Richard Parker bought/sold 13 companies - sold 100,000 copies of How To Buy A Good Business Course.

That's Welcome to the top M&A entrepreneurs. Today, my guest is Richardrocker. Richard and I have known each other for a while because almost 20 years ago, I bought a course uh how to buy a business from him, and he's been buying and selling businesses for 30 years. Welcome, Richard. Thank you. It's good to be here. It's nice to, uh, it's nice to put a face to an email or to an order confirmation. And, uh, I appreciate you having me. Yeah. So when I said, I think I bought a course from you, you went back in in your database and checked, and that was back in what, 2005? 2005. It was old enough that I have to go into the old database. I mean, I first looked at the, uh, order. Search and then shoot, they said, shoot, he's not even here. And I said, wait a minute. I know we redid the database in 2007, and uh, sure enough, dug it up and, and there you were in 2005, I think it was December 2005. Oh my God, that's a long time ago. Anyway, so how did you, let's start by like, how did you get into buying and selling businesses and, and I know that you released that course, but what were you doing before that? Hey, I'm gonna get into buying and selling business. OK, so this goes back, I hate to date myself, but this goes back to about 1990. I was working for a company. I was, I was doing quite well. I was a vice president of a consumer products company. And, uh, through the, uh, through my, uh, brilliance, I managed to plow a ton of money into the stock market and then found out this whole concept about margin and said, oh, wow, this is pretty good. I could double down and only use the same amount of money and I, uh, blew everything. Um, and wound up with about $60,000 in debt, which is pretty interesting considering my gross annual income at that point was $72,000 a year. So I was in a little bit of trouble. And I realized that there's no way I'm getting out of this hole. And I, and my then wife was pregnant with our first child, and I realized there's no way I'm getting out of this hole, um, working for somebody. So I decided to go into my own business, and the first business was actually not an acquisition, it's a business that I started. I, um, became an independent rep for the company that I was working for. They were in a, a, uh, they were selling off one of their divisions that I was running and I negotiated with the company that was buying, uh, buying them to, um, To be their independent sales rep for the territory of Eastern Canada. And shortly after doing that, probably about a year into it, I realized that, you know, growing the business, I either had to bring on more products or perhaps I should buy out some competitors or buy out some products that I was representing. So I did that. And, um, continued along that road, doing a little bit of distribution, mostly manufacturers, reps, um, rep work. And then I, uh, acquired a line called Sega, Sega Video, which at that point in time, just, and it was sheer dumb luck. I mean, it has nothing to do with brains. I was just, just got lucky. That was at the point in time when Nintendo owned 80% of the market. Sega owned 20%. And within about 18 months, that flipped, and I just happened to be there at the right time. Wait a minute, you owed the license to sell Sega. I had the I had the Eastern distribution rights. And so, and, and when you say, oh my God, you remember a time when the ad was like Sega, everything was going crazy. But that was at the time, like it was 92 and just when I started. Really, Nintendo, it was an 80/20 split. I mean, Sega was really nowhere. It was all Nintendo. Um, and then that flipped, right? Because they came up with the Sega Genesis and the business exploded. And my business, my repping and, and distribution business, which was doing a few million dollars a year, went to a little over $30 and just absolutely bonkers. And, um, And I had made a couple of other small acquisitions, um, along the way and started getting a bit of a reputation in my, uh, town in Montreal of, um, amongst my peers of, of knowing how to buy some businesses. So I started helping out some people. And then in that, that took me to about 1996 and at that point in time, I was making more money than the whole senior executive at Sega, and they weren't very happy, but, well, they were very happy because of my sale. But they weren't very happy when they were writing the checks, I guess, when they realized that they were making. So they bought me out, which was, which was perfect, and which I anticipated going into the contract. Um, I knew that would eventually happen. It generally does when an independent rep starts doing too well. They try to convert into house account, not protection in place. So I sold that and I decided I was going to move to, um, Toronto, um, because that's where all the, uh, major, uh, head offices. Offices were moving. Quebec was continually going through its language issues, I'm sure you read about. And, um, then I decided, you know, what the heck, once I'm moving, I'm going to move somewhere warm. I hated the winter outside of being an avid hockey player. I hated the winter. So I decided to move to Florida, got involved in a golf venture down here. Um, and again, and, and was continuing looking at, um, you know, making some acquisitions. Um, and then in 1999. I was looking at a business down here, which was in the commercial laundry business. It was the distributor um for a well-known brand, um. Um, in, in the commercial and not residential, that would supply, um, hotels, um, condominiums, apartments, dormitories, um, for, you know, you put in your, your 75 cents or 50 cents at that point in a quarter for a dry. Um, and, um, they serviced those, sold and serviced those machines. Um, I was negotiating the, uh, an acquisition of that company. I had the offer all done, signed, everything in place, deposit in place, and. started doing the real formalized due diligence and found out that, you know, that the company was an absolute disaster. I mean, it was a complete house of cards. It was, you know, every, everything that you would, that, uh, someone would fear could happen was in place at that business. And I decided to rescind my offer. And walking out of the place, and I remember it like it was yesterday, uh, when I was walking out, going to my car in the parking lot, I remember thinking to myself, you know, the average person. Who looked at this business and had got to the point that I got to, would have more than likely gone through with the transaction. And it was strictly because I had a, a, you know, a, a background of experience in really digging into a company to find out, you know, what red flags are, what's good, what's bad. That's the only reason why I was able to catch what I caught and backed out of the deal. But I said, you know, the average person would have gone through with that, and it would have been a disaster. I mean, it wasn't a monster acquisition. It's a little over a million dollars. Um, what were the red flags that you started to see