Another amazing episode with the dynamic insurance duo! This time they interview Bill Snow, an author, a speaker, and a seasoned professional in mergers and acquisitions
The Idudes kick off the episode with a lighthearted discussion about coming up with unique business names in today’s overcrowded market. Moving on to the crucial takeaway from the conversation that is, the importance of considering your personality when venturing into the world of insurance acquisitions. Perseverance and resilience are emphasized as essential traits for success in this field, where rejection can be a common experience.
Another important point touched upon is the evaluation of the quality of the book of business. With justified light, that is shed upon client retention and renewal rates.
📻 Tune in for a fun-filled view of the experts on the Insurance landscape as well as Mergers and Acquisitions.
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Bio of Bill Snow
Bill Snow is an experienced M&A professional with over 30 years of professional experience, including almost two decades as an investment banker. His work includes business sales and capital raises for middle-market companies as well as buy-side services for acquirers seeking middle-market companies. Bill’s clients have included water works manufacturers and value-added distributors as well as firms focusing on packaging, medical supplies and equipment, automotive parts, drink dispensing equipment, security, apparel, refined fuels, and more.
If you have an idea, write it down. Especially if you want to write, you gotta write every day, you got to work at those skills. And you have to show and demonstrate that you have skills and ability. You can't ask, okay? Because if I would have asked to write that book never would have happened, but I had shown skill and ability. So basically, I had something that I could offer something that here's what I have done, and they found it, and they contacted me. So that's how it all came together. Here is that marketingJason Feltman:
Insurance dudes are on a mission to escape being handcuffed by our agency.Jason Feltman:
Now, by uncovering the secrets to creating a predictable, consistent and profitable agency Sales Machine.Craig Pretzinger:
I am Craig Pretzinger.Jason Feltman:
I am Jason Feldman. We are agents. We are insurances. Mike, so what have you seen in trends as far as like industries that are going for more now compared to ones that are just falling, fallen off on?Bill Snow:
Well, m&a is this is another I think a bill snow ism. m&a is micro economic, everybody likes to focus on the macro, what's going on in the economy, the macro could certainly have an impact on a micro aspect of economics micro being a single company, right. So certainly something that goes on in the economy can have a can hurt the micro but but a bad economy and a strong growing company with good profits and management team that's gonna stick around. So it's a good good, strong company. But the economy is bad. That good company in a bad economy will trade in probably at a premium because it's just tough to find good assets. And the Conversely, the other side of that is a weak company, a bad company, declining sales, it's losing money management is fleeing all kinds of issues and problems. But the economy is going great gangbusters. I don't care how good the economy is, if the company is struggling and in a downward spiral, you're going to struggle to find bids or certainly bids that will be palatable to the seller. So focus on the company. So if you've got something, the focus should be on the strength of the underlying asset, not so much about the the greater economy again, greater economy can certainly have an impact on the micro,Jason Feltman:
what do you advise companies that are planning for an exit? Like what what should they do to really start bolstering up the all the things that you just mentioned?Bill Snow:
Yeah, yeah, for Congress is probably I'm gonna guess doesn't apply in the insurance business and the agencies. But there's a couple things that we, we focus on. Ideally, you want to have an outside accounting firm, do your statements, so you have to hire these people who don't want to talk to people, and they're very happy because they'll just look at numbers all day long, and they'll put together you want to have either a review or an audit. Okay? Ideally, two years, especially if you have any anything called inventory, because you want the accountants there observing the amount of inventory at the end of the year, and also the beginning of the year. This way, they can say, this is an unqualified opinion. We have no qualifications to this. It's unqualified. So you want two years of audits or reviews. We're really pushing business owners to do a quote, it's called the quality of earnings report. So an audit or view we'll set