For over 10 years, he has been a noteworthy leader in the business and startup community. He currently serves as the CEO of BuyAndSellABusiness.com, which he scaled to over $2B in transaction volume. Nunzio has been recognized as a Top 10 Alumni in...
Ronald P. Skelton - Host -
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Ronald Skelton 0:06
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.
Hello, and welcome to the how to exit podcast. Today I'm here with Nunzio Presta. Nunzio, you're a former hockey pro hockey player and the CEO of buyandsellabusiness.com. Thank you for being here. It's funny as I practice your name before this, and I think it's an ongoing theme. Anybody that's got a creative name, I like to say,
I've seen them mess it up when it when the lights are on and the cameras rolling and I'm under pressure. I butchered the name. So apologize for that. And let's just jump in and have a good time here, man.
Nunzio Presta 1:01
Yeah, no, no worries. Listen, I'm used to it. Like I've told you in the past, my Starbucks name is Matthew, because some people just don't get it right. So not a problem at all.
Ronald Skelton 1:14
As I told you earlier before the show I, people butcher my name Ron, right. It's Rod or Rob or whatever. And I used to take a picture today on Rob and post it on my social media. And somebody will say, "Hey Ron, like no, not today. I'm Rob today.". So let's cool. Let's just start right off with how did you get into this space? You went from pro hockey. And as we were talking to you, you were looking at playing in overseas too. And now you're in this mergers and acquisitions buying and selling a business space. Kind of, can you fill in the gap? What's the origin story of that?
Nunzio Presta 1:46
No, absolutely. So you know, being being Canadian hockey was a big part of my life. I, you know, I competed at some of the highest levels in the world. But unfortunately, my career came to an end, you know. One of the questions I had to ask myself, which I still ask myself today, you know, whether it's on certain business projects, or features or anything in life, pretty much is, whether I should, you know, try harder or walk away. And I had to make that decision to walk away from a game I really love. And after I made that decision, you know, I knew I wanted to go back to university back to business school. And I just fell in love with entrepreneurship. I saw a lot of similarities between entrepreneurship and sports. So I was really excited. And while I was in university, I started a little business with a friend of mine. We grew up to a pretty, you know, a pretty good, good position. But then, you know, we started to reflect, and we used to, you know, we used to tell each other that listen, you know, we don't have the resources, or the passion, or the expertise to really grow this business, you know, further along. So, we started looking for ways to try and sell this business, and this would have been in 2010, I believe, or 2011. And on that journey, Ron, you know, it was, it was difficult, you know. Real estate agents would would look at us and say, "Hey, listen, I'd rather sell a house.". You know, business brokers would say, "You're way too small.". They want, you know, something a lot bigger. And then at that time, just promoting the sale online, you know, there was just no good, you know, positive user experience. It was all these directories, and, you know, where I'd be promoting the sale my business, while someone else's promoting the sale of a, a dog or a bike or fridge, and user experience just wasn't there. So, I started digging into this world a little bit more. And I uncovered, you know, some great trends that were not just specific to Canada, but were, you know, applied around the world. And, you know, it was the increase in baby boomers looking to retire an exit that caught my attention. It was also I already started noticing this, you know, almost 11 years ago, there was this mindset shift that was happening, you know. A lot of people were starting to move away from that nine to five and entertain being their own boss. So that was interesting. And then also foreign investors interested in existing North American businesses, and then the, the increasing popularity around franchising, that was happening a lot as well, you know, almost a decade ago. So I said to myself, this is interesting. And like a typical entrepreneur said, Well, nothing's out there. I'm gonna jump in. And I'm going to create something special when you create something seamless, resourceful, and supportive. And that's pretty much the origin story. It's, you know, it's a quite simple, you know, typical entrepreneurial story, but if we fast forward to today, you know, we've been live to the market for about eight years. We've done over $2 billion in transaction value. And I think at the end of the day, you know, our entire team, we believe that everyone should love what they do and, and we see business ownership as a, as a path towards that. And, you know, we also believe that not everyone wants to start a business from scratch, or can start a business from scratch. So we see entrepreneurship through acquisition as as a path that mitigates risk, and really makes business ownership real for many. So, you know, our message is pretty much is pretty clear. Today, and it's, you know, you don't have to start a business to own one. And, you know, we promote and push that narrative day in and day out.
