In the late 1990’s, Jeremy Harbour acquired a competitor of the telecommunications he owned – without cash or involving a bank. Proving that necessity truly is the mother of invention, he figured out a deal structure that worked for the company he...
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Ronald Skelton 0:06
Hello, and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.
Hello, and welcome to the how to exit Podcast. Today I'm here with Jeremy Harbour, Jeremy is a mergers and acquisitions expert. I mentor an author, and still doing deals as we speak today. And actually, in full disclosure, he's one of my mentors. He's one of the one of the only full courses I've taken and I'm really active inside of his community. He built a beautiful community inside of the mergers and acquisition space. I want to welcome you and thank you for being on the show. Jeremy.
Jeremy Harbour 0:58
Thank you for having me.
Ronald Skelton 1:00
This is gonna be fun. Let's just start off with the same place we start everybody else out. And that is what is your origin story. How did you get into buying and selling business as you know what got you started?
Jeremy Harbour 1:12
Yeah, look, I'm an entrepreneur through, through and through. I was the annoying kid at school, I was always trying to sell people stuff. I was the son of a farmer. I grew up in the middle of nowhere in the south of England. And, and I could work on my dad's farm for a pound an hour, let's say, a buck an hour for your audience. And so of course, my imagination was constantly How the hell do I make more than a buck an hour, and so constantly be coming out with these schemes and ideas for generating more money. And I'm gonna have a weekend market store where I was selling watches and jewelry and a whole whole bunch of stuff. Anyway, I left school when I was 15. I didn't finish high school and I pursued that business it was actually generating quite a bit of cash at the time for a 15 year old. But that went spectacularly bust when I was 19 years old. I really overstretched myself, I took on a new premises lots of staff and I suddenly had this baptism of fire that not everything I touch turns to gold. In fact, in the little chat we were having, just before, just before this, this conversation I was saying to you, you know, the day I started in business was the day I felt I knew the most about business, you have this kind of arrogance about how easy everything is gonna be until the fucking rubber hits the road. And then you realize where all the obstacles are and how difficult it really is. Anyway, when bus when I was 19, and that time, it was the early 19, mid 1990s. And I got into telecommunications, so mobile phones were miniaturizing telecoms, every man and his dog had a telecommunications company. And it was really kind of booming. And I guess I rode the crest of that wave, and started my own company that grew quite quickly as I think pretty much anybody that family in that space at that time, did. And then what was really interesting is I mean, I was always a student of business, I read every book went to every seminar, you know, listen to cassettes, because that was what you did back then there was no internet. So, you know, I was really immersing myself in my own business education and talking to anybody that was very successful in that business. And what was completely clear to me then was that there are only three things you could really do to influence the performance of your business, and that was sales, marketing, and your team. And everything was kind of built around those three levers that you can play around with to improve your business. Now, when the telecoms industry started to massively consolidate in the late 1990s, and early 2000s, you end up.com, boom, sort of era, everybody was buying everybody else, I suddenly realized there was a there was a way to grow that had never been previously apparent to me. I mean, it was literally I just never ever thought about the idea of buying a business. And I guess I dismissed it, because I didn't have tons of money. I had a really shitty credit rating, because I've gone bust a few years before. And, um, yeah, basically, I couldn't borrow money from banks, you know, didn't have the capital to do it. In fact, I had choice, you know, that my choice would be better to pay the staff or the credit card bill at the end of the month, not whether to go and buy this other business. But what I realized, because I was being approached really regularly by all the telecoms companies that were trying to buy me, what I realized was, they didn't have any money either. You know, so these people sitting on the other side of the table, they talked a good game, and they put a good presentation together. And the idea that they were pitching me because it was a pitch, after all, was was pretty compelling. But they were in the same position I was they were just trying to grow their company and add more customers and more value. So I figured shit, I need to be on the other side of this desk. And so I went out and started pitching anyone I could find the head of telecoms business about trying to find now I had no idea what I was talking about. I was completely out of my depth. I was in my early 20s. And I always described myself as a late shaver. I never would have been able to produce that wonderful beard you have on your face. I was always
a little baby face, kid and And that really hampered me really held me back this kind of always looking younger than I was thinking. And so anyway, I went around pitching people, eventually I found somebody that basically was in a distressed scenario, they felt they had lots of natural buyers for the business, but obviously no one that will be able to complete a deal in the timeframe they were looking to do it in, which was a sort of matter of a matter of weeks. And I was able to put a deal together, literally kind of invent a deal structure, and paste something together got that deal done, and over the line without committing any capital upfront. Now, it wasn't an especially fantastic deal. It was a couple of 100 grand a year of revenue. But what was interesting about it is a it broke my deal virginity and gave me enormous confidence. I actually did my second deal two weeks later. So it really was the catalyst for, for doing lots of deals. And, and what was caught, what was really cool about it is I grew by a year's worth of sales in an afternoon, and I hadn't done any sales, any marketing or done anything with my team, or risk any capital in the transaction. And for me, it was just an epiphany, it was kind of like, you know, five findings, look at peeking behind the curtain and seeing a whole new universe that existed behind that. And that was really, from then on the the foundation of a new kind of life and addiction, frankly,
Ronald Skelton 6:24
you know, it's interesting, one of the things that attracted me to your course, and full disclosure I've taken I've taken your course, for my audienceto know, was that creative deal structure, I came from running a real estate investment group, a real estate investment firm that bought foreclosures, I seen that nasty things that banks will do to people, even a lot of the people not a lot, I'd say a high percentage, 3035 plus percent of the people in foreclosure were in foreclosure at no fault of their own. Insurance premiums changed, they just, you know, the only fault was they probably bought a house at the edge of what they could afford. But this corrective structure that you had with no banks involved, I'm making adverse. I really, like I've seen what they'll do. I've seen what they can do, and some of the shady stuff that, you know, happens, you know, in the big banking industry for just the real estate side. So when you're like, you know, when you were advertising, you know, dollar down, no money down type of deals in creating a structure. I've been doing that in real estate for a long time. So, you know, your first thought is, is it really possible?
