E: 20 Top M&A Entrepreneurs - Ernesto Ricci from Buenos Aires - Buying Football Tournaments

And then, uh, welcome to the top M&A entrepreneurs. I've got a guest all the way from Buenos Aires. Uh, his name is Ernesto Ricci. uh Ernesto was also a member of Roland Frasier's epic class. Uh, welcome, Ernesto. How are you doing today? How, how is, uh, Buenos Aires? Hey, here I'm at 7:30 p.m. in Buenos Aires. Hi everyone. Hi. So I, I got a question. So, you know, when did you take the Epic course and go through Roland Frasier's M&A uh course and and why did you do it? Yes, I started back in October 2020. Uh, uh, 1 little disclaimer the audience, I'm a Spanish speaker, so I don't have the best, uh, language speaking language. Uh, I speak like a caveman, so. Well, I think, uh, uh, you, you're doing great in this though. I mean, you're doing 100 times better than my Spanish would be to you, so. Oh, you think a little bit. No, no, even though I live 75 from all the borders from Mexico, I just don't speak enough Spanish, yeah, OK, OK. Yes, and. I was, well, I stopped working and doing business when the pandemic hit because I thought that. wouldn't last a lot and so I was a lot uh searching on the internet, uh starting to Uh, learn more about business, what other people do, what other people do in other countries, so. I came across with the, with an ad on YouTube of the Epic course. And one thing that is, uh, I, I'm 25 years old, so a vision that I have in the future is to be a successful entrepreneur, a successful business owner. To get to say it and for me to be that you have to be in not only one industry, but in A lot more and the thing to be good at business and to be a successful business owner is, is to be good in any business. So, yeah, that's good. That's uh kind of the Warren Buffett. He's great at insurance and he's also great at making candies with seized candies. I mean, he doesn't touch any of that stuff, he's just able to pick the right managers or help with that. Yeah. Yeah. So this, uh, thinking like, and I never seen something like that, like, hey, you want to buy a business for 0 down or for 0 money. And really got my attention and I never booked an online course ever and In the pandemic, I was thinking like I don't know, it's 50 bucks. Let's give it a try. Maybe something interest to me, and I start free now actually. I think he's the first, uh, level is free. And I paid $56 or maybe it was like a free offer that I didn't get. But um I, I watched, I, it's a five-day life challenge and I was blown away and it's something. And it's not the thing that he teaches, it's not something like a very difficult to do or, but it, the, the thing that has is that it's very outside uh thinking outside the box, yeah. I mean, how have you applied it since you've learned it? I mean, what are you working on right now? Right now I'm really devouring all the content because it's a lot of content, but um I'm starting, I have a plan that I, I read a book that is the 12 week year plan. I don't know if you got it, OK. So I started like 2 weeks ago um doing outreach and I have like 3 main industries that I want to get in that it's First of all, the one that I work in that is, uh, doing organizing massive social events. The other one is, uh, football tournaments, the amateur football tournaments that it's a great business that I didn't know. I mean like uh it's the most watched sport on the planet. Yes, it's a multi-million billion. I don't know. uh, Cristian Ronaldo has 500 million social media followers, so that's nothing to sneeze. That's the number one off Instagram. And, but I don't know if it happens there in the in the, in the US, but here in Argentina is the sport more uh practiced in all the country. And a lot of people pay for, uh, for participating in a tournament and it's really, it's a really, really good business people organize them. So how, how do you, how are you applying what you've learned to acquire a business or acquire an event? How's that working? Yes, and the The thing that I'm doing here, the, the, sorry, the thing that I'm doing right now, it's um well. I divide, I have my personal framework that I start uh tweaking it from the things that I learned from the epic and also the things that I do. It's a 10 step, but um I think like the general steps, the more important ones, it's like doing the outreach to start uh speaking to business owners. Yeah. And let me, let me ask you about that. How big is your list of of outreach of of names that you put on your list? I'm doing, um, I start first, for example, the football tournaments. I start first doing like a research findings of, OK, what to, what football tournaments are here. OK, the ones that meet my criteria of the, of the thing that I want to, of, of the location that I want to go and etc. So I started doing an investigation of that. How I think that the industry uh margins are and those kind of things. And after I do a spreadsheet of 100 business owners, I start reaching out to them and I have a base like 25 to 40 cold outreach per week. I could be doing more, but I think that then you have to uh start picking the phone and doing meetings and that stuff so I don't want to. Burn out myself, so I'm in that space. At your own pace. Do some of these termin tournaments, uh, you know, have separate or individual owners, they, they run a