Ronald Skelton 5:36
Yeah, I like the, you know, I got into this space, because I divested from my last company, and I was looking for what to do next. And to be honest, it's idea, I know the statistics behind it, like so many businesses fell from the startup phase. You know, if you really look at wanting to create a very successful business, something of significance, a million dollars of revenue, or more, the odds of doing that are something like 2001. Meaning that, you know, it's somewhere in there, I did the math a couple of different times, but a somewhere in that realm, meaning that if you just get past the first five years, 90 something percent of those businesses failed. And then out of the ones that succeed, the ones that reached that is only a small percentage. So you know, the idea at age 50, to go out and pull 60 to 80 hour weeks trying to get something off the ground and running, just really did not appeal to me. And I was listening to a podcast or something and a guy come on there, he's like, "Why run the marathon, when you can run the relay race and picked the baton up after your your, you know, your way in the way in the lead", right? You grabbed up, you don't have to run the last 100 yards. And what he was referring to was acquisition entrepreneurship. Somebody's got us 30, 40, 50 year old brand, they've proven market concept and proven everything. And now they're ready to retire. And they're just looking for somebody to take that baton over and take his next level. That made a lot more sense. And I kind of got into the space of this, because I seen the opportunity too, right? There are an enormous amount of and I'll get the statistic wrong if I guess I don't have baby boomers and people needing to retire out in the next five to 10 years. Maybe,
Nunzio Presta 7:25
Yeah, yeah. And, Ron, you're absolutely right. You know, from from a buyer side, you know, we, you, we're also driven to make sure that, you know, these small business owners, or these small businesses that literally are the backbone of our of our communities, stay up and running, right. We don't want to see jobs and local businesses disappearing from, you know, a traditional business perspective, and from a digital perspective, you know, there's, you know, their footprint is still large as well, and it, and it runs deep into the real world as well, right. So, you know, I think from, you know, a buyer side, we want, you know, we're driven to make sure that exits are easy and realistic. And then from the seller side, absolutely. Right. You want to you want to find something that mitigates risk. But I think from an from another angle, you also want to find something that you're passionate about, and something, you know, that you have the skill for, in order to grow that business, you know. Another, another thing that really drives our organization is this, this, you know, belief that a stronger economy, a better future is possible, when people wake up loving what they do. And business ownership, you know, in our opinion, is definitely a path towards that. So it's a very, very exciting space and, and, in my opinion, a fulfilling space. And that's why we've been around so long doing this.
Ronald Skelton 8:48
So buyandsellabusiness.com, is that more of a brokerage? Or is it a listing service website? Or, tell me, tell me what is that?
Nunzio Presta 8:56
Yeah, we'd like to say we participate in, you know, the purchase and sale tech space. So, you know, at its core, you know, we're a platform where buyers and sellers can connect. Those buyers and sellers are entrepreneurs themselves, small business owners, franchisors, franchisees, and even business brokers leveraging us as a marketing tool. And essentially, there's two, two, you know, three, I guess three ways to engage with our site. The first is through our search engine where you can search for business opportunities, and connect with with the sellers. The second from a seller perspective is what we call our introduction, subscription service, where you can list your your, your business for sale, and we we make introductions to potential buyers. And then the third is our fully guided full service solution, which basically, we've created, you know, really, really sound tech that as automated and digitize the entire purchase and sale experience from the offer to the LOI to e-signatures to chat document exchange for due diligence, all the way to closing, including the transfer of all deal funds. So from a seller perspective, our users could, you know, either engage with a guided solution or an introduction solution.
Ronald Skelton 10:19
Got it. So, let's talk about the process a little bit. A lot of, we just we talked about this earlier today on the show. But if if you look at the selling process, and what a seller has to go through. From your perspective, what does it look like to prepare a business to go through the process?
Nunzio Presta 10:41
So, so from our, so when when we talk about, you know, what a seller has to do in order to be ready to post on on our platform, you know, the business has to be sellable obviously. The process of actually getting getting that listing on our site is very self-sufficient. So they all they have to do is create an account. And from the moment, you know, they have access and verify their account have access to our, our platform, all they have to do is click sell. And then they're on their way to selecting some options and creating their listing within our platform. Once that listing is created, they add some images, and then they submit it for approval. Our team reviews the listing to make sure it's as perfect as it can be. Once it's approved, it's published and public, to our audience of buyers.
Ronald Skelton 11:35
The, so now they're published to your audience of buyers. You know, guys like me, can scroll through those, take a look at them. And then I imagine you have the communication tool too. So for us to reach through you to them.
Nunzio Presta 11:51
Exactly. Yep, exactly. So if the seller is engaged with our subscription solution, buyers have the call to action for the buyer would be just initiate contact. And that would be an automated introduction via email between the buyer and seller. If the seller is leveraging our full serve, digital and automated Purchase and Sale solution, then the call to action for that listing would be send an offer. It's a non binding offer. But we basically, you know, forced the hand of the buyer to say listen, you know, we want to reduce tire kickers, we're looking for an offer. Once that offer is sent, it's up to the seller to accept it. And then our technology moves both of those users through that purchase and sale journey.
Ronald Skelton 12:38
Interesting. So you've got a, a link or a way for buyers to just submit directly an offer. So I'm assuming that you've got information there, on there for them to evaluate in order to do that. So in the instance, like a deal room, you have a way for for the seller to upload a certain amount of stuff. Do you guys facilitate any type of NDA or anytime non disclosure between the two?
Nunzio Presta 13:11
Yeah, so once that non binding offer is sent and accepted, then then our technology guides them through what we call an an LOI builder. And within that loi builder, both buyers and sellers are able to tailor that letter of intent and enter the terms that they want, including a clause around NDA. Once that's e-signed and finalized, then our deal room is open to both the buyer and seller to engage with each other through either chat, exchanging documents. And then we kind of have this, you know, check and balance sort of thing in our platform where we'll let the buyers and seller know what stage they're in, what needs to be completed. Once those things are completed, the next stage is opened with, with the next, I guess, to do, to do list.
Ronald Skelton 14:01
So I think I lost something in the translation there. And your explanation. How does the, if it's making an offer is the first initial contact? How does how does an acquisition entrepreneur like myself have enough information to know what to offer or to make that offer?
