SPEAKER_02 0:00

How did you even get into doing this?

SPEAKER_01 0:02

Yeah, I question myself all the time too. I fell down a flight of stairs one time and then I stumbled out of the house and I got hit by a car. What are your strengths? Well, I'm a people person. What are your weaknesses?

SPEAKER_02 0:10

And then they What would you say for a lot of insurance agents like to get into other industries?

SPEAKER_01 0:17

Well, the question is why would they want to buy a business? What sort of business do they want? Are they just looking to make a lot of money? What's the difference between sales and marketing? I'll test both of you and stop talking. Jason, Craig, insurance sales guys, fire away. Correct. I'll give you a B plus man.

SPEAKER_03 0:32

There are so many things that seem to be very unique to the insurance industry. Like just weird things.

SPEAKER_01 0:38

Or different like everybody else. You know, a man has time for three things in his life career, family, and we dial.

SPEAKER_00 0:47

We're not I am great.

SPEAKER_02 1:20

I am we are injured. We are injured.

SPEAKER_01 1:26

The wildest thing that has ever happened to me in MA. I don't know if it's the wildest thing, but it's a good story. We were working on a transaction. It was a very difficult transaction. The buyer tried to reprice the deal numerous times. We had a lot of fights. And anyway, long, long story. We got the deal done. And a couple years go by, I write a book called Mergers and Acquisitions for Dummies. One of the PE guys shows up in my office. He wants to meet. By now, all the dust is settled. We're best friends. And he says, I have a copy of your book, and I want you to give me an autograph in it. And I want you to write something and make it funny. So great. Now I'm under pressure to come up with something. So I thought about the transaction. I thought about what happened afterwards. And so I simply wrote in there, Justin, thanks for the house, Bill. That's the story. I bought a house with the fee that I earned from beating you guys up. My name is Bill Snow with Focus Investment Bankers and author of MA for Dummies, mergers and acquisitions for dummies. And I am an insurance dude.

unknown 2:24

Yeah.

SPEAKER_03 2:25

No. Anyone that comes on here becomes an insurance dude. You don't even need to get a license.

SPEAKER_01 2:30

They forced me to say that under under uh false pretenses, but I'm I'm I'm happy to play along here.

SPEAKER_03 2:36

Using weapons across state lines.

SPEAKER_01 2:38

Yeah. I'm committed to be here, guys. Thank you for having me.

SPEAKER_03 2:41

Bill, it's like we we got to talking for so long before that I felt like we were gonna use up all the good stuff, but I think you got lots of good stuff.

SPEAKER_01 2:48

Oh, I got nothing but good stuff here. Oh, that's fine. Fire away. Let's see a test me here. So you guys come up there. You can do it. You guys don't look like insurance guys. You look like you have a personality. What the heck's going on here? Oh, dang! Yeah, I love our whole audience.

SPEAKER_03 3:04

Just turn it off.

SPEAKER_01 3:05

Can can can we make fun of insurance people? Listen, I speak to I speak to accountants. I tell accounting jokes all the time.

SPEAKER_03 3:12

Yeah.

SPEAKER_01 3:12

Uh how do people become an accountant? They go off to college and they ask somebody what kind of job can I get where I don't have to talk to people? And they say accounting. And it's great when you're in front of a CPA group and you've got 100, 200 CPAs out there, and you think they're gonna boo and hiss, they are so excited when somebody talks about them. I'm making jokes left and right at the expense of accountants, and they look at each other very excitedly and say, Oh, he's talking about us, isn't this great? So I don't know if insurance agents are the same. Yeah, they're like, Wait, should we laugh? Are we supposed to Yeah? He's he's talking about us. Yeah, they get really excited. It's great. So I don't know if insurance agents are the same the same way. So if there's any that are offended, too bad. Okay, next question.

SPEAKER_02 3:49

Most people, if you say you're an insurance agent, I don't even really say that. Um because the reaction is pretty poor.

SPEAKER_01 3:57

Uh uh yeah, sure.

SPEAKER_02 3:58

Yeah, it's like saying you're a lawyer.

SPEAKER_01 4:00

Sure. You're you seem like that guy in uh a groundhog day who kept trying to sell Bill Murray insurance all the time.

SPEAKER_03 4:07

Ned the head, needle nose head, needle nose.

SPEAKER_01 4:10

Yeah, Ned, Ned, yeah. Got the shingle real bad. Bing! Yeah, that's what you guys do all the time, right? That's that's why that's why you never get invited at golf trips. Yeah, I know.

SPEAKER_03 4:20

So we ran a split test where we said bing at the end of every sentence versus not saying it, and we did perform better when we said the bing.

SPEAKER_01 4:27

Oh, we just just talking to yahoos like me who are slepping a book or or when you're trying to sell insurance.

SPEAKER_03 4:33

We're trying to sell insurance.

SPEAKER_01 4:34

Oh, interesting. Yeah, okay.