number of different tournaments and say, hey, I'd like to sell this or what, what's the Yes, my outreach is and what the thing that I said to the business owner, first of all, um. I have my spreadsheets and I know that I have a lot of ways to contact them. So I have the email on their website. I have also his email, his uh phone number, uh. Uh, Instagram account, LinkedIn, uh, I Google them and I know who is the owner, etc. So the thing that I, the message that I send him is, it's um something along the lines that, hi, uh, my name is Ernesto Rchi, um. I'm a business owner that uh organize massive social events. I have a list of clients of between 1550 to 70 clients. And are between the ages of 80 to 25 years old. It's uh, I don't know how to say in English, but it's like um Have, have a higher power, uh, money authority a celebrity or net value or something, yes, but it's like the The here we call it like ABC one that is a classification that if you your family house, uh, have more money than this line, you have, you are in this classification. So it's like the top classification so it's people with money, yeah, it's people that can spend money, have disposable income, yes, yeah. And also here it's uh, I manage like uh. And these people, it's the same, um, I don't know how to say, wait a minute, ambiente, you know, the word biente, but they, they are all friends with them. Oh yeah, OK, OK, so, um, it's very difficult to move the people and the business owner of everyone really likes that and I have that facility. So I said to them, look, I'm looking my ideal outcome is if. And I'm trying, um, oh, sorry. The thing that I want is uh someone interested in selling their tournament, but also I'm open to uh do a Uh, partnership, a partnership or joint venture or something like that, yeah, yeah, exactly, exactly. Um A lot of uh the, the outreaches that I'm coming, I, I am coming like I 10 meetings and a lot of people like, like, yes, I can sell you this tournament, but I want to keep these ones or let's do a joint venture, or yes, I want to sell my business to all my tournaments. Um, yes, it's going, it's going and how many have you acquired those tournaments, like little business opportunities? How many? Sorry, how many have you acquired those tournaments so far? So far, none, because I've been doing this two weeks ago and I'm still in the due diligence. I call it commercial due diligence like I'm building a report with the business owner, uh, looking for commonalities when I speak with him. Um, also making referrals about me because I'm young but I still I know a lot of business owner because of my activities, so I know older people than me, so he can have like a testimonial about me and I didn't make any offer yet because I'm still uh. Finding the best opportunities. I have some of, some, uh, that I have like free tournaments. I, I will give them an offer. I think that through. Oh yeah, tell me about that. What that looks like, what an offer looks like for a tournament. I mean, a tournament is just like here in the United States, we call it soccer, and we have tournaments all the time and, you know, my kids were in soccer. Well, I grew up uh in the Air Force and my dad moved to Germany, so I was playing soccer when I was You know, 5 to 11 years old, way before it was even in the United States. Um, so called the football there, of course, um, but kids here, they play soccer all the way from, you know, 4 or 5 years old to now college and on now. Um, but how do those tournaments, how do you Structure an offer for a tournament, you know, if it's only like a tournament is at a weekend or a couple weeks or how do you do that? Yes, um, well, I will give you an example. I'm in speaking with one that uh. He, he's not only an organizer of tournament. He also owns the, the fields, uh, it's, it's right now, the stadium, yeah, OK. So the offer that I'm making him is, look, I have Um, all these clients. He wants to exit the because he wants to live in Miami actually in Florida. So he wants to sell the The, the fields, yeah, and that's a lot of real estate, right? Does he rent that or does he own the real estate? No, it's actually, it's a dates from the government and he have I got a sale, but, uh, a con he pays a fee. Yeah leases it or rents it, right? He rents it but like for 30 years, so he's like the owner of the. Oh, got it. OK, yeah, yeah. And he wants very, very, very cheap, very cheap. So he wants to retire to Miami. Yes, exactly from Buenos Aires. All right, um, I'm actually traveling to Miami on October to see the Rolling Stones. All right. Um, so what's he asking for this, so the thing that really, I don't know if this happens also in the US because I never did, did a deal there, but for example, uh, one of the tournaments that he has really goes with my clients, so. That I, I'm starting speaking, so what could be uh A fair price to sell the the tournament. Yeah, mm, I, yeah, so give me some characteristics what a tournament looks like. I mean, it, I mean, how much money does it make in a year? Do the tournaments like it's just like um. For example, him is organizing 300, no sorry, I don't know, I think that he has only 4 tournaments, but with uh 300 equipment, uh, football teams, yeah, so he's making. Um, I, I don't remember, but. One minute, uh. Yes, something alone, something like 100k per