Nunzio Presta 14:21
Yeah, so the listing itself, the seller provides, you know, the financials, the overview of the, of the business itself. But generally the way, the way we're approaching this right now is where the seller is providing as much information as they want to before any sort of NDA is signed. But once that initial offer is sent, then that's when the buyer and seller is going to receive additional information to actually go through a letter of intent and due diligence. So most of the meat of the deal won't be uncovered until there's there's, I guess an informal non-binding offer that's agreed to.
Ronald Skelton 15:04
Okay. That's cool. What is, what's the process like, I mean, what needs to be in place for them to effectively sell that business? I mean, is there, I know, you said it in one way. But if I if I was to sit down and go, okay, I'm trying to sell, what needs to be in place before I can to effectively to list on your site and, and start receiving offers? I guess, let's rephrase that, the successful listings, you see that sell fairly quickly, what did they have that the other ones don't?
Nunzio Presta 15:36
Yeah. Yeah. And that's a great question. And I think, you know, I think what you're really getting to is, you know, the market marketability of, of a potential listing. And, you know, we've been around for a while, and what we've noticed is, in order to, and I know, this sounds simple, but it's just the truth. But in order to really effectively, market a business for sale, not only doesn't have to be valuable, it needs to be sellable. Especially in the micro market. And, you know, we've been around for, you know, eight years, and we've never seen a bad business sell per se. You know, in larger markets, you know, acquisitions can take place for strategic reasons, even even if that business isn't profitable. However, the micro market some some buyers have, you know, the strategy and patience and resources to pull a business out of the gutter, but a majority of buyers are looking for an immediate return or looking for, you know, passive income or looking to replace their job. Therefore, the marketability of that listing and of that business really depends on how sellable the business is. And like I said, we've seen, we've seen tons of acquisitions and a micro market and in general, a sellable business has great timing and aligns with, you know, social, economic, and tech trends. We always urge our audience of buyers to really buy the business for future opportunities, not for what the businesses today. Sellable, but you know, businesses are self-sufficient, meaning they they aren't dependent on a particular stakeholder. And also sellable businesses have strong and healthy financials. And we see, we see the listings, with, you know, business models that have recurring recurring revenue. We see bonus points go to them, or premiums, at least go to those as well. So I think in general to market a listing on our platform, it really needs to be sellable, and needs to be organized. And you have to be prepared to sell that.
Ronald Skelton 17:32
And if you're listening to this, maybe one more thing to add on that is, the assets that need to be transferable. Right. Yeah, I was just reviewing. Yeah, I was just reviewing something. Small business. They have some contracts in place. And there's no, I think, technically, I'm no lawyer, don't take me for legal advice. But technically, all contracts are assignable. But as a buyer, we're looking for language inside of your contracts that says that in the event of businesses, you know, sold acquire whatever, you know, the contract stays in place is in full force. They had nothing in their contract for that. And now it's a question to attorneys is, how transferable are those contracts? Because without them, they don't have a business.
Nunzio Presta 18:19
It's a very good point. Yeah.
Ronald Skelton 18:20
We've, we've mentioned the word dealroom a couple of times here. I've a lot of people are not, you know, if you own a business, and you've never like, started your research to educate yourself on what it means to sell, there's a whole dictionary of terms that you've just never used in your day to day business. What is a deal room and what goes in it? What's what's, what's that about?
Nunzio Presta 18:45
Yeah, well, what goes into dea rooml, right. And what's interesting is now now that we launched this full service solution, and buyers and sellers are able to kind of create this deal room together and collaborate on this deal room together. We're starting to see the type of information that that you know, our users are, are putting in there. And, you know, I think the short answer is as much as possible, you know, not to be redundant, that, you know, our full service solution has done a great job at really digitizing automating that entire purchase and sale experience. Really helping you know, those buyers and sellers navigate through the offer due diligence and closing phase. So in our deal room, you know, buyers have the ability to chat with each other, have the ability to exchange documents. And like I said before, they also can request and accept all necessary deal funds to get that deal done. But, you know, in the end, or in a nutshell, the most important documents that and information that that should be available in the deal room, and what we've seen a majority of our buyers request in order to make an informed decision on whether they should move forward with that acquisition or not would be, you know, for example, information around ownership right. Organized, you know, information around the organizational chart, you know, including info on, you know who the most important stakeholders are and how dependent you know, are they on on the business? That's an important question. Obviously, articles of incorporation are in the deal room, the company's strategic plan, marketing plan sales plan. There's also financial statements and tax returns, for at least the past three years. A buyer wants to see at minimum three year history. There's also you know, budgets and financial projections, as mentioned previously, Ron, you know, one thing sellers need to appreciate is, the buyer isn't always buying the business for today, they're buying it for future opportunities. So it's super important to be crystal clear on on the financial projections and other opportunities within the market. And there's a lot of, you know, discussion and document documents around that. And another thing is, you know, information and documents around the legal environment, right. What are those pressing regulations, or tax or customer issues affecting the company? You know, there has to be clear transparency on that. And if your business is dependent on third party vendors, you know, details around who those vendors are, and what kind of work you know, do they do for the business. So, you know, the that deal room is essentially a catch all, to create as as much transparency on what this business is truly about, all the way down to the skeleton of the business.
