Buying a Business for the First Time? Don't Make These Mistakes

[00:00:00]Hello and welcome to Entrepreneur Conversations. Now, this week is going to be a bit different. This is all about buying businesses. This is the buying businesses special. This is all Oliver's idea. He's come up with it because I'm not around.

[00:00:15]>> Yes, that's right. Last week was commercial property. So, if you missed that episode, you can go back and watch that. But this week, it's tombola time questions all about buying businesses.

[00:00:25]>> So, what what do you want to achieve from this, Ollie? Come talk to me. What do you want to get across for our viewers and listeners?

[00:00:30]>> Well, I think people would like to learn a little bit more about your experience when buying businesses.

[00:00:37]>> Okay.

[00:00:37]>> What businesses are sort of um a good investment at the moment? Just sort of leaning on your knowledge really.

[00:00:43]>> Okay. All right. And you're going to do we're going to do this the same way again with the tomb. Yeah.

[00:00:48]>> Yeah. Let's do it with the tombbo.

[00:00:49]>> Okay. Let's have the jingle and get it on the the table of love.

[00:00:55]>> Tomola time. buying businesses. Here we go. Right. Straight in.

[00:01:00]>> Let's go straight in.

[00:01:01]>> Straight in. Here we go. Okay. We have a green ball. And this is going to go to question 17. Ollie, what is question 17?

[00:01:11]>> Okay. So, [snorts] how do you actually value a business before you make an offer? What m metrics matter most to you?

[00:01:20]>> Well, you're look you're looking for retention on turnover of what they're doing with their EBIT DAR. So there EBIT DAR every everything that's left after all of those X's are out [snorts] um I won't want to pay more than say two two and a half times but certain sectors get more because because of their their stability of their sector um sometimes you'll see a business might be up to eight times um but whatever capital I deploy I would want to be getting a return on that after year three slash4.

[00:01:56]Uh private equity would go run to five years, but I want to beat private equity. I I I would want to get in a return sooner than that. So that that means whatever you're going to go and buy, you want to see that you put your money into it, it pays you back whatever capital you've put in there out of that company. Um I think I think that the the biggest thing is Ollie that you you make sure I've bought businesses too small in the past.

[00:02:24]They just not been big enough. And I I've ended up having a job with those new businesses. I don't want a job. And I don't think listeners and viewers want jobs either. I think they they want to have find businesses that they can own and it's got management in it and it's got sales teams in it, whatever it might be doing. It's got operatives in there already and they're big enough to run themselves. All you're be doing is you're becoming the new owner and you're ga you're going to do some some some touches to make those businesses more profitable. It might be better technology. It might be bringing the accounts inhouse to a headquarters. It might it might be getting rid of a very expensive person that's in there that you can you know do it in another way or somebody else can take their place from one of your other companies. It depends what companies they are, >> you know. Um, if the valuation of a business is worth more if it's a group, like a group of businesses is worth more on eBay. Why is that?

[00:03:21]>> Well, that's because you're buying a sector. So, what what happens is we we spoke about this on one of our our videos. What video was that on? What was that one called we did on YouTube?

[00:03:29]>> Man in a van.

[00:03:30]>> Yeah. Man and a van. And we were talking about buying businesses to create a group of companies. So if if you had a w a big window cleaning company, you should buy a cleaning company because your customer is the same customer. Your your college that you're cleaning their windows also would want to clean the corridors or you have pest control and you had pest control in. And that now you're owning a group of companies in a sector of remedial maintenance. And it's the remedial maintenance sector that a buyer or an investor will come in and give you more for that because he can see the cross-pollination of customer base. And that allows them to feel more secure that there's going to be a a a revenue stream that is um galvanized into the future with with with with um good customers.

[00:04:22]>> So like every customer could be worth two to three times.

[00:04:26]>> Yes, that's right. You're right. That that that's a good way of explaining it.

[00:04:28]Yeah.

[00:04:29]>> Okay.

[00:04:29]>> Anything else on valuing a business?

[00:04:32]>> Yeah. I mean you value you value the business. I mean you know look at what you're you're wanting to buy and why.

[00:04:38]you know, why are you buying that business? How how can you add value to the business? And you want to value the business. If you can add value to it, you might be prepared to give a little bit of money extra for it because you know what other things you can do with it. Um, you know, we would buy a catering business. We would we would buy one. We we've looked them around. We can't find them big enough to add on to our wedding venue here. So, we it becomes an in-house situation. um you you you see where you can add value to it. When you value a business, who who who is the people behind the business? Who's doing the who's doing the the the dayto-day management of that business? You need to look at that. Are they all in their late 60s, late 50s? Well, they're not going to be around. So, you you you see a team in there that's a young team, been there some time. Well, you know that they're going to hang around even with you as the new owner. So, there's a value in that. their sector is it going to be eaten by AI and it won't exist as a model or is it in service industry that it is going to be a need actually the hourly rate for that sector might go up because there's not a lot of millenniums coming that actually want to be plumbers or tree surgeons or cleaners or whatever it might be. So you know that sector might go up in value in the future and and it's what where you can add systems and processes to add value means that you where the value is coming. Listen, we'll always try and have a deal. We'll always try and chip the price. I know that's what you want for the business, but what I'm prepared to pay for it might look a lot different just because you said a number, right? You know, make this is one thing I I would say to people, not only just for buying businesses, for buying anything. Make me say yes. Make me buy this business.