SPEAKER_03 4:37

So the reason why we don't look like yeah, go on, go on. Bill, the reason why we don't look like agents is because what we've been able to do is get old. No, well, we're older, we've we've done it a long time, and we've kind of gone through a lot of the building periods. So now what we're we're in that phase where we're helping the other agents to build that, right? Like, so we're giving out this information and all these things that are gonna actually get them there. So and that's more fun, right? Because now this is kind of the the agencies themselves sort of go on autopilot.

SPEAKER_01 5:09

Yeah, excellent, excellent. What kind of insurance? What kind of insurance are you guys selling?

SPEAKER_03 5:14

PNC, property and casualty, omen auto. Yeah, okay. Good stuff with micro margins.

SPEAKER_01 5:21

Yeah, yeah, I know. Micro margins. It's uh it's it's uh it's it's a tough racket, but uh someone's gotta do it, yeah.

SPEAKER_02 5:29

Yeah, most agents do buy books of business, so this is a very good conversation, but you don't work on the level of uh scale of an agent. You're a little bit a little bit higher, right?

SPEAKER_01 5:44

Yeah, we we typically work with what we call middle market, lower middle market companies, and that's revenues of roughly 20 million up to whatever 300 million or earnings, this horrible acronym that you hear in business called EBITDA earnings before interest tax depreciation amortization invented by a uh a cable TV executive. We love it. Seriously, John Malone was the guy's name. We love acronyms in MA. There you go. In fact, we love ampersands in them too. So if we could put an ampersand in EBITDA, that'd be even better. We'd be almost as wild and crazy as insurance guys. So we're getting there. We're getting there. Good work. So but so at least two million in earnings is what we're typically. I mean, they can make exceptions, but we want to have some meat on the bone. The the smaller transactions are are frankly getting uh more difficult to place because the buyers want more size and scale when they they buy something.

SPEAKER_02 6:36

I think agents are feeling the same same thing, same thing with buying books. Our scale is a little bit uh smaller, but let's let's go back real quick. How did you even get into to doing this? Because I mean, yeah, how did you even start?

SPEAKER_01 6:52

Why? Yeah, I I I wonder that I question myself all the time too. I fell down a flight of stairs one time, bumped my head, and then I stumbled out of the house and I got hit by a car. And uh I I got out of college back in the dark ages. It was in a previous century, 18, 19, something like that. And I didn't know what I wanted to do. And I did a bunch of things. I did sales jobs, I got into management. I was working for a retailer, we're buying up little mom and pop retails. I was in the Southeast for a while, and then I got interested in entrepreneurship and where do businesses come from and how do they start? So I worked for, you name it, friends and family, angel funded, venture capital funded, kind of worked my way up the food chain, learning the business, a lot of ins and outs, still haven't really uh accomplished much. Bought some companies or pieces of companies. So I was an owner, you know, minority owner along the way and some things too. And uh almost 20 years ago, I uh was contacted by somebody who worked with me at one of the venture uh deals I worked on. And he had gone to a middle market investment banking firm. And I thought, what the hell's investment banking? They do nothing with investments and they're not a bank, they call themselves investment bankers to sound fancy. If we could if we could make that an acronym and put an ampersand in that, we'd like to eat the title. Um so I I uh met with the founder of the firm, this is a little investment banking firm, it's a boutique, and I turned down the job offer four or five times to be an investment banker because I didn't think I wanted to do it. And then the owner called me one day and he caught me at a moment of weakness, and so I said, Okay, fine, I'll go be an investment banker, stop bothering me. And so I exaggerate really not that much. That's how I got into it. And um, I was not looking forward to doing a sales job because that was the main focus, executing the transactions. So calling up buyers, getting the materials out, setting up meetings. Uh, no one explained to me, by the way, that that's what the job is. I had to figure that out when I'm doing the job. Oh, that's the next thing. Maybe we should do something else here. And which is the best, which is the best way to learn. So I I did not have uh the benefit, by the way, of a fabulous book like this called Mergers and Acquisitions for Tommy. It's the second edition. Uh so I I learned the business, and what one of the great things about it is the selling of a business, you're actually buying because the number of buyers outnumbers sellers by a great number because you have a good company to sell, you can only sell it one time. If you have three, five, ten buyers who are interested and put offers together, only one of those will win the mandate. And so it is difficult for whether it's private equity firms, uh, strategic acquirers, to find companies to buy. And so when you have a company for sale, you tend to get reaction from the buyers. They call you back, they want to look at the materials. Uh, one of the things that I would always tell the younger people at the firm when somebody would say, Well, you're selling a company, what's so special about it? I would say, Well, it's a company and it's for sale. That's what's special about it. So that's how I got into it. So I I also do MA stand-up, as you can tell here. But it's yeah, it's good. It's good material. It's it's a great deal of fun in this business. It's actually quite boring. Uh, you need to be a good writer, you need to be good at math, good at accounting. Those are the skills. Everybody wants to do this job for some reason. They want to analyze the tar out of everything. Well, that's you know, who cares about that? That's the time it does it. Accounting skills, being able to write and having good math skills. If you play golf and you know how to play poker, those are skills when you move up and you start trying to find clients, you need to have those skills. But that's if you want to be an investment banker, there you go.

SPEAKER_02 10:16

And usually those skills aren't synonymous with uh somebody that likes to be outgoing and and funny. And so how how did how did you end up there?