that said, oh, and then you, the more doors you open, the more red flags. OK, so we could start with a number of things. The, they had two very distinctive sides of their business. One was the, um, um, repair, and one was, were the sales. And Stark found that what I, what was unbeknownst to me that the owner of the company, he had, um, a lot of these machines that he owned that he placed personally into a lot of locations. He was doing service, um, not charging the company. OK, so he was having his own employees do free service for all of his machines. That's the first thing. The other thing was, and I can go through the list was, I, I say he'd go through the laundry list, pardon the pun, um, inventory. They were doing a lot of parts servicing. When we went through the inventory, their lists say it's all good and resalable. Inventory, but starting digging through how many units and, and keep in mind, washing machine and dryer machine parts. I mean, the tiny little parts, you can have a box this big and you can have 500, uh, pieces in it, right? And started going through those and realized that in some cases, they had 15 years' worth of inventory. And what happened was they had, they had had a reputation for being the place where, you know, if you had an old machine, you could find the part there. But a lot of these parts are really expensive. And so they're saying, well, we have about a year's worth of inventory, but some of those cases you had, you know, they'd sell, you know, 15 a year, and they had, you know, 180 parts, 180 pieces in, in inventory. Then there was a case of, um, there were a couple of people that were being paid, um, cash. So what he was doing was the machines that he owned. Right? He was taking the machines, um, the cash out of the machines, not putting it through the business, OK, but saying, here's how much the cash was generating. So give you an example of saying there's, you know, $100,000 in unreported income that I take. machines. Well, it was cash in and he could cash out. But what he wasn't. But what he wasn't it wasn't trackable. And the other thing was he was paying, so it'd say like, well, let's say that number was 200,000, but he was paying people and suppliers in cash and wasn't recording it. So that, even if that number was legitimate, it was grossly reduced. Yeah, right. And I was trying to explain to him, hey, you can't steal it twice, right? I don't run a business that way. I put everything on the books, um, but you can't steal it twice. If you want to steal that money, that's your business. I don't judge, right? That's up to you. You could, you know, as long as you don't mind looking over your shoulder for the IRS, but you can't expect to get paid for it on a multiple. Right? I mean, it's, it, you, you just can't steal it twice. Um, there was the inventory, the machines, um, again, also, the machines themselves, a lot of them were, you know, were machines that just simply weren't wanted in the marketplace. The big, this particular brand, the, the big, you know, the big washers and big dryers that you'd find in coin laundries, this brand wasn't sought after. And he had a lot of that. OK, and said there's a relationship with the manufacturer, you can exchange the manufacturer said, no, no, that relationship doesn't exist. So from one thing after the other, I mean it was, it was endless, right? And then finally just threw up my hands and said this is not going to. Yeah, made the call and and happy that I did. And, and as I was in the parking lot, I said, you know, I'm very curious what the average, you know, what, what an individual does who's looking to buy a business on the lower. Maybe not even a million dollars. We're buying a $200,000 business. What resources are available? How can people help? I've been dealing with and doing some brokerage for many, many years who recognize that, you know, by and large, you know, brokers that, that, you know, can be an impediment to the deal, and they certainly don't, you know, voted a way to help the, the buyer. Their interest is selling a business, getting it closed, not necessarily making sure that the individual buys the right business. So I was very intrigued and say, OK, what type of information is available for individuals outside of hiring, you know, a $500 an hour accountant because CPAs aren't the right people to guide them and nor their attorneys. They need, you know, proper consultation. And this is when the internet just was, uh, you know, uh, the bubble was bursting and you know, everything was free, everything was free at that point. So I started, you know, getting busy with the internet, and it was more intrigued from a standpoint of research, um, and realized there's not a lot available. There were a lot of books about buying a business, right? But they were very basic and good. I mean, no education is bad education, um, but There was really nothing that took a buyer, an individual who had no experience for the most part by the hand, step by step through every stage of the process. Here's, he, here's what you are, what, what you're going to face. Here's what you need to know. Here's what you need to do. Here's how to do it. And if X happens, here's what you do in that situation. If this situation happens, Here's how you deal with it. Um, through, through, again, through and, and valuing a business and arranging financing and negotiating the deal, questions to ask the sellers, because people, for the most part still think of buying a business like buying a house. And, um, I decided to take all that hundreds and hundreds of files of businesses that I looked at or help people look at fairly close to 1000, and I always kept incredible notes. So I decided to put it into a course. Um, which I did. I wrote it quickly. I gave myself 90 days to write it because I, when I was thinking of when I it out, yeah. Yeah, great. But I was, when I was thinking about writing, I, I, I started speaking to a lot of people who, you know, about writing books and, you know, you meet a lot of people said, you know, they, oh, I'm writing a book now, and you say, well, really, how long are you writing it? 16 years, right? No one, no one gets to the finish line. I said, there's no way I'm going to do that. And digital publishing was just starting. So I said, you know what, I've got to get it out there. And if I have to make changes, I'll make changes on the fly. I didn't want a publisher. I'd had a couple of publishers once I produced this and sent it to a couple of publishers, there was a high level of interest, but I didn't realize that publishers don't promote your books, right? You got to do the promotions. So I said, you don't have to heck with them. What do I need these guys for? And so I launched it online April 23rd, 2001, and, um, the night before we pulled the trigger to go live. I remember my wife asking me, how many you think you're going to sell? And my answer to her then is still way I feel now is I, you know, I, if I sell one. And I help one person buy a good business or make sure one person avoids buying a bad one, that's going to be perfect for me. I didn't do it for the money. It was a labor love. If I never sell it, didn't sell a single book or never sell another one, a guide again, doesn't change my lifestyle. But that was my only, my only motive was to help one person. I just never thought it would turn into what it turned into, ever. I mean, it's crazy. It's 20 years old. What what has it turned into? I mean, how many courses do you think you sold over the last 30 years? Probably 100,000. 