E: 15 Top M&A Entrepreneurs Joe Valley Co-Owner Quiet Light Brokerage - Author: The EXITpreneur's Playbook

Hi, this is John Stoddard, top M&A podcast. I have a guest today is Joe Valley. Joe Valley is from, uh, the founder of Quiet Light Brokerage. Um, it sells online businesses and only online businesses. So Joe, welcome to the show. How are you? Good to be here, John. Good to be here. Glad to be here. Thanks so much for having me on. So I want to go back, you and I probably first talked 4 to 5 years ago when I was. Selling my, trying to sell my e-commerce company selling hearing aids. And then you said, Nah, it's, it's not right for us. I don't remember what the conversation was, but, uh, it just wasn't ready to be sold because I just didn't have any processes in place, mechanics in place. Do you remember that? Yeah. Yeah, yeah, actually I do. Now that you bring it up, I, I, I have a recollection of it, be honest with you, I've talked to about 8000 entrepreneurs over the last 9 years. So I can't remember the individual conversations, but I can tell you that there's not many that had hearing aid-based businesses. It was very unique at the time, um, but yes, quite some time ago. So Joe, how we, let me ask you how you got started in this. I mean, you were You're an entrepreneur by trade, or just by because you love it. I mean, how did you get started? Yeah, you know, I'm an entrepreneur. I've been self-employed since 1997, John. I'm, I'm an old guy, I get some gray in my chin, um, and I was, you know, when I left my last company that I worked for, I, I really had a choice. It came down to, I, I should probably move on and, and get to my own business, because if I don't, I'm probably gonna get fired, right? I had been promoted to uh my own level of incompetence and, and I was, I had some bosses that had without question, been promoted to theirs. And it just wasn't the same company that I, I, I, I worked at when I started in 1994. We went from, I, I was employee number 34, um, and we went from so we went from 34 people in January of 1994 to well over 1000 by the time I left in September of '97. So, it was an epic journey. It was great fun, but I needed to move on. And I, I did that in the fall of '97, started my own media buying agency uh for direct response radio clients. Within a year, I launched my own product on radio. Within a year I launched a television infomercial, and then I repeated that again, and that last product that I um developed was a digestive wellness program, and I took it 100% online. In 2005, and then took it through the best of and the worst of that economy. Came out the other end, tired, frustrated, needed to move on in 2010 and um connected with Quiet Light and sold my online business through Quiet Light, and then I joined the team. So I wasn't actually the original founder, my business partner, now business partner Mark founded it in 2007. And then uh I joined it after I sold my own e-commerce business in 2010 and he he and I are now partners. What was that, what's a digestive wellness? What's, what is that? All right, well, it really started out as a colon cleansing product. If you really want to gross your folks out listening. OK, so, yeah. So no, anybody that's over 50 years old starts having this conversation where a doctor is gonna be inside their butt. Yeah, yeah, no, it's not suprep like my wife just had her colonoscopy and uh you know, it's, it's, it's quite the process, but Yeah, this was, you know, I was 29 years old working at uh that company that I mentioned, and I was single, uh, living in Portland, Maine, where there's more bars per capita than almost any other city in the country, eating terribly, uh, having a great time, living the life, and, um, we were selling this type of product, uh through uh uh radio and TV spot ads and infomercials. And I, I used it and I'm like, there's just no way I should feel this good. Given what I'm putting in my body with alcohol and junk food, I feel amazing. Why do I feel so good? And I said to myself, if I ever, uh, go out on my own, I'll, I'll, I'll launch a product like that. It wasn't the first product I launched, it was the second, and then it went from that to a full digestive wellness center where we wrote good quality content over the course of 5 years, specific to Uh, the different, uh, processes in the digestive process from the mouth to, you know, the eventual exits. So you were uh you were focusing on the copy and the offer, how great that has to be. I mean, the Dan Kennedy and the, the, the big guys that write copy. Yeah, all we did was write good quality copy over 5 years and Google rewarded us. We, we did spend money on pay per click because we did have a product or a product line. And um it it just paid off over time. It's patience, it's being as helpful as possible and educating the potential consumer on whatever ailment they're doing a research on. It wasn't pitching them products, it was very subtle, giving them, giving them the information they wanted along with an opportunity to look at a supplement option, if that was the route that they wanted to take. Yeah, I got, I gotta tell you, I just went to the doctor, uh, and just did my checkup and, you know, a couple things were high on my metrics, so you really start thinking about, you know, I need to change my HDL, you know, less meat. Less trans fat, less processing stuff. So there's that timing is perfect cause I, you don't see those ads before that, and then when you start thinking about it, you start buying stuff. Oh, all you have to talk about, all you have to do is talk about it with your with your phone around and you'd be you'll get ads served to you by Google. It happens to me all the time. It's a little creepy now. Um, you know, back in 2005 when I started, it was, it was a little less competition, much easier in many ways, but very, very different also. And you sold that to Quiet Light, through Quiet Light, through Quiet Light. Yeah, I sold it through Quiet Light. I, I, uh, had my initial conversation with Mark in the spring of 2010. And he's, you know, one of 3 brokerage firms that I talked to at the time. Uh, the other two were just trying to reach through the phone to get their hooks into me for a commission, and Mark, uh, delved into my P&Ls, uh, looked at my AX schedule, firmed up my discretionary earnings, and said, hey, based upon trends, things are coming back rapidly. You're growing again after shrinkage in 2009, right, where the worst of the economy was. Uh, you, you might want to give it another 6 months before you sell, cause it's gonna be in your best interest if you do that, and he showed me the numbers based upon my growth, and I thought, this is a guy I gotta work with. He's actually telling me to go away because it's in my best interest. And that's exactly what I did, and I came back, uh, 6 months later. Jason ended up being my advisor at the time, Jason Ylowitz. He's still with Quiet Light. Jason, he's still here, man. Um, he was my advisor back then, and, uh, he's, he's just a great guy, become a good friend over the years. Did Mark tell you, did you prescribe anything or did you said wait for the trends to turn around? Oh, he educated me. He educated me without a doubt on all the The strengths and weaknesses of the business at the time, what buyers want, what they fear, um, what I needed to prepare for, you know, the eventual exit in terms of due diligence and SOPs that would make my life easier after the sale. Uh, basically everything I needed to know, you know, to have a better exit when the time came, that was the key differentiator. He really helped me and educated me as much as he could. Uh, I, I, I think you and a couple other people asked me, you know, I was looking for to sell my business at that time. I, and a few people asked me, you know, how much time, you know, the metrics were OK, it wasn't great, but you asked me how much time I spent on the business, and I said something like 50, 60 hours. And you, I don't know if it was