SPEAKER_01 10:25

I I think I I think I lost a bet. Uh I'm I'm at a point. Well, look, I decided a long time ago that I'm I'll use my personality. I I did a very deep dive, actually when the first book came out, which was 12 years ago. What am I good at? What am I bad at? What are my strengths? What are my weaknesses? And I always encourage people to do this because most people do not have a good handle on what they're good at. And more importantly, what they're bad at. Ask a young person, ask yourself, and you'll hear a bunch of nonsense. I call them the you know, they're just BS answers, right? What are your strengths? Well, I'm a people person, you know, so who cares? Anybody can say that. What are your weaknesses? And then these you know, ill-formed minds must say, well, let's hear, must phrase weakness in form of strength. I work so hard I irritate people. That's my big weakness. I'm excellent everywhere else. I work so hard I irritate people. And it's it's it's it's all it's all about you, you know, and and so being able to really understand that. So one of the things I I realized is I do not have the politician's gift for remembering names and faces. I think I had to write your names down here to remember who you guys are. So and I wish I I wish I was better at it. I'm terrible at it. So now I just don't care. And I decided I'll I'll be the memorable one. And I have I can't tell how many conversations I have with people, but I'm walking around downtown Chicago and I walk away and I'm thinking, I have no idea. I've met them, I have no idea who they are. They remember me. So I thought I'll be the memorable one and I'll do the ender on. If anybody says, Do you know who I am? No, I don't. Forget I met before, I don't remember your name. I don't care. And I'm not gonna try and put on airs, I'm not gonna try to lie, and I found that the honest approach is much better than to try to pretend that you're you're somebody that you're not. So that's one of my weaknesses. It's names and features.

SPEAKER_03 12:04

I mean, you can only be good at a certain number of things, and remembering names doesn't seem like it's the most important thing to be good at.

SPEAKER_01 12:13

Yeah, uh some people have I think I think maybe there's things you can do to get better at it. I don't know, maybe pay attention to people are talking. I I'll try that at some point in my life.

SPEAKER_03 12:20

Well there's only two two megabytes of RAM, it's difficult to yeah.

SPEAKER_01 12:26

Well, I I I do think that some people have a uh a gift for that. You know, it's like anything else. We have gifts. I mean, some people are, I mean, I am not visually uh I mean you can just see how it beautifully uh decorated my my office is. Uh the the only picture there is me with three different dogs throughout the stage of my life that my mother framed for me 20 years ago. Is that your only picture? Yeah, that's the only picture. Uh I got a lot of empty well actually that that was that what's what kind of spurred my my thinking about strengths and weaknesses. So when the first book came out, you know, uh MA for Dummies, um, when that came out in the spring of 11, the publisher sent me a copy of the book, and I was so proud of myself. And it this was a Friday, I was at home that day, housekeeper was there, and I was so I'm I'm holding up the book. Hey, look, I wrote a book, and who cares? You know, she didn't care. That's nice, Mr. You know, she didn't care. And I'm looking at this book and I'm really proud of myself in all seriousness. Hey, I wrote this thing, it's 300 plus pages. Holy cow, I put this together. And I thought, you know, I'm pretty good at this writing thing. I've I've always had a talent for that or an interest in doing, I've done a lot of writing and different things. And I'm looking around at my house and I see all these empty walls. I'm thinking, I have no idea what to do with the walls. And some people are just drooling because they have a good flair for it and a good eye for that. I don't. And I thought, clearly, I don't have any kind of visual design skills because I can't draw. I wish I was a great visual artist, a graphic designer. I don't have any of those skills. I and if if I tried, I would just be aping other people as opposed to something that's really coming from inside. The writing comes from inside. Okay, I did work hard at it. And so that's what got me thinking. What am I good at? What am I bad at? And and it's a great exercise, and I implore everybody else to do that. Uh, I realized I was pretty good at sales from from doing sales when the publisher contacted me. I did a sales job to get the book, and they sent me a book uh right before it was published. It was a little PDF, and they call it the author toolkit. I call it how to market your four dummies book for dummies. And I'm going through that, and I realized I don't know anything about marketing. The marketing, this is the big surprise when you write a book. It's the marketing is left up to the idiot who wrote the book. Okay, what is marketing? And so I thought I don't know anything about marketing. Maybe I can teach myself. So, what I've come up with is the shorthand for marketing, and you can test people who have a marketing marketing degree. Most fail at the answer. What's the difference between sales and marketing? I'll test both of you and stop talking. Jason, Craig, what is the difference between sales and marketing? Insurance sales guys, fire away.

SPEAKER_03 14:52

Well, marketing is the is the magnetic pull to get them in. Sales is actually converting them.

SPEAKER_01 15:00

Okay, you you're you've given one of the better extra. I'll I'll give you a B plus bordering on A minus. That's not bad.

SPEAKER_02 15:06

I mean B plus is way too good. It's the least aware, uh the least aware, and then and then sales is most aware to conversion.

