How to Grow Your Roofing Business by Buying the Competition with Chris Moore

Episode Transcript
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Speaker 1 (00:00):
What if the fastest way to grow your roofing
business isn't through moreleads, but by buying your
competition?
In today's episode, we'rebreaking down a playbook that's
changing the game, usingbusiness acquisitions and
roll-ups to scale your roofingcompany and unlock real wealth
without adding another sales repor spending a dime on marketing

(00:21):
.
I'm joined by Chris Moore ofthe Dealmaker Wealth Society.
He and his partner, carl Allen,have a group of over 27,000
entrepreneurs who buy existingcash-flowing businesses.
Today, chris walks us throughhow roofing contractors can use
strategies like EBITDA arbitrage, single silo and multi-silo,

(00:42):
roll-ups and seller financing toexplode their valuation and
exit on their terms.
Chris isn't just teachingtheory.
He's deep in the trenches, fromSBA-funded acquisitions to
avoiding deal heat and buildinga best-in-class company.
His insights are pure gold forany owner thinking about

(01:03):
long-term wealth.
What I love about Chris is hisclarity.
He'll show you how to stopthinking like an operator and
start thinking like an investor.
And if you're counting on yourbusiness to be your retirement
plan, this episode might be yourwake-up call.
Today's conversation is packedwith actionable tactics and real

(01:24):
numbers.
Let's get into it with ChrisMoore.
Welcome to the Roofing SuccessPodcast.
I'm Jim Alleyne and I'm here tobring you insights from top
leaders in the roofing industryto help you grow and scale your
roofing business.
Chris Moore, with the DealmakerWealth Society.
How are you, brother?
Yeah, good, glad to be here.

(01:44):
With the Dealmaker WealthSociety.
How are you, brother?
Yeah, good, glad to be here.
Yeah, it was good seeing you atthe event recently at the
Mansion Mastermind and man, whenyou were doing some of your
presentations I think you didtwo or three presentations I
just had an idea.
I was like man, I want to havethis conversation with Chris.
I had an idea.

(02:05):
I was like man, I want to havethis conversation with Chris for
the audience, for the RoofingSuccess Podcast audience.
So to give everyone somecontext what's your experience?
What is the Dealmaker WealthSociety and what do you guys
focus on over there?

Speaker 2 (02:18):
Yeah.
So Dealmaker Wealth Society isa business acquisitions coaching
program and community and mybusiness partner, carl Allen, is
the goat of businessacquisitions coaching program
and community.
And my business partner CarlAllen is the GOAT of business
acquisitions Main Street andWall Street, and right now we
have over 27,000 students thatwork under us and learn from us
and we teach them the art andscience of buying existing cash

(02:39):
flowing businesses, and that'snot just for someone looking to
get into business ownership, butwe actually work mostly with
business owners looking to buytheir competition, their vendors
, complimentary businesseswanting to get into roll-ups and
people who are looking to playthe game we call EBITDA
arbitrage and sell to privateequity.
So that's what we focus on, butthere's so many other ways to

(03:01):
do deals as well that peoplejust don't even think about, so
we're just spreading the goodnews.

Speaker 1 (03:08):
Yeah, that's awesome, man.
And what that?
What?
What really some of ourconversations and what you were
talking about made me think ofcause.
You know, private equity ishuge in roofing right now and
there are so many people whohave who have developed an
aspiration, so many owners whohave developed an aspiration to
exit to private equity, likethat has become, you know, one
of their goals, and I think theymay be thinking about it wrong.

(03:32):
I think that they are lookingat that as the end goal, but I
think that there are multipleways to achieve that.
The end goal may be to sell toprivate equity, but they may be
able to grow throughacquisitions and kind of skip a
level is the way I think aboutit.

(03:53):
Right, because a lot of themaybe you explain EBITDA
arbitrage a little bit inroll-ups.
Let me have you do that.

Speaker 2 (04:02):
Yeah, let's start with that.
So EBITDA arbitrage is just theconcept of taking the one plus
one equals three model and justcontinuously doing it again.
So I'll explain that real quick.
So one plus one equals threeMathematically that doesn't make
any sense and maybe you'rethinking this guy must be from
Alabama.
You are right, I am.
But it's correct.
It's the right formula and whatit is is when you take one

(04:22):
business and another business,add them together, you actually
get a lot more EBITDA and ahigher multiple.
You're able to have costsynergies and you have
cross-selling abilities with onetype of bolt-on and then others
you don't.
So we'll go over that realquick.
But that's the idea of takingtwo businesses, putting them
together.
Imagine each one has a $1million EBITDA, $1 million
EBITDA.
Now the combined entity has a$2 million EBITDA but the

(04:45):
multiple has gone up.
That's where it equals three,right?
So that's the idea of doing abolt-on acquisition.
One plus one equals threeRoll-ups.
I want to go over two thingswith you real quick.
Number one there's a singlesilo roll-up and there's a multi
silo roll-up.
So for most of you listening inthe roofing business, you'll
probably be looking at singlesilo roll-ups.
What that means is that it'smore vertical.

(05:06):
It's where you're out buyingcompetitors, you're buying other
roofing companies and you'regrowing your market share,
whether you're buying in aneighboring city, whether you're
buying a competitor bigger orsmaller in your same city, kind
of tucking them into your brandand making your business bigger
and essentially, instead oftrying to work on existing our
growth room like sales andmarketing, you're just buying
your growth that way.

(05:27):
So that's a single silo roll up, where you're putting a whole
bunch of the same exactbusinesses together and then
you're selling a larger businessto a trade buyer or to private
equity.
Okay, what you don't have withthe single silo is the ability
to do cross selling, becauseyou're not able to do that
because it's the same exactservice.
Or if you're buying a roofingcompany in a neighboring town,

(05:49):
you're not going to cross-sellone customer, the other service,
but that's okay.
That's the EBITDA arbitrage,where you're building up, taking
lots of smaller businesses andyou're having the ability to
exit at a much higher multipleand the more EBITDA you can get
by stacking it together, themore PE is going to want it.
The other concept is amulti-silo, and a multi-silo is
where you're not buying all thesame exact style of company, but

(06:12):
instead you're buying aroundthe one customer or customer
avatar.
So a multi-silo roll-up for aroofer would be also buying in
your same geographic area orservice area businesses that
your customer also does businesswith.
So an HVAC company, it could becleaning companies, it could be
remodeling, it could be asphaltrepair companies, things like

(06:34):
that, where you have the abilityto leverage the customer
relationship and have them buysomething else from a different
business without the cost ofcustomer acquisition, which is
where you can have a profitmaximization period there as
well, as you have all the costsynergies like you would have in
a single silo roll up.
I don't know if you want me togo over that with you, but it's
like you don't need three, MissPams in dispatching, you can

(06:57):
have one.
You don't need three differentoffices, you can have one.
You don't need three COOs, youcan have one and you can really
consolidate your back office andyour administration team and
that's where you can save a lotand your profit margins go up.
So that's a roll up.
That's EBIT arbitrage Real,quick, simple descriptions.