you or somebody else, you said that's too much cause I'm selling other businesses that are You know, pull in 400,000 a year, and they're only working 4 hours a month. I think that's an exaggeration, but the point was you said you gotta have a system in place. Yeah, you know, an individual owner operator that wants to buy your business doesn't want to buy it and and work 60 hours a week. They may early on because they're drinking through a fire hose in terms of their learning. Um, but ultimately, you know, most of these e-commerce or online businesses, whether it's content sass or a physical product, are operated in well less than 40 hours a week. And then you, you joined the uh quiet like brokerage and how did that go? We were you just saying? Uh I'm trying to understand, you know, a lot of people go, I'm just gonna keep buying and then selling business and I'm, uh, you know, I wanna keep growing this business, or I'm gonna create a portfolio of them and then take it bubbly or sell it to private equity. Yeah. Why, why did you want to get into a transactional type of mode? Uh, uh, you know, I'd, I'd already had 6 acquisitions and exits under my belt at that point, and I got to the stage in my life where I didn't want to climb that hill again. I'd, I'd been there, done that, had my, uh, success, and it was a point where I wanted to help others, and that's really the team and quiet light. Everybody's a very successful online entrepreneur. They've all built, bought or sold their own online business, and uh and this is just their next adventure. It's uh it's, it's different, right? Um the The, the benefit of the role is that there's uh for an advisor, there's, there's no overhead, right? You don't need working capital, you don't have money tied up in inventory, you just help. Now, that's the key thing in a differentiator. They're not sales people. Their advisors that have the experience, they've been there, done that, and they're here to help first and foremost. And that, in many cases will lead to, hey, look, John, I don't think it's in your best interest to sell right now, you need to fix this, this, this and that, and then when you're ready, when you're gonna have your exit, it's gonna be bigger and stronger. You know, I had a conversation with somebody yesterday I've known for, you know, several years, and he's been running his business for 10 years. And a couple of things happened in the business where he's just tired and frustrated. He's like I, you know, this happened and I'm ready to move on. And I said, OK, well, what was your original exit goal? And it was $5 million. I said, OK, and what are you hoping to sell it for right now? He goes, I would take 2. And we went through the whys of why he would take 2 now versus, you know, getting through a rough patch, and how to get through it, and set a goal and reverse engineer a path to it. Um, and now he's got to make a decision whether he wants to fix the things that need to be fixed and live to fight another day, and, and have that $5 million exit, or only take, you know, a small portion of that, not be able to be done, right? The $5 million exit for him would be done. He'd be like, OK, I'm good, I'm done. I'm gonna do whatever the hell I want for the rest of my life. He, and he's in his 50s already, so if he just Does that short exit now, um, he's gonna have to continue to work for another 5 to 7 years, and we just went through the whole process with him and, and give him the tools to make the best decision for him, not talk him into listing his business for sale. Yeah that's what we do and that's what we do with everybody. And the economics are sort of like more like buying a house. I mean, you're 100% commission, right? You don't. Yeah, yeah, we're we're not, we're not your an investment banking firm where they take a retainer and you know, a flat fee to start with and then a monthly retainer until the business is sold and that retainer is non-refundable. We are success-based advisors, so we only get paid if the business sells and, you know, it's Uh, uh, an exploding niche in the M&A world. Uh, granted, we've been at it since 2007 when Mark founded the company, but, you know, 14 years later, it's really, uh, catching on. Uh, we've had strong year over year growth and it's just the right place at the right time, um. And we don't have to. Pitch or sell people where the pipeline is big enough and long enough where we just want to have the best brand and reputation and help people first and foremost, and it's a strange thing. But the more people you help, uh, the, the better your brand and reputation and, and the more your business grows in the long run and grows the right way as opposed to focusing in on that commission, that next one, that next one, that next one, just trying to get the numbers in instead of truly helping people, um, where you It's, it's a strange thing. As you get a little gray in your chin, you realize the more people you can help and benefit, the more it's gonna benefit you as well. And that's, that's basically the approach. Yeah, you can't help somebody else without helping yourself. That's a nice parable, right. I, I noticed on your website, man, you're really moving up in the revenue size, yeah, there's much larger businesses when there was, I mean, I, I looked at, you know, 5 years ago and you're like, you know, $100,000 business or a million dollars dollar business. You're talking about $29 million dollar businesses. Yeah, we, um, you know, that first full calendar year when I was an advisor, I did like a total of 23 transactions, which is just nuts at this point looking back in history. Uh, and I think the average transaction size might have been 125 $150,000. Uh, today, the average transaction size is, you know, just $2 million but we, we generally do anything between $250 to 25, but as I said earlier, the $25 is creeping up, we, we keep getting pulled in that direction, and it's because of people that we've connected with. Um, and, you know, their business is just growing and we, we grow with them in that relationship, um, and then when they're ready, the business value just simply might be higher, and, and we're, I, I have no doubt in my mind, I still talking to the, the team the other day. Um, you know, I've sold personally about 100 million in transactions, the team collectively, about a half a billion, and that's gonna change, uh, pretty rapidly, but I, I think in the next 24 months, we'll have someone on the team that will close $100 million in transactions on their own, and it could just be 4 transactions where each of them are 25 million. It's starting to happen. We didn't think we'd want to play in the eight-figure exit business. Um, but I had one that was just uh. Just under 8 figures, about $9 million. And the reality is that They're not all that different than than the ones that are, uh, you know, a million dollars or $5 million. The $10 million ones are are very similar. The, the, the $25 million your buyers may be different, but we're dealing with people that have raised, you know, hundreds of millions of dollars now and looking at these businesses and so we're Different type of buyer now you're, I mean before it was somebody that, you know, it's, I had $100,000 in cash or I went and got an SBA loan. Or it's seller financing. Now you're looking at somebody and and you know, correct me if I'm wrong because I'm still in the M&A business looking for business too, but, you know, if I could put up 500,000, but I still have to find another 5 million bucks to to raise it. I'm gonna go to a lender or private equity or Yeah. Yeah, most people have that lined up before they make an offer, right? Because they have to these days. Uh, if they don't have that lined up, they're not going to get the business simply because in today's market, there, you know, are multiple offers on most businesses that we list. We have more buyers than sellers, especially when it comes to an FBA business because of the aggregators. I think year to date on average we had something like 4.6 offers on every listing. 