SPEAKER_01 15:17

Yeah, yeah, yeah. Not that not bad. Sounds like you guys are selling insurance for a living, so you you know a thing or two. What I say, and then you guys are you guys are actually most people completely flounder at that because they get lost on the tactics. They talk about TV ads or internet ads or face-to-face marketing events. You know what those are all valid, and those can be good marketing depending on what you're selling. But it's a very simple way to explain the difference. Marketing is what you do to get a chance to make a sale. That's it. That's it. And it could be anything. Pick pick the tactic, and there you go. And then I thought I thought about that. That's probably my best skill is I can take something complicated and explain it in a simple, easy to understand manner. Because, of course, you know, I wrote a Four Dummies book. Um, and so it's been very helpful. The visual design, I hate doing research. So I've tried to find people that have skills where I don't have skills or they really enjoy doing what I don't enjoy doing. And I I implore everybody to do that. And if you're honest with yourself and trying to say you're an expert in everything, where you know where you're weak, you can find people good there. It is the most freeing thing in the world. So I don't mess around with things where I I don't have a good eye for it. I don't mess with it anymore. It's been fantastic.

SPEAKER_02 16:24

And if you want to know what you're bad at, you can always ask your wife. My wife's really good at telling me what I'm not good at. So everything. I can get that, I can pull that list pretty pretty quick.

SPEAKER_01 16:33

Yeah. Uh-huh. We've we've we've all we've all been there. But uh, yeah. Um, so anyway, there you go. That's that the only other Four Dummies book I could write, by the way, is how to write a four dummies book for dummies. So I'm I'm very fortunate that that Wiley, Wiley Publishing owns the the dummy. Now I was talking to Jason and Craig before this, and they were asking, okay, let me get all the questions out here. Uh no, I did not get around the copyright. Yes, it quote unquote it's a real MA, it's a real four dummies book. Someone owns the brand. It's it's Wiley Publishing, they're a big behemoth. Uh, they contacted me. I did not write the book and sell it to them. If you try to contact them, they'll tell you go away. Oh, really? Oh, yeah, don't contact us. We'll we'll contact you because everybody, everybody in the world wants to write wine for dummies. Hey, there's an idea. Wine for dummies. I can write that.

SPEAKER_03 17:24

But yeah, nobody's thought of it.

SPEAKER_01 17:26

Yeah. Yeah, it's it's like trying to come up with the name of a rock band these days. Every name has been thought of, and it is very difficult to come up. I'm I'm good with coming up with names, by the way, but try it. Look, you look up on allmusic.com. Every name you can think of, unless it's just something really obscure or a bunch of random words put together, has been probably grabbed up. Sartorial Splendor, ironically enough, I just looked this up. I think is available. Seriously, you would think that would be like a like a human league ABC cover band, right? Start Sartorial Splendor, but Roxy Music, nobody has picked that as a name. So uh you kids out there looking to put an insurance rock and roll band together. There you go. Sartorial Splendor.

SPEAKER_02 18:03

I love it. I'm writing that down. So so tell us. I I I would love to know since you wrote the four dummies book, which is a you're on the perfect podcast for that because uh we're your audience. Um as far as an insurance agent goes, buying an insurance agency, like what are some tips? Like, like most insurance agents that get into this game and buy an agency, there's a lot of trust in other people, and we don't know as much about the MA world. Uh a lot of times it's like, uh, he said it was a good book. Should I should I buy this? And you ask a couple people, and they're like, Yeah, I think it's a good idea. But like what are some other tactics than asking your buddy if it's a good idea?

SPEAKER_01 18:53

You you sound like my mother when she walked me to kindergarten when I was five years old, and then she'd pick me up, and this went on for a few days, and then typical for my mother, she walked me to school and she said, Okay, Billy, today you're gonna walk home alone. You know how to get home, right? And I said, Uh-huh. And I I probably got lost. Yeah. And uh coming home. And then years, decades later, 50 years later, my mother was asking me about that, and she said, What would have happened to you if that nice lady didn't see you crying and call me? I said, I'd still be walking. So it's it's kind of the same thing with with buying an agency. Yeah, you're right. Uh, you know, coming up with the good questions to ask. Should I buy this? Don't ask a question like that because what's somebody gonna say, especially if they don't like you? Yeah, it's a great idea, idiot. Go buy it. Yeah, fantastic. Okay, so you you know, you have to ask yourself if you want to buy an an insurance agency, first of all, do you like rejection? Do you like people making fun of you? Okay, right. So if you're not in the insurance business, you have to ask, do you have that kind of personality where you have stick to itness and and and uh perseverance? A million people are gonna say no before somebody says yes and buys a product. Okay. If you don't like that, if you don't like getting on the hamster wheel and and dialing for dollars or emailing or whatever you can to jump drum up business and have most people uh say no to you, probably with a bit of invective and a few expletives, it's probably not for you. So if if you've now crossed the Rubicon and you've decided insurance, of all the things I can do in the world, insurance is it. It perfectly lines up with my personality for whatever reason. And I I'm a masochist, I enjoy being rejected. If this is where you have become and you've gotten to that point, now you want to buy something, then I guess you want to look at the nature of what you're buying. Now, I don't know what the multiples are, how you price an agency, but if you're buying a book of business, well, how strong is that book of business? Are these people going to stay with you? Are they shopping? I mean, have they been there for a long time? Do they tend to be long-term customers or do they look for uh a new uh insurance carrier every time they're up for renewal because they're looking for the the best price or the right price? I gotta imagine that's part of it too.

