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March 7, 2022

How2Exit: Mentor Mini Series Episode 4: Walker Deibel - the best-selling author of Buy Then Build.

How2Exit: Mentor Mini Series Episode 4: Walker Deibel - the best-selling author of Buy Then Build.

Walker Deibel is the best-selling author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game, which released to critical acclaim including being recognized by Forbes as “one of the top 7 books all entrepreneurs must read,” and...


Walker Deibel is the best-selling author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game, which released to critical acclaim including being recognized by Forbes as “one of the top 7 books all entrepreneurs must read,” and is currently being used in multiple universities as a textbook for "Entrepreneurship Through Acquisition."

Walker acquired seven companies outright over a ten-year period, resulting in having owned and operated in many industries including manufacturing, fulfillment, software, education, entertainment, and eCommerce. He’s also started companies from scratch, enjoyed 2 exits, made almost 2-dozen minority acquisitions.

He's a serial acquisition entrepreneur, Partner with Quiet Light where he helps online-based businesses exit, and the creator of the Acquisition Lab, which helps first-time business buyers with world-class education, coaching, tools, and community to create the world’s first “do-it-with-you” buyside advisory experience.

He is a Certified M&A Advisor, Certified M&A Professional, M&A Master Intermediary, Certified Exit Planning Advisor, and former FINRA / SEC licensed stockbroker. He has been awarded Thought Leader of the Year by both the Alliance of M&A Advisors and Axial, as well as having received the platinum award from M&A Source.

Walker holds an MBA from the Olin School of Business at Washington University in St. Louis where he was awarded the Declaration of Accomplishment in Entrepreneurship, and currently serves as an adjunct professor of acquisition entrepreneurship for MBA students.

His work has been featured in Forbes, Entrepreneur, Inc, Fast Company, and the Harvard Business Review.
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Contact Walker on
Linkedin: https://Linkedin.com/in/walkerdeibel
Website: https://www.BuyThenBuild.com

Book: https://read.amazon.com/kp/embed?asin=B07JKM2F5Q&preview=newtab&linkCode=kpe&ref_=cm_sw_r_kb_dp_S92MPH7HPPTHADB53PKW&tag=how2exit-20

As an Amazon Associate, I earn from qualifying purchases. Each purchase supports both the author and this podcast.

If you’d like additional ways to support this podcast, you can become a patron here: https://www.patreon.com/bePatron?u=66340956
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Reach me to sell me your business, be on my podcast or just share some love:
Linkedin: https://www.linkedin.com/in/ronskelton/
Twitter: https://twitter.com/ronaldskelton
Facebook: https://www.facebook.com/How2Exit

Have suggestions, comments, or want to tell us about a business for sale call our hotline and leave a message: 918-641-4150
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Watch it on Youtube: https://youtu.be/xoUH_Ixeook
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Other interviews:
Zoran Sarabaca: https://youtu.be/OLqszNP7yHY
John Andrews: https://youtu.be/vmGWbd2y5x0
Chris Daigle: Ronald P. Skelton - Host -

Reach me to sell me your business, connect for a JV or other business use LinkedIn:
Ronald Skelton: https://www.linkedin.com/in/ronskelton

Have suggestions, comments, or want to tell us about a business for sale
call our hotline and leave a message:  918-641-4150

 

Transcript

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 Wakil block I've messed up your first ever live. We did some coaching on the last name all my listeners know I butcher last names on a regular basis then I Tongue Tied Walker. So Walker and it's y'all I'm gonna let you do your last name just because Walker diable Walker dyeable. So now we got that right. Walker Walker is actually the best selling author of the book by then build a how to acquisitions entrepreneurs outsmart the startup game, which released to critical acclaim including being recognized by Forbes as one of the top seven books of all entrepreneurs must read. It is currently being used in multiple universities as a textbook for entrepreneurship through acquisition. Walker acquired seven companies outright over a 10 year period resulting in having operated in many industries including manufacturing, fulfillment, software, education, entertainment and E commerce. He's also started companies from scratch, enjoy two exits, and made almost two dozen minority acquisitions. He's a serial entrepreneur and a partner with quiet light, where he helps online based businesses exit and the creator of acquisitions Lab, which helps first time business buyers with world class education coaching, tools and community to create the world. World's first do it with you by side advisory experience. Thank you for being on our show Walker, that was a bunch of spit out but I think I got it.

Walker Deibel  2:00  
Ron, thanks so much for having me. Super excited to be here.

Ronald Skelton  2:02  
Cool. One of the first things I always ask everybody is kind of tell us your origin story. What How did you get into this space? What made you become an acquisitions entrepreneur?