60% of them have gone at or over asking price. It's 4 to 5 offers on an FBA business, yeah, on average year to date, and it's because of those aggregators that have cash in their pocket and they're ready to put it down. Yeah, yeah, and individual buyers as well. Everybody's competing against each other now, um, but there's a lot more aggregators with, uh, yes, they have cash, John, but they're not making all cash offers even though they say they are for the most part. Some of them are having to step up there because they're competing against other aggregators and do that. But generally, you know, they, what they want to do is, is put as little cash into it as possible. So if you're selling a business for You know, a million dollars to an aggregator, they may get you $600,000 in cash at closing, a $200,000 earn out, and a $200,000 stability payment. And then they also want, you know, you to give them a couple of months' worth of inventory for free. That's where they get their working capital peg. Uh, it's uh uh. Creative to say, to say it nicely. I haven't heard this term. What's the stability? Yeah, if you look it up, you Google it, you're not gonna find it. It's something that they've created, uh, and now uh originally Thras created it and now all the others are using it as well. Basically, it states, you know, John, if I buy your business and it's doing a million dollars in revenue in the trailing 12 months when I buy the business, we're gonna give, uh, we're gonna hold back 20% of the purchase price or in this case $200,000 as a stability payment. 12 months after I own the business, if the business is within 90% of that million, I'm gonna pay you that $200,000. If it's below the 90%. You're not gonna get it. So they're hedging their bets trying to make sure they don't buy a business that falls off the cliff. You're counting on them to do at least 90% in order to get your 200,000. So, you know, in the, in the, in the book, I go through that in great detail. There's things that you have to do as a seller to make sure that you don't go from 90% or 200,000 to 0%, right? You've got to step it down, 85% to 90%, you're gonna get 150, 80 to 85%, you're gonna get 100% and so on and so forth, and then try to create some upside for yourself as well. Is that a, is that included in the, the, the offer, the purchase price, or is that a bonus on top of it? No, no, no, no, it's not a bonus. It's not a bonus there. No, it's not. It's, it's, they're only gonna pay the $200 if it's part of the purchase price. So you're not in that scenario, you would get $600,000 in cash, a $200,000 stability payment if the business is doing 90% of the same revenue 12 months out, and then a $200,000 earn out as a percentage of they're gonna shoot for gross profit or Ebida, which you don't want to do either. And how does that, how do you reconcile where, well, am I the the seller is staying in the business partially or the new owner is running the business? No, no, no, the new owner in this case, if it's an aggregator, they're running the business. OK. So one of the things I recommend is sellers if they're if they're selling on their own or through a firm like Twilight, they they and they've got any kind of stability payment. Uh, or earn out, they should, uh, retain view-only access to the reporting software or to seller, right, so that they can sleep better at night and look at the numbers, right? Other things you want to do, if you get any kind of stability payment or earn out or anything in there that's tied to their success when they're running the business, you want to make sure that they don't run out of inventory. So, if you've got a stability payment or earn out, you've got to have a clause in there that says, if during any two week period in the You know, 12 months or whatever the earnout period. If you run out of inventory on XYZ SKU for 2 weeks, all bets are off. You owe me in full. Because these guys are growing like crazy, right? Takeras for, for example, these guys are really good people, right? But they're growing like crazy and they're just trying to find bodies to manage things. Those bodies, those people, those individuals that are, you know, doing inventory management are not gonna care as much about making sure they never run out of inventory as you are, the business owner. Yes, they've got more cash, but they've got people that are employees instead of owners that are not as passionate about it. And it's going to happen at some point where they're gonna run out of inventory, and if you've got a stability payment tied to, you know, revenue, but they run out of inventory for a 4-week period. And you hit that 88% instead of that 90%. It's not your fault, it's theirs because they screwed up. So you should get paid in full, so you can have a clause like that in there as well. Yeah, absolutely. I mean, if I was a seller and I said, well, look, I don't know about this stability payment because I've grown the business 5 years consistently every year, inventories, and you want me to, you know, you're gonna judge me or grade me on some kind of a stability payment. You know, that happens in here. I, yeah, all, all they did was create something that sounded. Interesting or good, so that they didn't have to give you as much cash at closing. The more cash they they get to hold on to, the more businesses they buy, the, the, the lower multiple cash wise they're putting up front. It's it's very creative. These guys are smart, they're well educated, they're likable, you would enjoy going out to dinner with them or having a drink with them, they're good people, um. And but that's the point of being a buyer, shrewd allocation of capital, and I'm not gonna put as much as possible down on the payment I can because I got to conserve the cash for something else, you know, it could be inventory, right, right. And early on, the, the likes of Threo again, good people had their way, right? Today there's, you know, 50, 60 aggregators that have raised hundreds of millions of dollars. Well, $4 billion collectively. Some have only raised $10 million but You know, they're all competing against each other, so we're now seeing, um, closer to true all cash offers and the multiples are going up substantial on these types of businesses. Now do these guys, I'm just curious, do these guys, uh, these funds, uh, do they expect you to present pocket offers or they just say, no, wait that's that's not in our best interest, in our client's best interest. Let's say I took you on as a client and all I'm gonna do is present it to one aggregator. That's like showing up to the shark tank. To pitch your brand and everybody calls in sick, but Mr. Wonderful, what kind of deal you gonna get, right? Not a good one. You're gonna get a royalty deal. It's not gonna work in your best interest, so no, they all have to compete against each other in order to get you the best value and the best deal structure. That's the problem with, you know, when I. Uh, I, I, the chapter 13 in the extrepreneur's playbook is specifically geared towards working with aggregators and negotiating with them. You You, it's, it's so flat. I talked to somebody this morning, I had coffee with them locally here. You know, he's been running his business for 20 years, and, and, you know, somebody has approached him in investment banking firm to buy his business. We're, we're talking. Many, many millions of dollars into the well into the, the 8 figures. Um, and, you know, as he said, the very successful entrepreneur like this, he said, it's flattering, and it piques your interest, and there's no question I'm gonna, you know, explore it. Um, the thing that he is smart enough to do is to make sure he's exploring it with others as well. He's not gonna just talk to one of them. With the individual uh Amazon FBA business owners, they get flattered because one of these aggregator reaches out to them, um, and then they're dealing with just this