SPEAKER_03 21:08

Um, real quick, just because this is interesting because there are so many things that that seem to be very unique to the insurance industry. Um, like just weird things that normally um in other like you know, normally people say my industry is different, right?

SPEAKER_01 21:28

We're different like everybody else.

SPEAKER_03 21:29

Yeah, but like an independent insurance agency or broker is gonna go for some multiple of ebid of uh ebida, right? That isn't how it works for for uh captive carriers. If you're a captive carrier, if you're with a captive carrier, it's it's uh multiple of commission, not not and not inclusive of bonus. So you could have bonus 300k, that doesn't count as towards it when they figured out. And that's only because this has just been the standard, right? And what's interesting and And I'd love you to apply some of your experience to this is price or uh commissions are going down right now, right? The the captive carriers are struggling with with competing with the big, you know, uh 800 number ones, and they're squeezing the commissions down. So what's happening is there's consolidation, right? So the the bigger agents are gobbling up the smaller agents, but we still have the there's this pressure because of the declining um commissions on that multiple. So normally in a regular business, it would be based off of okay, well, this one actually performs better, has a higher retention, has all these things that we have very good analytics on, but it doesn't seem to really be a driving force right now on those multiples. And we're looking at like two and a quarter of uh of your comp, which is pretty crazy. It's pretty low as a multiple.

SPEAKER_01 22:55

Yeah. So two two and a quarter of the compensation that an agent makes. Yeah.

SPEAKER_03 23:00

So let's say you did you did a million in a million in um in uh in yeah, commissions for the year. Okay, then yeah 2.25 million is what the the asking price would be.

SPEAKER_01 23:12

Oh 2.5 times, not 2.5%. Got it. Okay. Yeah, you know, I I don't know enough about the the insurance racket to to to give you whether that's good or bad, but that that makes sense. Okay, if that that's kind of the industry standard that that's being used, then you know that that's what you pay when you bought something, and that's what you can expect to sell it. Hopefully you've built up the business and and can sell it for more. Uh, if the commission rates are coming down, now does that put some downward pressure on on the price that has yeah, yeah.

SPEAKER_03 23:45

Yeah, these things are going for three and a half or four times uh you know ten years ago.

SPEAKER_01 23:49

Oh, okay, okay. So so it has already come down. Yeah. Yeah. Yeah.

SPEAKER_03 23:53

Not much more room.

SPEAKER_01 23:55

Yeah. Yeah, no, no. Uh ultimately, something everybody says, you know, valuation. They also want to talk about valuation, and and uh uh you might want to write this down, guys. There's another little bit of wisdom for this. This I'm gonna give you the the definition of the surefire way to understand valuation. It's a very complicated mathematical formula, so get ready to write. A very complicated mathematical formula that largely depends upon what side I'm representing. That's it. So that's a joke. That's a joke. You you you you in charge kids at all. It it doesn't get better than this, okay? Uh don't get me started on lawyers, okay. You know what they how you become a lawyer. You go to law school and they teach you one thing. It's not illegal if you don't get caught. And then you spend two years learning how to bill and you become a lawyer. It's it's a great thing. But if you have any of a real legal question, you hire paralegals and they go through all the the code and then they come up with the right laws.

SPEAKER_03 24:52

It's like you play doctors and nurses. Yeah. Yeah.

SPEAKER_01 24:55

Oh, doctors and nurses, they don't they don't do anything here. They they've got, you know, it's just uh they they watched uh uh you know they have uh catch me if you can, and they just say concur. They just walk around. Uh you do you concur? Yeah, the the person's gonna die. Yeah, I concur for you.

SPEAKER_03 25:11

Yeah, but marginal.

SPEAKER_01 25:12

Yeah, exactly. There you go. It's it's it's a piece of cake. Um lost track of where we were. So um the the we were talking about about uh multiple. So something is worth what somebody's gonna pay for it. That's the bottom line. So valuation, you can come with all these models, and and and sometimes that that's helpful to look at uh where other things have traded or some other met matrix metrics and and so forth. But ultimately, something is worth what somebody else will pay for it and what the what the seller will accept. That's the bottom line. So you might think uh you're selling something, you might think it's worth a hundred bucks. But if all I offer is fifty and I'm the only person willing to bid, then it's either worth 50 if you accept it, or if you don't like my my bid, you so sorry, I'm not gonna sell to you. It's worth more, then that that would be your choice. But if you accept my price, then it's our price because we both agreed to this price.

SPEAKER_02 26:04

Right. Mike, uh, so what have you seen in trends as far as like industries that are going for more now uh compared to ones that are just falling falling off, going lower?