Walker Deibel  2:13  
Ron, it's because I'm a really bad entrepreneur. Let's just call it what it is. Right? So So Um, okay, let's kind of take it from the top. I mean, you know, first of all, I like the origin story, like just going all the way back. All right. Um, if you were to take sort of my my dad's side of the family, my mom's side of the family. I grew up in a situation where my dad said that family was all small business owners, right. And when I say small business owner, I mean that it's what was going on in the 70s and 80s. And 90s. There wasn't like this entrepreneurship thing. We didn't call it that. Right. Um, and then, and then on my mom's side, it was it was a lot of academics and artists, right. And so it was this sort of, I don't know, not dichotomy. But but but sort of, you know, a straddle, if you will, in my family of two sides of the world. And so I grew up in that space. And it was all about, like, how can we create something cool, but also make it through economically sustainable right now, that was sort of like the ultimate background if I really got into it. Um, you know, from there, what I would say is, let's just go ahead and fast forward to business school. All right. So I was getting my, my MBA. And you know what, there's so many, there's so many mentioned before, that this is an origin story after all right? Right. So So, um, I get I ended up majoring in college in religious studies and English literature, okay. And everyone's like, what, you know, what do you want to do with that? And I'm like, Well, I'm going into business, and they're like, why don't you study business? I'm like, What's stupid? What's like, buy low, sell high? Like, what else do you want to know? Like, manage people. And the thing is, if you really look into it, more CEOs have an English degree than any other degree. Okay? Now, that information is about 15 years. I don't know if that's true today. But the concept is that, you know, communication and the ability to write is ranked very high in terms of being able to successfully operate a business, right? That was not exactly why I was doing it. I just wanted a liberal arts background. I became a stock broker right out of college, okay. And I was a stock broker, I got the, you know, the licensed by the SEC, and all the rest of it. And the point here is, I got a great opportunity to learn the public markets, right. And I advise people on asset allocation and, you know, like, like option strategies and just, you know, executing trades, etc. And that was really fun during the tail end of the tech boom, and really not fun during the tech bust where they pulled me off and sort of assign me to being the recipient of the inbound margin call. So basically, people would get a margin call and they're like, you're screwed. You owe us money. We're gonna sell your signal. He's starting at like noon, and they'd call back and I'd answer the phone and they're like crying, they're yelling, it's like, whatever. Terrible, right? Um, but that was really good, you know, early exposure. I'll skip a little bit, and I'll get myself in a business school at all. And Washington University in St. Louis. So I'm going to be school and I wanted to use it Ron as like a resume shield, right? Like, we all know that, you know, starting a business is, is hard. It's time consuming. You're really not making any money at the beginning. And even still, in this sort of like early not like 2000s, this sort of resume gap of like, oh, yeah, I went out and started a business if the business wasn't successful, it kind of sounded like a lie. Right? So so I used Business School as this sort of, you know, resume shield to kind of try to launch a business. And it was during that time, that we really got a lot of traction and momentum around one of my first startups, and it was called 3d media. And we had licensed, you know, today when you go to the movie theater, and it's real 3d, and you put the glasses on, and yeah, so we had that same technology for point of purchase advertising, okay. And we had a national retailer who wanted to, you know, bring it, launch it nationwide, we had investors starting to line up we were, we were a finalist in a business plan competition, like everything was going absolutely fantastic. So much so that, you know, I was not doing the normal MBA thing, which is looking for a job. I was like, No, man, this is gonna work. There are there is no plan B, like we're going to do this. And what happened was the month of graduation, the owner of the patent pulled the license from us. And I went from, you know, sort of co founder of this, like, really exciting, promising startup to you know, no longer a student and unemployed. Okay. It's really what it was. Right, right. And so I was like, okay, look, I mean, every time I look, let me fast for a little bit and talk back. So it's one of these where every single time I tried to start a company, okay, it has never worked out. All right, and I've taken a few at bats. And we all hear that it's all about at bats. Okay. And hopefully, hopefully, the acquisition lab, my new ironically, startup around helping people buy businesses is the little thing that makes the big difference. I think we've got it right. This time. We're a couple years in now. But the point here is that I started to really look at the data. Okay. And the thing is, is that starting a business from scratch, is punishment for not understanding statistics, okay.

Ronald Skelton  7:49  
That it's like a lottery ticket, right? being bad at math.