Jeremy Harbour 7:33
Yeah, no, it's a very common disconnect that people have. And for me, it was it was necessity, and what is it, they say necessity is the mother of invention. I didn't have a choice. And so I had to come up with a structure that work now obviously, that meant I probably walked away from a dozen deals that could have worked if I've had the cash but, you know, if you can, if you can create a deal that has asymmetric risk, so you your downside is 100% protected, you could break even or you could make money where you should take that and bet every time and and I guess that was what I tried to create with the with the deal structures that I was doing. And you know, they got more and more creative as I tried new things and grew a bit a bit older. But absolutely you know, I'm you know, there's there's leveraged buyouts, which is what most people understand a No Money Down deal to be, which is simply like taking a mortgage on a house, you borrow money to leverage an asset. Now, I don't like leveraging property, particularly, you know, I've been I'm 47 years old. So I've been through about three housing crises in my in my life. And you know, we're now in an era where the Fed is promising to raise interest rates. And historically, when that's happened, that often leads to a housing collapse. And the problem with the housing collapse is it tends to be a spiral. Because as soon as the prices go down, it pushes a whole new band of people into negative equity, those houses get repossessed, that drives the market a bit lower, and those will trigger a whole new rap and it gets very bloody very quickly. And then a good amount of time passes and everybody forgets about it, and all the investors in a new in real estate. And then history repeats itself. What is it? They say? The only thing we learned from history is we learned nothing from history. He can't back into the same, you know, shitty death spiral that you had 15, 20 years ago, I guess the last time was probably 2009. But that was a little bit. You know, I think people felt it in Florida and a couple of other places, but a lot of people escaped escape that one. But that's on the real estate side. Now real estate, you know, prices move in real estate pretty slowly. It's not a very liquid asset and and prices move pretty slowly. Small business is incredibly volatile. You know, you lose two key customers, two key staff members, the business can change dramatically overnight. Likewise, you could win a customer or take a significant step forwards or, you know, joint venture or something like that, that could massively increase the value of the business but nonetheless, you If you're going to leverage if you're going to borrow money, do you really want to be borrowing money against them of highly volatile asset? You know, I think I've said this to people before, you know, with the crypto currencies, the mean, coins and the NF T's that might be an NFT. Behind you, I can't really see that. You know, this kind of thing? Would you would you mortgaged your house and stick it into a meme coin? Or Dogecoin? Or something like that? I mean, I'm sure there's a percentage of the audience that would say yes, but it's fucking daft.
Ronald Skelton 10:33
And that's not enough do I have it touched enough to just for that purpose, I was like, I don't understand it enough to design it or be part of it, and studied a little bit just because I got curious for one of the acquisitions I was looking at. It had a potential NFT play on it. It was a lot of original content inside of there. But other than that, if it doesn't benefit, one of the businesses I'm in, I'm not a I'm gonna keep moving along.
Jeremy Harbour 11:00
It's a fascinating area. Look, I love NF T's. I love NF T's for the technology around chain of custody, I think that chain of custody thing enables you to sell smaller ticket assets and items enables you to to, you know, fractionalized assets more easily, whether that be art or physical assets, like yachts, and planes and things like that. But obviously, at the moment, we're still caught up in the ball eight phase, technology development. I mean, if you look at the early days of the Internet, that was just, you know, porn and gambling. So I guess they need to get whatever the latest generations equivalent of pulling gambling out on their system, and then the real innovation will come.
Ronald Skelton 11:39
I honestly think that there's gonna be a big shift, I think the NFT the technology about that chain of custody, isn't a disrupt, like, totally disrupt a lot of industries, at a company come to me and asked me if I want to buy a hosting company, because I'm, you know, very, very informed in the real estate space. And I was like, you know, not quite yet. And the reason is, I honestly think the blockchain and NF t's going to totally do away with a lot of the traditional closing, if anything to hold the title. So yeah, let's jump right into the topic of like, you know, buying versus building, right. We, a lot of us entrepreneurs, we think that we got to create a new idea, we just we start, nobody's got it done. Right. I'm gonna do it myself. You know? And, you know, what's the difference between that mentality and I love one of the phrases you use about the marathon? Right, right, running the race. But why boy, by one, it says pose the, you know, creating an idea of starting from scratch?
