How2Exit Episode 59: Bruce Marks - M&A Lender and an expert in Business Acquisition Financing.

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 Bruce our marks m&a lender and helping buyers and search funders. Get to the closing table, man. Thank you, Bruce, for being here today. I want to appreciate you sticking with me. We had a little bit of technical difficulty starting up I think we're gonna make this work.

Bruce Marks  0:48  
Yeah, Ron, it's great. Great. Great to be here. I greatly appreciate the opportunity.

Ronald Skelton  0:53  
Awesome. Well, I always, always, always seem to start right at the origin story. I want people to kind of get to know who you are. So the joking. The ongoing joke is I always say, Well, you were born. Now you, you ended up on a show about buying and selling businesses. Could you fill in the gap in between?

Bruce Marks  1:10  
Yeah, that would be great. So I started my lending career. Long time ago, I started out originally in commercial lending. And while I was in commercial lending, I did all kinds of the processes, real estate lending, I did underwriting I did close, and you know, you go through a formal credit training program and became a commercial lender. And then I got an opportunity to get into SBA lending. And it was interesting, because when I first got into SBA loans, way back into the early 80s, you know, SBA was, you know, stood for small bad assets, so to speak, right, I mean, people, people did not want to do SBA lending, it was a process, we had three part, parchment paper, all those fun, I mean, it was way back then the application process was, you know, putting it on a typewriter and send things into the SBA kickback. It was just a really different process than it is today. But, but through that whole experience, and I also became a business owner for 13 years, I've been on that side of the table. But about eight years ago, I shifted focus, I was working at an institution in a searcher who had graduated Harvard, that called me up and said, I'm buying a business, and I'm looking for a search forum. And I, I really did not know what that was to be truthful with you. I had been doing, you know, SBA and m&a, vulnerable market transactions, but I really was never familiar with the concept of, you know, search from lending or, you know, acquisition by helping people who put in a small equity check out, get different investors, and then, you know, along with the solid ticket piece and, and invited business, so, you know, really, for me, it, it really started to blow up about eight years ago, and this gentleman came to me and said, This is the model, this is how it works. You're really working with young guys that are coming out of either Harvard, Wharton, stanford the Kellogg within a lot of the major schools, in a lot of schools now have gone into the CTA entrepreneurial sector acquisition. And so the model kinda has blown up. There's a tremendous demand for it. As you know, there's baby boomers are age, and they're going to be exited, right. And so there's a lot of those folks in the marketplace that are, are looking to, you know, get the fruits of their labor, get a liquidity event, and sell the business. And I tell my searchers are buyers, when you buy a business, you're going to exit one way or another. Whether you want to or you're not, you're going to exit. So you know, there's a great opportunity out there for these folks making this transition and then for what I do in the lending space in helping those searchers obtain financing, you know, that security or recruiting event that the sellers want, and then obviously allowing the buyers to get along, divide the business and then fulfill their dreams (inaudible). 

Ronald Skelton  4:32  
So let's kind of go through the process, right. So, you know, a, a search funder, whether they're just graduating or they're, you know, just an individual that are out there looking to buy a business. And during the process, you know, there's just, there's a whole bunch of stuff that uh, that goes on in the beginning trying to figure out you know, who you are, what you want to, you what business type of business you want to run. At what point do they need to start talking to the lending advisors and people like yourself,

Bruce Marks  5:01  
you know, I always tell my clients, you're the client, and you're driving the ship. If you want to come to me, pre LOI, you want to come to me post LOI. That's clearly up to you. Right? So I think I have a lot of value to bring in, you know, I have a new business for 13 years, I've been a commercial lender, I've been a single owner of a bank, certified m&a advisor, I, I have a lot of experience. And so I tell searchers or buyers, is that if you want to engage with me at the very beginning, if you want to get a sim from the broker, and you just want to assess whether this is the right fit for you, I'm more than happy to sit down with them and talk about all the things that matter, right? Is this the right business for you? Do you have the skill set? What does the seller do that you're going to be required to do? You know, I'd like to share a couple of stories with you, because every, everybody likes stories, 

Ronald Skelton  6:03  
absolutely. 