Walker Deibel  7:53  
That's right. And it's just like it the odds of a startup completely failing, are immense, right. I mean, we all sort of know the axiom that, you know, 90% of startups fail. Okay, fine. Let's pretend that that's true. Okay. Um, what's little, what's less well known, much less well known, is what does it look like when you succeed? Right. And I started to realize that startups that succeed 96% of them never exceed a million dollars in annual revenue. Think about that for a minute. Okay, so 90% chance of complete failure, if you're in the 10% that make it 96% of them will never achieve a million dollars in revenue. Okay. So I started thinking to myself, Okay, when I was going to be school, a million dollar revenue company was so small that I would just ignore it, right? Like, this isn't even at capacity. But the truth is, is when you start looking at statistics, it's where the proof of Product Market Fit starts to trigger. Right. And so if I've got a company doing, you know, 500,000 700,000 in revenue, it's kind of suggesting that I'm the business, right. I mean, I'm working in the business usually, it's, it's, it's, you know, a small company and excetera. But once you exceed that million dollar mark, it's, it's one of those little milestones, that is actually tremendously separates the wheat from the chaff. So I decided in 2004, what I wanted to do was reverse the equation. I knew that there was a way that I could buy a business, I just had no idea how to do it. Right. And so a lot of people thought that I was a little crazy, and that's probably because I am right, but but the thing here is that, um, I realized, like, Okay, if I can go on buy company, even if it's just doing a million to 3 million in revenue, that's actually miles away from a startup and yes, it won't be sexy, right? It's not going to be one of these software, you know, you know, startups with, you know, everyone's given away equity, you know, because it's not worth any thing but it's worth everything etc. Um, you know, it would be something that would be unsexy, but would have revenue would have income infrastructure would be cashflow positive, would be bankable would have customers and I could own all of the equity of the company. That was the goal, right? Be a big fish in a small pond, rather than trying to create a market out of nothing. Okay, and this was back in 2004. Um, in 2018, I released by then built, okay, in my book, I got the the idea for buy them build a Thank you, Ron, I got the idea for buy them. In 2004, when I started to realize that there was no good information out there, I started to realize that this was a this was a much more sustainable business model than startup entrepreneurship, I realized that it was the fastest route to the corner office than any sort of, you know, middle management, traditional MBA kind of kind of line of work. And I also found out that it was it was probably the most direct way to building wealth for most people. Right, owning a company and ultimately being able to sell assets or is the thing that creates tremendous wealth, right? And so, I started to think like, Man, this is like such an unknown not not understood segment. So I Ron, I decided I was going to go out and buy a business. Okay, so here I am freshly minted MBA, totally unemployed. And I just started, you know, reaching out into my network, I started calling Business Brokers I started, you know, net net, working with with service, you know, providers to businesses, CPAs, and whatnot, you know, basically just trying to figure out in interviewing people that had done it, you know, all this kind of thing, looking for any kind of resources, I started talking to my MBA professors, and they're like, that is the dumbest idea, you absolutely shouldn't do that, right. And I'm, Ron, I completely failed. I spent months and months and months, and it was like, Dude, I got to pay the bills, I went corporate, okay, I went corporate, I did the thing. And I got a job. And, you know, just I'm, you know, a fairly driven individual and achievement driven. And so I, you know, absolutely. Did did fantastic there. But, but ultimately, I decided, you know, why am I working so hard to build somebody else's company, to build somebody else's equity, to build somebody else's brand. And my kind of aha moment came when corporate was doing a really bad job communicating to, you know, the sales team. And what and I realized that what I did was I built a model that that helped explain what they were trying to do. So that so that the salespeople could punch into the model all of the different variables to punch out, essentially how to make and what levels what units they needed to move to, in order to change that. Okay, so what activities do I need to do to make the money that I want, that's it, I built a model starts sharing it. And the next thing I knew was, I, you know, was flown out to somewhere regionally for the team, and I was brought into a room and my manager started using my model to explain to me, like, you know, and all of a sudden, I was like, Okay, I gotta get out of here. Like, now I'm doing your job to you, you know, so I mean, you know, it kind of an egotistical, late 20s, kind of kind of moment, right. But, but the thing was, was I started looking for a business again, part time. Alright, um, I want to come back to how this how this actually happened, but I ended up acquiring a book printing company. Okay. And again, we're gonna backtrack to that I don't want to skip over that story. I ended up acquiring a book printing company that was doing about 8 million in revenue. All right. And I learned a few things. Number one, the first thing that I wanted to do was actually buy an online business, okay, because when I started to look at the sort of like, earnings to revenue, and revenue to employees, it was just blowing everyone else out of the water. Moreover, I started realizing that if I wanted to sell an online business, there was no geographic restrictions. And so really, I could sell that business one day to anyone in the world, right. And so I really liked the sort of lightweight business model of these online businesses that were forming around, you know, to, you know, 2008 through 2010. Um, but the, but I couldn't get any financing, right, like the owners getting owner financing on those deals wasn't wasn't happening, not by and large, isn't today by and large. Um, you know, and, and so, but the thing was, was that I could get massive amounts of bank financing if I acquired a company that had assets, right. And so as long as there was a balance sheet That was strong, then I want to acquire a company. Okay, I let me say this more directly, I could not buy a $400,000 online business, but I could buy an $8 million printing company. Okay, so that was number one. Number two, everyone in my age group was running away from the printing business. It was it was that time where it was like print is dead, like, you know, like, you know, and like anyone who owned a printing business, like none of their kids wanted to do it, right. And so I walked into this industry, and I would go to the conferences and everything, and I was the youngest person in the room by about 20 years. Okay. But here's the thing. What I saw in terms of online book, purchasing was driving a couple of huge trends. Number one was digital book printing, okay, which was a new way of manufacturing books. And number two was the the the ISBN number had never been higher, and it was growing exponentially, meaning more people were writing and publishing books than ever before. So really, more publishing companies. Right, were forming. And so I actually determined based on market trends, this was the most innovative time in the industry since Gutenberg. Right? And so that's these are the reasons ultimately why I ended up buying that company, okay. I'll go faster on it promise that you're doing. I bought that company. I'm fast forwarding, I ended up selling that company in 2013. Got my first exit got a nice little golden egg. did another startup you know, you know, recruited an executive from Microsoft, you know, got got beta programs running and seven companies that you would know, completely ran out of money in 18. Months oversubscribed, the capital, raise all the things like I was not getting it wrong, this time. Total disaster, okay. And sold it sold the codebase for pennies on the dollar was like, why am I doing this, when I buy companies it works when I start companies it doesn't. I then went out from 2013 to 2016, and acquired another six companies during that time period and a bunch of different industries. Then from I spent about three years writing by then built after that, because now I felt like I was actually on the list of people that were kind of allowed to write the book on the subject, I had spent, you know, my entire net worth millions in debt, a decade of my life, done multiple transactions. And then along the way, you know, just sort of picked up like certified m&a advisor and NBA, let's start learning everything I could about the private capital markets. So I wrote buy them build and release it in 2018.

Ronald Skelton  17:44  
Awesome. So the books out now you've got actually a course that you you know, your book took off, right? If it wasn't just like you released a book, you had some background in book publishing. So you kind of probably knew I'm making some assumptions here. You probably knew what it took. Yeah, you get a national bestseller to get attention inside of a book. You had some insight into that. But your book did. Just because you know how to get something done doesn't mean it's going to happen. So great that that's a testament to what you created inside of the book. Thank you could know all this stuff and not get Forbes attention, right? There's there's something to be said for the attention you got around it. Then you created acquisitions lab, and you're sharing that to what I think I don't know if it's how long this phrase has been around. But that acquisition entrepreneur is something that's been kind of tossed around. As the earliest I seen it was about a year or two ago, it might have been before that. But you know, an acquisition entrepreneur or somebody that goes out and buys businesses instead of building them is, you know, kind of gaining some headway now. So let's talk a little bit about I kind of what happened that caused acquisitions lab. And what what makes it unique? What's different between what you guys do that that shop? Yeah, then your standard LBO model where, you know, somebody can go out and borrow go to the SBA and ask the SBA to help them by, you know, the or score and say, Hey, score, I want to buy a business. Can you help me fill out the loan docs? Right? There's, there's more to it than fill it out. Loan docs. Yeah. And so let's go there.

Walker Deibel  19:20  
Yeah, let me let me also say that I'm not going to take credit for this, but I will say that I came up with the term acquisition entrepreneur myself, right. I'm not going to go so far as to say I coined it but like, you know, walking around, you know, invite and build, you'll see things like, you know, the act was like the, the AE matrix, okay, which is, you know, all of the different growth opportunities. In, in, in in acquisition, right. And there's, there's really four quadrants, right. It took me 36 months to get the damn quad, right. So I spent a lot of time walking around and whiteboarding things and I did sort of come up with acquisition entrepreneurs. Just in contrast, right to like a real estate entrepreneur or like a, you know, like a digital online entrepreneur, like a startup entrepreneur, right? And that's why because the thing is, is that like, a lot of successful entrepreneurs, no two things. Once you have a business that's up and running, and you're successful, what you know is number one, organic growth is a great way to grow your company. And number two, acquisitions is a great way to grow your company, right? And most people don't really think about it until they're already up and running. Right. And by that time, if your startup entrepreneur you probably gave away 49% of your company, you've got a bunch of investors, right? Yeah, you know, I mean, it's all this type of things. And then it's like, oh, okay, so I can actually buy this company and grow faster. Right. And so it's, it's usually when you're in that room that you start to learn about it. And for acquisition, entrepreneurship, what, what I was trying to disrupt was this concept of, look, we don't need to be sexy, we don't need to be focused on you know, starting from scratch, we can actually pull a Moneyball and by starting through acquisition, okay, we're able to build value from the air, right? So start by getting on base and then building grow your company, right?