Ronald Skelton 21:37
It's interesting, as I've reviewed, probably pushing close to 300 now, businesses for sale over the last couple years. Most of them were marketing agencies, because we were doing a roll up. I've seen one, two, I can count them on one hand 1, 2, 3, 4, three really well-developed deal rooms. Yeah, really well, like everything I could think of it's in there. And the fourth one was pretty good. He had his financials and stuff, had no plans in there. But the basics of who he was, and it is historical information was in there. And what was missing in the conversation, you know, went down the path of is okay, if you were to run this for five more years, what what would you what would your current plan be? And he was just done. So he didn't do those plans, because he was like, I'm gonna sell this and it's your, that's your problem. But that's not how it kind of works is you haven't, the sellers don't realize they have an inside knowledge that the buyer does not have. Sometimes I say that sometimes buyers, like I own a pest control company of one of the many things fairly new I own, and it just few years now. But I know enough about that industry in that space that, you know, you wouldn't have to give me your projections on how to grow the business and stuff, I've got that fairly well figured out. I like to see your point of view. But that's not a deal stopper. But if I went into, I don't know, some type of construction or other company, I'd really want to see what you what you thought the opportunities in the upcoming market would look like. Like how are you going to handle the downturn in new builds and stuff when the economy looks like it's about to, you know, start down that it's already started down the path, but it looks like it's gonna continue down the path where it's going to be harmful to construction. So I can see that. But you know, it's, it's not common, that I've seen so far that a really well developed, sell my business product, that's what the deal room is, to me is like that of your marketing. This is here, here's my you know, display shelf showing you everything you need to know about my business to make a good, fair and valid offer. And, you know, out of pushing 300 businesses, I've taken a look at and spent an hour or two on the phone with over the last few years. Like I said, I can count them on one hand. That,
Nunzio Presta 23:59
It's not abnormal Ron. Especially in the micro market, right. A lot of these, a lot of these micro businesses or small businesses, you know, they're not prepared, they're not organized. So, you know, your experience is not abnormal. You know, with our solution, we're definitely trying to streamline that and help organize these these individuals with providing them with a due diligence checklist on the documents that we think they should provide to a potential buyer or buyer should request. But it's absolutely you know, not not abnormal. A lot of you know, not a lot but you know quite a bit of business owners in the micro market. Some of them you know, literally wake up in the morning, say you know what, I'm gonna sell my business today. And you know, in reality you need at least two to three years of getting that business ready to sell.
Ronald Skelton 24:47
A lot of people don't get that right. They like I'm just really stressful the markets turning on me I don't want to go through another downturn. I think I'll sell the business and like great, you know, you got one year to change your or accounting practices to show your true revenue as it stands now, because your that's not the way you're doing your taxes and your revenue now, your books is because you're trying to save money on taxes. Not because you're trying to sell it. So you got one year to clean that up. And then you got to run it that well way for at least three years to show that it's sustainable and reproducible. So you're looking at three to four years. You're right. And, you know, I was talking on a previous shows, I had a friend call said, Hey, I'd like to sell my business. I said, Great. Call me four years when you're ready. And he's kind of joking, because I know that guy, he's, "What do you mean? I want to, I don't want to do this four more years. I'm done." I was like, "You should have thought about that four years ago," and he says why I said, I already know who you're, I knew who his tax preparer is. And she's very coachy. She, you know, she coaches you a lot about things. I said, I know right now that your incomes understated. You've done everything you can to have all the write offs, you can have to you know, not pay out Uncle Sam, any dollars that you don't have to. It's, you know, he's fair, he's not hurting anybody. But he pays exactly what he has to pay, not what what you know. So the first year is always going to be, you got to undo that. Right, you got to, and you can't just go in and fix it, you know, a lot of people go, I'll just go in there and show you this is what it should look like. Shoulda, woulda, coulda don't sell businesses. Right?
Nunzio Presta 26:26
Ronald Skelton 26:27
And um, you know.
Nunzio Presta 26:29
And another important another important, I guess, tip for those business owners that say, Okay, I'm waking up, I want to sell my business, and then they're discouraged when, you know, an advisor, or, or, or consultant says, well, listen, you need, you know, let's, let's, this is gonna be a three year journey to getting your business to a sellable position. They can't, they can't sit back on their heels and led up on the business. And we've seen that before where someone's like, Okay, well, you know, I'm not really into this business anymore, I'm not passionate about it, or I'm tired. And they're, as they're trying to organize a business, you know, they start, like I said, before sitting on their heels, and, you know, the revenue starts to dip a little or culture starts to suffer a bit. And all of a sudden, what they're doing is, you know, putting pressure on the valuation of the business, right. You know, when they're actually prepared and ready to sell. So, if you're, if you get discouraged, because you need to plan to in three years, and organize the business in order to sell, don't. You know, that's the time to actually buckle down and take it even more serious. So at least you could sell for for, you know, a competitive price.
Ronald Skelton 27:41
Let's jump into like, there's a lot of misconceptions out there in all markets faces, there's a common belief, there's just absolutely not true. What's one that bugs you? What's something out there that people think about buying or selling a business that, you know, it's just it just doesn't exist? One of them we just talked about, right? You can wake up one day and decide to sell?