[00:06:27]It's a great question. You know, make me do it. Come up with something that makes me say, "Oh, go on then. Okay. Yeah, absolutely. If you're going to do that for me, it might be that they allow me to pay for the business over 5 years."

[00:06:38]Oh, well, I tell you what, you wanted a couple of million quid for it. I'll give you that. I'm not even going to argue the price, but if you let me pay for it over 5 years, there's so much value in allowing me to have that extension of payment that I'll pay that headline price, you know, and there's there's things like that you'd need to look at.

[00:06:54]>> When you say make me buy that business, is that something that you'd actually say to someone?

[00:06:58]>> Yeah, absolutely. I've said it loads of times. I've said that for the last 25 years. Absolutely. Yeah. Make me buy it.

[00:07:04]I I just went and bought my new camper van. Lovely. Right. Up at Great Yarmouth. Very nice people. Andrew, big shout out to you. Hi. thanks for all your help. And I said to him, you know, we're getting down to tax and he's leaning forward and he's saying, "We're going to give you this for your one and I'm going to do a little bit of discount on this." And I said, "All looks very good." Oh, good, good, good, good, good.

[00:07:23]I said, Andrew, we're down to brass tax now. We're right down to the wire. Make me buy it. And he just added on some other bits and a thing with the insurance and something else with this, you know, fill it up with diesel, put mats in it. It doesn't matter. Make me buy it, you know. giving me that extra incentive to say yes.

[00:07:43]>> So that's like that's um it's like saying come on put a cherry on top.

[00:07:48]>> Yeah. Absolutely. Yeah. And and that and that's what you you you're you're reversing the problem instead of you just sitting there thinking I wonder I can afford it. I do I really want to or should I just you know there's a moment for anyone there's always that moment of tension and there's a moment of power and there's a moment of want. But if you drive away from that meeting and you've not made a decision, someone says something and my sister-in-law's brother-in-law's got this that and the other and all of a sudden you could be deflected away from that sale very easily. So, you know, you want to try at that moment of power to make the difference. I mean, even for us, if you're on the other end of it, you know, giving something away for someone to buy, you know, is good.

[00:08:32]>> Okay. Should we do another question?

[00:08:33]>> Yeah, here we go. Sorry to interrupt. I just wanted to take a moment to let you know about Bad Park mastermind. I have created a mastermind for highlevel entrepreneurs. There's only 16 spaces and we've only got a few left. If you often find you're the biggest fish in the pond at other masterminds, click the link in the pod description because this just might be for you. Now, back to the pod.

[00:09:02]Tomb bowler time. It's tumble time, >> right? Here we go. So, the reason we're doing these is because I'm not around.

[00:09:12]I'm going off to sunny Australia down to I'll go to Melbourne. I first Melbourne and I'm doing some podcasts and some Q&As's and it'd be good.

[00:09:22]>> Have you any other cities yet or you just doing Melbourne for now?

[00:09:26]>> No, no, no, no, no, no. I've got It's all going I've got an agenda and everything.

[00:09:29]>> An agenda? [laughter] >> An agenda. the whole thing. We're going Melbourne to meet up the people that that that sort it all out for us and then we're going up to uh to Sydney and then Sydney across to somewhere else that's really nice. I can't remember, but I'm going I'm having a breakaway to Tasmania, mate.

[00:09:50]>> You are going to >> Tasmania. Tasmanian Devils, come on down. Bite your bum. I'm looking forward to that. I don't know why, but I've always wanted to go to Tasmania. Sounds great. Right, yellow. Question four, Ollie.

[00:10:03]>> Question four. Once you've bought a business, >> Yes.

[00:10:07]>> What's your first move?

[00:10:09]>> How do you integrate it?

[00:10:10]>> My first move is this. Yes.

[00:10:13][laughter] >> How do you integrate it? And what do you typically change or improve in those first few months?

[00:10:18]>> Well, I think you have to be very careful. You know, be careful with you.

[00:10:22]You with your new big broom coming in, right? We're going to change all this.

[00:10:26]you frighten the pants off of everyone, especially if there's management in place and you know they've got a good business going on, they've got good customer bases, they got relationships going on, they've got a good product they're selling, whatever it might be, but go steady. You know, I would say you don't do a lot to start with and you go and observe and you get in the weeds with them. I would have been doing that in in the negotiations as well, but sometimes you can't do it. Sometimes these owners want to sell the business and on Wednesday the sale goes through and you walk in the door. I've done those before and they're like, "Oh my god." And everybody's shocked and and that way you then have to calm everybody down and have a bit of a suare meeting to say, "Listen, everything's steady.

[00:11:07]There's nothing's going to really change. It's just me. I'm a nice guy.

