The Lucky Titan

The Buy-Up Revolution With Carl Allen

January 25, 2021 Josh Tapp
The Lucky Titan
The Buy-Up Revolution With Carl Allen
Chapters
The Lucky Titan
The Buy-Up Revolution With Carl Allen
Jan 25, 2021
Josh Tapp

Carl Allen is a world-class entrepreneur, investor and corporate dealmaker

who has worked on more than 330 transactions worth close to $48 billion.
In his nearly 30-year career, Carl has analyzed thousands of businesses big
and small in 17 different countries across nearly every business sector, including
technology, pharmaceuticals, transport and logistics, engineering, manufacturing,
aerospace, consumer goods and services, business services, retail, professional services, finance, packaging and corporate clothing.

Carl first earned his reputation during his 16 years on Wall Street working for Bank of America, Hewlett-Packard, Forrester and Gartner. There he advised some of the world’s largest corporations on investments, mergers, acquisitions, disposals and restructuring… and helped hundreds of business owners raise both equity and debt financing. Until he almost missed the birth of his second son… That’s when Carl quit the rat race and began brokering (and eventually buying) businesses for himself. Today he is considered one of the world’s premier experts on buying and financing small business acquisitions. Carl founded Dealmaker Wealth Society (formerly Ninja Acquisitions) because he believes starting a business from scratch is certifiably, BATSH*T CRAZY! He wanted to use his highly specialized skill set to help others realize their dream of self-employment didn’t have to be a long, hard, up-all-night slog with a 96% failure rate in 10-years*.

Today he’s helping thousands entrepreneurs all over the world buy existing, profitable small businesses that will immediately put money in their pockets. And best of all — he teaches them how to do this without using a dime of their own capital!

Links to promote: - trainwithcarl.com/theluckytitan
dealmakerwealthsociety.com

Show Notes Transcript

Carl Allen is a world-class entrepreneur, investor and corporate dealmaker

who has worked on more than 330 transactions worth close to $48 billion.
In his nearly 30-year career, Carl has analyzed thousands of businesses big
and small in 17 different countries across nearly every business sector, including
technology, pharmaceuticals, transport and logistics, engineering, manufacturing,
aerospace, consumer goods and services, business services, retail, professional services, finance, packaging and corporate clothing.

Carl first earned his reputation during his 16 years on Wall Street working for Bank of America, Hewlett-Packard, Forrester and Gartner. There he advised some of the world’s largest corporations on investments, mergers, acquisitions, disposals and restructuring… and helped hundreds of business owners raise both equity and debt financing. Until he almost missed the birth of his second son… That’s when Carl quit the rat race and began brokering (and eventually buying) businesses for himself. Today he is considered one of the world’s premier experts on buying and financing small business acquisitions. Carl founded Dealmaker Wealth Society (formerly Ninja Acquisitions) because he believes starting a business from scratch is certifiably, BATSH*T CRAZY! He wanted to use his highly specialized skill set to help others realize their dream of self-employment didn’t have to be a long, hard, up-all-night slog with a 96% failure rate in 10-years*.

Today he’s helping thousands entrepreneurs all over the world buy existing, profitable small businesses that will immediately put money in their pockets. And best of all — he teaches them how to do this without using a dime of their own capital!

Links to promote: - trainwithcarl.com/theluckytitan
dealmakerwealthsociety.com

Josh: what is up everybody, Josh Tapp here again and welcome back to the lucky titan podcast and today we are here with Carl Allen he is the founder of the Dealmaker Wealth Society this guy honestly like the reason I brought him is because I’ve been listening to his podcast over and over again on eofire this guy is really know what he’s taking about when it comes to buying, acquiring or scaling businesses and you know he can prove that I by having done over 330 transaction at over 48 billion with a B dollars I mean he obviously knows how business works and how to make a scale so Carl I am excited to have you here you say what’s up to everybody then we’ll hop in (00:41)