Speaker 1 (07:16):
So if thinking about it this way or I think a great
question to answer is or I thinka great question to answer is
is for a roofing boat businessowner, in understanding this,
they can, they could, they havethe ability to go into a single
silo rollup and a multi silorollup, what, what would be

(07:37):
their objective, what would betheir ultimate goal and and what
would, what would the fastestpath be to get them on that
track?

Speaker 2 (07:49):
Yeah, let's begin with the end in mind, right?
Yeah, we need to focus on whatyou want.
If your goal is to sell and Iwouldn't just say, hey, I want
to sell to private equity Maybethat sounds cool, but private
equity is not always extremelyfun and exciting.
There may be earnouts, etcetera.
We'll get to that in a minute.
But even selling to a largerregional trade buyer or a
national trade buyer, if yourgoal is to sell, you want to do

(08:12):
two things in general.
Number one you want to haveyour multiple increase.
Right, you want to sell for ahigher multiple.
So the reason why you would lookat doing a single silo roll up
and buying a competitor isbecause you're able to grow your
EBITDA, which grows yourmultiple, without having to just
do traditional sales andmarketing, and it's a lot faster

(08:34):
.
So growing through acquisitionis a lot faster.
Here's what I love about singlesilo roll-ups there's actually
you know you're familiar withthe NAICS code, n-a-i-c-s code.
When you buy a business withthe exact same NAICS code as a
business, you actually canunlock financing through the SBA
with no down payment.
It's a very interesting secretthat is available to you.

(08:56):
So it's even.
It's literally built.
The government put the SBAprogram, the 7A program and then
also this extra program in playfor you to be able to buy your
competitors.
It's that simple and you can doit without any down payment as
your business.
So that's an easier way to growthan rather than traditional
sales and marketing.
And as you do that, you do needto take advantage of the cost

(09:19):
synergies and make sure thatyou're not doubling down on your
labor, because you can actuallycan consolidate that.
Whether it's in a neighboringcity or not, you can have one
person or two people answeringincoming leads from Google and
Google local service ads.
You don't need to have one foreach business.
So there's a lot of ways youcan save money, but that is.
I hope that explains a littlebit, but that's the goal.

(09:40):
So the idea of I want to sellto private equity, I want to
sell to a larger business Well,go in and do a couple different
things.
Number one grow throughacquisition.
Take advantage of the sameNASECODE service that the SBA
offers, and there's a lot ofinformation on that.
We can help you with that aswell.
The other part of it is is youwant to make your business best
in class in as many ways as youcan.

(10:01):
That's where you're going toget a much higher multiple and
that's where you're going to bemuch more desirable and the
acquisition process to sell yourbusiness one day is going to be
a lot easier.
Do you want me to dive into acouple of those things?

Speaker 1 (10:14):
Yeah, let's dive into how to.
How do you make your roofingcompany become best in class to
get the best return on your exit?

Speaker 2 (10:24):
I don't want to go like extremely deep because this
is a long this is a three orfour hour topic but I'll keep it
as surface level as I can andmake it extremely easy to
understand.
Number one when I'm saying bestin class, carl, who's my
business partner, number onebusiness buying coach in the
world he talks about howbusinesses are evaluated by most
people completely wrong.
There's actually four pillarsof valuation and this is how you

(10:46):
get to a best in class multiple.
Most business buyers, who areindividuals, don't want to buy a
best in class business becausethey can't afford it, but these
larger businesses do becausethey don't want to get in and
get their hands dirty.
So I'll make it is very simplefor you.
Number one the owner does notneed to be involved really in
the business at any level.
That's number one.
You can't be the rainmaker.

(11:07):
You can't be the one out givingestimates.
You can't be the one that'sgoing and checking on job sites.
You can't be the one that'screating the opportunities.
Right, you need to workyourself out of a job at some
level.
Most businesses have threedifferent departments that
should be running the businessfor you.
Number one you have sales andmarketing.
Number two you have operations.

(11:27):
And number three, you have theHR and the finance arm of a
business, truly for being bestin class.
The owner cannot be involved inany of those three things.
If the owner is involved inthose things, what it does is it
hurts something called thetransfer of value.
And at this point, transfer ofvalue means what does it look
like for the new buyer?
Customer relationships, theability to generate more leads,

(11:51):
the ability to actually closethese leads into actually new
roof installs at a high rate.
Like you can't be involved inany of that stuff.
So that's number one.
Number two predictable customeracquisition.
This is huge If a businessdoesn't have the ability to
predictably acquire customersand really do this in a very
redundant manner, where youactually have lots of different

(12:14):
ways that you are getting newleads in and you're able to
close these and convert thesewithout your, without you being
a part of it, but also have avery, very strong system and
process around that.
So what I mean by that one?
On the lead acquisition side,you should be getting leads a
lot from Google, local SEO, youshould be getting leads from
more scalable lead sources likeFacebook ads and things like

(12:35):
that.
You should have a lot of strongbranding that's generating more
top of mind awareness.
You should have Googlepay-per-click or Google local
service ads.
You should have somebody who'salso going out and door knocking
and getting leads.
That way, you should have aprofessional referral network
and BNI all these differentthings where you have leads
coming in very consistently it'sfrom your team's efforts or

(12:56):
it's from an outsource companybringing it to you, but a way
where someone else can step inand there's a system that
literally will keep runningwhether you're there or not, and
it's very easy to predict yourrevenue and your projections.
Without that, you're not bestin class by any means.
Number three is your people.
Your people it's huge.

(13:16):
Your people are everythingPeople look at.
Imagine you're out pitching forcapital.
Your team is one of the biggestlevers for you getting capital.
If you are out raising capitaland it's the same thing with a
best in class business your teamis everything right.
You need to have very, verygood operators in place.
You need to have very goodpeople who are driving the sales
of the business.
One thing that I do this isjust a pro tip is I focus on

(13:40):
separating reactive andproactive activities and make
sure that I don't have a lot ofpeople on my team that are
focused on both, because they'renot going to be very effective,
right?
So just a very surface level.

Speaker 1 (13:52):
That's three of the things that I would be focused
on, so that's what that's kindof the work on your business,
work in your business, the oldmantra, right, you, you, you
can't.
I like to separate this, chris,and maybe you know, get your
thoughts on this.
I.
I think that we don't separatethe ownership in our company

(14:18):
from the role that we play inour company as a small business
owners.
A lot of times, right, we don'tunderstand that we sit in a
seat, Sometimes we sit inmultiple seats, right, but?
But there's a, there is this,there's a kind of a thing with
it, with us, that we're like butI'm the owner, I'm the owner,
yes, you are the owner, yes, youown the stock of the company,

(14:43):
but you also play the role.
Right, you sit in a seat, youdo a specific activity, you know
, eventually, maybe you're theCEO or the president of the
company and you're acting asthat.
Maybe you're the sales manager,Maybe you're the production
manager.
You can sit in any seat, butthere's a difference there and I

(15:03):
think that that's a good thingfor people to understand.
And I think that's where you gotto a little bit, because if
someone wants to buy the company, they're buying the ownership
level, right, they're not buyingyour job there, and so I think
that's a thing that people needto think about, a thing that

(15:27):
people need to think about andgetting out of getting out of
the business as as beingessential to the day-to-day,
that what, what you said havingpredictable sales and marketing,
predictable lead flow,predictable, uh, revenue and
then having a great team thatthat is.
That is that, that that can,that can do the work.
That that's what someone willbuy.
That's what they're looking forReally.