no, more 60K to 100K per year. I really don't have it in my mind. Yeah, is that, uh, is that, uh, currency in Buenos Aires or, uh, US dollar US dollar between 60K to 100K, yeah. Uh, it really depends because in the pandemic he didn't do, yeah, of course not. That's not, that's tough, yeah, that was a face to face kind of event, so it's tough, and also it's a, a, a self business operated so he does not do well the financials, uh. It's like he, and it's a lot of cash. So oh it's a cash kind of deal, yeah, yes, because he doesn't use like uh an accounting software like fresh books or quickBooks or anything like that. You just said, hey, this is money in, this is money out and uh interesting. How is he, how are you gonna offer him a reasonable price to say that that is, that is the, the thing that I really like. Not about the because of the tax liabilities that you could have, but the thing that um When I start negotiating with him, it's like, OK, I ask him for a 0.6 uh uh net profit of the two. To 2018, 2019, yeah. So, um. He, he sent me, no, 1 X. OK, 1 X, and but we have the, I will pay it when the pandemic uh finished, so it's like so so like a bulk payment at some point after a tournament or after you do it? And now we, we are back like the football is totally, I don't know how to say, but liberated. It's like in 2019, you know, we don't have any restrictions on football. So That is one thing And the other thing that uh that I said to him is, OK, so you have all the in paper, right, like uh the income statement and etc. you this profit that you told me that you're making, yeah. You can actually prove it to me, right? Or uh, you will give me an Excel spreadsheet that I don't know that I can literally tweak it and it's another number. Does it have bank accounts or you can tell by bank accounts or some kind of returns, tax returns or anything, and something that we have also here in my country is that we think in US dollars and for us it's an investment and a saving. Like to have your, your money in dollars, it's the best thing in the world here. OK, I didn't know that, but that's, that's cool. Yeah. So, a lot of people have them, we, we actually say like having your Your money under the, the bed. It's fantastic. So how are you nervous about him being truthful about his? No, I don't have any worries because uh he's, I, this is like a very straightforward, so he told me no. I said it, OK, so I'm really sorry. I know that this uh a If you, uh, keep it, you will have like this uh net profit every year, but for me it's zero down. It works so yeah it's the, the risk is on it because he's paying for it seller out. Uh, so he, his business has to reform for him to get paid. Sorry, I didn't get you. So his business has to perform so that he gets paid for you buying the business. Yes, of course, yeah. So the thing that I tell him it's OK, I will not buy your company. I will start my own company. I use my SPB. Yeah, and you could give me the assets and I will pay you if I make the money, um, and that's it. And he's interested because I have a big list of clients and also I, I ask him for a baseline. So if I make, if sorry, if I start uh Adding more football teams, I will start earning equity of his um Field business. So in some point he will exit and I will have the fields and also the tournaments. Yeah, so what, you know, let's talk about why you got into the business. Are you played football all your life? No, all the country, I don't like the soccer, yes, no, I really don't like. No, I mean, I mean, I mean soccer. I mean when I say I know, I know it's, it's football or because I, I, I forgot that you, you, you say yeah we called it when I lived in Germany, we're talking like the 1970s, we call it football and uh yeah. And no, the, the thing that it's very complementary to the thing that I do with social massive events. I even uh do 3 or 4 events that uh was an, I call it an after football. It's like uh A lot of tournaments in one area, so I rent out a field but not the football fields, you know, yeah. And I invite all the people and they go like 5 p.m. when they finish football they go with their shirts of football, everything you, you kind of sent out a bunch of like, hey man, there's a party going on somewhere and then. Yes, my technique is more like doing, I have a big team, like 100 sellers that sell tickets for me. Also they my big thing for promoting is Instagram. The, the, the story and also I give a free. Tickets to the, to the clients, the, the ones that are like not influencers, I call them micro influencers. And I give them also like a souvenir with that sometimes with a sponsorship that pays for that and also give me a fee for the branding and that is the um the promoting that I do. Oh, OK, so is that to boost up uh the, the football soccer tournaments or The football soccer tournaments kind of boost up your business, or how are you gonna work those together? They really like, uh, I don't know how one minute, I, I want to, uh, search for the translation exactly this word. Yeah, yeah, sure. You know, they're getting better at those. There's some uh Uh, and they'll translate for you. I, the, the thing is that, um, the football. Really give me clients for the, for the parties that I do and also the parties give me clients for the food. Like it's uh Both things like give uh yes, and also I started