[00:11:10]Look me up on YouTube. I know what I'm doing." Or whatever it might be. And that that that where you just build the fear down that everybody's going to lose their job or you know the thing's going to be uh have to work harder. Usually they will have to work harder. If you work for me in a business I want to get happy hardworking people for for for the journey. Um [snorts] you will put in processes, you will slick up the it will look at the the the the the customer funnel of what you can do with that. the more experienced we are with that, the better we're getting at doing that. And sometimes the opportunity for buying that company and why you've given the money for it is because you can see they're not doing that. Well, that's good because that means you can do it and take advantage of them not actually implementing those those those tricks and flicks that they should have been doing, >> you know.

[00:12:04]>> Um, anything that you've had any time you've had to make like a drastic change when you bought a business?

[00:12:09]>> Well, yeah, I mean I I did make a drastic change. And I bought a company, the Ingate Stone Garden Center, and promptly sacked someone the first day. I mean, it was and I told this story once, but you know, we had 37 staff all inherited in one day. And that was a walk-in we are the new owners. They didn't, no one knew what was going on.

[00:12:27]Um, and I walked around the back of house and there was a um a lady there with a great big joint on like that just smoking her brains out. And I went, "Hello." She went, "All right." I said, "What are you doing?" [laughter] She said, "I'm just I'm on my break." I said, "But you're smoking you're smoking marijuana, aren't you?" She went, "Yeah, well, it's my time. I'll do what I bloody well like." I went, "Right, okay.

[00:12:53]Well, no, you won't. Out. Leave now.

[00:12:56]Grab everything is you're not working for me doing drugs on site. I'm I'm not really into drugs at all because of some past history with with somebody that it they lost their life over it and they were out of there. Oh, and it wasn't PC and I didn't go through HR, this, that, and the other. We were meant to have put that person on a scheme to help them get off of drugs as the the the the employer. Well, obviously, we didn't do any of that. We just sacked them. So, that didn't work. Um, and I think it was about £17,000 we had to pay on the steps of the court 10, 15 months later, whatever it was. Yeah, there's a difference between having a drug problem and just openly just smoking drugs on your break in in the workplace.

[00:13:39]>> Yeah. Yeah. Listen, this buying businesses is not for the faint-hearted.

[00:13:44]You are going to buy walts and all. I mean, the the one thing that you you need to be very careful, you need to put warranties in place with some of this because you're buying usually a limited company and if you're buying a limited company, there could be claims against that company that they've not they've not disclosed to you. That's why it's always good to try and buy over some vendor finance of 3 years with those warranties in place because where you're paying for it, it might be that someone hasn't been paying the correct um employment rate. And I I've just been through this with one of my customers that I I I've been mentoring and what's happened there, he's not been paying two or three of his staff for the last three years the going um uh rate for employment. So we've seen that and said well you know we're going to get hammered for tax for this if the if the if the revenue pick it up. So we flagged it and there is like in one person there's 30 grand to pay and another one there's nearly 65 grand to pay. Well that comes he has to pay that because we've discovered it and the warranties in the contract relate to those types of things that could happen.

[00:14:51]They're like a little insurance policies that you put in place that you note on the contract. £65,000.

[00:14:57]>> Oh yeah, they were paying them for something like five years for the wrong rate and their hours were listed, but they're actually paying them like £850 an hour. Some good old boy. Well, that's not that's not correct.

[00:15:08]>> Oh my god, that's awful.

[00:15:09]>> It's like slave labor. You can't do that. I mean, and and it's and it's things like that or a claim against the company or suddenly a bad debt pops in two years later. Well, I wasn't going to claim against the guy there cuz I, you know, I didn't really get on him, but you're now the new owner. So I thought, well, you know, I did do the work. I never got paid for it cuz he said I didn't do a very good job. So I'm going to put a claim into you because I did do the work. Well, we don't know when the work was done, what it was. You know, so there's things with a limited company that you buy that can pop out of the woodwork. So you need to take professional advice with with with a good a good solicitor that can walk you through that. And you start needing to understand those mechanisms and things that you need to make sure are in the contract. And one of them would be warranties to make sure that they're responsible for any skeletons that jump out to bite you.

[00:15:59]>> Cool.

[00:16:00]>> Should we do another question?

[00:16:01]>> Yes. Here we go. Come on, Mr. Tombola.

[00:16:04]>> It's time.

[00:16:06]>> Now, we're using this tombler quite a lot. I think we might have to put grease nipples on these. They're getting a bit screechy and we're start We might have to put bearings and everything.

[00:16:16]You love it, don't you? You have no idea what I'm talking about.

[00:16:20]Right. Here we go. We are orangey color.

[00:16:23]Number three, Ollie. Question three on buying businesses.

[00:16:28]>> How do you decide whether to pull the trigger or walk away from a deal?

[00:16:33]>> Well, I think I think the way to do that is to have a few deals going on because if you're focused on one deal that you're doing, this one company that you're doing, you kind of get it's got to happen, it's got to happen, it's got to happen. and things are coming at you and you're not quite getting the right price right or the time for the vendor finance is getting shorter and you wanted it longer and you start making compromises.

