. They came in at four o'clock in the afternoon. They work until nine o'clock at night. That's five hours. I pay him 20 bucks an hour.

And then, I take that out of the cash register and hand it to him. And I was like, okay, so how do you ring and open the register so you can track it in your accounting? He goes, at the end of the register day we just put what cash, you know, what cash we started with and what cash came out of the cash register. They didn't use the receipts in his register for anything, right?

And I was like, Okay. And this, this place is making millions. Like it was, multi million dollar, uh, company that you would never expect to be that, that scale. 

But, uh, How many of these companies, like what's the process for you? The reason I brought this whole subject was a lot of these businesses come to you. They think they want to sell, but they've been running accounting, office spreadsheets and handing, trash bags full of receipts to their accountants at the end of every month for a long time.

What's the process look like? Do you guys have anything that kind of like where you build some type of quality of earnings report? Like you do, how far do you take their accounting to make it look good? 

[00:36:35] Devin Craig: Yeah. So our process with any deal is, yeah, we always start with that valuation piece, right? So if that comes up, that the valuation is not what they're wanting because of what you're describing, because they're not accounting for things properly, which happens pretty regularly.

Or just that they're, maybe they are, but they're just not that organized. I've had so few owners are really organized and have at their fingertips, this information to pull it quickly. Like the most recent one was a owner of a plumbing company in Idaho that we're just listening.

She was so organized and like fast, like, hey, can you get us three years of all your financials, tax returns, this, this, this, and just like boom, like next day. All it like organized and like that was the best I've had so far. Most of the rep, the rest of it's like, lemme call my accountant. Let me do this.

I need to scrounge it up from here. I gotta, whatever. So that's been kind of surprising to me. Even the ones who, they're not a cash based business, but, so if through that process, then we come back to them and tell them that, okay, this is what we think the price is. That's where typically we get in those conversations of like, most owners want more vast, vast majorities want more than what we tell them is financeable.

If it's close enough, we'll kind of negotiate a little bit and, come up to a good number, um, that we can hopefully both be in agreement of. And part of the process, what we're doing for that process is vetting the buyer or excuse me, the seller. Because if they're not willing to be flexible and be a little negotiable, then chances are, we're going to have a hard time putting a deal together.

And so, um, it's not so much like some brokerages tout a large success rate because they take on only certain sizes of businesses, right? Bigger businesses that are going to get more traction. We take on little businesses too. What's most important to us is that it's priced right and the seller is flexible and negotiable.

If we have someone who's coachable and we can work with, we'll get a deal done. We'll find a buyer for it even if it's a smaller business. Um, but anyways, let's say we get to that point where we're talking about that valuation. They say, Oh no, we, I have this app. I've had this happen a handful of times where they say, um, no, we do twice that business and we're just not recording it.

Okay. So then one of the few different things go on from there. We can, we give them some, so maybe it's as simple as they just need to actually start accounting for it. I mean, just simply like making sure it's actually on the books and maybe they already have an accountant and so maybe it's a simple fix.

So I've had several deals that that was the case where it's like, okay, if you want to sell for that price, then you have to make sure you start accounting for this. And if you could have a good solid three to six months where you're doing that. They can show a good trend of that. We make sure that list shows up on the tax return appropriately and documented.

Then great. We'll list you in six months from now or whatever. Sometimes they need a little more help because they're just thoroughly unorganized. And so we don't do it internally at Peterson necessarily where we're going to put all their books together for them. We have an entire list of localized, excellent resources for people.

One thing that, another thing that makes us kind of unique, it kind of goes back to what I was talking about, about us trying to be a resource over a lifetime for entrepreneurs and small business owners. Is we have the, do we do these top 10 lists of like CPAs and wealth advisors in the geographies we operate.

And so we've got these top 10 list of business resources for people. So we've got the CPA list and if I know one of them is a specialist in that type of business or fixing the problem that they have, because maybe that CPA is more advisory type or deals with that sector a lot or whatever, then I'll hand them off to that person.

And I do the same thing for, I've got a list of lawyers, business coaches and consultants and things like that, that I'll refer these folks to I say, Okay, but you need their help to fix this one thing, and then come back to me. So we know what we're really good at, which is those transactions and deals and education around all that stuff.