Bruce Marks  6:04  
A story several years ago, where a young gentleman called me up, he was a Harvard MBA graduate, he lived in Texas, and he wanted to move to Colorado because his wife's family in Colorado, and they were thinking about starting a family. Like a lot of people, that's what motivates a lot of young couples is, you know, where their family has asked to be truthful. And they focus their search on. Anyway, he, he found this business scan, it was essentially to ice group stores, right? So in different locations in Colorado, but destination points, and the businesses were thrown off about $600,000 in cash flow. And he said to me, okay, you know, the business is solid for 2.2, you know, going to put in till you're 25,000. So I was going to hold to 25. And no size deals, typically working capital is not involved when you have to cost so it's gonna be about 1,000,000 or (inaudible). And I started to talk with him. And I said to him, you know, what makes you really want to lose business. You're an executive, your Harvard MBA, and now we're looking at buying two icecream stores. And I share the story because I said to him, reality will set in, you're buying the business, but you're actually buying the business that you'd have to go in, turn the key in operate, right, you're gonna, and I said, and this is going to happen, there's going to be a Friday night. And the young teenage child or your teenage person that's behind the counter is going to call in sick for whatever reason that might be and you're not going to be able to get help to cover it for whatever reason. And now you're going to go have to put on the apron, and stand behind the counter and start scooping ice cream. That's what running a small business like that entails. And I said to him, if that's the vision that you had, going to Harvard, and graduating and putting yourself through that program to scoop ice cream, I'm all for, I'll absolutely do your transaction. But I want you to think about when we hung up, it was a Friday night, I'll never forget this Saturday morning, he calls me up. And he says Bruce, he says, it didn't take me long to think about what you had to say. And what you had to say was real. In thank you for slapping me and giving me a real sense of dose of reality. Because I don't think I looked at it. I think I want to set my sights on a different business. And you said, I think that's a great idea. And I'm not saying that it's a bad business to run, it was just not a fit for him. Right? So it's getting to the skill sets of the people if, if you're an IT guy, and that's what you've done in your career. Then you come to me and you say listen, I have found two pizza readers that I think a great and I want to run them, that's gonna be a really tough sell. Right? Because you don't have any skill set. You don't even everybody likes to eat in a restaurant, but that doesn't mean you operate a restaurant, right? So,

you know, I, I joke about that, and I laugh about it. But in reality, that's how granular I get with a lot of my clients. Because the reality is, is that you are going to own operate, run, and also control the people that you work with. You're going to have to pay back the bank, you're going to have to pay back the salary, you're going to have to pay the landlord, you've got to pay your vendors. There's a lot of going on and there's a lot dependent on that business. And I want to make sure we find the right one. And I always talk about that when it's upon (inaudible). It is in fact, the right word.

Ronald Skelton  9:27  
I actually had a guest on here the show, and he's talking about one of the transactions he tried to talk to the guy out of. And he bought a kind of the executive type just to go into board meetings where three piece suit their work everyday, buys a moving company, and then tries to have moved their, their staff meetings to like a boardroom setting. And everybody else showing up, you know, these are ex cons mostly right? You know, nonviolent offenders, because they're going into people's houses, but he had a lot, he had a large percentage of really rough neck type of guys working for him, and they just kind of ate him alive, because he didn't know how to handle that, you know, outside of a boardroom. So the culture matters. So the

Bruce Marks  10:42  
Story with that, because I think it's pretty, it's a pretty interesting, but true scenario. So I recently closed a transaction for just a great gentleman, a Wharton MBA, but an older child, he wasn't, you know, in his 30s, or 40s. He was older than that. He had a great work experience. And he bought a business here in Florida. And he was in LOI, the deal was moving well, we were, we approved the deal to dealers in closing, and he called me up and he said, Bruce, I don't live far from you. I'm, I'm panicking about a situation, I'd like to come down and take you to lunch. So I said, great, great idea. Why don't we do that. So we go to lunch. And we sit down, and we're having our conversation. And he turns to me, and he says, I want to present a scenario to you. And I'd like you to put on your old consulting hat. I know, we had a business as a consultant, consultant for 13 years. And really rob you and your corporate consultant. We said, Okay, what's the situation you said, when you look at me, I'm an African American, maybe I've got a great skill set. But the business that I'm buying to your point was in the services business. And the people that were the employees of this business did not look like it. This is what he said, he said, ie they do not have the same speaker. He said, and I'm really concerned about coming in and buying this business. And them seeing me and culture matters. To your point you just said, he said, I'm really fearful, what do I do? I said, I know exactly what you're doing. And I'm going to tell you what you're going to do, it's going to work out. I said, here's what you're going to do. When the seller and you are a week before closing, the seller is going to call this folks in and he's going to have his regular staff meeting. And he's going to on a screen, pop up your resume, not your picture is going to pop up your resume is going to say this is who I am. I'm a Harvard and Harvard MBA graduate. I've owned a business before I've owned this business before. This is my experience. Not only just that, but the second slide is going to be what's my vision for the company? Where do I see you in this role? Right? What do I What do I expect? What am I looking for? How are we going to grow this business together, and they're going to get a flavor of you, who you are, what you are and what you bring to the table without ever seeing a picture of you. Because then this way in their mind, they're already going to know why we're fortunate that this is the guy that bought the business ain't going to take us to the next level. And after he does that, and the transaction closes, then you can meet them face to face one on one. Don't do it in a group setting, do it one on one, so that they then can ask any questions they can meet you. You can tell them, you can ask them what their role is how they can help improve the company. Where did they want to go in the company? And he called me back and he said to me after it was done. It was the best advice. And it worked out fantastic. And I think in, in what we do as lenders, it's not just about and I say this all the time. Yes, we utilize the SBA loan to close our transactions, but the SBA is just the proceeds to get the deal to the closing table. It's not what I do. I look at myself when I say I'm different. I'm not an SBA lender. That's not my role. My role is to help facilitate the buyers are the searchers are the people that come to me to help them fulfill what it is that they want and desire and that's to get the deal to the place.