aggregator, that aggregator knows at the moment there's no competition amongst the other aggregators to buy this particular business, so they're not gonna pay the best value for it. We had a situation um recently through Quiet Light where uh one of the aggregators made an offer on a business, um. Pre-listing at Ku. I had made an offer without us involved of about $2 million. A very strong business, very attractive business. Um, the owner of that business ended up, uh, talking with a member of our team, signed an engagement letter, listed it. We had 8 offers. We sold it for $5.5 million. Oh my God, OK. Wow, huge, huge difference. Seller says thank you, Joe. Yeah, yes, so I said thank you, not actually she said thank you, Chuck. Um, but, you know, that's when you're dealing with one, you're not gonna get the best offer. So why pitch just to Mr. Wonderful or why, why only, um, negotiate with that one aggregator that reached out to you that really has a true interest in your business? Yes, it's, it's flattering, but it's not the best for, for all the time, energy, effort, risk, uh, that you took as an entrepreneur. You haven't taken all that much cash out of these businesses if it's physical product, you're just keeping up with inventory. Uh, it's, it's, it's really not. In your best interest to just work with one of them. You're not gonna get the best deal or deal auction. I mean to get the best price as a seller. Yeah, so, you know, a part of the, the challenge with a podcast like this or a conversation like, you know, like this that I have with one seller is that it's way too much information to absorb all at once. So, you know, I've, I've talked to, as I said before we started recording about 8000 individual entrepreneurs over the last 9 years, and there's so much information to absorb in those conversations, um, that I, I, I, I couldn't, they're so nuanced and I couldn't talk to enough people, right? Because there's probably 8 million that could use the information. So that, that was the point of writing the entrepreneur's playbook. It takes an entrepreneur in the online world, all the way from Hey, I'm thinking about selling my business, how do I prepare it? How do I, how do I train? How do I get trained on how to sell this all the way through to, you know, the closed transaction. It's everything you need to know from A to Z and it's written in a way that, you know, it's called the playbook. So it's written in a way with lots of sports analogies. The simplest one is that, you know, you don't want to wake up and just run a marathon or a 5K. Let's just stick with a 5K, right? You could probably pull it off. But you're not gonna finish well and you're gonna pay the price the next day, right? It's the same thing. If you don't train for your exit, you and you just wake up and decide to sell or wake up and accept an offer from an aggregator, you're gonna pay the financial price, right? And you're gonna have pain afterwards because the The deal structure is not gonna be good. So you got to choose the right pain. Do you wanna have the pain of that poor deal structure and, and, and, and poor price and dealing with stuff after closing, or do you want to choose the pain of getting some training, understanding the value of your greatest asset, your business, and prepare for it and exit well at maximum value with no catches on the back end. Nothing that's gonna keep you awake at night. Yeah, so let's, you mentioned this a couple times and uh you told me about this, but you've got a book coming out called Exit Premier Playbook, and that's coming out June 15th, June 15th, yeah, next Tuesday. Available through your site and Amazon. Yeah, exitpreneur.io where we also share lots of other tips and information, but you can just go to Amazon and just search exit Prener. It's uh it's a new word, I guess, instead of entrepreneur, it's exitpreneur. Um, and the book will be there in Kindle, paperback, and hardcover as well. Beautiful. And it's all talking about how to prepare your business, uh, just to get the basically the best price at at sale. Yeah, yeah, this isn't, this isn't gonna teach you how to, you know, build your online business in terms of, you know, marketing funnels and so on and so forth. That's what not that that's not what this is about. This is about. You understanding uh the value of what is likely your most valuable asset, how to set an exit goal, and how to reverse engineer a path to it. It's everything. You need to know, um, from the thought of that all the way through to the to the eventual exit. So that brings me back to my business that's selling hearing aids, you know, I was spending 50, 60 hours on the business, and then I was told by you and I, I think a couple other people spent, you're spending too much time. You gotta put systems in place. Does it? I'm looking forward to reading this book, but uh tell me how that, you know, if you could say. Yeah, we break it down in there as well, you know, I, I, I talk about, you know, here's what a buyer's gonna say in that situation. You say, John, look, I love your business. I think it's fantastic, but, you know, I'm not working 60 hours a week and I'm not gonna hire somebody that's gonna be the CEO of it, and, and they're not gonna work 60 hours a week. So what I have to do is I have to hire somebody to to make up that other 20 hours. And I only hire Americans and I only pay $25 an hour for that work, or $50 an hour, whatever they are in control of making that decision on how many hours they're gonna allocate to that new person that's gonna pick up some of the slack, the extra work that you do, and they're gonna determine how much that's gonna cost. Whereas, if you train for your exit, you're gonna go, OK, I know that's gonna be a problem. This is what buyers fear is this workload. I'm gonna have to pick certain things and outsource it. I'm gonna hire a VA or I'm gonna, I'm gonna be in control of who that person is that's hired and how much I pay them. You might be able to hire a really qualified, well educated person from the Philippines for $5 an hour, or $10 an hour and overpay them, right? So they're incredibly loyal. Uh, and you may find that you're now working 30 hours a week. That's gonna make your business much more attractive to buyers, and they're not going to look for an adjustment. To the discretionary earnings for that additional payroll that they would need to pay someone else. You're in control of that dollar amount instead of them, and you're in control of the the hours that somebody else works instead of them. I kind of wish that book was around earlier because it took me about a year to fix that. Yeah, well, you had it's it's, look, we had conversations about it and you had conversations with other people as well, um. And it's, it's hard to absorb those conversations. Look, I, I, I've been on podcasts like this. I know what I know because I do it every day, and I've done it thousands of times. And sometimes I, I, I, I talk about it so casually that it's, it just goes over somebody's head. I've been on podcasts where I've explained something, somebody asked me a question, I explain it, and then at the end of the podcast, they try to reiterate it and it doesn't come out right, right? And it's not because They're ignorant. It's because it's complex. They're experts at, in this case, that particular individuals, an expert on selling on Amazon, but not an expert on, you know, making that Amazon business as valuable as possible to buyers. Well, there's such a, I, I, I'll be honest with you, there's a couple emotional parts in there. There's ego in there, there's all kinds of fear, worry, and doubt that just do not penetrate inside when somebody else is telling you what you should be doing cause they saw it 8000 other times. Well, that's why it's in the book, right? I think that, I think that you'll be able to look at it and read it and go, OK. That makes sense, and here's 3 examples from his experience and clients whose names have been changed to protect