[00:16:59]But if you've got say four, five or six deals going on, the best thing that I've ever done in deals is I call it just walk to the gate. So you you're in a yard, you said you'd buy something in the yard, they say a price, you go, "No, it's okay. That's too expensive for me."

[00:17:16]turn around and walk to walk out of the premises. I'm telling you, by the time you get nearly to the gate, that guy will say, "Oh, hang on a minute. Well, what do you want me to give me for it?"

[00:17:26]And I I think that analogy on businesses where I've got so far and I've said, you know, we're in we probably been doing like eight months work on it or something. I there's a point where you just say, "Yeah, I think you've pushed me a little bit too far there. What I'm going to do, I'm going to back out at this point, but good luck and I hope you make a sale and walk away." And the minute you've got the power of being able to walk away and they can see that you're not just a, you know, a rabbit in the headlights and going to buy it regardless, then the negotiation suddenly will swing your way and commonly you'll get your way or they'll sell it to someone else. But always be prepared to walk away. You know, if it's not going and you've not done that matrix of profits and what you can add value to, how it will add to your other companies that you you already own. And if you can't make that work, you know, then walk away.

[00:18:16]>> Have you ever bought something that you wish you hadn't bought or like got a little bit too emotionally attached to a deal?

[00:18:23]>> Yeah, I think I think I have in the past. Um, yeah, there's some rip scars there. Uh, but I think what I' I've been very very good at is always making sure there's some equity in there so that there's a bit more fat in it to bounce onto.

[00:18:39]especially but this this wasn't really buying companies it was buying some land but I think that once you've made the decision you know my saying is is the decision right well guess what if it isn't the right decision as an entrepreneur and as the responsibility stops with you then you make it right so whatever it takes you just make it right you know and if there's there's less profit in it make more profit happen so there is more profit in it and you just make you repair it with your entrepreneur entrepreneurial flare now some hard work. But you know, you you you having lots of businesses on the go that you're trying to buy makes those decisions easier and it makes your negotiation platform stronger.

[00:19:24]>> Okay. Should we do another question?

[00:19:25]>> Yeah. Here we go.

[00:19:29]>> It's time.

[00:19:32]>> It sure is. Okay. Here we go.

[00:19:38]Right. Unlucky for some dull pinky movie color. And we're on question 13.

[00:19:46]Have you done that as a spoof one? Whoa.

[00:19:51]Um, what types of businesses do you think are a solid investment right now and what should people avoid?

[00:20:01][sighs] >> Well, just go on. Avoid avoid avoid businesses under a couple of million pound turnover. they they need to be 2 million pounds plus turnover up. So, you know, even if they were just yielding 10% of that, then you know that that's got a couple of hundred grand that you're getting as as profits coming out of it. Um, you know, you you you want to make sure you're not buying yourself a job. So, I'm repeating myself on that.

[00:20:29]You want that company to be able to stand on its own two feet and it also wants to fall somewhere into your ecosystem. You know what you do. We might buy here a grounds work company that does grounds work but it needs to have a lot of other customers going on around it and it could also then do our ground works at cost even though we do some ourselves but we do subcontract some of the bigger stuff out but we would look at a ground a grounds work civil engineering company. That's what I mean by grounds works. Say the question again or let me get myself back in.

[00:21:01]>> What types of businesses do you think are a solid investment right now?

[00:21:03]>> Yeah, solid investment. I think the service industry because of AI AI is going to help the service industry because it it's going to promote it higher up the chain for for for having need um and the the the the technology behind it will help you with your customer funnel and it will help you with your operations um with your systems and your processes and you know AI is not coming to take your plumber AI is not coming to take your gardener AI is not coming to take your window cleaner. They just aren't. Um, so I think that that that that's good. Uh, some technology companies are growing very well at the moment. You know, there there's investment in AI companies that are bringing AI on stream with either creating softwares um or or agents that that will fit into your to your business. um entertainment, you know, from from food and beverage um structured right and food and beverage is is is a dangerous one, but if it's structured right um and it's got niche to it, we're food and beverage here, but we're in a niche when we're on wedding.

[00:22:13]Um you know, another customer of mine um is Mark and Mark has a brilliant big business, but he just serves students.

[00:22:22]He has student pubs for food and drink.

[00:22:24]That's it. It's just for students. So, it's all all in the Bath and Bristol area and it's all built around students having um leisure time outside of their studies and they they spend plenty of money in the in his pubs. But he he's niched right in entertainment. You know, people will want to go and see proper entertainment, live entertainment. You know, we talk about AI and and Gen Z's and stuff that they are sort of cocooning in their bedroom. The entertainment everything's coming digitally. I think the future is going to be more in actual experiences. Uh companies that create experiences, I I would look to be buying stuff that does that. You actually have an experience. I mean, a AI or let's talk about that for a minute. I mean, you know, you need to do an AI audit in your company. You need to be doing that now. You know, get someone that's that can talk the language and is professional that will come in and hold your hand through what you can add in without frightening all your staff away. what what your company will look like in six years time. Will you take that same SWAT analysis to what companies you might be buying and and and and and buy in the sectors, you know, whatever sector it is, just put it in Google. There's plenty of companies for sale. Plenty of companies for sale.