Ronald Skelton  14:51  
You know, it's interesting, it's both sad and true that he even had to do that. He, he was able to establish his credibility before any preconceived. The huge internal biases of those employees kicked in. And like I said, it's both sad and true that you know, sometimes that's needed.

Bruce Marks  15:09  
Right? And that's reality, right? Like you said, sad and true, but it, but perception is people's reality. I've learned that as I've grown, right? That people will tell me things and I'll say, Oh, well, that's not correct. It doesn't matter if I tell them it's not cool. If that's their perception. That's their reality.

Ronald Skelton  15:29  
Stories. What makes up a good show? So let's give us another one.

Bruce Marks  15:33  
Sure. This searcher comes to me. This was here first FinCon, like a couple years ago. He's on Twitter. He was he's very noticeable, great, great guy. But he had really good experience. He called me up and he said, but I don't even know how to issue an LOI. And now we're going to talk about an LOI. But do you have a blank copy for me? So I can submit one? I mean, literally. And he was buying a, a construction related business, that's all say, and restarted from it, it was a proprietary search, right. So he got the financials from the solid and said, Okay, let's dive into the future. So, I mean, you want to talk literally, from day one, to the closing table. And he sent me a text matches the other night and said, you know, he's had another business just over a couple of years, but he's grown tremendously, even to is, is way up. He's been super successful. Had all the skill sets because he was buying a business in the sector that he was working in. He was very familiar with it. That's how it became a proprietary. He found out the seller was thinking about retiring, and that's how he got the deal. But literally, I, I worked with him from Okay, let's look at the financials, to help him with the LOI to getting into them just all as, aspects of the transaction. And so, yeah, it's, it's I just leave it up to them, to the individuals as to when they want to contact me, then I have some people that contact me post, post LOI, they're ready to rock and roll. I just got a transaction. It's in credit now. synergistic acquisition post LOI 123. Super quick, two weeks later, the deal was in, in underwriting getting ready to go to credit. So you know, just depends upon the individual.

Ronald Skelton  17:39  
I can see if you're a search funder, and you're fairly new, one of the most complex things there is valuations, right, figuring out what a company should be, like, you know, should be bought for and what would the SBA approved, because if your valuation is too high, the SBA is gonna have you renegotiate a correction. Right? Just tell, you know,

Bruce Marks  17:58  
let, let me share a little bit of tidbit of information. I have another story. So this searcher is in the Texas area. He's a military guy, Wharton MBA, just a great, great guy. And he comes to me, and he says, Bruce, I'm looking at a business and you know, the cash flow, and what the seller wants, isn't really meshing. And I said, Okay, he says, But you happen to know the investment bank will be able to market. So I said, All right, who is it? He told me? I said, Yeah, I know him very well. He said, I, I think it would be appropriate. If you had a conversation with myself. I already know the deal because the investment banker came to me before we put it on the market to get my opinion. So the investment banker and the solid go through various rounds of interviews on who they're going to sell the business to. They ended up narrowing it down to three people. Two of the three, were looking for SBA financing to get the deal to the closing table. The third person was a synergistic acquirer,

he was not going to use (inaudible) relationship with commercial bank. He had a business he could get a commercial loan to do returns. (inaudible) They move forward. They decided that they don't want to move forward with the synergistic choir that they're going to choose between buyer A and buyer B,  buyer A, buyer B with both extremely well qualified, I was having conversations with both but he said to me, listen, buyer a is who we really want to go with over buyer B, but buyer a, his price is $400,000 less than buyer B. Is there any way he could come up? Talking to you Within valuation, the business was GS sub 880. Okay, in EBITDA, they wanted 5.2 million for the business. Right? So, you know, you, you go, okay, 7 million, million times five is five, and this is eight sub ad, and they want 5.2. And I said, yeah, and in the face, I said, I don't know if it's going to appraise up. Right. So I've gone through the training to nap for,for the certification for business valuations. I am not a certified for liability purposes, from the bank's perspective. I'll even probably said to him, he asked me because I have a relationship with the investment bank. And he said, What do you think, Bruce, what do you think, and he said, I don't think is going to value up. But let's get a third party evaluator to do it. And we'll see what happens. Anyway, we choose buyer A client comes to me, they go ahead, they agree to offer the $5.2 million valuation comes in at 4,000,760. Now, the SBA does allow a 10% differential in price. So if somebody was buying a business for five 350, and that valuation came in at five, you are okay. The only thing you have to do is you have to write a letter as the buyer to the SBA, explaining to them why you are willing to spend in this case $350,000 More, it could be for the opportunity, it could be for you think you're going to scale it, you think you're going to build it much better, whatever the case may be. The SBA does allow that. And that's what we did in this case, right. But you kind of get a sense. I mean, it's valuations are, are, we look at there's eight different factors, really the main factors like you'll look at the valuation requirement, and we'll say, Well, this is going to get between a four and five multiple. Well, why is it four versus Why is it five? There's reasons, right? You know, that you, you're well experienced in the space. But I can sit down with the searcher and go, Okay, let's talk about the factors and see why we think it's a four versus why we think it's a five, I'll tell you a couple of other things. I'm a true believer in Warren Buffett, and his saying price is what you pay value is what you get. I tweeted all the time, and quoted all the time, I work with it every time. If you're talking about two or $300,000 in valuation difference between a buyer and a seller and the opportunity costs of not getting that deal to the closing table. My feeling is doesn't matter. Because if you advertise $300,000, over 10 years, you're talking about $30,000 a year, if you can take that business and grow it and make it your own and build it and scale it and all those things that go with buying an SMB, then that $30,000 shouldn't even be at play. It just doesn't even (inaudible). Do it move on. It's, it you get into a lot of emotional aspects between the buyer and the seller. I've had buyers literally say to me, I'm not given that guy $100,000. And I'm like, $10,000 a year, you're gonna pass on that opportunity. You've been searching for eight months. If it can run a year, you're gonna miss out on the opportunity doesn't make sense. I'll, I'll throw that back to you thoughts.