the innocent, right? Um, it, there's, there's tons of examples of people's Uh, success stories and, and some epic failures, you know, including, including my own. They're both in there, and so everything you hear from other people and you retain part of it, and, and you're like, OK, well, it kind of makes sense, but let me work through that. It's all here now, and and then there's math and logic associated with it, and that's the key is that you, you're gonna be able to understand how to How to get a pretty close ballpark calculation of your discretionary earnings, and then a ballpark value of what that business would be worth. And then, and then that kind of gets a little bit more exciting cause you wanna, you just can't, as an entrepreneur, we just sort of march along and we're on that hamster wheel and, and you can't get off, right? But And you have good days and you have bad days, but if you're working towards a goal, like everything else in life, if you're working towards a goal and it's very specific and clear, those hard days get a little easier. And so we're trying to define that goal and show you how to get there with the details. You talk about that like how to have your exit in mind? Absolutely, absolutely. It's, it's all there and it's not uh. It's not a pitch for Quiet Light Services. This book is written by Joe Valley. It's not written by Quiet Light Brokerage, you know, so people can take it if they're thinking about selling their business on their own, you know, it's there. This is gonna help them. If, if, if they're working with another brokerage firm, and they've got a relationship with somebody and they wanna sell eventually through that other brokerage firm, this book is definitely gonna help them. If you're a buyer out there listening, and you're thinking, I wanna buy an online business, this is gonna give you the inside track to that because it's gonna give you information that um may be at a higher level than what you're Uh, sellers' information is that or what that seller's advisor is if they're inexperienced. You could look at something and go, hm, they missed that ad back, that gives me instant equity. I'm OK paying full price because they did it wrong, and the business is actually worth more because discretionary earnings is $22,000 higher, kind of, you know, it's it's great for all parties involved, I think. Yeah. That's interesting, and it's I'm looking forward to that. That's June 15th, right? June 15th on Amazon, yeah, or Exitpreneur, yeah. Uh, if you go to Exitpreneur.io, um, you get three free chapters as well. Um, the book was written to help, right? First and foremost, so I can't just say that. I have to, you know, walk the walk as well. So, um, I've got the intro and 3, what I call shareable chapters. So I'm giving links to view only PDFs of the chapters that will live in my Google Drive folder for anybody to review and share with anybody they want. And those chapters are are deal structures, negotiating those deal structures and a full chapter on ad backs as well. And then there's an intro that gives big picture stuff. So they're, they're kind of the three most important chapters that I think somebody um uh can use. Let's get, let me go back to just a couple very common occurrences that happened, which is, what are the what are the, what do you see as like What when you come to a seller, what's the most common things that happen? I like, first of all, it's valuation. I know that because you just, everybody thinks their business is worth more than it is. And how do you have that conversation with somebody? Do you just say, hey, look, these are the stats, these are the comps and it is what it is, or is it more of a It's black, white, yeah, and every business is different, right? There's no two businesses that are alike, so we gotta deal with each of them individually. The first thing that I see, and this is the tides starting to change on this because we've talked about it enough, but you know, too many. I'd say more than 50%. Of online entrepreneurs, again, whether it's casas content or physical products are not using accrual accounting, uh, and they may not be using QuickBooks or 0. So first you gotta get your financial in this stage of age doesn't use some some kind of a quick books or something like that. I just had a conversation with somebody that's got a business that's probably worth about $15 million. And he does not use QuickBooks or Xero, doesn't even run P&Ls. He just pulls money out of his business when he needs it and he, you know, looks at his, uh, you know, merchant statement and Shopify, you know, statements and things like that. Does that affect his valuation? Well, is it, is it going to instill confidence in buyers? No, right. And so, you know, that goes to, you know, the risk factor or pillar or. You know, we talk about uh what buyers want and fear, and, and risk is what they fear, and you get a business doing $15 million in revenue but you don't have any financials to speak of. That's not going to instill confidence in your buyers and they're not gonna pay as much for your business. Whereas if you hired a good quality e-commerce bookkeeper, you can do that probably for less than a car payment every month, and they'll get the numbers right for you. They'll do it in an accrual basis, accounting, and they'll present you with profit and loss statements, balance sheets at the end of every month. Um, all I need to do is get an export of that with a monthly view going back as far as possible, and then I can help firm up the true value of your business. See, you gotta have that to get in the door with buyers. You gotta get in the room. So clean financials, clear financials will get you in the room. Um, what they'll pay for it is depending upon, you know, trends, risk, balance, growth trends, transferability, documentation, all of these other factors. Yeah. So once you have that conversation with them about valuation, they go, hey, look, we're in the same ballpark, you've got a range from, you know, there's a risk. Let's say an IT business, we've, we've been looking at IT businesses and uh business valuations, resources, values that at 2.7, 8.7, something like that, and medium is 5.2. And a number of You know, factors. If the guy leaves the business, there's no IP, there's no reoccurring businesses, he's not gonna get an 8.7, he's gonna get it by a 5.2. Uh, how do you guys settle on that and then place it on quiet light? Well, we're looking specifically at recent closed transactions that are similar, right? And that's where we're placing the value on the business. We know what the feedback we're getting from buyers are, we know what the average, uh, multiple is for any Amazon business business uh content business or the business. FBA business is pretty standard multiple, right? No, no, changing dramatically because of the aggregators. Oh, just going up. Uh, yeah, yeah, and the deal structures are changing. Yeah, so you, you can't go, all right, well, FBA businesses sell for 3 times, it's not the case. It's not the case at all. It's, it's gotta be, you gotta look at it individually cause no two are alike and um some are worth a heck of a lot more than others. Some you're gonna sell right away at a 3 time multiple, some you're gonna sell right away at a 6 time multiple. It's something that's never occurred in history, right? Uh. These types of businesses that are consistently getting 3 to 4 times discretionary earnings. It's happening and we're getting more than that in many of the cases. So it's, it's looking at it individually, John, and, and making a decision uh based upon all factors on risk, growth, transferability, uh, documentation, trends, skew balance, um, the owner and how prevalent they are in the business, um, QuickBooks and Xero and, and accrual accounting, whether it's content or SAS as well, um, you know, if you've got a SAS business and You got 500 customers or 500 users, but 251 of them come from one company, that's a risk problem, right? 