having more clients because It's like, uh, I don't know, a snowball, it's. Yeah, you know, that I, I like it. I haven't thought about this, you know, I had another conversation with Deanna Rogers epic, and she acquires properties for uh the Airbnb and then rents them out. I mean, like I, I wasn't even thinking of that. I mean, that's like totally out of my league and. Yes, uh, I, I know that business model. Yeah, and then, and then this is interesting too, because you're already doing social media events and you're kind of a, you know, like whatever, I don't know what the call is like you have access to hundreds of thousands of people that you can tell about a party or sell tickets to, and then you buy a tournament which could be, I don't know, do you think it's he's making money? Is he profitable with the the football tournaments? Yes, in the business, uh, the ones that I give you as an example, he's making at least 60K to 100K per year. Yeah, the thing here like. The uh medium salary, it's free, free, free, uh, it's like $333. That's a medium wage here. Yeah, so in the United States I think it's 22,500 is the number. Uh, per year, uh, yeah, I don't know what that is. Sorry, sorry, per month, per month, per month, right, OK, yeah, yeah, yeah, I think that's right, 25 per month it's 33,030, so. Um, winning here net profit on your own pocket 100K per year, it's a lot of money. Oh yeah, absolutely, uh, cost of living is, I don't know what the cost of living is Buenos Aires. It's not gonna go very far in Miami though. Sorry, it's that money is not gonna go very far in Miami though, because that is a higher cost of living definitely than Buenos Aires, yeah. Yeah, so what's the plan? I mean, where are you at with the negotiations? Are you, do you have a, uh, you know, a letter out to him, a letter of intent out to him to, to purchase, or is it a handshake or what what's the process in Buenos Aires to, to purchase a business? Yes, this is exactly, this exact business, it's uh. A term sheet that I do with the business owner, uh, exchange of emails, and that's it. That's it, yes. And are you gonna, does it go through escrow or you just, well, in this case you're not gonna, you're not paying him any money, he's gonna be paying them out of the cash flow of the business that you build with your social media business, right? Yeah, right. Yes. But uh in other acquisitions that I'm planning to do, yes, of course, it's the LOI then the due diligence. Or maybe no, but uh yes. and sign a contract, then the, the asset purchase agreement and start working on the growth strategies. Yeah, so tell me a little bit about, you know, why you took the entrepreneurial route, uh, versus going to work for somebody. I mean, have you always been working for yourself, or? Yes, I'm working since I'm 15 years. So and I start selling tickets to something that we call here matine that it's uh for 13 to 14 years old that they go like 8 p.m. to 120 p.m. And that's it. No alcohol? So I start selling tickets on that um and like the, the high schools and sell tickets to start uh to raise money for their, their trip when they finish school. Yeah, so I, I heard that if you are a seller, you start earning like 2 pesos more of commission for each ticket that a school sales. So I said like, OK, I'm a seller, and sales sales is a great profession, man, if you get good at it, yeah, and so I was like. I don't know how to say it but uh. I would say like Argentine, but I'm fucking them because it's sales that they are already doing, but I'm starting to get in a commission. And in I saw them, they were saying like, oh, this kid, it's awesome, sells a lot of tickets. And I really love it and I always love doing business. I, uh, even when I was in high school, I know, in primary school, I sold the pens that my fathers have in his office. So like I'm, I was always thinking of money. I love the, the mafia, and I write down all the business that they do. What is it, it's called the Well, Richie, is that, uh, that's Italian, is that it's very Italian, yeah, it's very Italian. It's, it's in the mafia. I got you, right, right, yeah. But my father is on the contrary. He's like he, he let, he do business, but he's not like he's not passionate about it. So when I started uh doing this uh selling tickets, I start like watching uh up there, so who's my boss and I started speaking to him like, I want to be your partner. I want to be your partner. I want to be your partner. I never have the chance and when I was 18, I start uh selling tickets, but for nightclubs. And also with my boss, I was, I want to be your partner. I want to be your partner. And there, there is competition. So I was selling a lot of tickets and also I, my sellers, I paid in the same commission that I was getting so I could build a team. Yeah, that's it, look, man, that, uh, that ambition right there is kind of infectious the way he says I want to be my, I wanna be your partner. I wanna be your partner. That's infectious. That's fantastic. Thanks and when I was 18, someone of the competition approached me. And start building report with me like, oh, what you do is great, etc. etc. Why do you have a 5% of uh Of a of a party that I will do X state. I would say, of course, and my boss told me like, no, you don't have to do that. uh uh you have to wait, you are very young, you have to