Nunzio Presta 28:03
Ronald Skelton 28:04
Probably not unless you unless you've been operating, I guess, the best one out there that I know of is they kind of Steve Shawn world Built to Sell. Unless you've been operating your business as if it's for sale, for the last three or four years, you're probably not going to be able to wake up one day and sell it. Not for anything. Everything's sellable. Right? You can call me today and say I have a $3 million business, I just need 10,000 bucks to, to, you know, kickstart my next project. I'm probably going to take a look at that pretty deeply no matter how you know, how messed up it is, but you know, to sell it what's at what's reasonable, and then this day, for those listening, that's two and a half for most industries, it's two and a half to three times your profit. What you were able to pay yourself on a regular basis sellers, discretionary earnings, EBITDA, what you need to call it. But it's pretty much your profit. So two to three times your profit is very normal. There are industries that are more than there's industries that are less. But, if, if, what are the other, you know, preconceived notions are out there, that just kind of really just don't land well with you?
Nunzio Presta 29:09
This is an easy question for me, because I actually hate when people ask me this question. And this comes from the buyer side, and it's like, well, why would I, you know, why would I buy an existing business? You know, they're selling for a reason. They're obviously not making money or, or something's, you know, something's bad about the business. Like, why would any reasonable business owner, get rid of a business that's doing so well? And, you know, truthfully, you know, that's, you know, just not true. There's a stigma around that. It's just, it's just not true. You know, a lot of business owners aren't selling because the business isn't doing well. Like I said at the beginning of this, of this podcast, we've we've never seen a bad business really sell on our platform. You know, they're all great businesses profitable and the driving force behind the exit isn't because the business is doing well. It's, you know, it could be health reasons it could be retirement, it could be, you know, the brutal reality that they are no longer interested or passionate about growing this business or building this business. They are operating this business, they want to, you know, start something else or buy something else and grow there. Right. So, there's so many other reasons why people are, are selling, you know, businesses, especially in the micro market, right. With the focus on on the micro market. So, yeah, that's definitely a question I hate being asked.
Ronald Skelton 30:36
It's interesting 'cause, I've had quite a few people, when asked, like, my favorite question is, like, out of all the things you can be doing in life, right, you know, what have you on the phone with the guy who buys or sells businesses? Like, this isn't my first call when I'm doing, like, kind of building rapport, like out of all the things you could be doing right now? What have you on the phone with me a guy who's looking to buy and sell businesses? And, you know, I would say more often than I expected, it's, I've, you know, I didn't expect this answer, the answer I didn't expect was, I get this often. Probably two or three times out of 10, is I've taken it as far as I can take it, I don't know how to take it any further. It's time for somebody else to take control of it and take it somewhere else. I've got another, they have another project, but they they hit what happened was at least a story, they're telling me what happened was, they hit a certain plateau, they knew they couldn't take it much further, they had this other idea, they kicked it off his start, now he's starting to get traction, and they need more time for that. So they're selling this one. Instead of you know, there's a million ways they could have handled that differently. But that's, you know, that's the truth of the matter is, not all businesses that sell are selling because there's something wrong or something bad or anything like that. It's selling because the intentions and expectations of the owner no longer aligned with where they want to go. Right? And, and, and it happens, right. And to be honest, somebody who's looking to, you know, take a business to public someday, that's his, you know, he went to college, got his master's degree, he knew he's gonna create a business, take a public, and he started some business, and he just never sees a passes that he might be selling you a business that makes 5, 10, $15 million a year. But it still doesn't make sense to take a public. Just because it doesn't make sense. And now he's gonna go try a different business, a software or another tool or something. So there's a million reasons why. And very often is, or very rarely is it, this thing is crashing and burning I better sell it.
Nunzio Presta 32:38
Exactly, exactly. Yep.
Ronald Skelton 32:40
So. Cool. So what's your favorite deal? Like it was the coolest thing you've ever seen go through your site, or you guys, you got to work with that help. I love good stories, what's it tell us a good story about something that, you know, you get to get to encounter in the last eight years?
Nunzio Presta 32:54
Well, you know, what, so as, as a platform, and you know, as we, the unfortunate thing is, you know, we have a very engaged community and, and, you know, we're very supportive, and, and, and constantly in, in, you know, contact with our user base. But like any other, you know, digital first platform or marketplace, there's a lot of users, there's a lot of deals going through. So unfortunately, we can't, you know, have a close relationship with all our users. But one that definitely stays top of mind for me is, is a story when my sister-in-law actually bought, you know, a children's playground through my platform. And it was just really rewarding, because I created something that added value to someone that was close, close by. And I saw the actual, you know, effect in real life, you know, I saw how she transformed this, you know, this great little playground, into into something that was, you know, pretty good. You know, she was, you know, she grew the revenue, they they dumped money back into the playground to renovate it and rebrand it and it was growing, it was growing great. So I think that's probably definitely top of mind for me because it was so close. And I saw the, you know, the real life effect of it.
Ronald Skelton 34:25
This one just keeps sticking in my head. So I'm gonna get it out there. What piece of advice would you consider most important for somebody thinking about selling? Like, if they could only if they're really busy, they're there, they're still engaged. They're pulling their 60 hour weeks, but they're thinking about selling and then they need to start the process. Where do you help them start? What's the most important thing for them to start doing differently?