(15:49):
They're buying the revenue, butthat revenue is the predictable
sales and they're buying theteam to manage it.
No one is looking to buy a job.

Speaker 2 (16:01):
It's correct, and that's why people get to the
conversations with PE andthey're so flabbergasted that
they'd have to work an earn outbecause there's transfer value
issues, right.
So knowing this upfront is alot better.
And you know business ownerslike I do, especially people who
own roofing companies at somelevel all of us, as business
owners, have a little bit of acontrol freak problem.

(16:22):
We want to stay in control.
We have something that we'vebuilt, something that's very
important to us.
Maybe it's our entirelivelihood.
All of our customers and ouremployees are very important to
us.
So keeping a very close eye onit, as well as on the pulse and
being able to control theoutcome, is something that we
instinctively do.
But I think a paradigm shifthas to happen inside your own

(16:43):
body and your own mind, and youhave to shift towards I don't
need to be in control ofeverything in the business.
I need to build a businesswhere it doesn't need to be in
my control, and I think that'sthe biggest thing you got to
think about.
And I'll tell you, there's aconcept to me called the
investor mindset, and investorswant their resources to create

(17:03):
them more resources, want themoney to make them more money.
Most business owners do not havethe investor mindset.
A lot of business owners areprotective of what they've built
.
They're staying in control ofwhat they've built because
that's the only thing they cancontrol and they have their
livelihood and their entireidentity tied up in their
business, compared to somebodywho has kind of elevated their

(17:24):
mindset to an owner investor.
And the investor mindset is I'mlooking to go and build a
portfolio, I'm looking to go andtake this money that I'm
generating at some level passivenow, since I've replaced myself
in my business and have morebusinesses and invest in real
estate and things like that.
And this is the scary partabout business ownership in
today's world.
It's interesting If you look atthe kind of the baby boomer who

(17:47):
is retiring, who has a business, the average they only have
$202,000 in retirement savingsoutside their primary residence.
And why that is is because somany people maybe this hits home
if you're listening have onlybeen reinvesting and investing
in their own business and theyhaven't been building wealth
outside of it.
And this is where it gets alittle scary for a lot of people

(18:10):
is because when you come downand your only significant asset
that's going to give you theability to retire at some point
is your business, because you'vebeen ignoring other investments
.
You were not a W-2 withmatching in 401k.
Maybe you haven't been maxingout your ira even if you did, it
wouldn't be that big and youhave your primary residence.
All of a sudden it is liverlike do or die.

(18:33):
You've got to sell thisbusiness.
So I think listening to whatwe're talking about today is
huge and don't leave anything tochance, and I think the big
lesson that you mentionedearlier is the idea of let's not
just get our business ready tosell to PE.
Let's go out and grow throughacquisition and be able to sell
for a much larger number.
And when you grow throughacquisition, you're also

(18:53):
grabbing amazing talent.
You're getting access tosuperpowers that another
business has that you don't,that you can cross leverage into
yours.
So I think it's very powerfuland I think this, hopefully, is
a wake up call that if you own ajob and own a business, you
need to focus on the thingswe're talking about if you want
to retire one day and I think ifyou, if you hear what I said

(19:14):
and say, wow, he just describedme.
I don't have a lot of money, Ihave my primary residence, but
all my, my entire world is inthis business, then you need to
pay attention, right?
I'm not trying to scare you,I'm just giving you my honest
feedback.

Speaker 1 (19:28):
It's true.
I think that, on just a littleto expand on that, I think a lot
of business owners don't lookat their business as their
retirement.
They look at it as their incomenow and really don't even
consider the enterprise value oftheir asset.

(19:50):
They don't even know what it'sworth.
You can look in your stockaccount, your E-Trade account,
your 401k, and you can see anumber.
A lot of times looking at yourbusiness, you, you can see a
number A lot of times looking atyour business, you can't see
that number.
So, getting a betterunderstanding through what
you're talking about andunderstanding what businesses

(20:12):
are valued at, so you can lookat your books at the end of the
year Okay, this was our netprofit, this was our EBITDA.
At this stage of our business,our enterprise value is probably
this If we hear a lot aboutJeff Bezos and Elon Musk's net

(20:33):
worth, that's really just theirownership in the stock in their
companies.
Right, it's not, and I thinkthat's a missed thing for people
.
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So now let's agree, let's speaka little bit about that.

(21:39):
Go going back to the ebitdaarbitrage and the roll up really
around that enterprise value.
Let's say they're a roofingcompany and they say a net
profit EBITDA of $500,000 a year.
Maybe someone will give them a3X and I'm making up numbers
here.
Maybe you know better numbers,I don't know but maybe someone

(22:01):
will give them three times theirEBITDA at that level.
But if they go and buy anotherroofing company and get to a
million dollars in EBITDA, maybesomeone gives them 5X.
And so there are levels alongthe way that I've seen and you

(22:22):
could give me your perspective,that I've seen and you could
give me your perspective topline revenue and EBITDA levels
that change the multiple on theway up.
Do you see any benchmarks thatpeople can look at Like, oh, if
I'm around here, I'm in thisrange, but if we get it to here,
I'm in this range.

Speaker 2 (22:42):
Yeah, we have multiple models.
We actually have formulas andspreadsheets where we can
simulate this.
Revenue is vanity, profit issanity, cash flow is king, right
.
So, like revenue, and top linerevenue is part of it.
Yes, it has less to do with themultiple than it does with the
actual EBITDA itself, but yes,if you're at $500,000 in EBITDA

(23:05):
or SDE and you're probably goingto trade at a 3x multiple, what
we were referencing earlier,getting more towards best in
class, will also increase thatmultiple.
So a best in class businessthat doesn't need the owner to
operate and everything we spokeabout, at that same 500,000
EBITDA, can trade at a highermultiple.
But yes, if you go out andacquire another business, say,
you're at 500,000 EBITDA, youacquire another business that's

(23:27):
at 500,000 EBITDA and then,between the cost synergies,
you're able to raise the EBITDAnow combined to 1.3 million and
now you can trade at a highermultiple because, like you said,
these PE companies and these,these family offices, these
trade buyers they're buyingcashflow, they're buying that
right and a lot of times they'rein roll-ups as well.

