Episode Transcript
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Speaker 1 (00:00):
So, let's say, a consultant, they're building a
desk from scratch.
They spend three years buildingtheir contractor desk from zero
to a million dollars GP.
Take out their salaries, forexample, and let's say that, you
know, maybe the true cost ofthat person could be I'm just
going to make this up half ofthat.
And so what they're actuallydoing is they're creating a
(00:20):
million dollars GP, but theequity is essentially what we're
talking about here.
The equity that they've createdfor the business might be two,
three, four million dollars inequity.
And so I think what a lot ofrecruiters perhaps overlook
around just thinking aboutincome is the equity that they
can build in a contractor book,similar to a house where you sit
(00:41):
on your house, you do a bit ofa reno, you jazz it up a little
bit.
It's worth 10% more in a year'stime.
Same type of outcome for acontractor book whereas, yeah,
you're getting cash, you'remaking a bit of profit, but
you're actually building moreequity than you're making in
commissions that you're earning.
So it's a super powerful way tobuild your future income and
(01:02):
your future net worth if you'rebuilding your own contractor
book.
So really interesting.
Okay, so we understand what,like, the multipliers are If
you're making a million dollarsin your business, you could sell
it for a 4X multiple.
You might get someone to payyou $4 million lump sum and you
walk away from your business.
What an amazing Very rarelylump sum, yeah, yeah, yeah, but
hypothetically I mean, if youfind someone, call us, yeah, a
(01:24):
few people would like to hearthat.
Yeah, if you're making one milnet profit or EBIT and you get a
4X multiplier, happy days,someone will give you $4 million
.
There's obviously some nuancesto that, but you know that's
just a general kind of ballpark.
So why would someone pay $4million, $3 million, whatever
the multiplier is for someone'scontracted book?
(01:45):
Like, what is the strategicadvantage?
Particularly, it depends on thecompany, right?
So I think the acquirer is amassive part of that, and if
you're a large recruitmentcompany buying another one,
you'll sit there and go well,I've got that contracted book.
Let's say they're solidcontractors in government.
So, let's say, a consultant, they're building a
desk from scratch.
They spend three years buildingtheir contractor desk from zero
to a million dollars GP.
Take out their salaries, forexample, and let's say that, you
know, maybe the true cost ofthat person could be I'm just
going to make this up half ofthat.
And so what they're actuallydoing is they're creating a
(00:20):
million dollars GP, but theequity is essentially what we're
talking about here.
The equity that they've createdfor the business might be two,
three, four million dollars inequity.
And so I think what a lot ofrecruiters perhaps overlook
around just thinking aboutincome is the equity that they
can build in a contractor book,similar to a house where you sit
(00:41):
on your house, you do a bit ofa reno, you jazz it up a little
bit.
It's worth 10% more in a year'stime.
Same type of outcome for acontractor book whereas, yeah,
you're getting cash, you'remaking a bit of profit, but
you're actually building moreequity than you're making in
commissions that you're earning.
So it's a super powerful way tobuild your future income and
(01:02):
your future net worth if you'rebuilding your own contractor
book.
So really interesting.
Okay, so we understand what,like, the multipliers are If
you're making a million dollarsin your business, you could sell
it for a 4X multiple.
You might get someone to payyou $4 million lump sum and you
walk away from your business.
What an amazing Very rarelylump sum, yeah, yeah, yeah, but
hypothetically I mean, if youfind someone, call us, yeah, a
(01:24):
few people would like to hearthat.
Yeah, if you're making one milnet profit or EBIT and you get a
4X multiplier, happy days,someone will give you $4 million
.
There's obviously some nuancesto that, but you know that's
just a general kind of ballpark.
So why would someone pay $4million, $3 million, whatever
the multiplier is for someone'scontracted book?
(01:45):
Like, what is the strategicadvantage?
Particularly, it depends on thecompany, right?
So I think the acquirer is amassive part of that, and if
you're a large recruitmentcompany buying another one,
you'll sit there and go well,I've got that contracted book.
Let's say they're solidcontractors in government.
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