Nunzio Presta 34:47
Right away, start creating, you know, operating principles, you know, systems and processes and even values in the business. Whether it's a two person show or a 25 person show, because you want to make sure that the business isn't dependent on you. I know, in our space, it's probably the number one piece of advice. But creating a self sufficient business is absolutely mandatory in this space, because a lot of buyers, you know, though, they fear the unknown. And if they, if they see that, that business is really dependent on that one, you know, owner or that one client or that one supplier, they know as soon as, as soon as they buy that business, and those certain stakeholders are gone. So as the revenue. So that would be my number one advice. Start working on really creating a business that's not dependent on you, day in and day out. And the next is really make sure your financials are healthy and clean and organized. You know, I always tell people, if you can introduce some sort of subscription or recurring model, go for it, because, you know, the valuation or the multiple of, of that revenue is higher, sometimes, or at least the multiples on revenue versus profits for models like that. And also be aware of timing, right? You know, if you if you think, you know, your, or you have always had this plan that you may want to exit, you know, know when the right time to exit is, right? And you need to be aware of all, you know, the socio economic and tech trends, right. I always it's an old example, but it's a very true example, you know, if you had, you know, a little independent taxi company that you wanted to sell, and all of a sudden, you know, Ubers, you know, on the corner, you may want to sell that sooner than later. Right. So just being aware of the environment as well, right.
Ronald Skelton 36:51
Right. One of the exercises I have some owners do when they tell me, Well, you know, I pulled 50, 60 hours a week was a cool, what roles do you hold? Yeah, I'm pretty much just manage things. Like not at 60 to 70 hours a week, right? So here's what I asked him to do. So for the next 10 days, do me a favor, he said, why at the end of every day, get a notebook, right? Or open up a notepad on your computer. And the end of every day, log went like, what time did you get there? What time are you about to go home, and then just brain dump everything, like all the different things you worked on. And do it for 10 days for me, and you'll, I want to see it. And the reason I do that in and this is for friends, mostly the new thing, but the reason I do that is because I honestly think a lot of owners don't realize how much they're actually doing. Right? And you see, notice reason they're a you know, accounting brought me this problem, and I helped them fix it or, like so now he's an accountant for a few seconds, right? But there's a lot of hats he's wearing. And I said what the second exercise I say is like, look everything on that list and figure out what should you be doing? Right? If, if your accounting is doing that three times a week, probably the next accounting hire needs to be just a little bit more senior, a little bit more experienced. So they go to the right, maybe not right away, but you're just like, you identify, Okay, I've got a weakness in this area. And it's, it's surprising what they learned in that space. Right? One of the guys like, you know, I realized I spent 10 hours a week out in the shop fixing machinery, like, okay, you've got 20 people on the floor, nobody else knows how to fix that stuff. Right? You know, these are it was a machine shop type of thing. So, but I honestly believe it's what's the word I'm looking for. If you get kind of acclimated to your environment, you don't see things that are right in front of you, because they're there every day. So getting the owner to kind of see what it is they spend their time doing is I think the first step. And then he said, Well, you know, the guy that asked me, that's okay, what's the finish step? I said, start taking vacation time. I sign all that stuff to other people, then take a week off, and then come back and see how things were working. Right?
Nunzio Presta 39:04
Ronald Skelton 39:05
Tell the staff you can't contact me unless it's placed a burden down. Right.
Nunzio Presta 39:10
But it also it also unlocks, it unlocks time for that owner, you know, to to put towards, you know, more strategic areas of the business to actually grow the business, right? When, when they're dependent on every aspect of the business. You know, it you know, it stops, it stops growth, in my opinion. And I saw that as a young young kid. My father had a CPA firm. And I remember as a little kid just in his lobby, just doing homework. The amount of clients that would come in and go to the Secretary saying, "Hey, is Frank here?" And they'd be like, unfortunately, he's he's busier with a client, but so and so can definitely help you. No, no, no, I want to wait for Frank. I need to talk to Frank. Can you talk Frank? So right away, I know it's accounting. So it could be a little different than other businesses because there's that one one on one relationship, but it still paints a picture that, you know, when you're really dependent on everything in a business, it could lead to, you know, a bad, you know, bad customer service or, or, or, you know, just, you know, being absorbed in the business where you can actually, you know, work on the business to see how you could grow it more, right. So, I think creating those those principles and those systems and processes, where, you know, decisions can be made without you, and the business could operate without you is absolutely critical, especially if you're thinking of selling.
Ronald Skelton 40:35
Absolutely, no, it's I did it my last business. I realized I, I used to kind of call myself a problem solver or somebody can, I love solving problems. And the problem was the number one problem was somebody who identifies as a problem solver, what do they have an abundance of?
Nunzio Presta 40:53
Solutions? Or problems?
Ronald Skelton 40:55
Problems, everybody brings a problem to a problem solver, right?