Carl: what’s up, thanks for having me on the show really excited for this 

Josh: yea it’s going to be fantastic so Carl the very first question I wanna ask you is really about your claim, so you are talking about buying a 1-to-5-million-dollar business with no money down not even spend a day of your own money before that claim (1:01)  

Carl: yea so there are truly into dollars of capital available to do the deals so I never talking about buying back this businesses I am taking about businesses but have a great cash flow they might even have assets on balance sheet and if you are buying a business in a set that you know you understand, you can have value to and you find what I call a distress  seller of a good business so a business owner that’s highly motivate to one to sell that they might be sick they might be burn down, frustrated, want to retire, 10,000 boomer retiring everyday in the US calling wall street journal, finding one of those guys or girls and strike ting the deal but so when for them and what surely interesting about buying companies small businesses 1-5 million dollars in revenues about 80% of those sellers don’t want to sell to a competitors so if you sell a company you can either sell to individual or you can sell to a large competitor who sometimes ripped that business apart and they will let go of the employees and untarnished the legacy and of the business owner goals if you really smart about how you do it you can acquire those businesses and not have up put any personal money in to the deal if you put the payment up in to a closing payment plus what we call sell a financing which is paying for the business over time but closing payment doesn’t have to be your own money the process on wall street is to be one we never use our money to buy companies, we use other people’s money, investors, the SPA, you know other institution that wanna put their money on working deals and that’s how we do it so when we say no money down there are situations where you can buy a business 100% differ you know I’ve done it you know I bought a marketing agency in California 2018 the seller wants 300,000 closing payments it's like multi 7 figure business I am said you know what do you really want and she said well the perfect deal for me us you don't change the name you don't change the logo, the logo and you don't fire the employees because they are my second family and I said to her well if I do all of those three thing, if I write those into legal agreement, can I buy your business 100% differed she said well all line is gonna need is about 17,000$ to pay my closing cost payment attorney and to pay my broker but you can use the cash is in the business to do that so that was the deal I did, that doesn't happen all the time most of the time you've got to pay something at closing whether it is a 50-50 split or if you are doing an SPA deal you can put 90% money down but your deposit, your equity deposit doesn’t have to be your money, if you own a business already you can use your own line of credit from your own business, you can work in investor put that cash down this is a lots of lots of capital out there top do deals it doesn’t have to come from your own pocket (4:18)

Josh: see and the cool thing about your methodology this is one of the things that really strikes me about your theory is that you don’t come out with the scarcity mentality there’s always a few businesses out there kinda like that you know high in the sky really hard to find deal you are saying there are thousands of them at any given time (4:39)

Carl: yea so you look at the US, so if you look at US, UK, Canada and Australia look at the 4 most prominent in western economies right now today there are 2.66 million small businesses for sale across those 4 country more than 2 million of them alone are there in the United States and only one in 11 of those businesses will sell in the next 12 months do you what is the number 1 exit strategy is for a US business owner of a Small business it’s closing the doors and turning off the lights and there’s many reason for that we can get into them if you wish but there are millions of businesses out there that you can buy that no one else gonna require so if there’s a great strategic fit to you if you wanna buy your first business so let’s say you’re sales guy IBM and you wanna go out on your own you want to start business, you wanna buy one already built and go buy a small technology company just hundreds of thousands of them for sale or if you own an existing company let’s say you want a million dollars in revenue it took you 5 years to get back then you can double your revenues in a day by going acquiring a complementary business and plug and get into the business that you already have and what’s great about that is let’s say you are a software company and you go out and acquire a million dollar IT services company you can sell the software to the service customers you can sell the service the software to customers and when you combine the two businesses together these load of due overhead that you are gonna be able to extract how so 1+1= 3 on the revenue side so 1+1 = 5 on the cash flow side and this is what the big guys do they just want the massive publicly traded businesses do they don’t grow organically they buy that scale you look at cisco you look at sales force they just paid 27 billion dollars for slack just to buy more customers and buying more products and services and they are not using their own money they are using the publicly traded stocks and which is trading you know a 50 time multiple you know to acquire that business so again all what doing, what I teaching here is what I learn in wall street you know and have the leverage the capital to market how to leverage other people’s money to acquire businesses for your own aims (7:18)