And then we leave the fixing to these localized experts who are great mutual referral partners. They've got people who they're working with proactively before they met us. They refer them on to us and vice versa. If I have someone who comes to me who says I want to sell, but you know, I need to fix this or I want the certain price point, then I try to help them troubleshooting who they need to go to, to fix that price point, basically, if that makes sense. 

[00:40:39] Ronald Skelton: It's interesting. That's how I kind of started in this space too, is, I would meet with business owners and one of the first conversations you have with them throughout the process is getting to know them. At some point they're going to go, Hey, uh, what do you think my business is worth? Or even better there's something, Hey, I need, $2 million for this business. My instant response to the, Hey, I need $2 million for this business has always been cool to see how we can get you there. Cause I don't know at this point, we haven't done due diligence. We haven't, we don't know the details enough usually to say, okay, that's what it's worth. When, but by just leaving it open and cool to see how he can get you there.

A lot of times getting you there is like, look, you're going to need to, work with a really good accounting firm for a couple of years. Put things together, clean up your books, grow your company a little bit, and get organized. And then, yeah, then you can probably hit that number.

[00:41:27] Devin Craig: That's what's beautiful. So that what makes me that you're exactly right. So that's basically kind of, sort of essentially what we do too, is like, say just that. Okay, so how can we help you figure out how to get there type thing. But what's really cool about Peterson I mentioned before this whole concept of QSI, like part of what I recognize too through getting into more brokering is that a lot of sellers also don't know what they're planning for next.

Like they know they want to sell because they're bored. They're burnt out. They're ready to move on. They're like tired or whatever. They say for other reasons like retirement or whatever but i've had some people approach me and they say retirement when they're in 50s and 60s. I'm, like you're an entrepreneur.

I really don't know sitting on your butt for the next 20 30 years? Probably not. So but what's unique about what we talk about is, we talk about okay use liquidity then to move into a whole new adventure. You don't have to stay married to the same industry. You don't have to stay married to the same location. You don't have to stay married to the same type of business or size of business.

Let's say you are older and let's say you want to downgrade just like your home. Many people downgrade home sizes after their kids have left because they don't need that bigger house anymore. Okay, great. So you could do the exact same thing with a business. You could use liquidity event to buy something that requires a lot less hours, maybe has zero to no employees or a couple contractors.

And you could use liquidity just to purchase that outright. And keep yourself kind of busy. But if you're younger, then you could use a little liquidity event to move into a whole new business and reignite the passion cycle because every entrepreneur has these cycles they go through. And this is another thing we've coined at Peterson called the passion cycle. Like three to five years and typical entrepreneurs are getting antsy. And they're kind of looking for the next thing, the next adventure, the next whatever.

And they try to do that internally to their business and organization, but that can be hard to do. And maybe they're, they've run out of options of where and how they can do that. And so sometimes it's nice to just do a nice clean break, sell the thing, let the next person, who the next entrepreneur come in and, and get fresh eyes and look at it themselves.

And see what they can go tackle in the business and you move on and do the same thing in someone else's business. And so that's what I meant earlier by talking about small businesses and as investments is like recognizing your passion cycle, recognizing when you've got good liquidity.

So oftentimes that's what I'm asking when someone, when that first thing they said, when they said I need 2 million, typically what I'm saying is like, the first question is not necessarily, how can I help you get there? Maybe it's why do you need that amount of money? What are you planning to do with $2 million?

Well, I don't know. Okay. Why do you need 2 million? Is that going to last you the next 25 years of your life? Probably not. So you're probably move that forward into the next venture. Into the next, and don't start it from scratch, buy something already established and learn something new and reignite your passion and try to innovate within that business.

[00:44:11] Ronald Skelton: And you can do that a little easier as a broker than I can as the buyer, right? Like, what do you need the money for? I used to do it in the real estate space all the time. Like, oh, you mind if I ask what you, you know, somebody, I need to have $80, 000 down. Like, cool. Do you mind if I ask you what $80, 000 for?

Well, I need you to have skin in the game and I want to go on a cruise. Like that, it's a one hell of a cruise, right? Oh no, I only need 10 grand. I only knew this was an old lady that I was negotiating with. Like, I really only need 10 grand for the, for the cruise. And, cut the story short, we ended up giving her about 15 grand now. 