100,000, wow, yeah. And are you surprised or shocked, uh, you know, within the last 5 years, so many other people are getting into the business of teaching other people how to buy businesses. I'm not surprised at all. I'm, I'm scared, to tell you the truth, because a lot of these are courses and boot camps for thousands and thousands of dollars that are trying to teach and preach this idea of buying businesses for no money down or distressed businesses. And, you know, I, I haven't attended these, um, uh, webinars or, or weekly retreats or whatever. So I, and I'm certainly not going to disparage any of the individuals, but conceptually, it just doesn't work, right? And it doesn't work because What, I mean, buying distressed businesses is not for the faint of heart. I bought a distressed business and it took me emotionally, you know, a year to turn it around and a lot of money. Yeah. Yeah. Well, well, so my line on distressed businesses, is this causes a lot of stress. I mean, OK. I mean, you're buying someone's garbage, right? So, yes. Can you buy a business for no money down? Yes, you'll buy garbage, right? for the most out of 1000 times, can you find one that's a good business possibly. But think about it this way. Why on earth, unless a seller, there's a morbid reason, death, divorce, illness, etc. Why on earth would anybody sell a good business to a stranger for no money down? I mean, if this is not like buying a house, right? Where if in a year, you know, if the people don't take care of the house, the house is still going to be standing. If you don't take care of the business, the business is gone bankrupt, not coming back. So nobody sells a good business for no money down. Now, there are cases where they may sell it to an employee or a family member or someone they know or someone who has familiarity with the business, but they're not selling it to a stranger for no money down. certainly not a good business. A distressed business, if you don't have the stomach for it, and if you don't have the brains, and if you don't have the capital, it's gone. It's, it's on its way to being gone anyways. So it's gonna go quicker. So you need to know what you're doing, and you need to have, uh, money to put into it. So you may get it for very little down, but that's not where it ends. I mean, the money only starts at that point. Um, And so this concept, it, it, it just doesn't work in the real world. And that's why I mean, over the years, I mean, I can't even tell you how many, 2 of them or 3 this week, where people emailed us and said something about that exact concept. Could I buy a business with no money? You know, I, if how many courses we've sold, I probably could have sold 10 times the amount if I told people, yeah, you could buy it for no money down, but it's not reality. Yeah, I, I had a, a call from uh Europe, a guy said he wanted to buy a business, and I said, well, tell me how you got this concept of buying a business, there's no money back. Well, everybody in America is selling their businesses, so no money out of pocket. Like, yeah, that's not really, that's not really happening. It's not really happening, not good businesses. You went through the experience, you said, and it's, it's, it's, it's it's painful. And if you don't know what you're doing, there's a reason why it's a distressed business. Now, there, there could be many reasons, but there certainly is one reason, whatever that may be, lack of customers, bad ownership, um, failing product. Uh, no marketing, whatever it may be, but there's a reason why that business has gone south. And so, you know, I, I've just been a huge proponent of buy a good business, work on it, OK? Build it up. Don't, don't, don't take out too much money as it starts to grow, keep putting it back in, and you're going to wind up way ahead of the game. That's how I did it. I mean, my first business. Remained the basis for my income for years and years. The 2nd, 3rd, 4th, 5th, 6th business I bought, I never took a penny out. I just put how many total businesses did you buy? 13, 13. And did you stack them on top of each other or did you buy some and some were uh investment more than mostly were businesses that I liked that I liked the concept. I like the model, I know what I'm good at and I certainly know what I'm not good at and I've got a lot more weaknesses than I do strengths. So businesses that would fit well with what I, um, what I believe and what I, you know, actually, you know, I'm not trying to being, being too humble. I know what I'm good at and I know what I'm not good at. And so, and so buying businesses where I can invest in the business, grow them, put in good structure. Even before, you know, the advent of, of all the wonderful technology we have today, but good processes and systems in place, um, so that they were, I always try to buy a business and think about selling it the day I bought it, even though I didn't want to run, even though I didn't buy it with the idea of selling it, I wanted to run it like I had to sell it. Yeah, did you, you wash the car, you clean it out. If somebody walked up and said, Hey, I'll pay you for that because it looks better. And the day before they saw the same car and it was dirty. Yes. Yes. That's a great analogy. It's exactly that. And it just, and it also made my life easier, right? So, cause if you have a business and you put in, you put in the front-end work and get the procedures and policies and systems and good people into place, then ultimately, it makes your life easier from a standpoint of running it. You can go away on vacation with a clear head. If someone leaves, you're not worried that the whole thing falls apart. You know, all of these, um, components to it just become better when the time comes to sell. You know, the, the important things, there's a few things that are important when you sell a business. You want to have clean books. And records, right? It should be able to, um, uh, it should have a good buyer pool, and you want to be able to make sure that it can transition well to a new owner, assuming that individual or, or, or, or group has the right people. And so you can pre-plan for that from the day you start or buy your first business. Well, let's talk about some of those businesses. What what, what are we looking at like the first couple, 2 or 3 that you liked and you're good at? So I, I, I know that my strengths are, um, sales, marketing, I'm very organized, and, um, I can get cut through to the processes that need to be in place, right? Um, and I don't, I, I like to automate as much as possible, not getting rid of people, but I like to automate, I