Jeremy Harbour 12:43
Yeah, so look, I think there's different reasons, you, you can buy companies, you know, so the one I just talked about was kind of a bolt on, it was a way of expanding a business I already had, without taking on additional staff members, investing in marketing, trying something new and risky, I could just add more customers to my customer base. And that's one kind of use by acquisitions and a very, very viable one, what you're talking about is kind of the starting or buying a business instead of starting one. And I think this is also quite valuable, because when you do start a business, you tend to find that first three years, is really pushing the rock up the hill, you know, you're developing the logo, the concept of brand values, the website, you know, finding employee number one going out there and selling product yourself to try and get some inertia. And and that's pretty thankless. So because when you value a business, you value it, you know, for the shareholder value perspective, you tend to value it on, on its yield, what it can earn you, you know, when you hear about price earnings ratio, it's a multiple of how much the business generates an income. Within that first three years, you don't generate a lot of income, you build a lot of foundations. And so you only have a finite number of those three year stretches, you can invest in things. And a lot of times 95%, apparently, of times, those three years end in tears, you know, they don't actually get you anywhere. And so I would much rather buy a business without investing my own capital. And without borrowing money from banks. That got me through the three year phase. I have staff, I have customers, I have revenue, I have profits, I have a website, I have a brand. Now, if you want to change that brand, or change that website or tweak the product, or add another product to the mix, you can do all of that stuff self financed from within the business. And you can do it a lot more quickly than developing it all from scratch. So even if you have an idea for a revolutionary poodle clipping parlor, and you can't find a poodle poodle clipping parlor to buy, maybe you could buy another business that perhaps has a similar customer demographic or, you know, something related, that you could then, you know, do do that sort of idea within rather than, you know, doing the absolute from scratch thing. And I think that thing that really solidified this idea in my mind was when I looked at what people spent on restaurants, you know, people spending half 1,000,002 million on a on a restaurant refurbishment. And I could literally pick them up, I was offered 10 a week, that closed down where I'd pick up all the fixtures, all the fittings, and, you know, kitchen and everything, pretty much if I took over the lease, and paid the rent to the landlord. And so, you know, all of this, you know, this happened with alarming regularity, how much money would be invested in that startup? Restaurant? And so, yeah, I think I think there's a lot to be said, for doing that. Having said that, I don't take away the education you get from a startup, you know, what I said about that kind of dose of humility that you get from, from, you know, having to do something yourself and realize how hard it is. Because if you haven't done a startup, I think you could be sitting there on the sidelines believing it's really easy. And I think you do need that. That dose of humility. I think it's a rite of passage to go through the process of doing a startup. I just don't get the serial startup guys, you know, the ones that have done 3040 startups in their life. Life's Too fucking short. Again, we were talking about this spending time with our kids thing. You know, we both have young families, we like to spend time with our kids. And I'm so glad that I took a dealmaking path in my life because my kids are seven and five, and I, I've worked from home, lived at home been with my kids that entire time. And I meet people who have adult children barely knew them as children because they were working so hard in their, in their business. So yeah, I'm hugely grateful for the time that you get being a dealmaker.
Ronald Skelton 16:41
Somebody asked me why don't you started so many businesses once you just grab an idea and run with it. And I was like, because I'm 50. And, you know, three to five years to get the rock pushed up the hill as you refer to it just doesn't appeal them use it anymore. Because those three to five years if you're really going after, if you really meaning mean to do that, you're gonna spend a lot of those weeks at 50 6070, sometimes even 80 hours of the week, my kids, businesses,
Jeremy Harbour 17:08
you thought you sacrifice everything in a startup? Your social life, you know? Yeah. Sometimes friendships, relationships, you know, all sorts of things, which it's a young man's game, I agree. And also, you know, you when you're young, you can take those kinds of Gamble's as well, it's, you know, you're you're happy to stick everything on red or black or whatever it is, and spin the wheel. When you you know, when you when you've gone through the motions, you've made some money, you had a career, it's time to stop sticking everything on rather than spinning the wheel. It's, like, a slightly more planned existence on robbing Peter not quite painful, you know, crazy existence.
Ronald Skelton 17:50
centrastate is one of my friends love. Yeah. But then you have the if you build it yourself, you have that story that I built this, like, Yeah, I kind of give it up the ego behind that. I'd rather say I own this than I built this. Right. So you know, we're out there, we're out. You know, I've got a lot of listeners here. They're out there. They're looking for deals and stuff. Talk a little bit about what does it look like? I mean, is this something you can do on your own? Do you build typically, like, have a set of resources, build a team around like a deal acquisitions team? What is your recommendation in that space?
Jeremy Harbour 18:25
Yeah, so look, it's quite common. It's quite common for people to build a build a deal team, you know, a lawyer, accountant, that kind of stuff all around them, I actually tend to recommend against it. So what I tend to find is that when you surround yourself with advisers, they feel like you have to be adding something to the to the conversation. And so consequently, you end up with this kind of decisions made by a committee, sort of thing. And also you start to second guess your own judgments and start to rely on other people's opinions. And at some point, I think you've got a you know, just make some decisions and stick by them and, and do things. And also, I think, for actually getting a deal done, if you can do it mano a mano with the business owner. So if you can sit down, you know, when you're buying a small to medium sized business is often owned or managed. So it's a very different transaction to a corporate transaction. You know, when, you know, this massive multinational brewing company buys another multinational Brewing Company? Well, you know, the shareholders are not the owner or not the directors and the directors, employ all these advisors and the advisors get in a room and hammer out the deal together, and then the directors present it to the shareholders. And if they vote in favor, then the deal goes ahead. That's a completely different dynamic, you know, when it's when it's owned or managed business, it's about creating a relationship and rapport with that business owner, solving a problem for them figuring out where they are now and where they want to be and is there a way that you can help them get there, which ends up with you getting what you want to and and that's, that's pretty much in a nutshell show what doing deals with business owners is about. And that could well be that they're transitioning into their retirement, it could well be they're transitioning into another business, it could well be, they're getting rid of a hot potato, something that's keeping them awake at night that they don't really want in their hands anymore. There's a whole whole bunch of reasons. And if you can help them get from where they are, to that new place, then often there's a deal to be done.
Ronald Skelton 20:25
So we're reaching out to business owners who have a need, we're solving the need. And that's how we facilitate, you know, getting a low down no down type of deal. A lot of people don't understand that, you know, it's not zero down, that the owner is not like handing to the business for $1, per se, it's it's no money, right? The second or it's, you know, a lot of times it's the third or it's out of out of the, you know, one of the ones I just seen, they acquired the business and promised the owner a certain down payment within the first 90 days. And then they liquidated a bunch of over excess inventory. And most of the money came out of the cash that was in the business and that that inventory, they were able to sell off to give the owner what he wanted down. Right. So it's still $1 out of out of the buyers out of that guy's pocket the acquisition entrepreneurs pocket, but you know, the owner still got money. How absolutely, yeah, nice when you do deals.