[00:23:43]And that, you know, there's no one queuing up with wheelbarrows of money.

[00:23:47]They will be on vendor finance because the banks won't back just companies alone. They'll back bricks and mortar.

[00:23:53]They they'll back some balance sheets, but you'll find they won't they won't back the whole thing. And that's where the vendor finance comes in and makes them quite affordable.

[00:24:04]>> Okay. Should we do another question?

[00:24:05]>> Another question. Here we go.

[00:24:07]>> Come on. The tomb.

[00:24:09]>> It's time.

[00:24:14]>> Right.

[00:24:17]What is this here? I've got red number eight. Ollie. Question eight. How do you identify businesses that complement what you're already doing versus ones that are completely separate?

[00:24:31][sighs] >> Well, I if you're looking for compliments, it has to fit into the ecosystem that your customer base that you've already got would be cross-pollinated onto their customer base and vice versa from their customer base would also be a similar customer base to what you're already using. You know, I think that if you do a SWAT on your company and your turnover and look at the the the sort of three main big um outgoings, what are they? And if if it's you're spending a fortune on cleaning, buy a cleaning company. You know, then you're getting your cleaning at cost.

[00:25:11]You know, if you're doing catering, buy a catering company if that's one of your big costs. You know, we was we were spending over there in the wedding venue here at Bad Park House. We were spending £1.4 million on a subcontractor as a as a caterer um you know an external caterer coming in to do it. Crown great people by the way really good. But we finished with them um this Christmas just gone and we've built we didn't buy a company but we built our own in-house catering because we could see the writing was on the wall that we needed those profits on that margin to come into our business and not to an external business. But you know look at what you're spending big chunks of money on in the ecosystem that you're already running and then buy a company to come in and bolt onto that. And I think that way that you're you're you know, we spend a load of money here on landscaping and stuff. We do it all in house, but if an opportunity came up for a big maintenance company or landscape company, I'd be very interested to buy that.

[00:26:17]>> So, let me know in the DMs. If you've got one and you want to sell it, message me. I'd be interested because, you know, it it why not? They would come with all their equipment. We we could shrink out what we're doing. Please don't my staff look at this because it's nothing's happening too quickly. Poor Allan, I think he's losing his job.

[00:26:36]>> And he's only been with me 38 years. 39 years now.

[00:26:39]>> What about um like laundry?

[00:26:43]>> Yeah, laundry.

[00:26:44]>> You you spend a lot on laundry.

[00:26:46]>> We do spend a lot of money on laundry.

[00:26:48]Very good, Oliver. Yeah. Yeah. I'd be interested in buying laundry. And if you have got a laundry company for sale, I'd be very interested in looking at that.

[00:26:56]Yes.

[00:26:57]>> It's expensive laundry. Yeah, >> there's so much stuff. Bloody beds, pillow cases, all the We're We're posh, aren't we? We've got all the tablecloth food. It's It's a lot of linen. Nap napkins. Oh my god, there's thousands of the things.

[00:27:13]>> How much do you know how much you spend on living?

[00:27:15]>> No, I don't. I don't run the company, do I? Kelly runs it. People ask me these questions. I can't do the numbers of stock. She runs the company.

[00:27:23]>> Yeah, I'll be curious to find out how much that is. I invite you to have a look over my shoulder at my newsletter.

[00:27:30]If you want to hear about the things that grab my attention each week that could bring you value, sign up in the episode description. Now, back to the pod.

[00:27:40]>> Should we do another question?

[00:27:41]>> Yeah. Here we go. Right.

[00:27:44]I think it's going all right.

[00:27:46]>> We're kind of getting through. I think we're getting Please message me. Me message us and and tell us what you think of what we're doing. Are we giving you the right information to help you grow your business to make more strides of stuff? Right, Oliver? A green question 20. Please do do those messages. Um, and uh, you can do that.

[00:28:10]>> What was your first business acquisition like and what would you do differently knowing what you know now?

[00:28:17][snorts] >> Um, I've got to think what the first businesses I bought. I've got to go all the way back there to what it was. I think I think the very first business I bought was a log round. I bought it off of a guy that used to do logs. He was an older guy and he had logs. He did um you know supplied all the the pubs cuz they all had open fires back in the day. And um uh he had a log round. We were doing a bit of logs. We weren't doing much. Um and we were giving him he was buying some of our raw logs. He produced a lot of logs, you know, a lot of a lot of timber and we were sending the timber to him and he produced logs and in the end it just made sense that we bought him out. He wanted to retire anyway and we bought him out um and he was down in Okin um and that wasn't too far from our depot and there was a quite a big yard there. Um yeah, I just trying to think of the man's name. I think his name was Ralph like Ralph something. It's a long time ago. crack. I was I must have been I must have been just 20 when I bought that off of him. Loggs was all right.

[00:29:25]It's a lot of time, effort, and diesel, but it would give you money through the winter because that that's when you do your main sales and you know the men sometimes in in in late December everybody's gone into Christmas mode or January and February. And back then it felt like we had a lot bader winters that even if you had work you couldn't do it but you could always do logs.