50% of your business is truly with one company, even though you got 251 paying users underneath that company. It's a risk and buyer's gonna, well, OK. We got a problem here, we're gonna pull that value back or that's what we would do before we listed the business for sale. We're gonna look at it from a buyer's point of view and, and put it all out there and here's, here's, here's the most important thing, and this is what when people sell their business on their own, oftentimes they're selling for less than they should, not more than they should. I think that you said earlier, people think their businesses are worth a lot more. I find when they don't have a good grip on their financials, um, They think it's actually worth less, cause they might be doing the numbers off of cash accounting and they don't understand that aspect of it, which is OK. But if you price the business properly, You're going to attract more buyers, there's gonna be more competition for your business and more offers. And when you have more eyeballs on the details, and more competition, it's going to, you know, get you a better deal structure that's at or uh over asking price, and it may get pushed up a little bit. The difference is that if you price it really aggressively, buyers are instantly gonna go, yeah, that that multiple is too high. I, I, I get what they're doing here. What I'm gonna do is just lowball them. And even with lowballing and negotiating, you don't get up to that properly priced listing, you know, number. It's, it's, it's a, it's a psychology thing with with buyers. So the best thing you can do as a seller, if you're selling on your own or with an advisors, make sure it's priced right based upon real market trends, so that you get as many eyeballs on it as possible and as many buyers on it as possible. So hopefully you'll be in a situation where you've got multiple offers, and you get to choose your buyer and choose your deal structure. Cause it's not just about going under Letterman's head, it's getting all the way through due diligence, and then having a nice healthy training and transition period, so that you can move on to your next adventure, or if you choose to do an equity role, it's somebody that you trust, and so on and so forth. So these this due diligence process, how long does usually see that takes? It's generally 3 to 4 weeks, not a whole lot more time than that. Are you seeing these uh larger funds uh outsourcing the due diligence to somebody else, but, uh, No, not necessarily. They, they're, if they, if they started doing it initially, they're now doing it all in-house for the most part. Some of the smaller ones might might be outsourcing it a little bit because that's part of their investor requirements until they bring it in-house. Is there a big 125 point checklist that they run through and Uh uh, each, each of them are different. I know that there's a company out there called Centurria. It's owned by uh Chris Yates, and, uh, Centurria has a checklist like that. They'll look at it depending upon the type of business. It's C E N T U RICA.com. Um, they've got that checklist and they'll run through all of those points for an FBA business, for a Shopify store, for a content sites Sass business. Um, they'll do all aspects of that research for you and due diligence, checking the numbers, they'll do a live screen share with the owner of the business, and they'll give you a healthy report at the end of it all, and that report will tell you what the strengths and weaknesses of the business of the business are, what, what you should pay attention to in terms of potential problems, and really at the end of the day what What it tells you is where you can uh strengthen up the business and and have it even, you know, a stronger value when you eventually exit. Yeah. And it's, it's, you know, it's somebody that's done it a few times. It's just, uh, you should do it, you should run your own number of financial analysis and check everything yourself, but uh have them do it as well. Oh yeah, we, I, I was working with this uh guy a lot younger than I was and he was trying to buy this e-commerce business with his jeans, and they got into it and they saw, well, most of the sales were coming from mask. I, well, that business is dead, man. This is not worth anything, what you think it is, right? Yeah, no, I mean that's This should never been Listed that way, right? I mean, uh, I've had those evaluation calls as everybody else on the team here at Qulight and the reality is that, you know, that's a temporary blip in, uh, revenue. It's gonna change and buyers are gonna look at and go, no, I don't think so. And so I'm shocked that even 11 other letter been sent. I it's like bordering on fraud almost just saying your sales are, you know, $5 million in jeans like, but, uh, you know, 3.5% of it came from mass. What an incredible waste of everyone's time. Yeah. Right, yours, the seller, the buyer, everybody involved, you know, you gotta, you gotta get ugly fast or quick or something like, I forget, Chuck on the team uses that phrase and he corrected me. I'm not using it right, but you gotta be, you gotta be honest. You gotta put the details out there, the, the, the, the expose the wars of the business in the, in the package so that people understand, you know, it's strengths and weaknesses and, and get through all of that before you go under letter of intent. When you do that, you do it right. You get to closing. When you hide things and like you said, you know, borderline fraud stuff, it's a waste of everybody's time and you're not gonna get to closing. There's no point in going under LOI if you, if you're not gonna get to closing. I'm gonna go back to the expert Premier's playbook. Now, it's easy to say, you know, look, here's what you should do to get the best valuation of the company, but sometimes that takes, you know, I, I've got to go find those resources to put the team together, uh, to, to help me in that area. Do you recommend certain areas or you say, well, just, you know, yeah, yeah, finally, finally, you know, we've been referring people out to You know, tax advisors, CPAs, e-commerce, bookkeepers, lenders, you know, lenders for inventory, SBA lenders, attorneys for years, I quite like. Finally, I put together a list and it's on the partner page at exit printer.io. If you go to the partner page there, um, it will give you resources uh of people that do all the different aspects of, you know, this, this part of what we do that will help you. If you need a good e-commerce bookkeeper, there's probably 5 or 6 there that you could choose from. If you need a, you know, a contract attorney, which you eventually will when you sell your business. There's some in there. You know, if, if, if, if, you know, we can help you with the value of your business and, you know, reverse engineering a path to that eventual exit, but we're not tax advisors, right? So we've got some tax advisors in there as well that can help you with. Um, getting a, a much clearer understanding of what's going to be left over after the sale. I talk about it in the book. I give you ballpark numbers, but those numbers are subject to change based upon the political climate and the administration if capital gains taxes go up or down, you never know, but you really got to uh do your own numbers at the end of the day to determine, you know, how much you're gonna have left after the sale cause Exiting for X amount isn't really as important as uh how much am I gonna have left from that amount when I'm all done. Right, right. Do you find anybody that, you know, looks at your, the, you know, the wisdom that you've instilled through them to go, hey man, I've got a renewed spirit in this. I'm just gonna keep the business and just stay with it. Yeah, yeah, that's and that's, that's awesome, right? You know, it's great, you know, I had a I had actually had a Talk about it in the book there a little bit. Um, I had a business that was listed for sale and it was in the mid six figure