(23:49):
They're buying market share,just like you are to play
another game of roll-up and sellit to somebody even bigger.
Yeah, so that's a very bigthing.
Can I go back to something yousaid a minute ago around?
net worth right, yeah, net worthis something that most people
don't really know about, andthis is just.
We're an industry home servicesis where a lot of people who if
you follow the E-myth somebodywho's a technician and a manager

(24:11):
than the entrepreneur a lot oftimes people end up building
their own businesses fromworking from somebody else and a
lot of times, like thefinancial literacy is never
something that people worry,like focus on, right?
So I just want to go over a fewthings.
So, net worth really in essenceequals what you own minus what
you owe assets minus liabilities, right, when you talk about

(24:33):
Musk and you talk about Bezos,they own stock in publicly
traded companies.
You cannot actually take yourprivate stock and add it to your
true net worth.
It doesn't compute.
It's actually only private orpublicly traded companies, so
that's why they're worth so muchmoney, like as a business owner
.
Let's say we have a businessowner and we're pretty proud of

(24:53):
what we do.
We have $5 million in revenue,even coming out of the last
couple of years, we're growingeven faster, right.
And let's say we make about 1.2million net, take home profit
and your EBITDA is around thatrange.
Right, that actually doesn'tcompute to your net worth and
it's interesting.
Your business isn't worthreally anything at all if it has

(25:15):
tons of transfer of valueissues where the business can't
really operate without you.
Sometimes it's worth justliquidation value, and this is
the stuff that no one likes tohear and that's why you got to
pay attention.
The goal if you want to sellthe business is you need to make
sure that it has lots oftransfer of value.
You need to be able to havewhat we talked about earlier and
have a best in class business.

(25:35):
Not only you're going to make alot more money when you sell it
, it's a lot more desirable andyou can even create a bidding
war Like that's what you'rereally going after.
Just think about real estate.
Imagine you had a house that'sdilapidated and no one really
wants it and it doesn't haveenough equity for a flipper to
grab it.
And then the HGTV buyer thatwants to make something pretty
is not going to buy it.
Like you're in that weird zonewhere no one's going to touch

(25:57):
you.
That's actually where mostbusinesses sit, where you don't
want to be in that.
Think about the like bridge ofreal estate.
Would you buy that property?
Well, there's not enough equity.
It's probably gonna be a lot ofsurprises.
It's gonna take a lot more work.
I'm not gonna be able to make aprofit.
That's how most people seebusinesses that are in the zone
that we're discussing right now.
So you have the moment here tobe intentional and understand

(26:19):
this is what I need to bebuilding towards to be able to
make my business really, reallydesirable.
Even create a bidding war andit runs without me, so it's
going to sell for even higherprice, right?
It's just an easy concept tothink about.
So just be careful.
We don't want to calculate hey,we're worth this much money.
Well, technically you're not.
It's what you own minus whatyou owe, and your business,

(26:42):
unless it's publicly traded,doesn't count in that.
But if you think about it fromthis angle, like, this is the
enterprise value of my business,and you start calculating that,
just like you were referencingkeeping on on your E-Trade or
your Wells Fargo account andyour IRA, that's the right way
to do.
It Say, all right, we'rebuilding something big here, I'm
watching the value increase andI'm getting it ready to have a
liquidation event.
This is where wealth comes fromand you know that, right,

(27:04):
you've.
You've sold some businesses,right?
This is where wealth comes from.
I call it surges of income.
It's money coming in from asale of an asset above and
beyond your current incomesource.
So I think it's powerful andthis is where people are making
the most money.
You just have to be intentional, educate yourself, um, and do
the right things.

Speaker 1 (27:22):
What are some of the some of the biggest challenges
or mistakes that people makegoing into this process?
They make the decision okay,this is what I want to do.
I want to develop a roll-upmyself.
I want to go and increase thevalue of my business through

(27:42):
acquisitions.
What are some of the biggestchallenges and mistakes that
people make along the way?
What are some of the?

Speaker 2 (27:48):
biggest challenges and mistakes that people make
along the way.
Well, just for the context ofjust a roofing company owner
going after and buying anotherroofing company or a
complimentary business or vendor, let's go that direction.
In general, the biggest mistakewe see people make is only
waiting for a business to comeon the market.
Going to biz, buy, sell andbroker sites and just looking at

(28:08):
what's available.
And there's this thing we thinkabout just like in real estate.
Why would I go out and look atall these off market deals when
there's millions of businessesfor sale?
Well, that is okay, but you'regetting somebody else's
leftovers or you're going tonegotiate with a business or a
business owner that has a thirdparty broker involved that may

(28:29):
have set improper expectationsthat may not be very easy to
work with.
They're going to have lots ofblocks and loops and jump a hoop
tree to jump through, and it'sjust not the best way to do it.
Going off market is actuallythe best way to acquire a
business in today's world,believe it or not.
80% of businesses that tradehands and this is true for 2022,

(28:50):
2023, and 2024, did so withouta broker.
So it's not customary to use abroker.
I think if you're selling yourbusiness, I think it's more
appropriate for you at thatpoint to have some sort of
representation.
But if you're looking to get agood deal, definitely go off
market.
That's number one and numbertwo.

(29:15):
Don't assume no one will takeseller financing.
Number two don't assume thatbusiness owners will not take
seller financing.
We call it shopping out of yourown pocket.
Don't look at your ownviewpoints and perspective and
just assume that's everyoneelse's.
You may say, well, I'd nevertake seller financing.
Don't assume that for otherpeople right Inside of our
programs, we call it a mud scoremotivation, urgency and
distress.
You want to look for businessesgreat businesses with distressed

(29:38):
owners, not distressedbusinesses.
This is an easy thing to findif you go out there and look for
it.
There's so many people who havemotivation, urgency and
distress and they're looking forsomeone to come in and acquire
them.
What's interesting is, in yourposition, being able to leverage
the SBA, especially with thesame NASE code, and be able to
buy businesses with no downpayment.
This is a lot easier for you,but a lot of people who are

(30:00):
looking to do seller financingor they don't want to leverage
traditional bank financing orSBAs.
There's a very big opportunityto go off market and get a lot
of seller financing.
We call those annuity dealsright.
So that's the two things that Iwould recommend from the very
beginning is go off market andreally get good at finding
opportunities.
The person who can findopportunities is going to do

(30:22):
very well.
Imagine in any business, if youcan't prospect, you're
obviously not going to sell anyclients and sell any customers.
So get really good atprospecting.
Go out and find deals offmarket and then don't just
assume somebody wants all oftheir money up front, because
it's not very often that happens.
Actually, I'll tell you thisfrom every acquisition we've
seen period and we've seen well,I guess in the last three and a

(30:45):
half years in our program $1billion of transactions have
closed.
There's not been one that we'reaware of that didn't have some
level of seller financing.
It is customary to have it atsome level and a lot of times
it's in an earn out or a lot oftimes it's in a place where
you're making sure or hedgingyour bets to make sure that the
owner stays around long enoughto make sure there's no transfer
value issues, et cetera.

(31:06):
But those are the two bigthings to start with.
Number three is is universityof YouTube is not going to give
you what you need.
It's not going to give you whatyou need.
Most people have never sold abusiness.
Most people have never bought abusiness I'm talking 99.9% of
the population and it's not thesame as a real estate
transaction.
It's not something that youshould go in and wing.