Josh: see and I love even through even kind of a chariot and I am gonna take it so I mean so you talk about you can use it as a way to just double your revenues over night it’s a great way to scale through that complimentary strategy I mean buying a complimentary business I mean for example like a marketing agency you know would be, if you are on Facebook Ads buying somebody who does SEO is thet correct? (7:41)

Carl: exactly that’s actually if you want a business there are actually 3 types of acquisition that you can make so let’s say you are on a landscaping company you can just go out and buy a landscaping company so you are doubling your market share and that’s gonna give you economy of scale you double the side gonna be timeless of fertilizer gonna get a better deal of equipment  list of those different things and if you are a landscaping company could you go and buy the fertilization supply that you use so you can buy a supplier you can vertically integrate and what you can do is you you just looking in more the margin in your company rather than spending all your over head with other companies go buy those businesses and put them into your group and then the third method is just the most common is you can buy a complimentary business so it’s the software company buying the services company it’s the landscaping guy buy the landscaping guy is the electrical contractor buying the carpentry firm so what you then doing you are creating leverage because you got two sets of customers to 2 sets of products or service and you can mix them all together and at the same time extracting those due flicks of cost that you have in those scandal of business I got students in some of my programs I got one guy who’s talk to me like Darren in the UK he sold this IT company and he decided he was gonna go and buy his daughter a hair dressing salon so he bought the program he bought my ideal maxi program and he went out there and he started doing the deal origination tactics that I teach, one of them is call the direct approach you gotta pick less of potential business owners, potential and you strike to them you know in a really cool way that I teach and you send 15,000 of these out got 350 people buying banging in this door saying to buy my business and then what you do with all those sellers is buying the ones I wanna use the word desperate you want - you are buying the ones the highly motivated sellers, people that want to retire, they’ve have enough you know they made their money they have the time, they want the business together for good home so he didn’t just buy 1 salon, he bought a team and he is on track own a hundred by the end of this year I have another student that work in an optometrist so if guys do the eye test and prescribing glasses  he came into my program pull the practice that he was working for as an optician and bought 72 more he now has a group doing 8 figures in revenue making multi 7 figures in profit all these people that wanna do 1 deal you know the idea sales guy he goes out and buy a web design firm you know now he is making 500,000$ a year he’s happy with that you know that for him is a great result and the great thing about being ideal maker Josh is it scalable you do just 1 deal get out of the corporate world, become a business owner  or you can use it to scale an existing business overtime or people can build empires, people can make millions and millions of dollars from doing this just depends on how motivated you are to do it you know each of their own (11:18)

Josh: yea and I love that because it’s really kind of pick your poison right it’s picking what you want I’m not says it’s the best analogy but choosing, you can pick and choose how big you wanna go, how fast you wanna grow so the question I have for you I am sure everybody is listening to this to say okay but where, where do you don’t those businesses because those first thing that everybody does they Google it, go to best buy sell and LLC listings there (11:45) 