Ronald Skelton  21:17  
It's interesting, as I kind of got into this space, I got into mergers and acquisitions, because, quite frankly, I'm getting old, right? I'll be 50 in 11 days. And you only look 49. Right? Yeah. Every minute of it, right. So,

Walker Deibel  21:35  
by the way, this again, I just I really want to pride you on the fact that you put that much of your own money into it. Most people will not do that, because they want to spend other people's money, right. And the thing is, is that if you take someone's money, you have to give it back to them. Right? And so the thing is, is like that, that's almost that's almost part of this story is that like is that raising other people's money, who then believe in you, and you can't return the money back to them, you better carry that around with you as a very heavyweight?

Ronald Skelton  22:05  
I'll tell you that the three are about 275 $300,000. It was other people money hurt me more than losing. All I mean, I liquidated my 401k stock off everything I could get my hands on to fund this thing to keep it running. And I'll be honest, it never was the intent. I thought I was gonna get this thing up and running for a few 100 grand. Yeah, right. Yeah. But, uh, any, I still carry more weight to this day, 1520 years later, you know, 20 years later now. of the money that those guys believed in me and put in me that I didn't, you know,

Walker Deibel  22:36  
but you're in my book. Yeah. Because if you put that much of your own money in, you're saying, I believe in this, I'm putting my money where my mouth is and my time and so they're, they're just adding fuel to the fire.

Ronald Skelton  22:46  
Yeah, but you want to hear the flaw in the whole plan just for the fun of the show. Yeah, but Right.

Walker Deibel  22:50  
But like, if you if you literally are putting no money in and everyone else funds you, and you blow it like, I couldn't, I couldn't live with myself. I mean, that's the worst case scenario.

Ronald Skelton  22:59  
The punchline of it was is I created a online dating service to keep people honest in their profiles, and then turned out and found out that nobody wants to be kept honest and online dating. Ended up with a real estate firm, was having trouble getting that above that million dollar idea to start up from scratch, right? Having problem to get get into above the million dollar mark. So I hired a performance coach. And one of the things he said was all your education, everything, you know, you should be playing a bigger game while you mess around with houses. Mm hmm. So I would go out and flip a house or something and you know, the check to the bank or the business would be 40 grand or whatever. And you know, that sounds great. You know, when you made you didn't you did a unit of work, you got $40,000 worth of you know, profit out of it, you think I'd be happy, but no, in the back of my head, I heard but you should be playing a bigger game. So I started figuring out, you know, I was coaching real estate and doing stuff like that at the time. And so I really didn't want to get into apartments and storage units, what I told you when I was coaching other people to step into, so I figured I've got a master's degree in business I want to get into and I used to flip websites for fun way back when, and like, I would buy a profitable website, make it better clean it up, give it a new design, get the revenue up to sell it for a higher multiple. And so I thought, you know, I'll go out and hire a mentor and learn the space. And part of interviewing you guys is just to get in the space, get in the conversation. See what's working for different people from different angles, because everybody especially in this mentor series that you're in right now is you guys all have a different approach a fresh approach a different angle to solve the problem. And it's not that on on similar what's troubling is not that different from the real estate world. You can get as creative inside of this. A lot of the contracts are even similar. So you can get as creative as you need to get and to get these deals done. And the idea of starting with proven revenue proven marketing strategies, systems and processes great team, you know those things sometimes in a startup those takes out, you know, six, six months a year, 12 months, you know, or sorry, 18 months, two years to get that all gel together and working? Why not step in somewhere? They've been doing it like that for 10 years? That's right. Cool. Yeah, I

Walker Deibel  25:16  
think the other the other components of acquisition entrepreneurship that, you know, really kind of attractive are, you know, when I was first getting started, people would be like, Oh, you're buying a company, you must be rich. And it's like, actually, you get it. That's like saying, Oh, you're starting a business, you must be rich, like you can actually get the money like getting the money's easier. For a company that has that has, you know, cash flow, however, more often than not, you're going to have to sign a personal guarantee, which makes people kind of cringe, which comes back to the well, wait a minute, are you going to take people's money and go start a business from scratch that is low, but whatever, that's a different argument. Anyway, the point is, is you don't have to be rich, the money is readily available. Number two, with the retiring baby boomers, we're looking at an estimated $10 trillion in business value that needs to change hands, okay, by the end of the decade. Okay. And then with the proliferation of the internet, you know, you've got all these other sort of alternative online assets. All right. And, and then if you pair them together, it's kind of interesting, right? Because it's sort of like when the baby boomers found their product market fit, and created their businesses, the internet didn't exist. So I'll even be so bold as to suggest that most of them probably have some low hanging fruit in terms of converting them to the new economy. Okay. Number two, the return on investment is unparalleled to any other asset class, okay? The private capital markets have had the highest returns of any other asset class for decades. And I mean, it's like six decades in a row. Right? So acquisition, entrepreneurship really borrows, obviously, from entrepreneurship, like get in there, run a company, but also borrows heavily from private equity. Right. So this has already been been proven, the business model has been in existence, it just doesn't look like entrepreneurship, right? This moves the cards from the private equity firm back to the operator to the entrepreneur. So you've got a huge opportunity, okay, you've got a high ROI, you've got what I call a margin of safety found in the in the decades of operation and the existing cash flow and all these other things that you're doing, right. And then the last thing is, you know, with your, with your experience in real estate, it's real easy for you to understand, wait a minute, this is sort of like real estate economics in entrepreneurship. So so this is kind of where it gets sort of interesting. When you buy a building, okay, you put a little down, you get it, you get a loan, then the then the renter comes in, okay, and, and builds up the equity. Alright, so you get this equity build up in the building, in this case in the business, the customers pay you revenue, and you build up equity. But the thing is, is that, first of all, if we were to convert, you know, let's just say SDE multiples to cap rates. In real estate, you're looking at like a six, seven cap rate. If you're on that same term, you're talking about 25 to 35% cap rate. I mean, it's just night and day. But here's the thing, here's the thing, real estate has the advantage of like, Oh, I totally screwed it up. I'm so sorry. There's a building go get it. Okay. businesses tend to not have that same downside protection. Okay. So you have to look at the intangibles, you have to say the margin of safety is not in bricks and mortar. It's in decades of operation, it's in the knowledge, it's in these people, it's in the hundreds of customers that they have, it's in the decades of deliverable. It's in the product market fit, etc, etc, etc. Okay, but the thing is, is that it's the appreciation value. So in real estate, it's kind of considered passive. And it's more like, you're kind of doing the minimum, so to speak, to kind of keep the thing operating, because there's not a lot you can do to grow to appreciate the asset. The external environment kind of has to do that over time. What are we going to get run to 2%? Maybe you're Yeah, especially