Nunzio Presta 40:58
I was gonna say,
Ronald Skelton 41:00
We create solutions. But you know,
Nunzio Presta 41:02
Ronald Skelton 41:03
You know, what happens is you end up surrounding yourself with employees who always have problems they need you to solve, right? Because you're good at solving them. So, you know, now if I showed one of my guys how to tie his shoe, then he did it. If it wasn't, if there was nothing wrong with his shoelace, he could do that over and over again. But the second there was an awkward knot or something different about the shoelace, he would come to me and go, Hey, this is different. What do I do with this one? Right? It was a bad culture to actually do to have created, right. And a lot of business owners don't realize that. I didn't realize it until later on that I had done it. That was the reason I was having some burnout stuff is like nobody does anything here but me. You know, that's because I hired people who, you know, made me feel smart, because he brought me problems I can solve. Every business owner has some of that in there, unless they've really addressed it. There's things that they do, that would be better served by other people doing them. And there's things you know, people they've hired, you know, I've had owners, like, Hey, I'll tell you the business, but you got to promise me, you fire nobody, for the first six months. I told everybody I'm selling, and I'm really concerned, they're all concern about losing their job. So just promise me you won't do make any changes for six months. I'm like, I can make promises. I won't do anything for the first 60 days, because it takes me that long to learn what I've got my hands on, right. But after that, I promise you, I just told them, I say I promise you there are people working for you that you're loyal to them, leave your loyalty to them, outweighs their value to the company. If you've been in business for 25 years. And you know, you hired your favorite employees grandson, he doesn't have to perform like everybody else, because you have a loyalty to your favorite employee. Right?
Nunzio Presta 42:49
Ronald Skelton 42:50
I don't have that loyalty. I don't know the guy. So that said, there is there's there's something to be said for understanding the culture understanding, who's there? Why are they hired? Who are they connected with? Right? You know, that space of like, it gets different when you start getting over 50 employees, but in a smaller environment. Those, the smaller the team, the more they call it connected, they kind of have to be, right. So inside is some of these spaces, how do you see that inside of a deal room or something like, okay, they got 13 employees? How do you, how do you get the owners to, or even the sellers to understand what the culture is gonna be? Like, I do it by long phone calls and zoom calls, and, you know, and other stuff, but I don't play in that digital market space where I can go scroll through a list of businesses and make an offer on something. I just, I haven't played in that is because it's my it's micro that it makes it easier to do that, or?
Nunzio Presta 43:55
Well, I think I think at the end of the day with the way we're positioning at, is sure the mic the micro space has, has something to do with it. But we're also we're also it's a mechanism from us as a platform to say listen, this is a non binding offer, right? This is just to make sure that you know we're kicking away these, these tire kickers and, and we're, we're making sure that the that the conversation is as qualified as possible. You know, there is no actual deal until a purchase and sale agreement is sent inside. So, you know, the offers are really like I said non binding. They're not you know, they're informal, per se it's just to align both the buyers and sellers. But you know, that's that's just the way our platform operates and that's just a mechanism we've, you know, release in order to try to make sure that you know, our sellers are not wasting time with with, you know, unqualified buyers.
Ronald Skelton 44:56
Can you give me an idea on what are the average business sizes on on the platform? Like, I don't know how you do it, like its revenue or profit or whatever. But from what's the range? What does it look like?
Nunzio Presta 45:09
Yeah, so right now we have something on our site called Data stories. And if you go there, it'll show you what the average listing price is and what the average connection price is. So right now, the average listing price is around, just, it just, it's almost around seven, 700,000. I believe, last time I checked, it was around 686,000. And then the average connection price. So the, you know, the, the valuation of, of the listing that a lot of buyers are connecting with is around 750,000. So that's that kind of, you know, creates the environment, or for the micro market that we play in. But just based on, you know, the list of the average listing price set of 680,000. You know, the average multiple, like you said, is anywhere from two to three, so you can easily understand the average profit per company on our, on our site.
Ronald Skelton 46:09
That's cool. So the reason I'm one of those, when I heard micro, I'm thinking, you know. I've had the CEO of Flippa, and micro acquire. Some of their site, I mean, a lot of their listings are really small, it's like, you know, five, $6,000 a year in, in profit. And I was like, okay, the only reason I'd buy that is, I'm in your industry, and I don't want to spend money to develop a website. I might as well buy your website that's in my industry, add my product to it, and bump my revenue up a little bit. And that's from my perspective. From, from a lot of other perspectives people buy in for other reasons. But so I was trying to figure out when you've used the phrase multiple times on the show, micro and micro to one person is different than micro to another so.
Nunzio Presta 46:52
Sure, yeah. So the way we defined it is under 5 million in enterprise value. That's a micro market for for us. Somewhat, some of these other players that have had platforms, you'll notice that micro may be defined in other ways. But generally, they're really, really, really, really micro because a majority of, of the deals that they attract are either SaaS base or ecommerce based or domains or startups, right. The world we live in is yes, of course. You know, we have bigger SaaS and ecommerce businesses for sale or digital businesses for sale on our platform. But we also have established main and main street businesses for sale as well. You know, these bigger wholesale and, and restaurant or aesthetics or, or fitness and health care. Businesses that create the, like I said, before, create the backbone of our, of our communities.
Ronald Skelton 47:48
You know, we've said a few times on here that the average going sells price right now is two and a half to three and a half, two and a half to three times sellers discretionary income.
Nunzio Presta 47:57
Ronald Skelton 48:00
But that's not necessarily always the case. There's a lot of industries that are different than that. And one of the things that of business owner probably finds the most confusion around is how to value their business. Do you have tools on there for valuation?
Nunzio Presta 48:15
Cool. Yep. Yeah. So because because we were sitting on a lot of rich data, we actually have a quick business valuation calculator. It's on our site, it's free, you plug in a couple of numbers, and then our back end does its job to spit out a report and email it back to you. And it's based on all you know, like I said, all the data that we've been, you know, analyzing and gathering for the last almost 10 years.