(31:26):
There's very, very differentthings that go on in a business
transaction and it's notsomething you just need to go to
YouTube or chat to BT and tryto figure out on your own.
You need to follow a system,and people who try to do it
without a system tend to failquite often, or they get to the
finish line and something goeswrong.
You need to have somebodyguiding you on that and you need

(31:46):
to have a system that you canfollow step-by-step, because
it's very much different, notvery complicated, it's not hard,
but it takes hard work.

Speaker 1 (31:56):
Definitely One thing that you made me think about is
in buying businesses or sellingbusinesses, there are many ways
for the seller to be compensatedfor that business.

Speaker 2 (32:11):
For sure.

Speaker 1 (32:12):
Could be all cash right.
It could be some sort of terms,some sort of financing earnouts
you mentioned.
Let's give everyone a kind ofan idea of all of those so that
they have that in their mindthat it's not just one way.

Speaker 2 (32:28):
Yep.
So there's lots of differentways.
It's not very customary to payall cash for a business.
That doesn't make a lot ofsense.
It may work in some scenariosIf you're buying a competitor
who's going out of business andyou're doing an asset purchase
and you're buying all of theirequipment and you're buying
their lead list and you'regetting a couple of their subs
or their crews to work with you.
That makes a lot of sense.

(32:49):
But when you're buying anactual good, cash flowing,
profitable business, it's notcustomary to pay cash.
You will find sometimes theselarge family offices, large
private equity firms would, butfor you as an individual buyer
or a business buying anotherbusiness, it's not very often
but it is possible.
Okay, money's cheap.
There's no reason to spend thatkind of money.

(33:09):
Keep your liquidity.
Number two is you can getfinancing.
Financing through a lot ofdifferent ways.
So you have the SBA is a greatoption.
Like we referenced, there's the7A program.
There's also something calledthe 504 if there's actual real
estate involved in thetransaction.
And then there's that extraadditional way you can acquire
somebody in the same NASE codefor no money out of pocket.

(33:31):
That's also part of the SBAprogram.
There's also kind oftraditional bank financing like
commercial loans, probably notthe best bet.
There's a lot of differentlenders out there that can work
with you on that, but mostlenders that do business
acquisition loans or SBAfinancing can guide you through
that process.
The next level is sellerfinancing.

(33:51):
Seller financing is just whatit sounds like just an
installment sale, and the IRSnow actually taxes people when
they sell their business with aninstallment, where they only
make them pay taxes on the moneythey receive in that year,
which is a great benefit.
The reason why a lot ofbusiness owners choose to get
seller financing is because it'svery much better for their

(34:14):
taxes.
They're not being chargedcapital gains at large amounts
upfront.
They're able to get their moneyover time and pay a lot less in
taxes.
There's also what we callconsulting for equity Very, very
common.
I've done this many, many times.
This is what I specialize inand that's where you come in and
get equity in someone'sbusiness, usually when you can't
finance it because it has allthese issues and the banks won't

(34:37):
touch it, you can come in andyou can combine forces with them
, or you can come in and getequity in their company, help
them fix things to get itfinanceable and then buy them
out of the rest of the businessand it's much easier once you're
already part owner of thecompany.
Or you can do it and just stayjust a partner in the company
and leverage it as a businessyou own.
So there's lots of differentways to do that.

(34:59):
Like I mentioned, we haven'tseen very many at all with
individual business buyers wherethe seller financing is not
part of it.
The other thing to think aboutis there's also the ability for
the seller to retain some equity.
Not every time you buy ahundred percent of the business.
A lot of people who are tryingto get into your industry, who
are not people with contractors,general contracting license,

(35:20):
builder's license they canactually buy a roofing company
or buy a plumbing company orelectrical or HVAC and then the
seller can retain some equityand they can leverage their
license.
There's just so many differentcombinations and it's just a
creative deal structure process.
You know there's there's somany different ways it can go
and that's part of understandingacquisitions is knowing all

(35:43):
right, I have all these toolsavailable to me, so when I go to
look at a business I have a wayto get it done, depending on
what tools necessary I'mprepared.

Speaker 1 (35:52):
Yeah, and that that that's what I wanted people to
understand.
So thanks for that, becauseit's not just one way like it's,
it's almost up to yourimagination right.
It's almost like you can.
It's it's between you know ifyou're doing.
It's almost like you can.
It's it's between you know ifyou're doing, if you're the
buyer and you're talking to aseller.

(36:12):
I mean you guys figure it out,figure out how how this could
work If it's something that youwant to acquire.
What are, what are some of thebiggest risks that that people
face?
Like there, there have to belandmines out there.
What landmines can they avoidwhen they're going and looking,
maybe evaluating a company tobuy, um, something like that?

Speaker 2 (36:36):
Uh, biggest landmine is what we call deal heat, and
that's when you get emotionallyexcited and attached to an
outcome.
There's certain things in anacquisition that you need to
outsource.
Listen to me need to outsourcedue diligence is definitely one
of them, like real deep duediligence, because what happens
as humans we decide when we getexcited about something, we
start taking concessions.

(36:56):
We'll start looking into thebusiness.
That's not perfect, it's notexactly what I was looking for.
Yeah, that's a little bitsurprised, but I want it.
But I want it, and I thinkthat's part of the biggest
landmine is allowing yourself toget emotionally attached to the
outcome.
You need to have more of aconcept of kind, of the power of
choice and abundance, and youwant to go out and originate a

(37:17):
lot of opportunities.
So you have that power ofchoice, so you can look at all
of them and choose which onethat you would like to acquire,
rather than only having oneopportunity.
This is your one shot.
You got to make it work,because that's when you start
taking concessions, right.
Number two don't go out and tryto buy perfect businesses.
Your goal is to build a perfectbusiness to sell at best in

(37:38):
class, but you don't want to buysomething that's best in class.
You want to buy something withsunk equity.
You want to buy something wherethere's room to grow and low
hanging fruit where you can geta good deal, and that's why we
like to buy somewhat distressedowners of great businesses where
we can get better deals.
The next landmine is trying tonot use an attorney.
That's the dumbest thing youcan do.
Attorneys are going to protectyou.

(37:58):
Usually, you come to terms atsome level once you have a
business under LOI letter ofintent and then the attorney
needs to step in and work withyou because the deal structure
can change very rapidlydepending on the entity
structure.
On the other side, whether it'sa C-corp, s-corp, llc there's a
lot of stuff that you justdon't know about.
The attorney can guide you onwhether you should do a stock

(38:20):
purchase or an asset purchase.
So either stock is buying theentire stock of the company
versus buying all the assets andthe customer relationships and
the money and opening it in anew LLC.
There's reasons why you would doone over the other.
I just you don't ever want totry to do this on your own.
That's one of the biggestthings is the university of
YouTube and chat.
Gpt will not get you there.

(38:41):
Number one.
Number two there's professionalservices companies like quality
of earnings reports and duediligence companies, and there's
M&A attorneys.
And there's lenders.
Like you need to build a dealteam around you and not try to
do it yourself.
This is not amateur hour.
And then the last thing is Iwould stay away from just going
after brokers.