gotta tell you, you must have learned a lot about automation if your sales for Sega went to 1 million to 30 million, figuring out how to put processes in place. Yeah, the good part is they were the company I was, you know, I was a distributor. I didn't have to deal with a lot of that, but boy did they ever, right? And they had, you know, a good part of what they had, Sega Japan, which is called, you know, Sega's abbreviation for service games. They've been, you know, leaders and kings in the arcade business for, for, I mean, it must have been close to 100 years, right? So when they came over to America, A lot of that was in place. A lot of it, you know, people, it was a different way of doing business, but a lot of that was in place. For me, it was really managing, you know, the, the biggest challenge I had is the product was so out of control and demand when we would release a new game like Virtual Fighter on the Genesis platform, like I'd get an allocation of, uh, whatever the number was, uh, 30,000 games, right? And out of orders for 130,000. Wow. So, you know, just keeping, keeping customers happy and making sure everybody got a little bit, and the ones that weren't loyal, making sure you didn't get any, right? So, um, but those type of processes and systems and making sure that the, the launch was, um, handled properly, um, that was, it, it took work. I mean, it's, it's, uh, it took a lot of work, but fun work, right? I mean, it was, uh, it was really popular. It was crazy and, and the, you know, uh, It was all advertising was, it was all over the TV and people walk around going, Sega. I mean, it was great, you know, like, you remember that? Yeah, yeah. So let's go back to like some of those like, what was the first business you bought that was, it was a profitable business? What was the revenue size? What kind of business was that? OK, so I started my rep agency and um then I um bought a small Um, and when I was selling consumer products, at this stage a little better for you. I was selling consumer products to the major retailers in Canada. It's carveout Zig and forget about that for a second. But I had the rights for, um, one of them was an infant products lines, pacifier, squeeze, toys, bibs. It was a playschool baby line that was under license from Hasbro, um, and I was actually a rep for Hasbro at that point. And what was happening is, I was selling these, this product into all these retailers like the Canadian version of CVS and Walgreens and Walmart, the Canadian version of those which have been Jean Coetzer Shoppers Drug Mart, um, sellers, those were comparable retailers. Walmart only came later to Canada. And what would happen is we, I'd sit with the buyer, we'd do the line listing for the year, we'd lay out all the products, the plant. And, and what it looked like. And it looked terrific, gorgeous packaging, blister packs, all laid out, all, you know, perfectly aligned, looked great. And then you'd ship in the stuff to the store, do ads throughout the year and promote certain products. And then you go into the store and you look at your 48 or 12 ft section and look like dog's breakfast, right? It was like, oh my God. Like this has no relationship to what we hung up in the buyer's office, right? Like what this is supposed to look at. And I was losing sales because we realized that, you know, merchandise was stuck in the back room, goods were being delivered to the store. They didn't have adequate uh store personnel to put it on the shelves. It wasn't that EDS, electronic data systems that you had, um, the transfer systems of the replenishing that came years later. So I bought a small company. It was based in, um, it was in Quebec and one of an office in Ottawa, that they did retail merchandise servicing. So they had people that went into the stores across Canada and took the merchandise from the back room, hung it up onto the shelves, a third party, and the supplier, so in this case, let's say Playschool Baby or whoever it was, was goody brushes and combs. They would, they would pay for that service because they knew it wouldn't get done by the store personnel. So we did that on test basis. Then I bought 3 other ones. I rolled up with a few partners to be able to, um, do this across Canada, where we had offices, um, so it was coast to coast. Canada is a big country. So there were people doing similar. Yeah, this way, it's big, right? So the people were doing some similar stuff on a very Very, very regional basis throughout Canada. So I bought and brought them in as partners, um, one in the, in the maritime provinces, another one in Ontario, one in Western Canada. And we formed this company which is called Devre D E V R E W Merchandizing, which was the, uh, one of the names of the company that my partner who company acquired was doing it in the maritime provinces. And we were doing uh It was a small business at that point. By the time I exited, it went from about a $500,000 business to $4.5 million. That's very profitable, very profitable. We're selling labor, right? Yeah, you're just they somebody come into your store, they have a picture of what it's supposed to look like. They'd come into a store like a CVS, go to the back room, get all the products, and then go rearrange them on the shelves at CVS. Correct. Yeah. You know, when you see sometimes you walk into the drugstore and you see someone working from, uh, Carlton Cards or something, they're rearranging. Oh yeah, you're asking, where do you find that? He goes, I don't work here. I don't work, right? They're doing the greeting cards. Greeting cards are. horrible because people put them back all over the place. The products we were doing a little easier, a little bigger, but yes, that was, that was the concept. Um, then I bought another rep agency, um, then I purchased and start, purchased a piece and, and, and, and started another component to an infant products company. Um, while I, after, um, I was doing the, uh, playschool baby work, um, decided to go into uh, competition with them, um, on some of the soft goods, infants, uh, you know, onesies and, and bibs and what. and hooded towels, you know, the, the vomit cloths, those type of things. Um, and I started importing those directly from Asia. And I went into, uh, and we bought a smaller company that was doing some cut and sew operations. So those were related. And then they're related and you had knowledge about that experience. JPIs. Yeah, exactly. And, and, and, and could understand and, you know, trying to keep in mind, focusing on what I'm, I'm good at and also at that point was Being able to sell more stuff to the same group of customers. Like, I don't want to have to learn a whole new customer base and through the whole introductory process. So that was good. Then I bought some crazy wild ones. I bought one, an ironworks company, believe it or not, that did the decorative, uh, ironworks. And the reason why I bought it was with, uh, it was for and with my, uh, more for my, uh, my late brother-in-law was, was a terrific guy. Um, and then, um, so how, how did that one go? The ironworks. I