Jeremy Harbour 21:26
Yeah, no money down doesn't mean no money. Yeah. So I think that's an important differentiation. And, and yeah, it's just how its structured. And it's structured in a way that creates that asymmetric asymmetric risk. And I think the other thing to be cognizant of is that this is a buyers market, there are a lot of businesses out there that need to transition and change hands. And there aren't a lot of natural buyers. For them, these, these businesses are way too small, for a institutional or competitor to buy them, they simply can't afford to do the due diligence to carry out a transaction. And the ones that are on the market really aren't geared up to sell their accounts aren't kept in a way that is suitable for a potential buyer, they're often you know, designed to mitigate tax rather than present profits, they've got lots of personal expenses running through them, that sort of thing. They don't have their data room up together, you know, they wouldn't pass the kind of traditional scrutiny that a buyer is going to want to go through in order to think about acquiring that company. And so, so really, you know, they don't have a ton of other options. And so when you can present them with a really good solution to transition out of the business that ends up with them getting a fair price for it as well. It really is a win win for everybody.
Ronald Skelton 22:39
You know, I was talking to a couple people here on the show that do private equity. And, you know, there were saying that the private equity starts looking at companies at the profit, we refer to it referred to as EBIT, ah, or solid discretion earnings, they're actually kind of focusing on that, that that EBIT, da or profit out of 1.5 million and above, while you add a really good profit margin, if you got an excellent profit margin of a company say 20%. That's a $7.5 million company, a lot of people use a small to medium for a lot of acquisition entrepreneurs, a company generating 1.4 1.3, you're under the radar, those institutional site buyers is still a life changing deal that can happen, you know, you know, that market? What I'm trying to get to, I guess, is that market of all business owners where their private equity and the you know, the corporate buyers are not really diving into is a lot bigger than most people would expect.
Jeremy Harbour 23:41
It's most it's most of the economy. Yeah. So it's a really, really, I mean, it's a pyramid, isn't it with kind of Apple and Amazon at the top. And the further down you go in terms of scale, the wider it becomes. And so, you know, there's a there's a bottoming out level, I wouldn't buy a business doing less than half a million a year because it's pretty much a job for someone, it's not really a business. But there's a there's a sweet spot in the kind of one to 5 million sort of space where the company is, you know, delineated. It's it's roles and tasks within it. So it separated sales from accounting, for example. And it's got, you know, all of that stuff mixed up, and there's not a lot of natural buyers for them. So you're the only game in town pretty much.
Ronald Skelton 24:27
I was looking at an industry statistics are saying right now a little over 1600 deals, or companies closed per day in the United States, because there's they don't have a transition plan. There's nobody to other biome. So I'm just trying to give you if you're listening in the scope, or the scale
Jeremy Harbour 24:46
across, I stumble across people all the time. There's a company here that was doing 12 point 5 million a year in revenue selling stolen generators, solar panels and solar generators. And he basically was leaving the country so he decided to close it. He literally just locked the doors turned off the website and disappeared. And it literally just does not cross people's mind. But there would be somebody that would buy that business. And yeah, you'd be astonished how many people go right? Well, I'm done. Now I'm retiring. So I'll start running the business down over the next 12 months, and then I'll close the doors and walk away. And they never dreamed that their business could actually be sold.
Ronald Skelton 25:27
So let's cover just a something that's unique about you amongst the other mentors that I've talked to and stuff. I think Carl travels a little bit that year or all over the world. When you say here, where do you happen to be right now? Because I've been on the clubhouse and you're in Dubai, or, you know, just you. That doesn't look, that doesn't look like your yacht. It looks because that you have I assumed that it's down there. So are you in Dubai?
Jeremy Harbour 25:55
In the Dubai Marina right now? So yeah, so I, yeah, so we were Singapore permanent residents. We have the house here in Dubai, we also spend the summers in Europe, we have a couple of places in Europe, we go regularly. So yeah, we travel around a lot. Funnily enough, I don't travel that much for business. So next weekend, I'm in Zanzibar, which I've never been to before in Tanzania, which should be good. Good fun taking the kids there, because it's the Easter holidays from school. And then as you have a business trip, and I don't do do too many of those. So yeah, I have a couple of couple of meetings. I'm flying to one in London, one in the north of England, and then back to Dubai. But yeah, we travel we travel a lot as a family. We're global citizens. We like to like to be in multiple places.