(39:01):
That's what called the brokerwall.
If you go in and go in and juststart talking to brokers, you
will have a very, very hard timeand it's going to take you a
while to learn how to evennavigate that and they're going
to block you like crazy.
They're going to want to seeyour social semen sample and
your net worth statement just toshow you a P&L, and it's just a
pain in the butt, right.
So that would be the threethings I would avoid right out

(39:22):
of the gate.

Speaker 1 (39:22):
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(39:45):
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(40:07):
Your full AI team is ready.
Let's talk a little bit aboutdue diligence, because if no one
has gone, if someone hasn'tgone through it, it's a very
extensive process and a veryimportant and impactful piece of
the puzzle.

(40:28):
We just backed out of a dealrecently that we were going to
acquire or looking to acquire.
We had an accepted letter ofintent.
We started going through duediligence.
In the process, I learned alesson, and I think it was.
It might've been I might'vetaken this from Alex Hermosi,
but it was what needs to be truefor for me to to buy this

(40:52):
business, and so I'm sure youhave a lot of thoughts and
processes around the same kindof concept.
So what I, what we, didn't do,was we didn't rank the things we
needed.
To be true, we, we kind of knewin our head you know, oh, we
want to have this, we want it tohave that, we want to make sure
the financials are in goodorder, we want to make sure that

(41:14):
there's, you know, predictablesales engine.
We want to like, we had thesethings, but we didn't have a
specific order to them.
So when we went through duediligence, it was our you know,
a rookie mistake.
Right?
We, we, I think we spent toolong in due diligence because we
didn't diligence the thing thatwas most important to us first.

(41:35):
Do you have any thoughts aroundthat?

Speaker 2 (41:37):
Yeah, yeah for sure.
Like one of the thoughts wetalk about a lot is the concept
of what do you want thisbusiness to do for you?
Right, go back to the realestate investor for a second.
Some people are only investingfor appreciation.
Some people are only investingfor cashflow.
Some people are buying housessight unseen through tax deeds
and they're flipping.
You know, some people are doingshort term, long-term,

(41:58):
multifamily commercial, likeit's so different and they have
different objectives thatthey're looking for.
So for you, when you go andacquire another company, what
are you hoping it's going to dofor you?
And then what has to be true,what would have to be true for
this to work really well?
It can be different, like youmay say, hey, what I'm looking
to do is get access to thislocal competitor and buy them,

(42:20):
and that way I'm buying mymarket share and I'm expecting
the business to not be in greatrepair.
I'm expecting the seller toleave very quickly, but I know
what to do with it and I'm theonly person who can buy his
business here and save him.
Other people say I want to buysomething and I want to make
sure it doesn't take any of mytime whatsoever.
It has to run itself completelyand since the profit margins

(42:40):
are thin, I can't afford to hirea lot of people Like I think
understanding what you want itto do for you first is huge.
Number two and due diligence.
This is what most people don'tunderstand.
There's actually a vettingprocess before the LOI and then
there's deep due diligence afterthe LOI.
Right, and this is where a lotof people fail and they take way
too long or they put way toomuch energy into things that

(43:01):
don't deserve it.
So before you submitted thatLOI, you should have done some
sort of sniff test or initialvetting to just determine
whether this seems to have theright ingredients for me to be
able to submit an LOI.
Most of the time submitting anLOI and if you do it right,
there's no financial risk thereand there's no risk there really
in general You're just gettingthe ability to dive deeper into

(43:24):
due diligence.
So don't be too cautious tojump into LOI.
You're not obligating yourselflike a real estate contract
would be.
You're able to just get in justto see what's on their side.
On the due diligence side, likeyou said, knowing what you're
looking for is going to beinteresting and it's going to be
very helpful for you, but alsounderstanding the due diligence

(43:45):
beyond the spreadsheet, and thisis one of the things that I
teach specifically.
If you just look at thespreadsheets and just look at
the balance sheets and theprofit and loss statements,
there's a lot of things thatyou're not able to really see
and those are the things thatare going to surprise you.
So don't be scared by that.
Just make sure you're askingthe right questions beyond just
looking at the numbers.
Questions like tell me, what doyou do to acquire customers?

(44:07):
If you had to acquire 15 newjobs this month, right now to
hit your numbers, what would thelever you'd pull be?
Tell me what happens whenyou're not able to come to the
office for 30 days.
Who would run the business inyour absence?
Like understanding thosetransfer value issues as part of
your seller conversations is abig part of it as well, and
that's just as important, if notmore important, than just

(44:32):
looking at the spreadsheet.
So I don't know if that helps alittle bit for you all.
On the business that you decidedand you backed out on, it
didn't have everything you'relooking for and you kind of said
man, I wish I would have juststarted there and say are these
things true?
Right, when you develop yourbuy box for me, I have these
five pieces of criteria andbefore I even look at it, if
they don't fit my five pieces ofcriteria, I don't even touch it
.
Which is high ticket, highmargin, nationwide to worldwide

(44:54):
audience, extremely easy totarget and people would have
paid 10 times more because ofthe value they received in my
business and digital services.
That's what I look for For youall.
You may be looking forsomething very specific.
If they don't have their, their, their, their deal origin or
the all you may be looking forsomething very specific.
If they don't have their leadgeneration machine dialed in,
they can't acquire customers ondemand.
That's not a problem that I'mready to go and solve For you.

(45:17):
Being a marketer, you could sayif they don't have their
customer acquisition dialed in,that's low hanging fruit for me.
I'm just getting a discount onthe business because I know how
to solve that problem.
But you say I may not be reallygreat at recruiting this kind
of skilled labor.
So they need to have thatrecruiting process really locked
down.
They need to have a number twoand a number three employee who

(45:38):
are solid, that we can make surewe can get to stay, because
that's not a problem that I'mready to solve yet, right?
So, kind of looking at yourcore strengths, you may say, wow
, I'm not really good atmarketing.
We have a great sales team.
Then you need to buy a businessthat has good marketing.
Does that help?

Speaker 1 (45:55):
Yeah, definitely I talk about that, or heard it
referenced, in terms ofsynergies, right, like, what
synergies do you have with thisbusiness business?
And if you put this, that's theone plus one equals three, not
just in the multiple arbitrageright, but just in the value, in
the efficiency of the business.
And those are some of thethings that to be self-aware of.

(46:18):
Then, as the business owner, ifyou are a roofing business
owner who wants to grow throughacquisitions, be aware of your
strengths, right.
If your strengths are.
I know I know some, some ownerswho have very competitive
advantage from a materialsperspective that they have.
They.
They do very well with buyingbulk materials.

(46:40):
They create extremeefficiencies and and increased
profitability with the with,with what they do there.
If they, if you are that personand you are out doing due
diligence and you're looking atthe materials cost in a business
and you go, man, I could shavethat by 10% day one.
These are the types of things Ithink Chris is talking about

(47:03):
right.
Talking about right If you seea team I know a private equity
owner in the roofing space whotheir buy box started as
companies that do retail roofingreally well, who are in areas

(47:31):
who occasionally get stormrestoration work, but they don't
know how to.
They don't have the knowledge orskillset in dealing with
insurance claims properly.
So when his, when he was goingout and looking to acquire he's
looking for a company, that man,they know how to, they know how
to produce, they know how tobuild roofs right, they know how
to sell retail roofing, butwhen a storm comes through,
they're undercapitalizing onthat.