Ronald Skelton  23:47  
My thought is ego gets in the way a lot, right? A lot of people think that even you know, I have my MBA, it's not for more, Wharton or Harvard, anything but it's, I've got what? And you know, they think you want you get what you think, okay, I know this business thing. Now I've got this magical piece of paper, it says I do. And we're humans, right? A lot of people miss that. That concept. You got to, you got to remember, remember, as you're going through these deals and processing things, are you allowing your ego to get in the way or your logic? Right? I think you should use a little bit of both. If you gotta you got to have the confidence to get you know, to get the job done. But you really out of base that thing on your logic. And, and a lot of people have a bad like a bad problem with separating the two. Right? That you know, when somebody says I won't pay another 100 grand for that, you know, for a business that I'm going to own for 30 years or 15 years, a lot of these guys are buying for the long term. Unless it's pushing you on day one, like your overvaluation anyway, or, you know, there's cases I can get it where there's cases but in most cases, it's, it's probably your ego. Right? And a lot of times, you know, if the sellers asking for more money at the last second or something like that, a lot of times it's not the money he's after, right it's a reluctance. because he doesn't know what to do next, it's, there's something he's gotta, you've found some flaw in your plan or something he doesn't believe in, and he just doesn't want you to be the buyer and you need to get out. It's not that it's, that's not the end of the road, it's an obstacle, you got to figure out, okay, how come? How come this comes up now? But, uh, my response to that is, you know,

Bruce Marks  25:18  
you know, we, we can get into conversations about valuation we can get into conversation. You know, I, I think that I tell searches in viruses (inaudible) is, if, if we're having a conversation, it's a topic that I don't understand. That's going to be just because at some point, after all these years of doing it, you've seen it. All right. So you know, the expression Oh, I wish I knew then what I know now, well, you, you couldn't know that what you know, now you haven't lived, right. So he experiences a great teacher, going through all of these seeing arms was like, I was saying, I got a lot of saying, My favorite one is today, you're the best at what it is you do. But tomorrow, you'll be even better. And that's what happens with experience, right? You learn something new every day. Maybe that doesn't apply to a baseball player who's now 39 and older in his career. But in our world, and what it is that we do, yeah, today, you're the best way to do it tomorrow (inaudible). Right? So it's, it's giving that experience to these, these buyers and searchers and look at that's what what I do every day,

all day. 

Ronald Skelton  26:31  
On that topic. What's the one thing you know, now you wish you'd known 10, 15 years ago?

Bruce Marks  26:36  
So absolutely. Being a specialist, understanding how to market that branded, and really facilitate the growth of it. You know, when I look at myself 10 or 15 years ago, I did all kinds( inaudible) your do whatever came my way. Today? I do one thing. So I look at it like you have the DO you have the MD? And then you have the neurologist right,  in (inaudible) Who's the (inaudible)? Everybody knows the answer to that question. And so I think if I and I share that with the folks at my bank that I'm a team lead, and I've got several people that report to me. And I share that with you I said get ahead of the curve. It's the one thing that I wish I knew (inaudible) is if you can specialize in something, and you can become an expert at it. People will come to you. And that's the one thing.

Ronald Skelton  27:38  
And I think that goes for the search funders too. There's a lot of guys, I just talked to somebody yesterday, who would I asked what they're looking for, like I don't know, yet. I'm just gonna market to a bunch of people, and then see what sticks. And I was like, yeah, that works. But it's difficult, right? If you can figure out that you want and I'm, I'm going through this, I go through phases, right? I was evaluating coffee shops for the first two or three months, I thought I really wanted to be in them and learn that I don't. But once you figure that out, you can actually put the word out there, say I'm looking for x, it needs to look like y and I want to buy it by z. And if you, you know really put that out there and you really market that deals will come to you, you know, especially after you learn the industry, you specialize in it. I mean, we did it last year with marketing agencies, and you know, we were doing a marketing agency roll up. And, you know, we built a, a communication channel that enabled us to evaluate over 200 marketing agencies in less than 200 days. And we take quite a few of them to the LOI stage and start due diligence. So you know, and that just because we knew exactly what we were looking for, we were able to articulate that. And then we were also able to simply articulate our value add what happens when they work with us. 