Carl: yea so business brokers you know I never ever work in this brokers and these brokers are not the place to go and find good deals the reason being is brokers it is a very efficient market and it’s not strictly regulated, no regulation in the UK, there’s a bare regulation in the US so is in California, Texas, New York you have to get a license to be a broker most of the states you go and business brokers generally they are not financially trained they’re more on sales marketing people they take most of their money less deals, tend to spend a lot of time on the closing they are also phenomenal brokers out there don’t get me wrong but most of the ones that I came across is not that great, so don’t recommend using brokers but that most people start you go to bizquest, bizbuysell.com and price refers you know there’s tons of deals on there buy the smart people the people that I coach we go off market so just better to do deals and no one else know about so this primary method that I teach to be deals the first one we just talak about direct approach to you can log in you your public library account access info USA pick a sector stay to whatever go to big list of business filter by revenue and earnings you know who the business owner are,  how old they are where they live then you right to o them just write to them with a highly confidential way tell them who you are, what you are looking to do hey I am josh I always want to own a marketing agency you know I really like your business you give the lead, I like the fact that you win this award and you do this type of service and oh by the way I found you on Facebook you know we both red sox fans, what is your favorite game send that letter in when you call them up 3 days later they gonna talk to you for sure, you build a relationship with them with a piece of paper what the people you know just use email and you know the old fashion letter it works like gun busters so that’s one method, the other method is leveraging social media and this is really interesting coz 28 years ago when I started in this industry we didn’t have the internet we didn’t have Google and Facebook and Twitter and LinkedIn and all these great free, LinkedIn is free it’s amazing so I made so much money buying businesses of LinkedIn, you know you go to your LinkedIn post you know you said hey I’m looking to acquire business in the industry within text miles or forever between 1 and 5 million you know please send me an email if you come across any you know take you 30 seconds to do that, you wake up the next day got 30 deals in your inbox it’s like great okay this is also and then my personal favorite josh is building a relationship network so it’s interesting with brokers only 20% of business owners wanna sell or go to a business broker most of them they don’t trust brokers they don’t want to pay listing fees and you know it’s pretty easy to find the broker listing and know who the businesses not that hard and business owners typically they don’t want the customers to know, their employees to know because this people they get anxious about this job gonna be at sake what happen to the business all these different things so if you are looking to sell a business these 4 people that you tell you tell you wealth manager because hey I am about to sell my business and have some money to invest you tell your CPA you know get ready Mr. CPA gonna do some due diligence and I need to know my numbers polish and ready, you tell your attorney hey this is gonna be a sale of purchase agreement we have to agree on and you tell your bank or your financial support your business you tell all those guys or girls so if you wanna find amazing deals you got a network with those people you got to build those communities for yourself tell them who you are, tell them what you are looking to do and they’ll incentives to help you if you are a CPA or a lawyer that’s gonna climbs the word to sell you are gonna connect the dot because then is that Professional you are gonna get fees from the seller and helping sell the business if you don’t have a client they’re gonna work for you with your adviser and don’t get fees from you out of the deal they help you close it, wealth managers the most network employee in the world you know they’re always out there looking to make connection you thought of wealth you find a wealth manager on LinkedIn and have a 10 minute call with him or a quick coffee somewhere if social distancing you can right now, they are gonna scale the earth with their client trying to find you a deal that’s insane so those all the methods that’s you know I can effect on these over and number as I, I was in corporate M&A until 2008 you know wall street, HP, product equity and then I went on my own, I almost missed the birth of my son  suddenly in 2008 so I was chasing a deal somewhere so when I got back to make the birth with a 5 minutes a spare and my wife said oh yea you can’t do this anymore you gotta stay close to home now, you got a family so I decided to do my own deals and I started teaching this methodology this is how I figure out how to send them brokers and get amazing deal, am I testing and perfected and tweaked this over 30 years and this what I coach my 5 and half thousand sheet to do whether they are existing business owners scaling to acquisition or that 6 figure people working for someone else and want their own business but they want to start a business (17:37)

josh: and you know what's really cool about your methodology here is none of these really requires a sort of crazy business sense I mean you are talking about whether they are good at numbers be a good human and work with them and no one the findings great people who actually wanted to hand their companies to you so a question that comes to mind for that is what are some of the negotiation tactics with this to get it to where they willing to give you the money or give you the business with no money down because lot of mark give to you for free right they want some sort of financial (18:13)