SPEAKER_01 26:17

Well, MA is this is uh another uh I think a Bill Snowism. MA is microeconomic. Everybody likes to focus on the macro. What's going on in the economy? And the macro can certainly have an impact on a micro aspect of economics, a 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 going to stick around. So it's a good, good, strong company, but the economy is bad. That bad that that good company and a bad economy will trade and probably at a premium because it's just tough to find good assets. And the uh 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.

SPEAKER_02 27:38

Do you what what do you advise uh companies that are are planning for an exit? Like what should they do to really start bolstering up the um all those things that you just mentioned?

SPEAKER_01 27:49

Yeah, yeah, for companies, this probably I'm gonna guess doesn't apply in the uh insurance business and the agencies, but there's a couple things that we 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 uh business owners to do a it's called a quality of earnings report. So uh an auditor or review will set up this horrible acronym. Uh it's a client that once called it EBITDEABADU. All right, so this this EBITDA stuff, right? For real? It's not yeah, yeah. EBITDA do. Yeah, no, no, he called it that. He was joking, of course, because he thought it was silly. So EBITDA, so audits and reviews set up EBITDA, right? Which is not even a gap term, and it's not even cash flow, it's just meant meant to be a way to measure companies on an apples for apples basis, right? If you take away uh taxes and the need to make uh capital investment and and so forth and so forth, right? Um you don't have to borrow money and pay interest on it. What what would the cash flow of the business be like? So that's and it makes sense. What's going on is a focus on adjusted EBITDA. So you've got kind of an Uber non-gap uh accounting measurement, adjusted EBITDA. So what are adjustments? Uh 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 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 is taking on a life of its own. And so you'll see these adjustments where you see the the EBITDA, and then you see these massive adjustments, and every single month, $30,000, $40,000, $50,000 in adjustments. And it might be different stuff, but they're adding back everything. And any buyer's gonna say, wait a minute, okay, yeah, that's one time only, but it seems like every month you have a one-time only expense for $40,000, $50,000. I'm just gonna have to keep that in because I'm gonna, I don't know what it is, something else, but I'm gonna have $40,000 or $50,000. So uh this adjusted eBIT DAW, you have to be careful. It's a bit of a Frankenstein's monster that's being used today.

SPEAKER_02 30:32

That makes sense. Well, what about uh owner operated versus uh non-own owner operated?

SPEAKER_01 30:38

Uh well, can you sure can you give me maybe a little more context in the in the question?

SPEAKER_02 30:43

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.

SPEAKER_01 30:54

Yeah, a lot. I mean, well, it depends on what what the company is and and then the size of the company, but you you do raise a very good point, you know, the owner operated versus maybe a company that's owned by uh a private equity firm. And so this is an issue that we'll see with with businesses. So somebody owns a business, it's uh you know manufacturing, they're they're making something, you know, they're bending metal or doing something, and it's a nice business and good revenue and and then real good profits, and the owner's made a real nice life for him or herself. Um, the problem with those, and it a potential problem 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 design or over okay 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 and it's a bitter pill sometimes for uh for entrepreneurs because they're so used to being 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.

SPEAKER_02 32:21

Yeah, it makes sense. Um what would you say for I I 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 and perhaps just buy a business, um, what are some things to look for, especially in this like day and age?

SPEAKER_01 32:44

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? Well, you know, get in line, everybody is trying to do that. They think they'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 and not pay a lot for it, but make a lot of money and not have to do any work. That's yeah, everybody has that same idea. Okay, then it'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? Uh is it just to diversify my my holdings or you know, and then 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 or try 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. Uh, you can get some family member, you can tell them some sort of sob story, and they'll write a check for a couple hundred grand. Okay. You can get money if you need it, right? Even in the higher interest rates. It was a little easier 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 it. A bank will uh loan you some money. So money is usually not the issue. Uh, 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 hear this all day long. And so trying to find a good company, because if you do talk to somebody that wants to sell a business, they probably have a you know, some sort of problem. Yeah, I'd love to sell it to you. It's probably the FBI is knocking on his door for some sort of ghost payroll, or you know, he he put his mom in front of a, you know, called it a woman-owned business, and you know, there's I've I've seen situations like that, you know. So hey, get me out of this thing. Um, so why are they talking to you? So you want to understand that. So trying to find a good company uh 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 gonna do with myself? I got plenty of money, I make good money from this thing. You couldn't offer that person enough money, and that puts some added pressure on simply trying to find good companies to buy.

SPEAKER_02 35:12

Yeah, makes sense. Well, what about like there's so many baby boomers that you know, businesses that are gonna be closing here or or just moving on or whatever?

SPEAKER_01 35:21

Um They've been saying that for 20 years.

SPEAKER_02 35:23

Yeah. But you see, like less and less, I I guess less and less buyers. I mean, people aren't having as many kids. Um, so it just seems like there's gonna be a lot more inventory than buyers.

