A small number of people do a lot of deals. They buy and sell many properties, start several businesses, acquire their competitors, find investors to back their ideas, secure the rights to intellectual property, get publishing contracts to write a book, or any number of life-changing deals that are there to be done. (Location 53)
When I find a company that I can buy for $1, I just buy it. Why would I want a salary to do that for someone else? (Location 100)
So, by precisely analyzing what it was I had been doing, I created a framework of processes and systems. I did my first-ever Harbour Club course in 2009—an intensive, all-inclusive, three-day seminar. We’ve done a few courses every year since and every time, there are more real deals completed, more important lessons learned, and more valuable ideas shared. (Location 108)
I believe the next step, that next rung of the ladder, is adding deal-making to your entrepreneurial repertoire. Buying and selling companies is a core component of taking the entrepreneurial experience to the next level. (Location 143)
For example, distressed deals can be a great way to add new customers and revenue with no cash up front. (Location 163)
It is a question of being armed with the right tools to go and do the deals. In this book, I’m going to give you some of the many tools, sub-tools, and tactics that you will need to accomplish this. (Location 194)
The world is not fair. Inequality is a global issue. Its presence is hard not to notice, as it is in every political speech, on TV, in films, and especially when you travel. Yet global living standards have risen exponentially. Don’t believe the media: levels of absolute poverty have been coming down year by year, and globalization has much to do with the elevation of living standards. (Location 207)
In any mature economy, SMEs represent around 50% of GDP and 95–99% of private-sector employment (depending on where they are located). SMEs are vital to the economy, job creation, tax contribution, and the health of the economy. (Location 227)
Businessmen and women who have secured real wealth are usually less operationally involved in their businesses, leaving them more time to think strategically about the bigger picture. (Location 248)
When I’m teaching at the Harbour Club, I always talk about the importance of breaking your deal virginity, getting that first deal done, and how valuable that experience is. (Location 372)
Ask yourself, what do you do every day? If the answer is mergers, acquisitions, joint ventures, or exits, you’ve moved up the ladder. If you’re still interfering in the day-to-day business, you need to learn by doing deals. Get that first deal under your belt. (Location 421)
If you position yourself as a shareholder in your business early on, you can start moving up the ladder and progressing as an entrepreneur. This is something that, had I known it earlier in my career, would have saved me a lot of time, effort, heartache, and headache. (Location 485)
“I learned how to use a company’s assets to buy a stake in it. Because I felt a loyalty to the commercial mortgage broker for finding the deal in the first place, I used him to mortgage the commercial property to release the cash. In hindsight, I should have lined up a property investor prior to doing the deal who would have bought the building, maybe at a slight discount, and then leased it back. I wouldn’t have required the $70,000 deposit to get the mortgage and would have still resulted in the same sort of cash result.” (Location 553)
“The smallest deal I’ve done is $150,000 revenue business, and the largest is a $17.6 million revenue. I’ve also done a couple of mergers, and I’m currently in the process of building several agglomerations.” (Location 561)
Most of the really distressed companies I find are profitable on a 1-month snapshot, but the balance sheet is a mess. The creditors are lining up to give them a kick and the cash flow is a disaster. (Location 575)
These people don’t even think they can sell: “Who on earth will buy this?” They are sitting at home, depressed with a bottle of whiskey, when they should be on a business-for-sale website creating advertisements. (Location 578)
However, they are frustrated: they started this business to be the next Google or Apple, not a decent small company. (Location 581)
belts. It is not about finding a company; it is about finding a stream of companies. (Location 596)
To find deals, you have to position yourself to be looking for deals in the first place. You have to think about where the deals are. It’s tempting to google “businesses for sale,” but all that will do is drag you down a rabbit hole to a bunch of brokers’ websites or business-for-sale websites. (Location 605)
Quite often, that’s because the broker is charging an upfront fee. Their business is less about selling companies and more about signing up sellers to get these upfront fees. (Location 609)
If you are looking to acquire a business, don’t look for businesses for sale. The reasons are many, but here are a few: (Location 616)
Networking can be hugely powerful. There are plenty of organized networking events specifically designed to do business. Try going to one of these and saying you are an investor. You will get everyone’s business cards immediately. You just have to weed out the real estate deals and start-ups to get to the real businesses. (Location 649)
party. A week before, it would have just been an interesting conversation with a person who moaned a bit about their business, but because Andrew was tuned in, he found a deal. (Location 661)
Every dollar you’ll ever make is in somebody else’s pocket right now. Being an investor is like putting up a big sign saying, “I’ve got dollars in my pocket, and if you’re smart enough, you can get them off me.” That starts many interesting conversations. (Location 668)
Focus 1: Tactical, Distressed, or Bolt-on Acquisitions These acquisitions tend to be smaller companies that you’re targeting because they’re distressed, or you’re using them as a bolt-on to grow your existing business by increasing either the products and services that you offer or perhaps to get some key talent or clients that exist in that business. This is a tactical move: you’re adding something that you don’t currently have. (Location 677)
There are always exceptions to the rule, but generally speaking, above the $5 million top-line revenue level, a business has started to delineate responsibilities. (Location 685)
Strategic acquisitions are for when you want to enter a new market or new territory—for example, you want an office in Indonesia or a different geographical part of your own country, or you’re looking for an order-of-magnitude acquisition. Typically, in the Harbour Club, we focus on companies that are profitable and have a history of generating profit, not the one-hit-wonder that has just become profitable. Instead of $500,000 to $5 million of revenue, it’s $500,000 to $5 million of profit that these companies are generating. They’re typically debt-free. We don’t like a bank or financial institution to have some kind of lien or charge over the business because you’ll often find that they have a lot of control. If you have a bad year, it can suddenly be your last year. It’s always good to add a nice debt-free business to the group. (Location 690)
People want to do deals with us because we’re solving their problem—even if we haven’t put the most cash on the table. We’ve created rapport and a situation in which the deal can happen. (Location 719)