mean, ironworks, you could, I mean, it's a, it's a visible, I, I kind of sometimes I like those uh businesses where people build stuff and you could see the finished product and you're proud of it, and then you install it in front of somebody's house and you go, hey, I built that, you know, you drive by and I, you know what, it, it's a great point because there's an enormous level of, of, of satisfaction and gratification versus selling, you know, someone a stack of bibs, right, that they're putting in the retail store. Yes, there, I mean, there's a very high level of gratification. And it was done on a small scale, but it was really, really nice. We did a lot of, um, you know, like, uh, Uh, driveway gates and, you know, ornamental, uh, fixtures and stuff like that. So it did, it worked OK. Um, and then my brother-in-law did all right with it. And then, you know, fast forward to here in, in, um, Florida. Um, I did a, I bought a legal documents company, a company that did legal documents. If, if you, any of your listeners are familiar with LegalZoom, I mean, they do, you know, there, there's a templates of certain agreements, whether it be in corporation or other type of agreements, but there's enormous, um, market in America. Unfortunately, you know, coming from Canada, we're not a litigious society. I don't sue anybody. But in the United States, everybody's suing everybody else, right? There's the courts and the cost for individuals to take something to court, whether it be divorce or guardianship or support, that type of thing, for lower-income individuals is really prohibitive. It's not only prohibitive from the standpoint of the costs if they're going to hire an attorney, but it's really daunting for them when they walk into a courthouse. You know, you have, for example, I think it was in Missouri, you have 42 counties and every county has a different set of documents to file for an uncontested divorce. Wow. And so this company that I bought, they had a, um, they had a barrage of phone calls that they really couldn't handle, um, but they were doing the document preparation work for individuals that were going to represent themselves in court. How did you come across that? Now you were, you were already selling your course and you yeah, yeah. Oh yeah. So yeah, sorry about that. If the chronology is off, I was selling my course. I was doing a lot of intermediary work. This was in 2009 when the market really crapped out, the brokerage intermediary work acquisition business. um, it dropped substantially. And during that time, he said, you know, I'm just going to buy a couple of businesses, put some systems in place and build them up. I don't care about the recession. I mean, there's plenty of businesses that do well in a recession, and there, you know, there's plenty of businesses that, you know, have, have stuttered a little bit that I could acquire and build them up. And, um, that, um, I bought it. That was a, a, a fellow, he was, we used to work together. He used to work for me in the golf business. I told you, but when I first moved to Florida. And he was a salesman for me and he was selling for this particular company. We were sitting around his house one night and just talking and he was telling me about this company that he's working for, and he's telling me they can't handle, they can't handle the amount of calls that they're getting. So wait, time out. I need to have a conversation with you. Yes. Anytime there's like pull from the market, you go, how do I get involved in that? Yeah. I mean, the hardest thing in business if you buy a business where, you know, where you have to create demand. I mean, it's so expensive and it's darn near impossible most of the time. So here you had a business and I said, like, give me an example, like when you say you can't handle the calls, right? She said, Oh yeah, he said, like, the company gets like 1500 calls a day. He said, we, we're like, you know, 6 sales people and they they're not, so I Dug in, and I, and I trusted him implicitly. So, dug into the product that they're doing and want to make sure, of course, that it's legal, right? Cause you're, if you're going to court, you want to make sure what they're doing was legal. And of course, it's, it's called prose PROSE pro se litigants or people who represent themselves in court. Not every jurisdiction or every county in every country, in every, uh, state allows it. There's certain cases that they can, for example, bankruptcy. You can't use a document preparer, right? Um, but most, most cases, custody, support, um, divorce, uncontested divorce, um, guardianship, those can all be done by pro se litigants. Um, and so what this company had was spoke to the owner and there's, there's documents all over the place, right? Like I said, those 42 counties, I think it was in Missouri. Um, so I said, OK, well, I liked what they're doing because the amount of calls and, and he was, the guy wasn't, he was, he was a mess, the guy who was running it. He wasn't, he wasn't paying people probably there were no systems. You're getting 1500 calls a day, you better have some systems in place. So I spoke to him a couple of times and then I bought the business from him. I paid him what he wanted for the business. It was grossly overpriced, but it wasn't a lot of money, right? And um, It was a private company I can't disclose the number, but it wasn't a big number. Does he did just want to get rid of the headache or what? Because I just wanted, I, I like the business and I just wanted to get rid of him. Yeah, but he did. He just wanted to get rid of it because it was a headache to him and he couldn't figure out. He was a moron. I mean, he really was, and I hope he's listening. It was, it was, it was like it was a case of as I dug in, there were people that I found that after people that he had taken money from, he didn't do their documents, didn't have the document prepared done. It shouldn't have been done in certain counties. So the first thing I did was I went through. All of the files, found out what was incomplete, where money was taken, got in touch with everybody. If they didn't have their files done and they couldn't be done, I just wrote them a check, gave them back their money. Right? That was just like, first, let's try to clean up this whole mess because the last thing I want is I didn't want the sales people to be spending the days answering calls from, from upset customers who were right. Like the last thing you, you, you're never right. You don't take people's money and not provide a service. If you can't provide it. You did it inadvertently. You thought you could do an uncontested divorce in the St. Lucie County and you realize after you can't do that when they're, well, just give the people their money back, right? I mean, very simple. So I first cleaned all that up and told the salespeople, look, we have all these calls, these are going to continue to come in. Just let's get everybody clean, right? Whoever, the company took money from, even though I, I, legally, I didn't have an obligation to do that, but it's the right thing to