SPEAKER_01 35:37

What are some ways to get in front of them that that you see well that that's you know, that's something that people have been forecasting, like I said, for for a couple decades. All these baby boys, they're gonna 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. Uh, it's not marketed. So those things are they they pass it along to the kids. They, you know, a junior's completed rehab and he's he's not sniffing coke anymore. And uh he's we're we're we're gonna trust him. We're we're we're gonna 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 here. Yeah, we see that's what he says. Yeah, it was a it was a lost 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 is going on too. Um, you know, how do you, if you want to buy a company, that 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 a 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 give give you a couple ideas. Hey, why don't we get together? I'll buy you lunch, or we can talk on the phone or take you 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 uh collapse of the multiples. You know, you can call up a uh an owner of a of an insurance uh 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 know, I'd love to get together. Can I buy you a sandwich sometime? Or, you know, do you play golf or can 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 an offer, sincere offer, um, you have a greater chance that somebody will engage you in a discussion. And then if you're artful enough and and creative enough and quick enough, maybe you can steer that conversation into what that person wants to do. And then 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 it's easier said than done.

SPEAKER_02 38:00

I love it. Going back to the marketing, right?

SPEAKER_01 38:02

Yeah, yeah, yeah, exactly. Bingo, you know, I was uh golfing a few years ago here in in suburban Chicago, and um uh executive at one of the banks around here, I I know, uh, took a couple people out to to his country club, nice country club out in in the suburbs. And he says, Bill, here's the guy you're gonna be playing with. It was a former PE guy. He was on his own, he was looking to buy a company, and I knew where this conversation was going. So I'm driving the cart, get to know him a little bit, wait a couple holes, and I 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 uh country club here. Everybody wants to play it. They they sometimes have PGA events there, 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 know, 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 gonna 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 uh 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 uh the company. You've got to do creative things like that, but he you know, sounds like work. That that's that's the main reason people don't do things. Sounds like work. Why would I want to do it?

SPEAKER_03 39:41

Work, hanging out at the golf course, meeting people.

SPEAKER_01 39:44

Yeah, 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. Someone has to.

SPEAKER_03 39:50

Someone has to.

SPEAKER_01 39:52

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.

SPEAKER_02 39:58

Yeah.

SPEAKER_01 39:59

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. Because the most important score in golf, people always think it's you know, writing 75 or 90 or whatever you get, the most important score, the 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. Probably because it's torture. So if 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 who wants to be in business in advance, learn to play golf.

SPEAKER_03 40:44

All you need to do is bring 90 balls and just every time that you hit one, just go up a 200 yards and drop one. Yeah, you and you and you'll be good.

SPEAKER_01 40:54

You you you could do that, yeah. It's it's kind of like uh uh you know, full contact golf. You know, you can try that. I've I've I listen, I guy I golf with it has injured himself. It's absolutely hilarious, at least on two occasions, has injured himself very horribly by hitting a golf ball. One time into a tree stump and it hit his leg and down he went. I thought he broke his shin. And then another time somehow he mishit the ball and it bounced up right into his mouth and it cut his lip open. He holds the world record for the most grievous injuries inflicted by his own struck golf ball. Yeah, it's it's pretty amazing. So that's there's certain goals you want to have in life too. I mean, that's not one of them that I want. Yeah, yeah.

SPEAKER_02 41:36

Okay. I gotta use those marketing skills of my wife to get me to allow me to golf.

SPEAKER_01 41:41

Oh, oh, I got I got the solution there. Okay. This is what you tell her. And then it's something my father used to say, uh, he he he passed away a few years ago, so I he won't sue me for uh for plagiarizing him. But he would say, because he 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 uh play golf and then be a great tennis player and go skiing and go horseback riding and have a powerboat and a sailboat and 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 proficiency and have a career and family, you can't have six or seven hobbies and be good at them. You can you can only choose one. So tell her, I'm gonna choose golf for for career purposes. Okay, see if you can sell that. Now, here's the downside. I told a young guy who's who was getting married. Yeah, oh oh well the this is the problem because I told I I told a young guy who used to work for me to do that, and he tried it. He came to work on Monday. I said, Well, how'd it go? What did she say? And he said, uh Yeah, it's terrible. Now she wants to play golf with me, so you have to be careful that that she doesn't want to learn to play golf because yeah, you can't make it sound too fun.

SPEAKER_02 43:02

Right, right. He oversold, he oversold his card.

SPEAKER_01 43:05

No, it's it's awful. It it's it's it's it's it's uh yeah, no, no. Oh, sure, sounds golf. You want to play golf every weekend? I'll join you. Teach me how. Yeah, what what a disaster. The poor kid. They they married and a kid, and he's probably walking, he's he's walking around the suburbs somewhere holding her purse. I mean that that's what's happening.

SPEAKER_03 43:22

It's just I I went my wife and I went to the golf course one time. It was probably 20, I mean, it had to be late 90s, probably. So it was a long ass time ago. Yeah, and it was the one time they had turned into a terrible argument, you know. I mean, I had very low emotional intelligence and and she had the very bad swing.

SPEAKER_01 43:45

So it just put your your your foot down. No. No, I mean some some women, you know, if if if they're good at golf, that that's great. That that's fine. Yeah, you know, most most would rather oh I'm gonna get in trouble here. These are jokes, everybody say them all the time here. But you know, and they they want to go to stores and and buy you know picture frames and candles and pillows. And and I I have a a special lady friend, and she has two of those three curses. 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 yeah, and that's but that's what she's that's what she's good at.