Bruce Marks  28:59  
That's right. 

Ronald Skelton  28:59  
Right? 

Bruce Marks  28:59  
right

Ronald Skelton  29:00  
And, you know, I always, you know, goof around and tell these guys, these search funders and stuff you are who Google says you are, you know, see

Bruce Marks  29:08  
your reputation deserved, right. And, and to that point, you know, I look at where I am today and in, in my life cycle and, you know, you eventually we all hope to get to that point where we're all you know, have financial stability, right? That's, that's the ultimate goal. And we can do the things that you want to do. You can look in the mirror and say that we've grown a business or we've built a business and we've been successful, right? That's, that, that's the bet. And I think at this point in time when I, when I look at it, and I say to myself the opportunities of the past seven or eight years now that I am an expert in this space and what it's allowed me to do it not so much for me but for the people that I work with, right? Because you and I talked it's different when you get up in the morning you don't have to go versus Having to go to work. It's a little bit different mindset. And I, I strive to be better each and every day so that I can help people accomplish what it is that they want to do. What they want to do is a ton of what we talked about, there's a ton of baby boomers exiting, and this next generation needs to come up and, and be able to facilitate those acquisitions and keep those businesses alive. And you know, it's my passion. It, it really isn't. I think that I worked very hard to get to this point, going back to school and becoming a certified m&a advisor, getting me doing all those things to, to become an expert in this space. And I couldn't know now, what you know, back then, because it just took that many years to be able to, because when it's when a searcher or buyer comes to me, and they say, I've got a problem. How do I handle it? I have to know, right? I have to set myself apart from the person who just says, oh, yeah, I'm an SBA. Like I said, I do not look at myself as an SBA. I just SBA is the funding tool we get, you know, that we used to get the ability (inaudible)

Ronald Skelton  31:13  
to on the last couple shows I recorded I purposely sent us down a rabbit hole and it was the funnest thing I did the first the for you guys out there listening and listening land. The one of them was asked the guy What's the coolest thing he's working on? He's buying a million dollar car and turn it into a almost a million dollar car and turning it into a profit center for his business. And the next guy asked, What's the craziest thing you've ever built, you know, in his company, in its giant rideable unicorn rocking horse things like because he does casting. So I'm gonna, I'm gonna take us down a rabbit hole. Now, what's the craziest thing you've ever funded or helped to help get funded as an acquisition that you just like? Like the storytime?

Bruce Marks  31:52  
Yeah, so interesting story, this young lady is in New York. She lives in a very high rise apartment.

And she lost her job. And she was talking with the neighbor. And the neighbor said to her, Well, you know, can I, you know, impose upon you to walk rocky twice a day. She said, It's hard for me to get back from where I am in my job to get to the DOD. So if I pay you 10 or $15 or $25 a day, can you here's my key, come in, pick up Rocky. Take them down for a walk for your backups. Spend 10 minutes with them, whatever the case may be, and then do it, you know, 10 o'clock and four o'clock? So she says, Yeah, I'll, I'll do that. So she does it. And she does it for a week or so. And one of the neighbors sees and says, Oh, is that your dog? Oh, no, no, no, it's, it's my neighbor's dog, dog sitting or dog walking? She says, you know, I've got a friend who has been looking for somebody to do that. Would you mind speaking with him? So the owner says, Yeah, I'll be more than happy to speak with her. So she speaks with a woman and lo and behold, she gets her second client. Second, client becomes third becomes fourth becomes 10 becomes 20. I can't do this anymore. I I'm making a lot of money. But there's only one of me. Oh, let me go get fine little Sally Sue. Who's in high school? Can you help me? After school, at least one time started helping this woman grew the business and she grew it enough to where she sold it in over five and a half million dollars for a dog walking business in New York City.

Ronald Skelton  34:02  
That's cool. That's cool. Anyway, this just shows that, uh, pretty much any unmet need is an opportunity for an entrepreneur to help out and, you know, I some people, you know, demonize the word capitalize, but to capitalize on opportunities just, just means that you're able to, to feed yourself and feed employees and, and to, to make something, you know, work. So, 

Bruce Marks  34:31  
you know,

one thing that she thought of right, it was like somebody approaching her at night, I, I mentioned that I owned my own business for 13 years, and it was somebody I was working in the banking industry, and somebody had made a comment to me, these people really could use some consulting helpers. I, I can't provide it to them. Do you know anybody who can? And I said, Well, what, you know, what can I do for them and who can I? It's interesting because if you want to know what people think about you? Or what they say about you if they're referring, all you need to do is ask. And I do it all the time. Like I'll say to people, if you're going to refer me, what is it that you say about me? Because if I want a certain message delivery, and they don't know, then how can they deliver? 

Ronald Skelton  35:24  
Right. 