range and it was, it was being sold because the owner's husband was being transferred to Japan and she's like, I, I, you know, I'm going obviously and some of her business was tied to local vendors in the San Francisco area, which is problematic, right, because you can't sell to somebody in Maine if you have a business that is dependent upon local vendors that you go visit in San Francisco. Um, but it was a must sell situation, so we went ahead and listed the business and there was actually interest and activity for about a 3 week period and then the transfer fell through, and she said, look, I'm gonna go ahead and pull the listing and work on those things that we've talked about that should have been worked on prior to listing it. Um, and she came back 18 months later. And the business was worth, you know, more than double, and she wound up with, you know, nearly a seven figure exit because she went back and fixed the business to make it fully transferable, not location dependent, cleaned it up, financials were in perfect shape. She had multiple offers within a couple of weeks and ended up selling the business for all cash. That's beautiful. Yeah, yeah, so you've taken 8000 conversations, instilled this wisdom in a book, and it's definitely gonna help a seller. How, how would it help a buyer? Oh, because the buyer now will have a full understanding of how these businesses are valued, and when they look at a listing, they'll be able to look at it and say they got this right or they got that wrong, you know, um, they'll be able to determine the, you know, the best way as a buyer to get instant equity for a business that's growing like crazy is if the seller, you know, presents it on a cash basis cause they're, you know, especially an inventory-based business. Yeah, and it's the same is true for assassin content, you know, that that if it's cash, that net income is always lagging 30 or 60 days on a content site. Uh, or if it's a bus uh a product business, the, let's say they've got $300,000 in inventory on hand. On a cash basis, that's just $300,000 off the net income of the business. You sell that business for that and your multiple is 4, you just lost $1.2 million. If a buyer sees that, they can jump on that, make an over uh asking purchase price all cash, and they're gaining a ton of instant equity instantly. So they're gonna learn, you know. What people are doing right, what people are doing wrong, and be able to analyze that and the businesses that they're looking at. Wasn't written for them, but it's definitely a side benefit for them. Yeah. Uh, what do you think of marketplaces like, uh, just an example of the Airbnb. I'm not saying that that large, but the smaller marketplaces where you need to aggregate buyers and sellers together and nothing really grows until there's an interaction and commerce between the two. There's there's a, there's a place for it, right? And it's not uh for a business that is. A $500.02 million dollars, $3 million because the nuances are, I mean, you're not gonna, you're not gonna get it right for the scale right. I just, yeah, right. So the, the, if somebody has a smaller business, let's say it's $100,000 and they want to list it on their own on a marketplace, this book will help them value it tremendously. They'll get it right. Um, the You, you mentioned something about emotions earlier on. Yeah, you know, what most people will not be prepared for, and I talk about it in the book, is the emotional stress, uh, that that is gonna happen when you are, you know, 2 weeks away, 3 weeks away, a week away from $100,000 a million dollars, $5 million you are gonna stress out. You're so close, but it hasn't happened yet. Your, your, your transaction will fall off the rails at some point, it's gonna go sideways. You just have to have the emotional fortitude to stick to it, not lose your cool, and not, you know, renegotiate the price of the business unless it's done with math and logic, right? That's the problem with marketplaces. If they're, you, you just You, you just, uh, it's You don't have somebody helping you, in a sense, right? Somebody with experience helping you and holding your hand. Uh, they're OK and there's a place for them, uh, eventually quitlight will have a smaller, you know, listing marketplace because we just get so many that are coming our way, uh, and we just try to help them so that they get larger, but some of them are just absolutely ready to sell, and eventually we'll have that, and there is a place for it, and they're just capped out. Sometimes you get in an industry, you build a marketplace and you're just capped out. You're really not gonna grow anymore. I mean, we, I, I'm gonna give you an example of this. I was a co-founder of TurboSquid, and it's a marketplace for 3D assets. It took 20 years to sell that. Shutterstock finally bought it, but it took 20 years. Wow. Yeah. Well, the, the what I see is a marketplace in this situation is just putting buyers and sellers together where they can, you know, look at a listing and make a transaction decision based upon the information that the seller puts up there on the marketplace. The book will help them put accurate information up there on the marketplace or prepare their business for sale before they put it up there on the marketplace, but they won't have somebody helping them with the transaction in between. They may have somebody that, you know, moves the transaction from point A to point B to point C within the marketplace to help them go through the processes, but uh it's not somebody that's gonna Have those deep conversations with them about, you know, why they should or shouldn't accept this particular deal or maybe you want to work with the seller instead of that that buyer instead of that buyer, um, yeah, in that situation where, you know, that business sold for 5.5 million when an aggregator offered two, there was a um multiple offers and the They were almost ready to agree and sign a letter of intent for one of them, and then another offer came in that was a million dollars more. And emotionally two completely different aggregators, just a million dollar difference, yes. The seller, uh, you know, she was, she was distraught about it, right? May sound strange, but she had her mind set, she was done. She, she picked one, liked the people, um, and, you know, had Made the decision that that's who she was gonna work with, and then another one comes in out of left field. And uh you know, you gotta do your homework and research on that aggregator to make sure they're legitimate, make sure they're truly funded already, uh, and not going out and raising funds for this sale, that's not what you want. Um, and it was very, very tough. I know it sounds odd, another a million dollars, tough decision. Uh, just take it, right? No, it was, are they real? Can we really close? Is it, is it, is it too good to be true? Um, and the, the reality was her business was amazing. She had multiple offers. If it fell through, she was gonna get it anyway. She, prior to being an entrepreneur, she was a branch manager at the bank making $60,000 a year. So we did the math on that. What does this mean? How many years are you gonna get paid for with this extra million dollars? And um it worked. We stuck through it and uh it was tough for her emotionally, um, at the end in particular because You know, it's never real until the money hits your bank account and uh eventually did. She's very yeah, that's there's two points in that. I remember selling my business and how many times you actually check your bank account to make sure that it comes in after the LOI signed after it's agreed to, and then you're like, ah, check the bank account, check the bank account. And it is you just go, holy shit. Yeah, I finished my transaction up for the transfer of all of the assets on a on a Friday, Friday afternoon, right? And so once I transfer the assets, then the funds are supposed to be transferred from escrow to my bank account and you know, so I had