do. So the first thing. Make everybody right. And over time, he said, if there's any of those calls coming in afterwards, just clean them. Just, just, just give them a check. I mean, we don't even have to go into the details. So that was step one. The second part was saying, OK, let's automate this whole process because it used to be people would call up, they would intake the information manually. They'd send it out to a document preparer. The document preparer would do the documents. They would send them out to the customer. The customer would then file them and, but there was no way of communicating with anybody how all of this was happening. So I spent, um, I, I spent at that point in time, I think it was $50,000 and automated the entire system. The only manual thing that was done was the actual answering of the phone call, because I wanted a human to answer the call. Other than that, all the customer information was entered in the system. We lined, we, um, we got the software for that or developed it ourselves. built it ourselves. So we got copies of every single case that we were doing in every single county that we're doing, and we had the template documents put into a system by field so that when you intake an order, you'd be able to quote the price exactly. You'd know exactly if we couldn't do a particular case in a particular county. Once that was done, it got uploaded, the information got uploaded and automatically triggered to a document preparer who would Specialized in or was in that area or had previously done similar documentation for a similar type of case in that county. So it went through with tears. They, they completed the documentation. If they have any questions for the client, they could communicate with the client, get the information, and then the information got uploaded, sent to the consumer, and we followed up to make sure once the, once it was filed, they sent us back documentation to confirm it was filed. If it wasn't filed, We helped them get through what was the reason, because the clerk of the courts in a lot of these areas are, are, are really difficult people. They, they make it very hard. They certainly make it hard on poor people, I could tell you that much, which is completely crazy. Like the people who need it most suffer the most. It was eye-opening. And I ran that for a few years, did very well with it. Um, we had a, a good do you think your ROI was on that when you, you sold it, right? Well, here's how I sold it. I ended up, um, I, I, I want to start taking it easy, so I brought in a partner from, um, He actually someone from, from Canada, came in, he bought 50% of the business, wanted me to help him run it for a while, and he said, we'll come up with a plan and a formula in advance for him to buy me out for the balance. I mean, the, the money in that business is about 8 or 10 times what the investment was. So that turned out pretty good. What happened was when I had my 50% of the business, um, my father passed away on June 13th, 2013. And it was not, that was not long after I'd sold the 1st 50%. My dad and I were really, really, really close. Um, he was up in Canada and I just was really not in the, I wasn't really in the mood to work and With the partner. He was, he was an OK guy. I was teaching him, right? And he was, he really got the hang of it. Um, we had a deal in place. We were probably a year or two out from when he would trigger the, um, the buy on the remaining 50%, right? But he was running because he had already moved it to his own location. He was running it. I wasn't really. Involved, um, just checking in or whatever. And then I went to see him. I said, look, I just, you know, really don't have the stomach or the interest to have any involvement, oversight, anything whatsoever. So forget the agreement that we had in place. Let's just come up with a number that you're comfortable with, and I'm going to give you the deal of the century to buy the other 50%. Yeah. And he did and I was done. And, um, then I went into, um, I'd helped I'd been hired by a family of, of a very well-known family in America in the investment business. They had hired me about 2007 to, um, Mentor, um, one of their sons who was looking to acquire a business in Florida. We worked together for a number of months, and then he ultimately decided to go work in the family office, which is, you know, family office invests the family's personal wealth, um, which was just starting out at that point. Um, and it was, it was the best decision, you know, certainly at that point, he ultimately became the co-CEO. The family office has like 100 people and it's, it's, it's Uber wealth. Um, and then Um, and I've been doing a lot of intermediary work along the way out of that window of the legal documents business, but I was doing a lot of buy-side and sell side intermediary work, which I really enjoyed, right? And a lot of leads would come from the course. People would hire me as an intermediary, consultant or getting a lot of profile, writing a lot of content online, getting hired by, um, um, uh, sellers and was doing that and was, I was really enjoying it and decided. In 2017 to go into the investment business. Um, with that family, um, my, my, uh, dear friend left, decided to leave the, uh, family office and start doing some of his own investments, and we hooked up together and, uh, um, went into the investment business and I took a break really from the, uh, M&A world, um, for 4 years. Roy Street advisors. It was prior to Roy Street, it was called the Pred yeah. And um that was a Dalio family office funded investment. My partner is Devin Dalio, Ray Dalio. Yeah, so Ray's son, Devin and I were partners and been very, very close friends, and the family hired me to uh mentor their eldest son in the investment business. So I did that started in 2017, um, made a number of investments, but co-investments and about 120 Taco Bell's and Applebee's and some other fund investments. And then in, um, on December 17th, 2020, my uh dear uh partner and cherished friend Devin, who was killed in a car accident. Oh, God damn. And um and he and I were, I mean, we're super close. Ray was Ray was our only investor. I mean, we didn't need another investor. We didn't need another investor. Ray was, uh, Ray was, uh, what's he worth now, right now, 16 billion. Yeah, I don't know. I don't count. He's worth a lot of money. Um, and the real neat thing about him is, if you spend time with him, right, outside of the fact that you would Realize very quickly how bright he is, right? No, no, you read his books. I mean, the principal than that, outside of that, you wouldn't know if he was the richest guy in Connecticut or the poorest. I mean, he is just like a down to earth, great guy, humble. I mean, our families, you know, I mean, they're extended family to me and vice versa. I mean, and You know, especially in light of, you know, the Devon's accident, but he's him, they're all family. I mean, they're, they have 3 other sons. I mean, they are just like the kindest, fairest, most down to earth, humble, not showy. I mean, just