(47:51):
So now, if that owner, if I,can buy that company and add my
skill set in the stormrestoration side of things, boy,
that just increases the valuethere.
So, some of those things tothink about.
What are your core skill sets?
Are you really a soliddoor-to-door marketing company?

(48:13):
And this company has a greatdigital marketing presence and
team that can amplify whatyou're already doing.
There's so many ways that youcan create this, but knowing
yourself a little bit and then,like you're saying Chris,
knowing exactly what you'relooking for, right.

Speaker 2 (48:33):
One thing I'll tell you on top of that when you're
doing your due diligence is Iwant to see what's being
measured and what's not beingmeasured.
I don't know how often youstare at that, but when I ask
questions, I'm trying to see ifthings are measured, like if you
go into a business and you saywhere are your leads coming from
and they don't know.
That's a red flag for me, right?

(48:54):
Because I can't do more ofwhat's working if we don't know
what's working, and that was oneof the biggest things that I
look for.
So I always ask questionsaround during due diligence is
what are they measuring and whatthey're not measuring?
Because what is measured can bemanaged and what is not
measured cannot.
So that's where we found mostof the surprises.
One of the things I'll tell youis my best due diligence tips

(49:16):
and tricks and strategies havecome from the bad acquisitions
we've made Not ones we haven't,but like, literally,
acquisitions where we said, wow,we should not have made that
Like.
One of the biggest red flags inmy business is if the seller,
the owner, is the person thatactually converts people into
customers, I won't touch itbecause a lot of times it's
harder to replace their efforts,because no one's going to have

(49:37):
the trust and the confidencethat they can give the customer
like the owner wire that maybeare great bolt-ons then we find
the sales process is verydifficult, yeah, but I think
looking at you and what yourbusiness does really well is
huge, like you just explained,and I think that's a big part of
it.
So they say roll-ups in generalare three different things
you're focusing on.

(49:57):
One is cost synergies, one iscross-selling abilities and one
is leveraging superpowers fromone business to the other and
that's where the profitmaximization goes up.

Speaker 1 (50:09):
Yeah, that's awesome.
That's awesome.
I think a lot of times you hadtalked about hey, have a
professional team, haveattorneys, have a diligence team
, have these things.
I think that scares some peoplebecause there's an investment
there.
What kind of investment is thatand what considerations should
people make around that?

Speaker 2 (50:31):
really it's different than the buyer and the seller
side.
Uh, one thing that we focus ona lot is is helping turn people
into sophisticated businessbuyers.
And when you're a sophisticatedbusiness buyer and when you go
and speak to somebody who'sgoing to help you with due
diligence or a cpa, an attorney,and you're saying, hey, will
you work on contingency feeswhich just means they only get

(50:52):
paid when the deal is done, alot of times they're going to
try to see if you're asophisticated buyer or not.
They're trying to say what'sthe likelihood of this person
actually closing a deal?
Because at that point they'reaccepting all of the risk.
Right?
Most people will not work oncontingency fees, especially if
they can smell you and say thisis not a sophisticated buyer,

(51:14):
right?
So one of the first things thatwe do in all of our programs is
turn people into sophisticatedbuyers, because that makes the
process so much easier.
It increases your likelihood ofactually achieving and
succeeding in buying a business.
It's going to make you muchmore of a safe pair of hands to
work on contingency fees withthrough your deal teams.
But don't expect that right outof the gate, because you're not

(51:36):
going to be able to give peoplethat kind of confidence right
out of the gates.
That's why learning what youneed to learn and learning a lot
about the process is important.
So the investment it depends onkind of the way you do it.
A lot of people in our programsget around the investment by
teaming up.
There's very common wherethey'll create a little group
where you have somebody who'samazing at due diligence, you

(51:59):
have somebody who's amazing atacquiring new opportunities and
getting new sellers on the phone, sellers on the phone, somebody
else who's an M&A attorney, andwhen you go and buy businesses
like that as a group, especiallyif you're going after a roll-up
, then you kind of have everyoneon staff rather than having to
pay and getting nickel and dimed.
That's a very common way andthat's why a lot of people group
up when they're doing roll-ups,even if you are not giving them

(52:21):
equity in your existingbusiness you own, but giving
them a percentage of all thebusinesses you acquire.
And then they have the chanceand success fees at the end of
the day when they close thedeals.
But they also have the abilityto make much more upside when
the business sells.
At the end the roll up sells.
So I don't know if that answersyour question.

(52:42):
You can go out and kind of hiresomeone to do due diligence.
You can hire someone to be yourattorney and it will nickel and
dime you.
It will cost you money, but ittakes money to make money
Absolutely and to do itcorrectly.
We have an attorney on staffand this is one of his favorite
sayings.
He says if you think it'sexpensive to hire an attorney,
try not hiring an attorney.
Right, and it's just.

(53:04):
It's one of those things.
It is a sunk cost.
But if you want to get awayfrom the sunk costs, you need to
potentially team up with somepeople and bring them in on the
deal.
People who are already doingthis every day, maybe, who are
already working with othercompanies, and for them it's
just one more thing that they'readding to their plate and they
can get success fees and theycan get part of the upside at
exit.

Speaker 1 (53:23):
Yeah.
So the team is important, right, not just in your company, not
just in the company that you'rebuying, but this is another team
that you can add to help dothis, to help do this.
Where do you see the landscape,chris?
Because you guys have 27,000students.
We have Cody Sanchez all overYouTube talking about buying

(53:46):
boring businesses.
We have private equity rollinginto the home services
contracting space withoutrageous amounts of money and
and and and effort.
We have you know.
Where do you see this spaceover the next five years?

Speaker 2 (54:06):
It's hard to know, like who to pay attention to or
who's telling the truth, andthings like that.
The space in general is goingto continue to get bigger.
Cody has been a blessing forour business for sure, even
though she's considered acompetitor, because she's
growing the awareness thatbusiness acquisitions is one of
the great wealth builders.
She teaches very, very smalllevels of business acquisitions

(54:30):
and she's lovely.
I'm not disparaging her at all.
She's teaching her to buy carwashes and vending machines and
laundromats and it's not reallyrelevant to anything we're
talking about today.
Carl and I and specifically Carlis the is the goat at roll-ups,
Literally.
He just raised a billiondollars.
He has his own fund.
We're a part of five roll-upstogether.
He just has another roll-up inNew York.