to, I did it on a Friday afternoon, so money couldn't be released until Monday. That was the longest weekend of my life. I had I had no business. I had no money, uh, you know, I was, I was terrified, but, uh, um, yeah, it's not real until the money hits your account. I, I have another client that, you know, they, they had the money hit their bank account, 7 figures. Had hit their bank account when uh the market took a dive last year because COVID hit and things were being shut down. And so something like March 17th or 27th of 2020, um, things just looked awful, except they just had 7 figures hit their bank accounts, so they were like, hm, this is pretty good. It's a it's a good time to get some money and maybe make some investments. Um, but, you know, they went through emotional hell for a while because their transaction was so tough and things fell through and got it back on the rails. Those are the things that marketplaces do not prepare you for, and they don't help you with that. And, and I think having an individual advisor um at your side is is definitely necessary for the larger transactions because of that. Hey, I, I'm gonna ask you one more question because we're running out of time. You know, when you said and when an offer is real, somebody else coming in with a million dollars, you know what I'm seeing a lot of, and this has happened, you know, maybe 5 times in the last year, is a private equity firm will come in, make an offer like uh we'll give you $5 million for it, or we'll give you $20 million for it. And then it just screws up every other offer that you worked on before, cause it's 2 times what it was. But then you go through this and it's not real. I mean, they're gonna put you through 90 days of due diligence, and they'll probably readjust your offer, and it's probably gonna go down. And then they want some conditions on there, like you gotta stay on for 3 years. You have you seen that, where it's just not real? Yeah. No, no, cause we, we vet these buyers, we pushed them through a process. And our letters of intent are very, very clear. Sometimes it's a letter of intent that the buyer presents, but there are certain things that need to be in there. You gotta you gotta lay out the deal points in a crystal clear way because those deal points are what's gonna wind up in. The asset purchase agreement, and if it's a private equity firm that's used to working capital pegs, we'll make it crystal clear. There is no working capital peg that will be applied to this business. Yeah, so you're not trying to sneak anything into this, I mean, this conceptual letter of agreement covers everything you talked about what this offer is gonna be, and they say, yes, I'm agreement, yes, yeah, yeah, when you, when you leave anything up to interpretation, you're leaving yourself up to renegotiation. In due diligence and you know, uh talking about that in in and I'm not even sure what chapters at this point, but negotiation on negotiations that you can get for free at Extern.io it it talks about, um, you know, uh, that everything in in in due diligence, if there's a renegotiation. It should only be with math and logic. If your seller's discretionary earnings was truly off by $10,000 you had a $10,000 higher, there was a currency conversion issue where it's really $10,000 lower. That is not an emotional decision in terms of renegotiation. It's math and logic. You, you, you're under LOI for 4 times, 4 times 10,000 is $40,000. This price of the business that, you know, goes down by $40,000. You might be able to say, totally get that, but we've been, you know, under LOI and another 30 days has passed. The SDE is actually climbed by $20,000. So let's just call it a wash. I see that happen as well. You've got to build trust early on. You've got to put, you know, by, by, by full disclosure in the package that you're talking about with your business. You've got to vet your buyer very closely, you've got to put all of the details properly in a letter of intent that clearly explains what the deal structure is, and then everything else is mat math and logic. I don't recall the last time I had a deal or we had a deal fall apart in due diligence. Because a buyer was just trying to renegotiate for the sake of renegotiating. Yeah, and the way you said that, if it's left up in interpretation, you're back into renegotiation. Yeah, that's It's really important because I I had this one experience I was in on a deal and I had to bring in an investor on it, and we had an LOI in place and it was signed, and then they got on the phone and they started pissing on each other's couch, like, wait a minute, we've already talked about this, and it was so important what you're talking about right now, just to have this trust up front and then vetted these buyers. Yeah, I, I won't go under a letter of intent with a, a buyer unless The person with the money is actually on the call, you know, uh, somebody says, yeah, my, my, my father-in-law is investing the money and he's gonna give me money for it. I'm like, OK, well put him on the phone. Let's have him part of this call. We're not gonna be going under a letter of intent with you because, uh, you know, uh, we don't have the full confidence that that person that's funding it is actually, you know, on board with you, so we need you both on the call. Um, and, and in agreement with this before we sign a letter of intent. Same thing with SBA lenders. Look, if you, if you come to the deal and you're an SBA buyer, awesome, love, love that. I think it's better for the seller because they're gonna get more cash and uh they keep the business for an extra 60 days and make more money. Emotionally, that's incredibly hard for the seller, most of them choose not to go with an SBA lender if they've got multiple cash offers as well. But I will not go under a letter of intent without having the SBA lender on a call with the buyer and seller. Already it's like Live Oak bank is saying already qualified or need the bank to say oh no, no, we've got to have a pre-approval. The bank's got to be on board with it. We won't sign a letter of intent to the bank's fully on board with it. But I also want the buyer and seller and the bank on a call together talking about timelines and setting expectations before we sign a letter of intent. That way everyone is on the same page and the emotions are not as high when the bank ends up, you know, overpromising and underdelivering on when they're gonna get that commitment letter, which they, you know, tend to do, right? They speak a different language, they live in a different world, uh, they may say, yeah, we're gonna close it, you know, in, uh, you know, 6 weeks. Closing to them maybe signing documents or getting that commitment letter, and then it's another 30 days to funding. So you've got to make sure everybody's speaking the same language. And uh the best thing to do is get on a call. We're all there. Let's do Zoom. I wanna see the whites of your eyes. Let's do it and just make sure we're on the same page. It just, it's the best way to do it. You can't leave anything, uh, you know, up to interpretation. How important an LOI and that conceptual agreement is. Joe, we run out of time, but I gotta tell you, I wish this book was around a lot earlier cause it sounds I I've learned a number of things here today. And you got the books called Exit Exit for Entrepreneurs, Exitreneurs. It's a lot of, it's a mouthful, isn't it? You know, you know, I, I had, I, I surveyed a bunch of people in the industry. And I gave them two titles, uh, you know, narrowed it down to 2, and one was Incredible exits and the other was the Extrepreneur. It was just excipreneur. Expreneur's Playbook coming out that's what it is. Everybody chose the other title, and I, I went to go with the Exit printer's playbook. Yes, you can find it on Amazon or at Exitpreneur.io if you want to get some free chapters. Beautiful. Thank you so much, Joe. I appreciate this. My pleasure, John. Thanks for having me on. Take care.