Ronald Skelton 26:43
So you're actively doing deals. I mean, you're like in the weeds doing the deals. And then you step outside of that occasionally to do mentoring and teacher teach a course I know you're coming to United States in May or June, I think. So,
Jeremy Harbour 27:00
well, this is a, this is the thing, you'd know that better than me, I actually don't know when I'm there. I have a team that so we have a Harbour club community. So when I started the Harbour Club, which is kind of the mentor and teaching side of things, I started it because I was being pestered all the time by people to come work for them. So it was like come and work for us and show us how you do what you do, you know, come and be a non exec director or come on be a consultant help us buy a company, we want to buy a company, you know, this kind of stuff. So I kept saying no to all these people. But you know, when you say no to so many people, you think there's going to be kind of a product or a service or something in that you can't get rid of the entrepreneur in you. And then I bought a seminar business. And the seminar business was telling the seminars, on marketing, on Facebook advertising on all these kinds of things. This was back in like 2008. And so I thought I have the solution. I can have a community for a course for buying and selling businesses, but I thought I want it to be the empty course. Because most of you know the most of the people that sell courses, you know, what is it the old, those who can do those who can't teach? adage, and most of them are really just marketing gurus. And they have this funnel, you know, so they sell you a little product, and then they sell you a bigger one, and then they sell you a bigger one. And it's kind of a relentless upsell. And I remember when I was a kid, and I used to go to seminars, this would drive me crazy, because it will be like $59, and you're gonna learn this and this and this over this three day course and you're like $59 For three days, that's amazing, you know, and then you get there, the first day is just shit about how great the second day is gonna be. The second day is, you know, warming you up for the close. And the third day is just a pinch, like a whole day pitch for 1020 30 grand product that you have to buy to get all the stuff you thought you were gonna get for the $59 Now, when you're an entrepreneur, three days of your life is a lifetime. I mean, the shit that you could have got done if you weren't sitting there listening to this arrogant bastard pick your day, you know, you could have really made some some progress. So I swore to myself, I would never do that kind of thing. And so we actually have an empty course there's no upsells there's nothing you can buy from us apart from a membership. And it is a real community, lots of people in the community and there's an app where everybody collaborates, you know, face to face meetups and stuff. But what's been really good I started it back in 2009 I had no idea it would be successful. I thought it'd just be a way of getting rid of these people that asked me to work for them. And actually it started off with like four or five people in every group now. You know, the the the one we're doing in London in April, I think 250 people. Now those are their existing members meeting up. This is not something we've sold them. This is a kind of group event. But yeah, it's cool. It's got a real life of its own and the product innovation that comes out to me because everyone's sharing ideas and coming up with new things. It constantly evolves and challenges my own ideas and everybody's ideas around different ways of doing deals. So it's been absolutely fantastic for my own development in this industry and, and getting stuff done. But I've been really lucky that the team I have around me in the harbor club pretty much take care of everything. In fact, I was asking, so the the live event, which under 50 people is in about 14 days or 15 days from now. And I haven't actually seen an agenda for it. Yeah, I'm obviously going to be standing on a stage for three days. But I haven't seen the agenda of what's exactly what's going on. And all of that has been prepared in the background without my involvement completely from, you know, like, you know, all the guest speakers from the harbor club community who are sharing their case studies and all of that sort of stuff. And literally, everything is taken care of, without me, which is kind of lucky, because I'm buried up to my eyeballs in deals at the moment. So we use, we use this, you know, Monday's, the project management software. So my whole team uses Mondays for tracking all the deals, but I use giant post it notes all over my wall, glass. And each one of those is a deal in various stages of progress. And so yeah, we've really kind of varied and very busy time, really varied at the moment. And so it's great that I can just turn up and speak when it comes to the harbor club. So and I turned up and speak about the last thing we did, or the deal we're working on at the moment, or the one that we closed last week, and then it's super authentic. It's not like some big pre planned presentation about a deal from 15 years ago. It's something very contemporary.
Ronald Skelton 31:33
That's awesome. You know, one thing I will say and as a kudos to you a compliment. The the the club or you the call that the wasn't the word I'm looking for the environment, people. Yeah, the people inside of Harbour club are worth twice the price of admission. Right? I really, I've been through a lot of courses I used to joke around, I have a bookcase it's taken down. All right, I turned my camera show you this, I have a bookcase of the real estate courses, I took that at one point I did the math, it was like $140,000 worth of courses on this dadgum bookshelf. You know, shelf development. Yeah, is this because you show up to one of these like I you know, if I go to this course, I'll learn something and move my business forward. They pitch it three more ideas, and you got the money. So you're like, if I build one idea out of that $3,000 course it's gonna, it's going to help my business, I had courses I still had cellophane on. So when I decided to switch gears from real estate to buying and selling business as opposed to houses, I started making, I made the promise to friends and families and I'm not gonna go to a dozen courses, I'm gonna pick one. And I'm gonna go do dealer two. And if I do it, you know, when I get when I get deals done, if I want to take something else, I'll go learn from somebody else. Right. But that has to pay for itself because I don't want cellophane wrapped plastic wrap courses out there that I'm never going to crack the case on. The, the community how that's what I was looking for earlier, the community inside of Harbour club truly is that it is a community you can post questions there. People can answer those questions. I know a few of the other guys out there have something similar, but I have not been in especially in the real estate side, I've been through all the programs, I haven't seen a community built like this. So I appreciate
Jeremy Harbour 33:17
I think, I think a lot of the other people because it's because they come from the digital marketing space, they tend to target the kind of get rich, quick crowd. So it's not so much a community, it's kind of the blind leading the blind. Whereas all of our marketing is deliberately targeted at entrepreneurs and business owners and interesting people. And so we don't tap into any kind of joint ventures with personal development companies or, you know, by any of those kind of get rich quick databases quite deliberately, because the quality of the community is really important. You know, ultimately, I end up doing deals in the community. So I don't want, you know, loads of people in there that are just taking up space, because they paid us some money. I'd much rather have people that, you know, actively out there finding deals, and when they find one that they think might be called joint venture with me, they'll bring it, they'll bring it to me, they're not obliged to but but you know, that does seem to work pretty well.
Ronald Skelton 34:12
That's awesome. You know, let's talk a little bit about the availability of deals across the world because you are uniquely positioned to have seen it right. You've been, you've been to the US you've been, you know, pretty much everywhere I like to travel, right. So,
Jeremy Harbour 34:32
in the last in the last four months, we've done Australia, New Zealand, Singapore, the UK, France, US and Canada transactions in all of those countries in the last problems. Yeah, so mainly English speaking. So we're a bit lazy in that respect, apart from France.