up this horrible acronym. Climate what's called EBIT? EBIT, dabba doo. So this this EBIT, dodges off right? Yeah, EBIT dabba doo. Yeah, no, no, he called it that it was joking, of course, because he thought it was silly. So even though audits and reviews set up EBIT da, right, which is not even a GAAP term, and it's not even cashflow. It's just meant meant to be a way to measure companies on an apples for apples basis, right? If you take away taxes and the need to make capital investment, and and so forth and so forth, right? You don't have to borrow money and pay interest on it. What would the cashflow the business be like? So that's it makes sense. What's going on is a focus on adjusted EBIT, da so you've got kind of an Uber non GAAP accounting measurement, adjusted EBIT, da so what are adjustments, adjusting for owner related expenses maybe the owner is taking out taking a big salary you can hire a new president for less than what the the current owner is making so you can make an adjustment there so basically expenses that go away once the deal is done one time only truly one time only expenses. And that's valid, but the problem is that this has taken on a life of its own and so you'll see these adjustments where you see the EBIT da and then you see these massive adjustments and every single month 3040 $50,000 and adjustments and it might be different stuff, but they're adding back everything in any buyers gonna say wait a minute, okay. Yeah, that's one time only but seems like every month you have a one time only expense for 40 $50,000 I'm just gonna have to keep that in because I'm gonna I don't know What is something else but I'm going to have 40 or 50 grand. So this adjusted EBIT? Da, you have to be careful, it's a bit of a Frankenstein's monster that's being used today.Jason Feltman:
That makes sense. What about owner operated versus non owner operated?Bill Snow:
Sure, can you give me maybe a little more context in the in the questionJason Feltman:
valuation like, yeah, valuation? I don't know, like, how much people like how, how many buyers are in the market for companies that are, you know, run by the owner?Bill Snow:
Yeah, a lot. I mean, well, it depends on what the company is, and then the size of the company, but you do raise a very good point, you know, the owner operated versus maybe a company that's owned by a private equity firm. And so this is an issue that we'll see with with businesses. So somebody owns a business and says, you know, manufacturing there, they're making some, you know, they're bending metal or doing something, and it's a nice business and good revenue and real good profits, and the owners made a real nice life for him or herself. The problem with those potential problems is an owner who is viewed as integral to the ongoing success. So you've got that person who has all the sales relationships, who oversees all the administration, who hires and fires, everybody who deals with the bank, who handles all the production and designer over okays this and tells all the engineers and designers what to do. So you take that person out of the mix, what do you have left? And and that's the, it's a bitter pill, sometimes for entrepreneurs, because they're so used to being in the middle, and they're great, they're great at all these things, and they built a great business. But if they are viewed as integral to the ongoing success of the business, that is going to put a downward pressure on the price that somebody else might pay for that business. So what I tell business owners make yourself expendable. If you're not needed to run the business day to day, the business is going to be worth a lot more. Hmm.Jason Feltman:
Yeah, makes sense. What would you say for a lot of insurance agents like to get into other industries? So for any entrepreneur that's looking to get into a new industry, and perhaps just buy a business? What are some things to look for? Especially in this, like, day and age?Bill Snow:
Sure, well, well, the question is, why would they want to buy a business? You know, what sort of business do they want? Are they just looking to make a lot of money and not do any work? You know, get in line, everybody's trying to do that? They think you're the smartest guy in the world. Hey, you know what, no one's ever thought of this. Yeah, I could buy a company. And, and not pay a lot for but make a lot of money and not have to do any work. That's everybody has that same idea. Okay, that's not gonna happen, you're gonna have to work work really hard. When you buy. So you want to figure out what am I looking to do? What do I like to do? Why do I want to make an acquisition? Is it just to, to to diversify my holdings, or Yeah, and there's no right or wrong, but you have to look inward and figure out why you want to buy this company. And then the next thing you have to realize