Ronald Skelton  29:20  
in this market, right? Where I'm at in Tulsa, Oklahoma, two 3% per year,

Walker Deibel  29:24  
On a business, okay. I got called by then chill. It's called buy, then build, because you need to build value, okay. And you can double the value of that asset that you acquired over the next three to five to seven years after you buy it. So for me, the big thing that makes the big difference is is not the margin of safety. It's not the built in ROI. It's not it's not the fact that you know, you've got these real estate economics it's the fact that you have control as an active investment. To increase the appreciation value, and as you increase the appreciation value other things happen. Ron, you touched on multiple expansion, right? I mean, if you're able to, if you're able to hit certain earnings milestones, you're gonna get multiple expansion because you're playing in a different ballpark. Right. And so So, um, you know, a lot of times in, in, in startups, we like to say like, oh, man, we're going to 10x. Right? That's like our favorite phrase. Right? Right. Well, if you actually run the numbers on acquisition, entrepreneurship, it's sort of like saying, We're going to 27x Like, in short order, right, you know, so so it's, it's, it's got all of those different kinds of components at play.

Ronald Skelton  30:38  
So interesting, as I like to people ask me, Well, why don't you just go back to real estate, you really know that well? And, like, why are you thinking about buying businesses or, you know, you've got to do or even better, they'll say, you got to do you want to just go build something. I was like, you know, when I build something, it's, it's for me to figure out, me to fund me to, you know, build the team and all that. So it's for me, you know, like to spend a year two years, three years trying to figure it out, bro, it, when I buy something, it's for me to screw it up, right, it's already up and running, I'd have to do something drastically, you know, and make some major area errors. Theoretically, in order to damage that company, it's up running has got systems and operating procedures, it's got, you know, people way more qualified to run it than I am most likely sitting in there. They've been doing it for 10 years or more. I was looking at one that, you know, the last year they had, you know, they've been an operation for 63 years, there's people that are a second generation employee at that company, their dads weren't there. Right. It's all they know, right? You think I know more about pouring concrete, you know, into a mold and somebody has been doing it. Second generation dad came home every day talking about what he messed up or what he fix, it's just not gonna happen. So I really like the idea of jumping into something to where, you know, if I listen to the employees, I listen to the market, I you know, and use my marketing skills, I'd have to do something bad to mess this thing up. Right now. There's, there's some risk, and there's factors and other stuff you got to look out for. I think it's a game changer. I honestly think that it worries me a little bit that we get, you know, get too many people out there. And all they're talking about is buying businesses and you know, who's gonna build them for us to buy at some point, but

Walker Deibel  32:15  
not enough buyers? I know, it doesn't feel like that. I know, it doesn't feel like that. But there's actually not enough buyers

Ronald Skelton  32:20  
yet. Right. So that I don't, it won't be in my lifetime will have to worry about that. I don't think anyway,

Walker Deibel  32:26  
there's two things that came to mind is you said that I wouldn't mind and I want to talk about the startup thing, because I you know, I think that, um, you know, my recent startup, we started it, right at the end of 2019. Was the acquisition laugh, okay. And the concept here was that, you know, after I wrote by then build people kind of followed me around, like, I remember I was I was at an entrepreneurship through acquisition conference, and I was at the urinal, and the guy goes, Are you Walker? Deibel? And I'm like, Yeah, and he's like, I'm hear you. And I was like, I'm peeing. Right now, can I just have

Ronald Skelton  33:08  
to wrap this up first?