Ronald Skelton 34:49
So, if you're listening to this, you think yeah, that works over there. Because, you know, you know, he lives in Dubai, and that's where all the wealthy people are. Or, you know, I'm not in California. In the world of businesses, I'm sitting in Tulsa, I'm moving to California and a few weeks I'm moving to one country, for family reasons, but I'm sitting in Tulsa, Oklahoma, and I've talked to businesses in Dubai, I've talked to businesses, you know, all over the world, the market has changed. How has COVID affected you? Because for us, it's actually helped us, people are way more comfortable zoom than ever before.
Jeremy Harbour 35:24
That was one big transformative thing. What was really funny, so are we, we got our Zoom account in 2016. And actually, at that time, we took a vote in our office because I've got like 17 people in our office in Singapore are not not in an office anymore. But in 2016, we had a vote on would you prefer to work from home or carry on coming to the office, and it was overwhelmingly work from home. And so we actually switched our entire business model to working from home from 2016, we also got rid of holiday time. So there's no vacation time, if you want to go on vacation, just go. You just have to make sure the work is done. So we have complete flexible working with the entire team. And so actually, when COVID arrived, we were pretty well set up for it straightaway and, and like Tuesday, doing deals over zoom, really, really improved. Although one thing I would say is that doing deals over zoom in Europe and Australasia and Asia was fairly easy. I would actually say in the US, it was a little bit harder. So in the US, we noticed during the the lot of the really harsh lockdown period, like 2020 time, complete drop off of transactions in the US. We were having plenty of calls, we were having plenty of conversations. But nothing was really closing. But we were closing deals like crazy in Europe. And they had exactly the same lock downs and restrictions and all that stuff. So So I think it does, it does vary a little bit from one geography to another, some people like that face to face tap, some of them are happy to do the entire transaction. Virtually. The other interesting thing was just in for all the people that might possibly want to sell to the front of it, you're definitely wanting to sell now. So they got off the fence pretty quickly. So there's a big influx of potential opportunities. And what was interesting is they weren't just the COVID effective businesses. So you have people wanting to sell who have businesses that look, you know, bucking the trend, we bought a caravan and motorhome business, you call them Harvey's. But, you know, that's obviously booming, because there's no cruise ships or foreign holidays and stuff like that. So you know, but that that was a retirement sale, whether retirement was possibly accelerated by COVID. And then you have all the bounce back kind of opportunity. So you have the restaurants, the spas, the gyms, health clubs, the hairdresser's all of those kinds of businesses that were, you know, decimated by COVID. But, you know, great businesses to bounce back once things kind of return to normality. And so, you know, there was kind of two streams of opportunity, there was the either when they're down because they're gonna bounce back or buy them, because they're a really good bet in this new world that we find ourselves in. So yeah, they kind of fall broadly into those two categories. But but but there's more of both.
Ronald Skelton 38:12
We put together a small team, and I want to go too far into it. But we in a matter of 200. And I think 200, in less than 220 days, spoke to nearly 200 marketing agencies, and all via zoom, a lot of them in the United States. And the funny thing, the United States, at the beginning of that conversation, we were right in the middle the COVID time, at the beginning of it, you could tell that the owners were a little disappointed, we weren't going to fly up, fly out, because here in the United States, there used to be a team or one or two people flying them out, taking them to the finest restaurant in town, buying them the finest bottle of wine and wining and dining. And we're like, yeah, we're not doing that, or, you know, we've got this opportunity for you. We're not flying anywhere. And if you're interested, let's talk and it's the conversations don't move forward. So I think there is a little bit of that here in the United States is, you know, business owners that are in specially in spaces that are courted commonly, marketing agencies, software companies, people that you know, people are trying to buy them often they some of them play the game, they just like to go out to the fine restaurants and dinners and hear what you have to say. So to some respect, we would have never accomplished talk than that many businesses if we had to fly somewhere travel and everything. And we would have spent that shit ton of money excuse my French we just spent a lot of money flying dining, you know, in just trying to have conversations just to find out that weren't really interested to start with so yeah,
Jeremy Harbour 39:37
just generally burning your marriage.
Ronald Skelton 39:41
It seriously it is dating the dating of business owners a lot easier when you zoom them and like you know, get a judge what their motivations are and what you're, they're trying to do that. Let's talk about that. The first call or the first like presentation you have with a business owner. What do you see as the most important thing to do on that call?
Jeremy Harbour 40:01
build rapport. So create a relationship with the other party. And I think I think people get so I see this a lot in the in the community with with new starters, they get really hung up on that first deal, or their first meeting. And I think they feel like this first meeting has to be a deal, they have to close it, they have to come out with something. And always to try and calm people back down and say, Look, treat this is like the research phase, you're, you're gonna go and speak to a bunch of entrepreneurs that all own the types of businesses that you'd like to end up owning in the future. And you're doing that in order to find out what the common issues or challenges are in the industry, areas where there might be opportunity to collaborate. And, and really just think of it that you didn't, you didn't have a deal when you went into that meeting. So what's the worst that can happen? You know, you leave the meeting, either having learned something or with a deal you never had before. So there really is no lose from that meeting. And if you can relax and approach the meeting from just having a chat with another human being about life, the universe and everything, you'll actually get a lot further than you will being this kind of hungry Rottweiler, trying to get information out of them and trying to get a deal done. Because nobody wants a hungry, Rottweiler humping their leg. At least in chat, and I think people really, really underestimate that. And particularly, you know, I see a lot of big kind of MBA students who, you know, they go nuts with the fancy dress department. So they've got their belt and their three piece suit. And, you know, they've got their 200 grand watch on everything, and they go, you know, they go in there, and they, they try and be as professional as possible by being as boring as fuck, and asking questions about accounts for two hours. And of course, that's not going to get them into the affections of a seasoned 30 year entrepreneurial veteran, who, you know, who's who's got their through their own kind of sweat and graft. And so, yeah, build build rapport, build empathy is the number one outcome for that first meeting.