is when you buy a company trying to buy a company, acquisition work, in my view, is divided into three main buckets, search, negotiate, and finance, let's take those in reverse order. Finance is usually the easiest, you can get money, you have money, you can get some family member, you can tell them some sort of sob story, the write a check for a couple 100 grand, okay, you can get money if you need it, right, even in the higher interest rates. So these are a few years ago, but money especially if you have a going concern, especially if you have a business, you probably have capital, or access to a bank will loan you some money. So money is usually not the issue. Negotiating. That's the fun part of putting the deals together. That's what I like the best, the most difficult of this acquisition is the search. And I call that this is a very technical term, you guys might want to write this down. I call it brain damage work. It is terrible, terrible work, calling up business owners, hey, I've got money, and I want to buy your company, you know, click they, they hear this all day long. And so trying to find a good company, because if you do talk to somebody wants to sell a business, they probably have some sort of problem. Yeah, love to sell it to you. And it's probably the FBI is knocking on his door for some sort of ghost payroll, or, you know, he put his mom in front of a, you know, call it a woman owned business. And you know, there's I've seen situations like that, you know, so they gave me all this thing. So why are they talking to you? So you want to understand that. So trying to find a good company for sale, and an owner who's reasonable because if you don't have to sell if you love what you're doing and you make good money, and someone calls you up, I want to buy your company. What am I going to do with myself? I got plenty of money, I make good money from this thing. You couldn't offer that person enough money that puts some added pressure on simply trying to find good companies to buy.Jason Feltman:
Yeah, makes sense. What about like, there's so many baby boomers that, you know, businesses that are gonna be closed in here, or just moving on or whatever?Bill Snow:
They've been saying that for 20 years. Yeah.Jason Feltman:
But you see, like less and less I guess less and less buyers. I mean, people aren't having as many kids. So it just seems like there's gonna be a lot more inventory than buyers. What are some ways to get in front of them that that you see? Yeah. Well,Bill Snow:
that's, you know, that's something that people have been forecasting. Like I said, for a couple of decades, all these baby boomers are going to be retiring. And you know, all these companies hasn't happened, right? They're holding on to their companies, or they maybe work out a discrete deal with one of their managers, and they don't go to market. They don't call somebody like me. It's not marketed. So those things are they pass it along to the kids, they, you know, Jr's completed rehab, and he's he's not sniffing coke anymore. And he's, we're going to trust them. We're going to trust Baby Huey, who's been living in the basement and he's 40 years old. That that he's he's turned a corner and he can run the business there. Yeah, we see. That's what he says. It was a last 20 years. But he's, you know, he's It was a long weekend, but he's back. So you know that that kind of stuff is going on to? You know, how do you if you want to buy a company? That's a great question. And you just can't say I've got money and I want to buy you, you've got to have something else and come up with a thesis. That's, that's one of the things that we've used, what's the thesis, something other than saying, I got money, and I want to buy you. So we've got a client and they see something in the industry? And let me get give me a couple ideas a, why don't we get together, I'll buy you lunch, or we can talk on the phone or take a golfing and talk about this, I'd like to talk to you because you, business owner are an expert, let me know if my client or my notion of what's going on specifically in your business holds water. So something going on in your business, the collapse of the multiples, you know, you can call up a an owner of a insurance firm a brokerage firm, and say, hey, you know, are you seeing the same thing too? I've got a couple ideas on this, you'd love to get together? Can I buy a sandwich sometime? Or, you know, do you play golf or we go do something else. So if you can talk about something else and have something useful? It's it's a, it's a philosophy that I have, which is offer something stop asking the whole world is asking, right, you got to offer something. And so if you can couch your approach in and offer sincere offer, you have a greater chance that somebody will engage you in a discussion. And then if you're artful enough and creative enough and quick enough, maybe you can steer that conversation into what that person wants to do. And maybe you're having a real discussion about acquiring the company. But it's, it's it's far, far more difficult than it sounds like that. It's easier said than done.Jason Feltman:
I love it. Going back to the marketing, right?Bill Snow:
Yeah, yeah, yeah, exactly. Bingo. You know, I was golfing a few years ago here in suburban Chicago and executive at one of the banks around here, I know, took a couple of people out to his country club, nice country club out in the suburbs. And he says, Bill, here's the guy you're going to be playing with it was a former PE guy who was on his own, he was looking to buy a company and I knew where this conversation was going. So I'm driving the car, get to know him a little bit, wait a couple holes, and they say so you want to buy a company? How's it going? And he just kind of shrunk like this. And he said, it's a lot more difficult than I thought. And and because he was used to you know, people like me, calling him and saying here's, here's a here's a one pager on this company. Are you interested in looking at this, so he didn't know what to do? This guy had a membership at Medina, which is a high end fancy Country Club, everybody wants to play they sometimes the PGA events are so it's a fancy thing. And I said, How many business owners have you invited and taken out golfing at your fancy Country Club and he laughed at me? Why would I want to do something like that? I said, you got a golden ticket, man. You call up enough business owners. You have a thesis, something to talk about. If you segue, hey, do you golf? Okay, not everyone's going to take you up on this but if you do this enough, maybe you get a few people, you take golfing, and you get to know them in a social situation not just business over the phone. And if you're artful enough maybe you can develop that rapport that relationship what are you doing with the company and maybe that leads to you being able to acquire the company you've got to do creative things like that but he sounds like work that's that's the main reason people don't do things sounds like work right? I want to do itCraig Pretzinger:
work hanging out the golf course meeting people yeah,Bill Snow:
I've got clients on the golf course it's it's it's it's tough work guys. Someone's got to do it. Yeah. Seriously, if you want to do what I do you learn learn to play golf because there are two types of people in the world those who can golf and those who can't. The further you get in your career I'm sorry if you guys don't play golf, but you don't want to be the guy that says no, sorry, I don't play golf even if you're not good. As long as you know the etiquette and you keep pace is the most important score in golf. People always think it's you know, riding 75 or 90 or whenever you get the most important score. Most important number in golf is time. Okay? Because you want to play but you don't want to spend all day so you want to get done as quickly as possible, because it's towards your growth. You know how to play and you can play quickly and you fix your ball marks and you know all that etiquette, you are in the club man. Because you know how to golf even if you have a horrendous score, you know, at least you look like you know what you're doing. So I implore anybody wants to be in business and advance, learn to play golf.Craig Pretzinger:
All you need to do is bring 90 balls. And yeah, just every time that you hit one just go up 200 yards and drop one. Yeah. And you'll be good.Bill Snow:
You could do that. Yeah, it's kind of like full contact golf. You know, you can try that I've I listen to a guy golf with it is injured himself until absolutely hilarious, at least on two occasions, has injured himself very horribly, by hitting a golf ball one time into a tree stump and a hit his leg and down he went, I thought he broke his shin. And then another time, somehow he missed hit the ball, and it bounced up right to his mouth and to cut his lip open. He holds the world record for the most grievous injuries inflicted by his own struck golf ball. It's pretty amazing. So that there's certain there's certain goals you want to have in life, too. That's not one of them that I want. Yeah.Jason Feltman:
Okay, getting is those marketing skills in my wife to get me to allow me to golf.Bill Snow:
Oh, I got I got the solution there. Okay. This is what you tell her. And it's something that my father used to say. He passed away a few years ago, so he won't sue me for for plagiarizing him. But he would say, because he enjoyed golf, he was in business and he did well and he said, you know, a man has time for for three things in his life, career family, and one hobby if you want to be good at it. You know, these guys that want to play golf and then be a great tennis player and go skiing and go horseback riding and have a powerboat and a sailboat and ride a motorcycle and, you know, on and on and on. These are all great pastimes. There's nothing wrong with any of those pastimes. But if you want to have a level of proficiency and have a career and family, you can't have six or seven hobbies and be good at them. You can only choose once a teller. I'm going to choose golf for for career purposes. Okay, see if you can sell that. Now. Here's the downside. I told her young guy who's who's getting married. Yeah. Oh, this is the problem because I told I told the young guy used to work for me to do that. And he tried it. He came to work Monday said well how to go which day? And he said, Yeah, it's terrible. Now she wants to play golf with me so that she doesn't want to learn to play golf, becauseCraig Pretzinger:
it sounds too fun.Jason Feltman:
Right, right. He oversold he oversold this card.Bill Snow:
No, it's awful. It's yeah, no, no, I'm sure it sounds golf. You want to play golf? Every weekend. I'll join you teach me how Yeah, what a disaster. The poor kid they married again. And he's probably walking. He's he's walking around the suburbs somewhere holding her purse. I mean, that's what's happening.Craig Pretzinger:
I went my wife and I went to the golf course one time, it was probably 20 I mean, it had to be the late 90s. Probably it was a long ass time ago. And it was the one time they get turned into a terrible argument. You know? I mean, I had very low emotional intelligence and, and she had a very bad swing. So oh,Bill Snow:
God, no, no, you gotta you gotta put your your foot down. No. Some some women, you know, if they're good at golf, that's great. That's fine. Yeah, most, most would rather a woman get in trouble here. These are jokes everybody same all the time. But they want to go to stores and buy you know, picture frames and candles and pillows. And and I have a special lady friend. And she has to have those three cursors. So everything except the picture frames, believe me. There's every time I go there to her house. There's more. More candles, and more pillows all over the place. So that's what she's that's what she's good at. Yeah.Jason Feltman:
Bill. This has been funny. informative. I think he wrote a book.Bill Snow:
Oh, let me show you. I don'tCraig Pretzinger:
like that. How'd you get past the copyright thing?Bill Snow:
Yeah. How did how did you get a hold of that? Yeah, they they contacted me. I wrote something else. Why? That's how I got it. I wrote a book on venture capital, I was upset about business meeting that did not go well. And I had an article idea. And I thought I'll finish the article. And it kept getting bigger and bigger and bigger. And I thought, well, I'll make it a book. So I made it even bigger. And then I woven narration through it and had some fun with it. I called it venture capital 101, which you can still buy on Amazon probably still have some typos. And so it's a little book that I just gave it away as a PDF. I didn't know what to do with it. This was 20 years 20 years ago, and that went all over the internet. And I was a very very very minor viral hit before that was a term and people were contacting me with good offers and bad offers a lot of crazy stuff. So it was kind of interesting. And and I remember thinking if I knew what I was doing, I could do something with this. And a few years later, I morphed into the middle market investment banking world and then a couple years after that, that little PDF I gave away for free ended up at Wiley Publishing so they contact To me to write a book and the lesson there is, if you have an idea, write it down. Especially if you want to write, you gotta write every day, you got to work at those skills. And you have to show and demonstrate that you have skills and ability, you can't ask, okay, because if I would have asked to write that book never would have happened, but I had shown skill and ability. So basically, I had something that I could offer something that here's what I have done, and they found it, and they contacted me. So that's how it all came together. Here's thatJason Feltman:
marketing lesson. Free offer marketing lesson. That is a theme of this, there youCraig Pretzinger:
go. Asking like asking, all you're all you're gonna get is shitty advice from everybody, right? Like, your friends are gonna tell you, dude, you can't write a book. And you're, you know, the enemies are gonna say, why would you spend your time you're never gonna get good feedback.Bill Snow:
I get I get people that say that all the time? Why would you do something like that. And of course, I don't care what they say I did it for myself. And as as a writer, what what that taught me I was in my early 40s, when I did that, that I am a writing preferenced learner. And I guess I've always known that but actually working through this industry that I knew well, by that time, and I'd had some success at it, having to think through all the steps that why we do and then explain it helped me uncover more ideas and learning. And so I learned more about my industry by having to write 300 Plus pages about it. Sure. And put that together. So I'm very, very fortunate and because of that I was contacted by some groups overseas. So before the pandemic, I was speaking overseas and was going to Dubai and Malaysia and doing presentations, I was in discussions to go elsewhere. Hopefully that comes back. But I never would have gotten that if I would have asked they were looking for speakers on a certain subject, they found my book, and they contacted me so again, if I would have looked for that never would have happened, but I had something to offer. And then people come to me with with ideas too. So yeah, it's been the most valuable career bit of advice that I've taught myself and I try and tell that everybody else have something to offer stop asking have something to offer?Craig Pretzinger:
Yeah, where are we have we finished Mike drop a book and it is at the publisher right now. You're not like oh, it's not there's no bookBill Snow:
well, you can do that today. Very easily with all the tools Dude, we can talk to talk offline.Craig Pretzinger:
I don't know that it was easy.Jason Feltman:
So here's the thing. This is what's funny. We started writing this two years ago right so sure. All of the frame like all of the hard part was done before AI could organize our brains and now it's like dude the tools that are out it's like crazy what would help us at least at the beginning phases you know Yeah,Craig Pretzinger:
because it definitely can't write it you know but it can give a good it can really help with ideas is so quick you knowBill Snow:
yeah yeah i It's that's a double still you want to stay away from it's right up right up there with with mayonnaise, you know, disgusting things. Manet's is double snot is what I call that and the AI I think that's the tool the devil stay away from that kid whatCraig Pretzinger:
happened? You asked Manny's questions toBill Snow:
its you don't want to do that it is just absolutelyCraig Pretzinger:
crossing the streams and Ghostbusters. It is yeah,Bill Snow:
it's even worse than that. It's just the most revolting thing ever. You want to stay away and the AI I don't know, you know, I get so tired now. And I'm like a cranky son of a gun. Now when I vote, I'm glad I'm old now because I was always cranking also involves afford to being older. But the I get I get a lot of LinkedIn context. And no doubt people will send me a LinkedIn context. And you can tell that you're not talking or communicating with an actual person. It's a bot. It's AI. And I just find that so insulting. And so I have a test now, and at some point, AI will figure this out. So when I suspect it's AI, I just type gibberish. I just make up words by random letters that you cannot pronounce. But I make kind of like a sentence, put an exclamation point. And then I send that if it's a person, they'll respond with a question mark. The AI does not know how to process that. I'm sure they'll they'll figure out how to how to deal with jerks like me. But I do that almost every day and it stops them in the tracksJason Feltman:
will do that and like train it. That's great because you're training and training it essentially.Bill Snow:
Yeah. Yeah, yeah. So at some point, I'm sure they'll they'll they'll figure that out. So the next step is to load up your your social media because they're scraping your social media with just a bunch of junk and just nonsense. So that's the problem. I think with AI it's it's just a classic computer program. Right? I mean, it's amazing how quick it is. But garbage in garbage out, right? Ai write a book, okay. Until AI says I want to write a book and it's going to be on this subject until it can come on its own volition. It's not It's not real artificial intelligence, just a really quick cool program that can do a lot of stuff. Right?Jason Feltman:
There you go. Cool, man. How can anyone get a hold of you like thinkingBill Snow:
they're gonna go to my website, they go to my website Bill snow.com Or some people like to say bills now.com You You go bills builds now you can find me pretty easily on LinkedIn and even Twitter and if you send me an interesting message, I might respond and hopefully it won't be too snarky.Jason Feltman:
Or hopefully willCraig Pretzinger:
it will I don't even have to label it.Bill Snow:
i Yeah, I sometimes will. You know, fire back because people are Wait hold on a second. Hold on a sec, guys. I have we got to wrap up here. Yeah, to wrap up your wrap up here. Wrap it up. Thank you so much, guys. Gotta go. We weren't fooling with the Thanks, guys.