Walker Deibel  33:10  
flattered, but like, not the right, like your timings off just a little. But you know, this was kind of a common occurrence. It was sort of like, Hey, will you help me find in my business? And it's like, No, I won't. And here's why. I'm to run someone through a process like that. Okay. I know that people that do it on the cheap end, it's about 125. Grant, okay, usually with a success fee attached. But here's the thing. If I spend a year with you, or 18 months with you, and you're going to pay me that kind of money, I still, I can't guarantee to you any kind of result, right? I can't do it. And so what I did was I said, Okay, how do we do this? And the concept actually, if I rewind, I got the idea to write by then build in 2004. I got the idea to build the acquisition lab in 2011. Okay, and the thing was, is I had a customer with a company called Veritas prep. Okay. And what they did was, we printed all of their books and materials. And what they did was they provided a leet GMAT education. In other words, in other words, if you wanted to go to an Ivy League, business school, okay, you've got to take the GMAT as the exam right? Now, what are you going to do? Like, go out and do Kaplan or Princeton Review? Just like everyone else who's going to kill you? Right? That's where I went undergrad. Right? You know, it's like, it's like, what, you can't use the same materials, right? And so what they did was they created an elite program that was specifically geared for success in that segment. Okay. And just like Facebook, they sort of targeted that upper upper, you know, rung and then ended up spreading to more mass market over time. Okay. With the acquisition lab, um, I, you know, I almost feel like we're the only company that turns revenue a way 25% of people in 2021 that wanted to give us money, we turn them away and said you can't get in. Now that's, that's kind of rough, right? But the point is, is that if we're going to engineer success, what I want to do is create world class curriculum. I want to create group coaching that is meaningful, okay, I want to create the tools and support in order to get that done. And the biggest thing is we need a community that's actually going to do it. And so the thing is, is when I get into these cohorts of the own of my own acquisition Lab, I'm intimidated by the people in the room. Right. And it's, I mean, these people are accomplished people, right? And they're really trying to figure out how to do it. Okay. And so the thing is, is that even to this day, I think I did, I took a very, very small amount of money out in 2021, but I'm not in it for the profits, we're turning people away, I'm in it for the love of the game. And the plan is to create the elite offering for people that actually want to get this done. Right. And so when I look back at what we just accomplished, you know, we got, we brought in 150, new members, we had over 30 acquisitions in 2021. So just looking at that ratio, to me, I'm happy with that, right, I think it's about 35 acquisitions, we're trying to get our arms around it. And the average the average acquisition was about 2 million. So you know, you can run those numbers, but it's like, we just, you know, we've potentially just closed like 70 million in acquisitions in the last on just me on the buy side, I've got another X on the sell side, but, you know, um, you know, so that's, that's something that I feel like we've got a foothold to do something good. And the concept here is, it's meant to be incredibly affordable, right? And it's about what my MBA students pay for their class, right? And so, I'm sorry, I didn't mean this to sound like an advertisement. It's no, no, it's more about all of those swings at bat. And all of those times being like, I'm going to create this market out of nothing. Okay. What I'm trying to say is, is that like, I feel like when the acquisition lab came, the market was already created by the things that I had done before it. So then the timing, the demand just sort of surfaced, and started to feel like when you start a business, okay, I'm not saying that every business should be started with an acquisition, some of them need to be started from scratch, right. But the thing is, is that like, when it's time to start from scratch, if you can create that demand first, it's almost equivalent to being able to bind by an existing company, because it's got that demand going. So if you can get that demand teed up first on both sides, that's that's the MIT potentially the pathway to success.

Ronald Skelton  37:42  
So I want to circle back to something you mentioned that you had 30 acquisitions on a student base of 150. So for those listeners who are listening to this, and they don't understand this coaching or entrepreneurial space, where you're teaching somebody else how to do something, it's a 3% success rate in industry standard. So in real estate gurus, sell courses, 3% of the people who buy the course actually use the course to buy a house, when and that's almost any other like, you know, informational informant info based business where they're teaching you how to do something. 90, I think it's 95 to 97%. I know somebody can correct me if I'm wrong, but I'm always okay with that. But I'm pretty sure that's the industry standard. So does this show where you're at, you know, at 3030 closes, plus, you know, on a group base of 150, it shows a couple things shows you select your students well, right, you're not just picking anybody that has a wallet, and it shows that you've got, you know, you care about your community well enough to walk them through the process and, and see that they're getting something done. It's, you know, I wouldn't say it's abnormal, but there's there's something there. I mean, there's I mean, you know, so all sales techniques aside, you got me curious, right, and I've already paid for a couple of these mentoring course.

Walker Deibel  39:00  
Ron, we'd love to have you know, it, you know, I mean, the thing is, is like, I think that, you know, look, I mean, every business has competitors, like there's other people out there with similar products substitutes. In the thing is, is out of all of them, I'll raise my hand and nominate myself as the absolute worst marketer of all of them, like, like, I feel like we're the quietest, you know, like, like, we're not we're not trying to, you know, like, fill cohorts with large volumes of people. But it's, it's it's been all about kind of focusing on building the right foundation. And I feel like we maybe got this startup thing finally, right. The big irony is, it's a startup around helping people buy businesses instead of start them because starting is punishment for people that don't understand statistics. Me.

Ronald Skelton  39:50  
So inside of one of the things I was curious is, you know, we talk a lot about acquisition entrepreneur, but the money's truly made on the exit like The Life Changing money's made on the exit. Right? So I call this the reason I call this hot exit. And we talk a lot about acquisitions. Yeah. Is acquisition as a part of the process in my book, right? It's, it's not step one, because there's a lot of pre work you got to do on the search and the valuation and the offers and negotiations. But acquisition happens early on. And then there's the growth period, and you know, whatever you're going to use to to add value, your value add period, and then the exit. So how to exits about, like, what does it look like to to have life altering, you know, exit, so monetary events? So let's talk a little bit about that inside of your course. When these when you've got students now you've got 30 students who have bought a business. What do I do? Yeah, but yes, sorry. That was the first initial visit 30 plus students, let's do it that because I know you're above that now. What is what is their? Are they still in the group? Are they still working with you? Are they still working on the build?

Walker Deibel  41:01  
Yeah, um, that's funny you're asking. So um, within our group, they ended up self creating something called the closer circle. And I was I was in EO for a number of years, and I'm starting to notice it looks a lot, it's starting to look a lot like that. And they just decided, hey, we all want to get together. And they're sort of forcing my hand to doing like a value acceleration kind of conference. And I'm going to call it more of a mastermind than a conference because it's obviously a mini group within a group. But we've just, we've just booked the dates, and we've got a location and like, that's happening. And so it's the first time I've ever put on a conference. But that's, that's about to happen. So it's emerging. And the concept was to call it something like like boardroom, you know, because it's sort of like all the people coming together to work on their business. So it's early stages, we'll see what happens there. Right?