Ronald Skelton 42:04
So it says on your LinkedIn profile, you just did this, you acquired your first business in the in the 90s. So you've been doing this for 20 plus years now? What are some of the things you know, now that you wish you had known on day one?
Jeremy Harbour 42:18
Oh, my God? Well, I guess one of the obvious ones is big deals take exactly the same time and energy as small ones. So you can put around doing a deal with, you know, for 500 grand in revenue, or one that's doing 50 million in revenue, and it's broadly the same amount of work and effort. And so yeah, I think bigger, I guess would be would be one thing, but then again, I wouldn't take away that rite of passage, possibly wouldn't be able to do those bigger deals with the hand hasn't gotten some smaller ones under my belt initially to give me the expertise and confidence. I mean, look, this is just a massive learning curve. I often joke to people that I know 10% About m&a. But that's 9% more than anybody else. It's such a vast topic. And particularly, I mean, we keep evolving what we're doing, you know, so we recreated a new product called an extra bond, which is effectively a currency you can use to acquire companies. It's kind of like printing your own money, and then acquiring businesses with them with that money. And we invented that strategy. We've done about 15 deals now using extra bombs in the last sort of year. And, and it's a game changer, and we're about to use it and a few other companies and kind of roll it out. But that's a baptism of fire, like, how would you list a bond? What is a bond? How do you structure a bond? What needs to go into the prospectus of the bond? How can you have a bond that's not for raising capital, but to be used as a currency? What are the legal ramifications of that? And basically, you know, how to reason and all that stuff, you know, ourselves and figure it out and go and do that. And that's really like, you know, I guess a fairly typical kind of thing for me, I spend a lot of time, you know, reading stuff on the internet, I was reading a whole bunch of stuff about interim reports. Today, we're listening a company on a junior stock market on another exchange, and they were challenging me about interim reports being audited. And I said, I'm pretty sure interim reports of public companies aren't actually audited. It's only the annual report that's audited, the interim reports are normally qualified. Maybe an auditor says yes, these are the company's management numbers, but manage management numbers by definition on auditing. And so you know, I'm off researching to be able to tell a regulator in a country what they should know. Something and I find myself doing that a lot, researching stuff so I can tell lawyers, what they should be telling me. But I think you need to, I think you need to do that. I think you need to, you know, constantly be educating yourself not relying just relying on advisors to go and find things for you and pay them for their advice that actually got, you know, if this is the takeover panel in the UK, for example, which governs the acquisition of companies by public companies in the UK? Well, the takeover panel has a website. And it has its rulebook. And it's not a big rulebook, it's 70 pages. So go read it. And honestly, if you've read it, you're probably more up to speed than your lawyer is because they read it 15 years ago. I may be aware of some of the amendments but probably aren't, probably isn't as current in their mind as yours when you've just finished reading it. So go go and do the research, go and do the legwork. Learn about everything voraciously. And you'd be amazed how much stuff you can pick up.
Ronald Skelton 45:42
So what I picked up out of that, right there was you don't have to give up your creative side and your building stuff side to be an acquisition entrepreneur, you could acquire companies and use your creative side and you're building side building new strategies for acquiring and building new strategies for funding building new strategies for exiting, right.
Jeremy Harbour 46:03
Absolutely as create creative deal structures. Yes. I mean, acquiring companies is kind of problem solving. And, and we all get a first when we solve a problem very, it's that it's that dopamine hit, I guess that I'm addicted to
Ronald Skelton 46:18
studies, I always call myself a problem solver. But I tried to quit a little bit there. Because what is the problem? What is everybody that you know, Marina problem solver. Right. So if you identify yourself as the guy who's really good at solving problems to this day, I still get three calls a week, at least, with the real estate problems, title problems, issues, and I help those people because they're friends. But
Jeremy Harbour 46:45
the problem, you should find the problem I have right now is the money that I want is in your pocket. Leave me alone.
Ronald Skelton 46:55
I have a friend who's going through law school, he just says he says you know what, send everybody an invoice and then put the friends and family discount at the bottom to zero it out. But at least then they can see what you would have charged anybody else did do that. And they'll respect your time a little bit more. I've got a dial down. I used to I would say, two years ago before that lawyer friend, a performance coach friend of mine, he's also a performance coach got onto me over it, I would spend 1015 hours a week on the phone helping people solve problems for for nothing, right? That's just that doesn't work. So inside of this space, you're you're reaching out to business owners, you're figuring out what their pain points are. I've learned through those 200 Plus conversations I've already had. And through talking to all these people on the podcast, most of the buyers don't necessarily take, I would say 80% of the people that when I asked them, they didn't take the highest and best offer on their business. Absolutely.
Jeremy Harbour 47:51
Absolutely. And the number of times I've seen this where somebody has a very well crafted offer with cash on the table, and they will ended up going with the no cash option because they see it as a safer pair of hands a more reliable buyer, a more empathetic buyer, perhaps somebody that's going to take care of their staff or, you know, maintain the company's name or the company's building or something like this, you know that there's a legacy is always the legacy is a really interesting motivation. Because most of the mentioned the other things people will bring up with you, as you know, straight off the bat as something that they're looking to do like I really want to make sure the staff are looked after is something that they'll they'll just come up with a saying I'd like my name on the front of his building for the next 30 years. It's a bit hard, you know, you sound like a broken egomaniac, if you know they want it. But you know, they want it. Yeah, so legacy legacy is one of those things where, if you suggest it, you'll very quickly gauge from their physiology, whether you've just hit the hot button, or whether it doesn't really bother them at all. And and if you have hit that hot button, then go full steam into legacy and what you're going to do, I'm going to set up, you know, I mean, Dave Smith Foundation for battered children go all in on legacy.