incredible, incredible, and uh. So it's unfortunate, of course, terrible, um, you know, it was, uh, just a, uh, horrible, horrible, uh, scenario was a young man, 42 years old, and he was, and like his, the rest of the family, just an incredibly philanthropic, like the kindest, I used to, when people used to ask me, you know, people have this impression, what's the son of a billionaire like? I mean, people were blown away by him because he was certainly, you know, he was the, you know, the, uh, the, the kindest, smartest guy that I'd ever met when you take a combination of those two, that my, you know, my, my late partner Devin. And after that, we had had to figure out how to extract ourselves from the business because the business was stood up for them. We, you know, they didn't need those investments that we were making. Um, and then decided I, I formed Roy. I took a lot of time off, um, after Devin's passing. Um, I, I'm looking this up. Devin is, uh, I was a young guy, 42 years old, yeah, with a young daughter, um, and, uh, an incredible guy. I mean, if you're, you're, you know, really interested, there was an article written, I think it's called Institutional Investor, and, um, I had spoken to myself in this, um, Uh, Bruce Zimmerman, who does the investments at the family office, who Devin was quite close to, um, just some, just get some good perspective on, uh, on him, the person, you know, because one of the things after I spent too much time, obviously, but You know, one of the things that happen when you're, um, you know, when, when that's who your father is, even after his passing, a lot of the articles were, were, you know, they spend time talking about Ray, and it was not about Ray. And Ray didn't want it to be about Ray, right? So, um, that was a, a good article that you get a real good sense of the, the person he was. He was a terrific, terrific guy. People were blown away. Him and I, we shared an office, we worked face to face. I had relocated up to, I was working out of, uh, New York and Connecticut, uh, together. And then subsequent to that formed Roy Street Advisors back into the um sell side representation, which I've been doing for a little over a year. I have, you know, great deal flow, right? So I have, yeah, where does that come from? Where where does your deal flow come from? Is that because of your social capital and the products that you've sold and your history or what do you think it comes from? I'm blessed because I don't have to do any advertising. And I've, you know, I, I know that I've conducted myself in a really good way, um, with the agenda to purely help people on both sides of the table all these years. And I'm not trying to blow smoke out of my own rear end. I, I, you know, I really take pride in doing the right thing. Um, good, bad, or otherwise, you know, it's part of the reason why I got out of the lower end business is because I, even though I was representing sellers, I could never bring myself to letting a buyer buy a business in the shape that they were in. So my, my deal flow comes from attorneys and accountants, often more often than times that we're on the other side of the deal, right? And um buyers from the course and I've written, you know, 100. hundreds of articles over the years that are online and still contributing right for Forbes. Um, so attorneys, accountants, other buyers, other sellers, and, and to your point, I just, I think I've built up some really nice capital of, um, you know, of, uh, referrals. I never take on an engagement easily. I like to work with sellers for For months or a year to make sure their business is ready. If there's any problems in place to get those corrected. I like the business to be very sellable because I understand the buy side and what a buyer is looking for. So oftentimes, you know, there's, there's a lot of upfront work before even taking an engagement. Um, but the deal flow has been good. It's always been good. You know what, what size of business do you take on? I try to operate in businesses that I like to say are too big to be too big to be small, too small to be big. So in other words, between business brokers and higher-end investment bankers, typically, businesses with EBIDA, I say businesses with EBITA from 1 to 10 million, but 10 is high. I mean, because once you start getting to $10 million you know, there are people that are, are better suited than me to handle those size transactions. So the sweet spot is really businesses of a million dollars to $5 million of IBEDA. OK. You know, and I like those, you're dealing very often with a more sophisticated person, um, and I'm not, you know, saying that in a negative way related to the, you know, owners of smaller business, they don't put stuff in place or there's, you know, they, they, they're not, you know, the buyer's not getting what they think they're getting. But, you know, and, and you can work with them very often they have a second. Level of management in place, um, and they, they have the capital if it requires some work to get it ready for sale, to get some systems into place. They have the capital to do it. So it's, it's a nice, and they're hard to finance. So this way, I don't have a lot of competition. Like there's very few, you know, investment bankers that work in my swim lane. You like bigger deals or they like or business brokers like much smaller or smaller deals. So it's a, it's a, it's a good spot for me. Yeah, and you find or you already have a network of sellers to help them. So let's say somebody finding a buyer that needs to finance it. Yeah, and the financing is always a challenging part, right? Um, but their deals are financeable, right? Combination of SBA seller financing, sometimes there's some of these search funds, sometimes it's, you know, the business where I play our, our, our businesses that could be purchased by private. private equity firms as an add-on. They, you know, unless you get to the $3 to $5 million ebiter range, they're not buying that as a platform company, but the smaller ones, they, they look at, um, for add-ons to their existing business. So I have a, a really good network of prospects. Yeah. Let me go back to that course, uh, that you wrote 32 years ago. Uh, you think that the 90 days, you think that what you wrote then is still relevant today, or? Uh, how much have you updated that course since then? OK, so, um, you asked great questions, by the way, and I wrote it was in 2001. You know why I love that business, similar business, why I like the intermediary business because I could do it till I die. On the, the course business and it's, you know, really courses 548 pages with lots of worksheets and, and, and, and valuation, um, uh, spreadsheets and, and formulas. If I were to look at the business for sale market from 30, 40 years ago to it is now, like if I died and came back in 20 years from now, I'd probably have to change 20 pages, right? The process hasn't changed. You know, certain businesses, you've got the advent of social media or some of other, uh, you know, financing may have changed somewhat or the, the, the areas for