Ronald Skelton 48:42
Okay. So I was just curious, because I mean, if you have a business owner, I had one of the same guy was talking about earlier, he called me said, How do I price my business? And I said, Yeah, that depends. And he said, Well, I Google it. And there's so many different ways to do this. There's like, Yeah, I think that's one of the major colleges like I don't know which one like ivy or something. One of the ivy schools out there actually has 147 valuation models that they teach, right? Yeah, at one school. So you know, where you and I are just throwing away, throwing out that, that multiple of EBITDA, or multiple of seller's discretionary earnings profit or whatever. That's just simplest one. Some of us use it some a lot of people preach against it until you're making a bad decision by using it. But if you if you're a business owner, you go down to Google, how do I, how do I get an estimate of what my business is worth? It can be daunting. I mean,
Nunzio Presta 49:39
It's yeah, it's, it's, like you said there are tons of different formulas. You know, I like to simplify it for people, obviously, you know, like we always recommend as well like, if you want to go invest in in a chartered business valuator by all means, invest in that type of guidance. Like it's, you know, it's pretty valuable, but in general, if you're looking for, you know, an estimate of value on your business. I don't know if you've heard of Scott Galloway. But he, he pitched it in, in a little panel discussion as part of, and he pitched it perfectly. He's like, if your model is transactional, most likely, you'll land on some sort of multiple of EBITDA. If your model is recurring, you will most likely land on some sort of multiple of revenue. And that's kind of the approach I take. It's simple. It's easy. And, and at the end of the day, I think, you know, buyers and sellers will, will always have that debate on, you know, what the multiple is. So it's part of that conversation as well.
Ronald Skelton 50:42
Are there any industries or anything like that you guys avoid not having on the website? You just don't put them on? You don't, you don't let them list it?
Nunzio Presta 50:47
Not really, we're pretty agnostic. We see, we see, you know, pretty much every listing across, cross Canada, US. And like I said, you know, every, every valuation as well, generally under the $5 million mark, but we do have outliers. Like we've had a bed and breakfast on our site for 12 million, which was pretty cool. We've had a little, you know, home based basket company that was trying to sell for $1,000. So we do have those outliers. But yeah, like, like the average is around that 700,000 mark.
Ronald Skelton 51:24
Okay. Man, we've, we've had been chatted for nearly an hour. And so let's just do some important housekeeping stuff. How do people contact you if they want to reach out to you and talk to you?
Nunzio Presta 51:35
Yeah, sure. So the easiest way is just to go to our website. So buyandsellabusiness.com. I'm almost, I'm also pretty active on Twitter. And that's just at nunziopresta, N-U-N-Z-I-O, P-R-E-S-T-A. And yeah, that's probably the easiest, easiest way to get in touch.
Ronald Skelton 51:56
So for my US listeners, that is Z.
Nunzio Presta 51:59
Ronald Skelton 52:01
I love it. I love it. I'm on the phone with people from Australia, and I've had people from, I love the different cultures and stuff. But I was just playing with you there. So our favorite question that always end the show with and we probably shouldn't get to that point now is how can myself or the audience help you out? What can we do to help you move your game forward?
Nunzio Presta 52:23
Yeah, you know, like, full service is fairly new, you know, we're the first platform to launch a solution that has really digitized and automated this, this purchase and sale experience for our users. So, you know, we've we've launched, I believe it's been just over three and a half months now. It's getting some great traction, some great momentum. But I love feedback on it, because we're trying to perfect that, that experience and that solution as much as we can. So, you know, I think my first ask would be would love some feedback on that solution. I don't know if we're able to share a link to that solution. But if we can, maybe we can drop that in the in the copy somewhere, Ron. But I just love some feedback on that solution. And, and then just like any other two sided marketplace, you know, we're looking for people to walk down the aisles, and we're looking for inventory on the shelf. So you know, word of mouth referrals and just going to our site and suggesting our site to people looking to buy or sell a business. Any type of business would be would be greatly appreciated.
Ronald Skelton 53:32
Awesome. And we'd definitely get that link in the show notes. Make sure you email what you want in there to my team, I tell you sent it to me, but I just moved, everything's crazy here. If you send it to me, I might lose it. Send it to Mariel. She manages the production team. She'll get it from there and get it in the show notes. So if you're listening to this, I expect it to be in the show notes. And if you don't see it in the show notes, reach out to me via the hotline that's on the show on the show. And tell me I forgot the link and I'll make sure we get it up. Things are still a little hectic moving to California, you know, I say hectic. We're gonna get off here. So I'm going to text the wife to bring the kid back that gets back over here, and I'm gonna grab my fishing gear go back to the ocean. So,
Nunzio Presta 54:11
Ronald Skelton 54:14
But uh, yeah, I appreciate having you on the show today. Thank you for being here. And let's call it an end.
Nunzio Presta 54:21
No, absolutely appreciate the opportunity, Ron.
Ronald Skelton 54:24
Awesome. Thank you.
Nunzio Presta 54:25
Thank you. Bye.
Ronald Skelton 54:27
Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150. That's 918-641-4150. Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you. Again that number is 918-641-4150. Call our hotline leave us some information. Thank you. The investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind introduce first in Napoleon Hills famous book Thinking Grow Rich. With accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible, I suggest you take a visit over to tiepm.com That's T i e. P m.com. And check out the investors and entrepreneurs professional mastermind.