[00:29:47]There was a big need for logs. A lot of need for logs pre Christmas as well.

[00:29:50]Everybody wanted a log fire at Christmas.

[00:29:53]>> Um so that was that.

[00:29:54]>> Well, so you'd cut down trees.

[00:29:57]>> Well, the tree surgery was already producing timber because it had to clear it anyway and we had to get rid of it and we used to get rid of it some of it well most of it to him. So in the end we bought him and we became our own sort of but why I bought him was that he had a great round of customers >> and and the only way we were selling logs we had to put adverts out. Put adverts out you got customers but he had real regular customers and and he had done for years and years.

[00:30:23]>> Would he buy the timber off you?

[00:30:25]>> So >> would he buy the timber off you?

[00:30:27]>> Sometimes we would sell it to him but not a lot. Sometimes we just get rid of it on him. Yeah. Because we just needed to empty the trucks, you know, and we had a yard up, a big yard up. A crack.

[00:30:37]It was just full. There was stuff coming. You know, we were busy, Ollie.

[00:30:40]Back then, we were we were really really busy.

[00:30:43]>> Yeah. You kind of did the opposite then of instead of like buying one of your costs, you bought one of your >> Well, yeah. I mean, we we actually bought a somewhere to distribute the stuff away. That That's why we did it.

[00:30:56]And it wasn't a lot of money. It weren't big money. not not buff anything.

[00:30:59]>> What was the what was the first thing you bought that was like, "Oh, this is this feels like a [clears throat] big deal."

[00:31:06]>> Um, I think the the garden center back in the day was quite a big deal because we were buying half of somebody else's shareholding, but the half we bought, they own 51%.

[00:31:21]And no one knew that it was for sale. It was all a bit sneaky deicky because we walked in on that Monday morning and we were calling the shots because we were actually the dominant partner on it >> and then we negotiated with the other partner and we end up buying his shares off of him as well. But it was quite a big deal. It was a lot >> there was a twist of things there because the company was kind of okay. It wiped its face but the reasons for buying that business then was because of the land acquisition. M >> the land was over 9 and a half acres there and it was in a very prime position in Ingade Stone. So there was there was there's a bit more of a backstory to buying that. But we I thought this was to the moon and the bloody thing had been on for sale with an agent, a specialist agent uh just for garden centers and nurseries for about 18 months. Nobody had bought it and it suddenly came across my radar and I should hold on a minute. This is right on my doorstep. I went over had a look.

[00:32:16]Well, yeah, we're having some of this and we negotiated a deal and it was great.

[00:32:20]>> Do you think people didn't want to buy it because it wasn't 100% of it?

[00:32:24]>> I think that that that was that complication. You got to have some brave pants on to be able to deal with that, but I think it wasn't actually earning any money and we could see the vision that we could make it earn some money while we went through the planning process, but we were actually buying it for the land.

[00:32:38]>> And then what did you just fall out with the guy that owned the other >> No, we we made some acquisition.

[00:32:44]Sorry. We we actually put some some money into the into the business because we we ran it for over five years before we we we got the the sale for the land and in that time we needed to make it profitable. So we put a load more money in and we asked him to do the same as the 49% shareholder and he didn't have money. So then he got diluted and gradually he got diluted over the period and in the end he said look just buy me out. I I I don't want to do this anymore. And these were older gentlemen.

[00:33:12]There was two guys. one one was in his 80s and the other guy was probably in in his late 70s. So >> So in when you're in that position like because you hold most of the shareholding, he doesn't really have a choice.

[00:33:27]>> Well, you Yeah. You you if you're not prepared to do that on the minutes of the of the of that board meeting, then you can you have the right to dilute them.

[00:33:34]>> Yeah. Yeah. And and there's a bit of a power play there a bit, but the the real truth of it is we gave both those gentlemen the opportunity to exit. And if not, you know, that they would just go to the grave with a with a load of of of of problems to sort that out. How was that how would that be done on a probate? It's very complicated. And I think the way the the way to do exit at the at the end of your career, a lot of people have no idea of how to make succession, right? And or exit. That's why there's so many companies for sale because they're missing that part of their planning to what they should be doing with their, you know, with their with their old age and and to make sure they're catered for. And I think a lot of the times the one first question I would say is the businesses say how old is the owner? It's something I need to know early. Why are they selling it? And you know, in anything you're buying commercially like that, divorce always a good sign. Age always a good sign because they're motivated sellers.

[00:34:35]Divorce motivated sellers. Older person motivated seller. Oh, they're 37 years old. Why are they selling? Why are they selling that? If they're that young, why are they selling? And it could be other reasons of why it is. Or they're breaking up with their sister who owns half of it or whatever. But always find that out early about why is this being sold.

[00:34:55]>> Although that's weird. When we bought our house, it was the um they were getting divorced. Oh, good sign, Ollie.

[00:35:00]>> And he was he was digging his heels in cuz he was going to go from living in this nice house to living in a flat somewhere.

[00:35:06]>> A very nice house, by the way. Oliver's house. You're all welcome to go around there for his for his house warming party.