Carl: you’d be surprise actually I’ve worked to a business, I bought a web design company in the  UK gosh, 3years ago you know I got a numbers in and I think I miss in the business is worth couple of hundreds of thousands of pounds at most and I actually sets the guy in a meeting what do you want he said well if you just take over the lease of the office and you take over this supplier that I have and the 20,000 pounds bank loan, I just give you the keys and I am thinking okay, there are instances where it done motivation is that high  to get out maybe I didn't ask why but I think you are sick, so if there are motivations really high and some cases they will just hand you they keys does it happen most of the time though, in terms of negotiation the first thing that I always recommended, a piece of advice is when you talk about not having a lot of business savvy you don’t need to have savvy of running a company but you do need to have some understanding of actually looking to acquire business in so that really helps the raffle building not really helps the relationship building if you gonna get a seller to hand you the key of their business they want some reassurance that you are gonna be able to look at after it if you are having to raise financial to make closing payment while you are not doing it personally or you are using the business as resources to do it that financial whether it is an SPA or whether it is an asset base land or whether it is an equity investment that you partner with you know they wanna see you at least know the industry so if you are the ideal sales guy if you are buying a web design, a firm or SEO company or IT services company or software company you are gonna be very very well, you go and try vineyard and laundromat it’s gonna be harder because the seller finances what do you know about the wine industry, what do you know about laundromat is a bad example you know my 12 year old could run a laundromat business any business that’s technically quite involve you really you know I don’t need to know that industry or sale to be prepared to partner with somebody you who can do it you know I’m inquire and invest so I am tender from business, you know I have GMs running those businesses for me so my goals is to buy businesses, sell businesses and do the strategic work in the businesses that I have so building the strong relationships is the first kind of point of any negotiation and then really what you are looking to do is truly understand what is the seller actually want so in one of the five times to seller will say hey I just want the money I want the maximum amount of money at closing, I don’t care who buy business I don't care what they do to it, you know I don’t do those deals, I want a seller that cares business, cares about their employees, cares about their legacy wants to know and see their business it going to trive in the new ownership structure so those are the people that I am looking to identify, once I found those people a lot of it becomes down to the tens of the deal, the structure of the deal you know a lot of broker deal maker they get really hung up on evaluation  they get really hung up on you know in finding a business you know the average of multiple of profit that people of paying these days is around 2 and a half time to find the business do 400 grand in cash flow and I am gonna be paying a million dollars for it and that’s a wrong question the right question is how can I structure deal you know I happen to pay five times multiple to buy a business if I can pay for over 10 years and so the terms of the deal for me is a lot more important so it’s always on the understanding what the seller really wants so a lot of business owners they want to sell they necessarily want that lump sum they are happy just to get more money but getting paid over time getting that regular monthly cash flow that they used to in the business but getting it from you as the new owner of the business as a way of paying for it and this ways that we securities that so we don’t pay them to get the business bank all that different stuff we make it safe to them but any, it’s a win, win you are giving them what they want they get to retire, get that monthly cash flow to live their life and the same way they did it now but you need to buy that business and you have to raise capital up front to do that deal you are just using the sellers own money to buy that company (22:50)

Josh: well and when you are financing that way of using their money for first of I love the methodology with it because you are finding people who are like you said, highly motivated but they care about the legacy of the business and those the type of company you know they have taking care of their customers the people are probably high providers who work for, who are their client you know that you can sell them you can cross sell them to other services very easily in your other company so you know with that methodology though and coming at people how would you recommend for a lot of people who are listening to this where should they find that first deal which type of company they should look for enough first deal (23:33)