Bruce Marks  35:24  
Right. So I ended up helping this person, they referred me to somebody else. And just like the woman with the dog walking business, boom, all of a sudden, I don't have time to go to work anymore. Because I'm too busy doing consulting work for everybody else. Fast forward, 13 years later, you know, I got a great opportunity to kind of work a perfect storm, we'll get into, but I got a great opportunity to, to jump back into the banking business. And what I realized was, as an entrepreneur, at least for me, I had built a very good me business. And what I also realized in doing what it is that I do is that you're not going to be able to solve and capitalize on any business. And so I looked at it, and I said, I've got a very nice business, and I do well, but it's nothing that I can scale, it is nothing that I can, because it's me, it's what's in between the two years. And so like I said, I got an A great opportunity. I don't regret that decision. at all, I, I love the journey I love where I've reached and where I'm going, because I'm still in my mind, going places and want to achieve my own goals and help more people and doing what it is that I want to do. But yeah, you do that. And sometimes that opportunity is being able to listen and taking advantage of a need. That's in the marketplace.

Ronald Skelton  36:58  
Yeah, and I, I think that that's the majority of entrepreneurs out there. A lot of the business you see the especially these businesses that are, you know, they're second, third generation, you know, I would bet more often than not, and I've seen this firsthand. You know, they didn't go to Harvard, the first guy that created this didn't go to Wharton didn't go to Harvard, they were out building, you know, they were they needed a widget or you know, a gear or whatever you call it, they needed a widget, they figured out how to make it, somebody else seen that they made it that really nicely, and asked them to make them one, the next thing to know they're turning out, you know, when needed to try to figure it out how to send out invoices. So when the search funders go out, and they start looking at these business, guys, their books are horrible. Yeah, nobody ever went to that none of their, you know, none of their team have ever been to your school. None of you have ever been taught what it's supposed to look like. Don't totally discredit that can, can you fix it? Right? But I, I call it accidental entrepreneurs. And most of people are like, you know, I would say my first business that I you know, not my first one is I've been an entrepreneur since I was a kid. My first business I did out of pure frustration and anger. I tried to go work for my dad, he told me no, so I grabbed the push mower and pushed it five miles into town and started mowing lawns. Because he told me I wasn't old enough for tough enough to work for him. I was like, I'll show you. You know, and then you know, I had a job ever since, or at work, you know, had a business or a job or something. But, you know, one of the bigger businesses that I had that did pretty well was you know, you know, I was stationed somewhere did a part time job. Next thing I didn't like I did something for somebody, they paid me they insisted upon pay me. Then they told their friends, I knew how to do it, like he was in the computer repair networking type of space. And next thing I know, I'm, I'm churning out, you know, so much work, I got a couple of friends who might help me do it. Yeah. So you know, and that's the way a lot of it happens. So not unheard of. The real trick is, is when it comes time to exit, you have to do one of two things, you have to get people that know that you're willing to take on that conversion themselves, which is rare, a lot of us guys, especially me, at my age, I just turned 50 I'm not looking to buy another job, I want something fairly well running, and systems and processes and team members in place before I even look. But you know, there are buyers out there that are willing to be the operator for a while. And to create that and there's a huge value don't miss don't pass it up. Just because I don't want to don't mean, don't want to do it doesn't mean somebody shouldn't because there's a huge.

Bruce Marks  39:29  
searchers that I speak with Phil, you know, they'll create these websites, right? And it will say to, you know, buy a business and operate it in one. And after a couple of years. Then they come in, they have a change of what it is that they want to do. So then they'll say, Well, now I want to buy a business and I want to put a manager in place. And I want to sit back and I was speaking with a searcher this morning and that was his motto. He said you know I, I bought a couple of businesses I run them, I've worked hard, you know, they're cash flowing. And now I want to, you know, put somebody in place to kind of just monitor them. And I'll be there, but I don't want to go in every day, right? Because life happens, right? people's kids get older, they've got to go to their soccer game, you know, they've got to be there to take them to school, whatever the case may be,

Ronald Skelton  40:22  
I've got a six and 11 year old, I want to be there when they want to go do stuff, right?

Bruce Marks  40:26  
Exactly. You don't want to miss out on that. Right. And so and I was, that was me, I have my own business while my my girls were growing up. And it allowed me to be at the skating rink, because my older daughter skated, be at the dance, you know, plays because my, my other daughter dance, I mean, that's what you want to do small business ownership. You know, let's face it, that's one of the benefits of being a small business owner. So, so people's perspective change when they do it. And, and to your point about, like the tax returns, or the the numbers and owners don't know what they have, you know, a lot of owners, you know, they have their accountants or they have their CPAs, or they have their bookkeepers, they're generally not, the majority of them are not, you know, you started out as a master electrician, now you've got an electrical company, you're not really watching over the books. Right? 

Ronald Skelton  41:24  
Right. 

Bruce Marks  41:24  
Yeah. Well, you look in the bank account, there's more money in there than you spent great, right. That's why there's a whole cottage industry of, you know, exit planning professionals that will come in and say, Okay, you want an exit in two or three years? Let's put your books in, or I did, I did that on a transaction. Last year, where it was just such a motivating factor for the searcher who said, the seller has already made the transition plan. He's got the managers really working, the books are in order, the QV has come back really well. He, he has put this business in a position to sell it. Right? And it was very easy to get that transaction done. Because he did. 