SPEAKER_02 44:22

Yeah. Bill, this has been funny, uh informative. Um I I think you wrote a book.

SPEAKER_01 44:30

Oh, let me show you. I don't think we mentioned that. Yeah, right there.

SPEAKER_03 44:33

Oh, look at that. How'd you get past the copyright thing?

SPEAKER_01 44:36

Yeah, how did how did you get a hold of that? Yeah, they they contacted me. I wrote something else, and why that that's how I got it.

SPEAKER_03 44:43

So what was the other thing?

SPEAKER_01 44:45

Yeah, I I wrote a book on on venture capital. I was upset about uh a business meeting that did not go well, and I 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 wove a narration through it. I had some fun with it. I called it Venture Capital 101, which you can still buy on Amazon, probably still has some typos. And so it's a little booklet. I just gave it away as a PDF. I didn't know what to do with it. This was 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 and 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 contacted 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 got to 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, it 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 and they contacted me. So that's how it all came together. There's that marketing lesson again.

SPEAKER_02 46:06

That free offer marketing lesson. That is the theme of this. There you go.

SPEAKER_03 46:10

And the asking, like asking, all you're all you're gonna get is 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? Yeah, you're never gonna get good feedback.

SPEAKER_01 46:24

I I I get I get people that that say that all the time. Why would you do something like that? And of course, I don't care what they they say. I did it for myself. And and 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 that an industry that I knew well by that time and I'd had some success at it, having to think through all the steps of 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 and put that together. So I'm I'm very, very fortunate. And because of that, I was contacted by uh some groups overseas. So before the pandemic, I was speaking overseas. I 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, that is that's been the most valuable um career bit of advice that I've taught myself, and I try and tell that to everybody else. Have something to offer. Stop asking, have something to offer.

SPEAKER_03 47:43

Yeah, where we have we finished mic drop a book, and it is at the publisher right now. Bro, you're not supposed to like oh, it's not. There's no book, and it's not as well.

SPEAKER_01 47:54

You you can do that today very easily with all the the tools, and we can talk talk offline.

SPEAKER_02 48:00

I'll tell you, I don't know that it was easy. I don't know that it was easy. So here's the thing this is what's funny. We started writing this two years ago, right? So we're yeah, sure. So 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 have at least at the beginning phases, you know. Yeah, yeah.

SPEAKER_03 48:26

Because it definitely can't write it, you know, but it it can give a good idea, it can really help with ideas. It's so quick, you know.

SPEAKER_01 48:33

Yeah, yeah. Yeah, but I uh it's that's the devil's tool. You want to stay away from that. It's it's it's right up right up there with with mayonnaise, you know, disgusting things like that. Yeah, it's mayonnaise is is devil's snot, is what I call that. And the AI, I think that's the tool of the devil's stay away from that, kids.

SPEAKER_03 48:52

What happens if you ask mayonnaise questions too?

SPEAKER_01 48:55

It's you don't want to do that.

SPEAKER_03 48:56

It is just absolutely like crossing the streams and Ghostbusters.

SPEAKER_01 49:00

It is it is yeah, yeah, it's it's even worse than that. It's just the most revolting thing ever. So yeah, you you you want to stay away and the AI, I don't know. You know, I I get so tired now, and I'm like a cranky son of a gun now. And I'm about I can I'm glad I'm old now because I was always cranky notes, I'm also looking forward to being older. But the the I get I get a lot of LinkedIn contacts, and and no doubt people will send me LinkedIn contacts, and and you can tell that you're not talking or communicating with an actual person. It's it's a bot, it's AI. And and I just find that so insulting. And so I have a test now, and 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 it kind of look like a sentence. Put an exclamation point in it, 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 I do that almost every day and it stops them in the tracks.

SPEAKER_02 50:00

Well, dude, that'll like train it. That's great because you're training untraining it essentially.

SPEAKER_01 50:05

Yeah, yeah, yeah. Yeah, yeah. So so at some point I'm 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 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 it's 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 up with that on its own volition, it it's not it's not real artificial intelligence, just a really quick, cool program that can do a lot of stuff. Right. There you go. Cool, man.

SPEAKER_02 50:43

How can anyone get a hold of you? Like it's thinking.

SPEAKER_01 50:47

They go to my website, billsnow.com, or some people like to say billsnow.com. You can you can find me pretty easy. Billsnow. Uh, you can find me pretty easily on LinkedIn and even Twitter. And uh, if you send me an interesting message, I I might respond and hopefully it won't be too snarky.

SPEAKER_03 51:07

Or hopefully it will.

SPEAKER_01 51:09

It will.

SPEAKER_03 51:10

I mean, why do we even have to label it?

SPEAKER_01 51:12

I uh yeah, I I I sometimes will uh uh you know fire back because people are oh wait, hold on a second. Uh hold on a second, guys. I have uh we we gotta wrap up here. I've answered. We gotta wrap, let's wrap up here, wrap up here.

SPEAKER_03 51:26

Wrap it. Thank you so much. Thanks, guys.

SPEAKER_01 51:31

Thanks, guys.