Carl: Yea so again this is a really quick recap with a lot of things that we just talk about so I think first and foremost depends who they are if they want to buy a business for the very first time then it’s all about mining their passion, the expertise, the skills or experiences really staying on the lane especially for their first deal you know I did hundreds and hundreds of deal so I can buy business any country, any sector but when I first started I couldn’t stand I stay within my and if they own a business right now they want to scale think about, what do their customers buy and consume that they don’t provide so get the landscape of buying a hand scraper, it is a plumber  buying a carpentry business it’s software company buying the service company it’s the supplements company and you know buying gym or buying an apparel business something like that so that’s the first question that you need to answer ask is what would make a really good business for me to acquire because you have to do that first and that’s why call a deal specification because if you don’t go into this with a clear vision of what you actually wanna buy and why but it’s a minefield because this literally millions and millions of deals to sit though and so you know exactly what you are looking for you just waste so much time and lacking through deal coz once you, you might decide okay I am electrical contractor I want to buy a carpet try business because all my customer wants carpentry okay great so I go this origination I might find a hundred deal and once you done that you look at the deals that you know gonna add the value so is it all the same location so if you are in Boston would it make sense to buy a company in LA you know you want probably buy something close to home if you are a software company buying a service company just a really matter you can buy a business in planet mars because it is virtual so those the source of question that you wanna be asking yourself and going in to this with the  focus on you know what a perfect deal really looks like and that makes all the difference then once you've done that it is all about finding next seller that emptiness - that seller that is whatever reason just how motivated to you know to hand the business over and once you get those two combined and you find the business that is generating good cash flow it is really easy to put money that is  ideals to buyer so you take those 3 boxes whether you are a first time business owner or you wanna scale through acquisition those are the three core things that you need to nail to this properly and quickly (26:16)

Josh: love that well and Carl so you have been talking about this and hitting at all this entire conversation but I you work at people get access to you this information I mean you have like a whole like a very of teaching and helping people to actually build these deals right (26:35) 

Carl: yes so we have a whole portfolio or coaching and mentoring program and courses and things that people to learn this but you know what I think is really good for this is we develop some really awesome free training where people can access and it’s by empire by blueprint so they can go through that  and really understand that the high level you know what to involve what is the 8 steps that needs to take for a blank piece of paper so closing a deal so people go to train where trainwithcarl.com/theluckytitan so trainwithcarl.com/theluckytitan they can download that training go through it and then people who want to learn more, want to learn deeper, want to partner with me on deals and it reigns different things that they can do but I think as a first step and go and hit that link because I think what is really interesting it’s a lot of people they want your business they get to 7 figures and they think it’s really hard now in scaling they probably not aware that I can scale super quick in other company so for all those people really it is more an inspiration thing there’s no point in investing and jumping into a big long mentoring program until you really figure out this is what I actually want so go thought that free training I think really cool qualify you is this something that actually wanna do.  

Josh: yea and I love that because it's like you said and this is really, I like about you Carl you are not coming and say hey I need a money right you are really doing this is way to give back and you would give it away free always but nobody with end up doing it a long run we’ve talk about that (28:19)

Carl: but I think this is a little bit of free training that's you know you can go through it’s very quick to consume you know probably  you know go through that and it think the exact, you know people are excited about this topic you know invest now and it’s a free training go to that link and then if you wanna jump deeper connect options is on there and then you know we can even work together and partner in some cases to we have me and my team as your as your ideal guys you know these, we've done a lot of deals with that which is fine coz some business owner just want to run their businesses and do what they do best and you know we partner with theirs do the deals and we share their ownership so that’s all good (29:05) 

Josh: love that well Carl thank you so much for coming on today buy I wanna ask you one final question 

Carl: Yup! 

Josh: So, you know we've covered a lot of different topics in this interview and everybody is probably wondering this at this point what is the one big take away you would hope that they will take away from this interview (29:22)

Carl: Yea so foe me it would be really think about, really think about out of the box for the next 5 to 10 years of your life so you know if you wanna be a business owner don't start a business please explore with the 96% failure rate, explore the option of acquiring  someone else hard work and using other people’s money to do it and then if you are existing high 6 or low 7 figures business owner and you wanna scale and don't do that organically it's hard, it gonna takes you forever fast track the process buy that revenue buy that cash flow buy that talent buy those products and services and customer go and acquire with other company and use other people’s money, it is all about leverage(30:12)