Ronald Skelton  41:31  
Oh, yeah. 

Bruce Marks  41:47  
Right. So you know, we talk about process and what it is that we do and how we do it, and how do we do it a little bit different. Same thing could be said for the seller on that side, you want to sell your business, you want to have an exit. It's like when you sell your home, throw a good coat of paint on it, clean up the lawn, make it look appealing, right? That's what they do. You know, clean out all the old junky furniture, make the space look nice, make it look inviting, and you're going to sell it. Right? It's the same principle, whether you apply that to a house or business and so and, and for me, think that, you know, in what I do here at first bank of the lake and, and how I work with buyers, and searchers is it's makes it easy when they come to me, and they've got a structure that they know is work, I've, I've got another one of my sayings. Congratulations, you've structured a transaction, that doesn't work. So now you got to go back. As a matter of fact, if you look on Twitter, and I know you and I are connected, you'll see me comment on that on the tweet that I made this morning. That's what happens and you know, ultimately got the deal to the closing table. Because it says going back and saying when you have a willing buyer, willing, seller willing lender, you can make a deal. And that's how you get a deal to the closing table, right? When you've got all parties at the table willing to work together versus a buyer going back on? No, I'm not going to give you $100,000 or seller going no, I'm not going to sell it to you for $100,000 less. I wish you another quick story with you. I got on a call with the seller three weeks ago, when a business that we first approved a year and a half. So a year and a half ago, we approved this business. The deal did not get to the closing table and won't share like I'll just say, fast forward six months later, another buyer comes along. We approve the deal. The deal does not get to the closing table. So the deal is still on the market. The broker has been terrific about referring business. He knows we understand that. It's a little bit of a complicated process. So finally, the broker and I decided let's have a conversation with the seller let's talk with him and find out what's the issue. He had an offer your prospect that I'm working with now It wasn't the price that he wanted. And I got on the phone with the seller. And they said to him look at, can you tell me why we're selling the business? Talk to me, I just, you've got a great business? I maybe not, I maybe

don't understand why you're selling it, can you just be emotional part of why you're saying it. So he goes on to talk about his wife and his family situation, really what his goals and desires are. And that the money at the end doesn't mean as much to him. And he said to him, I don't like to disagree with you. However, I've there's an offer on the table, it's $200,000, less than your asking price, then you've said no. So the purpose of my call with you is, I hear you saying one thing, but in reality, it is meaningful, because you're not selling the business. And you've waited a year and a half to make it happen. So can you shed some further light on? Because after you pay the broker, and after you pay the taxes, what's the net effect of a couple of $100,000, you know, you've been there done that. It's not a lot of money. So I said to, and you're making a million and a half dollars each year. So I can't, I just drilled down to the emotion. The next day, I got a call from the buyer, they accepted my offer. And I, and I think it was just sitting down with us, we were doing a face to face one on one just kind of like you and I don't know, there wasn't a podcast. But it was real, right? It was real conversation about the law. And at the end of the day, maybe it was an ego thing to your point that you made before. But I just got him to realize there's an opportunity cost, if you wait another six months, that $200,000 is not going to be as much as the 200,000 today. It just, it just didn't make sense to me. And in our potential, and it's a big transaction, it's a $6.3 million deal. So it's not like a, you know, a million dollar transaction, it's a good size transaction, with a good amount of EBITDA a terrific business that this guy has built. But that's the process of getting the deal to the closing table.

Ronald Skelton  47:33  
It happens a lot, actually, a lot of times people don't even understand why they throw a monkey wrench in it, and has to do a lot of things they don't, they're reluctant to sell, because they don't know what they're gonna do next, they, you know, like you mentioned, it was, you know, there's wife and other stuff going on. A lot of times, there's outside influences that make you want to sell, but you don't really want to. I was looking at a, a company and I asked him why the guy to sell. And he's like, Well, my wife got transferred, you know, 90 miles over, she wants to buy a house close to there. And I was like, Okay, what do you want? And he goes, You know, I kind of want to buy a house in the middle and keep my business, right. I don't want to like I'm not driving 90 miles, but I'll drive 45 miles a day. It's what it takes to run it. Right. But she doesn't want to do that. And I was like, Okay, that sounds like you need to have another conversation with your wife before we do this because you're gonna sell this business and really reluctant to be really, really wish you hadn't, you know, a lot of people

Bruce Marks  48:30  
get to the closing table, or he's gonna realize right before the closing, that if I had a deal that just exactly happened. It was a transaction for guidance buying a business. The wife knew the family. It was I want to move back to the Washington Delaware area. That's where my wife's family are they found out this business was for sale 101. We approve the deal, the deals in closing. And I'm asking Well, where's the purchase agreement? Where's the purchase agreement with? Well, we're having there's some sticking points, what sticking points. And then all of a sudden I get a call a week later the deal is not happening, why? Sellers backed up, right? And you've got deal costs at that point that are real, right? You've got QV you've got to turn the sellers got the attorney, you've got diligence. You've got they moved by, we're two weeks away from closing. They went they rented and I mean, there's real life and real money. When those deals break up, realizes I have I literally have, unfortunately, a dozen of those stories, a dozen of those stories where you have deals in closing. And then like two weeks before the break up night. It's a conversation that I have with all my buyers and searchers. Let's talk about why the seller is selling, what does he know? That you don't know? right? I want to know the reason I don't want to hear that the guy is 42. He's tired of making a million dollars flat for me, right? Like, I don't know, if you're tired of making a million, I don't know, anybody that's 42 tired making money (inaudible) i just don't. 