(54:51):
He just started.
This is what he does.
He's from wall street androll-ups is literally everything
he's ever worked on.
Amazon's a roll-up.
Facebook's a roll-up Uh.
So we we focus there.
I think roll-ups are the bigpart of the future when it comes
to acquisitions, yes, but Ithink the biggest wave you're
going to see is is peoplebecoming sophisticated business
buyers?
I think that's the biggestthing that you can focus on to

(55:13):
really set yourself up forsuccess.
Here's what I will tell you.
Those of you who do get to theother side you're going to be
wanting to get back in the gameagain Once you get into M&A,
whether it's selling yourbusiness to PE and you have this
big windfall of cash.
You're going to want to makethat money.
Make you money.
A lot of people want to jumpinto something new.
Like if I asked you, everyonewatching right now.
Like something new.
Like if I asked you, everyonewatching right now.
Like if you could trade in yourbusiness for a new one today.

(55:35):
Just like you were driving intoa car dealership but you drove
to a business dealership and youcan get a newer model, maybe
new bells and whistles.
You can get a truck instead ofa car.
You can serve differentcustomers.
Like.
A lot of you would probablytake that, because the reality
is what we've been passionateabout for 20 years sometimes
changes over time, and that'swhere we say, man, with
everything I know now, all thisnew perspective, all this

(55:57):
knowledge, all this experience,I would be doing this, and
that's one of the reasons thatyou need to pay attention and go
and try to find a way to get tothat successful exit.
Set yourself up.
So you have lots of differentoptions.
You have money in the bank andyou're going to become a
dealaholic.
So when I say, what is thelandscape looking like, here's
what I see.
Pe, by the way, would neverplay, even 10 years ago in this

(56:18):
market.
You had to be $10 million inrevenue or above.
They're swooping down andthey're buying these smaller
businesses in roofing, inelectrical contracting, in HVAC,
and they're playing in thesemarkets when they weren't before
.
I think that's going to continue.
I think next thing is you'regoing to see more roll-ups are
going to continue.
They've been around for a longtime, but you're going to see

(56:45):
much bigger companies and a lotfewer mom and pops.
I think, as time goes on, likeI guess you can consider them
like oligopolies versus havingkind of the transfer of wealth
across all these differentbusinesses.
Like you see it in home healthcare and you have all these
roll-ups that are going aroundand buying up and hospital
systems, buying up all thedoctor's offices.
It's going to keep happening.
You're seeing it in dermatology, You're seeing it in equipment
rentals, You're seeing it inelectrical contracting, You're
seeing it in roofing.

(57:05):
You're seeing it in everyindustry where, all of a sudden,
10 years later, you're eithergot purchased by one of these
larger companies and you did itearlier and you got a much
higher multiple, or it's goingto be your only option and
you're not going to get as muchmoney later.
So to me, I would probablystaying focused on that.
Buying cashflow or selling yourcashflow is never going to go

(57:26):
out of style.
So focusing on your business,making it best in class,
operating without you andraising your EBITDA is going to
do nothing but make you wealthy.
I don't know if that gives youthe answer you're looking for,
but what I see when I look atthe landscape Carl talks about
this all the time is thatcompounding annual growth rate
and industries that are startingto get disrupted.

(57:48):
Those things are the ones whereare going to drive more demand
to you.
So, like an industry that canget disrupted by AI very easily,
like software development or ITstaffing, industries that can
get really disrupted byconflicts and wars and the fear
of the unknown.
That's going to drive a lot ofpeople away from those
businesses and they're going tostart putting their eyes on your
industry and I think the demandis going to start to rise for

(58:12):
people who want to buybusinesses.
So I think it's your chance tojump into what we would call a
seller's market in the realestate business, where the
sellers control the price andthe terms, and I think you have
the ability to capitalize offthat and then learn to become a
sophisticated buyer in parallel.
So you are poised and ready togo, like Warren Buffett always
says, when it's your turn, andyou're able to make even more

(58:34):
money with your money thatyou've generated.
So, um, I'm not a psychic, youknow.
I'm not the world renownedexpert on M and a Carl.
My business partner is.
I have acquired quite a fewcompanies.
You can see I got tombstones.
Uh, my job is to growbusinesses once we buy them, and
that's what I'm really reallygood at.
So but I hope that helps.

Speaker 1 (58:50):
That does man and and .
So much great information, somuch value.
Just to do a kind of a summaryof everything that we talked
about how can a roofing businessowner create their own roll up?

Speaker 2 (59:06):
Well, step one you need to be educated on exactly
what has to happen andunderstand and become a
sophisticated buyer.
Otherwise, you're going to walkinto conversations.
People won't take you seriously, even though you have a great
company.
Number two you need to build adeal team around you, and that
is people who are ready to go,who have experience and a track
record working in this industry,someone to help you vet deals,

(59:29):
someone to help you get dealsfinanced.
And then you need to have anattorney on your team as well,
and then you need to master theart of finding opportunities
offline, off market, and be ableto get good deals.
The other thing is your vision.
A lot of times, you can getpeople to sell to you because
your vision and they're they'rebelieving in you and they're
buying your confidence, andthat's why having a and being a

(59:51):
sophisticated buyer is soimportant, as well as having a
good deal team, because you'reasking people to sell you their
baby, sell you their business.
Sometimes you're buying a partof the business at a discount
and bringing them with you tohelp them get a larger exit that
they couldn't get by themselves, right, so so, learning how to
really tell your story and yournarrative, learning what

(01:00:12):
financing options you haveavailable that you can take
advantage of.
Learning how to find deals thatother people can't find and be
able to get good deals like.
That's what I would be focusedon if you want to do a roll up
but education is definitely thefirst part you need to take
action as you're learning, butif you try to do it on your own,
it's going to be a verydifficult road yeah, definitely.

Speaker 1 (01:00:32):
And that kind of leads me to my last question is
for people that want to reallyexplore this and develop a skill
set around this.
How can you guys help them withthat?

Speaker 2 (01:00:43):
Yeah, well, we can help you.
Step one you got to geteducated.
Let's give you some freetraining.
You can go tostartdoingdealscom
startdoingdealscom, and we'llgive you access to our business
acquisition blueprint as well.
As you can go on our website,dealmakerwealthsocietycom.
Click on coaching.
We have some programs there,but we'd love to talk to you.
We have a lot of people in ourprogram right now that are

(01:01:06):
actually buying roofingcompanies and a lot of home
services companies.
We have a couple advisorswho've sold their businesses to
pe 30 40 million dollars andthey're actually coming in as
advisors in types of companieslike yours and helping them get
ready to sell the PE and helpingthem get to best in class.
So we have a lot of resources.
There's over a thousand peopleactive in our community called

(01:01:26):
Protege that's what I'm wearingon my shirt, Protege and it's
just full of all the people thatyou didn't know, that you need
to know, and we'd love to be apart of your journey.
Help you not only grow throughacquisition.
Help you and put you in touchwith the right advisors that are
going to help you get ready tosell a PE or a family office and
get best in class multiples andthen help you on your journey

(01:01:47):
and turn you into asophisticated buyer, so you can
continue to play the game afteryou take your exit.

Speaker 1 (01:01:52):
Awesome, chris man.
Thank you for your time today.
This has been another episodeof the Roofing Success Podcast.
Thank you for tuning in to theRoofing Success Podcast.
For more valuable content,visit roofingsuccesspodcastcom
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