financing, but the whole concept of identifying the type of business that's right for you, how, you know, the internet has changed how we search for it, but the business, how, you know, what's right for you? Um, questions to ask the seller, how you conduct due diligence, the valuation, the on it, the negotiation, tying it up and closing the deal. That's not. None of that the way you said that will ever change. Never. It's, it's 80 to 90% of the process remains the same. They're all changed. So, for example, you know, 20 years ago, I couldn't think of buying an online business or retail has changed, but the process of buying a business has stayed the same. And it's not going to change. Like I said, if I died and came back in 20 years from now, I'd have to rewrite 20 pages. Now, with that said, I update the course every year and update it as much anecdotally. Um, I try to keep stuff that's trendy away from it because I, I let anybody who buys our course email me at any time, and I'll get onto the phone with people. I'm on the phone all day long with people who buy our course and help them, and I never charge them. Um, you know, I'm happy to help them and Provide some consulting, so the emailing, so something that's topical or trendy, um, it's, it's best, um, reserved for not being memorialized and of course, which is, because it could change in a year from now, interest rates, for example, or that type of stuff. Um, so yeah, there's, you know, we do the updates every year, um, But it's a small percentage, and I try to through our articles and the uh interactions I have with our clients who can call me or email me, you know, the the more topical or, um, stuff that may be more applicable today is always addressed. But again, to the original question, by and large, I mean, it's like 80-90% at least, that's the same. Yeah, so let me ask you about this since you've probably been through a few cycles. Uh, inflation's up, interest rates up. How, how does that change buying a business? Harder to get financing for a business? Um, I wrote an article last week in Forbes. If everyone to check it out, the Forbes under my name and, and my, my heading was inflation is not going to have any impact on the business for sale market. I don't think it will. Um, I, you know, if you go back in time, interest rates have always gone up and down. Right? It's just good, so we've gotten used to this idea of, of, of, of borrowing money, cheap capital. Um, for, so for individuals who, let's say were borrowing from bank, which doesn't happen frequently, but more SBA type loans or seller or seller notes. So instead of paying, uh, you know, 4%, they might go to 7 or 8%. OK. So it's just, that's the only difference. But, you know, relative to the business size and what it's going to cost you over the long term, it's not a it's not. massive amount of money. I don't think it's going to change it. I think businesses that may decline as a result of the economy, that of course can have an impact. I do believe that valuations are going to have to come back down to normal on the, on the lower end of the market because they've gotten like people are smoking crack, but they're asking for the business. It makes no sense. It doesn't make sense from an ROI perspective. So on the lower market, those, I believe those multiples are going to come down. Um, with PE firms, um, that are making, um, investments, you know what, what, $13 trillion or more, that's not. Like they got deploy, the money's got to go somewhere. If they don't, if they don't buy businesses, they got to give back the money. So they're not giving it back. So that, so what'll happen on that end, I believe, the interest rate, they'll, they'll just put more equity into the deal. They're not going to leverage them as much. It might impact it a little bit. So they'll put more equity instead of, you know, instead of levering it some of them at crazy 6 times, they'll lever it at 3 or 4. They'll just put more equity in, which is better anyways. And so, you know, is where I think the inflation and interest rates are hurt is on the real low end of the market. And the reason being, is when you get into the real low end, people use their personal resources. They oftentimes will, um, take a, you know, home equity line to fund a down payment. That might get a little scary for them. They don't have the same capital. They, you know, people who individuals never bought a business before, you know, they're gonna, this is a massive decision, biggest decision you'll probably ever make in their life. They may not have the mindset to do it during a recessionary period. And so, for that low end, yes, I think it'll have an impact. Outside of that, I don't think it'll have any impact at all. I really don't. Yeah. And we just keep chugging along. We keep chugging along. I mean, business, business, some businesses are going to, you know, disappear or get hurt because of, um, because of the economy, and those won't get sold anyways. I mean, you know, if you go into the business for sale websites of the lower market, I mean, 75% of those businesses never get sold, so 75% still won't get sold because they're, you know, they're crap businesses, right? But in the, once you move up a little bit, I, I just, and I'm not trying, I'm, I'm deal in reality. I'm not just this, you know, crazy, optimistic, nothing but blue sky guy. I mean, I just do not believe that unless it's unless it's catastrophic. I just don't see it having a big impact. I think in some cases it'll help. I think some valuation, I think some multiples will drop and some direct to consumer businesses will suffer, but I, I, I, you know, where I play anyways, and especially with PE firms, I don't see any dip at all because, because at the end of the day, they, you know, they got all this capital like you say about 13 trillion, I mean, it's, it's got to be deployed. Yeah. Richard, uh, I, I really appreciate you spending time with me today, uh, sharing your wisdom and knowledge and experience on this. Uh, how, how do they find you, to get that course? Diomo.com. It's the abbreviation for doing it on my own, DOMO.com. And there's a whole series of, you know, guides for specifics for Forbes. Yeah, yeah, right right for Forbes, and that's an interesting article that people should, um. I should read that related to inflation to sort of recap of what we just talked about. At the same time, if anybody has any questions, I, I, I never actively promote the sale of, of my materials because it's, you know, I want to, I hope people just, uh, you know, can help them in some way. But notwithstanding that, if anybody has a question or wants to get in touch with me, my email isrparker@Domo.com. And you have any questions, I'm happy to help anybody. Yeah, and he's on LinkedIn too, so I'm on LinkedIn and that's how we found each other and I really, uh, it's really nice to connect with you after all this time and uh you asked great questions, so I really enjoyed this and I I really appreciate you having me. Yeah, thanks so much, Richard. I appreciate it. Thanks, we'll talk to you soon. OK, bye.