problem is what happens on those deals is they're 42, they may be tired of the business. And they realize they're clear in, you know, a million dollars a year, they think, Well, I'm selling this company for, you know, three and a half X, you know, EBITDA or whatever, some getting four or $5 million off this thing, you know, but the clicks in four years, if they, if they continue to pay themselves the way they're capable of paying themselves now, it's four years, that money's gone, and then what?

and then what? Yeah Yeah

Ronald Skelton  50:52  
 And some of them clicking the realization that, you know, there's a little bit of luck in this game. So just because you created a million dollar EBITDA business before doesn't mean the next one you're going to create, is that, right? There's a little bit of product market fit luck type of thing to where their next you might go through three business ideas in 10 years trying to get back up to a million dollars in EBITDA, right.

Bruce Marks  51:14  
The team that wins the Stanley Cup doesn't mean they're gonna win it the next year. Team that was the you know, the World Series is not going to make it the next year. Right. It's, it's hard to repeat, right? We've seen it you know, I've got stories of that where people have, you know, expanded, they had one operation they expanded, it didn't work out, well, you lost the game, you know, it's just, that's just everyday occurrence. Just think about all the businesses in the United States and what's happening with trade and commerce. Those things are just, they're happening, for sure.

Ronald Skelton  51:46  
Well, Bruce, we're getting to the top of the hour, man, time flies, we're having fun. So there's a couple of things I do want to make sure we, we get how do people reach out and, and get a hold of you, I keep turning your name on and off because of the camera angle your it's on your face? So but how do people? How do people reach out to you if they want to learn more about helping you, they'll get in your help to get their deals at the closing table.

Bruce Marks  52:10  
So there, so there's two ways my email is B marks, obviously, at FB lake.com B marks at FB lake.com and always available by so I've got this number for like all of us even 25, 30 years 9546465820, 9546465820 So either ways.

Ronald Skelton  52:38  
I'll make sure those in the show notes for you guys listening. And if you're listening to the podcast, it'll be in the show notes. When you pull over your safe and safe location. Take a look. And those for you guys watching. It'll be in the show notes. So, yeah, so the last, the last thing I always ask what can myself or my audience do to, to help you?

Bruce Marks  52:57  
You know, thrilled that I can say it's, it's not I'm not looking for help, right. So I'm looking to provide I, I at this point in my career on I, I literally say the more people that know me and know what it is that I do, then the more people that I can help, right. obviously it's, it's a win, win if we close a loan and the bank you know, makes a loan that's obviously a win, it's a win for you know, the people that are listening here it's a win for the people that are tuning into your podcast and all the people that you provide help for so not really what they can do for me but, but more so like we do (inaudible).

Ronald Skelton  53:44  
All right. So I'll throw this out there so if you are if you're graduated in college you've done the ETA the entrepreneurial through acquisition program, you have a friend a family member or a son or daughter that's in that program and you think about thinking about buying a business send them to this podcast have them watch it have a listen to Bruce here and then have them contact him and see if he can help them move their game forward. So I think that would be a good ask out there. And then on my side if you're out there you're listening to this make sure you understand that if you're a mergers and acquisitions guy we have a bimonthly meet up already hanging out help each other move our games forward. Bruce, you're invited to join us on this it's usually advertised on the search funders.com website which I'm not associated with in any shape or fashion. I just like to stop and then on LinkedIn and, and some other stuff, there's a meetup group that'll be in the show notes so you can join up and, and attend those we just it's kind of a business networking thing. We, we meet up we chat we try to help each other move our game the games forward. And then we have a Slack group also. And if you want to reach out and ask questions of different people we just had I haven't seen him respond anybody but we just had the CEO of Flippa join the slack group a couple days ago. So I mean, there's a lot of people on there that are very high level advisors that if you got a question, you're in the space, join our Slack group, and you can ask questions, and people will get to them and answer them as they can. And that's in the show notes also. But I want to thank you, Bruce, for being on the show. Is there any last like if somebody can take one takeaway from your one idea, or one thing they wanted to you, you wanted them to remember you by? What would be that idea?

Bruce Marks  55:28  
Ah, that's a good one. That if your dream is to own a small to medium sized business, that it's possible, even if you don't have a lot of money, that there are investor groups that can help along with whatever money you have. And if a well structured deal comes along, and you have a willing buyer, and a willing seller, willing lender, you can make the deal work.

Ronald Skelton  55:57  
Awesome. All right, well, we're gonna make dreams come true. That's awesome. So that's a great way to end the show. Thank you for listening today. And that's the show. 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.