[00:35:12]>> The best thing that we did was we went and viewed one of the neighbors houses and it was with the same agent.

[00:35:18]>> I think that got back to him and scared him and he ended up moving back in with his dad.

[00:35:22]>> Right. Okay.

[00:35:22]>> Cuz he was trying to find somewhere and then he it wasn't right.

[00:35:25]>> But that that that guy did string you along a bit. He didn't want to go, did he? He didn't want to go. No, we we found that out when we moved in and met the neighbors. They were like, "Yeah, he didn't. He didn't want to go."

[00:35:34]>> The example of what you're saying there, you know, I've gone through sales with commercial property and people suddenly, oh no, I don't want to sell it. They suddenly suddenly have this sort of like, "Hang on, hang on, hang on, hang on. Perhaps I'd need to keep it." You know, and and you do get that. And that's why if you're doing these deals, time kills all deals. It's absolutely true and I' I've I've been a victim of that. You need to get it done swiftly and execute it as fast as you can. You know, keep them in the zone that they do want to sell, you know, and be careful what smartass ass ideas you come up with. You might give them an idea they never thought of, you know. Oh, we're going to do this. So, I I keep my cards close to my chest in a in in a purchase.

[00:36:21]So, I I know what I'm going to do with it. You don't start educating them to what they might be able to do with it.

[00:36:25]What's the the latest point in a in a sale where they've decided we're not going to sell >> here? I think I was I was a good eight to nine months in and it was Christmas time and and and all these deals and this was quite complicated. There's a big estate here and other houses that we own and the farm and the vineyards at the back. There's quite a lot of of of bits to this. Well, you have to ask a lot of questions. There were there was some some internal leases that had to be sorted out, some sewage problems that had to be sorted out. And [snorts] you always get Ollie these lists of questions and they might start 70 questions and you just go through the process and you chop them all down. Chop them all down and you get down to say there's 15. Well, I know when I look at those last 15, there's seven of them that are never going to be answered.

[00:37:12]They're just impossible. Somebody in a credit committee has put them on there to be answered. And someone's got to take a view somewhere about that. And what happened with Annie here, she had probably 10 of these questions and she knew she couldn't answer. And she was just getting too much for her. She was, you know, just about coming up to 90.

[00:37:30]And she said, "No, no, no. I'll tell you what I do. This is all too complicated for me. Too many emails, too much going on. I am just going to stay here and die here." And she told me that Christmas Eve. Oh [laughter] my god.

[00:37:43]>> [sighs and gasps] >> So, I go, "Well, you know, I don't think you need to do that. You know, I think I think we're okay." No, no, no, no.

[00:37:49]They're asking me too many questions.

[00:37:50]It's all too complicated. I can't be doing with it. Thanks very much. Have a nice Christmas. Bye. Put the phone down.

[00:37:55][gasps] Oh my god. What are we doing? Um, and I just spoke to the agent, Paul from Verus. He was lovely guy, a good friend of mine. I said I said to him, "Paul, I know it's Christmas Eve. Thanks for picking up. Um, but I explain the situation. So, you've got some work to do between now and New Year's Eve. And uh he he did he came around and he spoke to her and he got it all back on track um for when we went into the new year.

[00:38:20]>> Thank God.

[00:38:22]>> A nice Christmas treat for everyone.

[00:38:23]>> Yeah. Yeah. But it is that that's the trials and tri, you know, this is not for the faint-hearted. This buying businesses, buying land, buy, you know, buying companies. It's not, you know, you you you you've got to be willing if the if the upsides are are there that they clearly are, and I've been very successful doing it, but it's not for the faint-hearted. You know, you you you you got to get your big girl pants on and start educating yourself and learning and try and learn pre the deals as opposed to learning in the deals. I learned most of my stuff in the deals. Well, that's a bit painful and costly sometimes. So listen to podcasts like this. Find people that have really done it. Don't go on a course or go on a scheme or go on a um a coaching course.

[00:39:09]Don't do that. Just deal with people that have got proper scars that have done it for a long time and that's what they do. That's their specialist subject. Please do that. That's not driving you to just follow me only whatever you follow whoever what you want to do and do whatever you want to do. But you need to deal with people that have done the walk. You know, >> I got a question. This this is going to seem really random.

[00:39:30]>> Um, >> what's your favorite time of year [snorts] >> cuz I know like over Christmas I feel like you get a bit bored because everyone's off. Yeah. But what's your what's your favorite time and you're really busy in the summer?

[00:39:44]I like I like September because Goodwood is on and uh this year we're very we're very you and I are very busy because we've got ideas fest as well and I'm talking at Ideasfest and we're making some podcast at Idea Fest. September's good. The holidays are finished.

[00:40:01]Everybody's done all that. Kids are back at school. September, there is that quarter, you know, that final quarter is is to make hay right the way through leading into December the 2nd and all of a sudden it's like someone's cut the phone off again because everybody's gone into bloody Christmas mode. So I think that that sort of September, October, November time is a good time, you know, is a good time to get stuff done.