So she could go on her cruise and, now she's, got a steady income. That's the one thing that she didn't realize is sell, you know, sell the house for cash. You get a check, but no, I mean, you get a tax hit all at once or sell it on a note. And now she's already got her social security and she's got a steady,she was 68.

She has 20 years of paying, us paying our, $1, 000 a month or whatever we were paying. So now she's a little more comfortable for the rest of her time. It's like, well, what if something happens to me? We just put the money, we set up a trust for her. My attorney set up a trust for her.

We paid the trust and so we continue paying the trust until like you have a beneficiary of the trust. If there's your kids, they get the money then. And there's nothing we have to do and you have to do. It's just done. And a lot of that can be done on the business side too. 

What are ways that people can reach out to you guys, to you specifically? We'll get to that next. So before we get there, what is one thing right now that you're looking for that help you move your game forward? If somebody's listening to the show, if you, if they could bring this to you, it would make a huge difference in your game. What's one ask that you'd have of the audience?

[00:45:45] Devin Craig: I mean, well the priority is, so Peterson's well established, but I mean the one thing i'm focused on right now is just finding deals that, we are interested in the capital company model. Because if I can find deals there, then one of two things happens. It's like we start adding more to our capital company.

And so the check boxes for the capital company we're looking for is around a million and a half in cashflow. And that it's been well established. It's been around for several years, at least. Ideally a business seller who's run it for, 20 years or something. And so they're kind of way beyond the end of their passion cycle.

And it doesn't matter the sector. Just ideally something that the SBA lends on and, that we could put together a deal for. So that's all I'm focused on right now is kind of capital company size deals, um, in my geography here in Washington state. So I don't know how many folks are in that category here that are sellers or know people who are sellers or whatever.

But yeah, I'm just looking to basically to put together more deals. So either people who know they'd be interested in helping us with that, either the, on the investor side or operating partner side, or then ideally, the people who own those types of businesses or sizing businesses. But we're going to do these all across the country, but I'm specifically interested in Washington state, but that's all I'm focused on right now is putting together deals like that check those particular boxes. 

[00:47:01] Ronald Skelton: So Peterson, is it located in Washington state? are they in most states now or what's the range? 

[00:47:09] Devin Craig: Yeah, I think in almost a half, half the states in the country, we do deals all over the place, but we have physical partners located physically in about half the states out of the country.

Chad Peterson started it in Kansas city. And so that's where he was kind of based. But yeah, 

[00:47:24] Ronald Skelton: Kansas or Missouri? 

[00:47:27] Devin Craig: Missouri, Kansas City, Missouri. I'm pretty sure Missouri. Don't quote me on that. But, um, yeah, anyway, so he started it out there and that's where he's kind of based and, kind of just owning that market essentially, but broadening out from there over the years.

And so he's done deals all over the state, the country, but now he's bringing on partners who are kind of local partners like me and, we're building out, like I said, the capital company and stuff. So we can do deals across the nation. I've got a deal in Idaho, Washington, California. So I'm kind of the West coast guy for right now.

I don't have anyone in California, Oregon or Washington, but most of the rest of the States, we've got partners. So if someone reached out to me and they're like, Hey, I'm in Minnesota, I'll link them up with Jim or whatever. And you can see all of our partners on like BizBuySell or a website. Yeah, the easy ways to connect with us is the Peterson website.

Or me on LinkedIn. I'm most active on LinkedIn. I'd talk, I do a lot of my outreach through LinkedIn. And so I'm pretty regularly on there. So if someone reached out to me there, plus that's all, or my other additional contact information is on my LinkedIn profile. So that's always a good way to reach out to them.

[00:48:27] Ronald Skelton: What genre is the, I know you don't want to like, a lot of people don't want to say the X businesses for sale because they don't want the employees to know quite yet. But is there a way for you to tell kind of people if they're looking to buy, you said you had one of your business for sale, what space is that in?

[00:48:41] Devin Craig: That's in one of the few spaces I just described. I don't want to give it away. 

[00:48:46] Ronald Skelton: It's absolutely okay to, and I didn't tell you this before the show, but it's always okay to say, no, I'm not answering that. Because I'll, I ask anything, this comes to mind, and sometimes the right answer is, yeah, probably not going to answer that right now. Just for the reason,

[00:48:58] Devin Craig: They could find that, they could find that under the Peterson listings. You know If they just went to their BizBuySell or Peterson website they could find it because it's actually not me who's listing. It's one of my partners and he's listing it. And so yeah, they could easily find it that way basically.