Ronald Skelton 49:11
I honestly would have never expected that legacy and taking care of their team would overrule money, way more often than it would not. Right?
Jeremy Harbour 49:25
Yeah. Oftentimes they're done with the Money Creation. But they did that years ago, they felt that they got the holiday home, they've got the new car, when you're going into retirement, you really have your pension plan and taken care of an extra few 100 grand here or there, you know, probably isn't the most important thing in your life not being hated and having to look over your shoulder in a small town for the rest of your life. That's a whole different kettle of fish.
Ronald Skelton 49:53
So one of the questions I had for you is because I've come across this a couple times when I was talking to somebody wanting to retire It's the, what do they do next? How do you inside of that report building thing? You know, I've seen deals like crash at the last second because the owner doesn't know what he's gonna do with this time when he sells. I have a soap company here in town, I'd love to get my hands on. But the owner 70 philosophy thinks all of his friends sold their business or shut it down and retired and then died within weeks. He thinks when he sells us think he's dying, right? Like he actually said, I'm not ready to die yet. So yeah,
Jeremy Harbour 50:28
it's it is a common one. I think it's Warren Buffett, you know, he bought that company from a woman who was 93. And she retired when she was 104 105. And then she died straightaway. And he says, and that just demonstrates the perils of early retirement. But the Yeah, I mean, that's one thing is to keep them around. So there's a kind of a non job called the chairman emeritus. So chairman emeritus, is the kind of person who started the business. And it gives them a role in the business as sort of an ambassador for the company, it can be unpaid, or it can be low paid. But it keeps their involvement, you know, you say to them, look, obviously, a lot of the, you know, a lot of the business was built on your reputation and your stuff. So we want to, you know, will you out for the Christmas parties and bring you in, perhaps for the old key client once or twice a year. And we'll keep you as chairman emeritus, which is the you know, not the chairman, not the CEO, nothing to do with management can't tell you to do anything. They still have a business card. And yeah, maybe on the website and things like that, it can be helpful. And, and actually, for transitioning, it's a positive thing. If they want to stick around and do that roll, it means that they, you know, they're not selling it, because they think it's gonna fall off a cliff tomorrow. So, you know, that's encouraging, if you can keep them around on that sort of basis.
Ronald Skelton 51:50
Call, we are actually getting close to the top of the hour. So one of the things I like to always ask is, like, what are your big three, two or three takeaways? As far as, like, if you're going to get into space? You probably should do these three things, or know these three things.
Jeremy Harbour 52:07
Yeah, look, start the process of educating yourself on the topic. So you know, there's lots of I publish tons of stuff on YouTube. There's tons of stuff on social media, we give away a lot of free content, because we want people to join the community who are pretty sure this is the path that they want to take, we even do a whole 21 day free email course, you can probably dig out if you follow me on social media, we probably post I actually don't know, but we probably post links to it. And, you know, that's really to try and educate the audience a lot without them having to part with any money or anything else. So that they understand this is a path they want to take. Because, look, it is pretty polarizing as an idea, you know, you either love it, or you hate it. So we'd much rather help people as far as as possible to decide whether or not that's something they want to do. So that would definitely be my number one kind of takeaway is to start that process of kind of educating yourself. And if you've decided it is something that you want to do, then you can even start the process of outreach to the company owners. So start speaking to business owners in the sort of industries that you're looking at, don't bother going to business brokers or businesses for sale or anything like that. But yeah, start that sort of outreach to have conversations with them, you'll be amazed sometimes, you know, when you speak to three of them, that you might find tie ups between those three, like one of them wants to retire and one of them is young and hungry, will maybe those two companies belong together. And, you know, you might actually find some natural synergies between the conversations that you know, that you end up having. And I'd probably say they're the kind of two key foundation things I wouldn't even go as far as saying number three.
Ronald Skelton 53:50
Awesome. And I really resonate with that, talking to the business owners. One of the things you said during the course and I don't know if you say it at everyone, but it just really stuck with me is don't buy yourself another job. So identifying those two that work together is often a way to do that. If you if you see a company really needs you know, some insight help. You know, buying a second one that's really well run that may be smaller or whatever, they're just better managed, would be a great way to give them that help.
Jeremy Harbour 54:20
So yeah, so a small distressed company can be a real handful, but you can inject that small distressed company into a big profitable one in exchange for a stake and and have a stake in something big and healthy.
Ronald Skelton 54:33
Awesome. Well is there any parting shots you want to throw out there to the the audience so let's make sure they know how to get a hold of you for one so yeah, so
Jeremy Harbour 54:41
social media I guess so I think my LinkedIn is there on the on the screen but yeah, Jeremy Harbour is in the British way. Ha RB Have you all but you can find me on LinkedIn, Instagram, Twitter, there's Jeremy hartman.com, as well. If you want to go there that's not linked to Pretty much everything.
Ronald Skelton 55:01
I'll put all those links in the show notes for you guys who are listening on the podcast, you just take a look at the show notes, there'll be there. And then on YouTube and everything else, it'd be in the show description. So I'll have links, how to reach out to him and, and I'll have my team put together all your social media links so they can reach out to you. I appreciate having you on the show today. Really appreciate everything you give to the community. And thank you for being here.
Jeremy Harbour 55:24
No, thank you so much for inviting me in. Yeah, hopefully, if we inspired one person out there to go out and do a deal. That'd be great.
Ronald Skelton 55:31
That would be awesome. Hang out a second there after we get done here. And we'll we'll make that that the show. Thank you guys for being on the show today.
Jeremy Harbour 55:40
Awesome. Thank you.
Ronald Skelton 55:41
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