[00:40:26]>> You know, lawyers going on holiday, you know, trying to buy a property and get to August. Oh no. Well, I always take a month off. Jesus, come on. And then the whole process just dies at that point.

[00:40:37]You know, I've had lawyers who said, "Oh, did I not mention it to you?" "No, you did not mention it to me." And you should have done. Yeah, but my my assistant's going to take care. No, they're not. They're scared to make a decision or to do. So, I've now wrapped myself with with with professionals around me that now, even if they are on holiday, they pick up the phone to me. I I I won't keep you much on the phone. I just need to answer this, do this, do that. Quick, quick, quick. You know, you want to have speed and it all goes back to what we spoke about earlier on. You need speed. You know, time kills all deals. You need speed to execute.

[00:41:11]>> Okay. Um, >> so September is the answer to that question. I like September. Yeah, it's good.

[00:41:17]>> I like September. Yeah.

[00:41:18]>> I think autumn's just nice in general, isn't it?

[00:41:20]>> Yeah. Yeah.

[00:41:21]>> Um, all right. Should we do one last question on this?

[00:41:24]>> Okay. Come on. Let's see. We go. Here we go.

[00:41:27]>> Hit that jingle.

[00:41:28]>> It's time. Have you been approached by anybody else to make more jingles for them?

[00:41:35]>> No.

[00:41:36]>> No. No. That's No, that was what I [laughter] was going to say. No, that's fine. That's great. That's a great answer.

[00:41:42]>> Is this Is this bullying in the workplace we're doing there?

[00:41:44]>> No, cuz you really like the jingles.

[00:41:46]>> I do really like the jingles. Right.

[00:41:48]This is Mo. This is number nine.

[00:41:50]Question nine on We've done a lot. One, two, three, four, five, six, eight questions. That's the most has ever come out of Tom Bowler. That's true.

[00:41:58]>> Question nine.

[00:42:01]for buying businesses.

[00:42:03]>> Okay, this one is for buying businesses.

[00:42:05]What's your approach to financing a business acquisition?

[00:42:09]>> Touched on this a bit already.

[00:42:10]>> Yeah, I mean you you you need to probably do some some back work. You you need to probably go and speak to the bank and tell them the one you're with that this is what you're thinking of doing. What do you need me to look like for it? What will you accept? What sectors do you like? I mean, if you went to the bank and say, "What sectors are growing at the moment?

[00:42:31]I'll buy a business in that sector that you like." Instead of taking a a a business to them that they have no interest in at all, like a restaurant, no one's going to back you. They're just not. Restaurants fail all the time. But if you go in there and it's um child care, they're going to go, "Yeah, we love child care. We think it's regulated business and it's a great business." And you say, "Well, look, I've got just the business here. Would you finance that?

[00:42:55]and what would you do and how much percentage and what is got and have the the whole question thing with the bank with your bank I would go to another two or three banks and ask them the same I'm looking to expand by buying businesses as opposed to growing businesses in house I want to do this as a business model what sectors would you be interested in as a bank and what do I need to do or look like for you to say yes I think that piece of groundwork would be like priceless And then also go to a a good a good um uh a good agent to to to to find you money. And that would be through um uh what they called I'm saying an agent.

[00:43:38]That's the wrong word. Ollie, what am I talking about? They're called um broker.

[00:43:42]Sorry. Find yourself a good broker. Uh we have fabulous brokers that we use.

[00:43:47]Antares. Um uh James Sinclair and I John Holiday. All of us use use that company.

[00:43:53]I think John actually owns a bit of that company. Um, but they are just brilliant. They they're all exank managers been in in in the trenches doing it properly, but they have ins on on say a different bank that likes that particular sector and they will sit down with me and say, "Look, if you're going to buy this, why don't we do it in this format? Put it up in this way, but I wouldn't do anything. I think you need to do a bigger acquisition than a smaller acquisition." Sometimes the banks feel better with something that has a company that has a bigger organization because there's more trust in that, especially if it's an older company that's been around for 20, 30 years. They have more trust in that and it has a nice big management team that's going to be there as opposed to like four people in a porter cabin that's doing quite well. You know, they'd prefer to see see more stability. Yeah.

[00:44:46]Does that make sense that they'd invest?

[00:44:48]But I think going to the banks definitely.

[00:44:50]>> Okay. Um yeah well I think I think that's us for today.

[00:44:54]>> Well listen I hope that has helped you um listening and watching. You know to scale your empire by buying companies is so much better than building them. You know you we all build companies. That's how we start. But to actually scale up the way to do that would be to to buy by buy by by acquisition. You'll scale so much faster. You'll find great people that work for these companies you're going to buy as well. And you might even be able to use some of their skill set in other companies that you already own.

[00:45:26]So, I wish everybody all the best of luck. Message me, let me know what's going on in your world. Tell tell us what you think about this little format cuz I'm off to sunny Australia. And um I wish you all the best leading into the future. And thanks for listening. And if I'm lucky, I'll see you on the next one.

[00:45:43]If you've enjoyed this episode, like, subscribe, leave a comment. There's someone you know that could gain something from what we do here. Pass the pod. And if I'm lucky, I'll see you on the next