sell tickets for commission. It's not OK to do that. They will hassle you, etc. etc. I would say if I, I, I will, I do it anyways. And then he told me, OK, OK, let's run it up. And I started partnering up with them, with my original uh boss. Then he actually hustled me, uh, he tried to Take all my sellers or the team that I have, he tried to pay them a bigger commission. We've all our lives that crossed us, yeah, yes, and I told and I told him, OK. And all the, all the team that I have are my friends. I really, I consider them my friends. So I tell them what happens. They told me, Ernesto, we will follow you. So we start competing and nowadays my former boss don't do events. He owns one nightclub, but it's like out of the league. So what's, uh, have you planned this out so you're gonna acquire some tournaments. Is there anything next? Like I'm gonna acquire a team, like a couple because those are billion dollar opportunities way down the road, you know, the, the reason I bring this up is. I just read this article about a guy called Thomas Tull. He's on the Forbes list, richest Americans. His first acquisition was when he was working at a, uh, or he knew this uh auto body shop was going out of business, and he said, can I take it over for you? That's what his his first acquisition was. Years later, he's, you know, started in movies, sold that, and now he's a billionaire. So, we all take this path and it's not the same. Yes, yes, yes, yes, uh, I'm not planning on being a billionaire. A millionaire, millionaire, of course we have no doubt about it, um, but, um. An ambitious goal that I have in my industry that I was thinking that. For you to take an idea, I have. Quite, uh, like, I don't want to sound like a cocky. I think that you it's the right word, but I have my money and it's very difficult to have it in Argentina. I'm very young and I don't know anyone that is a self-made in my country that um has my age that have the money that I got. And I still living in my parents' house. So that's said, look, that's traditional in Europe and many, many companies. It's different in the United States as the culture does that. People stay here a lot in Europe and South America, people stay in their family's house a lot longer. There's a closer family, familiar unit. Yes, I have my space although, but um like um I In my family we have 3 houses, so one always available for me, but I, I, I, I, I do not want to, uh, start like spending the money because I was thinking, OK, a million dollars and I will buy. Um, not only one but like 3 nightclub, etc. So I have a very ambitious goals or you're next. Yes, but it's, uh, nowadays with my business model, I even earn more money than a than an owner of a nightclub. But Fantastic. But if I also own a nightclub, it's twice, so yes, I, I really like that. I gotta ask you a question. Who's the next person you're gonna go, I wanna be your partner. I wanna be your partner. Yes, I have, uh, not in my country, but in Uruguay, uh, it's a limit trophy country that I I know him like 3 years ago. Actually, the first time that I met him, he pulled out a gun in my face. And now we are, we are very close friends, and he had the intention to sell. He, he's, he's, uh, he have like 5 other businesses. He's going well. Why did he pull the gun? Because did you, were you, uh, why did he pull it? Why do you think he pulled it? And nowadays don't work like that, but uh like, I don't know, like 40 years ago when I don't exist and the business owners in nightclubs were like the Like a cowboy, we have a gun and so they, they, they don't, they don't know me and they like to brag about themselves like, yes, I'm a heavy fish and I own this and whatever, and we were talking about deals that are 40K uh up in only one event and I was doing like free. So they want to show me like hey don't hassle me don't don't trick me and but for me it was like uh I'm really ethical when I do business. I'm transparent. I'm, I try to be honest, I think like. Being ethical, uh, is the thing that brings you to success. So it helps you sleep at night. Yeah, so when he pulled the gun and put it on the table for me it was like nothing. I also have to to do testimonials, a lot of my friends. One is my partner, and they were like. 00 my God, and they started like uh doing with a knee to the other one to see the gun, and it was very awkward because everyone saw the gun there and my friends didn't speak in all the meeting and I do all the speaking and went great. Actually my first SPV that I made, I um I put it with the name, with a nickname I put to the business owner. Ah, very nice. That's a kind of gesture, nice gesture, yeah, yeah, like, uh, we, we were very distant because of that of the gun and etc. and one time I called him with a nickname and he laughed and we started like. I need to use it for my SPV. Fantastic, man. Ernesto, look, I, I look, I appreciate the story and I wanna hear more about it. I'd love to just say, you know, in a year's time, let's reconnect and find out where you're at and say let's do it. Thank you, Sean. Hey, thanks. If you guys like this uh podcast, you know, give me a like or, uh, you know, just download it, let me know what you think, uh, top M&A entrepreneurs that Ernesto will reach you today. Thanks very much for joining us, Ernesto. Thank you, thank you, everyone. Cheers. Bye, cheers.