Ronald Skelton  42:01  
That's just a natural progression, right. You know, your books even says, By the bill, So, Bill, but let yourself when you're ready, but you're, you know, you're afraid. Right? So acquisitions lab, so I was just curious of the build was in there. Yeah. Yeah. Sounds like yeah, whether you want it to be or not, it's gonna be right, nothing is

Walker Deibel  42:17  
happening. So So one other thing that I want to I actually want to make clear is that I spent a lot of time with buyers, right. I mean, you know, all the podcasts I do are on the buy side, the books on the buy side, the acquisition labs on the buy side, um, the, you know, my content is all around the buy side. I work probably 40 plus hours a week with sellers, right? And here's, here's why I'm mentioning this, okay. Because the thing is, is that, like, I realized along the way, I still have companies that I own, okay, and, and the thing is, is I realized along the way, I am more passionate about transactions than I am about operating my own company. And the thing is, is like you got to know what you're good at. And the thing is, is I wanted to do a successful acquisition for so long, and tried so hard and put so much of my money and my debt and my net worth and my time into it that ultimately, I just got really good at doing transactions. And so the thing is, is that I'm being able to help an entrepreneur exit their business, okay. I've had a couple exits myself, Ron, as you know, it is a glorious day, it is a glorious day, okay, now, here's the thing, here's the thing. There's also a buyer in these transactions, okay? And the thing is, is that if I take a deal on as a broker, okay, and this is this is you know, I need to be careful, you know, do not you know, I'm not telling anyone to buy any listing, I'm brokering okay, but but the point is, is that like, when I take something on, it's like, okay, I view this as a sound business, I view this as a great exit for the seller. But I also view this as a great value for the buyer and so the value has to be on both sides. Okay? And a lot of times you know, like like in this space, okay, I can I can find myself getting a little a little aggravated because it's really easy to say things like oh man, when you sell we're going to sell for the highest multiple we're going to sell for to the strategic buyer we're going to sell to the you know what out to that to that one person in all of the world that is going to buy this company for the most money and we're going to make them buy the most money and then we're going to talk about buying companies are going to say we're not going to pay anything this is going to be you know, zero risk to you and like we're going to use seller financing and we're going to do all this other stuff. We're gonna make everyone else pay on this other valuation that you don't have to pay because you're working the deal. Both are true. Both are true. Both are extremes. Okay. And and the art the art to is fine. A deal that works for everybody, okay, and it doesn't have to be found in lack of knowledge arbitrage. It can be found in the private capital market, and how it works and functions, okay? In other words, I've got a lot of put equity moving into certain areas, and I'm telling my financial buyers do not go there. Don't go into that space right now, there's no reason for you to party, you're, you're not gonna, you're not, you're going to be taking on too much risk for you. But for these buyers over here, this is fitting their strategy, it's fitting what they do, okay, and I can make them all compete and drive a higher price. And it's still a good deal for them.

Ronald Skelton  45:38  
Yeah, there's some really hot stuff, right? Like, for me, industries, I'm not going to touch them, or weird ones, like, I'm not interested in restaurants whatsoever, I think they have a low profit margin, and they're hard to manage. But inside of the tech industry, software of the service is to me, like if they know what they're doing, they're overpriced, they're getting crazy multiples, and God bless them for doing if I was trying to sell a software as a service company, I want the high multiple too, right. And then the Facebook stores or whatever those things are getting crazy, you know, multiple bid high, you know, high multiple offers. You know, I'm out there looking that like the non sexy businesses, right, the, you know, Home Services, pest control, you know, just the various things out there that generate cash, to provide jobs to local communities. I'm not opposed to software companies and stuff like that. But the SAS, I'd love to find a good software company that has a product, we could turn into a software as a service that you could, you know, update their technology, maybe they're an 80s, or 90s company has been around for a long time, and they just do the things they've always done, and they've never moved into that space.

Walker Deibel  46:43  
Exactly what I did exactly what I did wrong. Yeah. Go ahead.

Ronald Skelton  46:47  
No, this, but so I'm not saying I'm opposed to software. But as far as if you're already a sexy SAS company, and you're getting crazy offers, there's, you know, I've heard rumors and stories of anywhere from 10x to 30x multiples on SAS software. I'm not in that game.

Walker Deibel  47:03  
Yeah. And look, I I understand. And I got to say that, um, you know, I never went that direction, either. I mean, look, if you want to make it make sense, I can make it make sense for you as a buyer, right? Because Because like SAS is interesting, because it's either it's either really, really valuable or completely useless. And I think the challenge is that most people can't tell the difference. Most brokers can't tell the difference, right? They just say, oh, SAS boom, right? No, that's not how it works. And so and so you get a lot of bad ones, with high with high bids, but but the truth is, is that the good ones, um, the reason they're expensive is because they're using LTV, lifetime value as the unit of measure of value of that, of that unit of that act, customer acquisition. And as a result, they look at the value of customer acquisition, the value of lifetime, and then as long like the rule of 30, you're able to lose money and go on a land grab, because you're basically pulling like, an Amazon, where you like, lose money for a decade, but then you emerge and you're like, the most profitable person ever. You just have to split the switches, right? And so there's a there's a certain economics and what you're pointing at is it doesn't cash flow. And that's correct. But the way that you buy those, and in my opinion is is and the reason I never did was because of what you just said, right? It's sort of like it doesn't make sense because it doesn't cash flow. But if you go raise a fund, and have a strategy of saying we're going to roll up b2b SaaS, it actually makes a whole lot of sense. You just need you didn't you need way less debt and way more patient equity? Right. And if you if you're a cash buyer, it's actually a beautiful purchase, right? But you got to know what you're doing. You got to be you need patient capital to do it.