[00:49:11] Ronald Skelton: Well, I appreciate having you here today. Is there anything else you want to add before we go? 

[00:49:15] Devin Craig: No, thanks so much for having me on and, uh, I appreciate it. And like I said, anyone reach out, any of your listeners reach out for any reason. I like just talking shop sometimes. So if someone just wanting to entertain, getting into the space or whatever, I'm happy to connect with anyone anytime.

[00:49:28] Ronald Skelton: And I'll be honest. I haven't looked into the education side of Peterson. So I'm going to dig into that a little bit and take a look around. I don't know that I need any more courses, but I'm kind of a course junkie. So I'll take a look. 

[00:49:38] Devin Craig: Yeah, no, it's I mean, at least on the sell side and also the QSI side, just learning more about kind of that concept and how we describe it.

It's pretty unique. And like I said, it convinced me to go, to sell the business that I thought I was going to keep for who knows how long and I had no specific exit plan for it. To saying like, No, I need to do this now because I need that equity I've built into it to move into either a capital company or a larger business and grow my income and wealth.

And like it convinced me hands down to do that right away. So I think it could do that because there's more methodology is just buy and hold of a business or start and hold. Those are the two most traditional we think of is like, you got to start it. And most people think you need to do that, right?

It's like, you've got to start a business and that's, everyone's still kind of on that, which is why I appreciate that there are guys out there like you were trying to like say, no, there is another way. And the second way is buy something already established. And let's try to innovate and grow it. And then the third way that we talk about this kind of on top of that is, buy it, we'll start it, and then have a predetermined exit time frame.

And use the equity to move that forward into a new adventure. Just knowing you're going to have a passion cycle that's going to run out and just plan for that. 

[00:50:44] Ronald Skelton: It's funny. Is, I just interviewed the lead instructor for, for Stanford universities, it's not live yet. by the time this comes out, it might be, right after, right before this one.

That said, Stanford teaches that. Basically, uh, in their ETA program is like, look, you're going to, we're going to teach you how to buy a company. He teaches the, how to buy a company, but the course is how to buy it, grow it, then sell it. And it's like a five to 10 year timeframe.

You're going to pick whether or not it's going to take you five to 10 years. You're going to plan everything out and own it as if you're going to be for sale. Own it as if you're trying to sell it to somebody else. Even if you end up keeping it longer, you can have a really well run company because you've engineered it from day one to sell. 

[00:51:21] Devin Craig: And that's what I recommend to every business owner. I was like, why would you not build it to sell? Like, cause if you're doing that, then it's ultimately also in the meantime that you're deciding to stay plugged into it, it's also should be giving you freedom because we're building it to sell.

It should be highly not owner dependent. And so you've built an automation, you built a team, things like that. So now all of a sudden you get to enjoy it more because you're also enjoying free time and hopefully ideally enjoying freedom, which should be a benefit of being an entrepreneur, this freedom of time, how you're spending your time.

And so if you're doing that well, and you built it to sell, then you're reaping the rewards now, long before you actually do sell it. And then when you know it is time to sell, which we always recommend the time to sell is when you're doing well. Not when it's on the downturn because your passion cycle is gone, your health is doing, dwindling, whatever. You got to move abruptly, like those are the wrong times to sell something. Sell it exactly when you know you're at your peak point of what you've invested into the business and reap those rewards.

And again, move that money forward. But yeah, no, I mean, everyone should like start with the end in mind, but when we started, we're not so passionate about the thing we're doing. And we're not thinking in those terms necessarily, but you can still have both. You could think about a pre planned determined exit and have fun while you're doing it, but you know, you don't have to, it doesn't have to be one or the other necessarily.

So yeah, that's, it's always a good thing to like research other ways of thinking about business ownership and that's exactly what Pearson does well. 

[00:52:42] Ronald Skelton: Awesome. Awesome. Well, I want to appreciate, I want to say thank you for being on the show. I appreciate having you on here and we'll call that a show today.

[00:52:49] Devin Craig: Sounds good. Yeah. Thanks Ron. 

[00:52:50] Ronald Skelton: Awesome. Hold on for just a second.