Ronald Skelton  48:51  
You got to be a little more patient and I'm, maybe maybe I'm my after I've exited a few times when I'm just flushed with cash and I'm trying to figure out what to do it. I'm not playing that game. I like the roll up space. But uh, you know, the other one. The reason I'm kind of, not for the Facebook stores as Facebook stores, sorry, the Amazon stores is I don't play in any realm or one single party can can really mess up your day. Right? No, all the guys that have those Amazon stores are one Amazon decision from being disrupted. It's like, it's like 1015 years ago when AdSense was working, you know, and the way it originally came out, you could almost be blind and make money and you know, not just blind like blind a business and make money on AdSense on click ad arbitrage. You know, put up some content, throw up some ads and be killing it. And, you know, Google went out there and did that, you know, algorithm change for it killed off all the made for AdSense web pages. Right. There are tons of websites I even I kind of that's why site.com was before at home bottom was like a, they just, they they were made for AdSense they were made for, you know, throwing some ads here and there. It was prior to sorry, it was prior to that space, but we were doing banner ads and stuff like that. And you know, thinking we were gonna make a profit on, you know, that I wish they had one of the engineers actually went over to Google. And I don't know if that's when they started placing the ads the way they did over there. But I know he was on their team. So maybe it would have been a different story altogether, if they would have listened to him when he was over at Excite. The that said, you know, I don't want to be in any realm to where there's a single player out there a single boss guy who can, you know, flip a switch and ruin your day? So are there any industries that you like for your students and stuff you just like you avoid, like the plague? Or is it just kind of open for whatever they're willing to look at?

Walker Deibel  50:55  
Interesting. So So Well, look, I mean, what you're kind of harping on is, you know, what, the sort of high level thing that we obviously cover is going to be Porter's Five Forces, right? And just sort of trying to understand, like, Where does the power lie in this equation? And so when you buy a company, you need to understand, like, who has the power? And if you buy an Amazon business, right, I think me as a reseller, we were the first people to figure out Wait a minute, Amazon is worse than Walmart, right? And then and then all of a sudden, it was the the content sites, right. And so the big question is, are the individual brands next? Are they going to find out that Amazon's you know, horrible to work with? Maybe, I mean, their their fulfillment costs, certainly make them the worst fulfillment company to work with on the planet. But but, you know, I think it's yet to be seen, you know, I'll stay away from that, that rabbit hole. But you know, the, but what you're saying directionally is absolutely accurate, right. So it's kind of like, Where does the power lie? Is there supplier power? Is there high common petition? Is there a platform power? You know, what exactly, is the part of the equation and I was working with a seller. And, you know, we went under loi, and it fell apart, letter of intent. We went and we went under Letter of Intent again, and it fell apart, we went into a letter of intent a third time, and it fell apart. And we went under a letter of intent a fourth time, and we eventually got to closed. And this was like this legendary sort of process. And like it was, it was I promise you, Ron, I would have bought the damn thing. It was like the best business I've ever seen kind of a thing. And I was, I mean, you would have bought it based on what you were just talking about. Right? So I mean, it was so good. But it was in the sort of, like, in between the like, five and $10 million sale price. So isn't it kind of a, you know, no one really parties in that space? Right. And so there's part of the, here's the point. The point is, is the seller said to me, after all this disappointment, he said, You know, I really was, you know, maybe kind of emphasizing the wrong thing, the first time around, it was really emphasizing like purchase price, you know, valuation, etc. What I should have been focused on is sort of like certainty and speed to closing, and I'm like, Oh, my gosh, can I put you on a video like that? Is that like, like, what, you know, one of the things we talked about is, as a buyer, you have to have to have the confidence and admit the confidence of, you know, confidence and speed to closing, that's all we've got, right? But what he said was, I'm not perfect as a seller. My business isn't perfect. All these buyers Walker, that you're parading in front of me aren't perfect. And it's all about just kind of lining up the imperfections, right, and finding that, that connection that goes all the way through, and I thought it was a really insightful point. And the reason I bring it up now is because your question was what industry? Right? And here's the thing, I think that most, especially first time buyers, if I had to pick the number one thing that they get wrong, okay? When they're looking at businesses to buy, it's that they look at the business as if it's like, in something that is intrinsic to itself. Okay, and that everything there is sort of, um, how would I say permanent and whatever's happened in the past is reflective of you know, what's gonna happen in the future, which by the way, is why we buy things. I mean, you have to sit you know, even though that's an all caps, but the thing is, is that like, what you get wrong is that the day after you buy that company, you are the CEO of that company, you are the owner of that company, you are the head and the brain of that company. You are spearheading where it's going, okay, the the magic is not in de risking the acquisition. The magic is in figuring out what the hell you bring to the table as the CEO and jumping in and taking that company to the next level and you can't see that when you're looking at a business or an industry. Okay. You are the most important part of the equation and the business.

Ronald Skelton  54:58  
I Love It knows we're at the top top of the hour, that's a great spot to wrap it up and tell people how to get a hold of you. So let's start with that I, I love that the the you as the buyer are the critical component whether or not this is going to work, right. So I'm going to share how to reach out to you. You're on LinkedIn, it's linkedin.com. And it's Walker spelt wa l k, er, your last name is spelled de IBEL. You can find him there. And you can search for him on that or the if you're watching the video, you can go to YouTube, watch the video, it's live on the screen. And that will be in the show notes. If you're listening to us on the podcast channels. And then his website is buy then build .com and you can find him on that. And I don't have it on the screen. But he also has acquisition lab if you want to apply to be part of his program.

Walker Deibel  55:52  
Well in run, let me just throw out there. We've got tons of free stuff on by the anvil comm. We got it, we got a Resources tab, we've got videos, and there's all kinds of free stuff. So if you're interested in learning more about the space, it's one place where you can go just for free stuff.

Ronald Skelton  56:07  
Awesome. That sounds great. I'm gonna dig through that too, because I haven't downloaded it all and looked at all and I'm an information I guess you'd call it information junkie I want to I want to absorb all the knowledge I can absorb and then put it to play in the next deal. I get a hold up. I appreciate you being on the show. Hang on for a couple of seconds after this. And we'll chat and thank you for being here. Thanks, Ron. I really had fun. All right, the investors and entrepreneur roles professional mastermind. The investors and entrepreneur professional mastermind combines that additional peer to peer mastermind interviews first in Napoleon Hills famous book Thinking Grow Rich, with accountability partnering, where your peers help you ensure that you set goals take actions and get results. If you want to scale blow past roadblocks and achieve success faster than you might think possible. I suggest you take a visit over to tiepm.com that's tiepm.com and check out the investors and entrepreneurs professional mastermind